Semi-Annual Report
SEPTEMBER 30, 1997
FIRST OMAHA FAMILY OF FUNDS (R)
FIRST NATIONAL BANK OF OMAHA - ADVISER
NOTICE TO INVESTORS
Shares of the First Omaha Funds are:
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NOT FDIC INSURED
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MAY LOSE VALUE
NO BANK GUARANTEE
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The U.S. Government Obligations Fund is not insured or guaranteed by the U.S.
government, nor can there can be any assurance that the Fund will be able to
maintain a stable net asset value of $1.00 per share.
The First Omaha Funds are distributed by Sunstone Distribution Services, LLC.
FIRST OMAHA FUNDS - Semi-Annual Report
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October 1997
Dear Shareholder:
We are pleased to provide you with the First Omaha Family of Funds' Semi-Annual
Report for the period ended September 30, 1997. In it you will be given helpful
information regarding your investment, its performance and its management. Also,
our portfolio managers have given their observations on the stock and bond
markets. Please read this Semi-Annual Report carefully and retain it with your
Prospectus for future reference.
Once again, thank you for your investment in the First Omaha Family of Funds.
THE STOCK MARKET OUTLOOK
The stock market has continued its unprecedented upward climb since our annual
report in March. The Standard & Poor's Composite ("S&P 500") recorded a total
return of 38% in 1995 (the highest annual return since 1958), followed by a 23%
total return in 1996. For the first three quarters of 1997, the total return of
the S&P 500 was nearly 30%. What makes this period even more spectacular than it
appears is that it began with the market at already above-average valuation
levels. The S&P 500 stood at approximately 460 at the end of 1994, with a
price/earnings ratio of 15x trailing earnings and a yield of 3.0%.
The advance in the market since the end of 1994 is remarkable when considered
another way as well. The upward momentum has been interrupted only twice - in
neither case was the interruption significant or long-lasting. In July of 1996
and in the spring of 1997 corrections of less than 10% occurred and were
followed by even more rapid upward climbs. In particular, following the March-
April 1997 correction, the market staged one of its most spectacular surges
ever. For the first quarter of 1997, the S&P 500 had a total return just under
3% and was then followed by a total return of over 25% in the second and third
quarters combined.
Small-capitalization<F1> stocks corrected comparatively more than large-
capitalization stocks in the Spring 1997 correction. Since then, however, these
stocks have performed even better than the S&P 500. The S&P 500's
underperformance relative to small- and mid-cap stocks during the second and
third quarters probably resulted, in large part, from some high-profile larger-
cap companies pre-announcing third quarter earnings disappointments. Examples
(but not an all-inclusive list) include: Coca-Cola, Gillette, Eastman Kodak,
Motorola, Aetna, Owens Corning and Delta Airlines. In most cases, earnings
remain quite good for these companies; however, they pale in comparison to lofty
expectations and estimates. This makes the point that in order to impress the
market, profit margins and returns not only need to be good, they need to be
better than sometimes unrealistic expectations.
<F1> CAPITALIZATION or its abbreviation CAP represents the value of a company as
determined by the stock price multiplied by the number of outstanding
shares.
Economically, it doesn't get much better than it is right now. Inflation, as
measured by the Consumer Price Index ("CPI") and Producer Price Index
("PPI"), is running at under a 2% rate so far in 1997. Corporate earnings have
not declined in any quarter in more than five years and are expected by many
analysts to rise at double-digit rates throughout the balance of the year.
Interest rates have been low and relatively stable, with the Fed raising rates
just once (March 1997) in over two years. This period of moderate growth, low
inflation and low interest rates has helped propel the stock market to
valuations that, in most cases, surpass historical peaks. For example, on
September 30, 1997, the S&P 400 dividend yields were at an all-time low 1.3%
compared to an average of 3.4% over the past 20 years. The price to book value
ratio is at nearly 5.9x trailing earnings compared to a 20-year average of 2.6x.
The price/earnings ratio of the S&P 400 based on trailing earnings is 25x
compared to a 20-year average of 16x and an average since 1871 of 14x.
This near-perfect economic environment has, along with several other factors,
contributed to profit margins reaching the highest levels since 1970.
Productivity improvements resulting from technology and restructuring have also
contributed to the earnings increases. Cost-cutting efforts and lower interest
rates have reduced corporate expenses. A weaker dollar than that experienced in
the early 1980s also contributed to U.S. corporations becoming more competitive
worldwide. However, given the high market valuations, corporate earnings will
clearly be a significant factor going forward.
While we believe the companies that we hold in our equity portfolios will
continue to perform at above-average rates in terms of profitability, the
performance of the stocks of these companies is difficult to predict. Since we
do not believe that stock prices and fundamentals can remain decoupled over
extended time periods, we urge you to keep your expectations for return in check
during this period of full market valuation. Valuations now being carried by
many stocks are simply too high and caution should be exercised.
Semi-Annual Report - FIRST OMAHA FUNDS
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FIRST OMAHA SMALL CAP VALUE FUND
The inception date of the First Omaha Small Cap Value Fund was June 10, 1996.
From that date until our Annual Report of March 1997, the Fund outperformed the
S&P 400 MidCap and the S&P 600 SmallCap indices. Since March, however, the Fund
has lagged these indices. The Small Cap Value Fund, like our large-
capitalization Equity Fund, invests in companies that are sound fundamentally
and have solid historical records of operations. Our objective for this Fund,
over the long term, is to invest in small- and mid-cap companies that have
strong market positions, good balance sheets, above average or improving return
on equity and managements that have demonstrated an ability to effectively
allocate cash flows to maximize shareholder value. The basis of our philosophy
is to buy companies - not stocks - and to buy them at a price that is below our
estimate of their long-term intrinsic value. The Fund, on average, seeks to hold
stocks that are less volatile than the overall market. This proved a positive
from June 1996 until March 1997 but has not been advantageous from March 1997 to
September 1997.
During the past six-month period, several actions were taken in the portfolio.
The position in Dean Foods was eliminated. While the company remains
fundamentally sound, it reached our target price - not surprising given the
overall market strength during this time period. During this period, however, we
also added three new positions to the portfolio - Universal Foods, First Brands
and Midwest Express (as of September 30, 1997, represented 3.6%, 3.9% and 2.7%,
respectively of the Fund's net assets).
Universal Foods is an international manufacturer of value-added flavor,
nutrition and color ingredients. It also manufacturers Red Star Baking yeast
which represents about 20% of its sales. Prospects for Universal's products
internationally appear to be quite good, and we believe growth through
acquisition is likely for the company. Universal has consistently earned a
return on equity above 15% and has a solid and consistent cash flow. The stock
had a price/earnings ratio of under 14x the 1998 estimate when the position
began and yielded 2.7%.
We also established a position in First Brands, which manufactures and markets
branded and private-label consumer products for the household and automotive
markets. Its Glad and Himolene plastic wrap and bags represented 65% of 1996
sales. STP and Simoniz Auto specialty products contributed 21% of 1996 sales,
and Scoop Away and Ever Clean cat litter products represented 14%. We anticipate
that the company will continue to grow by increasing market share as well as by
adding product lines through acquisitions. Return on equity is slightly below
average, but we expect improvement over the next several years due to recent
restructuring efforts. First Brands' balance sheet is strong and cash flow is
consistent. The stock's price/earnings ratio was less than 15x and it yielded
1.4% at the time the position was established.
Midwest Express was also added to the portfolio during the past six months.
Midwest operates a single class, premium service passenger jet airline that
caters to business travelers and serves selected major business destinations
throughout the United States. The company was a spin-off from Kimberly Clark and
has operated as a separate business since 1984. Midwest captures a higher
percentage of the more profitable business traveler market and, therefore, earns
20% to 30% more revenue per seat than the industry average. As a result, the
company has generated a positive cash flow even in difficult economic times. We
attribute Midwest's performance to a conservative management philosophy, unique
service orientation and careful route selection. The stock's price/earnings
ratio was under 12x the 1997 estimate when the initial position was purchased.
THE PORTFOLIO
The Small Cap Value Fund is invested in what we perceive to be high-quality
companies. At September 30, 1997, the portfolio was 88% invested in stocks and
had cash reserves of 12%. The portfolio held 30 positions and was broadly
diversified with exposure to all major economic sectors.
FIRST OMAHA FUNDS - Semi-Annual Report
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SMALL CAP VALUE FUND
PORTFOLIO COMPOSITION <F2>
as of September 30, 1997
BASIC INDUSTRIES 37%
CONSUMER STAPLES 15%
CONSUMER CYCLICALS 14%
CAPITAL GOODS/ TECHNOLOGY 13%
FINANCIAL 8%
TRANSPORTATION 7%
UTILITIES 6%
TOP FIVE HOLDINGS <F3>
as of September 30, 1997
% OF NET ASSETS
- ----------------------------------------
CLARCOR Inc. 4.59%
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The Guarantee Life Companies, Inc. 4.21
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First Brands Corp. 3.90
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Nash-Finch Co. 3.64
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Universal Foods Corp. 3.55
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<F2> Sector weightings represent the percentage of the Fund's equity investments
in certain general sectors. These sectors include more than one industry.
<F3> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
The five largest positions in the portfolio at the end of September represented
19.4% of the portfolio.
The portfolio, on a weighted-average basis, is strong fundamentally and has an
attractive valuation as demonstrated in the following tables:
PORTFOLIO FUNDAMENTAL PROFILE
as of September 30, 1997
WEIGHTED AVERAGE
- ----------------------------------------
Payout Ratio <F4> 29.8%
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Debt/Capital 24.1%
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ROE <F4> 15.2%
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<F4> Based on 1997 estimates
PAYOUT RATIO is a ratio used to analyze a company's policy of paying cash
dividends, calculated by dividing the dividends paid on common stock by the net
income available for common stockholders. DEBT/CAPITAL is the ratio of total
debt to total stockholder's equity. ROE (RETURN ON EQUITY) equals earnings
available to common stock divided by common shareholder's equity.
PORTFOLIO VALUATION PROFILE
as of September 30, 1997
WEIGHTED AVERAGE
- ----------------------------------------
Price/Earnings <F5> 15.1x
- ----------------------------------------
Price/Book Value <F5> 2.2x
- ----------------------------------------
Yield 2.6%
- ----------------------------------------
<F5> Based on 1997 estimates
TOTAL RETURN
as of September 30, 1997
AVERAGE
1 YEAR ENDED ANNUAL SINCE
9/30/97 COMMENCEMENT <F6>
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First Omaha Small Cap Value Fund 34.93% 24.55%
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<F6> Commencement date is 6/10/96
RETURN ON A $10,000 INVESTMENT
JUNE 10, SEPT. MARCH SEPT.
1996 1996 1997 1997
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FIRST OMAHA SMALL CAP VALUE FUND $10,000 9,880 10,730 13,331
S&P MIDCAP 400 INDEX $10,000 10,133 10,587 14,096
S&P SMALLCAP 600 INDEX $10,000 9,978 9,960 13,667
This chart assumes an initial investment of $10,000 made on 6/10/96. Total
Return is based on net change in N.A.V. assuming reinvestment of distributions.
Returns shown on this page include the reinvestment of all dividends and other
distributions. Performance figures reflect fee waivers in effect, represent past
performance, which is no guarantee of future results, and will fluctuate. In
the absence of fee waivers, Total Return would be reduced. The investment return
and principal value of an investment in the First Omaha Small Cap Value Fund
will fluctuate so that an investor's shares in the Fund, when redeemed, may be
worth more or less than their original cost. This Fund is advised by First
National Bank of Omaha.
The S&P MidCap 400 Index consists of 400 domestic stocks chosen for market size,
liquidity and industry group representation. It is also a market-value weighted
index and was the first benchmark of midcap stock price movement.
The S&P SmallCap 600 Index consists of 600 domestic stocks chosen for market
size, liquidity (bid-asked spread, ownership, share turnover and number of no
trade days) and industry group representation. It too is a market-value weighted
index.
Semi-Annual Report - FIRST OMAHA FUNDS
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FIRST OMAHA EQUITY FUND
The First Omaha Equity Fund had outperformed the S&P 500 from its inception in
December of 1992 until the second half of 1995. The significant returns
registered by the market since that time have been difficult to beat. The
defensive posture and cash position held in the Fund weighed negatively on the
portfolio's performance. Despite our disappointment regarding the under-
performance of the Fund, we continue to follow a deliberate, focused approach to
investing. We continue to invest in companies - not stocks. The basis of our
philosophy is to buy good quality companies at a price that is below our
estimate of intrinsic value. An environment such as the current one makes this
task challenging.
During the past six months, we added one new position to the equity portfolio -
Food Lion, Inc. (1.3% of the Fund's net assets as of September 30, 1997). Food
Lion operates a regional supermarket chain in the southeastern U.S. The company
operates 1200 plus retail stores as well as nine distribution centers. Food Lion
is strong financially and is very well managed. Return on equity surpassed 20%
in the 1980s and early 1990s, then dropped sharply to the mid-teens. A news
story that reported that Food Lion's food handling was poor resulted in
significant market share losses in 1993 which contributed to a sharp earnings
decline. The company approached this whole event in a very constructive way.
Food Lion evaluated all of its procedures and its operations in general. As a
result of actions taken during the 1993-1994 time period, as well as a recovery
of lost market share, the net margin has risen and return on equity has
increased above 15%. The retail food industry remains quite fragmented, despite
significant consolidation over the past decade. We expect Food Lion to increase
sales in existing stores and to add to its internal growth through strategic
acquisitions. We believe management will make only acquisitions that make
business and financial sense. The stock was attractively valued at 12x the 1998
estimate and yielded 2.1% when the position was established.
One position was eliminated from the portfolio during the past six months.
Tambrands was acquired by Procter & Gamble for $50 per share in cash. Tambrands
has a very strong U.S. franchise which we believed could be translated
successfully to international markets. Apparently, Procter & Gamble agreed with
us.
THE PORTFOLIO
On September 30, 1997, 81% of the portfolio was invested in equities with the
balance invested in cash and cash equivalents. The portfolio holds 32 stocks and
remains well-diversified with exposure to all major sectors of the economy.
EQUITY FUND
PORTFOLIO COMPOSITION <F7>
as of September 30, 1997
CONSUMER STAPLES 20%
CAPITAL GOODS/TECHNOLOGY 20%
CONSUMER CYCLICALS 20%
FINANCIAL 16%
ENERGY 10%
BASIC INDUSTRIES 9%
UTILITIES 5%
TOP FIVE HOLDINGS <F8>
as of September 30, 1997
% OF NET ASSETS
- ----------------------------------------
Kellwood Co. 4.56%
- ----------------------------------------
Exxon Corp. 4.11
- ----------------------------------------
Ingersoll-Rand Co. 4.07
- ----------------------------------------
Motorola, Inc. 3.94
- ----------------------------------------
Eastman Kodak Co. 3.92
- ----------------------------------------
<F7> Sector weightings represent the percentage of the Fund's equity investments
in certain general sectors. These sectors include more than one industry.
<F8> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
The five largest holdings are listed above. These stocks represented
approximately 20.6% of the Fund's net assets and approximately 25.4% of the
value of the equities in the portfolio.
As we discussed before, we believe owning above-average companies at below
intrinsic values should provide some downside protection in the event of a
market correction. We believe these holdings may offer significant upside
potential over the long term. The First Omaha Equity Fund holds stocks that are
fundamentally strong, yet are inexpensively valued as indicated in the charts on
the next page.
FIRST OMAHA FUNDS - Semi-Annual Report
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PORTFOLIO FUNDAMENTAL PROFILE
as of September 30, 1997
WEIGHTED S&P
AVERAGE 400
- -------------------------------------------
Payout Ratio <F9> 35.9% 28.3%
- -------------------------------------------
Debt/Capital 31.0% 36.0%
- -------------------------------------------
ROE <F9> 17.3% 22.0%
- -------------------------------------------
PORTFOLIO VALUATION PROFILE
as of September 30, 1997
WEIGHTED S&P
AVERAGE 400
- -------------------------------------------
Price/Earnings <F9> 16.0x 21.0x
- -------------------------------------------
Price/Book Value <F9> 2.9x 4.1x
- -------------------------------------------
Yield 2.3% 1.3%
- -------------------------------------------
<F9> Based on 1997 estimates
See the definitions on page 3 of the terms listed above.
TOTAL RETURN
as of September 30, 1997
1 YEAR ENDED AVERAGE ANNUAL SINCE
9/30/97 COMMENCEMENT <F10>
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First Omaha Equity Fund<F11> 29.28% 17.01%
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<F10> Commencement date is 12/13/92
<F11> Performance data from commencement through April 9, 1995 relates to a
predecessor, First Omaha Equity Fund, the assets of which were acquired
by the Fund on that date.
RETURN ON A $10,000 INVESTMENT
DEC. 13 SEPT. SEPT. SEPT. SEPT. SEPT.
1992 1993 1994 1995 1996 1996
------- -------- -------- -------- -------- --------
FIRST OMAHA EQUITY
FUND 10,000 10,681 11,723 14,333 16,446 21,262
S&P 500 COMPOSITE 10,000 10,835 11,234 14,576 17,539 24,634
This chart assumes an initial investment of $10,000 made on 12/13/92. Total
Return is based on net change in N.A.V. assuming reinvestment of distributions.
Returns shown on this page include the reinvestment of all dividends and other
distributions. Performance figures reflect fee waivers in effect, represent past
performance, which is no guarantee of future results, and will fluctuate. In
the absence of fee waivers, Total Return would be reduced. The investment return
and principal value of an investment in the First Omaha Equity Fund will
fluctuate so that an investor's shares in the Fund, when redeemed, may be worth
more or less than their original cost. This Fund is advised by First National
Bank of Omaha.
The S&P 500 Composite is an unmanaged index of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The returns for this index do not reflect any fees or expenses.
Semi-Annual Report - FIRST OMAHA FUNDS
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FIRST OMAHA BALANCED FUND
The First Omaha Balanced Fund provided a one-year total return of 20.1%, which
compares favorably with the benchmark indices shown on the next page. As of
September 30, 1997 the Fund was structured with a 49% allocation to equities and
a 51% allocation to fixed income securities and cash, resulting in a performance
that, we believe, will typically fall somewhere between the respective equity
and fixed benchmarks. We realize that there will inevitably be up and down
cycles in the capital markets (although many folks from Wall Street to Main
Street seem to have forgotten this fact!), which will provide us with periods in
which we can invest in good companies at more than satisfactory rates of return.
Conversely, there will be periods where the capital we invest underperforms the
current averages. Our success in meeting our objective depends on adhering to
our philosophy and executing it through a deliberate, focused approach to
investing. Our focal point will not be on trying to time the market, but instead
we focus on purchasing securities that provide good value and a reasonable
margin of safety.
The First Omaha Balanced Fund has a primary goal of providing a combination of
current income and capital appreciation. Our emphasis on the bond and stock
selection is based on our philosophy of buying securities that sell below their
fair value and meet our quantitative and qualitative criteria. Because we have a
long-term investment horizon of three to five years, we focus on long-term
results. Additionally, by focusing on the individual security's investment
merits, and whether or not we can find attractive prospects at reasonable
prices, the target asset allocation decision unfolds quite naturally. Stocks are
purchased when more attractive than bonds over our investment horizon. Bonds are
purchased when they appear attractive. Cash reserves will be a by-product of our
stock and bond selection processes. If we cannot find attractive candidates,
cash will build. Conversely, if there are numerous prospects that meet our
requirements, cash will decrease.
THE PORTFOLIO
Under normal market conditions, the Balanced Fund is expected to be allocated
approximately 65% in stocks and securities convertible into common stocks and
35% in debt securities, however, under current market conditions our target
asset allocation is 45% to 50% stocks, 40% to 45% bonds and 10% to 15% cash and
cash equivalents. In line with our stated target range, the asset mix at the
quarter ended September 30, 1997 consisted of 6% cash, 45% bonds and 49% stocks.
The composition of the bond portion of the portfolio consists of 40% high-
quality corporate bonds and 60% government and agency notes. The average yield
on the bond portfolio is 6.0% with an average maturity just over 7 years. The
portfolio boasts an average quality rating of AA1. It is well diversified across
sectors of the economy. The corporate portion of the portfolio is 40% industrial
bonds, 17% electric utility bonds, 14% financial bonds, 15% transportation
bonds, 11% gas utility bonds and 3% telephone utility bonds.
The dividend yield on the equity portion of the portfolio was 2.3% at the end of
the quarter, which compares favorably to the S&P 500 yield of 1.6%. The
portfolio contains 32 positions, with the top five positions at the end of the
quarter comprising approximately 25.5% of the equity portion of the portfolio,
including Kellwood, Ingersoll-Rand, Eastman Kodak, American General Corp., and
J.C. Penney. Like the First Omaha Equity Fund, this portfolio is diversified and
is constructed to participate in most major sectors of the economy. These
companies are fundamentally stronger and are above-average financially when
compared to the overall market. We believe these characteristics, combined with
an above-average dividend yield and the favorable valuation of the stock
portfolio, may provide additional downside protection for the portfolio in
declining markets.
BALANCED FUND
PORTFOLIO COMPOSITION
as of September 30, 1997
COMMON STOCKS 49%
U.S. GOVERNMENTS 22%
CORPORATE BONDS 18%
CASH EQUIVALENTS 6%
U.S. GOVERNMENT AGENCIES 5%
TOP FIVE HOLDINGS <F12>
as of September 30, 1997
% OF NET ASSETS
- -------------------------------------------
Kellwood Co. 2.79%
- -------------------------------------------
Union Tank Car Co., 7.45%, 6/1/09 2.65
- -------------------------------------------
U.S. Treasury Note, 7.00%, 7/15/06 2.65
- -------------------------------------------
Ingersoll-Rand Co. 2.59
- -------------------------------------------
U.S. Treasury Note, 6.50%, 8/15/05 2.56
- -------------------------------------------
<F12> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
FIRST OMAHA FUNDS - Semi-Annual Report
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TOTAL RETURN
as of September 30, 1997
1 YEAR ENDED AVERAGE ANNUAL SINCE
9/30/97 COMMENCEMENT <F13>
- -----------------------------------------------------------------------
First Omaha Balanced Fund 20.12% 18.29%
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<F13> Commencement date is 8/6/96
RETURN ON A $10,000 INVESTMENT
AUG. 6, SEPT. SEPT.
1996 1996 1997
------- ------- -------
FIRST OMAHA BALANCED FUND 10,000 10,105 12,138
S&P 500 COMPOSITE 10,000 10,431 14,650
LEHMAN BROS. GOV'T./CORP. BOND INDEX 10,000 10,158 11,132
This chart assumes an initial investment of $10,000 made on 8/6/96. Total Return
is based on net change in N.A.V. assuming reinvestment of distributions.
Returns shown on this page include the reinvestment of all dividends and other
distributions. Performance figures reflect fee waivers in effect, represent past
performance, which is no guarantee of future results, and will fluctuate. In
the absence of fee waivers, Total Return would be reduced. The investment return
and principal value of an investment in the First Omaha Balanced Fund will
fluctuate so that an investor's shares in the Fund, when redeemed, may be worth
more or less than their original cost. This Fund is advised by First National
Bank of Omaha.
The S&P 500 Composite is an unmanaged index of 500 selected common stocks, most
of which are listed on the New York Stock Exchange. The Index is heavily
weighted toward stocks with large market capitalizations and represents
approximately two-thirds of the total market value of all domestic common
stocks. The returns for this index do not reflect any fees or expenses.
The Lehman Bros. Gov't./Corp. Bond Index includes all public obligations of the
U.S. Treasury, excluding flower bonds and foreign-targeted issues; all publicly
issued debt of U.S. government agencies and quasi-federal corporations, and
corporate debt guaranteed by the U.S. government; and all publicly issued, fixed
rate, nonconvertible, investment grade, dollar-denominated, SEC-registered
corporate debt (including debt issued or guaranteed by foreign sovereign
governments, municipalities, or governmental agencies, or international
agencies). The returns for this index do not reflect any fees or expenses.
THE BOND MARKET OUTLOOK
Economic figures released during the second and third quarters confirmed the
growing perception that the economy can enjoy strong growth without igniting
inflation. From the first half of this year, real Gross Domestic Product's
("GDP") average annual growth rate was 4.3%, while inflationary pressures
remain subdued. Capital spending and productivity gains continue to contribute
to strong economic growth and low inflation. New orders for technology equipment
are up about 13% from a year ago and new orders for industrial equipment are up
about 7%. If capital spending remains strong as it was in the second quarter,
then we could see the continuation of deflationary pressures within the economy.
Less Treasury debt issuance and continued improvement in the government's fiscal
position are having a positive effect on the bond markets. Although a budget
surplus is plausible for 1998, the current condition of the economy and capital
markets must remain consistent. The President and Congress were able to agree
upon a budget deficit plan and a tax cut program in August. Among the items of
note were a lower capital gains rate and the establishment of a $500 per child
tax credit. Thus, as long as Congress doesn't spend the projected budget
surpluses before it is actually recorded, we should continue on our path toward
a lower budget deficit.
So while deflationary pressures continue to emerge, the persistence of the tight
labor market continues to hold the threat of future inflation. Federal Reserve
Chairman Alan Greenspan again recently voiced his concerns on the valuations of
the equity markets and the notion that inflation will not rise. He reminded the
market that the tight labor markets will keep the Fed on alert and that he
expects wages to increase, but is unsure of the timing.
Semi-Annual Report - FIRST OMAHA FUNDS
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FIRST OMAHA FIXED INCOME FUND
The First Omaha Fixed Income Fund invests at least 65% of its total assets
in investment grade fixed income securities. The portfolio will be constructed
primarily through the laddering of bonds of one to 20 years in maturity. In
this manner we seek to reduce credit and reinvestment rate risk over the
long term.
As of September 30, 1997, the portfolio's composition was allocated with 26%
government securities, 73% corporate bonds and 1% cash. The overall weighted
average credit quality of the portfolio remained the same at AA/Aa. The weighted
average maturity of the portfolio was 8.6 years. We continued to purchase longer
duration<F14> securities within the portfolio and anticipate maintaining the
portfolio's longer duration when compared against its benchmark. The First Omaha
Fixed Income Fund's performance has been in line with the Lehman Bros.
Gov't./Corp. Bond Index for the first nine months of 1997. Rates have moved down
since January 1, while we have seen corporate bond spreads widen slightly.
FIXED INCOME FUND
PORTFOLIO COMPOSITION
as of September 30, 1997
CORPORATE BONDS 73%
U.S.GOVERNMENTS 14%
U.S. GOVERNMENT AGENCIES 12%
CASH EQUIVALENTS 1%
<F14> DURATION measures the sensitivity of the value of bond investments to
changes in interest rates. Generally, if interest rates change one
percentage point, the value will change in the opposite direction by a
percentage equal to the duration.
TOP FIVE HOLDINGS <F15>
as of September 30, 1997
% OF NET ASSETS
- ---------------------------------------------------
U.S. Treasury STRIP, 2/15/07 4.68%
- ---------------------------------------------------
Federal Home Loan Mortgage
Corp., 6.78%, 3/15/04 3.83
- ---------------------------------------------------
AT&T Corp., 7.75%, 3/1/07 3.45
- ---------------------------------------------------
Citizens Utilities Co., 7.60%, 6/1/06 3.40
- ---------------------------------------------------
PPG Industries, Inc., 7.375%, 6/1/16 3.35
- ---------------------------------------------------
<F15> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
TOTAL RETURN
as of September 30, 1997
1 YEAR ENDED AVERAGE ANNUAL SINCE
9/30/97 COMMENCEMENT <F16>
- -----------------------------------------------------------------------
First Omaha Fixed Income Fund <F17> 9.60% 6.86%
- -----------------------------------------------------------------------
<F16> Commencement date is 12/13/92
<F17> Performance data from commencement through April 9, 1995 relates to a
predecessor, First Omaha Fixed Income Fund, the assets of which were
acquired by the Fund on that date.
RETURN ON A $10,000 INVESTMENT
DEC. 13, SEPT. SEPT. SEPT. SEPT. SEPT.
1992 1993 1994 1995 1996 1997
-------- ------ ------ ------ ------ ------
FIRST OMAHA FIXED INCOME FUND 10,000 11,248 10,603 12,201 12,547 13,753
LEHMAN BROS. GOV'T/CORP.
BOND INDEX 10,000 11,255 10,789 12,337 12,893 14,129
This chart assumes an initial investment of $10,000 made on 12/13/92. Total
Return is based on net change in N.A.V. assuming reinvestment of distributions.
Returns shown on this page include the reinvestment of all dividends and other
distributions. Performance figures reflect fee waivers in effect, represent
past performance, which is no guarantee of future results, and will fluctuate.
In the absence of fee waivers, Total Return would be reduced. The investment
return and principal value of an investment in the First Omaha Fixed Income Fund
will fluctuate so that an investor's shares in the Fund, when redeemed, may be
worth more or less than their original cost. This Fund is advised by First
National Bank of Omaha.
The Lehman Bros. Gov't./Corp. Bond Index includes all public obligations of the
U.S. Treasury, excluding flower bonds and foreign-targeted issues; all publicly
issued debt of U.S. government agencies and quasi-federal corporations, and
corporate debt guaranteed by the U.S. government; and all publicly issued, fixed
rate, nonconvertible, investment grade, dollar-denominated, SEC-registered
corporate debt (including debt issued or guaranteed by foreign sovereign
governments, municipalities, or governmental agencies, or international
agencies). The returns for this index do not reflect any fees or expenses.
FIRST OMAHA FUNDS - Semi-Annual Report
- -----------------------------------------------------------------------------
FIRST OMAHA SHORT-INTERMEDIATE FIXED INCOME FUND
The First Omaha Short/Intermediate Fixed Income Fund invests at least 65% of its
total assets in investment grade fixed income securities. The portfolio expects
to maintain a dollar-weighted average maturity of two to five years.
As of September 30, 1997 the portfolio's composition was allocated with 24%
government securities, 75% corporate bonds and 1% cash. The overall weighed
average credit quality remained AA/Aa for the portfolio, while the weighted
average maturity was 3.7 years. We anticipate continuing to preserve the overall
high credit quality and maintain the laddered bond maturities within the
portfolio. Year-to-date the First Omaha Short/Intermediate Fixed Income Fund has
slightly underperformed its benchmark, the Lehman Bros. Mutual Fund Short (1-5)
U.S. Government Index. This was due to the longer duration <F18> in the Fund
versus its benchmark (3.0 and 2.7, respectively). Short interest rates have
risen since the first of the year, the reason being strong first half economic
growth and the Federal Funds rate at 5.50%.
SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO COMPOSITION
as of September 30, 1997
CORPORATE BONDS 75%
U.S. GOVERNMENTS 24%
CASH EQUIVALENTS 1%
TOP FIVE HOLDINGS <F19>
as of September 30, 1997
% OF NET ASSETS
- ---------------------------------------------------
Eli Lilly & Co., 8.125%, 12/1/01 5.42%
- ---------------------------------------------------
U.S. Treasury STRIP, 2/15/02 5.29
- ---------------------------------------------------
Union Electric Co., 6.875%, 8/1/04 5.19
- ---------------------------------------------------
Anheuser-Busch Cos., Inc., 6.90%, 10/1/02 5.16
- ---------------------------------------------------
Federal Home Loan Bank, 6.50%, 11/29/05 5.13
- ---------------------------------------------------
<F18> DURATION measures the sensitivity of the value of bond investments to
changes in interest rates. Generally, if interest rates change one
percentage point, the value will change in the opposite direction by a
percentage equal to the duration.
<F19> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
TOTAL RETURN
as of September 30, 1997
1 YEAR ENDED AVERAGE ANNUAL SINCE
9/30/97 COMMENCEMENT <F20>
- -----------------------------------------------------------------------
First Omaha Short/Intermediate
Fixed Income Fund <F21> 7.12% 5.42%
- -----------------------------------------------------------------------
<F20> Commencement date is 12/13/92
<F21> Performance data from commencement through April 9, 1995 relates to a
predecessor, First Omaha Short/Intermediate Fixed Income Fund, the assets
of which were acquired by the Fund on that date.
RETURN ON A $10,000 INVESTMENT
Dec. 13, Sept. Sept. Sept. Sept. Sept.
1992 1993 1994 1995 1996 1997
-------- ------ ------ ------ ------ ------
FIRST OMAHA SHORT/INTERMEDIATE
FIXED INCOME FUND 10,000 10,682 10,555 11,552 12,029 12,885
LEHMAN BROS. MUTUAL FUND SHORT
(1-5) U.S. GOV'T. INDEX 10,000 10,710 10,690 11,689 12,326 13,225
This chart assumes an initial investment of $10,000 made on 12/13/92. Total
Return is based on net change in N.A.V. assuming reinvestment of distributions.
Returns shown on this page include the reinvestment of all dividends and other
distributions. Performance figures reflect fee waivers in effect, represent
past performance, which is no guarantee of future results, and will fluctuate.
In the absence of fee waivers, Total Return would be reduced. The
investment return and principal value of an investment in the First Omaha
Short/Intermediate Fixed Income Fund will fluctuate so that an investor's
shares in the Fund, when redeemed, may be worth more or less than their
original cost. This Fund is advised by First National Bank of Omaha.
The Lehman Bros. Mutual Fund Short (1-5) U.S. Government Index is an index
made up of the Treasury Bond Index (all public obligations of the U.S. Treasury,
excluding flower bonds and foreign-targeted issues) and the Agency Bond Index
(all publicly issued debt of U.S. government agencies and quasi-federal
corporations, and corporate debt guaranteed by the U.S. government). It
includes only those bonds with maturities of up to five years. The returns for
this index do not reflect any fees or expenses.
Semi-Annual Report - FIRST OMAHA FUNDS
- -----------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
September 30, 1997 (Unaudited)
SMALL CAP VALUE FUND
NUMBER
OF SHARES VALUE
---------- -------
COMMON STOCKS 90.12%
AIRLINES 2.74%
9,600 Midwest Express Holdings, Inc. <F22> $307,800
--------
BUSINESS SERVICES 3.13%
12,600 Franklin Covey Co. <F22> 352,012
--------
CHEMICALS 8.64%
8,800 Dexter Corp. 352,550
18,700 Oil-Dri Corp. of America 316,731
10,000 WD-40 Co. 301,250
--------
970,531
--------
CONSUMER PRODUCTS 3.90%
16,400 First Brands Corp. 438,700
--------
ELECTRONICS 2.74%
8,900 Teleflex, Inc. 308,163
--------
ENVIRONMENTAL CONTROL 4.08%
23,500 Calgon Carbon Corp. 306,969
18,300 Isco, Inc. 150,975
--------
457,944
--------
FOOD 7.18%
17,200 Nash-Finch Co. 408,500
9,900 Universal Foods Corp. 398,475
--------
806,975
--------
HOME FURNISHINGS 3.07%
8,200 National Presto Industries, Inc. 344,912
--------
INSURANCE 7.54%
8,400 American Financial Group, Inc. 373,800
16,400 The Guarantee Life Companies, Inc. 473,550
--------
847,350
--------
MACHINERY & EQUIPMENT 8.47%
12,600 Lawson Products, Inc. 371,700
9,300 Modine Manufacturing Co. 324,338
4,600 Tecumseh Products Co., Class A 256,162
--------
952,200
--------
MANUFACTURING 3.16%
9,600 Tennant Co. 355,200
--------
NUMBER
OF SHARES VALUE
---------- -------
METAL PRODUCTS 3.38%
15,500 Amcast Industrial Corp. $ 379,750
----------
MINING 3.49%
9,000 Cleveland-Cliffs, Inc. 392,625
----------
MOTOR VEHICLE PARTS & ACCESSORIES 4.59%
18,000 CLARCOR Inc. 515,250
----------
PACKAGING & CONTAINERS 2.47%
8,400 The West Co., Inc. 277,200
----------
PAPER PRODUCTS 3.32%
16,800 P.H. Glatfelter Co. 372,750
----------
TECHNOLOGY - SOFTWARE 1.11%
5,200 Cerner Corp. <F22> 124,475
----------
TEXTILE MANUFACTURING 3.31%
10,500 Kellwood Co. 372,094
----------
TIRE & RUBBER 2.87%
6,100 Bandag, Inc. 322,919
----------
TOBACCO 2.71%
8,400 Universal Corp. 304,500
----------
TRUCKING LEASING 3.13%
14,500 Werner Enterprises, Inc. 351,625
----------
UTILITIES - ELECTRIC SERVICES 1.96%
9,000 DPL Inc. 220,500
----------
UTILITIES - TELECOMMUNICATIONS 3.13%
14,500 Aliant Communications, Inc. 351,625
----------
Total Common Stocks (cost $8,451,238) 10,127,100
----------
PRINCIPAL
AMOUNT
---------
U.S. TREASURY BILLS 9.77%
$1,100,000 10/16/97 1,097,823
----------
Total U.S. Treasury Bills (cost $1,097,691) 1,097,823
----------
FIRST OMAHA FUNDS - Semi-Annual Report
- -----------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
--------- -------
INVESTMENT COMPANIES 2.51%
281,670 Goldman Sachs ILA Treasury
Obligations Portfolio $ 281,670
-----------
Total Investment Companies (cost $281,670) 281,670
-----------
Total Investments (cost $9,830,599) 102.40% 11,506,593
Liabilities, less Other Assets (2.40)% (269,901)
-----------
NET ASSETS 100.00% $11,236,692
===========
<F22> Non-dividend paying security
See notes to financial statements.
Semi-Annual Report - FIRST OMAHA FUNDS
- -----------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
September 30, 1997 (Unaudited)
EQUITY FUND
NUMBER
OF SHARES VALUE
---------- -------
COMMON STOCKS 81.20%
COMMUNICATIONS EQUIPMENT 3.94%
163,600 Motorola, Inc. $11,758,750
-----------
COMPUTERS & PERIPHERALS 2.82%
79,200 International Business Machines Corp. 8,390,250
-----------
COSMETICS 1.65%
100,500 International Flavors & Fragrances, Inc. 4,924,500
-----------
ELECTRICAL EQUIPMENT 3.40%
59,400 Emerson Electric Co. 3,422,925
149,250 Parker-Hannifin Corp. 6,716,250
-----------
10,139,175
-----------
ENVIRONMENTAL CONTROL 0.74%
169,200 Calgon Carbon Corp. 2,210,175
-----------
FOOD PROCESSING & PACKAGING 1.46%
47,100 CPC International, Inc. 4,362,638
-----------
GROCERY STORES 1.25%
260,540 Food Lion, Inc., Class A 2,173,881
195,450 Food Lion, Inc., Class B 1,563,600
-----------
3,737,481
-----------
HEAVY MACHINERY 4.07%
282,000 Ingersoll-Rand Co. 12,143,625
-----------
INSURANCE 12.70%
243,900 American Financial Group, Inc. 10,853,550
221,300 American General Corp. 11,479,937
67,800 Marsh & McLennan Cos., Inc. 5,195,175
195,100 SAFECO Corp. 10,340,300
-----------
37,868,962
-----------
MANUFACTURING 1.84%
120,800 Harsco Corp. 5,481,300
-----------
MEDICAL SUPPLIES 0.95%
58,900 Becton, Dickinson & Co. 2,819,837
-----------
MINING 3.29%
408,560 Cyprus Amax Minerals Co. 9,805,440
-----------
NUMBER
OF SHARES VALUE
---------- -------
MOTOR VEHICLE PARTS & ACCESSORIES 1.63%
169,200 CLARCOR Inc. $ 4,843,350
-----------
OIL 8.30%
191,400 Exxon Corp. 12,261,562
86,800 Texaco Inc. 5,332,775
165,500 Unocal Corp. 7,157,875
-----------
24,752,212
-----------
PACKAGING & CONTAINERS 2.67%
234,800 Sonoco Products Co. 7,968,525
-----------
PHARMACEUTICALS 1.65%
59,600 Bristol-Myers Squibb Co. 4,931,900
-----------
PHOTOGRAPHY 3.92%
179,900 Eastman Kodak Co. 11,682,256
-----------
PUBLISHING 3.68%
307,100 R.R. Donnelley & Sons Co. 10,959,631
-----------
RETAIL 7.06%
193,800 J.C. Penney Co., Inc. 11,288,850
176,200 Rite Aid Corp. 9,768,088
-----------
21,056,938
-----------
SOAPS & CLEANING AGENTS 1.84%
78,600 Colgate-Palmolive Co. 5,477,438
-----------
TEXTILE MANUFACTURING 4.56%
383,300 Kellwood Co. 13,583,194
-----------
TOBACCO 3.81%
313,400 Universal Corp. 11,360,750
-----------
UTILITIES - ELECTRIC SERVICES 3.97%
258,300 DPL Inc. 6,328,350
153,000 Texas Utilities Co. 5,508,000
-----------
11,836,350
-----------
Total Common Stocks (cost $163,200,629) 242,094,677
-----------
FIRST OMAHA FUNDS - Semi-Annual Report
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
---------- -------
U.S. TREASURY BILLS 17.17%
$ 6,000,000 10/16/97 $ 5,988,120
6,000,000 11/28/97 5,951,640
10,000,000 1/22/98 9,843,200
5,000,000 1/29/98 4,915,650
6,000,000 2/5/98 5,893,140
9,000,000 2/19/98 8,822,160
10,000,000 3/5/98 9,780,300
-----------
Total U.S. Treasury Bills (cost $51,184,885) 51,194,210
-----------
NUMBER
OF SHARES
----------
INVESTMENT COMPANIES 2.16%
6,437,311 Goldman Sachs ILA Treasury
Obligations Portfolio 6,437,311
------------
Total Investment Companies (cost $6,437,311) 6,437,311
------------
Total Investments (cost $220,822,825) 100.53% 299,726,198
Liabilities, less Other Assets (0.53)% (1,582,263)
------------
NET ASSETS 100.00% $298,143,935
============
See notes to financial statements.
Semi-Annual Report - FIRST OMAHA FUNDS
- -----------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
September 30, 1997 (Unaudited)
BALANCED FUND
NUMBER
OF SHARES VALUE
--------- -------
COMMON STOCKS 49.40%
COMMUNICATIONS EQUIPMENT 2.20%
6,100 Motorola, Inc. $ 438,438
----------
COMPUTERS & PERIPHERALS 1.49%
2,800 International Business Machines Corp. 296,625
----------
COSMETICS 1.11%
4,500 International Flavors & Fragrances, Inc. 220,500
----------
ELECTRICAL EQUIPMENT 2.52%
3,800 Emerson Electric Co. 218,975
6,300 Parker-Hannifin Corp. 283,500
----------
502,475
----------
ENVIRONMENTAL CONTROL 0.49%
7,500 Calgon Carbon Corp. 97,969
----------
FOOD PROCESSING & PACKAGING 1.16%
2,500 CPC International, Inc. 231,563
----------
GROCERY STORES 0.73%
10,020 Food Lion, Inc., Class A 83,604
7,570 Food Lion, Inc., Class B 60,560
----------
144,164
----------
HEAVY MACHINERY 2.59%
12,000 Ingersoll-Rand Co. 516,750
----------
INSURANCE 7.91%
9,900 American Financial Group, Inc. 440,550
9,000 American General Corp. 466,875
3,200 Marsh & McLennan Cos., Inc. 245,200
8,000 SAFECO Corp. 424,000
----------
1,576,625
----------
MANUFACTURING 1.14%
5,000 Harsco Corp. 226,875
----------
MEDICAL SUPPLIES 0.84%
3,500 Becton, Dickinson & Co. 167,562
----------
MINING 2.02%
16,770 Cyprus Amax Minerals Co. 402,480
----------
NUMBER
OF SHARES VALUE
--------- -------
MOTOR VEHICLE PARTS & ACCESSORIES 0.96%
6,700 CLARCOR Inc. $ 191,787
----------
OIL 4.36%
7,100 Exxon Corp. 454,844
3,000 Texaco Inc. 184,312
5,300 Unocal Corp. 229,225
----------
868,381
----------
PACKAGING & CONTAINERS 1.62%
9,500 Sonoco Products Co. 322,406
----------
PHARMACEUTICALS 0.62%
1,500 Bristol-Myers Squibb Co. 124,125
----------
PHOTOGRAPHY 2.54%
7,800 Eastman Kodak Co. 506,513
----------
PUBLISHING 2.20%
12,300 R.R. Donnelley & Sons Co. 438,956
----------
RETAIL 4.34%
8,000 J.C. Penney Co., Inc. 466,000
7,200 Rite Aid Corp. 399,150
----------
865,150
----------
SOAPS & CLEANING AGENTS 1.57%
4,500 Colgate-Palmolive Co. 313,594
----------
TEXTILE MANUFACTURING 2.79%
15,700 Kellwood Co. 556,369
----------
TOBACCO 2.00%
11,000 Universal Corp. 398,750
----------
UTILITIES - ELECTRIC SERVICES 2.20%
10,500 DPL Inc. 257,250
5,000 Texas Utilities Co. 180,000
----------
437,250
----------
Total Common Stocks (cost $8,139,991) 9,845,307
----------
FIRST OMAHA FUNDS - Semi-Annual Report
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
-------- -------
CORPORATE BONDS 17.75%
FINANCIAL SERVICES 2.56%
$500,000 General Electric Capital Corp.,
6.90%, 9/15/15 $ 509,600
----------
FOOD PRODUCTS 2.56%
500,000 Anheuser-Busch Cos., Inc.,
6.75%, 8/1/03 509,035
----------
PHARMACEUTICALS 2.44%
500,000 Eli Lilly & Co.,
6.57%, 1/1/16 486,250
----------
RAIL CAR LEASING 2.65%
500,000 Union Tank Car Co.,
7.45%, 6/1/09 528,280
----------
RETAIL 2.04%
400,000 Wal-Mart Stores, Inc.,
6.75%, 5/15/02 407,036
----------
UTILITIES - ELECTRIC SERVICES 3.01%
100,000 Indianapolis Power & Light Co.,
7.375%, 8/1/07 105,054
500,000 Tampa Electric Co.,
5.75%, 5/1/00 495,385
----------
600,439
----------
UTILITIES - NATURAL GAS 2.01%
400,000 Consolidated Natural Gas Co.,
6.625%, 12/1/08 400,360
----------
UTILITIES - TELECOMMUNICATIONS 0.48%
100,000 Illinois Bell Telephone Co.,
5.80%, 2/1/04 96,004
----------
Total Corporate Bonds (cost $3,464,978) 3,537,004
----------
PRINCIPAL
AMOUNT VALUE
-------- -------
U.S. GOVERNMENT AGENCIES 5.06%
$500,000 Federal Home Loan Mortgage Corp.,
7.065%, 7/18/12 $ 498,620
500,000 Federal National Mortgage Association,
7.27%, 8/24/05 508,785
----------
Total U.S. Government Agencies (cost $1,010,884) 1,007,405
----------
U.S. TREASURY NOTES 20.32%
500,000 5.375%, 11/30/97 500,095
500,000 5.125%, 4/30/98 499,030
500,000 5.875%, 8/15/98 500,905
500,000 6.75%, 5/31/99 507,310
500,000 6.625%, 6/30/01 510,285
500,000 5.875%, 2/15/04 494,550
500,000 6.50%, 8/15/05 510,430
500,000 7.00%, 7/15/06 527,105
----------
Total U.S. Treasury Notes (cost $4,000,715) 4,049,710
----------
U.S. TREASURY STRIPS 1.71%
850,000 2/15/12 340,382
----------
Total U.S. Treasury Strips (cost $322,137) 340,382
----------
NUMBER
OF SHARES
---------
INVESTMENT COMPANIES 5.44%
500,000 Federated Treasury Obligations 500,000
584,499 Goldman Sachs ILA Treasury
Obligations Portfolio 584,499
-----------
Total Investment Companies (cost $1,084,499) 1,084,499
-----------
Total Investments (cost $18,023,204) 99.68% 19,864,307
Other Assets, less Liabilities 0.32% 63,298
-----------
NET ASSETS 100.00% $19,927,605
===========
See notes to financial statements.
Semi-Annual Report - FIRST OMAHA FUNDS
- -----------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
September 30, 1997 (Unaudited)
FIXED INCOME FUND
PRINCIPAL
AMOUNT VALUE
-------- -------
CORPORATE BONDS 71.87%
COMMUNICATIONS EQUIPMENT 3.19%
$2,500,000 Motorola, Inc.,
6.50%, 3/1/08 $2,489,800
----------
FINANCIAL SERVICES 6.37%
2,500,000 General Electric Capital Corp.,
5.50%, 11/1/01 2,421,775
2,500,000 General Electric Capital Corp.,
6.90%, 9/15/15 2,548,000
----------
4,969,775
----------
FOOD PRODUCTS 3.24%
2,500,000 Anheuser-Busch Cos., Inc.,
7.25%, 9/15/15 2,531,325
----------
FOREST PRODUCTS 3.22%
2,500,000 Kimberly-Clark Corp.,
6.875%, 2/15/14 2,514,250
----------
GOVERNMENTS - FOREIGN 2.57%
2,000,000 Ontario Hydro,
5.80%, 3/31/98 2,002,760
----------
INDUSTRIAL GOODS & SERVICES 9.07%
2,000,000 Air Products & Chemicals, Inc.,
6.25%, 6/15/03 1,971,240
2,500,000 Monsanto Co.,
6.00%, 7/1/00 2,489,750
2,500,000 PPG Industries, Inc.,
7.375%, 6/1/16 2,614,275
----------
7,075,265
----------
OIL & GAS EXPLORATION & PRODUCTION 4.56%
2,500,000 Amoco Canada Petroleum Co. Ltd.,
6.75%, 2/15/05 2,548,650
1,000,000 BP America, Inc.,
8.875%, 12/1/97 1,005,170
----------
3,553,820
----------
PHARMACEUTICALS 2.55%
2,000,000 Eli Lilly & Co.,
6.25%, 3/15/03 1,990,360
----------
PRINCIPAL
AMOUNT VALUE
--------- -------
RAILROADS 0.66%
$ 500,000 Southern Railway Co.,
7.75%, 8/1/99 $ 514,000
----------
RETAIL 5.52%
2,000,000 J.C. Penney Co., Inc.,
6.00%, 5/1/06 1,904,640
2,500,000 Wal-Mart Stores, Inc.,
5.875%, 10/15/05 2,401,600
----------
4,306,240
----------
SOAPS & CLEANING AGENTS 1.95%
1,500,000 Colgate-Palmolive Co.,
6.85%, 11/24/99 1,522,410
----------
UTILITIES - ELECTRIC SERVICES 6.47%
2,500,000 National Rural Utilities Cooperative
Finance Corp., 6.50%, 9/15/02 2,512,500
2,500,000 Union Electric Co.,
6.75%, 5/1/08 2,533,200
----------
5,045,700
----------
UTILITIES - ELECTRIC & OTHER SERVICES
COMBINED 4.70%
2,500,000 Citizens Utilities Co.,
7.60%, 6/1/06 2,656,350
1,000,000 Louisville Gas & Electric Co.,
7.50%, 7/1/02 1,013,000
----------
3,669,350
----------
UTILITIES - NATURAL GAS 8.28%
2,500,000 Indiana Gas Co., Inc.,
6.625%, 12/1/97 2,505,250
2,500,000 Laclede Gas Co.,
6.50%, 11/15/10 2,456,725
1,500,000 Northern Illinois Gas Co.,
6.25%, 2/1/99 1,499,640
----------
6,461,615
----------
UTILITIES - TELECOMMUNICATIONS 9.52%
2,500,000 AT&T Corp.,
7.75%, 3/1/07 2,694,500
2,500,000 Chesapeake & Potomac Telephone
Co. of Maryland, 5.25%, 5/1/05 2,308,925
FIRST OMAHA FUNDS - Semi-Annual Report
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
--------- -------
UTILITIES - TELECOMMUNICATIONS 9.52% (CONT'D.)
$1,000,000 Southern Bell Telephone & Telegraph Co.,
4.75%, 9/1/00 $ 965,970
1,500,000 Southern Bell Telephone & Telegraph Co.,
6.00%, 10/1/04 1,459,530
----------
7,428,925
----------
Total Corporate Bonds (cost $55,276,854) 56,075,595
----------
U.S. GOVERNMENT AGENCIES 9.77%
3,000,000 Federal Home Loan Mortgage Corp.,
6.78%, 3/15/04 2,988,360
2,000,000 Federal National Mortgage Association,
8.625%, 11/10/04 2,095,060
2,500,000 Federal National Mortgage Association,
7.15%, 10/11/06 2,541,625
----------
Total U.S. Government Agencies (cost $7,430,253) 7,625,045
----------
U.S. GOVERNMENT AGENCY STRIPS 2.69%
5,300,000 Federal Home Loan Bank, 7/2/12 1,678,934
1,320,000 Federal Home Loan Bank, 7/2/12 418,149
----------
Total U.S. Government Agency Strips (cost $2,083,843) 2,097,083
----------
U.S. TREASURY BONDS 2.92%
1,000,000 8.75%, 11/15/08 1,126,440
1,000,000 9.125%, 5/15/09 1,154,380
----------
Total U.S. Treasury Bonds (cost $2,268,750) 2,280,820
----------
U.S. TREASURY STRIPS 10.56%
510,000 8/15/01 406,108
2,122,000 5/15/02 1,615,351
6,513,000 2/15/07 3,651,644
6,400,000 2/15/12 2,562,880
----------
Total U.S. Treasury Strips (cost $7,228,401) 8,235,983
----------
NUMBER
OF SHARES VALUE
--------- -------
INVESTMENT COMPANIES 0.81%
627,418 Goldman Sachs ILA Treasury
Obligations Portfolio $ 627,418
-----------
Total Investment Companies (cost $627,418) 627,418
-----------
Total Investments (cost $74,915,519) 98.62% 76,941,944
Other Assets, less Liabilities 1.38% 1,080,447
----------
NET ASSETS 100.00% $78,022,391
===========
See notes to financial statements.
Semi-Annual Report - FIRST OMAHA FUNDS
- ----------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
September 30, 1997 (Unaudited)
SHORT/INTERMEDIATE FIXED INCOME FUND
Principal
Amount Value
--------- -----
CORPORATE BONDS 74.03%
FINANCIAL SERVICES 3.88%
$ 750,000 General Electric Capital Corp.,
6.875%, 4/15/00 $ 762,728
----------
FOOD PRODUCTS 5.16%
1,000,000 Anheuser-Busch Cos., Inc.,
6.90%, 10/1/02 1,013,040
----------
PHARMACEUTICALS 15.56%
1,000,000 Eli Lilly & Co.,
8.125%, 12/1/01 1,065,510
1,000,000 SmithKline Beecham PLC,
6.625%, 10/01/05 997,800
1,000,000 Upjohn Co.,
5.875%, 4/15/00 994,530
----------
3,057,840
----------
RETAIL 5.12%
1,000,000 Wal-Mart Stores, Inc.,
6.50%, 6/1/03 1,005,840
----------
UTILITIES - ELECTRIC SERVICES 20.35%
1,000,000 Alabama Power Co.,
5.50%, 2/1/98 999,400
1,000,000 Florida Power & Light Co.,
5.50%, 7/1/99 990,920
1,000,000 Monongahela Power Co.,
5.625%, 4/1/00 988,250
1,000,000 Union Electric Co.,
6.875%, 8/1/04 1,018,890
----------
3,997,460
----------
UTILITIES - ELECTRIC & OTHER SERVICES
COMBINED 9.95%
1,000,000 Northern States Power Co.,
5.75%, 10/1/03 962,180
1,000,000 Wisconsin Electric Power Co.,
5.125%, 9/15/98 993,720
-----------
1,955,900
-----------
UTILITIES - NATURAL GAS 3.82%
750,000 Northern Illinois Gas Co.,
6.25%, 2/1/99 749,820
-----------
Principal
Amount Value
-------- -------
UTILITIES - TELECOMMUNICATIONS 10.19%
$1,000,000 Chesapeake & Potomac Telephone
Co. of Maryland, 5.875%, 9/15/99 $ 1,000,050
1,000,000 GTE California, Inc.,
6.25%, 1/15/98 1,001,480
-----------
2,001,530
-----------
Total Corporate Bonds (cost $14,356,640) 14,544,158
-----------
U.S. GOVERNMENT AGENCIES 5.13%
1,000,000 Federal Home Loan Bank,
6.50%, 11/29/05 1,007,440
-----------
Total U.S. Government Agencies (cost $1,003,063) 1,007,440
-----------
U.S. TREASURY NOTES 5.03%
1,000,000 5.875%, 2/15/04 989,100
-----------
Total U.S. Treasury Notes (cost $966,409) 989,100
-----------
U.S. TREASURY STRIPS 12.97%
810,000 2/15/99 749,671
896,000 8/15/00 759,449
1,345,000 2/15/02 1,039,524
-----------
Total U.S. Treasury Strips (cost $2,562,749) 2,548,644
-----------
NUMBER
OF SHARES
---------
INVESTMENT COMPANIES 1.20%
236,431 Goldman Sachs ILA Treasury
Obligations Portfolio 236,431
-----------
Total Investment Companies (cost $236,431) 236,431
-----------
Total Investments (cost $19,125,292) 98.36% 19,325,773
Other Assets, less Liabilities 1.64% 321,740
-----------
NET ASSETS 100.00% $19,647,513
===========
See notes to financial statements.
FIRST OMAHA FUNDS - Semi-Annual Report
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
September 30, 1997 (Unaudited)
U.S. GOVERNMENT OBLIGATIONS FUND
PRINCIPAL
AMOUNT VALUE
--------- -------
U.S. TREASURY BILLS 37.41%
$ 5,000,000 10/9/97 $ 4,993,997
5,000,000 11/6/97 4,973,278
5,000,000 11/13/97 4,968,500
5,000,000 12/11/97 4,949,613
5,000,000 1/15/98 4,924,919
5,000,000 1/22/98 4,918,798
10,000,000 2/12/98 9,805,517
5,000,000 2/19/98 4,899,992
------------
Total U.S. Treasury Bills (cost $44,434,614) 44,434,614
------------
U.S. TREASURY NOTES 29.43%
5,000,000 5.625%, 10/31/97 5,002,737
10,000,000 5.375%, 11/30/97 9,993,756
10,000,000 5.25%, 12/31/97 9,977,350
10,000,000 5.375%, 5/31/98 9,989,063
------------
Total U.S. Treasury Notes (cost $34,962,906) 34,962,906
------------
REPURCHASE AGREEMENTS 33.04%
19,253,640 G. X. Clarke & Co., 5.50%, dated 9/30/97,
repurchase price $19,256,582, maturing
10/1/97 (collateralized by U.S. Treasury
Notes, 6.125%, 8/31/98 and 5.125%,
2/28/98) 19,253,640
20,000,000 HSBC Securities, Inc., 5.75%, dated 9/30/97,
repurchase price $20,003,194, maturing
10/1/97 (collateralized by U.S. Treasury
Notes, 6.25%, 5/31/99) 20,000,000
------------
Total Repurchase Agreements (cost $39,253,640) 39,253,640
------------
Total Investments (cost $118,651,160) 99.88% 118,651,160
Other Assets, less Liabilities 0.12% 147,051
------------
NET ASSETS 100.00% $118,798,211
============
See notes to financial statements.
Semi-Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
<TABLE>
STATEMENTS OF ASSETS AND LIABILITIES
September 30, 1997 (Unaudited)
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND
------------ ------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value (cost $9,830,599,
$220,822,825, $18,023,204, $74,915,519,
$19,125,292 and $79,397,520, respectively) $11,506,593 $299,726,198 $19,864,307 $76,941,944 $19,325,773 $ 79,397,520
Repurchase agreements, at value (cost
$0, $0, $0, $0, $0 and $39,253,640,
respectively) - - - - - 39,253,640
Receivable for securities sold 150,510 - - - - -
Interest and dividends receivable 12,383 277,672 144,105 1,108,487 314,954 617,785
Organizational expenses, net of
accumulated amortization 7,092 17,549 3,594 17,549 17,549 17,549
Other assets 21,778 81,342 19,337 29,558 12,662 43,311
----------- ----------- ----------- ------------ ------------ -------------
Total Assets 11,698,356 300,102,761 20,031,343 78,097,538 19,670,938 119,329,805
----------- ----------- ----------- ------------ ------------ -------------
LIABILITIES:
Payable for securities purchased 429,762 1,717,293 75,633 - - -
Dividend payable - - - - - 456,574
Accrued expenses and other liabilities 31,243 198,974 26,729 66,919 21,750 51,652
Accrued investment advisory fee 659 42,559 1,376 8,228 1,675 23,368
----------- ------------ ----------- ------------ ------------ -------------
Total Liabilities 461,664 1,958,826 103,738 75,147 23,425 531,594
----------- ------------ ----------- ------------ ------------ -------------
NET ASSETS $11,236,692 $298,143,935 $19,927,605 $78,022,391 $19,647,513 $118,798,211
=========== ============ =========== =========== =========== ============
NET ASSETS CONSIST OF:
Capital stock 9 185 17 76 20 1,188
Paid-in capital in excess of par 9,160,942 199,948,713 17,940,742 76,023,622 19,791,774 118,812,319
Undistributed net investment income 1,808 60,166 11,611 87,555 19,377 3,984
Undistributed net realized gain (loss)
on investments 397,939 19,231,498 134,132 (115,287) (364,139) (19,280)
Net unrealized appreciation (depreciation)
on investments 1,675,994 78,903,373 1,841,103 2,026,425 200,481 -
----------- ------------ ----------- ------------ ------------ -------------
Net Assets $11,236,692 $298,143,935 $19,927,605 $78,022,391 $19,647,513 $118,798,211
=========== ============ =========== =========== =========== ============
CAPITAL STOCK, $0.00001 PAR VALUE
Authorized 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 300,000,000
Issued and outstanding 865,549 18,474,551 1,701,284 7,590,062 1,975,745 118,817,403
NET ASSET VALUE, REDEMPTION PRICE,
AND OFFERING PRICE PER SHARE
(NET ASSETS/SHARES OUTSTANDING) $12.98 $16.14 $11.71 $10.28 $9.94 $1.00
====== ====== ====== ====== ===== =====
<FN>
See notes to financial statements.
</TABLE>
FIRST OMAHA FUNDS - Semi-Annual Report
- -------------------------------------------------------------------------------
<TABLE>
STATEMENTS OF OPERATIONS
For the period from April 1, 1997 to September 30, 1997 (Unaudited)
<CAPTION> SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND
----------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 32,937 $ 1,575,928 $ 269,871 $2,555,142 $644,673 $3,185,168
Dividends 87,766 2,753,933 103,593 - - -
--------- ----------- ---------- ---------- -------- ----------
120,703 4,329,861 373,464 2,555,142 644,673 3,185,168
--------- ----------- ---------- ---------- -------- ----------
EXPENSES:
Investment advisory fees 39,005 1,062,240 64,698 226,942 51,025 148,507
Fund administration and accounting fees 25,069 283,264 25,069 75,647 20,410 118,806
Shareholder servicing fees 12,117 30,787 11,899 16,616 9,635 19,385
Professional fees 5,708 16,679 5,995 8,089 5,597 7,632
Federal and state registration fees 5,693 15,967 6,219 7,833 5,845 13,700
Administrative services plan fees 4,393 129,592 7,635 36,268 9,369 -
Custody fees 1,374 42,491 2,584 11,346 3,063 17,812
Amortization of organization expenses 964 3,482 468 3,482 3,482 3,482
Reports to shareholders 622 24,896 1,085 7,221 2,053 10,830
Pricing fees 617 1,072 1,913 2,330 1,351 182
Directors' fees 161 5,271 305 1,490 421 2,266
Insurance 70 5,438 96 1,717 481 2,306
Other expenses 66 2,986 142 1,002 560 1,111
--------- ----------- ---------- ---------- -------- ----------
Total expenses before waiver 95,859 1,624,165 128,108 399,983 113,292 346,019
Waiver of expenses (38,837) (144,652) (48,429) (58,490) (15,640) (16,103)
--------- ----------- ---------- ---------- -------- ----------
Net Expenses 57,022 1,479,513 79,679 341,493 97,652 329,916
--------- ----------- ---------- ---------- -------- ----------
NET INVESTMENT INCOME 63,681 2,850,348 293,785 2,213,649 547,021 2,855,252
--------- ----------- ---------- ---------- -------- ----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments 358,739 8,610,073 91,041 (83,637) (11,179) -
Change in unrealized appreciation
(depreciation) on investments 1,551,803 35,907,185 1,853,936 3,358,138 453,360 -
--------- ----------- ---------- ---------- -------- ----------
Net Gain on Investments 1,910,542 44,517,258 1,944,977 3,274,501 442,181 -
--------- ----------- ---------- ---------- -------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $1,974,223 $47,367,606 $2,238,762 $5,488,150 $989,202 $2,855,252
========== =========== ========== ========== ======== ==========
<FN>
See notes to financial statements.
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<CAPTION>
SMALL CAP VALUE FUND EQUITY FUND
------------------------------------ -------------------------------------
APRIL 1, 1997 JUNE 10, 1996 <F23> APRIL 1, 1997 YEAR ENDED
TO TO TO MAR. 31,
SEPT. 30, 1997 MAR. 31, 1997 SEPT. 30, 1997 1997
(UNAUDITED) (UNAUDITED)
------------- --------------- -------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 63,681 $ 65,818 $ 2,850,348 $ 5,308,437
Net realized gain (loss) on investments 358,739 59,722 8,610,073 20,637,056
Change in unrealized appreciation (depreciation)
on investments 1,551,803 124,191 35,907,185 8,274,849
----------- ------------ ------------ ------------
Net increase in net assets resulting
from operations 1,974,223 249,731 47,367,606 34,220,342
----------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (64,149) (65,097) (2,818,797) (5,313,779)
Net capital gains - (20,522) - (17,157,052)
----------- ---------- ------------ ------------
Total distributions (64,149) (85,619) (2,818,797) (22,470,831)
----------- ---------- ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 3,193,019 7,322,097 18,585,904 39,307,623
Proceeds from reinvestment of dividends 64,135 85,592 2,797,323 22,427,121
Redemption of shares (1,103,326) (399,511) (26,987,907) (38,453,262)
----------- ---------- ------------ ------------
Net increase (decrease) from share transactions 2,153,828 7,008,178 (5,604,680) 23,281,482
----------- ---------- ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 4,063,902 7,172,290 38,944,129 35,030,993
NET ASSETS:
Beginning of period 7,172,790 500 259,199,806 224,168,813
----------- ---------- ------------ ------------
End of period $11,236,692 $7,172,790 $298,143,935 $259,199,806
=========== ========== ============ ============
Undistributed net investment income, end of period $ 1,808 $ 2,276 $ 60,166 $ 28,615
=========== ========== ============ ============
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<CAPTION>
BALANCED FUND FIXED INCOME FUND
---------------------------------- ---------------------------------
APRIL 1, 1997 AUG. 6, 1996 <F23> APRIL 1, 1997 YEAR ENDED
TO TO TO MAR. 31,
SEPT. 30, 1997 MAR. 31, 1997 SEPT. 30, 1997 1997
(UNAUDITED) (UNAUDITED)
------------ ------------ ------------ -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 293,785 $ 109,468 $ 2,213,649 $ 3,493,559
Net realized gain (loss) on investments 91,041 43,091 (83,637) 231,327
Change in unrealized appreciation (depreciation)
on investments 1,853,936 (12,833) 3,358,138 (1,285,148)
----------- ----------- ----------- -----------
Net increase in net assets resulting
from operations 2,238,762 139,726 5,488,150 2,439,738
----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (288,281) (103,973) (2,212,461) (3,598,700)
Net capital gains - - - -
----------- ----------- ----------- -----------
Total distributions (288,281) (103,973) (2,212,461) (3,598,700)
----------- ----------- ----------- -----------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 8,417,857 11,063,418 5,755,669 12,299,589
Proceeds from reinvestment of dividends 287,831 103,947 2,192,948 3,579,341
Redemption of shares (1,623,288) (308,394) (8,726,225) (15,537,577)
----------- ----------- ----------- -----------
Net increase (decrease) from share transactions 7,082,400 10,858,971 (777,608) 341,353
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS 9,032,881 10,894,724 2,498,081 (817,609)
NET ASSETS:
Beginning of period 10,894,724 - 75,524,310 76,341,919
----------- ----------- ----------- -----------
End of period $19,927,605 $10,894,724 $78,022,391 $75,524,310
=========== =========== =========== ===========
Undistributed net investment income, end of period $ 11,611 $ 6,107 $ 87,555 $ 86,367
=========== =========== =========== ===========
</TABLE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (continued)
<CAPTION>
SHORT/INTERMEDIATE FIXED INCOME FUND U.S. GOVERNMENT OBLIGATIONS FUND
------------------------------------ ---------------------------------
APRIL 1, 1997 YEAR ENDED APRIL 1, 1997 YEAR ENDED
TO MAR. 31, TO MAR. 31,
SEPT. 30, 1997 1997 SEPT. 30, 1997 1997
(UNAUDITED) (UNAUDITED)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net investment income $ 547,021 $ 1,077,899 $ 2,855,252 $ 4,940,378
Net realized gain (loss) on investments (11,179) (64,983) - (3,242)
Change in unrealized appreciation (depreciation)
on investments 453,360 (164,132) - -
----------- ----------- ------------ ------------
Net increase in net assets resulting
from operations 989,202 848,784 2,855,252 4,937,136
----------- ----------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (549,917) (1,105,302) (2,855,252) (4,940,378)
Net capital gains - - - -
----------- ----------- ------------ ------------
Total distributions (549,917) (1,105,302) (2,855,252) (4,940,378)
----------- ----------- ------------ ------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 1,033,290 4,544,931 196,697,248 392,817,505
Proceeds from reinvestment of dividends 523,152 1,088,509 59,642 443,533
Redemption of shares (3,390,445) (6,390,503) (203,371,788) (355,559,420)
----------- ----------- ------------ ------------
Net increase (decrease) from share transactions (1,834,003) (757,063) (6,614,898) 37,701,618
----------- ----------- ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,394,718) (1,013,581) (6,614,898) 37,698,376
NET ASSETS:
Beginning of period 21,042,231 22,055,812 125,413,109 87,714,733
----------- ----------- ------------ ------------
End of period $19,647,513 $21,042,231 $118,798,211 $125,413,109
=========== =========== ============ ============
Undistributed net investment income, end of period $ 19,377 $ 22,273 $ 3,984 $ 3,984
=========== =========== ============ ============
<FN>
Commencement of operations
</TABLE>
See notes to financial statements.
Semi-Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
<TABLE>
Financial Highlights <F24>
<CAPTION>
SMALL CAP VALUE FUND EQUITY FUND
---------------------------------- -----------------------------------
APRIL 1, 1997 JUNE 10, 1996 <F25> APRIL 1, 1997 YEAR ENDED
TO TO TO MAR. 31,
SEPT. 30, 1997 MAR. 31, 1997 SEPT. 30, 1997 1997
(UNAUDITED) (UNAUDITED)
-------------- ------------- ------------ -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.52 $10.00 $13.74 $13.07
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.08 0.15 0.15 0.30
Net realized and unrealized gains (losses)
on investments 2.46 0.58 2.40 1.63
------ ------ ------ ------
Total from investment operations 2.54 0.73 2.55 1.93
------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.08 0.15 0.15 0.30
Distributions from capital gains - 0.06 - 0.96
------ ------ ------ ------
Total distributions 0.08 0.21 0.15 1.26
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.98 $10.52 $16.14 $13.74
====== ====== ====== ======
TOTAL RETURN <F26> 24.24% 7.30% 18.64% 14.99%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $11,237 $7,173 $298,144 $259,200
Ratio of net expenses to average net assets <F27> 1.24% 1.34% 1.04% 1.04%
Ratio of net investment income to average
net assets <F27> 1.39% 2.15% 2.01% 2.17%
Ratio of net expenses to average net
assets <F27><F28> 2.09% 3.76% 1.14% 1.10%
Ratio of net investment income to average
net assets <F27><F28> 0.54% (0.27)% 1.91% 2.11%
Portfolio turnover rate <F26> 11.12% 7.45% 4.76% 25.66%
Average commission rate paid on
portfolio investment transactions <F29> $0.0600 $0.0662 $0.0600 $0.0677
</TABLE>
<TABLE>
Financial Highlights<F24> (continued)
<CAPTION>
EQUITY FUND EQUITY FUND (CONT'D.) BALANCED FUND
----------------------------- -------------------------- ---------------------------
APRIL 10, JULY 1, 1994 YEAR ENDED DEC. 13, APRIL 1, AUG. 6,
1995 <F25> TO TO JUNE 30, 1992 TO 1997 TO 1996 <F25>
MAR. 31, 1996 APRIL 9, 1995 1994 JUNE 30, SEPT. 30, 1997 TO MAR. 31,
1993 (UNAUDITED) 1997
-------------- ------------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $11.39 $10.48 $10.55 $10.00 $10.41 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.28 0.21 0.20 0.11 0.19 0.21
Net realized and unrealized gains
(losses) on investments 2.13 1.48 0.15 0.54 1.30 0.40
------ ------ ------ ------ ------ ------
Total from investment operations 2.41 1.69 0.35 0.65 1.49 0.61
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.28 0.22 0.20 0.10 0.19 0.20
Distributions from capital gains 0.45 0.56 0.22 - - -
------ ------ ------ ------ ------ ------
Total distributions 0.73 0.78 0.42 0.10 0.19 0.20
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $13.07 $11.39 $10.48 $10.55 $11.71 $10.41
====== ====== ====== ====== ====== ======
TOTAL RETURN <F26> 21.52% 16.48% 3.34% 6.55% 14.36% 6.14%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $224,169 $161,323 $129,381 $111,059 $19,928 $10,895
Ratio of net expenses to average
net assets <F27> 0.99% 1.03% 1.04% 1.01% 0.92% 1.16%
Ratio of net investment income to
average net assets <F27> 2.32% 2.50% 1.93% 1.90% 3.41% 3.25%
Ratio of net expenses to average
net assets <F27><F28> 1.07% 1.62% 1.54% 1.32% 1.48% 3.04%
Ratio of net investment income to
average net assets <F27><F28> 2.24% 1.91% 1.43% 1.59% 2.85% 1.37%
Portfolio turnover rate<F26> 26.60% 14.36% 15.86% 4.94% 5.38% 5.92%
Average commission rate paid on
portfolio investment transactions <F29> N/A N/A N/A N/A $0.0600 $0.0686
</TABLE>
<TABLE>
Financial Highlights<F24> (continued)
<CAPTION>
FIXED INCOME FUND
------------------------------------------------------------------------------------------
APRIL 1, YEAR ENDED APRIL 10, JULY 1, YEAR ENDED DEC. 13,
1997 TO MAR. 31, 1995 <F25> 1994 TO JUNE 30, 1992 TO
SETP. 30, 1997 1997 TO MAR. 31, APRIL 9, 1995 1994 JUNE 30,
(UNAUDITED) 1996 1993
-------------- ------------- ---------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.84 $10.00 $ 9.63 $9.58 $10.49 $10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.30 0.45 0.59 0.51 0.67 0.39
Net realized and unrealized gains
(losses) on investments 0.44 (0.15) 0.35 0.07 (0.88) 0.47
------ ------ ------ ------ ------ ------
Total from investment operations 0.74 0.30 0.94 0.58 (0.21) 0.86
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.30 0.46 0.57 0.53 0.67 0.37
Distributions from capital gains - - - - 0.03 -
------ ------ ------ ------ ------ ------
Total distributions 0.30 0.46 0.57 0.53 0.70 0.37
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.28 $ 9.84 $10.00 $9.63 $ 9.58 $10.49
====== ====== ====== ===== ====== ======
TOTAL RETURN <F26> 7.58% 3.06% 9.79% 6.35% (2.29)% 8.72%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $78,022 $75,524 $76,342 $66,488 $61,714 $59,178
Ratio of net expenses to average
net assets <F27> 0.90% 0.89% 0.83% 0.87% 0.86% 0.79%
Ratio of net investment income to
average net assets <F27> 5.86% 4.48% 5.94% 6.98% 6.52% 6.89%
Ratio of net expenses to average
net assets <F27><F28> 1.06% 1.00% 0.96% 1.51% 1.41% 1.19%
Ratio of net investment income
to average net assets <F27><F28> 5.70% 4.37% 5.81% 6.34% 5.97% 6.49%
Portfolio turnover rate <F26> 6.22% 12.66% 37.35% 7.04% 13.09% 2.62%
Average commission rate paid on
portfolio investment transactions <F29> - - N/A N/A N/A N/A
<FN>
<F24> Performance data for each Fund prior to April 10, 1995 relates to a corresponding predecessor First Omaha Fund, the assets of
which were acquired on that date.
<F25> Commencement of operations
<F26> Not annualized
<F27> Annualized
<F28> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios
would have been as indicated.
<F29> Required by regulations first effective for the fiscal year ended March 31, 1997
</TABLE>
See notes to financial statements.
Semi-Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
<TABLE>
Financial Highlights <F30> (continued)
<CAPTION>
SHORT/INTERMEDIATE FIXED INCOME FUND
--------------------------------------------------------------------
APRIL 1, 1997 YEAR ENDED APRIL 10, 1995<F31> JULY 1, 1994
TO MAR. 31, TO TO
SEPT. 30, 1997 1997 MAR. 31, 1996 APRIL 9, 1995
(UNAUDITED)
-------------- --------- ------------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.73 $9.85 $9.66 $9.62
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.27 0.49 0.52 0.42
Net realized and unrealized gains
(losses) on investments 0.21 (0.10) 0.17 0.05
------ ------ ------ ------
Total from investment operations 0.48 0.39 0.69 0.47
------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.27 0.51 0.50 0.43
Distributions from capital gains - - - -
------ ------ ------ ------
Total distributions 0.27 0.51 0.50 0.43
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $9.94 $9.73 $9.85 $9.66
====== ====== ====== ======
TOTAL RETURN<F32> 4.97% 4.00% 7.24% 5.05%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $19,648 $21,042 $22,056 $22,130
Ratio of net expenses to average
net assets <F33> 0.96% 0.97% 0.89% 0.88%
Ratio of net investment income
to average net assets <F33> 5.36% 5.01% 5.34% 5.63%
Ratio of net expenses to average
net assets <F33><F34> 1.11% 1.08% 1.02% 1.51%
Ratio of net investment income
to average net assets <F33><F34> 5.21% 4.90% 5.21% 5.00%
Portfolio turnover rate <F32> 5.15% 4.73% 41.45% 9.93%
Average commission rate paid on
portfolio investment transactions <F35> - - N/A N/A
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS <F30> (continued)
<CAPTION>
SHORT/INTERMEDIATE FIXED INCOME FUND (CONT'D) U.S. GOVERNMENT OBLIGATIONS FUND
--------------------------------------------- ----------------------------------
YEAR ENDED DEC. 13, 1992 APRIL 1, 1997 YEAR ENDED
JUNE 30, TO TO MAR. 31,
1994 JUNE 30, 1993 SEPT. 30, 1997 1997
(UNAUDITED)
------ ------------- ------------ -----------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.18 $10.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.55 0.33 0.02 0.05
Net realized and unrealized gains
(losses) on investments (0.56) 0.16 - -
------ ------ ----- -----
Total from investment operations (0.01) 0.49 0.02 0.05
------ ------ ----- -----
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.55 0.31 0.02 0.05
Distributions from capital gains - - - -
------ ------ ----- -----
Total distributions 0.55 0.31 0.02 0.05
------ ------ ----- -----
NET ASSET VALUE, END OF PERIOD $ 9.62 $10.18 $1.00 $1.00
====== ====== ===== =====
TOTAL RETURN<F32> (0.22)% 5.00% 2.43% 4.76%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $21,938 $24,581 $118,798 $125,413
Ratio of net expenses to average
net assets <F33> 0.83% 0.79% 0.56% 0.58%
Ratio of net investment income to
average net assets <F33> 5.44% 5.91% 4.80% 4.66%
Ratio of net expenses to average
net assets <F33><F34> 1.38% 1.19% 0.58% 0.59%
Ratio of net investment income
to average net assets <F33><F34> 4.89% 5.51% 4.78% 4.65%
Portfolio turnover rate<F32> 20.52% 15.58% - -
Average commission rate paid on
portfolio investment transactions <F35> N/A N/A - -
</TABLE>
<TABLE>
FINANCIAL HIGHLIGHTS <F30> (continued)
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND (CONT'D)
----------------------------------------------------------------------------------------
APRIL 10, 1995<F31> JULY 1, 1994 YEAR ENDED YEAR ENDED DEC. 4, 1991
TO TO JUNE 30, JUNE 30, TO
MAR. 31, 1996 APRIL 9, 1995 1994 1993 JUNE 30, 1992
------------ ------------ ---------- ---------- --------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.05 0.04 0.03 0.03 0.02
Net realized and unrealized gains
(losses) on investments - - - - -
------ ------ ------ ------ ------
Total from investment operations 0.05 0.04 0.03 0.03 0.02
------ ------ ------ ------ ------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.05 0.04 0.03 0.03 0.02
Distributions from capital gains - - - - -
------ ------ ------ ------ ------
Total distributions 0.05 0.04 0.03 0.03 0.02
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
TOTAL RETURN <F32> 5.14% 3.51% 2.74% 2.72% 2.15%
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $87,715 $76,105 $89,195 $91,785 $81,152
Ratio of net expenses to average
net assets <F33> 0.54% 0.63% 0.60% 0.61% 0.46%
Ratio of net investment income
to average net assets <F33> 5.12% 4.46% 2.68% 2.67% 3.65%
Ratio of net expenses to average
net assets <F33><F34> 0.59% 1.23% 1.13% 0.96% 0.98%
Ratio of net investment income
to average net assets <F33><F34> 5.07% 3.86% 2.15% 2.32% 3.13%
Portfolio turnover rate <F32> - - - - -
Average commission rate paid on
portfolio investment transactions <F35> N/A N/A N/A N/A N/A
<FN>
<F30> Performance data for each Fund prior to April 10, 1995 relates to a corresponding predecessor First Omaha Fund, the assets of
which were acquired on that date.
<F31> Commencement of operations
<F32> Not annualized
<F33> Annualized
<F34> During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios
would have been as indicated.
<F35> Required by regulations first effective for the fiscal year ended March 31, 1997
</TABLE>
See notes to financial statements.
Semi-Annual Report - FIRST OMAHA FUNDS
NOTES TO FINANCIAL STATEMENTS
September 30, 1997 (Unaudited)
1. ORGANIZATION
First Omaha Funds, Inc. (the "Company") was organized in October, 1994 as a
Nebraska corporation and is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company
issuing its shares in series, each series representing a distinct portfolio with
its own investment objectives and policies. At September 30, 1997, the only
series presently authorized are the Small Cap Value Fund, the Equity Fund,
the Balanced Fund, the Fixed Income Fund, the Short/Intermediate Fixed Income
Fund and the U.S. Government Obligations Fund (individually referred to as a
"Fund" and collectively as the "Funds").
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.
(A) INVESTMENT VALUATION
Securities traded over-the-counter or on a national securities exchange are
valued on the basis of market value in their principal and most representative
market. Securities where the principal and most representative market is a
national securities exchange are valued at the latest reported sale price on
such exchange. Exchange-traded securities for which there were no transactions
are valued at the latest reported bid price.
Securities traded on only over-the-counter markets are valued at the latest bid
price. Debt securities (other than short-term instruments) are valued at prices
furnished by a pricing service, subject to review by the Funds' investment
adviser, First National Bank of Omaha (the "Adviser"), and determination of
the appropriate price whenever a furnished price is significantly different from
the previous day's furnished price. Short-term obligations (maturing within 60
days) are valued on an amortized cost basis. Securities for which quotations
are not readily available and other assets are valued at fair value as
determined in good faith by the Adviser under the supervision of the Board of
Directors.
Pursuant to Rule 2a-7 of the 1940 Act, investments of the U.S. Government
Obligations Fund are valued at either amortized cost, which approximates market
value, or at original cost, which combined with accrued interest, approximates
market value. Under the amortized cost valuation method, discount or premium is
amortized on a constant basis to the maturity of the security. In addition, the
Fund may not (i) purchase any instrument with a remaining maturity greater than
13 months unless such investment is subject to a demand feature, or (ii)
maintain a dollar-weighted average portfolio maturity which exceeds 90 days.
(B) REPURCHASE AGREEMENTS
The Funds may acquire repurchase agreements from financial institutions such as
banks and broker/dealers which the Adviser deems creditworthy under guidelines
approved by the Board of Directors, subject to the seller's agreement to
repurchase such securities at a mutually agreed-upon date and price. The
repurchase price generally equals the price paid by each Fund plus interest
negotiated on the basis of current short-term rates, which may be more or less
than the rate on the underlying portfolio securities. The seller, under a
repurchase agreement, is required to maintain the value of collateral held
pursuant to the agreement at not less than the repurchase price (including
accrued interest). Securities subject to repurchase agreements are held by the
Funds' custodian or another qualified custodian or in the Federal
Reserve/Treasury book-entry system. Repurchase agreements are considered to be
loans by the Funds under the 1940 Act.
(C) ORGANIZATION COSTS
Costs incurred by the Funds in connection with their organization, registration
and the initial public offering of shares have been deferred and will be
amortized on a straight-line basis over a period of five years from the date
upon which the Funds commenced their investment activities. Organization costs
have been allocated equally among the respective Funds or by specific
identification, as applicable. If any of the original shares of a Fund are
redeemed by any holder thereof prior to the end of the amortization period, the
redemption proceeds will be reduced by the pro rata share of the unamortized
expenses as of the date of redemption. The pro rata share by which the proceeds
are reduced will be derived by dividing the number of original shares of the
Fund being redeemed by the total number of original shares outstanding at the
time of redemption.
FIRST OMAHA FUNDS - Semi-Annual Report
- --------------------------------------------------------------------------------
(D) EXPENSES
The Funds are charged for those expenses that are directly attributable to each
portfolio, such as advisory and custodian fees. Expenses that are not directly
attributable to a portfolio are typically allocated among the portfolios in
proportion to their respective net assets.
(E) DISTRIBUTIONS TO SHAREHOLDERS
The U.S. Government Obligations Fund declares dividends of net investment income
daily. The remaining Funds declare dividends monthly; all of the Funds pay
dividends of net investment income monthly. Distributions of net realized
capital gains, if any, will be declared at least annually. Distributions to
shareholders are recorded on the ex-dividend date.
The character of distributions made during the year from net investment income
or net realized gains may differ from the characterization for federal income
tax purposes due to differences in the recognition of income, expense or gain
items for financial statement and tax purposes. Where appropriate,
reclassifications between net asset accounts are made for such differences that
are permanent in nature.
(F) FEDERAL INCOME TAXES
Each Fund intends to comply with the requirements of the Internal Revenue Code
necessary to qualify as a regulated investment company and to make the requisite
distributions of the income to its shareholders which will be sufficient to
relieve it from all or substantially all federal income taxes.
As of March 31, 1997, each of the Fixed Income Fund, Short/Intermediate Fixed
Income Fund and U.S. Government Obligations Fund had a federal income tax
capital loss carryforward of $31,650, $343,978 and $16,038, respectively. The
entire federal income tax loss carryforward for the Fixed Income Fund expires in
2004. The $343,978 federal income tax loss carryforward for the
Short/Intermediate Fixed Income Fund expires as follows: $31,092 in 2002,
$147,691 in 2003, $109,194 in 2004 and $56,001 in 2005. The entire federal
income tax loss carryforward for the U.S. Government Obligations Fund expires in
2003. It is management's intention to make no distribution of any future
realized capital gains until the federal income tax loss carryforwards are
exhausted.
(G) 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 reported amounts of assets and liabilities at the date of the
financial statements and the reported changes in net assets during the reporting
period. Actual results could differ from those estimates.
(H) OTHER
Investment transactions are accounted for on the trade date plus one. The Funds
determine the gain or loss realized from investment transactions by comparing
the original cost of the security lot sold with the net sale proceeds. Dividend
income is recognized on the ex-dividend date and interest income is recognized
on an accrual basis. Original issue discount is amortized over the expected
life of each applicable security.
Semi-Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
September 30, 1997 (Unaudited)
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Funds have an agreement with the Adviser to furnish investment advisory
services to the Funds. Under the terms of this agreement, the Funds will pay
the Adviser a monthly fee at the annual rate of the following percentages on
average daily net assets: 0.85% for the Small Cap Value Fund, 0.75% for the
Equity Fund, 0.75% for the Balanced Fund, 0.60% for the Fixed Income Fund, 0.50%
for the Short/Intermediate Fixed Income Fund and 0.25% for the U.S. Government
Obligations Fund. Advisory fees of $25,239, $34,506, $18,912 and $5,102 were
waived in the Small Cap Value Fund, the Balanced Fund, the Fixed Income Fund and
the Short/Intermediate Fixed Income Fund, respectively.
First National Bank of Omaha also serves as custodian and transfer agent for
each of the Funds. The custodian receives compensation from each of the Funds
for such services in an amount equal to a fee, computed daily and payable
monthly, at an annual rate of 0.03% of each Fund's average daily net assets.
Custody fees of $1,374, $42,491, $2,584, $11,346 and $3,063 were waived in the
Small Cap Value Fund, the Equity Fund, the Balanced Fund, the Fixed Income Fund
and the Short/Intermediate Fixed Income Fund, respectively. The transfer agent
also receives compensation from each of the Funds for such services.
Sunstone Financial Group, Inc. (the "Administrator") acts as Administrator for
each of the Funds. As compensation for its administrative and fund accounting
services and the assumption of certain administrative expenses, the
Administrator is entitled to a fee, computed daily and payable monthly, at an
annual rate of 0.20% of each Fund's average daily net assets. The Small Cap
Value Fund and the Balanced Fund are each subject to a $50,000 minimum annual
fee. Administrative fees of $10,028, $37,335, $7,521, $10,097, $2,793 and
$16,103 were waived in the Small Cap Value Fund, the Equity Fund, the Balanced
Fund, the Fixed Income Fund, the Short/Intermediate Fixed Income Fund and the
U.S. Government Obligations Fund, respectively.
The Administrator may periodically volunteer to reduce all or a portion of its
administrative fee with respect to one or more Funds. These waivers may be
terminated at any time at the Administrator's discretion. The Administrator may
not seek reimbursement of such voluntarily reduced fees at a later date. The
reduction of such fee will cause the yield of that Fund to be higher than it
would be in the absence of such reduction.
Sunstone Distribution Services, LLC (the "Distributor") acts as Distributor
for each of the Funds. The Distributor receives no compensation from the Funds
under its Distribution Agreement with the Company, but may receive compensation
under the Distribution and Service Plan.
4. DISTRIBUTION AND SERVICE PLAN
Pursuant to Rule 12b-1 under the 1940 Act, the Company has adopted a
Distribution and Service Plan (the "Plan"), under which each Fund is
authorized to pay a periodic amount representing distribution expenses
calculated at an annual rate not to exceed 0.25% of the average daily net assets
of that Fund. Such amount may be used to pay banks, broker/dealers and other
institutions, which may include the Adviser, its correspondent and affiliated
banks and the Distributor (each a "Participating Organization") for
distribution and/or shareholder service assistance pursuant to an agreement
between the Distributor and the Participating Organization. As of September 30,
1997, there are no 12b-1 Agreements with any Participating Organizations.
5. ADMINISTRATIVE SERVICES PLAN
The Company has adopted an Administrative Services Plan pursuant to which each
Fund is authorized to pay compensation to banks and other financial
institutions, which may include the Adviser, its correspondent and affiliated
banks and the Administrator (each a "Service Organization"). Such Service
Organizations agree to provide certain ministerial, record keeping and/or
administrative support services for their customers or account holders who are
the beneficial or record owner of shares of that Fund. In consideration for
such services, a Service Organization receives a fee from a Fund, computed daily
and paid monthly at an annual rate of up to 0.25% of the average daily net asset
value of shares of that Fund owned beneficially or of record by such Service
Organization's customers for whom the Service Organization provides such
services. Effective November 1, 1996, the Company entered into an agreement
under the Plan with the Adviser at an annual rate of 0.10% of the average daily
net assets serviced for each of the Small Cap Value Fund, the Equity Fund, the
Balanced Fund, the Fixed Income Fund and the Short/Intermediate Fixed Income
Fund. For the period ended September 30, 1997, fees of $4,393, $129,592,
$7,635, $36,268 and $9,369 were accrued under this agreement, respectively.
Fees of $2,196, $64,826, $3,818, $18,135 and $4,682 were waived by the Adviser,
respectively.
FIRST OMAHA FUNDS - Semi-Annual Report
- --------------------------------------------------------------------------------
6. CAPITAL STOCK
The Funds are authorized to issue a total of 1,000,000,000 shares of common
stock in series with a par value of $0.00001 per share. The Board of Directors
is empowered to issue other series of the Company's shares without shareholder
approval.
Each share of stock will have a pro rata interest in the assets of the Fund to
which the stock of that series relates and will have no interest in the assets
of any other Fund.
Transactions in shares of the Funds for the period ended September 30, 1997 were
as follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 276,787 1,237,093 776,161 569,192 104,700 196,697,248
Shares issued to holders in
reinvestment of dividends 5,428 183,510 25,556 217,535 53,113 59,642
Shares redeemed (98,498) (1,812,838) (147,089) (870,158) (343,756) (203,371,788)
-------- ----------- --------- --------- --------- -------------
Net increase (decrease) 183,717 (392,235) 654,628 (83,431) (185,943) (6,614,898)
======== =========== ========= ========= ========= =============
</TABLE>
Transactions in shares of the Funds for the period ended
March 31, 1997 were as follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold 711,381 2,887,017 1,065,983 1,233,635 462,034 392,817,505
Shares issued to holders in
reinvestment of dividends 8,181 1,648,351 9,941 360,215 111,068 443,533
Shares redeemed (37,780) (2,817,814) (29,268) (1,554,091) (649,910) (355,559,420)
-------- ----------- -------- ----------- --------- -------------
Net increase (decrease) 681,782 1,717,554 1,046,656 39,759 (76,808) 37,701,618
======== =========== ========= ====== ======== ==========
</TABLE>
Semi-Annual Report - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (continued)
September 30, 1997 (Unaudited)
7. INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the period ended September 30, 1997 were
as follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Purchases
U.S. Government - - $1,589,712 $2,041,078 $1,003,063 -
Other $2,794,784 $10,617,259 6,308,840 2,604,020 - -
Sales
U.S. Government - - - 3,064,490 900,772 -
Other 964,880 25,778,524 829,071 1,519,200 1,500,000 -
</TABLE>
As of September 30, 1997, gross unrealized appreciation and depreciation of
investments were as follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND
---------- ---------- ---------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Appreciation $1,721,545 $79,891,392 $1,943,357 $2,432,593 $270,348 -
(Depreciation) (45,551) (988,019) (102,254) (406,168) (69,867) -
Net appreciation on investments $1,675,994 $78,903,373 $1,841,103 $2,026,425 $200,481 -
========== =========== ========== ========== ======== ========
</TABLE>
As of September 30, 1997, the cost of investments for federal income tax
purposes is substantially the same as for financial statement purposes.
FIRST OMAHA FUNDS - Semi-Annual Report
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Shareholders and
Board of Directors of
First Omaha Funds, Inc.
We have audited the accompanying statements of assets and liabilities of First
Omaha Funds, Inc. (comprised, respectively, of the Small Cap Value Fund, the
Equity Fund, the Balanced Fund, the Fixed Income Fund, the Short/Intermediate
Fixed Income Fund and the U.S. Government Obligations Fund; collectively, the
"Funds"), including the schedules of portfolio investments as of March 31,
1997, and the related statements of operations and changes in net assets and the
financial highlights for each of the periods indicated herein. These financial
statements and financial highlights are the responsibility of the Funds'
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements and
financial highlights. Our procedures included confirmation of securities owned
as of March 31, 1997, by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds as of March 31, 1997, the results of their operations, changes in their
net assets and the financial highlights for each of the periods indicated
herein, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Omaha, Nebraska
April 11, 1997
INVESTMENT ADVISER AND CUSTODIAN
First National Bank of Omaha
Attention: Trust Division
One First National Center
Omaha, Nebraska 68102
ADMINISTRATOR
Sunstone Financial Group, Inc.
207 E. Buffalo St., Suite 400
Milwaukee, Wisconsin 53202
DISTRIBUTOR
Sunstone Distribution Services, LLC
207 E. Buffalo St., Suite 400
Milwaukee, Wisconsin 53202
LEGAL COUNSEL
Cline, Williams, Wright, Johnson & Oldfather
13th & M Streets
Lincoln, Nebraska 68508
AUDITORS
KPMG Peat Marwick LLP
Two Central Park Plaza, Suite 1501
Omaha, Nebraska 68102
This report has been prepared for the general information of First Omaha Funds
shareholders. It is not authorized for distribution to prospective investors
unless accompanied or preceded by an effective First Omaha prospectus. The
prospectus contains more complete information about First Omaha Funds'
investment objectives, management fees and expenses, risks and operating
policies. Please read the prospectus carefully before investing or sending
money.
For more INFORMATION
call 1-800-OMAHA-03
or write to:
First Omaha Funds
P.O. Box 419022
Kansas City, Missouri 64141-6022
FBO710209
