FIRST OMAHA FUNDS
SEMI-ANNUAL REPORT
SEPTEMBER 30, 1998
(logo)
First Omaha
Family of Funds
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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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An investment in the U.S. Government Obligations Fund is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency. Although the Fund seeks to preserve the value of your investment at
$1.00 per share, it is possible to lose money by investing in the Fund.
The First Omaha Funds are distributed by Sunstone Distribution Services, LLC.
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FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
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October 1998
DEAR SHAREHOLDER:
We are pleased to provide you with the First Omaha Family of Fund's Semi-Annual
Report for the period ended September 30, 1998. In it you will find 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 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. We
look forward to serving your future investment needs.
THE STOCK MARKET OVERVIEW
As the 3rd quarter came to a close, the general recognition of worldwide
financial turmoil was making headlines. The "Asian Contagion" had spread and the
question facing U.S. investors was whether or not they could be vaccinated from
the perils of the disinflationary spiral through some combination of
synchronized Fed easing, IMF intervention and Japanese fiscal policy changes.
The equity markets continued their amazing ascent during the past six months,
with the more recent two months providing a wild ride. The crescendo in stocks
peaked on July 17th when the market, as measured by the S&P 500, reached its
apex at 1186.75. Subsequent to the July top, global economic concerns dominated
U.S. investments as fears of the Asian Contagion's impact on earnings drove
prices lower, culminating in a one-day plunge on August 31st. The S&P 500
declined 6.8% for the day and 14.6% during the month of August, providing the
ninth largest one-month decline since 1929 and the largest decline since October
1987. The S&P 500's decline was the first negative quarter since the 4th quarter
of 1994 and the largest quarterly decline since the 3rd quarter of 1990.
Nevertheless, the equity market made a broad-based recovery in September, on the
belief that the Federal Reserve will eventually support the markets with
additional rate cuts. The S&P 500 finished the 3rd quarter with a total year-to-
date return of 4.8%.
<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.
While the S&P 500 showed satisfactory results for the nine months ended
September 30, 1998, results for the past six months were littered with the
carnage of negative returns, as the bear worked its way up the
capitalization<F1> spectrum from smaller companies towards larger ones. As we
noted in our last report to you, the largest stocks continued to garner the best
results, with the top 30 stocks in the S&P 500, measured by market
capitalization, contributing the greatest proportion to the overall results. In
fact, the top 30 now account for 41% of the index's total market capitalization,
up from 36% at the beginning of the year.
As of September 30, 1998, the total return for the last six months was -8.0% for
the S&P 500 and -16.3% and -24.4% for the S&P MidCap and S&P 600, respectively.
One-year returns were similarly split with the S&P 500 up 9.1% and the S&P
MidCap and S&P 600 showing losses of -6.3% and -18.7%, respectively. For the 3rd
quarter, the S&P 500 reported a -10.3%, the S&P MidCap was down 14.5% and the
S&P 600 reported a -20.9%. During the same period, the average diversified U.S.
stock fund posted a -15.0% return, with small stock funds sagging 21.2%,
according to Lipper Analytical Services, Inc. The trend of the largest stocks
reaping the best results continued, with the largest 30 stocks, measured by
market capitalization, contributing the greatest proportion to overall results.
As we've noted in the past, the level of profitability reflected in historically
high returns on capital cannot be sustained indefinitely. Profit expectations
have begun to reverse, based on the growing number of companies that are having
difficulty maintaining margins. This is due to the combination of increasing
costs and a difficult pricing environment. Corporate earnings growth appears to
have peaked and has begun to exhibit a falling trend_quite the opposite of the
trend seen in the early 1990's where companies experienced multi-year periods of
rising margins. In fact, between 1992 and 1997, earnings for the S&P 500 grew
at 12.5% per year annually compared to the long-term growth rate of 5-7%
annually for the past 35 years. Consequently, we believe 3rd quarter 1998 will
provide the poorest earnings comparison in seven years due to a confluence of
factors including the GM strike, financial institution losses from
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volatility of the capital markets, the Asian Contagion, and a relatively
difficult comparison to the strong performance in 3rd quarter 1997.
While the largest stocks have provided the lion's share of returns, the
valuations of these stocks as measured by price to earnings (P/E) ratios
continues to be at historically high levels. The equity market seems to have
amnesia regarding valuation levels in light of historical precedents. In this
instance, the fundamentals that drive the market have not changed substantially
in the past six months_but the valuations have steadily progressed ahead of the
underlying business values. This trend has been apparent for the past few years
and has allowed the market to perpetuate the major valuation divergence
exhibited in the S&P 500.
WE BELIEVE THAT VALUE STILL MATTERS.
Here's why. P/E's are high and have been justified based on the context of low
interest rates and the expectation of continued above average corporate
profitability. By paying a higher multiple, an investor is paying for higher
growth that may or may not be sustainable. However, in our opinion, if an
investor misjudges the growth of the business, or if interest rates change
dramatically and the investor overpays for the company, then the realized
returns will be much lower than anticipated. In other words, we believe P/Es do
matter because the greater one overpays for the company, the greater the
punishment when a company's fundamentals deteriorate or the company doesn't meet
expectations.
We continue to keep our long-term focus on the specific merits of individual
investments that provide long-term fundamentals that are attractive and that
sell below our appraisal of the company's long-term intrinsic value. As such, we
are maintaining a cautious stance, with a focus on investments in companies that
have high-quality balance sheets, improving returns on capital and managers that
have the demonstrated ability to effectively use capital to increase shareholder
value.
THE BOND MARKET OVERVIEW
The past two quarters have been an extraordinary period for bond investors. A
flight to quality, by investors who sought the safety of Treasuries, caused
interest rates for Treasury issues to drop. This flight to quality was brought
on by uncertainty in the financial markets, in the political arena, and in
foreign economies. The entire yield curve ended the 3rd quarter below the 5%
level, with the 30-year Treasury bond ending at a 4.96% yield, nearly one
percent lower than the start of the 2nd quarter. However, credit spreads, the
premiums investors receive by taking on the increased risk of corporate bonds,
widened significantly as investor concerns over earnings combined with the
flight to quality issues to lessen investors appetite for corporate bonds.
During the past six months, two non-economic factors led to increased
uncertainty in the financial markets. First, there was the continuing saga in
Washington, prompting investor concerns about the future of our leadership and
its ability to maintain its focus. Then, toward the end of this period, a large
hedge fund teetered on the brink of failure. Only a last minute infusion of
capital saved the bond market from the potential wrath which would have been
caused by liquidation of the fund.
On the economic front, the heightening of the financial crisis in Asia began to
impact other economies, including Russia and other emerging markets, which
negatively effected the demand for U.S. exports. Weakness in the manufacturing
sector caused by the reduced demand then lead to earnings disappointments,
worker layoffs, lower stock prices, and ultimately to declines in consumer
confidence. The Federal Reserve, armed with the data from a weakening economy as
well as with concerns over the potential damage that a failing hedge fund could
inflict, decided to ease monetary policy near the end of the 3rd quarter.
As we move toward the end of 1998 and beyond more questions arise. Can rates can
go any lower and will the U.S. economy avoid the recession that has plagued most
of the world? In searching for the answers all eyes will be on the Fed and their
willingness to continue this easing cycle, and on their foreign counterparts to
follow suit. If, in fact, the Fed does ease further, we believe short rates may
follow and long rates may rise, as the threat of inflation increases with the
lower costs of borrowing. However, if the Fed easing can prolong the expansion
without reigniting inflation, the long-term outlook for bonds would be positive.
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FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
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FIRST OMAHA SMALL CAP VALUE FUND
The inception date for the First Omaha Small Cap Value Fund was June 10, 1996.
The six-month period ending September 30 was the most turbulent period the Fund
has seen during its young life. The Fund held up relatively well with a six-
month return of -19.8% in a market that saw the S&P 400 and 600 down 16.3% and
24.4%, respectively. The most recent underperformance in the small cap sector of
the market vs. the large cap sector can be explained by a flight to quality and
a pronounced credit crunch occurring in the smaller companies. The most recent
flight to quality was caused by uneasiness concerning the world economy
(specifically Russia and Asia). Investors continued flocking to companies that
have historically had consistent visible earnings (i.e., larger companies).
Secondly, a pronounced credit crunch, caused by banks unwillingness to lend, has
occurred for smaller companies limiting access to capital needed to efficiently
run their business at current levels. By taking a long-term focus on companies
with solid balance sheets, strong market share and above average or improving
return on shareholder equity, we seek to shelter the Fund from these volatile
times.
During the six-month period ending September 30, one position was eliminated and
one new position was added. Isco was sold due to management's inability to
execute its business strategy. In addition, we believe it had inefficiently made
use of its existing capital by investing in areas that were not providing
adequate returns to the shareholders. We added Corn Products International to
the Fund in July. Corn Products was spun-off from CPC International and produces
a variety of food ingredients and industrial products derived from the wet
milling of corn.
Three of our existing holdings saw their portfolio weighting reduced during the
recent period. Universal Foods, Tennant Co. and Midwest Express were all
trimmed. While all three companies remain fundamentally sound we do not believe
they possess the same upside potential due to recent price appreciation.
Three of our existing holdings were added to during the period: Calgon Carbon,
Nash-Finch and Amcast Industrial. All three of these companies have shown
excessive weakness over the past six months and after analyzing the companies
future prospects we felt that the recent weakness provided an opportunity for
attractive returns going forward.
THE PORTFOLIO
The current structure of the Small Cap Value Fund is a diverse portfolio of
small- and mid-cap companies with strong fundamental profiles. We believe that
the portfolio should consist of companies with solid balance sheets that can
generate sufficient cash flow and that are currently selling below their
intrinsic value.
As of September 30, 1998 the portfolio was 93.1% invested in stocks and held
cash reserves of 6.9%. The equities were diversified across 30 positions with
significant exposure to various sectors of the market.
SMALL CAP VALUE FUND
PORTFOLIO COMPOSITION<F1>
as of September 30, 1998
Basic Industries 30%
Consumer Staples 19%
Capital Goods 17%
Consumer Cyclicals 14%
Financial 7%
Transportation 7%
Utilities 3%
Communication Services 3%
<F1> Sector weightings represent the percentage of the Fund's equity investments
in certain general sectors. These sectors include more than one industry.
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References to specific securities included in this letter should not be
construed as a recommendation to buy or sell shares in the companies.
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The five largest positions in the portfolio at the end of September represented
21% of the portfolio (see chart).
TOP FIVE HOLDINGS<F2>
as of September 30, 1998
% OF NET ASSETS
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CLARCOR, Inc. 4.24%
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Nash-Finch Co. 4.11
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First Brands Corp. 3.98
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National Presto Industries, Inc. 3.77
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Kellwood Co. 3.75
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<F2> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
We believe the portfolio, on a weighted average basis, is strong fundamentally
and has an attractive valuation as demonstrated by the following table:
PORTFOLIO VALUATION PROFILE
as of September 30, 1998
WEIGHTED S&P MIDCAP S&P SMALLCAP
AVERAGE 400 600
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Price/Earnings<F3> 10.8x 21.3x 19.8x
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Price/Book Value<F3> 1.6x 2.4x 1.8x
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Yield 3.1% 1.5% 1.1%
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<F3>Based on 1999 estimates
TOTAL RETURN
as of September 30, 1998
AVERAGE
1 YEAR ENDED ANNUAL SINCE
9/30/98 COMMENCEMENT<F4>
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First Omaha Small Cap Value Fund (16.37)% 4.82%
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<F4> Commencement date is 6/10/96
RETURN ON A $10,000 INVESTMENT
FIRST OMAHA SMALL CAP S&P SMALLCAP
VALUE FUND S&P MIDCAP 400 600 INDEX
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6/10/96 $10,000 $10,000 $10,000
Sept. 1996 9,880 10,133 9,978
Sept. 1997 13,331 14,096 13,667
Sept. 1998 11,148 13,207 11,115
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. It is not
possible to make a direct investment in an index.
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. It is not possible to make a direct investment in an index.
FIRST OMAHA GROWTH FUND
The U.S. stock market has come under considerable pressure over the last six
months, succumbing to the uncertainty that has gripped many other parts of the
world for more than a year. Medium-sized companies peaked in April, three months
earlier than large company stocks, with prices declining sharply through August.
While we know from experience that this is a common course of events in stock
markets, the fact is the magnitude of the drop in prices is unsettling for
investors.
Be assured that as economic conditions evolve and the outlook for companies and
industries shift, we will stay focused
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FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
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on what really matters over the long term: identifying those companies that are
most likely to prosper through the ups and downs of the market. These are the
companies that we believe have the potential to provide shareholders higher than
average growth in earnings and dividends, and eventually higher share prices.
Our investment strategy now, as always, is to find the best companies in a very
wide range of industries_companies that are likely to grow faster than their
competitors, taking market share through product development or innovation,
customer service, marketing, lower cost production or just better management.
During the recent market descent we reduced positions in major oil company
stocks, which had held up well during the decline, and added to positions in
financial, technology and transportation stocks, which had been especially weak.
Many companies with outstanding prospects for growth have had the largest drops
in price, in our view offering an opportunity to buy these companies at
particularly attractive valuations.
The decline in medium-size company stock prices was more severe and extended
over a longer period of time than large company stocks. Investors flocked to the
liquidity and perceived safety of these large companies as the rout in
developing markets began to be felt in Europe and North America. The dramatic
outperformance of large company stock prices relative to medium-size companies
has resulted in valuations that would seem to favor the prospects of medium-size
companies in the periods ahead. Many measures of small- and medium-company
valuations are as low as they have ever been relative to their larger rivals.
The total return of your First Omaha Growth Fund was -15.4% for the six months
ended September 30, 1998 compared to -16.3% for the Standard & Poors 400 MidCap
Index. The larger capitalization weighted Standard & Poors 500 Index only
declined by -7.0%. The average stock mutual fund tracked by Lipper Analytical
Services declined by -15.4% in the six-month period.
THE PORTFOLIO
The Growth Fund on September 30, 1998 was invested in 53 companies that we
believe will grow faster than their competitors, but are still selling at a
reasonable price. The Fund is diversified across many different industries,
avoiding concentrations in any single economic sector to reduce risk. The Fund
remains fully invested in stocks, with less than 1% of the portfolio held in
cash reserves. We intend to keep the Fund fully invested in stocks to
participate in the potential long-term appreciation in the value of U.S.
companies.
GROWTH FUND
PORTFOLIO COMPOSITION<F1>
as of September 30, 1998
Basic Industries 14%
Financial 13%
Capital Goods 12%
Technology 11%
Consumer Staples 10%
Utilities 10%
Consumer Cyclicals 10%
Transportation 5%
HealthCare 4%
Int'l. Mutual Funds 4%
Communication Services 4%
Energy 3%
Diversification is a key to lowering risk. Our five largest holdings represent
only 16.5% of the Fund at the end of September, and our largest single position
was only 3.8% of the Fund.
TOP FIVE HOLDINGS<F2>
as of September 30, 1998
% OF NET ASSETS
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Qwest Communications International Inc. 3.82%
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Cooper Industries, Inc. 3.38
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Swift Transportation Co., Inc. 3.23
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PACCAR Inc. 3.13
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Dover Corp. 2.94
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<F1> Sector weightings represent the percentage of the Fund's equity investments
in certain general sectors. These sectors include more than one industry.
<F2> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
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PORTFOLIO VALUATION PROFILE
as of September 30, 1998
WEIGHTED S&P
AVERAGE 500
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Price/Earnings<F3> 18.0x 21.0x
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Price/Book Value<F3> 2.4x 4.3x
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Yield 2.0% 1.7%
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<F3> Based on 1999 estimates
The characteristics of the portfolio confirm that valuations on our medium size
growth companies are more modest than what has been typical historically.
TOTAL RETURN
as of September 30, 1998
CUMULATIVE SINCE
COMMENCEMENT<F4>
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First Omaha Growth Fund (15.39)%
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<F4> Commencement date is 4/1/98
RETURN ON A $10,000 INVESTMENT
FIRST OMAHA
GROWTH FUND S&P MIDCAP 400
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4/1/98 $10,000 $10,000
Sept. 1998 8,461 8,370
This chart assumes an initial investment of $10,000 made on 4/1/98. 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 Growth 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 FNC Trust Group, n.a.
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 returns
for this index do not reflect any fees or expenses. It is not possible to make a
direct investment in an index.
FIRST OMAHA EQUITY FUND
The First Omaha Equity Fund continued to underperform the incredible returns of
the S&P 500 over the past year. For the 12 months ending September 30, 1998, the
Fund produced a return of -4.2% net of fees. As such, the Fund lagged the
outstanding return of 9.0% for the S&P 500 during the same period. During the
first half of the fiscal year, it was again difficult to beat the returns of the
S&P 500 due to the index's narrow focus of very large, more expensive stocks
supporting the rest of the index. So far this year, companies selling at 30x
trailing earnings or greater are up 28%, while low P/E stocks valued at 16x or
less are down 13%.
A number of companies in the Fund failed to meet expectations and have
experienced significant price declines, contributing to our underperformance.
For example, J.C. Penney's instituted a reorganization plan to improve the
coordination of purchasing and distribution functions, while simultaneously
rotating 600 store managers. This seemingly innocuous change caused some
inventory management problems and a resulting shortage in a number of summer
apparel lines. The missed sales opportunity and resulting margin reductions were
punished severely, resulting in the stock underperforming relative to its peer
group.
Similarly, a 20% decline in the price of copper and Wall Street analysts'
expectation of a possible dividend cut pushed Cyprus Amax's stock to "fire sale"
prices. However, the stock rebounded in September when pricing of copper failed
to reached the depths expected on the street. In addition, reported sales of
non-core assets will provide the company with $400 million in cash by year end,
assuaging the fears of the possible dividend cut.
While we realize that every portfolio will have its occasional underachiever, we
also realize that a number of companies occasionally will exceed expectations.
This last six months, Eastman Kodak Co. posted better than expected 2nd quarter
earnings on a combination of cost cutting and productivity gains which boosted
gross margins by 1% and in turn catapulted the stock back into Wall Street's
favor.
Taking advantage of the company's meteoric rise, we decreased our weighting in
Eastman Kodak. In addition, we reduced our positions in Exxon, Rite Aid and
American General, as valuations were approaching our estimates of fair
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FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
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valuation. Finally, we added to our positions in International Flavors &
Fragrances, Unocal, Texaco and SAFECO as these stocks appeared to be
attractively priced relative to our estimates of their respective intrinsic
values.
THE PORTFOLIO
On September 30, 1998, 85% of the portfolio was invested in equities with the
balance invested in cash and cash equivalents. The portfolio held 34 stocks and
continues to remain well-diversified with exposure to most sectors of the
economy.
EQUITY FUND
PORTFOLIO COMPOSITION<F1>
as of September 30, 1998
Consumer Staples 21%
Financial 15%
Basic Industries 13%
Energy 11%
Capital Goods 10%
Technology 9%
Consumer Cyclicals 8%
Utilities 5%
Health Care 4%
Communication Services 4%
The five largest holdings are listed below. These stocks represent approximately
19% of the Fund's net assets and approximately 22% of the value of the equities
in the portfolio.
TOP FIVE HOLDINGS<F2>
as of September 30, 1998
% OF NET ASSETS
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Ingersoll-Rand Co. 3.90%
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Kellwood Co. 3.86
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Cyprus Amax Minerals Co. 3.79
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Rite Aid Corp. 3.55
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SAFECO Corp. 3.50
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<F1> Sector weightings represent the percentage of the Fund's equity investments
in certain general sectors. These sectors include more than one industry.
<F2> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
The Fund has traditionally held some stocks that are fundamentally stronger and
more attractively valued when compared to the S&P 500 benchmark. Regardless of
the gyrations found in the general market, we will continue to maintain a
focused, conservative strategy that concentrates on companies that provide
attractive upside potential with limited business risks; or risks that, in our
opinion, are already discounted in the price we pay for the stock.
PORTFOLIO VALUATION PROFILE
as of September 30, 1998
WEIGHTED S&P
AVERAGE 500
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Price/Earnings<F3> 15.8x 21.0x
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Price/Book Value<F3> 2.8x 4.3x
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Yield 2.9% 1.7%
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<F3> Based on 1999 estimates
TOTAL RETURN
as of September 30, 1998
1 YEAR ENDED AVERAGE ANNUAL SINCE
9/30/98 COMMENCEMENT<F4>
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First Omaha Equity Fund<F5> (4.24)% 13.03%
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<F4> Commencement date is 12/13/92
<F5> 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.
Finally, given the large divergence between performance of the S&P 500 and that
of the broader market, we have provided an additional measure, the S&P 500 BARRA
Value Index, for our shareholders' use in appraising our relative performance.
It is felt that this additional information will provide a more thorough basis
for assessing our performance in light of our objective to provide you, our
shareholder, with long-term capital appreciation while simultaneously subjecting
your capital to a lower degree of risk.
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RETURN ON A $10,000 INVESTMENT
FIRST OMAHA S&P 500/BARRA
EQUITY FUND S&P 500 COMPOSITE VALUE INDEX
------------------- ----------------- ------------
12/13/92 $10,000 $10,000 $10,000
Sept. 1993 10,681 10,835 11,942
Sept. 1994 11,723 11,234 12,007
Sept. 1995 14,333 14,576 15,332
Sept. 1996 16,446 17,539 18,191
Sept. 1997 21,262 24,634 25,326
Sept. 1998 20,360 26,862 25,278
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. It is
not possible to make a direct investment in an index.
The Standard & Poors Barra Value Index is a market capitalization-weighted indes
of all the stocks in the Standard & Poor's 500 that have low price to book
ratios. It is designed so that approximately 50% of the Standard & Poors' 500
market capitalization is the Barra Value Index. The other 50% is in the Barra
Growth Index. The Barra Value & Barra Growth indices are rebalanced semi-
annually on January 1 and July 1. The returns for this index do not reflect any
fees or expenses. It is not possible to make a direct investment in an index.
FIRST OMAHA BALANCED FUND
The investment objective of the First Omaha Balanced Fund is to provide a
combination of current income and capital appreciation. We attempt to meet that
goal through careful analysis and selection of securities that pass through our
quantitative and qualitative screening process for value and margin-of-safety.
The investment horizon for the Fund is three to five years; therefore, we focus
on long-term results.
The First Omaha Balanced Fund provided a total return of 2.83% for the year
ended September 30, 1998, which lagged the benchmark indices due primarily to
equity underperformance. Our value philosophy has generally been unrewarding
during this last phase of the bull stock market. The equity market has
experienced large volatility on an almost daily basis, over 70% of the trading
days in the quarter moved up or down by over 0.5%. Over 40% of the trading days
moved over 1%. Stocks with high valuations have been the most volatile as
investors move to limit exposure to volatility. In uncertain markets such as
this, we believe the risk-adjusted returns of a long-term, value oriented style
will ultimately generate favorable returns. While stocks gyrated through the
quarter, bonds generated stellar returns. The flight to quality was evident as
Treasuries and to a lesser extent agencies and high-quality corporate bonds
moved higher in price.
THE PORTFOLIO
With the market as over-valued as it was at the quarter-ended June 30, 1998, we
deemed it prudent to pare down our exposure to equities. Our previous target
allocation was 55-60% stock, 40-45% bond and 0-10% cash. We lowered the target
range on stock to 45-55%, raised bond exposure to 40-50% and left the cash range
at 0-10%. At September 30, equities were a bit lower than target and cash was a
bit higher due to the timing of an investment program.
During the quarter, we used our asset allocation change to commit additional
funds to corporate bonds rather than to Treasuries as yields on corporate debt
versus Treasury bonds rose. The bond segment composition at quarter end was
33.6% Treasuries and agencies and 66.4% high-quality corporate bonds. The
average quality rating of the bond portfolio was AA1, reflecting our belief that
quality is an important component of future performance. The average maturity of
the port-
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
folio was increased to reflect our growing confidence in the U.S. bond market.
After adjusting for inflation, bond yields are at quite high levels. To take
advantage of these high yields, we purchased a Halliburton Co. put bond with an
actual maturity in 2027. We have the option of putting the bond back to the
company in 2007, in essence we get the upside potential of a thirty-year bond
when interest rates fall and receive the downside protection of a ten-year bond
if rates rise.
We selectively reduced equity holdings in Eastman Kodak, Exxon, Rite Aid and
American General as valuations had become extended but not enough to cause their
elimination from the portfolio. While we added to our positions in Unocal,
Texaco, SAFECO and Corn Products International, we spent less on acquisitions
than was generated on the sales. Other positions were increased or decreased to
assist in rebalancing the portfolio. We believe the companies we owned as of
September 30, 1998 were more fundamentally sound and financially stronger when
compared to the overall market. They boasted an above-average dividend yield and
a more favorable valuation. The dividend yield on the equity segment was 2.7% at
the end of the quarter versus 1.7% for the S&P 500. We own a well-diversified
portfolio of 34 stocks with the largest five positions at quarter end
representing almost 22% of the segment's market value.
In these turbulent financial markets, we deemed it prudent to lower equity
exposure in favor of bonds due to the continued uncertainty facing the world
economy. With the threat of recession so pronounced in so many countries, we see
the stability of the U.S. bond market as an attractive alternative to the
potentially destructive impact of slower economic growth on equities. We
continue to prefer stocks of companies which exhibit strong balance sheets,
improving returns on capital and healthy cash flows.
BALANCED FUND
PORTFOLIO COMPOSITION
as of September 30,1998
Common Stocks 41%
Corporate Bonds 29%
Cash Equivalents 16%
U.S. Governments 12%
U.S. Government Agencies 2%
TOP FIVE HOLDINGS<F1>
as of September 30,1998
% OF NET ASSETS
- ----------------------------------------------------------------
Halliburton Co., Series A, 6.75%, 2/1/27 3.25%
- ----------------------------------------------------------------
Laclede Gas Co., 6.50%, 10/15/02 3.19
- ----------------------------------------------------------------
General Electric Capital Corp., 6.90%, 9/15/15 3.18
- ----------------------------------------------------------------
Consolidated Natural Gas Co., 6.625%, 12/1/08 3.18
- ----------------------------------------------------------------
Norwest Financial, Inc., 6.375%, 12/1/07 3.08
- ----------------------------------------------------------------
<F1> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
TOTAL RETURN
as of September 30, 1998
1 YEAR ENDED AVERAGE ANNUAL SINCE
9/30/98 COMMENCEMENT<F2>
- -----------------------------------------------------------------
First Omaha Balanced Fund 2.83% 10.84%
- -----------------------------------------------------------------
<F2> Commencement date is 8/6/96
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
RETURN ON A $10,000 INVESTMENT
FIRST OMAHA LEHMAN BROS. GOV'T.
BALANCED FUND S&P 500 COMPOSITE CORP. BOND INDEX
------------------- ----------------- ------------------
8/6/1996 $10,000 $10,000 $10,000
Sept. 1996 10,105 10,431 10,158
Sept. 1997 12,138 14,650 11,132
Sept. 1998 12,481 15,975 12,561
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. It is
not possible to make a direct investment in an index.
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 govern mental agencies, or international
agencies). The returns for this index do not reflect any fees or expenses. It is
not possible to make a direct investment in an index.
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 is constructed primarily
through the laddering of bonds with various maturities. In this manner we seek
to reduce credit and reinvestment rate risk over the long term.
As of September 30, 1998, the portfolio composition was almost 25% government
and agency securities, 75% corporate bonds and less than 1% cash. The overall
weighted average credit quality of the portfolio remained the same at AA/Aa. The
weighted average maturity of the portfolio increased to 11 years.
The record lows in interest rates over the last six months have lead to double
digit returns for certain sectors of the bond market. The bond market, as
measured by Lehman Bros. Gov't./Corp. Bond Index, outperformed equities, as
measured by the S&P 500, over the last 12 months even though corporate bond
spreads widened considerably during the past quarter. The high yield and
mortgage bond sector have underperformed given the concerns over potentially
weak corporate earnings and faster prepayments by homeowners. The Fund did not
invest in either of these types of securities. The laddered structure and high
credit quality of the portfolio were rewarded with strong returns.
During the last six months we extended the portfolio's duration and average
maturity by selling shorter maturity bonds and buying longer maturity bonds. The
shorter maturity bonds we sold either had short maturity dates or a call option
embedded within the bond. The call option gives the issuer the right to redeem
the bond earlier than the stated maturity if conditions are favorable, such as
during a falling interest rate environment. For the holder of the callable bond,
having a bond called in a lower interest rate environment is not favorable. The
holder loses the high coupon bond and has to reinvest the proceeds at lower
interest rates. We purchased longer maturity bonds with embedded put options.
This put option allows us to redeem the bonds at a specified date in the future
if conditions are favorable. Favorable conditions would exist if interest rates
increased when the put option was redeemable, so we could redeem our bond with a
higher coupon bond, thus increasing cash flow for the portfolio. The end result
for the portfolio was that the high credit quality was maintained and the
reinvestment risk was reduced.
As mentioned previously, longer maturity securities and high credit quality
sectors outperformed all other sectors in the bond market over the past six
months. The portfolio is structured to take advantage of movements along the
entire yield curve, while reducing credit risk by investing in U.S. Treasury and
agency securities, and high grade corporate bonds. Our philosophy of
diversifying the maturity structure and issuer exposure will continue to be our
main emphasis going forward.
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
FIXED INCOME FUND
PORTFOLIO COMPOSITION
as of September 30, 1998
Corporate Bonds 74%
U.S. Governments 13%
U.S. Government Agencies 12%
Cash Equivalents 1%
TOP FIVE HOLDINGS<F1>
as of September 30, 1998
% OF NET ASSETS
- -------------------------------------------------------------
U.S. Treasury STRIP, 2/15/07 5.16%
- -------------------------------------------------------------
PPG Industries, Inc., 7.375%, 6/1/16 4.01
- -------------------------------------------------------------
Halliburton Co., Series A, 6.75%, 2/1/27 3.94
- -------------------------------------------------------------
General Electric Capital Corp., 6.90%, 9/15/15 3.85
- -------------------------------------------------------------
U.S. Treasury STRIP, 2/15/12 3.81
- -------------------------------------------------------------
<F1> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
TOTAL RETURN
as of September 30, 1998
1 YEAR ENDED AVERAGE ANNUAL SINCE
9/30/98 COMMENCEMENT<F2>
- ------------------------------------------------------------
First Omaha Fixed
Income Fund<F3> 13.30% 7.94%
- ------------------------------------------------------------
<F2> Commencement date is 12/13/92
<F3> 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
FIRST OMAHA LEHMAN BROS. GOV'T.
FIXED INCOME FUND CORP. BOND INDEX
------------------- -----------------
12/13/92 $10,000 $10,000
Sept. 1993 11,248 11,255
Sept. 1994 10,603 10,789
Sept. 1995 12,201 12,337
Sept. 1996 12,547 12,893
Sept. 1997 13,753 14,129
Sept. 1998 15,581 15,944
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, noncon vertible, investment grade, dollar-denominated, SEC-registered
corporate debt (including debt issued or guaranteed by foreign sovereign
governments, munici palities, or govern mental agencies, or international
agencies). The returns for this index do not reflect any fees or expenses. It is
not possible to make a direct investment in an index.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
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 weighted average maturity of two to five years.
As of September 30, 1998, the portfolio's composition was almost 30% government
and agency securities, 63% corporate bonds and 7% cash. The overall weighted
average credit quality remained AA/Aa for the portfolio, while the weighted
average maturity was 4.5 years.
With the continued move toward lower interest rates over the past several months
we have seen significant returns for certain sectors of the bond market,
including the short and intermediate parts of the yield curve. Concerns over
corporate profits has lead to the bond market, as measured by Lehman Bros.
Gov't./Corp. Bond Index, outperforming equities, as measured by the S&P 500, in
the latest 12-month period but has also lead to wider corporate bond spreads.
Given these concerns the high yield sector has underperformed the government and
high grade sectors. Mortgage-backed securities have also underperformed given
investor concerns over potentially faster prepayments of mortgages by
homeowners. The Fund invested in neither high yield bonds nor mortgage-backed
securities. The laddered maturity structure and high credit quality of the
portfolio were rewarded with strong returns.
During the past six months the portfolio has had one bond mature, Wisconsin
Electric Power, and one bond called, Northern Illinois Gas. Early in this period
the Northern Illinois Gas bond was replaced with a Treasury STRIP. Later in the
period, as economic conditions caused corporate bond yields to become more
attractive, other Treasury positions and the maturing Wisconsin Electric Power
were replaced with corporate bonds. This allowed us to take advantage of the
historically high relative yields that corporate bonds offered. Potomac Electric
Power and Motorola bonds were purchased in this manner. The resulting portfolio
was one that was slightly longer, maintained a high credit quality, and that had
reduced reinvestment risk by replacing the callable bond with a non-callable
bond.
Performance for the Fund was achieved by having a structure that takes advantage
of declining rates along the entire yield curve while reducing credit risk. This
allowed it to capitalize on the over performance of high credit quality sectors
and on the lower interest rate environment during the past six months. We will
continue to emphasize the philosophy of diversifying the maturity structure and
issuer exposure in the months that follow.
SHORT/INTERMEDIATE FIXED INCOME FUND
PORTFOLIO COMPOSITION
as of September 30, 1998
Corporate Bonds 63%
U.S. Governments 21%
U.S. Government Agencies 9%
Cash Equivalents 7%
TOP FIVE HOLDINGS<F1>
as of September 30, 1998
% OF NET ASSETS
- -----------------------------------------------------------
U.S. Treasury STRIP, 2/15/02 5.35%
- -----------------------------------------------------------
Federal Home Loan Bank, 6.50%, 11/29/05 5.04
- -----------------------------------------------------------
U.S. Treasury Note, 6.125%, 12/31/01 4.84
- -----------------------------------------------------------
U.S. Treasury STRIP, 2/15/07 3.93
- -----------------------------------------------------------
U.S. Treasury STRIP, 8/15/00 3.80
- -----------------------------------------------------------
<F1> Excluding cash and cash equivalents
Portfolio composition and holdings are subject to change at any time.
TOTAL RETURN
as of September 30, 1998
1 YEAR ENDED AVERAGE ANNUAL SINCE
9/30/98 COMMENCEMENT<F2>
- ----------------------------------------------------------------------
First Omaha Short/Intermediate
Fixed Income Fund<F3> 10.06% 6.21%
- ----------------------------------------------------------------------
<F2> Commencement date is 12/13/92
<F3> 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.
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
RETURN ON A $10,000 INVESTMENT
FIRST OMAHA LEHMAN BROS. MUTUAL FUND
SHORT/INTERMEDIATE FIXED INCOME FUND SHORT (1-5) U.S. GOV'T. INDEX
-------------------------------------- ----------------------------
12/13/92 $10,000 $10,000
Sept. 1993 10,698 10,710
Sept. 1994 10,555 10,690
Sept. 1995 11,552 11,689
Sept. 1996 12,029 12,326
Sept. 1997 12,885 13,225
Sept. 1998 14,182 14,431
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. It is not possible to make a direct
investment in an index.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
September 30, 1998 (Unaudited)
SMALL CAP VALUE FUND
NUMBER
OF SHARES VALUE
- -------------- -----------
COMMON STOCKS 92.96%
AIRLINES 2.70%
11,550 Midwest Express Holdings, Inc.<F1> $ 386,925
----------
BUSINESS SERVICES 3.48%
25,500 Franklin Covey Co.<F1> 498,844
----------
CHEMICALS 9.37%
15,500 Dexter Corp. 379,750
38,800 Oil-Dri Corp. of America 497,125
19,400 WD-40 Co. 464,387
----------
1,341,262
----------
CONSUMER PRODUCTS 3.98%
26,100 First Brands Corp. 569,306
----------
ELECTRONICS 2.54%
10,400 Teleflex, Inc. 364,000
----------
ENVIRONMENTAL CONTROL 3.37%
64,900 Calgon Carbon Corp. 482,694
----------
FOOD 10.36%
20,600 Corn Products International, Inc. 520,150
40,100 Nash-Finch Co. 588,969
17,900 Universal Foods Corp. 373,662
----------
1,482,781
----------
HOME FURNISHINGS 3.77%
14,400 National Presto Industries, Inc. 540,000
----------
INSURANCE 6.41%
13,400 American Financial Group, Inc. 433,825
26,700 The Guarantee Life Companies, Inc. 483,937
----------
917,762
----------
MACHINERY & EQUIPMENT 9.59%
20,100 Lawson Products, Inc. 442,200
14,700 Modine Manufacturing Co. 426,300
10,100 Tecumseh Products Co., Class A 505,000
----------
1,373,500
----------
MANUFACTURING 2.53%
9,700 Tennant Co. 361,931
----------
NUMBER
OF SHARES VALUE
- -------------- -----------
METAL PRODUCTS 2.81%
27,400 Amcast Industrial Corp. $ 402,438
----------
MINING 3.35%
12,300 Cleveland-Cliffs, Inc. 479,700
----------
MOTOR VEHICLE PARTS & ACCESSORIES 4.24%
39,500 CLARCOR Inc. 607,313
----------
PACKAGING & CONTAINERS 2.69%
13,400 The West Co., Inc. 385,250
----------
PAPER PRODUCTS 3.18%
34,800 P.H. Glatfelter Co. 454,575
----------
TEXTILE MANUFACTURING 3.75%
20,000 Kellwood Co. 537,500
----------
TIRE & RUBBER 2.68%
12,100 Bandag, Inc. 384,175
----------
TOBACCO 3.22%
12,900 Universal Corp. 461,175
----------
TRUCKING LEASING 3.45%
31,400 Werner Enterprises, Inc. 494,550
----------
UTILITIES - ELECTRIC SERVICES 3.03%
22,100 DPL Inc. 433,713
----------
UTILITIES - TELECOMMUNICATIONS 2.46%
14,200 Aliant Communications, Inc. 351,450
----------
Total Common Stocks (cost $15,093,712) 13,310,844
----------
PRINCIPAL
AMOUNT
- --------------
U.S. TREASURY BILLS 3.49%
$500,000 10/15/98 499,160
----------
Total U.S. Treasury Bills (cost $498,986) 499,160
----------
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -------------- -----------
INVESTMENT COMPANIES 3.34%
478,876 Goldman Sachs ILA Treasury
Obligations Portfolio $ 478,876
----------
Total Investment Companies (cost $478,876) 478,876
----------
Total Investments (cost $16,071,574) 99.79% 14,288,880
Other Assets, less Liabilities 0.21% 29,976
----------
NET ASSETS 100.00% $14,318,856
==========
<F1> Non-income producing security
See notes to financial statements.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
September 30, 1998 (Unaudited)
GROWTH FUND
Number
of Shares Value
- -------------- -----------
COMMON STOCKS 90.17%
AEROSPACE 4.59%
2,800 Boeing Co. $ 96,075
28,200 OEA Inc. 267,900
3,000 Raytheon Co., Class B 161,813
----------
525,788
----------
AUTOMOTIVE PARTS 1.65%
6,300 Genuine Parts Co. 189,394
----------
BANKING 1.25%
4,000 Norwest Corp. 143,250
----------
BEVERAGES 5.15%
3,000 Anheuser-Busch Cos., Inc. 162,000
3,700 PepsiCo, Inc. 108,919
14,300 Robert Mondavi Corp., Class A<F1> 319,069
----------
589,988
----------
BUSINESS SERVICES 1.30%
2,000 Automatic Data Processing, Inc. 149,500
----------
CHEMICALS 3.23%
3,400 Air Products and Chemicals, Inc. 101,150
9,300 Sigma-Aldrich Corp. 268,537
----------
369,687
----------
COMMUNICATION SERVICES 3.82%
14,000 Qwest Communications International Inc.<F1> 438,375
----------
COMPUTER COMPONENTS 2.93%
5,600 BMC Software, Inc.<F1> 336,350
----------
COMPUTER EQUIPMENT 3.87%
6,100 Adobe Systems, Inc. 211,594
7,000 Electronic Data Systems Corp. 232,313
----------
443,907
----------
COMPUTER SERVICES 1.91%
7,500 Oracle Corp.<F1> 218,437
----------
CONSTRUCTION 2.08%
5,800 Fluor Corp. 238,162
----------
NUMBER
OF SHARES VALUE
- -------------- -----------
DIVERSIFIED 4.85%
9,500 Cooper Industries, Inc. $387,125
3,100 PPG Industries, Inc. 169,144
----------
556,269
----------
ELECTRICAL - INDUSTRIAL 6.19%
3,600 FPL Group, Inc. 250,875
4,800 New Century Energies, Inc. 233,700
8,000 Northern States Power Co. 224,500
----------
709,075
----------
ELECTRICAL PRODUCTS 1.19%
2,200 Emerson Electric Co. 136,950
----------
ELECTRONICS 4.67%
2,500 Hewlett Packard Co. 132,344
20,000 Sensormatic Electronics Corp.<F1> 117,500
7,500 Thomas & Betts Corp. 285,469
----------
535,313
----------
FINANCIAL SERVICES 7.92%
7,100 Charles Schwab Corp. 279,562
6,200 MBIA, Inc. 332,863
8,000 MGIC Investment Corp. 295,000
----------
907,425
----------
FOOD 3.06%
2,300 Campbell Soup Co. 115,431
10,000 SYSCO Corp. 235,625
----------
351,056
----------
HEALTH CARE SERVICES 2.60%
8,500 United Healthcare Corp. 297,500
----------
INDUSTRIAL 3.13%
8,700 PACCAR, Inc. 358,331
----------
INSURANCE 4.01%
3,000 Allstate Corp. 125,062
25,280 Frontier Insurance Group, Inc. 334,960
----------
460,022
----------
MACHINERY & EQUIPMENT 2.94%
10,900 Dover Corp. 336,537
----------
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -------------- -----------
MANUFACTURING 1.05%
2,200 Illinois Tool Works Inc. $ 119,900
----------
OFFICE EQUIPMENT 1.04%
1,400 Xerox Corp. 118,650
----------
OIL & GAS 5.94%
1,700 Chevron Corp. 142,906
3,000 Enron Corp. 158,438
2,000 Mobil Corp. 151,875
5,500 NICOR Inc. 227,906
----------
681,125
----------
PHARMACEUTICALS 1.36%
3,600 Abbott Laboratories 156,375
----------
PHOTOGRAPHY 1.48%
2,200 Eastman Kodak Co. 170,088
----------
RAILROADS 0.91%
3,600 Norfolk Southern Corp. 104,625
----------
RETAIL 1.73%
5,600 Rite Aid Corp. 198,800
----------
TRANSPORTATION 4.32%
3,900 Burlington Northern Santa Fe Corp. 124,800
21,300 Swift Transportation Co., Inc.<F1> 370,087
----------
494,887
----------
Total Common Stocks (cost $11,946,691) 10,335,766
----------
NUMBER
OF SHARES VALUE
- -------------- -----------
INVESTMENT COMPANIES 5.74%
214,803 Goldman Sachs ILA Treasury
Obligations Portfolio $ 214,803
31,500 Morgan Stanley Asia-Pacific Fund 183,094
11,100 Scudder New Europe Fund, Inc. 181,762
10,000 Templeton Emerging Markets
Appreciation Fund 78,750
----------
Total Investment Companies (cost $757,843) 658,409
----------
REAL ESTATE INVESTMENT TRUSTS 4.64%
14,900 Meditrust Corp. - Paired Stock 254,231
10,000 MGI Properties, Inc. 277,500
----------
Total Real Estate Investment Trusts (cost $632,931) 531,731
----------
Total Investments (cost $13,337,465) 100.55% 11,525,906
Liabilities, less Other Assets (0.55)% (63,143)
----------
NET ASSETS 100.00% $11,462,763
==========
<F1> Non-income producing security
See notes to financial statements.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
September 30, 1998 (Unaudited)
EQUITY FUND
NUMBER
OF SHARES VALUE
- -------------- -----------
COMMON STOCKS 84.34%
BUILDING PRODUCTS 2.38%
225,700 Lafarge Corp. $6,446,556
----------
COMMUNICATIONS EQUIPMENT 2.58%
163,600 Motorola, Inc. 6,983,675
----------
COMPUTERS & PERIPHERALS 1.67%
35,300 International Business Machines Corp. 4,518,400
----------
COSMETICS 2.42%
198,200 International Flavors & Fragrances, Inc. 6,540,600
----------
ELECTRICAL EQUIPMENT 3.22%
56,400 Emerson Electric Co. 3,510,900
175,550 Parker-Hannifin Corp. 5,211,641
----------
8,722,541
----------
ENVIRONMENTAL CONTROL 0.46%
169,200 Calgon Carbon Corp. 1,258,425
----------
FOOD MISCELLANEOUS 2.21%
70,200 BestFoods 3,400,313
102,000 Corn Products International, Inc. 2,575,500
----------
5,975,813
----------
GROCERY STORES 2.50%
341,590 Food Lion, Inc., Class A 3,629,394
322,540 Food Lion, Inc., Class B 3,144,765
----------
6,774,159
----------
HEAVY MACHINERY 3.90%
278,000 Ingersoll-Rand Co. 10,546,625
----------
INSURANCE 12.11%
286,900 American Financial Group, Inc. 9,288,388
143,300 American General Corp. 9,153,287
97,700 Marsh & McLennan Cos., Inc. 4,860,575
227,100 SAFECO Corp. 9,467,231
----------
32,769,481
----------
MANUFACTURING 2.56%
229,500 Harsco Corp. 6,913,687
----------
NUMBER
OF SHARES VALUE
- -------------- -----------
MEDICAL SUPPLIES 1.68%
110,400 Becton, Dickinson & Co. $4,540,200
----------
MINING 3.79%
774,800 Cyprus Amax Minerals Co. 10,266,100
----------
MOTOR VEHICLE PARTS & ACCESSORIES 1.51%
265,800 CLARCOR Inc. 4,086,675
----------
OIL 9.55%
117,100 Exxon Corp. 8,218,956
135,900 Texaco Inc. 8,519,231
250,800 Unocal Corp. 9,091,500
----------
25,829,687
----------
PACKAGING & CONTAINERS 2.29%
258,280 Sonoco Products Co. 6,198,720
----------
PHARMACEUTICALS 1.60%
41,600 Bristol-Myers Squibb Co. 4,321,200
----------
PHOTOGRAPHY 2.79%
97,800 Eastman Kodak Co. 7,561,162
----------
PUBLISHING 2.57%
197,300 R.R. Donnelley & Sons Co. 6,942,494
----------
RETAIL 6.69%
188,800 J.C. Penney Co., Inc. 8,484,200
270,900 Rite Aid Corp. 9,616,950
----------
18,101,150
----------
SOAPS & CLEANING AGENTS 1.36%
53,600 Colgate-Palmolive Co. 3,671,600
----------
TELEPHONE 3.30%
162,400 GTE Corp. 8,932,000
----------
TEXTILE MANUFACTURING 3.86%
383,300 Kellwood Co. 10,435,563
----------
TOBACCO 3.37%
255,400 Universal Corp. 9,130,550
----------
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NUMBER
OF SHARES VALUE
- -------------- -----------
UTILITIES - ELECTRIC SERVICES 3.97%
358,650 DPL Inc. $ 7,038,506
79,400 Texas Utilities Co. 3,697,063
-----------
10,735,569
-----------
Total Common Stocks (cost $186,177,070) 228,202,632
-----------
PRINCIPAL
AMOUNT
- --------------
U.S. TREASURY BILLS 7.24%
$5,000,000 3/4/99 4,898,189
15,000,000 3/11/99 14,684,373
-----------
Total U.S. Treasury Bills (cost $19,582,562) 19,582,562
-----------
NUMBER
OF SHARES
- --------------
INVESTMENT COMPANIES 7.28%
7,500,000 Federated Treasury Obligations 7,500,000
12,210,165 Goldman Sachs ILA Treasury
Obligations Portfolio 12,210,165
-----------
Total Investment Companies (cost $19,710,165) 19,710,165
-----------
Total Investments (cost $225,469,797) 98.86% 267,495,359
Other Assets, less Liabilities 1.14% 3,077,791
-----------
NET ASSETS 100.00% $270,573,150
===========
See notes to financial statements.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
September 30, 1998 (Unaudited)
BALANCED FUND
NUMBER
OF SHARES VALUE
- -------------- -----------
COMMON STOCKS 40.52%
BUILDING PRODUCTS 1.15%
10,500 Lafarge Corp. $ 299,906
-----------
COMMUNICATIONS EQUIPMENT 1.21%
7,400 Motorola, Inc. 315,888
-----------
COMPUTERS & PERIPHERALS 1.23%
2,500 International Business Machines Corp. 320,000
-----------
COSMETICS 1.14%
9,000 International Flavors & Fragrances, Inc. 297,000
-----------
ELECTRICAL EQUIPMENT 1.54%
2,600 Emerson Electric Co. 161,850
8,100 Parker-Hannifin Corp. 240,469
-----------
402,319
-----------
ENVIRONMENTAL CONTROL 0.21%
7,400 Calgon Carbon Corp. 55,037
-----------
FOOD MISCELLANEOUS 1.20%
3,300 BestFoods 159,844
6,100 Corn Products International, Inc. 154,025
-----------
313,869
-----------
GROCERY STORES 1.22%
14,000 Food Lion, Inc., Class A 148,750
17,270 Food Lion, Inc., Class B 168,383
-----------
317,133
-----------
HEAVY MACHINERY 1.80%
12,400 Ingersoll-Rand Co. 470,425
-----------
INSURANCE 5.72%
13,000 American Financial Group, Inc. 420,875
6,500 American General Corp. 415,188
4,400 Marsh & McLennan Cos., Inc. 218,900
10,500 SAFECO Corp. 437,719
-----------
1,492,682
-----------
MANUFACTURING 1.19%
10,300 Harsco Corp. 310,287
-----------
MEDICAL SUPPLIES 0.80%
5,100 Becton, Dickinson & Co. 209,737
-----------
NUMBER
OF SHARES VALUE
- -------------- -----------
MINING 1.81%
35,600 Cyprus Amax Minerals Co. $ 471,700
-----------
MOTOR VEHICLE PARTS & ACCESSORIES 0.65%
11,050 CLARCOR Inc. 169,894
-----------
OIL 4.58%
5,400 Exxon Corp. 379,013
6,300 Texaco Inc. 394,931
11,600 Unocal Corp. 420,500
-----------
1,194,444
-----------
PACKAGING & CONTAINERS 1.08%
11,800 Sonoco Products Co. 283,200
-----------
PHARMACEUTICALS 0.76%
1,900 Bristol-Myers Squibb Co. 197,362
-----------
PHOTOGRAPHY 1.33%
4,500 Eastman Kodak Co. 347,906
-----------
PUBLISHING 1.24%
9,200 R.R. Donnelley & Sons Co. 323,725
-----------
RETAIL 3.14%
8,300 J.C. Penney Co., Inc. 372,981
12,600 Rite Aid Corp. 447,300
-----------
820,281
-----------
SOAPS & CLEANING AGENTS 0.63%
2,400 Colgate-Palmolive Co. 164,400
-----------
TELEPHONE 1.58%
7,500 GTE Corp. 412,500
-----------
TEXTILE MANUFACTURING 1.85%
18,000 Kellwood Co. 483,750
-----------
TOBACCO 1.59%
11,600 Universal Corp. 414,700
-----------
UTILITIES - ELECTRIC SERVICES 1.87%
16,600 DPL Inc. 325,775
3,500 Texas Utilities Co. 162,969
-----------
488,744
-----------
Total Common Stocks (cost $10,625,251) 10,576,889
-----------
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------- -----------
CORPORATE BONDS 28.27%
FINANCIAL SERVICES 6.27%
$750,000 General Electric Capital Corp.,
6.90%, 9/15/15 $ 831,165
750,000 Norwest Financial, Inc.,
6.375%, 12/1/07 804,255
-----------
1,635,420
-----------
FOOD PRODUCTS 2.07%
500,000 Anheuser-Busch Cos., Inc.,
6.75%, 8/1/03 539,785
-----------
INDUSTRIAL 3.25%
750,000 Halliburton Co., Series A,
6.75%, 2/1/27 849,075
-----------
PHARMACEUTICALS 3.07%
750,000 Eli Lilly & Co.,
6.57%, 1/1/16 801,097
-----------
RAIL CAR LEASING 2.24%
500,000 Union Tank Car Co.,
7.45%, 6/1/09 584,475
-----------
RETAIL 3.05%
750,000 Wal-Mart Stores, Inc.,
6.75%, 5/15/02 796,125
-----------
UTILITIES - ELECTRIC SERVICES 1.94%
500,000 Tampa Electric Co.,
5.75%, 5/1/00 507,090
-----------
UTILITIES - NATURAL GAS 6.38%
750,000 Consolidated Natural Gas Co.,
6.625%, 12/1/08 830,925
750,000 Laclede Gas Co.,
6.50%, 10/15/12 833,235
-----------
1,664,160
-----------
Total Corporate Bonds (cost $6,803,413) 7,377,227
-----------
PRINCIPAL
AMOUNT VALUE
- -------------- -----------
U.S. GOVERNMENT AGENCIES 2.01%
$500,000 Federal National Mortgage Association,
7.27%, 8/24/05 $ 523,540
-----------
Total U.S. Government Agencies (cost $510,881) 523,540
-----------
U.S. TREASURY NOTES 10.66%
300,000 6.75%, 5/31/99 303,948
500,000 6.625%, 6/30/01 528,445
750,000 5.875%, 2/15/04 804,120
500,000 6.50%, 8/15/05 563,550
500,000 7.00%, 7/15/06 582,065
-----------
Total U.S. Treasury Notes (cost $2,554,791) 2,782,128
-----------
U.S. TREASURY STRIPS 1.67%
850,000 2/15/12 436,858
-----------
Total U.S. Treasury Strips (cost $344,637) 436,858
-----------
REPURCHASE AGREEMENTS 13.41%
3,500,000 G.X. Clarke & Co., 5.30%, dated 9/30/98,
repurchase price $3,500,515, maturing
10/1/98 (collateralized by U.S. Treasury
Notes, 6.25%, 6/30/02) 3,500,000
-----------
Total Repurchase Agreements (cost $3,500,000) 3,500,000
-----------
NUMBER OF
SHARES
- --------------
INVESTMENT COMPANIES 2.77%
723,885 Goldman Sachs ILA Treasury
Obligations Portfolio 723,885
-----------
Total Investment Companies (cost $723,885) 723,885
-----------
Total Investments (cost $25,062,858) 99.31% 25,920,527
Other Assets, less Liabilities 0.69% 179,659
-----------
NET ASSETS 100.00% $26,100,186
===========
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
September 30, 1998 (Unaudited)
FIXED INCOME FUND
PRINCIPAL
AMOUNT VALUE
- -------------- -----------
CORPORATE BONDS 73.58%
COMMUNICATIONS EQUIPMENT 3.77%
$3,000,000 Motorola, Inc.,
6.50%, 3/1/08 $ 3,249,300
-----------
FINANCIAL SERVICES 10.43%
3,000,000 First Union National Bank,
6.18%, 2/15/36 3,172,470
2,500,000 General Electric Capital Corp.,
5.50%, 11/1/01 2,500,525
3,000,000 General Electric Capital Corp.,
6.90%, 9/15/15 3,324,660
-----------
8,997,655
-----------
FOREST PRODUCTS 3.18%
2,500,000 Kimberly-Clark Corp.,
6.875%, 2/15/14 2,740,175
-----------
INDUSTRIAL GOODS & SERVICES 29.60%
2,000,000 Air Products & Chemicals, Inc.,
6.25%, 6/15/03 2,110,260
2,000,000 Albertson's, Inc.,
6.34%, 2/25/13 2,208,820
2,500,000 Amoco Canada Petroleum Co. Ltd.,
6.75%, 2/15/05 2,729,425
2,990,000 First Data Corp.,
6.375%, 12/15/07 3,222,801
2,500,000 Gillette Co.,
5.75%, 10/15/05 2,614,225
3,000,000 Halliburton Co., Series A,
6.75%, 2/1/27 3,396,300
3,000,000 Ingersoll Rand Co.,
6.443%, 11/15/27 3,237,540
2,500,000 Monsanto Co.,
6.00%, 7/1/00 2,545,900
3,000,000 PPG Industries, Inc.,
7.375%, 6/1/16 3,462,630
-----------
25,527,901
-----------
PHARMACEUTICALS 3.67%
3,000,000 Eli Lilly & Co.,
6.25%, 3/15/03 3,169,560
-----------
RAILROADS 0.59%
500,000 Southern Railway Co.,
7.75%, 8/1/99 509,870
-----------
PRINCIPAL
AMOUNT VALUE
- -------------- -----------
SOAPS & CLEANING AGENTS 1.77%
$1,500,000 Colgate-Palmolive Co.,
6.85%, 11/24/99 $ 1,526,160
-----------
UTILITIES - ELECTRIC SERVICES 6.30%
2,500,000 National Rural Utilities Cooperative
Finance Corp., 6.50%, 9/15/02 2,641,350
2,500,000 Union Electric Co.,
6.75%, 5/1/08 2,796,925
-----------
5,438,275
-----------
UTILITIES - ELECTRIC & OTHER SERVICES
COMBINED 4.79%
2,750,000 Citizens Utilities Co.,
7.60%, 6/1/06 3,118,088
1,000,000 Louisville Gas & Electric Co.,
7.50%, 7/1/02 1,010,580
-----------
4,128,668
-----------
UTILITIES - NATURAL GAS 3.20%
2,500,000 Laclede Gas Co.,
6.50%, 11/15/10 2,756,825
-----------
UTILITIES - TELECOMMUNICATIONS 6.28%
2,500,000 AT&T Corp.,
7.75%, 3/1/07 2,908,375
2,500,000 Chesapeake & Potomac Telephone Co.
of Maryland, 5.25%, 5/1/05 2,509,400
-----------
5,417,775
-----------
Total Corporate Bonds (cost $58,840,625) 63,462,164
-----------
U.S. GOVERNMENT AGENCIES 9.15%
2,500,000 Federal National Mortgage Association,
6.85%, 9/12/05 2,590,800
2,500,000 Federal National Mortgage Association,
7.15%, 10/11/06 2,657,875
2,500,000 Federal National Mortgage Association,
6.88%, 11/20/06 2,640,575
-----------
Total U.S. Government Agencies (cost $7,605,278) 7,889,250
-----------
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- -------------- -----------
U.S. GOVERNMENT AGENCY STRIPS 2.64%
$5,300,000 Federal Home Loan Bank,
7/2/12 $ 1,823,730
1,320,000 Federal Home Loan Bank,
7/2/12 454,212
-----------
Total U.S. Government Agency Strips (cost $2,249,901) 2,277,942
-----------
U.S. TREASURY BONDS 1.42%
1,000,000 9.125%, 5/15/09 1,223,990
-----------
Total U.S. Treasury Bonds (cost $1,149,688) 1,223,990
-----------
U.S. TREASURY STRIPS 11.08%
2,122,000 5/15/02 1,816,347
6,513,00 2/15/07 4,450,528
6,400,000 2/15/12 3,289,280
-----------
Total U.S. Treasury Strips (cost $7,375,559) 9,556,155
-----------
NUMBER OF
SHARES
- --------------
INVESTMENT COMPANIES 0.83%
720,107 Goldman Sachs ILA Treasury
Obligations Portfolio 720,107
-----------
Total Investment Companies (cost $720,107) 720,107
-----------
Total Investments (cost $77,941,158) 98.70% 85,129,608
Other Assets, less Liabilities 1.30% 1,117,012
-----------
NET ASSETS 100.00% $86,246,620
===========
See notes to financial statements.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Schedule of Portfolio Investments
September 30, 1998 (Unaudited)
SHORT/INTERMEDIATE FIXED INCOME FUND
PRINCIPAL
AMOUNT VALUE
- -------------- -----------
CORPORATE BONDS 61.79%
COMMUNICATIONS EQUIPMENT 7.44%
$750,000 AT&T Corp.,
6.75%, 4/1/04 $ 805,230
750,000 Motorola, Inc.,
6.50%, 3/1/08 812,325
-----------
1,617,555
-----------
FINANCIAL SERVICES 10.81%
750,000 Ford Motor Credit Co.,
6.125%, 1/9/06 778,073
750,000 General Electric Capital Corp.,
6.875%, 4/15/00 770,640
750,000 LG&E Capital Corp.,
6.46%, 1/15/08 801,502
-----------
2,350,215
-----------
FOOD PRODUCTS 3.65%
750,000 Anheuser-Busch Cos., Inc.,
6.90%, 10/1/02 792,908
-----------
PHARMACEUTICALS 11.02%
750,000 Eli Lilly & Co.,
8.125%, 12/1/01 821,220
750,000 SmithKline Beecham PLC,
6.625%, 10/1/05 813,277
750,000 Upjohn Co.,
5.875%, 4/15/00 762,053
-----------
2,396,550
-----------
RETAIL 7.39%
750,000 Sears Roebuck Acceptance Notes,
6.90%, 8/1/03 804,127
750,000 Wal-Mart Stores, Inc.,
6.50%, 6/1/03 801,660
-----------
1,605,787
-----------
UTILITIES - ELECTRIC SERVICES 10.74%
750,000 Florida Power & Light Co.,
5.50%, 7/1/99 751,868
750,000 Monongahela Power Co.,
5.625%, 4/1/00 758,460
750,000 Union Electric Co.,
6.875%, 8/1/04 823,492
-----------
2,333,820
-----------
PRINCIPAL
AMOUNT VALUE
- -------------- -----------
UTILITIES - ELECTRIC & OTHER SERVICES
COMBINED 7.27%
$750,000 Northern States Power Co.,
5.75%, 10/1/03 $ 775,027
750,000 Potomoc Electric Power Co.,
6.25%, 10/15/07 806,475
-----------
1,581,502
-----------
UTILITIES - TELECOMMUNICATIONS 3.47%
750,000 Chesapeake & Potomac Telephone
Co. of Maryland, 5.875%, 9/15/99 754,920
-----------
Total Corporate Bonds (cost $12,786,232) 13,433,257
-----------
U.S. GOVERNMENT AGENCIES 8.71%
1,000,000 Federal Home Loan Bank,
6.50%, 11/29/05 1,095,570
750,000 Federal Home Loan Mortgage Corp.,
5.95%, 1/19/06 798,248
-----------
Total U.S. Government Agencies (cost $1,764,782) 1,893,818
-----------
U.S. TREASURY NOTES 6.07%
1,000,000 6.125%, 12/31/01 1,051,580
250,000 5.875%, 2/15/04 268,040
-----------
Total U.S. Treasury Notes (cost $1,252,305) 1,319,620
-----------
U.S. TREASURY STRIPS 14.90%
402,000 2/15/99 394,969
896,000 8/15/00 825,879
1,345,000 2/15/02 1,163,694
1,250,000 2/15/07 854,162
-----------
Total U.S. Treasury Strips (cost $3,104,840) 3,238,704
-----------
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
NUMBER OF
SHARES VALUE
- -------------- -----------
INVESTMENT COMPANIES 6.99%
800,000 Federated Trust for U.S. Treasury
Obligations $ 800,000
718,293 Goldman Sachs ILA Treasury
Obligations Portfolio 718,293
-----------
Total Investment Companies (cost $1,518,293) 1,518,293
-----------
Total Investments (cost $20,426,452) 98.46% 21,403,692
Other Assets, less Liabilities 1.54% 335,395
-----------
NET ASSETS 100.00% $21,739,087
===========
Schedule of Portfolio Investments
September 30, 1998 (Unaudited)
U.S. GOVERNMENT OBLIGATIONS FUND
PRINCIPAL
AMOUNT VALUE
- -------------- -----------
U.S. TREASURY BILLS 12.99%
$5,000,000 11/12/98 $4,970,338
5,000,000 12/24/98 4,940,383
5,000,000 2/4/99 4,923,000
-----------
Total U.S. Treasury Bills (cost $14,833,721) 14,833,721
-----------
U.S. TREASURY NOTES 52.58%
10,000,000 5.875%, 10/31/98 10,003,408
10,000,000 5.125%, 11/30/98 9,995,462
10,000,000 5.75%, 12/31/98 10,024,919
10,000,000 5.00%, 1/31/99 9,986,100
10,000,000 5.00%, 2/15/99 9,996,283
10,000,000 5.875%, 3/31/99 10,037,394
-----------
Total U.S. Treasury Notes (cost $60,043,566) 60,043,566
-----------
REPURCHASE AGREEMENTS 34.19%
19,043,190 G. X. Clarke & Co., 4.875%, dated 9/30/98,
repurchase price $19,045,769, maturing
10/01/98 (collateralized by U.S. Treasury
Notes, 6.25%, 3/31/99 and U.S. Treasury Bill,
3/4/99) 19,043,190
20,000,000 HSBC Securities, Inc., 5.20%, dated 9/30/98,
repurchase price $20,002,889, maturing
10/1/98 (collateralized by U.S. Treasury
Notes, 6.625%, 7/31/01) 20,000,000
-----------
Total Repurchase Agreements (cost $39,043,190) 39,043,190
-----------
Total Investments (cost $113,920,477) 99.76% 113,920,477
Other Assets, less Liabilities 0.24% 270,986
-----------
NET ASSETS 100.00% $114,191,463
============
See notes to financial statements.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
September 30, 1998 (Unaudited)
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments, at value
(cost $16,071,574, $13,337,465,
$225,469,797, $25,062,858,
$77,941,158, $20,426,452 and
$74,877,287, respectively) $14,288,880 $11,525,906 $267,495,359 $25,920,527 $85,129,608 $21,403,692 $ 74,877,287
- -----------------------------------------
Repurchase agreements, at value (cost
$0, $0, $0, $0, $0, $0 and $39,043,190,
respectively) _ _ _ _ _ _ 39,043,190
- -----------------------------------------
Receivable for securities sold _ _ 3,179,113 _ _ 3,577 _
- -----------------------------------------
Interest and dividends receivable 23,734 25,938 407,212 183,897 1,118,538 327,243 718,612
- -----------------------------------------
Organizational expenses, net of
accumulated amortization 5,169 13,521 10,602 2,659 10,602 10,602 10,602
- -----------------------------------------
Other assets 13,942 10,265 42,681 11,842 17,284 9,047 28,011
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Assets 14,331,725 11,575,630 271,134,967 26,118,925 86,276,032 21,754,161 114,677,702
- ----------------------------------------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
LIABILITIES:
- -----------------------------------------
Payable for securities purchased _ 100,600 491,146 _ _ _ _
- -----------------------------------------
Dividend payable _ _ _ _ _ _ 435,343
- -----------------------------------------
Accrued expenses and other liabilities 11,516 11,112 32,221 16,005 20,305 13,174 28,324
- -----------------------------------------
Accrued investment advisory fee 1,353 1,155 38,450 2,734 9,107 1,900 22,572
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Liabilities 12,869 112,867 561,817 18,739 29,412 15,074 486,239
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS $14,318,856 $11,462,763 $270,573,150 $26,100,186 $86,246,620 $21,739,087 $114,191,463
- ----------------------------------------- =========== =========== ============ =========== =========== =========== ============
NET ASSETS CONSIST OF:
Capital stock 14 14 191 23 78 21 1,142
- -----------------------------------------
Paid-in capital in excess of par 15,810,825 13,329,401 208,642,872 24,508,774 78,752,756 21,022,403 114,202,492
- -----------------------------------------
Undistributed net investment income 6,161 12,695 26,494 12,024 87,623 20,405 5,998
- -----------------------------------------
Undistributed net realized gain (loss)
on investments 284,550 (67,788) 19,878,031 721,696 217,713 (280,982) (18,169)
- -----------------------------------------
Net unrealized appreciation
(depreciation) on investments (1,782,694) (1,811,559) 42,025,562 857,669 7,188,450 977,240 _
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Assets $14,318,856 $11,462,763 $270,573,150 $26,100,186 $86,246,620 $21,739,087 $114,191,463
- ----------------------------------------- =========== =========== ============ =========== =========== =========== ============
CAPITAL STOCK, $0.00001 PAR VALUE
Authorized 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 300,000,000
- -----------------------------------------
Issued and outstanding 1,390,526 1,359,786 19,123,194 2,254,582 7,846,470 2,097,457 114,209,544
- -----------------------------------------
NET ASSET VALUE, REDEMPTION PRICE,
AND OFFERING PRICE PER SHARE
(NET ASSETS/SHARES OUTSTANDING) $10.30 $8.43 $14.15 $11.58 $10.99 $10.36 $1.00
====== ====== ====== ====== ====== ====== ======
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statements of Operations
For the Period from April 1, 1998 to September 30, 1998 (Unaudited)
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest $ 35,145 $ 19,333 $ 968,546 $ 382,608 $2,756,294 $ 611,312 $2,776,494
Dividends 176,636 103,036 3,115,274 169,306 _ _ _
- ----------------------------------------- ----------- ----------- ----------- ----------- ----------- ---------- -----------
211,781 122,369 4,083,820 551,914 2,756,294 611,312 2,776,494
----------- ----------- ----------- ----------- ----------- ---------- -----------
EXPENSES:
Investment advisory fees 69,773 39,772 1,123,472 99,962 241,984 50,048 129,400
- -----------------------------------------
Fund administration and accounting fees 25,068 25,068 299,592 26,656 80,661 20,019 103,520
- -----------------------------------------
Shareholder servicing fees 14,445 8,909 37,269 14,797 18,047 14,205 18,863
- -----------------------------------------
Federal and state registration fees 7,988 7,134 12,015 6,019 7,760 5,262 9,626
- -----------------------------------------
Administrative services plan fees 7,591 _ 135,128 10,775 38,385 9,110 _
- -----------------------------------------
Professional fees 5,712 6,348 16,146 5,878 7,724 5,530 7,089
- -----------------------------------------
Custody fees 2,463 1,591 44,939 3,998 12,099 3,003 15,528
- -----------------------------------------
Reports to shareholders 1,473 860 25,491 2,258 6,059 1,443 7,672
- -----------------------------------------
Amortization of organization expenses 964 1,506 3,483 469 3,483 3,483 3,483
- -----------------------------------------
Pricing fees 615 1,091 878 1,927 2,247 1,460 159
- -----------------------------------------
Directors' fees 456 186 8,072 696 2,078 516 2,817
- -----------------------------------------
Insurance 184 _ 5,525 313 1,555 411 2,216
- -----------------------------------------
Other expenses 167 119 2,939 266 760 126 740
- ----------------------------------------- ----------- ----------- ----------- ----------- ------------ --------- -----------
Total expenses before waiver 136,899 92,584 1,714,949 174,014 422,842 114,616 301,113
- -----------------------------------------
Waiver of expenses (40,895) (23,183) (171,191) (41,273) (67,258) (16,487) (20,283)
- ----------------------------------------- ----------- ----------- ----------- ----------- ------------ --------- -----------
Net Expenses 96,004 69,401 1,543,758 132,741 355,584 98,129 280,830
- ----------------------------------------- ----------- ----------- ----------- ----------- ------------ --------- -----------
NET INVESTMENT INCOME 115,777 52,968 2,540,062 419,173 2,400,710 513,183 2,495,664
- ----------------------------------------- ----------- ----------- ----------- ----------- ------------ --------- -----------
REALIZED AND UNREALIZED GAIN (LOSS):
Net realized gain (loss) on investments 123,089 (67,788) 13,341,283 565,189 274,672 61,935 1,111
- -----------------------------------------
Change in unrealized appreciation
(depreciation) on investments (3,839,461) (1,811,559) (52,272,041) (2,054,709) 3,903,351 753,644 _
- ----------------------------------------- ----------- ----------- ----------- ----------- ------------ --------- -----------
Net Gain (Loss) on Investments (3,716,372) (1,879,347) (38,930,758) (1,489,520) 4,178,023 815,579 1,111
- ----------------------------------------- ----------- ----------- ----------- ----------- ------------ --------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(3,600,595) $(1,826,379)$(36,390,696)$(1,070,347) $6,578,733 $1,328,762 $2,496,775
=========== =========== ============ =========== =========== ========== ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
SMALL CAP VALUE FUND GROWTH FUND EQUITY FUND
------------------------------ ---------------- -------------------------------
APRIL 1, 1998 YEAR ENDED APRIL 1, 1998 APRIL 1, 1998 YEAR ENDED
THROUGH MAR. 31, THROUGH THROUGH MAR. 31,
SEPT. 30, 1998 1998 SEPT. 30, 1998 SEPT. 30, 1998 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
OPERATIONS:
Net investment income $ 115,777 $ 182,706 $ 52,968 $ 2,540,062 $ 5,431,047
- -------------------------------------------
Net realized gain (loss) on investments 123,089 576,625 (67,788) 13,341,283 15,146,102
- -------------------------------------------
Change in unrealized appreciation
(depreciation) on investments (3,839,461) 1,932,576 (1,811,559) (52,272,041) 51,301,415
- ------------------------------------------- ------------ ------------ ------------ ------------ -------------
Net increase (decrease) in net assets
resulting from operations (3,600,595) 2,691,907 (1,826,379) (36,390,696) 71,878,564
- ------------------------------------------- ------------ ------------ ------------ ------------ -------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (114,912) (181,609) (40,273) (2,516,824) (5,458,420)
- -------------------------------------------
Net capital gains - (454,364) _ _ (19,230,779)
- ------------------------------------------- ------------ ------------ ------------ ------------ -------------
Total distributions (114,912) (635,973) (40,273) (2,516,824) (24,689,199)
- -------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 2,926,438 9,529,746 14,187,466 19,657,737 36,250,380
- -------------------------------------------
Proceeds from reinvestment of dividends 113,813 634,827 39,669 2,495,867 24,523,415
- -------------------------------------------
Redemption of shares (2,025,290) (2,373,895) (897,720) (24,746,223) (55,089,677)
- ------------------------------------------- ------------ ------------ ------------ ------------ -------------
Net increase (decrease) from share
transactions 1,014,961 7,790,678 13,329,415 (2,592,619) 5,684,118
- ------------------------------------------- ------------ ------------ ------------ ------------ -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (2,700,546) 9,846,612 11,462,763 (41,500,139) 52,873,483
- -------------------------------------------
NET ASSETS:
Beginning of period 17,019,402 7,172,790 _ 312,073,289 259,199,806
- ------------------------------------------- ------------ ------------ ------------ ------------ -------------
End of period $14,318,856 $17,019,402 $11,462,763 $270,573,150 $312,073,289
- ------------------------------------------- ============ ============ ============ ============ ============
Undistributed net investment income,
end of period $ 6,161 $ 5,296 $ 12,695 $ 26,494 $ 3,256
============ ============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
<F1> Commencement of operations
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
BALANCED FUND FIXED INCOME FUND
------------------------------ -------------------------------
APRIL 1, 1998 YEAR ENDED APRIL 1, 1998 YEAR ENDED
THROUGH MAR. 31, THROUGH MAR. 31,
SEPT. 30, 1998 1998 SEPT. 30, 1998 1998
(UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
OPERATIONS:
Net investment income $ 419,173 $ 662,106 $ 2,400,710 $ 4,422,924
- -------------------------------------------
Net realized gain (loss) on investments 565,189 247,580 274,672 (25,309)
- -------------------------------------------
Change in unrealized appreciation
(depreciation) on investments (2,054,709) 2,925,211 3,903,351 4,616,812
- ------------------------------------------- ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations (1,070,347) 3,834,897 6,578,733 9,014,427
- ------------------------------------------- ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (418,588) (657,708) (2,396,959) (4,427,433)
- -------------------------------------------
Net capital gains _ (134,164) _ _
- ------------------------------------------- ------------ ------------ ------------ ------------
Total distributions (418,588) (791,872) (2,396,959) (4,427,433)
- -------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 4,409,725 14,375,680 6,944,163 11,070,510
- -------------------------------------------
Proceeds from reinvestment of dividends 416,496 789,660 2,362,311 4,382,227
- -------------------------------------------
Redemption of shares (2,928,670) (3,411,519) (4,912,990) (17,892,679)
- ------------------------------------------- ------------ ------------ ------------ ------------
Net increase (decrease) from share
transactions 1,897,551 11,753,821 4,393,484 (2,439,942)
- ------------------------------------------- ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 408,616 14,796,846 8,575,258 2,147,052
- -------------------------------------------
NET ASSETS:
Beginning of period $25,691,570 $10,894,724 77,671,362 75,524,310
- ------------------------------------------- ------------ ------------ ------------ ------------
End of period $26,100,186 $25,691,570 $86,246,620 $77,671,362
- ------------------------------------------- ============ ============ ============ ============
Undistributed net investment income,
end of period $ 12,024 $ 11,439 $ 87,623 $ 83,872
============ ============ ============ ============
- ----------------------------------------------------------------------------------------------------------------------
<F1> Commencement of operations
</TABLE>
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
SHORT/INTERMEDIATE U.S. GOVERNMENT
FIXED INCOME FUND OBLIGATIONS FUND
------------------------------ -------------------------------
APRIL 1, 1998 YEAR ENDED APRIL 1, 1998 YEAR ENDED
THROUGH MAR. 31, THROUGH MAR. 31,
SEPT. 30, 1998 1998 SEPT. 30, 1998 1998
(UNAUDITED) (UNAUDITED)
- -----------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
OPERATIONS:
Net investment income $ 513,183 $ 1,108,779 $ 2,495,664 $ 5,327,594
- -------------------------------------------
Net realized gain (loss) on investments 61,935 10,043 1,111 _
- -------------------------------------------
Change in unrealized appreciation
(depreciation) on investments 753,644 476,475 _ _
- ------------------------------------------- ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations 1,328,762 1,595,297 2,496,775 5,327,594
- ------------------------------------------- ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income (513,055) (1,112,789) (2,495,664) (5,327,594)
- -------------------------------------------
Net capital gains _ _ _ _
- ------------------------------------------- ------------ ------------ ------------ ------------
Total distributions (513,055) (1,112,789) (2,495,664) (5,327,594)
- -------------------------------------------
CAPITAL SHARE TRANSACTIONS:
Proceeds from sale of shares 3,530,485 3,159,589 187,172,333 378,648,091
- -------------------------------------------
Proceeds from reinvestment of dividends 501,103 1,063,195 98,858 158,162
- -------------------------------------------
Redemption of shares (2,617,255) (6,238,476) (173,577,558) (403,722,643)
- ------------------------------------------- ------------ ------------ ------------ ------------
Net increase (decrease) from share
transactions 1,414,333 (2,015,692) 13,693,633 (24,916,390)
- ------------------------------------------- ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS 2,230,040 (1,533,184) 13,694,744 (24,916,390)
- -------------------------------------------
NET ASSETS:
Beginning of period 19,509,047 21,042,231 100,496,719 125,413,109
- ------------------------------------------- ------------ ------------ ------------ ------------
End of period $21,739,087 $19,509,047 $114,191,463 $100,496,719
- ------------------------------------------- ============ ============ ============ ============
Undistributed net investment income,
end of period $ 20,405 $ 20,277 $ 5,998 $ 5,998
============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------------------------------------
<F1> Commencement of operations
</TABLE>
See notes to financial statements.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Financial Highlights<F1>
<TABLE>
<CAPTION>
SMALL CAP VALUE FUND GROWTH FUND EQUITY FUND
-------------------------------------------- --------------- --------------------------
APRIL 1, 1998 YEAR ENDED JUNE 10, 1996<F2> APRIL 1, 1998 APRIL 1, 1998 YEAR ENDED
TO MAR. 31, TO TO TO MAR. 31,
SEPT. 30, 1998 1998 MAR. 31, 1997 SEPT. 30, 1998 SEPT. 30, 1998 1998
(UNAUDITED) (UNAUDITED) (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.94 $10.52 $10.00 $10.00 $16.19 $13.74
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.08 0.19 0.15 0.04 0.13 0.29
- ----------------------------------------
Net realized and unrealized gains
(losses) on investments (2.64) 2.88 0.58 (1.58) (2.04) 3.50
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Total from investment operations (2.56) 3.07 0.73 (1.54) (1.91) 3.79
- ---------------------------------------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.08 0.19 0.15 0.03 0.13 0.29
- ----------------------------------------
Distributions from capital gains _ 0.46 0.06 _ _ 1.05
- ---------------------------------------- -------- -------- -------- -------- -------- --------
Total distributions 0.08 0.65 0.21 0.03 0.13 1.34
- ---------------------------------------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $10.30 $12.94 $10.52 $ 8.43 $14.15 $16.19
- ---------------------------------------- ======== ======== ======== ======== ======== ========
TOTAL RETURN<F3> (19.83)% 29.60% 7.30% (15.39)% (11.85)% 28.89%
- ----------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $14,319 $17,019 $7,173 $11,463 $270,573 $312,073
- ----------------------------------------
Ratio of net expenses to average
net assets<F4> 1.17% 1.11% 1.34% 1.31% 1.03% 1.03%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4> 1.41% 1.62% 2.15% 1.00% 1.70% 1.89%
- ----------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 1.67% 1.92% 3.76% 1.75% 1.14% 1.14%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4><F5> 0.91% 0.81% (0.27)% 0.56% 1.59% 1.78%
- ----------------------------------------
Portfolio turnover rate<F3> 7.58% 16.54% 7.45% 11.43% 6.91% 15.87%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> 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.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.
See notes to financial statements.
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
Financial Highlights<F1>
<TABLE>
<CAPTION>
EQUITY FUND (CONT'D.)
----------------------------------------------------------------------------------
YEAR ENDED APRIL 10, 1995<F2> JULY 1, 1994 YEAR ENDED DEC. 13, 1992
MAR. 31, THROUGH TO JUNE 30, TO
1997 MAR. 31, 1996 APRIL 9, 1995 1994 JUNE 30, 1993
- --------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.07 $11.39 $10.48 $10.55 $10.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.30 0.28 0.21 0.20 0.11
- ----------------------------------------
Net realized and unrealized gains
(losses) on investments 1.63 2.13 1.48 0.15 0.54
- ---------------------------------------- -------- -------- -------- -------- --------
Total from investment operations 1.93 2.41 1.69 0.35 0.65
- ---------------------------------------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.30 0.28 0.22 0.20 0.10
- ----------------------------------------
Distributions from capital gains 0.96 0.45 0.56 0.22 _
- ---------------------------------------- -------- -------- -------- -------- --------
Total distributions 1.26 0.73 0.78 0.42 0.10
- ---------------------------------------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $13.74 $13.07 $11.39 $10.48 $10.55
- ---------------------------------------- ======== ======== ======== ======== ========
TOTAL RETURN<F3> 14.99% 21.52% 16.48% 3.34% 6.55%
- ----------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $259,200 $224,169 $161,323 $129,381 $111,059
- ----------------------------------------
Ratio of net expenses to average
net assets<F4> 1.04% 0.99% 1.03% 1.04% 1.01%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4> 2.17% 2.32% 2.50% 1.93% 1.90%
- ----------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 1.10% 1.07% 1.62% 1.54% 1.32%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4><F5> 2.11% 2.24% 1.91% 1.43% 1.59%
- ----------------------------------------
Portfolio turnover rate<F3> 25.66% 26.60% 14.36% 15.86% 4.94%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> 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.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
<TABLE>
<CAPTION>
BALANCED FUND
-----------------------------------------------
APRIL 1, 1998 YEAR ENDED AUG. 6, 1996<F2>
TO MAR. 31, TO
SEPT. 30, 1998 1998 MAR. 31, 1997
(UNAUDITED)
- -----------------------------------------------------------------------------------------------
<C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $12.24 $10.41 $10.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.19 0.38 0.21
- ----------------------------------------
Net realized and unrealized gains
(losses) on investments (0.66) 1.90 0.40
- ---------------------------------------- -------- -------- --------
Total from investment operations (0.47) 2.28 0.61
- ---------------------------------------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.19 0.38 0.20
- ----------------------------------------
Distributions from capital gains _ 0.07 _
- ---------------------------------------- -------- -------- --------
Total distributions 0.19 0.45 0.20
- ---------------------------------------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $11.58 $12.24 $10.41
- ---------------------------------------- ======== ======== ========
TOTAL RETURN<F3> (3.88)% 22.34% 6.14%
- ----------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $26,100 $25,692 $10,895
- ----------------------------------------
Ratio of net expenses to average
net assets<F4> 1.00% 0.88% 1.16%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4> 3.15% 3.37% 3.25%
- ----------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 1.31% 1.43% 3.04%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4><F5> 2.84% 2.82% 1.37%
- ----------------------------------------
Portfolio turnover rate<F3> 18.95% 10.46% 5.92%
- ----------------------------------------------------------------------------------------------------
</TABLE>
<F1> 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.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
<PAGE>
SEMI-ANNUAL REPORT- FIRST OMAHA FUNDS
- --------------------------------------------------------------------------------
Financial Highlights<F1> (continued)
<TABLE>
<CAPTION>
FIXED INCOME FUND
--------------------------------------------------------------------------------------------
APRIL 1, 1998 YEAR ENDED YEAR ENDED APRIL 10, 1995<F2> JULY 1, 1994 YEAR ENDED DEC. 13, 1992
TO MAR. 31, MAR. 31, TO TO JUNE 30, TO
SEPT. 30, 1998 1998 1997 MAR. 31, 1996 APRIL 9, 1995 1994 JUNE 30, 1993
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.45 $ 9.84 $10.00 $ 9.63 $9.58 $10.49 $10.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.32 0.59 0.45 0.59 0.51 0.67 0.39
- ----------------------------------------
Net realized and unrealized gains
(losses) on investments 0.54 0.61 (0.15) 0.35 0.07 (0.88) 0.47
- ---------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.86 1.20 0.30 0.94 0.58 (0.21) 0.86
- ---------------------------------------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.32 0.59 0.46 0.57 0.53 0.67 0.37
- ----------------------------------------
Distributions from capital gains _ _ _ _ _ 0.03 _
- ---------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions 0.32 0.59 0.46 0.57 0.53 0.70 0.37
- ---------------------------------------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $10.99 $10.45 $ 9.84 $10.00 $9.63 $ 9.58 $10.49
- ---------------------------------------- ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN<F3> 8.35% 12.50% 3.06% 9.79% 6.35% (2.29)% 8.72%
- ----------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $86,247 $77,671 $75,524 $76,342 $66,488 $61,714 $59,178
- ----------------------------------------
Ratio of net expenses to average
net assets<F4> 0.88% 0.89% 0.89% 0.83% 0.87% 0.86% 0.79%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4> 5.95% 5.74% 4.48% 5.94% 6.98% 6.52% 6.89%
- ----------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 1.05% 1.05% 1.00% 0.96% 1.51% 1.41% 1.19%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4><F5> 5.78% 5.58% 4.37% 5.81% 6.34% 5.97% 6.49%
- ----------------------------------------
Portfolio turnover rate<F3> 13.65% 19.03% 12.66% 37.35% 7.04% 13.09% 2.62%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> 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.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- ---------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT/INTERMEDIATE FIXED INCOME FUND
-----------------------------------------------------------------------------------------------
APRIL 1, 1998 YEAR ENDED YEAR ENDED APRIL 10, 1995<F2> JULY 1, 1994 YEAR ENDED DEC. 13, 1992
TO MAR. 31, MAR. 31, TO TO JUNE 30, TO
SEPT. 30, 1998 1998 1997 MAR. 31, 1996 APRIL 9, 1995 1994 JUNE 30, 1993
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $9.97 $9.73 $9.85 $9.66 $9.62 $10.18 $10.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.26 0.56 0.49 0.52 0.42 0.55 0.33
- ----------------------------------------
Net realized and unrealized gains
(losses) on investments 0.39 0.24 (0.10) 0.17 0.05 (0.56) 0.16
- ------------------------------------------------ -------- -------- -------- -------- -------- --------
Total from investment operations 0.65 0.80 0.39 0.69 0.47 (0.01) 0.49
- ------------------------------------------------ -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.26 0.56 0.51 0.50 0.43 0.55 0.31
- ----------------------------------------
Distributions from capital gains _ _ _ _ _ _ _
- ------------------------------------------------ -------- ------- -------- -------- -------- --------
Total distributions 0.26 0.56 0.51 0.50 0.43 0.55 0.31
- ------------------------------------------------ -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $10.36 $9.97 $9.73 $9.85 $9.66 $ 9.62 $10.18
- ----------------------------------------======== ======== ======== ======== ======== ======== ========
TOTAL RETURN<F3> 6.61% 8.37% 4.00% 7.24% 5.05% (0.22)% 5.00%
- ----------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $21,739 $19,509 $21,042 $22,056 $22,130 $21,938 $24,581
- ----------------------------------------
Ratio of net expenses to average
net assets<F4> 0.98% 0.99% 0.97% 0.89% 0.88% 0.83% 0.79%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4> 5.13% 5.54% 5.01% 5.34% 5.63% 5.44% 5.91%
- ----------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 1.15% 1.15% 1.08% 1.02% 1.51% 1.38% 1.19%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4><F5> 4.96% 5.38% 4.90% 5.21% 5.00% 4.89% 5.51%
- ----------------------------------------
Portfolio turnover rate<F3> 14.68% 26.58% 4.73% 41.45% 9.93% 20.52% 15.58%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> 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.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been as
indicated.
See notes to financial statements.
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- ---------------------------------------------------------------
Financial Highlights<F1> (continued)
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS FUND
-----------------------------------------------------------------------------------------------
APRIL 1, 1998 YEAR ENDED YEAR ENDED APRIL 10, 1995<F2>JULY 1, 1994 YEAR ENDED YEAR ENDED
TO MAR. 31, MAR. 31, TO TO JUNE 30, JUNE 30,
SEPT. 30, 1998 1998 1997 MAR. 31, 1996 APRIL 9, 1995 1994 1993
(UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ----------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.02 0.05 0.05 0.05 0.04 0.03 0.03
- ----------------------------------------
Net realized and unrealized gains
(losses) on investments _ _ _ _ _ _ _
- ---------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total from investment operations 0.02 0.05 0.05 0.05 0.04 0.03 0.03
- ---------------------------------------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income 0.02 0.05 0.05 0.05 0.04 0.03 0.03
- ----------------------------------------
Distributions from capital gains _ _ _ _ _ _ _
- ---------------------------------------- -------- -------- -------- -------- -------- -------- --------
Total distributions 0.02 0.05 0.05 0.05 0.04 0.03 0.03
- ---------------------------------------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- ---------------------------------------- ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN<F3> 2.44% 4.95% 4.76% 5.14% 3.51% 2.74% 2.72%
- ----------------------------------------
SUPPLEMENTAL DATA AND RATIOS:
Net assets, end of period (000s) $114,191 $100,497 $125,413 $87,715 $76,105 $89,195 $91,785
- ----------------------------------------
Ratio of net expenses to average
net assets<F4> 0.54% 0.55% 0.58% 0.54% 0.63% 0.60% 0.61%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4> 4.81% 4.83% 4.66% 5.12% 4.46% 2.68% 2.67%
- ----------------------------------------
Ratio of net expenses to average
net assets<F4><F5> 0.58% 0.58% 0.59% 0.59% 1.23% 1.13% 0.96%
- ----------------------------------------
Ratio of net investment income to
average net assets<F4><F5> 4.77% 4.80% 4.65% 5.07% 3.86% 2.15% 2.32%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<F1> 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.
<F2> Commencement of operations
<F3> Not annualized
<F4> Annualized
<F5> During the period, certain fees were voluntarily reduced. If such
voluntary fee reductions had not occurred, the ratios would have been
as indicated.
See notes to financial statements.
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
Notes to Financial Statements
September 30, 1998 (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, 1998, the only
series presently authorized are the Small Cap Value Fund, the Growth 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 respective Fund's
investment adviser, First National Bank of Omaha ("First National") or FNC Trust
Group, n.a. ("FNC;" collectively, the "Advisers"), 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 Advisers deem 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
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
Notes to Financial Statements (continued)
September 30, 1998 (Unaudited)
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.
(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, 1998, each of the Fixed Income Fund, Short/Intermediate Fixed
Income Fund and U.S. Government Obligations Fund had federal income tax capital
loss carryforwards of $39,879, $342,917 and $19,280, respectively. The $39,879
federal income tax loss carryforward for the Fixed Income Fund expires as
follows: $31,650 in 2004 and $8,229 in 2006. The $342,917 federal income tax
loss carryforward for the Short/Intermediate Fixed Income Fund expires as
follows: $30,031 in 2002, $147,691 in 2003, $109,194 in 2004 and $56,001 in
2005. The $19,280 federal income tax loss carryforward for the U.S. Government
Obligations Fund expires as follows: $16,038 in 2003 and $3,242 in 2006. 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.
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
3. INVESTMENT ADVISORY AND OTHER AGREEMENTS
The Funds have agreements with the respective Advisers to furnish investment
advisory services to the Funds. Under the terms of these agreements, the Funds
will pay a monthly fee at the annual rate of the following percentages on
average daily net assets: to First National, 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; and to FNC, 0.75% for the Growth Fund. For
the period ended September 30, 1998, advisory fees of $28,730, $13,257, $26,657,
$20,165 and $5,005 were waived in the Small Cap Value Fund, the Growth Fund, the
Balanced Fund, the Fixed Income Fund and the Short/Intermediate Fixed Income
Fund, respectively.
First National 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. For the period
ended September 30, 1998, custody fees of $2,463, $1,591, $44,939, $3,998,
$12,099 and $3,003 were waived in the Small Cap Value Fund, the Growth Fund, the
Equity Fund, the Balanced Fund, the Fixed Income Fund and the Short/Interme-
diate 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 Growth Fund are each subject to a $50,000 minimum annual fee.
For the period ended September 30, 1998, administrative fees of $5,905, $8,335,
$58,677, $5,221, $15,798, $3,921 and $20,283 were waived in the Small Cap Value
Fund, the Growth 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 Advisers and the Administrator may periodically volunteer to reduce all or a
portion of their fees with respect to one or more Funds. These waivers may be
terminated at any time. The Advisers and the Administrator may not seek
reimbursement of such voluntarily reduced fees at a later date. The reduction of
such fees 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 Agree-ment 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 Advisers, their 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, 1998, 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 Advisers, their correspondent and affiliated
banks and the Administrator (each a "Service Organization"). Such Service
Organizations agree to provide certain ministerial, recordkeeping 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
<PAGE>
SEMI-ANNUAL REPORT - FIRST OMAHA FUNDS
- -----------------------------------------------------------------------------
Notes to Financial Statements (continued)
September 30, 1998 (Unaudited)
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 First National 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,
1998, fees of $7,591, $135,128, $10,775, $38,385 and $9,110 were accrued under
this agreement, respectively, and fees of $3,797, $67,575, $5,397, $19,196 and
$4,558 were waived by First National, respectively.
6. CAPITAL STOCK
The Company is 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 share-
holder 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, 1998 were as follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Shares sold 239,194 1,451,433 1,282,417 367,023 657,017 351,002 187,172,333
- ---------------------------------------
Shares issued to holders in reinvestment
of dividends 9,941 4,425 162,181 35,013 223,678 49,840 98,858
- ---------------------------------------
Shares redeemed (173,685) (96,072) (1,594,665) (246,725) (465,137) (260,954) (173,577,558)
- --------------------------------------- --------- --------- ---------- --------- --------- --------- -------------
Net increase (decrease) 75,450 1,359,786 (150,067) 155,311 415,558 139,888 13,693,633
====== ========= ========= ======= ======= ======= ==========
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Transactions in shares of the Funds for the period ended March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Shares sold 781,847 _ 2,375,188 1,284,222 1,077,720 317,106 378,648,091
- ----------------------------------------
Shares issued to holders in reinvestment
of dividends 51,971 _ 1,679,612 68,840 427,624 107,312 158,162
- ----------------------------------------
Shares redeemed (200,574) _ (3,648,325) (300,447) (1,747,925) (628,537) (403,722,643)
- ---------------------------------------- --------- --------- ---------- --------- --------- --------- -------------
Net increase (decrease) 633,244 _ 406,475 1,052,615 (242,581) (204,119) (24,916,390)
======= ========= ========= ========= ========= ========= ============
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
FIRST OMAHA FUNDS - SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
7.INVESTMENT TRANSACTIONS
The aggregate purchases and sales of securities, excluding short-term
investments, for the Funds for the period ended September 30, 1998 were as
follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Purchases
U.S. Government - - - $ 253,672 - $ 779,225 -
Other $2,895,690 $14,191,092 $17,768,344 4,522,339 $15,265,533 2,335,673 -
- ----------------------------------------
Sales
U.S. Government - - - 1,202,156 1,606,184 1,082,790 -
Other 1,123,568 1,000,642 25,911,494 5,184,182 9,052,025 1,750,000 -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of September 30, 1998, gross unrealized appreciation and depreciation of
investments were as follows:
<TABLE>
<CAPTION>
SHORT/ U.S.
SMALL CAP FIXED INTERMEDIATE GOVERNMENT
VALUE GROWTH EQUITY BALANCED INCOME FIXED INCOME OBLIGATIONS
FUND FUND FUND FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
Appreciation $ 540,799 $ 363,001 $ 56,062,237 $1,978,949 $7,197,643 $990,080 -
- ---------------------------------------
(Depreciation) (2,323,493) (2,174,560) (14,036,675) (1,121,280) (9,193) (12,840) -
- --------------------------------------- ----------- ----------- ----------- ---------- --------- -------- -------
Net appreciation (depreciation) on
investments $(1,782,694) $(1,811,559) $42,025,562 $ 857,669 $7,188,450 $977,240 -
=========== =========== =========== ========== ========== ======== =======
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
As of September 30, 1998, the cost of investments for federal income tax
purposes is substantially the same as for financial statement purposes.
<PAGE>
INVESTMENT ADVISER AND CUSTODIAN
First National Bank of Omaha
Attention: Trust Division
1620 Dodge
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
One Pacific Place
1125 S. 103rd St., Suite 720
Omaha, Nebraska 68124-1071
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 Funds 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
FBO503613
