********************************************************************************
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THE FFB LEXICON FUNDS
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ANNUAL REPORT
AS OF AUGUST 31, 1995
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INVESTMENT
--------------------------------------------------------------------------------
STRATEGIES
--------------------------------------------------------------------------------
FOR
--------------------------------------------------------------------------------
LIVING
--------------------------------------------------------------------------------
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INVESTMENT ADVISER
First Fidelity Bank, N.A.
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
ADMINISTRATOR
SEI Financial Management Corporation
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx, Xxxxxxxxxxxx 00000
DISTRIBUTOR
SEI Financial Services Company
000 Xxxx Xxxxxxxxxx Xxxx
Xxxxx, Xxxxxxxxxxxx 00000
CUSTODIAN
First Fidelity Bank, N.A.
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
LEGAL COUNSEL
Xxxxxx, Xxxxx & Xxxxxxx
2000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
INDEPENDENT PUBLIC ACCOUNTANTS
Xxxxxx Xxxxxxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
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The information in this report must be preceded or accompanied by a current
prospectus for the funds described.
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Shares of The FFB Lexicon Funds are not sponsored or guaranteed by, and do
not constitute obligations of, First Fidelity Bank, N.A., any of its
affiliates or the U.S. Government, its agencies or instrumentalities. Shares
of The FFB Lexicon Funds are not insured by the Federal Deposit Insurance
Corporation or any other agency. Shares of The FFB Lexicon Funds involve
investment risks, including the possible loss of the principal amount
invested. SEI Financial Services Company, the Distributor of the FFB Lexicon
Funds, is not affiliated with the bank.
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September 19, 1995
Dear Lexicon Shareholder:
In last year's annual report we described significant volatility in the markets
which resulted in unfavorable investment returns in both the bond and equity
sectors. Also discussed was our belief that modest economic growth along with
inflation at reasonable levels would create a favorable 1995 environment for
both fixed-income and equity investors. So far this year the markets have
responded positively to the aforementioned economic climate.
For the fiscal year ending August 31, 1995, the Capital Appreciation Fund and
the Select Value Fund had positive returns of 20.11% and 23.95%, respectively.
These returns compare favorably to the 21.45% return in the Standard & Poor's
500 Composite Index ("S&P 500") for the same period. The Small Company Growth
Fund had a total return of 19.23% as of August 31, 1995, compared to a 20.80%
return for the Xxxxxxx 2000. The Fixed Income Fund and the Intermediate-Term
Government Securities Fund had positive returns for the fiscal year of 10.13%
and 8.16%, respectively versus an 11.49% return for the Xxxxxx
Government/Corporate Index and 8.97% for the Xxxxxx Intermediate-Term Government
Index.
During the past fiscal year, investors responded in a positive manner to actions
taken by the Federal Reserve and good economic news. The higher interest rates
during calendar year 1994 helped slow down economic growth and kept inflation
under control which provided for a much more stable economic environment. This
more stable economic environment and positive outlook has continued throughout
most of this year and no change appears to be in the offing as we proceed into
1996. The Federal Reserve responded in a positive manner earlier this calendar
year with a reduction in the federal funds rate of 25 basis points which gave
further credence to the health of the economy.
The past twelve months have been an excellent period for investors in general,
and equity investors specifically. We believe the economic environment will
continue to be a positive one with slow but steady growth and moderate
inflation, hence, our continued efforts and emphasis on stock selection to
achieve above average returns will be even more important as we head into 1996.
Corporate profitability has been exceptionally good and will likely be a key
ingredient to our stock selection process over the next several quarters. Simply
stated, we want to be invested in those stocks that meet or exceed expectations
rather than in stocks that are likely to have weaker earnings. With almost no
exceptions, investors have been very unkind to those companies that have
reported earnings below expectations. On the other hand, those companies that
have had favorable earnings reports have enjoyed further share price
appreciation.
Finally, we are also pleased to report that on June 18, 1995, First Fidelity
Bancorporation agreed to merge (the "merger") with and into a wholly-owned
subsidiary of First Union Corporation. Contingent upon the merger, which is
expected to be consummated by January 1, 1996, the FFB Lexicon family of mutual
funds will be combined (subject to various conditions, including shareholder
approval), with the Evergreen family of funds. We are excited about the
prospects of this fund merger and look forward to providing you access to one of
the most respected family of funds in existence over the past twenty years.
If you have questions on your investment, or information contained in this
Financial Report, please call 0-000-000-0000. We appreciate the opportunity to
be of service and look forward to working with you in the future.
Xxxxxx X. Ready Xxx X. Xxxxx
Senior Vice President Senior Vice President &
Mutual Fund Services Chief Investment Officer
First Fidelity Bank, N.A. First Fidelity Bank, N.A.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Trustees of
FFB Lexicon Funds:
We have audited the accompanying statements of net assets of the Cash
Management, Intermediate-Term Government Securities, Fixed Income, Capital
Appreciation Equity, Select Value and Small Company Growth Funds (six of the
funds constituting FFB Lexicon Funds) as of August 31, 1995, and the related
statements of operations, changes in net assets and financial highlights for the
periods presented. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Cash Management, Intermediate-Term Government Securities, Fixed Income, Capital
Appreciation Equity, Select Value and Small Company Growth Funds of FFB Lexicon
Funds as of August 31, 1995, the results of their operations, changes in their
net assets, and financial highlights for the periods presented, in conformity
with generally accepted accounting principles.
XXXXXX XXXXXXXX LLP
Philadelphia, Pa.
October 6, 1995
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
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FFB Lexicon Funds--August 31, 1995
Intermediate-Term
Government
Securities Fund
INVESTMENT POLICIES AND OBJECTIVE. The Intermediate-Term Government Securities
Fund (the "Fund") invests in U.S. Treasury obligations and obligations issued or
guaranteed as to principal and interest by agencies and instrumentalities of the
U.S. Government. The Fund expects to maintain an average maturity of three to
six years. The objective of the Fund is to seek to preserve principal value and
maintain a high degree of liquidity while providing current income.
PERFORMANCE SUMMARY & OVERVIEW. For the year ending August 31, 1995, the
Fund's Institutional Class total return was 8.16% versus a total return of 8.97%
for the Xxxxxx Brothers Intermediate- Term Government Index. The Fund slightly
underperformed the Index because of our negative policy posture which called for
a cautious approach with an average maturity and duration less than that of the
Index. During the rising interest rates environment of late 1994 this was a
distinct benefit. However, as the market rallied in the first quarter of 1995,
the performance lagged that of the Index. The discipline used to manage the Fund
is designed to react to longer term interest rate trends and not anticipate or
forecast directional moves in the market.
When the Federal Reserve Bank lowered the Fed Funds rate in early July our
policy went from negative to neutral and the duration of the Fund was lengthened
to just over 100% of the index. At present our outlook for interest rates is
positive based on an improved inflation outlook and economic growth that is
expected to remain within the range the Federal Reserve would consider its
non-inflationary potential. Currently, the Fund has an average maturity of 3.6
years and is composed of 75% Treasuries, 17% Federal agencies, 6% Mortgage
Securities, and 2% cash equivalents.
1
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------------------------------------------------------------
PORTFOLIO BREAKDOWN AS OF AUGUST 31, 1995
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Intermediate-Term
Government Securities Fund
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[PIE CHART]
Treasury 75.5%
Agency 17.0%
CMO 5.6%
Cash Equivalents 1.9%
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Intermediate-Term Government Securities Fund
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[CHART]
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
INITIAL INVESTMENT DATE 11/30/91 Aug-92 Aug-93 Aug-94 Aug-95
FFB LEXICON INTERMEDIATE-TERM
GOVERNMENT PORTFOLIO $10,000 $10,772 $11,637 $11,522 $12,462
XXXXXX BROTHERS INTERMEDIATE-TERM
GOVERNMENT INDEX $10,000 $10,840 $11,782 $11,750 $12,804
--------------------------------------------------------------------------------
One Year Return Average Annualized Inception to Date
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8.16% 6.25%
Past performance is no indication of future performance.
2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
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FFB Lexicon Funds--August 31, 1995
Fixed Income Fund
INVESTMENT POLICIES AND OBJECTIVE. The Fixed Income Fund (the "Fund") invests
in U.S. Treasury and Agency obligations, corporate bonds and debentures,
mortgage-backed securities, and money market instruments. The average weighted
maturity of the Fund will be between five and ten years. The Fund seeks to
maximize current yield consistent with the preservation of capital.
PERFORMANCE SUMMARY & OVERVIEW. For the year ending August 31, 1995, the
Fund's Institutional Class total return was 10.13% versus a total return of
11.49% for the Xxxxxx Brothers Government/Corporate Index. The Fund slightly
underperformed the Index because of our negative policy posture which called for
a cautious approach with an average maturity and duration less than that of the
Index. During the rising interest rates environment of late 1994 this was a
distinct benefit. However, as the market rallied in the first quarter of 1995,
the performance lagged that of the Index. The discipline used to manage the Fund
is designed to react to longer term interest rate trends and not anticipate or
forecast directional moves in the market.
When the Federal Reserve Bank lowered the Fed Funds rate in early July our
policy went from negative to neutral and the duration of the Fund was lengthened
to over 100% of the index. At present our outlook for interest rates is positive
based on an improved inflation outlook and economic growth that is expected to
remain within the range the Federal Reserve would consider its non-inflationary
potential. Currently, the Fund has an average maturity of 8.1 years and is
composed of 65% Treasuries, 3% Federal agencies, 17% Mortgage Securities, 4%
Corporates, 10% Yankee Obligations, and 1% cash equivalents.
3
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------------------------------------------------------------
PORTFOLIO BREAKDOWN AS OF AUGUST 31, 1995
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Fixed Income Fund
------------------------------------------------------------
[PIE CHART]
U.S. Treasuries 65.0%
U.S. Agency 3.0%
Collateralized Mortgage Obligations 17.1%
Corporate Bonds 4.4%
Yankee Obligations 9.6%
Cash Equivalents 0.9%
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Fixed Income Fund
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[CHART]
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
INITIAL INVESTMENT DATE 11/30/91 Aug-92 Aug-93 Aug-94 Aug-95
FFB LEXICON FIXED INCOME PORTFOLIO $10,000 $10,965 $12,380 $12,018 $13,236
XXXXXX BROTHERS GOVERNMENT/CORPORATE
BOND INDEX $10,000 $10,963 $12,342 $12,054 $13,440
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One Year Return Average Annualized Inception to Date
--------------------------------------------------------------------------------
10.13% 8.01%
Past performance is no indication of future performance.
4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
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FFB Lexicon Funds--August 31, 1995
Capital Appreciation
Equity Fund
INVESTMENT POLICIES AND OBJECTIVE. The objective of the Capital Appreciation
Equity Fund (the "Fund") is to seek to provide long term capital appreciation by
investing in a diversified portfolio of common stocks and securities convertible
into common stock.
PERFORMANCE SUMMARY & OVERVIEW. The Fund's Institutional Class achieved a
return of 20.11% for the fiscal year ending August 31, 1995. This compared to
the S&P 500 Composite Index return of 21.45% and Lipper Growth Average return of
22.45%.
During the fiscal year, the fund benefited from an overweighting in capital
goods and technology. However, these gains were moderated by the lag in returns
from basic industry and consumer cyclical holdings.
The Fund is committed to growth, an equity management style that should do
well in the future. Investor attention in expected to shift toward companies
that are able to generate steady above average earnings gains in a slow growth
world.
The Fund is focused toward a greater growth orientation to benefit from this
opportunity. Emphasis continues to be placed on fundamentally strong capital
goods, technology and service companies. In addition, the Fund maintains
substantial holdings in health related companies which are well positioned to
benefit from dynamic changes developing in this sector.
5
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----------------------------------------------------------
PORTFOLIO BREAKDOWN AS OF AUGUST 31, 1995
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Capital Appreciation Equity Fund
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[XXX XXXXX]
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CAPITAL APPRECIATION EQUITY FUND
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Technology 28.2%
Utilities 1.6%
Transportation 1.5%
Utilities 1.6%
Cash Equivalents 1.4%
Basic Materials 7.7%
Capital Goods 5.7%
Consumer Cyclical 10.6%
Consumer Staples 13.8%
Finance 7.5%
Healthcare 16.0%
Telephone & Telecommunications 6.0%
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TOP TEN HOLDINGS AS OF AUGUST 31, 1995
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1. Dell Computer 2.2%
2. Xxxxxx Xxxxxx 2.1
3. Lincare Holdings 2.0
4. Symbron International 2.0
5. Gymboree 1.9
6. Amgen 1.9
7. Cisco Systems 1.9
8. Applied Materials 1.9
9. XX XxXxxx de Nemours 1.9
10. LSI Logic 1.8
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Capital Appreciation Equity Fund
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[CHART]
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
INITIAL INVESTMENT DATE 11/30/91 Aug-92 Aug-93 Aug-94 Aug-95
FFB LEXICON CAPITAL APPRECIATION
EQUITY PORTFOLIO $10,000 $11,080 $12,539 $12,993 $15,606
S&P 500 COMPOSITE INDEX $10,000 $11,286 $13,003 $13,714 $16,653
S&P/BARRA GROWTH INDEX $10,000 $11,145 $11,868 $12,675 $15,676
LIPPER GROWTH AVERAGE $10,000 $10,844 $12,835 $13,386 $16,067
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One Year Return Average Annualized Inception to Date
--------------------------------------------------------------------------------
20.11% 10.76%
Past performance is no indication of future performance.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
--------------------------------------------------------------------------------
FFB Lexicon Funds--August 31, 1995
Select Value Fund
INVESTMENT POLICIES AND OBJECTIVE. The Select Value Fund (the "Fund") seeks to
achieve long-term growth of capital by investing primarily in common stocks
which, in the opinion of the investment adviser, are undervalued in the
marketplace. The Adviser characterizes undervalued common stocks as those that
have lower-than-average price/earnings and price/book value ratios as compared
to the S&P 500 Composite Index.
PERFORMANCE SUMMARY & OVERVIEW. The Fund recorded a total return of 23.95% for
the fiscal year ending August 31, 1995. The Fund's return exceeded the total
return of the S&P 500 Composite Index of 21.45%, and that of the Lipper Growth
and Income Index of 16.59%.
During the past twelve months the Fund has benefited from an overweighting in
two strong sectors, technology and financial. Worldwide demand for computers,
software, electronics, and telecommunications equipment continues to grow
rapidly. Although technology tends to have characteristics more typical of a
"growth" portfolio, we were able to find several stocks selling at attractive
valuations. However, in the wake of significant outperformance, fewer technology
stocks now meet our value-oriented parameters and thus, we have reduced our
weighting in this sector. Financial stocks continue to be emphasized due to the
attractive valuation and favorable outlook associated with banks and insurance
companies.
Our strategy is to identify individual stocks that are attractively priced
relative to their long-term prospects for growth in earnings and dividends.
Important factors to consider in a potential equity investment include strength
of management, product mix, and competitive position within the industry. We
believe that Citicorp, Chemical Banking, Xxxxxx Xxxxxx, Union Carbide, and
Philips Electronics reflect these strengths.
7
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----------------------------------------------------------
PORTFOLIO BREAKDOWN AS OF AUGUST 31, 1995
----------------------------------------------------------
----------------------------------------------------------
Select Value Fund
----------------------------------------------------------
[PIE CHART]
Finance 25.2%
Technology 10.5%
Utilities 16.1%
Basic Materials 9.8%
Capital Goods and Construction 5.1%
Consumer Cyclical 11.9%
Consumer Staples 13.7%
Energy 7.7%
----------------------------------------------------------
TOP TEN HOLDINGS AS OF AUGUST 31, 1995
----------------------------------------------------------
1. Philips Electronic, ADR 4.6%
2. Xxxxxx Xxxxxx 4.5
3. Comsat 4.3
4. Citicorp 3.9
5. Salomon 3.9
6. Ford Motor 3.8
7. Telefonos de Mexico, ADR 3.7
8. Sun Healthcare Group 3.6
9. YPF Sociedad Anonimn, ADR 3.5
10. Comdisco 3.4
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Select Value Fund
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[CHART]
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
INITIAL INVESTMENT DATE 11/30/92 Aug-93 Aug-94 Aug-95
FFB LEXICON SELECT VALUE PORTFOLIO $10,000 $11,521 $12,440 $15,419
S&P 500 COMPOSITE INDEX $10,000 $10,975 $11,575 $14,056
S&P/BARRA VALUE INDEX $10,000 $12,037 $12,540 $14,929
LIPPER GROWTH & INCOME AVERAGE $10,000 $11,066 $11,626 $13,586
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One Year Return Average Annualized Inception to Date
--------------------------------------------------------------------------------
23.95% 18.34%
Past performance is no indication of future performance.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FUND PERFORMANCE
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FFB Lexicon Funds--August 31, 1995
Small Company
Growth Fund
INVESTMENT POLICIES AND OBJECTIVE. The Small Company Growth Fund (the "Fund")
seeks long term capital appreciation by investing primarily in a diversified
portfolio of common stocks of growth-oriented, smaller capitalization companies,
many having a market capitalization less than $500 million at time of initial
purchase.
PERFORMANCE SUMMARY & OVERVIEW. The Fund recorded a total return of 19.23% for
the fiscal year ending August 31, 1995, nearly in line with the total return of
20.80% achieved by the Xxxxx Xxxxxxx 2000 Index. Over the past year, small
stocks lagged the larger capitalization S&P Composite 500, though this trend
appears to have reversed in recent months.
The heaviest concentrations within the Fund are found in the finance and
technology sectors, which together account for nearly half of the Fund's
holdings. As these have been the two best performing sectors in the market over
the past year, the Fund has benefited from these overweighted exposures.
However, some of the smaller technology stocks selected in the Fund have failed
to keep pace with the exceedingly strong performance of their larger
capitalization counterparts. Clearly, smaller niche technology companies have on
balance failed to exhibit the market dominance or competitive strengths that
have propelled larger technology companies to record results over the past year.
Healthcare remains a third area of emphasis within the fund. As with many of
our finance and technology selections, healthcare appears to present many
opportunities to participate in highly visible and sustainable secular trends
often absent from other more mature market sectors. This distinction is
similarly reflected by our minimal positions in the energy and utility sectors.
9
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----------------------------------------------------------
PORTFOLIO BREAKDOWN AS OF AUGUST 31, 1995
----------------------------------------------------------
----------------------------------------------------------
Small Company Growth Fund
----------------------------------------------------------
[PIE CHART]
Consumer Cyclical 17.0%
Consumer Staples 12.0%
Energy 1.0%
Finance 18.7%
Healthcare 9.8%
Technology 13.5%
Utilities 1.3%
Transportation 2.6%
Cash Equivalents 4.2%
Basic Materials 6.3%
Capital Goods 13.6%
----------------------------------------------------------
TOP TEN HOLDINGS AS OF AUGUST 31, 1995
----------------------------------------------------------
1. Micro Warehouse 1.6%
2. X. Xxxx Price & Associates 1.6
3. Xxxxxxx Xxxxxxx 1.5
4. HEALTHSOUTH Rehabilitation 1.5
5. Renal Treatment Centers 1.5
6. Health Management Associates 1.5
7. Respironics 1.5
8. Davidson & Associates 1.5
9. Equitable of Iowa 1.5
10. Agco 1.5
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Small Company Growth Fund
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[CHART]
COMPARISON OF CHANGE IN THE VALUE
OF A $10,000 INVESTMENT
INITIAL INVESTMENT DATE 11/30/92 Aug-93 Aug-94 Aug-95
FFB LEXICON SMALL COMPANY GROWTH PORTFOLIO $10,000 $11,057 $10,868 $12,958
XXXXX XXXXXXX 2000 STOCK INDEX $10,000 $11,659 $12,351 $14,920
NASDAQ/OTC INDEX $10,000 $11,381 $11,729 $15,631
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One Year Return Average Annualized Inception to Date
--------------------------------------------------------------------------------
19.23% 12.14%
Past performance is no indication of future performance.
10
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
FFB Lexicon Funds--August 31, 1995
CASH MANAGEMENT FUND
----------------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------------
COMMERCIAL PAPER -- 81.0%
Abbey National
5.670%, 11/07/95 $ 2,000 $ 1,979
ABN AMRO
5.450%, 02/05/96 1,500 1,464
American Express Credit
5.930%, 09/12/95 2,000 1,996
American General Finance
5.870%, 09/14/95 3,000 2,994
Ameritech
5.540%, 03/05/96 2,000 1,943
Associates Corporation of North
America
5.650%, 11/06/95 2,000 1,979
AT & T
5.640%, 10/24/95 3,000 2,975
Bank of Nova Scotia
5.640%, 10/11/95 1,000 994
Bayerische Landesbank
Girozentrale
5.750%, 09/28/95 2,500 2,489
BTR Dunlop
5.680%, 11/21/95 3,000 2,962
Cargill
5.670%, 09/25/95 3,000 2,989
Xxxxxx
5.630%, 11/03/95 3,000 2,970
CIT Group Holdings
5.630%, 11/27/95 2,000 1,973
Coca Cola
5.750%, 09/14/95 2,000 1,996
Compagnie Bancaire
5.720%, 11/15/95 2,500 2,470
E.I. Du Pont De Nemours
5.660%, 11/09/95 1,500 1,484
5.500%, 01/17/96 1,500 1,468
Eksportfinans
5.880%, 09/08/95 3,000 2,996
Federal Farm Credit
5.570%, 02/16/96 1,000 974
Ford Motor Credit
5.720%, 10/27/95 2,000 1,982
5.630%, 12/12/95 2,000 1,968
General Electric Capital
5.660%, 11/16/95 2,000 1,976
5.630%, 12/14/95 2,000 1,967
Xxxxxxx Xxxxx
5.750%, 10/17/95 3,000 2,978
Hershey Foods
5.650%, 10/06/95 3,000 2,984
Xxxxxxx Xxxxx
5.650%, 12/08/95 2,000 1,969
Metlife Funding
5.620%, 10/26/95 2,000 1,983
Pitney Xxxxx Credit
5.670%, 12/01/95 2,000 1,971
Xxxxxxx and Xxxxxx
5.750%, 09/19/95 1,000 997
Province of Alberta
5.650%, 12/28/95 2,000 1,963
Prudential Funding
5.750%, 09/27/95 2,000 1,992
Republic New York
5.620%, 10/13/95 2,000 1,987
Royal Bank of Canada
6.060%, 11/30/95 1,000 985
Shell Oil
5.620%, 11/16/95 2,000 1,976
Xxxxx Xxxxxx
5.700%, 11/21/95 3,000 2,962
Toronto Dominion
5.570%, 02/01/96 2,000 1,953
Transamerica Finance Group
6.050%, 10/20/95 2,000 1,984
5.650%, 12/18/95 1,000 983
5.380%, 04/04/96 1,000 968
----------
Total Commercial Paper
(Cost $79,623) 79,623
----------
CERTIFICATES OF DEPOSIT -- 6.1%
Bank of Montreal
5.800%, 10/05/95 2,000 2,000
Commerzbank
5.780%, 09/06/95 2,000 2,000
Union Bank of Switzerland
5.820%, 02/20/96 2,000 2,000
----------
Total Certificates of Deposit
(Cost $6,000) 6,000
----------
BANKERS ACCEPTANCE -- 2.0%
Republic New York
5.600%, 01/24/96 2,000 1,955
----------
Total Bankers Acceptance
(Cost $1,955) 1,955
----------
U.S. GOVERNMENT AGENCY
OBLIGATION -- 1.0%
FHLMC
6.790%, 02/20/96 1,000 1,000
----------
Total U.S. Government Agency
Obligation
(Cost $1,000) 1,000
----------
REPURCHASE AGREEMENTS -- 10.3%
X.X. Xxxxxx
5.83%, dated 08/31/95,
matures 09/01/95, repurchase
price $4,000,648,
(collateralized by FHLMC ARM
#420264, par value
$4,227,567, 6.243%, 07/01/34,
market value $4,080,000) 4,000 4,000
Prudential Securities 5.81%, dated 08/31/95, matures 09/01/95, repurchase
price $3,000,484, (collateralized by FNMA ARM #304032, par value $3,110,309,
6.257%, 11/01/22,
market value $3,060,000) 3,000 3,000
11
--------------------------------------------------------------------------------
----------------------------------------------------------------
Face
Description Amount (000) Value (000)
----------------------------------------------------------------
REPURCHASE AGREEMENTS -- CONTINUED
Union Bank of Switzerland 5.85%, dated 08/31/95, matures 09/01/95, repurchase
price $3,171,875, (collateralized by FHLMC ARM #420178, par value
$3,259,823, 6.394%, 06/01/20,
market value $3,252,148) $ 3,171 $ 3,171
----------
Total Repurchase Agreements
(Cost $10,171) 10,171
----------
Total Investments -- 100.4%
(Cost $98,749) 98,749
----------
OTHER ASSETS AND
LIABILITIES -- -0.4%
Other Assets and Liabilities, Net (401)
----------
Total Other Assets and Liabilities (401)
----------
NET ASSETS:
Portfolio shares of the
Institutional Class
(unlimited
authorization -- no par
value) based on 98,346,838
outstanding shares of
beneficial interest 98,346
Net realized gain on investments 2
----------
Total Net Assets: -- 100.0% $ 98,348
=========
Net Asset Value, Offering Price and
Redemption Price Per Share $ 1.00
=========
ARM Adjustable Rate Mortgage
FHLMC Federal Home Loan Mortgage Corporation
FNMA Federal National Mortgage Association
INTERMEDIATE-TERM
GOVERNMENT SECURITIES FUND
U. S. TREASURY OBLIGATIONS -- 74.7%
United States Treasury Notes
4.250%, 11/30/95 $ 800 $ 798
4.625%, 02/15/96 3,000 2,987
7.500%, 02/29/96 4,000 4,037
7.875%, 06/30/96 8,000 8,140
6.125%, 07/31/96 3,000 3,011
6.500%, 11/30/96 2,000 2,018
6.125%, 12/31/96 7,000 7,038
8.000%, 01/15/97 5,200 5,353
6.250%, 01/31/97 2,000 2,013
6.500%, 05/15/97 3,000 3,032
6.000%, 08/31/97 5,500 5,513
7.875%, 04/15/98 1,700 1,779
7.500%, 10/31/99 10,000 10,520
6.375%, 01/15/00 2,500 2,529
8.500%, 11/15/00 1,300 1,438
7.500%, 05/15/02 4,000 4,290
----------------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------------
6.375%, 08/15/02 2,000 2,018
7.250%, 05/15/04 $ 4,000 $ 4,243
7.875%, 11/15/04 3,500 3,868
7.500%, 02/15/05 4,250 4,597
----------
Total U. S. Treasury Obligations
(Cost $77,792) 79,222
----------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 5.5%
FHLMC 1666-C
5.600%, 02/15/13 5,000 4,881
United States Department of
Veteran Affairs 1992-2C
7.000%, 05/15/12 1,000 996
----------
Total Collateralized Mortgage
Obligations (Cost $6,008) 5,877
----------
U.S. GOVERNMENT AGENCY
OBLIGATIONS -- 16.8%
Federal Agriculture Mortgage
Corporation
6.440%, 05/28/96 2,100 2,110
Federal Home Loan Bank
8.600%, 01/25/00 1,300 1,417
Federal National Mortgage
Association
6.850%, 05/26/00 5,000 5,051
7.500%, 02/11/02 2,000 2,112
7.875%, 02/24/05 2,000 2,181
Student Loan Marketing
Association, callable
03/08/97 @ 100
7.670%, 03/08/00 2,000 2,036
Tennessee Valley Authority
6.375%, 06/15/05 2,000 1,980
World Bank
8.375%, 10/01/99 900 966
----------
Total U.S. Government Agency
Obligations
(Cost $17,393) 17,853
----------
REPURCHASE AGREEMENT -- 1.9%
Union Bank of Switzerland 5.85%, dated 08/31/95, matures 09/01/95, repurchase
price $1,989,843, (collateralized by FHLMC ARM #420178, par value
$2,044,646, 6.394%, 06/01/20,
market value $2,039,832) 1,990 1,990
----------
Total Repurchase Agreement
(Cost $1,990) 1,990
----------
Total Investments -- 98.9%
(Cost $103,183) 104,942
----------
OTHER ASSETS AND
LIABILITIES -- 1.1%
Other Assets and Liabilities,
Net 1,133
----------
Total Other Assets and Liabilities 1,133
----------
12
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
FFB Lexicon Funds--August 31, 1995
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND -- CONTINUED
----------------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------------
NET ASSETS:
Portfolio shares of the
Institutional Class
(unlimited authorization--no
par value) based on
10,454,398 outstanding shares
of beneficial interest $ 106,500
Portfolio shares of the
Investor Class (unlimited
authorization--no par value)
based on 879 outstanding
shares of beneficial interest 9
Accumulated net realized loss
on investments (2,193)
Net unrealized appreciation on
investments 1,759
----------
Total Net Assets: -- 100.0% $ 106,075
=========
Net Asset Value, Offering Price
and Redemption Price Per
Share -- Institutional Class $ 10.15
=========
Net Asset Value and Redemption
Price Per Share -- Investor
Class $ 10.15
=========
Maximum Offering Price Per
Share -- Investor Class
($10.15 / 95.5%) $ 10.63
=========
ARM Adjustable Rate Mortgage
FHLMC Federal Home Loan Mortgage
Corporation
FIXED INCOME FUND
U. S. TREASURY OBLIGATIONS -- 64.3%
United States Treasury Bond
7.500%, 11/15/16 $ 15,000 $ 16,267
United States Treasury Notes
4.625%, 02/29/96 6,500 6,470
5.375%, 05/31/98 2,000 1,971
6.375%, 01/15/99 11,500 11,625
6.750%, 04/30/00 6,000 6,154
6.375%, 08/15/02 7,000 7,064
5.750%, 08/15/03 8,000 7,732
6.500%, 05/15/05 4,500 4,558
----------
Total U. S. Treasury Obligations
(Cost $61,451) 61,841
----------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 16.9%
FHLMC 1555-PC
5.500%, 11/15/04 5,000
FHLMC 1601-PC
5.000%, 05/15/02 5,000 4,892
FHLMC REMIC G021-B4 4.800%,
11/25/08 5,000 4,870
Xxxxx Xxxxxx Trust P-3
9.000%, 10/01/12 1,578 1,620
----------
Total Collateralized Mortgage
Obligations (Cost $16,612) 16,281
----------
U.S. GOVERNMENT AGENCY
OBLIGATION -- 3.0%
Financial Assistance
8.800%, 06/10/05 2,500 2,884
----------
Total U.S. Government Agency
Obligation (Cost $2,665) 2,884
----------
YANKEE OBLIGATIONS -- 9.5%
Hydro-Quebec
8.000%, 02/01/13 3,000 3,107
KFW International
8.850%, 06/15/99 1,000 1,083
Petro Canada
8.600%, 01/15/10 800 925
Svenska Handelsbanken
8.350%, 07/15/04 1,000 1,085
8.125%, 08/15/07 2,000 2,148
Westpac
9.125%, 08/15/01 700 781
----------
Total Yankee Obligations
(Cost $8,559) 9,129
----------
CORPORATE OBLIGATIONS -- 4.3%
Deere
8.950%, 06/15/19 600 686
General Electric Capital,
Callable 12/15/96 @ 100
7.980%, 12/15/07 2,500 2,557
Xxxxxx Bancorp
9.375%, 06/01/01 800 908
----------
Total Corporate Obligations
(Cost $3,960) 4,151
----------
13
--------------------------------------------------------------------------------
----------------------------------------------------------------
Face Market
Description Amount (000) Value (000)
----------------------------------------------------------------
REPURCHASE AGREEMENT -- 1.0%
Union Bank of Switzerland 5.85%, dated 08/31/95, matures 09/01/95, repurchase
price $907,451, (collateralized by FHLMC ARM #420178, par value $932,457,
6.394%, 06/01/20, market
value $930,261) $ 907 $ 907
----------
Total Repurchase Agreement
(Cost $907) 907
----------
Total Investments -- 99.0%
(Cost $94,154) 95,193
----------
OTHER ASSETS AND
LIABILITIES -- 1.0%
Other Assets and Liabilities,
Net 928
----------
Total Other Assets and Liabilities 928
----------
NET ASSETS:
Portfolio shares of the
Institutional Class
(unlimited
authorization -- no par
value) based on 9,321,344
outstanding shares of
beneficial interest 95,663
Portfolio shares of the
Investor Class (unlimited
authorization -- no par
value) based on 15,566
outstanding shares of
beneficial interest 161
Accumulated net realized loss on
investments ( 742)
Net unrealized appreciation on
investments 1,039
----------
Total Net Assets: -- 100.0% $ 96,121
=========
Net Asset Value, Offering Price
and Redemption Price Per Share
--
Institutional Class $ 10.29
=========
Net Asset Value and Redemption
Price Per Share -- Investor
Class $ 10.30
=========
Maximum Offering Price Per
Share -- Investor Class
($10.30 / 95.5%) $ 10.79
=========
ARM Adjustable Rate Mortgage
FHLMC Federal Home Loan Mortgage
Corporation
REMIC Real Estate Mortgage
Investment Conduit
----------------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------------
CAPITAL APPRECIATION
EQUITY FUND
COMMON STOCK -- 98.3%
AGRICULTURE -- 1.6%
Pioneer Hi-Bred International 59,000 2,537
----------
Total Agriculture 2,537
----------
AUTOMOTIVE -- 2.9%
Xxxxxxx 65,500 2,162
Magna International, Class A 50,500 2,260
----------
Total Automotive 4,422
----------
BANKS -- 3.1%
Norwest 79,700 2,401
Xxxxx Fargo 12,800 2,386
----------
Total Banks 4,787
----------
BUILDING & CONSTRUCTION -- 1.5%
Medusa 82,500 2,269
----------
Total Building & Construction 2,269
----------
CHEMICALS -- 3.2%
E.I. Du Pont De Nemours 44,500 2,909
Praxair 73,000 1,898
----------
Total Chemicals 4,807
----------
COMMUNICATIONS EQUIPMENT -- 2.6%
DSC Communications* 49,000 2,573
Ultratech Stepper* 37,500 1,481
----------
Total Communications Equipment 4,054
----------
COMPUTERS & SERVICES -- 16.5%
3Com* 70,000 2,730
Adaptec* 60,000 2,550
Applied Materials* 28,000 2,912
Cisco Systems* 45,000 2,953
Dell Computer* 44,000 3,387
EMC* 92,000 1,886
HBO 44,000 2,420
Intel 34,000 2,087
Medic Computer Sytems* 44,000 1,936
Oracle* 63,000 2,528
----------
Total Computers & Services 25,389
----------
ELECTRICAL SERVICES -- 1.6%
Belden 89,000 2,470
----------
Total Electrical Services 2,470
----------
ELECTRONICS -- 6.2%
Input/Output* 59,000 2,198
Xxx Research* 29,300 1,765
LSI Logic* 57,000 2,807
Micron Technology 36,000 2,768
----------
Total Electronics 9,538
----------
14
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
FFB Lexicon Funds--August 31, 1995
CAPITAL APPRECIATION EQUITY FUND -- CONTINUED
----------------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------------
ENTERTAINMENT -- 4.3%
Carnival Cruise Lines, Class A 108,000 $ 2,349
Mattel 82,000 2,378
Xxxx Disney 35,000 1,964
----------
Total Entertainment 6,691
----------
FINANCIAL SERVICES -- 4.4%
Federal National Mortgage
Association 24,500 2,337
Reuters Holdings PLC ADR 36,000 1,886
X. Xxxx Price & Associates 55,000 2,612
----------
Total Financial Services 6,835
----------
FOOD, BEVERAGE & TOBACCO -- 7.7%
Xxxxxxxx Soup 40,000 1,830
Coca Cola 37,000 2,377
Kellogg 34,000 2,295
Xxxxxx Xxxxxx 44,000 3,284
UST 77,000 2,098
----------
Total Food, Beverage & Tobacco 11,884
----------
HOUSEHOLD PRODUCTS -- 3.1%
Colgate Palmolive 40,000 2,719
Xxxxxxxx 49,000 2,046
----------
Total Household Products 4,765
----------
LUMBER & WOOD PRODUCTS -- 1.7%
Xxxxxxx Homes 113,000 2,670
----------
Total Lumber & Wood Products 2,670
----------
MACHINERY -- 4.2%
Agco 38,000 1,848
Dover 33,000 2,631
General Electric 35,100 2,067
----------
Total Machinery 6,546
----------
MEASURING DEVICES -- 2.9%
KLA Instruments* 22,000 1,881
Thermo Electron* 59,300 2,557
----------
Total Measuring Devices 4,438
==========
MEDICAL PRODUCTS & SERVICES -- 6.1%
Health Management Associates,
Class A* 68,000 2,278
HEALTHSOUTH Rehabilitation* 103,000 2,433
Lincare Holdings* 104,000 3,107
Vencor* 56,000 1,659
----------
Total Medical Products & Services 9,477
----------
MOTORCYCLES, BICYCLES &
PARTS -- 1.4%
Harley-Davidson 79,000 2,192
----------
Total Motorcycles, Bicycles & Parts 2,192
----------
----------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
----------------------------------------------------------------
PHARMACEUTICALS -- 9.8%
Xxxxxx Laboratories 62,000 $ 2,403
Amgen* 62,000 2,968
Pfizer 44,600 2,202
Schering Plough 45,000 2,098
Sybron International* 74,000 3,034
Teva Pharmaceutical ADR 66,000 2,500
----------
Total Pharmaceuticals 15,205
----------
RAILROADS -- 1.5%
Illinois Central 60,000 2,303
----------
Total Railroads 2,303
----------
RETAIL -- 4.8%
Gymboree* 100,000 2,974
Xxxx'x Companies 57,700 1,919
Micro Warehouse* 53,000 2,531
----------
Total Retail 7,424
----------
STEEL & STEEL WORKS -- 1.2%
Nucor 39,000 1,911
----------
Total Steel & Steel Works 1,911
----------
TELEPHONE &
TELECOMMUNICATION -- 6.0%
Aspect Telecommunications* 47,000 2,244
AT&T 35,000 1,978
Equifax 66,500 2,585
MCI Communications 103,000 2,478
----------
Total Telephone & Telecommunication 9,285
----------
Total Common Stock
(Cost $121,799) 151,899
-----------
REPURCHASE AGREEMENT -- 1.4%
Union Bank of Switzerland 5.85%, dated 08/31/95, matures 09/01/95, repurchase
price $2,146,269, (collateralized by FHLMC ARM #420178, par value
$2,205,291, 6.394%, 06/01/20,
market value $2,200,099) $ 2,146 2,146
----------
Total Repurchase Agreement
(Cost $2,146) 2,146
----------
Total Investments -- 99.7%
(Cost $123,945) 154,045
----------
OTHER ASSETS AND LIABILITIES -- 0.3%
Other Assets and Liabilities, Net 447
----------
Total Other Assets and Liabilities 447
----------
15
--------------------------------------------------------------------------------
----------------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------------
NET ASSETS:
Portfolio shares of the
Institutional Class
(unlimited authorization --
no par value) based on
11,396,346 outstanding shares
of beneficial interest $ 113,584
Portfolio shares of the
Investor Class (unlimited
authorization -- no par
value) based on 4,485
outstanding shares of
beneficial interest 57
Undistributed net realized gain
on investments 10,751
Net unrealized appreciation on
investments 30,100
---------
Total Net Assets: -- 100.0% $ 154,492
=========
Net Asset Value, Offering Price
and Redemption Price Per
Share -- Institutional Class $ 13.55
=========
Net Asset Value and Redemption
Price Per Share -- Investor Class $ 13.55
=========
Maximum Offering Price Per
Share -- Investor Class
($13.55 / 95.5%) $ 14.19
=========
* Non-income producing
security
ADR American Depository Receipt
ARM Adjustable Rate Mortgage
FHLMC Federal Home Loan Mortgage
Corporation
PLC Public Limited Company
SELECT VALUE FUND
COMMON STOCK -- 94.9%
AIRCRAFT -- 2.0%
XxXxxxxxx Xxxxxxx 21,600 $ 1,733
----------
Total Aircraft 1,733
----------
APPAREL/TEXTILES -- 0.7%
V F 10,909 597
----------
Total Apparel/Textiles 597
----------
AUTOMOTIVE -- 3.9%
Ford Motor 111,100 3,402
----------
Total Automotive 3,402
----------
BANKS -- 11.6%
Baybanks 15,000 1,204
Chemical Banking 45,300 2,639
Citicorp 51,900 3,445
UJB Financial 21,630 749
Xxxxx Fargo 10,950 2,041
----------
Total Banks 10,078
----------
BUILDING & CONSTRUCTION -- 2.0%
Empresas ICA ADR 141,050 1,693
----------
Total Building & Construction 1,693
----------
CHEMICALS -- 5.5%
Monsanto 22,600 2,144
Union Carbide 74,800 2,656
----------
Total Chemicals 4,800
----------
COMMUNICATIONS EQUIPMENT -- 9.8%
X.X. Ericsson Telephone ADR 104,000 2,223
Motorola 30,000 2,243
Philips Electronics ADR* 90,300 4,063
----------
Total Communications Equipment 8,529
----------
COMPUTERS & SERVICES -- 2.7%
Advanced Micro Devices* 24,200 817
Intel 25,000 1,534
----------
Total Computers & Services 2,351
----------
ELECTRICAL SERVICES -- 5.2%
Houston Industries 12,500 530
Montana Power 94,700 2,083
Pacificorp 103,300 1,872
----------
Total Electrical Services 4,485
----------
ENVIRONMENTAL SERVICES -- 0.0%
Attwoods Contingent
PLC -- Warrants* 40,382 0
----------
Total Environmental Services 0
----------
FINANCIAL SERVICES -- 4.0%
Salomon 89,750 3,444
----------
Total Financial Services 3,444
----------
FOOD, BEVERAGE & TOBACCO -- 6.6%
Xxxxxxxx Brands International 111,268 1,753
Xxxxxx Xxxxxx 53,500 3,992
----------
Total Food, Beverage & Tobacco 5,744
----------
INSURANCE -- 4.9%
American Financial Group 85,649 2,644
Loews 12,450 1,636
----------
Total Insurance 4,280
----------
LEASING & RENTING -- 3.4%
Comdisco 98,000 2,989
----------
Total Leasing & Renting 2,989
----------
MEDICAL PRODUCTS & SERVICES -- 3.7%
Sun Healthcare Group* 217,300 3,178
----------
Total Medical Products & Services 3,178
----------
METALS & MINING -- 3.9%
Cyprus AMAX Minerals 26,000 728
Potash of Saskatchewan 46,400 2,639
----------
Total Metals & Mining 3,367
----------
MISCELLANEOUS BUSINESS
SERVICES -- 2.1%
Banyan Systems* 156,200 1,855
----------
Total Miscellaneous Business
Services 1,855
----------
16
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
FFB Lexicon Funds--August 31, 1995
SELECT VALUE FUND -- CONTINUED
----------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
----------------------------------------------------------------
PETROLEUM & FUEL PRODUCTS -- 3.6%
YPF Sociedad Anonima, ADR 177,700 $ 3,132
----------
Total Petroleum & Fuel Products 3,132
----------
PETROLEUM REFINING -- 3.7%
Amoco 27,100 1,728
Mobil 15,500 1,476
----------
Total Petroleum Refining 3,204
----------
PHOTOGRAPHIC EQUIPMENT &
SUPPLIES -- 2.0%
Xxxxxxx Kodak 29,900 1,723
----------
Total Photographic Equipment &
Supplies 1,723
----------
TELEPHONES &
TELECOMMUNICATION -- 10.0%
BCE 50,000 1,606
Comsat 164,100 3,816
Telefonos De Mexico, ADR 100,500 3,291
----------
Total Telephones & Telecommunication 8,713
----------
TRUCKING -- 0.9%
Pittston Services Group 30,000 761
----------
Total Trucking 761
----------
WHOLESALE -- 2.7%
Universal -- Virginia 103,500 2,329
----------
Total Wholesale 2,329
----------
Total Common Stock
(Cost $71,387) 82,387
----------
REPURCHASE AGREEMENT -- 7.4%
Union Bank of Switzerland 5.85%, dated 08/31/95, matures 09/01/95, repurchase
price $6,469,098, (collateralized by FHLMC ARM #420178, par value
$6,647,287, 6.394%, 06/01/20,
market value $6,631,638) $ 6,468 6,468
----------
Total Repurchase Agreement
(Cost $6,468) 6,468
----------
Total Investments -- 102.3%
(Cost $77,856) 88,856
----------
OTHER ASSETS AND
LIABILITIES -- -2.3%
Other Assets and Liabilities,
Net (2,003)
----------
TOTAL OTHER ASSETS AND LIABILITIES (2,003)
----------
NET ASSETS:
Portfolio shares of the
Institutional Class
(unlimited
authorization -- no par
value) based on 6,227,290
outstanding shares of
beneficial interest 69,315
----------------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------------
Portfolio shares of the
Investor Class (unlimited
authorization -- no par
value) based on 11,471
outstanding shares of
beneficial interest $ 154
Undistributed net realized
gain on investments 6,384
Net unrealized appreciation
on investments 11,000
----------
Total Net Assets: -- 100.0% $ 86,853
=========
Net Asset Value, Offering Price
and Redemption Price Per
Share -- Institutional Class $ 13.92
=========
Net Asset Value and Redemption
Price Per Share -- Investor
Class $ 13.92
=========
Maximum Offering Price Per
Share -- Investor Class
($13.92 / 95.5%) $ 14.58
=========
* Non-income producing
security
ADR American Depository Receipt
ARM Adjustable Rate Mortgage
FHLMC Federal Home Loan Mortgage
Corporation
PLC Public Limited Company
SMALL COMPANY
GROWTH FUND
COMMON STOCK -- 95.5%
AEROSPACE & DEFENSE -- 1.5%
Xxxxxxx Xxxxxxx 8,200 412
----------
Total Aerospace & Defense 412
----------
AUTOMOTIVE -- 2.4%
Superior Industries
International 10,100 299
Titan Wheel International 12,600 337
----------
Total Automotive 636
----------
BANKS -- 10.5%
Baybanks 4,200 337
Compass Bancshares 12,800 381
Xxxxxx Xxxxx Bankers 7,400 340
Firstier Financial 9,200 357
Xxxx Xxxxx Bancshares 10,400 364
Union Planters 11,400 338
Wilmington Trust 11,800 360
Zions Bancorporation 6,400 354
----------
Total Banks 2,831
----------
CHEMICALS -- 1.2%
OM Group 11,000 330
----------
Total Chemicals 330
----------
17
--------------------------------------------------------------------------------
----------------------------------------------------------------
Market
Description Shares Value (000)
----------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 5.0%
Black Box* 19,000 $ 314
Checkpoint Systems 13,000 312
Spectrian* 8,400 388
Ultratech Stepper* 8,000 316
----------
Total Communications Equipment 1,330
----------
COMPUTERS & SERVICES -- 2.1%
Input/Output* 9,000 335
Proxima* 12,000 224
----------
Total Computers & Services 559
----------
DRUGS -- 2.3%
North American Biological* 31,000 283
Sybron International* 8,400 344
----------
Total Drugs 627
----------
ELECTRICAL SERVICES -- 1.3%
Sierra Pacific Resources 16,000 344
----------
Total Electrical Services 344
----------
ENVIRONMENTAL SERVICES -- 1.0%
Newpark Resources* 14,600 270
----------
Total Environmental Services 270
----------
FINANCIAL SERVICES -- 1.6%
X. Xxxx Price & Associates 9,000 428
----------
Total Financial Services 428
----------
FOOD, BEVERAGE & TOBACCO -- 1.3%
Xxxxxxxx Brands International 22,200 350
----------
Total Food, Beverage & Tobacco 350
----------
INSURANCE -- 5.3%
Equitable of Iowa 10,500 391
Pacific Physician Services* 16,200 284
Penncorp Financial Group 16,600 378
Reliastar Financial 9,800 372
----------
Total Insurance 1,425
----------
LEASING & RENTING -- 1.2%
Comdisco 10,600 323
----------
Total Leasing & Renting 323
----------
LUMBER & WOOD PRODUCTS -- 2.5%
Xxxxxxx Homes 15,000 354
Ply-Gem 17,000 319
----------
Total Lumber & Wood Products 673
----------
MACHINERY -- 5.2%
Agco 8,000 388
Xxxxxx And Xxxxxxxx 8,200 311
Indresco* 23,200 389
Zebra Technology* 5,400 315
----------
Total Machinery 1,403
----------
MEDICAL PRODUCTS & SERVICES -- 9.8%
FHP International* 11,000 272
HEALTHSOUTH Rehabilitation* 16,800 397
Lincare Holdings* 10,400 311
Medisense* 13,000 309
Renal Treatment Centers* 12,200 397
Respironics* 22,200 394
Spacelabs Medical* 13,600 355
Sun Healthcare Group* 12,200 178
----------
Total Medical Products & Services 2,613
----------
METALS & MINING -- 2.5%
Cleveland-Cliffs 7,800 353
Vigoro 7,400 326
----------
Total Metals & Mining 679
----------
MISCELLANEOUS BUSINESS
SERVICES -- 9.4%
Banyan Systems* 20,000 238
Cerner 10,400 356
Davidson & Associates* 7,600 390
Electronic Arts* 7,600 289
Frame Technology* 12,000 317
Health Management Systems* 10,400 320
Medic Computer Sytems* 7,200 317
Wackenhut Corrections* 14,400 283
----------
Total Miscellaneous Business
Services 2,510
----------
MISCELLANEOUS MANUFACTURING -- 1.1%
Xxxxxx 11,000 305
----------
Total Miscellaneous Manufacturing 305
----------
OIL & GAS EQUIPMENT -- 1.1%
Global Industries* 13,800 307
----------
Total Oil & Gas Equipment 307
----------
PETROLEUM REFINING -- 1.0%
Total Petroleum of North
America 24,600 271
----------
Total Petroleum Refining 271
----------
PRINTING & PUBLISHING -- 1.3%
Medusa 12,800 352
----------
Total Printing & Publishing 352
----------
PROFESSIONAL SERVICES -- 1.5%
Health Management Associates,
Class A* 11,800 395
----------
Total Professional Services 395
----------
REAL ESTATE INVESTMENT TRUST -- 3.6%
Avalon Properties 16,000 324
CBL And Associates Properties 15,800 348
Health And Retirement Property
Trust 19,600 301
----------
Total Real Estate Investment
Trust 973
----------
RETAIL -- 4.1%
Gymboree* 12,000 357
Micro Warehouse* 9,000 430
Waban* 16,200 306
----------
Total Retail 1,093
----------
18
STATEMENT OF NET ASSETS
--------------------------------------------------------------------------------
FFB Lexicon Funds--August 31, 1995
SMALL COMPANY GROWTH FUND -- CONTINUED
----------------------------------------------------------------
Shares/Face Market
Description Amount (000) Value (000)
----------------------------------------------------------------
RUBBER & PLASTIC -- 1.3%
Xxxx XX Industries 15,750 $ 350
----------
Total Rubber & Plastic 350
----------
SEMI-CONDUCTORS/INSTRUMENTS -- 2.5%
Xxxxx 15,200 334
Three-Five Systems* 10,800 323
----------
Total Semi-Conductors/Instruments 657
----------
SPORTING AND ATHLETIC GOODS -- 1.3%
Callaway Golf 21,600 335
----------
Total Sporting and Athletic Goods 335
----------
TELEPHONES &
TELECOMMUNICATION -- 3.7%
Aspect Telecommunications* 7,000 334
Cellular Communications of
Puerto Rico 9,200 283
Comsat 15,600 363
----------
Total Telephones &
Telecommunication 980
----------
TRUCKING -- 2.6%
Pittston Services Group 13,000 330
Wabash National 9,800 358
----------
Total Trucking 688
----------
WHOLESALE -- 4.3%
FTP Software* 11,400 265
Xxxxxxxxx 26,400 251
Terra Industries 24,000 321
Universal-Virginia 13,600 306
----------
Total Wholesale 1,143
----------
Total Common Stock
(Cost $21,857) 25,592
----------
REPURCHASE AGREEMENT -- 4.2%
Union Bank of Switzerland 5.85%, dated 08/31/95, matures 09/01/95, repurchase
price $1,125,907, (collateralized by FHLMC ARM #420178, par value
$1,155,929, 6.394%, 06/01/20, market value
$1,153,207) $ 1,125 1,125
----------
Total Repurchase Agreement
(Cost $1,125) 1,125
----------
Total Investments -- 99.7%
(Cost $22,982) 26,717
----------
----------------------------------------------------------------
Market
Description Value (000)
----------------------------------------------------------------
OTHER ASSETS AND LIABILITIES -- 0.3%
Other Assets and Liabilities,
Net $ 82
----------
Total Other Assets and
Liabilities 82
----------
NET ASSETS:
Portfolio shares of the
Institutional Class
(unlimited
authorization -- no par
value) based on 1,987,456
outstanding shares of
beneficial interest 20,539
Portfolio shares of the
Investor Class (unlimited
authorization -- no par
value) based on 4,365 outstanding
shares of beneficial interest 52
Undistributed net realized gain
on investments 2,473
Net unrealized appreciation on
investments 3,735
---------
Total Net Assets: -- 100.0% $ 26,799
=========
Net Asset Value, Offering Price
and Redemption Price Per
Share -- Institutional Class $ 13.45
=========
Net Asset Value and Redemption
Price Per Share -- Investor
Class $ 13.46
=========
Maximum Offering Price Per
Share -- Investor Class
($13.46 / 95.5%) $ 14.09
=========
* Non-income producing
security
ARM Adjustable Rate Mortgage
FHLMC Federal Home Loan Mortgage
Corporation
The accompanying notes are an integral part of the financial statements.
19
[THIS PAGE INTENTIONALLY LEFT BLANK]
20
STATEMENT OF OPERATIONS (000)
--------------------------------------------------------------------------------
FFB Lexicon Funds--for the period ended August 31, 1995
----------
CASH
MANAGEMENT
FUND
----------
09/01/94
to
08/31/95
----------
Dividend Income $ --
Interest Income 6,350
------
Total Investment Income 6,350
------
EXPENSES:
Administrator Fee 189
Investment Advisory/Custodian Fee 445
Waiver of Investment Advisory/Custodian Fee (44)
Professional Fees 26
Trustee Fees 6
Registration Fees 7
Printing Fees 37
Insurance and Other Fees 3
Pricing Expense 1
Distribution Fees--12b-1 --
Distribution Fees Waived --
Amortization of Deferred Organizational Costs 3
------
Total Expenses 673
------
NET INVESTMENT INCOME 5,677
------
Net Realized Gain (Loss) on Securities Sold --
Net Unrealized Appreciation of Investment Securities --
------
Net Realized and Unrealized Gain on Investments --
------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $5,677
======
Amounts designated as "--" are either $0 or have been rounded to $0.
Distribution Fees are incurred at the Investor Class level.
The accompanying notes are an integral part of the financial statements.
21
--------------------------------------------------------------------------------
----------------- ----------- ------------ ----------- -----------
INTERMEDIATE-TERM CAPITAL SMALL
GOVERNMENT FIXED APPRECIATION SELECT COMPANY
SECURITIES INCOME EQUITY VALUE GROWTH
FUND FUND FUND FUND FUND
----------------- ----------- ------------ ----------- -----------
09/01/94 09/01/94 09/01/94 09/01/94 09/01/94
to 08/31/95 to 08/31/95 to 08/31/95 to 08/31/95 to 08/31/95
----------------- ----------- ------------ ----------- -----------
$ -- $ -- $ 2,010 $ 1,821 $ 281
6,589 5,740 346 315 84
------- ------ ------- ------- ------
6,589 5,740 2,356 2,136 365
------- ------ ------- ------- ------
180 154 235 115 40
634 545 1,035 506 177
(145) (128) (271) (123) (77)
25 21 37 22 7
5 4 7 3 --
7 5 11 5 3
23 21 30 17 5
2 2 3 1 1
4 3 5 2 1
-- -- -- -- --
-- -- -- -- --
3 3 3 3 3
------- ------ ------- ------- ------
738 630 1,095 551 160
------- ------ ------- ------- ------
5,851 5,110 1,261 1,585 205
------- ------ ------- ------- ------
(1,236) (742) 12,267 6,774 3,089
3,612 4,454 12,478 8,160 960
------- ------ ------- ------- ------
2,376 3,712 24,745 14,934 4,049
------- ------ ------- ------- ------
$ 8,227 $8,822 $26,006 $16,519 $4,254
======= ====== ======= ======= ======
22
STATEMENT OF CHANGES IN NET ASSETS (000)
--------------------------------------------------------------------------------
FFB Lexicon Funds
-------------------------
CASH
MANAGEMENT
FUND
-------------------------
09/01/94 09/01/93
to 08/31/95 to 08/31/94
-------------------------
OPERATIONS:
Net Investment Income $ 5,677 $ 2,729
Net Realized Gain (Loss) on Securities Sold -- --
Net Unrealized Appreciation (Depreciation) of Investments -- --
--------- ---------
Increase (Decrease) in Net Assets Resulting from Operations 5,677 2,729
--------- ---------
DISTRIBUTIONS TO SHAREHOLDERS:
Net Investment Income:
Institutional Class (5,677) (2,729)
Investor Class -- --
Net Realized Gains:
Institutional Class -- --
Investor Class -- --
--------- ---------
Total Distributions (5,677) (2,729)
CAPITAL TRANSACTIONS:
Institutional Class:
Proceeds from Shares Issued 317,861 360,618
Reinvestment of Cash Distributions -- --
Cost of Shares Repurchased (355,200) (275,228)
--------- ---------
Increase (Decrease) in Net Assets Derived from Institutional Class Transactions (37,339) 85,390
Investor Class:
Proceeds from Shares Issued -- --
Reinvestment of Cash Distributions -- --
Cost of Shares Repurchased -- --
--------- ---------
Increase in Net Assets Derived from Investor Class Transactions -- --
--------- ---------
Increase (Decrease) in Net Assets Derived from Capital Transactions (37,339) 85,390
--------- ---------
Net Increase (Decrease) in Net Assets (37,339) 85,390
--------- ---------
NET ASSETS:
Beginning of Period 135,687 50,297
--------- ---------
End of Period $ 98,348 $ 135,687
========= =========
SHARE TRANSACTIONS:
Institutional Class:
Shares Issued 317,861 360,618
Shares Issued in Lieu of Cash Distributions -- --
Shares Repurchased (355,200) (275,228)
---------- ----------
Total Institutional Class Transactions (37,339) 85,390
Investor Class:
Shares Issued -- --
Shares Issued in Lieu of Cash Distributions -- --
Shares Repurchased -- --
---------- ----------
Total Investor Class Transactions -- --
---------- ----------
Increase (Decrease) in Capital Shares (37,339) 85,390
---------- ----------
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
23
--------------------------------------------------------------------------------
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
INTERMEDIATE-TERM CAPITAL SMALL
GOVERNMENT FIXED APPRECIATION SELECT COMPANY
SECURITIES INCOME EQUITY VALUE GROWTH
FUND FUND FUND FUND FUND
----------------------- ----------------------- ----------------------- ----------------------- -----------------------
09/01/94 09/01/93 09/01/94 09/01/93 09/01/94 09/01/93 09/01/94 09/01/93 09/01/94 09/01/93
to 08/31/95 to 08/31/94 to 08/31/95 to 08/31/94 to 08/31/95 to 08/31/94 to 08/31/95 to 08/31/94 to 08/31/95 to 08/31/94
----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------
$ 5,851 $ 6,163 $ 5,110 $ 5,007 $ 1,261 $ 2,200 $ 1,585 $ 733 $ 205 $ 163
(1,236) (935) (742) 1,030 12,267 800 6,774 3,574 3,089 (103)
3,612 (6,583) 4,454 (9,057) 12,478 1,736 8,160 (1,240) 960 (640)
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
8,227 (1,355) 8,822 (3,020) 26,006 4,736 16,519 3,067 4,254 (580)
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
(5,850) (6,163) (5,105) (5,008) (1,262) (2,211) (1,584) (733) (206) (164)
-- -- (2) -- -- -- (1) -- -- --
(11) (580) (402) (1,744) (2,315) (1,930) (3,246) (951) -- --
-- -- -- -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
(5,861) (6,743) (5,509) (6,752) (3,577) (4,141) (4,831) (1,684) (206) (164)
19,834 27,243 16,023 32,873 17,125 32,576 32,761 24,452 3,904 7,547
5,214 6,200 4,955 6,340 3,497 4,116 4,569 1,645 198 162
(27,796) (38,069) (20,055) (24,609) (32,823) (35,892) (9,196) (11,452) (4,585) (5,732)
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
(2,748) (4,626) 923 14,604 (12,201) 800 28,134 14,645 (483) 1,977
9 -- 256 -- 57 -- 159 -- 52 --
-- -- 2 -- -- -- -- -- -- --
-- -- (97) -- -- -- (5) -- -- --
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
9 -- 161 -- 57 -- 154 -- 52 --
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
(2,739) (4,626) 1,084 14,604 (12,144) 800 28,288 14,645 (431) 1,977
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
(373) (12,724) 4,397 4,832 10,285 1,395 39,976 16,028 3,617 1,233
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
106,448 119,172 91,724 86,892 144,207 142,812 46,877 30,849 23,182 21,949
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
$106,075 $106,448 $ 96,121 $ 91,724 $154,492 $144,207 $86,853 $ 46,877 $26,799 $23,182
======== ======== ======== ======== ======== ======== ======= ======== ======= =======
1,999 2,638 1,605 3,114 1,459 2,838 2,697 2,094 339 644
526 606 499 609 326 360 403 143 17 14
(2,799) (3,746) (2,018) (2,394) (2,822) (3,174) (726) (988) (406) (502)
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
(274) (502) 86 1,329 (1,037) 24 2,374 1,249 (50) 156
1 -- 25 -- 4 -- 11 -- 4 --
-- -- -- -- -- -- -- -- -- --
-- -- (9) -- -- -- -- -- -- --
-------- -------- -------- -------- -------- -------- ------- -------- ------- -------
1 -- 16 -- 4 -- 11 -- 4 --
-------- -------- -------- -------- -------- --------- ------- -------- ------- -------
(273) (502) 102 1,329 (1,033) 24 2,385 1,249 (46) 156
-------- -------- -------- -------- -------- --------- ------- -------- ------- -------
24
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
FFB Lexicon Funds--For the period ending August 31, 1995
For a Share Outstanding Throughout the Period
Net Asset Net Realized and Dividends Distributions
Value Net Unrealized from Net from Net Asset
Beginning Investment Gains (Losses) Investment Realized Value End Total
of Period Income on Investments Income Capital Gains of Period Return
---------------------------------------------------------------------------------------------------------------------
----------------------------
CASH MANAGEMENT FUND
----------------------------
1995 $ 1.00 $ 0.05 -- $(0.05) -- $ 1.00 5.27%
1994 1.00 0.03 -- (0.03) -- 1.00 3.13%
1993 1.00 0.03 -- (0.03) -- 1.00 2.79%
1992(1) 1.00 0.03 -- (0.03) -- 1.00 3.83%*
-------------------------------------------------------
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
-------------------------------------------------------
INSTITUTIONAL CLASS
1995 $ 9.92 $ 0.55 $ 0.23 $(0.55) $ -- $ 10.15 8.16%
1994 10.61 0.54 (0.64) (0.54) (0.05) 9.92 (0.99)%
1993 10.41 0.57 0.24 (0.58) (0.03) 10.61 8.03%
1992(2) 10.00 0.48 0.40 (0.47) -- 10.41 10.88%*
INVESTOR CLASS
1995(4) 9.95 0.19 0.20 (0.19) -- 10.15 3.90%
----------------------
FIXED INCOME FUND
----------------------
INSTITUTIONAL CLASS
1995 $ 9.93 $ 0.56 $ 0.40 $(0.56) $ (0.04) $ 10.29 10.13%
1994 10.99 0.55 (0.86) (0.55) (0.20) 9.93 (2.92)%
1993 10.56 0.63 0.66 (0.64) (0.22) 10.99 12.90%
1992(2) 10.00 0.55 0.55 (0.54) -- 10.56 13.59%*
INVESTOR CLASS
1995(4) 9.98 0.18 0.33 (0.19) -- 10.30 5.17%
---------------------------------------
CAPITAL APPRECIATION EQUITY FUND
---------------------------------------
INSTITUTIONAL CLASS
1995 $ 11.60 $ 0.11 $ 2.14 $(0.11) $ (0.19) $ 13.55 20.11%
1994 11.51 0.17 0.24 (0.17) (0.15) 11.60 3.62%
1993 10.34 0.18 1.17 (0.18) -- 11.51 13.17%
1992(2) 10.00 0.17 0.33 (0.16) -- 10.34 6.09%*
INVESTOR CLASS
1995(4) 11.63 0.01 1.92 (0.01) -- 13.55 16.63%
---------------------
SELECT VALUE FUND
---------------------
INSTITUTIONAL CLASS
1995 $ 12.17 $ 0.29 $ 2.39 $(0.29) $ (0.64) $ 13.92 23.95%
1994 11.85 0.22 0.68 (0.22) (0.36) 12.17 7.98%
1993(3) 10.00 0.17 1.85 (0.17) -- 11.85 24.42%*
INVESTOR CLASS
1995(4) 12.64 0.09 1.29 (0.10) -- 13.92 10.94%
-----------------------------------
SMALL COMPANY GROWTH FUND
-----------------------------------
INSTITUTIONAL CLASS
1995 $ 11.38 $ 0.10 $ 2.07 $(0.10) -- $ 13.45 19.23%
1994 11.66 0.08 (0.28) (0.08) -- 11.38 (1.71)%
1993(3) 10.00 0.13 1.66 (0.13) -- 11.66 21.63%*
INVESTOR CLASS
1995(4) 11.78 0.03 1.68 (0.03) -- 13.46 14.54%*
Ratio of
Ratio Net Investment
Ratio of of Expenses Income
Ratio of Net Investment to Average to Average
Net Assets Expenses Income Net Assets Net Assets Portfolio
End of to Average to Average (Excluding (Excluding Turnover
Period (000) Net Assets Net Assets Waivers) Waivers) Rate
---------------------------------------------------------------------------------------------------------------------
--------------------
CASH MANAGEMENT FUND
--------------------
1995 $ 98,348 0.61% 5.11% 0.65% 5.07% NA
1994 135,687 0.55% 3.16% 0.66% 3.05% NA
1993 50,297 0.55% 2.77% 0.61% 2.71% NA
1992(1) 77,773 0.55%* 3.76%* 0.66%* 3.65%* NA
--------------------------------------------
INTERMEDIATE-TERM GOVERNMENT SECURITIES FUND
--------------------------------------------
INSTITUTIONAL CLASS
1995 $ 106,066 0.70% 5.54% 0.84% 5.40% 44.53%
1994 106,448 0.55% 5.22% 0.82% 4.95% 44.74%
1993 119,172 0.55% 5.48% 0.83% 5.20% 30.54%
1992(2) 87,648 0.55%* 5.68%* 0.86%* 5.37%* 47.39%
INVESTOR CLASS
1995(4) 9 0.80%* 5.42%* 1.34%* 4.88%* 44.53%
-----------------
FIXED INCOME FUND
-----------------
INSTITUTIONAL CLASS
1995 $ 95,961 0.69% 5.63% 0.83% 5.49% 72.51%
1994 91,724 0.55% 5.32% 0.83% 5.04% 68.63%
1993 86,892 0.55% 5.93% 0.83% 5.65% 49.40%
1992(2) 66,695 0.55%* 6.49%* 0.86%* 6.18%* 65.03%
INVESTOR CLASS
1995(4) 160 0.80%* 5.53%* 1.38%* 4.95%* 72.51%
--------------------------------
CAPITAL APPRECIATION EQUITY FUND
--------------------------------
INSTITUTIONAL CLASS
1995 $ 154,431 0.79% 0.92% 0.99% 0.72% 139.79%
1994 144,207 0.55% 1.49% 0.98% 1.06% 41.44%
1993 142,812 0.55% 1.64% 0.97% 1.22% 54.41%
1992(2) 122,105 0.55%* 1.95%* 1.00%* 1.50%* 78.31%
INVESTOR CLASS
1995(4) 61 0.95%* 0.24%* 1.53%* (0.34)%* 139.79%
-----------------
SELECT VALUE FUND
-----------------
INSTITUTIONAL CLASS
1995 $ 86,693 0.82% 2.35% 1.00% 2.17% 55.15%
1994 46,877 0.44% 2.03% 1.02% 1.45% 80.47%
1993(3) 30,849 0.39%* 1.85%* 1.05%* 1.19%* 32.36%
INVESTOR CLASS
1995(4) 160 0.95%* 2.13%* 1.47%* 1.61%* 55.15%
-------------------------
SMALL COMPANY GROWTH FUND
-------------------------
INSTITUTIONAL CLASS
1995 $ 26,740 0.67% 0.87% 1.00% 0.54% 113.94%
1994 23,182 0.45% 0.70% 1.02% 0.13% 74.71%
1993(3) 21,949 0.43%* 1.43%* 1.06%* 0.80%* 34.88%
INVESTOR CLASS
1995(4) 59 0.75%* 0.67%* 1.48%* (0.06)%* 113.94%
(1) The Institutional Class of the Cash Management Fund commenced operations on
October 31, 1991.
(2) The Institutional Class of the Intermediate-Term Government Securities Fund,
the Fixed Income Fund and the Capital Appreciation Equity Fund commenced
operations on November 1, 1991.
(3) The Institutional Class of the Select Value Fund and the Small Company
Growth Fund commenced operations on November 2, 1992.
(4) The Investor Class of the Intermediate-Term Government Securities, the Fixed
Income, the Capital Appreciation Equity, Select Value and Small Company
Growth Funds commenced operations on May 2, 1995.
* Annualized
Amounts designated as "--" are either $0 or have been rounded to $0.
The accompanying notes are an integral part of the financial statements.
25
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
FFB Lexicon Funds--August 31, 1995
1. ORGANIZATION:
FFB Lexicon Funds (the "Trust") was organized as a Massachusetts business trust
under a Declaration of Trust dated July 24, 1991. The Trust is registered under
the Investment Company Act of 1940, as amended, as a diversified open-end
management investment company with eight portfolios: the Cash Management Fund,
the Intermediate-Term Government Securities Fund, the Fixed Income Fund, the
Select Value Fund, the Capital Appreciation Equity Fund, the Dividend Growth
Fund, the Small Company Growth Fund and the Cash Plus Fund. The financial
statements included herein present those of the Cash Management Fund, the
Intermediate-Term Government Securities Fund, the Fixed Income Fund, the Capital
Appreciation Equity Fund, the Select Value Fund, and the Small Company Growth
Fund (the "Funds"). The financial statement of the Dividend Growth Fund is
presented separately. The Cash Plus Fund had not commenced operations as of
August 31, 1995. The assets of each Fund are segregated, and a shareholder's
interest is limited to the Fund in which shares are held.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of the significant accounting policies followed by
the Trust.
Security Valuation--Investment securities held by the Cash Management Fund
are stated at amortized cost, which approximates market value. Under this
valuation method, purchase discounts and premiums are accreted and amortized
ratably to maturity and are included in interest income.
Investment securities held by the Intermediate-Term Government Securities
Fund, the Fixed Income Fund, the Capital Appreciation Equity Fund, the Select
Value Fund, and the Small Company Growth Fund which are listed on a securities
exchange for which market quotations are available are valued at the last quoted
sales price on each business day. If there is no such reported sale, these
securities are valued at the most recently quoted bid price. Unlisted securities
for which market quotations are readily available are valued at the most
recently quoted bid price. Debt obligations, with sixty days or less remaining
until maturity, may be valued at their amortized cost.
Federal Income Taxes--It is each Fund's intention to continue to qualify as
a regulated investment company for Federal income tax purposes by complying with
the appropriate provisions of the Internal Revenue Code of 1986, as amended.
Accordingly, no provisions for Federal income taxes are required.
Security Transactions and Related Income--Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date, and interest income is
recognized on the accrual basis. Costs used in determining realized gains and
losses on the sale of investment securities are those of the specific securities
sold adjusted for the accretion and amortization of purchase discounts and
premiums during the respective holding period. Purchase discounts and premiums
on securities held by the Intermediate-Term Government Securities Fund, the
Fixed Income Fund, the Capital Appreciation Equity Fund, the Select Value Fund,
and the Small Company Growth Fund are accreted and amortized to maturity using
the scientific interest method, which approximates the effective interest
method.
Repurchase Agreements--Securities pledged as collateral for repurchase
agreements are held by the custodian bank until the respective agreements
mature. Provisions of the repurchase agreements ensure that the market value of
the collateral, including accrued interest thereon, is sufficient in the event
of default of the counterparty. If the counterparty defaults and the value of
the collateral declines or if the counterparty enters an insolvency proceeding,
realization of the collateral by the Funds may be delayed or limited.
Net Asset Value Per Share--The net asset value per share of each Fund is
calculated on each business day, by dividing the total value of each Fund's
assets, less liabilities, by the number of shares outstanding. The maximum
offering price per share for the Investor shares of the Intermediate-Term
Government Securities Fund, the Fixed Income Fund, the Capital Appreciation
Equity Fund, the Select Value Fund and the Small Com-
26
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
FFB Lexicon Funds--August 31, 1995
pany Growth Fund is equal to the net asset value per share plus a sales load of
4.50%.
Distributions--Distributions from net investment income are paid to
shareholders on a monthly basis. Any net realized capital gains on sales of
securities are distributed to shareholders at least annually. Income and capital
gain distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles.
Classes--Class-specific expenses are borne by that class. Income, expenses,
and realized and unrealized gains & losses are allocated to the respective
classes on the basis of relative daily net assets.
Other--Expenses that are directly related to one of the Funds are charged
to that Fund. Other operating expenses of the Trust are prorated to the Funds on
the basis of relative daily net assets.
3. ORGANIZATION COSTS AND
TRANSACTIONS WITH AFFILIATES:
The Trust incurred organization costs of approximately $136,000. These costs
have been deferred in the accounts of the Funds and are being amortized on a
straight line basis over a period of sixty months commencing with operations.
These costs include legal fees of approximately $39,000 for organizational work
performed by a firm of which a trustee and an officer of the Trust are partners.
On September 27, 1991, the Trust sold initial shares of beneficial interest to
SEI Financial Management Corporation (the "Administrator"). In the event any of
the initial shares of the Trust are redeemed by any holder thereof during the
period that the Trust is amortizing organizational costs, the redemption
proceeds payable to the holder thereof by the Fund will be reduced by the
unamortized organizational costs in the same ratio as the number of initial
shares being redeemed bears to the number of initial shares outstanding at the
time of redemption.
Certain officers and trustees of the Trust are also officers of the
Administrator and/or SEI Financial Services Company (the "Distributor"). Such
officers and trustees are paid no fees by the Trust for serving as officers and
trustees of the Trust.
4. ADMINISTRATION AND DISTRIBUTION
AGREEMENTS:
The Trust and the Administrator are parties to an administration agreement dated
October 18, 1991, under which the Administrator provides management and
administrative services for an annual fee of .17% of the average daily net
assets of each of the Funds of the Trust.
The Trust and the Distributor are parties to a distribution agreement dated
October 18, 1991. The Distributor receives no fees for its distribution services
under this agreement.
5. INVESTMENT ADVISORY AND CUSTODIAN
AGREEMENTS:
The Trust and First Fidelity Bank, N.A., (the "Adviser") are parties to an
investment advisory agreement (the "Advisory Agreement") dated October 18, 1991
under which the Adviser receives an annual fee equal to .40% of the average
daily net assets of the Cash Management Fund, .60% of the average daily net
assets of each of the Intermediate-Term Government Securities and Fixed Income
Funds, and .75% of the average daily net assets of the Capital Appreciation
Equity Fund, the Select Value Fund, and the Small Company Growth Fund. Effective
January 27, 1995, the Adviser has voluntarily agreed for an indefinite period of
time, to waive all or a portion of its fees (and to reimburse the Funds'
expenses) in order to limit operating expenses to .80% of the average daily net
assets of the Fixed Income Fund and the Intermediate-Term Government Securities
Fund; .95% of the average daily net assets of the Capital Appreciation Equity
Fund and the Select Value Fund; and .75% of the average daily net assets of the
Small Company Growth Fund. Prior to January 27, 1995, annual operating expenses
of the Intermediate-Term Government Securities Fund, the Fixed Income Fund, the
Select Value Fund, the Capital Appreciation Equity Fund and the Small Company
Growth Fund were limited to not more than .55% of average daily net assets.
Effective September 23, 1994, the Adviser eliminated its fee waiver with respect
to the Cash Management Fund and increased operating
27
--------------------------------------------------------------------------------
expenses from .55% to .61% of the average daily net assets. Fee waivers and
expense reimbursements are voluntary and may be terminated at any time.
First Fidelity Bank, N.A., acts as custodian (the "Custodian") for the
Funds. Fees payable to the Custodian for services are included as part of the
fees under the Advisory Agreement.
6. INVESTMENT TRANSACTIONS:
The cost of security purchases and the proceeds from security sales, other than
short-term investments, for the period ended August 31, 1995, are as follows:
Intermediate-
Term Capital Small
Government Fixed Appreciation Select Company
Securities Income Equity Value Growth
Fund Fund Fund Fund Fund
(000) (000) (000) (000) (000)
-------- ------ ------- ------ ------
Purchases $ 0 $ 2,509 $186,291 $59,367 $25,631
Sales 0 731 201,147 34,499 25,435
U.S. Gov't.
Purchases 44,777 60,471 0 0 0
U.S. Gov't. Sales 46,079 62,692 0 0 0
At August 31, 1995 the total cost of securities and the net realized gains
or losses on securities sold, for Federal income tax purposes, was not
materially different from amounts reported for financial reporting purposes. The
aggregate gross unrealized appreciation and depreciation for securities held by
the Funds at August 31, 1995 is as follows:
Intermediate-
Term Capital Small
Government Fixed Appreciation Select Company
Securities Income Equity Value Growth
Fund Fund Fund Fund Fund
(000) (000) (000) (000) (000)
--------- ----- --------- ------ ------
Aggregate gross
unrealized
appreciation $1,965 $2,053 $31,310 $14,908 $4,344
Aggregate gross
unrealized
depreciation (206) (1,014) (1,210) (3,908) (609)
------ ------ ------- ------- ------
Net unrealized
appreciation $1,759 $1,039 $30,100 $11,000 $3,735
====== ====== ======= ======= ======
Subsequent to October 31, 1994, the Funds recognized net capital losses for
tax purposes that have been deferred to 1995 and can be used to offset future
capital gains at August 31, 1995. The Funds also had capital losses carryforward
at August 31, 1995, to the extent provided in the regulations for Federal income
tax as follows:
Capital loss Carryover Post 10/31/94
August 31, 1995-- Deferred
Fund Expiring 2003 Losses
---------------- ----------
Intermediate-Term
Government $955,860 $1,236,390
Securities
Fixed Income 117,850 623,727
The Small Company Growth Fund utilized its entire capital loss carryforward
balance of $429,791 which was carried over from the previous year.
The Capital Appreciation Equity Fund had wash sales in the fiscal year
ended August 31, 1995 amounting to $367,572. These wash sale losses cannot be
used for income tax purposes and are deferred.
7. CONCENTRATION OF CREDIT RISK:
The Cash Management Fund invests in a portfolio of money market instruments
maturing in 397 days or less which are rated in the highest rating category by a
nationally recognized statistical rating agency or, if not rated, are believed
to be of comparable quality. The ability of the issuers of the securities held
by the Fund to meet their obligations may be affected by economic developments
in a specific industry, state or region.
The summary of credit quality ratings for the securities held by the Cash
Management Fund at August 31, 1995 are as follows:
Standard
& Poor's
-------
US Government Securities 2.00%
Repurchase Agreements 10.30%
A-1 8.51%
A-1+ 79.19%
Portfolio breakdowns are stated as a percentage of total portfolio value.
The US Government securities represent obligations issued or guaranteed by the
US Government and its agencies or instrumentalities. Repurchase agreements are
collateralized by U.S. Government or U.S. Government agency securities.
28
NOTES TO FINANCIAL STATEMENTS (Continued)
--------------------------------------------------------------------------------
FFB Lexicon Funds--August 31, 1995
Mortgage-backed securities held in the Intermediate-Term Government
Securities Fund and Fixed Income Fund are subject to prepayment of the
underlying mortgages. During periods of declining interest rates, prepayment of
mortgages underlying these securities can result in the reinvestment in
securities yielding lower prevailing rates.
8. SUBSEQUENT EVENT:
On June 18, 1995, First Fidelity Bancorporation, the parent corporation of First
Fidelity Bank, N.A., the investment advisor to the FFB Lexicon Funds, agreed to
merge with First Union Corporation on or about January 1, 1996. Contingent upon
the merger and various other conditions, including shareholder approval, the FFB
Lexicon Family of Funds will be combined with the Evergreen Family of Funds.
Therefore, the Trustees of the FFB Lexicon Funds have called a special meeting
of shareholders of the Cash Management, Intermediate-Term Government Securities,
Fixed Income, Capital Appreciation Equity, Select Value and Small Company Growth
Funds to be held on November 21 to vote on the following proposals: Shareholders
of the Cash Management, Capital Appreciation Equity, Select Value and Small
Company Growth Funds will vote to approve or disapprove a proposed combination
of their respective Funds with investment companies in the Evergreen Family of
mutual funds which have similar investment objectives and polices. If approved
it is expected that such a combination would take place on January 19, 1996.
Shareholders of the Intermediate-Term Government Securities and Fixed Income
Funds will vote to approve or disapprove a change in the Investment Advisor from
the First Fidelity Bank, N.A. to First Union National Bank. Detailed information
about these proposed transactions are described in the Prospectus/Proxy
Statement mailed to shareholders.
29
LEX-F-017-03
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