Table of Contents
Page
Letter to Shareholders 2
Fund Performance Reviews
Bond Fund 4
Balanced Fund 6
High Income Fund 8
Growth and Income Fund 10
Capital Appreciation Fund 12
International Stock Fund 14
Family of Investments 16
Portfolios of Investments
Cash Reserves Fund 18
Bond Fund 19
Balanced Fund 20
High Income Fund 22
Growth and Income Fund 29
Capital Appreciation Fund 31
International Stock Fund 33
Financial Statements
Statements of Assets & Liabilities 38
Statements of Operations 40
Statements of Changes in Net Assets 42
Financial Highlights 45
Notes to Financial Statements 52
Letter to Shareholders
Dear Shareholder,
The six months ended April 30, 1999 provided investors with much to feel good
about and an almost equal dose of cause for concern. It proved to be a difficult
environment for bond investors and produced widely divergent returns from the
various sectors of the stock market. Fortunately, the MEMBERS Funds weathered
this difficult environment very well. For the six-month period, every MEMBERS
fund other than the International Stock Fund essentially matched or beat
representative market indexes, and all but the Capital Appreciation Fund
performed at least in line with peer group averages:
Fund, Market Index and Peer Index Six-Month Return (Not Annualized)*
Growth & Income Fund (Class A Shares) 25.01%
Representative Market (S&P 500 Index) 22.32%
Lipper Growth & Income Fund Index 17.85%
Capital Appreciation Fund (Class A Shares) 20.57%
Representative Market (S&P 400 Index) 18.85%
Lipper Capital Appreciation Fund Index 26.91%
Balanced Fund (Class A Shares) 14.32%
Representative Market (Synthetic Index) 10.23%
Lipper Balanced Fund Index 12.79%
International Stock Fund (Class A Shares) 13.52%
Representative Market (Morgan Stanley Small Cap EAFE Index) 16.55%
Lipper International Fund Index 14.05%
High Income Fund (Class A) 12.63%
Representative Market (Lehman High Yield Bond Index) 8.24%
Lipper High Yield Bond Fund Index 11.72%
Cash Reserves Fund (Class A Shares) 2.24%
Representative Market (90-Day Bill) 2.24%
Lipper Money Market Fund Index 2.28%
Bond Fund (Class A Shares) 1.47%
Representative Market (Lehman Intermediate
Govt./Corp. Bond Index) 0.51%
Lipper Short/Intermediate Investment Grade Bond Fund Index 1.10%
* Return on Class A shares assuming purchase at the beginning of the period at
net asset value.
The Growth & Income Fund's exemplary performance - substantially out-performing
both its peers and the recently very difficult-to-beat Standard & Poor's 500
Index - is especially noteworthy in view of its conservative investment
approach. This is illustrated by the fund's "beta". Beta is a measure of a
fund's volatility relative to the markets. At .91 as of April 30th, it means the
Growth & Income Fund generally fluctuates week-to-week in value approximately 9%
less than the market. This reflects our "moderated risk" investment approach
pursued in various ways in each of the MEMBERS Funds.
The more modest performance of the Capital Appreciation Fund relative to its
peers during this six-month period reflects the practice of many peer "capital
appreciation" funds of investing to varying degrees in stocks of
Internet-related and other very early-stage technology companies. These types of
stocks produced truly remarkable returns in recent months, in many cases in
spite of the issuing companies' lack of profits and, in some cases, lack of
significant revenues. With our "value" to "growth at a reasonable price" stock
selection philosophy, such unproven companies and even more established "high
expectations" stocks rarely appear in our portfolios. Their stock prices simply
appear too high relative to practical expectations. For the six months covered
by this report, this hurt the Capital Appreciation Fund's relative performance.
Our International Stock Fund also under-performed its "peers" for what we
believe are also temporary reasons (described below). Overall, however, MEMBERS
Funds performed very much as we expect relative to representative markets and
peer group averages.
Another indication of the strength of the funds' returns is the April 30th, 1999
performance rankings from Morningstar, Inc., the widely followed provider of
mutual fund data and opinions. Six-month return rankings (which would exactly
coincide with this reporting period) are not published by Morningstar, but
rankings for the twelve months ended April 30 were recently announced, and they
illustrate the extremely competitive returns provided in recent months by the
MEMBERS Funds:
MEMBERS Funds Morningstar Category Rankings*
Growth & Income 7th Balanced 14th International Stock 81st
Capital Appreciation 21st High Income 33rd Bond 12th
* Percentile ranking, from 1 (best) to 100 (worst), among similar funds within
the Morningstar universe for the twelve months ended April 30, 1999.
The International Stock Fund's current twelve-month Morningstar ranking reflects
the potential downside effects of its greater diversification than most
international stock funds. Instead of concentrating in either large companies in
developed international markets, or small companies in developed markets, or
various sized companies in emerging economies, MEMBERS International Stock Fund
maintains exposure to all of these market segments. Over time, this broad
diversification and moderate exposure to the potentially faster growing
international sectors should benefit shareholders with more stable and
ultimately higher long-term total returns. Although this has not been the case
so far in this fund's short life, returns for this twelve-month ranking period
were very near break-even (-0.18%), and were a quite acceptable 13.52% for the
last six months of the period (on Class A shares assuming purchase at net asset
value).
Even with this modestly disappointing initial performance of the International
Stock Fund, MEMBERS Funds' performance is quite unique among mutual fund groups
in that all of the MEMBERS domestic, long-term investment funds ranked within
the top one-third of their peer groups. Most were in the top quarter and one was
in the top ten percent. The MEMBERS family of funds are designed with a limited
number of distinctly different funds, a limited number to avoid unnecessary
investor confusion and the temptation to "chase recent performance" among
essentially similar funds, and distinct differences to be able to meet
investors' changing needs over time. With this approach, it is imperative that
all of the funds be consistently good performers. The above results indicate
that this very difficult goal is being achieved quite well by the CIMCO and
CIMCO-selected sub-advisor portfolio management teams.
The six months ended April 30th saw the U.S. economy continue to expand in spite
of languishing overseas economies, rising U.S. interest rates, wildly
fluctuating world commodities prices, the increasingly troublesome NATO campaign
in Kosovo, growing domestic political uncertainty, the relentless approach of
year 2000 and its attendant concerns, etc. The next six months will almost
certainly present investors with a continuation of all of these threats plus new
ones as yet unrecognized. This is the nature of investing. It is an expression
of confidence in an uncertain world. But don't mistake this for confidence in
our nation's and our investment market's ability to avoid problems. Rather, it
is recognition that challenges will occur, but accompanying this recognition is
the confidence that our nation and our companies and our citizens possess the
abilities and resources necessary to deal successfully with whatever problems
arise. This is a vote of confidence we at CIMCO are very comfortable making, and
we appreciate your vote of confidence in us as your investing partner.
Sincerely,
/s/ Lawrence R. Halverson
Lawrence R. Halverson, CFA
President
Note: MEMBERS Funds sends only one annual and semi-annual report to each
shareholder household rather than sending multiple copies to one address.
Individual personal account statements, of course, are sent for each account. If
you wish to receive additional annual or semi-annual reports, simply call
MEMBERS Funds at 1-800-877-6089. Please note the new mailing address for MEMBERS
Funds shareholder services:
MEMBERS Mutual Funds
PO Box 60569
King of Prussia, PA 19406-0569
Fund Performance Review
MEMBERS Bond Fund
Bond prices fell and interest rates rose by over one-half percentage point
across the maturity spectrum during the past six months. Five-year Treasury
bonds were particularly hard hit, rising from 4.4% to end the period at 5.2%.
Most other sectors of the fixed income markets, such as corporates and
mortgage-backed securities, also rose in yield but not nearly as much.
Prompt action by the Federal Reserve to lower interest rates in the fall
calmed the very nervous world financial markets and paved the way for a
resumption of economic growth abroad. This, coupled with strong domestic growth
and rising energy prices, has now begun to raise market concerns about a
possible rebound in inflation. While the Federal Reserve has not raised interest
rates, they have indicated a "tightening bias" going forward. The recent, but
much anticipated, resignation of highly respected Treasury Secretary Robert
Rubin has also increased the anxiety of some market participants.
In this environment bond market returns were modest at best. The MEMBERS Bond
Fund posted a 1.5% return (on Class A shares at net asset value) over the past
six months. This compares quite favorably, however, to the 0.51% return of the
Lehman Brothers Intermediate Government/Corporate Index and 1.1% return
calculated by Lipper Analytical Services for it's index of Intermediate
Investment Grade Bond mutual funds for the same six month period. The MEMBERS
Bond Fund's heavier concentration in "spread product" (i.e., non-Treasury bonds)
boosted performance and cushioned the impact of rising interest rates.
As the accompanying chart demonstrates, the Fund is well diversified across
the major sectors of the fixed income markets. There are 27 issues in the
portfolio. They have an average quality rating of AA and an average term to
maturity of 4.8 years.
Looking forward, we will continue to maintain a high quality, diversified
portfolio with an intermediate-term maturity structure. Cyclical factors argue
for upward pressure on interest rates and yield spreads to Treasuries have
narrowed. Near-term we believe a higher concentration in intermediate Treasury
and Agency securities is warranted. However, we think this is temporary and that
over the next several years interest rates will test the lows established last
summer. As such, we believe investors will be well served by maintaining core
positions in the bond market.
Bond Fund Diversification
of Investments Among Market Sectors
At this place, the shareholder report contains a pie chart showing the
following: U.S. Government and Agency Obligations 50%, Corporate Notes and Bonds
44%, and Cash & Other Assets 6%.
Bond Fund Annualized Performance
of $10,000 Since Inception
At this place, the shareholder report shows a line chart which shows the
following:
Class A Shares................................................$10,225
Class B Shares................................................$10,195
Lehman Brothers Intermediate Government/Corporate Bond Index..$10,650
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the index on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Prospectus
and elsewhere in this report. Past performance is not indicative of future
performance. Indices are unmanaged and investors cannot invest in them.
Additionally, the Lehman index return does not reflect expenses or sales
charges.
<TABLE>
<CAPTION>
MEMBERS Bond Fund Average Annual Total Return
- -----------------------------------------------------------------------------------------------------------------------------------
% Return Without Sales Charge % Return Net Sales Charge***
12 Months Ended Since Inception 12 Months Ended Since Inception
4/30/99 to 4/30/99+ 4/30/99 to 4/30/99+
<S> <C> <C> <C> <C>
Class A Shares* 6.21 5.68% 1.62 2.25%
Class B Shares** 5.39 4.92 0.89 1.95
Lipper Short-Intermediate Investment Grade Fund Index 5.61 5.72 -- --
Lehman Brothers Intermediate Government/Corporate Bond Index 6.36 6.50 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Maximum Sales Charge is 4.3% for A Shares.
** Maximum Contingent Deferred Sales Charge is 4.5% for B Shares.
*** Assuming Maximum Sales Charge + Funds commenced operations on December 29,
1997.
</FN>
</TABLE>
MEMBERS Balanced Fund
Since the international crisis of confidence last August, it has been largely
up to the "new economy" of technology and communications companies to carry the
rest of the U.S. economy. While this looked a bit questionable in the last few
months of 1998 and early in 1999, by April it became clear that technology-led
economic growth was strongly in place and spreading.
In this environment, U.S. interest rates advanced by one-half percentage
point or more, moving from approximately 4.8% on the 10-year U.S. Treasury bond
and 5.2% on the 30-year bond to nearly 5.4% and 5.7% respectively. This
reflected investors' fears that continuing economic growth could soon strain
resources, especially our tight supply of labor, leading to increasing inflation
rates and imminent actions by the Federal Reserve to raise short-term interest
rates.
Investors in U.S. stocks, however, saw little to worry about and much to like
in this environment. Led by the stocks of the leading technology/communications
companies, and the more speculative Internet-related issues, stock market
indexes advanced generally 15% to 25%, bringing the major indexes to, if not
through, their previous record levels.
The MEMBERS Balanced Fund provided a total return of 14.3% (on Class A shares
at net asset value) for this six-month period, capitalizing on the favorable
stock market returns and generally preserving the values of its bond holdings.
For specific descriptions of the portfolio activities undertaken in each area,
please see the Fund Performance Reviews for the MEMBERS Growth & Income, Capital
Appreciation, Bond and Cash Reserves Funds elsewhere in this report. The
activities described for these funds were also employed within the Balanced
Fund, which generally maintained a portfolio mix of 53% stocks (a blend of the
Growth & Income and Capital Appreciation stocks), 40% bonds and 5% money market
investments throughout this period.
Looking ahead, there continue to be both risks and opportunities in the U.S.
economy and markets. After a rough year for many international economies, most
have stabilized. Commodity prices, important to many of the struggling
countries, have at least stabilized with oil prices showing a particularly
marked recovery. We disagree with those who see this as signaling increasing
inflation, including the Federal Reserve which may be unable to resist
increasing interest rates in response to its inflationary fears. The Fed has
exhibited a wonderful bedside manner, but has been too quick (in our opinion) to
administer medication.
The NATO strikes in Kosovo present risks to world economies, perhaps more
than the domestic markets have acknowledged to date. Y2K concerns will likely
build toward year-end. Any such events could spark a market sell-off and thereby
hurt the economy by curtailing consumer spending. However, we feel the
likelihood of such an event is highly uncertain and its probable duration even
less predictable.
Longer-term, factors strongly favor continued stock market growth and
moderate interest rates. The world is "awash in a sea of excess savings" as the
tremendous pool of money seeking investments continues to grow faster than the
amount of attractive securities available for investment. Other positive
long-term factors include the technological revolution, which is raising living
standards worldwide, and the increasing willingness and ability of investors
worldwide to invest in the U.S. markets. The U.S. is increasingly recognized as
a premier place to invest largely because of our unequaled success with
capitalism.
In summary, we expect the bumpy ride to continue, but look for both stocks
and bonds to provide continued gains into the next Millennium. MEMBERS Balanced
Fund, we believe, is well positioned to benefit its investors in this
environment.
Balanced Fund Diversification
of Investments Among Market Sectors
At this place, the shareholder report contains a pie chart showing the
following: Common Stocks 53%, Cash & Other Assets 7%, Corporate Notes & Bonds
22%, and U.S. Government Obligations 18%.
Balanced Fund Annualized Performance
of $10,000 Since Inception
At this place, the shareholder report shows a line chart which shows the
following:
Class A Shares................................................$11,315
Class B Shares................................................$11,420
Blended Synthetic Index.......................................$11,707
(45% S&P 500 Index return of 16.70%, 40% Lehman Brothers Intermediate
Government/Corporate Bond Index return of 8.20%, 15% 90-Day Treasury Bill return
of 4.29%)
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the index on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Prospectus
and elsewhere in this report. Past performance is not indicative of future
performance. Indices are unmanaged and investors cannot invest in them.
Additionally, the Blended index return does not reflect expenses or sales
charges.
<TABLE>
<CAPTION>
MEMBERS Balanced Fund Average Annual Total Return
- -----------------------------------------------------------------------------------------------------------------------------------
% Return Without Sales Charge % Return Net Sales Charge***
12 Months Ended Since Inception 12 Months Ended Since Inception
4/30/99 to 4/30/99+ 4/30/99 to 4/30/99+
<S> <C> <C> <C> <C>
Class A Shares* 14.15 17.86% 8.06 13.15%
Class B Shares** 13.38 17.06 8.88 14.20
Lipper Balanced Fund Index 11.13 16.21 -- --
Blended Synthetic Index 13.50 17.07 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Maximum Sales Charge is 5.3% for A Shares.
** Maximum Contingent Deferred Sales Charge is 4.5% for B Shares.
*** Assuming Maximum Sales Charge
+ Funds commenced operations on December 29, 1997.
</FN>
</TABLE>
MEMBERS High Income Fund
The last six months saw continued volatility for most financial markets,
including the high-yield bond market. In the final months of 1998, high-yield
bond prices declined due to renewed concerns that the economic problems in Asia
and Russia and the problem with Long-Term Capital Management would negatively
impact the domestic economy. Yield spreads were historically wide and new issues
of high-yield bonds nearly stopped. Once high-yield bonds began to stabilize,
the recovery in this fixed income asset class was rapid. For the six-month
period ending April 30, 1999, the high-yield bond markets as represented by the
Lehman Brothers High Yield Bond index provided a total return (interest income
plus or minus change in market price) of 8.2%. Similar funds as represented by
the Lipper High Yield Bond Fund index, returned 11.7%. MEMBERS High Income
Fund's total return for this six-month period was 12.6% (on Class A shares at
net asset value).
Throughout 1998 and into 1999, the Fund's investment strategy became more
conservative. Additions to conservative industries, which are major sectors of
the Fund, performed well. The Fund's two largest industries, communications and
telecommunications, carry weightings of 17.2% and 16.0% respectively as of April
30, 1999. Prices of high-yield bonds in the media sector rose as consolidation
among cable television companies and broadcasters caused valuations to increase
substantially. The announcement that AT&T will acquire Telecommunications, Inc.
caused great interest and helped this segment of the Fund perform well.
Telecommunications is another industry where investment opportunities are
apparent. The Fund is focusing on bonds of competitive local exchange companies
that build fiber-optic networks in metropolitan areas, and that compete with
local telephone companies for business customers. Holdings such as Colt Telecom
and Metronet are benefiting from tremendous growth in voice and data traffic.
The Fund benefited from having no exposure to emerging markets sovereign
bonds and minimal exposure to emerging market corporate bonds, as well as
underweighting in the energy sector. Due to this underweighted position in
energy, the Fund was largely unaffected when oil prices collapsed in 1998.
Finally, exposure to cyclical industries like metals and papers is minimal.
These industries performed poorly in 1998 due to commodity prices being near
their all-time lows because of the recession in Asia, and as a result dampened
the Fund's performance.
As of April 30, 1999 roughly 90% of the 205 bond holdings in the Fund were B
grade or higher, with an average yield of 9.0%. The average yield of the Fund is
3.8% higher than the average yield of 5.2% for comparable 5-year treasuries.
The high-yield market remains attractive due to the environment of moderate
economic growth and low inflation in the U.S. Many of the companies issuing
high-yield bonds are not the biggest firms in their industries, however many are
in relatively sound financial shape for this class of bonds and have not had
trouble meeting their debt payments. It is this type of reasonably secure and
generally growing company that we seek in the MEMBERS High Income Fund,
companies which are capable of not only meeting their financial obligations but
improving their credit quality over time.
High Income Fund Diversification
of Investments Among Market Sectors
At this place, the shareholder report contains a pie chart showing the
following: Telecommunications 16%, Communications 17%, Technology 5%, Retail 6%,
Finance 5%, Other Sectors 45%, and Cash & Other Assets 6%.
High Income Fund Annualized Performance
of $10,000 Since Inception
At this place, the shareholder report shows a line chart which shows the
following:
Class A Shares................................................$10,116
Class B Shares................................................$10,091
Lehman Brothers High Yield Bond Index.........................$10,444
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the index on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Prospectus
and elsewhere in this report. Past performance is not indicative of future
performance. Indices are unmanaged and investors cannot invest in them.
Additionally, the Lehman index return does not reflect expenses or sales
charges.
<TABLE>
<CAPTION>
MEMBERS High Income Fund Average Annual Total Return
- -----------------------------------------------------------------------------------------------------------------------------------
% Return Without Sales Charge % Return Net Sales Charge***
12 Months Ended Since Inception 12 Months Ended Since Inception
4/30/99 to 4/30/99+ 4/30/99 to 4/30/99+
<S> <C> <C> <C> <C>
Class A Shares* 3.15 4.55% (1.27) 1.16%
Class B Shares** 2.48 3.75 (1.81) 0.91
Lipper High Yield Bond Index 1.01 4.45 -- --
Lehman Brothers High Yield Bond Index 1.92 4.44 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Maximum Sales Charge is 4.3% for A Shares.
** Maximum Contingent Deferred Sales Charge is 4.5% for B Shares.
*** Assuming Maximum Sales Charge + Funds commenced operations on December 29,
1997.
</FN>
</TABLE>
MEMBERS Growth and Income Fund
This was definitely a six-month period to remember for most investors. The
U.S. stock market shrugged off overseas worries and looked past corporate profit
concerns to surge ahead amidst record intra-day volatility. The market
narrowness that plagued investors during the last several quarters began to ease
as the new year began. Signs of life emerged from the small- and
mid-capitalization sectors. During this six month period, all capitalization
sectors posted strong returns, but the large-caps as represented by the Standard
& Poor's 500 still led the way with an impressive 22.3% return. The S&P 400
Midcap Index returned 18.9% and the Russell 2000 Small Cap Index returned 15.3%.
MEMBERS Growth and Income Fund returned 25.0% (Class A shares at net asset
value) for the six month period ending April 30, 1999. The Fund's performance
compared very favorably with the S&P 500's return of 22.3% and substantially
exceeded the 17.9% return of the Growth and Income Mutual Fund Index as
calculated by Lipper Analytical Services.
The Fund's performance during this six-month period was driven by
out-performance relative to the market in the technology and basic materials
sectors. The strength in technology came from EMC Corporation, Texas
Instruments, Koninklijke Philips Electronics, and Motorola. Georgia Pacific and
Dow Chemical led the basic materials. Other strong sectors were communications
led by Airtouch and Sprint, and the capital goods sector led by United
Technologies and Honeywell. The weakest performing sector was healthcare where
Tenet Healthcare and Glaxo Wellcome were negatively impacted by pricing
pressures from managed care and Medicare reimbursements.
The Growth and Income Fund is currently modestly over-weighted in the basic
materials and energy sectors and modestly under-weighted in the finance,
technology and communications services sectors. Our sector weights reflect where
we are finding stocks with the strongest fundamentals and attractiveness; not
general assessments of the sectors or the overall economy. While the Fund's
sector exposures may deviate from the index's weightings, the Fund remains well
diversified at all times.
A confluence of events during the period generated increased optimism that a
global economic recession will be averted. The continued low inflation in the
U.S. combined with signs of stability in troubled economies, an improved profit
outlook and an oil production cutback from OPEC brought investors back into the
more cyclical stocks that had been neglected for so long. This rotation improved
the breadth of the market and propelled it to new highs.
The U.S. stock market is now at a crossroads. While many of the fundamental
underpinnings remain intact, inflationary pressures are building and could
result in action by the Federal Reserve to cool the economy and markets. The
"new paradigm" argument of technological improvements in productivity leading to
lower labor costs and only modest inflation will continue to be debated,
probably for many years. Currently, valuation ranges for U.S. equities are at
the upper end of historical ranges and interest rates have risen in anticipation
of increasing inflation, but world economies are firming and the profit picture
is improving. Underlying fundamentals remain sound and many areas of the market
are reasonably valued.
The speed and magnitude of the market's recent move reinforce the need for
long term investors to avoid trying to "time" the market and, instead, maintain
their investment discipline during what has been and will almost certainly
continue to be very volatile times. We continue to believe that long-term
investors will be rewarded by accumulating a diversified portfolio of quality,
reasonably priced securities like those we seek to provide in MEMBERS Growth and
Income Fund.
Growth and Income Fund Diversification
of Investments Among Market Sectors
At this place, the shareholder report contains a pie chart showing the
following: Financial Services 14%, Technology 17%, Consumer Staples 15%,
Communication Services 7%, Healthcare 10%, Energy 7%, Consumer Cyclical 5%,
Capital Goods 6%, Other Sectors 14% and Cash and Other Assets 5%.
Growth and Income Fund Annualized Performance
of $10,000 Since Inception
At this place, the shareholder report shows a line chart which shows the
following:
Class A Shares................................................$12,153
Class B Shares................................................$12,287
S&P 500 Index.................................................$13,057
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the index on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Prospectus
and elsewhere in this report. Past performance is not indicative of future
performance. Indices are unmanaged and investors cannot invest in them.
Additionally, the S&P index return does not reflect expenses or sales charges.
<TABLE>
<CAPTION>
MEMBERS Growth and Income Fund Average Annual Total Return
- -----------------------------------------------------------------------------------------------------------------------------------
% Return Without Sales Charge % Return Net Sales Charge***
12 Months Ended Since Inception 12 Months Ended Since Inception
4/30/99 to 4/30/99+ 4/30/99 to 4/30/99+
<S> <C> <C> <C> <C>
Class A Shares* 18.14 26.60% 11.85 21.53%
Class B Shares** 17.28 25.65 12.78 22.87
Lipper Growth & Income Index 10.27 18.69 -- --
S&P 500 Index 21.85 30.57 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Maximum Sales Charge is 5.3% for A Shares.
** Maximum Contingent Deferred Sales Charge is 4.5% for B Shares.
*** Assuming Maximum Sales Charge + Funds commenced operations on December 29,
1997.
</FN>
</TABLE>
MEMBERS Capital Appreciation Fund
The U.S. stock market recovered dramatically from its lows amid the global
financial crisis of last autumn. The domestic economic outlook firmed, sending
both interest rates and stock prices higher. During this six month period, all
U.S. stock market capitalization sectors posted strong returns, but the
large-caps as represented by the Standard & Poor's 500 still led the way with an
impressive 22.3% return. The S&P 400 Midcap Index returned 18.9% and the Russell
2000 Small Cap Index returned 15.3%.
MEMBERS Capital Appreciation Fund, with its mid- to large-capitalization
orientation, returned 20.6% (Class A shares at net asset value) during the six
months through April 30, 1999. This matched the blended return of the mid- and
large-capitalization indexes, but lagged the 26.9% return for similar mutual
funds as measured by Lipper Analytical Services' Capital Appreciation Mutual
Fund Index.
The Fund's performance was driven by exceptionally strong performance of
stocks in the communications services, consumer cyclicals, and basic materials
sectors. These included Sprint PCS, Airtouch and TelMex in the communications
services area, Tiffany, TJX and Dayton Hudson among the consumer cyclicals, and
Willamette and Dexter in basic materials. The weakest performing sector was
capital goods, where stocks such as Pall Corp. and Raychem suffered from both
company specific and global economic concerns. Stocks in the other economic
sectors provided generally market-like returns during this six-month period.
Currently, we see many stocks in the consumer staples sector which appear to
offer great potential, and the Fund is over-weighted in this sector relative to
a blended mid-to-large capitalization index. Conversely, we are under-weighted
in the utilities and health care sectors as we believe that many of the
component stocks in those sectors are fully valued relative to their prospects.
All other sector weights are approximately equal to those of the market. Our
sector weights reflect where we are finding individual stocks with the strongest
fundamentals and attractiveness; they are not general assessments of the sectors
or the overall economy.
We do, however, ensure that our portfolios remain well diversified across
economic sectors.
We are encouraged by the recent gains among small- and mid-capitalization
stocks. These stocks have appeared for some time to be quite attractive relative
to the largest companies' stocks, and the recent improvement in performance
validates these perceptions. The Capital Appreciation Fund invests in companies
of all sizes, so if the improved performance of smaller companies continues, it
could enhance the Fund's future returns.
The U.S. stock market is now at a crossroads. While many of the fundamental
underpinnings remain intact, inflationary pressures are building and could
result in action by the Federal Reserve to cool the economy and markets. The
"new paradigm" argument of technological improvements in productivity leading to
lower labor costs and only modest inflation will continue to be debated,
probably for many years. Currently, valuation ranges for U.S. equities are at
the upper end of historical ranges and interest rates have risen in anticipation
of increasing inflation, but world economies are firming and the profit picture
is improving. Underlying fundamentals remain sound and many areas of the market
are reasonably valued.
The speed and magnitude of the market's recent move reinforce the need for
long term investors to avoid trying to "time" the market and, instead, maintain
their investment discipline during what has been and will almost certainly
continue to be very volatile times. We continue to believe that long-term
investors will be rewarded by accumulating a diversified portfolio of quality,
reasonably priced securities like those we seek to provide in MEMBERS Capital
Appreciation Fund.
Capital Appreciation Fund Diversification
of Investments Among Market Sectors
At this place, the shareholder report contains a pie chart showing the
following: Technology 17%, Financial Services 15%, Consumer Cyclicals 12%, Basic
Materials 5%, Energy 5%, Healthcare 7%, Other Sectors 8%, Cash and Other Assets
6%, Communication Services 5%, Capital Goods 6%, and Consumer Staples 14%.
Capital Appreciation Fund Annualized Performance
of $10,000 Since Inception
At this place, the shareholder report shows a line chart which shows the
following:
Class A Shares................................................$11,904
Class B Shares................................................$12,034
S&P 400 Midcap Index..........................................$11,705
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the index on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Prospectus
and elsewhere in this report. Past performance is not indicative of future
performance. Indices are unmanaged and investors cannot invest in them.
Additionally, the S&P index return does not reflect expenses or sales charges.
<TABLE>
<CAPTION>
MEMBERS Capital Appreciation Fund Average Annual Total Return
- -----------------------------------------------------------------------------------------------------------------------------------
% Return Without Sales Charge % Return Net Sales Charge***
12 Months Ended Since Inception 12 Months Ended Since Inception
4/30/99 to 4/30/99+ 4/30/99 to 4/30/99+
<S> <C> <C> <C> <C>
Class A Shares* 13.58 24.00% 7.52 19.04%
Class B Shares** 12.74 23.15 8.24 20.34
Lipper Capital Appreciation Index 15.79 25.47 -- --
S&P400 Midcap Index 6.43 17.05 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Maximum Sales Charge is 5.3% for A Shares.
** Maximum Contingent Deferred Sales Charge is 4.5% for B Shares.
*** Assuming Maximum Sales Charge + Funds commenced operations on December 29,
1997.
</FN>
</TABLE>
MEMBERS International Stock Fund
During 1998, international trading markets experienced tremendous turmoil as
economies struggled in Asia, then Russia, then Brazil. The fallout from this
instability was increasingly volatile investment markets worldwide. The
international investment markets began to stabilize by early 1999, helped by the
increasing strength in Japanese equities. However, worldwide economies remained
vulnerable and have yet to post significant and sustained recoveries.
In this turbulent environment, MEMBERS International Stock Fund returned
13.5% for the six-month period ended April 30, 1999 (on Class A shares at net
asset value). Returns from the broad international markets, as measured by the
Morgan Stanley Europe, Australia and Far East (EAFE) index, were 15.4% for this
period. The Fund also invests in smaller capitalization stocks and stocks of
companies in emerging markets around the world not covered by the EAFE index.
The Morgan Stanley Small Cap EAFE index returned 16.6% since last October 31st,
while the Morgan Stanley Emerging Market index returned 33.50% over this same
time period.
Clearly, the story of late 1998 and into 1999 was one of Asian markets
rebounding. But, European markets performed poorly. The worst performing sector
was European small-cap stocks whose benchmark rose a fraction of that of
European large caps. Indeed, European small caps stand out as the only asset
class in the developed world not to have rallied significantly by the end of
1998 off the lows seen in October.
The performance of world markets in the first few months of 1999 was driven
by two dominant factors: strength in Japanese equities offset by weakness in the
Euro and, to a lesser extent, in the European stock markets. The Fund benefited
from strong stock selection in Japan and positive performance from Australia.
Both countries were represented through favorable stock selection and
over-weighted positions relative to the popular indexes. An over-weighted
position in the Euro zone markets dampened performance somewhat but was offset
by positive overall performance in Swiss stocks.
The large-cap portion of the Fund has approximately 50 holdings in 15
developed countries. The small-cap and emerging market portions hold roughly 120
positions in 39 countries. The Fund is positioned to benefit from improved
economic climates worldwide. Its exposure to Japan was increased to market
weight by adding positions in strong large-cap companies such as Japan Airlines
and Nippon Mitsubishi Oil. A near market weight is currently held in European
companies.
The Fund employs a value-oriented investment approach in all three
international sectors. The allocation of new monies flowing into the Fund
remains 70% to international large-cap, 15% to international small-cap and 15%
to emerging markets. We believe this investment approach will, over the long
term, provide solid risk-adjusted returns and excellent diversification benefits
to compliment a portfolio's domestic stock holdings.
International Stock Fund
Geographical Diversification of Investments
At this place, the shareholder report contains a pie chart showing the
following: France 10%, United Kingdom 13%, Germany 8%, Australia 5%, Japan 16%,
Cash and Other Assets 6%, Other Countries 33%, Switzerland 4%, and Finland 5%.
International Stock Fund Annualized Performance
of $10,000 Since Inception
At this place, the shareholder report shows a line chart which shows the
following:
Class A Shares......................................................$10,840
Class B Shares......................................................$10,916
Morgan Stanley Capital International Europe, Asia & Far East Index..$12,035
This chart compares a $10,000 investment made in the Fund on its inception date
to a $10,000 investment made in the index on that date. All dividends and
capital gains are reinvested. Further information relating to the Fund's
performance, including expense reimbursements, is contained in the Prospectus
and elsewhere in this report. Past performance is not indicative of future
performance. Indices are unmanaged and investors cannot invest in them.
Additionally, the EAFE Index return does not reflect expenses or sales charges.
<TABLE>
<CAPTION>
MEMBERS International Stock Fund Average Annual Total Return
- -----------------------------------------------------------------------------------------------------------------------------------
% Return Without Sales Charge % Return Net Sales Charge***
12 Months Ended Since Inception 12 Months Ended Since Inception
4/30/99 to 4/30/99+ 4/30/99 to 4/30/99+
<S> <C> <C> <C> <C>
Class A Shares* (0.18) 12.92% (5.48) 8.40%
Class B Shares** (0.94) 12.06 (5.19) 9.16
Lipper International Stock Fund Index 2.42 14.69 -- --
Morgan Stanley Capital International Europe,
Asia & Far East Index 9.81 20.35 -- --
- -----------------------------------------------------------------------------------------------------------------------------------
<FN>
* Maximum Sales Charge is 5.3% for A Shares.
** Maximum Contingent Deferred Sales Charge is 4.5% for B Shares.
*** Assuming Maximum Sales Charge + Funds commenced operations on December 29,
1997.
</FN>
</TABLE>
Family of Investments
MEMBERS Mutual Funds are a group of open-end investment companies, typically
called mutual funds. Each Fund is a separate investment portfolio with its own
investment objective, policies, restrictions and attendant risks. The
information in this table provides an overview, summarizing the Funds'
investment objectives, management, and primary strategies. For more specific and
complete information on the Funds, please refer to your prospectus and the
statement of additional information.
Cash Reserves Fund
Investment Objective
The Cash Reserves Fund seeks high current income from money market instruments
consistent with the preservation of capital and liquidity. The Fund intends to
maintain a stable net asset value of $1.00 per share.
Portfolio Management
The Fund is managed by a team of CIMCO's portfolio managers.
Primary Investment Strategies
The Cash Reserves Fund invests exclusively in U.S. dollar-denominated money
market securities maturing in thirteen months or less from the date of purchase,
including those issued by U.S. and foreign financial institutions, corporate
issuers, the U.S. Government and its agencies and instrumentalities,
municipalities, foreign governments, and multinational organizations such as the
World Bank. At least 95% of the Fund's assets must be rated in the highest
short-term category (or its unrated equivalent), and 100% of the Fund's assets
must be invested in securities rated in the two highest categories.
For a listing of the securities held in the portfolio on April 30, 1999, please
turn to page 18.
Bond Fund
Investment Objective
The Bond Fund seeks to generate a high level of current income, consistent with
the prudent limitation of risk, primarily through investment in a diversified
portfolio of income bearing securities.
Portfolio Management
The Fund is managed by a team of CIMCO's portfolio managers.
Primary Investment Strategies
To keep current income relatively stable and to limit share price volatility,
the Bond Fund emphasizes investment grade securities and maintains an
intermediate (typically 3 to 6 years) average portfolio duration. Under normal
circumstances, the Fund invests at least 80% of its assets in such securities.
The Fund may invest in the following instruments: o Corporate Debt Securities o
U.S. Government Debt Securities o Foreign Government Debt Securities o Other
issuer Debt Securities.
The Fund may also invest in asset-backed and mortgage-backed securities,
including securities backed by credit union originated loans, to the extent
permitted by law and available in the market.
For a listing of the securities held in the portfolio at April 30, 1999, please
turn to page 19.
Balanced Fund
Investment Objective
The Balanced Fund seeks a high total return through the combination of income
and capital appreciation.
Portfolio Management
The Fund is managed by a team of CIMCO's portfolio managers.
Primary Investment Strategies
The Balanced Fund invests in a broadly diversified array of securities including
common stocks, bonds and money market instruments. The percentage of the Fund's
assets invested in equity securities, income bearing securities and money market
instruments may vary somewhat depending upon the availability of attractively
priced stocks and bonds and anticipated cash needs of the Fund. Generally,
however, common stocks will constitute 60% to 40% of the Fund's assets, bonds
will constitute 40% to 60% of the Fund's assets and
money market instruments may constitute up to 20% of the Fund's assets.
For a listing of the securities held in the portfolio at April 30, 1999, please
turn to page 20.
HIGH INCOME Fund
Investment Objective
The High Income Fund seeks high current income by investing primarily in a
diversified portfolio of lower-rated, higher yielding income securities. The
Fund also seeks capital appreciation, but only when consistent with its primary
goal.
Portfolio Management
CIMCO uses one or more subadvisers under a "manager of managers" approach to
make investment decisions for this Fund. Massachusetts Financial Services
Company (MFS) is the only subadviser currently used by CIMCO to manage the
assets of the Fund.
Primary Investment Strategies
The High Income Fund invests primarily in lower-rated, higher-yielding income
bearing securities, such as "junk" bonds. Because the performance of these
securities has historically been strongly influenced by economic conditions, the
Fund may rotate securities selection by business sector according to the
economic outlook. Under normal market conditions, the Fund invests at least 80%
of its assets in bonds rated lower than investment grade (BBB/Baa) and their
unrated equivalents or other high-yielding securities.
For a listing of the securities held in the portfolio at April 30, 1999, please
turn to page 22.
Growth and Income Fund
Investment Objective
The Growth and Income Fund seeks long-term capital growth with income as a
secondary consideration.
Portfolio Management
The Fund is managed by a team of CIMCO's portfolio managers.
Primary Investment Strategies
The Growth and Income Fund will focus on stocks of companies with financial and
market strength and a long-term record of financial performance, and will, under
normal market conditions, maintain at least 80% of its assets in such stocks.
Primarily through ownership of a diversified portfolio of common stocks and
securities convertible into common stocks, the Fund will seek a rate of return
in excess of returns typically available from less variable investment
alternatives. The Fund will typically invest in securities representing every
sector of the S&P 500 in approximately the same weightings such sector has in
the S&P 500.
For a listing of the securities held in the portfolio at April 30, 1999, please
turn to page 29.
Capital Appreciation Fund
Investment Objective
The Capital Appreciation Fund seeks long-term capital appreciation.
Portfolio Management
The Fund is managed by a team of CIMCO's portfolio managers.
Primary Investment Strategies
The Capital Appreciation Fund invests primarily in common stocks, and will,
under normal market conditions, maintain at least 80% of its assets in such
securities. The Fund seeks stocks that have a low market price relative to the
portfolio managers' expected level and certainty of the issuing company's future
earnings. Relative to the Growth and Income Fund, the Capital Appreciation Fund
will include some smaller, less developed issuers and some companies undergoing
more significant changes in their operations or experiencing significant changes
in their markets. The Fund will diversify its holdings among various industries
and among companies within those industries but will often be less diversified
than the Growth and Income Fund.
For a listing of the securities held in the portfolio at April 30, 1999, please
turn to page 31.
International Stock Fund
Investment Objective
The International Stock Fund seeks long-term growth of capital by investing
primarily in foreign equity securities.
Portfolio Management
CIMCO uses one or more subadvisers under a "manager of managers" approach to
make investment decisions for this fund. IAI International Limited and Lazard
Asset Management are the subadvisers currently used by CIMCO to manage the
assets of the Fund.
Primary Investment Strategies
Under normal market conditions, the International Stock Fund invests at least
80% of its assets in foreign equity securities. Foreign securities are issued by
companies organized or whose principal operations are outside the U.S., issued
by a foreign government, principally traded outside of the U.S., or quoted or
denominated in a foreign currency. Equity securities include common stocks,
securities convertible into common stocks, preferred stocks, and other
securities representing equity interests such as American depository receipts,
European depository receipts and Global depository receipts.
For a listing of the securities held in the portfolio at April 30, 1999, please
turn to page 33.
Cash Reserves Fund - Portfolio of Investments (Unaudited)
Value
Par Value (Note 2)
COMMERCIAL PAPER (A) - 65.00%
Finance - 23.42%
$ 249,000 American Express Credit Corp.
4.878%, due 07/01/99 $ 247,017
250,000 American General Finance Co.
4.943%, due 05/03/99 249,933
250,000 Associates Corp. of North America
4.912%, due 05/10/99 249,699
General Motors Acceptance Corp.
200,000 5.001%, due 06/03/99 199,107
100,000 4.886%, due 06/15/99 99,403
120,000 IBM Credit Corp.
4.999%, due 08/24/99 118,152
300,000 Merrill Lynch & Co., Inc.
4.904%, due 07/20/99 296,813
1,460,124
Consumer Staples - 8.33%
250,000 Coca-Cola Co.
4.913%, due 05/06/99 249,833
270,000 Procter & Gamble Co.
4.905%, due 05/13/99 269,570
519,403
Technology - 8.12%
309,000 Emerson Electric Co.
4.872%, due 06/24/99 306,789
200,000 Lucent Technologies, Inc.
4.917%, due 05/26/99 199,333
506,122
Communication - 7.96%
300,000 AT&T Corp.
4.865%, due 07/27/99 296,564
200,000 Bellsouth Telecommunications, Inc.
4.903%, due 05/13/99 199,680
496,244
Media - 7.18%
200,000 Disney (Walt) Co.
4.859%, due 07/12/99 198,104
250,000 McGraw Hill Companies
4.876%, due 05/20/99 249,376
447,480
Durable Goods - 4.45%
280,000 Deere & Co.
4.951%, due 07/06/99 277,526
Utilities - 3.95%
$ 247,000 MDU Resources Group
4.884%, due 05/11/99 $ 246,671
Chemicals - 1.59%
100,000 du Pont (E.I.) de Nemours & Co.
4.878%, due 06/07/99 99,509
Total Commercial Paper 4,053,079
( Cost $4,053,079 )
U.S. GOVERNMENT AND AGENCY OBLIGATIONS (A) - 32.51%
Federal Home Loan Bank - 14.01%
180,000 4.886%, due 05/26/99 179,409
300,000 4.863%, due 05/28/99 298,940
300,000 5.092%, due 03/29/00 299,863
100,000 4.964%, due 03/31/00 95,617
873,829
Federal Home Loan Mortgage Corp. - 12.16%
200,000 4.874%, due 05/18/99 199,550
350,000 4.843%, due 06/11/99 348,127
214,000 4.913%, due 09/03/99 210,470
758,147
Federal Farm Credit Bank - 3.19%
200,000 4.899%, due 06/01/99 199,185
Federal National Mortgage Association - 3.15%
200,000 4.864%, due 09/17/99 196,371
Total U.S. Government and Agency
Obligations 2,027,532
( Cost $2,027,532 )
CERTIFICATE OF DEPOSIT - 2.70%
$ 168,214 State Street Eurodollar
4.500%, due 05/03/99 168,214
Total Certificate of Deposit 168,214
( Cost $168,214 )
TOTAL INVESTMENTS - 100.21% 6,248,825
( Cost $6,248,825** )
NET OTHER ASSETS AND LIABILITIES - (0.21)% (13,220)
TOTAL NET ASSETS - 100.00% $6,235,605
- -------------------------------
** Aggregate cost for Federal tax purposes.
(A) Rate noted represents annualized yield at time of purchase.
Bond Fund - Portfolio of Investments (Unaudited)
CORPORATE NOTES AND BONDS - 43.63%
Communication - 8.39%
$ 500,000 British Sky Broadcasting Group, Yankee
6.875%, due 02/23/09 $ 496,282
500,000 Cable & Wireless Communications, Inc., Yankee
6.750%, due 12/01/08 497,915
994,197
Finance - 8.18%
500,000 Carramerica Realty Corp.
6.625%, due 10/01/00 498,885
300,000 Ford Capital B.V., Yankee
10.125%, due 11/15/00 319,313
150,000 General Motors Acceptance Corp., MTN
6.050%, due 10/04/99 150,681
968,879
Durable Goods - 4.20%
500,000 Delphi Auto Systems Corp.
6.125%, due 05/01/04 496,950
Industrials - 4.19% 500,000 Conoco, Inc.
5.900%, due 04/15/04 496,803
Asset-Backed Securities - 4.17%
297,179 Morgan Stanley Capital I, Series 1999-WF1
Class A1, CMO
5.910%, due 04/15/08 293,289
200,000 Residential Funding Mortgage Securities II,
Series 1998-HI2, Step Coupon, Class A2, ABS (F)
6.290%, due 07/25/13 200,956
494,245
Energy - 3.83%
150,000 Transcontinental Gas Pipeline Corp.
6.125%, due 01/15/05 146,893
300,000 YPF Sociedad Anonima, Yankee
9.125%, due 02/24/09 307,036
453,929
Business Services - 3.50%
415,000 Comdisco, Inc.
6.000%, due 01/30/02 414,683
Utilities - 3.37%
400,000 Williams Companies, Inc.
6.200%, due 08/01/02 399,139
Defense - 2.57%
300,000 Martin Marietta Technologies, Inc.
6.500%, due 04/15/03 304,876
Health Services - 1.23%
$ 150,000 Columbia/HCA Healthcare Corp.
6.125%, due 12/15/00 $ 146,175
Total Corporate Notes and Bonds 5,169,876
( Cost $5,191,716)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 50.58%
U.S. Treasury Notes - 32.44%
1,000,000 5.000%, due 02/28/01 998,750
1,000,000 6.250%, due 01/31/02 1,027,500
500,000 6.250%, due 08/31/02 515,000
500,000 5.500%, due 03/31/03 504,063
250,000 5.875%, due 11/15/05 256,953
500,000 6.875%, due 05/15/06 542,656
3,844,922
Federal National Mortgage Association - 10.56%
500,000 5.900%, due 07/09/03 499,807
250,000 7.000%, due 08/27/12 256,675
487,655 7.000%, due 03/01/29 494,506
1,250,988
Government National Mortgage Association - 4.27%
498,609 7.000%, due 03/15/29 506,363
Federal Home Loan Bank - 3.31%
400,000 5.190%, due 10/20/03 392,052
Total U.S. Government and Agency
Obligations 5,994,325
( Cost $6,039,049 )
Shares
INVESTMENT COMPANY - 2.05%
243,229 State Street Prime Money Market
4.830% 243,229
Total Investment Company 243,229
( Cost $243,229 )
TOTAL INVESTMENTS - 96.26% 11,407,430
( Cost $11,473,994** )
NET OTHER ASSETS AND LIABILITIES - 3.74% 442,835
TOTAL NET ASSETS - 100.00% $11,850,265
- ----------------------------
** Aggregate cost for Federal tax purposes.
(F) Represents a security whose interest rate increases at predetermined
dates. The rate disclosed is the rate currently in effect.
MTN Medium Term Note
CMO Collateralized Mortgage Obligation
ABS Asset Backed Security
Balanced Fund - Portfolio of Investments (Unaudited)
Value
Shares (Note 2)
COMMON STOCKS - 52.81%
Technology - 10.17%
6,300 3Com Corp.* $ 164,587
1,300 Conexant Systems, Inc.* 52,975
5,400 EMC Corp.* 588,263
3,500 Gateway 2000, Inc.* 231,656
2,800 Hewlett-Packard Co. 220,850
2,000 International Business Machines Corp. 418,375
2,200 Koninklijke(Royal)Philips Electronics N.V. 187,825
3,800 Micron Technology, Inc.* 141,075
3,000 Motorola, Inc. 240,375
5,600 Seagate Technology, Inc.* 156,100
2,600 Texas Instruments, Inc. 265,525
6,600 Wang Laboratories, Inc.* 165,413
2,975,494
Consumer Staples - 7.76%
3,100 Cox Communications, Inc., Class A* 246,063
4,100 CVS Corp. 195,262
1,800 General Mills, Inc. 131,625
5,600 Kimberly-Clark Corp. 343,350
7,400 MediaOne Group, Inc.* 603,563
6,100 Nabisco Holdings Corp., Class A 230,656
4,200 Safeway, Inc.* 226,538
6,200 Sara Lee Corp. 137,950
7,500 Tyson Foods, Inc., Class A 155,156
2,270,163
Financial Services - 7.56%
5,100 Allstate Corp. 185,512
5,296 Bank of America Corp. 381,312
5,290 Bank One Corp. 312,110
1,600 Bankers Trust Corp. 144,100
5,400 Citigroup, Inc. 406,350
3,800 Edwards (A.G.), Inc. 133,000
4,100 Everest Reinsurance Holdings, Inc. 124,281
2,700 Household International, Inc. 135,844
2,100 Morgan Stanley Dean Witter & Co. 208,294
4,200 Wells Fargo Co. 181,388
2,212,191
Healthcare - 5.23%
3,600 Aetna, Inc. 315,675
6,700 American Home Products Corp. 408,700
5,200 Bristol-Myers Squibb Co. 330,525
3,500 Centocor, Inc.* 155,312
2,300 Glaxo Wellcome PLC, ADR 133,975
3,300 Pharmacia & Upjohn, Inc. 184,800
1,528,987
Consumer Cyclical - 5.02%
6,000 Dayton Hudson Corp. 403,875
3,800 IMS Health, Inc. 114,000
11,500 PRIMEDIA, Inc.* 186,156
5,000 Sears, Roebuck & Co. 230,000
Consumer Cyclical (continued)
4,400 Tiffany & Co. $ 369,600
3,600 Wal-Mart Stores, Inc. 165,600
1,469,231
Capital Goods - 3.88%
1,800 Honeywell, Inc. 170,550
6,800 Owens-Illinois, Inc.* 197,200
7,800 Pall Corp. 143,812
3,200 Raychem Corp. 84,600
3,200 Rockwell International Corp. 165,200
1,200 United Technologies Corp. 173,850
3,542 Waste Management, Inc. 200,123
1,135,335
Energy - 3.65%
1,482 BP Amoco PLC, ADR 167,744
2,100 Exxon Corp. 174,431
3,400 Kerr-McGee Corp. 144,075
3,600 Schlumberger, Ltd. 229,950
4,600 Unocal Corp. 191,187
5,100 USX-Marathon Group 159,375
1,066,762
Communication Services - 3.40%
3,100 AirTouch Communications, Inc.* 289,462
2,900 Ameritech Corp. 198,469
3,000 AT&T Corp. 151,500
2,800 GTE Corp. 187,425
2,200 Telefonos de Mexico SA, Class L, ADR 166,650
993,506
Basic Materials - 2.77%
1,800 Dow Chemical Co. 236,138
3,700 Praxair, Inc. 191,475
4,800 Rohm & Haas Co. 215,100
3,600 Willamette Industries, Inc. 168,300
811,013
Transportation - 1.71%
2,400 Delta Air Lines, Inc. 152,250
2,100 FDX Corp.* 236,381
3,400 Norfolk Southern Corp. 111,138
499,769
Utilities - 1.66%
2,900 Northern States Power Co. 69,963
3,900 PG & E Corp. 121,144
6,200 Williams Companies, Inc. 292,950
484,057
Total Common Stocks 15,446,508
( Cost $11,714,093 )
CORPORATE NOTES AND BONDS - 22.20%
Finance - 5.86%
$ 500,000 Carramerica Realty Corp.
6.625%, due 10/01/00 $ 498,885
700,000 Ford Capital B.V., Yankee
10.125%, due 11/15/00 745,064
50,000 General Motors Acceptance Corp., MTN
6.050%, due 10/04/99 50,227
420,000 Merrill Lynch & Co.
6.070%, due 04/06/04 420,906
1,715,082
Communication - 3.40%
500,000 British Sky Broadcasting Group, Yankee
6.875%, due 02/23/09 496,282
500,000 Cable & Wireless Communications, Inc., Yankee
6.750%, due 12/01/08 497,915
994,197
Asset-Backed Securities - 3.03%
693,417 Morgan Stanley Capital I, Series 1999-WF1,
Class A1, CMO
5.910%, due 04/15/08 684,341
200,000 Residential Funding Mortgage Securities II,
Series 1998-HI2, Step Coupon, Class A2, ABS (F)
6.290%, due 07/25/13 200,956
885,297
Industrials - 2.89%
500,000 Conoco, Inc.
5.900%, due 04/15/04 496,803
350,000 Williams Companies, Inc.
6.200%, due 08/01/02 349,247
846,050
Business Services - 2.32%
680,000 Comdisco, Inc.
6.000%, due 01/30/02 679,480
Defense - 2.30%
662,000 Martin Marietta Technologies, Inc.
6.500%, due 04/15/03 672,759
Durable Goods - 1.70%
500,000 Delphi Auto Systems Corp.
6.125%, due 05/01/04 496,950
Energy - 0.53%
100,000 Coastal Corp., Senior Note
8.125%, due 09/15/02 105,956
50,000 Transcontinental Gas Pipeline Corp.
6.125%, due 01/15/05 48,964
154,920
Health Services - 0.17%
$ 50,000 Columbia/HCA Healthcare Corp.
6.125%, due 12/15/00 $ 48,725
Total Corporate Notes and Bonds 6,493,460
( Cost $6,532,892)
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 18.33%
U.S. Treasury Notes - 7.03%
1,000,000 5.000%, due 02/28/01 998,750
500,000 5.875%, due 11/15/05 513,907
500,000 6.875%, due 05/15/06 542,656
2,055,313
Federal National Mortgage Association - 6.22%
500,000 7.000%, due 08/27/12 513,350
630,725 6.500%, due 06/01/13 636,603
659,326 7.000%, due 03/01/29 668,590
1,818,543
Federal Home Loan Bank - 2.01%
600,000 5.190%, due 10/20/03 588,077
Government National Mortgage Association - 1.73%
498,610 7.000%, due 03/15/29 506,363
Federal Home Loan Mortgage Corp. - 1.34%
400,000 6.000%, due 03/15/24 392,960
Total U.S. Government and Agency
Obligations 5,361,256
( Cost $5,402,085 )
Shares
INVESTMENT COMPANY - 4.65%
1,359,599 State Street Prime Money Market
4.830% 1,359,599
Total Investment Company 1,359,599
( Cost $1,359,599 )
TOTAL INVESTMENTS - 97.99% 28,660,823
(Cost $25,008,669**)
NET OTHER ASSETS AND LIABILITIES - 2.01% 587,148
TOTAL NET ASSETS - 100.00% $29,247,971
- ------------------------------
* Non-income producing security.
** Aggregate cost for Federal tax purposes.
(F) Represents a security whose interest rate increases at predetermined
dates. The rate disclosed is the rate currently in effect.
ADR American Depositary Receipt
CMO Collateralized Mortgage Obligation
MTN Medium Term Note
ABS Asset Backed Security
High Income Fund - Portfolio of Investments (Unaudited)
Value
Par Value (Note 2)
CORPORATE NOTES AND BONDS - 93.73%
Communication - 17.15%
$ 185,000 Allegiance Telecom, Inc., 144A, Step Coupon
With Warrants (B)(C)
11.750%, due 02/15/08 $ 124,644
25,000 American Cellular, 144A
Senior Note (C)
10.500%, due 05/15/08 26,437
75,000 Centennial Cellular Corp., 144A
Senior Subordinate Note (C)
10.750%, due 12/15/08 81,281
100,000 Charter Commercial Holdings LLC, 144A
Senior Note (C)
8.250%, due 04/01/07 102,250
35,000 Charter Commercial Holdings LLC,
144A, Step Coupon
Senior Discount Note (B)(C)
9.920%, due 04/01/11 23,013
130,000 Dolphin Telecom PLC, 144A, Step Coupon
Senior Discount Note (B)(C)(D)
11.500%, due 06/01/08 74,100
60,000 Esprit Telecom Group PLC, Yankee
Senior Note (D)
10.875%, due 06/15/08 64,500
90,000 Exodus Communications, Inc., 144A
Senior Note (C)
11.250%, due 07/01/08 98,100
25,000 Flag, Ltd., 144A, Senior Note (C)(D)
8.250%, due 01/30/08 24,813
50,000 Hermes Europe Railtel B.V., Yankee
Senior Note (D)
10.375%, due 01/15/09 53,375
60,000 Intelcom Group (USA), Inc.
Step Coupon (B)
12.500%, due 05/01/06 50,400
90,000 Intermedia Communication, Series B
Senior Note
8.875%, due 11/01/07 90,675
115,000 ITC Deltacom, 144A
Senior Note (C)
9.750%, due 11/15/08 124,488
10,000 Lenfest Communications
8.375%, due 11/01/05 10,700
35,000 Lenfest Communications
Senior Subordinate Note
10.500%, due 06/15/06 40,600
50,000 Lenfest Communications
Senior Subordinate Note
8.250%, due 02/15/08 51,500
45,000 Metronet Communications, Yankee, Step Coupon
Senior Discount Note (B)(D)
10.750%, due 11/01/07 34,988
175,000 Metronet Communications, Yankee, Step Coupon
Senior Discount Note (B)(D)
9.950%, due 06/15/08 136,500
Communication (continued)
$ 100,000 Millicom International Cellular, Yankee, Step Coupon
Senior Discount Note (B)(D)
13.500%, due 06/01/06 $ 76,750
55,000 MJD Communications, Inc., Series B
Senior Subordinate Note
9.500%, due 05/01/08 55,619
90,000 Mobile Telecommunication Technology
Senior Note
13.500%, due 12/15/02 102,150
100,000 Nextel Communications, Step Coupon
Senior Discount Note (B)
9.750%, due 10/31/07 76,750
90,000 Nextel Communications, Step Coupon (B)
9.950%, due 02/15/08 68,400
45,000 Nextel International, Inc., 144A, Step Coupon
Senior Discount Note (B) (C)
12.125%, due 04/15/08 22,500
25,000 Nextlink Communications
Senior Note
9.625%, due 10/01/07 25,313
70,000 Pagemart Wireless, Inc., Step Coupon, 144A
Senior Discount Note (B) (C)
11.250%, due 02/01/08 25,200
30,000 PSINET, Inc., Series B
Senior Note
10.000%, due 02/15/05 31,500
25,000 Qwest Communications International, Step Coupon
Senior Discount Note (B)
9.470%, due 10/15/07 20,063
50,000 Qwest Communications International, 144A
Senior Note (C)
7.500%, due 11/01/08 52,313
65,000 Rural Cellular Corp., Series B
Senior Subordinate Note
9.625%, due 05/15/08 68,413
32,791 Rural Cellular Corp., Series B, PIK
11.375%, due 05/15/10 33,447
30,000 Telesystem International, Yankee, Step Coupon
Senior Discount Note (B)(D)
13.250%, due 06/30/07 18,600
25,000 Telesystem International, Yankee, Step Coupon
Senior Discount Note (B)(D)
10.500%, due 11/01/07 12,500
85,000 Telewest Communications PLC, Yankee
Debenture (D)
9.625%, due 10/01/06 90,312
165,000 Triton Communications, 144A, Step Coupon
Senior Discount Note (B)(C)
11.000%, due 05/01/08 102,713
220,000 United International Holdings, Step Coupon, Series B
Senior Discount Note (B)
10.750%, due 02/15/08 150,700
Communication (continued)
$ 50,000 Versatel Telecom BV, 144A
With Warrants
Senior Note (C)(D)(E)
13.250%, due 05/15/08 $ 54,000
15,000 Viatel, Inc.,144A, Senior Note (C)
11.250%, due 04/15/08 15,675
160,000 Viatel, Inc.,Step Coupon, 144A
Senior Discount Note (B)(C)
12.500%, due 04/15/08 104,400
93 Viatel, Inc., Series A, PIK
10.000%, due 04/15/10 223
110,000 Western Wireless
Senior Subordinate Note
10.500%, due 02/01/07 122,100
2,542,005
Telecommunications - 16.02%
75,000 Adelphia Communications, 144A
Senior Note (C)
8.375%, due 02/01/08 76,875
25,000 Avalon Cable Holdings LLC, 144A, Step Coupon
Senior Discount Note (B)(C)
11.875%, due 12/01/08 17,000
75,000 Avalon Cable of Michigan, 144A
Senior Subordinate Note (C)
9.375%, due 12/01/08 79,500
65,000 Bresnan Communications, 144A
Senior Note (C)
8.000%, due 02/01/09 66,787
25,000 Bresnan Communications, 144A, Step Coupon
Senior Discount Note (B)(C)
9.250%, due 02/01/09 17,125
110,000 Chancellor Media Corp., Series B
8.750%, due 06/15/07 113,575
50,000 Chancellor Media Corp., 144A
Senior Note (C)
8.000%, due 11/01/08 51,500
90,000 Classic Cable, Inc., 144A
Senior Subordinate Note (C)
9.875%, due 08/01/08 96,300
75,000 Colt Telecom Group PLC, Yankee, Step Coupon
Senior Discount Note (B)
12.000%, due 12/15/06 63,750
100,000 CSC Holdings, Inc.
Senior Subordinate Note
9.250%, due 11/01/05 107,000
60,000 Cumulus Media, Inc.
10.375%, due 07/01/08 64,950
175,000 Echostar DBS Corp., 144A
Senior Note (C)
9.375%, due 02/01/09 182,656
100,000 Esat Telecom Group PLC, 144A
Senior Note (C)
11.875%, due 12/01/08 107,750
Telecommunications (continued)
$ 50,000 Fairchild Semiconductor Corp., 144A
Senior Subordinate Note (C)
10.375%, due 10/01/07 $ 51,375
110,000 Fox/Liberty Networks
Senior Note
8.875%, due 08/15/07 119,762
75,000 Frontiervision
Senior Subordinate Note
11.000%, due 10/15/06 84,188
40,000 Frontiervision Holdings LP, Step Coupon
Senior Discount Note (B)
11.875%, due 09/15/07 35,050
90,000 Granite Broadcasting Corp.
10.375%, due 05/15/05 94,050
50,000 Intermedia Capital Partners
Senior Note
11.250%, due 08/01/06 56,313
75,000 Jazztel PLC, 144A (C)
14.000%, due 04/01/09 76,875
50,000 LIN Television Corp.
8.375%, due 03/01/08 49,625
40,000 Northeast Optic Network
Senior Note
12.750%, due 08/15/08 42,400
80,000 NTL, Inc., 144A, Step Coupon
Senior Note (B)(C)
9.750%, due 04/01/08 56,100
150,000 NTL, Inc., 144A, Step Coupon
Senior Note (B)(C)
12.375%, due 10/01/08 105,750
50,000 NTL, Inc., 144A, Step Coupon
Senior Note (B)(C)
9.750%, due 04/15/09 49,870
110,000 Rogers Cablesystem, Yankee (D)
9.625%, due 08/01/02 118,800
65,000 Spectrasite Holdings, Inc., 144A, Step Coupon
Senior Discount Note (B)(C)
12.000%, due 07/15/08 41,763
75,000 Spectrasite Holdings, Inc., 144A, Step Coupon
Senior Discount Note (B)(C)
11.250%, due 04/15/09 43,875
100,000 Telemundo Holdings, Inc., 144A, Step Coupon
Senior Discount Note (B)(C)
11.500%, due 08/15/08 54,000
50,000 Telemundo Holdings, Inc., 144A, Step Coupon
Senior Discount Note (B)(C)
11.500%, due 08/15/08 27,688
60,000 Telewest Communication PLC, 144A, Step Coupon
Senior Discount Note (B)(C)
9.250%, due 04/15/09 40,650
85,000 Time Warner, Inc., LLC
Senior Note
9.750%, due 07/15/08 92,650
Telecommunications (continued)
$ 25,000 Verio, Inc.
Senior Note
10.375%, due 04/01/05 $ 26,781
60,000 Young Broadcasting, Inc., Series B
8.750%, due 06/15/07 61,500
2,373,833
Retail - 5.63%
85,000 Cole National Group
Senior Subordinate Note
8.625%, due 08/15/07 84,575
50,000 Florida Panthers Holdings, 144A
Senior Subordinate Note (C)
9.875%, due 04/15/09 50,125
25,000 Friendly Ice Cream Corp.
10.500%, due 12/01/07 23,500
85,000 J Crew Operating Corp.
Senior Subordinate Note
10.375%, due 10/15/07 83,300
60,000 Jitney-Jungle Stores
12.000%, due 03/01/06 64,350
20,000 Jitney-Jungle Stores
10.375%, due 09/15/07 18,900
100,000 Musicland Group, 144A
Senior Note (C)
9.875%, due 03/15/08 101,500
50,000 Pathmark Stores
Subordinate Note
11.625%, due 06/15/02 51,375
85,000 Pathmark Stores
Senior Subordinate Note
9.625%, due 05/01/03 87,550
100,000 Red Roof Inns, Senior Note
9.625%, due 12/15/03 102,500
100,000 Southland Corp.
Senior Subordinate Debenture
5.000%, due 12/15/03 88,500
75,000 Williams Scotsman, Inc.
9.875%, due 06/01/07 78,000
834,175
Finance - 5.45%
30,000 AMSC Acquisition Co., Inc., Series B
12.250%, due 04/01/08 22,200
75 Crown Castle International Corp., 144A, PIK (C)
12.750%, due 12/15/10 8,409
65,000 DTI Holdings, 144A
Step Coupon
With Warrants (B)(C)
12.500%, due 03/01/08 26,000
100,000 Global Crossing Holding LTD, 144A
Senior Note (C)
9.625%, due 05/15/08 111,500
Finance (continued)
$ 125,000 Grove Holdings LLC, 144A, Step Coupon
Debenture (B)(C)
11.625%, due 05/01/09 $ 45,000
100,000 Ono Finance PLC, 144A (C)
13.000%, due 05/01/09 100,000
75,000 P & L Coal Holdings Corp., 144A
Senior Subordinate Note (C)
9.625%, due 05/15/08 77,813
105,000 Pinnacle Holdings, Inc., Step Coupon
Senior Discount Note (B)
10.000%, due 03/15/08 64,837
90,000 Silgan Holdings, Inc.
Senior Subordinate Note
9.000%, due 06/01/09 93,375
80,000 Thermadyne Holdings Corp.
9.875%, due 06/01/08 75,000
160,000 Thermadyne Holdings Corp., Step Coupon
Debenture (B)
12.500%, due 06/01/08 81,600
100,000 Willis Corroon Corp., 144A
Senior Subordinate Note (C)
9.000%, due 02/01/09 101,250
806,984
Technology - 5.34%
110,000 Argo-Tech Corp.
Senior Subordinate Note
8.625%, due 10/01/07 107,113
95,000 Be Aerospace, Inc., Series B, 144A
Senior Note (C)
8.000%, due 03/01/08 94,762
25,000 Be Aerospace, Inc., 144A
Senior Note (C)
9.500%, due 11/01/08 26,687
75,000 Completel Europe N.V., 144A, Step Coupon (C)
14.000%, due 02/15/09 39,844
150,000 K & F Industries, Series B
Senior Subordinate Note
9.250%, due 10/15/07 154,125
150,000 Level 3 Communications, Inc., 144A
Senior Note (C)
9.125%, due 05/01/08 153,188
85,000 Metromedia Fiber Network, 144A
Senior Note (C)
10.000%, due 11/15/08 91,800
80,000 Unisys Corp., Series B
Senior Discount Note
12.000%, due 04/15/03 88,200
35,000 Unisys Corp.
Senior Note
7.875%, due 04/01/08 36,575
792,294
Building and Construction - 4.42%
$ 200,000 American Standard Companies, Inc.
7.375%, due 02/01/08 $ 197,000
50,000 American Standard Companies, Inc.
7.625%, due 02/15/10 49,500
50,000 Building Materials Corp., Series B
Senior Note
7.750%, due 07/15/05 49,000
50,000 Building Materials Corp., Series B
Senior Note
8.625%, due 12/15/06 50,750
50,000 Building Materials Corp., Series B
Senior Note
8.000%, due 10/15/07 49,375
100,000 Formica Corp., 144A
Senior Subordinate Note (C)
10.875%, due 03/01/09 101,125
40,000 MMI Products, Inc., 144A
Senior Subordinate Note (C)
11.250%, due 04/15/07 43,100
110,000 Nortek, Inc., Series B
Senior Note
9.250%, due 03/15/07 114,675
654,525
Metals and Mining - 4.05%
70,000 AK Steel Corp., Senior Note
9.125%, due 12/15/06 74,200
75,000 California Steel Industry, 144A, Senior Note (C)
8.500%, due 04/01/09 76,687
100,000 Commonwealth Aluminum
Senior Subordinate Note
10.750%, due 10/01/06 101,625
75,000 Doe Run Resources Corp., Series B
11.250%, due 03/15/05 65,437
60,000 Kaiser Aluminum & Chemical Co.
Senior Note
9.875%, due 02/15/02 61,200
50,000 Metal Management, Inc., 144A
Senior Subordinate Note (C)
10.000%, due 05/15/08 40,000
30,000 Schuff Steel Company
10.500%, due 06/01/08 27,975
100,000 WCI Steel, Inc., Series B
Senior Note
10.000%, due 12/01/04 104,500
50,000 Weirton Steel Corp.
Senior Note
10.750%, due 06/01/05 48,063
599,687
Durable Goods - 4.00%
$ 50,000 Dura Operating Corp., 144A
Senior Subordinate Note (C)
9.000%, due 05/01/09 $ 50,625
200,000 Federal-Mogul Corp., 144A (C)
7.500%, due 01/15/09 195,024
110,000 Hayes Wheels International, Inc.
Senior Subordinate Note
11.000%, due 07/15/06 122,100
50,000 International Knife & Saw
Senior Subordinate Note
11.375%, due 11/15/06 50,937
100,000 Oxford Automotive, Inc.
10.125%, due 06/15/07 104,000
65,000 Simonds Industries, 144A
Senior Subordinate Note (C)
10.250%, due 07/01/08 65,650
5,000 Talon Automotive, 144A
Senior Subordinate Note (C)
9.625%, due 05/01/08 4,413
592,749
Recreation - 3.99%
150,000 Boyd Gaming Corp.
Senior Subordinate Note
9.500%, due 07/15/07 154,875
125,000 Circus Circus Enterprise
Senior Note
6.450%, due 02/01/06 114,318
110,000 Coast Hotels & Casino, 144A
Senior Subordinate Note (C)
9.500%, due 04/01/09 112,200
50,000 Hollywood Park, Inc., 144A
Senior Subordinate Note (C)
9.250%, due 02/15/07 51,625
50,000 Isle of Capri Casinos, 144A
Senior Subordinate Note (C)
8.750%, due 04/15/09 49,875
30,000 Lady Luck Gaming, Series QTR
11.875%, due 03/01/01 30,487
75,000 Station Casinos
Senior Subordinate Note
8.875%, due 12/01/08 77,625
591,005
Basic Materials - 3.71%
50,000 Applied Extrusion Technology, Series B
Senior Note
11.500%, due 04/01/02 51,875
90,000 Buckeye Cellulos
Senior Subordinate Note
9.250%, due 09/15/08 95,062
Basic Materials (continued)
$ 50,000 Fibermark, Inc.
Senior Note
9.375%, due 10/15/06 $ 49,750
10,000 Florida Coast Paper LLC, Series B (C)
12.750%, due 06/01/03 4,600
15,000 Galey & Lord, Inc.
9.125%, due 03/01/08 11,550
100,000 Polymer Group, Inc.
9.000%, due 07/01/07 102,500
75,000 Repap New Brunswick, Yankee
Senior Note (D)
9.000%, due 06/01/04 72,000
50,000 Synthetic Industries, Inc., Series B
Senior Subordinate Note
9.250%, due 02/15/07 52,000
110,000 US Timberlands Co.
Senior Note
9.625%, due 11/15/07 110,138
549,475
Energy - 3.02%
110,000 Anacomp, Inc.
Senior Subordinate Note
10.875%, due 04/01/04 115,500
55,000 Chesapeake Energy, 144A
Senior Note (C)
9.625%, due 05/01/05 50,325
75,000 Clark R&M, Inc., 144A
Senior Note (C)
8.625%, due 08/15/08 71,250
45,000 Continental Resources, 144A
Senior Subordinate Note (C)
10.250%, due 08/01/08 34,256
100,000 Forest Oil Corp.
10.500%, due 01/15/06 105,000
10,000 Pool Energy Services Co., Series B
8.625%, due 04/01/08 10,150
60,000 Pride International, Inc.
Senior Note
9.375%, due 05/01/07 61,200
447,681
Consumer Staples - 2.93%
90,000 Finlay Enterprises, Inc.
Debentures
9.000%, due 05/01/08 87,300
50,000 International Utility Structures, Yankee, 144A
Senior Subordinate Note (C)(D)
10.750%, due 02/01/08 50,937
115,000 Pierce Leahy Corp.
Senior Subordinate Note
11.125%, due 07/15/06 128,225
Consumer Staples (continued)
$ 70,000 Remington Products Co. LLC, Series B
Senior Subordinate Note
11.000%, due 05/15/06 $ 53,900
90,000 Revlon Consumer Products
Senior Note
8.125%, due 02/01/06 88,200
35,000 Samsonite Corp.
Senior Subordinate Note
10.750%, due 06/15/08 26,075
434,637
Containers / Packaging - 2.92%
115,000 Ball Corp., 144A
Senior Subordinate Note (C)
8.250%, due 08/01/08 119,025
55,000 Gaylord Container Corp., Series B
Senior Note
9.750%, due 06/15/07 53,350
85,000 Gaylord Container Corp., 144A
Senior Subordinate Note (C)
9.875%, due 02/15/08 75,650
50,000 Graham Packaging Co., 144A
Senior Subordinate Note (C)
8.750%, due 01/15/08 49,937
50,000 Packaging Corp. of America, 144A
Senior Subordinate Note (C)
9.625%, due 04/01/09 51,875
80,000 Riverwood International
10.250%, due 04/01/06 82,400
432,237
Printing - 2.38%
110,000 Big Flower Press, Inc.
Senior Subordinate Note
8.875%, due 07/01/07 111,650
75,000 Hollinger International, Inc.
9.250%, due 03/15/07 78,562
75,000 Mail-Well Corp., 144A
Senior Subordinate Note (C)
8.750%, due 12/15/08 76,875
50,000 World Color Press, Inc.
Senior Subordinate Note
8.375%, due 11/15/08 51,000
35,000 World Color Press, Inc., 144A
Senior Subordinate Note (C)
7.750%, due 02/15/09 34,300
352,387
Media - 2.30%
50,000 Albritton Communications, Series B
Senior Subordinate Debenture Bond
9.750%, due 11/30/07 53,125
Media (continued)
$ 50,000 AMC Entertainment
Senior Subordinate Note
9.500%, due 03/15/09 $ 49,250
100,000 Cinemark USA, Series B
Senior Subordinate Note
9.625%, due 08/01/08 103,500
60,000 Regal Cinemas, Inc., 144A
Senior Subordinate Note (C)
9.500%, due 06/01/08 59,850
60,000 Satelites Mexicanos SA, 144A (C)(D)
10.125%, due 11/01/04 49,650
25,000 TV Guide, Inc., 144A
Senior Subordinate Note (C)
8.125%, due 03/01/09 25,500
340,875
Industrial - 2.24%
65,000 GCI, Inc., Senior Note
9.750%, due 08/01/07 67,031
60,000 General Binding Corp.
9.375%, due 06/01/08 61,425
75,000 Moog, Inc., Series B
Senior Subordinate Note
10.000%, due 05/01/06 76,537
55,000 Numatics, Inc., 144A
Senior Subordinate Note (C)
9.625%, due 04/01/08 51,425
75,000 Venture Holdings Trust
Senior Subordinate Note
9.750%, due 04/01/04 76,125
332,543
Chemicals and Drugs - 1.57%
120,000 NL Industries
Senior Note
11.750%, due 10/15/03 128,400
25,000 PCI Chemical Canada, Inc., Yankee (D)
9.250%, due 10/15/07 21,000
90,000 Sterling Chemicals, Inc., Series A
Senior Subordinate Note
11.250%, due 04/01/07 83,475
232,875
Consumer Services - 1.41%
75,000 Eldorado Resorts
Senior Subordinate Note
10.500%, due 08/15/06 79,125
40,000 Iron Mountain, Inc.
10.125%, due 10/01/06 43,450
85,000 Iron Mountain, Inc.
8.750%, due 09/30/09 87,125
209,700
Defense Electronics - 0.93%
$ 125,000 L-3 Communications Corp., Series B
Senior Subordinate Note
10.375%, due 05/01/07 $ 138,125
Capital Goods - 0.87%
20,000 Johnstown America Industries, Inc., Series C
Senior Note
11.750%, due 08/15/05 21,700
20,000 Johnstown America Industries, Inc.
Senior Subordinate Note
11.750%, due 08/15/05 21,700
90,000 Newcor, Inc., 144A
Senior Subordinate Note (C)
9.875%, due 03/01/08 85,950
129,350
Schools - 0.78%
110,000 Kindercare Learning Centers, Inc.
Senior Subordinate Note
9.500%, due 02/15/09 116,050
Transportation - 0.71%
110,000 Mark IV Industrial
Senior Subordinate Note
7.500%, due 09/01/07 105,468
Machinery - 0.67%
100,000 Columbus McKinnon Corp.
8.500%, due 04/01/08 99,750
Waste Disposal - 0.66%
100,000 Allied Waste North America, Series B
7.875%, due 01/01/09 97,500
Health Care Services - 0.58%
35,000 Alaris Medical, Inc., Step Coupon, 144A
Senior Discount Note (B)(C)
11.125%, due 08/01/08 21,525
30,000 Prime Medical Services, 144A
Senior Note (C)
8.750%, due 04/01/08 29,550
35,000 Tenet Healthcare Corp., 144A
Senior Subordinate Note (C)
8.125%, due 12/01/08 34,475
85,550
Total Corporate Notes and Bonds 13,891,460
( Cost $13,973,670)
PREFERRED STOCK - 0.16%
Media - 0.16%
250 Primedia, Inc., Series H $ 24,250
Total Preferred Stock 24,250
( Cost $24,850 )
WARRANTS - 0.01%
Communication - 0.01%
185 Allegiance Telecom, Inc. 27
30 American Mobile SAT 900
25 Convergent Communications, Inc., 144A (C) 0
50 Versatel Telecom BV, 144A (C) 0
927
Finance - 0.00%***
325 DTI Holdings, Inc., 144A (C) 3
Total Warrants 930
( Cost $0 )
Par Value
CERTIFICATE OF DEPOSIT - 5.30%
$ 784,555 State Street Eurodollar
4.500%, due 05/03/99 784,555
Total Certificate of Deposit 784,555
( Cost $784,555 )
TOTAL INVESTMENTS - 99.20% 14,701,195
( Cost $14,783,075** )
NET OTHER ASSETS AND LIABILITIES - 0.80% 118,928
TOTAL NET ASSETS 100.00% $14,820,123
Security Par Date Acquired Cost Basis
Versatel Telecom BV, 144A
Senior Note, With Warrants
13.250%, 05/15/08 $ 25,000 05/21/98 $ 25,000
Versatel Telecom BV, 144A
Senior Note, With Warrants
13.250%, 05/15/08 25,000 07/01/98 26,375
Other Information:
S&P Ratings % of Portfolio
BBB 1.6%
BB 17.6
B 70.4
CCC 9.4
NOTRATED 1.0
100.0%
** Aggregate cost for Federal tax purposes.
*** Amount represents less than 0.01%
PIK Payment-In-Kind
(B) Represents securities that remain zero coupon until predetermined date,
at which the stated coupon rate becomes the effective rate.
(C) Security sold within the terms of private placement memorandum exempt
from registration under section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
qualified institutional investors. These securities have been
determined to be liquid under guidelines established by the Board of
Directors.
(D) Notes and bonds, issued by foreign entities, denominated in U.S.
dollars. The aggregate of these securities are 6.43% of total net
assets.
(E) Securities purchased as part of a private placement which have not been
registered with the Securities and Exchange Commission under the
Securities act of 1933 and are considered illiquid. On April 30, 1999,
the total market value of these investments was $54,000 or 0.36% of the
total net assets.
Growth and Income Fund - Portfolio of Investments (Unaudited)
Value
Shares (Note 2)
COMMON STOCKS - 94.53%
Technology - 17.43%
21,000 Computer Associates International, Inc. $ 896,438
4,100 Conexant Systems, Inc.* 167,075
9,000 EMC Corp.* 980,438
18,200 Harris Corp. 629,038
11,400 Hewlett-Packard Co. 899,175
6,700 International Business Machines Corp. 1,401,556
10,100 Koninklijke (Royal) Philips
Electronics N.V. 862,288
11,900 Motorola, Inc. 953,488
9,500 Nortel Networks Corp. 647,781
10,600 Texas Instruments, Inc. 1,082,525
8,519,802
Consumer Staples - 14.79%
19,000 ConAgra, Inc. 472,625
14,900 CVS Corp. 709,612
15,500 Disney (Walt) Co. 492,125
9,000 General Mills, Inc. 658,125
21,800 Kimberly-Clark Corp. 1,336,613
21,900 MediaOne Group, Inc.* 1,786,219
17,600 Nabisco Holdings Corp., Class A 665,500
18,100 PepsiCo, Inc. 668,569
19,800 Sara Lee Corp. 440,550
7,229,938
Financial Services - 13.89%
26,600 Allstate Corp.* 967,575
17,092 Bank of America Corp. 1,230,624
19,970 Bank One Corp. 1,178,230
4,500 Bankers Trust Corp. 405,281
15,200 Citigroup, Inc. 1,143,800
13,700 Household International, Inc. 689,281
6,400 Morgan Stanley Dean Witter & Co.* 634,800
6,100 Wachovia Corp. 536,038
6,785,629
Healthcare - 9.74%
10,200 Aetna, Inc. 894,412
16,000 American Home Products Corp. 976,000
16,100 Bristol-Myers Squibb Co. 1,023,356
9,600 Glaxo Wellcome PLC, ADR 559,200
8,400 Johnson & Johnson 819,000
20,600 Tenet Healthcare Corp.* 486,675
4,758,643
Energy - 7.40%
5,803 BP Amoco PLC, ADR 656,827
6,800 Exxon Corp. 564,825
12,300 Schlumberger, Ltd. 785,662
9,000 Texaco, Inc.* 564,750
Energy (continued)
12,500 Unocal Corp. $ 519,531
16,800 USX-Marathon Group 525,000
3,616,595
Communication Services - 6.56%
4,700 AirTouch Communications, Inc.* 438,862
10,400 Ameritech Corp. 711,750
11,778 AT&T Corp. 594,789
11,100 GTE Corp. 743,006
7,000 Sprint Corp.* 717,938
3,206,345
Capital Goods - 6.32%
10,300 Crown Cork & Seal Co., Inc. 334,750
6,800 Honeywell, Inc. 644,300
9,900 Rockwell International Corp. 511,087
4,800 United Technologies Corp. 695,400
15,962 Waste Management, Inc.* 901,853
3,087,390
Consumer Cyclical - 4.66%
12,938 Dana Corp. 609,703
15,700 Sears, Roebuck & Co. 722,200
20,600 Wal-Mart Stores, Inc. 947,600
2,279,503
Utilities - 4.40%
7,700 Duke Energy Corp. 431,200
11,300 Northern States Power Co. 272,612
14,100 PG & E Corp. 437,981
21,300 Williams Companies, Inc. 1,006,425
2,148,218
Basic Materials - 4.23%
7,100 Dow Chemical Co. 931,431
5,400 Georgia-Pacific Group 499,500
9,800 PPG Industries, Inc. 636,388
2,067,319
Miscellaneous - 2.68%
11,400 AlliedSignal, Inc. 669,750
7,200 Minnesota Mining and Manufacturing Co. 640,800
1,310,550
Transportation - 2.43%
10,200 Burlington Northern Santa Fe Corp. 373,575
6,800 Delta Air Lines, Inc. 431,375
11,700 Norfolk Southern Corp. 382,444
1,187,394
Total Common Stocks 46,197,326
( Cost $38,413,134 )
CERTIFICATE OF DEPOSIT - 0.72%
$ 349,866 State Street Eurodollar
4.500%, due 05/04/03 $ 349,866
Total Certificate of Deposit 349,866
( Cost $349,866 )
INVESTMENT COMPANY - 4.70%
2,300,000 State Street Prime Money Market
4.83% 2,300,000
Total Investment Company 2,300,000
( Cost $2,300,000 )
TOTAL INVESTMENTS - 99.95% $48,847,192
( Cost $41,063,000** )
NET OTHER ASSETS AND LIABILITIES - 0.05% 24,598
TOTAL NET ASSETS - 100.00% $48,871,790
- -------------------------------
* Non-income producing security.
** Aggregate cost for Federal tax purposes.
ADR American Depositary Receipt
Capital Appreciation Fund - Portfolio of Investments (Unaudited)
Value
Shares (Note 2)
COMMON STOCKS - 94.68%
Technology - 17.48%
10,600 3Com Corp.* $ 276,925
7,100 Autodesk, Inc. 211,225
14,700 Cadence Design Systems, Inc.* 199,369
600 Conexant Systems, Inc.* 24,450
8,400 Dallas Semiconductor Corp. 357,000
7,300 EMC Corp.* 795,244
7,500 Gateway 2000, Inc.* 496,406
16,400 Keane, Inc.* 406,925
5,800 Micron Technology, Inc.* 215,325
15,600 PeopleSoft, Inc.* 213,525
11,400 Seagate Technology, Inc.* 317,775
3,400 Texas Instruments, Inc. 347,225
18,500 Wang Laboratories, Inc.* 463,656
4,325,050
Financial Services - 15.12%
9,000 Ace, Ltd. 272,250
2,100 Bankers Trust Corp. 189,131
9,800 Citigroup, Inc. 737,450
8,900 Edwards (A.G.), Inc. 311,500
11,000 Everest Reinsurance Holdings, Inc. 333,437
14,600 First Security Corp. 277,400
5,100 MBIA, Inc. 342,975
12,600 Mutual Risk Management, Ltd. 489,825
4,900 SunTrust Banks, Inc. 350,350
10,100 Wells Fargo Co.* 436,194
3,740,512
Consumer Staples - 13.84%
6,400 Cox Communications, Inc., Class A* 508,000
13,100 MediaOne Group, Inc.* 1,068,469
9,000 Nabisco Holdings Corp., Class A 340,312
11,200 Rite Aid Corp. 261,100
12,400 Safeway, Inc.* 668,825
8,900 Sara Lee Corp. 198,025
18,300 Tyson Foods, Inc., Class A 378,581
3,423,312
Consumer Cyclical - 12.41%
12,300 Dayton Hudson Corp. 827,944
8,800 IMS Health, Inc. 264,000
27,700 PRIMEDIA, Inc.* 448,394
13,800 Sherwin-Williams Co. 429,525
6,900 Tiffany & Co. 579,600
15,600 TJX Companies, Inc. 519,675
3,069,138
Healthcare - 7.31%
5,800 Aetna, Inc. 508,587
7,400 ALZA Corp.* 248,363
8,100 Centocor, Inc.* 359,438
Healthcare (continued)
7,000 Elan Corp., PLC, ADR* $ 360,500
5,900 Pharmacia & Upjohn, Inc. 330,400
1,807,288
Capital Goods - 6.03%
5,300 Illinois Tool Works, Inc.* 408,100
18,700 Owens-Illinois, Inc.* 542,300
13,900 Pall Corp. 256,281
10,800 Raychem Corp. 285,525
1,492,206
Basic Materials - 5.26%
6,500 Dexter Corp. 266,906
6,300 Praxair, Inc. 326,025
8,800 Rohm & Haas Co. 394,350
6,700 Willamette Industries, Inc. 313,225
1,300,506
Energy - 5.02%
5,100 Kerr-McGee Corp. 216,112
7,100 Unocal Corp. 295,094
11,800 USX-Marathon Group 368,750
10,700 Weatherford International, Inc.* 362,463
1,242,419
Communication Services - 4.58%
6,000 AirTouch Communications, Inc.* 560,250
2,100 Sprint Corp. (PCS Group)* 88,988
6,400 Telefonos de Mexico SA, Class L, ADR 484,800
1,134,038
Utilities - 3.66%
8,900 MidAmerican Energy Holdings Co.* 286,469
4,600 Sonat, Inc. 164,450
9,600 Williams Companies, Inc. 453,600
904,519
Transportation - 2.61%
4,100 FDX Corp.* 461,506
5,900 Midwest Express Holdings, Inc.* 184,375
645,881
Miscellaneous - 1.36%
19,300 Interim Services, Inc.* 335,337
Total Common Stocks 23,420,206
(Cost $20,002,124)
INVESTMENT COMPANY - 4.49%
1,110,532 State Street Prime Money Market
4.83% $1,110,532
Total Investment Company 1,110,532
( Cost $1,110,532 )
TOTAL INVESTMENTS - 99.17% 24,530,738
( Cost $21,112,656** )
NET OTHER ASSETS AND LIABILITIES - 0.83% 206,476
TOTAL NET ASSETS - 100.00% $24,737,214
- -------------------------------
* Non-income producing security.
** Aggregate cost for Federal tax purposes.
ADR American Depositary Receipt
International Stock Fund - Portfolio of Investments (Unaudited)
Value
(Note 2)
COMMON STOCKS - 90.91%
Argentina - 1.26%
11,100 Quilmes Industrial, S.A., ADR* $ 121,406
3,300 Telefonica de Argentina, S.A., ADR 123,337
4,400 YPF Sociedad Anonima, ADR 184,800
429,543
Australia - 5.18%
280,110 Boral, Ltd. 457,846
70,151 Broken Hill Proprietary Co., Ltd. 793,081
24,300 Cochlear, Ltd. 187,338
557,157 M.I.M. Holdings, Ltd. 328,142
1,766,407
Austria - 1.25%
377,125 Goodman Fielder, Ltd. 364,361
1,000 KTM-Sportmotorcycle AG 62,434
426,795
Belgium - 0.26%
2,020 Compagnie Maritime Belge S.A. 88,575
Bermuda - 0.81%
185,938 Dairy Farm International Holdings, Ltd. 275,188
Brazil - 1.45%
5,200 Companhia Brasileira de Distribuicao
Grupo Pao de Acucar, GDR* 90,675
9,100 Companhia Cervejaria Brahma, ADR 88,725
3,358 Companhia Energetica de Minas Gerais
S.A., ADR 80,561
10,000 Companhia Paranaense de Energia-
Copel, ADR* 81,875
162,800 Companhia Riograndense de
Telecomunicacoes* 64,199
13,300 Souza Cruz S.A. 89,120
1,500 Telecomunicacoes Brasileiras S.A., ADR* 117
4,284 Telecomunicacoes de Sao Paulo S.A. Rights 0
495,272
Canada - 0.08%
2,900 Maple Leaf Foods, Inc. 25,857
Chile - 0.78%
6,700 Administradora de Fondos de Pensiones Provida,
ADR 134,837
7,500 Quinenco, S.A., ADR 80,625
5,200 Santa Isabel, S.A., ADR 52,000
267,462
China - 0.24%
156,000 Jiangsu Expressway Co., Ltd., Class H 34,014
232,000 Shenzhen Expressway Co., Ltd., Class H 47,591
81,605
Czech Republic - 0.13%
31,900 Czeske Energeticke Zavody * $ 44,154
Denmark - 0.09%
400 Falck A/S 30,703
Finland - 4.72%
4,900 Amer Group, Ltd. 60,575
2,560 Asko Oyj, Class A 41,385
99,250 Fortum Corp., IVO - Neste Group* 529,581
8,450 Orion-Yhtyma Oyj, Class B 169,637
3,300 Rocla Oyj 23,361
1,600 Sampo Insurance Co. PLC, Class A* 50,396
22,670 UPM-Kymmene Oyj 686,257
600 Vaisala Oyj 47,547
1,608,739
France - 9.63%
1,200 Carbone-Lorraine 65,551
1,100 Cie des Signaux, S.A. 69,387
16,817 CNP Assurances 421,122
4,462 Dexia France 624,678
4,474 Eridania Beghin-Say, S.A. 620,685
2,552 Groupe Danone 682,200
6,100 Neopost, S.A.* 110,085
900 Scor, ADR 46,125
3,781 Suez Lyonnaise des Eaux 643,196
3,283,029
Germany - 5.83%
4,790 BASF AG 209,783
11,067 Bayer AG 467,736
6,730 BHF-Bank AG 254,926
600 Data Modul AG 14,201
7,850 Deutche Bank AG 453,284
872 Deutche Bank AG* 49,016
1,600 Hawesko Holding AG 64,241
100 KSB AG 14,370
7,500 Marseille-Kliniken AG 108,566
6,430 Veba AG 352,605
1,988,728
Greece - 0.28%
3,811 Hellenic Telecommunications
Organization S.A. 88,412
500 Hellenic Telecommunications
Organization S.A., ADR* 5,969
94,381
Hong Kong - 2.08%
310,000 Axa China Region, Ltd. 237,969
132,000 CDL Hotels International, Ltd. 54,496
1,500 China Telecom (Hong Kong), Ltd., ADR* 68,625
Hong Kong (continued)
154,000 Esprit Holdings, Ltd.* $ 91,395
7,000 Guangshen Railway Co., Ltd., ADR 46,812
75,000 Peregrine Investments Holdings, Ltd* (A) 0
30,000 Shaw Brothers (Hong Kong), Ltd. 20,513
24,000 VTech Holdings, Ltd. 82,054
49,000 Yue Yuen Industrial Holdings 108,102
709,966
Hungary - 0.27%
1,000 Magyar Tavkozlesi Rt., ADR, Class B 28,125
2,900 MOL Magyar Olaj-es Gazipari Rt. 64,609
92,734
India - 1.12%
4,400 Hindalco Industries, Ltd., GDR 63,030
3,250 Hindalco Industries, Ltd. 43,293
8,600 Larsen & Toubro, Ltd., GDR, 144A (C) 75,227
11,200 Mahanagar Telephone Nigam, Ltd., GDR,
144A* (C) 116,816
9,400 State Bank of India, GDR, 144A (C) 83,942
382,308
Ireland - 0.33%
7,800 Adare Printing Group PLC 57,690
19,100 Anglo Irish Bank Corp. PLC 55,498
113,188
Israel - 0.79%
17,200 Bank Hapoalim, Ltd. 41,048
3,700 ECI Telecom, Ltd. 136,437
6,800 Supersol, Ltd., ADR* 91,375
268,860
Italy - 2.78%
3,000 Banca Popolare di Brescia 103,177
5,100 Industrie Natuzzi SpA, ADR 97,537
11,400 Interpump Group SpA 50,831
18,300 Manuli Rubber Industries SpA 54,914
29,600 Premafin Finanziaria SpA* 21,236
115,310 Telecom Italia SpA 620,148
947,843
Japan - 16.09%
1,200 ADERANS Co., Ltd. 48,543
44,000 Eisai Co., Ltd. 823,618
119,000 Hitachi, Ltd. 869,079
700 Hokuto Corp. 21,692
97,000 Japan Airlines Co., Ltd. 305,461
1,000 Kawasumi Laboratories, Inc. 17,253
3,000 Laox 24,749
109,000 Mazda Motor Corp. 464,665
Japan (continued)
16,900 NAMCO, Ltd. $ 382,161
5,000 Nippon Mitsubishi Oil Corp. 22,320
82 Nippon Telegraph & Telephone Corp. 892,797
183,000 Nippon Yusen Kabushiki Kaisha 712,688
3,960 Paris Miki, Inc. 132,000
111,460 Sekisui Chemical Co., Ltd. 744,934
700 Torii Pharmaceutical Co., Ltd. 23,451
5,485,411
Korea - 0.99%
3,756 Samsung Electronics, GDR, 144A* (C) 160,287
12,759 SK Telecom Co., Ltd., ADR* 177,031
337,318
Malaysia - 0.14%
31,000 Jaya Tiasa Holdings Berhad 46,908
Mexico - 3.07%
33,880 Cemex, S.A. de C.V., CPO 157,667
1,800 Fomento Economico Mexicano,
S.A. de C.V., Class B, ADR 65,475
15,200 Fomento Economico Mexicano,
S.A. de C.V., Class B 54,286
60,146 Grupo Financiero Banamex Accival,
S.A. de C.V., Class O* 153,294
7,500 Grupo Financiero Banorte, S.A. de
C.V., Class B* 9,724
10,600 Grupo Industrial Maseca, S.A.,
de C.V., ADR 111,962
3,300 Grupo Televisa, S.A., GDR* 135,300
32,100 Kimberly-Clark de Mexico,
S.A. de C.V., Class A 125,065
3,200 Panamerican Beverages, Inc., Class A 71,000
8,500 Pepsi-Gemex, S.A., GDR* 89,250
6,700 Tubos de Acero de Mexico, S.A., ADR* 74,119
1,047,142
Netherlands - 2.51%
4,100 Avalix Groep N.V.* 33,140
1,600 Fugro N.V. 43,363
18,410 KLM-Konin Luchtvaart Mij N.V. 558,273
3,900 N.V. Holdingmaatschappij De Telegraaf 84,887
11,700 Scala Business Solutions N.V.* 72,319
900 Van der Moolen Holding N.V. 63,428
855,410
New Zealand - 0.99%
229,537 Carter Holt Harvey, Ltd. 336,837
Norway - 0.58%
5,000 Ekornes ASA 49,280
730 Electric Farm ASA* 0
Norway (continued)
19,000 P4 Radio Hele Norge ASA $ 72,960
6,000 Schibsted ASA 74,496
196,736
Peru - 0.42%
4,300 Credicorp, Ltd. 43,538
6,500 Telefonica del Peru S.A.A., ADR 97,906
141,444
Philippines - 0.68%
466,000 Benpres Holdings Corp.* 109,070
5,600 Benpres Holdings Corp., GDR, 144A* (C) 26,215
900 Benpres Holdings Corp., GDR* 3,712
2,900 Philippine Long Distance Telephone Co., ADR 93,525
232,522
Poland - 0.28%
8,000 Bank Handlowy W. Warszawie, GDR, 144A (C) 95,200
Portugal - 3.10%
21,732 Banco Pinto $ Sotto Mayor, S.A. 405,280
4 Banco Totta & Acores, S.A., Registered 60
1,278 Brisa-Auto Estradas de Portugal,
S.A., Registered 55,337
12,150 Brisa-Auto Estradas de Portugal,
S.A., Private Placement 514,791
2,900 Companhia de Seguros Mundial
Confianca, S.A.* 81,813
1,057,281
Singapore - 0.71%
24,453 United Overseas Bank, Ltd.,
Foreign Registered* 188,843
43,000 Want Want Holdings, Ltd. 52,460
241,303
South Africa - 1.80%
17,600 ABSA Group, Ltd. 92,555
15,671 Barlow, Ltd. 94,000
1 Edgars Stores, Ltd. 3
9,700 JD Group, Ltd. 62,408
3,800 Liberty Life Association of Africa, Ltd. 54,767
12,300 Naspers, Ltd., Class N 64,684
12,900 Rembrandt Group, Ltd. 98,048
57,100 Sanlam, Ltd.* 56,021
11,200 South African Breweries PLC* 92,582
615,068
South Korea - 0.17%
2,000 Korea Electric Power Corp. 57,552
Spain - 1.98%
1,800 Banco Pastor, S.A. 94,866
25,075 Fuerzas Electricas de Cataluna,
S.A., Class A 238,448
24,278 Iberdrola, S.A. 339,891
673,205
Sweden - 0.61%
3,100 Elanders AB, Class B $ 49,603
4,700 Getinge Industrier AB, Class B 72,976
6,200 Industrial & Financial Systems,
IFS AB, Class B* 49,603
9,100 Monark Stiga AB 35,593
207,775
Switzerland - 3.91%
52 Bank Sarasin & Cie, Registered 92,699
340 Edipresse, S.A., Bearer 85,791
100 Eichhof Holding AG, Registered 78,647
780 Gretag Imaging Group, Registered* 74,381
55 Moevenpick Holding AG, Bearer 28,116
130 SAIA-Burgess Electronics AG, Registered 33,740
1,163 The Swatch Group AG, Bearer 829,299
1,100 TAG Heuer International, S.A., Registered 110,123
1,332,796
Thailand - 0.29%
43,000 Bangkok Expressway Public Co., Ltd.,
Foreign Registered* 36,829
86,000 Siam Commercial Bank* 60,318
97,147
United Kingdom - 13.02%
18,600 AMEC PLC 80,490
29,600 Ashtead Group PLC 108,330
68,070 Blue Circle Industries PLC 450,884
14,540 Britannic PLC 233,203
19,000 Carpetright PLC 120,733
3,100 Denison International PLC, ADR* 41,463
12,100 Devro PLC 26,667
1,947 Euromoney Publications PLC 58,728
5,100 Games Workshop Group PLC 32,407
8,800 Goode Durrant PLC 67,527
57,674 Greenalls Group PLC 363,697
20,600 Hogg Robinson PLC 81,191
35,540 Hyder PLC 442,521
9,336 Invensys PLC 47,647
20,000 Jardine Lloyd Thompson Group PLC 70,944
23,400 JBA Holdings PLC 53,454
15,100 Man (E D & F) Group PLC 74,817
1,554 Medeva PLC 2,900
126,720 Rolls-Royce PLC* 587,101
78,510 Safeway PLC 326,799
9,088 Seton Scholl Healthcare Group PLC 112,573
5,700 Signet Group PLC, ADR 163,87
142,682 Tomkins PLC 606,540
73,046 United Biscuits (Holdings) PLC 227,380
19,700 Victrex PLC 54,826
4,436,697
Venezuela - 0.21%
1,600 Compania Anonima Nacional Telefonos
de Venezuela, ADR $ 44,000
9,200 Mavesa, S.A., ADR 27,600
71,600
Total Common Stocks 30,986,689
(Cost $28,618,238 )
PREFERRED STOCKS - 2.79%
Brazil - 0.84%
180,000 Banco Itau S.A. 94,827
1,500 Telecomunicacoes Brasileiras S.A., ADR 136,781
437,169 Telecomunicacoes de Sao Paulo S.A.* 55,008
286,616
Columbia - 0.16%
5,900 Banco Ganadero S.A., ADR 56,050
Germany - 1.79%
1,700 Fielmann AG 69,154
11,555 ProSieben Media AG 539,638
608,792
Total Preferred Stocks 951,458
( Cost $1,011,746 )
CERTIFICATE OF DEPOSIT - 4.88%
$1,664,709 State Street Eurodollar
4.500%, due 05/04/03 $1,664,709
Total Certificate of Deposit 1,664,709
( Cost $1,664,709 )
TOTAL INVESTMENTS - 98.58% 33,602,856
( Cost $31,294,693** )
NET OTHER ASSETS AND LIABILITIES - 1.42% 482,621
TOTAL NET ASSETS - 100.00% $34,085,477
- -------------------------------
* Non-income producing security.
** Aggregate cost for Federal tax purposes.
(A) As of January 8, 1998, security trading has been suspended.
(C) Security sold within the terms of private placement memorandum
exempt from registration under section 144A of the Securities Act of
1933, as amended, and may be sold only to dealers in that program or
other qualified institutional investors. These securities have been
determined to be liquid under guidelines established by the Board of
Directors.
ADR American Depositary Receipt
GDR Global Depository Receipt
As of April 30, 1999, the Fund had entered into the following forward foreign
currency exchange contracts resulting in net unrealized appreciation of $8,518.
Net Unrealized
Contracts to Deliver In Exchange For Settlement Date Appreciation
Japanese Yen 125,140,155 U.S. Dollars1,046,182 06/02/99 $ 6,653
Japanese Yen(125,140,155) U.S.Dollars(1,054,700) 06/02/99 1,865
$ 8,518
OTHER INFORMATION:
Industry Concentration as a Percentage of Net Assets:
% of Net Assets % of Net Assets
Finance 13.49% Building & Construction 3.50%
Communication 10.26 Durable Goods 3.27
Retail 8.54 Business Services 3.01
Transportation 8.34 Agriculture 2.21
Chemicals & Drugs 7.32 Media 1.69
Consumer Staples 5.74 Health 1.46
Industrial 5.61 Consumer Cyclical 1.29
Repurchase Agreement 4.88 Recreation 1.12
Energy 4.69 Consumer Services 0.09
Technology 4.46 Aerospace 0.01
Metals & Mining 3.82 Net Other Assets and Liabilities 1.42
Basic Materials 3.78 100.00%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Reserves Bond
Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
ASSETS:
Investments (Note 2):
<S> <C> <C>
Investments at cost $ 6,248,825 $ 11,473,994
Net unrealized appreciation (depreciation) -- (66,564)
----------------- -----------------
Total investments at value 6,248,825 11,407,430
Cash 120 --
Foreign currency (Cost $191,083)(Note 2) -- --
Receivables:
Investments sold -- 2,672,837
Fund shares sold -- 217,652
Dividends and interest 1,378 149,230
Due from Adviser, net 16,324 17,808
Net unrealized appreciation on forward currency contracts -- --
Deferred organization and offering costs 30,803 30,803
Prepaid insurance 726 1,055
Other assets -- --
----------------- -----------------
Total Assets 6,298,176 14,496,815
----------------- -----------------
Liabilities:
Cash overdraft -- 310,255
Payables:
Investments purchased -- 2,242,217
Due to Adviser, net -- --
Fund shares repurchased -- 8,804
Administration and transfer agent fees 8,952 11,273
Trustees' fees 124 239
Distribution fees - Class B 986 3,021
Shareholder servicing fees -- 2,349
Accrued expenses and other payables 52,509 68,392
----------------- -----------------
Total Liabilities 62,571 2,646,550
----------------- -----------------
Net Assets $ 6,235,605 $ 11,850,265
================= =================
Net Assets consist of:
Paid-in capital $ 6,211,805 $ 11,882,215
Accumulated undistributed (distribution in excess of) net investment income 23,338 (763)
Accumulated net realized gain (loss) on investments sold and
foreign currency related transactions 462 35,377
Net unrealized appreciation (depreciation) of investments (including
depreciation of foreign currency related transactions of $3,889 in the
International Stock Fund) -- (66,564)
----------------- -----------------
Net Assets $ 6,235,605 $ 11,850,265
================= =================
Class A Shares:
Net Assets $ 4,412,142 $ 6,663,682
Shares of beneficial interest outstanding 4,412,189 666,192
Net Asset Value and redemption price per share $ 1.00 $ 10.00
----------------- -----------------
Maximum offering price per share* $ 1.06 $ 10.45
================= =================
Class B Shares:
Net Assets $ 1,823,463 $ 5,186,583
Shares of beneficial interest outstanding 1,823,497 518,320
Net Asset Value and offering price per share** $ 1.00 $ 10.01
================= =================
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
* Sales charge of offering price is 5.3% for the Cash Reserves Fund, 4.3% for
the Bond Fund, 5.3% for the Balanced Fund, 4.3% for the High Income Fund
and 5.3% for the Growth and Income Fund, Capital Appreciation Fund and
International Stock Fund.
** Redemption price per share is equal to the Net Asset Value per share less
any applicable deferred sales charge.
</FN>
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced High Income Growth and Income Capital Appreciation International Stock
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 25,008,669 $ 14,783,075 $ 41,063,000 $ 21,112,656 $ 31,294,693
3,652,154 (81,880) 7,784,192 3,418,082 2,308,163
------------------ ------------------ ------------------ ------------------ -----------------
28,660,823 14,701,195 48,847,192 24,530,738 33,602,856
158,919 2,986 1,568 1,027 68,745
-- -- -- -- 184,963
2,243,365 -- 47,884 20,505 735,068
260,563 21,116 651,645 272,850 49,666
160,150 298,637 40,224 20,067 189,044
-- 10,473 -- -- --
-- -- -- -- 8,518
30,803 30,803 30,803 30,803 30,803
4,572 1,459 3,889 3,084 4,249
-- -- 9,375 11,523 78
------------------ ------------------ ------------------ ------------------ -----------------
31,519,195 15,066,669 49,632,580 24,890,597 34,873,990
------------------ ------------------ ------------------ ------------------ -----------------
-- -- -- -- --
2,155,442 110,906 647,369 94,288 712,186
18,910 -- 25,773 9,774 33,247
27,424 1,199 39,943 11,119 480
17,684 17,258 19,568 13,855 23,107
575 305 930 475 685
10,019 4,348 17,663 8,598 1,327
5,643 2,991 9,124 4,666 6,727
35,527 109,539 420 10,608 10,754
------------------ ------------------ ------------------ ------------------ -----------------
2,271,224 246,546 760,790 153,383 788,513
------------------ ------------------ ------------------ ------------------ -----------------
$ 29,247,971 $ 14,820,123 $ 48,871,790 $ 24,737,214 $ 34,085,477
================== ================== ================== ================== =================
$ 25,192,501 $ 15,067,383 $ 41,263,183 $ 20,891,821 $ 31,123,980
(1,425) 70,904 (20,080) (43,136) 52,895
404,741 (236,284) (155,505) 470,447 604,328
3,652,154 (81,880) 7,784,192 3,418,082 2,304,274
------------------ ------------------ ------------------ ------------------ -----------------
$ 29,247,971 $ 14,820,123 $ 48,871,790 $ 24,737,214 $ 34,085,477
================== ================== ================== ================== =================
$ 11,636,074 $ 7,544,088 $ 17,305,631 $ 9,397,198 $ 31,742,196
964,711 788,504 1,278,891 706,968 2,855,293
$ 12.06 $ 9.57 $ 13.53 $ 13.29 $ 11.12
------------------ ------------------ ------------------ ------------------ -----------------
$ 12.73 $ 10.00 $ 14.29 $ 14.03 $ 11.74
================== ================== ================== ================== =================
$ 17,611,897 $ 7,276,035 $ 31,566,159 $ 15,340,016 $ 2,343,281
1,459,204 760,446 2,334,353 1,163,005 211,297
$ 12.07 $ 9.57 $ 13.52 $ 13.19 $ 11.09
================== ================== ================== ================== =================
Statements of Operations for the Six Months Ended April 30, 1999 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------------------
Cash Reserves Bond
Fund Fund
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
<S> <C> <C>
Dividends $ -- $ --
Interest 136,697 277,709
Less: Foreign taxes withheld -- --
-----------------
Total investment income 136,697 277,709
-----------------
EXPENSES:
Management fees (Note 3) 10,922 23,745
Administration and transfer agent fees (Note 3) 45,562 49,441
Registration expenses 11,424 2,675
Custodian fees 3,816 3,662
Professional fees 5,997 5,252
Reports to shareholder expense 345 952
Trustees' fees (Note 3) 397 697
Distribution fees - Class B (Note 3) 4,883 13,633
Shareholder servicing fees - Class A (Note 3) -- 7,328
Shareholder servicing fees - Class B (Note 3) -- 4,544
Amortization of organization and offering costs (Note 2) 8,258 8,258
Other expenses 483 741
-----------------
Total expenses before reimbursement 92,087 120,928
Less reimbursement (Note 3) (72,182) (64,572)
-----------------
Total expenses net of reimbursement 19,905 56,356
-----------------
net investment income (loss) 116,792 221,353
-----------------
net realized and unrealized gain (loss) on investments (Note 2):
Net realized gain (loss) on investments (including a net realized loss on foreign currency
transactions of $15,076 in the International Stock Fund) 42 35,492
Net change in unrealized appreciation (depreciation) on investments (including a net
unrealized depreciation on foreign currency related transactions of $35,390 in the
International Stock Fund) -- (128,810)
-----------------
NET realized and unrealized GAIN (LOSS) ON INVESTMENTS 42 (93,318)
-----------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 116,834 $ 128,035
=================
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced High Income Growth and Income Capital Appreciation International Stock
Fund Fund Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 124,916 $ 1,188 $ 253,132 $ 88,390 $ 379,385
455,361 605,609 44,675 24,088 61,059
-- -- -- -- (39,011)
------------------ ----------------- ------------------ ------------------ -----------------
580,277 606,797 297,807 112,478 401,433
------------------ ----------------- ------------------ ------------------ -----------------
109,674 33,316 91,503 73,261 160,557
63,336 60,081 62,636 54,341 72,784
2,386 3,750 9,562 8,208 5,361
7,912 4,106 6,258 6,733 46,902
12,519 7,334 11,551 9,030 11,501
4,316 1,077 3,368 1,515 2,543
2,260 884 2,447 1,305 2,152
43,692 19,330 77,647 38,384 6,522
27,618 8,700 15,711 11,626 36,054
14,564 6,443 25,882 12,795 2,174
8,258 8,258 8,258 8,258 8,258
2,428 1,019 2,169 1,877 2,959
------------------ ----------------- ------------------ ------------------ -----------------
298,963 154,298 316,992 227,333 357,767
(69,797) (74,751) (72,969) (71,731) (106,431)
------------------ ----------------- ------------------ ------------------ -----------------
229,176 79,547 244,023 155,602 251,336
------------------ ----------------- ------------------ ------------------ -----------------
351,101 527,250 53,784 (43,124) 150,097
------------------ ----------------- ------------------ ------------------ -----------------
404,852 (169,168) (153,677) 472,454 630,772
3,244,598 1,006,637 7,744,001 3,036,065 3,228,844
------------------ ----------------- ------------------ ------------------ -----------------
3,649,450 837,469 7,590,324 3,508,519 3,859,616
------------------ ----------------- ------------------ ------------------ -----------------
$ 4,000,551 $ 1,364,719 $ 7,644,108 $ 3,465,395 $ 4,009,713
================== ================= ================== ================== =================
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Reserves Bond
Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
April 30, 1999 Period Ended April 30, 1999 Period Ended
(unaudited) October 31, 1998(1) (unaudited) October 31, 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period $ 5,233,081 $ 50,000 $ 7,022,297 $ 50,000
---------------- --------------- --------------- ----------------
Increase in net assets from operations:
Net investment income (loss) 116,792 167,773 221,353 194,052
Net realized gain (loss) 42 420 35,492 10,498
Net change in unrealized appreciation (depreciation) -- -- (128,810) 62,246
---------------- --------------- --------------- ----------------
Net increase (decrease) in net assets from operations 116,834 168,193 128,035 266,796
---------------- --------------- --------------- ----------------
Distributions to shareholders from:
Net investment income
Class A (93,133) (157,807) (160,527) (163,646)
Class B (23,659) (9,966) (84,272) (30,406)
Distributions in excess of net investment income
Class A -- -- (471) --
Class B -- -- (292) --
Net realized gains
Class A -- -- (6,869) --
Class B -- -- (3,744) --
---------------- --------------- --------------- ----------------
Total distributions (116,792) (167,773) (256,175) (194,052)
---------------- --------------- --------------- ----------------
Capital Stock transactions:
Class A Shares
Shares sold 765,496 5,496,824 1,984,846 4,702,204
Issued to shareholders in reinvestment of distributions 76,379 157,329 139,751 163,461
Shares redeemed (768,485) (1,364,778) (177,834) (174,114)
---------------- --------------- --------------- ----------------
Net increase (decrease) from capital stock transactions 73,390 4,289,375 1,946,763 4,691,551
---------------- --------------- --------------- ----------------
Class B Shares
Shares sold 1,652,103 1,315,996 3,196,883 2,223,002
Issued to shareholders in reinvestment of distributions 18,901 9,489 67,159 28,634
Shares redeemed (741,912) (432,199) (254,697) (43,634)
---------------- --------------- --------------- ----------------
Net increase from capital stock transactions 929,092 893,286 3,009,345 2,208,002
---------------- --------------- --------------- ----------------
Total increase in net assets 1,002,524 5,183,081 4,827,968 6,972,297
---------------- --------------- --------------- ----------------
NET ASSETS at end of period $ 6,235,605 $ 5,233,081 $ 11,850,265 $ 7,022,297
================ =============== =============== ================
Undistributed (distribution in excess of)
net investment income $ 23,338 $ 23,338 $ (763) $ 23,446
================ =============== =============== ================
OTHER INFORMATION:
Capital Share transactions:
Class A Shares
Shares sold 771,162 5,496,384 196,968 469,093
Issued to shareholders in reinvestment of distributions 77,078 157,376 13,894 16,269
Shares redeemed (774,149) (1,364,662) (17,665) (17,267)
---------------- --------------- --------------- ----------------
Net increase (decrease) in shares outstanding 74,091 4,289,098 193,197 468,095
---------------- --------------- --------------- ----------------
Class B Shares
Shares sold 1,671,935 1,314,093 317,719 220,718
Issued to shareholders in reinvestment of distributions 18,999 9,643 6,687 2,834
Shares redeemed (761,780) (430,393) (25,437) (4,301)
---------------- --------------- --------------- ----------------
Net increase in shares outstanding 929,154 893,343 298,969 219,251
---------------- --------------- --------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Funds commenced operations on December 29, 1997.
</FN>
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced High Income Growth and Income
Fund Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended Six Months Ended
April 30, 1999 Period Ended April 30, 1999 Period Ended April 30, 1999 Period Ended
(unaudited) October 31, 1998(1) (unaudited) October 31, 1998(1) (unaudited) October 31, 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 23,109,847 $ 50,000 $ 9,677,254 $ 50,000 $ 25,577,029 $ 50,000
--------------- ---------------- ---------------- --------------- ---------------- ----------------
351,101 151,971 527,250 457,306 53,784 51,697
404,852 2,595 (169,168) (67,321) (153,677) (1,828)
3,244,598 407,556 1,006,637 (1,088,517) 7,744,001 40,191
--------------- ---------------- ---------------- --------------- ---------------- ---------------
4,000,551 562,122 1,364,719 (698,532) 7,644,108 90,060
--------------- ---------------- ---------------- --------------- ---------------- ---------------
(266,859) (114,070) (288,970) (352,444) (55,928) (48,609)
(106,953) (37,901) (191,362) (104,862) (17,159) (3,088)
(933) (590) -- -- (7,585) (3,054)
(492) (306) -- -- (12,495) (2,653)
(1,979) -- -- -- -- --
(727) -- -- -- -- --
--------------- ---------------- ---------------- --------------- ---------------- --------------
(377,943) (152,867) (480,332) (457,306) (93,167) (57,404)
--------------- ---------------- ---------------- --------------- ---------------- --------------
16,975,401 15,586,877 1,310,677 6,528,079 7,624,530 11,287,655
249,485 114,515 235,569 350,011 63,095 51,706
(23,441,872) (458,280) (560,537) (149,760) (4,344,526) (439,612)
--------------- ---------------- ---------------- --------------- ---------------- -------------
(6,216,986) 15,243,112 985,709 6,728,330 3,343,099 10,899,749
--------------- ---------------- ---------------- --------------- ---------------- -------------
9,367,076 7,559,659 3,949,376 4,060,617 13,622,422 15,004,465
87,024 37,560 128,500 92,006 29,575 5,698
(721,598) (189,739) (805,103) (97,861) (1,251,276) (415,539)
--------------- ---------------- ---------------- --------------- ---------------- -------------
8,732,502 7,407,480 3,272,773 4,054,762 12,400,721 14,594,624
--------------- ---------------- ---------------- --------------- ---------------- -------------
6,138,124 23,059,847 5,142,869 9,627,254 23,294,761 25,527,029
--------------- ---------------- ---------------- --------------- ---------------- -------------
$ 29,247,971 $ 23,109,847 $ 14,820,123 $ 9,677,254 $ 48,871,790 $ 25,577,029
=============== ================ ================ =============== ================ =============
$ (1,425) $ 22,711 $ 70,904 $ 23,986 $ (20,080) $ 19,303
=============== ================ ================ =============== ================ =============
1,534,934 1,494,109 141,282 657,540 624,952 1,057,206
21,957 10,884 25,235 36,216 5,202 4,825
(2,059,943) (42,130) (60,673) (15,996) (377,449) (40,745)
--------------- ---------------- ---------------- --------------- ---------------- -------------
(503,052) 1,462,863 105,844 677,760 252,705 1,021,286
--------------- ---------------- ---------------- --------------- ---------------- -------------
814,465 710,854 427,710 410,828 1,110,799 1,363,973
7,640 3,588 13,757 9,755 1,861 557
(59,506) (17,937) (91,293) (10,411) (103,155) (39,782)
--------------- ---------------- ---------------- --------------- ---------------- ------------
762,599 696,505 350,174 410,172 1,009,505 1,324,748
--------------- ---------------- ---------------- --------------- ---------------- ------------
- ------------------------------------------------------------------------------------------------------------------------------------
Capital Appreciation International Stock
Fund Fund
- ------------------------------------------------------------------------------------------------------------------------------------
Six Months Ended Six Months Ended
April 30, 1999 Period Ended April 30, 1999 Period Ended
(unaudited) October 31, 1998(1) (unaudited) October 31, 1998(1)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSETS at beginning of period $ 20,435,388 $ 50,000 $ 29,005,768 $ 50,000
---------------- --------------- --------------- ----------------
Increase in net assets from operations:
Net investment income (loss) (43,124) (10,945) 150,097 218,074
Net realized gain (loss) 472,454 (2,007) 630,772 1,306,953
Net change in unrealized appreciation (depreciation) 3,036,065 382,017 3,228,844 (924,570)
---------------- --------------- --------------- ----------------
Net increase (decrease) in net assets from operations 3,465,395 369,065 4,009,713 600,457
---------------- --------------- --------------- ----------------
Distributions to shareholders from:
Net investment income
Class A -- -- (407,972) (19,999)
Class B -- -- (10,711) (1)
Distributions in excess of net investment income
Class A (10,082) (2,999) -- --
Class B -- (1) -- --
Net realized gains
Class A -- -- (1,166,977) --
Class B -- -- (66,391) --
---------------- --------------- --------------- ----------------
Total distributions (10,082) (3,000) (1,652,051) (20,000)
---------------- --------------- --------------- ----------------
Capital Stock transactions:
Class A Shares
Shares sold 3,948,627 13,061,416 430,381 26,957,663
Issued to shareholders in reinvestment of distributions 10,009 2,999 1,575,095
19,999
Shares redeemed (9,575,339) (198,712) (121,878) (66,752)
---------------- --------------- --------------- ----------------
Net increase (decrease) from capital stock transactions (5,616,703) 12,865,703 1,883,598 26,910,910
---------------- --------------- --------------- ----------------
Class B Shares
Shares sold 7,010,510 7,326,656 864,650 1,487,111
Issued to shareholders in reinvestment of distributions -- 1 76,883 1
Shares redeemed (547,294) (173,037) (103,084) (22,711)
---------------- --------------- --------------- ----------------
Net increase from capital stock transactions 6,463,216 7,153,620 838,449 1,464,401
---------------- --------------- --------------- ----------------
Total increase in net assets 4,301,826 20,385,388 5,079,709 28,955,768
---------------- --------------- --------------- ----------------
NET ASSETS at end of period $ 24,737,214 $ 20,435,388 $ 34,085,477 $ 29,005,768
================ =============== =============== ================
Undistributed (distribution in excess of) net
investment income $ (43,136) $ 10,070 $ 52,895 $ 321,481
================ =============== =============== ================
OTHER INFORMATION:
Capital Share transactions:
Class A Shares
Shares sold 320,549 1,227,548 42,189 2,672,922
Issued to shareholders in reinvestment of distributions 815 293 151,785 1,949
Shares redeemed (829,117) (18,020) (12,744) (5,708)
---------------- --------------- --------------- ----------------
Net increase (decrease) in shares outstanding (507,753) 1,209,821 181,230 2,669,163
---------------- --------------- --------------- ----------------
Class B Shares
Shares sold 570,839 656,474 84,505 133,396
Issued to shareholders in reinvestment of distributions -- --(2) 7,414 --(2)
Shares redeemed (47,736) (16,672) (11,890) (2,228)
---------------- --------------- --------------- ----------------
Net increase in shares outstanding 523,103 639,802 80,029 131,168
---------------- --------------- --------------- ----------------
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Funds commenced operations on December 29, 1997.
(2) Represents less than 1/2 of a share.
</FN>
Cash Reserves Fund
----------------------------------------------------------------
Class A Class B
----------------------------- ----------------------------
Six Months Six Months
Ended Period Ended Period
04/30/99 Ended 04/30/99 Ended
(unaudited) 10/31/98(a) (unaudited) 10/31/98(a)
----------- -----------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
Income from Investment Operations:
Net investment income 0.02 0.04 0.02 0.03
----------- ----------- ----------- -----------
Total from investment operations 0.02 0.04 0.02 0.03
----------- ----------- ----------- -----------
Less Distributions:
Distributions from net investment income (0.02) (0.04) (0.02) (0.03)
----------- ----------- ----------- -----------
Total distributions (0.02) (0.04) (0.02) (0.03)
----------- ----------- ----------- -----------
Net increase in net asset value -- -- -- --
----------- ----------- ----------- -----------
Net Asset Value, End of Period $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== ===========
Total Return2+ 2.24% 4.21% 1.84% 3.50%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's) $ 4,412 $ 4,339 $ 1,824 $ 894
Ratios of expenses to average net assets:
Before reimbursement of expenses by Adviser1 3.19% 4.76% 3.94% 5.51%
After reimbursement of expenses by Adviser1 0.55% 0.55% 1.30% 1.30%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Adviser1 1.82% 0.67% 1.06% (0.08)%
After reimbursement of expenses by Adviser1 4.46% 4.88% 3.70% 4.13%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Annualized
2 Not annualized.
+ Total return without applicable sales charge.
(a) Cash Reserves Fund commenced investment operations on December 29, 1997.
</FN>
Bond Fund
----------------------------------------------------------------
Class A Class B
----------------------------- ----------------------------
Six Months Six Months
Ended Period Ended Period
04/30/99 Ended 04/30/99 Ended
(unaudited) 10/31/98(a) (unaudited) 10/31/98(a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.14 $ 10.00 $ 10.14 $ 10.00
Income from Investment Operations:
Net investment income 0.23 0.45 0.22 0.39
Net realized and unrealized gain (loss) on investments (0.09) 0.14 (0.10) 0.14
----------- ----------- ----------- -----------
Total from investment operations 0.14 0.59 0.12 0.53
----------- ----------- ----------- -----------
Less Distributions:
Distributions from net investment income (0.27) (0.45) (0.24) (0.39)
Distributions from net realized gains (0.01) -- (0.01) --
----------- ----------- ----------- -----------
Total distributions (0.28) (0.45) (0.25) (0.39)
----------- ----------- ----------- -----------
Net increase (decrease) in net asset value (0.14) 0.14 (0.13) 0.14
----------- ----------- ----------- -----------
Net Asset Value, End of Period $ 10.00 $ 10.14 $ 10.01 $ 10.14
=========== =========== =========== ===========
Total Return2+ 1.47% 6.08% 1.19% 5.36%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's) $ 6,664 $ 4,797 $ 5,186 $ 2,225
Ratios of expenses to average net assets:
Before reimbursement of expenses by Adviser1 2.26% 4.83% 3.01% 5.58%
After reimbursement of expenses by Adviser1 0.90% 0.60% 1.65% 1.35%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Adviser1 3.59% 1.14% 2.84% 0.39%
After reimbursement of expenses by Adviser1 4.95% 5.37% 4.20% 4.62%
Portfolio Turn over 327% 95% 327% 95%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Annualized.
2 Not annualized.
+ Total return without applicable sales charge.
(a) Bond Fund commenced investment operations on December 29, 1997.
</FN>
Balanced Fund
----------------------------------------------------------------
Class A Class B
----------------------------- ----------------------------
Six Months Six Months
Ended Period Ended Period
04/30/99 Ended 04/30/99 Ended
(unaudited) 10/31/98(a) (unaudited) 10/31/98(a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.68 $ 10.00 $ 10.68 $ 10.00
Income from Investment Operations:
Net investment income 0.13 0.21 0.09 0.14
Net realized and unrealized gain on investments 1.39 0.68 1.40 0.68
----------- ----------- ----------- -----------
Total from investment operations 1.52 0.89 1.49 0.82
----------- ----------- ----------- -----------
Less Distributions:
Distributions from net investment income (0.14) (0.21) (0.10) (0.14)
Distributions from net realized gains --3 -- --3 --
----------- ----------- ----------- -----------
Total distributions (0.14) (0.21) (0.10) (0.14)
----------- ----------- ----------- -----------
Net increase in net asset value 1.38 0.68 1.39 0.68
----------- ----------- ----------- -----------
Net Asset Value, End of Period $ 12.06 $ 10.68 $ 12.07 $ 10.68
=========== =========== =========== ===========
Total Return2+ 14.32% 8.92% 13.98% 8.24%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's) $ 11,636 $ 15,670 $ 17,612 $ 7,440
Ratios of expenses to average net assets:
Before reimbursement of expenses by Adviser1 1.51% 3.40% 2.26% 4.15%
After reimbursement of expenses by Adviser1 1.10% 1.10% 1.85% 1.85%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Adviser1 1.94% 0.23% 1.18% (0.52)%
After reimbursement of expenses by Adviser1 2.35% 2.53% 1.59% 1.78%
Portfolio Turnover 190% 60% 190% 60%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Annualized.
2 Not annualized.
3 Amount represents less than $0.01 per share.
+ Total return without applicable sales charge.
(a) Balanced Fund commenced investment operations on December 29, 1997.
</FN>
High Income Fund
----------------------------------------------------------------
Class A Class B
----------------------------- ----------------------------
Six Months Six Months
Ended Period Ended Period
04/30/99 Ended 04/30/99 Ended
(unaudited) 10/31/98(a) (unaudited) 10/31/98(a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 8.85 $ 10.00 $ 8.85 $ 10.00
Income from Investment Operations:
Net investment income 0.41 0.61 0.38 0.55
Net realized and unrealized gain (loss) on investments 0.69 (1.15) 0.69 (1.15)
----------- ----------- ----------- -----------
Total from investment operations 1.10 (0.54) 1.07 (0.60)
----------- ----------- ----------- -----------
Less Distributions:
Distributions from net investment income (0.38) (0.61) (0.35) (0.55)
----------- ----------- ----------- -----------
Total distributions (0.38) (0.61) (0.35) (0.55)
----------- ----------- ----------- -----------
Net increase (decrease) in net asset value 0.72 (1.15) 0.72 (1.15)
----------- ----------- ----------- -----------
Net Asset Value, End of Period $ 9.57 $ 8.85 $ 9.57 $ 8.85
=========== =========== =========== ===========
Total Return2+ 12.63% (5.78)% 12.22% (6.39)%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's) $ 7,544 $ 6,045 $ 7,276 $ 3,632
Ratios of expenses to average net assets:
Before reimbursement of expenses by Adviser1 2.23% 3.52% 2.98% 4.27%
After reimbursement of expenses by Adviser1 1.00% 1.00% 1.75% 1.75%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Adviser1 7.79% 4.95% 7.04% 4.20%
After reimbursement of expenses by Adviser1 9.02% 7.47% 8.27% 6.72%
Portfolio Turnover 17% 56% 17% 56%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Annualized.
2 Not annualized.
+ Total return without applicable sales charge.
(a) High Income Fund commenced investment operations on December 29, 1997.
</FN>
Growth and Income Fund
----------------------------------------------------------------
Class A Class B
----------------------------- ----------------------------
Six Months Six Months
Ended Period Ended Period
04/30/99 Ended 04/30/99 Ended
(unaudited) 10/31/98(a) (unaudited) 10/31/98(a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.88 $ 10.00 $ 10.88 $ 10.00
Income from Investment Operations:
Net investment income 0.05 0.07 0.01 0.01
Net realized and unrealized gain on investments 2.66 0.89 2.65 0.89
----------- ----------- ----------- -----------
Total from investment operations 2.71 0.96 2.66 0.90
----------- ----------- ----------- -----------
Less Distributions:
Distributions from net investment income (0.05) (0.07) (0.01) (0.01)
Distributions in excess of net investment income (0.01) (0.01) (0.01) (0.01)
----------- ----------- ----------- -----------
Total distributions (0.06) (0.08) (0.02) (0.02)
----------- ----------- ----------- -----------
Net increase in net asset value 2.65 0.88 2.64 0.88
----------- ----------- ----------- -----------
Net Asset Value, End of Period $ 13.53 $ 10.88 $ 13.52 $ 10.88
=========== =========== =========== ===========
Total Return2+ 25.01% 9.57% 24.45% 8.97%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's) $ 17,306 $ 11,169 $ 31,566 $ 14,408
Ratios of expenses to average net assets:
Before reimbursement of expenses by Adviser1 1.44% 2.41% 2.19% 3.16%
After reimbursement of expenses by Adviser1 1.00% 1.00% 1.75% 1.75%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Adviser1 0.35% (0.60)% (0.40)% (1.35)%
After reimbursement of expenses by Adviser1 0.79% 0.81% 0.04% 0.06%
Portfolio Turnover 20% 5% 20% 5%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Annualized.
2 Not annualized.
+ Total return without applicable sales charge.
(a) Growth and Income commenced investment operations on December 29, 1997.
</FN>
Capital Appreciation Fund
----------------------------------------------------------------
Class A Class B
----------------------------- ----------------------------
Six Months Six Months
Ended Period Ended Period
04/30/99 Ended 04/30/99 Ended
(unaudited) 10/31/98(a) (unaudited) 10/31/98(a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 11.04 $ 10.00 $ 10.98 $ 10.00
Income from Investment Operations:
Net investment income (loss) (0.01) 0.01 (0.02) (0.02)
Net realized and unrealized gain on investments 2.28 1.04 2.23 1.01
----------- ----------- ----------- -----------
Total from investment operations 2.27 1.05 2.21 0.99
----------- ----------- ----------- -----------
Less Distributions:
Distributions in excess of net investment income (0.02) (0.01) -- (0.01)
----------- ----------- ----------- -----------
Total distributions (0.02) (0.01) -- (0.01)
----------- ----------- ----------- -----------
Net increase in net asset value 2.25 1.04 2.21 0.98
----------- ----------- ----------- -----------
Net Asset Value, End of Period $ 13.29 $ 11.04 $ 13.19 $ 10.98
=========== =========== =========== ===========
Total Return2+ 20.57% 10.51% 20.13% 9.91%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's) $ 9,397 $ 13,410 $ 15,340 $ 7,025
Ratios of expenses to average net assets:
Before reimbursement of expenses by Adviser1 1.93% 3.28% 2.68% 4.03%
After reimbursement of expenses by Adviser1 1.20% 1.20% 1.95% 1.95%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Adviser1 (0.78)% (1.97)% (1.53)% (2.72)%
After reimbursement of expenses by Adviser1 (0.05)% 0.11% (0.80)% (0.64)%
Portfolio Turnover 59% 10% 59% 10%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Annualized.
2 Not annualized.
+ Total return without applicable sales charge.
(a) Capital Appreciation Fund commenced investment operations on December 29,
1997.
</FN>
International Stock Fund
----------------------------------------------------------------
Class A Class B
----------------------------- ----------------------------
Six Months Six Months
Ended Period Ended Period
04/30/99 Ended 04/30/99 Ended
(unaudited) 10/31/98(a) (unaudited) 10/31/98(a)
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period $ 10.34 $ 10.00 $ 10.28 $ 10.00
Income from Investment Operations:
Net investment income 0.05 0.08 0.02 0.03
Net realized and unrealized gain on investments 1.32 0.27 1.30 0.26
----------- ----------- ----------- -----------
Total from investment operations 1.37 0.35 1.32 0.29
----------- ----------- ----------- -----------
Less Distributions:
Distributions from net investment income (0.15) (0.01) (0.07) (0.01)
Distributions from net realized gains (0.44) -- (0.44) --
----------- ----------- ----------- -----------
Total distributions (0.59) (0.01) (0.51) (0.01)
----------- ----------- ----------- -----------
Net increase in net asset value 0.78 0.34 0.81 0.28
----------- ----------- ----------- -----------
Net Asset Value, End of Period $ 11.12 $ 10.34 $ 11.09 $ 10.28
=========== =========== =========== ===========
Total Return2+ 13.52% 3.60% 13.13% 2.90%
Ratios/Supplemental Data:
Net Assets, End of Period (in 000's) $ 31,742 $ 27,656 $ 2,343 $ 1,350
Ratios of expenses to average net assets:
Before reimbursement of expenses by Adviser1 2.30% 2.76% 3.05% 3.51%
After reimbursement of expenses by Adviser1 1.60% 1.60% 2.35% 2.35%
Ratios of net investment income to average net assets:
Before reimbursement of expenses by Adviser1 0.31% (0.01)% (0.44)% (0.76)%
After reimbursement of expenses by Adviser1 1.01% 1.15% 0.26% 0.40%
Portfolio Turnover 26% 60% 26% 60%
- ------------------------------------------------------------------------------------------------------------------------------------
<FN>
1 Annualized.
2 Not annualized.
+ Total return without applicable sales charge.
(a) International Stock Fund commenced investment operations on December 29,
1997.
</FN>
</TABLE>
Notes to Financial Statements
1. ORGANIZATION
MEMBERS Mutual Funds, a Delaware Business Trust (the "Trust"), is registered
under the Investment Company Act of 1940, as amended (the "1940 Act") as an
open-end, management investment company. As of the date of this report, the
Trust offers seven Funds (individually, a "Fund," collectively, the "Funds")
each with two classes of shares: Class A and Class B. Each class of shares
represents an interest in the assets of the respective Fund and has identical
voting, dividend, liquidation and other rights, except that each class of shares
bears its own distribution fees and its proportional share of fund level
expenses, is subject to its own sales charges, if any, and has exclusive voting
rights on matters pertaining to the Rule 12b-1 plan as it relates to that class.
The accompanying financial statements include the Cash Reserves Fund, Bond Fund,
Balanced Fund, High Income Fund, Growth and Income Fund, Capital Appreciation
Fund and International Stock Fund, each commencing operations on December 29,
1997.
The only transactions of the Funds prior to commencement of operations were the
sale of 49,000 Class A shares and 1,000 Class B shares of Cash Reserves Fund at
$1 per share and the sale of 4,900 Class A shares and 100 Class B shares of Bond
Fund, Balanced Fund, High Income Fund, Growth and Income Fund, Capital
Appreciation Fund and International Stock Fund at $10 per share on November 10,
1997.
2. SIGNIFICANT ACCOUNTING POLICIES
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 and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies consistently followed by each Fund in the
preparation of its financial statements
Portfolio Valuation: Investments in securities which are traded on a
recognized stock exchange or for which price quotations are available will
normally be valued on the basis of market quotations furnished by a pricing
service which has been approved by The Board of Trustees. Short-term
obligations that mature in sixty days or less are valued at amortized cost,
which constitutes fair value. All other securities and other assets are
appraised at their fair values as determined in good faith by and under the
general supervision of The Board of Trustees.
Security Transactions and Investment Income: Security transactions are
accounted for on a trade date basis. Net realized gains or losses on sales
are determined by the identified cost method. Interest income is recorded
on the accrual basis. Dividend income is recorded on ex-dividend date.
Federal Income Taxes: It is each Fund's intention 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 in the
accompanying financial statements.
Classes: Class-specific expenses are borne by that class. Income, non-class
specific expenses, and realized and unrealized gains/losses are allocated
to the respective classes on the basis of relative net assets.
Expenses: Expenses that are directly related to one of the Funds are
charged directly to that Fund. Other operating expenses of the Fund are
allocated among the Funds on the basis of relative net assets.
Organization and Offering Costs: Each Fund bears all costs in connection
with its organization, including registration and notification fees and
expenses with respect to the sale of their shares under federal and state
securities regulation. These organization and offering costs are being
amortized on a straight-line basis over five years and one year,
respectively. In the event any of the initial shares of a Fund are redeemed
by any holder thereof during the amortization period, the proceeds of such
redemptions will be reduced by an amount equal to the pro-rata portion of
unamortized deferred organizational expenses in the same proportion as the
number of shares being redeemed bears to the number of initial shares of
such Fund outstanding at the time of such redemption. To the extent that
proceeds of the redemptions are less than such pro-rata portion of any
unamortized organizational expenses, CIMCO has agreed to reimburse the Fund
promptly.
Repurchase Agreements: Each Fund may engage in repurchase agreements. In a
repurchase agreement, a security is purchased for a relatively short period
(usually not more than 7 days) subject to the obligation to sell it back to
the issuer at a fixed time and price plus accrued interest. The Funds will
enter into repurchase agreements only with member banks of the Federal
Reserve System and with "primary dealers" in U.S. Government securities.
Foreign Currency Transactions: The books and records are maintained in U.S.
dollars. Foreign currency amounts are translated into U.S. dollars on the
following basis:
(1) market value of investment securities, assets and liabilities at the
current rate of exchange; and
(2) purchases and sales of investment securities, income, and expenses
at the relevant rates of exchange prevailing on the respective dates
of such transactions.
The High Income and International Stock Funds report certain foreign
currency-related transactions as components of realized gains or losses for
financial reporting purposes, whereas such components are treated as
ordinary income for federal income tax purposes.
The Funds do not isolate the portion of gains and losses on investments in
securities that is due to changes in the foreign exchange rates from that
which is due to change in market prices of securities. Such amounts are
catergorized as gain or loss on investments for financial reporting
purposes.
Forward Foreign Currency Exchange Contracts: The High Income and
International Stock Funds may each purchase or sell forward foreign
currency contracts for defensive or hedging purposes when the Fund's
Investment Adviser anticipates that the foreign currency will appreciate or
depreciate in value. The Funds realize a gain or a loss at the time the
forward contracts are closed out or offset by a matching contract. As of
April 30, 1999, International Stock Fund had open forward foreign currency
contracts.
Futures Contracts: The Funds (other than the Cash Reserves Fund) may
purchase and sell futures contracts and purchase and write options on
futures contracts. Cash or securities are deposited with brokers in order
to establish and maintain a position. Subsequent payments made or received
by the Fund based on the daily change in the market value of the position
are recorded as unrealized gains or losses until the contract is closed
out, at which time the gains or losses are realized.
Capital Loss Carryovers: For federal income tax purposes, the High Income
Fund, Growth and Income Fund, and Capital Appreciation Fund have capital
loss carryovers of $66,186, $1,433, and $219, respectively, as of October
31, 1998, which if not offset by subsequent capital gains, will expire in
2006.
3. ADVISORY, ADMINISTRATION AND DISTRIBUTION AGREEMENTS
The Trust has entered into an Investment Advisory Agreement with CIMCO Inc. (the
"Investment Adviser"). For its investment advisory services to the Portfolios,
CIMCO is entitled to receive a fee, which is calculated daily and paid monthly,
at an annual rate based upon the following percentages of average daily net
assets: 0.40% for the Cash Reserves Fund; 0.50% for the Bond Fund; 0.65% for the
Balanced Fund; 0.55% for the High Income Fund and Growth and Income Fund; 0.75%
for the Capital Appreciation Fund and 1.05% for the International Stock Fund.
The Investment Adviser has entered into Subadviser Agreements for the management
of the investments of the High Income Fund and the International Stock Fund. The
Investment Adviser is solely responsible for the payment of all fees to the
Subadvisers. The Subadvisers for these funds are Massachusetts Financial
Services Company for the High Income Fund and IAI International Limited and
Lazard Asset Management for the International Stock Fund.
The Investment Adviser voluntarily agrees to waive a portion of its fees and to
reimburse the Funds for certain expenses so that total expenses will not exceed
certain expense limitations on an annual basis. The Investment Adviser at its
discretion, may revise or discontinue the voluntary fee waivers and expense
reimbursements at any time. The Investment Adviser has agreed to waive fees
and/or reimburse expenses with respect to the Funds in order that total expenses
will not exceed the following amounts for the current fiscal year:
Fund Class A Class B
-----------------------------------------------------
Cash Reserves Fund 0.55% 1.30%
Bond Fund 0.90% 1.65%
Balanced Fund 1.10% 1.85%
High Income Fund 1.00% 1.75%
Growth and Income Fund 1.00% 1.75%
Capital Appreciation Fund 1.20% 1.95%
International Stock Fund 1.60% 2.35%
For the six months ended April 30, 1999, the Investment Adviser reimbursed
expenses of $72,182 for the Cash Reserves Fund, $64,572 for the Bond Fund,
$69,797 for the Balanced Fund, $74,751 for the High Income Fund, $72,969 for the
Growth and Income Fund, $71,731 for the Capital Appreciation Fund, and $106,431
for the International Stock Fund.
Any reimbursements made by the Investment Adviser to a Fund are subject to
repayment by the Fund within the subsequent eighteen months, to the extent that
the Fund is able to make the repayment within its expense cap.
The Trust and First Data Investor Services Group, Inc. ("First Data"), which is
a wholly-owned subsidiary of First Data Corporation, are parties to an agreement
under which First Data provides administration services for a fee calculated
daily and paid monthly, at the annual rate of 0.15% of the first $500 million of
the combined average daily net assets and 0.12% of the next $500 million of the
combined average daily net assets and 0.09% of the combined average daily net
assets over $1 billion. Currently, at April 30, 1999, the Funds are at the
minimum of $3,500 per Fund, per Class, per month until aggregate net assets
reach $392 million.
In addition, First Data also provides certain fund accounting, custody
administration and transfer agency services pursuant to certain fee
arrangements. Pursuant to such fee arrangements, First Data compensates the
Trust's custodian bank, State Street, for its services in addition to the fees
First Data receives.
CUNA Brokerage Services, Inc. (CUNA Brokerage) serves as distributor of the
Funds. The Trust adopted Distribution Plans (the "Plans") with respect to the
Trust's Class A and Class B shares pursuant to Rule 12b-1 under the 1940 Act.
Under the Plans, the Trust will pay service fees for Class A and Class B shares
at an aggregate annual rate of 0.25% of each Fund's daily net assets
attributable to the respective class of shares for all Funds except the Cash
Reserves Fund. The Trust will also pay distribution fees for Class B shares at
an aggregate annual rate of 0.75% of each Fund's daily net assets attributable
to Class B. The distribution fees are used to reimburse CUNA Brokerage for its
distribution expenses with respect to Class B shares only, including but not
limited to: (1) initial and ongoing sales compensation to selling brokers and
others engaged in the sale of Fund shares, (2) marketing, promotional and
overhead expenses incurred in connection with the distribution of Fund shares,
and (3) interest expenses on unreimbursed distribution expenses. The service
fees will be used to compensate selling brokers and others for providing
personal and account maintenance services to shareholders. In addition to
distribution fees, CUNA Brokerage received sales charges paid by the purchasers
or redeemers of the Funds' shares. For the six months ended April 30, 1999,
sales charges received by CUNA Brokerage were as follows:
Cash Reserves $77,352
Bond 183,617
Balanced 561,007
High Income 195,151
Growth & Income 844,081
Capital Appreciation 422,252
International Stock 54,215
Certain officers and trustees of the Funds are also officers of the Trust. The
Funds do not compensate its officers or affiliated trustees. Effective September
4, 1997, the Trust pays each unaffiliated trustee $1,000 per Board of Trustees
meeting attended.
4. DIVIDENDS FROM NET INVESTMENT INCOME AND DISTRIBUTIONS OF CAPITAL GAINS
With respect to the Cash Reserves Fund, Bond Fund, and High Income Fund,
dividends from net investment income are declared daily and net realized gains
from investment transactions, if any, are distributed to shareholders annually.
The Balanced Fund declares dividends from net investment income monthly and net
realized gains from investment transactions, if any, are distributed to
shareholders annually. The Growth and Income Fund declares dividends from net
investment income quarterly and net realized gains from investment transactions,
if any, are distributed to shareholders annually. The Capital Appreciation Fund
and the International Stock Fund declare dividends from net investment income
annually and net realized gains from investment transactions, if any, are
distributed to shareholders annually.
5. SECURITIES TRANSACTIONS
For the six months ended April 30, 1999, aggregate cost of purchases and
proceeds from sales of securities, other than short-term investments, were as
follows:
U.S. GOVERNMENT OTHER INVESTMENT
SECURITIES SECURITIES
------------------------------ -------------------------
Fund Purchases Sales Purchases Sales
------------------------------------------------------------------------------
Bond $ 19,679,580 $ 15,515,122 $14,460,797 $13,958,852
Balanced 30,797,699 29,727,450 31,134,091 29,918,589
High Income -- -- 6,103,665 1,959,820
Growth & Income -- -- 20,828,748 6,354,530
Capital Appreciation -- -- 11,470,272 11,222,908
International Stock -- -- 8,946,386 7,351,448
At April 30, 1999, the aggregate gross unrealized appreciation (depreciation)
and net unrealized appreciation (depreciation) for all securities as computed on
a federal income tax basis for each fund were as follows:
Fund Appreciation (Depreciation) Net
--------------------------------------------------------------------
Bond $ 10,158 $ (76,722) $ (66,564)
Balanced 3,938,854 (286,700) 3,652,154
High Income 299,459 (381,339) (81,880)
Growth & Income 8,565,456 (781,264) 7,784,192
Capital Appreciation 4,437,291 (1,019,209) 3,418,082
International Stock 3,939,527 (1,631,364) 2,308,163
6. FOREIGN SECURITIES
Each Fund may invest in foreign securities, although only the High Income Fund
and International Stock Fund anticipate having significant investments in such
securities. The International Stock Fund may invest all of its assets in foreign
securities and the High Income Fund may invest up to half of its assets in
foreign securities. No Fund will concentrate its investments in any particular
foreign country.
Foreign securities means securities that are: (1) issued by companies organized
outside the U.S. or whose principal operations are outside the U.S. ("foreign
issuers"), (2) issued by foreign governments or their agencies or
instrumentalities (also "foreign issuers"), (3) principally traded outside the
U.S., or (4) quoted or denominated in a foreign currency ("non-dollar
securities"). Foreign securities include ADR's, EDR's, GDR's, and foreign money
market securities.
7. FINANCIAL INSTRUMENTS
Investing in certain financial instruments including forward foreign currency
contracts and futures contracts involves risk other than that reflected in the
Statement of Assets and Liabilities. Risk associated with these instruments
include potential for an imperfect correlation between the movements in the
prices of instruments and the prices of the underlying securities and interest
rates, an illiquid secondary market for the instruments or inability of
counterparties to perform under the terms of the contracts, and changes in the
value of foreign currency relative to the U.S. dollar. The High Income Fund and
International Stock Fund enter into these contracts primarily to protect these
Funds from adverse currency movement.
8. CONCENTRATION OF RISK
The High Income Fund invests in securities offering high current income which
generally will be in the lower rating categories of recognized ratings agencies
(so-called "junk bonds"). These securities generally involve more credit risk
than securities in the higher rating categories. In addition, the trading market
for high yield securities may be relatively less liquid than the market for
higher-rated securities. The Fund generally invests at least 80% of its assets
in high yield securities.
9. CAPITAL SHARES AND AFFILIATED OWNERSHIP
Each fund is authorized to issue an unlimited number of shares of beneficial
interest with no par value. Each Fund currently offers two classes of shares,
Class A and Class B. At April 30, 1999, investments in the Funds by affiliates
were as follows:
<TABLE>
<CAPTION>
CUNA Mutual CUNA Mutual CUMIS
Fund Class Life Insurance Company Insurance Society Insurance Society, Inc.
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash Reserves A $ 5,653 $ 5,649 $ --
B -- 1,045 --
Bond A 6,849 6,845 --
B -- 1,055 --
Balanced A 9,071,063 9,375,572 5,805,298
B -- 1,228 --
High Income A 33,714 -- --
B 1,033 -- --
Growth and Income A -- 2,042,580 2,043,942
B -- 1,354 --
Capital Appreciation A -- 1,994,115 8,232,698
B -- 1,320 --
International Stock A 139,914 233,143 832,924
B -- 1,164 --
------------ ------------ ------------
Total Investments $9,258,226 $13,665,070 $16,914,862
============ ============ ============
</TABLE>
