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<PAGE>
<TABLE>
<CAPTION>
ABT GROWTH & INCOME TRUST
Schedule of Investments May 31, 1995
- ------------------------------------------------------------------------------------------------------------------------
Shares Value
---------- ---------------
<S> <C> <C> <C>
COMMON STOCKS -- 92.6%
Basic Material 45,000 Barrick Gold Corp. 1,136,250
15.6% 50,000 Avery Dennison Corp. 2,062,500
40,000 Chemed Corp. 1,355,000
20,000 Chesapeake Corp. 570,000
20,000 Cyprus Amax Mineral, Co. 530,000
30,000 Kennametal Inc. 975,000
80,000 Union Carbide Corp. 2,340,000
40,000 Wellman Inc. 1,005,000
---------------
9,973,750
---------------
Capital Goods 38,000 Emerson Electric Co. 2,612,500
6.7% 28,000 General Electric Co. 1,624,000
---------------
4,236,500
---------------
Consumer Cyclicals 35,000 Eastman Kodak Co. 2,113,125
11.2% 34,000 Penney (J.C.) Co., Inc. 1,602,250
25,000 Sears Roebuck & Co. 1,409,375
15,000 St. John Knits, Inc. 581,250
80,000 Sunbeam-Oster Co., Inc. 1,450,000
---------------
7,156,000
---------------
Consumer Cyclicals 25,000 Avon Products Inc. 1,684,375
8.0% 47,000 Philip Morris Cos., Inc. 3,425,125
---------------
5,109,500
---------------
Consumer Services 20,000 Dun & Bradstreet 1,060,000
5.9% 20,000 Omnicon Group, Inc. 1,152,500
90,000 Wendy's International, Inc. 1,541,250
---------------
3,753,750
---------------
Diversified 45,000 Corning, Inc. 1,440,000
4.6% 80,000 Hanson PLC 1,520,000
---------------
2,960,000
---------------
Energy 15,000 Atlantic Richfield Co. 1,741,875
14.3% 65,000 Dresser Industries, Inc. 1,486,875
15,000 Florida Progress, Corp. 478,125
50,000 Houston Industries, Inc. 2,156,250
20,000 Ohio Edison, Co. 437,500
50,000 Peco Energy, Co. 1,406,250
48,000 Unocal Corp. 1,422,000
---------------
9,128,875
---------------
Financial Services 20,000 American International Group, Inc. 2,275,000
7.0% 10,000 Comerica Inc. 316,250
60,000 Equifax, Inc. 1,882,500
---------------
4,473,750
---------------
Medical Supplies and 11,800 Bristol-Myers Squibb, Co. 783,225
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
Services 40,000 Mallinckrodt Group, Inc. 1,455,000
5.0% 30,000 U.S. Healthcare, Inc. 931,875
---------------
3,170,100
---------------
Technology 30,000 Automatic Data Processing, Inc. 1,867,500
14.3% 20,000 AMP, Inc. 852,500
30,000 Boeing Co. 1,766,250
20,000 Compaq Computer Corp. 782,500
25,000 *EMC Corp. 575,000
35,000 International Business Machines Corp. 3,263,750
---------------
9,107,500
---------------
Total Common Stocks (Cost $49,216,658) 59,069,725
---------------
CONVERTIBLE PREFERRED STOCKS -- 6.9%
45,000 AK Steel Holding PFD 1,293,750
60,000 Glendale Federal Bank, Series E, 8.75% 2,190,000
20,000 Reynolds Metals Series D, 7.00% 935,000
---------------
Total Convertible Preferred Stocks (Cost $3,938,062) 4,418,750
---------------
TOTAL INVESTMENTS (Cost $53,154,720) - 99.5% 63,488,475
Other assets, less liabilities - 0.5% 297,647
---------------
TOTAL NET ASSETS - 100.00% 63,786,122
===============
</TABLE>
*Non-income producing
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
ABT GROWTH AND INCOME TRUST
Statement of Assets and Liabilities (Unaudited) Statement of Operations (Unaudited)
May 31, 1995 Six months ended May 31, 1995
- ------------------------------------------------------------- -------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS INVESTMENT INCOME
Investments in securities at value Income:
(cost $53,154,720) $ 63,488,475 Dividends $ 939,363
Receivables: Interest 22,569
-------------
Investment securities sold 1,298,232 Total income 961,932
-------------
Shares of beneficial interest purchased 292 Expenses:
Dividends 269,427 Investment advisory fees (Note 3) 154,625
------------- Distribution Fees (Note 3) 15,463
Total assets 65,056,426 Transfer agent fees and expenses 47,590
------------- Administrative fees 30,315
Accounting fees 14,868
LIABILITIES Custodian fees 8,478
Payables: Registration fees and expenses 17,891
Investment securities purchased 896,200 Trustees' fees and expenses 20,444
Shares of beneficial interest redeemed 96,795 Insurance 6,422
Accrues expenses 73,669 Audit fees and expenses 11,477
Other Liabilities 203,640 Printing and shareholder
------------- communications 7,480
Total liabilities 1,270,304 Legal fees and expenses 7,480
------------- Other 4,015
-------------
NET ASSETS Total expenses 346,548
Source of Net Assets: -------------
Net capital paid in Net investment income 615,384
on shares of
beneficial interest $ 51,807,803 REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Distributions in excess of net Net realized gain
investment income (143,534) on investments $ 1,473,208
Accumulated net
realized gain 1,788,098 Change in unrealized
Net unrealized appreciation 5,610,377
appreciation 10,333,755 --------------
--------------- Net gain on
Total net assets $ 63,786,122 investments $ 7,083,585
============= -------------
Shares outstanding (Note 2) 5,603,017 Net increase in net
assets from operations $ 7,698,969
=============
Net asset value and redemption
price per share (total net assets
+ shares outstanding) $11.38
Offering price per share (net asset
value + 95.25%)* $11.95
</TABLE>
*The sales charge is 4.75% on a single sale of less than $100,000,
reduced on sales of $100,000 or more and certain other sales.
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
ABT GROWTH AND INCOME TRUST
Statements of Changes in Net Assets (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
Six month ended Year ended,
May 31, 1995 November 30, 1994
----------------- -------------------
<S> <C> <C>
Change in net assets from operations
Net investment income $ 615,384 $ 1,280,914
Net realized gain on investments 1,473,208 988,088
Unrealized appreciation (depreciation) for the period 5,610,377 (5,548,207)
-------------------------------------
Net increase (decrease) in net assets from operations 7,698,969 (3,279,205)
Distributions to shareholders from:
Dividends from net investment income (589,207) (1,280,914)
In excess of net investment income (76,008)
Fund share transactions (Note 2)
Net proceeds from sale of shares 308,366 959,017
Proceeds from distributions reinvested 493,523 1,128,438
Cost of shares redeemed (5,067,625) (12,486,359)
-------------------------------------
Net increase (decrease) in net assets from Fund share transactions (4,265,736) (10,398,904)
-------------------------------------
Total increase (decrease) 2,844,026 (15,035,031)
Net Assets:
Beginning of period 60,942,096 75,977,127
-------------------------------------
End of period $ 63,786,122 $ 60,942,096
=====================================
</TABLE>
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
ABT GROWTH AND INCOME TRUST
Financial Highlights (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
Six months Years ended November 30,
Per share operating performance ended --------------------------------------------------------
(Based on average shares outstanding) May 31, 1995 1994 1993 1992 1991 1990
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.16 $ 10.89 $ 10.72 $ 9.77 $ 8.39 $ 10.74
- ---------------------------------------------------------------------------------------------------------------------
Income from investment operations
Net investment income 0.10 0.19 0.24 0.24 0.22 0.35
Net realized and unrealized
gain (loss) 1.22 (0.71) 0.18 0.95 1.45 (1.23)
--------- --------- --------- ---------- -------- ----------
Total from investment operations 1.32 (0.52) 0.42 1.19 1.67 (0.88)
--------- --------- --------- ---------- -------- ----------
Less distributions
Dividends from net investment income (0.10) (0.20) (0.25) (0.24) (0.29) (0.41)
In excess of net investment income (0.01)
Distributions from net realized gains - - - (1.06)
--------- --------- --------- ---------- -------- ----------
(0.10) (0.21) (0.25) (0.24) (0.29) (1.47)
--------- --------- --------- ---------- -------- ----------
Change in net asset value for period 1.22 (0.73) 0.17 0.95 1.38 (2.35)
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 11.38 $ 10.16 $ 10.89 $ 10.72 $ 9.77 $ 8.39
- ---------------------------------------------------------------------------------------------------------------------
Total Return* 13.09% (4.90)% 3.95% 12.36% 20.22% (9.42)%
Ratios/supplemental data
Net assets, end of period $ 63,786 $ 60,942 $ 75,977 $ 84,926 $87,316 $ 80,415
Ratio to average net assets of:
Expenses 1.12%** 0.94% 1.06% 1.23% 1.27% 1.29%
Net investment income 1.99%** 1.88% 2.23% 2.34% 2.39% 3.83%
Portfolio Turnover 36%** 79% 47% 50% 32% 89%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
* Does not reflect sales load.
** Annualized.
See notes to financial statements
<PAGE>
ABT GROWTH AND INCOME TRUST
Notes to Financial Statements May 31, 1995
- --------------------------------------------------------------------------------
1. Summary of Significant
Accounting Policies
ABT Growth and Income Trust (the Fund) is a Maryland corporation. The Fund
is registered under the Investment Company Act of 1940 as an open-end,
diversified management investment company. The following is a summary of
significant accounting policies followed in the preparation of it financial
statements.
(a) Valuation of Investments. Securities listed or trade on a recognized
national stock exchange or NASDAQ are valued at the last reported sales prices
on the principal exchange on which the securities are traded. Over-the-counter
securities and listed securities for which no sale is reported are valued at the
last current bid price. Securities for which market quotations are not readily
available are valued at fair value as determined by management and approved in
good faith by the Board of Trustees. Securities with a remaining maturity of 60
days or less are valued at amortized cost, which approximates market value.
(b) Repurchase Agreements. Money market instruments may be purchased from banks
and non-bank dealers, subject to the seller's agreement to repurchase them at an
agreed upon date and price. The Fund's custodian takes possession of securities
collateralizing repurchase agreements until maturity of the repurchase agreement
through the Federal Reserve Book Entry System. Collateral is marked-to-market
daily to ensure that the market values of the underlying assets remain
sufficient to protect the Fund in the event of default; however, in the event of
default or bankruptcy by the other party to the agreement, realization and/or
retention of the collateral may be subject to legal proceedings..
(c) Investment Transactions and Related Investment Income. Investment
transactions are accounted for on trade date basis. Interest income is recorded
on a daily basis and dividend income is recorded on ex-dividend date.
(d) Income Taxes. It is the Fund's intention to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no
provision has been made for federal income taxes. Distributions to shareholders
are recorded on the ex-dividend date. Income and capital gain distributions are
determined in accordance with income tax regulations.
2. Transactions in Shares of
Beneficial Interest
As of May 31,1995, there were an unlimited number of shares at $1.00 par
value authorized. Transactions are summarized as follows:
<TABLE>
<CAPTION>
Six Months
ended Year ended
May 31, November 30,
1995 1994
------------ --------------
<S> <C> <C>
Shares sold 29,688 328,593
Shares issued on
reinvestment of
distributions 47,585 853,590
Shares redeemed (473,578) (2,293,836)
------------ --------------
Net increase
(decrease) in
shares
outstanding (396,305) (1,111,653)
============ ==============
</TABLE>
3. Investment Advisory Fees and
Other Transactions with Affiliates
The Fund pays monthly an investment advisory fee to Palm Beach Capital
Management, Inc. (the Adviser) [formerly Palm Beach Capital Management, Ltd.]
equal on an annual basis to 0.50% of the average daily net assets of the Fund up
to $100 million, reduced to 0.45% of such average daily net assets in excess of
$100 million.
ABT Financial Services, Inc. (ABT), an affiliate of the Adviser, serves as
the Fund's principal underwriter and distributor. During the six months ended
May 31, 1995, ABT received $for underwriting concessions on sales of shares and
$ in commissions as broker.
<PAGE>
ABT GROWTH AND INCOME TRUST
Notes to Financial Statements May 31, 1995
- --------------------------------------------------------------------------------
The Fund has adopted a distribution plan (12b-1 Plan) pursuant to which the
Fund reimburses ABT monthly (subject to a limit of 0.25% per annum of the Fund's
average daily net assets) for ABT's costs and expenses in connection with any
activity that is primarily intended to result in a sale of Fund shares. Such
distribution fees are set forth in the Statement of Operations.
During the year ended November 30, 1994, The Bank of New York provided
administrative and accounting services for the Fund, for which they received the
fees shown in the Statement of Operations. Effective December 1, 1994,
administrative and accounting services are being provided by the Adviser, and
all fees for these services will be paid to the Adviser.
Certain officers and a trustee of the Fund are also officers and/or
directors of the Adviser and ABT.
4. Investment Transactions
During the six months ended May 31, 1995, the cost of purchases and the
proceeds from sales of investment securities other than short-term obligations
were $10,814,679 and $12,793,702. The cost of securities for federal income tax
purposes is the same as that shown in the investment portfolio. Realized gains
and losses are reported on an identified cost basis.
At May 31, 1995, the aggregate gross unrealized appreciation and
depreciation of portfolio securities, based on cost for federal income tax
purposes, was as follows:
<TABLE>
Unrealized appreciation
Unrealized depreciation
--------------
<S> <C>
Net unrealized appreciation $10,333,755
==============
</TABLE>
5. Capital Loss Carryforward
At January 31, 1995, the tax year end of the Fund, the Fund had a net
realized capital loss carryforward of $3,084,806, which may be utilized to
offset future capital gains. Unless utilized, such loss carryforward expires as
follows: 1996, $1,418,721; 1998, $591,956; 1999, $242,357; and 2000, $831,772.
6. Reorganization
On March 3, 1995, the Adviser and certain of its affiliates entered into an
Asset Purchase Agreement with First Union National Bank (First Union) pursuant
to which First Union would acquire substantially all of the assets of the
Adviser (the Acquisition). On March 15, 1995, in connection with the
Acquisition, the Fund, entered into an Agreement and Plan of Reorganization (the
Plan) with First Union Funds, on behalf of First Union Value Portfolio (the
Portfolio). The Plan provides that the Fund will transfer substantially all of
its assets in exchange for Class A shares of beneficial interest of the
Portfolio, a diversified series of First Union Funds, on a tax-free basis. It
is anticipated that the Plan will be consummated at the close of business on
June 30, 1995.
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