<PAGE> 1
Dear Current and Future Shareholders:
Who could possibly have guessed that rates would decline in the midst of an
aggressive Federal Reserve ("Fed") tightening? During the quarter ended June 30,
2000, two year Treasury note yields fell close to 15 basis points and five-year
yields, almost 20. This happened as the Fed raised short term rates both on
March 21, 2000 then again on May 16, 2000. In our opinion, two factors are
responsible for this anomaly. First, investors have great confidence in Fed
Chairman Greenspan's ability to fine-tune the economy. They believe that he will
continue to be able to maintain a moderate growth path for the economy and
control inflation. In fact, this confidence is so strong that investors are
comfortable buying Treasuries at the same time (or even before) the Fed is
finished tightening. Secondly, now that we are operating with a budget surplus,
the Treasury has been buying U.S. Treasuries in the open market, driving rates
lower than otherwise would be the case. This is especially the case with longer
maturities as most of the "off the run" long bonds trade at premium dollar
prices.
Whatever the cause of the recent bull market, we believe that given the overall
economic picture, interest rates have built in an economic scenario that has yet
to take place. The most recent statistics show an economy that is growing at a
5.5% pace, with employment at historic highs. Inflation as measured by wage
growth, the P.P.I. and C.P.I., show that inflation has bottomed but has started
to climb from the 2-3% range to the 3-4% range. (The C.P.I. for June was up .6%
or a 7.2% annual rate!). Oil prices show little signs of declining which only
makes matters worse. All in all, we are going to need to see signs of
significant economic weakness to justify rates at current levels.
In the portfolio, we have maintained a conservative duration vis-a-vis the index
thinking (incorrectly) that rates were sure to rise. Although this has not hurt
relative performance, we were definitely wrong on the direction of rates this
year. The good news is that corporate and mortgage backed bond yields are as
generous as they have been in recent history and we think that this is a great
opportunity to pick up yield in the portfolio without sacrificing quality.
Although we don't expect rates to rise significantly, we do believe that there
will be an opportunity to initiate new positions at lower dollar prices before
year-end.
Sincerely,
[/s/ John D. Knox]
John D. Knox
Managing Director
Trainer Wortham & Company, Inc.
Past performance is no guarantee of future results. Share prices fluctuate and
you may have a gain or loss when you redeem shares.
This material is to be preceded or accompanied by a prospectus. The U.S.
Government guarantees the payment of principal and interest on U.S. Treasury
securities, while the principal and investment return of Trainer Wortham Funds
are not guaranteed and will vary over time. Shares of the Trainer Wortham Funds
are distributed by Provident Distributors, Inc. which is not affiliated with
First Republic Bank and is not a bank. Trainer Wortham & Co., Inc. is the
investment advisor to the Funds, for which it receives a fee.
SHARES OF THE FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED OR OTHERWISE SUPPORTED BY, ANY BANK, ITS AFFILIATES, AND ARE NOT
FEDERALLY INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, FEDERAL DEPOSIT
INSURANCE CORPORATION, FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENTAL AGENCY.
INVESTMENT IN THE FUNDS INVOLVE RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
<PAGE> 2
TRAINER WORTHAM TOTAL RETURN BOND FUND
SCHEDULE OF INVESTMENTS JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
<C> <S> <C>
FIXED INCOME SECURITIES - 97.61%
U.S. GOVERNMENT TREASURY - 29.90%
$ 800,000 U.S. Treasury Notes, 6.375%, 09/30/01....................... $ 798,744
225,000 U.S. Treasury Notes, 5.875%, 10/31/01....................... 223,241
900,000 U.S. Treasury Notes, 7.500%, 11/15/01....................... 911,808
750,000 U.S. Treasury Notes, 6.375%, 08/15/02....................... 749,063
900,000 U.S. Treasury Notes, 5.500%, 05/31/03....................... 880,029
1,000,000 U.S. Treasury Notes, 5.875%, 02/15/04....................... 986,560
650,000 U.S. Treasury Notes, 7.250%, 05/15/04....................... 670,312
500,000 U.S. Treasury Notes, 7.250%, 08/15/22....................... 561,090
-----------
TOTAL U.S. GOVERNMENT TREASURY (COST $5,907,580)............ 5,780,847
-----------
U.S. GOVERNMENT AGENCY - 34.92%
200,000 Federal Home Loan Bank
4.690%, 10/16/00............................................ 198,828
400,000 Student Loan Marketing Association
4.750%, 12/11/00............................................ 396,600
317,307 Federal Home Loan Mortgage Corp., Series #1647,
6.500%, 11/15/08............................................ 303,901
258,857 Federal Home Loan Mortgage Corp. Pool #E65534,
6.500%, 10/01/11............................................ 250,037
439,178 Federal National Mortgage Association Pool #421151,
6.000%, 05/01/13............................................ 415,708
106,320 Federal National Mortgage Association Pool #523853,
11.000%, 11/01/13........................................... 112,234
450,290 Federal National Mortgage Association Pool #479939,
5.500%, 01/01/14............................................ 417,221
444,413 Federal National Mortgage Association Pool #483994,
6.000%, 04/01/14............................................ 420,781
2,323 Federal National Mortgage Association Pool #041474,
7.500%, 04/01/17............................................ 2,290
10,284 Federal Home Loan Mortgage Corp. Pool #141248,
7.500%, 07/01/17............................................ 10,252
217,133 Federal Home Loan Mortgage Corp. Pool #A01632,
10.500%, 12/01/20........................................... 236,471
411,935 Federal National Mortgage Association Pool #100285,
9.500%, 12/15/20............................................ 431,114
360,094 Government National Mortgage Association Pool #331266,
8.000%, 08/15/22............................................ 362,795
349,829 Federal Home Loan Mortgage Corp. Gold Pool #D72664,
7.000%, 07/01/26............................................ 338,347
119,119 Federal Home Loan Mortgage Corp. Gold Pool #C80442,
7.000%, 10/01/26............................................ 115,209
478,005 Government National Mortgage Association Pool #407955,
6.500%, 10/15/27............................................ 453,952
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE> 3
TRAINER WORTHAM TOTAL RETURN BOND FUND
SCHEDULE OF INVESTMENTS (CONTINUED) JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
---------- -----------
<C> <S> <C>
$ 445,508 Federal National Mortgage Association Pool #251568,
6.500%, 03/01/28............................................ $ 420,167
429,043 Government National Mortgage Association Pool #458485,
6.500%, 08/15/28............................................ 407,454
998,456 Federal National Mortgage Association Pool #533853,
7.000%, 03/01/30............................................ 964,129
499,950 Federal National Mortgage Association Pool #538687,
7.500%, 06/01/30............................................ 493,040
-----------
TOTAL U.S. GOVERNMENT AGENCY (COST $6,919,596).............. 6,750,530
-----------
CORPORATE BONDS - 32.79%
160,000 Ford Motor Credit Co., 7.020%, 10/10/00..................... 160,051
200,000 Sears Roebuck Acceptance Corp., 5.870%, 01/08/01............ 198,750
150,000 Morgan Stanley Group, Inc., 9.375%, 06/15/01................ 152,813
62,648 WFS Financial Owner Trust, 1998-A A3, 5.900%, 05/20/02...... 62,517
500,000 General Electric Capital Corp., 7.250%, 05/03/04............ 501,250
400,000 First Union Corp., 6.950%, 11/01/04......................... 389,000
250,000 Hydro-Quebec, 6.720%, 03/16/05.............................. 243,750
400,000 Commercial Credit Company, 7.375%, 04/15/05................. 399,000
400,000 WorldCom, Inc., 8.000%, 05/15/06............................ 405,000
200,000 Salomon Smith Barney Holdings, Inc., 7.125%, 10/01/06....... 192,750
100,000 Union Pacific Resources Corp., 7.000%, 10/15/06............. 95,875
500,000 Sears Roebuck Acceptance Corp., 7.000%, 06/15/07............ 472,500
500,000 Time Warner, Inc., 8.180%, 08/15/07......................... 511,875
200,000 General Motors Acceptance Corp., 5.850%, 01/14/09........... 175,250
500,000 Sprint Capital Corp., 6.375%, 05/01/09...................... 451,875
400,000 Goldman Sachs Group, Inc., 7.350%, 10/01/09................. 384,000
250,000 SBC Communications, Inc., 6.625%, 11/01/09.................. 233,438
485,000 Comp De Desarollo Aeropu, 10.190%, 05/31/11 (Note 4)........ 340,106
200,000 Empresa Nacional Electric, 7.875%, 02/02/27................. 170,937
356,121 Norwest Asset Securities Corp., 1997-13 A1, 6.750%,
09/25/27.................................................... 344,636
500,000 IBM Corp., 6.500%, 01/15/28................................. 453,125
-----------
TOTAL CORPORATE BONDS (COST $6,782,726)..................... 6,338,498
-----------
TOTAL FIXED INCOME SECURITIES (COST $19,609,902)............ 18,869,875
-----------
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE> 4
TRAINER WORTHAM TOTAL RETURN BOND FUND
SCHEDULE OF INVESTMENTS (CONTINUED) JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
-------- -----------
<C> <S> <C>
SHORT TERM INVESTMENTS - 1.38%
267,525 UMB Bank, Money Market Fiduciary, 4.900% (Cost $267,525).... $ 267,525
-----------
TOTAL INVESTMENTS (COST $19,877,427**) - 98.99%............. 19,137,400
OTHER ASSETS LESS OTHER LIABILITIES - 1.01%................. 194,382
-----------
NET ASSETS - 100.00%........................................ $19,331,782
===========
** Cost for Federal income tax purposes is $19,877,427 and net unrealized depreciation
consists of:
Gross unrealized appreciation............................... $ 15,482
Gross unrealized depreciation............................... (755,509)
-----------
Net unrealized depreciation................................. $ (740,027)
===========
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE> 5
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURN
BOND FUND
------------
<S> <C>
ASSETS
Investments in securities at market value (identified cost
$19,877,427)
(Notes 1 and 4)......................................... $19,137,400
Receivables:
Dividends and interest.................................. 230,183
Deferred organizational costs (Note 1).................... 3,019
Other assets.............................................. 2,985
-----------
TOTAL ASSETS............................................ 19,373,587
-----------
LIABILITIES
Payables:
Capital stock redeemed.................................. 20,000
Advisory fee............................................ 1,455
Accrued expenses........................................ 20,350
-----------
TOTAL LIABILITIES....................................... 41,805
-----------
NET ASSETS
(applicable to outstanding shares of 1,989,910; unlimited
shares of $0.001 par value authorized).................. $19,331,782
===========
Net asset value, offering and redemption price per
share................................................... $ 9.71
===========
SOURCE OF NET ASSETS
Paid-in capital........................................... $20,094,184
Undistributed net investment income....................... 29,973
Accumulated net realized loss on investments.............. (52,348)
Net unrealized depreciation of investments................ (740,027)
-----------
NET ASSETS.............................................. $19,331,782
===========
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE> 6
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURN
BOND FUND
------------
<S> <C>
INVESTMENT INCOME
Interest.................................................. $1,092,625
----------
TOTAL INCOME............................................ 1,092,625
----------
EXPENSES
Advisory fees (Note 3).................................... 78,537
Administrator expense..................................... 23,023
Transfer agent fees....................................... 32,057
Bookkeeping and pricing................................... 26,859
Insurance expense......................................... 2,842
Custodian fees............................................ 9,732
Legal expense............................................. 12,576
Registration expense...................................... 16,930
Organizational expense (Note 1)........................... 2,359
Independent accountants................................... 7,677
Trustees' fees and expenses............................... 8,838
Reports to shareholders................................... 7,673
Other..................................................... 11,323
----------
TOTAL EXPENSES.......................................... 240,426
Expenses waived and reimbursed (Note 3)................. (69,117)
----------
NET EXPENSES............................................ 171,309
----------
NET INVESTMENT INCOME................................... 921,316
----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss from security transactions.............. (52,314)
Net change in unrealized depreciation of investments...... (295,114)
----------
Net unrealized loss on investments........................ (347,428)
----------
Net increase in net assets resulting from operations...... $ 573,888
==========
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE> 7
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURN BOND FUND
-------------------------
YEAR YEAR
ENDED ENDED
JUNE 30, JUNE 30,
2000 1999
----------- -----------
<S> <C> <C>
OPERATIONS
Net investment income..................................... $ 921,316 $ 678,867
Net realized gain (loss) on investments................... (52,314) 197,123
Net change in unrealized depreciation of investments...... (295,114) (566,965)
----------- -----------
Net increase in net assets resulting from operations...... 573,888 309,025
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS
Distributions from net investment income.................. (906,229) (670,385)
Distributions from realized gains on investments.......... (91,579) (149,582)
----------- -----------
Total distributions..................................... (997,808) (819,967)
----------- -----------
CAPITAL SHARE TRANSACTIONS
Receipt from shares sold.................................. 4,687,580 6,041,530
Receipt from shares issued on reinvestment of
distributions........................................... 914,758 778,454
Shares redeemed........................................... (2,772,438) (1,359,170)
----------- -----------
Net increase in net assets resulting from capital share
transactions(a)......................................... 2,829,900 5,460,814
----------- -----------
Total increase in net assets............................ 2,405,980 4,949,872
NET ASSETS
Beginning of year......................................... 16,925,802 11,975,930
----------- -----------
End of year............................................... $19,331,782 $16,925,802
=========== ===========
(a) Transactions in capital stock were:
Shares sold........................................... 479,462 587,067
Shares issued on reinvestment of distributions........ 93,958 76,423
Shares redeemed....................................... (282,230) (132,975)
----------- -----------
Net increase.......................................... 291,190 530,515
Beginning balance..................................... 1,698,720 1,168,205
----------- -----------
Ending balance........................................ 1,989,910 1,698,720
=========== ===========
</TABLE>
The notes to financial statements are an integral part of these statements.
<PAGE> 8
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The tables below set forth financial data for a share of capital stock
outstanding throughout each period presented.
<TABLE>
<CAPTION>
TOTAL RETURN BOND FUND
-----------------------------------------
PERIOD
YEARS ENDED JUNE 30, ENDED
----------------------------- JUNE 30,
2000 1999 1998 1997(1)
------- ------- ------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 9.96 $10.25 $10.08 $10.00
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
---------------------------------
Net investment income...................... 0.52 0.47 0.52 0.41
Net gains (losses) on securities (both
realized and unrealized)................. (0.20) (0.18) 0.25 0.08
------- ------- ------- -------
Total from investment operations......... 0.32 0.29 0.77 0.49
------- ------- ------- -------
LESS DISTRIBUTIONS
------------------
Dividends from net investment income....... (0.52) (0.47) (0.53) (0.40)
Distributions from capital gains........... (0.05) (0.11) (0.07) --
Distributions in excess of capital gains... -- -- -- (0.01)
------- ------- ------- -------
Total distributions...................... (0.57) (0.58) (0.60) (0.41)
------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD............... $ 9.71 $ 9.96 $10.25 $10.08
======= ======= ======= =======
TOTAL RETURN................................. 3.31% 2.80% 7.84% 4.90%+
RATIOS/SUPPLEMENTAL DATA
------------------------
Net assets, end of period (in 000's)....... $19,332 $16,926 $11,976 $8,479
Ratio of expenses to average net assets
before reimbursement of expenses by
Advisor................................ 1.38% 1.46% 1.68% 2.01%*
after reimbursement of expenses by
Advisor................................ 0.98% 1.20% 1.20% 0.88%*
Ratio of net investment income (loss) to
average net assets
before reimbursement of expenses by
Advisor................................ 4.89% 4.55% 4.86% 4.53%*
after reimbursement of expenses by
Advisor................................ 5.29% 4.81% 5.34% 5.66%*
Portfolio turnover rate.................... 16% 57% 83% 112%+
</TABLE>
-------------------------------------------
(1) The Total Return Bond Fund commenced operations on October 1, 1996.
+ Since inception, not annualized.
* Annualized.
The notes to financial statements are an integral part of these financial
statements.
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000
--------------------------------------------------------------------------------
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
Trainer Wortham Funds (the "Trust") is an open-end investment management company
which currently offers shares of four series: Trainer Wortham First Mutual Fund
("First Mutual Fund"); Trainer Wortham Large-Cap Growth Fund ("Large-Cap Growth
Fund"); Trainer Wortham Total Return Bond Fund ("Total Return Bond Fund"); and
Trainer Wortham California Intermediate Tax-Free Fund ("California Intermediate
Tax-Free Fund"). Each Fund has distinct investment objectives and policies. This
Annual Report relates to the Total Return Bond Fund. Information on the First
Mutual Fund, Large-Cap Growth Fund and the California Intermediate Tax-Free Fund
is provided in separate reports.
The Total Return Bond Fund seeks to maximize total return consistent with
preservation of capital. The Fund will invest in U.S. Government and agency
securities, investment grade corporate bonds and other fixed-income securities.
The Fund will seek to produce conservative, risk adjusted returns.
Due to the inherent risk in any investment program, the Fund can not ensure that
its investment objectives will be realized. The following is a summary of
significant accounting policies consistently followed by the Fund in the
preparation of financial statements. The policies are in conformity with
generally accepted accounting principles for investment companies.
A. SECURITY VALUATION. Investments in securities traded on a national
securities exchange are valued at the last reported sales price on the last
business day of the period. Unlisted securities, or listed securities in which
there were no sales, are valued at the mean of the closing bid and ask prices.
Short-term obligations with remaining maturities of 60 days or less are valued
at amortized cost which approximates market value. All other securities are
valued at their fair value as determined in good faith by the Board of Trustees.
B. OTHER. As is common in the industry, security transactions are accounted for
on the date the securities are purchased or sold (trade date). Cost is
determined and gains and losses are based on the identified cost basis for both
financial statement and Federal income tax purposes. Dividend income and
distributions to shareholders are reported on the ex-dividend date. Interest
income and estimated expenses are accrued daily. Discounts and premiums on
securities purchased are amortized over the life of the respective securities.
Distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. Those differences are
primarily due to different treatments for net operating losses and post-October
capital losses.
C. NET ASSET VALUE PER SHARE. Net asset value per share of the capital stock of
a Fund is determined daily as of the close of trading on the New York Stock
Exchange by dividing the value of its net assets by the number of Fund shares
outstanding. The offering price and redemption price per share is the same as
the net asset value per share.
D. FEDERAL INCOME TAXES. It is the policy of each Fund to comply with
requirements of the Internal Revenue Code applicable to regulated investment
companies, if such qualification is in the best interest of its stockholders,
and to make distributions of net investment income and
<PAGE> 10
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2000
--------------------------------------------------------------------------------
capital gains (after reduction for any amounts available for Federal income tax
purposes as capital loss carryovers) sufficient to relieve it from all, or
substantially all, Federal income taxes. During the year ended June 30, 2000 the
Fund realized $52,348 of capital losses for financial reporting purposes which
have been deferred for Federal income tax purposes.
E. USE OF ESTIMATES IN FINANCIAL STATEMENTS. In preparing financial statements
in conformity with generally accepted accounting principles, management makes
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, as well as the reported
amounts of income and expenses during the reporting period. Actual results may
differ from these estimates.
F. ORGANIZATIONAL COSTS. Organizational costs for Total Return Bond Fund are
being amortized on a straight-line basis over five years, commencing October 1,
1996.
NOTE 2 - PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities, other than short-term investments, for the
year ended June 30, 2000 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
---------- ----------
<S> <C> <C>
Total Return Bond Fund...................................... $6,058,986 $2,655,010
</TABLE>
NOTE 3 - INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Trainer Wortham & Co., Inc. (the "Advisor") is the investment advisor for the
Trust pursuant to four separate investment advisory agreements (the
"Agreements"). Under the terms of the Agreement, the Advisor receives an annual
fee, accrued daily and paid monthly, of 0.45% of the average daily net assets of
the Total Return Bond Fund. The Advisor has agreed, pursuant to an Operating
Expenses Agreement, to waive its advisory fees and/or reimburse other operating
expenses in amounts necessary to limit the annual operating expenses of the
Total Return Bond Fund to 1.00% of the fund's average daily net assets to at
least June 30, 2000. Prior to November 1, 1999, the Advisor agreed to waive its
advisory fees and/or reimburse other operating expenses to limit the annual
operating expenses of the Total Return Bond Fund to 1.20%. Effective September
1, 1999 the Advisor voluntarily agreed to further limit the Fund's annual
operating expenses by waiving all of its advisory fees. During the year ended
June 30, 2000 the Advisor waived advisory fees and/or reimbursed other operating
expenses in the amount of $69,117 for the Total Return Bond Fund.
Certain officers and trustees of the Trust are affiliated persons of the
Advisor.
NOTE 4 - RESTRICTED SECURITIES
Total Return Bond Fund owns certain investment securities which are restricted
as to resale. Accordingly, these securities are valued at fair value in good
faith by or under the direction of the Trust's Board of Trustees, taking into
consideration such factors including recent private sales, market conditions and
the issuer's financial performance. At June 30, 2000, Total Return Bond
<PAGE> 11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) JUNE 30, 2000
--------------------------------------------------------------------------------
Fund owned the following securities which may not be sold without registration
under the Securities Act of 1933:
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
ACQUISITION UNIT MARKET
SECURITY DATE PAR PRICE VALUE %TNA COST
-------- ----------- -------- ----- -------- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Comp De Desarollo Aeropu
10.190%, 05/31/11............. 07/16/97 $485,000 70.13 $340,106 1.76% $533,317
</TABLE>
<PAGE> 12
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
To the Shareholders and Board of Trustees
Trainer Wortham Funds
New York, New York
We have audited the statement of assets and liabilities of Trainer Wortham Total
Return Bond Fund (one of the series constituting Trainer Wortham Funds),
including the schedule of investments, as of June 30, 2000, and the related
statement of operations for the year then ended, the statement of changes in net
assets for each of the two years in the period then ended, and the financial
highlights for each of the three years in the period then ended and for the
period October 1, 1996 (commencement of operations) to June 30, 1997. These
financial statements and financial highlights are the responsibility of the
Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of June
30, 2000, by correspondence with the custodian. An audit also includes assessing
the accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Trainer Wortham Total Return Bond Fund series of Trainer Wortham Funds as of
June 30, 2000, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period then ended,
and the financial highlights for each of the three years in the period then
ended and for the period October 1, 1996 to June 30, 1997 in conformity with
generally accepted accounting principles.
BRIGGS, BUNTING & DOUGHERTY, LLP
Philadelphia, Pennsylvania
July 27, 2000
<PAGE> 13
ILLUSTRATION OF $10,000 INVESTMENT
--------------------------------------------------------------------------------
The graph below compares the increase in value of a $10,000 investment in the
Trainer Wortham Total Return Bond Fund with the performance of the Lehman
Aggregate Index. The values and returns for the Trainer Wortham Total Return
Bond Fund include reinvested dividends. Unlike a mutual fund, an unmanaged index
assumes no transaction costs, taxes, management fees or other expenses.
Average Annual Total Return
1 Year 3.31%
Since Inception 5.02%*
Past performance is not predictive of future performance.
<TABLE>
<CAPTION>
TOTAL RETURN BOND FUND LEHMAN AGGREGATE INDEX
---------------------- ----------------------
<S> <C> <C>
10/01/96 10,000.00 10,000.00
06/30/97 10,490.00 10,618.00
06/30/98 11,312.00 11,738.00
06/30/99 11,628.00 12,107.00
06/30/00 12,013.00 12,359.00
</TABLE>
* Fund commenced operations October 1, 1996.
<PAGE> 14
TRAINER WORTHAM FUNDS
845 Third Avenue, 6th Floor
New York, NY 10022
<TABLE>
<S> <C>
OFFICERS AUDITORS
David P. Como Briggs, Bunting & Dougherty, LLP
President Two Logan Square, Suite 2121
Philadelphia, PA 19103
John D. Knox
Vice President
CUSTODIAN
Robert J. Vile UMB Bank KC, NA
Vice President P.O. Box 412797
Kansas City, MO 64141
Brian J. O'Neill
Treasurer
FUND ADMINISTRATION
Kelly O'Neill PFPC Inc.
Secretary 3200 Horizon Drive
King of Prussia, PA 19406
INVESTMENT ADVISOR
Trainer Wortham & Co., Inc.
845 Third Avenue, 6th Floor
New York, NY 10022
</TABLE>
Distributed by Provident Distributors, Inc., 3200 Horizon Drive, King of
Prussia, PA 19406 -- DFU 8/00
This report is submitted for the general information of the shareholders of the
Trust. It is not authorized for distribution to prospective investors in the
Trust unless preceded or accompanied by an effective Prospectus which includes
details regarding the Trust's objectives, policies, expenses and other
information.
<PAGE> 15
TRUSTEES:
Robert H. Breslin, Jr.
David P. Como
Raymond Eisenberg
Todd L. Eisenberg
David Elias
Robert S. Lazar
Martin S. Levine
Timothy J. O'Hara
James F. Twaddell
For more complete information including
charges and expenses, you may request
a prospectus by calling:
888.257.4450
[TRAINER WORTHAM LOGO]
845 Third Avenue, New York, New York 10022
888.257.4450 - Fax: 415.288.1401-www.trainerwortham.com
[TRAINER WORTHAM FUNDS LOGO]
ANNUAL REPORT
JUNE 30, 2000
TOTAL RETURN BOND FUND
888.257.4450
