{LOGO]
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUSTS SEMI-ANNUAL REPORT
June 16, 1997
Dear Shareholder:
The Astra Adjustable U.S. Government Securities Trust I, I-A, II and IV (the
"Trusts") fiscal year began with the U.S. Federal Reserve not expected to
increase interest rates as U.S. economic data showed little signs of above-
average economic growth or inflationary pressures. However, beginning in late
February, U.S. interest rates began to rise as investors' perception of future
economic growth increased in conjunction with concerns of rising inflation
brought about by the release of economic data for January and February 1997,
including retail sales, housing starts, and the Consumer Price Index. The fear
of a rise in U.S. interest rates was further exacerbated by statements by
Federal Reserve governors alluding to a possible increase in the Federal Funds
rate. In fact, on March 25, 1997, the Federal Reserve did indeed increase the
Federal Funds rate by 0.25% to 5.50%. This increase, and the prospect for
further interest rate increases, caused the U.S. 30-year bond yield to rise from
a low of 6.35% on November 29, 1996 to 6.95% on April 30, 1997. During this same
time period, the U.S. 2-year note yield rose from a low of 5.58% on November 29,
1996 to 6.27% on April 30, 1997.
Despite this relatively hostile interest rate environment, the Trusts' total
returns for the six months ending April 30, 1997 were 5.36%, 5.18%, 5.42% and
4.39% for Trust I, I-A, II and IV, respectively.* This performance can be
primarily attributed to the price appreciation of certain subordinated mortgage
securities given improving market conditions for the underlying real estate as
well as the securities themselves, and the relatively short duration of the
portfolio during a period of rising interest rates. In addition, the Trusts
improved their performance by investing in higher-quality agency issues.
Currently, we plan to continue to take advantage of the relatively stable price
performance of annually resetting adjustable-rate Agency mortgages, particularly
high-coupon, short-duration GNMA and FHLMC securities. However, as the Trusts
continue to experience redemptions, a portion of its assets will be invested in
short-term U.S. government securities which have the ultimate effect of reducing
yield.
On behalf of Astra, we want to thank you for giving us the opportunity to help
you achieve your financial goals and objectives.
Sincerely,
Astra Management Corporation
- ------------------
*Total returns for the six months ended April 30, 1997 were 1.36%, 1.18%, 2.29%
and 4.39% for Trust I, I-A, II and IV shares, respectively, after deduction of
applicable sales charges (Trust I and I-A have a contingent deferred sales
charge of 4% and Trust II has an initial sales charge of 3.0%). Average annual
returns for the five years ended April 30, 1997 were .21% and -.08% for Trust I
and II, respectively after deduction of applicable sales charges (Trust II has
an initial sales charge of 3.0%). Average annual returns for the period from
inception to April 30, 1997 for Trust I, I-A, II and IV were 1.61%, .08%, .45%
and -1.81%, respectively, after deduction of applicable sales charges (Trust II
shares include an initial sales charge of 3.0%) and assume the reinvestment of
all dividends and capital gains distributions. Inception of operations for Trust
I, I-A, II and IV was February 21, 1991, May 22, 1992, November 27, 1991 and May
7, 1993, respectively.
Astra Adjustable U.S. Government Securities Trusts invest all investable assets
in the Astra Institutional Adjustable U.S. Government Securities Portfolio. The
Portfolio seeks to achieve its investment objective by investing at least 65% of
its assets in adjustable-rate mortgage (ARM) securities which are issued or
guaranteed by the U.S. Government, its agencies or instrumentalities ("U.S.
Government Mortgage Securities"). The Portfolio invests the remainder of its
assets generally in mortgage securities that are issued or sponsored by
commercial banks, savings and loan associations, mortgage bankers or other
financial institutions, that have no government guarantee and that are senior or
subordinated to other mortgage securities arising out of the same pool of
mortgages ("Multi-Class Residential Mortgage Securities"). The portion of assets
invested in Subordinated Residential Mortgage Securities may entail greater risk
than the portion invested in senior Mortgage Securities or U.S. Government
Mortgage Securities.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST WILL FLUCTUATE. SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
<PAGE>
TABLE OF CONTENTS
- ------------------------------
ASTRA ADJUSTABLE U.S GOVERNMENT SECURITIES TRUST I
Statement of Assets and Liabilities..................................... 3
Statement of Operations................................................. 3
Statement of Changes in Net Assets...................................... 4
Financial Highlights.................................................... 5
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
Statement of Assets and Liabilities..................................... 6
Statement of Operations................................................. 6
Statement of Changes in Net Assets...................................... 7
Financial Highlights.................................................... 8
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
Statement of Assets and Liabilities..................................... 9
Statement of Operations................................................. 9
Statement of Changes in Net Assets...................................... 10
Financial Highlights.................................................... 11
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
Statement of Assets and Liabilities..................................... 12
Statement of Operations................................................. 12
Statement of Changes in Net Assets...................................... 13
Financial Highlights.................................................... 14
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUSTS
Notes to Financial Statements........................................... 15
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
Portfolio of Investments................................................ 20
Statement of Assets and Liabilities..................................... 21
Statement of Operations................................................. 21
Statement of Changes in Net Assets...................................... 22
Financial Highlights.................................................... 23
Notes to Financial Statements........................................... 24
- ------
2
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
--------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $44,040,021) (Notes 1, 2A and 3)........... $ 38,802,604
Dividends receivable from Portfolio............................................................. 193,129
Prepaid expenses................................................................................ 28,208
--------------
Total Assets................................................................................ 39,023,941
--------------
LIABILITIES:
Payable for capital stock redeemed.............................................................. 59,338
Accrued expenses................................................................................ 91,029
--------------
Total Liabilities........................................................................... 150,367
--------------
NET ASSETS........................................................................................ $ 38,873,574
--------------
--------------
Net asset value per share ($38,873,574/6,867,068 shares) (Note 6)................................. $ 5.66
--------------
--------------
At April 30, 1997 the components of net assets were as follows:
Paid-in capital................................................................................. $ 117,412,243
Accumulated net realized loss on investments.................................................... (73,282,444)
Accumulated net investment deficit.............................................................. (18,809)
Net unrealized depreciation of investments...................................................... (5,237,416)
--------------
Net Assets.................................................................................. $ 38,873,574
--------------
--------------
</TABLE>
- ------------------
* Investments of Astra Adjustable U.S. Government Securities Trust I consist
entirely of 486,690 shares of Astra Institutional Adjustable U.S. Government
Securities Portfolio. Cost for Federal income tax purposes is $44,040,021. See
Notes 1 and 2A.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio...................................................................... $ 1,406,469
--------------
EXPENSES:
Distribution expenses (Note 4A)............................................................... 216,856
Shareholder servicing costs................................................................... 134,868
Insurance expense............................................................................. 37,943
Administrative servicing costs (Note 5)....................................................... 21,686
Professional fees............................................................................. 18,306
Trustees' fees................................................................................ 10,811
Registration fees............................................................................. 9,523
Reports to shareholders....................................................................... 8,503
Miscellaneous expense......................................................................... 2,638
--------------
Total expenses.............................................................................. 461,134
--------------
Net investment income.................................................................... 945,335
--------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments.............................................................. (3,064,056)
Net change in unrealized depreciation of investments.......................................... 4,386,616
--------------
Net gain on investments..................................................................... 1,322,560
--------------
Net increase in net assets resulting from operations..................................... $ 2,267,895
--------------
--------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
3
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
-------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income ..................................................... $ 945,335 $ 3,166,552
Net realized loss on investments .......................................... (3,064,056) (13,042,726)
Net change in unrealized depreciation of investments ...................... 4,386,616 11,835,902
------------ ------------
Net increase in net assets resulting from operations ...................... 2,267,895 1,959,728
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.119 and $0.246 per share,
respectively) ........................................................... (945,335) (3,183,651)
Distributions in excess of net investment income ($0.002 per share) ....... (18,809) --
Distributions from paid-in capital ($0.013 per share) ..................... -- (162,543)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a) .................................................. (10,983,990) (44,973,595)
------------ ------------
Total decrease in net assets .......................................... (9,680,239) (46,360,061)
Net assets at the beginning of the period ................................... 48,553,813 94,913,874
------------ ------------
NET ASSETS at the end of period (including accumulated net investment deficit
of $18,809 and $0, respectively) .......................................... $ 38,873,574 $ 48,553,813
------------ ------------
------------ ------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 (UNAUDITED) OCTOBER 31, 1996
--------------------------- ----------------------------
SHARES VALUE SHARES VALUE
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................... 7,222 $ 41,064 55,038 $ 305,886
Shares issued in reinvestment of distributions
to shareholders.............................. 89,576 498,202 314,016 1,728,337
Shares repurchased............................. (2,065,920) (11,523,256) (8,541,584) (47,007,818)
---------- ----------- ---------- ------------
Net decrease................................. (1,969,122) $10,983,990) (8,172,530) $(44,973,595)
---------- ----------- ---------- ------------
---------- ----------- ---------- ------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
4
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED OCTOBER 31,
APRIL 30, 1997 ---------------------------------------------------------------
(UNAUDITED) 1996 1995 1994 1993 1992
---------------- ------- ------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of
period...................... $ 5.490 $ 5.580 $ 6.370 $ 7.150 $ 7.290 $ 7.370
------- ------- ------- -------- -------- --------
Income (loss) from investment
operations--
Net investment income....... 0.119 0.246 0.246 (c) 0.270 0.364 0.850
Net realized and unrealized
gain (loss) on
investments............... 0.172 (0.077) (0.745)(c) (0.715) (0.055) 0.007
------- ------- ------- -------- -------- --------
Total from investment
operations............ 0.291 0.169 (0.499) (0.445) 0.309 0.857
------- ------- ------- -------- -------- --------
Less distributions--
Distributions from net
investment income......... 0.119 0.246 0.254 0.321 0.418 0.850
Distributions in excess of
net investment income..... 0.002 -- -- -- -- --
Distributions from paid-in
capital................... -- 0.013 0.037 0.014 0.031 0.087
------- ------- ------- -------- -------- --------
Total distributions..... 0.121 0.259 0.291 0.335 0.449 0.937
------- ------- ------- -------- -------- --------
Net asset value, end of
period...................... $ 5.660 $ 5.490 $ 5.580 $ 6.370 $ 7.150 $ 7.290
------- ------- ------- -------- -------- --------
------- ------- ------- -------- -------- --------
TOTAL RETURN (d).............. 5.36% 3.13% (8.28%) (6.43%) 4.34% 6.55%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).................. $38,874 $48,554 $94,914 $309,385 $675,810 $783,527
Ratio to average net assets--
Expenses.................... 2.13%(a)(b) 2.05%(b) 1.55%(b) 1.22%(b) 1.29%(b) 1.32%(b)
Net investment income....... 4.36%(a) 4.68% 4.28% 3.92% 4.91% 6.57%
Portfolio turnover rate....... 4% 7% 3% 3% 3% 8%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 1.16%(a), 0.94%, 0.86%,
0.62%, 0.61% and 0.64%(a), respectively, of expenses of the Portfolio, which
reduced dividends paid to Trust I.
(c) Based upon average shares outstanding throughout the period.
(d) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
5
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $32,564,881) (Notes 1, 2A and 3)............ $28,392,126
Dividends receivable from Portfolio.............................................................. 141,015
Deferred organization expense (net of accumulated amortization of $86,838) (Note 2D)............. 479
Prepaid expenses................................................................................. 22,783
-----------
Total Assets................................................................................. 28,556,403
-----------
LIABILITIES:
Payable for capital stock redeemed............................................................... 91,666
Accrued expenses................................................................................. 64,167
-----------
Total Liabilities............................................................................ 155,833
-----------
NET ASSETS......................................................................................... $28,400,570
-----------
-----------
Net asset value per share ($28,400,570/4,997,468 shares) (Note 6).................................. $ 5.68
-----------
-----------
At April 30, 1997 the components of net assets were as follows:
Paid-in capital.................................................................................. $76,320,090
Accumulated net realized loss on investments..................................................... (43,716,085)
Accumulated net investment deficit............................................................... (30,680)
Net unrealized depreciation of investments....................................................... (4,172,755)
-----------
Net Assets................................................................................... $28,400,570
-----------
-----------
</TABLE>
- ------------------
* Investments of Astra Adjustable U.S. Government Securities Trust I-A consist
entirely of 356,114 shares of Astra Institutional Adjustable U.S. Government
Securities Portfolio. Cost for Federal income tax purposes is $32,564,881. See
Notes 1 and 2A.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio........................................................................ $1,029,175
----------
EXPENSES:
Distribution expenses (Note 4A)................................................................. 158,616
Shareholder servicing costs..................................................................... 94,883
Insurance expense............................................................................... 28,723
Administrative servicing costs (Note 5)......................................................... 15,862
Professional fees............................................................................... 13,135
Reports to shareholders......................................................................... 9,554
Registration fees............................................................................... 8,848
Trustees' fees.................................................................................. 8,177
Amortization of organization expense (Note 2D).................................................. 4,831
Miscellaneous expense........................................................................... 2,314
----------
Total expenses................................................................................ 344,943
----------
Net investment income...................................................................... 684,232
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................ (2,477,421)
Net change in unrealized depreciation of investments............................................ 3,453,067
----------
Net gain on investments....................................................................... 975,646
----------
Net increase in net assets resulting from operations....................................... $1,659,878
----------
----------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
6
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 684,232 $ 2,343,160
Net realized loss on investments........................................... (2,477,421) (8,868,150)
Net change in unrealized depreciation of investments....................... 3,453,067 8,011,039
----------- -----------
Net increase in net assets resulting from operations....................... 1,659,878 1,486,049
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.118 and $0.255 per share,
respectively)............................................................ (684,232) (2,355,191)
Distributions in excess of net investment income ($0.005 per share)........ (30,680) --
Distributions from paid-in capital ($0.012 per share)...................... -- (112,823)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (8,598,773) (28,844,282)
----------- -----------
Total decrease in net assets........................................... (7,653,807) (29,826,247)
Net assets at the beginning of the period.................................... 36,054,377 65,880,624
----------- -----------
NET ASSETS at the end of the period (including accumulated net investment
deficit of $30,680 and $0, respectively)................................... $28,400,570 $36,054,377
----------- -----------
----------- -----------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 (UNAUDITED) OCTOBER 31, 1996
--------------------------- ---------------------------
SHARES VALUE SHARES VALUE
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold....................................... 11,094 $ 62,502 84,641 $ 473,520
Shares issued in reinvestment of distributions
to shareholders................................. 62,892 351,337 222,200 1,227,892
Shares repurchased................................ (1,609,165) (9,012,612) (5,528,219) (30,545,694)
---------- ----------- ---------- ------------
Net decrease.................................... (1,535,179) $(8,598,773) (5,221,378) $(28,844,282)
---------- ----------- ---------- ------------
---------- ----------- ---------- ------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
7
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
MAY 19, 1992
(COMMENCEMENT OF
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, OPERATIONS) TO
APRIL 30, 1997 --------------------------------------------------- OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992
---------------- ------- ------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period................ $ 5.520 $ 5.600 $ 6.380 $ 7.180 $ 7.310 $ 7.340
------- ------- ------- -------- -------- --------
Income (loss) from
investment operations--
Net investment
income................. 0.118 0.255 0.246 (e) 0.256 0.355 0.207
Net realized and
unrealized gain (loss)
on investments......... 0.165 (0.068) (0.741)(e) (0.726) (0.041) (0.004)
------- ------- ------- -------- -------- --------
Total from investment
operations......... 0.283 0.187 (0.495) (0.470) 0.314 0.203
------- ------- ------- -------- -------- --------
Less distributions--
Distributions from net
investment income...... 0.118 0.255 0.252 0.308 0.410 0.207
Distributions in excess
of net investment
income................. 0.005 -- -- -- -- --
Distributions from
paid-in capital........ -- 0.012 0.033 0.022 0.034 0.026
------- ------- ------- -------- -------- --------
Total
distributions...... 0.123 0.267 0.285 0.330 0.444 0.233
------- ------- ------- -------- -------- --------
Net asset value, end of
period................... $ 5.680 $ 5.520 $ 5.600 $ 6.380 $ 7.180 $ 7.310
------- ------- ------- -------- -------- --------
------- ------- ------- -------- -------- --------
TOTAL RETURN (f)........... 5.18% 3.45% (7.79%) (6.77%) 4.53% 6.16%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands)........... $28,401 $36,054 $65,881 $187,510 $378,912 $220,256
Ratio to average net
assets--
Expenses................. 2.17%(a)(b) 1.94%(b) 1.58%(b) 1.42%(b) 1.21%(b) 1.36%(a)(b)(c)
Net investment
income................. 4.31%(a) 4.79% 4.27% 3.68% 4.81% 5.59%(a)(d)
Portfolio turnover rate.... 4% 7% 3% 3% 1% 0%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 1.16%(a), 0.94%, 0.86%,
0.62%, 0.61% and 0.64%(a), respectively, of expenses of the Portfolio, which
reduced dividends paid to Trust I-A.
(c) Ratio of expenses to average net assets prior to expense waivers was
1.39%(a).
(d) Ratio of net investment income to average net assets prior to expense
waivers was 5.56% (a).
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
8
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $3,302,302) (Notes 1, 2A and 3).............. $3,030,745
Dividends receivable from Portfolio............................................................... 15,052
Prepaid expenses.................................................................................. 1,668
----------
Total Assets.................................................................................. 3,047,465
----------
LIABILITIES:
Payable for capital stock redeemed................................................................ 1,125
Accrued expenses.................................................................................. 9,088
----------
Total Liabilities............................................................................. 10,213
----------
NET ASSETS.......................................................................................... $3,037,252
----------
----------
COMPUTATION OF OFFERING PRICE:
Net asset value and redemption price per share ($3,037,252/529,568 shares)........................ $ 5.74
----------
----------
Offering price per share (100/97 of $5.74) (a).................................................... $ 5.92
----------
----------
At April 30, 1997 the components of net assets were as follows:
Paid-in capital................................................................................... $7,805,942
Accumulated net realized loss on investments...................................................... (4,495,086)
Accumulated net investment deficit................................................................ (2,047)
Net unrealized depreciation of investments........................................................ (271,557)
----------
Net Assets.................................................................................... $3,037,252
----------
----------
</TABLE>
- ------------------
* Investments of Astra Adjustable U.S. Government Securities Trust II consist
entirely of 38,014 shares of Astra Institutional Adjustable U.S. Government
Securities Portfolio. Cost for Federal income tax purposes is $3,302,302. See
Notes 1 and 2A.
(a) On investments of $100,000 or more the offering price is reduced.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio........................................................................ $ 101,302
----------
EXPENSES:
Shareholder servicing costs..................................................................... 10,570
Registration fees............................................................................... 6,586
Distribution expenses (Note 4B)................................................................. 3,911
Insurance expense............................................................................... 2,496
Professional fees............................................................................... 2,423
Administrative servicing costs (Note 5)......................................................... 1,565
Amortization of organization expense (Note 2D).................................................. 1,356
Miscellaneous expense........................................................................... 994
Reports to shareholders......................................................................... 838
Trustees' fees.................................................................................. 703
----------
Total expenses................................................................................ 31,442
----------
Net investment income...................................................................... 69,860
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................ (79,227)
Net change in unrealized depreciation of investments............................................ 173,452
----------
Net gain on investments....................................................................... 94,225
----------
Net increase in net assets resulting from operations....................................... $ 164,085
----------
----------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
9
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
STATEMENT OF CHANGES INNET ASSETS
- --------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED), OCTOBER 31, 1996
-------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 69,860 $ 192,554
Net realized loss on investments........................................... (79,227) (484,867)
Net change in unrealized depreciation of investments....................... 173,452 416,752
---------- ----------
Net increase in net assets resulting from operations....................... 164,085 124,439
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.124 and $0.285 per share,
respectively)............................................................ (69,860) (211,468)
Distributions in excess of net investment income ($0.004 per share)........ (2,047) --
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (296,591) (1,804,879)
---------- ----------
Total decrease in net assets........................................... (204,413) (1,891,908)
Net assets at the beginning of the period.................................... 3,241,665 5,133,573
---------- ----------
NET ASSETS at the end of the period (including accumulated net investment
deficit of $2,047 and $0, respectively).................................... $3,037,252 $3,241,665
---------- ----------
---------- ----------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
--------------------- ------------------------
SHARES VALUE SHARES VALUE
------- --------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................ -- -- 20,757 $ 115,608
Shares issued in reinvestment of
distributions to shareholders............................ 9,532 $ 53,694 27,146 151,488
Shares repurchased......................................... (62,033) (350,285) (371,131) (2,071,975)
------- --------- -------- -----------
Net decrease............................................. (52,501) $(296,591) (323,228) $(1,804,879)
------- --------- -------- -----------
------- --------- -------- -----------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
10
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
NOVEMBER 27, 1991
(COMMENCEMENT OF
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, OPERATIONS) TO
APRIL 30, 1997 --------------------------------------------------- OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992
---------------- ------- ------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of
period...................... $5.570 $5.670 $6.470 $ 7.240 $ 7.320 $ 7.350
------ ------ ------ ------- ------- -------
Income (loss) from investment
operations--
Net investment income....... 0.124 0.285 0.251 (e) 0.293 0.410 0.505
Net realized and unrealized
loss on investments....... 0.174 (0.100) (0.749)(e) (0.730) (0.044) (0.033)
------ ------ ------ ------- ------- -------
Total from investment
operations............ 0.298 0.185 (0.498) (0.437) 0.366 0.472
------ ------ ------ ------- ------- -------
Less distributions--
Distributions from net
investment income......... 0.124 0.285 0.260 0.303 0.415 0.502
Distributions in excess of
net investment income..... 0.004 -- -- -- -- --
Distributions from realized
gains on investments...... -- -- -- -- 0.003 --
Distributions from paid-in
capital................... -- -- 0.042 0.030 0.028 --
------ ------ ------ ------- ------- -------
Total distributions..... 0.128 0.285 0.302 0.333 0.446 0.502
------ ------ ------ ------- ------- -------
Net asset value, end of
period...................... $5.740 $5.570 $5.670 $ 6.470 $ 7.240 $ 7.320
------ ------ ------ ------- ------- -------
------ ------ ------ ------- ------- -------
TOTAL RETURN (f).............. 5.42% 3.38% (7.74%) (6.25%) 5.12% 7.13%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands).............. $3,037 $3,242 $5,134 $12,359 $99,888 $88,901
Ratio to average net assets--
Expenses.................... 2.01%(a)(b) 1.92%(b) 1.57%(b) 0.76%(b) 0.51%(b) 0.57%(a)(b)(c)
Net investment income....... 4.46%(a) 4.80% 4.27% 4.27% 5.57% 7.09%(a)(d)
Portfolio turnover rate....... 3% 10% 7% 12% 79% 97%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 1.16%(a), 0.94%, 0.86%,
0.62%, 0.61% and 0.64%(a), respectively, of expenses of the Portfolio, which
reduced dividends paid to Trust II.
(c) Ratio of expenses to average net assets prior to expense waivers was
0.59%(a).
(d) Ratio of net investment income to average net assets prior to expense
waivers was 7.07%(a).
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
11
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
- ------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $1,451,958) (Notes 1, 2A and 3).............. $ 1,311,670
Dividends receivable from Portfolio............................................................... 6,396
Deferred organization expense (net of accumulated amortization of $42,054) (Note 2D).............. 10,691
Prepaid expenses.................................................................................. 857
-----------
Total Assets.................................................................................. 1,329,614
-----------
LIABILITIES:
Accrued expenses.................................................................................. 12,432
-----------
NET ASSETS.......................................................................................... $ 1,317,182
-----------
-----------
Net asset value per share ($1,317,182/232,404 shares) (Note 6)...................................... $ 5.67
-----------
-----------
At April 30, 1997 the components of net assets were as follows:
Paid-in capital................................................................................... $ 5,878,009
Accumulated net realized loss on investments...................................................... (4,414,262)
Accumulated net investment deficit................................................................ (6,277)
Net unrealized depreciation of investments........................................................ (140,288)
-----------
Net Assets.................................................................................... $ 1,317,182
-----------
-----------
</TABLE>
- ------------------
* Investments of Astra Adjustable U.S. Government Securities Trust IV consist
entirely of 16,452 shares of Astra Institutional Adjustable U.S. Government
Securities Portfolio. Cost for Federal income tax purposes is $1,451,958. See
Notes 1 and 2A.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio........................................................................ $ 44,269
---------
EXPENSES:
Registration fees............................................................................... 6,490
Amortization of organization expense (Note 2D).................................................. 5,216
Shareholder servicing costs..................................................................... 4,803
Distribution expenses (Note 4B)................................................................. 4,107
Reports to shareholders......................................................................... 3,382
Professional fees............................................................................... 2,036
Insurance expense............................................................................... 1,280
Miscellaneous expense........................................................................... 947
Administrative servicing costs (Note 5)......................................................... 685
Trustees' fees.................................................................................. 357
---------
Total expenses................................................................................ 29,303
Expenses waived (Note 5)........................................................................ (1,344)
---------
Net expenses............................................................................... 27,959
---------
Net investment income...................................................................... 16,310
---------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................ (59,759)
Net change in unrealized depreciation of investments............................................ 101,375
---------
Net gain on investments....................................................................... 41,616
---------
Net increase in net assets resulting from operations....................................... $ 57,926
---------
---------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
12
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED
1997 OCTOBER 31,
(UNAUDITED) 1996
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 16,310 $ 85,638
Net realized loss on investments........................................... (59,759) (415,658)
Net change in unrealized depreciation of investments....................... 101,375 376,638
---------- -----------
Net increase in net assets resulting from operations....................... 57,926 46,618
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.065 and $0.237 per share,
respectively)............................................................ (16,310) (96,191)
Distributions in excess of net investment income ($0.025 per share)........ (6,277) --
Distributions from paid-in capital ($0.016 per share)...................... -- (6,670)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (203,548) (1,329,010)
---------- -----------
Total decrease in net assets........................................... (168,209) (1,385,253)
Net assets at the beginning of the period.................................... 1,485,391 2,870,644
---------- -----------
NET ASSETS at end of period (including accumulated net investment deficit of
$6,277 and $0, respectively)............................................... $1,317,182 $ 1,485,391
---------- -----------
---------- -----------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
--------------------- ------------------------
SHARES VALUE SHARES VALUE
------- --------- -------- -----------
<S> <C> <C> <C> <C>
Shares issued in reinvestment of
distributions to shareholders............................. 2,029 $ 11,311 9,516 $ 52,864
Shares repurchased.......................................... (38,546) (214,859) (249,371) (1,381,874)
------- --------- -------- -----------
Net decrease.............................................. (36,517) $(203,548) (239,855) $(1,329,010)
------- --------- -------- -----------
------- --------- -------- -----------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
13
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
MAY 7, 1993
(COMMENCEMENT OF
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, OPERATIONS) TO
APRIL 30, 1997 --------------------------------- OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993
---------------- ------- ------- ------- ----------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $5.520 $ 5.640 $ 6.510 $7.310 $ 7.350
------ ------- ------- ------ -------
Income (loss) from investment
operations--
Net investment income............. 0.065 0.237 0.211 (e) 0.300 0.171
Net realized and unrealized loss
on investments.................. 0.175 (0.104) (0.776)(e) (0.764) (0.025)
------ ------- ------- ------- -------
Total from investment
operations................. 0.240 0.133 (0.565) (0.464) 0.146
------ ------- ------- ------- -------
Less distributions--
Distributions from net investment
income.......................... 0.065 0.237 0.218 0.302 0.172
Distributions in excess of net
investment income............... 0.025 -- -- -- --
Distributions from paid-in
capital......................... -- 0.016 0.087 0.034 0.014
------ ------- ------- ------- -------
Total distributions........... 0.090 0.253 0.305 0.336 0.186
------ ------- ------- ------- -------
Net asset value, end of period...... $5.670 $ 5.520 $ 5.640 $ 6.510 $ 7.310
------ ------- ------- ------- -------
------ ------- ------- ------- -------
TOTAL RETURN (f).................... 4.39% 2.44% (8.75%) (6.57%) 4.11%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)........................ $1,317 $ 1,485 $ 2,871 $12,565 $78,145
Ratio to average net assets--
Expenses.......................... 4.28%(a)(b) 2.72%(b) 2.19%(b)(c) 0.85%(b)(c) 0.45%(a)(b)(c)
Net investment income............. 2.38%(a) 3.98% 3.64%(d) 4.23%(d) 4.71%(a)(d)
Portfolio turnover rate............. 3% 7% 6% 21% 3%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 1.16%(a), 0.94%, 0.86%,
0.62% and 0.61%, respectively, of expenses of the Portfolio, which reduced
dividends paid to Trust IV.
(c) Ratio of expenses to average net assets prior to expense waivers were 2.22%,
1.06% and 0.76%(a), respectively.
(d) Ratio of net investment income to average net assets prior to expense
waivers were 3.61%, 4.02% and 4.40%(a), respectively.
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
14
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUSTS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
NOTE 1--ORGANIZATION
Astra Strategic Investment Series (the "Company") is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. On September 15, 1994 the Company's shareholders approved a change in
the Company's Declaration of Trust to permit the creation of additional
classes of shares of each of the Trust's series. Currently, the Company has
authorized an unlimited number of shares of beneficial interest without par
value and at April 30, 1997 offered a single class of shares in seven series:
Astra Adjustable Rate Securities Trust I, I-A and IV (collectively, the "Astra
Adjustable Rate Securities Trusts"), Astra Adjustable U.S. Government Securities
Trust I, I-A, II and IV (collectively, the "Astra Adjustable U.S. Government
Securities Trusts" or the "Trusts"), all of which are non-diversified series.
The Trusts' investment objective is to seek high current income consistent with
low volatility of principal. The Trusts' seek to achieve this objective by
investing all of its investable assets in the Astra Institutional Adjustable
U.S. Government Securities Portfolio (the "Portfolio"), a non-diversified series
of Astra Institutional Securities Trust ("AIST") with the same investment
objective as the Trusts. The Portfolio seeks to achieve its investment objective
by investing at least 65% of its assets in adjustable rate mortgage securities
which are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. The Portfolio invests the remainder of its assets generally
in mortgage securities issued or sponsored by commercial banks, savings and loan
associations, mortgage bankers or other financial institutions, that have no
government guarantee and that are senior or subordinated to other mortgage
securities arising out of the same pool of mortgages. The Portfolio and Trusts
have experienced a reduction in net asset values per share due to adverse market
conditions for adjustable rate mortgage securities, including subordinated
residential mortgage securities. Although Astra Management Corp. (the "Manager")
believes that under normal market conditions the Portfolio's and Trusts'
investment objective can be achieved, there can be no assurance that the adverse
market conditions will not continue. In addition, as the Trusts have experienced
a high rate of shareholders redemptions, cash and cash equivalents have been
maintained in order to meet such redemptions, which has the effect of reducing
yield. The Manager intends to maintain this position until such time as the
market for subordinated residential mortgage securities normalizes and
redemptions stabilize. There can be no assurance that the Trusts' or Portfolio's
investment objective will be achieved.
The value of the Trusts' investment in shares of the Portfolio reflects their
proportionate interest in the net assets of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included in this report and should be read in conjunction with the financial
statements of the Trusts.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
A. SECURITY VALUATION. The investment policy of the Trusts is to invest in
shares of the Portfolio. Shares of the Portfolio held by the Trusts are
valued at the net asset value then determined by the Portfolio. A valuation
committee of the Board of Trustees of AIST is responsible for establishing
security valuation policies, reviewing the valuation of portfolio
securities, monitoring the level of illiquid securities and reviewing
liquidity determinations for securities held by the Portfolio. AIST
considers to be illiquid all securities which cannot be disposed of within
seven days in the ordinary course of business at approximately the amount
at
- ------
15
<PAGE>
which the Portfolio values the security. Additionally, interest rate swap
contracts, interest-only and principal-only mortgage backed securities, and
special hazard certificates are treated as illiquid securities in
accordance with Securities and Exchange Commission policy. Liquid
securities are valued primarily using prices provided by independent
pricing services which use prices provided by market-makers or estimates of
market values obtained from yield and other data relating to instruments or
securities with similar characteristics, and secondarily based upon market
quotations and/or other available information. Securities for which
reliable market information or pricing service quotes are not readily
available, including illiquid securities, are valued at fair value as
determined in good faith by, or under procedures established by, the Board
of Trustees of AIST, which procedures may include the delegation of certain
responsibilities regarding valuation to the Manager. The Manager reports,
as necessary, to the Trustees of AIST regarding portfolio valuation
determinations.
Short-term securities with less than sixty days remaining to maturity when
acquired by the Portfolio are valued on an amortized cost basis by the
Portfolio when the Trustees of AIST have determined that amortized cost is
fair value.
B. FEDERAL INCOME TAXES. The Trusts intend to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of their taxable income to their shareholders. Therefore,
no Federal income tax provision is required.
C. SECURITY TRANSACTIONS, INCOME AND DISTRIBUTIONS. As is common in the
industry, security transactions of the Portfolio and Trusts are accounted
for on the trade date. Interest income on adjustable rate mortgage
securities is recorded on the accrual basis at current interest rates.
Dividends to shareholders of the Portfolio from net investment income are
declared daily and paid or reinvested monthly. Dividends to Shareholders of
the Trusts from net investment income are declared and paid or reinvested
monthly. Discounts and premiums on Portfolio debt securities are amortized
in accordance with the provisions of the Internal Revenue Code.
D. DEFERRED ORGANIZATION EXPENSES. All of the expenses incurred in connection
with the organization of the Trusts are being borne ratably by the Trusts
and are being amortized on a straight-line basis over periods of five years
from the date of commencement of operations.
E. USE OF ESTIMATES. In preparing financial statements in accordance with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and revenues and
expenses during the period. Actual results could differ from those
estimates.
NOTE 3--INVESTMENTS
At April 30, 1997 the Portfolio held subordinated residential mortgage
securities which the Valuation Committee of the Board of Trustees of AIST has
determined to be illiquid. These securities are valued at $984,056 (representing
1.4% of the Portfolio's net assets). The fair value of these securities is
determined under procedures approved by the Board of Trustees of AIST in the
absence of readily ascertainable market values.
For the year ended April 30, 1997 the cost of purchases and the proceeds from
sales of investments in the Portfolio were as follows:
PURCHASES SALES
------------- --------------
Trust I............... $ 1,577,378 $ 12,691,111
Trust I-A............. 1,169,514 9,766,081
Trust II.............. 104,926 395,429
Trust IV.............. 48,205 243,766
- ------
16
<PAGE>
At October 31, 1996 the Trusts had capital loss carryforwards for federal income
tax purposes as follows:
CAPITAL LOSS EXPIRES
CARRYFORWARD OCTOBER 31,
-------------- -------------
Trust I................. $ 534,000 1999
14,000 2000
7,926,000 2002
48,702,000 2003
13,042,000 2004
-----------
$70,218,000
-----------
-----------
Trust I-A............... $ 4,253,000 2002
28,118,000 2003
8,868,000 2004
-----------
$41,239,000
-----------
-----------
Trust II................ $ 2,284,000 2002
1,647,000 2003
485,000 2004
-----------
$ 4,416,000
-----------
-----------
Trust IV................ $ 1,896,000 2002
2,043,000 2003
416,000 2004
-----------
$ 4,355,000
-----------
-----------
NOTE 4--DISTRIBUTION PLANS
A. TRUST I AND TRUST I-A DISTRIBUTION PLANS. Trust I and Trust I-A have
adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act (the
"Distribution Plans"), whereby they will provide daily compensation to
Astra Fund Distributors Corp., the Trusts' principal underwriter (the
"Principal Underwriter") in the form of sales commissions equal to 4% of
the amount received by Trust I for each share sold and 5% of the amount
received by Trust I-A for each share sold (excluding reinvestment of
dividends and distributions) plus an interest fee calculated by applying
the rate of 1% over prime rate to the outstanding balance of Uncovered
Distribution Charges. Daily compensation payments will be made monthly and
are limited to an annual rate of 0.75% of each Trust's daily net assets.
During the six months ended April 30, 1997 the Principal Underwriter earned
daily compensation of $162,642 from Trust I and $118,962 from Trust I-A. At
April 30, 1997 Uncovered Distribution Charges (cumulative sales commissions
and interest fees reduced by cumulative daily compensation and contingent
deferred sales charges paid to the Principal Underwriter) were $12,002,957
for Trust I and $9,988,545 for Trust I-A.
The Distribution Plans also provide for monthly payments to the Principal
Underwriter of a trail or maintenance fee in an amount equal to an annual
rate of 0.25% of the daily net assets of Trust I and Trust I-A. During the
six months ended April 30, 1997 the Principal Underwriter earned
maintenance fees of $54,214 from Trust I and $39,654 from Trust I-A.
B. TRUST II AND TRUST IV DISTRIBUTION PLANS. Trust II and Trust IV have
adopted distribution plans pursuant to rule 12b-1 under the 1940 Act (the
"Distribution Plans"), whereby Trust II may pay up to a maximum annual rate
of 0.25% of its average daily net assets and Trust IV may pay up to a
maximum annual rate of 0.60% of its average daily net assets to the
Principal Underwriter as reimbursement for expenses incurred in the
distribution of the shares of Trust II and Trust IV. Pursuant to the
Distribution Plans, the Principal Underwriter is entitled to reimbursement
each month (up to a maximum of 0.25% of Trust II's daily net assets and
0.60% of Trust IV's daily net assets) for its actual expenses incurred in
the distribution and promotion of Trust II's and Trust IV's shares,
including the printing of prospectuses used for sales purposes,
advertisements, expenses of preparation and printing of sales literature,
and other distribution related expenses, including any distribution or
service fees paid to security dealers and others who have executed a
- ------
17
<PAGE>
distribution or service agreement with the Principal Underwriter. The
Distribution Plans provide that the Principal Underwriter may include as
distribution expenses a portion of its overhead expenses directly
attributable to the distribution of Trust II's and Trust IV's shares,
including personnel and out-of-pocket costs. The Distribution Plans permit
the Principal Underwriter to carryforward for a maximum of three years
(without carrying charges) distribution expenses covered by the
Distribution Plans for which it has not yet received reimbursement. At
April 30, 1997, the Principal Underwriter had incurred $242,508 of
distribution expenses in excess of amounts currently reimbursable by Trust
II and $280,797 of distribution expenses in excess of amounts currently
reimbursable by Trust IV. During the six months ended April 30, 1997, the
Principal Underwriter received distribution expense reimbursements of
$3,911 from Trust II and $4,107 from Trust IV. Distribution expenses
incurred by the Principal Underwriter included $445 and $193 for the
salaries and related costs of certain of its employees involved in the
sales of Trust II's and Trust IV's shares, respectively.
NOTE 5--INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trusts invest substantially all of their assets in the Portfolio, which has
the same investment objective as each of the Trusts. The Trustees of AIST
establish the Portfolio's investment policies and supervise and review the
operations and management of the Portfolio. For furnishing the Portfolio with
investment advice and investment management and administrative services with
respect to the Portfolio's assets, including making specific recommendations as
to the purchase and sale of portfolio securities, furnishing requisite office
space and personnel, and in general supervising and managing the Portfolio's
investments subject to the ultimate supervision and direction of AIST's
Trustees, the Manager is paid monthly a fee equal to 0.55% per annum of the
first $500 million of average daily net assets of the Portfolio. The annual rate
is reduced to 0.50% on net assets from $500 million to $1 billion and to 0.45%
on net assets over $1 billion. The management fees paid by the Portfolio to the
Manager are expenses of the Portfolio and reduce the net investment income
available for distribution by the Portfolio to the Trusts. The Manager has
agreed to reimburse the Portfolio and Trusts to the extent required so that the
aggregate expenses do not exceed the expense limitations applicable under the
securities laws or regulations of those states or jurisdictions in which the
Trusts' shares are registered or qualified for sale. Accordingly, the Manager
reimbursed Trust IV $1,344 during the six months ended April 30, 1997.
The Trusts have retained Atlas Holdings Group Inc. (the "Administrator") to
provide administration for the Trusts pursuant to an administration agreement.
These administrative services include supervising the preparation and filing of
all documents required for compliance by the Trusts with applicable laws and
regulations, supervising the maintenance of books and records and other general
and administrative responsibilities. For providing these services the
Administrator receives a fee equal to 0.10% of each Trust(1)s average daily net
assets.
Certain officers and trustees of the Company are also officers and/or
directors/trustees of AIST, the Administrator, the Manager, and the Principal
Underwriter.
NOTE 6--EARLY WITHDRAWAL CHARGES
Shares of Trust I, Trust I-A and Trust IV which are redeemed may be subject to a
contingent deferred sales charge. The contingent deferred sales charge is not
imposed on shares acquired through the reinvestment of dividends and
distributions or on the appreciation of the value of shares acquired over their
purchase price. Redemption proceeds are applied first against shares not subject
to the contingent deferred sales charge for purposes of calculating such charge.
The contingent deferred sales charges are paid by the redeeming shareholder to
the Principal Underwriter at the
- ------
18
<PAGE>
time of redemption. The contingent deferred sales charges for Trust I and Trust
I-A are imposed at the rate of 4% for redemptions in the first year after
purchase, declining to 3%, 2%, and 1% in the second, third and fourth years,
respectively. The contingent deferred sales charges for Trust IV are imposed at
the rate of 0.25% of redemptions within 3 months of the date of purchase. During
the six months ended April 30, 1997 the Principal Underwriter received
contingent deferred sales charges of $1,347 from redemptions of Trust I shares,
$29,774 from redemptions of Trust I-A shares, and $-0- from redemptions of Trust
IV shares.
NOTE 7--LEGAL MATTERS
Between December 1994 and July 1995, various complaints were filed by certain
shareholders of the Astra Adjustable U.S. Government Securities Trusts and the
Astra Adjustable Rate Securities Trusts (collectively, the "Astra Trusts") in
the United States District Court for the Central District of California and in
the Superior Court for the State of California against the Company and certain
of its officers and trustees, AIST and certain of its officers and trustees,
Astra Management Corporation, Astra Fund Distributors Corporation, and, Atlas
Holdings Group Inc. and its principal stockholder and certain of its employees.
These complaints have been consolidated in the United States District Court for
the Central District of California in the matter referred to as "In re Pilgrim
Securities Litigation."
The complaints alleged violations of the Securities Act of 1933 and the
Investment Company Act of 1940 relating principally to disclosure concerning
pricing and liquidity of portfolio securities held by the Portfolios of AIST. In
August 1996, the parties reached a tentative settlement which provided for a
dismissal of all claims with prejudice and the release of all defendants from
liability arising from the litigation upon court approval. The settlement was
subsequently approved by the court in March 1997 and, as a consequence, all
claims were dismissed.
- ------
19
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<CAPTION>
MARKET
PRINCIPAL INTEREST VALUE
AMOUNT RATE* MATURITY (NOTE 2A)
- ------------- --------- --------- -------------
<S> <C> <C> <C> <C>
ADJUSTABLE RATE MORTGAGE SECURITIES: 82.3%
U.S. GOVERNMENT AGENCY SECURITIES: 80.9%
$ 3,536,305 Federal Home Loan Mtge. Corp., Pool 845249.............. 7.818% 11/01/22 $ 3,655,655
8,375,447 Federal Home Loan Mtge. Corp., Pool 635244.............. 7.732% 03/01/25 8,590,068
4,715,772 Federal National Mtge. Assoc., Pool 60680............... 6.071% 02/01/28 4,665,667
6,657,265 Federal National Mtge. Assoc., Pool 190880.............. 6.100% 11/01/28 6,586,532
4,731,484 Federal National Mtge. Assoc., Pool 339016.............. 6.073% 11/01/35 4,681,212
5,601,937 Federal National Mtge. Assoc., Pool 8302................ 6.875% 10/20/23 5,692,968
3,439,677 Government National Mtge. Assoc., Pool 8421............. 7.125% 05/20/24 3,517,070
3,870,513 Government National Mtge. Assoc., Pool 8963............. 7.500% 08/20/26 3,993,885
3,460,225 Government National Mtge. Assoc., Pool 8984............. 7.500% 09/20/26 3,558,634
5,804,503 Government National Mtge. Assoc., Pool 8991............. 6.500% 10/20/26 5,896,098
6,838,016 Government National Mtge. Assoc., Pool 80001............ 7.500% 10/20/26 7,060,252
-----------
Total U.S. Government Agencies.......................... 57,898,041
-----------
SUBORDINATED RESIDENTIAL MORTGAGE SECURITIES: 1.4%
11,342,548 (R)(I) Coast Federal Savings Bank 1991-1....................... 1.378% 06/01/20 983,196
5,189,386 (R)(I) Coast Federal Savings Bank 1991-2, Class B-1............ 0.154% 11/25/21 859
15,966,657 (R)(I) Paine Webber Acceptance Corp 1991-1, Class B............ 0.000% 02/21/21 1
-----------
Total Subordinated Residential Mortgage
Securities........................................ 984,056
-----------
Total Adjustable Rate Mortgage Securities
(Cost $88,226,764)................................ 58,882,097
-----------
FIXED RATE MORTGAGE SECURITIES: 7.6%
SUBORDINATED RESIDENTIAL MORTGAGE SECURITIES: 7.6%
7,771,780 (R) USGI Capital Markets Group Inc, Multi Family 1992-1
(Cost $6,191,263)..................................... 8.500% 09/30/07 5,455,012
-----------
U.S. GOVERNMENT SECURITIES: 1.4%
1,000,000 U.S. Government Treasury Note (Cost $993,906)........... 5.625% 11/30/98 992,290
-----------
SHORT-TERM SECURITIES: 1.3%
U.S. GOVERNMENT AGENCY DISCOUNT NOTES: 1.3%
935,000 Federal National Mtge. Assoc., Discount Note
(Cost $935,000)....................................... 5.280% 05/01/97 935,000
-----------
Total Investments in Securities
(Cost $96,346,933**).............................. 92.6% 66,264,399
Other Assets in Excess of Liabilities -- Net............ 7.4% 5,329,221
--------- -----------
Total Net Assets........................................ 100.0% $71,593,620
--------- -----------
--------- -----------
</TABLE>
- ------------------
(R) Restricted securities (See Note 3).
(l) Illiquid securities (See Note 3).
* Rates shown are as of April 30, 1997. Interest rates on adjustable rate
mortgage securities reset periodically.
** Cost for Federal income tax purposes is $96,346,933 and net unrealized
depreciation consists of:
<TABLE>
<CAPTION>
<S> <C> <C>
Gross Unrealized Appreciation........................................ $ 243,417
Gross Unrealized Depreciation........................................ (30,325,951)
------------
Net Unrealized Depreciation.......................................... $(30,082,534)
------------
------------
</TABLE>
See Notes to Financial Statements
- ------
20
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities at value (identified cost $96,346,933) (Notes 2A and 3)............... $ 66,264,399
Cash............................................................................................ 1,453
Receivables:
Interest...................................................................................... 508,283
Principal repayments.......................................................................... 343,644
Securities sold............................................................................... 4,912,704
-------------
Total Assets................................................................................ 72,030,483
-------------
LIABILITIES:
Distributions payable to Trusts................................................................. 355,867
Accrued expenses................................................................................ 80,996
-------------
Total Liabilities........................................................................... 436,863
-------------
NET ASSETS........................................................................................ $ 71,593,620
-------------
-------------
Net asset value per share ($71,593,620/897,978 shares)............................................ $ 79.73
-------------
-------------
At April 30, 1997 the components of net assets were as follows:
Paid-in capital................................................................................. $ 208,913,146
Accumulated net realized loss on investments.................................................... (107,329,161)
Undistributed net investment income............................................................. 92,169
Net unrealized depreciation of investments...................................................... (30,082,534)
-------------
Net Assets.................................................................................. $ 71,593,620
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
INCOME:
Interest...................................................................................... $ 3,138,561
------------
EXPENSES:
Investment management fee (Note 4)............................................................ 219,111
Recordkeeping fees............................................................................ 179,798
Custody fees.................................................................................. 31,317
Professional fees............................................................................. 30,231
Miscellaneous................................................................................. 1,909
Amortization of organization expense (Note 2E)................................................ 1,047
------------
Total expenses.............................................................................. 463,413
------------
Net investment income.................................................................... 2,675,148
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments.............................................................. (590,541)
Net change in unrealized depreciation of investments.......................................... 2,934,052
------------
Net loss on investments..................................................................... 2,343,511
------------
Net increase in net assets resulting from operations..................................... $ 5,018,659
------------
------------
</TABLE>
See Notes to Financial Statements
- ------
21
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
APRIL 30, YEAR ENDED
1997 OCTOBER 31,
(UNAUDITED) 1996
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 2,675,148 $ 8,585,041
Net realized loss on investments........................................... (590,541) (11,996,528)
Net change in unrealized depreciation of investments....................... 2,934,052 9,539,824
------------ ------------
Net increase in net assets resulting from operations....................... 5,018,659 6,128,337
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($2.527 and $5.207
per share, respectively)................................................. (2,582,979) (8,326,081)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in
the number of outstanding shares (a)..................................... (20,194,570) (81,042,207)
------------ ------------
Total decrease in net assets........................................... (17,758,890) (83,239,951)
Net assets at the beginning of the period.................................... 89,352,510 172,592,461
------------ ------------
NET ASSETS at the end of the period.......................................... $ 71,593,620 $ 89,352,510
------------ ------------
------------ ------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 (UNAUDITED) OCTOBER 31, 1996
--------------------------- -----------------------------
SHARES VALUE SHARES VALUE
---------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold......................................... 1,710 $ 135,425 5,180 $ 399,587
Shares issued in payment of
distributions to shareholders..................... 35,041 2,751,817 109,930 8,539,069
Shares repurchased.................................. (293,498) (23,081,812) (1,158,946) (89,980,863)
-------- ------------ ---------- ------------
Net decrease...................................... (256,747) $(20,194,570) (1,043,836) $(81,042,207)
-------- ------------ ---------- ------------
-------- ------------ ---------- ------------
</TABLE>
See Notes to Financial Statements
- ------
22
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
NOVEMBER 27, 1991
(COMMENCEMENT OF
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, OPERATIONS) TO
APRIL 30, 1997 ----------------------------------------------- OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992
---------------- --------- --------- --------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period........................ $77.380 $78.500 $ 88.650 $ 98.410 $ 99.600 $ 100.000
------- ------- -------- --------- ----------- ------------
Income (loss) from investment
operations--
Net investment income......... 2.630 5.437 5.750(b) 5.890 6.040 7.539
Net realized and unrealized
loss on investments......... 2.247 (1.350) (11.072)(b) (10.864) (0.601) (0.419)
------- ------- -------- --------- ----------- ------------
Total from investment
operations.............. 4.877 4.087 (5.322) (4.974) 5.439 7.120
------- ------- -------- --------- ----------- ------------
Less distributions--
Distributions from net
investment income........... 2.527 5.207 4.828 4.786 6.061 7.520
Distributions from paid-in
capital..................... -- -- -- -- 0.568 --
------- ------- -------- --------- ----------- ------------
Total distributions....... 2.527 5.207 4.828 4.786 6.629 7.520
------- ------- -------- --------- ----------- ------------
Net asset value, end of
period........................ $79.730 $77.380 $ 78.500 $ 88.650 $ 98.410 $ 99.600
------- ------- -------- --------- ----------- ------------
------- ------- -------- --------- ----------- ------------
TOTAL RETURN.................... 6.38% 5.41% (6.00%) (5.25%) 5.62% 7.80%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).................... $71,594 $89,353 $172,592 $535,353 $ 1,294,248 $ 1,111,565
Ratio to average net assets--
Expenses...................... 1.16%(a) 0.94% 0.86% 0.62% 0.61% 0.64%(a)
Net investment income......... 6.72%(a) 6.94% 7.14% 6.17% 6.66% 7.90%(a)
Portfolio turnover rate......... 78% 297% 108% 83% 87% 152%
</TABLE>
- ------------------
(a) Annualized
(b) Based upon average shares outstanding throughout the period.
See Notes to Financial Statements
- ------
23
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
NOTE 1--ORGANIZATION
Astra Institutional Securities Trust (the "Company") is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Company was organized as a Massachusetts Business Trust on
September 4, 1991 with an unlimited number of shares of beneficial interest
without par value. The Company offers shares in two non-diversified series,
Astra Institutional Adjustable U.S. Government Securities Portfolio (the
"Portfolio") and Astra Institutional Adjustable Rate Securities Portfolio. The
Portfolio is structured to serve as the investment vehicle for four affiliated
open-end management investment companies: Astra Adjustable U.S. Government
Securities Trust I, I-A, II and IV (collectively, the "Trusts"). The Trusts
invest substantially all of their net assets in the Portfolio, which has the
same investment objective as that of the Trusts.
The Portfolio's investment objective is to seek high current income consistent
with low volatility of principal. The Portfolio seeks to achieve its investment
objective by investing at least 65% of its assets in adjustable rate mortgage
securities which are issued or guaranteed by the U.S. Government, its agencies
or instrumentalities. The Portfolio invests the remainder of its assets
generally in mortgage securities issued or sponsored by commercial banks,
savings and loan associations, mortgage bankers or other financial institutions,
that have no government guarantee and that are senior or subordinated to other
mortgage securities arising out of the same pool of mortgages. The Portfolio has
experienced a reduction in net asset value per share due to adverse market
conditions for adjustable rate mortgage securities, including subordinated
residential mortgage securities. Although Astra Management Corp. (the "Manager")
believes that under normal market conditions the Portfolio's investment
objective can be achieved, there can be no assurance that the adverse market
conditions will not continue. In addition, as the Trusts have experienced a high
rate of shareholders redemptions, cash and cash equivalents have been maintained
in order to meet such redemptions, which has the effect of reducing yield. The
Manager intends to maintain this position until such time as the market for
subordinated residential mortgage securities normalizes and redemption rates
stabilize. There can be no assurance that the Portfolio's investment objective
will be achieved.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
A. SECURITY VALUATION. A valuation committee of the Board of Trustees is
responsible for establishing security valuation policies, reviewing the
valuation of portfolio securities, monitoring the level of illiquid
securities and reviewing liquidity determinations. The Company considers to
be illiquid all securities which cannot be disposed of within seven days in
the ordinary course of business at approximately the amount at which the
Portfolio values the security. Additionally, interest rate swap contracts,
interest-only and principal-only mortgage backed securities, and special
hazard certificates are treated as illiquid securities in accordance with
Securities and Exchange Commission policy. Liquid securities are valued
primarily using prices provided by independent pricing services which use
prices provided by market-makers or estimates of market values obtained
from yield and other data relating to instruments or securities with
similar characteristics, and secondarily based upon market quotations
and/or other available information. Securities for which reliable market
information or pricing service quotes are not
- ------
24
<PAGE>
readily available, including illiquid securities, are valued at fair value
as determined in good faith by, or under procedures established by, the
Board of Trustees, which procedures may include the delegation of certain
responsibilities regarding valuation to the Manager. The Manager reports,
as necessary, to the Trustees of the Company regarding portfolio valuation
determinations. Short-term securities with less than sixty days remaining
to maturity when acquired by the Portfolio will be valued on an amortized
cost basis by the Portfolio when the Board of Trustees has determined that
amortized cost is fair value.
B. FEDERAL INCOME TAXES. The Portfolio intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore,
no Federal income tax provision is required.
C. SECURITY TRANSACTIONS, INCOME AND DISTRIBUTIONS. As is common in the
industry, security transactions are accounted for on the trade date.
Interest income on adjustable rate mortgage securities is recorded on the
accrual basis at current interest rates. Dividends to shareholders from net
investment income are declared daily and paid or reinvested monthly.
Discounts and premiums on debt securities are amortized in accordance with
the provisions of the Internal Revenue Code.
D. INTEREST RATE SWAP CONTRACTS. The Portfolio may enter into interest rate
swap contracts as a hedging technique. Interest rate swap contracts are
marked-to-market daily using market quotations or independent pricing
services. The change in market value is recorded by the Portfolio as an
unrealized gain or loss. Interest income (expense) is accrued daily on the
contract's notional amount and applicable interest rates. Interest rate
swap contracts may expose the Portfolio to risks resulting from
unanticipated movements in interest rates or the failure of the
counterparty to the agreement to perform in accordance with the terms of
the contract.
E. DEFERRED ORGANIZATION EXPENSES. All of the Portfolio's expenses in
connection with its organization are being borne by the Portfolio and will
be amortized on a straight-line basis over a period of five years.
F. USE OF ESTIMATES. In preparing financial statements in accordance with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and revenues and
expenses during the period. Actual results could differ from those
estimates.
NOTE 3--INVESTMENTS
For the six months ended April 30, 1997, the cost of purchases and the proceeds
from sales of investments and principal repayments, excluding short-term
securities, aggregated $60,040,175 and $80,044,888 respectively.
On April 30, 1997, the Portfolio held restricted securities (i.e., securities
which may not be publicly sold without registration under the Federal Securities
Act of 1933 (the " '33 Act") or without an exemption under the '33 Act). The
valuation committee of the Board has reviewed the trading markets for certain of
the Portfolio's restricted securities and has determined that they are liquid
and readily marketable. At April 30, 1997 other restricted securities having a
market value of $984,056, representing 1.4% of the Portfolio's net assets have
been determined to be illiquid. On April 30, 1997, and on the acquisition dates
of the restricted securities, there were no market quotations available for
unrestricted securities of the same class. Dates of acquisition and costs of
restricted securities are as follows:
- ------
25
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL DATE(S) OF
AMOUNT ACQUISITION COST
- ---------------- ------------------------- --------------
<C> <S> <C> <C>
$ 11,342,548 Coast Federal Savings Bank 1991-1................... 06/27/91 TO 08/02/91 $10,161,870
5,189,386 Coast Federal Savings Bank 1991-2,
Class B-1........................................... 12/04/91 4,392,075
15,966,657 PaineWebber Mortgage Acceptance Corp
1991-1, Class B..................................... 10/24/91 TO 12/11/91 15,895,255
7,771,780 USGI Capital Markets Group Inc, Multi Family
1992-1.............................................. 09/28/92 6,191,263
-----------
Total restricted securities (Market Value of
$6,439,068 was 9.0% of net assets at April 30,
1997)............................................. $36,640,463
-----------
-----------
</TABLE>
At October 31, 1996 the Portfolio had a capital loss carryforward for Federal
income tax purposes of $106,739,000 of which $6,618,000 expires in 2000,
$4,385,000 in 2001, $25,842,000 in 2002, $58,186,000 in 2003 and $11,708,000 in
2004.
NOTE 4-- INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Manager provides the Portfolio with investment management and administrative
services under an Investment Management Agreement. The Manager furnishes all
investment advice, office space and salaries of personnel needed by the
Portfolio, except those involved with record-keeping, daily net asset value
calculations, placing orders for the execution of portfolio transactions,
shareholder servicing, and maintaining registration of shares under state
securities laws. As compensation for its services, the Manager is paid monthly a
fee which is equal to the annual rate of 0.55% of the first $500 million of
average daily net assets, 0.50% on net assets from $500 million to $1 billion
and 0.45% on net assets over $1 billion. The Manager has agreed to reimburse the
Portfolio and Trusts to the extent required so that the aggregate expenses do
not exceed the expense limitations applicable to the Portfolio and Trusts under
the securities laws or regulations of those states or jurisdictions in which the
Trusts' shares are registered or qualified for sale.
Certain officers and trustees of the Company are also officers and/or directors
of the Trusts and the Manager.
NOTE 5--LEGAL MATTERS
Between December 1994 and July 1995, various complaints were filed by certain
shareholders of Astra Adjustable U.S. Government Securities Trusts I, I-A, II,
III and IV and Astra Adjustable Rate Securities Trusts I, I-A, II, III and IV
(collectively, the "Astra Trusts") in the United States District Court for the
Central District of California and in the Superior Court for the State of
California against the Company and certain of its officers and trustees, the
Astra Trusts and certain of their officers and trustees, Astra Management
Corporation, Astra Fund Distributors Corporation, and, Atlas Holdings Group Inc.
and its principal stockholder and certain of its employees. These complaints
have been consolidated in the United States District Court for the Central
District of California in the matter referred to as "In re Pilgrim Securities
Litigation."
The complaints alleged violations of the Securities Act of 1933 and the
Investment Company Act of 1940 relating principally to disclosure concerning
pricing and liquidity of portfolio securities held by the two Portfolios of the
Company. In August 1996, the parties reached a tentative settlement which
provided for a dismissal of all claims with prejudice and the release of all
defendants from liability arising from the litigation upon court approval. The
settlement was subsequently approved by the court in March 1997 and, as a
consequence, all claims were dismissed.
- ------
26
<PAGE>
ASTRA GROUP
FAMILY OF FUNDS
- ------------------------------
ADJUSTABLE-INCOME FUNDS
- ------------------------------
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
FIXED-INCOME FUNDS
- ------------------------------
ASTRA ALL-AMERICAS GOVERNMENT INCOME TRUST
ASTRA SHORT-TERM MULTI-MARKET INCOME FUND I
ASTRA SHORT-TERM MULTI-MARKET INCOME FUND II
- ------------------
Prospectuses containing more complete information about the Funds, including
charges and expenses, may be obtained from Astra Fund Distributors Corp. Read
the Prospectus carefully before you invest or send money.
- ------
27
<PAGE>
- -------------------------------------------------------------------------------
11400 West Olympic Blvd.
Suite 200
Los Angeles, CA 90064
- -------------------------------------------------------------------------------
ASTRA ADJUSTABLE U.S.
GOVERNMENT SECURITIES
I, I-A, II, IV
INVESTMENT MANAGER
Astra Management Corp.
11400 West Olympic Blvd.
Suite 200
Los Angeles, CA 90064
1-310-445-8850
PRINCIPAL UNDERWRITER
Astra Fund Distributors Corp.
11400 West Olympic Blvd.
Suite 200
Los Angeles, CA 90064
1-800-219-1080
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419174
Kansas City, Missouri 64141
1-800-441-7267
TRANSFER AGENT
Investors Fiduciary Trust Company
c/o DST Systems, Inc.
P.O. Box 419174
Kansas City, Missouri 64141
This report is submitted for the general information of the shareholders of the
Trusts. It is not authorized for distribution to prospective investors in the
Trusts unless preceded or accompanied by an effective prospectus which includes
details regarding the Trusts' objectives, policies, sales commissions and other
information.
USG 0697 7.0 AST 705109
ASTRA
ARM
FUNDS
SEMI-ANNUAL REPORT
APRIL 30, 1997
ASTRA ADJUSTABLE
U.S. GOVERNMENT SECURITIES
TRUSTS I, I-A, II, IV
[GRAPHIC OMITTED]
[PHOTOGRAPH OF AN EAGLE]
[ASTRA LOGO]
ASTRA
<PAGE>
{LOGO]
ASTRA ADJUSTABLE RATE SECURITIES TRUSTS SEMI-ANNUAL REPORT
June 16, 1997
Dear Shareholder:
The Astra Adjustable Rate Securities Trust I, I-A, and IV (the "Trusts") fiscal
year began with the U.S. Federal Reserve not expected to increase interest rates
as U.S. economic data showed little signs of above-average economic growth or
inflationary pressures. However, beginning in late February, U.S. interest rates
began to rise as investors' perception of future economic growth increased in
conjunction with concerns of rising inflation brought about by the release of
economic data for January and February 1997, including retail sales, housing
starts, and the Consumer Price Index. The fear of a rise in U.S. interest rates
was further exacerbated by statements by Federal Reserve governors alluding to a
possible increase in the Federal Funds rate. In fact, on March 25, 1997, the
Federal Reserve did indeed increase the Federal Funds rate by 0.25% to 5.50%.
This increase, and the prospect for further interest rate increases, caused the
U.S. 30-year bond yield to rise from a low of 6.35% on November 29, 1996 to
6.95% on April 30, 1997. During this same time period, the U.S. 2-year note
yield rose from a low of 5.58% on November 29, 1996 to 6.27% on April 30, 1997.
Against this relatively hostile interest rate environment, we have attempted to
preserve shareholder asset value by investing in high-quality, short duration
adjustable-rate Agency mortgage securities. Currently, we plan to continue to
take advantage of the relatively stable price performance of annually resetting
adjustable-rate Agency mortgages, particularly high-coupon, short-duration GNMA
and FHLMC securities. However, as the Trusts continue to experience redemptions,
a portion of its assets will be invested in short-term U.S. government
securities which have the ultimate effect of reducing yield.
On behalf of Astra, we want to thank you for giving us the opportunity to help
you achieve your financial goals and objectives.
Sincerely,
Astra Management Corporation
- ------------------
Astra Adjustable Rate Securities Trusts invest all investable assets in the
Astra Institutional Adjustable Rate Securities Portfolio. The Portfolio seeks to
achieve its investment objective by investing in mortgage securities, issued or
sponsored by commercial banks, savings and loan associations, mortgage bankers
or other financial institutions, that have no government guarantee and that are
senior or subordinated to other mortgage securities arising out of the same pool
of mortgages. A majority of the Portfolio's assets are generally invested in
Multi-Class Residential Mortgage Securities that are subordinated in some manner
as to the payment of principal and/or interest to the holders of more Senior
Securities. The Portfolio invests the remainder of its assets in (i) mortgage
securities which are issued or guaranteed by the U.S. Government, its agencies
or instrumentalities or which are collateralized by or represent an interest in
U.S. Government Mortgage Securities and (ii) certain other mortgage securities.
The portion of assets invested in Subordinated Residential Mortgage Securities
may entail greater risk than the portion invested in senior Mortgage Securities
or U.S. Government Mortgage Securities. At least 65% of the Portfolio's total
assets are normally invested in mortgage securities that are collateralized by
loans with variable interest rates.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST WILL FLUCTUATE. SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
<PAGE>
TABLE OF CONTENTS
- ------------------------------
<TABLE>
<S> <C>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
Statement of Assets and Liabilities........................................................................ 3
Statement of Operations.................................................................................... 3
Statement of Changes in Net Assets......................................................................... 4
Financial Highlights....................................................................................... 5
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
Statement of Assets and Liabilities........................................................................ 6
Statement of Operations.................................................................................... 6
Statement of Changes in Net Assets......................................................................... 7
Financial Highlights....................................................................................... 8
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
Statement of Assets and Liabilities........................................................................ 9
Statement of Operations.................................................................................... 9
Statement of Changes in Net Assets......................................................................... 10
Financial Highlights....................................................................................... 11
ASTRA ADJUSTABLE RATE SECURITIES TRUSTS
Notes to Financial Statements.............................................................................. 12
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
Portfolio of Investments................................................................................... 17
Statement of Assets and Liabilities........................................................................ 18
Statement of Operations.................................................................................... 18
Statement of Changes in Net Assets......................................................................... 19
Financial Highlights....................................................................................... 20
Notes to Financial Statements.............................................................................. 21
</TABLE>
- ------
2
<PAGE>
<TABLE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
--------------------------------
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $2,556,893) (Notes 1, 2A and 3)............. $ 1,636,741
Dividends receivable from Portfolio.............................................................. 7,759
Prepaid expenses................................................................................. 1,051
-------------
Total Assets................................................................................. 1,645,551
-------------
LIABILITIES:
Payable for capital stock redeemed............................................................... 8,546
Accrued expenses................................................................................. 10,709
-------------
Total Liabilities............................................................................ 19,255
-------------
NET ASSETS......................................................................................... $ 1,626,296
-------------
-------------
Net asset value per share ($1,626,296/523,296 shares) (Note 6)..................................... $ 3.11
-------------
-------------
At April 30, 1997 the components of net assets were as follows:
Paid-in capital.................................................................................. $ 21,567,864
Accumulated net realized loss on investments..................................................... (19,019,545)
Accumulated net investment deficit............................................................... (1,871)
Net unrealized depreciation of investments....................................................... (920,152)
-------------
Net Assets................................................................................... $ 1,626,296
-------------
-------------
</TABLE>
- ------------------
* Investments of Astra Adjustable Rate Securities Trust I consist entirely of
35,604 shares of Astra Institutional Adjustable Rate Securities Portfolio.
Cost for Federal income tax purposes is $2,556,893. See Notes 1 and 2A.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio....................................................................... $ 50,246
Other (Note 4A)................................................................................ 5,933
-------------
Total Income................................................................................. 56,179
-------------
EXPENSES:
Shareholders servicing costs................................................................... 9,520
Registration fees.............................................................................. 4,570
Distribution expenses (Note 4A)................................................................ 2,282
Professional fees.............................................................................. 2,246
Insurance expense.............................................................................. 1,573
Amortization of organization expense (Note 2D)................................................. 1,187
Reports to shareholders........................................................................ 992
Miscellaneous expense.......................................................................... 947
Administrative servicing costs (Note 5)........................................................ 913
Trustees' fees................................................................................. 466
-------------
Total expenses............................................................................... 24,696
-------------
Net investment income..................................................................... 31,483
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments............................................................... (587,460)
Net change in unrealized depreciation of investments........................................... 585,246
-------------
Net loss on investments...................................................................... (2,214)
-------------
Net increase in net assets resulting from operations...................................... $ 29,269
-------------
-------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
3
<PAGE>
<TABLE>
<CAPTION>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 31,483 $ 169,811
Net realized loss on investments........................................... (587,460) (3,175,937)
Net change in unrealized depreciation of investments....................... 585,246 2,984,783
-------------- --------------
Net increase (decrease) in net assets resulting from operations............ 29,269 (21,343)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.052 and $0.169 per share,
respectively)............................................................ (31,483) (186,221)
Distributions in excess of net investment income ($0.003 per share)........ (1,871) --
Distributions from paid-in capital ($0.005 per share)...................... -- (5,030)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (429,933) (2,531,212)
-------------- --------------
Total decrease in net assets........................................... (434,018) (2,743,806)
Net assets at the beginning of the period.................................... 2,060,314 4,804,120
-------------- --------------
NET ASSETS at end of period (including accumulated net investment deficit of
$1,871 and $0, respectively)............................................... $ 1,626,296 $ 2,060,314
-------------- --------------
-------------- --------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 (UNAUDITED) OCTOBER 31, 1996
-------------------------- -----------------------------
SHARES VALUE SHARES VALUE
---------- -------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares issued in reinvestment of distributions to
shareholders....................................... 4,306 $ 13,363 23,488 $ 74,319
Shares repurchased................................... (142,625) (443,296) (835,943) (2,605,531)
---------- -------------- ------------ ---------------
Net decrease....................................... (138,319) $ (429,933) (812,455) $ (2,531,212)
---------- -------------- ------------ ---------------
---------- -------------- ------------ ---------------
</TABLE>
See Notes to Trusts' Financial Statements
------
4
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- -----------------------------
<TABLE>
<CAPTION>
NOVEMBER 27, 1991
(COMMENCEMENT OF
SIX MONTHS ENDED YEAR ENDED OCTOBER 31 OPERATIONS) TO
APRIL 30, 1997 -------------------------------------------- OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992
--------------- ---- ---- ---- ---- -----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of
period...................... $ 3.110 $ 3.260 $ 6.470 $ 7.210 $ 7.250 $ 7.350
--------- --------- --------- --------- --------- ---------
Income (loss) from investment
operations--
Net investment income....... 0.051 0.169 0.224 (e) 0.357 0.475 0.524
Net realized and unrealized
loss on investments....... 0.004 (0.145) (3.066)(e) (0.688) (0.002) (0.052)
--------- --------- --------- --------- --------- ---------
Total from investment
operations.............. 0.055 0.024 (2.842) (0.331) 0.473 0.472
--------- --------- --------- --------- --------- ---------
Less distributions--
Distributions from net
investment income......... 0.052 0.169 0.260 0.409 0.513 0.524
Distributions in excess of
net investment income..... 0.003 -- -- -- -- --
Distributions from paid-in
capital................... -- 0.005 0.108 -- -- 0.048
--------- --------- --------- --------- --------- ---------
Total distributions....... 0.055 0.174 0.368 0.409 0.513 0.572
--------- --------- --------- --------- --------- ---------
Net asset value, end of
period...................... $ 3.110 $ 3.110 $ 3.260 $ 6.470 $ 7.210 $ 7.250
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
TOTAL RETURN (F).............. 1.79% 0.85% (45.38%) (4.85%) 6.74% 7.18%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands).............. $ 1,626 $ 2,060 $ 4,804 $ 59,809 $ 63,121 $ 53,187
Ratio to average net assets--
Expenses.................... 2.71%(a)(b) 1.59%(b) 1.32%(b) 1.34%(b) 1.36%(b) 1.38%(a)(b)(c)
Net investment income....... 3.45%(a) 5.73% 4.68% 5.02% 6.59% 7.63%(a)(d)
Portfolio turnover rate....... 4% 9% 9% 30% 7% 4%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 1.13% (a), 0.73%, 1.09%,
0.76% and 0.76%(a), respectively, of expenses of the Portfolio, which
reduced dividends paid to Trust I.
(c) Ratio of expenses to average net assets prior to expense waivers was
1.46%(a).
(d) Ratio of net investment income to average net assets prior to expense
waivers was 7.55%(a).
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
5
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $7,829,670) (Notes 1, 2A and 3)............. $ 4,668,584
Dividends receivable from Portfolio.............................................................. 22,437
Deferred organization expense (net of accumulated amortization of $49,366) (Note 2D)............. 305
Prepaid expenses................................................................................. 1,505
-------------
Total Assets.............................................................................. 4,692,831
-------------
LIABILITIES:
Payable for capital stock redeemed............................................................... 12,098
Accrued expenses................................................................................. 25,106
-------------
Total Liabilities......................................................................... 37,204
-------------
NET ASSETS......................................................................................... $ 4,655,627
-------------
-------------
Net asset value per share ($4,655,627/1,509,440 shares) (Note 6)................................... $ 3.08
-------------
-------------
At April 30, 1997 the components of net assets were as follows:
Paid-in capital.................................................................................. $ 59,285,796
Accumulated net realized loss on investments..................................................... (51,458,414)
Accumulated net investment deficit............................................................... (10,669)
Net unrealized depreciation of investments....................................................... (3,161,086)
-------------
Net Assets................................................................................... $ 4,655,627
-------------
-------------
</TABLE>
- ------------------
* Investments of Astra Adjustable Rate Securities Trust I-A consist entirely of
101,555 shares of Astra Institutional Adjustable Rate Securities Portfolio.
Cost for Federal income tax purposes is $7,829,670. See Notes 1 and 2A.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio........................................................................ $ 149,098
------------
EXPENSES:
Distribution expenses (Note 4A)................................................................. 27,113
Shareholders servicing costs.................................................................... 25,542
Professional fees............................................................................... 5,265
Registration fees............................................................................... 5,112
Insurance expense............................................................................... 4,854
Amortization of organization expense (Note 2D).................................................. 3,092
Reports to shareholders......................................................................... 3,072
Administrative servicing costs (Note 5)......................................................... 2,711
Trustees' fees.................................................................................. 1,428
Miscellaneous................................................................................... 1,102
------------
Total expenses............................................................................. 79,291
------------
Net investment income.................................................................... 69,807
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................ (2,177,828)
Net change in unrealized depreciation of investments............................................ 2,172,004
------------
Net loss on investments.................................................................... (5,824)
------------
Net increase in net assets resulting from operations..................................... $ 63,983
------------
------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
6
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 69,807 $ 407,250
Net realized loss on investments........................................... (2,177,828) (8,867,330)
Net change in unrealized depreciation of investments....................... 2,172,004 8,278,896
-------------- --------------
Net increase (decrease) in net assets resulting from operations............ 63,983 (181,184)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.038 and $0.126 per share,
respectively)........................................................... (69,807) (414,577)
Distributions in excess of net investment income ($0.006 per share)........ (10,669) --
Distributions from paid-in capital ($0.039 per share)...................... -- (130,045)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a).................................................. (1,583,624) (7,343,974)
-------------- --------------
Total decrease in net assets.......................................... (1,600,117) (8,069,780)
Net assets at the beginning of the period.................................... 6,255,744 14,325,524
-------------- --------------
NET ASSETS at end of period (including accumulated net investment deficit of
$10,669 and $0, respectively).............................................. $ 4,655,627 $ 6,255,744
-------------- --------------
-------------- --------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 (UNAUDITED) OCTOBER 31, 1996
---------------------------- --------------------------------
SHARES VALUE SHARES VALUE
------------ -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Shares issued in reinvestment of distributions
to shareholders............................... 11,744 $ 36,317 80,411 $ 253,592
Shares repurchased.............................. (524,590) (1,619,941) (2,425,657) (7,597,566)
------------ -------------- -------------- ----------------
Net decrease.................................. (512,846) $ (1,583,624) (2,345,246) $ (7,343,974)
------------ -------------- -------------- ----------------
------------ -------------- -------------- ----------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
7
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
MAY 19, 1992
(COMMENCEMENT OF
SIX MONTHS ENDED YEAR ENDED OCTOBER 31 OPERATIONS) TO
APRIL 30, 1997 -------------------------------------------- OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992
--------------- ---- ---- ---- ---- ----------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period................ $ 3.090 $ 3.280 $ 6.490 $ 7.240 $ 7.260 $ 7.290
--------- --------- --------- --------- --------- ----------
Income (loss) from
investment operations--
Net investment
income................. 0.038 0.126 0.169 (e) 0.348 0.474 0.252
Net realized and
unrealized gain (loss)
on investments......... (0.004) (0.151) (3.032)(e) (0.694) 0.018 (0.004)
--------- --------- --------- --------- --------- ----------
Total from investment
operations........... 0.034 (0.025) (2.863) (0.346) 0.492 0.248
--------- --------- --------- --------- --------- ----------
Less distributions--
Distributions from net
investment income...... 0.038 0.126 0.184 0.404 0.512 0.252
Distributions in excess
of net investment
income................. 0.006 -- -- -- -- --
Distributions from
paid-in capital........ -- 0.039 0.163 -- -- 0.026
--------- --------- --------- --------- --------- ----------
Total distributions.... 0.044 0.165 0.347 0.404 0.512 0.278
--------- --------- --------- --------- --------- ----------
Net asset value, end of
period................... $ 3.080 $ 3.090 $ 3.280 $ 6.490 $ 7.240 $ 7.260
--------- --------- --------- --------- --------- ----------
--------- --------- --------- --------- --------- ----------
TOTAL RETURN (F)........... 1.11% (0.72%) (45.46%) (5.05%) 7.01% 7.63%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands)........... $ 4,656 $ 6,256 $ 14,326 $ 153,802 $ 178,769 $ 57,311
Ratio to average net
assets--
Expenses................. 2.92%(a)(b) 2.18%(b) 1.76%(b) 1.43%(b) 1.14%(b)(c) 1.18%(a)(b)(c)
Net investment
income................. 2.57%(a) 4.49% 3.51% 4.88% 6.40% 6.86%(a)(d)
Portfolio turnover rate.... 4% 7% 4% 23% 0% 0%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 1.13%(a), 0.73%, 1.09%,
0.76% and 0.76%(a), respectively, of expenses of the Portfolio, which
reduced dividends paid to Trust I-A.
(c) Ratio of expenses to average net assets prior to expense waivers was 1.16%
and 1.28%(a).
(d) Ratio of net investment income to average net assets prior to expense
waivers was 6.38% and 6.76%(a), respectively.
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
8
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $2,473,418) (Notes 1, 2A and 3)............. $ 1,694,634
Dividends receivable from Portfolio.............................................................. 7,991
Deferred organization expense (net of accumulated amortization of $41,338) (Note 2D)............. 10,529
Prepaid expenses................................................................................. 1,133
-------------
Total Assets................................................................................. 1,714,287
-------------
LIABILITIES:
Payable for capital stock redeemed............................................................... 21,483
Accrued expenses................................................................................. 11,738
-------------
Total Liabilities............................................................................ 33,221
-------------
NET ASSETS......................................................................................... $ 1,681,066
-------------
-------------
Net asset value per share ($1,681,066/533,025 shares) (Note 6)..................................... $ 3.15
-------------
-------------
At April 30, 1997 the components of net assets were as follows:
Paid-in capital.................................................................................. 30,106,020
Accumulated net realized loss on investments..................................................... (27,640,010)
Accumulated net investment deficit............................................................... (6,160)
Net unrealized depreciation of investments....................................................... (778,784)
-------------
Net Assets................................................................................... $ 1,681,066
-------------
-------------
</TABLE>
- ------------------
* Investments of Astra Adjustable Rate Securities Trust IV consist entirely of
36,863 shares of Astra Institutional Adjustable Rate Securities Portfolio.
Cost for Federal income tax purposes is $2,473,418. See Notes 1 and 2A.
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio....................................................................... $ 53,820
-------------
EXPENSES:
Shareholders servicing costs................................................................... 6,686
Distribution expenses (Note 4B)................................................................ 5,899
Amortization of organization expense (Note 2D)................................................. 5,139
Registration fees.............................................................................. 4,725
Professional fees.............................................................................. 2,435
Insurance expense.............................................................................. 1,694
Reports to shareholders........................................................................ 1,092
Administrative servicing costs (Note 5)........................................................ 983
Miscellaneous expense.......................................................................... 275
Trustees' fees................................................................................. 516
-------------
Total expenses............................................................................... 29,444
-------------
Net investment income..................................................................... 24,376
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments............................................................... (1,023,750)
Net change in unrealized depreciation of investments........................................... 1,021,739
-------------
Net loss on investments...................................................................... (2,011)
-------------
Net increase in net assets resulting from operations...................................... $ 22,365
-------------
-------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
9
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 24,376 $ 151,981
Net realized loss on investments........................................... (1,023,750) (2,666,436)
Net change in unrealized depreciation of investments....................... 1,021,739 2,479,965
-------------- --------------
Net increase (decrease) in net assets resulting from operations............ 22,365 (34,490)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.038 and $0.153 per share,
respectively)............................................................ (24,376) (162,375)
Distributions in excess of net investment income ($0.009 per share)........ (6,160) --
Distributions from paid-in capital ($0.019 per share)...................... -- (20,078)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (592,258) (2,044,893)
-------------- --------------
Total decrease in net assets........................................... (600,429) (2,261,836)
Net assets at the beginning of the period.................................... 2,281,495 4,543,331
-------------- --------------
NET ASSETS at end of period (including accumulated net investment deficit of
$6,160 and $0, respectively)............................................... $ 1,681,066 $ 2,281,495
-------------- --------------
-------------- --------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
APRIL 30, 1997 (UNAUDITED) OCTOBER 31, 1996
---------------------------- --------------------------------
SHARES VALUE SHARES VALUE
------------ -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Shares issued in reinvestment of distributions
to shareholders............................... 5,226 $ 16,512 35,315 $ 113,437
Shares repurchased.............................. (192,585) (608,770) (675,758) (2,158,330)
------------ -------------- -------------- ----------------
Net decrease.................................. (187,359) $ (592,258) (640,443) $ (2,044,893)
------------ -------------- -------------- ----------------
------------ -------------- -------------- ----------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
10
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
MAY 7, 1993
(COMMENCEMENT OF
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, OPERATIONS) TO
APRIL 30, 1997 ------------------------------- OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993
----------------- --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of
period...................... $ 3.170 $ 3.340 $ 6.680 $ 7.400 $ 7.350
--------- --------- --------- --------- ------------
Income (loss) from investment
operations--
Net investment income....... 0.038 0.153 0.210(e) 0.415 0.208
Net realized and unrealized
gain (loss) on
investments............... (0.011) (0.151) (3.173)(e) (0.728) 0.050
--------- --------- --------- --------- ------------
Total from investment
operations.............. 0.027 0.002 (2.963) (0.313) 0.258
--------- --------- --------- --------- ------------
Less distributions--
Distributions from net
investment income......... 0.038 0.153 0.211 0.407 0.208
Distributions in excess of
net investment income..... 0.009 -- -- -- --
Distributions from paid-in
capital................... -- 0.019 0.166 -- --
--------- --------- --------- --------- ------------
Total distributions....... 0.047 0.172 0.377 0.407 0.208
--------- --------- --------- --------- ------------
Net asset value, end of
period...................... $ 3.150 $ 3.170 $ 3.340 $ 6.680 $ 7.400
--------- --------- --------- --------- ------------
--------- --------- --------- --------- ------------
TOTAL RETURN (F).............. 0.86% 0.14% (45.78%) (4.47%) 7.28%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).................. $ 1,681 $ 2,281 $ 4,543 $ 77,411 $ 126,708
Ratio to average net assets--
Expenses.................... 3.06%(a)(b) 1.57%(b) 1.37%(b)(c) 0.65%(b)(c) 0.50%(a)(b)(c)
Net investment income....... 2.48%(a) 5.07% 4.26%(d) 5.58%(d) 5.56%(a)(d)
Portfolio turnover rate....... 17% 10% 3% 70% 0%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 1.13%(a), 0.73%, 1.09%,
0.76% and 0.76%(a), respectively, of expenses of the Portfolio, which
reduced dividends paid to Trust IV.
(c) Ratio of expenses to average net assets prior to expense waivers was 1.42%,
0.86% and 0.75%(a), respectively.
(d) Ratio of net investment income to average net assets prior to expense
waivers was 4.20%, 5.37% and 5.31%(a), respectively.
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
11
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUSTS
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
NOTE 1--ORGANIZATION
Astra Strategic Investment Series (the "Company") is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. On September 15, 1994 the Company's shareholders approved a change in
the Company's Declaration of Trust to permit the creation of additional classes
of shares of each of the Trust's series. Currently, the Company has authorized
an unlimited number of shares of beneficial interest without par value and at
April 30, 1997 had outstanding a single class of shares in seven series: Astra
Adjustable Rate Securities Trust I, I-A and IV (collectively, the "Astra
Adjustable Rate Securities Trusts" or the "Trusts"), Astra Adjustable U.S.
Government Securities Trust I, I-A, II and IV (collectively, the "Astra
Adjustable U.S. Government Securities Trusts"), all of which are non-diversified
series. Effective March 1, 1995, the Trusts discontinued the public offering of
their shares.
The Trusts' investment objective is to seek high current income consistent with
low volatility of principal. The Trusts' seek to achieve this objective by
investing all of their investable assets in the Astra Institutional Adjustable
Securities Portfolio (the "Portfolio"), a non-diversified series of Astra
Institutional Securities Trust ("AIST") with the same investment objective as
the Trusts. The Portfolio seeks to achieve its investment objective by investing
in mortgage securities, issued or sponsored by commercial banks, savings and
loan associations, mortgage bankers or other financial institutions, that have
no government guarantee and that are senior or subordinated to other mortgage
securities arising out of the same pool of mortgages. The Portfolio and Trusts
have experienced a reduction in net asset values per share due to adverse market
conditions for adjustable rate mortgage securities, including subordinated
residential mortgage securities. Although Astra Management Corp. (the "Manager")
believes that under normal market conditions the Portfolio's and Trusts'
investment objective can be achieved, there can be no assurance that the adverse
market conditions will not continue. In addition, as the Trusts have experienced
a high rate of shareholders redemptions, cash and cash equivalents have been
maintained in order to meet such redemptions, which has the effect of reducing
yield. The Manager intends to maintain this position until such time as the
market for subordinated residential mortgage securities normalizes and
redemption rates stabilize. There can be no assurance that the Trusts' or
Portfolio's investment objective will be achieved.
The value of the Trusts' investment in the Portfolio reflects their
proportionate interest in the net assets of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included in this report and should be read in conjunction with the financial
statements of the Trusts.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
A. SECURITY VALUATION. The investment policy of the Trusts is to invest in
shares of the Portfolio. Shares of the Portfolio held by the Trusts are
valued at the net asset value then determined by the Portfolio. A valuation
committee of the Board of Trustees of AIST is responsible for establishing
security valuation policies, reviewing the valuation of portfolio
securities, monitoring the level of illiquid securities and reviewing
liquidity determinations for securities held by the Portfolio. AIST
considers to be illiquid all securities which cannot be disposed of within
seven days in the ordinary course of business at approximately the amount
at which the Portfolio values the security. Additionally, interest rate
swap contracts, interest-only and principal-only mortgage
- ------
12
<PAGE>
backed securities, and special hazard certificates are treated as illiquid
securities in accordance with Securities and Exchange Commission policy.
Liquid securities are valued primarily using prices provided by independent
pricing services which use prices provided by market-makers or estimates of
market values obtained from yield and other data relating to instruments or
securities with similar characteristics, and secondarily based upon market
quotations and/or other available information. Securities for which
reliable market information or pricing service quotes are not readily
available, including illiquid securities, are valued at fair value as
determined in good faith by, or under procedures established by, the Board
of Trustees of AIST which procedures may include the delegation of certain
responsibilities regarding valuation to the Manager. The Manager reports,
as necessary, to the Trustees of AIST regarding portfolio valuation
determinations.
Short-term securities with less than sixty days remaining to maturity when
acquired by the Portfolio are valued on an amortized cost basis by the
Portfolio when the Trustees of AIST have determined that amortized cost is
fair value.
B. FEDERAL INCOME TAXES. The Trusts intend to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of their taxable income to their shareholders. Therefore,
no Federal income tax provision is required.
C. SECURITY TRANSACTIONS, INCOME AND DISTRIBUTIONS. As is common in the
industry, security transactions of the Portfolio and Trusts are accounted
for on the trade date. Interest income on adjustable rate mortgage
securities is recorded on the accrual basis at current interest rates.
Dividends to shareholders of the Portfolio from net investment income are
declared daily and reinvested monthly.
Dividends to shareholders of the Trusts from net investment income are
declared and paid or reinvested monthly. Discounts and premiums on
Portfolio debt securities are amortized in accordance with the provisions
of the Internal Revenue Code.
D. DEFERRED ORGANIZATION EXPENSES. All of the expenses incurred in connection
with the organization of the Trusts are being borne ratably by the Trusts
and are being amortized on a straight-line basis over periods of five years
from the date of commencement of operations.
E. USE OF ESTIMATES. In preparing financial statements in accordance with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and revenues and
expenses during the period. Actual results could differ from those
estimates.
NOTE 3--INVESTMENTS
For the six months ended April 30, 1997, the cost of purchases and the proceeds
from sales of investments in the Portfolio were as follows:
PURCHASES SALES
----------- -------------
Trust I................... $ 80,745 $ 504,429
Trust I-A................. 197,430 1,875,440
Trust IV.................. 327,243 890,826
At October 31, 1996 the Trusts had capital loss carryforwards for federal income
tax purposes as follows:
CAPITAL LOSS EXPIRES
CARRYFORWARD OCTOBER 31,
-------------- -------------
Trust I................. $ 15,256,000 2003
3,176,000 2004
--------------
$ 18,432,000
--------------
--------------
Trust I-A............... $ 54,000 2002
40,359,000 2003
8,868,000 2004
--------------
$ 49,281,000
--------------
--------------
- ------
13
<PAGE>
Trust IV................ $ 1,212,000 2002
22,738,000 2003
2,666,000 2004
--------------
$ 26,616,000
--------------
--------------
NOTE 4--DISTRIBUTION PLANS
A. TRUST I AND TRUST I-A DISTRIBUTION PLANS. Trust I and Trust I-A have
adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act (the
"Distribution Plans"), whereby they will provide daily compensation to
Astra Fund Distributors Corp., the Trusts' principal underwriter (the
"Principal Underwriter") in the form of sales commissions equal to 4% of
the amount received by Trust I for each share sold and 5% of the amount
received by Trust I-A for each share sold (excluding reinvestment of
dividends and distributions) plus an interest fee calculated by applying
the rate of 1% over prime rate to the outstanding balance of Uncovered
Distribution Charges. Daily compensation payments will be made monthly and
are limited to an annual rate of 0.75% of each Trust's daily net assets.
During the six months ended April 30, 1997, the Principal Underwriter
earned daily compensation of $20,335 from Trust I-A. At April 30, 1997,
Uncovered Distribution Charges (cumulative sales commissions and interest
fees reduced by cumulative daily compensation and contingent deferred sales
charges paid to the Principal Underwriter) were $3,385,484 for Trust I-A.
On November 1, 1994, Trust I had no Uncovered Distribution Charges pursuant
to the Distribution Plan and, accordingly, discontinued the accrual of
daily compensation payments. The Distribution Plan also contains provisions
which contractually obligate the Principal Underwriter to reimburse Trust
I, to the extent it has collected contingent deferred sales charges from
redeeming shareholders when there were no such Uncovered Distribution
Charges, for Trust I's pro rata share of the Portfolio's investment
management fee. This management fee is calculated at .65% of the
Portfolio's average daily net assets. During the six months ended April 30,
1997, such reimbursement amounted to $5,933 which is included in other
income in the accompanying financial statements of Trust I.
The Distribution Plans also provide for monthly payments to the Principal
Underwriter of a trail or maintenance fee in an amount equal to an annual
rate of 0.25% of the daily net assets of Trust I and Trust I-A. During the
six months ended April 30, 1997, the Principal Underwriter earned
maintenance fees of $2,282 from Trust I and $6,778 from Trust I-A.
B. TRUST IV DISTRIBUTION PLAN. Trust IV has adopted a distribution plan
pursuant to Rule 12b-1 under the 1940 Act (the "Distribution Plan"),
whereby Trust IV may pay up to a maximum annual rate of 0.60% of its
average daily net assets to the Principal Underwriter as reimbursement for
expenses incurred in the distribution of the shares of Trust IV. Pursuant
to the Distribution Plan, the Principal Underwriter is entitled to
reimbursement each month (up to a maximum of 0.60% of Trust IV's daily net
assets) for its actual expenses incurred in the distribution and promotion
of Trust IV's shares, including the printing of prospectuses used for sales
purposes, advertisements, expenses of preparation and printing of sales
literature, and other distribution related expenses, including any
distribution or service fees paid to security dealers and others who have
executed a distribution or service agreement with the Principal
Underwriter. The Distribution Plan provides that the Principal Underwriter
may include as distribution expenses a portion of its overhead expenses
directly attributable to the distribution of Trust IV's shares, including
personnel and out-of-pocket costs. The Distribution Plan permits the
Principal Underwriter to carryforward for a maximum of three years (without
carrying charges)
- ------
14
<PAGE>
distribution expenses covered by the Distribution Plans for which it has
not yet received reimbursement. At April 30, 1997, the Principal
Underwriter had incurred $1,018,232 of distribution expenses in excess of
amounts currently reimbursable by Trust IV. During the six months ended
April 30, 1997, the Principal Underwriter received distribution expense
reimbursements of $5,899 from Trust IV. Distribution expenses incurred by
the Principal Underwriter included $228 for the salaries and related costs
of certain of its employees involved in the sales of Trust IV's shares.
NOTE 5--INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trusts invest substantially all of their assets in the Portfolio, which has
the same investment objective as each of the Trusts. The Trustees of AIST
establish the Portfolio's investment policies and supervise and review the
operations and management of the Portfolio. For furnishing the Portfolio with
investment advice and investment management and administrative services with
respect to the Portfolio's assets, including making specific recommendations as
to the purchase and the sale of portfolio securities, furnishing requisite
office space and personnel, and in general supervising and managing the
Portfolio's investments subject to the ultimate supervision and direction of
AIST's Trustees, the Manager is paid monthly a fee equal to 0.65% per annum of
the first $500 million of average daily net assets of the Portfolio. The annual
rate is reduced to 0.60% on net assets from $500 million to $1 billion and to
0.55% on net assets over $1 billion. The management fees paid by the Portfolio
to the Manager are expenses of the Portfolio and reduce the net investment
income available for distribution by the Portfolio to the Trusts. The Manager
has agreed to reimburse the Portfolio and Trusts to the extent required so that
the aggregate expenses do not exceed the expense limitations applicable under
the securities laws or regulations of those states or jurisdictions in which the
Trusts' shares are registered or qualified for sale.
The Trusts have retained Atlas Holdings Group Inc. (The "Administrator") to
provide administration for the Trusts pursuant to an administraton agreement.
These administrative services include supervising the preparation and filing of
all documents required for compliance by the Trusts with applicable laws and
regulations, supervising the maintenance of books and records and other general
and administrative responsibilities. For providing these services the
Administrator receives a fee equal to 0.10% of each Trust's average daily net
assets.
Certain officers and trustees of the Company are also officers and/or
directors/trustees of AIST, the Administrator, the Manager, and the Principal
Underwriter.
NOTE 6--EARLY WITHDRAWAL CHARGES
Shares of Trust I, Trust I-A and Trust IV which are redeemed may be subject to a
contingent deferred sales charge. The contingent deferred sales charge is not
imposed on shares acquired through the reinvestment of dividends and
distributions or on the appreciation of the value of shares acquired over their
purchase price. Redemption proceeds are applied first against shares not subject
to the contingent deferred sales charge for purposes of calculating such charge.
The contingent deferred sales charges are paid by the redeeming shareholder to
the Principal Underwriter at the time of redemption. The contingent deferred
sales charges for Trust I and Trust I-A are imposed at the rate of 4% for
redemptions in the first year after purchase, declining to 3%, 2%, and 1% in the
second, third and fourth years, respectively. The contingent deferred sales
charges for Trust IV are imposed at the rate of 0.25% of redemptions within 3
months of the date of purchase. During the six months ended April 30, 1997, the
Principal Underwriter received contingent deferred sales charges of $10,760 from
redemptions of Trust I-A shares, and $-0- from redemptions of Trust IV shares.
NOTE 7--LEGAL MATTERS
Between December 1994 and July 1995, various complaints were filed by certain
shareholders of
- ------
15
<PAGE>
the Astra Adjustable Rate Securities Trusts and the Astra Adjustable U.S.
Government Securities Trusts (collectively, the "Astra Trusts") in the United
States District Court for the Central District of California and in the Superior
Court for the State of California against the Company and certain of its
officers and trustees, AIST and certain of its officers and trustees, Astra
Management Corporation, Astra Fund Distributors Corporation, and, Atlas Holdings
Group Inc. and its principal stockholder and certain of its employees. These
complaints have been consolidated in the United States District Court for the
Central District of California in the matter referred to as "In re Pilgrim
Securities Litigation."
The complaints alleged violations of the Securities Act of 1933 and the
Investment Company Act of 1940 relating principally to disclosure concerning
pricing and liquidity of portfolio securities held by the Portfolios of AIST. In
August 1996, the parties reached a tentative settlement which provided for a
dismissal of all claims with prejudice and the release of all defendants from
liability arising from the litigation upon court approval. The settlement was
subsequently approved by the court in March 1997 and, as a consequence, all
claims were dismissed.
- ------
16
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<CAPTION>
MARKET
PRINCIPAL INTEREST VALUE
AMOUNT RATE* MATURITY (NOTE 2A)
- ------------ -------- --------- -----------
<C> <S> <C> <C> <C>
ADJUSTABLE RATE MORTGAGE SECURITIES: 96.4%
U.S. GOVERNMENT AGENCY SECURITIES: 96.4%
$ 708,924 Federal Home Loan Mtge. Corp., Pool 845249............. 7.818% 11/01/22 $ 732,851
1,657,410 Federal Home Loan Mtge. Corp., Pool 635244............. 7.725% 03/01/25 1,699,881
842,157 Federal National Mtge. Assoc., Pool 190880............. 6.100% 11/01/28 833,209
471,578 Federal National Mtge. Assoc., Pool 60680.............. 6.071% 02/01/28 466,567
479,075 Government National Mtge. Assoc., Pool 8421............ 7.125% 05/20/24 489,854
2,996,718 Government National Mtge. Assoc., Pool 8963............ 7.500% 08/20/26 3,092,238
415,114 Government National Mtge. Assoc., Pool 80001........... 7.500% 10/20/26 428,606
-----------
Total U.S. Government Agency Securities................ 7,743,206
-----------
SUBORDINATED RESIDENTIAL MORTGAGE SECURITIES: 0.0%
1,553,121(R)(I) Coast Federal Bank 1991-2, Class B-1................... 0.154% 11/25/21 257
612,337(R)(I) Paine Webber Mortgage Acceptance Corp. 1991-1, Class
B.................................................... 0.000% 02/21/21 0
-----------
Total Subordinated Residential Mortgage Securities . . 257
-----------
Total Adjustable Rate Mortgage Securities
(Cost $9,641,349)................................ 7,743,463
-----------
U.S. GOVERNMENT OBLIGATIONS: 2.5%
200,000 U.S. Government Treasury Note (Cost $199,020).......... 5.625% 11/30/98 198,458
-----------
Total Investments In Securities (Cost $9,840,369**).... 98.9% 7,941,921
Other Assets in Excess of Other Liabilities--Net....... 1.1% 90,929
--------- -----------
Total Net Assets....................................... 100.0% $ 8,032,850
--------- -----------
--------- -----------
</TABLE>
- ------------------
(R) Restricted securities (See Note 3).
(I) Illiquid securities (See Note 3).
* Rates shown are as of April 30, 1997. Interest rates on adjustable rate
mortgage securities reset periodically.
** Cost for Federal income tax purposes is $9,840,369 and net unrealized
depreciation consists of:
<TABLE>
<S> <C> <C>
Gross Unrealized Appreciation......................................... $ 32,882
Gross Unrealized Depreciation......................................... (1,931,330)
-----------
Net Unrealized Depreciation........................................... $(1,898,448)
-----------
-----------
</TABLE>
See Notes to Financial Statements
- ------
17
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value (identified cost $9,840,369) (Note 2A)....................... $ 7,941,921
Cash............................................................................................ 22,931
Receivables:
Interest...................................................................................... 66,656
Principal repayments.......................................................................... 68,297
--------------
Total Assets.................................................................................. 8,099,805
--------------
LIABILITIES:
Distribution payable to Trusts.................................................................. 38,339
Accrued expenses................................................................................ 28,616
--------------
Total Liabilities............................................................................. 66,955
--------------
NET ASSETS........................................................................................ $ 8,032,850
--------------
--------------
Net asset value per share ($8,032,850/174,738 shares)............................................. $ 45.97
--------------
--------------
At April 30, 1997 the components of net assets were as follows:
Paid-in capital................................................................................. $ 123,367,716
Undistributed net investment income............................................................. 16,044
Accumulated net realized loss on investments.................................................... (113,452,462)
Net unrealized depreciation of investments...................................................... (1,898,448)
--------------
Net Assets.................................................................................... $ 8,032,850
--------------
--------------
</TABLE>
STATEMENT OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Interest....................................................................................... $ 322,488
-------------
EXPENSES:
Investment management fee (Note 4)............................................................. 30,168
Recordkeeping fees............................................................................. 14,540
Professional fees.............................................................................. 3,769
Custody fees................................................................................... 2,352
Miscellaneous.................................................................................. 1,058
Amortization of organization expense (Note 2E)................................................. 507
-------------
Total expenses............................................................................... 52,394
-------------
Net investment income..................................................................... 270,094
-------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investments............................................................... (141)
Net change in unrealized depreciation of investments........................................... (26,001)
-------------
Net loss on investments...................................................................... (26,142)
-------------
Net increase in net assets resulting from operations...................................... $ 243,952
-------------
-------------
</TABLE>
See Notes to Financial Statements
- ------
18
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 270,094 $ 1,175,644
Net realized loss on investments........................................... (141) (12,528,496)
Net change in unrealized depreciation of investments....................... (26,001) 11,326,999
-------------- --------------
Net increase (decrease) in net assets resulting from operations............ 243,952 (25,853)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($1.268 and $2.979 per share,
respectively)........................................................... (254,050) (1,129,875)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a).................................................. (2,664,339) (16,303,884)
-------------- --------------
Total decrease in net assets.......................................... (2,674,437) (17,459,612)
Net assets at the beginning of the period.................................... 10,707,287 28,166,899
-------------- --------------
NET ASSETS at the end of the period.......................................... $ 8,032,850 $ 10,707,287
-------------- --------------
-------------- --------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1997 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
------------------------- ---------------------------
SHARES VALUE SHARES VALUE
--------- -------------- ---------- ---------------
<S> <C> <C> <C> <C>
Shares sold.............................................. 6,957 $ 320,613 7,985 $ 374,295
Shares issued in payment of distributions to
shareholders........................................... 6,207 285,743 22,801 1,060,781
Shares repurchased....................................... (71,002) (3,270,695) (382,230) (17,738,960)
--------- -------------- ---------- ---------------
Net decrease........................................... (57,838) $ (2,664,339) (351,444) $ (16,303,884)
--------- -------------- ---------- ---------------
--------- -------------- ---------- ---------------
</TABLE>
See Notes to Financial Statements
- ------
19
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
NOVEMBER 22, 1991
(COMMENCEMENT OF
SIX MONTHS ENDED YEAR ENDED OCTOBER 31, OPERATIONS) TO
APRIL 30, 1997 ------------------------------------------ OCTOBER 31,
(UNAUDITED) 1996 1995 1994 1993 1992
----------------- --------- --------- --------- --------- ------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period................. $ 46.040 $ 48.230 $ 89.710 $ 99.040 99.050 $ 100.000
--------- --------- --------- --------- --------- ----------
Income (loss) from
investment operations--
Net investment
income.................. 1.360 3.176 6.049(d) 6.460 7.804 8.606
Net realized and
unrealized loss on
investments............. (0.162) (2.387) (44.668)(d) (9.750) (0.004) (0.950)
--------- --------- --------- --------- --------- ----------
Total from investment
operations............ 1.198 0.789 (38.619) (3.290) 7.800 7.656
--------- --------- --------- --------- --------- ----------
Less distributions--
Distributions from net
investment income....... 1.268 2.979 2.545 6.040 7.810 8.606
Distributions from paid-in
capital................. -- -- 0.316 -- -- --
--------- --------- --------- --------- --------- ----------
Total distributions..... 1.268 2.979 2.861 6.040 7.810 8.606
--------- --------- --------- --------- --------- ----------
Net asset value, end of
period.................. $ 45.970 $ 46.040 $ 48.230 $ 89.710 $ 99.040 $ 99.050
--------- --------- --------- --------- --------- ----------
--------- --------- --------- --------- --------- ----------
TOTAL RETURN................ 2.63% 1.79% (44.04%) (3.56%) 8.14% 8.51%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in thousands)............ $ 8,033 $ 10,707 $ 28,167 $ 333,886 $ 455,802 $ 156,682
Ratio to average net
assets--
Expenses.................. 1.13%(a) 0.73% 1.09% 0.76% 0.76% 0.76%(a)(b)
Net investment income..... 5.82%(a) 6.89% 8.87% 6.55% 7.61% 9.14%(a)(c)
Portfolio turnover rate..... 65% 311% 45% 61% 107% 254%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets prior to expense waivers was
0.79%(a).
(c) Ratio of net investment income to average net assets prior to expense
waivers was 9.11%(a).
(d) Based upon average shares outstanding throughout the period.
See Notes to Financial Statements
- ------
20
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
APRIL 30, 1997 (UNAUDITED)
- ------------------------------
NOTE 1--ORGANIZATION
Astra Institutional Securities Trust (the "Company") is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Company was organized as a Massachusetts Business Trust on
September 4, 1991 with an unlimited number of shares of beneficial interest
without par value. The Company offers shares in two non-diversified series,
Astra Institutional Adjustable Rate Securities Portfolio (the "Portfolio") and
Astra Institutional Adjustable U.S. Government Securities Portfolio. The
Portfolio is structured to serve as the investment vehicle for three affiliated
open-end management investment companies: Astra Adjustable Rate Securities Trust
I, I-A and IV (collectively, the "Trusts"). The Trusts invest substantially all
of their net assets in the Portfolio, which has the same investment objectives
as that of the Trusts.
The Portfolio's investment objective is to seek high current income consistent
with low volatility of principal. The Portfolio seeks to achieve its investment
objective by investing in mortgage securities, issued or sponsored by commercial
banks, savings and loan associations, mortgage bankers or other financial
institutions, that have no government guarantee and that are senior or
subordinated to other mortgage securities arising out of the same pool of
mortgages. The Portfolio has experienced a reduction in net asset value per
share due to adverse market conditions for adjustable rate mortgage securities,
including subordinated residential mortgage securities. Although Astra
Management Corp. (the "Manager") believes that under normal market conditions
the Portfolio's investment objective can be achieved, there can be no assurance
that the adverse market conditions will not continue. In addition, as the Trusts
have experienced a high rate of shareholders redemptions, cash and cash
equivalents have been maintained in order to meet such redemptions, which has
the effect of reducing yield. The Manager intends to maintain this position
until such time as the market for subordinated residential mortgage securities
normalizes and redemption rates stabilize. There can be no assurance that the
Portfolio's investment objective will be achieved.
NOTE 2--SIGNIFICANT ACCOUNTING POLICIES
A. SECURITY VALUATION. A valuation committee of the Board of Trustees is
responsible for establishing security valuation policies, reviewing the
valuation of portfolio securities, monitoring the level of illiquid
securities and reviewing liquidity determinations. The Company considers to
be illiquid all securities which cannot be disposed of within seven days in
the ordinary course of business at approximately the amount at which the
Portfolio values the security. Additionally, interest rate swap contracts,
interest-only and principal-only mortgage backed securities, and special
hazard certificates are treated as illiquid securities in accordance with
Securities and Exchange Commission policy. Liquid securities are valued
primarily using prices provided by independent pricing services which use
prices provided by market-makers or estimates of market values obtained
from yield and other data relating to instruments or securities with
similar characteristics, and secondarily based upon market quotation and/or
other available information. Securities for which reliable market
information or pricing service quotes are not readily available, including
illiquid securities, are valued at fair value as determined in good faith
by, or under procedures established by, the Board of Trustees, which
procedures may include the delegation of certain responsibilities
- ------
21
<PAGE>
regarding valuation to the Manager. The Manager reports, as necessary, to
the Trustees of the Company regarding portfolio valuation determinations.
Short-term securities with less than sixty days remaining to maturity when
acquired by the Portfolio are valued on an amortized cost basis by the
Portfolio when the Board of Trustees has determined that amortized cost is
fair value.
B. FEDERAL INCOME TAXES. The Portfolio intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore,
no Federal income tax provision is required.
C. SECURITY TRANSACTIONS, INCOME AND DISTRIBUTIONS. As is common in the
industry, security transactions are accounted for on the trade date.
Interest income on adjustable rate mortgage securities is recorded on the
accrual basis at current interest rates. Dividends to shareholders from net
investment income are declared daily and paid or reinvested monthly.
Discounts and premiums on debt securities are amortized in accordance with
the provisions of the Internal Revenue Code.
D. INTEREST RATE SWAP CONTRACTS. The Portfolio may enter into interest rate
swap contracts as a hedging technique. Interest rate swap contracts are
marked-to-market daily using market quotations or independent pricing
services. The change in market value is recorded by the Portfolio as an
unrealized gain or loss. Interest income (expense) is accrued daily on the
contract's notional amount and applicable interest rates.
Interest rate swap contracts may expose the Portfolio to risks resulting
from unanticipated movements in interest rates or the failure of the
counterparty to the agreement to perform in accordance with the terms of
the contract.
E. DEFERRED ORGANIZATION EXPENSES. All of the Portfolio's expenses in
connection with its organization are being borne by the Portfolio and are
amortized on a straight-line basis over a period of five years.
F. USE OF ESTIMATES. In preparing financial statements in accordance with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 3--INVESTMENTS
For the six months ended April 30, 1997, the cost of purchases and the proceeds
from sales of investments and principal repayments, excluding short-term
securities, aggregated $5,893,930 and $7,704,545, respectively.
At October 31, 1996, the Portfolio had a capital loss carryforward for Federal
income tax purposes of $113,452,000 of which $221,000 expires in 2000,
$3,271,000 in 2001, $15,105,000 in 2002, $82,382,000 in 2003 and $12,473,000 in
2004.
NOTE 4--INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Manager provides the Portfolio with investment management and administrative
services under an Investment Management Agreement. The Manager furnishes all
investment advice, office space and salaries of personnel needed by the
Portfolio, except those involved with record-keeping, daily net asset value
calculations, placing orders for the execution of portfolio transactions,
shareholder servicing, and maintaining registration of shares under state
securities laws. As compensation for its services, the Manager is paid monthly a
fee which is equal to the annual rate of 0.65% of the first $500 million of
average daily net assets, 0.60% on net assets from $500 million to $1 billion
and 0.55% on net assets over $1 billion.
- ------
22
<PAGE>
The Manager has agreed to reimburse the Portfolio and Trusts to the extent
required so that the aggregate expenses do not exceed the expense limitations
applicable to the Portfolio and Trust under the securities laws or regulations
of those states or jurisdictions in which the Trusts' shares are registered or
qualified for sale.
Certain officers and trustees of the Company are also officers and/or
trustees/directors of the Trusts and the Manager.
NOTE 5--LEGAL MATTERS
Between December 1994 and May 1995, various complaints were filed by certain
shareholders of Astra Adjustable U.S. Government Securities Trusts I, I-A, II,
III, and IV and Astra Adjustable Rate Securities Trusts I, I-A, II, III, and IV
(collectively, the "Astra Trusts") in the United States District Court for the
Central District of California and in the Superior Court for the State of
California against the Company and certain of its officers and trustees, the
Astra Trusts and certain of their officers and trustees, Astra Management
Corporation, Astra Fund Distributors Corporation, and Atlas Holding Group Inc.
and its principal stockholder and certain of its employees. These complaints
have been consolidated in the United States District Court for the Central
District of California in the matter referred to as "In re Pilgrim Securities
Litigation."
The complaints alleged violations of the securities Act of 1933 and the
Investment Company Act of 1940 relating principally to disclosure concerning
pricing and liquidity of portfolio securities held by the two Portfolios of the
Company. In August 1996, the parties reached a tentative settlement which
provided for a dismissal of all claims with prejudice and the release of all
defendants from liability arising from the litigation upon court approval. The
settlement was subsequently approved by the court in March 1997 and, as a
consequence, all claims were dismissed.
- ------
23
<PAGE>
ASTRA GROUP
FAMILY OF FUNDS
- ------------------------------
ADJUSTABLE-INCOME FUNDS
- ------------------------------
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
FIXED-INCOME FUNDS
- ------------------------------
ASTRA ALL-AMERICAS GOVERNMENT INCOME TRUST
ASTRA SHORT-TERM MULTI-MARKET INCOME FUND I
ASTRA SHORT-TERM MULTI-MARKET INCOME FUND II
- ------------------
Prospectuses containing more complete information about the Funds, including
charges and expenses, may be obtained from Astra Fund Distributors Corp. Read
the Prospectus carefully before you invest or send money.
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24
<PAGE>
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111400 West Olympic Blvd.
Suite 200
Los Angeles, CA 90064
- ------------------------------------
ASTRA ADJUSTABLE
RATE SECURITIES TRUSTS
I, I-A, IV
Investment Manager
Astra Management Corp.
11400 West Olympic Blvd.
Suite 200
Los Angeles, CA 90064
1-310-445-8850
Principal Underwriter
Astra Fund Distributors Corp.
11400 West Olympic Blvd.
Suite 200
Los Angeles, CA 90064
1-800-219-1080
Shareholder Servicing Agent
DST Systems, Inc.
P.O. Box 419174
Kansas City, Missouri 64141
1-800-441-7267
Transfer Agent
Investors Fiduciary Trust Company
c/o DST Systems, Inc.
P.O. Box 419174
Kansas City, Missouri 64141
This report is submitted for the general information of the
shareholders of the Trusts. It is not authorized for distribution to prospective
investors in the Trusts unless preceded or accompanied by an effective
prospectus which includes details regarding the Trusts' objectives, policies,
sales commissions and other information.
AARST 0697 2.0 AST 705108
ASTRA
ARM
FUNDS
SEMI-ANNUAL REPORT
April 30, 1997
ASTRA ADJUSTABLE
RATE SECURITIES TRUSTS
I, I-A, IV
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