MONTEREY MUTUAL FUND, N-30D, 1999-01-28

MONTEREY MUTUAL FUND
N-30D, 1999-01-28

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MONTEREY
FUNDS
- OCM GOLD
- CAMBORNE GOVERNMENT INCOME
- PIA EQUITY

MONTEREY
MUTUAL
FUND

ANNUAL REPORT
NOVEMBER 30, 1998

<PAGE>

Dear Shareholder:

We are pleased to provide you with this annual report for the year ended
November 30, 1998 for the following series of the Monterey Mutual Funds: the
Camborne Government Income Fund, the OCM Gold Fund, and the PIA Equity Fund.

During the 12 months ended November 30, 1998, the returns including the
reinvestment of dividends and capital gains, were as follows:

Camborne Government Income Fund 8.7%
OCM Gold Fund (2.2%)
PIA Equity Fund (4.9%)

During this most recent fiscal year, relative weakness in the prices of both
gold stocks on which the OCM Gold Fund focuses and smaller capitalization stocks
on which the PIA Equity Fund focuses severely impacted the returns on these two
portfolios. Your portfolio managers believe that the prospect of improved global
economic growth will in 1999 result in improved returns in these two sectors of
the stock market.

The Camborne Government Bond Fund, however, provided higher returns due largely
to its emphasis on investment in bonds issued by the United States government
and its agencies. During the stressful period of global economic uncertainty in
1998, these types of bonds fared considerably better than other riskier bonds
which had exposure to this prospect of severe global weakness.

Pacific Income Advisers, the fund's portfolio manager, has reported that the
apparent intent of the Federal Reserve to provide support during any periods of
global economic weakness bodes well for stability in U.S. capital markets and
for government bonds in particular.

This is the first year in which we have dedicated this annual report to focus on
these three Funds. We hope that shareholders will find the new report more
convenient and informative.

Please
take a moment to review your Fund(s)' statement of assets and results of
operations for the year ended November 30, 1998. After what has proven to be an
exciting year in the markets, we eagerly anticipate the challenges of the new
year and look forward to reporting to you in six months.

/S/ LLOYD MCADAMS
_______________________
Lloyd McAdams
Chairman of the Board

- 2 -

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998
<TABLE>
<CAPTION>

OCM GOLD FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS 84.50%
MAJOR GOLD PRODUCERS 43.45%
17,500 Anglogold Ltd. ADR. ................................... $ 397,031
16,000 Barrick Gold Corp. .................................... 320,000
10,000 Barrick Gold Corp I/R ................................. 131,742
10,500 Driefontein Consolidated ADR. ......................... 53,156
5,000 Freeport-McMoRan Copper & Gold Inc. ................... 63,125
70,000 Homestake Mining Co. .................................. 752,500
50,000 Newmont Mining Corp. .................................. 993,750
60,000 Placer Dome Inc. ...................................... 873,750
----------
3,585,054
----------

INTERMEDIATE GOLD PRODUCERS 7.42%
25,000 Ashanti Goldfields Co. Ltd. ........................... 217,188
55,000 Battle Mountain Gold Co. .............................. 257,812
55,000 Kinross Gold Corp. ................................... 137,500
----------
612,500
----------

MID-TIER GOLD PRODUCERS 19.06%
25,000 Agnico-Eagle Mines .................................... 114,063
25,000 Getchell Gold Corp.* .................................. 409,375
65,000 GoldCorp Inc. CI.A* ................................... 357,500
85,000 Meridian Gold Inc.* ................................... 456,875
125,000 TVX Gold Inc.* ........................................ 234,375
----------
1,572,188
----------

JUNIOR GOLD PRODUCERS 4.60%
20,000 Alta Gold Co.*......................................... 34,062
10,500 Golden Cycle Gold Corp.* .............................. 73,500
30,000 Miramar Mining Corp.* ................................. 20,006
55,000 Richmont Mines Inc.* .................................. 140,242
10,000 River Gold Mines Ltd.* ................................ 26,152
75,000 Vengold Inc. .......................................... 49,036
25,000 Viceroy Resources Corp. ............................... 36,777
----------
379,775
----------

EXPLORATION AND DEVELOPMENT
COMPANIES 1.50%
200,000 Addwest Minerals International Ltd.* .................. 18,960
10,000 Crown Resources Corp.*................................. 20,000
100,000 Franc-Or Resources Corp.*.............................. 24,845
10,000 Golden Queen Mining Ltd.* ............................. 3,269
185,500 New Guinea Gold Corp. ................................. 13,341
25,000 Omni Resources Inc.* .................................. 1,471
100,000 Silver Eagle Resources* ............................... 11,769
7,500 Sutton Resources Ltd.* ................................ 30,000
----------
123,655
----------

PRIMARY SILVER PRODUCERS 2.44%
5,800 Coeur D'Alene Mines Corp.* ............................ 29,363
35,000 Hecla Mining Co.* ..................................... 146,562
5,000 Pan American Silver Corp.*............................. 25,625
----------
201,550
----------

PLATINUM/PALLADIUM PRODUCERS 1.77%
4,000 Stillwater Mining Co.* ................................ 146,250
----------

GOLD MINING ROYALTY
COMPANIES 4.26%
17,000 Euro-Nevada Mining* ................................... 260,084
5,000 Franco Nevada Mining .................................. 91,533
----------
351,617
----------

TOTAL COMMON STOCKS
(cost $7,959,763) ..................................... 6,972,589
----------

PREFERRED STOCKS 0.67%
7,500 Coeur D'Alene Mines Corp.
(cost $111,075) ....................................... 55,313
----------

<FN>

* Non income producing security
</FN>
</TABLE>

See notes to financial statements

-3-

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998 (CONTINUED)

OCM GOLD FUND (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
SHORT TERM INVESTMENTS 15.19%
<C> <S> <C>
428,000 Star Treasury Fund
(cost $428,000)..................................$ 428,000
825,000 Star Bank Repurchase Agreement 3.5%
due December 1, 1998 collateralized by
$835,000 GNMA 6.625% due 9/20/22
(cost $825,000).................................. 825,000
----------
1,253,000
----------
TOTAL INVESTMENTS
(cost $9,323,838)............. 100.36% 8,280,902
----------
LIABILITIES LESS OTHER ASSETS .................... (0.36%) (29,642)
------ ----------
TOTAL NET ASSETS ................................. 100.00% $8,251,260
----------

CAMBORNE GOVERNMENT
INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
LONG TERM INVESTMENTS 98.08%
CORPORATE 28.48%
$ 30,000 Rochester Gas & Electric Corp., 9.375%, 04/01/21....... $ 33,413
40,000 Rohm & Haas Holdings Co., 9.80%, 04/15/20 ............. 51,808
100,000 Westvaco Corp., 10.125%, 06/01/19 ..................... 107,418
85,000 W.R. Berkley Corp., 9.875%, 05/15/08 .................. 98,524
----------
291,163
----------
MORTGAGE BACKED SECURITIES 38.38%
145,000 FHLMC RMC CL 1617-PM, 6.50%, 11/15/23.................. 145,676
162,605 FNMA CMO 199-192 CL-SA, 11.00%, 04/25/07 .............. 167,480
11,547 GNMA, 9.50%, 09/15/19 ................................. 12,490
31,392 GNMA, 6.00%, 12/20/27 ................................. 31,569
13,028 Prudential 1993-59 A5, 7.125%, 12/25/00 ............... 13,089
29,772 Traveler's Mortgage Securities Corp., 12.00%, 03/01/14 35,025
----------
405,329
----------
U.S. GOVERNMENT SECURITIES 29.92%
15,000 U.S. Treasury Notes, 4.00%, 10/31/00 .................. 14,845
105,000 U.S. Treasury Bonds, 6.375%, 08/15/27 ................. 121,800
160,000 U.S. Treasury Bonds, 5.50%, 08/15/28 .................. 169,150
----------
305,795
----------
<FN>

* Non income producing security
</FN>
</TABLE>

See notes to financial statements

- 4 -

<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998 (CONTINUED)

CAMBORNE GOVERNMENT
INCOME FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
TOTAL LONG TERM INVESTMENTS
(cost $946,081)........................................ $1,002,287
----------

SHORT TERM INVESTMENTS 0.36%
$ 3,679 Star Treasury Fund
(cost $3,679).......................................... 3,679
----------
TOTAL INVESTMENTS
(cost $949,760)........................ 98.44% 1,005,966
OTHER ASSETS LESS LIABILITIES ....................... 1.56% 15,937
------ ----------
TOTAL NET ASSETS.....................................100.00% $1,021,903
====== ==========

PIA EQUITY
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS 96.28%
AEROSPACE/DEFENSE 4.37%
2,000 AAR Corp. ............................................. $ 50,500
1,950 GenCorp Inc. .......................................... 48,019
----------
98,519
----------
AUTO PARTS 3.75%
900 Borg-Warner Automotive, Inc. .......................... 44,887
2,130 Standard Products Co. ................................. 39,871
----------
84,558
----------
BANKING AND FINANCIAL SERVICE 8.80%
1,100 Bank United Corp. ..................................... 48,469
1,450 John Nuveen Co. The ................................... 53,650
2,450 People Heritage Financial Group, Inc. ................. 50,455
1,800 Washington Federal Inc. ............................... 46,013
----------
198,587
----------
BUILDING AND CONSTRUCTION 2.41%
2,160 Kaufman & Broad Home Corp. ............................ 54,405
----------

CHEMICALS 1.86%
2,200 Witco Corp. ........................................... 41,937
----------

COMPUTERS/SOFTWARE 2.58%
1,600 Autodesk, Inc. ........................................ 58,300
----------

ELECTRIC-INTEGRATED 2.16%
1,400 Idacorp Inc. .......................................... 48,825
----------

ELECTRONIC COMPONENTS-SEMICONDUCTORS 2.34%
1,400 Dallas Semiconductor Corp. ............................ 52,850
----------
<FN>

* Non income producing security
</FN>
</TABLE>

See notes to financial statements

- 5 -

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998 (CONTINUED)

FUNERAL SERVICES 1.88%
1,900 Stewart Enterprises, Inc. ............................. 42,453
----------

INSURANCE 8.29%
1,500 Capital Re Corp. ...................................... 29,625
1,450 Fremont General Corp. ................................. 73,044
3,250 Frontier Insurance Group, Inc. ........................ 46,109
2,020 Selective Insurance Group.............................. 38,254
----------
187,032
----------
MANUFACTURING 1.74%
2,435 Mascotech Inc. ........................................ 39,264
2 Tyco International Ltd. ............................... 132
----------
39,396
----------

MEDICAL 7.59%
2,900 American Health Properties............................. 65,794
2,000 ICN Pharmaceuticals Inc. .............................. 50,500
1,050 Shared Medical Systems Corp. .......................... 54,994
----------
171,288
----------

METALS & MINING 2.64%
1,350 Precision Castparts Corp. ............................. 59,653
----------

PUBLISHING 5.60%
1,100 Central Newspapers, Inc. .............................. 74,800
1,840 Lee Enterprises Inc. .................................. 51,520
----------
126,320
----------
REAL ESTATE & MORTGAGE RELATED 9.97%
2,600 Developers Diversified Realty Corp. ................... 50,212
2,100 Duke Realty Investments Inc. .......................... 47,644
1,700 Felcor Lodging Inc. ................................... 40,481
1,700 Macerich Company The .................................. 45,263
1,900 Prentiss Properties Trust ............................. 41,325
----------
224,925
----------
RENTAL EQUIPMENT 2.35%
3,400 Aaron Rents, Inc. ..................................... 53,125

RESTAURANTS 5.44%
2,940 Bob Evans Farms ....................................... 71,387
2,100 CKE Restaurants, Inc. ................................. 51,319
----------
122,706
----------

RETAIL 5.63%
5,200 Pier 1 Imports, Inc. .................................. 55,900
1,950 Ross Stores, Inc. ..................................... 71,053
----------
126,953
----------

SECURITY SERVICES 1.73%
1,300 Pittston Brink's Group ................................ 39,000
----------

TRANSPORTATION & EQUIPMENT 11.31%
2,300 Airborne Freight Corp. ................................ 61,381
1,250 Gatx Corporation ...................................... 47,266
1,750 Ryder System, Inc. .................................... 49,984
2,300 Roadway Express Inc. .................................. 34,859
2,300 USFreightways Corporation Corp. ....................... 61,741
----------
255,231
----------
<FN>

* Non income producing security
</FN>
</TABLE>

See notes to financial statements

- 6 -

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998 (CONTINUED)

PIA EQUITY (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
UTILITY 1.98%
2,300 Public Service Co. Of NM .............................. $ 44,706
----------
TOTAL COMMON STOCKS
(cost $2,350,397) ..................................... 2,172,769
----------
SHORT TERM INVESTMENTS 3.61%
81,617 Star Treasury Fund
(cost $81,617)..................................... 81,617
----------
TOTAL INVESTMENTS
(cost $2,432,041)..................... 99.89% 2,254,386
OTHER ASSETS LESS LIABILITIES ...................... 0.11% 2,409
------ ----------
TOTAL NET ASSETS .................................. 100.00% $2,256,795
====== ==========

<FN>

* Non income producing security
</FN>
</TABLE>

See notes to financial statements

- 7 -

<PAGE>
MONTEREY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - NOVEMBER 30, 1998

<TABLE>
<CAPTION>
CAMBORNE
OCM GOVERNMENT PIA
GOLD INCOME EQUITY
-----------------------------------------

ASSETS
<S> <C> <C> <C>
Investments in securities, at value
(cost $9,323,838 $949,760
and $2,432,041, respectively) ................ $ 8,290,902 $ 1,005,966 $ 2,254,386
Cash ..............................................
Receivable for fund shares sold ................... 24,505 0 0
Income receivable .................................
Due from investment advisor ....................... 0 2,050 2,076
Prepaid expenses and other ........................ 24,454 13,495 9,824
Total Assets ......................................

LIABILITIES
Payable for fund shares redeemed .................. 47,911 0 0
Accrued expenses and other ........................ 33,920 13,776 12,421
Dividends payable .................................
Due to investment advisor ......................... 2,399 0 0
Total Liabilities .................................

NET ASSETS
Capital stock, no par value; unlimited shares
authorized ...................................
Undistributed net investment income ............... 0 596 7,689
Accumulated net realized gain (loss) on
investments and foreign currencies ........... (2,445,740) (290,765) 185,472
Net unrealized appreciation (depreciation)
on investments and foreign currencies ........ (1,042,936) 56,206 (177,628)
Net Assets ........................................

CALCULATION OF MAXIMUM OFFERING PRICE
Net asset value and redemption price per share .... $ 4.98 $ 14.28 $ 17.54
Maximum sales charge (4.50% of offering price) .... .23 .67 .83
Offering price to public ..........................
Shares Outstanding ................................

</TABLE>

See notes to financial statements

- 8 -

<PAGE>
MONTEREY FUNDS
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED NOVEMBER 30, 1998
<TABLE>
<CAPTION>

CAMBORNE
OCM GOVERNMENT PIA
GOLD INCOME EQUITY
------------------------------------

INVESTMENT INCOME
<S> <C> <C> <C>
Interest ................................................. $ 46,680 $ 79,874 $ 5,120
Dividends ................................................ 38,026 0 73,898
--------- --------- ---------
Total Investment Income .................................. 84,706 79,874 79,018
--------- --------- ---------

EXPENSES
Adviser & sub-adviser fees (Note 3) ...................... 57,341 4,406 33,406
Distribution fees (Note 4) ............................... 56,768 1,102 8,351
Transfer agent fees ...................................... 20,904 15,483 17,859
Administrative fees (Note 3) ............................. 19,300 14,473 15,210
Custodian fees ........................................... 4,571 1,736 2,386
Audit fees ............................................... 6,134 7,720 6,657
Legal fees ............................................... 1,602 1,602 1,602
Registration fees ........................................ 7,616 4,202 17,699
Trustees' fees ........................................... 959 1,045 1,072
Printing expense ......................................... 10,663 302 1,547
Postage expense .......................................... 3,599 0 610
Other expenses ........................................... 1,001 0 682
--------- --------- ---------
Total expenses ........................................... 190,458 52,071 107,081
Less: Expense reimbursement from adviser and
sub-adviser ......................................... (50,546) (39,953) (35,752)
--------- --------- ---------
Net expenses ............................................. 139,912 12,118 71,329
--------- --------- ---------
Net Investment Income (Loss) ............................. (55,206) 67,756 7,689
--------- --------- ---------

REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments .................. (364,267) 30,507 176,175
Net Change in Unrealized Appreciation on Investments ..... 209,137 (6,404) (317,246)
--------- --------- ---------
Net Gain (Loss) on Investments ........................... (155,130) 24,103 (141,071)
--------- --------- ---------
Net Increase (Decrease) in Net Assets
Resulting from Operations ................................ $(210,336) $ 91,859 $(133,382)
========= ========= =========

</TABLE>

See notes to financial statements

- 9 -

<PAGE>
MONTEREY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>

CAMBORNE
OCM GOVERNMENT PIA
GOLD INCOME EQUITY
--------------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1998 1997 1998 1997 1998 1997
--------------------------------------------------------------------------------------

OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ........... $ (55,206) $ (27,596) $ 67,756 $ 63,513 $ 7,689 $ (899)
Net realized gain (loss) on investments (364,267) 19,533 30,507 (10,449) 176,175 325,095
Net change in unrealized appreciation
on investments ....................... 209,137 (1,008,814) (6,404) 33,537 (317,246) (125,645)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations ............ (210,336) (1,016,877) 91,859 86,601 (133,382) 198,551
----------- ----------- ----------- ----------- ----------- -----------
Net equalization (debits) credits ...... 0 0 (42) (755) 0 0
----------- ----------- ----------- ----------- ----------- -----------

DIVIDENDS PAID TO SHAREHOLDERS
Dividends from net investment income ... 0 0 (69,700) (60,248) 0 0
Dividends from capital gain ............ 0 0 0 0 (320,265) (22,842)
----------- ----------- ----------- ----------- ----------- -----------
0 0 (69,700) (60,248) (320,265) (22,842)
----------- ----------- ----------- ----------- ----------- -----------

FUND SHARE TRANSACTIONS
Net proceeds from shares sold .......... 7,033,912 2,054,956 179,492 24,703 2,151,015 2,289,022
Dividends reinvested ................... 0 0 58,452 55,980 238,717 21,270
Payment for shares redeemed ............ (199,636) (941,627) (199,256) (437,944) (2,456,239) (424,338)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets
from fund share transactions ......... 6,834,276 1,113,329 38,688 (357,261) (66,507) 1,885,954
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in net assets .. 6,623,940 96,452 60,805 (331,663) (520,154) 2,061,663
NET ASSETS, BEGINNING OF PERIOD ........ 1,627,320 1,530,868 961,098 1,292,761 2,776,949 715,286
----------- ----------- ----------- ----------- ----------- -----------
NET ASSETS, END OF PERIOD .............. $ 8,251,260 $ 1,627,320 $ 1,021,903 $ 961,098 $ 2,256,795 $ 2,776,949
=========== =========== =========== =========== =========== ===========

CHANGES IN SHARES OUTSTANDING
Shares sold ............................ 1,375,985 279,147 12,886 1,837 111,105 118,526
Shares issued on reinvestment
of dividends ......................... 0 0 4,132 4,103 12,704 1,195
Shares redeemed ........................ (39,416) (143,814) (14,105) (32,396) (128,755) (22,574)
----------- ----------- ----------- ----------- ----------- -----------
Net Increase (decrease) in
shares outstanding ................... 1,336,569 135,333 2,913 (26,456) (4,946) 97,147
=========== =========== =========== =========== =========== ===========

<FN>

*Commencement of operations
</FN>
</TABLE>

See notes to financial statements

- 10 -

<PAGE>

MONTEREY FUNDS NOTES TO
FINANCIAL STATEMENTS - NOVEMBER 30, 1998

NOTE 1. ORGANIZATION

Monterey Mutual Fund (the "Trust"), formerly Monitrend Mutual Fund, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Trust was organized as
a Massachusetts business trust on January 6, 1984 and con-sists of nine series
of shares: the PIA Short Term Government Securities Fund, the Camborne
Government Income Fund, the OCM Gold Fund, the PIA Equity Fund, the Murphy New
World Biotechnology Fund, the Murphy New World Technology Fund, the Murphy New
World Technology Convertibles Fund, the PIA Global Bond Fund and the PIA Total
Return Bond Fund (collectively the "Funds"), each of which has separate assets
and liabilities and differing investment objectives. The investment objective
for each of the Funds presented herein are: the OCM Gold Fund, (the "Gold
Fund"), long-term growth of capital through investing primarily in equity
securities of domestic and foreign companies engaged in activities related to
gold and precious metals; the Camborne Government Income Fund, (the "Government
Fund"), growth of capital, whether over the short or long-term, income and
preservation of capital; the PIA Equity Fund, (the "Equity Fund"), long-term
growth of capital.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.

SECURITY VALUATION--Portfolio securities that are listed on the national
securities exchanges are valued at the last sale price as of the close of such
securities exchanges, Eastern time, or, in the absence of recorded sales, at the
average of readily available closing bid and asked prices on such exchanges.
Unlisted securities are valued at the average of the quoted bid and asked prices
in the over-the-counter market. Securities and other assets for which market
quotations are not readily available are valued at fair market value as
determined in good faith by the Adviser under procedures established by and
under the general supervision and responsibility of the Trust's Board of
Trustees. Short-term investments which mature in less than 60 days are valued at
amortized cost (unless the Board of Trustees determines that this method does
not represent fair market value). Short-term investments which mature after 60
days are valued at market. Stock Index Futures, which are traded on commodities
exchanges, are valued at their last sales price as of the close of such
commodities exchanges.

OPTIONS--When a call is written, an amount equal to the premium received is
included in the Statement of Assets and Liabilities as an equiva-lent liability.
The amount of the liability is subsequently marked to market to reflect the
current market value of the option written. If an option which was written
either expires on its stipulated expiration date, or a closing purchase
transaction is entered into, a gain is realized (or loss if the cost of a
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the under-lying security,
and the liability related to such option is extinguished. If a written call
option is exercised, a capital gain or loss is realized from the sale of the
underlying security and the proceeds from such sale are increased by the premium
originally received.

The premium paid for the purchase of a call or a put option is included in
the asset section of the Statement of Assets and Liabilities as an invest-ment
and is subsequently adjusted to the current market value of the option. If a
purchased option expires on its stipulated expiration date, a loss is realized
in the amount of the cost of the option. If a closing sale transaction is
entered into, a gain or loss will be realized depending on whether the sales
proceeds from the closing sale transaction are greater or less than the cost of
the option. If a put option is exercised, a gain or loss will be realized from
the sale of the underlying security and the proceeds from such sale will be
decreased by the premium originally paid.If a call option is exercised, the cost
of the security purchased upon exercise will be increased by the premium
originally paid.

FUTURES CONTRACTS--The Government Fund and Equity Fund may from time to
time enter into futures contracts as a hedge to provide protection against
adverse movements in the prices of securities in the portfolio. When a Fund
enters a futures contract, it is required to pledge to the clearing broker an
amount of cash and/or securities equal to approximately 5% of the contract
amount. This amount is known as the "initial margin". Pursuant to the futures
contract, the Fund agrees to take or make delivery of an amount of cash equal to
a specified dollar amount times the difference between the value at the close of
the day and the price at which the futures contract was originally struck. Such
payments, known as the "variation margin", are recorded by the Fund as
unrealized gains or losses. When the futures contract expires or is closed by
the Fund it realizes a gain or loss.

FINANCIAL INSTRUMENTS WITH OFF BALANCE SHEET RISK--Futures contracts
involve elements of market risk and credit risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The contract amounts of
these futures contracts reflect the extent of exposure to off balance sheet
risk. The predominant market risk is that movements in the prices of the a
Fund's portfolio securities being hedged may not correlate perfectly with the
movement in the prices of the future contracts. The lack of correlation could
render a Fund's hedging strategy unsuccessful and could result in a loss to the
Fund.

- 11 -

<PAGE>

Futures contracts are purchased only on exchanges. The exchange acts as the
counterparty to the Funds' futures transactions; therefore the Funds' credit
risk is limited to the failure of the exchange.

FEDERAL INCOME TAXES--It is each Fund's policy to meet the requirements of
the Internal Revenue Code applicable to regulated investment com-panies and to
distribute all of its taxable net income to its shareholders. Therefore the
Funds paid no Federal Income taxes and no Federal income tax provision was
required. At November 30, 1998, the Gold Fund and Government Fund had capital
loss carryovers of approximately $2,445,740 and $290,765, respectively, which
expire in varying amounts through 2003 and 2005, respectively.

OTHER--Securities transactions are recorded no later than the first
business day after the trade date. Discounts and premiums on securities
purchased are amortized over the life of the respective security. Realized gains
and losses on sales of securities are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on an accrual basis.

USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.

NOTE 3. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS

The Gold Fund has an advisory agreement with Orrell Capital Management, a
division of Orrell and Company, Inc. ("Orrell"). Under the agreement, the Gold
Fund pays Orrell a fee computed daily and payable monthly, at the following
annual rates based upon daily net assets:

ASSETS FEE RATE
- ------ --------
0 to $50 million ........................................ 1.000%
$50 million to $75 million .............................. 0.875%
$75 million to $100 million.............................. 0.750%
$100 million to $150 million ............................ 0.625%
$150 million to $250 million ............................ 0.500%
Over $250 million........................................ 0.375%

The Government Fund has an investment advisory agreement with Pacific
Income Advisers, Inc. ("PIA"), and PIA has a sub-advisory agreement with
Camborne Advisors Inc. Under the agreements, the Government Fund pays PIA a fee,
computed daily and payable monthly, at an annual rate of 0.40% of the Government
Fund's daily net assets; and PIA pays Camborne Advisors, Inc. a sub-advisory fee
computed daily and paid monthly at an annual rate of 0.20% of the Government
Fund's daily net assets.

The Equity Fund has an investment advisory agreement with PIA. The Equity
Fund pays PIA a fee computed daily and payable monthly, at the following annual
rate based upon daily net assets:

ASSETS FEE RATE
- ------ --------
0 to $50 million ........................................ 1.000%
$50 million to $75 million .............................. 0.875%
$75 million to $100 million ............................. 0.750%
$100 million to $150 million ............................ 0.625%
$150 million to $250 million ............................ 0.500%
Over $250 million ....................................... 0.375%

During the year ended November 30, 1998 the advisers agreed to reimburse
the Funds for expenses in excess of 2.44% of average net assets (for the Gold
and Equity Funds) and 1.10% of average net assets for the Government Fund. The
amounts reimbursed by the advisers in 1998 are set forth in the Statement of
Operations.

The Trust has a fund accounting and administrative agreement with American
Data Services, Inc. ("ADS"). ADS receives a fee, computed daily and payable
monthly, at an annual rate of .1% of each Fund's average daily net assets,
subject to a monthly minimum.

- 12 -

<PAGE>

MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 1998 (CONTINUED)

NOTE 4. DISTRIBUTION AGREEMENT AND PLAN

Syndicated Capital, Inc. serves as the Distributor of each Funds' shares.
The President and sole shareholder of the Distributor is also the Chairman and a
shareholder of PIA, as well as a trustee of the Trust.

The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The Plan authorizes each Fund,
to reimburse the Distributor for marketing expenses incurred in distributing
shares of each Fund, including the cost of printing sales material and making
payments to dealers in each Funds shares, in any fiscal year, subject to a limit
of 0.99% for the Gold Fund, 0.10% for the Government Fund and 0.25% for the
Equity Fund. Distribution fees incurred by each Fund are set forth in the
Statement of Operations.

NOTE 5. PURCHASES AND SALES OF SECURITIES

The cost of purchases and sales of investment securities (other than
short-term investments) for the year ended November 30, 1998, were as follows:
<TABLE>
<CAPTION>

PURCHASES SALES
--------- -----
<S> <C> <C>
Gold Fund ...................................... $5,820,046 $ 78,714
Government Fund ................................ 1,317,606 1,310,445
Equity Fund .................................... 4,323,863 4,740,570
</TABLE>

Unrealized appreciation and depreciation on investments at November 30,
1998 based on cost for Federal income taxes (which is the same as cost for
financial reporting purposes) are as follows:
<TABLE>
<CAPTION>

UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION NET
------------ ------------ ---
<S> <C> <C> <C> <C>
Gold Fund ............................... $ 391, 579 ($1,434,533) ($1,042,936)
Government Fund ......................... 60,893 (4,687) 56,206
Equity Fund ............................. 104,738 (282,366) (177,628)
</TABLE>

- 13 -

<PAGE>

MONTEREY FUNDS
OCM GOLD
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>

FOR THE YEAR ENDED NOVEMBER 30,
1998 1997++ 1996* 1995* 1994
-------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ...................................... $ 5.09 $ 8.29 $ 5.91 $ 5.87 $ 11.94
------- ------- ------- ------ -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ............................... (0.03) (.09) (0.15) (0.09) (0.15)
Net realized and unrealized gain (loss)
on investments ................................. (0.08) (3.11) 2.53 0.13 (5.92)
------- ------- ------- ------ -------
Total from investment operations .................... (0.11) (3.20) 2.38 0.04 (6.07)
------- ------- ------- ------ -------
LESS DISTRIBUTIONS
Dividends from net investment
income ......................................... 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------ -------
Total distributions ................................. 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------ -------
Net asset value, end of period ...................... $ 4.98 $ 5.09 $ 8.29 $ 5.91 $ 5.87
======= ======= ======= ======
Total return** ...................................... (2.16%) (38.60%) 40.27% 0.68% (50.84%)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in $000's) .................................... 8,251 1,627 1,531 421 1,274
Ratio of expenses to average
net assets ..................................... 2.44% 2.44% 2.37% 2.44% 2.45%
Ratio of expenses to average net assets,
before reimbursement ........................... 3.32% 5.78% 6.15% 12.52% 5.58%
Ratio of net investment income
(loss) to average net assets ................... (0.96%) (1.60%) (1.72)% (1.57)% (1.26%)
Portfolio turnover rate ............................. 1.73% 17.68% 35.70% 15.57% 229%

<FN>

* Based on average shares outstanding.
** Excluding sales charge.
++ On 12/13/96 Orrell and Company, Inc. became the Fund's investment adviser.
Prior to 12/31/96 Monitrend Investment Management, Inc. was the Fund's
investment adviser except during the period between February 1, 1991 to
August 17, 1994 when the investment adviser was Kensington Capital
Management Inc.

</FN>
</TABLE>

See notes to financial statements

- 14 -

<PAGE>

MONTEREY FUNDS
CAMBORNE GOVERNMENT
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

FOR THE YEAR ENDED NOVEMBER 30,
1998 1997 1996 1995 1994
---------------------------------------------------------

Net asset value, beginning
<S> <C> <C> <C> <C> <C>
of period .................................... $ 14.00 $ 13.59 $ 13.88 $ 12.76 $ 14.16
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income ............................. 0.87 0.89 0.73 0.81 0.87
Net realized and unrealized gain (loss)
on investments ............................... 0.31 0.38 (0.28) 1.12 (1.39)
------- ------- ------- ------- -------
Total from investment operations .................. 1.18 1.27 0.45 1.93 (0.52)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income .............. (0.90) (0.86) (0.74) (0.81) (0.88)
------- ------- ------- ------- -------
Total distributions ............................... (0.90) (0.86) (0.74) (0.81) (0.88)
------- ------- ------- ------- -------
Net asset value, end of period .................... $ 14.28 $ 14.00 $ 13.59 $ 13.88 $ 12.76
======= ======= ======= ======= =======
Total return* ..................................... 8.68% 9.70% 3.42% 15.56% (3.75%)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in $000's) .................................. 1,022 961 1,293 947 882
Ratio of expenses to average
net assets ................................... 1.10% 1.10% 1.07% 1.10% 1.10%
Ratio of expenses to average net assets,
before reimbursement ......................... 4.73% 6.98% 5.68% 5.73% 5.52%
Ratio of net investment income
(loss) to average net assets ................. 6.15% 6.53% 5.35% 6.04% 6.47%
Portfolio turnover rate ........................... 122.44% 111.26% 129.17% 91.03% 66.36%

<FN>

* Excluding sales charge.
</FN>
</TABLE>

See notes to financial statements

- 15 -

<PAGE>

MONTEREY FUNDS
PIA EQUITY
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>

YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1998 1997++ 1996* 1995* 1994
-------------------------------------------------------------

Net asset value, beginning
<S> <C> <C> <C> <C> <C>
of period .............................................. $ 20.79 $ 19.63 $ 15.36 $ 11.12 $ 13.35
------- ------- ------- ------- -------

INCOME FROM INVESTMENT OPERATIONS
Net investment (loss) ....................................... 0.06 (1.21) (0.37) (0.24) (0.52)
Net realized and unrealized gain (loss)
on investments ......................................... (0.91) 3.05 4.64 4.48 (1.71)
------- ------- ------- ------- -------
Total from investment operations ............................ (0.85) 1.84 4.27 4.24 (2.23)
------- ------- ------- ------- -------

LESS DISTRIBUTIONS
Dividends from net investment income ........................ 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- -------
Dividends from Capital Gains ................................ (2.40) (0.68) 0.00 0.00 0.00
------- ------- ------- ------- -------
Total distributions ......................................... (2.40) (0.68) 0.00 0.00 0.00
------- ------- ------- ------- -------
Net asset value, end of period .............................. $ 17.54 $ 20.79 $ 19.63 $ 15.36 $ 11.12
======= ======= ======= ======= =======
Total return** .............................................. (4.86%) 9.96% 27.80% 38.13% (16.70%)

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in $000's) ............................................ 2,257 2,777 715 526 610
Ratio of expenses to average
net assets ............................................. 2.14% 2.43% 2.25% 2.44% 2.44%
Ratio of expenses to average net assets,
before reimbursement ................................... 3.21% 6.71% 11.73% 11.44% 8.52%
Ratio of net investment income (loss) to average
net assets ............................................. .23% (0.06%) (2.07%) (2.21%) (2.22%)
Portfolio turnover rate ..................................... 135.49% 139.57% 41.22% 23.75% 26.57%
<FN>

* Based on average shares outstanding.
** Excluding sales charge.
++ On 12/13/96 Pacific Income Advisers, Inc. became the Fund's investment
adviser. Prior to 12/13/96, Monitrend Investment Management, Inc. was the
Fund's investment adviser.
</FN>
</TABLE>

See notes to financial statements

- 16 -

<PAGE>

INDEPENDENT AUDITOR'S REPORT

The Board of Trustees and Shareholders of
Monterey Mutual Fund

We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of the OCM Gold Fund, the Camborne Government
Income Fund and the PIA Equity Fund, series of Monterey Mutual Fund (the
"Trust") as of November 30, 1998 and the related statements of operations and
changes in net assets and financial highlights for the periods indicated in the
accompanying financial statements. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and per-form the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstate-ment. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian and with brokers or
other auditing procedures where confirmations from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
OCM Gold Fund, the Camborne Government Income Fund and the PIA Equity Fund as of
November 30, 1998 and the results of their operations, the changes in their net
assets, and their financial highlights for the periods indicated, in conformity
with generally accepted accounting principles.

/S/ MCGLADREY & PULLEN, LLP
- ---------------------------
McGladrey & Pullen, LLP

New York, New York
January 8, 1999

- 17 -

<PAGE>

MONTEREY MUTUAL FUND
PERFORMANCE RESULTS - YEAR ENDED NOVEMBER 30, 1998

(ALL PERFORMANCE MEASUREMENTS REFLECT THE MAXIMUM SALES LOAD CHARGED,
FOR EACH PERIOD SHOWN.)

OCM GOLD FUND

AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/98
- ---------------------------- -----------------
1 year (6.57%) OCM Gold $5,718
Inception (25.32%) Phil. Gold & Silver $6,184
S&P 500 $16,212

$10,000 Investment made 12/13/96 (date Orrell became investment adviser)

$ 5,000 ______ OCM Gold Fund $ 5,718

$20,000 ------ S&P 500 $16,212

$15,000 __ . __ Philadelphia Gold & Silver $ 6,184
$10,000
11/30/97 12/13/96 11/30/1998

Past performance is not The S&P 500 Index is a broad unmanaged
predictive of future index generally considered to be
performance representative of the US equity market.
The Philadelphia Gold & Silver Index
is an unmanaged index of 11 gold and
silver equity securities.

The Monterey OMC Gold Fund declined 2.16% (excluding sales charges) for the
fiscal year ending 11/30/98 versus a 0.02% advance in the Philadelphia Stock
Exchange Gold & Silver Index (XAU). The manager has positioned the fund in
predominantly high quality low cost North American gold producers, favoring
unhedged producers Newmont Mining and Homestake Mining. (See seperate
shareholder letter for a more complete review and outlook).

- --------------------------------------------------------------------------------

CAMBORNE
GOVERNMENT INCOME

AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/98
- ---------------------------- -----------------
1 year 3.79% Camborne Gov't. $14,892
5 years 5.54% Lehman Index $15,652
Inception 6.84%

$10,000 Investment made 10/31/92 (date PIA became investment adviser)

$ 9,000 __________ Camborne Government $14,982

$10,000 ---------- Lehman U.S. Government Index $15,652

$11,000

$12,000

$13,000

$14,000

$15,000

$16,000
1992 1993 1994 1995 1996 1997 1998

Past performance is not The Lehman Government Index is an unmanaged
predictive of future index consisting of all US Treasury &
performance Agency bonds weighted according to market
capitalization.

The Camborne Government Income Fund returned 8.68% (excluding sales charge) this
year versus the unmanaged Lehman Government Index return of 10.75%. The manager
has balanced the portfolio holdings among U.S. Treasury securities, U.S.
Government Agency mortgage-backed securities and corporate bonds. The manager
will continue active maturity management and sector rotation of the Fund to
attempt to capitalize on investment opportunities.

- 18 -

<PAGE>

MONTEREY MUTUAL FUND
PERFORMANCE RESULTS - YEAR ENDED NOVEMBER 30, 1998

(ALL PERFORMANCE MEASUREMENTS REFLECT THE MAXIMUM SALES LOAD CHARGED,
FOR EACH PERIOD SHOWN.)

PIA EQUITY

AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/98
- ---------------------------- -----------------
1 year (9.14%) PIA Equity $10,612
Inception 3.15% S&P 500 $16,212

$10,000 Investment made 12/13/96 (date PIA became investment adviser)

$10,000 ________ PIA Equity $10,612

$20,000 -------- S&P 500 $16,212

$15,000

12/13/96 1997 1998

Past performance is not The S&P 500 Index is a broad unmanaged
predictive of future index generally considered to be
performance representative of the US equity market.

The PIA Equity Fund lost 4.86% (excluding sales charge) for the fiscal year,
significantly underperforming the S&P 500. However, the more closely related
Russell 2000 index of small capitalization com-panies declined 7.25% in the same
period. The manager believes that the Fund is well positioned to take advantage
of the recovery of the small cap sector which it expects over the coming year.

See notes to financial statements

- 19 -

<PAGE>

Monterey Mutual Funds
Distributed by:

Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401

<PAGE>

MURPHY
NEW WORLD
FUNDS

-- Murphy New World Technology
-- Murphy New World Biotechnology
-- Murphy New World Technology
-- Convertibles

MONTEREY
MUTUAL
FUND

ANNUAL REPORT
NOVEMBER 30, 1998

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998

MURPHY NEW WORLD
TECHNOLOGY FUND
<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 91.68%
<C> <S> <C>
BIOTECHNOLOGY 11.88%
24,000 Amylin Pharmaceuticals Inc.* ................... $ 16,125
2,000 Cocensys Inc.* ................................. 1,156
4,000 Cor Therapeutics Inc.* ......................... 46,875
2,500 Isis Pharmaceuticals* .......................... 28,047
1,500 Ligand Pharmaceutical Inc. CL B* ............... 15,047
22,000 Neurobiological Technology* .................... 13,406
----------
120,656
----------

COMPUTERS & EQUIPMENT 6.40%
2,000 Compaq Computer Corp. .......................... 65,000
----------

DRUG DELIVERY 2.69%
19,000 InSite Vision Inc.* ............................ 27,313
----------

MISCELLANEOUS 0.47%
400 H&Q Life Sciences Investors .................... 4,800
----------

PHARMACEUTICALS 30.75%
23,900 Cephalon Inc.* ................................. 181,491
12,500 Dusa Pharmaceuticals Inc. ...................... 86,719
8,500 Microcide Pharmaceuticals Inc.* ................ 44,094
----------
312,304
----------

RESEARCH EQUIPMENT 4.15%
18,000 Trega Biosciences Inc.* ........................ 42,187
----------

SEMICONDUCTORS 26.77%
1,700 Applied Materials Inc.*......................... 65,928
2,000 LSI Logic Corp.*................................ 31,000
1,500 PMC-Sierra Inc.* ............................... 80,766
25,000 Seeq Technology Corp.*.......................... 42,578
22,000 Silicon Storage Technology Inc.*................ 51,562
----------
271,834
----------
SOFTWARE 8.57%
10,000 Informix Corp.*................................. 53,906
10,000 Ross Systems Inc.* ............................. 33,125
----------
87,031
----------
TOTAL COMMON STOCKS
(cost $1,372,233)............................... 931,125
----------

SHORT TERM INVESTMENTS 5.40%
54,823 Star Treasury Fund
(cost $54,823).................................. 54,823
----------

TOTAL INVESTMENTS
(cost $1,427,056)................... 97.08% 985,948
Other assets less liabilities .................. 2.92% 29,591
------ ----------
TOTAL NET ASSETS................................ 100.00% $1,015,539
====== ==========
<FN>

* Non income producing security
</FN>
</TABLE>

See notes to financial statements

- 2 -

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998
<TABLE>
<CAPTION>

MURPHY NEW WORLD
BIOTECHNOLOGY FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS 23.67%

BIOTECHNOLOGY 20.90%
1,000 Affymetrix Inc.* ............................. $ 24,937
10,000 Alpha-Beta Technology Inc.* .................. 11,094
8,000 Alteon Inc.* ................................. 7,875
20,000 Amylin Pharmaceutical Inc.* .................. 13,438
19,200 Anergen Inc.* ................................ 6,600
15,045 Axys Pharmaceutical Inc.* .................... 85,098
10,000 Biomira Inc.* ................................ 33,438
16,500 Cocensys Inc.* ............................... 9,539
10,000 Cortex Pharmaceuticals Inc.* ................. 3,281
10,000 COR Therapeutics Inc.* ....................... 117,187
1,800 Corvas International Inc.* ................... 4,950
10,000 Guilford Pharmaceuticals Inc.* ............... 140,000
5,000 Incyte Pharmaceuticals Inc.* ................. 156,875
1,000 Isis Pharmaceuticals Inc.* ................... 11,219
30,000 Neurobiological Technology* .................. 18,281
3,000 NPS Pharmaceuticals Inc.* .................... 21,188
3,000 Protein Design Labs Inc.* .................... 65,250
30,000 Xoma Corp.* .................................. 97,031
----------
827,281
----------

DRUG DELIVERY 0.33%
1,000 Dura Pharmaceuticals Inc.* ................... 12,989
----------

PHARMACEUTICALS 1.25%
4,500 Cadus Pharmaceutical Corp.* .................. 11,672
5,000 Cephalon Inc.* ............................... 37,969
----------
49,641
----------

RESEARCH EQUIPMENT 1.19%
1,000 Aurora Biosciences Corp.* .................... 5,062
18,000 Trega Biosciences Inc.* ...................... 42,187
----------
47,249
----------
TOTAL COMMON STOCKS
(cost $1,415,464)............................. 937,140
----------

LONG OPTIONS 0.19%
20 S&P 100 Index Opt Put Dec\550.00
(cost $26,850)................................ 7,625
----------

REPURCHASE AGREEMENT 70.89%
2,806,000 Star Bank 3.5%, due December 1, 1998,
EEcollateralized by $2,860,000 GNMA
EE6.625% due 9/20/22
(Cost $2,806,000)............................. 2,806,000
----------

SHORT TERM INVESTMENTS 4.97%
196,793 Star Treasury Fund
(Cost $196,793)............................... 196,793
----------

TOTAL INVESTMENTS
(cost $4,445,106).............. 99.72% 3,947,558
Other assets less liabilities.............. 0.28% 10,876
------- ----------
TOTAL NET ASSETS........................... 100.00% $3,958,434
======= ==========

<FN>

* Non income producing security
</FN>
</TABLE>

See notes to financial statements

- 3 -

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998
<TABLE>
<CAPTION>

MURPHY NEW WORLD TECHNOLOGY
CONVERTIBLES FUND
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
- --------------------------------------------------------------------------------
<C> <S> <C>

COMMON STOCKS 8.49%
PHARMACEUTICALS 8.49%
8,000 Cephalon Inc. ................................ $ 60,750
5,000 Dusa Pharmaceuticals Inc. .................... 34,688
----------
95,438
----------

TOTAL COMMON STOCKS
(cost $145,125) .............................. 95,438
----------

CONVERTIBLE BONDS 85.57%
BIOTECHNOLOGY 30.58%
426,000 Glycomed Inc., 7.50%, due 01/01/03............ 343,462
----------

COMPUTER EQUIPMENT 26.41%
300,000 Convex Computer Corp.,
6.00%, due 03/01/12........................... 296, 625
----------
COMPUTER PERIPHERALS 9.28%
70,000 Quantum Corp., 7.00%, due 08/01/04 ........... 65,362
55,000 Read Rite Corp., 6.50%, due 09/01/04.......... 38,844
----------
104,206
----------
DRUG DELIVERY 3.87%
60,000 Dura Pharmaceuticals Inc.,
3.50% due 07/30/97 .......................... 43,425
----------
SEMICONDUCTORS 3.41%
55,000 Integrated Device, 5.50%, due 06/01/02 ....... 38,294
----------
SOFTWARE 3.95%
60,000 System Software Associates,
7.00% due 09/15/02............................ 44,325
----------
SPECIALTY MATERIALS 3.93%
60,000 Hexcel Corp., 7.00%, due 08/01/11............. 44,175
----------
TELECOMMUNICATIONS 4.14%
70,000 California Microwave, 5.25%, due 12/15/03..... 46,550
----------

TOTAL CONVERTIBLE BONDS
(cost $1,101,582)............................. 961,062
----------

SHORT TERM INVESTMENTS 4.06%
45,574 Star Treasury Fund
(cost $45,574)................................ 45,574
----------

TOTAL INVESTMENTS
(cost $1,292,281).............. 98.12% 1,102,074
OTHER ASSETS LESS LIABILITIES.............. 1.88% 21,073
------- ----------
TOTAL NET ASSETS........................... 100.00% $1,123,147
======= ==========

<FN>

* Non income producing security
</FN>
</TABLE>

See notes to financial statements
- 4 -

<PAGE>

MONTEREY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - NOVEMBER 30, 1998

MURPHY
MURPHY MURPHY NEW WORLD
NEW WORLD NEW WORLD TECHNOLOGY
TECHNOLOGY BIOTECHNOLOGY CONVERTIBLES
--------------------------------------------
ASSETS
<S> <C> <C> <C>
Investments in securities, at value
(cost $1,427,056, $4,445,106 and
$1,292,281, respectively) $ 985,948 $ 3,917,558 $ 1,102,074
Cash .............................................................. 24,468 0 0
Receivable for fund shares sold ................................... 1,500 41,500 0
Income receivable ................................................. 282 948 27,247
Due from investment advisor ....................................... 0 0 2,825
Prepaid expenses and other ........................................ 16,641 8,390 10,652
----------- ----------- -----------
Total Assets ............................................. 1,028,839 3,998,396 1,142,298
----------- ----------- -----------

LIABILITIES
Payable for fund shares redeemed .................................. 0 880 0
Accrued expenses and other ........................................ 12,870 37,482 19,651
Due to investment advisor ......................................... 430 1,600 0
----------- ----------- -----------
Total Liabilities ........................................ 13,300 39,962 19,651
----------- ----------- -----------

NET ASSETS
Capital stock, no par value; unlimited shares
authorized ............................................... 1,513,954 4,680,751 2,196,692
Undistributed net investment income ............................... 0 0 56,284
Accumulated net realized gain (loss) on
investments and foreign currencies ....................... (57,307) (939,622)
Net unrealized appreciation (depreciation)
on investments and foreign currencies .................... (441,108) (497,548) (190,207)
----------- ----------- -----------
Net Assets ........................................................ 1,015,539 3,958,434 1,123,147
=========== =========== ===========

Net asset value, offering and redemption price per share .......... $ 11.64 $ 6.39 $ 22.14
=========== =========== ===========
Shares Outstanding ................................................ 87,250 619,839 50,729
=========== =========== ===========

</TABLE>

See notes to financial statements

- 5 -

<PAGE>

MONTEREY FUNDS
STATEMENTS OF OPERATIONS - FOR THE YEAR ENDED NOVEMBER 30,1998

<TABLE>

MURPHY
MURPHY MURPHY NEW WORLD
NEW WORLD NEW WORLD TECHNOLOGY
TECHNOLOGY BIOTECHNOLOGY CONVERTIBLES
--------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C>
Interest ..................................... $ 2,716 $ 11,247 $ 89,903
Dividends .................................... 222 0 2,587
--------- --------- ---------
Total Investment Income ............. 2,938 11,247 92,490
--------- --------- ---------

EXPENSES
Adviser (Note 3) ............................. 12,250 34,450 8,227
Distribution fees (Note 4) ................... 3,063 8,613 3,265
Transfer agent fees .......................... 16,695 19,742 19,902
Administrative fees (Note 3) ................. 16,920 18,368 18,472
Custodian fees ............................... 1,630 3,182 1,789
Audit fees ................................... 9,664 9,636 5,633
Legal fees ................................... 1,602 1,602 1,602
Registration fees ............................ 17,891 22,458 20,815
TrusteesO fees ............................... 1,082 1,122 1,151
Printing expense ............................. 2,424 6,253 6,587
Amortization of deferred organization expenses 2,030 2,030 0
Postage expense .............................. 1,352 2,151 2,932
Other expenses ............................... 838 1,019 271
--------- --------- ---------
Total expenses ............................... 87,441 130,626 90,646
Less: Expense reimbursement from adviser ..... (57,550) (46,568) (58,784)
--------- --------- ---------
Net expenses ................................. 29,891 84,058 31,862
--------- --------- ---------
Net Investment Income (Loss) ................. (26,953) (72,811) 60,628
--------- --------- ---------

REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net Realized Gain (Loss) on Investments ...... (65,179) (119,271) (103,913)
Net Change in Unrealized Appreciation on
Investments ......................... (321,157) (594,378) (167,308)
--------- --------- ---------
Net Gain (Loss) on Investments ............... (386,336) (713,649) (271,221)
--------- --------- ---------
Net Increase (Decrease) in Net Assets
Resulting from Operations .................... $(413,289) $(786,460) $(210,593)
========= ========= =========

</TABLE>

See notes to financial statements

- 6 -

<PAGE>

MONTEREY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS

<TABLE>
<CAPTION>
MURPHY MURPHY MURPHY NEW
NEW WORLD NEW WORLD WORLD TECHNOLOGY
TECHNOLOGY BIOTECHNOLOGY CONVERTIBLES
-----------------------------------------------------------------------------------

YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOV. 30, NOV. 30, NOV. 30 NOV. 30, NOV. 30, NOV. 30,
1998 1997 1998 1997 1998 1997
-----------------------------------------------------------------------------------

Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment income (loss) ........ $ (26,953) $ (24,615) $ (72,811) $ (22,562) $ 60,628 $ 11,556
Net realized gain (loss) on
investments ..................... (65,179) 220,579 (119,271) (41,445) (103,913) 336,435
Net change in unrealized appreciation
on investments .................. (321,157) (230,396) (594,378) 136,885 (167,308) (351,081)
Net increase (decrease) in net assets
resulting from operations ....... (413,289) (34,432) (786,460) 72,878 (210,593) (3,090)

Dividends Paid to Shareholders
Dividends from net investment income 0 0 0 0 (16,073) 0
Dividends from capital gain ......... (190,274) (25,966) 0 0 0 0
(190,274) (25,966) 0 0 (16,073) 0

Fund Share Transactions
Net proceeds from shares sold ....... 690,415 1,284,920 2,949,993 2,665,166 46,848 153,112
Dividends reinvested ................ 171,796 24,991 0 0 15,073 0
Payment for shares redeemed ......... (682,131) (696,855) (558,088) (616,300) (146,704) (274,985)
Net increase (decrease) in net assets
from fund share transactions .... 180,080 613,056 2,391,905 2,048,866 (84,783)
Net increase (decrease) in net assets (423,483) 552,658 1,605,445 2,121,744 (311,449) (124,963)
NET ASSETS, Beginning of Period ..... 1,439,022 886,364 2,352,989 231,245 1,434,596 1,559,559
NET ASSETS, End of Period ........... $1,015,539 $1,439,022 $3,953,434 $2,352,989 $1,123,147 $1,434,596

Changes in Shares Outstanding
Shares sold ......................... 50,527 64,714 406,645 342,349 1,830 5,719
Shares issued on reinvestment
of dividends .................... 12,431 1,245 0 0 581 0
Shares redeemed ..................... (50,720) (34,173) (79,194) (82,922) (5,786) (10,154)
Net Increase (decrease) in
shares outstanding .............. 12,238 31,786 327,451 259,427 (3,375) (4,435)

</TABLE>

See notes to financial statements
- 7 -

MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 1998

NOTE 1. ORGANIZATION

Monterey Mutual Fund (the "Trust"), formerly Monitrend Mutual Fund, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Trust was organized as
a Massachusetts business trust on January 6, 1984 and consists of nine series of
shares: the PIA Short Term Government Securities Fund, the Camborne Government
Income Fund, the OCM Gold Fund, the PIA Equity Fund, the Murphy New World
Biotechnology Fund, the Murphy New World Technology Fund, the Murphy New World
Technology Convertibles Fund, the PIA Global Bond Fund and the PIA Total Return
Fund (collectively the "Funds"), each of which has separate assets and
liabilities and differing investment objectives. The investment objective for
each of the Funds presented herein are: the Murphy New World Technology Fund,
(the "Technology Fund"), long-term growth of capital through investing primarily
in equity securities of companies that its investment adviser believes can
produce products or services that provide or benefit from advances in
technology; the Murphy New World Biotechnology Fund, (the "Biotechnology Fund"),
long-term growth of capital through investing primarily in equity securities of
companies that its investment adviser believes can produce products or services
that provide or benefit from advances in biotechnology; the Murphy New World
Technology Convertibles Fund (the "Convertibles Fund"), to maximize total return
through a combination of capital appreciation and income.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies followed by
the Funds in the preparation of their financial statements.

OPTIONS--When a call is written, an amount equal to the premium received is
included in the Statement of Assets and Liabilities as an equivalent liability.
The amount of the liability is subsequently marked to market to reflect the
current market value of the option written. If an option which was written
either expires on its stipulated expiration date, or a closing purchase
transaction is entered into, a gain is realized (or loss if the cost of a
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is extinguished. If a written call
option is exercised, a capital gain or loss is realized from the sale of the
underlying security and the proceeds from such sale are increased by the premium
originally received.

The premium paid for the purchase of a call or a put option is included in
the asset section of the Statement of Assets and Liabilities as an investment
and is subsequently adjusted to the current market value of the option. If a
purchased option expires on its stipulated expiration date, a loss is realized
in the amount of the cost of the option. If a closing sale transaction is
entered into, a gain or loss will be realized depending on whether the sales
proceeds from the closing sale transaction are greater or less than the cost of
the option. If a put option is exercised, a gain or loss will be realized from
the sale of the underlying security and the proceeds from such sale will be
decreased by the premium originally paid. If a call option is exercised, the
cost of the security purchased upon exercise will be increased by the premium
originally paid.

FUTURES CONTRACTS--The Technology Fund, the Biotechnology Fund, and the
Convertibles Fund, may from time to time enter into futures contracts as a hedge
to provide protection against adverse movements in the prices of securities in
the portfolio. When a Fund enters a futures contract, it is required to pledge
to the clearing broker an amount of cash and/or securities equal to
approximately 5% of the contract amount. This amount is known as the "initial
margin". Pursuant to the futures contract, the Fund agrees to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the value at the close of the day and the price at which the
futures contract was originally struck. Such payments, known as the "variation
margin", are recorded by the Fund as unrealized gains or losses. When the
futures contract expires or is closed by the Fund, it realizes a gain or loss.

Financial Instruments with Off Balance Sheet Risk--Futures contracts
involve elements of market risk and credit risk in excess of the amounts
reflected in the Statement of Assets and Liabilities. The contract amounts of
these futures contracts reflect the extent of exposure to off balance sheet
risk.

- 8 -

<PAGE>

MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 1998 (CONTINUED)

The predominant market risk is that movements in the prices of a Fund's
portfolio securities being hedged may not correlate perfectly with the movement
in the prices of the futures contracts. The lack of correlation could render a
Fund's hedging strategy unsuccessful and could result in a loss to the Fund.

Futures contracts are purchased only on exchanges. The exchange acts as the
counterparty to the Funds' futures transactions; therefore the Fund's credit
risk is limited to the failure of the exchange.

Subsequent market fluctuations of securities sold short may require a Fund
to purchase securities at prices which exceed the value reflected on the
Statement of Assets and Liabilities.

FEDERAL INCOME TAXES--It is each Fund's policy to meet the requirements of
the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable net income to its shareholders. Therefore the
Funds paid no Federal Income taxes and no Federal income tax provision was
required. At November 30, 1998, the Technology Fund, the Biotechnology Fund and
the Convertibles Fund had capital loss carryforwards of approximately $57,000,
$225,000 and $939,000, respectively, which expire in varying amounts through
2002, 2005 and 2006, respectively.

ORGANIZATIONAL COSTS--These costs have been capitalized and are being
amortized using the straight-Dline method over a period of sixty months
beginning on commencement of operations.

OTHER -- Securities transactions are recorded no later than the first
business day after the trade date. Discounts and premiums on securities
purchased are amortized over the life of the respective security. Realized gains
and losses on sales of securities are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on an accrual basis.

USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.

NOTE 3. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS

The Technology Fund and Biotechnology Fund each have an investment advisory
agreement with Murphy Investment Management, Inc. ("Murphy"), whereby each Fund
pays Murphy a fee, computed daily and payable monthly, at an annual rate of
1.00% of their respective net assets.

The Convertibles Fund also has an investment advisory agreement with
Murphy. The Convertibles Fund pays Murphy a fee computed daily and payable
monthly, at the following annual rate based upon daily net assets:

ASSETS FEE RATE
------ --------
0 to $150 million................................. 0.625%
$150 million to $250 million...................... 0.500%
Over $250 million................................. 0.375%

During the year ended November 30, 1998 Murphy agreed to reimburse the
Funds for expenses in excess of 2.44% of average net assets. Murphy has agreed
to reimburse the Funds for expenses in excess of 1.99% of average net assets for
the fiscal year ending November 30, 1999.

The Trust has a fund accounting and administrative agreement with American
Data Services, Inc. ("ADS"). ADS receives a fee, computed daily and payable
monthly, at an annual rate of 0.1% of each Fund's average daily net assets,
subject to a monthly minimum.

NOTE 4. DISTRIBUTION AGREEMENT AND PLAN

Syndicated Capital, Inc. serves as the Distributor of each Fund's shares.
The President and sole shareholder of the Distributor is also a trustee of the
Trust.

The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The Plan authorizes each Fund to
reimburse the Distributor for marketing expenses incurred in distributing shares
of each Fund, including the cost of printing sales material and making payments
to dealers in each Fund' shares, in any fiscal year, subject to a limit of
0.25%.

- 9 -

<PAGE>

MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 1998 (CONTINUED)

NOTE 5. PURCHASES AND SALES OF SECURITIES

The cost of purchases and sales of investment securities (other than
short-term investments) for the year ended November 30, 1998, were as follows:

PURCHASES SALES
--------- -----
Technology Fund ..................... $ 1,633,226 $ 1,560,312
Biotechnology Fund................... 7,269,078 7,335,902
Convertibles Fund.................... 800,406 332,802

Unrealized appreciation and depreciation on investments at November 30,
1998 based on cost for Federal income taxes (which is the same as cost for
financial reporting purposes) are as follows:

UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION NET
------------ ------------ ---
Technology Fund $ 46,009 ($ 487,117) ($ 441,108)
Biotechnology Fund 31,107 (558,655) (527,548)
Convertibles Fund 2,080 (192,287) (190,207)

- 10 -

<PAGE>

MONTEREY FUNDS
MURPHY NEW WORLD TECHNOLOGY
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>

YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1998* 1997 1996* 1995* 1994
------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 19.18 $ 20.51 $ 17.81 $ 14.35 $ 14.82
------------ ------------ ------------ ---------- ----------

Income from investment operations
Net investment (loss) .......................... (0.31) (0.33) (0.40) (0.32) (0.18)
Net realized and unrealized (loss)
on investments ................................. (4.77) (0.40) 4.86 4.19 (0.29)
------------ ------------ ------------ ---------- ----------
Total from investment operations ............... (5.08) (0.73) 4.46 3.87 (0.47)
------------ ------------ ------------ ---------- ----------

Less distributions
Dividends from net investment income ........... 0.00 0.00 0.00 0.00 0.00
Dividends from Capital Gains ................... (2.46) (0.60) (1.76) (0.41) 0.00
------------ ------------ ------------ ---------- ----------
Total distributions ............................ (2.46) (0.60) (1.76) (0.41) 0.00
------------ ------------ ------------ ---------- ----------
Net asset value, end of period ................. $ 11.64 $ 19.18 $ 20.51 $ 17.81 $ 14.35
============ ============ ============ ========== ==========
Total return** ................................. (28.51%) (3.69%) 26.32% 26.95% (3.17%)

Ratios/supplemental data
Net assets, end of period (in $000's) .......... 1,016 1,439 886 281 283
Ratio of expenses to average net assets ........ 2.44% 2.44% 2.34% 2.44% 2.44%
Ratio of expenses to average net assets,
EEbefore reimbursement ......................... 7.14% 8.13% 10.44% 18.74% 11.19%
Ratio of net investment income (loss) to average
net assets ..................................... (2.20%) (1.96%) (2.06%) (1.97%) (1.79%)
Portfolio turnover rate ........................ 142.89% 57.01 17.33% 40.77% 29.26%

<FN>

* Based on average shares outstanding.
** Excluding sales charge. Not annualized for periods less than a year.
++ On 12/13/96 Murphy Investment Management became the Fund's investment
adviser. Prior to 12/13/96, Monitrend Investment Management Inc. was the
Fund's investment adviser.
</FN>
</TABLE>

See notes to financial statements

- 11 -

<PAGE>

MONTEREY FUNDS
MURPHY NEW WORLD BIOTECHNOLOGY
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>

YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1998* 1997* 1996* 1995* 1994
-----------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 8.07 $ 7.19 $ 6.74 $ 6.12 $ 7.99
------------ ------------ ---------- ---------- ----------

Income from investment operations
Net investment (loss) .......................... (0.15) (0.16) (0.17) (0.15) (0.08)
Net realized and unrealized gain
on investments ................................. (1.53) 1.04 0.62 0.77 (1.79)
------------ ------------ ---------- ---------- ----------
Total from investment operations ............... (1.68) 0.88 0.45 0.62 (1.87)
------------ ------------ ---------- ---------- ----------

Less distributions
Dividends from net investment income ........... 0.00 0.00 0.00 0.00 0.00
------------ ------------ ---------- ---------- ----------
Total distributions ............................ 0.00 0.00 0.00 0.00 0.00
------------ ------------ ---------- ---------- ----------
Net asset value, end of period ................. $ 6.39 $ 8.07 $ 7.19 $ 6.74 $ 6.12
============ ============ ========== ========== ==========
Total return** ................................. (20.82%) 12.24 6.67% 10.13% (23.40%)

Ratios/supplemental data
Net assets, end of period (in $000's) .......... 3,958 2,353 231 400 824
Ratio of expenses to average net assets ........ 2.44% 2.47% 2.65% 2.89% 2.89%
Ratio of expenses to average net assets,
EEbefore reimbursement ......................... 3.79% 8.58% 15.28% 9.96% 6.40%
Ratio of net investment income (loss) to average
net assets ..................................... (2.11%) (1.98%) (2.31%) (2.18%) (1.18%)
Portfolio turnover rate ........................ 458.56% 15.09% 02.79% 36.89% 26.58%
<FN>

* Based on average shares outstanding.
** Excluding sales charge.
++ On 12/20/96 Murphy Investment Management became the Fund's investment
adviser. Prior to 12/20/96, Monitrend Investment Management, Inc. was the
Fund's investment adviser.
</FN>
</TABLE>

See notes to financial statements
- 12 -

<PAGE>

MONTEREY FUNDS
MURPHY NEW WORLD TECHNOLOGY CONVERTIBLES
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>

FOR THE YEAR ENDED NOVEMBER 30,
1998 1997* 1996 1995 1994
--------------------------------------------------------------------

Net asset value, beginning
<S> <C> <C> <C> <C> <C>
of period ...................... $ 26.52 $ 26.64 $ 21.42 $ 16.67 $ 17.20
------------ ------------ ------------ ------------ ------------

Income from investment operations
Net investment income ................... 1.19 0.21 0.01 0.02 0.09
Net realized and unrealized gain (loss)
on investments ................. (5.27) (0.33) 5.23 4.82 (0.58)
------------ ------------ ------------ ------------ ------------
Total from investment operations ........ (4.08) (0.12) 5.24 4.84 (0.49)
------------ ------------ ------------ ------------ ------------

Less distributions
Dividends from net investment income .... (0.30) 0 (0.02) (0.09) (0.04)
------------ ------------ ------------ ------------ ------------
Total distributions ..................... (0.30) 0 (0.02) (0.09) (0.04)
------------ ------------ ------------ ------------ ------------
Net asset value, end of period .......... $ 22.14 $ 26.52 $ 26.64 $ 21.42 $ 16.67
============ ============ ============ ============ ============
Total return** .......................... (15.55%) (0.45%) 24.49% 29.19% (2.86%)

Ratios/supplemental data
Net assets, end of period
(in $000's) .................... 1,123 1,435 1,560 1,377 1,573
Ratio of expenses to average
net assets ..................... 2.44% 2.44% 2.26% 2.44% 2.44%
Ratio of expenses to average
net assets, before reimbursement 6.94% 6.83% 5.11% 6.08% 5.46%
Ratio of net investment income
(loss) to average net assets ... 4.64% .76% 0.04% 0.10% 0.46%
Portfolio turnover rate ................. 28.90% 85.91% 80.93% 151.86% 0%

<FN>

** Excluding sales charge.
* On 12/31/96 Murphy Investment Management, Inc. became the Fund's investment
adviser. From 2/1/95 to 12/31/96 MidCap Associates, Inc. was the Fund's
investment adviser. Prior to 2/1/95, Monitrend Investment Management, Inc.,
was the Fund's investment adviser.
</FN>
</TABLE>

See notes to financial statements
- 13 -

<PAGE>

INDEPENDENT AUDITOR'S REPORT

The Board of Trustees and Shareholders of
Monterey Mutual Fund

We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of the Murphy New World Technology Fund, the Murphy
New World Biotechnology Fund and the Murphy New World Technology Convertibles
Fund, series of Monterey Mutual Fund, (the "Trust") as of November 30, 1998 and
the related statements of operations and changes in net assets and financial
highlights for the periods indicated in the accompanying financial statements.
These financial statements and financial highlights are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
November 30, 1998, by correspondence with the custodian and with brokers or
other auditing procedures where confirmations from brokers were not received. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the financial
position of the Murphy New World Technology Fund, the Murphy New World
Biotechnology Fund and the Murphy New World Technology Convertibles Fund as of
November 30, 1998 and the results of their operations, the changes in their net
assets, and their financial highlights for the periods indicated, in conformity
with generally accepted accounting principles.

/S/ MCGLADREY & PULLEN, LLP
- ---------------------------
McGladrey & Pullen, LLP

New York, New York
January 8, 1999

- 14 -

<PAGE>

MONTEREY FUNDS
PERFORMANCE RESULTS -- YEAR ENDED NOVEMBER 30, 1998

MURPHY NEW WORLD
TECHNOLOGY FUND

Average Annual Total Returns Value on 11/30/98
- ---------------------------- -----------------
1 year (28.51%) Technology $10,643
5 years 1.47% S&P 500 $27,827
Inception 1.20%

$10,000 Investment made 10/20/93 (Inception Date)

$30,000

$25,000

$20,000
_______ Murphy Technology $10,643
$15,000
------- S&P 500 $27,827
$10,000

$ 5,000
1993 1994 1995 1996 1997 1998

Past performance is not The S&P 500 Index is a broad unmanaged
predictive of future index generally considered to be representative
performance of the US equity market.

The MURPHY NEW WORLD TECHNOLOGY FUND declined 28.51% for the year, substantially
underperforming the Standard & Poor's 500 Index for the same two reasons as last
year: small capitalization stocks underperformed large cap stocks and the
biotechnology sector underperformed the electronics, computer and communications
groups. Although we did add some large capitalization stocks during the year,
the better relative values are in the mid-cap and small-cap areas. We realize it
is frustrating to wait for the large cap/small cap pendulum to swing our way,
but we continue to hold the smaller names for 1999. In biotechnology, we said
last year that we remained overweighted in these stocks in the belief 1998 would
be a good year for the group. The companies had another year in which we saw
many positive clinical trial results and several drug approvals by the FDA, yet
the stocks as a whole again performed badly. We expect continued fundamental
strength in 1999 and remain overweighted in this area. We doubt other investors
can ignore these stocks much longer, because we believe about nine more biotech
companies will turn profitable in 1999 and another twenty in 2000.

We have lowered the maximum expense ratio for your Fund from 2.44% to 1.99% in
1999. We reimburse the difference between actual expenses and this limit to the
Fund.
- --------------------------------------------------------------------------------

MURPHY NEW WORLD
BIOTECHNOLOGY FUND

AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/98
---------------------------- -----------------
1 Year (20.82%) Biotech $8,647
Inception (5.00%) S&P 500 $16,212

$10,000 Investment made 12/20/96 (date Murphy became investment adviser)

$19,000 ______ Murphy Biotechnology $ 8,647
------ S&P 500 $16,212
$16,000

$13,000

$10,000

$7,000

1997 1998

Past performance is not The S&P 500 Index is a broad unmanaged
predictive of future performance index generally considered to be
representative of the US equity market.

The MURPHY NEW WORLD BIOTECHNOLOGY FUND declined 20.82% for the fiscal year,
substantially underperforming the Standard & Poor's 500 Index. The biotechnology
sector underperformed most other groups due, in part, to the general
underperformance of small capitalization stocks compared to large cap stocks.

We made the strategic mistake at the beginning of the fiscal year of
overweighting smaller capitalization companies in the belief that there were
better relative values in the smaller stocks. Though we were 50% cash going into
the summer of 1998, our small-cap biotech stocks were pummeled in that market
decline. In the subsequent rebound, large-cap biotech again outperformed the
mid- and small-caps substantially, so that even though we owned many of the
large-caps like Amgen and Biogen during part of the year, our small-cap stocks
on average dragged down the Fund's performance.

Forecasts by several market strategists that biotech will do well in 1999 should
encourage diversified mutual funds to continue buying large-cap biotech stocks
and even mid-caps while possibly neglecting the very small-cap biotech stocks
(where liquidity is a problem for most mutual funds). So for 1999 our equity
investments are more heavily weighted in large- and mid-cap biotech stocks.

We have lowered the maximum expense ratio for your Fund from 2.44% to 1.99% in
1999. We reimburse the difference between actual expenses and this limit to the
Fund.

- 15 -

<PAGE>

MONTEREY FUNDS
PERFORMANCE RESULTS -- YEAR ENDED NOVEMBER 30, 1998

MURPHY NEW WORLD
TECHNOLOGY CONVERTIBLES FUND

AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/98
- ---------------------------- -----------------
1 year (15.55%) Tech Convertibles $8,538
Inception (7.92%) S&P 500 $16,212

$10,000 Investment made 1/1/97 (date Murphy became investment adviser)

Past performance is not The S&P 500 Index is a broad unmanaged
predictive of future index generally considered to be
performance representative of the US equity market.

The MURPHY NEW WORLD TECHNOLOGY CONVERTIBLES FUND showed a 15.55% loss for the
year, underperforming the Standard & Poor's 500 Index. In the second half of the
fiscal year, convertible bonds suffered somewhat from a widening of quality
spreads after the failure of Long Term Capital Management, the hedge fund. In
addition, most of our bonds are convertible into small capitalization stocks,
which underperformed large capitalization stocks during the year. We still think
the better relative equity values are in the mid-cap and small-cap areas, and
therefore prefer to hold bonds convertible into stocks in these sectors in 1999.
We also added a small equity position in two biotechnology companies during the
year, which hurt performance in 1998 but are expected to receive FDA approvals
in 1999.

Shortly after the end of the fiscal year, Hewlett-Packard called our
second-largest position for redemption, the Convex Computer bond. We will deploy
some of the proceeds to lower-yielding bonds with potentially greater
appreciation.

In order to improve the yield on your Fund, we have lowered the maximum expense
ratio from 2.44% to 1.99% in 1999. We reimburse the difference between actual
expenses and this limit to the Fund.

- 16 -

<PAGE>

Monterey Mutual Funds
Distributed by:

Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401

<PAGE>

MONTEREY
FUNDS

- PIA Short-Term Government
- PIA Total Return Bond
- PIA Global Bond

Monterey Mutual Funds
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401

Annual Report
November 30, 1998

<PAGE>

Dear Shareholder:

We are pleased to provide you with this annual report for the year ended
November 30, 1998 for the following series of the Monterey Mutual Funds: the PIA
Short-Term Government Fund, the PIA Total Return Bond Fund, and the PIA Global
Bond Fund.

During the 12 months ended November 30, 1998, the returns including the
reinvestment of dividends and capital gains, were as follows:

PIA Short-Term Government Fund 6.9%
PIA Global Bond Fund 10.2%

The PIA Total Return Bond Fund began operations on September 1, 1998 and from
that date through November 30, 1998 returned 2.65% or approximately 11.2% on an
annualized basis.

During 1998, it was a challenging year for the bond market. The flight to
quality that took place after Russia defaulted caused interest rates to decline
to record lows, providing fixed income investors with solid capital gains. PIA's
emphasis on high quality holdings benefited our Funds in this difficult
environment where many bonds provided low rates of return.

This is the first year in which we have dedicated this annual report to focus on
these three Funds. We hope that shareholders will find the new report more
convenient and informative.

Please take a moment to review your Fund(s)' statement of assets and results of
operations for the year ended November 30, 1998. After what has proven to be an
exciting year in the markets, we look forward to seeing what develops in 1999
and reporting to you in six months.

/s/Lloyd McAdams
Lloyd McAdams
Chairman of the Board

- 2 -

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998

PIA SHORT-TERM
GOVERNMENT FUND
- --------------------------------------------------------------------------------
Principal
Value Value
- --------------------------------------------------------------------------------

<C> <S> <C>
DEBT SECURITIES 97.30%
MORTGAGE BACKED 5.59%
$1,366,125 Bear Stearns Mortgage Sec. Inc.,
7.00%, due 11/25/10 ................ $ 1,381,867
669,777 Norwest Asset Sec. Corp.,
7.00%, due 04/25/12 ................ 672,681
99,447 Prudential Home Ser 1993-59,
due 12/25/00 ....................... 99,913
1,000,000 Prudential Home Ser 1993-9,
due 03/25/08 .................. 1,030,104
---------
3,184,565
---------

GOVERNMENT MORTGAGE BACKED
SECURITIES 21.29%
451,380 FHLMC Arm 755204, due 08/01/15 ...... 469,435
145,084 FHLMC 609231, due 02/01/24 .......... 146,272
435,874 FNMA FNR 1989-5 C, due 12/25/17 ..... 439,581
726,643 FNMA CMO 415842, due 01/01/13 ....... 779,553
2,456,484 GNMA ARM 80013, due 11/20/26 .. 2,500,504
608,605 GNMA ARM 80143, due 12/20/27 ........ 612,044
7,145,855 GNMA ARM 80154, DUE 01/20/28 .. 7,186,658
---------
12,134,047
----------

U.S. TREASURY NOTES 70.42%
2,150,000 U.S. Treasury Note 5.00%,
due 02/15/99 ......................... 2,151,344
5,500,000 U.S. Treasury Note 5.875%,
due 11/15/99 .......................... 5,560,159
2,600,000 U.S. Treasury Note 6.00%,
due 08/15/99 .......................... 2,623,564
1,000,000 U.S. Treasury Note 6.00%,
due 08/15/00 .......................... 1,022,188
1,850,000 U.S. Treasury Note 5.50%,
due 12/31/00 .......................... 1,882,375
2,700,000 U.S. Treasury Note 7.75%,
due 02/15/01 .......................... 2,875,500

PIA SHORT-TERM
GOVERNMENT FUND (continued)
- --------------------------------------------------------------------------------
Principal
Value Value
- --------------------------------------------------------------------------------
U.S. TREASURY NOTES 70.42% (continued)
$1,450,000 U.S. Treasury Note 5.625%,
due 02/28/01 .......................... $ 1,481,266
5,200,000 U.S. Treasury Note 6.25%,
due 02/28/02 .......................... 5,445,378
3,500,000 U.S. Treasury Note 6.625%,
due 04/30/02 .......................... 3,713,283
2,250,000 U.S. Treasury Note 6.25%,
due 08/31/02 .......................... 2,370,235
1,300,000 U.S. Treasury Note 5.75%,
due 04/30/03 .......................... 1,356,062
9,380,000 U.S. Treasury Note 5.25%,
due 08/15/03 .................. 9,652,611
----------
40,133,965
----------

TOTAL DEBT SECURITIES
(cost $54,691,604) .................... 55,452,577
----------

SHORT TERM INVESTMENTS 1.67%
952,807 Star Treasury Fund
(cost $952,807) ....................... 952,807
----------

TOTAL INVESTMENTS
(cost $55,644,411) ............. 98.97% 56,405,384
Other assets less liabilities .................. 1.03% 583,709
------ ----------

TOTAL NET ASSETS ...............................100.00% $56,989,093
====== ===========
</TABLE>

See notes to financial statements
- 3 -

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998
<TABLE>
<CAPTION>

PIA TOTAL RETURN
BOND FUND
- --------------------------------------------------------------------------------
Shares Value
- --------------------------------------------------------------------------------

<C> <S> <C>
PREFERRED STOCK 0.10%
1,000 Thornburg Mortgage Asset Corp.
Ser. A
(cost $19,560) ...................... $23,937

Principal
Value Value
- --------------------------------------------------------------------------------
LONG TERM INVESTMENTS 97.96%
MORTGAGE BACKED SECURITIES 10.44%
$ 115,515 Aetna Commercial Mortgage Trust,
1995-C5 A2, due 12/26/03 ...... 116,270
197,853 CAPCO 1998-D7 A-1A,
due 09/16/03 .................. 196,153
285,724 CBA Mortgage 1993-C1 A2,
due 12/25/03 .................. 291,860
210,309 DLJ Mortgage Acceptance Corp.
1994 MF11 A1, due 06/18/04 .... 229,011
18,468 FBC Mortgage Securities B2,
due 08/20/09 .................. 18,631
75,043 FDIC Remic Trust 1994-C1 2A2,
due 09/25/25 .................. 76,026
131,679 FDIC Remic Trust 1996-C1 1A,
due 05/25/26 .................. 131,719
115,000 Kidder Peabody Acceptance Corp.,
6.65%, due 02/01/06 ........... 117,583
71,706 Prudential Home Mortgage 1993-59 A5,
due 12/25/00 .................. 72,042
7,522 Resolution Trust Corp., 1992-C5 B,
due 05/25/22 .................. 7,617
21,869 Resolution Trust Corp., 1992-C1 A1,
due 08/25/23 .................. 21,817
800,000 Structured Asset Securities Corp.,
1996-CFL C, due 02/25/28 ...... 811,012
500,000 Structured Asset Securities Corp.,
1996-C3 B, due 06/25/30 .......... 516,078
---------
2,605,819
---------

PIA TOTAL RETURN
BOND FUND (continued)
- --------------------------------------------------------------------------------
Principal
Value Value
- --------------------------------------------------------------------------------
LONG TERM INVESTMENTS 97.96%
Asset Backed Securities 6.75%
$ 365,000 California Infrastructure PG&E,
1997-A7, due 09/25/08 ........ $ 374,594
200,000 Cigna CBO 1996-1 A2,
due 11/15/08 ....................... 216,375
500,000 Rhyno CBO Delaware Corp.,
1997-1 A2, due 09/15/09 ............ 535,469
370,000 Team Fleet Financial 1998-3 A,
due 10/25/04 ....................... 365,722
183,100 UCFC Home Equity Loan 1995-A1,
A5, due 01/10/20 .................. 190,702
----------
1,682,862
----------

CORPORATE BONDS 41.48%
AEROSPACE/DEFENSE 1.18%
98,270 Airplanes Passthrough Trust,
8.15%, due 03/15/19 ................ 106,301
175,000 Lockheed Martin Marietta, 7.00%,
due 03/15/11 ....................... 189,501
AIRLINES 0.11% ----------
295,802
AIRLINES 0.11% ----------

25,000 Southwest Air, 7.375%,
due 03/01/27 ....................... 28,171
----------

AUTOMOTIVE 1.83%
210,000 Ford Motor Credit, 9.14%, due 12/30/14 247,812
210,000 General Motors Acceptance Corp.,
5.875%, due 01/22/03 ............... 208,806
----------
456,618
----------

</TABLE>

See notes to financial statements
- 4 -

<PAGE>

MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - NOVEMBER 30, 1998
<TABLE>
<CAPTION>

PIA TOTAL RETURN
BOND FUND (continued)
Principal
Value Value
Banking & Financial Services 13.04%
<C> <S> <C>
$ 190,000 Ahmanson, H.F., 8.25%,
due 10/01/02 $ 205,763
135,000 Banc One Corp., 7.625%,
due 10/15/26 156,168
175,000 BankBoston, 6.375%,
due 03/25/08 175,519
340,000 Bankers Trust, 8.125%,
due 04/01/02 364,969
185,000 Bear Stearns Co.,7.00%,
due 03/01/07 191,081
252,000 Continental Bank, 12.50%,
due 04/01/01 286,634
300,000 Countrywide Home Loan, 7.26%,
due 05/10/04 319,679
160,000 First Bank System, 7.625%,
due 05/01/05 176,653
255,000 General Electric Capital 8.875%,
due 05/15/09 320,359
300,000 Green Tree Financial, 7.55%,
due 10/15/99 302,906
225,000 Lehman Brothers Holdings, 6.50%,
due 10/01/02 225,522
170,000 Morgan Stanley Group, 6.875%,
due 03/01/07 178,658
315,000 PNC Bank, 7.875%, due 04/15/05 348,069
3,251,980

Chemicals .82%
205,000 Eastman Chemical Co., 6.375%,
due 01/15/04 205,010

Computers/Software .69%
175,000 Computer Associates International,
6.375%, due 04/15/05 173,465

PIA TOTAL RETURN
BOND FUND (continued)
Principal
Value Value
Cruiselines 1.40%
$ 180,000 Carnival Corp., 6.15%, due 04/15/08 1 $ 184,994
165,000 Royal Caribbean Cruises, 7.00%,
due 10/15/07 164,873
349,867

Diversified Minerals .95%
200,000 American Re Corp., 7.45%, due 10/15/26 237,877

Electronic Components/
Semiconductors 1.50%
180,000 Applied Materials, 6.75%, due 10/15/07 187,215 180,000 Thomas &
Betts, 6.625%, due 05/07/08 186,603
373,818

Hotels 1.59%
220,000 Marriott International 144A, 6.875%,
due 11/15/05 221,169
175,000 Mirage Resorts, 7.25%,
due 10/15/06 175,013
396,182
Insurance 3.44%
205,000 Aetna Services, 7.125%,
due 08/15/06 215,222
170,000 CNA Financial, 6.50%,
due 04/15/05 171,234
215,000 Conseco Inc., 6.40%,
due 06/15/01 210,146
110,000 First Security Corp., 6.875%,
due 11/15/06 116,717
140,000 ITT Hartford Group, 6.375%,
due 11/01/02 143,631
856,950
See notes to financial statements -D 5 -D MONTEREY FUNDS Schedules of
Investments - November 30, 1998

PIA TOTAL RETURN
BOND FUND (continued)
Principal
Value Value
Multimedia .84%
$ 190,000 Time Warner Entertainment, 7.25%,
due 09/01/08 $ 208,322

Pipeline .79%
175,000 Questar Pipeline, 9.375%,
due 06/01/21 196,546

Real Estate & Mortgage Related 5.82%
265,000 Chateau Properties Limited Partnership,
8.75%, due 03/02/00 271,573
145,000 Health Care Properties, 6.50%,
due 02/15/06 135,365
191,000 Kimco Realty, 6.50%, due 10/01/03 184,899
150,000 Nationwide Health Properties, 8.67%,
due 03/10/05 160,030
205,000 Security Cap. Industrial, 7.625%,
due 07/01/17 201,688
160,000 Southern Investments UK, 6.80%,
due 12/01/06 165,471
310,000 United Dominion Realty, 7.95%,
due 07/12/06 331,928
1,450,954

Retail 2.21%
350,000 Ikon Office, 6.75%, due 11/01/04 343,229
190,000 J.C. Penney & Co., 7.60%,due 04/01/07 208,864
552,093

Telecommunications 2.35%
175,000 Airtouch Communications, 6.65%,
due 05/01/08 185,814
205,000 Frontier Corp., 7.25%, due 05/15/04 220,564
165,000 Worldcom Inc., 7.55%, due 04/01/04 179,578
585,956

PIA TOTAL RETURN
BOND FUND (continued)
Principal
Value Value
Transportation 2.37%
$ 165,000 Canadian National Railway, 7.00%,
due 03/15/04 $ 170,529
200,000 Federal Express Eetc. 6.845%,
due 01/15/19 213,657
205,000 TTX Co., 5.98%, due 07/15/27 207,247
591,433

Utilities .55%
125,000 Virginia Electric & Power, 8.75%,
due 04/01/21 136,228

U.S. GOVERNMENT
EESECURITIES 39.29%
Government Mortgage-Backed
EESecuritiesE9.79%
120,000 Fannie Mae X-130A H, due 09/25/18 120,925
100,000 FHLMC 1704 E,due 03/15/09 101,806
250,000 FHLMC 1312 I, due 07/15/22 263,613
110,633 FNMA ARM 162881, due 06/01/18 114,302
109,869 FNMA 1996-41 A, due 06/25/20 110,185
61,925 FNMA G92-31 H, due 12/25/20 62,247
7,789 FNMA 1992-12 SA, due 01/25/22 8,280
1,100,000 FNMA TBA, due 10/25/28 1,106,359
2,444 GNMA 175288, due 09/15/01 2,542
3,727 GNMA 198340, due 02/15/02 3,877
540,000 GNMA 1996-4 N, due 04/16/26 546,952
2,441,088

U.S. Treasury Notes 29.50%
500,000 U.S. Treasury Note 4.00%, due 10/31/00 494,844 2,395,000 U.S.
Treasury Note 5.375%, due 06/30/03 2,472,838 2,080,000 U.S. Treasury
Note 6.50%, due 10/15/06 2,306,200 1,105,000 U.S. Treasury Note 7.625%,
due 11/15/22 1,444,787 605,000 U.S. Treasury Note 5.50%,due 08/15/28
639,599
7,358,268
See notes to financial statements -D 6 -D MONTEREY FUNDS Schedules of
Investments - November 30, 1998

PIA TOTAL RETURN
BOND FUND (continued)
Principal
Value Value
TOTAL LONG TERM INVESTMENTS
(cost $24,220,349) $24,435,309

SHORT TERM INVESTMENTS 5.38%
$ 343,857 Star Treasury Fund
(cost $343,857) 343,857

Commercial Paper
500,000 Lucent Technologies, 5.10%,
due 12/10/98 499,363
500,000 Merrill Lynch, 5.10%, due 12/10/98 499,362
(cost $998,725) 998,725

TOTAL INVESTMENTS
(cost $25,582,491) 103.44% 25,801,828
Liabilities in excess of other assets (3.44%) (857,993)
TOTAL NET ASSETS 100.00% $24,943,835
See notes to financial statements
- -D 7 -D

PIA GLOBAL BOND FUND
Principal
Value Value
LONG TERM INVESTMENTS 95.79%
Foreign Government Obligations 23.12%
Germany
DM 1,400,000 Bundes Obligation 114, 6.50%
due 03/15/00 $ 860,561
800,000 Bundes Republic Deutschland,
6.00%, due 07/04/07 540,248
1,400,809

Mortgage-Backed Securities 15.49%
$ 105,000 FHLMC CMO, 6.50%, due 11/15/23 105,490
520,865 FNMA 30 yr, 7.00%, due 06/01/28 532,259
195,899 FNR 97-27 A, 7.00%, due 09/18/21 197,389
100,000 Prudential Home Mortgage Securities,
1993-9 A11, 7.50%, 03/25/08 103,010
938,148

U.S. Government Securities 57.18%
375,000 U.S. Treasury Notes, 6.00%,
due 08/15/00 383,321
210,000 U.S. Treasury Notes, 4.00%
due 10/31/00 207,834
250,000 U.S. Treasury Notes, 6.25%
due 01/31/02 261,563
175,000 U.S. Treasury Notes, 5.75%
due 11/30/02 181,781
70,000 U.S. Treasury Notes, 5.375%
due 06/30/03 72,275
820,000 U.S. Treasury Notes, 5.50%
due 02/15/08 865,613
655,000 U.S. Treasury Notes, 6.125%
due 08/15/07 714,359

PIA GLOBAL BOND FUND (continued)
Principal
Value Value
U.S. Government Securities 57.18%
(continued)
$ 50,000 U.S. Treasury Notes, 6.375%
due 08/15/27 $ 58,000
680,000 U.S. Treasury Notes, 5.50%,
Due 08/15/28 718,888
3,463,634

TOTAL LONG TERM INVESTMENTS
(cost $5,593,432) 5,802,591

SHORT TERM INVESTMENTS 2.47%
149,680 Star Treasury Fund
(cost $149,680) 149,680

TOTAL INVESTMENTS
(cost $5,743,112) 98.26% 5,952,271
Other assets less liabilities 1.74% 105,450

TOTAL NET ASSETS 100.00% $6,057,721

DM -D Deutschemarks
See notes to financial statements

</TABLE>

- -D 8 -D

MONTEREY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - NOVEMBER 30, 1998

PIA PIA
SHORT TERM TOTAL PIA
GOVERNMENT RETURN GLOBAL
SECURITIES BOND BOND
---------- ---- ----
ASSETS
Investments in securities, at value
<S> <C> <C> <C>
(cost $55,644,411, $25,582,491 and $5,743,112, respectively) $56,405,384 $25,801,828 $5,952,271
Receivable for securities sold ............................... 0 311 0
Income receivable ............................................ 613,897 297,205 109,217
Due from investment advisor .................................. 0 1,337 4,029
Prepaid expenses and other ................................... 6,940 2,013 4,655
----------- ----------- ----------
Total Assets ................................................. 57,026,221 26,102,694 6,070,172
----------- ----------- ----------

LIABILITIES
Payable for securities purchased ............................. 0 1,108,147 0
Accrued expenses and other ................................... 20,422 8,020 12,451
Dividends payable ............................................ 15,425 42,692 0
Due to investment advisor .................................... 1,276 0 0
----------- ----------- ----------
Total Liabilities ............................................ 37,123 11,588,590 12,451
----------- ----------- ----------

NET ASSETS
Capital stock, no par value; unlimited shares
authorized; shares outstanding ............................... 55,949,063 24,674,517 5,816,113
Undistributed net investment income .......................... 0 10,044 4,675
Accumulated net realized gain (loss) on
investments and foreign currencies ......................... 279,062 39,937 26,236
Net unrealized appreciation (depreciation)
on investments and foreign currencies ...................... 760,973 219,337 210,697
----------- ----------- ----------
Net Assets ................................................... 56,989,098 24,943,835 6,057,721
=========== =========== ==========

Net asset value, offering and redemption price ............... $ 10.38 $ 20.27 $ 21.31
=========== =========== ==========
Shares Outstanding ........................................... 5,990,027 1,230,672 284,218
=========== =========== ==========

</TABLE>

See notes to financial statements

- 9 -

<PAGE>

MONTEREY FUNDS
Statements of Operations - For The Year Ended November 30,1998

PIA PIA
SHORT TERM TOTAL PIA
GOVERNMENT RETURN GLOBAL
SECURITIES BOND* BOND
---------- ----- ----
INVESTMENT INCOME
<S> <C> <C> <C>
Interest ..................................... $ 3,274,232 $ 339,633 $ 334,983
--------- --------- ----------
Total Investment Income .............. 3,274,232 339,633 334,983
--------- --------- ----------

EXPENSES
Adviser fees (Note 3) ........................ 112,629 17,310 25,181
Distribution fees (Note 4) ................... 28,157 0 0
Transfer agent fees .......................... 8,758 2,100 15,650
Administrative fees (Note 3) ................. 43,942 5,000 15,779
Custodian fees ............................... 28,765 4,800 9,018
Audit fees ................................... 9,692 5,000 10,597
Legal fees ................................... 1,602 1,000 2,970
Registration fees ............................ 20,981 (222) 3,345
TrusteesO fees ............................... 1,109 361 1,612
Printing expense ............................. 0 1,000 616
Amortization of deferred organization expenses 0 0 241
Postage expense .............................. 209 0 252
Other expenses ............................... 6,565 75 1,816
--------- --------- ----------
Total expenses ............................... 262,409 36,424 87,071
Less: Expense reimbursement from adviser ..... (90,595) (13,344) (54,163)
--------- --------- ----------
Net expenses ................................. 171,814 23,080 32,908
--------- --------- ----------
Net Investment Income (Loss) ................. 3,102,918 316,553 302,075
--------- --------- ----------

REALIZED AND UNREALIZED GAIN
(Loss) on Investments
Net Realized Gain (Loss) on Investments
and foreign currencies ............... 284,717 39,937 62,461
Net Change in Unrealized Appreciation on
Investments and foreign currencies ... 501,366 219,337 226,129
--------- --------- ----------
Net Gain (Loss) on Investments ............... 786,083 259,274 288,590
--------- --------- ----------
Net Increase (Decrease) in Net Assets
Resulting from Operations ............ $ 3,888,501 $ 575,827 $ 590,665
========= ========= =========

<FN>
*September 1, 1998 (Commencement of operations) through November 30, 1998
</FN>
</TABLE>

See notes to financial statements

- 10 -

<PAGE>

MONTEREY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>

PIA PIA
SHORT-TERM TOTAL PIA
GOVERNMENT RETURN GLOBAL
SECURITIES BOND BOND
----------------------------------------------------------------------------
For the Period
Year ended Year ended Sept. 1, 1998* Year ended Year ended
Nov. 30, Nov. 30 to Nov. 30, Nov. 30, Nov. 30,
1998 1997 1998 1998 1997
----------------------------------------------------------------------------
Operations
<S> <C> <C> <C> <C> <C>
Net investment income (loss) ................ $ 3,102,918 $ 1,770,843 $ 316,553 $ 302,375 $ 125,165
Net realized gain (loss) on
investments and foreign currencies .. 284,717 48,409 39,937 62,461 (23,939)
Net change in unrealized appreciation
on investments and foreign currencies 501,366 164,144 219,337 226,129 15,432
----------- ------------ ------------ ---------- -----------
Net increase (decrease) in net assets
resulting from operations ........... 3,888,501 1,983,396 575,827 590,665 85,794
----------- ------------ ------------ ---------- -----------

Dividends Paid to Shareholders
Dividends from net investment income ........ (3,101,418) (1,770,843) (306,509) (313,779) (121,071)
Dividends from capital gain ................. (50,168) (19,653) 0 0 0
----------- ------------ ------------ ---------- -----------
(3,132,586) (1,790,496) (306,509) (313,779) (121,071)
----------- ------------ ------------ ---------- -----------

Fund Share Transactions
Net proceeds from shares sold ............... 13,650,663 34,947,791 24,563,866 1,572,860 5,400,000
Dividends reinvested ........................ 3,115,877 1,549,280 225,825 303,567 120,164
Payment for shares redeemed ................. (13,425,643) (4,241,857) (115,174) (1,680,979) 0
----------- ------------ ------------ ---------- -----------
Net increase (decrease) in net assets
from fund share transactions ........ 3,340,897 32,255,214 24,674,517 195,448 5,520,164
----------- ------------ ------------ ---------- -----------
Net increase (decrease) in net assets ....... 8,076,812 32,448,114 24,943,835 472,834 5,484,887
NET ASSETS, Beginning of Period ............. 32,912,286 20,464,172 0 5,584,887 100,000
----------- ------------ ------------ ---------- -----------
NET ASSETS, End of Period ................... $ 56,485,098 $ 52,912,286 $ 24,943,835 $ 6,057,721 $ 5,584,887
============ ============ ============ ============ ===========

Changes in Shares Outstanding
Shares sold ................................. 1,325,769 3,418,519 1,225,259 77,100 263,772
Shares issued on reinvestment
of dividends ........................ 301,984 151,712 11,048 14,734 5,988
Shares redeemed ............................. (1,296,941) (414,658) (5,635) (82,376) 0
Net Increase (decrease) in
shares outstanding .................. 330,812 3,155,573 1,230,672 9,458 269,760
<FN>

*Commencement of operations
</FN>

</TABLE>

See notes to financial statements
- 11 -
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 1998

NOTE 1. ORGANIZATION

Monterey Mutual Fund (the "Trust"), formerly Monitrend Mutual Fund, is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Trust was organized as
a Massachusetts business trust on January 6, 1984 and consists of nine series of
shares: the PIA Short Term Government Securities Fund, the Camborne Government
Income Fund, the OCM Gold Fund, the PIA Equity Fund, the Murphy New World
Biotechnology Fund, the Murphy New World Technology Fund, the Murphy New World
Technology Convertibles Fund, the PIA Global Bond Fund and the PIA Total Return
Bond Fund (collectively the "Funds"), each of which has separate assets and
liabilities and differing investment objectives. The investment objective for
each of the Funds presented herein are: the PIA Short-Term Government Securities
Fund, (the "Short-Term Government Fund"), to provide investors a high level of
current income, consistent with low volatility of principal through investing in
short term, adjustable rate and floating rate securities issued or guaranteed by
the U.S. Government, its agencies or instrumentalities; the PIA Total Return
Bond Fund, (the "Total Return Bond Fund"), to maximize total return through
investing in bonds while minimizing risk as compared to the market; and the PIA
Global Bond Fund, (the "Global Bond Fund"), to provide a high level of current
income through investing in bonds denominated in U.S. dollars and other
currencies.

NOTE 2. SIGNIFICANT ACCOUNTING POLICIES

The following is a summary
of significant accounting policies followed by the Funds in the preparation of
their financial statements.

SECURITY VALUATION -- Portfolio securities that are listed on the national
securities exchanges are valued at the last sale price as of the close of such
securities exchanges, Eastern time, or, in the absence of recorded sales, at the
average of readily available closing bid and asked prices on such exchanges.
Unlisted securities are valued at the average of the quoted bid and asked prices
in the over-the-counter market. Securities and other assets for which market
quotations are not readily available are valued at fair market value as
determined in good faith by the Adviser under procedures established by and
under the general supervision and responsibility of the Trust's Board of
Trustees. Short-term investments which mature in less than 60 days are valued at
amortized cost (unless the Board of Trustees determines that this method does
not represent fair market value). Short-term investments which mature after 60
days are valued at market. Stock Index Futures, which are traded on commodities
exchanges, are valued at their last sales price as of the close of such
commodities exchanges.

OPTIONS -- When a call is written, an amount equal to the premium received
is included in the Statement of Assets and Liabilities as an equivalent
liability. The amount of the liability is subsequently marked to market to
reflect the current market value of the option written. If an option which was
written either expires on its stipulated expiration date, or a closing purchase
transaction is entered into, a gain is realized (or loss if the cost of a
closing purchase transaction exceeds the premium received when the option was
sold) without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is extinguished. If a written call
option is exercised, a capital gain or loss is realized from the sale of the
underlying security and the proceeds from such sale are increased by the premium
originally received.

FUTURES CONTRACTS -- The Global Bond Fund and the Total Return Bond Fund
may from time to time enter into futures contracts as a hedge to provide
protection against adverse movements in the prices of securities in the
portfolio. When a Fund enters a futures contract, it is required to pledge to
the clearing broker an amount of cash and/or securities equal to approximately
5% of the contract amount. This amount is known as the "initial margin".
Pursuant to the futures contract, the Fund agrees to take or make delivery of an
amount of cash equal to a specified dollar amount times the difference between
the value at the close of the day and the price at which the futures contract
was originally struck. Such payments, known as the "variation margin", are
recorded by the Fund as unrealized gains or losses. When the futures contract
expires or is closed by the Fund, it realizes a gain or loss.

- 12 -

<PAGE>

MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 1998 (CONTINUED)

The predominant market risk is that movements in the prices of a Fund's
portfolio securities being hedged may not correlate perfectly with the movement
in the prices of the future contracts. The lack of correlation could render a
Fund's hedging strategy unsuccessful and could result in a loss to the Fund.

Futures contracts are purchased only on exchanges. The exchange acts as the
counterparty to a Fund's futures transactions; therefore the Fund's credit risk
is limited to the failure of the exchange.

ORGANIZATIONAL COSTS -- These costs have been capitalized and are being
amortized using the straight-line method over a period of sixty months beginning
on commencement of operations.

OTHER -- Securities transactions are recorded no later than the first
business day after the trade date. Discounts and premiums on securities
purchased are amortized over the life of the respective security. Realized gains
and losses on sales of securities are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on an accrual basis.

USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.

NOTE 3. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS

The Short-Term Government Fund, the Total Return Bond Fund and the Global
Bond Fund each has an investment advisory agreement with PIA. Each Fund pays PIA
a fee, computed daily and payable monthly, at an annual rate of 0.20%, 0.30% and
0.40%, respectively, of their net assets.

During the year ended November 30, 1998 the advisers agreed to reimburse
the Funds for expenses (except distribution fees) in excess of 0.30% of average
net assets of the Short-Term Government Fund, 0.40% of average net assets of the
Total Return Bond Fund and .0.51% of average net assets of the Global Bund Fund.

The Trust has a fund accounting and administrative agreement with American
Data Services, Inc. ("ADS"). ADS receives a fee, computed daily and payable
monthly, at an annual rate of 0.1% of each Fund's average daily net assets,
subject to a monthly minimum.

NOTE 4. DISTRIBUTION AGREEMENT AND PLAN

Syndicated Capital, Inc. serves as the Distributor of each Fund's shares.
The President and sole shareholder of the Distributor is also the Chairman and
shareholder of PIA, as well as a trustee of the Trust.

The Trust has adopted a Distribution Plan (the "Plan") pursuant to Rule
12b-1 under the Investment Company Act of 1940. The Plan authorizes each Fund,
except the Global Bond Fund, to reimburse the Distributor for marketing expenses
incurred in distributing shares of each Fund, including the cost of printing
sales material and making payments to dealers in each Fund shares, in any fiscal
year, subject to a limit of 0.05% for the Short-Term Government Fund and 0.25%
for the Total Return Bond Fund. The Total Return Bond Fund did not pay any Plan
expenses in 1998 and will not pay any Plan expenses in 1999.

NOTE 5. PURCHASES AND SALES OF SECURITIES

The cost of purchases and sales of investment securities (other than
short-term investments) for the year ended November 30, 1998, were as follows:

PURCHASES SALES
--------- -----
Short-Term Government Fund............ $81,376,352 $74,245,491
Total Return Bond Fund................ 27,349,462 3,131,384
Global Bond Fund ..................... 11,088,088 10,669,820

- 13 -

<PAGE>

MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - NOVEMBER 30, 1998 (CONTINUED)

Unrealized appreciation and depreciation on investments at November 30,
1998 based on cost for Federal income taxes (which is the same as cost for
financial reporting purposes), are as follows:

UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION NET
------------ ------------ ---
Short-Term Government Fund.......... $ 850,145 ($ 89,172) $ 760,973
Total Return Bond Fund.............. 334,079 (114,742) 219,337
Global Bond Fund.................... 210,740 (1,581) 209,159

- 14 -

<PAGE>

MONTEREY FUNDS
PIA SHORT-TERM GOVERNMENT SECURITIES
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
APRIL 22,1994
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED THRU
NOV. 30, NOV. 30, NOV. 30, NOV. 30, NOV. 30,
1998 1997 1996* 1995* 1994
-------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 10.26 $ 10.21 $ 10.12 $ 9.98 $ 10.00
-------- -------- ------- -------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment (loss) .......................... 0.57 .61 0.56 0.57 0.27
Net realized and unrealized gain
on investments ................................. 0.13 0.06 0.19 0.14 (0.02)
-------- -------- ------- -------- --------
Total from investment operations ............... 0.70 0.67 0.75 0.71 0.25
-------- -------- ------- -------- --------

LESS DISTRIBUTIONS
Dividends from net investment income ........... (0.57) (0.61) (0.56) (0.57) (0.27)
Dividends from capital gains ................... (0.01) (0.01) (0.10) 0 0
-------- -------- ------- -------- --------
Total distributions ............................ (0.58) (0.62) (0.66) (0.57) (0.27)
-------- -------- ------- -------- --------
Net asset value, end of period ................. $ 10.38 $ 10.26 $ 10.21 $ 10.12 $ 9.98
======== ======== ======= ======== ========
Total return** ................................. 6.99% 6.56% 7.68% 7.50% 2.50%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in $000's) .......... 56,989 52,912 20,464 3,405 2,041
Ratio of expenses to average net assets ........ 0.30% 0.30% 0.44% 0.46% 0.44%+
Ratio of expenses to average net assets,
before reimbursement ......................... 0.46% 0.55% 1.19% 2.01% 3.46%+
Ratio of net investment income (loss) to average
net assets ..................................... 5.51% 5.77% 5.51% 5.71% 4.68%+
Portfolio turnover rate ........................ 138.44% 63.08% 21.54% 163.55% 209.94%

<FN>

+ Annualized.
* Based on average shares outstanding
** Excluding sales charge during periods when applicable. Not annualized for
periods less than a year.
</FN>
</TABLE>

See notes to financial statements
- 15 -

<PAGE>

MONTEREY FUNDS
PIA TOTAL RETURN BOND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>

SEPTEMBER 1, 1998
(COMMENCEMENT OF
OPERATIONS)
THROUGH
NOVEMBER 30, 1998
-----------------

<S> <C>
Net asset value, beginning
of period .......................................... $ 20.00
---------

INCOME FROM INVESTMENT OPERATIONS
Net investment income ...................................... 0.27
Net realized and unrealized gain (loss)
on investments and foreign currencies .............. 0.26
Total from investment operations ........................... 0.53

LESS DISTRIBUTIONS
Dividends from net investment income ....................... (0.26)
---------
Total distributions ........................................ (0.26)
---------
Net asset value, end of period ............................. $ 20.27
---------
Total return** ............................................. 2.65%

RATIOS/SUPPLEMENTAL DATA
Net assets, end of period
(in $000's) ........................................ 24,944
Ratio of expenses to average
net assets ......................................... 0.40%+
Ratio of expenses to average
net assets, before reimbursement ................... 0.63%+
Ratio of net investment income
to average net assets .............................. 5.49%+
Portfolio turnover rate .................................... 13.22%

<FN>

+ Annualized
** Not annualized for periods less than a year.
</FN>
</TABLE>

See notes to financial statements
- 16 -

<PAGE>

MONTEREY FUNDS
PIA GLOBAL BOND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>

YEAR ENDED APRIL 1, 1997
NOV. 30, (COMMENCEMENT
1998 OF OPERATIONS)
THROUGH
NOV. 30, 1997
----------------------------

Net asset value, beginning
<S> <C> <C>
of period ............................... $ 20.33 $ 20.00

Income from investment operations
Net investment income ........................... .99 0.50
Net realized and unrealized gain (loss)
on investments and foreign currencies ... 1.03 0.32
Total from investment operations ................ 2.02 0.82

Less distributions
Dividends from net investment income ............ (1.04) (0.49)
Total distributions ............................. (1.04) (0.49)
Net asset value, end of period .................. $ 21.31 $ 20.33
Total return** .................................. 10.23% 4.15%

Ratios/supplemental data
Net assets, end of period
(in $000's) ............................. 6,058 5,585
Ratio of expenses to average
net assets .............................. 0.52% 0.51%+
Ratio of expenses to average
net assets, before reimbursement ........ 1.38% 2.05%+
Ratio of net investment income
to average net assets ................... 4.80% 4.71%+
Portfolio turnover rate ......................... 176.66% 82.47%

<FN>

+ Annualized
** Not annualized for periods less than a year.
</FN>
</TABLE>

See notes to financial statements
- 17 -

<PAGE>

INDEPENDENT AUDITOR'S REPORT

The Board of Trustees and Shareholders of
Monterey Mutual Fund

We have audited the accompanying statements of assets and liabilities, including
the schedules of investments of the PIA Short-Term Government Fund, the PIA
Total Return Bond Fund and the Global Bond Fund, series of Monterey Mutual Fund
(the "Trust") as of November 30, 1998 and the related statements of operations
and changes in net assets and financial highlights for the periods indicated in
the accompanying financial statements. These financial statements and financial
highlights are the responsibility of the Trust's management. Our responsibility
is to express an opinion on these financial statements and financial highlights
based on our audits.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
PIA Short-Term Government Fund, the PIA Total Return Bond Fund and the Global
Bond Fund as of November 30, 1998 and the results of their operations, the
changes in their net assets, and their financial highlights for the periods
indicated, in conformity with generally accepted accounting principles.

/S/ MCGLADREY & PULLEN, LLP
- ---------------------------
McGladrey & Pullen, LLP

New York, New York
January 8, 1999

- 18 -

<PAGE>

MONTEREY FUNDS
PERFORMANCE RESULTS - YEAR ENDED NOVEMBER 30, 1998

PIA SHORT-TERM
GOVERNMENT FUND

AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/98
- ---------------------------- -----------------
1 year 6.99% PIA ST Gov't. $13,527
Inception 6.76% Lehman Index $13,140

$10,000 Investment made 4/22/94 (Inception Date)

$15,000 _______ PIA ST Govt. $13,527
------- Lehman U.S. Government Index $13,140
$12,000

$10,000
1994 1995 1996 1997 1998

Past performance is not The Lehman Government 1-3 Year Index is
predictive of future an unmanaged index consisting of all US
performance Treasury & Agency bonds weighted according
to market capitalization with maturities
between one and three years.

The PIA Short-Term Government Fund again this year achieved its goal of
providing a high level of current income consistent with low volatility of
principal. The Fund returned 6.99% as compared to the unmanaged Lehman
Government 1-3 Year index return of 7.27%. The manager's strategy of investing
primarily in short-term adjustable rate and floating rate U.S. government
securities was again the major contributing factor in the Fund's ability to
maintain its low volatility in the midst of a volatile fixed-income market.

NOTE: Effective with this report, the Fund has changed the index against which
it portrays its results. Until now, the Fund showed results against the Lehman
Government Index; it now uses the Lehman Government 1-3 Year index, which more
closely matched the Fund's duration target. Had the Lehman Government Index been
used this year, the value of the index at 11/30/98 whould have been $14,670.

- --------------------------------------------------------------------------------

PIA GLOBAL BOND FUND

AVERAGE ANNUAL TOTAL RETURNS VALUE ON 11/30/98
- ---------------------------- -----------------
1 year 10.23% PIA Global $11,477
Inception 8.63% Lehman Index $11,622

$10,000 Investment made 4/1/97 (Inception Date)

$12,000 ________ PIA Global $11,477
-------- Lehman U.S. Government Index $11,822
$11,000

$10,000

1997 1998

Past performance is not The Lehman Government Index is an unmanaged
predictive of future index consisting of all US Treasury
performance & Agency bonds weighted according
to market capitalization.

The PIA Global Bond Fund returned a healthy 10.23% this year versus the Lehman
Government Index return of 10.75%. The Fund currently holds bonds issued by the
governments of Germany and the United States. (The Fund benefitted from its
allocation of assets to German bonds, as the German mark appreciated by 4.2%
during the period.) In addition, the fund manager has put over 15% of the Fund's
assets in mortgage-backed securities which have underperformed Treasury
securities during the period but should provide the Fund with price appreciation
potential as interest rates stabilize.

- 19 -

<PAGE>

Monterey Mutual Funds
Distributed by:

Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401