MURPHY
NEW WORLD
FUNDS
-- Murphy New World Technology
-- Murphy New World Biotechnology
-- Murphy New World Technology
Convertibles
MONTEREY
MUTUAL
FUND
SEMI-ANNUAL REPORT
(UNAUDITED)
MAY 31, 1999
<PAGE>
Dear Shareholder:
The semiannual report for the Murphy New World mutual funds, part of
the Monterey Funds group, is enclosed.
The first half of 1998 was an extremely difficult period for technology
stocks. The real effects of the economic decline in Asia were accentuated by
perceived problems in personal computer sales. June quarter PC sales were just
reported up 10% versus last year, well above the typical expectation for poor or
slow sales. Very few sectors in the U.S. economy are growing in double digits,
and we believe the June quarter will prove to be the weakest one of the year.
Sequential growth in the September quarter, due to strength in Europe, and in
the December quarter, when 50% of all PCs are sold in the U.S., should lead to
substantial improvement in these stocks.
In February, G. E. Morgenthaler became the portfolio manager for the
Murphy New World Biotechnology Fund, and this has had a beneficial effect on the
relative performance. The biotech sector still is performing badly in absolute
terms, and the heavy weighting I have in the sector has dragged down the
performance of the Murphy New World Technology Fund and the Convertibles Fund.
However, many of the companies we hold are making excellent progress with new
corporate partnering deals, successful clinical trials, FDA filings, advisory
committee recommendations for approval, FDA "approvable" letters and final
approvals. In general, their progress is not reflected in their stock prices. We
do not think this state of affairs can last much longer, unless Wall Street is
willing to ignore successful drugs and substantial royalty flows.
Technology stocks usually do well in the first quarter of the year, but
that was muted by the Asian problems. The second quarter, just completed, often
is the weakest of the year. We are looking forward to the second half of the
year with confidence that the PC and communications markets will be strong, the
number of biotech drug approvals will accelerate, and the portfolios of your
mutual funds will start reflecting the fundamental progress of the companies we
hold.
Although we still worry about the broad overvaluation in the general
market, we are not hedged with options or substantial short sales at this time.
We do have those tools available if the need arises.
Very truly yours,
Michael Murphy
<PAGE>
<TABLE>
<CAPTION>
MONTEREY FUNDS
Schedules of Investments - May 31, 1999
(Unaudited)
MURPHY NEW WORLD
TECHNOLOGY FUND
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS 98.41%
BIOTECHNOLOGY 9.66%
<C> <S> <C>
9,000 Bio-Technology General Corp.* .. $ 63,563
23,313 Cocensys Inc.* ................. 24,041
2,800 Ligand Pharmaceutical Inc. CL B* 28,612
---------
116,216
---------
COMPUTERS & EQUIPMENT 2.56%
1,300 Compaq Computer Corp. .......... 30,794
---------
INTERNET CONTENT 2.56%
6,000 Stockgroup.com, Inc. * ......... 30,750
---------
DRUG DELIVERY 1.98%
19,000 Insite Vision Inc.* ............ 23,750
---------
MISCELLANEOUS 3.85%
4,000 H&Q Life Sciences Investors .... 46,250
---------
PHARMACEUTICALS 32.22%
23,900 Cephalon Inc.* ................. 324,891
6,500 DUSA Pharmaceuticals Inc.* ..... 62,563
---------
387,454
---------
RESEARCH EQUIPMENT 4.29%
28,000 Trega Biosciences Inc.* ........ 51,625
---------
SEMICONDUCTORS 15.86%
3,000 C-Cube Microsystems Inc.* ...... 75,094
800 Intel Corp. .................... 43,350
1,600 Level One Communications, Inc.* 72,250
---------
190,694
---------
SOFTWARE 19.99%
1,200 BMC Software, Inc.* ............ $ 59,288
10,000 Informix Corp.* ................ 66,719
5,800 JDA Software Group, Inc. * ..... 51,837
1,700 Oracle Corp.* .................. 42,181
10,000 Ross Systems Inc.* ............. 20,312
---------
240,337
---------
TELECOMMUNICATIONS 5.44%
6,000 DBS Industries, Inc.* .......... 13,500
6,000 Premisys Communications, Inc.* . 51,937
---------
65,437
---------
TOTAL COMMON STOCKS
(cost $1,296,238) 1,183,307
---------
REPURCHASE AGREEMENT 9.56%
115,000 Star Bank 3.30%, due June 1, 1999
collateralized by $117,297
GNMA 7.00% due 10/01/11
(cost $115,000) 115,000
---------
SHORT TERM INVESTMENTS 5.14%
61,822 Star Treasury Fund
(cost $61,822) 61,822
---------
TOTAL INVESTMENTS
(cost $1,473,060) 113.11% 1,360,129
Liabilities in excess of cash
and other assets (13.11%) (157,662)
------- ---------
TOTAL NET ASSETS............ 100.00% 1,202,467
======= =========
* Non income producing security
See notes to financial statements
-1-
<PAGE>
MONTEREY FUNDS
Schedules of Investments - May 31, 1999
(Unaudited)
MURPHY NEW WORLD
BIOTECHNOLOGY FUND
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS 88.31%
BIOTECHNOLOGY 49.74%
15,000 Aastrom Biosciences Inc.* ...... $ 27,187
10,000 Alexion Pharmaceutical Inc.* ... 96,250
10,000 Alpha-Beta Technology Inc.* .... 0
8,000 Alteon Inc.* ................... 6,375
2,000 Amgen Inc.* .................... 126,563
44,000 Amylin Pharmaceutical Inc.* .... 57,063
5,000 Aviron Inc.* ................... 107,188
10,045 Axys Pharmaceutical Inc.* ...... 36,099
10,000 Biomira Inc.* .................. 39,062
5,000 Cell Genesys Inc.* ............. 24,062
2,000 Chiron Corp.* .................. 42,188
2,500 Cocensys Inc.* ................. 2,578
10,000 Cortex Pharmaceuticals Inc.* ... 8,250
14,000 Cor Therapeutics Inc.* ......... 197,750
1,800 Corvas International Inc.* ..... 3,628
5,000 Genelabs Technologies Inc.* .... 9,297
1,000 Genzyme Corp.* ................. 40,531
10,000 Geron Corp.* ................... 119,375
20,000 Guilford Pharmaceuticals Inc.* . 215,000
3,000 Human Genome Sciences Inc.* .... 126,563
1,000 ICOS Corp.* .................... 43,781
3,000 Incyte Pharmaceuticals Inc.* ... 77,906
3,500 Isis Pharmaceuticals Inc.* ..... 35,219
11,000 Microcide Pharmaceutical Inc.* . 46,234
3,000 NPS Pharmaceuticals Inc.* ...... 21,000
52,000 Neurobiological Technology* .... 63,375
5,000 Northfield Laboratories Inc.* .. 60,313
8,000 Protein Design Labs Inc.* ...... 156,500
5,000 Regeneron Pharmaceutical Inc.* . 35,547
15,000 Xoma Corp.* .................... 70,313
4,000 Vical Inc.* .................... 47,750
----------
1,942,947
----------
DRUG DELIVERY 6.30%
10,000 Alkermes Inc.* ................. $ 246,250
----------
MEDICAL INSTRUMENTS 0.97%
1,000 Boston Scientific Corp.* ....... 37,937
----------
PHARMACEUTICALS 27.12%
15,000 Alliance Pharmaceutical Corp.* . 44,063
4,500 Cadus Pharmaceutical Corp.* .... 4,500
10,000 Cephalon Inc.* ................. 135,938
1,073 Corixa Corp. * ................. 13,949
10,000 DUSA Pharmaceuticals Corp.* .... 96,250
2,000 Eli Lilly & Co. ................ 142,875
6,000 Ligand Pharmaceutical Inc., Class B 61,313
5,000 Medpartners Inc.* .............. 29,375
1,000 Merck & Company Inc. ........... 67,500
1,000 Pfizer Inc. .................... 107,000
8,000 Pharmacyclics Inc.* ............ 148,500
2,000 Schering Plough Corp. .......... 90,125
1,000 Smithkline Beecham ADR ......... 65,625
1,000 Supergen Inc.* ................. 17,406
2,000 Viropharma Inc.* ............... 15,062
1,000 Vertex Pharmaceuticals Inc.* ... 20,031
----------
1,059,512
----------
RESEARCH EQUIPMENT 0.99%
1,000 Aurora Biosciences Corp.* ...... 5,656
18,000 Trega Biosciences Inc.* ........ 33,187
----------
38,843
----------
RETAIL DRUG STORE 1.30%
5,000 Drug Emporium Inc.* ............ 50,625
----------
THERAPEUTICS 1.70%
2,000 Neurocrine Corp.* .............. 10,875
4,000 Sangstat Medical Corp.* ........ 55,375
----------
66,250
----------
* Non income producing security
See notes to financial statements
-2-
<PAGE>
MONTEREY FUNDS
Schedules of Investments - May 31, 1999
(Unaudited)
MURPHY NEW WORLD
BIOTECHNOLOGY FUND (CONTINUED)
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
WOUND, BURN & SKIN CARE 0.19%
10,000 Procyte Corp.* $ 7,344
-----------
TOTAL COMMON STOCKS
(cost $3,839,023) .............. 3,449,708
-----------
REPURCHASE AGREEMENT 9.04%
353,000 Star Bank 3.30%, due June 1, 1999
collateralized by $360,050
GNMA 7.00% due 10/01/11
(cost $353,000) ............ 353,000
-----------
SHORT TERM INVESTMENTS 4.86%
190,000 Star Treasury Fund
(cost $190,000) ............ 190,000
-----------
TOTAL INVESTMENTS
(cost $4,313,406) ... 102.21% 3,992,708
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS .......... (2.21%) (86,350)
------- -----------
TOTAL NET ASSETS ...... 100.00% $ 3,906,358
======= ===========
- ------------------------------------------------------
SECURITIES SOLD SHORT
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
COMMON STOCK
1,000 Immunex Corp. *
(proceeds $68,618)..........$ 130,094
-----------
MURPHY NEW WORLD TECHNOLOGY
CONVERTIBLES FUND
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS 25.64%
NETWORKING PRODUCTS 0.94%
100 Cisco Systems, Inc.*............ $ 10,897
----------
PHARMACEUTICALS 13.47%
8,000 Cephalon Inc.*.................. 108,750
5,000 DUSA Pharmaceuticals Inc.*...... 48,125
----------
156,875
----------
SEMICONDUCTORS 4.36%
200 Applied Materials, Inc.*........ 11,006
400 Intel Corp...................... 21,675
400 Level One Communication, Inc.*.. 18,062
----------
50,743
----------
SOFTWARE 6.87%
4,200 JDA Software Group, Inc.*....... 37,538
900 Oracle Corp.*................... 22,303
600 SAP AG.......................... 20,175
----------
80,016
----------
TOTAL COMMON STOCKS
($286,249)...................... 298,531
----------
CONVERTIBLE BONDS 56.45%
BIOTECHNOLOGY 29.50%
426,000 Glycomed Inc.,7.50%,
due 01/01/03................ 343,463
----------
COMPUTER PERIPHERALS 8.05%
70,000 Quantum Corp., 7.00%,
due 08/01/04................ 66,675
55,000 Read Rite Corp., 6.50%,
due 09/01/04................ 27,087
----------
93,762
----------
DRUG DELIVERY 3.85%
60,000 Dura Pharmaceuticals Inc.*
3.50%, due 07/30/02......... 44,850
----------
* Non income producing security
See notes to financial statements
-3-
<PAGE>
MONTEREY FUNDS
Schedules of Investments - May 31, 1999
(Unaudited)
MURPHY NEW WORLD TECHNOLOGY
CONVERTIBLES FUND (CONTINUED)
- ------------------------------------------------------
SHARES VALUE
- ------------------------------------------------------
SEMICONDUCTORS 3.68%
55,000 Integrated Device, 5.50%,
due 06/01/02................ $ 42,900
----------
SOFTWARE 2.50%
60,000 System Software Associates,
7.00%, due 09/15/02......... 29,100
----------
SPECIALTY MATERIALS 4.10%
60,000 Hexcel Corp., 7.00%,
due 08/01/11................ 47,700
----------
TELECOMMUNICATIONS 4.77%
70,000 Adaptive Broadband Corp.,
5.25%, 12/15/03............. 55,475
----------
TOTAL CONVERTIBLE BONDS
(cost $809,977) ................ 657,250
----------
REPURCHASE AGREEMENT 10.74%
125,000 Star Bank 3.30%, due June 1, 1999
collateralized by $127,496
GNMA 7.00% due 10/01/11
(cost $125,000)............. 125,000
----------
SHORT TERM INVESTMENTS 4.81%
56,000 Star Treasury Fund
(cost $56,000) 56,000
----------
TOTAL INVESTMENTS
(cost $1,277,225).....97.64% 1,136,781
OTHER ASSETS LESS
LIABILITIES............ 2.36% 27,465
------- ----------
TOTAL NET ASSETS................100.00% $1,164,246
======= ==========
<FN>
* Non income producing security
</FN>
</TABLE>
See notes to financial statements
-4-
<PAGE>
MONTEREY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - MAY 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Murphy
Murphy Murphy New World
New World New World Technology
Technology Biotechnology Convertibles
------------------------------------------
ASSETS
<S> <C> <C> <C>
Investments in securities, at value
(See Note 5) .................................. $ 1,360,129 $ 3,992,708 $ 1,136,781
Cash ................................................... 539 287 631
Receivable for fund shares sold ........................ 5,672 39,886 0
Receivable for securities sold ......................... 0 25,374 0
Income receivable ...................................... 244 873 22,915
Due from investment advisor ............................ 4,160 2,063 5,506
Due from broker ........................................ 0 0 2,101
Prepaid expenses and other ............................. 13,246 9,090 8,630
---------- ----------- -----------
Total Assets .................................. 1,383,990 4,070,281 1,176,564
---------- ----------- -----------
LIABILITIES
Securities sold short, at value - proceeds $68,618 ..... 0 130,094 0
Accrued expenses and other ............................. 4,381 7,998 12,318
Due to broker .......................................... 177,142 25,831 0
---------- ----------- -----------
Total Liabilities ............................. 181,523 163,923 12,318
---------- ----------- -----------
NET ASSETS
Capital stock, no par value; unlimited shares
authorized; shares outstanding ................ 1,560,917 4,689,329 2,214,499
Undistributed net investment income .................... (42,427) (77,207) 25,353
Accumulated net realized gain (loss)on
investments and foreign currencies ............ (203,092) (254,972) (935,162)
Net unrealized appreciation (depreciation)
on investments and foreign currencies ......... (112,931) (450,792) (140,444)
---------- ----------- -----------
Net Assets ............................................. 1,202,467 3,906,358 1,164,246
---------- ----------- -----------
Net asset value, offering and redemption price per share $ 13.26 $ 6.44 $ 22.57
========= ========== ===========
Shares Outstanding ..................................... $ 90,691 $ 606,447 $ 51,586
========= ========== ===========
</TABLE>
See notes to financial statements
-5-
<PAGE>
MONTEREY FUNDS
STATEMENTS OF OPERATIONS - FOR THE SIX MONTHS ENDED MAY 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Murphy
Murphy Murphy New World
New World New World Technology
Technology Biotechnology Convertibles
----------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C>
Interest ........................................... $ 391 $ 34,215 $ 36,780
Dividends .......................................... 90 110 75
--------- --------- ---------
Total Investment income ............................ 481 34,325 36,855
--------- --------- ---------
EXPENSES
Advisory (Note 3) .................................. 5,638 19,427 4,608
Distribution fees (Note 4) ......................... 1,409 4,857 1,391
Transfer agent fees ................................ 8,276 9,917 8,950
Administrative fees (Note 3) ....................... 8,189 9,222 9,144
Custodian fees ..................................... 1,730 2,585 1,658
Audit fees ......................................... 3,811 3,776 3,429
Legal fees ......................................... 814 814 810
Registration fees .................................. 8,292 10,856 9,712
Trustees' fees ..................................... 613 714 721
Printing expense ................................... 924 2,278 2,193
Amortization of deferred organization expenses ..... 120 131 0
Postage expense .................................... 589 1,090 989
Other expenses ..................................... 851 899 1,307
--------- --------- ---------
Total expenses ..................................... 41,256 66,566 44,912
Less: Expense reimbursement from adviser ........... (29,540) (27,845) (33,837)
--------- --------- ---------
Net expenses ....................................... 11,716 38,721 11,075
--------- --------- ---------
Net Investment Income (loss) ....................... (11,235) (4,396) 25,780
--------- --------- ---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net Realized Gain (loss) on Investments ............ (170,400) (30,203) 4,460
Net Change in Unrealized Appreciation on Investments 328,177 46,756 49,763
--------- --------- ---------
Net Gain (loss) on Investments ..................... 157,777 16,553 54,223
--------- --------- ---------
Net Increase (decrease) in Net Assets
Resulting from Operations ................. $ 146,542 $ 12,157 $ 80,003
========= ========= =========
</TABLE>
See notes to financial statements
-6-
<PAGE>
MONTEREY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Murphy
Murphy Murphy New World
New World New World Technology
Technology Biotechnology Convertibles
----------------------------------------------------------------------------------
For the Six For the Six For the Six
Months ended Year ended Months ended Year ended Months ended Year ended
May 31, Nov. 30, May 31, Nov. 30, May 31, Nov. 30,
1999 1998 1999 1998 1999 1998
----------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
Operations
<S> <C> <C> <C> <C> <C> <C>
Net investment Income (loss) .......... $ (11,235) $ (26,953) $ (4,396) $ (72,811) $ 25,780 $ 60,628
Net realized gain (loss) on investments (170,400) (65,179) (30,203) (119,271) 4,460 (103,913)
Net change in unrealized appreciation
on investments ............... 328,177 (321,157) 46,756 (594,578) 49,763 (167,308)
---------- ---------- ---------- ---------- --------- ---------
Net increase (decrease) in net assets
resulting from operations .... 146,542 (413,289) 12,157 (786,460) 80,003 (210,593)
---------- ---------- ---------- ---------- --------- ---------
Dividends Paid to Shareholders
Dividends from net investment income .. 0 0 0 0 (56,711) (16,073)
Dividends from capital gain ........... 0 (190,274) 0 0 0 0
---------- ---------- ---------- ---------- --------- ---------
0 (190,274) 0 0 (56,711) (16,073)
---------- ---------- ---------- ---------- --------- ---------
Fund Share Transactions
Net proceeds from shares sold ......... 573,273 690,415 511,946 2,949,993 22,400 46,848
Dividends reinvested .................. 0 171,786 0 0 52,619 15,073
Payment for shares redeemed ........... (532,887) (632,131) (576,179) (558,088) (57,212) 146,704)
---------- ---------- ---------- ---------- --------- ---------
Net increase (decrease) in net assets
from fund share transactions . 40,386 180,080 (64,233) 2,391,905 17,807 (84,783)
Net increase (decrease) in net assets . 186,928 (423,483) (52,076) 1,605,445 41,099 (311,449)
---------- ---------- ---------- ---------- --------- ---------
NET ASSETS, Beginning of Period ....... 1,015,539 1,439,022 3,958,434 2,352,989 1,123,147 1,434,596
---------- ---------- ---------- ---------- --------- ---------
NET ASSETS, End of Period ............. $1,202,467 $1,015,539 $3,906,358 $3,958,434 $1,164,246 $1,123,147
========== ========== ========== ========== ========== ==========
Changes in Shares Outstanding
Shares sold ........................... 45,401 50,527 79,212 406,645 1,033 1,830
Shares issued on reinvestment
of dividends ................. 0 12,431 0 0 2,452 581
Shares redeemed ....................... (41,959) (50,720) (91,805) (79,194) (2,629) (5,786)
Net Increase (decrease) in
Shares outstanding ........... 3,442 12,238 (12,593) 327,451 856 (3,375)
</TABLE>
See notes to financial statements
-7-
<PAGE>
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - MAY 31, 1999
(Unaudited)
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 Fund's 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 Technology Biotechnology Fund, ("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, ("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.
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.
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.
-8-
<PAGE>
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - MAY 31, 1999 (CONTINUED)
(Unaudited)
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.
The predominant market risk is that movements in the prices of the
Trust'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 the Trust's hedging strategy unsuccessful and could result in a loss to
the Trust.
Futures contracts are purchased only on exchanges. The exchange acts as
the counterparty to the Trust's futures transactions; therefore the Trust's
credit risk is limited to failure of the exchange.
Subsequent market fluctuations of securities sold short may require a
Trust 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 May 31, 1999, The Technology Fund, the
Biotechnology Fund and the Convertibles Fund had capital loss carryfowards of
approximately $57,000, $225,000 and $939,000, respectively, which expire in
varying amounts through 2002, 2005, 2006.
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.
-9-
<PAGE>
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - MAY 31, 1999 (CONTINUED)
(Unaudited)
NOTE 3. INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENTS
The Technology Fund and Biotechnology Fund also have an investment
advisory agreement with Investment Management, Inc. ("Murphy"). Whereby each
Fund pays Murphy a fee, computed daily and payable monthly, at the following
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%
For the six months ended May 31, 1999 Murphy 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 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%.
NOTE 5. PURCHASES AND SALES OF SECURITIES
The cost of purchases and sales of investment securities (other than
short-term investments) for the six months ended May 31, 1999, were as follows:
PURCHASES SALES
--------- -----
Technology Fund .................. $ 1,424,853 $ 1,312,021
Biotechnology Fund ............... 3,711,781 1,467,855
Convertibles Fund ................ 182,599 345,741
Unrealized appreciation and depreciation on investments at May 31, 1999
based on cost for Federal income taxes, are as follows:
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION NET
------------ ------------ ---
Technology Fund.................. $154,072 ($ 267,003) ($ 112,931)
Biotechnology Fund............... 209,114 (659,906) (450,792)
Convertibles Fund ............... 36,011 (176,455) (140,444)
-10-
<PAGE>
MONTEREY FUNDS
MURPHY NEW WORLD TECHNOLOGY
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHout each period)
<TABLE>
<CAPTION>
For the Six
Months ended Year ended Year ended Year ended Year ended
May 31, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1999 1998 1997++ 1996* 1995*
--------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 11.64 $ 19.18 $ 20.51 $ 17.81 $ 14.35
--------- --------- --------- -------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment (loss) .......................... (0.13) (0.31) (0.33) (0.40) (0.32)
Net realized and unrealized (loss)
on investments ........................ 1.75 (4.77) (0.40) 4.86 4.19
--------- --------- --------- -------- ---------
Total from investment operations ............... 1.62 (5.08) (0.73) 4.46 3.87
--------- --------- --------- -------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income ........... 0.00 0.00 0.00 0.00 0.00
Dividends from Capital Gains ................... 0.00 (2.46) (0.60) (1.76) (0.41)
--------- --------- --------- -------- ---------
Total distributions ............................ 0.00 (2.46) (0.60) (1.76) (0.41)
--------- --------- --------- -------- ---------
Net asset value, end of period ................. $ 13.26 $ 11.64 $ 19.18 $ 20.51 $ 17.81
========= ========= ========= ======== ==========
Total return** ................................. 13.92% (28.51%) (3.69%) 26.32% 26.95%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in $000's) .......... 1,202 1,016 1,439 886 281
Ratio of expenses to average net assets ........ 2.08%# 2.44% 2.44% 2.34% 2.44%
Ratio of expenses to average net assets,
before reimbursement .................. 7.32%# 7.14% 8.13% 10.44% 18.74%
Ratio of net investment income (loss) to average
net assets ............................ (1.99%)# (2.20%) (1.96%) 2.06% 1.97%
Portfolio turnover rate ........................ 132.18% 142.89% 57.01% 17.33% 40.77%
<FN>
# Annualized
* 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-
MONTEREY FUNDS
MURPHY NEW WORLD BIOTECHNOLOGY
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
For the Six
Months ended Year ended Year ended Year ended Year ended
May 31, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1999 1998 1997++ 1996* 1995*
--------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 6.39 $ 8.07 $ 7.19 $ 6.74 $ 6.12
--------- --------- --------- -------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment (loss) .......................... (0.01) (0.15) (0.16) (0.17) (0.15)
Net realized and unrealized (loss)
on investments ........................ 0.06 (1.53) 1.04 0.62 0.77
--------- --------- --------- -------- ---------
Total from investment operations ............... 0.05 (1.68) 0.88 0.45 0.62
--------- --------- --------- -------- ---------
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 ................. $ 6.44 $ 6.39 $ 8.07 $ 7.19 $ 6.74
========= ========= ========= ======== =========
Total return** ................................. 0.78% (20.82%) 12.24% 6.67% 10.13%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in $000's) .......... 3,906 3,958 2,353 231 400
Ratio of expenses to average net assets ........ 1.96%# 2.44% 2.47% 2.65% 2.89%
Ratio of expenses to average net assets,
before reimbursement .................. 3.37%# 3.79% 8.58% 15.28% 9.96%
Ratio of net investment income (loss) to average
net assets ............................ (0.22%)# (2.11%) (1.98%) (2.31%) (2.18%)
Portfolio turnover rate ........................ 73.08% 458.56% 15.09% 2.79% 36.89%
<FN>
# Annualized
* 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 Six
Months ended Year ended Year ended Year ended Year ended
May 31, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1999 1998 1997++ 1996* 1995*
--------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 22.44 $ 26.52 $ 26.64 $ 21.42 $ 16.67
--------- --------- --------- -------- ---------
Income from investment operations
Net investment (loss) .......................... 0.49 1.15 0.21 0.01 0.02
Net realized and unrealized (loss)
on investments ........................ 0.76 (5.23) (0.33) 5.23 4.82
--------- --------- --------- -------- ---------
Total from investment operations ............... 1.25 (4.08) (0.12) 5.24 4.84
--------- --------- --------- -------- ---------
Less distributions
Dividends from net investment income ........... (1.12) (0.30) 0.00 (0.02) (0.09)
--------- --------- --------- -------- ---------
Total distributions ............................ (1.12) (0.30) 0.00 (0.02) (0.09)
--------- --------- --------- -------- ---------
Net asset value, end of period ................. $ 22.57 $ 22.14 $ 26.52 $ 26.64 $ 21.42
========= ========= ========= ======== =========
Total return** ................................. 5.83% (15.55%) (0.45%) 24.49% 29.19%
Ratios/supplemental data
Net assets, end of period (in $000's) .......... 1,164 1,123 1,435 1,560 1,377
Ratio of expenses to average net assets ........ 1.96%# 2.44% 2.44% 2.26% 2.44%
Ratio of expenses to average net assets,
before reimbursement .................. 7.93%# 6.94% 6.83% 5.11% 6.08%
Ratio of net investment income (loss) to average
net assets ............................ 4.55%# 4.64% 0.76% 0.04% 0.10%
Portfolio turnover rate ........................ 20.29% 28.90% 85.91% 80.93% 151.86%
<FN>
# Annualized
* Based on average shares outstanding.
** Excluding sales charge.
++ On 12/13/96 Murphy Investment Management 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>
MONTEREY MUTUAL FUNDS
DISTRIBUTED BY:
SYNDICATED CAPITAL, INC.
1299 OCEAN AVENUE, SUITE 210
SANTA MONICA, CA 90401
<PAGE>
Monterey
Funds
-- OCM Gold
-- Camborne Government Income
-- PIA Equity
MONTEREY
MUTUAL
FUND
SEMI-ANNUAL REPORT
(UNAUDITED)
MAY 31, 1999
<PAGE>
<TABLE>
<CAPTION>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS- MAY 31, 1999
(Unaudited)
OCM GOLD FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 86.58%
MAJOR GOLD PRODUCERS 48.49%
<C> <S> <C>
22,000 Anglogold Ltd. ADR ........................... $ 442,063
34,472 Barrick Gold Corp. ........................... 594,642
5,000 Freeport-McMoRan Copper & Gold Inc.* ......... 65,625
16,500 Gold Fields Ltd. ............................. 53,109
80,000 Homestake Mining Co. ......................... 625,000
65,000 Newmont Mining Corp. ......................... 1,157,813
121,250 Placer Dome Inc. ............................. 1,348,906
----------
4,287,158
----------
INTERMEDIATE GOLD PRODUCERS 7.54%
42,500 Ashanti Goldfields Co. Ltd. .................. 318,750
100,000 Battle Mountain Gold Co.* .................... 243,750
55,000 Kinross Gold Corp.* .......................... 96,250
----------
658,750
----------
MID-TIER GOLD PRODUCERS 15.84%
35,000 Agnico-Eagle Mines ........................... 190,312
125,000 GoldCorp Inc. CI.A * ......................... 640,625
85,000 Meridian Gold Inc.* .......................... 419,688
125,000 TVX Gold Inc.* ............................... 132,812
----------
1,383,437
----------
JUNIOR GOLD PRODUCERS 5.24%
20,000 Alta Gold Co.* ............................... 10,000
35,000 Golden Cycle Gold Corp.* ..................... 258,125
30,000 Miramar Mining Corp.* ........................ 22,012
55,000 Richmont Mines Inc.* ......................... 112,099
10,000 River Gold Mines Ltd.* ....................... 22,420
75,000 Vengold Inc. ................................. 10,446
25,000 Viceroy Resources Corp. ...................... 22,080
----------
457,182
----------
EXPLORATION AND DEVELOPMENT
COMPANIES 1.45%
200,000 Addwest Minerals
International Ltd.* ..................... $ 16,305
10,000 Crown Resources Corp.* ....................... 16,719
100,000 Franc-Or Resources Corp.* .................... 16,475
10,000 Golden Queen Mining Ltd.* .................... 3,057
185,500 New Guinea Gold Corp.* ....................... 11,342
25,000 Omni Resources Inc.* ......................... 1,189
100,000 Silver Eagle Resources* ...................... 8,153
----------
73,240
----------
PRIMARY SILVER PRODUCERS 1.58%
5,800 Coeur DOAlene Mines Corp.* ................... 24,287
35,000 Hecla Mining Co.* ............................ 85,313
5,000 Pan American Silver Corp.* ................... 28,281
----------
137,881
----------
PLATINUM/PALLADIUM PRODUCERS 2.20%
6,000 Stillwater Mining Co.* ....................... 191,625
----------
GOLD MINING ROYALTY COMPANIES 4.24%
17,000 Euro-Nevada Mining* .......................... 211,357
10,000 Franco Nevada Mining ......................... 158,976
----------
370,333
----------
TOTAL COMMON STOCKS
(cost $9,287,766)............................. 7,559,606
----------
PREFERRED STOCKS 0.51%
7,500 Coeur D'Alene Mines Corp.
(cost $111,075) ......................... 45,000
----------
* Non income producing security
See notes to financial statements
-2-
<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS- MAY 31, 1999
(Unaudited)
OCM GOLD FUND (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
SHORT TERM INVESTMENTS 13.09%
439,000 Star Treasury Fund
(cost $439,000).......................... $ 439,000
704,000 Star Bank Repurchase Agreement
3.30% due June 1, 1999
collateralized by $835,000 GNMA
6.625% due 09/20/22
(cost $704,000)......................... 704,000
-----------
1,143,000
-----------
TOTAL INVESTMENTS
(cost $10,541,841)........... 100.18% 8,747,606
OTHER LIABILITIES IN EXCESS OF ASSETS....... (0.18%) (15,969)
------- -----------
TOTAL NET ASSETS 100.00% $ 8,731,637
======= ===========
CAMBORNE GOVERNMENT
INCOME FUND
- --------------------------------------------------------------------------------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
LONG TERM INVESTMENTS 89.19%
CORPORATE 29.38 %
$ 30,000 Rochester Gas & Electric Corp.,
9.375% 04/01/21 ......................... $ 32,499
40,000 Rohm & Haas Holdings Co.,
9.80%, 04/15/20 ......................... 48,308
50,000 Westvaco Corp.,
10.125%, 06/01/19 ....................... 52,544
85,000 W.R. Berkley Corp.,
9.875%, 05/15/08 ........................ 98,997
----------
232,348
----------
MORTGAGE-BACKED SECURITIES 40.27%
145,000 FHLMC RMC CL 1617-PM,
6.50%, due 11/15/23 ..................... 140,209
108,373 FNMA CMO 199-192 CL-SA,
11.00%, 04/25/07 ........................ 109,902
9,247 GNMA, 9.50%, 09/15/19 ........................ 10,025
22,263 GNMA, 6.00%, 12/20/27 ........................ 22,472
7,909 Prudential 1993-59 A5,
7.125%, 12/25/00 ........................ 7,913
25,282 Traveler's Mortgage Securities Corp.,
12.00%, 03/01/14 ........................ 27,872
----------
318,393
----------
U.S. GOVERNMENT SECURITIES 19.54%
30,000 U.S. Treasury Bonds,
5.00%, 04/30/01 ......................... 29,775
25,000 U.S. Treasury Bonds,
6.375%, 08/15/27 ........................ 26,047
70,000 U.S. Treasury Bonds,
6.125%, 11/15/27 ........................ 70,744
30,000 U.S. Treasury Bonds,
5.50%, 08/15/28 ......................... 27,966
----------
154,532
----------
* Non income producing security
See notes to financial statements
-3-
<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS- MAY 31, 1999
(Unaudited)
CAMBORNE GOVERNMENT
INCOME FUND (CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
TOTAL LONG TERM INVESTMENTS
(cost $683,672)............................... $ 705,273
-----------
SHORT TERM INVESTMENTS 4.80%
$ 38,000 Star Treasury Fund
(cost $38,000)........................... 38,000
-----------
TOTAL INVESTMENTS
(cost $721,672)................. 93.99% 743,273
OTHER ASSETS LESS LIABILITIES.................. 6.01% 47,516
------- -----------
TOTAL NET ASSETS 100.00% $ 790,789
======= ===========
PIA EQUITY
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
COMMON STOCKS 88.89%
AEROSPACE/DEFENSE 3.74%
1,300 AAR Corp. .................................... $ 25,675
1,100 GenCorp Inc. ................................. 26,881
----------
52,556
----------
AIRLINES 1.65%
800 K L M Airlines ............................... 23,200
----------
AUCTION HOUSE/ART DEALER 2.70%
1,000 Sotheby's Holdings, Inc. ..................... 37,938
----------
AUTO PARTS 2.17%
550 Borg-Warner Automotive, Inc. ................. 30,491
----------
BANKING AND FINANCIAL SERVICE 8.22%
650 Bank United Corp. ............................ 26,955
850 John Nuveen Co. The .......................... 35,806
1,400 People Heritage Financial Group, Inc. ........ 26,206
1,180 Washington Federal Inc. ...................... 26,550
----------
115,517
----------
BUILDING AND CONSTRUCTION 2.08%
1,210 Kaufman & Broad Home Corp. ................... 29,191
----------
CHEMICALS 1.68%
1,350 Witco Corp. .................................. 23,625
----------
CONSUMER PRODUCTS 1.82%
1,150 Tupperware Corp. ............................. 25,588
----------
COMPUTERS/SOFTWARE 1.77%
900 Autodesk, Inc. ............................... 24,834
----------
* Non income producing security
See notes to financial statements
-4-
<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS- MAY 31, 1999
(Unaudited)
PIA EQUITY (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
ELECTRONICS 7.76%
550 Avnet Inc. ................................... $ 23,959
900 Cohu, Inc. ................................... 26,831
800 Dallas Semiconductor Corp. ................... 34,800
550 Thomas & Betts Corp. ......................... 23,547
----------
109,137
----------
FOOD & RELATED 1.48%
950 Interstate Bakeries Corp. .................... 20,781
----------
FUNERAL SERVICES 1.37%
1,050 Stewart Enterprises, Inc. .................... 19,327
----------
GOLF 2.22%
1,900 Callaway Golf Company ........................ 31,231
----------
INSURANCE 7.41%
900 Capital Re Corp. ............................. 14,681
1,650 Fremont General Corp. ........................ 34,959
1,900 Frontier Insurance Group, Inc. ............... 32,656
1,170 Selective Insurance Group .................... 21,938
----------
104,234
----------
INTIMATE APPAREL 2.10%
1,000 Warnaco Group, Inc. The ...................... 29,500
----------
MANUFACTURING 1.59%
1,435 Mascotech Inc. ............................... 22,422
----------
MEDICAL 7.26%
1,200 Bergen Brunswig .............................. 26,400
1,100 ICN Phamaceuticals Inc. ...................... 36,163
600 Shared Medical Systems Corp. ................. 39,450
----------
102,013
----------
METALS & MINING 2.30%
800 Precision Castparts Corp. .................... 32,400
----------
OIL - EXPLORATION & PRODUCTION 2.43%
950 Apache Corporation ........................... 34,200
----------
REAL ESTATE & MORTGAGE RELATED 9.23%
1,550 Developers Diversified Realty Corp. .......... 25,575
1,200 Duke Realty Investments Inc. ................. 27,750
1,000 Felcor Lodging Inc. .......................... 22,688
1,050 Macerich Company The ......................... 27,759
1,100 Prentiss Properties Trust .................... 25,988
----------
129,770
----------
RENTAL EQUIPMENT 2.50%
1,850 Aaron Rents, Inc. ............................ 35,150
----------
RESTAURANTS 3.28%
2,510 CKE Restaurants, Inc. ........................ 46,121
----------
RETAIL 2.32%
2,950 Pier 1 Imports, Inc. ......................... 32,634
----------
SECURITY SERVICES 1.72%
850 Pittston Brink's Group ....................... 24,225
----------
TRANSPORTATION & EQUIPMENT 8.09%
750 Gatx Corporation ............................. 29,109
1,200 Roadway Express Inc. ......................... 23,176
1,000 Ryder System, Inc. ........................... 24,000
950 USFreightways Corporation Corp. .............. 37,495
----------
113,780
----------
TOTAL COMMON STOCKS
(cost $1,244,683)............................. 1,249,855
----------
* Non income producing security
See notes to financial statements
-5-
<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS- MAY 31, 1999
(Unaudited)
PIA EQUITY (CONTINUED)
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
SHORT TERM INVESTMENTS 4.77%
67,000 Star Treasury Fund
(cost $67,000) .......................... $ 67,000
----------
TOTAL INVESTMENTS
(cost $1,311,683).................... 93.66% 1,316,855
OTHER ASSETS LESS .................................. 6.34% 89,177
------- ----------
TOTAL NET ASSETS ................................... 100.00% $1,406,032
======= ==========
</TABLE>
* Non income producing security
See notes to financial statements
-6-
<PAGE>
MONTEREY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - MAY 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
CAMBORNE
OCM GOVERNMENT PIA
GOLD INCOME EQUITY
--------------------------------------------
ASSETS
<S> <C> <C> <C>
Investments in securities, at value
(cost $10,541,841, $721,672 and $1,311,683, respectively) $ 8,747,606 $ 743,273 $ 1,316,855
Cash ............................................................. 874 22,611 65,856
Receivable for fund shares sold .................................. 33,709 3,688 8,270
Income receivable ................................................ 9,494 8,170 1,817
Due from investment advisor ...................................... 0 7,999 5,108
Prepaid expenses and other ....................................... 21,530 12,828 12,317
------------ ------------ ------------
Total Assets ..................................................... 8,813,213 798,569 1,410,223
------------ ------------ ------------
LIABILITIES
Payable for fund shares redeemed ................................. 56,272 0 0
Accrued expenses and other ....................................... 22,545 3,786 4,191
Dividends payable ................................................ 0 3,994 0
Due to investment advisor ........................................ 2,759 0 0
------------ ------------ ------------
Total Liabilities ................................................ 81,576 7,780 4,191
------------ ------------ ------------
NET ASSETS
Capital stock, no par value; unlimited shares
authorized .............................................. 13,382,045 1,064,910 1,613,607
Undistributed net investment income .............................. (103,685) 1,547 4,761
Accumulated net realized gain (loss) on
investments and foreign currencies ...................... (2,752,488) (297,269) (217,508)
Net unrealized appreciation (depreciation)
on investments and foreign currencies ................... (1,794,235) 21,601 5,172
------------ ------------ ------------
Net Assets ....................................................... 8,731,637 790,789 1,406,032
------------ ------------ ------------
CALCULATION OF MAXIMUM OFFERING PRICE
Net asset value, offering and redemption price per share ......... $ 4.40 $ 13.66 $ 16.56
Maximum sales charge (4.50% of offering price) ................... 0.21 0.64 0.78
------------ ------------ ------------
Offering price to public ......................................... $ 4.61 $ 14.30 $ 17.34
------------ ------------ ------------
Shares Outstanding ............................................... 1,982,681 57,904 84,931
============ ============ ============
</TABLE>
See notes to financial statements
-7-
<PAGE>
MONTEREY FUNDS
STATEMENTS OF OPERATIONS - FOR THE SIX MONTHS ENDED MAY 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
CAMBORNE
OCM GOVERNMENT PIA
GOLD INCOME EQUITY
------------------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C>
Interest ............................................. $ 38,055 $ 33,492 $ 2,073
Dividends ............................................ 22,869 0 21,843
----------- ----------- -----------
Total investment income .............................. 60,924 33,492 23,916
----------- ----------- -----------
EXPENSES
Adviser & sub-adviser fees (Note 3) .................. 44,837 1,825 9,551
Distribution fees (Note 4) ........................... 44,389 456 2,388
Transfer agent fees .................................. 10,947 7,895 8,093
Administrative fees (Note 3) ......................... 11,443 8,108 8,717
Custodian fees ....................................... 3,024 1,655 1,915
Audit fees ........................................... 3,072 3,313 3,736
Legal fees ........................................... 813 814 814
Registration fees .................................... 8,147 1,962 8,983
Trustees' fees ....................................... 628 705 658
Printing expense ..................................... 2,559 (340) 788
Postage expense ...................................... 1,518 (44) 363
Other expenses ....................................... 797 870 658
----------- ----------- -----------
Total expenses ....................................... 132,174 27,219 46,664
Less: Expense reimbursement from adviser & sub-adviser (22,772) (22,200) (29,471)
----------- ----------- -----------
Net expenses ......................................... 109,402 5,019 17,193
----------- ----------- -----------
Net Investment Income (loss) ......................... (48,478) 28,473 6,723
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net Realized Gain (loss) on Investments .............. (306,748) (6,505) (202,729)
Net Change in Unrealized Appreciation on investments . (751,299) (34,605) 182,800
----------- ----------- -----------
Net Gain (loss) on Investments ....................... (1,058,047) (41,110) (19,929)
----------- ----------- -----------
Net Increase (decrease) in Net Assets ................ (1,058,047) (41,110) (19,929)
----------- ----------- -----------
Resulting from Operations ............................ ($1,106,525) ($ 12,637) ($ 13,206)
=========== =========== ===========
</TABLE>
See notes to financial statements
-8-
<PAGE>
MONTEREY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)
<TABLE>
<CAPTION>
CAMBORNE
OCM GOVERNMENT PIA
GOLD INCOME EQUITY
---------------------------------------------------------------------------------------
Six months Six months Six months
ended Year ended ended Year ended ended Year ended
May 31, Nov. 30, May 31, Nov. 30, May 31, Nov. 30,
1999 1998 1999 1998 1999 1998
---------------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment Income (loss) .......... $ (48,478) $ (55,206) $ 28,473 $ 67,756 $ 6,723 $ 7,689
Net realized gain (loss) on investments (306,748) (364,267) (6,505) 30,507 (202,729) 176,175
Net change in unrealized appreciation
on investments ............... (751,299) 209,137 (34,605) (6,404) 182,800 (317,246)
----------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net assets
resulting from operations .... (1,106,525) (210,336) (12,637) 91,859 (13,206) (133,382)
----------- ----------- ----------- ----------- ----------- ----------
Net equalization (debits) credits ..... 0 0 (398) (42) 0 0
----------- ----------- ----------- ----------- ----------- ----------
DIVIDENDS PAID TO SHAREHOLDERS
Dividends from net investment income .. 0 0 (28,318) (69,700) (9,651) 0
Dividends from capital gain ........... 0 0 0 0 (200,251) (320,265)
----------- ----------- ----------- ----------- ----------- ----------
0 0 (28,318) (69,700) (209,902) (320,265)
----------- ----------- ----------- ----------- ----------- ----------
FUND SHARE TRANSACTIONS
Net proceeds from shares sold ......... 2,059,272 7,033,912 0 179,492 597,976 2,151,015
Dividends reinvested .................. 0 0 26,134 58,452 209,902 238,717
Payment for shares redeemed ........... (472,370) (199,636) (215,895) (199,256) (1,435,533) (2,456,239)
----------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net assets
from fund share transactions . 1,586,902 6,834,276 (189,761) 38,688 (627,655) (66,507)
----------- ----------- ----------- ----------- ----------- ----------
Net increase (decrease) in net assets . 480,377 6,623,940 (231,114) 60,805 (850,763) (520,154)
NET ASSETS, BEGINNING OF PERIOD ....... 8,251,260 1,627,320 1,021,903 961,098 2,256,795 2,776,949
----------- ----------- ----------- ----------- ----------- ----------
NET ASSETS, END OF PERIOD ............. $ 8,731,637 $ 8,251,260 $ 790,789 $ 1,021,903 $ 1,406,032 $ 2,256,795
=========== =========== =========== =========== =========== ===========
CHANGES IN SHARES OUTSTANDING
Shares sold ........................... 425,183 1,375,985 12,886 12,886 39,005 111,105
Shares issued on reinvestment
of dividends ................. 0 0 4,132 4,132 13,490 12,704
Shares redeemed ....................... (99,028) (39,416) (14,105) (14,105) (96,207) (128,755)
----------- ----------- ----------- ----------- ----------- ----------
Net Increase (decrease) in
Shares outstanding .................... 326,155 1,336,569 2,913 2,913 (43,712) (4,946)
=========== =========== =========== =========== =========== ===========
<FN>
*Commencement of operations
</FN>
</TABLE>
See notes to financial statements
-9-
<PAGE>
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - MAY 31, 1999
(Unaudited)
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 Fund's 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 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 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.
-10-
<PAGE>
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - MAY 31, 1999 (CONTINUED)
(Unaudited)
The predominant market risk is that movements in the prices of the
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 the 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 Fund's futures transactions; therefore the Fund's credit
risk is limited to 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 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 May 31, 1999, the Gold Fund and Government Fund has 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 $200 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 $200 million............ 0.500%
Over $250 million....................... 0.375%
-11-
<PAGE>
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - MAY 31, 1999 (CONTINUED)
(Unaudited)
For the six months ended May 31, 1999 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 Fund 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 average daily net assets, subject
to a monthly minimum.
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 majority 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 Fund 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 May 31, 1999, were as follows:
PURCHASES SALES
--------- -----
Gold Fund......................... $ 1,983,765 $ 418,995
Government Fund................... 185,389 373,377
Equity Fund....................... 909,877 1,812,728
Unrealized appreciation and depreciation on investments at May 31, 1999
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
------------ ------------ ---
Gold Fund................... $ 405,759 ($2,199,994) ($1,794,235)
Government Fund............. 35,008 (13,407) 21,601
Equity Fund................. $ 76,107 (70,935) 5,172
-12-
<PAGE>
MONTEREY FUNDS
OCM GOLD
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
For the Six Months
ended
May 31, For the Year Ended November 30,
1999 1998 1997++ 1996* 1995*
-------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 4.98 $ 5.09 $ 8.29 $ 5.91 $ 5.87
--------- -------- -------- --------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .................. (0.03) (0.03) (0.09) (0.15) (0.09)
Net realized and unrealized gain
on investments ................ (0.55) (0.08) (3.11) 2.53 0.13
--------- -------- -------- --------- -------
Total from investment operations ....... (0.58) (0.11) (3.20) 2.38 0.04
--------- -------- -------- --------- -------
LESS DISTRIBUTIONS
Dividends from net investment income ... 0 0 0 0 0
--------- -------- -------- --------- -------
Total distributions .................... 0 0 0 0 0
--------- -------- -------- --------- -------
Net asset value, end of period ......... $ 4.40 $ 4.98 $ 5.09 $ 8.29 $ 5.91
========= ======== ======== ========= =======
Total return** ......................... (11.65%) (2.16%) (38.60%) 40.27% 0.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in $ 000's) . 8,732 8,251 1,627 1,531 421
Ratio of expenses to average net assets 2.44%^ 2.44% 2.44% 2.37% 2.44%
Ratio of expenses to average net
assets before reimbursement ... 2.95%^ 3.32% 5.78% 6.15% 12.52%
Ratio of net investment income (loss) to
average net assets ............ (1.08%)^ (0.96%) (1.60%) (1.72%) (1.57%)
Portfolio turnover rate ................ 5.48% 1.73% 17.68% 35.70% 15.57%
<FN>
* Based on average shares outstanding.
** Excluding sales charge. Not annualized for periods less than a year.
++ 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.
^ Annualized
</FN>
</TABLE>
See notes to financial statements
-13-
MONTEREY FUNDS
CAMBORNE GOVERNMENT
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
For the Six
Months ended
May 31, For the Year Ended November 30,
1999 1998 1997++ 1996* 1995*
-----------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 14.28 $ 14.00 $ 13.59 $ 13.88 $ 12.76
-------- --------- -------- --------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .......................... 0.44 0.87 0.89 0.73 0.81
Net realized and unrealized gain
on investments ........................ (0.62) 0.31 0.38 (0.28) 1.12
-------- --------- -------- --------- -------
Total from investment operations ............... (0.18) 1.18 1.27 0.45 1.93
-------- --------- -------- --------- -------
LESS DISTRIBUTIONS
Dividends from net investment income ........... (0.44) (0.90) (0.86) (0.74) (0.81)
-------- --------- -------- --------- -------
Total distributions ............................ (0.44) (0.90) (0.86) (0.74) (0.81)
-------- --------- -------- --------- -------
Net asset value, end of period ................. $ 13.66 $ 14.28 $ 14.00 $ 13.59 $ 13.88
======== ========= ======== ========= =======
Total return** ................................. (1.29%) 8.68% 9.70% 3.42% 15.56%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in $ 000's) ......... 791 1,022 961 1,293 947
Ratio of expenses to average net assets ........ 1.10%* 1.10% 1.10% 1.07% 1.10%
Ratio of expenses to average net
assets before reimbursement ........... 5.97%* 4.73% 6.98% 5.68% 5.73%
Ratio of net investment income (loss) to average
net assets ............................ 6.24%* 6.15% 6.53% 5.35% 6.04%
Portfolio turnover rate ........................ 21.10% 122.44% 111.26% 129.17% 91.03%
<FN>
* Annualized
** 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
-14-
MONTEREY FUNDS
PIA EQUITY
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
For the Six
Months ended
May 31, For the Year Ended November 30,
1999 1998 1997++ 1996* 1995*
------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 17.54 $ 20.79 $ 19.63 $ 15.36 $ 11.12
-------- --------- --------- -------- --------
Income from investment operations
Net investment income (loss) ................... 0.06 0.06 (1.21) (0.37) (0.24)
Net realized and unrealized gain
on investments ........................ 0.70 (0.91) 3.05 4.64 4.48
-------- --------- --------- -------- --------
Total from investment operations ............... 0.76 (0.85) 1.84 4.27 4.24
-------- --------- --------- -------- --------
Less distributions
Dividends from net investment income ........... (0.08) 0.00 0.00 0.00 0.00
Dividends from Capital Gains ................... (1.66) (2.40) (0.68) 0.00 0.00
-------- --------- --------- -------- --------
Total distributions ............................ (1.74) (2.40) (0.68) 0.00 0.00
-------- --------- --------- -------- --------
Net asset value, end of period ................. $ 16.56 $ 17.54 $ 20.79 $ 19.63 $ 15.36
======== ========= ========= ======== ========
Total return** ................................. 4.97% (4.86%) 9.96 27.80% 38.13%
Ratios/supplemental data
Net assets, end of period (in $ 000's) ......... 1,406 2,257 2,777 715 526
Ratio of expenses to average net assets ........ 1.80%^ 2.14% 2.43% 2.25% 2.44%
Ratio of expenses to average net
assets before reimbursement ........... 4.88%^ 3.21% 6.71% 11.73% 11.44%
Ratio of net investment income (loss) to average
net assets ............................ 0.70%^ 0.23% (0.06%) (2.07%) (2.21%)
Portfolio turnover rate ........................ 51.97% 135.49% 139.57% 41.22% 23.75%
<FN>
^ Annualized
* 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
-15-
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
FUND
SEMI-ANNUAL REPORT
(UNAUDITED)
MAY 31, 1999
<PAGE>
<TABLE>
<CAPTION>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - MAY 31, 1999
(Unaudited)
PIA SHORT-TERM
GOVERNMENT FUND
- --------------------------------------------------------------------------------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
LONG TERM INVESTMENTS 97.33%
ASSET BACKED 9.94%
<C> <S> <C>
$1,329,106.00 Bear Stearns Mortgage Sec. Inc.,
7.00% due 11/25/10 ......................... $ 1,329,830
355,404 Norwest Asset Sec. Corp.,
7.00% due 04/25/12 ......................... 357,702
60,368 Prudential Home Ser 1993-59,
7.125%due 12/25/00 ......................... 60,406
1,000,000 Prudential Home Ser 1993-9,
7.50% due 03/25/08 ......................... 1,019,421
445,250 Security Nat'l Mort Loan Tr.
7.171% due 2/25/06 ......................... 445,250
520,000 Contimortgage Home Equity Loan Tr.
6.28% due 12/25/19 ......................... 514,829
914,454 Countrywide Home Loans
8.00% due 8/25/27 .......................... 935,710
510,565 LB Commercial Conduit Mort. Tr.
7.204% due 8/25/04 ......................... 520,706
-----------
5,183,854
-----------
GOVERNMENT AGENCIES 17.64%
377,713 FHLMC Am 755204, due 08/01/15 .................. 385,740
125,817 FHLMC 609231, due 02/01/24 ..................... 129,386
130,421 FNMA FRN 1989-5 C, due 12/25/17 ................ 130,752
595,089 FNMA CMO 415842, due 01/01/13 .................. 629,432
1,856,910 GNMA ARM 80013, due 11/20/26 ................... 1,879,230
431,625 GNMA ARM 80143, due 12/20/27 ................... 435,673
5,540,200 GNMA ARM 80154, due 01/20/28 ................... 5,599,425
-----------
9,189,638
-----------
U.S. TREASURY NOTES 69.75%
4,800,000 U.S. Treasury Note 5.875%
due 11/15/99 ............................... 4,821,000
2,250,000 U.S. Treasury Note 6.25%
due 08/31/02 ............................... 2,290,079
1,300,000 U.S. Treasury Note 5.75%
due 04/30/03 ............................... 1,302,844
5,180,000 U.S. Treasury Note 5.375%
due 6/30/03 ................................ 5,123,346
3,500,000 U.S. Treasury Note 5.50%
due 12/31/00 ............................... 3,505,471
5,600,000 U.S. Treasury Note 7.75%
due 2/15/01 ................................ 5,811,753
5,200,000 U.S. Treasury Note 6.25%
due 2/28/02 ................................ 5,289,378
3,500,000 U.S. Treasury Note 6.625%,
due 4/30/02 ................................ 3,595,158
1,000,000 U.S. Treasury Note 5.625%,
due 2/28/01 ................................ 1,003,750
1,000,000 U.S. Treasury Note 6.00%,
due 8/15/99 ................................ 1,002,500
2,650,000 U.S. Treasury Note 4.00%
due 10/31/00 ............................... 2,603,625
-----------
36,348,904
-----------
TOTAL LONG TERM INVESTMENTS
(cost $50,917,879).............................. 50,722,396
SHORT TERM INVESTMENTS 2.63%
1,369,339 Star Treasury Fund
(cost $1,369,339)........................... 1,369,339
-----------
TOTAL INVESTMENTS
(cost $52,287,218).............. 99.96% 52,091,735
OTHER ASSETS LESS............................... 0.04% 20,009
------- -----------
TOTAL NET ASSETS................................ 100.00% $52,111,744
======= ===========
See notes to financial statements
-1-
<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - MAY 31, 1999
(Unaudited)
PIA TOTAL RETURN
BOND FUND
- --------------------------------------------------------------------------------
SHARES VALUE
- --------------------------------------------------------------------------------
PREFERRED STOCK 1.16%
1,000 Thornburg Mortgage Asset Corp.
Ser. A...................................... $ 24,188
1,000 New Plan Excel Realty Trust
Pfd. B...................................... 288,150
-----------
(cost $299,461)............................. $ 312,338
-----------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
LONG TERM INVESTMENTS 96.01%
MORTGAGE BACKED SECURITIES 13.54%
$ 76,389 Aetna Commercial Mortgage Trust,
1995-C5 A2, due 12/26/3..................... 76,465
310,391 BA Mortgage Securities Inc.,
due 09/16/03............................... 312,979
190,867 CAPCO 1998-D7-A-1A,
due 09/16/03............................... 186,924
280,000 Chase Mortgage Finance Corp.,
due 06/25/25............................... 279,610
324,467 Countrywide Funding Corp.,
due 10/25/17............................... 325,685
391,939 DLJ Mortgage Acceptance Corp.
1994-MF11 A1, due 06/18/04................. 415,575
11,797 FBC Mortgage Securities B2,
due 08/20/09............................... 11,896
77,854 FDIC Remic Trust 1994-C1 2A2,
due 09/25/25............................... 78,239
95,181 FDIC Remic Trust 1996-C1 1A,
due 05/25/26............................... 94,685
115,000 Kidder Peabody Acceptance Corp.
6.65%, due 02/01/06........................ 116,164
225,106 Lehman Structured Securities Corp.,
7.995%. due 6/25/26........................ 226,806
39,543 Prudential Home Mortgage 1993-59 A5,
due 12/25/00............................... 39,568
200,000 SASCO 1995-C4 D,
due 06/25/26............................... 191,382
231,187 Security National Mortgage Loan Trust
due 02/25/06............................... 231,188
800,000 Structured Asset Securities Corp.
1996-CFL C, due 02/25/28................... 803,581
12,025 Structured Asset Securities Corp.
1996-C3 B, due 06/25/30.................... 12,139
250,907 Structured Settlements 99-A A,
due 10/20/15............................... 250,889
-----------
3,653,775
-----------
ASSET BACKED SECURITIES 6.06%
365,000 California Infrastructure PG&E,
1997-A7, due 09/25/08...................... 365,057
200,000 Cigna CBO 1996-1 A2,
due 11/15/08............................... 212,188
500,000 RHYNO CBO Delaware Corp. 1997-1 A2,
due 09/15/09............................... 511,720
370,000 Team Fleet Financial 1998-3 A,
due 10/25/04............................... 357,513
183,100 UCFC Home Equity Loan 1995-A1 A5,
due 01/10/20............................... 188,208
-----------
1,634,686
-----------
CORPORATE BONDS 41.36%
AEROSPACE/DEFENSE 1.02%
97,740 Airplanes Passthrough Trust,
8.15%, due 03/15/11........................ 101,827
175,000 Lockheed Martin Marietta, 7.00%,
due 03/15/11............................... 175,418
-----------
277,245
-----------
See notes to financial statements
-2-
<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - MAY 31, 1999
(Unaudited)
PIA TOTAL RETURN
BOND FUND (continued)
- --------------------------------------------------------------------------------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
AIRLINES 0.09%
$25,000 Southwest Air, 7.375%,
due 03/01/27........................... $ 24,894
AUTOMOTIVE 1.64%
210,000 Ford Motor Credit, 9.14%, due 12/30/14 ......... 233,635
210,000 General Motors Acceptance Corp.,
5.875%, due 01/22/03................... 208,595
-----------
442,230
-----------
BANKING & FINANCIAL SERVICES 13.33%
190,000 Ahmanson, H.F., 8.25%,
due 10/01/02............................... $ 199,142
135,000 Banc One Corp., 7.625%,
due 10/15/26............................... 139,530
175,000 BankBoston, 6.375%,
due 03/25/08............................... 169,081
340,000 Bankers Trust, 8.125%,
due 04/01/02............................... 352,669
185,000 Bear Sterns Co., 7.00%,
due 03/01/07............................... 184,604
252,000 Continental Bank, 12.50%,
due 04/01/01............................... 275,318
335,000 Countrywide Home Loan, 7.26%,
due 05/10/04............................... 343,476
160,000 Fairfax Financial Holdings 144A, 7.375%
due 03/15/06............................... 160,772
160,000 First Bank System, 7.625%,
due 05/01/05............................... 168,063
270,000 Freemont General Corp 144A, 7.875%,
due 03/17/09............................... 268,704
255,000 General Electric Capital 8.875%
due 05/15/09............................... 301,472
300,000 Green Tree Financial, 7.55%,
due 10/15/99............................... 301,304
225,000 Lehman Brothers Holdings, 6.50%,
due 10/01/02............................... 226,260
170,000 Morgan Stanley Group, 6.875%,
due 03/01/07............................... 171,228
315,000 PNC Bank, 7.875%, due 04/15/05 ................. 334,852
-----------
3,596,475
-----------
CHEMICAL 0.75%
205,000 Eastman Chemical Co., 6.375%,
due 01/15/04................................ 201,001
-----------
COMPUTERS/SOFTWARE .62%
175,000 Computer Associates International,
6.375%, due 04/15/05........................ 166,865
-----------
CRUISELINES 1.23%
180,000 Carnival Corp., 6.15%, due 04/15/081............ 172,563
165,000 Royal Caribbean Cruises, 7.00%,
due 10/15/07................................ 159,494
-----------
332,057
-----------
DIVERSIFIED MINERALS .78%
200,000 American Re Corp., 7.45%, due 10/15/26.......... 209,806
-----------
ELECTRONIC COMPONENTS/
SEMICONDUCTORS 1.30%
180,000 Applied Materials, 6.75%, due 10/15/07 ......... 178,070
180,000 Thomas & Betts, 6.625%, due 05/07/08 ........... 172,808
-----------
350,878
-----------
See notes to financial statements
-3-
<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - MAY 31, 1999
(Unaudited)
PIA TOTAL RETURN
BOND FUND (continued)
- --------------------------------------------------------------------------------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
HOTELS 1.43%
$220,000 Marriott International 144A, 6.875%,
due 11/15/05............................... $ 214,752
175,000 Mirage Resorts, 7.25%,
due 10/15/06............................... 171,261
-----------
386,013
-----------
INSURANCE 3.10%
205,000 Aetna Services, 7.125%,
due 08/15/06............................... 207,106
170,000 CNA Financial, 6.50%
due 04/15/05............................... 166,675
215,000 Conseco Inc., 6.40%,
due 06/15/01............................... 211,301
110,000 First Security Corp., 6.875%,
due 11/15/06............................... 109,935
140,000 ITT Hartford Group, 6.375%,
due 11/01/02............................... 139,499
-----------
834,516
-----------
MULTIMEDIA .72%
190,000 Time Warner Entertainment, 7.25%,
due 09/01/08................................ 194,864
PIPELINE .71%
175,000 Questar Pipeline, 9.375%,
due 06/01/21................................ 190,802
REAL ESTATE & MORTGAGE RELATED 5.32%
305,000 Chateau Properties Limited Partnership,
8.75%, due 03/02/00......................... 308,925
145,000 Health Care Properties, 6.50%,
due 02/15/06............................... 133,708
191,000 Kimco Realty, 6.50%, due 10/01/03 .............. 187,633
150,000 Nationwide Health Properties, 8.67%,
due 03/10/05............................... 155,033
205,000 Security Cap. Industrial, 7.625%,
due 07/01/17............................... 192,940
160,000 Southern Investments UK, 6.80%,
due 12/01/06............................... 157,191
310,000 United Dominion Realty, 7.95%,
due 07/12/06............................... 298,484
-----------
1,433,914
-----------
RETAIL 1.94%
350,000 Ikon Office, 6.75%, due 11/01/04 ............... 328,849
190,000 J.C. Penney & Co., 7.60% due 04/01/07 .......... 194,347
-----------
523,196
-----------
TELECOMMUNICATIONS 2.91%
240,000 AT&T Corp., 6.00%, due 03/15/09................. 229,010
175,000 Airtouch Communications, 6.65%,
due 05/01/08............................... 173,753
205,000 Frontier Corp., 7.25%, due 05/15/04 ............ 210,413
165,000 Worldcom Inc., 7.55%, due 04/01/04 ............. 171,713
-----------
784,889
-----------
TRANSPORTATION 2.84%
170,000 AMR Corp., 10.05%, due 03/07/06................. 194,737
165,000 Canadian National Railway, 7.00%,
due 03/15/04............................... 165,673
200,000 Federal Express Eetc. 6.845%, due 01/15/19...... 200,967
205,000 TTX Co., 5.98%, due 07/15/27 ................... 205,648
-----------
767,025
-----------
See notes to financial statements
-4-
<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - MAY 31, 1999
(Unaudited)
PIA TOTAL RETURN
BOND FUND (continued)
- --------------------------------------------------------------------------------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
UTILITIES 1.63%
$180,000 Southern California Edison, 6.65%,
due 04/01/29................................ $ 169,928
125,000 Virginia Electric & Power, 8.75%,
due 04/01/21................................ 270,857
-----------
440,785
-----------
U.S. GOVERNMENT SECURITIES 35.05%
GOVERNMENT AGENCIES 25.17%
120,000 Fannie Mae X-130A H, due 09/25/18............... 120,197
100,000 FHLMC 1704 E, due 03/15/09...................... 98,567
250,000 FHLMC 1312 I, due 07/15/22..................... 258,470
109,186 FNMA ARM 162881, due 06/01/18................... 110,432
4,169 FNMA 1996-41 A, due 06/25/20.................... 4,161
14,867 FNMA G92-31 H, due 12/25/20..................... 14,858
5,869 FNMA 1992-12 SA, due 01/25/22................... 5,907
685,660 FNMA 313947, due 01/01/28....................... 687,133
945,535 FNMA 429618, due 07/01/28....................... 925,406
94,661 FNMA 443589, due 10/01/28....................... 92,646
1,995,485 FNMA 495378, due 04/01/29....................... 1,899,081
2,070 GNMA 175288, due 09/15/01....................... 2,122
1,182 GNMA 198340, due 02/15/02....................... 1,218
540,000 GNMA 1996-4 N, due 04/16/26..................... 540,986
996,793 GNMA 501569, due 03/15/29....................... 1,020,739
999,167 GNMA 5036003, due 04/15/29...................... 1,001,772
-----------
6,783,695
-----------
U.S. TREASURY NOTES 9.88%
740,000 U.S. Treasury Note 5.00%, due 04/30/01.......... 734,450
145,000 U.S. Treasury Note 5.25%, due 08/15/03.......... 142,689
925,000 U.S. Treasury Note 6.50%, due 10/15/06.......... 961,422
820,000 U.S. Treasury Note 6.125%, due 11/15/27......... 828,712
-----------
2,667,273
-----------
TOTAL LONG TERM INVESTMENTS
(cost $26,449,042).............................. 25,896,887
-----------
SHORT TERM INVESTMENTS 2.02%
545,524 Star Treasury Fund
(cost $545,524)............................. 545,524
-----------
TOTAL INVESTMENTS
(cost $27,294,027).................99.19% 26,754,749
LIABILITIES IN EXCESS OF OTHER ASSETS.................. 0.81% 218,310
------- -----------
TOTAL NET ASSETS 100.00% $26,973,059
======= ===========
See notes to financial statements
-5-
<PAGE>
MONTEREY FUNDS
SCHEDULES OF INVESTMENTS - MAY 31, 1999
(Unaudited)
PIA GLOBAL BOND FUND
- --------------------------------------------------------------------------------
PRINCIPAL
VALUE VALUE
- --------------------------------------------------------------------------------
LONG TERM INVESTMENTS 100.40%
FOREIGN GOVERNMENT OBLIGATIONS 42.43%
GERMANY
$1,400,000 Bundes Obligations 114, 6.50% due 03/15/00...... $ 770,650
800,000 Bundes Republic Deutschland, 114,
6.50% 6.00%, due 07/04/07................... 486,028
CANADA
1,000,000 Canada Government, 5.52% due 09/01/03........... 691,857
EURO DOLLAR
70,000 France O.A.T., 4.00% due 04/25/09............... 719,120
-----------
2,667,655
-----------
MORTGAGE-BACKED SECURITIES 14.91%
67,774 Countrywide Funding, 11.113% due 10/25/17....... 68,028
112,442 DLJ Mortgage 1994-M111, 8.10% due 06/18/04...... 119,223
105,000 FHLMC CMO 6.50%, due 11/15/23................... 101,530
479,657 FNMA 30yr, 7.00%, due 06/01/28.................. 480,687
64,971 FRN 97-27A, 7.00%, due 09/18/21................. 65,095
100,000 Prudential Home Mortgage Securities,
1993-9 A11,7.50%, 03/25/08.................. 101,942
-----------
936,505
-----------
U.S. GOVERNMENT SECURITIES 43.06%
175,000 U.S. Treasury Notes 6.00%, due 08/15/00......... 176,531
210,000 U.S. Treasury Notes 4.00%, due 10/31/00......... 206,325
110,000 U.S. Treasury Notes 5.00%, due 04/30/01......... 109,175
250,000 U.S. Treasury Notes 6.25%, due 01/31/02......... 254,219
70,000 U.S. Treasury Notes 5.375%, due 06/30/03........ 69,234
230,000 U.S. Treasury Notes 6.50%, due 11/15/03......... 217,278
1,200,000 U.S. Treasury Notes 6.50%, due 10/15/06......... 1,247,250
260,000 U.S. Treasury Notes 5.50%, due 02/15/08......... 242,369
50,000 U.S. Treasury Notes 6.125%, due 08/15/27........ 52,093
130,000 U.S. Treasury Notes 6.125%, due 11/15/27........ 131,381
-----------
2,705,855
-----------
TOTAL LONG TERM INVESTMENTS
(cost $6,440,948)........................... 6,310,015
-----------
SHORT TERM INVESTMENTS 3.81%
239,344 Star Treasury Fund
(cost $239,344)............................. 239,344
-----------
TOTAL INVESTMENTS
(cost $6,680,292)...............104.21% 6,549,359
LIABILITIES LESS OTHER ASSETS....................... (4.21%) (266,270)
------- -----------
TOTAL NET ASSETS 100.00% $ 6,283,089
======= ===========
</TABLE>
See notes to financial statements
-6-
<PAGE>
MONTEREY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES - MAY 31,1999
(Unaudited)
<TABLE>
<CAPTION>
PIA PIA
SHORT TERM TOTAL
GOVERNMENT PIA RETURN
SECURITIES GLOBAL BOND BOND
-----------------------------------------------
ASSETS
<S> <C> <C> <C>
Investments in securities, at value
(See Note 5) .................................. $ 52,091,735 $ 6,549,360 $ 26,754,759
Receivable for fund shares purchased ................... 189,203 0 0
Receivable for resources sold .......................... 0 1,023,882 0
Income receivable ...................................... 602,666 99,498 272,283
Due from investment advisor ............................ 0 4,264 5,926
Prepaid expenses and other ............................. 2,205 3,784 6,197
------------ ------------- ------------
Total Assets ........................................... 52,885,809 7,680,788 27,039,165
------------ ------------- ------------
LIABILITIES
Payable for securities purchased ....................... 520,818 1,374,179 0
Payable for fund shares redeemed ....................... 0 15,000 0
Accrued expenses and other ............................. 14,591 5,220 14,751
Dividends payable ...................................... 237,383 1,234 47,713
Due to investment advisor .............................. 1,273 2,066 6,899
------------ ------------- ------------
Total Liabilities ...................................... 774,065 1,397,699 69,363
------------ ------------- ------------
NET ASSETS
Capital stock, no par value; unlimited shares
authorized; shares outstanding ......................... 52,237,152 6,426,259 27,814,156
Undistributed net investment income .................... (719) 1,896 3,847
Accumulated net realized gain (loss)on
investments and foreign currencies ............ 70,795 (12,607) (305,667)
Net unrealized appreciation (depreciation)
on investments and foreign currencies ......... (195,484) (132,459) (539,277)
------------ ------------- ------------
Net Assets ............................................. 52,111,744 6,283,089 26,973,059
============ ============= ============
CALCULATION OF OFFERING PRICE
Net asset value, offering and redemption price per share $ 10.15 $ 20.07 $ 19.45
============ ============= ============
Shares Outstanding ..................................... 5,133,765 $ 313,117 $ 1,386,756
============ ============= ============
</TABLE>
See notes to financial statements
-7-
<PAGE>
MONTEREY FUNDS
STATEMENTS OF OPERATIONS - FOR THE SIX MONTHS ENDING MAY 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
PIA PIA
SHORT TERM TOTAL
GOVERNMENT PIA RETURN
SECURITIES GLOBAL BOND BOND
-----------------------------------------
INVESTMENT INCOME
<S> <C> <C> <C>
Interest ..................................... $ 1,470,700 $ 159,848 $ 817,844
----------- ----------- -----------
Total Investment income ...................... 1,470,700 159,848 817,844
----------- ----------- -----------
EXPENSES
Advisory fees (Note 3) ....................... 52,860 12,460 40,027
Distribution fees (Note 4) ................... 13,215 0 0
Transfer agent fees .......................... 4,407 7,900 4,177
Administrative fees (Note 3) ................. 22,743 7,974 17,839
Custodian fees ............................... 12,785 4,545 9,757
Audit fees ................................... 2,742 4,039 3,363
Legal fees ................................... 3,504 1,505 5,218
Registration fees ............................ 7,538 1,703 3,641
Trustees' fees ............................... 710 838 727
Printing expense ............................. 545 311 50
Amortization of deferred organization expenses 0 119 0
Postage expense .............................. 308 227 158
Other expenses ............................... 3,102 856 1,058
----------- ----------- -----------
Total expenses ............................... 124,459 42,477 86,015
Less: Expense reimbursement from adviser ..... (44,391) (26,885) (32,345)
----------- ----------- -----------
Net expenses ................................. 80,068 15,592 53,670
----------- ----------- -----------
Net Investment Income (Loss) ................. 1,390,632 144,256 764,174
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net Realized Gain (loss) on Investments
and foreign currencies ....................... 96,175 (4,960) (296,376)
Net Change in Unrealized Appreciation on
Investments and foreign currencies ........... (956,457) (343,156) (758,614)
----------- ----------- -----------
Net Gain (loss) on Investments ............... (860,282) (348,116) (1,054,990)
----------- ----------- -----------
Net Increase (decrease) in Net Assets
Resulting from Operations .................... $ 530,350 $ (203,860) $ (290,816)
=========== =========== ===========
</TABLE>
See notes to financial statements
-8-
<PAGE>
MONTEREY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
PIA PIA PIA
SHORT TERM TOTAL TOTAL
GOVERNMENT PIA RETURN RETURN
SECURITIES GLOBAL BOND BOND BOND
----------------------------------------------------------------------------------
For the six Year ended For the six Year ended For the six For the Period
months ended Nov. 30, months ended Nov. 30, months ended September 1,
May 31, 1999 1998 May 31, 1999 1998 May 31, 1999 1998 to
November 30,
1998*
----------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited)
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment Income (loss) .................$ 1,390,632 $ 3,102,918 $ 144,256 $ 302,375 $ 764,174 $ 316,553
Net realized gain (loss) on
investments and foreign currencies .. 96,175 284,717 (4,960) 62,461 (296,376) 39,937
Net change in unrealized appreciation
on investments and foreign currencies (956,457) 501,366 (343,156) 226,129 (758,614) 219,337
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
resulting from operations ........... 530,350 3,888,501 (203,860) 590,665 (290,816) 575,827
------------ ------------ ------------ ------------ ------------ ------------
DIVIDENDS PAID TO SHAREHOLDERS
Dividends from net investment income ......... (1,390,631) (3,102,418) (147,034) (313,779) (770,372) (306,509)
Dividends from capital gain .................. (305,161) (50,168) (33,883) 0 (49,227) 0
------------ ------------ ------------ ------------ ------------ ------------
(1,695,792) (3,152,586) (180,917) (313,779) (819,599) (306,509)
------------ ------------ ------------ ------------ ------------ ------------
FUND SHARE TRANSACTIONS
Net proceeds from shares sold ................ 6,227,149 13,650,663 714,988 1,572,860 4,337,828 24,563,866
Dividends reinvested ......................... 1,519,962 3,115,877 179,683 303,567 527,791 225,825
Payment for shares redeemed .................. (11,459,023) (13,425,643) (284,526) 1,680,978 (1,725,980) (115,174)
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets
from fund share transactions ........ (3,711,912) 3,340,897 610,145 195,448 3,139,639 24,674,517
------------ ------------ ------------ ------------ ------------ ------------
Net increase (decrease) in net assets ........ (4,877,354) 4,076,812 225,368 472,334 2,029,224 24,943,835
NET ASSETS, BEGINNING OF PERIOD .............. 56,989,098 52,912,286 6,057,721 5,584,887 24,943,835 0
------------ ------------ ------------ ------------ ------------ ------------
NET ASSETS, END OF PERIOD ....................$ 52,111,744 $ 56,989,098 $ 6,283,089 $ 6,057,721 $ 26,973,059 $ 24,943,835
============ ============ ============ ============ ============ ============
CHANGES IN SHARES OUTSTANDING
Shares sold .................................. 606,769 1,325,769 34,047 77,100 216,156 1,225,259
Shares issued on reinvestment
of dividends ........................ 148,200 301,984 8,658 14,734 26,608 11,048
Shares redeemed .............................. (1,111,231) (1,296,941) (13,807) (82,376) (86,683) (5,635)
------------ ------------ ------------ ------------ ------------ ------------
Net Increase (decrease) in
Shares outstanding .................. (356,262) 330,812 28,898 9,458 156,081 1,230,672
============ ============ ============ ============ ============ ============
<FN>
*Commencement of operations
</FN>
</TABLE>
See notes to financial statements
-9-
<PAGE>
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - MAY 31, 1999
(Unaudited)
NOTE 1. ORGANIZATION
Monterey Mutual Trust (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, (formerly Government Income), the OCM Gold Fund, (formerly Gold),
the PIA Equity Fund, (formerly Growth), the Murphy New World Biotechnology Fund,
(formerly Gaming and Leisure), the Murphy New World Technology Fund, (formerly
Technology), the Murphy New World Technology Convertibles Fund, (formerly Growth
& Income), 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
Fund's 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 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; and 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.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Fund 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.
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.
-10-
<PAGE>
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - MAY 31, 1999 (CONTINUED)
(Unaudited)
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.
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
Trust'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 the Trust's hedging strategy unsuccessful and could result in a loss to
the Trust.
Futures contracts are purchased only on exchanges. The exchange acts as
the counterparty to the Trust's futures transactions; therefore the Trust's
credit risk is limited to failure of the exchange.
Federal Income Taxes - It is each Trust'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 Fund paid no Federal Income taxes and no Federal income tax
provision was required.
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, Global Bond Fund and the Total Return
Bond Fund each has an investment advisory agreement with PIA. Each Fund pays PIA
a fee, computed daily and payable monthly, at the following annual rate of
0.20%, 0.30% and 0.40%, respectively, of their net assets.
For the six months ended May 31, 1999 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, 0.51% of average net assets for
the Global Bond Fund, and 0.40% of average net assets of Total Return Bond Fund.
The Fund 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 average daily net assets, subject
to a monthly minimum.
-11-
<PAGE>
MONTEREY FUNDS
NOTES TO FINANCIAL STATEMENTS - MAY 31, 1999 (CONTINUED)
(Unaudited)
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 majority 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.
NOTE 5. PURCHASES AND SALES OF SECURITIES
The cost of purchases and sales of investment securities (other than
short-term investments) for the six months ended May 31, 1999, were as follows:
PURCHASES SALES
--------- -----
Short-Term Government Fund.............. $ 23,374,963 $ 27,165,838
Global Bond Fund........................ 4,559,637 3,593,478
Total Return Fund....................... 16,601,945 13,757,975
Unrealized appreciation and depreciation on investments at May 31, 1999
based on cost for Federal income taxes, are as follows:
UNREALIZED UNREALIZED
APPRECIATION DEPRECIATION NET
------------ ------------ ---
Short-Term Government Fund......... $ 98,334 ($293,818) ($195,484)
Global Bond Fund................... 36,754 (167,686) (130,932)
Total Return Fund.................. $ 36,429 (575,707) (539,278)
-12-
<PAGE>
MONTEREY FUNDS
PIA SHORT-TERM GOVERNMENT SECURITIES
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
For the six months Year ended Year ended Year ended Year ended
ended May 31, Nov. 30, Nov. 30, Nov. 30, Nov. 30,
1999* 1998* 1997* 1996* 1995*
------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........... $ 10.38 $ 10.26 $ 10.21 $ 10.12 $ 9.98
---------- ---------- ---------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment (loss) .......................... 0.28 0.57 0.61 0.56 0.57
Net realized and unrealized gain
on investments ........................ (0.18) 0.13 0.06 0.19 0.14
---------- ---------- ---------- ---------- ---------
Total from investment operations ............... 0.10 0.70 0.67 0.75 0.71
---------- ---------- ---------- ---------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income ........... (0.27) (0.57) (0.61) (0.56) (0.57)
Dividends from Capital Gains ................... (0.06) (0.01) (0.01) (0.10) 0.00
---------- ---------- ---------- ---------- ---------
Total distributions ............................ (0.33) (0.58) (0.62) (0.66) (0.57)
---------- ---------- ---------- ---------- ---------
Net asset value, end of period ................. $ 10.15 $ 10.38 $ 10.26 $ 10.21 $ 10.12
========== ========== ========== ========== =========
Total return** ................................. 0.78% 6.99% 6.56% 7.68% 7.50%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in $000's) .......... 52,112 56,989 52,912 20,464 3,405
Ratio of expenses to average net assets# ....... 0.30%+ 0.30% 0.30% 0.44% 0.46%
Ratio of net investment income (loss) to average
net assets ............................ 5.55%+ 5.51% 5.77% 5.51% 5.71%
Portfolio turnover rate ........................ 44.66% 138.44% 63.08% 21.54% 163.55%
<FN>
** Excluding sales charge. Not annualized for periods less than a year.
# Net of Expense reimbursement. If the expense reimbursement had not been in
effect, the ratio of expenses to average net assets would have been .47%,
.46%, .55%, 1.19%, and 2.01% respectively.
* Based on average shares outstanding.
</FN>
</TABLE>
See notes to financial statements
-13-
MONTEREY FUNDS
PIA TOTAL RETURN BOND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
For the September 1, 1998
six months (Commencement of
ended May 31, Operations
1999 through November
30, 1998
-------------------------------
(Unaudited)
<S> <C> <C>
Net asset value, beginning of period ........... $ 20.27 $ 20.00
-------- --------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .......................... 0.57 0.27
Net realized and in unrealized gain (loss) on
investments and foreign currencies .... (0.78) 0.26
-------- --------
Total from investment operations ............... (0.21) 0.53
-------- --------
LESS DISTRIBUTIONS
Dividends from net investment income ........... (0.57) (0.26)
Dividends from Capital Gains ................... (0.04) 0
-------- --------
Total distributions ............................ (0.61) (0.26)
-------- --------
Net asset value, end of period ................. $ 19.45 $ 20.27
======== ========
Total return** ................................. (3.00%) 2.65%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in $000's) .......... 26,973 24,944
Ratio of expenses to average net assets+ ....... 0.40%+ .40%+
Ratio of net investment income (loss) to average
net assets ............................ 5.76%+ 5.49%+
Portfolio turnover rate ........................ 52.48% 13.22%
<FN>
+ Annualized
# Net of expense reimbursement. If the expense reimbursement had not been in
effect, the ratio of expenses to average net assets would have been .65% and
63%, respectively.
** Not annualized for periods less than a year.
</FN>
</TABLE>
See notes to financial statements
-14-
MONTEREY FUNDS
PIA GLOBAL BOND
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
April 1, 1997
For the six months Year ended (Commencement of
ended May 31, Nov. 30, Operations)
1999* 1998* through Nov. 30, 1997*
------------------------------------------------------
(Unaudited)
<S> <C> <C> <C>
Net asset value, beginning of period ........... $ 21.31 $ 20.33 $ 20.00
--------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS
Net investment income .......................... 0.48 0.99 0.5
Net realized and in unrealized gain (loss) on
investments and foreign currencies .... (1.12) 1.03 0.32
--------- ---------- ---------
Total from investment operations ............... (0.64) 2.02 0.82
--------- ---------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income ........... (0.48) (1.04) (0.49)
Dividends from Capital Gains ................... (0.12) 0 0
--------- ---------- ---------
Total distributions ............................ (0.60) (1.04) (0.49)
--------- ---------- ---------
Net asset value, end of period ................. $ 20.07 $ 21.31 $ 20.33
========= ========== =========
Total return** ................................. (6.08%) 10.23 4.15%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in $000's) .......... 6,283 6,058 5,585
Ratio of expenses to average net assets ........ 0.49% 52% .51%+
Ratio of net investment income (loss) to average
net assets ............................ 4.60% 4.80% 4.71%+
Portfolio turnover rate ........................ 59.40% 176.66% 82.47%
<FN>
+ Annualized
# Net of expense reimbursement. If the expense reimbursement had not been in
effect, the ratio of expenses to average net assets would have been 1.36%,
1.38%, and 2.05%, respectively.
* Based on average shares outstanding.
** Not annualized for periods less than a year.
</FN>
</TABLE>
See notes to financial statements
-15-
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<PAGE>
Monterey Mutual Funds
Distributed by:
Syndicated Capital, Inc.
1299 Ocean Avenue, Suite 210
Santa Monica, CA 90401
