<PAGE> 1
- --------------------------------------------------------------------------------
[HOTCHKIS AND WILEY FUNDS LOGO]
800 WEST SIXTH STREET
FIFTH FLOOR
LOS ANGELES, CALIFORNIA 90017
800-236-4479
INVESTMENT ADVISOR
Hotchkis and Wiley
800 West Sixth Street
Fifth Floor
Los Angeles, California 90017
LEGAL COUNSEL
Gardner, Carton & Douglas
321 North Clark Street
Chicago, Illinois 60610
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
100 East Wisconsin Avenue
Milwaukee, WI 53202
CUSTODIAN AND TRANSFER AGENT
Firstar Trust Company
615 East Michigan Street
Milwaukee, Wisconsin 53202
ANNUAL REPORT
FOR THE YEAR ENDED
JUNE 30, 1996
[HOTCHKIS AND WILEY FUNDS LOGO]
EQUITY INCOME FUND
-------------------------------------------------------------
SMALL CAP FUND
-------------------------------------------------------------
INTERNATIONAL FUND
-------------------------------------------------------------
BALANCED INCOME FUND
-------------------------------------------------------------
TOTAL RETURN BOND FUND
-------------------------------------------------------------
LOW DURATION FUND
-------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
- --------------------------------------------------------------------------------
THIS MATERIAL SHOULD BE PRECEDED
OR ACCOMPANIED BY A PROSPECTUS. HOTCHKIS AND WILEY:
INVESTMENT ADVISOR
<PAGE> 2
[HOTCHKIS AND WILEY FUNDS LOGO]
DEAR FELLOW SHAREHOLDERS:
We are pleased to report to you on the performance of the Hotchkis and Wiley
Funds and to provide you with an Annual Report for the fiscal year ended June
30, 1996.
BALANCED INCOME FUND
The Balanced Income Fund posted strong gains during the year ended June 30,
1996. The Fund's total return for the one-year period was 15.0%. Common stocks
generally produced positive returns during the first six months of the year;
although there has been an increasing amount of volatility and dispersion of
returns in various sectors of the equity market. Accordingly, we have reduced
our exposure in common stocks from a high of 56% in April 1995 to 41% at June
30, 1996. We believe that this reallocation of assets lowers the risk profile
and positions the Fund to better weather expected volatility in the markets.
---------------------------------------------------------
ASSET ALLOCATION SUMMARY
<TABLE>
<CAPTION>
Asset Current Average Low Equity High Equity
Category 6/30/96 8/13/85-6/30/96 10/16/87 8/11/89
------------------------------------------------------
<S> <C> <C> <C> <C>
Equity 41% 47% 27% 59%
Fixed
Income 59% 53% 73% 41%
</TABLE>
The equity portfolio is diversified, with 74 individual common stocks
strategically weighted in nine broad economic sectors. We continue to retain
healthy investment positions in basic industry, consumer durables and selective
utilities. Technology sector stocks and other issues that sell at high P/E
ratios and low yields have been avoided.
Fixed-income investments in the Fund are broadly diversified across
fixed-income sectors and focused on investment-grade securities. The portfolio
duration at 3.9 years is slightly longer than the benchmark Lehman Intermediate
Govt/Corp Index duration of 3.3 years to reflect the increased yield opportunity
in the current market. The average quality of the Funds fixed-income holdings
will remain AAA.
EQUITY INCOME FUND
The Equity Income Fund's total return for the fiscal year ended June 30, 1996
was 20.0%. The second quarter of 1996 was a difficult environment for value
investors, dampening the strong returns achieved in the previous three quarters.
There has been an increasing amount of volatility and dispersion of returns
between various sectors of the equity market. The market's recent performance
has come primarily from technology and consumer products. We have continued to
retain a healthy investment position in basic industry, including chemicals,
paper and steel. These areas underperformed in the Spring, as climbing interest
rates threatened continued expansion in the economy. Now the economy is sending
mixed signals. It seems to be teetering in a delicate balance between growth
that is too strong or not strong enough. Perhaps this is what a continuing "soft
landing" feels like -- a lot of bumps along the way.
In this uncertain, volatile environment, we continue to believe high
dividend yielding, low P/E stocks of financially strong companies will provide
superior returns with less risk. With this philosophy,
<PAGE> 3
the Fund is attractive relative to the market as of June 30, 1996, with a
projected price/earnings ratio of 12.5x compared to 16.5x for the S&P 500 Stock
Index, and a dividend yield of 3.3% compared to the S&P 500 stock Index of 2.2%.
We will continue to manage the portfolio by adherence to our investment
disciplines which emphasize these lower risk characteristics.
INTERNATIONAL FUND
The Hotchkis and Wiley International Fund has delivered another excellent year
of performance to shareholders, with a return for the year ended June 30, 1996
of 18.6%. This compares favorably with the 13.6% return for the EAFE Index and
the 15.5% return for the Lipper International Index for the same period. A
favorable global interest rate environment, significant corporate restructuring
and a steady stream of encouraging earnings reports all combined to boost
international equity markets. In the past twelve months, stocks held in the Fund
achieved sizable gains despite generally weak foreign currencies vs. the U.S.
dollar.
Relative to the Europe, Australia and Far East Index (EAFE), the Fund can
attribute a significant portion of its outperformance to currency and stock
selection. Specifically, the Fund's exposure to the Japanese yen was
considerably less than that of the EAFE Index (15% for the Fund vs. 40% for
EAFE). After a sharp rise in the first half of 1995, the yen lost 29% of its
value vs. the $US in the ensuing twelve months. In response to the influence of
a more competitive local currency, as well as monetary and fiscal stimulus, the
Japanese market rallied strongly (+44%) in this same period. However, yen
depreciation eroded away much of that market gain. Within markets, the Fund
scored major gains from its focus on stock that qualify for purchase under our
rigid value screens. This was especially true in Japan, Hong Kong, Australia,
Switzerland and Finland.
SMALL CAP FUND
The Small Cap Fund achieved a return of 14.2% for the year ended June 30, 1996.
This was a strong return given the value-orientation of the Fund. However, it
lagged the 23.9% performance of the Russell 2000 index. It was a period of
powerful performance from the technology sector and a very strong IPO market.
Both segments have a significant presence in the Russell 2000 index and play a
minimal role in the Fund. Virtually all of this outperformance was achieved in
the second half of 1995. The speculative tide receded in 1996, and, in the final
quarter of the fiscal year, the Fund outperformed the index.
Except for a brief time in the Spring of 1996, large caps outperformed
small caps during the period. Much of this was due to concern about a resurgence
in inflation and a possible return to restrictive monetary policy. On a
valuation basis, however, small caps appear to be markedly undervalued to their
big brothers when looking at P/E, price/book, and P/E to growth-rate ratios. In
these terms, the Fund is particularly well-positioned to participate in a
revaluation of assets relative to their earnings potential.
SHORT-TERM INVESTMENT FUND
LOW DURATION FUND
TOTAL RETURN BOND FUND
All three fixed-income funds achieved strong returns vs. their respective
benchmarks for the year ended June 30, 1996 as shown below:
<TABLE>
<S> <C>
- ----------------------------------------------
Short-Term Investment Fund.............. 7.2%
Six-Month Treasury Bill Index........... 5.5%
Low Duration Fund....................... 7.5%
Merrill Lynch 1-3 Year Index............ 5.5%
Total Return Bond Fund.................. 7.0%
Lehman Aggregate Index.................. 5.0%
- ----------------------------------------------
</TABLE>
The interest rate environment during the fiscal year ended June 1996 can
best be described as highly volatile. We started the third quarter of 1995 with
the 30 year long bond yielding close to 7% and the two-year note at 6%. Over the
balance of calendar 1995, yields on both instruments dropped significantly.
Rates bottomed in January of 1996 and started rising in February and continued
to do so through the first half of 1996. Despite the volatility in interest
rates, we have been successful in outperforming each of the benchmarks for the
respective fixed-income funds.
<PAGE> 4
The second half of 1995 ended with market participants believing that the
Federal Reserve was well on its way towards taking short-term rates lower. This
expectation had created somewhat of a bullish euphoria in the market place. As
often happens in times of euphoria, virtually all investors and economists were
in agreement that the bond market would continue to perform well. This
complacency ended up being short lived. In February, Alan Greenspan surprised
the markets during his Humphrey-Hawkins testimony when he indicated the economy
might be stronger than expected. His position was soon supported by economic
data when the February nonfarm payrolls data were released and were much
stronger than expected. This release foreshadowed an above-trend growth rate for
the entire first half of 1996.
Investors have had to do an about face during this time period.
Expectations of a Fed easing have been swept away, and current expectations are
that the Fed will most likely have to raise interest rates before the end of the
year. We believe that although the economy will continue to move forward, it
will do so in a restrained manner. The immediate threat of inflation is minimal.
However, signs of increased wage inflation are starting to appear and must be
monitored closely. Current positioning of the portfolios reflects our belief
that interest rates are not in danger of heading tremendously higher. In fact,
we anticipate a fairly benign period of time for interest rates over the next
couple of quarters.
We are pleased to announce that beginning in August, the management
responsibilities for the three fixed-income funds have been assumed by Hotchkis
and Wiley veteran, Roger DeBard, who founded the fixed-income department of
Hotchkis and Wiley in 1985 and portfolio manager, Michael Sanchez, who joined
Hotchkis and Wiley this year after nine years of experience in fixed-income
portfolio management. We will continue to manage the funds with the same
investment philosophy and multi-strategy approach with which we have built our
track record over the years.
As always, we appreciate the trust you place in us, and look forward to
meeting your high standards for all of our funds. We thank you for your
continued support and look forward to reporting to you again in six months.
Cordially,
Nancy D. Celick
Nancy D. Celick
President
HOTCHKIS AND WILEY FUNDS
A description of the market indices referred to in this letter and in the
following graphs is provided on page 43.
<PAGE> 5
How a $10,000 Investment Has Grown:
The following charts show the growth of a $10,000 investment for
each of the Hotchkis and Wiley Funds as compared to the
performance of representative market indices. The tables below
the charts show the average annual total returns on an
investment over various periods.
EQUITY INCOME FUND
JULY 1, 1987 - JUNE 30, 1996
EQUITY INCOME FUND CHART
<TABLE>
<CAPTION>
1489-CUM SP-CUM
-----------------------------
<S> <C> <C>
3Q87 10240.000 10660.000
4Q87 8341.504 8250.840
1Q88 9068.883 8721.138
2Q88 9715.495 9288.012
3Q88 9950.610 9315.876
4Q88 10104.844 9595.352
1Q89 10950.619 10276.622
2Q89 11849.665 11170.688
3Q89 13130.614 12354.781
4Q89 12496.405 12601.877
1Q90 11800.355 12223.821
2Q90 11801.535 12981.698
3Q90 9448.309 11190.223
4Q90 10240.078 12186.153
1Q91 12052.571 13965.332
2Q91 12621.453 13923.436
3Q91 13377.478 14661.378
4Q91 13785.491 15892.933
1Q92 14539.557 15495.610
2Q92 15055.711 15790.027
3Q92 14869.021 16279.517
4Q92 15709.120 17093.493
1Q93 16598.256 17845.607
2Q93 16814.034 17916.989
3Q93 17313.411 18382.831
4Q93 18186.006 18805.636
1Q94 17331.264 18091.022
2Q94 17386.724 18163.386
3Q94 18207.378 19057.025
4Q94 17542.808 19058.930
1Q95 19332.175 20907.647
2Q95 20956.077 22893.873
3Q95 22634.659 24723.094
4Q95 23587.578 26191.645
1Q96 24958.017 27619.090
2Q96 25157.681 28872.997
</TABLE>
<TABLE>
<CAPTION>
Ended
6/30/96
<S> <C>
--------------------------------
One Year 20.0%
--------------------------------
Five Years 14.8%
--------------------------------
Since Inception
(6/24/87) 10.8%
--------------------------------
</TABLE>
SMALL CAP FUND
OCTOBER 1, 1985 - JUNE 30, 1996
SMALL CAP FUND CHART
<TABLE>
<CAPTION>
1479-CUM R20-CUM
-----------------------------
<S> <C> <C>
4Q85 11518.000 11617.000
1Q86 12908.223 13261.967
2Q86 14489.480 13905.173
3Q86 12295.773 12203.180
4Q86 12471.602 12278.839
1Q87 15900.046 15263.825
2Q87 15435.764 15155.452
3Q87 16645.928 15790.465
4Q87 12266.384 11201.756
1Q88 13489.343 13337.931
2Q88 14518.580 14216.901
3Q88 13489.213 14083.262
4Q88 13361.065 13990.312
1Q89 13699.100 15067.566
2Q89 14399.124 16027.370
3Q89 16340.126 17109.218
4Q89 16106.462 16262.311
1Q90 16199.880 15902.914
2Q90 17358.171 16516.767
3Q90 12582.938 12463.552
4Q90 14655.348 13090.469
1Q91 18014.354 16983.574
2Q91 18331.406 16720.329
3Q91 19612.772 18083.036
4Q91 21725.067 19119.194
1Q92 23171.957 20553.133
2Q92 21821.032 19151.410
3Q92 21906.134 19701.055
4Q92 24707.928 22640.453
1Q93 25155.142 23607.200
2Q93 26141.223 24121.837
3Q93 27377.703 26230.085
4Q93 27807.533 26912.068
1Q94 28002.186 26185.442
2Q94 27134.118 25164.210
3Q94 27855.885 26910.606
4Q94 28123.302 26399.304
1Q95 29445.097 27613.672
2Q95 31152.913 30209.357
3Q95 33308.694 33194.042
4Q95 33315.356 33914.353
1Q96 32665.707 35643.985
2Q96 35586.021 37426.184
</TABLE>
<TABLE>
<CAPTION>
Ended
6/30/96
<S> <C>
--------------------------------
One Year 14.2%
--------------------------------
Five Years 14.2%
--------------------------------
Ten Years 9.4%
--------------------------------
Since Inception
(9/20/85) 12.5%
--------------------------------
</TABLE>
BALANCED INCOME FUND
SEPTEMBER 1, 1985 - JUNE 30, 1996
BALANCED INCOME FUND CHART
<TABLE>
<CAPTION>
CPI+4-CUM LB G/C-CUM 1481-CUM SP-CUM
------------------------------------------------------------
<S> <C> <C> <C> <C>
4Q85 10189.0000 10758.0000 11033.0000 11720.0000
1Q86 10248.0962 11675.6574 11905.7103 13360.8000
2Q86 10411.0409 11829.7761 12281.9307 14149.0872
3Q86 10588.0286 12068.7376 11904.8754 13158.6511
4Q86 10722.4966 12438.0410 12464.4045 13895.5356
1Q87 10985.1978 12622.1240 13350.6237 16855.2847
2Q87 11232.3648 12383.5659 13405.3613 17698.0489
3Q87 11486.2162 12023.2041 13601.0796 18866.1201
4Q87 11644.7260 12724.1569 12957.7485 14602.3770
1Q88 11871.7982 13179.6817 13688.5655 15434.7125
2Q88 12143.6624 13310.1605 14155.3456 16437.9688
3Q88 12450.8971 13559.0605 14520.5535 16487.2827
4Q88 12647.6213 13689.2275 14850.1701 16981.9012
1Q89 12962.5471 13839.8090 15418.9316 18187.6162
2Q89 13282.7220 14952.5296 16632.4015 19769.9388
3Q89 13512.5131 15093.0834 17508.9291 21865.5523
4Q89 13766.5483 15637.9437 17505.4273 22302.8633
1Q90 14187.8047 15458.1073 17265.6029 21633.7774
2Q90 14461.6293 16014.5992 17681.7039 22975.0716
3Q90 14918.6168 16112.2883 16210.5861 19804.5117
4Q90 15191.6275 16932.4038 17426.3801 21567.1132
1Q91 15480.2684 17389.5787 19217.8120 24715.9117
2Q91 15749.6251 17652.1613 19344.6496 24641.7640
3Q91 16045.7181 18667.1606 20298.3408 25947.7775
4Q91 16286.4039 19663.9870 21004.7231 28127.3908
1Q92 16612.1320 19369.0272 21546.6450 27424.2060
2Q92 16894.5382 20153.4728 22274.9216 27945.2659
3Q92 17198.6399 21138.9776 22479.8509 28811.5691
4Q92 17542.6127 21155.8888 22981.1516 30252.1476
1Q93 17928.5502 22139.6376 24114.1224 31583.2421
2Q93 18197.4785 22803.8267 24521.6511 31741.1583
3Q93 18470.4407 23558.6334 25580.9864 32566.4284
4Q93 18765.9678 23490.3134 25862.3773 33315.4563
1Q94 19122.5212 22755.0666 25262.3701 32049.4690
2Q94 19409.3590 22472.9038 25418.9968 32177.6669
3Q94 19778.1368 22585.2683 26390.0025 33754.3726
4Q94 20094.5870 22668.8338 26062.7665 33757.7480
1Q95 20516.5733 23797.7417 27756.8463 37032.2496
2Q95 20865.3550 25342.2151 29450.0139 40550.3133
3Q95 21169.9892 25826.2514 31211.1247 43790.2833
4Q95 21424.0291 27029.7547 32400.2686 46391.4261
1Q96 21944.6330 26397.2584 33417.6370 48919.7588
2Q96 22304.5250 26521.3255 33878.8004 51140.7158
</TABLE>
<TABLE>
<CAPTION>
Ended
6/30/96
<S> <C>
--------------------------------
One Year 15.0%
--------------------------------
Five Years 12.0%
--------------------------------
Ten Years 10.7%
--------------------------------
Since Inception
(8/13/85) 12.0%
--------------------------------
</TABLE>
Past performance is not predictive of future performance. The representative
market indices are unmanaged. The annual returns reflect the voluntary agreement
of Hotchkis and Wiley, the Funds' advisor, to assume fees and expenses in excess
of certain limits.
<PAGE> 6
INTERNATIONAL FUND
DECEMBER 1, 1990 - JUNE 30, 1996
INTERNATIONAL FUND CHART
<TABLE>
<CAPTION>
International Fund
1501 EAFE
-------------------------
<S> <C> <C>
Dec90 9953.0000 10166.0000
1Q91 10542.2176 10931.4998
2Q91 10037.2454 10343.3851
3Q91 11303.9458 11239.1222
4Q91 11978.7914 11436.9308
1Q92 11788.3286 10088.5167
2Q92 12843.3840 10311.4729
3Q92 11961.0435 10476.4565
4Q92 11659.6252 10081.4941
1Q93 13044.7887 11299.3386
2Q93 13789.6461 12445.0915
3Q93 14741.1317 13278.9126
4Q93 16993.5766 13402.4065
1Q94 16291.7419 13879.5322
2Q94 16094.6118 14598.4920
3Q94 17100.5250 14621.8496
4Q94 16493.4564 14482.9420
1Q95 16791.9880 14763.9111
2Q95 17880.1088 14883.4988
3Q95 19020.8597 15516.0475
4Q95 19774.0857 16156.8603
1Q96 20626.3488 16635.1034
2Q96 21208.0118 16911.2461
</TABLE>
<TABLE>
<CAPTION>
Ended
6/30/96
<S> <C>
--------------------------------
One Year 18.6%
--------------------------------
Five Years 16.1%
--------------------------------
Commencement of
Operations
(12/1/90) 14.4%
--------------------------------
</TABLE>
LOW DURATION FUND
MAY 18, 1993 - JUNE 30, 1996
LOW DURATION FUND CHART
<TABLE>
<CAPTION>
Low Duration Fund
1363-CUM ML Treasury
-------------------------
<S> <C> <C>
2Q93 10053.0000 10058.0000
3Q93 10579.7772 10201.8294
4Q93 10713.0824 10262.0202
1Q94 10872.7073 10210.7101
2Q94 10961.8635 10218.8787
3Q94 11149.3114 10320.0456
4Q94 11274.1837 10320.4584
1Q95 11616.9189 10667.2258
2Q95 12083.9190 11009.6437
3Q95 12330.4309 11174.7884
4Q95 12711.4413 11456.3930
1Q96 12818.2174 11494.1991
2Q96 12988.6997 11610.2905
</TABLE>
<TABLE>
<CAPTION>
Ended
6/30/96
<S> <C>
--------------------------------
One Year 7.5%
--------------------------------
Three Years 8.9%
--------------------------------
Since Inception
(5/18/93) 8.7%
--------------------------------
</TABLE>
TOTAL RETURN BOND FUND
DECEMBER 6, 1994 - JUNE 30, 1996
TOTAL RETURN BOND FUND CHART
<TABLE>
<CAPTION>
Total Return Bond Fund
1384-CUM LB aggregat
------------------------
<S> <C> <C>
4Q94 10033.0000 10006.0000
1Q95 10497.5279 10510.3024
2Q95 11187.2155 11150.3798
3Q95 11555.2749 11368.9273
4Q95 12172.3266 11853.2436
1Q96 11882.6252 11643.4412
2Q96 11971.7449 11709.8088
</TABLE>
<TABLE>
<CAPTION>
Ended
6/30/96
<S> <C>
--------------------------------
One Year 7.0%
--------------------------------
Since Inception
(12/6/94) 12.2%
--------------------------------
</TABLE>
SHORT-TERM INVESTMENT FUND
MAY 18, 1993 - JUNE 30, 1996
SHORT-TERM INVESTMENT FUND CHART
<TABLE>
<CAPTION>
Short-Term Investment Fund
136r-CUM ML Treasury
------------------------
<S> <C> <C>
2Q93 10028.0000 10033.0000
3Q93 10272.6832 10121.2904
4Q93 10505.8731 10203.2729
1Q94 10650.8542 10271.6348
2Q94 10778.6644 10362.0252
3Q94 10870.2831 10476.0074
4Q94 10971.3767 10599.6243
1Q95 11216.0384 10786.1777
2Q95 11401.1030 10966.3069
3Q95 11591.5014 11122.0284
4Q95 11830.2864 11293.3077
1Q96 12047.9636 11428.8274
2Q96 12225.0687 11571.6877
</TABLE>
<TABLE>
<CAPTION>
Ended
6/30/96
<S> <C>
--------------------------------
One Year 7.2%
--------------------------------
Three Years 6.8%
--------------------------------
Since Inception
(5/18/93) 6.6%
--------------------------------
</TABLE>
Past performance is not predictive of future performance. The representative
market indices are unmanaged. The annual returns reflect the voluntary agreement
of Hotchkis and Wiley, the Funds' advisor, to assume fees and expenses in excess
of certain limits.
<PAGE> 7
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SCHEDULES OF INVESTMENTS:
EQUITY INCOME FUND..................................... 1
SMALL CAP FUND......................................... 3
INTERNATIONAL FUND..................................... 5
BALANCED INCOME FUND................................... 8
TOTAL RETURN BOND FUND................................. 12
LOW DURATION FUND...................................... 15
SHORT-TERM INVESTMENT FUND............................. 20
STATEMENT OF ASSETS AND LIABILITIES...................... 22
STATEMENT OF OPERATIONS.................................. 24
STATEMENT OF CHANGES IN NET ASSETS....................... 26
NOTES TO FINANCIAL STATEMENTS............................ 30
FINANCIAL HIGHLIGHTS..................................... 35
REPORT OF INDEPENDENT ACCOUNTANTS........................ 42
MARKET INDICES........................................... 43
</TABLE>
[HOTCHKIS AND WILEY FUNDS LOGO]
<PAGE> 8
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
COMMON STOCKS -- 98.6% Shares Value
<S> <C> <C>
- --------------------------------------------------------
AEROSPACE -- 2.1%
........................................................
Lockheed Martin Corporation 23,079 $ 1,938,636
........................................................
Northrop Grumman Corporation 28,318 1,929,164
........................................ ============
3,867,800
- --------------------------------------------------------
AUTO-RELATED -- 2.8%
........................................................
Dana Corporation 106,636 3,305,716
........................................................
PACCAR, Incorporated 35,161 1,722,889
........................................ ============
5,028,605
- --------------------------------------------------------
AUTOS & TRUCKS -- 8.3%
........................................................
Chrysler Corporation 30,000 1,860,000
........................................................
Ford Motor Company 185,954 6,020,261
........................................................
General Motors Corporation 140,000 7,332,500
........................................ ============
15,212,761
- --------------------------------------------------------
BANKS -- 8.6%
........................................................
BankAmerica Corporation 33,038 2,502,628
........................................................
The Chase Manhattan
Corporation 16,105 1,137,416
........................................................
First Chicago NBD Corporation 83,349 3,261,030
........................................................
First Hawaiian, Inc. 37,757 1,076,075
........................................................
First of America Bank
Corporation 32,477 1,453,346
........................................................
KeyCorp 57,415 2,224,831
........................................................
National City Corporation 38,758 1,361,375
........................................................
Regions Financial Corporation 56,636 2,647,733
........................................ ============
15,664,434
- --------------------------------------------------------
BEVERAGES -- 0.7%
........................................................
Anheuser-Busch Companies, Inc. 16,991 1,274,325
- --------------------------------------------------------
BUILDING & FOREST PRODUCTS -- 1.4%
........................................................
Weyerhaeuser Company 60,016 2,550,680
- --------------------------------------------------------
CHEMICALS -- 2.2%
........................................................
Goodrich (B.F.) Company 60,412 2,257,898
........................................................
PPG Industries, Inc. 16,479 803,351
........................................................
Witco Corporation 27,631 949,816
........................................ ============
4,011,065
- --------------------------------------------------------
COAL & GAS -- 1.8%
........................................................
Eastern Enterprises 99,393 3,304,817
- --------------------------------------------------------
DIVERSIFIED -- 5.5%
........................................................
Ogden Corporation 173,655 3,147,497
........................................................
Olin Corporation 23,598 2,106,121
........................................................
Tenneco, Inc. 94,754 4,844,298
........................................ ============
10,097,916
- --------------------------------------------------------
<CAPTION>
Shares Value
<S> <C> <C>
- --------------------------------------------------------
DRUGS -- 1.2%
........................................................
Merck & Company, Inc. 34,925 $ 2,257,028
- --------------------------------------------------------
ENGINEERING AND CONSTRUCTION -- 1.0%
........................................................
Harsco Corporation 26,241 1,764,707
- --------------------------------------------------------
FINANCIAL SERVICES -- 6.1%
........................................................
Great Western Financial
Corporation 109,027 2,603,020
........................................................
H.F. Ahmanson & Company 102,253 2,760,831
........................................................
Household International, Inc. 49,084 3,730,384
........................................................
Transamerica Corporation 25,486 2,064,366
........................................ ============
11,158,601
- --------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES -- 0.2%
........................................................
Whirlpool Corporation 7,200 357,300
- --------------------------------------------------------
INSURANCE -- 6.0%
........................................................
Allstate Corporation 22,042 1,005,666
........................................................
Aon Corporation 102,183 5,185,787
........................................................
Lincoln National Corporation 41,699 1,928,579
........................................................
USLIFE Corporation 83,963 2,760,284
........................................ ============
10,880,316
- --------------------------------------------------------
MACHINERY -- 1.9%
........................................................
Deere & Company 84,954 3,398,160
- --------------------------------------------------------
METALS & MINING -- 0.6%
........................................................
Phelps Dodge Corporation 16,555 1,032,618
- --------------------------------------------------------
OIL -- DOMESTIC -- 2.9%
........................................................
Atlantic Richfield Company 3,776 447,456
........................................................
Occidental Petroleum
Corporation 121,589 3,009,328
........................................................
Sun Company, Inc. 57,237 1,738,574
........................................ ============
5,195,358
- --------------------------------------------------------
OIL -- INTERNATIONAL -- 3.2%
........................................................
Amoco Corporation 28,000 2,026,500
........................................................
Chevron Corporation 20,000 1,180,000
........................................................
Exxon Corporation 10,000 868,750
........................................................
Mobil Corporation 1,632 182,988
........................................................
Royal Dutch Petroleum Company
ADR 1,888 290,280
........................................................
TransCanada Pipelines Ltd. 93,071 1,372,797
........................................ ============
5,921,315
- --------------------------------------------------------
PAPER -- 1.9%
........................................................
Georgia Pacific Corporation 50,000 3,550,000
- --------------------------------------------------------
</TABLE>
See Notes to Financial Statements
1
<PAGE> 9
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
- --------------------------------------------------------
PHOTOGRAPHY & OPTICAL -- 1.7%
........................................................
Eastman Kodak Company 40,589 $ 3,155,795
- --------------------------------------------------------
POLLUTION CONTROL -- 3.5%
........................................................
Browning-Ferris Industries,
Inc. 220,000 6,380,000
- --------------------------------------------------------
PROFESSIONAL SERVICES -- 1.5%
........................................................
PHH Corporation 47,385 2,700,945
- --------------------------------------------------------
RAILROADS -- 4.3%
........................................................
Burlington Northern Santa Fe
Corp. 24,542 1,984,834
........................................................
Norfolk Southern Corporation 37,757 3,199,906
........................................................
Union Pacific Corporation 37,757 2,638,270
........................................ ============
7,823,010
- --------------------------------------------------------
RETAIL -- GENERAL -- 4.6%
........................................................
J.C. Penney Co., Incorporated 44,323 2,326,957
........................................................
Kmart Corporation 144,671 1,790,304
........................................................
May Department Stores Company 47,196 2,064,825
........................................................
Sears, Roebuck & Company 47,196 2,294,906
........................................ ============
8,476,992
- --------------------------------------------------------
STEEL -- 7.7%
........................................................
Allegheny Ludlum Corporation 397,900 7,510,362
........................................................
Lukens, Inc. 120,000 2,865,000
........................................................
USX-U.S. Steel Group, Inc. 128,941 3,658,701
........................................ ============
14,034,063
- --------------------------------------------------------
TELECOMMUNICATIONS -- 1.2%
........................................................
Comsat Corporation 84,954 2,208,804
- --------------------------------------------------------
TOBACCO -- 7.5%
........................................................
American Brands, Inc. 165,000 7,486,875
........................................................
Philip Morris Companies, Inc. 26,150 2,719,600
........................................................
UST, Inc. 101,029 3,460,243
........................................ ============
13,666,718
- --------------------------------------------------------
TRUCKING -- 0.9%
........................................................
Ryder System, Inc. 56,636 1,592,887
- --------------------------------------------------------
UTILITY -- ELECTRIC -- 3.1%
........................................................
CMS Energy Corporation 70,795 2,185,796
........................................................
New York State Electric & Gas
Corporation 15,197 370,427
........................................................
Peco Energy Company 75,000 1,950,000
........................................................
Public Service Enterprises
Group 43,893 1,201,571
........................................ ============
5,707,794
- --------------------------------------------------------
<CAPTION>
Shares Value
<S> <C> <C>
- --------------------------------------------------------
UTILITY -- TELEPHONE -- 4.2%
........................................................
BellSouth Corporation 35,114 $ 1,487,956
........................................................
Cincinnati Bell, Incorporated 60,000 3,127,500
........................................................
GTE Corporation 9,439 422,395
........................................................
NYNEX Corporation 56,636 2,690,210
........................................ ============
7,728,061
- --------------------------------------------------------
Total common stocks (cost
$145,227,490) 180,002,875
- --------------------------------------------------------
PREFERRED STOCKS -- 1.2%
- --------------------------------------------------------
Armco Incorporated Class A
........................................................
$2.10 Cum. Cv. Preferred 21,238 493,783
........................................................
$4.50 Cum. Cv. Preferred 6,702 315,832
........................................................
Bethlehem Steel Corporation
........................................................
$2.50 Cum. Cv. Preferred 4,600 122,475
........................................................
$5.00 Cum. Cv. Preferred 22,865 1,188,980
........................................ ============
Total preferred stocks
(cost $2,168,760) 2,121,070
- --------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE RATE Principal
DEMAND NOTES* -- 0.3% Amount
<S> <C> <C>
- --------------------------------------------------------
General Mills, Inc., 5.14% $241,721 241,721
........................................................
Pitney Bowes, Inc., 5.1441% 400,000 400,000
........................................ ============
Total variable rate demand
notes 641,721
(cost $641,721)
- --------------------------------------------------------
Total investments -- 100.1%
(cost $148,037,971) 182,765,666
........................................................
Liabilities in excess of
other
assets -- (0.1%) (227,561)
........................................ ============
Total net assets -- 100.0% $182,538,105
- --------------------------------------------------------
</TABLE>
* Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates. The
rates listed are as of June 30, 1996.
ADR -- American Depository Receipt.
See Notes to Financial Statements
2
<PAGE> 10
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
SMALL CAP FUND
<TABLE>
<CAPTION>
COMMON STOCKS -- 96.5% Shares Value
<S> <C> <C>
- --------------------------------------------------------
APPAREL & TEXTILES -- 3.8%
........................................................
Donnkenny, Inc. # 15,000 $ 292,500
........................................................
Kellwood Company 7,000 128,625
........................................................
Kenneth Cole Productions, Class
A # 10,000 197,500
......................................... ===========
618,625
- --------------------------------------------------------
APPLIANCES & HOUSEHOLD FURNITURE -- 4.8%
........................................................
Open Plan Systems, Inc. # 20,000 240,000
........................................................
REX Stores Corporation # 35,000 538,125
......................................... ===========
778,125
- --------------------------------------------------------
AUTO PARTS -- 4.0%
........................................................
APS Holding Corporation, Class
A # 30,000 660,000
- --------------------------------------------------------
AUTO-RELATED -- 2.4%
........................................................
Special Devices, Inc. # 25,000 400,000
- --------------------------------------------------------
BANKS -- 4.3%
........................................................
Coastal Bancorp, Inc. 30,000 540,000
........................................................
Commercial Bank of New York 16,000 176,000
......................................... ===========
716,000
- --------------------------------------------------------
BUILDING MATERIALS -- 3.1%
........................................................
NCI Building Systems, Inc. # 15,000 506,250
- --------------------------------------------------------
CHEMICALS -- 1.8%
........................................................
Dexter Corporation 10,000 297,500
- --------------------------------------------------------
COMMUNICATIONS & MEDIA -- 6.7%
........................................................
Century Communications
Corporation, Class A # 50,000 425,000
........................................................
EIS International, Inc. # 15,000 382,500
........................................................
VTEL Corporation # 30,000 288,750
......................................... ===========
1,096,250
- --------------------------------------------------------
COMPUTERS -- 0.9%
........................................................
Key Tronic Corporation # 23,000 149,500
- --------------------------------------------------------
COMPUTER-RELATED -- 3.1%
........................................................
Applied Voice Technology, Inc.
# 45,000 517,500
- --------------------------------------------------------
COMPUTER SERVICES -- 0.5%
........................................................
AMX Corporation # 10,000 78,750
- --------------------------------------------------------
ELECTRONICS -- 3.7%
........................................................
FLIR Systems, Inc. # 50,000 612,500
- --------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 1.4%
........................................................
Stewart and Stevenson Services,
Inc. 10,000 227,500
- --------------------------------------------------------
FOODS -- 2.1%
........................................................
Michael Foods, Inc. 30,000 348,750
- --------------------------------------------------------
<CAPTION>
Shares Value
<S> <C> <C>
- --------------------------------------------------------
HOMEBUILDERS -- 1.8%
........................................................
Del Webb Corporation 15,000 $ 300,000
- --------------------------------------------------------
HOSPITAL SUPPLIES & SERVICES -- 3.8%
........................................................
Healthcare Services Group, Inc.
# 70,000 630,000
- --------------------------------------------------------
INSURANCE -- 7.5%
........................................................
GCR Holdings, Ltd. 5,000 132,500
........................................................
Omni Insurance Group, Inc. # 60,000 555,000
........................................................
PXRE Corporation 22,500 545,625
......................................... ===========
1,233,125
- --------------------------------------------------------
OIL -- DOMESTIC -- 5.3%
........................................................
Abraxas Petroleum Corporation # 40,000 272,500
........................................................
Tom Brown, Inc. # 35,000 599,375
......................................... ===========
871,875
- --------------------------------------------------------
REAL ESTATE -- 10.2%
........................................................
NHP, Inc. # 20,000 412,500
........................................................
Redwood Trust, Inc. 45,000 1,260,000
......................................... ===========
1,672,500
- --------------------------------------------------------
RETAIL -- GENERAL -- 2.7%
........................................................
Orchard Supply Hardware Stores
Corporation # 15,000 451,875
- --------------------------------------------------------
RETAIL -- SPECIALTY APPAREL -- 2.0%
........................................................
Haggar Corporation 25,000 337,500
- --------------------------------------------------------
SAVINGS & LOANS -- 7.1%
........................................................
CENFED Financial Corporation 8,800 195,800
........................................................
First Republic Bancorp, Inc. # 40,000 615,000
........................................................
Metropolitan Bancorp
Corporation # 26,500 357,750
......................................... ===========
1,168,550
- --------------------------------------------------------
SEMICONDUCTORS -- 2.9%
........................................................
Lattice Semiconductor
Corporation # 20,000 482,500
- --------------------------------------------------------
STEEL FABRICATOR -- 1.8%
........................................................
Citation Corporation # 25,000 300,000
- --------------------------------------------------------
TOYS -- 2.5%
........................................................
Toy Biz, Inc., Class A # 20,000 405,000
- --------------------------------------------------------
TRANSPORTATION EQUIPMENT -- 1.3%
........................................................
Tranz Rail Holdings Ltd. -- ADR
# 15,000 208,125
- --------------------------------------------------------
</TABLE>
See Notes to Financial Statements
3
<PAGE> 11
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
SMALL CAP FUND
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
- --------------------------------------------------------
TRUCKING & SHIPPING -- 5.0%
........................................................
Covenant Transport, Inc. --
Class A # 15,000 $ 255,000
........................................................
Rollins Truck Leasing
Corporation 45,000 466,875
........................................................
USA Truck, Inc. # 10,000 105,000
......................................... ===========
826,875
- --------------------------------------------------------
Total common stocks
(cost $14,773,851) 15,895,175
- --------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE RATE Principal
DEMAND NOTES* -- 0.9% Amount
<S> <C> <C>
- --------------------------------------------------------
General Mills, Inc., 5.14% $153,675 153,675
......................................... ===========
Total variable rate demand
notes 153,675
(cost $153,675)
- --------------------------------------------------------
Total investments -- 97.4%
(cost $14,927,526) 16,048,850
........................................................
Other assets in excess of
liabilities -- 2.6% 431,836
......................................... ===========
Total net assets -- 100.0% $16,480,686
- --------------------------------------------------------
# Non-income producing security.
* Variable rate demand notes are considered short-term
obligations and are payable on demand. Interest rates
change periodically on specified dates. The rates
listed are as of June 30, 1996.
ADR -- American Depository Receipt.
</TABLE>
See Notes to Financial Statements
4
<PAGE> 12
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
COMMON STOCKS -- 93.0%
- ---------------------------------------------------------
AUSTRALIA -- 5.2% Shares Value
- ---------------------------------------------------------
<S> <C> <C>
BANKING -- 1.9%
.........................................................
Australia and New Zealand
Banking Group, Ltd. 1,338,000 $ 6,339,525
- ---------------------------------------------------------
BUILDING MATERIALS -- 1.2%
.........................................................
Pioneer International, Ltd. 1,352,000 3,937,155
- ---------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 0.2%
.........................................................
Pacific Dunlop, Ltd. 389,000 875,628
- ---------------------------------------------------------
INSURANCE -- 1.9%
.........................................................
GIO Australia Holdings, Ltd. 1,731,786 4,266,215
.........................................................
QBE Insurance Group, Ltd. 320,646 1,905,359
......................................... ============
6,171,574
......................................... ============
Total Australia 17,323,882
- ---------------------------------------------------------
AUSTRIA -- 1.6%
- ---------------------------------------------------------
STEEL -- 1.6%
.........................................................
Boehler-Uddeholm AG 70,000 5,423,663
......................................... ============
Total Austria 5,423,663
- ---------------------------------------------------------
BELGIUM -- 0.8%
- ---------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 0.8%
.........................................................
Groupe Bruxelles Lambert, S.A. 20,100 2,514,986
.........................................................
Groupe Bruxelles Lambert rights
# 60 17
......................................... ============
Total Belgium 2,515,003
- ---------------------------------------------------------
CANADA -- 5.8%
- ---------------------------------------------------------
BANKS -- 2.7%
.........................................................
Bank of Nova Scotia 152,038 3,696,241
.........................................................
Canadian Imperial Bank of
Commerce 168,000 5,419,077
......................................... ============
9,115,318
- ---------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 1.5%
.........................................................
IMASCO, Ltd. 238,000 4,862,405
- ---------------------------------------------------------
METALS & MINERALS -- 0.5%
.........................................................
Noranda, Inc. 79,000 1,616,884
- ---------------------------------------------------------
RAILROADS -- 1.1%
.........................................................
Canadian National Railway 201,000 3,701,724
......................................... ============
Total Canada 19,296,331
- ---------------------------------------------------------
<CAPTION>
FINLAND -- 1.7% Shares Value
- ---------------------------------------------------------
<S> <C> <C>
FOREST PRODUCTS & PAPER -- 1.7%
.........................................................
UPM-Kymmene OY # 270,000 $ 5,584,924
......................................... ============
Total Finland 5,584,924
- ---------------------------------------------------------
FRANCE -- 4.3%
- ---------------------------------------------------------
BUILDING MATERIALS & COMPONENTS -- 1.5%
.........................................................
LaFarge Coppee SA 83,173 5,032,623
- ---------------------------------------------------------
OIL & GAS -- 1.5%
.........................................................
Societe Nationale Elf
Acquitaine 66,000 4,853,762
- ---------------------------------------------------------
STEEL -- 1.3%
.........................................................
Unisor Sacilor # 297,000 4,283,580
......................................... ============
Total France 14,169,965
- ---------------------------------------------------------
GERMANY -- 3.1%
- ---------------------------------------------------------
CHEMICALS -- 1.6%
.........................................................
Bayer AG 155,000 5,453,017
- ---------------------------------------------------------
MANUFACTURING -- 1.5%
.........................................................
Buderus AG 11,500 4,873,077
......................................... ============
Total Germany 10,326,094
- ---------------------------------------------------------
HONG KONG -- 9.6%
- ---------------------------------------------------------
BANKS -- 1.8%
.........................................................
HSBC Holdings, PLC 392,800 5,937,285
- ---------------------------------------------------------
PRINTING & PUBLISHING -- 2.1%
.........................................................
Oriental Press Group, Ltd. 4,953,000 2,655,504
.........................................................
South China Morning Post
(Holdings), Ltd. 6,010,000 4,115,105
......................................... ============
6,770,609
- ---------------------------------------------------------
RETAIL -- SPECIALTY -- 1.5%
.........................................................
Dickson Concepts International,
Ltd. 2,850,000 3,645,110
.........................................................
Harbour Ring International
Holdings 11,426,000 1,239,950
......................................... ============
4,885,060
- ---------------------------------------------------------
REAL ESTATE DEVELOPMENT -- 2.9%
.........................................................
Hang Lung Development Co., Ltd. 1,955,000 3,674,856
.........................................................
New World Development Co., Ltd. 1,305,000 6,052,510
......................................... ============
9,727,366
- ---------------------------------------------------------
UTILITY -- TELECOMMUNICATIONS -- 1.3%
.........................................................
Hong Kong Telecommunications
Ltd. 2,480,000 4,453,455
......................................... ============
Total Hong Kong 31,773,775
- ---------------------------------------------------------
</TABLE>
See Notes to Financial Statements
5
<PAGE> 13
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
IRELAND -- 1.7% Shares Value
- ---------------------------------------------------------
<S> <C> <C>
PAPER -- 1.7%
.........................................................
Jefferson Smurfit Group PLC 2,129,430 $ 5,715,229
......................................... ============
Total Ireland 5,715,229
- ---------------------------------------------------------
ITALY -- 1.2%
- ---------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 1.2%
.........................................................
Danieli & Company 1,086,000 3,860,985
......................................... ============
Total Italy 3,860,985
- ---------------------------------------------------------
JAPAN -- 14.4%
- ---------------------------------------------------------
AUTOS & TRUCKS -- 1.3%
.........................................................
Bridgestone Corporation 165,000 3,144,104
.........................................................
Suzuki Motor Corporation 105,000 1,378,537
......................................... ============
4,522,641
- ---------------------------------------------------------
BUILDING MATERIAL & COMPONENTS -- 1.7%
.........................................................
Sekisui Chemical Co., Ltd. 469,000 5,729,864
- ---------------------------------------------------------
CONSTRUCTION & HOUSING -- 0.9%
.........................................................
Daiwa House Industry Co., Ltd. 187,000 2,898,392
- ---------------------------------------------------------
ELECTRONIC COMPONENTS -- 1.3%
.........................................................
Nintendo Co., Ltd. 57,300 4,262,962
- ---------------------------------------------------------
ELECTRICAL MACHINERY -- 3.2%
.........................................................
Nichicon Corporation 339,000 4,914,320
.........................................................
Sony Corporation 87,400 5,745,309
......................................... ============
10,659,629
- ---------------------------------------------------------
FINANCIAL SERVICES -- 1.1%
.........................................................
Promise Company Ltd. 74,500 3,667,893
- ---------------------------------------------------------
FOREST PRODUCTS & PAPER -- 1.0%
.........................................................
Hokushin 250,600 3,198,717
- ---------------------------------------------------------
INSURANCE -- 1.3%
.........................................................
Nippon Fire & Marine Insurance 645,000 4,204,675
- ---------------------------------------------------------
IRON/STEEL -- 1.6%
.........................................................
Yodogawa Steel Works 701,000 5,349,462
- ---------------------------------------------------------
PHARMACEUTICALS -- 1.0%
.........................................................
Terumo 259,000 3,282,322
......................................... ============
Total Japan 47,776,557
- ---------------------------------------------------------
<CAPTION>
MALAYSIA -- 2.2% Shares Value
- ---------------------------------------------------------
<S> <C> <C>
BUILDING MATERIALS -- 0.4%
.........................................................
Kedah Cement Holdings BHD 679,000 $ 1,257,187
- ---------------------------------------------------------
FINANCIAL SERVICES -- 0.9%
.........................................................
Arab Malaysian Finance Berhad 663,000 2,896,198
- ---------------------------------------------------------
TRUCKING & SHIPPING -- 0.9%
.........................................................
Malaysian International
Shipping Corporation BHD 1,013,000 3,146,294
......................................... ============
Total Malaysia 7,299,679
- ---------------------------------------------------------
NETHERLANDS -- 7.4%
- ---------------------------------------------------------
CHEMICALS -- 1.8%
.........................................................
Akzo Nobel NV 50,500 6,050,027
- ---------------------------------------------------------
CONSTRUCTION & HOUSING -- 1.4%
.........................................................
Hollandsche Beton Groep NV 24,479 4,689,365
- ---------------------------------------------------------
FINANCIAL SERVICES -- 1.4%
.........................................................
Internationale Nederlanden
Groep NV 155,857 4,647,471
- ---------------------------------------------------------
INSURANCE -- 1.3%
.........................................................
Fortis AMEV NV 147,843 4,235,267
- ---------------------------------------------------------
TELECOMMUNICATIONS -- 1.5%
.........................................................
KPN 127,763 4,835,153
......................................... ============
Total Netherlands 24,457,283
- ---------------------------------------------------------
NEW ZEALAND -- 1.8%
- ---------------------------------------------------------
BUILDING MATERIALS -- 1.0%
.........................................................
Fletcher Challenge Building 1,697,500 3,314,267
- ---------------------------------------------------------
FOREST PRODUCTS & PAPER -- 0.4%
.........................................................
Fletcher Challenge Paper 695,000 1,342,662
- ---------------------------------------------------------
OIL & GAS -- 0.4%
.........................................................
Fletcher Challenge Energy 522,500 1,152,590
......................................... ============
Total New Zealand 5,809,519
- ---------------------------------------------------------
NORWAY -- 1.3%
- ---------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 0.1%
.........................................................
Kvaerner AS--Class A 10,227 432,138
- ---------------------------------------------------------
PHARMACEUTICALS & HEALTH CARE -- 0.8%
.........................................................
Nycomed ASA -- Class B # 200,000 2,770,794
- ---------------------------------------------------------
UTILITY -- ELECTRIC -- 0.4%
.........................................................
Hafslund ASA -- Class B 200,000 1,262,251
......................................... ============
Total Norway 4,465,183
- ---------------------------------------------------------
</TABLE>
See Notes to Financial Statements
6
<PAGE> 14
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
SINGAPORE -- 2.7% Shares Value
- ---------------------------------------------------------
<S> <C> <C>
DIVERSIFIED INDUSTRIES -- 2.2%
.........................................................
Jardine Matheson 1,002,200 $ 7,366,170
- ---------------------------------------------------------
MACHINERY & ENGINEERING -- 0.5%
.........................................................
Sembawang Corporation 291,000 1,443,204
......................................... ============
Total Singapore 8,809,374
- ---------------------------------------------------------
SPAIN -- 3.3%
- ---------------------------------------------------------
BANKS -- 1.7%
.........................................................
Banco Santander SA 122,500 5,713,633
- ---------------------------------------------------------
TELECOMMUNICATIONS -- 1.6%
.........................................................
Telefonica De Espana 290,000 5,338,080
......................................... ============
Total Spain 11,051,713
- ---------------------------------------------------------
SWEDEN -- 3.1%
- ---------------------------------------------------------
COMPUTER SOFTWARE -- 0.7%
.........................................................
Enator AB # 101,500 2,332,727
- ---------------------------------------------------------
DEFENSE -- 0.4%
.........................................................
Celsius Industrier AB 101,500 1,330,802
- ---------------------------------------------------------
DIVERSIFIED -- 2.0%
.........................................................
Marieberg Tidnings AB -- Class
A 263,000 6,579,485
......................................... ============
Total Sweden 10,243,014
- ---------------------------------------------------------
SWITZERLAND -- 7.3%
- ---------------------------------------------------------
BUILDING MATERIALS -- 1.2%
.........................................................
Sarna Kunststoff Holding AG
"registered" 3,750 3,954,808
- ---------------------------------------------------------
BUSINESS SERVICES -- 0.5%
.........................................................
SGS Surveillance Holding SA 3,900 1,713,750
- ---------------------------------------------------------
CHEMICALS -- 1.2%
.........................................................
Ciba-Geigy AG "registered" 3,300 4,020,722
- ---------------------------------------------------------
FOOD PRODUCERS -- 0.2%
.........................................................
Nestle SA "registered" 735 839,150
- ---------------------------------------------------------
INSURANCE -- 1.6%
.........................................................
Swiss Reinsurance Co.
"registered" 5,000 5,133,261
- ---------------------------------------------------------
MACHINERY & EQUIPMENT -- 2.6%
.........................................................
Sig Schweizerische Industrie --
Gesellschaft Holding AG 2,010 4,753,440
.........................................................
Sulzer Gebruder AG (P.C.) 6,400 3,834,965
......................................... ============
8,588,405
......................................... ============
Total Switzerland 24,250,096
- ---------------------------------------------------------
<CAPTION>
UNITED KINGDOM -- 14.5% Shares Value
- ---------------------------------------------------------
<S> <C> <C>
BANKS -- 1.5%
.........................................................
National Westminster Bank, PLC 529,000 $ 5,063,275
- ---------------------------------------------------------
BUILDING MATERIALS -- 1.1%
.........................................................
Redland PLC 600,000 3,738,443
- ---------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 1.2%
.........................................................
Hanson, PLC 1,350,000 3,786,222
- ---------------------------------------------------------
FOOD PRODUCERS -- 1.5%
.........................................................
Hillsdown Holdings, PLC 1,840,000 4,974,646
- ---------------------------------------------------------
HOUSING CONSTRUCTION -- 0.7%
.........................................................
Barratt Developments PLC 562,500 2,219,992
- ---------------------------------------------------------
INSURANCE -- 0.7%
.........................................................
Commercial Union, PLC 270,000 2,433,251
- ---------------------------------------------------------
RETAIL -- 1.9%
.........................................................
Argyll Group PLC 1,150,000 6,200,439
- ---------------------------------------------------------
TOBACCO -- 1.4%
.........................................................
BAT Industries, PLC 602,500 4,690,184
- ---------------------------------------------------------
UTILITY -- ELECTRIC -- 1.7%
.........................................................
Powergen ORD 770,000 5,635,166
- ---------------------------------------------------------
UTILITY -- GAS -- 1.2%
.........................................................
British Gas PLC 1,400,000 3,915,576
- ---------------------------------------------------------
UTILITY -- WATER -- 1.6%
.........................................................
Hyder PLC 465,000 5,158,771
......................................... ============
Total United Kingdom 47,815,965
- ---------------------------------------------------------
Total common stocks -- 93.0%
(cost $291,115,551) 307,968,234
.........................................................
Other assets in excess of liabilities --
7.0% 23,025,209
......................................... ============
Total net assets -- 100% $330,993,443
- ---------------------------------------------------------
</TABLE>
# Non-income producing security.
P.C. -- Participation Certificates.
See Notes to Financial Statements
7
<PAGE> 15
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
BALANCED INCOME FUND
<TABLE>
<CAPTION>
COMMON STOCKS -- 41.2% Shares Value
<S> <C> <C>
- --------------------------------------------------------
AEROSPACE -- 1.8%
........................................................
Northrop Grumman Corporation 5,200 $ 354,250
........................................................
Rockwell International
Corporation 7,100 406,475
........................................................
United Technologies
Corporation 4,700 540,500
........................................ ============
1,301,225
- --------------------------------------------------------
AUTO-RELATED -- 0.4%
........................................................
Dana Corporation 10,000 310,000
- --------------------------------------------------------
AUTOS & TRUCKS -- 2.5%
........................................................
Ford Motor Company 30,100 974,486
........................................................
General Motors Corporation 14,500 759,438
........................................ ============
1,733,924
- --------------------------------------------------------
BANKS -- 2.4%
........................................................
BankAmerica Corporation 3,500 265,125
........................................................
The Chase Manhattan
Corporation 4,680 330,525
........................................................
Comerica, Inc. 5,500 245,438
........................................................
First Chicago NBD Corporation 3,300 129,113
........................................................
First of America Bank
Corporation 8,700 389,325
........................................................
National City Corporation 10,500 368,813
........................................ ============
1,728,339
- --------------------------------------------------------
BEVERAGES -- 0.5%
........................................................
Anheuser-Busch Companies, Inc. 5,000 375,000
- --------------------------------------------------------
BUILDING & FOREST PRODUCTS -- 0.8%
........................................................
Weyerhaeuser Company 14,000 595,000
- --------------------------------------------------------
CHEMICALS -- 1.0%
........................................................
Dow Chemical Company 4,800 364,800
........................................................
Dupont (E.I.) De Nemours &
Company 4,800 379,800
........................................ ============
744,600
- --------------------------------------------------------
DIVERSIFIED -- 1.4%
........................................................
Hanson PLC, ADR 26,000 370,500
........................................................
Tenneco, Inc. 12,400 633,950
........................................ ============
1,004,450
- --------------------------------------------------------
DRUGS -- 1.5%
........................................................
American Home Products
Corporation 5,000 300,625
........................................................
Baxter International, Inc. 6,200 292,950
........................................................
Bristol-Myers Squibb Company 2,800 252,000
........................................................
Merck & Company, Inc. 3,600 232,650
........................................ ============
1,078,225
- --------------------------------------------------------
<CAPTION>
Shares Value
<S> <C> <C>
- --------------------------------------------------------
FINANCIAL SERVICES -- 4.1%
........................................................
Beneficial Corporation 6,200 $ 347,975
........................................................
Great Western Financial
Corporation 31,000 740,125
........................................................
H.F. Ahmanson & Company 36,000 972,000
........................................................
Household International, Inc. 4,200 319,200
........................................................
Transamerica Corporation 6,000 486,000
........................................ ============
2,865,300
- --------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES -- 0.1%
........................................................
Whirlpool Corporation 1,300 64,513
- --------------------------------------------------------
INSURANCE -- 1.4%
........................................................
Aetna Life & Casualty Company 4,600 328,900
........................................................
Aon Corporation 7,500 380,625
........................................................
USLIFE Corporation 7,700 253,138
........................................ ============
962,663
- --------------------------------------------------------
MACHINERY -- 0.6%
........................................................
Deere & Company 10,600 424,000
- --------------------------------------------------------
METALS & MINING -- 2.0%
........................................................
Aluminum Company of America 10,900 625,387
........................................................
Phelps Dodge Corporation 8,000 499,000
........................................................
Reynolds Metals Company 5,000 260,625
........................................ ============
1,385,012
- --------------------------------------------------------
OIL -- DOMESTIC -- 1.7%
........................................................
Atlantic Richfield Company 5,500 651,750
........................................................
Ultramar Corporation 2,500 72,500
........................................................
USX-Marathon Group, Inc. 22,500 452,812
........................................ ============
1,177,062
- --------------------------------------------------------
OIL -- INTERNATIONAL -- 2.4%
........................................................
Chevron Corporation 6,000 354,000
........................................................
Exxon Corporation 4,000 347,500
........................................................
Mobil Corporation 2,000 224,250
........................................................
Royal Dutch Petroleum Company
-- ADR 3,500 538,125
........................................................
TransCanada Pipelines Ltd. 14,000 206,500
........................................ ============
1,670,375
- --------------------------------------------------------
</TABLE>
See Notes to Financial Statements
8
<PAGE> 16
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
BALANCED INCOME FUND
<TABLE>
<CAPTION>
Shares Value
<S> <C> <C>
- --------------------------------------------------------
PAPER -- 1.7%
........................................................
Georgia Pacific Corporation 5,000 $ 355,000
........................................................
International Paper Company 14,525 535,609
........................................................
Union Camp Corporation 6,000 292,500
........................................ ============
1,183,109
- --------------------------------------------------------
PHOTOGRAPHY & OPTICAL -- 0.5%
........................................................
Eastman Kodak Company 4,200 326,550
- --------------------------------------------------------
POLLUTION CONTROL -- 0.5%
........................................................
Browning-Ferris Industries,
Inc. 13,200 382,800
- --------------------------------------------------------
RAILROADS -- 1.3%
........................................................
Conrail, Inc. 8,500 564,188
........................................................
Norfolk Southern Corporation 3,800 322,050
........................................ ============
886,238
- --------------------------------------------------------
RETAIL -- GENERAL -- 2.6%
........................................................
J.C. Penney Co., Inc. 13,000 682,500
........................................................
May Department Stores Company 12,000 525,000
........................................................
Sears, Roebuck & Company 8,000 389,000
........................................................
Woolworth Corporation() 10,000 225,000
........................................ ============
1,821,500
- --------------------------------------------------------
SAVINGS & LOANS -- 0.4%
........................................................
Federal National Mortgage
Association 9,400 314,900
- --------------------------------------------------------
STEEL -- 0.7%
........................................................
USX-U.S. Steel Group, Inc. 17,500 496,562
- --------------------------------------------------------
TOBACCO -- 2.5%
........................................................
American Brands, Incorporated 16,000 726,000
........................................................
Philip Morris Companies,
Incorporated 9,700 1,008,800
........................................ ============
1,734,800
- --------------------------------------------------------
TRUCKING -- 0.6%
........................................................
Ryder System, Inc. 15,000 421,875
- --------------------------------------------------------
<CAPTION>
Shares Value
<S> <C> <C>
- --------------------------------------------------------
UTILITY -- ELECTRIC -- 3.3%
........................................................
CMS Energy Corporation 20,000 $ 617,500
........................................................
DTE Energy Company 7,500 231,563
........................................................
Edison International 19,300 340,162
........................................................
Entergy Corporation 1,100 31,213
........................................................
Illinova Corporation 5,000 143,750
........................................................
New York State Electric & Gas
Corporation 9,000 219,375
........................................................
Niagara Mohawk Power Company 13,500 104,625
........................................................
Peco Energy Company 11,000 286,000
........................................................
Public Service Enterprises
Group, Inc. 14,000 383,250
........................................ ============
2,357,438
- --------------------------------------------------------
UTILITY -- GAS PIPELINE -- 0.8%
........................................................
British Gas PLC, ADR 4,700 131,600
........................................................
Nicor, Inc. 6,000 170,250
........................................................
Peoples Energy Corporation 7,500 251,250
........................................ ============
553,100
- --------------------------------------------------------
UTILITY -- TELEPHONE -- 1.7%
........................................................
NYNEX Corporation 10,500 498,750
........................................................
Pacific Telesis Group 10,500 354,375
........................................................
US West, Inc. 10,000 318,750
........................................ ============
1,171,875
- --------------------------------------------------------
Total common stocks
(cost $25,525,390) 29,070,435
- --------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CORPORATE Principal
BONDS -- 14.8% Amount
<S> <C> <C>
- --------------------------------------------------------
BANKS -- 4.3%
........................................................
Okobank,
6.9687%, 9/27/2049 # $ 700,000 717,990
........................................................
Midland Bank PLC,
5.9125%, 6/29/2049 # 500,000 419,000
........................................................
Westpac Banking,
5.6187%, 9/29/2049 # 2,200,000 1,895,740
........................................ ============
3,032,730
- --------------------------------------------------------
</TABLE>
See Notes to Financial Statements
9
<PAGE> 17
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
BALANCED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- --------------------------------------------------------
FINANCIAL SERVICES -- 3.0%
........................................................
Salomon, Inc.:
5.65%, 2/10/1998 $ 500,000 $ 492,352
........................................................
6.58%, 12/01/1998 # 500,000 500,563
........................................................
5.799%, 4/05/1999 # 1,100,000 1,093,074
........................................ ============
2,085,989
- --------------------------------------------------------
PRINTING & PUBLISHING -- 0.7%
........................................................
Time Warner, Inc.,
6.46%, 8/15/2000 # 500,000 502,132
- --------------------------------------------------------
REAL ESTATE -- 2.1%
........................................................
Taubman Realty Group,
6.00%, 11/03/1997 # 1,500,000 1,492,200
- --------------------------------------------------------
SOVEREIGN -- 1.4%
........................................................
Swedish Export Credit Corp.,
9.875%, 3/15/2038 900,000 982,080
- --------------------------------------------------------
TELECOMMUNICATIONS -- 1.1%
........................................................
Southern New England Telephone,
8.70%, 8/15/2031 750,000 769,989
- --------------------------------------------------------
TRANSPORTATION -- 0.2%
........................................................
Delta Air Lines ETC,
9.90%, 1/02/2002 150,000 165,407
- --------------------------------------------------------
UTILITY -- ELECTRIC -- 2.0%
........................................................
CTC Mansfield Funding Corp. CLB,
11.125%, 9/30/2016 1,400,000 1,447,821
- --------------------------------------------------------
Total corporate bonds
(cost $10,435,557) 10,478,348
- --------------------------------------------------------
GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES -- 5.1%
- --------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 3.0%
........................................................
Federal Home Loan Mortgage
Corporation, 1316 Z, 8.00%,
6/15/2022 674,076 671,488
........................................................
Federal National Mortgage
Association:
1993-202 VS, 9.75%,
2/25/2023 # 599,328 481,004
........................................................
1994-2 SB, 10.00%,
1/25/2024 # 591,732 524,792
........................................................
1994-13 SJ, 8.75%,
2/25/2009 # 525,000 454,946
........................................ ============
2,132,230
- --------------------------------------------------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- --------------------------------------------------------
PASS-THROUGH SECURITIES -- 1.4%
........................................................
Federal Home Loan Bank,
6.44%, 12/21/2000 $1,000,000 $ 981,475
- --------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 0.7%
........................................................
Federal Home Loan Mortgage
Corporation, 1543 TH (IO),
3.559%, 1/15/2019 # 8,644,287 493,329
- --------------------------------------------------------
Total government agency
mortgage-backed securities
(cost $3,806,515) 3,607,034
- --------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED
SECURITIES -- 15.5%
- --------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS--13.2%
........................................................
Bear Stearns Mortgage
Securities,
Inc., 1993-8 A9, 7.50%,
8/25/2024 926,596 877,996
........................................................
Citicorp Mortgage Securities,
Inc.:
........................................................
1988-3 A2, 9.00%, 4/01/2018 246,281 253,665
........................................................
1991-7 M, 8.75%, 5/25/2021 743,831 753,985
........................................................
Donaldson, Lufkin & Jenrette,
1992-MF3 A3, 7.1375%,
6/18/2007 # 500,000 503,600
........................................................
Greenwich Capital Acceptance,
Inc., 1994-LB1, 7.6364%,
4/25/2024 # 1,442,198 1,461,235
........................................................
Independent National Mortgage
Corporation, 1995-N A5,
7.50%, 10/25/2025 1,500,000 1,397,850
........................................................
Marine Midland, 1991-3 AM,
8.00%, 12/25/2022 1,051,623 1,045,142
........................................................
PNC Mortgage Securities
Corporation, 1996-1 A11,
Class Z, 7.50%, 6/25/2026 1,577,864 1,462,285
........................................................
Ryland Mortgage Securities Corp.,
1992-15 B1, 7.5159%,
11/25/2022 # 1,682,653 1,559,651
........................................ ==========
9,315,409
- --------------------------------------------------------
PASS-THROUGH SECURITIES -- 0.0%
........................................................
Citicorp Mortgage Securities, Inc.,
1987-14, 9.50%, 9/25/2002 29,778 30,480
- --------------------------------------------------------
</TABLE>
See Notes to Financial Statements
10
<PAGE> 18
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
BALANCED INCOME FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- --------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 2.3%
........................................................
Bear Stearns, 1993-06 AS2
(Inverse IO),
3.5812%, 6/25/2024 # $7,784,458 $ 362,911
........................................................
Donaldson, Lufkin & Jenrette:
1993-Q16 IS (IO),
3.7392%, 11/25/2023 # 318,932 23,875
........................................................
1993-Q16 IIS (IO),
2.1783%, 11/25/2023 # 7,583,468 317,444
........................................................
1993-Q18 SC (IO),
3.0627%, 1/25/2024 # 5,275,913 255,671
........................................................
GE Capital Mortgage Services,
Inc.,
1993-1 G (IO),
657.2504%, 2/25/2022 # 29,415 411,800
........................................................
Greenwich Capital Acceptance,
Inc., 1992-LB8 (IO),
2.5542%, 2/25/2023 # 2,275,330 28,669
........................................................
Structured Mortgage Asset
Residential Trust:
1991-1 I (IO),
1000%, 6/25/2022 3,005 48,111
........................................................
1991-7 I (IO),
14669.70%, 12/25/2022 # 637 168,159
........................................ ============
1,616,640
- --------------------------------------------------------
Total non-agency mortgage-
backed securities
(cost $10,677,877) 10,962,529
- --------------------------------------------------------
U.S. TREASURY OBLIGATIONS -- 21.0%
- --------------------------------------------------------
U.S. Treasury Notes:
........................................................
5.375%, 5/31/1998 1,000,000 986,875
........................................................
8.00%, 8/15/1999 2,000,000 2,092,500
........................................................
6.75%, 4/30/2000 900,000 909,843
........................................................
6.375%, 3/31/2001 3,000,000 2,986,875
........................................................
7.25%, 5/15/2004 755,000 781,897
........................................................
7.50%, 2/15/2005 250,000 262,969
........................................................
6.50%, 5/15/2005 3,700,000 3,649,125
........................................ ============
11,670,084
- --------------------------------------------------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- --------------------------------------------------------
U.S. Treasury Bonds:
8.125%, 8/15/2019 $ 250,000 $ 280,469
........................................................
7.25%, 8/15/2022 500,000 512,500
........................................ ============
792,969
- --------------------------------------------------------
U.S. Treasury Bill,
5.64%, 5/29/1997 2,500,000 2,376,882
- --------------------------------------------------------
Total U.S. Treasury
obligations
(cost $14,942,811) 14,839,935
- --------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- 1.5%
- --------------------------------------------------------
........................................................
Pitney Bowes, Inc., 5.1441% 127,670 127,670
........................................................
Southwestern Bell, Inc.,
5.1239% 900,935 900,935
........................................ ============
Total variable rate demand
notes
(cost $1,028,605) 1,028,605
- --------------------------------------------------------
Total investments -- 99.1%
(cost $66,416,755) 69,986,886
........................................................
Other assets in excess
of liabilities -- 0.9% 611,307
........................................ ============
Total net assets -- 100% $ 70,598,193
- --------------------------------------------------------
</TABLE>
() Non-income producing security.
# Variable rate security. The rate listed is as of June 30, 1996.
* Variable rate demand notes are considered short-term obligations
and are payable on demand. Interest rates change periodically on specified
dates. The rates listed are as of June 30, 1996.
IO -- Interest only.
ETC -- Equipment Trust Certificate.
ADR -- American Depository Receipt.
CLB -- Callable.
See Notes to Financial Statements
11
<PAGE> 19
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
CORPORATE BONDS AND Principal
NOTES -- 39.0% Amount Value
<S> <C> <C>
- ---------------------------------------------------------
BANKS -- 7.7%
.........................................................
Den Norske Bank,
5.40%, 8/29/2049 # $ 400,000 $ 325,640
.........................................................
Kansallis-Osake-Pankki,
7.53%, 9/30/2043 # 500,000 515,700
.........................................................
Midland Bank PLC,
5.9125%, 6/29/2049 # 650,000 544,700
.........................................................
Swedbank,
6.8125%, 12/29/2049 # 1,500,000 1,508,550
.........................................................
Westpac Banking,
5.6187%, 9/29/2049 # 500,000 430,850
.......................................... ===========
3,325,440
- ---------------------------------------------------------
FINANCIAL SERVICES -- 4.1%
.........................................................
Salomon, Inc.:
6.3937%, 4/01/1997 # 600,000 602,094
.........................................................
6.00%, 7/28/1998 250,000 246,163
.........................................................
6.58%, 12/01/1998 # 150,000 150,169
.........................................................
5.799%, 4/05/1999 # 600,000 596,222
.........................................................
6.26%, 5/20/1999 # 200,000 198,080
.......................................... ===========
1,792,728
- ---------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 4.1%
.........................................................
RJR Nabisco, Inc.:
8.00%, 7/15/2001 350,000 347,558
.........................................................
7.625%, 9/15/2003 1,200,000 1,150,415
.........................................................
8.75%, 8/15/2005 300,000 297,351
.......................................... ===========
1,795,324
- ---------------------------------------------------------
PRINTING & PUBLISHING -- 3.1%
.........................................................
Valassis Inserts,
9.375%, 3/15/1999 1,300,000 1,319,348
- ---------------------------------------------------------
REAL ESTATE -- 3.4%
.........................................................
Taubman Reality Group,
6.00%, 11/03/1997 # 1,500,000 1,492,200
- ---------------------------------------------------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------
RETAIL -- 2.0%
.........................................................
Woolworth Corporation,
7.00%, 10/15/2002 $ 900,000 $ 853,640
- ---------------------------------------------------------
SAVINGS & LOAN -- 1.2%
.........................................................
Western Financial Savings,
8.50%, 7/01/2003 500,000 505,361
- ---------------------------------------------------------
SOVEREIGN -- 2.7%
.........................................................
Government of Mexico,
10.8125%, 7/21/1997 # 850,000 884,000
.........................................................
Republic of Argentina,
5.25%, 3/31/2023 # 500,000 275,312
.......................................... ===========
1,159,312
- ---------------------------------------------------------
TRANSPORTATION -- 0.6%
.........................................................
Delta Air Lines ETC,
9.90%, 1/02/2002 250,000 275,679
- ---------------------------------------------------------
UTILITY -- ELECTRIC -- 10.1%
.........................................................
Cleveland Electric Illum,
7.375%, 6/01/2003 800,000 724,294
.........................................................
Greece Public Power
Corporation,
7.25%, 11/15/2000 1,400,000 1,411,340
.........................................................
Hydro-Quebec,
9.40%, 2/01/2021 200,000 232,536
.........................................................
Northern States Power Co.
CLB,
9.125%, 4/01/2021 500,000 532,684
.........................................................
Westinghouse Electric Corporation:
9.30%, 6/07/1999 1,200,000 1,235,976
.........................................................
8.93%, 6/22/1999 250,000 258,472
.......................................... ===========
4,395,302
- ---------------------------------------------------------
Total corporate bonds
(cost $16,674,552) 16,914,334
- ---------------------------------------------------------
</TABLE>
See Notes to Financial Statements
12
<PAGE> 20
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
GOVERNMENT AGENCY
MORTGAGE-BACKED Principal
SECURITIES -- 19.1% Amount Value
<S> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 16.0%
.........................................................
Federal Home Loan Mortgage
Corporation:
1261 J, 8.00%, 7/15/2021 $ 553,935 $ 551,946
.........................................................
1316 Z, 8.00%, 6/15/2022 550,266 548,153
.........................................................
1468 S, 11.877%, 2/15/2023
# 449,224 446,557
.........................................................
1564 SE, 8.3612%, 8/15/2008
# 353,637 281,031
.........................................................
1627 SD, 9.50%, 12/15/2023
# 598,273 437,218
.........................................................
1761 Z, 8.50%, 11/15/2024 1,143,517 1,164,741
.........................................................
Federal National Mortgage
Association:
G93-27 SB, 6.6606%,
8/25/2023 # 115,176 62,356
.........................................................
1993-37 SB, 7.5396%,
3/25/2023 # 224,549 156,834
.........................................................
1993-45 SA, 9.0043%,
6/25/2022 # 550,360 429,797
.........................................................
1993-165 SJ, 10.25%,
1/25/2022 # 1,341,956 1,191,294
.........................................................
1993-202 VS, 9.75%,
2/25/2023 # 998,878 801,672
.........................................................
X-10B Z, 6.50%, 3/25/2024 1,072,751 880,740
.......................................... ===========
6,952,339
- ---------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 0.8%
.........................................................
Federal Home Loan Mortgage
Corporation, 1543 TH (IO),
3.559%, 1/15/2019 # 5,762,858 328,886
- ---------------------------------------------------------
GOVERNMENT AGENCY NOTE -- 2.3%
.........................................................
Federal Home Loan Mortgage
Corporation (CLB on
5/20/1997), 8.14%,
5/20/2004 1,000,000 1,001,884
- ---------------------------------------------------------
Total government agency
mortgage-backed securities
(cost $8,254,996) 8,283,109
- ---------------------------------------------------------
<CAPTION>
NON-AGENCY
MORTGAGE-BACKED Principal
SECURITIES -- 26.5% Amount Value
<S> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 23.7%
.........................................................
CMC Securities Corporation,
1994-G, 7.00%, 9/25/2024 $ 200,000 $ 180,208
.........................................................
Citicorp Mortgage Securities,
Inc.:
1990-D A1, 9.50%,
10/25/2005 263,904 262,716
.........................................................
1991-5 A, 6.248%, 5/25/2021
# 661,689 549,202
.........................................................
Collateralized Mortgage
Obligations Trust,
57-D, 9.90%, 2/01/2019 600,000 655,464
.........................................................
Countrywide Funding
Corporation, 1994-2 A12T,
9.00%, 2/25/2009 # 465,685 416,508
.........................................................
GE Capital Mortgage Services,
Inc.:
1993-17 A17, 9.00%,
12/25/2023 # 197,759 168,177
.........................................................
1994-24 A4, 7.00%,
7/25/2024 169,843 153,343
.........................................................
Greenwich Capital Acceptance,
Inc.,
1992-1 B1, 6.9252%,
1/25/2023 # 496,254 394,373
.........................................................
Guardian Savings & Loan
Assoc.:
1989-1 A, 7.47519%,
2/25/2019 # 287,791 250,608
.........................................................
1989-3 A, 7.7233%,
5/25/2019 # 283,238 255,141
.........................................................
Housing Securities, Inc.:
1994-1 AB2, 6.50%,
3/25/2009 540,316 383,287
.........................................................
1994-2 B1, 6.50%, 7/25/2009 274,629 234,012
.........................................................
Independent National Mortgage
Corporation:
1995-F, 8.25%, 5/25/2010 1,000,000 1,012,749
.........................................................
1995-MO A, 7.50%, 9/25/2025 1,000,000 930,800
.........................................................
1995-N A5, 7.50%,
10/25/2025 1,300,000 1,211,470
.........................................................
Resident Funding Mortgage
Securities I:
1993-S47 A15, 9.00%,
12/25/2023 # 1,116,689 698,489
.........................................................
1993-S47 A16, 5.4844%,
12/25/2023 # 1,753,018 619,890
.........................................................
</TABLE>
See Notes to Financial Statements
13
<PAGE> 21
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------
Resolution Trust Corp.:
1991-M4 A1, 6.341%,
2/25/2020 # $ 275,131 $ 269,986
.........................................................
1995-2 B6, 6.8362%,
5/25/2029 # 491,825 479,382
.........................................................
1995-2 B7, 7.2303%,
5/25/2029 # 721,387 692,315
.........................................................
Saxon Mortgage Securities
Corporation,
1994-6 B2, 8.1857%,
6/25/2024 # 488,810 485,193
.......................................... ===========
10,303,313
- ---------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 2.8%
.........................................................
Nomura Asset Securities
Corporation:
1994-2A 1 (IO), 2.1298%,
5/25/2024 # 9,331,045 360,598
.........................................................
1994-4A 2 (IO), 1.3988%,
9/25/2024 # 15,654,137 404,080
.........................................................
Ryland Mortgage Securities
Corporation, 42 2X1 (IO),
3428.23022%, 6/25/2023 # 8,233 452,844
.......................................... ===========
1,217,522
- ---------------------------------------------------------
Total non-agency mortgage-backed
securities
(cost $12,109,258) 11,520,835
- ---------------------------------------------------------
<CAPTION>
U.S. TREASURY Principal
OBLIGATIONS -- 8.5% Amount Value
<S> <C> <C>
- ---------------------------------------------------------
U.S. Treasury Bonds:
8.125%, 8/15/2019 $ 1,875,000 $ 2,103,516
.........................................................
8.75%, 8/15/2020 585,000 699,623
.........................................................
7.875%, 2/15/2021 400,000 438,375
.........................................................
6.25%, 8/15/2023 500,000 453,125
.......................................... ===========
Total U.S. Treasury
obligations
(cost $3,956,894) 3,694,639
- ---------------------------------------------------------
DISCOUNT NOTES -- 5.8%
- ---------------------------------------------------------
American Bankers Institute,
5.54%, 7/02/1996 1,000,000 999,846
.........................................................
Columbia/HCA Healthcare
Corp.,
5.60%, 8/16/1996 919,000 912,424
.........................................................
Source One Mortgage Services
Corp.,
5.60%, 7/08/1996 600,000 599,347
.......................................... ===========
Total discount notes
(cost $2,511,617) 2,511,617
- ---------------------------------------------------------
VARIABLE RATE DEMAND NOTE* -- 0.1%
- ---------------------------------------------------------
General Mills, Inc., 5.14% 60,945 60,945
.......................................... ===========
Total variable rate demand
note (cost $60,945) 60,945
- ---------------------------------------------------------
Total investments--99.0%
(cost $43,568,262) 42,985,479
.........................................................
Other assets in excess
of liabilities--1.0% 434,713
.......................................... ===========
Total net assets--100% $43,420,192
- ---------------------------------------------------------
</TABLE>
# Variable rate security. The rate listed is as of June 30, 1996.
* Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rate changes periodically on specified dates. The
rate listed is as of June 30, 1996.
IO -- Interest only.
CLB -- Callable.
See Notes to Financial Statements
14
<PAGE> 22
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
CORPORATE BONDS AND NOTES Principal
- -- 39.9% Amount Value
<S> <C> <C>
- ---------------------------------------------------------
BANKS -- 17.3%
.........................................................
Den Norske Bank,
5.40%, 8/29/2049 # $ 2,600,000 $ 2,116,660
.........................................................
Kansallis-Osake-Pankki,
7.53%, 9/30/2043 # 4,660,000 4,806,324
.........................................................
Midland Bank PLC,
5.9125%, 6/29/2049 # 3,650,000 3,058,700
.........................................................
National Australia Bank,
5.8062%, 10/29/2049 # 4,150,000 3,592,447
.........................................................
Okobank,
6.9687%, 9/27/2049 # 6,700,000 6,872,190
.........................................................
Swedbank:
7.3359%, 10/29/2049 # 6,000,000 6,154,800
.........................................................
6.8125%, 12/29/2049 # 900,000 905,130
.........................................................
Westpac Banking,
5.6187%, 9/29/2049 # 6,100,000 5,256,370
......................................... ============
32,762,621
- ---------------------------------------------------------
FINANCIAL SERVICES -- 7.3%
.........................................................
Lehman Brothers, Inc.:
9.50%, 6/15/1997 800,000 823,334
.........................................................
5.04%, 12/15/2003,
putable 10/15/1996 # 3,300,000 3,264,459
.........................................................
Salomon, Inc.:
6.0515%, 11/26/1996 # 720,000 720,000
.........................................................
5.20%, 1/20/1997 1,000,000 995,088
.........................................................
8.67%, 2/14/1997 400,000 405,938
.........................................................
5.53%, 1/30/1998 2,100,000 2,065,005
.........................................................
5.65%, 2/10/1998 200,000 196,941
.........................................................
5.70%, 2/11/1998 2,000,000 1,970,870
.........................................................
9.43%, 3/15/1998 1,000,000 1,042,998
.........................................................
6.125%, 5/15/1998 315,000 311,621
.........................................................
6.58%, 12/01/1998 # 1,500,000 1,501,690
.........................................................
6.26%, 5/20/1999 # 500,000 495,200
......................................... ============
13,793,144
- ---------------------------------------------------------
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------
HEALTH -- 0.1%
.........................................................
Health & Rehabilitation
Property Trust,
CLB 7/13/1996, 6.2551%,
7/13/1999 # $ 200,000 $ 198,300
- ---------------------------------------------------------
INDUSTRIALS -- 0.3%
.........................................................
Westinghouse Credit Co.,
9.07%, 7/25/1996 500,000 500,949
- ---------------------------------------------------------
PRINTING & PUBLISHING -- 5.2%
.........................................................
Time Warner, Inc.,
6.46%, 8/15/2000 # 3,195,000 3,208,626
.........................................................
Valassis Inserts,
9.375%, 3/15/1999 6,600,000 6,698,227
......................................... ============
9,906,853
- ---------------------------------------------------------
REAL ESTATE -- 2.8%
.........................................................
Taubman Reality Group,
6.00%, 11/03/1997 # 5,400,000 5,371,920
- ---------------------------------------------------------
SOVEREIGN -- 3.0%
.........................................................
Government of Mexico,
10.8125%, 7/21/1997 # 4,600,000 4,784,000
.........................................................
Republic of Argentina,
5.25%, 3/31/2023 # 1,550,000 853,469
......................................... ============
5,637,469
- ---------------------------------------------------------
TELECOMMUNICATIONS -- 0.2%
.........................................................
Illinois Bell Telephone Co.
CLB, 7.625%, 4/01/2006 300,000 304,810
- ---------------------------------------------------------
</TABLE>
See Notes to Financial Statements
15
<PAGE> 23
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------
UTILITY -- ELECTRIC -- 3.7%
.........................................................
Cleveland Electric Illum:
9.25%, 7/29/1999 $ 1,900,000 $ 1,935,786
.........................................................
8.55%, 11/15/2001 2,000,000 1,931,632
.........................................................
CTC Mansfield Funding Corp.
CLB, 11.125%, 9/30/2016 350,000 361,955
.........................................................
Gulf States Utilities CLB,
6.75%, 10/01/1998 700,000 692,763
.........................................................
Northern States Power Co.
CLB, 9.125%, 4/01/2021 2,000,000 2,130,738
......................................... ============
7,052,874
- ---------------------------------------------------------
Total corporate bonds and
notes (cost $73,923,633) 75,528,940
- ---------------------------------------------------------
GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 13.4%
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 8.2%
.........................................................
Federal Home Loan Mortgage
Corporation:
GNMA Series 16 PU,
4.50%, 10/25/2006 215,797 215,044
.........................................................
1081 I, 7.00%, 12/15/2019 392,030 394,417
.........................................................
1096 D, 7.00%, 6/15/2020 92,744 93,285
.........................................................
1194 G, 6.50%, 10/15/2006 500,000 487,440
.........................................................
1201 D, 7.00%, 10/15/2020 763,575 767,935
.........................................................
1262 F, 7.50%, 3/15/2015 500,000 508,594
.........................................................
1267 O, 7.25%, 12/15/2005 100,000 101,195
.........................................................
1336 H, 7.75%, 1/15/2021 400,000 403,248
.........................................................
1358 F, 6.75%, 1/15/2019 600,000 600,780
.........................................................
1499 SB, 9.9088%,
4/15/2023 # 1,282,435 1,066,825
.........................................................
1543 KE, 9.4456%,
9/15/2022 # 1,046,602 684,870
.........................................................
1617 D, 6.50%, 11/15/2023 71,000 61,637
.........................................................
1686 SG, 7.00%, 2/15/2024 # 924,490 721,969
.........................................................
1761 Z, 8.50%, 11/15/2024 1,143,517 1,164,741
- ---------------------------------------------------------
<CAPTION>
Principal
Amount Value
- ---------------------------------------------------------
<S> <C> <C>
Federal National Mortgage
Association:
1988-26 C, 7.50%,
7/25/2018 $ 154,670 $ 156,607
.........................................................
1990-112 E, 8.50%,
7/25/2019 149,733 153,507
.........................................................
1991-147 K, 7.00%,
1/25/2021 5,000 4,883
.........................................................
1991-153 N, 7.50%,
2/25/2007 300,000 306,234
.........................................................
G92-9 K, 7.00%, 1/25/2020 250,000 251,005
.........................................................
1992-138 O, 7.50%,
7/25/2022 88,509 85,203
.........................................................
1992-158 Z, 7.75%,
3/25/2021 1,344,642 1,302,031
.........................................................
1992-163 E, 6.75%,
9/25/2022 500,000 494,490
.........................................................
1993-45 SB, 9.118%,
4/25/2023 # 1,500,000 1,070,157
.........................................................
1993-141 SB, 9.4456%,
3/25/2023 # 2,103,469 1,403,409
.........................................................
1994-2 SB, 10.00%,
1/25/2024 # 373,185 330,969
.........................................................
1994-13 SJ, 8.75%,
2/25/2009 # 800,000 693,250
.........................................................
1994-27 SE, 10.00%,
3/25/2023 # 725,668 597,089
.........................................................
1994-60 D, 7.00%,
4/25/2024 30,000 25,894
.........................................................
Government National
Mortgage Association,
1995-2 G, 8.50%,
3/20/2020 1,300,000 1,347,359
......................................... ============
15,494,067
- ---------------------------------------------------------
</TABLE>
See Notes to Financial Statements
16
<PAGE> 24
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------
GOVERNMENT AGENCY NOTES -- 2.9%
.........................................................
Federal Home Loan Bank,
6.44%, 12/21/2000 $ 1,500,000 $ 1,472,212
.........................................................
Federal Home Loan Mortgage
Corporation:
8.14%, 5/20/2004 (CLB
5/20/1997) 2,000,000 2,003,768
.........................................................
8.44%, 10/27/2004 (CLB
10/27/1997) 2,000,000 2,038,682
......................................... ============
5,514,662
- ---------------------------------------------------------
PASS-THROUGH SECURITIES -- 1.8%
.........................................................
Federal Home Loan Mortgage
Corporation,
255452, 8.50%, 2/01/2008 722,090 748,331
.........................................................
Federal National Mortgage
Association:
21130, 8.00%, 9/01/2000 19,820 19,842
.........................................................
308798, 7.311%,
4/01/2025 # 1,926,798 1,980,162
.........................................................
312155, 7.317%,
3/01/2025 # 633,796 641,275
......................................... ============
3,389,610
- ---------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 0.5%
.........................................................
Federal Home Loan Mortgage
Corporation, 1543 TH
(IO), 3.559%, 1/15/2019 # 11,640,973 664,350
.........................................................
Federal National Mortgage
Association,
1993-97 L (IO), 7.50%,
5/25/2023 2,371,152 304,456
......................................... ============
968,806
- ---------------------------------------------------------
Total government agency
mortgage-backed securities
(cost $25,228,143) 25,367,145
- ---------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED
SECURITIES -- 31.1%
- ---------------------------------------------------------
ASSET-BACKED SECURITIES -- 0.1%
.........................................................
Western Financial Grantor
Trust, 1992-3, 4.70%,
1/01/1998 202,774 202,267
- ---------------------------------------------------------
<CAPTION>
Principal
Amount Value
- ---------------------------------------------------------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 29.0%
.........................................................
Bear Stearns Mortgage
Securities, Inc.,
1993-8 A9, 7.50%,
8/25/2024 $ 1,667,874 $ 1,580,394
.........................................................
Capstead Securities Corp.:
1992-2 C, 7.80%,
2/25/2022 437,774 439,153
.........................................................
1992-11 1B, 7.875%,
8/25/2022 440,881 420,910
.........................................................
Chemical Mortgage
Securities, Inc.,
1993-3 A1, 7.125%,
7/25/2023 407,827 407,297
.........................................................
Citicorp Mortgage
Securities, Inc.:
1987-9 A1, 9.00%,
7/25/2002 740,157 756,167
.........................................................
1988-3 A2, 9.00%,
4/01/2018 49,256 50,733
.........................................................
1989-8 A1, 10.50%,
6/25/2019 664,203 717,040
.........................................................
1989-17 A1, 7.1347%,
10/25/2019 # 1,233,201 1,235,544
.........................................................
1989-18 A1, 9.50%,
11/25/2004 202,631 202,065
.........................................................
1990-D A1, 9.50%,
10/25/2005 527,808 525,433
.........................................................
1990-4 A5, 9.50%,
3/25/2005 652,629 655,240
.........................................................
1991-5 A, 6.248%,
5/25/2021 # 1,386,395 1,150,708
.........................................................
1993-13 A6, 8.50%,
11/25/2008 # 285,000 226,853
.........................................................
</TABLE>
See Notes to Financial Statements
17
<PAGE> 25
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------
Countrywide Funding Corp.,
1994-17 A9, 8.00%,
7/25/2024 $ 4,000 $ 3,996
.........................................................
Donaldson, Lufkin &
Jenrette: 1992-M10 A1,
7.3125%, 12/22/2002 # 3,412,729 3,488,833
.........................................................
1992-MF3 A3, 7.1375%,
6/18/2007 # 4,000,000 4,028,800
.........................................................
First Bank Systems,
1993 AT T2, 8.25%,
3/25/2023 405,964 407,832
.........................................................
Fleet Mortgage Securities,
1992-2 2A4, 8.55%,
6/25/2023 2,632,953 2,677,450
.........................................................
GE Capital Mortgage
Services, Inc.:
1992-7A A6, 8.30%,
7/25/2023 1,962,448 2,009,468
.........................................................
1993-17 A17, 9.00%,
12/25/2023 # 461,538 392,499
.........................................................
Greenwich Capital
Acceptance, Inc.:
1992-1 B1, 6.9252%,
1/25/2023 # 2,481,270 1,971,865
.........................................................
1994-LB1, 7.6364%,
4/25/2024 # 961,466 974,157
.........................................................
Guardian Savings &
Loan Assoc.,
1991-1 A1, 7.2201%,
1/25/2021 # 1,581,927 1,158,306
.........................................................
Housing Securities, Inc.,
1994-2 B1, 6.50%,
7/25/2009 245,853 209,491
.........................................................
Independent National
Mortgage Corporation:
1995-A4, 8.75%, 3/25/2025 18,000 18,950
.........................................................
1995-MA4 A, 7.50%,
9/25/2025 1,000,000 930,800
.........................................................
Marine Midland,
1991-3 AM, 8.00%,
12/25/2022 4,503,750 4,475,994
.........................................................
Paine Webber Mortgage,
1993-9 A6, 7.00%,
10/25/2023 3,121,299 2,980,060
.........................................................
<CAPTION>
Principal
Amount Value
- ---------------------------------------------------------
<S> <C> <C>
Prudential Home Mortgage
Securities, Co.:
1993-36 A10, 7.25%,
10/25/2023 $ 500,000 $ 481,720
.........................................................
Residential Funding Corp.,
1993-S9 A8, 8.75%,
2/25/2008 # 125,305 86,365
.........................................................
Residential Funding
Mortgage
Securities, Inc.:
1989-SW1 A, 7.065%,
1/25/2019 # 808,144 791,577
.........................................................
1992-S5 A5, 7.50%,
2/25/2007 1,350,000 1,348,434
.........................................................
Resolution Trust Corp.:
1991-6 B6, 8.7563%,
3/25/2021 # 1,600,000 1,642,320
.........................................................
1991-M4 A1, 6.341%,
2/25/2020 # 2,109,336 2,069,891
.........................................................
1995-2 B6, 6.8362%,
5/25/2029 # 3,977,999 3,877,356
.........................................................
1995-2 B7, 7.2303%,
5/25/2029 # 3,428,390 3,290,226
.........................................................
Ryland Mortgage Securities
Corp.:
1989-8 E, 9.00%,
8/25/2020 931,556 929,599
.........................................................
1992-15 B1, 7.5159%,
11/25/2022 # 967,651 896,915
.........................................................
Saxon Mortgage
Securities Corp.,
1994-6 B2, 8.1844%,
6/25/2024 # 2,427,430 2,409,467
.........................................................
Structured Mortgage Asset
Residential Trust:
1991-1H, 8.25%, 6/25/2022 351,103 336,953
.........................................................
1992-3 A, 8.00%,
10/25/2007 272,501 262,746
.........................................................
1993-5A AA, 6.9456%,
6/25/2024 # 435,453 422,041
.........................................................
SML, Inc.,
1994-C 1, 6.4375%,
9/20/1999 # 2,000,000 2,006,700
......................................... ============
54,948,348
- ---------------------------------------------------------
</TABLE>
See Notes to Financial Statements
18
<PAGE> 26
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
<S> <C> <C>
- ---------------------------------------------------------
PASS-THROUGH SECURITIES -- 0.1%
.........................................................
Citicorp Mortgage
Securities, Inc.:
1987-5, 8.50%, 4/25/2017 $ 32,771 $ 32,831
.........................................................
1987-14, 9.50%, 9/25/2002 59,556 60,961
.........................................................
1988-16 A1, 10.00%,
11/25/2018 64,242 68,623
......................................... ============
162,415
- ---------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 1.9%
.........................................................
Donaldson, Lufkin &
Jenrette: 1993-Q16 IIS
(IO), 2.1783%, 11/25/2023 # 4,139,371 173,274
.........................................................
1993-Q16 IS (IO),
3.7392%, 11/25/2023 # 917,744 68,702
.........................................................
1993-Q18 SC (IO),
3.0627%, 1/25/2024 # 2,374,161 115,052
.........................................................
1994-Q8 IIS (IO), 1.95%,
5/25/2024 # 24,032,772 979,095
.........................................................
Nomura Asset Securities
Corporation:
1994-2A 1 (IO), 2.2144%,
5/25/2024 # 27,952,580 1,080,227
.........................................................
1994-5A 1 (IO), 1.0681%,
11/25/2024 # 51,111,414 762,838
.........................................................
Residential Funding Corp.,
1992-S2 A16 (IO), 0.50%,
1/25/2022 36,029,672 270,006
.........................................................
Structured Mortgage Asset
Residential Trust,
1991-2 I (IO), 28.1035%,
6/25/2022 # 53,325 68,795
......................................... ============
3,517,989
- ---------------------------------------------------------
Total non-agency mortgage-
backed securities
(cost $59,585,128) 58,831,019
- ---------------------------------------------------------
<CAPTION>
Principal
Amount Value
- ---------------------------------------------------------
<S> <C> <C>
U.S. TREASURY OBLIGATIONS -- 10.9%
- ---------------------------------------------------------
U.S. Treasury Notes:
5.375%,11/30/1997 $ 1,000,000 $ 991,875
.........................................................
5.00%, 1/31/1998 2,000,000 1,968,750
.........................................................
7.875%, 4/15/1998 7,000,000 7,210,000
.........................................................
7.50%, 10/31/1999 600,000 620,062
.........................................................
6.125%, 7/31/2000 950,000 939,609
.........................................................
6.25%, 8/31/2000 1,000,000 993,437
.........................................................
5.75%, 8/15/2003 7,885,000 7,505,534
.........................................................
U.S. Treasury Bonds,
8.75%, 8/15/2020 300,000 358,781
......................................... ============
Total U.S. Treasury
obligations
(cost $20,808,303) 20,588,048
- ---------------------------------------------------------
DISCOUNT NOTES -- 3.7%
- ---------------------------------------------------------
Columbia/HCA Healthcare
Corp.:
5.52%, 7/10/1996 3,000,000 2,995,860
.........................................................
5.50%, 8/15/1996 3,000,000 2,979,375
.........................................................
Source One Mortgage
Services Corporation,
5.60%, 7/08/1996 1,000,000 998,911
......................................... ============
Total discount notes
(cost $6,974,146) 6,974,146
- ---------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- 0.1%
- ---------------------------------------------------------
Pitney Bowes, Inc.,
5.1441% 256,243 256,243
......................................... ============
Total variable rate demand
note (cost $256,243) 256,243
- ---------------------------------------------------------
Total investments -- 99.1%
(cost $186,775,596) 187,545,541
.........................................................
Other assets in excess of
liabilities -- 0.9% 1,615,641
......................................... ============
Total net assets -- 100% $189,161,182
- ---------------------------------------------------------
</TABLE>
# Variable rate security. The rate listed is as of June 30, 1996.
* Variable rate demand notes are considered short-term obligations
and are payable on demand. Interest rates change periodically on specified
dates. The rates listed are as of June 30, 1996.
IO -- Interest Only.
CLB -- Callable.
See Notes to Financial Statements
19
<PAGE> 27
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
Principal
CORPORATE BONDS -- 30.5% Amount Value
<S> <C> <C>
- ---------------------------------------------------------
BANKS -- 18.1%
.........................................................
Den Norske Bank,
5.75%, 11/29/2049 # $ 700,000 $ 574,875
.........................................................
Kansallis-Osake-Pankki,
7.53%, 9/30/2043 # 200,000 206,280
.........................................................
National Australia Bank,
5.8062%, 10/29/2049 # 1,000,000 865,650
.........................................................
Okobank,
6.9687%, 9/27/2049 # 900,000 923,130
.........................................................
Swedbank,
7.3359%, 10/29/2049 # 800,000 820,640
.......................................... ===========
3,390,575
- ---------------------------------------------------------
FINANCIAL SERVICES -- 4.8%
.........................................................
Salomon, Inc.:
5.53%, 1/30/1998 500,000 491,668
.........................................................
6.58%, 12/01/1998 # 400,000 400,451
.......................................... ===========
892,119
- ---------------------------------------------------------
SOVEREIGN -- 3.0%
.........................................................
Government of Mexico,
10.8125%, 7/21/1997 # 550,000 572,000
- ---------------------------------------------------------
TELECOMMUNICATIONS -- 0.8%
.........................................................
Illinois Bell Telephone Co.
CLB, 7.625%, 4/01/2006 150,000 152,405
- ---------------------------------------------------------
UTILITY -- ELECTRIC -- 3.8%
.........................................................
Gulf States Utilities CLB,
6.75%, 10/01/1998 300,000 296,899
.........................................................
Westinghouse Electric
Corporation,
9.30%, 6/07/1999 400,000 411,992
.......................................... ===========
708,891
- ---------------------------------------------------------
Total corporate bonds
(cost $5,589,648) 5,715,990
- ---------------------------------------------------------
<CAPTION>
GOVERNMENT AGENCY
MORTGAGE-BACKED Principal
SECURITIES -- 8.8% Amount Value
<S> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 8.1%
.........................................................
Federal Home Loan Mortgage
Corporation:
16-B, 10.00%, 10/15/2019 $ 26,444 $ 27,006
.........................................................
1081 I, 7.00%, 12/15/2019 161,222 162,204
.........................................................
1722 PB, 6.50%, 2/15/2009 171,177 171,122
.........................................................
Federal Housing Authority
Project, 7.43%, 2/01/2023 139,560 140,785
.........................................................
Federal National Mortgage
Association:
G92-40 B, 7.00%, 12/25/2015 # 124,603 124,390
.........................................................
1992-43 B, 7.50%,
11/25/2018 669,283 673,961
.........................................................
1992-185 VA, 5.10%,
5/25/1997 225,632 224,221
.......................................... ===========
1,523,689
- ---------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 0.7%
.........................................................
Federal National Mortgage
Association, 1993-97 L
(IO),
7.50%, 5/25/2023 874,486 112,284
.........................................................
Government National Mortgage
Association, 103695,
11.50%, 9/15/1998 19,943 20,908
.......................................... ===========
133,192
- ---------------------------------------------------------
Total government agency
mortgage-backed securities
(cost $1,624,225) 1,656,881
- ---------------------------------------------------------
</TABLE>
See Notes to Financial Statements
20
<PAGE> 28
Schedule of Investments -- June 30, 1996
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
NON-AGENCY
MORTGAGE-BACKED Principal
SECURITIES -- 17.9% Amount Value
<S> <C> <C>
- ---------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 17.0%
.........................................................
Citicorp Mortgage Securities,
Inc.:
1989-18 A1, 9.50%,
11/25/2004 $ 159,210 $ 158,766
.........................................................
1990-D A1, 9.50%,
10/25/2005 263,904 262,716
.........................................................
1991-5 A, 6.248%,
5/25/2021 # 189,054 156,915
.........................................................
1991-7 M, 8.75%, 5/25/2021 82,648 83,776
.........................................................
Donaldson, Lufkin & Jenrette:
1992-M10 A1, 7.3125%,
12/22/2002 # 663,586 678,384
.........................................................
1992-MF3 A3, 7.1375%,
6/18/2007 # 500,000 503,600
.........................................................
Prudential Home Mortgage
Securities, Inc.,
1993-1 A1, 7.50%, 2/25/2023 279,189 280,895
.........................................................
Ryland Mortgage Securities
Corp.,
1992-15 B1, 7.5159%,
11/25/2022 # 387,060 358,766
.........................................................
Saxon Mortgage Securities
Corp.,
1994-6 B2, 8.1844%,
6/25/2024 # 488,810 485,193
.........................................................
Structured Mortgage Asset
Residential Trust,
1992-11B BH, 7.80%,
8/25/2021 209,903 212,300
.......................................... ===========
3,181,311
- ---------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 0.9%
.........................................................
Donaldson, Lufkin & Jenrette:
1993-Q16 IS (IO), 3.7392%,
11/25/2023 # 533,723 39,955
.........................................................
1993-Q18 SC (IO), 3.0627%,
1/25/2024 # 2,637,956 127,835
.......................................... ===========
167,790
- ---------------------------------------------------------
Total non-agency mortgage-
backed securities
(cost $3,447,235) 3,349,101
- ---------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY Principal
OBLIGATIONS -- 20.6% Amount Value
<S> <C> <C>
- ---------------------------------------------------------
U.S. Treasury Notes:
5.625%, 1/31/1998 $2,100,000 $ 2,086,875
.........................................................
5.375%, 5/31/1998 1,800,000 1,776,375
.......................................... ===========
Total U.S. Treasury
obligations
(cost $3,859,227) 3,863,250
- ---------------------------------------------------------
DISCOUNT NOTES -- 19.2%
- ---------------------------------------------------------
Alloman Funding Corp.,
5.42%, 7/22/1996 800,000 797,471
.........................................................
C & H Sugar,
5.50%, 7/09/1996 700,000 699,144
.........................................................
Columbia/HCA Healthcare
Corp.,
5.52%, 7/26/1996 700,000 697,317
.........................................................
Kerr McGee Credit Corp.,
5.55%, 7/08/1996 700,000 699,245
.........................................................
Source One Mortgage Services
Corp.,
5.55%, 7/19/1996 700,000 698,058
.......................................... ===========
Total discount notes
(cost $3,591,233) 3,591,235
- ---------------------------------------------------------
VARIABLE RATE DEMAND NOTE* -- 2.2%
- ---------------------------------------------------------
Southwestern Bell, Inc.,
5.1239% 408,706 408,706
.......................................... ===========
Total variable rate demand
note
(cost $408,706) 408,706
- ---------------------------------------------------------
Total investments -- 99.2%
(cost $18,520,274) 18,585,163
.......................................... ===========
Other assets in excess of
liabilities -- 0.8% 140,619
.......................................... ===========
Total net assets -- 100% $18,725,782
- ---------------------------------------------------------
</TABLE>
# Variable rate security. Rate listed is as of June 30, 1996.
* Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates. The
rates listed are as of June 30, 1996.
IO -- Interest Only.
CLB -- Callable.
See Notes to Financial Statements
21
<PAGE> 29
Financial Statements -- June 30, 1996
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
EQUITY SMALL
INCOME CAP
FUND FUND
--------------------------------
<S> <C> <C>
ASSETS:
Investments, at value*...................................... $182,765,666 $16,048,850
Foreign currency**.......................................... 0 0
Cash........................................................ 76,709 1,360
Dividends and interest receivable........................... 465,207 23,474
Receivable from Advisor..................................... 0 6,149
Receivable for investments sold............................. 0 427,792
Receivable for Fund shares sold............................. 53,000 10,000
Other receivables........................................... 1,567 7,010
------------ -----------
Total assets........................................... $183,362,149 $16,524,635
------------ -----------
LIABILITIES:
Payable to Advisor.......................................... 120,437 0
Payable for investments purchased........................... 348,725 0
Payable for Fund shares repurchased......................... 203,041 3,639
Dividends payable........................................... 0 0
Accrued expenses and other liabilities...................... 151,841 40,310
------------ -----------
Total liabilities...................................... 824,044 43,949
------------ -----------
Net assets............................................. $182,538,105 $16,480,686
============ ===========
NET ASSETS CONSIST OF:
Paid in capital............................................. $142,852,990 $13,319,788
Undistributed net investment income......................... 0 56,471
Undistributed net realized gain (loss) on securities
and foreign currency transactions........................ 4,957,420 1,983,103
Net unrealized appreciation (depreciation) of
securities and foreign currency.......................... 34,727,695 1,121,324
------------ -----------
Net assets............................................. $182,538,105 $16,480,686
============ ===========
CALCULATION OF NET ASSET VALUE PER SHARE:
Shares outstanding (unlimited shares of
no par value authorized)................................. 9,650,910 772,618
Net asset value per share (offering and redemption price)... $ 18.91 $ 21.33
============ ===========
*Cost of Investments......................................... $148,037,971 $14,927,526
============ ===========
**Cost of Foreign Currency.................................... $ 0 $ 0
============ ===========
</TABLE>
See Notes to Financial Statements
22
<PAGE> 30
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED TOTAL LOW SHORT-TERM
INTERNATIONAL INCOME RETURN BOND DURATION INVESTMENT
FUND FUND FUND FUND FUND
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$307,968,234 $69,986,886 $42,985,479 $187,545,541 $18,585,163
11,925,048 0 0 0 0
32,747,429 9,795 199 0 0
1,614,376 612,636 607,099 2,397,030 201,176
0 0 4,001 0 0
0 109,685 100,738 243,424 12,144
1,265,558 100,200 0 203,600 7,467
29,515 15,560 17,910 83,739 37,545
------------ ----------- ----------- ------------ -----------
355,550,160 70,834,762 43,715,426 190,473,334 18,843,495
------------ ----------- ----------- ------------ -----------
150,825 57,241 0 38,703 487
23,847,083 77,095 0 0 0
292,540 37,769 0 163,181 0
1,639 0 245,467 1,016,632 82,289
264,630 64,464 49,767 93,636 34,937
------------ ----------- ----------- ------------ -----------
24,556,717 236,569 295,234 1,312,152 117,713
------------ ----------- ----------- ------------ -----------
$330,993,443 $70,598,193 $43,420,192 $189,161,182 $18,725,782
============ =========== =========== ============ ===========
$312,994,774 $64,561,629 $43,688,951 $188,103,806 $18,745,835
503,115 80,910 79,541 290,152 0
664,767 2,385,523 234,483 (2,721) (84,942)
16,830,787 3,570,131 (582,783) 769,945 64,889
------------ ----------- ----------- ------------ -----------
$330,993,443 $70,598,193 $43,420,192 $189,161,182 $18,725,782
============ =========== =========== ============ ===========
16,192,046 3,865,012 3,396,308 18,700,254 1,841,171
$ 20.44 $ 18.27 $ 12.78 $ 10.12 $ 10.17
============ =========== =========== ============ ===========
$291,115,551 $66,416,755 $43,568,262 $186,775,596 $18,520,274
============ =========== =========== ============ ===========
$ 11,926,443 $ 0 $ 0 $ 0 $ 0
============ =========== =========== ============ ===========
</TABLE>
See Notes to Financial Statements
23
<PAGE> 31
Financial Statements -- Year Ended June 30, 1996
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
EQUITY SMALL
INCOME CAP
FUND FUND
-------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income*
Dividends................................................. $ 5,537,019 $ 172,082
Interest.................................................. 296,099 91,009
----------- -----------
Total income......................................... 5,833,118 263,091
----------- -----------
Expenses
Advisory fee.............................................. 1,238,052 159,346
Legal and auditing fees................................... 69,358 22,576
Custodian fees and expenses............................... 60,383 6,426
Accounting and transfer agent fees and expenses........... 94,976 25,211
Administration fee........................................ 33,744 2,784
Trustees' fees............................................ 6,275 6,275
Reports to shareholders................................... 28,000 20,000
Registration fees......................................... 55,374 12,726
Other expenses............................................ 29,925 1,268
----------- -----------
Total expenses....................................... 1,616,087 256,612
Less, expense reimbursement............................... 0 (44,825)
----------- -----------
Net expenses......................................... 1,616,087 211,787
----------- -----------
Net investment income........................................ 4,217,031 51,304
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain on securities and foreign currency
transactions............................................ 6,697,177 3,242,921
Net change in unrealized appreciation (depreciation) of
securities and foreign currency......................... 17,517,007 (1,035,528)
----------- -----------
Net gain (loss) on investments............................... 24,214,184 2,207,393
----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS..................... $28,431,215 $ 2,258,697
=========== ===========
*Net of Foreign Taxes Withheld................................. $ 15,236 $ 0
=========== ===========
</TABLE>
See Notes to Financial Statements
24
<PAGE> 32
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
BALANCED TOTAL LOW SHORT-TERM
INTERNATIONAL INCOME RETURN BOND DURATION INVESTMENT
FUND FUND FUND FUND FUND
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
$ 5,192,070 $ 858,947 $ 0 $ 0 $ 0
420,748 2,291,873 2,226,847 12,311,794 1,242,397
----------- ---------- ----------- ----------- ----------
5,612,818 3,150,820 2,226,847 12,311,794 1,242,397
----------- ---------- ----------- ----------- ----------
1,108,545 377,472 164,708 706,115 71,031
35,277 26,043 18,419 48,834 15,227
265,000 37,964 11,159 41,208 5,893
73,391 33,131 21,882 66,907 22,464
34,924 10,211 5,975 27,965 2,445
6,275 6,275 6,275 6,275 6,275
20,000 20,000 20,000 20,000 20,000
105,000 22,088 27,939 38,316 10,501
3,365 1,667 1,195 5,294 984
----------- ---------- ----------- ----------- ----------
1,651,777 534,851 277,552 960,914 154,820
(169,480) (31,555) (84,461) (29,763) (69,867)
----------- ---------- ----------- ----------- ----------
1,482,297 503,296 193,091 931,151 84,953
----------- ---------- ----------- ----------- ----------
4,130,521 2,647,524 2,033,756 11,380,643 1,157,444
----------- ---------- ----------- ----------- ----------
1,311,404 2,948,927 386,435 302,726 17,041
14,489,301 587,322 (1,233,325) (603,922) 72,725
----------- ---------- ----------- ----------- ----------
15,800,705 3,536,249 (846,890) (301,196) 89,766
----------- ---------- ----------- ----------- ----------
$19,931,226 $6,183,773 $1,186,866 $11,079,447 $1,247,210
=========== ========== =========== =========== ==========
$ 550,504 $ 14,043 $ 0 $ 0 $ 0
=========== ========== =========== =========== ==========
</TABLE>
See Notes to Financial Statements
25
<PAGE> 33
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY INCOME FUND
---------------------------------
<S> <C> <C>
Year Ended Year Ended
June 30, 1996 June 30, 1995
---------------------------------
OPERATIONS:
Net investment income (loss)........................... $ 4,217,031 $ 3,330,418
Net realized gain on securities and foreign currency
transactions......................................... 6,697,177 8,380,400
Net change in unrealized appreciation (depreciation)
of securities and foreign currency................... 17,517,007 8,445,277
------------- -------------
Net increase in net assets resulting from
operations...................................... 28,431,215 20,156,095
------------- -------------
NET EQUALIZATION CREDITS.................................... 0 101,938
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.................................. (5,190,178) (3,053,827)
Net realized gain on securities transactions........... (9,231,395) (2,560,940)
------------- -------------
Total dividends and distributions................. (14,421,573) (5,614,767)
------------- -------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold.......................... 71,541,636 41,289,943
Shares issued in connection with payment of dividends
and distributions.................................... 13,515,453 5,234,238
Cost of shares redeemed................................ (43,625,015) (21,285,555)
------------- -------------
Net increase (decrease) in net assets from Fund
share transactions.............................. 41,432,074 25,238,626
------------- -------------
Total increase (decrease) in net assets..................... 55,441,716 39,881,892
NET ASSETS:
Beginning of period.................................... 127,096,389 87,214,497
------------- -------------
End of period*......................................... $ 182,538,105 $ 127,096,389
============= =============
*Including undistributed net investment income of: $ 0 $ 1,600,193
============= =============
CHANGES IN SHARES OUTSTANDING:
Shares sold............................................ 3,846,201 2,625,774
Shares issued in connection with payment of dividends
and distributions.................................... 743,944 345,347
Shares redeemed........................................ (2,311,587) (1,384,748)
------------- -------------
Net increase (decrease)........................... 2,278,558 1,586,373
============= =============
</TABLE>
See Notes to Financial Statements
26
<PAGE> 34
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP FUND INTERNATIONAL FUND
------------------------------- -------------------------------
Year Ended Year Ended Year Ended Year Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------------------------- -------------------------------
<S> <C> <C> <C>
$ 51,304 $ (53,458) $ 4,130,521 $ 918,248
3,242,921 2,051,312 1,311,404 235,087
(1,035,528) 315,290 14,489,301 2,640,106
----------- ----------- ------------ ------------
2,258,697 2,313,144 19,931,226 3,793,441
----------- ----------- ------------ ------------
0 0 0 105,891
----------- ----------- ------------ ------------
0 0 (3,924,997) (1,058,855)
(3,229,051) (567,724) (911,877) (727,274)
----------- ----------- ------------ ------------
(3,229,051) (567,724) (4,836,874) (1,786,129)
----------- ----------- ------------ ------------
9,973,586 6,033,472 324,232,058 25,589,662
2,737,936 548,049 4,533,313 1,758,581
(15,737,773) (931,042) (64,341,082) (3,959,148)
----------- ----------- ------------ ------------
(3,026,251) 5,650,479 264,424,289 23,389,095
----------- ----------- ------------ ------------
(3,996,605) 7,395,899 279,518,641 25,502,298
20,477,291 13,081,392 51,474,802 25,972,504
----------- ----------- ------------ ------------
$16,480,686 $20,477,291 $330,993,443 $ 51,474,802
=========== =========== ============ ============
$ 56,471 $ 464,275 $ 503,115 $ 325,550
=========== =========== ============ ============
444,190 298,181 16,283,849 1,484,025
137,516 28,967 227,114 103,654
(760,129) (45,954) (3,226,302) (227,394)
----------- ----------- ------------ ------------
(178,423) 281,194 13,284,661 1,360,285
=========== =========== ============ ============
</TABLE>
See Notes to Financial Statements
27
<PAGE> 35
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED INCOME FUND
---------------------------------
Year Ended Year Ended
June 30, 1996 June 30, 1995
---------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income................................... $ 2,647,524 $ 1,917,881
Net realized gain (loss) on securities transactions..... 2,948,927 434,314
Net change in unrealized appreciation (depreciation) of
securities............................................ 587,322 2,852,215
------------- -------------
Net increase in net assets resulting from
operations....................................... 6,183,773 5,204,410
------------- -------------
NET EQUALIZATION (DEBITS).................................... 0 (65,989)
------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income................................... (2,554,681) (1,672,655)
Net realized gain on securities transactions............ (55,137) (1,199,739)
Return of capital....................................... 0 (30,446)
------------- -------------
Total dividends and distributions.................. (2,609,818) (2,902,840)
------------- -------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold........................... 43,038,215 10,526,666
Shares issued in connection with payment of dividends
and distributions..................................... 2,406,463 2,688,210
Cost of shares redeemed................................. (10,483,447) (19,360,405)
------------- -------------
Net increase (decrease) in net assets from Fund
share transactions............................... 34,961,231 (6,145,529)
------------- -------------
Total increase (decrease) in net assets...................... 38,535,186 (3,909,948)
NET ASSETS:
Beginning of period..................................... 32,063,007 35,972,955
------------- -------------
End of period**......................................... $ 70,598,193 $ 32,063,007
============= =============
**Including undistributed net investment income of: $ 80,910 $ 0
============= =============
CHANGES IN SHARES OUTSTANDING:
Shares sold............................................. 2,395,366 668,502
Shares issued in connection with payment of dividends
and distributions..................................... 134,345 172,367
Shares redeemed......................................... (580,252) (1,215,259)
------------- -------------
Net increase (decrease)............................ 1,949,459 (374,390)
============= =============
</TABLE>
* Commencement of operations.
See Notes to Financial Statements
28
<PAGE> 36
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURN BOND FUND LOW DURATION FUND SHORT-TERM INVESTMENT FUND
----------------------------------- ------------------------------- -------------------------------
December 6, 1994*
Year Ended through Year Ended Year Ended Year Ended Year Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
----------------------------------- ------------------------------- -------------------------------
<S> <C> <C> <C> <C> <C>
$ 2,033,756 $ 352,723 $ 11,380,643 $ 5,880,534 $ 1,157,444 $ 838,304
386,435 167,201 302,726 622,634 17,041 (131,070)
(1,233,325) 650,542 (603,922) 1,891,223 72,725 38,083
----------- ----------- ------------- ------------ ------------ -----------
1,186,866 1,170,466 11,079,447 8,394,391 1,247,210 745,317
----------- ----------- ------------- ------------ ------------ -----------
0 0 0 0 0 0
----------- ----------- ------------- ------------ ------------ -----------
(2,033,756) (352,723) (11,385,745) (5,880,534) (1,150,687) (838,304)
(239,612) 0 (680,292) (75,968) 0 0
0 0 0 0 (6,473) 0
----------- ----------- ------------- ------------ ------------ -----------
(2,273,368) (352,723) (12,066,037) (5,956,502) (1,157,160) (838,304)
----------- ----------- ------------- ------------ ------------ -----------
31,603,393 14,983,481 187,622,316 160,502,377 14,567,153 17,020,236
1,813,318 358,388 10,272,786 5,661,434 634,339 365,441
(4,198,498) (880,731) (131,067,667) (81,760,823) (16,377,951) (7,986,845)
----------- ----------- ------------- ------------ ------------ -----------
29,218,213 14,461,138 66,827,435 84,402,988 (1,176,459) 9,398,832
----------- ----------- ------------- ------------ ------------ -----------
28,131,711 15,278,881 65,840,845 86,840,877 (1,086,409) 9,305,845
15,288,481 9,600 123,320,337 36,479,460 19,812,191 10,506,346
----------- ----------- ------------- ------------ ------------ -----------
$43,420,192 $15,288,481 $ 189,161,182 $123,320,337 $ 18,725,782 $19,812,191
=========== =========== ============= ============ ============ ===========
$ 79,541 $ 167,201 $ 290,152 $ 693,241 $ 0 $ 0
=========== =========== ============= ============ ============ ===========
2,396,355 1,223,013 18,411,897 16,119,314 1,435,371 1,683,176
138,416 28,352 1,008,556 567,024 62,521 36,134
(319,560) (70,268) (12,866,489) (8,215,536) (1,613,876) (791,051)
----------- ----------- ------------- ------------ ------------ -----------
2,215,211 1,181,097 6,553,964 8,470,802 (115,984) 928,259
=========== =========== ============= ============ ============ ===========
</TABLE>
See Notes to Financial Statements
29
<PAGE> 37
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
NOTE 1.
ACCOUNTING POLICIES. Hotchkis and Wiley Funds (the "Trust") is registered under
the Investment Company Act of 1940 as a diversified, open-end management
investment company. The Trust was organized as a Massachusetts business trust on
August 22, 1984 and consists of eight series of shares comprising the Balanced
Income Fund, the Small Cap Fund, the Equity Income Fund, the International Fund,
the Total Return Bond Fund, the Low Duration Fund, the Short-Term Investment
Fund and the Equity Fund for Insurance Companies (collectively, the "Funds"),
the assets of which are invested in separate, independently managed portfolios.
The accompanying financial statements exclude financial information for the
Equity Fund for Insurance Companies; financial statements for that Fund are
reported on separately. Investment operations of the Funds began on August 13,
1985 (the Balanced Income Fund), September 20, 1985 (the Small Cap Fund), June
24, 1987 (the Equity Income Fund), October 1, 1990 (the International Fund),
January 29, 1993 (the Equity Fund for Insurance Companies), May 18, 1993 (the
Low Duration Fund and the Short-Term Investment Fund), and December 6, 1994 (the
Total Return Bond Fund).
The Balanced Income Fund seeks to preserve capital while producing a high total
return. The Small Cap Fund seeks capital appreciation. The Equity Income Fund
seeks to provide current income and long-term growth of income, accompanied by
growth of capital. The International Fund seeks to provide current income and
long-term growth of income, accompanied by growth of capital. The Total Return
Bond Fund seeks to maximize long-term total return. The Low Duration Fund seeks
to maximize total return, consistent with preservation of capital. The
Short-Term Investment Fund seeks to maximize total return, consistent with
preservation of capital. The following is a summary of significant accounting
policies followed by the Funds in the preparation of the financial statements.
SECURITY VALUATION: Portfolio securities that are listed on a securities
exchange (whether domestic or foreign) or the NASDAQ National Market System
("System") are valued at the last sale price as of 4:00 p.m., Eastern time, or,
in the absence of recorded sales, at the average of readily available closing
bid and asked prices on such exchange or such System. Unlisted securities that
are not included in such System are valued at the average of the quoted bid and
asked price in the over-the-counter market. Fixed income securities are normally
valued on the basis of quotes obtained from brokers and dealers or pricing
services. Certain fixed income securities for which daily market quotations are
not readily available may be valued pursuant to guidelines established by the
Board of Trustees, with reference to fixed income securities whose prices are
more readily obtainable or an appropriate matrix utilizing similar factors. As a
broader market does not exist, the proceeds received upon the disposal of such
securities may differ from quoted values previously furnished by such market
makers. Securities for which market quotations are not otherwise available are
valued at fair value as determined in good faith by Hotchkis and Wiley (the
"Advisor") under procedures established by the Board of Trustees.
30
<PAGE> 38
- --------------------------------------------------------------------------------
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 value), if their original maturity was 60 days or less, or by
amortizing the values as of the 61st day prior to maturity, if their original
term to maturity exceeded 60 days. Investments quoted in foreign currency are
valued daily in U.S. dollars on the basis of the foreign currency exchange rate
prevailing at the time of valuation.
REPURCHASE AGREEMENTS: Each Fund may enter into repurchase agreements with banks
or broker-dealers that meet credit guidelines established by the Board of
Trustees. In connection with transactions in repurchase agreements, it is the
Funds' policy that the custodian take possession of the underlying collateral
securities, the value of which exceeds the principal amount of the repurchase
transaction, including accrued interest. If the seller defaults, and the value
of the collateral declines, realization of the collateral by the Funds may be
delayed or limited.
FOREIGN CURRENCY TRANSLATIONS: The books and records of the Funds are maintained
in U.S. dollars. For the International Fund, foreign currency transactions are
translated into U.S. dollars on the following basis: (i) market value of
investment securities, assets and liabilities at the daily rates of exchange,
and (ii) purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on the
respective dates of such transactions. The International Fund does not isolate
and treat as ordinary income that portion of the results of operations arising
as a result of changes in the exchange rate from the fluctuations arising from
changes in the market prices of securities held during the period. However, for
federal income tax purposes the International Fund does isolate and treat as
ordinary income the effect of changes in foreign exchange rates arising from
actual foreign currency transactions and the effect of changes in foreign
exchange rates from the fluctuations arising from trade date and settlement date
differences.
FORWARD CURRENCY EXCHANGE CONTRACTS: The International Fund utilizes forward
currency exchange contracts for the purpose of hedging foreign currency risk on
unsettled trades. Under these contracts, it is obligated to exchange currencies
at specific future dates. Risks arise from the possible inability of
counter-parties to meet the terms of their contracts and from movements in
currency values.
FEDERAL INCOME TAXES: It is each Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and intends
to distribute investment company net taxable income and net capital gains to
shareholders. Therefore, no federal income tax provision is required.
EXPENSE ALLOCATION: Common expenses incurred by the Funds are allocated among
the Funds based upon (i) relative average net assets, (ii) as incurred on a
specific identification basis, or (iii) evenly among the Funds, depending on the
nature of the expenditure.
EQUALIZATION: Effective July 1, 1995, the Funds discontinued the practice of
equalization. The Balanced Income Fund, the Equity Income Fund, and the
International Fund each followed the accounting practice known as equalization,
by which
31
<PAGE> 39
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
a portion of the proceeds from sales and costs of redemptions of capital shares,
equivalent on a per share basis to the amount of undistributed net investment
income on the date of the transaction, is credited or charged to undistributed
net investment income. As a result, undistributed net investment income per
share was unaffected by sales or redemptions of the Fund's shares.
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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.
OTHER: Security and shareholder transactions are recorded no later than the
first business day after the trade date. Realized gains and losses on sales of
investments are calculated on the identified cost basis. Dividend income and
dividends and distributions to shareholders are recorded on the ex-dividend
date. Interest income is recognized on the accrual basis. Generally accepted
accounting principles require that permanent financial reporting and tax
differences relating to shareholder distributions be reclassified to paid in
capital.
NOTE 2.
INVESTMENT ADVISORY AGREEMENT. Each Fund has an investment advisory agreement
with the Advisor. The Advisor receives a fee, computed daily and payable
monthly, at the annual rates presented below as applied to each Fund's daily net
assets. The Advisor has voluntarily agreed to pay all operating expenses in
excess of the annual rates presented below as applied to each Fund's daily net
assets. For the year ended June 30, 1996, the Advisor waived the following fees
by Fund:
<TABLE>
<CAPTION>
Equity Income Small Cap International Balanced
Fund Fund Fund Income Fund
----------------------------------------------------------------
<S> <C> <C> <C> <C>
ANNUAL ADVISORY RATE.................. 0.75% 0.75% 0.75% 0.75%
ANNUAL CAP ON EXPENSES................ 1.00% 1.00% 1.00% 1.00%
FEES WAIVED........................... $0 $44,825 $169,480 $31,555
</TABLE>
<TABLE>
<CAPTION>
Total Return Low Duration Short-Term
Bond Fund Fund Investment Fund
-------------------------------------------------------
<S> <C> <C> <C>
ANNUAL ADVISORY RATE............................ 0.55%(2) 0.46%(2) 0.40%
ANNUAL CAP ON EXPENSES.......................... 0.65%(1) 0.58% 0.48%
FEES WAIVED..................................... $84,461 $29,763 $69,867
</TABLE>
- ---------------
(1) Prior to October 31, 1995 the cap on expenses was 0.80%.
(2) Prior to October 31, 1995 the annual advisory rate was 0.70% and 0.40% for
the Total Return Bond Fund and the Low Duration Fund, respectively.
32
<PAGE> 40
- --------------------------------------------------------------------------------
NOTE 3.
SECURITIES TRANSACTIONS. Purchases and sales of investment securities, other
than short-term investments, for the year ended June 30, 1996 were as follows:
<TABLE>
<CAPTION>
Purchases Sales
--------------------------------- --------------------------------
Fund U.S. Government Other U.S. Government Other
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQUITY INCOME FUND.......... -- $ 75,874,959 -- $38,653,126
SMALL CAP FUND.............. -- 23,177,790 -- 28,434,706
INTERNATIONAL FUND.......... -- 259,607,748 -- 17,421,880
BALANCED INCOME FUND........ $43,329,290 34,484,505 $29,749,363 13,853,364
TOTAL RETURN BOND FUND...... 17,375,098 25,284,188 8,117,336 4,987,113
LOW DURATION FUND........... 77,928,167 76,885,465 44,188,340 29,656,743
SHORT-TERM INVESTMENT
FUND...................... 4,306,944 7,112,715 138,491 9,066,542
</TABLE>
As of June 30, 1996, unrealized appreciation (depreciation) for federal income
tax purposes was as follows:
<TABLE>
<CAPTION>
Net Appreciation Appreciated Depreciated
Fund (Depreciation) Securities Securities
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
EQUITY INCOME FUND.............................. $ 34,682,882 $37,918,503 $(3,235,621)
SMALL CAP FUND.................................. 1,121,324 2,064,976 (943,652)
INTERNATIONAL FUND.............................. 16,419,100 24,406,777 (7,987,677)
BALANCED INCOME FUND............................ 3,545,902 5,358,698 (1,812,796)
TOTAL RETURN BOND FUND.......................... (589,991) 970,827 (1,560,818)
LOW DURATION FUND............................... 769,945 2,897,019 (2,127,074)
SHORT-TERM INVESTMENT FUND...................... 64,889 190,720 (125,831)
</TABLE>
33
<PAGE> 41
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
At June 30, 1996, the cost of investments for federal income tax purposes was
$148,082,784, $14,927,526, $291,549,134, $66,440,984, $43,575,470, $186,775,596
and $18,520,274 for the Equity Income, Small Cap, International, Balanced
Income, Total Return Bond, Low Duration and Short-Term Investment Funds,
respectively.
The International, Low Duration and Short-Term Investment Funds realized, on a
tax basis, post-October losses of $58,680, $2,721 and $1,827, respectively. Such
amounts may be used to offset future capital gains.
At June 30, 1996, the Short-Term Investment Fund had accumulated net realized
capital loss carryovers of $19,570 expiring in 2003 and $63,545 expiring in
2004. To the extent the Short-Term Investment Fund realizes future net capital
gains, taxable distributions to its shareholders will be offset by any unused
capital loss carryover.
For the year ended June 30, 1996, the following percent of dividends and
distributions paid qualifies for the dividend received deduction available to
corporate stockholders: Equity Income Fund 97%, Small Cap Fund 13% and Balanced
Income Fund 29%.
NOTE 4.
SUBSEQUENT EVENT. In June 1996, the Advisor, a limited partnership, entered into
a Purchase Agreement with Merrill Lynch & Co., Inc., a Delaware corporation
("ML"), pursuant to which ML will acquire the partnership interests in the
Advisor. The purchase is subject to a number of contingencies, including
approval by the Funds' Board of Trustees (which has occurred) and shareholders
of new investment advisory agreements relating to each Fund. If the transaction
occurs, it is anticipated that the Funds will be operated in the same manner as
they are currently.
The net assets and net asset value per share of each Fund as of August 16, 1996
were as follows:
<TABLE>
<CAPTION>
Net Assets Net Asset Value
Fund (in millions) Per Share
- -------------------------------------------------------
<S> <C> <C>
Equity Income Fund...... $ 177.8 $ 18.68
Small Cap Fund.......... 16.1 20.88
International Fund...... 346.8 20.41
Balanced Fund........... 70.1 18.30
Total Return Fund....... 35.4 12.94
Low Duration Fund....... 171.2 10.12
Short-Term Investment
Fund.................. 14.0 10.17
- -------------------------------------------------------
</TABLE>
TAX STATUS OF DIVIDENDS (UNAUDITED)
During the year ended June 30, 1996, the following Funds paid capital gain
dividends (taxable as long-term capital gains) as follows:
<TABLE>
<CAPTION>
Per Share
---------
<S> <C>
EQUITY INCOME FUND.................. $0.86
SMALL CAP FUND...................... $2.03
</TABLE>
34
<PAGE> 42
Financial Highlights
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------------------
1996 1995 1994 1993 1992
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year........... $17.24 $15.07 $15.50 $14.51 $12.53
------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income................... 0.45(1) 0.49 0.46 0.44 0.40
Net realized and unrealized gain on
investments........................... 2.89 2.48 0.10 1.21 1.99
------ ------ ------ ------ ------
Total from investment operations........ 3.34 2.97 0.56 1.65 2.39
------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)............................... (0.57) (0.44) (0.46) (0.43) (0.41)
Distributions (from realized gains)..... (1.10) (0.36) (0.53) (0.23) --
------ ------ ------ ------ ------
Total Distributions..................... (1.67) (0.80) (0.99) (0.66) (0.41)
------ ------ ------ ------ ------
Net Asset Value, End of Year................. $18.91 $17.24 $15.07 $15.50 $14.51
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Total Return................................. 20.04% 20.49% 3.40% 11.67% 19.28%
Net assets, end of year (millions)........... $182.5 $127.1 $87.2 $86.7 $71.6
Ratio of expenses to average net assets:
Before expense reimbursement............ 0.98% 1.02% 1.05% 1.02% 1.02%
After expense reimbursement............. 0.98% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to average net
assets:
Before expense reimbursement............ 2.56% 3.11% 2.85% 2.97% 2.93%
After expense reimbursement............. 2.56% 3.14% 2.90% 2.99% 2.95%
Portfolio turnover rate...................... 24% 50% 36% 25% 32%
</TABLE>
(1) Net investment income per share is calculated using ending balances prior to
consideration of adjustments for permanent book and tax differences.
See Notes to Financial Statements
35
<PAGE> 43
Financial Highlights
- --------------------------------------------------------------------------------
SMALL CAP FUND
<TABLE>
<CAPTION>
Year Ended June 30,
----------------------------------------------
1996 1995 1994 1993 1992
----------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year................ $21.53 $19.53 $19.88 $18.10 $17.30
------- ------- ------- ------- -------
Income from Investment Operations:
Net investment income (loss)................. 0.05(1) (0.06) (0.01) 0.27 0.09
Net realized and unrealized gain on
investments................................ 2.80 2.84 0.78 3.18 3.09
------- ------- ------- ------- -------
Total from investment operations............. 2.85 2.78 0.77 3.45 3.18
------- ------- ------- ------- -------
Less Distributions:
Dividends (from net investment income)....... -- -- (0.20) (0.04) (0.13)
Distributions (from realized gains).......... (3.05) (0.78) (0.92) (1.63) (2.25)
------- ------- ------- ------- -------
Total Distributions.......................... (3.05) (0.78) (1.12) (1.67) (2.38)
------- ------- ------- ------- -------
Net Asset Value, End of Year...................... $21.33 $21.53 $19.53 $19.88 $18.10
======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Total Return...................................... 14.24% 14.79% 3.77% 19.80% 19.04%
Net assets, end of year (millions)................ $16.5 $20.5 $13.1 $10.8 $8.8
Ratio of expenses to average net assets:
Before expense reimbursement................. 1.21% 1.49% 1.65% 1.40% 1.45%
After expense reimbursement.................. 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income (loss) to average
net assets:
Before expense reimbursement................. 0.03% (0.82)% (0.71)% 1.03% (0.06)%
After expense reimbursement.................. 0.24% (0.34)% (0.06)% 1.42% 0.40%
Portfolio turnover rate........................... 119% 81% 44% 20% 26%
</TABLE>
(1) Net investment income per share represents net investment income divided by
the average shares outstanding throughout the year.
See Notes to Financial Statements
36
<PAGE> 44
Financial Highlights
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Year Ended June 30,
--------------------------------------------------
1996 1995 1994 1993 1992
--------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year.............. $17.70 $16.79 $14.63 $13.97 $12.56
------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income...................... 0.56(1) 0.28 0.26 0.23 0.22
Net realized and unrealized gain on
investments.............................. 2.51 1.52 2.19 0.74 3.09
------ ------ ------ ------ ------
Total from investment operations........... 3.07 1.80 2.45 0.97 3.31
------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment income)..... (0.14) (0.44) (0.14) -- (0.61)
Distributions (from realized gains)........ (0.19) (0.45) (0.15) (0.31) (1.29)
------ ------ ------ ------ ------
Total Distributions........................ (0.33) (0.89) (0.29) (0.31) (1.90)
------ ------ ------ ------ ------
Net Asset Value, End of Year.................... $20.44 $17.70 $16.79 $14.63 $13.97
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Total Return.................................... 18.61% 11.08% 16.71% 7.36% 27.48%
Net assets, end of year (millions).............. $331.0 $51.5 $26.0 $6.6 $4.0
Ratio of expenses to average net assets:
Before expense reimbursement............... 1.11% 1.39% 1.61% 2.44% 4.19%
After expense reimbursement................ 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to average net
assets:
Before expense reimbursement............... 2.67% 2.45% 2.01% 1.14% 0.42%
After expense reimbursement................ 2.78% 2.83% 2.62% 2.58% 3.61%
Portfolio turnover rate......................... 12% 24% 23% 24% 88%
</TABLE>
(1) Net investment income per share represents net investment income divided by
the average shares outstanding throughout the year.
See Notes to Financial Statements
37
<PAGE> 45
Financial Highlights
- --------------------------------------------------------------------------------
BALANCED INCOME FUND
<TABLE>
<CAPTION>
Year Ended June 30,
------------------------------------------------------
1996 1995 1994 1993 1992
------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year........... $16.74 $15.71 $16.69 $16.35 $15.23
------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income................... 0.94 0.89 0.89 0.77 0.79
Net realized and unrealized gain (loss)
on investments........................ 1.53 1.53 (0.27) 0.82 1.45
------ ------ ------ ------ ------
Total from investment operations........ 2.47 2.42 0.62 1.59 2.24
------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)............................... (0.92) (0.80) (0.94) (0.74) (0.76)
Distributions (from realized gains)..... (0.02) (0.57) (0.66) (0.51) (0.36)
Return of capital....................... -- (0.02) -- -- --
------ ------ ------ ------ ------
Total Distributions..................... (0.94) (1.39) (1.60) (1.25) (1.12)
------ ------ ------ ------ ------
Net Asset Value, End of Year................. $18.27 $16.74 $15.71 $16.69 $16.35
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Total Return................................. 15.04% 16.40% 3.60% 10.10% 15.10%
Net assets, end of year (millions)........... $70.6 $32.1 $36.0 $30.3 $16.7
Ratio of expenses to average net assets:
Before expense reimbursement............ 1.06% 1.19% 1.20% 1.15% 1.27%
After expense reimbursement............. 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to average net
assets:
Before expense reimbursement............ 5.20% 5.44% 5.04% 4.62% 4.64%
After expense reimbursement............. 5.26% 5.63% 5.24% 4.77% 4.90%
Portfolio turnover rate...................... 92% 51% 97% 155% 36%
</TABLE>
See Notes to Financial Statements
38
<PAGE> 46
Financial Highlights
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
December 6, 1994*
Year Ended through
June 30, 1996 June 30, 1995
--------------------------------------
<S> <C> <C>
Net Asset Value, Beginning of Period............................. $12.94 $12.00
----------- --------
Income from Investment Operations:
Net investment income....................................... 0.84(1) 0.46
Net realized and unrealized gain on investments............. 0.06 0.94
----------- --------
Total from investment operations............................ 0.90 1.40
----------- --------
Less Distributions:
Dividends (from net investment income)...................... (0.93) (0.46)
Distributions (from realized gains)......................... (0.13) --
----------- --------
Total Distributions......................................... (1.06) (0.46)
----------- --------
Net Asset Value, End of Period................................... $12.78 $12.94
=========== ========
RATIOS/SUPPLEMENTAL DATA:
Total Return..................................................... 7.05% 11.88%
Net assets, end of period (millions)............................. $43.4 $15.3
Ratio of expenses to average net assets:
Before expense reimbursement................................ 0.98% 2.93%+
After expense reimbursement................................. 0.68% 0.80%+
Ratio of net investment income to average net assets:
Before expense reimbursement................................ 6.86% 4.92%+
After expense reimbursement................................. 7.16% 7.05%+
Portfolio turnover rate.......................................... 51% 68%
</TABLE>
* Commencement of operations.
+ Annualized.
(1) Net investment income per share is calculated using ending balances prior to
consideration of adjustments for permanent book and tax differences.
See Notes to Financial Statements
39
<PAGE> 47
Financial Highlights
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
May 18, 1993*
Year Ended June 30, through
1996 1995 1994 June 30, 1993
-------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $10.15 $ 9.93 $10.00 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income............................... 0.68 0.75 0.77 0.05
Net realized and unrealized gain on investments..... 0.06 0.23 0.11 0.00
-------- -------- -------- --------
Total from investment operations.................... 0.74 0.98 0.88 0.05
-------- -------- -------- --------
Less Distributions:
Dividends (from net investment income).............. (0.72) (0.75) (0.77) (0.05)
Distributions (from realized gains)................. (0.05) (0.01) (0.18) (0.00)
-------- -------- -------- --------
Total Distributions................................. (0.77) (0.76) (0.95) (0.05)
-------- -------- -------- --------
Net Asset Value, End of Period........................... $10.12 $10.15 $ 9.93 $ 10.00
======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Total Return............................................. 7.47% 10.23% 9.02% 4.36%+
Net assets, end of period (millions)..................... $189.2 $123.3 $36.5 $7.6
Ratio of expenses to average net assets:
Before expense reimbursement........................ 0.60% 0.75% 1.10% 4.94%+
After expense reimbursement......................... 0.58% 0.58% 0.58% 0.58%+
Ratio of net investment income to average net assets:
Before expense reimbursement........................ 7.07% 7.43% 6.82% 1.93%+
After expense reimbursement......................... 7.09% 7.61% 7.34% 6.28%+
Portfolio turnover rate.................................. 50% 71% 254% 34%
</TABLE>
* Commencement of operations.
+ Annualized.
See Notes to Financial Statements
40
<PAGE> 48
Financial Highlights
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
May 18, 1993*
Year Ended June 30, through
1996 1995 1994 June 30, 1993
-------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period..................... $10.12 $10.21 $10.00 $ 10.00
-------- -------- -------- --------
Income from Investment Operations:
Net investment income............................... 0.66 0.66 0.53 0.03
Net realized and unrealized
gain (loss) on investments........................ 0.05 (0.09) 0.21 --
-------- -------- -------- --------
Total from investment operations.................... 0.71 0.57 0.74 0.03
-------- -------- -------- --------
Less Distributions:
Dividends (from net investment income).............. (0.66) (0.66) (0.53) (0.03)
Return of capital................................... (0.00) -- -- --
-------- -------- -------- --------
Total Distributions................................. (0.66) (0.66) (0.53) (0.03)
-------- -------- -------- --------
Net Asset Value, End of Period........................... $10.17 $10.12 $10.21 $ 10.00
======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Total Return............................................. 7.23% 5.78% 7.47% 2.30%+
Net assets, end of period (millions)..................... $18.7 $19.8 $10.5 $.003
Ratio of expenses to average net assets:
Before expense reimbursement........................ 0.88% 1.26% 2.06% 57.02%+
After expense reimbursement......................... 0.48% 0.48% 0.48% 0.48%+
Ratio of net investment income (loss)
to average net assets:
Before expense reimbursement........................ 6.15% 5.74% 4.16% (56.99)%+
After expense reimbursement......................... 6.55% 6.52% 5.74% 2.32%+
Portfolio turnover rate.................................. 60% 81% 135% 0%
</TABLE>
* Commencement of operations.
+ Annualized.
See Notes to Financial Statements
41
<PAGE> 49
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of Hotchkis and Wiley Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Equity Income Fund, the Small
Cap Fund, the International Fund, the Balanced Income Fund, the Total Return
Bond Fund, the Low Duration Fund and the Short-Term Investment Fund (seven of
the eight separately managed portfolios of Hotchkis and Wiley Funds, the
"Funds") at June 30, 1996, the results of each of their operations for the year
then ended, and the changes in each of their net assets and their financial
highlights for each of the periods indicated, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Funds' management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at June 30, 1996 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
PRICE WATERHOUSE LLP
Milwaukee, WI
August 16, 1996
42
<PAGE> 50
- --------------------------------------------------------------------------------
MARKET INDICES
The following are definitions for indices used in the performance summary charts
as of June 30, 1996. These indices are unmanaged and include the reinvestment of
all dividends, but do not reflect the payment of transaction costs and advisory
fees associated with an investment in the Funds. The securities that comprise
these indices may differ substantially from the securities in the Funds'
portfolios. Each index named is not the only index which may be used to
characterize performance of a specific Fund and other indices may portray
different comparative performance.
STANDARD & POOR'S 500 INDEX (S&P 500) is a capital-weighted index, representing
the aggregate market value of the common equity of 500 stocks primarily traded
on the New York Stock Exchange.
RUSSELL 2000 INDEX (Russell 2000) is a stock market index comprised of the 2,000
smallest U.S. domiciled publicly traded common stocks that are included in the
Russell 3000 Index. These common stocks represent approximately 11% of the U.S.
equity market. The Russell 3000 Index is comprised of the 3,000 largest U.S.
domiciled publicly-traded common stocks by market capitalization representing
approximately 98% of the U.S. publicly-traded equity market.
MORGAN STANLEY CAPITAL INTERNATIONAL EUROPE, AUSTRALIA, FAR EAST INDEX
(MSCI-EAFE) is an arithmetical average weighted by market value of the
performance of over 1,000 non-U.S. companies representing 18 stock markets in
Europe, Australia, New Zealand and the Far East.
CONSUMER PRICE INDEX (CPI) is a measure of the average change in prices over
time in a fixed market basket of goods and services (e.g., food, clothing,
shelter, fuel, transportation fares, medical and other day-to-day services).
While not an objective of the Balanced Income Fund, the Advisor's current goal
is a return at least 4% greater than the rate of inflation as measured by the
CPI.
LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX (LB Govt/Corp) is a weighted index
comprised of publicly-traded intermediate and long-term government and corporate
debt with an average maturity of 11 years.
MERRILL LYNCH 1-3 YEAR TREASURY INDEX is an index of Treasury securities with
maturities ranging from one to three years.
MERRILL LYNCH 6 MONTH TREASURY BILL INDEX is an index of Treasury securities
with maturities of six months.
LEHMAN BROTHERS AGGREGATE INDEX is a weighted index comprised of the
Government/Corporate Index, the Mortgage-Backed Securities Index, and the
Asset-Backed Securities Index. The index includes fixed-rate debt issues rated
investment grade or higher. All issues have at least one year to maturity and an
outstanding par value of at least $100 million for U.S. Government issues and
$50 million for all others.
43
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> BALANCED INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 66,417
<INVESTMENTS-AT-VALUE> 69,987
<RECEIVABLES> 838
<ASSETS-OTHER> 10
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 70,835
<PAYABLE-FOR-SECURITIES> 77
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 160
<TOTAL-LIABILITIES> 237
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 64,562
<SHARES-COMMON-STOCK> 3,865
<SHARES-COMMON-PRIOR> 1,916
<ACCUMULATED-NII-CURRENT> 81
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 2,385
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,570
<NET-ASSETS> 70,598
<DIVIDEND-INCOME> 859
<INTEREST-INCOME> 2,292
<OTHER-INCOME> 0
<EXPENSES-NET> 503
<NET-INVESTMENT-INCOME> 2,648
<REALIZED-GAINS-CURRENT> 2,949
<APPREC-INCREASE-CURRENT> 587
<NET-CHANGE-FROM-OPS> 6,184
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,555
<DISTRIBUTIONS-OF-GAINS> 55
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,395
<NUMBER-OF-SHARES-REDEEMED> 580
<SHARES-REINVESTED> 134
<NET-CHANGE-IN-ASSETS> 38,535
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 377
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 535
<AVERAGE-NET-ASSETS> 50,346
<PER-SHARE-NAV-BEGIN> 16.74
<PER-SHARE-NII> 0.94
<PER-SHARE-GAIN-APPREC> 1.53
<PER-SHARE-DIVIDEND> 0.92
<PER-SHARE-DISTRIBUTIONS> 0.02
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.27
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> SMALL CAP FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 14,928
<INVESTMENTS-AT-VALUE> 16,049
<RECEIVABLES> 475
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 16,525
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 44
<TOTAL-LIABILITIES> 44
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 13,320
<SHARES-COMMON-STOCK> 773
<SHARES-COMMON-PRIOR> 951
<ACCUMULATED-NII-CURRENT> 57
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1,983
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,121
<NET-ASSETS> 16,481
<DIVIDEND-INCOME> 172
<INTEREST-INCOME> 91
<OTHER-INCOME> 0
<EXPENSES-NET> 212
<NET-INVESTMENT-INCOME> 51
<REALIZED-GAINS-CURRENT> 3,243
<APPREC-INCREASE-CURRENT> (1,035)
<NET-CHANGE-FROM-OPS> 2,259
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 3,229
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 444
<NUMBER-OF-SHARES-REDEEMED> 760
<SHARES-REINVESTED> 138
<NET-CHANGE-IN-ASSETS> (3,997)
<ACCUMULATED-NII-PRIOR> 464
<ACCUMULATED-GAINS-PRIOR> 1,505
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 159
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 257
<AVERAGE-NET-ASSETS> 21,179
<PER-SHARE-NAV-BEGIN> 21.53
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 2.80
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 3.05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.33
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> EQUITY INCOME FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 148,038
<INVESTMENTS-AT-VALUE> 182,766
<RECEIVABLES> 519
<ASSETS-OTHER> 77
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 183,362
<PAYABLE-FOR-SECURITIES> 349
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 475
<TOTAL-LIABILITIES> 824
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 142,853
<SHARES-COMMON-STOCK> 9,651
<SHARES-COMMON-PRIOR> 7,372
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 4,957
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 34,728
<NET-ASSETS> 182,538
<DIVIDEND-INCOME> 5,537
<INTEREST-INCOME> 296
<OTHER-INCOME> 0
<EXPENSES-NET> 1,616
<NET-INVESTMENT-INCOME> 4,217
<REALIZED-GAINS-CURRENT> 6,697
<APPREC-INCREASE-CURRENT> 17,517
<NET-CHANGE-FROM-OPS> 28,431
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 5,190
<DISTRIBUTIONS-OF-GAINS> 9,231
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,846
<NUMBER-OF-SHARES-REDEEMED> 2,311
<SHARES-REINVESTED> 744
<NET-CHANGE-IN-ASSETS> 55,442
<ACCUMULATED-NII-PRIOR> 1,600
<ACCUMULATED-GAINS-PRIOR> 6,864
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,238
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,616
<AVERAGE-NET-ASSETS> 164,793
<PER-SHARE-NAV-BEGIN> 17.24
<PER-SHARE-NII> 0.45
<PER-SHARE-GAIN-APPREC> 2.89
<PER-SHARE-DIVIDEND> 0.57
<PER-SHARE-DISTRIBUTIONS> 1.10
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 18.91
<EXPENSE-RATIO> 0.98
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 4
<NAME> INTERNATIONAL FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 291,116
<INVESTMENTS-AT-VALUE> 307,968
<RECEIVABLES> 2,909
<ASSETS-OTHER> 44,673
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 355,550
<PAYABLE-FOR-SECURITIES> 23,847
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 710
<TOTAL-LIABILITIES> 24,557
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 312,995
<SHARES-COMMON-STOCK> 16,192
<SHARES-COMMON-PRIOR> 2,907
<ACCUMULATED-NII-CURRENT> 503
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 664
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 16,831
<NET-ASSETS> 330,993
<DIVIDEND-INCOME> 5,192
<INTEREST-INCOME> 421
<OTHER-INCOME> 0
<EXPENSES-NET> 1,482
<NET-INVESTMENT-INCOME> 4,131
<REALIZED-GAINS-CURRENT> 1,311
<APPREC-INCREASE-CURRENT> 14,489
<NET-CHANGE-FROM-OPS> 19,931
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3,925
<DISTRIBUTIONS-OF-GAINS> 912
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 16,284
<NUMBER-OF-SHARES-REDEEMED> 3,226
<SHARES-REINVESTED> 227
<NET-CHANGE-IN-ASSETS> 279,519
<ACCUMULATED-NII-PRIOR> 326
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1,109
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,652
<AVERAGE-NET-ASSETS> 148,230
<PER-SHARE-NAV-BEGIN> 17.70
<PER-SHARE-NII> 0.56
<PER-SHARE-GAIN-APPREC> 2.51
<PER-SHARE-DIVIDEND> 0.14
<PER-SHARE-DISTRIBUTIONS> 0.19
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.44
<EXPENSE-RATIO> 1.00
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 6
<NAME> LOW DURATION FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 186,776
<INVESTMENTS-AT-VALUE> 187,546
<RECEIVABLES> 2,927
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 190,473
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,312
<TOTAL-LIABILITIES> 1,312
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 188,104
<SHARES-COMMON-STOCK> 18,700
<SHARES-COMMON-PRIOR> 12,146
<ACCUMULATED-NII-CURRENT> 290
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (3)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 770
<NET-ASSETS> 189,161
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 12,312
<OTHER-INCOME> 0
<EXPENSES-NET> 931
<NET-INVESTMENT-INCOME> 11,381
<REALIZED-GAINS-CURRENT> 302
<APPREC-INCREASE-CURRENT> (604)
<NET-CHANGE-FROM-OPS> 11,079
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 11,386
<DISTRIBUTIONS-OF-GAINS> 680
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 18,412
<NUMBER-OF-SHARES-REDEEMED> 12,867
<SHARES-REINVESTED> 1,009
<NET-CHANGE-IN-ASSETS> 65,841
<ACCUMULATED-NII-PRIOR> 693
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 706
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 961
<AVERAGE-NET-ASSETS> 160,543
<PER-SHARE-NAV-BEGIN> 10.15
<PER-SHARE-NII> 0.68
<PER-SHARE-GAIN-APPREC> 0.06
<PER-SHARE-DIVIDEND> 0.72
<PER-SHARE-DISTRIBUTIONS> 0.05
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.12
<EXPENSE-RATIO> 0.58
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 7
<NAME> SHORT-TERM INVESTMENT FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 18,520
<INVESTMENTS-AT-VALUE> 18,585
<RECEIVABLES> 259
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 18,844
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 118
<TOTAL-LIABILITIES> 118
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 18,746
<SHARES-COMMON-STOCK> 1,841
<SHARES-COMMON-PRIOR> 1,957
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (85)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 65
<NET-ASSETS> 18,726
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,242
<OTHER-INCOME> 0
<EXPENSES-NET> 85
<NET-INVESTMENT-INCOME> 1,157
<REALIZED-GAINS-CURRENT> 17
<APPREC-INCREASE-CURRENT> 73
<NET-CHANGE-FROM-OPS> 1,247
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,157
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,435
<NUMBER-OF-SHARES-REDEEMED> 1,614
<SHARES-REINVESTED> 63
<NET-CHANGE-IN-ASSETS> (1,086)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 71
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 155
<AVERAGE-NET-ASSETS> 17,699
<PER-SHARE-NAV-BEGIN> 10.12
<PER-SHARE-NII> 0.66
<PER-SHARE-GAIN-APPREC> 0.05
<PER-SHARE-DIVIDEND> 0.66
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.17
<EXPENSE-RATIO> 0.48
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 8
<NAME> TOTAL RETURN BOND FUND
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<INVESTMENTS-AT-COST> 43,568
<INVESTMENTS-AT-VALUE> 42,985
<RECEIVABLES> 730
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 43,715
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 295
<TOTAL-LIABILITIES> 295
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 43,689
<SHARES-COMMON-STOCK> 3,396
<SHARES-COMMON-PRIOR> 1,181
<ACCUMULATED-NII-CURRENT> 80
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 234
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (583)
<NET-ASSETS> 43,420
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 2,227
<OTHER-INCOME> 0
<EXPENSES-NET> 193
<NET-INVESTMENT-INCOME> 2,034
<REALIZED-GAINS-CURRENT> 386
<APPREC-INCREASE-CURRENT> (1,233)
<NET-CHANGE-FROM-OPS> 1,187
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 2,034
<DISTRIBUTIONS-OF-GAINS> 240
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,396
<NUMBER-OF-SHARES-REDEEMED> 319
<SHARES-REINVESTED> 138
<NET-CHANGE-IN-ASSETS> 28,132
<ACCUMULATED-NII-PRIOR> 167
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 165
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 278
<AVERAGE-NET-ASSETS> 28,417
<PER-SHARE-NAV-BEGIN> 12.94
<PER-SHARE-NII> 0.84
<PER-SHARE-GAIN-APPREC> 0.06
<PER-SHARE-DIVIDEND> 0.93
<PER-SHARE-DISTRIBUTIONS> 0.13
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.78
<EXPENSE-RATIO> 0.68
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
