<PAGE> 1
[HOTCHKIS AND WILEY FUNDS LOGO]
EQUITY INCOME FUND
Seeks to provide current income and long-term growth of income, accompanied by
growth of capital. The Fund invests primarily in domestic equity securities.
MID-CAP FUND
Seeks to provide current income and long-term growth of income, accompanied by
growth of capital. The Fund invests primarily in stocks of domestic companies
with market capitalizations between $750 million and $5 billion.
SMALL CAP FUND
Seeks capital appreciation. The Fund invests primarily in stocks of domestic
companies with market capitalizations of $1 billion or less.
INTERNATIONAL FUND
Seeks to provide current income and long-term growth of income, accompanied by
growth of capital. The Fund invests in international equity securities.
GLOBAL EQUITY FUND
Seeks to provide current income and long-term growth of income, accompanied by
growth of capital. The Fund invests in domestic and international equity
securities.
BALANCED FUND
Seeks to preserve capital while producing a high total return. It is expected
that the Fund's assets will be allocated among equity securities, fixed-income
securities and money market obligations.
TOTAL RETURN BOND FUND
Seeks to maximize long-term total return. The Fund invests in a diversified
portfolio of fixed-income securities of varying maturities with a portfolio
duration of two to eight years.
LOW DURATION FUND
Seeks to maximize total return, consistent with preservation of capital. The
Fund invests in a diversified portfolio of fixed-income securities of varying
maturities with a portfolio duration of one to three years.
SHORT-TERM
INVESTMENT FUND
Seeks to maximize total return, consistent with preservation of capital. The
Fund invests in a diversified portfolio of fixed-income securities of varying
maturities with a portfolio duration of up to one year.
- --------------------------------------------------------------------------------
<PAGE> 2
[HOTCHKIS AND WILEY FUNDS LOGO]
DEAR FELLOW SHAREHOLDERS:
We are pleased to present to you the semi-annual report of Hotchkis and Wiley
Funds for the six months ended December 31, 1997. Investment commentary on the
Funds and their strategies follows below:
EQUITY INCOME FUND
The Equity Income Fund's total return for the six months ended December 31, 1997
was 14.4% compared to the S&P 500 Index return of 10.7%. There was a dramatic
rotation in market leadership away from the narrow set of stocks that had been
driving performance over the past 2 1/2 years. Announcements by such companies
as Coca-Cola, Microsoft and Gillette tempered Wall Street's enthusiasm for
earnings growth expectations, prompting this rotation. In addition, concerns
over the mounting Asian debt crisis caused investors to become increasingly
defensive. The portfolio was well positioned to benefit from this breakdown of
the market's mega-cap momentum run. Many of the areas of the market where we
have identified valuation opportunities rebounded strongly as the market focused
on the underlying intrinsic value of companies. Our returns came primarily from
the finance, utilities, and consumer durables sectors of the market. Basic
material companies were a slight negative during the six months, as they
initially rose on strong profit announcements and then sold off on worries of
overseas revenue exposure.
Utilities was the best performing sector of the equity market and the Fund
during this period. Some of this gain was driven by a strong rally in the U.S.
Treasury market as the 30 year bond closed the year with a yield of only 5.92%
- -- a full 1.24% below the yearly high in April. In addition to the interest rate
move, utility stocks were supported by favorable resolution on deregulatory and
stranded cost issues, moves toward consolidation, and investors' desire for
stocks that are both isolated from the international turmoil and offer strong
valuation characteristics.
The Fund remains most heavily weighted in the financial, utility and basic
industry sectors of the market. We continue to find attractive opportunities
within the electric utility group, and expect the recent outperformance of these
stocks should continue. Similarly, the basic industry group appears cheap,
particularly following the group's recent decline, as it bears the brunt of the
Asian turmoil.
We believe the Fund is well situated to take advantage of an unsettled, richly
valued market. We are paying less for earnings (13.9x vs. 20.7x) and receiving
more in dividends (2.9% vs. 1.7%) than the average of companies in the S&P 500
Index. These key portfolio characteristics help control risk in a volatile
market and provide a platform for outperformance as investors refocus on
fundamental value. We continue to manage the portfolio by strict adherence to
our investment disciplines, which emphasize these lower risk characteristics.
MID-CAP FUND
The Mid-Cap Fund return was 13.1% for the six-month period ended December 31,
1997 versus the Russell Mid-Cap Index return of 14.5%. Although mid cap stocks
outpaced large cap stocks from July to September, the economic crisis in Asia in
October hampered the performance of mid-cap stocks in the latter three months of
1997. In response to the Asian turmoil, investors took a defensive stance by
shifting to large, well-established companies. This "flight to quality"
triggered a sell-off of some mid-cap issues.
<PAGE> 3
Long-term, we do not think this knee-jerk movement into the large capitalization
stocks is well founded. Since large capitalization stocks have a much greater
exposure to the international markets, their earnings may be more vulnerable to
a global economic downturn than mid-cap stocks. Furthermore, mid-cap stocks, on
average, have a higher long-term growth rate and are currently selling at
discounted valuations to the larger capitalization group. As such, we believe
there should be stocks in the mid-cap universe that command higher prices to
reflect these growth opportunities.
SMALL CAP FUND
The Small Cap Fund exhibited a relatively strong performance over the last six
months. The Fund outperformed the Russell 2000 Index by 4.02% with a return of
15.04% versus 11.03% for the Index. The strong results came primarily from the
energy, finance, and basic industry sectors.
From July to September, we observed a pleasant reversal in the relative
performance of small cap stocks. Investors shifted to small cap issues as signs
of a slowdown in earnings growth from several widely held large cap companies
began to surface. This period of relative outperformance, however, was curtailed
by the stock market decline across the Far East in October. The resulting
economic crisis in Asia reverberated to the U.S., causing the market to decline
significantly. Although the market recovered substantially by the end of
December, investors continued to maintain a defensive position and flocked to
large, blue chip stocks as a safe haven from the economic uncertainties in Asia.
As a result, the Russell 2000 Index underperformed the S&P 500 in the last three
months of 1997, although overall the Russell 2000 Index outperformed the S&P 500
for the six-month period ended December 31, 1997 due to its strong initial
results.
Since the Asian stock market turmoil, the valuation discount of small cap stocks
relative to large cap stocks has widened considerably, once again creating a
breadth of opportunities for investors. In the near-term, this unusual valuation
spread between small cap stocks and large cap stocks may persist; however, once
the impact of Asia's economic crisis is better understood by investors, we
expect the small cap stocks as a group to appreciate in value in line with their
estimated long-term growth rates. Furthermore, low interest rates in the U.S.
should buoy the valuations of small cap stocks. We continue to hold a long-term
view that the relative positions of small cap stocks will improve as investors
recognize that strong growth found in small caps is not fully reflected in their
share prices.
INTERNATIONAL FUND
Although in negative territory in the second half of 1997, the International
Fund's return of -4.49% fared far better than both the EAFE and the Lipper
International Indices of -8.36% and -6.57%, respectively. This six-month period
encompassed the worst of last year's Asia meltdown, which sent shock waves
throughout stock markets globally. The Asian effect also added momentum to the
rising U.S. dollar, especially relative to Asian currencies. European currencies
also lost ground. Uncertainty regarding the successful launch of the European
Monetary Union next year and the credibility of the new European Central Bank
has overshadowed many continental European currencies.
The Fund remained sheltered from the full extent of the bear market in Japan
with a 12% average weighting in Japan (vs. 29% for the EAFE Index). The Japanese
stock market declined by nearly 20% in yen terms, and by nearly 30% in U.S.
dollar terms. Investors sold the market in response to the Japanese government's
belated efforts to reverse an overly contractionary fiscal policy. Instability
in Japan's major trading partners, especially Korea, has made recovery in
Japanese real GDP growth all the more unlikely this year. Throughout this period
of market weakness, the Fund has accumulated positions in stocks in the Japanese
market trading at historically low valuation levels. We are finding the best
opportunities in companies whose earnings are especially sensitive to the
domestic economic cycle. The Fund's other significant Asian exposure is to Hong
Kong, with an average 7% weighting vs. 3% for the EAFE Index. This overweight
position hampered performance as the local market declined 30% in the period. As
a result, we are even more bullish on Hong Kong stocks and the greater China
economy. We have used this recent sell off to add to positions in the highest
quality companies in the Fund.
European stocks, in general, delivered robust performance in the second half,
seemingly unaffected by the crisis in Asia. Domestic currency depreciation
<PAGE> 4
versus the U.S. dollar and the pound sterling has provided an export boost to
many countries. The Fund has approximately two thirds of its total assets
invested in European and U.K. stocks. Encouragingly, many of the larger
companies in Europe and the U.K. are restructuring in an effort to enhance
shareholder returns in a benign environment for growth and inflation.
The Fund continues to seek areas of the international equity markets that offer
the most promising upside potential. Many of the opportunities that have
proliferated on our value screens are in the capital goods and basic materials
sectors. In these sectors, share prices more than reflect the loss of orders or
competitive threats stemming from the Asian turmoil.
GLOBAL EQUITY FUND
The Global Equity Fund performance of -4.03% did not keep pace with the MSCI
World Index performance of 5.20% in the second half of 1997. Our bottom-up stock
selection approach has resulted in market weightings that often vary
dramatically from the Index. The screened list of stocks that meet our strict
value-oriented criteria suggests significantly greater return potential in the
European and Asian regions than in the U.S. As a result, the Fund held an
average weighting of 26% in U.S. stocks (vs. nearly 50% for the MSCI World
Index) and near the MSCI World Index weighting in Japan. The U.S. market
shrugged off most ill effects from the Asian crisis and delivered another strong
performance (gaining approximately 11% in six months, based on the S&P 500).
This period encompassed the worst of last year's Asia meltdown, which sent shock
waves throughout stock markets globally.
European stocks, in general, delivered robust performance in the second half,
seemingly unaffected by the crisis in Asia. Domestic currency depreciation
versus the U.S. dollar and the pound sterling has provided an export boost to
many countries. The Fund had average weighting of approximately 48% in European
stocks vs. 31% for the Index. Encouragingly, many of the larger companies in
Europe and the U.K. are restructuring in an effort to enhance shareholder
returns in a benign environment for growth and inflation.
In Japan, renewed economic stagnation and slow progress in the shaky finance
sector made the environment for stocks extremely hostile. In U.S. dollar terms,
Japanese market performance ranked near the bottom for the six months ended
December 31, 1997. The Fund was not immune from the Asian economic and currency
crisis, and had an average 9% exposure to Asian ex-Japan markets (Hong Kong,
Malaysia and Singapore) versus 2% for the Index.
Our screens indicate more clearly than ever that upside potential (unadjusted
for risk) is greatest in the most embattled areas of the global equity markets.
The Fund's own characteristics relative to the benchmark also reinforce that
statement. As of December 31, 1997, the Fund had a prospective price-to-earnings
ratio and price-to-book value ratio of less than 60% of the World Index with a
return on equity of 1.4x the Index. The Fund should benefit significantly from
any improvement in the international markets (especially in Asia) and currencies
relative to the U.S.
BALANCED FUND
The Balanced Fund produced a total return of 7.8% for the six months ended
December 31, 1997. The current allocation of 40% equity and 60% fixed-income
reflects our assessment of relative value in terms of risk versus prospective
returns. Current income yield, derived from common stock dividends and fixed
income interest, is 4.6%. This compares to a dividend yield of 1.7% on the S&P
500 Index.
The following table provides a historical perspective of our asset allocation
strategy.
---------------------------------------------------------
ASSET ALLOCATION SUMMARY
<TABLE>
<CAPTION>
Asset Current Average Low Equity High Equity
Category 12/31/97 8/13/85-12/31/97 10/16/87 8/11/89
- ------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equities 40% 46% 27% 59%
Fixed-Income 60% 54% 73% 41%
</TABLE>
Financial sector stocks made the greatest contribution to the Fund's equity
portfolio returns during 1997 followed by utilities. Other economic sectors that
had superior returns were healthcare, consumer durables and energy. Both basic
industry and transportation lagged the general market for the year. We
<PAGE> 5
used price declines in metals, paper and wood product stocks as an opportunity
to add positions during the most recent quarter. Additions were also made in the
energy, capital spending and consumer durable sectors.
The fixed-income portfolio benefited from a strategic weighting of assets in
investment-grade corporate securities, U.S. Government securities, mortgage-
backed bonds and asset-backed securities. The fixed-income portfolio ended the
year with an effective duration of 3.3 years, which is slightly above the Lehman
Brothers Intermediate Govt./Corp. Index. The average credit quality of the
Fund's fixed-income holdings remains AAA.
SHORT-TERM INVESTMENT FUND
LOW DURATION FUND
TOTAL RETURN BOND FUND
All three of the Hotchkis and Wiley fixed-income funds continued their record of
strong performance during the six months ended December 31, 1997:
<TABLE>
<S> <C>
- ----------------------------------------------
Short-Term Investment Fund............. 3.1%
Merrill Lynch Six-Month Treasury Bill
Index................................ 2.7%
Low Duration Fund...................... 3.8%
Merrill Lynch 1-3 Year Treasury
Index................................ 3.7%
Total Return Bond Fund................. 6.4%
Lehman Aggregate Index................. 6.4%
- ----------------------------------------------
</TABLE>
The six months ended December 31,1997 proved to be very interesting for the
fixed-income markets. The economy continued its exceptional growth rate, with
annualized GDP advancing at a rate of 3.7% and the unemployment rate dropping to
4.7% from 5.0%. All the while, inflation was nowhere to be seen. Bond market
participants were finally convinced that strong economic growth in and of itself
would not necessarily increase inflation, and thus, not force the Federal
Reserve to raise short-term rates. With this tail wind, the bond market was able
to rally during the second half of 1997. The long end of the market outperformed
relative to shorter maturities as is typical of a market that is decreasing its
inflation expectations.
During this time, we began to restructure the portfolios as the fundamental
environment changed. In the fourth quarter of the year we went from an
overweight position in mortgages to an underweighting. The basis for this move
was our concern that prepayment rates are potentially being underestimated, and
that the market has not fully discounted this probability. We also began to
upgrade the credit quality of the corporate holdings in anticipation that
corporate earnings are exposed to downside pressure. The source of this pressure
is the continued lack of pricing flexibility corporations are experiencing
combined with increasing costs of business, especially with regard to employment
costs.
Looking forward, we anticipate a subtle slowdown in the U.S. economy due to
Asian economic turmoil. Most economies in Asia will be hamstrung by higher
interest rates and restrictive fiscal policies, both designed to shore up weak
capital reserve positions. We believe this slowdown will hamper U.S. exports.
Importantly, weaker overseas currencies should have the effect of holding down
domestic inflation. For these reasons, we are positive on the bond market, and
look for interest rates to continue to lower levels.
We thank you for your continued investment in the Hotchkis and Wiley Funds. We
look forward to serving your investment needs in the months and years ahead.
Sincerely,
Nancy D. Celick sig
Nancy D. Celick
President
HOTCHKIS AND WILEY FUNDS
<PAGE> 6
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
SCHEDULE OF INVESTMENTS:
EQUITY INCOME FUND..................................... 1
MID-CAP FUND........................................... 4
SMALL CAP FUND......................................... 7
INTERNATIONAL FUND..................................... 9
GLOBAL EQUITY FUND..................................... 14
BALANCED FUND.......................................... 18
TOTAL RETURN BOND FUND................................. 24
LOW DURATION FUND...................................... 27
SHORT-TERM INVESTMENT FUND............................. 32
STATEMENT OF ASSETS AND LIABILITIES...................... 36
STATEMENT OF OPERATIONS.................................. 38
STATEMENT OF CHANGES IN NET ASSETS....................... 40
NOTES TO FINANCIAL STATEMENTS............................ 44
FINANCIAL HIGHLIGHTS..................................... 49
</TABLE>
LOGO
LOGO
<PAGE> 7
(Intentionally Left Blank)
<PAGE> 8
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
COMMON STOCKS -- 99.3% Shares Value
- ----------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 2.5%
..........................................................
Northrop Grumman Corporation 24,000 $ 2,760,000
..........................................................
Raytheon Company 6,695 330,147
..........................................................
Rockwell International
Corporation 35,000 1,828,750
..................... .....................
-----------
4,918,897
- ----------------------------------------------------------
APPAREL & TEXTILES -- 0.9%
..........................................................
Russell Corporation 63,600 1,689,375
- ----------------------------------------------------------
AUTO-RELATED -- 1.6%
..........................................................
Dana Corporation 61,000 2,897,500
..........................................................
Meritor Automotive, Inc. 11,666 245,715
..................... .....................
-----------
3,143,215
- ----------------------------------------------------------
AUTOS & TRUCKS -- 8.0%
..........................................................
Chrysler Corporation 53,000 1,864,937
..........................................................
Ford Motor Company 155,000 7,546,563
..........................................................
General Motors Corporation 105,000 6,365,625
..................... .....................
-----------
15,777,125
- ----------------------------------------------------------
BANKS -- 8.0%
..........................................................
CoreStates Financial Corporation 33,000 2,642,062
..........................................................
First Chicago NBD Corporation 54,000 4,509,000
..........................................................
First Union Corporation 79,200 4,059,000
..........................................................
Fleet Financial Group, Inc. 20,000 1,498,750
..........................................................
KeyCorp 30,000 2,124,375
..........................................................
NationsBank Corporation 15,000 912,188
..................... .....................
-----------
15,745,375
- ----------------------------------------------------------
BEVERAGES -- 0.6%
..........................................................
Anheuser-Busch Companies, Inc. 26,000 1,144,000
- ----------------------------------------------------------
BUILDING & FOREST PRODUCTS -- 2.6%
..........................................................
Georgia-Pacific Corporation 19,900 1,208,925
..........................................................
Georgia-Pacific Corporation
(Timber Group) # 19,900 451,481
..........................................................
Weyerhaeuser Company 71,000 3,483,438
..................... .....................
-----------
5,143,844
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Shares Value
<S> <C> <C>
BUILDING MATERIALS -- 0.3%
..........................................................
Hanson PLC ADR 26,625 $ 614,039
- ----------------------------------------------------------
CHEMICALS -- 2.6%
..........................................................
The Dow Chemical Company 30,000 3,045,000
..........................................................
Eastman Chemical Company 34,000 2,025,125
..................... .....................
-----------
5,070,125
- ----------------------------------------------------------
CONGLOMERATES -- 1.2%
..........................................................
Tenneco, Inc. 60,000 2,370,000
- ----------------------------------------------------------
CONSUMER PRODUCTS -- 1.0%
..........................................................
Tupperware Corporation 72,900 2,032,088
- ----------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 0.9%
..........................................................
Harsco Corporation 43,000 1,854,375
- ----------------------------------------------------------
FINANCIAL SERVICES -- 4.5%
..........................................................
Beneficial Corporation 39,000 3,241,875
..........................................................
Household International, Inc. 28,000 3,571,750
..........................................................
Transamerica Corporation 20,000 2,130,000
..................... .....................
-----------
8,943,625
- ----------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES -- 2.1%
..........................................................
Whirlpool Corporation 75,000 4,125,000
- ----------------------------------------------------------
INSURANCE -- 5.2%
..........................................................
American General Corporation 56,000 3,027,500
..........................................................
Lincoln National Corporation 30,000 2,343,750
..........................................................
Safeco Corporation 50,000 2,437,500
..........................................................
St. Paul Companies, Inc. 24,000 1,969,500
..........................................................
TIG Holdings, Inc. 15,600 517,725
..................... .....................
-----------
10,295,975
- ----------------------------------------------------------
LEISURE/TOYS -- 1.9%
..........................................................
Fortune Brands, Inc. 100,000 3,706,250
- ----------------------------------------------------------
MACHINERY -- 2.9%
..........................................................
Deere & Company 34,000 1,982,625
..........................................................
New Holland N.V. 140,000 3,701,250
..................... .....................
-----------
5,683,875
- ----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
1
<PAGE> 9
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
Shares Value
- ----------------------------------------------------------
<S> <C> <C>
METALS & MINING -- 3.3%
..........................................................
Aluminum Company of America 46,000 $ 3,237,250
..........................................................
Reynolds Metals Company 52,000 3,120,000
..................... .....................
-----------
6,357,250
- ----------------------------------------------------------
NATURAL GAS -- 1.1%
..........................................................
Eastern Enterprises 48,000 2,160,000
- ----------------------------------------------------------
OIL -- DOMESTIC -- 7.0%
..........................................................
Atlantic Richfield Company 25,000 2,003,125
..........................................................
Occidental Petroleum Corporation 187,400 5,493,163
..........................................................
Phillips Petroleum Company 90,000 4,376,250
..........................................................
Ultramar Diamond Shamrock
Corporation 59,000 1,880,625
..................... .....................
-----------
13,753,163
- ----------------------------------------------------------
PAPER -- 2.1%
..........................................................
International Paper Company 53,000 2,285,625
..........................................................
Union Camp Corporation 33,000 1,771,688
..................... .....................
-----------
4,057,313
- ----------------------------------------------------------
POLLUTION CONTROL -- 2.8%
..........................................................
Browning-Ferris Industries, Inc. 58,263 2,155,731
..........................................................
Waste Management, Inc. 123,000 3,382,500
..................... .....................
-----------
5,538,231
- ----------------------------------------------------------
RAILROADS -- 1.5%
..........................................................
Norfolk Southern Corporation 99,000 3,050,437
- ----------------------------------------------------------
RETAIL -- 4.6%
..........................................................
Intimate Brands, Inc. 54,000 1,299,375
..........................................................
J.C. Penney Company, Inc. 56,000 3,377,500
..........................................................
May Department Stores Company 40,000 2,107,500
..........................................................
Sears, Roebuck & Company 50,500 2,285,125
..................... .....................
-----------
9,069,500
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Shares Value
<S> <C> <C>
SAVINGS & LOANS -- 5.3%
..........................................................
Fannie Mae 41,000 $ 2,339,562
..........................................................
H.F. Ahmanson & Company 94,500 6,325,594
..........................................................
Washington Mutual, Inc. 26,900 1,716,556
..................... .....................
-----------
10,381,712
- ----------------------------------------------------------
STEEL -- 3.4%
..........................................................
Allegheny Teledyne, Inc. 145,000 3,751,875
..........................................................
USX-U.S. Steel Group, Inc. 95,000 2,968,750
..................... .....................
-----------
6,720,625
- ----------------------------------------------------------
TOBACCO -- 4.8%
..........................................................
Gallaher Group PLC ADR # 80,000 1,710,000
..........................................................
Philip Morris Companies, Inc. 132,600 6,008,438
..........................................................
UST, Inc. 48,000 1,773,000
..................... .....................
-----------
9,491,438
- ----------------------------------------------------------
TRUCKING -- 0.9%
..........................................................
Ryder System, Inc. 53,000 1,735,750
- ----------------------------------------------------------
UTILITY -- ELECTRIC -- 8.4%
..........................................................
CMS Energy Corporation 84,000 3,701,250
..........................................................
Central & South West Corporation 85,000 2,300,312
..........................................................
DTE Energy Company 55,000 1,907,812
..........................................................
Illinova Corporation 130,000 3,501,875
..........................................................
PacifiCorp 44,000 1,201,750
..........................................................
Public Service Enterprises Group,
Inc. 70,000 2,218,125
..........................................................
SCANA Corporation 59,900 1,793,256
..................... .....................
-----------
16,624,380
- ----------------------------------------------------------
UTILITY -- TELEPHONE -- 7.3%
..........................................................
AT&T Corporation 128,000 7,840,000
..........................................................
Alltel Corporation 80,000 3,285,000
..........................................................
Bell Atlantic Corporation 35,328 3,214,848
..................... .....................
-----------
14,339,848
- ----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
2
<PAGE> 10
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
Value
- ----------------------------------------------------------
<S> <C> <C>
Total common stocks
(cost $139,108,518) $195,536,830
- ----------------------------------------------------------
Other assets in excess of
liabilities -- 0.7% 1,359,808
..................... .....................
-----------
Total net assets -- 100.0% $196,896,638
- ----------------------------------------------------------
</TABLE>
ADR -- American Depository Receipts.
# Non-income producing security.
See Notes to Financial Statements
3
<PAGE> 11
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
MID-CAP FUND
<TABLE>
<CAPTION>
COMMON STOCK -- 98.4% Shares Value
- -----------------------------------------------------------
<S> <C> <C>
APPAREL & TEXTILES -- 3.7%
...........................................................
Coats Viyella PLC ADR 16,800 $ 75,879
...........................................................
Russell Corporation 4,700 124,844
...................... ...................... ---------
200,723
- -----------------------------------------------------------
AUTO PARTS -- 1.4%
...........................................................
ITT Industries, Inc. 2,400 75,300
- -----------------------------------------------------------
AUTO-RELATED -- 4.1%
...........................................................
Dana Corporation 1,000 47,500
...........................................................
Echlin, Inc. 1,800 65,138
...........................................................
Lear Corporation # 2,400 114,000
...................... ...................... ---------
226,638
- -----------------------------------------------------------
BANKS -- 7.0%
...........................................................
Compass Bancshares, Inc. 1,150 50,312
...........................................................
First Commerce Bankshares, Inc. 400 26,900
...........................................................
First Union Corporation 770 39,463
...........................................................
Union Planters Corporation 1,600 108,700
...........................................................
UnionBanCal Corporation 1,500 161,250
...................... ...................... ---------
386,625
- -----------------------------------------------------------
BEVERAGES -- 1.9%
...........................................................
Pernod Ricard ADR 7,200 105,920
- -----------------------------------------------------------
CHEMICALS -- 4.3%
...........................................................
DSM N.V. ADR 3,500 79,936
...........................................................
Eastman Chemical Company 1,700 101,256
...........................................................
Wellman, Inc. 2,800 54,600
...................... ...................... ---------
235,792
- -----------------------------------------------------------
COMMERCIAL SERVICES -- 1.3%
...........................................................
Mac-Gray Corporation # 4,600 71,875
- -----------------------------------------------------------
COMMUNICATIONS & MEDIA -- 1.7%
...........................................................
Groupe AB SA ADR # 14,600 93,987
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Shares Value
<S> <C> <C>
COMPUTERS -- 2.1%
...........................................................
Komag, Inc. # 4,400 $ 65,450
...........................................................
Quantum Corporation # 2,600 52,163
...................... ...................... ---------
117,613
- -----------------------------------------------------------
CONSUMER PRODUCTS -- 2.9%
...........................................................
The Dial Corporation 600 12,487
...........................................................
Tupperware Corporation 5,200 144,950
...................... ...................... ---------
157,437
- -----------------------------------------------------------
CONTAINERS -- 3.5%
...........................................................
Ball Corporation 2,400 84,750
...........................................................
Crown Cork & Seal Company, Inc. 2,100 105,262
...................... ...................... ---------
190,012
- -----------------------------------------------------------
ELECTRIC PRODUCTS -- 2.0%
...........................................................
UCAR International, Inc. # 2,700 107,831
- -----------------------------------------------------------
ELECTRONICS -- 3.4%
...........................................................
Avnet, Inc. 1,100 72,600
...........................................................
EG&G, Inc. 1,000 20,813
...........................................................
Princeton Video Image, Inc. # 10,200 95,625
...................... ...................... ---------
189,038
- -----------------------------------------------------------
FOODS -- 1.1%
...........................................................
Dean Foods Company 1,000 59,500
- -----------------------------------------------------------
HEALTHCARE -- DRUGS -- 1.5%
...........................................................
Bergen Brunswig Corporation --
Class A 1,750 73,719
...........................................................
McKesson Corporation 100 10,819
...................... ...................... ---------
84,538
- -----------------------------------------------------------
HOSPITAL/HEALTHCARE MANAGEMENT -- 0.9%
...........................................................
Foundation Health Systems, Inc. --
Class A # 2,200 49,225
- -----------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES -- 2.1%
...........................................................
Whirlpool Corporation 2,100 115,500
- -----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
4
<PAGE> 12
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
MID-CAP FUND
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
INSURANCE -- 5.3%
...........................................................
Harleysville Group, Inc. 3,400 $ 81,600
...........................................................
IPC Holdings Limited 3,000 96,563
...........................................................
Ohio Casualty Corporation 1,200 53,550
...........................................................
St. Paul Companies, Inc. 700 57,444
...................... ...................... ---------
289,157
- -----------------------------------------------------------
MACHINERY -- 2.0%
...........................................................
New Holland N.V. 4,100 108,394
- -----------------------------------------------------------
METALS & MINING -- 1.9%
...........................................................
Reynolds Metals Company 1,700 102,000
- -----------------------------------------------------------
NATURAL GAS -- 1.9%
...........................................................
Equitable Resources, Inc. 1,400 49,525
...........................................................
MCN Energy Group, Inc. 1,300 52,488
...................... ...................... ---------
102,013
- -----------------------------------------------------------
OIL -- DOMESTIC -- 1.8%
...........................................................
Phillips Petroleum Company 2,000 97,250
- -----------------------------------------------------------
OIL -- EQUIPMENT -- 0.3%
...........................................................
Bayard Drilling Technologies, Inc. # 1,000 16,250
- -----------------------------------------------------------
OIL EXPLORATION & PRODUCTION -- 2.6%
...........................................................
Pioneer Natural Resources Company 4,100 118,644
...........................................................
TransCoastal Marine Services, Inc.
# 1,800 25,650
...................... ...................... ---------
144,294
- -----------------------------------------------------------
OIL & GAS SERVICES -- 1.8%
...........................................................
Friede Goldman International, Inc. # 1,400 41,825
...........................................................
Tidewater, Inc. 1,000 55,125
...................... ...................... ---------
96,950
- -----------------------------------------------------------
OIL REFINING & MARKETING -- 0.9%
...........................................................
Valero Energy Corporation 1,600 50,300
- -----------------------------------------------------------
PAPER -- 3.0%
...........................................................
Chesapeake Corporation 2,400 82,500
...........................................................
Consolidated Papers, Inc. 1,500 80,062
...................... ...................... ---------
162,562
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Shares Value
<S> <C> <C>
PROFESSIONAL SERVICES -- 1.5%
...........................................................
Olsten Corporation 5,600 $ 84,000
- -----------------------------------------------------------
REAL ESTATE INVESTMENT & MANAGEMENT -- 0.5%
...........................................................
Trammell Crow Company # 1,100 28,325
- -----------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 1.6%
...........................................................
Redwood Trust, Inc. 4,400 89,650
- -----------------------------------------------------------
RETAIL -- 2.9%
...........................................................
Family Dollar Stores, Inc. 2,150 63,022
...........................................................
Intimate Brands, Inc. 4,050 97,453
...................... ...................... ---------
160,475
- -----------------------------------------------------------
RETAIL -- SPECIALTY -- 0.7%
...........................................................
AutoZone, Inc. # 1,350 39,150
- -----------------------------------------------------------
SAVINGS & LOANS - 3.0%
...........................................................
Charter One Financial, Inc. 1,260 79,537
...........................................................
Washington Federal, Inc. 2,730 85,824
...................... ...................... ---------
165,361
- -----------------------------------------------------------
STEEL -- 5.5%
...........................................................
AK Steel Holding Corporation 6,000 106,125
...........................................................
Lukens, Inc. 3,000 85,687
...........................................................
USX - U.S. Steel Group, Inc. 3,600 112,500
...................... ...................... ---------
304,312
- -----------------------------------------------------------
TOBACCO -- 1.4%
...........................................................
Universal Corporation 1,800 74,025
- -----------------------------------------------------------
TRANSPORTATION -- AIR -- 1.7%
...........................................................
ASA Holdings, Inc. 3,200 91,000
- -----------------------------------------------------------
TRANSPORTATION -- MARINE -- 1.5%
...........................................................
Teekay Shipping Corporation 2,400 80,550
- -----------------------------------------------------------
TRAVEL & RECREATION -- 7.1%
...........................................................
American Coin Merchandising, Inc. # 6,800 119,850
...........................................................
Galileo International, Inc. 5,400 149,175
...........................................................
Royal Caribbean Cruises, Ltd. 2,300 122,619
...................... ...................... ---------
391,644
- -----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
5
<PAGE> 13
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
MID-CAP FUND
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
TRUCKING -- 1.0%
...........................................................
Ryder System, Inc. 1,700 $ 55,675
- -----------------------------------------------------------
UTILITY -- ELECTRIC -- 3.6%
...........................................................
DTE Energy Company 1,500 52,031
...........................................................
Illinova Corporation 3,600 96,975
...........................................................
Montana Power Company 1,600 50,900
...................... ...................... ---------
199,906
- -----------------------------------------------------------
Total common stock
(cost $5,148,235) 5,400,797
- -----------------------------------------------------------
VARIBLE RATE
DEMAND NOTES* Principal
-- 5.2% Amount
- -----------------------------------------------------------
Pitney Bowes, Inc., 5.3276% $124,836 124,836
...........................................................
Warner-Lambert Co., 5.4890% 161,091 161,091
...................... ...................... ---------
Total variable rate demand notes 285,927
(cost $285,927)
- -----------------------------------------------------------
Total investments -- 103.6% (cost
$5,434,162) 5,686,724
...........................................................
Liabilities in excess of other
assets -- (3.6)% (195,972)
...................... ...................... ---------
Total net assets -- 100.0% $5,490,752
- -----------------------------------------------------------
</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 December 31, 1997.
ADR -- American Depository Receipts.
# Non-income producing security.
See Notes to Financial Statements
6
<PAGE> 14
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
SMALL CAP FUND
<TABLE>
<CAPTION>
COMMON STOCKS-- 95.4% Shares Value
- -----------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 3.4%
...........................................................
AVTEAM, Inc. # 235,900 $ 2,093,613
- -----------------------------------------------------------
BUILDING MATERIALS -- 1.3%
...........................................................
NCI Building Systems, Inc. # 21,700 770,350
- -----------------------------------------------------------
CHEMICALS -- 2.7%
...........................................................
The Carbide/Graphite Group, Inc. # 49,600 1,674,000
- -----------------------------------------------------------
COMMERCIAL SERVICES -- 4.1%
...........................................................
FirstService Corporation # 128,100 960,750
...........................................................
Mac-Gray Corporation # 99,700 1,557,813
..................... ...................... ----------
2,518,563
- -----------------------------------------------------------
COMMUNICATIONS & MEDIA -- 4.2%
...........................................................
Groupe AB SA ADR # 338,900 2,186,090
...........................................................
VTEL Corporation # 56,000 343,000
..................... ...................... ----------
2,529,090
- -----------------------------------------------------------
COMMUNICATIONS EQUIPMENT/MANUFACTURERS -- 0.9%
...........................................................
Channell Commercial Corporation # 45,200 565,000
- -----------------------------------------------------------
COMPUTERS -- 6.8%
...........................................................
Hutchinson Technology, Inc. # 65,600 1,435,000
...........................................................
MICROS Systems, Inc. # 59,500 2,677,500
..................... ...................... ----------
4,112,500
- -----------------------------------------------------------
COMPUTER SERVICES -- 1.0%
...........................................................
AMX Corporation # 40,000 230,000
...........................................................
Princeton Video Image, Inc. # 38,900 364,688
...........................................................
Structural Dynamics Research
Corporation # 825 18,563
..................... ...................... ----------
613,251
- -----------------------------------------------------------
ELECTRONICS -- 4.3%
...........................................................
Stoneridge, Inc. # 164,300 2,628,800
- -----------------------------------------------------------
HEALTHCARE -- MISCELLANEOUS -- 0.6%
...........................................................
Healthcare Services Group, Inc. # 29,000 366,125
- -----------------------------------------------------------
HOSPITAL/HEALTHCARE MANAGEMENT -- 1.5%
...........................................................
Integrated Health Services, Inc. 29,500 922,825
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Shares Value
<S> <C> <C>
INSURANCE -- 9.7%
...........................................................
ESG Re Limited # 79,100 $ 1,858,850
...........................................................
FPIC Insurance Group, Inc. # 36,100 1,051,413
...........................................................
Liberty Corporation 13,100 612,425
...........................................................
Mutual Risk Management Ltd. 53,800 1,610,638
...........................................................
Philadelphia Consolidated Holding
Corporation # 34,000 603,500
...........................................................
Stirling Cooke Brown Holdings
Limited # 7,300 178,850
..................... ...................... ----------
5,915,676
- -----------------------------------------------------------
MACHINERY -- 4.6%
...........................................................
Denison International PLC ADR # 117,000 2,018,250
...........................................................
Gleason Corporation 28,800 775,800
..................... ...................... ----------
2,794,050
- -----------------------------------------------------------
METALS & MINING -- 1.6%
...........................................................
Commonwealth Industries, Inc. 19,500 282,750
...........................................................
Northwest Pipe Company # 28,900 693,600
..................... ...................... ----------
976,350
- -----------------------------------------------------------
OIL EXPLORATION & PRODUCTION -- 6.2%
...........................................................
Abraxas Petroleum Corporation # 83,100 1,225,725
...........................................................
Nuevo Energy Company # 19,800 806,700
...........................................................
TransCoastal Marine Services,
Inc. # 22,700 323,475
...........................................................
Trico Marine Services, Inc. # 48,000 1,410,000
..................... ...................... ----------
3,765,900
- -----------------------------------------------------------
OIL & GAS DRILLING -- 2.0%
...........................................................
Coho Energy, Inc. # 134,000 1,222,750
- -----------------------------------------------------------
REAL ESTATE INVESTMENT & MANAGEMENT -- 0.6%
...........................................................
Trammell Crow Company # 13,900 357,925
- -----------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 4.5%
...........................................................
Brandywine Realty Trust 27,900 700,988
...........................................................
Redwood Trust, Inc. 99,200 2,021,200
..................... ...................... ----------
2,722,188
- -----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
7
<PAGE> 15
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
SMALL CAP FUND
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
RETAIL -- 1.2%
...........................................................
Intimate Brands, Inc. 30,000 $ 721,875
- -----------------------------------------------------------
RETAIL -- FOOD CHAINS -- 5.0%
...........................................................
Dominick's Supermarkets, Inc. # 83,300 3,040,450
- -----------------------------------------------------------
RETAIL -- JEWELRY -- 6.5%
...........................................................
Finlay Enterprises, Inc. # 30,000 682,500
...........................................................
Friedman's, Inc. # 215,000 2,929,375
...........................................................
Marks Brothers Jewelers, Inc. # 22,500 371,250
..................... ...................... ----------
3,983,125
- -----------------------------------------------------------
SAVINGS & LOANS -- 2.6%
...........................................................
Coastal Bancorp, Inc. 25,000 871,875
...........................................................
Poughkeepsie Financial
Corporation 60,000 697,500
..................... ...................... ----------
1,569,375
- -----------------------------------------------------------
SECURITY SERVICES -- 1.4%
...........................................................
Wackenhut Corporation 39,000 823,875
- -----------------------------------------------------------
STEEL -- 1.7%
...........................................................
Lukens, Inc. 36,200 1,033,963
- -----------------------------------------------------------
STEEL FABRICATOR -- 2.3%
...........................................................
Citation Corporation # 48,410 786,663
...........................................................
WHX Corporation # 49,100 583,063
..................... ...................... ----------
1,369,726
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Shares Value
<S> <C> <C>
TRANSPORTATION -- AIR FREIGHT -- 2.9%
...........................................................
AirNet Systems, Inc. # 82,900 $ 1,782,350
- -----------------------------------------------------------
TRANSPORTATION -- MARINE -- 0.6%
...........................................................
Teekay Shipping Corporation 10,500 352,406
- -----------------------------------------------------------
TRAVEL & RECREATION -- 10.2%
...........................................................
Alliance Communications
Corporation # 96,000 1,224,000
...........................................................
American Coin Merchandising, Inc. # 181,600 3,200,700
...........................................................
Playboy Enterprises, Inc. # 112,000 1,757,000
..................... ...................... ----------
6,181,700
- -----------------------------------------------------------
TRUCKING -- 1.0%
...........................................................
Allied Holdings, Inc. # 31,200 596,700
..................... ...................... ----------
Total common stocks 58,004,501
(cost $54,959,435)
...........................................................
Other assets in excess of 2,803,477
liabilities -- 4.6%
..................... ...................... ----------
Total net assets -- 100.0% $60,807,978
- -----------------------------------------------------------
</TABLE>
ADR -- American Depository Receipts.
# Non-income producing security.
See Notes to Financial Statements
8
<PAGE> 16
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 92.7%
- ------------------------------------------------------------
AUSTRALIA -- 2.7% Shares Value
- ------------------------------------------------------------
BANKS -- 1.7%
............................................................
Australia and New Zealand
Banking Group, Ltd. 2,604,700 $ 17,208,938
- ------------------------------------------------------------
BUILDING MATERIALS -- 0.5%
............................................................
Pioneer International, Ltd. 1,916,550 5,232,299
- ------------------------------------------------------------
INSURANCE -- 0.5%
............................................................
GIO Australia Holdings, Ltd. 2,219,218 5,672,528
..................... ...................... -----------
Total Australia 28,113,765
- ------------------------------------------------------------
AUSTRIA -- 0.7%
- ------------------------------------------------------------
STEEL -- 0.7%
............................................................
Boehler-Uddeholm AG 117,000 6,848,436
..................... ...................... -----------
Total Austria 6,848,436
- ------------------------------------------------------------
CANADA -- 5.4%
- ------------------------------------------------------------
BANKS -- 2.2%
............................................................
Bank of Nova Scotia 190,038 8,944,011
............................................................
Canadian Imperial Bank of
Commerce 458,180 14,279,904
..................... ...................... -----------
23,223,915
- ------------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 1.4%
............................................................
Imasco, Ltd. 402,400 14,200,500
- ------------------------------------------------------------
METALS & MINERALS -- 0.9%
............................................................
Noranda, Inc. 549,705 9,449,723
- ------------------------------------------------------------
RAILROADS -- 0.9%
............................................................
Canadian National Railway
Company 201,000 9,452,908
..................... ...................... -----------
Total Canada 56,327,046
- ------------------------------------------------------------
DENMARK -- 0.8%
- ------------------------------------------------------------
BANKS -- 0.8%
............................................................
BG Bank A/S 122,775 8,266,035
..................... ...................... -----------
Total Denmark 8,266,035
- ------------------------------------------------------------
FINLAND -- 2.3% Shares Value
- ------------------------------------------------------------
FOREST PRODUCTS & PAPER -- 1.3%
............................................................
UPM-Kymmene Corporation OY 683,600 $ 13,683,338
- ------------------------------------------------------------
MACHINERY -- 0.3%
............................................................
The Rauma Group OY 179,950 2,808,887
- ------------------------------------------------------------
MANUFACTURING -- 0.7%
............................................................
Metra Oy 314,215 7,385,849
..................... ...................... -----------
Total Finland 23,878,074
- ------------------------------------------------------------
FRANCE -- 7.6%
- ------------------------------------------------------------
BANKS -- 1.4%
............................................................
Societe Generale 110,910 15,117,734
- ------------------------------------------------------------
BEVERAGES -- 1.7%
............................................................
Pernod-Ricard SA 295,093 17,364,581
- ------------------------------------------------------------
BUILDING MATERIALS & COMPONENTS -- 1.3%
............................................................
LaFarge SA 208,925 13,714,490
- ------------------------------------------------------------
OIL & GAS -- 1.0%
............................................................
Elf Aquitaine SA 88,000 10,239,597
- ------------------------------------------------------------
STEEL -- 0.8%
............................................................
Usinor Sacilor SA 561,930 8,117,160
- ------------------------------------------------------------
TOBACCO -- 1.4%
............................................................
SEITA SA 413,903 14,861,220
..................... ...................... -----------
Total France 79,414.782
- ------------------------------------------------------------
GERMANY -- 4.1%
- ------------------------------------------------------------
BANKS -- 1.8%
............................................................
Commerzbank AG 485,960 19,135,231
- ------------------------------------------------------------
BUILDING MATERIALS -- 1.0%
............................................................
Dyckerhoff AG 38,310 10,120,587
- ------------------------------------------------------------
CHEMICALS -- 0.7%
............................................................
Bayer AG 185,000 6,914,184
- ------------------------------------------------------------
MANUFACTURING -- 0.6%
............................................................
Buderus AG 13,500 6,051,579
..................... ...................... -----------
Total Germany 42,221.581
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
9
<PAGE> 17
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
HONG KONG -- 7.6%
- ------------------------------------------------------------
BANKS -- 0.9%
............................................................
HSBC Holdings PLC 372,800 $ 9,189,770
- ------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 1.5%
............................................................
Swire Pacific Ltd. 2,913,000 15,978,087
- ------------------------------------------------------------
PRINTING & PUBLISHING -- 0.4%
............................................................
South China Morning Post
(Holdings), Ltd. 6,625,000 4,659,912
- ------------------------------------------------------------
RETAIL -- SPECIALTY -- 0.3%
............................................................
Dickson Concepts International,
Ltd. 2,432,000 3,546,805
- ------------------------------------------------------------
REAL ESTATE DEVELOPMENT -- 2.2%
............................................................
Hang Lung Development Company 7,409,000 10,423,920
............................................................
New World Development Co., Ltd. 3,525,000 12,192,402
..................... ...................... ----------
22,616,322
- ------------------------------------------------------------
UTILITY -- ELECTRIC -- 1.5%
............................................................
China Light & Power Company,
Ltd. # 2,729,500 15,147,708
- ------------------------------------------------------------
UTILITY -- TELECOMMUNICATIONS -- 0.8%
............................................................
Hong Kong Telecommunications,
Ltd. 3,807,200 7,837,215
..................... ...................... -----------
Total Hong Kong 78,975,819
- ------------------------------------------------------------
IRELAND -- 1.4%
- ------------------------------------------------------------
PAPER -- 1.4%
............................................................
Jefferson Smurfit Group PLC 5,087,000 14,356,293
..................... ...................... -----------
Total Ireland 14,356,293
- ------------------------------------------------------------
ITALY -- 2.0%
- ------------------------------------------------------------
ENGINEERING &
CONSTRUCTION -- 0.4%
............................................................
Danieli & Company 1,236,000 4,446,253
- ------------------------------------------------------------
OIL & GAS -- 1.6%
............................................................
ENI 2,889,750 16,393,808
..................... ...................... -----------
Total Italy 20,840,061
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
JAPAN -- 10.4%
- ------------------------------------------------------------
AUTOS & TRUCKS -- 1.1%
............................................................
Nissan Motor Company, Ltd. 1,307,000 $ 5,428,196
............................................................
Suzuki Motor Corporation 647,000 5,871,817
..................... ...................... -----------
11,300,013
- ------------------------------------------------------------
CHEMICALS -- PLASTICS -- 1.0%
............................................................
Sekisui Chemical Co., Ltd. 2,056,000 10,483,899
- ------------------------------------------------------------
ELECTRICAL MACHINERY -- 1.9%
............................................................
Nichicon Corporation 1,059,000 9,855,247
............................................................
Sony Corporation 99,400 8,868,100
............................................................
Sony Music Entertainment (Japan)
Inc. 36,400 1,343,782
..................... ...................... -----------
20,067,129
- ------------------------------------------------------------
ELECTRONIC COMPONENTS -- 1.3%
............................................................
Nintendo Co., Ltd. 133,900 13,181,862
- ------------------------------------------------------------
FINANCIAL SERVICES -- 1.6%
............................................................
Promise Company, Ltd. 307,670 17,132,073
- ------------------------------------------------------------
IRON/STEEL -- 0.8%
............................................................
Yodogawa Steel Works 1,911,000 7,804,434
- ------------------------------------------------------------
MANUFACTURING -- 1.9%
............................................................
Kyocera Corporation 324,200 14,761,175
............................................................
NSK Limited 1,898,000 4,744,230
..................... ...................... -----------
19,505,405
- ------------------------------------------------------------
MEDICAL LABORATORIES -- 0.0%
............................................................
SRL Inc. 34,000 183,047
- ------------------------------------------------------------
RESTAURANTS -- 0.3%
............................................................
MOS Food Services 269,000 3,124,032
- ------------------------------------------------------------
TRANSPORTATION EQUIPMENT -- 0.5%
............................................................
Koito Manufacturing Co., Ltd. 1,414,000 5,655,083
..................... ...................... -----------
Total Japan 108,436,977
- ------------------------------------------------------------
MALAYSIA -- 0.8%
- ------------------------------------------------------------
TRAVEL & RECREATION -- 0.6%
............................................................
Genting Berhad 2,377,700 5,955,907
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
10
<PAGE> 18
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
TRUCKING & SHIPPING -- 0.2%
............................................................
Malaysia International Shipping
Berhad 1,702,000 $ 2,492,416
..................... ...................... -----------
Total Malaysia 8,448,323
- ------------------------------------------------------------
NETHERLANDS -- 6.8%
- ------------------------------------------------------------
BANKS -- 2.5%
............................................................
ABN Amro Holding N.V. 550,000 10,716,610
............................................................
ING Groep N.V. 351,560 14,809,996
..................... ...................... -----------
25,526,606
- ------------------------------------------------------------
CHEMICALS -- 1.6%
............................................................
Akzo Nobel N.V. 96,275 16,602,847
- ------------------------------------------------------------
CONSTRUCTION & HOUSING -- 0.7%
............................................................
Hollandsche Beton Groep N.V. 381,500 7,094,691
- ------------------------------------------------------------
INSURANCE -- 0.7%
............................................................
Fortis Amev N.V. 173,191 7,552,230
- ------------------------------------------------------------
TELECOMMUNICATIONS -- 1.3%
............................................................
Koninklije PTT Nederland N.V. 331,530 13,835,371
..................... ...................... -----------
Total Netherlands 70,611,745
- ------------------------------------------------------------
NEW ZEALAND -- 0.5%
- ------------------------------------------------------------
BUILDING MATERIALS -- 0.5%
............................................................
Fletcher Challenge Building 2,731,740 5,583,412
..................... ...................... -----------
Total New Zealand 5,583,412
- ------------------------------------------------------------
NORWAY -- 2.4%
- ------------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 0.9%
............................................................
Kvaerner ASA - Class A 181,525 9,258,227
- ------------------------------------------------------------
PHARMACEUTICALS & HEALTHCARE -- 1.5%
............................................................
Nycomed ASA - Class B # 434,463 15,793,964
..................... ...................... -----------
Total Norway 25,052,191
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
SINGAPORE -- 1.8%
- ------------------------------------------------------------
BEVERAGES -- 0.6%
............................................................
Fraser & Neave Ltd. 1,377,000 $ 5,965,851
- ------------------------------------------------------------
DIVERSIFIED INDUSTRIES -- 1.2%
............................................................
Jardine Matheson Holdings, Ltd. 2,436,600 12,426,660
..................... ...................... -----------
Total Singapore 18,392,511
- ------------------------------------------------------------
SPAIN -- 3.6%
- ------------------------------------------------------------
BANKS -- 1.4%
............................................................
Banco Santander SA 423,000 14,126,328
- ------------------------------------------------------------
OIL -- INTERNATIONAL -- 1.4%
............................................................
Repsol SA 353,375 15,070,246
- ------------------------------------------------------------
TELECOMMUNICATIONS -- 0.8%
............................................................
Telefonica de Espana SA 290,000 8,276,723
..................... ...................... -----------
Total Spain 37,473,297
- ------------------------------------------------------------
SWEDEN -- 1.8%
- ------------------------------------------------------------
APPLIANCES -- 1.2%
............................................................
Electrolux AB - Class B 185,870 12,907,701
- ------------------------------------------------------------
DIVERSIFIED -- 0.6%
............................................................
Marieberg Tidnings AB -- Class A 263,000 6,165,335
..................... ...................... -----------
Total Sweden 19,073,036
- ------------------------------------------------------------
SWITZERLAND -- 7.3%
- ------------------------------------------------------------
BUILDING MATERIALS -- 0.7%
............................................................
Sarna Kunststoff Holding AG
"registered" 5,080 6,756,843
- ------------------------------------------------------------
FOOD PRODUCERS -- 1.6%
............................................................
Nestle SA "registered" 11,037 16,564,380
- ------------------------------------------------------------
INSURANCE -- 2.1%
............................................................
Swiss Reinsurance Co.
"registered" 11,900 22,289,793
- ------------------------------------------------------------
MACHINERY & EQUIPMENT -- 2.3%
............................................................
SIG Schweizerische Industrie --
Gesellschaft Holding AG 5,358 14,694,035
............................................................
Sulzer AG "registered" (P.C.) 14,750 9,364,431
..................... ...................... -----------
24,058,466
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
11
<PAGE> 19
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
PHARMACEUTICALS & HEALTHCARE -- 0.6%
............................................................
Novartis AG "registered" 3,520 $ 5,719,649
............................................ -----------
Total Switzerland 75,389,131
- ------------------------------------------------------------
UNITED KINGDOM -- 22.7%
- ------------------------------------------------------------
APPAREL & TEXTILES -- 1.1%
............................................................
Coats Viyella PLC 7,665,850 11,541,251
- ------------------------------------------------------------
BANKS -- 2.4%
............................................................
Abbey National PLC 395,309 6,823,130
............................................................
National Westminster Bank PLC 1,075,300 17,861,068
..................... ...................... -----------
24,684,198
- ------------------------------------------------------------
BUILDING MATERIALS -- 1.2%
............................................................
Hanson PLC 2,830,597 12,691,589
- ------------------------------------------------------------
BUSINESS SERVICES -- 1.0%
............................................................
Lex Service PLC 1,367,300 10,495,108
- ------------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 3.0%
............................................................
BTR PLC 4,763,600 14,617,920
............................................................
Harrisons & Crosfield PLC 3,023,200 6,964,122
............................................................
Tomkins PLC 1,951,200 9,117,832
..................... ...................... -----------
30,699,874
- ------------------------------------------------------------
FOOD & BEVERAGES -- 1.7%
............................................................
Allied Domecq PLC 1,955,930 17,700,578
- ------------------------------------------------------------
FOOD PRODUCERS -- 1.5%
............................................................
Hillsdown Holdings PLC 4,005,500 9,787,114
............................................................
Tate & Lyle PLC 666,200 5,502,750
..................... ...................... -----------
15,289,864
- ------------------------------------------------------------
INSURANCE -- 1.4%
............................................................
Commercial Union PLC 1,008,700 14,904,240
- ------------------------------------------------------------
MANUFACTURING -- 2.2%
............................................................
Cookson Group PLC 4,574,400 14,714,732
............................................................
De La Rue PLC 1,273,500 8,297,500
..................... ...................... -----------
23,012,582
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
RETAIL -- 1.5%
............................................................
Safeway PLC 2,655,250 $ 15,085,542
- ------------------------------------------------------------
TOBACCO -- 1.6%
............................................................
B.A.T. Industries PLC 1,800,000 16,422,736
- ------------------------------------------------------------
UTILITY -- ELECTRIC -- 1.9%
............................................................
Energy Group PLC 513,610 5,700,158
............................................................
Powergen PLC 1,080,000 14,127,403
..................... ...................... -----------
19,827,561
- ------------------------------------------------------------
UTILITY -- GAS -- 0.5%
............................................................
BG PLC 1,235,294 5,569,195
- ------------------------------------------------------------
UTILITY -- WATER -- 1.7%
............................................................
Hyder PLC 1,129,000 17,944,962
..................... ...................... -----------
Total United Kingdom 235,869,280
............................................................
Total common stocks 963,571,795
(cost $890,060,232)
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS Principal
- -- 7.7% Amount
- -----------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER -- 7.7%
- -----------------------------------------------------------
Bombardier, Inc.
6.15%, 1/07/1998 $30,000,000 29,969,250
...........................................................
British Columbia
6.30%, 1/12/1998 20,000,000 19,961,500
...........................................................
Conagra, Inc.
5.97%, 1/14/1998 20,000,000 19,956,883
...........................................................
Texas Utilities Company
6.20%, 1/08/1998 10,000,000 9,987,944
.................... .....................
-----------
79,875,577
- -----------------------------------------------------------
CASH EQUIVALENTS -- 0.9% Shares
- -----------------------------------------------------------
Vista Institutional Prime
Money Market Fund 9,798,656 9,798,656
.................... ......................................
Total short-term investments
(cost $89,674,233) 89,674,233
- -----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
12
<PAGE> 20
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Value
- -----------------------------------------------------------
<S> <C> <C>
Total investments -- 100.8%
(cost $979,738,465) $1,053,246,028
...........................................................
Liabilities in excess of
other assets -- (0.8)% (14,015,957)
.................... .....................
-----------
Total net assets -- 100.0% $1,039,230,071
- -----------------------------------------------------------
</TABLE>
# Non-income producing security.
P.C. -- Participation Certificates.
See Notes to Financial Statements
13
<PAGE> 21
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 97.7%
- ------------------------------------------------------------
AUSTRALIA -- 2.3% Shares Value
- ------------------------------------------------------------
BANKS -- 1.3%
............................................................
Australia & New Zealand Banking
Group, Ltd. 10,720 $ 70,826
............................................................
INSURANCE -- 1.0%
............................................................
Reinsurance Australia Corporation 20,200 52,646
...................... ....................... ---------
Total Australia 123,472
- ------------------------------------------------------------
CANADA -- 1.0%
- ------------------------------------------------------------
METALS & MINERALS -- 1.0%
............................................................
Noranda, Inc. 2,915 50,111
...................... ....................... ---------
Total Canada 50,111
- ------------------------------------------------------------
DENMARK -- 0.4%
- ------------------------------------------------------------
BANKS -- 0.4%
............................................................
BG Bank A/S 295 19,861
...................... ....................... ---------
Total Denmark 19,861
- ------------------------------------------------------------
FINLAND -- 2.4%
- ------------------------------------------------------------
FOREST PRODUCTS & PAPER -- 1.3%
............................................................
UPM-Kymmene Corporation OY 3,365 67,356
- ------------------------------------------------------------
MACHINERY -- 0.4%
............................................................
The Rauma Group OY 1,356 21,166
- ------------------------------------------------------------
MANUFACTURING -- 0.7%
............................................................
Metra OY 1,650 38,784
...................... ....................... ---------
Total Finland 127,306
- ------------------------------------------------------------
FRANCE -- 6.1%
- ------------------------------------------------------------
BANKS -- 1.4%
............................................................
Societe Generale 540 73,605
- ------------------------------------------------------------
BEVERAGES -- 1.6%
............................................................
Pernod-Ricard SA 1,440 84,736
- ------------------------------------------------------------
BUILDING MATERIALS & COMPONENTS -- 1.6%
............................................................
LaFarge SA 1,225 80,413
- ------------------------------------------------------------
TOBACCO -- 1.5%
............................................................
SEITA SA 2,235 80,248
...................... ....................... ---------
Total France 319,002
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
GERMANY -- 3.3%
- ------------------------------------------------------------
DIAGNOSTIC EQUIPMENT -- 1.4%
............................................................
Draegerwerk AG 4,185 $ 76,343
- ------------------------------------------------------------
BANKS -- 1.9%
............................................................
Commerzbank AG 2,500 98,440
...................... ....................... ---------
174,783
Total Germany
- ------------------------------------------------------------
HONG KONG -- 6.8%
- ------------------------------------------------------------
DIVERSIFIED OPERATIONS -- 1.5%
............................................................
Swire Pacific Ltd. 15,000 82,276
- ------------------------------------------------------------
FINANCIAL SERVICES -- 0.8%
............................................................
Manhattan Card Company, Ltd. 113,000 39,741
- ------------------------------------------------------------
REAL ESTATE DEVELOPMENT -- 0.6%
............................................................
New World Development Co., Ltd. 9,000 31,130
- ------------------------------------------------------------
RETAIL -- SPECIALTY -- 0.8%
............................................................
Dickson Concepts International,
Ltd. 28,000 40,835
- ------------------------------------------------------------
UTILITY -- ELECTRIC -- 2.5%
............................................................
China Light & Power
Company, Ltd. # 13,000 72,145
............................................................
Hongkong Electric Holdings, Ltd. 16,500 62,714
...................... ....................... ---------
134,859
- ------------------------------------------------------------
UTILITY -- TELECOMMUNICATIONS -- 0.6%
............................................................
Hong Kong Telecommunications,
Ltd. 14,800 30,466
...................... ....................... ---------
Total Hong Kong 359,307
- ------------------------------------------------------------
IRELAND -- 0.9%
- ------------------------------------------------------------
PAPER -- 0.9%
............................................................
Jefferson Smurfit Group PLC 18,000 50,799
...................... ....................... ---------
Total Ireland 50,799
- ------------------------------------------------------------
ITALY -- 1.3%
- ------------------------------------------------------------
OIL & GAS -- 1.3%
............................................................
ENI SPA 12,000 68,077
...................... ....................... ---------
Total Italy 68,077
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
14
<PAGE> 22
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
JAPAN -- 9.8%
- ------------------------------------------------------------
CHEMICALS -- PLASTICS -- 1.0%
............................................................
Sekisui Chemical Co., Ltd. 10,000 $ 50,992
- ------------------------------------------------------------
ELECTRICAL MACHINERY -- 0.9%
............................................................
Nichicon Corporation 5,000 46,531
- ------------------------------------------------------------
ELECTRONIC COMPONENTS -- 1.3%
............................................................
Nintendo Co., Ltd. 700 68,912
- ------------------------------------------------------------
FINANCIAL SERVICES -- 1.1%
............................................................
Promise Company, Ltd. 150 8,353
............................................................
Takefuji Corporation 1,100 50,676
...................... ....................... ---------
59,029
- ------------------------------------------------------------
IRON/STEEL -- 1.0%
............................................................
Yodogawa Steel Works 13,000 53,091
- ------------------------------------------------------------
MACHINERY & EQUIPMENT -- 0.7%
............................................................
Asahi Diamond Indus. Co. Ltd. 9,000 39,386
- ------------------------------------------------------------
MANUFACTURING -- 1.5%
............................................................
Kyocera Corporation 1,700 77,403
- ------------------------------------------------------------
PHARMACEUTICALS -- 0.7%
............................................................
Yoshitomi Pharmaceutical
Industries, Ltd. 10,000 35,225
- ------------------------------------------------------------
RESTAURANTS -- 1.1%
............................................................
MOS Food Services 5,000 58,068
- ------------------------------------------------------------
TRANSPORTATION EQUIPMENT -- 0.5%
............................................................
Koito Manufacturing Co., Ltd. 7,000 27,995
...................... ....................... ---------
Total Japan 516,632
- ------------------------------------------------------------
MALAYSIA -- 0.7%
- ------------------------------------------------------------
FINANCIAL SERVICES -- 0.2%
............................................................
Public Finance Berhad 44,000 12,095
- ------------------------------------------------------------
TRAVEL & RECREATION -- 0.5%
............................................................
Genting Berhad 10,100 25,300
...................... ....................... ---------
Total Malaysia 37,395
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
NETHERLANDS -- 5.1%
- ------------------------------------------------------------
BANKS -- 2.2%
............................................................
ABN Amro Holding N.V. 2,565 $ 49,978
............................................................
ING Groep N.V. 1,575 66,349
...................... ....................... ---------
116,327
- ------------------------------------------------------------
CHEMICALS -- 2.0%
............................................................
Akzo Nobel N.V. 605 104,334
- ------------------------------------------------------------
CONSTRUCTION & HOUSING -- 0.9%
............................................................
Hollandsche Beton Groep N.V. 2,700 50,212
...................... ....................... ---------
Total Netherlands 270,873
- ------------------------------------------------------------
NORWAY -- 1.7%
- ------------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 0.6%
............................................................
Kvaerner ASA -- Class A 598 30,499
- ------------------------------------------------------------
PHARMACEUTICALS & HEALTHCARE -- 1.1%
............................................................
Nycomed ASA -- Class B # 1,561 56,747
...................... ....................... ---------
Total Norway 87,246
- ------------------------------------------------------------
SINGAPORE -- 1.4%
- ------------------------------------------------------------
DIVERSIFIED -- 1.4%
............................................................
Jardine Matheson Holdings, Ltd. 14,000 71,400
...................... ....................... ---------
Total Singapore 71,400
- ------------------------------------------------------------
SPAIN -- 1.4%
- ------------------------------------------------------------
OIL -- INTERNATIONAL -- 1.4%
............................................................
Repsol SA 1,700 72,499
.............................................. ---------
Total Spain 72,499
- ------------------------------------------------------------
SWEDEN -- 2.1%
- ------------------------------------------------------------
APPLIANCES -- 0.9%
............................................................
Electrolux AB -- Class B 715 49,653
- ------------------------------------------------------------
DIVERSIFIED -- 1.2%
............................................................
Marieberg Tidnings AB -- Class A 2,585 60,599
...................... ....................... ---------
Total Sweden 110,252
- ------------------------------------------------------------
SWITZERLAND -- 6.3%
- ------------------------------------------------------------
BUILDING MATERIALS -- 1.0%
............................................................
Forbo Holding AG "registered" 135 55,257
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
15
<PAGE> 23
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
FOOD PRODUCERS -- 1.1%
............................................................
Nestle SA "registered" 38 $ 57,030
- ------------------------------------------------------------
INSURANCE -- 2.3%
............................................................
Swiss Reinsurance Co.
"registered" 64 119,878
- ------------------------------------------------------------
MACHINERY & EQUIPMENT -- 1.9%
............................................................
Sulzer AG "registered" (P.C.) 60 38,093
............................................................
SIG Schweizerische Industrie-
Gesellschaft Holding AG 22 60,334
...................... ....................... ---------
98,427
...................... ....................... ---------
Total Switzerland 330,592
- ------------------------------------------------------------
UNITED KINGDOM -- 16.1%
- ------------------------------------------------------------
APPAREL & TEXTILES -- 1.5%
............................................................
Coats Viyella PLC 50,450 75,955
- ------------------------------------------------------------
BANKS -- 1.6%
............................................................
National Westminster Bank PLC 4,900 81,390
- ------------------------------------------------------------
BUILDING MATERIALS -- 1.1%
............................................................
Hanson PLC 12,600 56,495
- ------------------------------------------------------------
BUSINESS SERVICES -- 1.6%
............................................................
Lex Service PLC 10,900 83,666
- ------------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 2.5%
............................................................
BTR PLC 19,775 60,683
............................................................
Harrisons & Crosfield PLC # 21,000 48,375
............................................................
Tomkins PLC 4,900 22,897
...................... ....................... ---------
131,955
- ------------------------------------------------------------
FOOD & BEVERAGES -- 1.7%
............................................................
Allied Domecq PLC 9,860 89,230
- ------------------------------------------------------------
FOOD PRODUCERS -- 1.5%
............................................................
Hillsdown Holdings PLC 19,000 46,425
............................................................
Tate & Lyle PLC 4,190 34,609
...................... ....................... ---------
81,034
- ------------------------------------------------------------
INSURANCE -- 1.1%
............................................................
Commercial Union PLC 4,000 59,103
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
MANUFACTURING -- 0.9%
............................................................
Cookson Group PLC 15,400 $ 49,538
- ------------------------------------------------------------
UTILITY -- ELECTRIC -- 1.1%
............................................................
Powergen PLC 4,400 57,556
- ------------------------------------------------------------
UTILITY -- WATER -- 1.5%
............................................................
Hyder PLC 5,025 79,870
...................... ....................... ---------
Total United Kingdom 845,792
- ------------------------------------------------------------
UNITED STATES -- 28.6%
- ------------------------------------------------------------
AEROSPACE -- 0.1%
............................................................
Raytheon Company 43 2,107
- ------------------------------------------------------------
APPAREL & TEXTILES -- 1.1%
............................................................
Russell Corporation 2,100 55,781
- ------------------------------------------------------------
AUTOS & TRUCKS -- 2.2%
............................................................
Ford Motor Company 1,600 77,900
............................................................
General Motors Corporation 670 40,619
...................... ....................... ---------
118,519
- ------------------------------------------------------------
BUILDING & FOREST PRODUCTS -- 0.8%
............................................................
Weyerhaeuser Company 900 44,156
- ------------------------------------------------------------
CHEMICALS -- 1.4%
............................................................
Eastman Chemical Company 1,200 71,475
- ------------------------------------------------------------
CONSUMER PRODUCTS -- 1.2%
............................................................
Tupperware Corporation 2,270 63,276
- ------------------------------------------------------------
FINANCIAL SERVICES -- 1.4%
............................................................
Beneficial Corporation 900 74,813
- ------------------------------------------------------------
INSURANCE -- 3.6%
............................................................
American General Corporation 900 48,656
............................................................
Safeco Corporation 1,300 63,375
............................................................
TIG Holdings, Inc. 2,300 76,331
...................... ....................... ---------
188,362
- ------------------------------------------------------------
MACHINERY -- 1.8%
............................................................
New Holland N.V. 3,600 95,175
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
16
<PAGE> 24
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
METALS & MINING -- 1.2%
............................................................
Aluminum Company of America 900 $ 63,337
- ------------------------------------------------------------
OIL -- DOMESTIC -- 2.9%
............................................................
Occidental Petroleum Corporation 3,000 87,938
............................................................
Phillips Petroleum Company 1,300 63,213
...................... ....................... ---------
151,151
- ------------------------------------------------------------
POLLUTION CONTROL -- 1.1%
............................................................
Waste Management, Inc. 2,100 57,750
- ------------------------------------------------------------
RAILROADS -- 1.2%
............................................................
Norfolk Southern Corporation 2,000 61,625
- ------------------------------------------------------------
RETAIL -- 2.4%
............................................................
Intimate Brands, Inc. 3,300 79,406
............................................................
J.C. Penney Company, Inc. 800 48,250
...................... ....................... ---------
127,656
- ------------------------------------------------------------
SAVINGS & LOANS -- 1.1%
............................................................
Washington Mutual, Inc. 900 57,431
- ------------------------------------------------------------
STEEL -- 1.2%
............................................................
USX-U.S. Steel Group, Inc. 2,000 62,500
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
TOBACCO -- 2.2%
............................................................
Philip Morris Companies, Inc. 2,600 $ 117,813
- ------------------------------------------------------------
UTILITY -- ELECTRIC -- 1.7%
............................................................
Illinova Corporation 2,100 56,569
............................................................
SCANA Corporation 1,200 35,925
...................... ....................... ---------
92,494
...................... ....................... ---------
Total United States 1,505,421
- ------------------------------------------------------------
Total common stocks
(cost $5,205,939) 5,140,820
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 1.3%
- ------------------------------------------------------------
CASH EQUIVALENTS -- 1.3%
............................................................
Chase Bank Domestic Liquidity
Fund (cost $70,653) 70,653 70,653
...................... .......................
Total investments -- 99.0%
(cost $5,276,592) 5,211,473
...................... .......................
Other assets in excess of liabilities -- 1.0% 55,035
...................... ....................... ---------
Total net assets -- 100.0% $5,266,508
- ------------------------------------------------------------
</TABLE>
# Non-income producing security.
See Notes to Financial Statements
17
<PAGE> 25
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
COMMON STOCKS -- 39.3% Shares Value
- ------------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 1.2%
............................................................
Northrop Grumman Corporation 6,200 $ 713,000
............................................................
Raytheon Company 765 37,724
............................................................
Rockwell International Corporation 9,000 470,250
.............................................. ---------
1,220,974
- ------------------------------------------------------------
APPAREL & TEXTILES -- 0.4%
............................................................
Russell Corporation 15,400 409,063
- ------------------------------------------------------------
AUTO-RELATED -- 0.7%
............................................................
Dana Corporation 14,000 665,000
............................................................
Meritor Automotive, Inc. 2,000 42,125
.............................................. ---------
707,125
- ------------------------------------------------------------
AUTOS & TRUCKS -- 2.1%
............................................................
Ford Motor Company 29,000 1,411,937
............................................................
General Motors Corporation 13,000 788,125
.............................................. ---------
2,200,062
- ------------------------------------------------------------
BANKS -- 1.8%
............................................................
Comerica, Inc. 3,500 315,875
............................................................
CoreStates Financial Corporation 3,000 240,187
............................................................
First Union Corporation 16,100 825,125
............................................................
National City Corporation 6,800 447,100
.............................................. ---------
1,828,287
- ------------------------------------------------------------
BEVERAGES -- 0.2%
............................................................
Anheuser-Busch Companies, Inc. 5,000 220,000
- ------------------------------------------------------------
BUILDING & FOREST PRODUCTS -- 1.3%
............................................................
Georgia-Pacific Corporation 6,900 419,175
............................................................
Georgia-Pacific Corporation (Timber
Group) @ 3,700 83,944
............................................................
Weyerhaeuser Company 17,000 834,063
.............................................. ---------
1,337,182
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
CHEMICALS -- 1.9%
............................................................
The Dow Chemical Company 10,500 $1,065,750
............................................................
duPont (E.I.) de Nemours & Company 4,600 276,287
............................................................
Eastman Chemical Company 11,400 679,013
............................................................
Millennium Chemicals, Inc. 2,142 50,471
...................... ....................... ---------
2,071,521
- ------------------------------------------------------------
CONSUMER PRODUCTS -- 0.8%
............................................................
Tupperware Corporation 31,200 869,700
- ------------------------------------------------------------
CONGLOMERATES -- 0.5%
............................................................
Tenneco, Inc. 12,900 509,550
- ------------------------------------------------------------
FINANCIAL SERVICES -- 1.5%
............................................................
Beneficial Corporation 10,200 847,875
............................................................
Household International, Inc. 2,000 255,125
............................................................
Transamerica Corporation 4,600 489,900
...................... ....................... ---------
1,592,900
- ------------------------------------------------------------
HEALTHCARE -- DRUGS -- 0.4%
............................................................
American Home Products Corporation 2,500 191,250
............................................................
Bristol-Meyers Squibb Company 2,600 246,025
...................... ....................... ---------
437,275
- ------------------------------------------------------------
HEALTHCARE -- MEDICAL
PRODUCTS -- 0.2%
............................................................
Baxter International, Inc. 4,200 211,837
- ------------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES -- 0.9%
............................................................
Whirlpool Corporation 17,700 973,500
- ------------------------------------------------------------
INSURANCE -- 2.1%
............................................................
American General Corporation 7,700 416,281
............................................................
Aon Corporation 2,500 146,562
............................................................
Harleysville Group, Inc. 18,000 432,000
............................................................
Safeco Corporation 11,200 546,000
............................................................
St. Paul Companies, Inc. 5,600 459,550
............................................................
TIG Holdings, Inc. 4,500 149,344
...................... ....................... ---------
2,149,737
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
18
<PAGE> 26
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
LEISURE/TOYS -- 0.6%
............................................................
Fortune Brands, Inc. 16,500 $ 611,531
- ------------------------------------------------------------
MACHINERY -- 1.0%
............................................................
Deere & Company 3,600 209,925
............................................................
New Holland N.V. 29,900 790,481
...................... ....................... ---------
1,000,406
- ------------------------------------------------------------
METALS & MINING -- 2.0%
............................................................
Aluminum Company of America 13,000 914,875
............................................................
Phelps Dodge Corporation 9,000 560,250
............................................................
Reynolds Metals Company 9,400 564,000
...................... ....................... ---------
2,039,125
- ------------------------------------------------------------
OIL-DOMESTIC -- 2.4%
............................................................
Atlantic Richfield Company 12,600 1,009,575
............................................................
Occidental Petroleum Corporation 31,000 908,688
............................................................
USX-Marathon Group, Inc. 17,800 600,750
...................... ....................... ---------
2,519,013
- ------------------------------------------------------------
OIL-INTERNATIONAL -- 0.9%
............................................................
Phillips Petroleum Company 19,600 953,050
- ------------------------------------------------------------
PAPER -- 1.2%
............................................................
International Paper Company 18,000 776,250
............................................................
Union Camp Corporation 8,500 456,344
...................... ....................... ---------
1,232,594
- ------------------------------------------------------------
PHOTOGRAPHY & OPTICAL -- 0.4%
............................................................
Eastman Kodak Company 6,200 377,037
- ------------------------------------------------------------
POLLUTION CONTROL -- 0.9%
............................................................
Browning-Ferris Industries, Inc. 4,218 156,066
............................................................
Waste Management, Inc. 28,000 770,000
...................... ....................... ---------
926,066
- ------------------------------------------------------------
RAILROADS -- 0.7%
............................................................
Norfolk Southern Corporation 24,000 739,500
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
RETAIL -- 2.4%
............................................................
Intimate Brands, Inc. 19,000 $ 457,187
............................................................
J.C. Penney Company, Inc. 11,500 693,594
............................................................
May Department Stores Company 16,000 843,000
............................................................
Sears, Roebuck & Company 11,200 506,800
...................... ....................... ---------
2,500,581
- ------------------------------------------------------------
SAVINGS & LOANS -- 1.6%
............................................................
Fannie Mae 6,000 342,375
............................................................
H.F. Ahmanson & Company 11,000 736,312
............................................................
Washington Mutual, Inc. 8,630 550,702
...................... ....................... ---------
1,629,389
- ------------------------------------------------------------
STEEL -- 0.7%
............................................................
USX-U.S. Steel Group, Inc. 22,000 687,500
- ------------------------------------------------------------
TOBACCO -- 0.8%
............................................................
Philip Morris Companies, Inc. 19,200 870,000
- ------------------------------------------------------------
TRUCKING -- 0.3%
............................................................
Ryder System, Inc. 9,600 314,400
- ------------------------------------------------------------
UTILITY-ELECTRIC -- 3.8%
............................................................
CMS Energy Corporation 6,600 290,812
............................................................
Central & South West Corporation 14,700 397,819
............................................................
DTE Energy Company 12,000 416,250
............................................................
Edison International 19,300 524,719
............................................................
Energy Group PLC ADR 3,900 174,038
............................................................
Illinova Corporation 31,000 835,063
............................................................
PECO Energy Company 13,000 315,250
............................................................
PacifiCorp 18,300 499,819
............................................................
Public Service Enterprises Group,
Inc. 8,000 253,500
............................................................
SCANA Corporation 9,700 290,394
...................... ....................... ---------
3,997,664
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
19
<PAGE> 27
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
UTILITY-GAS PIPELINE -- 0.6%
............................................................
Nicor, Inc. 6,000 $ 253,125
............................................................
Peoples Energy Corporation 8,500 334,688
...................... ....................... ---------
587,813
- ------------------------------------------------------------
UTILITY-TELEPHONE -- 3.0%
............................................................
AT&T Corporation 21,900 1,341,375
............................................................
Alltel Corporation 16,100 661,106
............................................................
Bell Atlantic Corporation 6,144 559,104
............................................................
SBC Communications, Inc. 3,657 267,875
............................................................
US West Communications Group 7,000 315,875
...................... ....................... ---------
3,145,335
- ------------------------------------------------------------
Total common stocks
(cost $31,928,672) 40,869,717
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CORPORATE BONDS Principal
- -- 23.5% Amount Value
- ------------------------------------------------------------
<S> <C> <C>
BANKS -- 3.2%
............................................................
KeyCorp Instit Capital-A,
(Acquired 12/19/1996, Cost
$799,722), CLB 12/01/2006,
7.826%, 12/01/2026 r $ 825,000 $ 859,504
............................................................
MBNA Corporation, 6.25625%,
6/17/2002 # 1,500,000 1,492,503
............................................................
MBNA Global Capital Securities,
CLB 2/01/2007 6.55%, 2/01/2027
# 1,000,000 921,798
...................... ....................... ---------
3,273,805
- ------------------------------------------------------------
BUSINESS MACHINES & SOFTWARE -- 1.0%
............................................................
Oracle Corporation, 6.91%,
2/15/2007 1,000,000 1,022,289
- ------------------------------------------------------------
CONSUMER PRODUCTS -- 0.7%
............................................................
The Stop & Shop Companies, Inc.,
9.75%, 2/01/2002 700,000 782,426
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
EUROBANKS -- 6.8%
............................................................
Fokus Bank A/S, CLB 9/29/1999,
6.99375%, 9/29/2004 # $1,500,000 $1,517,790
............................................................
Foreningsbanken Kredit AB, CLB
12/18/2001, 6.65625%,
12/29/2049 # 2,000,000 2,007,400
............................................................
Nordbanken, CLB 10/25/2001,
6.4125%, 10/29/2049 # 2,000,000 2,002,468
............................................................
Okobank, CLB 9/27/1999, 7.3125%,
9/27/2049 # 1,500,000 1,521,825
...................... ....................... ---------
7,049,483
- ------------------------------------------------------------
FINANCIAL SERVICES -- 4.4%
............................................................
Associates First Capital
Corporation, Putable 5/15/1999,
5.96%, 5/15/2037 1,000,000 1,018,303
............................................................
Countrywide Home Loan, 6.84%,
10/22/2004 2,500,000 2,553,430
............................................................
Florida Windstorm, (Acquired
7/31/1997, cost $998,840),
6.85%, 8/25/2007 r 1,000,000 1,023,450
...................... ....................... ---------
4,595,183
- ------------------------------------------------------------
PAPER -- 0.7%
............................................................
Fort Howard Corporation, 11.00%,
1/02/2002 698,218 727,892
- ------------------------------------------------------------
TELECOMMUNICATIONS -- 5.2%
............................................................
Tele Communications, Inc.,
6.185%, 9/11/2000 # 1,500,000 1,489,200
............................................................
TKR Cable, Inc., CLB 10/30/99,
10.50%, 10/30/2007 3,500,000 3,890,754
...................... ....................... ---------
5,379,954
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
20
<PAGE> 28
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION -- 1.5%
............................................................
Delta Air Lines ETC, 9.90%,
1/02/2002 $ 150,000 $ 166,397
............................................................
Northwest Airlines, Inc., 11.3 %,
12/21/2012 1,092,862 1,421,718
.............................................. ---------
1,588,115
- ------------------------------------------------------------
Total corporate bonds
(cost $24,957,503) 24,419,147
- ------------------------------------------------------------
GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 9.8%
- ------------------------------------------------------------
ASSET-BACKED SECURITIES -- 0.7%
............................................................
Student Loan Marketing
Association, 1996-4 A1, 5.909%,
7/25/2004 # 767,350 766,797
- ------------------------------------------------------------
COLLATERALIZED MORTGAGE
OBLIGATIONS -- 3.0%
............................................................
Federal Home Loan Mortgage
Corporation - Government
National Mortgage Association,
61 SC, 9.110173%, 6/17/20 # 950,286 962,991
............................................................
Federal National Mortgage
Association: 1189 K, 9.403493%,
1/15/21 # 1,430,827 1,459,438
............................................................
G93-31 SD, 10.08723%,
12/25/2022 # 665,323 662,661
............................................................
1995-3 Z, 8.25%, 7/25/2024 126,221 126,107
.............................................. ---------
3,211,197
- ------------------------------------------------------------
PASS-THROUGH SECURITIES -- 2.4%
............................................................
Government National Mortgage
Association, G2AR, 7.00%,
9/20/2018 # 1,030,361 1,058,933
............................................................
G2AR, 7.00%, 2/20/2022 # 1,370,817 1,408,144
.............................................. ---------
2,467,077
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
STRIPPED MORTGAGE-BACKED
SECURITIES -- 3.7%
............................................................
Federal Home Loan Mortgage
Corporation:
1627 PN (IO), 6.00%, 9/15/2022 $3,100,000 $1,000,712
............................................................
1965 SA (Inverse IO), 2.05%,
3/15/2024 # 3,050,000 450,048
............................................................
Federal National Mortgage
Association:
1997-65 A (PO), 0.00%,
9/25/2000 1,841,918 1,619,530
............................................................
(PO) 0.00%, 10/09/2019 3,025,000 787,328
.............................................. ---------
3,857,618
- ------------------------------------------------------------
Total government agency
mortgage-backed securities
(cost $9,545,815) 10,302,689
- ------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED SECURITIES -- 10.9%
- ------------------------------------------------------------
ASSET-BACKED SECURITIES -- 6.1%
............................................................
Aesop Funding II LLC, (Acquired
7/23/97, cost $2,200,000),
1997-1 A1, 6.22%, 10/20/2001 r 2,200,000 $2,209,790
............................................................
Bridgestone/Firestone Master
Trust, 1996-1 A, 6.17%,
7/01/2003 1,400,000 1,405,796
............................................................
California Infrastructure, SCE,
1997-1 A7, 6.42%, 12/26/2009 1,000,000 1,012,250
............................................................
Ditech Home Loan Owner Trust,
1997-1, A2, 6.59%, 4/15/2013 1,750,000 1,750,787
...................... ....................... ---------
6,378,623
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
21
<PAGE> 29
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ------------------------------------------------------------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 2.3%
............................................................
Independent National Mortgage
Corporation, 1996-D A2, 7.00%,
5/25/2026 $ 572,975 $ 575,038
............................................................
PNC Mortgage Securities
Corporation, 1996-1 A11, Class
Z, 7.50%, 6/25/2026 1,776,146 1,822,985
...................... ....................... ---------
2,398,023
- ------------------------------------------------------------
PASS-THROUGH SECURITIES -- 0.0%
............................................................
Citicorp Mortgage Securities,
Inc., 1987-14 A1, 9.50%,
9/25/2002 18,579 18,533
- ------------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 2.5%
............................................................
Chase Commercial Mortgage Securi-
ties Corporation, 1997-1 X
(IO), 1.39704%, 4/19/2015 # 23,358,707 1,949,004
............................................................
Donaldson, Lufkin & Jenrette,
(Acquired 4/25/1997, cost
$588,356), 1997-CF1 S (IO),
1.0952%, 3/15/2017 # r 9,193,115 603,298
...................... ....................... ---------
2,552,302
- ------------------------------------------------------------
Total non-agency mortgage-backed
securities (cost $11,099,832) 11,347,481
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCKS
- -- 0.9% Shares Value
- ------------------------------------------------------------
<S> <C> <C>
Home Ownership Funding 2,
(Acquired 2/20/1997, cost
$1,000,000) r 1,000 $ 975,000
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS Principal
- -- 11.8% Amount
- ------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Bonds:
7.50%, 11/15/2016 $ 825,000 962,672
8.75%, 5/15/2017 750,000 983,203
6.50%, 11/15/2026 1,000,000 1,067,813
..................... ...................... ----------
3,013,688
- ------------------------------------------------------------
U.S. Treasury Notes:
6.375%, 5/15/1999 3,000,000 3,028,128
5.875%, 11/15/1999 3,225,000 3,237,097
6.50%, 5/31/2001 2,000,000 2,048,126
6.50%, 10/15/2006 900,000 942,751
..................... ...................... ----------
9,256,102
- ------------------------------------------------------------
Total U.S. Treasury
obligations (cost
$12,046,163) 12,269,790
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS
- -- 4.6%
- ------------------------------------------------------------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES* -- 4.6%
............................................................
General Mills, Inc., 5.3277% 1,463,209 1,463,209
............................................................
Pitney Bowes, Inc., 5.3276% 1,109,449 1,109,449
............................................................
Sara Lee, Corp., 5.3226% 176,000 176,000
............................................................
Warner-Lambert Co., 5.4890% 2,025,554 2,025,554
..................... ...................... ----------
Total short-term investments 4,774,212
(cost $4,774,212)
- ------------------------------------------------------------
Total investments -- 100.8%
(cost $95,352,196) 104,958,036
............................................................
Liabilities in excess of other
assets -- (0.8)% (852,333)
..................... ...................... -----------
$104,105,703
Total net assets -- 100.0%
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
22
<PAGE> 30
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
# Variable rate security. The rate listed is as of December 31, 1997.
* 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 December 31, 1997.
IO -- Interest Only.
PO -- Principal Only.
ETC -- Equipment Trust Certificate.
ADR -- American Depository Receipts.
CLB -- Callable.
r -- Restricted Security. Purchased in a private placement transaction; resale
to the public may require registration or may extend only to qualified
institutional buyers.
@ -- Non-income producing security.
See Notes to Financial Statements
23
<PAGE> 31
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
CORPORATE BONDS Principal
AND NOTES -- 32.6% Amount Value
- ----------------------------------------------------------
<S> <C> <C>
ADVERTISING -- 2.2%
..........................................................
Universal Outdoor, Inc., CLB
10/15/2001, 9.75%, 10/15/2006 $ 350,000 $ 393,750
- ----------------------------------------------------------
BANKS -- 5.4%
..........................................................
First Chicago NBD Corporation,
CLB
2/01/2007, 6.30%, 2/01/2027 # 500,000 482,961
..........................................................
MBNA Corporation,
6.25625%, 6/17/2002 # 500,000 497,501
..................... ......................
----------
980,462
- ----------------------------------------------------------
EUROBANKS -- 4.2%
..........................................................
European Investment Bank,
0.00%, 11/06/2026 1,600,000 271,613
..........................................................
Fokus Bank A/S, CLB 9/29/1999,
6.99375%, 9/29/2004 # 500,000 505,930
..................... ......................
----------
777,543
- ----------------------------------------------------------
FINANCIAL SERVICES -- 4.1%
..........................................................
AT&T Capital Corporation,
6.09%, 10/24/2000 # 500,000 501,158
..........................................................
Associates First Capital
Corporation, Putable
5/15/1999,
5.96%, 5/15/2037 250,000 254,576
..................... ......................
----------
755,734
- ----------------------------------------------------------
INDUSTRIAL -- 1.4%
..........................................................
Westinghouse Electric
Corporation,
8.93%, 6/22/1999 250,000 257,706
- ----------------------------------------------------------
SAVINGS & LOANS -- 2.6%
..........................................................
Western Financial Savings, CLB
7/1/2000
8.50%, 7/01/2003 500,000 485,066
- ----------------------------------------------------------
TELECOMMUNICATIONS -- 6.0%
..........................................................
Comcast Cable Communications, Inc.,
8.375%, 5/01/2007 500,000 557,768
..........................................................
TKR Cable, Inc., CLB 10/30/1999,
10.50%, 10/30/2007 500,000 555,822
..................... ......................
----------
1,113,590
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
TRANSPORTATION -- 1.5%
..........................................................
Delta Air Lines ETC,
9.90%, 1/02/2002 $ 250,000 $ 277,328
- ----------------------------------------------------------
TRAVEL & RECREATION -- 2.8%
..........................................................
Mirage Resorts, Incorporated,
6.75%, 8/01/2007 500,000 503,237
- ----------------------------------------------------------
UTILITY -- 2.4%
..........................................................
Calenergy Co., Inc., CLB
1/15/1999,
10.25%, 1/15/2004 400,000 432,000
- ----------------------------------------------------------
Total corporate bonds and notes
(cost $5,928,286) 5,976,416
- ----------------------------------------------------------
GOVERNMENT AGENCY MORTGAGE-BACKED
SECURITIES -- 18.3%
- ----------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 14.2%
..........................................................
Federal Home Loan Mortgage
Corporation:
1261 J, 8.00%, 7/15/2021 624,311 663,643
..........................................................
1468 S, 11.529%, 2/15/2023 # 449,224 468,234
..........................................................
1564 SE, 8.10983%, 8/15/2008 # 353,637 352,915
..........................................................
1969 ZB, 7.50%, 10/15/2024 219,742 219,957
..........................................................
Federal Home Loan Mortgage Corporation --
Government National Mortgage
Association, 61 SC,
9.110173%, 6/17/2020 # 215,974 218,861
..........................................................
Federal National Mortgage Association:
G93-27 SB, 6.30274%, 8/25/2023
# 115,176 89,107
..........................................................
1993-37 SB, 6.00833%,
3/25/2023 # 224,549 198,696
..........................................................
1993-85 E, 6.50%, 11/25/2007 272,552 271,530
..........................................................
1995-3 Z, 8.25%, 7/25/2024 120,733 120,624
..................... ......................
----------
2,603,567
- ----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
24
<PAGE> 32
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
GOVERNMENT AGENCY
MORTGAGE-BACKED Principal
SECURITIES Amount Value
- ----------------------------------------------------------
<S> <C> <C>
PASS-THROUGH SECURITIES -- 2.7%
..........................................................
Government National Mortgage
Association, 8974,
7.375%, 5/20/2022 # $ 480,438 $ 495,855
- ----------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 1.4%
..........................................................
Federal Home Loan Mortgage Corporation,
1965 SA (Inverse IO),
2.049999%, 3/15/2024 # 1,000,000 147,557
..........................................................
Federal National Mortgage Association,
(PO), 0.00%, 10/09/2019 400,000 104,109
..................... ......................
----------
251,666
- ----------------------------------------------------------
Total government agency
mortgage-backed securities
(cost $2,978,983) 3,351,088
- ----------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED
SECURITIES -- 26.1%
- ----------------------------------------------------------
ASSET-BACKED SECURITIES -- 6.9%
..........................................................
Champion Auto Grantor Trust
(Acquired 10/28/1997, cost
$289,384), 1997-D, 6.27%,
9/15/2002 r 258,737 259,282
..........................................................
Commercial Financial Services
Securitized Multiple Asset
Rated Trust, (Acquired
9/24/1997, cost $393,074),
1997-5 A1, 7.72%, 6/15/2005 r 393,074 394,426
..........................................................
Ditech Home Loan Owner Trust,
1997-1 A2, 6.59%, 4/15/2013 600,000 600,270
..................... ......................
----------
1,253,978
- ----------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 19.2%
..........................................................
Blackrock Capital Finance L.P
(Acquired 6/23/1997, cost
$367,573) 1997-R2 AP, 5.751%,
12/25/2035 # r 369,827 378,721
..........................................................
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
==========================================================
<S> <C> <C>
CMC Securities Corporation,
1994-G, 7.00%, 9/25/2024 $ 200,000 $ 199,692
..........................................................
Citicorp Mortgage Securities,
Inc.,
1990-D A1, 9.50%, 10/25/2005 150,539 150,526
..........................................................
Collateralized Mortgage Obligations Trust,
57-D, 9.90%, 2/01/2019 460,851 504,818
..........................................................
GE Capital Mortgage Services,
Inc.,
1994-24 A4, 7.00%, 7/25/2024 169,843 169,682
..........................................................
Housing Securities, Inc.:
1994-1 AB2, 6.50%, 3/25/2009 494,553 391,946
1994-2 B1, 6.50%, 7/25/2009 251,817 222,864
..........................................................
Independent National Mortgage Corporation,
1995-F A5, 8.25%, 5/25/2010 1,000,000 1,044,575
..........................................................
PNC Mortgage Securities Corp.,
1997-8 2A5, 7.00%, 12/25/2027 458,241 455,377
..................... ......................
----------
3,518,201
- ----------------------------------------------------------
Total non-agency mortgage-backed securities
(cost $4,591,563) 4,772,179
- ----------------------------------------------------------
PREFERRED STOCK -- 2.7% Shares
- ----------------------------------------------------------
Home Ownership Funding 2,
(Acquired 2/20/1997, cost
$500,000) r 500 487,500
- ----------------------------------------------------------
U.S. TREASURY
Principal
OBLIGATIONS -- 16.4% Amount
- ----------------------------------------------------------
U.S. Treasury Bonds:
7.50%, 11/15/2016 $ 550,000 641,782
7.875%, 2/15/2021 575,000 706,172
..........................................................
U.S. Treasury Notes,
6.50%, 10/15/2006 1,575,000 1,649,814
..................... ......................
----------
Total U.S. Treasury obligations
(cost $2,890,307) 2,997,768
- ----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
25
<PAGE> 33
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
VARIABLE RATE
DEMAND NOTES* -- 3.3%
- ----------------------------------------------------------
General Mills, Inc., 5.3277% $ 55,653 $ 55,653
..........................................................
Pitney Bowes, Inc., 5.3276% 25,608 25,608
..........................................................
Sara Lee Corp., 5.3226% 216,777 216,777
..........................................................
Warner-Lambert Co., 5.489% 315,941 315,941
..................... ......................
----------
Total variable rate demand notes
(cost $613,979) 613,979
- ----------------------------------------------------------
Total investments -- 99.4%
(cost $17,503,118) 18,198,930
..........................................................
Other assets in excess of
liabilities -- 0.6% 103,603
..................... ......................
----------
Total net assets -- 100.0% $18,302,533
- ----------------------------------------------------------
</TABLE>
# Variable rate security. The rate listed is as of December 31, 1997.
* 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 December 31, 1997.
IO -- Interest Only.
PO -- Principal Only.
CLB -- Callable.
r -- Restricted Security. Purchased in a private placement transaction; resale
to the public may require registration or may extend only to qualified
institutional buyers.
ETC -- Equipment Trust Certificate.
See Notes to Financial Statements
26
<PAGE> 34
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
CORPORATE BONDS Principal
AND NOTES -- 39.2% Amount Value
- -----------------------------------------------------------
<S> <C> <C>
ADVERTISING -- 1.9%
...........................................................
Universal Outdoor, Inc., CLB
10/15/2001, 9.75%,
10/15/2006 $ 3,300,000 $ 3,712,500
- -----------------------------------------------------------
BANKS -- 8.6%
...........................................................
Barnett Capital Trust III, CLB
2/01/2007, (Acquired
2/06/1997, cost $2,437,250),
6.375%, 2/01/2027 # r 2,500,000 2,423,037
...........................................................
Chase Capital II, CLB
2/1/2007, 6.25%, 2/01/2027 # 2,100,000 2,003,039
...........................................................
First Chicago NBD Corporation,
CLB 2/01/2007, 6.30%,
2/01/2027 # 3,000,000 2,897,766
...........................................................
First Maryland Capital II, CLB
2/01/2007, 6.70938%,
2/01/2027 # 4,000,000 3,952,416
...........................................................
MBNA Corporation, 6.25625%,
6/17/2002 # 1,125,000 1,119,377
...........................................................
MBNA Global Capital
Securities, CLB 2/01/2007,
6.55%, 2/01/2027 # 2,000,000 1,843,596
...........................................................
Old Kentucky Capital Trust I
(Acquired 2/6/1997, cost
$2,485,000), 6.6550%,
2/01/2027 # r 2,500,000 2,447,048
..................... ...................... -----------
16,686,279
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
EUROBANKS -- 9.6%
...........................................................
Fokus Bank A/S, CLB 9/29/1999,
6.99375%, 9/29/2004 # $ 3,500,000 $ 3,541,510
...........................................................
Foreningsbanken Kredit AB, CLB
12/18/2001, 6.65625%,
12/29/2049 # 5,750,000 5,771,275
...........................................................
Nordbanken, CLB 10/25/2001,
6.4125%, 10/29/2049 # 5,830,000 5,837,194
...........................................................
Skandinavinska Enskilda
Banken, CLB 6/28/2003,
6.78125%, 6/29/2049 # 3,500,000 3,518,988
..................... ...................... -----------
18,668,967
- -----------------------------------------------------------
FINANCIAL SERVICES -- 4.1%
...........................................................
AT&T Capital Corporation,
6.09%, 10/24/2000 # 2,750,000 2,756,371
...........................................................
Florida Windstorm, (Acquired
7/31/1997, cost $3,495,941),
6.85%, 8/25/2007 r 3,500,000 3,582,075
...........................................................
Household Capital Trust,
(Acquired
8/14/1997, cost $1,750,000),
6.25625%, 6/26/2004 r 1,750,000 1,744,190
..................... ...................... -----------
8,082,636
- -----------------------------------------------------------
PAPER -- 1.5%
...........................................................
Fort Howard Corporation,
11.00%, 1/02/2002 2,792,871 2,911,568
- -----------------------------------------------------------
TELECOMMUNICATIONS -- 7.8%
...........................................................
Continental Cablevision, Inc.,
CLB 6/01/1999, 11.00%,
6/01/2007 4,000,000 4,448,879
...........................................................
Illinois Bell Telephone Co.,
CLB 4/01/1998, 7.625%,
4/01/2006 300,000 304,784
...........................................................
Tele Communications, Inc.,
6.185%, 9/11/2000 # 5,300,000 5,261,840
...........................................................
TKR Cable, Inc., CLB
10/30/1999 10.50%,
10/30/2007 4,675,000 5,196,935
..................... ...................... -----------
15,212,438
- -----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
27
<PAGE> 35
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
TRANSPORTATION -- 1.2%
...........................................................
Delta Air Lines, 10.50%,
4/30/2016 $ 1,750,000 $ 2,308,268
- -----------------------------------------------------------
UTILITY -- ELECTRIC -- 4.5%
...........................................................
Calenergy Company, Inc., CLB
1/15/1999 10.25%, 1/15/2004 3,350,000 3,618,000
...........................................................
Long Island Lighting Co., CLB
7/15/1998 8.90%, 7/15/2019 4,800,000 5,112,297
..................... ...................... -----------
8,730,297
- -----------------------------------------------------------
Total corporate bonds and notes
(cost $76,229,449) 76,312,953
- -----------------------------------------------------------
GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 19.3%
- -----------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 12.3%
...........................................................
Federal Home Loan Mortgage
Corporation:
1081 I, 7.00%, 12/15/2019 140,370 140,821
...........................................................
1096 D, 7.00%, 6/15/2020 10,555 10,554
...........................................................
1194 G, 6.50%, 10/15/2006 500,000 502,875
...........................................................
1201 D, 7.00%, 10/15/2020 80,589 80,563
...........................................................
1206 GA, 7.00%, 3/15/2018 3,910,000 3,939,872
...........................................................
1262 F, 7.50%, 3/15/2015 242,742 243,521
...........................................................
1267 O, 7.25%, 12/15/2005 56,354 56,864
...........................................................
1336 H, 7.75%, 1/15/2021 400,000 413,080
...........................................................
1358 F, 6.75%, 1/15/2019 308,159 308,797
...........................................................
1521 B, 5.80%, 7/15/2000 133,391 133,262
...........................................................
1543 KE, 9.52875%, 9/15/2022
# 1,046,602 980,954
...........................................................
1617 D, 6.50%, 11/15/2023 71,000 68,185
...........................................................
1969 ZB, 7.50%, 10/15/2024 1,888,160 1,890,003
...........................................................
1957 SC, 10.00%, 7/15/2025 1,699,234 1,697,099
...........................................................
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
Federal Home Loan Mortgage
Corporation/Government
National Mortgage
Association:
61 SC, 9.11017%, 6/17/2020 # $ 3,196,418 $ 3,239,152
...........................................................
Federal National Mortgage
Association:
1988-26 C, 7.50%, 7/25/2018 93,881 95,241
...........................................................
1990-112 E, 8.50%, 7/25/2019 63,358 64,011
...........................................................
1991-6 K, 7.50%, 4/25/2014 586,786 585,648
...........................................................
1991-147 K, 7.00%, 1/25/2021 5,000 5,050
...........................................................
1991-153 N, 7.50%, 2/25/2007 300,000 306,639
...........................................................
1992-1 D, 7.25%, 10/25/2004 933,186 934,847
...........................................................
1992-138 O, 7.50%, 7/25/2022 56,456 56,400
...........................................................
1992-163 E, 6.75%, 9/25/2022 500,000 502,075
...........................................................
1993-45 SB, 9.156%,
4/25/2023 # 1,500,000 1,407,552
...........................................................
1993-85 E, 6.50%, 11/25/2007 991,098 987,381
...........................................................
1994-60 D, 7.00%, 4/25/2024 30,000 29,854
...........................................................
1995-3 Z, 8.25%, 7/25/2024 603,664 603,121
...........................................................
Government National Mortgage
Association,
1995-2 G, 8.50%, 3/20/2020 1,078,041 1,089,091
..................... ...................... -----------
20,372,512
- -----------------------------------------------------------
PASS-THROUGH
SECURITIES -- 5.7%
...........................................................
Federal Home Loan Mortgage
Corporation, 255452, 8.50%,
2/01/2008 545,902 568,797
...........................................................
Federal National Mortgage
Association:
21130, 8.00%, 9/01/2000 6,053 6,272
...........................................................
308798, 7.359%, 4/01/2025 # 1,055,086 1,093,005
...........................................................
312155, 7.318%, 3/01/2025 # 536,885 534,180
...........................................................
</TABLE>
See Notes to Financial Statements
28
<PAGE> 36
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
Government National Mortgage
Association:
8898, 7.000%, 1/20/2022 # $ 3,729,395 $ 3,830,946
...........................................................
8956, 7.375%, 4/20/2022 # 3,934,768 4,061,034
...........................................................
8974, 7.375%, 5/20/2022 # 1,051,678 1,085,426
..................... ...................... -----------
11,179,660
- -----------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 1.3%
...........................................................
Federal Home Loan Mortgage
Corporation,
1965 SA (Inverse IO), 2.05%,
3/15/2024 # 10,500,000 1,549,346
...........................................................
Federal National Mortgage
Association:
1989-43 C (PO), 0.00%,
10/25/1917 858,552 841,898
...........................................................
1993-72 J (IO), 6.50%,
12/25/2006 1,255,147 108,463
...........................................................
1993-97 L (IO), 7.50%,
5/25/2023 1,397,354 116,055
...........................................................
1997-65 A (PO), 0.00%,
9/25/2000 3,070,060 2,699,389
...........................................................
1997-7 SP (IO), 2.60%,
04/18/2015 29,976,571 806,049
..................... ...................... -----------
6,121,200
- -----------------------------------------------------------
Total government agency
mortgage-backed securities
(cost $36,791,125) 37,673,372
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
NON-AGENCY MORTGAGE-BACKED SECURITIES -- 23.2%
- -----------------------------------------------------------
ASSET-BACKED SECURITIES -- 10.5%
...........................................................
Asset-Backed Securities
Investment Trust, (Acquired
8/8/1997, cost $4,000,000),
1997-D A, 6.79%, 8/17/2003 r $ 4,000,000 $ 4,018,700
...........................................................
BHN II Mortgage Trust
(Acquired 4/30/1997, cost
$2,500,000), 1997-1 A1,
7.39141%, 3/25/2001 # r 2,255,769 2,142,981
...........................................................
Bridgestone/Firestone Master
Trust, 1996-1 A, 6.17%,
7/01/2003 3,000,000 3,012,420
...........................................................
California Infrastructure
PG&E, 1997-1 A4, 6.16%,
6/25/2003 1,300,000 1,303,640
...........................................................
Champion Auto Grantor Trust
(Acquired 10/28/1997, cost
$2,156,144), 1997-D, 6.27%,
9/15/2002 r 2,156,144 2,160,685
...........................................................
Commercial Financial Services
Securitized Multiple Asset
Rated Trust (Acquired
9/24/1997, cost $2,456,715),
1997-5 A1, 7.72%, 6/15/2005
r 2,456,715 2,465,162
...........................................................
Ditech Home Loan Owner Trust,
1997-1 A2, 6.59%, 4/15/2013 3,925,000 3,926,766
...........................................................
First Chicago Master Trust II,
1996-R A, 5.7575%, 7/15/2001
# 1,400,000 1,401,330
..................... ...................... -----------
20,431,684
- -----------------------------------------------------------
</TABLE>
See Notes to Financial Statements
29
<PAGE> 37
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 8.0%
...........................................................
Blackrock Capital Finance
L.P., (Acquired 6/23/1997,
cost $2,021,652), 1997-R2
AP, 5.751%, 12/25/2035 # r $ 2,034,047 $ 2,082,966
...........................................................
Capstead Securities Corp.,
1992-2 C, 7.80%, 2/25/2022 48,842 48,700
...........................................................
Chemical Mortgage Securities,
Inc., 1993-3 A1, 7.125%,
7/25/2023 298,069 299,335
...........................................................
Citicorp Mortgage Securities,
Inc., 1990-D A1, 9.50%,
10/25/2005 301,078 301,051
...........................................................
Countrywide Funding
Corporation, 1994-17 A9,
8.00%, 7/25/2024 4,000 4,243
...........................................................
First Bank Systems, 1993 AT
T2, 8.25%, 3/25/2023 189,493 190,278
...........................................................
Housing Securities, Inc.:
1992-B3, 8.00%, 7/25/2021 1,254,566 1,264,126
...........................................................
1994-2 B1, 6.50%, 7/25/2009 225,430 199,512
...........................................................
Independent National Mortgage
Corporation:
1995-A A4, 8.75%, 3/25/2025 18,000 18,794
...........................................................
1996-D A2, 7.00%, 5/25/2026 2,455,608 2,464,448
...........................................................
Prudential Home Mortgage
Securities, Inc., 1993-36
A10, 7.25%, 0/25/2023 500,000 505,264
...........................................................
PNC Mortgage Securities, Inc.,
1997-8 2A5, 7.00%, 9/25/2014 2,781,170 2,763,787
...........................................................
Residential Asset
Securitization Trust,
1996-A10 A1, 7.50%,
11/25/2011 1,291,106 1,291,920
...........................................................
Residential Funding Corp.,
1993-S9 A8, 7.1458%,
2/25/2008# 125,305 122,368
...........................................................
Residential Funding Mortgage
Securities, Inc., 1992-S5
A5, 7.50%, 2/25/2007 931,409 929,062
...........................................................
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
Structured Mortgage Asset
Residential Trust:
1991-1H, 8.25%, 6/25/2022 $ 223,597 $ 223,105
...........................................................
1992-3 A, 8.00%, 10/25/2007 206,200 211,977
...........................................................
1993-5A AA, 6.93501%,
6/25/2024 # 375,004 366,083
...........................................................
Walsh Acceptance, (Acquired
3/06/1997, cost $2,352,982),
1997-2 A, 6.75%, 3/01/2027 #
r 2,334,742 2,344,403
..................... ...................... -----------
15,631,422
- -----------------------------------------------------------
PASS-THROUGH
SECURITIES -- 0.5%
...........................................................
Citicorp Mortgage Securities,
Inc.:
1987-5, 8.50%, 4/25/2017 22,988 22,929
...........................................................
1987-9 A1, 9.00%, 7/25/2002 467,558 466,398
...........................................................
1987-14, 9.50%, 9/25/2002 37,159 37,067
...........................................................
1988-16 A1, 10.00%,
11/25/2018 42,525 45,557
...........................................................
1989-8 A1, 10.50%, 6/25/2019 425,749 461,508
..................... ...................... -----------
1,033,459
- -----------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 4.1%
...........................................................
Asset Securitization
Corporation, 1997-D5, PS1
(IO), 1.553%, 2/14/2041 15,000,000 1,629,750
...........................................................
Chase Commercial Mortgage
Securities Corporation,
1997-1 X (IO), 1.39704%,
4/19/2015 # 25,849,025 2,156,791
...........................................................
CS First Boston Mortgage
Securities Corporation,
(Acquired 8/14/1997, cost
$1,840,666), 1995-WF1 AX
(IO), 1.68858%, 12/21/2027 r 30,764,309 1,836,260
...........................................................
</TABLE>
See Notes to Financial Statements
30
<PAGE> 38
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
Donaldson, Lufkin & Jenrette,
(Acquired 4/25/1997, cost
$2,248,493), 1997-CF1 S
(IO), 1.0952%, 3/15/2017 # r $35,381,070 $ 2,321,883
...........................................................
Residential Funding Corp.,
1992-S2 A16 (IO), 0.50%,
1/25/2022 26,293,401 125,314
..................... ...................... -----------
8,069,998
- -----------------------------------------------------------
Total non-agency
mortgage-backed securities
(cost $44,843,547) 45,166,563
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCK -- 0.8% Shares
- ------------------------------------------------------------
<S> <C> <C>
Home Ownership Funding 2,
(Acquired 2/20/1997, cost
$1,500,000) r 1,500 1,462,500
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS Principal
- -- 5.5% Amount
- ------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Bonds,
7.500%, 11/15/2016 $5,000,000 5,834,380
............................................................
U.S. Treasury Notes:
5.875%, 11/15/1999 1,000,000 1,003,751
............................................................
6.500%, 10/15/2006 3,675,000 3,849,565
............................................................
Total U.S. Treasury
obligations (Cost
$10,222,330) 10,687,696
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 11.2%
- ------------------------------------------------------------
DISCOUNT NOTES -- 9.6%
............................................................
Bombardier, Inc., 6.70%,
1/05/1998 5,250,000 5,246,092
............................................................
Galleon, 6.40%, 1/14/1998 1,000,000 997,689
............................................................
Hertz Corp., 5.91%, 1/05/1998 5,000,000 4,996,717
............................................................
Houston Industries, Inc.,
6.13%, 1/07/1998 7,500,000 7,492,338
............................................................
Total discount notes (Cost
$18,732,836) 18,732,836
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
VARIBLE RATE DEMAND NOTES* -- 1.6%
............................................................
Pitney Bowes, Inc., 5.3276% 466,348 466,348
............................................................
Sara Lee Corp., 5.3226% 200,153 200,153
............................................................
Warner-Lambert Co., 5.4890% 2,418,432 2,418,432
..................... ...................... -----------
Total varible rate demand
notes 3,084,933
(cost $3,084,933)
............................................................
Total short-term investments 21,817,769
(cost $21,817,769)
- ------------------------------------------------------------
Total investments -- 99.1%
(Cost $191,404,220) 193,120,853
............................................................
Other assets in excess of
liabilities -- 0.9% 1,821,002
..................... ...................... -----------
$194,941,855
Total net assets -- 100.0%
- ------------------------------------------------------------
</TABLE>
# Variable rate security. The rate listed is as of December 31, 1997.
* 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 December 31, 1997.
IO -- Interest Only.
PO -- Principal Only.
CLB -- Callable.
r -- Restricted Security. Purchased in a private placement transaction; resale
to the public may require registration or may extend only to qualified
institutional buyers.
See Notes to Financial Statements
31
<PAGE> 39
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
CORPORATE BONDS AND Principal
NOTES -- 38.6% Amount Value
- ------------------------------------------------------------
<S> <C> <C>
ADVERTISING -- 1.8%
............................................................
Universal Outdoor, Inc., CLB
10/15/2001,
9.75%, 10/15/2006 $ 350,000 $ 393,750
- ------------------------------------------------------------
BANKS -- 2.3%
............................................................
MBNA Corporation,
6.25625%, 6/17/2002 # 500,000 497,501
- ------------------------------------------------------------
EUROBANKS -- 12.4%
............................................................
Fokus Bank A/S, CLB 9/29/1999,
6.99375%, 9/29/2004 # 600,000 607,116
............................................................
Foreningsbanken Kredit AB, CLB
12/18/2001,
6.65625%, 12/29/2049 # 750,000 752,775
............................................................
Nordbanken, CLB 10/25/2001,
6.4125%, 10/29/2049 # 550,000 550,679
............................................................
Skandinavinska Enskilda Banken,
CLB 6/28/2003,
6.78125%, 6/29/2049 # 800,000 804,340
...................... ...................... ----------
2,714,910
- ------------------------------------------------------------
FINANCIAL SERVICES -- 4.8%
............................................................
AT&T Capital Corporation,
6.09%, 10/24/2000 # 500,000 501,158
............................................................
Caterpillar Finance,
5.55%, 4/05/1999 # 550,000 547,444
...................... ...................... ----------
1,048,602
- ------------------------------------------------------------
REAL ESTATE -- 2.5%
............................................................
Taubman Realty Group, Ltd.,
6.80625%, 7/26/1999 # 550,000 550,342
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
TELECOMMUNICATIONS -- 9.7%
............................................................
Continental Cablevision, Inc.,
CLB 6/01/1999,
11.00%, 6/01/2007 $ 700,000 $ 778,554
............................................................
Illinois Bell Telephone Co., CLB
4/01/1998,
7.625%, 4/01/2006 150,000 152,392
............................................................
Tele Communications, Inc.,
6.185%, 9/11/2000 # 700,000 694,960
............................................................
TKR Cable, Inc., CLB 10/30/1999,
10.50%, 10/30/2007 450,000 500,240
...................... ...................... ----------
2,126,146
- ------------------------------------------------------------
UTILITY -- ELECTRIC -- 5.1%
............................................................
Calenergy Co., Inc., CLB
1/15/1999,
10.25%, 1/15/2004 500,000 540,000
............................................................
Long Island Lighting Co., CLB
7/15/1998,
8.90%, 7/15/2019 550,000 585,784
...................... ...................... ----------
1,125,784
- ------------------------------------------------------------
Total corporate bonds and notes
(cost $8,463,809) 8,457,035
- ------------------------------------------------------------
GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 29.1%
- ------------------------------------------------------------
ASSET-BACKED SECURITIES -- 1.7%
............................................................
Student Loan Marketing
Association,
1996-4 A1, 5.909%, 7/25/2004 # 383,675 383,398
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
32
<PAGE> 40
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ------------------------------------------------------------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 15.9%
............................................................
Federal Home Loan Mortgage
Corporation:
1957 SC, 10.00%, 7/15/2025 $ 665,314 $ 664,478
............................................................
1081 I, 7.00%, 12/15/2019 57,727 57,913
............................................................
1206 GA, 7.00%, 3/15/2018 750,000 755,730
............................................................
1969 ZB, 7.50%, 10/15/2024 164,807 164,967
............................................................
1521 B, 5.80%, 7/15/2000 30,665 30,635
............................................................
Federal Home Loan Mortgage
Corporation --
Government National Mortgage
Association,
61 SC, 9.110173%, 6/17/2020 # 518,338 525,268
............................................................
Federal Housing Authority
Project,
7.43%, 2/01/2023 136,272 138,697
............................................................
Federal National Mortgage
Association:
1991-6 K, 7.50%, 4/25/2014 206,292 205,892
............................................................
1992-39 SD, 21.65328%,
7/25/2019 # 526,604 563,026
............................................................
1993-85 E, 6.50%, 11/25/2007 272,552 271,530
............................................................
1992-43 B, 7.50%, 11/25/2018 29,484 29,409
............................................................
1995-3 Z, 8.25%, 7/25/2024 76,830 76,761
...................... ...................... ----------
3,484,306
- ------------------------------------------------------------
GOVERNMENT AGENCY NOTES -- 1.8%
............................................................
Federal Home Loan Bank, CLB
3/16/1998,
4.89%, 3/16/1999 # 400,000 397,043
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
PASS-THROUGH SECURITIES -- 7.3%
............................................................
Government National Mortgage
Association,
8346, 6.875%, 12/20/2023 # $1,232,083 $ 1,264,327
............................................................
Government National Mortgage
Association,
8570, 6.875%, 10/20/2019 # 329,291 338,215
............................................................
Government National Mortgage
Association,
103695, 11.50%, 9/15/1998 2,942 2,981
...................... ...................... ----------
1,605,523
- ------------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 2.3%
............................................................
Federal National Mortgage
Association,
1993-129 J (IO), 6.50%,
2/25/2007 1,322,861 125,750
............................................................
1993-97 L (IO), 7.50%, 5/25/2023 515,347 42,802
............................................................
1997-65 A (PO), 0.00%, 9/25/2000 392,532 345,139
...................... ...................... ----------
513,691
- ------------------------------------------------------------
Total government agency
mortgage-backed securities
(cost $6,333,335) 6,383,961
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
33
<PAGE> 41
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
NON-AGENCY MORTGAGE- Principal
BACKED SECURITIES -- 19.1% Amount Value
- ------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES -- 7.2%
............................................................
Asset-Backed Securities
Investment Trust, (Acquired
8/08/1997, cost $500,000),
1997-D, 6.79%, 8/17/2003 r $ 500,000 $ 502,337
............................................................
BHN II Mortgage Trust, (Acquired
4/30/1997, cost $491,514),
1997-1 A1, 7.39141%, 3/25/2011
# r 451,154 428,596
............................................................
Champion Auto Grantor Trust,
(Acquired 10/28/1997, cost
$288,580), 1997-D A, 6.27%,
9/15/2002 r 258,737 259,282
............................................................
Commercial Financial Services
Securitized Multiple Asset
Rated Trust, (Acquired
9/24/1997, cost $393,075),
1997-5 A1, 7.72%, 6/15/2005 r 393,074 394,426
...................... ...................... ----------
1,584,641
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 11.9%
............................................................
American Housing Trust, XD,
8.60%, 11/25/2015 $ 775,944 $ 781,065
............................................................
Citicorp Mortgage Securities,
Inc.,
1990-D A1, 9.50%, 10/25/2005 150,539 150,526
............................................................
PNC Mortgage Securities Corp.,
1997-8 2A5, 7.00%, 12/25/2027 458,241 455,377
............................................................
Prudential Home Mortgage
Securities, Inc.,
1993-1 A1, 7.50%, 2/25/2023 118,245 118,413
............................................................
Residential Asset Securitization
Trust,
1996-A10 A1, 7.50%, 11/25/2011 184,444 184,560
............................................................
Salomon Brothers Mortgage
Securities VI,
1986-1 A, 6.00%, 12/25/2011 427,310 421,229
............................................................
Structured Mortgage Asset
Residential Trust,
1992-11B BH, 7.80%, 8/25/2021 105,112 105,800
............................................................
Walsh Acceptance, (Acquired
3/06/1997, cost $475,681),
1997-2 A, 7.125%, 3/01/2027 #
r 389,124 390,734
...................... ...................... ----------
2,607,704
- ------------------------------------------------------------
Total non-agency mortgage-backed
securities
(cost $4,214,996) 4,192,345
- ------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
34
<PAGE> 42
Schedule of Investments -- December 31, 1997 (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENT FUND
U.S. TREASURY Principal
OBLIGATIONS -- 3.4% Amount Value
- ------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Notes:
5.625%, 1/31/1998 (cost
$754,968) $ 755,000 $ 755,236
- ------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 10.8%
- ------------------------------------------------------------
DISCOUNT NOTES -- 9.1%
............................................................
Hartford Financial Services,
5.90%, 1/26/1998 1,000,000 995,868
............................................................
Hertz Corporation,
5.91%, 1/05/1998 1,000,000 999,343
...................... ...................... ----------
1,995,211
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Principal
Amount Value
- ------------------------------------------------------------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES* - 1.7%
............................................................
Warner-Lambert Co.,
5.489% 361,762 361,762
- ------------------------------------------------------------
Total short-term investments
(cost $2,356,973) 2,356,973
- ------------------------------------------------------------
Total investments -- 101.0%
(cost $22,124,081) 22,145,550
............................................................
Liabilities in excess of other
assets -- (1.0)% (220,523)
...................... ...................... ----------
$21,925,027
Total net assets -- 100.0%
- ------------------------------------------------------------
</TABLE>
# Variable rate security. The rate listed is as of December 31, 1997.
* 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 December 31, 1997.
IO -- Interest Only.
PO -- Principal Only.
r -- Restricted Security. Purchased in a private placement transaction; resale
to the public may require registration or may extend only to qualified
institutional buyers.
See Notes to Financial Statements
35
<PAGE> 43
Financial Statements -- December 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY
INCOME MID-CAP SMALL
FUND FUND CAP FUND
---------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments, at value*................................ $195,536,830 $5,686,724 $58,004,501
Foreign currency**.................................... -- -- --
Cash.................................................. 1,181,310 -- 1,647,212
Dividends and interest receivable..................... 475,302 10,045 52,360
Receivable from Advisor............................... -- 5,614 --
Receivable for investments sold....................... -- -- 1,970,316
Receivable for Fund shares sold....................... 4,470 -- 1,317,649
Prepaid expenses...................................... 19,490 2,013 11,290
------------ ---------- -----------
Total assets..................................... 197,217,402 5,704,396 63,003,328
------------ ---------- -----------
LIABILITIES:
Payable to Advisor.................................... 124,135 -- 44,245
Payable for investments purchased..................... 108,516 207,305 1,773,608
Payable for forward currency exchange contracts....... -- -- --
Payable for Fund shares repurchased................... -- 84 360,837
Dividends payable..................................... -- -- 78
Accrued expenses and other liabilities................ 88,113 6,255 16,582
------------ ---------- -----------
Total liabilities................................ 320,764 213,644 2,195,350
------------ ---------- -----------
Net assets....................................... $196,896,638 $5,490,752 $60,807,978
============ ========== ===========
NET ASSETS CONSIST OF:
Paid in capital....................................... $138,296,287 $5,090,355 $57,044,998
Undistributed (distributions in excess of) net
investment income.................................. 14,636 643 (67,708)
Undistributed net realized gain (loss) on securities
and foreign currency transactions.................. 2,157,403 147,192 785,622
Net unrealized appreciation (depreciation) of
securities and foreign currency.................... 56,428,312 252,562 3,045,066
------------ ---------- -----------
Net assets....................................... $196,896,638 $5,490,752 $60,807,978
============ ========== ===========
CALCULATION OF NET ASSET VALUE PER SHARE:
Shares outstanding (unlimited shares of no par value
authorized)........................................ 9,487,578 429,882 2,440,247
Net asset value per share (offering and redemption
price)............................................. $ 20.75 $ 12.77 $ 24.92
============ ========== ===========
*Cost of Investments................................... $139,108,518 $5,434,162 $54,959,435
============ ========== ===========
**Cost of Foreign Currency.............................. $ -- $ -- $ --
============ ========== ===========
</TABLE>
See Notes to Financial Statements
36
<PAGE> 44
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL LOW SHORT-TERM
INTERNATIONAL GLOBAL EQUITY BALANCED RETURN BOND DURATION INVESTMENT
FUND FUND FUND FUND FUND FUND
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$1,053,246,028 $5,211,473 $104,958,036 $18,198,930 $193,120,853 $22,145,550
3,062,753 -- -- -- -- --
-- -- -- -- -- --
3,772,382 19,376 718,631 212,822 1,989,534 212,408
-- 5,377 -- -- -- --
4,373 59,740 301,441 127 83,234 9,583
5,493,748 -- 171,840 1,000 1,939,030 501,915
103,368 23,416 13,125 13,233 20,247 15,988
-------------- ---------- ------------ ----------- ------------ -----------
1,065,682,652 5,319,382 106,163,073 18,426,112 197,152,898 22,885,444
-------------- ---------- ------------ ----------- ------------ -----------
653,688 -- 64,693 2,140 86,769 737
16,187,301 45,674 1,762,701 -- 118,889 18,795
149 -- -- -- -- --
8,848,750 319 183,388 -- 924,630 796,521
75 -- -- 93,518 1,000,064 118,883
762,618 6,881 46,588 27,921 80,691 25,481
-------------- ---------- ------------ ----------- ------------ -----------
26,452,581 52,874 2,057,370 123,579 2,211,043 960,417
-------------- ---------- ------------ ----------- ------------ -----------
$1,039,230,071 $5,266,508 $104,105,703 $18,302,533 $194,941,855 $21,925,027
============== ========== ============ =========== ============ ===========
$ 985,901,416 $5,384,319 $ 93,831,491 $17,567,607 $193,099,130 $22,041,769
(11,737,592) (67,430) 13,388 16,042 24,689 (17,486)
(8,400,191) 14,958 654,984 23,072 101,403 (120,725)
73,466,438 (65,339) 9,605,840 695,812 1,716,633 21,469
-------------- ---------- ------------ ----------- ------------ -----------
$1,039,230,071 $5,266,508 $104,105,703 $18,302,533 $194,941,855 $21,925,027
============== ========== ============ =========== ============ ===========
45,835,370 513,734 5,398,210 1,374,954 19,135,247 2,162,723
$ 22.67 $ 10.25 $ 19.29 $ 13.31 $ 10.19 $ 10.14
============== ========== ============ =========== ============ ===========
$ 979,734,465 $5,276,592 $ 95,352,196 $17,503,118 $191,404,220 $22,124,081
============== ========== ============ =========== ============ ===========
$ 3,062,702 $ -- $ -- $ -- $ -- $ --
============== ========== ============ =========== ============ ===========
</TABLE>
See Notes to Financial Statements
37
<PAGE> 45
Financial Statements -- Six Months Ended December 31, 1997
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY SMALL
INCOME MID-CAP CAP
FUND FUND FUND
-------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income*
Dividends.......................................... $ 2,804,865 $ 40,884 $ 179,293
Interest........................................... 50,993 5,282 69,316
----------- -------- ----------
Total income.................................. 2,855,858 46,166 248,609
----------- -------- ----------
Expenses
Advisory fee....................................... 741,756 14,906 173,002
Legal and auditing fees............................ 12,966 1,392 6,634
Custodian fees and expenses........................ 22,016 900 4,988
Accounting and transfer agent fees and expenses.... 23,458 10,992 15,680
Administration fee................................. 30,368 412 7,753
Trustees' fees and expenses........................ 5,288 2,184 1,620
Reports to shareholders............................ 6,480 78 356
Registration fees.................................. 8,836 40,620 10,888
Other expenses..................................... 6,756 1,909 1,516
----------- -------- ----------
Total expenses................................ 857,924 73,393 222,437
Less, expense reimbursement........................ -- (53,519) --
----------- -------- ----------
Net expenses.................................. 857,924 19,874 222,437
----------- -------- ----------
Net investment income................................. 1,997,934 26,292 26,172
----------- -------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on securities and foreign
currency transactions............................ 6,972,319 270,438 4,412,030
Net change in unrealized appreciation
(depreciation) of securities and foreign
currency......................................... 17,489,509 58,366 (1,802,369)
----------- -------- ----------
Net gain (loss) on investments........................ 24,461,828 328,804 2,609,661
----------- -------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS............................................ $26,459,762 $355,096 $2,635,833
=========== ======== ==========
*Net of Foreign Taxes Withheld.......................... $ 17,089 $ 685 $ --
=========== ======== ==========
</TABLE>
See Notes to Financial Statements
38
<PAGE> 46
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL TOTAL LOW SHORT-TERM
INTERNATIONAL EQUITY BALANCED RETURN BOND DURATION INVESTMENT
FUND FUND FUND FUND FUND FUND
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 10,469,188 $ 59,532 $ 604,235 $ 50,700 $ 166,023 $ 6,962
2,090,372 1,777 2,056,451 582,382 6,317,876 772,717
------------ --------- ---------- -------- ---------- --------
12,559,560 61,309 2,660,686 633,082 6,483,899 779,679
------------ --------- ---------- -------- ---------- --------
3,781,518 19,120 362,846 44,689 415,748 46,010
45,161 1,310 12,336 7,704 21,238 5,250
473,070 3,982 13,796 4,408 20,884 4,887
96,867 14,302 25,388 16,108 46,376 16,548
174,783 867 18,524 1,238 34,252 4,445
5,142 2,192 5,176 5,204 5,204 5,235
71,700 97 -- 1,868 3,202 1,975
90,932 21,753 14,064 12,324 21,456 10,727
9,014 2,867 2,416 2,800 5,128 2,466
------------ --------- ---------- -------- ---------- --------
4,748,187 66,490 454,546 96,343 573,488 97,543
-- (40,997) -- (43,509) (49,285) (42,331)
------------ --------- ---------- -------- ---------- --------
4,748,187 25,493 454,546 52,834 524,203 55,212
------------ --------- ---------- -------- ---------- --------
7,811,373 35,816 2,206,140 580,248 5,959,696 724,467
------------ --------- ---------- -------- ---------- --------
(6,962,020) 84,106 2,147,554 98,721 424,452 4,102
(49,101,472) (365,578) 2,729,008 299,784 182,495 (37,918)
------------ --------- ---------- -------- ---------- --------
(56,063,492) (281,472) 4,876,562 398,505 606,947 (33,816)
------------ --------- ---------- -------- ---------- --------
$(48,252,119) $(245,656) $7,082,702 $978,753 $6,566,643 $690,651
============ ========= ========== ======== ========== ========
$ 1,165,108 $ 3,826 $ 2,840 $ -- $ -- $ --
============ ========= ========== ======== ========== ========
</TABLE>
See Notes to Financial Statements
39
<PAGE> 47
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY INCOME FUND MID-CAP FUND
---------------------------------- ------------------------------------------
Six Months Ended Six Months Ended
December 31, 1997 Year Ended December 31, 1997 January 2, 1997**
(unaudited) June 30, 1997 (unaudited) through June 30, 1997
---------------------------------- ------------------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income......... $ 1,997,934 $ 4,697,583 $ 26,292 $ 12,624
Net realized gain (loss) on
securities and foreign
currency
transactions................ 6,972,319 34,935,223 270,438 6,232
Net change in unrealized
appreciation (depreciation)
of securities and foreign
currency.................... 17,489,509 4,211,108 58,366 194,196
------------ ------------ ---------- ----------
Net increase in net
assets resulting from
operations............. 26,459,762 43,843,914 355,096 213,052
------------ ------------ ---------- ----------
DIVIDENDS AND DISTRIBUTIONS TO
SHAREHOLDERS:
Net investment income......... (2,071,731) (4,609,150) (27,348) (10,925)
Net realized gain on
securities transactions..... (26,619,075) (18,088,501) (129,478) --
------------ ------------ ---------- ----------
Total dividends and
distributions.......... (28,690,806) (22,697,651) (156,826) (10,925)
------------ ------------ ---------- ----------
FUND SHARE TRANSACTIONS:
Net proceeds from shares
sold........................ 10,865,753 42,695,225 3,336,945 2,380,798
Shares issued in connection
with payment of dividends
and distributions........... 28,204,923 21,727,110 156,270 10,844
Cost of shares redeemed....... (25,816,806) (82,232,891) (187,930) (606,572)
------------ ------------ ---------- ----------
Net increase (decrease)
in net assets from Fund
share transactions..... 13,253,870 (17,810,556) 3,305,285 1,785,070
------------ ------------ ---------- ----------
Total increase in net assets...... 11,022,826 3,335,707 3,503,555 1,987,197
NET ASSETS:
Beginning of period........... 185,873,812 182,538,105 1,987,197 --
------------ ------------ ---------- ----------
End of period*................ $196,896,638 $185,873,812 $5,490,752 $1,987,197
============ ============ ========== ==========
*Including undistributed
(distributions in excess of) net
investment income of: $ 14,636 $ 88,433 $ 643 $ 1,699
============ ============ ========== ==========
CHANGES IN SHARES OUTSTANDING:
Shares sold................... 477,997 2,183,683 261,927 226,865
Shares issued in connection
with payment of dividends
and distributions........... 1,380,750 1,142,942 12,542 942
Shares redeemed............... (1,120,222) (4,228,482) (15,187) (57,207)
------------ ------------ ---------- ----------
Net increase
(decrease)............. 738,525 (901,857) 259,282 170,600
============ ============ ========== ==========
** Commencement of operations
</TABLE>
See Notes to Financial Statements
40
<PAGE> 48
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP FUND INTERNATIONAL FUND GLOBAL EQUITY FUND
---------------------------------- ---------------------------------- ------------------------------------------
Six Months Ended Six Months Ended Six Months Ended
December 31, 1997 Year Ended December 31, 1997 Year Ended December 31, 1997 January 2, 1997**
(unaudited) June 30, 1997 (unaudited) June 30, 1997 (unaudited) through June 30, 1997
---------------------------------- ---------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 26,172 $ 18,067 $ 7,811,373 $ 14,552,015 $ 35,816 $ 46,344
4,412,030 1,503,738 (6,962,020) 953,040 84,106 21,267
(1,802,369) 3,726,110 (49,101,472) 105,727,351 (365,578) 300,239
------------ ------------ -------------- ------------- ---------- ----------
2,635,833 5,247,915 (48,252,119) 121,232,406 (245,656) 367,850
------------ ------------ -------------- ------------- ---------- ----------
(111,947) (56,310) (18,353,016) (15,060,247) (102,793) (45,630)
(5,072,568) (2,033,874) -- (3,759,354) (91,582) --
------------ ------------ -------------- ------------- ---------- ----------
(5,184,515) (2,090,184) (18,353,016) (18,819,601) (194,375) (45,630)
------------ ------------ -------------- ------------- ---------- ----------
72,394,866 21,595,726 461,024,422 655,854,799 2,016,200 3,368,545
5,017,869 1,901,255 17,150,476 17,244,335 192,909 44,743
(41,586,276) (15,605,197) (260,868,137) (217,976,937) (232,166) (5,912)
------------ ------------ -------------- ------------- ---------- ----------
35,826,459 7,891,784 217,306,761 455,122,197 1,976,943 3,407,376
------------ ------------ -------------- ------------- ---------- ----------
33,277,777 11,049,515 150,701,626 557,535,002 1,536,912 3,729,596
27,530,201 16,480,686 888,528,445 330,993,443 3,729,596 --
------------ ------------ -------------- ------------- ---------- ----------
$ 60,807,978 $ 27,530,201 $1,039,230,071 $ 888,528,445 $5,266,508 $3,729,596
============ ============ ============== ============= ========== ==========
$ (67,708) $ 18,067 $ (11,737,592) $ (1,195,950) $ (67,430) $ (453)
============ ============ ============== ============= ========== ==========
2,597,795 998,558 19,245,665 29,673,741 179,820 332,759
207,693 97,400 755,505 739,904 18,950 4,002
(1,520,358) (713,459) (10,920,124) (9,851,367) (21,227) (571)
------------ ------------ -------------- ------------- ---------- ----------
1,285,130 382,499 9,081,046 20,562,278 177,543 336,190
============ ============ ============== ============= ========== ==========
</TABLE>
See Notes to Financial Statements
41
<PAGE> 49
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED FUND
---------------------------------------
Six Months Ended
December 31, 1997 Year Ended
(unaudited) June 30, 1997
---------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income................................. $ 2,206,140 $ 3,580,837
Net realized gain (loss) on securities transactions... 2,147,554 4,518,798
Net change in unrealized appreciation (depreciation)
of securities....................................... 2,729,008 3,306,702
------------ ------------
Net increase in net assets resulting from
operations..................................... 7,082,702 11,406,337
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income................................. (5,598,223) (3,999,551)
Net realized gain on securities transactions.......... (2,243,447) (2,410,169)
------------ ------------
Total dividends and distributions................ (7,841,670) (6,409,720)
------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold......................... 18,543,722 39,290,919
Shares issued in connection with payment of dividends
and distributions................................... 7,650,582 6,071,836
Cost of shares redeemed............................... (11,488,147) (30,799,051)
------------ ------------
Net increase (decrease) in net assets from Fund
share transactions............................. 14,706,157 14,563,704
------------ ------------
Total increase (decrease) in net assets.................... 13,947,189 19,560,321
NET ASSETS:
Beginning of period................................... 90,158,514 70,598,193
------------ ------------
End of period*........................................ $104,105,703 $ 90,158,514
============ ============
*Including undistributed (distributions in excess of) net
investment income of: $ 13,388 $ 50,696
============ ============
CHANGES IN SHARES OUTSTANDING:
Shares sold........................................... 922,402 2,119,226
Shares issued in connection with payment of dividends
and distributions................................... 397,742 325,867
Shares redeemed....................................... (573,679) (1,658,360)
------------ ------------
Net increase (decrease).......................... 746,465 786,733
============ ============
</TABLE>
See Notes to Financial Statements
42
<PAGE> 50
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURN BOND FUND LOW DURATION FUND SHORT-TERM INVESTMENT FUND
--------------------------------- --------------------------------- ---------------------------------
Six Months Ended Six Months Ended Six Months Ended
December 31, 1997 Year Ended December 31, 1997 Year Ended December 31, 1997 Year Ended
(unaudited) June 30, 1997 (unaudited) June 30, 1997 (unaudited) June 30, 1997
--------------------------------- --------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C>
$ 580,248 $ 1,964,962 $ 5,959,696 $ 10,574,255 $ 724,467 $ 1,058,876
98,721 (42,063) 424,452 1,057,714 4,102 (46,704)
299,784 978,811 182,495 764,193 (37,918) (5,502)
----------- ------------ ------------ ------------- ------------ ------------
978,753 2,901,710 6,566,643 12,396,162 690,651 1,006,670
----------- ------------ ------------ ------------- ------------ ------------
(699,843) (1,964,962) (6,381,359) (10,574,255) (724,467) (1,058,876)
-- (241,973) (1,045,647) (176,195) -- --
----------- ------------ ------------ ------------- ------------ ------------
(669,843) (2,206,935) (7,427,006) (10,750,450) (724,467) (1,058,876)
----------- ------------ ------------ ------------- ------------ ------------
5,052,651 14,661,662 84,815,072 191,220,600 22,018,496 39,041,151
493,799 1,802,150 6,777,178 10,052,581 449,076 570,013
(1,859,940) (46,271,666) (67,004,063) (220,866,044) (22,225,497) (36,567,972)
----------- ------------ ------------ ------------- ------------ ------------
3,686,510 (29,807,854) 24,588,187 (19,592,863) 242,075 3,043,192
----------- ------------ ------------ ------------- ------------ ------------
3,995,420 (29,113,079) 23,727,824 (17,947,151) 208,259 2,990,986
14,307,113 43,420,192 171,214,031 189,161,182 21,716,768 18,725,782
----------- ------------ ------------ ------------- ------------ ------------
$18,302,533 $ 14,307,113 $194,941,855 $ 171,214,031 $ 21,925,027 $ 21,716,768
=========== ============ ============ ============= ============ ============
$ 16,042 $ 105,637 $ 24,689 $ 446,351 $ (17,486) $ (17,486)
=========== ============ ============ ============= ============ ============
380,632 1,130,467 8,272,083 18,787,386 2,167,290 3,847,758
37,364 139,510 661,963 990,060 44,231 56,209
(140,480) (3,568,847) (6,537,144) (21,739,355) (2,188,840) (3,605,096)
----------- ------------ ------------ ------------- ------------ ------------
277,516 (2,298,870) 2,396,902 (1,961,909) 22,681 298,871
=========== ============ ============ ============= ============ ============
</TABLE>
See Notes to Financial Statements
43
<PAGE> 51
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
December 31, 1997
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 ten series of shares comprising the Balanced
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,
the Mid-Cap Fund, the Global Equity 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 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), December 6, 1994 (the Total Return Bond Fund), and January 2,
1997 (the Mid-Cap Fund and the Global Equity Fund).
The Balanced 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 Mid-Cap Fund seeks to provide current income and long-term growth
of income, accompanied by growth of capital. The Global Equity Fund seeks to
provide current income and long-term growth of income, accompanied by growth 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
44
<PAGE> 52
- --------------------------------------------------------------------------------
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. 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 and the Global Equity 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
and the Global Equity Fund do 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 and the Global Equity Fund do 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 arising from trade date and settlement date differences.
FORWARD CURRENCY EXCHANGE CONTRACTS: The International Fund and the Global
Equity Fund utilize forward currency exchange contracts for the purpose of
hedging foreign currency risk on unsettled trades. Under these contracts, they
are 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. At December 31, 1997, the International
Fund had open forward currency receivables of $4,224. Net unrealized losses of
$149 have been recorded on these open forwards at December 31, 1997 for the
International Fund.
FEDERAL INCOME TAXES: It is each Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and
45
<PAGE> 53
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
December 31, 1997
each Fund 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.
RESTRICTED SECURITIES: The Balanced, Total Return Bond, Low Duration, and
Short-Term Investment Funds own investment securities which are unregistered and
thus restricted as to resale. These securities are valued by the Funds after
giving due consideration to pertinent factors including recent private sales,
market conditions and the issuer's financial performance. Where future
disposition of these securities requires registration under the Securities Act
of 1933, the Funds have the right to include these securities in such
registration, generally without cost to the Funds. The Funds have no right to
require registration of unregistered securities. The Balanced, Total Return
Bond, Low Duration, and Short-Term Investment Funds had restricted securities
with an aggregate market value of $5,671,042, $1,519,929, $31,031,809, and
$1,975,375, respectively, representing 5.4%, 8.3%, 15.9%, and 9.0% of the net
assets of each Fund, respectively.
WHEN-ISSUED SECURITIES: The Funds may purchase securities on a when-issued or
delayed delivery basis. Although the payment and interest terms of these
securities are established at the time the purchaser enters into the agreement,
these securities may be delivered and paid for at a future date, generally
within 45 days. The Fund records purchases of when-issued securities and
reflects the values of such securities in determining net asset value in the
same manner as other portfolio securities. The Fund segregates and maintains at
all times cash or other liquid assets in an amount at least equal to the amount
of outstanding commitments for when-issued securities.
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 on 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 AGREEMENTS. 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
46
<PAGE> 54
- --------------------------------------------------------------------------------
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 six
months ended December 31, 1997, the Advisor waived the following fees:
<TABLE>
<CAPTION>
Equity Income Mid-Cap Small Cap International Global Equity Balanced
Fund Fund Fund Fund Fund Fund
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ANNUAL ADVISORY RATE........ 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
ANNUAL CAP ON EXPENSES...... 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
FEES WAIVED................. $0 $53,519 $0 $0 $40,997 $0
</TABLE>
<TABLE>
<CAPTION>
Total Return Low Duration Short-Term
Bond Fund Fund Investment Fund
-----------------------------------------------------
<S> <C> <C> <C>
ANNUAL ADVISORY RATE............................ 0.55% 0.46% 0.40%
ANNUAL CAP ON EXPENSES.......................... 0.65% 0.58% 0.48%
FEES WAIVED..................................... $43,509 $49,285 $42,331
</TABLE>
NOTE 3.
SECURITIES TRANSACTIONS. Purchases and sales of investment securities, other
than short-term investments, for the six months ended December 31, 1997 were as
follows:
<TABLE>
<CAPTION>
Purchases Sales
---------------------------------- ----------------------------------
Fund U.S. Government Other U.S. Government Other
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQUITY INCOME FUND......... -- $ 16,000,281 -- $ 25,466,464
MID-CAP FUND............... -- 4,180,042 -- 993,962
SMALL CAP FUND............. -- 54,015,041 -- 24,266,974
INTERNATIONAL FUND......... -- 248,222,918 -- 53,470,483
GLOBAL EQUITY FUND......... -- 2,587,155 -- 639,539
BALANCED FUND.............. $37,918,225 31,572,375 $40,810,028 16,985,983
TOTAL RETURN BOND FUND..... 5,956,237 7,979,140 2,816,449 6,593,598
LOW DURATION FUND.......... 43,655,641 57,053,322 33,368,403 51,238,102
SHORT-TERM INVESTMENT
FUND..................... 5,008,537 7,735,640 2,155,130 8,121,539
</TABLE>
47
<PAGE> 55
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
December 31, 1997
As of December 31, 1997, 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............................ $56,377,389 $ 57,435,357 $ (1,057,968)
MID-CAP FUND.................................. 252,562 572,301 (319,739)
SMALL CAP FUND................................ 3,045,066 6,910,058 (3,864,992)
INTERNATIONAL FUND............................ 59,249,551 146,409,101 (87,159,447)
GLOBAL EQUITY FUND............................ (134,100) 425,911 (560,011)
BALANCED FUND................................. 9,605,840 10,156,671 (550,831)
TOTAL RETURN BOND FUND........................ 695,812 762,877 (67,065)
LOW DURATION FUND............................. 1,716,633 2,419,775 (703,142)
SHORT-TERM INVESTMENT FUND.................... 21,469 78,644 (57,175)
</TABLE>
At December 31, 1997, the cost of investments for federal income tax purposes
was $139,159,441, $5,434,162, $54,959,435, $993,996,374, $5,345,573,
$95,352,196, $17,503,118, $191,404,220 and $22,124,081 for the Equity Income,
Mid-Cap, Small Cap, International, Global Equity, Balanced Income, Total Return
Bond, Low Duration and Short-Term Investment Funds, respectively.
48
<PAGE> 56
Financial Highlights
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended June 30,
1997 ------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period... $21.25 $18.91 $17.24 $15.07 $15.50 $14.51
------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income............. 0.24 0.49 0.45(1) 0.49 0.46 0.44
Net realized and unrealized gain
on investments.................. 2.76 4.15 2.89 2.48 0.10 1.21
------ ------ ------ ------ ------ ------
Total from investment
operations...................... 3.00 4.64 3.34 2.97 0.56 1.65
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)......................... (0.25) (0.48) (0.57) (0.44) (0.46) (0.43)
Distributions (from realized
gains).......................... (3.25) (1.82) (1.10) (0.36) (0.53) (0.23)
------ ------ ------ ------ ------ ------
Total distributions............... (3.50) (2.30) (1.67) (0.80) (0.99) (0.66)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period......... $20.75 $21.25 $18.91 $17.24 $15.07 $15.50
====== ====== ====== ====== ====== ======
Total Return........................... 14.44%++ 26.15% 20.04% 20.49% 3.40% 11.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)... $196.9 $185.9 $182.5 $127.1 $87.2 $86.7
Ratio of expenses to average net
assets:
Before expense reimbursement...... 0.87%+ 0.88% 0.98% 1.02% 1.05% 1.02%
After expense reimbursement....... 0.87%+ 0.88% 0.98% 1.00% 1.00% 1.00%
Ratio of net investment income to
average net assets:
Before expense reimbursement...... 2.02%+ 2.49% 2.56% 3.11% 2.85% 2.97%
After expense reimbursement....... 2.02%+ 2.49% 2.56% 3.14% 2.90% 2.99%
Portfolio turnover rate................ 8% 44% 24% 50% 36% 25%
Average commission rate per share...... $0.0471 $0.0472 N/A N/A N/A N/A
</TABLE>
(1) Net investment income per share is calculated using ending balances prior to
consideration of adjustments for permanent book and tax differences.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements
49
<PAGE> 57
Financial Highlights
- --------------------------------------------------------------------------------
MID-CAP FUND
<TABLE>
<CAPTION>
Six Months Ended January 2, 1997*
December 31, 1997 through
(unaudited) June 30, 1997
------------------ ----------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $11.65 $10.00
------ ------
Income from Investment Operations:
Net investment income.................................. 0.06 0.07
Net realized and unrealized gain on investments........ 1.45 1.64
------ ------
Total from investment operations....................... 1.51 1.71
------ ------
Less Distributions:
Dividends (from net investment income)................. (0.07) (0.06)
Distributions (from realized gains).................... (0.32) --
------ ------
Total distributions.................................... (0.39) (0.06)
------ ------
Net Asset Value, End of Period.............................. $12.77 $11.65
====== ======
Total Return................................................ 13.07%++ 17.15%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)........................ $5.4 $ 2.0
Ratio of expenses to average net assets:
Before expense reimbursement........................... 3.69%+ 8.26%+
After expense reimbursement............................ 1.00%+ 1.00%+
Ratio of net investment income (loss) to average net assets:
Before expense reimbursement........................... (1.37)%+ (5.39)%+
After expense reimbursement............................ 1.32%+ 1.87%+
Portfolio turnover rate..................................... 26% 23%
Average commission rate per share........................... $0.0448 $0.0330
</TABLE>
* Commencement of operations.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements
50
<PAGE> 58
Financial Highlights
- --------------------------------------------------------------------------------
SMALL CAP FUND
<TABLE>
<CAPTION>
Six Months
Ended Year Ended June 30,
December 31, --------------------------------------------------------
1997 1997 1996 1995 1994 1993
(unaudited)
------------ --------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.......................... $ 23.83 $ 21.33 $21.53 $19.53 $19.88 $18.10
------- ------- ------ ------ ------ ------
Income from Investment
Operations:
Net investment income
(loss)..................... 0.01 0.03 0.05(1) (0.06) (0.01) 0.27
Net realized and unrealized
gain on investments........ 3.50 5.62 2.80 2.84 0.78 3.18
------- ------- ------ ------ ------ ------
Total from investment
operations................. 3.51 5.65 2.85 2.78 0.77 3.45
------- ------- ------ ------ ------ ------
Less Distributions:
Dividends (from net
investment income)......... (0.05) (0.09) -- -- (0.20) (0.04)
Distributions (from realized
gains)..................... (2.37) (3.06) (3.05) (0.78) (0.92) (1.63)
------- ------- ------ ------ ------ ------
Total distributions.......... (2.42) (3.15) (3.05) (0.78) (1.12) (1.67)
------- ------- ------ ------ ------ ------
Net Asset Value, End of Period.... $ 24.92 $ 23.83 $21.33 $21.53 $19.53 $19.88
======= ======= ====== ====== ====== ======
Total Return...................... 15.04%++ 29.74% 14.24% 14.79% 3.77% 19.80%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(millions)...................... $60.8 $27.5 $16.5 $20.5 $13.1 $10.8
Ratio of expenses to average net
assets:
Before expense
reimbursement.............. 0.96%+ 1.30% 1.21% 1.49% 1.65% 1.40%
After expense
reimbursement.............. 0.96%+ 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income
(loss) to average net assets:
Before expense
reimbursement.............. 0.11%+ (0.20)% 0.03% (0.82)% (0.71)% 1.03%
After expense
reimbursement.............. 0.11%+ 0.10% 0.24% (0.34)% (0.06)% 1.42%
Portfolio turnover rate........... 56% 88% 119% 81% 44% 20%
Average commission rate per
share........................... $0.0496 $0.0460 N/A N/A N/A N/A
</TABLE>
(1) Net investment income per share represents net investment income divided by
the average shares outstanding throughout the year.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements
51
<PAGE> 59
Financial Highlights
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Six Months
Ended
December 31,
1997 Year Ended June 30,
(unaudited) -------------------------------------------------------
------------ 1997 1996 1995 1994 1993
-------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period.......................... $ 24.17 $ 20.44 $17.70 $16.79 $14.63 $13.97
-------- ------- ------ ------ ------ ------
Income from Investment
Operations:
Net investment income........ 0.19 0.59(1) 0.56(1) 0.28 0.26 0.23
Net realized and unrealized
gain (loss) on
investments................ (1.28) 3.78 2.51 1.52 2.19 0.74
-------- ------- ------ ------ ------ ------
Total from investment
operations................. (1.09) 4.37 3.07 1.80 2.45 0.97
-------- ------- ------ ------ ------ ------
Less Distributions:
Dividends (from net
investment income)......... (0.41) (0.48) (0.14) (0.44) (0.14) --
Distributions (from realized
gains)..................... -- (0.16) (0.19) (0.45) (0.15) (0.31)
-------- ------- ------ ------ ------ ------
Total distributions.......... (0.41) (0.64) (0.33) (0.89) (0.29) (0.31)
-------- ------- ------ ------ ------ ------
Net Asset Value, End of Period.... $ 22.67 $ 24.17 $20.44 $17.70 $16.79 $14.63
======== ======= ====== ====== ====== ======
Total Return...................... (4.41)%++ 21.59% 18.61% 11.08% 16.71% 7.36%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(millions)...................... $1,039.2 $ 888.5 $331.0 $51.5 $26.0 $6.6
Ratio of expenses to average net
assets:
Before expense
reimbursement.............. 0.94%+ 1.07% 1.11% 1.39% 1.61% 2.44%
After expense
reimbursement.............. 0.94%+ 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to
average net assets:
Before expense
reimbursement.............. 1.55%+ 2.59% 2.67% 2.45% 2.01% 1.14%
After expense
reimbursement.............. 1.55%+ 2.66% 2.78% 2.83% 2.62% 2.58%
Portfolio turnover rate........... 6% 18% 12% 24% 23% 24%
Average commission rate per
share........................... $0.0170 $0.0147 N/A N/A N/A N/A
</TABLE>
(1) Net investment income per share represents net investment income divided by
the average shares outstanding throughout the year.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements
52
<PAGE> 60
Financial Highlights
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
Six Months
Ended
December 31, January 2, 1997*
1997 through
(Unaudited) June 30, 1997
------------ ----------------
<S> <C> <C>
Net Asset Value, Beginning of Period........................ $11.09 $10.00
------- -------
Income from Investment Operations:
Net investment income.................................. 0.08 0.14
Net realized and unrealized gain (loss) on
investments........................................... (0.53) 1.09
------- -------
Total from investment operations....................... (0.45) 1.23
------- -------
Less Distributions:
Dividends (from net investment income)................. (0.21) (0.14)
Distributions (from realized gains).................... (0.18) --
------- -------
Total distributions.................................... (0.39) (0.14)
------- -------
Net Asset Value, End of Period.............................. $10.25 $11.09
======= =======
Total Return................................................ (4.03)%++ 12.32%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)........................ $5.3 $3.7
Ratio of expenses to average net assets:
Before expense reimbursement........................... 2.60%+ 4.43%+
After expense reimbursement............................ 1.00%+ 1.00%+
Ratio of net investment income to average net assets:
Before expense reimbursement........................... (0.20)%+ 0.07%+
After expense reimbursement............................ 1.40%+ 3.50%+
Portfolio turnover rate..................................... 14% 18%
Average commission rate per share........................... $0.0229 $0.0144
</TABLE>
* Commencement of operations.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements
53
<PAGE> 61
Financial Highlights
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended June 30,
1997 -------------------------------------------------------
(unaudited) 1997 1996 1995 1994 1993
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $ 19.38 $ 18.27 $16.74 $15.71 $16.69 $16.35
------- ------- ------ ------ ------ ------
Income from Investment
Operations:
Net investment income......... 0.45 0.90(1) 0.94 0.89 0.89 0.77
Net realized and unrealized
gain (loss) on
investments................. 1.03 1.86 1.53 1.53 (0.27) 0.82
------- ------- ------ ------ ------ ------
Total from investment
operations.................. 1.48 2.76 2.47 2.42 0.62 1.59
------- ------- ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)..................... (0.46) (0.99) (0.92) (0.80) (0.94) (0.74)
Distributions (from realized
gains)...................... (1.11) (0.66) (0.02) (0.57) (0.66) (0.51)
Return of capital............. -- -- -- (0.02) -- --
------- ------- ------ ------ ------ ------
Total distributions........... (1.57) (1.65) (0.94) (1.39) (1.60) (1.25)
------- ------- ------ ------ ------ ------
Net Asset Value, End of Period..... $ 19.29 $ 19.38 $18.27 $16.74 $15.71 $16.69
======= ======= ====== ====== ====== ======
Total Return....................... 7.77%++ 15.75% 15.04% 16.40% 3.60% 10.10%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(millions)....................... $104.1 $90.2 $70.6 $32.1 $36.0 $30.3
Ratio of expenses to average net
assets:
Before expense
reimbursement............... 0.94%+ 0.98% 1.06% 1.19% 1.20% 1.15%
After expense reimbursement... 0.94%+ 0.98% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to
average net assets:
Before expense
reimbursement............... 4.56%+ 4.77% 5.20% 5.44% 5.04% 4.62%
After expense reimbursement... 4.56%+ 4.77% 5.26% 5.63% 5.24% 4.77%
Portfolio turnover rate............ 62% 117% 92% 51% 97% 155%
Average commission rate per
share............................ $0.0423 $0.0392 N/A N/A N/A N/A
</TABLE>
(1) Net investment income per share is calculated using ending balances prior to
consideration of adjustments for permanent book and tax differences.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements
54
<PAGE> 62
Financial Highlights
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended June 30, December 6, 1994*
1997 -------------------- through
(unaudited) 1997 1996 June 30, 1995
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period............. $13.04 $12.78 $12.94 $12.00
------ ------ ------ ------
Income from Investment Operations:
Net investment income....................... 0.46 0.99 0.84(1) 0.46
Net realized and unrealized gain on
investments............................... 0.36 0.30 0.06 0.94
------ ------ ------ ------
Total from investment operations............ 0.82 1.29 0.90 1.40
------ ------ ------ ------
Less Distributions:
Dividends (from net investment income)...... (0.55) (0.92) (0.93) (0.46)
Distributions (from realized gains)......... -- (0.11) (0.13) --
------ ------ ------ ------
Total distributions......................... (0.55) (1.03) (1.06) (0.46)
------ ------ ------ ------
Net Asset Value, End of Period................... $13.31 $13.04 $12.78 $12.94
====== ====== ====== ======
Total Return..................................... 6.37%++ 10.48% 7.05% 11.88%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)............. $18.3 $ 14.3 $ 43.4 $15.3
Ratio of expenses to average net assets:
Before expense reimbursement................ 1.18%+ 0.95% 0.98% 2.93%+
After expense reimbursement................. 0.65%+ 0.65% 0.68% 0.80%+
Ratio of net investment income to average net
assets:
Before expense reimbursement................ 6.59%+ 6.78% 6.86% 4.92%+
After expense reimbursement................. 7.13%+ 7.08% 7.16% 7.05%+
Portfolio turnover rate.......................... 62% 173% 51% 68%
</TABLE>
* Commencement of operations.
(1) Net investment income per share is calculated using ending balances prior to
consideration of adjustments for permanent book and tax differences.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements
55
<PAGE> 63
Financial Highlights
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended June 30, May 18, 1993*
1997 -------------------------------------- through
(Unaudited) 1997 1996 1995 1994 June 30, 1993
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period............................. $10.23 $10.12 $10.15 $ 9.93 $10.00 $10.00
------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income........... 0.34 0.66 0.68 0.75 0.77 0.05
Net realized and unrealized gain
on investments................ 0.04 0.10 0.06 0.23 0.11 0.00
------ ------ ------ ------ ------ ------
Total from investment
operations.................... 0.38 0.76 0.74 0.98 0.88 0.05
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)....................... (0.37) (0.64) (0.72) (0.75) (0.77) (0.05)
Distributions (from realized
gains)........................ (0.05) (0.01) (0.05) (0.01) (0.18) (0.00)
------ ------ ------ ------ ------ ------
Total distributions............. (0.42) (0.65) (0.77) (0.76) (0.95) (0.05)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period....... $10.19 $10.23 $10.12 $10.15 $ 9.93 $10.00
====== ====== ====== ====== ====== ======
Total Return......................... 3.77%++ 7.79% 7.47% 10.23% 9.02% 4.36%+
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(millions)......................... $194.9 $171.2 $189.2 $123.3 $36.5 $7.6
Ratio of expenses to average net
assets:
Before expense reimbursement.... 0.63%+ 0.66% 0.60% 0.75% 1.10% 4.94%+
After expense reimbursement..... 0.58%+ 0.58% 0.58% 0.58% 0.58% 0.58%+
Ratio of net investment income to
average net assets:
Before expense reimbursement.... 6.53%+ 6.26% 7.07% 7.43% 6.82% 1.93%+
After expense reimbursement..... 6.59%+ 6.34% 7.09% 7.61% 7.34% 6.28%+
Portfolio turnover rate.............. 51% 202% 50% 71% 254% 34%
</TABLE>
* Commencement of operations.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements
56
<PAGE> 64
Financial Highlights
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
Six Months
Ended
December 31, Year Ended June 30, May 18, 1993*
1997 --------------------------------- through
(unaudited) 1997 1996 1995 1994 June 30, 1993
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period.... $10.15 $10.17 $10.12 $10.21 $10.00 $10.00
------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income.............. 0.32 0.58 0.66 0.66 0.53 0.03
Net realized and unrealized gain
(loss) on investments............ (0.01) (0.01) 0.05 (0.09) 0.21 --
------ ------ ------ ------ ------ ------
Total from investment operations... 0.31 0.57 0.71 0.57 0.74 0.03
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income).......................... (0.32) (0.59) (0.66) (0.66) (0.53) (0.03)
Return of capital.................. -- -- (0.00) -- -- --
------ ------ ------ ------ ------ ------
Total distributions................ (0.32) (0.59) (0.66) (0.66) (0.53) (0.03)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Period.......... $10.14 $10.15 $10.17 $10.12 $10.21 $10.00
====== ====== ====== ====== ====== ======
Total Return............................ 3.13%++ 5.77% 7.23% 5.78% 7.47% 2.30%+
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions).... $21.9 $21.7 $18.7 $19.8 $10.5 $.003
Ratio of expenses to average net assets:
Before expense reimbursement....... 85%+ 0.96% 0.88% 1.26% 2.06% 57.02%+
After expense reimbursement........ 48%+ 0.48% 0.48% 0.48% 0.48% 0.48%+
Ratio of net investment income (loss) to
average net assets:
Before expense reimbursement....... 5.93%+ 5.34% 6.15% 5.74% 4.16% (56.99)%+
After expense reimbursement........ 6.29%+ 5.82% 6.55% 6.52% 5.74% 2.32%+
Portfolio turnover rate................. 52% 154% 60% 81% 135% 0%
</TABLE>
* Commencement of operations.
+ Annualized.
++ Not annualized.
See Notes to Financial Statements
57
<PAGE> 65
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SEMI-ANNUAL REPORT
HOTCHKIS AND WILEY FUNDS
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FOR THE SIX MONTHS ENDED
DECEMBER 31, 1997
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HOTCHKIS AND WILEY FUNDS
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