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SEMI-ANNUAL REPORT
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HOTCHKIS AND WILEY FUNDS LOGO
725 SOUTH FIGUEROA STREET
SUITE 4000
LOS ANGELES, CALIFORNIA 90017-5400
800-236-4479
INVESTMENT ADVISOR
Hotchkis and Wiley
725 South Figueroa Street
Suite 4000
Los Angeles, California 90017-5400
LEGAL COUNSEL
Gardner, Carton & Douglas
321 North Clark Street
Chicago, Illinois 60610
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
100 East Wisconsin Avenue
Milwaukee, WI 53202
DISTRIBUTOR
Princeton Funds Distributor, Inc.
800 Scudders Mill Road
Plainsboro, New Jersey 08536
ADMINISTRATOR AND TRANSFER AGENT
Firstar Mutual Fund Services, LLC
615 East Michigan Street
Milwaukee, Wisconsin 53202
CUSTODIAN
Firstar Bank Milwaukee, N.A.
615 East Michigan Street
Milwaukee, Wisconsin 53202
DECEMBER 31, 1998
[TORCH LOGO]
[HOTCHKIS AND WILEY FUNDS LOGO]
EQUITY INCOME FUND
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MID-CAP FUND
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SMALL CAP FUND
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INTERNATIONAL FUND
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GLOBAL EQUITY FUND
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BALANCED FUND
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TOTAL RETURN BOND FUND
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LOW DURATION FUND
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SHORT-TERM INVESTMENT FUND
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THIS MATERIAL MUST BE PRECEDED
OR ACCOMPANIED BY A PROSPECTUS. HOTCHKIS AND WILEY:
INVESTMENT ADVISOR
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[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.
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[HOTCHKIS AND WILEY FUNDS LOGO]
DEAR SHAREHOLDERS:
We are pleased to present to you the semi-annual report of Hotchkis and Wiley
Funds for the six months ended December 31, 1998. Investment commentary on the
Funds and their strategies follows.
EQUITY INCOME FUND
The last six months of 1998 were a time of great volatility and dramatic events
in the marketplace. July began strongly for a narrow group of the largest growth
companies. Underneath this narrow group, the erosion of stock prices, which
began in April, continued with value underperforming dramatically.
On July 17, the whole U.S. market began collapsing, culminating in a selling
crescendo in the last three trading days in August. During the sell-off, a
pronounced shift in investor preference began to emerge, as investors refocused
on underlying valuation support and were drawn to truly over-sold opportunities
within the market. From August 26 through October 8, the more value-oriented
stocks performed well relative to the stocks in the S&P 500 Index. The Equity
Income Fund held up well during this period. From August 16 through October 8,
the Equity Income Fund generated a -3.5% return while the S&P 500 Index returned
- -11.1% and the Russell 1000 Value Index returned -8.1%. However, during the last
full six months of 1998, the Fund lagged these indexes, returning -2.6% versus
9.3% for the S&P 500 and 3.1% for the Russell 1000 Value.
The correction ended in early October when the Federal Reserve ignited the
market with three interest rate cuts in quick succession. Investors crowded into
a handful of the largest, most liquid names. The S&P 500 Index produced
sensational returns, but in a relatively narrow group of large-cap stocks. The
wide disparity in performance between growth and value stocks continued, as did
that between mega-cap stocks and all the others -- large-, mid-, and small- cap.
Returns in the Equity Income Fund came predominantly from telephone companies,
as the dynamics of new strategic initiatives became apparent, and electric
companies. Also contributing to returns were paper companies, with continuing
consolidation; Fannie Mae, which benefited from a refinancing boom driven by
falling rates; and Philip Morris, which moved steadily upward on the multi-state
tobacco litigation settlement. The Fund's returns were hampered by holdings in
the energy sector, which suffered from historically low oil prices. Returns also
suffered from lack of exposure to technology and drug companies, which were
among the best performing sectors and continued to trade at what we believed
were excessive valuation levels.
The difference in prices between value and growth stocks has become exaggerated.
The divergence has been with us for over three years and has widened to record
levels. Our research supports the current value orientation of the Equity Income
Fund, and we intend to stick to our disciplines of focusing on financially
strong companies with above-average current yield and below-average
price-to-earnings ratios.
<PAGE> 4
TOTAL RETURNS FOR PERIODS ENDED 12/31/98*
<TABLE>
<CAPTION>
Equity Inc. Fund S&P 500 Index
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<S> <C> <C>
Six Months -2.6% 9.3%
One Year 4.3% 28.8%
Five Years 15.8% 24.2%
Ten Years 14.1% 19.2%
Since Inception (6/24/87) 12.3% 15.9%
</TABLE>
* Average annual total return for the periods greater than one year. Past
performance is no guarantee of future performance.
MID-CAP FUND
The world economy grew at a less than expected 2% in 1998, the slowest rate
since 1991 and less than half the growth rate of 1997. The economic meltdown led
by depressions in Asia caused a flight to quality in financial markets that was
exacerbated by illiquid hedge funds. This proved to be a difficult environment
for the Mid-Cap Fund. Our value orientation pointed us to cyclical stocks that
were hardest hit by the economic problems and to smaller capitalization issues
that traded lower because of financial and market liquidity concerns.
One of the few areas of strength was U.S. consumer demand. The American consumer
benefited from strong real wage growth and low interest rates. As a result,
demand for high-end goods was abnormally strong for this late in an economic
expansion. Weak raw material pricing was in sharp contrast to the strong
consumer demand. Raw material capacity, planned during the early 1990's, was
expected to be absorbed by a strong world economy. This capacity instead came on
during a weak world economy, and pricing has followed utilization rates lower.
Stock prices reflected these trends. For example, at December 31, Best Buy, a
consumer electronics retailer and S&P Midcap 400 Index member, was trading at
nine times book value and at all-time high multiples of sales, earnings and cash
flow. Additionally, the Fund's oil positions were trading at or below company
net asset values with relative multiples at historic lows. The Mid-Cap Fund is
anticipating a return to a more normal relationship between consumer demand and
raw material pricing by increasing its weighting in raw materials suppliers and
decreasing its exposure to consumer product companies.
The Fund should benefit from any reversion to more normal market liquidity and
returns. While the S&P 500 Index gained over 26% last year, the average stock on
the New York Stock Exchange was down 6%. This flight to quality, which has
plagued smaller capitalization stocks for the last few years, is an opportunity
for the Mid-Cap Fund to invest in cheap stocks. These stocks should appreciate
over the long term as either investors seek out value or larger companies use
their relatively more expensive stock as currency to acquire these smaller
companies.
TOTAL RETURNS FOR PERIODS ENDED 12/31/98*
<TABLE>
<CAPTION>
Mid-Cap Fund Russell Midcap Index
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<S> <C> <C>
Six Months -11.8% 0.9%
One Year -10.3% 10.1%
Since Inception (1/2/97) 9.0% 19.2%
</TABLE>
* Average annual total return for the period greater than one year. Past
performance is no guarantee of future performance.
SMALL CAP FUND
The latter half of 1998 proved to be a difficult and volatile time for the
equity markets. During the third quarter, the continuing turmoil in world
financial markets and announcements of hedge fund losses by U.S. banks drove
market volatility to near record levels. This volatility created instability in
both the equity and credit markets, which sparked a flight to liquidity not seen
since the last U.S. recession in the early 1990s. This also caused valuation
spreads between small cap and large cap stocks, as represented by the Russell
2000 Index and the S&P 500 Index, to approach record levels. By year-end,
premiums being paid for stocks were at historically high levels with the stocks
in the S&P 500 Index trading at 24.8x fiscal year 1998 earnings and those in the
Russell 2000 Index trading at 19.5x fiscal year 1998 earnings.
Significant academic studies such as those conducted by Professors Fama and
French in 1992 have noted two basic characteristics that are associated with
long-term outperformance in the U.S. equity market: market capitalization and
valuation. According to the studies, smaller companies have outperformed larger
companies over long time periods, and lower price-to-book value or
price-to-earnings companies have
<PAGE> 5
done well over time. (Of course, past performance is no guarantee of future
performance.)
The Hotchkis and Wiley small cap management style focuses on these two
characteristics as we invest in smaller-than-average market cap companies with
lower-than-average valuation characteristics. As of December 31, 1998, the
median market cap of the stocks in the Hotchkis and Wiley Small Cap Fund was 46%
lower than that of the Russell 2000 Index. The fiscal year price-to-earnings
ratio and price-to-book value ratio of the stocks in the Small Cap Fund were 12%
and 14% lower than the Index, respectively.
By adhering to our investment discipline, we have underperformed the Russell
2000 Index for the six months and the year ended December 31, 1998.
Unfortunately, our concentration in smaller stocks has penalized us in this
liquidity driven market where investors are focusing more on earnings than they
are on earnings per share.
Notwithstanding the recent environment, we believe that investors will re-focus
on valuation over the long run and that the valuation discrepancy between small
cap and large cap stocks will return to more normal levels.
TOTAL RETURNS FOR PERIODS ENDED 12/31/98*
<TABLE>
<CAPTION>
Small Cap Fund Russell 2000 Index
- ------------------------------------------------------------
<S> <C> <C>
Six Months -20.5% -7.1%
One Year -15.6% -2.6%
Five Years 10.0% 11.9%
Ten Years 12.9% 12.9%
Since Inception (9/20/85) 12.0% 12.3%
</TABLE>
* Average annual total return for the periods greater than one year. Past
performance is no guarantee of future performance.
INTERNATIONAL FUND
The International Fund's return of -5.7% lagged the MSCI EAFE Index return of
+3.66% in the second half of 1998. This six-month period could be divided into
two distinct periods -- the third quarter and the fourth quarter. The third
quarter saw the Asian economic crisis spread to all the emerging markets. The
contagion effect made investors spurn the shares of economically cyclical
industries. This bout of stock market weakness brought the International Fund a
rare opportunity to add some cheaply priced stocks to the portfolio. We were
able add stocks like Total of France, one of the world's most profitable energy
companies; Lloyds TSB, a British retail bank that generates a return on equity
far ahead of its peers; and Philips Electronics, a Dutch giant with world class
franchises in lighting, semiconductors, and medical equipment. The weak market
environment also brought some highly defensive (less cyclical) stocks into our
buying range. These included Veba, a German utility with an undervalued mobile
phone business; Telefonica of Spain; Telecom Italia; and BIC, a French
manufacturer of ballpoint pens and disposable lighters and razors. Adding to the
woes of investors, the Russian devaluation sparked a round of trading losses and
provisioning in the banking sector. Credit concerns prompted a massive flight to
quality, further draining capital from the corporate securities markets.
The fourth quarter saw a complete reversal in the world markets. Central bankers
in the U.S., Europe, the U.K., China and Hong Kong all eased monetary policies
with an eye to avoiding a recession and counteracting the credit contraction.
This created a veritable flood of money in the world financial system. As
capacity investments waned, there were limited avenues for this new cash, namely
stock markets, bonds, bank deposits and financial restructurings. The EAFE Index
was up 20.8% in this quarter. This wall of money flowed into the large cap,
liquid stocks, leaving the rest of the market far behind. The U.K. was the most
striking, where the ten largest stocks captured virtually all the performance
for the calendar year.
The most significant drag on the International Fund's performance in the six
months ended December 31, 1998 came from stock selection in the ebullient 11 EMU
markets, especially in France and Germany, as well as in the U.K. and Japan. The
U.K. again proved problematic with its penchant for telecommunications and
pharmaceutical stocks. In Japan, the International Fund had an average weight of
11% vs. 21% for the EAFE Index, which was deleterious given that the yen
appreciated by 21% vs. the U.S. dollar in the final quarter. Looking forward,
U.K. stocks remain the most attractive to us and were the
<PAGE> 6
International Fund's single largest country weighting at December 31.
The very largest companies, the mega caps, have been the dominant drivers of
global equity performance. However, stock prices can spiral upward only to the
point where earnings are set to go in the opposite direction. At that point, the
gap in valuation between the low price-to-book value, high earnings yield stocks
and the mega cap growth stocks should close.
TOTAL RETURNS FOR PERIODS ENDED 12/31/98*
<TABLE>
<CAPTION>
International Fund MSCI EAFE Index
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<S> <C> <C>
Six Months -5.7% 3.7%
One Year 6.4% 20.3%
Five Years 9.1% 9.5%
Since Inception (12/1/90) 12.5% 10.6%
</TABLE>
* Average annual total return for the periods greater than one year. Past
performance is no guarantee of future performance.
GLOBAL EQUITY FUND
The Global Equity Fund continued to lag the MSCI World Index during the six
months ended December 31, 1998. Central bankers in the G-7 ex-Japan made a
concerted effort to loosen monetary policy to thwart a potential credit
contraction and recession. This created a veritable flood of money in the world
financial system. As capacity investments waned, there were limited avenues for
this new cash, namely stock markets, bonds, bank deposits and financial
restructurings. This liquidity boost and the specter of recession explained why
the valuation gap became so extreme between companies that exhibited earnings
visibility and those considered more economically cyclical.
The most significant drag on the Global Equity Fund's performance during the six
months ended December 31, 1998 came from stock selection in the U.S. and Japan.
Returns in the U.S. were hampered by our holdings in the energy sectors, which
suffered from historically low oil prices, and lack of exposure to the richly
valued technology and pharmaceutical stocks. While energy and other
commodity-related stocks performed poorly, the U.S. portion of the Global Equity
Fund did achieve some successes in telecommunications with its holdings in
Alltel and AT&T as well as in retailers such as the Limited. Alltel has
transformed itself from a sleepy rural telephone company to a significant
regional wireless competitor, while AT&T has also progressed via its acquisition
of IBM's data network. In Japan, the Global Equity Fund did not have any
exposure to the incipient recovery in the larger banks and real estate stocks,
which rebounded from previously distressed levels.
In the second half of 1998, winning stocks benefited from the perception that
they were insulated from an economic slowdown. Generally, these stocks were in
the consumer, technology, utility and selected finance-related areas.
Furthermore, the best performers had much larger than average market
capitalizations. In fact, the very largest companies, the mega-caps, were the
dominant drivers of global equity performance. However, equity prices can spiral
upward only to the point where earnings are set to go in the opposite direction.
At that point, the gap in valuation between the low price-to-book value, high
earnings yield stocks and the mega-cap growth stocks should close.
The Global Equity Fund's strict earnings yield and dividend yield thresholds
have made it impossible for us to follow the crowds and pay the sky-high
valuation multiples associated with the global equity market leaders.
Alternatively, we are scouring our weekly screens for the greatest valuation
anomalies where the markets are not recognizing a company's asset value and/or
earnings growth potential. U.K. and U.S. stocks remain the most attractive, in
general, from our perspective and constitute the Global Equity Fund's two
largest country weightings.
TOTAL RETURNS FOR PERIODS ENDED 12/31/98*
<TABLE>
<CAPTION>
Global Equity Fund MSCI World Index
- -------------------------------------------------------------
<S> <C> <C>
Six Months -4.8% 6.8%
One Year 6.7% 24.8%
Since Inception (1/2/97) 7.3% 20.4%
</TABLE>
* Average annual total return for the period greater than one year. Past
performance is no guarantee of future performance.
<PAGE> 7
BALANCED FUND
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ASSET ALLOCATION SUMMARY
<TABLE>
<CAPTION>
Average
Asset Current 8/13/85 - Low Equity High Equity
Category 12/31/98 12/31/98 10/16/87 8/11/89
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<S> <C> <C> <C> <C>
Equities 42% 46% 27% 59%
Fixed-Income 58% 54% 73% 41%
</TABLE>
Asset allocation made a contribution to returns during the second half of 1998.
The Balanced Fund increased equity holdings from a low of 39% of total assets in
July to 47% in November, a period when lower stock prices provided investment
opportunities in value-oriented equities. The comparatively high fixed-income
allocation helped to protect the Fund's asset values in the August 26 through
October 8 market decline and provided a steady stream of realized income
throughout the year.
At year-end, the equity portfolio was broadly diversified, with a total of 82
companies invested in 39 industry categories. Utility sector holdings,
representing 20% of the equity portfolio, made the most positive impact on
performance. Finance-related investments (18%) and consumer durables (12%) also
made significant contributions during the year. Basic industry, capital goods
and energy stocks were added to the equity portfolio, based on their fundamental
valuation characteristics.
Fixed-income investments were concentrated in intermediate maturity securities,
and overall portfolio duration at December 31 was 3.7 years. This strategy will
benefit from a continued Federal Reserve vigilance in maintaining a relatively
low inflation and interest rate policy. At December 31, U.S. Government
securities and AAA issues represent 67% of the fixed-income portfolio, with the
remaining 33% allocated to securities with investment-grade credit ratings
ranging from AA to BBB. A decreased weighting of mortgage-backed and corporate
securities helped performance as concerns over credit quality and liquidity
reduced prices in these sectors.
TOTAL RETURNS FOR PERIODS ENDED 12/31/98*
<TABLE>
<CAPTION>
50/50 S&P 500
Lehman Brothers
Balanced Fund Govt./Corp. Index
- ------------------------------------------------------------
<S> <C> <C>
Six Months 0.1% 7.6%
One Year 5.2% 18.9%
Five Years 11.5% 15.3%
Ten Years 11.6% 14.0%
Since Inception 8/13/85 11.9% N/A
</TABLE>
* Average annual total return for the periods greater than one year.
Past performance is no guarantee of the future performance.
SHORT-TERM
INVESTMENT FUND
LOW DURATION FUND
TOTAL RETURN BOND FUND
There probably never has been a three-month period quite like the third quarter
of 1998 and most fixed-income investors hope there won't be another. The
"contagion" which started in Thailand at the end of 1997 continued to spread and
roil financial markets around the world. Despite these difficulties, the U.S.
economy seemed destined to roll along as though unaffected by the troubles
experienced by other countries. As the third quarter progressed, however, some
signs of weakness began to appear. The housing market, which had been a powerful
driver of growth, slowed in the final two months of the quarter. Manufacturing
continued to show weakness, with the National Purchasing Manager's Index
contracting.
The rosy picture in the U.S. masked the damage being done internationally by a
global deflationary spiral. The payback was swift and destructive, kicked off by
Russia defaulting on domestic debt at the beginning of the third quarter. Panic
quickly gripped a marketplace that had become complacent. Debt and equity
markets around the world fell dramatically, with emerging markets bearing the
brunt of the problems. These wild swings led to a contraction of global
liquidity that proved even more destructive. Long Term Capital Management, one
of the world's largest, highest profile and most leveraged hedge funds,
collapsed, provoking unprecedented intervention by the Federal Reserve.
Suddenly, only U.S. treasuries were liquid enough for market participants and
all other securities were shunned.
<PAGE> 8
The fourth quarter of 1998 started as a continuation and deepening of the
difficulties which had appeared over the previous few months. Hedge funds and
dealer firms kept dumping bonds into the already thin markets, exacerbating the
stunning collapse in market liquidity. Into this quagmire stepped the Federal
Reserve, hoping to provide liquidity and save the day. First, the Federal Open
Market Committee lowered interest rates three times beginning at the end of
September. Second, and perhaps more important, Chairman Greenspan ascribed the
change in monetary policy to concerns over market liquidity rather than economic
growth. This was an unprecedented admission and gave some confidence back to
market participants.
Spread product, particularly asset-backed securities, suffered throughout
October but began to regain some ground later in the quarter. While the peak of
the crisis occurred in October, the market continued to value liquidity above
all else, meaning the recovery was primarily seen in a narrow group of
securities. Only the large "benchmark" names in the corporate market and the
most liquid parts of the mortgage-backed market saw noticeable gains in the last
two months of 1998.
Throughout it all, the U.S. economy chugged along impressively, growing at a
3.7% rate in the third quarter and accelerating to an estimated 4.5% rate in the
fourth quarter. The drop in the equity markets proved short-lived, and the
housing market never skipped a beat, sustaining the "wealth effect" driving U.S.
growth.
The heavy weighting in spread product hurt the Fixed-Income Funds during the
second half of the year as liquidity vigilantes pushed spreads dramatically
wider during the third and early fourth quarters. Duration had a positive impact
as interest rates were lower on the year. Our long position in duration hurt in
the fourth quarter as rates rose modestly. We did take advantage of the historic
cheapness of mortgage-backed and corporate securities to add in selected names
which had a positive impact on the portfolios, particularly in December.
TOTAL RETURNS FOR PERIODS ENDED 12/31/98*
<TABLE>
<CAPTION>
Total Return Lehman Aggregate
Bond Fund Index
- ------------------------------------------------------------
<S> <C> <C>
Six Months 4.2% 4.6%
One Year 8.8% 8.7%
Since Inception (12/6/94) 11.0% 9.8%
</TABLE>
<TABLE>
<CAPTION>
Low Duration Merrill Lynch 1-3 Yr.
Fund Treas. Index
- --------------------------------------------------------------
<S> <C> <C>
Six Months 2.3% 3.9%
One Year 5.6% 7.0%
Five Year 7.5% 6.0%
Since Inception (5/18/93) 7.9% 5.8%
</TABLE>
<TABLE>
<CAPTION>
Short-Term
Investment Merrill Lynch 6 Month
Fund Treas. Index
- -------------------------------------------------------------
<S> <C> <C>
Six Months 2.5% 2.7%
One Year 5.8% 5.6%
Five Years 6.1% 5.4%
Since Inception (5/18/93) 6.3% 5.1%
</TABLE>
* Average annual total return for the periods greater than one year. Past
performance is no guarantee of future performance.
As always, we appreciate the trust you place in us. We thank you for your
continued support and look forward to reporting to you again in six months.
Sincerely,
Nancy D. Celick sig
Nancy D. Celick
President
HOTCHKIS AND WILEY FUNDS
The opinions expressed above are as of December 31, 1998. The Funds are actively
managed and may not continue to hold any specific securities mentioned.
Total returns and average annual total returns for the Funds are net of all
charges and fees and assume reinvestment of capital gains distributions and
shareholder dividends at net asset value. The investment advisor has agreed to
pay annual operating expenses of the Funds above certain limits as set forth in
the current prospectus. Were the investment advisor not to pay such expenses,
net returns of some of the Funds would be lower. Investment return and principal
will vary so that shares, when redeemed, may be worth more or less than their
original cost. Past performance is no guarantee of future performance.
The cited market indexes are unmanaged. It is not possible to invest directly in
an index. (Index descriptions appear on the next page.)
<PAGE> 9
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MARKET INDEXES
The indexes described below are unmanaged and include the reinvestment of all
dividends, but do not reflect the payment of transaction costs and advisory fees
associated with an investment in the Funds. The securities that comprise these
indexes may differ substantially from the securities in the Funds' portfolios.
Each index named is not the only index which may be used to characterize
performance of a specific Fund and other indexes may portray different
comparative performance.
LEHMAN BROTHERS AGGREGATE INDEX is a weighted index comprised of the
Government/Corporate Index, the Mortgage-Backed Securities Index, and the
Asset-Backed Securities Index. The index includes fixed-rate debt issues rated
investment grade or higher. All issues have at least one year to maturity and an
outstanding par value of at least $100 million for U.S. Government issues and
$50 million for all others.
LEHMAN BROTHERS GOVERNMENT/CORPORATE INDEX is a weighted index comprised of
publicly-traded intermediate and long-term government and corporate debt with an
average maturity of 11 years.
MERRILL LYNCH 1-3 YEAR U.S. TREASURY BILL INDEX is an index of Treasury
securities with maturities ranging from one to three years.
MERRILL LYNCH 6 MONTH U.S. TREASURY BILL INDEX is an index of Treasury
securities with maturities of six months.
MORGAN STANLEY CAPITAL INTERNATIONAL EAFE (EUROPE, AUSTRALIA, FAR EAST) INDEX
includes the equity securities of companies, within various industries, whose
primary trading markets are located outside the U.S. These securities are among
the larger capitalization companies in these markets. The countries currently
included in the MSCI EAFE Index are Australia, Austria, Belgium, Denmark,
Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia, The
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland and the U.K.
MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX is an arithmetic, market
value-weighted average of the performance of over 1,500 securities listed on the
stock exchanges of the following countries: Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, Malaysia,
The Netherlands, New Zealand, Norway, Portugal, Singapore, South Africa, Spain,
Sweden, Switzerland, the U.K. and the U.S.
RUSSELL 1000 VALUE INDEX measures the performance of those Russell 1000
companies with lower price-to-book value ratios and lower forecasted growth
values. (The Russell 1000 Index, measures the performance of the 1,000 largest
companies in the Russell 3000 Index, which is comprised of the 3,000 largest
U.S.-domiciled publicly-traded common stocks by market capitalization
representing approximately 98% of the U.S. publicly-traded equity market.)
RUSSELL 2000 INDEX is a stock market index comprised of the 2,000 smallest U.S.
domiciled publicly-traded common stocks that are included in the Russell 3000
Index. These common stocks represent approximately 11% of the U.S. equity
market. The Russell 3000 Index is comprised of the 3,000 largest U.S. domiciled
publicly-traded common stocks by market capitalization representing
approximately 98% of the U.S. publicly-traded equity market.
<PAGE> 10
RUSSELL MIDCAP INDEX measures the performance of the 800 smallest securities in
the Russell 1000 Index, which represent approximately 35% of the total market
capitalization of the Russell 1000 Index.
STANDARD & POOR'S MIDCAP 400 INDEX, an unmanaged index, is comprised of 400
domestic stocks chosen for market size, liquidity, and industry group
representation.
STANDARD & POOR'S 500 INDEX is a capital-weighted index, representing the
aggregate market value of the common equity of 500 stocks primarily traded on
the New York Stock Exchange.
THE 50/50 STANDARD & POOR'S 500 INDEX/LEHMAN BROTHERS GOVERNMENT/CORPORATE
INTERMEDIATE INDEX is an equal weighting of the Standard & Poor's 500 Index and
the Lehman Brothers Government/ Corporate Intermediate Index, an unmanaged,
weighted index comprised of publicly traded intermediate and long-term
government and corporate debt with an average maturity of 11 years.
<PAGE> 11
TABLE OF CONTENTS
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<TABLE>
<S> <C>
SCHEDULE OF INVESTMENTS:
EQUITY INCOME FUND..................................... 1
MID-CAP FUND........................................... 4
SMALL CAP FUND......................................... 7
INTERNATIONAL FUND..................................... 9
GLOBAL EQUITY FUND..................................... 13
BALANCED FUND.......................................... 17
TOTAL RETURN BOND FUND................................. 22
LOW DURATION FUND...................................... 26
SHORT-TERM INVESTMENT FUND............................. 31
STATEMENT OF ASSETS AND LIABILITIES...................... 36
STATEMENT OF OPERATIONS.................................. 38
STATEMENT OF CHANGES IN NET ASSETS....................... 40
NOTES TO FINANCIAL STATEMENTS............................ 44
FINANCIAL HIGHLIGHTS..................................... 50
</TABLE>
[TORCH LOGO]
[HOTCHKIS AND WILEY FUNDS LOGO]
<PAGE> 12
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
COMMON STOCKS -- 102.4% Shares Value
- ----------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 5.3%
..........................................................
Lockheed Martin Corporation 33,000 $ 2,796,750
..........................................................
Northrop Grumman Corporation 54,000 3,948,750
..........................................................
Rockwell International
Corporation 32,721 1,589,014
...............................................-----------
8,334,514
- ----------------------------------------------------------
APPAREL & TEXTILES -- 0.8%
..........................................................
Russell Corporation 59,300 1,204,531
- ----------------------------------------------------------
AUTO PARTS -- 2.2%
..........................................................
Dana Corporation 64,300 2,628,263
..........................................................
TRW Inc. 15,200 854,050
...............................................-----------
3,482,313
- ----------------------------------------------------------
AUTOS & TRUCKS -- 7.0%
..........................................................
Ford Motor Company 89,200 5,234,925
..........................................................
General Motors Corporation 82,000 5,868,125
...............................................-----------
11,103,050
- ----------------------------------------------------------
BANKS -- 8.0%
..........................................................
Bank One Corporation 84,000 4,289,250
..........................................................
First Union Corporation 23,800 1,447,338
..........................................................
Fleet Financial Group, Inc. 57,000 2,547,188
..........................................................
KeyCorp 65,000 2,080,000
..........................................................
Washington Mutual, Inc. 61,000 2,329,438
...............................................-----------
12,693,214
- ----------------------------------------------------------
BEVERAGES -- 0.7%
..........................................................
Anheuser-Busch Companies, Inc. 16,500 1,082,813
- ----------------------------------------------------------
BUILDING & FOREST PRODUCTS -- 3.0%
..........................................................
Georgia-Pacific (Timber Group) 58,510 1,393,269
..........................................................
Weyerhaeuser Company 65,000 3,302,813
...............................................-----------
4,696,082
- ----------------------------------------------------------
CHEMICALS -- 2.5%
..........................................................
The Dow Chemical Company 31,000 2,819,063
..........................................................
Eastman Chemical Company 26,000 1,163,500
...............................................-----------
3,982,563
- ----------------------------------------------------------
<CAPTION>
Shares Value
- ----------------------------------------------------------
<S> <C> <C>
CONGLOMERATES -- 2.1%
..........................................................
Tenneco, Inc. 96,500 $ 3,287,031
- ----------------------------------------------------------
CONSUMER PRODUCTS -- 0.5%
..........................................................
Tupperware Corporation 51,600 848,175
- ----------------------------------------------------------
ENGINEERING AND CONSTRUCTION -- 0.9%
..........................................................
Harsco Corporation 48,595 1,479,110
- ----------------------------------------------------------
FINANCIAL SERVICES -- 3.1%
..........................................................
Associates First Capital
Corporation -- Class A 19,000 805,125
..........................................................
Household International, Inc. 59,802 2,369,654
..........................................................
Transamerica Corporation 15,000 1,732,500
...............................................-----------
4,907,279
- ----------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES -- 2.0%
..........................................................
Whirlpool Corporation 56,500 3,128,688
- ----------------------------------------------------------
INSURANCE -- 5.9%
..........................................................
American General Corporation 26,000 2,028,000
..........................................................
Lincoln National Corporation 25,000 2,045,313
..........................................................
Safeco Corporation 55,000 2,361,563
..........................................................
St. Paul Companies, Inc. 42,000 1,459,500
..........................................................
TIG Holdings, Inc. 94,833 1,475,839
...............................................-----------
9,370,215
- ----------------------------------------------------------
LEISURE/TOYS -- 0.8%
..........................................................
Fortune Brands, Inc. 37,500 1,185,938
- ----------------------------------------------------------
MACHINERY -- 1.6%
..........................................................
New Holland N.V 181,000 2,477,438
- ----------------------------------------------------------
METALS & MINING -- 3.6%
..........................................................
Alcoa, Inc. 35,000 2,609,688
..........................................................
Phelps Dodge Corporation 14,300 727,513
..........................................................
Reynolds Metals Company 44,500 2,344,594
...............................................-----------
5,681,795
- ----------------------------------------------------------
NATURAL GAS -- 1.0%
..........................................................
Eastern Enterprises 35,000 1,531,250
- ----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
1
<PAGE> 13
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
Shares Value
- ----------------------------------------------------------
<S> <C> <C>
OIL -- DOMESTIC -- 6.7%
..........................................................
Atlantic Richfield Company 24,207 $ 1,579,507
..........................................................
Occidental Petroleum Corporation 157,100 2,651,063
..........................................................
Phillips Petroleum Company 77,000 3,282,125
..........................................................
Texaco Inc. 4,200 222,075
..........................................................
USX-Marathon Group, Inc. 53,700 1,617,713
..........................................................
Ultramar Diamond Shamrock
Corporation 49,200 1,193,100
...............................................-----------
10,545,583
- ----------------------------------------------------------
PAPER -- 3.6%
..........................................................
Georgia-Pacific Group 25,993 1,522,215
..........................................................
International Paper Company 45,000 2,016,563
..........................................................
Union Camp Corporation 32,000 2,160,000
...............................................-----------
5,698,778
- ----------------------------------------------------------
PHOTOGRAPHY & OPTICAL -- 1.8%
..........................................................
Eastman Kodak Company 39,200 2,822,400
- ----------------------------------------------------------
POLLUTION CONTROL -- 2.1%
..........................................................
Browning-Ferris Industries, Inc. 45,000 1,279,688
..........................................................
Waste Management, Inc. 43,000 2,004,875
...............................................-----------
3,284,563
- ----------------------------------------------------------
RAILROADS -- 2.0%
..........................................................
CSX Corporation 15,000 622,500
..........................................................
Norfolk Southern Corporation 80,000 2,535,000
...............................................-----------
3,157,500
- ----------------------------------------------------------
RETAIL -- 3.9%
..........................................................
Intimate Brands, Inc. 44,000 1,314,500
..........................................................
J.C. Penney Company, Inc. 35,500 1,664,063
..........................................................
May Department Stores Company 29,700 1,793,138
..........................................................
Sears, Roebuck & Company 33,400 1,419,500
...............................................-----------
6,191,201
- ----------------------------------------------------------
<CAPTION>
Shares Value
- ---------------------------------------------------------
<S> <C> <C>
SAVINGS & LOANS -- 2.5%
..........................................................
Fannie Mae 54,000 $ 3,996,000
- ----------------------------------------------------------
STEEL -- 2.4%
..........................................................
Allegheny Teledyne, Inc. 51,000 1,042,313
..........................................................
USX-U.S. Steel Group, Inc. 116,300 2,674,900
...............................................-----------
3,717,213
- ----------------------------------------------------------
TOBACCO -- 5.1%
..........................................................
Philip Morris Companies, Inc. 132,500 7,088,750
..........................................................
UST, Inc. 27,000 941,625
...............................................-----------
8,030,375
- ----------------------------------------------------------
TRUCKING -- 0.6%
..........................................................
Ryder System, Inc. 39,000 1,014,000
- ----------------------------------------------------------
UTILITY -- ELECTRIC -- 12.1%
..........................................................
CMS Energy Corporation 67,000 3,245,313
..........................................................
Central & South West Corporation 70,000 1,920,625
..........................................................
DTE Energy Company 44,000 1,886,500
..........................................................
Edison International 30,000 836,250
..........................................................
Entergy Corporation 31,000 964,875
..........................................................
GPU, Inc. 24,000 1,060,500
..........................................................
Illinova Corporation 110,000 2,750,000
..........................................................
PacifiCorp 29,001 610,834
..........................................................
PECO Energy Company 17,000 707,625
..........................................................
P P & L Resources, Inc. 27,997 780,416
..........................................................
Public Service Enterprises Group,
Inc. 54,000 2,160,000
..........................................................
SCANA Corporation 57,000 1,838,250
..........................................................
USEC, Inc. 24,000 333,135
...............................................-----------
19,094,323
- ----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
2
<PAGE> 14
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
Shares Value
- ----------------------------------------------------------
<S> <C> <C>
UTILITY -- TELEPHONE -- 8.6%
..........................................................
AT&T Corporation 52,000 $ 3,913,000
..........................................................
ALLTEL Corporation 61,000 3,648,563
..........................................................
Bell Atlantic Corporation 54,000 2,862,000
..........................................................
GTE Corporation 14,500 942,500
..........................................................
SBC Communications, Inc. 42,500 2,279,063
...............................................-----------
13,645,126
- ----------------------------------------------------------
Total Common Stock
(cost $130,440,221) 161,673,061
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
VARIABLE RATE Principal
DEMAND NOTES * -- 0.4% Amount Value
- ------------------------------------------------------------
<S> <C> <C>
General Mills, Inc., 5.2337% $492,455 $ 492,455
............................................................
Pitney Bowes, Inc., 5.2337% 79,783 79,783
.................................................-----------
Total variable rate demand notes 572,238
(cost $572,238)
- ------------------------------------------------------------
Total investments -- 102.8%
(cost $131,012,459) 162,245,299
............................................................
Liabilities in excess of other
assets -- (2.8%) (4,385,562)
.................................................-----------
$157,859,737
Total net assets -- 100.0%
- ------------------------------------------------------------
</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, 1998.
See Notes to the Financial Statements
3
<PAGE> 15
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
MID-CAP FUND
<TABLE>
<CAPTION>
COMMON STOCK -- 97.0% Shares Value
- -----------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 3.2%
...........................................................
Northrop Grumman Corporation 2,700 $ 197,437
- -----------------------------------------------------------
APPAREL & TEXTILES -- 3.2%
...........................................................
Coats Viyella PLC ADR 24,600 33,153
...........................................................
Russell Corporation 8,100 164,531
.................................................----------
197,684
- -----------------------------------------------------------
AUTO PARTS -- 5.4%
...........................................................
Borg-Warner Automotive, Inc. 1,400 78,138
...........................................................
Dana Corporation 3,472 141,918
...........................................................
Lear Corporation # 2,800 107,800
.................................................----------
327,856
- -----------------------------------------------------------
BANKS -- 8.1%
...........................................................
Compass Bancshares, Inc. 1,150 43,772
...........................................................
First Midwest Bancorp, Inc. 2,000 76,125
...........................................................
Colonial BancGroup, Inc. 4,000 48,000
...........................................................
Union Planters Corporation 1,600 72,500
...........................................................
UnionBanCal Corporation 7,500 255,469
.................................................----------
495,866
- -----------------------------------------------------------
CHEMICALS -- 0.6%
...........................................................
Wellman, Inc. 3,800 38,713
- -----------------------------------------------------------
COMMUNICATION EQUIPMENT MANUFACTURERS -- 0.3%
...........................................................
Princeton Video Image, Inc. # 6,200 18,600
- -----------------------------------------------------------
COMMUNICATIONS & MEDIA -- 0.6%
...........................................................
Groupe AB SA ADR # 18,300 35,456
- -----------------------------------------------------------
COMPUTERS -- 2.3%
...........................................................
Quantum Corporation # 6,500 138,125
- -----------------------------------------------------------
COMPUTER SOFTWARE & SERVICES -- 3.3%
...........................................................
Vanstar Corporation # 22,100 204,425
- -----------------------------------------------------------
ELECTRIC PRODUCTS -- 1.7%
...........................................................
UCAR International, Inc. # 6,000 106,875
- -----------------------------------------------------------
ELECTRONICS -- 2.0%
...........................................................
Avnet, Inc. 2,000 121,000
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------
Shares Value
<S> <C> <C>
FOODS -- 4.2%
...........................................................
Dean Foods Company 1,700 $ 69,381
...........................................................
Vlasic Foods International Inc. # 8,000 190,500
.................................................----------
259,881
- -----------------------------------------------------------
HEALTHCARE -- DRUGS -- 2.1%
...........................................................
Bergen Brunswig Corporation --Class
A 3,600 125,550
- -----------------------------------------------------------
HOSPITAL/HEALTHCARE MANAGEMENT -- 0.7%
...........................................................
Foundation Health Systems, Inc. -
Class A # 3,700 44,169
- -----------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES -- 2.3%
...........................................................
Whirlpool Corporation 2,500 138,437
- -----------------------------------------------------------
INSURANCE -- 8.9%
...........................................................
Harleysville Group, Inc. 3,400 87,762
...........................................................
IPC Holdings Limited 3,000 69,563
...........................................................
Ohio Casualty Corporation 1,200 49,350
...........................................................
St. Paul Companies, Inc. 1,400 48,650
...........................................................
TIG Holdings, Inc. 18,400 286,350
.................................................----------
541,675
- -----------------------------------------------------------
MACHINERY -- 2.7%
...........................................................
New Holland N.V 12,000 164,250
- -----------------------------------------------------------
METALS & MINING -- 2.2%
...........................................................
Cameco Corporation 1,600 28,500
...........................................................
Reynolds Metals Company 2,000 105,375
.................................................----------
133,875
- -----------------------------------------------------------
MISCELLANEOUS -- 1.2%
...........................................................
American Coin Merchandising, Inc. # 13,000 76,375
- -----------------------------------------------------------
OIL -- DOMESTIC -- 2.3%
...........................................................
Occidental Petroleum Corporation 2,300 38,813
...........................................................
Pennzoil-Quaker State Company # 1,100 16,294
...........................................................
Valero Energy Corporation 4,100 87,125
.................................................----------
142,232
- -----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
4
<PAGE> 16
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
MID-CAP FUND
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
OIL & GAS DRILLING -- 3.5%
...........................................................
Nuevo Energy Corporation # 3,000 $ 34,500
...........................................................
PennzEnergy Company 1,100 17,944
...........................................................
Triton Energy Limited # 20,400 161,925
.................................................----------
214,369
- -----------------------------------------------------------
PAPER -- 4.4%
...........................................................
Chesapeake Corporation 1,800 66,375
...........................................................
Consolidated Papers, Inc. 3,400 93,500
...........................................................
Louisiana-Pacific Corporation 6,000 109,875
.................................................----------
269,750
- -----------------------------------------------------------
PROFESSIONAL SERVICES -- 0.7%
...........................................................
Olsten Corporation 6,200 45,725
- -----------------------------------------------------------
PUBLISHING -- 2.1%
...........................................................
Playboy Enterprises, Inc. -- Class
A # 2,900 55,463
...........................................................
Playboy Enterprises, Inc. # 3,500 73,281
.................................................----------
128,744
- -----------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS -- 1.8%
...........................................................
Redwood Trust, Inc. 8,000 112,000
- -----------------------------------------------------------
RETAIL -- JEWELRY -- 3.3%
...........................................................
Friedman's Inc. # 19,400 198,850
- -----------------------------------------------------------
RETAIL -- SPECIALTY -- 1.1%
...........................................................
AutoZone, Inc. # 2,000 65,875
- -----------------------------------------------------------
SAVINGS & LOANS -- 2.5%
...........................................................
Charter One Financial, Inc. 2,625 72,844
...........................................................
Washington Federal, Inc. 3,003 80,143
.................................................----------
152,987
- -----------------------------------------------------------
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
STEEL -- 5.5%
...........................................................
AK Steel Holding Corporation 8,300 $ 195,050
...........................................................
USX -- U.S. Steel Group, Inc. 6,100 140,300
.................................................----------
335,350
- -----------------------------------------------------------
TOBACCO -- 5.6%
...........................................................
RJR Nabisco Holdings Corp. 9,000 267,187
...........................................................
Universal Corporation/VA 2,200 77,275
.................................................----------
344,462
- -----------------------------------------------------------
TRANSPORTATION -- AIR -- 0.1%
...........................................................
KLM 75 2,250
- -----------------------------------------------------------
TRUCKING -- 0.8%
...........................................................
Ryder System, Inc. 1,800 46,800
- -----------------------------------------------------------
UTILITY -- ELECTRIC -- 8.3%
...........................................................
CMP Group Inc. 6,500 122,687
...........................................................
GPU, Inc. 4,000 176,750
...........................................................
Illinova Corporation 2,300 57,500
...........................................................
P P & L Resources, Inc. 2,339 65,200
...........................................................
PacifiCorp 1,400 29,487
...........................................................
USEC, Inc. 4,200 58,275
.................................................----------
509,899
- -----------------------------------------------------------
Total common stock
(cost $6,889,454) 5,935,542
- -----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
5
<PAGE> 17
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
MID-CAP FUND
<TABLE>
<CAPTION>
VARIABLE RATE
DEMAND NOTES* Principal
- -- 3.5% Amount Value
- -----------------------------------------------------------
<S> <C> <C>
General Mills, Inc., 5.2337% $167,598 $ 167,598
...........................................................
Pitney Bowes, Inc., 5.2337% 4,623 4,623
...........................................................
Sara Lee Corp., 5.2287% 39,741 39,741
.................................................----------
Total variable rate demand notes 211,962
(cost $211,962)
- -----------------------------------------------------------
Total investments -- 100.5%
(cost $7,101,416) 6,147,504
...........................................................
Liabilities in excess of other
assets -- (0.5%) (27,129)
.................................................----------
$ 6,120,375
Total net assets -- 100.0%
- -----------------------------------------------------------
</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, 1998.
ADR -- American Depository Receipts.
# -- Non-income producing security.
See Notes to the Financial Statements
6
<PAGE> 18
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
SMALL CAP FUND
<TABLE>
<CAPTION>
COMMON STOCK -- 94.9% Shares Value
- ------------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 3.3%
............................................................
Aeroquip-Vickers, Inc. 5,900 $ 176,631
............................................................
AVTEAM, Inc. # 438,200 1,698,025
..................................................----------
1,874,656
- ------------------------------------------------------------
AUTO PARTS -- 0.4%
............................................................
Titan International, Inc. 26,500 251,750
- ------------------------------------------------------------
APPLIANCE & HOUSEHOLD FURNITURE -- 1.9%
............................................................
Hussman International, Inc. 55,800 1,081,125
- ------------------------------------------------------------
CHEMICALS -- 3.4%
............................................................
The Carbide/Graphite Group, Inc.
# 130,900 1,930,775
- ------------------------------------------------------------
COMMERCIAL SERVICES -- 2.1%
............................................................
FirstService Corporation # 101,200 1,208,075
- ------------------------------------------------------------
COMMUNICATION EQUIPMENT/MANUFACTURERS -- 0.2%
............................................................
Princeton Video Image, Inc. # 36,200 108,600
- ------------------------------------------------------------
COMMUNICATIONS & MEDIA -- 1.3%
............................................................
Groupe AB SA ADR # 375,200 726,950
- ------------------------------------------------------------
COMPUTER SYSTEMS -- 8.3%
............................................................
Radisys Corporation # 155,300 4,659,000
- ------------------------------------------------------------
ELECTRONICS -- 3.2%
............................................................
Stoneridge, Inc. # 78,300 1,781,325
- ------------------------------------------------------------
ENTERTAINMENT -- 2.3%
............................................................
Alliance Communications
Corporation Class B # 25,300 415,869
............................................................
Midway Games Inc. 79,000 869,000
..................................................----------
1,284,869
- ------------------------------------------------------------
FINANCE -- MISCELLANEOUS -- 3.3%
............................................................
Executive Risk, Inc. 33,500 1,840,406
- ------------------------------------------------------------
FOOD, BEVERAGE & TOBACCO -- 9.9%
............................................................
Canandaigua Brands, Inc. # 31,000 1,792,187
............................................................
J & J Snack Foods Corporation # 135,700 3,036,288
............................................................
Vlasic Foods International Inc. 31,400 747,713
..................................................----------
5,576,188
- ------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
HEALTHCARE -- MISCELLANEOUS -- 4.7%
............................................................
HealthPlan Services Corporation 227,700 $ 2,618,550
- ------------------------------------------------------------
INSURANCE -- 16.5%
............................................................
ESG Re Limited 218,900 4,432,725
............................................................
FPIC Insurance Group, Inc. # 22,200 1,061,437
............................................................
Scottish Annuity & Life
Holdings, Ltd. # 25,200 346,500
............................................................
Stirling Cooke Brown Holdings
Limited 123,100 2,138,863
............................................................
TIG Holdings, Inc. 83,100 1,293,244
..................................................----------
9,272,769
- ------------------------------------------------------------
MACHINERY -- 4.6%
............................................................
Denison International PLC ADR # 168,000 2,100,000
............................................................
Hawk Corporation Class A # 56,100 469,838
..................................................----------
2,569,838
- ------------------------------------------------------------
MISCELLANEOUS -- 5.0%
............................................................
American Coin Merchandising,
Inc. # 347,000 2,038,625
............................................................
Mac-Gray Corporation # 42,200 480,025
............................................................
Ralcorp Holdings, Inc. # 17,000 310,250
..................................................----------
2,828,900
- ------------------------------------------------------------
OIL EXPLORATION & PRODUCTION -- 0.8%
............................................................
Abraxas Petroleum Corporation # 99,100 433,562
- ------------------------------------------------------------
OIL & GAS DRILLING -- 1.4%
............................................................
Coho Energy, Inc. # 134,000 376,875
............................................................
Nuevo Energy Company # 36,000 414,000
..................................................----------
790,875
- ------------------------------------------------------------
PUBLISHING -- 5.3%
............................................................
Playboy Enterprises, Inc. Class
A # 35,500 678,938
............................................................
Playboy Enterprises, Inc. # 108,700 2,275,906
..................................................----------
2,954,844
- ------------------------------------------------------------
RETAIL -- APPAREL -- 3.0%
............................................................
Payless ShoeSource, Inc. # 35,200 1,667,600
- ------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
7
<PAGE> 19
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
SMALL CAP FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
RETAIL -- JEWELRY -- 4.2%
............................................................
Friedman's, Inc. # 229,400 $ 2,351,350
- ------------------------------------------------------------
SOFTWARE -- 4.6%
............................................................
Vanstar Corporation # 278,200 2,573,350
- ------------------------------------------------------------
TRANSPORTATION -- AIR FREIGHT -- 2.2%
............................................................
AirNet Systems, Inc. # 85,200 1,224,750
- ------------------------------------------------------------
UTILITY -- ELECTRIC -- 3.0%
............................................................
CMP Group Inc. 89,300 1,685,537
- ------------------------------------------------------------
Total common stocks (cost $70,116,222) 53,295,644
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
Total investments -- 94.9%
(cost $70,116,222) $53,295,644
............................................................
Other assets in excess of
liabilities -- 5.1% 2,863,405
..................................................----------
$56,159,049
Total net assets -- 100.0%
- ------------------------------------------------------------
</TABLE>
ADR -- American Depository Receipts.
# -- Non-income producing security.
See Notes to the Financial Statements
8
<PAGE> 20
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 96.9% Shares Value
- ------------------------------------------------------------
AUSTRALIA -- 3.5%
- ------------------------------------------------------------
BANKS -- 2.0%
............................................................
Australia and New Zealand
Banking Group, Ltd. 4,209,045 $ 27,574,899
- ------------------------------------------------------------
BUILDING MATERIALS -- 1.5%
............................................................
Pioneer International, Ltd. 9,988,357 21,138,407
...............................................-------------
48,713,306
Total Australia
- ------------------------------------------------------------
AUSTRIA -- 0.5%
- ------------------------------------------------------------
STEEL -- 0.5%
............................................................
Boehler -- Uddeholm AG 153,590 7,148,404
...............................................-------------
7,148,404
Total Austria
- ------------------------------------------------------------
CANADA -- 3.5%
- ------------------------------------------------------------
BANKS -- 1.3%
............................................................
Canadian Imperial Bank of
Commerce 705,092 17,443,682
- ------------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 1.2%
............................................................
Imasco, Ltd. 804,800 17,133,437
- ------------------------------------------------------------
FOREST PRODUCTS & PAPER -- 0.1%
............................................................
Nexfor, Inc. 465,386 1,833,063
- ------------------------------------------------------------
METALS & MINERALS -- 0.8%
............................................................
Noranda, Inc. 1,067,399 10,597,549
- ------------------------------------------------------------
OIL EXPLORATION & PRODUCTION -- 0.1%
............................................................
Canadian Hunter Exploration
Ltd. # 266,850 1,737,303
...............................................-------------
48,745,034
Total Canada
- ------------------------------------------------------------
FINLAND -- 2.1%
- ------------------------------------------------------------
FOREST PRODUCTS & PAPER -- 2.1%
............................................................
Metra OYJ 336,011 5,836,481
............................................................
UPM-Kymmene OYJ 856,030 23,993,425
...............................................-------------
29,829,906
Total Finland
- ------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
FRANCE -- 9.5%
- ------------------------------------------------------------
BANKS -- 3.2%
............................................................
Banque Nationale de Paris 294,965 $ 24,286,328
............................................................
Societe Generale 126,870 20,542,452
...............................................-------------
44,828,780
- ------------------------------------------------------------
BEVERAGES -- 1.5%
............................................................
Pernod Ricard SA 315,848 20,513,016
- ------------------------------------------------------------
BUILDING MATERIALS -- 1.6%
............................................................
Lafarge SA 239,177 22,722,635
- ------------------------------------------------------------
CONSUMER DURABLES -- MISCELLANEOUS -- 0.7%
............................................................
Societe BIC SA 173,206 9,606,593
- ------------------------------------------------------------
OIL -- INTERNATIONAL -- 2.5%
............................................................
Elf Aquitaine SA 171,960 19,874,889
............................................................
Total SA 151,543 15,346,066
...............................................-------------
35,220,955
...............................................-------------
132,891,979
Total France
- ------------------------------------------------------------
GERMANY -- 6.6%
- ------------------------------------------------------------
BANKS -- 1.1%
............................................................
Commerzbank AG 502,070 15,876,832
- ------------------------------------------------------------
BUILDING MATERIALS -- 1.5%
............................................................
Dyckerhoff AG 45,200 12,530,528
............................................................
Friedrich Grohe AG 32,968 8,704,308
...............................................-------------
21,234,836
- ------------------------------------------------------------
CHEMICALS -- 1.4%
............................................................
Bayer AG 343,116 14,319,474
............................................................
SGL Carbon AG 77,597 4,656,224
...............................................-------------
18,975,698
- ------------------------------------------------------------
CONSUMER DURABLES -- MISCELLANEOUS -- 0.9%
............................................................
Buderus AG 36,315 13,227,071
- ------------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 1.7%
............................................................
VEBA AG 385,012 23,033,417
...............................................-------------
92,347,854
Total Germany
- ------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
9
<PAGE> 21
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
HONG KONG -- 5.2%
- ------------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 0.5%
............................................................
Jardine Matheson Holdings,
Ltd. 2,780,600 $ 7,173,948
- ------------------------------------------------------------
METALS & MINING -- 0.3%
............................................................
Yanzhou Coal Mining Co., Ltd.
# 21,746,000 3,648,987
- ------------------------------------------------------------
PRINTING & PUBLISHING -- 1.2%
............................................................
South China Morning Post
(Holdings), Ltd. 32,175,000 16,508,413
- ------------------------------------------------------------
REAL ESTATE DEVELOPMENT -- 2.2%
............................................................
Hang Lung Development Company 12,633,000 13,534,251
............................................................
New World Development Co.,
Ltd. 7,124,000 17,931,150
...............................................-------------
31,465,401
- ------------------------------------------------------------
UTILITY -- ELECTRIC -- 1.0%
............................................................
Swire Pacific Ltd. - Class A 3,071,300 13,756,291
...............................................-------------
72,553,040
Total Hong Kong
- ------------------------------------------------------------
IRELAND -- 2.7%
- ------------------------------------------------------------
FOOD PRODUCERS -- 1.1%
............................................................
Greencore Group PLC 3,550,900 16,403,414
- ------------------------------------------------------------
PAPER -- 1.6%
............................................................
Jefferson Smurfit Group PLC 12,320,265 22,214,653
...............................................-------------
38,618,067
Total Ireland
- ------------------------------------------------------------
ITALY -- 3.6%
- ------------------------------------------------------------
OIL EXPLORATION & PRODUCTION -- 1.6%
............................................................
ENI SPA 3,413,424 22,344,373
- ------------------------------------------------------------
TELECOMMUNICATIONS -- 2.0%
............................................................
Telecom Italia SPA 2,825,900 24,150,720
............................................................
Telecom Italia SPA -- RNC 586,000 3,693,900
...............................................-------------
27,844,620
...............................................-------------
50,188,993
Total Italy
- ------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------
Shares Value
<S> <C> <C>
JAPAN -- 8.3%
- ------------------------------------------------------------
ELECTRONIC COMPONENTS -- 1.8%
............................................................
Nintendo Co., Ltd. 263,800 $ 25,608,267
- ------------------------------------------------------------
ELECTRONICS -- 2.7%
............................................................
Kyocera Corporation 428,700 22,689,196
............................................................
Nichicon Corporation 1,168,000 14,600,013
...............................................-------------
37,289,209
- ------------------------------------------------------------
FINANCIAL SERVICES -- 2.0%
............................................................
Promise Company, Ltd. 541,300 28,216,727
- ------------------------------------------------------------
LEISURE -- TOYS -- 1.4%
............................................................
NAMCO, Ltd. 963,300 19,385,576
- ------------------------------------------------------------
REAL ESTATE DEVELOPMENT -- 0.3%
............................................................
Daito Trust Construction Co.,
Ltd. 487,019 4,226,880
- ------------------------------------------------------------
STEEL -- 0.1%
............................................................
Yodogawa Steel Works 381,000 1,438,884
...............................................-------------
116,165,543
Total Japan
- ------------------------------------------------------------
NETHERLANDS -- 9.4%
- ------------------------------------------------------------
BANKS -- 1.0%
............................................................
ABN AMRO Holding N.V 711,820 14,973,833
- ------------------------------------------------------------
CHEMICALS -- 1.7%
............................................................
Akzo Nobel N.V 519,266 23,644,041
- ------------------------------------------------------------
ELECTRONICS -- 1.6%
............................................................
Koninklijke (Royal) Philips
Electronics N.V 329,780 22,128,937
- ------------------------------------------------------------
INSURANCE -- MULTI-LINE -- 3.4%
............................................................
Fortis (NL) N.V 242,471 20,092,552
............................................................
ING Groep N.V 454,936 27,740,960
...............................................-------------
47,833,512
- ------------------------------------------------------------
TELECOMMUNICATIONS -- 1.5%
............................................................
Koninklijke KPN N.V 421,830 21,116,941
- ------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
10
<PAGE> 22
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
TRANSPORTATION SERVICES -- 0.2%
............................................................
TNT Post Group N.V. # 91,470 $ 2,947,133
...............................................-------------
132,644,397
Total Netherlands
- ------------------------------------------------------------
NORWAY -- 1.5%
- ------------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 0.4%
............................................................
Kvaerner PLC -- Class A 315,595 6,213,315
- ------------------------------------------------------------
PHARMACEUTICALS & HEALTHCARE -- 1.1%
............................................................
Nycomed Amersham 2,172,315 15,111,261
...............................................-------------
21,324,576
Total Norway
- ------------------------------------------------------------
SINGAPORE -- 2.4%
- ------------------------------------------------------------
COMPUTERS -- 2.4%
............................................................
Creative Technology, Ltd. # 2,219,300 33,289,500
...............................................-------------
33,289,500
Total Singapore
- ------------------------------------------------------------
SPAIN -- 2.4%
- ------------------------------------------------------------
BANKS -- 1.0%
............................................................
Banco Santander SA 706,740 14,057,630
- ------------------------------------------------------------
TELECOMMUNICATIONS -- 1.4%
............................................................
Telefonica de Espana S.A. 435,543 19,384,907
............................................................
Telefonica de Espana S.A. --
Bonus Rights # 435,543 387,084
...............................................-------------
19,771,991
...............................................-------------
33,829,621
Total Spain
- ------------------------------------------------------------
SWEDEN -- 1.6%
- ------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 1.6%
............................................................
Electrolux AB - Class B 1,313,650 22,607,784
...............................................-------------
22,607,784
Total Sweden
- ------------------------------------------------------------
SWITZERLAND -- 8.6%
- ------------------------------------------------------------
BUILDING MATERIALS -- 0.5%
............................................................
Sarna Kunststoff Holding AG
"registered" 5,080 7,304,696
- ------------------------------------------------------------
FOOD PRODUCERS -- 1.5%
............................................................
Nestle SA "registered" 9,872 21,490,557
- ------------------------------------------------------------
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
INSURANCE -- 1.6%
............................................................
Schweizerische
Rueckversicherungs-
Gesellschaft "registered" 8,538 $ 22,260,341
- ------------------------------------------------------------
MACHINERY & EQUIPMENT -- 2.4%
............................................................
SIG Schweizerische
Industrie - Gesellschaft
Holding 21,432 12,639,185
............................................................
Sulzer AG "registered" 35,465 21,586,269
...............................................-------------
34,225,454
- ------------------------------------------------------------
MEDICAL PRODUCTS & SUPPLIES -- 2.6%
............................................................
Novartis AG "registered" 18,211 35,798,835
...............................................-------------
121,079,883
Total Switzerland
- ------------------------------------------------------------
UNITED KINGDOM -- 25.5%
- ------------------------------------------------------------
AUTOS -- 0.9%
............................................................
Lex Service PLC 2,006,000 12,750,283
- ------------------------------------------------------------
BANKS -- 4.3%
............................................................
Lloyds TSB Group PLC 2,139,836 30,370,717
............................................................
National Westminster Bank PLC 1,535,321 29,582,391
...............................................-------------
59,953,108
- ------------------------------------------------------------
BUILDING MATERIALS -- 2.3%
............................................................
Hanson PLC 4,012,587 31,730,149
- ------------------------------------------------------------
CHEMICALS -- 2.9%
............................................................
BOC Group PLC 1,308,479 19,159,094
............................................................
Laporte PLC 2,793,563 21,660,572
...............................................-------------
40,819,666
- ------------------------------------------------------------
DIVERSIFIED -- 1.3%
............................................................
Cookson Group PLC 8,660,100 18,732,329
- ------------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 3.9%
............................................................
BTR PLC 5,819,190 11,909,490
............................................................
Tomkins PLC 6,044,093 28,460,538
............................................................
Williams PLC 2,351,725 13,206,442
...............................................-------------
53,576,470
- ------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
11
<PAGE> 23
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Shares Value
- ------------------------------------------------------------
<S> <C> <C>
ENGINEERING & CONSTRUCTION -- 1.5%
............................................................
TI Group PLC 3,889,706 $ 20,985,643
- ------------------------------------------------------------
FOOD & BEVERAGES -- 1.4%
............................................................
Allied Domecq PLC 2,141,964 19,477,260
- ------------------------------------------------------------
FOOD PRODUCERS -- 0.7%
............................................................
Hillsdown Holdings PLC 7,857,187 9,935,877
- ------------------------------------------------------------
INSURANCE -- 2.9%
............................................................
Allied Zurich AG PLC # 1,284,144 19,219,426
............................................................
CGU PLC 1,411,615 22,066,760
...............................................-------------
41,286,186
- ------------------------------------------------------------
MEDICAL PRODUCTS & SUPPLIES -- 0.6%
............................................................
Medeva PLC 5,075,970 8,952,626
- ------------------------------------------------------------
RETAIL -- FOOD CHAINS -- 0.9%
............................................................
Safeway PLC 2,502,850 12,483,016
- ------------------------------------------------------------
TOBACCO -- 0.9%
............................................................
B.A.T. Industries PLC 1,393,564 12,370,489
- ------------------------------------------------------------
UTILITY -- ELECTRIC -- 1.0%
............................................................
Powergen PLC 1,080,000 14,232,280
...............................................-------------
357,285,382
Total United Kingdom
...............................................-------------
Total common stocks (cost 1,359,263,269
$1,262,403,665)
- ------------------------------------------------------------
<CAPTION>
SHORT-TERM INVESTMENTS Principal
- -- 3.8% Amount Value
- -----------------------------------------------------------
<S> <C> <C>
COMMERCIAL
PAPER -- 3.5%
- -----------------------------------------------------------
Countrywide Home Loans, Inc.
5.50%, 1/04/1999 $ 9,000,000 $ 8,995,875
...........................................................
Finova Capital Corporation
6.40%, 1/04/1999 40,000,000 39,978,667
..............................................
-------------
48,974,542
- -----------------------------------------------------------
CASH EQUIVALENTS -- 0.3%
- -----------------------------------------------------------
Vista Institutional Prime
Money Market Fund 3,852,241 3,852,241
- -----------------------------------------------------------
Total short-term investments
(cost $52,826,783) 52,826,783
- -----------------------------------------------------------
Total investments -- 100.7%
(cost $1,315,230,448) 1,412,090,052
...........................................................
Liabilities in excess of
other assets -- (0.7)% (9,872,698)
..............................................
-------------
Total net assets -- 100.0% $1,402,217,354
- -----------------------------------------------------------
</TABLE>
# Non-income producing security.
See Notes to the Financial Statements
12
<PAGE> 24
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
COMMON STOCKS --97.6% Shares Value
- -----------------------------------------------------------
<S> <C> <C>
AUSTRALIA -- 2.4%
- -----------------------------------------------------------
BANKS -- 1.6%
...........................................................
Australia and New Zealand Banking
Group, Ltd. 16,940 $ 110,980
- -----------------------------------------------------------
DIVERSIFIED COMPANIES -- 0.8%
...........................................................
Reinsurance Australia Corporation,
Ltd. 39,233 60,190
..................................................---------
171,170
Total Australia
- -----------------------------------------------------------
CANADA -- 1.0%
- -----------------------------------------------------------
FOREST PRODUCTS & PAPER -- 0.1%
...........................................................
Nexfor, Inc. 2,361 9,299
- -----------------------------------------------------------
METALS & MINERALS -- 0.8%
...........................................................
Noranda, Inc. 5,415 53,762
- -----------------------------------------------------------
OIL EXPLORATION & PRODUCTION -- 0.1%
...........................................................
Canadian Hunter Exploration Ltd. # 1,354 8,814
..................................................---------
71,875
Total Canada
- -----------------------------------------------------------
FINLAND -- 0.6%
- -----------------------------------------------------------
FOREST PRODUCTS & PAPER -- 0.6%
...........................................................
Metra OYJ 2,651 46,048
..................................................---------
46,048
Total Finland
- -----------------------------------------------------------
FRANCE -- 5.8%
- -----------------------------------------------------------
BANKS -- 2.4%
...........................................................
Banque Nationale de Paris 820 67,516
...........................................................
Societe Generale 625 101,198
..................................................---------
168,714
- -----------------------------------------------------------
BEVERAGES -- 1.1%
...........................................................
Pernod Ricard SA 1,200 77,935
- -----------------------------------------------------------
BUILDING MATERIALS -- 1.6%
...........................................................
Lafarge SA 1,202 114,194
- -----------------------------------------------------------
OIL -- INTERNATIONAL -- 0.7%
...........................................................
Total SA 514 52,050
..................................................---------
412,893
Total France
- -----------------------------------------------------------
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
GERMANY -- 3.8%
- -----------------------------------------------------------
BANKS -- 1.1%
...........................................................
Commerzbank AG 2,500 $ 79,057
- -----------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 1.6%
...........................................................
VEBA AG 1,880 112,471
- -----------------------------------------------------------
MEDICAL PRODUCTS -- 1.1%
...........................................................
Draegerwerk AG 4,985 80,764
..................................................---------
272,292
Total Germany
- -----------------------------------------------------------
HONG KONG -- 4.1%
- -----------------------------------------------------------
BANKS -- 1.6%
...........................................................
Dao Heng Bank Group, Ltd. 38,000 117,473
- -----------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 0.5%
...........................................................
Jardine Matheson Holdings, Ltd. 14,000 36,120
- -----------------------------------------------------------
REAL ESTATE DEVELOPMENT -- 1.2%
...........................................................
New World Development Co., Ltd. 33,000 83,061
- -----------------------------------------------------------
RETAIL -- SPECIALTY -- 0.8%
...........................................................
Dickson Concepts International, Ltd. 73,500 56,923
..................................................---------
293,577
Total Hong Kong
- -----------------------------------------------------------
IRELAND -- 2.1%
- -----------------------------------------------------------
PAPER -- 2.1%
...........................................................
Jefferson Smurfit Group PLC 84,440 152,254
..................................................---------
152,254
Total Ireland
- -----------------------------------------------------------
ITALY -- 2.9%
- -----------------------------------------------------------
OIL EXPLORATION & PRODUCTION -- 1.1%
...........................................................
ENI SPA 12,000 78,552
- -----------------------------------------------------------
TELECOMMUNICATIONS -- 1.8%
...........................................................
Telecom Italia SPA 12,300 105,118
...........................................................
Telecom Italia SPA -- RNC 3,425 21,590
..................................................---------
126,708
..................................................---------
205,260
Total Italy
- -----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
13
<PAGE> 25
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
JAPAN -- 8.7%
- -----------------------------------------------------------
AUTO PARTS -- 0.9%
...........................................................
NIFCO, Inc. 8,000 $ 64,610
- -----------------------------------------------------------
ELECTRONIC COMPONENTS -- 1.6%
...........................................................
Nintendo Co., Ltd. 1,200 116,489
- -----------------------------------------------------------
ELECTRONICS -- 3.0%
...........................................................
Kyocera Corporation 2,200 116,436
...........................................................
Nichicon Corporation 8,000 100,000
..................................................---------
216,436
- -----------------------------------------------------------
FINANCAL SERVICES -- 1.8%
...........................................................
Promise Company, Ltd. 2,500 130,319
- -----------------------------------------------------------
LEISURE/TOYS -- 1.4%
...........................................................
NAMCO, Ltd. 4,900 98,608
..................................................---------
626,462
Total Japan
- -----------------------------------------------------------
NETHERLANDS -- 7.6%
- -----------------------------------------------------------
BANKS -- 1.1%
...........................................................
ABN AMRO Holding N.V. 3,585 75,414
- -----------------------------------------------------------
CHEMICALS -- 1.5%
...........................................................
Akzo Nobel N.V. 2,420 110,191
- -----------------------------------------------------------
ELECTRONICS -- 1.4%
...........................................................
Koninklijke (Royal) Philips
Electronics N.V. 1,460 97,969
- -----------------------------------------------------------
INSURANCE -- MULTI-LINE -- 1.9%
...........................................................
ING Groep N.V. 2,255 137,505
- -----------------------------------------------------------
TELECOMMUNICATIONS -- 0.9%
...........................................................
Koninklijke KPN N.V. 1,300 65,078
- -----------------------------------------------------------
TRANSPORTATION -- SERVICES -- 0.8%
...........................................................
TNT Post Group N.V. # 1,845 59,445
..................................................---------
545,602
Total Netherlands
- -----------------------------------------------------------
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
NEW ZEALAND -- 1.5%
- -----------------------------------------------------------
BUILDING MATERIALS -- 1.5%
...........................................................
Fletcher Challenge Building 69,015 $ 106,833
..................................................---------
106,833
Total New Zealand
- -----------------------------------------------------------
NORWAY -- 0.8%
- -----------------------------------------------------------
MEDICAL PRODUCTS & SUPPLIES -- 0.8%
...........................................................
Nycomed Amersham 7,805 54,294
..................................................---------
54,294
Total Norway
- -----------------------------------------------------------
SINGAPORE -- 2.3%
- -----------------------------------------------------------
COMPUTERS -- 2.3%
...........................................................
Creative Technology, Ltd. # 11,200 168,000
..................................................---------
168,000
Total Singapore
- -----------------------------------------------------------
SPAIN -- 1.7%
- -----------------------------------------------------------
TELECOMMUNICATIONS -- 1.7%
...........................................................
Telefonica de Espana S.A. 2,690 119,725
...........................................................
Telefonica de Espana S.A. -- Bonus
Rights # 2,690 2,391
..................................................---------
122,116
Total Spain
- -----------------------------------------------------------
SWEDEN -- 1.6%
- -----------------------------------------------------------
ELECTRICAL EQUIPMENT -- 1.6%
...........................................................
Electrolux AB -- Class B 6,675 114,876
..................................................---------
114,876
Total Sweden........................
- -----------------------------------------------------------
SWITZERLAND -- 7.7%
- -----------------------------------------------------------
BUILDING MATERIALS -- 1.4%
...........................................................
Forbo Holding AG "registered" 224 97,852
- -----------------------------------------------------------
FOOD PRODUCERS -- 1.1%
...........................................................
Nestle SA "registered" 38 82,723
- -----------------------------------------------------------
INSURANCE -- 1.6%
...........................................................
Schweizerische Rueckversicherungs-
Gesellschaft "registered" 44 114,717
- -----------------------------------------------------------
MACHINERY & EQUIPMENT -- 1.0%
...........................................................
SIG Schweizerische
Industrie-Gesellschaft Holding 126 74,307
- -----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
14
<PAGE> 26
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
MEDICAL PRODUCTS & SUPPLIES -- 2.6%
...........................................................
Novartis AG "registered" 94 $ 184,783
..................................................---------
554,382
Total Switzerland
- -----------------------------------------------------------
UNITED KINGDOM -- 18.4%
- -----------------------------------------------------------
APPAREL & TEXTILES -- 1.0%
...........................................................
Coats Viyella PLC 154,380 69,355
- -----------------------------------------------------------
BANKS -- 3.7%
...........................................................
Lloyds TSB Group PLC 8,892 126,204
...........................................................
National Westminster Bank PLC 7,150 137,765
..................................................---------
263,969
- -----------------------------------------------------------
BUILDING MATERIALS -- 1.8%
...........................................................
Hanson PLC 16,430 129,923
- -----------------------------------------------------------
DIVERSIFIED -- 0.8%
...........................................................
Cookson Group PLC 27,000 58,403
- -----------------------------------------------------------
DIVERSIFIED INDUSTRIALS -- 3.6%
...........................................................
BTR PLC 20,837 42,645
...........................................................
Elementis PLC 55,010 76,428
...........................................................
Tomkins PLC 29,832 140,474
..................................................---------
259,547
- -----------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 1.2%
...........................................................
TI Group PLC 16,090 86,808
- -----------------------------------------------------------
FOOD & BEVERAGES -- 1.4%
...........................................................
Allied Domecq PLC 11,210 101,935
- -----------------------------------------------------------
INSURANCE -- 2.6%
...........................................................
Allied Zurich AG PLC # 5,870 87,855
...........................................................
CGU PLC 6,340 99,109
..................................................---------
186,964
- -----------------------------------------------------------
MEDICAL PRODUCTS & SUPPLIES -- 0.6%
...........................................................
Medeva PLC 25,878 45,642
- -----------------------------------------------------------
TOBACCO -- 0.9%
...........................................................
B.A.T. Industries PLC 7,230 64,180
- -----------------------------------------------------------
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
UTILITY -- ELECTRIC -- 0.8%
...........................................................
Powergen PLC 4,400 $ 57,983
..................................................---------
1,324,709
Total United Kingdom
- -----------------------------------------------------------
UNITED STATES -- 24.6%
- -----------------------------------------------------------
AEROSPACE -- 1.1%
...........................................................
Northrop Grumman Corporation 1,100 80,438
- -----------------------------------------------------------
AUTO PARTS -- 1.0%
...........................................................
Dana Corporation 1,800 73,575
- -----------------------------------------------------------
AUTOS & TRUCKS -- 1.0%
...........................................................
Ford Motor Company 1,260 73,946
- -----------------------------------------------------------
BANKS -- 1.5%
...........................................................
Bank One Corporation 2,106 107,538
- -----------------------------------------------------------
BUILDING & FOREST PRODUCTS -- 1.0%
...........................................................
Weyerhaeuser Company 1,450 73,678
- -----------------------------------------------------------
CONGLOMERATES -- 1.1%
...........................................................
Tenneco, Inc. 2,400 81,750
- -----------------------------------------------------------
FINANCIAL SERVICES -- 1.2%
...........................................................
Household International, Inc. 2,210 87,571
- -----------------------------------------------------------
INSURANCE -- 1.1%
...........................................................
Safeco Corporation 1,800 77,288
- -----------------------------------------------------------
MACHINERY -- 1.2%
...........................................................
New Holland N.V. 6,220 85,136
- -----------------------------------------------------------
METALS & MINING -- 1.0%
...........................................................
Alcoa, Inc. 1,000 74,563
- -----------------------------------------------------------
OIL -- DOMESTIC -- 1.9%
...........................................................
Occidental Petroleum Corporation 3,400 57,375
...........................................................
Phillips Petroleum Company 1,840 78,430
..................................................---------
135,805
- -----------------------------------------------------------
PHOTOGRAPHY & OPTICAL -- 1.4%
...........................................................
Eastman Kodak Company 1,400 100,800
- -----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
15
<PAGE> 27
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
Shares Value
- -----------------------------------------------------------
<S> <C> <C>
RETAIL -- SPECIALTY APPAREL -- 1.1%
...........................................................
The Limited, Inc. 2,600 $ 75,725
- -----------------------------------------------------------
SAVINGS & LOANS -- 1.1%
...........................................................
Fannie Mae 1,050 77,700
- -----------------------------------------------------------
TOBACCO -- 2.2%
...........................................................
Philip Morris Companies, Inc. 2,905 155,418
- -----------------------------------------------------------
UTILITY -- ELECTRIC -- 1.8%
...........................................................
GPU, Inc. 1,590 70,258
...........................................................
Texas Utilities Company 1,200 56,025
..................................................---------
126,283
- -----------------------------------------------------------
UTILITY -- TELEPHONE -- 3.9%
...........................................................
AT&T Corporation 1,300 97,825
...........................................................
ALLTEL Corporation 1,800 107,663
...........................................................
GTE Corporation 1,200 78,000
..................................................---------
283,488
..................................................---------
1,770,702
Total United States
- -----------------------------------------------------------
Total common stock--
(cost $6,838,232) 7,013,345
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
CASH EQUIVALENTS -- 1.2% Amount Value
- -----------------------------------------------------------
<S> <C> <C>
Chase Bank Domestic Liquidity Fund
(cost $89,741) $ 89,741 $ 89,741
- -----------------------------------------------------------
Total investments -- 98.8%
(cost $6,927,973) 7,103,086
...........................................................
Other assets in excess of
liabilities -- 1.2% 83,568
..................................................
---------
Total net assets -- 100.0% $7,186,654
- -----------------------------------------------------------
</TABLE>
# Non-income producing security.
See Notes to the Financial Statements
16
<PAGE> 28
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
COMMON STOCKS -- 44.0% Shares Value
- ----------------------------------------------------------
<S> <C> <C>
AEROSPACE -- 2.4%
..........................................................
Lockheed Martin Corporation 8,800 $ 745,800
..........................................................
Northrop Grumman Corporation 17,000 1,243,125
..........................................................
Rockwell International Corporation 11,400 553,613
................................................----------
2,542,538
- ----------------------------------------------------------
APPAREL & TEXTILES -- 0.3%
..........................................................
Russell Corporation 17,500 355,469
- ----------------------------------------------------------
AUTO PARTS -- 0.9%
..........................................................
Dana Corporation 17,300 707,137
..........................................................
Meritor Automotive, Inc. 1 21
..........................................................
TRW Inc. 4,300 241,606
................................................----------
948,764
- ----------------------------------------------------------
AUTOS & TRUCKS -- 2.8%
..........................................................
Ford Motor Company 26,000 1,525,875
..........................................................
General Motors Corporation 21,300 1,524,281
................................................----------
3,050,156
- ----------------------------------------------------------
BANKS -- 2.4%
..........................................................
Bank One Corporation 20,176 1,030,237
..........................................................
First Union Corporation 13,700 833,131
..........................................................
Washington Mutual, Inc. 17,500 668,281
................................................----------
2,531,649
- ----------------------------------------------------------
BEVERAGES -- 0.7%
..........................................................
Anheuser-Busch Companies, Inc. 11,400 748,125
- ----------------------------------------------------------
BUILDING & FOREST PRODUCTS -- 1.3%
..........................................................
Georgia-Pacific (Timber Group) 14,500 345,281
..........................................................
Weyerhaeuser Company 19,900 1,011,169
................................................----------
1,356,450
- ----------------------------------------------------------
<CAPTION>
Shares Value
- ----------------------------------------------------------
<S> <C> <C>
CHEMICALS -- 1.3%
..........................................................
The Dow Chemical Company 9,000 $ 818,437
..........................................................
Eastman Chemical Company 10,800 483,300
..........................................................
Millennium Chemicals, Inc. 2,042 40,585
................................................----------
1,342,322
- ----------------------------------------------------------
CONGLOMERATES -- 0.9%
..........................................................
Tenneco, Inc. 29,200 994,625
- ----------------------------------------------------------
CONSUMER PRODUCTS -- 0.2%
..........................................................
Tupperware Corporation 13,400 220,263
- ----------------------------------------------------------
ENGINEERING & CONSTRUCTION -- 0.5%
..........................................................
Harsco Corporation 15,800 480,913
- ----------------------------------------------------------
FINANCIAL SERVICES -- 1.1%
..........................................................
Associates First Capital
Corporation -- Class A 5,600 237,300
..........................................................
Household International, Inc. 13,000 515,125
..........................................................
Transamerica Corporation 3,400 392,700
................................................----------
1,145,125
- ----------------------------------------------------------
HEALTHCARE -- DRUGS -- 0.2%
..........................................................
American Home Products Corporation 800 45,050
..........................................................
Bristol Myers Squibb Company 1,500 200,719
................................................----------
245,769
- ----------------------------------------------------------
HEALTHCARE -- MEDICAL PRODUCTS -- 0.2%
..........................................................
Baxter International, Inc. 2,600 167,212
- ----------------------------------------------------------
HOUSEHOLD FURNISHINGS & APPLIANCES -- 0.8%
..........................................................
Whirlpool Corporation 15,400 852,775
- ----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
17
<PAGE> 29
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Shares Value
- ----------------------------------------------------------
<S> <C> <C>
INSURANCE -- 3.2%
..........................................................
American General Corporation 9,300 $ 725,400
..........................................................
Harleysville Group, Inc. 17,000 438,813
..........................................................
Lincoln National Corporation 7,000 572,687
..........................................................
Safeco Corporation 17,000 729,938
..........................................................
St. Paul Companies, Inc. 16,200 562,950
..........................................................
TIG Holdings, Inc. 27,800 432,637
..................... ...................... ----------
3,462,425
- ----------------------------------------------------------
LEISURE/TOYS -- 0.4%
..........................................................
Fortune Brands, Inc. 15,200 480,700
- ----------------------------------------------------------
MACHINERY -- 0.8%
..........................................................
Deere & Company 1,400 46,375
..........................................................
New Holland N.V 55,500 759,656
..................... ...................... ----------
806,031
- ----------------------------------------------------------
METALS & MINING -- 1.9%
..........................................................
Alcoa, Inc. 12,300 917,119
..........................................................
Phelps Dodge Corporation 9,700 493,487
..........................................................
Reynolds Metals Company 12,100 637,519
..................... ...................... ----------
2,048,125
- ----------------------------------------------------------
OIL-DOMESTIC -- 2.9%
..........................................................
Atlantic Richfield Company 7,000 456,750
..........................................................
Occidental Petroleum Corporation 30,900 521,438
..........................................................
Phillips Petroleum Company 26,000 1,108,250
..........................................................
Texaco Inc. 1,300 68,738
..........................................................
USX-Marathon Group, Inc. 18,600 560,325
..........................................................
Ultramar Diamond Shamrock
Corporation 16,700 404,975
..................... ...................... ----------
3,120,476
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Shares Value
- ----------------------------------------------------------
<S> <C> <C>
PAPER -- 1.7%
..........................................................
Georgia-Pacific Group 8,600 $ 503,637
..........................................................
International Paper Company 15,200 681,150
..........................................................
Union Camp Corporation 10,100 681,750
..................... ...................... ----------
1,866,537
- ----------------------------------------------------------
PHOTOGRAPHY & OPTICAL -- 0.7%
..........................................................
Eastman Kodak Company 10,400 748,800
- ----------------------------------------------------------
POLLUTION CONTROL -- 0.9%
..........................................................
Browning-Ferris Industries, Inc. 13,300 378,219
..........................................................
Waste Management, Inc. 12,300 573,488
..................... ...................... ----------
951,707
- ----------------------------------------------------------
RAILROADS -- 1.1%
..........................................................
CSX Corporation 9,700 402,550
..........................................................
Norfolk Southern Corporation 26,000 823,875
..................... ...................... ----------
1,226,425
- ----------------------------------------------------------
RETAIL -- 1.6%
..........................................................
Intimate Brands, Inc. 12,500 373,437
..........................................................
J.C. Penney Company, Inc. 9,400 440,625
..........................................................
May Department Stores Company 9,000 543,375
..........................................................
Sears, Roebuck & Company 9,500 403,750
..................... ...................... ----------
1,761,187
- ----------------------------------------------------------
SAVINGS & LOAN -- 1.0%
..........................................................
Fannie Mae 15,000 1,110,000
- ----------------------------------------------------------
STEEL -- 0.7%
..........................................................
USX-U.S. Steel Group, Inc. 33,700 775,100
- ----------------------------------------------------------
TOBACCO -- 2.0%
..........................................................
Philip Morris Companies, Inc. 39,700 2,123,950
- ----------------------------------------------------------
TRUCKING -- 0.1%
..........................................................
Ryder System, Inc. 5,300 137,800
- ----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
18
<PAGE> 30
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Shares Value
- ----------------------------------------------------------
<S> <C> <C>
UTILITY-ELECTRIC -- 5.5%
..........................................................
CMS Energy Corporation 6,400 $ 310,000
..........................................................
Central & South West Corporation 16,600 455,462
..........................................................
DTE Energy Company 13,800 591,675
..........................................................
Edison International 22,400 624,400
..........................................................
Entergy Corporation 8,900 277,012
..........................................................
GPU, Inc. 6,700 296,056
..........................................................
Illinova Corporation 30,300 757,500
..........................................................
PECO Energy Company 16,100 670,162
..........................................................
P P & L Resources, Inc. 11,500 320,562
..........................................................
PacifiCorp 14,400 303,300
..........................................................
Public Service Enterprises Group,
Inc. 8,100 324,000
..........................................................
SCANA Corporation 16,600 535,350
..........................................................
Texas Utilities Company 6,300 294,131
..........................................................
USEC, Inc. 7,940 110,217
..................... ...................... ----------
5,869,827
- ----------------------------------------------------------
UTILITY -- GAS PIPELINE -- 0.2%
..........................................................
Peoples Energy Corporation 5,000 199,375
- ----------------------------------------------------------
UTILITY -- TELEPHONE -- 3.3%
..........................................................
AT&T Corporation 13,300 1,000,825
..........................................................
ALLTEL Corporation 11,200 669,900
..........................................................
Bell Atlantic Corporation 14,500 768,500
..........................................................
GTE Corporation 4,500 292,500
..........................................................
SBC Communications, Inc. 14,900 799,012
..................... ...................... ----------
3,530,737
- ----------------------------------------------------------
Total common stocks (cost
$41,201,351) 47,201,357
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CORPORATE BONDS Principal
- -- 16.2% Amount Value
- ----------------------------------------------------------
<S> <C> <C>
BANKS -- 1.4%
..........................................................
MBNA Corporation, 5.5693%,
6/17/2002 # $ 1,500,000 $ 1,490,805
- ----------------------------------------------------------
EUROBANKS -- 5.5%
..........................................................
Foreningsbanken Kredit AB, CLB
12/18/2001, 5.9760%,
12/29/2049 # 2,500,000 2,478,750
..........................................................
Nordbanken, CLB 10/25/2001
(Acquired 12/11/1996, cost
$1,993,795), 5.8092%,
10/29/2049 #, r 2,000,000 1,945,982
..........................................................
Okobank, CLB 9/09/2002,
5.7386%, 9/29/2049 # 1,500,000 1,502,466
..................... ...................... ----------
5,927,198
- ----------------------------------------------------------
FINANCIAL SERVICES -- 3.4%
..........................................................
Countrywide Home Loans, Inc.,
6.84%, 10/22/2004 2,500,000 2,568,325
..........................................................
Florida Windstorm (Acquired
7/31/1997, cost $998,928),
6.85%, 8/25/2007 r 1,000,000 1,042,287
..................... ...................... ----------
3,610,612
- ----------------------------------------------------------
INDUSTRIAL -- 1.9%
..........................................................
Rite Aid Corp. (Acquired
12/16/1998, cost $747,645),
6.00%, CLB 12/15/2005 r 750,000 753,354
..........................................................
Safeway Inc., 6.50%, CLB
11/15/2008 1,200,000 1,246,015
..................... ...................... ----------
1,999,369
- ----------------------------------------------------------
PAPER -- 1.7%
..........................................................
Fort Howard Corporation,
11.00%, CLB 1/02/2002 1,821,781 1,819,344
- ----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
19
<PAGE> 31
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
TRANSPORTATION -- 2.3%
..........................................................
Delta Air Lines ETC:
9.90%, CLB 1/02/2002 $ 150,000 $ 163,710
10.50%, 4/30/2016 750,000 975,694
..........................................................
Northwest Airlines, Inc.,
11.30%, CLB 12/21/2012 1,063,815 1,325,699
..................... ...................... ----------
2,465,103
- ----------------------------------------------------------
Total corporate bonds (cost
$17,293,669) 17,312,431
- ----------------------------------------------------------
GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 14.0%
- ----------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 9.9%
..........................................................
Federal Home Loan Mortgage
Corporation,
1189 K, 10.6013%, CLB
1/15/2021 # 356,304 360,076
..........................................................
2067 PD, 6.50%, CLB 9/15/2026 2,900,000 2,954,562
..........................................................
6.00%, 12/01/2028 ' 3,000,000 2,966,892
..........................................................
Federal National Mortgage
Association:
1993-46 SG, 8.0499%,
7/25/2022 # 571,758 571,301
..........................................................
G93-31 SD, 10.8610%,
12/25/2022 # 50,976 50,934
..........................................................
1998-34 ZE, 6.50%, 6/18/2028 690,261 688,397
..........................................................
6.00%, 1/25/2029 ' 3,000,000 2,965,017
..................... ...................... ----------
10,557,179
- ----------------------------------------------------------
PASS-THROUGH SECURITIES -- 2.5%
..........................................................
Government National Mortgage
Association,
8404, 6.625%, 9/20/2018 # 858,558 877,957
..........................................................
8919, 6.875%, 2/20/2022 # 1,002,554 1,025,583
..........................................................
8247, 6.625%, 7/20/2023 # 802,951 820,118
..................... ...................... ----------
2,723,658
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
STRIPPED MORTGAGE-BACKED SECURITIES -- 1.6%
..........................................................
Federal National Mortgage
Association:
0.00%, 10/09/2019 $ 3,025,000 $ 908,250
..........................................................
1994-53 E (PO), 0.00%,
11/25/2023 889,671 857,800
..................... ...................... ----------
1,766,050
- ----------------------------------------------------------
Total government agency
mortgage-backed securities
(cost $14,881,373) 15,046,887
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
NON-AGENCY MORTGAGE-
BACKED SECURITIES
- -- 15.4%
- ------------------------------------------------------------
<S> <C> <C>
ASSET-BACKED SECURITIES -- 9.7%
............................................................
Ditech Home Loan Owner Trust,
1997-1 A3, 6.71%, CLB
8/15/2018 1,750,000 1,784,414
............................................................
GREAT 1998-1 A1 (Acquired
7/02/1998, cost $1,129,745)
7.33%, 9/15/2007 r 1,129,745 790,821
............................................................
Green Tree Financial
Corporation, 1996-5 B2,
8.45%, CLB 7/15/2027 1,549,754 1,471,298
............................................................
Heilig-Meyers Master Trust
(Acquired 2/20/1998, cost
$1,399,872), 1998-1A A,
6.125%, CLB 1/20/2007 r 1,400,000 1,399,923
............................................................
IMC Home Equity Loan Trust,
1996-4 A4, 7.11%, CLB
8/25/2014 1,250,000 1,273,894
............................................................
Nomura Asset Securities
Corporation:
1995-MD3 A1B, 8.15%, CLB
3/04/2020 1,000,000 1,121,685
............................................................
1998-D6 A1B, 6.59%, CLB
3/17/2028 2,500,000 2,608,763
...................... ...................... ----------
10,450,798
- ------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
20
<PAGE> 32
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ------------------------------------------------------------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 3.5%
............................................................
GE Capital Mortgage Services,
Inc., 1995-8 A5, 7.50%, CLB
10/25/2025 $ 29 $ 29
............................................................
Independent National Mortgage
Corporation, 1996-D A2,
7.00%, CLB 5/25/2026 164,363 164,571
............................................................
1996-E A5, 7.00%, CLB
5/25/2026 1,635,498 1,646,390
............................................................
PNC Mortgage Securities
Corporation, 1996-1 A11,
Class Z, 7.50%, CLB 6/25/2026 1,902,183 1,952,277
...................... ...................... ----------
3,763,267
- ------------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 2.2%
............................................................
Chase Commercial Mortgage
Securities Corporation,
1997-1 X (IO), 1.437%, CLB
4/19/2015 # 22,103,081 1,678,464
............................................................
Donaldson, Lufkin & Jenrette
(Acquired 4/25/1997, cost
$700,049), 1997-CF1 VS (IO),
1.0923%, CLB 5/15/2030 # r 11,790,550 641,111
...................... ...................... ----------
2,319,575
- ------------------------------------------------------------
Total non-agency
mortgage-backed securities
(cost $16,835,685) 16,533,640
- ------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PREFERRED STOCKS
- -- 0.9% Shares
- ----------------------------------------------------------
<S> <C> <C>
Home Ownership Funding 2,
(Acquired 2/20/1997, Cost
$1,000,000) r 1,000 950,000
- ----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY OBLIGATIONS Principal
- -- 8.7% Amount Value
- -----------------------------------------------------------
<S> <C> <C>
U.S. Treasury Bonds:
6.25%, 2/28/2002 " $ 950,000 $ 993,400
...........................................................
U.S. Treasury Notes:
7.25%, 5/15/2004 350,000 392,328
...........................................................
6.50%, 10/15/2006 " 3,400,000 3,775,064
...........................................................
6.625%, 5/15/2007 " 1,975,000 2,222,265
..................... ...................... -----------
6,389,657
- -----------------------------------------------------------
U.S. Treasury Strips:
...........................................................
0.00%, 2/15/2009 3,150,000 1,902,143
- -----------------------------------------------------------
Total U.S. Treasury obligations
(cost $9,265,520) 9,285,200
- -----------------------------------------------------------
SHORT-TERM INVESTMENTS -- 1.5%
- -----------------------------------------------------------
VARIABLE RATE DEMAND
NOTES* -- 1.5%
...........................................................
General Mills, Inc., 5.2337% 668,420 668,420
...........................................................
Pitney Bowes, Inc., 5.2337% 325,596 325,596
...........................................................
Sara Lee, Corp., 5.2287% 258,674 258,674
...........................................................
Warner-Lambert Co., 5.1760% 323,374 323,374
..................... ...................... -----------
Total short-term investments 1,576,064
(cost $1,576,064)
- -----------------------------------------------------------
Total investments -- 100.7%
(cost $102,053,662) 107,905,579
...........................................................
Liabilities in excess of other
assets -- (0.7)% (728,485)
..................... ...................... -----------
$107,177,094
Total net assets -- 100.0%
- -----------------------------------------------------------
</TABLE>
# Variable rate security. The rate listed is as of December 31, 1998.
* 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, 1998.
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.
' -- When-issued security.
" -- Security segregated as collateral to cover when-issued security.
See Notes to the Financial Statements
21
<PAGE> 33
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
CORPORATE BONDS AND Principal
NOTES -- 22.2% Amount Value
- -------------------------------------------------------------
<S> <C> <C>
BANKS -- 1.8%
The Hertz Corporation, 6.625%,
5/15/2008 $ 1,000,000 $ 1,040,114
.............................................................
MBNA Corporation, 5.5693%,
6/17/2002 # 500,000 496,935
...................................................
----------
1,537,049
- -------------------------------------------------------------
EUROBANKS -- 2.3%
.............................................................
Nordbanken, CLB 9/27/2001
5.95%, 9/29/2049 # 1,300,000 1,284,608
.............................................................
Svenska Hndls Banken, CLB
3/03/2002 5.7767%, 3/29/2049 700,000 684,565
...................................................
----------
1,969,173
- -------------------------------------------------------------
FINANCIAL SERVICES -- 5.9%
.............................................................
Associates Corp., NA
5.75%, 11/01/2003 1,400,000 1,411,469
.............................................................
AT & T Capital Corp.
4.53%, 10/24/2000 500,000 497,447
.............................................................
Countrywide Home Loans, Inc.,
5.7528%, 3/16/2005 # 450,000 446,940
.............................................................
General Motors Acceptance Corp.,
8.25%, 3/01/2005 750,000 852,165
.............................................................
Lehman Brothers Holdings,
6.20%, 1/15/2002 1,900,000 1,886,383
...................................................
----------
5,094,404
- -------------------------------------------------------------
INDUSTRIAL -- 8.4%
.............................................................
Fred Meyer Inc., 7.375%, CLB
3/01/2005 750,000 795,156
.............................................................
Kroger Co., 6.80%, CLB 12/15/2018 1,500,000 1,502,421
.............................................................
Petroleos Mexicanos (Acquired
11/19/1998, cost $800,000),
9.375%, 12/02/2008 r 800,000 796,000
.............................................................
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------
Principal
Amount Value
<S> <C> <C>
Rite Aid Corp. (Acquired
12/16/1998, cost $1,246,075),
6.00%, CLB 12/15/2005 r $ 1,250,000 $ 1,255,590
.............................................................
Safeway Inc., 6.50%, CLB
11/15/2008 1,600,000 1,661,354
.............................................................
USA Networks Inc. (Acquired
11/18/1998, cost $995,200),
6.75%, 11/15/2005 r 1,000,000 1,005,103
.............................................................
Westinghouse Electric Corporation,
8.93%, 6/22/1999 250,000 253,168
...................................................
----------
7,268,792
- -------------------------------------------------------------
OIL & GAS (DOMESTIC) -- 0.5%
Harcor Energy, Inc., CLB
7/15/1999, 14.875%, 7/15/2002 400,000 458,436
- -------------------------------------------------------------
SAVINGS & LOAN -- 0.5%
.............................................................
Western Financial Savings, CLB
7/1/2000, 8.50%, 7/01/2003 500,000 411,665
- -------------------------------------------------------------
TELECOMMUNICATIONS -- 1.7%
.............................................................
TKR Cable, Inc., CLB 10/30/1999,
10.50%, 10/30/2007 600,000 653,278
.............................................................
Worldcom, Inc., CLB 1/15/2001,
8.875%, 1/15/2006 775,000 844,659
...................................................
----------
1,497,937
- -------------------------------------------------------------
TRANSPORTATION -- 1.1%
.............................................................
Delta Air Lines ETC: 9.90%, CLB
1/02/2002 250,000 272,849
.............................................................
10.50%, 4/30/2016 500,000 650,462
...................................................
----------
923,311
- -------------------------------------------------------------
Total corporate bonds and notes
(cost $16,499,848) 19,160,767
- -------------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
22
<PAGE> 34
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
GOVERNMENT AGENCY MORTGAGE-BACKED Principal
SECURITIES -- 20.6% Amount Value
- -------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 18.2%
.............................................................
Federal Home Loan Mortgage
Corporation:
1564 SE, 8.6860%, CLB
8/15/2008 # $ 250,788 $ 251,521
.............................................................
1261 J, 8.00%, CLB 7/15/2021 676,129 699,203
.............................................................
1573 GC, 10.5900%,
CLB 1/15/2023 # 1,094,171 1,118,237
.............................................................
1468 S, 12.3270%, CLB
2/15/2023 # 449,224 454,639
.............................................................
2067 PD, 6.50%, CLB 9/15/2026 1,200,000 1,222,577
.............................................................
6.00%, 12/15/2028 ' 4,000,000 3,955,856
.............................................................
2118 Z, 6.50%, 1/15/2029 818,000 792,949
.............................................................
Federal National Mortgage
Association:
1993-46 SG, 7.3500%, 7/25/2022 # 980,552 979,767
.............................................................
1993-37 SB, 7.1020%, 3/25/2023 # 224,549 224,358
.............................................................
1993-54 SD, 7.3500%, 4/25/2023 # 319,797 317,406
.............................................................
1993-G27 SB, 6.9043%, 8/25/2023
# 89,277 86,485
.............................................................
1996-63 SC, 10.6890%, 1/18/2027
# 685 686
.............................................................
1998-48 ZN, 6.50%, 8/25/2028 320,086 319,333
.............................................................
1998-51 Z, 6.50%, 9/25/2028 334,768 329,956
.............................................................
6.00%, 1/25/2029 ' 4,250,000 4,200,441
- -------------------------------------------------------------
Government National Mortgage
Association, 1997-7 SB,
16.8670%, CLB 5/16/2027 # 812,807 837,797
..................................................
----------
15,791,211
- -------------------------------------------------------------
PASS-THROUGH SECURITIES -- 0.5%
.............................................................
Government National Mortgage
Association, 8247, 6.625%,
7/20/2023 # 401,475 410,059
- -------------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 1.9%
.............................................................
Federal National Mortgage
Association:
0.00% (PO), 10/09/2019 400,000 120,099
.............................................................
0.00% (PO), 9/25/2023 571,654 548,118
.............................................................
<TABLE>
<CAPTION>
Principal
Amount Value
- -------------------------------------------------------------
<S> <C> <C>
0.00% (PO), 5/18/2027 $ 969,190 $ 953,230
.............................................................
1998-48 CI (IO), 6.50%,
8/25/2028 219,944 20,367
..................................................
----------
1,641,814
- -------------------------------------------------------------
Total government agency mortgage-
backed securities (cost
$17,377,325) 17,843,084
- -------------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED
SECURITIES -- 18.2%
- -------------------------------------------------------------
ASSET BACKED SECURITIES -- 13.7%
.............................................................
Associates Manufactured Housing
Pass-Through Certificates,
1996-2 A4, 6.60%, CLB 6/15/2027 500,000 510,342
.............................................................
Commercial Financial Services
Securitized Multiple Asset Rated
Trust (Acquired 9/24/1997, cost
$363,529), 1997-5 A1, 7.72%,
6/15/2005 r 363,529 254,470
.............................................................
Commercial Mortgage Acceptance
Corporation (Acquired 3/13/1998,
cost $291,373), 1996-C2 A2,
7.0139%, CLB 9/15/2023 r 288,176 292,152
.............................................................
CPS Auto Trust, 1998-1 A, 6.00%,
CLB 8/15/2003 414,185 418,407
.............................................................
The C.S. First Boston Mortgage
Securities Corp. Commercial
Mortgage Pass-Through
Certificates, Series, 1998-C1
A1B, 6.48%, 5/17/2008 750,000 776,479
.............................................................
Ditech Home Loan Owner Trust,
1997-1 A3, 6.71%, CLB 8/15/2018 600,000 611,799
.............................................................
Firstplus Home Loan Trust, 1996-2
A4, 7.35%, CLB 10/20/2009 499,852 500,059
.............................................................
GREAT (Acquired 7/02/1998, cost
$2,766,722), 1998-1 A1 7.33%,
9/15/2007 r 161,392 112,974
.............................................................
</TABLE>
See Notes to the Financial Statements
23
<PAGE> 35
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- -------------------------------------------------------------
<S> <C> <C>
Green Tree Financial Corporation:
1995-4 A4, 6.75%, CLB 7/15/2025 $ 400,000 $ 404,410
.............................................................
1996-5 B2, 8.45%, CLB 7/15/2027 749,881 711,918
.............................................................
Green Tree Recreational, Equipment
& Consumer Trust, 1996-B CTFS,
7.70%, CLB 7/15/2018 450,000 434,250
.............................................................
Heilig-Meyers Master Trust
(Acquired 2/20/1998, cost
$499,954), 1998-1A A, 6.125%,
CLB 1/20/2007 r 500,000 499,972
.............................................................
Home Loan Owner Trust (Acquired
8/20/1998, cost $801,500), 1998-
1A A2, 6.29%, CLB 7/15/2011 r 800,000 800,250
.............................................................
IMC Home Equity Loan Trust, 1996-4
A4, 7.11%, CLB 8/25/2014 750,000 764,336
.............................................................
Nomura Asset Securities
Corporation:
1995-MD3 A1B, 8.15%, CLB
3/04/2020 750,000 841,264
.............................................................
1998-D6 A1B, 6.59%, CLB
3/15/2030 850,000 886,979
.............................................................
Resolution Trust Corporation,
1994-C2 G, 8.00%, CLB 4/25/2025 526,728 540,099
.............................................................
1994-C1 E, 8.00%, CLB 6/25/2026 998,020 988,040
.............................................................
The Ugly Duckling Auto Grantor
Trust (Acquired 12/18/1998, cost
$7,255,311), 1998-D A, 5.90%,
5/15/2003 r 1,500,000 1,499,062
...................................................
----------
11,847,262
- -------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 4.5%
.............................................................
Blackrock Capital Finance L.P
(Acquired 6/23/1997, cost
$221,538), 1997-R2 AP, 1.4390%,
10/25/2035 # r 222,896 230,697
.............................................................
CMC Securities Corporation, 1994-G
A4, 7.00%, CLB 9/25/2024 200,000 203,920
.............................................................
Citicorp Mortgage Securities,
Inc., 1997-3 A2, 6.92%, CLB
8/25/2027 195,107 195,859
.............................................................
<CAPTION>
Principal
Amount Value
- -------------------------------------------------------------
<S> <C> <C>
Collateralized Mortgage
Obligations Trust, 57 D, 9.90%,
CLB 2/01/2019 $ 319,965 $ 335,764
.............................................................
GE Capital Mortgage Services,
Inc., 1994-24 A4, 7.00%,
7/25/2024 169,843 173,055
.............................................................
Housing Securities, Inc.:
(Acquired 3/03/1995, cost
$303,411), 1994-1 AB2, 6.50%,
CLB 3/25/2009 r 459,714 384,459
.............................................................
(Acquired 1/19/1995, cost
$176,800), 1994-2 B1, 6.50%,
CLB 7/25/2009 r 234,951 217,542
.............................................................
ICI Funding Corporation Secured
Assets Corporation, 1997-2 1A4,
7.60%, CLB 7/25/2028 750,000 753,174
.............................................................
Independent National Mortgage
Corporation, 1995-F A5, 8.25%,
CLB 5/25/2010 750,000 770,632
.............................................................
Ocwen Residential MBS Corp.
(Acquired 6/18/1998, cost
$675,258), 1998-R2 AP, 4.9730%,
CLB 11/25/2034 r # 676,103 679,530
...................................................
----------
3,944,632
- -------------------------------------------------------------
Total non-agency mortgage-backed
securities (cost $18,421,712) 15,791,894
- -------------------------------------------------------------
PREFERRED STOCK -- 0.5% Shares
- -------------------------------------------------------------
Home Ownership Funding 2,
(Acquired 2/20/1997, cost
$500,000) r 500 475,000
- -------------------------------------------------------------
Principal
U.S. TREASURY OBLIGATIONS -- 35.5% Amount
- -------------------------------------------------------------
U.S. Treasury Bonds:
6.375%, 8/15/2027 $ 4,050,000 4,658,768
.............................................................
U.S. Treasury Notes:
7.25%, 8/15/2004 3,750,000 4,218,750
.............................................................
6.625%, 5/15/2007 4,075,000 4,584,375
.............................................................
4.75%, 11/15/2008 2,500,000 2,520,313
.............................................................
</TABLE>
See Notes to the Financial Statements
24
<PAGE> 36
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- -------------------------------------------------------------
<S> <C> <C>
U.S. Treasury Strips:
0.00%, 2/15/2009 $24,400,000 $14,734,062
- -------------------------------------------------------------
Total U.S. Treasury obligations
(cost $30,538,340) 30,716,268
- -------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 12.6%
- -------------------------------------------------------------
DISCOUNT NOTES--12.2%
.............................................................
Finova Capital Corp., 6.40%,
1/04/1999 4,000,000 3,997,867
.............................................................
Novartis AG, 5.50%, 1/08/1999 3,700,000 3,696,043
.............................................................
Safeway Inc., 5.97%, 1/08/1999 2,900,000 2,896,634
...................................................
----------
Total discount notes 10,590,544
- -------------------------------------------------------------
VARIABLE RATE DEMAND NOTES*--0.4%
.............................................................
General Mills, Inc., 5.2337% 230,673 230,673
.............................................................
Pitney Bowes, Inc., 5.2337% 37,405 37,405
.............................................................
Sara Lee Corp., 5.2287% 12,229 12,229
.............................................................
Warner-Lambert Co., 5.176% 68,058 68,058
................ .................
----------
Total variable rate demand notes
(cost $348,365) 348,365
- -------------------------------------------------------------
<CAPTION>
Principal
Amount Value
- -------------------------------------------------------------
<S> <C> <C>
Total short term investments (cost
$10,938,909) $10,938,909
- -------------------------------------------------------------
Total investments -- 109.6%
(cost $94,276,134) 94,925,922
.............................................................
Liabilities in excess of other
assets -- (9.6%) (8,317,414)
...................................................
----------
Total net assets -- 100.0% $86,608,508
- -------------------------------------------------------------
</TABLE>
# Variable rate security. The rate listed is as of December 31, 1998.
* 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, 1998.
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.
- - -- When-issued security.
- -- -- Security segregated as collateral to cover when-issued security.
See Notes to the Financial Statements
25
<PAGE> 37
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
CORPORATE BONDS Principal
AND NOTES -- 22.8% Amount Value
- ----------------------------------------------------------
<S> <C> <C>
BANKS -- 0.8%
..........................................................
MBNA Corporation, 5.5693%,
6/17/2002 # $ 1,125,000 $ 1,118,104
..........................................................
MBNA Global Capital
Securities, CLB 2/01/2007,
6.0193%, 2/01/2027 # 2,000,000 1,847,824
...............................................-----------
2,965,928
- ----------------------------------------------------------
EUROBANKS -- 6.1%
..........................................................
Foreningsbanken Kredit AB, CLB
12/18/2001, 5.9760%,
12/29/2049 # 5,750,000 5,701,125
..........................................................
Nordbanken, CLB 10/25/2001,
5.8092%, 10/29/2049 # 6,680,000 6,499,580
..........................................................
Okobank, CLB 9/09/2002:
5.7385%, 9/29/2049 # 2,750,000 2,754,521
6.7937%, 10/29/2049 # 2,000,000 1,991,900
..........................................................
Skandinavinska Enskilda
Banken, CLB 6/28/2003,
6.25%, 6/29/2049 # 3,500,000 3,446,195
..........................................................
Svenska Handls Banken, CLB
3/03/2002, 5.7767%,
3/29/2049 # 3,250,000 3,178,338
...............................................-----------
23,571,659
- ----------------------------------------------------------
FINANCIAL SERVICES -- 5.0%
..........................................................
AT & T Capital Corp., 4.53%,
10/24/2000 # 2,750,000 2,735,959
..........................................................
Countrywide Home Loans, Inc.,
5.7528%, 3/16/2005 # 5,000,000 4,966,005
..........................................................
Florida Windstorm (Acquired
7/31/1997, cost $3,496,092),
6.85%, 8/25/2007 r 3,500,000 3,648,004
..........................................................
General Motors Acceptance
Corporation, 8.25%,
3/01/2005 500,000 568,110
..........................................................
Lehman Brothers Holdings,
6.20%, 1/15/2002 7,500,000 7,446,247
...............................................-----------
19,364,325
- ----------------------------------------------------------
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
INDUSTRIAL -- 5.0%
..........................................................
Fred Meyer Inc., CLB, 7.375%,
3/01/2005 $ 3,150,000 $ 3,339,655
..........................................................
Petroleos Mexicanos (Acquired
11/19/1998, cost
$1,150,000), 9.375%,
12/02/2008 r 1,150,000 1,144,250
..........................................................
Rite Aid Corp., (Acquired
12/16/98, cost $3,943,167),
5.50%, 12/15/2000 r 3,950,000 3,935,338
6.70%, 12/15/2001 4,200,000 4,313,828
..........................................................
Safeway Inc., 5.875%,
11/15/2001 5,000,000 5,017,435
..........................................................
USA Networks Inc. (Acquired
11/18/1998, cost
$1,691,840), 6.75%,
11/15/2005 r 1,700,000 1,708,675
...............................................-----------
19,459,181
- ----------------------------------------------------------
MISCELLANEOUS -- 1.1%
..........................................................
URSA Major Rated Limited
(Acquired 1/28/1998, cost
$3,961,137), 5.90%,
1/06/2003 r 4,000,000 4,074,472
- ----------------------------------------------------------
OIL & GAS (DOMESTIC) -- 1.4%
..........................................................
Harcor Energy, Inc., CLB
7/15/1999, 14.8750%,
7/15/2002 4,636,000 5,313,269
- ----------------------------------------------------------
PAPER -- 0.7%
..........................................................
Fort Howard Corporation,
11.00%, 1/02/2002 2,686,498 2,682,903
- ----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
26
<PAGE> 38
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS -- 2.7%
..........................................................
Continental Cablevision, Inc.,
CLB 6/01/1999, 11.00%,
6/01/2007 $ 5,150,000 $ 5,538,578
..........................................................
TKR Cable, Inc., CLB
10/30/1999, 10.50%,
10/30/2007 4,675,000 5,090,121
...............................................-----------
10,628,699
- ----------------------------------------------------------
Total corporate bonds and
notes (cost $88,266,045) 88,060,436
- ----------------------------------------------------------
GOVERNMENT AGENCY MORTGAGE-BACKED SECURITIES -- 18.4%
- ----------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 14.1%
..........................................................
Federal Home Loan Mortgage Corporation:
1267 O, 7.25%, 12/15/2005 7,906 7,905
..........................................................
1564 SB, 11.8520%, 8/15/2008
# 1,639,099 1,666,563
..........................................................
1336 H, 7.75%, 1/15/2021 330,575 334,829
..........................................................
1543 KE, 9.7912%, 9/15/2022
# 266,193 266,270
..........................................................
1477 P, 10.0540%, 3/15/2023
# 1,968,078 1,988,412
..........................................................
1617 D, 6.50%, 11/15/2023 71,000 68,300
..........................................................
2094 Z, 6.50%, 4/15/2026 4,406,053 4,392,679
..........................................................
6.00%, 12/15/2028 19,000,000 18,790,316
..........................................................
2118 Z, 6.50%, 1/15/2029 4,000,000 3,877,500
..........................................................
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
Federal National Mortgage
Association:
1991-153 N, 7.50%, 2/25/2007 $ 207,422 $ 210,422
..........................................................
1993-6 S, 9.0830%, 1/25/2008
# 1,917,953 1,964,040
..........................................................
1988-26 C, 7.50%, 7/25/2018 49,698 50,221
..........................................................
1991-147 K, 7.00%, 1/25/2021 3,713 3,737
..........................................................
1992-138 O, 7.50%, 7/25/2022 25,548 25,498
..........................................................
1993-45 SB, 9.2760%,
4/25/2023 # 1,500,000 1,506,825
..........................................................
1994-60 D, 7.00%, 4/25/2024 30,000 28,804
..........................................................
1997-83 SA, 8.3130%,
6/18/2024 # 4,988,679 4,999,044
..........................................................
1997-76 FT, 6.0250%,
9/17/2027 # 1,253,228 1,243,976
..........................................................
1998-67 ZA, 6.50%, 7/25/2028 8,546,042 8,521,447
..........................................................
1998-48 CI, 6.50%, 8/25/2028 871,508 80,703
..........................................................
1998-48 ZN, 6.50%, 8/25/2028 1,264,341 1,261,365
..........................................................
1998-51 Z, 6.50%, 9/25/2028 962,457 948,622
..........................................................
Government National Mortgage
Association, 1997-7 SB,
16.8670%, 5/16/2027 # 2,167,173 2,233,804
...............................................-----------
54,471,282
- ----------------------------------------------------------
PASS-THROUGH SECURITIES -- 2.6%
..........................................................
Government National Mortgage
Association:
8264, 7.0000%, 9/20/2017 # 2,098,605 2,146,167
..........................................................
8898, 6.8750%, 1/20/2022 # 2,899,059 2,965,651
..........................................................
8956, 6.8750%, 4/20/2022 # 2,792,812 2,856,963
..........................................................
8067, 7.0000%, 11/20/2022 # 1,089,879 1,115,586
..........................................................
8247, 6.6250%, 7/20/2023 # 802,951 820,118
...............................................-----------
9,904,485
- ----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
27
<PAGE> 39
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
STRIPPED MORTGAGE-BACKED SECURITIES -- 1.7%
..........................................................
Federal National Mortgage
Association:
1993-72 J (IO), 6.50%,
12/25/2006 $ 805,022 $ 45,576
..........................................................
1997-7 SP (IO), 2.60%,
04/18/2015 15,855,702 150,463
..........................................................
1993-97 L (IO), 7.50%,
5/25/2023 801,580 38,061
..........................................................
1994-53 E (PO), 0.00%,
11/25/2023 4,693,012 4,524,893
..........................................................
1997-30 EA (PO), 0.00%,
5/18/2027 1,894,869 1,868,119
...............................................-----------
6,627,112
- ----------------------------------------------------------
Total government agency mortgage-backed
securities (cost $70,136,738) 71,002,879
- ----------------------------------------------------------
NON-AGENCY MORTGAGE-BACKED SECURITIES -- 27.2%
- ----------------------------------------------------------
ASSET-BACKED SECURITIES -- 18.5%
..........................................................
Asset-Backed Securities
Investment Trust (Acquired
8/08/1997, cost $826,173),
1997-D A, 6.79%, 8/17/2003 r 826,173 826,099
..........................................................
Champion Auto Grantor Trust
(Acquired 3/18/1998, cost
$1,469,162), CLB, 1998-A A,
6.11%, 10/15/2002 r 1,469,185 1,475,154
..........................................................
Cityscape Home Equity Loan
Trust, (Acquired 9/09/1998,
cost $3,683,956), CLB, 1996
- 4 A10, 7.40%, 9/25/2027 r 3,629,514 3,644,260
..........................................................
Commercial Financial Services
Securitized Multiple Asset
Rated Trust (Acquired
9/24/1997, cost $2,353,829),
1997-5 A1, 7.72%, 6/15/2005
r 2,272,057 1,590,440
..........................................................
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
Commercial Mortgage Acceptance
Corporation, CLB, (Acquired
3/13/1998, cost $1,248,740),
1996-C2 A2, 7.0370%,
9/15/2023 # r $ 1,235,039 $ 1,252,080
..........................................................
CPS Auto Trust, CLB, 1998-1 A,
6.00%, 8/15/2003 1,656,739 1,673,629
..........................................................
Ditech Home Loan Owner Trust,
CLB, 1997-1 A3, 6.71%,
8/15/2018 3,280,000 3,344,501
..........................................................
Firstplus Home Loan Trust,
CLB:
1996-2 A4, 7.35%, 10/20/2009 3,998,814 4,000,474
..........................................................
1998-4 A4, 6.32%, 3/10/2017 5,000,000 5,049,825
..........................................................
First Tennessee Auto Grantor
Trust, CLB, (Acquired
4/17/1998, cost $2,211,911),
1998-A A, 6.134%, 4/15/2003
r 2,211,911 2,228,719
..........................................................
GREAT (Acquired 7/02/1998,
cost $2,766,722), 1998-1 A1,
7.330%, 9/15/2007 r 2,766,722 1,936,705
..........................................................
Green Tree Financial
Corporation, CLB:
1995-4 A4, 6.75%, 7/15/2025 5,435,000 5,494,921
..........................................................
1996-5 B2, 8.45%, 7/15/2027 4,145,001 3,935,160
..........................................................
Green Tree Recreational,
Equipment & Consumer Trust,
CLB, 1996-B CTFS, 7.70%,
7/15/2018 2,250,000 2,171,250
..........................................................
Heilig-Meyers Master Trust
(Acquired 2/20/1998, cost
$4,099,626), 1998-1A A,
6.125%, 1/20/2007 r 4,100,000 4,099,775
..........................................................
Home Loan Owner Trust
(Acquired 8/20/1998, cost
$3,506,563), 1998-1 A2,
6.29%, 7/15/2011 r 3,500,000 3,501,096
..........................................................
</TABLE>
See Notes to the Financial Statements
28
<PAGE> 40
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
Long Beach Acceptance Auto
Grantor Trust, CLB,
(Acquired 1/29/1998, cost
$1,899,196), 1998-1 A,
6.19%, 1/25/2004 r $ 1,899,217 $ 1,906,636
..........................................................
Nomura Asset Securities
Corporation, CLB, 1995-MD3
A1B, 8.15%, 3/04/2020 2,750,000 3,084,634
..........................................................
Resolution Trust Corporation,
CLB: 1992-C3 A3, 6.2120%,
8/25/2023 # 538,816 538,803
..........................................................
1992-C8 A2, 7.0375%,
12/25/2023 # 1,046,474 1,048,646
..........................................................
1994-C1 E, 8.00%, 6/25/2026 6,921,469 6,852,255
..........................................................
1994-C1 F, 8.00%, 6/25/2026 2,002,168 1,974,676
..........................................................
The Money Store Residential
Trust, CLB, 1998-I A2,
6.20%, 3/15/2008 2,250,000 2,255,051
..........................................................
The Ugly Duckling Auto Grantor
Trust, CLB, (Acquired
12/18/1998, cost
$7,255,311), 1998-D A,
5.9000% 5/15/2003 r 7,500,000 7,495,312
...............................................-----------
71,380,101
- ----------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 7.0%
..........................................................
Blackrock Capital Finance
L.P., CLB, (Acquired
6/23/1997, Cost $1,218,457),
1997-R2 AW, 1.4390%,
10/25/2035 # r 1,225,927 1,268,831
..........................................................
Chemical Mortgage Securities,
Inc., CLB, 1993-3 A1,
7.125%, 7/25/2023 38,404 38,341
..........................................................
Citicorp Mortgage Securities,
Inc., CLB: 1997-3 A2, 6.92%,
8/25/2027 1,658,408 1,664,801
..........................................................
Countrywide Funding
Corporation, CLB, 1994-17
A9, 8.00%, 7/25/2024 4,000 4,181
..........................................................
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
Housing Securities, Inc., CLB,
1994-2 B1, 6.50%, 7/25/2009 $ 210,332 $ 194,747
..........................................................
ICI Funding Corporation
Secured Assets Corporation,
CLB,
1997-2 1A4, 7.60%, 7/25/2028 5,500,000 5,523,277
..........................................................
Independent National Mortgage
Corporation, CLB:
1995-A A4, 8.75%, 3/25/2025 18,000 18,295
..........................................................
1996-D A2, 7.00%, 5/25/2026 704,412 705,303
..........................................................
1996-E A5, 7.00%, 5/25/2026 3,634,440 3,658,643
..........................................................
Morgan Stanley Mortgage Trust,
CLB, 8.9712%, 6/22/2018 1,186,367 1,211,616
..........................................................
Ocwen Residential MBS Corp.,
CLB, (Acquired 6/18/1998,
cost $4,220,365), 1998-R2
AP, 4.9730%, 11/25/2034 # r 4,225,645 4,247,065
..........................................................
Prudential Home Mortgage
Securities, Co., CLB,
1993-36 A10, 7.25%,
10/25/2023 500,000 504,967
..........................................................
Residential Funding Mortgage
Securities, Inc., CLB:
1992-S5 A5, 7.50%, 2/25/2007 467,024 465,658
..........................................................
1993-S9 A8, 8.3125%,
2/25/2008 # 125,091 125,564
..........................................................
1998-S17 A6, 6.75%,
8/25/2028 4,071,449 4,082,503
..........................................................
Salomon Brothers Mortgage
Securities VII, 1994-6 A1,
6.9803%, 5/25/2024 # 1,718,352 1,722,227
..........................................................
Structured Mortgage Asset
Residential Trust, CLB:
1992-3 A, 8.00%, 10/25/2007 131,104 134,827
..........................................................
1991-1 H, 8.25%, 6/25/2022 122,341 124,932
..........................................................
1993-5A AA, 6.8669%,
6/25/2024 # 171,292 174,098
..........................................................
</TABLE>
See Notes to the Financial Statements
29
<PAGE> 41
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- ----------------------------------------------------------
<S> <C> <C>
Walsh Acceptance (Acquired
3/06/1997, cost $1,375,944),
1997-2 A, 6.1250%, 3/01/2027
# r $ 1,420,848 $ 1,261,494
...............................................-----------
27,131,370
- ----------------------------------------------------------
PASS-THROUGH SECURITIES -- 0.1%
Citicorp Mortgage Securities,
Inc., CLB: 1988-16 A1,
10.00%, 11/25/2018 33,254 35,040
..........................................................
1989-8 A1, 10.50%, 6/25/2019 332,574 353,632
...............................................-----------
388,672
- ----------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 1.6%
..........................................................
Asset Securitization
Corporation, 1997-D5 PS1
(IO), 1.3850%, 2/14/2041 # 14,797,828 1,534,017
..........................................................
Chase Commercial Mortgage
Securities Corporation, CLB,
1997-1 X (IO), 1.4370%,
4/19/2015 # 24,459,534 1,857,408
..........................................................
CS First Boston Mortgage
Securities Corporation, CLB,
(Acquired 8/14/1997, cost
$1,181,202), 1995-WF1 AX
(IO), 1.4160%, 12/21/2027 #r 18,133,433 878,347
..........................................................
Donaldson, Lufkin & Jenrette,
CLB, (Acquired 4/25/1997,
cost $2,058,486), 1997-CF1 S
(IO), 1.0923%, 3/15/2017 # r 34,978,631 1,901,963
...............................................-----------
6,171,735
- ----------------------------------------------------------
Total non-agency mortgage-backed securities
(cost $107,749,029) 105,071,878
- -----------------------------------------------------------
<CAPTION>
PREFERRED STOCK -- 0.4% Shares
- -----------------------------------------------------------
Home Ownership Funding 2, (Acquired
2/20/1997, cost $1,500,000) r 1,500 1,425,000
- -----------------------------------------------------------
<CAPTION>
U.S. TREASURY OBLIGATIONS Principal
- -- 30.4% Amount Value
- ----------------------------------------------------------
<S> <C> <C>
U.S. Treasury Notes:
5.50%, 3/31/2000 $13,500,000 $ 13,639,226
..........................................................
5.875%, 11/30/2001 47,775,000 49,372,500
..........................................................
6.25%, 02/28/2002 26,250,000 27,439,466
..........................................................
6.25%, 6/30/2002 18,500,000 19,419,228
..........................................................
6.25%, 2/15/2003 2,000,000 2,114,376
..........................................................
5.75%, 8/15/2003 5,000,000 5,220,315
...............................................-----------
Total U.S. Treasury obligations
(cost $117,091,803) 117,205,111
- ----------------------------------------------------------
SHORT-TERM INVESTMENTS -- 7.4%
- ----------------------------------------------------------
DISCOUNT NOTES -- 7.3%
..........................................................
Countrywide Home Loans, Inc.,
5.50%, 1/04/1999 11,750,000 11,744,615
..........................................................
Finova Capital Corp., 6.40%,
1/04/1999 16,450,000 16,441,227
...............................................-----------
Total discount notes 28,185,842
- ----------------------------------------------------------
VARIABLE RATE DEMAND NOTES* -- 0.1%
General Mills, Inc., 5.2337% 389,048 389,048
..........................................................
Warner-Lambert Co., 5.1760% 202,400 202,400
...............................................-----------
Total variable rate demand
notes 591,448
- ----------------------------------------------------------
Total short-term investments
(cost $28,777,290) 28,777,290
- ----------------------------------------------------------
Total investments -- 106.6% (cost
$413,520,905) 411,542,594
Liabilities in excess of other
assets -- (6.6)% (25,652,367)
...............................................-----------
Total net assets -- 100.0 %$385,890,227
- ----------------------------------------------------------
</TABLE>
# Variable rate security. Rate listed is as of December 31, 1998.
* Variable rate demand notes are considered short-term obligations and are
payable on demand. Interest rates change periodically on specified dates. The
rate listed is as of December 31, 1998.
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.
When-issued security.
Security segregated as collateral to cover when-issued security.
See Notes to the Financial Statements
30
<PAGE> 42
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
CORPORATE BONDS AND Principal
NOTES -- 18.3% Amount Value
- -----------------------------------------------------------
<S> <C> <C>
BANKS -- 1.1%
...........................................................
MBNA Corporation, 5.5693%,
6/17/2002 # $ 500,000 $ 496,935
- -----------------------------------------------------------
EUROBANKS -- 6.5%
...........................................................
Foreningsbanken Kredit AB, CLB
12/18/2001, 5.9760%,
12/29/2049 # 750,000 743,625
...........................................................
Nordbanken, CLB 10/25/2001,
5.8092%, 10/29/2049 # 550,000 535,145
...........................................................
Skandinavinska Enskilda Banken,
CLB 6/28/2003, 6.25%,
6/29/2049 # 800,000 787,702
...........................................................
Svenska Hndls Banken, CLB
3/03/2002 5.7767%, 3/29/2049 # 750,000 733,463
..................... ...................... ----------
2,799,935
- -----------------------------------------------------------
FINANCIAL SERVICES -- 5.0%
...........................................................
AT & T Capital Corp., 4.53%,
10/24/2000 # 500,000 497,447
...........................................................
Countrywide Home Loans, Inc.,
5.7528%, 3/16/2005 # 750,000 744,901
...........................................................
Lehman Brothers Holdings, 6.20%,
1/15/2002 900,000 893,550
..................... ...................... ----------
2,135,898
- -----------------------------------------------------------
OIL & GAS (DOMESTIC) -- 1.7%
...........................................................
Harcor Energy, Inc., CLB
7/15/1999, 14.875%, 7/15/2002 650,000 744,958
- -----------------------------------------------------------
PAPER & FOREST PRODUCTS -- 1.1%
...........................................................
Fort Howard Corporation, 11.00%,
1/02/2002 461,742 461,124
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
TELECOMMUNICATIONS -- 2.9%
...........................................................
Continental Cablevision, Inc.,
CLB 6/01/1999, 11.00%,
6/01/2007 $ 700,000 $ 752,816
...........................................................
TKR Cable, Inc., CLB 10/30/1999,
10.50%, 10/30/2007 450,000 489,958
..................... ...................... ----------
1,242,774
- -----------------------------------------------------------
Total corporate bonds and notes
(cost $7,957,600) 7,881,624
- -----------------------------------------------------------
GOVERNMENT AGENCY
MORTGAGE-BACKED
SECURITIES -- 16.7%
- -----------------------------------------------------------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 7.7%
...........................................................
Federal Home Loan Mortgage
Corporation, 2118 Z, 6.50%,
1/15/2029 500,000 484,687
...........................................................
Federal National Mortgage
Association:
1993-142 SA, 8.7489%,
10/25/2022 # 266,532 267,200
...........................................................
1993-54 SD, 7.35%, 4/25/2023 240,902 239,101
...........................................................
1996-63 SC, 10.6890%,
1/18/2027 # 485 485
...........................................................
1998-33 SG, 11.00%, 4/18/2028 824,910 829,327
...........................................................
1998-67 ZA, 6.50%, 7/25/2028 1,508,125 1,503,785
..................... ...................... ----------
3,324,585
- -----------------------------------------------------------
GOVERNMENT AGENCY NOTES -- 1.7%
...........................................................
Federal Home Loan Bank, 3.6800%,
CLB 3/16/1999 # 400,000 399,096
...........................................................
Government National Mortgage
Association, 1997-7 SB,
16.8670%, CLB 5/16/2027 # 304,803 314,174
..................... ...................... ----------
713,270
- -----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
31
<PAGE> 43
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
PASS-THROUGH SECURITIES -- 6.2%
...........................................................
Federal Housing Authority
Project, 7.43%, 2/01/2023 $ 133,985 $ 136,001
...........................................................
Government National Mortgage
Association:
8264, 7.00%, 9/20/2017# 890,039 910,210
...........................................................
8570, 7.00%, 10/20/2019 # 241,899 247,774
...........................................................
8067, 7.00%, 11/20/2022 # 435,952 446,235
...........................................................
8346, 7.00%, 12/20/2023 # 912,328 933,478
..................... ...................... ----------
2,673,698
- -----------------------------------------------------------
STRIPPED MORTGAGE-BACKED SECURITIES -- 1.1%
...........................................................
Federal National Mortgage
Association:
1993-129 J (IO), 6.50%,
2/25/2007 793,281 63,681
...........................................................
1993-97 L (IO), 7.50%,
5/25/2023 295,624 14,037
...........................................................
1997-30 EA (PO), 0.00%,
5/18/2027 387,578 382,107
..................... ...................... ----------
459,825
- -----------------------------------------------------------
Total government agency mortgage-backed
securities (cost $7,141,920) 7,171,378
- -----------------------------------------------------------
NON AGENCY MORTGAGE-BACKED
SECURITIES -- 19.0%
- -----------------------------------------------------------
ASSET-BACKED SECURITIES -- 16.6%
...........................................................
Asset-Backed Securities
Investment Trust (Acquired
8/08/1997, cost $103,272),
1997-D A, 6.79%,
CLB 8/17/2003 r 103,272 103,262
...........................................................
Associates Manufactured Housing
Pass-Through Certificates,
1996-2 A4, 6.60%, CLB
6/15/2027 500,000 510,342
...........................................................
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
Champion Auto Grantor Trust
(Acquired 10/28/1997, cost
$103,157), 1997-D A, 6.27%,
CLB 9/15/2002 r $ 103,157 $ 103,093
...........................................................
Commercial Financial Services
Securitized Multiple Asset
Rated Trust (Acquired
9/24/1997, cost $363,529),
1997-5 A1, 7.72%, 6/15/2005 r 363,529 254,470
...........................................................
First Tennessee Auto Grantor
Trust (Acquired 4/17/1998,
cost $597,814), 1998-A A,
6.134%, CLB 4/15/2003 r 597,814 602,357
...........................................................
Home Loan Owner Trust (Acquired
8/20/1998, cost $500,938),
1998-1A A2, 6.29%, CLB
7/15/2011 r 500,000 500,156
...........................................................
Long Beach Acceptance Auto
Grantor Trust (Acquired
1/29/1998, cost $365,230),
1998-1 A, 6.19%, CLB
1/25/2004 r 365,234 366,661
...........................................................
Resolution Trust Corporation:
1992-C3 A3, 6.2122%, CLB
8/25/2023 # 898,026 898,005
...........................................................
1992-C8 A2, 7.038%, CLB
12/25/2023 1,420,875 1,423,823
...........................................................
1994-C2 G, 8.00%, CLB
4/25/2025 351,152 360,066
...........................................................
The Money Store Home Equity
Trust, 1994-C A3, 7.40%, CLB
3/15/2018 45,423 45,456
...........................................................
The Ugly Duckling Auto Grantor
Trust (Acquired 12/18/1998,
cost $999,688),1998-D A,
5.90%, CLB 5/15/2003 r 1,000,000 999,375
...........................................................
Union Acceptance Corporation,
1998-C A2, 5.44%, CLB
10/09/2001 1,000,000 1,002,725
..................... ...................... ----------
7,169,791
- -----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
32
<PAGE> 44
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS -- 2.4%
...........................................................
American Housing Trust, XD,
8.60%, CLB 11/25/2015 $ 84,582 $ 84,322
...........................................................
Residential Funding Mortgage
Securities Inc., 1998-S17 AG,
6.75%, CLB 8/25/2028 407,145 408,250
...........................................................
Salomon Brothers Mortgage
Securities VI, 1986-1 A,
6.00%, CLB 12/25/2011 325,486 326,563
...........................................................
Walsh Acceptance (Acquired
3/06/1997, cost $238,658),
1997-2 A, 6.1250%,
3/01/2027 # r 236,808 210,249
..................... ...................... ----------
1,029,384
- -----------------------------------------------------------
Total non-agency mortgage-backed securities
(cost $8,313,108) 8,199,175
- -----------------------------------------------------------
U.S. TREASURY
OBLIGATIONS -- 12.9%
- -----------------------------------------------------------
U.S. Treasury Notes:
5.875%, 3/31/1999 $ 900,000 903,094
...........................................................
5.75%, 10/31/2000 2,600,000 2,650,375
...........................................................
5.875%, 11/30/2001 1,925,000 1,989,368
..................... ...................... ----------
Total U.S. Treasury Notes (cost 5,542,837
$5,515,337)
- -----------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 33.8%
- -----------------------------------------------------------
DISCOUNT NOTES -- 33.3%
...........................................................
Ciesco LP , 5.60%, 1/04/1999 $ 400,000 $ 399,813
...........................................................
Countrywide Home Loans, Inc.,
5.50%, 1/04/1999 1,500,000 1,499,312
...........................................................
Cox Enterprises, 5.95%,
1/04/1999 700,000 699,653
...........................................................
Finova Capital Corp., 6.40%,
1/04/1999 2,000,000 1,998,933
...........................................................
International Business Machines
Corporation, 5.06%, 1/29/1999 1,250,000 1,245,081
...........................................................
Lockheed Martin Corporation,
5.65%, 1/22/1999 2,000,000 1,993,408
...........................................................
NY Times Corp., 5.15%, 1/08/1999 1,750,000 1,748,248
...........................................................
Novartis AG, 5.50%, 1/08/1999 1,250,000 1,248,663
...........................................................
Safeway Inc., 5.97%, 1/08/1999 2,000,000 1,997,678
...........................................................
Sony Capital Corp., 5.70%,
1/04/1999 1,500,000 1,499,287
..................... ...................... ----------
14,330,076
Total discount notes
- -----------------------------------------------------------
</TABLE>
See Notes to the Financial Statements
33
<PAGE> 45
Schedule of Investments -- December 31, 1998 (Unaudited)
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
Principal
Amount Value
- -----------------------------------------------------------
<S> <C> <C>
VARIABLE RATE DEMAND NOTES* -- 0.5%
...........................................................
General Mills, Inc., 5.2337% $ 224,282 $ 224,282
..................... ...................... ----------
224,282
Total variable rate demand notes
- -----------------------------------------------------------
Total short-term investments
(cost $14,554,360) 14,554,358
- -----------------------------------------------------------
Total investments -- 100.7%
(cost $43,482,325) 43,349,372
...........................................................
Liabilities in excess of other
assets -- (0.7)% (317,696)
..................... ...................... ----------
$43,031,676
Total net assets -- 100.0%
- -----------------------------------------------------------
</TABLE>
# Variable rate security. The rate listed is as of December 31, 1998.
* 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, 1998.
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 the Financial Statements
34
<PAGE> 46
(Intentionally Left Blank)
<PAGE> 47
Financial Statements -- December 31, 1998
- --------------------------------------------------------------------------------
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*................................ $162,245,299 $6,147,504 $53,295,644
Cash.................................................. -- -- 671,000
Dividends and interest receivable..................... 403,773 10,330 2,053
Receivable from Advisor............................... -- 9,014 6,437
Receivable for investments sold....................... 263,968 -- 715,060
Receivable for Fund shares sold....................... 112,679 10,313 1,785,677
Prepaid expenses...................................... 2,107 8,743 14,023
------------ ---------- -----------
Total assets..................................... 163,027,826 6,185,904 56,489,894
------------ ---------- -----------
LIABILITIES:
Payable for forward currency exchange contracts....... -- -- --
Payable to Advisor.................................... 103,718 -- --
Payable for investments purchased..................... 382,464 -- --
Payable for Fund shares repurchased................... 4,614,396 47,814 306,711
Accrued expenses and other liabilities................ 67,511 17,715 24,134
------------ ---------- -----------
Total liabilities................................ 5,168,089 65,529 330,845
------------ ---------- -----------
Net assets....................................... $157,859,737 $6,120,375 $56,159,049
============ ========== ===========
NET ASSETS CONSIST OF:
Paid in capital....................................... $123,302,728 $7,457,454 $73,298,136
Undistributed (distributions in excess of) net
investment income.................................. 112,022 42,864 (135,115)
Undistributed net realized gain (loss) on
securities......................................... 3,212,147 (426,031) (183,394)
Net unrealized appreciation (depreciation) of
securities and foreign currency.................... 31,232,840 (953,912) (16,820,578)
------------ ---------- -----------
Net assets....................................... $157,859,737 $6,120,375 $56,159,049
============ ========== ===========
CALCULATION OF NET ASSET VALUE PER SHARE:
Shares outstanding (unlimited shares of no par value
authorized)........................................ 8,623,496 620,862 2,883,525
Net asset value per share (offering and redemption
price)............................................. $ 18.31 $ 9.86 $ 19.48
============ ========== ===========
*Cost of Investments................................... $131,012,459 $7,101,416 $70,116,222
============ ========== ===========
</TABLE>
See Notes to the Financial Statements
36
<PAGE> 48
- --------------------------------------------------------------------------------
<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>
$1,412,090,052 $7,103,086 $107,905,579 $94,925,922 $411,542,594 $43,349,372
53,693 -- 4,999 -- -- --
3,163,495 14,365 658,507 667,665 3,988,498 250,205
-- 16,164 -- -- -- --
2,700,921 182,149 4,836,536 335 112,727 3,900
4,259,833 -- 28,439 -- 1,709,546 25,300
6,784 12,604 8,668 16,437 31,177 11,723
-------------- ---------- ------------ ----------- ------------ -----------
1,422,274,778 7,328,368 113,442,728 95,610,359 417,384,542 43,640,500
-------------- ---------- ------------ ----------- ------------ -----------
1,358,215 3,962 -- -- -- --
875,007 -- 68,567 33,765 149,746 26,738
1,538,305 69,081 6,025,698 8,940,534 27,817,555 488,778
12,684,211 -- 129,689 2,610 2,857,719 57,083
3,601,686 68,671 41,680 24,942 669,295 36,225
-------------- ---------- ------------ ----------- ------------ -----------
20,057,424 141,714 6,265,634 9,001,851 31,494,315 608,824
-------------- ---------- ------------ ----------- ------------ -----------
$1,402,217,354 $7,186,654 $107,177,094 86,608,508 $385,890,227 $43,031,676
============== ========== ============ =========== ============ ===========
$1,327,971,018 $7,141,889 $ 99,907,255 86,011,645 $388,821,788 $43,453,887
(13,048,993) (53,144) 50,794 (413,915) (1,701,050) (106,642)
(9,143,930) (76,863) 1,367,128 360,990 747,800 (182,616)
96,439,259 174,772 5,851,917 649,788 (1,978,311) (132,953)
-------------- ---------- ------------ ----------- ------------ -----------
$1,402,217,354 $7,186,654 $107,177,094 86,608,508 $385,890,227 $43,031,676
============== ========== ============ =========== ============ ===========
60,233,510 672,577 5,749,048 6,440,796 38,273,722 4,272,448
$ 23.28 $ 10.69 $ 18.64 13.45 $ 10.08 $ 10.07
============== ========== ============ =========== ============ ===========
$1,315,230,448 $6,927,973 $102,053,662 $94,276,134 $413,520,905 $43,482,325
============== ========== ============ =========== ============ ===========
</TABLE>
See Notes to the Financial Statements
37
<PAGE> 49
Financial Statements -- Six Months Ended December 31, 1998
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
EQUITY SMALL
INCOME MID-CAP CAP
FUND FUND FUND
-------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Income*
Dividends..................................... $ 2,378,815 $ 67,965 $ 157,456
Interest...................................... 51,801 6,738 41,682
------------ ----------- ------------
Total income............................. 2,430,616 74,703 199,138
------------ ----------- ------------
Expenses
Advisory fee.................................. 613,214 23,879 251,842
Legal and auditing fees....................... 6,797 -- 8,118
Custodian fees and expenses................... 28,668 2,995 21,892
Accounting and transfer agent fees and
expenses.................................... 35,836 24,910 56,036
Administration fee............................ 32,343 1,404 22,906
Trustees' fees and expenses................... 3,908 102 2,201
Reports to shareholders....................... 4,026 454 20,129
Registration fees............................. 18,684 11,662 17,893
Other expenses................................ -- -- --
------------ ----------- ------------
Total expenses........................... 743,476 65,406 401,017
Less, expense reimbursement................... -- (33,567) (66,764)
------------ ----------- ------------
Net expenses............................. 743,476 31,839 334,253
------------ ----------- ------------
Net investment income (loss)..................... 1,687,140 42,864 (135,115)
------------ ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on securities and
foreign currency transactions............... 6,879,221 (423,626) (2,178,054)
Net change in unrealized appreciation
(depreciation) of securities and foreign
currency.................................... (12,895,909) (592,547) (17,699,888)
------------ ----------- ------------
Net gain (loss) on investments................... (6,016,688) (1,016,173) (19,877,942)
------------ ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS.................................. $ (4,329,548) $ (973,309) $(20,013,057)
============ =========== ============
*Net of Foreign Taxes Withheld..................... $ -- $ 259 $ --
============ =========== ============
</TABLE>
See Notes to the Financial Statements
38
<PAGE> 50
- --------------------------------------------------------------------------------
<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> <C>
$ 12,247,769 $ 83,159 $ 743,649 $ 33,683 $ 101,048 $ --
1,959,876 -- 1,946,944 2,051,482 10,599,554 1,206,138
---------------- --------- ----------- ---------- ----------- ----------
14,207,645 83,159 2,690,593 2,085,165 10,700,602 1,206,138
---------------- --------- ----------- ---------- ----------- ----------
5,154,031 25,799 398,781 178,205 765,786 75,547
114,426 -- 4,374 1,428 15,469 --
464,684 7,234 19,698 10,940 33,625 15,611
238,506 33,634 38,171 29,099 64,500 26,030
138,308 1,304 23,365 7,980 48,816 5,500
15,754 301 2,109 1,928 5,133 720
199,995 438 7,511 975 11,521 --
27,888 7,186 13,174 12,132 22,610 13,541
10,560 -- -- -- -- --
---------------- --------- ----------- ---------- ----------- ----------
6,364,152 75,896 507,183 242,687 967,460 136,949
-- (41,288) -- (32,888) (8,181) (46,293)
---------------- --------- ----------- ---------- ----------- ----------
6,364,152 34,608 507,183 209,799 959,279 90,656
---------------- --------- ----------- ---------- ----------- ----------
7,843,493 48,551 2,183,410 1,875,366 9,741,323 1,115,482
---------------- --------- ----------- ---------- ----------- ----------
9,320,097 (75,559) 1,571,961 748,197 661,484 (70,155)
(96,835,507) (350,998) (3,147,231) (250,910) (3,290,733) (171,768)
---------------- --------- ----------- ---------- ----------- ----------
(87,515,410) (426,557) (1,575,270) 497,287 (2,629,249) (241,923)
---------------- --------- ----------- ---------- ----------- ----------
$ (79,671,917) $(378,006) $ 608,140 $2,372,653 $ 7,112,074 $ 873,559
================ ========= =========== ========== =========== ==========
$ 863,048 $ 4,104 $ 48 $ -- $ -- $ --
================ ========= =========== ========== =========== ==========
</TABLE>
See Notes to the Financial Statements
39
<PAGE> 51
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
EQUITY INCOME FUND MID-CAP FUND
--------------------------------- ---------------------------------
Six Months Ended Six Months Ended
December 31, 1998 Year Ended December 31, 1998 Year Ended
(Unaudited) June 30, 1998 (Unaudited) June 30, 1998
--------------------------------- ---------------------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss)............ $ 1,687,140 $ 3,776,239 $ 42,864 $ 64,398
Net realized gain (loss) on securities
and foreign currency transactions..... 6,879,221 29,878,073 (423,626) 928,847
Net change in unrealized appreciation
(depreciation) of securities and
foreign currency...................... (12,895,909) 5,189,945 (592,547) (555,561)
------------ ------------ ----------- ----------
Net increase (decrease) in net
assets resulting from
operations....................... (4,329,548) 38,844,257 (973,309) 437,684
------------ ------------ ----------- ----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income................... (1,627,944) (3,812,071) -- (66,341)
Net realized gain on securities
transactions.......................... (24,468,164) (26,619,074) (807,762) (129,478)
------------ ------------ ----------- ----------
Total dividends and
distributions.................... (26,096,108) (30,431,145) (807,762) (195,819)
------------ ------------ ----------- ----------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold........... 27,839,553 23,627,560 1,044,709 6,338,383
Shares issued in connection with payment
of dividends and distributions........ 23,957,797 29,778,874 806,204 194,620
Cost of shares redeemed................. (38,766,542) (72,438,773) (1,488,647) (1,222,885)
------------ ------------ ----------- ----------
Net increase (decrease) in net
assets from Fund share
transactions..................... 13,030,808 (19,032,339) 362,266 5,310,118
------------ ------------ ----------- ----------
Total increase (decrease) in net assets..... (17,394,848) (10,619,227) (1,418,805) 5,551,983
NET ASSETS:
Beginning of period..................... 175,254,585 185,873,812 7,539,180 1,987,197
------------ ------------ ----------- ----------
End of period*.......................... $157,859,737 $175,254,585 $ 6,120,375 $7,539,180
============ ============ =========== ==========
*Including undistributed (distributions in
excess of) net investment income of: $ 112,022 $ 52,825 $ 42,864 $ --
============ ============ =========== ==========
CHANGES IN SHARES OUTSTANDING:
Shares sold............................. 1,362,020 1,065,609 93,511 489,941
Shares issued in connection with payment
of dividends and distributions........ 1,322,642 1,451,197 83,631 15,545
Shares redeemed......................... (2,019,471) (3,307,554) (140,005) (92,361)
------------ ------------ ----------- ----------
Net increase (decrease)............ 665,191 (790,748) 37,137 413,125
============ ============ =========== ==========
</TABLE>
See Notes to the Financial Statements
40
<PAGE> 52
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP FUND INTERNATIONAL FUND GLOBAL EQUITY FUND
---------------------------------- ----------------------------------- ----------------------------------
Six Months Ended Six Months Ended Six Months Ended
December 31, 1998 Year Ended December 31, 1998 Year Ended December 31, 1998 Year Ended
(Unaudited) June 30, 1998 (Unaudited) June 30, 1998 (Unaudited) June 30, 1998
---------------------------------- ----------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ (135,115) $ (154,400) $ 7,843,493 $ 27,073,883 $ 48,551 $ 111,802
(2,178,054) 9,968,991 9,320,097 3,289,299 (75,559) 121,357
(17,699,888) (3,968,125) (96,835,507) 70,706,856 (350,998) 225,531
------------ ------------ -------------- -------------- ---------- ----------
(20,013,057) 5,846,466 (79,671,917) 101,070,038 (378,006) 458,690
------------ ------------ -------------- -------------- ---------- ----------
-- (111,869) (14,481,899) (32,976,929) (76,144) (175,171)
(4,099,721) (5,072,568) (19,626,745) -- (15,242) (91,582)
------------ ------------ -------------- -------------- ---------- ----------
(4,099,721) (5,184,437) (34,108,644) (32,976,929) (91,386) (266,753)
------------ ------------ -------------- -------------- ---------- ----------
30,355,886 140,132,855 902,170,976 1,292,839,186 565,585 4,309,902
3,981,064 5,017,869 29,138,937 29,643,512 90,118 263,932
(48,978,399) (78,429,678) (892,117,382) (802,298,868) (344,942) (1,150,082)
------------ ------------ -------------- -------------- ---------- ----------
(14,641,449) 66,721,046 39,192,531 520,183,830 310,761 3,423,752
------------ ------------ -------------- -------------- ---------- ----------
(38,754,227) 67,383,075 (74,588,030) 588,276,939 (158,631) 3,615,689
94,913,276 27,530,201 1,476,805,384 888,528,445 7,345,285 3,729,596
------------ ------------ -------------- -------------- ---------- ----------
$ 56,159,049 $ 94,913,276 $1,402,217,354 $1,476,805,384 $7,186,654 $7,345,285
============ ============ ============== ============== ========== ==========
$ (135,115) $ -- $ (13,048,993) $ (6,410,587) $ (53,144) $ (24,779)
============ ============ ============== ============== ========== ==========
1,428,670 5,096,875 39,802,362 52,830,892 52,670 388,720
208,432 207,693 1,297,953 1,253,628 8,657 25,235
(2,338,156) (2,875,106) (39,177,134) (32,528,515) (34,250) (104,646)
------------ ------------ -------------- -------------- ---------- ----------
(701,054) 2,429,462 1,923,181 21,556,005 27,077 309,309
============ ============ ============== ============== ========== ==========
</TABLE>
See Notes to the Financial Statements
41
<PAGE> 53
Financial Statements
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
BALANCED FUND
---------------------------------------
Six Months Ended
December 31, 1998 Year Ended
(Unaudited) June 30, 1998
---------------------------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................. $ 2,183,410 $ 4,562,817
Net realized gain (loss) on securities transactions.... 1,571,961 5,754,835
Net change in unrealized appreciation (depreciation) of
securities........................................... (3,147,231) 2,122,314
------------ ------------
Net increase (decrease) in net assets resulting
from operations................................. 608,140 12,439,966
------------ ------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.................................. (2,134,042) (4,563,299)
Net realized gain on securities transactions........... (4,515,885) (5,598,223)
------------ ------------
Total dividends and distributions................. (6,649,927) (10,161,522)
------------ ------------
FUND SHARE TRANSACTIONS:
Net proceeds from shares sold.......................... 21,810,654 34,493,608
Shares issued in connection with payment of dividends
and distributions.................................... 6,483,945 9,851,285
Cost of shares redeemed................................ (19,671,131) (32,186,438)
------------ ------------
Net increase (decrease) in net assets from Fund
share transactions.............................. 8,623,468 12,158,455
------------ ------------
Total increase (decrease) in net assets..................... 2,581,681 14,436,899
NET ASSETS:
Beginning of period.................................... 104,595,413 90,158,514
------------ ------------
End of period*......................................... $107,177,094 $104,595,413
============ ============
*Including undistributed (distributions in excess of) net
investment income of: $ 50,794 $ 1,426
============ ============
CHANGES IN SHARES OUTSTANDING:
Shares sold............................................ 1,146,010 1,728,761
Shares issued in connection with payment of dividends
and distributions.................................... 348,065 508,237
Shares redeemed........................................ (1,017,565) (1,616,205)
------------ ------------
Net increase (decrease)........................... 476,510 620,793
============ ============
</TABLE>
See Notes to the Financial Statements
42
<PAGE> 54
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURN BOND FUND LOW DURATION FUND SHORT-TERM INVESTMENT FUND
--------------------------------- --------------------------------- ---------------------------------
Six Months Ended Six Months Ended Six Months Ended
December 31, 1998 Year Ended December 31, 1998 Year Ended December 31, 1998 Year Ended
(Unaudited) June 30, 1998 (Unaudited) June 30, 1998 (Unaudited) June 30, 1998
--------------------------------- --------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,875,366 $ 1,532,385 $ 9,741,323 $ 12,919,157 $ 1,115,482 $ 1,509,613
748,197 318,597 661,484 1,052,667 (70,155) (42,539)
(250,910) 504,670 (3,290,733) (221,716) (171,768) (20,572)
------------ ----------- ------------- ------------ ------------ ------------
2,372,653 2,355,652 7,112,074 13,750,108 873,559 1,446,502
------------ ----------- ------------- ------------ ------------ ------------
(2,323,553) (1,622,000) (11,467,856) (13,340,819) (1,149,731) (1,509,613)
(611,925) -- (642,509) (1,045,647) -- --
------------ ----------- ------------- ------------ ------------ ------------
(2,935,478) (1,622,000) (12,110,365) (14,386,466) (1,149,731) (1,509,613)
------------ ----------- ------------- ------------ ------------ ------------
58,439,652 33,566,256 237,203,895 182,933,522 61,589,846 50,189,024
2,906,886 1,101,255 12,471,915 12,908,812 864,256 894,623
(19,423,006) (4,460,475) (111,937,827) (113,269,472) (47,184,732) (44,698,826)
------------ ----------- ------------- ------------ ------------ ------------
41,923,532 30,207,036 137,737,983 82,572,862 15,269,370 6,384,821
------------ ----------- ------------- ------------ ------------ ------------
41,360,707 30,940,688 132,739,692 81,936,504 14,993,198 6,321,710
45,247,801 14,307,113 253,150,535 171,214,031 28,038,478 21,716,768
------------ ----------- ------------- ------------ ------------ ------------
$ 86,608,508 $45,247,801 $ 385,890,227 $253,150,535 $ 43,031,676 $ 28,038,478
============ =========== ============= ============ ============ ============
$ (413,915) $ 34,272 $ (1,701,050) $ -- $ (106,642) $ (72,392)
============ =========== ============= ============ ============ ============
4,285,064 2,516,857 23,213,312 17,898,633 6,067,442 4,944,329
214,610 82,830 1,226,079 1,263,801 85,438 88,164
(1,421,067) (334,936) (10,991,935) (11,074,513) (4,648,413) (4,404,554)
------------ ----------- ------------- ------------ ------------ ------------
3,078,607 2,264,751 13,447,456 8,087,921 1,504,467 627,939
============ =========== ============= ============ ============ ============
</TABLE>
See Notes to the Financial Statements
43
<PAGE> 55
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
December 31, 1998
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 (formerly named the Balanced Income Fund), the Small Cap Fund, the Equity
Income Fund, the International Fund, the Total Return Bond Fund, the Low
Duration Fund, the Short-Term Investment Fund, 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 Stock Market ("NSM") 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 NSM. Unlisted securities that are not included in NSM
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
44
<PAGE> 56
- --------------------------------------------------------------------------------
broader market does not exist, the proceeds received upon the disposal of such
securities may differ from quoted values previously furnished by such market
makers. Securities for which market quotations are not otherwise available are
valued at fair value as determined in good faith by Hotchkis and Wiley (the
"Advisor") under procedures established by the Board of Trustees. 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.
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. At December 31, 1998 all of the open forward
contracts are 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.
FEDERAL INCOME TAXES: It is each Fund's policy to meet the requirements of the
Internal Revenue Code applicable to regulated investment companies and 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 Small Cap, Balanced, Total Return Bond, Low Duration
and Short-Term Investment Funds own investment securities which
45
<PAGE> 57
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
December 31, 1998
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. At December 31, 1998, the
Balanced, Total Return Bond, Low Duration and Short-Term Investment Funds had
restricted securities with an aggregate market value of $7,523,478, $6,034,294,
$49,868,750 and $3,139,623, respectively, representing 7.0%, 7.0%, 12.9% and
7.3% 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 Funds record purchases of when-issued securities and reflect
the values of such securities in determining net asset value in the same manner
as other portfolio securities. The Funds segregate and maintain 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.
DISTRIBUTIONS TO SHAREHOLDERS: Dividends from net investment income are declared
and paid monthly for the Total Return Bond, Low Duration and Short-Term
Investment Funds, declared and paid quarterly for the Balanced and Equity Income
Funds, declared and paid semi-annually for the Mid-Cap, International and Global
Equity Funds and declared and paid annually for the Small Cap Fund.
Distributions of net realized capital gains, if any, will be declared at least
annually.
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.
46
<PAGE> 58
- --------------------------------------------------------------------------------
NOTE 2.
INVESTMENT ADVISORY AGREEMENTS. Each Fund has an investment advisory agreement
with the Advisor with whom certain officers and Trustees of the Trust are
affiliated. The Advisor is a division of Merrill Lynch Asset Management, L.P.,
an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc. The Advisor
receives a fee, computed daily and payable monthly, at the annual rates
presented below as applied to each Fund's daily net assets. The Advisor has
voluntarily agreed to pay all operating expenses in excess of the annual rates
presented below as applied to each Fund's daily net assets. For the six months
ended December 31, 1998, the Advisor reimbursed the following expenses:
<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%
EXPENSES REIMBURSED......... $0 $33,567 $66,764 $0 $41,288 $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%
EXPENSES REIMBURSED............................. $32,888 $8,181 $46,293
</TABLE>
The International Fund paid commissions on Fund transactions to an affiliated
broker in the amount of $123,772 during the six months ended December 31, 1998.
As permitted under Rule 10f-3 of the Investment Company Act of 1940, the Board
of Trustees of the Funds has adopted procedures which allow the Funds, under
certain conditions described in the Rule, to acquire newly-issued securities
from a member of an underwriting group in which an affiliated underwriter
participates.
47
<PAGE> 59
- --------------------------------------------------------------------------------
NOTES TO THE FINANCIAL STATEMENTS (UNAUDITED)
December 31, 1998
NOTE 3.
SECURITIES TRANSACTIONS. Purchases and sales of investment securities, other
than short-term investments, for the six months ended December 31, 1998 were as
follows:
<TABLE>
<CAPTION>
Purchases Sales
---------------------------------- ----------------------------------
Fund U.S. Government Other U.S. Government Other
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQUITY INCOME FUND......... -- $ 13,897,958 -- $ 19,988,573
MID-CAP FUND............... -- 2,916,419 -- 3,033,825
SMALL CAP FUND............. -- 15,681,804 -- 35,341,287
INTERNATIONAL FUND......... -- 385,760,727 -- 316,342,332
GLOBAL EQUITY FUND......... -- 1,925,325 -- 1,754,186
BALANCED FUND.............. $ 52,695,248 14,644,483 $ 40,785,903 18,507,308
TOTAL RETURN BOND FUND..... 75,437,298 26,936,804 45,413,102 16,634,774
LOW DURATION FUND.......... 295,277,222 98,470,213 157,850,373 81,858,451
SHORT-TERM INVESTMENT
FUND..................... 22,511,734 10,204,549 16,812,014 7,766,434
</TABLE>
As of December 31, 1998, 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........................... $ 31,152,262 $ 40,607,659 $ (9,455,397)
MID-CAP FUND................................. (956,884) 448,305 (1,405,189)
SMALL CAP FUND............................... (16,833,087) 4,466,196 (21,299,283)
INTERNATIONAL FUND........................... 96,409,216 232,971,476 (136,562,260)
GLOBAL EQUITY FUND........................... 173,051 965,336 (792,285)
BALANCED FUND................................ 5,842,943 9,681,971 (3,839,028)
TOTAL RETURN BOND FUND....................... 649,788 1,300,740 (650,952)
LOW DURATION FUND............................ (1,978,311) 2,395,387 (4,373,698)
SHORT-TERM INVESTMENT FUND................... (132,953) 126,379 (259,332)
</TABLE>
At December 31, 1998, the cost of investments for federal income tax purposes
was $131,093,037, $7,104,388, $70,128,731, $1,315,680,836, $6,930,035,
$102,062,636, $94,276,134,
48
<PAGE> 60
- --------------------------------------------------------------------------------
$413,520,905 and $43,482,325 for the Equity Income, Mid-Cap, Small Cap,
International, Global Equity, Balanced, Total Return Bond, Low Duration and
Short-Term Investment Funds, respectively. Any differences between book and tax
are due primarily to wash sale losses and REIT return of capital distributions.
In addition, the cost basis differences in the International Fund and Global
Equity Fund are due to mark-to-market adjustments for passive foreign investment
companies.
49
<PAGE> 61
Financial Highlights
- --------------------------------------------------------------------------------
EQUITY INCOME FUND
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30,
December 31, 1998 ------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year.............................. $ 22.02 $21.25 $18.91 $17.24 $15.07 $15.50
-------- ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income.......... 0.20 0.46 0.49 0.45(1) 0.49 0.46
Net realized and unrealized
gain (loss) on investments... (0.83) 4.02 4.15 2.89 2.48 0.10
-------- ------ ------ ------ ------ ------
Total from investment
operations................... (0.63) 4.48 4.64 3.34 2.97 0.56
-------- ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)...................... (0.20) (0.46) (0.48) (0.57) (0.44) (0.46)
Distributions (from realized
gains)....................... (2.88) (3.25) (1.82) (1.10) (0.36) (0.53)
-------- ------ ------ ------ ------ ------
Total distributions............ (3.08) (3.71) (2.30) (1.67) (0.80) (0.99)
-------- ------ ------ ------ ------ ------
Net Asset Value, End of Year........ $ 18.31 $22.02 $21.25 $18.91 $17.24 $15.07
======== ====== ====== ====== ====== ======
Total Return........................ (2.62)%++ 22.60% 26.15% 20.04% 20.49% 3.40%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(millions)........................ $157.9 $175.3 $185.9 $182.5 $127.1 $87.2
Ratio of expenses to average net
assets:
Before expense reimbursement... 0.91%+ 0.87% 0.88% 0.98% 1.02% 1.05%
After expense reimbursement.... 0.91%+ 0.87% 0.88% 0.98% 1.00% 1.00%
Ratio of net investment income to
average net assets:
Before expense reimbursement... 2.06%+ 1.99% 2.49% 2.56% 3.11% 2.85%
After expense reimbursement.... 2.06%+ 1.99% 2.49% 2.56% 3.14% 2.90%
Portfolio turnover rate............. 9%++ 23% 44% 24% 50% 36%
</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 the Financial Statements
50
<PAGE> 62
Financial Highlights
- --------------------------------------------------------------------------------
MID-CAP FUND
<TABLE>
<CAPTION>
Six Months
Ended Year Ended January 2, 1997*
December 31, 1998 June 30, through
(Unaudited) 1998 June 30, 1997
----------------- ---------- ----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period.................. $12.92 $11.65 $10.00
------ ------ ------
Income from Investment Operations:
Net investment income............................ 0.07 0.13 0.07
Net realized and unrealized gain (loss) on
investments.................................... (1.62) 1.60 1.64
------ ------ ------
Total from investment operations................. (1.55) 1.73 1.71
------ ------ ------
Less Distributions:
Dividends (from net investment income)........... -- (0.14) (0.06)
Distributions (from realized gains).............. (1.51) (0.32) --
------ ------ ------
Total distributions.............................. (1.51) (0.46) (0.06)
------ ------ ------
Net Asset Value, End of Period........................ $ 9.86 $12.92 $11.65
====== ====== ======
Total Return.......................................... (11.76)%++ 15.00% 17.15%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions).................. $6.1 $7.5 $2.0
Ratio of expenses to average net assets:
Before expense reimbursement..................... 2.05%+ 2.72% 8.26%+
After expense reimbursement...................... 1.00%+ 1.00% 1.00%+
Ratio of net investment income (loss) to average net
assets:
Before expense reimbursement..................... 0.29%+ (0.52)% (5.39)%+
After expense reimbursement...................... 1.34%+ 1.20% 1.87%+
Portfolio turnover rate............................... 48%++ 71% 23%++
</TABLE>
* Commencement of operations.
(+) Annualized.
(++) Not Annualized.
See Notes to the Financial Statements
51
<PAGE> 63
Financial Highlights
- --------------------------------------------------------------------------------
SMALL CAP FUND
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30,
December 31, 1998 ------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year.............................. $ 26.48 $23.83 $21.33 $21.53 $19.53 $19.88
------- ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income (loss)... (0.05) (0.06)(1) 0.03 0.05(1) (0.06) (0.01)
Net realized and unrealized
gain (loss) on investments... (5.42) 5.13 5.62 2.80 2.84 0.78
------- ------ ------ ------ ------ ------
Total from investment
operations................... (5.47) 5.07 5.65 2.85 2.78 0.77
------- ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)...................... -- (0.05) (0.09) -- -- (0.20)
Distributions (from realized
gains)....................... (1.53) (2.37) (3.06) (3.05) (0.78) (0.92)
------- ------ ------ ------ ------ ------
Total distributions............ (1.53) (2.42) (3.15) (3.05) (0.78) (1.12)
------- ------ ------ ------ ------ ------
Net Asset Value, End of Year........ $ 19.48 $26.48 $23.83 $21.33 $21.53 $19.53
======= ====== ====== ====== ====== ======
Total Return........................ (20.54)%++ 22.24% 29.74% 14.24% 14.79% 3.77%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(millions)........................ $56.2 $94.9 $27.5 $16.5 $20.5 $13.1
Ratio of expenses to average net
assets:
Before expense reimbursement... 1.20%+ 0.94% 1.30% 1.21% 1.49% 1.65%
After expense reimbursement.... 1.00%+ 0.94% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income
(loss) to average net assets:
Before expense reimbursement... (0.60)%+ (0.23)% (0.20)% 0.03% (0.82)% (0.71)%
After expense reimbursement.... (0.40)%+ (0.23)% 0.10% 0.24% (0.34)% (0.06)%
Portfolio turnover rate............. 24%++ 85% 88% 119% 81% 44%
</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 the Financial Statements
52
<PAGE> 64
Financial Highlights
- --------------------------------------------------------------------------------
INTERNATIONAL FUND
<TABLE>
<CAPTION>
Six Months
Ended Year Ended June 30,
December 31, 1998 --------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year............................ $ 25.33 $ 24.17 $20.44 $17.70 $16.79 $14.63
-------- -------- ------ ------ ------ ------
Income from Investment
Operations:
Net investment income........ 0.14 0.59 0.59(1) 0.56(1) 0.28 0.26
Net realized and unrealized
gain (loss) on
investments................ (1.61) 1.23 3.78 2.51 1.52 2.19
-------- -------- ------ ------ ------ ------
Total from investment
operations................. (1.47) 1.82 4.37 3.07 1.80 2.45
-------- -------- ------ ------ ------ ------
Less Distributions:
Dividends (from net
investment income)......... (0.25) (0.66) (0.48) (0.14) (0.44) (0.14)
Distributions (from realized
gains)..................... (0.33) -- (0.16) (0.19) (0.45) (0.15)
-------- -------- ------ ------ ------ ------
Total distributions.......... (0.58) (0.66) (0.64) (0.33) (0.89) (0.29)
-------- -------- ------ ------ ------ ------
Net Asset Value, End of Year...... $ 23.28 $ 25.33 $24.17 $20.44 $17.70 $16.79
======== ======== ====== ====== ====== ======
Total Return...................... (5.70%)++ 7.77% 21.59% 18.61% 11.08% 16.71%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(millions)...................... $1,402.2 $1,476.8 $888.5 $331.0 $51.5 $26.0
Ratio of expenses to average net
assets:
Before expense
reimbursement.............. 0.93%+ 0.89% 1.07% 1.11% 1.39% 1.61%
After expense
reimbursement.............. 0.93%+ 0.89% 1.00% 1.00% 1.00% 1.00%
Ratio of net investment income to
average net assets:
Before expense
reimbursement.............. 1.14%+ 2.32% 2.59% 2.67% 2.45% 2.01%
After expense
reimbursement.............. 1.14%+ 2.32% 2.66% 2.78% 2.83% 2.62%
Portfolio turnover rate........... 24%++ 20% 18% 12% 24% 23%
</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 the Financial Statements
53
<PAGE> 65
Financial Highlights
- --------------------------------------------------------------------------------
GLOBAL EQUITY FUND
<TABLE>
<CAPTION>
Six Months
Ended January 2, 1997*
December 31, 1998 Year Ended through
(Unaudited) June 30, 1998 June 30, 1997
----------------- ------------- ----------------
<S> <C> <C> <C>
Net Asset Value, Beginning of Period................. $11.38 $11.09 $10.00
------ ------ ------
Income from Investment Operations:
Net investment income........................... 0.07 0.28 0.14
Net realized and unrealized gain (loss) on
investments................................... (0.63) 0.51 1.09
------ ------ ------
Total from investment operations................ (0.56) 0.79 1.23
------ ------ ------
Less Distributions:
Dividends (from net investment income).......... (0.11) (0.32) (0.14)
Distributions (from realized gains)............. (0.02) (0.18) --
------ ------ ------
Total distributions............................. (0.13) (0.50) (0.14)
------ ------ ------
Net Asset Value, End of Period....................... $10.69 $11.38 $11.09
====== ====== ======
Total Return......................................... (4.84)%++ 7.61% 12.32%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (millions)................. $7.2 $7.3 $3.7
Ratio of expenses to average net assets:
Before expense reimbursement.................... 2.20%+ 2.88% 4.43%+
After expense reimbursement..................... 1.00%+ 1.00% 1.00%+
Ratio of net investment income to average net assets:
Before expense reimbursement.................... 0.21%+ 0.00% 0.07%+
After expense reimbursement..................... 1.41%+ 1.88% 3.50%+
Portfolio turnover rate.............................. 26%++ 54% 18%++
</TABLE>
* Commencement of operations.
(+) Annualized.
(++) Not Annualized.
See Notes to the Financial Statements
54
<PAGE> 66
Financial Highlights
- --------------------------------------------------------------------------------
BALANCED FUND
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30,
December 31, 1998 --------------------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Year............................. $19.84 $19.38 $ 18.27 $ 16.74 $15.71 $16.69
------ ------ ------- ------- ------ ------
Income from Investment
Operations:
Net investment income......... 0.39 0.89 0.90(1) 0.94 0.89 0.89
Net realized and unrealized
gain (loss) on
investments................. (0.39) 1.58 1.86 1.53 1.53 (0.27)
------ ------ ------- ------- ------ ------
Total from investment
operations.................. 0.00 2.47 2.76 2.47 2.42 0.62
------ ------ ------- ------- ------ ------
Less Distributions:
Dividends (from net investment
income)..................... (0.38) (0.90) (0.99) (0.92) (0.80) (0.94)
Distributions (from realized
gains)...................... (0.82) (1.11) (0.66) (0.02) (0.57) (0.66)
Return of capital............. -- -- -- -- (0.02) --
------ ------ ------- ------- ------ ------
Total distributions........... (1.20) (2.01) (1.65) (0.94) (1.39) (1.60)
------ ------ ------- ------- ------ ------
Net Asset Value, End of Year....... $18.64 $19.84 $ 19.38 $ 18.27 $16.74 $15.71
====== ====== ======= ======= ====== ======
Total Return....................... 0.07%++ 13.29% 15.75% 15.04% 16.40% 3.60%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(millions)....................... $107.2 $104.6 $90.2 $70.6 $32.1 $36.0
Ratio of expenses to average net
assets:
Before expense
reimbursement............... 0.95%+ 0.93% 0.98% 1.06% 1.19% 1.20%
After expense reimbursement... 0.95%+ 0.93% 0.98% 1.00% 1.00% 1.00%
Ratio of net investment income to
average net assets:
Before expense
reimbursement............... 4.11%+ 4.49% 4.77% 5.20% 5.44% 5.04%
After expense reimbursement... 4.11%+ 4.49% 4.77% 5.26% 5.63% 5.24%
Portfolio turnover rate............ 57%++ 121% 117% 92% 51% 97%
</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 the Financial Statements
55
<PAGE> 67
Financial Highlights
- --------------------------------------------------------------------------------
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30, December 6, 1994*
December 31, 1998 ------------------------------ through
(Unaudited) 1998 1997 1996 June 30, 1995
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of
Period........................... $13.46 $13.04 $12.78 $12.94 $12.00
------ ------ ------ ------ ------
Income from Investment
Operations:
Net investment income......... 0.39 0.89 0.99 0.84(1) 0.46
Net realized and unrealized
gain on investments......... 0.17 0.50 0.30 0.06 0.94
------ ------ ------ ------ ------
Total from investment
operations.................. 0.56 1.39 1.29 0.90 1.40
------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)..................... (0.47) (0.97) (0.92) (0.93) (0.46)
Distributions (from realized
gains)...................... (0.10) -- (0.11) (0.13) --
------ ------ ------ ------ ------
Total distributions........... (0.57) (0.97) (1.03) (1.06) (0.46)
------ ------ ------ ------ ------
Net Asset Value, End of Period..... $13.45 $13.46 $13.04 $12.78 $12.94
====== ====== ====== ====== ======
Total Return....................... 4.19%++ 11.04% 10.48% 7.05% 11.88%++
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(millions)....................... $86.6 $ 45.2 $14.3 $43.4 $15.3
Ratio of expenses to average net
assets:
Before expense
reimbursement............... 0.75%+ 1.02% 0.95% 0.98% 2.93%+
After expense reimbursement... 0.65%+ 0.65% 0.65% 0.68% 0.80%+
Ratio of net investment income to
average net assets:
Before expense
reimbursement............... 5.66%+ 6.28% 6.78% 6.86% 4.92%+
After expense reimbursement... 5.76%+ 6.65% 7.08% 7.16% 7.05%+
Portfolio turnover rate............ 101%++ 195% 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 the Financial Statements
56
<PAGE> 68
Financial Highlights
- --------------------------------------------------------------------------------
LOW DURATION FUND
<TABLE>
<CAPTION>
Six Months
Ended Year Ended June 30,
December 31, 1998 ------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year..... $10.20 $10.23 $10.12 $10.15 $ 9.93 $10.00
------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income............. 0.29 0.66 0.66 0.68 0.75 0.77
Net realized and unrealized gain
(loss) on investments........... (0.06) 0.05 0.10 0.06 0.23 0.11
------ ------ ------ ------ ------ ------
Total from investment
operations...................... 0.23 0.71 0.76 0.74 0.98 0.88
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)......................... (0.33) (0.68) (0.64) (0.72) (0.75) (0.77)
Distributions (from realized
gains).......................... (0.02) (0.06) (0.01) (0.05) (0.01) (0.18)
------ ------ ------ ------ ------ ------
Total distributions............... (0.35) (0.74) (0.65) (0.77) (0.76) (0.95)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Year........... $10.08 $10.20 $10.23 $10.12 $10.15 $ 9.93
====== ====== ====== ====== ====== ======
Total Return........................... 2.29%++ 7.19% 7.79% 7.47% 10.23% 9.02%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions)..... $385.9 $253.2 $171.2 $189.2 $123.3 $36.5
Ratio of expenses to average net
assets:
Before expense reimbursement...... 0.58%+ 0.65% 0.66% 0.60% 0.75% 1.10%
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...... 5.82%+ 6.39% 6.26% 7.07% 7.43% 6.82%
After expense reimbursement....... 5.82%+ 6.46% 6.34% 7.09% 7.61% 7.34%
Portfolio turnover rate................ 79%++ 119% 202% 50% 71% 254%
</TABLE>
(+) Annualized.
(++) Not Annualized.
See Notes to the Financial Statements
57
<PAGE> 69
Financial Highlights
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENT FUND
<TABLE>
<CAPTION>
Six Months Ended Year Ended June 30,
December 31, 1998 ------------------------------------------
(Unaudited) 1998 1997 1996 1995 1994
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Year..... $10.13 $10.15 $10.17 $10.12 $10.21 $10.00
------ ------ ------ ------ ------ ------
Income from Investment Operations:
Net investment income............. 0.31 0.63 0.58 0.66 0.66 0.53
Net realized and unrealized gain
(loss) on investments........... (0.06) 0.00 (0.01) 0.05 (0.09) 0.21
------ ------ ------ ------ ------ ------
Total from investment
operations...................... 0.25 0.63 0.57 0.71 0.57 0.74
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends (from net investment
income)......................... (0.31) (0.65) (0.59) (0.66) (0.66) (0.53)
Return of capital................. -- -- -- (0.00) -- --
------ ------ ------ ------ ------ ------
Total distributions............... (0.31) (0.65) (0.59) (0.66) (0.66) (0.53)
------ ------ ------ ------ ------ ------
Net Asset Value, End of Year........... $10.07 $10.13 $10.15 $10.17 $10.12 $10.21
====== ====== ====== ====== ====== ======
Total Return........................... 2.54%++ 6.37% 5.77% 7.23% 5.78% 7.47%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (millions)..... $43.0 $28.0 $21.7 $18.7 $19.8 $10.5
Ratio of expenses to average net
assets:
Before expense reimbursement...... 0.72%+ 0.92% 0.96% 0.88% 1.26% 2.06%
After expense reimbursement....... 0.48%+ 0.48% 0.48% 0.48% 0.48% 0.48%
Ratio of net investment income to
average net assets:
Before expense reimbursement...... 5.64%+ 5.92% 5.34% 6.15% 5.74% 4.16%
After expense reimbursement....... 5.88%+ 6.36% 5.82% 6.55% 6.52% 5.74%
Portfolio turnover rate................ 91%++ 121% 154% 60% 81% 135%
</TABLE>
(+) Annualized.
(++) Not Annualized.
See Notes to the Financial Statements
58
