<PAGE>
MESSAGE FROM THE CHAIRMAN
DEAR FELLOW SHAREHOLDERS:
1995 was an excellent year for nearly all financial assets. Just about
everything that could have gone right ... did.
Inflation remained well contained with the Consumer Price Index (CPI)
increasing less than 3 percent for the fourth consecutive year.
Much of the pain that investors endured during 1994, when the Federal
Reserve raised interest rates seven times to slow down the economy and keep
inflation at bay, is but a distant memory. Indeed, the Federal Reserve did an
excellent job guiding the economy to a much publicized soft landing, thereby
successfully prolonging the current economic expansion.
Once investors recognized that inflation fears were unfounded, both the
bond and stock markets responded with strong rallies.
What is more important, corporate America continued to post strong earnings
gains benefiting from moderate growth in the economy, cost cutting and improved
productivity.
It is remarkable, however, that going into 1995 the "chicken littles" of
the world had all sorts of reasons to doubt that the financial markets would
recover. Such skepticism reinforces my belief that it is difficult to predict
the direction of the market on a weekly, monthly or even annual basis. Our
experience has been that the market rewards those investors that truly take a
long-term approach.
For the year ended December 31, 1995, The Balanced Return Fund was a strong
performer. The net asset value (NAV) of its A Shares increased 27.18 percent,
outperforming the average balanced fund, which returned 25.19(1) percent. The
Nifty Fifty Fund A Shares posted a 28.21 percent increase in NAV and The
Pasadena Growth Fund A Shares' NAV advanced 27.16 percent. Both of these funds
slightly lagged the average growth fund, which returned 30.80(1) percent for the
year, but overall the returns are very gratifying. Complete standard
performance figures on all Share Classes of The Pasadena Group of Mutual Funds
are listed on pages 7, 9 and 11.
So the obvious question at this point is, "what's next?" First and
foremost, we remain faithful to our tried and true strategy of being long-term
investors in a diversified portfolio of steady growth companies.
(1) As reported by Lipper Analytical Services
Line chart illustrating inflation vs. S&P Stock Index P/E ratio from 1950
through 1995.
Inflation vs. S&P 500 Stock Index Price/Earnings Ratio -- 1950 through 1995(2)
[GRAPH]
YEAR INFLATION PRICE/EARNINGS
1950 5.79% 7.15
1951 5.87% 8.57
1952 0.88% 10.57
1953 0.62% 9.77
1954 -0.50% 11.75
1955 3.70% 12.59
1956 2.86% 13.24
1957 3.02% 12.73
1958 1.76% 16.33
1959 1.50% 17.32
1960 1.48% 16.98
1961 0.67% 21.67
1962 1.22% 17.39
1963 1.65% 18.19
1964 1.08% 18.62
1965 1.92% 17.92
1966 3.35% 15.15
1967 3.04% 17.48
1968 4.72% 17.66
1969 6.11% 16.48
1970 5.49% 15.69
1971 3.36% 18.49
1972 3.41% 18.20
1973 8.80% 14.22
1974 12.20% 8.94
1975 7.01% 10.99
1976 4.81% 11.25
1977 6.77% 9.29
1978 9.03% 8.33
1979 13.31% 7.43
1980 12.40% 8.01
1981 8.94% 8.41
1982 3.87% 8.83
1983 3.80% 12.50
1984 3.95% 9.99
1985 3.77% 11.75
1986 1.13% 14.66
1987 4.41% 16.24
1988 4.42% 11.18
1989 4.65% 12.73
1990 6.11% 13.36
1991 3.06% 16.77
1992 2.90% 17.63
1993 2.75% 17.12
1994 2.67% 14.65
1995 2.54% 14.97
Price/earnings source: Goldman Sachs Inflation source: Ibbotson and
Associates
(2) 1995 Price/Earnings ratio information is based on 1995 earnings estimates
<PAGE>
MESSAGE FROM THE CHAIRMAN (CONTINUED)
As I survey the economic landscape, however, many of the elements that
contributed to 1995's solid performance continue to emit positive signals.
Currently, the news on inflation is encouraging. Consensus estimates
indicate that 1996 should provide moderate to low inflation.
Consistently low inflation facilitates long-term business planning, as
people worry less about the purchasing power of the dollar eroding. As a
result, the price investors are willing to pay for each dollar of earnings,
or in the vernacular of investment folks, the price to earnings ratio (P/E),
is highly dependent on the outlook for inflation (please refer to chart on
page 1). Historically P/Es have been negatively correlated with inflation.
For time periods when inflation is high, it is not unusual to see the average
S&P 500(1) company selling for a single digit P/E ratio. Conversely, when
inflation is low investors are willing to pay P/Es in the mid-to-high teens.
In fact, there are some exceptional periods when P/Es can rise above 20 for
the average company.
Given this historical context and our estimates for the level of earnings
for the S&P 500 in 1996, we do not believe the stock market is currently
overvalued.
The second element we consider of primary importance when evaluating the
stock market is earnings growth. After several years of above-average growth,
the earnings of the average company in the S&P 500 appear to be slowing. In
fact, the cumulative growth of corporate profits, as measured by the Dow Jones
Equity Market Index for the third quarter of 1995, slowed to only 5 percent.
Compare this to the 15 percent growth experienced in the second quarter and the
48 percent growth achieved in the first quarter of 1995. I believe the
companies in your fund portfolios should be able to deliver steady earnings
growth which we currently estimate to be in the annualized range of 15 to 20
percent throughout this slowing environment.
What is more encouraging is that investors are clearly recognizing this
trend and are emphasizing steady growth companies. If you look at the price
activity in the Dow Jones Industrial Average over the past six months, there is
a distinct divergence in performance between steady growth companies and
cyclical companies. As a result, the steady growth companies held in your
portfolios, such as Procter & Gamble and Philip Morris, have gained more than 20
percent. By contrast, cyclical companies such as International Paper and
Caterpillar are down more than 10 percent. To us, this is a clear signal from
the market that the expectation is for companies' earnings growth to begin to
slow.
In summary, with profits slowing down we believe that picking the right
companies, as opposed to being in a specific sector, will be the greatest
challenge for investors in 1996. This is an attractive environment for our
fundamental analysis and emphasis on strong, steady businesses to bear fruit.
In the MESSAGE FROM PORTFOLIO MANAGEMENT, you'll find details on the
investment decisions that affected our portfolios and our strategy for the
upcoming year.
Thank you for the loyalty you have shown to The Pasadena Group of Mutual
Funds. As an investor right along with you in each of the Funds, I share your
desire for superior performance over the long term, and I want to assure you we
are totally committed to that objective.
/S/ Roger Engemann
Roger Engemann
Chairman of the Board and President
February 16, 1996
(1)THE S&P 500 STOCK INDEX IS AN UNMANAGED INDEX WHICH ASSUMES REINVESTMENT OF
ALL DIVIDENDS AND DISTRIBUTIONS AND IS GENERALLY CONSIDERED REPRESENTATIVE OF
THE U.S. EQUITY MARKET FOR LARGER CAPITALIZATION STOCKS. THE S&P 500 STOCK
INDEX DOES NOT REFLECT ANY OPERATING EXPENSES.
2
<PAGE>
MESSAGE FROM PORTFOLIO MANAGEMENT
MANAGEMENT BACKGROUND
Roger Engemann Management Co., Inc. (REMC), manager of The Pasadena Group
of Mutual Funds, is a subsidiary of Roger Engemann & Associates, Inc. (REA), a
leading investment managment firm. REA was established in 1969 and specializes
in the management of private equity portfolios, generally with account minimums
of $1 million. REMC was established in 1985.
JIM MAIR and JOHN TILSON direct the Portfolio Management team for the
overall Engemann organization. They have been with REA since 1983 and have
managed each of the Funds since their inception.
Jim and John are both Chartered Financial Analysts and Chartered Investment
Counselors. Together they have more than 50 years of professional investment
experience. They use a consultative team approach to managing our Funds,
enabling them to bypass the risk of having all investment decisions made by one
individual as well as the potential delays involved when decisions must be made
by committee consensus. Jim and John spend a significant amount of their time
in face-to-face meetings with the management of the companies they follow. As a
result, their investment conclusions are based on timely, direct information.
- ----------
The Pasadena Group of Mutual Funds has a history of investing in stable,
growing businesses. The Funds favor companies that have demonstrated the
unusual ability to grow their earnings steadily in various economic
environments. This characteristic is attractive to investors, especially in a
slowing economy.
Much of our analysis surrounds fundamental bottom-up scrutiny of the
underlying business. We continually evaluate the competitive and financial
strength of the companies we own and the worldwide events that are likely to
alter demand patterns for the companies' products. Our philosophy is long term
in nature, for we believe a diversified portfolio of strong businesses is likely
to outperform all other asset classes in the long run.
In general, we are pleased with the performance of the stocks in the Funds'
portfolios for the year ended December 31, 1995. Most of the companies in the
portfolios achieved the earnings growth we expected and some exceeded our
estimates. However, there were also some companies that disappointed us. What
follows is a discussion of themes that impacted the Funds' portfolios during
1995 and an overview on how the Funds are positioned for the upcoming year.
RETAIL
One area that hampered Fund performance during the year was the retail
sector. Although the economy continued to expand, retailers behaved as if the
country was in a recession. Simply put, there are too many retail stores.
Combine this with the ill effects of President Clinton's retroactive tax and
increasing levels of consumer debt, and you have a less than favorable climate.
The bankruptcies of a number of retailers during the year serve as ample
evidence of this difficult environment. True, these events are painful in the
short term, but we believe that over the long term this is a healthy process
which will strengthen the competitive position of the surviving companies.
During the year we took a number of steps to align the Funds' portfolios to
better reflect this retail climate. We sold retailers such as Toys "R" Us,
Lowe's and Brinker that were having a difficult time meeting our earnings
projections.
TECHNOLOGY
Although the Funds were underweighted in technology for most of the year,
each Fund did own a number of technology stocks which contributed to overall
performance. But first a word on diversification. To us, diversification is
the heart and soul of investing. Therefore portfolios will never be extremely
overweighted in any particular segment of the market. This is especially true
of technology stocks which have a volatile history. That being said, the Funds
had strong gains in both Intel and Microsoft. In addition, during the year we
initiated new Fund positions in Cisco Systems, Hewlett-Packard and Oracle.
We would emphasize that we remain faithful to our underlying philosophy of
selecting stocks. That is, we continue to favor those companies that
dominate their respective market categories, have an advantage considered
sustainable, expect above-average
3
<PAGE>
consistent growth in revenues and earnings and possess strong potential for
growth in overseas markets. We would say the technology stocks found in the
Funds' portfolios possess these characteristics.
Cisco Systems, for example, is a dominant supplier of networking switches
that maintains the No. 1 or 2 market share position for most of its products.
The company is benefiting from the trend of corporate America's buildout of
computer networks and the telecommunications industry's expansion of wireless
communication capabilities. In addition to outstanding growth opportunities in
the U.S., the company derives more than 40 percent of its revenues from
overseas markets.
HEALTH CARE
Among the sectors that performed particularly well during the year was
health care. In a way, this was one of the most satisfying as well. For a long
time we have believed that health care provides excellent investment
opportunities. Pharmaceutical companies, for example, are exactly the type of
companies we traditionally favor. These are stable growth businesses that have
good international opportunities and, what is most important, many of the
companies' products are insulated from competition through patents. During 1992
and 1993 the market disregarded these favorable characteristics and focused on
Washington's initiatives to lower health-care costs. Consequently, the Funds
endured a difficult period. In 1995, however, the market once again
recognized the superior characteristics of these companies and health-care
stocks had a tremendous run. Strong performers included Fund holdings Merck,
Pfizer, Johnson & Johnson and Medtronic.
CONSUMER STAPLES
Fear that a slowing economy would cause cyclical companies to report
disappointing earnings compelled investors to bid up the price on consumer
staple companies that are perceived to be steady growers. As a result, the
Funds had solid showings from some of our long-term core holdings such as Philip
Morris, McDonald's, PepsiCo, Coca-Cola and Gillette.
FINANCIALS
Another of the standout sectors for the Funds was the financial group.
Lower interest rates and consolidation in banks enabled this group to post
strong gains. Among the issues that performed strongly were Wells Fargo, First
Interstate and NationsBank. The Funds also have holdings in Fannie Mae and
Freddie Mac. While getting an added boost from falling interest rates, these
mortgage agencies continued to achieve consistent growth and stable margins.
Both of these issues were among the Funds' top performers as well.
OUTLOOK
Going into 1996, many of the attributes which contributed to 1995's strong
market are still in place. Inflation is well contained. 1996 is expected to be
the sixth consecutive year with moderate to low inflation. Low inflation and a
slowing economy should provide impetus for the Federal Reserve to continue to
lower interest rates. Finally, we believe the earnings growth of the companies
in Fund portfolios should remain consistent. We are excited about 1996 because
we believe the steady earnings growth companies in our portfolio should achieve
earnings growth that is superior to the average company. This hasn't been true
over the last several years, as many cyclical companies posted strong earnings,
benefiting from a prolonged economic expansion and cost cutting. However, we
are beginning to see signs of earnings slowing for the average company in the
S&P 500 Stock Index. It is in this environment that the steady growth
companies found in the portfolio of each of The Pasadena Group of Mutual Funds
should shine.
/s/ James E. Mair /s/ John S. Tilson
James E. Mair John S. Tilson
Managing Directors/Portfolio Management
February 16, 1996
4
<PAGE>
THE PASADENA GROWTH FUND
The Pasadena Growth Fund's objective is to achieve long-term capital
appreciation by investing in common stocks with rapidly growing earnings per
share. The Fund invests in stocks of various market capitalizations.
The Pasadena Growth Fund's A Share NAV increased 27.16 percent during the
year ended December 31, 1995(1). This compares with the S&P 500 Index which
gained 37.47 percent, and the average growth fund, as reported by Lipper
Analytical Services, which advanced 30.80 percent.
Much of the Fund's underperformance can be attributed to two factors:
overweighting in the retail sector and modest representation, for most of the
year, in the technology sector.
Among the Fund's disappointing performers in the retail sector were TOYS
"R" US, INC., BRINKER INTERNATIONAL, INC. AND LOWE'S COMPANIES, INC. Because of
an extremely competitive retail environment, these companies had a difficult
time meeting our growth estimates. As a result, these companies were eliminated
from the Fund. Because we expect this challenging retail climate to continue in
the near term, we reduced exposure to this sector by selling many of the Fund's
smaller retailers as well.
Historically, technology stocks have been plagued with shorter product
cycles and lower predictability in earnings than the types of companies we
typically favor. We therefore have traditionally approached technology stocks
conservatively in The Pasadena Group of Mutual Funds.
Once we concluded the growth drivers for technology were firmly in place
and this would be one of the fastest growing areas in the economy over the next
three to five years, we did increase the Fund's technology weighting. Our
efforts were deliberate and cautious as we sought to identify companies that
possess characteristics we believe enable them to grow consistently over the
long haul. During the year, a number of new technology companies were added to
the Fund's holdings, several of which meaningfully contributed to overall
performance for the year, including CISCO SYSTEMS, LINEAR TECHNOLOGY
CORPORATION, and ORACLE SYSTEMS. That being said, technology did produce
several disappointments as well. Among them was SILICON GRAPHICS, whose stock
price declined when the company cautioned investors that expectations were too
high.
Reviewing the Growth Fund's ten largest holdings, most of the companies
performed well. The perception that the economy was slowing, which would result
in companies having a tougher time meeting their earnings projections, caused
investors to favor consumer staple companies. These companies are expected to
post consistent earnings growth. Four of the Fund's top ten holdings--THE
GILLETTE COMPANY, PEPSICO, INC., PFIZER INC. and THE COCA-COLA COMPANY--
benefited from this trend and were all strong performers. Lower interest rates
and consolidation in banking spurred WELLS FARGO & COMPANY, FEDERAL NATIONAL
MORTGAGE ASSOCIATION and FEDERAL HOME LOAN MORTGAGE CORPORATION to new highs.
Although REUTERS HOLDINGS PLC ADS B and THE WALT DISNEY COMPANY both posted
solid gains for the year, their performance lagged somewhat. Reuters
experienced a temporary slowdown in revenues because of the ongoing
consolidation in the financial services sector. Disney, on the other hand, may
have been affected by its proposed merger with Capital Cities/ABC as investors
contemplated the success of the combined entity. Finally, THE HOME DEPOT, INC.
showed a small gain for the year, consistent with the difficulties in the retail
sector.
In addition to high quality, blue chip companies the Growth Fund has
approximately 25 to 30 percent of its assets invested in small cap and midcap
stocks. Similar to the large cap portion of this portfolio, the small cap
and midcap holdings of the Fund represent companies we believe dominate their
markets and can grow consistently. IDEXX LABORATORIES, INC., for example,
is a leader in diagnostic products for veterinary food and environmental
testing applications. The company has been posting dynamic growth and was
one of the Fund's best performers. Another star performer was MAXIM
INTEGRATED PRODUCTS, INC. Strong demand for the company's analog integrated
circuits fueled growth.
(1) See Average Annual Total Returns table on page 7
5
<PAGE>
THE PASADENA GROWTH FUND
With smaller companies comes greater risk that they will not meet
expectations. As a result, several companies in this portion of the portfolio
proved to be disappointments including AVID TECHNOLOGY and BEST BUY CO, INC.
Both companies were sold for a loss when it became evident that the outlook for
their long-term prospects had deteriorated. We would emphasize, however, that
we believe that small cap and midcap companies are an important part of a
diversified growth portfolio. As such, we believe the risks associated with
smaller companies are worthwhile, given the potential rewards.
Although much of the Funds' assets are concentrated in large multinationals
based in the United States, the Fund also has approximately 11 percent invested
in foreign stocks. Italian-based LUXOTTICA GROUP S.p.A., the dominant supplier
of eyeglass frames in the world, was among the Funds top performers. During the
year, the Fund also initiated several new positions including P.T.
TELEKOMUNIKASI INDONESIA (PERSERO) ADS, the principal provider of
telecommunication services in Indonesia, and U.K.-based INVESCO PLC, one of the
world's largest independent investment management groups.
Looking ahead into 1996, we remain optimistic. Moderate economic growth
and low inflation provide an opportunity for the stocks in this portfolio to
perform well.
6
<PAGE>
THE PASADENA GROWTH FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURNS(1)
-------------------------------
1 Year 5 Years Since Inception
- ----------------------------------------------------------------------
A Shares(2) (INCEPTION: 6/24/86)
NAV 27.16% 14.60% 11.58%
POP 20.14% 13.31% 10.92%
- ----------------------------------------------------------------------
B Shares(3) (INCEPTION DATE 1/3/94)
CDSC 21.26% N/A 8.38%
No CDSC 26.26% N/A 10.22%
- ----------------------------------------------------------------------
C Shares(4) (INCEPTION DATE 1/3/94)
26.26% N/A 10.22%
(1) Total returns are historical and include changes in share price,
reinvestment of dividends and capital gains distributions.
(2) "Public Offering Price" total returns include the effect of the maximum
front-end 5.50% sales charge. "Net Asset Value" total returns do not
include the effect of that sales charge.
(3) "CDSC" total returns include the effect of the 5.00% or 4.00% contingent
deferred sales charge applicable to redemptions of B Shares during the
first or second year after purchase. "No CDSC" total returns assume no
redemption at the end of the period.
(4) C Shares are not subject to any front-end or contingent deferred sales
charge.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
PIE CHART ILLUSTRATING THE LARGEST SECTOR HOLDINGS (AS A PERCENT OF TOTAL
ASSETS) OF THE PASADENA GROWTH FUND
- -------------------------------------------------------------------------
Other 5%
Consumer Staples 24%
Industrial Equipment & Services 4%
Foreign 11%
Technology 23%
Consumer Cyclicals 21%
Financials 12%
SECTOR HOLDINGS ARE BASED ON THE BREAKDOWN OF THE S&P 500 INDEX AS DETERMINED BY
CALLAN & ASSOCIATES.
LINE CHART ILLUSTRATING A COMPARISON OF THE CHANGE IN VALUE
OF A $10,000 INVESTMENT IN THE PASADENA GROWTH FUND A SHARES(5)
AND THE S&P 500 STOCK INDEX FROM INCEPTION(6) THROUGH 12/31/95.
--------------------------------------------------------------
Fund After S&P 500
Maximum Sales Load Stock Index
------------------ -----------
6/24/86(6) $10,000 $10,000
6/30/86 $9,707 $10,159
7/31/86 $9,218 $9,593
8/31/86 $9,145 $10,303
9/30/86 $8,662 $9,453
10/31/86 $9,017 $9,997
11/30/86 $8,888 $10,236
12/31/86 $8,580 $9,976
1/31/87 $9,844 $11,317
2/28/87 $10,660 $11,757
3/31/87 $10,894 $12,096
4/30/87 $10,145 $11,987
5/31/87 $9,961 $12,089
6/30/87 $10,016 $12,697
7/31/87 $10,304 $13,339
8/31/87 $10,427 $13,835
9/30/87 $9,918 $13,532
10/31/87 $7,309 $10,627
11/30/87 $6,757 $9,754
12/31/87 $7,598 $10,495
1/31/88 $7,868 $10,952
2/28/88 $8,525 $11,210
3/31/88 $8,997 $11,093
4/30/88 $9,126 $11,230
5/31/88 $8,868 $11,301
6/30/88 $9,691 $11,823
7/31/88 $9,580 $11,797
8/31/88 $9,463 $11,379
9/30/88 $10,028 $11,865
10/31/88 $10,132 $12,210
11/30/88 $9,856 $12,016
12/31/88 $10,317 $12,230
1/31/89 $11,176 $13,136
2/28/89 $11,151 $12,793
3/31/89 $11,532 $13,099
4/30/89 $12,508 $13,794
5/31/89 $13,195 $14,319
6/30/89 $12,968 $14,247
7/31/89 $14,330 $15,545
8/31/89 $15,012 $15,829
9/30/89 $14,864 $15,768
10/30/89 $14,085 $15,410
11/30/89 $14,324 $15,707
12/31/89 $14,211 $16,087
1/31/90 $12,740 $15,029
2/28/90 $13,003 $15,198
3/31/90 $13,833 $15,611
4/30/90 $13,556 $15,238
5/31/90 $15,297 $16,683
6/30/90 $15,790 $16,581
7/31/90 $15,223 $16,542
8/31/90 $13,199 $15,035
9/30/90 $11,849 $14,315
10/31/90 $11,599 $14,268
11/30/90 $12,754 $15,168
12/31/90 $13,565 $15,593
1/31/91 $15,132 $16,288
2/28/91 $16,605 $17,425
3/31/91 $17,800 $17,860
4/30/91 $17,753 $17,914
5/31/91 $18,760 $18,652
6/30/91 $17,368 $17,809
7/31/91 $18,760 $18,655
8/31/91 $19,935 $19,071
9/30/91 $19,861 $18,755
10/31/91 $20,009 $19,026
11/30/91 $19,347 $18,241
12/31/91 $22,766 $20,322
1/31/92 $22,969 $19,969
2/28/92 $23,810 $20,205
3/31/92 $22,550 $19,818
4/30/92 $22,075 $20,419
5/31/92 $21,994 $20,490
6/30/92 $21,086 $20,186
7/31/92 $21,818 $21,031
8/31/92 $21,574 $20,580
9/30/92 $21,574 $20,818
10/31/92 $21,967 $20,916
11/30/92 $23,390 $21,599
12/31/92 $23,277 $21,870
1/31/93 $23,058 $22,077
2/28/93 $21,853 $22,356
3/31/93 $21,976 $22,826
4/30/93 $20,114 $22,299
5/31/93 $20,990 $22,859
6/30/93 $20,798 $22,928
7/31/93 $20,292 $22,861
8/31/93 $21,072 $23,701
9/30/93 $21,072 $23,517
10/31/93 $21,524 $24,027
11/30/93 $21,552 $23,771
12/31/93 $21,911 $24,066
1/31/94 $22,404 $24,902
2/28/94 $21,842 $24,206
3/31/94 $20,596 $23,158
4/30/94 $20,884 $23,480
5/31/94 $20,801 $23,828
6/30/94 $20,021 $23,247
7/31/94 $20,719 $24,034
8/31/94 $21,979 $24,994
9/30/94 $21,555 $24,379
10/31/94 $21,842 $24,945
11/30/94 $21,239 $24,019
12/31/94 $21,089 $24,374
1/31/95 $21,650 $25,024
2/28/95 $22,130 $25,980
3/31/95 $22,801 $26,750
4/30/95 $23,143 $27,556
5/31/95 $23,746 $28,618
6/30/95 $24,786 $29,285
7/31/95 $25,841 $30,277
8/31/95 $25,868 $30,332
9/30/95 $26,676 $31,611
10/31/95 $26,238 $31,515
11/30/95 $27,032 $32,869
12/31/95 $26,816 $33,507
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
(5) THIS CHART ILLUSTRATES RETURNS ON CLASS A SHARES ONLY.
RETURNS WILL VARY FOR CLASS B AND CLASS C SHARES DUE TO
DIFFERING SALES CHARGES.
(6) 6/24/86 (FUND INCEPTION)
TEN LARGEST HOLDINGS AT DECEMBER 31, 1995 (AS A PERCENTAGE OF TOTAL ASSETS)
---------------------------------------------------------------------------
1. The Gillette Company 3.9%
GLOBAL MANUFACTURER OF RAZORS
2. Pfizer Inc. 2.7%
MAJOR PRODUCER OF PHARMACEUTICALS
3. Federal National Mortgage Association 2.6%
NATIONS LARGEST PROVIDER OF RESIDENTIAL MORTGAGE FUNDS
4. Wells Fargo & Company 2.5%
BANK HOLDING COMPANY
5. Federal Home Loan Mortgage Corporation 2.5%
U. S. GOVERNMENT SPONSORED MORTGAGE AGENCY
6. The Coca-Cola Company 2.4%
WORLDS LARGEST SOFT DRINK COMPANY
7. The Home Depot, Inc. 2.0%
HOME IMPROVEMENT PRODUCTS RETAIL
8. The Walt Disney Company 1.9%
DIVERSIFIED ENTERTAINMENT COMPANY
9. PepsiCo, Inc. 1.7%
WORLDWIDE PRODUCER OF BEVERAGES AND SNACK FOODS
10. Reuters Holdings PLC ADS B 1.6%
GLOBAL NEWS, COMMUNICATIONS AND FINANCIAL SERVICE COMPANY
7
<PAGE>
THE PASADENA NIFTY FIFTY FUND
Redefining this popular designation of the 1960s, The Pasadena Nifty Fifty
Fund invests in approximately 50 of what we consider to be the best long-term
growth companies in America. We believe these companies offer investors
outstanding appreciation potential.
The Pasadena Nifty Fifty Fund's A Share NAV increased 28.21 percent during
the year ended December 31, 1995(1). This compares with the S&P 500 Index which
gained 37.47 percent and the average growth fund, as reported by Lipper
Analytical Services, which advanced 30.80 percent.
Although the Fund posted strong performance for the year, two factors were
largely responsible for restraining the Fund's progress. First, the Fund was
negatively affected by its holdings in the retail sector and second, it was
under-represented for most of the year in technology stocks, one of the market's
strongest sectors in 1995.
Because we believe the retail environment will remain extremely competitive
in the near term, we sold underperforming retailers including TOYS "R" US, INC.,
BRINKER INTERNATIONAL, INC. and LOWE'S COMPANIES, INC. However, we did use the
weakness in retail stocks to increase the Fund's investment in THE HOME DEPOT,
INC. and AUTOZONE, INC. We believe both companies dominate their niche and
should still have plenty of room to grow.
Our philosophy has consistently been to identify and invest in companies we
believe can produce steady growth in diverse economic environments. The
underpinnings of this philosophy are to estimate demand and to characterize the
company's competitive position. One of the reasons we have traditionally taken
a conservative posture when it comes to investing in technology stocks is that
we believe the industry's shorter product cycles lead to lower predictability
in earnings.
As investors, we must constantly be sensitive to change. After speaking to
the management of technology companies that we owned, and some that we didn't
own, we concluded that some of these companies were operating in the
fastest-growing areas in the economy. As a result, we increased the Fund's
technology weighting to be in line with some of the major indices. In doing so,
we continually applied our often-stated investment philosophy of investing in
companies that we believed were in strong competitive positions and had
excellent prospects for growth. Consequently, we added a number of new
technology holdings to this Fund during the year. Several of these companies
contributed meaningful overall performance for the year, including INTEL
CORPORATION, ERICSSON LM TELEFONAKTIEBOLAGET ADR CL B and CISCO SYSTEMS. The
Fund's foray into technology wasn't without disappointments, however. SILICON
GRAPHICS, for example, reported lower-than-expected earnings and the stock price
tumbled. Similarly, GENERAL INSTRUMENTS shares declined amid concerns that cable
companies were decreasing their capital spending budgets.
A review of The Nifty Fifty Fund's ten largest holdings illustrates that
most of the companies performed extremely well. Indeed, many of our top
performers include long time core holdings, such as THE GILLETTE COMPANY,
MCDONALD'S CORPORATION, PEPSICO, INC. and THE COCA-COLA COMPANY. Aside from
producing strong operating results, these companies benefitted from investors
favoring steady growth companies, as fears that a slowdown in the economy would
make it tougher for the average company to post earnings growth mounted. The
realization that budget cuts were less of a threat to health-care related
companies than initially thought, combined with strong earnings growth, buoyed
the shares of PFIZER INC., MEDTRONIC, INC. and JOHNSON & JOHNSON. WELLS FARGO &
COMPANY'S take-over bid for it's California neighbor, FIRST INTERSTATE BANCORP,
enabled both stocks to be among the Funds top performers. One stock that proved
disappointing was MOTOROLA, INC., whose shares were down slightly for the year.
The company experienced increased competition in the cellular handset market,
resulting in lower margins. Finally, WAL-MART STORES, INC. and THE HOME DEPOT,
INC. showed small gains for the year, consistent with the difficulties in the
retail sector.
We believe The Nifty Fifty Fund can benefit from the current investment
environment. With the economy slowing and inflation well contained, we believe
that investors should favor high-quality companies that have consistently
demonstrated their ability to grow steadily, such as those that are represented
in The Nifty Fifty Fund.
(1)SEE AVERAGE ANNUAL TOTAL RETURNS TABLE ON PAGE 9
8
<PAGE>
THE PASADENA NIFTY FIFTY FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURNS(1)
-------------------------------
1 Year 5 Years Since Inception
- ----------------------------------------------------------------------
A Shares(2) (INCEPTION: 12/17/90)
NAV 28.21% 17.50% 17.27%
POP 21.14% 16.18% 15.97%
- ----------------------------------------------------------------------
B Shares(3) (INCEPTION DATE 1/3/94)
CDSC 22.26% N/A 11.56%
No CDSC 27.26% N/A 13.34%
- ----------------------------------------------------------------------
C Shares(4) (INCEPTION DATE 1/3/94)
27.26% N/A 13.34%
(1) Total returns are historical and include changes in share price,
reinvestment of dividends and capital gains distributions.
(2) "Public Offering Price" total returns include the effect of the maximum
front-end 5.50% sales charge. "Net Asset Value" total returns do not
include the effect of that sales charge.
(3) "CDSC" total returns include the effect of the 5.00% or 4.00% contingent
deferred sales charge applicable to redemptions of B Shares during the
first or second year after purchase. "No CDSC" total returns assume no
redemption at the end of the period.
(4) C Shares are not subject to any front-end or contingent deferred sales
charge.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
PIE CHART ILLUSTRATING THE LARGEST SECTOR HOLDINGS
(AS A PERCENTAGE OF TOTAL ASSETS) OF THE PASADENA NIFTY FIFTY FUND
- ------------------------------------------------------------------
Other 5%
Consumer Staples 37%
Industrial Equipment & Services 4%
Foreign 6%
Technology 20%
Consumer Cyclicals 17%
Financials 11%
SECTOR HOLDINGS ARE BASED ON THE BREAKDOWN OF THE S&P 500 INDEX AS DETERMINED BY
CALLAN & ASSOCIATES.
LINE CHART ILLUSTRATING A COMPARISON OF CHANGE IN VALUE OF A $10,000
INVESTMENT--THE PASADENA NIFTY FIFTY FUND A SHARES(5) AND THE
S&P 500 STOCK INDEX FROM INCEPTION(6) THROUGH 12/31/95
Fund After S&P 500
Maximum Sales Load Stock Index
------------------ -----------
12/17/90(6) $10,000 $10,000
12/31/90 $9,417 $10,143
1/31/91 $10,400 $10,595
2/28/91 $11,260 $11,335
3/31/91 $12,177 $11,618
4/30/91 $12,621 $11,652
5/31/91 $13,633 $12,133
6/30/91 $13,047 $11,585
7/31/91 $13,633 $12,135
8/31/91 $14,285 $12,405
9/30/91 $14,163 $12,199
10/31/91 $14,352 $12,376
11/30/91 $13,926 $11,865
12/31/91 $15,786 $13,219
1/31/92 $15,510 $12,989
2/28/92 $15,729 $13,143
3/31/92 $15,330 $12,891
4/30/92 $15,177 $13,282
5/31/92 $15,263 $13,328
6/30/92 $14,987 $13,130
7/31/92 $15,434 $13,680
8/31/92 $15,272 $13,387
9/30/92 $15,320 $13,542
10/31/92 $15,577 $13,605
11/30/92 $16,366 $14,050
12/31/92 $16,366 $14,226
1/31/93 $16,357 $14,360
2/28/93 $15,843 $14,542
3/31/93 $16,005 $14,848
4/30/93 $14,854 $14,505
5/31/93 $15,615 $14,869
6/30/93 $15,567 $14,914
7/31/93 $15,272 $14,870
8/31/93 $15,929 $15,417
9/30/93 $15,700 $15,297
10/31/93 $16,147 $15,629
11/30/93 $16,261 $15,462
12/31/93 $16,280 $15,654
1/31/94 $16,613 $16,198
2/28/94 $16,280 $15,745
3/31/94 $15,482 $15,064
4/30/94 $15,815 $15,273
5/31/94 $15,862 $15,499
6/30/94 $15,368 $15,121
7/31/94 $16,100 $15,634
8/31/94 $16,765 $16,258
9/30/94 $16,347 $15,858
10/31/94 $16,793 $16,226
11/30/94 $16,423 $15,624
12/31/94 $16,452 $15,855
1/31/95 $17,060 $16,278
2/28/95 $17,422 $16,900
3/31/95 $17,916 $17,400
4/30/95 $18,287 $17,924
5/31/95 $18,839 $18,615
6/30/95 $19,390 $19,049
7/31/95 $19,847 $19,695
8/31/95 $19,694 $19,730
9/30/95 $20,360 $20,562
10/31/95 $20,503 $20,500
11/30/95 $21,292 $21,381
12/31/95 $21,093 $21,795
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
(5) THIS CHART ILLUSTRATES RETURNS ON CLASS A SHARES ONLY. RETURNS WILL VARY
FOR CLASS B AND CLASS C SHARES DUE TO DIFFERING SALES CHARGES.
(6) 12/17/90 (FUND INCEPTION)
TEN LARGEST HOLDINGS AT DECEMBER 31, 1995 (AS A PERCENTAGE OF TOTAL ASSETS)
1. The Gillette Company 5.4%
GLOBAL MANUFACTURER OF RAZORS
2. The Coca-Cola Company 4.3%
WORLD'S LARGEST SOFT DRINK COMPANY
3. Pfizer Inc. 3.8%
MAJOR PRODUCER OF PHARMACEUTICALS
4. Wells Fargo & Company 3.3%
BANK HOLDING COMPANY
5. Medtronic, Inc. 2.7%
THE WORLD'S LEADING PRODUCER OF IMPLANTABLE CARDIAC DEVICES
6. McDonald's Corporation 2.6%
GLOBAL OPERATOR OF FAST FOOD RESTAURANTS
7. Johnson & Johnson 2.6%
COMPREHENSIVE HEALTH-CARE COMPANY
8. Motorola, Inc. 2.6%
LEADING MANUFACTURER OF TELECOMMUNICATIONS EQUIPMENT
9. Wal-Mart Stores, Inc. 2.6%
LARGEST DISCOUNT RETAILER IN U.S.
10. PepsiCo, Inc. 2.5%
WORLDWIDE PRODUCER OF BEVERAGES AND SNACK FOODS
9
<PAGE>
THE PASADENA BALANCED RETURN FUND
The Pasadena Balanced Return Fund seeks to achieve its investment objective
by investing in a mix of high-quality growth stocks and U.S. Government
securities.
For the year ended December 31, 1995, The Balanced Return Fund's A Share
NAV increased 27.18(1) percent, outperforming the average balanced fund, which
returned 25.19 percent as reported by Lipper Analytical Services.
The performance of The Balanced Return Fund is reflective of the overall
strength of the financial markets for 1995. The Fund's asset allocation for the
year ranged between approximately 60 to 70 percent equities and 30 to 40 percent
fixed income.
1995's fixed-income market was the mirror image of the markets movements
during 1994, as we saw both markets move in almost equal and opposite
directions. 1994 was plagued by fears of rising inflation and seven interest
rate hikes by the Federal Reserve. Although we supported the Federal Reserve's
preemptive attack on inflation, rising interest rates were painful nonetheless.
By contrast, 1995 saw inflationary concerns subside and toward the end of the
year, as evidence mounted that the economy was slowing, the Federal Reserve
lowered interest rates. As such, the bond markets posted strong gains, with the
yield on long-term government bonds falling from approximately 7.9 percent in
January to 6.03 percent at year end 1995.
The Fund started the year with the fixed-income portion of the portfolio
largely invested in long-term government bonds. As the year progressed,
inflationary fears slowly started to dissipate and long bonds experienced a
strong rally. About half way through the year, we decided to take a more
conservative stance in order to reduce portfolio volatility and moved the Fund
into intermediate bonds and short-term notes.
On the equity side, most of the Funds holdings performed well. Fear that
the economy slowing would cause companies to report earnings shortfalls led
investors to steady growth companies. Among Fund strong performers in this area
were PHILIP MORRIS COMPANIES INC., MCDONALD'S CORPORATION, PEPSICO, INC., THE
COCA-COLA COMPANY, and THE GILLETTE COMPANY.
Another area that has traditionally produced steady growth is health care.
Over the last several years, however, investors were fearful of threatened
regulatory efforts and their negative impact on industry prospects and
profitability. In 1995 investors embraced these companies once again, as voters
expressed dissatisfaction and the Fund benefitted from sharp gains in MEDTRONIC,
INC., PFIZER INC., MERCK & CO., INC., and JOHNSON & JOHNSON. Lower interest
rates and consolidation in banking enabled WELLS FARGO & COMPANY, FIRST
INTERSTATE BANCORP, FEDERAL NATIONAL MORTGAGE ASSOCIATION, and FEDERAL HOME LOAN
MORTGAGE CORPORATION to reach new highs.
One sector that provided disappointing results for this fund was retail.
Currently, the industry is beset by fierce competition. Although the economy
has been growing, retailers have been behaving as if the country is in a
recession. The bankruptcies of a number of retailers during the year, a weak
holiday shopping season and heavy discounting serve as ample evidence of this
difficult environment. Because we believe this challenging climate will prevail
in the near term, the Fund sold companies that were having difficulties meeting
our earnings estimates, including TOYS "R" US, INC., BRINKER INTERNATIONAL, INC.
and LOWE'S COMPANIES, INC.
During the year the Fund also added several new holdings to the portfolio.
Among the new additions were several technology stocks including CISCO SYSTEMS,
INTEL CORPORATION and HEWLETT-PACKARD. Traditionally we have taken a
conservative approach to technology stocks in this Fund. We believe, however,
that given the strong secular demand trends, this should be one of the fastest
growing areas in the economy over the next three to five years. In managing the
Funds' assets in 1995, our efforts were deliberate and cautious as we sought to
identify companies possessing characteristics that we believed would provide
consistent growth over the long haul. Although technology stocks contributed to
the Funds overall performance, there were some disappointments.
Lower-than-expected earnings at SILICON GRAPHICS caused the shares to decline,
while fear of a slowdown in capital spending at cable companies pushed GENERAL
INSTRUMENTS' stock price lower.
The outlook for low inflation and moderate growth in the economy bodes well
for both the stock and bond market. We are therefore optimistic that The
Balanced Return Fund is well positioned for the upcoming year.
(1) SEE AVERAGE ANNUAL TOTAL RETURNS TABLE ON PAGE 11
10
<PAGE>
THE PASADENA BALANCED RETURN FUND (CONTINUED)
AVERAGE ANNUAL TOTAL RETURNS(1)
----------------------------
1 Year 5 Years Since Inception
- ----------------------------------------------------------------------
A Shares(2) (INCEPTION: 6/8/87)
NAV 27.18% 12.56% 14.21%
POP 20.16% 11.29% 13.47%
- ----------------------------------------------------------------------
B Shares(3) (INCEPTION DATE 1/3/94)
CDSC 21.20% N/A 7.76%
No CDSC 26.20 N/A 9.61%
- ----------------------------------------------------------------------
C Shares(4) (INCEPTION DATE 1/3/94)
26.23% N/A 9.62%
(1) Total returns are historical and include changes in share price,
reinvestment of dividends and capital gains distributions.
(2) "Public Offering Price" total returns include the effect of the maximum
front-end 5.50% sales charge. "Net Asset Value" total returns do not
include the effect of that sales charge.
(3) "CDSC" total returns include the effect of the 5.00% or 4.00% contingent
deferred sales charge applicable to redemptions of B Shares during the
first or second year after purchase. "No CDSC" total returns assume no
redemption at the end of the period.
(4) C Shares are not subject to any front-end or contingent deferred sales
charge.
The investment return and principal value of an investment will fluctuate so
that an investor's shares, when redeemed, may be worth more or less than their
original cost.
PIE CHART ILLUSTRATING THE LARGEST SECTOR HOLDINGS (AS A
PERCENTAGE OF TOTAL ASSETS) OF THE PASADENA BALANCED RETURN FUND
- ----------------------------------------------------------------
Other 4%
Industrial Equipment & Services 3%
Consumer Staples 28%
Bonds 29%
Consumer Cyclicals 10%
Foreign 3%
Financials 12%
Technology 11%
SECTOR HOLDINGS ARE BASED ON THE BREAKDOWN OF THE S&P 500 INDEX AS DETERMINED BY
CALLAN & ASSOCIATES.
LINE CHART ILLUSTRATING COMPARISON OF CHANGE IN VALUE OF A
$10,000 INVESTMENT--THE PASADENA BALANCED RETURN FUND A SHARES(5)
AND THE S&P 500 STOCK INDEX FROM INCEPTION(6) THROUGH 12/31/95
Fund After S&P 500
Maximum Sales Load Stock Index
------------------ -----------
6/8/87(6) $10,000 $10,000
6/30/87 $9,490 $10,262
7/31/87 $10,510 $10,781
8/31/87 $10,548 $11,182
9/30/87 $10,605 $10,937
10/31/87 $10,680 $8,589
11/30/87 $10,340 $7,883
12/31/87 $10,870 $8,482
1/31/88 $11,059 $8,851
2/28/88 $11,417 $9,060
3/31/88 $11,388 $8,966
4/30/88 $11,378 $9,077
5/31/88 $11,398 $9,134
6/30/88 $11,794 $9,556
7/31/88 $11,823 $9,534
8/31/88 $11,678 $9,197
9/30/88 $12,190 $9,590
10/31/88 $12,229 $9,868
11/30/88 $12,113 $9,712
12/31/88 $12,328 $9,885
1/31/89 $12,919 $10,617
2/28/89 $12,574 $10,340
3/31/89 $12,910 $10,587
4/30/89 $13,777 $11,148
5/31/89 $14,447 $11,573
6/30/89 $14,604 $11,515
7/31/89 $15,846 $12,564
8/31/89 $15,994 $12,794
9/30/89 $16,112 $12,744
10/30/89 $15,925 $12,454
11/30/89 $16,329 $12,695
12/31/89 $16,393 $13,002
1/31/90 $15,280 $12,147
2/28/90 $15,362 $12,283
3/31/90 $15,713 $12,617
4/30/90 $15,538 $12,315
5/31/90 $17,125 $13,483
6/30/90 $17,610 $13,401
7/31/90 $17,259 $13,370
8/31/90 $15,733 $12,152
9/30/90 $14,744 $11,570
10/31/90 $14,702 $11,532
11/30/90 $15,775 $12,259
12/31/90 $16,329 $12,603
1/31/91 $17,375 $13,164
2/28/91 $18,303 $14,084
3/31/91 $18,933 $14,435
4/30/91 $19,114 $14,478
5/31/91 $20,043 $15,075
6/30/91 $19,040 $14,394
7/31/91 $19,947 $15,078
8/31/91 $21,003 $15,413
9/30/91 $20,982 $15,158
10/31/91 $20,929 $15,378
11/30/91 $20,267 $14,743
12/31/91 $22,679 $16,425
1/31/92 $22,094 $16,139
2/28/92 $22,300 $16,330
3/31/92 $21,921 $16,017
4/30/92 $21,856 $16,503
5/31/92 $22,149 $16,561
6/30/92 $22,051 $16,315
7/31/92 $22,766 $16,998
8/31/92 $22,701 $16,633
9/30/92 $22,820 $16,826
10/31/92 $22,982 $16,905
11/30/92 $23,632 $17,457
12/31/92 $23,697 $17,676
1/31/93 $23,839 $17,843
2/28/93 $23,534 $18,068
3/31/93 $23,577 $18,449
4/30/93 $22,554 $18,023
5/31/93 $23,120 $18,475
6/30/93 $23,218 $18,531
7/31/93 $22,956 $18,477
8/31/93 $23,751 $19,155
9/30/93 $23,610 $19,007
10/31/93 $24,132 $19,420
11/30/93 $24,122 $19,212
12/31/93 $24,275 $19,451
1/31/94 $24,905 $20,126
2/28/94 $23,976 $19,564
3/31/94 $22,794 $18,717
4/30/94 $23,059 $18,977
5/31/94 $22,916 $19,258
6/30/94 $22,496 $18,789
7/31/94 $23,258 $19,425
8/31/94 $23,711 $20,200
9/30/94 $23,004 $19,704
10/31/94 $23,369 $20,161
11/30/94 $23,060 $19,413
12/31/94 $23,199 $19,700
1/31/95 $23,933 $20,226
2/28/95 $24,509 $20,998
3/31/95 $25,063 $21,620
4/30/95 $25,447 $22,272
5/31/95 $26,587 $23,130
6/30/95 $27,118 $23,669
7/31/95 $27,525 $24,471
8/31/95 $27,491 $24,515
9/30/95 $28,145 $25,549
10/31/95 $28,529 $25,472
11/30/95 $29,354 $26,566
12/31/95 $29,503 $27,081
PAST PERFORMANCE IS NOT PREDICITIVE OF FUTURE PERFORMANCE
(5) THIS CHART ILLUSTRATES RETURNS ON CLASS A SHARES ONLY. RETURNS WILL VARY
FOR CLASS B AND CLASS C SHARES DUE TO DIFFERING SALES CHARGES.
(6) 6/8/87 (FUND INCEPTION)
TEN LARGEST HOLDINGS AT DECEMBER 31, 1995 (AS A PERCENTAGE OF TOTAL ASSETS)
1. The Gillette Company 3.6%
GLOBAL MANUFACTURER OF RAZORS
2. Federal National Mortgage Association 2.8%
NATIONS LARGEST PROVIDER OF RESIDENTIAL MORTGAGE FUNDS
3. Pfizer Inc. 2.7%
MAJOR PRODUCER OF PHARMACEUTICALS
4. Reuters Holdings PLC ADS B 2.7%
GLOBAL NEWS, COMMUNICATIONS AND FINANCIAL SERVICE COMPANY
5. Wells Fargo & Company 2.6%
BANK HOLDING COMPANY
6. Federal Home Loan Mortgage Corporation 2.5%
U. S. GOVERNMENT SPONSORED MORTGAGE AGENCY
7. McDonald's Corporation 2.1%
GLOBAL OPERATOR OF FAST FOOD RESTAURANTS
8. WMX Technologies, Inc. 2.1%
LEADING INTERNATIONAL PROVIDER OF ENVIRONMENTAL AND ENGINEERING SERVICES
9. Merck & Co., Inc. 2.1%
LEADING MANUFACTURER OF PHARMACEUTICALS
10. The Walt Disney Company 2.0%
DIVERSIFIED ENTERTAINMENT COMPANY
11
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
COMMON STOCKS
ADVERTISING - 0.6%
The Interpublic Group of
Companies, Inc.. . . . . . . . . . 65,000 $ 2,819
----------
BANKING - 4.2%
First Interstate Bancorp . . . . . . 30,000 4,095
NationsBank Corporation. . . . . . . 55,000 3,829
Wells Fargo & Company. . . . . . . . 55,000 11,880
----------
19,804
----------
BEVERAGES - 4.0%
The Coca-Cola Company. . . . . . . . 150,000 11,138
PepsiCo, Inc.. . . . . . . . . . . . 140,000 7,822
----------
18,960
----------
BUSINESS SERVICES - 10.0%
American List Corporation. . . . . . 75,000 1,913
Automatic Data Processing, Inc.. . . 100,000 7,425
CKS Group, Inc.* . . . . . . . . . . 50,000 1,950
DST Systems, Inc.* . . . . . . . . . 100,000 2,850
Electro Rent Corporation*. . . . . . 100,000 2,175
Federal Express Corporation* . . . . 60,000 4,433
First Data Corporation . . . . . . . 100,000 6,688
General Motors Corporation, Class E. 100,000 5,200
The Harper Group, Inc. . . . . . . . 150,000 2,663
Kansas City Southern Indus.. . . . . 40,000 1,830
Mecon, Inc.* . . . . . . . . . . . . 13,000 206
Reuters Holdings PLC ADS B . . . . . 140,000 7,717
VeriFone, Inc.*. . . . . . . . . . . 75,000 2,147
----------
47,197
----------
COMMUNICATIONS EQUIPMENT - 3.5%
Bay Networks*. . . . . . . . . . . . 55,000 2,262
Cisco Systems* . . . . . . . . . . . 95,000 7,089
MRV Communications, Inc. . . . . . . 30,000 761
MicroCom, Inc.*. . . . . . . . . . . 65,000 1,690
StrataCom, Inc.. . . . . . . . . . . 30,000 2,205
3Com Corp.*. . . . . . . . . . . . . 50,000 2,331
----------
16,338
----------
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
COMPUTER HARDWARE - 2.1%
COMPAQ Computer* . . . . . . . . . . 60,000 $ 2,880
Hewlett-Packard. . . . . . . . . . . 40,000 3,350
Silicon Graphics*. . . . . . . . . . 90,000 2,475
Visioneer, Inc.* . . . . . . . . . . 60,000 1,335
----------
10,040
----------
COMPUTER SOFTWARE - 3.3%
Comshare, Inc* . . . . . . . . . . . 80,000 2,080
Informix Corp.*. . . . . . . . . . . 80,000 2,400
Insignia Solutions ADR*. . . . . . . 70,500 828
Legato Systems, Inc.*. . . . . . . . 42,500 1,317
Microsoft Corporation* . . . . . . . 50,000 4,387
Oracle Systems*. . . . . . . . . . . 110,000 4,661
----------
15,673
----------
CONSUMER PRODUCTS - 6.3%
Avon Products, Inc.. . . . . . . . . 30,000 2,261
Department 56, Inc.* . . . . . . . . 40,000 1,535
Duracell International Inc.. . . . . 90,000 4,658
The Gillette Company . . . . . . . . 350,000 18,244
Luxottica Group S.p.A. . . . . . . . 50,000 2,925
----------
29,623
----------
CONSUMER SERVICES - 1.0%
Aaron Rents, Inc., Class B . . . . . 130,000 2,340
Mail Boxes Etc.* . . . . . . . . . . 170,000 2,125
----------
4,465
----------
DIVERSIFIED MANUFACTURING - 0.6%
General Electric . . . . . . . . . . 40,000 2,880
----------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 6.4%
Alliance Semiconductor
Corporation* . . . . . . . . . . . 60,000 698
Altera Corp.*. . . . . . . . . . . . 20,000 995
ANADIGICS, Inc.* . . . . . . . . . . 55,000 1,169
Applied Materials, Inc.* . . . . . . 60,000 2,363
Burr-Brown Corp.*. . . . . . . . . . 44,700 1,140
Elantec Semiconductor, Inc.* . . . . 50,000 513
Etec Systems, Inc.*. . . . . . . . . 70,000 788
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT DECEMBER 31, 1995 (CONTINUED)
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
ELECTRONICS & ELECTRICAL
EQUIPMENT - 6.4% (CONTINUED)
Integrated Device Technology, Inc.*. 24,000 $ 309
Intel Corporation. . . . . . . . . . 130,000 7,377
KLA Instruments* . . . . . . . . . . 30,000 782
LSI Logic Corporation* . . . . . . . 110,000 3,603
Linear Technology Corporation. . . . 100,000 3,925
Maxim Integrated Products, Inc.* . . 60,000 2,310
Photon Dynamics, Inc.* . . . . . . . 100,000 800
Pinnacle Systems, Inc.*. . . . . . . 40,000 990
Silicon Valley Group*. . . . . . . . 30,000 757
VLSI Technology, Inc.* . . . . . . . 40,000 725
Xilinx, Inc.*. . . . . . . . . . . . 30,000 915
----------
30,159
----------
ENVIRONMENTAL SERVICES - 1.1%
WMX Technologies, Inc. . . . . . . . 175,000 5,228
----------
FINANCIAL SERVICES - 8.2%
American Express . . . . . . . . . . 125,000 5,172
Dean Witter Discover . . . . . . . . 75,000 3,525
Federal Home Loan Mortgage
Corporation. . . . . . . . . . . . 140,000 11,690
Federal National Mortgage
Association. . . . . . . . . . . . 100,000 12,413
Imperial Credit Industries, Inc.*. . 150,000 3,263
Mercury Finance Company. . . . . . . 45,000 596
Roosevelt Financial Group, Inc.. . . 100,000 1,937
----------
38,596
----------
FOOD PRODUCTS - 1.4%
International Flavors &
Fragrances Inc.. . . . . . . . . . 50,000 2,400
Wrigley (Wm.) Jr.. . . . . . . . . . 80,000 4,200
----------
6,600
----------
GAMING - 3.1%
Anchor Gaming *. . . . . . . . . . . 293,400 6,675
Casino Data Systems* . . . . . . . . 150,000 3,750
Circus Circus Enterprises, Inc.* . . 100,000 2,788
Mirage Resorts, Incorporated*. . . . 40,000 1,380
----------
14,593
----------
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
HEALTH-CARE SERVICES - 0.1%
ARV Assisted Living, Inc.* . . . . . 50,000 $ 587
----------
HOSPITAL COMPANIES - 1.1%
Columbia/HCA Healthcare
Corporation. . . . . . . . . . . . 100,000 5,075
----------
HOUSEHOLD PRODUCTS - 1.6%
Colgate-Palmolive Company. . . . . . 70,000 4,918
The Procter & Gamble Company . . . . 30,000 2,490
----------
7,408
----------
INDUSTRIAL /DIRECT MAIL
DISTRIBUTOR - 0.6%
MSC Industrial Direct Co., Inc.* . . 100,000 2,750
----------
INVESTMENT COMPANIES - 2.7%
The Asia Tigers Fund, Inc. . . . . . 250,000 2,781
The Central European
Equity Fund, Inc.. . . . . . . . . 100,000 1,637
The India Fund, Inc. . . . . . . . . 400,000 3,550
The Korea Fund, Inc. . . . . . . . . 116,588 2,565
The Thai Fund, Inc.. . . . . . . . . 87,234 1,952
----------
12,485
----------
INVESTMENT MANAGEMENT - 0.8%
Invesco PLC. . . . . . . . . . . . . 100,000 3,875
----------
LEISURE - 3.9%
Carnival Corporation . . . . . . . . 300,000 7,313
The Walt Disney Company. . . . . . . 150,000 8,850
Regal Cinemas, Inc.* . . . . . . . . 75,000 2,231
----------
18,394
----------
MEDICAL EQUIPMENT &
SUPPLIES - 2.0%
Johnson & Johnson. . . . . . . . . . 40,000 3,425
Medtronic, Inc.. . . . . . . . . . . 110,000 6,146
----------
9,571
----------
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT DECEMBER 31, 1995 (CONTINUED)
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
MUSIC - PUBLISHING - 0.5%
Polygram NV. . . . . . . . . . . . . 40,000 $ 2,100
----------
PHARMACEUTICALS - 5.9%
Elan Corporation, PLC ADS* . . . . . 60,000 2,917
Merck & Co., Inc.. . . . . . . . . . 115,000 7,561
Pfizer Inc.. . . . . . . . . . . . . 200,000 12,600
Roche Holdings Ltd. ADR. . . . . . . 55,000 4,338
----------
27,416
----------
RESTAURANTS - 1.2%
McDonald's Corporation . . . . . . . 125,000 5,641
----------
RETAIL - APPAREL & ACCESSORY
STORES - 1.5%
Claire's Stores, Inc.. . . . . . . . 100,000 1,763
Kohl's Corporation*. . . . . . . . . 100,000 5,250
----------
7,013
----------
RETAIL - AUTO SUPPLY STORES - 1.2%
AutoZone, Inc.*. . . . . . . . . . . 200,000 5,775
----------
RETAIL - BUILDING MATERIALS &
HARDWARE - 2.0%
The Home Depot, Inc. . . . . . . . . 200,000 9,575
----------
RETAIL - CATALOG - 0.4%
Viking Office Products, Inc.*. . . . 40,000 1,860
----------
RETAIL - GENERAL
MERCHANDISE - 2.3%
Dollar General Corporation . . . . . 200,000 4,150
Wal-Mart Stores, Inc.. . . . . . . . 300,000 6,712
----------
10,862
----------
RETAIL - GROCERY STORES - 0.8%
Albertson's, Inc.. . . . . . . . . . 65,000 2,137
Smart & Final Inc. . . . . . . . . . 75,000 1,594
----------
3,731
----------
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
RETAIL - HOME FURNITURE,
FURNISHINGS & EQUIPMENT
STORES - 2.4%
Bed Bath & Beyond, Inc.* . . . . . . 70,000 $ 2,717
Circuit City Stores, Inc.. . . . . . 100,000 2,763
Leslie's Poolmart* . . . . . . . . . 100,000 1,400
Williams-Sonoma, Inc.* . . . . . . . 225,000 4,162
----------
11,042
----------
RETAIL-SPECIALTY - 2.0%
The Gymboree Corporation*. . . . . . 85,000 1,753
Office Depot, Inc.*. . . . . . . . . 150,000 2,962
Staples, Inc.* . . . . . . . . . . . 135,000 3,291
Trend-Lines, Inc.* . . . . . . . . . 145,000 1,450
----------
9,456
----------
TELECOMMUNICATIONS
EQUIPMENT - 3.3%
DSC Communications*. . . . . . . . . 40,000 1,475
Ericsson LM Telefonaktiebolaget
ADR CL B . . . . . . . . . . . . . 220,000 4,290
Motorola, Inc. . . . . . . . . . . . 100,000 5,700
Spectrian Corp.* . . . . . . . . . . 50,000 1,112
Tellabs, Inc.* . . . . . . . . . . . 80,000 2,960
----------
15,537
----------
TELECOMMUNICATIONS SERVICES - 1.5%
Nokia Corporation ADS. . . . . . . . 50,000 1,944
Paging Network, Inc.*. . . . . . . . 50,000 1,219
P.T. Telekomunikasi Indonesia
(Persero) ADS. . . . . . . . . . . 90,000 2,272
Saville Systems PLC* . . . . . . . . 125,000 1,781
----------
7,216
----------
TOBACCO PRODUCTS - 1.5%
Philip Morris Companies Inc. . . . . 80,000 7,240
----------
UTILITIES - 0.7%
Korea Electric Power
Corporation ADS. . . . . . . . . . 125,000 3,344
----------
VETERINARIAN PRODUCTS - 1.5%
IDEXX Laboratories, Inc.*. . . . . . 150,000 7,050
----------
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT DECEMBER 31, 1995 (CONTINUED)
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES/
WARRANTS VALUE
---------- ----------
<S> <C> <C>
Total Common
Stocks - 97.3%
(Cost $316,472). . . . . . . . . . $ 457,978
----------
PREFERRED STOCKS
MEDIA PUBLISHING - 0.7%
The News Corporation Limited . . . . 160,000 3,080
----------
TOTAL PREFERRED STOCKS - 0.7%
(COST $2,749). . . . . . . . . . . 3,080
----------
WARRANTS
ELECTRONIC & ELECTRICAL
EQUIPMENT - 0.3%
Intel Corporation* . . . . . . . . . 60,000 1,605
----------
TOTAL WARRANTS - 0.3%
(COST $2,254). . . . . . . . . . . 1,605
----------
TOTAL INVESTMENT IN SECURITIES - 98.3%
(COST $321,475). . . . . . . . . . $ 462,663
----------
----------
</TABLE>
- -----------------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
THE PASADENA NIFTY FIFTY FUND
INVESTMENT IN SECURITIES AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
COMMON STOCKS
BANKING - 6.0%
First Interstate Bancorp . . . . . . 15,000 $ 2,047
NationsBank Corporation. . . . . . . 35,000 2,437
Wells Fargo & Company. . . . . . . . 25,000 5,400
----------
9,884
----------
BEVERAGES - 6.8%
The Coca-Cola Company. . . . . . . . 95,000 7,054
PepsiCo, Inc.. . . . . . . . . . . . 75,000 4,191
----------
11,245
----------
BUSINESS SERVICES - 8.9%
Automatic Data Processing, Inc.. . . 47,000 3,490
Federal Express Corporation* . . . . 30,000 2,216
First Data Corporation . . . . . . . 50,000 3,344
General Motors Corporation, Class E. 50,000 2,600
Reuters Holdings PLC ADS B . . . . . 56,000 3,087
----------
14,737
----------
COMMUNICATIONS EQUIPMENT - 1.6%
Cisco Systems* . . . . . . . . . . . 35,000 2,612
----------
COMPUTER HARDWARE - 2.8%
Hewlett-Packard. . . . . . . . . . . 30,000 2,512
Silicon Graphics*. . . . . . . . . . 75,000 2,062
----------
4,574
----------
COMPUTER SOFTWARE - 3.5%
Microsoft Corporation* . . . . . . . 30,000 2,632
Oracle Systems*. . . . . . . . . . . 75,000 3,178
----------
5,810
----------
CONSUMER PRODUCTS - 7.2%
Avon Products, Inc.. . . . . . . . . 20,000 1,508
Duracell International Inc.. . . . . 30,000 1,553
The Gillette Company . . . . . . . . 170,000 8,861
----------
11,922
----------
DIVERSIFIED MANUFACTURING - 2.0%
General Electric . . . . . . . . . . 45,000 3,240
----------
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
ELECTRONICS & ELECTRICAL
EQUIPMENT - 3.9%
Intel Corporation. . . . . . . . . . 60,000 $ 3,405
Linear Technology Corporation. . . . 75,000 2,944
----------
6,349
----------
ENVIRONMENTAL SERVICES - 2.2%
WMX Technologies, Inc. . . . . . . . 120,000 3,585
----------
FINANCIAL SERVICES - 5.4%
American Express . . . . . . . . . . 40,000 1,655
Federal Home Loan Mortgage
Corporation. . . . . . . . . . . . 45,000 3,757
Federal National Mortgage
Association. . . . . . . . . . . . 28,000 3,475
----------
8,887
----------
FOOD PRODUCTS - 3.3%
International Flavors &
Fragrances Inc.. . . . . . . . . . 60,000 2,880
Wrigley (Wm.) Jr.. . . . . . . . . . 50,000 2,625
----------
5,505
----------
GAMING - 2.3%
Circus Circus Enterprises, Inc.* . . 72,000 2,007
Mirage Resorts, Incorporated*. . . . 50,000 1,725
----------
3,732
----------
HOSPITAL COMPANIES - 1.8%
Columbia/HCA Healthcare
Corporation. . . . . . . . . . . . 60,000 3,045
----------
HOUSEHOLD PRODUCTS - 3.0%
Colgate-Palmolive Company. . . . . . 38,000 2,670
The Procter & Gamble Company . . . . 28,000 2,324
----------
4,994
----------
LEISURE - 4.2%
Carnival Corporation . . . . . . . . 150,000 3,656
The Walt Disney Company. . . . . . . 55,000 3,245
----------
6,901
----------
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
THE PASADENA NIFTY FIFTY FUND
INVESTMENT IN SECURITIES AT DECEMBER 31, 1995 (CONTINUED)
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
MEDIA PUBLISHING - 1.3%
The News Corporation
Limited ADS. . . . . . . . . . . . 100,000 $ 2,138
----------
MEDICAL EQUIPMENT &
SUPPLIES - 5.3%
Johnson & Johnson. . . . . . . . . . 50,000 4,281
Medtronic, Inc.. . . . . . . . . . . 80,000 4,470
----------
8,751
----------
PHARMACEUTICALS - 6.0%
Merck & Co., Inc.. . . . . . . . . . 55,000 3,616
Pfizer Inc.. . . . . . . . . . . . . 100,000 6,300
----------
9,916
----------
RESTAURANTS - 2.6%
McDonald's Corporation . . . . . . . 95,000 4,287
----------
RETAIL - APPAREL & ACCESSORIES - 1.3%
Kohl's Corporation*. . . . . . . . . 40,000 2,100
----------
RETAIL - AUTO SUPPLY STORES - 1.8%
AutoZone, Inc.*. . . . . . . . . . . 100,000 2,888
----------
RETAIL - BUILDING MATERIALS
& HARDWARE - 2.2%
The Home Depot, Inc. . . . . . . . . 75,000 3,591
----------
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
RETAIL - GENERAL
MERCHANDISE - 2.6%
Wal-Mart Stores, Inc.. . . . . . . . 190,000 $ 4,251
----------
RETAIL - GROCERY STORES - 1.3%
Albertson's, Inc.. . . . . . . . . . 67,000 2,203
----------
TELECOMMUNICATIONS
EQUIPMENT - 4.1%
Ericsson LM Telefonaktiebolaget
ADR CL B . . . . . . . . . . . . . 132,000 2,574
Motorola, Inc. . . . . . . . . . . . 75,000 4,275
----------
6,849
----------
TOBACCO PRODUCTS - 2.2%
Philip Morris Companies Inc. . . . . 40,000 3,620
----------
UTILITIES - 1.2%
Korea Electric Power
Corporation ADS. . . . . . . . . . 75,000 2,006
----------
TOTAL COMMON STOCKS - 96.8%
(COST $110,120) . . . . . . . . . 159,622
----------
TOTAL INVESTMENT IN
SECURITIES - 96.8%
(COST $110,120) . . . . . . . . . $ 159,622
----------
----------
</TABLE>
- ----------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
THE PASADENA BALANCED RETURN FUND
INVESTMENT IN SECURITIES AT DECEMBER 31, 1995
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
COMMON STOCKS
ADVERTISING - 1.1%
The Interpublic Group of
Companies, Inc.. . . . . . . . . . 15,000 $ 651
----------
BANKING - 5.3%
First Interstate Bancorp . . . . . . 5,000 682
NationsBank Corporation. . . . . . . 12,000 835
Wells Fargo & Company. . . . . . . . 7,000 1,512
----------
3,029
----------
BEVERAGES - 3.9%
The Coca-Cola Company. . . . . . . . 15,000 1,114
PepsiCo, Inc.. . . . . . . . . . . . 20,000 1,117
----------
2,231
----------
BUSINESS SERVICES - 5.5%
Automatic Data Processing, Inc.. . . 11,000 817
General Motors Corporation, Class E . 15,000 780
Reuters Holdings PLC ADS B . . . . . 28,000 1,544
----------
3,141
----------
COMMUNICATIONS EQUIPMENT - 1.6%
Cisco Systems* . . . . . . . . . . . 12,000 895
----------
COMPUTER HARDWARE - 1.5%
Hewlett-Packard. . . . . . . . . . . 7,000 589
Silicon Graphics*. . . . . . . . . . 10,000 275
----------
864
----------
COMPUTER SOFTWARE - 2.4%
Microsoft Corporation* . . . . . . . 11,000 965
Oracle Systems*. . . . . . . . . . . 10,000 424
----------
1,389
----------
CONSUMER PRODUCTS - 5.5%
Avon Products, Inc.. . . . . . . . . 6,000 452
Duracell International Inc.. . . . . 12,000 621
The Gillette Company . . . . . . . . 40,000 2,085
----------
3,158
----------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 1.5%
Intel Corporation. . . . . . . . . . 15,000 851
----------
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
ENVIRONMENTAL SERVICES - 2.1%
WMX Technologies, Inc. . . . . . . . 40,000 $ 1,195
----------
FINANCIAL SERVICES - 5.2%
Federal Home Loan Mortgage
Corporation. . . . . . . . . . . . 17,000 1,419
Federal National Mortgage
Association. . . . . . . . . . . . 12,800 1,589
----------
3,008
----------
FOOD PRODUCTS - 1.9%
International Flavors &
Fragrances Inc.. . . . . . . . . . 10,000 480
Wrigley (Wm.) Jr.. . . . . . . . . . 12,000 630
----------
1,110
----------
GAMING - 0.5%
Circus Circus Enterprises, Inc.* . . 10,000 279
----------
HOSPITAL COMPANIES - 1.3%
Columbia/HCA Healthcare
Corporation. . . . . . . . . . . . 15,000 761
----------
HOUSEHOLD PRODUCTS - 3.3%
Colgate-Palmolive Company. . . . . . 15,000 1,054
The Procter & Gamble Company . . . . 10,000 830
----------
1,884
----------
INVESTMENT MANAGEMENT - 1.3%
United Asset Managment
Corporation. . . . . . . . . . . . 20,000 767
----------
LEISURE - 3.7%
Carnival Corporation . . . . . . . . 40,000 975
The Walt Disney Company. . . . . . . 20,000 1,180
----------
2,155
----------
MEDICAL EQUIPMENT &
SUPPLIES - 3.7%
Johnson & Johnson. . . . . . . . . . 12,000 1,027
Medtronic, Inc.. . . . . . . . . . . 20,000 1,117
----------
2,144
----------
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
THE PASADENA BALANCED RETURN FUND
INVESTMENT IN SECURITIES AT DECEMBER 31, 1995 (CONTINUED)
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
PHARMACEUTICALS - 4.8%
Merck & Co., Inc.. . . . . . . . . . 18,000 $ 1,183
Pfizer Inc.. . . . . . . . . . . . . 25,000 1,575
----------
2,758
----------
REAL ESTATE INVESTMENT
TRUST - 1.6%
Chelsea GCA Realty . . . . . . . . . 30,000 900
----------
RESTAURANTS - 2.1%
McDonald's Corporation . . . . . . . 27,000 1,218
----------
RETAIL - AUTO SUPPLY STORES - 1.4%
AutoZone, Inc.*. . . . . . . . . . . 27,000 780
----------
RETAIL - BUILDING MATERIAL
& HARDWARE - 0.8%
The Home Depot, Inc. . . . . . . . . 10,000 479
----------
RETAIL - GENERAL
MERCHANDISE - 1.9%
Wal-Mart Stores, Inc.. . . . . . . . 50,000 1,119
----------
RETAIL - GROCERY STORES - 1.1%
Albertson's, Inc.. . . . . . . . . . 20,000 658
----------
TELECOMMUNICATIONS
EQUIPMENT - 1.5%
Motorola, Inc. . . . . . . . . . . . 15,000 855
----------
TOBACCO PRODUCTS -2.0%
Philip Morris Companies Inc. . . . . 13,000 1,176
----------
TOTAL COMMON STOCKS - 68.5%
(COST $25,371) . . . . . . . . . . 39,455
----------
<CAPTION>
(DOLLARS IN THOUSANDS)
SHARES VALUE
---------- ----------
<S> <C> <C>
UNITED STATES TREASURY OBLIGATIONS
United States Treasury Notes,
5.875%, 05/31/1996 . . . . . . . . $ 6,500 $ 6,514
United States Treasury Notes,
6.375%, 01/15/2000 . . . . . . . . 3,500 3,629
United States Treasury Notes,
6.5%, 08/15/2005 . . . . . . . . . 6,400 6,824
----------
16,967
----------
TOTAL UNITED STATES TREASURY
OBLIGATIONS - 29.5%
(COST $16,516) . . . . . . . . . . 16,967
----------
TOTAL INVESTMENT IN
SECURITIES - 98.0%
(COST $41,887) . . . . . . . . . . $ 56,422
----------
----------
</TABLE>
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
<TABLE>
<CAPTION>
THE PASADENA GROWTH, NIFTY FIFTY AND BALANCED.RETURN FUNDS
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31,1995 (in thousands except per share amounts and related calculations)
THE PASADENA THE PASADENA THE PASADENA
GROWTH NIFTY FIFTY BALANCED
ASSETS: FUND FUND RETURN FUND
------------- ------------- -----------
<S> <C> <C> <C>
Investment in securities, at value (Cost $321,475, $110,120 and $41,887)
See accompanying schedules. . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 462,663 $ 159,622 $ 56,422
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,335 5,390 961
Receivable for Fund shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . 357 131 15
Dividends and interest receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 668 210 354
--------- --------- ---------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 472,023 165,353 57,752
--------- --------- ---------
LIABILITIES:
Payable for Fund shares repurchased 193 42 37
Payable for investments purchased. . . . . . . . . . . . . . . . . . . . . . . . . . 42 - -
Accrued administration fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 265 106 44
Accrued investment management fees . . . . . . . . . . . . . . . . . . . . . . . . . 246 100 41
Accrued service fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479 136 61
Accrued distribution fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 80 11
--------- --------- ---------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,324 464 194
--------- --------- ---------
NET ASSETS AT DECEMBER 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . . . . $ 470,699 $ 164,889 $ 57,558
--------- --------- ---------
--------- --------- ---------
NET ASSETS CONSIST OF:
Capital paid-in. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 329,199 $ 116,082 $ 43,083
Accumulated undistributed income:
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - - 8
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . 312 (695) (68)
Net unrealized appreciation in value of investments. . . . . . . . . . . . . . . . . 141,188 49,502 14,535
--------- --------- ---------
PER SHARE VALUES:. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 470,699 $ 164,889 $ 57,558
--------- --------- ---------
--------- --------- ---------
CLASS A
Net asset value and redemption price ($415,415,763 DIVIDED BY 21,543,651,
$122,321,891 DIVIDED BY 5,515,356 and $52,027,536 DIVIDED BY 2,049,008). . . . . . . $ 19.28 $ 22.18 $ 25.39
--------- --------- ---------
--------- --------- ---------
Maximum offering price [NAV per share DIVIDED BY (1 - maximum sales load)] . . . . . $ 20.40 $ 23.47 $ 26.87
--------- --------- ---------
--------- --------- ---------
Class B
Net asset value and offering price ($34,786,309 DIVIDED BY 1,831,582,
$27,461,375 DIVIDED BY 1,256,781 and $2,721,060 DIVIDED BY 107,705). . . . . . . . . $18.99 $21.85 $25.26
--------- --------- ---------
--------- --------- ---------
CLASS C
Net asset value, offering price and redemption price ($20,497,148 DIVIDED BY 1,079,233,
$15,105,363 DIVIDED BY 691,303 and $2,808,943 DIVIDED BY 111,094). . . . . . . . . . $18.99 $21.85 $25.28
--------- --------- ---------
--------- --------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
<TABLE>
<CAPTION>
THE PASADENA GROWTH, NIFTY FIFTY AND BALANCED RETURN FUNDS
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995 (IN THOUSANDS)
THE PASADENA THE PASADENA THE PASADENA
GROWTH NIFTY FIFTY BALANCED
FUND FUND RETURN FUND
------------- ------------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,405 $ 1,888 $ 624
Interest and other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 386 411 1,222
--------- --------- ---------
Total investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,791 2,299 1,846
--------- --------- ---------
EXPENSES:
Administration fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,212 1,203 541
Investment management fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,985 1,131 512
Service fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,136 363 141
Distribution fees - Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . 184 135 14
Distribution fees - Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 80 17
--------- --------- ---------
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,624 2,912 1,225
--------- --------- ---------
Net investment income (loss). . . . . . . . . . . . . . . . . . . . . . . . . (1,833) (613) 621
--------- --------- ---------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain (loss) on investments . . . . . . . . . . . . . . . . . . . . . 35,297 (1) 3,083
Net increase in unrealized appreciation . . . . . . . . . . . . . . . . . . . . . 73,976 35,055 9,811
--------- --------- ---------
Net gain on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . 109,273 35,054 12,894
--------- --------- ---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.... . . . . . . . . . . . . . . $ 107,440 $ 34,441 $ 13,515
--------- --------- ---------
--------- --------- ---------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
<TABLE>
<CAPTION>
PASADENA GROWTH, NIFTY FIFTY AND BALANCED RETURN FTINDV
STATEMENT OF CHANGES NET ASSETS
(IN THOUSANDS)
THE PASADENA THE PASADENA THE PASADENA
GROWTH FUND NIFTY FIFTY FUND BALANCED RETURN FUND
---------------------- ---------------------- ----------------------
For the Year Ended December 31,
-------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS: 1995 1994 1995 1994 1995 1994
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Operations:
Net investment income (loss) . . . . . . . . . .$ (1,833) $ (819) $ (613) $ (241) $ 621 $ 1,203
Net realized gain (loss) on investments. . . . . 35,297 7,098 (1) 4,360 3,083 (1,453)
Net increase (decrease) in unrealized
appreciation in value of investments . . . . 73,976 (25,127) 35,055 (3,217) 9,811 (3,223)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting ftom operations. . . . . . . . . . 107,440 (18,848) 34,441 902 13,515 (3,473)
---------- ---------- ---------- ---------- ---------- ----------
Dividends and distributions to shareholders:
Net investment income. . . . . . . . . . . . . . - - - - (612) (1,224)
Capital gains. . . . . . . . . . . . . . . . . . (7,232) - - - (971) -
---------- ---------- ---------- ---------- ---------- ----------
Decrease in net assets resulting from
dividends and distributions to
shareholders . . . . . . . . . . . . . . . . (7,232) - - - (1,583) (1,224)
---------- ---------- ---------- ---------- ---------- ----------
Capital share transactions:
Net increase (decrease) in net assets
resulting from capital share transactions. . (38,825) (104,044) 18,847 (23,585) (10,093) (24,175)
---------- ---------- ---------- ---------- ---------- ----------
Total increase (decrease) in net assets. . . . . 61,383 (122,892) 53,288 (22,683) 1,839 (28,872)
NET ASSETS:
Beginning of year. . . . . . . . . . . . . . . . . 409,316 532,208 111,601 134,284 55,719 84,591
---------- ---------- ---------- ---------- ---------- ----------
End of year. . . . . . . . . . . . . . . . . . . . $ 470,699 $ 409,316 $ 164,889 $ 111,601 $ 57,558 $ 55,719
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
<TABLE>
<CAPTION>
THE PASEDENA GROWTH FUND
FINANCIAL HIGHLIGHTS
For the Year Ended December 31,
------------------------------------------------------------------------------------
1995 1994
---------------------------------- --------------------------------------------
Class A Class B Class C Class A Class B Class C(3)
---------- --------- --------- ---------- ---------- ----------
PER SHARE OPERATING
PERFORMANCE
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of year . . . . . . . . . . . . . . . $15.40 $15.28 $15.28 $16.00 $15.89 15.89
---------- --------- --------- ---------- ---------- ----------
GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment loss(1). . . . . . . . (.06) (.20) (.20) (.03) (.14) (.14)
Net realized and unrealized
gain (loss) on investments.... . 4.24 4.21 4.21 (.57) (.47) (.47)
---------- --------- --------- ---------- ---------- ----------
Total gain (loss) from
investment operations. . . . . . 4.18 4.01 4.01 (.60) (.61) (.61)
---------- --------- --------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from capital
gains. . . . . . . . . . . . . . (.30) (.30) (.30) - - -
---------- --------- --------- ---------- ---------- ----------
Total distributions . . . . . . . . . (.30) (.30) (.30) - - -
---------- --------- --------- ---------- ---------- ----------
Net asset value, end of year . . . . . . $ 19.28 $ 18.99 $ 18.99 $ 15.40 $ 15.28 $ 15.28
---------- --------- --------- ---------- ---------- ----------
---------- --------- --------- ---------- ---------- ----------
TOTAL RETURN(2). . . . . . . . . . . . . 27.16 % 26.26 % 26.26 % (3.75)% (3.84)% (3.84)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year . . . . . . . $ 415,416 $ 34,786 $ 20,497 $ 391,831 $ 11,349 $ 6,136
(in thousands)
Ratio of expenses to average
net assets . . . . . . . . . . . 1.6 % 2.4 % 2.4 % 1.6 % 2.3% 2.3 %
Ratio of net investment loss to
average net assets . . . . . . . (.3)% (1.1)% (1.1) % (.2)% (1.0)% (1.0)%
Portfolio turnover rate . . . . . . . 65.9 % 65.9 % 65.9 % 53.8 % 53.8 % 53.8 %
</TABLE>
____________________
The table above provides condensed information concerning income and capital
changes for one share of The Pasadena Growth Fund. Such information is based on
the Fund's audited financial statements for the years presented.
(1) This information was prepared using the average number of shares
outstanding during the year.
(2) Total return measures the change in the value of an investment during each
of the years indicated.It does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(2) The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold.
SEE NOTES TO FINANCIAL STATEMENTS.
23
<PAGE>
<TABLE>
<CAPTION>
THE PASADENA GROWTH FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
For the Year Ended December 31,
------------------------------------
1993 1992 1991(3)
----------- ---------- ----------
Class A Class A Class A
----------- ---------- ----------
<S> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of year. . . . . . . . . . . . . . . $ 17.00 $ 16.80 $ 10.04
----------- ---------- ----------
GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment loss(1) . . . . . . . (.02) (.05) (.08)
Net realized and unrealized
gain (loss) on investments . . . . (.98) .43 6.89
----------- ---------- ----------
Total gain (loss) from
investment operations. . . . . . . (1.00) .38 6.81
----------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from capital
gains. . . . . . . . . . . . . . . - (.18) (.05)
----------- ---------- ----------
Total distributions. . . . . . . . . - (.18) (.05)
----------- ---------- ----------
Net asset value, end of year . . . . . .$ 16.00 $ 17.00 $ 16.80
----------- ---------- ----------
TOTAL RETURN(2). . . . . . . . . . . . . (5.87)% 2.24 % 67.83 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands) . . . . . . . . . . $ 532,208 $625,624 $ 323,484
Ratio of expenses to average
net assets . . . . . . . . . . . . 1.6 % 1.6 % 1.8 %
Ratio of net investment loss to
average net assets . . . . . . . . - % (.3) % (.6) %
Portfolio turnover rate. . . . . . . 22.9 % 24.5 % 23.5 %
</TABLE>
- ------------------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Growth Fund. Such
information is based on the Fund's audited financial statements for the
years presented.
1 This information was prepared using the average number of shares
outstanding during the year.
2 Total return measures the change in the value of an investment during
each of the years indicated. It does not include the impact of paying
any applicable front-end or contingent deferred sales charge.
3 Per share amounts for years prior to 1992 have been restated to
reflect a 2 for 1 share split effective September 30, 1991.
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
<TABLE>
<CAPTION>
THE PASADENA NIFTY FIFTY FUND
FINANCIAL HIGHLIGHTS
For the Year Ended December 31,
--------------------------------------------------------------------------------------
1995 1994
---------------------------------------- ----------------------------------------
Class A Class B Class C Class A Class B(3) Class C(3)
---------- ---------- ---------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of year . . . . . . . . . . . . . . . $ 17.30 $ 17.17 $ 17.17 $ 17.12 $ 17.02 $ 17.02
---------- ---------- ---------- ---------- --------- ----------
GAIN FROM INVESTMENT
OPERATIONS:
Net investment loss(1). . . . . . . . (.05) (.21) (.21) (.03) (.14) (.15)
Net realized and unrealized
gain on investments . . . . . . . 4.93 4.89 4.89 .21 .29 .30
---------- ---------- ---------- ---------- --------- ----------
Total gain from
investment operations . . . . . . 4.88 4.68 4.68 .18 .15 .15
---------- ---------- ---------- ---------- --------- ----------
Net asset value, end of year . . . . . . $ 22.18 $ 21.85 $ 21.85 $ 17.30 $ 17.17 $ 17.17
---------- ---------- ---------- ---------- --------- ----------
---------- ---------- ---------- ---------- --------- ----------
TOTAL RETURN(2). . . . . . . . . . . . . 28.21 % 27.26 % 27.26 % 1.05 % .88 % .88 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands). . . . . . . . . . $ 122,322 $ 27,462 $ 15,105 $ 100,596 $ 6,722 $ 4,283
Ratio of expenses to average
net assets. . . . . . . . . . . . 1.9 % 2.6 % 2.6 % 1.9 % 2.6 % 2.6 %
Ratio of net investment loss to
average net assets. . . . . . . . (.3)% (1.0)% (1.0)% (.2)% (.9)% (.9)%
Portfolio turnover rate . . . . . . . 26.5 % 26.5 % 26.5% 23.2% 23.2% 23.2 %
</TABLE>
- ------------------------------
The table above provides condensed information concerning income and
capital changes for one share of The Pasadena Nifty Fifty Fund. Such
information is based on the Fund's audited financial statements for the
years presented.
1 This information was prepared using the average number of shares
outstanding during the year.
2 Total return measures the change in the value of an investment during each
of the years indicated. It does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
3 The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold.
SEE NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
<TABLE>
<CAPTION>
THE PASADENA NIFTY FIFTY FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
For the Year Ended Decmber 31,
----------------------------------------
1993 1992 1991
---------- ---------- ----------
Class A Class A Class A
---------- ---------- ----------
<S> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of year. . . . . . . . . . . . . . $ 17.21 $ 16.60 $ 9.97
---------- ---------- ----------
GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment loss(1) . . . . . . (.06) (.05) (.01)
Net realized and unrealized
gain (loss) on investments. . . (.03) .66 6.74
---------- ---------- ----------
Total gain (loss) from
investment operations . . . . . (.09) .61 6.73
---------- ---------- ----------
LESS DISTRIBUTIONS:
Distributions from capital
gains . . . . . . . . . . . . . - - (.10)
---------- ---------- ----------
Total distributions. . . . . . . . - - (.10)
---------- ---------- ----------
Net asset value, end of year . . . . . $ 17.12 $ 17.21 $ 16.60
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN(2). . . . . . . . . . . . (.52)% 3.67 % 67.64 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands). . . . . . . . . $ 134,284 $ 195,067 $ 64,156
Ratio of expenses to average
net assets. . . . . . . . . . . 1.8 % 1.9 % 1.9%
Ratio of net investment income
(loss) to average net assets. . - (.3)% (.1)%
Portfolio turnover rate. . . . . . 2.2 % 12.9 % 27.6 %
</TABLE>
- ---------------------
The table above provides condensed information concerning income and capital
changes for one share of The Pasadena Nifty Fifty Fund. Such information is
based on the Fund's audited financial statements for the years presented.
1 This information was prepared using the average number of shares
outstanding during the year.
2 Total return measures the change in the value of an investment during
each of the years indicated. It does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
<TABLE>
<CAPTION>
THE PASADENA BALANCED RETURN FUND
FINANCIAL HIGHLIGHTS
For the Year Ended December 31,
-------------------------------------------------------------------------------------
1995 1994
--------------------------------------- ----------------------------------------
Class A Class B Class C Class A Class B(3) Class C(3)
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning of year . . . . $ 20.54 $ 20.49 $ 20.48 $ 21.97 $ 21.89 $ 21.89
---------- ---------- ---------- ---------- ---------- ----------
GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment income(1). . . . . . . . .27 .08 .07 .39 .26 .25
Net realized and unrealized
gain (loss) on investments. . . . . 5.31 5.29 5.30 (1.36) (1.32) (1.31)
---------- ---------- ---------- ---------- ---------- ----------
Total gain (loss) from
investment operations . . . . . . . 5.58 5.37 5.37 (.97) (1.06) (1.06)
---------- ---------- ---------- ---------- ---------- ----------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment
income. . . . . . . . . . . . . . . (.29) (.16) (.13) (.46) (.34) (.35)
Distributions from capital
gains . . . . . . . . . . . . . . . (.44) (.44) (.44) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total distributions . . . . . . . . . . (.73) (.60) (.57) (.46) (.34) (.35)
---------- ---------- ---------- ---------- ---------- ----------
Net asset value, end of year . . . . . . . $ 25.39 $ 25.26 $ 25.28 $ 20.54 $ 20.49 $ 20.48
---------- ---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ---------- ----------
TOTAL RETURN(2). . . . . . . . . . . . . . 27.18 % 26.20 % 26.23 % (4.43)% (4.85)% (4.85)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands). . . . . . . . . . . $ 52,028 $ 2,721 $ 2,809 $ 53,047 $ 1,223 $ 1,449
Ratio of expenses to average
net assets. . . . . . . . . . . . . 2.1 % 2.9 % 2.9 % 2.1 % 2.9 % 2.9 %
Ratio of net investment income
to average net assets . . . . . . . 1.2 % .3 % .3 % 1.8 % 1.3 % 1.3 %
Portfolio turnover rate . . . . . . . . 51.1 % 51.1 % 51.1 % 28.2 % 28.2 % 28.2 %
</TABLE>
- ------------------------
The table above provides condensed information concerning income and capital
changes for one share of The Pasadena Balanced Return Fund. Such information is
based on the Fund's audited financial statements for the years presented.
1 This information was prepared using the average number of shares
outstanding during the year.
2 Total return measures the change in the value of an investment during each
of the years indicated. It does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
3 The beginning net asset value per share of Class B and Class C shares
equals the net asset value per share of the Class A shares as of the first
day Class B and Class C shares were sold.
SEE NOTES TO FINANCIAL STATEMENTS.
27
<PAGE>
<TABLE>
<CAPTION>
THE PASADENA BALANCED RETURN FUND
FINANCIAL HIGHLIGHTS (CONTINUED)
For the Year Ended December 31,
----------------------------------------
1993 1992 1991
---------- ---------- ----------
Class A Class A Class A
---------- ---------- ----------
<S> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of year. . . . . . . . . . . . . . . . . $ 21.76 $ 20.95 $ 15.30
---------- ---------- ----------
GAIN FROM INVESTMENT
OPERATIONS:. . . . . . . . . . . . . . . . . .32 .25 .24
Net investment income(1)
Net realized and unrealized
gain on investments. . . . . . . .21 .69 5.70
--------- ---------- ---------
Total gain from
investment operations. . . . . . . . . .53 .94 5.94
--------- ---------- ---------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment
income. . . . . . . . . . . . . . . (.32) (.13) (.16)
Distributions from capital
gains . . . . . . . . . . . . . . . -- -- (.13)
---------- ---------- ----------
Total distributions. . . . . . . . . . . (.32) (.13) (.29)
---------- ---------- ----------
Net asset value, end of year . . . . . . . . $ 21.97 $ 21.76 $ 20.95
---------- ---------- ----------
---------- ---------- ----------
TOTAL RETURN(2). . . . . . . . . . . . . . . 2.44 % 4.49 % 38.89 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands). . . . . . . . . . . $84,591 $75,143 $16,020
Ratio of expenses to average
net assets. . . . . . . . . . . . . 2.1 % 2.3 % 2.5 %
Ratio of net investment income
to average net assets . . . . . . . 1.5 % 1.2 % 1.3 %
Portfolio turnover rate. . . . . . . . . 4.8 % 6.3 % 4.9 %
</TABLE>
- ------------------------------
The table above provides condensed information concerning income and capital
changes for one share of The Pasadena Balanced
Return Fund. Such information is based on the Fund's audited financial
statements for the years presented.
1 This information was prepared using the average number of shares
outstanding during the year.
2 Total return measures the change in the value of an investment during each
of the years indicated. It does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
SEE NOTES TO FINANCIAL STATEMENTS.
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES: The Pasadena Growth Fund, The
Pasadena Nifty Fifty Fund and The Pasadena Balanced Return Fund,
collectively referred to as the "Funds," are series of the Pasadena
Investment Trust (the "Trust"), a Massachusetts business trust registered
under the Investment Company Act of 1940 as a diversified, open-end
management investment company. The Funds each offer three Classes (Class
A, Class B and Class C) of no par value shares (an unlimited number of
which have been authorized). Class A shares are sold with a maximum front-
end sales charge of 5.5% of the offering price. Class B and Class C shares
are sold at their net asset value. Class B shares redeemed during the
first four years of ownership may be subject to a contingent deferred sales
charge of up to 5%. At the beginning of the seventh year after purchase,
Class B shares automatically convert into Class A shares based upon the
relative net asset values of the two Classes, without imposition of any
sales charges. The significant accounting policies of the Funds are as
follows:
A. SECURITIES VALUATION. Securities traded on a national securities
exchange or on Nasdaq are stated at the last sale price determined as
of 4:00 p.m. Eastern Time on the day of valuation; securities for
which no sale was reported on that date are stated at the last sale
price on the business day the security was last traded. Securities
traded only in the over-the-counter market and not on Nasdaq are
valued at the current or last quoted bid price. If no bid price is
quoted that day, and in the case of U.S. Government securities if no
bid prices of comparable issues exist, the security is valued by such
method as the Trust's Board of Trustees shall determine in good faith
reflects the security's fair value.
B. INCOME AND EXPENSE ALLOCATION. All items of income and expense not
directly related to a specific Class of shares are allocated among the
three Classes based upon the relative aggregate value of the
outstanding shares of each Class.
C. FEDERAL INCOME TAXES. It is the Funds' policy to comply with the
requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of their taxable income to
their shareholders. Accordingly, no federal income tax provisions are
required. Distributions of income and capital gains are determined in
accordance with income tax regulations which differ in certain
respects from generally accepted accounting principles. Accordingly,
the Funds have reclassified to capital paid-in the effects of
permanent differences included in undistributed net investment income.
The aggregate cost of securities for financial statement purposes
approximates their cost for federal income tax purposes.
D. OTHER. The Funds recognize security transactions on the trade date.
Realized gains and losses on sales of investments are determined on
the identified cost basis. Dividend income less foreign taxes
withheld (if any) and distributions to shareholders are recorded on
the ex-dividend date. Interest income is recorded on an accrual
basis.
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES: Under an investment
management agreement with the Funds, Roger Engemann Management Co., Inc.
(the "Manager") furnishes advice and recommendations with respect to the
Funds' securities portfolios, supervises the Funds' investments, provides
Fund accounting and pricing, and provides the Trust's Board of Trustees
with periodic and special reports on investment securities, economic
conditions and other pertinent subjects. The Manager also performs various
administrative and shareholder services to the Funds under an
administration agreement. All normal operating expenses of the Funds,
except for fees and expenses associated with investment management
services, service fees and distribution fees, are paid by the Manager
pursuant to the administration agreement.
For the services provided and expenses assumed under the management and
administration agreements, the Manager receives separate fees computed and
prorated on a daily basis, which fees on a combined basis range from an
annualized 2.05% of each Fund's average daily net assets up to $30 million,
reduced for various average daily net asset levels thereafter, to a
combined annualized fee of 1.00% of each Fund's average daily net assets
when its average daily net assets exceed $500 million. Investment
management fees are subject to reduction, if necessary, to comply with
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
2. FEES AND OTHER TRANSACTIONS WITH AFFILIATES (CONTINUED):
the most restrictive expense limitation imposed by any state in which each
Fund's shares are registered for sale. Broker/dealers and other service
providers, including the Manager and the Funds' distributor, Pasadena Fund
Services, Inc. (the "Distributor"), receive service fees at an annualized
0.25% of each Fund's average daily net asset value for services to
shareholders.
Pursuant to the distribution plans (the "Plans") adopted by the Funds, each
Fund pays distribution fees to the Distributor at an annualized rate of
0.75% of its average daily net assets attributable to Class B and Class C
shares. The fees reimburse the Distributor for distribution costs
(principally payments to broker/dealers) incurred on behalf of the Funds
with respect to Class B and Class C shares. Under the Plans, Class B and
Class C shares are not obligated to pay any distribution costs in excess of
the distribution fee paid or accrued even if the Plans are terminated or
otherwise discontinued.
Roger Engemann & Associates, Inc., a wholly-owned subsidiary of Pasadena
Capital Corporation, owns 93.5% of the Manager's capital stock. Pasadena
Capital Corporation is also an affiliate of the Distributor. Roger
Engemann, the controlling shareholder of Pasadena Capital Corporation, is
the Chairman of the Board and President of the Trust.
3. INVESTMENT TRANSACTIONS: For the year ended December 31, 1995,
purchases and sales of securities, other than short-term securities,
aggregated $293,627 and $345,739 respectively, for The Pasadena Growth
Fund, $60,108 and $35,946 respectively, for The Pasadena Nifty Fifty Fund
and $27,071 (which includes $16,438 in U.S. government obligations) and
$37,574 (which includes $22,159 in U.S. government obligations)
respectively, for The Pasadena Balanced Return Fund.
At December 31, 1995, net unrealized appreciation aggregated $141,188,
$49,502 and $14,535 for The Pasadena Growth Fund, The Pasadena Nifty Fifty
Fund and The Pasadena Balanced Return Fund, respectively, of which
$155,765, $51,877 and $14,971, respectively, related to appreciated
securities and $14,577, $2,375 and $436 respectively, related to
depreciated securities.
As of December 31, 1995, The Pasadena Nifty Fifty Fund had available for
federal income tax purposes unused capital loss carryforwards of $614, $86
and $1, expiring in 2000, 2001 and 2002, respectively. Neither The
Pasadena Growth Fund nor The Pasadena Balanced Return Fund had an unused
capital loss carryforward at December 31, 1995.
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS: The Funds' capital (IN THOUSANDS)
share transactions were as follows:
<TABLE>
<CAPTION>
THE PASADENA GROWTH FUNDS
--------------------------------------------------------
Net Assets Shares
------------------------------- ----------------------
For the Year Ended December 31,
--------------------------------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold . . . . . . . . . . . . . . . $ 25,923 $ 26,009 1,467 1,671
Shares issued in reinvestment
of distributions. . . . . . . . . . . . 5,625 - 294 -
Shares repurchased. . . . . . . . . . . . (100,949) (147,730) (5,667) (9,482)
------------ ----------- ------------ -----------
Net decrease. . . . . . . . . . . . . . . (69,401) (121,721) (3,906) (7,811)
------------ ----------- ------------ -----------
CLASS B
Shares sold . . . . . . . . . . . . . . . 20,183 11,583 1,162 752
Shares issued in reinvestment
of distributions . . . . . . . . . . . 502 - 27 -
Shares repurchased. . . . . . . . . . . . (1,815) (147) (100) (10)
------------ ----------- ------------ -----------
Net increase. . . . . . . . . . . . . . . 18,870 11,436 1,089 742
------------ ----------- ------------ -----------
CLASS C
Shares sold . . . . . . . . . . . . . . . 14,314 7,167 823 462
Shares issued in reinvestment
of distributions . . . . . . . . . . . 287 - 15 -
Shares repurchased. . . . . . . . . . . . (2,895) (926) (160) (60)
------------ ----------- ------------ -----------
Net increase. . . . . . . . . . . . . . . 11,706 6,241 678 402
------------ ----------- ------------ -----------
Net decrease resulting from
capital share transactions . . . . . . $ (38,825) $ (104,044) (2,139) (6,667)
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
</TABLE>
<TABLE>
<CAPTION>
THE PASADENA NIFTY FIFTY FUND
--------------------------------------------------------
Net Assets Shares
------------------------------- ----------------------
For the Year Ended December 31,
--------------------------------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold . . . . . . . . . . . . . . . $ 17,467 $ 10,535 907 616
Shares repurchased. . . . . . . . . . . . (24,108) (45,033) (1,206) (2,644)
------------ ----------- ------------ -----------
Net decrease. . . . . . . . . . . . . . . (6,641) (34,498) (299) (2,028)
------------ ----------- ------------ -----------
CLASS B
Shares sold . . . . . . . . . . . . . . . 18,638 6,912 945 406
Shares repurchased. . . . . . . . . . . . (1,688) (240) (80) (14)
------------ ----------- ------------ -----------
Net increase. . . . . . . . . . . . . . . 16,950 6,672 865 392
------------ ----------- ------------ -----------
CLASS C
Shares sold . . . . . . . . . . . . . . . 11,993 4,417 611 259
Shares repurchased. . . . . . . . . . . . (3,455) (176) (169) (10)
------------ ----------- ------------ -----------
Net increase. . . . . . . . . . . . . . . 8,538 4,241 442 249
------------ ----------- ------------ -----------
Net increase (decrease) in net
assets resulting from capital
share transactions. . . . . . . . . . . . $ 18,847 $ (23,585) 1,008 (1,387)
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
</TABLE>
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED): (IN THOUSANDS)
<TABLE>
<CAPTION>
THE PASADENA BALANCED RETURN FUND
--------------------------------------------------------
Net Assets Shares
------------------------------- ----------------------
For the Year Ended December 31,
--------------------------------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CLASS A
Shares sold . . . . . . . . . . . . . . . $ 2,304 $ 2,814 97 132
Shares issued in reinvestment
of distributions. . . . . . . . . . . . 1,331 1,047 53 50
Shares repurchased. . . . . . . . . . . . (15,800) (30,777) (683) (1,450)
------------ ----------- ------------ -----------
Net decrease (12,165) (26,916) (533) (1,268)
------------ ----------- ------------ -----------
CLASS B
Shares sold . . . . . . . . . . . . . . . 1,527 1,346 65 64
Shares issued in reinvestment
of distributions. . . . . . . . . . . . 52 20 2 1
Shares repurchased. . . . . . . . . . . . (430) (102) (19) (5)
------------ ----------- ------------ -----------
Net increase. . . . . . . . . . . . . . . 1,149 1,264 48 60
------------ ----------- ------------ -----------
CLASS C
Shares sold . . . . . . . . . . . . . . . 2,728 1,757 115 84
Shares issued in reinvestment
of distributions. . . . . . . . . . . . 55 21 2 1
Shares repurchased. . . . . . . . . . . . (1,860) (301) (77) (14)
------------ ----------- ------------ -----------
Net increase. . . . . . . . . . . . . . . 923 1,477 40 71
------------ ----------- ------------ -----------
Net decrease
resulting from capital share
transactions. . . . . . . . . . . . . . . $ (10,093) $ (24,175) (445) (1,137)
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
</TABLE>
5. DIVIDENDS AND DISTRIBUTIONS: Dividends and distributions to
shareholders were as follows:
<TABLE>
<CAPTION>
THE PASADENA THE PASADENA
GROWTH FUND BALANCED RETURN FUNDS
------------------------------- ----------------------
For the Year Ended December 31,
--------------------------------------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net investment income:
Class A $ - $ - $ 582 $ 1,181
Class B - - 16 20
Class C - - 14 23
Net realized gains on investments:
Class A 6,381 - 878 -
Class B 536 - 46 -
Class C 315 - 47 -
--------- --------- -------- --------
Total $ 7,232 $ - $ 1,583 $ 1,224
--------- --------- -------- --------
--------- --------- -------- --------
</TABLE>
The Pasadena Nifty Fifty Fund had no distributable net investment income or net
realized capital gains in l995 and l994.
32
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of Pasadena Investment Trust:
We have audited the accompanying statements of assets and liabilities of
The Pasadena Growth Fund, The Pasadena Nifty Fifty Fund and The Pasadena
Balanced Return Fund, collectively referred to as the "Funds," which Funds
are series of the Pasadena Investment Trust, including the schedules of
investment in securities as of December 31, 1995, and the related
statements of operations for the year then ended, the statements of changes
in net assets for the two years then ended, and the financial highlights
for each of the five years then ended. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. Our procedures included confirmation of
securities owned as of December 31, 1995, by correspondence with the
custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position
of The Pasadena Growth Fund, The Pasadena Nifty Fifty Fund and The Pasadena
Balanced Return Fund as of December 31, 1995, the results of their
operations for the year then ended, the changes in their net assets for
each of the two years then ended, and the financial highlights for the five
years then ended in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Los Angeles, California
February 16, 1996
33
<PAGE>
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34
<PAGE>
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35
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
[LOGO] THE PASADENA GROUP
OF MUTUAL FUNDS-REGISTERED TRADEMARK-
TAKE TIME TO GROW-SM-
OFFICERS AND TRUSTEES
- ----------------------------------
ROGER ENGEMANN
CHAIRMAN OF THE BOARD,
PRESIDENT AND TRUSTEE
BARRY E. MCKINLEY ANNUAL REPORT
TRUSTEE FOR THE YEAR ENDED
DECEMBER 31, 1995
ROBERT L. PETERSON
TRUSTEE
MICHAEL STOLPER
TRUSTEE
RICHARD C. TAYLOR THE PASADENA
TRUSTEE GROWTH
FUND-REGISTERED TRADEMARK-
JOHN S. TILSON -----
CHIEF FINANCIAL OFFICER,
SECRETARY AND TRUSTEE THE PASADENA
NIFTY FIFTY
RICHARD A. WATSON FUND-REGISTERED TRADEMARK-
CONTROLLER - FUND ACCOUNTING ----
ANGELA WONG
TRUSTEE
THE PASADENA
BALANCED RETURN
FUND-REGISTERED TRADEMARK-
----
This report is for the information
of shareholders of The Pasadena Growth
Fund. The Pasadena Nifty Fifty Fund
and The Pasadena Balanced Return Fund, but
it may also be used as sales literature
when preceded or accompanied by the Funds'
current prospectus which gives details about
charges, investment objectives and
operating policies of the Funds.
MANAGED BY
Roger Engemann Management Co., Inc.
600 North Rosemead Boulevard
Pasadena, California 91107-2133
(800) 648-8050
Distributed by Pasadena Fund Services, Inc.
</TABLE>
