<PAGE>
[LOGO] THE PASADENA GROUP
OF MUTUAL FUNDS
TAKE TIME TO GROW-REGISTERED TRADEMARK-
SEMIANNUAL REPORT
FOR THE PERIOD ENDED JUNE 30, 1996
THE PASADENA
GROWTH
FUND
THE PASADENA
NIFTY FIFTY
FUND
THE PASADENA
BALANCED RETURN
FUND
- ------------------------------------------------------------
MANAGED BY
ROGER ENGEMANN MANAGEMENT CO., INC.
600 NORTH ROSEMEAD BOULEVARD
PASADENA, CALIFORNIA 91107-2133
(800) 648-8050
DISTRIBUTED BY PASADENA FUND SERVICES, INC.
<PAGE>
MESSAGE FROM THE CHAIRMAN
DEAR FELLOW SHAREHOLDERS:
We have often proclaimed, "It pays to stay on the train." The stock
market's behavior during the first six months of 1996 proved how difficult
this can be, but when the dust finally settled, it confirmed the rewards
long-term investors can enjoy.
Investors' fortitude was tested several times during the first part of
the year when interest rates rose in response to fears that economic growth
was accelerating. The result was several volatile days in the financial
markets. And the first few days in July indicate that a few more bumps may be
in store for us during the second half of the year.
However, it has been our view all along that rising interest rates can't
be sustained without a similar rise in inflation. As far as we can tell,
inflation remains well contained. Indeed, it appears this sentiment prevailed
as the stock market moved into record territory over the six-months ended
June 30, 1996. The S&P 500 Stock Index(1) increased 10.09 percent for the
period, an ample reward for patient investors who "stayed on the train."
More importantly, we are very pleased with the performance of our Funds
during the first half of the year. For the period ended June 30,1996, both of
our stock Funds surpassed the 10.09 percent return of the stocks in the S&P
500: The net asset value (NAV) for A shares of The Pasadena Growth Fund and
The Nifty Fifty Fund increased 14.32 percent and 12.89 percent respectively.
The two Funds' returns also exceeded the 10.l08 percent increase achieved
during the same period by the average growth fund measured by Lipper Analytical
Services, Inc.
[GRAPHIC - Figure 1]
LINE CHART ENTITLED "GROWTH RESURGENCE" ILLUSTRATING GROWTH STOCK
AVERAGE VS. CYCLICAL STOCK AVERAGE FROM 1/95 THROUGH 6/96.
<TABLE>
<CAPTION>
GROWTH AVERAGE CYCLICAL AVERAGE
-------------- ----------------
<S> <C> <C>
1/1/95 1.00 1.00
1/8/95 0.99 1.03
1/15/95 1.01 1.04
1/22/95 1.01 1.01
1/29/95 1.04 0.98
2/5/95 1.06 1.00
2/12/95 1.06 1.01
2/19/95 1.06 1.02
2/26/95 1.08 1.03
3/5/95 1.08 1.01
3/12/95 1.09 1.01
3/19/95 1.11 1.01
3/26/95 1.12 1.02
4/2/95 1.11 1.05
4/9/95 1.12 1.06
4/16/95 1.12 1.06
4/23/95 1.12 1.08
4/30/95 1.12 1.07
5/7/95 1.15 1.08
5/14/95 1.13 1.12
5/21/95 1.14 1.10
5/28/95 1.14 1.09
6/4/95 1.17 1.12
6/11/95 1.15 1.11
6/18/95 1.18 1.13
6/25/95 1.18 1.13
7/2/95 1.19 1.15
7/9/95 1.18 1.22
7/16/95 1.18 1.23
7/23/95 1.18 1.19
7/30/95 1.20 1.20
8/6/95 1.20 1.20
8/13/95 1.19 1.19
8/20/95 1.18 1.20
8/27/95 1.19 1.19
9/3/95 1.20 1.22
9/10/95 1.20 1.23
9/17/95 1.24 1.22
9/24/95 1.26 1.19
10/1/95 1.27 1.18
10/8/95 1.27 1.13
10/15/95 1.28 1.15
10/22/95 1.29 1.14
10/29/95 1.28 1.12
11/5/95 1.29 1.15
11/12/95 1.31 1.15
11/19/95 1.33 1.14
11/26/95 1.34 1.19
12/3/95 1.36 1.20
12/10/95 1.38 1.19
12/17/95 1.36 1.14
12/24/95 1.36 1.16
12/31/95 1.37 1.17
1/7/96 1.37 1.17
1/14/96 1.34 1.14
1/21/96 1.37 1.16
1/28/96 1.40 1.18
2/4/96 1.42 1.23
2/11/96 1.47 1.27
2/18/96 1.43 1.22
2/25/96 1.44 1.26
3/3/96 1.47 1.27
3/10/96 1.44 1.29
3/17/96 1.45 1.34
3/24/96 1.44 1.31
3/31/96 1.44 1.31
4/7/96 1.42 1.30
4/14/96 1.39 1.31
4/21/96 1.40 1.32
4/28/96 1.40 1.33
5/5/96 1.37 1.33
5/12/96 1.42 1.34
5/19/96 1.45 1.34
5/26/96 1.46 1.33
6/2/96 1.46 1.31
6/9/96 1.48 1.30
6/16/96 1.47 1.29
6/23/96 1.49 1.28
6/30/96 1.50 1.27
</TABLE>
SOURCE: MORGAN STANLEY
The Balanced Return Fund beat its category average as well, with an NAV
increase in A shares of 8.70 percent, compared to 5.05 percent for the
average balanced fund measured by Lipper. Complete standard performance figures
on all Shares Classes of The Pasadena Group of Mutual Funds are listed on
pages 4, 7, and 10.
Our Funds' performance can be attributed to the excellent returns
delivered by the type of holdings we prefer: HIGH-QUALITY, STEADILY GROWING
COMPANIES.
As we have discussed for a while, we believe it is becoming increasingly
difficult for the AVERAGE company to produce superior earnings growth. For
several years these companies produced strong earnings gains by virtue of a
strong economy and cost cutting. With the economy growing at a moderate pace
and cost-cutting opportunities largely exhausted, companies will now have to
grow earnings the good old fashioned way--by increasing sales. That will be
the tough part.
Our strategy has always been to focus on companies that have a history
of consistent growth--both in sales and earnings. This is what drove our
Funds' performance during the first part of the year. With the likelihood of
earnings growth for the average company slowing from the record pace of the
past several years, investors are favoring steady growth stocks as opposed to
cyclical issues (see Figure 1).
As this story continues to unfold in the second half of the year, we
believe the prospects for high-quality growth stocks remain excellent.
Thank you for the loyalty you have shown to The Pasadena Group of Mutual
Funds. We appreciate your confidence and look forward to serving you well for
many years to come.
/s/ Roger Engemann
Roger Engemann
Chairman of the Board and President
July 15, 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.
<PAGE>
THE PASADENA GROWTH FUND
The objective of The Pasadena Growth Fund (The Growth Fund) is to
achieve long-term capital appreciation by investing in common stocks with
rapidly growing earnings per share. The Growth Fund invests in stocks of
various market capitalizations.
The NAV for The Growth Fund's A shares increased 14.32 percent for the
six-month period ended June 30, 1996. This compares with the S&P 500 Index,
which gained 10.09 percent and the average growth fund, as reported by Lipper
Analytical Services, which advanced 10.08 percent.
Both large- and small-cap stock holdings of The Growth Fund performed
extremely well and contributed to the Funds' strong performance. In large-cap
stocks, the market seemed to favor shares of companies that could provide
steady, predictable earnings growth. The market also embraced small-cap
stocks following their period of underperformance relative to larger issues.
RETAIL
After several years of lagging performance, the retail sector finally
came to life in the first part of this year. As stronger than expected sales
and depressed valuations attracted investors to this group, we were rewarded
for our patience and our decision to consolidate holdings to the most
promising companies in the sector. Among the portfolio's larger long-term
core holdings, companies such as AUTOZONE, INC., DOLLAR GENERAL CORPORATION,
KOHL'S CORPORATION, and THE HOME DEPOT, INC. all performed well. In addition,
The Growth Fund achieved outstanding returns from its small retailer holdings
as well. Shares of CLAIRES STORES, INC., for example, more than doubled.
Similarly, the Fund enjoyed solid performance from MAIL BOXES ETC., REGAL
CINEMAS, INC. and AARON RENTS, INC. CLASS B.
TECHNOLOGY
Computer networks and the Internet are creating dynamic changes in the
way we communicate--causing explosive growth at internetworking and
communications equipment companies. As a result, The Growth Fund benefited
from sharp gains in CISCO SYSTEMS, LEGATO SYSTEMS, INC., TELLABS, INC. and
STRATACOM, INC. Software proved to be another strong sector, as illustrated
by health returns from MICROSOFT CORPORATION and ORACLE SYSTEMS.
However, investment in technology did not come without some
disappointment. Excess manufacturing capacity led to dramatic price decreases
in semiconductors. Although we emphasized specialty semiconductor
manufacturers, which are less affected by price swings, the market didn't
differentiate and stocks in the entire group declined. As a result, The
Growth Fund's positions in LINEAR TECHNOLOGY CORPORATION, LSI LOGIC
CORPORATION and MAXIM INTEGRATED PRODUCTS, INC. restrained The Growth Fund's
progress somewhat. Despite the pricing pressure, INTEL CORPORATION was one
semiconductor company that performed exceptionally well.
CONSUMER STAPLES
We continue to focus on companies with solid brand names that are likely
to benefit from rising standards of living overseas and produce above-average
earnings gains on a consistent basis. This sector achieved excellent results
as investors grew fearful that earnings for the average company were
slowing down. Leading the pack of solid brand companies were three of our 10
largest holdings: THE COCA-COLA COMPANY, THE GILLETTE COMPANY and PHILIP
MORRIS COMPANIES, INC.
One exception in this sector was DURACELL INTERNATIONAL, INC. The
company reported a disappointing quarter and, in turn, many investors sold
the stock. Batteries are one of the fastest growing consumer products in the
world. We believe Duracell's difficulties are temporary and the company is
poised for solid growth in the years ahead.
FINANCIALS
Rising interest rates impeded the progress of some of our holdings in
financial companies. Although NATIONSBANK CORPORATION and WELLS FARGO &
COMPANY performed reasonably well, gains at FEDERAL HOME LOAN MORTGAGE
CORPORATION (Freddie Mac) and FEDERAL NATIONAL MORTGAGE ASSOCIATION (Fannie
Mae) were muted because of the perceived
2
<PAGE>
THE PASADENA GROWTH FUND (CONTINUED)
risk of rising interest rates. Our experience has shown us that Fannie Mae
and Freddie Mac produce solid earnings growth regardless of the interest rate
environment. Therefore we expect both companies to perform well as their
earnings capability comes to the forefront.
HEALTHCARE
The large increase expected in the aging U.S. population over the next
decade makes a compelling case that the demand for healthcare services will
growth at a rapid rate. After an excellent performance in 1995, however, the
healthcare sector has produced mixed results so far during 1996. The Growth
Fund's strongest performers were PFIZER INC. and JOHNSON & JOHNSON. Both
companies have exciting product pipelines. MERCK & CO., INC. lost ground over
concerns about the side-effect profile of its new treatment for osteoporosis,
Fosamax. The company contends the drug is safe if used as directed.
SPECIAL SITUATIONS
ANCHOR GAMING was The Growth Fund's best performing holding. The stock
price escalated as excitement over the company's new slot machine, "Wheel of
Gold" caused investors to increase their expectations for the company's
earnings potential. Global issues such as REUTERS HOLDINGS PLC ADS B and
LUXOTICCA GROUP S.P.A. also contributed to The Growth Fund's return.
OUTLOOK
Notwithstanding recent increases in interest rates, we believe the
general outlook for growth stocks is promising. Our outlook is for moderate
economic growth and relatively tame inflation, which should enable the
companies in The Growth Fund to achieve their earnings objectives. Moreover,
if earnings for the average company slow down, investors' appetite for
quality growth stocks should increase.
3
<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 23.68% 12.03% 12.46%
POP 16.90% 10.77% 11.83%
- --------------------------------------------------------------------------
B Shares(3) (INCEPTION DATE 1/3/94)
CDSC 17.70% N/A 12.87%
No CDSC 22.70% N/A 13.86%
- --------------------------------------------------------------------------
C Shares(4) (INCEPTION DATE 1/3/94)
22.70% N/A 13.86%
(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%, 4.00% or 3.00%
contingent deferred sales charge applicable to redemptions of B Shares
during the first, second or third 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 GROWTH FUND
Consumer Staples 31%
Consumer Cyclicals 22%
Other 5%
Indust. Equip. & Services 4%
Technology 24%
Financials 14%
SECTOR CLASSIFICATIONS 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 06/30/96.
Fund After Maximum Sales Load S&P 500 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 $12,988 $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 $20,188
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 $20,598 $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 $26,678 $31,511
10/31/95 $26,238 $31,515
11/30/95 $27,032 $32,869
12/31/95 $26,816 $33,507
1/31/96 $27,790 $34,664
2/29/96 $28,513 $34,966
3/31/96 $28,666 $35,308
4/30/96 $29,821 $35,847
5/31/96 $30,961 $36,733
6/30/96 $30,655 $36,882
(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)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
---------------------
TEN LARGEST HOLDINGS AT JUNE 30, 1996 (AS A PERCENTAGE OF TOTAL ASSETS)
1. The Gillette Company 4.4%
GLOBAL MANUFACTURER OF RAZORS
2. Wells Fargo & Company 3.6%
BANK HOLDING COMPANY
3. Anchor Gaming 3.0%
MANUFACTURER OF GAMING DEVICES AND CASINO OPERATOR
4. Pfizer, Inc. 2.9%
MAJOR PRODUCER OF PHARMACEUTICALS
5. Merck & Co., Inc. 2.5%
LEADING MANUFACTURER OF PHARMACEUTICALS
6. The Coca-Cola Company 2.4%
WORLD'S LARGEST SOFT DRINK COMPANY
7. Federal National Mortgage Association 2.4%
U. S. GOVERNMENT SPONSORED MORTGAGE AGENCY
8. Philip Morris Companies Inc. 2.3%
GLOBAL PRODUCER OF TOBACCO AND FOOD PRODUCTS
9. Cisco Systems 2.2%
LEADING PRODUCER OF SWITCHES AND ROUTERS FOR INTERNETWORKING
10. Federal Home Loan Mortgage Corporation 2.1%
NATIONS LARGEST PROVIDER OF RESIDENTIAL MORTGAGE FUNDS
4
<PAGE>
THE PASADENA NIFTY FIFTY FUND
Redefining this popular designation of the 1960s, The Pasadena Nifty
Fifty Fund (The 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 Nifty Fifty Fund's A share NAV increased 12.89 percent for the
six-months ended June 30, 1996. This compares with the S&P 500 Index which
gained 10.09 percent and the average growth fund, as reported by Lipper
Analytical Services, which advanced 10.08 percent.
The first six-months of 1996 provided many conflicting signals, with the
main point of debate among investors being the strength of the economy.
Although rising interest rates indicated that investors believed the economy
was stronger than anticipated, investors nevertheless favored steady,
predictable growth companies when it came to stock selection. The Nifty Fifty
Fund, with its list of high quality growth companies, benefitted from this
environment.
RETAIL
During 1995 we consolidated The Nifty Fifty Fund's retail holdings. By
and large this move worked well, and during the first half of 1996 most of
the stocks in this sector posted admirable gains including AUTOZONE, INC.,
THE HOME DEPOT, INC., and KOHL'S CORPORATION. In addition to displaying
strong growth in their primary businesses, large retailers are extending
their distribution capabilities to compete in new formats where consolidation
opportunities exist. For example, Home Depot recently started to roll-out
smaller stores in rural areas. AutoZone and OFFICE DEPOT, INC., which was
recently purchased for the Fund, are investing heavily in the commercial end
of their business. Another new addition to the Fund, CIRCUIT CITY STORES,
INC., is launching an aggressive bid to consolidate the used-car business. We
believe these ventures can add another leg to the growth profiles of these
companies.
TECHNOLOGY
The Nifty Fifty Fund's technology holdings performed exceptionally well
during the first six months of the year. As we have stated in the past, our
emphasis is on companies with strong competitive positions. The Nifty Fifty
Fund's top performer was CISCO SYSTEMS, which dominates both the router and
switch markets. The company continues to benefit from robust growth in the
internetworking market, as corporations and governments build their networks
so telecommuters and branch offices can communicate with the main office.
Other companies which contributed to The Nifty Fifty Fund's performance
include INTEL CORPORATION, ORACLE SYSTEMS and MICROSOFT CORPORATION.
We recently sold The Nifty Fifty Fund's holdings in MOTOROLA, INC. We
expected the company to redeploy its investments to higher return areas in
order to increase its profitability. However, as weakness developed in
domestic demand for cellular phones, this product increasingly began to look
like a low margin commodity business. This caused us to lose faith in the
company's ability to reach its objectives.
CONSUMER STAPLES
We don't think enough can be said about the value of companies that can
achieve strong, predictable and consistent earnings growth over long periods
of time. As a result, companies such as THE COCA-COLA COMPANY, THE GILLETTE
COMPANY, and PHILIP MORRIS COMPANIES, INC., which have long histories of
steady earnings gains, are long-term core holdings of The Nifty Fifty Fund.
We believe the current environment will be particularly favorable to such
companies as the rate of earnings growth for the average company slows down.
So far this year the group has performed extremely well, with the exception
of DURACELL INTERNATIONAL INC., which experienced a decline in stock price
after a disappointing quarter. However, we believe the outlook for Duracell
is bright, as batteries are in one of the fastest growing consumer segments.
FINANCIALS
In the rising interest rate environment during the first half of the
year, The Nifty Fifty Fund's financial stocks slightly lagged the overall
market. On the whole, however, their returns were positive.
5
<PAGE>
THE PASADENA NIFTY FIFTY FUND
The Nifty Fifty Fund's largest holding in this sector is WELLS FARGO &
COMPANY, which recently completed its acquisition of FIRST INTERSTATE
BANCORP. We believe the combined company will reap significant cost savings
over the next several years--generating considerable cash in excess of its
capital needs. We expect Wells Fargo's management to return this free cash
flow to shareholders, in part by aggressively repurchasing stock.
HEALTHCARE
Healthcare is another sector with a history of consistent earnings
growth. Moreover, as the baby boomers age, we believe the demand for
healthcare services is likely to increase at a rapid rate. So far this year
the group has produced mixed results. Both PFIZER INC. and JOHNSON & JOHNSON
performed well as investors anticipate the benefits of exciting product
pipelines. MEREK & CO., INC., on the other hand, experienced share-price
declines over concerns about the side effects of its new treatment for
osteoporosis, Fosamax. The company contends the drug is safe if used as
directed. Given what we believe to be excellent prospects for the company, we
used the weakness in the share price to increase The Nifty Fifty Fund's
position in the stock.
OUTLOOK
We are excited about the prospects for The Nifty Fifty Fund throughout
1996. With a solid roster of companies with the potential to produce steady,
above-average earnings gains, we believe The Nifty Fifty Fund is well
positioned to benefit from an environment where the average company finds it
difficult to replicate the record earnings growth of the past few years.
6
<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 22.81% 12.79% 18.16%
POP 16.03% 11.52% 16.96%
- --------------------------------------------------------------------------------
B SHARES(3) (INCEPTION DATE 1/3/94)
CDSC 16.88% N/A 14.89%
No CDSC 21.88% N/A 15.87%
- --------------------------------------------------------------------------------
C SHARES(4) (INCEPTION DATE 1/3/94)
21.88% N/A 15.87%
(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%, 4.00% or 3.00%
contingent deferred sales charge applicable to redemptions of B Shares
during the first, second or third 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
Consumer Staples 36%
Consumer Cyclical 20%
Other 4%
Indust. Equip. & Services 4%
Technology 21%
Financials 15%
SECTOR CLASSIFICATIONS ARE BASED ON THE BREAKDOWN OF THE
S&P 500 INDEX AS DETERMINED BY CALLAN & ASSOCIATES
---------------------
LINE CHART ILLUSTRATING THE CHANGE IN VALUE OF A $10,000
INVESTMENT IN THE PASADENA NIFTY FIFTY FUND A SHARES (5) AND THE S&P 500
STOCK INDEX FROM INCEPTION (6) THROUGH 06/30/96.
Fund After Maximum Sales Load S&P 500 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 $21,092 $21,975
1/31/96 $22,053 $22,548
2/29/96 $22,557 $22,744
3/31/96 $22,967 $22,967
4/30/96 $22,861 $23,317
5/31/96 $23,584 $23,894
6/30/96 $23,812 $23,991
(5) THIS CHART ILLUSTRATES RETURNS ON CLASS A SHARES ONLY.
RETURNS WILL VARYFOR CLASS B AND CLASS C SHARES DUE TO DIFFERING
SALES CHARGES.
(6) 12/17/90 (FUND INCEPTION)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
---------------------
TEN LARGEST HOLDINGS AT JUNE 30, 1996 (AS A PERCENTAGE OF TOTAL ASSETS)
1. The Gillette Company 4.2%
GLOBAL MANUFACTURER OF RAZORS
2. Pfizer Inc. 3.8%
MAJOR PRODUCER OF PHARMACEUTICALS
3. Wells Fargo & Company 3.8%
BANK HOLDING COMPANY
4. Merck & Co., Inc. 3.6%
LEADING MANUFACTURER OF PHARMACEUTICALS
5. Intel Corporation 3.1%
LEADING MANUFACTURER OF MICROPROCESSORS
6. Philip Morris Companies Inc. 2.8%
GLOBAL PRODUCER OF TOBACCO AND FOOD PRODUCTS
7. The Coca-Cola Company 2.6%
WORLD'S LARGEST SOFT DRINK COMPANY
8. Johnson & Johnson 2.6%
COMPREHENSIVE HEALTHCARE COMPANY
9. AutoZone, Inc. 2.4%
RETAILER OF AUTO PARTS
10. Medtronic, Inc. 2.4%
THE WORLD'S LEADING PRODUCER OF IMPLANTABLE CARDIAC DEVICES
7
<PAGE>
THE PASADENA BALANCED RETURN FUND
The Pasadena Balanced Return Fund (The Balanced Fund) seeks to achieve
its investment objective by investing in a mix of high-quality growth stocks
and U.S. Government securities.
For the six-months ended June 30, 1996, the NAV for The Balanced Fund A
shares increased 8.70 percent, surpassing the average balanced fund, as
reported by Lipper Analytical Services, which increased 5.05 percent.
The performance of The Balanced Fund is indicative of the divergence
between the stock and bond market during the first half of the year. With the
stock market reaching new highs, the strong performance of the Balance Fund's
equity holdings enabled it to outdistance the average balanced fund. Fears of
an accelerating economy, however, caused the bond market to tumble.
Consequently, the fixed-income portion of the portfolio hindered overall
performance. The Balanced Fund's asset allocation for the first six months of
1996 was approximately 70 percent equities and 30 percent fixed income.
FIXED INCOME
The Bond market's performance during the first six-months of the year
can be attributed to several employment reports which were stronger than
expected. As investors began to fear that a strengthening economy would lead
the Federal Reserve to raise interest rates, the bond market sank. The yield
on long-term treasury bonds increased nearly 100 basis points, from 5.94
percent at the beginning of the 1996 to 6.89 percent by midyear.
The Balanced Fund started the year with an even split between
intermediate bonds and short-term notes. With long-term interest rates
reaching close to 7.0 percent and our belief that inflation was well
contained, we decided to capitalize on these higher rates. We sold all of The
Balanced Fund's short-term notes and purchased long-term bonds. Although we
may have moved somewhat early, we are confident that in a low-inflation
world, investors will find a 7.0 percent yield on long-term bonds quite
attractive.
CONSUMER PRODUCTS
While the bond market suffered, consumer staple companies prospered.
Investors favored reliable companies they were confident would reach their
earnings targets. As such The Balanced Fund had excellent gains in some of
its top holdings including THE GILLETTE COMPANY, PHILIP MORRIS COMPANIES
INC. and COLGATE-PALMOLIVE COMPANY. Our one disappointment in this sector was
DURACELL INTERNATIONAL INC. as the company reported earnings below investors'
expectations. However, we believe the company will be back on its growth
track by the end of the year. With a well recognized brand name and a growing
global presence, Duracell is positioned to benefit from strong growth in the
consumer electronics market.
TECHNOLOGY
Although The Balanced Fund was slightly underweighted in technology
stocks, this sector was a solid contributor to overall Balanced Fund
performance. There were no major disappointments in the group. CISCO SYSTEMS
posted the highest gains for the Fund during the first half of 1996. The
company is a leader in the rapidly growing internetworking market with over
50 percent market share in the router market and 40 percent market share in
the switch market. Among other standouts in this sector were HEWLETT-PACKARD,
MICROSOFT CORPORATION and ORACLE SYSTEMS.
FINANCIALS
Although financial stocks typically don't perform well when interest
rates are rising, The Balanced Fund managed to post a respectable return in
this sector. The biggest winner was UNITED ASSET MANAGEMENT CORPORATION, as
investors reacted to positive asset inflows at several of the company's money
management firms. Bank stock holdings such as NATIONSBANK CORPORATION and
WELLS FARGO & COMPANY also performed well. During the first part of the year,
Wells Fargo completed the acquisition of FIRST INTERSTATE BANCORP. Management
believes the shareholders will reap the benefits of significant cost savings
as the two companies consolidate their operations. Fears of rising interest
rates did subdue returns on two other Balanced Fund holdings, FEDERAL
NATIONAL MORTGAGE ASSOCIATION and FEDERAL HOME LOAN MORTGAGE CORPORATION. Our
position on both companies is that their management's track record clearly
demonstrates an
8
<PAGE>
THE PASADENA BALANCED RETURN FUND (CONTINUED)
ability to produce steady earnings gains through diverse interest rate
environments. We are therefore optimistic that both companies will meet
investors' earnings expectations.
OUTLOOK
We believe both the fixed-income and equity portions of The Balanced
Return Fund are positioned to perform well in the current environment. We
expect that the Federal Reserve's strong resolve to keep inflation in check
will reassure investors that rising inflation is not a concern and yields in
the bond market will decline. On the equity side we remain confident that the
companies in this portfolio will achieve steady earnings growth. As a result,
we believe high-quality growth stocks will be increasingly attractive to
investors as the earnings of the average company regress to their historical
mean.
9
<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 18.27% 10.99% 14.43%
POP 11.75% 9.74% 13.72%
- --------------------------------------------------------------------------
B Shares(3) (INCEPTION DATE 1/3/94)
CDSC 12.25% N/A 10.05%
No CDSC 17.25% N/A 11.08%
- --------------------------------------------------------------------------
C Shares(4) (INCEPTION DATE 1/3/94)
17.26% N/A 11.09%
(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%, 4.00% or
3.00% contingent deferred sales charge applicable to redemptions
of B Shares during the first, second or third 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
Consumer Staples 29%
Consumer Cyclical 14%
Financials 13%
Bonds 28%
Technology 11%
Indust. Equip. & Services 2%
Other 3%
SECTOR CLASSIFICATIONS 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 BALANCED RETURN FUND A SHARES (5) AND THE S&P 500
STOCK INDEX FROM INCEPTION (6) THROUGH 06/30/96.
Fund After Maximum Sales Load S&P 500 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 $6,589
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 $10,817
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 $25,587 $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
1/31/96 $30,329 $28,016
2/29/96 $30,619 $28,260
3/31/96 $30,770 $28,537
4/30/96 $30,700 $28,972
5/31/96 $31,456 $29,689
6/30/96 $32,071 $29,809
(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)
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE
---------------------
TEN LARGEST HOLDINGS AT JUNE 30, 1996 (AS A PERCENTAGE OF TOTAL ASSETS)
1. The Gillette Company 3.8%
GLOBAL MANUFACTURER OR RAZORS
2. Wells Fargo & Company 3.7%
BANK HOLDING COMPANY
3. Pfizer Inc. 3.1%
MAJOR PRODUCER OF PHARMACEUTICALS
4. Cisco Systems 2.3%
LEADING PRODUCER OF SWITCHES AND ROUTERS
FOR INTERNETWORKING
5. Philip Morris Companies Inc. 2.3%
GLOBAL PRODUCER OF TOBACCO AND FOOD PRODUCTS
6. Microsoft Corporation 2.3%
WORLD'S LEADING COMPUTER SOFTWARE COMPANY
7. Federal National Mortgage Association 2.2%
U.S. GOVERNMENT SPONSORED MORTGAGE AGENCY
8. Federal Home Loan Mortgage Corporation 2.2%
NATIONS LARGEST PROVIDER OF RESIDENTIAL
MORTGAGE FUNDS
9. Colgate-Palmolive Company 2.2%
DIVERSIFIED CONSUMER PRODUCTS COMPANY
10. McDonald's Corporation 2.2%
GLOBAL OPERATOR OF FAST FOOD RESTAURANTS
10
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS)
SHARES VALUE
-------- -------
COMMON STOCKS
ADVERTISING - 0.4%
The Interpublic Group of
Companies, Inc. ............................. 40,000 $ 1,875
---------
BANKING - 4.7%
Associated First Capital Corporation* ......... 85,000 3,198
NationsBank Corporation........................ 30,000 2,479
Wells Fargo & Company.......................... 75,000 17,916
---------
23,593
---------
BEVERAGES - 4.2%
The Coca-Cola Company.......................... 250,000 12,219
PepsiCo, Inc. ................................. 240,000 8,490
---------
20,709
---------
BUSINESS SERVICES - 6.5%
American List Corporation...................... 45,000 1,192
Automatic Data Processing, Inc. ............... 75,000 2,897
Electro Rent Corporation* ..................... 100,000 2,475
First Data Corporation......................... 100,000 7,962
Labor Ready, Inc.* ............................ 100,000 2,800
The Profit Recovery Group
International, Inc.* ........................ 75,000 1,519
Reuters Holdings PLC ADS B..................... 140,000 10,150
USCS International, Inc.* ..................... 100,000 1,925
VeriFone, Inc.* ............................... 30,000 1,268
---------
32,188
---------
COMMUNICATIONS EQUIPMENT - 4.6%
Bay Networks* ................................. 150,000 3,862
Cisco Systems* ................................ 190,000 10,759
MRV Communications, Inc. ...................... 41,000 1,753
MicroCom, Inc.* ............................... 50,000 631
StrataCom, Inc. ............................... 60,000 3,375
3Com Corp.* ................................... 50,000 2,288
---------
22,668
---------
COMPUTER HARDWARE - 1.2%
Dell Computer Corporation* .................... 30,000 1,526
Hewlett-Packard................................ 40,000 3,985
SS&C Technologies, Inc.* ...................... 45,000 686
---------
6,197
---------
COMPUTER SOFTWARE - 8.2%
Applied Graphics Technologies, Inc.* .......... 117,000 1,857
Aspen Technology, Inc.* ....................... 30,000 1,650
Business Objects S.A. ADS* .................... 52,000 2,093
Comshare, Inc* ................................ 80,000 2,480
Indus Group, Inc.* ............................ 100,000 2,025
Informix Corp.* ............................... 200,000 4,500
Legato Systems, Inc.* ......................... 65,000 3,575
McAfee Associates, Inc.* ...................... 5,800 284
Microsoft Corporation* ........................ 50,000 6,006
NICE-Systems Ltd.* ............................ 60,000 1,140
PeopleSoft, Inc.* ............................. 20,000 1,425
Planning Sciences
International plc ADS* ...................... 75,000 1,688
PowerCerv Corporation* ........................ 81,200 995
Oracle Systems* ............................... 195,000 7,690
SunGard Data Systems Inc.* .................... 45,000 1,806
Technomatix Technologies Ltd.* ................ 80,000 1,520
---------
40,734
---------
CONSUMER PRODUCTS - 5.7%
Duracell International Inc. ................... 100,000 4,313
The Gillette Company........................... 350,000 21,831
Luxottica Group S.p.A. ........................ 30,000 2,201
---------
28,345
---------
CONSUMER SERVICES - 1.2%
Aaron Rents, Inc., Class B..................... 250,000 3,156
Mail Boxes Etc.* .............................. 130,000 2,974
---------
6,130
---------
DIVERSIFIED MANUFACTURING - 0.5%
General Electric............................... 30,000 2,595
---------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 5.8%
Advanced Lighting
Technologies, Inc.* ......................... 100,000 1,750
Altera Corp.* ................................. 30,000 1,140
ANADIGICS, Inc.* .............................. 55,000 1,602
Applied Power Inc. ............................ 50,000 1,400
Etec Systems, Inc.* ........................... 100,000 2,225
SEE NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1996 (UNAUDITED)-CONTINUED
(DOLLARS IN THOUSANDS)
SHARES VALUE
-------- -------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 5.8% (CONTINUED)
Intel Corporation.............................. 130,000 $ 9,547
LSI Logic Corporation* ........................ 100,000 2,600
Linear Technology Corporation.................. 150,000 4,500
Maxim Integrated Products, Inc.* ............. 60,000 1,639
Photon Dynamics, Inc.* ........................ 175,000 1,662
Xilinx, Inc.* ................................. 30,000 952
---------
29,017
---------
FINANCIAL SERVICES - 7.7%
American Express............................... 75,000 3,347
Dean Witter Discover........................... 50,000 2,863
Eaton Vance Corp. ............................. 35,000 1,269
Federal Home Loan Mortgage
Corporation.................................. 125,000 10,687
Federal National Mortgage
Association.................................. 375,000 12,562
Imperial Credit Industries, Inc.* ............. 100,000 3,025
Medallion Financial Corp.* .................... 75,000 937
Mercury Finance Company ....................... 100,000 1,275
T. Rowe Price Associates, Inc.* ............... 70,200 2,159
---------
38,124
---------
FINANCIAL SERVICES/
BROKERAGE - 0.6%
The Charles Schwab Corporation................. 120,000 2,940
---------
FOOD PRODUCTS - 0.4%
International Flavors &
Fragrances Inc. ............................. 40,000 1,905
---------
GAMING - 4.0%
Anchor Gaming* ................................ 250,000 15,062
Casino Data Systems* .......................... 125,000 1,891
Circus Circus Enterprises, Inc.* .............. 70,000 2,870
---------
19,823
---------
HEALTHCARE SERVICES - 2.2%
HCIA Inc.* .................................... 65,000 4,095
Oxford Health Plans, Inc.* .................... 100,000 4,113
Transition Systems, Inc.* ..................... 100,000 2,850
---------
11,058
---------
HOSPITAL COMPANIES - 1.1%
Columbia/HCA Healthcare
Corporation.................................. 100,000 5,337
---------
HOUSEHOLD PRODUCTS - 1.2%
Colgate-Palmolive Company...................... 40,000 3,390
The Procter & Gamble Company................... 30,000 2,719
---------
6,109
---------
INDUSTRIAL/DIRECT MAIL
DISTRIBUTOR - 0.5%
MSC Industrial Direct Co., Inc.* .............. 75,000 2,419
---------
INVESTMENT COMPANIES - 1.8%
The Asia Tigers Fund, Inc. .................... 250,000 2,906
The India Fund, Inc. .......................... 200,000 1,850
The Korea Fund, Inc. .......................... 100,000 2,113
The Thai Fund, Inc. ........................... 96,419 2,278
---------
9,147
---------
INVESTMENT MANAGEMENT - 0.9%
Invesco PLC.................................... 100,000 3,500
United Assets Management
Corporation.................................. 40,000 980
---------
4,480
---------
LEISURE - 3.2%
Carnival Corporation........................... 250,000 7,219
The Walt Disney Company........................ 100,000 6,287
Regal Cinemas, Inc.* .......................... 50,000 2,288
---------
15,794
---------
MANUFACTURING - HOUSING - 0.6%
Fleetwood Enterprises, Inc. ................... 100,000 3,100
---------
MANUFACTURING - TOYS - 0.6%
Mattel, Inc. .................................. 100,000 2,862
---------
SEE NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1996 (UNAUDITED)-CONTINUED
(DOLLARS IN THOUSANDS)
SHARES VALUE
-------- -------
MEDICAL EQUIPMENT &
SUPPLIES - 3.6%
Boston Scientific Corporation* ................ 100,000 $ 4,500
Johnson & Johnson.............................. 80,000 3,960
Medtronic, Inc. ............................... 110,000 6,160
Qiagen N.V.* .................................. 30,000 454
Rockford Industries, Inc.* .................... 50,000 894
SangStat Medical Corporation* ................. 50,000 850
UroCor, Inc.* ................................. 74,000 906
---------
17,724
---------
MISCELLANEOUS SERVICES - 0.2%
Barefoot Inc.* ................................ 100,000 1,100
---------
PHARMACEUTICALS - 9.4%
Biogen, Inc.* ................................. 50,000 2,744
Elan Corporation, PLC ADS* .................... 56,000 3,199
Genzyme Corporation............................ 50,000 2,512
Interneuron Pharmaceuticals, Inc.* ............ 140,000 4,200
Merck & Co., Inc. ............................. 200,000 12,925
Pfizer Inc. ................................... 200,000 14,275
Regeneron Pharmaceuticals, Inc.* .............. 70,000 1,216
Roche Holding Ltd. ADR......................... 75,000 5,700
---------
46,771
---------
RESTAURANTS - 0.7%
McDonald's Corporation......................... 75,000 3,506
---------
RETAIL - APPAREL & ACCESSORY
STORES - 1.7%
Claire's Stores, Inc. ......................... 200,000 5,525
Donna Karan International* .................... 6,000 168
Kohl's Corporation* ........................... 75,000 2,747
---------
8,440
---------
RETAIL - AUTO SUPPLY STORES - 1.4%
AutoZone, Inc.* ............................... 200,000 6,950
---------
RETAIL - BUILDING MATERIALS &
HARDWARE - 1.6%
The Home Depot, Inc. .......................... 150,000 8,100
---------
RETAIL - CATALOG - 0.6%
Viking Office Products, Inc.* ................. 100,000 3,138
---------
RETAIL - GENERAL
MERCHANDISE - 1.9%
Dollar General Corporation..................... 200,000 5,850
Wal-Mart Stores, Inc. ......................... 150,000 3,806
---------
9,656
---------
RETAIL - GROCERY STORES - 0.2%
Smart & Final Inc. ............................ 47,800 1,225
---------
RETAIL - HOME FURNITURE,
FURNISHINGS & EQUIPMENT
STORES - 1.3%
Circuit City Stores, Inc. ..................... 100,000 3,613
Leslie's Poolmart* ............................ 150,000 2,625
---------
6,238
---------
RETAIL-SPECIALTY - 1.9%
Barnes & Noble, Inc.* ......................... 70,000 2,511
Office Depot, Inc.* ........................... 300,000 6,113
Trend-Lines, Inc.* ............................ 173,000 865
---------
9,489
---------
TECHNOLOGY/NETWORKING
EQUIPMENT - 0.4%
Ceridian Corporation........................... 40,000 2,020
---------
TELECOMMUNICATIONS
EQUIPMENT - 1.2%
Ascend Communications, Inc.* .................. 50,000 2,812
Tellabs, Inc.* ................................ 50,000 3,344
---------
6,156
---------
TELECOMMUNICATIONS SERVICES - 1.1%
Paging Network, Inc.* ......................... 50,000 1,200
P.T. TeleKomunikasi Indonesia
(Persero) ADS................................ 40,000 1,190
360 degree Communications Company* ............ 120,000 2,880
---------
5,270
---------
TOBACCO PRODUCTS - 2.5%
Philip Morris Companies Inc. .................. 120,000 12,480
---------
SEE NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
THE PASADENA GROWTH FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1996 (UNAUDITED)-CONTINUED
(DOLLARS IN THOUSANDS)
SHARES VALUE
-------- -------
UTILITIES - 0.6%
Korea Electric Power
Corporation ADS.............................. 125,000 $ 3,031
---------
VETERINARIAN PRODUCTS - 1.0%
IDEXX Laboratories, Inc.* ..................... 125,000 4,906
---------
TOTAL COMMON
STOCKS - 99.1%
(COST $305,838).............................. 493,349
---------
PREFERRED STOCKS
MEDIA PUBLISHING - 0.6%
The News Corporation Limited................... 150,000 3,019
---------
TOTAL PREFERRED STOCKS - 0.6%
(COST $2,574)................................ 3,019
---------
TOTAL INVESTMENT IN SECURITIES - 99.7%
(COST $308,412).............................. $496,368
---------
---------
- ------------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
14
<PAGE>
THE PASADENA NIFTY FIFTY FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS)
SHARES VALUE
-------- --------
COMMON STOCKS
ADVERTISING - 2.0%
The Interpublic Group of
Companies, Inc. ..................................... 80,000 $ 3,750
--------
BANKING - 5.4%
NationsBank Corporation................................ 35,000 2,892
Wells Fargo & Company.................................. 30,000 7,166
--------
10,058
--------
BEVERAGES - 4.9%
The Coca-Cola Company.................................. 100,000 4,888
PepsiCo, Inc. ......................................... 120,000 4,245
--------
9,133
--------
BUSINESS SERVICES - 5.9%
Automatic Data Processing, Inc. ....................... 90,000 3,476
First Data Corporation................................. 50,000 3,981
Reuters Holdings PLC ADS B............................. 50,000 3,625
--------
11,082
--------
COMMUNICATIONS EQUIPMENT - 2.1%
Cisco Systems* ........................................ 70,000 3,964
--------
COMPUTER HARDWARE - 2.1%
Hewlett-Packard........................................ 40,000 3,985
--------
COMPUTER SOFTWARE - 5.3%
Electronic Data Systems Corporation* .................. 35,000 1,881
Microsoft Corporation* ................................ 30,000 3,604
Oracle Systems* ....................................... 112,500 4,437
--------
9,922
--------
CONSUMER PRODUCTS - 6.5%
Duracell International Inc. ........................... 100,000 4,312
The Gillette Company................................... 125,000 7,797
--------
12,109
--------
DIVERSIFIED MANUFACTURING - 1.8%
General Electric....................................... 40,000 3,460
--------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 4.7%
Intel Corporation...................................... 80,000 $ 5,875
Linear Technology Corporation.......................... 100,000 3,000
--------
8,875
--------
FINANCIAL SERVICES - 8.1%
American Express....................................... 100,000 4,462
Federal Home Loan Mortgage Corporation................. 45,000 3,848
Federal National Mortgage Association.................. 112,000 3,752
Mercury Finance Company................................ 120,000 1,530
T. Rowe Price Associates, Inc.* ....................... 53,300 1,639
--------
15,231
--------
FINANCIAL SERVICES/BROKERAGE - 0.9%
The Charles Schwab Corporation......................... 70,000 1,715
--------
FOOD PRODUCTS - 1.0%
International Flavors & Fragrances Inc. ............... 40,000 1,905
--------
GAMING - 1.1%
Circus Circus Enterprises, Inc.* ...................... 50,000 2,050
--------
HOSPITAL COMPANIES - 1.7%
Columbia/HCA Healthcare Corporation.................... 60,000 3,202
--------
HOUSEHOLD PRODUCTS - 3.1%
Colgate-Palmolive Company.............................. 30,000 2,542
The Procter & Gamble Company........................... 35,000 3,172
--------
5,714
--------
LEISURE - 3.4%
Carnival Corporation................................... 100,000 2,888
The Walt Disney Company................................ 55,000 3,458
--------
6,346
--------
MANUFACTURING - TOYS - 0.8%
Mattel, Inc. .......................................... 50,000 1,431
--------
SEE NOTES TO FINANCIAL STATEMENTS.
15
<PAGE>
THE PASADENA NIFTY FIFTY FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1996 (UNAUDITED)-CONTINUED
(DOLLARS IN THOUSANDS)
SHARES VALUE
-------- --------
MEDIA PUBLISHING - 1.9%
The News Corporation Limited ADS....................... 150,000 $ 3,525
--------
MEDICAL EQUIPMENT & SUPPLIES - 6.0%
Boston Scientific Corporation* ........................ 40,000 1,800
Johnson & Johnson...................................... 100,000 4,950
Medtronic, Inc. ....................................... 80,000 4,480
--------
11,230
--------
PHARMACEUTICALS - 9.6%
American Home Products Corporation..................... 35,000 2,104
Merck & Co., Inc. ..................................... 105,000 6,786
Pfizer Inc. ........................................... 100,000 7,137
Roche Holding Ltd. ADR................................. 25,000 1,900
--------
17,927
--------
RESTAURANTS - 2.4%
McDonald's Corporation................................. 95,000 4,441
--------
RETAIL - APPAREL & ACCESSORIES - 1.6%
Kohl's Corporation* ................................... 80,000 2,930
--------
RETAIL - AUTO SUPPLY STORES - 2.4%
AutoZone, Inc.* ....................................... 130,000 4,518
--------
RETAIL - BUILDING MATERIALS & HARDWARE - 2.2%
The Home Depot, Inc. .................................. 75,000 4,050
--------
RETAIL - GENERAL MERCHANDISE - 1.4%
Wal-Mart Stores, Inc. ................................. 100,000 $ 2,538
--------
RETAIL - HOME FURNITURE,
FURNISHINGS & EQUIPMENT - 1.2%
Circuit City Stores, Inc. ............................. 60,000 2,168
--------
RETAIL - SPECIALTY - 1.6%
Office Depot, Inc.* ................................... 150,000 3,056
--------
TECHNOLOGY/NETWORKING EQUIPMENT - 1.1%
Ceridian Corporation .................................. 40,000 2,020
--------
TELECOMMUNICATIONS EQUIPMENT - 1.2%
Tellabs, Inc.* ........................................ 35,000 2,341
--------
TOBACCO PRODUCTS - 2.8%
Philip Morris Companies Inc. .......................... 50,000 5,200
--------
UTILITIES - 1.0%
Korea Electric Power Corporation ADS................... 75,000 1,819
--------
TOTAL COMMON STOCKS - 97.2%
(COST $119,900)...................................... 181,695
--------
TOTAL INVESTMENT IN SECURITIES - 97.2%
(COST $119,900)...................................... $181,695
========
- --------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
16
<PAGE>
THE PASADENA BALANCED RETURN FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1996 (UNAUDITED)
(DOLLARS IN THOUSANDS)
SHARES VALUE
-------- --------
COMMON STOCKS
ADVERTISING - 2.0%
The Interpublic Group of
Companies, Inc. ..................................... 25,000 $ 1,172
--------
BANKING - 5.1%
NationsBank Corporation................................ 10,000 826
Wells Fargo & Company.................................. 9,000 2,150
--------
2,976
--------
BEVERAGES - 4.2%
The Coca-Cola Company.................................. 25,000 1,222
PepsiCo, Inc. ......................................... 35,000 1,238
--------
2,460
--------
BUSINESS SERVICES - 3.6%
Automatic Data Processing, Inc. ....................... 22,000 850
Reuters Holdings PLC ADS B............................. 17,000 1,232
--------
2,082
--------
COMMUNICATIONS EQUIPMENT - 2.3%
Cisco Systems* ........................................ 24,000 1,359
--------
COMPUTER HARDWARE - 1.2%
Hewlett-Packard........................................ 7,000 697
--------
COMPUTER SOFTWARE - 3.8%
Microsoft Corporation* ................................ 11,000 1,322
Oracle Systems* ....................................... 22,500 887
--------
2,209
--------
CONSUMER PRODUCTS - 4.7%
Duracell International Inc. ........................... 12,000 518
The Gillette Company................................... 35,000 2,183
--------
2,701
--------
ELECTRONICS & ELECTRICAL
EQUIPMENT - 1.9%
Intel Corporation...................................... 15,000 1,102
--------
FINANCIAL SERVICES - 5.7%
Federal Home Loan Mortgage Corporation................. 15,000 $ 1,282
Federal National Mortgage Association.................. 38,000 1,300
New England Investment Companies, L.P. ................ 30,000 705
--------
3,287
--------
FOOD PRODUCTS - 0.8%
International Flavors & Fragrances Inc. ............... 10,000 476
--------
GAMING - 0.7%
Circus Circus Enterprises, Inc.* ...................... 10,000 410
--------
HOSPITAL COMPANIES - 1.4%
Columbia/HCA Healthcare Corporation.................... 15,000 801
--------
HOUSEHOLD PRODUCTS - 3.8%
Colgate-Palmolive Company.............................. 15,000 1,271
The Procter & Gamble Company........................... 10,000 906
--------
2,177
--------
INVESTMENT MANAGEMENT - 1.7%
United Asset Management Corporation.................... 40,000 980
--------
LEISURE - 4.2%
Carnival Corporation................................... 40,000 1,155
The Walt Disney Company................................ 20,000 1,258
--------
2,413
--------
MANUFACTURING - HOUSING - 2.1%
Fleetwood Enterprises, Inc. ........................... 40,000 1,240
--------
SEE NOTES TO FINANCIAL STATEMENTS.
17
<PAGE>
THE PASADENA BALANCED RETURN FUND
INVESTMENT IN SECURITIES AT JUNE 30, 1996 (UNAUDITED)-CONTINUED
(DOLLARS IN THOUSANDS)
SHARES VALUE
-------- --------
MEDICAL EQUIPMENT & SUPPLIES - 4.0%
Johnson & Johnson...................................... 24,000 $ 1,188
Medtronic, Inc. ....................................... 20,000 1,120
--------
2,308
--------
PHARMACEUTICALS - 7.7%
American Home Products Corporation..................... 13,000 782
Merck & Co., Inc. ..................................... 18,000 1,163
Pfizer Inc. ........................................... 25,000 1,784
Roche Holding Ltd. ADR................................. 10,000 760
--------
4,489
--------
REAL ESTATE INVESTMENT TRUST - 1.4%
Chelsea GCA Realty..................................... 25,000 794
--------
RESTAURANTS - 2.2%
McDonald's Corporation................................. 27,000 1,262
--------
RETAIL - AUTO SUPPLY STORES - 1.6%
AutoZone, Inc.* ....................................... 27,000 938
--------
RETAIL - BUILDING MATERIALS & HARDWARE - 0.9%
The Home Depot, Inc. .................................. 10,000 540
--------
RETAIL - GENERAL MERCHANDISE - 2.0%
Wal-Mart Stores, Inc. ................................. 45,000 $ 1,142
--------
TOBACCO PRODUCTS - 2.3%
Philip Morris Companies Inc. .......................... 13,000 1,352
--------
TOTAL COMMON STOCKS - 71.3%
(COST $23,170)...................................... 41,367
--------
FACE
AMOUNT VALUE
---------- --------
UNITED STATES TREASURY OBLIGATIONS
United States Treasury Notes,
6.0%, 02/15/2026.................................... $ 8,300 $ 7,360
United States Treasury Notes,
6.5%, 08/15/2005.................................... 8,900 8,772
--------
16,132
--------
TOTAL UNITED STATES TREASURY
OBLIGATIONS - 27.8%
(COST $16,612)...................................... 16,132
--------
TOTAL INVESTMENT IN SECURITIES - 99.1%
(COST $39,782)...................................... $ 57,499
========
- --------------
* Non-income producing securities.
SEE NOTES TO FINANCIAL STATEMENTS.
18
<PAGE>
THE PASADENA GROWTH, NIFTY FIFTY AND BALANCED RETURN FUNDS
STATEMENTS OF ASSETS AND LIABILITIES (UNAUDITED)
JUNE 30, 1996
<TABLE>
<CAPTION>
(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 $308,412, $119,900 and $39,782)
See accompanying schedules............................................. $ 496,368 $ 181,695 $ 57,499
Cash..................................................................... 1,825 7,306 726
Receivable for investments sold.......................................... 3,706 -- --
Receivable for Fund shares sold......................................... 500 355 50
Dividends and interest receivable........................................ 416 196 468
-------------- -------------- --------------
Total assets......................................................... 502,815 189,552 58,743
-------------- -------------- --------------
LIABILITIES:
Payable for investments purchased........................................ 3,455 2,010 469
Payable for Fund shares repurchased...................................... 239 147 96
Accrued administration fees.............................................. 276 116 43
Accrued investment management fees....................................... 256 108 41
Accrued service fees..................................................... 532 159 66
Accrued distribution fees................................................ 124 98 15
-------------- -------------- --------------
Total liabilities..................................................... 4,882 2,638 730
-------------- -------------- --------------
NET ASSETS AT JUNE 30, 1996.............................................. $ 497,933 $ 186,914 $ 58,013
-------------- -------------- --------------
-------------- -------------- --------------
NET ASSETS CONSIST OF:
Capital paid-in.......................................................... $ 290,370 $ 116,440 $ 38,745
Accumulated undistributed income:
Net investment income.................................................. -- -- 275
Net realized gain on investments....................................... 19,607 8,679 1,276
Net unrealized appreciation in value of investments...................... 187,956 61,795 17,717
-------------- -------------- --------------
$ 497,933 $ 186,914 $ 58,013
-------------- -------------- --------------
-------------- -------------- --------------
PER SHARE VALUES:
CLASS A
Net asset value and redemption price ($429,590,179 DIVIDED BY 19,494,678,
$133,856,278 DIVIDED BY 5,346,406 and $51,678,673 DIVIDED BY 1,872,637).. $ 22.04 $ 25.04 $ 27.60
-------------- -------------- --------------
-------------- -------------- --------------
Maximum offering price [NAV per share DIVIDED BY (1 MINUS maximum
sales load)]........................................................... $ 23.32 $ 26.50 $ 29.21
-------------- -------------- --------------
-------------- -------------- --------------
CLASS B
Net asset value and offering price ($43,505,672 DIVIDED BY 2,011,972,
$35,103,097 DIVIDED BY 1,428,470 and $3,116,916 DIVIDED BY 113,990)...... $ 21.62 $ 24.57 $ 27.34
-------------- -------------- --------------
-------------- -------------- --------------
CLASS C
Net asset value, offering price and redemption price
($24,837,175 DIVIDED BY 1,148,618, $17,955,073 DIVIDED BY 730,659 and
$3,217,515 DIVIDED BY 117,584)........................................... $ 21.62 $ 24.57 $ 27.36
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
19
<PAGE>
THE PASADENA GROWTH, NIFTY FIFTY AND BALANCED RETURN FUNDS
STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE SIX-MONTHS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
(IN THOUSANDS)
THE PASADENA THE PASADENA THE PASADENA
GROWTH NIFTY FIFTY BALANCED
FUND FUND RETURN FUND
-------------- -------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............................................................. $ 2,220 $ 1,025 $ 321
Interest and other..................................................... 266 113 574
-------------- -------------- --------------
Total investment income.............................................. 2,486 1,138 895
-------------- -------------- --------------
EXPENSES:
Administration fees.................................................... 1,694 700 274
Investment management fees............................................. 1,573 657 260
Service fees........................................................... 602 220 72
Distribution fees - Class B............................................ 147 117 11
Distribution fees - Class C............................................ 85 61 11
-------------- -------------- --------------
Total expenses....................................................... 4,101 1,755 628
-------------- -------------- --------------
Net investment income (loss)......................................... (1,615) (617) 267
-------------- -------------- --------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments....................................... 19,295 9,374 1,344
Net increase in unrealized appreciation................................ 46,768 12,293 3,182
-------------- -------------- --------------
Net gain on investments.............................................. 66,063 21,667 4,526
-------------- -------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $ 64,448 $ 21,050 $ 4,793
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
20
<PAGE>
THE PASADENA GROWTH, NIFTY FIFTY AND BALANCED RETURN FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
(IN THOUSANDS)
THE PASADENA THE PASADENA THE PASADENA
GROWTH FUND NIFTY FIFTY FUND BALANCED RETURN FUND
---------------------------- ---------------------------- ----------------------------
Six-Months Six-Months Six-Months
Ended June 30, Year Ended Ended June 30, Year Ended Ended June 30, Year Ended
1996 December 31, 1996 December 31, 1996 December 31,
(unaudited) 1995 (unaudited) 1995 (unaudited) 1995
-------------- ------------ -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income (loss)......... $ (1,615) $ (1,833) $ (617) $ (613) $ 267 $ 621
Net realized gain (loss) on
investments......................... 19,295 35,297 9,374 (1) 1,344 3,083
Net increase in unrealized
appreciation in value of
investments......................... 46,768 73,976 12,293 35,055 3,182 9,811
--------- -------- -------- -------- ------- -------
Net increase in net assets
resulting from operations........... 64,448 107,440 21,050 34,441 4,793 13,515
--------- -------- -------- -------- ------- -------
Dividends and distributions to
shareholders:
Net investment income................ -- -- -- -- -- (612)
Capital gains........................ -- (7,232) -- -- -- (971)
--------- -------- -------- -------- ------- -------
Decrease in net assets resulting
from dividends and distributions
to shareholders..................... -- (7,232) -- -- -- (1,583)
--------- -------- -------- -------- ------- -------
Capital share transactions:
Net increase (decrease) in net
assets resulting from capital
share transactions.................. (37,214) (38,825) 975 18,847 (4,338) (10,093)
--------- -------- -------- -------- ------- -------
Total increase in net assets......... 27,234 61,383 22,025 53,288 455 1,839
NET ASSETS:
Beginning of period.................... 470,699 409,316 164,889 111,601 57,558 55,719
--------- -------- -------- -------- ------- -------
End of period.......................... $497,933 $470,699 $186,914 $164,889 $58,013 $57,558
--------- -------- -------- -------- ------- -------
--------- -------- -------- -------- ------- -------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
21
<PAGE>
THE PASADENA GROWTH FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Six-Months Ended For the Year Ended
June 30, 1996 (unaudited) December 31, 1995
----------------------------------- ----------------------------------
Class A Class B Class C Class A Class B Class C
--------- --------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning
of period............................. $ 19.28 $ 18.99 $ 18.99 $ 15.40 $ 15.28 $ 15.28
-------- ------- ------- -------- ------- -------
GAIN FROM INVESTMENT OPERATIONS
Net investment loss(1)................ (.06) (.14) (.14) (.06) (.20) (.20)
Net realized and unrealized
gain on investments................. 2.82 2.77 2.77 4.24 4.21 4.21
-------- ------- ------- -------- ------- -------
Total gain from
investment operations............... 2.76 2.63 2.63 4.18 4.01 4.01
-------- ------- ------- -------- ------- -------
LESS DISTRIBUTIONS:
Distributions from capital gains...... -- -- -- (.30) (.30) (.30)
-------- ------- ------- -------- ------- -------
Total distributions................... -- -- -- (.30) (.30) (.30)
-------- ------- ------- -------- ------- -------
Net asset value, end of period.......... $ 22.04 $ 21.62 $ 21.62 $ 19.28 $ 18.99 $ 18.99
-------- ------- ------- -------- ------- -------
-------- ------- ------- -------- ------- -------
TOTAL RETURN(2)......................... 14.32% 13.85% 13.85% 27.16% 26.26% 26.26%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)...................... $429,590 $43,506 $24,837 $415,416 $34,786 $20,497
Ratio of expenses to average
net assets(3)....................... 1.6% 2.3% 2.3% 1.6% 2.4% 2.4%
Ratio of net investment loss to
average net assets(3)............... (0.6)% (1.4)% (1.4)% (0.3)% (1.1)% (1.1)%
Portfolio turnover rate............... 33.1% 33.1% 33.1% 65.9% 65.9% 65.9%
Average commission
rate paid per share(4).............. $ 0.0581 $0.0581 $0.0581 N/A N/A N/A
</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 unaudited financial statements for the six-months ended June
30, 1996, and the Fund's audited financial statements for all other periods
presented.
(1) This information was prepared using the average number of shares outstanding
during each period.
(2) Total return measures the change in the value of an investment during each
of the periods indicated. It does not include the impact of paying any
applicable front-end or contingent deferred sales charge.
(3) Annualized for periods of less than one year.
(4) This disclosure, effective for the first time in 1996, has not been applied
retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
22
<PAGE>
THE PASADENA GROWTH FUND
FINANCIAL HIGHLIGHTS-CONTINUED
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------------------------------
1994 1993 1992 1991(3)
--------------------------------------- --------- --------- ----------
Class A Class B(4) Class C(4) Class A Class A Class A
----------- ----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of year......................................... $ 16.00 $ 15.89 $ 15.89 $ 17.00 $ 16.80 $ 10.04
----------- ----------- ----------- --------- --------- ----------
GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment loss(1).......................... (.03) (.14) (.14) (.02) (.05) (.08)
Net realized and unrealized
gain (loss) on investments.................... (.57) (.47) (.47) (.98) .43 6.89
----------- ----------- ----------- --------- --------- ----------
Total gain (loss) from
investment operations......................... (.60) (.61) (.61) (1.00) .38 6.81
----------- ----------- ----------- --------- --------- ----------
LESS DISTRIBUTIONS:
Distributions from capital
gains......................................... -- -- -- -- (.18) (.05)
----------- ----------- ----------- --------- --------- ----------
Total distributions............................. -- -- -- -- (.18) (.05)
----------- ----------- ----------- --------- --------- ----------
Net asset value, end of year...................... $ 15.40 $ 15.28 $ 15.28 $ 16.00 $ 17.00 $ 16.80
----------- ----------- ----------- --------- --------- ----------
----------- ----------- ----------- --------- --------- ----------
TOTAL RETURN(2)................................... (3.75)% (3.84)% (3.84)% (5.87)% 2.24% 67.83%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands)................................ $ 391,831 $ 11,349 $ 6,136 $ 532,208 $ 625,624 $ 323,484
Ratio of expenses to average
net assets.................................... 1.6% 2.3% 2.3% 1.6% 1.6% 1.8%
Ratio of net investment loss to
average net assets............................ (0.2)% (1.0)% (1.0)% --% (0.3)% (0.6)%
Portfolio turnover rate......................... 53.8% 53.8% 53.8% 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 each 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.
(4) 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>
THE PASADENA NIFTY FIFTY FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Six-Months Ended June 30, 1996(unaudited) For the Year Ended December 31, 1995
------------------------------------------------- -------------------------------------
Class A Class B Class C Class A Class B Class C
----------- ----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period....................................... $ 22.18 $ 21.85 $ 21.85 $ 17.30 $ 17.17 $ 17.17
----------- ----------- ----------- --------- --------- ----------
GAIN FROM INVESTMENT
OPERATIONS:
Net investment loss(1).......................... (.06) (.14) (.15) (.05) (.21) (.21)
Net realized and unrealized
gain on investments........................... 2.92 2.86 2.87 4.93 4.89 4.89
----------- ----------- ----------- --------- --------- ----------
Total gain from
investment operations......................... 2.86 2.72 2.72 4.88 4.68 4.68
----------- ----------- ----------- --------- --------- ----------
Net asset value, end of period.................... $ 25.04 $ 24.57 $ 24.57 $ 22.18 $ 21.85 $ 21.85
----------- ----------- ----------- --------- --------- ----------
----------- ----------- ----------- --------- --------- ----------
TOTAL RETURN(2)................................... 12.89 % 12.45 % 12.45 % 28.21 % 27.26 % 27.26 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)................................ $ 133,856 $ 35,103 $ 17,955 $ 122,322 $ 27,462 $ 15,105
Ratio of expenses to average
net assets(3)................................. 1.8 % 2.5 % 2.5 % 1.9 % 2.6 % 2.6 %
Ratio of net investment loss to
average net assets(3)......................... (0.5)% (1.2)% (1.2)% (.3)% (1.0)% (1.0)%
Portfolio turnover rate......................... 27.2 % 27.2 % 27.2 % 26.5 % 26.5 % 26.5 %
Average commission
rate paid per share(4)........................ $ 0.0584 $ 0.0584 $ 0.0584 N/A N/A N/A
</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 unaudited financial statement for the six-months ended
June 30, 1996, and the Fund's audited financial statements for all other
periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) Total return measures the change in the value of an investment during
each of the periods indicated. It does not include the impact of paying
any applicable front-end or contingent deferred sales charge.
(3) Annualized for periods of less than one year.
(4) This disclosure, effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
24
<PAGE>
THE PASADENA NIFTY FIFTY FUND
FINANCIAL HIGHLIGHTS-CONTINUED
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------------------------------
1994 1993 1992 1991
--------------------------------------- --------- --------- ----------
Class A Class B(3) Class C(3) Class A Class A Class A
----------- ----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of year......................................... $ 17.12 $ 17.02 $ 17.02 $ 17.21 $ 16.60 $ 9.97
----------- ----------- ----------- --------- --------- ----------
GAIN (LOSS) FROM INVESTMENT
OPERATIONS:
Net investment loss(1).......................... (.03) (.14) (.15) (.06) (.05) (.01)
Net realized and unrealized
gain (loss) on investments.................... .21 .29 .30 (.03) .66 6.74
----------- ----------- ----------- --------- --------- ----------
Total gain (loss) from
investment operations......................... .18 .15 .15 (.09) .61 6.73
----------- ----------- ----------- --------- --------- ----------
LESS DISTRIBUTIONS:
Distributions from capital
gains......................................... -- -- -- -- -- (.10)
----------- ----------- ----------- --------- --------- ----------
Total distributions............................. -- -- -- -- -- (.10)
----------- ----------- ----------- --------- --------- ----------
Net asset value, end of year...................... $ 17.30 $ 17.17 $ 17.17 $ 17.12 $ 17.21 $ 16.60
----------- ----------- ----------- --------- --------- ----------
----------- ----------- ----------- --------- --------- ----------
TOTAL RETURN(2)................................... 1.05 % 0.88 % 0.88 % (0.52)% 3.67 % 67.64 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year
(in thousands)................................ $ 100,596 $ 6,722 $ 4,283 $ 134,284 $ 195,067 $ 64,156
Ratios of expenses to average
net assets.................................... 1.9 % 2.6 % 2.6 % 1.8 % 1.9 % 1.9 %
Ratios of net investment income
(loss) to average net assets.................. (0.2)% (0.9)% (0.9)% -- (0.3)% (0.1)%
Portfolio turnover rate......................... 23.2 % 23.2 % 23.2 % 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 each 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>
THE PASADENA BALANCED RETURN FUND
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
For the Six-Month Ended June 30, 1996 (unaudited) For the Year Ended December 31, 1995
------------------------------------------------- -------------------------------------
Class A Class B Class C Class A Class B Class C
----------- ----------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net asset value, beginning
of period....................................... $ 25.39 $ 25.26 $ 25.28 $ 20.54 $ 20.49 $ 20.48
----------- ----------- ----------- --------- --------- ----------
GAIN FROM INVESTMENT
OPERATIONS:
Net investment income(1)........................ .13 .03 .03 .27 .08 .07
Net realized and unrealized
gain on investments........................... 2.08 2.05 2.05 5.31 5.29 5.30
----------- ----------- ----------- --------- --------- ----------
Total gain from
investment operations......................... 2.21 2.08 2.08 5.58 5.37 5.37
----------- ----------- ----------- --------- --------- ----------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income............ -- -- -- (.29) (.16) (.13)
Distributions from capital
gains......................................... -- -- -- (.44) (.44) (.44)
----------- ----------- ----------- --------- --------- ----------
Total dividends and distributions............... -- -- -- (.73) (.60) (.57)
----------- ----------- ----------- --------- --------- ----------
Net asset value, end of period.................... $ 27.60 $ 27.34 $ 27.36 $ 25.39 $ 25.26 $ 25.28
----------- ----------- ----------- --------- --------- ----------
----------- ----------- ----------- --------- --------- ----------
TOTAL RETURN(2)................................... 8.70 % 8.23 % 8.23 % 27.18 % 26.20 % 26.23 %
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands)................................ $ 51,679 $ 3,117 $ 3,217 $ 52,028 $ 2,721 $ 2,809
Ratios of expenses to average
net assets(3)................................. 2.1 % 2.8 % 2.8 % 2.1 % 2.9 % 2.9 %
Ratios of net investment income to
average net assets(3)......................... 1.0 % 0.2 % 0.2 % 1.2 % 0.3 % 0.3 %
Portfolio turnover rate......................... 28.8 % 28.8 % 28.8 % 51.1 % 51.1 % 51.1 %
Average commission
rate paid per share(4)........................ $ 0.0604 $ 0.0604 $ 0.0604 N/A N/A N/A
</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 unaudited financial statement for the six-months ended
June 30, 1996, and the Fund's audited financial statements for all other
periods presented.
(1) This information was prepared using the average number of shares
outstanding during each period.
(2) Total return measures the change in the value of an investment during
each of the periods indicated. It does not include the impact of paying
any applicable front-end or contingent deferred sales charge.
(3) Annualized for periods of less than one year.
(4) This disclosure, effective for the first time in 1996, has not been
applied retroactively.
SEE NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
THE PASADENA BALANCED RETURN FUND
FINANCIAL HIGHLIGHTS-CONTINUED
<TABLE>
<CAPTION>
For the Year Ended December 31,
------------------------------------------------------------------------
1994 1993 1992 1991
------------------------------------ --------- --------- --------
Class A Class B(3) Class C(3) Class A Class A Class A
------- ---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year .................... $ 21.97 $ 21.89 $ 21.89 $ 21.76 $ 20.95 $ 15.30
------- ------- ------- ------- ------- -------
GAIN (LOSS) FROM INVESTMENT OPERATIONS:
Net investment income(1) ............................ .39 .26 .25 .32 .25 .24
Net realized and unrealized gain (loss) on
investments ....................................... (1.36) (1.32) (1.31) .21 .69 5.70
------- ------- ------- ------- ------- -------
Total gain (loss) from investment operations ........ (.97) (1.06) (1.06) .53 .94 5.94
------- ------- ------- ------- ------- -------
LESS DIVIDENDS AND DISTRIBUTIONS:
Dividends from net investment income ................ (.46) (.34) (.35) (.32) (.13) (.16)
Distributions from capital gains .................... -- -- -- -- -- (.13)
------- ------- ------- ------- ------- -------
Total distributions ................................. (.46) (.34) (.35) (.32) (.13) (.29)
------- ------- ------- ------- ------- -------
Net asset value, end of year .......................... $ 20.54 $ 20.49 $ 20.48 $ 21.97 $ 21.76 $ 20.95
------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- -------
TOTAL RETURN(2) ....................................... (4.43)% (4.85)% (4.85)% 2.44% 4.49% 38.89%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (in thousands) .............. $53,047 $ 1,223 $ 1,449 $84,591 $75,143 $16,020
Ratio of expenses to average net assets ............. 2.1% 2.9% 2.9% 2.1% 2.3% 2.5%
Ratio of net investment income to average net
assets ............................................ 1.8% 1.3% 1.3% 1.5% 1.2% 1.3%
Portfolio turnover rate ............................. 28.2% 28.2% 28.2% 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 each 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>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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. Each Fund
offers 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
administrative 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
28
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)-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 brokers/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 (PCC), owns 93.5% of the Manager's capital stock. The
Distributor is also a wholly-owned subsidiary of PCC. Roger Engemann, the
controlling shareholder of PCC, is the Chairman of the Board and President of
the Trust.
3. INVESTMENT TRANSACTIONS: For the six-months ended June 30, 1996,
purchases and sales of securities, other than short-term securities,
aggregated $159,349 and $191,707 respectively, for The Pasadena Growth Fund,
$47,462 and $47,057 respectively, for The Pasadena Nifty Fifty Fund and
$16,164 (which includes $12,127 in U.S. government obligations) and $19,613,
respectively, for The Pasadena Balanced Return Fund.
At June 30, 1996, net unrealized appreciation aggregated $187,956, $61,795
and $17,717 for The Pasadena Growth Fund, The Pasadena Nifty Fifty Fund and
The Pasadena Balanced Return Fund, respectively, of which $195,934, $63,440
and $18,197, respectively, related to appreciated securities and $7,978,
$1,645 and $480, 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. For the six-months ended June 30, 1996,
The Pasadena Nifty Fifty Fund had net realized gains on investments of $9,374.
29
<PAGE>
NOTES TO FINANCIAL STATEMENTS-CONTINUED
4. CAPITAL SHARE TRANSACTIONS: The Funds' capital share transactions were as
follows:
<TABLE>
<CAPTION>
(IN THOUSANDS)
THE PASADENA GROWTH FUND
------------------------------------------------------------
Net Assets Shares
----------------------------- -----------------------------
Six-Months Six-Months
Ended June 30, Year Ended Ended June 30, Year Ended
1996 December 31, 1996 December 31,
(unaudited) 1995 (unaudited) 1995
--------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold...................................... $ 10,681 $ 25,923 514 1,467
Shares issued in reinvestment
of distributions............................... -- 5,625 -- 294
Shares repurchased............................... (52,915) (100,949) (2,563) (5,667)
-------- ---------- ------ -------
Net decrease..................................... (42,234) (69,401) (2,049) (3,906)
-------- ---------- ------ -------
CLASS B
Shares sold...................................... 6,747 20,183 332 1,162
Shares issued in reinvestment
of distributions............................... -- 502 -- 27
Shares repurchased............................... (3,133) (1,815) (152) (100)
-------- ---------- ------ -------
Net increase..................................... 3,614 18,870 180 1,089
-------- ---------- ------ -------
CLASS C
Shares sold...................................... 3,953 14,314 196 823
Shares issued in reinvestment
of distributions............................... -- 287 -- 15
Shares repurchased............................... (2,547) (2,895) (126) (160)
-------- ---------- ------ -------
Net increase..................................... 1,406 11,706, 70 678
-------- ---------- ------ -------
Net decrease resulting from
capital share transactions..................... $(37,214) $ (38,825) (1,799) (2,139)
-------- ---------- ------ -------
-------- ---------- ------ -------
<CAPTION>
THE PASADENA NIFTY FIFTY FUND
------------------------------------------------------------
Net Assets Shares
----------------------------- -----------------------------
Six-Months Six-Months
Ended June 30, Year Ended Ended June 30, Year Ended
1996 December 31, 1996 December 31,
(unaudited) 1995 (unaudited) 1995
-------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold...................................... $ 9,134 $ 17,467 383 907
Shares repurchased............................... (13,143) (24,108) (552) (1,206)
-------- --------- ------ ------
Net decrease..................................... (4,009) (6,641) (169) (299)
-------- --------- ------ ------
CLASS B
Shares sold...................................... 6,687 18,638 285 945
Shares repurchased............................... (2,669) (1,688) (114) (80)
-------- --------- ------ ------
Net increase..................................... 4,018 16,950 171 865
-------- --------- ------ ------
CLASS C
Shares sold...................................... 3,881 11,993 167 611
Shares repurchased............................... (2,915) (3,455) (127) (169)
-------- -------- ------- ------
Net increase..................................... 966 8,538 40 442
-------- -------- ------- ------
Net increase resulting from capital
share transactions............................. $ 975 $ 18,847 42 1,008
-------- -------- ------- ------
-------- -------- ------- ------
</TABLE>
30
<PAGE>
NOTES TO FINANCIAL STATEMENTS-CONTINUED
4. CAPITAL SHARE TRANSACTIONS-CONTINUED:
<TABLE>
<CAPTION>
(IN THOUSANDS)
THE PASADENA BALANCED RETURN FUND
---------------------------------------------------------------
Net Assets Shares
----------------------------- --------------------------------
Six-Months Six-Months
Ended June 30, Year Ended Ended June 30, Year Ended
1996 December 31, 1996 December 31,
(unaudited) 1995 (unaudited) 1995
--------------- ------------ --------------- -------------
<S> <C> <C> <C> <C>
CLASS A
Shares sold...................................... $ 902 $ 2,304 34 97
Shares issued in reinvestment
of distributions............................... -- 1,331 -- 53
Shares repurchased............................... (5,575) (15,800) (210) (683)
------- -------- ------- ------
Net decrease..................................... (4,673) (12,165) (176) (533)
------- -------- ------- ------
CLASS B
Shares sold...................................... 335 1,527 13 65
Shares issued in reinvestment
of distributions............................... -- 52 -- 2
Shares repurchased............................... (171) (430) (7) (19)
------- -------- ------- ------
Net increase..................................... 164 1,149 6 48
------- -------- ------- ------
CLASS C
Shares sold...................................... 881 2,728 34 115
Shares issued in reinvestment
of distributions............................... -- 55 -- 2
Shares repurchased............................... (710) (1,860) (27) (77)
------- -------- ------- ------
Net increase..................................... 171 923 7 40
------- -------- ------- ------
Net decrease resulting from capital
share transactions............................. $(4,338) $(10,093) (163) (445)
------- -------- ------- ------
------- -------- ------- ------
</TABLE>
5. DIVIDENDS AND DISTRIBUTIONS: DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS
WERE AS FOLLOWS:
<TABLE>
<CAPTION>
THE PASADENA THE PASADENA
GROWTH FUND BALANCED RETURN FUND
----------------------------- --------------------------------
Six-Months Six-Months
Ended June 30, Year Ended Ended June 30, Year Ended
1996 December 31, 1996 December 31,
(unaudited) 1995 (unaudited) 1995
--------------- ------------ --------------- -------------
<S> <C> <C> <C> <C>
Net investment income:
Class A $ -- $ -- $ -- $ 582
Class B -- -- -- 16
Class C -- -- -- 14
Capital gains:
Class A -- 6,381 -- 878
Class B -- 536 -- 46
Class C -- 315 -- 47
------- -------- ------- ------
Total $ -- $ 7,232 $ -- $1,583
------- -------- ------- ------
------- -------- ------- ------
</TABLE>
The Pasadena Nifty Fifty Fund had no dividends or distributions in 1996 and
1995.
31
<PAGE>
OFFICERS AND TRUSTEES
- ------------------------------------------------------------
ROGER ENGEMANN
CHAIRMAN OF THE BOARD,
PRESIDENT AND TRUSTEE
BARRY E. MCKINLEY
TRUSTEE
ROBERT L. PETERSON
TRUSTEE
MICHAEL STOLPER
TRUSTEE
RICHARD C. TAYLOR
TRUSTEE
JOHN S. TILSON
CHIEF FINANCIAL OFFICER,
SECRETARY AND TRUSTEE
RICHARD A. WATSON
CONTROLLER - FUND ACCOUNTING
ANGELA WONG
TRUSTEE
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.
REMCO-047
