<PAGE>
ANNUAL REPORT
DECEMBER 31, 1995
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Chairman's Letter................................................................................ 2
Review of Eclipse Funds
Ultra Short Term Income Fund................................................................. 4
Balanced Fund................................................................................ 6
Growth and Income Fund....................................................................... 8
Equity Fund.................................................................................. 10
Statements of Net Assets
Ultra Short Term Income Fund................................................................. 12
Balanced Fund................................................................................ 16
Growth and Income Fund....................................................................... 25
Equity Fund.................................................................................. 28
Statements of Operations......................................................................... 34
Statements of Changes in Net Assets.............................................................. 35
Notes to Financial Statements.................................................................... 37
Selected Financial Information
Ultra Short Term Income Fund................................................................. 40
Balanced Fund................................................................................ 41
Growth and Income Fund....................................................................... 42
Equity Fund.................................................................................. 43
Independent Auditor's Report..................................................................... 44
Trustees and Officers............................................................................ 45
Towneley Capital Management, Inc., Investment Manager............................................ 46
Glossary......................................................................................... 47
</TABLE>
- --------------------------------------------------------------------------------
1
<PAGE>
CHAIRMAN'S LETTER
Dear Fellow Shareholder:
Last year was a good one for the American stock markets. In fact, as measured by
the Standard and Poor's 500 Index, 1995 ranked in the top 10% for calendar year
equity market returns over the past seventy years.
The market was driven by a number of factors:
1. Relatively low and declining interest rates prevalent in 1995 were an
inducement to equity and bond investing.
2. The lower interest rates benefited financial companies such as commercial
banks, thrifts, and savings and loans, by increasing loan volume and
lowering their financing costs, leading to higher profit margins.
3. Corporate restructurings have allowed many companies to lower their cost of
operations, which has helped earnings growth. Although companies have
restructured in various ways, the most significant trend in restructuring
is the use of technology to enhance production. This has led to a large
number of employees taking early retirement or being laid off.
4. The increased use of technology has strengthened revenue and earnings
growth of technology companies. This growth was a continuation of the 1994
trend and was recognized by the equity markets. Technology stocks soared
during the year.
5. The technology sector in most equity indexes was one of the largest factors
in their return, and became a larger proportional component of various
stock indexes.
We do not know how long these trends will continue, or whether the support of
these sectors in the equity market is in line with the true relative economic
growth of the companies. We also do not know the potential impact on the equity
market of the layoffs, early retirements, slower consumer spending and high
levels of consumer debt. But history suggests that a sluggish economic
environment and slower corporate earnings growth lie ahead.
MARKET CYCLES AND INVESTMENT STYLES
Just as the stock market has cycles, so do investment styles. Investment styles
are often characterized as either "growth" or "value." "Growth" investing is
generally defined as investing in equities with high price to book value and/or
high price to earnings ratios, while "value" investing is generally defined as
investing in equities with low price to book value and/or low price to earnings
ratios. The strength in the market this year has largely been "growth" stock
driven, with a particular focus on technology. On the value side, the finance
sector benefited. Timing the market or sectors is a risky strategy and one in
which we do not participate.
Our approach has been and remains value-driven, using a "bottom-up" style of
stock selection. That means that we choose companies based on an examination of
their assets, revenues and earnings relative to current market prices. We add
stocks to our portfolios that we calculate are undervalued.
Over time, we continue to monitor our portfolios carefully, and when a stock
becomes overvalued we rebalance the portfolio, replacing the overvalued stocks
with undervalued ones. This rebalancing may result in missing part of the short
term price momentum; however, we believe it is in the best interests of our
shareholders to maintain the undervalued characteristics of the portfolios.
- ---------------------------------------------------------
2
<PAGE>
Our returns, based on our strategy of selecting value stocks, were very good
this year. However, because the 1995 market rewarded technology and other high
growth stocks that do not fit with our value-oriented investment philosophy, our
stock and balanced funds results trailed several market benchmarks.
We believe that our consistent, value-centered approach will, over time,
continue to provide solid returns at lower risk than other, more aggressive,
investment strategies. As you can see from the enclosed statistics, the risk
inherent in our three stock funds, as measured by standard deviation, is
substantially lower than that of the market and mutual fund indices against
which they are measured.
THE FUTURE
As many of you know, the Eclipse fund "family" has now grown to four funds.
We're pleased with the reception of our two latest additions, the Ultra Short
Term Income Fund and the Growth and Income Fund.
- The Eclipse Ultra Short Term Income Fund had excellent absolute and relative
returns this year. We expect good growth in both assets and shareholder
numbers when investors start to seek safety, liquidity, and returns from
fixed income.
- We saw continued and growing interest in the Eclipse Balanced Fund for
401(k) and IRA programs, where individuals wish to have us consistently
rebalance to a 60% value equity and 40% short term bond portfolio. Such
asset allocation funds are growing in popularity, as increasing numbers of
Americans in their middle years focus on investment for a secure retirement,
but do not wish to make the asset allocation decision themselves.
- The Growth and Income Fund, new last year, is an exciting offering for us.
It is a 100% equity portfolio using the same strategies as the equity
portion of the Balanced Fund. We expect interest in this fund to continue to
grow, as investors increasingly appreciate the benefits inherent in "value"
investing, but desire to create their own "balance." They may choose to do
this with municipal or other fixed income funds.
- Lastly, the Eclipse Equity Fund's value style has been out of favor for some
time. Most small company mutual funds focus on growth and price momentum;
such funds have produced superior results in recent years when compared to
the Equity Fund, which focuses on assets and revenues relative to market
price. We are unable to predict style shifts, but when the markets move away
from excessive valuation and speculation, we believe this fund will show
better relative results.
We thank you for your continued confidence in the Eclipse Funds and wish you a
successful and financially rewarding 1996.
Sincerely,
[Signature to come]
Wesley G. McCain
Chairman
- --------------------------------------------------------------------------------
3
<PAGE>
REVIEW OF ECLIPSE ULTRA SHORT TERM
INCOME FUND
The Eclipse Ultra Short Term Income Fund is managed with the three objectives of
seeking a high level of current income, preserving capital, and maintaining a
relatively stable net asset value.
To meet these objectives, the Ultra Short Term Income Fund invests in a
portfolio of short term, high quality fixed income securities.
Completing its first full year of operation, the Eclipse Ultra Short Term Income
Fund's total return was 7.8%, outperforming the Lipper Ultra Short Obligation
Fund Average, which had a return of 6.6%. The fund ranked third among the
eighteen funds averaged for total return, and ranked sixth on a yield basis.
At year end, the Fund's duration was 0.89 years, and its dollar weighted average
maturity was 362 days.
- ----------------------------------------------
LARGEST INDUSTRY HOLDINGS -- 12/31/95 % OF PORTFOLIO
- ------------------------------------------------------------
<TABLE>
<S> <C>
U.S. Federal Agency.......................... 25.4%
Finance...................................... 12.6
U.S. Treasury................................ 12.0
Consumer Non-Durables........................ 10.4
</TABLE>
- ----------------------------------------------------
- --------------------------------------------------------------------------------
PERFORMANCE AND RISK DATA
PERIOD ENDING DECEMBER 31, 1995
<TABLE>
<CAPTION>
TOTAL RETURN(1)
1 YEAR RISK(2)
<S> <C> <C>
- -------------------------------------------------------------------
Eclipse Ultra Short Term Income Fund (3,4)........ 7.8 % 1.0 %
Lipper Ultra Short Obligation Funds Average (5)... 6.6 0.2
3 Month Treasury Bill............................. 6.0 0.1
1 Year Treasury Bill.............................. 7.9 0.6
</TABLE>
- ------------
1) With income reinvested.
2) Annualized standard deviation of monthly return.
3) The Fund's inception was 12/27/94; its annualized total return through
12/31/95 was 7.7%.
4) Net of management fee waived and after expense reimbursement by manager. For
the year ended December 31, 1995 this amounted to 1.67% of annualized average
net assets.
5) After all expenses.
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
4
<PAGE>
GROWTH OF $10,000 SINCE INCEPTION
ECLIPSE ULTRA SHORT TERM INCOME FUND WITH INCOME REINVESTED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ECLIPSE ULTRA SHORT TERM INCOME 1 YR. T-BILL
<S> <C> <C>
Dec-94 10,000 10,000
Jan-95 10,100 10,100
Feb-95 10,151 10,189
Mar-95 10,200 10,248
Apr-95 10,301 10,307
May-95 10,402 10,399
Jun-95 10,453 10,458
Jul-95 10,453 10,510
Aug-95 10,504 10,560
Sep-95 10,556 10,603
Oct-95 10,660 10,667
Nov-95 10,713 10,730
Dec-95 10,784 10,790
</TABLE>
All returns represent past performance, which are not predictive of future
results. Investment returns and share price will vary and shares, when redeemed,
may be worth more or less than their cost.
- --------------------------------------------------------------------------------
PER SHARE DIVIDEND INFORMATION -- 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Income dividends............................................................................ $ 0.1139
Short-term capital gain dividends........................................................... --
Long-term capital gain dividends............................................................ --
---------
Total 1995 dividends........................................................................ $ 0.1139
---------
---------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5
<PAGE>
REVIEW OF ECLIPSE BALANCED FUND
The Eclipse Balanced Fund was up 23% in 1995. Since inception it has had about
the same return as the Lipper Balanced Fund Index with less risk, as measured by
annualized standard monthly deviation.
For the three and five year periods ending December, 1995, we outperformed the
Lipper Balanced Fund Index by a wide margin.
As with Eclipse Equity and Eclipse Growth and Income Funds, the equity portion
of the Balanced Fund was overweighted in some underperforming sectors and
underweighted in sectors that outperformed. (See discussion under those funds.)
Our continuing commitment to invest in shorter duration bonds also contributed
to the shortfall. This strategy protects investors in a stock and bond markets
downturn, but investors do not participate in the strong returns that long term
bonds can provide, as they did this year. We remain confident that our asset
allocation mix of 60% large capitalization stocks and 40% short term government
and investment grade corporate bonds will continue to provide excellent income
and growth in capital over time with relatively low risk levels.
- --------------------------------------------------------------------------------
COMPARATIVE EQUITY INDUSTRY HOLDINGS AS A PERCENT OF ENTIRE PORTFOLIO
<TABLE>
<CAPTION>
12/31/95 12/31/94 CHANGE
<S> <C> <C> <C>
- ------------------------------------------------------------------------
Utilities............................... 20.8% 1.1% +19.7%
Retail Trade............................ 9.4 12.2 -2.8
Electronic Technology................... 5.6 15.0 -9.4
Consumer Non-Durables................... 3.4 2.4 +1.0
Finance................................. 3.2 0.0 +3.2
Energy Minerals......................... 1.9 9.8 -7.9
Process Industries...................... 0.8 6.4 -5.6
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PERFORMANCE AND RISK DATA
PERIOD ENDING DECEMBER 31, 1995
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURN(1)
INCEPTION
TO
1 YEAR 3 YEARS 5 YEARS 12/95(2) RISK(2,3)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Eclipse Balanced Fund (4,5)....................... 23.0% 12.9% 14.3% 11.5% 6.7%
Lipper Balanced Fund Index (4).................... 24.6 10.7 12.9 11.4 7.7
Merrill Lynch 3-5 Year Government Bond Index...... 16.1 7.2 8.8 9.5 3.8
Standard & Poor's 500 Index....................... 37.5 15.3 16.6 14.2 11.7
3 Month Treasury Bill............................. 6.0 4.5 4.7 5.7 0.6
</TABLE>
- ------------
1) With income reinvested.
2) May 1, 1989 to December 31, 1995
3) Annualized standard deviation of monthly return.
4) After all expenses.
5) Net of management fee waived equivalent to 0.8%, 0.8%, 0.8%, 0.8%, 0.5%,
0.4%, and 0.3% of average net assets for the years 1989 through 1995,
respectively. Returns are also net of reimbursed expenses equivalent to 0.84%
of average net assets in 1989 and 0.05% of average net assets in 1990.
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
6
<PAGE>
GROWTH OF $10,000 SINCE INCEPTION
ECLIPSE BALANCED FUND WITH INCOME REINVESTED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ECLIPSE BALANCED ML 3-5 YR. CORP S&P 500
<S> <C> <C> <C>
Apr-89 10,000 10,000 10,000
Dec-89 10,445 10,891 11,683
Dec-90 10,596 11,766 11,312
Dec-91 12,812 13,536 14,768
Dec-92 14,353 14,641 15,900
Dec-93 16,803 16,085 17,820
Dec-94 16,807 15,820 17,718
Dec-95 20,673 18,757 24,350
</TABLE>
All returns represent past performance, which are not predictive of future
results. Investment returns and share price will vary and shares, when redeemed,
may be worth more or less than their cost.
- --------------------------------------------------------------------------------
PER SHARE DIVIDEND INFORMATION -- 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Income dividends............................................................................ $ 0.6436
Short-term capital gain dividends........................................................... 0.2051
Long-term capital gain dividends............................................................ 0.3554
---------
Total 1995 dividends........................................................................ $ 1.2041
---------
---------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7
<PAGE>
REVIEW OF ECLIPSE GROWTH AND
INCOME FUND
The Eclipse Growth and Income Fund is managed with the long term objective of
seeking a high total return -- including both capital gains and current dividend
income -- from a portfolio composed entirely of undervalued, larger
capitalization stocks. In its first full year of operation the Fund was up
26.8%.
In 1995 the Fund achieved 88% of the return of the Lipper Growth and Income Fund
Index, with less risk, as measured by annualized monthly standard deviation for
the year.
Several factors contributed to the performance of this fund: First, it was not
fully invested in equities until the second quarter. Second, and similar to our
other funds, the Growth and Income Fund was overweighted in some underperforming
sectors, such as retail trade, and underweighted in sectors such as electronic
technology and finance, which led the markets. In 1995, we reduced our holdings
in electronic technology stocks as some stocks became overvalued. As a result of
this rebalancing, we did not participate in some of the short term price
movement of that industry.
We have in recent years been reluctant to invest heavily in the financial sector
due to the difficulty of assessing the quality of assets held at financial
institutions. This difficulty has become aggravated by the ability of companies
to alter their balance sheet risk overnight through the use of derivative
securities. We recently have developed measures which we believe adequately
determine the risk associated with a portfolio of investments in financial
institutions, which will allow us to have a stronger participation in this
sector.
The strategy of the Eclipse Growth and Income Fund is value-based. The concept
behind our value-oriented investment process is to select companies which are
economically undervalued and have -- or are expected to have -- above average
profitability. In theory and historical practice, owning companies that are
undervalued and have high profitability offers superior investment returns. We
continue to believe that our undervalued securities have solid prospects for
long term capital appreciation.
- ----------------------------------------------
LARGEST INDUSTRY HOLDINGS -- 12/31/95 % OF PORTFOLIO
- ------------------------------------------------------------
<TABLE>
<S> <C>
Utilities.................................... 19.6%
Retail Trade................................. 16.6
Electronic Technology........................ 13.0
Producer Manufacturing....................... 7.2
Commercial Services.......................... 6.8
</TABLE>
- ----------------------------------------------------
- --------------------------------------------------------------------------------
PERFORMANCE AND RISK DATA
PERIOD ENDING DECEMBER 31, 1995
<TABLE>
<CAPTION>
TOTAL RETURN(1)
1 YEAR RISK(2)
<S> <C> <C>
- -------------------------------------------------------------------
Eclipse Growth and Income Fund (3,4).............. 26.8% 4.2%
Lipper Growth and Income Fund Index (5)........... 30.5 5.0
Standard & Poor's 500 Index....................... 37.5 4.9
3 Month Treasury Bill............................. 6.0 0.1
</TABLE>
- ------------
1) With income reinvested.
2) Annualized standard deviation of monthly return.
3) The Fund's inception was 12/27/94; its annualized total return through
12/31/95 was 26.5%.
4) Net of management fee waived and after expense reimbursement by manager. For
the year ended December 31, 1995 this amounted to 0.95% of annualized average
net assets.
5) After all expenses.
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
8
<PAGE>
GROWTH OF $10,000 SINCE INCEPTION
ECLIPSE GROWTH AND INCOME FUND WITH INCOME REINVESTED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ECLIPSE GROWTH AND INCOME S&P 500
<S> <C> <C>
Dec-94 10,000 10,000
Jan-95 10,000 10,260
Feb-95 10,190 10,658
Mar-95 10,460 10,974
Apr-95 10,830 11,293
May-95 10,991 11,739
Jun-95 11,271 12,015
Jul-95 11,741 12,415
Aug-95 11,811 12,448
Sep-95 12,212 12,970
Oct-95 12,322 12,925
Nov-95 12,521 13,493
Dec-95 12,684 13,743
</TABLE>
All returns represent past performance, which are not predictive of future
results. Investment returns and share price will vary and shares, when redeemed,
may be worth more or less than their cost.
- --------------------------------------------------------------------------------
PER SHARE DIVIDEND INFORMATION -- 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Income dividends............................................................................ $ 0.1059
Short-term capital gain dividends........................................................... 0.2640
Long-term capital gain dividends............................................................ --
---------
Total 1995 dividends........................................................................ $ 0.3699
---------
---------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
9
<PAGE>
REVIEW OF ECLIPSE EQUITY FUND
The Eclipse Equity Fund was up 19.7% for the year.
We continue to concentrate our efforts in our definition of value stocks, which
did not do as well this year as growth stocks did. Therefore, our results
trailed the performance of the small capitalization indexes for the year ended
December 31, 1995.
We had substantial holdings in such sectors as retail trade (15.2%), utilities
(11.2%), and commercial services (11.2%), which underperformed the market, and
were underweighted in the electronic technologies (8.2%) and financial (4.4%)
sectors, which led the indexes.
During the year we took profits in some electronic technology stocks as they
became overvalued according to our investment criteria, reducing our holdings
from 11.6% of the portfolio in December, 1994 to 8.2% in December, 1995. As a
result of this rebalancing, we did not participate in much of the short term
momentum of that group.
As we mentioned in our review of the Eclipse Growth and Income Fund, we had
previously been reluctant to invest heavily in the financial sector due to the
difficulty of assessing the quality of assets held at financial institutions. We
recently have developed measures which we believe will, for our purposes,
adequately determine the risk associated with a diversified investment in
financial institutions, and this will allow us to have a stronger participation
in this sector in the future.
The strategy of the Eclipse Equity Fund is to select small company value stocks.
By contrast, our investment style attribution analysis of the Lipper Small
Company Growth Fund Index and the Russell 2000 Index indicates that most of
their returns are attributed to growth styles and/or to mid- to larger
capitalization growth stocks. We believe, therefore, that these indexes are not
appropriate comparative measures, and that the S&P Small Cap 600 Index is a more
accurate benchmark. From inception to date the Eclipse Equity Fund outperformed
the Standard & Poor's 600 Index with only 58% of the risk as measured by the
annualized standard deviation.
We continue to believe that our undervalued securities have solid prospects for
long term capital appreciation.
Highlighted in the following table are the six largest industry holdings for the
fund at year end 1995 and 1994, and the change in the portfolio of the largest
holdings from a year ago.
- --------------------------------------------------------------------------------
COMPARATIVE INDUSTRY HOLDINGS -- % OF PORTFOLIO
<TABLE>
<CAPTION>
12/31/95 12/31/94 CHANGE
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------
Retail Trade...................................... 15.2% 17.7% -2.5%
Utilities......................................... 11.2 1.0 +10.2
Commercial Services............................... 11.2 7.9 +3.3
Consumer Durables................................. 9.3 5.4 +3.9
Electronic Technology............................. 8.2 11.6 -3.4
Producer Manufacturing............................ 6.9 4.5 +2.4
Transportation.................................... 4.0 6.3 -2.3
Consumer Non-Durables............................. 3.4 9.6 -6.2
Energy Minerals................................... 2.1 9.5 -7.4
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10
<PAGE>
- --------------------------------------------------------------------------------
PERFORMANCE AND RISK DATA
PERIOD ENDING DECEMBER 31, 1995
<TABLE>
<CAPTION>
ANNUALIZED TOTAL RETURN(1)
INCEPTION
TO
1 YEAR 3 YEARS 5 YEARS 12/95(2) RISK(2,3)
<S> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Eclipse Equity Fund (4,5)......................... 19.7% 10.1% 15.9% 9.8% 10.9%
Lipper Small Company Growth Fund Index (4)........ 31.4 15.2 20.4 11.9 17.0
Standard & Poor's Small Cap 600 Index............. 28.6 12.5 19.9 7.2 18.8
Standard & Poor's 500 Index....................... 37.5 15.3 16.6 12.9 14.2
3 Month Treasury Bill............................. 6.0 4.5 4.7 6.1 0.6
</TABLE>
- ------------
1) With income reinvested.
2) January 31, 1987 to December 31, 1995
3) Annualized standard deviation of monthly return.
4) After all expenses.
5) Net of management fee waived in 1987 equivalent to 0.1% of average net
assets.
- --------------------------------------------------------------------------------
GROWTH OF $10,000 SINCE INCEPTION
ECLIPSE EQUITY FUND WITH INCOME REINVESTED
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ECLIPSE EQUITY S&P 600 S&P 500
<S> <C> <C> <C>
Jan-87 10,000 10,000 10,000
Dec-87 9,723 7,670 9,277
Dec-88 10,957 8,977 10,837
Dec-89 12,757 10,007 14,249
Dec-90 11,016 7,463 13,797
Dec-91 14,449 10,887 18,012
Dec-92 17,249 13,003 19,394
Dec-93 20,183 15,293 21,331
Dec-94 19,223 14,401 21,610
Dec-95 23,009 18,521 29,698
</TABLE>
All returns represent past performance, which are not predictive of future
results. Investment returns and share price will vary and shares, when redeemed,
may be worth more or less than their cost.
- --------------------------------------------------------------------------------
PER SHARE DIVIDEND INFORMATION -- 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Income dividends............................................................................ $ 0.0672
Short-term capital gain dividends........................................................... 0.1488
Long-term capital gain dividends............................................................ 0.3684
---------
Total 1995 dividends........................................................................ $ 0.5844
---------
---------
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
11
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
ULTRA SHORT TERM INCOME FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
U.S. CORPORATE BONDS (45.66%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
CONSUMER NON-DURABLES (10.44%)
Coca-Cola Company (The) Notes, 7.75%, due
02/15/96........................................ $ 100,000 $ 100,273
Heinz (H.J.) Company Notes, 5.50%, due
09/15/97........................................ 50,000 50,071
Hertz Corporation Senior Notes, 9.125%, due
08/01/96........................................ 100,000 101,992
PepsiCo, Inc. Notes, 6.875%, due 05/15/97........ 100,000 102,011
Procter & Gamble Company Notes, 6.85%, due
06/01/97........................................ 25,000 25,509
Ralston Purina Company Notes, 9.00%, due
06/15/96........................................ 100,000 101,437
------------
481,293
------------
ELECTRONIC TECHNOLOGY (4.38%)
IBM Corporation Notes, 6.375%, due 11/01/97...... 100,000 101,620
Martin Marietta Technologies, Inc. Notes, 8.50%,
due 03/01/96.................................... 100,000 100,464
------------
202,084
------------
FINANCE (12.64%)
Avco Financial Services, Inc. Senior Notes,
8.85%, due 02/01/96............................. 50,000 50,123
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
FINANCE (CONT'D)
Chrysler Financial Corporation Notes, 5.375%, due
10/15/98........................................ $ 50,000 $ 49,469
Fireman's Fund Mortgage Corporation Notes, 8.25%,
due 11/01/96.................................... 100,000 101,896
General Motors Corporation Notes, 7.625%, due
02/15/97........................................ 100,000 102,221
Household Finance Corporation Notes, 7.80%, due
11/01/96........................................ 100,000 101,862
International Lease Finance Corporation Senior
Notes, 6.50%, due 07/15/97...................... 75,000 76,010
U.S. Leasing International, Inc. Notes, 8.75%,
due 05/01/96.................................... 100,000 100,965
------------
582,546
------------
HEALTH TECHNOLOGY (3.33%)
American Home Products Corporation Notes, 6.875%,
due 04/15/97.................................... 100,000 101,743
Lilly (Eli) & Company Notes, 6.75%, due
11/15/99........................................ 50,000 51,878
------------
153,621
------------
INDUSTRIAL SERVICES (1.66%)
WMX Technologies, Inc. Notes, 7.125%, due
03/22/97........................................ 75,000 76,475
------------
</TABLE>
- ---------------------------------------------------------
12
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
ULTRA SHORT TERM INCOME FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
PRODUCER MANUFACTURING (1.15%)
Xerox Corporation Notes, 9.625%, due 09/01/97.... $ 50,000 $ 53,256
------------
RETAIL TRADE (5.32%)
Penney (J.C.) Company Notes, 5.375%, due
11/15/98........................................ 100,000 99,351
Sears Roebuck & Company Notes, 8.55%, due
08/01/96........................................ 70,000 71,214
Wal-Mart Stores, Inc. Notes, 5.50%, due
03/01/98........................................ 75,000 74,942
------------
245,507
------------
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
UTILITIES (6.74%)
MCI Communications Senior Notes, 7.625%, due
11/07/96........................................ $ 50,000 $ 50,905
New England Telephone & Telegraph Notes, 6.25%,
due 12/15/97.................................... 100,000 101,270
Sonat, Inc. Notes, 9.50%, due 08/15/99........... 50,000 55,689
Transcontinental Gas Pipeline Company Notes,
9.00%, due 11/15/96............................. 100,000 102,805
------------
310,669
------------
Total U.S. Corporate Bonds
(Cost $2,098,988)............................... $ 2,105,451
------------
</TABLE>
YANKEE BONDS (4.34%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
PROCESS INDUSTRIES (2.17%)
Dow Capital B.V. Notes, 5.75%, due 09/15/97...... $ 100,000 $ 99,919
------------
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
PRODUCER MANUFACTURING (2.17%)
Hanson Overseas B.V. Notes, 5.50%, due
01/15/96........................................ $ 100,000 $ 99,991
------------
Total Yankee Bonds (Cost $199,444)............... $ 199,910
------------
</TABLE>
UNITED STATES GOVERNMENT OBLIGATIONS (12.01%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
United States Treasury Note, 7.875%, due
02/15/96........................................ $ 100,000 $ 100,313
United States Treasury Note, 5.125%, due
03/31/96........................................ 75,000 74,976
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
United States Treasury Note, 7.625%, due
04/30/96........................................ $ 100,000 $ 100,812
United States Treasury Note, 7.375%, due
05/15/96........................................ 100,000 100,781
</TABLE>
- --------------------------------------------------------------------------------
13
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
ULTRA SHORT TERM INCOME FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
United States Treasury Note, 6.00%, due
06/30/96........................................ $ 75,000 $ 75,281
United States Treasury Note, 6.375%, due
06/30/97........................................ 100,000 101,688
------------
<CAPTION>
VALUE
(NOTE 1)
<S> <C> <C>
Total United States Government Obligations (Cost
$551,963)....................................... $ 553,851
------------
</TABLE>
FEDERAL AGENCIES (25.37%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
Federal Home Loan Bank, 6.85%, due 02/25/97...... $ 300,000 $ 305,057
Federal Home Loan Mortgage Corporation, 7.24%,
due 02/05/96.................................... 155,000 155,276
Federal Home Loan Mortgage Corporation, 6.18%,
due 11/18/97.................................... 150,000 151,951
Federal Land Bank, 7.95%, due 10/21/96........... 100,000 102,111
Federal National Mortgage Association, 8.45%, due
10/21/96........................................ 200,000 204,793
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
Federal National Mortgage Association (V.R.)
5.72%, due 12/14/98............................. $ 100,000 $ 99,943
Student Loan Marketing Association (V.R.), 5.40%,
due 10/30/97.................................... 100,000 100,219
Student Loan Marketing Association (V.R.), 5.40%,
due 01/21/98.................................... 50,000 50,117
------------
Total Federal Agencies (Cost $1,168,985)......... $ 1,169,467
------------
</TABLE>
SHORT-TERM INVESTMENTS (1.74%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
REPURCHASE AGREEMENTS (1.74%)
State Street Bank and Trust Company, 4.25%, due
01/02/96
(collateralized by $62,000 U.S. Treasury Bonds,
8.75%, due 05/15/17)............................ $ 80,228 $ 80,228
------------
Total Short-Term Investments (Cost $80,228)...... $ 80,228
------------
</TABLE>
- ---------------------------------------------------------
14
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
ULTRA SHORT TERM INCOME FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Total Investments (89.12%) (Cost $4,099,608+).... $ 4,108,907
Other Assets (11.63%)
Cash............................................. 2,000
Fund shares sold................................. 401,397
Interest receivable.............................. 73,366
Receivable from advisor.......................... 33,255
Deferred organization expenses................... 26,236
------------
Total assets..................................... 4,645,161
------------
Liabilities (0.75%)
Payable for deferred organization expenses....... 12,634
Fund shares redeemed............................. 793
Dividends payable................................ 55
Accrued expenses................................. 21,195
------------
Total liabilities................................ 34,677
------------
Net Assets (100.00%) 2,262,377 shares outstanding
(Note 3)........................................ $ 4,610,484
------------
------------
Net Asset Value, offering and redemption price
per share....................................... $2.04
------------
------------
</TABLE>
+ The cost stated also represents the aggregate cost for federal income tax
purposes. Aggregate unrealized appreciation and depreciation of investments,
based on cost for federal income tax purposes, are $14,058 and $4,759,
respectively.
See notes to financial statements.
- --------------------------------------------------------------------------------
15
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
BALANCED FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
COMMON STOCKS (59.71%)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
COMMERCIAL SERVICES (3.08%)
Kelly Services, Inc. Class A..................... 17,700 $ 491,175
Supervalu, Inc................................... 32,500 1,023,750
Sysco Corporation................................ 34,800 1,131,000
--------------
2,645,925
--------------
CONSUMER DURABLES (1.67%)
Honda Motor Co., Ltd............................. 28,000 1,176,000
Volvo AB, ADR.................................... 12,400 255,363
--------------
1,431,363
--------------
CONSUMER NON-DURABLES (3.39%)
ConAgra, Inc..................................... 32,100 1,324,125
IBP, Inc......................................... 15,100 762,550
Universal Corporation............................ 23,300 567,938
Whitman Corporation.............................. 11,000 255,750
--------------
2,910,363
--------------
ELECTRONIC TECHNOLOGY (5.58%)
Avnet Inc........................................ 19,600 877,100
Digital Equipment Corporation*................... 15,800 1,013,175
Gateway 2000, Inc.*.............................. 28,400 695,800
Polaroid Corporation............................. 23,500 1,113,312
SCI Systems, Inc.*............................... 14,000 434,000
United Technologies Corporation.................. 7,000 664,125
--------------
4,797,512
--------------
ENERGY MINERALS (1.91%)
Kerr-McGee Corporation........................... 9,700 615,950
Occidental Petroleum Corporation................. 16,000 342,000
Panhandle Eastern Corporation.................... 5,000 139,375
USX-Marathon Group............................... 27,800 542,100
--------------
1,639,425
--------------
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
FINANCE (3.22%)
Bear Stearns Companies Inc. (The)................ 12,300 $ 244,462
Great Western Financial Corporation.............. 19,600 499,800
National City Corporation........................ 15,400 510,125
SouthTrust Corporation........................... 19,600 502,250
USF&G Corporation................................ 29,200 492,750
Washington Mutual, Inc........................... 17,800 513,975
--------------
2,763,362
--------------
HEALTH SERVICES (2.28%)
Bergen Brunswig Corporation Class A.............. 20,700 514,913
Cardinal Health, Inc............................. 17,400 952,650
McKesson Corporation............................. 9,700 491,062
--------------
1,958,625
--------------
INDUSTRIAL SERVICES (0.58%)
Fluor Corporation................................ 7,600 501,600
--------------
NON-ENERGY MINERALS (0.29%)
Manville Corporation*............................ 19,200 252,000
--------------
PROCESS INDUSTRIES (0.83%)
Terra Industries, Inc............................ 15,500 218,938
Union Carbide Corporation........................ 13,100 491,250
--------------
710,188
--------------
PRODUCER MANUFACTURING (3.15%)
Canadian Pacific, Ltd............................ 28,000 507,500
Cummins Engine Company, Inc...................... 26,000 962,000
Johnson Controls, Inc............................ 18,000 1,237,500
--------------
2,707,000
--------------
</TABLE>
- --------------------------------------------------------*Non-Income Producing.
16
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
BALANCED FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
RETAIL TRADE (9.37%)
American Stores Co............................... 17,500 $ 468,125
Eckerd Corporation*.............................. 12,100 539,963
Food Lion, Inc. Class A.......................... 98,000 560,442
Giant Food Inc. Class A.......................... 16,100 507,150
Kroger Company (The)*............................ 27,600 1,035,000
Rite Aid Corporation............................. 30,700 1,051,475
Safeway, Inc.*................................... 20,000 1,030,000
Smith's Food & Drug Centers, Inc................. 13,300 335,825
Vons Companies, Inc.*............................ 19,000 536,750
Walgreen Company................................. 32,800 979,900
Winn-Dixie Stores, Inc........................... 27,300 1,006,687
--------------
8,051,317
--------------
TECHNOLOGY SERVICES (0.91%)
Arrow Electronics, Inc.*......................... 18,200 784,875
--------------
TRANSPORTATION (2.62%)
Federal Express Corporation*..................... 12,600 930,825
KLM Royal Dutch Airlines, ADR.................... 30,000 1,057,500
Northwest Airlines Corporation*.................. 5,200 265,200
--------------
2,253,525
--------------
UTILITIES (20.83%)
Allegheny Power System, Inc...................... 41,700 1,193,663
American Electric Power Company, Inc............. 25,700 1,040,850
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
UTILITIES (CONT'D)
Central Illinois Public Service Company Inc...... 7,100 $ 276,900
CMS Energy Corporation........................... 25,900 773,762
Central & South West Corporation................. 33,100 922,663
Coastal Corporation (The)........................ 23,000 856,750
Columbia Gas System, Inc. (The)*................. 24,400 1,070,550
DQE.............................................. 32,800 1,008,600
Detroit Edison Company........................... 26,700 921,150
FPL Group, Inc................................... 21,600 1,001,700
Illinova Corporation............................. 31,800 954,000
Korea Electric Power Corporation, ADR............ 19,600 524,300
New York State Electric & Gas Corporation........ 40,400 1,045,350
Ohio Edison Company.............................. 40,000 940,000
Pacific Gas & Electric Company................... 24,900 706,538
Pinnacle West Capital Corporation................ 35,900 1,032,125
Public Service Company of Colorado............... 26,000 919,750
SCEcorp.......................................... 52,000 923,000
Unicom Corporation............................... 30,000 982,500
Western Resources, Inc........................... 24,000 801,000
--------------
17,895,151
--------------
Total Common Stocks (Cost $45,549,298)........... $ 51,302,231
--------------
</TABLE>
- --------------------------------------------------------*Non-Income Producing.
17
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
BALANCED FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
U.S. CORPORATE BONDS (34.33%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
COMMERCIAL SERVICES (0.62%)
Supervalu Inc. Notes, 7.25%, due 07/15/99........ $ 300,000 $ 314,534
Supervalu Inc. Notes, 7.80%, due 11/15/02........ 200,000 219,283
-------------
533,817
-------------
CONSUMER DURABLES (0.09%)
Eastman Kodak Company Notes, 7.25%, due
04/15/97........................................ 75,000 76,772
-------------
CONSUMER NON-DURABLES (5.19%)
Anheuser-Busch Companies, Inc. Notes, 8.75%, due
12/01/99........................................ 50,000 55,360
Bass America, Inc. Guaranteed Notes, 6.75%, due
08/01/99........................................ 550,000 568,171
Coca-Cola Company Notes, 7.875%, due 09/15/98.... 100,000 105,996
Coca-Cola Enterprises Notes, 6.50%, due
11/15/97........................................ 150,000 152,825
Coca-Cola Enterprises Notes, 7.00%, due
11/15/99........................................ 350,000 365,787
Coca-Cola Enterprises Notes, 7.875%, due
02/01/02........................................ 200,000 219,669
Gillette Company (The) Notes, 4.75%, due
08/15/96........................................ 300,000 298,952
Heinz (H.J.) Company Notes, 5.50%, due
09/15/97........................................ 250,000 250,357
Heinz (H.J.) Company Notes, 6.75%, due
10/15/99........................................ 200,000 207,392
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
CONSUMER NON-DURABLES (CONT'D)
Hertz Corporation Senior Notes, 8.30%, due
02/02/98........................................ $ 300,000 $ 316,106
Hertz Corporation Senior Notes, 7.00%, due
04/15/01........................................ 300,000 313,019
PepsiCo, Inc. Notes, 7.875%, due 08/15/96........ 100,000 101,526
PepsiCo, Inc. Notes, 7.00%, due 11/15/96......... 50,000 50,712
PepsiCo, Inc. Notes, 6.125%, due 01/15/98........ 200,000 202,795
PepsiCo, Inc. Notes, 7.75%, due 10/01/98......... 100,000 105,759
PepsiCo, Inc. Notes, 6.25%, due 09/01/99......... 200,000 204,378
PepsiCo, Inc. Notes, 6.80%, due 05/15/00......... 200,000 208,400
Philip Morris Companies Inc. Med. Term Notes,
7.80%, due 09/24/96............................. 100,000 101,405
Philip Morris Companies Inc. Med. Term Notes,
8.90%, due 07/15/98............................. 100,000 107,068
Philip Morris Companies Inc. Notes, 7.50%, due
03/15/97........................................ 100,000 102,263
Philip Morris Companies Inc. Notes, 6.375%, due
01/15/98........................................ 100,000 101,296
Philip Morris Companies Inc. Notes, 7.625%, due
05/15/02........................................ 100,000 107,206
RJR Nabisco Inc. Medium Term Notes, 7.625%, due
09/01/00........................................ 200,000 211,217
-------------
4,457,659
-------------
CONSUMER SERVICES (0.12%)
Gannett Co., Inc. Notes, 5.25%, due 03/01/98..... 100,000 99,579
-------------
</TABLE>
- --------------------------------------------------------------------------------
18
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
BALANCED FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
ELECTRONIC TECHNOLOGY (1.15%)
Boeing Co. Notes, 8.375%, due 03/01/96........... $ 100,000 $ 100,468
IBM Corporation Notes, 6.375%, due 11/01/97...... 100,000 101,620
IBM Corporation Notes, 6.375%, due 06/15/00...... 200,000 204,835
IBM Corporation Notes, 7.25%, due 11/01/02....... 300,000 321,403
McDonnell Douglas Finance Corp. Med. Term Notes,
7.25%, due 06/15/98............................. 200,000 206,834
Rockwell International Corporation Notes, 8.875%,
due 09/15/99.................................... 50,000 55,438
-------------
990,598
-------------
ENERGY MINERALS (1.10%)
Exxon Capital Corporation Notes, 6.50%, due
07/15/99........................................ 300,000 308,763
Exxon Capital Corporation Notes, 7.45%, due
12/15/01........................................ 300,000 324,982
Shell Oil Company Notes, 6.95%, due 12/15/98..... 300,000 312,010
-------------
945,755
-------------
FINANCE (13.69%)
Allstate Corporation Notes, 5.875%, due
06/15/98........................................ 250,000 251,257
American Express Credit Corporation Notes,
7.375%, due 02/01/99............................ 500,000 524,492
American Express Credit Corporation Notes,
6.125%, due 06/15/00............................ 200,000 202,882
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
FINANCE (CONT'D)
American Express Credit Corporation Sr. Notes,
7.75%, due 03/01/97............................. $ 50,000 $ 51,271
American General Finance Corporation Notes,
8.00%, due 02/15/00............................. 200,000 215,158
American General Finance Corporation Sr. Notes,
5.80%, due 04/01/97............................. 300,000 301,187
American General Finance Corporation Sr. Notes,
8.25%, due 01/15/98............................. 200,000 210,136
Aristar, Inc. Senior Notes, 7.875%, due
02/15/99........................................ 150,000 159,037
Associates Corp. of North America Notes, 8.75%,
due 02/01/96.................................... 50,000 50,122
Associates Corp. of North America Notes, 7.25%,
due 05/15/98.................................... 400,000 414,670
Associates Corp. of North America Notes, 7.875%,
due 09/30/01.................................... 100,000 109,164
Associates Corp. of North America Sr. Notes,
8.80%, due 03/01/96............................. 50,000 50,251
Associates Corp. of North America Sr. Notes,
6.875%, due 01/15/97............................ 150,000 152,136
Avco Financial Services, Inc. Notes, 7.50%, due
11/15/96........................................ 50,000 50,861
Avco Financial Services, Inc. Sr. Notes, 5.875%,
due 10/15/97.................................... 300,000 301,891
</TABLE>
- --------------------------------------------------------------------------------
19
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
BALANCED FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
FINANCE (CONT'D)
CIT Group Holdings, Inc. Notes, 8.75%, due
02/15/96........................................ $ 50,000 $ 50,184
CIT Group Holdings, Inc. Notes, 8.75%, due
04/15/98........................................ 300,000 320,235
CNA Financial Corporation Sr. Notes, 8.875%, due
03/01/98........................................ 100,000 105,873
Chrysler Financial Corporation Notes, 6.625%, due
08/15/00........................................ 1,000,000 1,025,492
Commercial Credit Company Medium Term Notes,
6.75%, due 01/15/97............................. 300,000 303,718
Commercial Credit Company Notes, 8.25%, due
11/01/01........................................ 200,000 221,627
Farmers Group, Inc. Notes, 8.25%, due 07/15/96... 350,000 354,362
Ford Holdings Inc. Notes, 9.25%, due 03/01/00.... 50,000 56,118
Ford Motor Credit Company Notes, 8.875%, due
03/15/96........................................ 50,000 50,318
Ford Motor Credit Company Notes, 8.00%, due
12/01/96........................................ 100,000 102,170
Ford Motor Credit Company Notes, 5.625%, due
03/03/97........................................ 200,000 200,262
Ford Motor Credit Company Notes, 8.00%, due
01/15/99........................................ 100,000 106,122
Ford Motor Credit Company Notes, 7.25%, due
05/15/99........................................ 250,000 260,934
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
FINANCE (CONT'D)
Ford Motor Credit Company Notes, 8.375%, due
01/15/00........................................ $ 250,000 $ 272,464
General Electric Capital Corporation Notes,
8.00%, due 01/15/98............................. 400,000 418,925
General Motors Acceptance Corporation Notes,
8.00%, due 10/01/96............................. 300,000 305,265
General Motors Corporation Notes, 7.00%, due
06/15/03........................................ 700,000 730,405
Heller Financial, Inc. Notes, 8.85%, due
04/15/96........................................ 100,000 100,905
Heller Financial, Inc. Notes, 7.75%, due
05/15/97........................................ 50,000 51,408
Heller Financial, Inc. Notes, 9.375%, due
03/15/98........................................ 50,000 53,743
Heller Financial, Inc. Notes, 7.875%, due
11/01/99........................................ 100,000 106,483
Household Finance Corporation Notes, 7.80%, due
11/01/96........................................ 100,000 101,862
Household Finance Corporation Notes, 7.50%, due
03/15/97........................................ 200,000 204,526
Household Finance Corporation Notes, 7.75%, due
06/15/97........................................ 200,000 206,059
Household International Inc. (Floating Rate)
Notes, 6.0625%, due 05/27/97.................... 200,000 200,191
International Lease Finance Corporation Notes,
4.75%, due 07/15/96............................. 200,000 199,167
</TABLE>
- --------------------------------------------------------------------------------
20
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
BALANCED FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
FINANCE (CONT'D)
International Lease Finance Corporation Notes,
6.375%, due 11/01/96............................ $ 100,000 $ 100,631
International Lease Finance Corporation Notes,
8.125%, due 01/15/98............................ 200,000 209,581
International Lease Finance Corporation Sr.
Notes, 7.90%, due 10/01/96...................... 100,000 101,654
Lehman Brothers Holdings, Inc. Notes, 7.625%, due
06/15/97........................................ 150,000 153,596
Merrill Lynch & Co., Inc. Notes, 7.25%, due
05/15/97........................................ 100,000 102,233
Pitney Bowes Credit Corporation Notes, 5.625%,
due 02/15/97.................................... 300,000 300,647
Transamerica Finance Corporation Notes, 6.75%,
due 08/15/97.................................... 300,000 305,580
Travelers Group Inc. Notes, 6.125%, due
06/15/00........................................ 300,000 302,686
USL Capital Corporation Notes, 8.125%, due
02/15/00........................................ 300,000 323,862
USLife Corporation Sr. Notes, 6.75%, due
01/15/98........................................ 300,000 305,562
Xerox Credit Corp. Notes, 6.25%, due 01/15/96.... 400,000 400,075
-------------
11,759,440
-------------
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
HEALTH TECHNOLOGY (1.90%)
American Home Products Corporation Notes, 7.70%,
due 02/15/00.................................... $ 500,000 $ 535,289
Baxter International Inc. Notes, 7.50%, due
05/01/97........................................ 150,000 153,741
Becton, Dickinson & Co. Notes, 7.875%, due
12/15/96........................................ 150,000 153,334
Lilly (Eli) & Company Notes, 8.125%, due
12/01/01........................................ 250,000 278,258
Pfizer Inc. Notes, 6.50%, due 02/01/97........... 150,000 151,872
Upjohn Company Notes, 5.875%, 04/15/00........... 200,000 200,934
Warner-Lambert Company Notes, 6.625%, due
09/15/02........................................ 150,000 156,169
-------------
1,629,597
-------------
INDUSTRIAL SERVICES (0.54%)
WMX Technologies Inc. Notes, 4.875%, due
06/15/96........................................ 200,000 199,447
WMX Technologies Inc. Notes, 6.375%, due
07/01/97........................................ 50,000 50,601
WMX Technologies Inc. Sr. Notes, 8.125%, due
02/01/98........................................ 200,000 209,844
-------------
459,892
-------------
NON-ENERGY MINERALS (0.12%)
Alcan Aluminum Corporation Guaranteed Notes,
7.25%, due 12/15/99............................. 100,000 104,815
-------------
</TABLE>
- --------------------------------------------------------------------------------
21
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
BALANCED FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
PROCESS INDUSTRIES (0.61%)
DuPont (E.I.) De Nemours & Company Notes, 8.65%,
due 12/01/97.................................... $ 50,000 $ 52,933
DuPont (E.I.) De Nemours & Company Notes, 6.00%,
due 12/01/01.................................... 200,000 201,857
International Paper Company Med. Term Notes,
7.80%, due 03/18/99............................. 100,000 105,803
James River Corporation of Viriginia, 8.375%, due
11/15/01........................................ 150,000 165,672
-------------
526,265
-------------
PRODUCER MANUFACTURING (1.29%)
Dresser Industries, Inc. Senior Notes, 6.25%, due
06/01/00........................................ 600,000 609,005
Illinois Tool Works, Inc. Notes, 5.875%, due
03/01/00........................................ 400,000 401,075
Ingersoll-Rand Company Notes, 8.25%, due
11/01/96........................................ 50,000 51,082
Xerox Corporation Notes, 9.20%, due 07/15/99..... 50,000 51,083
-------------
1,112,245
-------------
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
RETAIL TRADE (1.92%)
Dayton Hudson Corporation Notes, 7.50%, due
03/01/99........................................ $ 300,000 $ 315,189
Dillard Department Stores Notes, 7.375%, due
06/15/99........................................ 255,000 268,753
Kmart Corporation Medium Term Notes, 8.50%, due
05/09/97........................................ 100,000 85,046
Limited, Inc. (The) Notes, 8.875%, due
08/15/99........................................ 200,000 219,071
Nordstrom Credit Inc. Medium Term Notes, 8.05%,
due 08/28/96.................................... 100,000 101,591
Penney (J.C.) Co., Inc. Notes, 6.875%, due
06/15/99........................................ 50,000 51,770
Sears Roebuck and Company Notes, 9.25%, due
08/01/97........................................ 100,000 105,510
Wal-Mart Stores Inc. Notes, 5.50%, due
09/15/97........................................ 250,000 250,156
Wal-Mart Stores Inc. Notes, 8.625%, due
04/01/01........................................ 50,000 56,198
Woolworth Corporation Medium Term Notes, 6.50%,
due 01/24/96.................................... 200,000 200,156
-------------
1,653,440
-------------
TRANSPORTATION (1.75%)
CSX Corporation Notes, 8.25%, due 11/01/96....... 100,000 102,243
Consolidated Rail Corporation Medium Term Notes,
5.20%, due 02/12/96............................. 500,000 500,019
</TABLE>
- --------------------------------------------------------------------------------
22
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
BALANCED FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
TRANSPORTATION (CONT'D)
Consolidated Rail Corporation Notes, 6.90%, due
07/01/98........................................ $ 200,000 $ 205,993
Kansas City Southern Industries Senior Notes,
7.875%, due 07/01/02............................ 150,000 164,731
Union Pacific Corporation Notes, 7.375%, due
05/15/01........................................ 500,000 530,279
-------------
1,503,265
-------------
UTILITIES (4.24%)
AT&T Capital Corp. Medium Term Notes, 7.40%, due
11/01/96........................................ 150,000 152,232
AT&T Corporation Notes, 4.50%, due 02/15/96...... 50,000 49,943
Ameritech Capital Funding Inc. (Floating Rate)
Notes, 5.925%, due 05/12/98..................... 550,000 549,921
Bell Atlantic-Virginia, Inc. Notes, 7.125%, due
01/15/02........................................ 300,000 317,102
Consolidated Edison Company Series F, 5.70%, due
10/01/98........................................ 350,000 350,055
GTE California, Inc. Notes, 6.75%, due
12/01/97........................................ 50,000 50,144
GTE Corporation Notes, 8.85%, due 03/01/98....... 50,000 53,027
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
UTILITIES (CONT'D)
GTE Northwest, Inc. Notes, 7.375%, due
05/01/01........................................ $ 500,000 $ 530,974
Pacific Bell Notes, 7.25%, due 07/01/02.......... 300,000 318,227
Pacific North West Bell Telephone Notes, 7.50%,
due 12/01/96.................................... 300,000 304,900
Public Service Electric & Gas Notes, 6.00%, due
01/01/98........................................ 100,000 100,469
Sonat, Inc. Notes, 9.00%, due 05/01/01........... 50,000 56,448
Southern California Edison Company Notes, 5.90%,
due 01/15/97.................................... 50,000 50,112
Southern California Edison Company Notes, 5.875%,
due 02/01/98.................................... 300,000 300,774
Southern California Edison Company Notes, 6.50%,
due 06/01/01.................................... 200,000 204,720
Southwestern Bell Telephone Notes, 8.30%, due
06/01/96........................................ 250,000 252,601
-------------
3,641,649
-------------
Total U.S. Corporate Bonds
(Cost $28,683,749).............................. $ 29,494,788
-------------
</TABLE>
YANKEE BONDS (0.35%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
NON-ENERGY MINERALS (0.12%)
Alcan Aluminum Ltd. Notes, 8.20%, due 09/01/96... $ 100,000 $ 101,727
-------------
</TABLE>
- --------------------------------------------------------------------------------
23
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
BALANCED FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
PROCESS INDUSTRIES (0.23%)
Dow Capital B.V. Notes, 8.25%, due 02/15/96...... $ 100,000 $ 100,266
Dow Capital B.V. Notes, 5.75%, due 09/15/97...... 100,000 99,919
-------------
200,185
-------------
Total Yankee Bonds
Cost ($307,194)................................. $ 301,912
-------------
</TABLE>
UNITED STATES GOVERNMENT OBLIGATIONS (3.64%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
United States Treasury Note, 6.375%, due
01/15/00........................................ $ 500,000 $ 518,593
United States Treasury Note, 5.50%, due
04/15/00........................................ 500,000 503,750
United States Treasury Note, 5.875%, due
02/15/04........................................ 500,000 510,155
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
United States Treasury Note, 6.50%, due
05/15/05........................................ $ 1,500,000 $ 1,598,438
-------------
Total United States Government Obligations
(Cost $2,980,532)............................... $ 3,130,936
-------------
</TABLE>
Short-term Investments (4.71%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
REPURCHASE AGREEMENTS (4.71%)
State Street Bank and Trust Co., 4.25%, due
01/02/96 (Collateralized by $3,105,000 U.S.
Treasury Notes, 8.75%, due 05/15/17)............ $ 4,046,671 $ 4,046,671
-------------
<CAPTION>
VALUE
(NOTE 1)
<S> <C> <C>
Total Short-Term Investments
(Cost $4,046,671)............................... $ 4,046,671
-------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Total Investments
(102.74%)
(Cost $81,567,444+)..... $88,276,538
Liabilities in Excess of
Cash and Other Assets
(-2.74%)................ (2,354,336)
-----------
Net Assets (100.00%)
4,173,768 shares
outstanding (Note 3).... $85,922,202
-----------
-----------
Net Asset Value, offering
and redemption price per
share................... $20.59
-----------
-----------
</TABLE>
+ The cost stated also represents the aggregate cost for federal income tax
purposes. Aggregate unrealized appreciation and depreciation of investments,
based on cost for federal income tax purposes, are $7,289,156 and $580,062,
respectively.
See notes to financial statements.
- --------------------------------------------------------------------------------
24
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
GROWTH AND INCOME FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
COMMON STOCKS (96.27%)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
COMMERCIAL SERVICES (6.80%)
Alco Standard Corporation........................ 2,400 $ 109,500
Rykoff-Sexton, Inc............................... 4,400 77,000
Supervalu, Inc................................... 5,800 182,700
Sysco Corporation................................ 5,300 172,250
-----------
541,450
-----------
CONSUMER DURABLES (3.76%)
Honda Motor Co., Ltd............................. 5,900 247,800
Volvo AB, ADR.................................... 2,500 51,484
-----------
299,284
-----------
CONSUMER NON-DURABLES (3.72%)
ConAgra, Inc..................................... 3,000 123,750
IBP, Inc......................................... 2,300 116,150
Universal Corporation............................ 2,300 56,062
-----------
295,962
-----------
ELECTRONIC TECHNOLOGY (13.00%)
Avnet Inc........................................ 1,700 76,075
Dell Computer Corporation*....................... 2,200 76,175
Digital Equipment Corporation*................... 3,600 230,850
Gateway 2000, Inc.*.............................. 5,500 134,750
Philips Electronics N.V.......................... 2,800 100,450
Polaroid Corporation............................. 3,400 161,075
SCI Systems, Inc.*............................... 1,500 46,500
United Technologies Corporation.................. 2,200 208,725
-----------
1,034,600
-----------
ENERGY MINERALS (3.31%)
Kerr-McGee Corporation........................... 1,100 69,850
Sun Company, Inc................................. 5,000 136,875
USX-Marathon Group............................... 2,900 56,550
-----------
263,275
-----------
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
FINANCE (3.17%)
Bear Stearns Companies Inc. (The)................ 2,500 $ 49,688
Great Western Financial Corporation.............. 2,000 51,000
SouthTrust Corporation........................... 2,000 51,250
USF&G Corporation................................ 2,900 48,937
Washington Mutual, Inc........................... 1,800 51,975
-----------
252,850
-----------
HEALTH SERVICES (5.37%)
Bergen Brunswig Corporation Class A.............. 3,600 89,550
Cardinal Health, Inc............................. 3,400 186,150
McKesson Corporation............................. 3,000 151,875
-----------
427,575
-----------
INDUSTRIAL SERVICES (3.07%)
Fluor Corporation................................ 3,700 244,200
-----------
NON-ENERGY MINERALS (0.63%)
Manville Corporation*............................ 3,800 49,875
-----------
PROCESS INDUSTRIES (3.11%)
Union Carbide Corporation........................ 6,600 247,500
-----------
PRODUCER MANUFACTURING (7.24%)
Canadian Pacific, Ltd............................ 1,800 32,625
Cummins Engine Company, Inc...................... 6,000 222,000
Johnson Controls, Inc............................ 3,500 240,625
Lear Seating Corporation*........................ 2,800 81,200
-----------
576,450
-----------
RETAIL TRADE (16.56%)
American Stores Co............................... 2,400 64,200
Eckerd Corporation*.............................. 1,900 84,788
Food Lion, Inc. Class A.......................... 10,000 57,188
Giant Food Inc. Class A.......................... 3,000 94,500
</TABLE>
- --------------------------------------------------------*Non-Income Producing.
25
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
GROWTH AND INCOME FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
RETAIL TRADE (CONT'D)
Kroger Company (The)*............................ 6,600 $ 247,500
Rite Aid Corporation............................. 3,000 102,750
Safeway, Inc.*................................... 2,800 144,200
Smith's Food & Drug Centers, Inc................. 3,400 85,850
Vons Companies, Inc.*............................ 2,600 73,450
Walgreen Company................................. 6,000 179,250
Winn-Dixie Stores, Inc........................... 5,000 184,375
-----------
1,318,051
-----------
TECHNOLOGY SERVICES (1.84%)
Arrow Electronics, Inc.*......................... 3,400 146,625
-----------
TRANSPORTATION (5.12%)
Federal Express Corporation*..................... 1,900 140,363
KLM Royal Dutch Airlines, ADR.................... 6,000 211,500
Northwest Airlines Corporation*.................. 1,100 56,100
-----------
407,963
-----------
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
UTILITIES (19.57%)
Allegheny Power System, Inc...................... 2,600 $ 74,425
Central & South West Corporation................. 4,300 119,862
Columbia Gas System, Inc. (The)*................. 4,100 179,888
Detroit Edison Company........................... 4,800 165,600
FPL Group, Inc................................... 2,700 125,213
Illinova Corporation............................. 5,700 171,000
Korea Electric Power Corporation, ADR............ 2,000 53,500
Ohio Edison Company.............................. 3,600 84,600
Pinnacle West Capital Corporation................ 5,900 169,625
Public Service Company of Colorado............... 3,400 120,275
SCEcorp.......................................... 7,500 133,125
Unicom Corporation............................... 4,900 160,475
-----------
1,557,588
-----------
Total Common Stocks
(Cost $6,822,515)............................... $ 7,663,248
-----------
</TABLE>
- --------------------------------------------------------*Non-Income Producing.
26
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
GROWTH AND INCOME FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS (7.10%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
REPURCHASE AGREEMENTS (7.10%)
State Street Bank and Trust Company, 4.25%, due
01/02/96 (collateralized by $435,000 U.S.
Treasury Bonds, 8.75%, due 05/15/17)............ $ 565,192 $ 565,192
-------------
Total Short-Term Investments (Cost $565,192)..... $ 565,192
-------------
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Total Investments (103.37%)
(Cost $7,387,707+).............................. $ 8,228,440
Liabilities in Excess of Cash and Other Assets
(-3.37%)........................................ (268,000)
-----------
Net Assets (100.00%) 646,426 shares outstanding
(Note 3)........................................ $ 7,960,440
-----------
-----------
Net Asset Value, offering and redemption price
per share....................................... $12.31
-----------
-----------
</TABLE>
+ Aggregate cost for federal income tax purposes is $7,387,950. Aggregate
unrealized appreciation and depreciation of investments, based on cost for
federal income tax purposes, are $965,984 and $125,494, respectively.
See notes to financial statements.
- --------------------------------------------------------------------------------
27
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
EQUITY FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
COMMON STOCKS (96.95%)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
COMMERCIAL SERVICES (11.15%)
ABM Industries Inc............................... 38,100 $ 1,057,275
ADIA S.A. ADR*................................... 51,900 1,050,975
Advo, Inc........................................ 42,200 1,097,200
Alco Standard Corporation........................ 7,600 346,750
Bearings, Inc.................................... 4,000 117,000
CompuCom Systems, Inc.*.......................... 20,900 198,550
Computer Task Group, Inc......................... 25,900 511,525
Hughes Supply, Inc............................... 41,700 1,178,025
JP Foodservice, Inc.*............................ 27,800 542,100
Jacobs Engineering Group Inc.*................... 16,600 415,000
Kelly Services, Inc. Class A..................... 36,800 1,021,200
Norrell Corporation.............................. 34,000 998,750
Performance Food Group Company*.................. 42,500 1,009,375
Rexel, Inc.*..................................... 25,400 342,900
Richfood Holdings, Inc........................... 139,064 3,719,962
Sun Distributors L.P. Class B.................... 54,300 271,500
Super Food Services, Inc......................... 19,200 249,600
Supervalu, Inc................................... 33,000 1,039,500
Sysco Corporation................................ 21,300 692,250
UniFirst Corporation............................. 52,600 946,800
United Stationers Inc............................ 10,000 277,500
Volt Information Sciences, Inc.*................. 54,600 1,487,850
Wackenhut Corporation Class A.................... 50,800 914,400
-------------
19,485,987
-------------
CONSUMER DURABLES (9.30%)
Anthony Industries, Inc.......................... 66,741 1,535,043
Champion Enterprises, Inc.*...................... 114,700 3,541,362
</TABLE>
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
CONSUMER DURABLES (CONT'D)
First Brands Corporation......................... 23,200 $ 1,104,900
Honda Motor Co., Ltd............................. 32,000 1,344,000
M.D.C. Holdings, Inc............................. 144,400 1,028,850
Polaris Industries, Inc.......................... 29,250 859,219
Redman Industries, Inc.*......................... 119,200 4,023,000
Toro Company (The)............................... 66,800 2,196,050
Volvo AB, ADR.................................... 12,400 255,363
Windmere Corporation............................. 49,800 354,825
-------------
16,242,612
-------------
CONSUMER NON-DURABLES (3.43%)
Block Drug Company, Inc. Class A................. 19,673 683,637
ConAgra, Inc..................................... 25,600 1,056,000
IBP, Inc......................................... 34,800 1,757,400
International Multifoods Corporation............. 46,500 935,812
Interstate Bakeries Corporation.................. 58,100 1,299,988
Whitman Corporation.............................. 11,000 255,750
-------------
5,988,587
-------------
CONSUMER SERVICES (3.99%)
AMC Entertainment Inc.*.......................... 42,000 981,750
Aaron Rents, Inc. Class B........................ 72,900 1,312,200
Buffets, Inc.*................................... 82,500 1,134,375
Consolidated Products, Inc.*..................... 53,460 788,535
DAKA International, Inc.*........................ 31,500 866,250
NPC International, Inc. Class A.................. 55,600 403,100
Roto-Rooter, Inc................................. 10,800 356,400
Ryan's Family Steak Houses, Inc.*................ 162,200 1,135,400
-------------
6,978,010
-------------
</TABLE>
- --------------------------------------------------------*Non-Income Producing.
28
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
EQUITY FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
ELECTRONIC TECHNOLOGY (8.23%)
Avnet Inc........................................ 8,700 $ 389,325
Dell Computer Corporation*....................... 8,600 297,775
Digital Equipment Corporation*................... 13,500 865,688
Esterline Technologies Corporation*.............. 48,200 1,138,725
Gateway 2000, Inc.*.............................. 33,500 820,750
HADCO Corporation*............................... 50,600 1,423,125
Lockheed Martin Corporation...................... 6,700 529,300
Logicon, Inc..................................... 2,200 60,500
Micron Electronics, Inc.*........................ 37,100 398,825
Park Electrochemical Corporation................. 54,200 1,788,600
Polaroid Corporation............................. 19,500 923,812
Quantum Corporation*............................. 42,800 690,150
SCI Systems, Inc.*............................... 68,900 2,135,900
United Technologies Corporation.................. 8,900 844,388
Western Digital Corporation*..................... 115,800 2,069,925
--------------
14,376,788
--------------
ENERGY MINERALS (2.11%)
EOTT Energy Partners, L.P........................ 5,600 102,200
Getty Petroleum Corporation...................... 33,400 450,900
KCS Energy, Inc.................................. 50,800 762,000
Kerr-McGee Corporation........................... 7,500 476,250
Tesoro Petroleum Corporation*.................... 78,900 680,512
Tosco Corporation................................ 24,100 918,813
USX-Marathon Group............................... 15,300 298,350
--------------
3,689,025
--------------
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
FINANCE (4.40%)
American Annuity Group, Inc...................... 22,900 $ 271,938
American Federal Bank, FSB....................... 17,200 262,300
BankAtlantic Bancorp, Inc........................ 13,500 253,125
Bear Stearns Companies Inc. (The)................ 25,000 496,875
California Federal Bank, FSB*.................... 15,800 248,850
City National Corporation........................ 18,500 259,000
Comdisco, Inc.................................... 11,000 248,875
Firstbank Puerto Rico............................ 4,800 107,400
Gainsco, Inc..................................... 48,600 552,825
Glendale Federal Bank, FSB*...................... 14,800 259,000
Great Western Financial Corporation.............. 19,600 499,800
Independent Bank Corporation..................... 13,600 100,300
Morgan Keegan, Inc............................... 19,800 249,975
National City Corporation........................ 15,400 510,125
People's Bank.................................... 13,200 250,800
Peoples Heritage Financial Group, Inc............ 4,700 106,925
Presidential Life Corporation.................... 25,000 246,875
Quick & Reilly Group (The), Inc.................. 10,900 223,450
Reliance Group Holdings, Inc..................... 29,800 257,025
Riggs National Corporation*...................... 17,900 232,700
SouthTrust Corporation........................... 19,600 502,250
United Insurance Companies, Inc.*................ 28,600 539,825
USF&G Corporation................................ 29,200 492,750
Washington Mutual, Inc........................... 17,800 513,975
--------------
7,686,963
--------------
</TABLE>
- --------------------------------------------------------*Non-Income Producing.
29
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
EQUITY FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
HEALTH SERVICES (6.55%)
Bergen Brunswig Corporation Class A.............. 96,000 $ 2,388,000
Bindley Western Industries, Inc.................. 122,500 2,082,500
Coventry Corporation*............................ 52,200 1,076,625
FHP International Corporation*................... 37,600 1,071,600
Foxmeyer Health Corporation*..................... 62,700 1,677,225
Health Systems International, Inc.*.............. 2,400 77,100
McKesson Corporation............................. 13,700 693,562
Owens & Minor, Inc............................... 7,800 99,450
Physicians Health Services Inc. Class A*......... 37,000 1,369,000
United Wisconsin Services, Inc................... 41,500 913,000
--------------
11,448,062
--------------
NON-ENERGY MINERALS (2.41%)
Castle (A.M.) & Company.......................... 58,050 1,632,656
J & L Specialty Steel, Inc....................... 62,500 1,171,875
Manville Corporation*............................ 19,200 252,000
Roanoke Electric Steel Corporation............... 15,300 254,363
Universal Forest Products, Inc................... 97,500 901,875
--------------
4,212,769
--------------
PROCESS INDUSTRIES (3.42%)
AEP Industries, Inc.*............................ 34,100 750,200
Darling International Inc.*...................... 38,100 1,023,938
Geon Company (The)............................... 32,600 794,625
Material Sciences Corporation*................... 39,000 580,125
Mercer International Inc.*....................... 12,000 246,000
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
PROCESS INDUSTRIES (CONT'D)
Shiloh Industries, Inc.*......................... 20,200 $ 251,237
Spartech Corporation............................. 33,800 236,600
Springs Industries, Inc. Class A................. 21,500 889,563
Union Carbide Corporation........................ 13,100 491,250
United Dominion Industries Ltd................... 33,000 713,625
--------------
5,977,163
--------------
PRODUCER MANUFACTURING (6.85%)
Allied Products Corporation...................... 12,200 292,800
Avondale Industries Inc.*........................ 16,200 234,900
Butler Manufacturing Company..................... 39,250 1,540,562
Canadian Pacific, Ltd............................ 28,000 507,500
Citation Corporation*............................ 57,600 691,200
Cummins Engine Company, Inc...................... 20,200 747,400
Franklin Electric Company, Inc................... 6,200 204,600
Griffon Corporation*............................. 103,000 927,000
HON INDUSTRIES Inc............................... 24,600 571,950
Jason Inc.*...................................... 36,500 237,250
Johnson Controls, Inc............................ 14,000 962,500
Larizza Industries Inc.*......................... 22,100 142,269
Lear Seating Corporation*........................ 82,100 2,380,900
Oshkosh Truck Corporation Class B................ 6,800 103,700
Sterling Chemicals, Inc.*........................ 40,000 325,000
Titan Wheel International Inc.................... 14,400 234,000
Tower Automotive, Inc.*.......................... 10,000 175,000
Tredegar Industries, Inc......................... 25,500 828,750
UNR Industries, Inc.............................. 28,400 244,950
Varlen Corporation............................... 28,340 609,310
--------------
11,961,541
--------------
</TABLE>
- --------------------------------------------------------*Non-Income Producing.
30
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
EQUITY FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
RETAIL TRADE (15.20%)
American Stores Co............................... 12,200 $ 326,350
Ben Franklin Retail Stores, Inc.*................ 10,450 28,738
Big B, Inc....................................... 60,000 600,000
Borders Group, Inc.*............................. 6,300 116,550
Carr Gottstein Foods Co.*........................ 18,600 106,950
Casey's General Stores, Inc...................... 59,600 1,303,750
Claire's Stores, Inc............................. 64,800 1,142,100
CompUSA, Inc.*................................... 34,200 1,064,475
Eckerd Corporation*.............................. 25,400 1,133,475
Fabri-Centers of America, Inc. Class B*.......... 42,500 456,875
Fay's Inc........................................ 29,700 222,750
Food Lion, Inc. Class A.......................... 79,000 451,785
Genovese Drug Stores Class A..................... 98,505 1,108,181
Giant Food Inc. Class A.......................... 3,000 94,500
Goody's Family Clothing, Inc.*................... 11,900 104,125
Hannaford Bros. Company.......................... 73,900 1,819,787
Kroger Company (The)*............................ 29,200 1,095,000
Longs Drug Stores Corporation.................... 25,200 1,206,450
Petco Animal Supplies, Inc.*..................... 34,800 1,017,900
Regis Corporation................................ 111,200 2,668,800
Rex Stores Corporation*.......................... 24,700 438,425
Rite Aid Corporation............................. 30,700 1,051,475
Ross Stores, Inc................................. 12,600 240,975
Ruddick Corporation.............................. 84,000 966,000
Safeway, Inc.*................................... 15,300 787,950
Service Merchandise Company, Inc.*............... 83,400 417,000
Shopko Stores, Inc............................... 44,200 497,250
Smart & Final, Inc............................... 1,200 25,500
Smith's Food & Drug Centers, Inc................. 35,700 901,425
Sportmart, Inc.*................................. 14,700 69,825
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
RETAIL TRADE (CONT'D)
Stop & Shop Companies, Inc.*..................... 36,400 $ 841,750
Vons Companies, Inc.*............................ 83,000 2,344,750
Walgreen Company................................. 26,400 788,700
Winn-Dixie Stores, Inc........................... 30,000 1,106,250
--------------
26,545,816
--------------
TECHNOLOGY SERVICES (4.70%)
Arrow Electronics, Inc.*......................... 38,200 1,647,375
Bell Industries, Inc.*........................... 46,095 1,037,138
Control Data Systems, Inc.*...................... 85,100 1,670,087
Kaman Corporation Class A........................ 84,200 936,725
Safeguard Scientifics, Inc.*..................... 59,100 2,925,450
--------------
8,216,775
--------------
TRANSPORTATION (4.03%)
Air Express International Corporation............ 77,550 1,783,650
American Medical Response, Inc.*................. 25,400 825,500
American President Companies, Ltd................ 40,800 938,400
Amtran, Inc.*.................................... 20,000 255,000
Federal Express Corporation*..................... 10,000 738,750
Harper Group, Inc.(The).......................... 39,500 701,125
KLM Royal Dutch Airlines, ADR.................... 23,800 838,950
Landstar System, Inc.*........................... 6,000 160,500
Northwest Airlines Corporation*.................. 5,200 265,200
Old Dominion Freight Line, Inc.*................. 39,600 316,800
WorldCorp, Inc.*................................. 22,500 225,000
--------------
7,048,875
--------------
</TABLE>
- --------------------------------------------------------*Non-Income Producing.
31
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
EQUITY FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
UTILITIES (11.18%)
Allegheny Power System, Inc...................... 29,300 $ 838,713
American Electric Power Company, Inc............. 18,000 729,000
CMS Energy Corporation........................... 34,500 1,030,687
Carolina Power & Light Company................... 29,500 1,017,750
Central & South West Corporation................. 28,600 797,225
Coastal Corporation (The)........................ 25,200 938,700
Columbia Gas System, Inc. (The)*................. 19,900 873,113
DQE.............................................. 29,300 900,975
Destec Energy, Inc.*............................. 85,000 1,168,750
Detroit Edison Company........................... 29,200 1,007,400
FPL Group, Inc................................... 22,300 1,034,162
Illinova Corporation............................. 35,800 1,074,000
Jabil Circuit, Inc.*............................. 6,700 75,375
Korea Electric Power Corporation, ADR............ 19,600 524,300
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
UTILITIES (CONT'D)
New York State Electric & Gas Corporation........ 28,300 $ 732,263
Ohio Edison Company.............................. 40,300 947,050
Pacific Gas & Electric Company................... 27,500 780,312
Pinnacle West Capital Corporation................ 25,100 721,625
Public Service Company of Colorado............... 22,500 795,937
SCEcorp.......................................... 46,700 828,925
Tejas Gas Corporation*........................... 16,000 846,000
Unicom Corporation............................... 30,300 992,325
Western Resources, Inc........................... 26,000 867,750
--------------
19,522,337
--------------
Total Common Stocks
(Cost $138,122,889)............................. $ 169,381,310
--------------
</TABLE>
WARRANTS (0.03%)
<TABLE>
<CAPTION>
VALUE
SHARES (NOTE 1)
<S> <C> <C>
Unitrode Corporation*............................ 11,535 $ 43,256
-------------
<CAPTION>
VALUE
(NOTE 1)
<S> <C> <C>
Total Warrants
(Cost $0)....................................... $ 43,256
-------------
</TABLE>
SHORT-TERM INVESTMENTS (4.79%)
<TABLE>
<CAPTION>
FACE VALUE
AMOUNT (NOTE 1)
<S> <C> <C>
REPURCHASE AGREEMENTS (4.79%)
State Street Bank and Trust Company 4.25%, due
01/02/96 (Collateralized by $6,425,000 U.S.
Treasury Bonds, 8.75%, due 05/15/17)............ $8,373,783 $ 8,373,783
-------------
<CAPTION>
VALUE
(NOTE 1)
<S> <C> <C>
Total Short-Term Investments
(Cost $8,373,783)............................... $ 8,373,783
-------------
</TABLE>
- --------------------------------------------------------*Non-Income Producing.
32
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
EQUITY FUND
STATEMENT OF NET ASSETS -- DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
VALUE
(NOTE 1)
<S> <C> <C>
Total Investments (101.77%) (Cost
$146,496,672+).................................. $ 177,798,349
Liabilities in Excess of Cash and Other Assets
(-1.77%)........................................ (3,093,170)
-------------
Net Assets (100.00%) 12,880,921 shares
outstanding (Note 3)............................ $ 174,705,179
-------------
-------------
<CAPTION>
VALUE
(NOTE 1)
<S> <C> <C>
Net Asset Value, offering and redemption price
per share....................................... $13.56
-------------
-------------
</TABLE>
+ The cost stated also represents the aggregate cost for federal income tax
purposes. Aggregate unrealized appreciation and depreciation of investments,
based on cost for federal income tax purposes, are $34,479,361 and
$3,177,684, respectively.
See notes to financial statements.
- --------------------------------------------------------------------------------
33
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ULTRA SHORT
TERM BALANCED GROWTH AND EQUITY
INCOME FUND FUND INCOME FUND FUND
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest.............................. $177,846 $ 1,495,957 $ 15,979 $ 488,594
Dividends (a)......................... -- 793,627 97,114 2,468,351
-------------- -------------- ------------- --------------
Total income........................ 177,846 2,289,584 113,093 2,956,945
-------------- -------------- ------------- --------------
Expenses (Note 2):
Management Fee........................ 10,021 414,448 41,173 1,860,540
Custodian and related shareholder
expenses............................ 16,318 108,481 25,358 144,467
Legal, compliance and filing fees..... 12,846 32,378 13,932 72,072
Audit and accounting.................. 5,500 11,501 5,500 21,999
Trustees' fees........................ 156 2,724 209 11,834
Other................................. 2,567 9,488 2,817 13,795
-------------- -------------- ------------- --------------
Total expenses before
reimbursement..................... 47,408 579,020 88,989 2,124,707
Fees paid indirectly.................. (1,189) (4,331) (4,404) (571)
Expense reimbursement from Advisor.... (41,811) (160,241) (43,412) --
-------------- -------------- ------------- --------------
Net expenses........................ 4,408 414,448 41,173 2,124,136
-------------- -------------- ------------- --------------
Net investment income................... 173,438 1,875,136 71,920 832,809
-------------- -------------- ------------- --------------
- --------------------------------------
<CAPTION>
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS -
- -
- --------------------------------------
<S> <C> <C> <C> <C>
Net realized gain on investments........ 230 2,248,284 165,914 6,400,213
Change in unrealized appreciation of
investments............................ 9,299 6,046,085 840,733 26,485,424
-------------- -------------- ------------- --------------
Net gain on investments............... 9,529 8,294,369 1,006,647 32,885,637
-------------- -------------- ------------- --------------
Increase in net assets from
operations............................. $182,967 $ 10,169,505 $1,078,567 $ 33,718,446
-------------- -------------- ------------- --------------
-------------- -------------- ------------- --------------
</TABLE>
(a) Dividends recorded net of foreign withholding taxes of $0, $1,237, $121 and
$3,221, respectively.
See notes to financial statements.
- ---------------------------------------------------------
34
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ULTRA SHORT TERM
INCOME FUND BALANCED FUND
-------------------------------- --------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994* 1995 1994
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C> <C> <C>
Operations:
Net investment income.................................... $ 173,438 $ 44 $ 1,875,136 $ 820,345
Net realized gain on investments......................... 230 -- 2,248,284 473,376
Change in unrealized appreciation of
investments............................................ 9,299 -- 6,046,085 (1,350,226)
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets from
operations............................................. 182,967 44 10,169,505 (56,505)
--------------- --------------- --------------- ---------------
Distributions to shareholders from:
Net investment income.................................... (169,141) -- (1,877,538) (819,017)
Net realized gains on investments........................ -- -- (2,248,136) (473,376)
--------------- --------------- --------------- ---------------
Total distributions to shareholders.................... (169,141) -- (4,125,674) (1,292,393)
--------------- --------------- --------------- ---------------
Transactions in shares of beneficial interest
(Note 3).................................................. 3,975,264 621,350 52,175,819 7,361,085
--------------- --------------- --------------- ---------------
Total increase......................................... 3,989,090 621,394 58,219,650 6,012,187
Net Assets:
Beginning of period...................................... 621,394 -- 27,702,552 21,690,365
--------------- --------------- --------------- ---------------
End of period (including undistributed net investment
income of $4,341, $44, $353 and $2,755,
respectively).......................................... $ 4,610,484 $ 621,394 $ 85,922,202 $ 27,702,552
--------------- --------------- --------------- ---------------
--------------- --------------- --------------- ---------------
</TABLE>
* Commenced operations on December 27, 1994.
See notes to financial statements.
- --------------------------------------------------------------------------------
35
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH AND INCOME FUND EQUITY FUND
--------------------------------- ----------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994* 1995 1994
--------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
<CAPTION>
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C> <C> <C>
Operations:
Net investment income (loss)........................... $ 71,920 $ (2) $ 832,809 $ 413,885
Net realized gain on investments....................... 165,914 -- 6,400,213 13,339,329
Change in unrealized appreciation of
investments.......................................... 840,733 -- 26,485,424 (23,395,147)
--------------- ---------------- ---------------- ----------------
Increase (decrease) in net assets from
operations........................................... 1,078,567 (2) 33,718,446 (9,641,933)
--------------- ---------------- ---------------- ----------------
Distributions to shareholders from:
Net investment income.................................. (66,641) -- (829,705) (413,663)
Net realized gains on investments...................... (165,914) -- (6,388,563) (13,339,329)
In excess of realized gains on investments............. (216) -- -- (6,248)
--------------- ---------------- ---------------- ----------------
Total distributions to shareholders.................. (232,771) -- (7,218,268) (13,759,240)
--------------- ---------------- ---------------- ----------------
Transactions in shares of beneficial interest
(Note 3)................................................ 6,799,365 315,281 (46,902,152) 21,402,251
--------------- ---------------- ---------------- ----------------
Total increase (decrease)............................ 7,645,161 315,279 (20,401,974) (1,998,922)
Net Assets:
Beginning of period.................................... 315,279 -- 195,107,153 197,106,075
--------------- ---------------- ---------------- ----------------
End of period (including undistributed net investment
income of $5,277, ($2), $4,485 and $1,381,
respectively)........................................ $ 7,960,440 $ 315,279 $ 174,705,179 $ 195,107,153
--------------- ---------------- ---------------- ----------------
--------------- ---------------- ---------------- ----------------
</TABLE>
* Commenced operations on December 27, 1994.
See notes to financial statements.
- --------------------------------------------------------------------------------
36
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF ACCOUNTING POLICIES
Eclipse Financial Asset Trust (the "Trust"), a Massachusetts business trust
registered under the Investment Company Act of 1940, is a no-load, diversified,
open-end management investment company. The Trust currently has four investment
portfolios, the Ultra Short Term Income Fund, the Balanced Fund, the Growth and
Income Fund and the Equity Fund. The investment objective of the Ultra Short
Term Income Fund is to seek a high total return consisting of current income,
preservation of capital, and a relatively stable net asset value. The Balanced
Fund seeks a high total return from a combination of equity and fixed-income
investments. The Growth and Income Fund seeks a high total return consisting of
both current income and realized and unrealized capital gains from equity
securities and equity-related securities. The investment objective of the Equity
Fund is to seek a high total return from equity investments. The financial
statements are prepared in accordance with generally accepted accounting
principles for investment companies as follows:
a) Valuation of Securities
Securities traded on a national securities exchange or admitted to trading
on the National Association of Securities Dealers Inc. Automated Quotations
National List are valued at the last reported sales price on the last
business day of the fiscal period. Common stocks for which no sale was
reported on that date and over-the-counter securities are valued at the
mean between the last reported bid and asked prices. United States
Government obligations and other debt instruments having sixty days or less
remaining until maturity are stated at amortized cost. Debt instruments
having a remaining maturity of more than sixty days will be valued at the
highest bid price obtained from a dealer maintaining an active market in
that security or on the basis of prices obtained from a pricing service
approved as reliable by the Board of Trustees. All other investment assets,
including restricted and not readily marketable securities, are valued in
such a manner as the Board of Trustees in good faith deems appropriate to
reflect their fair market value.
b) Federal Income Taxes
It is the policy of each Fund to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Therefore, no
provision for federal income tax is required.
c) Organization Expenses
Costs incurred with the initial organization and registration of the Ultra
Short Term Income Fund and the Growth and Income Fund are estimated to be
approximately $26,200 for each Fund. Each Fund will amortize its respective
organization expenses over the period commencing when the Fund's asset size
reaches $25 million to December 26, 1999.
d) Dividends and Distributions to Shareholders
Dividends and distributions are recorded on the ex-dividend date. Dividends
from net investment income will be declared and paid quarterly for the
Ultra Short Term Income Fund and the Balanced Fund, and annually for the
Growth and Income Fund and the Equity Fund. Distributions from net realized
gains and income distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for deferral of
wash sales.
e) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of
- --------------------------------------------------------------------------------
37
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
increases and decreases in net assets from operations during the reporting
period. Actual results could differ from those estimates.
f) General
Securities transactions are recorded on a trade date basis. Interest income
is accrued as earned and dividend income is recorded on the ex-dividend
date. Realized gains and losses from securities transactions are recorded
on the identified cost basis. It is the Trust's policy to take possession
of securities as collateral under repurchase agreements and to determine on
a daily basis that the value of such securities plus accrued interest are
sufficient to cover the value of the repurchase agreements.
2. INVESTMENT MANAGEMENT FEES AND
OTHER TRANSACTIONS WITH AFFILIATES
Under the Management Contract, the Trust pays a management fee to Towneley
Capital Management, Inc. (Manager) equal to an annual rate of the average daily
net assets of .40%, .80%, .90% and 1.00% for the Ultra Short Term Income Fund,
the Balanced Fund, the Growth and Income Fund and the Equity Fund, respectively.
The Manager is required to reimburse each Fund for its expenses (exclusive of
interest, taxes, brokerage, allowable distribution expenses, and extraordinary
expenses) to the extent that such expenses, including the management fee, for
any fiscal year exceed 2.5% of the first $30 million of the Fund's average net
assets, 2% of the next $70 million of its average net assets and 1.5% of its
average net assets in excess of $100 million. No such reimbursement was required
for the year ended December 31, 1995. For the year ended December 31, 1995, the
Manager voluntarily waived fees for the Ultra Short Term Income Fund, the
Balanced Fund and the Growth and Income Fund of $10,021, $160,241 and $41,173,
respectively. In addition the Manager reimbursed expenses of $31,790 for the
Ultra Short Term Income Fund and $2,239 for the Growth and Income Fund.
Fees are paid to Trustees who are unaffiliated with the Manager on the basis of
$2,000 per annum plus $750 per meeting attended.
Included in the statement of operations under the caption "Custodian and related
shareholder expenses" are custodian fee offsets of $1,189, $4,331, $4,404 and
$571 for the Ultra Short Term Income Fund, the Balanced Fund, the Growth and
Income Fund and the Equity Fund, respectively.
- ---------------------------------------------------------
38
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
3. TRANSACTIONS IN SHARES
OF BENEFICIAL INTEREST
At December 31, 1995, the Trust had an unlimited authorized number of shares of
beneficial interest ($.01 par value). Capital paid in amounted to $4,596,614,
$79,212,607, $7,114,646 and $143,399,017 for the Ultra Short Term Income Fund,
the Balanced Fund, the Growth and Income Fund and the Equity Fund. Transactions
were as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
BALANCED FUND
ULTRA SHORT TERM INCOME FUND --------------------------------------------------
----------------------------------------
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 DECEMBER 31, 1994 DECEMBER 31, 1995 DECEMBER 31, 1994
--------------------- ----------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sold.......................... 2,141,483 $4,361,299 310,675 $621,350 2,895,766 $ 57,764,393 501,006 $ 9,339,173
Issued on reinvestment of
dividends.................... 83,063 169,028 -- -- 198,878 4,040,631 69,574 1,250,599
Redeemed...................... (272,844) (555,063) -- -- (480,370) (9,629,205) (175,210) (3,228,687)
--------- ---------- ------- -------- ---------- ------------ ---------- ------------
Net increase.................. 1,951,702 $3,975,264 310,675 $621,350 2,614,274 $ 52,175,819 395,370 $ 7,361,085
--------- ---------- ------- -------- ---------- ------------ ---------- ------------
--------- ---------- ------- -------- ---------- ------------ ---------- ------------
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
GROWTH AND INCOME FUND EQUITY FUND
------------------------------------- --------------------------------------------------
<CAPTION>
PERIOD ENDED
YEAR ENDED DECEMBER 31, YEAR ENDED YEAR ENDED
DECEMBER 31, 1995 1994 DECEMBER 31, 1995 DECEMBER 31, 1994
------------------- ---------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sold.......................... 608,522 $6,717,270 31,528 $315,281 94,373 $ 1,236,042 1,801,239 $ 23,749,360
Issued on reinvestment of
dividends.................... 16,609 203,130 -- -- 532,276 7,175,073 1,159,524 13,717,171
Redeemed...................... (10,233) (121,035) -- -- (4,246,137) (55,313,267) (1,225,156) (16,064,280)
------- ---------- ------ -------- ---------- ------------ ---------- ------------
Net increase (decrease)....... 614,898 $6,799,365 31,528 $315,281 (3,619,488) ($46,902,152) 1,735,607 $ 21,402,251
------- ---------- ------ -------- ---------- ------------ ---------- ------------
------- ---------- ------ -------- ---------- ------------ ---------- ------------
</TABLE>
4. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, other than U.S. Government direct
and agency obligations and short-term investments, totalled $2,101,619 and
$228,550 for the Ultra Short Term Income Fund, $81,725,552 and $32,591,144 for
the Balanced Fund, $9,306,782 and $2,650,181 for the Growth and Income Fund and
$131,430,752 and $177,771,126 for the Equity Fund.
- --------------------------------------------------------------------------------
39
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. SELECTED FINANCIAL INFORMATION.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
ULTRA SHORT TERM INCOME FUND
DECEMBER 27,
FOR THE 1994
YEAR ENDED (INCEPTION) TO
DECEMBER 31, DECEMBER 31,
1995 1994
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Per share operating performance for a share
outstanding throughout the period
Net asset value, beginning of period........................ $ 2.00 $ 2.00
--------------- ---------------
Income from investment operations:
Net investment income....................................... 0.11 --
Net realized and unrealized gains
on investments............................................. 0.04 --
--------------- ---------------
Total from investment operations........................ 0.15 --
--------------- ---------------
Less distributions:
Dividends from net investment income........................ (0.11) --
--------------- ---------------
Total distributions..................................... (0.11) --
--------------- ---------------
Net asset value, end of period.............................. $ 2.04 $ 2.00
--------------- ---------------
--------------- ---------------
Total return................................................ 7.83% 0.00%
Ratios/Supplemental data
Net assets, end of period (000)............................. $4,610 $ 621
Ratios to average net assets:
Expenses.................................................. 0.22%+# 0.50%*+
Net investment income..................................... 6.92%+ 0.65%*+
Portfolio turnover rate..................................... 39.26% 0.00%
</TABLE>
- -------------
* Annualized.
+ Net of management fee waived equivalent to 0.4% and 0.4% of average net assets
plus expenses reimbursed equivalent to 1.27% and 21.54% of average net assets,
respectively.
# Includes custodian fees paid indirectly.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
40
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. SELECTED FINANCIAL INFORMATION (CONT'D)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
BALANCED FUND
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating
performance for a share
outstanding throughout the
year
Net asset value, beginning of
year......................... $ 17.76 $ 18.63 $ 17.37 $ 17.02 $ 14.69
--------- --------- --------- --------- ---------
Income from investment
operations:
Net investment income......... 0.64 0.56 0.62 0.73 0.71
Net realized and unrealized
gains (losses)
on investments............... 3.39 (0.56) 2.32 1.28 2.33
--------- --------- --------- --------- ---------
Total from investment
operations............... 4.03 0.00 2.94 2.01 3.04
--------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment
income....................... (0.64) (0.56) (0.64) (0.73) (0.71)
Distributions from net
realized gains............... (0.56) (0.31) (1.04) (0.93) --
--------- --------- --------- --------- ---------
Total distributions....... (1.20) (0.87) (1.68) (1.66) (0.71)
--------- --------- --------- --------- ---------
Net asset value, end of
year......................... $ 20.59 $ 17.76 $ 18.63 $ 17.37 $ 17.02
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Total return.................. 22.99% 0.01% 17.06% 12.01% 20.91%
Ratios/Supplemental data
Net assets, end of year
(000)........................ $ 85,922 $ 27,703 $ 21,690 $ 14,044 $ 10,736
Ratios to average net assets:
Expenses.................. 0.81%+# 0.80%+ 0.69%+ 0.52%+ 0.66%+
Net investment income..... 3.62%+ 3.10%+ 3.42%+ 4.31%+ 5.03%+
Portfolio turnover rate....... 74.72% 94.38% 65.05% 95.51% 101.51%
</TABLE>
- ------------
+ Net of management fee waived equivalent to 0.3%, 0.4%, 0.5%, 0.8% and 0.8% of
average net assets.
# Includes custodian fees paid indirectly.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
41
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. SELECTED FINANCIAL INFORMATION (CONT'D)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
GROWTH AND INCOME FUND
FOR THE YEAR DECEMBER 27, 1994
ENDED DECEMBER (INCEPTION) TO
31, 1995 DECEMBER 31, 1994
- --------------------------------------------------------------------------------------------------------
<S> <C> <C>
Per share operating performance for a share
outstanding throughout the period
Net asset value, beginning of period.............................. $ 10.00 $ 10.00
-------- --------
Income from investment operations:
Net investment income............................................. 0.11 --
Net realized and unrealized gains
on investments................................................... 2.57 --
-------- --------
Total from investment operations.............................. 2.68 --
-------- --------
Less distributions:
Dividends from net investment income.............................. (0.11) --
Distributions from net realized gains............................. (0.26) --
-------- --------
Total distributions........................................... (0.37) --
-------- --------
Net asset value, end of period.................................... $ 12.31 $ 10.00
-------- --------
-------- --------
Total return...................................................... 26.82% 0.00%
Ratios/Supplemental data
Net assets, end of period (000)................................... $ 7,960 $ 315
Ratios to average net assets:
Expenses........................................................ 1.00%+# 1.20%*+
Net investment income........................................... 1.57%+ (0.06)%*+
Portfolio turnover rate........................................... 63.16% 0.00%
</TABLE>
- -------------
* Annualized.
+ Net of management fee waived equivalent to 0.9% and 0.9% of average net assets
plus expenses reimbursed equivalent to 0.05% and 43.15% of average net assets,
respectively.
# Includes custodian fees paid indirectly.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
42
<PAGE>
- --------------------------------------------------------------------------------
ECLIPSE FINANCIAL ASSET TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. SELECTED FINANCIAL INFORMATION (CONT'D)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
EQUITY FUND
FOR THE YEAR ENDED DECEMBER 31,
1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Per share operating performance for a
share
outstanding throughout the year
Net asset value, beginning of year........ $ 11.82 $ 13.35 $ 13.20 $ 11.73 $ 9.07
---------- ---------- ---------- ---------- ----------
Income from investment operations:
Net investment income..................... 0.07 0.03 0.08 0.15 0.16
Net realized and unrealized gains (losses)
on investments........................... 2.26 (0.66) 2.17 2.12 2.66
---------- ---------- ---------- ---------- ----------
Total from investment operations...... 2.33 (0.63) 2.25 2.27 2.82
---------- ---------- ---------- ---------- ----------
Less distributions:
Dividends from net investment income...... (0.07) (0.03) (0.08) (0.15) (0.16)
Distributions from net realized gains..... (0.52) (0.87) (2.02) (0.65) --
---------- ---------- ---------- ---------- ----------
Total distributions................... (0.59) (0.90) (2.10) (0.80) (0.16)
---------- ---------- ---------- ---------- ----------
Net asset value, end of year.............. $ 13.56 $ 11.82 $ 13.35 $ 13.20 $ 11.73
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Total return.............................. 19.69% (4.74)% 17.02% 19.38% 31.18%
Ratios/Supplemental data
Net assets, end of year (000)............. $ 174,705 $ 195,107 $ 197,106 $ 163,170 $ 149,385
Ratios to average net assets:
Expenses................................ 1.14%# 1.12% 1.12% 1.15% 1.18%
Net investment income................... 0.45% 0.21% 0.55% 1.17% 1.48%
Portfolio turnover rate................... 74.40% 92.20% 101.09% 110.98% 118.58%
</TABLE>
- -------------
# Includes custodian fees paid indirectly.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
43
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Trustees and Shareholders
Eclipse Financial Asset Trust
We have audited the accompanying statements of net assets of the Ultra Short
Term Income Fund, the Balanced Fund, the Growth and Income Fund, and the Equity
Fund series of Eclipse Financial Asset Trust, as of December 31, 1995, and the
related statements of operations, changes in net assets and selected financial
information for the periods indicated in the accompanying financial statements.
These financial statements and selected financial information are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and selected financial information based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and selected
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1995, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and selected financial information
referred to above present fairly, in all material respects, the financial
position of the Ultra Short Term Income Fund, the Balanced Fund, the Growth and
Income Fund, and the Equity Fund series of Eclipse Financial Asset Trust as of
December 31, 1995, the results of their operations, the changes in their net
assets and the selected financial information for the periods indicated, in
conformity with generally accepted accounting principles.
[SIGNATURE]
New York, New York
January 26, 1996
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ECLIPSE FINANCIAL ASSET TRUST
TRUSTEES AND OFFICERS
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<TABLE>
<S> <C>
Wesley G. McCain Trustee, Chairman and President
Trustee, Secretary, Executive Vice
Sigrid A. Hess President
John Novogrod Trustee
John C. Van Eck Trustee
Yung Wong Trustee
Anthony W. Polis Vice President, Treasurer
Sylvia McCormick Vice President
Antoinette B. Cirillo Assistant Treasurer
A. Thomas Smith III Assistant Secretary
Sara L. Badler Assistant Secretary
</TABLE>
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TOWNELEY CAPITAL MANAGEMENT, INC.
Towneley Capital Management, Inc. is the Manager of the Eclipse Funds.
Established in 1971, Towneley is a registered investment adviser serving
individual and institutional clients. As of December 31, 1995 total assets under
management exceeded $950 million.
The firm's three lines of business are the investment management of the Eclipse
Funds, of separate accounts, and of portfolios of no-load mutual funds
customized to meet clients' financial planning objectives.
Towneley Capital Management is organized for efficient investment decision
making and administration with electronically linked offices in New York City,
Laguna Hills, California and Peachtree City, Georgia.
Hallmarks of each of Towneley Capital Management's investment services are
integration of risk management with pursuit of investment return, dedication to
clients' investment goals, application of fundamentally sound quantitative
strategies and extension of institutional investment expertise to individuals
and groups through low cost approaches.
Towneley Capital Management's founder and chairman, Wesley G. McCain, directs
the investment process, in collaboration with a staff of 25 professional and
administrative personnel. Dr. McCain, who holds a doctoral degree from Stanford
University and master's degrees from Columbia and Stanford, was formerly on the
faculty of the Graduate School of Business of Columbia University. Towneley
Capital Management has managed the Eclipse Funds since their inception.
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GLOSSARY
ASSET/VALUE STOCKS are defined as companies which are cheap to their economic
book value or adjusted net worth. These companies typically have low price to
stated book value ratios, low price to earnings ratios, high dividends, and low
price to sales ratios.
CURRENT YIELD is the annual interest paid by a bond, divided by its current
market value.
DURATION is a measure of the expected life of all fixed income securities in a
fund. It is market value weighted and incorporates each bond's yield, coupon
interest payments, final maturity and call feature into one measure. In general,
the lower the coupon rate of interest, the longer the duration, and the higher
the coupon, the shorter the duration. Duration is used as a proxy for the
sensitivity of prices to changes in interest rates. The shorter the duration,
the less sensitive the price is to interest rate changes.
GROWTH/VALUE STOCKS are defined as companies which have experienced a high level
of profitability from a combination of high margins and/or asset turns. They
generally have good working capital and debt management, and typically have low
price to sales ratios, high price earnings ratios, nominal dividends, and high
historical earnings or revenue growth.
LARGE CAPITALIZATION is defined by Eclipse by ranking all publicly traded
companies in our universe based on market capitalization. We then divide that
universe into ten groups, each with an equal number of companies. The 10% with
the highest market capitalization are considered large. The next 10-20% are
mid-size and the balance of the universe we consider small companies. As the
stock market and the economic environment change, companies once considered
large may become mid-size or small and vice versa.
LIPPER BALANCED FUND INDEX tracks the performance of the 30 largest balanced
funds, adjusted for the reinvestment of capital gain distributions and income
dividends. Source: Lipper Analytical Services
LIPPER GROWTH AND INCOME FUND INDEX tracks the performance of the 30 largest
growth and income funds, adjusted for the reinvestment of capital gains
distributions and income dividends. These growth and income funds combine a
growth of earnings orientation and an income requirement for level and/or rising
dividends. Source: Lipper Analytical Services
LIPPER SMALL COMPANY GROWTH FUND INDEX tracks the performance of the 30 largest
small company growth funds, adjusted for the reinvestment of capital gains
distributions and income dividends. Source: Lipper Analytical Services
LIPPER ULTRA SHORT OBLIGATION FUNDS AVERAGE is an average of funds which invest
at least 65% of their assets in investment grade debt issues, or better, and
maintain a portfolio dollar-weighted average maturity between 91 days and 365
days. Source: Lipper Analytical Services
MARKET CAPITALIZATION refers to the market value of all of a company's shares of
common stock outstanding. If a company has five million shares of common stock
selling at $50 a share, its market capitalization is $250 million dollars.
MERRILL LYNCH 3-5 YEAR GOVERNMENT BOND INDEX is an index of all currently
available United States Treasury Bonds maturing in three to five years. Source:
Merrill Lynch & Company
RISK, in the sense of market risk, refers to the possibility that an asset might
lose value or not gain value because of price fluctuations. There are virtually
riskless investments, such as Treasury bills and low-risk investments like
short-term high quality bonds. Medium- and high-risk investments include stocks,
bonds, options, etc. A fundamental principle of finance is that investors make
riskier investments because they expect higher returns over time.
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RUSSELL 2000 INDEX tracks the smallest 2000 companies in the Russell 3000 Index.
The Russell 3000 includes the largest 3,000 United States companies as
determined by market capitalization. The index represents 98% of the U.S. equity
market. Source: Frank Russell Company
S&P 500 COMPOSITE STOCK PRICE INDEX is a market value weighted benchmark of
common stock performance. The S&P Composite Index includes 500 stocks in 87
industries and represents over 70% of the total U.S. equity market. Source:
Standard & Poor's Securities.
S&P SMALL CAPITALIZATION 600 INDEX is a market value weighted benchmark of 600
smaller capitalization common stocks. Source: Standard & Poor's Securities.
SHARPE RATIO measures return in excess of the risk-free rate per unit of risk.
For example, Treasury bills pay a risk-free rate of return. Subtract the
Treasury bill rate of return from the portfolio's rate of return to get the
extra return earned by taking a greater risk. Divide the excess return by the
portfolio's standard deviation (a measure of risk) to get the Sharpe Ratio. By
comparing the Sharpe Ratios of different funds and indexes, you can see which
provided more excess return per unit of risk. (Calculations are based on
arithmetic monthly averages of returns and standard deviations.)
SMALL CAPITALIZATION (see Large Capitalization)
STANDARD DEVIATION is a statistical measure, often used to evaluate market risk.
Standard deviation compares the volatility or variation of all the individual
returns to the average return of an investment over a time period. The bigger
the price fluctuations, the higher the variation and the riskier the return.
WEIGHTED AVERAGE MATURITY is the remaining life of all the bonds in a portfolio
adjusted for the size of each holding. If you held 60% of your investment in
Bond A, which matured in 4 years, and 40% in Bond B, maturing in 2 years, your
average weighted maturity would be 3.2 years (60% of 4 plus 40% of 2).
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Eclipse Financial Services, Inc.
P.O. Box 2196
Peachtree City, GA 30269
Telephone: 800.872.2710
In Georgia: 770.631.0414
Towneley Capital Management, Inc.
144 East 30th Street
New York, New York 10016
Investors Fiduciary Trust Company
210 West 10th Street
Kansas City, Missouri 64105-1716
