<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
ANNUAL REPORT
December 31, 1996
<TABLE>
<CAPTION>
<S> <C>
Officers Supervisory Committee
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Henry J. Lartigue, Chief Executive Officer Henry J. Lartigue, Chairman
Cheryl M. Morgan, Treasurer Frank A. Liddell, Jr.
Marguerite Williams, Controller and Chief Accounting Officer George E. McDavid
Thomas J. Press, Compliance Officer and Secretary Kenneth L. Otto
Guy Barba, Portfolio Officer H. Michael Tyson
Denise Byington, Portfolio Officer
H. Mitchell Harper, Portfolio Officer
Deborah Williams-McGehee, Portfolio Officer
Sylvia Cruz, Assistant Compliance Officer
Joy H. Rose, Assistant Compliance Officer
Trustee
---------------------------------
Texas Commerce Bank
National Association
712 Main
Houston, Texas 77002
Legal Counsel Independent Accountants
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Simpson Thacher & Bartlett Price Waterhouse, LLP
425 Lexington Avenue 1201 Louisiana, Suite 2900
New York, New York 10017 Houston, Texas 77002
AVESTA Trust
---------------------------------
7-TCT-37
P. O. Box 1555
Houston, Texas
77251-1555
This report is not authorized for distribution to prospective investors unless preceded or accompanied by a current prospectus.
</TABLE>
<PAGE>
AVESTA EQUITY GROWTH FUND
- --------------------------------------------------------------------------------
Average Annual Total Return* 1 Year 3 Years 5 Years Since Inception
April 4, 1988
----------------------------------------------
Period ended 12/31/96
20.52% 14.53% 10.38% 12.47%
- --------------------------------------------------------------------------------
The Equity Growth Fund seeks to increase retirement assets by investing in
securities that provide capital appreciation. Current income is a secondary
objective. Primary emphasis is on equity-based securities, which include common
stocks and those debt securities and preferred stocks that are convertible into
common stocks. Throughout 1996, growth stocks outperformed the value sector.
During the first half of 1996, the Fund's performance was enhanced by a mix of
large and mid-capitalization common stocks. The Fund's Adviser continued steps
towards a broader portfolio, representative of a large and mid-capitalization
growth style. During the second half of the year, the Fund continued to be
positioned in a manner that reflects its growth objective at approximately 2/3
growth stocks and 1/3 cyclical stocks. With the Fund's focus on valuation and
growing earnings, the Adviser continues to find opportunities in growth stocks.
The Equity Growth Fund's total return* for 1996 was 20.52%, compared to the
Standard & Poor's 500 Stock Index return of 22.92%
The following graph illustrates total return* based on a $10,000 investment in
the Fund made at the date of inception (April 4, 1988) and held through December
31, 1996, as well as the performance of the Standard & Poor's 500 Stock Index.
Past performance is not predictive of future returns.
[GRAPH APPEARS HERE]
The Standard & Poor's 500 Stock Index covers 500 industrial, utility,
transportation and financial companies of the U.S. markets (mostly NYSE issues).
The Index represents about 75% of NYSE market capitalization and 30% of NYSE
issues. It is a capitalization-weighted Index calculated on a total return basis
with dividends reinvested.
*Total returns are net of expenses and fees and reflect reimbursement of certain
expenses and the Fund's policy of not distributing income and capital gains on a
current basis.
<PAGE>
AVESTA EQUITY INCOME FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN* 1 YEAR 3 YEARS 5 YEARS SINCE INCEPTION
APRIL 4, 1988
----------------------------------------------
Period ended 12/31/96
17.87% 15.05% 12.56% 12.58%
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The Equity Income Fund seeks to increase retirement assets through investing in
equity securities that provide both capital appreciation as well as current
income. Investment emphasis is on equity-based securities, which include common
stocks and those debt securities and preferred stocks convertible into common
stocks. The top five performance sectors for the Equity Income Fund for the year
were financial services, technology, energy, consumer and healthcare. Changes in
the portfolio holdings for 1996 generally reflected the Adviser's search for
investments with the Fund's classic combination of higher yielding stocks with
attractive valuations and superior earnings growth potential. The Adviser
reduced the Fund's positions in issues with forward earning growth dependent on
the continuation of a strong domestic economy. A continuation of this strategy
is warranted, we believe, based on our observation that despite current record
profit levels for Standard & Poor's 500 companies, relative earnings growth is
more likely to be achieved in companies with products focused on secular rather
than cyclical sources of earnings.
The Equity Income Fund's total return* for 1996 was 17.87%, compared to the
return of the Standard & Poor's 500 Stock Index of 22.92%.
The following graph illustrates total return* based on a $10,000 investment in
the Fund made at the date of inception (April 4, 1988) and held through December
31, 1996, as well as the performance of the Standard & Poor's 500 Stock Index.
Past performance is not predictive of future returns.
[GRAPH APPEARS HERE]
The Standard & Poor's 500 Stock Index covers 500 industrial, utility,
transportation and financial companies of the U.S. markets (mostly NYSE issues).
The Index represents about 75% of NYSE market capitalization and 30% of NYSE
issues. It is a capitalization-weighted Index calculated on a total return basis
with dividends reinvested.
*Total returns for the Fund are net of expenses and fees and reflect
reimbursement of certain expenses and the Fund's policy of not distributing
income and capital gains on a current basis.
<PAGE>
AVESTA BALANCED FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN* 1 YEAR 3 YEARS 5 YEARS SINCE INCEPTION
APRIL 4, 1988
----------------------------------------------
Period ended 12/31/96
11.31% 10.45% 8.51% 10.34%
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The Balanced Fund seeks to increase retirement assets by investing in a
combination of bonds and equity-based securities, which include common stocks,
debt securities and preferred stocks that are convertible into common stocks, to
provide a balance of current income and growth of capital. Investment emphasis
is on common stocks and fixed-income securities. At the beginning of 1996, the
Fund was invested to achieve a ratio of 50% equity investments and 50% fixed-
income investments. Within the equity portion of the portfolio, positions in
technology, large multinational consumer issues and health care holdings were
added throughout the year. Within the Fund's fixed-income sector, the Adviser
positioned the Fund defensively in the first quarter when interest rates began
to climb significantly. The Fund's duration and maturity were moved into a
market-neutral posture mid-year amid signs of stabilization, and remained in
that mode for the balance of the year.
The Balanced Fund's total return* for 1996 was 11.31%, compared to the Lehman
Brothers Government/ Corporate Bond Index of 2.90% and the Standard & Poor's 500
Stock Index of 22.92%, respectively.
The following graph illustrates total return* based on a $10,000 investment in
the Fund made at the date of inception (April 4, 1988) and held through December
31, 1996, as well as the performance of the Lehman Brothers Government/Corporate
Bond Index and the Standard & Poor's 500 Stock Index. Past performance is not
predictive of future returns.
[GRAPH APPEARS HERE]
The Lehman Brothers Government/Corporate Bond Index is composed of all bonds
that are investment grade (rated Baa or higher by Moody's or BBB or higher by
S&P, if unrated by Moody's). Issues must have amounts outstanding in excess of
$25 million and have at least one year to maturity. The Standard & Poor's 500
Stock Index covers industrial, utility, transportation and financial companies
of the U.S. markets (mostly NYSE issues). The Index represents about 75% of NYSE
market capitalization and 30% of NYSE issues. It is a capitalization-weighted
Index calculated on a total return basis with dividends reinvested.
*Total returns are net of expenses and fees and reflect reimbursement of certain
expenses and the Fund's policy of not distributing income and capital gains on a
current basis.
<PAGE>
AVESTA INCOME FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN* 1 YEAR 3 YEARS 5 YEARS SINCE INCEPTION
APRIL 4, 1988
--------------------------------------------------
Period ended 12/31/96
1.91% 4.84% 5.95% 7.32%
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The Income Fund seeks to increase retirement assets by investing in securities
that earn a high level of current income with consideration also given to safety
of principal. By stressing current yield through fixed-income securities, and
managing maturities, the Income Fund attempts to provide greater stability of
unit value than certain of the other AVESTA funds. While the Income Fund may
participate to a limited extent in the general equity markets, capital
appreciation is an incidental consideration, and investment emphasis is on
fixed-income securities. As a matter of operating policy, the fixed-income
securities purchased by the Fund normally have a maturity in excess of one year.
Throughout 1996, the Fund's average maturity fluctuated between 7.9 years and
9.8 years. Interest rates rose substantially during the first quarter of the
year as the bond market reacted to greater-than-expected economic growth and the
Fund's maturity structure was defensive. However, the Adviser moved the Fund to
a more market-neutral position amid some signs of stabilization of the interest
rate environment in the second quarter, and remained in that stance for the
balance of the year.
The Income Fund's total return* for 1996 was 1.91%, compared to 2.90% for the
Lehman Brothers Government/Corporate Bond Index.
The following graph illustrates the total return* based on a $10,000 investment
in the Fund made at the date of inception (April 4, 1988) and held through
December 31, 1996, as well as the performance of the Lehman Brothers
Government/Corporate Bond Index. Past performance is not predictive of future
performance.
[GRAPH APPEARS HERE]
The Lehman Brothers Government/Corporate Bond Index is composed of all bonds
that are investment grade (rated Baa or higher by Moody's or BBB or higher by
S&P, if unrated by Moody's). Issues must have amounts outstanding in excess of
$25 million and have at least one year to maturity. Total return for the Index
comprises price appreciation/depreciation and income as a percentage of the
original investment. The Index is rebalanced monthly by market capitalization.
*Total returns for the Income Fund are net of expenses and fees and reflect
reimbursement of certain expenses, waivers of certain fees and the Fund's policy
of not distributing income and gain on a current basis.
<PAGE>
AVESTA CORE EQUITY FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN* 1 YEAR 3 YEARS SINCE INCEPTION
APRIL 1, 1993
--------------------------------------------
Period ended 12/31/96
22.54% 13.87% 13.23%
- --------------------------------------------------------------------------------
The Core Equity Fund seeks to increase retirement assets by maximizing total
investment return by emphasizing long-term capital appreciation and current
income consistent with reasonable risk. The Fund pursues its objective by
investing at least 70% of its total assets in a diversified portfolio of common
stocks of well-established companies that are domiciled in the U.S. The Fund may
also invest in other equity-based securities, such as debt securities and
preferred stocks that are convertible into common stocks. The Fund reflected the
performance of the Standard & Poor's 500 Stock Index during the first half of
the year as a result of its strategy of remaining full invested in the market
and diversified among the Standard & Poor's 500 Stock Index. During the second
half, the Fund's Adviser increased its holdings in large capitalization
multinational companies including Coca-Cola, General Electric, and Johnson &
Johnson as well as positions in other large capitalization companies.
The Core Equity Fund's average annual total return* from inception on April 1,
1993 through December 31, 1996 was 13.23%. For the full year 1996, the Fund
returned 22.54%, compared to the return of the Standard & Poor's 500 Stock Index
of 22.92%.
The following graph illustrates the total return* based on a $10,000 investment
in the Fund made at the date of inception (April 1, 1993) and held through
December 31, 1996, as well as the performance of the Standard & Poor's 500 Stock
Index. Past performance is not predictive of future returns.
[GRAPH APPEARS HERE]
The Standard & Poor's 500 Stock Index covers 500 industrial, utility,
transportation and financial companies of the U.S. markets (mostly NYSE issues).
The Index represents about 75% of NYSE market capitalization and 30% of NYSE
issues. It is a capitalization-weighted Index calculated on a total return basis
with dividends reinvested.
*Total returns are net of expenses and fees and reflect reimbursement of certain
expenses and the Fund's policy of not distributing income and capital gains on a
current basis.
<PAGE>
AVESTA SMALL CAPITALIZATION FUND
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AVERAGE ANNUAL TOTAL RETURN 1 YEAR 3 YEARS SINCE INCEPTION
APRIL 1, 1993
---------------------------------------------
Period ended 12/31/96 30.88% 17.24% 16.19%
- --------------------------------------------------------------------------------
The Small Capitalization Fund seeks to increase retirement assets primarily
through capital appreciation. Although the Fund, in seeking its objective, may
receive current income from dividends and interest, income is only an incidental
consideration. The Small Capitalization Fund invests primarily in common stocks
of U.S. companies having stock market capitalizations of up to $750 million. The
Fund tries to identify smaller, rapidly growing companies in growth sectors of
the economy. These smaller capitalization companies may be more volatile than
larger capitalization companies. The Fund's performance was helped by holdings
in the strong performing financial and energy sectors. The Adviser decreased the
Fund's weightings in positions which had become extended on price and valuation
basis, reducing downside risk, and softening the effects of the market
correction during the June and July time period. During the second half of the
year, the Fund's Adviser maintained the overweight position in the energy
sector. The Adviser maintains a positive outlook for small cap stocks and strong
earnings growth of small capitalization issues during 1997.
The Small Capitalization Fund's average annual total return* from inception on
April 1, 1993 through December 31, 1996 was 16.19%. For the full year 1996, the
Fund returned 30.88% compared to the Standard & Poor's 600 Small Capitalization
Stock Index return of 21.31%
The following graph illustrates the total return* based on a $10,000 investment
in the Fund made at the date of inception (April 1, 1993) and held through
December 31, 1996, as well as the performance of the Standard & Poor's 600 Small
Capitalization Stock Index. Past performance is not predictive of future
returns.
[GRAPH APPEARS HERE]
The Standard & Poor's 600 Small Cap Stock Index covers 600 industrial,
technology, utility, transportation and financial companies of the U.S. markets.
The Index represents about 4% of the total market value of U.S. equities. It is
a capitalization-weighted Index calculated on a total return basis with
dividends reinvested.
*Total returns for the Fund are net of expenses and fees and reflect
reimbursement of certain expenses, waivers of certain fees and the Fund's policy
of not distributing income and gain on a current basis.
<PAGE>
AVESTA Short-Intermediate Term U.S. Government Securities Fund
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AVERAGE ANNUAL TOTAL RETURN* 1 YEAR 3 YEARS SINCE INCEPTION
APRIL 1, 1993
----------------------------------------------
Period ended 12/31/96 2.68% 4.40% 4.17%
- --------------------------------------------------------------------------------
The Short-Intermediate Term U.S. Government Securities Fund seeks to increase
retirement assets by providing as high a level of current income as is
consistent with preservation of capital. The Fund invests primarily in U.S.
Government Securities and related repurchase agreements. "U.S. Government
Securities" include debt securities issued by the Treasury that are direct
obligations of the United States government. These securities are backed by the
full faith and credit of U.S. agencies or instrumentalities. These securities
are not direct obligations of the Treasury. As a matter of operating policy, the
Fund maintains a dollar-weighted average maturity, under normal market
conditions, of two to five years measured at the time of investment. The Fund
maintained its maturity structure between 2.1 years and 3.5 years throughout the
full year 1996. During the year, over 90% of the Fund's assets were invested in
Treasury and U.S. Government agency securities. At December 31, 1996 the average
maturity of the Fund's portfolio securities was 3.3 years.
The Short-Intermediate Term U.S. Government Securities Fund's average annual
total return* from inception on April 1, 1993 through December 31, 1996 was
4.17%. For the full year 1996, the Fund returned 2.68%. The return on the Lehman
Brothers 1 - 3 Year Government Index and the Lehman Brothers Intermediate
Government Bond Index was 5.08% and 4.06%, respectively, for 1996.
The following graph illustrates total return* based on a $10,000 investment in
the Fund made at the date of inception (April 1, 1993) and held through December
31, 1996, as well as the performance of the Lehman Brothers 1-3 Year Government
Index and the Lehman Brothers Intermediate Government Bond Index over the same
period. Past performance is not predictive of future performance.
[GRAPH APPEARS HERE]
The Lehman Brothers Intermediate Government Bond Index is composed of all bonds
covered by the Lehman Brothers Government Bond Index with maturities between one
and 9.99 years. The Lehman Brothers 1-3 Year Government Index is composed of all
bonds covered by the Lehman Brothers Government Bond Index with maturities
between one and three years.
*Total returns for the Fund are net of expenses and fees and reflect
reimbursement of certain expenses and the Fund's policy of not distributing
income and gain on a current basis.
<PAGE>
AVESTA U. S. GOVERNMENT SECURITIES FUND
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURN* 1 YEAR 3 YEARS SINCE INCEPTION
APRIL 1, 1993
----------------------------------------
Period ended 12/31/96
-1.89% 5.36% 6.72%
- --------------------------------------------------------------------------------
The U.S. Government Securities Fund seeks to increase retirement assets by
providing current income with an emphasis on capital preservation. The Fund
invests primarily in U.S. Government Securities and related repurchase
agreements. The average maturity ranged from 21.5 years to 23.6 years during the
full year 1996. There are no restrictions on the maturity of the securities in
the Fund's portfolio. Substantially all of the assets of the Fund were invested
in U. S Government and Government Agency Securities throughout 1996. The Fund
invests primarily in long-term Treasury securities and is structured to remain
relatively fully invested. The Fund's performance roughly paralleled the course
of long-term bond prices during the year.
The U.S. Government Securities Fund's average total return* from inception on
April 1, 1993 through December 31, 1996 was 6.72%. For the full year 1996, the
Fund returned -1.89%. The total return of the Lehman Brothers Government Long-
Term Bond Index was -0.84% for 1996.
The following graph illustrates total return based on a $10,000 investment in
the Fund made at the date of inception (April 1, 1993) and held through December
31, 1996, as well as the performance of the Lehman Brothers Government Long-Term
Bond Index during such period. Past performance is not predictive of future
performance.
[GRAPH APPEARS HERE]
The Lehman Brothers Government Long-Term Bond Index is composed of all bonds
covered by the Lehman Brothers Government Bond Index with maturities of ten
years or greater. Total return for the Index comprises price
appreciation/depreciation and income as a percentage of the original investment.
The Index is rebalanced monthly by market capitalization.
*Total returns for the Fund are net of expenses and fees and reflect
reimbursement of certain expenses, waivers of certain fees and the Fund's policy
of not distributing income and gain on a current basis.
<PAGE>
AVESTA INTERMEDIATE TERM BOND FUND
- --------------------------------------------------------------------------------
1 YEAR SINCE INCEPTION OCTOBER 3, 1994
---------------------------------------------
Average Annual Total Return*
Period ended 12/31/96 1.86% 7.99%
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The Intermediate Term Bond Fund seeks to increase retirement assets primarily
through current income, with consideration given to stability of principal.
Primary investment emphasis is on intermediate term, investment grade fixed-
income securities. The Fund maintains a dollar weighted average portfolio
maturity ranging from three to ten years. Under normal market conditions, at
least 65% of the Intermediate Term Bond Fund's total assets will be invested in
bonds, notes, or debentures issued by domestic or foreign corporations, U.S.
Government Securities and debt obligations collateralized by U.S. Government
Securities. During the first quarter of the year, interest rates increased
significantly and the yield on five-year U.S. Treasury bonds increased
approximately 100 basis points, lessening the value of the securities in the
Fund's portfolio. As rates dropped during the second quarter, the Adviser
structured the Fund's portfolio more aggressively than its benchmark Index.
The AVESTA Intermediate Term Bond Fund had average annual total return* from
inception on October 3, 1994 through December 31, 1996 of 7.99%. For the full
year 1996, the Fund returned 1.86%. The return of the Lehman Brothers
Government/ Corporate Bond Index was 2.90% over the same period. Past
performance is not predictive of future returns.
The following graph illustrates total return* based on a $10,000 investment in
the Fund made at the date of inception (October 3, 1994) and held through
December 31, 1996, as well as the performance of the Lehman Brothers
Intermediate Government/Corporate Bond Index for the same time period. Past
performance is not predictive of future returns.
[GRAPH APPEARS HERE]
The Lehman Brothers Government/Corporate Bond Index is composed of all bonds
that are investment grade (rated Baa or higher by Moody's or BBB or higher by
S&P, if unrated by Moody's). Issues must have amounts outstanding in excess of
$25 million and have at least one year to maturity. Total return for the Index
comprises price appreciation/depreciation and income as a percentage of the
original investment. The Index is rebalanced monthly by market capitalization.
*Total return for the AVESTA Intermediate Term Bond Fund is net of expenses and
fees and reflect reimbursement of certain expenses and the Fund's policy of not
distributing income and gain on a current basis.
<PAGE>
AVESTA RISK MANAGER-INCOME FUND
1 YEAR SINCE INCEPTION OCTOBER 3, 1994
---------------------------------------------
Average Annual Total Return*
Period ended 12/31/96
6.90% 9.64%
- --------------------------------------------------------------------------------
The Risk Manager-Income Fund seeks to increase retirement assets by investing in
a combination of debt and, to a lesser extent, equity-based securities to
achieve high current income, and where appropriate, capital appreciation. The
Fund seeks to achieve its objectives by following an asset allocation strategy
that contemplates investing in a flexible portfolio of fixed-income, equity-
based and money market securities of domestic and foreign issuers. During the
first quarter of the year, interest rates increased significantly and the
Adviser positioned the Fund's maturity structure defensively. The Fund's risk
profile was moved into a more market-neutral posture amid some signs of
stabilization of interest rates and remained in that stance for the balance of
the year.
The AVESTA Risk Manager-Income Fund had an average annual total return* from
inception on October 3, 1994 through December 31, 1996 of 9.64%. For the full
year 1996, the Fund returned 6.90%. The return of the Lehman Brothers
Government/ Corporate Bond Index was 2.90%; the Standard & Poor's 500 Stock
Index returned 22.92% for the same time period.
The following graph illustrates total return* based on a $10,000 investment in
the Fund made at the date of inception (October 3, 1994) and held through
December 31, 1996, as well as the performance of the Lehman Brothers
Government/Corporate Bond Index and the Standard & Poor's 500 Stock Index for
the same time period. Past performance is not predictive of future returns.
[GRAPH APPEARS HERE]
The Lehman Brothers Government/Corporate Bond Index is composed of all bonds
that are investment grade (rated Baa or higher by Moody's or BBB or higher by
S&P, if unrated by Moody's). Issues must have amounts outstanding in excess of
$25 million and have at least one year to maturity. The Standard & Poor's 500
Stock Index covers industrial, utility, transportation and financial companies
of the U.S. markets (mostly NYSE issues). Total return of the Indexes comprises
price appreciation/depreciation and income as a percentage of the original
investment. Indexes are rebalanced monthly by market capitalization.
*Total return for the AVESTA Risk Manager-Income Fund is net of expenses and
fees and reflects reimbursement of certain expenses and the Fund's policy of not
distributing income and gain on a current basis.
<PAGE>
AVESTA RISK MANAGER-BALANCED FUND
- --------------------------------------------------------------------------------
1 YEAR SINCE INCEPTION OCTOBER 3, 1994
----------------------------------------------
Average Annual Total Return*
Period ended 12/31/96 11.23% 12.35%
- --------------------------------------------------------------------------------
The Risk Manager-Balanced Fund seeks to increase retirement assets by investing
in a combination of debt and equity-based securities, which include common
stocks and debt securities and preferred stocks that are convertible into common
stocks, to provide high total return. The Fund seeks to achieve its objectives
by following an asset allocation strategy that contemplates investing in a
flexible portfolio of equity-based, fixed-income and money market securities of
domestic and foreign issuers. During the first quarter of the year, the Fund's
Adviser moved the Fund's maturity structure to a defensive stance as interest
rates increased significantly. As the interest rate environment stabilized, the
Fund moved into a more market-neutral posture, and remained in that mode for the
balance of the year. The equity portion of the Fund was structured to remain
diversified among Standard & Poor's 500 Stock Index companies. The Adviser
increased the Fund's exposure to large capitalization multinational companies
including General Electric, Coca Cola and Travelers Corporation.
The AVESTA Risk Manager-Balanced Fund had an average annual total return* from
inception on October 3, 1994 through December 31, 1996 of 12.35%. For the full
year 1996, the Fund returned 11.23%. The return of the Lehman Brothers
Government/ Corporate Bond Index was 2.90% and the Standard & Poor's 500 Stock
Index returned 22.92% for the same time period, respectively.
The following graph illustrates total return* based on a $10,000 investment in
the Fund made at the date of inception (October 3, 1994) and held through
December 31, 1996, as well as the performance of the Lehman Brothers
Government/Corporate Bond Index and the Standard & Poor's 500 Stock Index for
the same time period. Past performance is not predictive of future returns.
[GRAPH APPEARS HERE]
The Lehman Brothers Government/Corporate Bond Index is composed of all bonds
that are investment grade (rated Baa or higher by Moody's or BBB or higher by
S&P, if unrated by Moody's). Issues must have amounts outstanding in excess of
$25 million and have at least one year to maturity. The Standard & Poor's 500
Stock Index covers industrial, utility, transportation and financial companies
of the U.S. markets (mostly NYSE issues). The Index represents about 75% of NYSE
market capitalization and 30% of NYSE issues. It is a capitalization-weighted
Index calculated on a total return basis with dividends reinvested. Total return
of the Indexes comprises price appreciation/depreciation and income as a
percentage of the original investment. Indexes are rebalanced monthly by market
capitalization.
*Total return for the AVESTA Risk Manager-Balanced Fund is net of expenses and
fees and reflects reimbursement of certain expenses and the Fund's policy of not
distributing income and gain on a current basis.
<PAGE>
AVESTA RISK MANAGER-GROWTH FUND
- --------------------------------------------------------------------------------
1 YEAR SINCE INCEPTION OCTOBER 3, 1994
----------------------------------------------
Average Annual Total Return*
Period ended 12/31/96 13.09% 14.92%
- --------------------------------------------------------------------------------
The Risk Manager-Growth Fund seeks to increase retirement assets by investing in
a combination of equity-based securities, and to a lesser extent, debt
securities, to achieve capital appreciation and, secondarily, current income.
The Fund seeks to achieve its objectives by following an asset allocation
strategy that contemplates investing in a flexible portfolio of equity-based,
fixed-income and money market securities of domestic and foreign issuers. During
the first quarter of the year, the Fund's Adviser moved the Fund's maturity
structure to a defensive stance as interest rates increased significantly. As
the interest rate environment stabilized, the Fund moved into a more market-
neutral posture, and remained in that mode for the balance of the year. The
equity portion of the Fund was structured to remain diversified among Standard &
Poor's 500 Stock Index companies. The Adviser increased the Fund's exposure to
large capitalization multinational companies including General Electric, Coca
Cola and Travelers Corporation.
The AVESTA Risk Manager-Growth Fund had an average annual total return* from
inception on October 3, 1994 through December 31, 1996 of 14.92%. For the full
year 1996, the Fund returned 13.09%. The return of the Lehman Brothers
Government/ Corporate Bond Index was 2.90% and the Standard & Poor's 500 Index
returned 22.92% for the same time period, respectively.
The following graph illustrates total return* based on a $10,000 investment in
the Fund made at the date of inception (October 3, 1994) and held through
December 31, 1996, as well as the performance of the Lehman Brothers
Government/Corporate Bond Index and the Standard & Poor's 500 Stock Index for
the same time period. Past performance is not predictive of future returns.
[GRAPH APPEARS HERE]
The Lehman Brothers Government/Corporate Bond Index is composed of all bonds
that are investment grade (rated Baa or higher by Moody's or BBB or higher by
S&P, if unrated by Moody's). Issues must have amounts outstanding in excess of
$25 million and have at least one year to maturity. The Standard & Poor's 500
Stock Index covers industrial, utility, transportation and financial companies
of the U.S. markets (mostly NYSE issues). The Index represents about 75% of NYSE
market capitalization and 30% of NYSE issues. It is a capitalization-weighted
Index calculated on a total return basis with dividends reinvested. Total return
of the Indexes comprises price appreciation/depreciation and income as a
percentage of the original investment. Indexes are rebalanced monthly by market
capitalization.
*Total return for the AVESTA Risk Manager-Growth Fund is net of expenses and
fees and reflects reimbursement of certain expenses and the Fund's policy of not
distributing income and gain on a current basis.
<PAGE>
PRICE WATERHOUSE LLP
REPORT OF INDEPENDENT ACCOUNTANTS
February 14, 1997
To the Unitholders and the Supervisory Committee of
the AVESTA Trust
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the selected per share data and ratios for the funds
listed in the accompanying index on page i, present fairly, in all material
respects, the financial position of each of the funds listed at December 31,
1996, the results of each of their operations, the changes in each of their net
assets and the selected per unit data and ratios for each of the periods
specified in the accompanying index, in conformity with generally accepted
accounting principles. The thirteen funds listed in the accompanying index
constitute the AVESTA Trust (the "Trust"). These financial statements and
selected per share data and ratios (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1996 by correspondence with custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
________________________
Price Waterhouse LLP
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INDEX TO FUND FINANCIAL STATEMENTS AND SCHEDULES
Page ref.
Equity Growth Fund (1) 1-7
Equity Income Fund (1) 8-15
Balanced Fund (1) 16-24
Income Fund (1) 25-31
Core Equity Fund (2) 32-40
Small Capitalization Fund (2) 41-49
Short-Intermediate Term U.S. Government Securities Fund (2) 50-55
U.S. Government Securities Fund (2) 56-61
Intermediate Term Bond Fund (3) 62-68
Risk Manager-Income Fund (3) 69-78
Risk Manager-Balanced Fund (3) 79-87
Risk Manager-Growth Fund (3) 88-97
Money Market Fund (1) 98-104
(1) Financial statements and schedules include the Portfolio of Investments and
Statement of Assets and Liabilities as of December 31, 1996, Statements of
Operations for the year ended December 31, 1996, Statement of Changes in
Net Assets for the two years ended December 31, 1996, and selected per unit
data and ratios for each of the five years in the period ended December 31,
1996
(2) Financial statements and schedules include the Portfolio of Investments and
Statement of Assets and Liabilities as of December 31, 1996, Statements of
Operations for the year ended December 31, 1996, Statement of Changes in
Net Assets for the two years ended December 31, 1996 and selected per unit
data and ratios for the three years ended December 31, 1996 and for the
period from April 1, 1993 (inception) through December 31, 1993
(3) Financial statements and schedules include the Portfolio of Investments and
Statement of Assets and Liabilities as of December 31, 1996, Statements of
Operations for the year ended December 31, 1996, Statement of Changes in
Net Assets for the two years ended December 31, 1996 and selected per unit
data and ratios for the two years ended December 31, 1996 and for the
period from October 3, 1994 (inception) through December 31, 1994
i
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
----------- --------
COMMON STOCKS - 98.5%
Consumer Discretionary - 13.6%
26,000 Bed Bath & Beyond, Inc.* $ 630,500
17,700 Dayton Hudson Corporation 694,725
6,500 Disney (Walt) Company 452,563
32,700 Federated Department Stores, Inc.* 1,115,887
10,100 Gannett Company, Inc. 756,237
26,500 GAP, Inc. 798,313
21,400 Jones Apparel Group, Inc.* 799,825
25,700 Kroger Company* 1,195,050
6,800 McDonald's Corporation 307,700
45,800 Wal-Mart Stores, Inc. 1,047,675
-----------
Total Consumer Discretionary 7,798,475
-----------
Consumer Staples - 15.0 - %
50,300 Coca-Cola Company 2,647,037
19,500 Coca-Cola Enterprises 945,750
16,900 Gillette Company 1,313,975
30,600 PepsiCo, Inc. 895,050
11,900 Phillip Morris Companies, Inc. 1,340,238
13,800 Procter & Gamble Company 1,483,500
-----------
Total Consumer Staples 8,625,550
-----------
Financial Services - 10.3%
21,200 American Express Company 1,197,800
10,700 American International Group, Inc. 1,158,275
32,200 Federal National Mortgage Association 1,199,450
23,300 Salomon, Inc. 1,098,012
38,800 The Charles Schwab Corporation 1,241,600
-----------
Total Financial Services 5,895,137
-----------
The accompanying notes are an integral part of this statement.
-1-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASOCIATION
AVESTA TRUST
EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Healthcare - 18.4%
15,700 Abbott Laboratories, Inc. $ 796,775
21,500 Alza Corporation* 556,312
12,300 American Home Products Corporation 721,088
13,600 Amgen, Inc.* 739,500
10,600 Bristol-Myers Squibb Company 1,152,750
23,200 Johnson & Johnson 1,154,200
8,200 Lilly (Eli) & Company 598,600
9,800 Medtronic, Inc. 666,400
20,400 Merck & Company, Inc. 1,616,700
12,900 Pfizer, Inc. 1,069,088
28,900 Teva Pharmaceutical Industries, Ltd. ADR 1,452,225
-----------
Total Healthcare 10,523,638
-----------
Integrated Oil - 1.5%
9,100 Exxon Corporation 891,800
-----------
Materials and Processing - 3.7%
12,500 DuPont (E.I.) de Nemours & Company, Inc. 1,179,687
11,100 Potash Corporation Saskatchewan, Inc. 943,500
-----------
Total Materials and Processing 2,123,187
-----------
Producer Durables - 10.5%
8,450 Allied-Signal, Inc. 566,150
14,000 Boeing Company 1,489,250
15,000 Fluor Corporation 941,250
30,300 General Electric Company 2,995,913
-----------
Total Producer Durables 5,992,563
-----------
Technology - 18.1%
12,400 BMC Software, Inc.* 513,050
20,600 Cisco Systems, Inc.* 1,310,675
14,100 Compaq Computer Corporation* 1,046,925
The accompanying notes are an integral part of this statement.
-2-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Technology - 18.1% (continued)
9,300 Computer Associates International, Inc. $ 462,675
20,100 Hewlett-Packard Company 1,010,025
19,400 Intel Corporation 2,540,188
31,200 Microsoft Corporation* 2,577,900
23,200 Newbridge Networks Corporation* 655,400
6,100 Oracle Systems Corporation* 254,675
-----------
Total Technology 10,371,513
-----------
Utilities - 7.4%
28,000 AT&T Corporation 1,218,000
13,100 Bell Atlantic Corporation 848,225
20,100 GTE Corporation 914,550
9,074 Lucent Technologies, Inc. 419,673
16,200 SBC Communications, Inc. 838,350
-----------
Total Utilities 4,238,798
-----------
Total Common Stocks (Cost $42,173,676) 56,460,661
-----------
SHORT-TERM INVESTMENTS - 1.1%
Repurchase Agreement - 1.1%
Barclays BZW Securities, dated
12/31/96, 5.90%, due 01/02/97 in
the amount of $632,000 (collateralized
by $642,112 U.S. Treasury Note,
6.25%, due 06/30/98, with a market
value of $646,627 at 12/31/96),
632,000 repurchase proceeds $632,207 632,000
-----------
Total Short-Term Investments
(Cost $632,000) 632,000
-----------
Total Investments (Cost
$42,805,676) - 99.6% 57,092,661
-----------
Other assets in excess of
liabilities - 0.4% 235,461
-----------
NET ASSETS - 100% $57,328,122
===========
* Non-income producing security.
The accompanying notes are an integral part of this statement.
-3-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $42,805,676) $ 57,092,661
Cash 627
Investment income receivable 88,306
Receivable for investments sold 473,131
Receivable for units issued 313,720
-------------
Total assets 57,968,445
-------------
Liabilities
Payable for investments purchased 592,354
Management fee payable 47,211
Payable for units redeemed 758
-------------
Total liabilities 640,323
-------------
Net assets $ 57,328,122
=============
Net assets were comprised of:
Units of beneficial interest $ 32,627,751
Accumulated net investment income 1,812,318
Accumulated net realized gain 8,601,068
Net unrealized appreciation 14,286,985
-------------
Net assets at December 31, 1996 $ 57,328,122
=============
Unit value, offering price and redemption
price per unit ($57,328,122/2,050,816 units
of beneficial interest issued and outstanding;
unlimited number of units authorized) $ 27.95
=============
The accompanying notes are an integral part of this statement.
-4-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY GROWTH FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Dividends $ 613,727
Interest 105,070
------------
Total income 718,797
------------
Expenses:
Management fee (Note 2) 509,223
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 4,640
Legal fees 2,537
Registration fees 3,810
Shareholder reports 2,792
Miscellaneous 4,508
------------
Total expenses 550,737
Expense subsidy (Note 3) (41,514)
------------
Net expenses 509,223
------------
Net investment income 209,574
Net realized and unrealized gain on investments
Net realized gain on investments 2,782,798
Unrealized appreciation in value of
investments during the year 6,636,433
------------
Net gain on investments 9,419,231
------------
Net increase in net assets resulting from operations $ 9,628,805
============
The accompanying notes are an integral part of this statement.
-5-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
1996 1995
Increase/(decrease) in net assets:
From operations:
Net investment income $ 209,574 $ 319,295
Net realized gain on investments 2,782,798 2,467,251
Unrealized appreciation in value of
investments during the year 6,636,433 6,401,728
------------ ------------
Net increase in net assets resulting
from operations 9,628,805 9,188,274
------------ ------------
From unit transactions:
Net proceeds from units issued 15,022,289 9,610,716
Cost of units redeemed (12,900,781) (9,904,550)
Net increase/(decrease) in net assets
resulting from unit transactions 2,121,508 (293,834)
------------ ------------
Total increase in net assets 11,750,313 8,894,440
Net assets, beginning of year 45,577,809 36,683,369
------------ ------------
Net assets, end of year $ 57,328,122 $ 45,577,809
============ ============
Net change in units outstanding:
Units issued 590,521 447,019
Units redeemed (504,266) (471,304)
------------ ------------
86,255 (24,285)
============ ============
The accompanying notes are an integral part of this statement.
-6-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY GROWTH FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTNADING THROUGHOUT EACH OF THE YEARS INDICATED)
Years ended December 31,
1996 1995 1994 1993* 1992*
---- ---- ---- ---- ----
Selected per unit data:
Investment income $ 0.35 $ 0.38 $ 0.38 $ 0.38 $ 0.36
Expenses (0.27) (0.23) (0.21) (0.21)# (0.21)
Expense subsidy 0.02 0.02 0.03 0.03 0.04
------ ------ ------ ------ ------
Net investment income 0.10 0.17 0.20 0.20 0.19
Net realized and unrealized
gain/(loss) on investments 4.65 4.59 (0.37) 0.25 0.91
------ ------ ------ ------ ------
Net increase/(decrease) in
net asset value 4.75 4.76 (0.17) 0.45 1.10
Net asset value, beginning
of year 23.20 18.44 18.61 18.16 17.06
------ ------ ------ ------ ------
Net asset value, end of year $ 27.95 $ 23.20 $ 18.44 $ 18.61 $ 18.16
====== ====== ====== ====== ======
Ratio to average net assets:
Expenses 1.00% 1.00% 1.00% 1.00%## 1.00%
Net investment income 0.41% 0.78% 1.07% 1.12% 1.16%
Other:
Average net assets
(000 omitted) $51,222 $40,753 $30,806 $29,305 $20,343
Portfolio turnover 62% 99% 116% 97% 99%
Number of units outstanding
at end of year (000 omitted) 2,051 1,965 1,989 1,646 1,405
Total return 20.52% 25.78% (0.90%) 2.48% 6.43%
# Reflects voluntary fee waiver of $11,479 or $0.01 per unit. Without
voluntary fee waiver, expense per unit is $0.22.
## Does not reflect voluntary waiver of management fees of $11,479. Net of
the voluntary management fee waiver, the net expense ratio is 0.96% of
average net assets.
* Amounts adjusted to reflect 10:1 reverse split for the years ended
1992-1993.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
-7-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
COMMON STOCKS - 97.5%
Auto and Transportation - 4.6%
17,800 Ford Motor Company $ 567,375
11,500 General Motors Corporation 641,125
12,000 Norfolk Southern Corporation 1,050,000
11,100 Union Pacific Corporation 667,387
------------
Total Auto and Transportation 2,925,887
------------
Banks - 5.0%
6,000 Citicorp, Inc. 618,000
24,000 Bank of New York 810,000
35,300 Suntrust Banks, Inc. 1,738,525
------------
Total Banks 3,166,525
------------
Consumer Discretionary - 2.4%
19,200 Penney (J.C.) Company, Inc. 936,000
12,100 Sears, Roebuck & Company 558,113
------------
Total Consumer Discretionary 1,494,113
------------
Consumer Products and Services - 1.0%
11,000 Avon Products, Inc. 628,375
------------
Consumer Staples - 10.0%
18,400 Anheuser-Busch Companies, Inc. 736,000
13,000 Coca-Cola Company 684,125
9,000 Gillette Company 699,750
21,300 PepsiCo, Inc. 623,025
7,100 Phillip Morris Companies, Inc. 799,638
13,600 Procter & Gamble Company 1,462,000
9,900 Ralston Purina Group 726,413
19,000 Sysco Corporation 619,875
------------
Total Consumer Staples 6,350,826
------------
The accompanying notes are an integral part of this statement.
-8-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TURST
EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Financial Services - 12.5%
33,400 American Express Company $ 1,887,100
16,787 American International Group, Inc. 1,817,193
11,900 First Union Corporation 880,600
15,600 General Re Corporation 631,000
19,100 Transamerica Corporation 1,508,900
26,466 Travelers Corporation 1,200,890
------------
Total Financial Services 7,925,683
------------
Healthcare - 10.1%
15,000 Abbott Laboratories, Inc. 761,250
13,600 American Home Products Corporation 797,300
12,200 Bristol-Myers Squibb Company 1,326,750
13,200 Johnson & Johnson 656,700
14,400 Lilly (Eli) & Company 1,051,200
11,100 Merck & Company, Inc. 879,675
11,400 Pfizer, Inc. 944,775
------------
Total Healthcare 6,417,650
------------
Integrated Oils - 9.0%
12,100 Amoco Corporation 974,050
18,500 Chevron Corporation 1,202,500
10,200 Mobil Corporation 1,246,950
7,393 Royal Dutch Petroleum Company ADR 1,262,355
10,350 Texaco, Inc. 1,015,594
------------
Total Integrated Oils 5,701,449
------------
Materials and Processing - 7.2%
18,500 Dover Corporation 929,625
10,000 Dow Chemical Company 783,750
10,800 DuPont (E.I.) de Nemours & Company, Inc. 1,019,250
14,300 International Paper Company 577,362
32,900 Monsanto Company 1,278,988
------------
Total Materials and Processing 4,588,975
------------
The accompanying notes are an integral part of this statement.
-9-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
----------- --------
Other Energy - 3.0%
18,400 Enron Corporation $ 793,500
16,000 Sonat, Inc. 824,000
9,401 Union Pacific Resources, Inc. 274,982
------------
Total Other Energy 1,892,482
------------
Producer Durables - 9.8%
4,100 Boeing Company 436,137
9,900 Fluor Corporation 621,225
14,200 General Electric Company 1,404,025
13,600 Lockheed Martin Corporation 1,244,400
23,700 Raytheon Company 1,140,563
32,500 Sunstrand Corporation 1,381,250
------------
Total Producer Durables 6,227,600
------------
Technology - 11.5%
13,200 Hewlett-Packard Company 663,300
5,000 Intel Corporation 654,687
12,400 International Business Machines Corporation 1,872,400
8,000 Microsoft Corporation 661,000
17,300 Motorola, Inc. 1,061,787
15,200 Texas Instruments, Inc. 969,000
25,800 Xerox Corporation 1,357,725
------------
Total Technology 7,239,899
------------
Utilities - 11.4%
11,300 Ameritech Corporation 685,062
19,700 AT&T Corporation 856,950
9,800 Bell Atlantic Corporation 634,550
14,100 BellSouth Corporation 569,287
44,300 DQE, Inc. 1,284,700
24,300 Duke Power Company 1,123,875
The accompanying notes are an integral part of this statement.
-10-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOICATION
AVESTA TRUST
EQUITY INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
----------- --------
Utilities - 11.5% (continued)
6,384 Lucent Technologies, Inc. $ 295,260
30,300 NIPSCO Industries, Inc. 1,200,638
11,700 SBC Communications, Inc. 605,475
------------
Total Utilities 7,255,797
------------
Total Common Stocks (Cost $44,936,478) 61,815,261
------------
Principal
amount
-----------
SHORT-TERM INVESTMENTS - 3.5%
Repurchase Agreement - 3.5%
Barclays BZW Securities, dated 12/31/96,
5.90%, due 01/02/97 in the amount of
$2,195,000 (collateralized by $2,230,120
U.S. Treasury Note, 6.25%, due 06/30/98,
with a market value of $2,245,801 at
12/31/96), repurchase proceeds
$2,195,000 $2,195,719 2,195,000
------------
Total Short-Term Investments
(Cost $2,195,000) 2,195,000
------------
Total Investments
(Cost $47,131,478) - 101.0% 64,010,261
------------
Liabilities in excess of other
assets - (1.0%) (619,797)
------------
NET ASSETS - 100% $ 63,390,464
============
The accompanying notes are an integral part of this statement.
-11-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $47,131,478) $ 64,010,261
Cash 56
Investment income receivable 114,161
Receivable for units issued 297,604
-------------
Total assets 64,422,082
-------------
Liabilities
Payable for investments purchased 971,790
Management fee payable 53,946
Payable for units redeemed 5,882
-------------
Total liabilities 1,031,618
-------------
Net assets $ 63,390,464
=============
Net assets were comprised of:
Units of beneficial interest $ 34,500,164
Accumulated net investment income 4,713,324
Accumulated net realized gain 7,298,193
Net unrealized appreciation 16,878,783
-------------
Net assets at December 31, 1996 $ 63,390,464
=============
Unit value, offering price and
redemption price per unit ($63,390,464/
2,247,062 units of beneficial interest
issued and outstanding; unlimited
number of units authorized) $ 28.21
=============
The accompanying notes are an integral part of this statement.
-12-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY INCOME FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Dividends $ 1,418,527
Interest 167,631
-----------
Total income 1,586,158
-----------
Expenses:
Management fee (Note 2) 594,351
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 4,830
Legal fees 2,537
Registration fees 471
Shareholder reports 2,792
Miscellaneous 4,949
-----------
Total expenses 633,157
Expense subsidy (Note 3) (38,806)
-----------
Net expenses 594,351
-----------
Net investment income 991,807
-----------
Net realized and unrealized gain on investments
Net realized gain on investments 4,768,241
Unrealized appreciation in value
of investments during the year 4,099,749
-----------
Net gain on investments 8,867,990
-----------
Net increase in net assets resulting from operations $ 9,859,797
===========
The accompanying notes are an integral part of this statement.
-13-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
1996 1995
---- ----
Increase/(decrease) in net assets:
From operations:
Net investment income $ 991,807 $ 938,303
Net realized gain on investments 4,768,241 884,985
Unrealized appreciation in value
of investments during the year 4,099,749 11,054,690
----------- -----------
Net increase in net assets resulting
from operations 9,859,797 12,877,978
----------- -----------
From unit transactions:
Net proceeds from units issued 14,693,984 12,190,344
Cost of units redeemed (16,148,394) (9,379,681)
----------- -----------
Net increase/(decrease) in net
assets resulting from unit transactions (1,454,410) 2,810,663
----------- -----------
Total increase in net assets 8,405,387 15,688,641
Net assets, beginning of year 54,985,077 39,296,436
----------- -----------
Net assets, end of year $63,390,464 $54,985,077
=========== ===========
Net change in units outstanding:
Units issued 578,822 552,331
Units redeemed (629,084) (450,395)
----------- -----------
(50,262) 101,936
=========== ===========
The accompanying notes are an integral part of this statement.
-14-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
EQUITY INCOME FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTANDING THROUGHOUT EACH OF THE YEARS INDICATED)
<TABLE>
<CAPTION>
Years ended December 31,
------------------------------------------------
1996 1995 1994 1993* 1992*
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Selected per unit data:
Investment income $ 0.69 $ 0.65 $ 0.57 $ 0.52 $ 0.55
Expenses (0.27) (0.23) (0.20) (0.20)# (0.19)
Expense subsidy 0.01 0.02 0.02 0.03 0.03
------- ------- ------- ------- -------
Net investment income 0.43 0.44 0.39 0.35 0.39
Net realized and unrealized
gain/(loss) on investments 3.85 5.59 (1.01) 1.68 0.50
------- ------- ------- ------- -------
Net increase/(decrease) in
net asset value 4.28 6.03 (0.62) 2.03 0.89
Net asset value, beginning
of year 23.93 17.90 18.52 16.49 15.60
------- ------- ------- ------- -------
Net asset value, end of year $ 28.21 $ 23.93 $ 17.90 $ 18.52 $ 16.49
======= ======= ======= ======= =======
Ratio to average net assets:
Expenses 1.00% 1.00% 1.00% 1.00%## 1.00%
Net investment income 1.67% 2.10% 2.13% 1.98% 2.52%
Other:
Average net assets
(000 omitted) $59,291 $44,651 $41,889 $31,308 $18,565
Portfolio turnover 24% 11% 42% 40% 25%
Number of units outstanding
at end of year (000 omitted) 2,247 2,297 2,195 2,246 1,389
Total return 17.87% 33.72% (3.37%) 12.34% 5.61%
</TABLE>
# Reflects voluntary fee waiver of $17,300 or $0.01 per unit. Without
voluntary fee waiver, expense per unit is $0.21.
## Does not reflect voluntary waiver of management fees of $17,330. Net of
the voluntary management fee waiver, the net expense ratio is 0.95% of
average net assets.
* Amounts adjusted to reflect 10:1 reverse split for the years ended
1992-1993.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
-15-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
LONG-TERM INVESTMENTS - 88.5%
COMMON STOCKS - 50.8%
Consumer Discretionary - 7.0%
5,300 Bed Bath & Beyond, Inc.* $ 128,525
3,550 Dayton Hudson Corporation 139,337
1,300 Disney (Walt) Company 90,512
6,600 Federated Department Stores, Inc.* 225,225
2,100 Gannett Company, Inc. 157,238
5,400 GAP, Inc. 162,675
4,300 Jones Apparel Group, Inc.* 160,713
5,200 Kroger Company* 241,800
1,400 McDonald's Corporation 63,350
9,300 Wal-Mart Stores, Inc. 212,738
------------
Total Consumer Discretionary 1,582,113
------------
Consumer Staples - 7.7%
10,200 Coca-Cola Company 536,775
4,000 Coca-Cola Enterprises 194,000
3,400 Gillette Company 264,350
6,200 PepsiCo, Inc. 181,350
2,400 Phillip Morris Companies, Inc. 270,300
2,800 Procter & Gamble Company 301,000
------------
Total Consumer Staples 1,747,775
------------
Financial Services - 5.3%
4,300 American Express Company 242,950
2,200 American International Group, Inc. 238,150
6,500 Federal National Mortgage Association 242,125
4,700 Salomon, Inc. 221,488
8,000 The Charles Schwab Corporation 256,000
------------
Total Financial Services 1,200,713
------------
The accompanying notes are an integral part of this statement.
-16-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Healthcare - 9.5%
3,200 Abbott Laboratories, Inc. $ 162,400
4,400 Alza Corporation* 113,850
2,500 American Home Products Corporation 146,562
2,800 Amgen, Inc.* 152,250
2,200 Bristol-Myers Squibb Company 239,250
4,600 Johnson & Johnson 228,850
1,700 Lilly (Eli) & Company 124,100
2,000 Medtronic, Inc. 136,000
4,100 Merck & Company, Inc. 324,925
2,600 Pfizer, Inc. 215,475
6,000 Teva Pharmaceutical Industries, Ltd. ADR 301,400
-----------
Total Healthcare 2,145,062
-----------
Integrated Oil - 0.8%
1,800 Exxon Corporation 176,400
-----------
Materials and Processing - 1.9%
2,500 DuPont (E.I.) de Nemours & Company, Inc. 235,938
2,300 Potash Corporation Saskatchewan, Inc. 195,500
-----------
Total Materials and Processing 431,438
-----------
Producer Durables - 5.4%
1,700 Allied-Signal, Inc. 113,900
2,800 Boeing Company 297,850
3,000 Fluor Corporation 188,250
6,200 General Electric Company 613,025
-----------
Total Producer Durables 1,213,025
-----------
Technology - 9.4%
2,500 BMC Software, Inc.* 103,437
4,200 Cisco Systems, Inc.* 267,225
2,900 Compaq Computer Corporation* 215,325
The accompanying notes are an integral part of this statement.
-17-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Technology - 9.4% (continued)
1,925 Computer Associates International, Inc. $ 95,668
4,200 Hewlett-Packard Company 214,277
3,900 Intel Corporation 510,656
6,400 Microsoft Corporation* 528,800
4,700 Newbridge Networks Corporation* 132,775
1,200 Oracle Systems Corporation* 50,100
-----------
Total Technology 2,118,263
-----------
Utilities - 3.8%
5,700 AT&T Corporation 247,950
2,700 Bell Atlantic Corporation 174,825
4,100 GTE Corporation 186,550
1,844 Lucent Technologies, Inc. 85,285
3,300 SBC Communications, Inc. 170,775
-----------
Total Utilities 865,385
-----------
Total Common Stocks
(Cost $8,707,967) 11,480,174
-----------
Principal
amount
CORPORATE BONDS - 9.1%
Auto and Transportation - 1.8%
$ 360,000 Ford Motor Company, 8.88%,
due 01/15/22 414,942
-----------
Financial and Other - 7.3%
500,000 Anheuser-Busch Company, Inc.,
6.75% due 08/01/03 502,136
400,000 BankAmerica Corporation, 6.20%,
due 02/15/06 375,976
345,263 Ford Credit Grantor Trust, 5.90%,
due 10/15/00 345,642
450,000 McDonald's Corporation, 7.05%,
due 11/15/25 430,308
-----------
Financial and other 1,654,062
-----------
Total Corporate Bonds
(Cost $2,030,430) 2,069,004
-----------
The accompanying notes are an integral part of this statement.
-18-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 28.6%
U.S. Government Agency Obligation - 2.2%
Federal Home Loan Mortgage Company,
$ 500,000 8.35%, due 10/06/04 $ 509,194
-----------
U.S. Treasury Obligations - 26.4%
1,125,000 U.S. Treasury Bond, 6.25%, due 08/15/23 1,054,337
400,000 U.S. Treasury Bond, 8.13%, due 05/15/21 464,000
980,000 U.S. Treasury Note, 5.88%, due 02/15/04 954,275
1,850,000 U.S. Treasury Note, 6.38%, due 03/31/01 1,862,141
600,000 U.S. Treasury Note, 6.75%, due 08/15/26 604,125
1,000,000 U.S. Treasury Note, 6.88%, due 05/15/06 1,030,938
-----------
Total U.S. Treasury Obligations 5,969,816
-----------
Total U.S. Government and Agency
Obligations (Cost $6,360,666) 6,479,010
-----------
Total Long-Term Investments
(Cost $17,099,063) 20,028,188
-----------
SHORT-TERM INVESTMENTS - 10.9%
Financial Services - 1.6%
360,000 Beneficial Corporation, 6.60%,
due 10/29/97 362,247
-----------
Repurchase Agreement - 3.7%
Barclays BZW Securities,
dated 12/31/96, 5.90%, due 01/02/97
in the amount of $834,000
(collateralized by $847,344
U.S. Treasury Note, 6.25%,
due 06/30/98, with a market
834,000 value of $853,302 at 12/31/96),
repurchase proceeds $834,273 834,000
-----------
The accompanying notes are an integral part of this statement.
-19-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Short-Term Investment Fund - 1.2%
Fidelity Institutional Cash Portfolios:
265,000 Government $ 265,000
-----------
Principal
amount
U.S. Government Obligation - 4.4%
$ 1,000,000 U.S. Treasury Note, 4.75%,
due 02/15/97 998,438
-----------
Total Short-Term Investments
(Cost $2,459,685) 2,459,685
-----------
Total Investments
(Cost $19,558,748) - 99.4% 22,487,873
-----------
Other assets in excess of
liabilities - 0.6% 143,349
-----------
NET ASSETS - 100% $22,631,222
===========
* Nonincome producing security.
The accompanying notes are an integral part of this statement.
-20-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $19,558,748) $ 22,487,873
Cash 76
Investment income receivable 196,643
Receivable for investments sold 94,626
Receivable for units issued 5,098
-------------
Total assets 22,784,316
-------------
Liabilities
Payable for investments purchased 133,777
Management fee payable 19,317
-------------
Total liabilities 153,094
-------------
Net assets $ 22,631,222
=============
Net assets were comprised of:
Units of beneficial interest $ 4,583,479
Accumulated net investment income 6,826,149
Accumulated net realized gain 8,292,469
Net unrealized appreciation 2,929,125
-------------
Net assets at December 31, 1996 $ 22,631,222
=============
Unit value, offering price and redemption
price per unit ($22,631,222/956,554 units
of beneficial interest issued and outstanding;
unlimited number of units authorized) $ 23.66
=============
The accompanying notes are an integral part of this statement.
-21-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
BALANCED FUND
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
Net investment income
Income:
Dividends $ 156,938
Interest 682,598
------------
Total income 839,536
------------
Expenses:
Management fee (Note 2) 219,535
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 4,120
Legal fees 2,537
Registration fees 1,892
Shareholder reports 2,792
Miscellaneous 3,035
------------
Total expenses 257,138
Expense subsidy (Note 3) (37,603)
------------
Net expenses 219,535
------------
Net investment income 620,001
------------
Net realized and unrealized gain on investments
Net realized gain on investments 1,430,532
Unrealized appreciation in value
of investments during the year 322,380
------------
Net gain on investments 1,752,912
------------
Net increase in net assets resulting from operations $ 2,372,913
============
The accompanying notes are an integral part of this statement.
-22-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
1996 1995
---- ----
Increase/(decrease) in net assets:
From operations:
Net investment income $ 620,001 $ 641,949
Net realized gain on investments 1,430,532 1,560,947
Unrealized appreciation in value
of investments during the year 322,380 2,414,091
----------- -----------
Net increase in net assets resulting
from operations 2,372,913 4,616,987
----------- -----------
From unit transactions:
Net proceeds from units issued 6,612,764 3,492,374
Cost of units redeemed (7,825,902) (9,439,693)
----------- -----------
Net decrease in net assets resulting
from unit transactions (1,213,138) (5,947,319)
----------- -----------
Total increase/(decrease) in net assets 1,159,775 (1,330,332)
Net assets, beginning of year 21,471,447 22,801,779
----------- -----------
Net assets, end of year $22,631,222 $21,471,447
=========== ===========
Net change in units outstanding:
Units issued 297,343 179,016
Units redeemed (351,351) (496,947)
----------- -----------
(54,008) (317,931)
=========== ===========
The accompanying notes are an integral part of this statement.
-23-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
BALANCED FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTANDING THROUGHOUT EACH OF THE YEARS INDICATED)
Years ended December 31,
1996 1995 1994 1993* 1992*
Selected per unit data:
Investment income $ 0.85 $ 0.76 $ 0.63 $ 0.64 $ 0.68
Expenses (0.26) (0.23) (0.20) (0.19) (0.18)
Expense subsidy 0.04 0.04 0.03 0.02 0.02
-------- -------- -------- -------- --------
Net investment income 0.63 0.57 0.46 0.47 0.52
Net realized and unrealized
gain/(loss) on investments 1.78 3.52 (0.86) 0.52 0.32
-------- -------- -------- -------- --------
Net increase/(decrease) in
net asset value 2.41 4.09 (0.40) 0.99 0.84
Net asset value, beginning
of year 21.25 17.16 17.56 16.57 15.73
-------- -------- -------- -------- --------
Net asset value, end of year $ 23.66 $ 21.25 $ 17.16 $ 17.56 $ 16.57
======== ======== ======== ======== ========
Ratio to average net assets:
Expenses 1.00% 1.00% 1.00% 1.00% 1.00%
Net investment income 2.82% 2.94% 2.69% 2.78% 3.33%
Other:
Average net assets
(000 omitted) $ 21,953 $ 21,843 $ 27,825 $ 51,971 $ 43,061
Portfolio turnover 70% 98% 157% 148% 187%
Number of units outstanding
at end of year (000 omitted) 957 1,011 1,328 2,123 3,084
Total return 11.31% 23.83% (2.27%) 6.01% 5.32%
*Amounts adjusted to reflect 10:1 reverse split for the years ended 1992-1993.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
-24-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
LONG-TERM INVESTMENTS - 77.1%
CORPORATE BONDS - 17.4%
Auto and Transportation - 2.4%
$ 1,140,000 Ford Motor Company, 8.88%,
due 01/15/22 $ 1,313,984
------------
Financial and Other - 11.8%
2,500,000 Anheuser-Busch Companies, Inc. 6.75%,
due 08/01/03 2,510,680
2,000,000 BankAmerica Corporation, 6.20%,
due 02/15/06 1,879,878
2,000,000 McDonald's Corporation, 7.05%,
due 11/15/25 1,912,480
------------
Total Financial and Other 6,303,038
------------
Financial Services - 3.2%
1,726,313 Ford Credit Grantor Trust, 5.90%,
due 10/15/00 1,728,211
------------
Total Corporate Bonds
(Cost $9,239,029) 9,345,233
------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 59.7%
U.S. Government Agency Obligation - 4.9%
Federal Home Loan Mortgage Company, 8.35%,
2,550,000 due 10/06/04 (Cost $2,543,719) 2,596,889
U.S. Treasury Obligations - 54.8%
550,000 U.S. Treasury Bond, 6.25%, due 08/15/23 515,453
4,050,000 U.S. Treasury Bond, 6.75%, due 08/15/26 4,077,844
6,000,000 U.S. Treasury Bond, 8.13%, due 05/15/21 6,960,000
2,300,000 U.S. Treasury Note, 5.88%, due 02/15/04 2,239,625
15,500,000 U.S. Treasury Note, 6.38%, due 03/31/01 15,601,726
------------
Total U.S. Treasury Obligations
(Cost $29,292,125) 29,394,648
------------
Total U.S. Government and Agency
Obligations (Cost $31,835,844) 31,991,537
------------
Total Long-Term Investments
(Cost $41,074,873) 41,336,770
------------
The accompanying notes are an integral part of this statement.
-25-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
SHORT-TERM INVESTMENTS - 21.4%
Financial Services - 2.1%
$ 1,140,000 Beneficial Corporation, 6.60%,
due 10/29/97 $ 1,147,116
------------
Repurchase Agreements - 9.2%
Goldman Sachs and Company,
dated 12/31/96, 6.00%,
due 01/02/97 in the amount
of $2,421,000 (collateralized by
$2,454,289 U.S. Treasury Note,
6.25%, due 05/31/00, with a market
value of $2,480,774 at 12/31/96),
2,421,000 repurchase proceeds $ 2,421,807 2,421,000
Barclays BZW Securities, dated 12/31/96,
5.90%, due 01/02/97 in the amount
of $2,421,000 (collateralized by
$2,459,736 U.S. Treasury Note,
6.25%, due 06/30/98, with a market
value of $2,477,031 at 12/31/96),
2,421,000 repurchase proceeds $2,421,794 2,421,000
Merrill Lynch Government Securities,
dated 12/31/96, 5.50%, due 01/02/97
in the amount of $81,000 (collateralized
by $79,960 U.S. Treasury Note, 6.50%,
due 08/31/01, with a market value of
$82,661 at 12/31/96) repurchase
81,000 proceeds $81,025 81,000
------------
Total Repurchase Agreements 4,923,000
------------
Number of
shares
Short-Term Investment Fund - 4.5%
Fidelity Institutional Cash Portfolios:
2,437,000 Government 2,437,000
------------
The accompanying notes are an integral part of this statement.
-26-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
U.S. Government Obligation - 5.6%
$ 3,000,000 U.S. Treasury Bill, 5.00%, due 02/06/97 $ 2,984,985
------------
Total Short-Term Investments
(Cost $11,492,101) 11,492,101
------------
Total Investments
(Cost $52,566,974) - 98.5% 52,828,871
------------
Other assets in excess of
liabilities - 1.5% 785,428
------------
NET ASSETS - 100% $ 53,614,299
============
The accompanying notes are an integral part of this statement.
-27-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $52,566,974) $ 52,828,871
Cash 485
Investment income receivable 732,955
Receivable for units issued 121,154
------------
Total assets 53,683,465
------------
Liabilities
Management fee payable 35,165
Payable for units redeemed 34,001
------------
Total liabilities 69,166
------------
Net assets $ 53,614,299
============
Net assets were comprised of:
Units of beneficial interest $ 30,544,479
Accumulated net investment income 20,873,076
Accumulated net realized gain 1,934,847
Net unrealized appreciation 261,897
------------
Net assets at December 31, 1996 $ 53,614,299
============
Unit value, offering price and redemption price
per unit ($53,614,299/2,888,629 units of
beneficial interest issued and outstanding;
unlimited number of units authorized) $ 18.56
============
The accompanying notes are an integral part of this statement.
-28-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INCOME FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Interest $ 3,422,155
------------
Total income 3,422,155
------------
Expenses:
Management fee (Note 2) 405,352
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 4,900
Legal fees 2,537
Registration fees 0
Shareholder reports 2,792
Miscellaneous 4,990
------------
Total expenses 443,798
Expense subsidy (Note 3) (38,446)
------------
Net expenses 405,352
------------
Net investment income 3,016,803
------------
Net realized and unrealized gain/loss on investments
Net realized gain on investments 233,730
Unrealized depreciation in value of
investments during the year (2,268,924)
------------
Net loss on investments (2,035,194)
------------
Net increase in net assets resulting from operations $ 981,609
============
The accompanying notes are an integral part of this statement.
-29-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
1996 1995
---- ----
Increase/(decrease) in net assets:
From operations:
Net investment income $ 3,016,803 $ 3,153,511
Net realized gain on investments 233,730 1,136,606
Unrealized appreciation/(depreciation)
in value of investments during the year (2,268,924) 4,897,758
------------ ------------
Net increase in net assets resulting
from operations 981,609 9,187,875
------------ ------------
From unit transactions:
Net proceeds from units issued 8,529,032 10,958,151
Cost of units redeemed (13,347,969) (14,929,216)
------------ ------------
Net decrease in net assets resulting
from unit transactions (4,818,937) (3,971,065)
------------ ------------
Total increase/(decrease) in net assets (3,837,328) 5,216,810
Net assets, beginning of year 57,451,627 52,234,817
------------ ------------
Net assets, end of year $ 53,614,299 $ 57,451,627
============ ============
Net change in units outstanding:
Units issued 473,031 643,190
Units redeemed (738,759) (883,838)
------------ ------------
(265,728) (240,648)
The accompanying notes are an integral part of this statement.
-30-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INCOME FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTANDING THROUGHOUT EACH OF THE YEARS INDICATED)
Years ended December 31,
1996 1995 1994 1993* 1992*
Selected per unit data:
Investment income $ 1.14 $ 1.09 $ 0.97 $ 0.97 $ 1.02
Expenses (0.15)** (0.14)** (0.14)** (0.17) (0.16)
Expense subsidy 0.01 0.02 0.01 0.02 0.02
------- ------- ------- ------- -------
Net investment income 1.00 0.97 0.84 0.82 0.88
Net realized and unrealized
gain/(loss) on investments (0.65) 1.85 (1.56) 0.67 (0.16)
------- ------- ------- ------- -------
Net increase/(decrease) in
net asset value 0.35 2.82 (0.72) 1.49 0.72
Net asset value, beginning
of year 18.21 15.39 16.11 14.62 13.90
------- ------- ------- ------- -------
Net asset value, end of year $ 18.56 $ 18.21 $ 15.39 $ 16.11 $ 14.62
======= ======= ======= ======= =======
Ratio to average net assets:
Expenses 0.75%*** 0.75%*** 0.75%*** 1.00% 1.00%
Net investment income 5.58% 5.77% 5.43% 5.20% 6.21%
Other:
Average net assets
(000 omitted) $54,048 $54,637 $63,817 $70,750 $53,886
Portfolio turnover 72% 93% 239% 156% 285%
Number of units outstanding
at end of year (000 omitted) 2,889 3,154 3,395 4,724 4,413
Total return 1.91% 18.38% (4.47%) 10.18% 5.13%
* Amounts adjusted to reflect 10:1 reverse split for the years ended
1992-1993.
** Reflects management fee reduction of $135,137 or $0.05 per unit, $136,617 or
$0.04 per unit and $99,627 or $0.03 per unit for the years ended December
31, 1996, 1995 and 1994, respectively. Without management fee reduction,
expense per unit is $0.18, $0.18 and $0.17 for the years ended December 31,
1996, 1995 and 1994, respectively.
*** Reflects management fee reductions of 0.25% or $135,137, $136,617 and
$99,627 for the years ended December 31, 1996, 1995 and 1994, respectively.
For the year ended December 31, 1994 the actual net expense ratio for the
year was 0.8% of average net assets as the fee reduction went into effect on
5/2/94.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
-31-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
CORE EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
COMMON STOCKS - 98.1%
Auto and Transportation - 5.1%
5,000 AMR Corporation* $ 440,625
15,000 Chrysler Corporation 495,000
7,900 Ford Motor Company 251,813
5,000 General Motors Corporation 278,750
------------
Total Auto and Transportation 1,466,188
------------
Consumer Discretionary - 10.1%
9,300 Dayton Hudson Corporation 365,025
3,100 Disney (Walt) Company 215,838
5,000 Eastman Kodak Company 401,250
10,000 Federated Department Stores, Inc.* 341,250
4,300 Home Depot, Inc. 215,538
11,875 Mattel, Inc. 329,531
4,150 McDonald's Corporation 187,788
9,500 Sears, Roebuck & Company 438,188
17,500 Wal-Mart Stores, Inc. 400,313
------------
Total Consumer Discretionary 2,894,721
------------
Consumer Staples - 9.1%
10,000 Coca-Cola Company 526,250
4,600 Gillette Company 357,650
8,200 PepsiCo, Inc. 239,850
3,500 Phillip Morris Companies, Inc. 394,188
4,200 Procter & Gamble Company 451,500
14,500 Sysco Corporation 473,063
900 Unilever, N.V. 157,725
------------
Total Consumer Staples 2,600,226
------------
The accompanying notes are an integral part of this statement.
-32-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
CORE EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
share Value
Financial Services - 14.8%
8,500 American Express Company $ 480,250
6,000 American International Group, Inc. 649,500
18,000 Federal National Mortgage Association 670,500
6,000 MBIA, Inc. 607,500
8,000 Student Loan Marketing Association 745,000
4,800 The Charles Schwab Corporation 153,600
20,000 Travelers Corporation 907,477
------------
Total Financial Services 4,213,827
------------
Healthcare - 7.8%
4,100 Abbott Laboratories, Inc. 208,075
3,600 American Home Products Corporation 211,050
2,700 Bristol-Myers Squibb Company 293,625
3,450 Columbia HCA/Healthcare Corporation 140,588
6,000 Johnson & Johnson 298,500
2,800 Lilly (Eli) & Company 204,400
6,800 Merck & Company, Inc. 538,900
3,900 Pfizer, Inc. 323,212
------------
Total Healthcare 2,218,350
------------
Integrated Oils - 10.0%
3,000 Amoco Corporation 241,500
4,595 British Petroleum Company PLC 649,618
4,800 Chevron Corporation 312,000
6,000 Exxon Corporation 588,000
5,000 Mobil Corporation 611,250
2,700 Royal Dutch Petroleum Company ADR 461,025
------------
Total Integrated Oils 2,863,393
------------
The accompanying notes are an integral part of this statement.
-33-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
CORE EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Materials and Processing - 9.9%
3,100 Aluminum Company of America $ 197,625
9,500 Dover Corporation 477,375
5,500 Dow Chemical Company 431,062
5,000 DuPont (E.I.) de Nemours & Company, Inc. 471,875
5,600 Inco, Ltd. 178,500
6,600 International Paper Company 266,475
1,500 Kimberly-Clark Corporation 142,875
5,750 Minnesota Mining & Manufacturing Company 476,531
2,900 Phelps Dodge Corporation 195,750
-----------
Total Materials and Processing 2,838,068
-----------
Other Energy - 1.2%
3,500 Schlumberger, Ltd. 349,562
-----------
Producer Durables - 10.9%
8,500 Allied-Signal, Inc. 569,500
3,100 Boeing Company 329,762
5,000 Emerson Electric Company 483,750
3,900 Fluor Corporation 244,725
9,000 General Electric Company 889,875
4,700 General Motors Corporation 264,375
5,800 York International Corporation 324,075
-----------
Total Producer Durables 3,106,062
-----------
Technology - 11.2%
3,400 Cisco Systems, Inc.* 216,325
5,300 Compaq Computer Corporation* 393,525
2,700 Computer Associates International, Inc. 134,325
4,900 Hewlett-Packard Company 246,225
575 Imation Corporation* 16,172
4,500 Intel Corporation 589,218
The accompanying notes are an integral part of this statement.
-34-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
CORE EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Technology - 11.2% (continued)
2,750 International Business Machines Corporation $ 415,250
8,800 Microsoft Corporation* 727,100
2,400 Motorola, Inc. 147,300
6,000 Xerox Corporation 315,750
-----------
Total Technology 3,201,190
-----------
Utilities - 8.0%
8,451 AT&T Corporation 367,597
12,500 GTE Corporation 568,750
2,738 Lucent Technologies, Inc. 126,632
8,400 MCI Communications Corp. 274,575
12,500 NIPSCO Industries, Inc. 495,312
8,500 SBC Communications, Inc. 439,875
-----------
Total Utilities 2,272,741
-----------
Total Common Stocks (Cost $20,131,688) 28,024,328
Principal
amount
SHORT-TERM INVESTMENTS - 0.8%
Repurchase Agreement - 0.7%
Barclays BZW Securities,
dated 12/31/96, 5.90%,
due 01/02/97 in the amount
of $221,000 (collateralized by
$224,536 U.S. Treasury Note, 6.25%,
due 06/30/98, with a market value of
$ 221,000 $226,115 at 12/31/96), repurchase
proceeds $221,072 221,000
-----------
The accompanying notes are an integral part of this statement.
-35-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
CORE EQUITY FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Short-Term Investment Fund - 0.1%
Fidelity Institutional Cash Portfolios:
17,000 Government $ 17,000
------------
Total Short-Term Investments
(Cost $238,000) 238,000
------------
Total Investments (Cost
$20,369,688) - 98.9% 28,262,328
------------
Other assets in excess of liabilities - 1.1% 321,249
------------
NET ASSETS - 100% $ 28,583,577
============
* Nonincome producing security.
The accompanying notes are an integral part of this statement.
-36-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
CORE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $20,369,688) $ 28,262,328
Cash 820
Investment income receivable 58,000
Receivable for units issued 287,750
------------
Total assets 28,608,898
------------
Liabilities
Management fee payable 24,440
Payable for units redeemed 881
------------
Total liabilities 25,321
------------
Net assets $ 28,583,577
============
Net assets were comprised of:
Units of beneficial interest $ 18,367,824
Accumulated net investment income 959,488
Accumulated net realized gain 1,363,625
Net unrealized appreciation 7,892,640
------------
Net assets at December 31, 1996 $ 28,583,577
============
Unit value, offering price and redemption
price per unit ($28,583,577/1,793,487 units
of beneficial interest issued and outstanding;
unlimited number of units authorized) $ 15.94
============
The accompanying notes are an integral part of this statement.
-37-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
CORE EQUITY FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Dividends $ 512,924
Interest 45,282
-----------
Total income 558,206
-----------
Expenses:
Management fee (Note 2) 265,417
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 4,310
Legal fees 2,537
Registration fees 0
Shareholder reports 2,792
Miscellaneous 3,219
-----------
Total expenses 301,502
Expense subsidy (Note 3) (36,085)
-----------
Net expense 265,417
-----------
Net investment income 292,789
-----------
Net realized and unrealized gain on investments
Net realized gain on securities 374,940
Unrealized appreciation in value of
investments during the year 4,766,319
-----------
Net gain on investments 5,141,259
-----------
Net increase in net assets resulting from operations $ 5,434,048
===========
The accompanying notes are an integral part of this statement.
-38-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
CORE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
1996 1995
Increase/(decrease) in net assets:
From operations:
Net investment income $ 292,789 $ 321,856
Net realized gain on investments 374,940 1,676,560
Unrealized appreciation in value
of investments during the year 4,766,319 3,034,911
----------- -----------
Net increase in net assets resulting
from operations 5,434,048 5,033,327
----------- -----------
From unit transactions:
Net proceeds from units issued 6,279,420 4,888,390
Cost of units redeemed (7,497,025) (6,590,153)
----------- -----------
Net decrease in net assets resulting
from unit transactions (1,217,605) (1,701,763)
----------- -----------
Total increase in net assets 4,216,443 3,331,564
Net assets, beginning of year 24,367,134 21,035,570
----------- -----------
Net assets, end of year $28,583,577 $24,367,134
=========== ===========
Net change in units outstanding:
Units issued 440,515 412,444
Units redeemed (520,615) (569,249)
----------- -----------
(80,100) (156,805)
=========== ===========
The accompanying notes are an integral part of this statement.
-39-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
CORE EQUITY FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTANDING THROUGHOUT EACH OF THE YEARS INDICATED)
Years ended December 31,
1996 1995 1994 1993*
Selected per unit data:
Investment income $ 0.30 $ 0.29 $ 0.28 $ 0.21
Expenses (0.16) (0.14)# (0.13) (0.20)#
Expense subsidy 0.02 0.02 0.03 0.13
-------- -------- -------- --------
Net investment income 0.16 0.17 0.18 0.14
Net realized and unrealized
gain/(loss) on investments 2.77 2.48 (0.62) 0.66
-------- -------- -------- --------
Net increase/(decrease) in
net asset value 2.93 2.65 (0.44) 0.80
Net asset value, beginning
of period 13.01 10.36 10.80 10.00
-------- -------- -------- --------
Net asset value, end of period $ 15.94 $ 13.01 $ 10.36 $ 10.80
======== ======== ======== ========
Ratio to average net assets:
Expenses 1.00% 1.00% 1.00% 1.00%##
Net investment income 1.10% 1.44% 1.68% 1.84%**
Other:
Average net assets
(000 omitted) $ 26,542 $ 22,336 $ 16,948 $ 4,356
Portfolio turnover 29% 133% 129% 83%
Number of units outstanding
at end of year (000 omitted) 1,793 1,874 2,030 1,086
Total return 22.54% 25.53% (4.03%) 7.95%***
# Reflects voluntary fee waiver of $6,949 or $0.01 per unit. Without
voluntary fee waiver, expense per unit is $0.21.
## Does not reflect voluntary waiver of management fees in 1993 of $6,949. Net
of the voluntary management fee waiver, the net expense ratio is 0.79% of
average net assets. This figure is annualized.
* Commencement of Operations April 1, 1993.
** Annualized.
*** Nonannualized.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
-40-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
COMMON STOCKS - 93.6%
Auto and Transportation - 2.9%
11,200 AAR Corporation $ 338,800
10,000 Railtex, Inc.* 252,500
------------
Total Auto and Transportation 591,300
------------
Capital Goods & Services - 1.0%
20,900 Lojack Corporation* 209,000
------------
Consumer Discretionary - 15.6%
10,100 CDI Corporation* 286,587
8,700 Carson Pirie Scott Company* 219,675
8,800 Corrections Corporation of America* 269,500
8,300 Fair Isaacs & Company 324,738
10,100 Mohawk Industries* 222,200
6,600 Personnel Group of America* 159,225
8,000 Proffitt's, Inc.* 295,000
12,200 Servico, Inc.* 196,725
13,500 St. John Knits, Inc. 587,250
5,500 Talbot's, Inc. 157,437
5,645 Unavision* 208,865
12,050 Waban, Inc.* 313,300
------------
Total Consumer Discretionary 3,240,502
------------
Consumer Staples - 2.6%
3,600 JP Food Service* 100,350
9,700 Richfood Holdings, Inc. 235,225
6,500 Schweitzer Mauduit International, Inc. 205,563
------------
Total Consumer Staples 541,138
------------
Financial Services - 15.1%
6,600 Allied Group, Inc. 215,325
9,725 Capstead Mortgage Corporation 233,400
The accompanying notes are an integral part of this statement.
-41-
<PAGE>
TEXAS COMMERCE BANK NATIONA ASSOCIATION
AVESTA TRUST
SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Financial Services - 15.1% (continued)
19,100 City National Corporation $ 413,037
8,900 Collective Bancorp, Inc. 312,612
13,720 Delphi Financial Group, Inc.* 404,740
5,600 Evans Withycombe Residential, Inc. 117,600
7,600 Magna Group, Inc. 224,200
12,700 Roosevelt Financial Group, Inc. 266,700
6,200 Southern Pacific Funding* 192,975
8,450 Vesta Insurance Group, Inc. 265,119
10,300 Weeks Corporation 342,475
7,370 WFS Financial, Inc.* 146,479
------------
Total Financial Services 3,134,662
------------
Healthcare - 12.8%
15,100 ADAC Laboratories 360,512
7,900 American Medical Response* 256,750
11,150 Centocor, Inc.* 398,613
11,200 Liposome Company, Inc.* 214,200
13,200 Multicare Companies, Inc.* 267,300
7,350 OccuSystems, Inc.* 198,450
8,844 Pharmaceutical Product Development, Inc.* 223,311
12,250 Sofamor/Danek Group, Inc. 373,625
10,650 Sybron International Corporation* 351,450
------------
Total Healthcare 2,644,211
------------
Integrated Oil - 0.8%
9,900 Cabot Oil & Gas Corporation 169,538
------------
Materials and Processing - 8.5%
9,800 Chase Brass Industries* 194,775
8,100 Delta and Pine Land Company 259,200
7,000 Huntco, Inc. 103,250
9,400 Jacobs Engineering Group* 222,075
5,600 NCI Building Systems, Inc.* 193,200
The accompanying notes are an integral part of this statement.
-42-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Materials and Processing - 8.5% (continued)
15,600 Pegasus Gold* $ 117,975
3,150 Potash Corporation Saskatchewan, Inc. 267,750
12,000 US Can Corporation* 202,500
5,900 Wolverine Tube, Inc.* 207,975
-----------
Total Materials and Processing 1,768,700
-----------
Other Energy - 9.6%
3,700 Atwood Oceanics* 234,950
6,250 Barrett Resources Corporation* 266,406
5,750 Energy Venturs, Inc.* 292,532
12,300 Falcon Drilling Company, Inc.* 482,775
8,700 Parker & Parsley Petroleum Company 319,725
3,600 Rutherford-Moran Oil Corporation* 100,800
3,800 Tosco Corporation 300,675
-----------
Total Other Energy 1,997,863
-----------
Producer Durables - 4.4%
9,800 Oregon Mettalurgical* 316,050
10,800 Tracor, Inc.* 229,500
11,430 USA Waste Services, Inc. 364,331
-----------
Total Producer Durables 909,881
-----------
Technology - 17.2%
8,100 Analyst International Company 228,825
12,500 Black Box Corporation* 515,625
14,500 Comverse Technology, Inc.* 548,281
7,800 Fisher Scientific International 367,575
6,650 Kronos, Inc.* 212,800
6,700 Merix Corporation* 102,175
11,250 National Computer Systems, Inc. 286,875
3,100 PairGain Technologies, Inc.* 94,356
The accompanying notes are an integral part of this statement.
-43-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
----------- ---------
Technology - 17.2% (continued)
7,150 PRI Automation, Inc.* $ 325,325
12,800 Quickturn Design Systems, Inc.* 262,400
12,050 SDL, Inc.* 316,312
4,062 Sterling Commerce, Inc.* 143,186
2,500 Sterling Software, Inc.* 79,063
3,400 Teltrend, Inc.* 94,350
------------
Total Technology 3,577,148
------------
Utilities - 3.1%
7,450 California Energy Company, Inc.* 250,506
8,200 Tejas Gas Corporation* 390,525
------------
Total Utilities 641,031
------------
Total Common Stocks
(Cost $14,832,324) 19,424,974
------------
Principal
amount
-----------
SHORT-TERM INVESTMENTS - 6.0%
Repurchase Agreement - 4.0%
Barclays BZW Securities,
dated 12/31/96, 5.90%, due 01/02/97
in the amount of $834,000
(collateralized by $847,344 U.S.
Treasury Note, 6.25%, due 06/30/98,
with a market value of $853,302 at
12/31/96), repurchase proceeds
$ 834,000 $834,273 834,000
------------
The accompanying notes are an integral part of this statement.
-44-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASOCIATION
AVESTA TRUST
SMALL CAPITALIZATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Short-Term Investment Fund - 2.0%
Fidelity Institutional Cash Portfolios:
408,000 Government $ 408,000
-----------
Total Short-Term Investments
(Cost $1,242,000) 1,242,000
-----------
Total Investments
(Cost $16,074,324) - 99.6% 20,666,974
-----------
Other assets in excess of
liabilities - 0.4% 83,235
-----------
NET ASSETS - 100% $20,750,209
===========
* Nonincome producing security.
The accompanying notes are an integral part of this statement.
-45-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SMALL CAPITALIZATION FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $16,074,324) $ 20,666,974
Investment income receivable 4,251
Receivable for units issued 95,657
------------
Total assets 20,766,882
------------
Liabilities
Cash overdraft 24
Management fee payable 16,649
------------
Total liabilities 16,673
------------
Net assets $ 20,750,209
============
Net assets were comprised of:
Units of beneficial interest $ 13,571,362
Accumulated net investment income 118,619
Accumulated net realized gain 2,467,578
Net unrealized appreciation 4,592,650
------------
Net assets at December 31, 1996 $ 20,750,209
============
Unit value, offering price and redemption
price per unit ($20,750,209/1,182,097 units
of beneficial interest issued and outstanding;
unlimited number of units authorized) $ 17.55
============
The accompanying notes are an integral part of this statement.
-46-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SMALL CAPITALIZATION FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Dividends $ 92,129
Interest 77,839
----------
Total income 169,968
----------
Expenses:
Management fee (Note 2) 164,194
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 3,920
Legal fees 2,537
Registration fees 1,624
Shareholder reports 2,792
Miscellaneous 2,060
----------
Total expenses 200,354
Expense subsidy (Note 3) (36,160)
----------
Net expenses 164,194
----------
Net investment income 5,774
----------
Net realized and unrealized gain on investments
Net realized gain on investments 2,846,278
Unrealized appreciation in value
of investments during the year 1,536,847
----------
Net gain on investments 4,383,125
----------
Net increase in net assets resulting from operations $4,388,899
==========
The accompanying notes are an integral part of this statement.
-47-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SMALL CAPITALIZATION FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
1996 1995
---- ----
Increase in net assets:
From operations:
Net investment income $ 5,774 $ 47,355
Net realized gain on investments 2,846,278 370,797
Unrealized appreciation in value
of investments during the year 1,536,847 2,480,282
------------ -------------
Net increase in net assets resulting
from operations 4,388,899 2,898,434
From unit transactions:
Net proceeds from units issued 7,179,789 2,518,482
Cost of units redeemed (3,666,519) (1,835,378)
------------ -------------
Net increase in net assets resulting
from unit transactions 3,513,270 683,104
------------ -------------
Total increase in net assets 7,902,169 3,581,538
Net assets, beginning of year 12,848,040 9,266,502
------------ -------------
Net assets, end of year $ 20,750,209 $ 12,848,040
============ =============
Net change in units outstanding:
Units issued 458,305 215,639
Units redeemed (234,176) (163,732)
------------ -------------
224,129 51,907
============ =============
The accompanying notes are an integral part of this statement.
-48-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SMALL CAPITALIZATION FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTANDING THROUGHOUT EACH OF THE YEARS INDICATED)
<TABLE>
<CAPTION>
Years ended December 31,
---------------------------------------------
1996 1995 1994 1993***
-------- ------- ------- --------
<S> <C> <C> <C> <C>
Selected per unit data:
Investment income $ 0.16 $ 0.17 $ 0.16 $ 0.09
Expenses (0.18)** (0.16)** (0.15)** (0.17)#
Expense subsidy 0.03 0.04 0.05 0.10
------- ------- ------ ------
Net investment income 0.01 0.05 0.06 0.02
Net realized and unrealized
gain/(loss) on investments 4.13 3.13 (0.72) 0.87
-------- ------- ------ ------
Net increase/(decrease) in
net asset value 4.14 3.18 (0.66) 0.89
Net asset value, beginning
of period 13.41 10.23 10.89 10.00
-------- ------- ------ ------
Net asset value, end of period $ 17.55 $ 13.41 $10.23 $10.89
======== ======= ====== ======
Ratio to average net assets:
Expenses 1.00%* 1.00%* 1.00%* 1.15%##
Net investment income 0.04% 0.46% 0.55% 0.28%-
Other:
Average net assets (000 omitted) $16,384 $10,378 $9,678 $ 768
Portfolio turnover 68% 89% 120% 161%
Number of units outstanding
at end of year (000 omitted) 1,182 958 906 903
Total return 30.88% 31.14% (6.12%) 8.94%****
</TABLE>
- - Annualized
# Reflects voluntary fee waiver of $14,349 or $0.02 per unit. Without
voluntary fee waiver, expense per unit is $0.19.
## Does not reflect voluntary waiver of management fees of $14,349. Net of the
voluntary management fee waiver, the net expense ratio is 0.82% of average
net assets. This figure is annualized.
* Reflects management fee reduction of 0.15% or $24,219, $15,584 and $9,153
for the years ended December 31, 1996, 1995 and 1994, respectively. For the
year ended December 31, 1994 the actual net expense ratio for the year was
1.06% of average net assets as the fee reduction went into effect on
May 2, 1994.
** Reflects management fee reduction of $24,219 or $0.02 per unit, $15,584 or
$0.02 per unit and $9,153 or $0.01 per unit for the years ended December
31, 1996, 1995 and 1994, respectively. Without management fee reduction,
expense per unit is $0.18, $0.17 and $0.16 for the years ended December 31,
1996, 1995 and 1994, respectively.
*** Commencement of Operations April 1, 1993.
**** Not annualized.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
-49-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
INTERMEDIATE-TERM U.S. GOVERNMENT
OBLIGATIONS - 95.6%
U.S. Government Agency Obligation - 9.0%
Federal Home Loan Mortgage Corporation,
$ 2,601,540 5.60%, due 09/15/00 $ 2,556,742
------------
U.S. Government Obligations - 86.6%
3,000,000 U.S. Treasury Note, 5.13%, due 02/28/98 2,971,875
4,666,000 U.S. Treasury Note, 5.50%, due 11/15/98 4,631,005
1,265,000 U.S. Treasury Note, 5.75%, due 08/15/03 1,227,050
1,000,000 U.S. Treasury Note, 5.88%, due 04/30/98 999,063
900,000 U.S. Treasury Note, 5.88%, due 11/30/01 886,782
4,666,000 U.S. Treasury Note, 6.13%, due 03/31/98 4,676,209
1,865,000 U.S. Treasury Note, 6.25%, due 10/31/01 1,866,165
765,000 U.S. Treasury Note, 6.38%, due 08/15/02 770,021
400,000 U.S. Treasury Note, 6.50%, due 05/31/01 404,500
1,235,000 U.S. Treasury Note, 6.50%, due 10/15/06 1,241,947
1,600,000 U.S. Treasury Note, 6.88%, due 05/15/06 1,649,501
2,500,000 U.S. Treasury Note, 7.75%, due 11/30/99 2,610,937
765,000 U.S. Treasury Note, 7.88%, due 08/15/01 815,443
------------
Total U.S. Government Obligations 24,750,498
------------
Total Intermediate-Term U.S. Government
Obligations (Cost $27,190,800) 27,307,240
------------
SHORT-TERM INVESTMENTS - 1.8%
Repurchase Agreement - 1.4%
Barclays BZW Securities, dated 12/31/96,
5.90%, due 01/02/97 in the amount of
$373,000 (collateralized by $378,968
U.S. Treasury Note, 6.25%, due 06/30/98
with a market value of $381,633 at 12/31/96),
373,000 repurchase proceeds $373,122 373,000
------------
The accompanying notes are an integral part of this statement.
-50-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
Short-Term Investment Funds - 0.3%
Fidelity Institutional Cash Portfolios:
5,000 Government $ 5,000
Goldman Sachs-Institutional Liquid
88,992 Assets - Government Portfolio 88,992
-----------
Total Short-Term Investment Funds 93,992
-----------
Principal
amount
U.S. Government Obligation - 0.1%
$ 30,000 U.S. Treasury Bill, 5.08% due 01/09/97 29,964
-----------
Total Short-Term Investments
(Cost $496,956) 496,956
-----------
Total Investments
(Cost $27,687,756) - 97.4% 27,804,196
-----------
Other assets in excess of
liabilities - 2.6% 746,585
-----------
NET ASSETS - 100% $28,550,781
===========
The accompanying notes are an integral part of this statement.
-51-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $27,687,756) $ 27,804,196
Cash 772
Investment income receivable 319,013
Receivable for units issued 446,931
------------
Total assets 28,570,912
------------
Liabilities
Management fee payable 17,754
Payable for units redeemed 2,377
------------
Total liabilities 20,131
------------
Net assets $ 28,550,781
============
Net assets were comprised of:
Units of beneficial interest $ 25,183,990
Accumulated net investment income 3,993,430
Accumulated net realized loss (743,079)
Net unrealized appreciation 116,440
------------
Net assets at December 31, 1996 $ 28,550,781
============
Unit value, offering price and redemption
price per unit ($28,550,781/2,449,452
units of beneficial interest issued
and outstanding; unlimited number of
units authorized) $ 11.66
============
The accompanying notes are an integral part of this statement.
-52-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Interest $ 1,704,862
-----------
Expenses:
Management fee (Note 2) 212,672
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 4,310
Legal fees 2,537
Registration fees 959
Shareholder reports 2,792
Miscellaneous 3,359
-----------
Total expenses 249,856
Expense subsidy (Note 3) (37,184)
-----------
Net expenses 212,672
-----------
Net investment income 1,492,190
-----------
Net realized and unrealized gain/loss on investments
Net realized loss on securities (308,589)
Net realized loss on futures (33,099)
Net realized gain on options 80,584
-----------
Net realized loss on investments (261,104)
Unrealized depreciation in value
of investments during the year (513,449)
-----------
Net loss on investments (774,553)
-----------
Net increase in net assets resulting from operations $ 717,637
===========
The accompanying notes are an integral part of this statement.
-53-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
1996 1995
Increase/(decrease) in net assets:
From operations:
Net investment income $ 1,492,190 $ 1,310,352
Net realized gain/(loss) on investments (261,104) 172,381
Unrealized appreciation/(depreciation)
in value of investments during the year (513,449) 1,250,842
------------- ------------
Net increase in net assets resulting
from operations 717,637 2,733,575
------------- ------------
From unit transactions:
Net proceeds from units issued 8,522,957 10,490,632
Cost of units redeemed (9,473,140) (7,433,318)
------------- ------------
Net increase/(decrease) in net assets
resulting from unit transactions (950,183) 3,057,314
------------- ------------
Total increase/(decrease) in net assets (232,546) 5,790,889
Net assets, beginning of year 28,783,327 22,992,438
------------- ------------
Net assets, end of year $ 28,550,781 $ 28,783,327
============= ============
Net change in units outstanding:
Units issued 745,912 960,197
Units redeemed (832,085) (693,274)
------------- ------------
(86,173) 266,923
============= ============
The accompanying notes are an integral part of this statement.
-54-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTANDING THROUGHOUT EACH OF THE YEARS INDICATED)
Years ended December 31,
1996 1995 1994 1993*
Selected per unit data:
Investment income $ 0.69 $ 0.66 $ 0.52 $ 0.33
Expenses (0.10) (0.10) (0.09) (0.11)#
Expense subsidy 0.01 0.02 0.02 0.07
------- ------- ------- ------
Net investment income 0.60 0.58 0.45 0.29
Net realized and unrealized
gain/(loss) on investments (0.29) 0.63 (0.55) (0.05)
------- ------- ------- ------
Net increase/(decrease) in
net asset value 0.31 1.21 (0.10) 0.24
Net asset value, beginning
of period 11.35 10.14 10.24 10.00
------- ------- ------- ------
Net asset value, end of period $ 11.66 $ 11.35 $ 10.14 $ 10.24
======= ======== ======== =======
Ratio to average net assets:
Expenses 0.75% 0.75% 0.75% 0.75%##
Net investment income 5.26% 5.38% 4.41% 3.76%**
Other:
Average net assets
(000 omitted) $28,354 $ 24,350 $ 21,504 $ 8,598
Portfolio turnover 177% 187% 268% 247%
Number of units outstanding
at end of year (000 omitted) 2,449 2,536 2,269 1,698
Total return 2.68% 12.01% (1.05%) 2.43%***
# Reflects voluntary fee waiver of $9,789 or $0.02 per unit. Without
voluntary fee waiver, expense per unit is $0.13.
## Does not reflect voluntary waiver of management fees of $9,789. Net of the
voluntary management fee waiver, the net expense ratio is 0.60% of average
net assets. This figure is annualized.
* Commencement of Operations April 1, 1993.
** Annualized.
*** Not annualized.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
-55-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
LONG-TERM U.S. GOVERNMENT OBLIGATIONS - 84.3%
$ 1,825,000 U.S. Treasury Bond, 6.25%, due 08/15/23 $ 1,710,368
600,000 U.S. Treasury Bond, 6.75%, due 08/15/26 604,125
-----------
Total Long-Term U.S. Government
Obligations (Cost $2,207,685) 2,314,493
-----------
SHORT-TERM INVESTMENTS - 13.6%
Repurchase Agreements - 5.6%
Barclays BZW Securities, dated 12/31/96,
5.90%, due 01/02/97 in the amount of
$124,000 (collateralized by $125,984
U.S. Treasury Note, 6.25%, due 06/30/98,
with a market value of $126,869 at
124,000 12/31/96), repurchase proceeds $124,040 124,000
Goldman Sachs and Company, dated 12/31/96,
6.00%, due 01/02/97 in the amount of
$29,000 (collateralized by $29,398
U.S. Treasury Note, 6.25%, due 05/31/00,
29,000 with a market value of $29,716 at 12/31/96),
repurchase proceeds $29,009 29,000
-----------
Total Repurchase Agreements 153,000
-----------
Number of
shares
Short-Term Investment Fund - 2.6%
Fidelity Institutional Cash Portfolios:
72,000 Government 72,000
-----------
The accompanying notes are an integral part of this statement.
-56-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
U.S. GOVERNMENT SECURITIES FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
U.S. Government Obligation - 5.4%
$ 150,000 U.S. Treasury Bill, 5.08%, due 01/09/97 $ 149,834
-----------
Total Short-Term Investments
(Cost $374,834) 374,834
-----------
Total Investments
(Cost $2,582,519) - 97.9% 2,689,327
-----------
Other assets in excess of liabilities - 2.1% 57,350
-----------
NET ASSETS - 100% $ 2,746,677
===========
The accompanying notes are an integral part of this statement.
-57-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $2,582,519) $ 2,689,327
Cash 428
Investment income receivable 58,717
------------
Total assets 2,748,472
------------
Liabilities
Management fee payable 1,795
------------
Total liabilities 1,795
------------
Net assets $ 2,746,677
============
Net assets were comprised of:
Units of beneficial interest $ 2,259,107
Accumulated net investment income 571,995
Accumulated net realized loss (191,233)
Net unrealized appreciation 106,808
------------
Net assets at December 31, 1996 $ 2,746,677
============
Unit value, offering price and redemption
price per unit ($2,746,677/215,229 units
of beneficial interest issued and outstanding;
unlimited number of units authorized) $ 12.76
============
The accompanying notes are an integral part of this statement.
-58-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Interest $ 185,522
-----------
Total income 185,522
-----------
Expenses:
Management fee (Note 2) 20,595
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 3,435
Legal fees 2,537
Registration fees 784
Shareholder reports 2,792
Miscellaneous 1,400
-----------
Total expenses 54,770
Expense subsidy (34,175)
-----------
Net expenses 20,595
-----------
Net investment income 164,927
-----------
Net realized and unrealized gain/loss on investments
Net realized gain on investments 54,565
Unrealized changes in depreciation
of investments during the year (271,709)
-----------
Net loss on investments (217,144)
-----------
Net decrease in net assets
resulting from operations $ (52,217)
===========
The accompanying notes are an integral part of this statement.
-59-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
U.S. GOVERNMENT SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
1996 1995
Increase/(decrease) in net assets:
From operations:
Net investment income $ 164,927 $ 161,680
Net realized gain on investments 54,565 23,350
Unrealized appreciation/(depreciation)
in value of investments during the year (271,709) 494,639
---------- ----------
Net increase/(decrease) in net
assets resulting from operations (52,217) 679,669
---------- ----------
From unit transactions:
Net proceeds from units issued 794,123 1,036,585
Cost of units redeemed (872,518) (1,467,055)
---------- ----------
Net decrease in net assets resulting
from unit transactions (78,395) (430,470)
---------- ----------
Total increase/(decrease) in net assets (130,612) 249,199
Net assets, beginning of year 2,877,289 2,628,090
---------- ----------
Net assets, end of year $2,746,677 $2,877,289
========== ==========
Net change in units outstanding:
Units issued 64,599 87,397
Units redeemed (70,569) (129,083)
---------- ----------
(5,970) (41,686)
========== ==========
The accompanying notes are an integral part of this statement.
-60-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
U.S. GOVERNMENT SECURITIES FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTANDING THROUGHOUT EACH OF THE YEARS INDICATED)
Years ended December 31,
1996 1995 1994 1993***
Selected per unit data:
Investment income $ 0.83 $ 0.81 $ 0.70 $ 0.45
Expenses (0.25)** (0.24)** (0.23)** (0.36)#
Expense subsidy 0.16 0.16 0.15 0.31
------- ------- ------- -------
Net investment income 0.74 0.73 0.62 0.40
Net realized and unrealized
gain/(loss) on investments (0.99) 2.28 (1.53) 0.51
------- ------- ------- -------
Net increase/(decrease) in
net asset value (0.25) 3.01 (0.91) 0.91
Net asset value, beginning
of period 13.01 10.00 10.91 10.00
------- ------- ------- -------
Net asset value, end of period $ 12.76 $ 13.01 $ 10.00 $ 10.91
======= ======== ======== ========
Ratio to average net assets:
Expenses 0.75%* 0.75%* 0.75%* 0.85%##
Net investment income 6.01% 6.38% 6.23% 4.91%-
Other:
Average net assets (000 omitted) $ 2,746 $ 2,535 $ 2,810 $ 1,905
Portfolio turnover 48% 17% 174% 232%
Number of units outstanding
at end of year (000 omitted) 215 221 263 267
Total return (1.89%) 30.11% (8.39%) 9.12%****
- - Annualized.
# Reflects voluntary fee waiver of $3,040 or $0.02 per unit. Without
voluntary fee waiver, expense per unit is $0.38.
## Does not reflect voluntary waiver of management fees of $3,040. Net of the
voluntary management fee waiver, the net expense ratio is 0.64% of average
net assets. This figure is annualized.
* Reflects management fee reduction of 0.10% or $2,757, $2,527 and $1,886 for
the years ended December 31, 1996, 1995 and 1994, respectively. For the
year ended December 31, 1994 the actual net expense ratio for the year was
0.80% of average net assets as the fee reduction went into effect on
5/2/94.
** Reflects management fee reduction of $2,757 or $0.01 per unit, $2,527 or
$0.01 per unit and $1,886 or $0.01 per unit for the years ended December
31, 1996, 1995 and 1994, respectively. Without management fee reduction,
expense per unit is $0.10, $0.25 and $0.24 for the years ended December 31,
1996, 1995 and 1994, respectively.
*** Commencement of Operations April 1, 1993.
**** Not annualized.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
-61-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INTERMEDIATE TERM BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
LONG-TERM INVESTMENTS - 93.5%
CORPORATE BONDS - 29.4%
Banks - 10.7%
$ 150,000 BankAmerica Corporation, 6.85%,
due 03/01/03 $ 150,333
200,000 Citicorp Corporation, 7.13%,
due 09/01/05 201,052
200,000 First Union Corporation, 7.00%,
due 03/15/06 198,250
200,000 Norwest Corporation, 6.20%, due 12/01/05 191,523
------------
Total Banks 741,158
------------
Financial and Other - 16.7%
Associates Corporation of North America,
150,000 7.70%, due 03/01/02 156,890
200,000 Chubb Capital, 6.88%, due 02/01/03 201,279
141,244 Ford Credit Grantor Trust, 5.90%,
due 10/15/00 141,399
General Motors Acceptance Corporation,
70,918 7.15%, due 03/15/00 71,741
150,000 Household Finance Company, 6.18%,
due 06/30/98 150,192
150,000 International Lease Finance, 5.50%,
due 01/15/99 147,878
150,000 U.S. Leasing International, 5.95%,
due 10/15/03 142,158
150,000 WMX, 6.25%, due 04/01/99 149,929
------------
Total Financial and Other 1,161,466
------------
Financial Services - 2.0%
150,000 Commercial Credit Corporation, 6.13%,
due 12/01/05 141,696
------------
Total Corporate Bonds
(Cost $2,048,623) 2,044,320
------------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 64.1%
U.S. Government Agency Obligation - 1.4%
100,000 Federal Home Loan Bank, 6.05%,
due 06/28/00 99,385
------------
-62-
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INTERMEDIATE TERM BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
------ -----
U.S. Treasury Obligation - 62.7%
$ 300,000 U.S. Treasury Note, 5.63%, due 02/15/06 $ 283,875
575,000 U.S. Treasury Note, 6.00%, due 09/30/98 576,453
190,000 U.S. Treasury Note, 6.38%, due 03/31/01 191,247
300,000 U.S. Treasury Note, 6.38%, due 09/30/01 301,688
1,035,000 U.S. Treasury Note, 6.38%, due 08/15/02 1,042,980
590,000 U.S. Treasury Note, 6.50%, due 10/15/06 593,319
590,000 U.S. Treasury Note, 6.88%, due 05/15/06 608,253
350,000 U.S. Treasury Note, 7.25%, due 08/15/04 368,485
375,000 U.S. Treasury Note, 7.75%, due 01/31/00 392,461
----------
Total U.S. Treasury Obligations 4,358,761
----------
Total U.S. Government and Agency Obligations
(Cost $4,439,292) 4,458,146
----------
Total Long-Term Investment (Cost $6,487,916) 6,502,466
----------
SHORT-TERM INVESTMENTS - 11.1%
Repurchase Agreements - 7.3%
Barclays BZW Securities, dated 12/31/96, 5.90%,
due 01/02/97 in the amount of $313,000
(collateralized by $318,008 U.S. Treasury Note,
6.25%, due 06/30/98, with a market value of
$320,244 at 12/31/96), repurchase proceeds
313,000 $313,013 313,000
Goldman Sachs and Company, dated 12/31/96,
6.00%, due 01/02/97 in the amount of $192,000
(collateralized by $194,640 U.S. Treasury Note,
6.25%, due 05/31/00, with a market value of
$196,740 at 12/31/96), repurchase proceeds
192,000 $192,064 192,000
----------
Total Repurchase Agreements 505,000
----------
The accompanying notes are an integral part of this statement.
63
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INTERMEDIATE TERM BOND FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
------ -----
Short-Term Investment Fund - 0.1%
Fidelity Institutional Cash Portfolios:
1,000 Government $ 1,000
3,043 Goldman Sachs-Institutional Liquid Assets- 3,043
------------
Government Portfolio
Total Short-Term Investment Funds 4,043
------------
Principal
amount
------
U.S. Government Obligation - 3.7%
$ 260,000 U.S. Treasury Bill, 5.08%, due 01/09/97 $ 259,711
------------
Total Short-Term Investments (Cost $768,754) 768,754
------------
Total Investments (Cost $7,256,670) - 98.5% 7,271,220
------------
Liabilities in excess of other assets - (4.6%) 322,462
------------
NET ASSETS - 100% $ 6,948,758
============
The accompanying notes are an integral part of this statement.
64
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INTERMEDIATE TERM BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $7,256,670) $ 7,271,220
Cash 914
Investment income receivable 115,387
Receivable for units issued 2,293
-----------
Total assets 7,389,814
-----------
Liabilities
Payable for investments purchased 428,462
Management fee payable 4,345
Other payables 8,249
-----------
Total liabilities 441,056
-----------
Net assets $ 6,948,758
===========
Net assets were comprised of:
Units of beneficial interest $ 5,958,755
Accumulated net investment income 764,843
Accumulated net realized gain 210,610
Net unrealized appreciation 14,550
-----------
Net assets at December 31, 1996 $ 6,948,758
===========
Unit value, offering price and redemption price per unit
($6,948,758/584,568 units of beneficial interest issued
and outstanding; unlimited number of units authorized) $ 11.89
===========
The accompanying notes are an integral part of this statement.
65
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INTERMEDIATE TERM BOND FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996c
Net investment income
Income:
Interest $ 384,549
----------
Total income 384,549
----------
Expenses:
Management fee (Note 2) 47,537
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 3,600
Legal fees 9,087
Registration fees 1,354
Shareholder reports 2,792
Miscellaneous 2,382
----------
Total expenses 89,979
Expense subsidy (Note 3) (42,442)
----------
Net expenses 47,537
----------
Net investment income 337,012
----------
Net realized and unrealized loss on investments
Net realized loss on securities (117,537)
Net realized loss on futures (13,917)
Net realized loss on options (4,579)
----------
Net realized loss on investments (136,033)
Unrealized depreciation in value of investments during
the year (106,912)
----------
Net loss on investments (242,945)
----------
Net increase in net assets resulting from operations $ 94,067
==========
The accompanying notes are an integral part of this statement.
66
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INTERMEDIATE TERM BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
------------
1996 1995
---- ----
Increase/(decrease) in net assets:
From operations:
Net investment income $ 337,012 $ 351,652
Net realized gain/(loss) on investments (136,033) 350,978
Unrealized appreciation/(depreciation) in value
of investments during the year (106,912) 196,223
----------- ----------
Net increase in net assets resulting
from operations 94,067 898,853
----------- ----------
From unit transactions:
Net proceeds from units issued 5,518,425 2,335,347
Cost of units redeemed (3,694,415) (3,327,720)
----------- ----------
Net increase/(decrease) in net assets
resulting from unit transactions 1,824,010 (992,373)
----------- ----------
Total increase/(decrease) in net assets 1,918,077 (93,520)
Net assets, beginning of year 5,030,681 5,124,201
----------- ----------
Net assets, end of year $ 6,948,758 $5,030,681
=========== ==========
Net change in units outstanding:
Units issued 477,320 212,880
Units redeemed (323,790) (294,670)
----------- ----------
153,530 (81,790)
=========== ==========
The accompanying notes are an integral part of this statement.
67
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
INTERMEDIATE TERM BOND FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTANDING THROUGHOUT EACH OF THE YEARS INDICATED)
Years ended December 31,
------------------------
1996 1995 1994*
---- ---- ----
Selected per unit data:
Investment income $ 0.70 $ 0.72 $ 0.17
Expenses (0.16) (0.16) (0.08)
Expense subsidy 0.07 0.08 0.06
------- ------- -------
Net investment income 0.61 0.64 0.15
Net realized and unrealized
gain/(loss) on investments (0.39) 1.04 (0.16)
------- ------- -------
Net increase/(decrease) in net asset value 0.22 1.68 (0.01)
Net asset value, beginning of period 11.67 9.99 10.00
------- ------- -------
Net asset value, end of period $ 11.89 $ 11.67 $ 9.99
======= ======= =======
Ratio to average net assets:
Expenses 0.75% 0.75% 0.75%**
Net investment income 5.32% 5.89% 6.12%**
Other:
Average net assets (000 omitted) $ 6,338 $ 5,973 $ 5,046
Portfolio turnover 134% 198% 7%
Number of units outstanding
at end of year (000 omitted) 585 431 513
Total return 1.86% 16.79% (0.32%)**
* Commencement of Operations October 3, 1994.
** Annualized.
Per unit amounts are calculated using average units outstanding for the period.
68
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
------ -----
LONG-TERM INVESTMENTS - 65.8%
COMMON STOCKS - 20.7%
Auto and Transportation - 1.0%
200 AMR Corporation* $ 17,625
400 Chrysler Corporation 13,200
300 Ford Motor Company 9,563
150 General Motors Corporation 8,362
---------
Total Auto and Transportation 48,750
---------
Consumer Discretionary - 2.0%
350 Dayton Hudson Corporation 13,737
150 Disney (Walt) Company 10,444
200 Eastman Kodak Company 16,050
350 Federated Department Stores, Inc.* 11,944
200 Home Depot, Inc. 10,025
400 Mattel, Inc. 11,100
100 McDonald's Corporation 4,525
650 Wal-Mart Stores, Inc. 14,869
---------
Total Consumer Discretionary 92,694
---------
Consumer Staples - 2.2%
300 Coca-Cola Company 15,787
200 Gillette Company 15,550
300 PepsiCo, Inc. 8,775
150 Philip Morris Companies, Inc. 16,894
200 Procter & Gamble Company 21,500
550 Sysco Corporation 17,944
50 Unilever, N.V. 8,762
---------
Total Consumer Staples 105,212
---------
The accompanying notes are an integral part of this statement.
69
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
------ -----
Financial Services - 2.8%
250 American Express Company $ 14,125
200 American International Group, Inc. 21,650
600 Federal National Mortgage Association 22,350
200 MBIA, Inc. 20,250
200 Student Loan Marketing Association 18,625
200 The Charles Schwab Corporation 6,400
633 Travelers Corporation 28,722
---------
Total Financial Services 132,122
---------
Healthcare - 1.3%
100 Abbott Laboratories, Inc. 5,075
100 American Home Products Corporation 5,862
100 Bristol-Myers Squibb Company 10,875
150 Columbia HCA/Healthcare Corporation 6,113
100 Lilly (Eli) & Company 7,300
200 Merck & Company, Inc. 15,850
100 Pfizer, Inc. 8,288
---------
Total Healthcare 59,363
---------
Integrated Oils - 2.3%
100 Amoco Corporation 8,050
200 British Petroleum Company PLC 28,275
200 Chevron Corporation 13,000
200 Exxon Corporation 19,600
200 Mobil Corporation 24,450
100 Royal Dutch Petroleum Company ADR 17,075
---------
Total Integrated Oils 110,450
---------
Materials and Processing - 2.2%
150 Aluminum Company of America 9,562
300 Dover Corporation 15,075
The accompanying notes are an integral part of this statement.
70
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
------ -----
Materials and Processing - 2.2% (continued)
200 Dow Chemical Company $ 15,675
200 DuPont (E.I.) de Nemours & Company, Inc. 18,875
250 Inco, Ltd. 7,969
200 International Paper Company 8,075
50 Kimberly-Clark Corporation 4,763
200 Minnesota Mining & Manufacturing Company 16,575
100 Phelps Dodge Corporation 6,750
---------
Total Materials and Processing 103,319
---------
Other Energy - 0.3%
150 Schlumberger, Ltd. 14,981
---------
Producer Durables - 2.2%
300 Allied-Signal, Inc. 20,100
150 Boeing Company 15,956
200 Emerson Electric Company 19,350
100 Fluor Corporation 6,275
200 General Electric Company 19,775
200 General Motors Corporation 11,250
200 York International Corporation 11,175
---------
Total Producer Durables 103,881
---------
Technology 2.6%
100 Cisco Systems, Inc.* 6,362
200 Compaq Computer Corporation* 14,850
50 Computer Associates International, Inc. 2,488
200 Hewlett-Packard Company 10,050
20 Imation Corporation* 563
200 Intel Corporation 26,187
100 International Business Machines Corporation 15,100
400 Microsoft Corporation* 33,050
The accompanying notes are an integral part of this statement
71
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
------ -----
Technology 2.6% (continued)
100 Motorola, Inc. $ 6,138
175 Xerox Corporation 9,209
---------
Total Technology 123,997
---------
Utilities - 1.8%
350 AT&T Corporation 15,225
450 GTE Corporation 20,475
113 Lucent Technologies, Inc. 5,227
300 MCI Communications Corporation 9,806
450 NIPSCO Industries, Inc. 17,831
300 SBC Communications, Inc. 15,525
---------
Total Utilities 84,089
---------
Total Common Stocks (Cost $737,156) 978,858
---------
Principal
amount
------
CORPORATION BONDS - 4.6%
$ 125,000 Anheuser-Busch Companies, Inc. 6.75%, due 08/01/03 125,534
100,000 BankAmerica Corporation, 6.20%, due 02/15/06 93,994
---------
Total Corporate Bonds (Cost $223,613) 219,528
---------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 40.5%
U.S. Government Agency Obligation - 3.1%
150,000 Federal Home Loan Bank, 6.05%, due 06/28/00 149,078
---------
The accompanying notes are an integral part of this statement.
72
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
------ -----
U.S. Government Obligations - 37.4%
$ 150,000 U.S. Treasury Note, 6.00%, due 08/15/99 $ 149,953
500,000 U.S. Treasury Note, 6.38%, due 03/31/01 503,282
350,000 U.S. Treasury Note, 6.38%, due 08/15/02 352,297
630,000 U.S. Treasury Note, 7.25%, due 08/15/04 663,272
100,000 U.S. Treasury Note, 9.25%, due 08/15/98 105,031
-----------
Total U.S. Government Obligations 1,773,835
-----------
Total U.S. Government and Agency Obligations
(Cost $1,913,929) 1,922,913
-----------
Total Long-Term Investments (Cost $2,874,698) 3,121,299
-----------
SHORT-TERM INVESTMENTS - 32.8%
Repurchase Agreements - 6.2%
Barclays BZW Securities, dated 12/31/96, 5.90%,
due 01/02/97 in the amount of $214,000
(collateralized by $217,424 U.S. Treasury Note,
6.25%, due 06/30/98, with a market value of
$218,953 at 12/31/96), repurchase proceeds
214,000 $214,070 214,000
Goldman Sachs and Company, dated 12/31/96,
6.00%, due 01/01/97 in the amount of $82,000
(collateralized by $83,128 U.S. Treasury Note,
6.25%, due 05/31/00, with a market value of
$84,025 at 12/31/96), repurchase proceeds
82,000 $82,027 82,000
-----------
Total Repurchase Agreements 296,000
-----------
Units
Short-Term Investment Fund - 2.4%
Fidelity Institutional Cash Portfolios:
112,000 Government 112,000
U.S. Government Obligation - 24.2%
The accompanying notes are an integral part of this statement.
73
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
------ -----
$ 200,000 U.S. Treasury Bill, 5.08%, due 01/09/97 $ 199,778
950,000 U.S. Treasury Note, 4.75%, due 02/15/97 948,516
-----------
Total U.S. Government Obligations 1,148,294
-----------
Total Short-Term Investments (Cost $1,556,294) 1,556,294
-----------
Total Investments (Cost $4,430,992) - 98.6% 4,677,593
-----------
Other assets in excess of liabilities - 1.4% 62,668
-----------
NET ASSETS - 100% $ $ 4,740,261
===========
* Nonincome producing securities.
The accompanying notes are an integral part of this statement.
74
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $4,430,992) $ 4,677,593
Cash 901
Investment income receivable 66,060
Receivable for units issued 96
-----------
Total assets 4,744,650
-----------
Liabilities
Management fee payable 4,389
-----------
Total liabilities 4,389
-----------
Net assets $ 4,740,261
===========
Net assets were comprised of:
Units of beneficial interest $ 2,840,195
Accumulated net investment income 779,722
Accumulated net realized gain 873,743
Net unrealized appreciation 246,601
-----------
Net assets at December 31, 1996 $ 4,740,261
===========
Unit value, offering price and redemption price per unit
($4,740,261/385,376 units of beneficial interest issued
and outstanding; unlimited number of units authorized) $ 12.30
===========
The accompanying notes are an integral part of this statement.
75
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Dividends $ 21,050
Interest 221,823
--------
Total income 242,873
--------
Expenses:
Management fee (Note 2) 53,775
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 3,635
Legal fees 9,087
Registration fees 387
Shareholder reports 2,792
Miscellaneous 1,621
--------
Total expenses 94,524
Expense subsidy (Note 3) (40,749)
--------
Net expenses 53,775
--------
Net investment income 189,098
--------
Net realized and unrealized gain on investments
Net realized gain on investments 98,693
Unrealized appreciation in value of investments during the year 23,398
--------
Net gain on investments 122,091
--------
Net increase in net assets resulting from operations $311,189
========
The accompanying notes are an integral part of this statement.
76
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
------------
1996 1995
---- ----
Increase/(decrease) in net assets:
From operations:
Net investment income $ 189,098 $ 479,083
Net realized gain on investments 98,693 808,803
Unrealized appreciation in value
of investments during the year 23,398 307,656
----------- ------------
Net increase in net assets resulting from
operations 311,189 1,595,542
----------- ------------
From unit transactions:
Net proceeds from units issued 952,199 13,404,622
Cost of units redeemed (1,892,110) (19,276,354)
----------- ------------
Net decrease in net assets resulting
from unit transactions (939,911) (5,871,732)
----------- ------------
Total decrease in net assets (628,722) (4,276,190)
Net assets, beginning of year 5,368,983 9,645,173
----------- ------------
Net assets, end of year $ 4,740,261 $ 5,368,983
=========== ============
Net change in units outstanding:
Units issued 80,449 1,270,206
Units redeemed (161,659) (1,770,961)
----------- ------------
(81,210) (500,755)
=========== ============
The accompanying notes are an integral part of this statement.
77
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-INCOME FUND
SELECTED PER UNIT DATA AND RATIOS
(SELECTED DATA FOR A UNIT OUTSTANDING THROUGHOUT EACH OF THE YEARS INDICATED)
Years ended December 31,
------------------------
1996 1995 1994*
---- ---- ----
Selected per unit data:
Investment income $ 0.58 $ 0.60 $ 0.15
Expenses (0.23) (0.16) (0.06)
Expense subsidy 0.10 0.04 0.03
------- ------- -------
Net investment income 0.45 0.48 0.12
Net realized and unrealized
gain/(loss) on investments 0.34 1.06 (0.15)
------- ------- -------
Net increase in net asset value 0.79 1.54 (0.03)
Net asset value, beginning of period 11.51 9.97 10.00
Net asset value, end of period $ 12.30 $ 11.51 $ 9.97
======= ======= =======
Ratio to average net assets:
Expenses 1.10% 1.10% 1.10%**
Net investment income 3.88% 4.52% 4.77%**
Other:
Average net assets (000 omitted) $ 4,874 $10,590 $ 9,491
Portfolio turnover 66% 278% 15%
Number of units outstanding
at end of year (000 omitted) 385 467 967
Total return 6.90% 15.41% (1.22%)**
* Commencement of Operations October 3, 1994.
** Annualized.
Per unit amounts are calculated using average units outstanding for
the period.
The accompanying notes are an integral part of this statement.
78
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996c
Number of
shares Value
------ -----
LONG-TERM INVESTMENTS - 82.4%
COMMON STOCKS - 45.2%
Auto and Transportation - 2.2%
500 AMR Corporation* $ 44,062
1,000 Chrysler Corporation 33,000
800 Ford Motor Company 25,500
450 General Motors Corporation 25,088
----------
Total Auto and Transportation 127,650
----------
Consumer Discretionary - 3.9%
900 Dayton Hudson Corporation 35,325
300 Disney (Walt) Company 20,888
400 Eastman Kodak Company 32,100
1,000 Federated Department Stores, Inc.* 34,125
450 Home Depot, Inc. 22,556
1,187 Mattel, Inc. 32,939
400 McDonald's Corporation 18,100
1,500 Wal-Mart Stores, Inc. 34,312
----------
Total Consumer Discretionary 230,345
----------
Consumer Staples - 4.3%
1,000 Coca-Cola Company 52,625
400 Gillette Company 31,100
800 PepsiCo, Inc. 23,400
350 Phillip Morris Companies, Inc. 39,419
400 Procter & Gamble Company 43,000
1,450 Sysco Corporation 47,306
100 Unilever, N.V. 17,525
----------
Total Consumer Staples 254,375
----------
The accompanying notes are an integral part of this statement.
79
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
------ -----
Financial Services - 6.7%
800 American Express Company $ 45,200
500 American International Group, Inc. 54,125
1,700 Federal National Mortgage Association 63,325
600 MBIA, Inc. 60,750
750 Student Loan Marketing Association 69,844
450 The Charles Schwab Corporation 14,400
2,000 Travelers Corporation 90,750
---------
Total Financial Services 398,394
---------
Healthcare - 3.4%
400 Abbott Laboratories, Inc. 20,300
400 American Home Products Corporation 23,450
300 Bristol-Myers Squibb Company 32,625
375 Columbia HCA/Healthcare Corporation 15,281
300 Lilly (Eli) & Company 21,900
700 Merck & Company, Inc. 55,475
400 Pfizer, Inc. 33,150
---------
Total Healthcare 202,181
---------
Integrated Oils - 4.8%
300 Amoco Corporation 24,150
400 British Petroleum Company PLC 56,550
500 Chevron Corporation 32,500
600 Exxon Corporation 58,800
500 Mobil Corporation 61,125
300 Royal Dutch Petroleum Company ADR 51,225
---------
Total Integrated Oils 284,350
---------
Materials and Processing - 4.8%
350 Aluminum Company of America 22,312
900 Dover Corporation 45,225
The accompanying notes are an integral part of this statement.
80
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
------ -----
Materials and Processing - 4.8% (continued)
500 Dow Chemical Company $ 39,188
500 DuPont (E.I.) de Nemours & Company, Inc. 47,188
600 Inco, Ltd. 19,125
700 International Paper Company 28,262
150 Kimberly-Clark Corporation 14,668
600 Minnesota Mining & Manufacturing Company 49,725
300 Phelps Dodge Corporation 20,250
---------
Total Materials and Processing 285,943
---------
Other Energy - 0.6%
350 Schlumberger, Ltd. 34,956
---------
Producer Durables - 5.2%
850 Allied-Signal, Inc. 56,950
300 Boeing Company 31,912
500 Emerson Electric Company 48,375
400 Fluor Corporation 25,100
850 General Electric Company 84,044
500 General Motors Corporation 28,125
600 York International Corporation 33,525
---------
Total Producer Durables 308,031
---------
Technology - 5.6%
300 Cisco Systems, Inc.* 19,088
500 Compaq Computer Corporation* 37,125
300 Computer Associates International, Inc. 14,925
450 Hewlett-Packard Company 22,612
60 Imation Corporation* 1,688
500 Intel Corporation 65,469
300 International Business Machines Corporation 45,300
900 Microsoft Corporation* 74,362
250 Motorola, Inc. 15,344
600 Xerox Corporation 31,575
---------
Total Technology 327,488
---------
The accompanying notes are an integral part of this statement.
81
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-BALANCE FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Number of
shares Value
------ -----
Utilities - 3.7%
850 AT&T Corporation $ 36,975
1,200 GTE Corporation 54,600
275 Lucent Technologies, Inc. 12,719
800 MCI Communications Corporation 26,150
1,250 NIPSCO Industries, Inc. 49,531
800 SBC Communications, Inc. 41,400
----------
Total Utilities 221,375
----------
Total Common Stocks (Cost $1,976,994) 2,675,088
----------
Principal
amount
------
CORPORATION BONDS - 3.7%
$ 125,000 Anheuser-Busch Companies, Inc. 6.75%, due
08/01/03 125,534
100,000 BankAmerica Corporation, 6.20%, due 02/15/06 93,994
----------
Total Corporate Bonds (Cost $223,614) 219,528
----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 33.5%
U.S. Government Agency Obligation - 2.5%
150,000 Federal Home Loan Bank, 6.05%, due 06/28/00 149,078
----------
U.S. Government Obligations - 31.0%
300,000 U.S. Treasury Note, 6.00%, due 08/15/99 299,906
500,000 U.S. Treasury Note, 6.38%, due 03/31/01 503,281
575,000 U.S. Treasury Note, 6.38%, due 08/15/02 578,774
270,000 U.S. Treasury Note, 7.25%, due 08/15/04 284,260
150,000 U.S. Treasury Note, 8.50%, due 11/15/00 162,000
----------
Total U.S. Government Obligations 1,828,221
----------
Total U.S. Government and Agency Obligations
(Cost $1,988,991) 1,977,299
----------
Total Long-Term Investments (Cost $4,189,599) 4,871,915
----------
The accompanying notes are an integral part of this statement.
82
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-BALANCED FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
Principal
amount Value
------ -----
SHORT-TERM INVESTMENTS - 16.7%
Repurchase Agreements - 1.0%
Barclays BZW Securities, dated 12/31/96, 5.90%,
due 01/02/97 in the amount of $58,000
(collateralized by $58,928 U.S. Treasury Note,
6.25%, due 06/30/98, with a market value of
$59,342 at 12/31/96), repurchase proceeds
$ 58,000 $58,019 $ 58,000
----------
Number of
shares
------
Short-Term Investment Fund - 0.5%
Fidelity Institutional Cash Portfolios:
31,000 Government 31,000
----------
Principal
amount
------
U.S. Government Obligations - 15.2%
$ 250,000 U.S. Treasury Bill, 5.08%, due 01/09/97 249,723
650,000 U.S. Treasury Note, 4.75%, due 02/15/97 648,985
----------
Total U.S. Government Obligations 898,708
----------
Total Short-Term Investments (Cost $987,708) 987,708
----------
Total Investments (Cost $5,177,307) - 99.1% 5,859,623
----------
Other assets in excess of liabilities 0.9% 55,650
----------
NET ASSETS - 100% $5,915,273
==========
* Nonincome producing security.
The accompanying notes are an integral part of this statement.
83
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments, at value (cost $5,177,307) $ 5,859,623
Cash 702
Investment income receivable 60,601
Receivable for units issued 185
-----------
Total assets 5,921,111
-----------
Liabilities
Management fee payable 5,554
Payable for units redeemed 284
-----------
Total liabilities 5,838
-----------
Net assets $ 5,915,273
===========
Net assets were comprised of:
Units of beneficial interest $ 3,987,249
Accumulated net investment income 529,476
Accumulated net realized gain 716,232
Net unrealized appreciation 682,316
-----------
Net assets at December 31, 1996 $ 5,915,273
===========
Unit value, offering price and redemption price per unit
($5,915,273/455,222 units of beneficial interest issued
and outstanding; unlimited number of units authorized) $ 12.99
===========
The accompanying notes are an integral part of this statement.
84
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-BALANCED FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Dividends $ 49,989
Interest 196,583
---------
Total income 246,572
---------
Expenses:
Management fee (Note 2) 65,896
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 3,600
Legal fees 9,087
Registration fees 908
Shareholder reports 2,792
Miscellaneous 1,669
---------
Total expenses 107,179
Expense subsidy (Note 3) (41,283)
---------
Net expenses 65,896
---------
Net investment income 180,676
---------
Net realized and unrealized gain on investments
Net realized gain on investments 82,515
Unrealized appreciation in value of investments during the year 369,085
---------
Net gain on investments 451,600
---------
Net increase in net assets resulting from operations $ 632,276
=========
The accompanying notes are an integral part of this statement.
85
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended
December 31,
------------
1996 1995
Increase/(decrease) in net assets:
From operations:
Net investment income $ 180,676 $ 299,128
Net realized gain on investments 82,515 672,362
Unrealized appreciation in value
of investments during the year 369,085 356,487
----------- ------------
Net increase in net assets resulting
from operations 632,276 1,327,977
----------- ------------
From unit transactions:
Net proceeds from units issued 1,739,716 14,814,714
Cost of units redeemed (2,373,479) (15,323,567)
----------- ------------
Net decrease in net assets resulting
from unit transactions (633,763) (508,853)
----------- ------------
Total increase/(decrease) in net assets (1,487) 819,124
Net assets, beginning of year 5,916,760 5,097,636
----------- ------------
Net assets, end of year $ 5,915,273 $ 5,916,760
=========== ============
Net change in units outstanding:
Units issued 144,554 1,379,553
Units redeemed (195,789) (1,386,206)
----------- ------------
(51,235) (6,653)
=========== ============
The accompanying notes are an integral part of this statement.
86
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-BALANCED FUND
SELECTED PER UNIT DATA AND RATIOS
(Selected data for a unit outstanding throughout each of the
years indicated)
Years ended December 31,
--------------------------
1996 1995 1994*
------ ------- -------
Selected per unit data:
Investment income $ 0.50 $ 0.50 $ 0.13
Expenses (0.21) (0.17) (0.09)
Expense subsidy 0.08 0.05 0.06
------ ------ ------
Net investment income 0.37 0.38 0.10
Net realized and unrealized
gain/(loss) on investments 0.94 1.36 (0.16)
------ ------ ------
Net increase/(decrease) in net asset value 1.31 1.74 (0.06)
Net asset value, beginning of period 11.68 9.94 10.00
------ ------ ------
Net asset value, end of period $12.99 $11.68 $ 9.94
====== ====== ======
Ratio to average net assets:
Expenses 1.10% 1.10% 1.10%**
Net investment income 3.02% 3.54% 3.99%**
Other:
Average net assets (000 omitted) $5,990 $8,456 $5,051
Portfolio turnover 51% 337% 17%
Number of units outstanding
at end of year (000 omitted) 455 506 513
Total return 11.23% 17.59% (2.64%)**
- --------------
* Commencement of Operations October 3, 1994.
** Annualized.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
87
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Number of
shares Value
------ -----
<C> <S> <C>
LONG-TERM INVESTMENTS - 73.9%
COMMON STOCKS - 50.4%
Auto and Transportation - 2.2%
250 AMR Corporation* $ 22,031
600 Chrysler Corporation 19,800
500 Ford Motor Company 15,938
300 General Motors Corporation 16,725
--------
Total Auto and Transportation 74,494
--------
Consumer Discretionary - 4.8%
600 Dayton Hudson Corporation 23,550
200 Disney (Walt) Company 13,925
350 Eastman Kodak Company 28,087
750 Federated Department Stores, Inc.* 25,594
250 Home Depot, Inc. 12,531
250 McDonald's Corporation 11,313
550 Sears, Roebuck & Company 25,369
1,000 Wal-Mart Stores, Inc. 22,875
--------
Total Consumer Discretionary 163,244
--------
Consumer Products and Services - 0.0%
7 Conseco, Inc. 445
--------
Consumer Staples - 5.2%
700 Coca-Cola Company 36,838
300 Gillette Company 23,325
600 PepsiCo, Inc. 17,550
250 Phillip Morris Companies, Inc. 28,156
250 Procter & Gamble Company 26,875
1,000 Sysco Corporation 32,625
50 Unilever, N.V. 8,762
--------
Total Consumer Staples 174,131
--------
</TABLE>
The accompanying notes are an integral part of this statement.
88
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Number of
shares Value
------ -----
<C> <S> <C>
Financial Services - 6.9%
500 American Express Company $ 28,250
300 American International Group, Inc. 32,475
1,000 Federal National Mortgage Association 37,250
300 MBIA, Inc. 30,375
500 Student Loan Marketing Association 46,563
350 The Charles Schwab Corporation 11,200
1,000 Travelers Corporation 45,375
--------
Total Financial Services 231,488
--------
Healthcare - 3.6%
250 Abbott Laboratories, Inc. 12,688
200 American Home Products Corporation 11,725
150 Bristol-Myers Squibb Company 16,313
300 Columbia HCA/Healthcare Corporation 12,225
200 Lilly (Eli) & Company 14,600
450 Merck & Company, Inc. 35,662
200 Pfizer, Inc. 16,575
--------
Total Healthcare 119,788
--------
Integrated Oils - 5.4%
200 Amoco Corporation 16,100
300 British Petroleum Company PLC 42,413
300 Chevron Corporation 19,500
350 Exxon Corporation 34,300
300 Mobil Corporation 36,675
200 Royal Dutch Petroleum Company ADR 34,150
--------
Total Integrated Oils 183,138
--------
Materials and Processing - 5.8%
200 Aluminum Company of America 12,750
600 Dover Corporation 30,150
</TABLE>
The accompanying notes are an integral part of this statement.
89
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Number of
shares Value
------ -----
<C> <S> <C>
Materials and Processing - 5.8% (continued)
300 Dow Chemical Company $ 23,512
250 DuPont (E.I.) de Nemours & Company, Inc. 23,594
400 Inco, Ltd. 12,750
400 International Paper Company 16,150
300 Kimberly-Clark Corporation 28,575
400 Minnesota Mining & Manufacturing Company 33,150
200 Phelps Dodge Corporation 13,500
--------
Total Materials and Processing 194,131
--------
Other Energy - 0.6%
200 Schlumberger, Ltd. 19,975
--------
Producer Durables - 5.7%
600 Allied-Signal, Inc. 40,200
200 Boeing Company 21,275
400 Emerson Electric Company 38,700
200 Fluor Corporation 12,550
350 General Electric Company 34,606
300 General Motors Corporation 16,875
500 York International Corporation 27,937
--------
Total Producer Durables 192,143
--------
Technology - 6.4%
200 Cisco Systems, Inc.* 12,725
400 Compaq Computer Corporation* 29,700
150 Computer Associates International, Inc. 7,463
400 Hewlett-Packard Company 20,100
40 Imation Corporation* 1,125
300 Intel Corporation 39,281
150 International Business Machines Corporation 22,650
</TABLE>
The accompanying notes are an integral part of this statement.
90
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Number of
shares Value
------ -----
<C> <S> <C>
Technology - 6.4% (continued)
600 Microsoft Corporation* $ 49,575
150 Motorola, Inc. 9,206
450 Xerox Corporation 23,681
----------
Total Technology 215,506
----------
Utilities - 3.8%
550 AT&T Corporation 23,925
550 GTE Corporation 25,025
178 Lucent Technologies, Inc. 8,232
500 MCI Communications Corporation 16,344
750 NIPSCO Industries, Inc. 29,719
500 SBC Communications, Inc. 25,875
----------
Total Utilities 129,120
----------
Total Common Stocks (Cost $1,286,867) 1,697,603
----------
</TABLE>
<TABLE>
<CAPTION>
Principal
amount
------
<C> <S> <C>
CORPORATE BOND - 0.8% (Cost $28,794)
$ 30,000 BankAmerica Corporation, 6.20%, 02/15/06 28,199
----------
U.S. GOVERNMENT AND AGENCY OBLIGATIONS - 22.7%
U.S. Government Agency Obligation - 1.5%
50,000 Federal Home Loan Bank, 6.05%, due 06/28/00 49,693
----------
U.S. Government Obligations - 21.2%
150,000 U.S. Treasury Note, 6.00%, due 08/15/99 149,953
250,000 U.S. Treasury Note, 6.38%, due 03/31/01 251,641
90,000 U.S. Treasury Note, 6.50%, due 08/15/05 90,619
30,000 U.S. Treasury Note, 7.25%, due 08/15/04 31,584
50,000 U.S. Treasury Note, 7.50%, due 05/15/02 52,875
130,000 U.S. Treasury Note, 7.75%, due 01/31/00 136,053
----------
Total U.S. Government Obligations 712,725
----------
</TABLE>
The accompanying notes are an integral part of this statement.
91
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Principal
amount Value
------ -----
<C> <S> <C>
Total U.S. Government and Agency Obligations
(Cost $752,683) $ 762,418
----------
Total Long-Term Investments (Cost $2,068,344) 2,488,220
----------
SHORT-TERM INVESTMENTS - 25.6%
Repurchase Agreements - 9.0%
Barclays BZW Securities, dated 12/31/96, 5.90%,
due 01/02/97 in the amount of $153,000
(collateralized by $155,448 U.S. Treasury Note,
6.25%, due 06/30/98, with a market value of
$156,541 at 12/31/96), repurchase proceeds
$ 153,000 $153,050 153,000
Goldman Sachs and Company, dated 12/31/96,
6.00%, due 01/02/97 in the amount of $149,000
(collateralized by $151,049 U.S. Treasury Note,
6.25%, due 05/31/00, with a market value of
$152,679 at 12/31/96), repurchase proceeds
149,000 $149,050 149,000
----------
Total Repurchase Agreements 302,000
----------
</TABLE>
<TABLE>
<CAPTION>
Number of
shares
------
<C> <S> <C>
Short-Term Investment Fund - 3.2%
Fidelity Institutional Cash Portfolios:
109,000 Government 109,000
----------
</TABLE>
The accompanying notes are an integral part of this statement.
92
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Principal
amount Value
------ -----
<C> <S> <C>
U.S. Government Obligations - 13.4%
$ 400,000 U.S. Treasury Bill, 5.08%, due 01/09/97 $ 399,558
50,000 U.S. Treasury Note, 4.75%, due 02/15/97 49,922
----------
Total U.S. Government Obligations 449,480
----------
Total Short-Term Investments (Cost $860,480) 860,480
----------
Total Investments (Cost $2,928,824) - 99.5% 3,348,700
----------
Other assets in excess of liabilities - 0.5% 17,941
----------
NET ASSETS - 100% $3,366,641
==========
</TABLE>
* Nonincome producing security
The accompanying notes are an integral part of this statement.
93
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
------
Investments, at value (cost $2,928,824) $3,348,700
Cash 480
Investment income receivable 20,260
Receivable for units issued 309
----------
Total assets 3,369,749
----------
Liabilities
-----------
Management fee payable 3,108
----------
Total liabilities 3,108
----------
Net assets $3,366,641
Net assets were comprised of:
Units of beneficial interest $2,016,563
Accumulated net investment income 286,605
Accumulated net realized gain 643,597
Net unrealized appreciation 419,876
----------
Net assets at December 31, 1996 $3,366,641
==========
Unit value, offering price and redemption price per unit
($3,366,641/246,209 units of beneficial interest issued
and outstanding; unlimited number of units authorized) $ 13.67
==========
The accompanying notes are an integral part of this statement.
94
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
---------------------
Income:
Dividends $ 30,846
Interest 95,229
--------
Total income 126,075
--------
Expenses:
Management fee (Note 2) 34,824
Accounting fees 9,892
Audit fees 11,088
Directors' fees 2,247
Insurance 3,505
Legal fees 9,087
Registration fees 1,033
Shareholder reports 2,792
Miscellaneous 1,484
--------
Total expenses 75,952
Expense subsidy (Note 3) (41,128)
--------
Net expenses 34,824
--------
Net investment income 91,251
--------
Net realized and unrealized gain on investments
-----------------------------------------------
Net realized gain on investments 8,108
Unrealized appreciation in value of investments during the year 288,719
--------
Net gain on investments 296,827
--------
Net increase in net assets resulting from operations $388,078
========
The accompanying notes are an integral part of this statement.
95
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Years ended
December 31,
------------
1996 1995
---- ----
<S> <C> <C>
Increase/(decrease) in net assets:
From operations:
Net investment income $ 91,251 $ 156,984
Net realized gain on investments 8,108 693,488
Unrealized appreciation in value
of investments during the year 288,719 162,228
---------- -----------
Net increase in net assets resulting
from operations 388,078 1,012,700
---------- -----------
From unit transactions:
Net proceeds from units issued 1,582,402 2,678,624
Cost of units redeemed (994,516) (6,252,526)
---------- -----------
Net increase/(decrease) in net assets
resulting from unit transactions 587,886 (3,573,902)
---------- -----------
Total increase/(decrease) in net assets 975,964 (2,561,202)
Net assets, beginning of year 2,390,677 4,951,879
---------- -----------
Net assets, end of year $3,366,641 $ 2,390,677
========== ===========
Net change in units outstanding:
Units issued 126,044 246,984
Units redeemed (77,561) (549,521)
---------- -----------
48,483 (302,537)
========== ===========
</TABLE>
The accompanying notes are an integral part of this statement.
96
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
RISK MANAGER-GROWTH FUND
SELECTED PER UNIT DATA AND RATIOS
(Selected data for a unit outstanding throughout each of the
years indicated)
<TABLE>
<CAPTION>
Years ended December 31,
-------------------------------------
1996 1995 1994*
---- ---- -----
<S> <C> <C> <C>
Selected per unit data:
Investment income $ 0.51 $ 0.43 $ 0.11
Expenses (0.31) (0.20) (0.09)
Expense subsidy 0.17 0.08 0.06
Net investment income 0.37 0.31 0.08
Net realized and unrealized
gain/(loss) on investments 1.21 1.88 (0.18)
Net increase/(decrease) in
net asset value 1.58 2.19 (0.10)
Net asset value, beginning of period 12.09 9.90 10.00
Net asset value, end of period $13.67 $12.09 $ 9.90
Ratio to average net assets:
Expenses 1.10% 1.10% 1.10%**
Net investment income 2.88% 2.84% 3.14%**
Other:
Average net assets (000 omitted) $3,166 $5,532 $4,949
Portfolio turnover 42% 191% 31%
Number of units outstanding
at end of year (000 omitted) 246 198 500
Total return 13.09% 22.15% (4.10%)**
</TABLE>
* Commencement of Operations October 3, 1994.
** Annualized.
Per unit amounts are calculated using average units outstanding
for the period.
The accompanying notes are an integral part of this statement.
97
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Annualized
Principal Maturity yield on date
amount date of purchase Value
------ ---- ----------- -----
<C> <S> <C> <C> <C>
CERTIFICATES OF DEPOSIT - 5.0%
$2,000,000 Commerzbank AG, 5.75%, due 04/11/97 $ 1,999,738
4,000,000 Societe Generale, 5.45%, due 02/07/97 4,000,054
-----------
Total Certificates of Deposit 5,999,792
-----------
COMMERCIAL PAPER - 59.9%
4,000,000 American Express Credit Corporation 02/03/97 5.30% 3,980,567
1,300,000 American Express Credit Corporation 02/25/97 5.28% 1,289,513
4,500,000 American General Corporation 01/16/97 5.30% 4,490,063
3,000,000 Bank of America NT & SA 03/06/97 5.28% 2,971,840
2,000,000 Bank of America NT & SA 04/16/97 5.31% 1,969,025
4,500,000 BellSouth Telecommunications Corporation 01/21/97 5.27% 4,486,825
5,000,000 Caisse D'Amortissement 02/06/97 5.32% 4,973,400
4,000,000 Cargill, Inc. 01/30/97 5.28% 3,982,987
1,000,000 Cargill, Inc. 04/08/97 5.33% 985,638
1,200,000 Ford Motor Credit Company 02/07/97 5.28% 1,193,488
2,900,000 Ford Motor Credit Company 03/20/97 5.27% 2,866,887
5,000,000 General Electric Capital Corporation 02/20/97 5.28% 4,963,333
4,000,000 Goldman Sachs Group, LP 02/14/97 5.38% 3,973,698
1,000,000 Goldman Sachs Group, LP 05/09/97 5.30% 981,155
3,000,000 International Lease Finance Corporation 01/27/97 5.28% 2,988,560
4,500,000 Metropolitan Life Funding, Inc. 01/24/97 5.30% 4,484,763
2,000,000 Merrill Lynch & Company
National Rural Utilities Cooperative 01/30/97 5.33% 1,991,413
4,500,000 Finance Corporation 01/13/97 5.31% 4,492,035
4,500,000 Schering Corporation 04/22/97 5.32% 4,426,254
5,000,000 Transamerica Finance Corporation 03/21/97 5.27% 4,942,176
5,000,000 U.S.A.A. Capital Corporation 03/31/97 5.30% 4,934,486
-----------
Total Commercial Paper 71,368,106
-----------
CORPORATE BONDS - 15.2%
Associates Corporation of North America,
1,000,000 6.63%, due 11/15/97 1,007,578
Caterpillar Finance Corporation, 5.48%,
4,000,000 due 11/03/97* 4,000,000
International Lease Finance Corporation,
1,900,000 6.28%, due 01/27/97 1,901,262
</TABLE>
98
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Principal
amount
------
<C> <S> <C>
CORPORATE BONDS - 15.2% (continued)
Merrill Lynch and Company, Inc., 5.74%,
$3,000,000 due 04/04/97** $ 2,999,847
1,172,000 NationsBank Corporation, 7.50%, due 02/15/97 1,175,396
3,000,000 PepsiCo, Inc., 5.00%, due 02/24/97 2,999,945
4,000,000 Student Loan Corporation, 5.49%, due 03/25/97*** 4,000,000
-----------
Total Corporate Bonds 18,084,028
-----------
REPURCHASE AGREEMENTS - 9.3%
Barclays BZW Securities, dated 12/31/96, 5.90%,
due 01/02/97 in the amount of $4,128,000
(collateralized by $4,194,048 U.S. Treasury
Note,6.25%, due 06/30/98, with a market value of
$4,223,537 at 12/31/96), repurchase proceeds
4,128,000 $4,129,353 4,128,000
Goldman Sachs and Company, dated 12/31/96,
6.00%, due 01/02/97 in the amount of $5,127,000
(collateralized by $5,197,496 U.S. Treasury
Note, 6.25%, due 05/31/00, with a market value
of $5,253,585 at 12/31/96), repurchase proceeds
5,127,000 $5,128,709 5,127,000
Merrill Lynch Government Securities, dated
12/31/96, 5.50%, due 01/02/97 in the amount
of $1,788,000 (collateralized by $1,765,040
U.S. Treasury Note, 6.50%, due 08/31/01, with
a market value of $1,824,665 at 12/31/96),
1,788,000 proceeds $1,788,546 1,788,000
-----------
Total Repurchase Agreements 11,043,000
-----------
Number of
shares
- -----------
SHORT-TERM INVESTMENT FUND - 4.3%
Fidelity Institutional Cash Portfolios:
5,091,000 Government 5,091,000
-----------
</TABLE>
The accompanying notes are an integral part of this statement.
99
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
Principal
amount
------
<C> <S> <C>
U.S. GOVERNMENT AGENCY OBLIGATION - 0.8%
Federal National Mortgage Association, 5.45%,
$ 1,000,000 due 02/13/97 $ 1,000,000
------------
U.S. GOVERNMENT OBLIGATION - 4.2%
5,000,000 U.S. Treasury Bill, 5.20%, due 01/23/97 4,984,111
------------
Total Investments (Cost $117,570,037) - 98.7% 117,570,037
------------
Other assets in excess of liabilities - 1.3% 1,535,953
------------
NET ASSETS - 100% $119,105,990
============
</TABLE>
* Interest rate is reset quarterly based on the three-month LIBOR.
Rate shown is the rate in effect on December 31, 1996 minus five
basis points.
** Interest rate is reset monthly based on the one-month CP flat
rate. Rate shown is the rate in effect on December 31, 1996.
*** Interest rate is reset weekly based on the three-month U.S.
Treasury Bill. Rate shown is the rate in effect on December 31,
1996 plus 27 basis points.
The accompanying notes are an integral part of this statement.
100
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
Assets
Investments at amortized cost, which approximates value $117,570,037
Cash 140
Investment income receivable 405,085
Receivable for units issued 1,395,783
------------
Total assets 119,371,045
------------
Liabilities
Management fee payable 50,394
Payable for units redeemed 214,661
------------
Total liabilities 265,055
------------
Net assets $119,105,990
============
Unit value, offering price and redemption price per unit
($119,105,990/119,105,990 units of beneficial interest
issued and outstanding; unlimited
number of units authorized) $ 1.00
============
The accompanying notes are an integral part of this statement.
101
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
MONEY MARKET FUND
STATEMENT OF OPERATIONS
DECEMBER 31, 1996
Net investment income
Income:
Dividends $ 153,896
Interest 4,728,061
----------
Total income 4,881,957
----------
Expenses:
Management fee (Note 2) 449,833
Accounting fees 8,954
Audit fees 11,088
Directors' fees 2,247
Insurance 5,090
Legal fees 2,537
Registration fees 28,033
Shareholder reports 2,792
Miscellaneous 6,328
----------
Total expenses 516,902
Expense subsidy (Note 3) (67,069)
----------
Net expenses 449,833
----------
Net investment income $4,432,124
==========
The accompanying notes are an integral part of this statement.
102
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
Years ended December 31,
------------------------------
1996 1995
----------- ----------
Increase in net assets:
From operations:
Net investment income $ 4,432,124 $ 3,640,840
------------- -------------
Dividends to unitholders (4,432,124) (3,640,840)
------------- -------------
From unit transactions (at $1 per unit):
Net proceeds from units issued 163,851,223 143,467,408
Net asset value of units issued for
dividends reinvested 4,432,124 3,640,840
Cost of units redeemed (120,487,579) (131,303,078)
------------- -------------
Net increase in net assets
resulting from unit transactions 47,795,768 15,805,170
------------- -------------
Total increase in net assets 47,795,768 15,805,170
Net assets, beginning of year 71,310,222 55,505,052
------------- -------------
Net assets, end of year $ 119,105,990 $ 71,310,222
============= =============
Net change in units outstanding:
Units issued 163,851,223 143,467,408
Units redeemed (120,487,579) (131,303,078)
Units issued for dividends reinvested 4,432,124 3,640,840
------------- -------------
47,795,768 15,805,170
============= =============
The accompanying notes are an integral part of this statement.
103
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
MONEY MARKET FUND
SELECTED PER UNIT DATA AND RATIOS
(Selected data for a unit outstanding throughout each of the
years indicated)
<TABLE>
<CAPTION>
Years ended December 31,
-----------------------------------------------------------
1996 1995* 1994* 1993 1992
------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
Selected per unit data:
Investment income $ 0.054 $ 0.059 $ 0.045 $ 0.032 $ 0.041
Expenses (0.006)** (0.006)** (0.007)** (0.008) (0.008)
Expense subsidy 0.001 0.001 0.001 0.002 0.002
------- ------- ------- ------- -------
Net investment income 0.049 0.054 0.039 0.026 0.035
Dividends to unitholders (0.049) (0.054) (0.039) (0.026) (0.035)
------- ------- ------- ------- -------
Net asset value, beginning
of year 1.000 1.000 1.000 1.000 1.000
------- ------- ------- ------- -------
Net asset value, end of year $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
======= ======= ======= ======= =======
Ratio to average net assets:
Expenses 0.50%* 0.50%* 0.50%* 0.65% 0.65%
Net investment income 4.93% 5.43% 3.90% 2.57% 3.37%
Other:
Average net assets
(000 omitted) $89,967 $67,067 $31,587 $30,917 $34,125
Number of units outstanding
at end of year (000 omitted) 119,106 71,310 55,505 28,024 32,861
Total return 5.10% 5.57% 3.80% 2.60% 3.44%
</TABLE>
- -----------
* Reflects management fee reduction of 0.15% or $134,952, $100,525 and $27,802
for the years ended December 31, 1996, 1995 and 1994, respectively. For the
year ended December 31, 1994 the actual net expense ratio for the year was
0.56% of average net assets as the fee reduction went into effect on 5/2/94.
** Reflects management fee reduction of $134,952 or $0.002 per unit, $100,525
or $0.002 per unit and $27,802 or $0.001 per unit for the years ended
December 31, 1996, 1995 and 1994, respectively. Without management fee
reduction, expense per unit is $0.007, $0.007 and $0.008 for the years ended
December 31, 1996, 1995 and 1994, respectively.
Per unit amounts are calculated using average units outstanding for the period.
The accompanying notes are an integral part of this statement.
104
<PAGE>
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
AVESTA TRUST
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
The AVESTA Trust (the "Trust"), formerly the Retirement Investment Trust, is
registered under the Investment Company Act of 1940 as an open-end, management
investment company that consists of fifteen Funds for the collective investment
of retirement accounts for which Texas Commerce Bank National Association
("TCB") or one of its affiliated banks serves as trustee. Under an amended and
restated Declaration of Trust, TCB is the Trustee of the Trust and, as such,
provides, or arranges for the provision of, investment advisory, administrative
and custodial services and unitholder accounting. Chase Securities of Texas,
Inc., an affiliate of TCB, is the distributor of the Trust. Each Fund has an
unlimited number of units authorized.
The Trust currently offers thirteen Funds, each of which is accounted for
separately and has a different investment objective.
The EQUITY GROWTH FUND seeks to increase retirement assets primarily by
investing in equity-based securities, which include common stocks and those debt
securities and preferred stocks convertible into common stock, that provide
capital appreciation. Current income is a secondary objective.
The EQUITY INCOME FUND seeks to increase retirement assets by investing
primarily in equity-based securities that provide capital appreciation as well
as current income.
The BALANCED FUND seeks to increase retirement assets by investing in a
combination of bonds and equity-based securities to provide a balance of current
income and capital appreciation.
The INCOME FUND seeks to increase retirement assets by investing primarily in
domestic debt securities that earn a high level of current income with
consideration also given to safety of principal.
The CORE EQUITY FUND seeks to increase retirement assets by investing primarily
in common stocks of U.S. companies to maximize total investment return through
emphasis on capital appreciation and current income consistent with reasonable
risk.
The SMALL CAPITALIZATION FUND seeks to increase retirement assets by investing
primarily in common stocks and other equity-based securities of small
capitalization U.S. companies that can provide capital appreciation.
105
<PAGE>
The SHORT-INTERMEDIATE TERM U.S. GOVERNMENT SECURITIES FUND seeks to increase
retirement assets by investing primarily in shorter-term securities issued or
guaranteed by the U.S. Government or its agencies or instrumentalities, and
repurchase agreements with respect thereto, to provide as high a level of
current income as is consistent with the preservation of capital.
The U.S. GOVERNMENT SECURITIES FUND seeks to increase retirement assets by
investing primarily in securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, and repurchase agreements with respect
thereto, to provide current income with emphasis on preservation of capital.
There is no restriction on the maturity of the Fund's portfolio or any
particular portfolio security.
The INTERMEDIATE TERM BOND FUND seeks to increase retirement assets by investing
primarily in debt securities with intermediate term maturities to provide
current income, with consideration given to stability of principal.
The RISK MANAGER-INCOME FUND seeks to increase retirement assets by investing in
a combination of debt and, to a lesser extent, equity-based securities to
achieve high current income and, when appropriate, capital appreciation.
The RISK MANAGER-BALANCED FUND seeks to increase retirement assets by investing
in a combination of debt and equity-based securities for high total return.
The RISK MANAGER-GROWTH FUND seeks to increase retirement assets by investing in
a combination of equity-based and, to a lesser extent, debt securities to
achieve capital appreciation and, secondarily, current income.
The MONEY MARKET FUND seeks to increase retirement assets by investing only in
instruments with a remaining maturity of thirteen months or less to provide a
high level of current income with equal emphasis on liquidity and stability of
principal.
The INTERNATIONAL EQUITY FUND had not commenced operations at December 31, 1996.
The INTERNATIONAL BOND FUND had not commenced operations at December 31, 1996.
The ability of the issuers of the securities held by the Trust to meet their
obligations may be affected by economic developments in a specific industry or
region.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
106
<PAGE>
NOTE 1 - ACCOUNTING POLICIES
SECURITIES VALUATION
Securities listed or traded on a national securities exchange are valued at the
last reported sales price on the primary exchange on which they are traded,
usually 3:00 p.m. Houston time. Unlisted securities and listed securities for
which the last sales price is not available are valued at the last reported bid
price. U.S. Government securities are valued at the last reported bid price.
For all Funds except for the Money Market Fund, short-term securities which
mature in more than 60 days are valued at current market quotations. Short-term
securities are valued at amortized cost if, (1) their term to maturity from date
of purchase was 60 days or less, (2) their maturity is 60 days or less, or (3)
their original term to maturity from date of purchase exceeded 60 days, by
amortizing their value on the 61st day prior to maturity. The Money Market Fund
values all securities at amortized cost.
A repurchase agreement is a short-term investment in which a Fund acquires
ownership of a debt security and the seller agrees to repurchase the security at
a future time at a specified price. Repurchase agreements are entered into only
with approved counterparties which are monitored on a daily basis. It is the
Fund's policy that its custodian take possession of the underlying collateral
securities, through physical delivery or book entry transfer, the value of which
exceeds the principal amount of the repurchase transaction, including accrued
interest. To the extent that any repurchase transaction exceeds one business
day, the value of the collateral is marked-to-market on a daily basis to ensure
the adequacy of the collateral.
OPTIONS AND FUTURES CONTRACTS
Put and Call Options
All Funds, except the Money Market Fund, may invest in exchange-listed and over-
the-counter put and call options in order to take advantage of market
inefficiencies or to provide portfolio protection in expectation of a declining
market. During 1996, the Trust invested in options contracts solely for the
purpose of hedging their existing portfolio.
When a Fund writes (sells) a call option, an amount equal to the premium
received by the Fund is recorded as a liability and is subsequently adjusted to
the current market value of the option written. Premiums received from writing
call options which expire unexercised are treated by the Fund on the expiration
date as realized gains from the sale of options. The difference between the
premium received and the amount paid on effecting a closing purchase
transaction, including brokerage commissions, is also treated as a realized
gain, or if the premium is less than the amount paid for the closing purchase
transaction, as a realized loss. If a written call option is exercised, the
premium is added to the proceeds from the sale of the underlying security in
determining whether the Fund has realized a gain or loss. The Fund, as writer of
a call option, may have no control over whether the underlying securities may be
sold, and as a result, bears the
-107-
<PAGE>
market risk of an unfavorable change in the price of the security underlying the
written call option. If a written call option on a futures contract is
exercised, the premium is recognized as a gain. Thereafter, such futures
contracts are accounted for as described under "Financial Futures Contracts."
The Fund may not write put options.
The premium paid by a Fund for the purchase of a call or put option is recorded
as an investment and is subsequently valued to reflect the current market value
of the option purchased. If a purchased option expires, the Fund realizes a loss
in the amount of the premium paid for the option. If the Fund enters into a
closing transaction, it realizes a gain or loss, depending on whether the
proceeds from the sale are more or less than the cost of the option. If the Fund
exercises a purchased put option, it realizes a gain or loss from the sale of
the underlying security and the proceeds from such sale are decreased by the
premium originally paid. If the Fund exercises a purchased call option, the
amount of the premium originally paid increases the cost of the security which
the Fund purchases upon exercise of the option.
Financial Futures Contracts
A financial futures contract is an agreement between two parties to purchase
(long) or sell (short) a financial instrument at a set price for delivery on a
future date. Upon entering into a financial futures contract, the Fund is
required to pledge to the broker an amount of cash and/or U.S. Government
securities equal to a certain percentage of the contract amount. This amount is
known as the "initial margin." Subsequent payments, known as "variation margin,"
are made or received by the Fund each day, depending on the daily fluctuations
in the value of the underlying security. Such variation margin is recorded for
financial statement purposes on a daily basis as a realized gain or loss. The
Fund invests in financial futures contracts solely for the purpose of hedging
its existing portfolio securities or securities the Fund intends to purchase
against fluctuations in value caused by changes in prevailing market interest
rates. Should market values move unexpectedly, the Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a loss.
The use of futures transactions involves the risk of imperfect correlation in
movements in the price of futures contracts, interest rates and the underlying
hedged assets.
FEDERAL INCOME TAXES
No provision for federal income taxes is required because the IRS has ruled that
the Fund is a pooled-fund arrangement exempt from Federal Income Tax. To
maintain this tax-exempt status, only Individual Retirement Accounts, Keogh
plans, 401(k) plans and other plans exempt from federal taxation may invest in
the Funds.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME
Securities transactions are recorded on the trade date. Realized gains and
losses on sales of investments are calculated on the identified cost basis.
Dividend income is recorded on the ex-dividend date. Interest income is recorded
on the accrual basis. Discounts and premiums are
-108-
<PAGE>
amortized using the scientific method except for the Money Market Fund which
utilizes the straight-line method.
DIVIDEND DISTRIBUTIONS
The Money Market Fund declares daily and pays monthly dividend distributions
from net investment income and short-term capital gains; such dividend
distributions are automatically reinvested. Dividend distributions are recorded
on ex-dividend date. The other twelve Funds do not declare or pay dividends on
investment income.
NOTE 2 - MANAGEMENT FEES
The Fund has management agreements with TCB. Pursuant to these agreements, TCB
has responsibility for all investment advisory services in connection with the
management of the Fund. TCB pays the compensation of officers and employees of
the Fund, occupancy and certain accounting and clerical costs of the Fund. The
Fund bears all other costs and expenses.
The investment management fee paid by each Fund is accrued daily and paid
monthly. With respect to the Equity Growth Fund, the Equity Income Fund, the
Balanced Fund, the Income Fund and the Core Equity Fund, the management fee is
limited to an annual rate of 1.00% of the first $250 million of the average
daily net assets of each Fund, 0.90% of the next $250 million of such net assets
and 0.80% of such net assets in excess of $500 million. The Short-Intermediate
Term U.S. Government Securities Fund and the Intermediate Term Bond Fund pay a
management fee limited to an annual rate of 0.75% of the first $250 million of
the average daily net assets of the Fund, 0.65% of the next $250 million of such
net assets and 0.55% of such net assets in excess of $500 million. The U.S.
Government Securities Fund pays a management fee limited to an annual rate of
0.85% of the first $250 million of the average daily net assets of the Fund,
0.75% of the next $250 million of such net assets and 0.65% of such net assets
in excess of $500 million. The Small Capitalization Fund pays a management fee
limited to an annual rate of 1.15% of the first $250 million of the average
daily net assets of the Fund, 1.05% of the next $250 million of such net assets
and 0.95% of such net assets in excess of $500 million. The Risk Manager-Income
Fund, the Risk Manager-Balanced Fund and the Risk Manager-Growth Fund pay a
management fee limited to an annual rate of 1.10% of the first $250 million of
the average daily net assets of the Fund, 1.00% of the next $250 million of such
net assets and 0.90% of such net assets in excess of $500 million. The Money
Market Fund pays a management fee limited to an annual rate of 0.65% of the
Fund's average daily net assets.
NOTE 3 - EXPENSE SUBSIDY AND VOLUNTARY FEE WAIVER
In accordance with the management agreements, TCB has agreed to subsidize 100%
of the operating expenses in excess of the management fee of each Fund until net
assets of each Fund exceeds $250 million. Generally, expenses applicable to all
Funds are allocated equally. Expenses incurred for specific Funds are allocated
to the respective Funds.
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<PAGE>
From time to time, TCB may voluntarily elect to waive a portion of the Fund's
management fee. The voluntary fee waiver may be discontinued at any time without
prior notice.
For the year ended December 31, 1996, TCB elected to reduce management fees by a
total of $297,065 resulting in the following amounts of fees reduced per Fund:
$135,137 in the Income Fund, $24,219 in the Small Capitalization Fund, $2,757 in
the U.S. Government Securities Fund and $134,952 in the Money Market Fund.
NOTE 4 - PORTFOLIO SECURITIES
Purchases and sales of investment securities, excluding short-term securities,
futures and written options, for the year ended December 31, 1996 and gross
unrealized appreciation and depreciation at December 31, 1996 were as follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Purchases Sales Appreciation Depreciation
--------- ----- ------------- ------------
<S> <C> <C> <C> <C>
Equity Growth Fund $ 34,977,528 $ 27,755,339 $ 14,645,886 $ 358,901
Equity Income Fund 20,226,771 8,787,768 17,235,565 356,782
Balanced Fund 13,355,687 12,999,797 3,022,322 88,519
Income Fund 30,290,503 31,467,434 565,367 303,470
Core Equity Fund 7,528,897 7,409,156 7,978,415 85,775
Small Capitalization Fund 14,103,155 7,359,850 5,076,207 483,557
Short-Intermediate Term U.S.
Government Securities Fund 49,238,128 38,371,333 188,442 72,002
U.S. Government Securities Fund 1,148,281 1,064,165 109,255 2,447
Intermediate Term Bond Fund 9,721,142 7,883,102 49,419 34,869
Risk Manager-Income Fund 2,162,385 2,975,405 270,102 23,501
Risk Manager-Balanced Fund 2,289,403 2,344,308 712,728 30,411
Risk Manager-Growth Fund 1,174,818 908,180 429,619 9,739
</TABLE>
Purchases and sales of long-term U.S. Government Obligations included in the
purchase and sale amounts above for the year ended December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
Gross Gross
Unrealized Unrealized
Purchases Sales Appreciation Depreciation
--------- ----- ------------- ------------
<S> <C> <C> <C> <C>
Balanced Fund $ 3,847,273 $ 3,487,398 $ 111,279 $ 2,534
Income Fund 21,501,563 26,728,078 272,876 170,354
Short-Intermediate Term U.S.
Government Securities Fund 41,701,067 37,712,777 181 65,522
U.S. Government Securities Fund 1,148,281 1,118,766 106,807
Intermediate Term Bond Fund 8,281,943 7,115,667 25,781 6,342
Risk Manager-Income Fund 1,620,906 1,889,380 22,007 11,433
Risk Manager-Balanced Fund 1,352,297 1,265,615 5,033 15,284
Risk Manager-Growth Fund 688,294 450,592 10,268 203
</TABLE>
The Money Market Fund held only short-term securities and, therefore, is not
included above.
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<PAGE>
NOTE 5 - 10:1 REVERSE SPLIT
On May 7, 1993, the Equity Growth Fund, the Equity Income Fund, the Balanced
Fund and the Income Fund effected a 10 for 1 reverse split. One unit of
beneficial interest was exchanged for each ten units of beneficial interest
outstanding.
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