<PAGE> 1
[PHOTO] SEMIANNUAL
REPORT
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APRIL 30, 1995
(UNAUDITED)
[PHOTO] [PHOTO]
COMMON
COMMON SENSE(R) SENSE(R) TRUST
FAMILY OF FUNDS
<PAGE> 2
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SHAREHOLDERS' MESSAGE
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JUNE 1, 1995
Dear Shareholder,
During the six-month period covered by this report,
November 1, 1994 through April 30, 1995, we saw the
close of a challenging and difficult year in the [PHOTO, DON G. POWELL]
financial markets-and the beginning of a new year,
with renewed optimism and strength on many fronts.
MARKET OVERVIEW
In an effort to moderate economic growth and keep inflation under control, the
Federal Reserve Board raised the federal funds rate (the rate banks charge each
other for overnight loans) seven times from February 1994 through February
1995. As a result, the fed funds rate doubled from 3 percent to 6 percent, its
highest level in three years. Intermediate- and long-term interest rates
quickly followed the Fed's lead and moved significantly higher as well. The
yield on 30-year Treasury securities, for example, began 1994 at 6.35 percent
and increased to a high of 8.16 percent, before retreating to 7.89 percent at
the end of the year. However, since yields and prices move in opposite
directions, this had a negative impact on prices of fixed-income securities.
Stock market investors did not fare much better during this rising
interest rate environment, which continued into early 1995. Despite a robust
economy and stronger corporate earnings, the market was concerned that higher
interest rates and the prospect for continued rate hikes might altogether
extinguish the economic expansion.
In contrast, 1995 began more positively as the bond market got a boost
from growing sentiment that the Fed had stabilized economic growth while
keeping inflation under control, and that it may be near the end of its
tightening cycle. Subsequently, the yield on 30-year Treasury securities fell
to 7.34 percent at the end of April-down more than three quarters of a
percentage point from its November 1994 high of 8.16 percent.
The stock market responded in late February with the Dow Jones
Industrial Average breaking through the 4000 mark, setting a new record high
and raising expectations for a stronger market in 1995. At the same time,
almost all other major stock indexes rose, including the S&P 500 Index, the New
York Stock Exchange Composite Index, and the Nasdaq Composite Index.
Additionally, at the end of April, the Van Kampen American Capital
Index of Investor Intentions reached 138, an increase of 11 percent over its
March-end level of 124. The index, computed from an independently conducted
survey and published by Van Kampen American Capital, measures the investment
climate (investors' confidence) by asking 1,000 investors about what they
intend to do with their money over the next 60-90 days. A total of 46.3 percent
of investors said the next 60-90 days would be a "good" time to invest.
1
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OUTLOOK
Economic data continues to point to a slowdown in the economy. First-quarter
gross domestic product, for example, grew at an annualized rate of 2.8 percent,
substantially lower than its fourth-quarter rate of 5.1 percent last year. Many
analysts now expect GDP to grow between 1 and 2 percent for the second half of
the year. If this happens, we do not believe the Fed will be compelled to raise
short-term interest rates. On the other hand, if GDP grows between 2.5 percent
and 4 percent, we may see the Fed increase interest rates once again. But, we
do not anticipate the same level of volatility from a rate hike that we saw in
the markets last year.
We believe stocks and bonds will continue to perform well, as the
economy grows at a moderate pace and inflation remains low. Corporate earnings
continue to be stronger-than-expected despite a slower economy, which has
helped to drive stock prices higher. The Dow Jones Industrial Average, for
example, closed above the 4300 mark at the end of April, its 17th record high
since late February. Likewise, bond prices continue to appreciate as yields on
long-term rates continue to fall.
On the following pages, you can read about your Fund's performance
during the past six months, as well as portfolio management's outlook for the
Fund in the coming months. We hope that you will find this information helpful
in reviewing your investment with Common Sense Trust.
Additionally, we are pleased to announce the addition of David C.
Johnson to the portfolio management team of Common Sense Trust Municipal Bond
Fund. Mr. Johnson has more than 12 years of management experience in the
tax-free fixed-income sector, and will be primarily responsible for the
day-to-day management of the Fund's investment portfolio. You can be assured
that your Fund's portfolio management team remains committed to seeking high
current income and preservation of capital.
We look forward to communicating with you on a regular basis,
providing information about your Fund's performance and new investment
opportunities. We appreciate your continued confidence in Common Sense Trust.
Sincerely,
/s/ Don G. Powell
Don G. Powell
President
2
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PORTFOLIO PERSPECTIVE
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The following is an interview with the portfolio management team of
the Common Sense Trust stock funds. The team includes: Stephen L.
Boyd, Common Sense Growth Fund; James A. Gilligan, Common Sense
Growth and Income Fund; and, Alan T. Sachtleben, executive vice
president, equity investments.
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Q. WHAT FACTORS HAD THE GREATEST IMPACT ON THE PERFORMANCE OF THE STOCK
FUNDS DURING THE SIX MONTHS ENDED APRIL 30, 1995?
A. The biggest boost to stock prices came from interest rates, which
declined during the reporting period. After watching rates rise during
the previous six months, investors were optimistic about the impact
that falling rates would have on corporate profits. In response, the
stock market continued to attract new money and set several record
highs, as measured by the Dow Jones Industrial Average, an unmanaged
index that reflects the performance of large industrial companies.
COMMON SENSE GORWTH FUND
HOLDINGS BY INDUSTY
[PIE CHART]
Lower interest rates help companies for two reasons. First,
they are an indication that the stock market is not concerned about
inflation, which generally boosts stock prices. Second, they reduce a
company's cost of borrowing, which provides a direct boost to profits.
The stock funds also benefited from the continued slowing of
economic growth rates and a declining U.S. dollar. Slower growth
means inflation is less likely to be a problem, which means the
Federal Reserve Board is less likely to raise interest rates. The
devaluing of the dollar compared to the Japanese yen and European
currencies meant U.S. exports were more affordable and imports less
affordable, both of which helped increase sales for domestic
companies.
Q. WHAT CHANGES DID YOU MAKE TO THE PORTFOLIOS TO DEAL WITH THE CHANGING
ECONOMIC CONDITIONS?
A. Common Sense Growth Fund reduced its holdings of cyclical stocks,
which are companies most likely to be affected by changes in the
economy. As a result, we reduced the Fund's exposure to companies in
the consumer durables (autos), raw materials (chemicals and paper) and
retail industries, while significantly increasing our investment in
financial services. Firms in this industry usually benefit from lower
interest rates. The Fund also increased slightly its holdings of
technology stocks because of the continued strong growth of that
industry.
COMMON SENSE GROWTH & INCOME FUND
HOLDINGS BY INDUSTRY
[PIE CHART]
Common Sense Growth and Income Fund increased the percentage
of the portfolio invested in financial services and health care.
Additionally, as a result of buying fundamentally attractive
companies, both funds increased their holdings of companies that
appeared to be possible candidates for takeovers or restructurings,
and they benefited from these positions. Common Sense Growth & Income
Fund owned
3
<PAGE> 5
stock in four companies - Dr Pepper, PET, U.S. Shoe and E Systems -
that either were taken over or became takeover targets during the past
six months.
The diversification of both funds is shown by the charts on
the previous page.
Q. HOW DID THE FUNDS PERFORM DURING THE SIX MONTHS ENDED APRIL 30, 1995?
A. Common Sense Growth Fund achieved a total return at net asset value
(without a sales charge) of 7.18 percent, including reinvestment of
dividends totaling $.155 per share and a capital gains distribution of
$1.035 per share. Common Sense Growth and Income Fund achieved a total
return at net asset value of 9.06 percent, including reinvestment of
dividends totaling $.165 per share and a capital gains distribution of
$1.595 per share. By comparison, the Standard & Poor's 500-Stock
Index, an unmanaged index that reflects general stock market
performance, achieved a total return of 10.45 percent. The index does
not reflect any commissions or fees that would be paid by an investor
purchasing the securities it represents.
Q. WHAT IS THE OUTLOOK FOR STOCKS?
A. We believe that stocks are fairly valued. However, certain segments of
the stock market remain attractive, including companies in the energy
and communications industries. We will continue to look for stocks
that have solid fundamentals and that we believe offer good prospects
for growth, regardless of economic conditions. This strategy may
continue to provide the added benefit of enhanced growth from
takeovers, since we anticipate merger activity to remain steady or
increase.
<TABLE>
<S> <C> <C>
/s/ Alan T. Sachtleben /s/ Stephen L. Boyd /s/ James A. Gilligan
Alan T. Sachtleben Stephen L. Boyd James A. Gilligan
Executive Vice President Portfolio Manager Portfolio Manager
Equity Investments Common Sense Growth Fund Common Sense Growth and Income Fund
</TABLE>
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The following is an interview with the portfolio management team of
the Common Sense Trust fixed-income funds. The team includes: John R.
Reynoldson, Common Sense Government Fund; David C. Johnson, Common
Sense Municipal Bond Fund; David R. Troth, Common Sense Money Market
Fund; and, Robert C. Peck, Jr., executive vice president,
fixed-income investments.
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Q. WHAT FACTORS HAD THE GREATEST IMPACT ON THE PERFORMANCE OF THE COMMON
SENSE TRUST FIXED-INCOME FUNDS DURING THE SIX MONTHS ENDED APRIL 30,
1995?
A. Changes in interest rates had a significant impact on the fixed-income
funds, as they did on the stock funds. After rising during the
previous six months, interest rates began to fall during the reporting
period. The impact on yields can be seen in the chart at right, which
shows yields on 10-Year Treasury notes dropping from a high of 8.03
percent on November 7 to a low of 6.99 percent on April 24.
YIELDS ON 10-YEAR TREASURY NOTES
[LINE CHART]
Generally, when interest rates fall, prices of bonds and the
net asset value of bond funds increase. This was the case during the
reporting period, with the net asset value of the Common Sense
Government Fund, for example, rising from $9.99 on October 31, 1994,
to $10.34 on April 30, 1995, or 3.5 percent.
Additionally, the municipal bond market was positively
impacted by the supply and demand relationship at the start of 1995.
January, typically a big month for refundings and call dates among
bond issuers, placed additional investment money into the hands of
investors. Subsequently, demand for municipal bonds by investors
seeking to reinvest their money into newly issued municipal bonds
exceeded supply. This caused municipal bond prices to appreciate.
Q. WHAT CHANGES DID YOU MAKE TO THE PORTFOLIOS TO DEAL WITH THE CHANGING
INTEREST-RATE ENVIRONMENT?
A. Common Sense Government Fund responded to these changes by increasing
its holdings of mortgage-backed securities, which our research
indicated offered attractive values. We also increased the Fund's
sensitivity to changes in interest rates by extending the average
maturity and duration of the portfolio to capture the capital gains
opportunities offered by falling yields.
COMMON SENSE MUNICIPAL BOND FUND
QUALITY RATING
[PIE CHART]
Common Sense Municipal Bond Fund continued to focus on
long-term bonds with high coupon rates and bonds that we believed
would provide relative stability to the portfolio. As a result, we did
not reposition the portfolio in any major way. The quality of the
portfolio is illustrated by the chart at right.
We increased the average maturity of the Common Sense Money
Market Fund portfolio to capture the additional yields available
during the early part of the reporting period. As a result, the
average maturity increased from 25 days on October 31 to 39 days on
April 30. In addition, we shifted the weighting of the portfolio,
raising the percentage of commercial paper to 49 percent on April 30
from 29 percent on October 31.
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<PAGE> 7
Q. HOW DID THE FUNDS PERFORM DURING THE SIX MONTHS ENDED APRIL 30, 1995?
A. Common Sense Government Fund achieved a total return at net asset
value of 7.11 percent, including reinvestment of dividends totaling
$.3443 per share. By comparison, the Lehman Brothers General U.S.
Government Index achieved a total return of 6.52 percent. The
unmanaged index is used as a benchmark for many government funds, but
it does not reflect any commissions or fees that would be paid by an
investor purchasing the securities it represents.
Common Sense Municipal Bond Fund achieved a total return at
net asset value of 5.77 percent, including reinvestment of dividends
totaling $.354 per share. By comparison, the Lehman Brothers Municipal
Bond Index achieved a total return of 7.57 percent. This unmanaged
index is used as a benchmark for many municipal bond funds but it does
not reflect any commissions or fees that would be paid by an investor
purchasing the securities it represents.
Common Sense Money Market Fund achieved a total return at net
asset value of 2.43 percent.
Q. WHAT'S THE OUTLOOK FOR FIXED-INCOME SECURITIES?
A. Through the reporting period, rates of economic growth slowed and
inflation remained in check, reflecting the Fed's tightening of the
money supply in 1994. This slowdown in growth seems to have put
further Fed tightening on hold, and has allowed the bond market to
rally. Looking ahead, we expect a moderate rebound in economic
activity, and some increase in the inflation rate. We believe this
environment will cause interest rates to rise moderately during the
rest of the year.
<TABLE>
<S> <C>
/s/ Robert C. Peck, Jr. /s/ John R. Reynoldson
Robert C. Peck, Jr. John R. Reynoldson
Executive Vice President Portfolio Manager
Fixed Income Investments Common Sense
Government Fund
/s/ David C. Johnson /s/ David R. Troth
David C. Johnson David R. Troth
Portfolio Manager Portfolio Manager
Common Sense Common Sense
Municipal Bond Fund Money Market Fund
</TABLE>
Investments in Common Sense Money Market Fund are neither insured nor
guaranteed by the U.S. Government. Although the Fund seeks to maintain a stable
net asset value of $1 per share, there is no guarantee that it will be able to
do so.
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GROWTH FUND STATEMENT OF NET ASSETS
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APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
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<S> <C> <C>
COMMON STOCK 93.6%
CONSUMER DISTRIBUTION 3.7%
175,000 Albertsons, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,534,375
*600,000 Kroger Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,300,000
250,000 May Department Stores Co. . . . . . . . . . . . . . . . . . . . . . . . 9,062,500
225,000 Sears, Roebuck & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,206,250
400,000 Sysco Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,200,000
225,000 Walgreen Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,575,000
850,000 Wal-Mart Stores, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 20,187,500
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TOTAL CONSUMER DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 84,065,625
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CONSUMER DURABLES 1.0%
264,100 Black & Decker Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,923,000
400,000 Echlin, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,600,000
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TOTAL CONSUMER DURABLES . . . . . . . . . . . . . . . . . . . . . . . 22,523,000
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CONSUMER NON-DURABLES 8.0%
250,000 Campbell Soup Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,812,500
200,000 Coca-Cola Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,625,000
300,000 Colgate-Palmolive Co. . . . . . . . . . . . . . . . . . . . . . . . . . 21,075,000
500,000 ConAgra, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,625,000
250,000 CPC International, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 14,656,250
200,000 General Mills, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 12,200,000
300,000 Heinz (H.J.) Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,600,000
450,000 PepsiCo, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,731,250
325,000 Procter & Gamble Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 22,709,375
250,000 Ralston-Ralston Purina Group . . . . . . . . . . . . . . . . . . . . . . 11,875,000
*400,000 RJR Nabisco Holdings Corp., Class A . . . . . . . . . . . . . . . . . . 11,150,000
500,000 Sara Lee Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,937,500
300,000 Whitman Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,475,000
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TOTAL CONSUMER NON-DURABLES . . . . . . . . . . . . . . . . . . . . . 185,471,875
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CONSUMER SERVICES 8.0%
160,000 Capital Cities ABC, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 13,520,000
200,000 CBS, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,825,000
*350,000 Circus Circus Enterprises, Inc. . . . . . . . . . . . . . . . . . . . . 11,593,750
*320,000 Cox Communications, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 4,880,000
325,000 Disney (Walt) Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,996,875
500,000 Marriott International, Inc. . . . . . . . . . . . . . . . . . . . . . . 18,000,000
500,000 McDonald's Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,500,000
600,000 News Corp., Ltd., ADR . . . . . . . . . . . . . . . . . . . . . . . . . 11,700,000
500,000 Service Corp. International . . . . . . . . . . . . . . . . . . . . . . 14,125,000
*750,000 Tele-Communications, Inc., Class A . . . . . . . . . . . . . . . . . . . 14,343,750
450,000 Time Warner, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,481,250
200,000 Tribune Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,825,000
*200,000 Viacom, Inc., Class B . . . . . . . . . . . . . . . . . . . . . . . . . 9,175,000
*125,000 Wolters Kluwer, NV, ADR . . . . . . . . . . . . . . . . . . . . . . . . 10,156,250
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TOTAL CONSUMER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . 184,121,875
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</TABLE>
7
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GROWTH FUND STATEMENT OF NET ASSETS, continued
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<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
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<S> <C> <C>
ENERGY 8.7%
450,000 Amoco Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,531,250
200,000 Ashland, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,400,000
180,000 British Petroleum Co., PLC, ADR . . . . . . . . . . . . . . . . . . . . 15,502,500
700,000 Coastal Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,825,000
350,000 Exxon Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,368,750
150,000 Mobil Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,231,250
950,000 Panhandle Eastern Corp. . . . . . . . . . . . . . . . . . . . . . . . . 22,800,000
225,000 Repsol SA, ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,200,000
115,000 Royal Dutch Petroleum Co., ADR . . . . . . . . . . . . . . . . . . . . . 14,260,000
350,000 Texaco, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,931,250
625,000 Williams Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,546,875
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TOTAL ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 200,596,875
--------------
FINANCE 16.6%
375,000 Ahmanson (H.F.) & Co. . . . . . . . . . . . . . . . . . . . . . . . . . 7,875,000
6,565,075 American Capital Small Capitalization Fund, Inc. (see Note 2) . . . . . 67,423,319
600,000 American Express Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 20,850,000
200,000 American International Group, Inc. . . . . . . . . . . . . . . . . . . . 21,350,000
500,000 Bank of Boston Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 16,750,000
300,000 BayBanks, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,750,000
600,000 Chase Manhattan Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 26,250,000
500,000 Chemical Banking Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 20,875,000
300,000 CoreStates Financial Corp. . . . . . . . . . . . . . . . . . . . . . . . 9,787,500
600,000 Federal National Mortgage Association . . . . . . . . . . . . . . . . . 52,950,000
300,000 First Bank System, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 12,150,000
300,000 First Chicago Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 16,575,000
500,000 Green Point Financial Corp. . . . . . . . . . . . . . . . . . . . . . . 11,968,750
600,000 Great Western Financial Corp. . . . . . . . . . . . . . . . . . . . . . 12,675,000
300,000 Green Tree Financial Corp. . . . . . . . . . . . . . . . . . . . . . . . 12,262,500
250,000 MBNA Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,562,500
600,000 Midlantic Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,900,000
850,000 West One Bancorp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,481,250
--------------
TOTAL FINANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 381,435,819
--------------
HEALTH CARE 11.0%
500,000 Abbott Laboratories, Inc. . . . . . . . . . . . . . . . . . . . . . . . 19,687,500
250,000 American Home Products Corp. . . . . . . . . . . . . . . . . . . . . . . 19,281,250
*150,000 Amgen, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,903,125
*400,000 Astra, AB, Series A, ADR . . . . . . . . . . . . . . . . . . . . . . . . 11,500,000
500,000 Baxter International, Inc. . . . . . . . . . . . . . . . . . . . . . . . 17,375,000
150,000 Becton Dickinson & Co. . . . . . . . . . . . . . . . . . . . . . . . . . 8,362,500
600,000 Caremark International, Inc. . . . . . . . . . . . . . . . . . . . . . . 10,500,000
350,000 Columbia/HCA Healthcare Corp. . . . . . . . . . . . . . . . . . . . . . 14,700,000
*100,000 Forest Laboratories, Inc. . . . . . . . . . . . . . . . . . . . . . . . 4,500,000
*125,000 Genentech, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,296,875
*400,000 Healthcare & Retirement Corp. . . . . . . . . . . . . . . . . . . . . . 11,300,000
200,000 Healthsouth Rehabilitation . . . . . . . . . . . . . . . . . . . . . . . 3,950,000
125,000 Integrated Health Services, Inc. . . . . . . . . . . . . . . . . . . . . 4,328,125
200,000 Johnson & Johnson . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,000,000
</TABLE>
8
<PAGE> 10
- --------------------------------------------------------------------------------
GROWTH FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE-continued
225,000 Mallinckrodt Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . $ 8,100,000
400,000 Mylan Laboratories, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 12,300,000
125,000 Pfizer, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,828,125
*225,000 Scherer (R.P.) Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,743,750
300,000 Schering-Plough Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 22,612,500
400,000 Upjohn Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,500,000
225,000 Warner Lambert Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,943,750
--------------
TOTAL HEALTH CARE . . . . . . . . . . . . . . . . . . . . . . . . . . 252,712,500
--------------
PRODUCER MANUFACTURING 8.3%
550,000 Browning-Ferris Industries, Inc. . . . . . . . . . . . . . . . . . . . . 18,150,000
500,000 Corning, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,687,500
225,000 Deere & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,450,000
360,000 General Electric Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 20,160,000
700,000 Honeywell, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,037,500
200,000 Illinois Tool Works, Inc. . . . . . . . . . . . . . . . . . . . . . . . 10,025,000
225,000 ITT Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,512,500
250,000 Philip NV, ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,625,000
400,000 Rockwell International Corp. . . . . . . . . . . . . . . . . . . . . . . 17,450,000
*450,030 Thermo Fibertek, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 8,269,301
295,600 Wheelabrator Technologies, Inc. . . . . . . . . . . . . . . . . . . . . 4,286,200
650,000 WMX Technologies, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 17,712,500
--------------
TOTAL PRODUCER MANUFACTURING . . . . . . . . . . . . . . . . . . . . . 191,365,501
--------------
RAW MATERIALS/PROCESSING INDUSTRIES 5.1%
200,000 Air Products & Chemicals, Inc. . . . . . . . . . . . . . . . . . . . . . 10,075,000
350,000 Du Pont (E.I.) de Nemours & Co., Inc. . . . . . . . . . . . . . . . . . 23,056,250
200,000 Eastman Chemical Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 11,350,000
145,000 Engelhard Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,564,375
300,000 Grace (W.R.) & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,087,500
300,000 James River Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,137,500
325,000 Lubrizol Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,334,375
400,000 Pall Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,350,000
75,000 Scott Paper Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,684,375
425,000 Sherwin Williams Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 15,140,625
--------------
TOTAL RAW MATERIALS/PROCESSING INDUSTRIES . . . . . . . . . . . . . . 116,780,000
--------------
TECHNOLOGY 19.4%
175,000 Adobe Systems, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 10,193,750
*250,000 Applied Materials, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 15,406,250
99,300 BMC Software, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,181,425
300,000 Boeing Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,500,000
*225,000 Cisco Systems, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,971,875
*980,000 Compaq Computer Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 37,240,000
200,000 Computer Associates International, Inc. . . . . . . . . . . . . . . . . 12,875,000
*325,000 DSC Communications Corp. . . . . . . . . . . . . . . . . . . . . . . . . 12,025,000
180,000 Hewlett-Packard Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 11,902,500
175,000 Integrated Device Technology, Inc. . . . . . . . . . . . . . . . . . . . 6,671,875
</TABLE>
9
<PAGE> 11
- --------------------------------------------------------------------------------
GROWTH FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY-continued
400,000 Intel Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 40,950,000
425,000 International Business Machines Corp. . . . . . . . . . . . . . . . . . 40,268,750
135,000 Linear Technology Corp. . . . . . . . . . . . . . . . . . . . . . . . . 8,066,250
300,000 Lockheed Martin Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 17,325,000
250,000 Loral Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,750,000
*274,600 Lotus Development Corp. . . . . . . . . . . . . . . . . . . . . . . . . 8,649,900
*120,000 LSI Logic Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,995,000
350,000 McDonnell Douglas Corp. . . . . . . . . . . . . . . . . . . . . . . . . 21,700,000
*380,000 Microsoft Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,065,000
*477,500 National Semiconductor Corp. . . . . . . . . . . . . . . . . . . . . . . 10,922,813
150,000 Northrop Grumman Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 7,443,750
*200,000 Silicon Graphics, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 7,500,000
*400,000 Symantec Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,300,000
400,000 Texas Instruments, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 42,400,000
*160,000 3Com Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,960,000
400,000 Varian Associates, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 18,400,000
135,000 Xerox Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,621,875
--------------
TOTAL TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . 447,286,013
--------------
TRANSPORTATION 1.6%
200,000 AMR Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,475,000
385,000 Burlington Northern, Inc. . . . . . . . . . . . . . . . . . . . . . . . 22,907,500
--------------
TOTAL TRANSPORTATION . . . . . . . . . . . . . . . . . . . . . . . . . 36,382,500
--------------
UTILITIES 2.2%
*250,000 ALC Communications Corp. . . . . . . . . . . . . . . . . . . . . . . . . 9,531,250
250,000 AT&T Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,687,500
350,000 Baltimore Gas & Electric Co. . . . . . . . . . . . . . . . . . . . . . . 8,268,750
200,000 FPL Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,350,000
250,000 WorldCom, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000,000
300,000 Peco Energy Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,725,000
--------------
TOTAL UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,562,500
--------------
TOTAL COMMON STOCK (Cost $1,953,634,082) . . . . . . . . . . . . . . . 2,154,304,083
--------------
PREFERRED STOCK 0.8%
400,000 Cellular Communications, Inc., (Cost $13,201,982) . . . . . . . . . . . 18,650,000
--------------
PRINCIPAL
AMOUNT UNITED STATES GOVERNMENT OBLIGATIONS 4.4%
- --------------
United States Treasury Notes
$50,000,000 6.875%, 2/28/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,242,000
50,000,000 7.75%, 2/15/01 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51,961,000
--------------
TOTAL UNITED STATES GOVERNMENT OBLIGATIONS (Cost $101,328,125) . . . . 102,203,000
--------------
</TABLE>
10
<PAGE> 12
- --------------------------------------------------------------------------------
GROWTH FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM INVESTMENTS 4.6%
$35,334,000 Federal Home Loan Mortgage Corp., 6.00% to 6.03%, 5/2/95 to 5/9/95 . . . $ 35,317,284
14,000,000 Federal National Mortgage Association, 6.00%, 5/30/95 . . . . . . . . . 13,931,050
55,570,000 Repurchase agreement with Salomon Brothers, Inc., dated 4/28/95, 5.93%,
due 5/1/95 (collateralized by U.S. Government obligations in a
pooled cash account) repurchase proceeds $55,597,461 . . . . . . . . . 55,570,000
--------------
TOTAL SHORT-TERM INVESTMENTS (Cost $104,818,737) . . . . . . . . . . 104,818,334
--------------
TOTAL INVESTMENTS (Cost $2,172,982,926) 103.4% . . . . . . . . . . . . . 2,379,975,417
Other assets and liabilities, net (3.4%) . . . . . . . . . . . . . . . . (77,625,580)
--------------
NET ASSETS, equivalent to $15.10 per share 100% . . . . . . . . . . . . $2,302,349,837
==============
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par $.01 per share; unlimited shares authorized;
152,425,634 shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,524,256
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,018,050,103
Undistributed net realized gain on securities . . . . . . . . . . . . . . . . . . . . . 65,930,122
Net unrealized appreciation of securities . . . . . . . . . . . . . . . . . . . . . . . 206,992,491
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . 9,852,865
--------------
NET ASSETS at April 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,302,349,837
==============
</TABLE>
*Non-income producing security.
See Notes to Financial Statements.
11
<PAGE> 13
- --------------------------------------------------------------------------------
GROWTH FUND FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(UNAUDITED)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1995
--------------
<S> <C>
INVESTMENT INCOME
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 17,369,676
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,672,643
---------------
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,042,319
---------------
EXPENSES
Advisory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,720,918
Shareholder service agent's fees and expenses . . . . . . . . . . . . . . . . . . . 4,178,536
Accounting services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128,708
Trustees' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,098
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,784
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,175
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,626
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 519,600
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,703
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,807
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,753,955
---------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,288,364
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain on securities
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62,316,524
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,142,770
Net unrealized appreciation (depreciation) of securities during the period
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73,481,336
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,601,436)
---------------
Net realized and unrealized gain on securities . . . . . . . . . . . . . . . . . 142,339,194
---------------
Increase in net assets resulting from operations . . . . . . . . . . . . . . . . $ 155,627,558
---------------
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1995 1994
--------------- ---------------
<S> <C> <C>
NET ASSETS, beginning of period . . . . . . . . . . . . . . . . . . . $ 2,169,907,302 $ 2,065,704,741
--------------- ---------------
OPERATIONS
Net investment income . . . . . . . . . . . . . . . . . . . . . . . 13,288,364 18,949,920
Net realized gain on securities . . . . . . . . . . . . . . . . . . 71,459,294 150,460,394
Net unrealized appreciation (depreciation) of securities
during the period . . . . . . . . . . . . . . . . . . . . . . . . 70,879,900 (125,267,340)
--------------- ---------------
Increase in net assets resulting from operations . . . . . . . . 155,627,558 44,142,974
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income . . . . . . . . . . . . . . . . . . . . . . . (22,052,763) (14,476,435)
Net realized gain on securities . . . . . . . . . . . . . . . . . . (147,255,728) (151,147,388)
--------------- ---------------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (169,308,491) (165,623,823)
--------------- ---------------
CAPITAL TRANSACTIONS
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . 156,799,925 394,956,323
Proceeds from shares issued for distributions reinvested . . . . . 168,458,192 164,787,271
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . (179,134,649) (334,060,184)
--------------- ---------------
Increase in net assets resulting from capital transactions . . . 146,123,468 225,683,410
--------------- ---------------
INCREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . 132,442,535 104,202,561
--------------- ---------------
NET ASSETS, end of period . . . . . . . . . . . . . . . . . . . . . . $ 2,302,349,837 $ 2,169,907,302
=============== ===============
CAPITAL SHARE TRANSACTIONS
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,783,492 25,712,863
Shares issued for distributions reinvested . . . . . . . . . . . . 12,278,300 10,798,656
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . (12,376,753) (21,793,543)
--------------- ---------------
Increase in capital shares outstanding . . . . . . . . . . . . . 10,685,039 14,717,976
=============== ===============
</TABLE>
See Notes to Financial Statements.
12
<PAGE> 14
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK 81.5%
CONSUMER DISTRIBUTION 2.7%
*13,500 AmeriSource Health Corp. . . . . . . . . . . . . . . . . . . . . . . . . $ 298,687
72,000 Gap, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,295,000
103,000 May Department Stores Co. . . . . . . . . . . . . . . . . . . . . . . . 3,733,750
85,000 McKesson Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,368,125
*120,000 Michael's Stores, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 3,420,000
*120,000 Nine West Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 3,900,000
80,000 Nordstrom, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,080,000
--------------
TOTAL CONSUMER DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 20,095,562
--------------
CONSUMER DURABLES 2.3%
180,000 Black & Decker Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,400,000
90,000 Eastman Kodak Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,175,000
95,000 Echlin, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,467,500
82,000 Stanley Works. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,249,250
--------------
TOTAL CONSUMER DURABLES . . . . . . . . . . . . . . . . . . . . . . . 17,291,750
--------------
CONSUMER NON-DURABLES 7.0%
125,000 Coca-Cola Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,265,625
87,000 CPC International, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 5,100,375
60,000 Gillette Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,920,000
121,000 Heinz (H.J.)Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,082,000
78,000 Kellogg Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,953,000
41,000 Nike, Inc., Class B . . . . . . . . . . . . . . . . . . . . . . . . . . 3,141,625
120,000 Procter & Gamble Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,385,000
132,000 Ralston-Ralston Purina Group . . . . . . . . . . . . . . . . . . . . . . 6,270,000
93,900 RJR Nabisco Holdings Corp., Class A . . . . . . . . . . . . . . . . . . 2,617,463
196,000 Sara Lee Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,463,500
--------------
TOTAL CONSUMER NON-DURABLES . . . . . . . . . . . . . . . . . . . . . 53,198,588
--------------
CONSUMER SERVICES 4.1%
40,000 Capital Cities ABC, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 3,380,000
89,000 Disney (Walt) Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,928,375
160,000 Gaylord Entertainment Co., Class A . . . . . . . . . . . . . . . . . . . 3,780,000
200,000 McDonald's Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000,000
83,571 Omnicom Group, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,648,637
35,000 Tribune Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,069,375
280,000 Wendy's International, Inc. . . . . . . . . . . . . . . . . . . . . . . 4,760,000
--------------
TOTAL CONSUMER SERVICES . . . . . . . . . . . . . . . . . . . . . . . 30,566,387
--------------
ENERGY 8.8%
150,000 British Petroleum Co., PLC, ADR . . . . . . . . . . . . . . . . . . . . 12,918,750
165,000 Exxon Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,488,125
80,000 Mobil Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,590,000
</TABLE>
13
<PAGE> 15
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY-continued
430,000 Pacific Enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,588,750
205,000 Panhandle Eastern Corp. . . . . . . . . . . . . . . . . . . . . . . . . 4,920,000
108,000 Repsol SA, ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,456,000
100,000 Royal Dutch Petroleum Co., ADR . . . . . . . . . . . . . . . . . . . . . 12,400,000
175,000 USX-Marathon Group . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,281,250
--------------
TOTAL ENERGY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,642,875
--------------
FINANCE 13.2%
240,000 Ahmanson (H.F.) & Co. . . . . . . . . . . . . . . . . . . . . . . . . . 5,040,000
75,000 American International Group, Inc. . . . . . . . . . . . . . . . . . . . 8,006,250
65,000 Avalon Properties, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 1,275,625
220,000 Bank of Boston Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 7,370,000
71,000 BankAmerica Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,514,500
60,000 BayBanks, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,750,000
65,000 Beacon Properties Corp. . . . . . . . . . . . . . . . . . . . . . . . . 1,275,625
*140,000 Capital One Financial Corp. . . . . . . . . . . . . . . . . . . . . . . 2,817,500
70,000 Carr Realty Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,242,500
293,000 Chemical Banking Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 12,232,750
245,000 CoreStates Financial Corp. . . . . . . . . . . . . . . . . . . . . . . . 7,993,125
75,000 Crestar Financial Corp. . . . . . . . . . . . . . . . . . . . . . . . . 3,375,000
90,000 Debartolo Realty Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 1,248,750
45,000 Duke Realty Investments, Inc. . . . . . . . . . . . . . . . . . . . . . 1,226,250
50,000 Equity Residential Properties Trust . . . . . . . . . . . . . . . . . . 1,337,500
130,000 Federal National Mortgage Association . . . . . . . . . . . . . . . . . 11,472,500
105,000 First Bank System, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 4,252,500
28,000 General Re Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,566,500
50,000 Health Care Property Investors, Inc. . . . . . . . . . . . . . . . . . . 1,512,500
100,000 Liberty Property Trust . . . . . . . . . . . . . . . . . . . . . . . . . 1,862,500
50,000 Manufactured Home Communities, Inc. . . . . . . . . . . . . . . . . . . 787,500
72,500 Morgan (J.P.) & Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . 4,757,813
102,000 St. Paul Companies, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 4,908,750
150,000 TIG Holdings, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,375,000
40,000 Weingarten Realty Investors . . . . . . . . . . . . . . . . . . . . . . 1,400,000
--------------
TOTAL FINANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99,600,938
--------------
HEALTH CARE 10.5%
130,000 Abbott Laboratories, Inc. . . . . . . . . . . . . . . . . . . . . . . . 5,118,750
68,000 American Home Products Corp. . . . . . . . . . . . . . . . . . . . . . . 5,244,500
*100,000 Amgen, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,268,750
145,000 Baxter International, Inc. . . . . . . . . . . . . . . . . . . . . . . . 5,038,750
*100,000 Charter Medical Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 1,775,000
*103,000 Foundation Health Corp. . . . . . . . . . . . . . . . . . . . . . . . . 2,858,250
58,600 Lilly (Eli) & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,380,350
*88,500 Lincare Holdings, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 2,732,437
175,000 Merck & Co., Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,503,125
135,000 Mylan Laboratories Inc. . . . . . . . . . . . . . . . . . . . . . . . . 4,151,250
*300,000 National Medical Enterprises, Inc. . . . . . . . . . . . . . . . . . . . 5,100,000
*120,000 Nellcor, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,980,000
95,000 Pfizer, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,229,375
</TABLE>
14
<PAGE> 16
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE-continued
*150,000 Physicians Corp. of America . . . . . . . . . . . . . . . . . . . . . . $ 2,681,250
100,000 Schering-Plough Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 7,537,500
140,000 Upjohn Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,075,000
--------------
TOTAL HEALTH CARE . . . . . . . . . . . . . . . . . . . . . . . . . . 79,674,287
--------------
PRODUCER MANUFACTURING 7.7%
85,000 Allied-Signal, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,368,125
240,000 Browning-Ferris Industries, Inc. . . . . . . . . . . . . . . . . . . . . 7,920,000
125,000 Fluor Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,437,500
155,000 General Electric Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 8,680,000
122,000 Honeywell, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,712,250
85,000 Illinois Tool Works, Inc. . . . . . . . . . . . . . . . . . . . . . . . 4,260,625
225,000 Philip NV, ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,662,500
133,000 Rockwell International Corp. . . . . . . . . . . . . . . . . . . . . . . 5,802,125
200,000 Wheelabrator Technologies, Inc. . . . . . . . . . . . . . . . . . . . . 2,900,000
207,000 WMX Technologies, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 5,640,750
--------------
TOTAL PRODUCER MANUFACTURING . . . . . . . . . . . . . . . . . . . . . 58,383,875
--------------
RAW MATERIALS/PROCESSING INDUSTRIES 6.3%
52,000 Air Products & Chemicals Inc. . . . . . . . . . . . . . . . . . . . . . 2,619,500
155,000 Bemis, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,301,250
115,000 Cabot Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,513,750
55,000 Du Pont (E.I.) de Nemours & Co., Inc. . . . . . . . . . . . . . . . . . 3,623,125
82,000 Eastman Chemical Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,653,500
325,700 Ethyl Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,501,275
94,100 Ferro Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,670,087
*173,000 Fort Howard Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,205,750
175,000 Grace (W.R.) & Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,384,375
43,000 International Paper Co. . . . . . . . . . . . . . . . . . . . . . . . . 3,311,000
95,000 Nalco Chemical Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,325,000
81,000 Sigma-Aldrich Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . 3,584,250
--------------
TOTAL RAW MATERIALS/PROCESSING INDUSTRIES . . . . . . . . . . . . . . 47,692,862
--------------
TECHNOLOGY 9.9%
100,000 Adobe Systems, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,825,000
128,000 Computer Associates International, Inc. . . . . . . . . . . . . . . . . 8,240,000
*110,000 DSC Communications Corp. . . . . . . . . . . . . . . . . . . . . . . . . 4,070,000
64,000 Hewlett-Packard Co. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,232,000
202,500 International Business Machines Corp. . . . . . . . . . . . . . . . . . 19,186,875
110,000 Loral Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,170,000
*80,000 Lotus Development Corp. . . . . . . . . . . . . . . . . . . . . . . . . 2,520,000
*60,000 Microsoft Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,905,000
153,000 Northern Telecom, Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . 5,565,375
70,000 Northrop Grumman Corp. . . . . . . . . . . . . . . . . . . . . . . . . . 3,473,750
*95,000 Sterling Software, Inc. . . . . . . . . . . . . . . . . . . . . . . . . 3,230,000
65,000 Xerox Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,003,125
--------------
TOTAL TECHNOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . . . 74,421,125
--------------
</TABLE>
15
<PAGE> 17
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES 9.0%
115,000 Ameritech Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,175,000
93,000 AT&T Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,719,750
107,000 BellSouth Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,553,750
230,000 General Public Utilities Corp. . . . . . . . . . . . . . . . . . . . . . 6,555,000
236,000 GTE Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,053,500
211,000 National Power, PLC, ADR . . . . . . . . . . . . . . . . . . . . . . . . 2,400,125
280,000 Pacific Telesis Group . . . . . . . . . . . . . . . . . . . . . . . . . 8,645,000
540,000 PacifiCorp . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,260,000
260,000 Peco Energy Co. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,695,000
50,000 PowerGen, PLC, ADR . . . . . . . . . . . . . . . . . . . . . . . . . . . 637,500
208,000 U.S. West, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,606,000
--------------
TOTAL UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 68,300,625
--------------
TOTAL COMMON STOCK (Cost $518,249,371) . . . . . . . . . . . . . . . . 615,868,874
--------------
CONVERTIBLE PREFERRED STOCK 4.3%
40,000 Citicorp, $5.375 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,095,000
130,000 Corning Glass Works, MIPS, 6.00% . . . . . . . . . . . . . . . . . . . . 6,695,000
15,000 Enron Corp., Series J, $10.50 . . . . . . . . . . . . . . . . . . . . . 6,675,000
170,000 James River Corp., DECS, $1.55 . . . . . . . . . . . . . . . . . . . . . 4,165,000
66,000 SCI Finance, NV, LLC, 6.25% . . . . . . . . . . . . . . . . . . . . . . 3,663,000
75,000 Transco Energy Co., $3.50 . . . . . . . . . . . . . . . . . . . . . . . 4,293,750
151,400 Westinghouse Electric Corp., PEPS, $1.30 . . . . . . . . . . . . . . . . 2,252,075
--------------
TOTAL CONVERTIBLE PREFERRED STOCK (Cost $24,909,481) . . . . . . . . . 32,838,825
--------------
Principal
Amount CONVERTIBLE CORPORATE OBLIGATIONS 7.7%
- --------------
CONSUMER DISTRIBUTION 1.3%
$ 5,500,000 Price Co., 6.75%, 3/1/01 . . . . . . . . . . . . . . . . . . . . . . . . 5,376,250
8,500,000 Rite Aid Corp., LYON, Zero Coupon, 7/24/06 . . . . . . . . . . . . . . . 3,995,000
--------------
TOTAL CONSUMER DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . 9,371,250
--------------
CONSUMER SERVICES 2.9%
17,000,000 Comcast Corp., 1.125%, 4/15/07 . . . . . . . . . . . . . . . . . . . . . 7,225,000
9,000,000 News America Holdings, Inc., LYON, Zero Coupon, 3/11/13 . . . . . . . . 3,892,500
Time Warner, Inc.
4,000,000 8.75%, 1/10/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,010,000
11,000,000 LYON, Zero Coupon, 12/17/12 . . . . . . . . . . . . . . . . . . . . . 3,561,250
9,000,000 LYON, Zero Coupon, 6/22/13 . . . . . . . . . . . . . . . . . . . . . . 3,431,250
--------------
Total Consumer Services . . . . . . . . . . . . . . . . . . . . . . . . 22,120,000
--------------
FINANCE 0.5%
97,038 Allstate Corp., 6.76%, 4/15/98 . . . . . . . . . . . . . . . . . . . . . 3,785,163
--------------
HEALTH CARE 1.9%
23,000,000 Roche Holdings, Inc., LYON, Zero Coupon, 4/20/10 . . . . . . . . . . . . 8,596,250
6,000,000 United Technologies Corp., Zero Coupon, 9/8/97 . . . . . . . . . . . . . 5,850,000
--------------
Total Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . 14,446,250
--------------
TECHNOLOGY 0.6%
3,000,000 General Instrument Corp., 5.00%, 6/15/00 . . . . . . . . . . . . . . . . 4,477,500
--------------
</TABLE>
16
<PAGE> 18
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES 0.5%
$ 87,005 Sprint Corp., DECS, 8.25%, 3/30/00 . . . . . . . . . . . . . . . . . . . $ 3,824,505
--------------
TOTAL CONVERTIBLE CORPORATE OBLIGATIONS (Cost $55,915,633) . . . . . . 58,024,668
--------------
UNITED STATES GOVERNMENT OBLIGATIONS 1.9%
14,000,000 United States Treasury Notes, 7.75%, 2/15/01 Cost ($14,334,687) . . . . 14,549,080
--------------
SHORT-TERM INVESTMENTS 3.9%
**12,000,000 Federal Home Loan Mortgage Corp., 6.15%, 10/10/95 . . . . . . . . . . . 11,673,840
12,425,000 Repurchase Agreement with SBC, Capital Markets, Inc., dated 4/28/95,
6.00%, 5/1/95 (collateralized by U.S. Government obligations in
a pooled cash account) repurchase proceeds $12,431,212 . . . . . . . . 12,425,000
**5,000,000 United States Treasury Bills, 5.66%, 7/20/95 . . . . . . . . . . . . . . 4,934,750
--------------
TOTAL SHORT-TERM INVESTMENTS (Cost $29,037,799) . . . . . . . . . . . 29,033,590
--------------
TOTAL INVESTMENTS (Cost $642,446,971) 99.3% . . . . . . . . . . . . . . 750,315,037
Other assets and liabilities, net 0.7% . . . . . . . . . . . . . . . . . 5,348,499
--------------
NET ASSETS, equivalent to $15.22 per share 100% . . . . . . . . . . . . $ 755,663,536
==============
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par $.01 per share; unlimited shares authorized:
49,662,176 shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 496,622
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 633,781,856
Undistributed net realized gain on securities . . . . . . . . . . . . . . . . . . . . . 10,330,393
Net unrealized appreciation of securities
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107,868,066
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 178,200
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . 3,008,399
--------------
NET ASSETS at April 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 755,663,536
==============
</TABLE>
*Non-income producing security.
**Securities with a market value of approximately $15.5 million were placed as
collateral for futures contracts (Note 1B).
DECS - Dividend enhanced convertible stock
LYON - Liquid yield option note
MIPS - Monthly income participating security
PEPS - Preferred equity participating security
See Notes to Financial Statements.
17
<PAGE> 19
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(UNAUDITED)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1995
--------------
<S> <C>
INVESTMENT INCOME
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 9,955,841
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,081,785
---------------
Investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,037,626
---------------
EXPENSES
Advisory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,306,206
Shareholder service agent's fees and expenses . . . . . . . . . . . . . . . . . . . 976,523
Accounting services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,968
Trustees' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31,319
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,634
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21,801
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,102
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166,274
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 46,888
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,937
---------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,626,652
---------------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,410,974
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain (loss) on securities
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,178,893
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (848,465)
Net unrealized appreciation of securities during the period
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,968,607
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,942
---------------
Net realized and unrealized gain on securities . . . . . . . . . . . . . . . . . . 54,524,977
---------------
Increase in net assets resulting from operations . . . . . . . . . . . . . . . . . $ 62,935,951
===============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1995 1994
--------------- ---------------
<S> <C> <C>
NET ASSETS, beginning of period . . . . . . . . . . . . . . . . . . . $ 712,895,284 $ 712,367,257
OPERATIONS
Net investment income . . . . . . . . . . . . . . . . . . . . . . . 8,410,974 12,993,062
Net realized gain on securities . . . . . . . . . . . . . . . . . . 10,330,428 72,326,560
Net unrealized appreciation (depreciation) of securities
during the period . . . . . . . . . . . . . . . . . . . . . . . . 44,194,549 (81,656,758)
--------------- ---------------
Increase in net assets resulting from operations . . . . . . . . . 62,935,951 3,662,864
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income . . . . . . . . . . . . . . . . . . . . . . . (7,735,223) (12,164,102)
Net realized gain on securities . . . . . . . . . . . . . . . . . . (71,730,542) (48,603,788)
--------------- ---------------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . (79,465,765) (60,767,890)
--------------- ---------------
CAPITAL TRANSACTIONS
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . 45,904,093 124,276,586
Proceeds from shares issued for distributions reinvested . . . . . 78,375,866 59,928,843
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . (64,981,893) (126,572,376)
--------------- ---------------
Increase in net assets resulting from capital transactions . . . 59,298,066 57,633,053
--------------- ---------------
INCREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . 42,768,252 528,027
--------------- ---------------
NET ASSETS, end of period . . . . . . . . . . . . . . . . . . . . . . $ 755,663,536 $ 712,895,284
=============== ===============
CAPITAL SHARE TRANSACTIONS
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,125,152 7,820,632
Shares issued for distributions reinvested . . . . . . . . . . . . 5,763,801 3,781,949
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . (4,440,429) (7,984,398)
--------------- ---------------
Increase in capital shares outstanding . . . . . . . . . . . . . 4,448,524 3,618,183
=============== ===============
</TABLE>
See Notes to Financial Statements.
18
<PAGE> 20
- --------------------------------------------------------------------------------
GOVERNMENT FUND STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES GOVERNMENT AGENCIES 56.5%
FEDERAL HOME LOAN MORTGAGE CORP.
$ 6,413,364 6.50% Pools, 10/1/97 to 7/1/98 . . . . . . . . . . . . . . . . . . . . $ 6,281,122
661,138 7.00% 5 yr., Pools, 12/1/96 to 8/1/97 . . . . . . . . . . . . . . . . 659,486
5,048,573 7.00% 30 yr., Pools, 7/1/24 to 9/1/24 . . . . . . . . . . . . . . . . 4,805,636
**25,891,572 7.50% Pools, 4/1/24 to 10/1/24 . . . . . . . . . . . . . . . . . . . . 25,284,671
**9,973,827 8.00% Pools, 6/1/24 to 10/1/24 . . . . . . . . . . . . . . . . . . . . 9,951,984
FEDERAL NATIONAL MORTGAGE ASSOCIATION
5,078,387 7.00% Pools, 4/1/24 to 8/1/24 . . . . . . . . . . . . . . . . . . . . 4,829,240
**19,795,206 7.50% Pools, 6/1/23 to 11/1/24 . . . . . . . . . . . . . . . . . . . . 19,325,070
**10,130,297 8.00% Pools, 5/1/22 to 12/1/24 . . . . . . . . . . . . . . . . . . . . 10,104,972
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
**4,726,612 7.00% Pools, 5/15/23 to 5/15/24 . . . . . . . . . . . . . . . . . . . 4,472,557
**38,946,012 7.50% Pools, 3/15/22 to 10/15/24 . . . . . . . . . . . . . . . . . . . 37,972,362
**52,685,465 8.00% Pools, 6/15/16 to 11/15/24 . . . . . . . . . . . . . . . . . . . 52,652,801
9,812,767 8.50% Pools, 12/15/05 to 12/15/22 . . . . . . . . . . . . . . . . . . 10,002,938
14,634 10.00% Pool, 3/15/16 . . . . . . . . . . . . . . . . . . . . . . . . . 15,709
--------------
TOTAL UNITED STATES GOVERNMENT AGENCIES (Cost $184,851,718) . . . . . 186,358,548
--------------
UNITED STATES GOVERNMENT OBLIGATIONS 35.3%
UNITED STATES TREASURY NOTES
**20,000,000 6.50%, 8/15/97 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,934,400
10,000,000 7.25%, 11/15/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,106,300
10,000,000 7.50%, 12/31/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,150,000
**15,000,000 7.875%, 7/31/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,253,200
15,000,000 7.875%, 1/15/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,424,200
25,000,000 8.50%, 8/15/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,175,750
20,000,000 8.875%, 2/15/96 . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,390,600
--------------
TOTAL UNITED STATES GOVERNMENT OBLIGATIONS (Cost $115,435,156) . . . . 116,434,450
--------------
FORWARD PURCHASE COMMITMENTS 10.0%
FEDERAL NATIONAL MORTGAGE ASSOCIATION
*5,000,000 7.00%, settling May 95 . . . . . . . . . . . . . . . . . . . . . . . . 4,754,700
*8,500,000 7.50%, settling July 95 . . . . . . . . . . . . . . . . . . . . . . . 8,268,885
*20,000,000 8.00%, settling July 95 . . . . . . . . . . . . . . . . . . . . . . . 19,881,200
--------------
TOTAL FORWARD PURCHASE COMMITMENTS (Cost $32,790,313) . . . . . . . . 32,904,785
--------------
</TABLE>
19
<PAGE> 21
- --------------------------------------------------------------------------------
GOVERNMENT FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS+ 14.8%
$ 29,505,000 Salomon Brothers, Inc., dated 4/28/95, 5.93%, due 5/1/95, repurchase
proceeds $29,519,580 . . . . . . . . . . . . . . . . . . . . . . . . . $ 29,505,000
19,280,000 SBCCapital Markets, Inc., dated 4/28/95, 6.00%, due 5/1/95, repurchase
proceeds $19,289,640 . . . . . . . . . . . . . . . . . . . . . . . . . 19,280,000
--------------
TOTAL REPURCHASE AGREEMENTS (Cost $48,785,000) . . . . . . . . . . . . 48,785,000
--------------
TOTAL INVESTMENTS (Cost $381,862,187) 116.6% . . . . . . . . . . . . . . 384,482,783
Receivable for investments sold 11.5% . . . . . . . . . . . . . . . . . 38,121,094
Payable for investments purchased (27.8%) . . . . . . . . . . . . . . . (91,862,607)
Other assets and liabilities, net (0.3%) . . . . . . . . . . . . . . . . (921,278)
--------------
NET ASSETS, equivalent to $10.34 per share 100% . . . . . . . . . . . . $ 329,819,992
==============
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par $.01 per share; unlimited shares authorized;
31,892,262 shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 318,923
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 363,172,535
Accumulated net realized loss on securities . . . . . . . . . . . . . . . . . . . . . . (37,270,798)
Unrealized appreciation (depreciation) of securities
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,620,596
Forward commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 835,175
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (109,704)
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . 253,265
--------------
NET ASSETS at April 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 329,819,992
==============
</TABLE>
* Non-income producing securities.
** Securities with a market value of approximately $143.9 million were placed
as collateral for futures contracts and forward commitments.
+ Collateralized by U.S. Government obligations in a pooled cash account.
See Notes to Financial Statements.
20
<PAGE> 22
- --------------------------------------------------------------------------------
GOVERNMENT FUND FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(UNAUDITED)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1995
--------------
<S> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 12,889,894
---------------
EXPENSES
Advisory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 987,430
Shareholder service agent's fees and expenses . . . . . . . . . . . . . . . . . . . 263,276
Accounting services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,265
Trustees' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,616
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,984
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29,003
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,200
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,081
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,701
---------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,393,556
---------------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,496,338
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized gain (loss) on securities
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,177,323)
Forward commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,372,734
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,324,289)
Net unrealized appreciation (depreciation) of securities during the period
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,668,589
Forward commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 808,482
Futures contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (105,723)
---------------
Net realized and unrealized gain on securities . . . . . . . . . . . . . . . . . 11,242,470
---------------
Increase in net assets resulting from operations . . . . . . . . . . . . . . . . $ 22,738,808
===============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1995 1994
--------------- ---------------
<S> <C> <C>
NET ASSETS, beginning of period . . . . . . . . . . . . . . . . . . . $ 334,961,646 $ 370,213,049
--------------- ---------------
OPERATIONS
Net investment income . . . . . . . . . . . . . . . . . . . . . . . 11,496,338 24,980,745
Net realized loss on securities . . . . . . . . . . . . . . . . . . (4,128,878) (34,030,620)
Net unrealized appreciation (depreciation) of securities
during the period . . . . . . . . . . . . . . . . . . . . . . . . 15,371,348 (11,216,315)
--------------- ---------------
Increase (decrease) in net assets resulting from operations . . . . . 22,738,808 (20,266,190)
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM
Net investment income . . . . . . . . . . . . . . . . . . . . . . . (11,338,002) (22,822,040)
Excess of book-basis net realized gain on securities (see Note 1F) -- (16,458,421)
--------------- ---------------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . . . (11,338,002) (39,280,461)
--------------- ---------------
CAPITAL TRANSACTIONS
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . 20,665,965 82,600,565
Proceeds from shares issued for distributions reinvested . . . . . 9,688,944 34,396,895
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . (46,897,369) (92,702,212)
--------------- ---------------
Increase (decrease) in net assets resulting from
capital transactions . . . . . . . . . . . . . . . . . . . . . (16,542,460) 24,295,248
--------------- ---------------
DECREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . (5,141,654) (35,251,403)
--------------- ---------------
NET ASSETS, end of period . . . . . . . . . . . . . . . . . . . . . . $ 329,819,992 $ 334,961,646
=============== ===============
CAPITAL SHARE TRANSACTIONS
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,048,891 7,689,030
Shares issued for distributions reinvested . . . . . . . . . . . . 957,150 3,189,561
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . (4,649,029) (8,707,829)
--------------- ---------------
Increase (decrease) in capital shares outstanding . . . . . . . . (1,642,988) 2,170,762
=============== ===============
</TABLE>
See Notes to Financial Statements.
21
<PAGE> 23
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL BONDS 96.6%
EDUCATION 11.1%
$ 500,000 Chicago, Illinois, Public Building Commission, Building Rev., Series
A-1990, MBIA, 7.125%, 1/1/15 . . . . . . . . . . . . . . . . . . . . . $ 536,840
500,000 Connecticut State Health & Educational Facilities Authority Rev.
(University of Hartford), Series D, 6.75%, 7/1/12 . . . . . . . . . . 471,395
500,000 Cook County, Illinois, Community College, District #508, Certificates
of Participation, FGIC, 8.75%, 1/1/07 . . . . . . . . . . . . . . . . 630,630
500,000 District of Columbia Rev. (Howard University), Series A, MBIA,
8.00%, 10/1/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533,810
500,000 Erie, Pennsylvania, Higher Education Building Authority, College Rev.,
Series A, 8.50%, 6/1/15 . . . . . . . . . . . . . . . . . . . . . . . 572,165
Frenship, Texas, Independent School District, Refunding
500,000 5.50%, 2/15/03 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 504,045
500,000 5.50%, 2/15/04 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,990
200,000 Huron Valley, Michigan, School District, FGIC, 7.10%, 5/1/08 . . . . . . 222,882
Illinois Educational Facilities Authority Rev.
1,000,000 Illinois State University, Auxiliary Facilities System, MBIA,
5.75%, 4/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . 957,730
320,000 Loyola University, 7.125%, 7/1/11 . . . . . . . . . . . . . . . . . . 331,773
680,000 Loyola University, Series A, 7.125%, 7/1/11 . . . . . . . . . . . . . 759,961
1,000,000 University of Chicago, 5.70%, 12/1/25 . . . . . . . . . . . . . . . . 922,780
500,000 Merriville, Indiana, Multi-School Building Corp., 1st Mtg.,
7.50%, 7/15/09 . . . . . . . . . . . . . . . . . . . . . . . . . . . 561,970
350,000 New York City, New York, Industrial Development Agency, Civil Facility Rev.
(Marymount Manhattan College Project), 7.00%, 7/1/23 . . . . . . . . . 352,989
New York State Dormitory Authority Rev.
100,000 City University System, Series A, 8.00%, 7/1/07 . . . . . . . . . . . 108,763
500,000 City University System, Series C, 6.00%, 7/1/16 . . . . . . . . . . . 480,285
750,000 State University Educational Facilities, Series A, 7.70%, 5/15/12 . . 852,818
750,000 Ohio State Higher Educational Facilities, Community College Rev.
(Case Western Reserve Project), Series A, 7.70%, 10/1/18 . . . . . . . 812,810
Pennsylvania State Higher Educational Facilities Authority Rev.
500,000 Hahnemann University Project, Series 1989, MBIA, 7.20%, 7/1/19 . . . . 534,025
250,000 Medical College of Pennsylvania, Series A, 8.375%, 3/1/11 . . . . . . 270,698
150,000 Thomas Jefferson University, 8.00%, 1/1/18 . . . . . . . . . . . . . . 164,145
500,000 Shenandoah Valley School District, Pennsylvania, Series B, Zero
Coupon, 2/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 173,970
250,000 State Public School Building Authority, Pennsylvania School Rev.
(Shenandoah Valley School District), AMBAC, 7.375%, 9/15/10 . . . . . 271,595
1,000,000 Wisconsin State Health & Educational Facilities Rev.
(Marquette University Project), 6.45%, 12/1/19 . . . . . . . . . . . . 1,012,130
--------------
TOTAL EDUCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,541,199
--------------
HEALTH CARE 3.9%
1,250,000 Harris County, Texas, Health Facilities (TECO Projects), Series A,
AMBAC, 7.25%, 2/15/15 . . . . . . . . . . . . . . . . . . . . . . . . 1,336,212
250,000 Illinois Development Finance Authority Rev., Refunding
(Columbus-Cuneo-Cabrini Medical Center), 8.50%, 2/1/15 . . . . . . . . 270,202
1,000,000 Indiana Health Facilities Finance Authority, MBIA, 6.85%, 7/1/22 . . . . 1,043,430
New Hampshire Higher Education & Health Facility Authority
520,000 7.50%, 6/1/05 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 548,163
370,000 9.00%, 6/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 403,452
</TABLE>
22
<PAGE> 24
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE-continued
$ 500,000 New York State Medical Care Facilities Finance Agency Rev.
(Montefiore Medical Center), 7.25%, 2/15/24 . . . . . . . . . . . . . $ 535,210
225,000 Scottsdale, Arizona, Industrial Development Authority, Series A,
8.25%, 6/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 237,686
--------------
TOTAL HEALTH CARE . . . . . . . . . . . . . . . . . . . . . . . . . . 4,374,355
--------------
HOSPITALS 18.4%
500,000 Ames, Iowa, Hospital Rev. (Mary Greeley Medical Center Project),
AMBAC, 5.75%, 8/15/22 . . . . . . . . . . . . . . . . . . . . . . . . 469,265
500,000 Bexar County, Texas, Health Facilities Development Rev. (St. Lukes
Lutheran Hospital Project), 7.90%, 5/1/18 . . . . . . . . . . . . . . 585,720
500,000 Boston, Massachusetts, Rev. (Boston City Hospital) FHA, 7.625%, 2/15/21 565,450
1,000,000 Charleston County, South Carolina, Hospital Facilities Rev. (Bon
Secours Health System Project), FSA, 5.625%, 8/15/25 . . . . . . . . . 901,980
250,000 Clarksville, Tennessee, Hospital Rev., Refunding & Improvement
(Clarksville Memorial Project), 6.25%, 7/1/13 . . . . . . . . . . . . 237,495
250,000 Delaware State, Economic Development Authority Rev. (Osteopathic
Hospital Association), Series A, 6.75%, 1/1/13 . . . . . . . . . . . . 229,032
500,000 District of Columbia Hospital Rev. (National Rehabilitation Hospital),
Series A, MBIA, 7.10%, 11/1/11 . . . . . . . . . . . . . . . . . . . . 529,715
500,000 Ector County, Texas, Hospital District (Medical Center Hospital),
7.125%, 4/15/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . 527,990
250,000 Erie County, Pennsylvania, Hospital Authority Rev.
(Metro Health Center), Series 1992, 7.25%, 7/1/12 . . . . . . . . . . 255,500
250,000 Harris County, Texas, Health Facilities Development Corp.
(Memorial Hospital System Project), 7.125%, 6/1/15 . . . . . . . . . . 264,182
Illinois Health Facilities Authority Rev.
40,000 Community Pooled Program, Refunding, Series A, MBIA, 7.90%, 8/15/03 . 46,670
106,000 Community Pooled Program, Unrefunding, Series A, MBIA, 7.90%, 8/15/03 108,956
500,000 Delnor Community Hospital, 8.00%, 5/15/19 . . . . . . . . . . . . . . 562,515
500,000 Lutheran Health Systems, Series B, MBIA, 6.00%, 4/1/18 . . . . . . . . 481,320
500,000 Masonic Medical Center, Series 1989-B, 7.70%, 10/1/19 . . . . . . . . 561,010
250,000 Memorial Hospital, 7.25%, 5/1/24 . . . . . . . . . . . . . . . . . . . 250,652
300,000 Mercy Center For Health Care Services, 6.625%, 10/1/12 . . . . . . . . 300,813
500,000 Northwestern Memorial Hospital, 6.75%, 8/15/11 . . . . . . . . . . . . 517,240
500,000 Kent Hospital Finance Authority, Michigan (Butterworth Hospital),
Series A, 7.25%, 1/15/12 . . . . . . . . . . . . . . . . . . . . . . . 552,375
250,000 Laramie County, Wyoming, Hospital Rev. (Memorial Hospital Project),
AMBAC, 6.70%, 5/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . 261,617
100,000 Leesburg, Florida, Hospital Rev., 8.40%, 7/1/08 . . . . . . . . . . . . 104,664
500,000 Louisiana Public Facilities Authority, Hospital Rev.
(Southern Baptist Hospital Project), FSA, 6.80%, 5/15/12 . . . . . . . 529,025
500,000 McKeesport, Pennsylvania, Hospital Authority Rev.
(McKeesport Hospital Project), 6.50%, 7/1/08 . . . . . . . . . . . . . 490,420
Michigan State Hospital Finance Authority Rev. (Detroit Medical
Center), Series A,
500,000 7.50%, 10/1/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502,765
250,000 8.125%, 8/15/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . 276,907
Mississippi, Hospital Equipment and Facilities, Series A
500,000 Magnolia Hospital Project, 7.375%, 10/1/21 . . . . . . . . . . . . . . 512,545
250,000 Wesley Health System Inc., CONN, 6.05%, 4/1/12 . . . . . . . . . . . . 234,400
Missouri State Health and Educational Facilities Authority Rev.
500,000 Heartland Health Systems Project, 6.875%, 11/15/04 . . . . . . . . . . . 523,845
250,000 Heartland Health Systems Project, 8.125%, 10/1/10 . . . . . . . . . . . 279,598
500,000 Lake of the Ozarks Hospital, 8.00%, 2/15/11 . . . . . . . . . . . . . . 522,205
</TABLE>
23
<PAGE> 25
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND STATEMENT OF NET ASSETS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOSPITALS-continued
$ 280,000 Montgomery County, Pennsylvania, IDR (Pennsburg Nursing & Rehabilitation
Center), 7.625%, 7/1/18 . . . . . . . . . . . . . . . . . . . . . . . $ 260,224
250,000 Newton, Kansas, Hospital Rev. (Newton Healthcare Corp.), Series A,
7.375%, 11/15/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . 251,918
250,000 North Carolina Medical Care Community Health Care Facility, Rev.
(Stanley Memorial Hospital Project), 7.80%, 10/1/19 . . . . . . . . . 263,085
Northeastern Pennsylvania Hospital Authority Rev.
100,000 Nesbitt Memorial Hospital, Series A, 7.50%, 7/1/12 . . . . . . . . . . 112,327
500,000 Wilkes Barre General Hospital, 8.375%, 7/1/06 . . . . . . . . . . . . 545,960
500,000 Royal Oak, Michigan, Hospital Finance Authority Rev.
(William Beaumont Hospital), Series D, 6.75%, 1/1/20 . . . . . . . . . 511,640
250,000 Rusk County, Texas, Health Facilities Corp., Hospital Rev.
(Henderson Memorial Hospital Project), 7.75%, 4/1/13 . . . . . . . . . 257,293
1,000,000 Sayre, Pennsylvania, Health Care Facility Authority Rev.,
Series H-2, AMBAC, 7.625%, 12/1/15 . . . . . . . . . . . . . . . . . . 1,090,460
250,000 Scranton-Lackawanna, Pennsylvania, Health & Welfare Authority Rev.
(Moses Taylor Hospital Project), Series B, 8.50%, 7/1/20 . . . . . . . 270,463
South Dakota State Health & Educational Facility Authority Rev.
500,000 Huron Regional Medical Center, 7.25%, 4/1/20 . . . . . . . . . . . . . 495,190
500,000 Rapid City Regional Hospital, MBIA, 7.00%, 9/1/14 . . . . . . . . . . 520,125
250,000 Sioux Valley Hospital, 7.625%, 11/1/13 . . . . . . . . . . . . . . . . 277,363
500,000 St. Joseph County, Indiana, Hospital Authority Rev.
(Memorial Hospital South Bend Project), MBIA, 6.25%, 8/15/22 . . . . . 501,030
500,000 St. Petersburg, Florida, Health Facilities Authority Rev., Allegany
Health System (St. Mary's Hospital), Series B, 7.75%, 12/1/15 . . . . 563,730
500,000 Tarrant County, Texas, Health Facilities Development Corp.,
Hospital Rev., Refunding & Improvement (Fort Worth Osteopathic
Hospital), 7.00%, 5/15/28 . . . . . . . . . . . . . . . . . . . . . . 509,720
500,000 Tulsa, Oklahoma, Industrial Authority, Hospital Rev.
(Tulsa Regional Medical Center), 7.20%, 6/1/17 . . . . . . . . . . . . 490,750
100,000 Tyler, Texas, Health Facilities Development Corp., Hospital Rev.
(East Texas Hospital Project), Series A, 8.375%, 11/1/11 . . . . . . . 112,748
200,000 University of North Carolina, Chapel Hill, Board of Governors,
6.00%, 2/15/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 194,376
500,000 Warren County, Pennsylvania, Hospital Authority Rev. (Warren General
Hospital Project), Series A, 6.90%, 4/1/11 . . . . . . . . . . . . . . 495,205
1,000,000 Weslaco, Texas, Health Facilities Development (Knapp Medical
Center Project), Series-A, 5.25%, 6/1/16 . . . . . . . . . . . . . . . 884,700
100,000 Wisconsin State Health & Educational Facilities Authority Rev.
(Wheaton Franciscan Services, Inc.), Series 88, 8.20%, 8/15/18 . . . . 111,629
--------------
TOTAL HOSPITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,905,807
--------------
HOUSING 9.1%
685,000 Austin, Texas, Housing Finance Corp., Multi-Family Housing Rev.,
6.50%, 10/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 674,485
1,000,000 Colorado Housing Finance Authority, Single Family Mtg. Rev.,
7.90%, 12/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,082,950
75,000 East Baton Rouge, Louisiana, Mtg. Finance Authority, Single Family
Mtg. Rev., Series C, 8.375%, 2/1/17 . . . . . . . . . . . . . . . . . 78,198
1,000,000 Greater Cincinnati, Ohio (FHA Cambridge Apartments), Series A,
6.60%, 8/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 998,750
215,000 Houston, Texas, Housing Finance Corp., Single Family Mtg. Rev.,
Series A, FSA, 5.95%, 12/1/10 . . . . . . . . . . . . . . . . . . . . 211,134
95,000 Illinois Housing Development Authority, Residential Mtg. Rev.,
8.10%, 8/1/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98,795
365,000 Juneau, Alaska, City & Borough Home, Refunding, Mtg. Backed
Securities Program, FNMA, 8.00%, 2/1/09 . . . . . . . . . . . . . . . 388,539
500,000 Lebanon County, Pennsylvania, Health Facilities (United Church of
Christ Homes Project), Series A, 6.75%, 10/1/10 . . . . . . . . . . . 502,045
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HOUSING-continued
$ 250,000 Maine State Housing Authority, Mtg. Purchase Rev., Series B,
7.90%, 11/15/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 259,687
400,000 Maricopa County, Arizona, IDR, Multi-Family Rev., Refunding (Laguna
Point Apartments Project), 6.50%, 7/1/09 . . . . . . . . . . . . . . . 405,024
250,000 Massachusetts State, Housing, Single Family, Series 31, 6.45%, 12/1/16 252,187
150,000 Minneapolis, Minnesota, Health Care Facility (Ebenezer Society
Project), Series A, 7.00%, 7/1/12 . . . . . . . . . . . . . . . . . . 143,218
155,000 New York State, Mtg. Agency Rev., Adjustable Rate-Homeowner Mtg.,
Series BB2, 7.95%, 10/1/15 . . . . . . . . . . . . . . . . . . . . . . 163,003
500,000 Ridgeland, Mississippi, Urban Renewal (The Orchard, Ltd. Project)
Series A, 7.75%, 12/1/15 . . . . . . . . . . . . . . . . . . . . . . . 491,380
1,000,000 Rhode Island Housing & Mortgage Finance, Series 17B, 6.60%, 10/1/25 . . 1,002,390
500,000 South Carolina State Housing Finance and Development Authority,
Homeownership Mtg., Series A, 7.625%, 7/1/16 . . . . . . . . . . . . . 523,125
1,000,000 Tennessee Housing Development Agency, 6.80%, 7/1/17 . . . . . . . . . . 1,023,830
Texas Housing Agency
485,000 Residential Development Rev., Adjustable Mtg., Series A, 7.60%,
7/1/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 503,959
365,000 Single Family Mtg., Refunding, Series A, 7.15%, 9/1/12 . . . . . . . . 379,808
Texas State Veterans Association
210,000 8.30%, 12/1/16, Pre-refunded . . . . . . . . . . . . . . . . . . . . . 238,104
130,000 8.30%, 12/1/16, Un-refunded . . . . . . . . . . . . . . . . . . . . . 135,321
485,000 Texas State Veterans Housing Assistance, MBIA, 6.80%, 12/1/23 . . . . . 507,315
100,000 Utah State Housing Finance Agency, Single Family Mtg., Series G-1,
8.10%, 7/1/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104,750
150,000 Wisconsin Housing & Economical Development Authority
Rev., Series B, 8.00%, 11/1/18 . . . . . . . . . . . . . . . . . . . . 157,415
--------------
TOTAL HOUSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,325,412
--------------
MISCELLANEOUS 12.7%
250,000 Berry Creek Metropolitan District, Eagle, Colorado, G.O.,
Refunding & Improvement, 8.25%, 12/1/11 . . . . . . . . . . . . . . . 266,342
100,000 California Special Districts Finance Authority, Certificates of
Participation Rev., Series A, 8.50%, 7/1/18 . . . . . . . . . . . . . 108,502
2,000,000 Clark County, Nevada (Nevada Power Co. Project), IDR, AMBAC, 7.20%,
10/1/22 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,135,120
500,000 Compton, California, Certificates of Participation, Refunding,
Series B, 7.50%, 8/1/15 . . . . . . . . . . . . . . . . . . . . . . . 530,290
500,000 Cook County, Illinois, MBIA, 7.00%, 11/1/10 . . . . . . . . . . . . . . 552,700
500,000 Detroit, Michigan, Tax Increment (Development Area No. 1) Series A,
7.60%, 7/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 521,870
500,000 District of Columbia, Series A, AMBAC, 7.50%, 6/1/10 . . . . . . . . . . 560,920
500,000 Du Page County, Illinois, Alternative Rev. (Storm Water Project)
6.55%, 1/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 544,710
1,000,000 El Paso County, Texas, Parking Facilities Rev., 6.50%, 8/15/11 . . . . . 1,073,440
250,000 Emmaus, Pennsylvania, General Authority, Local Government Pool
Program Rev., Series A, BIG, 8.15%, 5/15/18 . . . . . . . . . . . . . 268,490
1,000,000 Hawaii State, Series C-D, AMBAC, 5.00%, 2/1/03 . . . . . . . . . . . . . 982,280
500,000 Highlands Ranch, Colorado, Metropolitan District No. 1, Refunding
& Improvement, Series A, 7.30%, 9/1/12 . . . . . . . . . . . . . . . . 549,375
1,500,000 Irving, Texas, Flood Control District, Section #3, AMBAC, Zero
Coupon, 9/1/08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 697,725
500,000 Milwaukee County, Wisconsin, Refunding, Series A, 5.25%, 9/1/00 . . . . 504,130
400,000 Mountain Village Metropolitan District, San Miguel County, Colorado,
Refunding, Series 1992, 7.95%, 12/1/03 . . . . . . . . . . . . . . . . 413,248
1,000,000 New York, New York, G.O., Series B, 7.00%, 8/15/16 . . . . . . . . . . . 1,018,610
125,000 North Slope Borough, Alaska, Series G, 8.35%, 6/30/98 . . . . . . . . . 136,098
1,500,000 Philadelphia, Pennsylvania, Municipal Authority Rev., Refunding Lease,
Series A, FGIC, 5.625%, 11/15/14 . . . . . . . . . . . . . . . . . . . 1,439,850
50,000 Pocahontas, Iowa, IDR (International Harvester Co.) 10.25%, 10/1/00 . . 51,870
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MISCELLANEOUS-continued
$ 100,000 Tampa, Florida, Capital Improvement Project Rev., Series B,
8.375%, 10/1/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 104,624
Texas General Services, Community Partner Interests, (Office
Building and Land Acquisition Project)
130,000 7.00%, 8/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 133,444
330,000 7.00%, 8/1/24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 338,742
250,000 Utah State Building Ownership Authority, Lease Rev. (Dept. of
Employment Security) 7.80%, 8/15/10 . . . . . . . . . . . . . . . . . 271,800
1,000,000 Valdez, Alaska, Marine Term Rev., Refunding, (Sohio Pipeline),
7.125%, 12/1/25 . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,069,420
--------------
TOTAL MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 14,273,600
--------------
MUNICIPAL UTILITY DISTRICT (MUD) 1.5%
250,000 Brazoria County, Texas, MUD No. 2, Refunding, 7.00%, 9/1/08 . . . . . . 253,665
Harris County, Texas
250,000 #90, Refunding, 7.50%, 10/1/97 . . . . . . . . . . . . . . . . . . . . 259,012
100,000 #151, 8.65%, 3/1/07 . . . . . . . . . . . . . . . . . . . . . . . . . 107,613
500,000 #322, 6.25%, 5/1/17 . . . . . . . . . . . . . . . . . . . . . . . . . 467,220
Louetta North Public Utility District, Texas
215,000 10.10%, 4/1/98 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,574
25,000 10.10%, 4/1/98; Pre-refunded, 4/1/96 . . . . . . . . . . . . . . . . . 26,229
265,000 10.20%, 4/1/99 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 278,271
100,000 Western Oaks, Texas, MUD, Contract Rev., 8.40%, 11/15/01;
Pre-refunded, 11/15/96 . . . . . . . . . . . . . . . . . . . . . . . . 107,007
--------------
TOTAL MUD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,724,591
--------------
NURSING HOMES 0.5%
100,000 Carmel, Indiana, Retirement Rent Housing Rev., Refunding
(Beverly Enterprises, Inc. Project), Series 1992, 8.75%, 12/1/08 . . . 108,500
240,000 Louisiana Public Facilities Authority, IDR, Refunding (Beverly
Enterprises, Inc.), 8.25%, 9/1/08 . . . . . . . . . . . . . . . . . . 252,754
250,000 Massachusetts, Industrial Finance Agency, IDR, Refunding (Beverly
Enterprises, Inc., Gloucester and Lexington Projects), Series 1992,
8.00%, 5/1/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 261,272
--------------
TOTAL NURSING HOMES . . . . . . . . . . . . . . . . . . . . . . . . . 622,526
--------------
POLLUTION CONTROL REVENUE (PCR) 8.8%
Brazos River Authority, Texas, Rev., PCR (Houston Power & Light Co. Project),
500,000 Series B, 8.25%, 5/1/15 . . . . . . . . . . . . . . . . . . . . . . . 547,450
1,000,000 Series C, BIG, 8.10%, 5/1/19 . . . . . . . . . . . . . . . . . . . . . 1,094,300
500,000 Capital Industrial Development Corp., Texas, PCR (International
Business Machines Corp.), 7.40%, 5/1/12 . . . . . . . . . . . . . . . 548,025
250,000 County of Coshocton, Ohio, Solid Waste Disposal Rev., Refunding (Stone
Container Corp. Project), Series 1992, 7.875%, 8/1/13 . . . . . . . . 250,822
1,000,000 Emery County, Utah, PCR, Refunding (Pacificorp Project), Series A,
AMBAC, 5.65%, 11/1/23 . . . . . . . . . . . . . . . . . . . . . . . . 924,340
1,000,000 Farmington, New Mexico, PCR, Refunding, 7.20%, 4/1/21 . . . . . . . . . 1,076,760
995,000 Mercer County, North Dakota, PCR (Basin Electric Power), Series E,
7.00%, 1/1/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,025,148
570,000 Ohio State Air Quality Development Authority Rev., PCR (Cleveland Co.
Project), FGIC, 8.00%, 12/1/13 . . . . . . . . . . . . . . . . . . . . 654,503
500,000 Parish of St. Charles, Louisiana, PCR(Louisiana Power &Light Co.),
8.25%, 6/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 533,910
1,000,000 Petersburg, Indiana, PCR, Refunding (Indianapolis Power & Lighting),
Series 1993-A, 6.10%, 1/1/16 . . . . . . . . . . . . . . . . . . . . . 974,700
1,500,000 Skowhegan, Maine, PCR, Refunding (Scott Paper Co. Project),
5.90%, 11/1/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,416,210
400,000 Stevens County, Washington, Public Corp., PCR (Washington Water &
Power Co., Kettle Project), 6.00%, 12/1/23 . . . . . . . . . . . . . . 361,256
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
POLLUTION CONTROL REVENUE (PCR)-continued
$ 500,000 Sweetwater County, Wyoming, PCR (Idaho Power Co.), Series C,
7.625%, 12/1/13 . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 526,685
--------------
TOTAL PCR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,934,109
--------------
POOL FINANCING PROGRAM 1.7%
Indianapolis, Indiana, Local Public Improvement
660,000 Series C, 6.70%, 1/1/17 . . . . . . . . . . . . . . . . . . . . . . . 662,930
1,000,000 Series D, 6.50%, 2/1/22 . . . . . . . . . . . . . . . . . . . . . . . 993,600
250,000 Series D, 6.75%, 2/1/20 . . . . . . . . . . . . . . . . . . . . . . . 253,530
--------------
TOTAL POOL FINANCING PROGRAM . . . . . . . . . . . . . . . . . . . . . 1,910,060
--------------
RESOURCE RECOVERY REVENUE 2.5%
440,000 Broward County, Florida, Resource Recovery Rev. (North Project),
7.95%, 12/1/08 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 479,002
1,000,000 Delaware County, Pennsylvania, Industrial Development Authority Rev.,
Resource Recovery, 8.10%, 12/1/13 . . . . . . . . . . . . . . . . . . 1,057,850
1,000,000 Montgomery County, Pennsylvania, Industrial Development Authority
Rev., Resource Recovery, 7.50%, 1/1/12 . . . . . . . . . . . . . . . . 1,052,150
250,000 Regional Waste Systems, Inc., Maine, Solid Waste Resource Recovery
Rev., 7.95%, 7/1/10 . . . . . . . . . . . . . . . . . . . . . . . . . 269,970
--------------
TOTAL RESOURCE RECOVERY REVENUE . . . . . . . . . . . . . . . . . . . 2,858,972
--------------
SALES TAX REVENUE 1.7%
500,000 Arvada, Colorado, Sales & Use Tax Rev., Refunding & Improvement, FGIC,
6.25%, 12/1/12 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 512,700
250,000 Crestwood, Illinois, Tax Increment Rev., Refunding, 7.25%, 12/1/08 . . . 245,537
400,000 Edgewater, Colorado, Redevelopment Authority Tax Increment Rev.,
Refunding (Edgewater Development Project), 6.75%, 12/1/08 . . . . . . 404,792
100,000 Illinois State Sales Tax Rev., Series F, 8.00%, 6/15/18 . . . . . . . . 110,606
100,000 Jefferson County, Colorado, Southeast Jefferson County Local
Improvement District, 8.20%, 12/1/13 . . . . . . . . . . . . . . . . . 110,741
500,000 Rhode Island Depositors' Economic Corp., Special Obligation,
Series A, FSA, 6.625%, 8/1/19 . . . . . . . . . . . . . . . . . . . . 549,310
--------------
TOTAL SALES TAX REVENUE . . . . . . . . . . . . . . . . . . . . . . . 1,933,686
--------------
TRANSPORTATION 4.7%
500,000 Cleveland, Ohio, Parking Facilities Improvement Rev., 8.00%, 9/15/12 . 522,720
500,000 Delaware Transportation Authority Rev., 5.50%, 7/1/16 . . . . . . . . . 470,205
250,000 Denver, Colorado, City & County Airport Rev., 8.875%, 8/1/15 . . . . . . 253,070
1,000,000 Des Moines, Iowa, Parking Facilities Rev., FGIC, 7.25%, 7/1/15 . . . . . 1,077,610
250,000 Harris County, Texas, Toll Road Rev., Senior Lien, Series 85-D,
8.25%, 8/15/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 281,580
500,000 Kentucky State Turnpike Authority, Toll Road Rev., Series A,
5.50%, 7/1/07 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484,440
1,000,000 New Jersey State Turnpike Authority, Series C, 6.50%, 1/1/16 . . . . . . 1,053,790
Triborough Bridge & Tunnel Authority, New York, Rev.
150,000 Series A, 8.00%, 1/1/18 . . . . . . . . . . . . . . . . . . . . . . . 164,081
500,000 Series R, 7.375%, 1/1/16 . . . . . . . . . . . . . . . . . . . . . . . 555,870
500,000 Wayne County, Michigan, Airport Rev., Sub. Lien, Series B, AMBAC,
6.00%, 12/1/20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 488,470
--------------
TOTAL TRANSPORTATION . . . . . . . . . . . . . . . . . . . . . . . . . 5,351,836
--------------
UTILITIES-COMBINATION ELECTRIC, GAS AND/OR WATER 6.6%
Austin, Texas, Utility System Rev., Refunding
250,000 FGIC, 7.75%, 11/15/06 . . . . . . . . . . . . . . . . . . . . . . . . 262,720
250,000 Series C, 7.30%, 5/15/17 . . . . . . . . . . . . . . . . . . . . . . . 279,545
500,000 Brownsville, Texas, Utility System Rev., AMBAC, 6.50%, 9/1/17 . . . . . 516,715
2,500,000 Chicago, Illinois, Gas Supply Rev. (Peoples Gas), Series B,
7.50%, 3/1/15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,676,475
500,000 Chicago, Illinois, Metropolitan Water District, G.O., 7.00%, 1/1/11 . . 566,165
250,000 Jefferson, Wisconsin, Sewer System, Waterworks, 7.40%, 7/1/16 . . . . . 279,405
1,000,000 Los Angeles, California, Dept. of Water & Power, Electric Plan
Rev., 5.375%, 9/1/23 . . . . . . . . . . . . . . . . . . . . . . . . . 887,340
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES-COMBINATION ELECTRIC, GAS AND/OR WATER-continued
$ 1,000,000 New York State Energy Research and Development Authority, AMBAC,
6.75%, 1/15/27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,036,470
1,000,000 Orlando, Florida, Utilities Commission Water & Electric Rev.,
Refunding, 8.625%, 10/1/05; Pre-refunded 10/1/95 . . . . . . . . . . . 1,036,900
--------------
TOTAL UTILITIES-COMBINATION ELECTRIC, GAS AND/OR WATER . . . . . . . . 7,541,735
--------------
UTILITIES-ELECTRIC 10.3%
1,000,000 Alaska Energy Authority Power Rev., First Series (Bradley Lake
Hydroelectric Project), BIG, 6.25%, 7/1/21 . . . . . . . . . . . . . . 1,005,710
Intermountain Power Agency, Utah
500,000 1st Crossover Series, Special Obligation 7.875%, 7/1/14 . . . . . . . 524,005
1,000,000 Power Supply Rev., Series B, 7.00%, 7/1/21 . . . . . . . . . . . . . . 1,047,180
250,000 Lower Colorado River Authority, Texas, Rev., 8.25%, 1/1/06 . . . . . . . 260,820
100,000 Massachusetts Municipal Wholesale Electric Co., Power Supply System
Rev., Series A, 8.75%, 7/1/18 . . . . . . . . . . . . . . . . . . . . 110,740
250,000 Michigan Public Power Agency Rev., Refunding (Belle River Project)
7.00%, 1/1/18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 256,345
225,000 Municipal Electric Authority, Georgia, Special Obligation, 2nd
Crossover Series Rev., Series O, 8.125%, 1/1/17 . . . . . . . . . . . 243,754
North Carolina Eastern Municipal Power Agency, Power System Rev.
500,000 Series A, 4.50%, 1/1/24 . . . . . . . . . . . . . . . . . . . . . . . 396,320
50,000 8.00%, 1/1/21 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54,782
400,000 8.00%, 1/1/21, Pre-refunded, 11/1/98 . . . . . . . . . . . . . . . . . 438,252
North Carolina Municipal Power Agency, Catawba Electric Rev.
1,000,000 MBIA, 5.75%, 1/1/20 . . . . . . . . . . . . . . . . . . . . . . . . . 966,680
250,000 7.875%, 1/1/19 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 273,100
1,000,000 Northern Minnesota Municipal Power Agency, Series A, AMBAC,
7.25%, 1/1/16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,066,210
500,000 Piedmont Municipal Power Agency, South Carolina Electric Rev.,
8.00%, 1/1/23 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 518,395
775,000 Sam Rayburn, Texas, Municipal Power Agency, Refunding, Series A,
6.75%, 10/1/14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 689,967
300,000 South Carolina State Public Service Authority, Electric System
Expansion Rev., 7.875%, 7/1/21 . . . . . . . . . . . . . . . . . . . . 310,400
Washington State Public Power Supply System Rev.
250,000 Nuclear Project #1, Series B, 7.125%, 7/1/16 . . . . . . . . . . . . . 268,260
250,000 Nuclear Project #2, Series 1990-C, 7.625%, 7/1/10 . . . . . . . . . . 283,775
1,500,000 Nuclear Project #3, MBIA 5.60%, 7/1/17 . . . . . . . . . . . . . . . . 1,376,985
1,500,000 Refunding, Series B, 7.00%, 7/1/12 . . . . . . . . . . . . . . . . . . 1,568,475
--------------
TOTAL UTILITIES-ELECTRIC . . . . . . . . . . . . . . . . . . . . . . . 11,660,155
--------------
UTILITIES-WATER AND SEWER 3.1%
500,000 Chicago, Illinois, Waste Water Transmission, Rev., FGIC, 6.30%, 1/1/12 539,490
500,000 Dallas, Texas, Water Works and Sewer System Rev., Series A, 5.50%,
10/1/06 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 498,720
500,000 Houston, Texas, Water System Rev., 7.25%, 12/1/07 . . . . . . . . . . . 538,970
500,000 Massachusetts State Water Resource Authority, Series A, 7.50%, 4/1/16 . 559,460
500,000 New York City Municipal Water Finance Authority, New York, Water &
Sewer System Rev., Series C, 7.75%, 6/15/20 . . . . . . . . . . . . . 577,330
500,000 Texas Water Resource Finance Authority Rev., AMBAC, 7.50%, 8/15/13 . . . 535,190
250,000 Winters, Texas, Water Works & Sewer Rev., 8.50%, 8/1/17 . . . . . . . . 303,850
--------------
TOTAL UTILITIES-WATER AND SEWER . . . . . . . . . . . . . . . . . . . 3,553,010
--------------
TOTAL MUNICIPAL BONDS (Cost $107,078,067) . . . . . . . . . . . . . . 109,511,053
--------------
</TABLE>
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- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MUNICIPAL VARIABLE RATE DEMAND NOTES+ 3.4%
$ 600,000 Anchorage Alaska, Higher Education Rev. (Alaska Pacific University)
4.75%, 7/1/17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 600,000
700,000 District of Columbia, Series A-6, 5.10%, 10/1/07 . . . . . . . . . . . . 700,000
500,000 Kentucky Development Finance Authority Rev., 4.80%, 12/1/15 . . . . . . 500,000
300,000 New York City, New York, G.O. 1993, Series B, 4.80%, 10/1/20 . . . . . . 300,000
100,000 North Carolina, Educational Facilities Finance (Bowman Grey School
Medical Project) 4.60%, 9/1/20 . . . . . . . . . . . . . . . . . . . . 100,000
1,000,000 Parish of West Feliciana, Louisiana, PCR, 4.80%, 4/1/16 . . . . . . . . 1,000,000
200,000 Pinal County, Arizona, Industrial Development, Series A, 5.00%, 12/1/09 200,000
500,000 Uinta County, Wyoming, PCR, Refunding (Chevron U.S.A., Inc.
Project), 4.65%, 8/15/20 . . . . . . . . . . . . . . . . . . . . . . . 500,000
--------------
Total Municipal Variable Rate Demand Notes (Cost $3,900,000) . . . . . 3,900,000
--------------
TOTAL INVESTMENTS (Cost $110,978,067) 100% . . . . . . . . . . . . . . . 113,411,053
Other assets and liabilities, net 0.0% . . . . . . . . . . . . . . . . . (36,394)
--------------
NET ASSETS, equivalent to $13.34 per share 100% . . . . . . . . . . . . $ 113,374,659
==============
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, par value $.01 per share; unlimited shares
authorized; 8,498,779 shares outstanding . . . . . . . . . . . . . . . . . . . . . . $ 84,988
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110,905,434
Accumulated net realized loss on securities . . . . . . . . . . . . . . . . . . . . . . (211,529)
Net unrealized appreciation of securities . . . . . . . . . . . . . . . . . . . . . . . 2,432,986
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . 162,780
--------------
NET ASSETS at April 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 113,374,659
==============
</TABLE>
<TABLE>
<S> <C>
Insurers:
+Interest rates are as of April 30, 1995 AMBAC-AMBAC Indemnity Corp.
FHA-Federal Housing Administration BIG-Bond Investors Guaranty Insurance Co.
FNMA-Federal National Mortgage Association CONN-Connie Lee
G.O.-General obligation bond FGIC-Financial Guaranty Insurance Corp.
Rev.-Revenue bond FSA-Financial Security Assurance, Inc.
IDR-Industrial Development Revenue Bond MBIA-Municipal Bond Investor's Assurance Corp.
</TABLE>
See Notes to Financial Statements.
29
<PAGE> 31
- --------------------------------------------------------------------------------
MUNICIPAL BOND FUND FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(UNAUDITED)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1995
--------------
<S> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,686,807
---------------
EXPENSES
Advisory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 332,314
Shareholder service agent's fees and expenses . . . . . . . . . . . . . . . . . . . 108,885
Accounting services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44,496
Trustees' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,658
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,483
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,285
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 932
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,018
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,225
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 765
---------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 543,061
---------------
NET INVESTMENT INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,143,746
---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
Net realized loss on securities . . . . . . . . . . . . . . . . . . . . . . . . . . (184,756)
Net unrealized appreciation of securities during the period . . . . . . . . . . . . 3,816,347
---------------
NET REALIZED AND UNREALIZED GAIN ON SECURITIES . . . . . . . . . . . . . . . . . 3,631,591
---------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . $ 6,775,337
===============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1995 1994
--------------- ---------------
<S> <C> <C>
NET ASSETS, beginning of period . . . . . . . . . . . . . . . . . . . $ 112,088,419 $ 95,903,641
--------------- ---------------
OPERATIONS
Net investment income . . . . . . . . . . . . . . . . . . . . . . . 3,143,746 5,614,009
Net realized gain (loss) on securities . . . . . . . . . . . . . . (184,756) 14,380
Net unrealized appreciation (depreciation) of securities
during the period . . . . . . . . . . . . . . . . . . . . . . . . 3,816,347 (9,413,118)
--------------- ---------------
Increase (decrease) in net assets resulting from operations . . . 6,775,337 (3,784,729)
--------------- ---------------
DISTRIBUTION TO SHAREHOLDERS FROM NET INVESTMENT INCOME . . . . . . . (3,012,124) (5,586,734)
--------------- ---------------
NET EQUALIZATION CREDITS . . . . . . . . . . . . . . . . . . . . . . -- 34,076
--------------- ---------------
CAPITAL TRANSACTIONS
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . 12,515,927 46,071,557
Proceeds from shares issued for distributions reinvested . . . . . 2,615,130 4,883,341
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . (17,608,030) (25,432,733)
--------------- ---------------
Increase (decrease) in net assets resulting from
capital transactions . . . . . . . . . . . . . . . . . . . . . (2,476,973) 25,522,165
--------------- ---------------
INCREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . 1,286,240 16,184,778
--------------- ---------------
NET ASSETS, end of period . . . . . . . . . . . . . . . . . . . . . . $ 113,374,659 $ 112,088,419
=============== ===============
CAPITAL SHARE TRANSACTIONS
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 960,355 3,404,943
Shares issued for distributions reinvested . . . . . . . . . . . . 200,423 363,194
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . (1,354,762) (1,889,648)
--------------- ---------------
Increase (decrease) in capital shares outstanding . . . . . . . . (193,984) 1,878,489
=============== ===============
</TABLE>
See Notes to Financial Statements.
30
<PAGE> 32
- --------------------------------------------------------------------------------
MONEY MARKET FUND STATEMENT OF NET ASSETS
- --------------------------------------------------------------------------------
APRIL 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MARKET
AMOUNT VALUE
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER 48.7%
$ 2,700,000 Associates Corp. of North America, 6.23%, 7/12/95 . . . . . . . . . . . $ 2,666,602
2,700,000 Chevron Oil Finance Co., 6.00%, 5/10/95 . . . . . . . . . . . . . . . . 2,695,522
2,700,000 Du Pont (E.I.) de Nemours & Co., Inc., 6.06%, 6/27/95 . . . . . . . . . 2,673,987
2,600,000 General Electric Capital Corp., 6.19%, 7/24/95 . . . . . . . . . . . . . 2,562,983
2,700,000 General Electric Co., 6.23%, 9/5/95 . . . . . . . . . . . . . . . . . . 2,641,728
2,600,000 Metlife Funding, Inc., 6.12%, 5/10/95 . . . . . . . . . . . . . . . . . 2,595,645
2,700,000 Pitney Bowes Credit Corp., 6.12%, 6/23/95 . . . . . . . . . . . . . . . 2,675,579
2,700,000 Pitney Bowes, Inc., 5.99%, 5/24/95 . . . . . . . . . . . . . . . . . . . 2,689,272
1,300,000 Prudential Funding Corp., 6.23%, 7/24/95 . . . . . . . . . . . . . . . . 1,281,368
1,400,000 Prudential Funding Corp., 6.23%, 7/27/95 . . . . . . . . . . . . . . . . 1,379,227
2,700,000 Raytheon Co., 5.96%, 5/30/95 . . . . . . . . . . . . . . . . . . . . . . 2,686,658
--------------
TOTAL COMMERCIAL PAPER (Cost $26,548,571) . . . . . . . . . . . . . . 26,548,571
--------------
UNITED STATES GOVERNMENT AGENCIES 38.4%
Federal Home Loan Mortgage Corp.
5,000,000 5.97%, 7/20/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,933,738
3,000,000 6.08%, 5/8/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,996,007
3,000,000 6.16%, 5/2/95 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,998,988
10,000,000 Federal National Mortgage Association, 6.09%, 5/15/95 . . . . . . . . . 9,975,000
--------------
TOTAL UNITED STATES GOVERNMENT AGENCIES (Cost $20,903,733) . . . . . . 20,903,733
--------------
REPURCHASE AGREEMENTS* 13.3%
3,535,000 Salomon Brothers, Inc., dated 4/28/95, 5.93%, due 5/1/95,
repurchase proceeds $3,536,747 . . . . . . . . . . . . . . . . . . . . 3,535,000
3,700,000 SBC Capital Markets, Inc., dated 4/28/95, 6.00%, due 5/1/95,
repurchase proceeds $3,701,850 . . . . . . . . . . . . . . . . . . . . 3,700,000
--------------
TOTAL REPURCHASE AGREEMENTS (Cost $7,235,000) . . . . . . . . . . . . 7,235,000
--------------
TOTAL INVESTMENTS (Cost $54,687,304) 100.4% . . . . . . . . . . . . . . 54,687,304
Other assets and liabilities, net (0.4%) . . . . . . . . . . . . . . . . (196,533)
--------------
NET ASSETS, equivalent to $1.00 per share 100% . . . . . . . . . . . . . $ 54,490,771
==============
NET ASSETS WERE COMPRISED OF:
Shares of beneficial interest, at par value $.01 per share; unlimited shares
authorized; 54,491,318 shares outstanding . . . . . . . . . . . . . . . . . . . . . . $ 544,913
Capital surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53,946,149
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (291)
--------------
NET ASSETS at April 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 54,490,771
==============
</TABLE>
* Collateralized by U.S. Government obligations in a pooled cash account.
See Notes to Financial Statements.
31
<PAGE> 33
- --------------------------------------------------------------------------------
MONEY MARKET FUND FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(UNAUDITED)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
APRIL 30, 1995
--------------
<S> <C>
INVESTMENT INCOME
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,600,236
---------------
EXPENSES
Advisory fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 138,287
Shareholder service agent's fees and expenses . . . . . . . . . . . . . . . . . . . 257,044
Accounting services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,681
Trustees' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,755
Audit fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,433
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,074
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,315
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,150
Registration and filing fees . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,314
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 424
Expense reimbursement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (209,903)
---------------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 276,574
---------------
Net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,323,662
---------------
Increase in net assets resulting from operations . . . . . . . . . . . . . . . . $ 1,323,662
===============
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED APRIL 30, OCTOBER 31,
1995 1994
--------------- ---------------
<S> <C> <C>
NET ASSETS, beginning of period . . . . . . . . . . . . . . . . . . . $ 56,401,350 $ 59,198,092
--------------- ---------------
OPERATIONS
Net investment income . . . . . . . . . . . . . . . . . . . . . . . 1,323,662 1,621,523
--------------- ---------------
Increase in net assets resulting from operations . . . . . . . . . 1,323,662 1,621,523
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET INVESTMENT INCOME . . . . . . (1,325,144) (1,621,596)
--------------- ---------------
CAPITAL TRANSACTIONS
Proceeds from shares sold . . . . . . . . . . . . . . . . . . . . . 28,606,627 59,396,624
Proceeds from shares issued for distributions reinvested . . . . . 1,286,701 1,600,922
Cost of shares redeemed . . . . . . . . . . . . . . . . . . . . . . (31,802,425) (63,794,215)
--------------- ---------------
Decrease in net assets resulting from capital transactions . . . (1,909,097) (2,796,669)
--------------- ---------------
DECREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . (1,910,579) (2,796,742)
--------------- ---------------
NET ASSETS, end of period . . . . . . . . . . . . . . . . . . . . . . $ 54,490,771 $ 56,401,350
=============== ===============
CAPITAL SHARE TRANSACTIONS
Shares sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28,606,627 59,396,624
Shares issued for distributions reinvested . . . . . . . . . . . . 1,286,701 1,600,922
Shares redeemed . . . . . . . . . . . . . . . . . . . . . . . . . . (31,802,425) (63,794,215)
--------------- ---------------
Decrease in capital shares outstanding . . . . . . . . . . . . . . (1,909,097) (2,796,669)
=============== ===============
</TABLE>
See Notes to Financial Statements.
32
<PAGE> 34
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(UNAUDITED)
NOTE 1-SIGNIFICANT ACCOUNTING POLICIES
Common Sense Trust (the "Trust"), is registered under the Investment Company
Act of 1940, as amended, as a diversified open-end management investment
company which offers shares in eleven separate portfolios, five of which are
described in this report: Growth Fund ("Growth"), Growth and Income Fund
("Growth and Income"), Government Fund ("Government"), Municipal Bond Fund
("Municipal Bond") and Money Market Fund ("Money Market"). Each Fund is
accounted for as a separate entity. The following is a summary of significant
accounting policies consistently followed by the Trust in the preparation of
its financial statements.
A. INVESTMENT VALUATIONS
Securities listed or traded on a national securities exchange are
valued at the last sales price. Unlisted securities and listed
securities for which the last sales price is not available are valued
at the most recent bid price. U.S. Government securities are valued at
the last reported bid price. Municipal bonds are valued at the last
quoted bid prices or at bid prices based on a matrix system (which
considers such factors as security prices, yields, maturities and
ratings) furnished by dealers and an independent pricing service.
Variable rate securities are valued at par; periodic rate changes
reflect current market conditions. Securities for which market
quotations are not readily available are valued at fair value under a
method approved by the Board of Trustees.
Short-term investments with a maturity of more than 60 days when
purchased are valued based on market quotations until the remaining
days to maturity become less than 61 days. From such time, until
maturity, such investments are valued at amortized cost. For Money
Market, all investments are valued at amortized cost.
Municipal Bond investments include lower rated debt securities which
may be more susceptible to adverse economic conditions than other
investment grade holdings. These securities are often subordinated to
the prior claims of other senior lenders and uncertainties exist as to
an issuer's ability to meet principal and interest payments. At April
30, 1995, debt securities rated below investment grade and comparable
unrated securities represented approximately 9% of Municipal Bond's
investment portfolio. Issuers of certain securities owned by Municipal
Bond have obtained insurance guaranteeing their timely payment of
principal at maturity and interest. The insurance reduces financial
risk but not market risk of the securities.
B. FUTURES CONTRACTS AND FORWARD COMMITMENTS
General-Transactions in futures contracts and forward commitments are
utilized in strategies to manage the market risk of the Trust's
investments. The purchase of a futures contract or forward commitment
increases the impact on net asset value of changes in the market price
of investments. Forward commitments have a risk of loss due to
nonperformance of counterparties. There is also a risk that the market
movement of such instruments may not be in the direction forecasted.
Note 3-Investment activity contains additional information.
Futures Contracts-Upon entering into futures contracts, the Trust
maintains, in a segregated account with its custodian, securities
with a value equal to its obligation under the futures contracts. A
portion of these funds is held as collateral in an account in the name
of the broker, the Trust's agent in acquiring the futures position.
During the period the futures contract is open, changes in the value
of the contract ("variation margin") are recognized by marking the
contract to market on a daily basis. As unrealized gains or losses are
incurred, variation margin payments are received from or made to the
broker. Upon the closing or cash settlement of a contract, gains and
losses are realized. The cost of securities acquired through delivery
under a contract is adjusted by the unrealized gain or loss on the
contract.
Forward Commitments-The Trust trades certain securities under the
terms of forward commitments, whereby the settlement for payment and
delivery occurs at a specified future date. Forward commitments are
privately negotiated transactions between the Trust and dealers. Upon
executing a forward commitment and during the period of obligation,
the Trust maintains collateral of cash or securities in a segregated
account with its custodian in an amount sufficient to relieve the
obligation. If the intent of the Trust is to accept delivery of a
security traded under a forward purchase commitment, the commitment is
recorded as a long-term purchase. For forward purchase and sale
commitments which security settlement is not intended by the Trust,
changes in the value of the commitment are recognized by marking the
commitment to market on a daily basis. During the commitment, the
Trust may either resell or repurchase the forward commitment and enter
into a new forward commitment, the effect of which is to extend the
settlement date. In addition,
33
<PAGE> 35
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, continued
- --------------------------------------------------------------------------------
the Trust may occasionally close such forward commitments prior to
delivery. Gains and losses are realized upon the ultimate closing or
cash settlement of forward commitments.
C. REPURCHASE AGREEMENTS
A repurchase agreement is a short-term investment in which the Trust
acquires ownership of a debt security and the seller agrees to
repurchase the security at a future time and specified price. The
Trust may invest independently in repurchase agreements, or transfer
uninvested cash balances into a pooled cash account along with other
investment companies advised by Van Kampen American Capital Asset
Management, Inc. (the "Adviser"), the daily aggregate of which is
invested in repurchase agreements. Repurchase agreements are
collateralized by the underlying debt security. The Trust will make
payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian bank. The seller
is required to maintain the value of the underlying security at not
less than the repurchase proceeds due the Trust.
D. FEDERAL INCOME TAXES
No provision for federal income taxes is required because the Trust
has elected to be taxed as a "regulated investment company" under the
Internal Revenue Code and intends to maintain this qualification by
annually distributing all taxable net investment income and taxable
net realized capital gains to its shareholders. It is anticipated that
no distributions of capital gains will be made until tax basis capital
loss carryforwards, if any, expire or are offset by net realized
capital gains.
The net realized capital loss carryforward at October 31, 1994 for
Municipal Bond was approximately $27,000, which will expire in 1997
and 2001. Government had a capital loss carryforward of approximately
$33.1 million, which will expire in 2002. The net realized capital
loss carryforwards may be utilized to offset current or future capital
gains until expiration.
E. INVESTMENT TRANSACTIONS AND RELATED INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized
gains and losses on investments are determined on the basis of
identified cost. Dividend income is recorded on the ex-dividend date.
Interest income is accrued daily.
F. DIVIDENDS AND DISTRIBUTIONS
The Trust, excluding Money Market, declares annual distributions from
long-term gains. Government may distribute short-term capital gains
quarterly. Dividends from net investment income are declared daily for
Government, Municipal Bond and Money Market, quarterly for Income and
annually for Growth. Dividends and distributions to shareholders are
recorded on the record date.
The Trust distributes tax basis earnings in accordance with the
minimum distribution requirements of the Internal Revenue Code, which
may differ from generally accepted accounting principles. Such
dividends or distributions may exceed financial statement earnings.
Municipal Bond intends to continue to invest principally in tax-exempt
obligations sufficient in amount to qualify it to pay "exempt-interest
dividends" as defined in the Internal Revenue Code. However, a portion
of such dividends may represent tax preference items subject to
alternative minimum tax.
G. EQUALIZATION
At October 31, 1994, the Municipal Bond discontinued the accounting
practice of equalization, which it had used since its inception.
Equalization is a practice whereby a portion of the proceeds from
sales and the costs of redemptions of Trust shares, equivalent on a
per-share basis to the amount of the undistributed net investment
income, is charged or credited to undistributed net investment income.
H. DEBT DISCOUNT OR PREMIUM
For financial reporting purposes, debt discounts or premiums are
accounted for on the same basis as is followed for federal income tax
reporting. Accordingly, original issue discounts on long-term debt
securities purchased are amortized over the life of the security. For
Money Market and Municipal Bond, all premiums are amortized. Market
discounts and premiums are recognized at the time of sale as realized
gains and realized losses, respectively, for book purposes, and
ordinary income and ordinary loss, respectively, for tax purposes.
34
<PAGE> 36
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, continued
- --------------------------------------------------------------------------------
NOTE 2-ADVISORY FEES AND OTHER TRANSACTIONS WITH AFFILIATES
The Adviser serves as investment manager of the Trust. Advisory fees to Adviser
are paid monthly, based on the average daily net assets of each fund at an
annual rate as indicated by the following graduated fee schedules.
<TABLE>
<CAPTION>
GROWTH FUND &
GROWTH AND INCOME GOVERNMENT MUNICIPAL BOND MONEY MARKET
- ------------------------- ----------------------- ------------------------ -------------------------
AVERAGE DAILY ANNUAL AVERAGE DAILY ANNUAL AVERAGE DAILY ANNUAL AVERAGE DAILY ANNUAL
NET ASSETS RATE NET ASSETS RATE NET ASSETS RATE NET ASSETS RATE
- ---------------- ------ --------------- ------ ---------------- ------ ----------------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
First $1 billion .65% First $1 billion .60% First $1 billion .60% First $2 billion .50%
Next $1 billion .60% Next $1 billion .55% Next $1 billion .55% Next $2 billion .475%
Next $1 billion .55% Next $1 billion .50% Next $1 billion .50% Over $4 billion .45%
Next $1 billion .50% Next $1 billion .45% Over $3 billion .45%
Over $4 billion .45% Next $1 billion .40%
Over $5 billion .35%
</TABLE>
The Adviser has voluntarily elected to reimburse Money Market for any ordinary
business expenses in excess of 1.00% of its average daily net assets. The
Adviser may modify or terminate this election at any time without prior notice.
At the end of the period, the Adviser reimbursed $209,903 of Money Market's
expenses.
Accounting services include the salaries and overhead expenses of the Trust's
Treasurer and the personnel operating under his direction. Charges are
allocated among investment companies advised by the Adviser. These charges
include the employee costs attributable to the Trust's accounting officers. A
portion of the accounting services expense was paid to the Adviser in
reimbursement of personnel, facilities and equipment costs attributable to the
provision of accounting services. The services provided by the Adviser are at
cost.
Common Sense Shareholder Services ("CSSS") serves as the Trust's shareholder
service agent. CSSS is a subsidiary of PFS Services, Inc. Common Sense
Distributors, a subsidiary of PFS Distributors, Inc., serves as Distributor of
the Trust's shares through an exclusive selling agreement with PFS Investments
Inc. (the "Retail Dealer"). The Retail Dealer is an indirect wholly-owned
subsidiary of Primerica Financial Services. During the period, the Trust paid
brokerage commissions of $216,758 to companies which are deemed affiliates of
the Adviser's parent because it owns more than 5% of the company's outstanding
voting securities. As of December 20, 1994, the companies were no longer
considered affiliates. Certain officers and trustees of the Trust are officers
and directors of the Adviser or its affiliates.
Amounts paid by the Trust to affiliates during the period were as follows:
<TABLE>
<CAPTION>
GROWTH MUNICIPAL MONEY
GROWTH AND INCOME GOVERNMENT BOND MARKET
----------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
Accounting services . . . . . . . $ 17,768 $ 7,740 $ 5,163 $ 3,664 $ 3,277
Shareholder service agent fees . 3,643,077 848,960 239,173 84,756 222,964
Sales of Trust shares:
Distributor commissions . . . . 1,997,027 472,181 245,180 53,494 --
Retail Dealer commissions . . . 9,297,215 2,230,412 722,709 421,162 --
</TABLE>
35
<PAGE> 37
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, continued
- --------------------------------------------------------------------------------
At the end of the period, Growth owned approximately 49% of the American
Capital Small Capitalization Fund, Inc. ("Small Cap"), an investment company
managed by the Adviser. Small Cap comprised approximately 3% of Growth's total
net assets. Small Cap's portfolio consisted of the following securities:
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK
CONSUMER DISTRIBUTION
6,000 Arbor Drugs, Inc. $ 154,500
29,000 Barnes & Noble, Inc. 833,750
13,000 Big B, Inc. 189,313
5,000 Books-A-Million, Inc. 68,125
3,000 Carson Pirie Scott & Co. 48,000
4,000 CDW Computer Centers, Inc. 142,000
39,000 Circuit City Stores, Inc. 984,750
60,000 Claire's Stores, Inc. 832,500
12,000 CompUSA, Inc. 295,500
26,000 Fingerhut Companies, Inc. 295,750
7,000 Food Lion, Inc. 38,938
33,000 General Nutrition Companies, Inc. 810,563
16,000 Gymboree Corp. 378,000
4,000 Haggar Corp. 82,000
11,000 Health Management, Inc. 198,000
2,000 Hills Stores Co. 40,250
14,000 MacFrugals Bargains Closeouts 197,750
4,000 Medicine Shoppe International, Inc. 129,000
6,000 Men's Wearhouse, Inc. 151,500
7,900 Meyer (Fred), Inc. 245,888
1,000 Michael's Stores, Inc. 28,750
20,000 Micro Warehouse, Inc. 705,000
7,000 New England Business Service, Inc. 127,750
4,000 Nine West Group, Inc. 129,500
39,900 Pier 1 Imports, Inc. 359,100
5,000 Proffitts, Inc. 123,438
5,000 Rex Stores Corp. 67,500
3,000 Richfood Holdings, Inc. 60,000
7,000 Ross Stores, Inc. 67,813
12,500 Rykoff-Sexton, Inc. 217,188
5,000 Shoe Carnival, Inc. 30,000
31,800 Stop & Shop Companies, Inc. 846,675
31,000 Sunglass Hut International, Inc. 875,749
3,000 Urban Outfitters, Inc. 63,000
13,000 Viking Office Products, Inc. 354,250
39,000 Waban, Inc. 648,375
3,000 Younkers, Inc. 55,875
12,000 Zale Corp. 140,250
-------------
TOTAL CONSUMER DISTRIBUTION 11,016,290
-------------
CONSUMER DURABLES
11,000 Aldila, Inc. 68,750
2,000 Armstrong World Industries, Inc. 90,750
11,000 Automotive Industries Holdings, Inc., Class A 290,125
3,000 Borg Warner Automotive, Inc. 75,750
10,000 Breed Technologies, Inc. 202,500
4,000 Champion Enterprises, Inc. 118,500
35,000 Clayton Homes, Inc. 581,875
28,000 Echlin, Inc. 1,022,000
5,000 Fleetwood Enterprises, Inc. 111,875
8,000 Harman International Industries, Inc. 290,000
11,000 Leggett & Platt, Inc. 424,875
32,000 Lennar Corp. 524,000
7,000 Libbey, Inc. 136,500
32,000 Masland Corp. 428,000
46,000 Maytag Co. 793,500
30,000 Oakwood Homes Corp. 742,500
12,000 Outboard Marine Corp. 256,500
10,000 Pulte Corp. 215,000
7,000 Smith (A.O.) Corp. 166,250
3,000 Strattec Security Corp. 34,500
12,000 Toro Co. 346,500
15,000 Winnebago Industries, Inc. 151,875
14,000 Zenith Electronics Corp. 105,000
-------------
TOTAL CONSUMER DURABLES 7,177,125
-------------
CONSUMER NON-DURABLES
22,000 American Greetings Corp., Class A 603,625
7,000 Armour All Products Corp. 140,000
6,000 Barefoot, Inc. 66,000
5,000 Cyrk, Inc. 71,250
4,000 Dean Foods Co. 113,000
4,000 Dial Corp. 96,000
7,000 Fieldcrest Cannon, Inc. 155,750
15,000 Griffon Corp. 118,125
5,000 Hormel (Geo. A.) & Co. 136,250
13,000 IBP, Inc. 477,750
1,800 Jones Apparel Group, Inc. 47,025
2,000 Kellwood Co. 35,250
19,000 Lancaster Colony Corp. 665,000
5,000 Nautica Enterprises, Inc. 140,000
5,000 Nu-kote Holdings, Inc., Class A 139,063
22,000 Paragon Trade Brands, Inc. 338,250
11,000 Phillips-Van Heusen Corp. 167,750
3,000 Scotts Co., Class A 59,250
9,000 Smithfield Foods, Inc. 204,750
18,000 Springs Industries, Inc. 693,000
4,000 Starbucks Corp. 93,750
3,000 St. John Knits, Inc. 102,750
31,000 Topps, Inc. 186,000
17,000 Unifi, Inc. 431,375
9,000 Universal Foods Corp. 292,500
10,000 Westpoint Stevens, Inc. 183,750
53,000 Whitman Corp. 960,625
6,000 WLR Foods, Inc. 138,000
12,000 Wolverine World Wide, Inc. 393,000
-------------
TOTAL CONSUMER NON-DURABLES 7,248,838
-------------
CONSUMER SERVICES
4,000 Advo, Inc. 80,000
4,000 American Media, Inc., Class A 24,500
10,200 American Medical Response 261,375
5,000 Banta Corp. 166,250
6,000 Belo (A.H.) Corp. 361,500
25,000 Bowne & Co., Inc. 403,125
6,000 Brinker International, Inc. 102,750
1,000 Central Newspapers, Inc., Class A 26,000
3,500 Club Med, Inc. 99,313
33,000 Equifax, Inc. 1,056,000
1,000 Heritage Media Corp., Class A 25,500
16,000 Hospitality Franchise Systems, Inc. 488,000
3,000 Jones Intercable, Inc., Class A 43,125
</TABLE>
36
<PAGE> 38
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
11,000 Kelly Services, Inc. $ 375,375
1,000 Lee Enterprises, Inc. 35,750
28,000 Lone Star Steakhouse & Saloon, Inc. 861,000
27,000 Mirage Resorts, Inc. 803,250
35,760 Ogden Corp. 733,080
11,000 Olsten Corp. 374,000
5,200 PHH Corp. 207,350
17,000 Players International, Inc. 503,625
3,000 Regal Cinemas, Inc. 82,500
33,000 Robert Half International, Inc. 870,375
26,000 Sbarro, Inc. 672,750
3,000 Scripps (E.W.) Co., Class A 86,625
10,000 Service Corp. International 278,750
13,500 Spelling Entertainment, Group I 138,374
18,000 SPS Transaction Services 558,000
58,000 Wendy's International, Inc. 993,250
32,000 Westcott Communications, Inc. 452,000
-------------
TOTAL CONSUMER SERVICES 11,163,492
-------------
ENERGY
5,000 Addington Resources, Inc. 58,125
21,000 Ashland, Inc. 769,125
17,000 BJServices Co. 391,000
5,000 Chesapeake Energy Corp. 117,500
4,000 Columbia Gas System, Inc. 118,000
14,000 Diamond Shamrock R & M, Inc. 383,250
27,000 Eastern Enterprises 806,625
19,000 El Paso Natural Gas Co. 553,375
19,000 KCS Energy, Inc. 339,625
2,000 MAPCO, Inc. 113,250
7,000 McDermott (J. Ray) & Co., Inc. 193,375
102,000 Nabors Industries, Inc. 956,250
9,000 NACCO Industries, Inc., Class A 499,500
15,500 National Fuel Gas Co. 443,687
8,000 New Jersey Resources Corp. 183,000
35,000 NICOR, Inc. 866,250
20,000 Offshore Logistics, Inc. 271,250
14,400 ONEOK, Inc. 273,600
3,000 Oryx Energy Co. 41,625
39,000 Pacific Enterprises 960,375
3,000 Phoenix Resource Co. 85,500
7,000 Quaker State Corp. 99,750
6,000 Smith International, Inc. 103,500
7,000 Southwestern Energy Co. 106,750
4,000 Tosco Corp. 136,500
301 Transco Energy Co. 6,095
30,000 Varco International, Inc. 247,500
5,400 WICOR, Inc. 147,150
-------------
TOTAL ENERGY 9,271,532
-------------
FINANCE
8,000 Advanta Corp., Class A 274,000
15,000 Alex Brown, Inc. 605,625
2,080 Alleghany Corp. 323,960
17,000 AMBAC, Inc. 688,500
29,000 Bankers Life Holdings Corp. 605,375
8,000 BanPonce Corp. 257,000
4,500 Capitol American Financial Corp. 97,875
6,000 Capital Re Corp. 138,750
6,000 Charter One Financial, Inc. 137,250
10,000 CMACInvestment Corp. 365,000
5,000 Comdisco, Inc. 140,625
11,000 Commercial Federal Corp. 288,750
16,500 Compass Bancshares, Inc. 432,094
81,960 Dime Bancorp, Inc. 778,620
2,000 Eaton Vance Corp. 63,250
13,000 Finova Group, Inc. 438,750
7,000 First American Corp. 241,500
1,000 First Commercial Corp. 27,500
2,000 First Financial Corp. 31,625
26,000 First USA, Inc. 1,111,500
15,000 Firstar Corp. 433,125
24,000 FirstFed Michigan Corp. 579,000
14,000 Foothill Group, Inc., Class A 306,250
13,000 Fremont General Corp. 287,625
4,000 GATX Corp. 180,000
79,000 Hibernia Corp., Class A 651,750
15,000 Integra Financial Corp. 654,375
5,000 Inter-Regional Financial Group, Inc. 126,875
7,000 Marshall & Ilsley Corp. 140,875
2,000 Mercantile Bancorporation, Inc. 72,750
20,000 Mercury Finance Co. 302,500
29,300 MGIC Investment Corp. 1,230,600
3,000 Ohio Casualty Corp. 87,375
4,000 Old Kent Financial Corp. 124,000
17,250 Orion Capital Corp. 605,906
15,000 Protective Life Corp. 680,625
29,000 Regions Financial Corp. 1,000,500
20,000 Reliastar Financial Corp. 715,000
3,000 Roosevelt Financial Group, Inc. 48,094
7,000 Southern National Corp. 142,625
54,000 SouthTrust Corp. 1,161,000
2,000 Standard Federal Bancorp 56,000
20,300 Star Banc Corp. 847,525
10,000 TCF Financial Corp. 427,500
5,500 White River Corp. 180,125
-------------
TOTAL FINANCE 18,089,549
-------------
HEALTH CARE
8,000 Abbey Healthcare Group, Inc. 311,000
24,000 AMSCO International, Inc. 303,000
23,000 Calgene, Inc. 158,125
14,000 Circa Pharmaceuticals, Inc. 341,250
6,000 Cognex Corp. 178,500
3,000 Cordis Corp. 219,750
4,000 Dentsply International, Inc. 141,000
38,000 FoxMeyer Health Corp. 726,750
14,000 Genetic Therapy, Inc. 133,000
51,000 Gilead Sciences, Inc. 752,250
8,000 Healthsouth Rehabilitation 157,000
26,000 ICOS Corp. 117,000
9,000 Integrated Health Services, Inc. 312,750
21,000 Lincare Holdings, Inc. 630,000
1,000 Manor Care, Inc. 29,750
6,000 Mariner Health Group, Inc. 87,750
11,000 Mentor Corp. 248,875
27,000 Mylan Laboratories, Inc. 833,625
23,000 Nellcor, Inc. 943,000
16,000 Oxford Health Plans, Inc. 672,000
6,000 Pacific Physician Services, Inc. 110,250
12,000 Pacificare Health Systems, Inc., Class A 750,000
3,000 Quintiles Transnational 114,000
7,000 Scios Nova, Inc. 46,375
1,000 Sierra Health Services, Inc. 26,500
18,000 Steris Corp. 711,000
3,000 Target Therapeutics, Inc. 108,750
</TABLE>
37
<PAGE> 39
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
26,000 Thermo Cardiosystems, Inc. $ 867,750
2,000 United American Healthcare Corp. 34,000
4,000 United Wisconsin Services, Inc. 81,000
3,000 Universal Health Services, Inc. 78,750
24,000 Vivra, Inc. 777,000
15,000 Watsons Pharmaceuticals, Inc. 465,000
-------------
TOTAL HEALTH CARE 11,466,750
-------------
PRODUCER MANUFACTURING
18,000 AGCO Corp. 639,000
36,000 Allwaste, Inc. 220,500
5,000 Ametek, Inc. 81,250
9,600 Aptar Group, Inc. 283,200
3,000 Belden, Inc. 67,500
2,000 Blount, Inc., Class A 90,000
20,000 Briggs & Stratton Corp. 702,500
21,000 Cummins Engine Co., Inc. 929,250
30,000 Danaher Corp. 862,500
10,000 Detroit Diesel Corp. 232,500
2,000 Duracraft Corp. 64,500
4,000 Granite Construction, Inc. 80,250
24,500 IDEX Corp. 808,500
7,000 Indresco, Inc. 95,375
20,000 Juno Lighting, Inc. 405,000
5,000 Kaydon Corp. 138,125
2,000 Kent Electrics Corp. 58,750
8,000 Kulicke & Soffa Industries, Inc. 343,000
40,000 Manville Corp. 465,000
12,000 Mueller Industries, Inc. 498,000
4,000 National Service Industries, Inc. 112,000
1,000 Newpark Resources, Inc. 21,625
5,500 PEC Israel Economic Corp. 151,938
8,000 Ruddick Corp. 166,000
9,000 Southdown, Inc. 171,000
11,000 SPS Technologies, Inc. 343,750
16,000 Sterling Chemicals, Inc. 198,000
42,000 Thermo Instrument Systems, Inc. 976,500
5,000 United Waste Systems, Inc. 145,000
14,000 Varity Corp. 586,250
6,000 Watts Industries, Inc., Class A 138,000
9,000 Wellman, Inc. 247,500
7,000 York International Corp. 288,750
-------------
TOTAL PRODUCER MANUFACTURING 10,611,013
-------------
RAW MATERIALS/PROCESSING INDUSTRIES
9,900 Amcast Industrial Corp. 195,525
35,000 Ecolab, Inc. 796,250
6,000 First Mississippi Corp. 150,000
22,000 Georgia Gulf Corp. 723,250
24,000 Handy & Harman 357,000
8,000 Inland Steel Industries, Inc. 208,000
6,000 International Specialty Products, Inc. 47,250
14,000 Jefferson Smurfit Corp. 190,750
2,000 Justin Industries, Inc. 22,000
6,000 Kaiser Aluminum Corp. 67,500
22,000 Longview Fibre Co. 360,250
18,000 Lubrizol Corp. 627,750
29,000 Lyondell Petrochemical Co. 725,000
20,000 Magma Copper Co., Class B 330,000
3,000 Medusa Corp. 67,875
22,000 Minerals Technologies, Inc. 731,500
2,000 NCH Corp. 127,000
12,000 Olin Corp. 670,500
73,000 Owens-Illinois, Inc. 866,875
2,000 Pentair, Inc. 91,000
10,000 Potlatch Corp. 422,500
16,000 Rayonier, Inc. 530,000
9,000 Riverwood International Corp. 196,875
25,000 RPM,Inc. 490,625
10,000 Sealed Air Corp. 427,500
15,000 Terra Industries, Inc. 165,000
7,000 USG Corp. 163,625
21,000 Vigoro Corp. 840,000
4,000 Vulcan Materials Co. 232,500
37,500 Worthington Industries, Inc. 703,124
-------------
TOTAL RAW MATERIALS/PROCESSING INDUSTRIES 11,527,024
-------------
TECHNOLOGY
7,500 Altera Corp. 600,469
13,950 Analog Devices, Inc. 371,419
10,000 Aspect Telecommunications Corp. 416,250
4,000 Atmel Corp. 171,000
3,000 Augat, Inc. 61,125
22,400 Avnet, Inc. 994,000
16,000 BMCSoftware, Inc. 988,000
13,000 Chipcom Corp. 419,250
3,000 Cirrus Logic, Inc. 146,625
5,000 Conner Peripherals, Inc. 53,750
21,000 Credence Systems Corp. 771,750
2,000 Cyrix Corp. 48,375
21,000 Electroglas, Inc. 913,500
20,000 Electronics For Imaging 920,000
16,000 Exabyte Corp. 200,000
21,000 Filenet Corp. 708,750
22,000 Frame Technology Corp. 462,000
4,000 FTP Software, Inc. 104,500
48,000 Gateway 2000, Inc. 912,000
17,000 Harris Corp. 799,000
4,200 Input/Output, Inc. 143,325
10,000 Integrated Device Technology, Inc. 390,000
14,000 International Rectifier Corp. 353,500
51,000 Intervoice, Inc. 777,750
3,000 Komag, Inc. 116,625
21,000 Lam Research Corp. 1,050,000
25,000 LEGENT Corp. 675,000
1,000 Littelfuse, Inc. 33,750
12,000 National Semiconductor Corp. 271,500
15,500 Novellus Systems, Inc. 926,125
3,000 Pioneer Standard Electronics, Inc. 58,500
5,000 Quantum Corp. 91,250
4,000 Recoton Corp. 63,000
19,000 S3, Inc. 444,125
14,000 Seagate Technology 441,000
33,000 Sequent Computer Systems, Inc. 548,624
34,000 Solectron Corp. 994,500
16,000 Sterling Software, Inc. 536,000
1,000 Symbol Technologies, Inc. 32,875
9,000 Synopsys, Inc. 488,250
15,000 Tandem Computers, Inc. 193,125
18,000 Teradyne, Inc. 893,250
6,000 3Com Corp. 336,750
5,737 U.S. Robotics Corp. 446,768
5,000 VLSI Technology, Inc. 102,500
6,000 Wall Data, Inc. 111,000
49,000 Western Digital Corp. 784,000
11,000 Xilinx, Inc. 838,750
-------------
TOTAL TECHNOLOGY 22,203,605
-------------
</TABLE>
38
<PAGE> 40
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, continued
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER MARKET
OF SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C>
TRANSPORTATION
45,000 Arkansas Best Corp. $ 450,000
8,000 Arnold Industries, Inc. 142,000
6,800 Consolidated Freightways, Inc. 173,400
28,000 Illinois Central Corp. 983,500
2,000 M.S. Carriers, Inc. 47,750
29,000 Northwest Airlines, Inc., Class A 866,375
19,000 Pittston Company Services Group 451,250
9,000 Skywest, Inc. 142,875
-------------
TOTAL TRANSPORTATION 3,257,150
-------------
UTILITIES
8,000 Atlantic Energy, Inc. 145,000
37,100 Boston Edison Co. 890,400
3,000 C-TEC Corp. 63,750
4,300 Central Hudson Gas & Electric Corp. 111,263
2,000 Cilcorp, Inc. 72,750
44,000 Delmarva Power & Lighting Co. 863,500
28,000 DQE, Inc. 941,500
8,000 Eastern Utilities Association 191,000
42,000 Illinova Corp. 976,500
35,000 Lincoln Telecommunications Co. 542,500
33,500 Oklahoma Gas & Electric Co. 1,151,562
3,000 Orange & Rockland Utilities, Inc. 95,250
40,000 Pinnacle West Capital Corp. 855,000
47,000 Portland General Corp. 963,500
16,000 Public Services Co. of New Mexico 202,000
14,200 Southern New England Telecommunications 466,825
-------------
TOTAL UTILITIES 8,532,300
-------------
TOTAL COMMON STOCK 131,564,668
-------------
CONVERTIBLE PREFERRED STOCK
1,600 FHP International, $1.25, Series A 37,800
-------------
Principal
Amount
(000) REPURCHASE AGREEMENT
- ---------
$ 2,045 SBC Capital Markets, Inc., 5.92%, 5/1/95 2,045,000
-------------
TOTAL INVESTMENTS 133,647,468
Other assets and liabilities, net 3,104,847
-------------
NET ASSETS at April 30, 1995 $ 136,752,315
=============
</TABLE>
NOTE 3-INVESTMENT ACTIVITY
During the period, the cost of purchases and proceeds from sales and maturities
of investments, excluding short-term investments, forward commitments and
variable rate demand notes were:
<TABLE>
<CAPTION>
GROWTH MUNICIPAL
GROWTH AND INCOME GOVERNMENT BOND
------------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Purchases . . . . . . . . . . . . . . . . $2,562,054,723 $425,306,482 $378,078,823 $6,715,140
Sales . . . . . . . . . . . . . . . . . . 2,383,919,510 410,429,313 450,898,093 5,443,790
</TABLE>
The following table presents the identified cost of investments at the end of
the period for federal income tax purposes with the associated net unrealized
appreciation.
<TABLE>
<CAPTION>
GROWTH MUNICIPAL
GROWTH AND INCOME GOVERNMENT BOND
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Identified cost . . . . . . . . . . . . . $2,173,892,480 $642,446,971 $381,862,187 $110,978,067
============== ============ ============ ============
Gross unrealized appreciation . . . . . . $ 218,750,927 $114,051,917 $ 4,746,892 $ 4,389,261
Gross unrealized depreciation . . . . . . (12,667,990) (6,183,851) (2,126,296) (1,956,275)
-------------- ------------ ------------ ------------
Net unrealized appreciation . . . . . . . $ 206,082,937 $107,868,066 $ 2,620,596 $ 2,432,986
============== ============ ============ ============
</TABLE>
Money Market held only short-term investments.
At the end of the period, the Trust held the following futures contracts
expiring in June 1995:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF MARKET APPRECIATION
FUND DESCRIPTION CONTRACTS VALUE (DEPRECIATION)
- ------------------- --------------------------------- --------- ------------ --------------
<S> <C> <C> <C> <C>
Growth and Income Standard & Poor's 500 Index (long) 60 $15,502,500 $ 178,200
=========== ============
Government U.S. Treasury Bond (short) 30 $(3,160,313) $ (121,315)
U.S. Treasury Note (short) 70 (17,903,125) 11,611
----------- ------------
(21,063,438) $ (109,704)
=========== ============
</TABLE>
39
<PAGE> 41
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, continued
- --------------------------------------------------------------------------------
At the end of the period, Government held the following forward commitments:
<TABLE>
<CAPTION>
PRINCIPAL MARKET UNREALIZED
AMOUNT SECURITY VALUE APPRECIATION
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Government National Mortgage Association
$ 5,000,000 7.00%, settling 5/95 (sale) $(4,731,250) $ 17,187
10,000,000 7.50%, settling 6/95 (purchase) 9,735,300 10,300
20,000,000 7.50%, settling 7/95 (purchase) 19,435,200 35,200
5,000,000 8.00%, settling 6/95 (purchase) 4,987,900 37,900
20,000,000 8.50%, settling 5/95 (purchase) 20,387,600 578,225
5,000,000 8.50%, settling 6/95 (purchase) 5,086,050 7,925
30,000,000 9.00%, settling 5/95 (purchase) 31,125,000 148,438
----------- -----------
(Net obligation $85,190,625) $86,025,800 $ 835,175
=========== ===========
</TABLE>
NOTE 4-TRUSTEE COMPENSATION
Trustees who are not affiliated with the Adviser are compensated by the Trust
at the annual rate of $19,240 plus a fee of $1,285 per day for the Board
meetings attended.
<TABLE>
<CAPTION>
GROWTH
AND MUNICIPAL MONEY
GROWTH INCOME GOVERNMENT BOND MARKET
--------- ------ ---------- --------- -------
<S> <C> <C> <C> <C> <C>
Trustees' fees for the period . . . . . $ 70,750 $28,393 $20,355 $11,924 $10,156
========= ======= ======= ======= =======
</TABLE>
40
<PAGE> 42
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated (Unaudited).
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31
APRIL 30, ----------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
GROWTH FUND
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period . . . . . . . . . . . $15.31 $16.26 $16.02 $15.47 $11.26 $13.15
-------- -------- -------- -------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Investment income . . . . . . . . . . . . . . . . . . . . . .17 .29 .281 .30 .36 .38
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . (.08) (.16) (.165) (.17) (.17) (.175)
-------- -------- -------- -------- -------- ------
Net investment income . . . . . . . . . . . . . . . . . . . .09 .13 .116 .13 .19 .205
Net realized and unrealized gain or losses on securities . .89 .2075 2.0065 1.3925 4.2425 (1.25)
-------- -------- -------- -------- -------- ------
Total from investment operations . . . . . . . . . . . . . .98 .3375 2.1225 1.5225 4.4325 (1.045)
-------- -------- -------- -------- -------- ------
LESS DISTRIBUTIONS FROM
Net investment income . . . . . . . . . . . . . . . . . . . (.155) (.1125) (.115) (.17) (.2225) (.2025)
Net realized gain on securities . . . . . . . . . . . . . . (1.035) (1.175) (1.3996) (.8025) -- (.6425)
Excess of book-basis net realized gain on securities . . . -- -- (.3679) -- -- --
-------- -------- -------- -------- -------- ------
Total distributions . . . . . . . . . . . . . . . . . . . . (1.19) (1.2875) (1.8825) (.9725) (.2225) (.845)
-------- -------- -------- -------- -------- ------
Net asset value, end of period . . . . . . . . . . . . . . $15.10 $15.31 $16.26 $16.02 $15.47 $11.26
======== ======== ======== ======== ======== ======
TOTAL RETURN(1) . . . . . . . . . . . . . . . . . . . . . . 7.18% 2.04% 14.27% 9.83% 39.90% (8.73%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) . . . . . . . . . . . $2,302.3 $2,169.9 $2,065.7 $1,648.0 $1,311.5 $866.1
Average net assets (millions) . . . . . . . . . . . . . . . $2,171.2 $2,123.1 $1,894.0 $1,479.7 $1,127.8 $878.0
Ratios to average net assets (annualized)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . 1.09% 1 .09% 1.14% 1.18% 1.26% 1.53%
Net investment income . . . . . . . . . . . . . . . . . . 1.23% .89% .80% .91% 1.44% 1.79%
Portfolio turnover rate . . . . . . . . . . . . . . . . . . 118% 164% 166% 134% 100% 99%
- ----------------------------------------------------------------------------------------------------------------------------------
GROWTH AND INCOME FUND
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period . . . . . . . . . . . $15.77 $17.13 $15.54 $14.70 $11.49 $12.51
-------- -------- -------- -------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Investment income . . . . . . . . . . . . . . . . . . . . . .25 .45 .46 .435 .46 .47
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . (.08) (.16) (.17) (.16) (.155) (.165)
-------- -------- -------- -------- -------- ------
Net investment income . . . . . . . . . . . . . . . . . . . .17 .29 .29 .275 .305 .305
Net realized and unrealized gain or losses on securities . 1.04 (.2125) 1.8775 1.2875 3.2225 (.9975)
-------- -------- -------- -------- -------- ------
Total from investment operations . . . . . . . . . . . . . 1.21 .0775 2.1675 1.5625 3.5275 (.6925)
-------- -------- -------- -------- -------- ------
LESS DISTRIBUTIONS FROM
Net investment income . . . . . . . . . . . . . . . . . . . (.165) (.275) (.2775) (.295) (.3175) (.325)
Net realized gain on securities . . . . . . . . . . . . . . (1.595) (1.1625) (.30) (.4275) -- (.0025)
-------- -------- -------- -------- -------- ------
Total distributions . . . . . . . . . . . . . . . . . . . . (1.76) (1.4375) (.5775) (.7225) (.3175) (.3275)
-------- -------- -------- -------- -------- ------
Net asset value, end of period . . . . . . . . . . . . . . $15.22 $15.77 $17.13 $15.54 $14.70 $11.49
======== ======== ======== ======== ======== ======
TOTAL RETURN(1) . . . . . . . . . . . . . . . . . . . . . . 9.06% .51% 14.13% 10.85% 31.68% (5.84%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) . . . . . . . . . . . $755.7 $712.9 $712.4 $591.0 $499.6 $366.6
Average net assets (millions) . . . . . . . . . . . . . . . $709.6 $707.5 $659.5 $545.0 $449.4 $351.5
Ratios to average net assets (annualized)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . 1.03% 1 .02% 1.05% 1.09% 1.14% 1.37%
Net investment income . . . . . . . . . . . . . . . . . . 2.39% 1 .84% 1.76% 1.84% 2.29% 2.55%
Portfolio turnover rate . . . . . . . . . . . . . . . . . . 61% 88% 51% 32% 42% 48%
</TABLE>
(1) Total return for periods of less than one full year are not annualized.
Total return does not consider the effect of sales charges.
See Notes to Financial Statements.
41
<PAGE> 43
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS, continued
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated (Unaudited).
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31
APRIL 30, ----------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
GOVERNMENT FUND
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period . . . . . . . . . . . $ 9.99 $11 .80 $11.56 $11.47 $10.79 $11.46
-------- -------- -------- -------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Investment income . . . . . . . . . . . . . . . . . . . . . .39 .78 .8536 .97 1.012 1.073
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . (.04) (.09) (.0920) (.11) (.107) (.118)
-------- -------- -------- -------- -------- ------
Net investment income . . . . . . . . . . . . . . . . . . . .35 .69 .7616 .86 .905 .955
Net realized and unrealized gain or loss on securities . . .3443 (1.358) .4249 .1639 .6788 (.4421)
-------- -------- -------- -------- -------- ------
Total from investment operations . . . . . . . . . . . . . .6943 (.668) 1.1865 1.0239 1.5838 .5129
-------- -------- -------- -------- -------- ------
LESS DISTRIBUTIONS FROM
Net investment income . . . . . . . . . . . . . . . . . . . (.3443) (.6878) (.7615) (.8639) (.9038) (.9579)
Net realized gain on securities . . . . . . . . . . . . . . -- -- (.185) (.07) -- (.225)
Excess of book-basis net realized gains on securities . . . -- (.4542) -- -- -- --
-------- -------- -------- -------- -------- ------
Total distributions . . . . . . . . . . . . . . . . . . . . (.3443) (1.142) (.9465) (.9339) (.9038) (1.1829)
Net asset value, end of period . . . . . . . . . . . . . . $10.34 $9.99 $11.80 $11.56 $11.47 $10.79
======== ======== ======== ======== ======== ======
TOTAL RETURN(1) . . . . . . . . . . . . . . . . . . . . . . 7.11% (5.45%) 10.55% 9.32% 15.16% 4.94%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period(millions) . . . . . . . . . . . . $329.8 $335.0 $370.2 $282.0 $189.0 $140.9
Average net assets (millions) . . . . . . . . . . . . . . . $329.1 $353.8 $330.1 $229.5 $161.2 $120.0
Ratios to average net assets (annualized)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . .85% .89% .89% .95% .96% 1.09%
Net investment income . . . . . . . . . . . . . . . . . . 7.04% 7 .06% 7.35% 7.46% 8.15% 8.78%
Portfolio turnover rate . . . . . . . . . . . . . . . . . . 114% 256%. 218% 112% 39% 28%
</TABLE>
(1) Total return for periods of less than one full year are not annualized.
Total return does not consider the effect of sales charges.
See Notes to Financial Statements.
42
<PAGE> 44
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS, continued
- --------------------------------------------------------------------------------
Selected data for a share of beneficial interest outstanding throughout each of
the periods indicated (Unaudited).
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEAR ENDED OCTOBER 31
APRIL 30, ----------------------------------------------------
1995 1994 1993 1992 1991 1990
-------- -------- -------- -------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
MUNICIPAL BOND FUND
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period . . . . . . . . . . . $12.89 $14 .07 $13.03 $12.84 $12.18 $12.37
-------- -------- -------- -------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Investment income . . . . . . . . . . . . . . . . . . . . . .43 .84 .859 .875 .905 .91
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . (.06) (.13) (.141) (.15) (.145) (.16)
Expense reimbursement(2) . . . . . . . . . . . . . . . . . -- -- .01 -- -- .01
-------- -------- -------- -------- -------- ------
Net investment income . . . . . . . . . . . . . . . . . . . .37 .71 .728 .725 .76 .76
Net realized and unrealized gain or loss on securities . . .434 (1.182) 1.038 .2175 .648 (.185)
-------- -------- -------- -------- -------- ------
Total from investment operations . . . . . . . . . . . . . .804 (.472) 1.766 .9425 1.408 .575
-------- -------- -------- -------- -------- ------
Distributions from net investment income . . . . . . . . . (.354) (.708) (.726) (.7525) (.748) (.765)
-------- -------- -------- -------- -------- ------
Net asset value, end of period . . . . . . . . . . . . . . $13.34 $12.89 $14.07 $13.03 $12.84 $12.18
======== ======== ======== ======== ======== ======
TOTAL RETURN(1) . . . . . . . . . . . . . . . . . . . . . . 5.77% (3.38%) 13.84% 7.57% 11.79% 4.77%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) . . . . . . . . . . . $113.4 $112.1 $95.9 $60.3 $42.5 $37.1
Average net assets (millions) . . . . . . . . . . . . . . . $110.8 $106.6 $77.1 $50.0 $39.2 $31.7
Ratios to average net assets (annualized)(2)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . .99% .99% .96% 1.14% 1.15% 1.25%
Expenses, without expense reimbursement . . . . . . . . . -- -- 1.04% -- -- 1.28%
Net investment income . . . . . . . . . . . . . . . . . . 5.72% 5.27% 5.29% 5.56% 6.08% 6.21%
Net investment income, without expense reimbursement . . -- -- 5.21% -- -- 6.18%
Portfolio turnover rate . . . . . . . . . . . . . . . . . . 5% 4% 4% 6% 1% 4%
- -------------------------------------------------------------------------------------------------------------------------------
MONEY MARKET FUND
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period . . . . . . . . . . . $1.00 $1 .00 $1.00 $1.00 $1.00 $1.00
-------- -------- -------- -------- -------- ------
INCOME FROM INVESTMENT OPERATIONS
Investment income . . . . . . . . . . . . . . . . . . . . . .0294 .0388 .033 .0424 .0647 .0839
Expenses . . . . . . . . . . . . . . . . . . . . . . . . . (.0089) (.0184) (.0174) (.016) (.014) (.014)
Expense reimbursement(2) . . . . . . . . . . . . . . . . . .0038 .0084 .0074 .006 .0041 .004
-------- -------- -------- -------- -------- ------
Net investment income . . . . . . . . . . . . . . . . . . . .0243 .0288 .023 .0324 .0548 .0739
Distributions from net investment income . . . . . . . . . (.0243) (.0288) (.023) (.0324) (.0548) (.0739)
-------- -------- -------- -------- -------- ------
Net asset value, end of period . . . . . . . . . . . . . . $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
======== ======== ======== ======== ======== ======
TOTAL RETURN(1) . . . . . . . . . . . . . . . . . . . . . . 2.43% 2.91% 2.31% 3.29% 5.65% 7.61%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (millions) . . . . . . . . . . . $54.5 $56.4 $59.2 $72.5 $84.8 $95.7
Average net assets (millions) . . . . . . . . . . . . . . . $55.3 $56.6 $65.8 $77.9 $92.6 $81.6
Ratios to average net assets (annualized)(2)
Expenses . . . . . . . . . . . . . . . . . . . . . . . . 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Expenses, without expense reimbursement . . . . . . . . . 1.77% 1.84% 1.74% 1.60% 1.41% 1.36%
Net investment income . . . . . . . . . . . . . . . . . . 4.83% 2.87% 2.30% 3.27% 5.53% 7.37%
Net investment income, without expense reimbursement . . 4.06% 2.03% 1.56% 2.67% 5.12% 7.01%
</TABLE>
(1) Total return for periods of less than one full year are not annualized.
Total return does not consider the effect of sales charges.
(2) See Note 2.
See Notes to Financial Statements.
43
<PAGE> 45
- --------------------------------------------------------------------------------
COMMON SENSE TRUST
- --------------------------------------------------------------------------------
BOARD OF TRUSTEES
Donald M. Carlton F. Robert Paulsen
A. Benton Cocanougher R. Richardson Pettit
Stephen R. Gross Don G. Powell
Norman Hackerman Alan B. Shepard, Jr.
Robert D. H. Harvey Miller Upton
Alan G. Merten Benjamin N. Woodson
Steven Muller
OFFICERS
Don G. Powell Curtis W. Morell
President Vice President and
Treasurer
Gerald Baxter
Stephen L. Boyd Tanya M. Loden
Jim Conheady Vice President and
Kenneth S. Durham Controller
Harvey Eisen
James A. Gilligan Nori L. Gabert
John A. Helms Vice President and
David C. Johnson Secretary
Gary M. Lewis
Dennis J. McDonnell Huey P. Falgout, Jr.
Jeff New J. David Wise
Ronald A. Nyberg Assistant Secretaries
Robert C. Peck, Jr.
Greg Pitts Perry F. Farrell
John R. Reynoldson M. Robert Sullivan
Jeffrey Russell Assistant Treasurers
Alan T. Sachtleben
David R. Troth
D. Richard Williams
Paul R. Wolkenberg
Vice Presidents
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Van Kampen American Capital Asset Management, Inc.
2800 Post Oak Blvd., Houston, Texas 77056
- --------------------------------------------------------------------------------
DISTRIBUTOR
Common Sense Distributors
3100 Breckinridge Blvd., Duluth, Georgia 30199-0001
- --------------------------------------------------------------------------------
SHAREHOLDER SERVICE AGENT
Common Sense Shareholder Services
3100 Breckinridge Blvd., Duluth, Georgia 30199-0062
- --------------------------------------------------------------------------------
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, Massachusetts 02110
- --------------------------------------------------------------------------------
COUNSEL
Sullivan & Worcester
1025 Connecticut Avenue N.W., Washington, D.C. 20036
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This report is submitted for the general information of the shareholders of the
Trust. It is not authorized for distribution to prospective investors unless it
has been preceded or is accompanied by an effective prospectus of the Trust
which contains additional information on how to purchase shares, the sales
charge, and other pertinent data.
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Shareholder inquiries should be directed in writing to the
Shareholder Service Agent. Common Sense Shareholder Services, 3100
Breckinridge Blvd., Duluth, Georgia 30199-001, or by calling (800)
544-5445.
- ---------------------------------------------------------------------------
44
<PAGE> 46
-------------------
COMMON BULK RATE
SENSE(R) TRUST U.S. POSTAGE
FAMILY OF FUNDS PAID
Permit No. 8048
Common Sense Shareholder Services Houston, TX.
3120 Breckinridge Blvd. -------------------
Duluth, Georgia 30199-0001
If you have any questions, please contact
one of our Customer Service Representatives
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PRINTED MATTER
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45
