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[HIGHMARK LOGO]
ANNUAL REPORT
JULY 31, 1996
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NOT FDIC INSURED
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Message from the Chairman and the Investment Adviser
Page 1
Report of Independent Auditors'
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Statements of Assets and Liabilities
Page 25
Statements of Operations
Page 28
Statements of Changes in Net Assets
Page 31
Schedules of Portfolio Investments
Page 35
Notes to Financial Statements
Page 67
Financial Highlights
Page 83
Results of Special Shareholder Meeting
Page 94
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MESSAGE FROM THE CHAIRMAN
DEAR SHAREHOLDER:
We are pleased to report strong results for The HighMark Mutual Fund Group for
the fiscal year ended July 31, 1996, despite volatility in the stock and bond
markets during this period.
INCOME EQUITY FUND RECEIVES INDUSTRY RECOGNITION
In particular, we would like to highlight the performance of the Income Equity
Fund, which was once again ranked among the top funds in its category as
reported by The Wall Street Journal. The fund (Fiduciary Shares) was ranked 13th
out of the top 15 equity income funds by Lipper Analytical Services based on
total return for the one-year period ending August 1, 1996. For the five years
ending on that date it ranked 26 out of 58 similar funds.(1)
In addition, the fund's Fiduciary Shares received a 5-star rating from
Morningstar out of 2,917 equity funds for the one-year period ending July 31,
1996. For the three, five- and 10-year periods ending on that date, the fund was
awarded four stars.(2)
WEATHERPROOFING YOUR PORTFOLIO
The past fiscal year serves as a vivid illustration of the power of
diversification. At various times during the year, large-company stocks
outperformed small-company stocks and vice versa. At times, the growth style of
investing outperformed value and vice versa. And stocks as a whole outperformed
bonds for much of the year, except for two months early in 1996. By staying
diversified across different types of investments, investors are able to
capitalize on those sectors that are outperforming at any given time.
The HighMark fund family contains a variety of different stock and bond funds
that can give most investors the tools they need to diversify a portfolio both
by security and asset class. Your investment professional will be happy to
review your current investments and suggest changes in your asset mix if needed.
A COMMITMENT TO MAINTAINING YOUR TRUST
At HighMark, we are committed to providing you with conservatively managed funds
designed to balance the pursuit of higher returns with a rigorous approach to
managing risk. We know how important it is to you to preserve your principal
while aiming to achieve the kind of returns you seek.
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In this report, we've changed the format for the fund discussions that follow
this letter and the Investment Adviser's commentary. The fund managers are now
directly answering some basic questions about their investment strategies and
their funds' performance. We hope you'll find it more helpful to read what they
have to say in their own words.
As always, we urge you to read the entire report closely to help you monitor the
progress of your investment in the HighMark funds. If you have any questions
about your investment in The HighMark Group, or would like a prospectus or other
information about any of our funds, please call your investment representative
or HighMark at 1-800-433-6884.
Sincerely,
/s/ Stephen G. Mintos
Stephen G. Mintos
Chairman
The HighMark Group
August 22, 1996
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(1) Past performance is no guarantee of future results.
(2) The Income Equity Fund's Fiduciary Shares received a 4-star rating based on
performance (649 out of 1,606 equity funds) for the 3-year period, (396 out
of 1,007 equity funds) for the five-year period and (208 out of 541 funds)
for the 10-year period ending on July 31, 1996. Morningstar proprietary
ratings reflect historical risk-adjusted performance and are calculated from
a fund's 3- and 5-year average annual returns, with fee adjustments, in
excess of 90-day Treasury bill returns and a risk factor that reflects fund
performance below 90-day Treasury bill returns. The one-year rating is
calculated using the same methodology but is not a component of the overall
rating. Ten percent of the funds in an investment category receive 5 stars,
and 22.5% receive 4 stars.
For more complete information on any HighMark fund, including fees, expenses and
sales charges, please call 1-800-433-6884 for a prospectus. Please read the
prospectus carefully before you invest or send money.
Mutual funds:
- are not FDIC insured
- have no bank guarantee
- may lose value
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MESSAGE FROM THE INVESTMENT ADVISER
DEAR SHAREHOLDER:
The fiscal year ended July 31, 1996, started out strong. Between August 1, 1995,
and January 31, 1996, the stock and bond markets continued their upward march.
During the first half of our fiscal year, the Standard & Poor's 500 Stock Index
rose 14.54%, while the Lehman Brothers Aggregate Bond Index returned 7.24%.
But the second half of the year was quite different, with the S&P 500 advancing
just 2% and bonds actually falling about 2%. It was in this half that investors
began to become concerned about a fast-growing economy and the return of
inflation. The equity markets were also surprised when some high-visibility
growth companies reported disappointing earnings.
LONG-TERM INTEREST RATES CROSS THE 7% MARK
Although its moves were closely followed, the Federal Reserve Board was
relatively inactive during the fiscal year, lowering short-term interest rates
on just two occasions last winter to 5.25%. Long-term interest rates weren't
much higher; indeed, the benchmark 30-year U.S. Treasury bond yielded about 6%
at December 31, 1995.
However, by late February, investors were surprised by extremely strong
employment data from the federal government. Anticipating that the Fed might
have to raise short-term interest rates, long-term interest rates surged beyond
7%. Although there was a concern about inflation, there was very little
supporting evidence. By early summer, the economy appeared to be moderating, and
inflation fears cooled. At the end of the fiscal year on July 31, the bond
market rallied sharply, as the yield on the long bond fell to 6.8%.
STOCKS SUFFER MINI-CORRECTION
While the bond market was volatile during the spring, the stock market remained
steady. On May 22, the Dow Jones Industrial Average set a record--5780. However,
for the next two months, the stock market would come as close to a normal
"correction" as it had in six years. Rising interest rates, weaker corporate
profit comparisons (with the prior year) and historically high valuations
combined to send the market down anywhere from 5% to 20%, depending upon the
sector. Small-capitalization stocks--which had run up sharply during early
1996--were hit the worst. During June and July, the bond market outperformed the
stock market. But by July 31, 1996, the stock market recovered, coming within
range of its all-time high once again.
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LOOKING AHEAD
Upward pressure on the U.S. economy may come from our trading partners in Europe
and Japan, which are beginning to show signs of economic recovery after several
years of sluggishness. Their recovery could generate stronger U.S. exports,
which, in turn, would stimulate our economy and create more new jobs. This is
both good and bad news. If consumer spending, employment, inventory building,
fiscal policy and continued job growth are strong, then we could be confronted
with higher inflation. This, in turn, could cause the Federal Reserve Board to
raise interest rates for the first time in nearly two years.
Between now and the presidential election, any Federal Reserve Board action
could be interpreted in a political context and is, therefore, unlikely. Once
the election is over, however, the outlook on the economy and inflation will
once again largely determine the direction of the stock and bond markets. While
we remain optimistic, we will continue to monitor events, and asset allocation
and security selection will remain critically important.
Sincerely,
/s/ Luke Mazur
Chief Investment Officer
MERUS-UCA Capital Management
August 22, 1996
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HIGHMARK INCOME EQUITY FUND
For the year ended July 31, 1996, the HighMark Income Equity Fund produced a
total return of 18.21% (Investor Shares at NAV), outperforming the 16.59% return
of the Standard & Poor's 500 Stock Index during the same period. The average
equity income fund as measured by Lipper Analytical Services rose 14.17% during
the year.
Thomas M. Arrington, CFA, is the team leader for the HighMark Income Equity
Fund. Mr. Arrington, who holds an MBA from San Francisco State University and a
bachelor's degree in economics from UCLA, has a decade of investment management
experience.
HOW WOULD YOU ASSESS YOUR PERFORMANCE FOR THE YEAR?
We are pleased with the performance of the income equity strategy for the latest
year. Our strategy outperformed the S&P 500 and the average equity income fund.
Our goal is to outperform the market over the long term with less risk. As
reported in The Wall Street Journal (August 8, 1996), the fund was ranked 13th
out of 136 comparable funds by Lipper Analytical Services based on its total
return for the one-year period ending August 1, 1996.(1)
WHAT IS YOUR STRATEGY FOR SELECTING STOCKS?
Following our income equity strategy, we invest in dividend-paying stocks of
established companies. Such an emphasis offers three important advantages:
reduced volatility, a relatively steady source of investment return potential
and enhanced total return through the reinvesting and compounding of dividends.
Our discipline compares the dividend yield of the stock with the yield of the
market as a whole, tracking that relationship over a 20-to-30-year time frame.
We can see how a stock's relative yield has moved over time to determine when to
buy or sell it.
WHAT AREAS OF THE MARKET PERFORMED WELL, AND WHERE DO YOU CURRENTLY SEE VALUE?
A very strong area of the market has been the pharmaceutical group. We bought
stocks such as American Home Products, Bristol-Myers Squibb, Eli Lilly and Merck
very cheaply in 1993 when there were concerns about a government takeover of
health care. These stocks have performed very well, showing that they can
increase their earnings and develop new products. We have since scaled back on
drug companies because they have reached our predetermined sell targets. In the
natural gas area, Consolidated Natural Gas is a relatively large holding (2.37%
of the portfolio). The company has benefited from the strong demand for natural
gas, which burns cleanly and is relatively inexpensive to use.
Every one of our bank holdings outperformed the market during the past year.
Banks continue to generate 10% earnings gains, despite concerns about rising
consumer delinquencies. The banks have shown that they are well reserved and
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continue to maintain control over their loans. In other areas, B.F. Goodrich's
stock rose 38% during the year, as management continues to generate increased
profitability in the chemical and aerospace divisions. Energy was a strong
sector, with big oil companies such as Texaco up 33%. Tobacco stocks posted
strong returns for the year, and we sold them in August. Although the retail
industry lagged for the year, we continue to think that it's an attractive area.
For instance, J.C. Penney has a good balance sheet and strong private brands.
The company should benefit from demographic trends--baby boomers are pressed for
time and will increasingly go to department stores for their one-stop shopping
convenience.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We continue to find good value using our discipline. If the market continues to
rise, these stocks, in our opinion, should turn in a strong performance. If the
market goes down, then these stocks may help preserve principal. Even with the
downdraft in the market earlier this summer, we still haven't seen a real
correction--in which stocks fall 10%--since 1990. Typically, the market goes
down 10% every two years. When the market truly becomes volatile, we believe
that our strategy will likely outperform the market.
As of July 31, 1996, the fund's top five holdings were Philip Morris (3.28%),
J.C. Penney (3.16%), Atlantic Richfield (3.11%), Bank One Corp. (2.71%) and J.P.
Morgan & Co. (2.46%).+
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(1) Performance rankings are based on total returns for the period. Past
performance is no guarantee of future results. For the 5-year period, the
fund was ranked 26th out of 58 comparable funds.
+ The composition of the fund's holdings is subject to change.
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<TABLE>
HIGHMARK INCOME EQUITY FUND
<CAPTION>
GROWTH OF A $10,000 INVESTMENT
MORNINGSTAR
MEASUREMENT PERIOD INVESTOR FIDUCIARY EQUITY
(FISCAL YEAR COVERED) SHARES SHARES S&P 500 INCOME INDEX
<S> <C> <C> <C> <C>
2/84 9543 10000 10000 10000
7/84 9026 9458 9774 9774
7/85 12350 12941 12953 12761
7/86 15764 16518 16637 15787
7/87 20003 20960 23181 18946
7/88 19714 20657 20497 18193
7/89 25265 26474 27035 22478
7/90 25053 26252 28792 22601
7/91 28210 29561 32463 25153
7/92 32734 34301 36615 28911
7/93 35926 37646 39812 32469
7/94 37445 39238 41866 33766
7/95 44004 46011 52786 39274
7/96 52017 54409 61542 44839
</TABLE>
<TABLE>
<CAPTION>
HighMark Income Equity Fund
Performance Average Annual
Total Return as of 7/31/96
----------------------------------------
1 Year 5 Years 10 Years Since
Inception
(2/9/84)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Investor* 12.93% 11.99% 12.17% 14.12%
Fiduciary 18.25% 12.98% 12.66% 14.53%
</TABLE>
The performance of the HighMark Income Equity Fund is measured against the S&P
500 Stock Index, an unmanaged index generally considered to be representative of
the U.S. stock market, and the Morningstar Equity Income Average, a composite of
managed equity income funds. The index does not reflect the deduction of
expenses associated with a mutual fund, such as investment management and fund
accounting fees. However, the fund's performance and the Morningstar Equity
Income Average reflect these value-added services. Past performance is not
predictive of future results. The investment return and NAV will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than the
original cost.
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* Reflects 4.50% sales charge.
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HIGHMARK GROWTH FUND
For the year ended July 31, 1996, the HighMark Growth Fund produced a total
return of 12.88% (Investor Shares at NAV). In comparison, the Standard & Poor's
500 Stock Index rose 16.59% during the same period.
The HighMark Growth Fund is managed by Scott A. Chapman, CFA. Mr. Chapman, who
holds an MBA from Golden Gate University and a bachelor's degree in accounting
from Santa Clara University, has 16 years' experience in the investment
business.
HOW WOULD YOU ASSESS YOUR PERFORMANCE FOR THE YEAR?
Although we underperformed the S&P 500, we outperformed our peer universe of
other growth funds as measured by Lipper Analytical Services, Inc. For the one
year ended July 31, 1996, the HighMark Growth Fund was ranked 217 out of 622
such funds based on total return, which gives it a 35th percentile rank.(1) So
we outperformed almost two-thirds of the growth funds in the country over that
one-year period. We underperformed the S&P 500 because we were underweighted in
certain industries that did well, such as chemical and international oil
companies. We were also overweighted in semiconductors, which underperformed.
WHAT INDUSTRIES IN THE PORTFOLIO DID PARTICULARLY WELL?
Industries where we outperformed were defense/electronics, soft drinks and
pharmaceuticals. In defense, two companies in the portfolio were taken over. One
was E-Systems, acquired by Raytheon. The other was Loral, acquired by Lockheed
Martin Marietta. Even if they hadn't been acquired, both E-Systems and Loral
would have remained in the portfolio due to their strong growth prospects.
Although defense spending is falling, there are selective opportunities in such
areas as surveillance and satellite technology.
Coca-Cola is our biggest position in the soft-drink industry. Over 80% of its
earnings come from overseas. One can argue that Coca-Cola is the best-known
brand name in the world, especially after the Olympics. Investors are willing to
pay for the visibility of their earnings stream, and that's why the stock keeps
doing well. We believe that the stock, currently selling at about 35 times 1996
estimated earnings, has become more expensive relative to the market, so we've
scaled back our holding from 3% to 2% of the portfolio. With a return on equity
of 57%, there is no other large-capitalization growth company that can match
their profitability.
In the drug area, we own Pfizer, Merck and Pharmacia-Upjohn. Pfizer has the best
new product pipeline of any company in the industry. Between now and the year
2000 a lot of drugs are going off patent, and there is a need to replace them
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with drugs that add value. In the past, the strategy of many drug companies was
to produce many "me-too" drugs in the hope that they would simply outsell the
competition. The reality in the industry today is that the drugs have to have
added value because HMOs have very narrow approved lists of drugs.
WHAT IS YOUR STRATEGY FOR MANAGING THE FUND?
We have ten commandments that we use when selecting a company: 1) a seasoned,
blue-chip growth company; 2) demonstrated consistent earnings growth; 3) strong
cash flow; 4) a recurring revenue base; 5) a unique product or service,
preferably with an increasing barrier to entry; 6) an attractive or improving
return on capital; 7) a leading company rather than a number three or number
four that's trying to catch up; 8) a management team that is owner-oriented,
seasoned, communicative and respected; 9) a willingness to buy back shares; and
10) a company that's attractively priced.
WHAT IS YOUR OUTLOOK FOR THE FUND?
I can't tell you what the markets will do next year, but I can say that we will
try to capitalize on any volatility. For example, during July, when the NASDAQ
was down 8.8%, double the S&P's decline, we took the opportunity to increase our
holdings in technology. If the economy weakens, we believe that investors would
want to pay more for our types of companies that continue to grow even though
the economy is slowing.
As of July 31, 1996, the fund's top five holdings were Chase Manhattan (2.51%),
McDonald's (2.48%), Intel (2.25%), Gillette (2.20%) and General Electric
(2.20%).+
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(1) Past performance is no guarantee of future results.
+ The composition of the fund's holdings is subject to change.
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<TABLE>
HIGHMARK GROWTH FUND
<CAPTION>
GROWTH OF A $10,000 INVESTMENT
MEASUREMENT PERIOD INVESTOR FIDUCIARY MORNINGSTAR GROWTH
(FISCAL YEAR COVERED) SHARES SHARES S&P 500 AVERAGE INDEX
<S> <C> <C> <C> <C>
11/18/93 9551 10000 10000 10000
7/31/94 9382 9813 10003 9952
7/31/95 11737 12289 12613 12453
7/31/96 13250 13852 14706 13464
</TABLE>
<TABLE>
<CAPTION>
HighMark Growth Fund
Performance Average Annual
Total Return as of 7/31/96
----------------------------
1 Year Since
Inception
(11/18/93)
<S> <C> <C>
- -----------------------------------------------------
Investor* 7.80% 10.97%
Fiduciary 12.72% 12.81%
</TABLE>
The performance of the HighMark Growth Fund is measured against the S&P 500
Stock Index, an unmanaged index generally considered to be representative of the
U.S. stock market, and the Morningstar Growth Average, a composite of managed
growth funds. The index does not reflect the deduction of expenses associated
with a mutual fund, such as investment management and fund accounting fees.
However, the fund's performance and the Morningstar Growth Average reflect these
value-added services. Past performance is not predictive of future results. The
investment return and NAV will fluctuate, so that an investor's shares, when
redeemed, may be worth more or less than the original cost.
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* Reflects 4.50% sales charge.
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HIGHMARK INCOME & GROWTH FUND
For the year ended July 31, 1996, the HighMark Income & Growth Fund produced a
total return of 15.02% (Investor Shares at NAV). In comparison, the Standard &
Poor's 500 Stock Index rose 16.59% during the same period.
The HighMark Income & Growth Fund is managed by David L. Freeman, CFA. Mr.
Freeman, who holds a bachelor's degree in economics and psychology from Western
Michigan University and performed graduate work at UCLA, has 14 years'
experience in the investment business.
WHAT FACTORS AFFECTED YOUR PERFORMANCE?
We saw a very large increase in long-term interest rates, especially since early
1996. This exerted downward pressure on the interest-rate-sensitive segments of
the stock market. The other factor affecting the fund was the roller-coaster
ride in technology stocks. About a year ago, they were hitting new highs. Then
they came down very sharply through the middle of January, rallied again to new
highs and came down sharply again in July. We increased the weighting in
high-quality technology stocks this past year when the stocks sold off.
WHAT STOCKS IN THE PORTFOLIO HAVE BEEN THE STRONGEST PERFORMERS?
Examples: Intel has outperformed its counterparts, thanks to a diversified
product line that allows it to weather downturns much better than a smaller
company with a single product. General Electric is a very good stock for our
style of income and growth investing, which seeks to provide above-average
dividend yield, as well as above-average potential for earnings growth. GE
manufactures aircraft engines, appliances, power generators--and owns NBC,
currently number one in the television ratings. Anheuser-Busch, the number-one
beer company in the U.S., has the potential for growth overseas as it expands
further into Europe, Latin America and the Far East. Over the past few months, a
developing theme has been a focus on interest-rate sensitive stocks. We've added
a significant weighting in bank, insurance, electric and telephone companies, as
well as construction companies. We believe that these stocks offer better-
than-average value going forward. We have also added to our technology holdings,
taking advantage of the sharp sell-off in technology that took place in late
1995 and in July of 1996.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We see slow growth in the economy in the second half of this year, with the
economy continuing to grow at a subdued rate of 2% to 3% in 1997. We expect that
the higher interest rates of earlier this year will cause housing, auto sales
and other interest-rate-sensitive segments of the economy to slow. However, we
expect long-term interest rates to decline
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to a range of 6.25% to 6.50% over the next 12 months. Inflation that was feared
in the first half of the year never materialized and should remain at low
levels. Over the next few years, we are optimistic on stocks and the U.S.
economy as we expect our trading partners in Europe and Japan to continue to
show improvement. We believe this should be bullish for U.S. exports and the
industrial side of the economy at a time when the U.S. consumer may be slowed by
a fairly heavy debt burden.
As of July 31, 1996, the fund's top five holdings were General Electric (2.70%),
Anheuser-Busch (2.33%), Intel (1.88%), Motorola (1.69%) and Minnesota Mining &
Manufacturing (1.57%)+
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+ The portfolio's composition is subject to change.
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<TABLE>
HIGHMARK INCOME & GROWTH FUND
<CAPTION>
GROWTH OF A $10,000 INVESTMENT
MEASUREMENT PERIOD INVESTOR FIDUCIARY
(FISCAL YEAR COVERED) SHARES SHARES S&P 500
<S> <C> <C> <C>
11/14/93 9551 10000 10000
7/31/94 9716 10163 10003
7/31/95 11724 12265 12613
7/31/96 13485 14109 14706
</TABLE>
<TABLE>
<CAPTION>
HighMark Income & Growth Fund
Performance Average Annual
Total Return as of 7/31/96
------------------------------
1 Year Since
Inception
(11/14/93)
<S> <C> <C>
- ---------------------------------------------------------
Investor* 9.88% 11.64%
Fiduciary 15.04% 13.52%
</TABLE>
The performance of the HighMark Income & Growth Fund is measured against the S&P
500 Stock Index, an unmanaged index generally considered to be representative of
the U.S. stock market. The index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. However, the fund's performance reflects these value-added services. Past
performance is not predictive of future results. The investment return and NAV
will fluctuate, so that an investor's shares, when redeemed, may be worth more
or less than the original cost.
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* Reflects 4.50% sales charge.
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HIGHMARK BALANCED FUND
For the year ended July 31, 1996, the HighMark Balanced Fund produced a total
return of 10.94% (Investor Shares at NAV). In comparison, the fund's benchmarks,
the Standard & Poor's 500 Stock Index and the Lehman Brothers Aggregate Bond
Index, were up 16.59% and 5.52%, respectively.
The HighMark Balanced Fund is managed by David L. Freeman, CFA, who also manages
the Income & Growth Fund, and E. Jack Montgomery, CFA, who also manages the Bond
Fund. Mr. Freeman, who holds a bachelor's degree in economics and psychology
from Western Michigan University and performed graduate work at UCLA, has 14
years' experience in the investment business. Mr. Montgomery, who holds an MBA
from the University of Oregon and a bachelor's degree from the University of
Oklahoma, has 15 years' experience in financial analysis and portfolio
management.
HOW DID THE MIXTURE OF STOCKS, BONDS AND CASH CHANGE DURING THE PERIOD?
In late May, the portfolio shifted from 60% stocks, 35% bonds and 5% cash to 55%
stocks, 40% bonds and 5% cash. As of fiscal year end, the portfolio was
comprised of 53% stocks, 38% bonds and 9% cash. With stock prices continuing to
rise, our asset allocation model--which analyzes risk and return for various
assets--began to favor bonds. Although it has been a difficult year for bonds,
they outperformed stocks in June and July of 1996.
HOW WOULD YOU ASSESS THE PERFORMANCE OF THE BOND PORTION OF THE BALANCED FUND?
The fiscal year ended July 31, 1996, can be divided into two discrete periods.
In the first half, interest rates fell, and we outperformed our benchmark.
Because of our longer-than-average duration (the degree to which the portfolio
is affected by changing interest rates), we tend to do better in a falling
interest-rate environment. But during the second half of the fiscal year,
interest rates rose. We underperformed during the second half of the fiscal year
for the same reasons that we outperformed earlier. In a period such as the one
between February and July 1996, when interest rates were rising, a longer
duration was a disadvantage. We continue to maintain a longer duration because
we believe that inflation is not going to be a problem in the immediate future.
Even if inflation is 3%, long-term bonds at 7% are a pretty good value.
WHAT STOCKS HAVE BEEN THE STRONGEST?
Intel has performed better than its counterparts in technology. It's one of the
largest technology companies with a diversified product line that allows it to
weather downturns much better than a smaller company with a single product.
General Electric is a good stock for our style of equity investing, which seeks
both above-average dividend yield as well
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as above-average potential for earnings growth. The company is diversified and
owns NBC, which is currently the number-one-rated television network.
Anheuser-Busch, another excellent performer, is expanding further into Europe,
Latin America and the Far East. Our overall approach is to own a
well-diversified portfolio of companies with above-average growth prospects,
with better-than-average value than the stock market as a whole.
WHAT IS YOUR OUTLOOK FOR THE FUND?
We expect the economy to grow slowly in the second half of 1996, followed by
continued growth at a subdued rate of 2% to 3% in 1997. Housing, auto sales and
other interest-rate-sensitive segments of the economy will probably slow due to
the effects of higher interest rates earlier in the year. We also expect
longer-term interest rates to decline to a range of 6.25% to 6.5%. Inflation
fears so far have proved unwarranted. Over the next few years, we are optimistic
about stocks and the U.S. economy since we expect the economies of our trading
partners in Europe and Japan to continue to strengthen. We believe that this
will be bullish for U.S. exports at a time when the U.S. consumer seems pretty
heavily burdened with debt.
As of July 31, 1996, the fund's top five equity holdings were General Electric
(1.58%), Anheuser-Busch (1.15%), Intel (1.05%), Corning Glass (.99%), and
BankAmerica (.95%).+
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+ The composition of the fund's holdings is subject to change.
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<TABLE>
HIGHMARK BALANCED FUND
<CAPTION>
GROWTH OF A $10,000 INVESTMENT LEHMAN
BROTHERS MORNINGSTAR
MEASUREMENT PERIOD INVESTOR FIDUCIARY AGGREGATE BALANCED
(FISCAL YEAR COVERED) SHARES SHARES S&P 500 BOND INDEX
<S> <C> <C> <C> <C> <C>
11/14/93 9551 10000 10000 10000 10000
7/31/94 9527 10026 10003 9773 9929
7/31/95 11013 11592 12613 10767 11468
7/31/96 12218 12874 14706 11361 12560
</TABLE>
<TABLE>
<CAPTION>
HighMark Balanced Fund
Performance Average Annual
Total Return as of 7/31/96
----------------------------
1 Year Since
Inception
(11/14/93)
<S> <C> <C>
- ------------------------------------------------------
Investor* 5.93% 7.66%
Fiduciary 11.06% 9.75%
</TABLE>
The performance of the HighMark Balanced Fund is measured against the S&P 500
Stock Index, an unmanaged index generally considered to be representative of the
U.S. stock market, the Lehman Brothers Aggregate Bond Index, an unmanaged
broad-based index generally considered to be representative of the bond market
as a whole, and the Morningstar Balanced Average, a composite of managed
balanced funds. These indices do not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. However, the fund's performance and the Morningstar Balanced Average
reflect these value-added services. Past performance is not predictive of future
results. The investment return and NAV will fluctuate, so that an investor's
shares, when redeemed, may be worth more or less than the original cost.
- ---------------
* Reflects 4.50% sales charge.
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<PAGE> 19
HIGHMARK BOND FUND
For the year ended July 31, 1996, the HighMark Bond Fund produced a total return
of 4.95% (Investor Shares at NAV). In comparison, the Lehman Brothers Aggregate
Bond Index was up 5.52%.
The HighMark Bond Fund is managed by E. Jack Montgomery, CFA. Mr. Montgomery,
who holds an MBA from the University of Oregon and a bachelor's degree from the
University of Oklahoma, has 15 years' experience in financial analysis and
portfolio management.
HOW WOULD YOU ASSESS THE PERFORMANCE OF THE HIGHMARK BOND FUND?
The fiscal year ended July 31, 1996, can be divided into two discrete periods.
In the first half, interest rates fell, and we outperformed our benchmark.
Because of our longer-than-average duration, we tend to do better in a falling
interest-rate environment. (Duration measures the sensitivity of a portfolio to
changes in interest rates. The value of a share in a longer-duration portfolio
will go up more than a share in a short-duration fund when interest rates fall;
it will fall more steeply when interest rates rise.) During the second half of
the fiscal year, interest rates rose, and we underperformed for the same reasons
that we outperformed earlier. When interest rates are rising, as they did
between February and July 1996, a longer duration is a disadvantage.
WHY HAVE YOU CONTINUED TO MAINTAIN A LONG DURATION?
It is our continuing belief that inflation is not going to be a problem in the
immediate future. Last year, the economy surprised us on the downside. It was
slower than expected, but this year the opposite has happened. The job numbers
have been particularly strong. With low unemployment and job growth healthy,
investors started paying attention to wages. But the latest wage numbers are
still very benign. The year-over-year growth in average hourly earnings is just
2.9%. Even if inflation is 3%, long-term bonds at 7% are a pretty good value.
Our duration at 5.2 years is about 10% beyond the index, so it's not a huge bet.
We're watching these things very carefully, and our strategy is subject to
change. But so far, we're not convinced that we have a problem on our hands.
HOW HAS THE PORTFOLIO SHIFTED IN TERMS OF SECTORS?
In the last six months, corporate bonds have been reduced by about 5%. Some of
that cash has been redeployed into mortgage-backed securities, which offer more
yield and currently represent more value than corporate bonds. Mortgages have
been the best-performing sector this year, primarily due to their shorter
duration and higher yield. Right now, the yield spread between corporates and
U.S. Treasuries is very narrow. A 30-year AAA-rated corporate bond offers only
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<PAGE> 20
half a percentage point more than a comparable U.S. Treasury bond. And within
the corporate market, there's very little difference in yield between a AAA and
a AA credit. As a result, we've opted for higher quality. Treasuries and
mortgage-backed and asset-backed securities, all rated AAA, represent about 75%
of the portfolio. The portfolio currently does not contain any bonds rated BBB.
If the economy weakens, we believe that the corporate bond market will likely
suffer. As a result, the corporate bonds that we own have short maturities. We
are focusing our exposure on longer maturities in the U.S. Treasury market.
WHAT IS YOUR OUTLOOK FOR THE REST OF 1996?
A rally in the bond market started July 31, when bond yields fell from 7.2% to
about 6.7% in a period of three days. That was the result of
weaker-than-expected employment data. In addition, average hourly wage inflation
for July was revised downward to 2.8%. We don't think inflation is going to be a
problem, nor do we see the economy running away on the upside, so interest rates
should remain well behaved. One engine of the economy, government spending, is
down sharply. Excluding interest payments, the federal budget is actually in a
surplus by $100 billion. We're no longer creating new federal spending programs
with money we don't have. The environment has changed on spending and that's
good.
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<PAGE> 21
<TABLE>
HIGHMARK BOND FUND
<CAPTION>
GROWTH OF A $10,000 INVESTMENT
MORNINGSTAR
CORPORATE LEHMAN
BOND HIGH BROTHERS
MEASUREMENT PERIOD INVESTOR FIDUCIARY QUALITY AGGREGATE
(FISCAL YEAR COVERED) SHARES SHARES INDEX BOND INDEX
<S> <C> <C> <C> <C>
2/84 9695 10000 10000 10000
7/84 9479 9778 10077 10275
7/85 11804 12175 12225 12733
7/86 14947 15417 14436 15470
7/87 15186 15664 15140 16180
7/88 16073 16579 16119 17394
7/89 18450 19030 18127 200039
7/90 19468 20081 19231 21452
7/91 21218 21886 20994 23749
7/92 24280 25044 23768 27262
7/93 26725 27566 25693 30037
7/94 25707 26699 25832 30061
7/95 28096 29217 27820 33098
7/96 29488 30622 29203 34925
</TABLE>
<TABLE>
<CAPTION>
HighMark Bond Fund
Performance Average Annual
Total Return as of 7/31/96
----------------------------------------
1 Year 5 Years 10 Years Since
Inception
(2/15/84)
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------
Investor* 1.79% 6.15% 6.71% 9.06%
Fiduciary 4.81% 6.95% 7.10% 9.39%
</TABLE>
The performance of the HighMark Bond Fund is measured against the Lehman
Brothers Aggregate Bond Index, an unmanaged broad-based index generally
considered to be representative of the bond market as a whole, and the
Morningstar Corporate Bond High Quality Average, a composite of managed
corporate bond funds. The index does not reflect the deduction of expenses
associated with a mutual fund, such as investment management and fund accounting
fees. However, the fund's performance and the Morningstar Corporate Bond
High Quality Average reflect these value-added services. Past performance is not
predictive of future results. The investment return and NAV will fluctuate, so
that an investor's shares, when redeemed, may be worth more or less than the
original cost.
- ---------------
* Reflects 3.00% sales charge.
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<PAGE> 22
HIGHMARK GOVERNMENT BOND FUND
For the year ended July 31, 1996, the HighMark Government Bond Fund, which
invests primarily in U.S. Government securities maturing in one to five years,
produced a total return of 4.79% (Investor Shares at NAV). In comparison, the
Lehman Brothers Mutual Fund Short Government Index returned 5.34%.
The HighMark Government Bond Fund is managed by Bill Howard, who has 15 years'
experience in the investment business and holds an MBA from Golden Gate
University and a bachelor's degree from Seattle University.
HOW WOULD YOU ASSESS THE FUND'S PERFORMANCE?
Interest rates rose sharply beginning in February, and that had a negative
impact on the bond market as a whole, including the Government Bond Fund. To
offset rising interest rates, we shortened the maturity of the bond portfolio.
However, the fund still underperformed because the portfolio has a longer
average maturity than the benchmark. On the plus side, we hope the fund will be
able to take advantage of the recent rally and outperform the market during the
early part of the new fiscal year.
WHAT WAS YOUR STRATEGY DURING THE PAST 12 MONTHS?
The rationale for the sell-off in the market was a perception that the economy
was far more robust than had been expected and was going to remain so for an
extended period of time. However, our outlook on the economy was basically
unchanged, and trying to time the market by picking its peaks and valleys is a
loser's game. So we didn't take any significant action other than let the
portfolio naturally become shorter through the passage of time. If you try to
time the market by trying to shorten the portfolio through trading activity,
then you've got to lengthen it once you're into a rally. That process of
shortening and lengthening is extremely difficult to do effectively, and it's
very costly from a trading standpoint.
WHAT IS YOUR OUTLOOK FOR THE REST OF THE YEAR?
We think the interest-rate increases earlier in the year will keep the economy
from overheating and getting too far ahead of itself. Indeed, recent employment
and inflation data have taken a lot of fear out of the market.
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<PAGE> 23
<TABLE>
HIGHMARK GOVERNMENT BOND FUND
GROWTH OF A $10,000 INVESTMENT
<CAPTION>
MEASUREMENT PERIOD INVESTOR FIDUCIARY LEHMAN BROTHERS
(FISCAL YEAR COVERED) SHARES SHARES MUTUAL FUND
SHORT GOVT.
INDEX
<S> <C> <C> <C>
11/14/93 9699 10000 10000
7/31/94 9465 9841 9868
7/31/95 10172 10560 10633
7/31/96 10659 11061 11203
</TABLE>
<TABLE>
<CAPTION>
HighMark Government Bond Fund
Performance Average Annual
Total Return as of 7/31/96
--------------------------------
1 Year Since
Inception
(11/14/93)
<S> <C> <C>
- --------------------------------------------------------
Investor* 1.66% 2.38%
Fiduciary 4.75% 3.78%
</TABLE>
The performance of the HighMark Government Bond Fund is measured against the
Lehman Brothers Mutual Fund Short Government Index, an unmanaged broad-based
index generally considered to be representative of U.S. Government securities
with maturities of one to five years. The index does not reflect the deduction
of expenses associated with a mutual fund, such as investment management and
fund accounting fees. However, the fund's performance reflects these value-added
services. Past performance is not predictive of future results. The investment
return and NAV will fluctuate, so that an investor's shares, when redeemed, may
be worth more or less than the original cost.
- ---------------
* Reflects 3.00% sales charge.
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<PAGE> 24
HIGHMARK MONEY MARKET FUNDS
<TABLE>
<CAPTION>
7 DAYS ENDING 7/31/96
EFFECTIVE*
YIELD YIELD*
INVESTOR FIDUCIARY INVESTOR FIDUCIARY
HIGHMARK FUND CLASS CLASS CLASS CLASS
<S> <C> <C> <C> <C>
Diversified Obligations Fund 4.87 4.87 4.76 4.76
U.S. Government Obligations Fund 4.71 4.72 4.60 4.61
100% U.S. Treasury Obligations Fund 4.56 4.56 4.46 4.46
California Tax-Free Fund 2.75 2.75 2.71 2.71
Tax-Free Fund 2.74 2.74 2.70 2.70
</TABLE>
* Effective yield assumes reinvestment of dividends. Yields shown are annualized
7-day effective and 7-day yields for the period ending July 31, 1996. Past
performance is not predictive of future performance as yields on money market
funds fluctuate daily. An investment in any of the HighMark money market funds
is neither insured nor guaranteed by the U.S. Government. Although such funds
are managed to maintain a stable net asset value of $1.00 per share, there can
be no assurance that they will be able to do so.
Some of the fees of the California Tax-Free Fund and the Tax-Free Fund are
currently being waived, resulting in higher yields in the funds than would
occur if full fees were charged. If full fees had been charged, the 7-day
effective and 7-day yields for the Investor Shares of the California Tax-Free
Fund would have been 2.54% and 2.51% and 2.52% and 2.49% for the Fiduciary
Shares, respectively, for the period ending July 31, 1996. If full fees had
been charged, the 7-day effective and 7-day yields for the Investor Shares of
the Tax-Free Fund would have been 2.58% and 2.55% and 2.45% and 2.42% for the
Fiduciary Shares, respectively, for the period ending July 31, 1996.
THE TAXABLE MONEY MARKET FUNDS
For the year ended July 31, 1996, the Diversified Obligations Fund, which holds
primarily certificates of deposit, commercial paper and repurchase agreements,
produced a total return of 5.01%. The U.S. Government Obligations Fund,
comprised mostly of U.S. Government agency issues, produced a total return of
4.86% for Investor Shares and 4.88% for Fiduciary Shares. The 100% U.S. Treasury
Obligations Fund produced a total return of 4.74%.
In December and January, the Federal Reserve Board reduced short-term interest
rates by a total of half a percentage point to stimulate the economy. By early
spring, it became apparent that the economy was indeed robust. When interest
rates on longer-term securities began to rise, the money market funds took on a
number of longer positions, extending average maturities, which added
significantly to each portfolio's yield.
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<PAGE> 25
Since recent economic data suggest that the economy is moderating, it currently
appears that the Federal Reserve Board will not have to raise short-term rates.
THE TAX-FREE MONEY MARKET FUNDS+
For the year ended July 31, 1996, the California Tax-Free Money Market Fund
produced a total return of 2.91%. The Tax-Free Money Market Fund, which includes
municipal bonds issued throughout the country, produced a total return of 2.87%.
Both funds currently maintain maturities in the 20-25-day range to enhance
liquidity. Most of the bonds held in these funds are credit-enhanced, meaning
they are insured or backed by irrevocable bank letters of credit.
- ---------------
+ Some or all of the income may be subject to certain state and local taxes,
and, depending on a shareholder's tax bracket, to the federal alternative
minimum tax.
The HighMark Group is a family of mutual funds distributed by BISYS Fund
Services, independent of Union Bank of California, N.A., and its affiliates.
Certain fees of some funds are currently being waived, which may result in
higher fund total returns than would occur if full fees were charged. Past
performance is not predictive of future results. The composition of the funds'
holdings is subject to change.
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<PAGE> 26
REPORT OF INDEPENDENT AUDITORS'
TO THE BOARD OF TRUSTEES AND SHAREHOLDERS OF
THE HIGHMARK GROUP
We have audited the accompanying statements of assets and liabilities including
the schedules of portfolio investments of The HighMark Group (the "Funds"),
including Diversified Obligations Fund, U.S. Government Obligations Fund, 100%
U.S. Treasury Obligations Fund, California Tax-Free Fund, Tax-Free Fund, Bond
Fund, Government Bond Fund, Income Equity Fund, Balanced Fund, Growth Fund, and
Income & Growth Fund, as of July 31, 1996, the related statements of operations,
statements of changes in net assets and the financial highlights for the year
then ended. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements based on our audits. The financial
highlights for the other years presented and the statement of changes in net
assets for the year ended July 31, 1995 were audited by other auditors whose
report, dated September 22, 1995, expressed an unqualified opinion on those
statements.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1996 by correspondence with the Funds' custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Funds at July 31, 1996, the results of
their operations, the changes in their net assets, and the financial highlights
for the year then ended, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Dayton, Ohio
September 13, 1996
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<PAGE> 27
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
100% U.S.
DIVERSIFIED U.S. GOVERNMENT TREASURY CALIFORNIA
OBLIGATIONS OBLIGATIONS OBLIGATIONS TAX-FREE TAX-FREE
FUND FUND FUND FUND FUND
----------- --------------- ----------- ----------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, at amortized cost............ $ 413,900 $ 188,438 $ 274,306 $ 148,504 $43,994
Repurchase agreements, at cost.......................... 21,502 39,183 -- -- --
-------- -------- -------- -------- -------
Total Investments..................................... 435,402 227,621 274,306 148,504 43,994
Cash.................................................... 3 16 -- 897 215
Interest receivable..................................... 2,256 557 910 432 158
Receivable from brokers for investments sold............ -- -- -- 2,500 --
Prepaid expenses and other assets....................... 14 17 12 10 1
-------- -------- -------- -------- -------
Total Assets........................................ 437,675 228,211 275,228 152,343 44,368
-------- -------- -------- -------- -------
LIABILITIES:
Distributions payable................................... 1,690 863 1,088 287 78
Payable to brokers for investments purchased............ 5,000 -- -- -- --
Accrued expenses and other payables:
Investment advisory fees.............................. 143 76 98 31 12
Administration fees................................... 19 10 12 5 1
Shareholder services fees............................. 1 1 1 1 --
Custodian, accounting and transfer agent fees......... 26 26 13 14 13
Other................................................. 69 38 53 26 7
-------- -------- -------- -------- -------
Total Liabilities................................... 6,948 1,014 1,265 364 111
-------- -------- -------- -------- -------
NET ASSETS:
Capital................................................. 431,097 227,373 273,958 152,028 44,273
Accumulated undistributed net realized gains (losses) on
investment transactions............................... (370) (176) 5 (49) (16)
-------- -------- -------- -------- -------
Net Assets.......................................... $ 430,727 $ 227,197 $ 273,963 $ 151,979 $44,257
======== ======== ======== ======== =======
Net Assets
Investor.............................................. $ 185,952 $ 75,714 $ 100,623 $ 53,627 $16,148
Fiduciary............................................. 244,775 151,483 173,340 98,352 28,109
-------- -------- -------- -------- -------
Total............................................... $ 430,727 $ 227,197 $ 273,963 $ 151,979 $44,257
======== ======== ======== ======== =======
Outstanding units of beneficial interest (shares)
Investor.............................................. 186,031 75,727 100,626 53,639 16,153
Fiduciary............................................. 245,066 151,646 173,332 98,389 28,120
-------- -------- -------- -------- -------
Total............................................... 431,097 227,373 273,958 152,028 44,273
======== ======== ======== ======== =======
Net asset value -- offering and redemption price per
share
Investor.............................................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
Fiduciary............................................. 1.00 1.00 1.00 1.00 1.00
======== ======== ======== ======== =======
</TABLE>
See notes to financial statements.
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<PAGE> 28
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
INCOME
BOND GOVERNMENT EQUITY
FUND BOND FUND FUND
-------- ---------- ----------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value (cost $59,354; $4,334; and $232,422,
respectively)............................................................... $ 58,799 $4,295 $ 266,771
Repurchase agreements, at cost................................................ 2,237 121 4,858
------- ------ --------
Total Investments......................................................... 61,036 4,416 271,629
Interest and dividends receivable............................................. 912 94 796
Receivable from brokers for investments sold.................................. -- -- 2,930
Prepaid expenses and other assets............................................. 2 12 6
------- ------ --------
Total Assets.............................................................. 61,950 4,522 275,361
------- ------ --------
LIABILITIES:
Distributions payable......................................................... 319 24 586
Payable for capital shares redeemed........................................... 42 -- --
Payable to brokers for investments purchased.................................. -- -- 1,726
Accrued expenses and other payables:
Investment advisory fees.................................................... 23 -- 154
Administration fees......................................................... 2 -- 12
Custodian, accounting and transfer agent fees............................... 15 5 21
Other....................................................................... 18 3 59
------- ------ --------
Total Liabilities......................................................... 419 32 2,558
------- ------ --------
NET ASSETS:
Capital....................................................................... 65,254 4,837 223,480
Net unrealized appreciation (depreciation) on investments..................... (555) (39) 34,349
Undistributed net investment income........................................... 32 2 --
Accumulated undistributed net realized gains (losses) on investment
transactions................................................................ (3,200) (310) 14,974
------- ------ --------
Net Assets................................................................ $ 61,531 $4,490 $ 272,803
======= ====== ========
Net Assets
Investor.................................................................... $ 1,157 $1,104 $ 10,143
Fiduciary................................................................... 60,374 3,386 262,660
------- ------ --------
Total..................................................................... $ 61,531 $4,490 $ 272,803
======= ====== ========
Outstanding units of beneficial interest (shares)
Investor.................................................................... 114 119 710
Fiduciary................................................................... 5,900 362 18,413
------- ------ --------
Total..................................................................... 6,014 481 19,123
======= ====== ========
Net asset value
Investor -- redemption price per share...................................... $ 10.15 $ 9.28 $ 14.29
Fiduciary -- offering and redemption price per share........................ 10.23 9.35 14.27
======= ====== ========
Maximum Sales Charge (Investor Shares)........................................ 3.00% 3.00% 4.50%
======= ====== ========
Maximum Offering Price (100%/(100%-Maximum Sales Charge) of net asset value
adjusted to nearest cent) per share (Investor Shares)....................... $ 10.46 $ 9.57 $ 14.96
======= ====== ========
</TABLE>
See notes to financial statements.
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<PAGE> 29
STATEMENTS OF ASSETS AND LIABILITIES
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
INCOME &
BALANCED GROWTH GROWTH
FUND FUND FUND
-------- ------- --------
<S> <C> <C> <C>
ASSETS:
Investments in securities, at value (cost $32,159; $39,610; and $4,969,
respectively).................................................................. $36,273 $43,527 $6,022
Repurchase agreements, at cost................................................... 3,787 900 386
--------- --------- -------
Total Investments............................................................ 40,060 44,427 6,408
Interest and dividends receivable................................................ 278 55 12
Receivable from brokers for investments sold..................................... -- 216 --
Prepaid expenses................................................................. 9 5 5
--------- --------- -------
Total Assets................................................................. 40,347 44,703 6,425
--------- --------- -------
LIABILITIES:
Distributions payable............................................................ 118 28 9
Payable to brokers for investments purchased..................................... -- 301 --
Accrued expenses and other payables:
Investment advisory fees....................................................... 20 21 --
Administration fees............................................................ 2 2 --
Custodian, accounting and transfer agent fees.................................. 5 5 6
Other.......................................................................... 6 8 3
--------- --------- -------
Total Liabilities............................................................ 151 365 18
--------- --------- -------
NET ASSETS:
Capital.......................................................................... 35,830 38,047 5,100
Net unrealized appreciation on investments....................................... 4,114 3,917 1,053
Undistributed net investment income.............................................. 1 -- --
Accumulated undistributed net realized gains on investment transactions.......... 251 2,374 254
--------- --------- -------
Net Assets................................................................... $40,196 $44,338 $6,407
========= ========= =======
Net Assets
Investor....................................................................... $ 694 $ 2,843 $ 394
Fiduciary...................................................................... 39,502 41,495 6,013
--------- --------- -------
Total........................................................................ $40,196 $44,338 $6,407
========= ========= =======
Outstanding units of beneficial interest (shares)
Investor....................................................................... 60 226 31
Fiduciary...................................................................... 3,392 3,300 480
--------- --------- -------
Total........................................................................ 3,452 3,526 511
========= ========= =======
Net asset value
Investor -- redemption price per share......................................... $ 11.56 $ 12.60 $12.52
Fiduciary -- offering and redemption price per share........................... 11.64 12.58 12.51
========= ========= =======
Maximum Sales Charge (Investor Shares)........................................... 4.50% 4.50% 4.50%
========= ========= =======
Maximum Offering Price (100%/(100%-Maximum Sales Charge) of net asset value
adjusted to nearest cent) per share (Investor Shares).......................... $ 12.10 $ 13.19 $13.11
========= ========= =======
</TABLE>
See notes to financial statements.
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<PAGE> 30
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
U.S. 100% U.S.
DIVERSIFIED GOVERNMENT TREASURY CALIFORNIA
OBLIGATIONS OBLIGATIONS OBLIGATIONS TAX-FREE TAX-FREE
FUND FUND FUND FUND FUND
----------- ---------- ----------- ---------- --------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Interest income.................................. $22,468 $ 13,070 $16,193 $5,301 $1,554
------- ------- ------- ------ ------
Total Income................................. 22,468 13,070 16,193 5,301 1,554
------- ------- ------- ------ ------
EXPENSES:
Investment advisory fees......................... 1,591 944 1,203 618 172
Administration fees.............................. 795 472 602 309 86
Distribution fees (Investor shares).............. 396 194 267 122 36
Shareholder services fees........................ 994 590 752 386 108
Custodian and accounting fees.................... 264 181 177 121 83
Legal and audit fees............................. 63 37 52 29 5
Trustees' fees and expenses...................... 11 7 9 5 1
Transfer agent fees.............................. 89 44 50 47 34
Registration and filing fees..................... 47 16 28 5 4
Printing costs................................... 51 69 42 23 6
Other............................................ 13 7 9 4 2
------- ------- ------- ------ ------
Total Expenses............................... 4,314 2,561 3,191 1,669 537
Expenses voluntarily reduced..................... (1,327) (739) (978) (824) (207)
------- ------- ------- ------ ------
Net Expenses................................. 2,987 1,822 2,213 845 330
------- ------- ------- ------ ------
Net Investment Income............................ 19,481 11,248 13,980 4,456 1,224
------- ------- ------- ------ ------
REALIZED GAINS ON INVESTMENTS:
Net realized gains (losses) on investments....... 16 15 (51) -- --
------- ------- ------- ------ ------
Change in net assets resulting from operations... $19,497 $ 11,263 $13,929 $4,456 $1,224
======= ======= ======= ====== ======
</TABLE>
See notes to financial statements.
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<PAGE> 31
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
GOVERNMENT INCOME
BOND BOND EQUITY
FUND FUND FUND
------ ---------- ----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income...................................................... $4,316 $304 $ 425
Dividend income...................................................... -- -- 9,943
------ ---- -------
Total Income....................................................... 4,316 304 10,368
------ ---- -------
EXPENSES:
Investment advisory fees............................................. 534 43 1,755
Administration fees.................................................. 123 9 521
Distribution fees (Investor shares).................................. 2 2 20
Shareholder services fees............................................ 154 11 651
Custodian and accounting fees........................................ 85 64 174
Legal and audit fees................................................. 10 3 44
Trustees' fees and expenses.......................................... 2 -- 7
Transfer agent fees.................................................. 54 32 106
Registration and filing fees......................................... 6 1 19
Printing costs....................................................... 22 2 47
Other................................................................ 3 -- 8
------ ---- -------
Total Expenses................................................... 995 167 3,352
Expenses voluntarily reduced......................................... (445) (87) (666)
------ ---- -------
Total expenses before expense reimbursements..................... 550 80 2,686
Expense reimbursements........................................... -- (43) --
------ ---- -------
Net Expenses..................................................... 550 37 2,686
------ ---- -------
Net Investment Income................................................ 3,766 267 7,682
------ ---- -------
REALIZED/UNREALIZED GAINS (LOSSES) ON INVESTMENTS:
Net realized gains (losses) on investment transactions............... (369) (8) 19,384
Net change in unrealized appreciation (depreciation) on
investments........................................................ (465) (67) 13,911
------ ---- -------
Net realized/unrealized gains (losses) on investments................ (834) (75) 33,295
------ ---- -------
Change in net assets resulting from operations....................... $2,932 $192 $ 40,977
====== ==== =======
</TABLE>
See notes to financial statements.
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29
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<PAGE> 32
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
INCOME &
BALANCED GROWTH GROWTH
FUND FUND FUND
-------- ------ --------
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income........................................................ $ 996 $ 82 $ 21
Dividend income........................................................ 549 607 163
------ ------ ------
Total Income......................................................... 1,545 689 184
------ ------ ------
EXPENSES:
Investment advisory fees............................................... 348 362 62
Administration fees.................................................... 70 72 12
Distribution fees (Investor shares).................................... 2 5 1
Shareholder services fees.............................................. 87 90 16
Custodian and accounting fees.......................................... 64 78 74
Legal and audit fees................................................... 6 6 3
Trustees' fees and expenses............................................ 1 1 --
Transfer agent fees.................................................... 33 42 33
Registration and filing fees........................................... 3 4 1
Printing costs......................................................... 6 6 --
Other.................................................................. 1 2 --
------ ------ ------
Total Expenses..................................................... 621 668 202
Expenses voluntarily reduced........................................... (293) (333 ) (119)
------ ------ ------
Total expenses before expense reimbursements....................... 328 335 83
Expense reimbursements............................................. -- -- (23)
------ ------ ------
Net Expenses....................................................... 328 335 60
------ ------ ------
Net Investment Income.................................................. 1,217 354 124
------ ------ ------
REALIZED/UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment transactions.......................... 446 3,272 628
Net change in unrealized appreciation on investments................... 1,716 155 56
------ ------ ------
Net realized/unrealized gains on investments........................... 2,162 3,427 684
------ ------ ------
Change in net assets resulting from operations......................... $3,379 $3,781 $808
====== ====== ======
</TABLE>
See notes to financial statements.
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30
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<PAGE> 33
STATEMENTS OF CHANGES IN NET ASSETS
Amounts in Thousands
<TABLE>
<CAPTION>
DIVERSIFIED U.S. GOVERNMENT
OBLIGATIONS FUND OBLIGATIONS FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income.......................... $ 19,481 $ 17,476 $ 11,248 $ 8,697
Net realized gains (losses) on investment
transactions................................. 16 (29) 15 34
----------- ----------- ----------- -----------
Change in net assets resulting from operations... 19,497 17,447 11,263 8,731
----------- ----------- ----------- -----------
DISTRIBUTIONS TO INVESTOR SHAREHOLDERS:
From net investment income..................... (7,738) (5,516) (3,707) (2,084)
DISTRIBUTIONS TO FIDUCIARY SHAREHOLDERS:
From net investment income..................... (11,743) (11,960) (7,541) (6,613)
----------- ----------- ----------- -----------
Change in net assets from shareholder
distributions.................................. (19,481) (17,476) (11,248) (8,697)
----------- ----------- ----------- -----------
CAPITAL TRANSACTIONS:
Proceeds from shares issued.................... 1,943,043 1,562,243 1,933,728 1,760,626
Dividends reinvested........................... 7,326 4,915 3,487 1,950
Cost of shares redeemed........................ (1,918,325) (1,473,121) (1,918,254) (1,740,538)
----------- ----------- ----------- -----------
Change in net assets from share transactions..... 32,044 94,037 18,961 22,038
----------- ----------- ----------- -----------
Change in net assets............................. 32,060 94,008 18,976 22,072
NET ASSETS:
Beginning of period............................ 398,667 304,659 208,221 186,149
----------- ----------- ----------- -----------
End of period.................................. $ 430,727 $ 398,667 $ 227,197 $ 208,221
=========== =========== =========== ===========
</TABLE>
See notes to financial statements.
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31
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<PAGE> 34
STATEMENTS OF CHANGES IN NET ASSETS
Amounts in Thousands
<TABLE>
<CAPTION>
100% U.S. TREASURY CALIFORNIA
OBLIGATIONS FUND TAX-FREE FUND TAX-FREE FUND
----------------------- ---------------------- ----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995 1996 1995
----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income........... $ 13,980 $ 10,640 $ 4,456 $ 4,619 $ 1,224 $ 1,405
Net realized gains (losses) on
investment transactions....... (51) 57 -- (23) -- (13)
---------- --------- --------- --------- --------- ---------
Change in net assets resulting
from operations................. 13,929 10,697 4,456 4,596 1,224 1,392
---------- --------- --------- --------- --------- ---------
DISTRIBUTIONS TO INVESTOR
SHAREHOLDERS:
From net investment income...... (4,948) (2,706) (1,404) (1,089) (400) (422)
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment income...... (9,032) (7,934) (3,052) (3,530) (824) (983)
---------- --------- --------- --------- --------- ---------
Change in net assets from
shareholder distributions....... (13,980) (10,640) (4,456) (4,619) (1,224) (1,405)
---------- --------- --------- --------- --------- ---------
CAPITAL TRANSACTIONS:
Proceeds from shares issued..... 1,004,680 736,668 343,893 354,814 132,220 156,974
Dividends reinvested............ 4,571 2,106 1,425 1,035 419 429
Cost of shares redeemed......... (1,014,501) (659,445) (339,625) (356,054) (131,897) (164,192)
---------- --------- --------- --------- --------- ---------
Change in net assets from share
transactions.................... (5,250) 79,329 5,693 (205) 742 (6,789)
---------- --------- --------- --------- --------- ---------
Change in net assets.............. (5,301) 79,386 5,693 (228) 742 (6,802)
NET ASSETS:
Beginning of period............. 279,264 199,878 146,286 146,514 43,515 50,317
---------- --------- --------- --------- --------- ---------
End of period................... $ 273,963 $ 279,264 $ 151,979 $ 146,286 $ 44,257 $ 43,515
========== ========= ========= ========= ========= =========
</TABLE>
See notes to financial statements.
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32
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<PAGE> 35
STATEMENTS OF CHANGES IN NET ASSETS
Amounts in Thousands
<TABLE>
<CAPTION>
BOND FUND GOVERNMENT BOND FUND INCOME EQUITY FUND
---------------------- ---------------------- ----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............ $ 3,766 $ 3,824 $ 267 $ 294 $ 7,682 $ 7,595
Net realized gains (losses) on
investment transactions........ (369) (1,512) (8) (55) 19,384 8,944
Net change in unrealized
appreciation (depreciation) on
investments.................... (465) 3,052 (67) 79 13,911 17,456
-------- -------- ------- -------- -------- --------
Change in net assets resulting from
operations....................... 2,932 5,364 192 318 40,977 33,995
-------- -------- ------- -------- -------- --------
DISTRIBUTIONS TO INVESTOR
SHAREHOLDERS:
From net investment income....... (63) (18) (53) (3) (239) (43)
From net realized gains on
investments.................... (1) -- -- -- (277) (16)
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment income....... (3,703) (3,806) (214) (291) (7,443) (7,552)
From net realized gains on
investments.................... (32) -- (2) -- (11,279) (7,309)
-------- -------- ------- -------- -------- --------
Change in net assets from
shareholder distributions........ (3,799) (3,824) (269) (294) (19,238) (14,920)
-------- -------- ------- -------- -------- --------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...... 15,630 11,393 1,352 1,376 63,282 36,043
Dividends reinvested............. 3,043 3,125 266 297 17,495 13,535
Cost of shares redeemed.......... (16,591) (19,934) (1,035) (2,884) (54,919) (56,799)
-------- -------- ------- -------- -------- --------
Change in net assets from share
transactions..................... 2,082 (5,416) 583 (1,211) 25,858 (7,221)
-------- -------- ------- -------- -------- --------
Change in net assets............... 1,215 (3,876) 506 (1,187) 47,597 11,854
NET ASSETS:
Beginning of period.............. 60,316 64,192 3,984 5,171 225,206 213,352
-------- -------- ------- -------- -------- --------
End of period.................... $ 61,531 $ 60,316 $4,490 $ 3,984 $272,803 $225,206
======== ======== ======= ======== ======== ========
</TABLE>
See notes to financial statements.
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33
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<PAGE> 36
STATEMENTS OF CHANGES IN NET ASSETS
Amounts in Thousands
<TABLE>
<CAPTION>
BALANCED FUND GROWTH FUND INCOME & GROWTH FUND
---------------------- ---------------------- ----------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, JULY 31, JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995 1996 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
FROM INVESTMENT ACTIVITIES:
OPERATIONS:
Net investment income............ $ 1,217 $ 992 $ 354 $ 272 $ 124 $ 133
Net realized gains on investment
transactions................... 446 21 3,272 915 628 42
Net change in unrealized
appreciation on investments.... 1,716 2,804 155 3,752 56 961
------- ------- ------- ------- ------ -------
Change in net assets resulting from
operations....................... 3,379 3,817 3,781 4,939 808 1,136
------- ------- ------- ------- ------ -------
DISTRIBUTIONS TO INVESTOR
SHAREHOLDERS:
From net investment income....... (23) (3) (21) (5) (6) (1)
From net realized gains on
investments.................... -- -- (94) (3) (14) --
DISTRIBUTIONS TO FIDUCIARY
SHAREHOLDERS:
From net investment income....... (1,194) (989) (333) (267) (118) (132)
From net realized gains on
investments.................... (2) -- (1,566) (240) (314) --
------- ------- ------- ------- ------ -------
Change in net assets from
shareholder distributions........ (1,219) (992) (2,014) (515) (452) (133)
------- ------- ------- ------- ------ -------
CAPITAL TRANSACTIONS:
Proceeds from shares issued...... 15,840 10,356 19,239 9,727 2,923 1,771
Dividends reinvested............. 1,172 986 1,965 503 434 127
Cost of shares redeemed.......... (9,404) (9,590) (4,947) (3,594) (4,190) (788)
------- ------- ------- ------- ------ -------
Change in net assets from share
transactions..................... 7,608 1,752 16,257 6,636 (833) 1,110
------- ------- ------- ------- ------ -------
Change in net assets............... 9,768 4,577 18,024 11,060 (477) 2,113
NET ASSETS:
Beginning of period.............. 30,428 25,851 26,314 15,254 6,884 4,771
------- ------- ------- ------- ------ -------
End of period.................... $ 40,196 $ 30,428 $ 44,338 $ 26,314 $6,407 $6,884
======= ======= ======= ======= ====== =======
</TABLE>
See notes to financial statements.
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34
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<PAGE> 37
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
<S> <C> <C> <C>
CERTIFICATES OF DEPOSIT (23.4%):
Euro Certificates of Deposit (3.7%):
$ 5,000 Abbey National Treasury
Services, 5.72%, 9/11/96... $ 5,000
6,000 Abbey National Treasury
Services, 5.22%, 3/4/97 5,983
5,000 Bayerische Vereinsbank,
5.49%, 11/13/96 5,001
--------
15,984
--------
Yankee Certificates of Deposit (19.7%):
10,000 ABN-AMRO Bank N.V., 5.53%,
3/18/97.................... 9,996
5,000 Commerzbank, 5.66%, 4/24/97.. 4,997
10,000 Dresdner Bank, 5.05%,
2/26/97.................... 9,999
10,000 Deutsche Bank, 5.57%,
3/31/97.................... 10,001
5,000 Rabobank Nederland N.V.,
5.82% 8/14/96.............. 5,000
10,000 Sanwa Bank Ltd., 5.62%,
10/16/96................... 10,002
10,000 Society Generale, 5.65%,
4/1/97..................... 9,993
5,000 Society Generale, 5.80%,
4/15/97.................... 5,002
10,000 Sumitomo Bank Ltd., 5.48%,
8/26/96.................... 10,000
5,000 Sumitomo Bank Ltd., 5.46%,
9/3/96..................... 5,000
5,000 Sumitomo Bank Ltd., 6.01%,
10/30/96................... 5,000
--------
84,990
--------
Total Certificates of Deposit 100,974
--------
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------
<S> <C> <C> <C>
COMMERCIAL PAPER/MASTER DEMAND NOTES (67.5%):
Automotive (6.9%):
$ 5,000 Daimler-Benz North America
Corp., 5.35%, 1/6/97....... $ 4,876
5,000 Daimler-Benz North America
Corp., 5.53%, 1/13/97...... 4,873
5,000 Ford Motor Credit Corp.,
5.27%, 8/13/96............. 4,991
10,000 Ford Motor Credit Corp.,
5.34%, 8/15/96............. 9,979
5,000 Ford Motor Credit Corp.,
5.42%, 9/6/96.............. 4,973
--------
29,692
--------
Banking (9.2%):
5,000 ANZ (De) Inc., 5.38%,
9/10/96.................... 4,970
5,000 ANZ (De) Inc., 5.40%,
9/9/96..................... 4,971
5,000 ANZ (De) Inc., 5.47%,
10/9/96.................... 4,948
5,000 Abbey National North America
Inc., 5.54%, 9/25/96....... 4,958
5,000 Abbey National North America
Inc., 5.40%, 12/4/96....... 4,906
5,000 Commerzbank U.S. Finance
Inc., 5.35%, 8/8/96........ 4,995
5,000 Den Danske Corporation Inc.,
5.38%, 8/6/96.............. 4,996
5,000 Den Danske Corporation Inc.,
5.42%, 10/1/96............. 4,954
--------
39,698
--------
</TABLE>
Continued
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35
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<PAGE> 38
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMERCIAL PAPER/MASTER DEMAND NOTES,
CONTINUED:
Business Credit Institutions (21.9%):
$10,000 Alpha Finance Corp., 5.48%,
10/11/96................... $ 9,892
10,000 Assets Securitization
Cooperative Corp., 5.37%,
8/5/96..................... 9,994
5,000 Assets Securitization
Cooperative Corp., 5.40%,
9/17/96.................... 4,965
5,000 Beta Finance Inc., 5.53%,
1/3/97..................... 4,881
10,000 Ciesco, L.P., 5.26%,
8/16/96.................... 9,978
5,000 Ciesco, L.P., 5.32%,
9/9/96..................... 4,971
5,200 Corporate Receivables Corp.,
5.35%, 8/22/96............. 5,184
10,000 Corporate Receivables Corp.,
5.40%, 9/12/96............. 9,937
5,000 Corporate Receivables Corp.,
5.42%, 10/8/96............. 4,949
5,000 CXC, Inc., 5.38%, 8/1/96..... 5,000
10,000 CXC, Inc., 5.40%, 9/3/96..... 9,950
5,000 Falcon Asset Securitization
Corp., 5.40%, 8/19/96...... 4,986
5,000 Falcon Asset Securitization
Corp., 5.55%, 1/21/97...... 4,867
5,000 Jet Funding Corp., 5.50%,
9/30/96.................... 4,954
---------
94,508
---------
Electronic & Electrical--General (4.6%):
10,000 Panasonic Finance Inc.,
5.38%, 9/9/96.............. 9,942
10,000 Panasonic Finance Inc.,
5.34%, 9/17/96............. 9,930
---------
19,872
---------
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
COMMERCIAL PAPER/MASTER DEMAND NOTES,
CONTINUED:
Insurance (1.2%):
$ 5,000 TransAmerica Corp., 5.36%,
8/9/96..................... $ 4,994
---------
Mining (1.1%):
5,000 RTZ America Inc., 5.30%,
8/22/96.................... 4,985
---------
Multiple Industry (6.9%):
10,000 BTR Dunlop Finance Inc.,
5.37%, 8/7/96.............. 9,991
5,000 BTR Dunlop Finance Inc.,
5.27%, 8/26/96............. 4,982
5,000 BTR Dunlop Finance Inc.,
5.40%, 9/16/96............. 4,965
10,000 General Electric Capital
Corp., 5.29%, 9/5/96....... 9,949
---------
29,887
---------
Retail (3.5%):
5,000 J.C. Penney Funding Corp.,
5.38%, 8/7/96.............. 4,996
10,000 J.C. Penney Funding Corp.,
5.34%, 8/29/96............. 9,958
---------
14,954
---------
Technology (1.7%):
7,200 Hewlett Packard Co., 5.29%,
8/27/96.................... 7,172
---------
Tobacco & Tobacco Products (1.2%):
5,000 B.A.T. Capital Corp., 5.33%,
8/16/96.................... 4,989
---------
</TABLE>
Continued
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36
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<PAGE> 39
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMERCIAL PAPER/MASTER DEMAND NOTES,
CONTINUED:
Trading Company (3.5%):
$10,000 Cargill Financial Services
Corp. 5.33%, 8/16/96....... $ 9,978
5,000 Cargill Inc., 5.35%,
8/2/96..................... 4,999
---------
14,977
---------
Telecommunications (3.5%):
10,000 AT&T Corp., 5.30%, 8/8/96.... 9,990
5,000 AT&T Corp., 5.42%, 9/18/96... 4,964
---------
14,954
---------
Utility (2.3%):
10,000 National Rural Utilities
Co-op. Finance Corp.,
5.37%, 8/9/96.............. 9,988
---------
Total Commercial Paper / Master Demand
Notes 290,670
---------
MEDIUM TERM NOTES/CORPORATE BONDS (2.9%):
Banking (2.3%):
10,000 Sanwa Business Credit Corp.,
5.56%, 12/4/96 *........... 10,000
---------
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
Manufacturing--Consumer Goods (0.6%):
$ 2,500 Gillette Co., 4.75%,
8/15/96.................... $ 2,499
---------
Total Medium Term Notes/Corporate Bonds
12,499
---------
U.S. TREASURY BILLS (2.3%):
10,000 4.62%, 2/6/97................ 9,757
---------
Total U.S. Treasury Bills 9,757
---------
Total Investments, at value 413,900
---------
REPURCHASE AGREEMENTS (5.0%);
21,502 C.S. First Boston Corp.,
5.62%, 8/1/96
(Collateralized by 18,006
U.S. Treasury Bonds, 8.75%,
8/15/20, market value
$21,970)................... 21,502
---------
Total Repurchase Agreements 21,502
---------
Total $435,402 (a)
==========
</TABLE>
- ------------
Percentages indicated are based on net assets of $430,727.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity arrangements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of market
interest rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect on July 31, 1996.
See notes to financial statements.
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37
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<PAGE> 40
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ------------- ----------------------------- ---------
<S> <C> <C> <C>
U.S. TREASURY BILLS (4.3%):
$10,000 4.62%, 2/6/97................ $ 9,757
--------
Total U.S. Treasury Bills 9,757
--------
U.S. GOVERNMENT AGENCIES (78.6%):
Federal Home Loan Bank:
7,500 Discount note, 5.32%,
8/14/96.................... 7,486
5,000 Discount note, 5.22%,
8/20/96.................... 4,986
5,000 Discount note, 5.31%,
9/25/96.................... 4,959
5,000 Discount note, 5.19%,
10/15/96................... 4,946
5,000 Discount note, 5.37%,
11/1/96.................... 4,931
5,000 Discount note, 5.25%,
11/4/96.................... 4,931
5,000 Discount note, 5.19%,
1/14/97.................... 4,881
5,000 Discount note, 5.21%,
1/21/97.................... 4,875
4,610 5.26%, 1/29/97............... 4,610
Federal Home Loan Mortgage Corp.:
5,000 Discount note, 5.34%,
9/16/96.................... 4,966
Federal National Mortgage Assoc.:
5,000 Discount note, 5.30%,
8/1/96..................... 5,000
5,000 Discount note, 5.25%,
8/15/96.................... 4,990
5,000 Discount note, 5.24%,
8/21/96.................... 4,985
5,000 Discount note, 5.33%,
9/9/96..................... 4,971
5,000 Discount note, 5.35%,
9/10/96.................... 4,970
5,000 Discount note, 5.34%,
9/11/96.................... 4,970
10,000 Discount note, 5.27%,
9/17/96.................... 9,931
5,000 Discount note, 5.26%,
9/23/96.................... 4,961
5,540 Discount note, 5.30%,
9/24/96.................... 5,496
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- ------------- ----------------------------- ---------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 5,000 Discount note, 5.38%,
10/15/96................... $ 4,944
5,000 Discount note, 5.29%,
12/6/96.................... 4,907
6,940 7.60%, 1/10/97............... 6,999
20,000 5.30%, 5/5/97 *.............. 19,987
Overseas Private Investment Corp.:
20,000 5.40%, 1/15/09 *............. 20,000
Student Loan Marketing Assoc.:
10,000 5.57%, 9/23/96 *............. 9,999
10,000 5.49%, 7/18/97 *............. 10,000
--------
Total U.S. Government Agencies 178,681
--------
Total Investments, at value 188,438
--------
REPURCHASE AGREEMENTS (17.2%):
39,183 C. S. First Boston Corp.,
5.62%, 8/1/96
(Collateralized by 32,811
U.S. Treasury Bonds,
8.75%, 8/15/20, market
value--$40,034).............. 39,183
--------
Total Repurchase Agreements 39,183
--------
Total $227,621 (a)
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $227,197.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of
credit or other credit and/or liquidity agreements. The interest rate, which
will change periodically, is based upon bank prime rates or an index of market
interest rates. The rate reflected on the Schedule of Portfolio Investments is
the rate in effect at July 31, 1996.
See notes to financial statements.
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38
LOGO U.S. GOVERNMENT OBLIGATIONS FUND
<PAGE> 41
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
<S> <C> <C> <C>
U.S. TREASURY BILLS (85.5%):
$ 1,355 4.99%, 8/1/96*............... $ 1,355
15,000 5.00%, 8/8/96*............... 14,985
2,303 5.01%, 8/8/96*............... 2,301
2,226 5.02%, 8/8/96*............... 2,224
5,000 5.03%, 8/8/96*............... 4,995
5,000 5.04%, 8/8/96*............... 4,995
10,192 4.96%, 8/15/96*.............. 10,172
7,425 5.01%, 8/15/96*.............. 7,411
5,000 5.03%, 8/15/96*.............. 4,990
2,777 5.04%, 8/15/96*.............. 2,772
1,067 4.95%, 8/22/96*.............. 1,064
10,000 4.98%, 8/22/96*.............. 9,971
10,000 5.02%, 8/22/96*.............. 9,971
2,000 5.48%, 8/22/96*.............. 1,993
2,500 5.50%, 8/22/96*.............. 2,492
4,744 4.98%, 8/29/96*.............. 4,725
10,000 5.05%, 8/29/96*.............. 9,961
2,023 5.04%, 9/5/96*............... 2,013
312 5.06%, 9/5/96*............... 310
4,572 5.07%, 9/5/96*............... 4,550
865 5.08%, 9/5/96*............... 861
15,000 5.10%, 9/5/96*............... 14,925
3,640 5.04%, 9/12/96*.............. 3,618
892 5.07%, 9/12/96*.............. 887
5,000 5.10%, 9/12/96*.............. 4,970
7,703 5.11%, 9/12/96*.............. 7,657
5,225 5.12%, 9/12/96*.............. 5,193
385 5.07%, 9/19/96*.............. 382
6,651 5.09%, 9/19/96*.............. 6,605
5,410 5.11%, 9/19/96*.............. 5,373
4,828 5.13%, 9/19/96*.............. $ 4,794
<CAPTION>
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- ----------------------------- ---------
<S> <C> <C> <C>
U.S. TREASURY BILLS, CONTINUED:
$ 5,936 5.14%, 9/19/96*.............. 5,895
5,000 5.04%, 10/3/96*.............. 4,956
1,227 5.09%, 10/3/96*.............. 1,216
3,162 5.11%, 10/3/96*.............. 3,134
3,077 5.11%, 10/10/96*............. 3,046
5,000 5.15%, 10/10/96*............. 4,950
5,000 5.05%, 10/17/96*............. 4,946
2,034 5.09%, 10/17/96*............. 2,012
7,639 5.11%, 10/17/96*............. 7,556
4,000 5.07%, 10/24/96*............. 3,953
5,000 5.12%, 10/24/96*............. 4,940
5,000 5.34%, 1/9/97*............... 4,881
5,000 5.24%, 1/23/97*.............. 4,873
5,000 4.91%, 2/6/97*............... 4,871
5,000 5.11%, 2/6/97*............... 4,866
5,000 5.16%, 4/3/97*............... 4,825
5,000 5.32%, 4/3/97*............... 4,819
--------
Total U.S. Treasury Bills 234,254
--------
U.S. TREASURY NOTES (12.8%):
10,000 7.25%, 8/31/96............... 10,013
10,000 7.25%, 8/31/96............... 10,011
10,000 6.63%, 3/31/97............... 10,072
5,000 6.50%, 4/30/97............... 5,031
--------
Total U.S. Treasury Notes 35,127
--------
U.S. TREASURY STRIPS (1.8%):
5,000 5.12%, 11/15/96*............. 4,925
--------
Total U.S. Treasury Strips 4,925
--------
Total $274,306 (a)
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $273,963.
(a) Cost for federal income tax and financial reporting purposes are the same.
* Discount yield at date of purchase.
See notes to financial statements.
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39
LOGO 100% U.S. TREASURY OBLIGATIONS FUND
<PAGE> 42
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------------------------------------------------------------------------------- ---------
<C> <S> <C>
MUNICIPAL SECURITIES $(90.1%):
California (90.1%)
$ 5,025 Contra Costa County, Park Regency, Series 1992, 3.70%, 8/1/32, AMT*................ $ 5,025
2,500 Department of Water Resources, 3.35%, 11/29/96..................................... 2,500
3,300 Health Facilities Authority, Enloe Memorial Hospital, 3.00%, 1/1/16*............... 3,300
6,800 Health Facilities Authority, Memorial Health Services, 3.25%, 10/1/24*............. 6,800
6,600 Health Finance Authority, Catholic Healthcare West, 3.25%, 7/1/05*................. 6,600
900 Health Finance Authority, Catholic Healthcare West, 3.25%, 7/1/09*................. 900
6,900 Health Finance Authority, Kaiser Permanente Series, 3.25%, 5/1/28*................. 6,900
1,700 Health Finance Authority, Pooled Program, Series 1990 A, 3.40%, 9/1/20*............ 1,700
2,400 Health Finance Authority, Pooled Program, Series B, 3.40%, 10/1/10*................ 2,400
1,200 Health Finance Authority, Santa Barbara Cottage, 3.25%, 9/1/15*.................... 1,200
1,000 Health Finance Authority, Santa Barbara Cottage, Series B, 3.25%, 9/1/05*.......... 1,000
1,200 Kern County Public Facilities, Project Series B, 3.35%, 8/1/06*.................... 1,200
1,700 Lancaster Multi-Family Housing, Westwood Park Apartments, 3.40%, 12/1/07*.......... 1,700
6,800 Los Angeles County Metro Transportation Authority, Union Station Gateway Project, 6,800
3.25%, 7/2/25*...................................................................
4,700 Los Angeles County Transportation, 3.40%, 7/1/12*.................................. 4,700
700 Los Angeles Multi-Family Housing, Crescent Gardens, 3.40%, 7/1/14*................. 700
3,700 Los Angeles Multi-Family Housing, Series K, 3.25%, 7/1/10*......................... 3,700
7,500 Los Angeles Multi-Family Housing, Southpark Apartment Project, 3.55%, 12/1/05*..... 7,500
3,700 Metropolitan Water District of Southern California, 3.25%, 6/1/23.................. 3,700
2,800 Oxnard Housing Authority, Seawood Apartments Project, 3.65%, 12/1/20, AMT*......... 2,800
7,200 Pollution Control Finance Authority, Burney Forest 1988, 3.70%, 9/1/20, AMT*....... 7,200
1,900 Pollution Control Finance Authority, Delano Project 1989, 3.65%, 8/1/19, AMT*...... 1,900
2,310 Pollution Control Finance Authority, Delano Project 1990, 3.65%, 8/1/19, AMT*...... 2,310
3,000 Pollution Control Finance Authority, Delano Project 1991, 3.65%, 8/1/19, AMT*...... 3,000
2,600 Pollution Control Finance Authority, Honey Lake Power Project, Series 88, 3.65%,
9/1/18, AMT...................................................................... 2,600
1,700 Pollution Control Finance Authority, North County Recycling Center, Series B,
3.40%, 7/1/17*................................................................... 1,700
500 Pollution Control Finance Authority, Pacific Gas & Electric, Series 88C, 3.35%,
8/15/96.......................................................................... 500
</TABLE>
Continued
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40
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<PAGE> 43
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------
<C> <S> <C>
MUNICIPAL SECURITIES, CONTINUED:
California, continued:
$ 3,200 Pollution Control Finance Authority, Southern California Edison, Series 85C, 3.55%, $ 3,200
9/24/96..........................................................................
1,000 Pollution Control Finance Authority, Southern California Edison, Series 85D, 3.35%, 1,000
9/10/96..........................................................................
2,600 Pollution Control Finance Authority, Southern California Edison, Series 85C, 3.55%, 2,600
9/6/96...........................................................................
500 Pollution Control Finance Authority, Southern California Edison, Series 85C, 3.60%, 500
1/15/97..........................................................................
1,550 Pollution Control Finance Authority, Southern California Edison, Series 85C, 3.15%, 1,550
8/1/96...........................................................................
500 Pollution Control Finance Authority, Southern California Edison, Series 85C, 3.20%, 500
9/10/96..........................................................................
4,000 Pollution Control Finance Authority, Southern California Edison, Series 85C, 3.35%, 4,000
10/1/96..........................................................................
1,200 Pollution Control Finance Authority, Southern California Edison, Series 85C, 3.45%, 1,200
11/14/96.........................................................................
1,100 Pollution Control Finance Authority, Southern California Edison, Series 86A, 3.40%, 1,100
2/28/08*.........................................................................
1,400 Pollution Control Finance Authority, Southern California Edison, Series 86B, 3.40%, 1,400
2/28/08*.........................................................................
2,000 Pollution Control Finance Authority, Southern California Edison, Series 86C, 3.40%, 2,000
2/28/08..........................................................................
2,200 Pollution Control Finance Authority, Southern California Edison, Series 86D, 3.40%, 2,200
2/28/08..........................................................................
2,200 Sacramento County Multi-Family Housing Authority, River Oaks Apartments, 3.55%, 2,200
9/15/07*.........................................................................
5,000 San Bernardino County, TRANs, 4.50%, 6/30/97....................................... 5,027
500 San Jose, Multi-Family Housing, Somerset Park, 3.55%, 11/1/17, AMT*................ 500
2,900 SCAPPA, Revenue, 91 Refunding Series, 3.40%, 7/1/19*............................... 2,900
3,000 State of California, Tax Exempt Commercial Paper, 3.10%, 8/7/96.................... 3,000
1,000 State of California, Tax Exempt Commercial Paper, 3.35%, 11/14/96.................. 1,000
2,000 State of California, Tax Exempt Commercial Paper, 3.55%, 9/13/96................... 2,000
6,865 Statewide Community Development Authority, Series 95A, 3.45%, 5/15/25*............. 6,866
900 Vacaville Multi-Family Housing, The Sycamores Apartments, 3.40%, 4/1/05*........... 900
1,000 Walnut Creek Multi-Family Housing, Creekside Drive Apartments, 3.40%, 4/1/07*...... 1,000
--------
Total Municipal Securities 136,978
--------
</TABLE>
Continued
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41
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<PAGE> 44
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
- --------- ----------------------------------------------------------------------------------- ---------
INVESTMENT COMPANIES $(7.6%):
<C> <S> <C>
5,214 Goldman Sachs California Tax-Exempt Money Market Fund.............................. $ 5,214
6,312 Provident California Money Market Fund............................................. 6,312
--------
Total Investment Companies 11,526
--------
Total $148,504 (a)
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $151,979.
<TABLE>
<C> <S>
(a) Cost for federal income tax and financial reporting purposes are the same.
* Variable rate securities having liquidity sources through bank letters of credit or other credit and/or
liquidity agreements. The interest rate, which will change periodically, is based upon bank prime rates or an
index of market interest rates. The rate reflected on the Schedule of Portfolio Investments is the rate in
effect at July 31, 1996.
AMT Alternative Minimum Tax Paper
TRANs Tax Revenue Anticipation Notes
</TABLE>
See notes to financial statements.
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42
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<PAGE> 45
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
MUNICIPAL SECURITIES (90.4%):
Arizona (4.8%):
$1,200 Maricopa County, PCR, Southern California Edison,
Series D, 3.25%, 12/1/09....................................................... $ 1,200
500 Maricopa County, PCR, Southern California Edison,
Series D, 3.35%, 12/1/09....................................................... 500
400 Maricopa County, PCR, Southern California Edison,
Series 85F, 3.50%, 2/1/09...................................................... 400
-------
2,100
-------
California (22.7%):
700 Health Facilities Finance Authority Revenue,
Kaiser Permanente Series B, 3.24%, 5/1/28...................................... 700
1,000 Health Facilities Finance Authority Revenue,
Memorial Health Services, 3.24%, 10/1/24....................................... 1,000
100 Los Angeles County Metro Transportation Authority,
Union Station Gateway Project, 3.24%, 7/1/25................................... 100
200 Los Angeles MFH Crescent Gardens Apartments, 3.40%, 7/1/14....................... 200
1,700 Los Angeles MFH, Series K, 3.49%, 7/1/10......................................... 1,700
400 Los Angeles MFH, Southpark Apartment Project, 3.54%,
12/1/05........................................................................ 400
100 Pollution Control Finance Authority,
Burney Forest 1988, 3.70%, 9/1/20, AMT......................................... 100
1,390 Pollution Control Finance Authority,
Delano Project 1990, 3.65%, 8/1/19............................................. 1,390
200 Pollution Control Finance Authority Revenue,
Southern California Edison, Series 85C, 3.15%, 3/1/08.......................... 200
500 Pollution Control Finance Authority Revenue,
Southern California Edison, Series 85C, 3.20%, 3/1/08.......................... 500
1,200 Pollution Control Finance Authority Revenue,
Southern California Edison, Series 85D, 3.20%, 3/1/08.......................... 1,200
250 Pollution Control Finance Authority Revenue,
Southern California Edison, Series 88C, 3.40%, 10/1/20......................... 250
</TABLE>
Continued
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43
LOGO TAX-FREE FUND
<PAGE> 46
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------------------------------- -------
<S> <C> <C> <C>
MUNICIPAL SECURITIES, CONTINUED:
California, continued:
$1,000 San Bernardino County, TRANS, 4.50%, 6/30/97..................................... $ 1,005
1,000 State of California, Tax Exempt Commercial Paper, 3.50%, 10/24/96................ 1,000
300 Statewide Community Development Authority,
Series 95A, 3.45%, 5/15/25..................................................... 300
-------
10,045
-------
Florida (6.1%):
800 Broward County Housing Authority, Welleby Apartments
Project, 3.70%, 12/1/06........................................................ 800
1,900 Indian Trace Community Development, Water
Management Special Benefit, 3.54%, 11/1/99..................................... 1,900
-------
2,700
-------
Hawaii (4.1%):
1,800 Hawaii State Housing Finance, Affordable Rental
Housing, Series A, 3.54%, 7/1/27............................................... 1,800
-------
Illinois (4.0%):
300 Illinois Health Facilities Finance Authority, Methodist
Medical Center, Series 1985B, 3.65%, 10/1/14................................... 300
1,485 Illinois Housing Development Authority, MFH,
Revenue, 4.15%, 2/1/24......................................................... 1,485
-------
1,785
-------
Indiana (4.7%):
600 City of Sullivan, PCR, Hoosier 85, 3.65%, 9/24/96................................ 600
1,000 Jasper County, PCR Indiana Public Services, 3.65%, 11/1/16....................... 1,000
500 Jasper County, PCR, Indiana Public Services,
Series 1988C, 3.25%, 11/1/16................................................... 500
-------
2,100
-------
Kentucky (2.0%):
885 Clark County, PCR, East Kentucky Power Co-Op,
3.40%, 10/15/96................................................................ 885
-------
</TABLE>
Continued
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44
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<PAGE> 47
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------------------------------- -------
<S> <C> <C> <C>
MUNICIPAL SECURITIES, CONTINUED:
Louisiana (3.8%):
$1,700 Public Facilities
Authority for Kenner Hotel, Ltd., 3.65%, 12/1/15............................... $ 1,700
-------
Minnesota (0.2%):
100 Hubbard County Solid Waste Disposal Revenue,
Potlatch Corp. Project, Series 1, 3.70%, 8/1/14................................ 100
-------
Missouri (2.7%):
1,200 St. Charles, Sun River Village Apartments, 3.65%, 12/1/07........................ 1,200
-------
Nevada (4.3%):
1,900 Clark County Airport, Sub Lien Revenue, Series
1995A-1, 3.54%, 7/1/25......................................................... 1,900
-------
New Mexico (4.3%):
1,900 Albuquerque Airport Revenue, Sub Lien Revenue,
Series 1995, 3.54%, 7/1/14..................................................... 1,900
-------
New York (4.5%):
200 GO, Series 1993, 3.70%, 10/1/20.................................................. 200
200 GO, Series 1993, 3.70%, 10/1/22.................................................. 200
1,600 Triborough Bridge Authority, 3.40%, 1/1/24....................................... 1,600
-------
2,000
-------
Oregon (4.0%):
1,760 Port Morrow Revenue, Portland General Electric
Co., Series A, 3.70%, 10/1/13.................................................. 1,760
-------
Pennsylvania (0.5%):
200 Lehigh County Industrial Development Authority, PCR,
Allegheny Electric Co-Op, Inc., Series A, 3.40%, 12/1/15....................... 200
-------
Rhode Island (0.9%):
400 State Student Loan Authority, Student Loan Revenue,
Series 1995, 3.70%, 7/1/19..................................................... 400
-------
Texas (4.6%):
2,040 Amoco Gulf Coast Waste Disposal, 3.65%, 10/1/17.................................. 2,040
-------
</TABLE>
Continued
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45
LOGO TAX-FREE FUND
<PAGE> 48
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY AMORTIZED
AMOUNT DESCRIPTION COST
--------- --------------------------------------------------------------------------------- ---------
<S> <C> <C> <C>
MUNICIPAL SECURITIES, CONTINUED:
Utah (2.3%):
$1,000 Emery County, PCR, Pacific Corp. Project, 3.60%, 7/1/15.......................... $ 1,000
-------
Virginia (8.8%):
2,100 Alexandria Redevelopment & Housing Authority,
MFH Revenue, Crystal City Apartments
Project, 3.65%, 12/15/18....................................................... 2,100
100 Amelia County Industrial Development Authority,
Chambers Waste Power Project, Series 1991, 3.85%,
7/1/07......................................................................... 100
1,700 Charles County Industrial Development Authority,
Chamber Development of Virginia Inc. Project, 3.85%,
10/1/04........................................................................ 1,700
-------
3,900
-------
Wyoming (1.1%):
500 Sweetwater County, PCR, Pacific Corp. Project,
Series 1990A, 3.49%, 7/1/15.................................................... 500
-------
Total Municipal Securities 40,015
-------
INVESTMENT COMPANIES (9.0%):
1,851 Goldman Sachs Tax Exempt National Fund........................................... 1,851
2,128 SEI Institutional Tax Exempt Money Market Fund................................... 2,128
-------
Total Investment Companies 3,979
-------
Total $43,994(a)
=======
</TABLE>
- ------------
Percentages indicated are based on total net assets of $44,257.
(a) Cost for federal income tax and financial reporting purposes are the same.
<TABLE>
<S> <C>
AMT Alternative Minimum Tax Paper
GO General Obligation
MFH Multi-Family Housing
PCR Pollution Control Revenue
TRANs Tax Revenue Anticipation Notes
</TABLE>
See notes to financial statements.
LOGO
46
LOGO TAX-FREE FUND
<PAGE> 49
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
ASSET BACKED SECURITIES (17.4%):
$ 374 Advanta Mortgage Loan Trust,
7.90%, 3/25/07............... $ 375
1,000 Carco Auto Loan Master Trust,
Series 1994-2, 7.88%,
8/15/97...................... 1,018
860 Carco Auto Loan Master Trust,
Series 1991-3,
7.88%,3/15/98................ 869
1,125 Contimortgage Home Equity Loan
Trust, 8.09%, 9/15/09........ 1,144
1,000 Contimortgage Home Equity Loan
Trust, 8.05%, 7/15/12........ 1,016
1,200 EQCC Home Equity Loan Trust,
7.80%, 12/15/10.............. 1,196
1,250 Green Tree Financial Corp.,
6.80%, 1/15/26............... 1,221
500 MBNA Credit Card, 7.25%,
6/15/99...................... 502
738 Mid State Trust 4, 8.33%,
4/1/30....................... 765
531 Premier Auto Receivable Trust,
4.90%, 10/15/98.............. 525
1,000 Standard Credit Card Master
Trust, 4.65%, 3/7/99......... 987
600 UCFC Home Equity Loan, 7.78%,
12/10/06..................... 608
496 UFSB Grantor Trust, 5.08%,
5/15/00...................... 489
-------
Total Asset Backed Securities 10,715
-------
COLLATERALIZED MORTGAGE OBLIGATIONS (14.4%):
Bear Stearns Secured Investors:
500 7.50%, 1/20/99................. 504
Country Wide Mortgage:
1,021 6.75%, 3/25/08................. 995
Federal Home Loan Mortgage Corp.:
1,500 6.25%, 1/15/24................. 1,347
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
COLLATERALIZED MORTGAGE OBLIGATIONS, CONTINUED:
Federal National Mortgage Assoc.:
$ 2,000 6.20%, 9/25/02................. $ 1,928
1,500 6.50%, 3/25/13................. 1,421
GE Capital Mortgage Service, Inc.:
1,850 6.50%, 1/25/24................. 1,740
Residential Funding Mortgage:
950 6.75%, 11/25/07................ 910
-------
Total Collateralized Mortgage Obligations 8,845
-------
CORPORATE BONDS (24.7%):
Automotive (3.9%):
2,290 General Motors Acceptance
Corp., 8.00%, 10/1/99........ 2,364
-------
Banking (5.2%):
1,785 Bank of America, 6.00%,
7/15/97...................... 1,779
600 Citicorp, 6.75%, 8/15/05....... 572
900 U.S. Bancorp, 6.75%,
10/15/05..................... 858
-------
3,209
-------
Computer Hardware (1.4%):
800 IBM Corp., 8.38%, 11/1/19...... 861
-------
Financial Services (1.0%):
650 Golden West Financial, 6.70%,
7/1/02....................... 634
-------
Governments (Foreign) (2.7%):
825 Hydro-Quebec, 8.05, 7/7/24..... 869
785 Norske Hydro, 7.75, 6/15/23.... 786
-------
1,655
-------
Industrial Goods & Services (1.3%):
860 Caterpillar Tractor Co., 6.00%,
5/1/07....................... 772
-------
Retail Stores (5.8%):
980 J.C. Penney Inc., 6.00%,
5/1/06....................... 883
900 Sears Roebuck Co., 9.25%,
8/1/97....................... 925
</TABLE>
Continued
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47
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<PAGE> 50
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
CORPORATE BONDS, CONTINUED:
Retail Stores, continued:
$ 1,850 Wal-Mart Stores, 6.38,
3/1/03....................... $ 1,785
-------
3,593
-------
Telecommunications (3.4%):
1,500 Bell Atlantic-Maryland, 8.00%,
10/15/29..................... 1,581
500 New England Telephone &
Telegraph, 7.88%, 11/15/29... 524
-------
2,105
-------
Total Corporate Bonds 15,193
-------
U.S. GOVERNMENT AGENCIES (19.6%):
Federal Home Loan Bank:
300 8.38%, 10/25/99................ 315
Federal National Mortgage Assoc.:
1,000 9.05%, 4/10/00................. 1,074
1,750 5.45%, 10/10/03................ 1,610
1,625 6.50%, 3/1/24, Pool # 276510... 1,526
1,659 8.50%, 5/1/25, Pool # 303300... 1,696
1,018 6.50%, 5/1/26, Pool # 342718... 950
Government National Mortgage Association:
1,836 6.50%, 6/15/23, Pool #
354601....................... 1,717
616 6.50%, 12/15/23, Pool #
369270....................... 574
823 7.50%, 1/15/24, Pool #
352844....................... 811
157 7.50%, 1/15/24, Pool #
360285....................... 154
34 7.50%, 1/15/24, Pool #
362734....................... 34
299 7.50%, 1/15/24, Pool #
368677....................... 294
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Government National Mortgage Assoc., continued:
$ 371 7.50%, 2/15/24, Pool #
353297....................... $ 366
70 7.50%, 2/15/24, Pool #
336245....................... 69
906 7.00%, 4/15/24, Pool #
392055....................... 869
-------
Total U.S. Government Agencies 12,059
-------
U.S. TREASURY BONDS (16.4%):
1,500 10.38%, 11/15/12............... 1,894
2,500 7.25%, 5/15/16................. 2,546
2,360 8.75%, 8/15/20................. 2,804
2,800 7.13%, 2/15/23................. 2,813
-------
Total U.S. Treasury Bonds 10,057
-------
U.S. TREASURY NOTES (3.1%):
1,000 8.13%, 2/15/98................. 1,029
430 9.00%, 5/15/98................. 450
420 8.50%, 11/15/00................ 451
-------
Total U.S. Treasury Notes 1,930
-------
Total Investments, at value 58,799
-------
REPURCHASE AGREEMENTS (3.6%):
2,237 C.S. First Boston Corp., 5.62%,
8/1/96 (Collateralized by
2,046 U.S. Treasury Bonds,
8.75%, 11/15/08, market
value--$2,287)............... 2,237
-------
Total Repurchase Agreements 2,237
-------
Total (Cost--$61,591)(a) $61,036
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $61,531.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation............................................ $ 816
Unrealized depreciation............................................ (1,371)
------
Net unrealized depreciation........................................ $ (555)
======
</TABLE>
See notes to financial statements.
LOGO
48
LOGO BOND FUND
<PAGE> 51
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
Amounts in Thousands
<TABLE>
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (95.7%):
Federal Home Loan Bank:
$ 240 9.25%, 11/25/98................ $ 254
200 9.30%, 1/25/99................. 212
50 5.43%, 2/25/99................. 49
660 6.31%, 4/6/99.................. 656
330 7.91%, 11/7/01................. 346
Federal Home Loan Mortgage Corp.:
315 5.88%, 3/22/00................. 307
240 6.22%, 3/24/03................. 231
Federal National Mortgage Assoc.:
370 8.20%, 3/10/98................. 380
255 4.88%, 10/15/98................ 247
215 9.55%, 3/10/99................. 230
500 8.55%, 8/30/99................. 527
<CAPTION>
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Federal National Mortgage Assoc., continued:
$ 320 9.05%, 4/10/00................. $ 344
300 8.25%, 12/18/00................ 317
200 6.16%, 4/3/01.................. 195
-------
Total U.S. Government Agencies 4,295
-------
Total Investments, at value 4,295
-------
REPURCHASE AGREEMENTS (2.7%):
121 C.S. First Boston Corp., 5.62%,
8/1/96, (Collateralized by 99
U.S. Treasury Bonds, 10.38%
11/15/12, market
value--$126)................. 121
-------
Total Repurchase Agreements 121
-------
Total (Cost--$4,455)(a) $ 4,416
=======
</TABLE>
- ------------
Percentages indicated are based on net assets of $4,490.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized depreciation of securities as follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation............................................. $ 47
Unrealized depreciation............................................. (86)
-----
Net unrealized depreciation......................................... $ (39)
=====
</TABLE>
See notes to financial statements
LOGO
49
LOGO GOVERNMENT BOND FUND
<PAGE> 52
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS (97.8%):
Aerospace (2.0%):
153,100 B.F. Goodrich Co........... $ 5,550
--------
Banks (12.7%):
213,650 Banc One Corp.............. 7,398
82,200 BankAmerica Corp........... 6,555
122,800 Fleet Financial Group,
Inc...................... 4,973
77,900 J. P. Morgan & Co.......... 6,699
82,700 National City Corp......... 2,864
95,050 U.S. Bancorp............... 3,256
64,700 Wachovia Corp.............. 2,863
--------
34,608
--------
Beverages (2.0%):
72,000 Anheuser-Busch Co.......... 5,382
--------
Business Equipment & Services (0.6%):
34,600 Pitney Bowes, Inc.......... 1,678
--------
Chemicals-Petroleum & Inorganic (2.1%):
77,200 Dow Chemical Co............ 5,742
--------
Chemicals-Specialty (1.8%):
55,200 Betz Labs, Inc............. 2,505
83,500 Witco Corp................. 2,421
--------
4,926
--------
Commercial Goods & Services (1.2%):
87,000 National Services
Industries, Inc.......... 3,317
--------
Consumer Goods & Services (1.2%):
36,600 Clorox Co.................. 3,326
--------
Cosmetics & Toiletries (0.9%):
56,300 International Flavors &
Fragrances, Inc.......... 2,407
--------
Electrical Equipment (1.0%):
70,800 Thomas & Betts Corp........ 2,584
--------
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Environmental Services (0.3%):
37,700 Browning-Ferris Industries,
Inc...................... $ 844
--------
Financial Services (3.2%):
105,100 American General Corp...... 3,652
33,800 Beneficial Corp............ 1,825
106,700 Federal National Mortgage
Assoc.................... 3,388
--------
8,865
--------
Food & Related (2.6%):
94,300 General Mills, Inc......... 5,116
63,150 H.J. Heinz Co.............. 2,092
--------
7,208
--------
Forest & Paper Products (4.8%):
43,700 Georgia-Pacific Corp....... 3,267
92,470 International Paper Co..... 3,502
154,700 Weyerhaeuser Co............ 6,459
--------
13,228
--------
Health Care (5.9%):
77,000 Bristol-Myers Squibb Co.... 6,670
102,000 Pharmacia & Upjohn Co...... 4,208
48,800 SmithKline Beecham PLC
ADR...................... 2,623
44,100 Warner-Lambert Co.......... 2,403
--------
15,904
--------
Insurance-Life (0.8%):
45,125 Jefferson Pilot Corp....... 2,369
--------
Insurance-Multiline (1.8%):
53,600 Marsh & McLennan Cos.,
Inc...................... 4,857
--------
</TABLE>
Continued
LOGO
50
LOGO INCOME EQUITY FUND
<PAGE> 53
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Insurance-Property & Casualty (3.1%):
42,500 Lincoln National Corp...... $ 1,812
78,300 SAFECO Corp................ 2,696
70,800 St. Paul Cos., Inc......... 3,664
--------
8,172
--------
Machinery & Equipment (1.2%):
80,900 Cooper Industries, Inc..... 3,185
--------
Medical Equipment & Supplies (0.6%):
39,000 Baxter International,
Inc...................... 1,623
--------
Motor Vehicle Parts (0.9%):
58,500 Genuine Parts Co........... 2,479
--------
Motor Vehicles (0.9%):
86,600 Chrysler Corp.............. 2,457
--------
Multiple Industry (3.1%):
43,300 General Electric Co........ 3,567
76,000 Minnesota Mining &
Manufacturing Co......... 4,940
--------
8,507
Petroleum-Domestic (4.5%):
73,200 Atlantic Richfield Co...... 8,491
83,400 Dresser Industries Inc..... 2,252
41,700 Phillips Petroleum Co...... 1,647
--------
12,390
--------
Petroleum-Internationals (7.3%):
95,300 Amoco Corp................. 6,373
58,300 Chevron Corp............... 3,374
52,300 Exxon Corp................. 4,302
68,500 Texaco, Inc................ 5,822
--------
19,871
--------
Publishing (0.9%):
61,400 McGraw-Hill, Inc........... 2,395
--------
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
- ------------- ------------------------------- -------
COMMON STOCKS, CONTINUED:
Railroad (0.5%):
20,500 Union Pacific Corp......... $ 1,404
--------
Retail-General Merchandise (4.1%):
173,100 J.C. Penney, Inc........... 8,612
59,000 May Department Stores
Co....................... 2,647
--------
11,259
--------
Telecommunications (7.2%):
25,600 Ameritech Corp............. 1,421
67,300 Bell Atlantic Corp......... 3,979
63,400 BellSouth Corp............. 2,599
118,500 GTE Corp................... 4,888
91,300 Nynex Corp................. 4,097
86,170 U.S. West, Inc............. 2,618
--------
19,602
--------
Tobacco (6.5%):
94,500 American Brands, Inc....... 4,300
85,400 Phillip Morris Cos.,
Inc...................... 8,935
139,400 UST, Inc................... 4,635
--------
17,870
--------
Utilities-Electric (8.3%):
123,400 Baltimore Gas & Electric
Co....................... 3,178
115,400 Central & South West
Corp..................... 3,087
36,600 Dominion Resources......... 1,377
72,500 Florida Progress Corp...... 2,429
70,000 PacifiCorp................. 1,461
118,900 Teco Energy, Inc........... 2,764
102,400 Texas Utilities Co......... 4,301
147,200 Wisconsin Energy Corp...... 3,919
--------
22,516
--------
</TABLE>
Continued
LOGO
51
LOGO INCOME EQUITY FUND
<PAGE> 54
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Utilities--Gas & Pipeline (3.8%):
128,200 Consolidated Natural Gas
Co....................... $ 6,458
44,100 Nicor, Inc................. 1,251
51,500 Tenneco, Inc............... 2,537
--------
10,246
--------
Total Common Stocks 266,771
--------
Total Investments, at value 266,771
--------
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
REPURCHASE AGREEMENTS (1.8%):
$4,857,527 C. S. First Boston Corp.,
5.62%, 8/1/96
(Collateralized by 3,888
U.S. Treasury Bonds,
10.38%, 11/15/12, market
value--$4,961)........... $ 4,858
--------
Total Repurchase Agreements 4,858
--------
Total (Cost--$237,280)(a) $271,629
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $272,803.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $64 (amount in thousands). Cost for federal income tax
purposes differs from value by net unrealized appreciation of securities as
follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.......................................... $ 38,217
Unrealized depreciation.......................................... (3,932)
--------
Net unrealized appreciation...................................... $ 34,285
=======
</TABLE>
ADR -- American Depository Receipt
PLC -- Public Limited Company
See notes to financial statements.
LOGO
52
LOGO INCOME EQUITY FUND
<PAGE> 55
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
ASSET BACKED SECURITIES (4.0%)
$ 205,000 Carco Auto Loan Master
Trust, Series 1994-2,
7.88%, 3/15/98........... $ 207
190,000 Carco Auto Loan Master
Trust, Series 1991-3,
7.88%, 8/15/97........... 194
200,000 Contimortgage Home Equity
Loan Trust, 8.09%,
9/15/09.................. 203
200,000 Contimortgage Home Equity
Loan Trust, 7.44%,
9/15/12.................. 197
250,000 Green Tree Financial Corp.,
6.80%, 1/15/26........... 244
400,000 Standard Credit Card
MasterTrust, 4.65%,
3/7/99................... 395
165,324 UFSB Grantor Trust, 5.08%,
5/15/00.................. 163
--------
Total Asset Backed Securities 1,603
--------
COLLATERALIZED MORTGAGE OBLIGATIONS (2.3%):
86,516 Country Wide Mortgage,
6.75%, 3/25/08........... 84
500,000 Federal Home Loan Mortgage
Corp., 6.25%, 1/15/24.... 449
250,000 GE Capital Mortgage
Service, Inc., 1994-1,
6.50%, 1/25/24........... 235
175,000 Residential Funding
Mortgage, 6.75%,
11/25/07................. 168
--------
Total Collateralized Mortgage Obligations
936
--------
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS (52.6%):
Aerospace (0.5%):
5,800 B.F. Goodrich Co........... $ 210
--------
Air Transportation (0.4%):
1,300 Federal Express Corp.
(b)...................... 101
2,200 Southwest Airlines Co...... 55
--------
156
--------
Banks (3.9%):
2,970 Banc One Corp.............. 103
4,800 BankAmerica Corp........... 383
3,300 Chase Manhattan Corp....... 229
8,000 Fleet Financial Group,
Inc...................... 324
1,300 J.P. Morgan & Co........... 112
3,300 National City Corp......... 114
6,000 Norwest Corp............... 213
2,400 Wachovia Corp.............. 106
--------
1,584
--------
Beverages (2.5%):
6,200 Anheuser-Busch Co.......... 463
5,600 Coca-Cola Co............... 263
8,200 PepsiCo, Inc............... 259
--------
985
--------
Building Materials (0.4%):
5,600 Masco Corp................. 156
--------
Business Equipment & Services (0.6%):
1,900 Dun & Bradstreet Corp...... 109
2,800 Pitney Bowes, Inc.......... 136
--------
245
--------
</TABLE>
Continued
LOGO
53
LOGO BALANCED FUND
<PAGE> 56
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Chemicals--Petroleum & Inorganic (0.9%):
1,400 Dow Chemical Co............ $ 104
1,400 duPont, (E.I.) de Nemours
Co....................... 113
5,000 Monsanto Corp.............. 156
--------
373
--------
Chemicals--Specialty (0.3%):
3,000 Betz Labs, Inc............. 136
--------
Commercial Goods & Services (0.3%):
3,000 National Services
Industries, Inc.......... 114
--------
Computers--Main & Mini (0.5%):
2,000 International Business
Machines Corp............ 216
--------
Computers (0.3%):
2,800 Seagate Technology, Inc.
(b)...................... 136
--------
Computer Software (1.0%):
1,900 Electronic Data Systems
Corp. (b)................ 101
1,300 Microsoft Corp. (b)........ 153
2,400 Shared Medical Systems
Corp..................... 132
--------
386
--------
Construction Materials (0.3%):
3,700 Fleetwood Enterprises,
Inc...................... 112
--------
Cosmetics & Toiletries (0.8%):
2,900 Colgate-Palmolive Co....... 228
2,600 International Flavors &
Fragrances, Inc.......... 111
--------
339
--------
Defense (0.7%):
5,400 Raytheon Co................ 262
--------
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
COMMON STOCKS, CONTINUED:
Electrical Equipment (4.5%):
7,600 AMP, Inc................... $ 294
2,600 Duracell International,
Inc...................... 117
2,500 Emerson Electric Co........ 211
7,700 General Electric Co........ 634
5,600 Intel Corp................. 421
3,300 Thomas & Betts Corp........ 120
--------
1,797
--------
Electronics (0.6%):
4,800 Motorola, Inc.............. 259
--------
Electronic Instruments (0.4%):
4,100 Texas Instruments, Inc..... 177
--------
Environmental Services (0.3%):
6,000 Browning-Ferris Industries,
Inc...................... 134
--------
Financial Services (1.2%):
6,600 American General Corp...... 230
7,600 Federal National Mortgage
Assoc.................... 241
--------
471
--------
Food & Related (1.6%):
3,700 General Mills, Inc......... 201
6,450 H. J. Heinz Co............. 213
1,500 Hershey Foods Corp......... 123
1,700 Ralston-Purina Co.......... 107
--------
644
--------
Forest & Paper Products (1.4%):
2,700 Georgia Pacific Corp....... 202
2,200 International Paper Co..... 83
</TABLE>
Continued
LOGO
54
LOGO BALANCED FUND
<PAGE> 57
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Forest & Paper Products, continued:
1,500 Kimberly Clark Corp........ $ 114
4,000 Weyerhaeuser Co............ 167
--------
566
--------
Health Care--General (1.1%):
2,500 Bristol-Myers Squibb Co.... 217
5,000 Johnson & Johnson.......... 239
--------
456
--------
Hospital Supply & Management (0.5%):
4,100 Columbia/HCA Healthcare
Corp..................... 210
--------
Household--General Products (0.4%):
6,100 Rubbermaid, Inc............ 175
--------
Insurance--Life (0.3%):
2,250 Jefferson Pilot Corp....... 118
--------
Insurance--Multiline (0.9%):
1,761 Allstate Corp.............. 79
3,300 Marsh & McLennan
Cos., Inc................ 299
--------
378
--------
Insurance--Property & Casualty (1.0%):
1,500 General Re Corp............ 220
2,100 Hartford Steam Boiler
Inspection & Insurance
Co....................... 92
1,900 St. Paul Cos., Inc......... 98
--------
410
--------
Machinery & Equipment (0.5%):
4,300 Snap-On, Inc............... 191
--------
Manufacturing (0.7%):
500 Imation Corp. (b).......... 11
2,700 Ingersoll-Rand Co.......... 115
2,500 Service Corp.
International............ 138
--------
264
--------
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
COMMON STOCKS, CONTINUED:
Medical Equipment & Supplies (0.5%):
5,000 Baxter International,
Inc...................... $ 208
--------
Motor Vehicle Parts (0.3%):
2,400 Genuine Parts Co........... 102
--------
Motor Vehicles (0.5%):
5,900 Ford Motor Co.............. 192
--------
Multiple Industry (1.8%):
10,800 Corning, Inc............... 398
5,000 Minnesota Mining &
Manufacturing Co......... 325
--------
723
--------
Petroleum--Domestic (1.2%):
1,900 Atlantic Richfield Co...... 220
6,700 Phillips Petroleum Co...... 265
--------
485
--------
Petroleum--Internationals (3.2%):
4,600 Amoco Corp................. 308
5,600 Chevron Corp............... 324
2,700 Exxon Corp................. 222
2,000 Mobil Corp................. 221
2,400 Texaco, Inc................ 204
--------
1,279
--------
Petroleum--Services (0.9%):
9,300 Baker Hughes, Inc.......... 273
2,000 Halliburton Co............. 104
--------
377
--------
</TABLE>
Continued
LOGO
55
LOGO BALANCED FUND
<PAGE> 58
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Pharmaceuticals (2.3%):
2,600 Abbott Laboratories........ $ 114
3,800 Merck & Co., Inc........... 244
3,300 Pfizer, Inc................ 231
1,800 Schering-Plough Corp....... 99
4,600 Warner Lambert Co.......... 251
--------
939
--------
Photographic Equipment (0.3%):
1,600 Eastman Kodak Co........... 120
--------
Publishing (0.6%):
3,500 Gannett Co., Inc........... 230
--------
Railroad (1.0%):
3,100 Burlington Northern Santa
Fe....................... 245
2,100 Union Pacific Corp......... 144
--------
389
--------
Restaurants (0.2%):
6,800 Brinker International,
Inc. (b)................. 89
--------
Retail--General Merchandise (1.3%):
4,400 J.C. Penney, Inc........... 219
2,800 Sears Roebuck & Co......... 115
6,900 Wal-Mart Stores, Inc....... 165
--------
499
--------
Retail--Specialty Stores (0.5%):
5,500 Albany International, Class
A........................ 102
2,200 Home Depot, Inc............ 111
--------
213
--------
Tobacco (1.2%):
2,500 Phillip Morris Cos.,
Inc...................... 262
6,200 UST, Inc................... 206
--------
468
--------
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
COMMON STOCKS, CONTINUED:
Tools (0.3%):
3,800 Stanley Works.............. $ 108
--------
Toys (0.3%):
4,250 Mattel, Inc................ 105
--------
Utilities--Electric (2.5%):
4,600 FPL Group, Inc............. 209
9,500 PacifiCorp................. 198
9,000 Potomac Electric Power
Co. (b).................. 217
6,500 Public Service Enterprise
Group, Inc............... 170
5,100 Texas Utilities Co......... 214
--------
1,008
--------
Utilities--Gas & Pipeline (0.9%):
2,600 Consolidated Natural Gas
Co....................... 131
4,100 Pacific Enterprises........ 121
1,900 Tenneco, Inc............... 94
--------
346
--------
Utilities--Telephone (4.0%):
11,400 AirTouch Communications,
Inc. (b)................. 313
3,800 Ameritech Corp............. 211
4,500 AT&T Corp.................. 235
5,000 BellSouth Corp............. 205
2,100 DSC Communications
Corp. (b)................ 63
5,700 GTE Corp................... 235
400 Lucent Technologies,
Inc...................... 15
3,500 MCI Telecommunications
Corp..................... 86
</TABLE>
Continued
LOGO
56
LOGO BALANCED FUND
<PAGE> 59
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Utilities--Telephone, continued:
4,000 Network Equipment
Technologies, Inc. (b)... $ 53
6,100 U.S. West, Inc............. 185
--------
1,601
--------
Total Common Stocks 21,141
--------
CORPORATE BONDS (6.8%):
Automotive (1.6%):
$ 300,000 Ford Capital, 9.38%,
1/1/98................... 312
305,000 General Motors Acceptance
Corp., 8.00%, 10/1/99.... 315
--------
627
--------
Banking (1.1%):
215,000 Bank of America, 6.00%,
7/15/97.................. 214
100,000 Citicorp, 6.75%, 8/15/05... 96
150,000 U.S. Bancorp, 6.75%,
10/15/05................. 143
--------
453
--------
Beverages (0.2%):
95,000 Bass America, Inc., 6.75%,
8/1/99................... 95
--------
Computer Hardware (0.5%):
200,000 IBM Corp., 8.38%,11/1/19... 215
--------
Financial Services (0.2%):
100,000 Golden West Financial
Corp., 6.70%, 7/1/02..... 97
--------
Governments (Foreign) (0.8%):
$ 100,000 Hydro-Quebec, 8.05%,
7/7/24................... 106
215,000 Norske Hydro, 7.75%,
6/15/23.................. 215
--------
321
--------
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
CORPORATE BONDS, CONTINUED:
Industrial Goods & Services (0.5%):
205,000 Caterpillar Tractor Co.,
6.00%, 5/1/07............ $ 184
--------
Retail Stores (1.1%):
100,000 J.C. Penney, Inc., 6.00%,
5/1/06................... 90
150,000 Sears Roebuck Co., 9.25%,
8/1/97................... 154
200,000 Wal-Mart Stores, Inc.,
6.38%, 3/1/03............ 193
--------
437
--------
Telecommunications (0.8%):
175,000 Bell Atlantic Maryland,
8.00%,10/15/29........... 184
125,000 New England Telephone &
Telegraph Co., 7.88%,
11/15/29................. 131
--------
315
--------
Total Corporate Bonds 2,744
--------
U.S. GOVERNMENT AGENCIES (10.2%):
Federal National Mortgage Assoc.:
1,350,000 5.45%, 10/10/03............ 1,242
316,003 6.50%, 3/1/24, Pool
#276510.................. 297
999,999 8.00%, 7/1/26.............. 1,006
</TABLE>
Continued
LOGO
57
LOGO BALANCED FUND
<PAGE> 60
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCIES, CONTINUED:
Government National Mortgage Assoc.
$ 95,076 6.50%, 2/15/24, Pool
#388599.................. $ 88
484,019 7.50%, 5/15/24, Pool
#386494.................. 476
1,016,375 7.00%, 2/15/26............. 972
--------
Total U.S. Government Agencies 4,081
--------
U.S. TREASURY BONDS (6.3%):
1,150,000 7.25%, 5/15/16............. 1,171
205,000 8.75%, 8/15/20............. 244
1,125,000 7.13%, 2/15/23............. 1,130
--------
Total U.S. Treasury Bonds 2,545
--------
U.S. TREASURY NOTES (8.0%):
200,000 8.13%, 2/15/98............. 206
1,000,000 8.25%, 7/15/98............. 1,037
<CAPTION>
SHARES
OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
---------- --------------------------- --------
<S> <C> <C> <C>
U.S. TREASURY NOTES, CONTINUED:
$1,000,000 5.50%, 4/15/00............. $ 969
500,000 8.50%, 11/15/00............ 536
500,000 5.88%, 2/15/04............. 475
--------
Total U.S. Treasury Notes 3,223
--------
Total Investments, at value 36,273
--------
REPURCHASE AGREEMENTS (9.4%):
3,786,776 C.S. First Boston Corp.,
Repurchase Agreement,
5.62%, 8/1/96
(Collateralized by 3,033
U.S. Treasury Bonds,
10.38%, 11/15/12 , market
value $3,870)............ 3,787
--------
Total Repurchase Agreements 3,787
--------
Total (Cost--$35,946)(a) $ 40,060
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $40,196.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $14 (amount in thousands). Cost for federal income tax
purposes differs from value by net unrealized appreciation of securities as
follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.......................................... $ 4,702
Unrealized depreciation.......................................... (602)
--------
Net unrealized appreciation...................................... $ 4,100
=======
</TABLE>
(b) Represents non-income producing securities.
See notes to financial statements.
LOGO
58
LOGO BALANCED FUND
<PAGE> 61
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ------
<S> <C> <C> <C>
COMMON STOCKS (98.2%):
Aerospace (2.0%):
24,565 B.F. Goodrich................ $ 890
--------
Banks (8.4%):
10,365 BankAmerica Corp............. 827
3,280 Barnett Banks, Inc........... 201
16,030 Chase Manhattan.............. 1,114
16,830 Fleet Financial Group,
Inc........................ 681
3,825 Wells Fargo & Co............. 891
--------
3,714
--------
Beverages (5.4%):
8,985 Anheuser-Busch Co............ 672
19,215 Coca-Cola Co................. 901
26,390 PepsiCo, Inc................. 834
--------
2,407
--------
Business Equipment & Services (0.3%):
9,080 OfficeMax, Inc. (b).......... 120
--------
Capital Equipment (0.5%):
3,240 Illinois Tool Works.......... 209
--------
Chemicals--Petroleum & Inorganic (0.4%):
3,750 Hercules, Inc................ 188
--------
Computers--Main & Mini (4.0%):
9,610 Ceridan Corp. (b)............ 418
14,660 Hewlett Packard Co........... 645
4,375 International Business
Machines................... 472
4,685 Silicon Graphics, Inc. (b)... 110
2,140 Sun Microsystems, Inc. (b)... 117
--------
1,762
--------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Computer Software (10.6%):
2,885 Automatic Data Processing,
Inc........................ $ 114
17,005 Cisco Systems (b)............ 880
11,888 Computer Associates
International, Inc......... 605
3,355 Computer Sciences (b)........ 228
17,770 Electronic Data Systems
Corp. (b).................. 940
11,588 First Data Corp.............. 899
3,705 Microsoft Corp. (b).......... 437
10,045 Oracle Systems Corp. (b)..... 393
5,350 Parametric Technology Corp.
(b)........................ 223
--------
4,719
--------
Computers (2.0%):
5,840 Digital Equipment (b)........ 207
14,390 Seagate Technology (b)....... 696
--------
903
--------
Consumer Goods & Services (1.6%):
21,715 Xilinx, Inc. (b)............. 703
--------
Cosmetics & Toiletries (4.1%):
4,720 Avon Products................ 208
5,485 Colgate-Palmolive Co......... 430
15,360 Gillette Co.................. 977
5,110 Ingersoll-Rand Co............ 218
--------
1,833
--------
Durable Goods (0.6%):
15,870 Coleman, Inc. (b)............ 282
--------
Electronics (0.6%):
5,170 Motorola, Inc................ 279
--------
</TABLE>
Continued
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59
LOGO GROWTH FUND
<PAGE> 62
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Electrical Equipment (6.5%):
5,480 AMP, Inc..................... $ 212
10,640 Duracell International,
Inc........................ 480
11,860 General Electric Co.......... 977
13,275 Intel Corp................... 997
14,810 National Semiconductor
Corp. (b).................. 209
--------
2,875
--------
Electronic Components (0.2%):
3,245 Applied Materials, Inc.
(b)........................ 77
--------
Electronic Instruments (0.4%):
4,220 Texas Instruments, Inc....... 183
--------
Entertainment (0.8%):
7,080 Circus Circus Enterprises,
Inc. (b)................... 217
6,715 Harrah's Entertainment (b)... 148
--------
365
--------
Financial Services (7.2%):
14,835 American Express Co.......... 649
5,745 Federal Home Loan Mortgage
Corp....................... 484
30,635 Federal National Mortgage
Assoc...................... 973
1,405 Household International,
Inc........................ 105
10,926 Mutual Risk Management
Ltd........................ 307
15,935 Travelers Corp. (b).......... 673
--------
3,191
--------
Food & Related (1.6%):
2,550 General Mills, Inc........... 138
2,950 Hershey Foods................ 242
5,397 Ralston-Purina Co............ 339
--------
719
--------
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ------
COMMON STOCKS, CONTINUED:
Forest & Paper Products (1.1%):
5,605 Albany International Corp.,
Class A.................... $ 104
1,220 Georgia Pacific Corp......... 91
2,340 International Paper Co....... 89
5,280 Weyerhaeuser Co.............. 220
--------
504
--------
Healthcare--Drugs (8.1%):
4,962 Abbott Laboratories.......... 218
3,820 American Home Products
Corp....................... 217
8,501 Amgen, Inc. (b).............. 464
7,240 Merck & Co................... 465
9,090 Pfizer, Inc.................. 635
15,850 Pharmacia & Upjohn Co........ 654
11,240 Schering Plough Corp......... 620
6,270 Warner-Lambert Co............ 342
--------
3,615
--------
Healthcare--General (2.0%):
18,230 Johnson & Johnson............ 870
--------
Hospital Supply & Management (0.5%):
4,081 Columbia/HCA Healthcare
Corp....................... 209
--------
Hotel Management & Related Services (0.4%):
7,392 Promus Hotel Corp. (b)....... 202
--------
Household-General Products (0.5%):
2,270 Proctor & Gamble Co.......... 203
--------
Insurance--Multiline (0.5%):
2,547 Allstate Corp................ 114
1,400 Marsh & McLennan Cos.,
Inc........................ 127
--------
241
--------
</TABLE>
Continued
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60
LOGO GROWTH FUND
<PAGE> 63
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Insurance--Property & Casualty (2.3%):
5,955 American International Group,
Inc........................ $ 560
1,560 General Re Corp.............. 229
2,985 MBIA, Inc.................... 226
--------
1,015
--------
Leisure Time Industry (2.2%):
17,405 The Walt Disney Co........... 968
--------
Machinery & Equipment (0.4%):
5,275 Deere & Co................... 189
--------
Manufacturing (1.1%):
8,480 Service Corp.
International.............. 468
--------
Medical Equipment & Supplies (1.3%):
6,469 Chiron Corp. (b)............. 569
--------
Petroleum--Internationals (2.1%):
7,515 Amoco Corp................... 503
5,305 Exxon Corp................... 436
--------
939
--------
Petroleum--Services (1.3%):
4,835 Baker Hughes, Inc............ 142
3,655 Dresser Industries Inc....... 99
4,520 Halliburton Co............... 236
1,215 Schlumberger Ltd............. 97
--------
574
--------
Pharmaceuticals (2.0%):
17,370 ALZA Corp., Class A (b)...... 430
4,900 Astra AB, Class A (b)........ 207
4,500 SmithKline Beecham
PLC-ADR.................... 242
--------
879
--------
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ------
COMMON STOCKS, CONTINUED:
Publishing (2.0%):
13,535 Gannett Co., Inc............. $ 888
--------
Restaurants (2.5%):
23,720 McDonald's Corp.............. 1,100
--------
Retail--Food Stores (0.8%):
9,425 Safeway, Inc. (b)............ 339
--------
Retail--General Merchandise (1.5%):
11,480 Price/Costco, Inc. (b)....... 235
10,625 Sears Roebuck & Co........... 436
--------
671
--------
Retail--Speciality Stores (1.4%):
8,190 Home Depot, Inc.............. 414
7,215 Toys R Us (b)................ 190
--------
604
--------
Telecommunications (1.3%):
12,585 Airtouch (b)................. 346
6,555 Lucent Technologies, Inc..... 243
--------
589
--------
Telecommunications--Equipment (0.2%):
5,115 Network Equipment
Technologies (b)........... 68
--------
Tobacco (2.3%):
8,700 Phillip Morris Cos., Inc..... 910
3,105 UST.......................... 103
--------
1,013
--------
Toys (1.4%):
25,040 Mattel, Inc.................. 620
--------
Utilities--Gas & Pipeline (0.3%):
2,305 Tenneco, Inc................. 114
--------
</TABLE>
Continued
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61
LOGO GROWTH FUND
<PAGE> 64
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amount)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Utilities--Telephone (1.5%):
3,550 Ameritech Corp............... $ 197
5,260 AT&T Corp.................... 274
4,500 GTE Corp..................... 186
--------
657
--------
Total Common Stocks 43,527
--------
Total Investments, at value 43,527
--------
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
REPURCHASE AGREEMENTS (2.0%):
$ 899,983 C. S. First Boston Corp.,
5.62%, 8/1/96
(Collateralized by 825 U.S.
Treasury Bonds, 8.75%,
11/15/08, market
value--$922)............... $ 900
--------
Total Repurchase Agreements 900
--------
Total (Cost -- $40,510)(a) $ 44,427
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $44,338.
(a) Represents cost for financial reporting purposes and differs from cost basis
for federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of
approximately $208 (amount in thousands). Cost for federal income tax
purposes differs from value by net unrealized appreciation of securities as
follows (amounts in thousands):
<TABLE>
<S> <C>
Unrealized appreciation.......................................... $ 5,175
Unrealized depreciation.......................................... (1,466)
--------
Net unrealized appreciation...................................... $ 3,709
=======
</TABLE>
(b) Represents non-income producing securities.
ADR -- American Depository Receipt
PLC -- Public Limited Company
See notes to financial statements.
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62
LOGO GROWTH FUND
<PAGE> 65
SCHEDULE OF PORTFOLIO INVESTMENTS
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amounts)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMON STOCKS (94.0%):
Aerospace (0.9%):
1,600 B.F. Goodrich Co............. $ 58
--------
Air Transportation (0.9%):
500 Federal Express Corp. (b).... 39
800 Southwest Airlines Co........ 20
--------
59
--------
Banks (6.5%):
870 Banc One Corp................ 30
900 BankAmerica Corp............. 72
1,000 Chase Manhattan Corp......... 69
2,200 Fleet Financial Group,
Inc........................ 89
500 J. P. Morgan & Co............ 43
900 National City Corp........... 31
1,500 Norwest Corp................. 53
600 Wachovia Corp................ 27
--------
414
--------
Beverages (4.6%):
2,000 Anheuser-Busch Co............ 149
1,600 Coca-Cola Co................. 75
2,200 PepsiCo, Inc................. 70
--------
294
--------
Building Materials (0.9%):
2,000 Masco Corp................... 56
--------
Business Equipment & Services (0.9%):
500 Dun & Bradstreet Corp........ 29
600 Pitney Bowes, Inc............ 29
--------
58
--------
Chemicals--Petroleum & Inorganic (1.2%):
400 Dow Chemical Co.............. 30
400 du Pont (E.I.) de Nemours
Co......................... 32
500 Monsanto Corp................ 16
--------
78
--------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Chemicals--Specialty (0.5%):
700 Betz Labs, Inc............... $ 32
--------
Commercial Goods & Services (0.5%):
900 National Services Industries,
Inc........................ 34
--------
Computer (0.7%):
900 Seagate Technology, Inc.
(b)........................ 44
--------
Computer--Main & Mini (1.0%):
600 International Business
Machines Corp.............. 65
--------
Computer Software (1.9%):
600 Electronic Data Systems Corp.
(b)........................ 32
600 Microsoft Corp. (b).......... 70
400 Shared Medical Systems
Corp....................... 22
--------
124
--------
Construction Materials (0.5%):
1,100 Fleetwood Enterprises,
Inc........................ 33
--------
Cosmetics & Toiletries (1.5%):
800 Colgate-Palmolive Co......... 63
800 International Flavors &
Fragrances, Inc............ 34
--------
97
--------
Defense (1.0%):
1,300 Raytheon Co.................. 63
--------
</TABLE>
Continued
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63
LOGO INCOME & GROWTH FUND
<PAGE> 66
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amounts)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Electrical Equipment (7.7%):
1,600 AMP, Inc..................... $ 62
800 Duracell International,
Inc........................ 36
800 Emerson Electric Co.......... 67
2,100 General Electric Co.......... 173
1,600 Intel Corp................... 120
900 Thomas & Betts Corp.......... 33
--------
491
--------
Electronics (1.7%):
2,000 Motorola, Inc................ 108
--------
Electronic Instruments (0.8%):
1,200 Texas Instruments, Inc....... 52
--------
Environment Services (0.7%):
1,900 Browning-Ferris Industries,
Inc........................ 43
--------
Financial Services (2.0%):
1,900 American General Corp........ 66
2,000 Federal National Mortgage
Assoc...................... 64
--------
130
--------
Food & Related (2.7%):
1,000 General Mills, Inc........... 54
1,900 H. J. Heinz Co............... 63
300 Hershey Foods Corp........... 25
500 Ralston-Purina Co............ 31
--------
173
--------
Forest & Paper Products (3.0%):
1,000 Georgia-Pacific Corp......... 75
800 International Paper Co....... 30
400 Kimberly Clark Corp.......... 31
1,300 Weyerhaeuser Co.............. 54
--------
190
--------
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
COMMON STOCKS, CONTINUED:
Health Care--General (1.9%):
600 Bristol-Myers Squibb Co...... $ 52
1,400 Johnson & Johnson............ 67
--------
119
--------
Hospital Supply & Management (0.8%):
1,000 Columbia/HCA Healthcare
Corp....................... 51
--------
Household--General Products (1.0%):
2,300 Rubbermaid, Inc.............. 66
--------
Insurance--Life (0.5%):
575 Jefferson Pilot Corp......... 30
--------
Insurance--Multiline (1.8%):
756 Allstate Corp................ 34
900 Marsh & McLennan Cos.,
Inc........................ 81
--------
115
--------
Insurance--Property & Casualty (1.6%):
300 General Re Corp.............. 44
600 Hartford Steam Boiler
Inspection & Insurance
Co......................... 26
600 St. Paul Cos., Inc........... 31
--------
101
--------
Machinery & Equipment (1.5%):
800 Ingersoll-Rand Co............ 34
1,400 Snap-On, Inc................. 62
--------
96
--------
Manufacturing (0.7%):
155 Imation Corp. (b)............ 3
700 Service Corp.
International.............. 39
--------
42
--------
Medical Equipment & Supplies (0.8%):
1,300 Baxter International, Inc.... 54
--------
</TABLE>
Continued
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64
<PAGE> 67
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amounts)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Motor Vehicle Parts (1.6%):
850 Genuine Parts Co............. $ 36
1,900 Ford Motor Co................ 62
--------
98
--------
Multiple Industry (3.1%):
2,700 Corning, Inc................. 99
1,550 Minnesota Mining &
Manufacturing Co........... 101
--------
200
--------
Petroleum--Domestic (1.5%):
300 Atlantic Richfield Co........ 35
1,600 Phillips Petroleum Co........ 63
--------
98
--------
Petroleum--Internationals (5.8%):
1,400 Amoco Corp................... 94
1,600 Chevron Corp................. 92
800 Exxon Corp................... 66
600 Mobil Corp................... 66
600 Texaco, Inc.................. 51
--------
369
--------
Petroleum--Services (1.5%):
2,300 Baker Hughes, Inc............ 68
500 Halliburton Co............... 26
--------
94
--------
Pharmaceuticals (4.6%):
700 Abbott Laboratories.......... 31
900 Merck & Co................... 58
1,200 Pacific Enterprises.......... 35
1,000 Pfizer, Inc.................. 70
600 Schering-Plough Corp......... 33
1,200 Warner-Lambert Co............ 65
--------
292
--------
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Photographic Equipment (0.3%):
300 Eastman Kodak Co............. $ 22
--------
Publishing (1.1%):
1,100 Gannett Co., Inc............. 72
--------
Railroad (1.8%):
700 Burlington Northern Santa
Fe......................... 55
900 Union Pacific Corp........... 62
--------
117
--------
Restaurants (0.4%):
1,900 Brinker International, Inc.
(b)........................ 25
--------
Retail--General Merchandise (2.2%):
1,300 J.C. Penney, Inc............. 65
600 Sears Roebuck & Co........... 24
2,200 Wal-Mart Stores, Inc......... 53
--------
142
--------
Retail--Specialty Stores (1.0%):
1,600 Albany International, Class
A.......................... 30
700 Home Depot, Inc.............. 35
--------
65
--------
Telecommunications (7.1%):
1,800 AT&T Corp.................... 94
3,200 AirTouch Telecommunications
(b)........................ 88
1,100 Ameritech Corp............... 61
1,600 BellSouth Corp............... 66
1,500 General Telephone Electric
Corp. (b).................. 62
</TABLE>
Continued
LOGO
65
<PAGE> 68
SCHEDULE OF PORTFOLIO INVESTMENTS, CONTINUED
JULY 31, 1996
(Amounts in Thousands, Except for Shares or Principal Amounts)
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Telecommunications, continued:
100 Lucent Technologies, Inc..... $ 4
1,000 MCI Telecommunications
Corp....................... 25
1,800 U.S. West, Inc............... 55
--------
455
--------
Telecommunications--Equipment (0.6%):
700 DSC Communications Corp.
(b)........................ 21
1,200 Network Equipment
Technologies (b)........... 16
--------
37
--------
Tobacco (2.1%):
700 Phillip Morris Co., Inc...... 73
1,900 UST, Inc..................... 63
--------
136
--------
Tools (0.5%):
1,200 Stanley Works................ 34
--------
Toys (0.4%):
1,125 Mattel, Inc.................. 28
--------
Utilities--Electric (4.7%):
1,400 FPL Group, Inc............... 64
2,600 PacifiCorp................... 54
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------- ----------------------------- ---------
<S> <C> <C> <C>
COMMON STOCKS, CONTINUED:
Utilities--Electric, continued:
2,600 Potomac Electric Power Co.
(b)........................ $ 63
2,100 Public Service Enterprise
Group, Inc................. 55
1,600 Texas Utilities Co........... 67
--------
303
--------
Utilities--Gas & Pipeline (1.0%):
800 Consolidated Natural Gas
Co......................... 40
500 Tenneco, Inc................. 25
--------
65
--------
Total Common Stocks 6,022
--------
Total Investments, at value 6,022
--------
REPURCHASE AGREEMENTS (6.0%):
$ 386,342 First Boston, 5.62%, 8/1/96
(Collateralized by 303 U.S.
Treasury Bonds, 9.88%,
11/15/15, market
value--$396)............... 386
--------
Total Repurchase Agreements 386
--------
Total (Cost--$5,355)(a) $ 6,408
========
</TABLE>
- ------------
Percentages indicated are based on net assets of $6,407.
<TABLE>
<S> <C>
(a) Represents cost for financial reporting purposes and differs from cost basis for federal income tax purposes
by the amount of losses recognized for financial reporting in excess of federal income tax reporting of
approximately $5 (amount in thousands). Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows (amounts in thousands):
Unrealized appreciation................................................... 1,162
Unrealized depreciation................................................... (114)
------
Net unrealized appreciation............................................... 1,048
======
(b) Represents non-income producing securities.
</TABLE>
See notes to financial statements.
LOGO
66
<PAGE> 69
JULY 31, 1996
1. ORGANIZATION:
The HighMark Group (the "Group") was organized on March 10, 1987 and is
registered under the Investment Company Act of 1940 as amended (the "1940
Act"), as a diversified, open-end investment company established as a
Massachusetts business trust.
The Group is authorized to issue an unlimited number of shares which are
units of beneficial interest without par value. The Group presently offers
shares in the Diversified Obligations Fund, the U.S. Government Obligations
Fund, the 100% U.S. Treasury Obligations Fund, the California Tax-Free Fund,
the Tax-Free Fund, the Bond Fund, the Government Bond Fund, the Income
Equity Fund, the Balanced Fund, the Growth Fund and the Income & Growth Fund
(collectively, "the Funds" and individually, "a Fund"). Sales of shares may
be made to customers of Union Bank of California, NA ("Union Bank of
California") and to its affiliates, to all accounts of its correspondent
banks, to institutional investors, and to the general public. MERUS-UCA
Capital Management, ("MERUS-UCA"), a division of Union Bank of California,
serves as investment adviser to the Group.
The investment objective of the Diversified Obligations Fund, the U.S.
Government Obligations Fund, and the 100% U.S. Treasury Obligations Fund is
to seek current income with liquidity and stability of principal. The
Diversified Obligations Fund invests in obligations issued or guaranteed by
the U.S. Government, its agencies, or instrumentalities, and additionally
invests in other high-quality money market instruments and other unrated
instruments deemed to be of comparable high quality by the investment
adviser pursuant to guidelines established by the Group's Board of Trustees.
Some of the obligations and money market instruments in which the
Diversified Obligations Fund invests may be subject to repurchase
agreements. The U.S. Government Obligations Fund invests in obligations
issued or guaranteed by the U.S. Treasury, and additionally invests in
obligations issued or guaranteed by agencies or instrumentalities of the
U.S. Government. Some of the obligations in which the U.S. Government
Obligations Fund invests may be subject to repurchase agreements. The 100%
U.S. Treasury Obligations Fund invests exclusively in direct U.S. Treasury
obligations guaranteed as to timely payment of principal and interest by the
full faith and credit of the U.S. Treasury. The California Tax-Free Fund's
investment objective is to seek as high a level of current interest income
free from federal income tax and California personal income tax as is
consistent with the preservation of capital and relative stability of
principal. The Tax-Free Fund's investment objective is to seek as high a
level of current interest income free from federal income taxes as is
consistent with the preservation of capital and relative stability of
principal. The California Tax-Free Fund and the Tax-Free Fund invest
primarily in bonds and notes issued by or on behalf of states (primarily, in
the case of the California Tax-Free Fund, the State of California),
territories and possessions of the United States, and the District of
Columbia and their respective authorities, agencies, instrumentalities and
political sub-divisions ("Municipal Securities"). The investment objective
of the Bond Fund is to seek current income through investments in long-term,
fixed-income securities. The
Continued
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JULY 31, 1996
investment objective of the Government Bond Fund is to seek current income
and relative stability of principal through investments in short- to
intermediate-term U.S. Government Securities. The investment objective of
the Income Equity Fund is to seek investments in equity securities that
provide current income through the regular payment of dividends, with the
goal that the Fund will have a high current yield and a low level of price
volatility. Opportunities for long-term growth of asset value is a secondary
consideration. The primary investment objective of the Balanced Fund is to
seek total return. Conservation of capital is a secondary objective. The
investment objective of the Growth Fund is to seek investments in equity
securities that provide opportunity for long-term capital appreciation. The
production of current income is an incidental objective. The investment
objective of the Income and Growth Fund is to seek current income above the
average current income of companies included in the Standard & Poor's 500
Stock Index (the "S&P 500") and to seek total return (dividends plus price
appreciation) at least equal to that of the S&P 500 while maintaining lower
price volatility than the S&P 500. There can, however, be no assurance that
any of the funds' investment objectives will be achieved.
On December 1, 1990, the Diversified Obligations Fund, the U.S. Government
Obligations Fund, the 100% U.S. Treasury Obligations Fund, the California
Tax-Free Fund, and the Tax-Free Fund (collectively, "the money market
funds") commenced offering Class A Shares and designated existing shares as
Class B Shares. As of June 20, 1994, Class A and Class B Shares were
designated as "Investor" and "Fiduciary" Shares, respectively. On June 20,
1994, the Bond Fund, the Government Bond Fund, the Income Equity Fund, the
Balanced Fund, the Growth Fund and the Income & Growth Fund (collectively,
"the variable net asset value funds") commenced offering Investor Shares and
designated existing shares as Fiduciary Shares. Investor and Fiduciary
Shares represent interests in the same portfolio investments of a Fund and
are identical in all respects except that Investor Shares bear the expense,
if any, of the distribution fee under the Group's Distribution Plan (the
"Distribution Plan"), which will cause the Investor Shares to have a higher
expense ratio and to pay lower dividends than Fiduciary Shares. Investor
Shares have certain exclusive voting rights with respect to the Distribution
Plan.
In addition, Investor Shares of the variable net asset value funds are
subject to initial sales charges imposed at the time of purchase, in
accordance with the Funds' prospectuses.
2. SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by
the Group in the preparation of its financial statements. The policies are
in conformity with generally accepted accounting principles. The preparation
of financial statements requires management to make estimates and
assumptions which affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from those
estimates.
Continued
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JULY 31, 1996
SECURITIES VALUATION:
Investments in the money market funds are valued at either amortized cost,
which approximates market value, or at original cost, which when combined
with accrued interest, approximates market value. Under the amortized cost
valuation method, discount or premium is amortized on a constant basis to
the maturity of the security. In addition, the money market funds may not a)
purchase any instrument with a remaining maturity greater than thirteen
months unless such investment is subject to a demand feature, or b) maintain
a dollar weighted average portfolio maturity which exceeds 90 days.
Investments in common stocks and preferred stocks, corporate notes,
commercial paper, and U.S. Government securities of the variable net asset
value funds are valued at their market values determined on the basis of the
mean of the latest available bid prices in the principal market (closing
sales prices if the principal market is an exchange) in which such
securities are normally traded. Investments in investment companies are
valued at their net asset values as reported by such companies. Securities,
including restricted securities, for which market quotations are not readily
available, are valued at fair market value under the supervision of the
Fund's Board of Trustees. The differences between cost and market values of
investments held by the variable net asset value funds are reflected as
either unrealized appreciation or depreciation.
SECURITIES TRANSACTIONS AND RELATED INCOME:
Securities transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis and includes, where applicable for the money market funds, the pro
rata amortization of premium. The Funds accrete discounts of securities on
the same basis for both financial reporting and federal income tax purposes,
with the applicable portion of market discount recognized as ordinary income
upon disposition or maturity. Dividend income is recorded on the ex-dividend
date. Gains or losses realized on sales of securities are determined by
comparing the identified cost of the security lot sold with the net sales
proceeds.
REPURCHASE AGREEMENTS:
The Funds may enter into repurchase agreements with financial institutions,
such as banks and broker-dealers, which MERUS-UCA deems creditworthy under
guidelines approved by the Group's Board of Trustees, subject to the
seller's agreement to repurchase such securities at a mutually agreed-upon
date and price. The repurchase price generally equals the price paid by a
Fund plus interest negotiated on the basis of current short-term rates,
which may be more or less than the rate on the underlying portfolio
securities. The seller, under a repurchase agreement, is required to pledge
securities as collateral pursuant to the agreement at not less than 102% of
the repurchase price (including accrued interest). Securities subject to
repurchase agreements are held by the Funds' custodian in
Continued
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JULY 31, 1996
the Federal Reserve/Treasury book-entry system. Repurchase agreements are
considered to be loans by a Fund under the 1940 Act.
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income are declared daily and paid monthly
for the money market funds. Distributions from net investment income are
declared and paid monthly for the variable net asset value funds.
Distributable net realized capital gains, if any, are declared and
distributed at least annually for each of the Funds.
Distributions from net investment income and from net realized capital gains
are determined in accordance with income tax regulations which may differ
from generally accepted accounting principles. These differences are
primarily due to differing treatments for expiring capital loss
carryforwards and deferrals of certain losses for income tax purposes.
FEDERAL INCOME TAXES:
It is the policy of each of the Funds to continue to qualify as a regulated
investment company by complying with the provisions available to certain
investment companies, as defined in applicable sections of the Internal
Revenue Code, and to make distributions of net investment income and net
realized capital gains sufficient to relieve it from all, or substantially
all, federal income taxes. Accordingly, no provision for federal income tax
is required.
OTHER:
Expenses that are directly related to one of the Funds are charged directly
to that Fund and are allocated to each class of shares based on the relative
net assets of each class. Other operating expenses of the Group are prorated
to the Funds on the basis of relative net assets.
3. PURCHASES AND SALES OF SECURITIES:
Purchases and sales of securities (excluding short-term securities) for the
year ended July 31, 1996 are as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Bond Fund..................................................... $ 12,838,463 $ 12,390,087
Government Bond Fund.......................................... $ 2,334,192 $ 1,857,187
Income Equity Fund............................................ $120,339,920 $104,047,894
Balanced Fund................................................. $ 11,733,334 $ 4,060,963
Growth Fund................................................... $ 42,228,828 $ 27,423,180
Income & Growth Fund.......................................... $ 2,120,488 $ 3,323,657
</TABLE>
Continued
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JULY 31, 1996
4. CAPITAL SHARE TRANSACTIONS:
Transactions in capital shares for the Group for the years ended July 31,
1996 and 1995 were as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT OBLIGATIONS
DIVERSIFIED OBLIGATIONS FUND FUND
------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, 1996 JULY 31, 1995 JULY 31, 1996 JULY 31, 1995
------------- ------------- ------------- -------------
Amounts in Thousands
<S> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR SHARES:
Proceeds from shares issued............................... $ 1,099,638 $ 646,263 $ 712,337 $ 394,176
Dividends reinvested...................................... 7,260 4,895 3,476 1,948
Shares redeemed........................................... (1,049,143) (598,685) (688,578) (371,715)
------------- ------------- ------------- -------------
Change in net assets from Investor Share transactions..... $ 57,755 $ 52,473 $ 27,235 $ 24,409
============ ============ ============ ============
FIDUCIARY SHARES:
Proceeds from shares issued............................... $ 843,405 $ 915,980 $ 1,221,391 $ 1,366,450
Dividends reinvested...................................... 66 20 11 2
Shares redeemed........................................... (869,182) (874,436) (1,229,676) (1,368,823)
------------- ------------- ------------- -------------
Change in net assets from Fiduciary Share transactions.... $ (25,711) $ 41,564 $ (8,274) $ (2,371)
============ ============ ============ ============
SHARE TRANSACTIONS:
INVESTOR SHARES:
Issued.................................................... 1,099,638 646,263 712,337 394,176
Reinvested................................................ 7,260 4,895 3,476 1,948
Redeemed.................................................. (1,049,143) (598,685) (688,578) (371,715)
------------- ------------- ------------- -------------
Change in Investor Shares................................. 57,755 52,473 27,235 24,409
============ ============ ============ ============
FIDUCIARY SHARES:
Issued.................................................... 843,405 915,980 1,221,391 1,366,450
Reinvested................................................ 66 20 11 2
Redeemed.................................................. (869,182) (874,436) (1,229,676) (1,368,823)
------------- ------------- ------------- -------------
Change in Fiduciary Shares................................ (25,711) 41,564 (8,274) (2,371)
============ ============ ============ ============
</TABLE>
Continued
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JULY 31, 1996
<TABLE>
<CAPTION>
100% U.S. TREASURY CALIFORNIA
OBLIGATIONS FUND TAX-FREE FUND TAX-FREE FUND
------------------------------ ------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, 1996 JULY 31, 1995 JULY 31, 1996 JULY 31, 1995 JULY 31, 1996 JULY 31, 1995
------------- ------------- ------------- ------------- ------------- -------------
Amounts in Thousands
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR SHARES:
Proceeds from shares
issued..................... $ 463,343 $ 310,873 $ 120,369 $ 99,160 $ 36,847 $ 44,420
Dividends reinvested......... 4,526 2,090 1,419 1,027 402 412
Shares redeemed.............. (455,887) (263,475) (108,705) (91,159) (33,803) (52,158)
------------- ------------- ------------- ------------- ------------- -------------
Change in net assets from
Investor Share
transactions............... $ 11,982 $ 49,488 $ 13,083 $ 9,028 $ 3,446 $ (7,326)
============ ============ ============ ============ ============ ============
FIDUCIARY SHARES:
Proceeds from shares
issued..................... $ 541,337 $ 425,795 $ 223,524 $ 255,654 $ 95,373 $ 112,554
Dividends reinvested......... 45 16 6 8 17 17
Shares redeemed.............. (558,614) (395,970) (230,920) (264,895) (98,094) (112,034)
------------- ------------- ------------- ------------- ------------- -------------
Change in net assets from
Fiduciary Share
transactions............... $ (17,232) $ 29,841 $ (7,390) $ (9,233) $ (2,704) $ 537
============ ============ ============ ============ ============ ============
SHARE TRANSACTIONS:
INVESTOR SHARES:
Issued....................... 463,343 310,873 120,369 99,160 36,847 44,420
Reinvested................... 4,526 2,090 1,419 1,027 402 412
Redeemed..................... (455,887) (263,475) (108,705) (91,159) (33,803) (52,158)
------------- ------------- ------------- ------------- ------------- -------------
Change in Investor Shares.... 11,982 49,488 13,083 9,028 3,446 (7,326)
============ ============ ============ ============ ============ ============
FIDUCIARY SHARES:
Issued....................... 541,337 425,795 223,524 255,654 95,373 112,554
Reinvested................... 45 16 6 8 17 17
Redeemed..................... (558,614) (395,970) (230,920) (264,895) (98,094) (112,034)
------------- ------------- ------------- ------------- ------------- -------------
Change in Fiduciary Shares... (17,232) 29,841 (7,390) (9,233) (2,704) 537
============ ============ ============ ============ ============ ============
</TABLE>
Continued
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JULY 31, 1996
<TABLE>
<CAPTION>
BOND FUND GOVERNMENT BOND FUND INCOME EQUITY FUND
------------------------------ ------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, 1996 JULY 31, 1995 JULY 31, 1996 JULY 31, 1995 JULY 31, 1996 JULY 31, 1995
------------- ------------- ------------- ------------- ------------- -------------
Amounts in Thousands
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR SHARES:
Proceeds from shares
issued..................... $ 754 $ 626 $ 1,055 $ 97 $ 10,342 $ 4,131
Dividends reinvested......... 60 14 47 2 501 52
Shares redeemed.............. (177) (113) (33) (32) (5,008) (506)
------------- ------------- ------------- ------------- ------------- -------------
Change in net assets from
Investor Share
transactions............... $ 637 $ 527 $ 1,069 $ 67 $ 5,835 $ 3,677
============ ============ ============ ============ ============ ============
FIDUCIARY SHARES:
Proceeds from shares
issued..................... $ 14,876 $ 10,767 $ 297 $ 1,279 $ 52,940 $ 31,913
Dividends reinvested......... 2,983 3,111 219 295 16,994 13,482
Shares redeemed.............. (16,414) (19,821) (1,002) (2,852) (49,911) (56,293)
------------- ------------- ------------- ------------- ------------- -------------
Change in net assets from
Fiduciary Share
transactions............... $ 1,445 $ (5,943) $ (486) $ (1,278) $ 20,023 $ (10,898)
============ ============ ============ ============ ============ ============
SHARE TRANSACTIONS:
INVESTOR SHARES:
Issued....................... 71 63 110 11 721 331
Reinvested................... 6 1 5 -- 35 5
Redeemed..................... (17) (11) (3) (4) (344) (40)
------------- ------------- ------------- ------------- ------------- -------------
Change in Investor Shares.... 60 53 112 7 412 296
============ ============ ============ ============ ============ ============
FIDUCIARY SHARES:
Issued....................... 1,421 1,074 32 137 3,719 2,625
Reinvested................... 284 311 22 32 1,200 1,154
Redeemed..................... (1,563) (1,974) (104) (305) (3,529) (4,658)
------------- ------------- ------------- ------------- ------------- -------------
Change in Fiduciary Shares... 142 (589) (50) (136) 1,390 (879)
============ ============ ============ ============ ============ ============
</TABLE>
Continued
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JULY 31, 1996
<TABLE>
<CAPTION>
BALANCED FUND GROWTH FUND INCOME & GROWTH FUND
------------------------------ ------------------------------ ------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
JULY 31, 1996 JULY 31, 1995 JULY 31, 1996 JULY 31, 1995 JULY 31, 1996 JULY 31, 1995
------------- ------------- ------------- ------------- ------------- -------------
Amounts in Thousands
<S> <C> <C> <C> <C> <C> <C>
CAPITAL TRANSACTIONS:
INVESTOR SHARES:
Proceeds from shares
issued..................... $ 526 $ 480 $ 1,796 $ 1,230 $ 213 $ 205
Dividends reinvested......... 22 2 107 5 17 1
Shares redeemed.............. (358) (20) (370) (144) (66) --
------------- ------------- ------------- ------------- ------------- -------------
Change in net assets from
Investor Share
transactions............... $ 190 $ 462 $ 1,533 $ 1,091 $ 164 $ 206
============ ============ ============ ============ ============ ============
FIDUCIARY SHARES:
Proceeds from shares
issued..................... $ 15,314 $ 9,876 $ 17,443 $ 8,497 $ 2,710 $ 1,566
Dividends reinvested......... 1,150 984 1,858 498 417 126
Shares redeemed.............. (9,046) (9,570) (4,577) (3,450) (4,124) (788)
------------- ------------- ------------- ------------- ------------- -------------
Change in net assets from
Fiduciary Share
transactions............... $ 7,418 $ 1,290 $ 14,724 $ 5,545 $ (997) $ 904
============ ============ ============ ============ ============ ============
SHARE TRANSACTIONS:
INVESTOR SHARES:
Issued....................... 46 45 143 115 17 18
Reinvested................... 2 -- 9 1 1 --
Redeemed..................... (31) (2) (29) (13) (5) --
------------- ------------- ------------- ------------- ------------- -------------
Change in Investor Shares.... 17 43 123 103 13 18
============ ============ ============ ============ ============ ============
FIDUCIARY SHARES:
Issued....................... 1,321 976 1,397 836 220 150
Reinvested................... 100 99 154 50 35 12
Redeemed..................... (789) (964) (365) (334) (343) (73)
------------- ------------- ------------- ------------- ------------- -------------
Change in Fiduciary Shares... 632 111 1,186 552 (88) 89
============ ============ ============ ============ ============ ============
</TABLE>
Continued
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5. RELATED PARTY TRANSACTIONS:
Investment advisory services are provided to the Group by MERUS-UCA. Under
the terms of the investment advisory agreement, Union Bank of California, of
which MERUS-UCA is a division, is entitled to receive fees based on a
percentage of the average net assets of each of the Funds. Union Bank of
California also serves as custodian, sub-transfer agent and
sub-administrator for the Group.
BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services ("BISYS"),
an Ohio Limited Partnership, and BISYS Fund Services Ohio, Inc. ("BISYS
Ohio") are subsidiaries of The BISYS Group, Inc.
BISYS, with whom certain officers and trustees of the Group are affiliated,
serves the Group as administrator. Such officers and trustees are paid no
fees directly by the Funds for serving as officers and trustees of the
Group. Under the terms of the administration agreement, BISYS' fees are
computed daily as a percentage of the average net assets of the Funds. BISYS
also serves as the Group's distributor. As distributor, BISYS is entitled to
receive fees from the Funds for providing distribution services. For the
year ended July 31, 1996, BISYS received $212,765 for commissions earned on
sales of shares of the Group's variable net asset value funds, of which
$23,664 was reallowed to affiliated parties. BISYS Ohio, serves the Group as
transfer agent and mutual fund accountant. Transfer agent fees are computed
on a sliding scale, based upon the number of shareholders.
The Group has adopted a Distribution Plan pursuant to Rule 12b-1 under the
1940 Act pursuant to which each Fund may pay the Distributor as compensation
for its services in connection with the Distribution Plan a distribution
fee, computed daily and paid monthly, at a maximum annual rate of
twenty-five one-hundredths of one percent (0.25%) of the average daily net
assets attributable to the Funds' Investor Shares. A Fund's Fiduciary Shares
are not subject to the Distribution Plan or a distribution fee. The
Distributor has agreed to voluntarily reduce payments to be received
pursuant to the Distribution Plan with respect to a money market fund to the
extent necessary to ensure that such payments do not exceed the income
attributable to such Fund's shares on any day.
The Group has also adopted a Shareholder Services Plan permitting payment of
compensation to financial institutions that agree to provide certain
administrative support services for their customers who are Fund
shareholders. Each Fund has entered into a specific arrangement with BISYS
for the provision of such services and reimburses BISYS for its cost of
providing these services, subject to a maximum annual rate of twenty-five
one-hundredths of one percent (0.25%) of each Fund's average daily net
assets.
Fees may be voluntarily reduced or reimbursed to assist the Funds in
maintaining competitive expense ratios. Such fees are permanently waived.
Continued
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Information regarding these transactions is as follows for the year ended
July 31, 1996: (amounts in thousands)
<TABLE>
<CAPTION>
DIVERSIFIED U.S. GOVERNMENT 100% U.S. TREASURY
OBLIGATIONS FUND OBLIGATIONS FUND OBLIGATIONS FUND
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee (percentage of
average net assets)................ 0.40% 1st $500 million 0.40% 1st $500 million 0.40% 1st $500 million
0.35% next $500 million 0.35% next $500 million 0.35% next $500 million
0.30% remaining 0.30% remaining 0.30% remaining
ADMINISTRATION FEES:
Annual fee (percentage of
average net assets)................ 0.20% 0.20% 0.20%
DISTRIBUTION FEES (INVESTOR SHARES):
Annual fee before voluntary
fee reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 395 $ 179 $ 267
SHAREHOLDER SERVICES FEES:
Annual fee before voluntary
fee reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 932 $ 560 $ 711
CUSTODIAN FEES: (percentage of
average net assets) 0.02% (minimum $2,500) 0.02% (minimum $2,500) 0.02% (minimum $2,500)
ACCOUNTING FEES: (percentage of
average net assets) 0.03% (minimum $40,000) 0.03% (minimum $40,000) 0.03% (minimum $40,000)
</TABLE>
Continued
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JULY 31, 1996
<TABLE>
<CAPTION>
CALIFORNIA
TAX-FREE FUND TAX-FREE FUND
----------------------- -----------------------
<S> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)........................... 0.40% 1st $500 million 0.40% 1st $500 million
0.35% next $500 million 0.35% next $500 million
0.30% remaining 0.30% remaining
Voluntary fee reductions....................................... $ 266 $ 24
ADMINISTRATION FEES:
Annual fee (percentage of average net assets).................. 0.20% 0.20%
Voluntary fee reductions....................................... $ 77 $ 46
DISTRIBUTION FEES (INVESTOR SHARES):
Annual fee before voluntary fee reductions
(percentage of average net assets)........................... 0.25% 0.25%
Voluntary fee reductions....................................... $ 122 $ 36
SHAREHOLDER SERVICES FEES:
Annual fee before voluntary fee reductions
(percentage of average net assets)........................... 0.25% 0.25%
Voluntary fee reductions....................................... $ 359 $ 101
CUSTODIAN FEES: (percentage of average net assets) 0.02% (minimum $2,500) 0.02% (minimum $2,500)
ACCOUNTING FEES: (percentage of average net assets) 0.03% (minimum $40,000) 0.03% (minimum $40,000)
</TABLE>
Continued
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<TABLE>
<CAPTION>
BOND FUND GOVERNMENT BOND FUND INCOME EQUITY FUND
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 1.00% 1st $40 million 1.00% 1st $40 million 1.00% 1st $40 million
0.60% remaining 0.60% remaining 0.60% remaining
Voluntary fee reductions............. $ 257 $ 43 $ 33
ADMINISTRATION FEES:
Annual fee (percentage of
average net assets)................ 0.20% 0.20% 0.20%
Voluntary fee reductions............. $ 43 $ 9 --
DISTRIBUTION FEES (INVESTOR SHARES):
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 2 $ 2 $ 20
SHAREHOLDER SERVICES FEES:
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 143 $ 10 $ 613
CUSTODIAN FEES: (percentage of
average net assets) 0.02% (minimum $2,500) 0.02% (minimum $2,500) 0.02% (minimum $2,500)
Voluntary fee reductions $ 23
ACCOUNTING FEES: (percentage of
average net assets) 0.03% (minimum $40,000) 0.03% (minimum $40,000) 0.03% (minimum $40,000)
</TABLE>
Continued
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<TABLE>
<CAPTION>
BALANCED FUND GROWTH FUND INCOME & GROWTH FUND
----------------------- ----------------------- -----------------------
<S> <C> <C> <C>
INVESTMENT ADVISORY FEES:
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 1.00% 1st $40 million 1.00% 1st $40 million 1.00% 1st $40 million
0.60% remaining 0.60% remaining 0.60% remaining
Voluntary fee reductions............. $ 161 $ 182 $ 62
ADMINISTRATION FEES:
Annual fee (percentage of
average net assets)................ 0.20% 0.20% 0.20%
Voluntary fee reductions............. -- -- $ 12
DISTRIBUTION FEES (INVESTOR SHARES):
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 2 $ 5 $ 1
SHAREHOLDER SERVICES FEES:
Annual fee before voluntary fee
reductions (percentage of
average net assets)................ 0.25% 0.25% 0.25%
Voluntary fee reductions............. $ 82 $ 87 $ 14
CUSTODIAN FEES: (percentage of
average net assets) 0.02% (minimum $2,500) 0.02% (minimum $2,500) 0.02% (minimum $2,500)
Voluntary fee reductions............. $ 29 $ 40 $ 30
ACCOUNTING FEES: (percentage of
average net assets) 0.03% (minimum $40,000) 0.03% (minimum $40,000) 0.03% (minimum $40,000)
Voluntary fee reductions............. $ 19 $ 19 --
</TABLE>
Continued
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79
LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
<PAGE> 82
JULY 31, 1996
6. CONCENTRATION OF CREDIT RISK:
The California Tax-Free Fund invests substantially all of its assets in a
diversified portfolio of tax-exempt debt obligations primarily consisting of
securities issued by the State of California, its municipalities, counties,
and other taxing districts. The issuers' abilities to meet their obligations
may be affected by domestic and foreign or California economic, regional and
political developments.
At July 31, 1996, The California Tax-Free Fund had the following
concentrations by industry sector (as a percentage of total investments):
<TABLE>
<CAPTION>
TAX-EXEMPT CALIFORNIA
INDUSTRY CLASS TAX-FREE FUND
--------------------------------------------------------------------- -------------
<S> <C>
Utilities -- Electric................................................ 23.2%
Housing.............................................................. 22.1%
Hospitals............................................................ 20.7%
Pollution Control.................................................... 10.6%
Governments.......................................................... 8.2%
Money Markets........................................................ 7.8%
Utilities -- Water & Sewer........................................... 4.2%
Transportation & Shipping............................................ 3.2%
------
100.0%
</TABLE>
7. ELIGIBLE DISTRIBUTIONS (UNAUDITED):
The Group designates the following eligible distributions for the dividends
received deduction for corporations for the Fund's taxable year ended July
31, 1996:
<TABLE>
<CAPTION>
INCOME BALANCED GROWTH INCOME &
EQUITY FUND FUND FUND GROWTH FUND
----------- -------- ------ -----------
<S> <C> <C> <C> <C>
Dividend Income (in thousands)...... $ 9.943 $ 549 $ 607 $ 163
Dividend Income Per Share........... $ 0.402 $0.142 $0.107 $ 0.221
</TABLE>
Continued
LOGO
80
LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
<PAGE> 83
JULY 31, 1996
8. EXEMPT-INTEREST INCOME DESIGNATION (UNAUDITED):
The Group designates the following exempt-interest dividends for the Fund's
taxable year ended July 31, 1996.
<TABLE>
<CAPTION>
CALIFORNIA
TAX-FREE FUND TAX-FREE FUND
------------- -------------
<S> <C> <C>
Exempt-interest dividends........................... $ 5.255 $ 1.537
Exempt-interest dividends per share................. 0.028 0.028
</TABLE>
The following information indicates by state the percentage of income earned
by the California Tax-Free Fund and the Tax-Free Fund for the year ended
July 31, 1996:
<TABLE>
<CAPTION>
CALIFORNIA
TAX-FREE FUND TAX-FREE FUND
------------- -------------
<S> <C> <C>
Alaska.............................................. 2.6%
Arizona............................................. 3.4
California.......................................... 100.0% 21.0
Colorado............................................ 2.6
Florida............................................. 6.5
Hawaii.............................................. 3.0
Illinois............................................ 4.6
Indiana............................................. 4.9
Kentucky............................................ 3.1
Louisiana........................................... 4.1
Michigan............................................ 3.8
Minnesota........................................... 0.2
Missouri............................................ 2.8
Nevada.............................................. 4.7
New Mexico.......................................... 4.2
New York............................................ 4.4
Oregon.............................................. 1.9
Pennsylvania........................................ 0.5
Rhode Island........................................ 1.3
Texas............................................... 1.2
Utah................................................ 2.3
Virginia............................................ 10.3
Wyoming............................................. 1.3
Other Territories................................... 5.3
------ ------
100.0% 100.0%
============== ==============
</TABLE>
Continued
LOGO
81
LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
<PAGE> 84
JULY 31, 1996
For the year ended July 31, 1996, 18.9% of the income earned by the Tax-Free
Fund and 16.9% of the income earned by the California Tax-Free Fund may be
subject to the alternative minimum tax.
For California residents, 100.0% of the income earned by the California
Tax-Free Fund for the year ended July 31, 1996 is designated as tax-exempt
income.
The following information indicates by type the percentage of income earned
by the 100% U.S. Treasury Obligations Fund for the year ended July 31, 1996:
<TABLE>
<CAPTION>
100% U.S. TREASURY
TYPE OBLIGATIONS FUND
---------------------------------------------------------------- ------------------
<S> <C>
Federal obligations (such as U.S. Treasury bills, notes,
bonds)........................................................ 100.0%
===================
</TABLE>
For California residents, the 100% U.S. Treasury Obligations Fund met the
quarterly diversification tests for each fiscal quarter ended during the
year ended July 31, 1996. In addition, for California residents, 100% of the
income earned by the 100% U.S. Treasury Obligations Fund for the year ended
July 31, 1996 is designated as tax-exempt income.
Please consult your tax advisor for the proper treatment of the information
reflected in Notes 7 and 8.
9. FEDERAL INCOME TAXES:
For federal income tax purposes, the following funds have capital loss
carryforwards as of July 31, 1996, which are available to offset future
capital gains, if any:
<TABLE>
<CAPTION>
AMOUNT EXPIRES
---------- -------
<S> <C> <C>
Diversified Obligations Fund................................. $ 341,422 2001
29,246 2002
U.S. Government Obligations Fund............................. 174,662 2001
100% U.S. Treasury Obligations Fund.......................... 6,637 2004
California Tax-Free Fund..................................... 24,741 2002
22,777 2003
Tax-Free Fund................................................ 9,016 2002
13,234 2003
Bond Fund.................................................... 2,766,351 2003
54,397 2004
Government Bond Fund......................................... 243,536 2002
55,189 2003
10,219 2004
</TABLE>
LOGO
82
LOGO NOTES TO FINANCIAL STATEMENTS, CONTINUED
<PAGE> 85
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------------- -------------------- -------------------- -------------------- --------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE,
BEGINNING OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
INVESTMENT
ACTIVITIES
Net
investment
income..... 0.049 0.049 0.049 0.049 0.028 0.028 0.027 0.027 0.043 0.043
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
DISTRIBUTIONS
From net
investment
income..... (0.049) (0.049 ) (0.049) (0.049 ) (0.028) (0.028 ) (0.027) (0.027 ) (0.043) (0.043 )
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
NET ASSET
VALUE, END OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== ========== =========== ========== =========== ========== =========== ========== ===========
Total
Return....... 5.01% 5.01% 4.99% 4.99% 2.88% 2.88% 2.75% 2.75% 4.41% 4.41%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at
end of
period
(000)...... $185,952 $244,775 $128,191 $270,476 $ 75,725 $228,934 $ 77,589 $254,034 $ 17,600 $337,485
Ratio of
expenses to
average net
assets..... 0.75% 0.75% 0.74% 0.74% 0.74% 0.74% 0.72% 0.72% 0.72% 0.72%
Ratio of net
investment
income to
average net
assets..... 4.89% 4.91% 4.92% 4.88% 2.83% 2.83% 2.72% 2.72% 4.34% 4.34%
Ratio of
expenses to
average net
assets*.... 1.23% 0.99% 1.23% 0.98% 1.14% 0.89% 0.79% 0.73% 0.97% 0.72%
Ratio of net
investment
income to
average net
assets*.... 4.41% 4.67% 4.43% 4.64% 2.42% 2.67% 2.65% 2.71% 4.09% 4.34%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
LOGO
83
LOGO DIVERSIFIED OBLIGATIONS FUND
<PAGE> 86
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------------- -------------------- -------------------- -------------------- --------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE,
BEGINNING OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
INVESTMENT
ACTIVITIES
Net
investment
income..... 0.048 0.048 0.048 0.048 0.027 0.027 0.027 0.027 0.042 0.042
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
DISTRIBUTIONS
From net
investment
income..... (0.048) (0.048 ) (0.048) (0.048 ) (0.027) (0.027 ) (0.027) (0.027 ) (0.042) (0.042 )
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
NET ASSET
VALUE, END OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== ========== =========== ========== =========== ========== =========== ========== ===========
Total
Return....... 4.86% 4.88% 4.86% 4.87% 2.74% 2.74% 2.72% 2.72% 4.25% 4.25%
RATIOS/SUPPLEMENTARY DATA:
Net Assets at
end of
period
(000)...... $ 75,714 $151,483 $ 48,474 $159,747 $ 24,055 $162,094 $ 37,332 $166,182 $ 12,527 $ 94,252
Ratio of
expenses to
average net
assets..... 0.79% 0.77% 0.78% 0.78% 0.77% 0.78% 0.71% 0.71% 0.73% 0.73%
Ratio of net
investment
income to
average net
assets..... 4.77% 4.76% 4.82% 4.76% 2.63% 2.70% 2.67% 2.67% 4.15% 4.15%
Ratio of
expenses to
average net
assets*.... 1.26% 1.00% 1.27% 1.02% 1.17% 0.94% 0.79% 0.74% 0.99% 0.74%
Ratio of net
investment
income to
average net
assets*.... 4.30% 4.53% 4.33% 4.52% 2.23% 2.54% 2.59% 2.65% 3.89% 4.14%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
LOGO
84
LOGO U.S. GOVERNMENT OBLIGATIONS FUND
<PAGE> 87
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------------- -------------------- -------------------- -------------------- --------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE,
BEGINNING OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
INVESTMENT
ACTIVITIES
Net
investment
income..... 0.046 0.046 0.046 0.046 0.026 0.026 0.026 0.026 0.040 0.040
Net realized
and
unrealized
gains on
investments... -- -- -- -- -- -- -- -- 0.001 0.001
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
Total from
Investment
Activities.. 0.046 0.046 0.046 0.046 0.026 0.026 0.026 0.026 0.041 0.041
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
DISTRIBUTIONS
From net
investment
income..... (0.046) (0.046 ) (0.046) (0.046 ) (0.026) (0.026 ) (0.026) (0.026 ) (0.040) (0.040 )
From net
investment
income..... -- -- -- -- -- -- -- -- (0.001) (0.001 )
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
Total
Distributions... (0.046) (0.046 ) (0.046) (0.046 ) (0.026) (0.026 ) (0.026) (0.026 ) (0.041) (0.041 )
========== =========== ========== =========== ========== =========== ========== =========== ========== ===========
NET ASSET
VALUE, END OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== ========== =========== ========== =========== ========== =========== ========== ===========
Total
Return....... 4.74% 4.74% 4.69% 4.69% 2.68% 2.68% 2.64% 2.64% 4.18% 4.18%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at
end of
period
(000)...... $100,623 $173,340 $ 88,660 $190,604 $ 39,157 $160,721 $ 32,629 $191,946 $ 11,551 $219,451
Ratio of
expenses to
average net
assets..... 0.74% 0.74% 0.73% 0.73% 0.74% 0.74% 0.67% 0.67% 0.65% 0.65%
Ratio of net
investment
income to
average net
assets..... 4.64% 4.64% 4.68% 4.60% 2.68% 2.63% 2.60% 2.60% 3.99% 3.99%
Ratio of
expenses to
average net
assets*.... 1.23% 0.97% 1.22% 0.97% 1.15% 0.90% 0.75% 0.72% 0.97% 0.72%
Ratio of net
investment
income to
average net
assets*.... 4.15% 4.41% 4.19% 4.36% 2.27% 2.48% 2.52% 2.55% 3.67% 3.92%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
LOGO
85
LOGO 100% U.S. TREASURY OBLIGATIONS FUND
<PAGE> 88
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------------- -------------------- -------------------- -------------------- --------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE,
BEGINNING OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
INVESTMENT
ACTIVITIES
Net
investment
income..... 0.029 0.029 0.031 0.031 0.020 0.020 0.021 0.021 0.032 0.032
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
DISTRIBUTIONS
From net
investment
income..... (0.029) (0.029 ) (0.031) (0.031 ) (0.020) (0.020 ) (0.021) (0.021 ) (0.032) (0.032 )
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
NET ASSET
VALUE, END OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== ========== =========== ========== =========== ========== =========== ========== ===========
Total
Return....... 2.91% 2.91% 3.16% 3.16% 1.99% 1.99% 2.13% 2.13% 3.20% 3.20%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at
end of
period
(000)...... $ 53,627 $ 98,352 $ 40,544 $105,742 $ 31,521 $114,993 $ 44,410 $142,939 $ 4,609 $116,062
Ratio of
expenses to
average net
assets..... 0.55% 0.55% 0.50% 0.50% 0.50% 0.50% 0.44% 0.44% 0.54% 0.54%
Ratio of net
investment
income to
average net
assets..... 2.89% 2.88% 3.14% 3.11% 1.96% 1.96% 2.08% 2.08% 3.15% 3.15%
Ratio of
expenses to
average net
assets*.... 1.25% 1.00% 1.26% 1.01% 1.18% 0.93% 0.79% 0.73% 0.99% 0.74%
Ratio of net
investment
income to
average net
assets*.... 2.19% 2.43% 2.38% 2.60% 1.28% 1.53% 1.73% 1.78% 2.70% 2.95%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
LOGO
86
LOGO CALIFORNIA TAX-FREE FUND
<PAGE> 89
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31,
----------------------------------------------------------------------------------------------------------------
1996 1995 1994 1993 1992
-------------------- -------------------- -------------------- -------------------- --------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET
VALUE,
BEGINNING OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INVESTMENT
ACTIVITIES
Net
investment
income..... 0.028 0.028 0.030 0.030 0.019 0.019 0.021 0.021 0.033 0.033
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
DISTRIBUTIONS
From net
investment
income..... (0.028) (0.028 ) (0.030) (0.030 ) (0.019) (0.019 ) (0.021) (0.021 ) (0.033) (0.033 )
-------- --------- -------- --------- -------- --------- -------- --------- -------- ---------
NET ASSET
VALUE, END OF
PERIOD....... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== =========== ========== =========== ========== =========== ========== =========== ========== ===========
Total
Return....... 2.87% 2.87% 3.00% 3.00% 1.96% 1.96% 2.16% 2.16% 3.35% 3.35%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at
end of
period
(000)...... $ 16,148 $ 28,109 $ 12,702 $ 30,813 $ 20,032 $ 30,285 $ 40,010 $ 29,799 $ 23,780 $ 27,136
Ratio of
expenses to
average net
assets..... 0.77% 0.76% 0.73% 0.73% 0.69% 0.69% 0.53% 0.53% 0.57% 0.57%
Ratio of net
investment
income to
average net
assets..... 2.81% 2.86% 2.90% 2.95% 1.93% 1.95% 2.12% 2.12% 3.31% 3.31%
Ratio of
expenses to
average net
assets*.... 1.42% 1.16% 1.39% 1.14% 1.27% 1.02% 0.96% 0.84% 1.09% 0.84%
Ratio of net
investment
income to
average net
assets*.... 2.16% 2.46% 2.24% 2.54% 1.36% 1.62% 1.69% 1.82% 2.79% 3.05%
</TABLE>
- ---------------
*During the period, certain fees were voluntarily reduced. If such voluntary fee
reductions had not occurred, the ratios would have been as indicated.
See notes to financial statements.
LOGO
87
LOGO TAX-FREE FUND
<PAGE> 90
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, YEAR
1994 TO ENDED
YEAR ENDED YEAR ENDED JULY 31, JULY 31, YEAR ENDED JULY 31,
JULY 31, 1996 JULY 31, 1995 1994(A)(B) 1994(B)
---------------------- ---------------------- ---------- --------- -------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY 1993 1992
-------- --------- -------- --------- ---------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.... $10.29 $ 10.38 $10.04 $ 10.11 $10.12 $ 11.13 $ 11.02 $ 10.29
-------- --------- -------- --------- ---------- --------- ------- -------
INVESTMENT ACTIVITIES
Net investment
income............... 0.69 0.66 0.66 0.64 0.07 0.63 0.70 0.67
Net realized and
unrealized gains
(losses) on
investments.......... (0.18) (0.16) 0.23 0.27 (0.05) (0.97) 0.35 0.77
-------- --------- -------- --------- ---------- --------- ------- -------
Total from Investment
Activities......... 0.51 0.50 0.89 0.91 0.02 (0.34) 1.05 1.44
-------- --------- -------- --------- ---------- --------- ------- -------
DISTRIBUTIONS
From net investment
income............... (0.65) (0.65) (0.64) (0.64) (0.10) (0.63) (0.70) (0.67)
From net realized
gains................ -- -- -- -- -- (0.01) (0.24) (0.04)
In excess of net
realized gains....... -- -- -- -- -- (0.04) -- --
-------- --------- -------- --------- ---------- --------- ------- -------
Total
Distributions...... (0.65) (0.65) (0.64) (0.64) (0.10) (0.68) (0.94) (0.71)
-------- --------- -------- --------- ---------- --------- ------- -------
NET ASSET VALUE, END OF
PERIOD................. $10.15 $ 10.23 $10.29 $ 10.38 $10.04 $ 10.11 $ 11.13 $ 11.02
========= =========== ========= =========== =============== =========== ======== ========
Total Return (excludes
sales charges)......... 4.95% 4.81% 9.29% 9.43% (3.81)%(c) (3.14)% 10.07% 14.43%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)......... $1,157 $60,374 $ 558 $59,758 $ 7 $64,185 $33,279 $21,651
Ratio of expenses to
average net assets... 0.89% 0.89% 0.92% 0.92% 0.99%(d) 0.86% 0.93% 0.91%
Ratio of net investment
income to average net
assets............... 6.10% 6.10% 6.29% 6.35% 5.77%(d) 6.11% 6.41% 6.23%
Ratio of expenses to
average net
assets*.............. 1.85% 1.61% 1.89% 1.64% 2.96%(d) 1.37% 1.55% 1.55%
Ratio of net investment
income to average net
assets*.............. 5.14% 5.38% 5.32% 5.62% 3.80%(d) 5.60% 5.79% 5.59%
Portfolio turnover..... 20.65%(e) 20.88%(e) 36.20%(e) 36.20%(e) 44.33%(e) 44.33%(e) 58.81% 79.56%
</TABLE>
- ---------------
<TABLE>
<S> <C>
(a) Period from commencement of operations.
(b) On June 20, 1994, the Bond Fund commenced offering Investor Shares and designated existing shares as Fiduciary Shares.
(c) Represents total return for the Fiduciary shares for the period from August 1, 1993 to June 19, 1994 plus the total return
for the Investor Shares for the period from June 20, 1994 to July 31, 1994.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
*During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios
would have been as indicated.
</TABLE>
See notes to financial statements.
LOGO
88
LOGO BOND FUND
<PAGE> 91
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, NOVEMBER 14,
1994 TO 1993 TO
YEAR ENDED YEAR ENDED JULY 31, JULY 31,
JULY 31, 1996 JULY 31, 1995 1994(A) 1994(A)
---------------------- ---------------------- --------- ------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $ 9.43 $ 9.50 $ 9.36 $ 9.44 $ 9.47 $10.00
-------- --------- -------- --------- --------- ------
INVESTMENT ACTIVITIES
Net investment income....................... 0.62 0.60 0.66 0.60 0.01 0.40
Net realized and unrealized gains (losses)
on investments............................ (0.18) (0.16) 0.01 0.06 (0.02) (0.56)
-------- --------- -------- --------- --------- ------
-------- --------- -------- --------- --------- ------
DISTRIBUTIONS
From net investment income.................. (0.59) (0.59) (0.60) (0.60) (0.10) (0.40)
-------- --------- -------- --------- --------- ------
NET ASSET VALUE, END OF PERIOD............... $ 9.28 $ 9.35 $ 9.43 $ 9.50 $ 9.36 $ 9.44
========= =========== ========= =========== ========== ==============
Total Return (excludes sales charges)........ 4.79% 4.75% 7.47% 7.30% (2.42)%(b)(e) (1.59)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........... $1,104 $ 3,386 $ 68 $ 3,916 $ -- $5,171
Ratio of expenses to average net assets..... 0.85% 0.85% 0.85% 0.85% 0.87%(c) 0.85%(c)
Ratio of net investment income to average
net assets................................ 6.22% 6.12% 6.25% 6.32% 4.37%(c) 5.84%(c)
Ratio of expenses to average net assets*.... 4.05% 3.80% 2.54% 2.29% 0.87%(c) 3.09%(c)
Ratio of net investment income to average
net assets*............................... 3.02% 3.17% 4.56% 4.88% 4.37%(c) 3.60%(c)
Portfolio turnover (d)...................... 44.72% 44.72% 67.49% 67.49% 176.26% 176.26%
</TABLE>
- ---------------
<TABLE>
<S> <C>
(a) Period from commencement of operations. On June 20, 1994, the Government Bond Fund commenced offering Investor Shares and
designated existing shares as Fiduciary Shares.
(b) Represents total return for the Fiduciary Shares from commencement of operations to June 19, 1994, plus the total return for
the Investor Shares for the period from June 20, 1994 to July 31, 1994.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
(e) Not annualized.
*During the period, certain fees were voluntarily reduced. In addition, certain expenses were reimbursed. If such voluntary
fee reductions and expense reimbursements had not occurred, the ratios would have been as indicated.
</TABLE>
See notes to financial statements.
LOGO
89
LOGO GOVERNMENT BOND FUND
<PAGE> 92
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, YEAR
1994 TO ENDED
YEAR ENDED YEAR ENDED JULY 31, JULY 31, YEAR ENDED JULY 31,
JULY 31, 1996 JULY 31, 1995 1994(A)(B) 1994(B)
----------------------- ---------------------- ---------- --------- --------------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY 1993 1992
-------- --------- -------- --------- ---------- --------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD............... $ 13.03 $ 13.00 $11.92 $ 11.92 $11.85 $ 12.13 $ 11.42 $ 10.22
-------- --------- -------- --------- ---------- --------- -------- -------
INVESTMENT ACTIVITIES
Net investment
income............. 0.42 0.42 0.42 0.44 0.04 0.39 0.38 0.40
Net realized and
unrealized gains on
investments........ 1.92 1.93 1.55 1.50 0.08 0.12 0.71 1.20
-------- --------- -------- --------- ---------- --------- -------- -------
Total from
Investment
Activities....... 2.34 2.35 1.97 1.94 0.12 0.51 1.09 1.60
-------- --------- -------- --------- ---------- --------- -------- -------
DISTRIBUTIONS
From net investment
income............. (0.42 ) (0.42 ) (0.44) (0.44 ) (0.05) (0.39 ) (0.38) (0.40)
From net realized
gains.............. (0.66 ) (0.66 ) (0.42) (0.42 ) -- (0.33 ) -- --
-------- --------- -------- --------- ---------- --------- -------- -------
Total
Distributions.... (1.08 ) (1.08 ) (0.86) (0.86 ) (0.05) (0.72 ) (0.38) (0.40)
-------- --------- -------- --------- ---------- --------- -------- -------
NET ASSET VALUE, END
OF PERIOD............ $ 14.29 $ 14.27 $13.03 $ 13.00 $11.92 $ 11.92 $ 12.13 $ 11.42
========= =========== ========= =========== =============== =========== ========== ========
Total Return (excludes
sales charges)....... 18.21 % 18.25 % 17.52% 17.26 % 4.23%(c) 4.23 % 9.75% 16.04%
RATIOS/SUPPLEMENTARY
DATA:
Net Assets at end of
period (000)....... $10,143 $262,660 $3,881 $221,325 $ 24 $213,328 $104,840 $74,478
Ratio of expenses to
average net
assets............. 1.03 % 1.03 % 1.06% 1.06 % 1.10%(d) 1.06 % 1.15% 1.16%
Ratio of net
investment income
to average net
assets............. 2.89 % 2.95 % 3.06% 3.59 % 0.93%(d) 3.29 % 3.27% 3.76%
Ratio of expenses to
average net
assets*............ 1.51 % 1.27 % 1.55% 1.30 % 1.33%(d) 1.10 % 1.21% 1.29%
Ratio of net
investment income
to average net
assets*............ 2.41 % 2.71 % 2.57% 3.34 % 0.71%(d) 3.24 % 3.22% 3.64%
Portfolio turnover... 41.51 %(e) 41.51 %(e) 36.64%(e) 36.64 %(e) 33.82%(e) 33.82 %(e) 29.58% 23.05%
</TABLE>
- ---------------
<TABLE>
<S> <C>
(a) Period from commencement of operations.
(b) On June 20, 1994, the Income Equity Fund commenced offering Investor Shares and designated existing shares as Fiduciary
Shares.
(c) Represents total return for the Fiduciary Shares for the period from August 1, 1993 to June 19, 1994 plus the total return
for the Investor Shares for the period from June 20, 1994 to July 31, 1994.
(d) Annualized.
(e) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
*During the period, certain fees were voluntarily reduced. If such voluntary fee reductions had not occurred, the ratios
would have been as indicated.
</TABLE>
See notes to financial statements.
LOGO
90
LOGO INCOME EQUITY FUND
<PAGE> 93
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, NOVEMBER 14,
1994 TO 1993 TO
YEAR ENDED YEAR ENDED JULY 31, JULY 31,
JULY 31, 1996 JULY 31, 1995 1994(A) 1994(A)
---------------------- ---------------------- --------- ------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $10.79 $ 10.85 $ 9.71 $ 9.76 $ 9.71 $ 10.00
-------- --------- -------- --------- --------- ------------
INVESTMENT ACTIVITIES
Net investment income....................... 0.40 0.40 0.43 0.39 -- 0.26
Net realized and unrealized gains (losses)
on investments............................ 0.77 0.79 1.04 1.09 0.06 (0.24)
-------- --------- -------- --------- --------- ------------
Total from Investment Activities.......... 1.17 1.19 1.47 1.48 0.06 0.02
-------- --------- -------- --------- --------- ------------
DISTRIBUTIONS
From net investment income.................. (0.40) (0.40) (0.39) (0.39) (0.06) (0.26)
-------- --------- -------- --------- --------- ------------
NET ASSET VALUE, END OF PERIOD............... $11.56 $ 11.64 $10.79 $ 10.85 $ 9.71 $ 9.76(e)
========= =========== ========= =========== ========== ============
Total Return (excludes sales charges)........ 10.94% 11.06% 15.60% 15.62% (0.25)%(b) (0.26)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........... $ 694 $39,502 $ 467 $29,961 -- $ 25,851
Ratio of expenses to average net assets..... 0.94% 0.94% 0.90% 0.89% -- 0.87%(c)
Ratio of net investment income to average
net assets................................ 3.48% 3.49% 3.78% 3.93% -- 3.77%(c)
Ratio of expenses to average net assets*.... 2.03% 1.78% 2.05% 1.80% -- 1.79%(c)
Ratio of net investment income to average
net assets*............................... 2.39% 2.85% 2.63% 3.02% -- 2.85%(c)
Portfolio turnover (d)...................... 12.84% 12.84% 20.70% 20.70% 44.14% 44.14%
- ---------------
(a) Period from commencement of operations. On June 20, 1994, the Balanced Fund commenced offering Investor Shares and designated
existing shares as Fiduciary Shares.
(b) Represents total return for the Fiduciary Shares from commencement of operations to June 19, 1994 plus the total return for
the Investor Shares for the period from June 20, 1994 to July 31, 1994.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
(e) Not annualized.
*During the period, certain fees were voluntarily reduced. If such voluntary fee reductions and expense reimbursements had
not occurred, the ratios would have been as indicated.
</TABLE>
See notes to financial statements.
LOGO
91
LOGO BALANCED FUND
<PAGE> 94
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, NOVEMBER 18,
1994 TO 1993 TO
YEAR ENDED YEAR ENDED JULY 31, JULY 31,
JULY 31, 1996 JULY 31, 1995 1994(A) 1994(A)
---------------------- ---------------------- --------- ------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $11.87 $ 11.87 $ 9.77 $ 9.76 $ 9.74 $ 10.00
-------- --------- -------- --------- --------- ------------
INVESTMENT ACTIVITIES
Net investment income....................... 0.11 0.12 0.15 0.15 -- 0.05
Net realized and unrealized gains (losses)
on investments............................ 1.38 1.35 2.25 2.26 0.04 (0.24)
-------- --------- -------- --------- --------- ------------
Total from Investment Activities.......... 1.49 1.47 2.40 2.41 0.04 (0.19)
-------- --------- -------- --------- --------- ------------
DISTRIBUTIONS
From net investment income.................. (0.12) (0.12) (0.15) (0.15) (0.01) (0.05)
From net realized gains..................... (0.64) (0.64) (0.15) (0.15) -- --
-------- --------- -------- --------- --------- ------------
Total Distributions....................... (0.76) (0.76) (0.30) (0.30) (0.01) (0.05)
-------- --------- -------- --------- --------- ------------
NET ASSET VALUE, END OF PERIOD............... $12.60 $ 12.58 11.87 $ 11.87 $ 9.77 $ 9.76
========= =========== ========= =========== ========== ============
Total Return (excludes sales charges)........ 12.88% 12.72% 25.10% 25.23% (1.77)%(b) (1.87)%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........... $2,843 $41,495 $1,218 $25,096 -- $ 15,254
Ratio of expenses to average net assets..... 0.93% 0.93% 0.84% 0.79% -- 0.77%(c)
Ratio of net investment income to average
net assets................................ 0.96% 0.98% 1.17% 1.40% -- 0.86%(c)
Ratio of expenses to average net assets*.... 1.91% 1.67% 2.11% 1.92% -- 2.61%(c)
Ratio of net investment income (loss) to
average net assets*....................... (0.02)% 0.23% (0.10)% 0.26% -- (0.98)%(c)
Portfolio turnover (d)...................... 78.58% 78.58% 67.91% 67.91% 123.26% 123.26%
- ---------------
<FN>
(a) Period from commencement of operations. On June 20, 1994, the Growth Fund commenced offering Investor Shares and designated
existing shares as Fiduciary Shares.
(b) Represents total return for the Fiduciary Shares from commencement of operations to June 19, 1994 plus the total return for
the Investor Shares for the period from June 20, 1994 to July 31, 1994.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
(e) Not annualized.
*During the period, certain fees were voluntarily reduced. In addition, certain expenses were reimbursed. If such voluntary
fee reductions and expense reimbursements had not occurred, the ratios would have been as indicated.
</TABLE>
See notes to financial statements.
LOGO
92
LOGO GROWTH FUND
<PAGE> 95
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
JUNE 20, NOVEMBER 14,
1994 TO 1993 TO
YEAR ENDED YEAR ENDED JULY 31, JULY 31,
JULY 31, 1996 JULY 31, 1995 1994(A) 1994(A)
---------------------- ---------------------- --------- ------------
INVESTOR FIDUCIARY INVESTOR FIDUCIARY INVESTOR FIDUCIARY
-------- --------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......... $11.75 $ 11.74 $ 9.97 $ 9.96 $ 9.86 $10.00
-------- --------- -------- --------- --------- ------
INVESTMENT ACTIVITIES
Net investment income....................... 0.22 0.25 0.27 0.25 -- 0.20
Net realized and unrealized gains (losses)
on investments............................ 1.49 1.46 1.76 1.78 0.14 (0.04)
-------- --------- -------- --------- --------- ------
Total from Investment Activities.......... 1.71 1.71 2.03 2.03 0.14 0.16
-------- --------- -------- --------- --------- ------
DISTRIBUTIONS
From net investment income.................. (0.25) (0.25) (0.25) (0.25) (0.03) (0.20)
From net realized gains..................... (0.69) (0.69) -- -- -- --
-------- --------- -------- --------- --------- ------
Total Distributions....................... (0.94) (0.94) (0.25) (0.25) (0.03) (0.20)
-------- --------- -------- --------- --------- ------
NET ASSET VALUE, END OF PERIOD............... $12.52 $ 12.51 $11.75 $ 11.74 $ 9.97 $ 9.96
========= =========== ========= =========== ========== =========
Total Return (excludes sales charges)........ 15.02% 15.04% 20.67% 20.68% 1.73%(b) 1.63%(e)
RATIOS/SUPPLEMENTARY DATA:
Net Assets at end of period (000)........... $ 394 $ 6,013 $ 215 $ 6,669 -- $4,771
Ratio of expenses to average net assets..... 0.98% 0.98% 0.97% 0.97% 0.88%(c) 0.95%(c)
Ratio of net investment income to average
net assets................................ 1.96% 2.00% 2.23% 2.37% 0.88%(c) 2.86%(c)
Ratio of expenses to average net assets*.... 3.52% 3.27% 2.66% 2.41% 0.88%(c) 3.27%(c)
Ratio of net investment income (loss) to
average net assets*....................... (0.58)% (0.29)% 0.54% 0.93% 0.88%(c) 0.54%(c)
Portfolio turnover (d)...................... 36.64% 36.64% 15.01% 15.01% 97.24% 97.24%
- ---------------
<FN>
(a) Period from commencement of operations. On June 20, 1994, the Income & Growth Fund commenced offering Investor Shares and
designated existing shares as Fiduciary Shares.
(b) Represents total return for the Fiduciary Shares from commencement of operations to June 19, 1994 plus the total return for
the Investor Shares for the period from June 20, 1994 to July 31, 1994.
(c) Annualized.
(d) Portfolio turnover is calculated on the basis of the Fund as a whole without distinguishing between the classes of shares
issued.
(e) Not annualized.
*During the period, certain fees were voluntarily reduced. In addition, certain expenses were reimbursed. If such voluntary
fee reductions and expense reimbursements had not occurred, the ratios would have been as indicated.
</TABLE>
See notes to financial statements.
LOGO
93
LOGO INCOME & GROWTH FUND
<PAGE> 96
On March 11, 1996, a special meeting of the shareholders of the Group was
held to consider Proposal 1 -- the approval of a new investment advisory
agreement, ratification of the continuation of the sub-administration
agreement, ratification of the continuation of the sub-transfer agency
agreement, and ratification of the continuation of the custodian agreement,
Proposal 2 -- the election of five Trustees, and Proposal 3 -- the
ratification of the selection of Deloitte & Touche LLP as the Group's
independent certified public accountants.
Proposal 1 -- The shareholders of the Group were requested to approve a new
investment advisory agreement between Union Bank of California and the
Group, ratify the continuation of the sub-administration agreement between
BISYS and Union Bank of California, ratify the sub-transfer agency agreement
between BISYS Ohio and Union Bank of California and ratification of the
continuation of the custodian agreement between the Group and Union Bank of
California. The Shareholders approved the proposal. The results of the vote
were as follows:
<TABLE>
<CAPTION>
VOTES FOR THE VOTES AGAINST THE
PROPOSAL PROPOSAL ABSTAIN
- -------------- ----------------- ----------
<S> <C> <C>
731,393,746 5,804,523 5,354,321
</TABLE>
Proposal 2 -- The shareholders were requested to vote for the election of
the group to act as the Board of Trustees of the Group: Thomas L. Braje,
David A. Goldfarb, Joseph C. Jaegar, Frederick J. Long and Stephen G.
Mintos. The shareholders approved the proposal. The results were as follows:
<TABLE>
<CAPTION>
VOTES FOR THE VOTES AGAINST THE
PROPOSAL PROPOSAL ABSTAIN
- -------------- ----------------- ----------
<S> <C> <C>
688,829,237 -- 4,879,329
</TABLE>
Proposal 3 -- The shareholders of the Group ratified the appointment of
Deloitte & Touche LLP as the Group's independent certified public
accountants for the fiscal year ended July 31, 1996 as follows:
<TABLE>
<CAPTION>
VOTES FOR THE VOTES AGAINST THE
PROPOSAL PROPOSAL ABSTAIN
- -------------- ----------------- ----------
<S> <C> <C>
680,104,384 5,566,071 6,882,134
</TABLE>
LOGO
94
LOGO RESULTS OF SPECIAL SHAREHOLDER MEETING (UNAUDITED)
<PAGE> 97
[HIGHMARK LOGO]
Annual Report
July 31, 1996
Investment Adviser
MERUS-UCA Capital Management,
A division of Union Bank of California, N.A.
400 California Street
P.O. Box 45000
San Francisco, CA 94104
Custodian
Union Bank of California, N.A.
400 California Street
P.O. Box 45000
San Francisco, CA 94104
Administrator & Distributor
BISYS Fund Services
3435 Stelzer Road
Columbus, OH 43219
Not FDIC Insured
