-------------------------------------
-------------------------------------
TOWER
MUTUAL FUNDS
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TOWER CAPITAL APPRECIATION FUND
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TOWER TOTAL RETURN BOND FUND
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TOWER LOUISIANA MUNICIPAL INCOME FUND
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TOWER U.S. GOVERNMENT INCOME FUND
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TOWER CASH RESERVE FUND
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TOWER U.S. TREASURY MONEY MARKET FUND
---------
TOWER COMBINED
SEMI-ANNUAL REPORT
FEBRUARY 28, 1995
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PRESIDENT'S MESSAGE 1
- ------------------------------------------------------
INVESTMENT REVIEWS 2
- ------------------------------------------------------
TOWER CAPITAL APPRECIATION FUND
- ------------------------------------------------------
Portfolio of Investments 8
Financial Statements 15
TOWER TOTAL RETURN BOND FUND
- ------------------------------------------------------
Portfolio of Investments 19
Financial Statements 22
TOWER LOUISIANA MUNICIPAL INCOME FUND
- ------------------------------------------------------
Portfolio of Investments 26
Financial Statements 34
TOWER U.S. GOVERNMENT INCOME FUND
- ------------------------------------------------------
Portfolio of Investments 38
Financial Statements 41
TOWER CASH RESERVE FUND
- ------------------------------------------------------
Portfolio of Investments 45
Financial Statements 48
TOWER U.S. TREASURY MONEY MARKET FUND
- ------------------------------------------------------
Portfolio of Investments 52
Financial Statements 53
COMBINED NOTES TO FINANCIAL STATEMENTS 57
- ------------------------------------------------------
TRUSTEES AND OFFICERS 63
- ------------------------------------------------------
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the combined Semi-Annual Report to Shareholders of the
Tower Mutual Funds (the "Trust") for the six-month period ended February 28,
1995. For each of the six investment portfolios (individually referred to as,
the "Fund" collectively as, the "Funds"), you will find detailed financial
information, including statements, a question and answer section with your
Fund's portfolio manager and a list of investments for each Fund.
As you will see, this report brings together information on all the Funds in one
convenient document. This gives you an easy way to compare the progress of each
Fund, while it substantially reduces the Trust's mailing and printing expenses.
Of special note is the new question and answer section, which allows you to look
in on some of the issues behind your portfolio manager's investment decisions.
Thank you for putting your continued confidence in the Tower Mutual Funds. As
always, we will continue to keep you informed on the progress of your
investment, and will remain committed to delivering a high level of personal
service.
We welcome your questions and comments, and invite your thoughts on our new
combined format.
Sincerely,
Edward C. Gonzales
President
April 15, 1995
* Mutual funds are not deposits or obligations of, and are not guaranteed or
insured by any bank, the FDIC, or any other government agency.
* Mutual funds are subject to risk and may fluctuate in value which may result
in a possible loss of principal amount invested.
* Hibernia National Bank is the investment adviser and custodian for the Tower
Mutual Funds and receives compensation for these services.
* For some investments, income may be subject to the federal alternative minimum
tax, state and local taxes.
TOWER CAPITAL APPRECIATION FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
Increasing interest rates have affected all major financial markets during
the six-month reporting period. How did the stock market react during the
reporting period?
A
The market reached it's most volatile point during the reporting period, as
interest rates continued to climb and the stock market moved into a more
cautious mode.
Q
Given the way interest rates have impacted some industries, have you
adjusted Tower Capital Appreciation Fund's (the "Fund") portfolio to favor
any particular segments of the economy?
A
As a rule, we do not commit to any one area of the economy when selecting
securities. We have not made any significant changes to the composition of
the Fund's portfolio.
Q
You follow a risk-averse, disciplined approach to stock selection. Do you
modify this strategy when interest rates change?
A
We believe that consistency is the best way to ride out changes in the
market. As a result, we have continued to hold our investment course, and
remain committed to pursuing the best possible portfolio of investments
with what we believe to be a reasonable level of investment risk.
TOWER TOTAL RETURN BOND FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
The bond market was deeply affected by several upward changes in interest
rates. What did the rising rates do to the performance of the Tower Total
Return Bond Fund (the "Fund")?
A
The increase in short-term interest rates in 1994 translated into sharply
lower performance for bond funds in general. Recently, however, yields have
been improving. Also, positive news on inflation and a slowing economy have
helped bonds significantly during the first two months of 1995.
Q
Over the period, how did the Fund perform?
A
Over the last six months, the Fund's total return was up 5.16% from -2.46%*
in August, 1994, to 2.70%* in February, 1995. The total return for the same
period, based on the offering price, which includes the 3.00% maximum sales
load, was -0.40%.* If interest rates should begin falling, the Fund could
potentially generate higher returns.
Q
In view of the current interest rate environment, has it been necessary to
change the Fund's concentration on particular sectors of the economy?
A
During the last six months, we have maintained our sector weights,
concentrating primarily on Treasuries and securities from government
agencies. As the economy cools somewhat, we expect to see opportunities to
buy corporate and mortgage bonds.
Q
With a number of initiatives underway by the new Congress that could impact
the way government programs are funded, what indicators are you watching,
and why?
A
We are most concerned about funding for or support of government agencies,
such as the Student Loan Marketing Association and the Tennessee Valley
Authority. If the new Congress really does cut spending, we would
anticipate movement toward lower interest rates.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
TOWER LOUISIANA MUNICIPAL INCOME FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
The last several months have been a tumultuous period for the bond market.
Could you comment on the series of interest rate increases that caused bond
prices to fall?
A
In order to put the brakes on inflation, the Federal Reserve Board (the
"Fed") raised interest rates several times during 1994. It now appears that
the Fed's preemptive action has been successful in slowing the economy.
Consequently, interest rates have begun to decline.
Q
How has Tower Louisiana Municipal Income Fund (the "Fund") performed over
the six-month reporting period?
A
In the past six months, the net asset value of the Fund shifted from $10.82
per share to $10.78 per share. The Fund's total return during the period
was 3.33%,* based on net asset value which does not reflect the maximum
sales load of 3.00%. The total return for the same period, based on the offering
price, which includes the 3.00% maximum sales load, was 0.27%.*
Q
How have the Fund's asset level and share value been impacted by the
increases in interest rates?
A
1994 was the most difficult year for fixed income securities since the
Great Depression. The decline in bond prices, in addition to shareholders
withdrawing funds, caused a substantial shrinkage in the size of Fund.
Q
Have you made any changes to the Fund's average maturity, diversification,
or credit quality in response to interest rate increases?
A
With the decline in bond prices and the rise in interest rates, we have
extended the Fund's average effective maturity to 16 years. Credit quality,
however, remains 100% AAA rated.
Q
Do you anticipate any of the issues contained in the "Contract With
America," and specifically, the movement to shift responsibility for
entitlement programs to the individual states, to have an impact on the
municipal bond market?
A
The "Contract with America" and the general trend to redirect
responsibilities for programs from the Federal government to state
governments will present Louisiana with many challenges. These challenges
will probably force Louisiana to seek new sources of revenue while reducing or
eliminating many programs. This re-evaluation of the way programs and services
are delivered may have a negative impact on the State's credit quality. For this
reason, we will continue to purchase only municipal bonds insured by AAA
insurance companies.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
TOWER U.S. GOVERNMENT INCOME FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
Can you update us on the recent developments in the bond market,
particularly the series of interest rate increases which have caused bond
prices to fall?
A
After a series of interest rate increases in 1994, the government bond
market finally stabilized in mid-December. Evidence of a slowing economy in
early 1995 provided the spark necessary to start the government bond market
rising.
Q
How did Tower U.S. Government Income Fund (the "Fund") perform over the
six-month reporting period?
A
The Fund showed a total return of 3.18%* for the six-month period ended
February 28, 1995, based on net asset value, which does not reflect the
maximum sales load of 3.00%. The total return for the same period, based on
the offering price, which includes the 3.00% maximum sales load, was 0.05%.*
During the period the net asset value shifted from $9.92 per share to $9.88 per
share.
Q
Over the reporting period, interest rates have been on the rise and home
sales have slowed. With this in mind, what is your outlook for the mortgage
market?
A
The rise in interest rates and slowing of home sales has put the brakes on
the mortgage market. Lower interest rates in 1995 may help to revive the
mortgage market.
Q
Do you anticipate adjusting the duration of the Fund in response to the
current interest rate environment?
A
Yes, we do. With the recent rise in bond prices, we anticipate shortening
our duration in an effort to reduce the volatility of the portfolio.
Q
What is your outlook on the movement of interest rates, and what is your
strategy for the coming months?
A
We anticipate that long-term interest rates will remain around 7 1/2% over
the coming months. Short-term interest rates will probably remain high
unless, as anticipated, the Federal Reserve Board begins lowering the
discount rate in late 1995 or early 1996.
* Performance quoted represents past performance. Investment return and
principal value will fluctuate, so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
TOWER CASH RESERVE FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
How did the increasing short-term interest rate environment affect Tower
Cash Reserve Fund's (the "Fund") performance?
A
Rates paid to shareholders increased sharply during the year as short-term
interest rates rose. In fact, the effective yield, the amount of income
actually generated by the Fund, moved from around 3.83%* to 5.38%* by the
beginning of 1995. The seven-day net yield for the same period was 5.24%.*
Q
Over the period, high-quality commercial paper made up the majority of the
Fund's assets. Do you expect to continue with that strategy given the
current state of the economy?
A
Yes, we do. While the economy is slowing down somewhat from the effects of
rising interest rates, we believe that it is not expected to slip into a
recession. Since we are very careful about the individual issues we buy, we
are actually seeing some shortage in the amount of commercial paper available.
This tells us that the issuers behind the commercial paper tend to have solid
economic positions.
Q
Have you targeted any particular areas of the commercial paper market?
A
While we are required to invest at least 25% of our assets in the Finance
Sector, we have continued to spread the remainder of our investments over
all U.S. sectors of the market, as well as in the government agency market.
Q
Some experts feel that interest rates may have reached their peak. What is
your outlook for interest rates in the future?
A
Most market experts agree that interest rates will go down eventually.
Rates in our Fund are closely tied to the Federal Funds Rate, which is
controlled by the Federal Reserve Board (the "Fed"). We feel there may be
one more increase by the Fed before rates actually begin to ease. As a result,
we have lengthened the average days to maturity of the portfolio to "lock in"
today's rates if market rates should fall later this year.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary.
TOWER U.S. TREASURY MONEY MARKET FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q
Rising interest rates over the last several months have had a negative
impact on the economy. What have these rate changes done to the market for
U.S. Treasury securities?
A
While rising rates have hurt the value of longer term U.S. Treasuries, the
very short-term securities held by Tower U.S. Treasury Money Market Fund
(the "Fund") change very little with higher rates. In fact, higher interest
rates allow us to reinvest Fund assets at higher rates, which can generate
higher dividends.
Q
How did the increasing short-term interest rate environment affect the
Fund's performance?
A
By maintaining very short average maturities, we were able to reinvest our
money quickly as rates moved higher during 1994. As a result, our yield
rose considerably. (Of course, past performance is not indicative of future
results.)
Q
How long does it take for a change in interest rates to impact the
performance and returns of a money market mutual fund?
A
We carry close to 50% of our assets in investments that mature daily. When
the Federal Reserve Board increases interest rates, that rate increase
generally affects such short-term investments that day. So the impact of
interest rate increases can really be seen immediately.
Q
Some economists feel that interest rates are stabilizing, and may possibly
start to fall. What would a downward shift in interest rates mean for the
Fund?
A
Just as interest rates rose and your dividend increased in 1994, interest
rates and yields could both fall in 1995. To help protect your investment,
we plan to lengthen the Fund's average maturity slightly, in order to take
advantage of higher interest rates for as long as possible.
TOWER CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--97.6%
- ------------------------------------------------------------------------------------
BASIC INDUSTRY--9.9%
------------------------------------------------------------------
20,000 Aluminium Company of America $ 780,000
------------------------------------------------------------------
35,000 American Greetings Corp. 1,028,125
------------------------------------------------------------------
6,500 Belo A H Corp. 366,438
------------------------------------------------------------------
21,900 Browning Ferris Industries, Inc. 681,638
------------------------------------------------------------------
28,500 duPont (E.I.) deNemours & Co. 1,599,563
------------------------------------------------------------------
16,500 Dow Chemical Co. 1,105,500
------------------------------------------------------------------
16,400 Dow Jones & Co., Inc. 580,150
------------------------------------------------------------------
18,700 Hercules, Inc. 820,463
------------------------------------------------------------------
12,800 International Paper Co. 977,600
------------------------------------------------------------------
13,200 ITT Corp. 1,287,000
------------------------------------------------------------------
4,200 Monsanto Co. 332,850
------------------------------------------------------------------
26,500 New York Times Co. 569,750
------------------------------------------------------------------
13,900 Nucor Corp. 780,138
------------------------------------------------------------------
13,500 PPG Industries, Inc. 496,125
------------------------------------------------------------------
12,400 Phelps Dodge Corp. 675,800
------------------------------------------------------------------
43,900 Praxair, Inc. 993,238
------------------------------------------------------------------
12,000 UST, Inc. 357,000
------------------------------------------------------------------
10,900 Union Carbide Corp. 312,010
------------------------------------------------------------------ ------------
Total 13,743,388
------------------------------------------------------------------ ------------
CAPITAL GOODS--7.7%
------------------------------------------------------------------
24,500 Allied Signal, Inc. 931,000
------------------------------------------------------------------
23,000 Briggs & Stratton Corp. 799,250
------------------------------------------------------------------
14,000 Emerson Electric Co. 925,750
------------------------------------------------------------------
15,800 Equifax, Inc. 487,825
------------------------------------------------------------------
50,300 General Electric Co. 2,760,213
------------------------------------------------------------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
------------------------------------------------------------------
11,400 Georgia Pacific Corp. $ 853,575
------------------------------------------------------------------
32,100 McDonnell Douglas Corp. 1,797,600
------------------------------------------------------------------
21,700 Philips N.V. 713,388
------------------------------------------------------------------
24,900 Textron, Inc. 1,363,275
------------------------------------------------------------------ ------------
Total 10,631,876
------------------------------------------------------------------ ------------
CONSUMER--11.1%
------------------------------------------------------------------
39,450 Archer Daniels Midland Co. 749,550
------------------------------------------------------------------
18,300 Brunswick Corp. 363,713
------------------------------------------------------------------
18,800 Campbell Soup 853,050
------------------------------------------------------------------
31,800 Coca Cola Co. 1,749,000
------------------------------------------------------------------
33,900 ConAgra, Inc. 1,110,225
------------------------------------------------------------------
17,300 Gillette Co. 1,368,863
------------------------------------------------------------------
9,200 Kellogg Co. 497,950
------------------------------------------------------------------
31,600 Kroger Co. 829,500
------------------------------------------------------------------
30,300 Newell Cos. 723,413
------------------------------------------------------------------
31,200 Pepsico, Inc. 1,220,700
------------------------------------------------------------------
35,800 Philip Morris Cos., Inc. 2,174,850
------------------------------------------------------------------
29,900 Proctor & Gamble Co. 1,988,350
------------------------------------------------------------------
30,900 Sara Lee Corp. 811,125
------------------------------------------------------------------
47,300 Whitman Corp. 892,786
------------------------------------------------------------------ ------------
Total 15,333,075
------------------------------------------------------------------ ------------
CONSUMER CYCLICAL--15.4%
------------------------------------------------------------------
17,100 Armstrong World Industries, Inc. 782,325
------------------------------------------------------------------
23,900 Autozone, Inc. 633,350
------------------------------------------------------------------
11,000 Capital Cities/ABC, Inc. 973,500
------------------------------------------------------------------
30,200 Chrysler Corp. 1,313,700
------------------------------------------------------------------
22,400 Circuit City Stores, Inc. 484,400
------------------------------------------------------------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
------------------------------------------------------------------
15,700 Cummins Engine, Inc. $ 714,350
------------------------------------------------------------------
10,000 Eastman Kodak Co. 510,000
------------------------------------------------------------------
98,500 * Federated Department Stores, Inc. 2,167,000
------------------------------------------------------------------
42,600 Ford Motor Co. 1,112,925
------------------------------------------------------------------
12,600 Gannett Co. 693,000
------------------------------------------------------------------
28,000 General Motors Corp. 1,053,500
------------------------------------------------------------------
12,000 Goodyear Tire and Rubber 442,500
------------------------------------------------------------------
14,600 J.C. Penney Co., Inc. 625,975
------------------------------------------------------------------
10,000 * King World Productions, Inc. 356,250
------------------------------------------------------------------
29,500 McDonald's Corp. 980,875
------------------------------------------------------------------
14,800 Nordstrom, Inc. 625,300
------------------------------------------------------------------
7,800 Premark International, Inc. 337,350
------------------------------------------------------------------
18,000 * Safeway, Inc. 645,750
------------------------------------------------------------------
40,900 Seagram Ltd. 1,257,675
------------------------------------------------------------------
18,700 Sears Roebuck & Co. 920,975
------------------------------------------------------------------
4,600 Stratec Sec Corp. 58,650
------------------------------------------------------------------
19,400 Tandy Corp. 868,150
------------------------------------------------------------------
8,400 Tektronix, Inc. 287,700
------------------------------------------------------------------
11,900 V.F. Corp. 612,850
------------------------------------------------------------------
22,000 Varity Corp. 803,000
------------------------------------------------------------------
25,900 Walt Disney Co. 1,382,413
------------------------------------------------------------------
45,400 Wendy's International, Inc. 703,700
------------------------------------------------------------------ ------------
Total 21,347,163
------------------------------------------------------------------ ------------
ENERGY--8.7%
------------------------------------------------------------------
22,600 Amoco Corp. 1,339,050
------------------------------------------------------------------
30,100 Ashland Oil, Co. 974,488
------------------------------------------------------------------
14,700 British Petroleum PLC 1,124,550
------------------------------------------------------------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
ENERGY--CONTINUED
------------------------------------------------------------------
36,600 Exxon Corp. $ 2,342,400
------------------------------------------------------------------
17,100 Halliburton Co. 636,975
------------------------------------------------------------------
28,500 Mobil Corp. 2,479,500
------------------------------------------------------------------
26,900 Phillips Petroleum Co. 897,788
------------------------------------------------------------------
19,700 Royal Dutch Petroleum Co. 2,208,862
------------------------------------------------------------------ ------------
Total 12,003,613
------------------------------------------------------------------ ------------
FINANCIAL--11.3%
------------------------------------------------------------------
20,600 AFLAC, Inc. 777,650
------------------------------------------------------------------
41,600 American Express Co. 1,404,000
------------------------------------------------------------------
25,300 American General Corp. 800,113
------------------------------------------------------------------
13,100 American International Group, Inc. 1,359,125
------------------------------------------------------------------
43,300 Bank New York, Inc. 1,450,550
------------------------------------------------------------------
10,800 BankAmerica Corp. 519,750
------------------------------------------------------------------
44,300 Citicorp 1,993,500
------------------------------------------------------------------
34,200 Dean Witter, Discover & Co. 1,380,825
------------------------------------------------------------------
32,500 First Chicago Corp. 1,645,313
------------------------------------------------------------------
53,900 NBD Bancorp., Inc. 1,677,637
------------------------------------------------------------------
21,600 Transamerica Corp. 1,179,900
------------------------------------------------------------------
8,700 Wells Fargo & Co. 1,397,437
------------------------------------------------------------------ ------------
Total 15,585,800
------------------------------------------------------------------ ------------
HEALTH CARE--9.4%
------------------------------------------------------------------
37,700 Abbott Laboratories 1,338,350
------------------------------------------------------------------
24,100 Bristol Myers Squibb Co. 1,494,200
------------------------------------------------------------------
20,400 Columbia/HCA Healthcare 844,050
------------------------------------------------------------------
26,500 Humana, Inc. 629,375
------------------------------------------------------------------
32,800 Johnson & Johnson 1,861,400
------------------------------------------------------------------
10,600 Medtronic, Inc. 636,000
------------------------------------------------------------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
HEALTH CARE--CONTINUED
------------------------------------------------------------------
47,000 Merck & Co., Inc. $ 1,991,625
------------------------------------------------------------------
21,800 Mylan Labs, Inc. 681,250
------------------------------------------------------------------
13,700 Pfizer, Inc. 1,133,675
------------------------------------------------------------------
18,000 Schering-Plough 1,410,750
------------------------------------------------------------------
25,200 Upjohn Co. 888,300
------------------------------------------------------------------ ------------
Total 12,908,975
------------------------------------------------------------------ ------------
TECHNOLOGY--8.7%
------------------------------------------------------------------
29,500 Apple Computers 1,165,250
------------------------------------------------------------------
13,250 * Cabletron Systems, Inc. 525,031
------------------------------------------------------------------
14,100 * Compaq Computer Corp. 486,450
------------------------------------------------------------------
21,800 Computer Associates International, Inc. 1,242,600
------------------------------------------------------------------
14,900 Hewlett Packard Co. 1,713,500
------------------------------------------------------------------
22,200 International Business Machines Corp. 1,670,550
------------------------------------------------------------------
14,200 Micron Technology, Inc. 880,400
------------------------------------------------------------------
18,800 * Microsoft Corp. 1,184,400
------------------------------------------------------------------
10,400 Motorola, Inc. 598,000
------------------------------------------------------------------
18,600 Sun Microsystems, Inc. 595,200
------------------------------------------------------------------
16,100 Texas Instruments, Inc. 1,267,875
------------------------------------------------------------------
17,800 Varian Associates, Inc. 651,925
------------------------------------------------------------------ ------------
Total 11,981,181
------------------------------------------------------------------ ------------
TRANSPORTATION--2.2%
------------------------------------------------------------------
9,500 AMR Corp. Del. 580,688
------------------------------------------------------------------
45,600 Consolidated Freightways, Inc. 1,083,000
------------------------------------------------------------------
10,300 Norfolk Southern Corp. 681,087
------------------------------------------------------------------
27,800 Pittston Services Group 695,000
------------------------------------------------------------------ ------------
Total 3,039,775
------------------------------------------------------------------ ------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
COMMON STOCKS--CONTINUED
- ------------------------------------------------------------------------------------
UTILITIES--13.2%
------------------------------------------------------------------
41,300 Ameritech Corp. $ 1,770,737
------------------------------------------------------------------
32,600 Bell Atlantic Corp. 1,748,175
------------------------------------------------------------------
30,700 BellSouth Corp. 1,811,300
------------------------------------------------------------------
8,800 DSC Communications Corp. 316,800
------------------------------------------------------------------
48,700 General Public Utilities Corp. 1,473,175
------------------------------------------------------------------
42,300 GTE Corp. 1,411,762
------------------------------------------------------------------
66,700 Pacific Telesis Group 2,001,000
------------------------------------------------------------------
80,500 Pinnacle West Capital Corp. 1,730,750
------------------------------------------------------------------
41,400 Southwestern Bell Corp. 1,723,274
------------------------------------------------------------------
25,800 Sprint Corp. 754,650
------------------------------------------------------------------
84,600 Unicom Corp. 2,157,300
------------------------------------------------------------------
43,700 Williams Cos., Inc. 1,256,374
------------------------------------------------------------------ ------------
Total 18,155,297
------------------------------------------------------------------ ------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $120,640,465) 134,730,143
------------------------------------------------------------------ ------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- ------------------------------------------------------------------ ------------
<C> <C> <S> <C>
**REPURCHASE AGREEMENT--2.2%
- ------------------------------------------------------------------------------------
$3,102,000 HSBC Securities, Inc., 5.82%, dated 2/27/1995, due 3/1/1995
(AT AMORTIZED COST) $ 3,102,000
------------------------------------------------------------------ ------------
TOTAL INVESTMENTS (IDENTIFIED COST, $123,742,465) $137,832,143+
------------------------------------------------------------------ ------------
</TABLE>
* Non-income producing.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $123,742,465. The
net unrealized appreciation of investments on a federal tax basis amounts to
$14,089,678, which is comprised of $15,378,188 appreciation and $1,288,510
depreciation at February 28, 1995.
Note: The categories of investments are shown as a percentage of net assets
($138,033,063) at February 28, 1995.
(See Notes which are an integral part of the Financial Statements)
TOWER CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost $123,742,465) $137,832,143
- -------------------------------------------------------------------------------
Dividends and interest receivable 370,579
- -------------------------------------------------------------------------------
Receivable for shares sold 92,895
- -------------------------------------------------------------------------------
Receivable for investments sold 57,506
- ------------------------------------------------------------------------------- ------------
Total assets 138,353,123
- -------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------
Payable for investments purchased $277,807
- --------------------------------------------------------------------
Payable for shares redeemed 5,711
- --------------------------------------------------------------------
Accrued expenses 36,542
- -------------------------------------------------------------------- --------
Total liabilities 320,060
- ------------------------------------------------------------------------------- ------------
NET ASSETS for 10,049,852 shares of beneficial interest outstanding $138,033,063
- ------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------
Paid-in capital $124,655,168
- -------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 14,089,678
- -------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (828,593)
- -------------------------------------------------------------------------------
Undistributed net investment income 116,810
- ------------------------------------------------------------------------------- ------------
Total Net Assets $138,033,063
- ------------------------------------------------------------------------------- ------------
NET ASSET VALUE and Redemption Proceeds Per Share:
($138,033,063 / 10,049,852 shares of beneficial interest outstanding) $13.73
- ------------------------------------------------------------------------------- ------------
Offering Price Per Share (100/97 of $13.73)* $14.15
- ------------------------------------------------------------------------------- ------------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
TOWER CAPITAL APPRECIATION FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income $ 52,467
- ---------------------------------------------------------------------------------
Dividend income 1,801,896
- --------------------------------------------------------------------------------- ----------
Total income 1,854,363
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $493,926
- ----------------------------------------------------------------------
Administrative personnel and services fee 86,425
- ----------------------------------------------------------------------
Custodian fees 15,679
- ----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 15,018
- ----------------------------------------------------------------------
Trustees' fees 4,110
- ----------------------------------------------------------------------
Auditing fees 6,869
- ----------------------------------------------------------------------
Legal fees 3,014
- ----------------------------------------------------------------------
Portfolio accounting fees 22,764
- ----------------------------------------------------------------------
Distribution services fee 164,641
- ----------------------------------------------------------------------
Share registration costs 6,364
- ----------------------------------------------------------------------
Printing and postage 7,559
- ----------------------------------------------------------------------
Insurance premiums 3,572
- ----------------------------------------------------------------------
Miscellaneous 2,815
- ---------------------------------------------------------------------- --------
Total expenses 832,756
- --------------------------------------------------------------------------------- ----------
Net investment income 1,021,607
- --------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) 606,144
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 1,247,907
- --------------------------------------------------------------------------------- ----------
Net realized and unrealized gain (loss) on investments 1,854,051
- --------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $2,875,658
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 1,021,607 $ 2,330,945
- -------------------------------------------------------
Net realized gain (loss) on investments ($606,144 and
$5,096,800 net gains, respectively, as computed for
federal tax purposes) 606,144 5,052,026
- -------------------------------------------------------
Net change in unrealized appreciation (depreciation) on
investments 1,247,907 (1,535,597)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from operations 2,875,658 5,847,374
- ------------------------------------------------------- --------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Dividends to shareholders from net investment income (1,062,547) (2,486,403)
- -------------------------------------------------------
Distributions from net realized gains (2,669,232) (10,874,905)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from distributions
to shareholders (3,731,779) (13,361,308)
- ------------------------------------------------------- --------------- --------------
SHARE TRANSACTIONS
- -------------------------------------------------------
Proceeds from sale of shares 9,337,543 24,840,898
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 2,861,521 10,583,871
- -------------------------------------------------------
Cost of shares redeemed (12,390,670) (29,637,716)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from share
transactions (191,606) 5,787,053
- ------------------------------------------------------- --------------- --------------
Change in net assets (1,047,727) (1,726,881)
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 139,080,790 140,807,671
- ------------------------------------------------------- --------------- --------------
End of period (including undistributed net investment
income of $116,810 and $157,750, respectively) $138,033,063 $ 139,080,790
- ------------------------------------------------------- --------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER CAPITAL APPRECIATION FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST 31,
FEBRUARY 28, 1995 --------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990 1989(A)
----------------- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.81 $14.60 $14.02 $14.35 $11.93 $12.94 $10.17
- -------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------
Net investment income 0.10 0.23 0.30 0.29 0.33 0.38 0.33
- -------------------------------------
Net realized and unrealized gain
(loss) on investments 0.19 0.36 2.00 0.11 2.45 (0.76) 2.68
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.29 0.59 2.30 0.40 2.78 (0.38) 3.01
- -------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------
Distributions from net
investment income (0.11) (0.25) (0.30) (0.27) (0.36) (0.39) (0.24)
- -------------------------------------
Distributions in excess of net
investment income -- -- -- -- -- (0.02)(b) --
- -------------------------------------
Distributions from net realized gain (0.26) (1.13) (1.42) (0.46) -- (0.22) --
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.37) (1.38) (1.72) (0.73) (0.36) (0.63) (0.24)
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $13.73 $13.81 $14.60 $14.02 $14.35 $11.93 $12.94
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN (C) 2.30% 4.27% 17.89% 2.93% 23.77% (3.11)% 32.29%
- -------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------
Expenses 1.26%(d) 1.09% 0.85% 0.83% 0.74% 0.42% 0.56%(d)
- -------------------------------------
Net investment income 1.55%(d) 1.67% 2.10% 1.99% 2.58% 3.06% 4.00%(d)
- -------------------------------------
Expense waiver/reimbursement (e) -- -- 0.18% 0.25% 0.29% 0.75% 0.83%(d)
- -------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------
Net assets, end of period (000
omitted) $138,033 $139,081 $140,808 $73,653 $87,927 $60,448 $48,093
- -------------------------------------
Portfolio turnover 41% 118% 127% 163% 124% 123% 70%
- -------------------------------------
</TABLE>
(a) Reflects operations for the period from October 14, 1988 (date of initial
public investment) to August 31, 1989.
(b) Distributions in excess of net investment income for the fiscal year ended
August 31, 1990, were a result of certain book and tax timing differences.
These distributions did not represent a return of capital for federal tax
purposes.
(c) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(d) Computed on an annualized basis.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TOWER TOTAL RETURN BOND FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
CORPORATE BONDS/ASSET BACKED SECURITIES--14.4%
- -------------------------------------------------------------------------------------
AUTOMOTIVE--1.4%
------------------------------------------------------------------
$ 1,000,000 Ford Capital B.V., 10.125%, 11/15/2000 $ 1,102,420
------------------------------------------------------------------ -----------
BANKING--2.5%
------------------------------------------------------------------
1,000,000 BankAmerica Corp., 7.50%, 10/15/2002 973,570
------------------------------------------------------------------
1,000,000 Signet Banking Corp., 5.20%, 2/15/2002 920,400
------------------------------------------------------------------ -----------
Total 1,893,970
------------------------------------------------------------------ -----------
FINANCE-RETAIL--6.1%
------------------------------------------------------------------
750,000 American General Finance Corp., 8.00%, 2/15/2000 760,920
------------------------------------------------------------------
1,000,000 CIT Group Securitization Corp., 5.75%, 6/15/2002 930,500
------------------------------------------------------------------
1,000,000 Discover Credit Card Trust 1993 Class A, 6.25%, 8/16/2000 966,570
------------------------------------------------------------------
1,000,000 Household Finance Corp., 9.00%, 9/1/1995 1,011,580
------------------------------------------------------------------
1,000,000 Standard Credit Card Master Trust PC, Series 1992-2A Class A,
5.875%, 7/7/1995 987,640
------------------------------------------------------------------ -----------
Total 4,657,210
------------------------------------------------------------------ -----------
MISCELLANEOUS--0.2%
------------------------------------------------------------------
170,422 USWFS 1990A, Manufactured Housing, 9.05%, 12/25/2010 170,848
------------------------------------------------------------------ -----------
TELECOMMUNICATIONS--1.3%
------------------------------------------------------------------
1,000,000 U.S. West Financial Services, 6.45%, 9/5/1995 1,001,120
------------------------------------------------------------------ -----------
UTILITIES--2.9%
------------------------------------------------------------------
2,000,000 KN Energy Inc., 9.625%, 8/1/2021 2,180,240
------------------------------------------------------------------ -----------
TOTAL CORPORATE BONDS/ASSET BACKED SECURITIES
(IDENTIFIED COST, $11,286,900) 11,005,808
------------------------------------------------------------------ -----------
</TABLE>
TOWER TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
GOVERNMENT AGENCIES--12.3%
- -------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP.--1.4%
------------------------------------------------------------------
$ 1,000,000 9.00%, Series 1024-I, 11/15/2005 $ 1,028,560
------------------------------------------------------------------ -----------
FEDERAL NATIONAL MORTGAGE CORP.--5.2%
------------------------------------------------------------------
77,921 11.00%, 4/1/2010-8/1/2019 84,665
------------------------------------------------------------------
3,900,000 8.05%, 7/14/2004 3,910,140
------------------------------------------------------------------ -----------
Total 3,994,805
------------------------------------------------------------------ -----------
GOVERNMENT NATIONAL MORTGAGE ASSOC.--5.7%
------------------------------------------------------------------
1,136,458 10.00%, 3/15/2016-9/15/2020 1,221,681
------------------------------------------------------------------
1,353,845 9.00%, 8/15/2019-5/15/2020 1,405,873
------------------------------------------------------------------
1,731,223 8.00%, 7/15/2016-4/15/2021 1,734,443
------------------------------------------------------------------ -----------
Total 4,361,997
------------------------------------------------------------------ -----------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST, $9,469,329) 9,385,362
------------------------------------------------------------------ -----------
U.S. TREASURY OBLIGATIONS--59.7%
- -------------------------------------------------------------------------------------
U.S. TREASURY BILLS--9.7%
------------------------------------------------------------------
7,500,000 6/1/1995 7,392,000
------------------------------------------------------------------ -----------
U.S. TREASURY BONDS--39.8%
------------------------------------------------------------------
10,100,000 12.50%, 8/15/2014 14,515,012
------------------------------------------------------------------
5,000,000 11.25%, 2/15/2015 6,877,500
------------------------------------------------------------------
6,000,000 8.875%, 8/15/2017 6,815,100
------------------------------------------------------------------
2,000,000 8.75%, 11/15/2008 2,168,320
------------------------------------------------------------------ -----------
Total 30,375,932
------------------------------------------------------------------ -----------
U.S. TREASURY NOTES--10.2%
------------------------------------------------------------------
3,000,000 4.375%, 8/15/1996 2,906,610
------------------------------------------------------------------
3,000,000 4.25%, 11/30/1995 2,954,280
------------------------------------------------------------------
2,000,000 4.00%, 1/31/1996 1,957,640
------------------------------------------------------------------ -----------
Total 7,818,530
------------------------------------------------------------------ -----------
TOTAL U.S. TREASURY OBLIGATIONS (IDENTIFIED COST, $45,120,684) 45,586,462
------------------------------------------------------------------ -----------
</TABLE>
TOWER TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ------------------------------------------------------------------ -----------
<C> <C> <S> <C>
*REPURCHASE AGREEMENT--13.1%
- -------------------------------------------------------------------------------------
$10,007,000 HSBC Securities, Inc., 5.82%, dated 2/27/1995, due 3/1/1995 $10,007,000
------------------------------------------------------------------ -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $75,883,913) $75,984,632+
------------------------------------------------------------------ -----------
</TABLE>
* The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $75,883,913. The
net unrealized appreciation of investments on a federal tax basis amounts to
$100,719, which is comprised of $812,847 appreciation and $712,128
depreciation at February 28, 1995.
Note: The categories of investments are shown as a percentage of net assets
($76,348,494) at February 28, 1995.
The following abbreviation is used within this portfolio:
PC--Participation Certificate
(See Notes which are an integral part of the Financial Statements)
TOWER TOTAL RETURN BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investment in repurchase agreement $10,007,000
- -------------------------------------------------------------------
Investments in securities 65,977,632
- ------------------------------------------------------------------- -----------
Total investments, at value (identified and tax cost $75,883,913) $75,984,632
- ---------------------------------------------------------------------------------
Interest receivable 424,031
- ---------------------------------------------------------------------------------
Receivable for Fund shares sold 330
- ---------------------------------------------------------------------------------
Deferred expenses 2,402
- --------------------------------------------------------------------------------- -----------
Total assets 76,411,395
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Dividends payable 33,027
- -------------------------------------------------------------------
Accrued expenses 29,874
- ------------------------------------------------------------------- -----------
Total liabilities 62,901
- --------------------------------------------------------------------------------- -----------
NET ASSETS for 7,931,323 shares of beneficial interest outstanding $76,348,494
- --------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- ---------------------------------------------------------------------------------
Paid in capital $78,565,408
- ---------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 100,719
- ---------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (2,400,192)
- ---------------------------------------------------------------------------------
Undistributed net investment income 82,559
- --------------------------------------------------------------------------------- -----------
Total Net Assets $76,348,494
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, and Redemption Proceeds Per Share:
($76,348,494 / 7,931,323 shares of beneficial interest outstanding) $9.63
- --------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/97 of $9.63)* $9.93
- --------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
TOWER TOTAL RETURN BOND FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income $2,520,100
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $250,341
- ----------------------------------------------------------------------
Administrative personnel and services fee 46,933
- ----------------------------------------------------------------------
Custodian fees 8,939
- ----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 12,019
- ----------------------------------------------------------------------
Trustees' fees 2,266
- ----------------------------------------------------------------------
Auditing fees 6,895
- ----------------------------------------------------------------------
Legal fees 3,330
- ----------------------------------------------------------------------
Portfolio accounting fees 26,347
- ----------------------------------------------------------------------
Distribution services fee 89,383
- ----------------------------------------------------------------------
Share registration costs 6,801
- ----------------------------------------------------------------------
Printing and postage 7,454
- ----------------------------------------------------------------------
Insurance premiums 2,957
- ----------------------------------------------------------------------
Miscellaneous 3,962
- ---------------------------------------------------------------------- --------
Total expenses 467,627
- ---------------------------------------------------------------------- --------
Net investment income 2,052,473
- --------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) (991,641)
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 975,027
- --------------------------------------------------------------------------------- ----------
Net realized and unrealized gain (loss) on investments (16,614)
- --------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $2,035,859
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER TOTAL RETURN BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 2,052,473 $ 3,620,729
- -------------------------------------------------------
Net realized gain (loss) on investments ($991,641 and
$47,834, net losses, respectively as computed for
federal tax purposes) (991,641) (1,407,891)
- -------------------------------------------------------
Net change in unrealized appreciation (depreciation) on
investments 975,027 (3,658,165)
- ------------------------------------------------------- -------------- --------------
Change in net assets resulting from operations 2,035,859 (1,445,327)
- ------------------------------------------------------- -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Distributions from net investment income (1,994,696) (3,662,582)
- -------------------------------------------------------
Distributions from net realized gains -- (136,345)
- ------------------------------------------------------- -------------- --------------
Change in net assets resulting from distributions
to shareholders (1,994,696) (3,798,927)
- ------------------------------------------------------- -------------- --------------
SHARE TRANSACTIONS--
- -------------------------------------------------------
Proceeds from sale of shares 8,440,183 26,200,656
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 1,838,595 3,543,220
- -------------------------------------------------------
Cost of shares redeemed (6,059,634) (16,019,025)
- ------------------------------------------------------- -------------- --------------
Change in net assets resulting from share
transactions 4,219,144 13,724,851
- ------------------------------------------------------- -------------- --------------
Change in net assets 4,260,307 8,480,597
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 72,088,187 63,607,590
- ------------------------------------------------------- -------------- --------------
End of period (including undistributed net investment
income of $82,559 and $24,782, respectively) $ 76,348,494 $72,088,187
- ------------------------------------------------------- -------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER TOTAL RETURN BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED AUGUST
FEBRUARY 28, 31,
1995 ------------------
(UNAUDITED) 1994 1993(A)
---------------- ------ -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.64 $10.49 $10.00
- --------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------
Net investment income 0.27 0.57 0.56
- --------------------------------------------------
Net realized and unrealized gain (loss)
on investments (0.02) (0.83) 0.48
- -------------------------------------------------- ------ ------ ------
Total from investment operations 0.25 (0.26) 1.04
- --------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------
Distributions from net investment income (0.26) (0.57) (0.55)
- --------------------------------------------------
Distributions from net realized gains -- (0.02) --
- -------------------------------------------------- ------ ------ ------
TOTAL DISTRIBUTIONS (0.26) (0.59) (0.55)
- -------------------------------------------------- ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.63 $ 9.64 $10.49
- -------------------------------------------------- ------ ------ ------
TOTAL RETURN (B) 2.70% (2.46)% 10.39%
- --------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------
Expenses 1.31%(c) 1.21% 0.77%(c)
- --------------------------------------------------
Net investment income 5.74%(c) 5.62% 6.56%(c)
- --------------------------------------------------
Expense waiver/reimbursement (d) 0.00% 0.00% 0.22%(c)
- --------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------
Net assets, end of period (000 omitted) $76,348 $72,088 $63,608
- --------------------------------------------------
Portfolio turnover 32% 96% 78%
- --------------------------------------------------
</TABLE>
(a) Reflects operations for the period from November 2, 1992 (date of initial
public investment) to August 31, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TOWER LOUISIANA MUNICIPAL INCOME FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- --------------------------------------------------------- -------- -----------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--97.8%
- -----------------------------------------------------------------------
LOUISIANA--96.4%
---------------------------------------------------------
$ 370,000 Ascension Parish, LA, Parishwide School District,
5.40% (Series B)/(AMBAC Insured), 3/1/2013 AAA $ 347,693
---------------------------------------------------------
200,000 Bossier City, LA, 6.875% City Sales & Use Tax
(FGIC Insured), 11/1/2011 AAA 211,220
---------------------------------------------------------
100,000 Calcasieu Parish, LA, School District, #22, 7.25%
(Series A)/(BIG Insured), 2/1/2009 AAA 108,034
---------------------------------------------------------
960,000 Denham Springs, LA, 7.20% Livingston Housing and Mortgage
Finance Bonds, 8/1/2010 AAA 1,044,394
---------------------------------------------------------
300,000 East Baton Rouge, LA, 7.25% Sales and Use Tax
(MBIA Insured), 2/1/2006 AAA 324,687
---------------------------------------------------------
200,000 East Baton Rouge, LA, 7.25% Sales and Use Tax
(MBIA Insured), 2/1/2008 AAA 215,720
---------------------------------------------------------
1,000,000 East Baton Rouge, LA, 4.80% Sales and Use Tax
(FGIC Insured), 2/1/2006 AAA 921,380
---------------------------------------------------------
930,000 East Baton Rouge, LA, 4.80% Sales and Use Tax
(FGIC Insured), 2/1/2011 AAA 810,458
---------------------------------------------------------
500,000 East Baton Rouge, LA, 6.50% Sales and Use Tax
(AMBAC Insured), 2/1/2013 AAA 522,655
---------------------------------------------------------
500,000 East Baton Rouge, LA, 5.20% Sales & Use Tax
(FSA Insured), 2/1/2016 AAA 446,640
---------------------------------------------------------
1,000,000 East Baton Rouge, LA, 5.20% Sales & Use Tax
(FSA Insured), 2/1/2017 AAA 889,160
---------------------------------------------------------
195,000 East Baton Rouge, LA, MFA, 5.40% Refunding Bonds,
10/1/2025 AAA 166,195
---------------------------------------------------------
40,000 East Baton Rouge, LA, MFA, 7.90%, (Series C)/
(GNMA Collateralized), 2/1/2002 AAA 41,960
---------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- --------------------------------------------------------- -------- -----------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- -----------------------------------------------------------------------
LOUISIANA--CONTINUED
---------------------------------------------------------
$1,680,000 East Baton Rouge, LA, MFA, 7.40%, (Series C)/ (GNMA
Collateralized), 8/1/2012 AAA $ 1,792,476
---------------------------------------------------------
1,000,000 East Baton Rouge, LA, MFA, 7.00%, (Series C)/ (GNMA
Collateralized), 4/1/2032 AAA 1,028,310
---------------------------------------------------------
750,000 Greater New Orleans, 5.50% Expressway Commission (MBIA
Insured), 11/1/2012 AAA 719,257
---------------------------------------------------------
1,000,000 Greater New Orleans, 6.00% Expressway Commission (MBIA
Insured), 11/1/2016 AAA 1,001,350
---------------------------------------------------------
1,000,000 Houma, LA, 6.25% Utility Revenue Bonds
(FGIC Insured), 1/1/2012 AAA 1,028,440
---------------------------------------------------------
115,000 Jefferson Parish, LA, 7.70% (FGIC Insured), 9/1/2002 AAA 122,484
---------------------------------------------------------
2,000,000 Jefferson Parish, LA, 6.25% School Board Sales & Use Tax
(MBIA Insured), 2/1/2008 AAA 2,090,220
---------------------------------------------------------
1,000,000 Jefferson Parish, LA, 6.50% Drain Sales Tax Revenue Bonds
(AMBAC Insured), 11/1/2011 AAA 1,036,500
---------------------------------------------------------
820,000 Jefferson Parish, LA, Home Mortgage Authority, 7.10%
Single Family Revenue Bonds, 8/1/2010 AAA 884,067
---------------------------------------------------------
1,165,000 Jefferson Parish, LA, Hospital Service District #1, 5.10%
(FGIC Insured), 1/1/2005 AAA 1,110,268
---------------------------------------------------------
1,000,000 Jefferson Parish, LA, Hospital Service District #2, 5.50%
(MBIA Insured), 7/1/2008 AAA 978,660
---------------------------------------------------------
210,000 Jefferson Parish, LA, Housing Development Corp., 7.375%
Multi-Family Revenue Bonds (Concordia Project)/
(FNMA Collateralized), 8/1/2005 AAA 227,281
---------------------------------------------------------
1,100,000 Kenner, LA, 5.75% Sales Tax Revenue (FGIC Insured),
6/1/2006 AAA 1,116,060
---------------------------------------------------------
1,000,000 Lafayette, LA, 4.70% Utilities Revenue Refunding Bonds
(AMBAC Insured), 11/1/2004 AAA 925,630
---------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- --------------------------------------------------------- -------- -----------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- -----------------------------------------------------------------------
LOUISIANA--CONTINUED
---------------------------------------------------------
$ 50,000 Lafayette, LA, 8.00%, Public Improvement Sales Revenue
Bonds (FGIC Insured), 3/1/2009 AAA $ 55,299
---------------------------------------------------------
350,000 Louisiana HFA, 5.85% Revenue Refunding Bonds Multi-Family
Housing-Woodward-A (GNMA Collateralized), 12/20/2008 AAA 342,510
---------------------------------------------------------
1,650,000 Louisiana HFA, 6.10% Revenue Multi-Family Housing-
Woodward-A (GNMA Collateralized), 12/20/2018 AAA 1,589,725
---------------------------------------------------------
1,000,000 Louisiana HFA, 6.20% Revenue Multi-Family Housing-
Woodward-A (GNMA Collateralized), 6/20/2028 AAA 959,210
---------------------------------------------------------
1,000,000 Louisiana HFA, 7.10% Revenue Bonds, Villa Maria
Retirement Center (GNMA Collateralized), 1/20/2035 AAA 1,039,780
---------------------------------------------------------
1,000,000 Louisiana PFA, 4.60% Special Insurance Assessment Bonds,
10/1/2002 AAA 939,380
---------------------------------------------------------
1,000,000 Louisiana PFA, 4.85% Crossover Refunding Bonds, Jefferson
Parish Eastbank, 8/1/2006 AAA 903,520
---------------------------------------------------------
1,000,000 Louisiana PFA, 5.10% Revenue Refunding Bonds
(St. Francis Medical Center), 7/1/2007 AAA 943,030
---------------------------------------------------------
1,910,000 Louisiana PFA, 5.70% Revenue Refunding Bonds (Womans
Hospital Foundation), 10/1/2008 AAA 1,899,170
---------------------------------------------------------
315,000 Louisiana PFA, 5.75% Revenue Refunding Bonds (Womans
Hospital Foundation), 10/1/2009 AAA 311,611
---------------------------------------------------------
500,000 Louisiana PFA, 5.75% (Tulane University), 2/15/2018 AAA 472,625
---------------------------------------------------------
1,250,000 Louisiana PFA, 6.00% (Series C)/(Alton Ochsner Medical
Foundation)/(MBIA Insured), 5/15/2017 AAA 1,236,250
---------------------------------------------------------
750,000 Louisiana PFA, 6.00% (General Health, Inc.)/
(MBIA Insured), 11/1/2012 AAA 755,392
---------------------------------------------------------
995,000 Louisiana PFA, 6.30% Hospital Revenue Crossover Bonds,
(Our Lady of the Lake Regional Hospital)/(MBIA Insured),
12/1/2016 AAA 1,009,577
---------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- --------------------------------------------------------- -------- -----------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- -----------------------------------------------------------------------
LOUISIANA--CONTINUED
---------------------------------------------------------
$ 500,000 Louisiana PFA, 6.40% (Lafayette General Medical Center)/
(FSA Insured), 10/1/2012 AAA $ 515,860
---------------------------------------------------------
350,000 Louisiana PFA, 6.50% (Series B)/(Alton Ochsner Medical
Foundation)/(MBIA Insured), 5/15/2022 AAA 357,735
---------------------------------------------------------
670,000 Louisiana PFA, 6.80% Student Opportunity Loan (FSA
Insured), 1/1/2006 AAA 713,858
---------------------------------------------------------
670,000 Louisiana PFA, 6.85% Student Opportunity Loan (FSA
Insured), 1/1/2009 AAA 704,338
---------------------------------------------------------
425,000 Louisiana PFA, Jefferson Parish Eastbank 7.60% (FGIC
Insured), 8/1/2003 AAA 467,785
---------------------------------------------------------
750,000 Louisiana PFA, Jefferson Parish Eastbank 7.70% (FGIC
Insured), 8/1/2010 AAA 828,427
---------------------------------------------------------
95,000 Louisiana PFA, 7.90% Prerefunded Health and Education
Capital Facilities, 12/1/2015 AAA 106,247
---------------------------------------------------------
580,000 Louisiana PFA, 7.90%, Unrefunded--Health & Education,
12/1/2015 AAA 633,169
---------------------------------------------------------
1,450,000 Louisiana PFA, 8.20% Health and Education Capital
Facilities (BIG Insured), 12/1/2015 AAA 1,626,320
---------------------------------------------------------
2,045,000 Louisiana PFA, 7.50% (Multi-Family Housing Walmsley-A),
(FHLMC Collateralized), 6/1/2021 AAA 2,197,680
---------------------------------------------------------
500,000 Louisiana Stadium & Expo District, 6.00% Revenue
Refunding Bonds (Series A)/(FGIC Insured), 7/1/2016 AAA 498,755
---------------------------------------------------------
2,000,000 Louisiana Stadium & Expo District, 6.00% Revenue
Refunding Bonds (FGIC Insured), 7/1/2024 AAA 1,980,720
---------------------------------------------------------
525,000 Monroe-Brentwood, LA, 6.50% Housing Development
Corp. (FNMA Collateralized), 2/1/2010 AAA 532,655
---------------------------------------------------------
1,020,000 Monroe-Brentwood, LA, 6.70%, Housing Development
Corp. (FNMA Collateralized), 8/1/2021 AAA 1,033,168
---------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- --------------------------------------------------------- -------- -----------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- -----------------------------------------------------------------------
LOUISIANA--CONTINUED
---------------------------------------------------------
$ 160,000 Morgan City, LA, 7.45% Utility Revenue Bonds
(AMBAC Insured), 3/1/2003 AAA $ 172,992
---------------------------------------------------------
500,000 New Orleans, LA, 6.00% GO Bonds (AMBAC Insured),
12/1/2004 AAA 517,816
---------------------------------------------------------
1,500,000 New Orleans, LA, 6.00% GO Bonds (Audubon Park)/ (FGIC
Insured), 10/1/2013 AAA 1,503,390
---------------------------------------------------------
500,000 New Orleans, LA, 7.00% GO Bonds (FGIC Insured),
9/1/2019 AAA 530,795
---------------------------------------------------------
1,465,000 New Orleans, LA, Housing Development Corp., 7.375% Multi-
Family Revenue Bonds (FNMA Collateralized), 8/1/2005 AAA 1,579,307
---------------------------------------------------------
1,250,000 New Orleans, LA, Home Mortgage Authority, 6.65% Single
Family Mortgage Revenue Bonds (Series A)/(GNMA
Collateralized), 9/1/2008 AAA 1,298,850
---------------------------------------------------------
2,375,000 New Orleans, LA, Zero Coupon, GO UT Bonds, (AMBAC
Insured), 9/1/2013 AAA 775,437
---------------------------------------------------------
2,000,000 New Orleans, LA, Zero Coupon, GO UT Bonds, (AMBAC
Insured), 9/1/2016 AAA 539,000
---------------------------------------------------------
850,000 Orleans Parish, LA, School Board, 7.00% GO Bonds (Series
1989A)/(MBIA Insured), 6/1/2009 AAA 881,603
---------------------------------------------------------
750,000 Orleans, LA, Levee District, 8.125% (MBIA Insured),
11/1/2007 AAA 801,810
---------------------------------------------------------
500,000 Orleans Parish, LA, Law Enforcement District, 7.10% GO
Bonds (AMBAC Insured), 5/1/2010 AAA 531,395
---------------------------------------------------------
300,000 Plaquemines Parish, LA, 6.50% GO Bonds
(AMBAC Insured), 8/1/2008 AAA 315,453
---------------------------------------------------------
1,300,000 Regional Transit Authority, 8.00% (FGIC Insured),
12/1/2008 AAA 1,446,445
---------------------------------------------------------
175,000 Slidell, LA, 7.50% Sales & Use Tax (MBIA Insured),
10/1/2005 AAA 189,469
---------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- --------------------------------------------------------- -------- -----------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- -----------------------------------------------------------------------
LOUISIANA--CONTINUED
---------------------------------------------------------
$ 500,000 St. Charles Parish, LA, 5.95% Environmental Improvement
Revenue Bonds (FSA Insured), 12/1/2023 AAA $ 472,090
---------------------------------------------------------
1,000,000 St. Charles Parish, LA, 7.00% Solid Waste Disposal
Revenue Bonds (AMBAC Insured), 12/1/2022 AAA 1,057,780
---------------------------------------------------------
1,485,000 St. Charles Parish, LA, 7.15% Waterworks & Waste-Water
(District #1) Utility Revenue Bonds (MBIA Insured),
7/1/2016 AAA 1,605,671
---------------------------------------------------------
500,000 St. Landry, LA, Consolidated School District #1, 6.10% GO
Bonds (MBIA Insured), 5/1/2008 AAA 510,500
---------------------------------------------------------
375,000 St. Mary's Parish, LA, Sewage District #5, 7.60% (AMBAC
Insured), 5/1/2004 AAA 409,080
---------------------------------------------------------
1,000,000 St. Tammany Parish, LA, 6.25%, Revenue Refunding Bonds,
Hospital Service District #2, (Series 1994), 10/1/2014 AAA 1,003,190
---------------------------------------------------------
400,000 St. Tammany Parish, LA, 6.125%, Revenue Refunding Bonds,
Hospital Service District #2, (Series 1994), 10/1/2011 AAA 404,104
---------------------------------------------------------
300,000 St. Tammany, LA, 7.20% Single Family Revenue Bonds,
7/1/2010 AAA 326,271
---------------------------------------------------------
50,000 St. Tammany, LA, 7.90% Sales & Use Tax District #3
(Series A)/(FGIC Insured), 12/1/2003 AAA 55,919
---------------------------------------------------------
1,125,000 State of Louisiana, 5.80% GO UT Refunding Bonds (Series
A)/(MBIA Insured), 8/1/2010 AAA 1,132,931
---------------------------------------------------------
550,000 State of Louisiana, 6.00% Revenue Refunding Bonds
(Energy & Power Authority Project)/(Rodemacher Unit #2)/
(FGIC Insured), 1/1/2013 AAA 550,478
---------------------------------------------------------
1,500,000 State of Louisiana, 6.10% GO UT Bonds (Series A)/ (AMBAC
Insured), 5/1/2011 AAA 1,536,480
---------------------------------------------------------
400,000 State of Louisiana, 7.25% Gas & Fuels Tax Revenue Bonds
(Series A)/(FGIC Insured), 11/15/2004 AAA 438,188
---------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CREDIT
RATING:
PRINCIPAL MOODY'S
AMOUNT OR S&P* VALUE
- ---------- --------------------------------------------------------- -------- -----------
<C> <S> <C> <C>
LONG-TERM MUNICIPAL SECURITIES--CONTINUED
- -----------------------------------------------------------------------
LOUISIANA--CONTINUED
---------------------------------------------------------
$ 170,000 Terrebonne Parish, LA, 7.40% Hospital Service District #1
(Terrebonne General Medical Center)/(BIG Insured),
4/1/2003 AAA $ 185,382
---------------------------------------------------------
130,000 Terrebonne Parish, LA, 7.50% Hospital Service District #1
(Terrebonne General Medical Center)/(BIG Insured),
4/1/2008 AAA 140,764
---------------------------------------------------------
1,225,000 Terrebonne Parish, LA, 7.50% Hospital Service District #1
(Terrebonne General Medical Center)/(BIG Insured),
4/1/2015 AAA 1,306,830
--------------------------------------------------------- -----------
TOTAL LOUISIANA (IDENTIFIED COST, $65,611,570) 66,984,415
--------------------------------------------------------- -----------
PUERTO RICO--1.4%
---------------------------------------------------------
1,000,000 Puerto Rico Municipal Finance Authority, 6.00%
Revenue Bonds (Series A)/(FSA Insured), 7/1/2014
(IDENTIFIED COST $966,270) AAA 1,016,360
--------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $66,577,840) $68,000,775+
--------------------------------------------------------- -----------
</TABLE>
* Please refer to the Appendix of the Statement of Additional Information for an
explanation of the credit ratings. Current credit ratings are unaudited.
+ The cost of investments for federal tax purposes amounts to $66,577,840. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,422,935, which is comprised of $2,373,964 appreciation and $951,029
depreciation at February 28, 1995.
Note: The categories of investments are shown as a percentage of net assets
($69,503,398) at February 28, 1995.
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
The following abbreviations are used in this portfolio:
<TABLE>
<S> <C>
AMBAC --American Municipal Bond Assurance Corporation
BIG --Bond Investors Guaranty
FGIC --Financial Guaranty Insurance Company
FHLMC --Federal Home Loan Mortgage Corporation
FNMA --Federal National Mortgage Association
FSA --Financial Security Assurance
GNMA --Government National Mortgage Association
GO --General Obligation
HFA --Housing Finance Authority
MBIA --Municipal Bond Investors Assurance
MFA --Mortgage Finance Authority
PFA --Public Facility Authority
UT --Unlimited Tax
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER LOUISIANA MUNICIPAL INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost $66,577,840) $68,000,775
- --------------------------------------------------------------------------------
Cash 705,944
- --------------------------------------------------------------------------------
Interest receivable 974,810
- --------------------------------------------------------------------------------
Receivable for shares sold 22,075
- -------------------------------------------------------------------------------- -----------
Total assets 69,703,604
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for shares redeemed $ 33,652
- ---------------------------------------------------------------------
Dividends payable 147,376
- ---------------------------------------------------------------------
Accrued expenses 19,178
- --------------------------------------------------------------------- --------
Total liabilities 200,206
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 6,446,485 shares of beneficial interest outstanding $69,503,398
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $68,641,656
- --------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments 1,422,935
- --------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (607,632)
- --------------------------------------------------------------------------------
Undistributed net investment income 46,439
- -------------------------------------------------------------------------------- -----------
Total Net Assets $69,503,398
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE, and Redemption Proceeds Per Share:
($69,503,398 / 6,446,485 shares of beneficial interest outstanding) $10.78
- -------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/97 of $10.78)* $11.11
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
TOWER LOUISIANA MUNICIPAL INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income $2,279,720
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $158,045
- ----------------------------------------------------------------------
Administrative personnel and services fee 46,094
- ----------------------------------------------------------------------
Custodian fees 10,564
- ----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 26,775
- ----------------------------------------------------------------------
Trustees' fees 2,481
- ----------------------------------------------------------------------
Auditing fees 6,892
- ----------------------------------------------------------------------
Legal fees 2,925
- ----------------------------------------------------------------------
Portfolio accounting fees 31,446
- ----------------------------------------------------------------------
Share registration costs 6,823
- ----------------------------------------------------------------------
Printing and postage 10,710
- ----------------------------------------------------------------------
Insurance premiums 3,114
- ----------------------------------------------------------------------
Miscellaneous 1,511
- ---------------------------------------------------------------------- --------
Total expenses 307,380
- ----------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 28,097
- ---------------------------------------------------------------------- --------
Net expenses 279,283
- --------------------------------------------------------------------------------- ----------
Net investment income 2,000,437
- --------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ---------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) (598,940)
- ---------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 356,999
- --------------------------------------------------------------------------------- ----------
Net realized and unrealized gain (loss) on investments (241,941)
- --------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $1,758,496
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER LOUISIANA MUNICIPAL INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 2,000,437 $ 4,476,563
- -------------------------------------------------------
Net realized gain (loss) on investments ($598,940 net
loss and $563,347 net gain, respectively, as computed
for federal tax purposes) (598,940) 563,347
- -------------------------------------------------------
Net change in unrealized appreciation (depreciation) of
investments 356,999 (5,870,977)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from operations 1,758,496 (831,067)
- ------------------------------------------------------- --------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Distributions from net investment income (1,955,141) (4,509,430)
- -------------------------------------------------------
Distributions from net realized gains (563,576) (789,175)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from distributions
to shareholders (2,518,717) (5,298,605)
- ------------------------------------------------------- --------------- --------------
SHARE TRANSACTIONS--
- -------------------------------------------------------
Proceeds from sale of shares 3,572,579 17,361,944
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 1,508,449 2,766,399
- -------------------------------------------------------
Cost of shares redeemed (14,515,311) (20,214,860)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from share
transactions (9,434,283) (86,517)
- ------------------------------------------------------- --------------- --------------
Change in net assets (10,194,504) (6,216,189)
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 79,697,902 85,914,091
- ------------------------------------------------------- --------------- --------------
End of period (including undistributed net investment
income of $46,439 and $1,143, respectively) $ 69,503,398 $ 79,697,902
- ------------------------------------------------------- --------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER LOUISIANA MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
1995 --------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990 1989(A)
---------------- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $10.82 $11.60 $10.91 $10.46 $ 9.98 $10.14 $10.00
- -------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------
Net investment income 0.30 0.59 0.62 0.64 0.64 0.64 0.43
- -------------------------------------
Net realized and unrealized gain
(loss) on investments 0.03 (0.68) 0.73 0.48 0.48 (0.16) 0.14
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.33 (0.09) 1.35 1.12 1.12 0.48 0.57
- -------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------
Distributions from net investment
income (0.29) (0.59) (0.62) (0.64) (0.64) (0.64) (0.43)
- -------------------------------------
Distributions from net realized gains (0.08) (0.10) (0.04) (0.03) -- -- --
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.37) (0.69) (0.66) (0.67) (0.64) (0.64) (0.43)
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.78 $10.82 $11.60 $10.91 $10.46 $ 9.98 $10.14
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN (B) 3.33% (0.76%) 12.75% 11.02% 11.59% 4.89% 5.82%
- -------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------
Expenses 0.80%(c) 0.71% 0.66% 0.65% 0.74% 0.81% 0.62%(c)
- -------------------------------------
Net investment income 5.70%(c) 5.24% 5.59% 6.04% 6.29% 6.35% 6.57%(c)
- -------------------------------------
Expense waiver/reimbursement (d) 0.08%(c) 0.08% 0.14% 0.16% 0.20% 0.41% 0.61%(c)
- -------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------
Net assets, end of period (000
omitted) $69,503 $79,698 $85,914 $57,547 $42,210 $31,380 $12,285
- -------------------------------------
Portfolio turnover 6% 33% 32% 19% 26% 32% 28%
- -------------------------------------
</TABLE>
(a) Reflects operations for the period from October 14, 1988 (date of initial
public investment) to August 31, 1989.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. GOVERNMENT INCOME FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
The obligations listed below are issued by the U.S. government, its agencies or
instrumentalities.
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- -------------------------------------------------------------------- -----------
<C> <C> <S> <C>
LONG-TERM OBLIGATIONS--85.5%
- -----------------------------------------------------------------------------------
* FEDERAL HOME LOAN MORTGAGE CORP. PC--7.7%
--------------------------------------------------------------------
$1,116,194 10.00%, 6/1/2018 $ 1,178,969
--------------------------------------------------------------------
56,901 9.50%, 10/1/2001 59,070
--------------------------------------------------------------------
272,611 9.50%, 12/1/2001 283,003
--------------------------------------------------------------------
138,557 9.50%, 10/1/2004 143,839
--------------------------------------------------------------------
114,461 9.50%, 10/1/2019 119,467
--------------------------------------------------------------------
302,701 9.25%, 6/1/2002 313,105
--------------------------------------------------------------------
339,378 9.00%, 8/1/2001 350,723
--------------------------------------------------------------------
132,526 9.00%, 6/1/2016 136,417
--------------------------------------------------------------------
149,264 9.00%, 5/1/2018 152,713
--------------------------------------------------------------------
454,679 8.75%, 1/1/2011 461,281
--------------------------------------------------------------------
454,155 8.75%, 2/1/2017 460,749
-------------------------------------------------------------------- -----------
Total 3,659,336
-------------------------------------------------------------------- -----------
* FEDERAL HOME LOAN MORTGAGE CORP. REMIC--25.0%
--------------------------------------------------------------------
246,341 9.50%, Series 24B, 1/15/2005 256,178
--------------------------------------------------------------------
42,683 9.25%, Series 1C, 8/15/2013 42,626
--------------------------------------------------------------------
1,000,000 9.00%, Series 1015E, 6/15/2020 1,040,900
--------------------------------------------------------------------
1,558,000 7.50%, Series 1378 ND, 9/15/2007 1,495,384
--------------------------------------------------------------------
1,000,000 7.50%, Series 1348 PN, 9/15/2021 926,370
--------------------------------------------------------------------
2,000,000 7.00%, Series 1435 HC, 11/15/2005 1,889,220
--------------------------------------------------------------------
2,500,000 7.00%, Series 1440 PQ, 12/15/2006 2,334,850
--------------------------------------------------------------------
2,000,000 6.375%, Series 1449 GB, 11/15/2006 1,839,120
--------------------------------------------------------------------
</TABLE>
TOWER U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- -------------------------------------------------------------------- -----------
<C> <C> <S> <C>
LONG-TERM OBLIGATIONS--CONTINUED
- -----------------------------------------------------------------------------------
* FEDERAL HOME LOAN MORTGAGE CORP. REMIC--CONTINUED
--------------------------------------------------------------------
$1,750,000 6.10%, Series 1394E, 6/15/2016 $ 1,660,278
--------------------------------------------------------------------
500,000 6.00%, Series 1524E, 10/15/2004 472,675
-------------------------------------------------------------------- -----------
Total 11,957,601
-------------------------------------------------------------------- -----------
* FEDERAL NATIONAL MORTGAGE ASSOCIATION REMIC--9.3%
--------------------------------------------------------------------
258,720 9.30%, Series 1990-10H, 8/25/2017 260,073
--------------------------------------------------------------------
234,000 9.00%, Series 1990-93D, 10/25/2018 235,668
--------------------------------------------------------------------
2,000,000 9.00%, Series 1990-105H, 6/25/2019 2,029,400
--------------------------------------------------------------------
974,124 8.00%, Series 1990-54E, 12/25/2003 976,530
--------------------------------------------------------------------
1,000,000 7.50%, Series 1992-117K, 3/25/2021 954,530
-------------------------------------------------------------------- -----------
Total 4,456,201
-------------------------------------------------------------------- -----------
* FEDERAL NATIONAL MORTGAGE ASSOCIATION DEBENTURES--11.8%
--------------------------------------------------------------------
5,500,000 8.05%, 7/14/2004 5,514,300
-------------------------------------------------------------------- -----------
* FEDERAL NATIONAL MORTGAGE ASSOCIATION PC--1.9%
--------------------------------------------------------------------
188,563 10.75%, 1/1/2001 201,228
--------------------------------------------------------------------
140,542 9.50%, 8/1/2020 147,832
--------------------------------------------------------------------
523,616 8.50%, 2/1/2011 533,591
-------------------------------------------------------------------- -----------
Total 882,651
-------------------------------------------------------------------- -----------
* GOVERNMENT NATIONAL MORTGAGE ASSOCIATION PC--8.2%
--------------------------------------------------------------------
795,515 9.50%, 6/15/2020 840,502
--------------------------------------------------------------------
637,216 9.00%, 2/15/2020 660,506
--------------------------------------------------------------------
1,593,429 8.00%, 11/15/2022 1,582,451
--------------------------------------------------------------------
876,825 7.50%, 10/15/2022 847,767
-------------------------------------------------------------------- -----------
Total 3,931,226
-------------------------------------------------------------------- -----------
U.S. TREASURY BONDS--3.3%
--------------------------------------------------------------------
1,500,000 8.00%, 11/15/2021 1,571,400
-------------------------------------------------------------------- -----------
</TABLE>
TOWER U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ---------- -------------------------------------------------------------------- -----------
<C> <C> <S> <C>
LONG-TERM OBLIGATIONS--CONTINUED
- -----------------------------------------------------------------------------------
U.S. TREASURY NOTES--18.3%
--------------------------------------------------------------------
$8,232,000 6.375%-9.25%, 8/15/1997-7/15/1999 $ 8,736,705
-------------------------------------------------------------------- -----------
TOTAL LONG-TERM OBLIGATIONS (IDENTIFIED COST, $41,975,312) 40,709,420
-------------------------------------------------------------------- -----------
** REPURCHASE AGREEMENT--9.6%
- -----------------------------------------------------------------------------------
4,590,000 HSBC Securities, Inc., 5.82%, dated 2/27/1995, due 3/1/1995 4,590,000
-------------------------------------------------------------------- -----------
TOTAL INVESTMENTS (IDENTIFIED COST, $46,565,312) $45,299,420+
-------------------------------------------------------------------- -----------
</TABLE>
* Because of monthly principal payments, the average lives of the Government
National Mortgage Association Participation Certificates, Federal Home Loan
Mortgage Corp. Participation Certificates and REMICS, and Federal National
Mortgage Association Pass-Through Securities are less than the indicated
periods.
** The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ The cost of investments for federal tax purposes amounts to $46,565,312. The
net unrealized depreciation of investments on a federal tax basis amounts to
$1,265,892, which is comprised of $279,043 appreciation and $1,544,935
depreciation at February 28, 1995.
Note: The categories of investments are shown as a percentage of net assets
($47,636,883) at February 28, 1995.
The following abbreviations are used in this portfolio:
<TABLE>
<C> <S> <C>
PC -- Participation Certificates
REMIC -- Real Estate Mortgage Investment Conduit
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. GOVERNMENT INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments, at value (identified and tax cost $46,565,312) $45,299,420
- --------------------------------------------------------------------------------
Interest receivable 323,510
- --------------------------------------------------------------------------------
Receivable for investments sold 2,419,706
- --------------------------------------------------------------------------------
Receivable for shares sold 9,515
- -------------------------------------------------------------------------------- -----------
Total assets 48,052,151
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for shares redeemed $222,928
- ---------------------------------------------------------------------
Dividends payable 177,789
- ---------------------------------------------------------------------
Accrued expenses 14,551
- --------------------------------------------------------------------- --------
Total liabilities 415,268
- -------------------------------------------------------------------------------- -----------
NET ASSETS for 4,823,204 shares of beneficial interest outstanding $47,636,883
- -------------------------------------------------------------------------------- -----------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital $51,729,207
- --------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments (1,265,892)
- --------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investments (2,929,556)
- --------------------------------------------------------------------------------
Undistributed net investment income 103,124
- -------------------------------------------------------------------------------- -----------
Total Net Assets $47,636,883
- -------------------------------------------------------------------------------- -----------
NET ASSET VALUE, and Redemption Proceeds Per Share:
($47,636,883 / 4,823,204 shares of beneficial interest outstanding) $9.88
- -------------------------------------------------------------------------------- -----------
Offering Price Per Share (100/97 of $9.88)* $10.19
- -------------------------------------------------------------------------------- -----------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. GOVERNMENT INCOME FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------
Interest income $ 2,144,222
- --------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------
Investment advisory fee $120,575
- ---------------------------------------------------------------------
Administrative personnel and services fee 35,170
- ---------------------------------------------------------------------
Custodian fees 6,696
- ---------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 21,776
- ---------------------------------------------------------------------
Trustees' fees 2,434
- ---------------------------------------------------------------------
Auditing fees 6,725
- ---------------------------------------------------------------------
Legal fees 3,526
- ---------------------------------------------------------------------
Portfolio accounting fees 26,684
- ---------------------------------------------------------------------
Share registration costs 6,689
- ---------------------------------------------------------------------
Printing and postage 8,776
- ---------------------------------------------------------------------
Insurance premiums 3,133
- ---------------------------------------------------------------------
Miscellaneous 2,201
- --------------------------------------------------------------------- --------
Total expenses 244,385
- ---------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 16,077
- --------------------------------------------------------------------- --------
Net expenses 228,308
- -------------------------------------------------------------------------------- -----------
Net investment income 1,915,914
- -------------------------------------------------------------------------------- -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------
Net realized gain (loss) on investments (identified cost basis) (2,171,592)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments 1,437,046
- -------------------------------------------------------------------------------- -----------
Net realized and unrealized gain (loss) on investments (734,546)
- -------------------------------------------------------------------------------- -----------
Change in net assets resulting from operations $ 1,181,368
- -------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. GOVERNMENT INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 1,915,914 $ 5,257,764
- -------------------------------------------------------
Net realized gain (loss) on investments ($2,171,592
and $97,781 net losses, respectively, as computed for
federal tax purposes) (2,171,592) (639,236)
- -------------------------------------------------------
Net change in unrealized appreciation (depreciation)
on investments 1,437,046 (6,333,912)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from operations 1,181,368 (1,715,384)
- ------------------------------------------------------- --------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Distributions from net investment income (1,839,423) (5,207,830)
- -------------------------------------------------------
Distributions from net realized gains -- (286,051)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from distributions
to shareholders (1,839,423) (5,493,881)
- ------------------------------------------------------- --------------- --------------
SHARE TRANSACTIONS--
- -------------------------------------------------------
Proceeds from sale of shares 1,245,824 13,454,908
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 627,230 1,317,799
- -------------------------------------------------------
Cost of shares redeemed (20,629,131) (27,109,534)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from share
transactions (18,756,077) (12,336,827)
- ------------------------------------------------------- --------------- --------------
Change in net assets (19,414,132) (19,546,092)
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 67,051,015 86,597,107
- ------------------------------------------------------- --------------- --------------
End of period (including undistributed net investment
income of $103,124 and $26,633, respectively) $ 47,636,883 $ 67,051,015
- ------------------------------------------------------- --------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. GOVERNMENT INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
1995 --------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990 1989(A)
---------------- ------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.92 $10.85 $10.75 $10.49 $10.07 $10.20 $10.17
- -------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------
Net investment income 0.36 0.69 0.74 0.79 0.85 0.86 0.69
- -------------------------------------
Net realized and unrealized gain
(loss) on investments (0.06) (0.89) 0.12 0.30 0.43 (0.11) 0.03
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
Total from investment operations 0.30 (0.20) 0.86 1.09 1.28 0.75 0.72
- -------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------
Distributions from net
investment income (0.34) (0.69) (0.74) (0.79) (0.85) (0.86) (0.69)
- -------------------------------------
Distributions in excess of net
investment income -- -- (0.01)(b) -- -- --
- -------------------------------------
Distributions from net realized gains -- (0.04) (0.01) (0.04) (0.01) (0.02) --
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.34) (0.73) (0.76) (0.83) (0.86) (0.88) (0.69)
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 9.88 $ 9.92 $10.85 $10.75 $10.49 $10.07 $10.20
- ------------------------------------- ------ ------ ------ ------ ------ ------ ------
TOTAL RETURN (C) 3.18% (1.67)% 8.11% 10.72% 13.27% 7.48% 9.20%
- -------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------
Expenses 0.85%(d) 0.74% 0.68% 0.69% 0.68% 0.69% 0.59%(d)
- -------------------------------------
Net investment income 7.15%(d) 6.68% 7.03% 7.51% 8.30% 8.50% 8.64%(d)
- -------------------------------------
Expense waiver/reimbursement (e) 0.06%(d) 0.06% 0.11% 0.11% 0.17% 0.45% 0.52%(d)
- -------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------
Net assets, end of period (000
omitted) $47,637 $67,051 $86,597 $61,646 $48,482 $32,596 $15,753
- -------------------------------------
Portfolio turnover 0% 26% 61% 36% 20% 32% 42%
- -------------------------------------
</TABLE>
(a) Reflects operations for the period from October 14, 1988 (date of initial
public investment) to August 31, 1989.
(b) Distributions in excess of net investment income for the fiscal year ended
August 31, 1993, were a result of certain book and tax timing differences.
These distributions did not represent a return of capital for federal tax
purposes.
(c) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(d) Computed on an annualized basis.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TOWER CASH RESERVE FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <S> <C> <C>
*COMMERCIAL PAPER--68.1%
- ----------------------------------------------------------------------------------
CHEMICALS--2.3%
-----------------------------------------------------------------
$ 5,000,000 duPont (E.I.) deNemours & Co., 5.90%, 3/21/1995 $ 4,983,611
----------------------------------------------------------------- ------------
COMPUTERS--2.3%
-----------------------------------------------------------------
5,000,000 Hewlett Packard Co., 6.12%, 3/21/1995 4,983,000
----------------------------------------------------------------- ------------
FINANCE--AUTOMOTIVE--4.5%
-----------------------------------------------------------------
5,000,000 Ford Motor Credit Corp., 6.10%, 4/5/1995 4,970,347
-----------------------------------------------------------------
5,000,000 Toyota Motor Credit Corp., 6.05%, 5/4/1995 4,946,222
----------------------------------------------------------------- ------------
Total 9,916,569
----------------------------------------------------------------- ------------
FINANCE--COMMERCIAL--16.0%
-----------------------------------------------------------------
5,000,000 CIT Group Holdings, Inc., 6.15%, 3/6/1995 4,995,729
-----------------------------------------------------------------
5,000,000 General Electric Capital Co., 6.22%, 6/1/1995 4,920,522
-----------------------------------------------------------------
5,000,000 John Deere Capital Corp., 5.98%, 4/28/1995 4,951,828
-----------------------------------------------------------------
5,000,000 Norwest Corp., 6.05%, 4/17/1995 4,960,507
-----------------------------------------------------------------
5,000,000 Pitney Bowes Inc., 5.97%, 4/4/1995 4,971,808
-----------------------------------------------------------------
5,000,000 Transamerica Financial Group, Inc., 6.00%, 4/10/1995 4,966,667
-----------------------------------------------------------------
5,000,000 USAA Capital Corp., 6.00%, 5/22/1995 4,931,667
----------------------------------------------------------------- ------------
Total 34,698,728
----------------------------------------------------------------- ------------
FINANCE--RETAIL--6.9%
-----------------------------------------------------------------
10,000,000 American General Finance Corp., 6.00%-6.03%, 3/1/1995-5/2/1995 9,948,334
-----------------------------------------------------------------
5,000,000 Commercial Credit Co., 6.00%, 3/15/1995 4,988,333
----------------------------------------------------------------- ------------
Total 14,936,667
----------------------------------------------------------------- ------------
FOOD & BEVERAGE--4.6%
-----------------------------------------------------------------
5,000,000 Anheuser Busch Inc., 5.95%, 4/25/1995 4,954,549
-----------------------------------------------------------------
5,000,000 H. J. Heinz Co., 6.00%, 4/3/1995 4,972,500
----------------------------------------------------------------- ------------
Total 9,927,049
----------------------------------------------------------------- ------------
</TABLE>
TOWER CASH RESERVE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <S> <C> <C>
* COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------
FUNDING CORPORATION--9.1%
-----------------------------------------------------------------
$ 5,000,000 Beta Finance, Inc., 5.93%, 3/28/1995 $ 4,977,762
-----------------------------------------------------------------
5,000,000 CIESCO, 6.10%, 5/15/1995 4,936,458
-----------------------------------------------------------------
5,000,000 Falcon Asset Securitization Corp., 6.00%, 3/13/1995 4,990,000
-----------------------------------------------------------------
5,000,000 Paccar Financial Corp., 6.17%, 3/10/1995 4,992,288
----------------------------------------------------------------- ------------
Total 19,896,508
----------------------------------------------------------------- ------------
HEALTH CARE--4.6%
-----------------------------------------------------------------
5,000,000 Abbott Laboratories, 6.17%, 3/27/1995 4,977,719
-----------------------------------------------------------------
5,000,000 Ciba Geigy Corp., 6.00%, 3/31/1995 4,975,000
----------------------------------------------------------------- ------------
Total 9,952,719
----------------------------------------------------------------- ------------
OIL & OIL FINANCE--6.8%
-----------------------------------------------------------------
5,000,000 Atlantic Richfield Co., 5.94%, 4/18/1995 4,960,400
-----------------------------------------------------------------
5,000,000 Chevron Oil Finance Co., 6.10%, 4/5/1995 4,970,347
-----------------------------------------------------------------
5,000,000 Texaco, Inc., 5.95%, 3/10/1995 4,992,563
----------------------------------------------------------------- ------------
Total 14,923,310
----------------------------------------------------------------- ------------
PRINTING & PUBLISHING--2.3%
-----------------------------------------------------------------
5,000,000 Donnelley (RR) & Sons Co., 6.05%, 4/17/1995 4,960,507
----------------------------------------------------------------- ------------
TELECOMMUNICATIONS--4.6%
-----------------------------------------------------------------
5,000,000 American Telephone & Telegraph Co., 6.01%, 5/9/1995 4,942,404
-----------------------------------------------------------------
5,000,000 BellSouth Telecommunications, Inc., 6.02%, 3/27/1995 4,978,261
----------------------------------------------------------------- ------------
Total 9,920,665
----------------------------------------------------------------- ------------
TOBACCO--2.3%
-----------------------------------------------------------------
5,000,000 Philip Morris Cos., Inc., 6.03%, 4/3/1995 4,972,363
----------------------------------------------------------------- ------------
</TABLE>
TOWER CASH RESERVE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- ------------
<C> <S> <C> <C>
* COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------
UTILITIES--1.8%
-----------------------------------------------------------------
$ 4,000,000 South Carolina Electric & Gas, 6.02%, 3/3/1995 $ 3,998,662
----------------------------------------------------------------- ------------
TOTAL COMMERCIAL PAPER 148,070,358
----------------------------------------------------------------- ------------
U.S. GOVERNMENT AGENCIES--13.6%
- ----------------------------------------------------------------------------------
15,000,000 Federal Home Loan Bank, 5.93%-6.04%, 4/10/1995-5/22/1995 14,865,353
-----------------------------------------------------------------
15,000,000 Federal National Mortgage Association, 5.92%-6.14%,
5/8/1995-6/12/1995 14,800,342
----------------------------------------------------------------- ------------
TOTAL U.S. GOVERNMENT AGENCIES 29,665,695
----------------------------------------------------------------- ------------
**REPURCHASE AGREEMENTS--20.8%
- ----------------------------------------------------------------------------------
23,000,000 HSBC, Inc., 5.82%, dated 2/27/1995, due 3/1/1995 23,000,000
-----------------------------------------------------------------
22,266,000 Merrill Lynch Inc., 5.80%, dated 2/27/1995, due 3/1/1995 22,266,000
----------------------------------------------------------------- ------------
TOTAL REPURCHASE AGREEMENTS 45,266,000
----------------------------------------------------------------- ------------
TOTAL INVESTMENTS, AT AMORTIZED COST $223,002,053+
----------------------------------------------------------------- ------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase.
** The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($217,400,539) at February 28, 1995.
(See Notes which are an integral part of the Financial Statements)
TOWER CASH RESERVE FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- --------------------------------------------------------------------------------
Investments in repurchase agreements $ 45,266,000
- -----------------------------------------------------------------
Investments in securities 177,736,053
- ----------------------------------------------------------------- ------------
Total investments, at amortized cost $223,002,053
- --------------------------------------------------------------------------------
Receivable for investments sold 9,991,362
- --------------------------------------------------------------------------------
Interest receivable 14,680
- -------------------------------------------------------------------------------- ------------
Total assets 233,008,095
- --------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased 14,836,511
- -----------------------------------------------------------------
Dividends payable 694,731
- -----------------------------------------------------------------
Accrued expenses 76,314
- ----------------------------------------------------------------- ------------
Total liabilities 15,607,556
- -------------------------------------------------------------------------------- ------------
NET ASSETS for 217,400,539 shares of beneficial interest outstanding $217,400,539
- -------------------------------------------------------------------------------- ------------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($217,400,539 / 217,400,539 shares of beneficial interest outstanding) $1.00
- -------------------------------------------------------------------------------- ------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER CASH RESERVE FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income $5,415,910
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $399,655
- ----------------------------------------------------------------------
Administrative personnel and services fees 131,062
- ----------------------------------------------------------------------
Custodian fees 22,486
- ----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 15,796
- ----------------------------------------------------------------------
Trustees' fees 5,457
- ----------------------------------------------------------------------
Auditing fees 6,925
- ----------------------------------------------------------------------
Legal fees 2,525
- ----------------------------------------------------------------------
Portfolio accounting fees 22,083
- ----------------------------------------------------------------------
Distribution services fee 249,784
- ----------------------------------------------------------------------
Share registration costs 5,439
- ----------------------------------------------------------------------
Printing and postage 4,704
- ----------------------------------------------------------------------
Insurance premiums 3,631
- ----------------------------------------------------------------------
Miscellaneous 3,341
- ---------------------------------------------------------------------- --------
Total expenses 872,888
- --------------------------------------------------------------------------------- ----------
Net investment income $4,543,022
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER CASH RESERVE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 4,543,022 $ 4,623,218
- ------------------------------------------------------- ---------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Distributions from net investment income (4,543,022) (4,623,218)
- ------------------------------------------------------- ---------------- --------------
SHARE TRANSACTIONS--
- -------------------------------------------------------
Proceeds from sale of shares 158,499,135 356,956,748
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 605,781 616,017
- -------------------------------------------------------
Cost of shares redeemed (125,626,360) (327,702,458)
- ------------------------------------------------------- ---------------- --------------
Change in net assets resulting from share
transactions 33,478,556 29,870,307
- ------------------------------------------------------- ---------------- --------------
Change in net assets 33,478,556 29,870,307
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 183,921,983 154,051,676
- ------------------------------------------------------- ---------------- --------------
End of period $ 217,400,539 $ 183,921,983
- ------------------------------------------------------- ---------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER CASH RESERVE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28, YEAR ENDED AUGUST 31,
1995 -------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990 1989(A)
---------------- ----- ----- ----- ----- ----- -------
<S> <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
- --------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------
Net investment income 0.02 0.03 0.02 0.04 0.06 0.08 0.07
- -------------------------------------- ----- ----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
- --------------------------------------
Distributions from net investment
income (0.02) (0.03) (0.02) (0.04) (0.06) (0.08) (0.07)
- -------------------------------------- ----- ----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------- ----- ----- ----- ----- ----- ----- -----
TOTAL RETURN (B) 2.27% 2.73% 2.49% 3.75% 6.45% 8.02% 6.86%
- --------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------
Expenses 0.87%(c) 0.91% 0.89% 0.89% 0.80% 0.77% 0.75%(c)
- --------------------------------------
Net investment income 4.55%(c) 2.71% 2.48% 3.79% 6.30% 7.71% 8.68%(c)
- --------------------------------------
Expense waiver/reimbursement (d) -- -- -- 0.03% -- 0.01% --
- --------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------
Net assets, end of period (000
omitted) $217,401 $183,922 $154,052 $162,068 $249,822 $300,668 $169,303
- --------------------------------------
</TABLE>
(a) Reflects operations for the period from October 14, 1988 (date of initial
public investment) to August 31, 1989.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. TREASURY MONEY MARKET FUND
PORTFOLIO OF INVESTMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
- ----------- ----------------------------------------------------------------- -----------
<C> <C> <S> <C>
U.S. TREASURY BILLS--55.2%
- -------------------------------------------------------------------------------------
$46,000,000 3/16/1995-7/13/1995 $45,489,666
----------------------------------------------------------------- -----------
*REPURCHASE AGREEMENTS--45.2%
- -------------------------------------------------------------------------------------
19,400,000 HSBC Securities, Inc., 5.82%, dated 2/27/1995, due 3/1/1995 19,400,000
-----------------------------------------------------------------
17,836,000 Merrill Lynch, Pierce, Fenner & Smith, Inc., 5.80%, dated
2/27/1995, due 3/1/1995 17,836,000
----------------------------------------------------------------- -----------
TOTAL REPURCHASE AGREEMENTS 37,236,000
----------------------------------------------------------------- -----------
TOTAL INVESTMENTS, AT AMORTIZED COST $82,725,666+
----------------------------------------------------------------- -----------
</TABLE>
* The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
+ Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($82,454,053) at February 28, 1995.
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ---------------------------------------------------------------------------------
Investments in repurchase agreements $37,236,000
- -------------------------------------------------------------------
Investments in securities 45,489,666
- ------------------------------------------------------------------- -----------
Total investments, at amortized cost $82,725,666
- ---------------------------------------------------------------------------------
Cash 377
- ---------------------------------------------------------------------------------
Interest receivable 16,442
- ---------------------------------------------------------------------------------
Deferred expenses 1,121
- --------------------------------------------------------------------------------- -----------
Total assets 82,743,606
- ---------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Dividends payable 273,282
- -------------------------------------------------------------------
Accrued expenses 16,271
- ------------------------------------------------------------------- -----------
Total liabilities 289,553
- --------------------------------------------------------------------------------- -----------
NET ASSETS for 82,454,053 shares of beneficial interest outstanding $82,454,053
- --------------------------------------------------------------------------------- -----------
NET ASSET VALUE, Offering Price and Redemption Proceeds Per Share:
($82,454,053 / 82,454,053 shares of beneficial interest outstanding) $1.00
- --------------------------------------------------------------------------------- -----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. TREASURY MONEY MARKET FUND
STATEMENT OF OPERATIONS
SIX MONTHS ENDED FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ---------------------------------------------------------------------------------
Interest income $1,805,642
- ---------------------------------------------------------------------------------
EXPENSES:
- ---------------------------------------------------------------------------------
Investment advisory fee $137,416
- ----------------------------------------------------------------------
Administrative personnel and services fee 45,070
- ----------------------------------------------------------------------
Custodian fees 7,431
- ----------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 10,592
- ----------------------------------------------------------------------
Trustees' fees 1,410
- ----------------------------------------------------------------------
Auditing fees 6,868
- ----------------------------------------------------------------------
Legal fees 3,173
- ----------------------------------------------------------------------
Portfolio accounting fees 19,540
- ----------------------------------------------------------------------
Share registration costs 6,780
- ----------------------------------------------------------------------
Printing and postage 5,749
- ----------------------------------------------------------------------
Insurance premiums 2,492
- ----------------------------------------------------------------------
Miscellaneous 1,770
- ---------------------------------------------------------------------- --------
Total expenses 248,291
- ----------------------------------------------------------------------
Deduct--Waiver of investment advisory fee (75,579)
- ---------------------------------------------------------------------- --------
Net expenses 172,712
- --------------------------------------------------------------------------------- ----------
Net investment income $1,632,930
- --------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. TREASURY MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
FEBRUARY 28,
1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
---------------- ---------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------
Net investment income $ 1,632,930 $ 1,171,203
- ------------------------------------------------------- --------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------
Distributions from net investment income (1,632,930) (1,171,203)
- ------------------------------------------------------- --------------- --------------
SHARE TRANSACTIONS--
- -------------------------------------------------------
Proceeds from sale of shares 128,024,704 140,396,462
- -------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of dividends declared 182,177 66,203
- -------------------------------------------------------
Cost of shares redeemed (90,775,169) (129,435,476)
- ------------------------------------------------------- --------------- --------------
Change in net assets resulting from share
transactions 37,431,712 11,027,189
- ------------------------------------------------------- --------------- --------------
Change in net assets 37,431,712 11,027,189
- -------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------
Beginning of period 45,022,341 33,995,152
- ------------------------------------------------------- --------------- --------------
End of period $ 82,454,053 $ 45,022,341
- ------------------------------------------------------- --------------- --------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. TREASURY MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, AUGUST 31,
1995 ----------------
(UNAUDITED) 1994 1993(A)
---------------- ----- -------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $ 1.00
- --------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- --------------------------------------------------
Net investment income 0.02 0.03 0.002
- --------------------------------------------------
LESS DISTRIBUTIONS
- --------------------------------------------------
Distributions from net investment income (0.02) (0.03) (0.002)
- -------------------------------------------------- ----- ----- ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $ 1.00
- -------------------------------------------------- ----- ----- ------
TOTAL RETURN (B) 2.34% 2.85% 0.34%
- --------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- --------------------------------------------------
Expenses 0.50%(c) 0.66% 0.50%(c)
- --------------------------------------------------
Net investment income 4.75%(c) 2.85% 2.80%(c)
- --------------------------------------------------
Expense waiver/reimbursement (d) 0.22%(c) 0.23% 0.32%(c)
- --------------------------------------------------
SUPPLEMENTAL DATA
- --------------------------------------------------
Net assets, end of period (000 omitted) $82,454 $45,022 $33,995
- --------------------------------------------------
</TABLE>
(a) Reflects operations for the period from July 19, 1993 (date of initial
public investment) to August 31, 1993.
(b) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(c) Computed on an annualized basis.
(d) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
TOWER MUTUAL FUNDS
COMBINED NOTES TO FINANCIAL STATEMENTS
FEBRUARY 28, 1995
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) ORGANIZATION
Tower Mutual Funds (the "Trust") is registered under the Investment Company Act
of 1940, as amended (the "Act") as an open-end management investment company.
The Trust consists of five diversified portfolios and one non-diversified
portfolio (individually referred to as the "Fund", or collectively as the
"Funds"). The following portfolios comprise the Trust:
<TABLE>
<CAPTION>
PORTFOLIO NAME DIVERSIFICATION
- ---------------------------------------------------------------------------- ---------------
<S> <C>
Tower Cash Reserve Fund ("Cash Reserve") diversified
Tower U.S. Treasury Money Market Fund ("U.S. Treasury") diversified
Tower Capital Appreciation Fund ("Capital Appreciation") diversified
Tower Total Return Bond Fund ("Total Return Bond") diversified
Tower U.S. Government Income Fund ("U.S. Government Income") diversified
Tower Louisiana Municipal Income Fund ("Louisiana Municipal Income") non-diversified
</TABLE>
The assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data it
deems relevant in determining valuations for normal institutional size
trading units of debt securities. The independent pricing service does not
rely exclusively on quoted prices. Listed equity securities are valued at
the last sale price reported on national securities exchanges. Listed
corporate bonds (and other fixed-income and asset-backed securities),
unlisted securities, and short-term securities are valued at the prices
provided by an independent pricing service. U.S. government securities are
generally valued at the mean between the over-the-counter bid and asked
prices as furnished by an independent pricing service. Short-term
securities with remaining maturities of sixty days or less may be valued at
amortized cost, which approximates fair market value. The Cash Reserve and
U.S. Treasury Funds' use of the amortized cost method to value their
portfolio securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
agreement transactions. Additionally, procedures have been established by
the Funds to monitor, on a daily basis, the market value of each repurchase
agreement's collateral to ensure that the value of collateral at least
equals the repurchase price to be paid under the repurchase agreement
transaction.
The Funds will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Funds could receive
less than the repurchase price on the sale of collateral securities.
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of their income. Accordingly, no
provisions for federal tax are necessary.
At August 31, 1994, the U.S. Government Income and Total Return Bond Funds,
for federal tax purposes, had capital loss carryforwards of $97,781 and
$47,334, respectively, which will reduce the Funds' taxable income arising
from future net realized gain on investments, if any, to the extent
permitted by the Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Funds of
any liability for federal tax. Pursuant to the Code, such capital loss
carryforwards will expire in 2002.
Additionally, net capital losses of $612,016 and $1,360,057, for the U.S.
Government Income and Total Return Bond Funds, respectively, attributable
to security transactions incurred after October 31, 1993 are treated as
arising on September 1, 1994, the first day of the Funds taxable year.
WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Funds may engage in
when-issued or delayed delivery transactions. The Funds record when-issued
securities on the trade date and maintain security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
DEFERRED EXPENSES--The costs incurred by each Fund with respect to
registration of their shares in their first fiscal year, excluding the
initial expense of registering their shares, have been deferred and are
being amortized using the straight-line method not to exceed a period of
five years from each Fund's commencement date.
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
OTHER--Investment transactions are accounted for on the trade date.
CONCENTRATION OF CREDIT RISK--Since the Louisiana Municipal Income Fund invests
a substantial portion of its assets in issuers located in one state, it will be
more susceptible to factors adversely affecting issuers of that state than would
be a comparable general tax-exempt mutual fund. In order to reduce the credit
risk associated with such factors, at February 28, 1995, 85.2% of the securities
in the portfolio of investments are backed by letters of credit or bond
insurance of various financial institutions and financial guaranty assurance
agencies. The value of investments insured by or supported (backed) by a letter
of credit for any one institution or agency does not exceed 20.3% of total
investments.
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value). At
February 28, 1995, Cash Reserve and U.S. Treasury Funds' capital paid-in
aggregated $217,400,539, and $82,454,053, respectively. Transactions in Fund
shares were as follows:
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
CASH RESERVE FUND
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31, 1994
- ------------------------------------------------------ ----------------- ---------------
<S> <C> <C>
Shares sold 158,499,135 356,956,748
- ------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 605,781 616,017
- ------------------------------------------------------
Shares redeemed (125,626,360) (327,702,458)
- ------------------------------------------------------ --------------- --------------
Net change resulting from Fund share transactions 33,478,556 29,870,307
- ------------------------------------------------------ --------------- --------------
</TABLE>
<TABLE>
<CAPTION>
U.S. TREASURY FUND
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31, 1994
- ------------------------------------------------------ ----------------- ---------------
<S> <C> <C>
Shares sold 128,024,704 140,396,462
- ------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 182,177 66,203
- ------------------------------------------------------
Shares redeemed (90,775,169) (129,435,476)
- ------------------------------------------------------ -------------- --------------
Net change resulting from Fund share transactions 37,431,712 11,027,189
- ------------------------------------------------------ -------------- --------------
</TABLE>
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
FLUCTUATING NAV FUNDS
<TABLE>
<CAPTION>
CAPITAL APPRECIATION FUND
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31, 1994
- ------------------------------------------------------ ----------------- ---------------
<S> <C> <C>
Shares sold 706,777 1,813,334
- ------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 222,682 774,171
- ------------------------------------------------------
Shares redeemed (948,218) (2,161,249)
- ------------------------------------------------------ ------------- -------------
Net change resulting from Fund share transactions (18,759) 426,256
- ------------------------------------------------------ ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
TOTAL RETURN BOND FUND
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31, 1994
- ------------------------------------------------------ ----------------- ---------------
<S> <C> <C>
Shares sold 895,105 2,648,699
- ------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 194,602 355,310
- ------------------------------------------------------
Shares redeemed (639,548) (1,587,686)
- ------------------------------------------------------ ------------ -------------
Net change resulting from Fund share transactions 450,159 1,416,323
- ------------------------------------------------------ ------------ -------------
</TABLE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT INCOME
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31, 1994
- ------------------------------------------------------ ----------------- ---------------
<S> <C> <C>
Shares sold 128,916 1,291,084
- ------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 64,951 127,820
- ------------------------------------------------------
Shares redeemed (2,132,533) (2,640,253)
- ------------------------------------------------------ -------------- -------------
Net change resulting from Fund share transactions (1,938,666) (1,221,349)
- ------------------------------------------------------ -------------- -------------
</TABLE>
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL INCOME FUND
-------------------------------------
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1995 AUGUST 31, 1994
- ------------------------------------------------------ ----------------- ---------------
<S> <C> <C>
Shares sold 341,993 1,535,457
- ------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 147,557 247,317
- ------------------------------------------------------
Shares redeemed (1,406,351) (1,823,703)
- ------------------------------------------------------ -------------- -------------
Net change resulting from Fund share transactions (916,801) (40,929)
- ------------------------------------------------------ -------------- ------------
</TABLE>
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Hibernia National Bank, the Funds' investment adviser
(the "Adviser") receives for its services an annual investment advisory fee
based on a percentage of each Fund's average daily net assets (see below).
<TABLE>
<CAPTION>
ANNUAL
FUND RATE
------------------------------------------------------------------- ------
<S> <C>
Cash Reserve 0.40%
U.S. Treasury 0.40%
Capital Appreciation 0.75%
Total Return Bond 0.70%
U.S. Government Income 0.45%
Louisiana Municipal Income 0.45%
</TABLE>
The Adviser may voluntarily choose to waive a portion of its fee. The Adviser
can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the Funds
with certain administrative personnel and services. The FAS fee is based on the
level of average aggregate net assets of the Trust for the period. FAS may
voluntarily choose to waive a portion of its fee.
DISTRIBUTION SERVICES FEE--The Trust has adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, each
Fund will reimburse Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's shares. The Plan provides that each Fund may
incur distribution expenses up to 0.25 of 1% of the average daily net assets of
the Fund, annually, to reimburse FSC. The distributor may voluntarily choose to
waive a portion of its fee. The distributor can modify or terminate this
voluntary waiver at any time at its sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Funds for
which it receives a fee. The FServ fee is based on the size, type, and number of
accounts and transactions made by shareholders.
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Funds' average
net assets for the period, plus out-of-pocket expenses.
CUSTODIAN FEES--Hibernia National Bank is the Funds' custodian for which it
receives a fee. The fee is based on the level of each Fund's average net assets
for the period plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were borne initially by FAS.
The Total Return Bond and U.S. Treasury Funds have agreed to reimburse FAS for
the organizational expenses during the five year period following September 15,
1992 and June 1, 1993 (the dates Total Return Bond and U.S. Treasury,
respectively, became effective). For the six months ended February 28, 1995 the
Funds paid the following pursuant to this agreement.
<TABLE>
<CAPTION>
AMOUNT REIMBURSED
EXPENSES OF TO FAS FOR THE
ORGANIZING SIX MONTHS ENDED
FUND THE FUNDS FEBRUARY 28, 1995
------------------------------------ -------------- --------------------
Total Return Bond $ 50,000 $1,308
<S> <C> <C>
U.S. Treasury $ 30,000 $ 759
</TABLE>
Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the six
months ended February 28, 1995, were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Capital Appreciation $56,326,773 $60,689,436
Total Return Bond 24,916,632 21,182,014
U.S. Government Income 0 21,245,815
Louisiana Municipal 4,421,160 13,833,597
</TABLE>
<TABLE>
<S> <C>
TRUSTEES OFFICERS
</TABLE>
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Edward C. Gonzales Edward C. Gonzales
Robert L. diBenedetto, M.D. President and Treasurer
James A. Gayle, Sr. Jeffrey W. Sterling
J. Gordon Reische Vice President and
Assistant Treasurer
Peter J. Germain
Secretary
Gail Cagney
Assistant Secretary
</TABLE>
Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including possible loss of principal amount invested. Although money market
funds seek to maintain a stable net asset value of $1.00 per share, there is no
assurance that they will be able to do so.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses and other information.
FEDERATED SECURITIES CORP.
(LOGO)
- --------------------------------------------------------------------------------
Distributor 007697 (4/95)
