THE SHARES OF THE TOWER MUTUAL FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF
HIBERNIA NATIONAL BANK OR ITS AFFILIATES, ARE NOT ENDORSED OR GUARANTEED BY
HIBERNIA NATIONAL BANK OR ITS AFFILIATES, AND ARE NOT INSURED BY THE FEDERAL
DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENTAL AGENCY.
INVESTMENT IN THE SHARES OF THE TOWER MUTUAL FUNDS INVOLVES INVESTMENT RISKS,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL AMOUNT INVESTED.
THE TOWER CASH RESERVE FUND AND THE TOWER U.S. TREASURY MONEY MARKET FUND
ATTEMPT TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE; THERE CAN
BE NO ASSURANCE THAT THESE FUNDS WILL BE ABLE TO DO SO.
PRESIDENT'S MESSAGE
- --------------------------------------------------------------------------------
Dear Shareholder:
I am pleased to present the Annual Report to Shareholders of the Tower Mutual
Funds. The report, which covers the twelve-month period ended August 31, 1995,
includes an interview with each fund's portfolio manager, as well as a complete
list of investments and financial statements for each fund.
Please note the following highlights for each Tower fund over the twelve-month
reporting period:
In the favorable stock market environment that characterized the
reporting period, TOWER CAPITAL APPRECIATION FUND delivered extremely
strong performance. The fund paid dividends of $0.21 per share and
capital gains of $0.27 per share. Its net asset value increased from
$13.81 on the first day of the reporting period to $16.09 on the last day
of the reporting period. The fund produced a total return of 20.71%*. At
the end of the reporting period, net assets stood at more than $144
million.
TOWER TOTAL RETURN BOND FUND paid dividends of $0.54 per share, while its
net asset value increased from $9.64 on the first day of the reporting
period to $10.05 on the last day of the reporting period. Consistent with
its name, the fund produced a very strong total return of 10.19%*. At the
end of the reporting period, net assets stood at more than $69 million.
TOWER LOUISIANA MUNICIPAL INCOME FUND paid double-tax-free dividends of
$0.58 per share and capital gains of $0.08 per share. Its net asset value
increased from $10.82 on the first day of the reporting period to $10.99
on the last day of the reporting period. The fund produced a total return
of 8.20%*. At the end of the reporting period, net assets stood at more
than $67 million.
TOWER U.S. GOVERNMENT INCOME FUND paid dividends of $0.69 per share,
while its net asset value increased from $9.92 on the first day of the
reporting period to $10.14 on the last day of the period. The fund
produced a total return of 9.60%*. At the end of the reporting period,
net assets stood at more than $42 million.
TOWER CASH RESERVE FUND paid dividends of $0.05 per share. At the end of
the reporting period, net assets stood at more than $191 million.
TOWER U.S. TREASURY MONEY MARKET FUND paid dividends of $0.05 per share.
At the end of the reporting period, net assets stood at more than $116
million.
Thank you for pursuing your financial goals through the Tower Mutual Funds. We
are making every effort to ensure that your choice of a Tower fund is a choice
with which you can be comfortable.
Sincerely,
Edward C. Gonzales
President
October 15, 1995
*Performance quoted represents past performance. Investment return and principal
value will fluctuate, so an investor's shares, when redeemed, may be worth more
or less than their original cost. Total returns quoted above do not include the
maximum 3.0% sales charge. Refer to the investment review for the loads
figures.
TOWER CAPITAL APPRECIATION FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q During the twelve-month reporting period, economic growth declined while
corporate profits increased, often exceeding Wall Street's expectations. In
this context, how did the stock market react?
A The stock market reacted in a very positive manner during the reporting
period.
Q How did Tower Capital Appreciation Fund perform over this period?
A The Tower Capital Appreciation Fund produced a total return of 20.71%* on a
no-load basis for the reporting period, and 17.07% on a load basis.
Q Would you explain how the composition of the portfolio affected the Fund's
performance?
A The Fund had a bias towards "growth" that was a positive influence on total
returns for the reporting period.
Q What are your plans for the Fund in the near term?
A We will continue to use our quantitative process, which features a sector
neutral posture, and pick stocks against the benchmark, which is the S&P
500.
Q What long-term benefits might shareholders realize in a capital
appreciation fund relative to a fixed-income investment?
A We expect that rates of return of stocks will exceed fixed income rates of
return over the long term although at a higher risk to principal.
* 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. Load total return reflects
the maximum 3.0% sales charge.
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN TOWER CAPITAL APPRECIATION FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Tower Capital Appreciation Fund (the "Fund") from October 14, 1988 (start of
performance) to August 31, 1995, compared to the Standard & Poor's 500 Index
("S&P 500").+
GRAPH APPEARS HERE. SEE APPENDIX A1.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
+ THE S&P 500 IS NOT ADJUSTED TO REFLECT SALES LOADS, EXPENSES, OR OTHER FEES
THAT THE SEC REQUIRES TO BE REFLECTED IN THE FUND'S PERFORMANCE. THIS INDEX
IS UNMANAGED.
* REPRESENTS A HYPOTHETICAL INVESTMENT OF $10,000 IN THE FUND AFTER DEDUCTING
THE ORIGINAL MAXIMUM SALES CHARGE OF 4.50% ($10,000 INVESTMENT MINUS $450
SALES CHARGE = $9,550), WHICH WAS EFFECTIVE ON OCTOBER 14, 1988. EFFECTIVE
MAY 1, 1994, THE MAXIMUM SALES CHARGE HAS BEEN REDUCED TO 3.00%. THE FUND'S
PERFORMANCE ASSUMES THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. THE
S&P 500 HAS BEEN ADJUSTED TO REFLECT REINVESTMENT OF DIVIDENDS ON SECURITIES
IN THE INDEX.
** TOTAL RETURN QUOTED REFLECTS ALL APPLICABLE SALES CHARGES AND CONTINGENT
DEFERRED SALES CHARGES.
TOWER TOTAL RETURN BOND FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q During the twelve-month reporting period, economic growth slowed
considerably and the federal funds rate was lowered to help stimulate the
economy once again. In this environment, how did the bond market perform?
A Long-term bond prices rose dramatically in the fiscal year ended August 31,
1995, while short-term bond prices turned in a more modest increase. During
this period, the Salomon Brothers Broad Investment-Grade Bond Index scored
an 11.37% total return.
Q How did the Tower Total Return Bond Fund perform over the same period?
A The Fund experienced a total return of 10.19%* during the fiscal year ended
August 31, 1995 on a no-load basis and 6.86% on a load basis.
Q What strategy guided the management of the Fund during this time?
A In mid-1994, the Fund was defensively positioned against rising short-term
and long-term interest rates. Long-term interest rates gradually peaked in
the final months of 1994 and began a steady decline. The Tower Total Return
Bond Fund was aggressively repositioned in early 1995 to take advantage of
falling interest rates. Short-term treasuries were swapped for long-term
high coupon treasuries in order to lock in their higher rates of return.
Q Many economists are calling for a decrease in interest rates to stimulate
economic growth. How might lower interest rates affect your plans for the
Fund in the near future?
A The Fund has already taken steps to lock in higher yielding longer term
bonds in anticipation of a decline in interest rates. If the anticipated
decline in interest rates does materialize, we would likely maintain our
aggressive position until such time as we see interest rates begin to rise.
* 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. Load total return reflects
the maximum 3.0% sales charge.
TOWER TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN TOWER TOTAL RETURN BOND FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Tower Total Return Bond Fund (the "Fund") from November 2, 1992 (start of
performance) to August 31, 1995, compared to the Salomon Brothers Broad
Investment Grade Bond Index ("SBBIGBI").+
GRAPH APPEARS HERE. SEE APPENDIX A2.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
+ THE SBBIGBI IS NOT ADJUSTED TO REFLECT SALES LOADS, EXPENSES, OR OTHER FEES
THAT THE SEC REQUIRES TO BE REFLECTED IN THE FUND'S PERFORMANCE. THIS INDEX IS
UNMANAGED.
*REPRESENTS A HYPOTHETICAL INVESTMENT OF $10,000 IN THE FUND AFTER DEDUCTING
THE ORIGINAL MAXIMUM SALES CHARGE OF 4.50% ($10,000 INVESTMENT MINUS $450
SALES CHARGE = $9,550), WHICH WAS EFFECTIVE ON NOVEMBER 2, 1992. EFFECTIVE MAY
1, 1994, THE MAXIMUM SALES CHARGE HAS BEEN REDUCED TO 3.00%. THE FUND'S
PERFORMANCE ASSUMES THE REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS. THE
SBBIGBI HAS BEEN ADJUSTED TO REFLECT REINVESTMENT OF DIVIDENDS ON SECURITIES
IN THE INDEX.
**TOTAL RETURN QUOTED REFLECTS ALL APPLICABLE SALES CHARGES AND CONTINGENT
DEFERRED SALES CHARGES.
TOWER LOUISIANA MUNICIPAL INCOME FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q Over the twelve-month reporting period, investors witnessed an improved
market for bonds, featuring rising bond prices. How did the Tower Louisiana
Municipal Income Fund perform over this period?
A The Tower Louisiana Municipal Income Fund suffered through 1994 along with
the rest of the market as the Federal Reserve Board raised interest rates
to slow an overheated domestic economy. In the final months of 1994, the
Fund anticipated the reversal of the market's decline and positioned the
Fund to benefit from the rise in bond prices beginning in 1995.
Consequently, the Fund earned an 8.20%* total return for the fiscal year
ended August 31, 1995 on a no-load basis and 5.0% on a load basis.
Q What factors affected your choice of securities for the Fund during the
past year?
A The Tower Louisiana Municipal Income Fund has continued to purchase only
AAA-rated securities. Beyond AAA ratings, we focused our investments on
higher yielding housing bonds and hospital issues where value could be
found. We continued to purchase long-term securities where the most yield
could be found.
Q How would you review the Fund's investment philosophy?
A We are an active manager seeking to add value to the portfolio by buying
undervalued securities and those in which we believe the credit quality of
the issuer will improve. We practice diversification among market sectors
as well as municipal bond insurance providers.
Q Many economists are suggesting a decrease in interest rates to stimulate
the economy and avoid a recession. How might decreasing interest rates
affect your near future plans for the Fund?
A We have already positioned the Fund for a decline in interest rates. If
rates do decline as anticipated for the balance of 1995, we will continue
to keep the Fund aggressively postured to provide maximum income and yield
potential. If indications are that inflation may be on the horizon, we
would shorten our average maturity and concentrate purchases more in the
general obligation bond sector.
* 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. Load total return reflects
the maximum 3.0% sales charge.
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN TOWER LOUISIANA MUNICIPAL INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Tower Louisiana Municipal Income Fund (the "Fund"), from October 14, 1988 (start
of performance) to August 31, 1995, compared to the Lehman Ten Year Insured
Index ("LTYII").+
GRAPH APPEARS HERE. SEE APPENDIX A3.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
+ THE LTYII IS NOT ADJUSTED TO REFLECT SALES LOADS, EXPENSES, OR OTHER FEES
THAT THE SEC REQUIRES TO BE REFLECTED IN THE FUND'S PERFORMANCE. THIS INDEX
IS UNMANAGED.
* REPRESENTS A HYPOTHETICAL INVESTMENT OF $10,000 IN THE FUND AFTER DEDUCTING
THE ORIGINAL MAXIMUM SALES CHARGE OF 4.50% ($10,000 INVESTMENT MINUS $450
SALES CHARGE = $9,550), WHICH WAS EFFECTIVE ON OCTOBER 14, 1988. EFFECTIVE
OCTOBER 31, 1993, THE MAXIMUM SALES CHARGE HAS BEEN REDUCED TO 3.00%. THE
FUND'S PERFORMANCE ASSUMES THE REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS. THE LTYII HAS BEEN ADJUSTED TO REFLECT REINVESTMENT OF
DIVIDENDS ON SECURITIES IN THE INDEX.
** TOTAL RETURN QUOTED REFLECTS ALL APPLICABLE SALES CHARGES AND CONTINGENT
DEFERRED SALES CHARGES.
TOWER U.S. GOVERNMENT INCOME FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q Will you describe the key events that characterized the bond market during
the twelve-month reporting period?
A Inflation fears surrounding a robust economy combined with a succession of
Federal Reserve Board interest rate increases to push bond prices down and
interest rates up in 1994. By the end of 1994, evidence began to surface
that the higher interest rates were beginning to slow the economy. The
Federal Reserve Board continued to raise short-term interest rates in
early 1995 to ensure an economic slowdown was carried out. Weaker
economic reports continued into 1995 allowing the Federal Reserve Board
to begin lowering short-term rates in July, 1995.
Q How did the Tower U.S. Government Income Fund perform in this environment
over the same period?
A The Fund experienced a 9.60%* total return for the reporting period on a
no-load basis and 6.28% on a load basis.
Q Can you review recent occurrences in the mortgage market and the
implications of this activity for the Fund?
A The dramatic rise in interest rates in 1994 and the decline in interest
rates in the first half of 1995 have caused a high degree of volatility in
mortgage prepayments and bond prices. In addition, the financial debacle in
Orange County, California, has drawn attention to derivative securities and
their potentially risky nature. One aspect of our investment strategy has
always been to avoid these types of highly volatile securities in favor
of more conservative investments.
Q Will you describe your economic outlook and plans for the Fund's near
future?
A We anticipate that for the balance of 1995 interest rates will likely
decline gradually on both short-term and long-term securities as the
economy remains sluggish and the Federal Reserve Board becomes
accommodative.
* 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. Load total return reflects
the maximum 3.0% sales charge.
TOWER U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
GROWTH OF $10,000 INVESTED IN TOWER U.S. GOVERNMENT INCOME FUND
The graph below illustrates the hypothetical investment of $10,000 in the
Tower U.S. Government Income Fund (the "Fund"), from October 14, 1988 (start of
performance) to August 31, 1995, compared to the Salomon Brothers Medium Term
Broad Index ("SBMTBI").+
GRAPH APPEARS HERE. SEE APPENDIX A4.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF OR
GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.
+ THE SBMTBI IS NOT ADJUSTED TO REFLECT SALES LOADS, EXPENSES, OR OTHER FEES
THAT THE SEC REQUIRES TO BE REFLECTED IN THE FUND'S PERFORMANCE. THIS INDEX
IS UNMANAGED.
* REPRESENTS A HYPOTHETICAL INVESTMENT OF $10,000 IN THE FUND AFTER DEDUCTING
THE ORIGINAL MAXIMUM SALES CHARGE OF 4.50% ($10,000 INVESTMENT MINUS $450
SALES CHARGE = $9,550), WHICH WAS EFFECTIVE ON OCTOBER 14, 1988. EFFECTIVE
OCTOBER 31, 1993, THE MAXIMUM SALES CHARGE HAS BEEN REDUCED TO 3.00%. THE
FUND'S PERFORMANCE ASSUMES THE REINVESTMENT OF ALL DIVIDENDS AND
DISTRIBUTIONS. THE SBMTBI HAS BEEN ADJUSTED TO REFLECT REINVESTMENT OF
DIVIDENDS ON SECURITIES IN THE INDEX.
** TOTAL RETURN QUOTED REFLECTS ALL APPLICABLE SALES CHARGES AND CONTINGENT
DEFERRED SALES CHARGES.
TOWER CASH RESERVE FUND
INVESTMENT REVIEW
- --------------------------------------------------------------------------------
Q What effect did the interest rate environment have on the market for
commercial paper during the twelve-month reporting period?
A As interest rates increased, the availability of commercial paper was very
good and particularly good in the 90-180 day range. Since the first
decrease in interest rates, the issues have become fewer and have shorter
maturities.
Q How did Tower Cash Reserve Fund perform in this context over the same
period?
A The Fund's 7-day net yield increased to 5.18%* as of July 6, 1995 until the
effects of the Federal Reserve Board's first rate-decrease. The Fund's
performance was effected by the shortage of commercial paper.
Q What factors guided the selection of securities for the Fund's portfolio
during the year?
A The Fund experienced a temporary increase in assets from investors waiting
to get into or out of the equity market. This, coupled with the decrease in
the availability of commercial paper, caused the Fund to increase its
positions in U.S. government agency paper and Treasury bills.
Q In light of speculation that interest rates may be eased, do you expect to
make any changes in the composition of the Fund's portfolio?
A We plan to invest in a higher percentage of commercial paper and lengthen
the maturity to 45 to 55 days.
* 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 The twelve-month reporting period was marked by an economic slowdown and,
finally, a decrease in interest rates to stimulate growth. Amid this
activity, how did the Tower U.S. Treasury Money Market Fund fare?
A Prior to the last increase by the Federal Reserve Board in February, 1995,
the Tower U.S. Treasury Money Market Fund yield increased, but after rates
peaked in December, 1994, the Fund has slowly been decreasing in yield.
Q Would you review the investment philosophy of Tower U.S. Treasury Money
Market Fund, and summarize its performance over the period?
A The investment philosophy is to maintain a high percentage in repurchase
agreements, since their rate or return follows the federal funds rate, and
investments in high issue Treasury bills, such as cash management bills.
Q Many economists expect the Federal Reserve Board to lower interest rates
further to spur economic growth. How might this affect your plans for the
Fund?
A Consistant with the Fund's average maturity of 30 to 40 days, it will try
to hold on the higher rates as long as possible. However, as rates fall due
to Federal Reserve Board action, so will the money market rates.
TOWER CAPITAL APPRECIATION FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- -----------------
COMMON STOCKS--97.1%
- -----------------------------------------------------------------------------------------------
COMMERCIAL SERVICES--0.4%
-------------------------------------------------------------------------------
15,800 Equifax, Inc. $ 614,225
------------------------------------------------------------------------------- -----------------
CONSUMER DURABLES--3.2%
-------------------------------------------------------------------------------
23,000 Briggs & Stratton Corp. 871,125
-------------------------------------------------------------------------------
32,400 Brunswick Corp. 652,050
-------------------------------------------------------------------------------
15,500 Eastman Kodak Co. 893,188
-------------------------------------------------------------------------------
36,200 Goodyear Tire & Rubber Co. 1,448,000
-------------------------------------------------------------------------------
30,300 Newell Co. 757,500
------------------------------------------------------------------------------- -----------------
Total 4,621,863
------------------------------------------------------------------------------- -----------------
CONSUMER NON-DURABLES--9.4%
-------------------------------------------------------------------------------
18,800 Campbell Soup Co. 860,100
-------------------------------------------------------------------------------
40,800 Coca-Cola Co. 2,621,400
-------------------------------------------------------------------------------
31,500 ConAgra, Inc. 1,193,063
-------------------------------------------------------------------------------
9,200 Kellogg Co. 621,000
-------------------------------------------------------------------------------
49,900 PepsiCo, Inc. 2,257,975
-------------------------------------------------------------------------------
36,700 Philip Morris Cos., Inc. 2,738,738
-------------------------------------------------------------------------------
25,000 Procter & Gamble Co. 1,734,375
-------------------------------------------------------------------------------
30,900 Sara Lee Corp. 857,475
-------------------------------------------------------------------------------
11,900 V.F. Corp. 651,525
------------------------------------------------------------------------------- -----------------
Total 13,535,651
------------------------------------------------------------------------------- -----------------
CONSUMER SERVICES--4.4%
-------------------------------------------------------------------------------
10,200 Capital Cities/ABC, Inc. 1,173,000
-------------------------------------------------------------------------------
22,700 Disney (Walt) Co. 1,274,038
-------------------------------------------------------------------------------
17,200 King World Productions, Inc. (a) 653,600
-------------------------------------------------------------------------------
18,400 McDonald's Corp. 671,600
-------------------------------------------------------------------------------
25,700 Tribune Co. 1,721,900
-------------------------------------------------------------------------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- -----------------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
CONSUMER SERVICES--CONTINUED
-------------------------------------------------------------------------------
45,400 Wendy's International, Inc. $ 890,975
------------------------------------------------------------------------------- -----------------
Total 6,385,113
------------------------------------------------------------------------------- -----------------
ELECTRONIC TECHNOLOGY--10.2%
-------------------------------------------------------------------------------
13,250 Cabletron Systems, Inc. 700,594
-------------------------------------------------------------------------------
8,800 DSC Communications Corp. 462,000
-------------------------------------------------------------------------------
24,900 Hewlett-Packard Co. 1,992,000
-------------------------------------------------------------------------------
26,900 Intel Corp. 1,650,987
-------------------------------------------------------------------------------
18,500 International Business Machines Corp. 1,912,438
-------------------------------------------------------------------------------
26,000 McDonnell-Douglas Corp. 2,086,500
-------------------------------------------------------------------------------
27,600 Sun Microsystems, Inc. (a) 1,597,350
-------------------------------------------------------------------------------
27,000 Texas Instruments, Inc. 2,021,625
-------------------------------------------------------------------------------
13,400 United Technologies Corp. 1,117,225
-------------------------------------------------------------------------------
22,100 Varian Association, Inc. 1,193,400
------------------------------------------------------------------------------- -----------------
Total 14,734,119
------------------------------------------------------------------------------- -----------------
ENERGY MINERALS--7.8%
-------------------------------------------------------------------------------
19,800 Amoco Corp. 1,262,250
-------------------------------------------------------------------------------
15,800 Atlantic Richfield Co. 1,724,175
-------------------------------------------------------------------------------
16,500 British Petroleum, Ltd., ADR 1,487,062
-------------------------------------------------------------------------------
29,700 Exxon Corp. 2,041,875
-------------------------------------------------------------------------------
22,500 Mobil Corp. 2,143,125
-------------------------------------------------------------------------------
27,800 Pittston Services Group Co. 705,425
-------------------------------------------------------------------------------
16,500 Royal Dutch Petroleum Co., ADR 1,967,625
------------------------------------------------------------------------------- -----------------
Total 11,331,537
------------------------------------------------------------------------------- -----------------
FINANCE--11.9%
-------------------------------------------------------------------------------
20,600 Aflac, Inc. 842,025
-------------------------------------------------------------------------------
11,100 Allstate Corp. 376,012
-------------------------------------------------------------------------------
29,500 American Express Co. 1,191,063
-------------------------------------------------------------------------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- -----------------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
FINANCE--CONTINUED
-------------------------------------------------------------------------------
25,300 American General Corp. $ 891,825
-------------------------------------------------------------------------------
13,650 American International Group, Inc. 1,100,531
-------------------------------------------------------------------------------
37,800 Bank of New York Co., Inc. 1,644,300
-------------------------------------------------------------------------------
20,400 BankAmerica Corp. 1,152,600
-------------------------------------------------------------------------------
35,900 Citicorp 2,382,863
-------------------------------------------------------------------------------
29,900 Dean Witter, Discover & Co. 1,524,900
-------------------------------------------------------------------------------
27,200 First Chicago Corp. 1,723,800
-------------------------------------------------------------------------------
45,200 NBD Bancorp, Inc. 1,615,900
-------------------------------------------------------------------------------
23,100 NationsBank Corp. 1,417,763
-------------------------------------------------------------------------------
18,900 Transamerica Corp. 1,285,200
------------------------------------------------------------------------------- -----------------
Total 17,148,782
------------------------------------------------------------------------------- -----------------
HEALTH SERVICES--1.0%
-------------------------------------------------------------------------------
20,400 Columbia/HCA Healthcare Corp. 958,800
-------------------------------------------------------------------------------
11,400 United Healthcare Corp. 481,650
------------------------------------------------------------------------------- -----------------
Total 1,440,450
------------------------------------------------------------------------------- -----------------
HEALTH TECHNOLOGY--8.7%
-------------------------------------------------------------------------------
32,900 Abbott Laboratories 1,274,875
-------------------------------------------------------------------------------
26,500 Bristol-Myers Squibb Co. 1,818,563
-------------------------------------------------------------------------------
27,500 Johnson & Johnson 1,897,500
-------------------------------------------------------------------------------
10,600 Medtronic, Inc. 1,000,375
-------------------------------------------------------------------------------
39,300 Merck & Co., Inc. 1,960,088
-------------------------------------------------------------------------------
32,700 Mylan Laboratories, Inc. 748,012
-------------------------------------------------------------------------------
30,500 Pfizer, Inc. 1,505,938
-------------------------------------------------------------------------------
49,200 Schering Plough Corp. 2,293,950
------------------------------------------------------------------------------- -----------------
Total 12,499,301
------------------------------------------------------------------------------- -----------------
INDUSTRIAL SERVICES--1.0%
-------------------------------------------------------------------------------
21,900 Browning-Ferris Industries, Inc. 736,387
-------------------------------------------------------------------------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- -----------------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
INDUSTRIAL SERVICES--CONTINUED
-------------------------------------------------------------------------------
17,100 Halliburton Co. $ 724,612
------------------------------------------------------------------------------- -----------------
Total 1,460,999
------------------------------------------------------------------------------- -----------------
NON-ENERGY MINERALS--2.7%
-------------------------------------------------------------------------------
29,300 Aluminum Co. of America 1,673,763
-------------------------------------------------------------------------------
15,900 Georgia-Pacific Corp. 1,431,000
-------------------------------------------------------------------------------
12,400 Phelps Dodge Corp. 785,850
------------------------------------------------------------------------------- -----------------
Total 3,890,613
------------------------------------------------------------------------------- -----------------
PROCESS INDUSTRIES--4.6%
-------------------------------------------------------------------------------
15,300 Dow Chemical Co. 1,132,200
-------------------------------------------------------------------------------
15,700 Du Pont (E.I.) de Nemours & Co. 1,026,387
-------------------------------------------------------------------------------
16,600 International Paper Co. 1,359,125
-------------------------------------------------------------------------------
3,600 Monsanto Co. 341,550
-------------------------------------------------------------------------------
21,800 PPG Industries, Inc. 931,950
-------------------------------------------------------------------------------
8,300 Pioneer Hi-Bred International, Inc. 356,900
-------------------------------------------------------------------------------
40,800 Praxair, Inc. 1,060,800
-------------------------------------------------------------------------------
10,900 Union Carbide Corp. 386,950
------------------------------------------------------------------------------- -----------------
Total 6,595,862
------------------------------------------------------------------------------- -----------------
PRODUCER MANUFACTURING--7.3%
-------------------------------------------------------------------------------
12,400 Allied-Signal, Inc. 550,250
-------------------------------------------------------------------------------
17,100 Armstrong World Industries, Inc. 981,112
-------------------------------------------------------------------------------
22,900 Cummins Engine Co., Inc. 898,825
-------------------------------------------------------------------------------
13,000 Emerson Electric Co. 927,875
-------------------------------------------------------------------------------
39,600 General Electric Co. 2,331,450
-------------------------------------------------------------------------------
11,600 ITT Corp. 1,387,650
-------------------------------------------------------------------------------
21,700 Philips Electronics N.V., ADR 976,500
-------------------------------------------------------------------------------
21,700 Textron, Inc. 1,486,450
-------------------------------------------------------------------------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- -----------------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
PRODUCER MANUFACTURING--CONTINUED
-------------------------------------------------------------------------------
22,000 Varity Corp. (a) $ 1,001,000
------------------------------------------------------------------------------- -----------------
Total 10,541,112
------------------------------------------------------------------------------- -----------------
RETAIL TRADE--6.5%
-------------------------------------------------------------------------------
68,200 Circuit City Stores, Inc. 2,352,900
-------------------------------------------------------------------------------
21,700 Federated Department Stores, Inc. 585,900
-------------------------------------------------------------------------------
21,100 Kroger Co., Inc. (a) 688,387
-------------------------------------------------------------------------------
32,400 Premark International, Inc. 1,696,950
-------------------------------------------------------------------------------
18,000 Safeway, Inc. (a) 708,750
-------------------------------------------------------------------------------
40,400 Sears, Roebuck & Co. 1,307,950
-------------------------------------------------------------------------------
33,500 Tandy Corp. 2,081,187
------------------------------------------------------------------------------- -----------------
Total 9,422,024
------------------------------------------------------------------------------- -----------------
TECHNOLOGY SERVICES--3.6%
-------------------------------------------------------------------------------
19,000 Computer Associates International, Inc. 1,320,500
-------------------------------------------------------------------------------
23,900 General Motors Corp. 1,123,300
-------------------------------------------------------------------------------
16,500 Microsoft Corp. (a) 1,526,250
-------------------------------------------------------------------------------
32,400 Oracle Systems Corp. (a) 1,300,050
------------------------------------------------------------------------------- -----------------
Total 5,270,100
------------------------------------------------------------------------------- -----------------
TRANSPORTATION--1.7%
-------------------------------------------------------------------------------
9,500 AMR Corp. (a) 669,750
-------------------------------------------------------------------------------
42,300 Consolidated Freightways, Inc. 1,094,512
-------------------------------------------------------------------------------
10,300 Norfolk-Southern Corp. 728,724
------------------------------------------------------------------------------- -----------------
Total 2,492,986
------------------------------------------------------------------------------- -----------------
UTILITIES--12.7%
-------------------------------------------------------------------------------
34,600 Ameritech Corp. 1,773,250
-------------------------------------------------------------------------------
41,900 Bell Atlantic Corp. 2,503,525
-------------------------------------------------------------------------------
25,700 BellSouth Corp. 1,766,875
-------------------------------------------------------------------------------
50,000 GTE Corp. 1,831,250
-------------------------------------------------------------------------------
</TABLE>
TOWER CAPITAL APPRECIATION FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- ------------------------------------------------------------------------------- -----------------
COMMON STOCKS--CONTINUED
- -----------------------------------------------------------------------------------------------
UTILITIES--CONTINUED
-------------------------------------------------------------------------------
53,600 General Public Utilities Corp. $ 1,534,300
-------------------------------------------------------------------------------
67,400 Pinnacle West Capital Corp. 1,676,575
-------------------------------------------------------------------------------
34,600 SBC Communications, Inc. 1,751,625
-------------------------------------------------------------------------------
58,100 Sprint Corp. 2,062,550
-------------------------------------------------------------------------------
70,800 Unicom Corp. 1,991,250
-------------------------------------------------------------------------------
38,200 Williams Companies, Inc. 1,399,075
------------------------------------------------------------------------------- -----------------
Total 18,290,275
------------------------------------------------------------------------------- -----------------
TOTAL COMMON STOCKS (IDENTIFIED COST, $109,544,540) 140,275,012
------------------------------------------------------------------------------- -----------------
*REPURCHASE AGREEMENT--2.8%
- -----------------------------------------------------------------------------------------------
$ 4,075,000 HSBC Securities, Inc., 5.77%, dated 8/31/1995, due 9/1/1995
(AT AMORTIZED COST) 4,075,000
------------------------------------------------------------------------------- -----------------
TOTAL INVESTMENTS (IDENTIFIED COST, $113,619,540)(B) $ 144,350,012
------------------------------------------------------------------------------- -----------------
</TABLE>
* The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(a) Non-income producing security.
(b) The cost of investments for federal tax purposes amounts to $113,723,866.
The unrealized appreciation of investments on a federal tax basis amounts to
$30,626,146, which is comprised of $31,236,083 appreciation and $609,937
depreciation at August 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($144,475,689) at August 31, 1995.
The following acronym is used throughout this portfolio:
ADR--American Depositary Receipt
(See Notes which are an integral part of the Financial Statements)
TOWER CAPITAL APPRECIATION FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments, at value (identified cost $113,619,540 and tax cost $113,723,866) $ 144,350,012
- -----------------------------------------------------------------------------------------------
Income receivable 383,447
- -----------------------------------------------------------------------------------------------
Receivable for shares sold 777
- ----------------------------------------------------------------------------------------------- -----------------
Total assets 144,734,236
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------
Payable for shares redeemed $ 213,657
- ---------------------------------------------------------------------------------
Payable to bank 2,655
- ---------------------------------------------------------------------------------
Accrued expenses 42,235
- --------------------------------------------------------------------------------- ------------
Total liabilities 258,547
- ----------------------------------------------------------------------------------------------- -----------------
NET ASSETS for 8,977,933 shares outstanding $ 144,475,689
- ----------------------------------------------------------------------------------------------- -----------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------
Paid-in capital $ 109,266,630
- -----------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 30,730,472
- -----------------------------------------------------------------------------------------------
Accumulated net realized gain on investments 4,373,848
- -----------------------------------------------------------------------------------------------
Undistributed net investment income 104,739
- ----------------------------------------------------------------------------------------------- -----------------
Total Net Assets $ 144,475,689
- ----------------------------------------------------------------------------------------------- -----------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------------------------
Net Asset Value Per Share ($144,475,689 / 8,977,933 shares outstanding) $16.09
- ----------------------------------------------------------------------------------------------- -----------------
Computation of Offering Price Per Share (100/97 of $16.09)* $16.59
- ----------------------------------------------------------------------------------------------- -----------------
</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
YEAR ENDED AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------
Dividends $ 3,558,372
- ------------------------------------------------------------------------------------------------
Interest 117,338
- ------------------------------------------------------------------------------------------------ ---------------
Total income 3,675,710
- ------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------------
Investment advisory fee $ 1,018,267
- --------------------------------------------------------------------------------
Administrative personnel and services fees 177,184
- --------------------------------------------------------------------------------
Custodian fees 32,182
- --------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 25,081
- --------------------------------------------------------------------------------
Directors'/Trustees' fees 8,355
- --------------------------------------------------------------------------------
Auditing fees 13,964
- --------------------------------------------------------------------------------
Legal fees 6,127
- --------------------------------------------------------------------------------
Portfolio accounting fees 46,275
- --------------------------------------------------------------------------------
Distribution services fee 339,422
- --------------------------------------------------------------------------------
Share registration costs 12,936
- --------------------------------------------------------------------------------
Printing and postage 6,088
- --------------------------------------------------------------------------------
Insurance premiums 7,261
- --------------------------------------------------------------------------------
Miscellaneous 5,734
- -------------------------------------------------------------------------------- --------------
Total expenses 1,698,876
- ------------------------------------------------------------------------------------------------ ---------------
Net investment income 1,976,834
- ------------------------------------------------------------------------------------------------ ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------------------------------------
Net realized gain on investments 5,776,399
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 17,920,887
- ------------------------------------------------------------------------------------------------ ---------------
Net realized and unrealized gain on investments 23,697,286
- ------------------------------------------------------------------------------------------------ ---------------
Change in net assets resulting from operations $ 25,674,120
- ------------------------------------------------------------------------------------------------ ---------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
TOWER CAPITAL APPRECIATION FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------
1995 1994
<S> <C> <C>
- ---------------------------------------------------------------------------- ----------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 1,976,834 $ 2,330,945
- ----------------------------------------------------------------------------
Net realized gain (loss) on investments
($5,857,912 and $5,096,800, respectively, as computed
for federal tax purposes) 5,776,399 5,052,026
- ----------------------------------------------------------------------------
Net change in unrealized appreciation of investments 17,920,887 (1,535,597)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from operations 25,674,120 5,847,374
- ---------------------------------------------------------------------------- ----------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income (2,029,845) (2,486,403)
- ----------------------------------------------------------------------------
Distributions from net realized gains (2,669,232) (10,874,905)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from distributions to shareholders (4,699,077) (13,361,308)
- ---------------------------------------------------------------------------- ----------------- -----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 15,224,935 24,840,898
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 3,279,872 10,583,871
- ----------------------------------------------------------------------------
Cost of shares redeemed (34,084,951) (29,637,716)
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets resulting from share transactions (15,580,144) 5,787,053
- ---------------------------------------------------------------------------- ----------------- -----------------
Change in net assets 5,394,899 (1,726,881)
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 139,080,790 140,807,671
- ---------------------------------------------------------------------------- ----------------- -----------------
End of period (including undistributed net investment income of $104,739 and
$157,750, respectively) $ 144,475,689 $ 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>
YEAR ENDED AUGUST 31,
---------------------------------------------------------------------------
1995 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 0.22 0.23 0.30 0.29 0.33 0.38 0.33
- ------------------------------------------------
Net realized and unrealized gain (loss) on
investments 2.54 0.36 2.00 0.11 2.45 (0.76) 2.68
- ------------------------------------------------ --------- --------- --------- --------- --------- --------- ---------
Total from investment operations 2.76 0.59 2.30 0.40 2.78 (0.38) 3.01
- ------------------------------------------------ --------- --------- --------- --------- --------- --------- ---------
LESS DISTRIBUTIONS
- ------------------------------------------------
Distributions from net investment income (0.21) (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 on
investment transactions (0.27) (1.13) (1.42) (0.46) -- (0.22) --
- ------------------------------------------------ --------- --------- --------- --------- --------- --------- ---------
Total distributions (0.48) (1.38) (1.72) (0.73) (0.36) (0.63)
(0.24)
- ------------------------------------------------ --------- --------- --------- --------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 16.09 $ 13.81 $ 14.60 $ 14.02 $ 14.35 $ 11.93 $ 12.94
- ------------------------------------------------ --------- --------- --------- --------- --------- --------- ---------
TOTAL RETURN (C) 20.71% 4.27% 17.89% 2.93% 23.77% (3.11%) 32.29%
- ------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ------------------------------------------------
Expenses 1.25% 1.09% 0.85% 0.83% 0.74% 0.42% 0.56%*
- ------------------------------------------------
Net investment income 1.46% 1.67% 2.10% 1.99% 2.58% 3.06% 4.00%*
- ------------------------------------------------
Expense waiver/reimbursement (d) -- -- 0.18% 0.25% 0.29% 0.75% 0.83%*
- ------------------------------------------------
SUPPLEMENTAL DATA
- ------------------------------------------------
Net assets, end of period (000 omitted) $144,476 $139,081 $140,808 $73,653 $87,927 $60,448 $48,093
- ------------------------------------------------
Portfolio turnover rate 69% 118% 127% 163% 124% 123% 70%
- ------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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 realized gain on investment transactions for
the fiscal year ended August 31, 1990, were a result of certain book and tax
timing differences. These distributions do 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) 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
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
CORPORATE BONDS/ASSET BACKED SECURITIES--14.8%
- ------------------------------------------------------------------------------------------------
AUTOMOTIVE--1.6%
--------------------------------------------------------------------------------
$ 1,000,000 Ford Capital BV, Debenture, 10.125%, 11/15/2000 $ 1,143,730
-------------------------------------------------------------------------------- ---------------
BANKING--1.5%
--------------------------------------------------------------------------------
1,000,000 BankAmerica Corp., Subordinated Notes, 7.50%, 10/15/2002 1,036,130
-------------------------------------------------------------------------------- ---------------
FINANCE-RETAIL--6.8%
--------------------------------------------------------------------------------
750,000 American General Finance Corp., Note, 8.00%, 2/15/2000 790,785
--------------------------------------------------------------------------------
1,000,000 CIT Group Securitization Corp., 1993-1, Class A2, 5.75%,
6/15/2018 956,000
--------------------------------------------------------------------------------
1,000,000 Discover Card Trust 1993-A, Class A, 6.25%, 8/16/2000 994,790
--------------------------------------------------------------------------------
1,000,000 Household Finance Corp., Debenture, 9.00%, 9/1/1995 1,000,450
--------------------------------------------------------------------------------
1,000,000 Signet Credit Card Master Trust 1993-1, Class A, 5.20%,
2/15/2002 953,540
-------------------------------------------------------------------------------- ---------------
Total 4,695,565
-------------------------------------------------------------------------------- ---------------
MISCELLANEOUS--1.6%
--------------------------------------------------------------------------------
99,376 USWFS Manufactured Housing Contract 1990-A, Class A, 9.05%, 12/25/2010 99,407
--------------------------------------------------------------------------------
1,000,000 USWFS Inc. Medium Term Note, 6.26%, 9/5/1995 999,190
-------------------------------------------------------------------------------- ---------------
Total 1,098,597
-------------------------------------------------------------------------------- ---------------
UTILITIES--3.3%
--------------------------------------------------------------------------------
2,000,000 KN Energy, Inc., Debenture, 9.625%, 8/1/2021 2,311,320
-------------------------------------------------------------------------------- ---------------
TOTAL CORPORATE BONDS/ASSET BACKED SECURITIES
(IDENTIFIED COST, $10,213,719) 10,285,342
-------------------------------------------------------------------------------- ---------------
GOVERNMENT AGENCIES--16.6%
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN BANK--1.5%
--------------------------------------------------------------------------------
1,000,000 7.72%, 3/29/2000 1,009,370
-------------------------------------------------------------------------------- ---------------
</TABLE>
TOWER TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
GOVERNMENT AGENCIES--CONTINUED
- ------------------------------------------------------------------------------------------------
FEDERAL HOME LOAN MORTGAGE CORP. 30-YEAR GOLD--1.5%
--------------------------------------------------------------------------------
$ 1,000,000 Pool 1024, 9.00%, 11/15/2005 $ 1,048,010
-------------------------------------------------------------------------------- ---------------
FEDERAL NATIONAL MORTGAGE CORP. 30-YEAR SEASONED--0.1%
--------------------------------------------------------------------------------
12,684 Pool 76204, 11.00%, 6/1/2019 14,055
--------------------------------------------------------------------------------
11,191 Pool 78956, 11.00%, 8/1/2019 12,401
--------------------------------------------------------------------------------
9,216 Pool 34138, 11.00%, 4/1/2010 10,213
--------------------------------------------------------------------------------
18,205 Pool 1804, 11.00%, 4/1/2011 20,173
--------------------------------------------------------------------------------
23,740 Pool 85131,11.00%, 5/1/2017 26,307
-------------------------------------------------------------------------------- ---------------
Total 83,149
-------------------------------------------------------------------------------- ---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION BOND--5.8%
--------------------------------------------------------------------------------
3,900,000 8.05%, 7/14/2004 4,009,629
-------------------------------------------------------------------------------- ---------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 30-YEAR--7.7%
--------------------------------------------------------------------------------
115,112 Pool 291100, 9.00%, 5/15/2020 121,334
--------------------------------------------------------------------------------
90,499 Pool 288967, 9.00%, 4/15/2020 95,391
--------------------------------------------------------------------------------
60,128 Pool 288570, 10.00%, 8/15/2020 65,482
--------------------------------------------------------------------------------
217,082 Pool 287853, 9.00%, 4/15/2020 228,815
--------------------------------------------------------------------------------
124,044 Pool 296315, 10.00%, 9/15/2020 135,090
--------------------------------------------------------------------------------
148,712 Pool 292364, 10.00%, 9/15/2020 161,954
--------------------------------------------------------------------------------
205,379 Pool 289082, 9.00%, 4/15/2020 216,480
--------------------------------------------------------------------------------
1,222,508 Pool 415427, 7.50%, 8/15/2025 1,229,745
--------------------------------------------------------------------------------
62,797 Pool 288052, 10.00%, 7/15/2020 68,389
--------------------------------------------------------------------------------
166,026 Pool 212660, 8.00%, 4/15/2017 171,161
--------------------------------------------------------------------------------
146,668 Pool 279629, 9.00%, 10/15/2019 154,595
--------------------------------------------------------------------------------
166,208 Pool 278300, 10.00%, 7/15/2019 181,009
--------------------------------------------------------------------------------
14,030 Pool 188080, 8.00%, 9/15/2018 14,420
--------------------------------------------------------------------------------
209,598 Pool 217533, 8.00%, 5/15/2017 216,081
--------------------------------------------------------------------------------
185,315 Pool 147875, 10.00%, 3/15/2016 201,817
--------------------------------------------------------------------------------
190,610 Pool 168511, 8.00%, 7/15/2016 196,506
--------------------------------------------------------------------------------
</TABLE>
TOWER TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
GOVERNMENT AGENCIES--CONTINUED
- ------------------------------------------------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION 30-YEAR--CONTINUED
--------------------------------------------------------------------------------
$ 269,915 Pool 212047, 8.00%, 5/15/2017 $ 278,263
--------------------------------------------------------------------------------
233,854 Pool 216950, 8.00%, 6/15/2017 241,087
--------------------------------------------------------------------------------
89,660 Pool 177145, 8.00%, 1/15/2017 92,433
--------------------------------------------------------------------------------
109,539 Pool 253449, 10.00%, 10/15/2018 119,293
--------------------------------------------------------------------------------
120,247 Pool 283261, 9.00%, 11/15/2019 126,746
--------------------------------------------------------------------------------
115,528 Pool 279619, 10.00%, 9/15/2019 125,816
--------------------------------------------------------------------------------
241,172 Pool 302697, 8.00%, 4/15/2021 247,877
--------------------------------------------------------------------------------
64,175 Pool 225725, 10.00%, 9/15/2020 69,890
--------------------------------------------------------------------------------
216,204 Pool 174673, 8.00%, 8/15/2016 222,891
--------------------------------------------------------------------------------
213,322 Pool 288994, 9.00%, 5/15/2020 224,852
--------------------------------------------------------------------------------
151,657 Pool 227430, 9.00%, 8/15/2019 159,854
-------------------------------------------------------------------------------- ---------------
Total 5,367,271
-------------------------------------------------------------------------------- ---------------
TOTAL GOVERNMENT AGENCIES (IDENTIFIED COST, $11,379,330) 11,517,429
-------------------------------------------------------------------------------- ---------------
TREASURY SECURITIES--62.4%
- ------------------------------------------------------------------------------------------------
U.S. TREASURY BOND--39.5%
--------------------------------------------------------------------------------
750,000 7.125%, 2/15/2023 784,010
--------------------------------------------------------------------------------
3,800,000 11.25%, 2/15/2015 5,666,826
--------------------------------------------------------------------------------
12,000,000 8.875%, 8/15/2017 14,872,560
--------------------------------------------------------------------------------
4,000,000 12.50%, 8/15/2014 6,114,320
-------------------------------------------------------------------------------- ---------------
Total 27,437,716
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY NOTES--22.9%
--------------------------------------------------------------------------------
2,000,000 4.25%, 11/30/1995 1,994,200
--------------------------------------------------------------------------------
3,000,000 6.25%, 8/31/1996 3,015,150
--------------------------------------------------------------------------------
3,000,000 6.50%, 11/30/1996 3,026,820
--------------------------------------------------------------------------------
1,000,000 4.00%, 1/31/1996 993,580
--------------------------------------------------------------------------------
$ 7,000,000 5.125%, 4/30/1998 $ 6,865,250
-------------------------------------------------------------------------------- ---------------
Total 15,895,000
-------------------------------------------------------------------------------- ---------------
</TABLE>
TOWER TOTAL RETURN BOND FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
TREASURY SECURITIES--CONTINUED
- ------------------------------------------------------------------------------------------------
U.S. TREASURY NOTES--CONTINUED
--------------------------------------------------------------------------------
TOTAL TREASURY SECURITIES (IDENTIFIED COST, $41,553,562) 43,332,716
-------------------------------------------------------------------------------- ---------------
*REPURCHASE AGREEMENT--5.5%
- ------------------------------------------------------------------------------------------------
3,828,000 HSBC Securities, Inc., 5.77%, dated 8/31/1995, due 9/1/1995
(at amortized cost) 3,828,000
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST, $66,974,611)(A) $ 68,963,487
-------------------------------------------------------------------------------- ---------------
</TABLE>
* The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(a) The cost of investments for federal tax purposes amounts to $66,974,611. The
net unrealized appreciation of investments on a federal tax basis amounts to
$1,988,876, which is comprised of $2,185,006 appreciation and $196,130
depreciation at August 31, 1995.
Note: The categories of investments are shown as a percentage of net assets
($69,454,642) at August 31, 1995.
(See Notes which are an integral part of the Financial Statements)
TOWER TOTAL RETURN BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments, at value (identified and tax cost $66,974,611) $ 68,963,487
- -------------------------------------------------------------------------------------------------
Cash 9,208
- -------------------------------------------------------------------------------------------------
Income receivable 549,858
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 2,084
- -------------------------------------------------------------------------------------------------
Deferred expenses 1,921
- ------------------------------------------------------------------------------------------------- ---------------
Total assets 69,526,558
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------
Income distribution payable $ 36,205
- -----------------------------------------------------------------------------------
Payable to portfolio accountant 5,045
- -----------------------------------------------------------------------------------
Accrued expenses 30,666
- ----------------------------------------------------------------------------------- ------------
Total liabilities 71,916
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS for 6,910,624 shares outstanding $ 69,454,642
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid-in capital $ 68,704,364
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 1,988,876
- -------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (1,381,519)
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 142,921
- ------------------------------------------------------------------------------------------------- ---------------
Total Net Assets $ 69,454,642
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($69,454,642 / 6,910,624 shares outstanding) $10.05
- ------------------------------------------------------------------------------------------------- ---------------
Computation of Offering Price Per Share (100/97 of $10.05)* $10.36
- ------------------------------------------------------------------------------------------------- ---------------
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TOWER TOTAL RETURN BOND FUND
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------
Interest $4,918,845
- -------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------------
Investment advisory fee $ 491,566
- -----------------------------------------------------------------------------------
Administrative personnel and services fees 91,672
- -----------------------------------------------------------------------------------
Custodian fees 17,554
- -----------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 25,589
- -----------------------------------------------------------------------------------
Directors'/Trustees' fees 4,557
- -----------------------------------------------------------------------------------
Auditing fees 12,450
- -----------------------------------------------------------------------------------
Legal fees 6,697
- -----------------------------------------------------------------------------------
Portfolio accounting fees 52,989
- -----------------------------------------------------------------------------------
Distribution services fee 175,534
- -----------------------------------------------------------------------------------
Share registration costs 13,676
- -----------------------------------------------------------------------------------
Printing and postage 6,262
- -----------------------------------------------------------------------------------
Insurance premiums 5,947
- -----------------------------------------------------------------------------------
Miscellaneous 8,057
- ----------------------------------------------------------------------------------- ------------
Total expenses 912,550
- ------------------------------------------------------------------------------------------------- ---------------
Net investment income 4,006,295
- ------------------------------------------------------------------------------------------------- ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- -------------------------------------------------------------------------------------------------
Net realized gain on investments 27,032
- -------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 2,863,184
- ------------------------------------------------------------------------------------------------- ---------------
Net realized and unrealized gain on investments 2,890,216
- ------------------------------------------------------------------------------------------------- ---------------
Change in net assets resulting from operations $6,896,511
- ------------------------------------------------------------------------------------------------- ---------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TOWER TOTAL RETURN BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-----------------------------------
<S> <C> <C>
1995 1994
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 4,006,295 $ 3,620,729
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments ($(1,035,780) and
$(47,834), respectively, as computed for federal tax purposes) 27,032 (1,407,891)
- -----------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 2,863,184 (3,658,165)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from operations 6,896,511 (1,445,327)
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------
Distributions from net investment income (3,888,156) (3,662,582)
- -----------------------------------------------------------------------------
Distributions from net realized gains -- (136,345)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from distributions to
shareholders (3,888,156) (3,798,927)
- ----------------------------------------------------------------------------- ---------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 12,812,859 26,200,656
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 3,525,916 3,543,220
- -----------------------------------------------------------------------------
Cost of shares redeemed (21,980,675) (16,019,025)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from share transactions (5,641,900) 13,724,851
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets (2,633,545) 8,480,597
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 72,088,187 63,607,590
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period (including undistributed net investment income of $142,921 and
$24,782, respectively) $ 69,454,642 $ 72,088,187
- ----------------------------------------------------------------------------- ---------------- ----------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TOWER TOTAL RETURN BOND FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------
1995 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 0.56 0.57 0.56
- ---------------------------------------------------------------
Net realized and unrealized gain (loss) on investments 0.39 (0.83) 0.48
- --------------------------------------------------------------- --------- --------- ---------
Total from investment operations 0.95 (0.26) 1.04
- --------------------------------------------------------------- --------- --------- ---------
LESS DISTRIBUTIONS
- ---------------------------------------------------------------
Distributions from net investment income (0.54) (0.57) (0.55)
- ---------------------------------------------------------------
Distributions from net realized gain on investment
transactions -- (0.02) --
- --------------------------------------------------------------- --------- --------- ---------
Total distributions (0.54) (0.59) (0.55)
- --------------------------------------------------------------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 10.05 $ 9.64 $ 10.49
- --------------------------------------------------------------- --------- --------- ---------
TOTAL RETURN (B) 10.19% (2.46%) 10.39%
- ---------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- ---------------------------------------------------------------
Expenses 1.30% 1.21% 0.77%*
- ---------------------------------------------------------------
Net investment income 5.71% 5.62% 6.56%*
- ---------------------------------------------------------------
Expense waiver/reimbursement (c) -- -- 0.22%*
- ---------------------------------------------------------------
SUPPLEMENTAL DATA
- ---------------------------------------------------------------
Net assets, end of period (000 omitted) $69,455 $72,088 $63,608
- ---------------------------------------------------------------
Portfolio turnover 91% 96% 78%
- ---------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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)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
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
LONG-TERM MUNICIPALS--102.0%
- ------------------------------------------------------------------------------------
LOUISIANA--100.5%
--------------------------------------------------------------------
$ 200,000 Bossier City, LA, Public Improvement Sales Revenue Bonds (Series
ST-1989), 6.875% (FGIC INS)/(Original Issue Yield: 7.20%), 11/1/2011 AAA $ 215,354
--------------------------------------------------------------------
100,000 Calcasieu Parish, LA School District No. 022, Ward 3 (Series A),
7.25% (BIG LOC)/(Prerefunded--U.S. Government)/(Original Issue
Yield: 7.40%), 2/1/1999 (@100) AAA 109,409
--------------------------------------------------------------------
760,000 Denham Springs, LA Livingston Housing & Mortgage Finance Authority,
SFM Revenue Bond, 7.20% (FHA LOC), 8/1/2010 AAA 830,885
--------------------------------------------------------------------
500,000 East Baton Rouge Parish, LA Public Improvement Revenue Bond, (Series
ST), 6.50% (AMBAC INS)/(Original Issue Yield: 6.80%), 2/1/2013 AAA 522,725
--------------------------------------------------------------------
1,000,000 East Baton Rouge Parish, LA, Sales and Use Tax Revenue Bonds (Series
ST A), 4.80% (FGIC INS)/(Original Issue Yield: 4.85%), 2/1/2006 AAA 968,870
--------------------------------------------------------------------
1,250,000 East Baton Rouge Parish, LA, Sales & Use Tax Revenue Bonds (Series
ST), 5.90%, 2/1/2017 AAA 1,242,413
--------------------------------------------------------------------
930,000 East Baton Rouge Parish, LA, Sales & Use Tax Revenue Bonds (Series
ST-A), 4.80% (FGIC INS)/(Original Issue Yield: 5.15%), 2/1/2011 AAA 831,653
--------------------------------------------------------------------
500,000 East Baton Rouge Parish, LA, Sales & Use Tax Revenue Bonds, 5.20%
(FSA INS)/(Original Issue Yield: 5.65%),
2/1/2016 AAA 463,215
--------------------------------------------------------------------
200,000 East Baton Rouge Parish, LA, Sales and Use Tax Public Improvement
Bond, 7.25% (MBIA Insurance Corporation INS)/(Original Issue Yield:
7.45%), 2/1/2008 AAA 221,078
--------------------------------------------------------------------
1,000,000 East Baton Rouge Parish, LA, Sales and Use Tax Revenue Bonds (Series
ST), 5.20% (FSA INS)/(Original Issue Yield: 5.65%), 2/1/2017 AAA 923,440
--------------------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
LONG-TERM MUNICIPALS--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
--------------------------------------------------------------------
$ 300,000 East Baton Rouge Parish, LA, Sales and Use Tax Public Improvement
Bond, 7.25% (MBIA Insurance Corporation INS)/(Original Issue Yield:
7.40%), 2/1/2006 AAA $ 331,617
--------------------------------------------------------------------
40,000 East Baton Rouge, LA Mortgage Finance Authority, SFM Revenue Bonds
(Series C), 7.90% (GNMA COL)/(Original Issue Yield: 7.90%), 2/1/2002 AAA 42,130
--------------------------------------------------------------------
1,680,000 East Baton Rouge, LA Mortgage Finance Authority, SFM Revenue
Refunding Bonds (Series B), 7.40% (GNMA COL), 8/1/2012 AAA 1,809,830
--------------------------------------------------------------------
190,000 East Baton Rouge, LA Mortgage Finance Authority, SFM Purchasing
Revenue Bonds (Series B), 5.40% (Federal National Mortgage
Association COL), 10/1/2025 AAA 167,508
--------------------------------------------------------------------
935,000 East Baton Rouge, LA Mortgage Finance Authority, SFM Revenue
Refunding Bonds (Series C), 7.00%, 4/1/2032 AAA 975,925
--------------------------------------------------------------------
1,225,000 Greater New Orleans Expressway Commission, Revenue Refunding Bonds,
6.00% (Louisiana Expressway)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 6.55%), 11/1/2016 AAA 1,227,438
--------------------------------------------------------------------
1,000,000 Houma, LA, Utilities Revenue Refunding Bonds, 6.25% (FGIC
INS)/(Original Issue Yield: 6.40%), 1/1/2012 AAA 1,036,870
--------------------------------------------------------------------
1,000,000 Jefferson Parish, LA Hospital Service District No. 2, Hospital
Revenue Bonds, 5.50% (MBIA Insurance Corporation LOC)/(Original
Issue Yield: 5.924%), 7/1/2008 AAA 1,002,930
--------------------------------------------------------------------
2,000,000 Jefferson Parish, LA School Board, Sales and Use Tax Revenue
Refunding Bond, 6.25% (MBIA Insurance Corporation INS)/(Original
Issue Yield: 6.48%), 2/1/2008 AAA 2,105,360
--------------------------------------------------------------------
1,000,000 Jefferson Parish, LA, Drain Sales Tax Revenue Bond, 6.50% (AMBAC
INS)/(Original Issue Yield: 6.753%),
11/1/2011 AAA 1,048,940
--------------------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
LONG-TERM MUNICIPALS--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
--------------------------------------------------------------------
$ 210,000 Jefferson, LA Housing Development Corp., Multifamily Revenue
Refunding Bonds (Series A), 7.375% (Concordia Project)/(Federal
National Mortgage Association COL)/ (Original Issue Yield: 7.544%),
8/1/2005 AAA $ 229,358
--------------------------------------------------------------------
115,000 Jefferson Parish, LA GO Refunding Bonds, 7.70% (FGIC INS), 9/1/2002 AAA 123,329
--------------------------------------------------------------------
50,000 Lafayette, LA, Public Improvement Sales Tax Revenue Refunding Bond,
8.00% (FGIC INS)/(Prerefunded--U.S. Government)/(Original Issue
Yield: 8.10%), 3/1/1998 (@102) AAA 55,518
--------------------------------------------------------------------
1,650,000 Louisiana HFA, Multifamily Housing Revenue Refunding Bonds (Series
A), 6.10% (GNMA COL), 12/20/2018 AAA 1,652,310
--------------------------------------------------------------------
350,000 Louisiana HFA, Multifamily Housing Revenue Refunding Bonds, 5.85%
(GNMA COL), 12/20/2008 AAA 354,284
--------------------------------------------------------------------
1,000,000 Louisiana HFA, Multifamily Housing Revenue Refunding Bonds, 6.20%
(GNMA COL), 6/20/2028 AAA 1,001,390
--------------------------------------------------------------------
1,000,000 Louisiana HFA, Revenue Bond, 7.10% (Villa Maria Project)/(GNMA COL),
1/20/2035 AAA 1,053,670
--------------------------------------------------------------------
2,000,000 Louisiana HFA, SFM Revenue Bonds (Series A-2), 6.55%, 12/1/2026 AAA 2,020,960
--------------------------------------------------------------------
95,000 Louisiana PFA, Health and Education Capital Facilities Revenue
Refunding Bonds (Series D), 7.90% (BIG LOC)/ (Prerefunded--U.S.
Government ), 12/1/1998 (@102) AAA 107,598
--------------------------------------------------------------------
1,450,000 Louisiana PFA, Health and Education Capital Facilities, 8.20% (Our
Lady of Lake)/(BIG LOC), 12/1/2015 AAA 1,645,388
--------------------------------------------------------------------
580,000 Louisiana PFA, Unrefunded Health and Education Capital Revenue
Refunding Bonds (Series D), 7.90%
(BIG LOC), 12/1/2015 AAA 647,860
--------------------------------------------------------------------
1,000,000 Louisiana PFA, Hospital Revenue Bonds, 5.70% (Woman's Hospital
Foundation)/(FGIC INS)/(Original Issue Yield: 5.80%), 10/1/2008 AAA 1,018,870
--------------------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
LONG-TERM MUNICIPALS--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
--------------------------------------------------------------------
$ 995,000 Louisiana PFA, Hospital Revenue Refunding Bonds (Series C), 6.30%
(Our Lady Of Lake Regional)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 6.375%), 12/1/2016 AAA $ 1,017,328
--------------------------------------------------------------------
500,000 Louisiana PFA, Hospital Revenue Refunding Bonds, 6.40% (Lafayette
General Medical Center Project)/(FSA INS)/(Original Issue Yield:
6.53%), 10/1/2012 AAA 522,355
--------------------------------------------------------------------
2,045,000 Louisiana PFA, Multifamily Housing Revenue Bonds (Series A), 7.50%
(Federal Home Loan Mortgage Corp. COL), 6/1/2021 AAA 2,216,800
--------------------------------------------------------------------
750,000 Louisiana PFA, Student Opportunity Loan Revenue Bond, 6.00% (General
Health, Inc.)/(MBIA Insurance Corporation INS)/(Original Issue
Yield: 6.15%),
11/1/2012 AAA 756,233
--------------------------------------------------------------------
670,000 Louisiana PFA, Revenue Bonds (Series A), 6.80% (FSA INS), 1/1/2006 AAA 723,613
--------------------------------------------------------------------
670,000 Louisiana PFA, Revenue Bonds (Series A), 6.85% (FSA COL), 1/1/2009 AAA 713,168
--------------------------------------------------------------------
1,890,000 Louisiana PFA, Revenue Refunding Bonds (Series A), 6.75% (Bethany
Home Project)/(FHA LOC), 8/1/2025 AAA 1,950,934
--------------------------------------------------------------------
350,000 Louisiana PFA, Revenue Refunding Bonds (Series B), 6.50% (Alton
Ochsner Medical Foundation)/(MBIA Insurance Corporation
INS)/(Original Issue Yield: 6.743%),
5/15/2022 AAA 360,735
--------------------------------------------------------------------
1,000,000 Louisiana PFA, Revenue Refunding Bonds, 5.10% (St. Francis Medical
Center, CA)/(FSA LOC), 7/1/2007 AAA 977,350
--------------------------------------------------------------------
425,000 Louisiana PFA, Revenue Refunding Bonds, 7.60% (Jefferson Parish
Eastbank)/(FGIC INS), 8/1/2003 AAA 477,322
--------------------------------------------------------------------
750,000 Louisiana PFA, Revenue Refunding Bonds, 7.70% (Jefferson Parish
Eastbank)/(FGIC INS)/(Original Issue Yield: 7.747%), 8/1/2010 AAA 843,555
--------------------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
LONG-TERM MUNICIPALS--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
--------------------------------------------------------------------
$ 500,000 Louisiana Stadium and Expo District, Hotel Occupancy Tax and Stadium
Revenue Refunding Bonds (Series A), 6.00% (FGIC INS), 7/1/2016 AAA $ 501,135
--------------------------------------------------------------------
1,950,000 Louisiana Stadium and Expo District, Hotel Tax and Revenue Refunding
Bonds (Series A), 6.00% (FGIC INS)/ (Original Issue Yield: 6.10%),
7/1/2024 AAA 1,955,967
--------------------------------------------------------------------
550,000 Louisiana State Energy & Power Authority, Revenue Refunding Bonds,
6.00% (Rodemacher Unit No. 2 Project)/(FGIC INS)/(Original Issue
Yield: 6.962%), 1/1/2013 AAA 551,930
--------------------------------------------------------------------
1,500,000 Louisiana State, GO Bonds (Series A), 6.10% (AMBAC INS)/(Original
Issue Yield: 6.30%), 5/1/2011 AAA 1,538,865
--------------------------------------------------------------------
1,125,000 Louisiana State, GO Refunding Bonds (Series A), 5.80% (MBIA
Insurance Corporation INS)/(Original Issue Yield: 5.85%), 8/1/2010 AAA 1,160,134
--------------------------------------------------------------------
875,000 Louisiana State, GO Bonds (Series A), 6.00%, (Original Issue Yield:
5.1%), 5/15/1998 AAA 915,504
--------------------------------------------------------------------
400,000 Louisiana State, Gas and Fuel Tax Revenue Bonds (Series A), 7.25%
(FGIC INS)/(Original Issue Yield: 7.45%),
11/15/2004 AAA 445,704
--------------------------------------------------------------------
500,000 Monroe, LA School District, GO Bonds, 5.35% (Original Issue Yield:
5.90%), 3/1/2012 AAA 477,840
--------------------------------------------------------------------
750,000 Monroe, LA School District, Special School District GO Bonds, 5.35%
(FGIC INS)/(Original Issue Yield: 5.75%), 3/1/2009 AAA 739,373
--------------------------------------------------------------------
1,020,000 Monroe-Brentwood, LA Housing Development Corp., Multifamily Housing
Mortgage Revenue Refunding Bond, 6.70% (Federal National Mortgage
Association COL), 8/1/2021 AAA 1,041,828
--------------------------------------------------------------------
525,000 Monroe-Brentwood, LA Housing Development Corp., Multifamily Housing
Revenue Refunding Bonds, 6.50% (Federal National Mortgage
Association COL), 2/1/2010 AAA 538,922
--------------------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
LONG-TERM MUNICIPALS--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
--------------------------------------------------------------------
$ 160,000 Morgan City, LA, Utility Revenue Refunding Bonds, 7.45% (AMBAC
INS)/(Original Issue Yield: 7.55%),
3/1/2003 AAA $ 174,138
--------------------------------------------------------------------
1,500,000 New Orleans, LA Audubon Park, GO Bonds, 6.00% (FGIC INS)/(Original
Issue Yield: 6.25%), 10/1/2013 AAA 1,513,455
--------------------------------------------------------------------
1,000,000 New Orleans, LA Home Mortgage Authority, GO Refunding Revenue Bonds,
6.25% (Original Issue Yield: 6.517%), 1/15/2011 AAA 1,041,140
--------------------------------------------------------------------
1,250,000 New Orleans, LA Home Mortgage Authority, SFM Revenue Bonds (Series
A), 6.65% (GNMA COL), 9/1/2008 AAA 1,316,225
--------------------------------------------------------------------
310,000 New Orleans, LA Housing Development Corp., Multifamily Housing
Refunding Revenue Bonds, 7.375% (Federal National Mortgage
Association COL)/(Original Issue Yield: 7.544%), 8/1/2005 AAA 338,074
--------------------------------------------------------------------
1,105,000 New Orleans, LA Housing Development Corp., Multifamily Revenue
Bonds, 7.375% (Southwood Patio)/(Federal National Mortgage
Association COL)/(Original Issue Yield: 7.544%), 8/1/2005 AAA 1,203,068
--------------------------------------------------------------------
400,000 New Orleans, LA GO Bonds, 6.00% (AMBAC INS)/
(Original Issue Yield: 7.40%), 12/1/2004 AAA 423,960
--------------------------------------------------------------------
500,000 New Orleans, LA, GO Bonds, 7.00% (FGIC INS),
9/1/2019 AAA 570,320
--------------------------------------------------------------------
2,375,000 New Orleans, LA, Zero Coupon, GO Bonds Capital Appreciation Bonds
(AMBAC INS)/(Original Issue Yield: 7.10%), 9/1/2013 AAA 817,998
--------------------------------------------------------------------
2,000,000 New Orleans, LA, Zero Coupon, GO Capital Appreciation Revenue Bonds
(AMBAC INS)/(Original Issue Yield: 7.15%), 9/1/2016 AAA 570,880
--------------------------------------------------------------------
100,000 New Orleans, LA, GO Refunding, 6.00% (AMBAC INS)/ (Original Issue
Yield: 7.40%), 12/1/2004 AAA 102,765
--------------------------------------------------------------------
1,900,000 New Orleans, LA, GO Refunding Bond, 6.20% (Original Issue Yield:
6.30%), 10/1/2021 AAA 1,931,844
--------------------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
LONG-TERM MUNICIPALS--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
--------------------------------------------------------------------
$ 500,000 Orleans Parish LA Law Enforcement District, GO Bonds, 7.10% (AMBAC
INS)/(Original Issue Yield: 7.25%),
5/1/2010 AAA $ 541,660
--------------------------------------------------------------------
850,000 Orleans Parish, LA School Board, GO Revenue Bonds (Series A), 7.00%
(MBIA Insurance Corporation INS)/ (Original Issue Yield: 7.25%),
6/1/2009 AAA 888,658
--------------------------------------------------------------------
750,000 Orleans, LA School District, Crossover Refunding Bonds (Series A),
8.125% (MBIA Insurance Corporation INS)/ (Original Issue Yield:
8.174%), 11/1/2007 AAA 799,620
--------------------------------------------------------------------
300,000 Plaquemines Parish LA, GO Refunding Bonds, 6.50% (AMBAC
INS)/(Original Issue Yield: 6.65%), 8/1/2008 AAA 322,464
--------------------------------------------------------------------
1,300,000 Regional Transportation Authority, Revenue Refunding Bonds, 8.00%
(FGIC INS), 12/1/2008 AAA 1,474,395
--------------------------------------------------------------------
175,000 Slidell, LA, Sales and Use Tax Public Improvement Revenue Bond,
7.50% (MBIA Insurance Corporation COL)/ (Prerefunded--U.S.
Government )/(Original Issue Yield: 7.70%), 10/1/1997 (@102) AAA 190,710
--------------------------------------------------------------------
1,485,000 St. Charles Parish, LA, Consolidated Waterworks and Wastewater
District No. 1, Utility Revenue Refunding Bonds, 7.15% (MBIA
Insurance Corporation INS),
7/1/2016 AAA 1,653,354
--------------------------------------------------------------------
500,000 St. Charles Parish, LA, Environmental Improvement Revenue Bonds,
5.95% (LA Power & Light Company)/(FSA INS)/(Original Issue Yield:
5.986%), 12/1/2023 AAA 489,900
--------------------------------------------------------------------
1,000,000 St. Charles Parish, LA, Solid Waste Disposal Revenue Bonds, 7.00%
(LA Power & Light Company)/(AMBAC INS)/(Original Issue Yield:
7.04%), 12/1/2022 AAA 1,093,880
--------------------------------------------------------------------
500,000 St. Landry Parish, LA Consolidated School District No. 1, GO Bonds,
6.10% (MBIA Insurance Corporation INS)/ (Original Issue Yield:
6.60%), 5/1/2008 AAA 518,570
--------------------------------------------------------------------
375,000 St. Mary Parish, LA Sewage District No. 5, Refunding Bonds, 7.60%
(AMBAC LOC), 5/1/2004 AAA 415,058
--------------------------------------------------------------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL CREDIT
AMOUNT RATING* VALUE
<C> <S> <C> <C>
- -------------- -------------------------------------------------------------------- ---------- ---------------
LONG-TERM MUNICIPALS--CONTINUED
- ------------------------------------------------------------------------------------
LOUISIANA--CONTINUED
--------------------------------------------------------------------
$ 1,000,000 St. Tammany Parish, LA Hospital, Service District No. 2, Revenue
Bonds, 6.25% (Connie Lee LOC)/(Original Issue Yield: 6.40%),
10/1/2014 AAA $ 1,023,210
--------------------------------------------------------------------
400,000 St. Tammany Parish, LA Hospital, Service District No. 2, Hospital
Revenue Refunding Bonds, 6.125% (Connie Lee LOC)/(Original Issue
Yield: 6.315%), 10/1/2011 AAA 410,164
--------------------------------------------------------------------
50,000 St. Tammany Parish, LA, Sales & Use Tax Dist. No. 3 Revenue Bonds
(Series A), 7.90% (FGIC INS)/(Prerefunded--U.S.
Government)/(Original Issue Yield: 7.90%), 12/1/1998 (@102) AAA 56,630
--------------------------------------------------------------------
130,000 Terrebonne Parish, LA, Hospital Service District, No. 1, Refunding
Revenue Bonds, 7.50% (BIG LOC)/(Original Issue Yield: 7.649%),
4/1/2008 AAA 142,760
--------------------------------------------------------------------
1,225,000 Terrebonne Parish, LA, Hospital Service District, Revenue Refunding
Bonds, 7.50% (Terrebonne General Medical Center)/(BIG LOC)/(Original
Issue Yield: 7.745%),
4/1/2015 AAA 1,344,608
--------------------------------------------------------------------
170,000 Terrebonne Parish, LA, Hospital Service District, Service District
No. 1, Hospital Revenue Refunding Bonds, 7.40% (Terrebonne General
Medical Center)/(BIG LOC)/ (Original Issue Yield: 7.50%), 4/1/2003 AAA 185,835
-------------------------------------------------------------------- ---------------
Total 67,970,063
-------------------------------------------------------------------- ---------------
PUERTO RICO--1.5%
--------------------------------------------------------------------
1,000,000 Puerto Rico Municipal Finance Agency, Revenue Bonds (Series A),
6.00% (FSA INS)/(Original Issue Yield: 6.30%), 7/1/2014 AAA 1,016,630
-------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST $66,213,049)(A) $ 68,986,693
-------------------------------------------------------------------- ---------------
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
- --------------------------------------------------------------------------------
(a) The cost of investments for federal tax purposes amounts to $66,213,049. The
unrealized appreciation of investments on a federal tax basis amounts to
$2,773,644, which is comprised of $2,980,689 appreciation and $207,045
depreciation at August 31, 1995.
* Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
Note: The categories of investments are shown as a percentage of net assets
($67,600,211) at August 31, 1995.
The following acronyms are used throughout this portfolio:
AMBAC-- American Municipal Bond
Assurance Corporation
BIG--Bond Investors Guaranty
COL--Collateralized
FGIC-- Financial Guaranty Insurance Company
FHA-- Federal Housing Administration
FSA-- Financial Security Assurance
GNMA-- Government National Mortgage Association
GO--General Obligation
HFA--Housing Finance Authority
INS--Insured
LOC--Letter of Credit
MBIA-- Municipal Bond Investors Assurance
PFA--Public Facility Authority
SFM--Single Family Mortgage
(See Notes which are an integral part of the Financial Statements)
TOWER LOUISIANA MUNICIPAL INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- ------------------------------------------------------------------------------------------------
Investments, at value
(identified and tax cost $66,213,049) $ 68,986,693
- ------------------------------------------------------------------------------------------------
Cash 4,615
- ------------------------------------------------------------------------------------------------
Income receivable 975,540
- ------------------------------------------------------------------------------------------------
Receivable for shares sold 2,591
- ------------------------------------------------------------------------------------------------ ---------------
Total assets 69,969,439
- ------------------------------------------------------------------------------------------------
LIABILITIES:
- --------------------------------------------------------------------------------
Payable for investments purchased $ 1,885,510
- --------------------------------------------------------------------------------
Payable for shares redeemed 306,483
- --------------------------------------------------------------------------------
Income distribution payable 153,108
- --------------------------------------------------------------------------------
Accrued expenses 24,127
- -------------------------------------------------------------------------------- --------------
Total liabilities 2,369,228
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS for 6,150,962 shares outstanding $ 67,600,211
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------
Paid-in capital $ 65,404,573
- ------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 2,773,644
- ------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (652,919)
- ------------------------------------------------------------------------------------------------
Undistributed net investment income 74,913
- ------------------------------------------------------------------------------------------------ ---------------
Total Net Assets $ 67,600,211
- ------------------------------------------------------------------------------------------------ ---------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($67,600,211 / 6,150,962 shares outstanding) $10.99
- ------------------------------------------------------------------------------------------------ ---------------
Computation of Offering Price Per Share (100/97 of $10.99)* $11.33
- ------------------------------------------------------------------------------------------------ ---------------
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $4,413,947
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee $ 314,904
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 91,349
- ------------------------------------------------------------------------------------
Custodian fees 26,852
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 42,164
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 5,015
- ------------------------------------------------------------------------------------
Auditing fees 12,633
- ------------------------------------------------------------------------------------
Legal fees 5,911
- ------------------------------------------------------------------------------------
Portfolio accounting fees 63,556
- ------------------------------------------------------------------------------------
Share registration costs 13,792
- ------------------------------------------------------------------------------------
Printing and postage 8,662
- ------------------------------------------------------------------------------------
Insurance premiums 6,293
- ------------------------------------------------------------------------------------
Miscellaneous 3,108
- ------------------------------------------------------------------------------------ ------------
Total expenses 594,239
- ------------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 55,983
- ------------------------------------------------------------------------------------ ------------
Net expenses 538,256
- -------------------------------------------------------------------------------------------------- --------------
Net investment income 3,875,691
- -------------------------------------------------------------------------------------------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- --------------------------------------------------------------------------------------------------
Net realized loss on investments (644,227)
- --------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 1,707,708
- -------------------------------------------------------------------------------------------------- --------------
Net realized and unrealized gain on investments 1,063,481
- -------------------------------------------------------------------------------------------------- --------------
Change in net assets resulting from operations $4,939,172
- -------------------------------------------------------------------------------------------------- --------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------
<S> <C> <C>
1995 1994
- -----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 3,875,691 $ 4,476,563
- -----------------------------------------------------------------------------
Net realized gain (loss) on investments ($(86,087) and $563,347,
respectively, as computed for federal tax purposes) (644,227) 563,347
- -----------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 1,707,708 (5,870,977)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from operations 4,939,172 (831,067)
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------
Distributions from net investment income (3,801,921) (4,509,430)
- -----------------------------------------------------------------------------
Distributions from net realized gains (563,576) (789,175)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from distributions
to shareholders (4,365,497) (5,298,605)
- ----------------------------------------------------------------------------- ---------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 7,153,333 17,361,944
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 2,452,299 2,766,399
- -----------------------------------------------------------------------------
Cost of shares redeemed (22,276,998) (20,214,860)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from share transactions (12,671,366) (86,517)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets (12,097,691) (6,216,189)
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 79,697,902 85,914,091
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period (including undistributed net investment income of $74,913 and
$1,143, respectively) $ 67,600,211 $ 79,697,902
- ----------------------------------------------------------------------------- ---------------- ----------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------------------------------------------------
1995 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 0.59 0.59 0.62 0.64 0.64 0.64 0.43
- -------------------------------------------
Net realized and unrealized gain (loss)
on investments 0.24 (0.68) 0.73 0.48 0.48 (0.16) 0.14
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
Total from investment operations 0.83 (0.09) 1.35 1.12 1.12 0.48 0.57
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- -------------------------------------------
Distributions from net investment income (0.58) (0.59) (0.62) (0.64) (0.64) (0.64) (0.43)
- -------------------------------------------
Distributions from net realized gain on
investment transactions (0.08) (0.10) (0.04) (0.03) -- -- --
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
Total distributions (0.66) (0.69) (0.66) (0.67) (0.64) (0.64) (0.43)
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.99 $ 10.82 $ 11.60 $ 10.91 $ 10.46 $ 9.98 10.14
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN (B) 8.20% (0.76%) 12.75% 11.02% 11.59% 4.89% 5.82%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.77% 0.71% 0.66% 0.65% 0.74% 0.81% 0.62%*
- -------------------------------------------
Net investment income 5.54% 5.24% 5.59% 6.04% 6.29% 6.35% 6.57%*
- -------------------------------------------
Expense waiver/reimbursement (c) 0.08% 0.08% 0.14% 0.16% 0.20% 0.41% 0.61%*
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period (000 omitted) $67,600 $79,698 85,914 57,547 $42,210 $31,380 $12,285
- -------------------------------------------
Portfolio turnover 22% 33% 32% 19% 26% 32% 28 %
- -------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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)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
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
LONG-TERM OBLIGATIONS--96.6%
- ------------------------------------------------------------------------------------------------
(A) FEDERAL HOME LOAN MORTGAGE CORP. REMIC-24.8%
--------------------------------------------------------------------------------
$ 219,697 9.50%, 1/15/2005 $ 231,497
--------------------------------------------------------------------------------
1,000,000 9.00%, 6/15/2020 1,053,430
--------------------------------------------------------------------------------
1,000,000 7.50%, 9/15/2021 1,001,400
--------------------------------------------------------------------------------
1,558,000 7.50%, 9/15/2007 1,560,882
--------------------------------------------------------------------------------
2,500,000 7.00%, 12/15/2006 2,501,375
--------------------------------------------------------------------------------
2,000,000 7.00%, 11/15/2005 2,014,600
--------------------------------------------------------------------------------
1,750,000 6.10%, 6/15/2016 1,713,950
--------------------------------------------------------------------------------
500,000 6.00%, 10/15/2004 491,570
-------------------------------------------------------------------------------- ---------------
Total 10,568,704
-------------------------------------------------------------------------------- ---------------
(A) FEDERAL HOME LOAN MORTGAGE CORP. DEBENTURES--4.7%
--------------------------------------------------------------------------------
2,000,000 6.50%, 6/8/2000 1,999,380
-------------------------------------------------------------------------------- ---------------
(A) FEDERAL HOME LOAN MORTGAGE CORP. PC--8.1%
--------------------------------------------------------------------------------
137,781 10.00%, 5/1/2014 148,328
--------------------------------------------------------------------------------
440,590 10.00%, 6/1/2018 474,317
--------------------------------------------------------------------------------
111,022 10.00%, 8/1/2019 119,521
--------------------------------------------------------------------------------
147,003 10.00%, 10/1/2019 158,256
--------------------------------------------------------------------------------
12,489 10.00%, 3/1/2020 13,445
--------------------------------------------------------------------------------
122,734 10.00%, 4/1/2020 132,130
--------------------------------------------------------------------------------
91,274 10.00%, 6/1/2020 98,261
--------------------------------------------------------------------------------
112,473 9.50%, 10/1/2019 117,533
--------------------------------------------------------------------------------
121,876 9.50%, 10/1/2004 127,549
--------------------------------------------------------------------------------
244,626 9.50%, 12/1/2001 256,013
--------------------------------------------------------------------------------
52,744 9.50%, 10/1/2001 55,200
--------------------------------------------------------------------------------
295,522 9.25%, 6/1/2002 308,353
--------------------------------------------------------------------------------
</TABLE>
TOWER U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
LONG-TERM OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------------------
(A) FEDERAL HOME LOAN MORTGAGE CORP. PC--CONTINUED
--------------------------------------------------------------------------------
$ 3,078 9.00%, 9/1/2016 $ 3,186
--------------------------------------------------------------------------------
125,573 9.00%, 1/1/2017 129,966
--------------------------------------------------------------------------------
13,148 9.00%, 5/1/2018 13,608
--------------------------------------------------------------------------------
108,371 9.00%, 6/1/2016 112,570
--------------------------------------------------------------------------------
14,966 9.00%, 10/1/2016 15,546
--------------------------------------------------------------------------------
295,455 9.00%, 8/1/2001 307,822
--------------------------------------------------------------------------------
433,949 8.75%, 2/1/2017 447,098
--------------------------------------------------------------------------------
414,191 8.75%, 1/1/2011 426,741
-------------------------------------------------------------------------------- ---------------
Total 3,465,443
-------------------------------------------------------------------------------- ---------------
(A)FEDERAL NATIONAL MORTGAGE ASSOCIATION REMIC--8.7%
--------------------------------------------------------------------------------
80,065 9.30%, 8/25/2017 79,859
--------------------------------------------------------------------------------
1,835,942 9.00%, 6/25/2019 1,852,594
--------------------------------------------------------------------------------
157,060 9.00%, 10/25/2018 157,133
--------------------------------------------------------------------------------
624,152 8.00%, 12/25/2003 624,939
--------------------------------------------------------------------------------
1,000,000 7.50%, 3/25/2021 1,011,400
-------------------------------------------------------------------------------- ---------------
Total 3,725,925
-------------------------------------------------------------------------------- ---------------
(A)FEDERAL NATIONAL MORTGAGE ASSOCIATION DEBENTURE--13.3%
--------------------------------------------------------------------------------
5,500,000 8.05%, 7/14/2004 5,654,605
-------------------------------------------------------------------------------- ---------------
(A)FEDERAL NATIONAL MORTGAGE ASSOCIATION PC--1.9%
--------------------------------------------------------------------------------
156,799 10.75%, 1/1/2001 165,714
--------------------------------------------------------------------------------
139,933 9.50%, 8/1/2020 147,278
--------------------------------------------------------------------------------
469,134 8.50%, 2/1/2011 486,722
-------------------------------------------------------------------------------- ---------------
Total 799,714
-------------------------------------------------------------------------------- ---------------
(A)GOVERNMENT NATIONAL MORTGAGE ASSOCIATION PC--9.0%
--------------------------------------------------------------------------------
273,823 9.50%, 6/15/2020 290,592
--------------------------------------------------------------------------------
407,658 9.50%, 7/15/2020 432,623
--------------------------------------------------------------------------------
</TABLE>
TOWER U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- -------------- -------------------------------------------------------------------------------- ---------------
LONG-TERM OBLIGATIONS--CONTINUED
- ------------------------------------------------------------------------------------------------
(A)GOVERNMENT NATIONAL MORTGAGE ASSOCIATION PC--CONTINUED
--------------------------------------------------------------------------------
$ 93,712 9.50%, 7/15/2020 $ 99,745
--------------------------------------------------------------------------------
603,341 9.00%, 2/15/2020 633,689
--------------------------------------------------------------------------------
1,455,575 8.00%, 11/15/2022 1,492,401
--------------------------------------------------------------------------------
865,654 7.50%, 10/15/2022 870,779
-------------------------------------------------------------------------------- ---------------
Total 3,819,829
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY BONDS--10.2%
--------------------------------------------------------------------------------
2,000,000 8.625%, 8/15/1997 2,101,580
--------------------------------------------------------------------------------
1,500,000 8.00%, 11/15/2021 1,722,465
--------------------------------------------------------------------------------
500,000 7.125%, 2/15/2023 522,675
-------------------------------------------------------------------------------- ---------------
Total 4,346,720
-------------------------------------------------------------------------------- ---------------
U.S. TREASURY NOTES--15.9%
--------------------------------------------------------------------------------
6,200,000 9.25%, 8/15/1998 6,745,103
--------------------------------------------------------------------------------
32,000 6.375%, 7/15/1999 32,379
-------------------------------------------------------------------------------- ---------------
Total 6,777,482
-------------------------------------------------------------------------------- ---------------
TOTAL LONG-TERM OBLIGATIONS (IDENTIFIED COST, $41,100,311) 41,157,802
-------------------------------------------------------------------------------- ---------------
*REPURCHASE AGREEMENT--3.0%
- ------------------------------------------------------------------------------------------------
1,299,000 HSBC Securities, Inc., 5.77%, dated 8/31/1995, due 9/1/1995
(at amortized cost) 1,299,000
-------------------------------------------------------------------------------- ---------------
TOTAL INVESTMENTS (IDENTIFIED COST, $42,399,311) (B) $ 42,456,802
-------------------------------------------------------------------------------- ---------------
</TABLE>
* The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(a) 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 Participation Certificates and REMICs are less than the
indicated periods.
(b) The cost of investments for federal tax purposes amounts to $42,399,311. The
unrealized appreciation of investments on a federal tax basis amounts to
$57,491, which is comprised of $733,619 appreciation and $676,128
depreciation at August 31, 1995.
TOWER U.S. GOVERNMENT INCOME FUND
- --------------------------------------------------------------------------------
Note: The categories of investments are shown as a percentage of net assets
($42,593,130) at August 31, 1995.
The following acronyms are used throughout this portfolio:
PC --Participation Certificate
REMIC --Real Estate Mortgage Investment Conduit
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. GOVERNMENT INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -------------------------------------------------------------------------------------------------
Investments, at value
(identified and tax cost $42,399,311) $ 42,456,802
- -------------------------------------------------------------------------------------------------
Income receivable 334,109
- -------------------------------------------------------------------------------------------------
Receivable for shares sold 89
- ------------------------------------------------------------------------------------------------- ---------------
Total assets 42,791,000
- -------------------------------------------------------------------------------------------------
LIABILITIES:
- -------------------------------------------------------------------------------------------------
Payable for shares redeemed $ 23,927
- -----------------------------------------------------------------------------------
Income distribution payable 162,534
- -----------------------------------------------------------------------------------
Payable to Bank 1,149
- -----------------------------------------------------------------------------------
Accrued expenses 10,260
- ----------------------------------------------------------------------------------- ------------
Total liabilities 197,870
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS for 4,199,561 shares outstanding $ 42,593,130
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSETS CONSIST OF:
- -------------------------------------------------------------------------------------------------
Paid-in capital $ 45,464,583
- -------------------------------------------------------------------------------------------------
Net unrealized appreciation of investments 57,491
- -------------------------------------------------------------------------------------------------
Accumulated net realized loss on investments (3,048,154)
- -------------------------------------------------------------------------------------------------
Undistributed net investment income 119,210
- ------------------------------------------------------------------------------------------------- ---------------
Total Net Assets $ 42,593,130
- ------------------------------------------------------------------------------------------------- ---------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -------------------------------------------------------------------------------------------------
Net Asset Value Per Share ($42,593,130 / 4,199,561 shares outstanding) $10.14
- ------------------------------------------------------------------------------------------------- ---------------
Computation of Offering Price Per Share (100/97 of $10.14)* $10.45
- ------------------------------------------------------------------------------------------------- ---------------
</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
YEAR ENDED AUGUST 31,1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- ------------------------------------------------------------------------------------------------
Interest $ 3,896,792
- ------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------------------------------------------
Investment advisory fee $ 223,677
- --------------------------------------------------------------------------------
Administrative personnel and services fee 64,915
- --------------------------------------------------------------------------------
Custodian fees 12,424
- --------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 29,545
- --------------------------------------------------------------------------------
Directors'/Trustees' fees 4,931
- --------------------------------------------------------------------------------
Auditing fees 11,418
- --------------------------------------------------------------------------------
Legal fees 4,602
- --------------------------------------------------------------------------------
Portfolio accounting fees 52,612
- --------------------------------------------------------------------------------
Share registration costs 13,552
- --------------------------------------------------------------------------------
Printing and postage 10,040
- --------------------------------------------------------------------------------
Insurance premiums 6,347
- --------------------------------------------------------------------------------
Miscellaneous 4,516
- -------------------------------------------------------------------------------- --------------
Total expenses 438,579
- --------------------------------------------------------------------------------
Deduct--Waiver of investment advisory fee 29,824
- -------------------------------------------------------------------------------- --------------
Net expenses 408,755
- ------------------------------------------------------------------------------------------------ ---------------
Net investment income 3,488,037
- ------------------------------------------------------------------------------------------------ ---------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
- ------------------------------------------------------------------------------------------------
Net realized loss on investments (2,290,190)
- ------------------------------------------------------------------------------------------------
Net change in unrealized appreciation of investments 2,760,429
- ------------------------------------------------------------------------------------------------ ---------------
Net realized and unrealized gain on investments 470,239
- ------------------------------------------------------------------------------------------------ ---------------
Change in net assets resulting from operations $ 3,958,276
- ------------------------------------------------------------------------------------------------ ---------------
</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>
YEAR ENDED AUGUST 31,
--------------------------------
<S> <C> <C>
1995 1994
INCREASE (DECREASE) IN NET ASSETS:
- -----------------------------------------------------------------------------
OPERATIONS--
- -----------------------------------------------------------------------------
Net investment income $ 3,488,037 $ 5,257,764
- -----------------------------------------------------------------------------
Net realized loss on investments
($(1,657,595) and $(97,781), respectively, as computed
for federal tax purposes) (2,290,190) (639,236)
- -----------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) of investments 2,760,429 (6,333,912)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from operations 3,958,276 (1,715,384)
- ----------------------------------------------------------------------------- ---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -----------------------------------------------------------------------------
Distributions from net investment income (3,395,460) (5,207,830)
- -----------------------------------------------------------------------------
Distributions from net realized gains -- (286,051)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from distributions to shareholders (3,395,460) (5,493,881)
- ----------------------------------------------------------------------------- ---------------- ----------------
SHARE TRANSACTIONS--
- -----------------------------------------------------------------------------
Proceeds from sale of shares 2,611,463 13,454,908
- -----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 1,153,323 1,317,799
- -----------------------------------------------------------------------------
Cost of shares redeemed (28,785,487) (27,109,534)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets resulting from share transactions (25,020,701) (12,336,827)
- ----------------------------------------------------------------------------- ---------------- ----------------
Change in net assets (24,457,885) (19,546,092)
- -----------------------------------------------------------------------------
NET ASSETS:
- -----------------------------------------------------------------------------
Beginning of period 67,051,015 86,597,107
- ----------------------------------------------------------------------------- ---------------- ----------------
End of period (including undistributed net investment income of $119,210 and
$26,633, respectively) $ 42,593,130 $ 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>
YEAR ENDED AUGUST 31,
----------------------------------------------------------------------------
1995 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 0.71 0.69 0.74 0.79 0.85 0.86 0.69
- -------------------------------------------
Net realized and unrealized gain (loss)
on investments 0.20 (0.89) 0.12 0.30 0.43 (0.11) 0.03
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
Total from investment operations 0.91 (0.20) 0.86 1.09 1.28 0.75 0.72
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
LESS DISTRIBUTIONS
- -------------------------------------------
Distributions from net investment income (0.69) (0.69) (0.74) (0.79) (0.85) (0.86) (0.69)
- -------------------------------------------
Distributions from net realized gain on
investment transactions -- (0.04) (0.01) (0.04) (0.01) (0.02) --
- -------------------------------------------
Distributions in excess of net investment
income -- -- (0.01 (c) -- -- -- --
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
Total distributions (0.69) (0.73) (0.76) (0.83) (0.86) (0.88) (0.69)
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
NET ASSET VALUE, END OF PERIOD $ 10.14 $ 9.92 $ 10.85 $ 10.75 $ 10.49 $ 10.07 $ 10.20
- ------------------------------------------- --------- --------- --------- --------- --------- --------- -----------
TOTAL RETURN(B) 9.60% (1.67%) 8.11% 10.72% 13.27% 7.48% 9.20%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.82% 0.74% 0.68% 0.69% 0.68% 0.69% 0.59%*
- -------------------------------------------
Net investment income 7.02% 6.68% 7.03% 7.51% 8.30% 8.50% 8.64%*
- -------------------------------------------
Expense waiver/reimbursement (d) 0.06% 0.06% 0.11% 0.11% 0.17% 0.45% 0.52%*
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period (000 omitted) $42,593 $67,051 $86,597 $61,646 $48,482 $32,596 $15,753
- -------------------------------------------
Portfolio turnover 5% 26% 61% 36% 20% 32% 42%
- -------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) Distributions in excess of net investment for the fiscal year ended August
31, 1993, were a result of certain book and tax timing differences. These
distributions do not represent a return of capital for federal tax purposes.
(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 CASH RESERVE FUND
PORTFOLIO OF INVESTMENTS
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
PAPER--72.8% ---------------------------------------------------------------------------------
CHEMICALS--2.6%
-----------------------------------------------------------------------------
$ 5,000,000 Du Pont (E.I.) de Nemours & Co., 5.75%, 9/7/1995 $ 4,995,208
----------------------------------------------------------------------------- -----------------
COMPUTERS--5.2%
-----------------------------------------------------------------------------
5,000,000 Electronic Data Systems Corp., 5.72%, 10/16/1995 4,964,250
-----------------------------------------------------------------------------
5,000,000 Hewlett Packard Co., 5.68%, 10/17/1995 4,963,711
----------------------------------------------------------------------------- -----------------
Total 9,927,961
----------------------------------------------------------------------------- -----------------
FINANCE-AUTOMOTIVE--5.2%
-----------------------------------------------------------------------------
5,000,000 Ford Credit Receivables Funding, Inc., 6.10%, 10/2/1995 4,973,736
-----------------------------------------------------------------------------
5,000,000 Toyota Motor Credit Corp., 6.03%, 12/22/1995 4,906,200
----------------------------------------------------------------------------- -----------------
Total 9,879,936
----------------------------------------------------------------------------- -----------------
FINANCE-COMMERCIAL--15.6%
-----------------------------------------------------------------------------
5,000,000 Deere (John) Capital Corp., 5.69%, 9/18/1995 4,986,565
-----------------------------------------------------------------------------
5,000,000 CIT Group Holdings, Inc., 5.95%, 9/5/1995 4,996,694
-----------------------------------------------------------------------------
5,000,000 Transamerica Finance Corp., 6.03%, 10/16/1995 4,962,313
-----------------------------------------------------------------------------
5,000,000 U.S.A.A. Capital Corp., 5.60%, 10/27/1995 4,956,444
-----------------------------------------------------------------------------
5,000,000 Norwest Corp, 5.72%, 10/19/1995 4,961,868
-----------------------------------------------------------------------------
5,000,000 General Electric Capital Corp., 5.75%, 9/19/1995 4,985,626
----------------------------------------------------------------------------- -----------------
Total 29,849,510
----------------------------------------------------------------------------- -----------------
FINANCE-RETAIL--5.2%
-----------------------------------------------------------------------------
5,000,000 Commercial Credit Co., 5.72%, 9/5/1995 4,996,822
-----------------------------------------------------------------------------
5,000,000 American General Finance Corp., 6.00%, 11/1/1995 4,949,167
----------------------------------------------------------------------------- -----------------
Total 9,945,989
----------------------------------------------------------------------------- -----------------
FOOD & BEVERAGE--10.4%
-----------------------------------------------------------------------------
5,000,000 Heinz (H.J.) Co., 5.72%, 9/8/1995 4,994,439
-----------------------------------------------------------------------------
5,000,000 Anheuser-Busch Companies, Inc., 5.69%, 9/11/1995 4,992,097
-----------------------------------------------------------------------------
</TABLE>
TOWER CASH RESERVE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- -----------------
*COMMERCIAL PAPER--CONTINUED
- ----------------------------------------------------------------------------------------------
FOOD & BEVERAGE--CONTINUED
-----------------------------------------------------------------------------
$ 5,000,000 PepsiCo, Inc., 5.70%, 9/22/1995 $ 4,983,375
-----------------------------------------------------------------------------
5,000,000 Cargill, Inc., 5.70%, 9/5/1995 4,996,834
----------------------------------------------------------------------------- -----------------
Total 19,966,745
----------------------------------------------------------------------------- -----------------
FUNDING CORPORATION--10.4%
-----------------------------------------------------------------------------
5,000,000 Beta Finance, Inc., 5.70%, 9/8/1995 4,994,458
-----------------------------------------------------------------------------
5,000,000 Paccar Financial Corp., 5.80%, 9/21/1995 4,983,889
-----------------------------------------------------------------------------
5,000,000 CIESCO, Inc., 5.70%, 9/22/1995 4,983,375
-----------------------------------------------------------------------------
5,000,000 Falcon Asset Securitization Corp., 5.70%, 9/14/1995 4,989,708
----------------------------------------------------------------------------- -----------------
Total 19,951,430
----------------------------------------------------------------------------- -----------------
HEALTH CARE--2.6%
-----------------------------------------------------------------------------
5,000,000 Abbott Laboratories, 5.68%, 9/21/1995 4,984,222
----------------------------------------------------------------------------- -----------------
OIL & OIL FINANCE--5.2%
-----------------------------------------------------------------------------
5,000,000 Chevron Oil Finance Co., (Guaranteed by Chevron Corp.) 5.68%, 9/1/1995 5,000,000
-----------------------------------------------------------------------------
5,000,000 Texaco, Inc., 5.71%, 10/4/1995 4,973,829
----------------------------------------------------------------------------- -----------------
Total 9,973,829
----------------------------------------------------------------------------- -----------------
TELECOMMUNICATIONS--7.8%
-----------------------------------------------------------------------------
5,000,000 Southwestern Bell Capital Corp., 5.80%, 9/20/1995 4,984,694
-----------------------------------------------------------------------------
5,000,000 BellSouth Telecommunications, Inc., 5.69%, 9/13/1995 4,990,517
-----------------------------------------------------------------------------
5,000,000 AT&T Corp., 5.61%, 12/12/1995 4,920,525
----------------------------------------------------------------------------- -----------------
Total 14,895,736
----------------------------------------------------------------------------- -----------------
TOBACCO--2.6%
-----------------------------------------------------------------------------
5,000,000 Philip Morris Cos., Inc., 5.70%, 9/20/1995 4,984,958
----------------------------------------------------------------------------- -----------------
TOTAL COMMERCIAL PAPER 139,355,524
----------------------------------------------------------------------------- -----------------
U.S. GOVERNMENT AGENCIES--20.8%
- ----------------------------------------------------------------------------------------------
15,000,000 Federal Home Loan Bank System, 5.55%--6.07%,
11/6/1995-12/29/1995 14,749,826
-----------------------------------------------------------------------------
</TABLE>
TOWER CASH RESERVE FUND
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- -----------------
U.S. GOVERNMENT AGENCIES--CONTINUED
- ----------------------------------------------------------------------------------------------
$ 10,000,000 Federal Home Loan Mortgage Corp., 5.71%,
9/15/1995-9/18/1995 $ 9,975,415
-----------------------------------------------------------------------------
15,000,000 Federal National Mortgage Association, 5.77%-5.84%,
9/11/1995-9/12/1995 14,975,007
----------------------------------------------------------------------------- -----------------
TOTAL U.S. GOVERNMENT AGENCIES 39,700,248
----------------------------------------------------------------------------- -----------------
**REPURCHASE AGREEMENT--6.8%
- ----------------------------------------------------------------------------------------------
12,973,000 State Street Bank and Trust Co., 5.78%, dated 8/31/1995, due
9/1/1995 12,973,000
----------------------------------------------------------------------------- -----------------
TOTAL INVESTMENTS, AT AMORTIZED COST (A) $ 192,028,772
----------------------------------------------------------------------------- -----------------
</TABLE>
* Each issue shows the rate of discount at the time of purchase.
** The repurchase agreement is fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(a) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($191,242,362) at August 31, 1995.
(See Notes which are an integral part of the Financial Statements)
TOWER CASH RESERVE FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------
Investments, at amortized cost and value $ 192,028,772
- -----------------------------------------------------------------------------------------------
Income receivable 2,083
- ----------------------------------------------------------------------------------------------- -----------------
Total assets 192,030,855
- -----------------------------------------------------------------------------------------------
LIABILITIES:
- ---------------------------------------------------------------------------------
Income distribution payable $ 702,284
- ---------------------------------------------------------------------------------
Payable to bank 3,626
- ---------------------------------------------------------------------------------
Accrued expenses 82,583
- --------------------------------------------------------------------------------- ------------
Total liabilities 788,493
- ----------------------------------------------------------------------------------------------- -----------------
Net Assets for 191,242,362 shares outstanding $ 191,242,362
- ----------------------------------------------------------------------------------------------- -----------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- -----------------------------------------------------------------------------------------------
$191,242,362 / 191,242,362 shares outstanding $1.00
- ----------------------------------------------------------------------------------------------- -----------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TOWER CASH RESERVE FUND
STATEMENT OF OPERATIONS
YEAR ENDED AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- -------------------------------------------------------------------------------------------------
Interest $ 11,673,867
- -------------------------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------------------------------------------------
Investment advisory fee $ 814,726
- -----------------------------------------------------------------------------------
Administrative personnel and services fees 265,774
- -----------------------------------------------------------------------------------
Custodian fees 45,760
- -----------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 21,015
- -----------------------------------------------------------------------------------
Directors'/Trustees' fees 11,023
- -----------------------------------------------------------------------------------
Auditing fees 18,672
- -----------------------------------------------------------------------------------
Legal fees 673
- -----------------------------------------------------------------------------------
Portfolio accounting fees 44,916
- -----------------------------------------------------------------------------------
Distribution services fee 509,203
- -----------------------------------------------------------------------------------
Share registration costs 12,690
- -----------------------------------------------------------------------------------
Printing and postage 1,867
- -----------------------------------------------------------------------------------
Insurance premiums 7,335
- -----------------------------------------------------------------------------------
Miscellaneous 6,748
- ----------------------------------------------------------------------------------- ------------
Total expenses 1,760,402
- ------------------------------------------------------------------------------------------------- ---------------
Net investment income $ 9,913,465
- ------------------------------------------------------------------------------------------------- ---------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TOWER CASH RESERVE FUND
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
-------------------------------------
<S> <C> <C>
1995 1994
INCREASE (DECREASE) IN NET ASSETS:
- --------------------------------------------------------------------------
OPERATIONS--
- --------------------------------------------------------------------------
Net investment income $ 9,913,465 $ 4,623,218
- -------------------------------------------------------------------------- ------------------ ------------------
DISTRIBUTIONS TO SHAREHOLDERS--
- --------------------------------------------------------------------------
Distributions from net investment income (9,913,465) (4,623,218)
- -------------------------------------------------------------------------- ------------------ ------------------
SHARE TRANSACTIONS--
- --------------------------------------------------------------------------
Proceeds from sale of shares 372,472,324 356,956,748
- --------------------------------------------------------------------------
Net asset value of shares issued to shareholders in
payment of distributions declared 1,342,657 616,017
- --------------------------------------------------------------------------
Cost of shares redeemed (366,494,602) (327,702,458)
- -------------------------------------------------------------------------- ------------------ ------------------
Change in net assets resulting from share transactions 7,320,379 29,870,307
- -------------------------------------------------------------------------- ------------------ ------------------
Change in net assets 7,320,379 29,870,307
- --------------------------------------------------------------------------
NET ASSETS:
- --------------------------------------------------------------------------
Beginning of period 183,921,983 154,051,676
- -------------------------------------------------------------------------- ------------------ ------------------
End of period $ 191,242,362 $ 183,921,983
- -------------------------------------------------------------------------- ------------------ ------------------
(See Notes which are an integral part of the Financial Statements)
</TABLE>
TOWER CASH RESERVE FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
YEAR ENDED AUGUST 31,
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1995 1994 1993 1992 1991 1990 1989(A)
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 0.05 0.03 0.02 0.04 0.06 0.08 0.07
- -------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------
Distributions from net investment income (0.05) (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) 4.97% 2.73% 2.49% 3.75% 6.45% 8.02% 6.86%
- -------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------
Expenses 0.86% 0.91% 0.89% 0.89% 0.80% 0.77% 0.75%*
- -------------------------------------------
Net investment income 4.87% 2.71% 2.48% 3.79% 6.30% 7.71% 8.68%*
- -------------------------------------------
Expense waiver/reimbursement (c) -- -- -- 0.03% -- 0.01% --
- -------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------
Net assets, end of period (000 omitted) $191,242 $183,922 $154,052 $162,038 $249,822 $300,668 $169,303
- -------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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)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
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- --------------- ----------------------------------------------------------------------------- -----------------
U.S. TREASURY BILLS--54.5%
- ----------------------------------------------------------------------------------------------
$ 64,000,000 9/7/1995-2/1/1996 $ 63,542,610
----------------------------------------------------------------------------- -----------------
*REPURCHASE AGREEMENTS--45.7%
- ----------------------------------------------------------------------------------------------
26,250,000 HSBC Securities, Inc., 5.77%, dated 8/31/1995, due 9/1/1995 26,250,000
-----------------------------------------------------------------------------
27,000,000 State Street Bank and Trust Co., 5.78%, dated 8/31/1995, due
9/1/1995 27,000,000
----------------------------------------------------------------------------- -----------------
TOTAL REPURCHASE AGREEMENTS 53,250,000
----------------------------------------------------------------------------- -----------------
TOTAL INVESTMENTS, AT AMORTIZED COST (A) $ 116,792,610
----------------------------------------------------------------------------- -----------------
</TABLE>
* The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(a) Also represents cost for federal tax purposes.
Note: The categories of investments are shown as a percentage of net assets
($116,489,072) at August 31, 1995.
(See Notes which are an integral part of the Financial Statements)
TOWER U.S. TREASURY MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------
Investment in repurchase agreements $ 53,250,000
- -----------------------------------------------------------------------------
Investment in securities 63,542,610
- ----------------------------------------------------------------------------- ---------------
Total investments, at amortized cost and value $ 116,792,610
- ----------------------------------------------------------------------------------------------
Income receivable 8,542
- ----------------------------------------------------------------------------------------------
Deferred expenses 945
- ---------------------------------------------------------------------------------------------- -----------------
Total assets 116,802,097
- ----------------------------------------------------------------------------------------------
LIABILITIES:
- ----------------------------------------------------------------------------------------------
Income distribution payable 299,175
- -----------------------------------------------------------------------------
Accrued expenses 12,596
- -----------------------------------------------------------------------------
Payable to bank 1,254
- ----------------------------------------------------------------------------- ---------------
Total liabilities 313,025
- ---------------------------------------------------------------------------------------------- -----------------
Net Assets for 116,489,072 shares outstanding $ 116,489,072
- ---------------------------------------------------------------------------------------------- -----------------
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PROCEEDS PER SHARE:
- ----------------------------------------------------------------------------------------------
$116,489,072 / 116,489,072 shares 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
YEAR ENDED AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
- --------------------------------------------------------------------------------------------------
Interest $ 4,791,506
- --------------------------------------------------------------------------------------------------
EXPENSES:
- --------------------------------------------------------------------------------------------------
Investment advisory fee $ 341,980
- ------------------------------------------------------------------------------------
Administrative personnel and services fee 111,430
- ------------------------------------------------------------------------------------
Custodian fees 18,490
- ------------------------------------------------------------------------------------
Transfer and dividend disbursing agent fees and expenses 22,670
- ------------------------------------------------------------------------------------
Directors'/Trustees' fees 2,836
- ------------------------------------------------------------------------------------
Auditing fees 12,448
- ------------------------------------------------------------------------------------
Legal fees 4,877
- ------------------------------------------------------------------------------------
Portfolio accounting fees 34,534
- ------------------------------------------------------------------------------------
Share registration costs 18,203
- ------------------------------------------------------------------------------------
Printing and postage 5,078
- ------------------------------------------------------------------------------------
Insurance premiums 5,013
- ------------------------------------------------------------------------------------
Miscellaneous 3,478
- ------------------------------------------------------------------------------------ ------------
Total expenses 581,037
- ------------------------------------------------------------------------------------
Deduct-Waiver of investment advisory fee 188,089
- ------------------------------------------------------------------------------------ ------------
Net expenses 392,948
- -------------------------------------------------------------------------------------------------- --------------
Net investment income $ 4,398,558
- -------------------------------------------------------------------------------------------------- --------------
</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>
YEAR ENDED AUGUST 31,
-------------------------------------
<S> <C> <C>
1995 1994
INCREASE (DECREASE) IN NET ASSETS:
- ----------------------------------------------------------------------------
OPERATIONS--
- ----------------------------------------------------------------------------
Net investment income $ 4,398,558 $ 1,171,203
- ---------------------------------------------------------------------------- ------------------ ----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- ----------------------------------------------------------------------------
Distributions from net investment income (4,398,558) (1,171,203)
- ---------------------------------------------------------------------------- ------------------ ----------------
SHARE TRANSACTIONS--
- ----------------------------------------------------------------------------
Proceeds from sale of shares 307,600,098 140,396,462
- ----------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of distributions
declared 992,817 66,203
- ----------------------------------------------------------------------------
Cost of shares redeemed (237,126,184) (129,435,476)
- ---------------------------------------------------------------------------- ------------------ ----------------
Change in net assets resulting from share transactions 71,466,731 11,027,189
- ---------------------------------------------------------------------------- ------------------ ----------------
Change in net assets 71,466,731 11,027,189
- ----------------------------------------------------------------------------
NET ASSETS:
- ----------------------------------------------------------------------------
Beginning of period 45,022,341 33,995,152
- ---------------------------------------------------------------------------- ------------------ ----------------
End of period $ 116,489,072 $ 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>
YEAR ENDED AUGUST 31,
------------------------------
<S> <C> <C> <C>
1995 1994 1993(A)
NET ASSET VALUE, BEGINNING OF PERIOD $1.00 $1.00 $1.00
- -------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------
Net investment income 0.05 0.03 .002
- -------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------
Distributions from net investment income (0.05) (0.03) (.002)
- ------------------------------------------------------------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00
- ------------------------------------------------------------- --------- --------- ---------
TOTAL RETURN (B) 5.15% 2.85% 0.34%
- -------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------
Expenses 0.46% 0.66% 0.50%*
- -------------------------------------------------------------
Net investment income 5.15% 2.85% 2.80%*
- -------------------------------------------------------------
Expense waiver/reimbursement (c) 0.22% 0.23% 0.32%*
- -------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------
Net assets, end of period (000 omitted) $116,489 $45,022
$33,995
- -------------------------------------------------------------
</TABLE>
* Computed on an annualized basis.
(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) 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
AUGUST 31, 1995
- --------------------------------------------------------------------------------
(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 six portfolios (individually referred to as the "Fund", or
collectively as the "Funds") which are presented herein:
<TABLE>
<CAPTION>
PORTFOLIO NAME DIVERSIFICATION
<S> <C>
Tower Capital Appreciation Fund ("Capital Appreciation") diversified
Tower Total Return Bond Fund ("Total Return Bond") diversified
Tower Louisiana Municipal Income Fund ("Louisiana Municipal Income") non-diversified
Tower U.S. Government Income Fund ("U.S. Government Income") diversified
Tower Cash Reserve Fund ("Cash Reserve") diversified
Tower U.S Treasury Money Market Fund ("U.S. Treasury") 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--Short-term securities with remaining maturities of
sixty days or less at the time of purchase may be valued at amortized cost,
which approximates fair market value. All other securities are valued at
prices provided by an independent pricing service. Cash Reserve and U.S.
Treasury Money Market Fund's 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 a 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 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 Funds' adviser to be
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
creditworthy pursuant to guidelines and/or standards reviewed or
established by the Board of Trustees (the "Trustees").
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
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").
FEDERAL TAXES--It is the Funds' 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, 1995, Total Return Bond, Louisiana Municipal Income and U.S.
Government Income, for federal tax purposes, had a capital loss
carryforward, as noted below, 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.
<TABLE>
<CAPTION>
FUND TOTAL TAX LOSS CARRYFORWARD
<S> <C>
Total Return Bond $ 1,083,614
Louisiana Municipal Income $ 86,087
U.S. Government Income $ 1,755,376
</TABLE>
Pursuant to the Code, such capital loss carryforwards will expire as follows:
<TABLE>
<CAPTION>
EXPIRATION AMOUNT
<S> <C> <C> <C>
TOTAL RETURN LOUISIANA U.S. GOVERNMENT
EXPIRATION YEAR BOND MUNICIPAL INCOME INCOME
2002 $ 47,834 $ -- $ 97,781
2003 1,035,780 86,087 1,657,595
</TABLE>
Additionally, net capital losses, as noted below, attributable to security
transactions incurred after October 31, 1994 are treated as arising on the first
day of the Funds' next taxable year (September 1, 1995).
<TABLE>
<CAPTION>
FUND TOTAL TAX LOSS PUSHFORWARD
<S> <C>
Total Return Bond $ 297,245
Louisiana Municipal Income $ 558,140
U.S. Government Income $ 1,292,425
</TABLE>
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
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
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 over a period of five years
from each Fund's commencement date.
OTHER--Investment transactions are accounted for on the trade date.
(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 August
31, 1995, Cash Reserve and U.S. Treasury Funds' capital paid-in aggregated
$191,242,362 and $116,489,072, respectively.
Transactions in shares were as follows:
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
CASH RESERVE U.S. TREASURY
--------------------------------- --------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1995 AUGUST 31, 1994
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 372,472,324 356,956,748 307,600,098 140,396,462
- ---------------------------------------
Shares issued to shareholders in pay-
ment of distributions declared 1,342,657 616,017 992,817 66,203
- ---------------------------------------
Shares redeemed (366,494,602) (327,702,458) (237,126,184) (129,435,476)
- --------------------------------------- ---------------- ---------------- ---------------- ----------------
Net change resulting from share
transactions 7,320,379 29,870,307 71,466,731 11,027,189
- --------------------------------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
FLUCTUATING NET ASSET VALUE FUNDS
<TABLE>
<CAPTION>
CAPITAL APPRECIATION TOTAL RETURN BOND
--------------------------------- --------------------------------
<S> <C> <C> <C> <C>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1995 AUGUST 31, 1994
--------------- --------------- --------------- ---------------
Shares sold 1,095,340 1,813,334 1,340,601 2,648,699
- ---------------------------------------
Shares issued to shareholders in pay-
ment of distributions declared 251,073 774,171 364,803 355,310
- ---------------------------------------
Shares redeemed (2,437,091) (2,161,249) (2,275,944) (1,587,686)
- --------------------------------------- ---------------- ---------------- ---------------- ----------------
Net change resulting from share
transactions (1,090,678) 426,256 (570,540) 1,416,323
- --------------------------------------- ---------------- ---------------- ---------------- ----------------
</TABLE>
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
LOUISIANA MUNICIPAL INCOME U.S. GOVERNMENT INCOME
--------------------------------- --------------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
AUGUST 31, 1995 AUGUST 31, 1994 AUGUST 31, 1995 AUGUST 31, 1994
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold 672,074 1,535,457 265,325 1,291,084
- ---------------------------------------
Shares issued to shareholders in pay-
ment of distributions declared 234,129 247,317 117,298 127,820
- ---------------------------------------
Shares redeemed (2,118,527) (1,823,703) (2,944,932) (2,640,253)
- --------------------------------------- ---------------- ---------------- ---------------- ----------------
Net change resulting from share
transactions (1,212,324) (40,929) (2,562,309) (1,221,349)
- --------------------------------------- ---------------- ---------------- ---------------- ----------------
</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>
FUND ANNUAL RATE
<S> <C>
Capital Appreciation 0.75%
Total Return Bond 0.70%
Louisiana Municipal Income 0.45%
U.S. Government Income 0.45%
Cash Reserve 0.40%
U.S. Treasury 0.40%
</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. This 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., the principal distributor, from
the net assets of the Fund to finance activities intended to result in the sale
of each 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's shares,
annually, to reimburse Federated Securities Corp ("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.
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
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. This fee is based on the size, type, and number of
accounts and transactions made by shareholders.
PORTFOLIO ACCOUNTING FEES--FServ maintains the Funds' accounting records for
which it receives a fee. The fee is based on the level of each Fund's average
daily 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 daily net
assets for the period, plus out-of-pocket expenses.
ORGANIZATIONAL EXPENSES--Organizational expenses were initially borne by FAS.
The Funds have agreed to reimburse FAS for the organizational expenses during
the five year periods following September 15, 1992 and June 1, 1993 (the dates
Total Return Bond and U.S. Treasury, respectively, became effective). For the
year ended August 31, 1995, the Funds paid the following pursuant to this
agreement.
<TABLE>
<CAPTION>
EXPENSES OF AMOUNT REIMBURSED TO FAS
ORGANIZING FOR THE YEAR ENDED
FUND THE FUNDS AUGUST 31, 1995
----------- -----------------------
<S> <C> <C>
Total Return Bond $ 50,000 $ 2,616
U.S. Treasury $ 30,000 $ 2,018
</TABLE>
GENERAL--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
period ended
August 31, 1995, were as follows:
<TABLE>
<CAPTION>
FUND PURCHASES SALES
- ---- --------- -----
<S> <C> <C>
Capital Appreciation $ 91,331,571 $ 111,236,321
Total Return Bond $ 58,103,927 $ 58,185,884
Louisiana Municipal Income $ 15,035,399 $ 24,797,121
U.S. Government Income $ 2,503,929 $ 26,925,297
</TABLE>
(6) CONCENTRATION OF CREDIT RISK
Since Louisiana Municipal Income 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
TOWER MUTUAL FUNDS
- --------------------------------------------------------------------------------
with such factors, at August 31, 1995, 85.4% of the securities in the portfolio
of investments were 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 from any one
institution or agency did not exceed 17.7% of total investments.
REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
To the Trustees and Shareholders of
TOWER MUTUAL FUNDS:
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Tower Mutual Funds (comprising, respectively,
Tower Capital Appreciation Fund, Tower Total Return Bond Fund, Tower Louisiana
Municipal Income Fund, Tower U.S. Government Income Fund, Tower Cash Reserve
Fund and Tower U.S. Treasury Money Market Fund) as of August 31, 1995, and the
related statements of operations for the year then ended, and the statements of
changes in net assets and financial highlights for the periods presented
therein. These financial statements and financial highlights are the
responsibility of the Trust's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1995, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective portfolios of the Tower Mutual Funds, as identifed above, at
August 31, 1995, the results of their operations for the year then ended, and
the changes in their net assets and financial highlights for the periods
presented therein, in conformity with generally accepted accounting principles.
ERNST & YOUNG LLP
Pittsburgh, Pennsylvania
October 6, 1995
TRUSTEES OFFICERS
- --------------------------------------------------------------------------------
<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
</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.
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.
APPENDIX
A 1. The graphic presentation here displayed consists of a legend in the
bottom center indicating the components of the corresponding line graph. Tower
Capital Appreciation Fund is represented by a broken line. The Standard and
Poor's 500 Index is represented by a solid line. The line graph is a visual
representation of a comparison of change in value of a hypothetical $10,000
purchase in the Fundand Standard and Poor's 500 Index. The "y" axis reflects
the cost of the investment. The "x" axis reflects computation periods from
October 14, 1988 (start of performance) to August 31, 1995. The right margin
reflects the ending value of the hypothetical investment in the Fund as compared
to Standard and Poor's 500 Index; the ending values are $23,139 and $25,597,
respectively. There is also a legend below the graphic presentation which
indicates the Average Annual Total Return for the 1 year and 5 year periods, as
well as the Average Annual Total Return from the inception date of the Fund,
October 14, 1988; the Average Annual Total Returns are 17.07%, 12.89%, and
13.23%, respectively.
A 2. The graphic presentation here displayed consists of a legend in the
bottom center indicating the components of the corresponding line graph. Tower
Total Return Bond Fund is represented by a broken line. The Salomon Brothers
Broad Investment Grade Bond Index is represented by a solid line. The line
graph is a visual representation of a comparison of change in value of a
hypothetical $10,000 purchase in the Fundand Salomon Brothers Brothers Broad
Investment Grade Bond Index. The "y" axis reflects the cost of the investment.
The "x" axis reflects computation periods from November 2, 1992 (start of
performance) to August 31, 1995. The right margin reflects the ending value of
the hypothetical investment in the Fund as compared to Salomon Brothers Broad
Investment
Grade Bond Index; the ending values are $11,353 and $12,212, respectively.
There is also a legend below the graphic presentation which indicates the
Average Annual Total Return for the 1 year period, as well as the Average Annual
Total Return from the inception date of the Fund, November 2, 1992; the Average
Annual Total Returns are 6.86%, and 5.16%, respectively.
A 3. The graphic presentation here displayed consists of a legend in the
bottom center indicating the components of the corresponding line graph. Tower
Louisiana Municipal Income Fund is represented by a broken line. The Lehman Ten
Year Insured Index is represented by a solid line. The line graph is a visual
representation of a comparison of change in value of a hypothetical $10,000
purchase in the Fund and the Lehman Ten Year Insured Index. The "y" axis
reflects the cost of the investment. The "x" axis reflects computation periods
from October 14, 1988 (start of performance) to August 31, 1995. The right
margin reflects the ending value of the hypothetical investment in the Fund as
compared to the Lehman Ten Year Insured Index; the ending values are $15,899
and $17,764, respectively. There is also a legend below the graphic
presentation which indicates the Average Annual Total Return for the 1 year and
5 year periods, as well as the Average Annual Total Return from the inception
date of the Fund, October 14, 1988; the Average Annual Total Returns are 5.00%,
7.78%, and 7.21%, respectively.
A 4. The graphic presentation here displayed consists of a legend in the
bottom center indicating the components of the corresponding line graph. Tower
U.S. Government Income Fund is represented by a broken line. The Salomon
Brothers Medium Term Broad Index is represented by a solid line. The line
graph is a visual representation of a comparison of change in value of a
hypothetical $10,000 purchase in the Fund and the Salomon Brothers Medium Term
Broad Index. The "y" axis reflects the cost of the investment. The "x" axis
reflects computation periods from October 14, 1988 (start of performance) to
August 31, 1995. The right margin reflects the ending value of the hypothetical
investment in the Fund as compared to the Salomon Brothers Medium Term Broad
Index; the ending values are $16,402 and $18,261, respectively. There is also a
legend below the graphic presentation which indicates the Average Annual Total
Return for the 1 year and 5 year periods, as well as the Average Annual Total
Return from the inception date of the Fund, October 14, 1988; the Average Annual
