TOWER
MUTUAL FUNDS
TOWER CAPITAL APPRECIATION FUND
TOWER TOTAL RETURN BOND FUND
TOWER LOUISIANA MUNICIPAL INCOME FUND
TOWER U.S. GOVERNMENT INCOME FUND
TOWER CASH RESERVE FUND
TOWER U.S. TREASURY MONEY MARKET FUND
TOWER COMBINED
SEMI-ANNUAL REPORT
FEBRUARY 29, 1996
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TABLE OF CONTENTS
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PRESIDENT'S MESSAGE......................................................... 1
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INVESTMENT REVIEWS.......................................................... 2
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PORTFOLIOS OF INVESTMENTS................................................... 8
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STATEMENTS OF ASSETS AND LIABILITIES........................................ 24
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STATEMENTS OF OPERATIONS.................................................... 26
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STATEMENTS OF CHANGES IN NET ASSETS......................................... 28
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FINANCIAL HIGHLIGHTS........................................................ 30
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NOTES TO FINANCIAL STATEMENTS............................................... 32
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- - 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.
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PRESIDENT'S MESSAGE
Dear Shareholder:
I am pleased to present the Semi-Annual Report to Shareholders for the Tower
Mutual Funds. The report covers the activity of the Tower Mutual Funds over the
six-month period ended February 29, 1996. It 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 six-month
reporting period:
- As a favorable stock market environment continued during the reporting
period, TOWER CAPITAL APPRECIATION FUND delivered a strong performance.
The fund's portfolio of stocks paid dividends of $0.10 per share and
capital gains of $0.84 per share. Its net asset value increased from
$16.09 on the first day of the period to $17.39 on the last day of the
period. The fund delivered a total return of 14.27% based on net asset
value*. At the end of the reporting period, net assets stood at more than
$161 million.
- The diversified portfolio of TOWER TOTAL RETURN BOND FUND paid dividends
of $0.29 per share, while its net asset value increased from $10.05 on the
first day of the period to $10.12 on the last day of the period. The fund
produced total return of 3.57% based on net asset value.* At the end of
the reporting period, net assets stood at more than $70 million.
- TOWER LOUISIANA MUNICIPAL INCOME FUND paid double-tax-free** dividends of
$0.30 per share. Its net asset value increased from $10.99 on the first
day of the period to $11.19 on the last day of the period. The fund's
total return was 4.60% based on net asset value.* At the end of the
reporting period, net assets stood at $66.9 million.
- TOWER U.S. GOVERNMENT INCOME FUND paid dividends of $0.36 per share, while
producing a total return of 3.43% based on net asset value.* At the end of
the reporting period, its net asset value was $10.13, compared to $10.14
on the first day of the period. At the end of the reporting period, net
assets stood at $41.6 million.
- TOWER CASH RESERVE FUND paid dividends of $0.02 per share. At the end of
the period, net assets stood at more than $190 million.
- TOWER U.S. TREASURY MONEY MARKET FUND paid dividends of $0.03 per share.
At the end of the period, net assets stood at more than $116 million.
Thank you for your confidence in the Tower Mutual Funds. We are committed to
providing you with the highest level of service as we keep you up-to-date on
your investment progress.
Sincerely,
/s/ Edward C. Gonzales
Edward C. Gonzales
President
April 15, 1996
* 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% sales charge. Please refer to the investment
review for the sales charge performance figures.
** Income may be subject to the federal alternative minimum tax.
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INVESTMENT REVIEWS TOWER MUTUAL FUNDS
Six-month Period Ended February 29, 1996
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TOWER CAPITAL APPRECIATION FUND
Q In a favorable environment that has propelled the stock market to new
heights, how did Tower Capital Appreciation Fund perform over the six-month
period ended February 29, 1996?
A The fund experienced a total rate of return of 14.27% on a no-load basis
and 10.83% on a load basis.* The fund compared favorably to stock mutual
funds with growth and income investment objectives according to Lipper
Analytical Services, Inc.
Q The fund is broadly diversified among different sectors that make up the
Standard & Poor's 500 Stock Index.** Can you briefly review the process you
use to select the most attractive stocks in each sector?
A We use our multifactor quantitative model to select the best stocks in each
industry group on a continual basis. The process uses ever changing current
input from fundamental sources.
Q As we end the first quarter of 1996, what is your outlook for the market?
A We remain positive in terms of our outlook for the stock market. We focus
on the long-term and our goal is to provide fund returns that are 2% to 3%
better than the broad market index over time, coupled with risk that is
very close to market risk. Our policy of broad diversification among
individual issues paired with a sector neutral policy has paid off with
good performance over time.
* 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.
** Standard & Poor's 500 Stock Index is a composite index of common stocks in
industry, transportation, and financial and public utility companies that can
be used to compare to the total returns of funds whose portfolios are
invested primarily in common stocks. This index is unmanaged, and actual
investments cannot be made in an index.
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TOWER TOTAL RETURN BOND FUND
Q Overall, how did the bond market perform during the six-month period ended
February 29, 1996?
A The fixed income markets turned in a favorable performance for the
six-month period ended February 29, 1996. Investors enjoyed a modest rise
in bond prices and solid investment income for the period. The market
overall turned in a 4.13% total return for the six-month period as
measured by the Lehman Brothers Aggregate Bond Index.*
Q How did Tower Total Return Bond Fund perform over the same period?
A The Tower Total Return Bond Fund enjoyed positive performance during the
period. The fund produced a total return of 3.57% during the period on a
no-load basis and 0.47% on a load basis.**
Q In the fund's previous report, you discussed the fund's aggressive
positioning in long-term, high-yielding Treasuries to take advantage of
falling 1995 interest rates. Did that strategy remain in place throughout
the reporting period?
A The fund was aggressively positioned in long-term fixed income securities
throughout most of the period to take advantage of declining interest
rates. In mid February, 1996, when the direction of interest rates reversed
themselves and began to move higher, fund's manager moved to shorten the
average maturity of the portfolio and reduce the fund's aggressive posture.
Q Based on your outlook for the remainder of 1996, what is your strategy in
terms of portfolio mix and maturity?
A Our strategy for the balance of 1996 will be to maintain our current
portfolio mix which is weighted heavily toward Treasuries and mortgage pass
through securities. We will seek portfolio duration and average maturity
similar to that of the market overall.
* Lehman Brothers Aggregate Bond Index is a total return index measuring both
the capital price changes and income provided by the underlying universe of
securities, weighted by market value outstanding. This index is unmanaged,
and actual investments cannot be made in an index.
** 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.
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TOWER LOUISIANA MUNICIPAL INCOME FUND
Q Can you recap the interest rate environment over the six-month period ended
February 29, 1996?
A Municipal tax exempt interest rates generally followed that of the Treasury
markets during the six-month period ended February 29, 1996. Interest rates
moved lower throughout the end of 1995 and into January of 1996. In
February 1996, the markets turned sour and interest rates began to rise sharply.
Q How did Tower Louisiana Municipal Income Fund perform?
A During the reporting period, Tower Louisiana Municipal Income Fund
performed well. The fund experienced a total rate of return of 4.60% during
this period on a no-load basis and 1.46% on a load basis,* despite the
market turmoil in February 1996.
Q The fund is the only Louisiana municipal bond fund that has always focused
exclusively on AAA-rated bonds. What did this quality focus mean to
shareholders during the period?
A The focus on quality helped the fund to maintain greater stability and
consequently less fluctuation in its net asset value.
Q Based on your outlook for the remainder of 1996, how are you positioning
the fund's portfolio in terms of maturity and portfolio composition?
A We are positioning the fund to take advantage of a stable interest rate
environment. We are anticipating interest rates will be flat to possibly
slightly lower for the balance of 1996. In this environment, price
appreciation is unlikely and portfolio income is paramount. We believe higher
yielding callable securities will provide better return for the foreseeable
future. Portfolio average maturity will remain in the 12-14 year range.
* 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.
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TOWER U.S. GOVERNMENT INCOME FUND
Q Overall, how did the long-term mortgage market perform during the six-month
period ended February 29, 1996?
A Mortgages performed consistently overall with the markets during the
six-month period ended February 29, 1996. The fixed income markets overall
returned 4.13% for the period while mortgages returned 4.14%.
Q How did Tower U.S. Government Income Fund perform in this environment over
the same period?
A Tower U.S. Government Income Fund performed well in this environment. The
intermediate-term nature of the fund provided acceptable returns while
possessing less risk than that of long-term funds. During the six-month
period ended February 29, 1996, the fund experienced a total rate of return of
3.43% on a no-load basis and 0.36% on a load basis.*
Q What is your outlook for the remainder of 1996?
A We expect interest rates to be generally flat to slightly lower for the
balance of 1996. During this period mortgages should be among the best
performing assets.
Q In response, how are you positioning the fund's portfolio in terms of
maturity and portfolio composition?
A We are currently neutral to the intermediate-term fixed income markets in
duration and average maturity. We continue to overweight the mortgage
sector of the market in anticipation of a market where coupon income will
be the major source of return.
* 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.
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TOWER CASH RESERVE FUND
Q Can you review the short-term interest rate environment during the
six-month reporting period?
A At the beginning of the six-month period, the federal fund target rate was
5.75%. As economic data indicated a weaker economy, the Federal Reserve
Board (the "Fed") lowered the rate by 25 basis points on December 19, 1995
and January 31, 1996.
Q How did the yield of Tower Cash Reserve Fund respond?
A As interest rates dropped during the six-month period ended February 29,
1996, reinvestments dropped the fund's 7-day net yield from 5.01% at the
beginning of the period to 4.49% at the end of the period.*
Q What factors guided the fund's portfolio mix and average maturity during
the period?
Anticipating possible interest rate cuts by the Fed, longer maturities were
sought to increase the fund's average maturity beyond 50 days. Due to a
shortage of commercial paper beyond 30 days, an increase in the purchase of
U.S. government agency discount notes was required.
Q Based on your outlook for interest rates for the rest of 1996, what is your
strategy going forward?
A Our strategy for the rest of 1996 is based on interest rates continuing in
a trading range with the Fed on the sideline. We anticipate that fund
average maturity will be maintained between 40 to 50 days with a high
percentage of investments in 60 to 90 day commercial paper.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary.
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TOWER U.S. TREASURY MONEY MARKET FUND
Q What was the short-term interest rate environment like during the six-month
reporting period?
A The short-term interest rate environment during the six-month reporting
period was characterized by lower rates based on the economic data. The Fed
responded to this data by cutting the federal fund target rate twice to the
current 5.25%.
Q How did the yield of Tower U.S. Treasury Money Market Fund respond?
A Due to the increase in interest rate cuts by the Fed, reinvestments were in
lower yielding securities resulting in the fund's 7-day net yield dropping
from 5.26% at the beginning of the period to 4.80% at the end of the
period.*
Q What factors guided the fund's mix of direct obligations and repurchase
agreements as well as its average maturity during the period?
A With economic pressures indicating that interest rates would be lower in
the future, the average maturity was increased to a range of 35 to 40 days
and a higher percentage was invested in treasury bills rather than
repurchase agreements.
Q Based on your outlook for interest rates for the rest of 1996, what is your
strategy going forward?
A Our strategy for the rest of 1996 is based on interest rates being in a
range which reflects minimal inflation and slow steady growth in the
economy. With the Fed on hold, we anticipate that the average maturity will
be maintained between 30-35 days with 45% to 50% in repurchase agreements.
* Performance quoted represents past performance and is not indicative of future
results. Yield will vary.
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PORTFOLIO OF INVESTMENTS TOWER MUTUAL FUNDS
February 29, 1996 (unaudited)
TOWER CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
<C> <S> <C>
SHARES VALUE
COMMON STOCKS--97.4%
Aerospace & Defense--1.0%
29,500 Rockwell International
Corp. $ 1,681,500
------------
Automobile--1.0%
30,000 Chrysler Corp. 1,691,250
------------
Consumer Durables--2.8%
30,000 (d)Black & Decker Corp. 1,012,500
32,400 Brunswick Corp. 741,150
15,500 Eastman Kodak Co. 1,108,250
33,800 Goodyear Tire & Rubber Co. 1,605,500
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Total 4,467,400
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Consumer Non-Durables--
10.8%
13,100 Avon Products, Inc. 1,052,912
18,800 Campbell Soup Co. 1,160,900
21,500 Clorox Co. 1,822,125
36,400 Coca-Cola Co. 2,939,300
29,400 ConAgra, Inc. 1,238,475
9,200 Kellogg Co. 694,600
10,700 Nike, Inc. 694,163
47,400 PepsiCo, Inc. 2,998,050
34,400 Philip Morris Cos., Inc. 3,405,600
44,400 Sara Lee Corp. 1,437,450
------------
Total 17,443,575
------------
Consumer Services--4.1%
9,500 Capital Cities/ABC, Inc. 1,208,875
21,200 Disney (Walt) Co. 1,388,600
17,200 King World Productions,
Inc. 720,250
18,400 McDonald's Corp. 920,000
58,000 New York Times Co. 1,595,000
45,400 Wendy's International, Inc. 822,875
------------
Total 6,655,600
------------
Electrical Equipment--1.0%
31,100 Honeywell, Inc. 1,648,300
------------
Electronic Technology--9.4%
18,300 Applied Materials, Inc. 654,225
19,000 Bay Networks, Inc. 836,000
31,200 (d)Cisco Systems, Inc. 1,482,000
27,400 Compaq Computer Corp. 1,387,125
31,600 Harris Corp. 2,101,400
23,500 Hewlett-Packard Co. 2,367,625
25,100 Intel Corp. 1,476,194
TOWER CAPITAL APPRECIATION FUND (cont'd)
SHARES VALUE
17,900 International Business
Machines Corp. $ 2,194,988
17,300 (d)Sun Microsystems, Inc. 908,250
16,500 United Technologies Corp. 1,773,750
------------
Total 15,181,557
------------
Energy Minerals--7.2%
18,500 Amoco Corp. 1,285,750
14,100 Atlantic Richfield Co. 1,543,950
18,300 British Petroleum, Ltd.,
ADR 1,836,863
25,300 Exxon Corp. 2,011,350
22,650 Mobil Corp. 2,483,006
17,500 Royal Dutch Petroleum Co.,
ADR 2,410,625
------------
Total 11,571,544
------------
Finance--12.9%
18,500 Allstate Corp. 793,188
27,500 American Express Co. 1,265,000
12,700 American International
Group, Inc. 1,227,138
32,300 Bank of New York Co., Inc. 1,675,563
33,200 BankAmerica Corp. 2,365,500
10,200 CIGNA Corp. 1,208,700
30,700 Citicorp 2,394,600
32,700 Dean Witter, Discover & Co. 1,757,625
40,300 First Chicago NBD Corp. 1,748,013
36,800 First Union Corp. 2,226,400
1,710 Highlands Insurance Group,
Inc. 34,841
27,500 NationsBank Corp. 2,028,125
19,600 SAFECO Corp. 715,400
17,600 Transamerica Corp. 1,326,600
------------
Total 20,766,693
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Forest Products & Paper--
1.0%
20,800 Kimberly-Clark Corp. 1,588,600
------------
Health Services--1.2%
20,400 Columbia/HCA Healthcare
Corp. 1,116,900
11,400 United Healthcare Corp. 743,850
------------
Total 1,860,750
------------
Health Technology--9.0%
18,000 Becton, Dickinson & Co. 1,476,000
26,000 Bristol-Myers Squibb Co. 2,213,250
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
TOWER CAPITAL APPRECIATION FUND (cont'd)
<C> <S> <C>
SHARES $ VALUE
23,400 Johnson & Johnson 2,187,900
19,800 Medtronic, Inc. 1,136,025
40,600 Merck & Co., Inc. 2,689,750
35,700 Pfizer, Inc. 2,351,738
42,100 Schering Plough Corp. 2,362,863
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Total 14,417,526
------------
Industrial Services--1.6%
11,800 Fluor Corp. 792,075
17,100 Halliburton Co. 938,362
10,600 Schlumberger Ltd. 772,475
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Total 2,502,912
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Non-Energy Minerals--1.4%
26,000 Nucor Corp. 1,400,750
12,400 Phelps Dodge Corp. 757,950
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Total 2,158,700
------------
Process Industries--4.0%
29,600 Du Pont (E.I.) de Nemours &
Co. 2,264,400
31,000 International Paper Co. 1,104,375
13,600 Monsanto Co. 1,830,900
38,100 Praxair, Inc. 1,314,450
------------
Total 6,514,125
------------
Producer Manufacturing--
6.0%
12,400 Allied-Signal, Inc. 689,750
13,000 Emerson Electric Co. 1,012,375
50,100 General Electric Co. 3,782,550
39,600 Ingersoll-Rand Co. 1,618,650
14,100 Johnson Controls, Inc. 1,011,675
20,200 Textron, Inc. 1,590,750
------------
Total 9,705,750
------------
Retail Trade--6.6%
25,100 American Stores Co. 731,037
37,600 Gap (The), Inc. 2,016,300
45,400 Home Depot, Inc. 1,963,550
35,100 Premark International, Inc. 1,838,362
50,600 Safeway, Inc. 1,511,675
57,100 Sears, Roebuck & Co. 2,590,912
------------
Total 10,651,836
------------
Technology Services--2.5%
24,700 (d)Microsoft Corp. 2,437,581
30,200 Oracle Corp. 1,570,400
------------
Total 4,007,981
------------
TOWER CAPITAL APPRECIATION FUND (cont'd)
SHARES VALUE
Transportation--2.0%
9,500 AMR Corp. $ 833,625
30,000 CSX Corp. 1,346,250
13,400 Norfolk Southern Corp. 1,092,100
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Total 3,271,975
------------
Utilities--11.9%
26,000 AT&T Corp. 1,654,250
36,000 Bell Atlantic Corp. 2,380,500
64,100 BellSouth Corp. 2,555,987
42,800 GTE Corp. 1,835,050
50,000 General Public Utilities 1,668,750
60,200 Pinnacle West Capital Corp. 1,708,175
30,900 SBC Communications, Inc. 1,695,636
49,600 Sprint Corp. 2,132,800
60,500 Unicom Corp. 1,936,000
35,600 Williams Cos., Inc. (The) 1,691,000
------------
Total 19,258,148
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TOTAL INVESTMENTS
(IDENTIFIED COST
$120,072,625) $157,045,722
===========
</TABLE>
TOWER TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
CORPORATE BONDS/
ASSET-BACKED
SECURITIES--11.7%
Automotive--1.6%
$ 1,000,000 Ford Capital BV, Deben-
ture, 10.125%, 11/15/2000 $ 1,151,720
------------
Banking--1.5%
1,000,000 BankAmerica Corp., Subor-
dinated Notes, 7.50%,
10/15/2002 1,047,740
------------
Finance-Retail--5.3%
750,000 American General Finance
Corp., Note 8.00%,
2/15/2000 797,558
1,000,000 CIT Group Securitization
Corp., 1993-1, Class A2,
5.75%, 6/15/2018 978,430
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
TOWER TOTAL RETURN BOND FUND (cont'd)
<C> <S> <C>
PRINCIPAL
AMOUNT Discover Card Trust
$ 1993-A, Class A, 6.25%, $ VALUE
1,000,000 8/16/2000 1,007,180
1,000,000 Signet Credit Card Master
Trust 1993-1, Class A,
5.20%, 2/15/2002 984,250
------------
Total 3,767,418
------------
Utilities--3.3%
2,000,000 KN Energy, Inc., Deben-
ture, 9.625%, 8/1/2021 2,307,400
------------
TOTAL CORPORATE
BONDS/ASSET-BACKED
SECURITIES
(IDENTIFIED COST
$8,036,901) 8,274,278
------------
GOVERNMENT AGENCIES--
27.6%
FEDERAL HOME LOAN
BANK--1.4%
1,000,000 7.72%, 3/29/2000 1,001,870
------------
Federal Home Loan Mortgage
Corp. 30-Year Gold--1.5%
1,000,000 Pool 1024, 9.00%,
11/15/2005 1,060,420
------------
Federal National Mortgage
Corp. 30-Year Seasoned--
0.1%
8,702 Pool 34138, 11.00%,
4/1/2010 9,744
14,229 Pool 1804, 11.00%,
4/1/2011 15,932
23,444 Pool 85131, 11.00%,
5/1/2017 26,250
12,591 Pool 76204, 11.00%,
6/1/2019 14,098
------------
Total 66,024
------------
Federal National Mortgage
Association Bond--5.6%
3,900,000 8.05%, 7/14/2004 4,003,428
------------
TOWER TOTAL RETURN BOND FUND (cont'd)
PRINCIPAL
AMOUNT VALUE
Government National
Mortgage Association
30-Year--19.0%
$ 154,598 Pool 147875, 10.00%,
3/15/2016 $ 170,877
108,831 Pool 253449, 10.00%,
10/15/2018 120,291
165,411 Pool 278300, 10.00%,
7/15/2019 182,828
101,928 Pool 279619, 10.00%,
9/15/2019 112,661
36,193 Pool 288052, 10.00%,
7/15/2020 40,004
59,871 Pool 288570, 10.00%,
8/15/2020 66,176
59,843 Pool 225725, 10.00%,
9/15/2020 66,145
141,573 Pool 292364, 10.00%,
9/15/2020 156,481
97,984 Pool 296315, 10.00%,
9/15/2020 108,302
146,492 Pool 227430, 9.00%,
8/15/2019 156,469
125,987 Pool 279629, 9.00%,
10/15/2019 134,568
100,105 Pool 283261, 9.00%,
11/15/2019 106,924
203,612 Pool 287853, 9.00%,
4/15/2020 217,480
66,087 Pool 288967, 9.00%,
4/15/2020 70,588
155,095 Pool 289082, 9.00%,
4/15/2020 165,658
174,807 Pool 288994, 9.00%,
5/15/2020 186,713
97,080 Pool 291100, 9.00%,
5/15/2020 103,692
188,889 Pool 168511, 8.00%,
7/15/2016 196,443
213,596 Pool 174673, 8.00%,
8/15/2016 222,138
83,884 Pool 177145, 8.00%,
1/15/2017 87,239
147,497 Pool 212660, 8.00%,
4/15/2017 153,395
183,970 Pool 217533, 8.00%,
5/15/2017 191,327
260,542 Pool 212047, 8.00%,
5/15/2017 270,961
231,744 Pool 216950, 8.00%,
6/15/2017 241,011
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
TOWER TOTAL RETURN BOND FUND (cont'd)
<C> <S> <C>
PRINCIPAL
$ AMOUNT Pool 188080, 8.00%, $ VALUE
12,524 9/15/2018 12,939
238,643 Pool 302697, 8.00%,
4/15/2021 246,545
1,180,138 Pool 415427, 7.50%,
8/15/2025 1,191,928
962,886 Pool 420153, 7.00%,
9/15/2010 975,210
497,593 Pool 345031, 7.00%,
10/15/2023 491,675
509,012 Pool 345090, 7.00%,
11/15/2023 502,959
263,965 Pool 360772, 7.00%,
2/15/2024 260,826
535,991 Pool 302101, 7.00%,
6/15/2024 529,617
602,449 Pool 382074, 7.00%,
9/15/2025 595,286
213,034 Pool 404653, 7.00%,
9/15/2025 210,501
513,567 Pool 408884, 7.00%,
9/15/2025 507,461
792,480 Pool 410108, 7.00%,
9/15/2025 783,057
309,749 Pool 410786, 7.00%,
9/15/2025 306,066
513,029 Pool 415865, 7.00%,
9/15/2025 506,929
1,301,696 Pool 418781, 7.00%,
9/15/2025 1,286,219
1,524,866 Pool 420157, 7.00%,
10/15/2025 1,506,736
------------
Total 13,442,325
------------
TOTAL GOVERNMENT AGENCIES
(IDENTIFIED COST
$19,416,892) 19,574,067
------------
TREASURY SECURITIES--
52.2%
U.S. Treasury Bonds--33.9%
4,000,000 12.50%, 8/15/2014 6,160,080
3,800,000 11.25%, 2/15/2015 5,733,212
TOWER TOTAL RETURN BOND FUND (cont'd)
PRINCIPAL
AMOUNT VALUE
$ 9,000,000 8.875%, 8/15/2017 $ 11,311,740
750,000 7.125%, 2/15/2023 795,840
------------
Total 24,000,872
------------
U.S. Treasury Notes--18.3%
3,000,000 6.50%, 11/30/1996 3,027,900
3,000,000 6.25%, 8/31/1996 3,016,110
7,000,000 5.125%, 4/30/1998 6,954,430
------------
Total 12,998,440
------------
TOTAL TREASURY SECURITIES
(IDENTIFIED COST
$35,155,242) 36,999,312
------------
(a)REPURCHASE AGREE-
MENT--8.1%
5,736,000 HSBC Securities, Inc.,
5.375%, dated 2/29/1996,
due 3/1/1996 (at amor-
tized cost) 5,736,000
------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$68,345,035) $ 70,583,657
===========
</TABLE>
TOWER LOUISIANA MUNICIPAL INCOME FUND
<TABLE>
<CAPTION>
<C> <S> <C> <C>
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
(e)LONG-TERM
MUNICIPALS--
98.3%
LOUISIANA--96.7%
$ 200,000 Bossier City, LA,
City Public Im-
provement Sales
Revenue Bonds
(Series ST-1989),
6.875% (FGIC
INS)/(Original
Issue Yield:
7.20%), 11/1/2011 AAA $ 219,050
500,000 East Baton Rouge
Parish, LA, City
Sales & Use Tax
Revenue Bonds
(Series ST),
6.50% (AMBAC
INS)/ (Original
Issue Yield:
6.80%), 2/1/2013 AAA 544,510
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$1,250,000 East Baton Rouge
Parish, LA, Sales
& Use Tax Reve-
nue Bonds (Series
ST), 5.90% (FGIC
LOC)/(Original
Issue Yield:
6.00%), 2/1/2017 AAA $1,295,925
930,000 East Baton Rouge
Parish, LA, Sales
& Use Tax Reve-
nue Bonds (Series
ST-A), 4.80%
(FGIC INS/(Orig-
inal Issue Yield:
5.15%), 2/1/2011 AAA 877,381
300,000 East Baton Rouge
Parish, LA, Sales
& Use Tax Bond,
7.25% (MBIA In-
surance Corpora-
tion INS/
(Original Issue
Yield: 7.40%),
2/1/2006 AAA 326,592
200,000 East Baton Rouge
Parish, LA, Sales
& Use Tax Bond,
7.25% (MBIA In-
surance Corpora-
tion INS/
(Original Issue
Yield: 7.45%),
2/1/2008 AAA 217,728
500,000 East Baton Rouge
Parish, LA, Sales
& Use Tax Reve-
nue Bonds (Series
ST), 5.20% (FSA
INS)/(Original
Issue Yield:
5.65%), 2/1/2017 AAA 476,395
35,000 East Baton Rouge,
LA, Mortgage Fi-
nance Authority,
Revenue Bonds
(Series C), 7.90%
(GNMA COL)/
(Original Issue
Yield: 7.90%),
2/1/2002 Aaa 36,938
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$ 190,000 East Baton Rouge,
LA, Mortgage Fi-
nance Authority,
SFM Purchasing
Revenue Re-
funding Bonds
(Series B), 5.40%
(Federal National
Mortgage Associ-
ation COL),
10/1/2025 Aaa $ 181,885
1,680,000 East Baton Rouge,
LA, Mortgage Fi-
nance Authority,
SFM Revenue Re-
funding Bonds
(Series B), 7.40%
(GNMA COL),
8/1/2012 Aaa 1,792,291
890,000 East Baton Rouge,
LA, Mortgage Fi-
nance Authority,
SFM Revenue Re-
funding Bonds
(Series C),
7.00%, 4/1/2032 Aaa 929,685
1,000,000 Ernest N Morial-
New Orleans, LA,
Exhibit Hall
Authority, Spe-
cial Tax Re-
funding Bonds
(Series C), 5.50%
(MBIA Insurance
Corporation
INS)/(Original
Issue Yield:
5.58%), 7/15/2018 AAA 986,630
1,000,000 Greater New Orle-
ans Expressway
Commission,
Revenue Re-
funding Bonds,
6.00% (Louisiana
Expressway)/
(MBIA Insurance
Corporation
INS)/(Original
Issue Yield:
6.55%), 11/1/2016 AAA 1,039,970
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$1,000,000 Houma, LA, Utili-
ties Revenue Re-
funding Bonds,
6.25% (FGIC
INS)/(Original
Issue Yield:
6.40%), 1/1/2012 AAA 1,068,860
1,000,000 Jefferson Parish,
LA, Hospital Ser-
vice District No.
2, Hospital
Revenue Bonds,
5.50% (MBIA In-
surance Corpora-
tion LOC)/
(Original Issue
Yield: 5.924%),
7/1/2008 AAA 1,029,730
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 2,161,360
1,000,000 Jefferson Parish,
LA, Drain Sales
Tax Revenue Bond,
6.50% (AMBAC
INS)/ (Original
Issue Yield:
6.753%),
11/1/2011 AAA 1,087,340
205,000 Jefferson, LA,
Housing Devel-
opment Corp.,
Multifamily Rev-
enue Refunding
Bonds (Series A),
7.375% (Concor-
dia
Project)/(Fed-
eral National
Mortgage Associ-
ation COL)/
(Original Issue
Yield: 7.544%),
8/1/2005 AAA 223,368
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(F) VALUE
$ 115,000 Jefferson Parish,
LA, GO Refunding
Bonds, 7.70%
(FGIC INS),
9/1/2002 AAA $ 120,873
1,000,000 Lafayette Parish,
LA, School Board,
Sales Tax Revenue
Bonds, 4.875%
(FGIC
LOC)/(Original
Issue Yield:
5.15%), 4/1/2012 AAA 944,500
1,650,000 Louisiana HFA,
Multifamily
Housing Revenue
Refunding Bonds
(Series A),
6.10%, (Woodward
Wright Apart-
ments Project)/
(GNMA COL),
12/20/2018 Aaa 1,666,797
350,000 Louisiana HFA,
Multifamily
Housing Revenue
Refunding Bonds,
5.85%, (Woodward
Wright Apartments
Project)/ (GNMA
COL), 12/20/2008 Aaa 358,894
1,000,000 Louisiana HFA,
Multifamily
Housing Revenue
Refunding Bonds,
6.20%, (Woodward
Wright Apartments
Project)/ (GNMA
COL), 6/20/2028 Aaa 1,013,820
1,000,000 Louisiana HFA,
Revenue Bond,
7.10% (Villa Ma-
ria Retirement
Center)/ (GNMA
COL), 1/20/2035 AAA 1,059,790
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$2,000,000 Louisiana HFA, SFM
Revenue Bonds
(Series A-2),
6.55%, 12/1/2026 Aaa 2,039,620
95,000 Louisiana PFA,
Health and Edu-
cation Capital
Facilities
Revenue Bonds
(Series D), 7.90%
(BIG LOC)/(United
States Treasury
PRF), 12/1/1998
(@102) AAA 106,910
1,450,000 Louisiana PFA,
Health and Edu-
cation Capital
Facilities, 8.20%
(Our Lady of Lake
Regional)/(BIG
LOC), 12/1/2015 AAA 1,627,176
575,000 Louisiana PFA,
Health and Edu-
cation Capital
Revenue Re-
funding Bonds
(Series D), 7.90%
(BIG LOC),
12/1/2015 AAA 638,020
500,000 Louisiana PFA,
Hospital Revenue
Bonds, 5.70%
(Woman's Hospi-
tal Foundation)/
(FGIC INS)/
(Original Issue
Yield: 5.80%),
10/1/2008 AAA 523,870
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$ 995,000 Louisiana PFA,
Hospital Revenue
Crossover Re-
funding Bonds
(Series C), 6.30%
(Our Lady of Lake
Regional)/ (MBIA
Insurance
Corporation
INS)/(Original
Issue Yield:
6.375%),
12/1/2016 AAA $ 1,055,884
500,000 Louisiana PFA,
Hospital Revenue
Refunding Bonds,
6.40% (Lafayette
General Medical
Center Project)/
(FSA INS)/(Orig-
inal Issue Yield:
6.53%), 10/1/2012 AAA 539,775
2,045,000 Louisiana PFA,
Multifamily
Housing Revenue
Bonds (Series A),
7.50% (Federal
Home Loan
Mortgage Corp.
COL), 6/1/2021 AAA 2,214,980
750,000 Louisiana PFA,
Revenue Bond,
6.00% (General
Health, Inc.)/
(MBIA Insurance
Corporation
INS)/(Original
Issue Yield:
6.15%), 11/1/2012 AAA 777,878
1,890,000 Louisiana PFA,
Revenue Re-
funding Bonds
(Series A), 6.75%
(Bethany Home
Project)/(FHA
LOC), 8/1/2025 AAA 1,968,170
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(F) VALUE
$ 350,000
Louisiana PFA,
Revenue Re-
funding Bonds
(Series B), 6.50%
(Alton Ochsner
Medical Founda-
tion)/(MBIA In-
surance
Corporation
INS)/(Original
Issue Yield:
6.743%),
5/15/2022 AAA 379,428
425,000 Louisiana PFA,
Revenue Re-
funding Bonds,
7.60% (Jefferson
Parish
Eastbank)/(FGIC
INS), 8/1/2003 AAA 473,960
750,000 Louisiana PFA,
Revenue Re-
funding Bonds,
7.70% (Jefferson
Parish
Eastbank)/(FGIC
INS)/(Original
Issue Yield:
7.747%), 8/1/2010 AAA 838,763
670,000 Louisiana PFA,
Student Opportu-
nity Loans Reve-
nue Bonds (Series
A), 6.80%, (FSA
LOC), 1/1/2006 AAA 721,302
670,000 Louisiana PFA,
Student Opportu-
nity Loans Reve-
nue Bonds (Series
A), 6.85% (FSA
COL), 1/1/2009 AAA 713,309
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$ 500,000 Louisiana Stadium
and Expo Dis-
trict, Hotel
Occupancy Tax and
Stadium Revenue
Refunding Bonds
(Series A), 6.00%
(FGIC INS),
7/1/2016 AAA $ 521,275
2,155,000 Louisiana Stadium
and Expo Dis-
trict, Hotel
Occupancy Tax and
Revenue Re-
funding Bonds
(Series A), 6.00%
(FGIC INS)/
(Original Issue
Yield: 6.10%),
7/1/2024 AAA 2,238,054
550,000 Louisiana State
Energy & Power
Authority, Reve-
nue Refunding
Bonds, 6.00%
(Rodemacher Unit
No. 2 Pro-
ject)/(FGIC INS)/
(Original Issue
Yield: 6.962%),
1/1/2013 AAA 564,900
1,500,000 Louisiana State,
GO Bonds (Series
A), 6.10% (AMBAC
INS)/ (Original
Issue Yield:
6.30%), 5/1/2011 AAA 1,586,640
1,125,000 Louisiana State,
GO Refunding
Bonds (Series A),
5.80% (MBIA In-
surance Corpora-
tion INS)/
(Original Issue
Yield: 5.85%),
8/1/2010 AAA 1,209,083
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$ 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 444,464
750,000 Monroe, LA School
District, Special
School District,
GO Bonds, 5.35%
(FGIC INS)/
(Original Issue
Yield: 5.75%),
3/1/2009 AAA 761,835
525,000 Monroe-Brentwood,
LA, Housing
Development
Corp., Multifam-
ily Housing
Mortgage Revenue
Refunding Bonds,
6.50% (Federal
National Mortgage
Association COL),
2/1/2010 Aaa 540,876
1,020,000 Monroe-Brentwood,
LA, Housing
Development
Corp., Multifam-
ily Housing
Mortgage Revenue
Refunding Bonds,
6.70% (Federal
National Mortgage
Association COL),
8/1/2021 Aaa 1,044,052
1,500,000 New Orleans, LA,
Audubon Park, GO
LT Bonds, 6.00%
(FGIC INS)/
(Original Issue
Yield: 6.25%),
10/1/2013 AAA 1,568,310
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$1,250,000 New Orleans, LA,
Home Mortgage
Authority, SFM
Revenue Bonds
(Series A), 6.65%
(GNMA COL),
9/1/2008 Aaa $ 1,323,838
1,000,000 New Orleans, LA
Home Mortgage
Authority, Spe-
cial Obligation
Revenue Bonds
6.25% (United
States Treasury
COL)/(Original
Issue Yield:
6.517%),
1/15/2011 AAA 1,083,420
300,000 New Orleans, LA,
Housing Devel-
opment Corp.,
Multifamily
Housing Re-
funding Revenue
Bonds, 7.375%
(Federal National
Mortgage Associ-
ation COL)/
(Original Issue
Yield: 7.544%),
8/1/2005 AAA 328,737
1,065,000 New Orleans, LA,
Housing Devel-
opment Corp.,
Multifamily
Housing Revenue
Bonds, 7.375%
(Southwood Pa-
tio)/(Federal Na-
tional Mortgage
Association
COL)/(Original
Issue Yield:
7.544%), 8/1/2005 AAA 1,163,257
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(F) VALUE
$1,900,000 New Orleans, LA,
GO UT Refunding
Bond, 6.20%
(AMBAC
INS)/(Original
Issue Yield:
6.30%), 10/1/2021 AAA 2,015,748
400,000 New Orleans, LA,
GO UT Bonds,
6.00% (AMBAC
INS)/
(United States
Treasury PRF)/
(Original Issue
Yield: 7.40%),
12/1/2003 (@100) AAA 436,124
2,375,000 New Orleans, LA,
GO UT Capital
Appreciation
Bonds (AMBAC
INS)/ (Original
Issue Yield:
7.10%), 9/1/2013 AAA 892,478
2,000,000 New Orleans, LA,
GO UT Capital
Appreciation
Revenue Bonds
(AMBAC INS)/
(Original Issue
Yield: 7.15%),
9/1/2016 AAA 629,200
100,000 New Orleans, LA,
GO UT Refunding
Bonds, 6.00%
(AMBAC
INS)/(United
States Treasury
PRF)/(Original
Issue Yield:
7.40%), 12/1/1996
(@100) AAA 102,029
500,000 Orleans Parish,
LA, Law Enforce-
ment District, GO
UT Bonds, 7.10%
(AMBAC INS)/
(Original Issue
Yield: 7.25%),
5/1/2010 AAA 548,210
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(F) VALUE
$ 750,000 Orleans, LA, Levee
District,
Crossover Re-
funding Bonds
(Series A),
8.125% (MBIA
Insurance
Corporation
INS)/(Original
Issue Yield:
8.174%),
11/1/2007 AAA $ 786,585
300,000 Plaquemines Par-
ish, LA, GO UT
Refunding Bonds,
6.50% (AMBAC
INS)/ (Original
Issue Yield:
6.65%), 8/1/2008 AAA 330,918
1,300,000 Regional Trans-
portation Author-
ity, Revenue
Refunding Bonds,
8.00% (FGIC INS),
12/1/2008 AAA 1,440,803
500,000 Shreveport, LA,
Water & Sewer,
Revenue Bonds
(Series A), 5.95%
(FGIC LOC),
12/1/2014 AAA 517,605
1,485,000 St. Charles
Parish, LA,
Consolidated
Waterworks and
Wastewater Dis-
trict No. 1,
Utility Revenue
Refunding Bonds,
7.15% (MBIA In-
surance Corpora-
tion INS),
7/1/2016 AAA 1,685,252
1,000,000 St Charles Parish,
LA, Public Im-
provement, UT GO
Refunding Bonds
(Series ST-96),
5.25% (Original
Issue Yield:
5.45%),
12/1/2009) AAA 1,006,460
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(F) VALUE
$ 500,000 St. Charles
Parish, LA,
Environmental
Improvement
Revenue Bonds,
5.95% (LA Power &
Light Company)/
(FSA INS)/(Orig-
inal Issue Yield:
5.986%),
12/1/2023 AAA 503,810
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 1,123,090
500,000 St. Landry Parish,
LA, Consolidated
School District
No. 1, GO UT
Bonds, 6.10%
(MBIA Insurance
Corporation
INS)/(Original
Issue Yield:
6.60%), 5/1/2008 AAA 524,175
375,000 St. Mary Parish,
LA, Sewage Dis-
trict No. 5, Re-
funding Bonds,
7.60% (AMBAC
LOC), 5/1/2004 AAA 409,380
400,000 St. Tammany Par-
ish, LA, Hospital
Service District
No. 2, Hospital
Revenue Re-
funding Bonds,
6.125% (Connie
Lee INS/(Origi-
nal Issue Yield:
6.315%),
10/1/2011 AAA 421,152
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$1,000,000 St. Tammany Par-
ish, LA, Hospital
Service District
No. 2, Revenue
Bonds, 6.25%
(Connie Lee
LOC)/(Original
Issue Yield:
6.40%), 10/1/2014 AAA $ 1,060,770
130,000 Terrebonne Parish,
LA, Hospital Ser-
vice District No.
1, Refunding
Revenue Bonds,
7.50% (Terre-
bonne General
Medical Center)/
(BIG INS)/(Origi-
nal Issue Yield:
7.649%), 4/1/2008 AAA 140,448
1,225,000 Terrebonne Parish,
LA, Hospital Ser-
vice District No.
1 Revenue
Refunding Bonds,
7.50% (Terre-
bonne General
Medical Center)/
(BIG LOC)/
(Original Issue
Yield: 7.745%),
4/1/2015 AAA 1,324,223
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
<C> <S> <C> <C>
TOWER LOUISIANA MUNICIPAL INCOME
FUND (cont'd)
PRINCIPAL CREDIT
AMOUNT RATING(f) VALUE
$ 170,000 Terrebonne Parish,
LA, Hospital Ser-
vice District No.
1, Hospital
Revenue Re-
funding Bonds,
7.40% (Terre-
bonne General
Medical Center)/
(BIG INS/(Origi-
nal Issue Yield:
7.50%), 4/1/2003 AAA 183,326
------------
TOTAL 64,739,884
------------
Puerto Rico--1.6%
1,000,000 Puerto Rico Mu-
nicipal Finance
Agency, Revenue
Bonds (Series A),
6.00% (FSA INS)/
(Original Issue
Yield: 6.30%),
7/1/2014 AAA 1,053,050
------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$62,070,206) $ 65,792,934
===========
</TABLE>
TOWER U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
LONG-TERM OBLIGA-
TIONS--96.9%
(g)Federal Home Loan Mort-
gage Corp. PC--32.9%
$ 846,832 10.00%, 6/1/2018 $ 923,039
86,543 9.50%, 10/1/2019 93,330
193,957 9.50%, 1/15/2005 205,109
108,347 9.50%, 10/1/2004 114,203
198,396 9.50%, 12/1/2001 209,119
46,260 9.50%, 10/1/2001 48,760
281,506 9.25%, 6/1/2002 295,579
1,000,000 9.00%, 6/15/2020 1,056,740
130,494 9.00%, 5/1/2018 135,997
110,440 9.00%, 6/1/2016 116,962
253,036 9.00%, 8/1/2001 265,369
425,601 8.75%, 2/1/2017 440,620
399,355 8.75%, 1/1/2011 413,448
1,000,000 7.50%, 9/15/2021 1,002,710
1,558,000 7.50%, 9/15/2007 1,574,951
2,500,000 7.00%, 12/15/2006 2,505,575
2,000,000 7.00%, 11/15/2005 2,019,300
1,750,000 6.10%, 6/15/2016 1,740,953
500,000 6.00%, 10/15/2004 497,005
------------
Total 13,658,769
------------
(g)Federal Home Loan
Mortgage Corp.
Debentures--4.8%
2,000,000 6.50%, 6/8/2000 2,022,500
------------
(g)Federal National
Mortgage Association
PC--1.7%
123,294 10.75%, 1/1/2001 131,672
393,827 8.50%, 2/1/2011 415,235
139,292 9.50%, 8/1/2020 151,479
------------
Total 698,386
------------
(g)Federal National
Mortgage Association
Debentures--13.6%
5,500,000 8.05%, 7/14/2004 5,645,860
------------
(g)Federal National
Mortgage Association
REMIC--5.7%
1,171,535 9.00%, 6/25/2019 1,178,388
10,472 9.00%, 10/25/2018 10,472
181,335 8.00%, 12/25/2003 181,036
1,000,000 7.50%, 3/25/2021 1,017,100
------------
Total 2,386,996
------------
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
TOWER U.S. GOVERNMENT INCOME
FUND (cont'd)
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
(g)Federal National
Mortgage Association
PC--9.5%
$ 93,222 9.50%, 7/15/2020 $ 101,466
543,929 9.50%, 6/15/2020 584,207
533,034 9.00%, 2/15/2020 561,674
1,308,891 8.00%, 11/15/2022 1,345,684
834,558 7.50%, 10/15/2022 842,895
394,176 7.00%, 9/15/2010 399,221
103,885 7.00%, 11/15/2009 105,215
------------
Total 3,940,362
------------
U.S. Treasury Bonds--7.4%
1,500,000 8.00%, 11/15/2021 1,747,890
1,250,000 7.125%, 2/15/2023 1,326,400
------------
Total 3,074,290
------------
U.S. Treasury Notes--21.3%
6,200,000 9.25%, 8/15/1998 6,723,528
32,000 6.375%, 7/15/1999 32,738
2,100,000 5.625%, 11/30/2000 2,086,917
------------
Total 8,843,183
------------
TOTAL LONG-TERM OBLIGA-
TIONS (IDENTIFIED COST
$40,123,293) 40,270,346
------------
(a) Repurchase Agree-
ment--2.7%
1,112,000 HSBC Securities, Inc.,
5.375%, dated 2/29/1996,
due 3/1/1996 (at amor-
tized cost) 1,112,000
------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$41,235,293) $ 41,382,346
===========
</TABLE>
TOWER CASH RESERVE FUND
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
(b)COMMERCIAL PAPER--
67.7%
Chemicals--2.7%
$ 5,000,000 du Pont (E.I.) de Nemours
& Co., 5.59%, 3/8/1996 $ 4,994,643
------------
Computers--5.3%
5,000,000 Electronic Data Systems
Corp., 5.45%, 4/4/1996 4,974,594
5,000,000 Hewlett Packard Co.,
5.30%, 4/23/1996 4,961,501
------------
Total 9,936,095
------------
ENERGY MINERALS--2.6%
5,000,000 Alantic Richfield Co.,
5.28% - 5.39%, 4/26/1966
- 5/8/1966 4,957,590
------------
Finance-Automotive--5.2%
5,000,000 Ford Motor Credit Co,
5.31%, 6/6/1966 4,929,944
5,000,000 Toyota Motor Credit Corp.,
5.19%, 4/4/1966 4,975,681
------------
Total 9,905,625
------------
Finance-Commercial-18.2%
5,000,000 CIT Group Holdings, Inc.,
5.50%, 5/1/1996 4,954,419
5,000,000 Deere (John) Capital
Corp., 5.22%, 4/12/1996 4,969,725
5,000,000 Falcon Asset
Securitization Corp.,
5.20%, 4/17/1996 4,966,382
5,000,000 General Electric Capital
Corp., 5.53%, 5/23/1996 4,937,865
5,000,000 Norwest Financial, Inc.,
5.26%, 4/25/1996 4,960,354
5,000,000 Transamerica Finance
Corp., 5.38%, 3/12/1996 4,991,826
5,000,000 U.S.A.A. Capital Corp.,
5.10%, 5/17/1996 4,946,207
------------
Total 34,726,778
------------
Finance-Retail--7.8%
5,000,000 American General Finance
Corp., 5.32%, 3/29/1996 4,979,506
5,000,000 Beta Finance, Inc., 5.34%,
6/14/1996 4,923,875
5,000,000 Commercial Credit Co.,
5.41%, 3/1/1996 5,000,000
------------
Total 14,903,381
------------
</TABLE>
(See Notes to Portfolio of Investments)
<TABLE>
<CAPTION>
TOWER CASH RESERVE FUND (cont'd)
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
Food & Beverage--5.2%
$ 5,000,000 Anheuser-Busch Companies,
Inc., 5.15%, 4/4/1996 $ 4,975,822
5,000,000 Cargill, Inc., 5.14%,
5/21/1996 4,942,963
------------
Total 9,918,785
------------
Funding Corporation--2.6%
5,000,000 CIESCO, Inc., 5.34%,
4/18/1996 4,964,867
------------
Household Products--2.5%
4,800,000 Colgate-Palmolive Co.,
5.63%, 3/18/1996 4,787,420
------------
Oil & Oil Finance--2.6%
5,000,000 Chevron Oil Finance Co.,
(Guaranteed by Chevron
Corp.), 5.18%, 4/5/1996 4,974,965
------------
Pharmaceuticals--2.6%
5,000,000 Ciba Geigy Corp., 5.40%,
4/10/1996 4,970,389
------------
Telecommunications--5.2%
5,000,000 AT&T Capital Corp., 5.54%,
4/25/1996 4,958,521
5,000,000 Southwestern Bell Capital
Corp., 5.18%, 3/12/1996 4,992,101
------------
Total 9,950,622
------------
Tobacco--2.6%
5,000,000 Philip Morris Cos., Inc.,
5.36%, 3/22/1996 4,984,483
------------
Utilities--Electric--2.6%
5,000,000 South Carolina Electric
and Gas, 5.25%, 3/28/1996 4,980,387
------------
TOTAL COMMERCIAL PAPER 128,956,030
------------
TOWER CASH RESERVE FUND (cont'd)
PRINCIPAL
AMOUNT VALUE
(b) GOVERNMENT
AGENCIES--21.4%
$14,070,000 Federal Home Loan Bank,
5.28%-5.44%,
5/6/1996-5/22/1996 $ 13,922,214
13,000,000 Federal Home Loan Mort-
gage Corp., 5.11%-5.40%,
4/8/1996-5/28/1996 12,892,972
14,100,000 Federal National Mortgage
Association, 5.25%-5.53%,
5/2/1996-6/26/1996 13,927,198
------------
TOTAL GOVERNMENT AGENCIES 40,742,384
------------
(a)REPURCHASE AGREE-
MENT--11.1%
21,102,000 HSBC Securities, Inc.,
5.375%, dated 2/29/1996,
due 3/1/1996 21,102,000
------------
TOTAL INVESTMENTS,
AT AMORTIZED COST (C) $190,800,414
===========
</TABLE>
TOWER U.S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
U.S. TREASURY BILLS--
55.5%
$65,000,000 3/7/1996-7/18/1996 $ 64,498,370
------------
(a)REPURCHASE AGREE-
MENTS--44.9%
28,168,000 HSBC Securities, Inc.,
5.375%, dated 2/29/1996,
due 3/1/1996 28,168,000
24,000,000 State Street Bank and
Trust Co., 5.25%, dated
2/29/1996, due 3/1/1996 24,000,000
------------
TOTAL REPURCHASE
AGREEMENTS 52,168,000
===========
TOTAL INVESTMENTS,
AT AMORTIZED COST (C) $116,666,370
===========
</TABLE>
(See Notes to Portfolio of Investments)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS
(a) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(b) Rate shown represents yield to maturity.
(c) Also represents cost for federal tax purposes.
(d) Non-income producing security.
(e) At February 29, 1996, 9.8% of the total investments at market value were
subject to alternative minimum tax.
(f) Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings. Current credit ratings are unaudited.
(g) Because of monthly principal payments, the average lives of the Federal Home
Loan Mortgage Corp. Participation Certificates and Federal National Mortgage
Association Participation Certificates and REMIC's are less than the
indicated periods.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
ADR -- American Depository Receipt
FGIC -- Financial Guaranty Insurance Company
FHA -- Federal Housing Administration
FHLMC -- Federal Home Loan Mortgage Corporation
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation
HFA -- Housing Finance Authority
INS -- Insured
LOC -- Letter of Credit
LT -- Limited Tax
MBIA -- Municipal Bond Investors Assurance
PC -- Participation Certificate
PFA -- Public Facility Authority
PRF -- Prerefunded
REMIC -- Real Estate Mortgage Investment Conduit
SFM -- Single Family Mortgage
UT -- Unlimited Tax
</TABLE>
- ----------------------------------------------------------
- ----------------------------------------------------------
NOTES TO PORTFOLIO OF INVESTMENTS (CONT'D)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
COST OF NET
INVESTMENTS UNREALIZED GROSS GROSS
FOR FEDERAL APPRECIATION UNREALIZED UNREALIZED
TOWER MUTUAL FUNDS TAX PURPOSES (DEPRECIATION) APPRECIATION DEPRECIATION TOTAL NET ASSETS
<S> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $ 120,175,410 $ 36,870,312 $ 37,828,071 $957,759 $161,273,746
Total Return Bond Fund 68,345,035 2,238,622 2,310,622 72,000 70,931,879
Louisiana Municipal Income Fund 62,070,206 3,722,728 3,748,839 26,111 66,959,398
U.S. Government Income Fund 41,235,293 147,053 782,189 635,136 41,566,941
Cash Reserve Fund 190,800,414 0 0 0 190,100,428
U.S. Treasury Money Market Fund 116,666,370 0 0 0 116,243,038
</TABLE>
(See Notes which are an integral part of the Financial Statements)
- ---------------------------------------------------------
- ---------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES TOWER MUTUAL FUNDS
February 29, 1996 (unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
TOWER TOWER
CAPITAL TOTAL
APPRECIATION RETURN BOND
FUND FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ -- $ 5,736,000
Investments in securities 157,045,722 64,847,657
---------------- ----------------
Total investments in securities, at value $157,045,722 $ 70,583,657
Cash -- --
Income receivable 398,365 573,613
Receivable for investments sold 3,974,110 --
Receivable for shares sold 1,836 461
Deferred expenses -- 1,201
---------------- ----------------
Total assets 161,420,033 71,158,932
---------------- ----------------
LIABILITIES:
Payable for shares redeemed 19,209 5,756
Income distribution payable -- 47,006
Payable to Bank 94,643 152,520
Accrued expenses 32,435 21,771
---------------- ----------------
Total liabilities 146,287 227,053
---------------- ----------------
NET ASSETS CONSIST OF:
Paid in capital 114,025,481 69,716,932
Net unrealized appreciation (depreciation) of investments 36,973,097 2,238,622
Accumulated net realized gain (loss) on investments 10,218,101 (1,108,144)
Undistributed net investment income 57,067 84,469
---------------- ----------------
Total Net Assets $161,273,746 $ 70,931,879
---------------- ----------------
NET ASSET VALUE AND REDEMPTION PROCEEDS PER SHARE $17.39 $10.12
---------------- ----------------
Offering Price Per Share* $17.93 $10.43
---------------- ----------------
SHARES OUTSTANDING 9,276,491 7,010,970
---------------- ----------------
Investments, at identified cost $120,072,625 $ 68,345,035
================= =================
Investments, at tax cost $120,175,410 $ 68,345,035
================= =================
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
* See "What Shares Cost" in the Prospectus.
(See Notes which are an integral part of the Financial Statements)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
TOWER TOWER TOWER TOWER
LOUISIANA U.S. GOVERNMENT CASH U.S. TREASURY
MUNICIPAL INCOME RESERVE MONEY MARKET
INCOME FUND FUND FUND FUND
----------------------------------------------------------------------------------------
<C> <C> <C> <C>
$ -- $ 1,112,000 $ 21,102,000 $ 52,168,000
65,792,934 40,270,346 169,698,414 64,498,370
------------------- ------------------- ------------------- -------------------
$65,792,934 $41,382,346 $ 190,800,414 $ 116,666,370
448,165 -- 5,335 2,338
941,163 337,777 3,152 7,706
-- -- -- --
7,758 -- 101 --
-- -- -- 767
------------------- ------------------- ------------------- -------------------
67,190,020 41,720,123 190,809,002 116,677,181
------------------- ------------------- ------------------- -------------------
65,901 3,625 -- --
153,481 149,299 654,764 432,078
-- 258 -- --
11,240 -- 53,810 2,065
------------------- ------------------- ------------------- -------------------
230,622 153,182 708,574 434,143
------------------- ------------------- ------------------- -------------------
63,538,532 44,469,178 190,100,428 116,243,038
3,722,728 147,053 -- --
(359,495) (3,106,977) -- --
57,633 57,687 -- --
------------------- ------------------- ------------------- -------------------
$66,959,398 $41,566,941 $ 190,100,428 $ 116,243,038
------------------- ------------------- ------------------- -------------------
$11.19 $10.13 $1.00 $1.00
------------------- ------------------- ------------------- -------------------
$11.54 $10.44 $1.00 $1.00
------------------- ------------------- ------------------- -------------------
5,982,941 4,102,506 190,100,428 116,243,038
------------------- ------------------- ------------------- -------------------
$62,070,206 $41,235,293 $ 190,800,414 $ 116,666,370
==================== ==================== ==================== ====================
$62,070,206 $41,235,293 $ 190,800,414 $ 116,666,370
==================== ==================== ==================== ====================
----------------------------------------------------------------------------------------
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
STATEMENTS OF OPERATIONS TOWER MUTUAL FUNDS
Six Months Ended February 29, 1996 (unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
TOWER TOWER
CAPITAL TOTAL
APPRECIATION RETURN BOND
FUND FUND
<S> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME:
Dividends $ 1,700,603 $ --
Interest 91,151 2,369,761
---------------- ----------------
Total income 1,791,754 2,369,761
---------------- ----------------
EXPENSES:
Investment advisory fee 574,679 245,587
Administrative personnel and services fee 99,306 45,470
Custodian fees 17,811 8,771
Transfer and dividend disbursing agent fees and expenses 15,912 10,525
Directors'/Trustees' fees 3,979 2,346
Auditing fees 7,211 6,912
Legal fees 2,188 3,014
Portfolio accounting fees 25,859 25,704
Distribution services fee 191,560 87,710
Share registration costs 5,809 5,698
Printing and postage 4,475 3,855
Insurance premiums 2,357 2,533
Miscellaneous 1,720 3,261
---------------- ----------------
Total expenses 952,866 451,386
---------------- ----------------
Waivers--
Waiver of investment advisory fee -- --
---------------- ----------------
NET EXPENSES 952,866 451,386
---------------- ----------------
NET INVESTMENT INCOME 838,888 1,918,375
---------------- ----------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 13,358,230 273,375
Change in unrealized appreciation (depreciation) on investments 6,242,625 249,746
---------------- ----------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS 19,600,855 523,121
---------------- ----------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 20,439,743 $2,441,496
================= =================
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
TOWER TOWER TOWER TOWER
LOUISIANA U.S. GOVERNMENT CASH U.S. TREASURY
MUNICIPAL INCOME RESERVE MONEY MARKET
INCOME FUND FUND FUND FUND
<S> <C> <C> <C>
----------------------------------------------------------------------------------------
$ -- $ -- $ -- $ --
2,036,807 1,574,545 5,606,301 3,087,959
------------------- ------------------- ------------------- -------------------
2,036,807 1,574,545 5,606,301 3,087,959
------------------- ------------------- ------------------- -------------------
150,796 94,406 389,934 220,481
43,431 27,188 126,334 71,435
11,362 5,245 21,983 12,740
12,744 13,969 13,082 12,929
2,213 1,978 5,962 1,765
7,145 7,160 6,912 5,842
2,266 2,088 2,741 2,064
31,961 27,349 23,929 20,815
-- -- 243,709 --
5,642 4,958 1,214 11,522
3,980 3,218 4,039 2,886
2,432 2,535 2,983 2,908
1,889 1,356 1,995 1,995
------------------- ------------------- ------------------- -------------------
275,861 191,450 844,817 367,382
------------------- ------------------- ------------------- -------------------
(26,808) (12,587) -- (121,264)
------------------- ------------------- ------------------- -------------------
249,053 178,863 844,817 246,118
------------------- ------------------- ------------------- -------------------
1,787,754 1,395,682 4,761,484 2,841,841
------------------- ------------------- ------------------- -------------------
293,424 (58,823) -- --
949,084 89,562 -- --
------------------- ------------------- ------------------- -------------------
1,242,508 30,739 -- --
------------------- ------------------- ------------------- -------------------
$ 3,030,262 $ 1,426,421 $ 4,761,484 $ 2,841,841
==================== ==================== ==================== ====================
----------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------
- --------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS TOWER MUTUAL FUNDS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
TOWER TOWER
CAPITAL APPRECIATION FUND TOTAL RETURN BOND FUND
- ---------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
FEBRUARY 29, ENDED FEBRUARY 29, ENDED
1996 AUGUST 31, 1996 AUGUST 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 838,888 $ 1,976,834 $ 1,918,375 $ 4,006,295
Net realized gain (loss) on investment
transactions 13,358,230 5,776,399 273,375 27,032
Net change in unrealized appreciation
(depreciation) of investments 6,242,625 17,920,887 249,746 2,863,184
------------- ------------ ------------- ------------
Change in net assets resulting from
operations 20,439,743 25,674,120 2,441,496 6,896,511
------------- ------------ ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders from net investment
income (886,560) (2,029,845) (1,976,827) (3,888,156)
Distributions to shareholders from net realized
gain on investments (7,513,977) (2,669,232) -- --
------------- ------------ ------------- ------------
Change in net assets from distributions to
shareholders (8,400,537) (4,699,077) (1,976,827) (3,888,156)
------------- ------------ ------------- ------------
SHARE TRANSACTIONS:
Proceeds from sale of shares 13,096,797 15,224,935 6,113,997 12,812,859
Net asset value of shares issued to
shareholders in payment of dividends declared 6,894,050 3,279,872 1,701,878 3,525,916
Cost of shares redeemed (15,231,996) (34,084,951) (6,803,307) (21,980,675)
------------- ------------ ------------- ------------
Change in net assets resulting
from share transactions 4,758,851 (15,580,144) 1,012,568 (5,641,900)
------------- ------------ ------------- ------------
Change in net assets 16,798,057 5,394,899 1,477,237 (2,633,545)
NET ASSETS:
Beginning of period 144,475,689 139,080,790 69,454,642 72,088,187
------------- ------------ ------------- ------------
End of period $ 161,273,746 $144,475,689 $70,931,879 $ 69,454,642
============ ============ ============ ============
Undistributed net investment income
included in net assets at end of period $ 57,067 $ 104,739 $ 84,469 $ 142,921
============ ============ ============ ============
Net gain (loss) as computed for federal tax
purposes $ 13,356,689 $ 5,857,912 $ 273,375 $ (1,035,780)
============ ============ ============ ============
- ------------------------------------------------------------------------------------------------------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
TOWER TOWER U.S. TREASURY
LOUISIANA MUNICIPAL U.S. GOVERNMENT TOWER MONEY
INCOME FUND INCOME FUND CASH RESERVE FUND MARKET FUND
- -------------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 29, ENDED FEBRUARY 29, ENDED FEBRUARY 29, ENDED FEBRUARY 29,
1996 AUGUST 31, 1996 AUGUST 31, 1996 AUGUST 31, 1996
(UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED) 1995 (UNAUDITED)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,787,754 $ 3,875,691 $ 1,395,682 $ 3,488,037 $ 4,761,484 $ 9,913,465 $ 2,841,841
293,424 (644,227) (58,823) (2,290,190) -- -- --
949,084 1,707,708 89,562 2,760,429 -- -- --
------------ ------------ ------------ ------------ ------------- ------------- -------------
3,030,262 4,939,172 1,426,421 3,958,276 4,761,484 9,913,465 2,841,841
------------ ------------ ------------ ------------ ------------- ------------- -------------
(1,805,034) (3,801,921) (1,457,205) (3,395,460) (4,761,484) (9,913,465) (2,841,841)
-- (563,576) -- -- -- -- --
------------ ------------ ------------ ------------ ------------- ------------- -------------
(1,805,034) (4,365,497) (1,457,205) (3,395,460) (4,761,484) (9,913,465) (2,841,841)
------------ ------------ ------------ ------------ ------------- ------------- -------------
3,887,398 7,153,333 3,072,950 2,611,463 165,019,107 372,472,324 129,032,942
879,472 2,452,299 491,589 1,153,323 603,633 1,342,657 911,557
(6,632,911) (22,276,998) (4,559,944) (28,785,487) (166,764,674) (366,494,602) (130,190,533)
------------ ------------ ------------ ------------ ------------- ------------- -------------
(1,866,041) (12,671,366) (995,405) (25,020,701) (1,141,934) 7,320,379 (246,034)
------------ ------------ ------------ ------------ ------------- ------------- -------------
(640,813) (12,097,691) (1,026,189) (24,457,885) (1,141,934) 7,320,379 (246,034)
67,600,211 79,697,902 42,593,130 67,051,015 191,242,362 183,921,983 116,489,072
------------ ------------ ------------ ------------ ------------- ------------- -------------
$66,959,398 $67,600,211 $41,566,941 $42,593,130 $ 190,100,428 $ 191,242,362 $ 116,243,038
============ ============ ============ ============ ============= ============= =============
$ 57,633 $ 74,913 $ 57,687 $ 119,210 -- -- --
============ ============ ============ ============ ============= ============= =============
$ 293,424 $ (86,087) $ (58,823) $(1,657,595) -- -- --
============ ============ ============ ============ ============= ============= =============
$ 4,398,558
--
--
-------------
4,398,558
-------------
--
------------
(4,398,558)
------------
307,600,098
992,817
237,126,184)
-----------
71,466,731
-----------
71,466,731
45,022,341
-------------
$ 116,489,072
=============
--
=============
--
=============
</TABLE>
- --------------------------------------------------------------------------------
- ---------------------------------------------------------
- ---------------------------------------------------------
FINANCIAL HIGHLIGHTS
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
DISTRIBUTIONS TO
SHAREHOLDERS
DISTRIBUTIONS TO FROM NET DISTRIBUTIONSTO
NET ASSET NET REALIZED SHAREHOLDERS REALIZED SHAREHOLDERS IN
VALUE, NET AND UNREALIZED TOTAL FROM FROM NET GAIN ON EXCESS OF NET
YEAR ENDED BEGINNING INVESTMENT GAIN/(LOSS) ON INVESTMENT INVESTMENT INVESTMENT INVESTMENT
AUGUST 31, OF PERIOD INCOME INVESTMENTS OPERATIONS INCOME TRANSACTIONS INCOME
<S> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
TOWER CAPITAL APPRECIATION FUND
1989(a) $ 10.17 0.33 2.68 3.01 (0.24) -- --
1990 $ 12.94 0.38 (0.76) (0.38) (0.39) (0.22) (0.02)(g)
1991 $ 11.93 0.33 2.45 2.78 (0.36) -- --
1992 $ 14.35 0.29 0.11 0.40 (0.27) (0.46) --
1993 $ 14.02 0.30 2.00 2.30 (0.30) (1.42) --
1994 $ 14.60 0.23 0.36 0.59 (0.25) (1.13) --
1995 $ 13.81 0.22 2.54 2.76 (0.21) (0.27) --
1996(i) $ 16.09 0.09 2.15 2.24 (0.10) (0.84) --
TOWER TOTAL RETURN BOND FUND
1993(b) $ 10.00 0.56 0.48 1.04 (0.55) -- --
1994 $ 10.49 0.57 (0.83) (0.26) (0.57) (0.02) --
1995 $ 9.64 0.56 0.39 0.95 (0.54) -- --
1996(i) $ 10.05 0.28 0.08 0.36 (0.29) -- --
TOWER LOUISIANA MUNICIPAL INCOME FUND
1989(a) $ 10.00 0.43 0.14 0.57 (0.43) -- --
1990 $ 10.14 0.64 (0.16) 0.48 (0.64) -- --
1991 $ 9.98 0.64 0.48 1.12 (0.64) -- --
1992 $ 10.46 0.64 0.48 1.12 (0.64) (0.03) --
1993 $ 10.91 0.62 0.73 1.35 (0.62) (0.04) --
1994 $ 11.60 0.59 (0.68) (0.09) (0.59) (0.10) --
1995 $ 10.82 0.59 0.24 0.83 (0.58) (0.08) --
1996(i) $ 10.99 0.30 0.20 0.50 (0.30) -- --
TOWER U.S. GOVERNMENT INCOME FUND
1989(a) $ 10.17 0.69 0.03 0.72 (0.69) -- --
1990 $ 10.20 0.86 (0.11) 0.75 (0.86) (0.02) --
1991 $ 10.07 0.85 0.43 1.28 (0.85) (0.01) --
1992 $ 10.49 0.79 0.30 1.09 (0.79) (0.04) --
1993 $ 10.75 0.74 0.12 0.86 (0.74) (0.01) (0.01)(h)
1994 $ 10.85 0.69 (0.89) (0.20) (0.69) (0.04) --
1995 $ 9.92 0.71 0.20 0.91 (0.69) -- --
1996(i) $ 10.14 0.35 -- 0.35 (0.36) -- --
TOWER CASH RESERVE FUND
1989(a) $ 1.00 0.07 -- 0.07 (0.07) -- --
1990 $ 1.00 0.08 -- 0.08 (0.08) -- --
1991 $ 1.00 0.06 -- 0.06 (0.06) -- --
1992 $ 1.00 0.04 -- 0.04 (0.04) -- --
1993 $ 1.00 0.02 -- 0.02 (0.02) -- --
1994 $ 1.00 0.03 -- 0.03 (0.03) -- --
1995 $ 1.00 0.05 -- 0.05 (0.05) -- --
1996(i) $ 1.00 0.02 -- 0.02 (0.02) -- --
TOWER U.S. TREASURY MONEY MARKET
1993(c) $ 1.00 0.002 -- 0.002 (0.002) -- --
1994 $ 1.00 0.03 -- 0.03 (0.03) -- --
1995 $ 1.00 0.05 -- 0.05 (0.05) -- --
1996(i) $ 1.00 0.03 -- 0.03 (0.03) -- --
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
(a) Reflects operations for the period from October 14, 1988 (date of initial
public investment) to August 31, 1989.
(b) Reflects operations for the period from November 2, 1992 (date of initial
public investment) to August 31, 1993.
(c) Reflects operations for the period from July 19, 1993 (date of initial
public investment) to August 31, 1993.
(d) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(e) Computed on an annualized basis.
<TABLE>
<CAPTION>
RATIOS TO AVERAGE NET ASSETS
--------------------------------------
NET ASSET NET NET ASSETS, PORTFOLIO
TOTAL VALUE, TOTAL INVESTMENT EXPENSE END OF PERIOD TURNOVER
DISTRIBUTIONS END OF PERIOD RETURN (d) EXPENSES INCOME WAIVER (f) (000 OMITTED) RATE
<S> <C> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
(0.24) $ 12.94 32.29% 0.56%(e) 4.00%(e) 0.83%(e) $ 48,093 70%
(0.63) $ 11.93 (3.11%) 0.42% 3.06% 0.75% $ 60,448 123%
(0.36) $ 14.35 23.77% 0.74% 2.58% 0.29% $ 87,927 124%
(0.73) $ 14.02 2.93% 0.83% 1.99% 0.25% $ 73,653 163%
(1.72) $ 14.60 17.89% 0.85% 2.10% 0.18% $ 140,808 127%
(1.38) $ 13.81 4.27% 1.09% 1.67% -- $ 139,081 118%
(0.48) $ 16.09 20.71% 1.25% 1.46% -- $ 144,476 69%
(0.94) $ 17.39 14.27% 1.24%(e) 1.09%(e) -- $ 161,274 42%
(0.55) $ 10.49 10.39% 0.77%(e) 6.56%(e) 0.22%(e) $ 63,608 78%
(0.59) $ 9.64 (2.46%) 1.21% 5.62% -- $ 72,088 96%
(0.54) $ 10.05 10.19% 1.30% 5.71% -- $ 69,455 91%
(0.29) $ 10.12 3.57% 1.29%(e) 5.47%(e) -- $ 70,932 13%
(0.43) $ 10.14 5.82% 0.62%(e) 6.57%(e) 0.61%(e) $ 12,285 28%
(0.64) $ 9.98 4.89% 0.81% 6.35% 0.41% $ 31,380 32%
(0.64) $ 10.46 11.59% 0.74% 6.29% 0.20% $ 42,210 26%
(0.67) $ 10.91 11.02% 0.65% 6.04% 0.16% $ 57,547 19%
(0.66) $ 11.60 12.75% 0.66% 5.59% 0.14% $ 85,914 32%
(0.69) $ 10.82 (0.76%) 0.71% 5.24% 0.08% $ 79,698 33%
(0.66) $ 10.99 8.20% 0.77% 5.54% 0.08% $ 67,600 22%
(0.30) $ 11.19 4.60% 0.74%(e) 5.34%(e) 0.08%(e) $ 66,959 9%
(0.69) $ 10.20 9.20% 0.59%(e) 8.64%(e) 0.52%(e) $ 15,753 42%
(0.88) $ 10.07 7.48% 0.69% 8.50% 0.45% $ 32,596 32%
(0.86) $ 10.49 13.27% 0.68% 8.30% 0.17% $ 48,482 20%
(0.83) $ 10.75 10.72% 0.69% 7.51% 0.11% $ 61,646 36%
(0.76) $ 10.85 8.11% 0.68% 7.03% 0.11% $ 86,597 61%
(0.73) $ 9.92 (1.67%) 0.74% 6.68% 0.06% $ 67,051 26%
(0.69) $ 10.14 9.60% 0.82% 7.02% 0.06% $ 42,593 5%
(0.36) $ 10.13 3.43% 0.85%(e) 6.65%(e) 0.06%(e) $ 41,567 8%
(0.07) $ 1.00 6.86% 0.75%(e) 8.68%(e) -- $ 169,303 --
(0.08) $ 1.00 8.02% 0.77% 7.71% 0.01% $ 300,668 --
(0.06) $ 1.00 6.45% 0.80% 6.30% -- $ 249,822 --
(0.04) $ 1.00 3.75% 0.89% 3.79% 0.03% $ 162,038 --
(0.02) $ 1.00 2.49% 0.89% 2.48% -- $ 154,052 --
(0.03) $ 1.00 2.73% 0.91% 2.71% -- $ 183,922 --
(0.05) $ 1.00 4.97% 0.86% 4.87% -- $ 191,242 --
(0.02) $ 1.00 2.45% 0.87%(e) 4.88%(e) -- $ 190,100 --
(0.002) $ 1.00 0.34% 0.50%(e) 2.80%(e) 0.32%(e) $ 33,995 --
(0.03) $ 1.00 2.85% 0.66% 2.85% 0.23% $ 45,022 --
(0.05) $ 1.00 5.15% 0.46% 5.15% 0.22% $ 116,489 --
(0.03) $ 1.00 5.41% 0.45%(e) 5.16%(e) 0.22%(e) $ 116,243 --
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE
COMMISSION
PAID
--
--
--
--
--
--
--
0.06
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
- --------------------------------------------------------------------------------------------------------------------------
(f) This voluntary expense decrease is reflected in both the expense and net investment income ratios.
(g) 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.
(h) 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.
(i) Reflects operations for the six months ended February 29, 1996 (unaudited).
</TABLE>
(See Notes which are an integral part of the Financial Statements)
- ------------------------------------------------------
- ------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS TOWER MUTUAL FUNDS
February 29, 1996 (unaudited)
- ------------------------------------------------------
- ------------------------------------------------------
(1) ORGANIZATION
Tower Mutual Funds (the "Trust") is registered under the Investment Company
Act of 1940, as amended (the "Act"), as an open-end management investment
company. The Trust consists of six portfolios (individually referred to as the
"Fund", or collectively as the "Funds") which are presented herein:
<TABLE>
<S> <C> <C>
----------------------------------------------------------------------------------------------
PORTFOLIO NAME DIVERSIFICATION INVESTMENT OBJECTIVE
----------------------------------------------------------------------------------------------
Tower Capital Appreciation Fund diversified Provide growth of capital and
("Capital Appreciation") income.
----------------------------------------------------------------------------------------------
Tower Total Return Bond Fund diversified Maximize total return.
("Total Return Bond")
----------------------------------------------------------------------------------------------
Tower Louisiana Municipal Income non-diversified Provide current income which is
Fund ("Louisiana Municipal generally exempt from federal
Income") income tax and personal income
taxes imposed by the state of
Louisiana.
----------------------------------------------------------------------------------------------
Tower U.S. Government Income Fund diversified Provide current income.
("U.S. Government Income")
----------------------------------------------------------------------------------------------
Tower Cash Reserve Fund diversified Current income consistent with
("Cash Reserve") stability of principal.
----------------------------------------------------------------------------------------------
Tower U.S. Treasury Money Market diversified Current income consistent with
Fund ("U.S. Treasury") stability of principal and
liquidity.
----------------------------------------------------------------------------------------------
</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 Funds' use of the amortized cost method to value their portfolio
securities is in accordance with Rule 2a-7 under the Act.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require 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 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. Pursuant to the Code, such capital loss
carryforwards will expire as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
EXPIRATION YEAR
---------------------------------------------------------------------------------------------------------------
TOTAL TAX LOSS
FUND 2002 2003 CARRYFORWARD
<S> <C> <C> <C>
---------------------------------------------------------------------------------------------------------------
Total Return Bond $ 47,834 $1,035,780 $1,083,614
Louisiana Municipal Income -- 86,087 86,087
U.S. Government Income 97,781 1,657,595 1,755,376
</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>
-------------------------------------------------------------------------------------------------------------
<S> <C>
TOTAL TAX LOSS
FUND 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 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 its shares in its first fiscal year have been deferred and
are being amortized using the straight-line method over a period of five
years from each Fund's commencement date.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts of assets, liabilities,
expenses and revenues reported in the financial statements. Actual results
could differ from those estimated.
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
February 29, 1996, Cash Reserve and U.S. Treasury Funds' capital paid-in
aggregated $190,100,428, and $116,243,038, respectively.
Transactions in shares were as follows:
EQUITY AND INCOME FUNDS
[CAPTION]
<TABLE>
-----------------------------------------------------------------------------------------------------------------
CAPITAL APPRECIATION TOTAL RETURN BOND
-----------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
FEBRUARY 29, ENDED FEBRUARY 29, ENDED
1996 AUGUST 31, 1996 AUGUST 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C>
Shares sold 779,704 1,095,340 613,015 1,340,601
Shares issued to shareholders in payment
of distributions declared 420,540 251,073 166,521 364,803
Shares redeemed (901,686) (2,437,091) (662,483) (2,275,944)
------------- ------------ ------------- ------------
Net change resulting from share
transactions 298,558 (1,090,678) 117,053 (570,540)
============== ============ ============== ============
</TABLE>
[CAPTION]
<TABLE>
-----------------------------------------------------------------------------------------------------------------
LOUISIANA MUNICIPAL INCOME U.S. GOVERNMENT INCOME
-----------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
FEBRUARY 29, ENDED FEBRUARY 29, ENDED
1996 AUGUST 31, 1996 AUGUST 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
Shares sold 347,108 672,074 299,303 265,325
Shares issued to shareholders in payment
of distributions declared 79,016 234,129 48,144 117,298
Shares redeemed (594,145) (2,118,527) (444,501) (2,944,932)
------------- ------------ ------------- ------------
Net change resulting from share
transactions (168,021) (1,212,324) (97,054) (2,562,309)
============== ============ ============== ============
</TABLE>
MONEY MARKET FUNDS
[CAPTION]
<TABLE>
-----------------------------------------------------------------------------------------------------------------
CASH RESERVE U.S. TREASURY
-----------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
FEBRUARY 29, ENDED FEBRUARY 29, ENDED
1996 AUGUST 31, 1996 AUGUST 31,
(UNAUDITED) 1995 (UNAUDITED) 1995
<S> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------------
Shares sold 165,019,107 372,472,324 129,032,942 307,600,098
Shares issued to shareholders in payment
of distributions declared 603,633 1,342,657 911,557 992,817
Shares redeemed (166,764,674) (366,494,602) (130,190,533) (237,126,184)
------------- ------------ ------------- ------------
Net change resulting from share
transactions (1,141,934) 7,320,379 (246,034) 71,466,731
============== ============ ============== ============
</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>
<S> <C>
--------------------------------------------------------------------------------------------------------------
ANNUAL
FUND RATE
--------------------------------------------------------------------------------------------------------------
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. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Funds' shares. The Plan provides that each Fund may
incur distribution expenses up to 0.25 of 1% of the average daily net assets
of each Fund's shares, annually, to reimburse FSC.
The distributor may voluntarily choose to waive a portion of its fee. The
distributor can modify or terminate this voluntary waiver at any time at its
sole discretion.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES--Federated Services Company
("FServ") serves as transfer and dividend disbursing agent for the Funds for
which it receives a fee. 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 period following each Fund's effective date. For the six months
ended, February 29, 1996, the Funds paid the following pursuant to this
agreement.
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------
AMOUNT REIMBURSED
EXPENSES OF TO FAS FOR THE
ORGANIZING SIX MONTHS ENDED
FUND THE FUNDS FEBRUARY 29, 1996
---------------------------------------------------------------------------------------------------------------
Total Return Bond $13,075 $1,521
U.S. Treasury $17,585 $2,536
---------------------------------------------------------------------------------------------------------------
</TABLE>
GENERAL--Certain of the Officers of the Trust are Officers and Directors or
Trustees of the above companies.
- ------------------------------------------------------
- ------------------------------------------------------
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities, for the
six months ended February 29, 1996, were as follows:
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------------------------------------
FUND PURCHASES SALES
---------------------------------------------------------------------------------------------------------------
Capital Appreciation $62,318,751 $65,148,979
Total Return Bond $ 8,577,692 $ 9,388,644
Louisiana Municipal Income $ 5,821,802 $10,289,378
U.S. Government Income $ 3,470,527 $ 4,388,723
---------------------------------------------------------------------------------------------------------------
</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 with
such factors, at February 29, 1996, 94.0% 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 does not exceed 21.9% of total investments.
TOWER MUTUAL FUNDS
TRUSTEES AND OFFICERS
----------------------------------
----------------------------------
<TABLE>
<S> <C>
TRUSTEES OFFICERS
EDWARD C. GONZALES EDWARD C. GONZALES
President and Treasurer
ROBERT L. DIBENEDETTO, M.D. JEFFREY W. STERLING
Vice President and Assistant Treasurer
JAMES A. GAYLE, SR. PETER J. GERMAIN
Secretary
J. GORDON REISCHE GAIL CAGNEY
Assistant Secretary
MUTUAL FUNDS ARE NOT BANK DEPOSITS OR OBLIGATIONS, ARE NOT GUARANTEED BY ANY BANK,
AND ARE NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER GOVERNMENT AGENCY.
INVESTMENT IN MUTUAL FUNDS INVOLVES INVESTMENT RISK, INCLUDING POSSIBLE LOSS OF
PRINCIPAL AMOUNT INVESTED. ALTHOUGH MONEY MARKET FUNDS SEEK TO MAINTAIN A STABLE NET
ASSET VALUE OF $1.00 PER SHARE, THERE IS NO ASSURANCE THAT THEY WILL BE ABLE TO DO SO.
THIS REPORT IS AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY WHEN
PRECEDED OR ACCOMPANIED BY THE FUNDS' PROSPECTUS WHICH CONTAINS FACTS CONCERNING
THEIR OBJECTIVES AND POLICIES, MANAGEMENT FEES, EXPENSES AND OTHER INFORMATION.
</TABLE>
[LOGO] Since 1955
FEDERATED INVESTORS
Federated Investors Tower
Pittsburgh, PA 15222-3779
Federated Securities Corp. is the distributor of the fund
and is a subsidiary of Federated Investors
Cusip 891836108
Cusip 891836207
Cusip 891836306
Cusip 891836405
Cusip 891836504
Cusip 891836603
