SEMI-ANNUAL REPORT
FEBRUARY 28, 1998
TOWER MUTUAL FUNDS
TOWER CAPITAL APPRECIATION FUND
CLASS A SHARES
CLASS B SHARES
TOWER LOUISIANA MUNICIPAL INCOME FUND
TOWER TOTAL RETURN BOND FUND
TOWER U.S. GOVERNMENT INCOME FUND
TOWER CASH RESERVE FUND
TOWER U.S. TREASURY MONEY MARKET FUND
<PAGE>
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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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NOTES TO PORTFOLIOS OF INVESTMENTS......................... 29
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STATEMENTS OF ASSETS AND LIABILITIES.........................30
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STATEMENTS OF OPERATIONS................................................32
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STATEMENTS OF CHANGES IN NET ASSETS.........................34
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FINANCIAL HIGHLIGHTS.................................................. 36
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COMBINED NOTES TO FINANCIAL STATEMENTS................38
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- - 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.
- - TOWER CASH RESERVE FUND AND 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. AN INVESTMENT IN THE FUNDS
IS NOT INSURED OR GUARANTEED BY THE U.S. GOVERNMENT.
- - PAST PERFORMANCE IS NO INDICATION OF FUTURE RESULTS.
- - 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.
<PAGE>
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PRESIDENT'S MESSAGE
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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 from September 1, 1997, through February 28, 1998. It includes
an interview with each fund's portfolio manager, as well as a complete list of
portfolio holdings and financial statements for each fund.
The highlights for each fund over the six-month reporting period are as follows:
- As the stock market continued to record strong gains and experience
periods of volatility, TOWER CAPITAL APPRECIATION FUND produced very
strong total return performance. For Class A Shares, the total return was
16.46%. Contributing to the total return were dividends of $0.05 per share
and capital gains of $2.34 per share, and a 5% increase in net asset
value.* For Class B Shares, the total return was 16.05%. Contributing to
the total return of Class B Shares were capital gains of $2.34 per share
and a 5% increase in net asset value.* At the end of the reporting period,
net assets in the fund reached $324 million.
- Designed for tax-sensitive Louisiana residents, TOWER LOUISIANA MUNICIPAL
INCOME FUND paid double-tax-free dividends of $0.28 per share and capital
gains of $0.05 per share.** Its net asset value increased from $11.21 on
the first day of the period to $11.40 on the last day of the period. The
fund's total return was 4.71%.* At the end of the reporting period, net
assets totaled $100 million.
- The diversified portfolio of TOWER TOTAL RETURN BOND FUND paid dividends
of $0.29 per share and capital gains totaling $0.07 per share, while its
net asset value increased from $9.99 on the first day of the period to
$10.12 on the last day of the period. As a result, the fund produced total
return of 4.88%.* At the end of the reporting period, net assets stood at
more than $75 million.
- TOWER U.S. GOVERNMENT INCOME FUND paid dividends totaling $0.30 per share,
while its net asset value increased from $9.98 to $10.16. As a result, the
fund produced a total return of 4.90%.* Net assets ended the reporting
period at $61 million.
- TOWER CASH RESERVE FUND, a portfolio of high quality money market
securities, paid dividends of $0.02 per share. At the end of the reporting
period, net assets stood at more than $155 million.
- TOWER U.S. TREASURY MONEY MARKET FUND, a portfolio of U.S. Treasury money
market securities, paid dividends of $0.02 per share. At the end of the
reporting period, net assets stood at more than $160 million.
Thank you for choosing one or more of the Tower Mutual Funds to participate in
key financial markets. We are committed to providing you with the highest level
of service as we keep you up-to-date on your investment progress.
Sincerely,
LOGO
Edward C. Gonzales
President
April 15, 1998
* Performance quoted represents past performance and is not indicative of
future results. 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 are based on net asset value and do
not reflect the maximum sales charges. Total returns based on the maximum
sales charge for the six-month reporting period are as follows: Tower Capital
Appreciation Fund Class A Shares, 11.24%; Tower Capital Appreciation Fund
Class B Shares, 9.93%; Tower Louisiana Municipal Income Fund, 1.54%; Tower
Total Return Bond Fund, 1.72%; and Tower U.S. Government Income Fund, 1.74%.
** Income may be subject to the federal alternative minimum tax.
<PAGE>
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INVESTMENT REVIEWS
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TOWER CAPITAL APPRECIATION FUND
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Q What is your review of the stock market during the first half of the fund's
fiscal year?
A The market continued to enjoy positive returns due to a favorable economic
environment in the United States and demand for stocks by the investing
public.
Q How did Tower Capital Appreciation Fund perform over the six-month
reporting period ended February 28, 1998?
A Tower Capital Appreciation Fund experienced a total return of 16.46% for
Class A Shares and 16.05% for Class B Shares for the six-month reporting
period ended February 28, 1998.*
Q Do you expect that the economic environment will continue to keep the bull
market intact through 1998?
A Yes, but with a higher degree of difficulty than in the past three years.
* Performance quoted represents past performance and is not indicative of
future results. 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. The total return quoted above is based on net asset value and
does not reflect the maximum sales charge. The total return based on the
maximum sales charge for the six-month reporting period is 11.24% for Class A
Shares and 9.93% for Class B Shares.
<PAGE>
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TOWER LOUISIANA MUNICIPAL INCOME FUND
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Q Would you agree that the first half of the fund's fiscal year was a
relatively good period for municipal bonds?
A Low inflation, declining interest rates and short supply combined to push
Louisiana municipal bond prices higher during the reporting period.
Q How did Tower Louisiana Municipal Income Fund perform on a total return
basis?
A The fund experienced a 4.71% total return* for the six-month reporting
period ended February 28, 1998**. Price appreciation accounted for 1.70%
while dividends added 3.01%.
Q What has been the status of the Louisiana municipal bond market?
A The Louisiana municipal bond market has experienced strong demand and short
supply for the last six months. The quality of Louisiana municipal bond
issues has improved due to the strong local economy.
* Performance quoted represents past performance and is not indicative of
future results. 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. The total return quoted above is based on net asset value and
does not reflect the maximum sales charge. The total return based on the
maximum sales charge for the six-month reporting period is 1.54%.
** Income may be subject to the federal alternative minimum tax.
<PAGE>
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TOWER TOTAL RETURN BOND FUND
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Q In a period that saw Asian market turmoil, a continued strong U.S. economy
and negligible inflation, how did the bond market perform during the first
half of the fund's fiscal year?
A The bond market enjoyed strong performance over the past six months as
investors sought safety from the Asian crisis.
Q On a total return basis, how did Tower Total Return Bond Fund compare to
its benchmark, the Salomon Brothers Broad Investment-Grade Bond Index*?
A The Tower Total Return Bond Fund experienced a total return of 4.88%**
during the six month reporting period while the Salomon Brothers Broad
returned 5.10%.
Q Did the fund's holdings continue to focus on Treasury securities for most
of the period?
A The fund continued to own a large position in U.S. Treasury securities. The
weighting in U.S. Treasuries has and will continue to decline as higher
yielding quality corporate bonds are added to the portfolio.
* Salomon Brothers Broad Investment-Grade Bond Index is an unmanaged index
designed to provide the investment-grade bond manager with an all-inclusive
universe of institutionally traded U.S. Treasury, agency, mortgage and
corporate securities which can be used as a benchmark. Investments cannot be
made in an index.
** Performance quoted represents past performance and is not indicative of
future results. 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. The total return quoted above is based on net asset value and
does not reflect the maximum sales charge. The total return based on the
maximum sales charge for the six-month reporting period is 1.72%.
<PAGE>
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TOWER U.S. GOVERNMENT INCOME FUND
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Q In a period that saw Asian market turmoil, a continued strong U.S. economy
and negligible inflation, how did the bond market perform during the first
half of the fund's fiscal year?
A The bond market saw consistent strength as headlines reporting low to
little inflation bolstered prices of bonds, causing yields on the benchmark
30 year Treasury to fall from 6.60% to 5.92% during the 6 month reporting
period ending February 28, 1998. The Asian market turmoil helped bonds as
investors sought the "safe harbor" of U.S. government debt.
Q How did Tower U.S. Government Income Fund perform in this environment?
A The total return of the fund for the 6 month reporting period ending
February 28, 1998, was 4.90%, based on net asset value. The NAV price
appreciation alone accounted for a 1.63% gain. As of February 28, 1998, the
funds 30-day SEC yield was 5.83%, based on offering price.*
Q Have mortgage-backed bonds continued to play a key role in the fund's
portfolio?
A The mortgage-backed sector has been a moderate relative performer as rates
came down and refinancings increased. The fund has and will continue to
seek out mortgages where we find value. As of February 28, 1998, the fund's
assets, based on net asset value, were allocated as follows:
Mortgage-Backed Securities 37.5%; Treasuries 23.3%; Agencies 29.2%;
Asset-Backed Securities 8.3%; Corporate 1.6%; and Repurchase Agreements
1.2%.
* Performance quoted represents past performance and is not indicative of
future results. 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. The total return quoted above is based on net asset value and
does not reflect the maximum sales charge. The total return based on the
maximum sales charge for the six-month reporting period is 1.74%.
<PAGE>
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TOWER CASH RESERVE FUND
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Q The environment of a strong economy and negligible inflation continued over
the reporting period, with no move by the Federal Reserve Board (the "Fed")
to "fix what isn't broken." In what range did short-term rates travel?
A The 3-month Treasury Bill traded, generally, in a narrow and sideways range
mostly between 5.05% and 5.35%.
Q How did the yield of the Tower Cash Reserve Fund respond to this
environment?
A The 7-day net yield for the fund was 4.74% on September 1, 1997, and 4.72%
on February 28, 1998*.
Q What was your strategy in terms of the fund's portfolio mix and average
maturity during the reporting period?
A Our portfolio strategy was equally weighted among the following factors:
relative attractiveness of overnight repurchase agreements, availability of
prime commercial paper and our own view of Fed action and timing.
Q What is your outlook for rates for the rest of 1998?
A We believe the Fed is on hold with a close eye on the Asian markets. If we
gather a clear bias as to their next rate move, we will endeavor to react
accordingly.
* Performance quoted represents past performance and is not indicative of
future results. Yield will vary. Yields quoted for money market funds most
closely reflect the fund's current earnings.
<PAGE>
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TOWER U.S. TREASURY MONEY MARKET FUND
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Q The environment of a strong economy and negligible inflation continued over
the reporting period, with no move by the Fed to "fix what isn't broken."
In what range did short-term rates travel?
A The 3-month Treasury Bill traded, generally, in a narrow and sideways range
mostly between 5.05% and 5.35%.
Q How did Tower U.S. Treasury Money Market Fund perform for shareholders in
terms of 7-day net yield during the six-month reporting period?
A The 7-day net yield for the fund was 4.86% on September 1, 1997 and 4.77%
on February 28, 1998*.
Q What has been the typical combination of overnight repurchase agreements
and Treasury securities in the fund's portfolio?
A A typical mix would be 45/55 overnight repurchase agreements and Treasury
securities.
Q Do you expect the Fed to maintain a "hands-off" policy toward interest
rates for the rest of 1998?
A We believe the Fed is on hold with a close eye on the Asian markets. If we
gather a clear bias as to their next rate move, we will endeavor to react
accordingly.
* Performance quoted represents past performance and is not indicative of
future results. Yield will vary. Yields quoted for money market funds most
closely reflect the fund's current earnings.
<PAGE>
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PORTFOLIOS OF INVESTMENTS TOWER MUTUAL FUNDS
February 28, 1998 (unaudited)
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CAPITAL APPRECIATION FUND
<TABLE>
<CAPTION>
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SHARES VALUE
<C> <S> <C>
COMMON STOCKS--99.0%
Chemical--0.5%
58,800 Solutia, Inc. $ 1,605,975
------------
Commercial Services--1.3%
80,400 Cendant Corp. 3,015,000
23,000 Sysco Corp. 1,082,438
------------
Total 4,097,438
------------
Consumer Durables--1.0%
57,430 Ford Motor Co. 3,248,384
------------
Consumer Non-
Durables--10.2%
24,000 Avon Products, Inc. 1,690,500
34,800 Campbell Soup Co. 2,020,575
65,100 Clorox Co. 5,712,525
75,500 Coca-Cola Co. 5,185,906
68,550 ConAgra, Inc. 2,056,500
146,205 PepsiCo, Inc. 5,345,620
105,900 Philip Morris Cos., Inc. 4,600,031
37,920 Procter & Gamble Co. 3,220,830
44,500 Quaker Oats Co. 2,397,438
19,700 V.F. Corp. 939,444
------------
Total 33,169,369
------------
Consumer Services--4.2%
30,550 Clear Channel
Communications, Inc. 2,768,594
35,700 Disney (Walt) Co. 3,996,169
46,300 King World Productions,
Inc. 1,235,631
36,450 Marriott Corp. 2,761,088
41,900 New York Times Co., Class
A 2,741,831
------------
Total 13,503,313
------------
Electronic
Technology--12.4%
86,100 (a)Applied Materials, Inc. 3,169,556
43,987 Cisco Systems, Inc. 2,897,644
169,300 (a)Compaq Computer Corp. 5,428,181
51,600 (a)Dell Computer Corp. 7,217,550
40,300 EMC Corp. Mass 1,541,475
71,700 Harris Corp. 3,634,294
17,900 Intel Corp. 1,605,406
----------
SHARES VALUE
51,000 Rockwell International
Corp. $ 3,085,500
29,000 (a)Sun Microsystems, Inc. 1,381,125
13,450 (a)Tellabs, Inc. 812,044
68,500 Texas Instruments, Inc. 3,964,438
62,100 United Technologies Corp. 5,546,306
------------
Total 40,283,519
------------
Energy Minerals--6.9%
24,850 Amoco Corp. 2,112,250
23,200 Atlantic Richfield Co. 1,803,800
40,500 British Petroleum Co. PLC,
ADR 3,348,844
102,950 Exxon Corp. 6,575,931
51,400 Mobil Corp. 3,723,288
38,700 Royal Dutch Petroleum Co.,
ADR 2,101,894
18,600 Texaco, Inc. 1,038,113
44,800 USX Corp. 1,548,400
------------
Total 22,252,520
------------
Finance--16.0%
32,750 Allstate Corp. 3,053,938
58,200 AMBAC 3,099,150
21,100 Amsouth Bancorporation 1,185,556
48,730 Banc One Corp. 2,753,245
71,500 BankAmerica Corp. 5,541,250
28,000 BankBoston Corp. 2,791,250
20,100 Citicorp 2,663,250
108,700 Equitable Cos., Inc. 5,686,369
75,825 Fleet Financial Group,
Inc. 5,975,958
49,700 Merrill Lynch & Co., Inc. 3,556,656
41,800 National City Corp. 2,727,450
34,075 Republic New York Corp. 4,123,075
50,930 State Street Corp. 3,148,111
100,800 Travelers Group, Inc. 5,619,600
------------
Total 51,924,858
------------
Health Services--1.8%
45,100 HBO & Co. 2,441,038
94,050 (a)Tenet Healthcare Corp. 3,509,241
------------
Total 5,950,279
------------
Health Technology--11.0%
44,700 Abbott Laboratories 3,344,119
95,550 Biomet, Inc. 2,848,584
44,400 Bristol-Myers Squibb Co. 4,448,325
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
CAPITAL APPRECIATION FUND (continued)
<TABLE>
<CAPTION>
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SHARES VALUE
<C> <S> <C>
COMMON STOCKS- Health
Technology-(cont'd)
53,200 Johnson & Johnson $ 4,016,600
45,750 Lilly (Eli) & Co. 3,010,922
44,300 Merck & Co., Inc. 5,651,019
57,500 Pfizer, Inc. 5,088,750
94,600 Schering Plough Corp. 7,195,513
------------
Total 35,603,832
------------
Industrial Services--0.6%
27,300 Schlumberger Ltd. 2,057,738
------------
Non-Energy Minerals--1.3%
19,775 Aluminum Co. of America 1,450,991
26,000 Nucor Corporation 1,339,000
13,700 Vulcan Materials Co. 1,378,563
------------
Total 4,168,554
------------
Process Industries--3.6%
91,275 Ball Corp. 2,977,847
60,900 Du Pont (E.I.) de Nemours
& Co. 3,733,931
33,500 Kimberly-Clark Corp. 1,865,531
47,200 PPG Industries, Inc. 3,059,150
------------
Total 11,636,459
------------
Producer
Manufacturing--6.6%
40,900 Dana Corp. 2,231,606
35,200 Emerson Electric Co. 2,246,200
127,300 General Electric Co. 9,897,575
83,400 Ingersoll-Rand Co. 3,971,925
59,800 Tyco International, Ltd. 3,034,850
------------
Total 21,382,156
------------
Retail Trade--5.1%
34,000 (a)Bed Bath & Beyond, Inc. 1,468,375
47,900 Dayton-Hudson Corp. 3,703,269
79,225 Home Depot, Inc. 5,055,545
69,550 Safeway, Inc. 2,425,556
101,800 TJX Cos., Inc. 3,932,025
------------
Total 16,584,770
------------
Technology Services--5.7%
28,000 (a)Compuware Corp. 1,179,500
----------
SHARES
OR
PRINCIPAL
AMOUNT VALUE
30,400 General Motors Corp. $ 2,095,700
43,100 Lucent Technologies, Inc. 4,670,963
124,000 (a)Microsoft Corp. 10,509,000
------------
Total 18,455,163
------------
Transportation--1.5%
36,700 CSX Corp. 2,052,906
28,300 Tidewater, Inc. 1,259,350
14,100 UAL Corp. 1,200,263
16,100 Yellow Corp. 339,106
------------
Total 4,851,625
------------
Utilities--9.3%
59,000 AT&T Corp. 3,591,625
26,600 Ameritech Corp. 1,108,888
33,800 Bell Atlantic Corp. 3,033,550
69,500 BellSouth Corp. 4,239,500
22,000 Coastal Corp. 1,399,750
136,200 GPU, Inc. 5,473,531
79,700 GTE Corp. 4,313,763
65,000 Pinnacle West Capital
Corp. 2,652,813
58,400 SBC Communications, Inc. 4,416,500
------------
Total 30,229,920
------------
TOTAL COMMON STOCKS
(IDENTIFIED COST
$202,568,063) 321,005,872
------------
(b)REPURCHASE
AGREEMENT--1.0%
Finance--1.0%
$3,226,000 State Street Bank and
Trust Co., 5.56%, dated
2/27/1998, due 3/2/1998
(at amortized cost) 3,226,000
------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$205,794,063) $324,231,872
============
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND
<TABLE>
<CAPTION>
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<C> <S> <C> <C>
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
(c)LONG-TERM
MUNICIPALS--
99.2%
COLORADO--0.6%
$ 475,000 Colorado Health
Facilities
Authority,
Revenue Bonds,
7.125% (Rose
Medical Center
Project),
9/1/2008 AAA $ 539,134
100,000 Colorado Health
Facilities
Authority,
Revenue Re-
funding Bonds,
5.50% (Sisters of
Charity Health
Care System)/
(AMBAC
INS)/(Original
Issue Yield:
5.60%), 5/15/2000 AAA 103,564
------------
Total 642,698
------------
FLORIDA--1.0%
655,000 Florida State
Board of Educa-
tion Administra-
tion, GO UT
Refunding Bonds,
6.10%, 6/1/2000 AAA 670,615
345,000 Florida State
Board of Educa-
tion Administra-
tion, GO UT
Refunding Bonds,
6.10%, 6/1/2000 AA+ 352,517
------------
Total 1,023,132
------------
LOUISIANA--96.6%
500,000 Alexandria, LA
Utilities Revenue
Bonds, 5.25%
(FGIC INS)/
(Original Issue
Yield: 5.70%),
5/1/2010 AAA 525,285
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$ 500,000 Bossier City, LA,
Revenue Re-
funding Bonds,
5.20% (FGIC
INS)/(Original
Issue Yield:
5.35%), 11/1/2014 AAA $ 510,720
200,000 Caddo Parish, LA,
GO UT, 7.20%
(MBIA INS)/
(United States
Treasury PRF)/
(Original Issue
Yield: 7.45%),
2/1/1999 (@100) AAA 206,528
100,000 De Soto Parish, LA
Environmental
Improvement
Authority, PCR
Refunding Bonds
(Series A), 5.05%
(International
Paper Co.),
12/1/2002 A- 103,518
250,000 East Ascension
Parish, LA Drain-
age District No.
1, Revenue
Refunding Bonds,
5.45% (FGIC
INS)/(Original
Issue Yield:
5.60%), 12/1/2009 AAA 266,312
500,000 East Baton Rouge
Parish, LA, City
Sales & Use Tax
Revenue Bonds
(Series ST),
6.50% (AMBAC
INS)/(United
States Treasury
PRF)/(Original
Issue Yield:
6.80%), 2/1/2013 AAA 537,995
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$1,500,000 East Baton Rouge
Parish, LA,
Refunding Revenue
Bonds, 5.40%
(FGIC INS)/(Original Issue Yield:
5.85%), 2/1/2018 AAA $ 1,545,660
1,250,000 East Baton Rouge
Parish, LA, Sales
& Use Tax Revenue
Bonds (Series
ST), 5.90% (FGIC
INS), 2/1/2017 AAA 1,336,187
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 928,903
500,000 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 502,545
25,000 East Baton Rouge,
LA Mortgage
Finance
Authority,
Revenue Bonds
(Series C), 7.90%
(GNMA COL)/
(Original Issue
Yield: 7.90%),
2/1/2002 Aaa 25,888
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$ 225,000 East Baton Rouge,
LA Mortgage
Finance
Authority,
Revenue Bonds,
7.625% (GNMA
Collateralized
Home Mortgage
Program COL),
8/1/2008 Aaa $ 235,834
300,000 East Baton Rouge,
LA Mortgage
Finance
Authority,
Revenue Refunding
Bonds, 4.80%
(GNMA
Collateralized
Home Mortgage
Program COL),
10/1/2004 Aaa 306,912
550,000 East Baton Rouge,
LA Mortgage
Finance
Authority, SFM
Purchasing
Revenue Bonds
(Series B), 5.40%
(Federal National
Mortgage
Association COL),
10/1/2025 Aaa 552,007
1,665,000 East Baton Rouge,
LA Mortgage
Finance
Authority, SFM
Revenue Refunding
Bonds (Series B),
7.40% (GNMA COL),
8/1/2012 Aaa 1,752,479
605,000 East Baton Rouge,
LA Mortgage
Finance
Authority, SFM
Revenue Refunding
Bonds (Series C),
7.00%, 4/1/2032 Aaa 639,067
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$ 255,000 East Feliciana
Parish, LA School
Board, Sales &
Use Tax Revenue
Bonds, 6.50%
(MBIA INS),
10/1/2002 AAA $ 267,803
1,000,000 Ernest N Morial-
New Orleans, LA Exhibit Hall Authority, Special Tax Refunding
Bonds (Series C), 5.50% (MBIA INS)/(Original Issue Yield:
5.58%), 7/15/2018 AAA 1,030,980
1,200,000 Ernest N Morial-
New Orleans, LA
Exhibit Hall
Authority,
Special Tax
Refunding Bonds
(series C), 5.60%
(MBIA INS)/
(Original Issue
Yield: 5.65%),
7/15/2025 AAA 1,247,856
1,450,000 Greater New
Orleans
Expressway
Commission, LA,
Revenue Refunding
Bonds, 6.00%
(Louisiana
Expresssway)/
(MBIA INS)/
(Original Issue
Yield: 6.55%),
11/1/2016 AAA 1,575,179
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$1,000,000 Houma, LA,
Utilities Revenue
Refunding Bonds,
6.25% (FGIC
INS)/(Original
Issue Yield:
6.40%), 1/1/2012 AAA $ 1,087,200
645,000 Houma, LA, Utility
Revenue Refunding
Bonds, 5.80%
(FGIC INS)/(Original Issue Yield:
5.90%), 1/1/2003 AAA 692,111
1,000,000 Jefferson Parish
LA Hospital
Service District
No. 2, Hospital
Revenue Bonds,
5.50% (MBIA
INS)/(Original
Issue Yield:
5.924%), 7/1/2008 AAA 1,061,890
1,000,000 Jefferson Parish
LA Hospital
Service District
No. 2, Refunding
Revenue Bonds,
5.75% (MBIA
INS)/(Original
Issue Yield:
6.05%), 7/1/2016 AAA 1,046,180
2,000,000 Jefferson Parish,
LA Home Mortgage
Authority,
Refunding Revenue
Bond (Series A),
6.15% (Federal
National Mortgage
Association and
GNMA COLs),
6/1/2028 AAA 2,117,160
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$ 500,000 Jefferson Parish,
LA Home Mortgage
Authority,
Revenue Bonds,
5.85% (FNMA and
GNMA LOCs),
12/1/2028 AAA $ 519,355
500,000 Jefferson Parish,
LA School Board,
Revenue Bonds,
5.00% (AMBAC
INS), 2/1/2008 AAA 519,415
1,000,000 Jefferson Parish,
LA, Drain Sales
Tax Revenue Bond,
6.50% (AMBAC
INS)/(Original
Issue Yield:
6.753%),
11/1/2011 AAA 1,084,470
170,000 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 183,245
500,000 Lafayette, LA
Public Power
Authority,
Refunding Revenue
Bonds, 5.50%
(AMBAC INS),
11/1/2010 AAA 520,705
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$ 500,000 Lafayette, LA
Public Power
Authority,
Refunding Revenue
Bonds, 5.50%
(AMBAC INS),
11/1/2011 AAA $ 518,685
260,000 Lafayette, LA
Public Power
Authority,
Refunding Revenue
Bonds, 5.50%
(AMBAC INS),
11/1/2012 AAA 268,801
50,000 Lafayette, LA
Public Power
Authority,
Revenue Refunding
Bonds, 5.25%
(AMBAC
INS)/(Original
Issue Yield:
5.35%), 11/1/2009 AAA 52,112
150,000 Lafayette, LA
Public Power
Authority,
Revenue Refunding
Bonds, 5.40%
(AMBAC
INS)/(Original
Issue Yield:
5.55%), 11/1/2008 AAA 156,689
150,000 Lafayette, LA
Public Power
Authority,
Revenue Refunding
Bonds, 5.50%
(AMBAC
INS)/(Original
Issue Yield:
5.65%), 11/1/2009 AAA 156,897
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$ 250,000 Lafayette, LA,
Public
Improvement Sales
Tax Revenue
Bonds, 5.50%
(FGIC INS)/(Original Issue Yield:
5.60%), 3/1/2009 AAA $ 263,813
1,000,000 Lafourche Parish,
LA Consolidated
School District
No. 1 , GO UT,
5.00%, 2/1/2016 AAA 995,280
1,650,000 Louisiana HFA,
Multifamily
Housing Revenue
Refunding Bonds
(Series A), 6.10%
(Woodward Wright
Apartments
Project)/(GNMA
COL), 12/20/2018 Aaa 1,720,554
350,000 Louisiana HFA,
Multifamily
Housing Revenue
Refunding Bonds,
5.85% (Woodward
Wright Apartments
Project)/(GNMA
COL), 12/20/2008 Aaa 366,254
1,000,000 Louisiana HFA,
Multifamily
Housing Revenue
Refunding Bonds,
6.20% (Woodward
Wright Apartments
Project)/(GNMA
COL), 6/20/2028 Aaa 1,042,590
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$1,000,000 Louisiana HFA,
Revenue Bond,
7.10% (Villa
Maria Retirement
Center)/(GNMA
COL), 1/20/2035 AAA $ 1,075,590
565,000 Louisiana HFA, SFM
Revenue Bonds
(Series A-2),
6.55%, 12/1/2026 Aaa 601,635
145,000 Louisiana Health
Care Authority,
Certificate
Participation
Bonds, 5.95%
(Lallie Kemp
Regional Medical
Center)/(Societe
Generale, New
York INV)/
(Original Issue
Yield: 6.00%),
12/1/1999 AAA 145,800
500,000 Louisiana PFA,
Hospital Revenue
Bonds, 5.70%
(Woman's Hospital
Foundation)/
(FGIC INS)/
(Original Issue
Yield: 5.80%),
10/1/2008 AAA 539,850
995,000 Louisiana PFA,
Hospital Revenue
Crossover
Refunding Bonds
(Series C), 6.30%
(Our Lady of Lake
Regional)/ (MBIA
INS)/
(Original Issue
Yield: 6.375%),
12/1/2016 AAA 1,075,605
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$ 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 $ 547,160
2,045,000 Louisiana PFA,
Multifamily
Housing Revenue
Bonds (Series A),
7.50% (Federal
Home Loan
Mortgage Corp.
COL), 6/1/2021 AAA 2,216,637
1,000,000 Louisiana PFA,
Refunding Revenue
Bonds, 5.00%
(Original Issue
Yield: 5.30%),
2/1/2028 AAA 968,300
2,000,000 Louisiana PFA,
Refunding Revenue
Bonds, 5.75%
(Alton Ochsner
Medical
Foundation)/
(MBIA INS)/
(Original Issue
Yield: 6.636%),
5/15/2011 AAA 2,109,020
1,000,000 Louisiana PFA,
Revenue Bond,
5.25% (Xavier
University of LA
Project)/(MBIA
LOC), 9/1/2027 AAA 1,005,140
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$ 750,000 Louisiana PFA,
Revenue Bond,
6.00% (General
Health, Inc.)/
(MBIA INS)/
(Original Issue
Yield: 6.15%),
11/1/2012 AAA $ 815,745
500,000 Louisiana PFA,
Revenue Bonds,
5.10% (Tulane
University)/
(MBIA INS)/
(Original Issue
Yield: 5.27%),
11/15/2021 AAA 494,535
500,000 Louisiana PFA,
Revenue Bonds, 5.875% (Our Lady of Lourdes Regional Medical
Center)/(MBIA INS)/(Original Issue Yield:
5.95%), 2/1/2002 AAA 531,505
425,000 Louisiana PFA,
Revenue Bonds, 6.00% (Our Lady of Lourdes Regional Medical
Center)/(MBIA INS)/(Original Issue Yield:
6.05%), 2/1/2003 AAA 458,324
1,890,000 Louisiana PFA,
Revenue Refunding
Bonds (Series A),
6.75% (Bethany
Home
Project)/(FHA
LOC), 8/1/2025 AAA 2,024,474
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$ 350,000 Louisiana PFA,
Revenue Refunding
Bonds (Series B),
6.50% (Alton
Ochsner Medical
Foundation)/
(MBIA INS)/
(Original Issue
Yield: 6.743%),
5/15/2022 AAA $ 381,962
50,000 Louisiana PFA,
Revenue Refunding
Bonds, 4.25%
(Jefferson Parish
Eastbank)/
(FGIC INS)/
(Original Issue
Yield: 4.40%),
8/1/2000 AAA 50,435
1,000,000 Louisiana PFA,
Revenue Refunding
Bonds, 5.45%
(AMBAC INS)/(Original Issue Yield:
5.45%), 2/1/2013 NR 1,038,490
830,000 Louisiana PFA,
Revenue Refunding
Bonds, 6.20%
(Guaranteed
Student Loans),
3/1/2001 Aaa 871,815
750,000 Louisiana PFA,
Revenue Refunding
Bonds, 7.70%
(Jefferson Parish
Eastbank)/
(FGIC INS)/
(Original Issue
Yield: 7.747%),
8/1/2010 AAA 799,553
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$ 385,000 Louisiana PFA,
Student Loan
Refunding Revenue
Bonds (Series
A-2), 6.75%
(Student Loans
GTD), 9/1/2006 NR $ 408,527
355,000 Louisiana PFA,
Student
Opportunity Loans
Revenue Bonds
(Series A), 6.80%
(FSA INS),
1/1/2006 AAA 379,076
350,000 Louisiana PFA,
Student
Opportunity Loans
Revenue Bonds
(Series A), 6.85%
(FSA COL),
1/1/2009 AAA 373,328
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 540,705
2,155,000 Louisiana Stadium
and Expo
District, Hotel
Occupancy Tax and
Revenue Refunding
Bonds (Series A),
6.00% (FGIC INS)/
(Original Issue
Yield: 6.10%),
7/1/2024 AAA 2,330,439
3,500,000 Louisiana Stadium
and Expo
District, Revenue
Bonds, 5.75%
(FGIC INS)/
(Original Issue
Yield: 5.85%),
7/1/2026 AAA 3,727,220
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$ 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 $ 575,498
5,000,000 Louisiana State
University and
Agricultural and
Mechanical
College, Revenue
Bonds, 5.50%
(MBIA INS)/
(Original Issue
Yield: 5.80%),
7/1/2026 AAA 5,158,850
1,565,000 Louisiana State
University and
Agricultural and
Mechanical
College, Revenue
Bonds, 5.75%
(FGIC INS)/
(Original Issue
Yield: 6.043%),
7/1/2014 AAA 1,679,229
420,000 Louisiana State,
(Series A), 6.70%
(MBIA INS)/
(United States
Treasury PRF)/
(Original Issue
Yield: 6.80%),
8/1/1998 NR 425,620
80,000 Louisiana State,
(Series A), 6.70%
(Original Issue
Yield: 6.80%),
8/1/1998 NR 80,997
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$ 20,000 Louisiana State,
GO UT Bond
(Series A), 6.25%
(Original Issue
Yield: 6.50%),
8/1/1999 AAA $ 20,440
30,000 Louisiana State,
GO UT Bonds
(Series A), 6.25%
(Original Issue
Yield: 6.50%),
8/1/1999 AAA 31,052
220,000 Louisiana State,
GO UT Refunding Bonds, 5.375% (MBIA INS)/(Original Issue
Yield:
5.50%), 8/1/2005 AAA 234,751
25,000 Louisiana State,
GO UT, 4.60%
(MBIA INS)/
(Original Issue
Yield: 4.70%),
8/1/1998 AAA 25,111
775,000 Louisiana State,
GO UT, 5.125%
(FGIC INS)/
(Original Issue
Yield: 5.30%),
4/15/2009 AAA 810,100
250,000 Louisiana State,
GO UT, 6.30%
(MBIA INS)/
(Original Issue
Yield: 6.35%),
5/1/2004 AAA 274,010
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 429,900
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$ 250,000 Monroe, LA School
District, Special
School District,
GO UT Bonds,
5.35% (FGIC INS)/
(Original Issue
Yield: 5.75%),
3/1/2009 AAA $ 261,890
525,000 Monroe-Brentwood,
LA Housing
Development
Corp.,
Multifamily
Housing Mortgage
Revenue Refunding
Bonds, 6.50%
(Federal National
Mortgage
Association COL),
2/1/2010 Aaa 543,984
1,020,000 Monroe-Brentwood,
LA Housing
Development
Corp.,
Multifamily
Housing Mortgage
Revenue Refunding
Bonds, 6.70%
(Federal National
Mortgage
Association COL),
8/1/2021 Aaa 1,054,180
2,000,000 New Orleans, LA
Audubon Park, GO
LT Bonds, 6.00%
(FGIC INS)/(Original Issue Yield:
6.25%), 10/1/2013 AAA 2,167,640
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$1,250,000 New Orleans, LA
Home Mortgage
Authority, SFM
Revenue Bonds
(Series A), 6.65%
(GNMA COL),
9/1/2008 Aaa $ 1,324,000
100,000 New Orleans, LA
Home Mortgage
Authority, Single
Family Mortgage
Revenue Bonds,
5.35% (Federal
National Mortgage
Association and
Government
National Mortgage
Association
COLs), 12/1/2020 Aaa 101,752
1,000,000 New Orleans, LA
Home Mortgage
Authority,
Special
Obligation
Revenue Bonds,
6.25% (United
States Treasury
COL)/(Original
Issue Yield:
6.517%),
1/15/2011 AAA 1,128,800
200,000 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 216,528
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$ 930,000 New Orleans, LA
Housing Development Corp., Multifamily Housing Revenue Bonds,
7.375% (Southwood Patio)/(FNMA COL)/(Original Issue Yield:
7.544%), 8/1/2005 AAA $ 1,002,661
1,900,000 New Orleans, LA,
GO Refunding
Bond, 6.20%
(AMBAC INS)/
(Original Issue
Yield: 6.30%),
10/1/2021 AAA 2,102,502
4,750,000 New Orleans, LA,
GO UT Capital
Appreciation
Bonds (AMBAC
INS)/(Original
Issue Yield:
7.10%), 9/1/2013 AAA 2,234,970
825,000 New Orleans, LA,
GO UT Refunding Bonds, 5.20% (AMBAC INS)/(Original Issue
Yield:
5.30%), 10/1/2004 AAA 867,207
980,000 New Orleans, LA,
GO UT Refunding Bonds, 5.875% (AMBAC INS)/(Original Issue
Yield:
6.00%), 10/1/2011 AAA 1,063,594
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$ 6,000 New Orleans, LA,
GO UT Refunding
Bonds, 7.30%
(AMBAC
INS)/(Original
Issue Yield:
7.35%), 12/1/2001 AAA $ 6,679
2,000,000 New Orleans, LA,
GO UT, 7.70% (BIG
and FSA INSs),
10/1/1998 NR 2,048,280
500,000 Orleans Parish, LA Parishwide School District, GO UT, 5.125%
(MBIA INS)/ (Original Issue Yield:
5.35%), 9/1/2021 Aaa 498,035
750,000 Orleans Parish, LA
School Board,
Revenue Refunding
Bonds, 6.00%
(MBIA INS),
12/1/2006 AAA 841,035
1,000,000 Orleans, LA Levee
District,
Refunding Revenue
Bonds (Series A),
5.95% (FSA INS)/
(Original Issue
Yield: 6.039%),
11/1/2014 AAA 1,095,560
1,000,000 Ouachita Parish,
LA West Ouachita
Parish School
District, Series
A GO UT Refunding
Bonds, 6.20% (FSA
INS), 3/1/2000 AAA 1,045,730
300,000 Plaquemines Parish LA, GO UT Refunding Bonds, 6.50% (AMBAC
INS)/ (Original Issue Yield:
6.65%), 8/1/2008 AAA 327,510
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$1,000,000 Regional
Transportation
Authority, Sales
Tax Revenue
Bonds, 6.50%
(FGIC INS)/
(Original Issue
Yield: 6.673%),
12/1/2008 AAA $ 1,098,110
750,000 Shreveport, LA,
Revenue Bonds
(Series A),
5.375% (FSA INS),
1/1/2028 AAA 750,923
1,500,000 Shreveport, LA,
Revenue Bonds
(Series B),
5.375% (FSA INS),
1/1/2024 AAA 1,500,540
750,000 Shreveport, LA,
Water & Sewer,
Revenue Bonds
(Series A), 5.95%
(FGIC LOC),
12/1/2014 AAA 822,428
1,485,000 St. Charles
Parish, LA
Consolidated
Waterworks and
Wastewater
District No. 1,
Utility Revenue
Refunding Bonds,
7.15% (MBIA INS),
7/1/ 2016 AAA 1,642,158
1,000,000 St. Charles
Parish, LA Public
Improvement, UT
GO Refunding
Bonds (Series ST-
96), 5.25%
(Original Issue
Yield: 5.45%),
12/1/2009 AAA 1,052,320
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$ 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 $ 534,380
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 1,120,780
350,000 St. Landry Parish,
LA Consolidated
School District
No. 1, GO UT
Bonds, 6.10%
(MBIA INS)/
(Original Issue
Yield: 6.60%),
5/1/2008 AAA 371,651
400,000 St. Tammany
Parish, LA
Hospital Service
District No. 2,
Hospital Revenue
Refunding Bonds,
6.125% (Connie
Lee INS)/
(Original Issue
Yield: 6.315%),
10/1/2011 AAA 442,488
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
$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 $ 1,104,690
500,000 St. Tammany
Parish, LA Wide
School District
No. 12, GO UT
Bonds, 5.375%
(FSA INS),
3/1/2013 AAA 517,250
500,000 State Colleges &
Universities, LA,
Revenue Bonds,
5.65% (University
of Southwestern,
LA)/(MBIA INS),
9/1/2026 AAA 525,500
25,000 Tangipahoa Parish,
LA Hospital
Service District
No. 1, Revenue
Refunding Bonds,
6.90% (AMBAC
INS)/(United
States Treasury
PRF), 2/1/1998
(@100) AAA 25,000
130,000 Terrebonne Parish
LA Hospital
Service District
No.1, No. 1,
Refunding Revenue
Bonds, 7.50%
(Terrebonne
General Medical
Center)(BIG INS)
(Original Issue
Yield: 7.649%),
4/1/2008 AAA 133,039
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
$1,200,000 Terrebonne Parish
LA Hospital
Service District
No.1, Revenue
Refunding Bonds,
7.50% (Terrebonne
General Medical
Center)(BIG
LOC)/(Original
Issue Yield:
7.745%), 4/1/2015 AAA $ 1,227,864
170,000 Terrebonne Parish
LA Hospital
Service District
No.1, Service
District No. 1,
Hospital Revenue
Refunding Bonds,
7.40% (Terrebonne
General Medical
Center)/(BIG
INS)/(Original
Issue Yield:
7.50%), 4/1/2003 AAA 173,959
------------
Total 96,703,109
------------
PUERTO RICO--0.7%
600,000 Puerto Rico
Municipal Finance
Agency, Revenue
Bonds (Series A),
6.00% (FSA INS)/
(Original Issue
Yield: 6.30%),
7/1/2014 AAA 654,894
------------
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
LOUISIANA MUNICIPAL INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL CREDIT
AMOUNT RATING(D) VALUE
<C> <S> <C> <C>
LONG-TERM
MUNICIPALS-
(cont'd)
TEXAS--0.3%
$ 5,000 Austin, TX,
Electric
Waterworks &
Sewer System
Revenue Bonds,
6.60%, 10/1/2001 AAA $ 5,191
50,000 Gulf Coast, TX
Water Authority,
Revenue Refunding
Bonds, 6.40%
(AMBAC INS),
7/10/2003 AAA 54,334
100,000 Texas Municipal
Power Agency,
Revenue Refunding
Bonds, 5.60%
(MBIA
INS)/(Original
Issue Yield:
5.80%), 9/1/2001 AAA 105,226
100,000 Texas Municipal
Power Agency,
Revenue Refunding
Bonds, 5.75%
(MBIA
INS)/(Original
Issue Yield:
5.90%), 9/1/2002 AAA 106,987
------------
Total 271,738
------------
TOTAL LONG-TERM
MUNICIPALS
(IDENTIFIED COST
$92,944,924) 99,295,571
------------
MUTUAL FUND--0.1%
102,077 Dreyfus Tax Exempt
Cash Management
(AT NET ASSET
VALUE) 102,077
------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$93,047,001) $ 99,397,648
============
</TABLE>
TOTAL RETURN BOND FUND
<TABLE>
<CAPTION>
----------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
CORPORATE BONDS/ ASSET
BACKED SECURITIES--26.3%
Automobile--1.5%
$1,000,000 Ford Capital BV, Deb.,
10.125%, 11/15/2000 $ 1,100,650
------------
Banking--2.1%
1,500,000 Swiss Bank Corp. New York,
Sub. Note, 7.25%,
9/1/2006 1,586,397
------------
Consumer Durables--2.8%
2,000,000 Ford Motor Co., Note,
7.25%, 10/1/2008 2,136,940
------------
Consumer Non-
Durables--2.0%
1,500,000 Nabisco, Inc., Note,
6.375%, 2/1/2035 1,489,215
------------
Finance--4.1%
1,250,000 American Express Co., Sr.
Unsub., 6.75%, 6/23/2004 1,289,862
750,000 American General Finance
Corp., Note, 8.00%,
2/15/2000 777,765
1,000,000 BankAmerica Corp., Sub.
Note, 7.50%, 10/15/2002 1,055,730
------------
Total 3,123,357
------------
Finance--Retail--2.5%
399,446 CIT Manf. Housing Tr.
Corp. 1993-1, Class A2,
5.75%, 6/15/2018 398,284
500,000 Discover Card Trust
1993-A, Class A, 6.25%,
8/16/2000 499,608
1,000,000 Signet Credit Card Master
Trust 1993-1, Class A,
5.20%, 2/15/2002 996,435
------------
Total 1,894,327
------------
Finance-Insurance--2.8%
2,000,000 Old Republic International
Corp., Deb., 7.00%,
6/15/2007 2,081,860
------------
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
TOTAL RETURN BOND FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
CORPORATE BONDS/ASSET
BACKED
SECURITIES-(cont'd)
Process Industries--1.3%
$1,000,000 Du Pont (E.I.) de Nemours
& Co., Note, 6.50%,
9/1/2002 $ 1,020,660
------------
Retail Trade--4.2%
3,000,000 Dayton-Hudson Corp., Note,
7.50%, 7/15/2006 3,209,580
------------
Utilities--3.0%
2,000,000 K N Energy, Inc., Deb.,
9.625%, 8/1/2021 2,244,800
------------
TOTAL CORPORATE
BONDS/ASSET-BACKED
SECURITIES (IDENTIFIED
COST $19,276,541) 19,887,786
------------
CORPORATE NOTE--1.3%
Utilities--1.3%
1,000,000 General Electric Capital
Corp., Medium Term Note,
Series A, 6.15%,
11/5/2001 (identified
cost $1,000,000) 1,008,430
------------
GOVERNMENT AGENCIES--17.1%
Federated Home loan
Bank--0.8%
550,000 7.01%, 6/14/2006 588,989
------------
Federal Home Loan Mortgage
Corp. 30-Year Gold--1.3%
986,208 Series 1024, 9.00%,
11/15/2005 995,241
------------
(e)Federal National
Mortgage Association
30-Year Seasoned--0.1%
9,293 Pool 1804, 11.00%,
4/1/2011 10,251
7,329 Pool 34138, 11.00%,
4/1/2010 8,153
4,571 Pool 76204, 11.00%,
6/1/2019 5,186
14,257 Pool 85131, 11.00%,
5/1/2017 16,173
------------
Total 39,763
------------
----------
PRINCIPAL
AMOUNT VALUE
GOVERNMENT
AGENCIES-(cont'd)
(e)Government National
Mortgage Association
15-Year--1.2%
$ 861,713 Pool 420153, 7.00%,
9/15/2010 $ 880,024
------------
(e)Government National
Mortgage Association
30-Year--13.7%
407,500 Pool 345031, 7.00%,
10/15/2023 413,995
451,979 Pool 345090, 7.00%,
11/15/2023 458,334
219,444 Pool 360772, 7.00%,
2/15/2024 222,942
478,364 Pool 302101, 7.00%,
6/15/2024 485,089
540,233 Pool 382074, 7.00%,
9/15/2025 546,818
169,638 Pool 404653, 7.00%,
9/15/2025 171,706
462,425 Pool 408884, 7.00%,
9/15/2025 468,062
670,506 Pool 410108, 7.00%,
9/15/2025 679,518
282,254 Pool 410786, 7.00%,
9/15/2025 285,695
464,985 Pool 415865, 7.00%,
9/15/2025 470,653
1,197,099 Pool 418781, 7.00%,
9/15/2025 1,211,692
1,400,147 Pool 420157, 7.00%,
10/15/2025 1,417,215
25,000 Pool 453533, 7.50%,
1/15/1999 25,108
1,035,129 Pool 415427, 7.50%,
8/15/2025 1,065,676
163,998 Pool 168511, 8.00%,
7/15/2016 172,659
140,995 Pool 174673, 8.00%,
8/15/2016 148,441
60,399 Pool 177145, 8.00%,
1/15/2017 63,589
103,479 Pool 212660, 8.00%,
4/15/2017 108,943
113,556 Pool 212047, 8.00%,
5/15/2017 119,553
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
TOTAL RETURN BOND FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
GOVERNMENT
AGENCIES-(cont'd)
$ 138,936 Pool 217533, 8.00%,
5/15/2017 $ 146,273
190,298 Pool 216950, 8.00%,
6/15/2017 200,348
9,422 Pool 188080, 8.00%,
9/15/2018 9,919
152,153 Pool 302697, 8.00%,
4/15/2021 159,286
109,295 Pool 227430, 9.00%,
8/15/2019 118,209
73,710 Pool 279629, 9.00%,
10/15/2019 79,722
59,177 Pool 283261, 9.00%,
11/15/2019 64,078
141,710 Pool 287853, 9.00%,
4/15/2020 153,268
22,162 Pool 288967, 9.00%,
4/15/2020 23,997
89,954 Pool 289082, 9.00%,
4/15/2020 97,403
116,173 Pool 288994, 9.00%,
5/15/2020 125,648
60,497 Pool 291100, 9.00%,
5/15/2020 65,431
113,547 Pool 147875, 10.00%,
3/15/2016 126,002
77,183 Pool 253449, 10.00%,
10/15/2018 85,601
86,939 Pool 278300, 10.00%,
7/15/2019 96,366
78,646 Pool 279619, 10.00%,
9/15/2019 87,199
35,395 Pool 288052, 10.00%,
7/15/2020 39,233
58,701 Pool 288570, 10.00%,
8/15/2020 65,067
31,870 Pool 225725, 10.00%,
9/15/2020 35,326
73,026 Pool 292364, 10.00%,
9/15/2020 80,945
15,161 Pool 296315, 10.00%,
9/15/2020 16,805
------------
Total 10,411,814
------------
TOTAL GOVERNMENT AGENCIES
(IDENTIFIED COST
$12,678,873) 12,915,831
------------
----------
PRINCIPAL
AMOUNT VALUE
MUNICIPALS--2.7%
$2,000,000 New Orleans, LA Aviation
Board, Revenue Bonds,
7.10% Bonds (AMBAC INS),
10/1/2027 (IDENTIFIED
COST $1,985,180) $ 2,058,900
------------
TREASURY SECURITIES--49.8%
U.S. Treasury Bonds--29.4%
4,000,000 United States Treasury
Bond, 12.50%, 8/15/2014 6,185,560
2,500,000 United States Treasury
Bond, 6.00%, 2/15/2026 2,505,400
1,000,000 United States Treasury
Bond, 7.50%, 11/15/2016 1,170,060
11,500,000 United States Treasury
Bond, 7.50%, 5/15/2002 12,302,930
------------
Total 22,163,950
------------
U.S. Treasury Notes--20.4%
200,000 United States Treasury
Note, 5.125%, 4/30/1998 199,948
2,000,000 United States Treasury
Note, 5.50%, 1/31/2003 1,991,900
5,000,000 United States Treasury
Note, 6.625%, 4/30/2002 5,185,200
500,000 United States Treasury
Note, 7.00%, 7/15/2006 542,565
5,000,000 United States Treasury
Note, 7.125%, 2/29/2000 5,146,700
2,250,000 United States Treasury
Note, 7.875%, 11/15/1999 2,333,520
------------
Total 15,399,833
------------
TOTAL TREASURY SECURITIES
(IDENTIFIED COST
$37,103,969) 37,563,783
------------
(b)REPURCHASE
AGREEMENT--1.4%
1,054,000 State Street Bank and
Trust Co., 5.56%, dated
2/27/1998, due 3/2/1998
(at amortized cost) 1,054,000
------------
TOTAL INVESTMENTS
(IDENTIFIED COST
$73,098,563) $ 74,488,730
============
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
----------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
LONG-TERM OBLIGA-
TIONS--99.9%
Asset-Backed
Securities--8.3%
$1,250,000 American Express Credit Ac-
count Master Trust 1996-1,
6.800%, 12/15/2003 $ 1,283,781
1,138,421 CIT Manf. Housing Tr. Corp.
1993-1, 5.750%, 6/15/2018 1,135,108
500,000 Discover Card Master Trust I
1993-2, 5.400%, 11/16/2001 499,060
20,106 Premier Auto Trust 1993-5,
4.220%, 3/2/1999 20,039
1,400,000 Sears Credit Account Master
Trust 1995-2, 8.100%,
6/15/2004 1,456,742
250,000 Sears Credit Account Master
Trust 1995-4, 6.250%,
1/15/2003 250,813
415,083 WFS Financial 1997-A Owner
Trust, 6.150%, 12/20/1999 415,573
-----------
Total 5,061,116
-----------
Corporate Notes--1.6%
1,000,000 General Electric Capital
Corp., 6.150%, 11/5/2001 1,008,430
-----------
Federal Farm Credit
Bank--3.3%
1,000,000 Federal Farm Credit System,
6.030%, 3/11/2002 996,300
1,000,000 Federal Farm Credit System,
7.210%, 10/29/2007 1,005,496
-----------
Total 2,001,796
-----------
Federal Home Loan Bank
PC--4.9%
1,325,000 6.104%, 1/17/2001 1,325,928
850,000 7.010%, 6/14/2006 910,257
205,000 7.555%, 2/27/2002 218,202
500,000 8.450%, 7/26/1999 519,285
-----------
Total 2,973,672
-----------
(e)Federal Home Loan
Mortgage Corporation
15 Year--0.9%
61,362 8.750%, 1/1/2002 63,165
118,259 9.000%, 8/1/2001 123,470
159,756 9.250%, 6/1/2002 164,798
33,487 9.500%, 10/1/2001 34,711
----------
PRINCIPAL
AMOUNT VALUE
$ 62,593 9.500%, 10/1/2004 $ 65,664
87,808 9.500%, 12/1/2001 92,116
-----------
Total 543,924
-----------
(e)Federal Home Loan
Mortgage Corporation
30 Year--2.1%
269,689 8.750%, 1/1/2011 282,963
279,316 8.750%, 2/1/2017 295,550
72,805 9.000%, 1/1/2017 77,447
8,199 9.000%, 10/1/2016 8,768
12,486 9.000%, 5/1/2018 13,282
60,313 9.000%, 6/1/2016 64,497
1,696 9.000%, 9/1/2016 1,804
70,524 9.500%, 10/1/2019 75,680
65,332 10.000%, 5/1/2014 71,436
251,983 10.000%, 6/1/2018 275,528
6,525 10.000%, 6/1/2020 7,135
56,665 10.000%, 6/1/2020 61,960
34,499 10.000%, 8/1/2019 37,722
-----------
Total 1,273,772
-----------
(e)Federal Home Loan
Mortgage Corporation
PC--14.5%
500,000 6.000%, 10/15/2004 500,070
740,453 6.100%, 6/15/2016 738,342
3,074,000 7.000%, 11/15/2005 3,179,715
897,099 7.500%, 2/15/2003 925,295
1,558,000 7.500%, 9/15/2007 1,600,300
1,000,000 7.500%, 9/15/2021 1,034,450
637,820 9.000%, 6/15/2020 656,476
210,446 9.500%, 1/15/2005 219,314
-----------
Total 8,853,962
-----------
Federal Home Loan
Mortgage Corporation
Debentures--10.7%
1,000,000 6.320%, 7/14/2000 1,000,620
2,000,000 6.500%, 6/8/2000 2,005,340
2,000,000 6.665%, 7/23/2002 2,009,780
1,500,000 7.055%, 8/2/2001 1,524,090
-----------
Total 6,539,830
-----------
(e)Federal National
Mortgage Association
REMIC--2.7%
561,000 6.500%, 5/25/2023 559,328
1,000,000 7.500%, 3/25/2021 1,025,760
78,347 9.400%, 7/25/2003 82,120
-----------
Total 1,667,208
-----------
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
U.S. GOVERNMENT INCOME FUND (continued)
<TABLE>
<CAPTION>
----------
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
(e)Federal National
Mortgage Association
15 Year--0.1%
$ 43,291 10.750%, 1/1/2001 $ 46,281
-----------
(e) Federal National
Mortgage Association
30 Year--0.5%
186,363 8.500%, 2/1/2011 196,729
74,913 9.500%, 8/1/2020 80,875
-----------
Total 277,604
-----------
Federal National Mortgage
Association Medium Term
Notes--10.4%
1,000,000 6.560%, 11/26/2007 1,006,380
2,000,000 6.860%, 4/24/2000 2,004,460
500,000 7.000%, 4/20/2001 501,080
1,750,000 7.150%, 1/29/2007 1,806,172
1,000,000 7.280%, 5/23/2007 1,042,430
-----------
Total 6,360,522
-----------
(e)Government National
Mortgage Association 30
Year--15.8%
666,478 7.500%, 10/15/2022 685,012
1,350,594 7.500%, 3/15/2026 1,390,450
1,789,289 8.000%, 1/15/2022 1,865,334
895,017 8.000%, 11/15/2022 928,025
1,782,636 8.000%, 4/15/2022 1,858,398
1,872,470 8.000%, 8/15/2022 1,952,050
453,720 8.500%, 2/20/2025 479,382
300,932 9.000%, 2/15/2020 322,843
59,579 9.500%, 6/15/2020 64,978
138,296 9.500%, 6/15/2020 150,828
-----------
Total 9,697,300
-----------
(e)Government National
Mortgage Association
POOL--0.9%
77,735 7.000%, 11/15/2009 79,387
339,629 7.000%, 9/15/2010 346,846
46,264 9.500%, 7/15/2020 50,457
91,132 9.500%, 7/15/2020 99,562
-----------
Total 576,252
-----------
U.S. Treasury Bonds--14.2%
1,000,000 United States Treasury Bond,
10.750%, 2/15/2003 1,218,960
----------
PRINCIPAL
AMOUNT VALUE
$1,800,000 United States Treasury Bond,
6.000%, 2/15/2026 $ 1,803,888
2,400,000 United States Treasury Bond,
7.125%, 2/15/2023 2,748,192
1,100,000 United States Treasury Bond,
7.250%, 8/15/2022 1,275,054
500,000 United States Treasury Bond,
7.875%, 2/15/2021 615,770
300,000 United States Treasury Bond,
8.500%, 2/15/2020 391,071
500,000 United States Treasury Bond,
8.750%, 5/15/2020 667,770
-----------
Total 8,720,705
-----------
U.S. Treasury Notes--9.0%
1,500,000 United States Treasury Note,
6.250%, 2/15/2007 1,558,020
32,000 United States Treasury Note,
6.375%, 7/15/1999 32,349
250,000 United States Treasury Note,
6.500%, 10/15/2006 263,343
1,000,000 United States Treasury Note,
6.500%, 5/15/2005 1,049,140
500,000 United States Treasury Note,
6.500%, 5/31/2002 516,460
500,000 United States Treasury Note,
6.750%, 4/30/2000 511,955
500,000 United States Treasury Note,
6.875%, 7/31/1999 508,880
1,000,000 United States Treasury Note,
7.000%, 7/15/2006 1,085,130
-----------
Total 5,525,277
-----------
TOTAL LONG-TERM
OBLIGATIONS (IDENTIFIED
COST $59,607,291) 61,127,651
-----------
(b)REPURCHASE
AGREEMENT--1.2%
758,000 State Street Bank and Trust
Co., 5.560%, dated
2/27/1998, due 3/2/1998 758,000
-----------
TOTAL INVESTMENTS
(IDENTIFIED COST
$60,365,291) $61,885,651
===========
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
CASH RESERVE FUND
<TABLE>
<CAPTION>
-----------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(f)COMMERCIAL PAPER--63.7%
Consumer Durables--3.2%
$ 5,000,000 Toyota Motor Credit Corp.,
5.526%, 5/5/1998 $ 4,950,618
------------
Consumer Non-
Durables--9.6%
5,000,000 Coca-Cola Co., 5.448%,
4/9/1998 4,970,804
5,000,000 Colgate-Palmolive Co.,
5.475%, 3/5/1998 4,996,972
5,000,000 Heinz (H.J.) Co., 5.486%,
4/20/ 1998 4,962,222
------------
Total 14,929,998
------------
Consumer Services--2.9%
4,637,000 Disney (Walt) Co., 5.742%,
3/27/1998 4,618,078
------------
Energy Minerals--3.2%
5,000,000 Atlantic Richfield Co.,
5.546%, 3/25/1998 4,981,733
------------
Finance--12.8%
5,000,000 CIESCO, L.P., 5.510%,
4/24/1998 4,959,125
5,000,000 Ford Motor Credit Corp.,
5.567%, 4/8/1998 4,971,025
5,000,000 Norwest Corp., 5.539%,
4/24/1998 4,958,825
5,000,000 Paccar Financial Corp.,
5.793%, 3/4/1998 4,997,621
------------
Total 19,886,596
------------
Finance--Commercial--9.6%
5,000,000 CIT Group Holdings, Inc.,
5.426%, 4/27/1998 4,957,646
5,000,000 Deere (John) Capital
Corp., 5.525%, 4/10/1998 4,969,611
5,000,000 General Electric Capital
Corp., 5.538%, 6/3/1998 4,928,847
------------
Total 14,856,104
------------
Finance--Retail--6.4%
5,000,000 Beta Finance, Inc.,
5.767%, 3/2/1998 4,999,211
5,000,000 Commercial Credit Co.,
5.495%, 4/29/1998 4,955,586
------------
Total 9,954,797
------------
Food & Beverage--3.2%
5,000,000 Cargill, Inc., 5.490%,
4/13/1998 4,967,511
------------
-----------
PRINCIPAL
AMOUNT VALUE
Health Technology--3.2%
$ 5,000,000 Abbott Laboratories,
5.453%, 3/4/1998 $ 4,997,737
------------
Process Industries--3.2%
5,000,000 Du Pont (E.I.) de Nemours
& Co., 5.463%, 4/20/1998 4,962,569
------------
Utilities--6.4%
5,000,000 BellSouth
Telecommunications, Inc.,
5.457%, 4/9/1998 4,970,644
5,000,000 South Carolina Electric
and Gas, 5.570%, 4/2/1998 4,975,378
------------
Total 9,946,022
------------
TOTAL COMMERCIAL PAPER 99,051,763
------------
GOVERNMENT AGENCIES--5.1%
Finance--5.1%
5,000,000 Federal National Mortgage
Association, 5.550%,
3/25/1998 4,981,500
3,000,000 Federal National Mortgage
Association, 5.370%,
6/5/1998 2,957,040
------------
TOTAL GOVERNMENT AGENCIES 7,938,540
------------
TIME DEPOSITS--9.6%
Finance--9.6%
5,000,000 ABN AMRO Bank N.V.,
Amsterdam, 5.650%,
4/1/1998 5,000,000
5,000,000 Deutsche Bank, AG, 5.760%,
3/10/1998 5,000,000
5,000,000 Societe Generale, Paris,
5.790%, 3/4/1998 5,000,000
------------
TOTAL TIME DEPOSITS 15,000,000
------------
(b)REPURCHASE
AGREEMENT--21.6%
33,539,000 State Street Bank and
Trust Co., 5.560%, dated
2/27/1998, due 3/2/1998 33,539,000
------------
TOTAL INVESTMENTS (AT
AMORTIZED COST) $155,529,303
============
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
U.S. TREASURY MONEY MARKET FUND
<TABLE>
<CAPTION>
-----------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
(g)U.S. TREASURY
BILLS--43.7%
$ 3,000,000 5.296%, 3/26/1998 $ 2,989,104
5,000,000 5.470%, 4/16/1998 4,967,244
7,000,000 5.207-5.340%, 4/2/1998 6,967,964
12,000,000 5.181-5.410%, 4/23/1998 11,907,618
17,000,000 5.170-5.346%, 4/30/1998 16,853,983
10,000,000 5.170-5.355%, 5/28/1998 9,874,832
5,000,000 5.233-5.234%, 5/7/1998 4,952,607
7,000,000 5.201-5.306%, 6/25/1998 6,884,757
5,000,000 5.280%, 6/4/1998 4,937,179
------------
TOTAL U.S. TREASURY BILLS 70,335,288
------------
U.S. TREASURY NOTES--16.2%
3,000,000 5.125%, 3/31/1998 2,999,386
15,000,000 5.125%, 4/30/1998 14,993,500
3,000,000 5.875%, 4/30/1998 3,002,331
5,000,000 6.125%, 3/31/1998 5,003,139
------------
TOTAL U.S. TREASURY NOTES 25,998,356
------------
(b)REPURCHASE
AGREEMENTS--46.3%
38,000,000 Dean Witter Reynolds,
Inc., 5.610%, dated
2/27/1998, due 3/2/1998 38,000,000
36,501,000 HSBC Securities, Inc.,
5.560%, dated 2/27/1998,
due 3/2/1998 36,501,000
------------
TOTAL REPURCHASE
AGREEMENTS 74,501,000
------------
TOTAL INVESTMENTS (AT
AMORTIZED COST) $170,834,644
============
</TABLE>
(See Notes to Portfolios of Investments)
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO PORTFOLIOS OF INVESTMENTS
- --------------------------------------------------------------------------------
(a) Non-income producing security.
(b) The repurchase agreements are fully collateralized by U.S. Treasury
obligations based on market prices at the date of the portfolio.
(c) At February 28, 1998, 11.1% of the total investments at market value were
subject to alternative minimum tax.
(d) Please refer to the Appendix of the Statement of Additional Information for
an explanation of the credit ratings.
(e) Because of monthly principal payments, the average lives of certain
government securities are less than the indicated periods.
(f) Rate shown represents yield to maturity.
(g) These issues show the rate of discount at the time of purchase.
The following acronyms are used throughout this portfolio:
<TABLE>
<S> <C>
AMBAC -- American Municipal Bond Assurance Corporation BIG -- Bond Investors
Guaranty COL -- Collateralized FGIC -- Financial Guaranty Insurance Company FHA
- -- Federal Housing Administration FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance GNMA -- Government National Mortgage
Association GO -- General Obligation GTD -- Guaranty HFA -- Housing Finance
Authority INS -- Insured LOC -- Letter of Credit LT -- Limited Tax MBIA --
Municipal Bond Investors Assurance PCR -- Pollution Control Revenue PFA --
Public Facility Authority PRF -- Pre-Refunded REMIC -- Real Estate Mortgage
Investment Conduit SFM -- Single Family Mortgage UT -- Unlimited Tax </TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
FOR FEDERAL TAX PURPOSES
- ---------------------------------------------------------------------------------------------------------------
NET
UNREALIZED GROSS GROSS
COST OF APPRECIATION UNREALIZED UNREALIZED
TOWER MUTUAL FUNDS INVESTMENTS (DEPRECIATION) APPRECIATION DEPRECIATION TOTAL NET ASSETS
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund $205,794,063 $118,437,809 $119,208,735 $ 770,926 $324,390,760
Louisiana Municipal Income Fund 93,047,001 6,350,647 6,437,037 86,390 100,073,248
Total Return Bond Fund 73,098,563 1,390,167 1,563,839 173,672 75,479,138
U.S. Government Income Fund 60,365,291 1,520,360 1,575,964 55,604 61,199,691
Cash Reserve Fund 155,529,303 -- -- -- 155,491,124
U.S. Treasury Money Market Fund 170,834,644 -- -- -- 160,832,960
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
Note: The categories of investments are shown as a percentage of net assets at
February 28, 1998.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES TOWER MUTUAL FUNDS
February 28, 1998 (unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
CAPITAL
APPRECIATION LOUISIANA MUNICIPAL
FUND INCOME FUND
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments in repurchase agreements $ 3,226,000 $ --
Investments in securities 321,005,872 99,397,648
------------ ------------
Total investments in securities, at value 324,231,872 99,397,648
Cash -- --
Income receivable 536,794 1,371,714
Receivable for investments sold -- 1,467
Receivable for shares sold 480,667 40,905
Deferred organizational costs -- --
------------ ------------
Total assets 325,249,333 100,811,734
------------ ------------
LIABILITIES:
Payable for investments purchased -- --
Payable for shares redeemed 96,266 42,629
Income distribution payable -- 287,293
Payable to bank 473,729 367,889
Accrued expenses 288,578 40,675
------------ ------------
Total liabilities 858,573 738,486
------------ ------------
NET ASSETS CONSIST OF:
Paid in capital 188,158,708 93,352,198
Net unrealized appreciation of investments 118,437,809 6,350,647
Accumulated net realized gain (loss) on investments 17,813,012 334,476
Undistributed net investment income (Distributions in
excess of net investment income) (18,769) 35,927
------------ ------------
Total Net Assets $324,390,760 $100,073,248
------------ ------------
NET ASSETS: $316,070,974(1) $100,073,248
------------ ------------
$ 8,319,786(2) --
------------ ------------
SHARES OUTSTANDING 13,486,673(1) 8,776,127
356,468(2) --
------------ ------------
Total Shares Outstanding 13,843,141 8,776,127
============ ============
NET ASSET VALUE PER SHARE $23.44(1) $11.40
------------ ------------
$23.34(2) --
------------ ------------
OFFERING PRICE PER SHARE* $24.54(1)**** $11.75***
------------ ------------
$23.34(2) --
------------ ------------
REDEMPTION PROCEEDS PER SHARE** $23.44(1) $11.40
------------ ------------
$22.06(2)***** --
------------ ------------
Investments, at identified cost $205,794,063 $ 93,047,001
============ ============
Investments, at tax cost $205,794,063 $ 93,047,001
============ ============
- ----------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents Class A Shares of Capital Appreciation Fund. The other Funds do
not have class designations.
(2) Represents Class B Shares of Capital Appreciation Fund. The other Funds do
not have class designations.
* See "What Shares Cost" in the Prospectus.
** See "Redeeming Shares" in the Prospectus.
*** Computation of Offering Price: 100/97 of net asset value.
**** Computation of Offering Price: 100/95.50 of net asset value.
***** Computation of Redemption Proceeds: 94.50/100 of net asset value.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
TOTAL RETURN U.S. GOVERNMENT CASH RESERVE U.S. TREASURY
BOND FUND INCOME FUND FUND MONEY MARKET FUND
<S> <C> <C> <C>
-----------------------------------------------------------------------------------------
$ 1,054,000 $ 758,000 $ 33,539,000 $ 74,501,000
73,434,730 61,127,651 121,990,303 96,333,644
----------- ----------- ------------ ------------
74,488,730 61,885,651 155,529,303 170,834,644
-- -- 295,571 --
1,120,449 526,717 188,257 531,076
3,527 -- -- --
-- 379,981 76,855 13,038
8,179 -- -- 9,379
----------- ----------- ------------ ------------
75,620,885 62,792,349 156,089,986 171,388,137
----------- ----------- ------------ ------------
-- 997,500 -- 4,967,244
3,729 2,581 -- --
109,144 247,747 552,825 576,381
2,809 331,770 -- 4,941,757
26,065 13,060 46,037 69,795
----------- ----------- ------------ ------------
141,747 1,592,658 598,862 10,555,177
----------- ----------- ------------ ------------
74,098,653 63,361,504 155,491,124 160,832,960
1,390,167 1,520,360 -- --
(17,295) (3,658,935) -- --
7,613 (23,238) -- --
----------- ----------- ------------ ------------
$75,479,138 $61,199,691 $155,491,124 $160,832,960
----------- ----------- ------------ ------------
$75,479,138 $61,199,691 $155,491,124 $160,832,960
----------- ----------- ------------ ------------
-- -- -- --
----------- ----------- ------------ ------------
7,456,938 6,023,843 155,491,124 160,832,960
-- -- -- --
----------- ----------- ------------ ------------
7,456,938 6,023,843 155,491,124 160,832,960
=========== =========== ============ ============
$10.12 $10.16 $1.00 $1.00
----------- ----------- ------------ ------------
-- -- -- --
----------- ----------- ------------ ------------
$10.43*** $10.47*** $1.00 $1.00
----------- ----------- ------------ ------------
-- -- -- --
----------- ----------- ------------ ------------
$10.12 $10.16 $1.00 $1.00
----------- ----------- ------------ ------------
-- -- -- --
----------- ----------- ------------ ------------
$73,098,563 $60,365,291 $155,529,303 $170,834,644
=========== =========== ============ ============
$73,098,563 $60,365,291 $155,529,303 $170,834,644
=========== =========== ============ ============
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS TOWER MUTUAL FUNDS
Six Months Ended February 28, 1998
(unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
CAPITAL LOUISIANA
APPRECIATION MUNICIPAL
FUND INCOME FUND
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Dividends $2,444,834 $ --
Interest 90,226 2,849,233
---------- ----------
Total income 2,535,060 2,849,233
---------- ----------
EXPENSES:
Investment advisory fee 1,131,216 226,208
Administrative personnel and services fee 178,119 59,371
Custodian fees 32,348 12,533
Transfer and dividend disbursing agent fees and expenses 36,924 18,643
Directors'/Trustees' fees 4,525 1,629
Auditing fees 8,507 6,335
Legal fees 4,163 2,896
Portfolio accounting fees 50,137 28,779
Distribution services fee 392,584(a) --
Shareholder services fee 7,756(b) --
Share registration costs 16,290 11,041
Printing and postage 6,154 6,154
Insurance premiums 3,077 1,267
Miscellaneous 4,163 3,258
---------- ----------
Total expenses 1,875,963 378,114
---------- ----------
Waivers--
Waiver of investment advisory fee -- (40,215)
---------- ----------
Net expenses 1,875,963 337,899
---------- ----------
Net investment income 659,097 2,511,334
---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments 22,658,509 565,081
Net change in unrealized appreciation on investments 23,062,472 1,648,792
---------- ----------
Net realized and unrealized gain (loss) on investments 45,720,981 2,213,873
---------- ----------
Change in net assets resulting from operations $46,380,078 $4,725,207
========== ==========
- ----------------------------------------------------------------------------------------------------
</TABLE>
(a) Represents distribution services fee of $369,316 and $23,268 for Class A
Shares and Class B Shares, respectively.
(b) Represents shareholder services fee for Class B Shares.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------
TOTAL
RETURN BOND U.S. GOVERNMENT CASH U.S. TREASURY
FUND INCOME FUND RESERVE FUND MONEY MARKET FUND
-----------------------------------------------------------------------------------------
<S> <C> <C> <C>
$ -- $ -- $ -- $ --
2,524,658 2,037,381 4,881,765 4,227,071
---------- ---------- ---------- ----------
2,524,658 2,037,381 4,881,765 4,227,071
---------- ---------- ---------- ----------
253,442 134,034 346,500 312,040
42,764 35,182 102,209 92,109
9,052 7,446 19,805 18,225
16,833 19,425 18,281 24,616
2,172 724 3,439 3,258
6,154 5,973 8,869 8,507
2,715 3,077 3,982 2,896
21,720 23,711 24,073 23,168
90,515 -- 216,562 --
-- -- -- --
6,516 5,797 7,964 11,403
2,896 7,421 6,516 5,611
905 1,448 1,448 905
1,629 1,991 7,783 5,611
---------- ---------- ---------- ----------
457,313 246,229 767,431 508,349
---------- ---------- ---------- ----------
(11,659) (17,871) -- --
---------- ---------- ---------- ----------
445,654 228,358 767,431 508,349
---------- ---------- ---------- ----------
2,079,004 1,809,023 4,114,334 3,718,722
---------- ---------- ---------- ----------
390,193 233,583 -- --
956,651 844,101 -- --
---------- ---------- ---------- ----------
1,346,844 1,077,684 -- --
---------- ---------- ---------- ----------
$3,425,848 $2,886,707 $4,114,334 $3,718,722
========== ========== ========== ==========
-----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- -------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS TOWER MUTUAL FUNDS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
CAPITAL LOUISIANA MUNICIPAL
APPRECIATION FUND INCOME FUND
- ---------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
FEBRUARY 28, ENDED FEBRUARY 28, ENDED
1998 AUGUST 31, 1998 AUGUST 31,
(UNAUDITED) 1997 (UNAUDITED) 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
OPERATIONS:
Net investment income $ 659,097 $ 1,592,549 $ 2,511,334 $ 4,002,159
Net realized gain (loss) on investments 22,658,509 26,519,341 565,081 774,842
Net change in unrealized appreciation/
depreciation 23,062,472 62,190,078 1,648,792 2,527,992
------------- ------------ ------------ ------------
Change in net assets resulting from
operations 46,380,078 90,301,968 4,725,207 7,304,993
------------- ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income (667,439)(1) (1,694,309)(1) (2,494,634) (4,058,449)
Distributions from net realized gain on
investments (30,675,928)(2) (19,032,852)(2) (460,469) (220,394)
------------- ------------ ------------ ------------
Change in net assets from distributions to
shareholders (31,343,367) (20,727,161) (2,955,103) (4,278,843)
------------- ------------ ------------ ------------
SHARE TRANSACTIONS:
Proceeds from sale of shares 24,351,367 27,841,991 3,187,328 5,399,903
Proceeds from shares issued to shareholders in
connection with the acquisition of the
Common Trust Funds -- 57,075,362 -- 36,590,980
Net asset value of shares issued to
shareholders in payment of distributions
declared 25,013,616 15,809,726 1,080,235 1,720,137
Cost of shares redeemed (27,685,460) (52,275,086) (7,405,882) (11,012,373)
------------- ------------ ------------ ------------
Change in net assets from share transactions 21,679,523 48,451,993 (3,138,319) 32,698,647
------------- ------------ ------------ ------------
Change in net assets 36,716,234 118,026,800 (1,368,215) 35,724,797
NET ASSETS:
Beginning of period 287,674,526 169,647,726 101,441,463 65,716,666
------------- ------------ ------------ ------------
End of period $ 324,390,760 $287,674,526 $100,073,248 $101,441,463
============= ============ ============ ============
Undistributed net investment income
(Distributions in excess of net investment
income) included in net assets at end of
period $ (18,769) $ (10,427) $ 35,927 $ 19,227
============= ============ ============ ============
Net gain (loss) as computed for federal tax
purposes $ 22,658,509 $ 26,519,341 $ 565,081 $ 774,842
============= ============ ============ ============
- --------------------------------------------------------------------------------
</TABLE>
(1) Represents income distributions for Class A Shares only.
(2) Represents gain distributions of $30,066,368 and $609,560 for Class A Shares
and Class B Shares, respectively.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN U.S. GOVERNMENT U.S. TREASURY
BOND FUND INCOME FUND CASH RESERVE FUND MONEY MARKET FUND
- ----------------------------------------------------------------------------------------------------------------------------
SIX MONTHS SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR
FEBRUARY 28, ENDED FEBRUARY 28, ENDED FEBRUARY 28, ENDED FEBRUARY 28, ENDED
1998 AUGUST 31, 1998 AUGUST 31, 1998 AUGUST 31, 1998 AUGUST 31,
(UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997 (UNAUDITED) 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 2,079,004 $ 4,188,597 $ 1,809,023 $ 2,667,853 $ 4,114,334 $ 7,825,771 $ 3,718,722 $ 7,203,624
390,193 884,814 233,583 (369,915) -- -- -- --
956,651 978,557 844,101 1,353,086 -- -- -- --
----------- ------------ ----------- ------------ ------------- ------------- ------------- -------------
3,425,848 6,051,968 2,886,707 3,651,024 4,114,334 7,825,771 3,718,722 7,203,624
----------- ------------ ----------- ------------ ------------- ------------- ------------- -------------
(2,073,105) (4,245,320) (1,802,456) (2,738,780) (4,114,334) (7,825,771) (3,718,722) (7,203,624)
(472,991) -- -- -- -- -- -- --
----------- ------------ ----------- ------------ ------------- ------------- ------------- -------------
(2,546,096) (4,245,320) (1,802,456) (2,738,780) (4,114,334) (7,825,771) (3,718,722) (7,203,624)
----------- ------------ ----------- ------------ ------------- ------------- ------------- -------------
9,241,558 15,852,296 4,064,446 10,466,537 280,870,210 462,383,174 300,388,897 396,797,192
-- -- -- 21,368,846 -- -- -- --
1,908,568 3,287,237 273,578 623,990 841,726 1,743,290 1,235,844 3,258,924
(8,417,559) (20,267,617) (3,660,457) (11,477,619) (276,598,180) (482,092,964) (295,415,928) (381,500,330)
----------- ------------ ----------- ------------ ------------- ------------- ------------- -------------
2,732,567 (1,128,084) 677,567 20,981,754 5,113,756 (17,966,500) 6,208,813 18,555,786
----------- ------------ ----------- ------------ ------------- ------------- ------------- -------------
3,612,319 678,564 1,761,818 21,893,998 5,113,756 (17,966,500) 6,208,813 18,555,786
71,866,819 71,188,255 59,437,873 37,543,875 150,377,368 168,343,868 154,624,147 136,068,361
----------- ------------ ----------- ------------ ------------- ------------- ------------- -------------
$75,479,138 $71,866,819 $61,199,691 $59,437,873 $155,491,124 $150,377,368 $160,832,960 $ 154,624,147
=========== ============ =========== ============ ============= ============= ============= =============
$ 7,613 $ 1,714 $ (23,238) $ (29,805) -- -- -- --
=========== ============ =========== ============ ============= ============= ============= =============
$ 390,193 $ 840,675 $ 233,583 $ (553,828) -- -- -- --
=========== ============ =========== ============ ============= ============= ============= =============
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
NET DISTRIBUTIONS
NET ASSET INVESTMENT NET REALIZED DISTRIBUTIONS FROM NET
VALUE, INCOME AND UNREALIZED TOTAL FROM FROM NET REALIZED
YEAR ENDED BEGINNING (OPERATING GAIN/(LOSS) ON INVESTMENT INVESTMENT GAIN ON
AUGUST 31, OF PERIOD LOSS) INVESTMENTS OPERATIONS INCOME INVESTMENTS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
CAPITAL APPRECIATION FUND--CLASS A SHARES
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 $16.09 0.19 2.62 2.81 (0.19) (0.84)
1997 $17.87 0.15 6.51 6.66 (0.16) (1.99)
1998(a) $22.38 0.05 3.40 3.45 (0.05) (2.34)
CAPITAL APPRECIATION FUND--CLASS B
1997(b) $18.90 (0.01)(j) 3.48 3.47 -- --
1998(a) $22.32 (0.02) 3.38 3.36 -- (2.34)
LOUISIANA MUNICIPAL INCOME FUND
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 $10.99 0.60 (0.05) 0.55 (0.60) --
1997 $10.94 0.57 0.28 0.85 (0.58) --
1998(a) $11.21 0.28 0.24 0.52 (0.28) (0.05)
TOTAL RETURN BOND FUND
1993(c) $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 $10.05 0.56 (0.27) 0.29 (0.57) --
1997 $ 9.77 0.60 0.23 0.83 (0.61) --
1998(a) $ 9.99 0.29 0.20 0.49 (0.29) (0.07)
U.S. GOVERNMENT INCOME FUND
1993 $10.75 0.74 0.12 0.86 (0.74) (0.01)
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 $10.14 0.67 (0.30) 0.37 (0.69) --
1997 $ 9.82 0.62 0.18 0.80 (0.64) --
1998(a) $ 9.98 0.30 0.18 0.48 (0.30) --
CASH RESERVE FUND
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 $ 1.00 0.05 -- 0.05 (0.05) --
1997 $ 1.00 0.05 -- 0.05 (0.05) --
1998(a) $ 1.00 0.02 -- 0.02 (0.02) --
U.S. TREASURY MONEY MARKET
1993(d) $ 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 $ 1.00 0.05 -- 0.05 (0.05) --
1997 $ 1.00 0.05 -- 0.05 (0.05) --
1998(a) $ 1.00 0.02 -- 0.02 (0.02) --
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------
DISTRIBUTIONS
IN EXCESS OF
NET
YEAR ENDED INVESTMENT
AUGUST 31, INCOME
- ---------------------------------------------------------
<S> <C>
CAPITAL APPRECIATION FUND--CLASS A SHA
1993 --
1994 --
1995 --
1996 --
1997 --
1998(a) --
CAPITAL APPRECIATION FUND--CLASS B
1997(b) (0.05)(h)
1998(a) --
LOUISIANA MUNICIPAL INCOME FUND
1993 --
1994 --
1995 --
1996 --
1997 --
1998(a) --
TOTAL RETURN BOND FUND
1993(c) --
1994 --
1995 --
1996 --
1997 --
1998(a) --
U.S. GOVERNMENT INCOME FUND
1993 (0.01)(h)
1994 --
1995 --
1996 --
1997 --
1998(a) --
CASH RESERVE FUND
1993 --
1994 --
1995 --
1996 --
1997 --
1998(a) --
U.S. TREASURY MONEY MARKET
1993(d) --
1994 --
1995 --
1996 --
1997 --
1998(a) --
- ---------------------------------------------------------
</TABLE>
(a) Six months ended February 28, 1998 (unaudited).
(b) Reflects operations for the period from December 2, 1996 (date of initial
public offering) to August 31, 1997.
(c) Reflects operations for the period from November 2, 1992 (date of initial
public investment) to August 31, 1993.
(d) Reflects operations for the period from July 19, 1993 (date of initial
public investment) to August 31, 1993.
(e) Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.
(f) Computed on an annualized basis.
(g) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
----------------------------------
NET
INVESTMENT
NET ASSET INCOME NET ASSETS, PORTFOLIO AVERAGE
TOTAL VALUE, TOTAL (OPERATING EXPENSE END OF PERIOD TURNOVER COMMISSION
DISTRIBUTIONS END OF PERIOD RETURN (E) EXPENSES LOSS) WAIVER (G) (000 OMITTED) RATE PAID (I)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(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% --
(1.03) $17.87 18.03% 1.24% 1.08% -- $169,648 69% $0.0632
(2.15) $22.38 39.56% 1.24% 0.72% -- $283,040 62% $0.0700
(2.39) $23.44 16.46% 1.23%(f) 0.45%(f) -- $316,071 31% $0.0700
(0.05) $22.32 18.40% 1.99%(f) (0.09%)(f) -- $ 4,635 62% $0.0700
(2.34) $23.34 16.05% 1.98%(f) (0.28%)(f) -- $ 8,320 31% $0.0700
(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% --
(0.60) $10.94 5.04% 0.74% 5.37% 0.08% $ 65,717 17% --
(0.58) $11.21 8.31% 0.69% 5.19% 0.08% $101,441 17% --
(0.33) $11.40 4.71% 0.67%(f) 5.00%(f) 0.08%(f) $100,073 12% --
(0.55) $10.49 10.39% 0.77%(f) 6.56%(f) 0.22%(f) $ 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% --
(0.57) $ 9.77 2.90% 1.29% 5.57% -- $ 71,188 38% --
(0.61) $ 9.99 8.71% 1.29% 6.00% -- $ 71,867 65% --
(0.36) $10.12 4.88% 1.23%(f) 5.74%(f) 0.03%(f) $ 75,479 13% --
(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% --
(0.69) $ 9.82 3.72% 0.87% 6.64% 0.06% $ 37,544 27% --
(0.64) $ 9.98 8.39% 0.88% 6.31% 0.06% $ 59,438 72% --
(0.30) $10.16 4.90% 0.77%(f) 6.07%(f) 0.06%(f) $ 61,200 16% --
(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 -- --
(0.05) $ 1.00 4.79% 0.87% 4.69% -- $168,344 -- --
(0.05) $ 1.00 4.70% 0.89% 4.59% -- $150,377 -- --
(0.02) $ 1.00 2.38% 0.89%(f) 4.75%(f) -- $155,491 -- --
(0.002) $ 1.00 0.34% 0.50%(f) 2.80%(f) 0.32%(f) $ 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 -- --
(0.05) $ 1.00 5.08% 0.44% 4.95% 0.22% $136,068 -- --
(0.05) $ 1.00 4.92% 0.50% 4.81% 0.14% $154,624 -- --
(0.02) $ 1.00 2.39% 0.65%(f) 4.77%(f) -- $160,833 -- --
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(h) These distributions in excess of net investment income were a result of
certain book and tax timing differences. These distributions do not
represent a return of capital for federal tax purposes.
(i) Represents total commissions paid on portfolio securities divided by total
portfolio shares purchased or sold on which commissions were charged. This
disclosure is required for fiscal years beginning on or after September 1,
1995.
(j) Per share information presented is based on the net operating loss divided
by the monthly average of shares outstanding due to large fluctuations in
the number of shares outstanding during the period.
(See Notes which are an integral part of the Financial Statements)
<PAGE>
- --------------------------------------------------------------------------------
COMBINED NOTES TO FINANCIAL STATEMENTS TOWER MUTUAL FUNDS
February 28, 1998 (unaudited)
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(1) ORGANIZATION
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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>
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PORTFOLIO NAME DIVERSIFICATION INVESTMENT OBJECTIVE
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<S> <C> <C>
Tower Capital Appreciation Fund diversified Provide growth of capital and
("Capital Appreciation Fund") income.
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Tower Louisiana Municipal Income non-diversified Provide current income which is
Fund generally exempt from federal
("Louisiana Municipal Income income tax and personal income
Fund") taxes imposed by the state of
Louisiana.
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Tower Total Return Bond Fund diversified Maximize total return.
("Total Return Bond Fund")
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Tower U.S. Government Income Fund diversified Provide current income.
("U.S. Government Income Fund")
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Tower Cash Fund diversified Provide current income consistent ("Cash Reserve
Fund") with stability of principal.
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Tower U.S. Treasury Money Market diversified Provide current income consistent
Fund with stability of principal and
("U.S. Treasury Money Market liquidity.
Fund")
- ------------------------------------------------------------------------------------------------
</TABLE>
The assets of each portfolio are segregated and a shareholder's interest is
limited to the portfolio in which shares are held.
On May 12, 1997, three of the Tower Mutual Funds engaged in a tax-free common
trust fund conversion with three Hibernia National Bank Common Trust Funds.
The following is a summary of the transactions:
<TABLE>
<CAPTION>
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CAPITAL APPRECIATION LOUISIANA MUNICIPAL U.S. GOVERNMENT
FUND INCOME FUND INCOME FUND
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HIBERNIA PERSONAL STOCK HIBERNIA PERSONAL TAX HIBERNIA PERSONAL BOND
COMMON TRUST FUND ACQUIRED FUND EXEMPT BOND FUND FUND
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<S> <C> <C> <C>
Common Trust Fund Shares
Converted 932,721 3,612,185 1,962,801
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Tower Fund Shares Issued 2,789,607 3,317,405 2,156,291
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Common Trust Fund Assets
Acquired $ 57,075,362 $ 36,590,980 $21,368,846
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Unrealized Appreciation* $ 18,492,828 $ 886,608 $ 132,392
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Tower Fund Net Assets Following
Acquisition $270,386,000 $102,143,658 $54,858,937
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</TABLE>
*Unrealized Appreciation is included in the Common Trust Fund Assets Acquired
above.
<PAGE>
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(2) SIGNIFICANT ACCOUNTING POLICIES
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The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. These
policies are in conformity with generally accepted accounting principles.
INVESTMENT VALUATIONS--Municipal bonds are valued by an independent pricing
service, taking into consideration yield, liquidity, risk, credit quality,
coupon, maturity, type of issue, and any other factors or market data the
pricing service deems relevant. U.S. government securities, listed
corporate bonds, and other fixed income and asset-backed securities are
generally valued at the mean of the latest bid and asked price as furnished
by an independent pricing service. Listed equity securities are valued at
the last sale price reported on a national securities exchange. Cash
Reserve and U.S. Treasury Money Market Funds use the amortized cost method
to value portfolio securities in accordance with Rule 2a-7 under the Act.
For Capital Appreciation Fund, Louisiana Municipal Income Fund, Total
Return Bond Fund, and U.S. Government Income Fund, short-term securities
are valued at the prices provided by an independent pricing service.
However, short-term securities purchased with remaining maturities of sixty
days or less may be valued at amortized cost, which approximates fair
market value. Investments in other open-end regulated investment companies
are valued at net asset value.
REPURCHASE AGREEMENTS--It is the policy of the Funds to require the
custodian bank to take possession, to have legally segregated in the
Federal Reserve Book Entry System, or to have segregated within the
custodian bank's vault, all securities held as collateral under repurchase
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 the guidelines and/or
standards reviewed or established by the Board of Trustees (the
"Trustees").
INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Interest income and expenses
are accrued daily. Bond premium and discount, if applicable, are amortized
as required by the Internal Revenue Code, as amended (the "Code"). Dividend
income and distributions to shareholders are recorded on the ex-dividend
date.
FEDERAL TAXES--It is the 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, 1997, U.S. Government Income Fund, for federal tax purposes,
had a capital loss carryforward, as noted below, which will reduce the
Fund's 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>
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EXPIRATION YEAR
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TOTAL TAX LOSS
FUND 2002 2003 2004 2005 CARRYFORWARD
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<S> <C> <C> <C> <C> <C>
U.S. Government Income Fund $97,781 $1,657,595 $1,298,006 $553,828 $3,607,210
</TABLE>
<PAGE>
Additionally, net capital losses, as noted below, attributable to security
transactions incurred after October 31, 1996 are treated as arising on the first
day of the Funds' next taxable year (September 1, 1997).
<TABLE>
<CAPTION>
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TOTAL TAX LOSS
FUND PUSHFORWARD
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<S> <C>
U.S. Government Income Fund $236,799
- ----------------------------------------------------------------------------------
</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.
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.
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(3) SHARES OF BENEFICIAL INTEREST
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The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in shares were as follows:
EQUITY AND INCOME FUNDS
<TABLE>
<CAPTION>
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CAPITAL APPRECIATION FUND
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997
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CLASS A SHARES SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
Shares sold 934,044 $ 21,397,974 2,060,360 $ 23,465,207
Shares issued in connection with the acquisition of the
Common Trust Funds -- -- 2,789,607 57,075,362
Shares issued to shareholders in payment of distributions
declared 1,140,121 24,406,321 835,384 15,807,335
Shares redeemed (1,236,122) (27,453,440) (2,528,206) (52,191,192)
---------- ------------ ---------- ------------
Net change resulting from Class A Shares transactions 838,043 $ 18,350,855 3,157,145 $ 44,156,712
========== ============ ========== ============
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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SIX MONTHS ENDED PERIOD ENDED
FEBRUARY 28, 1998 AUGUST 31, 1997*
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CLASS B SHARES SHARES DOLLARS SHARES DOLLARS
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<S> <C> <C> <C> <C>
Shares sold 130,570 $ 2,953,393 211,458 $ 4,376,784
Shares issued to shareholders in payment of distributions
declared 28,471 607,295 113 2,391
Shares redeemed (10,196) (232,020) (3,948) (83,894)
---------- ------------ ---------- ------------
Net change resulting from Class B Shares transactions 148,845 $ 3,328,668 207,623 $ 4,295,281
========== ============ ========== ============
Net change resulting from fund share transactions 986,888 $ 21,679,523 3,364,768 $ 48,451,993
========== ============ ========== ============
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</TABLE>
*For the period from December 2, 1996 (date of initial public offering) to
August 31, 1997.
<TABLE>
<CAPTION>
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LOUISIANA MUNICIPAL TOTAL RETURN BOND FUND U.S. GOVERNMENT
INCOME FUND INCOME FUND
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SIX MONTHS SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR ENDED YEAR
FEBRUARY ENDED FEBRUARY ENDED FEBRUARY ENDED
28, AUGUST 31, 28, AUGUST 31, 28, AUGUST 31,
1998 1997 1998 1997 1998 1997
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<S> <C> <C> <C> <C> <C> <C>
Shares sold 280,994 566,626 910,191 1,596,634 400,213 1,066,484
Shares issued in connection
with the acquisition of
the Common Trust Funds -- 3,317,405 -- -- -- 2,156,291
Shares issued to
shareholders in payment of
distributions declared 95,547 155,298 189,054 329,947 27,039 62,787
Shares redeemed (652,839) (992,694) (832,645) (2,022,793) (361,529) (1,151,003)
-------- ---------- ---------- ---------- -------- ----------
Net change resulting from
share transactions (276,298) 3,046,635 266,600 (96,212) 65,723 2,134,559
======== ========== ========== ========== ======== ==========
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</TABLE>
MONEY MARKET FUNDS
<TABLE>
<CAPTION>
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U.S. TREASURY
CASH RESERVE FUND MONEY MARKET FUND
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SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED
FEBRUARY 28, AUGUST 31, FEBRUARY 28, AUGUST 31,
1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Shares sold 280,870,210 462,383,174 300,388,897 396,797,192
Shares issued to shareholders in payment of
distributions declared 841,726 1,743,290 1,235,844 3,258,924
Shares redeemed (276,598,180) (482,092,964) (295,415,928) (381,500,330)
------------ ------------ ------------ ------------
Net change resulting from share
transactions 5,113,756 (17,966,500) 6,208,813 18,555,786
============ ============ ============ ============
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</TABLE>
<PAGE>
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(4) INVESTMENT ADVISORY FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
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INVESTMENT ADVISORY FEE--Hibernia National Bank, the Funds' investment adviser
(the "Adviser") receives for its services an annual investment advisory fee
based on a percentage of each Fund's average daily net assets (see below).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
ANNUAL
FUND RATE
- --------------------------------------------------------------------------------------
<S> <C>
Capital Appreciation Fund 0.75%
Louisiana Municipal Income Fund 0.45%
Total Return Bond Fund 0.70%
U.S. Government Income Fund 0.45%
Cash Reserve Fund 0.40%
U.S. Treasury Money Market Fund 0.40%
- --------------------------------------------------------------------------------------
</TABLE>
The Adviser may voluntarily choose to waive any portion of its fee. The
Adviser can modify or terminate this voluntary waiver at any time at its sole
discretion.
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS") provides the
Funds with certain administrative personnel and services. The fee paid to FAS
is based on the level of average aggregate net assets of the Trust for the
period.
DISTRIBUTION SERVICES FEE--The Funds have adopted a Distribution Plan (the
"Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the Plan, the
Funds will reimburse Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Funds to finance activities intended
to result in the sale of each Fund's shares. The Plan provides that the Funds,
except for Class B Shares of the Capital Appreciation Fund, may incur
distribution expenses up to 0.25% of the average daily net assets of the
Funds, annually, to reimburse FSC. Class B Shares of the Capital Appreciation
Fund may incur distribution expenses up to 0.75% of the average daily net
assets of the Class B Shares, annually, to reimburse FSC. For the period ended
February 28, 1998, Louisiana Municipal Income Fund, U.S. Government Income
Fund and U.S. Treasury Money Market Fund did not incur distribution services
fees.
SHAREHOLDERS SERVICES FEE--Under the terms of a Shareholder Services Agreement
with Federated Shareholder Services ("FSS"), Class B Shares of Capital
Appreciation Fund will pay FSS up to 0.25% of its daily average net assets for
the period. The fee paid to FSS is used to finance certain services for
shareholders and to maintain shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ"), through its subsidiary, Federated Shareholder Services
Company ("FSSC") serves as transfer and dividend disbursing agent for the
Funds. The fee paid to FSSC 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 of $13,075 and $17,585 for
Total Return Bond Fund and U.S. Treasury Money Market Fund, respectively, were
initially borne by FAS. The Funds have reimbursed FAS for these expenses.
These expenses have been deferred and are being amortized over the five-year
period following the Fund's effective date.
GENERAL--Certain of the Officers and Trustees of the Trust are Officers and
Directors or Trustees of the above companies.
<PAGE>
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(5) INVESTMENT TRANSACTIONS
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Purchases and sales of investments, excluding short-term securities, for the
period ended February 28, 1998, were as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
FUND PURCHASES SALES
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital Appreciation Fund $100,542,645 $91,916,122
Louisiana Municipal Income Fund $11,852,750 $14,648,918
Total Return Bond Fund $16,330,787 $9,037,441
U.S. Government Income Fund $11,878,908 $9,357,514
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
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(6) CONCENTRATION OF CREDIT RISK
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Since Louisiana Municipal Income Fund invests a substantial portion of its
assets in issuers located in one state, it will be more susceptible to factors
adversely affecting issuers of that state than would be a comparable general
tax-exempt mutual fund. In order to reduce the credit risk associated with
such factors, at February 28, 1998, 93.33% 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 22.65% of total investments.
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(7) SUBSEQUENT EVENT
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Effective March 11, 1998, Cash Reserve Fund added Class B Shares and
designated the existing share class as Class A Shares.
<PAGE>
TOWER MUTUAL FUNDS
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TRUSTEES AND OFFICERS
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<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
</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 FUNDS' PROSPECTUS WHICH
CONTAINS FACTS CONCERNING THEIR OBJECTIVES AND POLICIES, MANAGEMENT
FEES, EXPENSES AND OTHER INFORMATION.
<PAGE>
Federated Securities Corp., Distributor
891836108
891836207
891836306
891836504
891836405
891836603
007697 (4/98)
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