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Sierra Trust Funds
SEMI-ANNUAL REPORT
for the six months ended
December 31, 1995
DIVERSIFICATION:
A SOLUTION
FOR TODAY'S
INVESTOR
[LOGO]
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[LOGO]
Message from the President 1
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1995 Year in Review / 1996 Outlook 2
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Individual Fund Reviews 3
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Statements of Assets and Liabilities 30
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Statements of Operations 34
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Statements of Changes in Net Assets 36
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Statements of Changes in Net Assets -- Capital Stock Activity 40
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Statement of Cash Flows 44
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Financial Highlights 46
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Portfolio of Investments 62
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Notes to Financial Statements 98
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Time -- Not Timing -- Can Lead to Investment Success 114
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[photo]
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A MESSAGE FROM THE PRESIDENT
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DEAR
SHAREHOLDER:
We are pleased to provide you with the SIERRA TRUST FUNDS Semi-Annual Report for
the six-month period ended December 31, 1995.
Over the past year, strong performances in the U.S. financial markets were very
positive reminders that staying invested through periods of market turbulence
can be a wise strategy.
In 1995, equity mutual funds averaged returns of 31.08%, while taxable bond
funds on average returned 15.20% according to Lipper Analytical Services. This
positive market environment was in sharp contrast to 1994, when rising interest
rates and fears of impending inflation led to sharp declines in the prices of
intermediate- and long-term bonds, as well as generally lackluster performance
in stock investments.
The past year was also favorable for many SIERRA shareholders, and our
commitment to professional portfolio management continued to successfully serve
our long-term investors. Throughout 1995, the SIERRA TRUST FUNDS continued to
grow, ending the year with 274,137 SIERRA TRUST shareholder accounts diversified
among our family of 16 mutual funds, and $2.9 billion in total assets under
management as of December 31, 1995.
As the markets propelled to new highs, a number of SIERRA TRUST FUNDS provided
shareholders with significant, double-digit total returns for the 12 months
ending December 31, 1995. Additionally, for the one-year time period, the SIERRA
CORPORATE INCOME FUND and the SIERRA CALIFORNIA INSURED INTERMEDIATE MUNICIPAL
FUND achieved outstanding total return performance recognition from Lipper
Analytical Services. The SIERRA CORPORATE INCOME FUND was ranked Sixth among a
total of 82 mutual funds in the Corporate Debt Funds BBB-Rated category,* and
the SIERRA CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND was ranked Number One
by Lipper among a total of 27 funds in the California Intermediate Municipal
Debt Funds category for the one-year period ending December 31, 1995.**
Over the past year, the Dow Jones Industrial Average's record-breaking surge
past 5,000 captured public attention, and may well have contributed to record
inflows to stock mutual funds. According to the Investment Company Institute
(ICI), new investments into domestic stock funds totaled $117 billion for the 12
months ended December, 1995, ahead of the previous single-year asset record of
$91 billion for that category set in 1993.
However, this surge into equity mutual funds, coinciding with the Dow Jones
Industrial Average breaking through the 5,000 level in November, may suggest
that many investors may be attempting to "time" the market in managing their
investments. Market timing is the practice of attempting to buy investments when
prices are rising and sell when prices begin to decline. Unfortunately, many
investors who practice this strategy often run the risk of substantially
underperforming the markets, as even the top economists and market strategists
can't always time the market.
Historical data shows that investors who stay invested through both up and down
market cycles can substantially affect their returns. For example, missing just
the three best months in the S&P 500 from January 1, 1990, through December 31,
1995, would have reduced an investor's compound average annual return from
13.02% to 8.04%.***
Rather than focusing on the market's current strength or weakness, we believe
that investors will be better served by working with their Investment
Representative to establish specific investment goals and develop an appropriate
long-term strategy. Investing on a regular basis, diversification and a
long-term horizon are keys to reaching your financial goals throughout changing
market climates.
As you consider your investment strategies in 1996 and beyond, please know that
SIERRA remains fully committed to helping you achieve your financial goals over
time.
Thank you for selecting the SIERRA TRUST FUNDS. We appreciate the confidence you
have placed with us, and look forward to serving your investment needs in the
years to come.
Sincerely,
/s/ F. BRIAN CERINI
F. BRIAN CERINI
PRESIDENT
* The SIERRA CORPORATE INCOME FUND ranked Fifth among a total of 27 funds in
the Corporate Debt Funds BBB-Rated category for the five-year period ending
12/31/95.
** Lipper rankings exclude sales charges. Rankings represent past performance
and are no guarantee of future results.
*** Source: Ibbotson Associates. The market is represented by the Standard &
Poor's Composite of 500 stocks, a group of unmanaged stocks regarded to be
representative of the stock market in general. Results assume the
reinvestment of dividends and capital gains. Past performance is no
guarantee of future results.
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FOR MOST INVESTORS, AN EXCEPTIONAL YEAR
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1995 YEAR IN REVIEW
1996 OUTLOOK
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BY ALMOST ANY MEASURE, the performance of U.S. investment markets in 1995 far
exceeded investor expectations. The meteoric rise -- 37.58% through 12/31/95 --
of the S&P 500 (Standard & Poor's Composite Index of 500 Stocks), was even more
impressive coming after a disappointing 1994. The U.S. bond market recovered
spectacularly as well. Long-term bonds returned 29.93% for the 12 months ended
December 31 as the yield on the 30-year Treasury bond fell to slightly under 6%,
the lowest level in two years.
MARKET HIGHLIGHTS
Over the past year, moderate economic growth and low inflation were positive
factors for both stocks and bonds. With inflation remaining in check, the
Federal Reserve reversed course in mid-1995 and began lowering short-term
interest rates. From July through December, the Federal Reserve cut short-term
rates on two separate occasions. This led to rallies in both the stock and bond
markets, as long-term interest rates also fell.
Strength in the bond markets, resulting primarily from falling interest rates,
also reflected investor expectations that Congress and the Clinton
administration would reach an agreement on a balanced budget and tax relief in
1996.
In the U.S. stock market, 1995 attention focused on the record-breaking
surge of the Dow Jones Industrial Average through 4,000 early last year and
5,000 just before Thanksgiving. It took 88 years for the Dow to cross 1,000 but
its sprint from 4,000 to 5,000 took just nine months. In early 1996, the Dow has
continued to reach new highs.
Continued strength in corporate earnings contributed to the stock market's
climb. Pre-tax corporate profits for non-financial U.S. companies were expected
to approach $500 billion in 1995, nearly double that of 1992. Profits were also
exceptionally strong in certain market segments. For example, small-cap stocks
as a group performed well in the first half of the year but were outpaced by the
broader market in the fourth quarter, with small company stocks returning 34.46%
for the full year.
1995 MARKET RETURNS OF MAJOR ASSET CLASSES
LARGE COMPANY STOCKS 37.58%
SMALL COMPANY STOCKS 34.46%
LONG-TERM BONDS 29.93%
INTERNATIONAL STOCKS 11.21%
TREASURY BILLS 5.81%
Sources: Ibbotson Associates - T-bills represent 90-day U.S. Treasury Bills;
bonds are represented by Lehman Brothers Long-Term Government and Corporate Bond
Index; small company stocks are represented by Ibbotson Small Company Index.
Large company stocks are represented by S&P 500 Composite Index. International
stocks are represented by MSCI EAFE Index. Indexes represent unmanaged
performance. T-bills are generally considered the safest securities because they
are short term and offer a fixed yield at maturity, which is guaranteed by the
U.S. government. Government bonds are riskier than T-bills because of the longer
maturities, yet they are generally subject to less credit risk, because the
interest payments and return of principal are also backed by the U.S.
government, if held to maturity. An investor would typically purchase stocks for
long-term growth of capital. However, stocks are often subject to significant
price fluctuations and therefore an investor may have a gain or loss in
principal when the shares are sold. This chart is not intended to represent the
performance of any SIERRA TRUST FUND.
FACTORS FOR 1996
Looking ahead to factors that may affect the U.S. markets in 1996, it is
expected that the economic growth rate will be slightly below 3%, with inflation
at roughly the same level. As a result, interest rates should remain generally
stable, adjusting up or down in response to growth and inflation outlooks.
Moderate growth and low inflation should be positive indicators for stocks and
stock mutual funds. However, market returns may be constrained by slower growth
in corporate earnings. Many estimates put the current price-to-earnings ratio
(share prices divided by corporate earnings) for stocks in the S&P 500 at about
17. This compares favorably with historical levels, and may indicate that in
general, the stock
CONTINUED ON PAGE 113
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INDIVIDUAL FUND REVIEWS
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SIERRA INVESTMENT
ADVISORS CORPORATION
SIERRA Investment Advisors Corporation ("SIERRA Advisors"), a registered
investment advisor, is the investment advisor to the SIERRA Trust Funds, and has
general oversight responsibility for the services provided to the Funds. These
services include formulating the Funds' investment policies, analyzing economic
trends affecting the Funds, and directing and evaluating the investment services
provided by the Sub-Advisors and the individual Portfolio Managers of each Fund.
SIERRA Advisors supervises the Portfolio Managers' day-to-day management of the
Funds in the SIERRA Trust Funds family to ensure that the policies and
guidelines are met, and to determine appropriate investment performance
measures.
STEPHEN C. SCOTT
PRESIDENT AND CHIEF INVESTMENT OFFICER
Mr. Scott received his B.A. and M.B.A. from California State University, Long
Beach. He joined the firm in 1988, and is responsible for providing economic
analysis, as well as conducting investment analysis and management for the
SIERRA Asset Management (SAM) Account. Prior to joining SIERRA Advisors, Mr.
Scott was President & Chairman of his own firm, SDS Investment Advisors, after
nine years as Senior Pension Investment Manager with the Group Pension and
Investment Division of The Equitable Life Assurance Society of the United
States.
MICHAEL D. GOTH
CHIEF OPERATING OFFICER
Mr. Goth received his B.S. and M.S. degrees from Rensselaer Polytechnic
Institute of New York, and M.B.A. from Harvard Business School. He joined the
firm in 1991 and is responsible for the supervision of the SIERRA Trust Funds'
Portfolio Managers. Previously, he served as Vice President of The Boston
Company Advisors, Inc. He also served as Executive Vice President of the GIT
Mutual Fund Group for over ten years.
UNDERSTANDING THE
ENCLOSED CHARTS AND
PERFORMANCE FIGURES
In order to help you understand the SIERRA Trust Funds' investment performance,
we have included the following discussions along with graphs that compare the
Funds' performance with certain market indices. Descriptions of these indices
are provided next to the individual graphs on the following pages.
Generally, an index represents the market value of an unmanaged group of
securities, regarded by investors as representative of a particular market. An
index does not reflect any asset-based charges for investment management or
other expenses. Total return is used to measure a Fund's performance and
reflects both changes in the value of the price of the Fund's shares as well as
any income dividend and/or capital gain distributions made by the Fund during
the period. Past performance is not a guarantee of future results. A mutual
fund's share price and investment return will vary with market conditions, and
the principal value of an investment when you sell your shares may be more or
less than the original cost.
The 30-day average yield is computed by dividing net investment income per share
earned over the one-month period ended December 31, 1995, by the maximum
offering price on that date, and annualizing the result.
Yield indicates the investment income per share as a percentage of the offering
price, whereas total return includes both net investment income and changes in
the value of the shares as a percentage of the initial investment. The 30-day
SEC yield is the yield calculated pursuant to a standard formula required by the
Securities and Exchange Commission ("SEC") for performance advertisement
purposes, and does not imply any endorsement or recommendation by the SEC.
<PAGE>
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TO OUR
SHAREHOLDERS:
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WE ARE PLEASED TO PROVIDE YOU WITH AN OVERVIEW OF THE FOLLOWING FUNDS IN THE
SIERRA TRUST FUNDS FAMILY FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995. TO
HELP YOU BETTER UNDERSTAND THE OUTSTANDING INVESTMENT MANAGEMENT AVAILABLE TO
YOU AS A SIERRA TRUST FUNDS' SHAREHOLDER, WE HAVE ALSO INCLUDED BIOGRAPHIES
HIGHLIGHTING THE INVESTMENT PROFESSIONALS MANAGING YOUR FUNDS.
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SHORT TERM HIGH QUALITY BOND FUND
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PORTFOLIO MANAGER:
SCUDDER, STEVENS & CLARK, INC.
THOMAS M. POOR
Mr. Poor, Managing Director of Scudder, is the portfolio manager for the SIERRA
SHORT TERM HIGH QUALITY BOND FUND. He is a Chartered Financial Analyst and has
been with Scudder since 1970. Mr. Poor has had primary investment management
responsibility for the Fund since its inception.
PERFORMANCE REVIEW:
From the Fund's inception (November 1, 1993) through December 31, 1995, the
SIERRA SHORT TERM HIGH QUALITY BOND FUND (Class A Shares) advanced 3.75% on an
average annual total return basis, or 2.05% adjusted for the maximum sales
charge. For the 12-month period ended December 31, 1995, the Fund's total return
was 10.03%, or 6.18% adjusted for the maximum sales charge. THE FUND'S 30-DAY
SEC YIELD AS OF DECEMBER 31, 1995, WAS 5.87%. For additional information,
including Class B and Class S Share performance, see the accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The second half of 1995 produced an economic backdrop that was quite favorable
for bond investors. U.S. economic growth remained moderate as businesses reduced
inventories, foreign economies continued to falter, and consumer spending was
flat. Meanwhile, inflation stayed subdued and even showed signs of decreasing.
The Federal Reserve greeted this impressive inflation result by lowering
short-term interest rates by 0.25 percent on two occasions during the year.
After falling for the first half of 1995, the U.S. Dollar also staged a dramatic
comeback against the Japanese Yen. Adding to this positive economic environment
was the potential for a credible deficit reduction plan. As the Republicans
gained power in Congress, deficit reduction and a balanced budget moved to the
forefront of the political agenda.
With interest rates falling as a result of slow economic growth and modest
inflation, the Fund's performance benefited significantly during the second half
of the year.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION* 11/1/93
Nov. 93 10005 9655 9991
Dec. 93 10052 9700 9940
Jan. 94 10098 9745 10046
Feb. 94 10063 9711 9944
Mar. 94 9947 9599 9831
Apr. 94 9908 9561 9772
May 94 9915 9568 9788
Jun. 94 9927 9580 9816
Jul. 94 9981 9632 9944
Aug. 94 9989 9639 9988
Sep. 94 9993 9644 9933
Oct. 94 9997 9647 9945
Nov. 94 10002 9652 9888
Dec. 94 9842 9497 9910
Jan. 95 9851 9507 10074
Feb. 95 9942 9594 10274
Mar. 95 10037 9685 10339
Apr. 95 10130 9776 10461
May 95 10357 9995 10730
Jun. 95 10366 10003 10800
Jul. 95 10375 10012 10828
Aug. 95 10472 10105 10922
Sep. 95 10524 10156 10993
Oct. 95 10625 10253 11100
Nov. 95 10726 10351 11233
Dec. 95 10829 10450 11340
* Index total returns were calculated from 10/31/93 to 12/31/95. The Lehman
Brothers Mutual Fund Short (1-5) Investment Grade Debt Index includes all
investment-grade, corporate debt securities with maturities of one to five
years, assumes reinvestment of all dividends/distributions, and does not
reflect any asset-based charges for investment management or other expenses.
Past performance does not guarantee future performance. The returns shown for
the Fund assume reinvestment of all dividends/distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation)
and Administrator (SIERRA Fund Administration Corporation) waived a portion of
their management fees; the Advisor absorbed other expenses, and the Custodian
reduced fees by credits. In the absence of the waivers and absorption of other
expenses or fees reduced by credits, yield and total return would have been
lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
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(November 1, 1993)
<S> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 4.47% 10.03% 3.75%
Fund (adjusted for the maximum 3.5% sales charge) 0.81% 6.18% 2.05%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index* 5.00% 14.44% 5.98%
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
------- ------ ---------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 4.08% 9.22% 5.19%
Fund (adjusted for the maximum 4% contingent deferred sales charge) 0.08% 5.22% 3.23%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index* 5.00% 14.44% 10.10%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 4.08% 9.22% 5.18%
Fund (adjusted for the maximum 5% contingent deferred sales charge) -0.92% 4.22% 2.57%
Lehman Brothers Mutual Fund Short (1-5) Investment Grade Debt Index* 5.00% 14.44% 10.10%
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</TABLE>
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SHORT TERM HIGH QUALITY BOND FUND
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WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
For most of the six months ended December 31, 1995, the Fund was positioned
aggressively to take advantage of the declining interest rate environment. The
Fund's duration or sensitivity to interest rates was approximately 2.5 years for
most of this period, compared to approximately six months in late 1994. As
short-term interest rates fell over 60 basis points during the second half of
1995, the value of the Fund rose considerably. Duration in the Fund remains
relatively high in anticipation of a slowing U.S. economy and further monetary
easing by the Federal Reserve in 1996.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
During the six-month period, we actively managed the Fund's exposure to various
sectors of the bond market. We began the third quarter by reducing positions in
U.S. Treasuries in favor of higher yielding investments in the corporate and
mortgage sectors. In terms of the corporate bond market, we added to our
existing assets in the consumer finance company, The Money Store, Inc., and a
real estate investment trust, Taubman Realty Corporation. Both issues provide
excellent credit quality and competitive yields compared to similar Treasury
offerings. In the mortgage sector, we purchased seasoned mortgage securities
that afford improved protection against prepayment, the risk that consumers may
pay off their loans early, causing a reduction in yields. These portfolio
changes were made to capture attractive buying opportunities and to help
increase the overall yield in the Fund.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
Looking forward to 1996, we believe the outlook for the U.S. fixed income market
remains favorable. Our economic forecast calls for slower growth in the first
half of 1996 and potentially negative growth in the second half of the year. In
this environment, we expect further declines in inflation as consumer demand
recedes and trends such as increased productivity, aging demographics, and
deregulation continue to contain price pressures.
Given this outlook, interest rates should drop lower in 1996. Specifically, we
are looking for short-term rates to fall faster than long-term rates as the
Federal Reserve attempts to stimulate economic growth. This scenario would lead
to a steeper yield curve, a condition that would be advantageous for the SIERRA
SHORT TERM HIGH QUALITY BOND FUND, since most of its investments are located at
the short end of the yield curve.
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HIGH-QUALITY PORTFOLIO FOR ADDED PRINCIPAL STABILITY
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[graphic omitted: pie chart]
AAA 67%
BBB 21%
A 8%
AA 4%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
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SHORT TERM GLOBAL GOVERNMENT FUND
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PORTFOLIO MANAGER:
SCUDDER, STEVENS & CLARK, INC.
ADAM M. GRESHIN
Adam M. Greshin is the lead portfolio manager for the SIERRA SHORT TERM GLOBAL
GOVERNMENT FUND. Mr. Greshin joined Scudder in 1986 as an international bond
analyst. Currently, he is Product Leader for Scudder's global and international
fixed-income investing. He was involved in the original design of the Fund and
has served as a member of the Fund's portfolio management team since 1992. Mr.
Greshin assumed responsibility for the Fund's day-to-day management and
investment strategies in November 1995.
PERFORMANCE REVIEW:
From the Fund's inception (February 11, 1992) through December 31, 1995, the
SIERRA SHORT TERM GLOBAL GOVERNMENT FUND (Class A Shares) advanced 5.34% on an
average annual total return basis, or 4.38% adjusted for the maximum sales
charge. For the 12-month period ended December 31, 1995, the Fund's total return
was 8.83% or 5.02% adjusted for the maximum sales charge. THE FUND'S 30-DAY SEC
YIELD AS OF DECEMBER 31, 1995 WAS 6.09%. For additional information, including
Class B and Class S Share performance, see the accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The six-month period was extremely positive for bond investors around the globe
as most major markets rallied. The rallies were fueled by a series of interest
rate reductions in Europe and the U.S., brought on by weak growth and
expectations of lower inflation. Following a joint effort by the world's central
banks to support the U.S. currency, the U.S. Dollar rebounded in August. By the
end of the year, the Dollar was 4 percent higher against the Yen and 7 percent
lower versus the Deutschemark. Although these factors contributed to some price
volatility, the Fund showed considerable gains throughout the six-month period.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION* 2/11/92
Feb. 92 10015 9665 10000
Mar. 92 10006 9655 9945
Apr. 92 10157 9801 10028
May 92 10313 9952 10280
Jun. 92 10550 10181 10553
Jul. 92 10636 10264 10748
Aug. 92 10544 10175 11019
Sep. 92 10617 10246 10965
Oct. 92 10560 10190 10688
Nov. 92 10626 10254 10521
Dec. 92 10659 10286 10561
Jan. 93 10726 10351 10702
Feb. 93 10746 10370 10768
Mar. 93 10900 10519 10904
Apr. 93 10966 10582 11126
May 93 11120 10731 11203
Jun. 93 11186 10795 11137
Jul. 93 11249 10855 11074
Aug. 93 11315 10919 11303
Sep. 93 11341 10944 11424
Oct. 93 11453 11052 11394
Nov. 93 11375 10977 11291
Dec. 93 11383 10985 11359
Jan. 94 11494 11091 11480
Feb. 94 11409 11010 11442
Mar. 94 11327 10930 11493
Apr. 94 11385 10986 11526
May 94 11347 10950 11510
Jun. 94 11310 10914 11636
Jul. 94 11327 10930 11729
Aug. 94 11294 10899 11744
Sep. 94 11354 10957 11844
Oct. 94 11371 10973 12020
Nov. 94 11481 11079 11825
Dec. 94 11246 10852 11843
Jan. 95 11255 10861 12069
Feb. 95 11255 10861 12284
Mar. 95 11263 10869 12661
Apr. 95 11422 11022 12816
May 95 11534 11131 13045
Jun. 95 11543 11139 13158
Jul. 95 11705 11295 13300
Aug. 95 11817 11404 13086
Sep. 95 11981 11562 13316
Oct. 95 12044 11623 13464
Nov. 95 12158 11733 13538
Dec. 95 12239 11811 13709
* Index total returns were calculated from 2/28/92 to 12/31/95. The Lehman
Brothers Mutual Fund Short World Multimarket Index includes all debt instruments
of the United States and 12 Lehman major countries denominated by U.S. Dollars
with maturities of one to five years. The Index assumes reinvestment of all
dividends/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation),
Administrator (SIERRA Fund Administration Corporation) and Distributor waived a
portion of their management or distribution fees, the Administrator absorbed
other expenses, and the Custodian reduced fees by credits. In the absence of the
waivers, absorption of other expenses, or fees reduced by credits, yield and
total return would have been lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
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AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
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(February 11, 1992)
<S> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 6.03% 8.83% 5.34%
Fund (adjusted for the maximum 3.5% sales charge) 2.32% 5.02% 4.38%
Lehman Brothers Mutual Fund Short World Multimarket Index* 4.19% 15.77% 8.78%
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
------- ------ -----------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 5.64% 8.03% 4.63%
Fund (adjusted for the maximum 4% contingent deferred sales charge) 1.64% 4.03% 2.71%
Lehman Brothers Mutual Fund Short World Multimarket Index* 4.19% 15.77% 11.55%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 5.64% 8.03% 4.63%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 0.64% 3.03% 2.07%
Lehman Brothers Mutual Fund Short World Multimarket Index* 4.19% 15.77% 11.55%
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</TABLE>
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SHORT TERM GLOBAL GOVERNMENT FUND
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WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
Over the six-month period, we placed our emphasis on maintaining the Fund's
share price, while also attempting to capture the best yield opportunities
available. Assets were concentrated in Europe and the U.S. Dollar-bloc markets
of Canada, Australia, and New Zealand.
In Europe, inflationary concerns were benign, and the economic outlook was
increasingly positive. Research indicated that the interest rate cycle had
peaked early in 1995 and the effects of slower GDP growth and inflation would
lead to interest rate reductions, particularly in Germany. To take advantage of
these market conditions, we increased duration, or the Fund's sensitivity to
interest rate changes, in Europe and focused our acquisitions in this market. We
also anticipated a rebound in the U.S. Dollar-bloc markets by mid-1995 and
increased our concentration of assets accordingly. Our strategy was to capture
the ripple effects of the U.S. bond rallies on Canada, Australia, and New
Zealand, as well as to enhance the portfolio's yield.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
The portfolio's duration increased slightly from 1.8 years to 2.0 years during
the six months ended December 31, 1995. Reflecting our positive outlook for the
European Bloc, duration was highest in the peripheral markets of Sweden and
Italy -- positions held in the portfolio during the third quarter of 1995. These
additions proved to be two of the best investment decisions in the portfolio. An
easing of political tensions in Sweden and the approval of a federal budget
favorable to the financial markets in Italy contributed heavily to the stellar
returns in both countries.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
The intermediate-term outlook for bond markets continues to be positive. The
rise in bond prices last year, particularly in the U.S. and Europe, is expected
to extend into 1996 as fears of recession grip Europe and their respective
central banks use instruments of monetary policy to fine tune their economies.
Although we remain bullish, we expect to see more volatility in the market,
especially since there appears to be greater susceptibility to bad news than
good news. Of course, any price movement will be greater on the long end of the
yield curve, as compared to the short end, where the short-term securities in
this Fund are located.
Europe remains the largest weighting in the Fund. We prefer the risk
characteristics of the U.S. Dollar and will therefore hedge much of the
portfolio's foreign currency exposure into U.S. Dollars. Our fundamental
strategy continues to be a commitment to finding opportunities that offer our
shareholders the most favorable risk/return attributes for a top-quality,
highly diversified global income fund.
- --------------------------------------------------------------------------------
DIVERSIFICATION BY REGION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
Europe 64.34%
Americas 29.51%
Australia 6.15%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
U.S. GOVERNMENT FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
BLACKROCK FINANCIAL
MANAGEMENT, INC.
KEITH ANDERSON
E.G. FISHER
Mr. Anderson is Managing Director, co-head of the Portfolio Management Group,
and a member of the Management Committee and the Investment Strategy Committee
at BlackRock. He also serves as Vice President of BlackRock's family of mutual
funds. E.G. Fisher, co-manager of the Fund, is a Principal at BlackRock and a
member of its Investment Management Committee. Mr. Fisher joined BlackRock in
1990 in the Risk Management and Analytics Group where he was responsible for
risk management analysis and reverse engineering of CMOs. He received a B.A. in
Economics from Dartmouth College in 1989. Both Mr. Anderson and Mr. Fisher
assumed primary investment management responsibilities for the SIERRA U.S.
GOVERNMENT FUND in December 1994.
PERFORMANCE REVIEW:
From the Fund's inception (July 25, 1989) through December 31, 1995, the SIERRA
U.S. GOVERNMENT FUND (Class A Shares) advanced 7.83% on an average annual total
return basis, or 7.06% adjusted for the maximum sales charge. For the 12-month
period ended December 31, 1995, the Fund's total return was 16.48%, or 11.23%
adjusted for the maximum sales charge. THE FUND'S 30-DAY SEC YIELD AS OF
DECEMBER 31, 1995, WAS 6.16%, AND ITS 30-DAY AVERAGE YIELD WAS 6.68%. For
additional information, including Class B and Class S Share performance, see the
accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The most significant factor affecting the performance of the Fund has been the
dramatic rally in the bond market. Except for a sharp correction in July 1995,
yields fell steadily, driven primarily by moderate economic growth, low
inflation, and a gradual easing by the Federal Reserve.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION* 7/25/89
Jul. 89 10020 9569 10000 10000
Aug. 89 9920 9473 9832 9870
Sep. 89 9979 9530 9874 9940
Oct. 89 10182 9724 10130 10167
Nov. 89 10292 9829 10228 10278
Dec. 89 10385 9918 10246 10338
Jan. 90 10306 9842 10101 10266
Feb. 90 10345 9880 10121 10326
Mar. 90 10375 9908 10119 10352
Apr. 90 10319 9855 10030 10259
May 90 10561 10086 10310 10577
Jun. 90 10698 10217 10473 10744
Jul. 90 10869 10380 10607 10931
Aug. 90 10828 10341 10460 10815
Sep. 90 10896 10406 10560 10904
Oct. 90 10999 10504 10732 11027
Nov. 90 11179 10676 10970 11259
Dec. 90 11357 10846 11141 11448
Jan. 91 11466 10950 11260 11622
Feb. 91 11538 11019 11324 11719
Mar. 91 11608 11085 11382 11799
Apr. 91 11712 11185 11507 11908
May 91 11770 11241 11552 12013
Jun. 91 11783 11252 11536 12023
Jul. 91 11960 11422 11673 12227
Aug. 91 12193 11644 11944 12449
Sep. 91 12408 11850 12194 12682
Oct. 91 12589 12023 12302 12892
Nov. 91 12699 12127 12425 12985
Dec. 91 13041 12454 12848 13246
Jan. 92 12863 12284 12648 13093
Feb. 92 12957 12373 12697 13217
Mar. 92 12864 12285 12624 13132
Apr. 92 12983 12399 12703 13261
May 92 13217 12622 12938 13500
Jun. 92 13401 12798 13123 13659
Jul. 92 13561 12951 13454 13779
Aug. 92 13722 13104 13579 13958
Sep. 92 13832 13209 13771 14067
Oct. 92 13657 13043 13572 13943
Nov. 92 13678 13062 13549 13987
Dec. 92 13869 13245 13777 14167
Jan. 93 14084 13451 14070 14353
Feb. 93 14235 13594 14352 14498
Mar. 93 14305 13662 14399 14586
Apr. 93 14377 13730 14510 14662
May 93 14408 13760 14494 14745
Jun. 93 14589 13933 14816 14858
Jul. 93 14648 13989 14906 14917
Aug. 93 14762 14098 15239 14987
Sep. 93 14711 14049 15296 15001
Oct. 93 14771 14106 15355 15044
Nov. 93 14719 14057 15186 15014
Dec. 93 14811 14144 15245 15136
Jan. 94 15014 14338 15454 15285
Feb. 94 14768 14104 15126 15178
Mar. 94 14276 13634 14786 14784
Apr. 94 14085 13452 14669 14674
May 94 13981 13352 14650 14733
Jun. 94 13919 13293 14616 14701
Jul. 94 14181 13543 14885 14995
Aug. 94 14208 13569 14888 15043
Sep. 94 13996 13367 14678 14829
Oct. 94 13918 13292 14668 14820
Nov. 94 13825 13203 14642 14774
Dec. 94 13943 13316 14731 14892
Jan. 95 14246 13605 15005 15211
Feb. 95 14597 13940 15327 15599
Mar. 95 14656 13996 15424 15672
Apr. 95 14855 14186 15626 15895
May 95 15275 14587 16256 16396
Jun. 95 15335 14645 16381 16489
Jul. 95 15300 14611 16320 16517
Aug. 95 15472 14776 16511 16689
Sep. 95 15578 14877 16670 16836
Oct. 95 15798 15087 16923 16986
Nov. 95 16018 15298 17187 17179
Dec. 95 16241 15510 17431 17394
* Index total returns were calculated from 7/31/89 to 12/31/95. The Lehman
Brothers Mutual Fund U.S. General Government Index represents all U.S.
Government agency and Treasury securities. The Lehman Brothers Mutual Fund U.S.
Mortgage Index includes all U.S. agency mortgage-backed securities. The indices
assume reinvestment of all dividends/distributions, and do not reflect any
asset-based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation),
Administrator (SIERRA Fund Administration Corporation) and Distributor waived a
portion of their management or distribution fees, the Advisor and Administrator
absorbed other expenses, and the Custodian reduced fees by credits. In the
absence of the waivers, absorption of other expenses, or fees reduced by
credits, yield and total return would have been lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(July 25, 1989)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 5.91% 16.48% 7.42% 7.83%
Fund (adjusted for the maximum 4.5% sales charge) 1.14% 11.23% 6.43% 7.06%
Lehman Brothers Mutual Fund U.S. General Government Index* 6.42% 18.34% 9.37% 9.05%
Lehman Brothers Mutual Fund U.S. Mortgage Index* 5.49% 16.80% 8.73% 9.01%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 5.51% 15.62% N/A 10.03%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 0.51% 10.62% N/A 7.47%
Lehman Brothers Mutual Fund U.S. General Government Index* 6.42% 18.34% N/A 12.46%
Lehman Brothers Mutual Fund U.S. Mortgage Index* 5.49% 16.80% N/A 11.87%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 5.51% 15.62% N/A 10.03%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 0.51% 10.62% N/A 7.47%
Lehman Brothers Mutual Fund U.S. General Government Index* 6.42% 18.34% N/A 12.46%
Lehman Brothers Mutual Fund U.S. Mortgage Index* 5.49% 16.80% N/A 11.87%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
U.S. GOVERNMENT FUND
- --------------------------------------------------------------------------------
U.S. Treasuries outperformed almost all other fixed income securities, including
most mortgage-backed bonds. The relative underperformance of mortgage securities
was a result of increased refinancing brought on by falling interest rates. With
many consumers paying off their mortgage loans early and assuming new loans with
lower rates, yields of many mortgage-backed securities dropped. The Fund seeks
protection from this prepayment risk by maintaining an allocation of seasoned
mortgage securities which have weathered several refinancing cycles and are less
susceptible to prepayment. Using this tactic, the Fund was able to maintain its
income focus while posting strong relative performance compared to other U.S.
mortgage funds.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
With interest rates falling steadily over the six-month period, the Fund
gradually reduced exposure to mortgage-backed securities. At the beginning of
the period, the Fund had a strong weighting in mortgages. These holdings
performed well in the third quarter of 1995 as rates increased and the economy
showed signs of recovery. However, as interest rates started falling again in
the fourth quarter, prepayment activity increased. The Fund responded by
reducing exposure to mortgage securities without superior prepayment protection
and shifting its emphasis to seasoned mortgages with less cash flow risk, U.S.
Treasuries, and other government agency bonds. This strategy allowed the Fund to
keep its yield at competitive levels throughout the six-month period.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
Along with a reduction in the Fund's exposure to mortgage-backed securities, we
have concentrated on bonds of intermediate maturities. This "bullet" structure
(concentration on medium-term bonds) will allow the Fund to benefit from a
steepening yield curve -- a phenomenon that historically occurs in an
environment of monetary easing, where declines in short rates outpace those of
longer maturities. With expectations that the Federal Reserve will further
reduce short-term rates, the Fund is well positioned for both higher yields and
greater price stability, relative to the two ends of the yield curve.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
We have positioned the Fund more aggressively (duration slightly greater than
our benchmark) in anticipation of a further near-term decline in interest rates.
In a period of soft economic growth, a 5.50 percent Fed Funds target appears to
be too restrictive. Any decision to lower interest rates, however, will hinge on
the budget talks and continuing low inflation. While certain commodity indices
have recently risen, the increase has been largely confined to energy prices as
a harshly cold winter has swept across the country. Surveys of retailers and
manufacturers show that there is virtually no ability to pass increases to
consumers. Further supporting a Federal Reserve easing of monetary policy has
been the sharp acceleration in consumer debt. All of these factors suggest that
there is a greater downside than upside risk to the economy, and the Fed will
have to respond more aggressively than it has over the last half of 1995.
Overall, economic projections appear very favorable for the Fund and the bond
market in general.
- --------------------------------------------------------------------------------
PORTFOLIO COMPOSITION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
FHLMC 34.58%
FNMA 20.98%
GNMA 13.28%
US Treasury Obligations and Options
Purchased on US Treasury Bond Futures 9.61%
GNMA II 8.69%
ARM 4.64%
Small Business Administration 2.84%
Repurchase Agreements 2.84%
Agency Debentures 2.54%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
CORPORATE INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
TCW FUNDS MANAGEMENT, INC.
JAMES M. GOLDBERG
Mr. Goldberg, a Chartered Financial Analyst and Chartered Investment Counselor,
has been Managing Director of TCW Management since 1989, and Managing Director
of the Trust Company of the West, the parent corporation of TCW Management,
since 1984. He has had primary portfolio management responsibility for the
SIERRA CORPORATE INCOME FUND since its inception.
PERFORMANCE REVIEW:
From the Fund's inception (July 18, 1990) through December 31, 1995, the SIERRA
CORPORATE INCOME FUND (Class A Shares) advanced 10.73% on an average annual
total return basis, or 9.80% adjusted for the maximum sales charge. For the
12-month period ended December 31, 1995, the Fund's total return was 27.08%, or
21.37% adjusted for the maximum sales charge. THE CORPORATE INCOME FUND'S 30-DAY
SEC YIELD AS OF DECEMBER 31, 1995, WAS 6.06%. For additional information,
including Class B and Class S Share performance, see the accompanying chart.
The Fund also received outstanding total return performance recognition from
Lipper Analytical Services. For the one-year period ending December 31, 1995,
the Fund was ranked Sixth among a total of 82 mutual funds in the Corporate Debt
Funds BBB-Rated category. For the five-year period ending December 31, 1995, the
Fund was ranked Fifth among a total of 27 funds in the category.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The Fund outperformed its benchmark index for the six-month period ended
December 31, 1995. The Fund returned 9.46 percent during the period compared to
a return of 7.42 percent for the Lehman Brothers Mutual Fund Corporate Debt
BBB-Rated Index. This impressive result for the second half of 1995 was
attributable to the strengthening credit profiles of the corporate bonds held in
the Fund and the portfolio's longer maturity and duration (a measure of the
Fund's sensitivity to interest rate changes) during a period of declining
interest rates.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION* 7/18/90
Jul. 90 10050 9598 10000
Aug. 90 9761 9322 9841
Sep. 90 9592 9160 9886
Oct. 90 9524 9096 9931
Nov. 90 9723 9286 10135
Dec. 90 9932 9485 10278
Jan. 91 9960 9512 10409
Feb. 91 10227 9767 10587
Mar. 91 10400 9932 10717
Apr. 91 10627 10148 10856
May 91 10705 10224 10931
Jun. 91 10730 10247 10930
Jul. 91 10886 10396 11088
Aug. 91 11205 10701 11338
Sep. 91 11374 10862 11572
Oct. 91 11489 10972 11682
Nov. 91 11616 11093 11796
Dec. 91 11981 11442 12182
Jan. 92 11905 11369 12030
Feb. 92 12000 11460 12145
Mar. 92 11969 11430 12093
Apr. 92 12001 11461 12153
May 92 12280 11728 12424
Jun. 92 12478 11917 12618
Jul. 92 12883 12303 12955
Aug. 92 12944 12361 13056
Sep. 92 13089 12500 13214
Oct. 92 12839 12261 12979
Nov. 92 12842 12264 13000
Dec. 92 13140 12549 13240
Jan. 93 13453 12847 13549
Feb. 93 13867 13243 13860
Mar. 93 13946 13318 13909
Apr. 93 14050 13418 14016
May 93 14143 13506 14033
Jun. 93 14555 13900 14374
Jul. 93 14739 14075 14477
Aug. 93 15234 14548 14838
Sep. 93 15277 14589 14873
Oct. 93 15425 14731 14948
Nov. 93 15165 14483 14764
Dec. 93 15290 14602 14851
Jan. 94 15589 14887 15139
Feb. 94 15019 14343 14782
Mar. 94 14338 13692 14328
Apr. 94 13980 13350 14190
May 94 13853 13230 14138
Jun. 94 13781 13161 14102
Jul. 94 14224 13584 14459
Aug. 94 14123 13488 14475
Sep. 94 13725 13107 14206
Oct. 94 13651 13036 14173
Nov. 94 13676 13061 14151
Dec. 94 13717 13100 14268
Jan. 95 14034 13402 14570
Feb. 95 14514 13861 14990
Mar. 95 14630 13971 15113
Apr. 95 14861 14192 15368
May 95 15887 15172 16092
Jun. 95 15926 15209 16237
Jul. 95 15693 14987 16166
Aug. 95 16129 15403 16426
Sep. 95 16379 15641 16620
Oct. 95 16722 15970 16836
Nov. 95 17053 15285 17157
Dec. 95 17432 16648 17440
* Index total returns were calculated from 7/31/90 to 12/31/95. The Lehman
Brothers Mutual Fund Corporate Debt BBB-Rated Index represents all
investment-grade, corporate debt securities, assumes reinvestment of all
dividend/distributions, and does not reflect any asset-based charges for
investment management or other expenses. Past investment performance does not
guarantee future performance. The returns shown for the Fund assume reinvestment
of all dividends/distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation),
Administrator (SIERRA Fund Administration Corporation) and Distributor waived a
portion of their management or distribution fees, and the Custodian reduced fees
by credits. In the absence of the waivers, or fees reduced by credits, yield and
total return would have been lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(July 18, 1990)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 9.46% 27.08% 11.91% 10.73%
Fund (adjusted for the maximum 4.5% sales charge) 4.53% 21.37% 10.88% 9.80%
Lehman Brothers Mutual Fund Corporate Debt BBB-Rated Index* 7.42% 22.25% 11.15% 10.81%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 9.05% 26.15% N/A 16.14%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 4.05% 21.15% N/A 13.64%
Lehman Brothers Mutual Fund Corporate Debt BBB-Rated Index* 7.42% 22.25% N/A 15.22%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 9.05% 26.15% N/A 16.14%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 4.05% 21.15% N/A 13.65%
Lehman Brothers Mutual Fund Corporate Debt BBB-Rated Index* 7.42% 22.25% N/A 15.22%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CORPORATE INCOME FUND
- --------------------------------------------------------------------------------
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
A cornerstone of the Fund's investment strategy is diversification. By carefully
diversifying its assets, the Fund seeks to minimize the market risks associated
with investing in only one or a few concentrated sectors. Diversification also
helps to position the portfolio for a broad range of diverse market conditions.
As of December 31, 1995, the Fund had an average credit rating of A3 and held
the securities of approximately 50 different corporate issuers. Purchase
decisions have focused on companies that are experiencing improving fundamentals
and are at a positive stage within their business cycle. This philosophy,
combined with the Fund's long average maturity, provided the primary reasons for
the excellent investment performance during the last six months of 1995.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
The Fund's exposure to industrial issues increased slightly during the past six
months. During the period, the Fund sold positions in Boeing Company, CBS, Inc.,
Carnival Corporation, Fruit of the Loom, McDermott, Inc., and Panhandle Eastern
Pipe Line Company. In some instances, these sales were strategically motivated
and allowed the Fund to realize gains. In other instances, issues were sold
because of declining credit profiles.
The Fund also increased its financial holdings, adding American General
Corporation to the portfolio. This sector benefited from significant credit
upgrades and the announcement of major merger and acquisition activities in the
banking industry. Other major moves occurred in the utilities and
telecommunications sectors, where we sold our assets in Commonwealth Edison,
GTE Corp., Niagara Mohawk, Philadelphia Electric Company, and Texas Utilities
Electric Company.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
The U.S. economy continues to reflect modest growth and low inflation. After
experiencing a weak 1995 holiday season, further economic slowing could be on
the way. Recent apparel and automobile sales signal a downturn in consumer
spending, and housing sales are also starting to wane despite lower mortgage
interest rates.
The good news is that inflation and interest rates should remain low, thereby
supporting the price of bonds. As measured by the Consumer Price Index (CPI),
inflation continues to be under control at 3 percent or less. Given the likely
slowing of growth in 1996, there is little reason to anticipate that inflation
will pick up. Under this scenario, we believe that the Federal Reserve will be
compelled to further ease interest rates to encourage economic growth. This
action will mean enhanced performance for the bond market, and particularly for
the SIERRA CORPORATE INCOME FUND, which has an average maturity of 23 years and
a duration of 8.1 years.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
Autos & Transportation 16.25%
Materials & Processing 15.60%
Energy 14.09%
Consumer Discretionary 12.41%
US Government Agency Obligations 12.10%
Financial Services 10.57%
Producer Durables 5.97%
Utilities 5.61%
Telecommunications 2.97%
US Treasury Notes 2.43%
Investment Company 2.00%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
VAN KAMPEN AMERICAN CAPITAL MANAGEMENT, INC.
JOSEPH A. PIRARO
Mr. Piraro, Vice President of Van Kampen, joined the company in 1992, and serves
as Vice President and portfolio manager of Van Kampen American Capital
Investment Advisory Corp., an affiliate of Van Kampen. He has had primary
portfolio management responsibility for the SIERRA CALIFORNIA MUNICIPAL FUND
since May 1992.
PERFORMANCE REVIEW:
From the Fund's inception (July 25, 1989) through December 31, 1995, the SIERRA
CALIFORNIA MUNICIPAL FUND (Class A Shares) advanced 7.73% on an average annual
total return basis, or 6.96% adjusted for the maximum sales charge. For the
12-month period ended December 31, 1995, the Fund's total return was 18.09% or
12.77% adjusted for the maximum sales charge. THE FUND'S 30-DAY SEC YIELD AS OF
DECEMBER 31, 1995, WAS 4.57%, AND ITS 30-DAY AVERAGE YIELD WAS 5.30% OR 9.67% ON
A TAX-EQUIVALENT BASIS.* For additional information, including Class B and Class
S Share performance, see the accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The interest rate environment had a major impact on the Fund's performance. As
rates declined over the past six months, the Fund showed a steady increase in
value.
Another important factor that contributed to the Fund's return was the large
concentration of top quality holdings in the Fund. Approximately 60 percent of
assets are triple-A rated, a winning attribute for investors who remain
concerned over the credit quality of Orange County, Los Angeles County, and
other troubled California municipalities.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION** 7/25/89
Jul. 89 10080 9626 10000
Aug. 89 9978 9529 9902
Sep. 89 9952 9504 9872
Oct. 89 10117 9662 9993
Nov. 89 10252 9790 10168
Dec. 89 10325 9860 10251
Jan. 90 10208 9748 10203
Feb. 90 10303 9840 10294
Mar. 90 10379 9912 10297
Apr. 90 10214 9755 10223
May 90 10458 9988 10445
Jun. 90 10598 10122 10537
Jul. 90 10750 10266 10692
Aug. 90 10497 10024 10537
Sep. 90 10564 10089 10544
Oct. 90 10740 10257 10734
Nov. 90 10992 10498 10950
Dec. 90 10993 10498 10998
Jan. 91 11044 10547 11146
Feb. 91 11115 10615 11243
Mar. 91 11161 10659 11247
Apr. 91 11274 10767 11397
May 91 11389 10876 11498
Jun. 91 11357 10846 11487
Jul. 91 11472 10956 11627
Aug. 91 11607 11085 11780
Sep. 91 11724 11196 11933
Oct. 91 11864 11330 12041
Nov. 91 11901 11365 12075
Dec. 91 12054 11511 12334
Jan. 92 12045 11503 12362
Feb. 92 12059 11516 12366
Mar. 92 12096 11552 12371
Apr. 92 12182 11633 12481
May 92 12315 11761 12629
Jun. 92 12556 11991 12841
Jul. 92 13015 12430 13226
Aug. 92 12812 12236 13096
Sep. 92 12851 12273 13181
Oct. 92 12587 12020 13052
Nov. 92 12970 12387 13286
Dec. 92 13159 12567 13421
Jan. 93 13336 12736 13577
Feb. 93 13899 13274 14069
Mar. 93 13787 13167 13919
Apr. 93 13939 13311 13779
May 93 14028 13396 13856
Jun. 93 14294 13651 14087
Jul. 93 14282 13640 14106
Aug. 93 14654 13994 14399
Sep. 93 14847 14179 14563
Oct. 93 14848 14180 14591
Nov. 93 14628 13970 14463
Dec. 93 14955 14282 14768
Jan. 94 15113 14433 14936
Feb. 94 14719 14057 14549
Mar. 94 13967 13338 13957
Apr. 94 13981 13352 14076
May 94 14088 13454 14198
Jun. 94 13982 13352 14112
Jul. 94 14210 13570 14370
Aug. 94 14264 13622 14420
Sep. 94 14075 13441 14208
Oct. 94 13788 13168 13955
Nov. 94 13446 12841 13703
Dec. 94 13667 13052 14004
Jan. 95 14126 13490 14405
Feb. 95 14559 13904 14824
Mar. 95 14728 14065 14994
Apr. 95 14757 14093 15012
May 95 15224 14539 15491
Jun. 95 15040 14363 15356
Jul. 95 15112 14432 15502
Aug. 95 15300 14611 15699
Sep. 95 15414 14721 15798
Oct. 95 15660 14955 16027
Nov. 95 15950 15232 16293
Dec. 95 16139 15413 16450
*Tax-equivalent yield is based on Federal income taxes at 39.6% and California
income taxes at 9.3%, and the federal deduction of state taxes paid.
**Index total returns were calculated from 7/31/89 to 12/31/95. The Lehman
Brothers Municipal Bond Index is a total return performance benchmark for the
long-term, investment-grade, tax-exempt bond market, and includes approximately
29,000 municipal bonds. The index assumes reinvestment of all dividends/
distributions, and does not reflect any asset-based charges for investment
management or other expenses. Past investment performance does not guarantee
future performance. The returns shown for the Fund assume reinvestment of all
dividends/distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation),
Administrator (SIERRA Fund Administration Corporation) and Distributor waived a
portion of their management or distribution fees, the Administrator absorbed
other expenses, and the Custodian reduced fees by credits. In the absence of the
waivers and absorption of other expenses, or fees reduced by credits, yield and
total return would have been lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(July 25, 1989)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 7.31% 18.09% 7.98% 7.73%
Fund (adjusted for the maximum 4.5% sales charge) 2.48% 12.77% 6.99% 6.96%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% 8.38% 8.07%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 6.91% 17.21% N/A 9.25%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 1.91% 12.21% N/A 6.68%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% N/A 10.76%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 6.91% 17.21% N/A 9.25%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 1.91% 12.21% N/A 6.68%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% N/A 10.76%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA MUNICIPAL FUND
- --------------------------------------------------------------------------------
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
During the last six months of 1995, two notable changes occurred in the market.
First, in response to investor concerns about credit quality in California, the
percentage of insured paper that was introduced in the State increased 12
percent, compared to a 4 percent increase in the issuance of national insured
securities. Second, with continuing worries about the financial troubles in
Orange and Los Angeles Counties, investors showed a marked preference for
Northern California issues over Southern California issues. The Fund dealt with
these trends by acquiring California municipal bonds that offered the best yield
and credit values, with an emphasis on discount paper.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
There were no shifts in credit rating or sector allocation that had a critical
impact on the Fund's total return. The Fund remains well-diversified, with
exposure to 16 different sectors ranging from waste disposal to tax district
holdings. Given continued credit concerns and the tight spreads between quality
and lower rated paper, the Fund is weighted heavily toward triple-A securities.
The largest percentage of assets are in the tax district sector (19 percent) and
the utilities sector (13 percent). Both sectors performed well during the
six-month period.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
The supply and demand characteristics for high quality California paper continue
to favor investors. While the volume of new national issues increased slightly
in 1995, California volume was extremely light. During the last quarter of 1995,
many California state funds also experienced a large percentage of redemptions
that should further accelerate demand. This supply and demand factor presents
buying opportunities for investors willing to venture into the California
market.
Compared to U.S. Treasuries, municipal bonds also show excellent value with 15-
to 30-year municipal rates yielding nearly 90 percent of U.S. Treasuries.
Traditionally, the relative value of tax-exempt to taxable yields has averaged
78-85 percent. A positive resolution to the tax reform debate, combined with
this high ratio of municipal to taxable yields, could push the municipal market
higher in 1996. With its well-diversified portfolio and superior credit ratings,
we expect the Fund to perform well in all anticipated market scenarios.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
Tax District 19.28%
Retail Electric/Gas/Telephone 13.39%
General Purpose 9.38%
Transportation 8.90%
Public Building 8.42%
Single-Family Housing 7.04%
Multi-Family Housing 6.40%
Health Care 4.51%
Public Education 4.03%
Industrial Revenue 3.96%
Higher Education 3.38%
Airport 3.13%
Waste Disposal 2.77%
Water & Sewer 2.23%
Other Assets 1.18%
Other Care 1.14%
Wholesale Electric 0.86%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
FLORIDA INSURED MUNICIPAL FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
VAN KAMPEN AMERICAN CAPITAL
MANAGEMENT, INC.
JOSEPH A. PIRARO
Mr. Piraro, Vice President of Van Kampen, joined the company in 1992, and serves
as Vice President and portfolio manager of Van Kampen American Capital
Investment Advisory Corp., an affiliate of Van Kampen. He has had primary
portfolio management responsibility for the SIERRA FLORIDA INSURED MUNICIPAL
FUND since June 1995.
PERFORMANCE REVIEW:
From the Fund's inception (June 7, 1993) through December 31, 1995, the SIERRA
FLORIDA INSURED MUNICIPAL FUND (Class A Shares) advanced 5.60% on an average
annual total return basis, or 3.72% adjusted for the maximum sales charge. For
the 12-month period ended December 31, 1995, the Fund's total return was 17.57%,
or 12.28% adjusted for the maximum sales charge. THE FUND'S 30-DAY SEC YIELD AS
OF DECEMBER 31, 1995, WAS 4.48%, AND ITS 30-DAY AVERAGE YIELD WAS 4.78% OR 7.92%
ON A TAX-EQUIVALENT BASIS.* For additional information, including Class B and
Class S Share performance, see the accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The Fund's strong performance over the past six months resulted primarily from
declining interest rates, a high percentage of insured holdings in the
portfolio, and the growing demand for municipal bonds issued in Florida. Since
late 1994, the municipal market has rallied, fueled by falling interest rates
and low inflation. In this declining rate environment, municipal bond funds made
up of longer-term bonds tend to perform better than those with shorter-term
bonds. With an average maturity of about 21 years and a duration of 9.03 years
(duration measures the sensitivity of bond prices to interest rate changes) on
December 31, 1995, the value of the SIERRA FLORIDA INSURED MUNICIPAL FUND
benefited significantly from the rate decreases.
An additional factor that contributed to the Fund's positive return was its
focus on Florida insured paper. With the fallout from the Orange County,
California bankruptcy in 1994, municipal bond investors continue to be
attracted by triple-A insured offerings. As of December 31, 1995, the Fund had
87 percent of its assets in triple-A rated securities, up 5 percent from six
months ago. Quality holdings, especially in specialty states such as Florida,
performed extremely well during this six-month period. Florida also remains one
of the few states whose volume of new municipal bond offerings increased in
1995, indicating a continuing demand for Florida paper.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION** 6/7/93
Jun. 93 10050 9598 10000
Jul. 93 10083 9629 10013
Aug. 93 10387 9920 10221
Sep. 93 10511 10038 10338
Oct. 93 10545 10070 10357
Nov. 93 10355 9889 10266
Dec. 93 10686 10206 10483
Jan. 94 10813 10326 10602
Feb. 94 10414 9945 10328
Mar. 94 9797 9356 9907
Apr. 94 9893 9448 9992
May 94 9970 9521 10079
Jun. 94 9899 9454 10017
Jul. 94 10092 9638 10200
Aug. 94 10095 9641 10236
Sep. 94 9960 9512 10086
Oct. 94 9675 9240 9906
Nov. 94 9410 8987 9727
Dec. 94 9780 9340 9941
Jan. 95 10043 9591 10225
Feb. 95 10362 9896 10523
Mar. 95 10464 9993 10644
Apr. 95 10445 9975 10656
May 95 10702 10220 10996
Jun. 95 10495 10022 10901
Jul. 95 10587 10111 11004
Aug. 95 10758 10274 11144
Sep. 95 10815 10329 11214
Oct. 95 11053 10556 11377
Nov. 95 11315 10806 11566
Dec. 95 11498 10981 11677
*Tax-equivalent yield is based on Federal income taxes at 39.6%.
** Index total returns were calculated from 6/30/93 to 12/31/95. The Lehman
Brothers Municipal Bond Index is a total return performance benchmark for the
long-term, investment-grade, tax-exempt bond market, and includes approximately
29,000 municipal bonds. The index assumes reinvestment of all dividends/
distributions, and does not reflect any asset-based charges for investment
management or other expenses. Past investment performance does not guarantee
future performance. The returns shown for the Fund assume reinvestment of all
dividends/distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation)
and Administrator (SIERRA Fund Administration Corporation) waived a portion of
their management fees, the Advisor absorbed other expenses, and the Custodian
reduced fees by credits. In the absence of the waivers and absorption of other
expenses, or fees reduced by credits, yield and total return would have been
lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
------- ------ ---------------
(June 7, 1993)
<S> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 9.56% 17.57% 5.60%
Fund (adjusted for the maximum 4.5% sales charge) 4.63% 12.28% 3.72%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% 6.40%
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
------- ------ ---------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 9.15% 16.70% 9.69%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 4.15% 11.70% 7.13%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% 10.76%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 9.15% 16.70% 9.69%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 4.15% 11.70% 7.13%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% 10.76%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
FLORIDA INSURED MUNICIPAL FUND
- --------------------------------------------------------------------------------
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
Along with a continuing decline in interest rates, the Fund was affected by
moderate economic growth which kept inflation below 3 percent, strong rallies in
both the stock and bond markets, and concerns over tax reform. Despite lower
interest rates, the Fund maintained a competitive yield by increasing the
percentage of non-rated holdings in its portfolio from 2 percent to 5 percent of
assets. This purchase of lower quality paper enhanced the overall yield of the
Fund without adding significant pressure to the portfolio's credit risk. The
majority of purchases, however, focused on insured paper and intermediate-term
securities - strategies designed to shorten duration and establish a more
defensive structure in the Fund. Although Florida suffered billions in damages
from Hurricane Opal and the severe weather over the past six months, these
losses had little impact on the credit ratings of municipal bond issuers in the
affected regions. The creditworthiness of Florida municipalities remains
strong due to the combination of FEMA assistance and overall growth in the
amount of insured securities.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
The largest change in the Fund's portfolio was a 10 percent increase in the
airport sector. As of December 31, 1995, the Fund had 17 percent of its assets
in airport holdings. Other portfolio changes included a 3 percent decline in
water and sewer holdings and a 2 percent decline in industrial revenue issues.
These shifts in the Fund's holdings were made to take advantage of buying
opportunities in fundamentally strong industries and to provide long-term total
returns. None of the above adjustments was the driving force for the Fund's
performance over the last six months. Rather, the Fund had an excellent
six-month period as a result of its emphasis on longer-term bonds and its high
percentage of insured holdings.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
Several trends suggest a stronger municipal market in 1996. During the second
half of 1995, concerns over tax reform led some investors to avoid tax-exempt
securities. As the November 1996 elections approach and investors gain further
insight into the direction of proposed tax changes, the municipal market should
pick up strength. Given the attractive municipal yields, any resolution of the
tax reform debate could cause the municipal bond market to outperform other
fixed income investments in 1996.
The volume of new Florida municipal issues is projected to remain high, along
with the demand for Florida paper. Nationally, voters showed a new willingness
to support infrastructure projects by approving almost 85 percent of bond issues
on the November 1994 ballots, the highest approval rating since 1988. In this
setting, we expect Florida and other specialty state insured paper to maintain
its attractive values. Considering its focus on quality, insured offerings and
its diversification across many industries, the Fund should continue to provide
positive returns over the intermediate and long term.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
Public Education 17.69%
Airport 17.43%
Health Care 16.75%
Retail Electric/Gas/Telephone 8.82%
Water & Sewer 7.60%
Transportation 7.55%
Higher Education 6.17%
Industrial Revenue 5.21%
Multi-Family Housing 3.83%
Public Building 3.63%
Single-Family Housing 2.71%
Tax District 2.61%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
VAN KAMPEN AMERICAN CAPITAL
MANAGEMENT, INC.
JOSEPH A. PIRARO
Mr. Piraro is portfolio manager of Van Kampen's California and national insured
municipal funds, as well as portfolio manager for the SIERRA California
Municipal, Florida Insured Muncipal and SIERRA CALIFORNIA INSURED INTERMEDIATE
MUNICIPAL FUNDS.
PERFORMANCE REVIEW:
From the Fund's inception (April 4, 1994) through December 31, 1995, the SIERRA
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND (Class A Shares) advanced 10.25%
on an average annual total return basis, or 7.37% adjusted for the maximum sales
charge. On a basis not adjusted for the maximum sales charge, the Fund
outperformed the benchmark Lehman Brothers Municipal Bond Index which advanced
9.80% on an average annual total return basis for the same period.** For the
12-months ended December 31, 1995, the Fund's total return was 16.45%, or 11.21%
adjusted for the maximum sales charge. THE FUND'S 30-DAY SEC YIELD AS OF
DECEMBER 31, 1995, WAS 3.91%, AND ITS 30-DAY AVERAGE YIELD WAS 4.44% OR 8.11% ON
A TAX-EQUIVALENT BASIS.* For additional information, including Class B and Class
S Share performance, see the accompanying chart.
The Fund also received outstanding total return performance recognition from
Lipper Analytical Services. For the one-year period ending December 31, 1995,
the Fund ranked Number One among a total of 27 funds in the California
Intermediate Municipal Debt Funds category.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The Fund performed extremely well in the second half of 1995, ranking at the top
of the Lipper universe of similar funds. This notable achievement was a result
of many factors, including the Fund's long average maturity and duration (a
financial term that gauges the sensitivity of bond prices to interest rate
changes), the continuing decline in interest rates, and the Fund's focus on
insured paper.
When rates fall, mutual funds with longer durations tend to show greater
appreciation in value, a result of the "seesaw" effect on bond prices from lower
interest rates. As of December 31, 1995, the Fund had a duration of 6.09 years,
versus a duration of 5.90 years for the Lehman Intermediate California Bond
Index.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
Fund (not Fund Lehman Brothers
adjusted for (adjusted for Municipal
sales charge) sales charge) Bond Index
------------- -------------- ---------------
INCEPTION** 4/4/94
Apr 94 10172 9714 10000
May 94 10264 9802 10087
June 94 10226 9766 10025
July 94 10410 9942 10209
Aug 94 10443 9973 10245
Sep 94 10333 9868 10094
Oct 94 10181 9723 9914
Nov 94 10039 9587 9735
Dec 94 10175 9717 9949
Jan 95 10468 9997 10234
Feb 95 10793 10308 10531
Mar 95 10911 10420 10653
Apr 95 10913 10422 10665
May 95 11253 10746 11006
Jun 95 11117 10617 10910
Jul 95 11257 10751 11013
Aug 95 11430 10916 11153
Sep 95 11507 10989 11224
Oct 95 11648 11123 11386
Nov 95 11800 11269 11575
Dec 95 11849 11316 11686
*Tax-equivalent yield is based on Federal income taxes at 39.6% and California
income taxes at 9.3% and the federal deduction of state taxes paid.
** Index total returns were calculated from 4/30/94 to 12/31/95. The Lehman
Brothers Municipal Bond Index is a total return performance benchmark for the
long-term, investment-grade, tax-exempt bond market, and includes approximately
29,000 municipal bonds. The index assumes reinvestment of all dividends/
distributions, and does not reflect any asset-based charges for investment
management or other expenses. Past investment performance does not guarantee
future performance. The returns shown for the Fund assume reinvestment of all
dividends/ distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation)
and Administrator (SIERRA Fund Administration Corporation) waived a portion of
their management fees, the Advisor absorbed other expenses, and the Custodian
reduced fees by credits. In the absence of the waivers and absorption of other
expenses, or fees reduced by credits, yield and total return would have been
lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
------- ------ -----------------
(April 4, 1994)
<S> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 6.59% 16.45% 10.25%
Fund (adjusted for the maximum 4.5% sales charge) 1.79% 11.21% 7.37%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% 9.80%
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
----------------------------------------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 6.19% 15.59% 9.52%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 1.19% 10.59% 6.95%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% 10.76%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 6.19% 15.59% 9.52%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 1.19% 10.59% 6.95%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% 10.76%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
- --------------------------------------------------------------------------------
The high percentage of insured holdings in the Fund also contributed positively
to performance. With anxiety from the Orange County, California bankruptcy still
in the air, investors continue to gravitate toward high quality, insured
municipal bonds.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
Aside from the interest rate environment, market conditions that greatly
affected the Fund's performance were the supply and demand fundamentals of
California municipal bonds, the moderate growth in the economy, the recent
strong performance of both equities and fixed income, and the continuing
concerns over tax reform. Solid demand and a depressed supply of California
issues led to continued appreciation in the value of California offerings. In
response to investor concerns about credit quality, the percentage of California
insured securities rose by 12 percent, compared to a 4 percent increase in
national insured securities. Investors also showed greater interest in
securities from Northern California versus those issued in Southern California,
where most of the financial difficulties have occurred.
On the negative side, some investors have been reluctant to enter or add to
positions in the tax-exempt market due to fears over flat tax proposals. As tax
reform talks progress and the presidential election nears, we believe these
fears should abate, giving renewed momentum to the sector.
The Fund addressed these market conditions by keeping the core position of the
Fund intact, maintaining a large percentage of insured assets, and purchasing
securities in the longest maturity ranges possible to capture additional yield.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
From a credit rating perspective, there were no major shifts in the Fund. The
Fund continues to have over 83 percent of its assets in securities rated
triple-A. In terms of sector concentration, the Fund increased general purpose
holdings by 8 percent and decreased its positions slightly in the public
education, tax district, and public building sectors. These shifts reflect
market availability and also had no significant impact on performance. The
Fund's highest exposure is to the general purpose sector (21.12 percent of
assets), followed by higher education (13.87 percent), and public education
(13.62 percent).
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
The Fund's focus on high quality insured securities, coupled with its
well-diversified structure, should continue driving strong returns over the
coming year. We anticipate that retail investors will return to the municipal
market in 1996 as they become more accustomed to the lower yields available (due
to the interest rate environment) and as fears over tax reform begin to lessen.
As new money enters the Fund, these assets will be invested with the intent of
keeping the core structure of triple-A rated holdings unchanged.
We expect that California, as well as other specialty state insured paper, will
continue to hold its premium value over the intermediate and long term. Demand
for these quality securities should remain high, not only from state funds, but
also national funds as well.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
General Purpose 21.12%
Higher Education 13.87%
Public Education 13.62%
Health Care 12.76%
Tax District 8.47%
Water & Sewer 8.39%
Transportation 7.23%
Multi-Family Housing 7.07%
Single-Family Housing 3.62%
Retail Electric/Gas/Telephone 1.90%
Other Assets 1.79%
Airport 0.16%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
NATIONAL MUNICIPAL FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
VAN KAMPEN AMERICAN CAPITAL
MANAGEMENT, INC.
DAVID C. JOHNSON
Mr. Johnson, Senior Vice President of Van Kampen, has over 14 years experience
in the tax-free municipal sector of the fixed-income market. He has been with
Van Kampen since 1989 and has had primary portfolio management responsibility
for the SIERRA NATIONAL MUNICIPAL FUND since its inception.
PERFORMANCE REVIEW:
From the Fund's inception (July 18, 1990) through December 31, 1995, the SIERRA
NATIONAL MUNICIPAL FUND (Class A Shares) advanced 9.05% on an average annual
total return basis, or 8.14% adjusted for the maximum sales charge. On a basis
not adjusted for the maximum sales charge, the Fund outperformed the benchmark
Lehman Brothers Municipal Bond Index which advanced 8.68% on an average annual
total return basis for the same period.** For the 12-month period ended December
31, 1995, the Fund's total return was 15.62% or 10.42% adjusted for the maximum
sales charge. THE FUND'S 30-DAY SEC YIELD AS OF DECEMBER 31, 1995, WAS 4.74%,
AND ITS 30-DAY AVERAGE YIELD WAS 5.34% OR 8.84% ON A TAX-EQUIVALENT BASIS.* For
additional information, including Class B and Class S Share performance, see the
accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
Over the six-month period, the fixed income markets continued their rally as
interest rates fell. Driven by moderate economic growth, low inflation, and an
easing of monetary policy by the Federal Reserve, bond prices were up
significantly in the second half of the year. Composed of mainly longer-term
bonds whose price tends to increase more than shorter-term bonds when interest
rates fall, the SIERRA NATIONAL MUNICIPAL FUND outperformed most of its peers
over the six-month period.
In addition to interest rates, the Fund's performance was positively affected by
the triple-A rated insured securities in the portfolio. With the effects of the
1994 Orange County, California bankruptcy still on the minds of some investors,
the quality of the Fund's holdings attracted substantial investor interest.
About 40 percent of the Fund's assets were invested in triple-A rated insured
holdings at the end of 1995.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION** 7/18/90
Jul. 90 10060 9607 10000
Aug. 90 9834 9391 9855
Sep. 90 9871 9427 9861
Oct. 90 9939 9492 10039
Nov. 90 10170 9713 10241
Dec. 90 10218 9758 10286
Jan. 91 10320 9855 10424
Feb. 91 10473 10002 10515
Mar. 91 10504 10031 10519
Apr. 91 10702 10220 10659
May 91 10827 10340 10754
Jun. 91 10826 10339 10743
Jul. 91 11007 10512 10874
Aug. 91 11189 10685 11018
Sep. 91 11317 10808 11161
Oct. 91 11414 10900 11261
Nov. 91 11446 10931 11293
Dec. 91 11774 11245 11536
Jan. 92 11780 11250 11562
Feb. 92 11830 11298 11566
Mar. 92 11891 11356 11570
Apr. 92 12009 11469 11673
May 92 12207 11658 11811
Jun. 92 12496 11934 12009
Jul. 92 13026 12440 12370
Aug. 92 12711 12139 12248
Sep. 92 12763 12189 12328
Oct. 92 12436 11876 12207
Nov. 92 12804 12228 12426
Dec. 92 12966 12382 12552
Jan. 93 13175 12582 12698
Feb. 93 13801 13180 13158
Mar. 93 13603 12991 13018
Apr. 93 13764 13144 13150
May 93 13865 13241 13223
Jun. 93 14172 13535 13444
Jul. 93 14202 13563 13462
Aug. 93 14549 13894 13742
Sep. 93 14738 14075 13898
Oct. 93 14743 14079 13925
Nov. 93 14624 13966 13802
Dec. 93 14916 14245 14093
Jan. 94 15097 14418 14254
Feb. 94 14698 14037 13885
Mar. 94 14018 13387 13320
Apr. 94 14036 13404 13433
May 94 14143 13507 13550
Jun. 94 14045 13413 13467
Jul. 94 14258 13616 13714
Aug. 94 14341 13696 13762
Sep. 94 14176 13538 13559
Oct. 94 13866 13242 13318
Nov. 94 13462 12856 13077
Dec. 94 13872 13248 13365
Jan. 95 14377 13730 13747
Feb. 95 14802 14136 14147
Mar. 95 14944 14271 14310
Apr. 95 14877 14207 14327
May 95 15112 14432 14784
Jun. 95 14934 14262 14655
Jul. 95 15018 14342 14794
Aug. 95 15243 14557 14982
Sep. 95 15314 14625 15077
Oct. 95 15527 14828 15295
Nov. 95 15853 15140 15549
Dec. 95 16039 15318 15699
*Tax-equivalent yield is based on Federal income taxes at 39.6%.
** Index total returns were calculated from 7/31/90 to 12/31/95. The Lehman
Brothers Municipal Bond Index is a total return performance benchmark for the
long-term, investment-grade, tax-exempt bond market, and includes approximately
29,000 municipal bonds. The index assumes reinvestment of all dividends/
distributions and does not reflect any asset-based charges for investment
management or other expenses. Past investment performance does not guarantee
future performance. The returns shown for the Fund assume reinvestment of all
dividends/distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation),
Administrator (SIERRA Fund Administration Corporation) and Distributor waived a
portion of their management or distribution fees; the Administrator absorbed
other expenses, and the Custodian reduced fees by credits. In the absence of the
waivers and absorption of other expenses, or fees reduced by credits, yield and
total return would have been lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(July 18, 1990)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 7.41% 15.62% 9.44% 9.05%
Fund (adjusted for the maximum 4.5% sales charge) 2.57% 10.42% 8.43% 8.14%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% 8.82% 8.68%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 7.00% 14.76% N/A 8.46%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 2.00% 9.76% N/A 5.88%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% N/A 10.76%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 7.00% 14.76% N/A 8.46%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 2.00% 9.76% N/A 5.88%
Lehman Brothers Municipal Bond Index** 7.12% 17.45% N/A 10.76%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NATIONAL MUNICIPAL FUND
- --------------------------------------------------------------------------------
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
Market conditions that most affected the Fund's performance were the supply and
demand fundamentals in the municipal market, a moderation in economic growth,
and lingering anxiety over the potential impact of any flat tax or other tax
reform proposals. New issue volume in 1995 totaled $156 billion, higher than the
$140-$145 billion projected at the beginning of the year and only 5 percent less
than new issues introduced in 1994. In part, this higher-than-expected volume
was due to falling interest rates which prompted a resurgence in refunding
issues.
In 1995, tax-exempt mutual funds experienced net redemptions of about $1
billion, a trend resulting partly from lower municipal yields and investor fears
of potential tax reform. While the lower rates were difficult for some consumers
to accept, municipal yields remained extremely attractive when compared to U.S.
Treasuries. At times during the year, municipal yields exceeded 90 percent of
their taxable counterparts on the long end of the yield curve.
The Fund responded to these market trends by extending duration, a measure of
how bond prices will change when interest rates fluctuate: the longer the
duration in a declining rate environment, the higher the bond value and vice
versa. To limit price volatility and reduce overall portfolio risk, the Fund
purchased interest rate futures and structured the portfolio with a mixture of
high coupon "cushion" bonds (which provide greater income with less volatility)
and discount holdings (which offer maximum return potential).
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
The Fund experienced no major changes in portfolio holdings or sectors in the
second half of 1995. From a credit quality perspective, the Fund is structured
in the shape of a "barbell," with the heaviest concentrations of assets on the
two ends of the credit spectrum. About 40 percent of the Fund's assets are
invested in triple-A insured securities, while 33 percent is invested in
triple-B bonds. While the triple-B bonds tend to lag in appreciation during
market rallies, this position contributes to the dividend paying ability of the
Fund.
In terms of sector concentration, the Fund has exposure to 19 sectors, with the
largest being heath care (25 percent of assets), utilities (12 percent of
assets), and industrial revenue (10 percent of assets).
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
Despite the Orange County, California bankruptcy and continuing debate over tax
reform, 1995 proved to be a rewarding year for investors in the municipal
market. We anticipate that 1996 will also be favorable for municipal bond
investors, especially if proposed tax reform moves away from discussions of a
flat tax or other legislation that could adversely affect the municipal market.
Overall credit quality is likely to continue improving in all national issues.
In particular, the financial crisis in Orange County, California has eased
considerably since last June, and now it appears that the terms of the recovery
plan will be accepted, paving the way for Orange County to emerge from
bankruptcy by mid 1996.
The Fund is poised to take advantage of the improved credit quality of national
issues. Acquisitions will continue to focus on top quality insured paper, and
attention will be given to keep the Fund fully diversified in sectors, such as
health care, utilities, transportation, and industrial revenue. These
fundamental strategies, combined with an anticipated stable economic and
interest rate environment, should position the Fund for strong performance in
the coming year.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
Health Care 25.15%
Retail Electric/Gas/Telephone 12.53%
Industrial Revenue 10.17%
General Purpose 8.42%
Airport 7.30%
Transportation 6.96%
Wholesale Electric 3.99%
Public Building 3.80%
Public Education 3.74%
Single-Family Housing 3.63%
Higher Education 2.37%
Water & Sewer 2.21%
Multi-Family Housing 2.01%
Waste Disposal 1.96%
Tax District 1.82%
Student Loan 1.80%
Other Assets 1.13%
Bond Bank 0.77%
Other Care 0.24%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
J.P. MORGAN INVESTMENT MANAGEMENT INC.
HENRY D. CAVANNA
WILLIAM M. RIEGEL
Mr. Cavanna is a senior portfolio manager in the J.P. Morgan Equity and Balanced
Accounts Group, and has been with J.P. Morgan since 1971.
Mr. Riegel is a senior equity portfolio manager in the Equity and Balanced
Accounts Group, and has been with J.P. Morgan since 1979. They have had primary
portfolio management responsibility for the SIERRA GROWTH AND INCOME FUND since
September 1993.
PERFORMANCE REVIEW:
From the Fund's inception (July 25, 1989) through December 31, 1995, the SIERRA
GROWTH AND INCOME FUND (Class A Shares) advanced 10.22% on an average annual
total return basis, or 9.44% adjusted for the maximum sales charge. For the
12-month period ended December 31, 1995, the Fund's total return was 31.12%, or
25.22% adjusted for the maximum sales charge. For additional information,
including Class B and Class S Share performance, see the accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The most significant factors contributing to the Fund's performance in the
second half of 1995 were the continuing stock market rally, the general decline
in interest rates, solid corporate earnings growth, and the euphoric buying from
investors that helped push stocks to historic highs in 1995. The strengthening
U.S. Dollar also played an important role in improving the profitability of
multinationals and other domestic companies trading and operating overseas. The
market saw stellar returns from a broad number of sectors, yet also experienced
increasing volatility. The Fund's performance held fairly steady during the ups
and downs of the market, primarily because of its highly diversified approach to
seeking long-term value.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION* 7/25/89
Jul. 89 10030 9579 10000
Aug. 89 10210 9751 10195
Sep. 89 10170 9712 10153
Oct. 89 9930 9483 9918
Nov. 89 10110 9655 10119
Dec. 89 10144 9688 10362
Jan. 90 9630 9196 9667
Feb. 90 9761 9322 9792
Mar. 90 9973 9524 10051
Apr. 90 9679 9243 9801
May 90 10450 9980 10754
Jun. 90 10317 9853 10682
Jul. 90 10103 9648 10648
Aug. 90 9318 8899 9687
Sep. 90 8909 8508 9216
Oct. 90 8786 8390 9177
Nov. 90 9452 9027 9769
Dec. 90 9785 9345 10041
Jan. 91 10315 9851 10477
Feb. 91 10937 10445 11225
Mar. 91 11103 10604 11497
Apr. 91 11114 10614 11524
May 91 11625 11102 12020
Jun. 91 11008 10513 11469
Jul. 91 11532 11013 12004
Aug. 91 11689 11163 12287
Sep. 91 11511 10993 12081
Oct. 91 11658 11133 12243
Nov. 91 11100 10601 11751
Dec. 91 12489 11927 13093
Jan. 92 12510 11947 12849
Feb. 92 12679 12109 13016
Mar. 92 12235 11685 12763
Apr. 92 12426 11867 13137
May 92 12331 11776 13201
Jun. 92 11960 11421 13005
Jul. 92 12310 11756 13536
Aug. 92 12055 11513 13259
Sep. 92 12236 11685 13415
Oct. 92 12215 11665 13461
Nov. 92 12716 12143 13918
Dec. 92 12829 12251 14089
Jan. 93 12904 12323 14207
Feb. 93 12807 12231 14400
Mar. 93 13178 12585 14704
Apr. 93 12952 12369 14349
May 93 13329 12729 14732
Jun. 93 13059 12472 14775
Jul. 93 13005 12420 14715
Aug. 93 13556 12946 15272
Sep. 93 13502 12895 15152
Oct. 93 13882 13257 15465
Nov. 93 13904 13278 15318
Dec. 93 14256 13615 15503
Jan. 94 14808 14142 16030
Feb. 94 14489 13837 15595
Mar. 94 13894 13269 14916
Apr. 94 14214 13574 15108
May 94 14287 13644 15355
Jun. 94 13931 13304 14979
Jul. 94 14375 13728 15470
Aug. 94 14905 14234 16104
Sep. 94 14607 13950 15711
Oct. 94 14743 14079 16062
Nov. 94 14038 13407 15478
Dec. 94 14265 13623 15707
Jan. 95 14557 13902 16114
Feb. 95 15115 14434 16742
Mar. 95 15639 14936 17235
Apr. 95 15946 15228 17742
May 95 16505 15762 18450
Jun. 95 16796 16040 18878
Jul. 95 17396 16614 19504
Aug. 95 17436 16652 19553
Sep. 95 17882 17078 20377
Oct. 95 17414 16631 20304
Nov. 95 18377 17550 21195
Dec. 95 18703 17862 21603
* Index total returns were calculated from 7/31/89 to 12/31/95. The Standard &
Poor's 500 Composite Index (S&P 500) represents an unmanaged weighted index of
500 industrial, transportation, utility, and financial companies widely regarded
by investors as representative of the stock market. The index assumes
reinvestment of all dividends/distributions, and does not reflect any
asset-based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation),
Administrator (SIERRA Fund Administration Corporation) and Distributor waived a
portion of their management or distribution fees, and the Custodian reduced
fees by credits. In the absence of the waivers, or fees reduced by credits,
yield and total return would have been lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(July 25, 1989)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 11.36% 31.12% 13.83% 10.22%
Fund (adjusted for the maximum 4.5% sales charge) 6.35% 25.22% 12.79% 9.44%
Standard & Poor's 500 Composite Index* 14.44% 37.58% 16.56% 12.75%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 10.99% 30.04% N/A 20.87%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 5.99% 25.04% N/A 18.43%
Standard & Poor's 500 Composite Index* 14.44% 37.58% N/A 27.65%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 10.98% 30.10% N/A 20.92%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 5.98% 25.10% N/A 18.48%
Standard & Poor's 500 Composite Index* 14.44% 37.58% N/A 27.65%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
GROWTH AND INCOME FUND
- --------------------------------------------------------------------------------
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
The stock market continued to surge upward in the second half of 1995. Market
factors instrumental in helping to propel the Dow Jones Industrial Average past
the 5000 mark for the first time in history included declining interest rates,
benign inflation, low unemployment, and solid growth in corporate profits.
Rather than seeking plays in high-flying sectors expected to do well in this
economic environment, we maintained our diversified, value-oriented approach to
stock selection. Using this technique, we attempted to identify companies that
were undervalued relative to our forecast of long-term earnings and dividend
payouts. The benefits of this strategy were apparent, for example, when the
technology sector started experiencing considerable volatility in late 1995.
While some growth and income funds were hit hard due to their overweighting in
technology or other higher risk sectors, the SIERRA GROWTH AND INCOME FUND
performed rather consistently over this period -- a result of diversification
and a philosophy of selecting only the most undervalued stocks, no matter what
the sector.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
We did not make any major changes in portfolio holdings or sector concentration
that had a crucial impact on the Fund's performance. During the six months the
Fund slightly underperformed the market as a result of individual stock
selections. Holdings that had the greatest, positive impact on the Fund's
returns included Bay Networks Inc., Freeport-McMoran Copper, and Service
Corporation International. At the same time, stocks that hindered performance
the most were Coltec Industries Inc., Circus Circus Enterprises Inc., and Novell
Inc. Positions in the basic industry and utilities sectors contributed strongly
to overall performance, while those in retail and capital goods had the opposite
effect.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
With a slowdown in corporate profit growth and an increase in the number of
negative earnings surprises in late 1995, the U.S. equity market could
experience increased volatility over the coming months. By utilizing its
fundamental valuation techniques and choosing stocks with long-term value in a
wide range of industries, the Fund should minimize the adverse effects of this
volatility. As always, the Fund will remain fully invested in a diversified
collection of stocks, a move which should insulate the portfolio from large
short-term swings in either direction.
Lingering signs of slow growth are also apparent in sluggish production and
employment figures. Our view is that corporate earnings are possibly peaking,
and that 1996 could see flat performance as cost-cutting measures become less
effective. In light of these economic conditions, we believe that the Federal
Reserve could shift from a policy of growth prevention to one of recession
prevention. If this occurs, lower rates may be on the way, along with another
potential uptick in stocks.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
Consumer Discretionary 13.53%
Financial Services 13.20%
Telecommunications 11.83%
Energy 10.22%
Materials & Processing 9.28%
Consumer Staples 8.44%
Health Care 8.22%
Auto & Transportation 7.32%
Producer Durables 5.98%
Technology 4.17%
Utilities 2.27%
US Treasury Bills 1.38%
US Government Agency Obligations 1.30%
Convertible Bonds & Notes 1.30%
Convertible Preferred Stocks 0.98%
Other 0.58%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
JANUS CAPITAL CORPORATION
WARREN B. LAMMERT
Mr. Lammert is a graduate of Yale University and the London School of Economics.
He first joined Janus in January 1987 and has been portfolio manager of the
SIERRA GROWTH FUND since its inception. He is a Chartered Financial Analyst.
PERFORMANCE REVIEW:
From the Fund's inception (April 5, 1993) through December 31, 1995, the SIERRA
GROWTH FUND (Class A Shares) advanced 18.79% on an average annual total return
basis, or 16.81% adjusted for the maximum sales charge, outperforming the S&P
500 benchmark's 16.58% average annual total return for the same period.* For the
12-month period ended December 31, 1995, the Fund had a total return of 36.25%,
or 30.12% adjusted for the maximum sales charge. For additional information,
including Class B and Class S Share performance, see the accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
In 1995, the stock market's fine returns were fueled by falling interest rates
and another excellent year for corporate profits. The yield on the benchmark
30-year U.S. Treasury bond fell below the psychologically important 6 percent
level during the fourth quarter, a long distance from the 8.15 percent high of
November, 1994.
Despite the impact of the slowing economy, the Fund experienced plenty of good
news, particularly in the financial services and pharmaceutical sectors.
Overall, we continued to focus on finding stocks with solid earnings prospects
while maintaining a strict buy and sell policy for the portfolio.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
During the second half of 1995, the Standard & Poor's 500 Index surged 14.44
percent, with a 6.02 percent increase in the fourth quarter. The U.S. economy
slowed markedly in the last three months of 1995, with consumer spending the
area of greatest weakness.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION* 4/5/93
Apr. 93 10020 9569 10000
May 93 10550 10075 10267
Jun. 93 10720 10238 10297
Jul. 93 10480 10008 10255
Aug. 93 10900 10410 10644
Sep. 93 11250 10744 10560
Oct. 93 11500 10983 10778
Nov. 93 11300 10792 10676
Dec. 93 11680 11154 10805
Jan. 94 12160 11613 11172
Feb. 94 12040 11498 10869
Mar. 94 11740 11212 10395
Apr. 94 11630 11107 10529
May 94 11190 10686 10701
Jun. 94 10730 10247 10439
Jul. 94 11150 10648 10782
Aug. 94 11830 11298 11223
Sep. 94 11870 11336 10949
Oct. 94 12200 11651 11194
Nov. 94 11750 11221 10787
Dec. 94 11756 11227 10947
Jan. 95 11886 11351 11230
Feb. 95 12257 11705 11668
Mar. 95 12507 11944 12011
Apr. 95 12938 12355 12365
May 95 13428 12824 12858
Jun. 95 14199 13560 13156
Jul. 95 15121 14440 13593
Aug. 95 15231 14545 13627
Sep. 95 15681 14976 14201
Oct. 95 15261 14574 14151
Nov. 95 15942 15224 14771
Dec. 95 16018 15297 15056
* Index total returns were calculated from 4/30/93 to 12/31/95. The Standard &
Poor's 500 Composite Index (S&P 500) represents an unmanaged weighted index of
500 industrial, transportation, utility, and financial companies widely regarded
by investors as representative of the stock market. The index assumes
reinvestment of all dividends/distributions, and does not reflect any
asset-based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/ distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation)
waived a portion of its management fees and absorbed other expenses, and the
Custodian reduced fees by credits. In the absence of the waivers and absorption
of other expenses, or fees reduced by credits, yield and total return would have
been lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
------- ------ ---------------
(April 5, 1993)
<S> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 12.81% 36.25% 18.79%
Fund (adjusted for the maximum 4.5% sales charge) 7.73% 30.12% 16.81%
Standard & Poor's 500 Composite Index* 14.44% 37.58% 16.58%
- ---------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR SINCE INCEPTION
------- ------ ---------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 12.39% 35.21% 29.78%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 7.43% 30.21% 27.42%
Standard & Poor's 500 Composite Index* 14.44% 37.58% 27.65%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 12.39% 35.21% 29.77%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 7.43% 30.21% 27.41%
Standard & Poor's 500 Composite Index* 14.44% 37.58% 27.65%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
GROWTH FUND
- --------------------------------------------------------------------------------
As U.S. exports decreased due to slowing economies abroad and negative earnings
surprises started appearing in the fourth quarter, the technology sector took a
negative turn. With a high percentage of technology holdings in its portfolio,
the Fund also experienced some price volatility during this period. In light of
this weaker environment, the positions that contributed most positively to the
Fund's performance were in less economically sensitive sectors, such as
pharmaceuticals and financial services.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
We made several portfolio changes to take advantage of the excellent values
currently available in the financial services and pharmaceutical industries. The
Fund continued to hold positions in the Federal National Mortgage Association,
added Bank of New York Company, Inc. holdings, and increased its Chase Manhattan
Corporation holdings. These financial stocks showed promise not only due to
lower interest rates, but also due to increased productivity, a streamlining of
their operations, and renewed focus on their most profitable niches. In the
pharmaceutical sector, we in creased our assets in Pfizer, Inc. and added Eli
Lilly & Company and Amgen Inc. to the portfolio -- all companies that have a
pipeline of new products with enormous global applications.
Other strong issues included Hospitality Franchise Systems, Inc. (HFS) and
Pittway Corporation. HFS is the franchisor for a number of popular hotel and
motel chains, including Ramada and Howard Johnson's, and recently purchased real
estate broker Century 21. HFS boosted profits in its hotel business via an
extremely successful cross-selling strategy, and management intends to apply the
same techniques to improving margins at Century 21. Pittway Corporation
provides electronic security systems and is increasing market share in another
lucrative area: data transmission.
Although we trimmed some technology stocks before the downturn in late 1995,
portfolio performance did not entirely escape the effects of the slide. Nokia AB
declined when it announced that the outlook for the third quarter was less
robust than previously anticipated due to a dip in demand for analog cellular
phones.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
In 1996, a weaker economy could cause mixed reactions in the stock market. Stock
prices would be supported if interest rates remain at current favorable levels
or descend lower; however, these events could also hinder corporate earnings
momentum across a wide spectrum of industries and lead to price volatility in
many individual stocks. Although this volatility is in fact a more normal state
of affairs compared to the heady advance of 1995, the stock market may overreact
as investors become accustomed to the new environment.
On the positive side, increased market volatility could create buying
opportunities and provide a climate where extensive research and stockpicking
ability, which are the focus of the SIERRA GROWTH FUND'S portfolio managers,
enjoy greater rewards. In fact, by selecting companies with attractive
valuations, we believe the Fund is well positioned no matter what the market
conditions.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
Technology 23.78%
Financial Services 17.39%
Health Care 16.29%
Telecommunications 13.33%
Consumer Discretionary 10.22%
Commercial Paper 6.99%
Producer Durables 3.91%
Preferred Stocks-Foreign 3.72%
Other 2.36%
Materials & Processing 1.42%
Consumer Staples 0.59%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
JANUS CAPITAL CORPORATION
JAMES P. GOFF
Mr. Goff has a degree from Yale University and is a Chartered Financial Analyst.
He has been with Janus since 1988, and has had primary portfolio management
responsibility for the SIERRA EMERGING GROWTH FUND since September 1993.
PERFORMANCE REVIEW:
From the Fund's inception (July 18, 1990) through December 31, 1995, the SIERRA
EMERGING GROWTH FUND (Class A Shares) has advanced 14.98% on an average annual
total return basis, or 14.02% adjusted for the maximum sales charge. Over this
same time frame, the Fund outperformed the S&P 500 benchmark index which
achieved an average annual total return of 13.95%.* For the 12-month period
ended December 31, 1995, the Fund's total return was 32.26% or 26.30%, adjusted
for the maximum sales charge. For additional information, including Class B and
Class S Share performance, see the accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The spectacular market performance of 1995 began to slow in the fourth quarter,
when technology and telecommunications stocks finally showed some weakness. The
Standard & Poor's 500 Index still managed a gain of 6.0 percent for the quarter,
topping off a climb of 37.5 percent for 1995.
Over the past six months, the performance of the SIERRA EMERGING GROWTH FUND was
significantly affected by key developments in four of our major holdings: Paging
Network Inc., a provider of paging services; Insignia Financial Group Inc., the
largest real estate management company in the U.S.; Hospitality Franchise
Services Inc. (HFS), a franchisor of hotel and motel chains including Ramada and
Super 8; and APS Holding Corporation, a distributor of automobile parts and
accessories.
In late 1995, Paging Network Inc. signed a sales agreement with Sprint for the
large phone company to offer Paging Network Inc. services. This contract, along
with a similar agreement with MCI in 1994, should help increase sales
substantially. Insignia Financial Group Inc. and HFS entered into a joint
venture, where HFS will help introduce value-added services to Insignia
Financial's customer base. This joint venture could add nicely to HFS's earnings
in the next several years and increase Insignia's profitability in return.
Finally, APS Holdings Corporation acquired Parts, Inc., the largest member of
the Parts Plus auto parts chains. This is an excellent acquisition and should
prove an important driver of earnings in the future.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION* 7/18/90
Jul. 90 9600 9168 10000
Aug. 90 8520 8137 9097
Sep. 90 7810 7459 8655
Oct. 90 7620 7277 8618
Nov. 90 8190 7821 9174
Dec. 90 8263 7891 9430
Jan. 91 8747 8353 9840
Feb. 91 9231 8816 10542
Mar. 91 9846 9403 10797
Apr. 91 9897 9451 10823
May 91 10179 9721 11288
Jun. 91 9705 9268 10772
Jul. 91 10018 9567 11273
Aug. 91 10179 9721 11540
Sep. 91 10310 9846 11346
Oct. 91 10916 10425 11498
Nov. 91 10664 10184 11037
Dec. 91 11509 10991 12297
Jan. 92 12161 11614 12067
Feb. 92 12456 11896 12224
Mar. 92 11896 11361 11986
Apr. 92 11804 11273 12338
May 92 12049 11507 12398
Jun. 92 11886 11351 12214
Jul. 92 12100 11555 12713
Aug. 92 11733 11205 12453
Sep. 92 11845 11312 12599
Oct. 92 12395 11837 12642
Nov. 92 12935 12353 13072
Dec. 92 13281 12684 13232
Jan. 93 13581 12970 13342
Feb. 93 13850 13227 13524
Mar. 93 14212 13573 13810
Apr. 93 13581 12970 13476
May 93 14191 13553 13835
Jun. 93 14233 13592 13876
Jul. 93 14078 13444 13820
Aug. 93 14905 14234 14343
Sep. 93 15133 14452 14230
Oct. 93 15505 14807 14524
Nov. 93 15029 14353 14386
Dec. 93 16243 15512 14560
Jan. 94 16356 15620 15055
Feb. 94 16322 15587 14646
Mar. 94 15643 14940 14009
Apr. 94 15270 14583 14189
May 94 15248 14562 14421
Jun. 94 14717 14054 14068
Jul. 94 15384 14691 14529
Aug. 94 16050 15328 15124
Sep. 94 16152 15425 14755
Oct. 94 17056 16289 15085
Nov. 94 15870 15155 14536
Dec. 94 16187 15459 14752
Jan. 95 16280 15547 15134
Feb. 95 16650 15900 15723
Mar. 95 16627 15878 16186
Apr. 95 16476 15735 16663
May 95 16499 15757 17327
Jun. 95 17887 17082 17729
Jul. 95 19193 18330 18317
Aug. 95 19795 18904 18363
Sep. 95 20685 19754 19137
Oct. 95 19852 18959 19069
Nov. 95 20153 19246 19905
Dec. 95 21409 20445 20289
* Index total returns were calculated from 7/31/90 to 12/31/95. The Standard &
Poor's 500 Composite Index (S&P 500) represents an unmanaged weighted index of
500 industrial, transportation, utility, and financial companies widely regarded
by investors as representative of the stock market. The index assumes
reinvestment of all dividends/distributions, and does not reflect any
asset-based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/ distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation)
waived a portion of its management fees, and the Custodian reduced fees by
credits. In the absence of the waivers, or fees reduced by credits, yield and
total return would have been lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(July 18, 1990)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 19.69% 32.26% 20.97% 14.98%
Fund (adjusted for the maximum 4.5% sales charge) 14.30% 26.30% 19.87% 14.02%
Standard & Poor's 500 Composite Index* 14.44% 37.58% 16.56% 13.95%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
-------------------------------------------------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 19.24% 31.20% N/A 27.52%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 14.24% 26.20% N/A 25.14%
Standard & Poor's 500 Composite Index* 14.44% 37.58% N/A 27.65%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 19.23% 31.27% N/A 27.57%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 14.23% 26.27% N/A 25.19%
Standard & Poor's 500 Composite Index* 14.44% 37.58% N/A 27.65%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
EMERGING GROWTH FUND
- --------------------------------------------------------------------------------
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
Along with the overall stock market, the Fund's performance was pushed higher by
a consistent stream of good news. Economic growth was moderate, inflation
remained at low levels, and interest rates took a dramatic fall. Also of
importance in this scenario were corporate profit margins, which reached an
all-time high for companies in the Standard & Poor's 500 Index. Corporate
earnings exhibited double-digit gains for the fourth year in a row, with a
cumulative increase in earnings of 127 percent from 1991-1995.
Profit growth of this magnitude is understandably hard to sustain. As we enter
1996, a number of companies are already beginning to miss their earnings
estimates. It appears unlikely that earnings growth will accelerate as it has in
the past four years. As a result, a tug of war may develop in 1996 between low
interest rates, which tend to reinforce stock prices, and weakening earnings
comparisons that could push stocks downward. The resulting volatility will
likely create a stockpicker's market, one in which growth stocks with more
predictable earnings should perform well. The SIERRA EMERGING GROWTH FUND, which
stresses an investment approach dependent on comprehensive research and careful
valuation, should continue to find stocks with appealing growth potential and
attractive fundamentals.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
There were no major holding or sector changes in the period that greatly
affected the Fund's performance. Many of the Fund's Top 10 holdings at mid-year
remain in the Top 10 at the end of 1995. As of December 31, 1995, the largest
concentrations of assets were in the health care, consumer discretionary,
telecommunications, and financial services industries.
Sector weightings, however, are not a critical consideration in selecting
acquisitions or making portfolio decisions for the Fund. We do not evaluate a
sector, determine the future strength or appreciation potential of the sector,
and then look for companies within the sector. Instead, we select securities
using a "bottom-up" approach, analyzing each company for its earnings
possibilities, the fairness of its price, the talent and experience of its
management team, and other criteria that focus on the potential success of the
firm rather than the success of a sector.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
Our outlook for the Fund remains positive over the intermediate and long term.
Although corporate profit growth may not be as strong in 1996 as in previous
years, we expect to continue finding individual companies that can grow their
earnings rapidly even in a weak economy. We believe that we already have many of
these companies in the portfolio and are positive about the Fund's prospects
going forward, despite the absence of a nice "market tail wind." Our stock
selection process emphasizes the intrinsic attributes of the company and tends
to uncover companies that will generate the kind of earnings growth that could
drive share prices higher, regardless of market conditions.
- --------------------------------------------------------------------------------
SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
Consumer Discretionary 23.39%
Health Care 18.28%
Financial Services 15.39%
Telecommunications 12.67%
Technology 5.84%
Autos & Transportation 5.48%
Producer Durables 4.63%
Materials & Processing 4.42%
Utilities 3.25%
Consumer Staples 2.49%
Commercial Paper 2.01%
Warrants 1.54%
Other 0.40%
Preferred Stocks-Foreign 0.21%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
J.P. MORGAN INVESTMENT
MANAGEMENT INC.
DOUGLAS J. DOOLEY
MARTYN C. HOLE
Mr. Dooley, Managing Director, has been with J.P. Morgan since 1979. He has
served as head of the International Research Group, and has been responsible for
the emerging equity component of the SIERRA INTERNATIONAL GROWTH FUND. Mr. Hole,
Vice President, joined J.P. Morgan in 1981 from Cambridge University and is a
Chartered Financial Analyst. He is portfolio manager in the International Equity
Group in London with responsibility for Scandinavia and New Zealand. Both Mr.
Dooley and Mr. Hole have had primary portfolio management responsibility for the
SIERRA INTERNATIONAL GROWTH FUND since its inception.
PERFORMANCE REVIEW:
From the Fund's inception (July 18, 1990) through December 31, 1995, the SIERRA
INTERNATIONAL GROWTH FUND (Class A Shares) has advanced 2.47% on an average
annual total return basis, or 1.61% adjusted for the maximum sales charge. For
the 12-month period ended December 31, 1995, the Fund's total return was 4.87%,
or 0.15% adjusted for the maximum sales charge. For additional information,
including Class B and Class S Share performance, see the accompanying chart.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The event that had the greatest impact on the Fund's performance was the recent
turnaround in the Japanese equity market. After dropping to three-year lows in
the second quarter of 1995, Japanese stocks finally began to recover in the
third quarter. When the U.S. Federal Reserve lowered interest rates in July, the
Japanese government followed suit, reduced its rates, and then purchased U.S.
Dollars to support the currency. These actions led to a sharp rise in the value
of the U.S. Dollar against the Yen and helped to propel the Japanese market up
more than 20 percent during the second half of 1995. With its strong exposure to
Japan, the value of the Fund rose significantly over the period, regaining much
of the year's declines and closing 1995 on a positive note.
[ chart/graph: ] GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
INCEPTION* 7/18/90
Jul. 90 9780 9340 10000
Aug. 90 8690 8299 9029
Sep. 90 7760 7411 7770
Oct. 90 8730 8337 8981
Nov. 90 8250 7879 8451
Dec. 90 8150 7783 8589
Jan. 91 8460 8079 8866
Feb. 91 9190 8776 9817
Mar. 91 8630 8242 9228
Apr. 91 8720 8328 9318
May 91 8870 8471 9416
Jun. 91 8270 7898 8724
Jul. 91 8680 8289 9152
Aug. 91 8700 8309 8966
Sep. 91 9020 8614 9472
Oct. 91 9050 8643 9607
Nov. 91 8800 8404 9158
Dec. 91 9325 8905 9632
Jan. 92 9255 8838 9426
Feb. 92 9124 8713 9089
Mar. 92 8742 8348 8489
Apr. 92 8792 8396 8529
May 92 9214 8800 9100
Jun. 92 8872 8473 8668
Jul. 92 8540 8156 8446
Aug. 92 9043 8636 8976
Sep. 92 8651 8262 8799
Oct. 92 8279 7906 8337
Nov. 92 8319 7945 8415
Dec. 92 8339 7964 8459
Jan. 93 8359 7983 8458
Feb. 93 8642 8253 8714
Mar. 93 9197 8783 9474
Apr. 93 9833 9391 10373
May 93 10055 9603 10592
Jun. 93 9894 9449 10426
Jul. 93 10217 9757 10791
Aug. 93 10792 10307 11374
Sep. 93 10762 10278 11118
Oct. 93 11065 10567 11461
Nov. 93 10439 9969 10459
Dec. 93 11037 10540 11214
Jan. 94 11813 11282 12162
Feb. 94 11503 10985 12128
Mar. 94 10933 10441 11605
Apr. 94 11265 10758 12097
May 94 11296 10787 12028
Jun. 94 11120 10619 12198
Jul. 94 11430 10916 12315
Aug. 94 11679 11153 12607
Sep. 94 11296 10787 12209
Oct. 94 11513 10995 12616
Nov. 94 11026 10530 12009
Dec. 94 10892 10402 12085
Jan. 95 10324 9860 11621
Feb. 95 10182 9724 11587
Mar. 95 10368 9901 12310
Apr. 95 10695 10214 12773
May 95 10794 10308 12621
Jun. 95 10674 10193 12400
Jul. 95 11143 10641 13173
Aug. 95 11001 10506 12671
Sep. 95 11088 10589 12918
Oct. 95 10859 10370 12570
Nov. 95 10968 10475 12920
Dec. 95 11422 10908 13440
* Index total returns were calculated from 7/31/90 to 12/31/95. The Morgan
Stanley Capital International EAFE Index includes stock markets of Europe,
Australia, and the far East weighted by capitalization. EAFE is a broad-based
index of equity markets representing 18 countries. The index assumes
reinvestment of all dividends/distributions, and does not reflect any
asset-based charges for investment management or other expenses. Past investment
performance does not guarantee future performance. The returns shown for the
Fund assume reinvestment of all dividends/ distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation),
Administrator (SIERRA Fund Administration Corporation) and Distributor waived a
portion of their management or distribution fees, and the Custodian reduced
fees by credits. In the absence of the waivers, or fees reduced by credits,
yield and total return would have been lower.
The performance of the Class B Shares and Class S Shares will be less than
indicated by the lines shown above for the Class A Shares, based on the
differences in sales loads and fees paid by Class B and Class S shareholders.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(July 18, 1990)
<S> <C> <C> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 7.01% 4.87% 6.98% 2.47%
Fund (adjusted for the maximum 4.5% sales charge) 2.20% 0.15% 6.00% 1.61%
Morgan Stanley Capital International EAFE Index* 8.39% 11.21% 9.37% 5.61%
- ---------------------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/95 6 MONTH 1 YEAR 5 YEAR SINCE INCEPTION
------- ------- ------- ---------------
(June 30, 1994)
CLASS B SHARES
Fund (not adjusted for contingent deferred sales charge) 6.61% 4.15% N/A 1.13%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 1.61% -0.80% N/A -1.33%
Morgan Stanley Capital International EAFE Index* 8.39% 11.21% N/A 6.68%
CLASS S SHARES
Fund (not adjusted for contingent deferred sales charge) 6.67% 4.21% N/A 1.17%
Fund (adjusted for the maximum 5% contingent deferred sales charge) 1.67% -0.74% N/A -1.29%
Morgan Stanley Capital International EAFE Index* 8.39% 11.21% N/A 6.68%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
INTERNATIONAL GROWTH FUND
- --------------------------------------------------------------------------------
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
The Fund's returns continued to improve during the period due to a number of
favorable changes in the international markets. Specifically, market conditions
began to improve in Japan, with stocks rallying significantly in the third and
fourth quarters of 1995. The weakening of the Yen versus the U.S. Dollar and the
general decline in global interest rates also had a favorable impact on the
international equity markets.
Besides adding value through our COUNTRY ALLOCATION decisions, we concentrated
our strategic efforts on STOCK SELECTION -- that is, attempting to outperform
each of the local markets in which we invest by purchasing the most undervalued
stocks. We also put heavy emphasis on CURRENCY MANAGEMENT in an effort to limit
the potential volatility associated with foreign currencies. Our team of
currency specialists had expected the Yen to decline in value against the U.S.
Dollar, and our decision to partially hedge the Fund's Yen exposure to U.S.
Dollars was rewarded throughout the six-month period.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
Over the period, the Fund has benefited from its strong exposure to Japan. The
fall in the Yen and sharply lower interest rates have led to an improvement in
business confidence. Under these conditions, economic growth and corporate
profits are likely to surprise on the upside. However, given that Japanese
stocks are up almost 40 percent from their 1995 lows, we believe that a lot of
the good news has already been priced into the market. As a result, we recently
scaled back our Japanese positions. Holdings in other Far East markets such as
Malaysia were also reduced as signs emerged of a growing inflation problem.
The Fund's European assets were increased over the period, particular in the
United Kingdom. The additions to our United Kingdom position were driven by
improved valuations as interest rates declined and demand strengthened due to
institutional buying, high merger and acquisitions activity, and rapid dividend
increases. Finally, our concentration of assets in the core European countries
was rewarded as some of the more peripheral markets of Finland, Sweden, Austria,
and Italy all suffered sharp declines in the latter part of the year.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
Although international equities generally underperformed the U.S. market during
the six-month period, our valuation analysis indicates that foreign stocks
should be significantly more attractive than U.S. stocks at the present time. We
do not believe that last year's events in Mexico should serve as a harbinger of
events to follow in the emerging markets. Currently, economic growth is strong,
capital inflows remain steady, and valuations have come down to very attractive
levels in many emerging markets.
In the U.S., we believe long-term interest rates are below normal, whereas
internationally and particularly in Europe, there appears to be greater scope
for further rate declines. While U.S. corporate profits appear to be reaching a
cyclical peak, profits in international markets such as Japan are showing early
signs of a strong rebound. These factors all point to attractive opportunities
worldwide and the potential for investors to earn competitive returns in the
Fund.
- --------------------------------------------------------------------------------
DIVERSIFICATION BY REGION
- --------------------------------------------------------------------------------
[graphic omitted: pie chart]
Europe 49.71%
Asia 35.51%
Americas 12.74%
Australia 2.04%
Allocation percentages are based on total investment value of the portfolio as
of 12/31/95.
<PAGE>
- --------------------------------------------------------------------------------
TARGET MATURITY 2002 FUND
- --------------------------------------------------------------------------------
PORTFOLIO MANAGER:
BLACKROCK FINANCIAL
MANAGEMENT, INC.
KEITH ANDERSON
E.G. FISHER
Mr. Anderson is Managing Director, co-head of the Portfolio Management Group,
and a member of the Management Committee and the Investment Strategy Committee
at BlackRock. He also serves as Vice President of BlackRock's family of mutual
funds. E.G. Fisher, co-manager of the Fund, is a Principal at BlackRock and a
member of its Investment Management Committee. Mr. Fisher joined BlackRock in
1990 in the Risk Management and Analytics Group where he was responsible for
risk management analysis and reverse engineering of CMOs. He received a B.A. in
Economics from Dartmouth College in 1989. Both Mr. Anderson and Mr. Fisher have
had primary investment management responsibilities for the SIERRA TARGET
MATURITY 2002 FUND since its inception on March 20, 1995.
PERFORMANCE REVIEW:
From the Fund's inception (March 20, 1995) through December 31, 1995, the SIERRA
TARGET MATURITY 2002 FUND advanced 15.70% on an aggregate total return basis, or
13.39% adjusted for the maximum sales charge. For the six-month period ended
December 31, 1995, the Fund's total return was 7.33%, or 5.18% adjusted for the
maximum sales charge.
WHAT WERE THE MOST SIGNIFICANT FACTORS CONTRIBUTING TO THE FUND'S PERFORMANCE
OVER THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1995?
The factor that had the greatest impact on the Fund's performance over the last
six months was the decline in interest rates. Lower rates led to a strong U.S.
Treasury rally in the second half of 1995 and pushed domestic bond prices
higher. With 90 percent of its holdings in zero coupon U.S. Treasury notes, the
Fund has performed well over this period.
WHAT MARKET CONDITIONS AFFECTED THE FUND'S PERFORMANCE DURING THE PERIOD, AND
WHAT INVESTMENT TECHNIQUES WERE USED TO ADDRESS THOSE CONDITIONS?
The investment objective of the Fund is to maintain 90 percent of its assets in
zero coupon U.S. Treasury notes maturing in November, 2002. Based on this goal,
the Fund's performance is primarily affected by interest rate fluctuations.
During the second half of 1995, rates have generally declined, causing the Fund
to rise in value.
WERE THERE ANY SHIFTS IN THE FUND'S PORTFOLIO HOLDINGS/ SECTORS THAT HAD A
SIGNIFICANT IMPACT ON FUND PERFORMANCE?
There were no shifts in the Fund's portfolio holdings. In accordance with the
Fund's investment policies, we have consistently held about 90 percent of the
Fund's assets in zero coupon U.S. Treasury notes with a seven-year maturity. The
notes mature in November, 2002.
WHAT IS OUR INTERMEDIATE- AND LONG-TERM OUTLOOK FOR THE FUND?
Our outlook is for the Federal Reserve to continue reducing short-term interest
rates in 1996. In a period of declining economic growth, a Fed Funds rate of
approximately 5.50 percent appears overly restrictive. Coupled with low
inflation and reports indicating a sharp acceleration in consumer debt and a
drop in retail sales during the 1995 holiday season, it seems likely that the
Federal Reserve will lower rates further to stimulate economic growth.
Given its portfolio composition of zero coupon U.S. Treasury notes, the Fund's
performance will appreciate, should interest rates continue to decrease.
Conversely, if rates go up again, there will be a negative impact on the Fund's
performance. Over time, as its maturity date approaches, the duration, or
interest rate sensitivity, of the Fund will shorten, lessening the impact on the
Fund's net asset value of interest rate movements. The zero coupon U.S. Treasury
notes in the Fund will mature at par in November, 2002.
Past performance does not guarantee future performance. The returns shown for
the Fund assume reinventment of all dividends/distributions by the shareholder.
During the period noted, the Advisor (SIERRA Investment Advisors Corporation)
and Administrator (SIERRA Fund Administration Corporation) waived a portion of
their management fees, the Advisor absorbed other expenses, and the Custodian
reduced fees by credits. In the absence of the waivers and absorption of other
expenses, or fees reduced by credits, yield and total return would have been
lower.
GROWTH OF A $10,000 INVESTMENT (CLASS A SHARES)
Plot points
Mar. 95 9900 9790
Apr. 95 10140 9937
May 95 10690 10476
Jun. 95 10780 10564
Jul. 95 10670 10457
Aug. 95 10840 10623
Sep. 95 10960 10741
Oct. 95 11160 10937
Nov. 95 11390 11162
Dec. 95 11570 11339
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
AGGREGATE TOTAL RETURNS AS OF 12/31/95 6 MONTH SINCE INCEPTION
------- ---------------
(March 20, 1995)
<S> <C> <C>
CLASS A SHARES
Fund (not adjusted for sales charge) 7.33% 15.70%
Fund (adjusted for the maximum 2% sales charge) 5.18% 13.39%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
SIERRA TRUST FUNDS
SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
For the Six Months Ended December 31, 1995
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
DECEMBER 31, 1995 (UNAUDITED)
U.S. SHORT TERM
GLOBAL GOVERNMENT CALIFORNIA HIGH
MONEY MONEY MONEY QUALITY
FUND FUND FUND BOND FUND
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (Note 2)
See accompanying schedules ........................... $167,221,371 $41,437,998 $48,202,273 $41,023,591
Cash and/or foreign currency ........................... 306,092 445,280 42,266 --
Variation Margin (Note 2) .............................. -- -- -- --
Net unrealized appreciation of forward foreign currency
contracts (Note 2) See accompanying schedules ........ -- -- -- --
Receivable for dollar roll fee income (Notes 2 and 5) .. -- -- -- --
Dividends and/or interest receivable ................... 522,481 264,490 449,128 472,677
Receivable for Fund shares sold ........................ 564,890 7,170,693 61,136 37,503
Receivable for investment securities sold .............. -- -- 200,962 --
Premium receivable for call options written ............ -- -- -- --
Unamortized organization costs (Note 7) ................ -- -- -- 10,045
Receivable from investment advisor ..................... 2,871 -- -- 6,342
Other assets ........................................... -- -- -- --
------------ ----------- ----------- -----------
Total Assets ....................................... 168,617,705 49,318,461 48,955,765 41,550,158
------------ ----------- ----------- -----------
INVESTMENTS, AT COST (NOTE 2) .......................... 167,221,371 41,437,998 48,202,273 40,328,103
CASH AND/OR FOREIGN CURRENCY AT COST (NOTE 2) .......... 306,092 445,280 42,266 --
LIABILITIES
Net unrealized depreciation of forward foreign currency
contracts (Note 2) See accompanying schedules ........ -- -- -- --
Options written, at value (Premiums received
$403,967)(Note 2) See accompanying schedule .......... -- -- -- --
Payable for dollar roll transactions (Notes 2 and 5) ... -- -- -- --
Deferred income for dollar roll transactions ........... -- -- -- --
Variation Margin (Note 2) .............................. -- -- -- --
Payable for Fund shares redeemed........................ 960,787 522,050 335,299 54,171
Payable for investment securities purchased ............ -- -- -- 1,601,719
Investment advisory fee payable (Note 3) ............... -- 3,779 7,163 --
Administration fee payable (Note 3)..................... 43,135 10,765 12,558 8,788
Shareholder servicing and distribution fees payable
(Note 4) ............................................. 46,514 9,106 10,516 12,095
Dividends payable ...................................... 18,188 4,269 3,069 58,795
Accrued legal and audit fees ........................... 15,076 11,049 12,066 13,110
Accrued transfer agent fees ............................ 28,900 11,141 9,872 10,578
Accrued Trustees' fees and expenses (Note 3) ........... 1,070 267 312 250
Due to Custodian ....................................... -- -- -- 102,629
Accrued expenses and other payables .................... 18,931 5,325 5,370 12,674
------------ ----------- ----------- -----------
Total Liabilities ................................. 1,132,601 577,751 396,225 1,874,809
------------ ----------- ----------- -----------
NET ASSETS ............................................. $167,485,104 $48,740,710 $48,559,540 $39,675,349
============ =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
DECEMBER 31, 1995 (UNAUDITED)
SHORT TERM
GLOBAL U.S. CORPORATE CALIFORNIA
GOVERNMENT GOVERNMENT INCOME MUNICIPAL
FUND FUND FUND FUND
------------- -------------- ------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (Note 2)
See accompanying schedules ........................... $82,043,073 $618,291,577 $424,315,502 $409,161,742
Cash and/or foreign currency ........................... 904 6,679 201 --
Variation Margin (Note 2) .............................. -- 99,406 -- --
Net unrealized appreciation of forward foreign currency
contracts (Note 2) See accompanying schedules ........ -- -- -- --
Receivable for dollar roll fee income (Notes 2 and 5) .. -- 214,890 -- --
Dividends and/or interest receivable ................... 2,678,899 3,954,964 8,261,738 6,242,558
Receivable for Fund shares sold ........................ 825,726 313,897 395,897 211,939
Receivable for investment securities sold .............. 5,323,871 259,390 -- 3,835,090
Premium receivable for call options written ............ 26,778 -- -- --
Unamortized organization costs (Note 7) ................ 2,295 -- -- --
Receivable from investment advisor ..................... -- 49,311 -- --
Other assets ........................................... -- -- -- --
----------- ------------ ------------ ------------
Total Assets ....................................... 90,901,546 623,190,114 432,973,338 419,451,329
----------- ------------ ------------ ------------
INVESTMENTS, AT COST (NOTE 2) .......................... 79,546,728 604,855,777 386,417,886 378,152,522
CASH AND/OR FOREIGN CURRENCY AT COST (NOTE 2) .......... 1,053 6,679 201 --
LIABILITIES
Net unrealized depreciation of forward foreign currency
contracts (Note 2) See accompanying schedules ........ 1,720,259 -- -- --
Options written, at value (Premiums received
$403,967)(Note 2) See accompanying schedule .......... 326,869 -- -- --
Payable for dollar roll transactions (Notes 2 and 5) ... -- 150,368,398 38,897,500 --
Deferred income for dollar roll transactions ........... -- -- 22,776 --
Variation Margin (Note 2) .............................. -- -- -- --
Payable for Fund shares redeemed........................ 69,252 340,921 192,247 119,610
Payable for investment securities purchased ............ 5,285,392 906,857 3,089,820 3,000,000
Investment advisory fee payable (Note 3) ............... 4,301 -- 96,655 107,605
Administration fee payable (Note 3)..................... 24,671 108,962 113,201 122,637
Shareholder servicing and distribution fees payable
(Note 4) ............................................. 19,821 117,507 100,005 95,249
Dividends payable ...................................... 1,255,896 1,049,332 966,596 648,504
Accrued legal and audit fees ........................... 25,828 27,651 25,522 23,694
Accrued transfer agent fees ............................ 21,010 100,763 77,502 79,635
Accrued Trustees' fees and expenses (Note 3) ........... 525 2,946 2,408 2,608
Due to Custodian ....................................... -- -- -- 107,517
Accrued expenses and other payables .................... 14,844 152,066 38,716 47,245
----------- ------------ ------------ ------------
Total Liabilities ................................. 8,768,668 153,175,403 43,622,948 4,354,304
----------- ------------ ------------ ------------
NET ASSETS ............................................. $82,132,878 $470,014,711 $389,350,390 $415,097,025
=========== ============ ============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
DECEMBER 31, 1995 (UNAUDITED)
CALIFORNIA
FLORIDA INSURED
INSURED INTERMEDIATE NATIONAL GROWTH AND
MUNICIPAL MUNICIPAL MUNICIPAL INCOME
FUND FUND FUND FUND
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (Note 2)
See accompanying schedules ........................... $39,126,356 $70,206,636 $261,237,539 $226,959,609
Cash and/or foreign currency ........................... 1,306,587 162,714 23,319 9,149
Variation Margin (Note 2) .............................. -- -- -- --
Net unrealized appreciation of forward foreign currency
contracts (Note 2) See accompanying schedules ........ -- -- -- --
Receivable for dollar roll fee income (Notes 2 and 5) .. -- -- -- --
Dividends and/or interest receivable ................... 644,780 1,239,244 3,637,285 331,408
Receivable for Fund shares sold ........................ 202,246 50,337 106,239 466,452
Receivable for investment securities sold .............. -- -- -- 2,618,439
Premium receivable for call options written ............ -- -- -- --
Unamortized organization costs (Note 7) ................ 32,171 5,273 -- --
Receivable from investment advisor ..................... -- -- -- --
Other assets ........................................... -- -- -- --
----------- ----------- ------------ ------------
Total Assets ....................................... 41,312,140 71,664,204 265,004,382 230,385,057
----------- ----------- ------------ ------------
INVESTMENTS, AT COST (NOTE 2) .......................... 36,879,104 65,887,136 237,380,555 204,668,643
CASH AND/OR FOREIGN CURRENCY AT COST (NOTE 2) .......... 1,306,587 162,714 23,319 9,149
LIABILITIES
Net unrealized depreciation of forward foreign currency
contracts (Note 2) See accompanying schedules ........ -- -- -- --
Options written, at value (Premiums received
$403,967)(Note 2) See accompanying schedule .......... -- -- -- --
Payable for dollar roll transactions (Notes 2 and 5) ... -- -- -- --
Deferred income for dollar roll transactions ........... -- -- -- --
Variation Margin (Note 2) .............................. -- -- 31,250 --
Payable for Fund shares redeemed........................ 15,816 54,200 52,404 108,880
Payable for investment securities purchased ............ 3,026,024 -- -- 170,843
Investment advisory fee payable (Note 3) ............... 4,574 5,107 83,018 146,610
Administration fee payable (Note 3)..................... 11,104 21,091 78,218 66,952
Shareholder servicing and distribution fees payable
(Note 4) ............................................. 11,075 24,836 59,659 71,880
Dividends payable ...................................... 72,578 91,319 485,836 172,611
Accrued legal and audit fees ........................... 11,102 12,908 21,256 18,428
Accrued transfer agent fees ............................ 5,761 15,760 52,513 49,385
Accrued Trustees' fees and expenses (Note 3) ........... 236 449 1,664 1,424
Due to Custodian ....................................... -- -- -- --
Accrued expenses and other payables .................... 6,857 19,386 37,823 29,105
----------- ----------- ------------ ------------
Total Liabilities ................................. 3,165,127 245,056 903,641 836,118
----------- ----------- ------------ ------------
NET ASSETS ............................................. $38,147,013 $71,419,148 $264,100,741 $229,548,939
=========== =========== ============ ============
*Redemption price per share is equal to Net Asset Value less any applicable contingent deferred sales charge.
+Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
DECEMBER 31, 1995 (UNAUDITED)
EMERGING INTERNATIONAL TARGET
GROWTH GROWTH GROWTH MATURITY
FUND FUND FUND 2002 FUND
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments, at value (Note 2)
See accompanying schedules ........................... $230,292,442 $287,882,283 $103,084,754 $3,377,975
Cash and/or foreign currency ........................... 103,411 54,085 2,344,819 42,588
Variation Margin (Note 2) .............................. -- -- -- --
Net unrealized appreciation of forward foreign currency
contracts (Note 2) See accompanying schedules ........ -- -- 78,482 --
Receivable for dollar roll fee income (Notes 2 and 5) .. -- -- -- --
Dividends and/or interest receivable ................... 56,865 95,436 395,381 --
Receivable for Fund shares sold ........................ 439,205 379,925 5,578,575 114,484
Receivable for investment securities sold .............. 1,874,449 2,183,808 571,654 --
Premium receivable for call options written ............ -- -- -- --
Unamortized organization costs (Note 7) ................ 26,537 -- -- 49,965
Receivable from investment advisor ..................... -- -- -- 1,477
Other assets ........................................... 1,890 7,986 -- --
------------ ------------ ------------ ----------
Total Assets ....................................... 232,794,799 290,603,523 112,053,665 3,586,489
------------ ------------ ------------ ----------
INVESTMENTS, AT COST (NOTE 2) .......................... 198,792,210 230,097,104 101,339,984 3,124,659
CASH AND/OR FOREIGN CURRENCY AT COST (NOTE 2) .......... 103,383 54,048 2,358,691 42,588
LIABILITIES
Net unrealized depreciation of forward foreign currency
contracts (Note 2) See accompanying schedules ........ 174,868 42,720 -- --
Options written, at value (Premiums received
$403,967)(Note 2) See accompanying schedule .......... -- -- -- --
Payable for dollar roll transactions (Notes 2 and 5) ... -- -- -- --
Deferred income for dollar roll transactions ........... -- -- -- --
Variation Margin (Note 2) .............................. -- -- -- --
Payable for Fund shares redeemed........................ 3,568,138 3,372,123 69,376 --
Payable for investment securities purchased ............ 656,886 2,858,154 689,523 --
Investment advisory fee payable (Note 3) ............... 175,072 201,733 80,227 --
Administration fee payable (Note 3)..................... 66,641 81,323 31,291 503
Shareholder servicing and distribution fees payable
(Note 4) ............................................. 76,516 84,629 34,858 707
Dividends payable ...................................... 707,486 206,166 5,463,169 116,707
Accrued legal and audit fees ........................... 17,230 20,190 20,818 5,944
Accrued transfer agent fees ............................ 40,430 54,014 25,526 125
Accrued Trustees' fees and expenses (Note 3) ........... 1,417 1,730 666 21
Due to Custodian ....................................... -- -- -- --
Accrued expenses and other payables .................... 36,488 37,289 43,380 155
------------ ------------ ------------ ----------
Total Liabilities ................................. 5,521,172 6,960,071 6,458,834 124,162
------------ ------------ ------------ ----------
NET ASSETS ............................................. $227,273,627 $283,643,452 $105,594,831 $3,462,327
============ ============ ============ ==========
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
DECEMBER 31, 1995 (UNAUDITED)
U.S. SHORT TERM
GLOBAL GOVERNMENT CALIFORNIA HIGH
MONEY MONEY MONEY QUALITY
FUND FUND FUND BOND FUND
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net investment income/(accumulated net
investment loss/distributions in excess of net
investment income) ................................... $ (7,391) $ 5,326 $ 3,196 $ (53,838)
Accumulated net realized gain/(loss)/(distributions in
excess of net realized gain) on investments sold,
futures contracts, closed written options, forward
foreign currency contracts and foreign currency
transactions ......................................... 27,284 (12,338) (40,974) (848,682)
Net unrealized appreciation of investments, foreign
currency, written options, futures contracts, forward
foreign currency contracts and other assets and
liabilities .......................................... -- -- -- 695,488
Paid-in capital ........................................ 167,465,211 48,747,722 48,597,318 39,882,381
------------ ----------- ----------- -----------
Total Net Assets ................................... $167,485,104 $48,740,710 $48,559,540 $39,675,349
============ =========== =========== ===========
NET ASSETS:
Class A Shares ......................................... $150,410,302 $48,519,978 $48,479,830 $33,715,057
============ =========== =========== ===========
Class B Shares ......................................... $ 250,204 $ 144,562 $ 69,393 $ 3,151,191
============ =========== =========== ===========
Class S Shares ......................................... $ 16,824,598 $ 76,170 $ 10,317 $ 2,809,101
============ =========== =========== ===========
SHARES OUTSTANDING:
Class A Shares ......................................... 150,370,382 48,531,267 48,520,737 14,152,350
============ =========== =========== ===========
Class B Shares ......................................... 250,137 144,552 69,451 1,322,823
============ =========== =========== ===========
Class S Shares ......................................... 16,848,954 76,165 10,326 1,179,393
============ =========== =========== ===========
CLASS A SHARES:
Net asset value per share of beneficial interest
outstanding*.......................................... $1.00 $1.00 $1.00 $2.38
============ =========== =========== ===========
Maximum sales charge ................................... -- -- -- 3.5%
Maximum offering price per share of beneficial interest
outstanding .......................................... -- -- -- $2.47
============ =========== =========== ===========
CLASS B SHARES:
Net asset value and offering price per share of
beneficial interest outstanding* ..................... $1.00 $1.00 $1.00 $2.38
============ =========== =========== ===========
CLASS S SHARES:
Net asset value and offering price per share of
beneficial interest outstanding* ..................... $1.00 $1.00 $1.00 $2.38
============ =========== =========== ===========
- --------------
<FN>
* Redemption price per share is equal to Net Asset Value less any applicable contingent deferred sales charge.
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
DECEMBER 31, 1995 (UNAUDITED)
SHORT TERM
GLOBAL U.S. CORPORATE CALIFORNIA
GOVERNMENT GOVERNMENT INCOME MUNICIPAL
FUND FUND FUND FUND
------------ ------------- ------------- -----------
<S> <C> <C> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net investment income/(accumulated net
investment loss/distributions in excess of net
investment income) ................................... $ 1,339,710 $ 681,962 $ (1,086,967) $ 2,094
Accumulated net realized gain/(loss)/(distributions in
excess of net realized gain) on investments sold,
futures contracts, closed written options, forward
foreign currency contracts and foreign currency
transactions ......................................... (2,804,108) (68,362,729) (32,430,426) (15,160,380)
Net unrealized appreciation of investments, foreign
currency, written options, futures contracts, forward
foreign currency contracts and other assets and
liabilities .......................................... 998,941 13,291,025 37,897,616 31,009,220
Paid-in capital ........................................ 82,598,335 524,404,453 384,970,167 399,246,091
----------- ------------ ------------ ------------
Total Net Assets ................................... $82,132,878 $470,014,711 $389,350,390 $415,097,025
=========== ============ ============ ============
NET ASSETS:
Class A Shares ......................................... $78,649,559 $439,291,848 $358,147,904 $402,491,585
=========== ============ ============ ============
Class B Shares ......................................... $ 1,383,242 $ 19,062,483 $ 22,778,005 $ 12,594,019
=========== ============ ============ ============
Class S Shares ......................................... $ 2,100,077 $ 11,660,380 $ 8,424,481 $ 11,421
=========== ============ ============ ============
SHARES OUTSTANDING:
Class A Shares ......................................... 34,428,203 44,426,000 32,230,605 36,632,497
=========== ============ ============ ============
Class B Shares ......................................... 605,525 1,927,816 2,049,868 1,146,267
=========== ============ ============ ============
Class S Shares ......................................... 919,200 1,179,213 758,125 1,039
=========== ============ ============ ============
CLASS A SHARES:
Net asset value per share of beneficial interest
outstanding*.......................................... $2.28 $9.89 $11.11 $10.99
=========== ============ ============ ============
Maximum sales charge ................................... 3.5% 4.5% 4.5% 4.5%
Maximum offering price per share of beneficial interest
outstanding .......................................... $2.36 $10.36 $11.63 $11.51
=========== ============ ============ ============
CLASS B SHARES:
Net asset value and offering price per share of
beneficial interest outstanding* ..................... $2.28 $9.89 $11.11 $10.99
=========== ============ ============ ============
CLASS S SHARES:
Net asset value and offering price per share of
beneficial interest outstanding* ..................... $2.28 $9.89 $11.11 $10.99
=========== ============ ============ ============
- --------------
<FN>
* Redemption price per share is equal to Net Asset Value less any applicable contingent deferred sales charge.
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
DECEMBER 31, 1995 (UNAUDITED)
CALIFORNIA
FLORIDA INSURED
INSURED INTERMEDIATE NATIONAL GROWTH AND
MUNICIPAL MUNICIPAL MUNICIPAL INCOME
FUND FUND FUND FUND
---------- ---------- ----------- ----------- -
<S> <C> <C> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net investment income/(accumulated net
investment loss/distributions in excess of net
investment income) ................................... $ 2,724 $ 2,141 $ 2,823 $ 7,319
Accumulated net realized gain/(loss)/(distributions in
excess of net realized gain) on investments sold,
futures contracts, closed written options, forward
foreign currency contracts and foreign currency
transactions ......................................... (3,063,473) 134,717 (12,631,585) 5,227,127
Net unrealized appreciation of investments, foreign
currency, written options, futures contracts, forward
foreign currency contracts and other assets and
liabilities .......................................... 2,247,252 4,319,500 23,681,807 22,290,966
Paid-in capital ........................................ 38,960,510 66,962,790 253,047,696 202,023,527
----------- ----------- ------------ ------------
Total Net Assets ................................... $38,147,013 $71,419,148 $264,100,741 $229,548,939
=========== =========== ============ ============
NET ASSETS:
Class A Shares ......................................... $32,885,586 $55,954,615 $257,960,560 $190,061,359
=========== =========== ============ ============
Class B Shares ......................................... $ 5,249,925 $15,453,070 $ 6,128,885 $ 13,183,990
=========== =========== ============ ============
Class S Shares ......................................... $ 11,502 $ 11,463 $ 11,296 $ 26,303,590
=========== =========== ============ ============
SHARES OUTSTANDING:
Class A Shares ......................................... 3,264,571 5,160,180 22,956,163 14,654,315
=========== =========== ============ ============
Class B Shares ......................................... 521,141 1,425,097 545,416 1,020,127
=========== =========== ============ ============
Class S Shares ......................................... 1,142 1,057 1,005 2,034,571
=========== =========== ============ ============
CLASS A SHARES:
Net asset value per share of beneficial interest
outstanding*.......................................... $10.07 $10.84 $11.24 $12.97
=========== =========== ============ ============
Maximum sales charge ................................... 4.5% 4.5% 4.5% 4.5%
Maximum offering price per share of beneficial interest
outstanding .......................................... $10.54 $11.35 $11.77 $13.58
=========== =========== ============ ============
CLASS B SHARES:
Net asset value and offering price per share of
beneficial interest outstanding* ..................... $10.07 $10.84 $11.24 $12.92
=========== =========== ============ ============
CLASS S SHARES:
Net asset value and offering price per share of
beneficial interest outstanding* ..................... $10.07 $10.84 $11.24 $12.93
=========== =========== ============ ============
*Redemption price per share is equal to Net Asset Value less any applicable contingent deferred sales charge.
+Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
DECEMBER 31, 1995 (UNAUDITED)
EMERGING INTERNATIONAL TARGET
GROWTH GROWTH GROWTH MATURITY
FUND FUND FUND 2002 FUND
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
NET ASSETS CONSIST OF:
Undistributed net investment income/(accumulated net
investment loss/distributions in excess of net
investment income) ................................... $ (635,179)+ $ (938,672)+ $ (3,395,554) $ (3,958)
Accumulated net realized gain/(loss)/(distributions in
excess of net realized gain) on investments sold,
futures contracts, closed written options, forward
foreign currency contracts and foreign currency
transactions ......................................... 2,313,642 5,840,357 2,878,278 (5)
Net unrealized appreciation of investments, foreign
currency, written options, futures contracts, forward
foreign currency contracts and other assets and
liabilities .......................................... 31,372,178 57,741,192 1,807,219 253,316
Paid-in capital ........................................ 194,222,986 221,000,575 104,304,888 3,212,974
------------ ------------ ------------ ----------
Total Net Assets ................................... $227,273,627 $283,643,452 $105,594,831 $3,462,327
============ ============ ============ ==========
NET ASSETS:
Class A Shares ......................................... $179,856,637 $239,486,062 $ 84,901,170 $3,462,327
============ ============ ============ ==========
Class B Shares ......................................... $ 14,054,386 $ 16,214,465 $ 2,922,925 --
============ ============ ============
Class S Shares ......................................... $ 33,362,604 $ 27,942,925 $ 17,770,736 --
============ ============ ============
SHARES OUTSTANDING:
Class A Shares ......................................... 12,747,814 13,486,090 8,555,762 309,627
============ ============ ============ ==========
Class B Shares ......................................... 1,006,917 923,181 296,391 --
============ ============ ============
Class S Shares ......................................... 2,389,741 1,590,462 1,802,918 --
============ ============ ============
CLASS A SHARES:
Net asset value per share of beneficial interest
outstanding*.......................................... $14.11 $17.76 $9.92 $11.18
============ ============ ============ ==========
Maximum sales charge ................................... 4.5% 4.5% 4.5% 2.0%
Maximum offering price per share of beneficial interest
outstanding .......................................... $14.77 $18.60 $10.39 $11.41
============ ============ ============ ==========
CLASS B SHARES:
Net asset value and offering price per share of
beneficial interest outstanding* ..................... $13.96 $17.56 $9.86 --
============ ============ ============
CLASS S SHARES:
Net asset value and offering price per share of
beneficial interest outstanding* ..................... $13.96 $17.57 $9.86 --
============ ============ ============
*Redemption price per share is equal to Net Asset Value less any applicable contingent deferred sales charge.
+Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
U.S. SHORT TERM
GLOBAL GOVERNMENT CALIFORNIA HIGH
MONEY MONEY MONEY QUALITY
FUND FUND FUND BOND FUND
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .................................... $ -- $ -- $ -- $ --
Foreign withholding tax on dividend income ... -- -- -- --
Interest ..................................... 4,346,901 1,221,850 1,001,288 1,772,768
Foreign withholding tax on interest income ... -- -- -- --
Fee income (Note 5) .......................... -- -- -- --
---------- ---------- ---------- ----------
Total investment income .................. 4,346,901 1,221,850 1,001,288 1,772,768
---------- ---------- ---------- ----------
EXPENSES:
Investment advisory fee (Note 3) ............. 291,932 84,580 100,475 127,900
Administration fee (Note 3) .................. 218,949 63,435 75,356 89,530
Custodian fees ............................... 7,680 1,523 2,120 5,424
Legal and audit fees ......................... 19,604 11,083 12,438 12,827
Trustees' fees and expenses (Note 3) ......... 2,779 779 921 924
Amortization of organization costs (Note 7) .. -- -- -- 1,773
Registration and filing fees ................. 36,901 20,666 4,846 26,635
Transfer agent fees ......................... 56,989 22,727 20,432 23,456
Other ........................................ 13,693 5,689 5,010 8,624
---------- ---------- ---------- ----------
Subtotal ................................. 648,527 210,482 221,598 297,093
Shareholder servicing and distribution fees
(Note 4):
Class A Shares ............................. 167,208 52,480 62,697 55,828
Class B Shares ............................. 1,210 593 349 15,931
Class S Shares ............................. 59,789 938 51 16,555
Fees waived and/or expenses absorbed by
investment advisor and administrator (Note 3) (356,757) (82,405) (70,879) (168,340)
Fees reduced by credits allowed by the
custodian (Note 3) ......................... (804) (1,049) -- (635)
---------- ---------- ---------- ----------
Total expenses before interest expense ... 519,173 181,039 213,816 216,432
---------- ---------- ---------- ----------
Interest expense (Note 5) .................... -- -- -- --
---------- ---------- ---------- ----------
Total expenses ........................... 519,173 181,039 213,816 216,432
---------- ---------- ---------- ----------
NET INVESTMENT INCOME/(LOSS) ................. 3,827,728 1,040,811 787,472 1,556,336
---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS (Notes 2 and 5):
Realized gain/(loss) from:
Security transactions ...................... 10,322 (838) 87 185,201
Forward foreign currency contracts and
foreign currency transactions ............ -- -- -- (1,161)
Futures contracts .......................... -- -- -- --
Written options ............................ -- -- -- (14,410)
Net change in unrealized appreciation/
(depreciation) of:
Securities ................................. -- -- -- 251,155
Forward foreign currency contracts ......... -- -- -- --
Foreign currency, written options, futures
contracts and other assets and liabilities -- -- -- --
---------- ---------- ---------- ----------
Net realized and unrealized gain/(loss)
on investments ............................. 10,322 (838) 87 420,785
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................. $3,838,050 $1,039,973 $ 787,559 $1,977,121
========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
SHORT TERM
GLOBAL U.S. CORPORATE CALIFORNIA
GOVERNMENT GOVERNMENT INCOME MUNICIPAL
FUND FUND FUND FUND
------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .................................... $ -- $ -- $ -- $ --
Foreign withholding tax on dividend income ... -- -- -- --
Interest ..................................... 3,763,856 18,255,257 15,201,011 13,335,322
Foreign withholding tax on interest income ... (38,153) -- -- --
Fee income (Note 5) .......................... -- 793,115 417,994 --
---------- ----------- ----------- -----------
Total investment income .................. 3,725,703 19,048,372 15,619,005 13,335,322
---------- ----------- ----------- -----------
EXPENSES:
Investment advisory fee (Note 3) ............. 313,741 1,294,739 1,252,356 1,132,346
Administration fee (Note 3) .................. 168,938 823,925 674,345 720,584
Custodian fees ............................... 10,495 69,529 3,284 12,498
Legal and audit fees ......................... 26,935 48,927 38,905 42,330
Trustees' fees and expenses (Note 3) ......... 1,729 8,527 6,916 7,473
Amortization of organization costs (Note 7) .. 1,000 -- -- --
Registration and filing fees ................. 459 -- 5,860 --
Transfer agent fees ......................... 43,017 186,301 150,006 154,386
Other ........................................ 10,964 93,616 38,980 43,170
---------- ----------- ----------- -----------
Subtotal ................................. 577,278 2,525,564 2,170,652 2,112,787
Shareholder servicing and distribution fees
(Note 4):
Class A Shares ............................. 116,035 559,230 449,274 502,998
Class B Shares ............................. 6,756 72,532 92,118 46,765
Class S Shares ............................. 11,782 44,621 37,488 55
Fees waived and/or expenses absorbed by
investment advisor and administrator (Note 3) (287,093) (1,556,413) (861,107) (720,570)
Fees reduced by credits allowed by the
custodian (Note 3) ......................... (49) (24,539) (203) (12,498)
---------- ----------- ----------- -----------
Total expenses before interest expense ... 424,709 1,620,995 1,888,222 1,929,537
---------- ----------- ----------- -----------
Interest expense (Note 5) .................... -- 412,243 -- --
---------- ----------- ----------- -----------
Total expenses ........................... 424,709 2,033,238 1,888,222 1,929,537
---------- ----------- ----------- -----------
NET INVESTMENT INCOME/(LOSS) ................. 3,300,994 17,015,134 13,730,783 11,405,785
---------- ----------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS (Notes 2 and 5):
Realized gain/(loss) from:
Security transactions ...................... 510,892 6,766,559 (1,225,452) 641,395
Forward foreign currency contracts and
foreign currency transactions ............ (1,620,426) -- -- --
Futures contracts .......................... -- (1,706,230) -- --
Written options ............................ 1,481,003 -- -- --
Net change in unrealized appreciation/
(depreciation) of:
Securities ................................. 657,749 3,655,854 21,964,870 16,694,071
Forward foreign currency contracts ......... 1,217,626 -- -- --
Foreign currency, written options, futures
contracts and other assets and liabilities 220,178 1,149,367 -- --
---------- ----------- ----------- -----------
Net realized and unrealized gain/(loss)
on investments ............................. 2,467,022 9,865,550 20,739,418 17,335,466
---------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................. $5,768,016 $26,880,684 $34,470,201 $28,741,251
========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
CALIFORNIA
FLORIDA INSURED
INSURED INTERMEDIATE NATIONAL GROWTH AND
MUNICIPAL MUNICIPAL MUNICIPAL INCOME
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .................................... $ -- $ -- $ -- $ 2,121,115
Foreign withholding tax on dividend income ... -- -- -- (15,580)
Interest ..................................... 1,069,965 1,862,501 8,763,654 256,226
Foreign withholding tax on interest income ... -- -- -- --
Fee income (Note 5) .......................... -- -- -- --
---------- ---------- ----------- -----------
Total investment income .................. 1,069,965 1,862,501 8,763,654 2,361,761
---------- ---------- ----------- -----------
EXPENSES:
Investment advisory fee (Note 3) ............. 102,572 191,752 732,777 817,532
Administration fee (Note 3) .................. 65,273 122,024 466,313 371,125
Custodian fees ............................... 2,190 3,336 3,027 11,477
Legal and audit fees ......................... 13,504 13,611 33,621 21,469
Trustees' fees and expenses (Note 3) ......... 674 1,275 4,823 3,925
Amortization of organization costs (Note 7) .. 6,572 811 -- --
Registration and filing fees ................. 10,856 15,686 6,579 29,895
Transfer agent fees ......................... 11,732 32,180 101,481 92,948
Other ........................................ 5,988 16,002 32,148 25,490
---------- ---------- ----------- -----------
Subtotal ................................. 219,361 396,677 1,380,769 1,373,861
Shareholder servicing and distribution fees
(Note 4):
Class A Shares ............................. 41,324 69,506 326,558 227,495
Class B Shares ............................. 21,145 70,560 26,036 49,466
Class S Shares ............................. 54 56 54 100,908
Fees waived and/or expenses absorbed by
investment advisor and administrator (Note 3) (144,372) (224,314) (352,691) --
Fees reduced by credits allowed by the
custodian (Note 3) ......................... (2,190) (3,336) (3,027) (415)
---------- ---------- ----------- -----------
Total expenses before interest expense ... 135,322 309,149 1,377,699 1,751,315
---------- ---------- ----------- -----------
Interest expense (Note 5) .................... -- -- -- --
---------- ---------- ----------- -----------
Total expenses ........................... 135,322 309,149 1,377,699 1,751,315
---------- ---------- ----------- -----------
NET INVESTMENT INCOME/(LOSS) ................. 934,643 1,553,352 7,385,955 610,446
---------- ---------- ----------- -----------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS (Notes 2 and 5):
Realized gain/(loss) from:
Security transactions ...................... 108,669 344,051 680,683 15,495,929
Forward foreign currency contracts and
foreign currency transactions ............ -- -- -- --
Futures contracts .......................... 17,568 17,568 (1,982,530) --
Written options ............................ -- -- -- --
Net change in unrealized appreciation/
(depreciation) of:
Securities ................................. 2,341,470 2,438,917 13,077,386 6,531,990
Forward foreign currency contracts ......... -- -- -- --
Foreign currency, written options, futures
contracts and other assets and liabilities -- -- (277,495) --
---------- ---------- ----------- -----------
Net realized and unrealized gain/(loss)
on investments ............................. 2,467,707 2,800,536 11,498,044 22,027,919
---------- ---------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................. $3,402,350 $4,353,888 $18,883,999 $22,638,365
========== ========== =========== ===========
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
EMERGING INTERNATIONAL TARGET
GROWTH GROWTH GROWTH MATURITY
FUND FUND FUND 2002 FUND
------------ ------------ ----------- ---------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends .................................... $ 528,448 $ 1,087,755 $ 914,269 $ --
Foreign withholding tax on dividend income ... (5,124) (12,443) (106,044) --
Interest ..................................... 680,525 242,066 181,051 93,766
Foreign withholding tax on interest income ... -- -- (31) --
Fee income (Note 5) .......................... -- -- -- --
----------- ----------- ---------- --------
Total investment income .................. 1,203,849 1,317,378 989,245 93,766
----------- ----------- ---------- --------
EXPENSES:
Investment advisory fee (Note 3) ............. 959,472 1,107,742 467,573 3,799
Administration fee (Note 3) .................. 363,786 445,779 182,180 5,319
Custodian fees ............................... 25,350 18,414 42,503 1,596
Legal and audit fees ......................... 24,238 29,290 22,002 5,953
Trustees' fees and expenses (Note 3) ......... 3,860 4,795 1,893 58
Amortization of organization costs (Note 7) .. 5,809 -- -- 5,879
Registration and filing fees ................. 19,057 33,593 13,988 8,909
Transfer agent fees ......................... 86,249 112,516 51,632 630
Other ........................................ 21,153 30,693 17,752 589
----------- ----------- ---------- --------
Subtotal ................................. 1,508,974 1,782,822 799,523 32,732
Shareholder servicing and distribution fees
(Note 4):
Class A Shares ............................. 214,171 276,255 109,469 3,799
Class B Shares ............................. 52,367 66,075 13,116 --
Class S Shares ............................. 130,341 102,557 69,521 --
Fees waived and/or expenses absorbed by
investment advisor and administrator (Note 3) -- -- -- (25,820)
Fees reduced by credits allowed by the
custodian (Note 3) ......................... (2,406) (7,553) (1,057) (1,561)
----------- ----------- ---------- --------
Total expenses before interest expense ... 1,903,447 2,220,156 990,572 9,150
----------- ----------- ---------- --------
Interest expense (Note 5) .................... -- -- -- --
----------- ----------- ---------- --------
Total expenses ........................... 1,903,447 2,220,156 990,572 9,150
----------- ----------- ---------- --------
NET INVESTMENT INCOME/(LOSS) ................. (699,598) (902,778) (1,327) 84,616
----------- ----------- ---------- --------
NET REALIZED AND UNREALIZED GAIN/(LOSS) ON
INVESTMENTS (Notes 2 and 5):
Realized gain/(loss) from:
Security transactions ...................... 18,530,674 15,409,679 874,469 1
Forward foreign currency contracts and
foreign currency transactions ............ (203,851) (201,230) 3,486,377 --
Futures contracts .......................... -- -- -- --
Written options ............................ -- -- -- --
Net change in unrealized appreciation/
(depreciation) of:
Securities ................................. 6,983,338 29,740,788 2,741,165 139,543
Forward foreign currency contracts ......... 26,317 271,879 198,770 --
Foreign currency, written options, futures
contracts and other assets and liabilities 47,903 (23) (49,196) --
----------- ----------- ---------- --------
Net realized and unrealized gain/(loss)
on investments ............................. 25,384,381 45,221,093 7,251,585 139,544
----------- ----------- ---------- --------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS ................................. $24,684,783 $44,318,315 $7,250,258 $224,160
=========== =========== ========== ========
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
SIERRA TRUST FUNDS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
U.S. SHORT TERM
GLOBAL GOVERNMENT CALIFORNIA HIGH
MONEY MONEY MONEY QUALITY
FUND FUND FUND BOND FUND
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net investment income/(loss) ............. $ 3,827,728 $ 1,040,811 $ 787,472 $ 1,556,336
Net realized gain/(loss) on investments
sold, forward foreign currency contracts,
foreign currency transactions, futures
contracts and closed written options
during the period ...................... 10,322 (838) 87 169,630
Net unrealized appreciation of investments,
forward foreign currency contracts,
foreign currency, futures contracts,
written options and other assets and
liabilities during the period .......... -- -- -- 251,155
------------ ----------- ----------- -----------
Net increase in net assets resulting
from operations ........................ 3,838,050 1,039,973 787,559 1,977,121
Distributions to shareholder from:
Net investment income:
Class A Shares ....................... (3,579,720) (1,033,746) (786,516) (1,374,806)
Class B Shares ....................... (5,570) (2,475) (834) (86,399)
Class S Shares ....................... (275,861) (4,590) (122) (88,783)
Net realized gains on investments:
Class A Shares ....................... -- -- -- --
Class B Shares ....................... -- -- -- --
Class S Shares ....................... -- -- -- --
Net increase/(decrease) in net assets from
Fund share transactions:
Class A Shares ....................... 40,389,043 1,028,579 (355,990) (10,457,614)
Class B Shares ....................... 9,693 21,812 (9,376) 105,607
Class S Shares ....................... 9,458,354 (660,943) 123 471,358
------------ ----------- ----------- -----------
Net increase/(decrease) in net assets .... 49,833,989 388,610 (365,156) (9,453,516)
NET ASSETS:
Beginning of period ...................... 117,651,115 48,352,100 48,924,696 49,128,865
------------ ----------- ----------- -----------
End of period ............................ $167,485,104 $48,740,710 $48,559,540 $39,675,349
============ =========== =========== ===========
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net investment
income) at end of period .............. $ (7,391) $ 5,326 $ 3,196 $ (53,838)
============ =========== =========== ===========
--------------
<FN>
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SIERRA TRUST FUNDS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
SHORT TERM
GLOBAL U.S. CORPORATE CALIFORNIA
GOVERNMENT GOVERNMENT INCOME MUNICIPAL
FUND FUND FUND FUND
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net investment income/(loss) ............. $ 3,300,994 $ 17,015,134 $ 13,730,783 $ 11,405,785
Net realized gain/(loss) on investments
sold, forward foreign currency contracts,
foreign currency transactions, futures
contracts and closed written options
during the period ...................... 371,469 5,060,329 (1,225,452) 641,395
Net unrealized appreciation of investments,
forward foreign currency contracts,
foreign currency, futures contracts,
written options and other assets and
liabilities during the period .......... 2,095,553 4,805,221 21,964,870 16,694,071
------------ ------------ ------------ ------------
Net increase in net assets resulting
from operations ........................ 5,768,016 26,880,684 34,470,201 28,741,251
Distributions to shareholder from:
Net investment income:
Class A Shares ....................... (3,639,916) (15,613,295) (12,904,160) (11,188,178)
Class B Shares ....................... (52,280) (447,425) (586,474) (222,344)
Class S Shares ....................... (82,279) (275,570) (240,149) (263)
Net realized gains on investments:
Class A Shares ....................... -- -- -- --
Class B Shares ....................... -- -- -- --
Class S Shares ....................... -- -- -- --
Net increase/(decrease) in net assets from
Fund share transactions:
Class A Shares ....................... (27,256,575) (30,578,507) (44,684,909) (20,374,488)
Class B Shares ....................... 62,375 8,016,298 6,523,242 4,933,025
Class S Shares ....................... (235,879) 4,580,393 (714,845) 283
------------ ------------ ------------ ------------
Net increase/(decrease) in net assets .... (25,436,538) (7,437,422) (18,137,094) 1,889,286
NET ASSETS:
Beginning of period ...................... 107,569,416 477,452,133 407,487,484 413,207,739
------------ ------------ ------------ ------------
End of period ............................ $ 82,132,878 $470,014,711 $389,350,390 $415,097,025
============ ============ ============ ============
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net investment
income) at end of period .............. $ 1,339,710 $ 681,962 $ (1,086,967) $ 2,094
============ ============ ============= ==============
--------------
<FN>
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SIERRA TRUST FUNDS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
CALIFORNIA
FLORIDA INSURED
INSURED INTERMEDIATE NATIONAL GROWTH AND
MUNICIPAL MUNICIPAL MUNICIPAL INCOME
FUND FUND FUND FUND
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net investment income/(loss) ............. $ 934,643 $ 1,553,352 $ 7,385,955 $ 610,446
Net realized gain/(loss) on investments
sold, forward foreign currency contracts,
foreign currency transactions, futures
contracts and closed written options
during the period ...................... 126,237 361,619 (1,301,847) 15,495,929
Net unrealized appreciation of investments,
forward foreign currency contracts,
foreign currency, futures contracts,
written options and other assets and
liabilities during the period .......... 2,341,470 2,438,917 12,799,891 6,531,990
----------- ----------- ------------ ------------
Net increase in net assets resulting
from operations ........................ 3,402,350 4,353,888 18,883,999 22,638,365
Distributions to shareholder from:
Net investment income:
Class A Shares ....................... (850,441) (1,281,568) (7,267,904) (615,115)
Class B Shares ....................... (91,963) (271,569) (124,791) (3,735)
Class S Shares ....................... (239) (215) (260) (7,588)
Net realized gains on investments:
Class A Shares ....................... -- (228,212) -- (13,499,648)
Class B Shares ....................... -- (63,023) -- (940,265)
Class S Shares ....................... -- (47) -- (1,876,397)
Net increase/(decrease) in net assets from
Fund share transactions:
Class A Shares ....................... (2,999,449) (563,542) (22,328,952) 14,481,114
Class B Shares ....................... 1,631,437 2,565,232 1,108,880 6,187,300
Class S Shares ....................... 258 275 284 11,721,932
----------- ----------- ------------ ------------
Net increase/(decrease) in net assets .... 1,091,953 4,511,219 (9,728,744) 38,085,963
NET ASSETS:
Beginning of period ...................... 37,055,060 66,907,929 273,829,485 191,462,976
----------- ----------- ------------ ------------
End of period ............................ $38,147,013 $71,419,148 $264,100,741 $229,548,939
=========== =========== ============ ============
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net investment
income) at end of period .............. $ 2,724 $ 2,141 $ 2,823 $ 7,319
=========== =========== ============ ============
--------------
<FN>
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
SIERRA TRUST FUNDS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
EMERGING INTERNATIONAL TARGET
GROWTH GROWTH GROWTH MATURITY
FUND FUND FUND 2002 FUND
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
Net investment income/(loss) ............. $ (699,598) $ (902,778) $ (1,327) $ 84,616
Net realized gain/(loss) on investments
sold, forward foreign currency contracts,
foreign currency transactions, futures
contracts and closed written options
during the period ...................... 18,326,823 15,208,449 4,360,846 1
Net unrealized appreciation of investments,
forward foreign currency contracts,
foreign currency, futures contracts,
written options and other assets and
liabilities during the period .......... 7,057,558 30,012,644 2,890,739 139,543
------------ ------------ ------------ ----------
Net increase in net assets resulting
from operations ........................ 24,684,783 44,318,315 7,250,258 224,160
Distributions to shareholder from:
Net investment income:
Class A Shares ....................... -- -- (730,416) (116,707)
Class B Shares ....................... -- -- (16,044) --
Class S Shares ....................... -- -- (107,864) --
Net realized gains on investments:
Class A Shares ....................... (21,692,930) (9,919,223) (3,699,960) --
Class B Shares ....................... (1,672,535) (667,520) (128,323) --
Class S Shares ....................... (3,964,701) (1,151,988) (780,562) --
Net increase/(decrease) in net assets from
Fund share transactions:
Class A Shares ....................... 26,030,549 24,840,199 (8,584,900) 729,056
Class B Shares ....................... 7,714,406 4,455,500 634,137 --
Class S Shares ....................... 15,752,339 13,998,693 6,607,645 --
------------ ------------ ------------ ----------
Net increase/(decrease) in net assets .... 46,851,911 75,873,976 443,971 836,509
NET ASSETS:
Beginning of period ...................... 180,421,716 207,769,476 105,150,860 2,625,818
------------ ------------ ------------ ----------
End of period ............................ $227,273,627 $283,643,452 $105,594,831 $3,462,327
============ ============ ============ ==========
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net investment
income) at end of period .............. $ (635,179)+ $ (938,672)+ $ (3,395,554) $ (3,958)
============ ============ ============ ==========
--------------
<FN>
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE YEAR ENDED JUNE 30, 1995
U.S. SHORT TERM
GLOBAL GOVERNMENT CALIFORNIA HIGH
MONEY MONEY MONEY QUALITY
FUND FUND FUND BOND FUND
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net investment income/(loss) ............. $ 4,327,076 $ 1,780,115 $ 1,467,379 $ 3,274,272
Net realized gain/(loss) on investments
sold, forward foreign currency contracts,
foreign currency transactions, futures
contracts and closed written options
during the year ........................ 21,401 (2,254) (20,162) (2,579,188)
Net unrealized appreciation/(depreciation)
of investments, forward foreign currency
contracts, foreign currency, futures
contracts, written options and other
assets and liabilities during the year . -- -- -- 1,061,733
------------ ----------- ----------- -----------
Net increase/(decrease) in net assets
resulting from operations ............. 4,348,477 1,777,861 1,447,217 1,756,817
Distributions to shareholders from:
Net investment income:
Class A Shares ...................... (4,191,083) (1,774,474) (1,465,972) (1,572,815)
Class B Shares ...................... (6,712) (1,037) (1,205) (51,308)
Class S Shares ...................... (127,884) (4,604) (202) (44,015)
Distributions in excess of net
investment income:
Class A Shares ...................... -- -- -- (1,368,026)
Class B Shares ...................... -- -- -- (57,854)
Class S Shares ...................... -- -- -- (50,627)
Net realized gains on investments:
Class A Shares ...................... (1,350) -- -- --
Class B Shares ...................... (2) -- -- --
Class S Shares ...................... (45) -- -- --
Distributions in excess of net realized
gains on investments:
Class A Shares ...................... -- -- -- --
Class B Shares ...................... -- -- -- --
Class S Shares ...................... -- -- -- --
Capital (Note 2):
Class A Shares ...................... -- -- -- (65,223)
Class B Shares ...................... -- -- -- (2,758)
Class S Shares ...................... -- -- -- (2,414)
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares ...................... 56,025,698 17,314,506 (13,644,611) 23,435,197
Class B Shares ...................... 240,444 122,740 78,827 3,026,900
Class S Shares ...................... 7,390,600 737,108 10,203 2,354,086
------------ ----------- ----------- -----------
Net increase/(decrease) in net assets ... 63,678,143 18,172,100 (13,575,743) 27,357,960
NET ASSETS:
Beginning of year ....................... 53,972,972 30,180,000 62,500,439 21,770,905
------------ ----------- ----------- -----------
End of year ............................. $117,651,115 $48,352,100 $48,924,696 $49,128,865
============ =========== =========== ===========
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) at end of year...... $ 26,032 $ 5,326 $ 3,196 $ (60,186)
============ =========== ============ ============
<FN>
- --------------
* The Target Maturity 2002 Fund commenced operations on March 20, 1995.
# Amount represents less than $1.00.
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE YEAR ENDED JUNE 30, 1995
SHORT TERM
GLOBAL U.S. CORPORATE CALIFORNIA
GOVERNMENT GOVERNMENT INCOME MUNICIPAL
FUND FUND FUND FUND
-------------- -------------- -------------- -----------
<S> <C> <C> <C> <C>
Net investment income/(loss) ............. $ 11,864,314 $ 39,386,893 $ 33,780,248 $ 25,870,424
Net realized gain/(loss) on investments
sold, forward foreign currency contracts,
foreign currency transactions, futures
contracts and closed written options
during the year ........................ (11,992,927) (54,757,067) (28,272,871) (4,641,450)
Net unrealized appreciation/(depreciation)
of investments, forward foreign currency
contracts, foreign currency, futures
contracts, written options and other
assets and liabilities during the year . 2,985,927 61,068,404 51,363,673 7,744,208
------------ ------------ ------------- ------------
Net increase/(decrease) in net assets
resulting from operations ............. 2,857,314 45,698,230 56,871,050 28,973,182
Distributions to shareholders from:
Net investment income:
Class A Shares ...................... (1,108,181) (37,939,401) (27,582,318) (25,700,052)
Class B Shares ...................... (518) (403,591) (436,090) (163,977)
Class S Shares ...................... (648) (205,850) (284,731) (544)
Distributions in excess of net
investment income:
Class A Shares ...................... (440,172) -- (3,754,869) --
Class B Shares ...................... (206) -- (68,516) --
Class S Shares ...................... (259) -- (44,607) --
Net realized gains on investments:
Class A Shares ...................... -- -- -- (5,670)
Class B Shares ...................... -- -- -- (42)
Class S Shares ...................... -- -- -- (0)#
Distributions in excess of net realized
gains on investments:
Class A Shares ...................... (616,469) -- -- --
Class B Shares ...................... (3,918) -- -- --
Class S Shares ...................... (7,731) -- -- --
Capital (Note 2):
Class A Shares ...................... (8,263,524) -- (1,452,137) --
Class B Shares ...................... (52,527) -- (26,497) --
Class S Shares ...................... (103,627) -- (17,251) --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares ...................... (109,220,929) (213,296,316) (110,542,297) (106,271,233)
Class B Shares ...................... 1,341,558 10,370,819 14,144,330 7,142,339
Class S Shares ...................... 2,365,311 6,662,705 8,162,654 10,293
------------ ------------ ------------- ------------
Net increase/(decrease) in net assets ... (113,254,526) (189,113,404) (65,031,279) (96,015,704)
NET ASSETS:
Beginning of year ....................... 220,823,942 666,565,537 472,518,763 509,223,443
------------ ------------ ------------- ------------
End of year ............................. $107,569,416 $477,452,133 $407,487,484 $413,207,739
============ ============ ============ ============
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) at end of year...... $ 1,813,191 $ 3,118 $ (1,086,967) $ 7,094
============ ============ ============ ============
<FN>
- --------------
* The Target Maturity 2002 Fund commenced operations on March 20, 1995.
# Amount represents less than $1.00.
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE YEAR ENDED JUNE 30, 1995
CALIFORNIA
FLORIDA INSURED
INSURED INTERMEDIATE NATIONAL GROWTH AND
MUNICIPAL MUNICIPAL MUNICIPAL INCOME
FUND FUND FUND FUND
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net investment income/(loss) ............. $ 1,999,264 $ 2,816,965 $18,063,121 $ 1,817,413
Net realized gain/(loss) on investments
sold, forward foreign currency contracts,
foreign currency transactions, futures
contracts and closed written options
during the year ........................ (1,755,884) 65,027 (8,590,608) 11,539,202
Net unrealized appreciation/(depreciation)
of investments, forward foreign currency
contracts, foreign currency, futures
contracts, written options and other
assets and liabilities during the year . 1,600,492 2,019,396 7,239,910 17,468,762
------------ ----------- ----------- -------------
Net increase/(decrease) in net assets
resulting from operations ............. 1,843,872 4,901,388 16,712,423 30,825,377
Distributions to shareholders from:
Net investment income:
Class A Shares ...................... (1,911,228) (2,488,884) (17,947,581) (1,744,256)
Class B Shares ...................... (87,257) (327,566) (126,501) (19,234)
Class S Shares ...................... (486) (433) (526) (42,887)
Distributions in excess of net
investment income:
Class A Shares ...................... -- -- -- --
Class B Shares ...................... -- -- -- --
Class S Shares ...................... -- -- -- --
Net realized gains on investments:
Class A Shares ...................... -- -- (307,407) (10,906,199)
Class B Shares ...................... -- -- (2,881) (178,420)
Class S Shares ...................... -- -- (11) (521,173)
Distributions in excess of net realized
gains on investments:
Class A Shares ...................... -- -- (2,475,316) --
Class B Shares ...................... -- -- (23,199) --
Class S Shares ...................... -- -- (88) --
Capital (Note 2):
Class A Shares ...................... -- -- -- --
Class B Shares ...................... -- -- -- --
Class S Shares ...................... -- -- -- --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares ...................... (4,653,523) 18,663,791 (81,322,337) 28,907,852
Class B Shares ...................... 3,311,767 12,002,591 4,811,084 6,481,529
Class S Shares ...................... 10,496 10,443 10,635 13,411,643
------------ ----------- ----------- -------------
Net increase/(decrease) in net assets ... (1,486,359) 32,761,330 (80,671,705) 66,214,232
NET ASSETS:
Beginning of year ....................... 38,541,419 34,146,599 354,501,190 125,248,744
------------ ----------- ----------- -------------
End of year ............................. $ 37,055,060 $66,907,929 $273,829,485 $191,462,976
============ =========== ============ ============
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) at end of year...... $ 10,724 $ 2,141 $ 9,823 $ 23,311
============ =========== ============ ============
<FN>
- --------------
* The Target Maturity 2002 Fund commenced operations on March 20, 1995.
# Amount represents less than $1.00.
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE YEAR ENDED JUNE 30, 1995
EMERGING INTERNATIONAL TARGET
GROWTH GROWTH GROWTH MATURITY
FUND FUND FUND 2002 FUND*
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
Net investment income/(loss) ............. $ 336,008 $ (550,525) $ 747,107 $ 25,194
Net realized gain/(loss) on investments
sold, forward foreign currency contracts,
foreign currency transactions, futures
contracts and closed written options
during the year ........................ 17,615,980 3,026,460 1,298,457 (6)
Net unrealized appreciation/(depreciation)
of investments, forward foreign currency
contracts, foreign currency, futures
contracts, written options and other
assets and liabilities during the year . 25,111,808 29,092,221 (7,697,847) 113,773
------------ ------------ ------------ ----------
Net increase/(decrease) in net assets
resulting from operations ............. 43,063,796 31,568,156 (5,652,283) 138,961
Distributions to shareholders from:
Net investment income:
Class A Shares ...................... (162,651) -- (492,964) --
Class B Shares ...................... (894) -- (4,215) --
Class S Shares ...................... (1,598) -- (22,311) --
Distributions in excess of net
investment income:
Class A Shares ...................... -- -- -- --
Class B Shares ...................... -- -- -- --
Class S Shares ...................... -- -- -- --
Net realized gains on investments:
Class A Shares ...................... (3,749) (3,353,075) (5,380,826) --
Class B Shares ...................... (71) (103,364) (67,746) --
Class S Shares ...................... (226) (68,962) (358,790) --
Distributions in excess of net realized
gains on investments:
Class A Shares ...................... -- -- (741,797) --
Class B Shares ...................... -- -- (9,339) --
Class S Shares ...................... -- -- (49,463) --
Capital (Note 2):
Class A Shares ...................... -- -- -- --
Class B Shares ...................... -- -- -- --
Class S Shares ...................... -- -- -- --
Net increase/(decrease) in net assets
from Fund share transactions:
Class A Shares ...................... (11,458,811) 34,301,173 (24,385,190) 2,486,857
Class B Shares ...................... 6,067,316 9,447,809 2,471,442 --
Class S Shares ...................... 16,110,339 11,037,190 12,080,098 --
------------ ------------ ------------ ----------
Net increase/(decrease) in net assets ... 53,613,451 82,828,927 (22,613,384) 2,625,818
NET ASSETS:
Beginning of year ....................... 126,808,265 124,940,549 127,764,244 --
------------ ------------ ------------ ----------
End of year ............................. $180,421,716 $207,769,476 $105,150,860 $2,625,818
============ ============ ============ ==========
Undistributed net investment income/
(accumulated net investment loss/
distributions in excess of net
investment income) at end of year...... $ 64,419 $ (35,894)+ $ (2,539,903) $ 28,133
============ ============ ============ ==========
<FN>
- --------------
* The Target Maturity 2002 Fund commenced operations on March 20, 1995.
# Amount represents less than $1.00.
+ Represents accumulated net investment loss.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
U.S. SHORT TERM
GLOBAL GOVERNMENT CALIFORNIA HIGH
MONEY MONEY MONEY QUALITY
FUND FUND FUND BOND FUND
-------------- -------------- ------------- --------------
<S> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ..................................... $ 230,195,427 $ 170,490,558 $ 20,530,368 $ 14,611,731
Issued as reinvestment of dividends ...... 3,408,300 982,790 767,892 1,006,275
Redeemed ................................. (193,214,684) (170,444,769) (21,654,250) (26,075,620)
------------- ------------- ------------ -------------
Net increase/(decrease) .................. $ 40,389,043 $ 1,028,579 $ (355,990) $ (10,457,614)
============= ============= ============ =============
CLASS B:
Sold ..................................... $ 88,388 $ 29,822 $ -- $ 1,103,244
Issued as reinvestment of dividends ...... 5,292 2,379 827 63,185
Redeemed ................................. (83,987) (10,389) (10,203) (1,060,822)
------------- ------------- ------------ -------------
Net increase/(decrease) .................. $ 9,693 $ 21,812 $ (9,376) $ 105,607
============= ============= ============ =============
CLASS S:
Sold ..................................... $ 10,155,541 $ 9,275,425 $ -- $ 3,809,579
Issued as reinvestment of dividends ...... 274,648 1,837 123 73,541
Redeemed ................................. (971,835) (9,938,205) -- (3,411,762)
------------- ------------- ------------ -------------
Net increase/(decrease) .................. $ 9,458,354 $ (660,943) $ 123 $ 471,358
============= ============= ============ =============
SHARES
CLASS A:
Sold ..................................... 230,195,427 170,490,558 20,530,368 6,176,938
Issued as reinvestment of dividends ...... 3,408,300 982,790 767,892 427,315
Redeemed ................................. (193,214,684) (170,444,769) (21,654,250) (11,057,452)
------------- ------------- ------------ -------------
Net increase/(decrease) .................. 40,389,043 1,028,579 (355,990) (4,453,199)
============= ============= ============ =============
CLASS B:
Sold ..................................... 88,388 29,822 -- 467,547
Issued as reinvestment of dividends ...... 5,292 2,379 827 26,794
Redeemed ................................. (83,987) (10,389) (10,203) (453,090)
------------- ------------- ------------ -------------
Net increase/(decrease) .................. 9,693 21,812 (9,376) 41,251
============= ============= ============ =============
CLASS S:
Sold .................................... 10,155,541 9,275,425 -- 1,613,439
Issued as reinvestment of dividends .... 274,648 1,837 123 31,198
Redeemed ................................ (971,835) (9,938,205) -- (1,445,970)
------------- ------------- ------------ -------------
Net increase/(decrease) ................. 9,458,354 (660,943) 123 198,667
============= ============= ============ =============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
SHORT TERM
GLOBAL U.S. CORPORATE CALIFORNIA
GOVERNMENT GOVERNMENT INCOME MUNICIPAL
FUND FUND FUND FUND
-------------- ------------- ------------- ------------
<S> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ..................................... $ 4,744,164 $ 29,181,473 $ 24,242,664 $ 16,075,018
Issued as reinvestment of dividends ...... 2,277,568 9,172,791 6,992,427 7,257,468
Redeemed ................................. (34,278,307) (68,932,771) (75,920,000) (43,706,974)
------------- ------------ ------------ ------------
Net increase/(decrease) .................. $ (27,256,575) $(30,578,507) $(44,684,909) $(20,374,488)
============= ============ ============ ============
CLASS B:
Sold ..................................... $ 201,984 $ 8,762,580 $ 7,747,626 $ 5,822,763
Issued as reinvestment of dividends ...... 34,611 268,479 279,938 157,968
Redeemed ................................. (174,220) (1,014,761) (1,504,322) (1,047,706)
------------- ------------ ------------ ------------
Net increase/(decrease) .................. $ 62,375 $ 8,016,298 $ 6,523,242 $ 4,933,025
============= ============ ============ ============
CLASS S:
Sold ..................................... $ 1,599,038 $ 5,033,901 $ 4,248,266 $ --
Issued as reinvestment of dividends ...... 63,950 250,009 203,871 283
Redeemed ................................. (1,898,867) (703,517) (5,166,982) --
------------- ------------ ------------ ------------
Net increase/(decrease) .................. $ (235,879) $ 4,580,393 $ (714,845) $ 283
============= ============ ============ ============
SHARES
CLASS A:
Sold ..................................... 2,083,729 3,004,109 2,268,063 1,504,850
Issued as reinvestment of dividends ...... 998,478 944,276 654,224 676,155
Redeemed ................................. (15,008,837) (7,110,343) (7,146,279) (4,097,811)
------------- ------------ ------------ ------------
Net increase/(decrease) .................. (11,926,630) (3,161,958) (4,223,992) (1,916,806)
============= ============ ============ ============
CLASS B:
Sold ..................................... 88,634 903,495 725,716 543,378
Issued as reinvestment of dividends ...... 15,175 27,581 26,084 14,675
Redeemed ................................. (76,431) (104,641) (141,047) (98,316)
------------- ------------ ------------ ============
Net increase/(decrease) .................. 27,378 826,435 610,753 459,737
============= ============ ============ ============
CLASS S:
Sold .................................... 701,077 518,408 399,431 --
Issued as reinvestment of dividends .... 27,939 25,687 19,065 24
Redeemed ................................ (829,030) (72,401) (487,144) --
------------- ------------ ------------ ------------
Net increase/(decrease) ................. (100,014) 471,694 (68,648) 24
============= ============ ============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
CALIFORNIA
FLORIDA INSURED
INSURED INTERMEDIATE NATIONAL GROWTH AND
MUNICIPAL MUNICIPAL MUNICIPAL INCOME
FUND FUND FUND FUND
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ..................................... $ 2,196,947 $ 5,422,139 $ 34,592,788 $ 72,991,598
Issued as reinvestment of dividends ...... 416,219 1,158,654 4,268,502 13,965,254
Redeemed ................................. (5,612,615) (7,144,335) (61,190,242) (72,475,738)
----------- ----------- ------------ ------------
Net increase/(decrease) .................. $(2,999,449) $ (563,542) $(22,328,952) $ 14,481,114
=========== =========== ============ ============
CLASS B:
Sold ..................................... $ 1,900,824 $ 2,939,445 $ 1,585,563 $ 5,753,025
Issued as reinvestment of dividends ...... 57,151 253,778 73,461 928,373
Redeemed ................................. (326,538) (627,991) (550,144) (494,098)
----------- ----------- ------------ ------------
Net increase/(decrease) .................. $ 1,631,437 $ 2,565,232 $ 1,108,880 $ 6,187,300
=========== =========== ============ ============
CLASS S:
Sold ..................................... $ -- $ -- $ -- $ 11,079,562
Issued as reinvestment of dividends ...... 258 275 284 1,868,391
Redeemed ................................. -- -- -- (1,226,021)
----------- ----------- ------------ ------------
Net increase/(decrease) .................. $ 258 $ 275 $ 284 $ 11,721,932
=========== =========== ============ ============
SHARES
CLASS A:
Sold ..................................... 226,489 506,594 3,143,421 5,466,217
Issued as reinvestment of dividends ...... 42,813 107,611 388,799 1,075,996
Redeemed ................................. (580,711) (667,626) (5,581,393) (5,416,381)
----------- ----------- ------------ ------------
Net increase/(decrease) .................. (311,409) (53,421) (2,049,173) 1,125,832
=========== =========== ============ ============
CLASS B:
Sold ..................................... 195,578 274,669 144,436 434,472
Issued as reinvestment of dividends ...... 5,860 23,591 6,683 71,847
Redeemed ................................. (33,555) (58,343) (50,580) (37,493)
=========== =========== ============ ============
Net increase/(decrease) .................. 167,883 239,917 100,539 468,826
=========== =========== ============ ============
CLASS S:
Sold .................................... -- -- -- 837,823
Issued as reinvestment of dividends .... 25 24 24 144,483
Redeemed ................................ -- -- -- (92,392)
----------- ----------- ------------ ------------
Net increase/(decrease) ................. 25 24 24 889,914
=========== =========== ============ ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
EMERGING INTERNATIONAL TARGET
GROWTH GROWTH GROWTH MATURITY
FUND FUND FUND 2002 FUND
------------- ------------- ------------ ---------
<S> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold ..................................... $ 110,415,836 $ 126,189,039 $ 72,022,795 $ 819,783
Issued as reinvestment of dividends ...... 21,025,657 9,724,107 4,387,392 116,033
Redeemed ................................. (105,410,944) (111,072,947) (84,995,087) (206,760)
------------- ------------- ------------ ---------
Net increase/(decrease) .................. $ 26,030,549 $ 24,840,199 $ (8,584,900) $ 729,056
============= ============= ============ =========
CLASS B:
Sold ..................................... $ 6,595,374 $ 4,573,423 $ 845,538 --
Issued as reinvestment of dividends ...... 1,658,263 663,089 142,345 --
Redeemed ................................. (539,231) (781,012) (353,746) --
------------- ------------- ------------
Net increase/(decrease) .................. $ 7,714,406 $ 4,455,500 $ 634,137 --
============= ============= ============
CLASS S:
Sold ..................................... $ 14,729,015 $ 14,039,143 $ 7,688,263 --
Issued as reinvestment of dividends ...... 3,938,760 1,144,027 881,574 --
Redeemed ................................. (2,915,436) (1,184,477) (1,962,192) --
------------- ------------- ------------
Net increase/(decrease) .................. $ 15,752,339 $ 13,998,693 $ 6,607,645 --
============= ============= ============
SHARES
CLASS A:
Sold ..................................... 7,249,632 7,376,934 7,097,843 74,745
Issued as reinvestment of dividends ...... 1,490,125 547,529 442,308 10,379
Redeemed ................................. (6,902,500) (6,440,045) (8,365,026) (19,065)
------------- ------------- ------------ ---------
Net increase/(decrease) .................. 1,837,257 1,484,418 (824,875) 66,059
============= ============= ============ =========
CLASS B:
Sold ..................................... 432,285 267,188 84,286 --
Issued as reinvestment of dividends ...... 118,787 37,761 14,437 --
Redeemed ................................. (35,385) (45,920) (35,389) --
============= ============= ============
Net increase/(decrease) .................. 515,687 259,029 63,334 --
============= ============= ============
CLASS S:
Sold .................................... 969,478 824,151 765,242 --
Issued as reinvestment of dividends .... 282,146 65,113 89,409 --
Redeemed ................................ (189,715) (68,937) (194,547) --
------------- ------------- ------------
Net increase/(decrease) ................. 1,061,909 820,327 660,104 --
============= ============= ============
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE YEAR ENDED JUNE 30, 1995*
U.S. SHORT TERM
GLOBAL GOVERNMENT CALIFORNIA HIGH
MONEY MONEY MONEY QUALITY
FUND FUND FUND BOND FUND
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .................................... $ 344,061,728 $ 273,679,428 $ 50,256,138 $ 73,205,642
Issued as reinvestment of dividends ..... 3,910,296 1,667,813 1,414,049 2,310,310
Redeemed ................................ (291,946,326) (258,032,735) (65,314,798) (52,080,755)
------------- ------------- ------------ ------------
Net increase/(decrease) ................. $ 56,025,698 $ 17,314,506 $(13,644,611) $ 23,435,197
============= ============= ============ ============
CLASS B:
Sold .................................... $ 357,829 $ 296,191 $ 157,149 $ 3,748,540
Issued as reinvestment of dividends ..... 6,413 543 926 78,815
Redeemed ................................ (123,798) (173,994) (79,248) (800,455)
------------- ------------- ------------ ------------
Net increase ............................ $ 240,444 $ 122,740 $ 78,827 $ 3,026,900
============= ============= ============ ============
CLASS S:
Sold .................................... $ 7,747,143 $ 7,486,699 $ 10,001 $ 5,178,997
Issued as reinvestment of dividends ..... 127,561 1,752 202 86,181
Redeemed ................................ (484,104) (6,751,343) -- (2,911,092)
------------- ------------- ------------ ------------
Net increase ............................ $ 7,390,600 $ 737,108 $ 10,203 $ 2,354,086
============= ============= ============ ============
SHARES
CLASS A:
Sold .................................... 344,061,728 273,679,428 50,256,138 30,949,418
Issued as reinvestment of dividends ..... 3,910,296 1,667,813 1,414,049 887,524
Redeemed ................................ (291,946,326) (258,032,735) (65,314,798) (22,359,364)
------------- ------------- ------------ ------------
Net increase/(decrease) ................. 56,025,698 17,314,506 (13,644,611) 9,477,578
============= ============= ============ ============
CLASS B:
Sold .................................... 357,829 296,191 157,149 1,593,248
Issued as reinvestment of dividends ..... 6,413 543 926 33,809
Redeemed ................................ (123,798) (173,994) (79,248) (345,485)
------------- ------------- ------------ ------------
Net increase ............................ 240,444 122,740 78,827 1,281,572
============= ============= ============ ============
CLASS S:
Sold .................................... 7,747,143 7,486,699 10,001 2,214,031
Issued as reinvestment of dividends ..... 127,561 1,752 202 32,824
Redeemed ................................ (484,104) (6,751,343) -- (1,266,129)
------------- ------------- ------------ ------------
Net increase ............................ 7,390,600 737,108 10,203 980,726
============= ============= ============ ============
<FN>
- --------------
* The Funds, with the exception of the Target Maturity 2002 Fund, commenced selling Class B and Class S shares,
in addition to Class A shares, on July 1, 1994. Shares in existence prior to July 1, 1994 were designated
Class A shares.
** The Target Maturity 2002 Fund commenced operations on March 20, 1995.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE YEAR ENDED JUNE 30, 1995*
SHORT TERM
GLOBAL U.S. CORPORATE CALIFORNIA
GOVERNMENT GOVERNMENT INCOME MUNICIPAL
FUND FUND FUND FUND
-------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .................................... $ 45,922,545 $ 69,309,832 $ 84,545,315 $ 38,869,621
Issued as reinvestment of dividends ..... 6,782,801 22,425,147 19,301,502 17,229,951
Redeemed ................................ (161,926,275) (305,031,295) (214,389,114) (162,370,805)
------------- ------------- ------------- -------------
Net increase/(decrease) ................. $(109,220,929) $(213,296,316) $(110,542,297) $(106,271,233)
============= ============= ============= =============
CLASS B:
Sold .................................... $ 1,726,835 $ 12,281,469 $ 15,366,569 $ 8,026,398
Issued as reinvestment of dividends ..... 37,544 243,129 237,120 119,111
Redeemed ................................ (422,821) (2,153,779) (1,459,359) (1,003,170)
------------- ------------- ------------- -------------
Net increase ............................ $ 1,341,558 $ 10,370,819 $ 14,144,330 $ 7,142,339
============= ============= ============= =============
CLASS S:
Sold .................................... $ 6,328,952 $ 7,777,250 $ 10,617,936 $ 67,177
Issued as reinvestment of dividends ..... 90,872 181,744 309,996 517
Redeemed ................................ (4,054,513) (1,296,289) (2,765,278) (57,401)
------------- ------------- ------------- -------------
Net increase ............................ $ 2,365,311 $ 6,662,705 $ 8,162,654 $ 10,293
============= ============= ============= =============
SHARES
CLASS A:
Sold .................................... 20,232,716 7,363,825 8,733,946 4,096,004
Issued as reinvestment of dividends ..... 2,977,677 2,386,233 1,821,240 1,674,938
Redeemed ................................ (71,314,635) (32,671,743) (21,974,395) (16,298,541)
------------- ------------- ------------- -------------
Net increase/(decrease) ................. (48,104,242) (22,921,685) (11,419,209) (10,527,599)
============= ============= ============= =============
CLASS B:
Sold .................................... 750,403 1,306,396 1,563,762 772,943
Issued as reinvestment of dividends ..... 16,494 25,853 23,718 11,516
Redeemed ................................ (188,750) (230,868) (148,365) (97,929)
------------- ------------- ------------- -------------
Net increase ............................ 578,147 1,101,381 1,439,115 686,530
============= ============= ============= =============
CLASS S:
Sold .................................... 2,785,355 827,576 1,081,002 6,680
Issued as reinvestment of dividends ..... 40,467 19,254 31,136 50
Redeemed ................................ (1,806,608) (139,311) (285,365) (5,715)
------------- ------------- ------------- -------------
Net increase ............................ 1,019,214 707,519 826,773 1,015
============= ============= ============= =============
- --------------
* The Funds, with the exception of the Target Maturity 2002 Fund, commenced selling Class B and Class S shares,
in addition to Class A shares, on July 1, 1994. Shares in existence prior to July 1, 1994 were designated
Class A shares.
** The Target Maturity 2002 Fund commenced operations on March 20, 1995.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE YEAR ENDED JUNE 30, 1995*
CALIFORNIA
FLORIDA INSURED
INSURED INTERMEDIATE NATIONAL GROWTH AND
MUNICIPAL MUNICIPAL MUNICIPAL INCOME
FUND FUND FUND FUND
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .................................... $ 10,025,936 $ 36,674,526 $ 71,622,721 $116,297,145
Issued as reinvestment of dividends ..... 1,021,929 1,852,989 13,219,823 12,504,774
Redeemed ................................ (15,701,388) (19,863,724) (166,164,881) (99,894,067)
------------ ------------ ------------- ------------
Net increase/(decrease) ................. $ (4,653,523) $ 18,663,791 $ (81,322,337) $ 28,907,852
============ ============ ============= ============
CLASS B:
Sold .................................... $ 3,929,427 $ 12,946,924 $ 5,518,679 $ 6,743,410
Issued as reinvestment of dividends ..... 48,332 240,887 99,508 192,797
Redeemed ................................ (665,992) (1,185,220) (807,103) (454,678)
------------ ------------ ------------- ------------
Net increase ............................ $ 3,311,767 $ 12,002,591 $ 4,811,084 $ 6,481,529
============ ============ ============= ============
CLASS S:
Sold .................................... $ 10,009 $ 10,010 $ 10,011 $ 15,883,019
Issued as reinvestment of dividends ..... 487 433 624 561,220
Redeemed ................................ -- -- -- (3,032,596)
------------ ------------ ------------- ------------
Net increase ............................ $ 10,496 $ 10,443 $ 10,635 $ 13,411,643
============ ============ ============= ============
SHARES
CLASS A:
Sold .................................... 1,063,315 3,620,035 6,984,325 9,909,988
Issued as reinvestment of dividends ..... 109,635 182,396 1,242,336 1,152,061
Redeemed ................................ (1,698,306) (1,968,744) (15,898,135) (8,616,524)
------------ ------------ ------------- ------------
Net increase/(decrease) ................. (525,356) 1,833,687 (7,671,474) 2,445,525
============ ============ ============= ============
CLASS B:
Sold .................................... 419,443 1,279,374 512,482 572,323
Issued as reinvestment of dividends ..... 5,167 23,589 9,376 17,815
Redeemed ................................ (71,352) (117,783) (76,981) (38,837)
------------ ------------ ------------- ------------
Net increase ............................ 353,258 1,185,180 444,877 551,301
============ ============ ============= ============
CLASS S:
Sold .................................... 1,065 990 923 1,356,937
Issued as reinvestment of dividends ..... 52 43 58 51,894
Redeemed ................................ -- -- -- (264,174)
------------ ------------ ------------- ------------
Net increase ............................ 1,117 1,033 981 1,144,657
============ ============ ============= ============
- --------------
* The Funds, with the exception of the Target Maturity 2002 Fund, commenced selling Class B and Class S shares,
in addition to Class A shares, on July 1, 1994. Shares in existence prior to July 1, 1994 were designated
Class A shares.
** The Target Maturity 2002 Fund commenced operations on March 20, 1995.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS -- CAPITAL STOCK ACTIVITY (CONTINUED)
<TABLE>
<CAPTION>
SIERRA TRUST FUNDS
FOR THE YEAR ENDED JUNE 30, 1995*
EMERGING INTERNATIONAL TARGET
GROWTH GROWTH GROWTH MATURITY
FUND FUND FUND 2002 FUND**
------------- ------------- ------------- ----------
<S> <C> <C> <C> <C>
AMOUNT
CLASS A:
Sold .................................... $ 164,790,182 $ 179,661,800 $ 135,148,440 $2,509,448
Issued as reinvestment of dividends ..... 162,293 3,319,792 6,547,275 --
Redeemed ................................ (176,411,286) (148,680,419) (166,080,905) (22,591)
------------- ------------- ------------- ----------
Net increase/(decrease) ................. $ (11,458,811) $ 34,301,173 $ (24,385,190) $2,486,857
============= ============= ============= ==========
CLASS B:
Sold .................................... $ 6,556,661 $ 10,064,567 $ 2,801,600 --
Issued as reinvestment of dividends ..... 949 102,495 80,533 --
Redeemed ................................ (490,294) (719,253) (410,691) --
------------- ------------- -------------
Net increase ............................ $ 6,067,316 $ 9,447,809 $ 2,471,442 --
============= ============= =============
CLASS S:
Sold .................................... $ 17,991,509 $ 11,489,038 $ 16,175,188 --
Issued as reinvestment of dividends ..... 1,814 68,743 428,494 --
Redeemed ................................ (1,882,984) (520,591) (4,523,584) --
------------- ------------- -------------
Net increase ............................ $ 16,110,339 $ 11,037,190 $ 12,080,098 --
============= ============= =============
SHARES
CLASS A:
Sold .................................... 13,826,099 12,646,514 13,257,566 245,738
Issued as reinvestment of dividends ..... 13,834 237,123 655,962 --
Redeemed ................................ (14,745,441) (10,478,150) (16,425,569) (2,170)
------------- ------------- ------------- ----------
Net increase/(decrease) ................. (905,508) 2,405,487 (2,512,041) 243,568
============= ============= ============= ==========
CLASS B:
Sold .................................... 530,090 707,285 267,274 --
Issued as reinvestment of dividends ..... 81 7,342 8,096 --
Redeemed ................................ (38,941) (50,475) (42,313) --
------------- ------------- -------------
Net increase ............................ 491,230 664,152 233,057 --
============= ============= =============
CLASS S:
Sold .................................... 1,478,376 801,685 1,562,186 --
Issued as reinvestment of dividends ..... 155 4,924 43,089 --
Redeemed ................................ (150,699) (36,474) (462,461) --
------------- ------------- -------------
Net increase ............................ 1,327,832 770,135 1,142,814 --
============= ============= =============
- --------------
* The Funds, with the exception of the Target Maturity 2002 Fund, commenced selling Class B and Class S shares,
in addition to Class A shares, on July 1, 1994. Shares in existence prior to July 1, 1994 were designated
Class A shares.
** The Target Maturity 2002 Fund commenced operations on March 20, 1995.
</TABLE>
See Notes to Financial Statements.
<PAGE>
STATEMENT OF CASH FLOWS
U.S. GOVERNMENT FUND
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
Cash flows from operating activities:
Investment income received ................. $ 20,877,816
Fee income received ........................ 622,205
Payment of operating expenses .............. (1,683,981)
Proceeds from sales of long-term securities
and purchased options ................... 873,220,275
Net proceeds from futures transactions ..... (1,706,230)
Purchases of long-term securities and
purchased options ....................... (735,620,571)
Net proceeds from short-term investments ... (16,643,770)
Variation margin for futures transactions .. 1,405,992
Interest paid .............................. (543,545)
-------------
CASH PROVIDED BY OPERATING ACTIVITIES ........ $139,928,191
Cash flows from financing activities:
Proceeds from shares sold .................. 43,115,899
Payments on shares redeemed ................ (70,761,441)
Distributions paid* ........................ (6,741,242)
Payments for reverse repurchase agreements . (105,594,950)
-------------
CASH USED FOR FINANCING ACTIVITIES ........... (139,981,734)
------------
Decrease in cash ............................. (53,543)
Cash at beginning of period .................. 60,222
------------
Cash at end of period ........................ $ 6,679
============
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM OPERATIONS
TO CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from
operations ............................... $ 26,880,684
Increase in investments** ................ $ (45,128,092)
Decrease in interest receivable .......... 1,587,948
Increase in deferred fee income from
dollar roll transactions .............. (170,910)
Decrease in variation margin for futures
transactions .......................... 256,625
Increase in other assets ................. (10,192)
Decrease in receivables for investments
sold ................................... 14,733,492
Increase in payable for investments
purchased ............................. 872,824
Increase in payable for dollar roll
transactions .......................... 141,089,908
Decrease in accrued expenses ............. (184,096)
-------------
Total adjustments .................... 113,047,507
-------------
CASH PROVIDED BY OPERATING ACTIVITIES ........ $139,928,191
============
- --------------
* Non cash activities include reinvestment of dividends of $9,691,279.
** Includes unrealized appreciation of $13,435,800.
See Notes to Financial Statements.
<PAGE>
STATEMENT OF CASH FLOWS
CORPORATE INCOME FUND
SIX MONTHS ENDED DECEMBER 31, 1995 (UNAUDITED)
Cash flows from operating activities:
Investment income received ................... $15,710,108
Fee income received .......................... 391,953
Payment of operating expenses ................ (1,830,998)
Proceeds from sales of long-term securities .. 92,250,609
Purchases of long-term securities ............ (50,431,909)
Net proceeds from short-term investments ..... (3,418,064)
-----------
CASH PROVIDED BY OPERATING ACTIVITIES .......... $52,671,699
Cash flows from financing activities:
Proceeds from shares sold .................... 36,340,456
Payments on shares redeemed .................. (82,637,036)
Distributions paid* .......................... (6,374,918)
-----------
CASH USED FOR FINANCING ACTIVITIES ............. (52,671,498)
-----------
Increase in cash ............................... 201
Cash at beginning of period .................... 0
-----------
Cash at end of period .......................... $ 201
===========
RECONCILIATION OF NET INCREASE IN NET ASSETS FROM OPERATIONS TO
CASH PROVIDED BY OPERATING ACTIVITIES:
Net increase in net assets resulting from
operations ................................. $34,470,201
Decrease in investments** .................. $31,690,211
Decrease in interest receivable ............ 620,573
Increase in deferred fee income from dollar
roll transactions ........................ (26,041)
Decrease in other assets ................... 6,766
Increase in payable for investments
purchased ................................ 828,920
Decrease in payable for dollar roll
transactions ............................. (14,969,389)
Increase in accrued expenses ............... 50,458
-----------
Total adjustments ...................... 18,201,498
-----------
CASH PROVIDED BY OPERATING ACTIVITIES .......... $52,671,699
===========
- --------------
* Non cash activities include reinvestment of dividends of $7,476,236.
** Includes unrealized appreciation of $37,897,616.
See Notes to Financial Statements.
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
GLOBAL MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94 06/30/93 06/30/92 06/30/91
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. 0.027 0.049 0.030 0.031 0.048 0.073
------ ------ ------ ------ ------ ------
Total from investment operations....... 0.027 0.049 0.030 0.031 0.048 0.073
LESS DISTRIBUTIONS:
Dividends from net investment income .. (0.027) (0.049) (0.030) (0.031) (0.048) (0.073)
------ ------ ------ ------ ------ ------
Total distributions ................... (0.027) (0.049) (0.030) (0.031) (0.048) (0.073)
------ ------ ------ ------ ------ ------
Realized gain on investments distributed
to shareholders ...................... -- (0.000)# (0.000)# -- -- --
------ ------ ------ ------ ------ ------
Net asset value, end of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 2.72% 5.06% 3.04% 3.17% 4.95% 7.51%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .. $150,410 $110,012 $53,973 $48,283 $71,492 $92,334
Ratio of operating expenses to average
net assets ........................... 0.65%** 0.54% 0.45% 0.41% 0.42% 0.30%
Ratio of net investment income to average
net assets ........................... 5.31%** 5.08% 2.99% 3.15% 4.90% 6.99%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ...... 0.65%**(a) N/A N/A N/A N/A N/A
Ratio of operating expenses to average
net assets without fee waivers,
expenses absorbed and/or fees reduced
by credits allowed by the custodian ... 1.14%**(a) 1.18% 1.35% 1.32% 1.34% 1.51%
Net investment income per share without
fee waivers, expenses absorbed and/or
fees reduced by credits allowed by the
custodian ............................. $0.024 $0.043 $0.021 $0.022 $0.039 $0.060
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived and/or expenses absorbed by the investment advisor, administrator and/or distributor or if fees had
not been reduced by credits allowed by the custodian.
# Amount represents less than $0.001 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GLOBAL MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
-------------------- ---------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. 0.023 0.042 0.023 0.042
------ ------ ------ ------
Total from investment operations....... 0.023 0.042 0.023 0.042
LESS DISTRIBUTIONS:
Dividends from net investment income .. (0.023) (0.042) (0.023) (0.042)
------ ------ ------ ------
Total distributions ................... (0.023) (0.042) (0.023) (0.042)
------ ------ ------ ------
Realized gain on investments distributed
to shareholders ...................... -- (0.000)# -- (0.000)#
------ ------ ------ ------
Net asset value, end of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ======
TOTAL RETURN+ 2.34% 4.29% 2.34% 4.29%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .. $ 250 $241 $16,825 $7,399
Ratio of operating expenses to average
net assets ........................... 1.40%** 1.29% 1.40%** 1.29%
Ratio of net investment income to average
net assets ........................... 4.56%** 4.33% 4.56%** 4.33%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ...... 1.40%**(a) N/A 1.40%**(a) N/A
Ratio of operating expenses to average
net assets without fee waivers,
expenses absorbed and/or fees reduced
by credits allowed by the custodian ... 1.89%**(a) 1.93% 1.89%**(a) 1.93%
Net investment income per share without
fee waivers, expenses absorbed and/or
fees reduced by credits allowed by the
custodian ............................. $0.020 $0.036 $0.020 $0.036
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived and/or expenses absorbed by the investment advisor, administrator and/or distributor or if fees had
not been reduced by credits allowed by the custodian.
# Amount represents less than $0.001 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
-------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94 06/30/93 06/30/92 06/30/91
----------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. 0.025 0.046 0.027 0.027 0.042 0.065
------ ------ ------ ------ ------ ------
Total from investment operations....... 0.025 0.046 0.027 0.027 0.042 0.065
LESS DISTRIBUTIONS:
Dividends from net investment income .. (0.025) (0.046) (0.027) (0.027) (0.042) (0.065)
------ ------ ------ ------ ------ ------
Total distributions ................... (0.025) (0.046) (0.027) (0.027) (0.042) (0.065)
------ ------ ------ ------ ------ ------
Realized gain on investments
distributed to shareholders .......... -- -- -- -- 0.002 --
------ ------ ------ ------ ------ ------
Net asset value, end of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 2.50% 4.67% 2.67% 2.70% 4.45% 6.65%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .. $48,520 $47,492 $30,180 $36,802 $44,233 $62,473
Ratio of operating expenses to average
net assets ........................... 0.85%** 0.85% 0.85% 0.85% 0.85% 0.86%
Ratio of net investment income to
average net assets ................... 4.93%** 4.63% 2.68% 2.69% 4.43% 6.54%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ..... 0.85%**(a) N/A N/A N/A N/A N/A
Ratio of operating expenses to average
net assets without fee waivers and/or
fees reduced by credits allowed
by the custodian ..................... 1.24%**(a) 1.25% 1.32% 1.34% 1.35% 1.52%
Net investment income per share without
fee waivers and/or fees reduced by
credits allowed by the custodian ..... $0.023 $0.042 $0.022 $0.022 $0.037 $0.058
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived by the investment advisor, administrator and/or distributor or if fees had not been reduced by
credits allowed by the custodian.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
U.S. GOVERNMENT MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
--------------------- ---------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. 0.021 0.038 0.021 0.038
------ ------ ------ ------
Total from investment operations....... 0.021 0.038 0.021 0.038
LESS DISTRIBUTIONS:
Dividends from net investment income .. (0.021) (0.038) (0.021) (0.038)
------ ------ ------ ------
Total distributions ................... (0.021) (0.038) (0.021) (0.038)
------ ------ ------ ------
Realized gain on investments
distributed to shareholders .......... -- -- -- --
------ ------ ------ ------
Net asset value, end of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ======
TOTAL RETURN+ 2.12% 3.91% 2.12% 3.91%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .. $145 $123 $76 $737
Ratio of operating expenses to average
net assets ........................... 1.60%** 1.60% ` 1.60%** 1.60%
Ratio of net investment income to
average net assets ................... 4.18%** 3.88% 4.18%** 3.88%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ..... 1.60%**(a) N/A 1.60%**(a) N/A
Ratio of operating expenses to average
net assets without fee waivers and/or
fees reduced by credits allowed
by the custodian ..................... 1.99%**(a) 2.00% 1.99%**(a) 2.00%
Net investment income per share without
fee waivers and/or fees reduced by
credits allowed by the custodian ..... $0.019 $0.034 $0.019 $0.034
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived by the investment advisor, administrator and/or distributor or if fees had not been reduced by
credits allowed by the custodian.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CALIFORNIA MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94 06/30/93 06/30/92 06/30/91
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. 0.016 0.028 0.018 0.021 0.033 0.044
------ ------ ------ ------ ------ ------
Total from investment operations....... 0.016 0.028 0.018 0.021 0.033 0.044
LESS DISTRIBUTIONS:
Dividends from net investment income .. (0.016) (0.028) (0.018) (0.021 (0.033) (0.044)
------ ------ ------ ------ ------ ------
Total distributions ................... (0.016) (0.028) (0.018) (0.021) (0.033) (0.044)
------ ------ ------ ------ ------ ------
Net asset value, end of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 1.59% 2.79% 1.81% 2.07% 3.35% 4.52%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .. $48,480 $48,836 $62,500 $68,404 $94,607 $113,392
Ratio of operating expenses to average
net assets ........................... 0.85%** 0.85% 0.85% 0.85% 0.85% 0.83%
Ratio of net investment income to
average net assets ................... 3.14%** 2.73% 1.80% 2.06% 3.31% 4.48%
Ratio of operating expenses to average
net assets without fee waivers ....... 1.13%** 1.15% 1.27% 1.29% 1.28% 1.48%
Net investment income per share
without fee waivers .................. $0.015 $0.025 $0.014 $0.016 $0.029 $0.037
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived by the investment advisor, administrator and/or distributor.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CALIFORNIA MONEY FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
--------------------- ---------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .. $ 1.00 $ 1.00 $ 1.00 $ 1.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................. 0.012 0.020 0.012 0.020
------ ------ ------ ------
Total from investment operations....... 0.012 0.020 0.012 0.020
LESS DISTRIBUTIONS:
Dividends from net investment income .. (0.012) (0.020) (0.012) (0.020)
------ ------ ------ ------
Total distributions ................... (0.012) (0.020) (0.012) (0.020)
------ ------ ------ ------
Net asset value, end of period ........ $ 1.00 $ 1.00 $ 1.00 $ 1.00
====== ====== ====== ======
TOTAL RETURN+ 1.21% 2.04% 1.21% 2.04%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .. $69 $79 $10 $10
Ratio of operating expenses to average
net assets ........................... 1.60%** 1.60% 1.60%** 1.60%
Ratio of net investment income to
average net assets ................... 2.39%** 1.98% 2.39%** 1.98%
Ratio of operating expenses to average
net assets without fee waivers ....... 1.88%** 1.90% 1.88%** 1.90%
Net investment income per share
without fee waivers .................. $0.011 $0.017 $0.011 $0.017
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated. The total returns would have been lower if certain
fees had not been waived by the investment advisor, administrator and/or distributor.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SHORT TERM HIGH QUALITY BOND FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
--------------------------------------------
SIX MONTHS
ENDED YEAR PERIOD
12/31/95 ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94*
-------------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period ..... $ 2.35 $ 2.39 $ 2.50
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................... 0.07 0.08 0.09
Net realized and unrealized gain/(loss)
on investments .......................... 0.03 0.02 (0.11)
------ ------ ------
Total from investment operations ......... 0.10 0.10 (0.02)
LESS DISTRIBUTIONS:
Dividends from net investment income ..... (0.07) (0.08) (0.09)
Distributions in excess of net investment
income ................................. -- (0.06) --
Distributions from capital (Note 2) ...... -- (0.00)# --
------ ------ ------
Total distributions ...................... (0.07) (0.14) (0.09)
------ ------ ------
Net asset value, end of period ........... $ 2.38 $ 2.35 $ 2.39
====== ====== ======
TOTAL RETURN+ 4.47% 4.42% (0.73)%
====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..... $33,715 $43,811 $21,771
Ratio of operating expenses to average
net assets .............................. 0.75%** 0.75% 0.00%**
Ratio of net investment income to
average net assets ...................... 6.18%** 6.10% 5.70%**
Portfolio turnover rate .................. 93% 137% 95%
Ratio of operating expenses to average
net assets without fees reduced by credits
allowed by the custodian ................ 0.75%**(a) N/A N/A
Ratio of operating expenses to average
net assets without fee waivers, expenses
absorbed and/or fees reduced by credits
allowed by the custodian ................ 1.41%**(a) 1.39% 1.61%**
Net investment income per share without fee
waivers, expenses absorbed and/or fees
reduced by credits allowed by the
custodian ............................... $ 0.07 $ 0.07 $ 0.06
<FN>
- --------------
* The Fund commenced operations on November 1, 1993. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges.
The total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor
and/or administrator or if fees had not been reduced by credits allowed by the custodian.
# Amount represents less than $0.01 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
SHORT TERM HIGH QUALITY BOND FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
------------------------------- ----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
-------------- ----------- ------------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $ 2.35 $ 2.39 $ 2.35 $ 2.39
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................... 0.06 0.06 0.06 0.06
Net realized and unrealized gain/(loss)
on investments .......................... 0.03 0.02 0.03 0.02
------ ------ ------ ------
Total from investment operations ......... 0.09 0.08 0.09 0.08
LESS DISTRIBUTIONS:
Dividends from net investment income ..... (0.06) (0.06) (0.06) (0.06)
Distributions in excess of net investment
income ................................. -- (0.06) -- (0.06)
Distributions from capital (Note 2) ...... -- (0.00)# -- (0.00)#
------ ------ ------ ------
Total distributions ...................... (0.06) (0.12) (0.06) (0.12)
------ ------ ------ ------
Net asset value, end of period ........... $ 2.38 $ 2.35 $ 2.38 $ 2.35
====== ====== ====== ======
TOTAL RETURN+ 4.08% 3.64% 4.08% 3.64%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..... $3,151 $3,015 $2,809 $2,303
Ratio of operating expenses to average
net assets .............................. 1.50%** 1.50% 1.50%** 1.50%
Ratio of net investment income to
average net assets ...................... 5.43%** 5.35% 5.43%** 5.35%
Portfolio turnover rate .................. 93% 137% 93% 137%
Ratio of operating expenses to average
net assets without fees reduced by credits
allowed by the custodian ................ 1.50%**(a) N/A 1.50%**(a) N/A
Ratio of operating expenses to average
net assets without fee waivers, expenses
absorbed and/or fees reduced by credits
allowed by the custodian ................ 2.16%**(a) 2.14% 2.16%**(a) 2.14%
Net investment income per share without fee
waivers, expenses absorbed and/or fees
reduced by credits allowed by the
custodian ............................... $ 0.06 $ 0.05 $ 0.06 $ 0.05
<FN>
- --------------
* The Fund commenced operations on November 1, 1993. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges.
The total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor
and/or administrator or if fees had not been reduced by credits allowed by the custodian.
# Amount represents less than $0.01 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SHORT TERM GLOBAL GOVERNMENT FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
-----------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR PERIOD
12/31/95 ENDED ENDED ENDED ENDED
(UNAUDITED)++ 06/30/95 06/30/94 06/30/93 06/30/92*
------------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 2.24 $ 2.34 $ 2.48 $ 2.56 $ 2.50
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. 0.08 0.17 0.17 0.19 0.07
Net realized and unrealized gain/(loss)
on investments ........................ 0.05 (0.12) (0.14) (0.04) 0.07
------ ------ ------ ------ ------
Total from investment operations ....... 0.13 0.05 0.03 0.15 0.14
LESS DISTRIBUTIONS:
Dividends from net investment income ... (0.09) (0.02) (0.13) (0.20) (0.08)
Distributions in excess of net
investment income ..................... -- (0.00)# (0.03) -- --
Distributions in excess of net realized
gains ................................. -- (0.01) (0.01) (0.03) --
Distributions from capital (Note 2) .... -- (0.12) (0.00)# -- --
------ ------ ------ ------ ------
Total distributions .................... (0.09) (0.15) (0.17) (0.23) (0.08)
------ ------ ------ ------ ------
Net asset value, end of period ......... $ 2.28 $ 2.24 $ 2.34 $ 2.48 $ 2.56
====== ====== ====== ====== ======
TOTAL RETURN+ 6.03% 2.10% 1.10% 6.03% 5.34%
====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ... $78,650 $103,986 $220,824 $215,348 $106,609
Ratio of operating expenses to average
net assets ............................ 0.85%** 0.85% 0.85% 0.73% 0.41%**
Ratio of net investment income to average
net assets ............................ 6.87%** 7.22% 6.87% 7.67% 8.65%**
Portfolio turnover rate ................ 39% 217% 222% 294% 81%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ...... 0.85%**(a) N/A N/A N/A N/A
Ratio of operating expenses to average
net assets without fee waivers,
expenses absorbed and/or fees reduced
by credits allowed by the custodian ... 1.45%**(a) 1.44% 1.52% 1.55% 1.92%**
Net investment income per share
without fee waivers, expenses
absorbed and/or fees reduced by
credits allowed by the custodian ...... $ 0.07 $ 0.16 $ 0.16 $ 0.17 $ 0.06
<FN>
- --------------
* The Fund commenced operations on February 11, 1992. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor,
administrator and/or distributor or if fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method, which more appropriately presents the per share data for
the period since the use of the undistributed income method did not accord with results of operations.
# Amount represents less than $0.01 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SHORT TERM GLOBAL GOVERNMENT FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
------------------------ ---------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED)++ 06/30/95* (UNAUDITED)++ 06/30/95*
------------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 2.24 $ 2.34 $ 2.24 $ 2.34
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. 0.07 0.15 0.07 0.15
Net realized and unrealized gain/(loss)
on investments ........................ 0.05 (0.12) 0.05 (0.12)
------ ------ ------ ------
Total from investment operations ....... 0.12 0.03 0.12 0.03
LESS DISTRIBUTIONS:
Dividends from net investment income ... (0.08) (0.00)# (0.08) (0.00)#
Distributions in excess of net
investment income ..................... -- (0.00)# -- (0.00)#
Distributions in excess of net realized
gains ................................. -- (0.01) -- (0.01)
Distributions from capital (Note 2) .... -- (0.12) -- (0.12)
------ ------ ------ ------
Total distributions .................... (0.08) (0.13) (0.08) (0.13)
------ ------ ------ ------
Net asset value, end of period ......... $ 2.28 $ 2.24 $ 2.28 $ 2.24
====== ====== ====== ======
TOTAL RETURN+ 5.64% 1.33% 5.64% 1.33%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ... $1,383 $1,297 $2,100 $2,286
Ratio of operating expenses to average
net assets ............................ 1.60%** 1.60% 1.60%** 1.60%
Ratio of net investment income to average
net assets ............................ 6.12%** 6.47% 6.12%** 6.47%
Portfolio turnover rate ................ 39% 217% 39% 217%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ...... 1.60%**(a) N/A 1.60%**(a) N/A
Ratio of operating expenses to average
net assets without fee waivers,
expenses absorbed and/or fees reduced
by credits allowed by the custodian ... 2.20%**(a) 2.19% 2.20%**(a) 2.19%
Net investment income per share
without fee waivers, expenses
absorbed and/or fees reduced by
credits allowed by the custodian ...... $ 0.06 $ 0.14 $ 0.06 $ 0.14
<FN>
- --------------
* The Fund commenced operations on February 11, 1992. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor,
administrator and/or distributor or if fees had not been reduced by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method, which more appropriately presents the per share data for
the period since the use of the undistributed income method did not accord with results of operations.
# Amount represents less than $0.01 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. GOVERNMENT FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
------------------------------------------------------------ -
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94 06/30/93 06/30/92 06/30/91
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 9.67 $ 9.45 $10.65 $10.52 $10.04 $ 9.93
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. 0.35 0.70 0.75 0.74 0.84 0.84
Net realized and unrealized gain/(loss)
on investments ........................ 0.21 0.22 (1.21) 0.16 0.49 0.13
------ ------ ------ ------ ------ ------
Total from investment operations........ 0.56 0.92 (0.46) 0.90 1.33 0.97
LESS DISTRIBUTIONS:
Dividends from net investment income ... (0.34) (0.70) (0.64) (0.74) (0.84) (0.85)
Distributions in excess of net
realized gains ........................ -- -- (0.10) -- -- --
Distributions from capital (Note 2) ... -- -- -- (0.03) (0.01) (0.01)
------ ------ ------ ------ ------ ------
Total distributions .................... (0.34) (0.70) (0.74) (0.77) (0.85) (0.86)
------ ------ ------ ------ ------ ------
Net asset value, end of period ......... $ 9.89 $ 9.67 $ 9.45 $10.65 $10.52 $10.04
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 5.91% 10.17% (4.59)% 8.87% 13.74% 10.14%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ... $439,292 $459,968 $666,566 $842,277 $504,776 $166,920
Ratio of operating expenses to
average net assets .................... 0.65%** 0.95% 1.05% 0.91% 0.72% 1.12%
Ratio of net investment income to
average net assets .................... 7.27%** 7.58% 7.26% 6.98% 7.67% 8.32%
Portfolio turnover rate ................ 128% 226% 27% 67% 35% 54%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ...... 0.66%**(a) N/A N/A N/A N/A N/A
Ratio of operating expenses to average
net assets without fee waivers,
expenses absorbed and/or fees reduced
by credits allowed by the custodian ... 1.50%**(a) 1.59% 1.34% 1.34% 1.39% 1.57%
Ratio of operating expenses to average
net assets including interest expense . 0.83%** 1.22% 1.06% 0.91% 0.72% 1.12%
Net investment income per share
without fee waivers, expenses
absorbed and/or fees reduced by
credits allowed by the custodian ...... $ 0.32 $ 0.66 $ 0.72 $ 0.70 $ 0.77 $ 0.79
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor,
administrator and/or distributor or if fees had not been reduced by credits allowed by the custodian.
(a) The ratio, includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
U.S. GOVERNMENT FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
--------------------- ---------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ... $ 9.67 $ 9.45 $9.67 $ 9.45
------ ------ ----- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................. 0.31 0.63 0.31 0.63
Net realized and unrealized gain/(loss)
on investments ........................ 0.21 0.22 0.21 0.22
------ ------ ----- ------
Total from investment operations........ 0.52 0.85 0.52 0.85
LESS DISTRIBUTIONS:
Dividends from net investment income ... (0.30) (0.63) (0.30) (0.63)
Distributions in excess of net
realized gains ........................ -- -- -- --
Distributions from capital (Note 2) ... -- -- -- --
------ ------ ----- ------
Total distributions .................... (0.30) (0.63) (0.30) (0.63)
------ ------ ----- ------
Net asset value, end of period ......... $ 9.89 $ 9.67 $9.89 $ 9.67
====== ====== ===== ======
TOTAL RETURN+ 5.51% 9.36% 5.51% 9.36%
====== ====== ===== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ... $19,062 $10,646 $11,660 $6,839
Ratio of operating expenses to
average net assets .................... 1.40%** 1.70% 1.40%** 1.70%
Ratio of net investment income to
average net assets .................... 6.52%** 6.83% 6.52%** 6.83%
Portfolio turnover rate ................ 128% 226% 128% 226%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ...... 1.41%**(a) N/A 1.41%**(a) N/A
Ratio of operating expenses to average
net assets without fee waivers,
expenses absorbed and/or fees reduced
by credits allowed by the custodian ... 2.25%**(a) 2.34% 2.25%**(a) 2.34%
Ratio of operating expenses to average
net assets including interest expense . 1.58%** 1.97% 1.58%** 1.97%
Net investment income per share
without fee waivers, expenses
absorbed and/or fees reduced by
credits allowed by the custodian ...... $ 0.28 $ 0.59 $0.28 $ 0.59
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor,
administrator and/or distributor or if fees had not been reduced by credits allowed by the custodian.
(a) The ratio, includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CORPORATE INCOME FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94 06/30/93 06/30/92 06/30/91*
----------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $10.52 $ 9.87 $11.33 $10.52 $ 9.87 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................... 0.38 0.68 0.80 0.84 0.91 0.81
Net realized and unrealized gain/(loss) on
investments .............................. 0.59 0.78 (1.35) 0.84 0.64 (0.13)
------ ------ ------ ------ ------ ------
Total from investment operations........... 0.97 1.46 (0.55) 1.68 1.55 0.68
LESS DISTRIBUTIONS:
Dividends from net investment income ...... (0.38) (0.68) (0.78) (0.84) (0.90) (0.81)
Distributions in excess of net investment
income ................................... -- (0.09) (0.01) -- -- --
Distributions from net realized gains ..... -- -- (0.06) -- -- --
Distributions in excess of net
realized gains ........................... -- -- (0.06) -- -- --
Distributions from capital (Note 2) ....... -- (0.04) -- (0.03) -- --
------ ------ ------ ------ ------ ------
Total distributions ....................... (0.38) (0.81) (0.91) (0.87) (0.90) (0.81)
------ ------ ------ ------ ------ ------
Net asset value, end of period ............ $11.11 $10.52 $ 9.87 $11.33 $10.52 $ 9.87
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 9.46% 15.57% (5.32)% 16.64% 16.29% 7.31%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ...... $358,148 $383,642 $472,519 $396,357 $169,682 $35,478
Ratio of operating expenses to average net
assets ................................... 0.93%** 0.90% 1.35% 1.24% 0.97% 1.21%**
Ratio of net investment income to average
net assets ............................... 7.18%** 8.26% 7.19% 7.67% 8.29% 9.01%**
Portfolio turnover rate ................... 14% 55% 30% 37% 8% 31%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ......... 0.93%**(a) N/A N/A N/A N/A N/A
Ratio of operating expenses to average
net assets without fee waivers and/or
fees reduced by credits allowed by the
custodian ................................ 1.38%**(a) 1.40% 1.42% 1.42% 1.48% 1.78%**
Net investment income per share without
fee waivers and/or fees reduced by credits
allowed by the custodian ................. $ 0.36 $ 0.64 $ 0.80 $ 0.82 $ 0.85 $ 0.76
<FN>
- --------------
* The Fund commenced operations on July 18, 1990. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived by the investment advisor, administrator and/or
distributor or if fees had not been reduced by credits allowed by the custodian.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CORPORATE INCOME FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
--------------------- ---------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ...... $10.52 $ 9.87 $10.52 $ 9.87
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................... 0.34 0.61 0.34 0.61
Net realized and unrealized gain/(loss) on
investments .............................. 0.59 0.78 0.59 0.78
------ ------ ------ ------
Total from investment operations........... 0.93 1.39 0.93 1.39
LESS DISTRIBUTIONS:
Dividends from net investment income ...... (0.34) (0.61) (0.34) (0.61)
Distributions in excess of net investment
income ................................... -- (0.09) -- (0.09)
Distributions from net realized gains ..... -- -- -- --
Distributions in excess of net
realized gains ........................... -- -- -- --
Distributions from capital (Note 2) ....... -- (0.04) -- (0.04)
------ ------ ------ ------
Total distributions ....................... (0.34) (0.74) (0.34) (0.74)
------ ------ ------ ------
Net asset value, end of period ............ $11.11 $10.52 $11.11 $10.52
====== ====== ====== ======
TOTAL RETURN+ 9.05% 14.73% 9.05% 14.73%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ...... $22,778 $15,145 $8,424 $8,701
Ratio of operating expenses to average net
assets ................................... 1.68%** 1.65% 1.68%** 1.65%
Ratio of net investment income to average
net assets ............................... 6.43%** 7.51% 6.43%** 7.51%
Portfolio turnover rate ................... 14% 55% 14% 55%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ......... 1.68%**(a) N/A 1.68%**(a) N/A
Ratio of operating expenses to average
net assets without fee waivers and/or
fees reduced by credits allowed by the
custodian ................................ 2.13%**(a) 2.15% 2.13%**(a) 2.15%
Net investment income per share without
fee waivers and/or fees reduced by credits
allowed by the custodian ................. $ 0.32 $ 0.57 $0.32 $ 0.57
<FN>
- --------------
* The Fund commenced operations on July 18, 1990. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived by the investment advisor, administrator and/or
distributor or if fees had not been reduced by credits allowed by the custodian.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CALIFORNIA MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94 06/30/93 06/30/92 06/30/91
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $10.53 $10.38 $11.22 $10.45 $10.07 $10.01
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................... 0.30 0.61 0.61 0.62 0.65 0.63
Net realized and unrealized gain/(loss) on
investments ............................. 0.46 0.15 (0.82) 0.77 0.38 0.06
------ ------ ------ ------ ------ ------
Total from investment operations.......... 0.76 0.76 (0.21) 1.39 1.03 0.69
LESS DISTRIBUTIONS:
Dividends from net investment income ..... (0.30) (0.61) (0.61) (0.62) (0.65) (0.63)
Distributions in excess of net
investment income ....................... -- -- (0.00)# -- -- --
Distributions from net realized gains .... -- (0.00)# -- -- -- --
Distributions in excess of net
realized gains .......................... -- -- (0.02) -- -- --
------ ------ ------ ------ ------ ------
Total distributions ...................... (0.30) (0.61) (0.63) (0.62) (0.65) (0.63)
------ ------ ------ ------ ------ ------
Net asset value, end of period ........... $10.99 $10.53 $10.38 $11.22 $10.45 $10.07
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 7.31% 7.57% (2.19)% 13.84% 10.56% 7.16%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..... $402,492 $405,967 $509,223 $511,364 $309,146 $202,595
Ratio of operating expenses to
average net assets ...................... 0.92%** 0.85% 0.79% 0.80% 0.94% 1.05%
Ratio of net investment income to average
net assets .............................. 5.56%** 5.89% 5.45% 5.74% 6.08% 6.30%
Portfolio turnover rate .................. 8% 22% 50% 41% 29% 16%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ........ 0.93%**(a) N/A N/A N/A N/A N/A
Ratio of operating expenses to average
net assets without fee waivers and/or
fees reduced by credits allowed by the
custodian ............................... 1.28%**(a) 1.29% 1.39% 1.41% 1.40% 1.60%
Net investment income per share without
fee waivers and/or fees reduced by
credits allowed by the custodian ........ $ 0.28 $ 0.56 $ 0.54 $ 0.56 $ 0.60 $ 0.58
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived by the investment advisor, administrator and/or
distributor or if fees had not been reduced by credits allowed by the custodian.
# Amount represents less than $0.01 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CALIFORNIA MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
--------------------- ---------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $10.53 $10.38 $10.53 $10.38
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................... 0.26 0.53 0.26 0.53
Net realized and unrealized gain/(loss) on
investments ............................. 0.46 0.15 0.46 0.15
------ ------ ------ ------
Total from investment operations.......... 0.72 0.68 0.72 0.68
LESS DISTRIBUTIONS:
Dividends from net investment income ..... (0.26) (0.53) (0.26) (0.53)
Distributions in excess of net
investment income ....................... -- -- -- --
Distributions from net realized gains .... -- (0.00)# -- (0.00)#
Distributions in excess of net
realized gains .......................... -- -- -- --
------ ------ ------ ------
Total distributions ...................... (0.26) (0.53) (0.26) (0.53)
------ ------ ------ ------
Net asset value, end of period ........... $10.99 $10.53 $10.99 $10.53
====== ====== ====== ======
TOTAL RETURN+ 6.91% 6.78% 6.91% 6.78%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..... $12,594 $7,230 $11 $11
Ratio of operating expenses to
average net assets ...................... 1.67%** 1.60% 1.67%** 1.60%
Ratio of net investment income to average
net assets .............................. 4.81%** 5.14% 4.81%** 5.14%
Portfolio turnover rate .................. 8% 22% 8% 22%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ........ 1.68%**(a) N/A 1.68%**(a) N/A
Ratio of operating expenses to average
net assets without fee waivers and/or
fees reduced by credits allowed by the
custodian ............................... 2.03%**(a) 2.04% 2.03%**(a) 2.04%
Net investment income per share without
fee waivers and/or fees reduced by
credits allowed by the custodian ........ $ 0.24 $ 0.48 $ 0.24 $ 0.48
<FN>
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition to Class A shares. Those shares in existence
prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived by the investment advisor, administrator and/or
distributor or if fees had not been reduced by credits allowed by the custodian.
# Amount represents less than $0.01 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FLORIDA INSURED MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
-----------------------------------------------
SIX MONTHS
ENDED YEAR YEAR PERIOD
12/31/95 ENDED ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94 06/30/93*
-------------- ------- ------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 9.43 $ 9.40 $10.05 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.25 0.52 0.52 0.00#
Net realized and unrealized gain/ (loss) on
investments ................................ 0.64 0.03## (0.65) 0.05
------ ------ ------ ------
Total from investment operations ............ 0.89 0.55 (0.13) 0.05
LESS DISTRIBUTIONS:
Dividends from net investment income ........ (0.25) (0.52) (0.52) --
Distributions in excess of net investment
income ..................................... -- -- (0.00)# --
Distributions in excess of net realized
gains ...................................... -- -- (0.00)# --
------ ------ ------ ------
Total distributions ......................... (0.25) (0.52) (0.52) --
------ ------ ------ ------
Net asset value, end of period .............. $10.07 $ 9.43 $ 9.40 $10.05
====== ====== ====== ======
TOTAL RETURN+ 9.56% 6.01% (1.50)% 0.50%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........ $32,886 $33,714 $38,541 $4,837
Ratio of operating expenses to average
net assets ................................. 0.64%** 0.39% 0.00% 0.00%**
Ratio of net investment income to average net
assets ..................................... 5.10%** 5.53% 5.09% 0.48%**
Portfolio turnover rate ..................... 35% 44% 83% 0%
Ratio of operating expenses to average net
assets without fees reduced by credits
allowed by the custodian ................... 0.65%**(a) N/A N/A N/A
Ratio of operating expenses to average net
assets without fee waivers, expenses
absorbed and/or fees reduced by credits
allowed by the custodian ................... 1.43%**(a) 1.51% 1.55% 5.59%**
Net investment income/(loss) per share
without fee waivers, expenses absorbed
and/or fees reduced by credits allowed by
the custodian .............................. $ 0.21 $ 0.42 $ 0.36 $(0.02)
<FN>
- --------------
* The Fund commenced operations on June 7, 1993. On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition
to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor and
administrator or if fees had not been reduced by credits allowed by the custodian.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing of sales
and redemptions of Fund shares.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
FLORIDA INSURED MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
------------------------- -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
------------ --------- ------------ ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ........ $ 9.43 $ 9.40 $ 9.43 $ 9.40
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.21 0.45 0.21 0.45
Net realized and unrealized gain/ (loss) on
investments ................................ 0.64 0.03## 0.64 0.03##
------ ------ ------ ------
Total from investment operations ............ 0.85 0.48 0.85 0.48
LESS DISTRIBUTIONS:
Dividends from net investment income ........ (0.21) (0.45) (0.21) (0.45)
Distributions in excess of net investment
income ..................................... -- -- -- --
Distributions in excess of net realized
gains ...................................... -- -- -- --
------ ------ ------ ------
Total distributions ......................... (0.21) (0.45) (0.21) (0.45)
------ ------ ------ ------
Net asset value, end of period .............. $10.07 $ 9.43 $10.07 $ 9.43
====== ====== ====== ======
TOTAL RETURN+ 9.15% 5.23% 9.15% 5.23%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ........ $5,250 $3,330 $12 $11
Ratio of operating expenses to average
net assets ................................. 1.39%** 1.14% 1.39%** 1.14%
Ratio of net investment income to average net
assets ..................................... 4.35%** 4.78% 4.35%** 4.78%
Portfolio turnover rate ..................... 35% 44% 35% 44%
Ratio of operating expenses to average net
assets without fees reduced by credits
allowed by the custodian ................... 1.40%**(a) N/A 1.40%**(a) N/A
Ratio of operating expenses to average net
assets without fee waivers, expenses
absorbed and/or fees reduced by credits
allowed by the custodian ................... 2.18%**(a) 2.26% 2.18%**(a) 2.26%
Net investment income/(loss) per share
without fee waivers, expenses absorbed
and/or fees reduced by credits allowed by
the custodian .............................. $ 0.17 $ 0.35 $ 0.17 $ 0.35
<FN>
- --------------
* The Fund commenced operations on June 7, 1993. On July 1, 1994 the Fund commenced selling Class B and Class S shares in addition
to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor and
administrator or if fees had not been reduced by credits allowed by the custodian.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing of sales
and redemptions of Fund shares.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
---------------------------------------
SIX MONTHS
ENDED YEAR PERIOD
12/31/95 ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94*
-------------- ---------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period .......... $10.45 $10.10 $10.00
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.25 0.50 0.11
Net realized and unrealized gain on investments 0.43 0.35 0.11##
------ ------ ------
Total from investment operations .............. 0.68 0.85 0.22
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.25) (0.50) (0.11)
Distributions from net realized gains ......... (0.04) -- (0.01)
------ ------ ------
Total distributions ........................... (0.29) (0.50) (0.12)
------ ------ ------
Net asset value, end of period ................ $10.84 $10.45 $10.10
====== ====== ======
TOTAL RETURN+ 6.59% 8.71% 2.20%
====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $55,955 $54,507 $34,147
Ratio of operating expenses to average
net assets ................................... 0.73%** 0.42% 0.00%**
Ratio of net investment income to average net
assets ....................................... 4.61%** 4.95% 4.25%**
Portfolio turnover rate ....................... 10% 13% 17%
Ratio of operating expenses to average net
assets without fees reduced by credits allowed
by the custodian ............................. 0.74%**(a) N/A N/A
Ratio of operating expenses to average net
assets without fee waivers, expenses absorbed
and/or fees reduced by credits allowed by the
custodian .................................... 1.39%**(a) 1.41% 1.95%**
Net investment income per share without fee
waivers, expenses absorbed and/or fees
reduced by credits allowed by the custodian .. $ 0.21 $ 0.40 $ 0.06
<FN>
- --------------
* The Fund commenced operations on April 4, 1994. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor and
administrator or if fees had not been reduced by credits allowed by the custodian.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing of sales
and redemptions of Fund shares.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
----------------------------- -----------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
-------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .......... $10.45 $10.10 $10.45 $10.10
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.21 0.43 0.21 0.43
Net realized and unrealized gain on investments 0.43 0.35 0.43 0.35
------ ------ ------ ------
Total from investment operations .............. 0.64 0.78 0.64 0.78
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.21) (0.43) (0.21) (0.43)
Distributions from net realized gains ......... (0.04) -- (0.04) --
------ ------ ------ ------
Total distributions ........................... (0.25) (0.43) (0.25) (0.43)
------ ------ ------ ------
Net asset value, end of period ................ $10.84 $10.45 $10.84 $10.45
====== ====== ====== ======
TOTAL RETURN+ 6.19% 7.90% 6.19% 7.90%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) .......... $15,453 $12,391 $11 $11
Ratio of operating expenses to average
net assets ................................... 1.48%** 1.17% 1.48%** 1.17%
Ratio of net investment income to average net
assets ....................................... 3.86%** 4.20% 3.86%** 4.20%
Portfolio turnover rate ....................... 10% 13% 10% 13%
Ratio of operating expenses to average net
assets without fees reduced by credits allowed
by the custodian ............................. 1.49%**(a) N/A 1.49%**(a) N/A
Ratio of operating expenses to average net
assets without fee waivers, expenses absorbed
and/or fees reduced by credits allowed by the
custodian .................................... 2.14%**(a) 2.16% 2.14%**(a) 2.16%
Net investment income per share without fee
waivers, expenses absorbed and/or fees
reduced by credits allowed by the custodian .. $ 0.17 $ 0.33 $ 0.17 $ 0.33
<FN>
- --------------
* The Fund commenced operations on April 4, 1994. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor and
administrator or if fees had not been reduced by credits allowed by the custodian.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing of sales
and redemptions of Fund shares.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NATIONAL MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS A SHARES
------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94 06/30/93 06/30/92 06/30/91*
----------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $10.76 $10.85 $11.65 $10.96 $10.16 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................... 0.31 0.64 0.65 0.67 0.72 0.64
Net realized and unrealized gain/(loss)
on investments .......................... 0.48 0.01## (0.73) 0.75 0.79 0.16
------ ------ ------ ------ ------ ------
Total from investment operations ......... 0.79 0.65 (0.08) 1.42 1.51 0.80
LESS DISTRIBUTIONS:
Dividends from net investment income ..... (0.31) (0.64) (0.65) (0.67) (0.71) (0.64)
Distributions in excess of net
investment income ....................... -- -- (0.00)# -- -- --
Distributions from net realized gains .... -- (0.01) (0.07) (0.06) -- --
Distributions in excess of net realized
gains ................................... -- (0.09) -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions ...................... (0.31) (0.74) (0.72) (0.73) (0.71) (0.64)
------ ------ ------ ------ ------ ------
Net asset value, end of period ........... $11.24 $10.76 $10.85 $11.65 $10.96 $10.16
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 7.41% 6.32% (0.90)% 13.41% 15.42% 8.27%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..... $257,961 $269,033 $354,501 $390,187 $226,984 $44,915
Ratio of operating expenses to average
net assets .............................. 1.02%** 0.83% 0.87% 0.86% 0.64% 0.55%**
Ratio of net investment income to average
net assets .............................. 5.56%** 5.97% 5.60% 5.89% 6.34% 6.84%**
Portfolio turnover rate .................. 9% 23% 44% 83% 61% 81%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ........ 1.02%**(a) N/A N/A N/A N/A N/A
Ratio of operating expenses to average
net assets without fee waivers,
expenses absorbed and/or fees reduced
by credits allowed by the custodian ..... 1.29%**(a) 1.30% 1.36% 1.37% 1.40% 1.68%**
Net investment income per share without
fee waivers, expenses absorbed and/or
fees reduced by credits allowed by
the custodian ........................... $ 0.30 $ 0.59 $ 0.59 $ 0.61 $ 0.63 $ 0.53
<FN>
- --------------
* The Fund commenced operations on July 18, 1990. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor,
administrator and/or distributor or if fees had not been reduced by credits allowed by the custodian.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing of sales
and redemptions of Fund shares.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
NATIONAL MUNICIPAL FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
CLASS B SHARES CLASS S SHARES
--------------------- ---------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $10.76 $10.85 $10.76 $10.85
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................... 0.26 0.56 0.26 0.56
Net realized and unrealized gain/(loss)
on investments .......................... 0.48 0.01## 0.48 0.01##
------ ------ ------ ------
Total from investment operations ......... 0.74 0.57 0.74 0.57
LESS DISTRIBUTIONS:
Dividends from net investment income ..... (0.26) (0.56) (0.26) (0.56)
Distributions in excess of net
investment income ....................... -- -- -- --
Distributions from net realized gains .... -- (0.01) -- (0.01)
Distributions in excess of net realized
gains ................................... -- (0.09) -- (0.09)
------ ------ ------ ------
Total distributions ...................... (0.26) (0.66) (0.26) (0.66)
------ ------ ------ ------
Net asset value, end of period ........... $11.24 $10.76 $11.24 $10.76
====== ====== ====== ======
TOTAL RETURN+ 7.00% 5.54% 7.00% 5.54%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/
SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ..... $$6,129 $4,786 $ 11 $ 11
Ratio of operating expenses to average
net assets .............................. 1.77%** 1.58% 1.77%** 1.58%
Ratio of net investment income to average
net assets .............................. 4.81%** 5.22% 4.81%** 5.22%
Portfolio turnover rate .................. 9% 23% 9% 23%
Ratio of operating expenses to average
net assets without fees reduced by
credits allowed by the custodian ........ 1.77%**(a) N/A 1.77%**(a) N/A
Ratio of operating expenses to average
net assets without fee waivers,
expenses absorbed and/or fees reduced
by credits allowed by the custodian ..... 2.04%**(a) 2.05% 2.04%**(a) 2.05%
Net investment income per share without
fee waivers, expenses absorbed and/or
fees reduced by credits allowed by
the custodian ........................... $ 0.25 $ 0.51 $ 0.25 $ 0.51
<FN>
- --------------
* The Fund commenced operations on July 18, 1990. On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994 were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated and does not reflect any applicable sales charges. The
total returns would have been lower if certain fees had not been waived and/or expenses absorbed by the investment advisor,
administrator and/or distributor or if fees had not been reduced by credits allowed by the custodian.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and losses of portfolio securities due to the timing of sales
and redemptions of Fund shares.
(a) The ratio includes custodian fees before reduction by credits allowed by the custodian as required by amended disclosure
requirements effective September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
GROWTH AND INCOME FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
----------------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR YEAR
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED) 06/30/95 06/30/94 06/30/93 06/30/92 06/30/91
------------ -------- -------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $12.58 $11.30 $12.09 $11.25 $10.51 $10.12
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.05 0.13 0.12 0.12 0.17 0.23
Net realized and unrealized gain on investments .. 1.37 2.04 0.72 0.91 0.74 0.43
------ ------ ------ ------ ------ ------
Total from investment operations.................. 1.42 2.17 0.84 1.03 0.91 0.66
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.04) (0.12) (0.12) (0.12) (0.17) (0.27)
Distributions from net realized gains ............ (0.99) (0.77) (1.51) (0.07) -- --
------ ------ ------ ------ ------ ------
Total distributions .............................. (1.03) (0.89) (1.63) (0.19) (0.17) (0.27)
------ ------ ------ ------ ------ ------
Net asset value, end of period ................... $12.97 $12.58 $11.30 $12.09 $11.25 $10.51
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 11.36% 20.47% 6.67% 9.20% 8.65% 6.70%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $190,061 $170,177 $125,249 $97,873 $83,825 $33,930
Ratio of operating expenses to average net assets. 1.55%** 1.56% 1.50% 1.46% 1.50% 1.52%
Ratio of net investment income/(loss) to average
net assets ...................................... 0.68%** 1.11% 1.04% 1.01% 1.51% 2.48%
Portfolio turnover rate .......................... 34% 72% 127% 47% 16% 19%
Ratio of operating expenses to average net assets
without fees reduced by credits allowed by the
custodian ....................................... 1.55%**(a) N/A N/A N/A N/A N/A
Ratio of operating expenses to average net assets
without fee waivers and/or fees reduced by
credits allowed by the custodian ................ 1.55%**(a) 1.56% 1.59% 1.46% 1.55% 1.78%
Net investment income per share without fee
waivers and/or fees reduced by credits allowed
by the custodian ................................ $ 0.05 $ 0.13 $ 0.11 $ 0.12 $ 0.16 $ 0.21
<CAPTION>
CLASS B SHARES CLASS S SHARES
------------------------ -------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED) 06/30/95* (UNAUDITED) 06/30/95*
------------ --------- ------------ ---------
Net asset value, beginning of period ............. $12.55 $11.30 $12.55 $11.30
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.00# 0.05 0.00# 0.05
Net realized and unrealized gain on investments .. 1.37 2.04 1.37 2.04
------ ------ ------ ------
Total from investment operations.................. 1.37 2.09 1.37 2.09
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.01) (0.07) (0.00)# (0.07)
Distributions from net realized gains ............ (0.99) (0.77) (0.99) (0.77)
------ ------ ------ ------
Total distributions .............................. (1.00) (0.84) (0.99) (0.84)
------ ------ ------ ------
Net asset value, end of period ................... $12.92 $12.55 $12.93 $12.55
====== ====== ====== ======
TOTAL RETURN+ 10.99% 19.67% 10.98% 19.75%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $13,184 $6,918 $26,304 $14,368
Ratio of operating expenses to average net assets. 2.30%** 2.31% 2.30%** 2.31%
Ratio of net investment income/(loss) to average
net assets ...................................... (0.07)%** 0.36% (0.07)%** 0.36%
Portfolio turnover rate .......................... 34% 72% 34% 72%
Ratio of operating expenses to average net assets
without fees reduced by credits allowed by the
custodian ....................................... 2.30%**(a) N/A 2.30%**(a) N/A
Ratio of operating expenses to average net assets
without fee waivers and/or fees reduced by
credits allowed by the custodian ................ 2.30%**(a) 2.31% 2.30%**(a) 2.31%
Net investment income per share without fee
waivers and/or fees reduced by credits allowed
by the custodian ................................ $ 0.00# $ 0.05 $ 0.00# $ 0.05
- --------------
* On July 1, 1994 the Fund commenced selling Class B and Class S shares in
addition to Class A shares. Those shares in existence prior to July 1, 1994
were designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges. The total returns would
have been lower if certain fees had not been waived by the investment
advisor and/or administrator or if fees had not been reduced by credits
allowed by the custodian.
# Amount represents less than $0.01 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by
the custodian as required by amended disclosure requirements effective
September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
GROWTH FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR PERIOD
12/31/95 ENDED ENDED ENDED
(UNAUDITED)++ 06/30/95++ 06/30/94 06/30/93*
------------- ---------- -------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ............. $14.18 $10.73 $10.72 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) ..................... (0.04) 0.05 (0.02) 0.00#
Net realized and unrealized gain on investments .. 1.86 3.42 0.03## 0.72
----- ----- ----- -----
Total from investment operations ................. 1.82 3.47 0.01 0.72
LESS DISTRIBUTIONS:
Dividends from net investment income ............. -- (0.02) -- --
Distributions from net realized gains ............ (1.89) (0.00)# -- --
----- ----- ----- -----
Total distributions .............................. (1.89) (0.02) -- --
----- ----- ----- -----
Net asset value, end of period ................... $14.11 $14.18 $10.73 $10.72
====== ====== ====== ======
TOTAL RETURN+ 12.81% 32.33% 0.00% 7.30%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).............. $179,857 $154,763 $126,808 $23,323
Ratio of operating expenses to average net assets. 1.70%** 1.76% 1.75% 1.44%**
Ratio of net investment income/(loss) to average
net assets ...................................... (0.54)%** 0.28% (0.35)% (0.63)%**
Portfolio turnover rate .......................... 93% 233% 227% 13%
Ratio of operating expenses to average net assets
without fees reduced by credits allowed by the
custodian ....................................... 1.70%**(a) N/A N/A N/A
Ratio of operating expenses to average net assets
without fee waivers, expenses absorbed and/or
fees reduced by credits allowed by the custodian. 1.70%**(a) 1.76% 1.75% 2.52%**
Net investment income/(loss) per share without fee
waivers, expenses absorbed and/or fees reduced by
credits allowed by the custodian ................ $ (0.04) $ 0.05 $ (0.02) $ (0.01)
<CAPTION>
CLASS B SHARES CLASS S SHARES
----------------------------- ---------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED)++ 06/30/95*++ (UNAUDITED)++ 06/30/95*++
------------- ----------- ------------- -----------
Net asset value, beginning of period ............ $14.10 $10.73 $14.11 $10.73
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) ..................... (0.10) (0.04) (0.10) (0.04)
Net realized and unrealized gain on investments .. 1.85 3.42 1.84 3.42
----- ----- ----- -----
Total from investment operations ................. 1.75 3.38 1.74 3.38
LESS DISTRIBUTIONS:
Dividends from net investment income ............. -- (0.01) -- (0.00)#
Distributions from net realized gains ............ (1.89) (0.00)# (1.89) (0.00)#
----- ----- ----- -----
Total distributions (1.89) (0.01) (1.89) (0.00)
----- ----- ----- -----
Net asset value, end of period ................... $13.96 $14.10 $13.96 $14.11
====== ====== ====== ======
TOTAL RETURN+ 12.39% 31.46% 12.39% 31.44%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's).............. $14,054 $6,928 $33,363 $18,730
Ratio of operating expenses to average net assets. 2.45%** 2.51% 2.45%** 2.51%
Ratio of net investment income/(loss) to average
net assets ...................................... (1.29)%** (0.47)% (1.29)%** (0.47)%
Portfolio turnover rate .......................... 93% 233% 93% 233%
Ratio of operating expenses to average net assets
without fees reduced by credits allowed by the
custodian ....................................... 2.45%**(a) N/A 2.45%**(a) N/A
Ratio of operating expenses to average net assets
without fee waivers, expenses absorbed and/or
fees reduced by credits allowed by the custodian. 2.45%**(a) 2.51% 2.45%**(a) 2.51%
Net investment income/(loss) per share without fee
waivers, expenses absorbed and/or fees reduced by
credits allowed by the custodian ................ $ (0.10) $ (0.04) $ (0.10) $ (0.04)
- --------------
* The Fund commenced operations on April 5, 1993. On July 1, 1994 the Fund
commenced selling Class B and Class S shares in addition to
Class A shares. Those shares in existence prior to July 1, 1994 were
designated Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges. The total returns would
have been lower if certain fees had not been waived and expenses absorbed
by the investment advisor or if fees had not been reduced by credits
allowed by the custodian.
++ Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed income method did not accord with results of
operations.
# Amount represents less than $0.01 per share.
## The amount shown may not accord with the change in aggregate gains and
losses of portfolio securities due to the timing of sales and redemptions
of Fund shares.
(a) The ratio includes custodian fees before reduction by credits allowed by
the custodian as required by amended disclosure requirements effective
September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
EMERGING GROWTH FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
-------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR PERIOD
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED)++ 06/30/95++ 06/30/94 06/30/93 06/30/92++ 06/30/91*
-------------- ---------- -------- ------- ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $15.47 $13.02 $13.76 $11.67 $ 9.62 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) ..................... (0.05) (0.00)# (0.09) (0.02) (0.01) 0.09
Net realized and unrealized gain/(loss) on
investments...................................... 3.10 2.77 0.68 2.31 2.16 (0.40)
------ ------ ------ ------ ------ ------
Total from investment operations ................. 3.05 2.77 0.59 2.29 2.15 (0.31)
LESS DISTRIBUTIONS:
Dividends from net investment income ............. -- -- -- -- (0.01) (0.07)
Distributions from net realized gains ............ (0.76) (0.32) (1.33) (0.20) (0.08) --
Distributions from capital (Note 2) .............. -- -- -- -- (0.01) --
------ ------ ------ ------ ------ ------
Total distributions .............................. (0.76) (0.32) (1.33) (0.20) (0.10) (0.07)
------ ------ ------ ------ ------ ------
Net asset value, end of period ................... $17.76 $15.47 $13.02 $13.76 $11.67 $ 9.62
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 19.69% 21.54% 3.40% 19.75% 22.47% (2.95)%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $239,486 $185,722 $124,941 $96,646 $27,652 $8,490
Ratio of operating expenses to average net assets. 1.64%** 1.68% 1.66% 1.59% 1.93% 1.84%**
Ratio of net investment income/(loss) to average
net assets ...................................... (0.61)%** (0.31)% (0.68)% (0.32)% (0.04)% 1.10%**
Portfolio turnover rate .......................... 76% 181% 224% 28% 60% 17%
Ratio of operating expenses to average net assets
without fees reduced by credits allowed by the
custodian........................................ 1.65%**(a) N/A N/A N/A N/A N/A
Ratio of operating expenses to average net assets
without fee waivers and/or fees reduced by
credits allowed by the custodian ................ 1.65%**(a) 1.68% 1.66% 1.59% 1.93% 2.11%**
Net investment income/(loss) per share without fee
waivers and/or fees reduced by credits allowed by
the custodian ................................... $(0.05) $(0.00)# $(0.09) $(0.02) $(0.01) $0.07
<CAPTION>
CLASS B SHARES CLASS S SHARES
--------------------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED)++ 06/30/95*++ (UNAUDITED)++ 06/30/95*++
---------- ------------- ---------- -------------
Net asset value, beginning of period ............. $15.37 $13.02 $15.37 $13.02
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) ..................... (0.12) (0.10) (0.12) (0.10)
Net realized and unrealized gain/(loss) on
investments...................................... 3.07 2.77 3.08 2.77
------ ------ ------ ------
Total from investment operations ................. 2.95 2.67 2.96 2.67
LESS DISTRIBUTIONS:
Dividends from net investment income ............. -- -- -- --
Distributions from net realized gains ............ (0.76) (0.32) (0.76) (0.32)
Distributions from capital (Note 2) .............. -- -- -- --
------ ------ ------ ------
Total distributions .............................. (0.76) (0.32) (0.76) (0.32)
------ ------ ------ ------
Net asset value, end
of period ......... $17.56 $15.37 $17.57 $15.37
====== ====== ====== ======
TOTAL RETURN+ 19.24% 20.69% 19.23% 20.76%
====== ====== ====== ======
RATIOS TO AVERAGE
NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $16,214 $10,208 $27,943 $11,840
Ratio of operating expenses to average net assets. 2.39%** 2.43% 2.39%** 2.43%
Ratio of net investment income/loss) to average
net assets ...................................... (1.36)%** (1.06)% (1.36)%** (1.06)%
Portfolio turnover rate .......................... 76% 181% 76% 181%
Ratio of operating expenses to average net assets
without fees reduced by credits allowed by the
custodian........................................ 2.40%**(a) N/A 2.40%**(a) N/A
Ratio of operating expenses to average net assets
without fee waivers and/or fees reduced by
credits allowed by the custodian ................ 2.40%**(a) 2.43% 2.40%**(a) 2.43%
Net investment income/(loss) per share without fee
waivers and/or fees reduced by credits allowed by
the custodian ................................... $(0.12) $(0.10) $(0.12) $(0.10)
- --------------
* The Fund commenced operations on July 18, 1990. On July 1, 1994 the Fund
commenced selling Class B and Class S shares in addition to Class A
shares. Those shares in existence prior to July 1, 1994 were designated
Class A shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges. The total returns would
have been lower if certain fees had not been waived by the investment
advisor or if fees had not been reduced by credits allowed by the
custodian.
++ Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed income method did not accord with results of
operations.
# Amount represents less than $0.01 per share.
(a) The ratio includes custodian fees before reduction by credits allowed by
the custodian as required by amended disclosure requirements effective
September 1, 1995.
See notes to financial statements.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
INTERNATIONAL GROWTH FUND
FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD.
<TABLE>
<CAPTION>
CLASS A SHARES
-------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR YEAR YEAR YEAR PERIOD
12/31/95 ENDED ENDED ENDED ENDED ENDED
(UNAUDITED)++ 06/30/95++ 06/30/94 06/30/93 06/30/92 06/30/91*
------------ ------------- ------- ------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............. $ 9.78 $10.74 $ 9.80 $ 8.82 $ 8.27 $10.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) ..................... 0.01 (0.11)+++ 0.06 0.07 0.05 0.02
Net realized and unrealized gain/(loss) on
investments ..................................... 0.68 (0.31) 1.15 0.94 0.55 (1.75)
------ ------ ------ ------ ------ ------
Total from investment operations ................. 0.69 (0.42) 1.21 1.01 0.60 (1.73)
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.09) (0.04) (0.02) (0.03) (0.05) --
Distributions from net realized gains ............ (0.46) (0.44) (0.25) -- -- --
Distributions in excess of net realized gains .... -- (0.06) -- -- -- --
------ ------ ------ ------ ------ ------
Total distributions .............................. (0.55) (0.54) (0.27) (0.03) (0.05) --
------ ------ ------ ------ ------ ------
Net asset value, end of period ................... $ 9.92 $ 9.78 $10.74 $ 9.80 $ 8.82 $ 8.27
====== ====== ====== ====== ====== ======
TOTAL RETURN+ 7.01% (4.01)% 12.39% 11.51% 7.28% (17.30)%
====== ====== ====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $84,901 $91,763 $127,764 $56,962 $24,479 $11,647
Ratio of operating expenses to average net assets. 1.78%** 1.69% 1.69% 1.80% 2.25% 2.24%**
Ratio of net investment income/(loss) to average
net assets ...................................... 0.12%** 0.62% 0.54% 1.07% 0.69% 0.51%**
Portfolio turnover rate........................... 31% 81% 44% 63% 66% 45%
Ratio of operating expenses to average net assets
without fees reduced by credits allowed by the
custodian ....................................... 1.78%**(a) N/A N/A N/A N/A N/A
Ratio of operating expenses to average net assets
without fee waivers and/or fees reduced by
credits allowed by the custodian ................ 1.78%**(a) 1.69% 1.69% 1.80% 2.29% 2.47%**
Net investment income/(loss) per share without fee
waivers and/or fees reduced by credits allowed by
the custodian ................................... $ 0.01 $ (0.11) $ 0.06 $ 0.07 $ 0.04 $ 0.01
<CAPTION>
CLASS B SHARES CLASS S SHARES
------------------------------ -------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
12/31/95 ENDED 12/31/95 ENDED
(UNAUDITED)++ 06/30/95*++ (UNAUDITED)++ 06/30/95*++
------------- -------------- ------------ --------------
Net asset value, beginning of period ............. $ 9.73 $10.74 $ 9.73 $10.74
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) ..................... (0.03) (0.17)+++ (0.03) (0.17)+++
Net realized and unrealized gain/(loss) on
investments ..................................... 0.68 (0.31) 0.68 (0.31)
------ ------ ------ ------
Total from investment operations ................. 0.65 (0.48) 0.65 (0.48)
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.06) (0.03) (0.06) (0.03)
Distributions from net realized gains ............ (0.46) (0.44) (0.46) (0.44)
Distributions in excess of net realized gains .... -- (0.06) -- (0.06)
------ ------ ------ ------
Total distributions .............................. (0.52) (0.53) (0.52) (0.53)
------ ------ ------ ------
Net asset value, end of period ................... $ 9.86 $ 9.73 $ 9.86 $ 9.73
====== ====== ====== ======
TOTAL RETURN+ 6.61% (4.61)% 6.67% (4.61)%
====== ====== ====== ======
RATIOS TO AVERAGE NET ASSETS/ SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............. $2,923 $2,268 $17,771 $11,120
Ratio of operating expenses to average net assets. 2.53%** 2.44% 2.53%** 2.44%
Ratio of net investment income/(loss) to average
net assets ...................................... (0.63)%** (0.13)% (0.63)%** (0.13)%
Portfolio turnover rate........................... 31% 81% 31% 81%
Ratio of operating expenses to average net assets
without fees reduced by credits allowed by the
custodian ....................................... 2.53%**(a) N/A 2.53%**(a) N/A
Ratio of operating expenses to average net assets
without fee waivers and/or fees reduced by
credits allowed by the custodian ................ 2.53%**(a) 2.44% 2.53%**(a) 2.44%
Net investment income/(loss) per share without fee
waivers and/or fees reduced by credits allowed by
the custodian ................................... $(0.03) $(0.17) $(0.03) $(0.17)
- --------------
* The Fund commenced operations on July 18, 1990. On July 1, 1994 the Fund
commenced selling Class B and Class S shares in addition to Class A shares.
Those shares in existence prior to July 1, 1994 were designated Class A
shares.
** Annualized.
+ Total return represents aggregate total return for the periods indicated
and does not reflect any applicable sales charges. The total returns would
have been lower if certain fees had not been waived by the investment
advisor, administrator and/or distributor or if fees had not been reduced
by credits allowed by the custodian.
++ Per share numbers have been calculated using the average shares method,
which more appropriately presents the per share data for the period since
the use of the undistributed income method did not accord with results of
operations.
+++ See Note 2 of the financial statements.
(a) The ratio includes custodian fees before reduction by credits allowed by
the custodian as required by amended disclosure requirements effective
September 1, 1995.
</TABLE>
<PAGE>
FINANCIAL HIGHLIGHTS
TARGET MATURITY 2002 FUND
FOR A FUND SHARE OUTSTANDING THROUGH EACH PERIOD
CLASS A SHARES
-----------------------------
SIX MONTHS
ENDED PERIOD
12/31/95 ENDED
(UNAUDITED) 06/30/95*
----------- ---------
Net asset value, beginning of period ............ $10.78 $10.00
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................... 0.26 0.12
Net realized and unrealized gain on investments . 0.53 0.66
------ ------
Total from investment operations ................ 0.79 0.78
LESS DISTRIBUTIONS:
Dividends from net investment income ............ (0.39) --
------ ------
Total distributions ............................. (0.39) --
------ ------
Net asset value, end of period .................. $11.18 $10.78
====== ======
TOTAL RETURN+ 7.33% 7.80%
====== ======
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL DATA:
Net assets, end of period (in 000's) ............ $3,462 $2,626
Ratio of operating expenses to average net
assets ......................................... 0.60%** 0.74%**
Ratio of net investment income to average net
assets ........................................ 5.57%** 5.22%**
Portfolio turnover rate ......................... 0% 0%
Ratio of operating expenses to average net
assets without fees reduced by credits allowed
by the custodian .............................. 0.70%**(a) N/A
Ratio of operating expenses to average net assets
without fee waivers, expenses absorbed and/or
fees reduced by credits allowed by the
custodian ...................................... 2.40%**(a) 4.71%**
Net investment income per share without fee
waivers, expenses absorbed and/or fees reduced
by credits allowed by the custodian ............ $0.18 $0.03
- --------------
* The Fund commenced operations on March 20, 1995.
** Annualized.
+ Total return represents aggregate total return for the period indicated and
does not reflect any applicable sales charges. The total return would have
been lower if certain fees had not been waived and/or expenses absorbed by
the investment advisor and administrator or if fees had not been reduced
by credits allowed by the custodian.
(a) The ratio includes custodian fees before reduction by credits allowed by
the custodian as required by amended disclosure requirements effective
September 1, 1995.
<PAGE>
PORTFOLIO OF INVESTMENTS
GLOBAL MONEY FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
CERTIFICATES OF DEPOSIT -- (YANKEE) -- 33.1%
$ 2,500,000 Banque Nationale de Paris,
5.790% due 01/26/1996 ........................ $ 2,500,000
6,000,000 Canadian Imperial Bank of Commerce,
5.800% due 01/18/1996 ........................ 6,000,000
7,000,000 Commerzbank,
5.740% due 02/06/1996 ........................ 7,000,741
7,000,000 Fuji Bank, Ltd.,
6.120% due 01/17/1996 ........................ 7,000,000
7,000,000 Industrial Bank of Japan,
6.300% due 02/23/1996 ........................ 7,001,651
5,000,000 National Australia Bank,
5.750% due 10/02/1996 ........................ 4,995,315
5,000,000 National Westminster Bank USA,
5.720% due 02/06/1996 ........................ 5,000,704
8,000,000 Societe Generale, New York,
5.770% due 02/05/1996 ........................ 8,000,000
Sumitomo Bank, Ltd.:
6,000,000 5.990% due 01/16/1996 ........................ 6,000,098
2,000,000 6.120% due 01/19/1996 ........................ 2,000,040
------------
Total Certificates of Deposit -- (Yankee)
(Cost $55,498,549) ........................... 55,498,549
------------
COMMERCIAL PAPER -- (DOMESTIC) -- 31.9%
7,000,000 Abbott Laboratories,
5.820% due 01/04/1996++ ................... 6,996,616
2,000,000 Associate Corporation of North America,
5.690% due 02/01/1996++ ................... 1,990,201
8,500,000 Bank of New York,
5.830% due 01/18/1996++ ................... 8,476,599
6,000,000 Ford Motor Credit Company,
5.850% due 01/05/1996++ ................... 5,996,100
8,500,000 General Electric Capital Corporation,
5.790% due 01/30/1996++ ................... 8,460,355
7,700,000 Georgia Power Company,
5.670% due 02/06/1996++ ................... 7,656,341
6,000,000 Nations Bank Corporation,
5.350% due 06/12/1996++ ................... 5,854,658
8,000,000 Pfizer Inc.,
5.650% due 02/05/1996++ ................... 7,956,056
------------
Total Commercial Paper -- (Domestic)
(Cost $53,386,926) ........................... 53,386,926
------------
U.S. GOVERNMENT AGENCY DISCOUNT NOTES -- 19.0%
Federal Home Loan Bank (FHLB):
1,810,000 5.480% due 01/22/1996++ ................... 1,804,232
9,890,000 5.487% due 01/22/1996++ ................... 9,858,482
5,000,000 Federal Home Loan Mortgage Corporation (FHLMC),
5.536% due 01/16/1996++ ................... 4,988,500
Federal National Mortgage Association (FNMA):
4,755,000 5.682% due 01/19/1996++ ................... 4,741,567
10,000,000 5.467% due 01/23/1996++ ................... 9,966,633
450,000 5.530% due 01/31/1996++ ................... 447,938
------------
Total U.S. Government Agency Discount Notes
(Cost $31,807,352) ........................... 31,807,352
------------
MEDIUM-TERM NOTES -- 7.4%
Federal National Mortgage Association (FNMA):
3,000,000 5.600% due 11/01/1996 ....................... 2,995,925
4,000,000 5.370% due 12/18/1996 ....................... 3,994,091
2,000,000 5.300% due 12/26/1996 ....................... 1,995,829
2,000,000 Society National Bank,
6.300% due 05/09/1996 ....................... 1,999,865
1,400,000 Westdeutsche Landesbank,
6.750% due 03/13/1996 ....................... 1,400,141
------------
Total Medium-Term Notes
(Cost $12,385,851) .......................... 12,385,851
------------
COMMERCIAL PAPER -- (FOREIGN) -- 6.4%
5,000,000 Electric de France,
4.675% due 04/04/1996++ .................. 4,926,759
6,000,000 Ontario Hydro,
5.620% due 04/09/1996++ .................. 5,907,270
------------
Total Commercial Paper -- (Foreign)
(Cost $10,834,029) .......................... 10,834,029
------------
CORPORATE BOND -- 1.2% (Cost $2,000,000)
2,000,000 Boatmens First National Bank,
5.924% due 06/12/1996(+) ................... 2,000,000
------------
U.S. TREASURY BILLS -- 0.8%
39,000 5.033% due 03/21/1996++ ..................... 38,547
900,000 5.450% due 07/25/1996++ ..................... 871,933
415,000 5.030% due 10/17/1996++ ..................... 398,184
------------
Total U.S. Treasury Bills
(Cost $1,308,664) ............................ 1,308,664
------------
TOTAL INVESTMENTS (COST $167,221,371*)................ 99.8% 167,221,371
OTHER ASSETS AND LIABILITIES (NET) ................... 0.2 263,733
----- ------------
NET ASSETS ........................................... 100.0% $167,485,104
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Variable rate security. The interest rate shown reflects the rate
currently in effect.
++ Rate represents annualized yield at date of purchase.
See Notes To Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
U.S. GOVERNMENT MONEY FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 85.0%
STUDENT LOAN MARKETING ASSOCIATION (SLMA) -- 27.9%
$8,590,000 5.500% due 08/22/1996+ ........................ $ 8,602,469
5,000,000 5.400% due 11/20/1997+ ........................ 5,005,920
-----------
Total SLMAs (Cost $13,608,389) ................... 13,608,389
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA) -- 25.3%
6,530,000 6.460% due 03/27/1996 ............................ 6,539,891
2,000,000 5.210% due 04/04/1997+ ........................ 1,998,823
2,400,000 Discount Note, 5.550% due 02/13/1996++ ........ 2,384,090
1,400,000 Discount Note, 5.530% due 02/20/1996++ ........ 1,389,247
-----------
Total FNMAs (Cost $12,312,051) ................... 12,312,051
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC) -- 19.3%
500,000 6.450% due 04/08/1996 ............................ 499,909
8,000,000 Discount Note, 5.550% due 02/20/1996++ ........ 7,938,333
1,000,000 Discount Note, 5.910% due 05/01/1996++ ........ 980,236
-----------
Total FHLMCs (Cost $9,418,478) ................... 9,418,478
-----------
FEDERAL HOME LOAN BANK (FHLB) -- 6.4%
(Cost $3,099,505)
3,100,000 Discount Note, 5.750% due 01/02/1996++ ........ 3,099,505
-----------
FEDERAL FARM CREDIT BANK (FFCB) -- 6.1%
1,000,000 6.760% due 02/28/1996 ............................ 1,000,045
2,000,000 5.510% due 06/20/1996+ ........................ 1,999,530
-----------
Total FFCBs (Cost $2,999,575) .................... 2,999,575
-----------
TOTAL INVESTMENTS (COST $41,437,998*) ................. 85.0% 41,437,998
OTHER ASSETS AND LIABILITIES (NET) .................... 15.0 7,302,712
----- -----------
NET ASSETS ............................................ 100.0% $48,740,710
===== ===========
- --------------
* Aggregate cost for federal tax purposes.
+ Variable rate securities payable upon not more than seven calender days'
notice. The interest rate shown reflects the rate currently in effect.
++ Rate represents annualized yield at date of purchase.
See Notes To Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
CALIFORNIA MONEY FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
MUNICIPAL BONDS AND NOTES -- 99.3%
CALIFORNIA -- 99.3%
Anaheim, IDR:
$2,400,000 Heat and Control Inc., Series 95A,
5.450% due 11/01/2025++ ...................... $2,400,000
2,400,000 JMS Family Partnership, Series 95A, 5.450% due
10/01/2025++ ................................. 2,400,000
1,400,000 Big Bear Lake, IDR, Southwest Gas,
Series 93A,
5.050% due 12/01/2028++ ...................... 1,400,000
2,240,000 California Housing Finance Agency, SFMR, Home
Mortgage, Series 15A,
5.250% due 08/01/2025++ ...................... 2,240,000
California Pollution Control Financing Authority,
Solid Waste Revenue:
2,000,000 Colmac Energy, Series 90A,
5.050% due 12/01/2016++ ...................... 2,000,000
1,900,000 Western Waste Industries, Series 94A, 5.200% due
10/01/2006++ ................................. 1,900,000
1,000,000 California State, Economic Development Authority,
IDR, National R.V. Inc.,
5.750% due 12/01/2020++ ...................... 1,000,000
California Statewide Communities Project, IDR:
1,985,000 Chino Basin Municipal Water, Series 90, 5.400%
due 08/01/2010++ ............................. 1,985,000
1,520,000 Lorber Industries, Series 92,
5.550% due 06/01/1998++ ...................... 1,520,000
400,000 Irvine Ranch, Municipal Water District,
Series 93A, 6.000% due 05/01/2009++ .......... 400,000
2,500,000 Los Angeles County, TRAN, Series 95,
4.500% due 07/01/1996 ........................... 2,508,376
300,000 Oceanside, MFHR, Riverview Springs,
Series 90A, 5.600% due 07/01/2020++ .......... 300,000
2,000,000 Orange County, COP, Florence Crittendon Services,
Series 90, 5.000% due 03/01/2016++ ........... 2,000,000
4,200,000 Orange County, Irvine Coast Assessment District
No. 88-1, 6.500% due 09/02/2018+ ............. 4,200,000
4,700,000 Orange County, Municipal Water District, Water
Facilities, Allen-McColloch, Series 92A,
5.200% due 07/01/2006++ ...................... 4,700,000
5,000,000 San Bernadino County, GO, TRAN, Series 95, 4.500%
due 07/05/1996 ................................. 5,012,460
2,030,000 San Francisco City and County, IDR, Hoefer
Scientific, Series 92A,
5.800% due 08/01/2007++ ...................... 2,030,000
2,500,000 Santa Clara, Unified School District, GO, TRAN,
Series 95, 4.500% due 07/10/1996 ................ 2,506,267
2,875,000 Santa Cruz County, IDR, Fixed Wilson Entities
Ltd., Series 93, 5.350% due 11/01/2018++ ..... 2,875,000
1,000,000 Stockton, MFHR, Mariners Pointe Association,
Series 94A, 4.900% due 09/01/2018++ .......... 1,000,000
2,400,000 Vallejo, IDR, Meyer Cookware, Series 93A, 5.550%
due 12/01/2023++ ............................. 2,400,000
1,420,000 Ventura, Unified School District, GO, TRAN, Series
95, 4.750% due 07/05/1996 ....................... 1,425,170
----------
TOTAL INVESTMENTS (COST $48,202,273*) ................. 99.3% 48,202,273
OTHER ASSETS AND LIABILITIES (NET) .................... 0.7 357,267
----- -----------
NET ASSETS ............................................ 100.0% $48,559,540
===== ===========
- --------------
* Aggregate cost for federal tax purposes.
+ Variable rate demand notes payable upon not more than one business day's
notice. The interest rate shown reflects the rate currently in effect.
++ Variable rate demand notes payable upon not more than seven calendar days'
notice. The interest rate shown reflects the rate currently in effect.
- -----------------------------------------------
GLOSSARY OF TERMS
COP -- Certificates of Participation
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue
MFHR -- Multi-family Housing Revenue
SFMR -- Single Family Mortgage Revenue
TRAN -- Tax and Revenue Anticipation Note
- -----------------------------------------------
See Notes To Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
SHORT TERM HIGH QUALITY BOND FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
MORTGAGE-BACKED SECURITIES -- 28.6%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) -- 19.9%
$ 330,674 #038720, Seasoned,
11.000% due 02/15/2010 ......................... $ 373,727
295,332 #130183, Seasoned,
11.000% due 05/15/2015 ......................... 334,705
289,048 #131917, Seasoned,
11.000% due 10/15/2015 ......................... 327,583
161,906 #132833, Seasoned,
11.000% due 12/15/2015 ......................... 183,492
111,308 #139704, Seasoned,
11.000% due 11/15/2015 ......................... 126,148
260,837 #140835, Seasoned,
11.000% due 11/15/2015 ......................... 295,611
120,080 #189482, Seasoned,
11.000% due 04/15/2020 ......................... 136,089
410,531 #291375, Seasoned,
11.000% due 08/15/2020 ......................... 465,263
509,478 #405486,
8.000% due 09/15/2010 .......................... 531,742
1,177,583 #780060,
8.000% due 02/15/2025 .......................... 1,227,689
1,185,050 #780081, Seasoned,
10.000% due 02/15/2025 ......................... 1,311,483
855,861 #780141, Seasoned,
10.000% due 12/15/2020 ......................... 941,982
49,351 #780160,
8.000% due 05/15/2010 .......................... 51,508
1,500,000 Generic, 30 Year, TBA, Seasoned,
9.000% due 08/15/2025 .......................... 1,599,375
-----------
Total GNMAs (Cost $7,774,474) .................... 7,906,397
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) -- 4.4%
7 Year Balloon:
775,692 #250235,
8.500% due 02/01/2002 .......................... 798,381
1,014,615 #281187,
5.000% due 04/01/2001 .......................... 969,049
-----------
Total FNMAs (Cost $1,766,513) .................... 1,767,430
-----------
ADJUSTABLE RATE MORTGAGE-BACKED SECURITIES
(ARM) -- 2.2%
Federal National Mortgage Association:
444,150 #1124571,
7.710% due 11/01/2022+ ...................... 451,714
423,805 #152205,
7.338% due 01/01/2019+ ...................... 432,942
-----------
Total ARMs (Cost $882,075) ....................... 884,656
-----------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) -- 2.1% (Cost $801,961)
834,989 #G50157, GOLD,
5.000% due 05/01/1999 .......................... 820,936
-----------
Total Mortgage-Backed Securities
(Cost $11,225,023) ............................. 11,379,419
-----------
CORPORATE NOTES - 21.9%
1,000,000 Bayerische Landesbank, MTN,
(Inverse Floater),
5.820% due 12/29/1997+ ...................... 1,017,500
1,000,000 Capital One Bank Corporation, MTN,
8.625% due 01/15/1997 .......................... 1,027,900
700,000 General Motors Acceptance Corporation, MTN,
7.850% due 11/17/1997 .......................... 727,923
330,000 Lockheed Corporation,
5.875% due 03/15/1998 .......................... 331,122
Lyondell Petrochemical Company:
70,000 9.950% due 06/01/1996 .......................... 71,116
175,000 8.250% due 03/15/1997 .......................... 179,515
1,225,000 10.000% due 06/01/1999 ......................... 1,371,326
Taubman Realty Corporation, MTN:
1,000,000 7.400% due 06/10/2002 .......................... 999,450
500,000 7.500% due 06/15/2002 .......................... 502,250
The Money Store, Inc.:
200,000 9.160% due 09/09/1997+++ ..................... 207,900
400,000 9.160% due 09/09/1997+++ ..................... 415,800
1,500,000 7.630% due 04/15/1998+++ ..................... 1,530,075
300,000 Time Warner, Inc.,
7.450% due 02/01/1998 .......................... 308,355
-----------
Total Corporate Notes
(Cost $8,477,752) .............................. 8,690,232
-----------
ASSET-BACKED SECURITIES -- 21.3%
650,000 Discover Card Trust, 1993-AB,
6.800% due 08/16/2000 .......................... 665,230
EquiCredit:
32,860 1993-4-B1,
5.650% due 12/15/2008 .......................... 32,295
1,041,526 1994-4-A1,
8.300% due 03/15/2002 .......................... 1,048,035
900,000 Green Tree Financial Corporation, 1995-1-B2,
9.200% due 06/15/2025 .......................... 996,183
454,408 Green Tree NIM, 1994-B, Class A,
7.850% due 07/15/2004 .......................... 463,354
351,740 Green Tree Security Mortgage Trust, 1994-A,
6.900% due 02/15/2004 .......................... 351,410
200,000 Household Affinity Credit Card, 1993,
4.950% due 03/15/1999 .......................... 198,624
Merrill Lynch Mortgage Investment Trust:
310,157 1991-B-A,
9.200% due 04/15/2011 .......................... 318,299
347,745 1991-I-A,
7.650% due 01/15/2012 .......................... 353,831
1,040,365 1992-B-A4,
7.850% due 04/15/2012 .......................... 1,064,418
1,357,363 Mid-State Trust, Series 4, Class A,
8.330% due 04/01/2030 .......................... 1,474,052
Standard Credit Card Trust:
125,000 90-3B,
9.850% due 07/10/1998 .......................... 132,070
200,000 94-1A,
4.650% due 03/07/1999 .......................... 198,250
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
SHORT TERM HIGH QUALITY BOND FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
ASSET-BACKED SECURITIES -- (CONTINUED)
The Money Store, Inc.:
$ 85,367 1993-D-A2,
5.075% due 02/15/2018 .......................... $ 83,606
1,051,849 1994-D-A1,
7.625% due 10/15/2004 .......................... 1,054,314
-----------
Total Asset-Backed Securities
(Cost $8,264,002) .............................. 8,433,971
-----------
COLLATERALIZED MORTGAGE OBLIGATIONS -- 14.0%
75,000 Chemical Mortgage Securities Inc.,
1993-1-A4,
7.450% due 02/25/2023 .......................... 76,148
Countrywide Funding Corporation:
118,638 1994-1-A3,
6.250% due 03/25/2024 .......................... 115,969
75,000 1994-A-A3,
6.750% due 03/25/2024 .......................... 75,164
170,000 1994-C-A5,
6.375% due 03/25/2024 .......................... 168,778
Federal Home Loan Mortgage Corporation (FHLMC),
REMIC, P/O:
818,125 #1719-C,
Zero coupon due 04/15/1999 ..................... 721,484
406,113 #167-A,
Zero coupon due 05/01/1999 ..................... 357,887
1,296,098 Federal National Mortgage Association (FNMA),
REMIC, 1992-121-C,
7.000% due 07/25/1999 .......................... 1,299,338
1,106,302 Fund America Investors Corporation,
1991-1-H,
7.950% due 02/20/2020 .......................... 1,121,514
662,929 General Electric Capital Mortgage Association,
1994-27-A1,
6.500% due 07/25/2024 .......................... 665,000
498,573 Prudential Home Mortgage, Series 1992-47,
7.500% due 01/25/2023 .......................... 497,950
346,153 Ryland Acceptance Corporation,
8.950% due 08/20/2019 .......................... 356,859
100,000 Sears Mortgage Securities Corporation,
1993-11-T4,
7.125% due 11/25/2020 .......................... 100,500
-----------
Total Collateralized Mortgage Obligations
(Cost $5,514,745) .............................. 5,556,591
-----------
U.S. TREASURY OBLIGATIONS -- 9.5%
U.S. TREASURY NOTES -- 2.0%
400,000 5.250% due 07/31/1998 .......................... 400,000
400,000 5.875% due 08/15/1998 .......................... 406,312
-----------
Total U.S. Treasury Notes (Cost $798,053) ........ 806,312
-----------
U.S. TREASURY STRIPS -- 7.5%
1,075,000 Zero coupon due 02/15/1999 ..................... 913,557
3,200,000 Zero coupon due 02/15/2004 ..................... 2,040,352
-----------
Total U.S. Treasury Strips (Cost $2,875,953) ..... 2,953,909
-----------
Total U.S. Treasury Obligations
(Cost $3,674,006) .............................. 3,760,221
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 1.8%
Federal National Mortgage Association (FNMA):
425,000 (Inverse Floater),
9.452% due 12/29/1997+ ...................... 456,875
250,000 Principal Strip, Non-income producing until
08/21/1996,
Zero coupon due 08/21/2001 ..................... 241,563
-----------
Total U.S. Government Agency Obligations (Cost
$679,003) ...................................... 698,438
-----------
COMMERCIAL PAPER -- 6.2%
1,500,000 General Electric Capital Corporation,
5.850% due 01/02/1996++ ...................... 1,500,000
952,000 Prudential Securities,
5.900% due 01/02/1996++ ...................... 952,000
-----------
Total Commercial Paper (Cost $2,452,000) ......... 2,452,000
-----------
NUMBER OF EXPIRATION STRIKE
CONTRACTS DATE PRICE
--------- ---------- ------
CALL OPTIONS PURCHASED ON U.S. TREASURY
BOND FUTURES -- 0.1%
11 U.S. Treasury Bond Call 02/17/1996 $120.00 28,016
17 U.S. Treasury Bond Call 02/17/1996 $122.00 24,703
-----------
Total Call Options Purchased on U.S. Treasury
Bond Futures (Cost $41,572) ................... 52,719
-----------
TOTAL INVESTMENTS (COST $40,328,103*) ............ 103.4% 41,023,591
OTHER ASSETS AND LIABILITIES (NET) ............... (3.4) (1,348,242)
----- -----------
NET ASSETS ....................................... 100.0% $39,675,349
===== ===========
- --------------
* Aggregate cost for federal tax purposes.
+ Variable rate security. The interest rate shown reflects the rate
currently in effect.
++ Rate represents annualized yield at date of purchase.
+++ Security exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
- ---------------------------------------------------------
GLOSSARY OF TERMS
BALLOON -- Five- and seven-year mortgages with larger
dollar amounts of payments falling due in
the later years of the obligation
GOLD -- Payments are on accelerated 45-day payment
cycle instead of 75-day cycle
MTN -- Medium Term Note
P/O -- Principal Only
REMIC -- Real Estate Mortgage Investment Conduit
STRIP -- Separate trading of registered interest and
principal of securities
TBA -- To Be Announced
- ---------------------------------------------------------
See Notes To Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
SHORT TERM GLOBAL GOVERNMENT FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
FOREIGN BONDS -- 72.9%
GERMAN DEUTSCHE MARK BONDS -- 10.0%
Federal Republic of Germany:
DEM 4,500,000 6.625% due 01/20/1998 ................... $ 3,305,962
6,700,000 6.000% due 02/20/1998 ................... 4,868,480
-----------
Total German Deutsche Mark Bonds
(Cost $7,155,988) ....................... 8,174,442
-----------
DANISH KRONER BONDS -- 9.6%
Kingdom of Denmark:
DKK 8,600,000 5.250% due 08/10/1996 ................... 1,552,894
10,900,000 9.000% due 11/15/1996 ................... 2,032,979
22,000,000 9.000% due 11/15/1998 ................... 4,318,387
-----------
Total Danish Kroner Bonds
(Cost $7,383,140) ....................... 7,904,260
-----------
ITALIAN LIRA BONDS -- 9.5%
Italian Treasury Bonds:
ITL 5,200,000,000 8.500% due 08/01/1997 ................... 3,206,557
7,500,000,000 8.500% due 01/01/1999 ................... 4,544,924
-----------
Total Italian Lira Bonds
(Cost $7,499,402) ....................... 7,751,481
-----------
NETHERLANDS GUILDER BONDS -- 8.3%
Government of Netherlands:
NLG 8,300,000 6.250% due 07/15/1998 ................... 5,417,991
2,000,000 7.500% due 06/15/1999 ................... 1,358,385
-----------
Total Netherlands Guilder Bonds
(Cost $6,597,106) ....................... 6,776,376
-----------
SWEDISH KRONA BOND -- 6.3% (Cost $4,431,314)
SEK 32,000,000 Kingdom of Sweden,
11.000% due 01/21/1999 .................. 5,194,663
-----------
AUSTRALIAN DOLLAR BOND AND NOTE -- 6.1%
AUD 4,645,000 Commonwealth of Australia,
12.500% due 01/15/1998 .................. 3,783,137
1,700,000 New South Wales Treasury Note,
7.500% due 02/01/1998 ................... 1,265,168
-----------
Total Australian Dollar Bond and Note
(Cost $4,956,464) ....................... 5,048,305
-----------
CANADIAN DOLLAR BONDS -- 5.5%
CAD 2,440,000 Government of Canada,
9.500% due 10/01/1998 ................... 1,936,630
1,500,000 Province of Ontario,
10.625% due 07/15/1998 .................. 1,201,758
1,800,000 Province of Quebec,
8.000% due 03/30/1998 ................... 1,367,090
-----------
Total Canadian Dollar Bonds
(Cost $4,418,721) ....................... 4,505,478
-----------
GREAT BRITAIN POUND STERLING NOTE -- 5.2%
(Cost $4,237,170)
GBP 2,655,000 United Kingdom Treasury Note,
8.750% due 09/01/1997 ................... 4,282,990
-----------
EUROPEAN CURRENCY UNIT BONDS -- 5.0%
XEU 1,125,000 European Investment Bank,
10.000% due 02/14/1997 .................. 1,514,416
2,000,000 Kingdom of Norway,
9.000% due 07/01/1996 ................... 2,607,880
-----------
Total European Currency Unit Bonds (Cost
$4,154,235) ............................. 4,122,296
-----------
SPANISH PESETA BOND -- 4.6% (Cost $3,714,100)
ESP 440,000,000 Government of Spain,
11.450% due 08/30/1998 .................. 3,809,827
-----------
FRENCH FRANC BOND -- 2.8% (Cost $2,323,294)
FRF 11,000,000 Government of France,
8.500% due 03/12/1997 ................... 2,336,134
-----------
Total Foreign Bonds
(Cost $56,870,934) ...................... 59,906,252
-----------
CORPORATE BONDS AND NOTES -- 8.5%
$ 5,000,000 Home Savings of America, Sub. Notes,
10.500% due 06/12/1997 .................. 5,044,750
2,000,000 USAT Holdings,
9.050% due 05/15/1998+++ ................ 1,965,000
-----------
Total Corporate Bonds and Notes
(Cost $7,207,567) ....................... 7,009,750
-----------
ASSET-BACKED COLLATERALIZED MORTGAGE
OBLIGATIONS -- 5.5%
168,739 General Electric Capital Corporation,
1991-5PTA,
8.500% due 08/25/2006 ................... 171,270
3,349,909 Green Tree Security Mortgage Trust, 1994-A,
6.900% due 02/15/2004 ................... 3,346,760
416,507 Household Finance Corporation,
1992-2SRS A3,
5.250% due 10/20/2007 ................... 413,383
346,788 Merrill Lynch Mortgage Investors
Corporation, 1992-B A3,
7.850% due 04/15/2012 ................... 354,806
187,771 Old Stone Credit Corporation,
1992-A4,
6.550% due 11/25/2007 ................... 189,121
-----------
Total Asset-Backed Collateralized Mortgage
Obligations (Cost $4,464,519) ........... 4,475,340
-----------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 3.8%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) -- 2.7% (Cost $2,122,342)
1,966,602 Pass-through certificates,
10.000% due 03/15/2018-02/15/2021** 2,171,737
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
SHORT TERM GLOBAL GOVERNMENT FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- (CONTINUED)
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) -- 1.1% (Cost $917,460)
$ 899,087 FNMA #141461,
7.672% due 11/01/2021+ ................. $ 919,739
-----------
Total U.S. Government Agency Obligations
(Cost $3,039,802) ....................... 3,091,476
-----------
INDEXED NOTE -- 2.4% (Cost $2,000,000)
2,000,000 Bayerische Landesbank, Giro Zentrale,
(Coupon rate is directly linked to the
Czech Koruna),
10.200% due 01/16/1996 .................. 1,995,800
-----------
COMMERCIAL PAPER -- 6.2%
4,075,000 Ford Motor Credit Company,
6.000% due 01/02/1996++ ................. 4,075,000
1,000,000 General Electric Capital Corporation,
5.850% due 01/02/1996++ ................. 1,000,000
-----------
Total Commercial Paper
(Cost $5,075,000) ....................... 5,075,000
-----------
EXPIRATION STRIKE
DATE PRICE
---------- ------
OPTIONS PURCHASED -- 0.6%
PUT OPTIONS PURCHASED ON FOREIGN CURRENCY -- 0.4%
AUD 10,125,865 Australian Dollar Put 01/08/1996 $ 0.688 10
CAD 4,274,565 Canadian Dollar Put .. 01/09/1996 1.341 54,714
ITL 6,800,000,000 Italian Lira
Put ................ 01/22/1996 1,627.750 3,808
DEM 8,595,000 German Deutsche Mark
Put ................ 02/01/1996 1.433 78,680
FRF 25,000,000 French Franc Put ..... 02/08/1996 5.000 25,000
DEM 8,600,000 German Deutsche Mark
Put ................ 02/16/1996 1.495 20,872
SEK 29,200,000 Swedish Krona Put .... 02/26/1996 6.712 63,364
DEM 8,490,000 German Deutsche Mark
Put ................ 04/19/1996 1.489 64,651
FRF 27,000,000 French Franc Put ..... 05/30/1996 5.108 52,731
-----------
Total Put Options Purchased on
Foreign Currency (Cost $758,656) ......... 363,830
-----------
NUMBER OF EXPIRATION STRIKE VALUE
CONTRACTS DATE PRICE (NOTE 2)
--------- ---------- ------ --------
CALL OPTIONS PURCHASED ON FOREIGN INTEREST RATE
FUTURES - 0.2%
50 Euro Dollar Call ..... 03/31/1996 $94.75 $ 10,000
25 Euro Dollar Call ..... 06/30/1996 94.75 19,375
50 Euro Dollar Call ..... 09/30/1996 94.75 56,250
25 Euro Dollar Call ..... 12/31/1996 94.50 40,000
-----------
Total Call Options Purchased on
Foreign Interest Rate Futures
(Cost $130,250) .......................... 125,625
-----------
Total Options Purchased
(Cost $888,906) .......................... 489,455
-----------
TOTAL INVESTMENTS (COST $79,546,728*) ................. 99.9% 82,043,073
-----------
PRINCIPAL
AMOUNT
- ---------
OPTIONS WRITTEN -- (0.4)%
CALL OPTIONS WRITTEN ON FOREIGN CURRENCY -- (0.4)%
AUD 2,765,865 Australian Dollar
Call ............... 01/08/1996 0.715 (74,604)
ITL 6,800,000,000 Italian Lira
Call ............... 01/22/1996 1,578.500 (16,048)
XEU 3,311,500 European Currency Unit
Call .............. 01/25/1996 1.302 (24,132)
AUD 4,300,000 Australian Dollar Call 01/31/1996 0.745 (21,586)
DEM 4,350,000 German Deutsche Mark
Call ............... 02/08/1996 1.350 (2,610)
SEK 29,200,000 Swedish Krona Call ... 02/26/1996 6.407 (15,476)
GBP 2,200,000 Great Britain Pound
Sterling Call ...... 04/26/1996 1.533 (90,090)
FRF 27,000,000 French Franc Call .... 05/30/1996 4.770 (82,323)
-----------
Total Call Options Written on
Foreign Currency (Premiums
received $403,967) ....................... (326,869)
-----------
OTHER ASSETS AND LIABILITIES (NET) .................... 0.5 416,674
----- -----------
NET ASSETS ............................................ 100.0% $82,132,878
===== ===========
- --------------
* Aggregate cost for federal tax purposes.
** A portion of this security is pledged as collateral for options.
+ Variable rate security. The interest rate shown reflects the rate
currently in effect.
++ Rate represents annualized yield at date of purchase.
+++ Security exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
SHORT TERM GLOBAL GOVERNMENT FUND
DECEMBER 31, 1995 (UNAUDITED)
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
CONTRACTS TO RECEIVE NET UNREALIZED
----------------------------------------------- APPRECIATION/
EXPIRATION VALUE IN IN EXCHANGE (DEPRECIATION)
DATE LOCAL CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- ------------------- ----------- ----------- --------------
01/17/1996 DEM 12,209,400 8,522,862 8,400,000 $ 122,862
01/17/1996 DEM 14,137,355 9,868,685 9,907,741 (39,056)
01/17/1996 DEM 1,927,955 1,345,823 1,407,677 (61,854)
01/29/1996 DEM 32,845,120 22,944,323 23,068,923 (124,600)
01/29/1996 DEM 14,077,360 9,833,896 10,105,786 (271,890)
01/29/1996 DEM 10,167,760 7,102,802 7,426,059 (323,257)
01/29/1996 DEM 6,987,000 4,880,846 5,000,000 (119,154)
02/20/1996 XEU 5,081,208 6,503,680 6,546,401 (42,721)
02/22/1996 BEF 161,500,000 5,503,826 5,401,193 102,633
02/28/1996 NLG 3,605,026 2,254,608 2,181,559 73,049
------------
$ (683,988)
------------
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
CONTRACTS TO DELIVER NET UNREALIZED
----------------------------------------------- APPRECIATION/
EXPIRATION VALUE IN IN EXCHANGE (DEPRECIATION)
DATE LOCAL CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ---------- ------------------- ----------- ----------- --------------
01/05/1996 FRF 12,030,431 2,454,850 2,426,371 $ (28,479)
01/17/1996 DEM 14,137,355 9,868,685 9,397,963 (470,722)
01/17/1996 DEM 14,137,355 9,868,685 9,900,109 31,424
01/26/1996 DKK 34,000,000 6,127,166 6,303,300 176,134
01/29/1996 DEM 32,845,120 22,944,323 22,059,991 (884,332)
01/29/1996 DEM 38,786,713 27,094,889 27,450,014 355,125
01/29/1996 DEM 5,045,400 3,524,520 3,610,950 86,430
01/29/1996 ESP 446,487,288 3,668,530 3,641,821 (26,709)
02/06/1996 SEK 7,460,872 1,119,742 1,120,285 543
02/20/1996 XEU 5,081,208 6,503,681 6,621,831 118,150
02/21/1996 DKK 12,040,727 2,171,320 2,217,854 46,534
02/22/1996 BEF 202,806,140 6,911,516 6,737,746 (173,770)
02/28/1996 NLG 3,605,026 2,254,608 2,195,175 (59,433)
03/13/1996 CHF 5,082,530 4,442,608 4,235,442 (207,166)
-----------
$(1,036,271)
-----------
Net Unrealized Depreciation of Forward Foreign
Currency Contracts .......................... $(1,720,259)
===========
- --------------------------------------------
GLOSSARY OF TERMS
AUD -- Australian Dollar
BEF -- Belgian Franc
CAD -- Canadian Dollar
CHF -- Swiss Franc
DEM -- German Deutsche Mark
DKK -- Danish Kroner
ESP -- Spanish Peseta
FRF -- French Franc
GBP -- Great Britain Pound Sterling
ITL -- Italian Lira
NLG -- Netherlands Guilder
SEK -- Swedish Krona
XEU -- European Currency Unit
- --------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
U.S. GOVERNMENT FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 115.2%
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) -- 45.5%
$10,236,877 6.500% due 07/01/2023-10/01/2025 ............... $ 10,127,325
8,914,500 7.000% due 04/01/2023-09/01/2025 ............... 8,995,846
14,700,007 7.500% due 05/01/2024-12/01/2025 ............... 15,072,069
4,763,560 8.000% due 09/01/2011-12/01/2024 ............... 4,954,793
4,950,573 8.500% due 10/01/2018-05/01/2025 ............... 5,181,576
1,541,688 8.750% due 08/01/2008 .......................... 1,615,134
19,951,695 9.000% due 12/01/2008-08/01/2022 ............... 21,192,216
1,257,518 9.500% due 06/01/2015-05/01/2017 ............... 1,344,891
509,410 10.500% due 09/01/2009-05/01/2019 .............. 558,861
109,727 10.750% due 12/01/2012 ......................... 120,495
188,722 11.000% due 09/01/2015-02/01/2016 .............. 210,217
228,262 11.750% due 07/01/2013 ......................... 255,567
61,857 12.000% due 01/01/2015 ......................... 70,691
19,000,000 Commitment to Purchase, GOLD, 6.500% ........... 18,798,125
74,000,000 Commitment to Purchase, GOLD, 7.000% ........... 74,670,625
24,000,000 Commitment to Purchase, GOLD, 7.500% ........... 24,705,000
99,346 Series 1551, Class 1551-H, Multiclass,
1155.800% due 05/15/2001 (I/O) ............... 740,653
5,585,000 Series 93, Class 93-H, Multiclass,
8.500% due 11/15/2020** ...................... 6,167,906
16,500,000 Series 138, Class 138-F, Multiclass,
9.650% due 07/15/2021** ...................... 19,016,250
------------
Total FHLMCs (Cost $209,468,269) ............... 213,798,240
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) -- 27.6%
48,566 5.500% due 02/01/2009 .......................... 47,276
4,851,311 7.000% due 06/01/2010-11/01/2010 ............... 4,940,721
9,388,063 7.500% due 04/01/2017-02/01/2025 ............... 9,619,793
13,947,979 8.000% due 05/01/2017-01/01/2025 ............... 14,533,815
45,061,718 8.500% due 01/01/2002-09/01/2025 ............... 47,109,711
5,081,095 9.000% due 06/01/2016-06/01/2021 ............... 5,405,108
12,958,801 10.000% due 03/15/2012-05/01/2022 .............. 14,263,128
184,423 10.500% due 06/01/2020 ......................... 205,401
433,983 11.500% due 03/01/2011-07/01/2015 .............. 492,602
12,000,000 Commitment to Purchase, 7.000% ................. 12,228,750
20,000,000 Commitment to Purchase, 8.500% ................. 20,881,250
------------
Total FNMAs (Cost $126,232,643) ................ 129,727,555
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) -- 17.5%
68,128,981 9.000% due 04/15/2016-06/15/2022** ............. 72,708,824
6,752,168 9.500% due 04/15/2016-11/15/2017 ............... 7,301,474
1,397,663 10.000% due 02/15/2019-12/15/2020 .............. 1,538,902
374,106 10.500% due 09/15/2018-07/15/2020 .............. 418,755
114,825 11.000% due 07/15/2018-12/15/2019 .............. 130,003
------------
Total GNMAs (Cost $80,282,662) ................. 82,097,958
------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA II) -- 11.5%
36,318,834 6.500% due 04/20/2025-05/20/2025 ............... 37,022,693
12,305,130 7.500% due 03/20/2025 .......................... 12,532,036
1,896,170 9.500% due 02/20/2017-03/20/2021 ............... 2,027,936
367,762 10.000% due 07/20/2019 ......................... 402,247
160,073 10.500% due 09/20/2019-11/20/2019 .............. 177,530
1,334,541 11.000% due 06/20/2019-07/20/2020 .............. 1,497,595
84,774 11.500% due 08/20/2019 ......................... 96,218
------------
Total GNMA IIs (Cost $53,037,332) .............. 53,756,255
------------
ADJUSTABLE RATE MORTGAGE-BACKED SECURITIES
(ARM) -- 6.1%
Federal Home Loan Mortgage Corporation:
2,599,925 7.144% due 04/01/2009 ........................ 2,687,672
40,194 6.172% due 04/01/2024 ........................ 41,413
Federal National Mortgage Association:
1,547,017 6.729% due 04/01/2019 ........................ 1,553,792
2,121,839 7.625% due 05/01/2019 ........................ 2,178,195
2,805,052 7.558% due 01/01/2020 ........................ 2,849,764
715,193 7.943% due 07/01/2023 ........................ 730,391
7,272,763 6.656% due 10/01/2024+ ...................... 7,512,546
10,799,222 7.541% due 01/01/2025 ........................ 11,124,926
------------
Total ARMs (Cost $28,376,995) .................. 28,678,699
------------
SMALL BUSINESS ADMINISTRATION (SBA) -- 3.7%
5,000,000 7.350% due 08/01/2005 .......................... 5,307,813
3,000,000 8.500% due 01/01/2015 .......................... 3,295,312
8,757,000 6.850% due 10/01/2015 .......................... 8,928,036
------------
Total SBAs (Cost $16,918,828) .................. 17,531,161
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)
DEBENTURES -- 3.3%
1,000,000 9.550% due 12/10/1997 .......................... 1,077,500
REMIC, Pass-through certificates:
4,000,000 Series 89-28, Class 28-C,
9.500% due 04/25/2004 .......................... 4,517,480
5,000,000 Series 93-4, Class 4-HB,
11.000% due 01/25/2019** ....................... 5,971,850
124,459 Series 90-98, Class 98-K,
949.3846% due 08/25/2020 (I/O) ................. 1,857,011
40,822 Series 90-133, Class 133-K,
1009.500% due 11/25/2020 (I/O) ................. 1,064,590
1,276,712 Series 92-83, Class 83-X,
7.000% due 02/25/2022 .......................... 1,240,007
------------
Total FNMA Debentures
(Cost $15,123,078) ........................... 15,728,438
------------
Total U.S. Government Agency Obligations
(Cost $529,439,807) .......................... 541,318,306
------------
U.S. TREASURY OBLIGATIONS -- 12.0%
U.S. TREASURY NOTES -- 9.3%
780,000 5.750% due 09/30/1997 .......................... 787,067
25,190,000 5.375% due 11/30/1997 .......................... 25,272,035
750,000 7.250% due 02/15/1998 .......................... 779,880
6,200,000 6.125% due 09/30/2000 .......................... 6,386,000
5,060,000 6.250% due 08/31/2000 .......................... 5,225,833
5,250,000 5.875% due 11/15/2005 .......................... 5,368,125
------------
Total U.S. Treasury Notes
(Cost $43,699,187) ........................... 43,818,940
------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
U.S. GOVERNMENT FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
--------- --------
U.S. TREASURY OBLIGATIONS -- (CONTINUED)
U.S. TREASURY BONDS -- 2.7%
$ 6,915,000 8.125% due 08/15/2021 .......................... $ 8,698,584
3,400,000 6.875% due 08/15/2025 .......................... 3,834,554
------------
Total U.S. Treasury Bonds
(Cost $12,451,865) ........................... 12,533,138
------------
Total U.S. Treasury Obligations
(Cost $56,151,052) ........................... 56,352,078
------------
NUMBER OF EXPIRATION STRIKE
CONTRACTS DATE PRICE
--------- ---------- ------
CALL OPTIONS PURCHASED ON U.S. TREASURY
BOND FUTURES -- 0.6%
155 U.S. Treasury Bond Call 02/17/1996 $118.00 612,735
879 U.S. Treasury Bond Call 02/17/1996 112.00 2,458,458
------------
Total Call Options Purchased on U.S.
Treasury Bond Futures
(Cost $1,714,918) ........................... 3,071,193
------------
TOTAL U.S. GOVERNMENT AGENCY, U.S. TREASURY OBLIGATIONS, AND
CALL OPTIONS PURCHASED ON U.S. TREASURY BOND FUTURES
(Cost $587,305,777) ....................................... 600,741,577
------------
PRINCIPAL
AMOUNT
---------
REPURCHASE AGREEMENT -- 3.7% (Cost $17,550,000)
$17,550,000 Agreement with Lehman Brothers Inc.,
5.860% dated 12/28/1995 to be
repurchased at $17,564,284 on
01/02/1996, collateralized by
$17,015,000 U.S. Treasury Note,
6.250% due 08/31/2000 .................... 17,550,000
------------
TOTAL INVESTMENTS (COST $604,855,777*) .......... 131.5% 618,291,577
OTHER ASSETS AND LIABILITIES (NET) ............ (31.5) (148,276,866)
----- ------------
NET ASSETS ...................................... 100.0% $470,014,711
===== ============
- --------------
* Aggregate cost for federal tax purposes.
** A portion or all of this security is pledged as collateral for dollar roll
transactions.
# A portion of this security is pledged as collateral for futures contracts.
+ Variable rate security. The interest rate shown reflects the rate
currently in effect.
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
- --------- ------------
FUTURES CONTRACTS -- LONG POSITION
64 Municipal Bond Index, March 1996 ............... $ 117,696
529 U.S. Treasury Note, Two Year, March 1996 ....... 275,212
673 U.S. Treasury Note, Five Year, March 1996 ...... 480,522
127 U.S. Treasury Note, Ten Year, March 1996 ....... 129,928
------------
Net Unrealized Appreciation of Futures
Contracts -- Long Position ................... $ 1,003,358
============
UNREALIZED
(DEPRECIATION)
--------------
FUTURES CONTRACTS -- SHORT POSITION
487 U.S. Treasury Bond, Thirty Year,
March 1996 ................................... $ (1,148,133)
============
- ------------------------------------------------------
GLOSSARY OF TERMS
GOLD -- Payments are on an accelerated 45-day
payment cycle instead of 75-day cycle
I/O -- Interest Only
REMIC -- Real Estate Mortgage Investment Conduit
- ------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
CORPORATE INCOME FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
CORPORATE BONDS AND NOTES -- 90.9%
AUTOS & TRANSPORTATION -- 17.7%
$ 2,000,000 American Airlines Inc., Pass-through
certificates, Series A,
8.040% due 09/16/2011 ........................ $ 2,117,500
6,030,000 Conrail Inc., Deb.,
9.750% due 06/15/2020 ........................ 8,238,488
Ford Motor Company, Deb.:
3,750,000 8.875% due 01/15/2022 ........................ 4,687,500
8,000,000 8.875% due 11/15/2022 ........................ 9,440,000
14,500,000 General Motors Corporation, Deb.,
9.400% due 07/15/2021 ........................ 18,868,125
8,400,000 Laidlaw Inc., Deb.,
8.250% due 05/15/2023 ........................ 9,523,500
United Air Lines Inc.:
5,000,000 Equipment Trust certificates,
10.850% due 07/05/2014 ....................... 6,350,000
Pass-through certificates:
3,000,000 9.080% due 10/26/2015 ........................ 3,322,500
5,500,000 9.560% due 10/19/2018 ........................ 6,400,625
------------
68,948,238
------------
CONSUMER DISCRETIONARY -- 13.5%
9,775,000 Carnival Corporation, Deb.,
7.200% due 10/01/2023** ...................... 9,897,188
Dayton-Hudson Corporation:
Deb.:
4,500,000 9.875% due 07/01/2020 ........................ 5,900,625
3,000,000 7.875% due 06/15/2023 ........................ 3,165,000
Sinking Fund Deb.:
300,000 9.500% due 10/15/2016 ........................ 315,375
2,000,000 9.250% due 11/15/2016 ........................ 2,105,000
May Department Stores Company, Deb.:
1,500,000 9.875% due 06/15/2021** ...................... 1,895,625
10,100,000 8.375% due 10/01/2022** ...................... 11,248,875
6,500,000 Ogden Corporation, Deb.,
9.250% due 03/01/2022 ........................ 8,060,000
7,760,000 Time Warner, Inc., Deb.,
9.150% due 02/01/2023 ........................ 8,894,900
1,000,000 V.F. Corporation, Note,
9.500% due 05/01/2001 ........................ 1,157,500
------------
52,640,088
------------
MATERIALS & PROCESSING -- 17.0%
2,000,000 AMAX Inc., Note,
9.875% due 06/13/2001 ........................ 2,292,500
Boise Cascade Corporation:
6,351,000 Deb.,
9.450% due 11/01/2009 ........................ 7,946,689
3,000,000 Note,
9.875% due 02/15/2001 ........................ 3,285,000
5,000,000 du Pont (E.I.) de Nemours & Company, Deb.,
8.250% due 01/15/2022 ........................ 5,618,750
3,010,000 Federal Paper Board Company, Deb.,
10.000% due 04/15/2011 ....................... 3,890,425
Georgia-Pacific Corporation, Deb.:
5,000,000 9.875% due 11/01/2021 ........................ 5,900,000
7,000,000 9.500% due 05/15/2022 ........................ 8,155,000
6,000,000 James River Corporation, Deb.,
9.250% due 11/15/2021 ........................ 7,500,000
6,860,000 Praxair, Inc., Deb.,
8.700% due 07/15/2022 ........................ 8,283,450
10,450,000 Tyco Laboratories, Inc., Deb.,
9.500% due 05/01/2022 ........................ 13,323,750
------------
66,195,564
------------
ENERGY -- 15.4%
12,625,000 ANR Pipeline Company, Deb.,
9.625% due 11/01/2021 ........................ 16,570,312
2,850,000 BP America Inc., Guaranteed Deb.,
(British Petroleum Company),
10.000% due 07/01/2018 ....................... 3,199,125
Occidental Petroleum Corporation,
Sr. Deb.:
8,700,000 11.125% due 08/01/2010 ....................... 12,223,500
250,000 11.750% due 03/15/2011 ....................... 264,688
2,500,000 Panhandle Eastern Pipe Line Company, Deb.,
8.625% due 04/15/2025 ........................ 2,900,000
8,500,000 Petro-Canada, Deb.,
9.250% due 10/15/2021 ........................ 10,901,250
5,950,000 Phillips Petroleum Company, Deb.,
9.180% due 09/15/2021 ........................ 6,998,687
5,750,000 Trans-Canada Pipeline Corporation, Deb.,
8.500% due 03/20/2023 ........................ 6,727,500
------------
59,785,062
------------
FINANCIAL SERVICES -- 11.5%
American General Corporation:
2,000,000 9.625% due 02/01/2018 ........................ 2,225,000
3,425,000 Sinking Fund Deb.,
7.500% due 07/15/2025 ........................ 3,686,156
400,000 Banc One Corporation, Sub. Note,
10.000% due 08/15/2010 ....................... 530,000
Barclays North American Capital Corporation,
Capital Note:
1,000,000 10.500% due 12/15/2017** ..................... 1,136,250
9,000,000 9.750% due 05/15/2021** ...................... 10,766,250
1,000,000 Barnett Banks, Florida, Inc., Sub. Note,
10.875% due 03/15/2003 ....................... 1,268,750
1,100,000 First Interstate Bancorp, Sub. Note,
9.125% due 02/01/2004 ........................ 1,300,750
2,000,000 Ford Holdings, Inc., Deb.,
9.375% due 03/01/2020** ...................... 2,597,500
1,000,000 GATX Leasing Corporation, MTN,
10.000% due 03/21/2001 ....................... 1,171,250
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
CORPORATE INCOME FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
CORPORATE BONDS AND NOTES -- (CONTINUED)
FINANCIAL SERVICES -- (CONTINUED)
$ 1,000,000 Mellon Financial Company, Sub. Deb.,
9.750% due 06/15/2001 ........................ $ 1,180,000
NCNB Corporation, Sub. Notes:
4,200,000 9.375% due 09/15/2009 ........................ 5,286,750
10,125,000 10.200% due 07/15/2015** ..................... 13,694,062
------------
44,842,718
------------
PRODUCER DURABLES -- 6.5%
4,000,000 Boeing Company, Deb.,
8.750% due 08/15/2021** ...................... 5,030,000
5,000,000 Caterpillar Inc., Sinking Fund Deb.,
9.750% due 06/01/2019 ........................ 5,731,250
5,000,000 Northrop Grumman Corporation, Deb.,
9.375% due 10/15/2024 ........................ 6,037,500
7,800,000 Textron Inc., Deb.,
8.750% due 07/01/2022 ........................ 8,521,500
------------
25,320,250
------------
UTILITIES -- 6.1%
5,000,000 Louisiana Power & Light Company,
First Mortgage,
8.500% due 07/01/2022 ........................ 5,406,250
5,000,000 Mississippi Power & Light Company,
First and Refundable Mortgage,
8.650% due 01/15/2023 ........................ 5,850,000
5,000,000 Philadelphia Electric Company,
First and Refundable Mortgage,
8.250% due 09/01/2022 ........................ 5,268,750
Texas Utilities Electric Company,
First Mortgage:
1,200,000 8.875% due 02/01/2022 ........................ 1,423,500
3,000,000 8.750% due 11/01/2023 ........................ 3,495,000
2,050,000 Utilicorp United Inc., Sr. Note,
10.500% due 12/01/2020 ....................... 2,370,313
------------
23,813,813
------------
TELECOMMUNICATIONS -- 3.2%
GTE Corporation:
250,000 Deb.,
10.300% due 11/15/2017 ....................... 280,937
1,000,000 Sinking Fund Deb.,
10.750% due 09/15/2017 ....................... 1,123,750
Tele-Communications, Inc.:
Sr. Deb.:
2,000,000 9.800% due 02/01/2012 ........................ 2,377,500
3,950,000 9.250% due 01/15/2023 ........................ 4,315,375
4,000,000 Sr. Note,
9.250% due 04/15/2002 ........................ 4,500,000
------------
12,597,562
------------
Total Corporate Bonds and Notes
(Cost $317,032,468) .......................... 354,143,295
------------
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
U.S. GOVERNMENT AGENCY OBLIGATIONS -- 13.2%
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION
(GNMA) -- 8.1%
7,439,640 #377441,
9.000% due 02/15/2025 ........................ 7,888,343
23,000,000 Commitment to Purchase, GOLD,
7.500% due 01/01/2026 ........................ 23,639,688
------------
Total GNMAs (Cost $31,161,935) ................. 31,528,031
------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(FNMA) -- 4.0% (Cost $15,264,844)
15,000,000 Commitment to Purchase,
7.500% due 01/01/2026 ........................ 15,360,938
------------
FEDERAL HOME LOAN MORTGAGE CORPORATION
(FHLMC) -- 1.1%
2,609,987 #C00362,
9.000% due 06/01/2024 ........................ 2,750,274
1,624,565 #C80258,
9.000% due 01/01/2025 ........................ 1,711,886
------------
Total FHLMCs (Cost $4,356,296) ................. 4,462,160
------------
Total U.S. Government Agency Obligations
(Cost $50,783,075) ........................... 51,351,129
------------
U.S. TREASURY NOTES -- 2.7%
6,400,000 7.500% due 02/15/2005** ........................ 7,258,559
3,000,000 5.875% due 11/15/2005 .......................... 3,068,520
------------
Total U.S. Treasury Notes
(Cost $10,108,344) ........................... 10,327,079
------------
SHARES
------
INVESTMENT COMPANY SECURITY -- 2.2%
(Cost $8,493,999)
8,493,999 Lehman Provident Tempfund ...................... 8,493,999
------------
TOTAL INVESTMENTS (COST $386,417,886*)................109.0% 424,315,502
OTHER ASSETS AND LIABILITIES (NET) .................. (9.0) (34,965,112)
----- ------------
NET ASSETS .......................................... 100.0% $389,350,390
===== ============
- --------------
* Aggregate cost for federal tax purposes.
** A portion or all of this security is pledged as collateral for dollar roll
transactions.
- -----------------------------------------------------------------------
GLOSSARY OF TERMS
GOLD -- Payments are on an accelerated 45-day
payment cycle instead of 75-day cycle
MTN -- Medium Term Note
- -----------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
CALIFORNIA MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- 98.6%
CALIFORNIA -- 97.8%
Alameda, Improvement Board Act of 1915, Marina
Village Assessment District,
Series 89-1:
$ 3,075,000 7.650% due 09/02/2013 ........................ $ 3,169,433
3,310,000 7.650% due 09/02/2014 ........................ 3,411,650
5,360,000 Alhambra Improvement Board Act of 1915,
Assessment District No. 1, Public Works, (MBIA
Insured),
6.125% due 09/02/2018 ........................ 5,654,800
4,000,000 Anaheim, Public Financing Authority Revenue,
Residual Interest Bond,
(MBIA Insured),
6.450% due 12/28/2018 ........................ 4,430,000
1,000,000 Arcadia, Hospital Revenue Authority, (Methodist
Hospital),
6.500% due 11/15/2012 ........................ 1,037,500
2,000,000 Barstow Redevelopment Agency, Central
Redevelopment Project, Tax Allocation, Series
A, (MBIA Insured),
7.000% due 09/01/2014 ........................ 2,420,000
1,000,000 Brea & Olinda, Unified School District, (High
School Refinancing Project), COP, Series A,
(CPGAR Insured),
6.000% due 08/01/2009 ........................ 1,056,250
1,535,000 Brisbane, Capital Improvement, COP,
6.000% due 04/01/2018 ........................ 1,490,869
California Educational Facilities Authority
Revenue:
4,885,000 (College of Osteopathic Medicine),
7.500% due 06/01/2018 ........................ 5,849,787
(University LaVerne):
705,000 5.700% due 04/01/2001 ........................ 718,219
2,000,000 6.300% due 04/01/2009 ........................ 2,055,000
California Health Facilities Authority Revenue:
2,140,000 (Aids Healthcare Foundation), Series C,
6.250% due 09/01/2015 ........................ 2,209,550
1,000,000 (Kaiser Permanent), Series A,
7.000% due 12/01/2010 ........................ 1,103,750
4,000,000 (R.F. Kennedy Medical Center),
(State Insured),
7.750% due 03/01/2014 ........................ 4,295,000
California Housing Finance Agency, Home
Ownership & Improvement Revenue, AMT:
1,985,000 Series 1988G,
8.150% due 08/01/2019 ........................ 2,069,363
3,185,000 Series 1989D,
7.500% due 08/01/2020 ........................ 3,356,194
5,010,000 Series C,
6.650% due 08/01/2014 ........................ 5,348,175
665,000 Series D, (MBIA Insured),
6.300% due 08/01/2014 ........................ 694,925
2,630,000 Series F, (MBIA Insured),
6.800% due 08/01/2014 ........................ 2,863,413
4,620,000 Series F-2,
7.250% due 08/01/2016 ........................ 5,041,575
California PCR, Pollution Control Financing
Authority:
1,000,000 (Keller Canyon Landfill Company Project),
6.875% due 11/01/2027 ........................ 1,075,000
(Pacific Gas and Electric), Series B, AMT:
5,000,000 8.875% due 01/01/2010 ........................ 5,543,750
3,000,000 5.850% due 12/01/2023 ........................ 3,052,500
9,000,000 (San Diego Gas and Electric), Series A, (AMBAC
Insured),
5.850% due 06/01/2021 ........................ 9,146,250
13,250,000 Series B, (AMBAC Insured),
6.400% due 12/01/2024 ........................ 14,293,438
(Southern California Edison):
5,000,000 Series B, (FGIC Insured),
6.400% due 12/01/2024 ........................ 5,393,750
4,000,000 Series C, (AMBAC Insured),
6.000% due 07/01/2027+ .................... 4,140,000
6,565,000 (Tracy Material Recovery Project),
Series A,
6.600% due 08/01/2014 ........................ 6,745,538
5,000,000 (Waste Management), Series A, AMT,
7.150% due 02/01/2011 ........................ 5,556,250
3,100,000 (Waste Removal Systems), Series A,
7.100% due 11/01/2009 ........................ 3,328,625
2,250,000 California Residential Efficiency Financing
Authority, (First Resource Efficiency), (AMBAC
Insured),
6.000% due 07/01/2017 ........................ 2,370,938
1,425,000 California Rural Home Mortgage Finance
Authority, SFMR, Mortgage-Backed Securities
Project, Series A-2,
7.950% due 12/01/2024 ........................ 1,583,531
9,750,000 California State, GO, (MBIA Insured),
6.000% due 10/01/2014 ........................ 10,237,500
California Statewide, Community Development
Authority, COP:
3,000,000 (Cedars-Sinai Medical Center),
6.500% due 08/01/2012 ........................ 3,423,750
2,500,000 (Children's Campus),
6.500% due 09/01/2022 ........................ 2,615,625
Capistrano Unified School District, Community
Facilities District, Supplemental Tax, (Aliso
Viejo):
5,500,000 #87-1,
8.375% due 10/01/2020 ........................ 5,891,875
2,500,000 #88-1,
7.600% due 09/01/2014 ........................ 2,575,000
5,865,000 Carson, Improvement Board Act of 1915, GO,
7.375% due 09/02/2022 ........................ 6,231,562
Centralia, School District, COP:
775,000 Zero coupon due 06/01/2008 ................... 382,656
835,000 Zero coupon due 06/01/2009 ................... 384,100
890,000 Zero coupon due 06/01/2010 ................... 379,362
940,000 Zero coupon due 06/01/2011 ................... 373,650
1,010,000 Zero coupon due 06/01/2012 ................... 373,700
1,075,000 Zero coupon due 06/01/2013 ................... 370,875
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
CALIFORNIA MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA -- (CONTINUED)
$ 4,675,000 Chula Vista, IDR, (San Diego Gas and Electric),
Series A, AMT,
(AMBAC Insured),
6.400% due 12/01/2027 ........................ $ 5,025,625
3,000,000 Chula Vista, Redevelopment Agency, Tax
Allocation Revenue,
8.625% due 09/01/2024 ........................ 3,573,750
2,750,000 Contra Costa County, COP, (Merrithew Memorial
Hospital),
6.625% due 11/01/2022 ........................ 2,915,000
Contra Costa County, Finance Authority, Tax
Allocation Revenue, Series A:
1,595,000 7.000% due 08/01/2009 ........................ 1,698,675
1,000,000 7.100% due 08/01/2022 ........................ 1,058,750
7,749,000 Contra Costa County, MFHR, (Crescent Park
Apartments Project), Series B,
7.800% due 05/20/2034 ........................ 8,688,566
3,310,000 Delano, COP, Series A,
9.250% due 01/01/2022 ........................ 3,690,650
1,990,000 El Cajon, COP, (Helix View Nursing Hospital),
Limited Obligation, Series 1990, AMT, (FHA
Insured),
7.750% due 02/01/2029 ........................ 2,071,411
5,025,000 Fairfield Housing Authority Revenue, Mortgage
Revenue, (Creekside Estates Project),
7.875% due 02/01/2015 ........................ 5,219,719
Foothill Eastern Transportation Corridor Agency,
Series A:
5,000,000 Zero coupon due 01/01/2008 ................... 2,925,000
10,000,000 Zero coupon due 01/01/2019 ................... 2,375,000
10,000,000 Zero coupon due 01/01/2025 ................... 1,625,000
10,000,000 Zero coupon due 01/01/2027 ................... 1,437,500
10,000,000 Zero coupon due 01/01/2028 ................... 1,350,000
1,400,000 Fresno, Joint Powers Financing Authority, Local
Agency Revenue, Series A, (MBIA Insured),
6.550% due 09/02/2012 ........................ 1,417,500
Gilroy, Unified School District, COP, (Measure J
Capital Projects), (FSA Insured):
1,135,000 6.000% due 09/01/2007 ........................ 1,239,988
2,000,000 6.250% due 09/01/2012 ........................ 2,157,500
1,250,000 Kings County, Waste Management Authority, Solid
Waste Revenue,
7.200% due 10/01/2014 ........................ 1,376,562
12,690,000 Long Beach, Harbor Revenue, Series 1989A, AMT,
(MBIA Insured),
7.250% due 05/15/2019 ........................ 13,816,237
Los Angeles, Community Redevelopment Agency,
AMT:
1,425,000 5.850% due 12/01/2026 ........................ 1,414,312
3,735,000 COP,
7.550% due 10/01/2008 ........................ 4,038,469
3,490,000 Series C, (AMBAC Insured),
6.750% due 07/01/2014 ........................ 3,751,750
3,000,000 Los Angeles County, MFHR,
7.400% due 01/20/2022 ........................ 3,123,900
Los Angeles County, Residual Interest Bond:
4,200,000 6.320% due 11/01/2011+ .................... 4,504,500
1,000,000 8.316% due 05/01/2015+ .................... 1,035,000
3,740,000 (Edmund D. Edelman Children's Center), COP,
(AMBAC Insured),
6.000% due 04/01/2012 ........................ 3,922,325
11,110,000 (Pension Obligation), COP, (MBIA Insured),
Non-income producing until 06/30/1998,
Zero coupon due 06/30/2008 ................... 12,498,750
1,605,000 Los Angeles County, Single Family Housing
Revenue, Series B,
7.600% due 08/01/2016 ........................ 1,729,388
660,000 Los Angeles Home Mortgage Revenue, GNMA
collateralized,
8.100% due 05/01/2017 ........................ 721,875
Los Angeles, Los Angeles Convention and
Exposition Center, (AMBAC Insured), Series
1990:
5,000,000 Zero coupon due 08/15/2002 ................... 3,687,500
5,000,000 Zero coupon due 08/15/2003 ................... 3,493,750
590,000 Los Angeles, SFMR, Program 1990, Issue A, GNMA
collateralized, AMT,
7.550% due 12/01/2023 ........................ 622,450
800,000 Mojave Water Agency Improvement District,
6.600% due 09/01/2013 ........................ 854,000
1,000,000 Montebello, Unified School District Revenue,
6.300% due 06/01/2011 ........................ 1,003,750
7,000,000 National City Community Development Revenue,
Series A, (AMBAC Insured),
6.250% due 08/01/2012 ........................ 7,490,000
New Haven, Unified School District, Capital
Appreciation, Series D:
5,720,000 Zero coupon due 08/01/2018 ................... 1,558,700
5,920,000 Zero coupon due 08/01/2019 ................... 1,524,400
1,000,000 Newport Beach, Special Tax Improvement, District
No. 95-1, Series A,
6.750% due 09/01/2020 ........................ 1,001,250
3,500,000 Novato, Special Tax Revenue, (Community
Facilities District),
7.200% due 08/01/2015 ........................ 3,613,750
Orange County, Airport Revenue, AMT:
1,400,000 (John Wayne International Airport),
6.625% due 07/01/2017 ........................ 1,410,500
600,000 Pre-refunded,
6.625% due 07/01/2017 ........................ 622,500
5,000,000 Orange County, Series A, (MBIA Insured),
6.000% due 06/01/2010 ........................ 5,262,500
4,500,000 Palm Desert, Financing Authority, Tax Allocation
Revenue, (MBIA Insured), (Inverse Floater),
8.330% due 04/01/2022+ .................... 5,068,125
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
CALIFORNIA MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA -- (CONTINUED)
$ 1,150,000 Palm Springs, Financing Authority, (Convention
Center Project), Series A, (MBIA Insured),
6.750% due 11/01/2021 ........................ $ 1,266,438
3,000,000 Pasadena, Special Tax No. 1,
7.200% due 12/01/2012 ........................ 3,150,000
980,000 Pleasanton, Joint Powers Finance Authority
Revenue,
6.200% due 09/02/2017 ........................ 1,000,825
Port Oakland:
12,500,000 Port Revenue, Series 1989A, AMT, (MBIA/BIGI
Insured),
7.600% due 11/01/2016 ........................ 13,328,125
Special Facilities Revenue, Series A:
3,030,000 6.750% due 01/01/2012 ........................ 3,264,825
2,300,000 6.800% due 01/01/2019 ........................ 2,466,750
3,000,000 Rancho, Water District Financing Authority,
Residual Interest Bond, (AMBAC Insured),
8.199% due 08/17/2021+ .................... 3,742,500
2,750,000 Redding, Electrical Systems Revenue, Residual
Interest Bond, (MBIA Insured),
8.295% due 07/01/2022+ .................... 3,585,312
1,500,000 Riverside, School District, Special Project,
7.250% due 09/01/2018 ........................ 1,548,750
85,000 Sacramento, City Financing Authority, Revenue
Bonds,
6.700% due 11/01/2011 ........................ 91,481
6,500,000 Sacramento County, Airport System Revenue,
Series 1989, AMT, (AMBAC Insured),
7.000% due 07/01/2020 ........................ 7,117,500
10,000,000 San Bernardino County, Residual Interest Bond,
COP, (MBIA Insured),
5.510% due 07/01/2016+ .................... 10,087,500
4,000,000 San Diego County, Residual Interest Bond, COP,
Series B, (MBIA Insured),
8.270% due 04/08/2021+ .................... 4,635,000
5,000,000 San Diego, IDR, (San Diego Gas and Electric
Company), Series B, AMT, (AMBAC Insured),
7.375% due 12/01/2021 ........................ 5,239,700
San Francisco, City and County Apartments:
1,000,000 6.250% due 05/01/2020 ........................ 1,063,750
2,000,000 6.300% due 05/01/2025 ........................ 2,127,500
San Francisco, City and County, Multi-family
Mortgage Revenue, Series A:
1,000,000 6.350% due 02/15/2012 ........................ 1,038,750
1,250,000 6.450% due 02/15/2024 ........................ 1,290,625
San Francisco, City and County Redevelopment
Agency, Lease Revenue, Capital Appreciation,
(George R. Moscone Project):
3,500,000 Zero coupon due 07/01/2007 ................... 1,863,750
4,500,000 Zero coupon due 07/01/2010 ................... 1,974,375
3,750,000 Zero coupon due 07/01/2011 ................... 1,542,188
4,250,000 Zero coupon due 07/01/2013 ................... 1,519,375
285,000 San Francisco, City and County, SFMR, GNMA and
FNMA Mortgage-Backed Securities Program,
7.450% due 01/01/2024 ........................ 302,100
575,000 San Jose, Airport Revenue Authority, (San Jose
Airport), AMT, (AMBAC Insured),
7.500% due 03/01/1998 ........................ 622,438
2,825,000 San Jose, Financing Authority Revenue, Series C,
7.000% due 09/02/2015 ........................ 2,883,930
3,000,000 Santa Clarita, Community Development Authority,
7.500% due 11/15/2012 ........................ 3,228,750
4,765,000 Santa Rosa, Mortgage Revenue, (Channate Lodge),
(FHA Insured),
6.700% due 12/01/2024 ........................ 5,056,856
10,000 Sonoma County, Home Mortgage Revenue, SFMR,
9.125% due 06/01/2015 ........................ 10,662
South Orange County, Public Financing Authority,
Special Tax Revenue, Senior Lien, Series A,
(MBIA Insured):
5,000,000 7.000% due 09/01/2008 ........................ 5,868,750
5,000,000 6.200% due 09/01/2013 ........................ 5,306,250
1,200,000 South Tahoe, Joint Powers Financing Authority,
Series B,
6.000% due 10/01/2010 ........................ 1,200,000
Southern California, Housing Finance Agency,
SFMR, GNMA and FNMA Mortgage-Backed Securities
Program:
1,095,000 Series 1988A, GNMA collateralized, AMT,
8.125% due 02/01/2021 ........................ 1,208,606
1,545,000 Series A,
7.350% due 09/01/2024 ........................ 1,631,906
210,000 Series B,
6.900% due 10/01/2024 ........................ 224,437
Stockton, Community Facilities Supplemental Tax
#90-2, SFMR, GNMA Mortgage-Backed Securities
Program:
55,000 (Brookside Estates), Supplemental Tax #90,
Series 2, AMT,
7.450% due 08/01/2010 ........................ 60,087
4,000,000 Series A,
7.750% due 08/01/2015 ........................ 4,210,000
4,000,000 Tracy, Community Facilities District,
Supplemental Tax #89-1, (Industrial Specific
Plan Northeast Avenues),
7.500% due 08/01/2020 ........................ 4,195,000
University of California:
5,000 Facility Mortgage Review, Series 1985,
9.200% due 01/01/2018 ........................ 5,146
5,000,000 Multiple Purpose Review Projects,
(MBIA Insured),
6.300% due 09/01/2014 ........................ 5,368,750
------------
405,689,242
------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
CALIFORNIA MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
PUERTO RICO -- 0.8%
$ 2,000,000 Puerto Rico (Commonwealth of), Electric Power
Authority, Series S,
7.000% due 07/01/2007 ........................ $ 2,347,500
1,000,000 Puerto Rico (Commonwealth of), GO,
5.400% due 07/01/2007 ........................ 1,045,000
------------
3,392,500
------------
Total Municipal Bonds and Notes
(Cost $378,072,522) .......................... 409,081,742
------------
SHORT-TERM MUNICIPAL BOND -- 0.0%#
(Cost $80,000)
80,000 California Health Facilities Authority Revenue,
(St. Joseph's Hospital), Series A,
5.900% due 07/01/2013+ ...................... 80,000
------------
TOTAL INVESTMENTS (COST $378,152,522*) ............... 98.6% 409,161,742
OTHER ASSETS AND LIABILITES (NET) .................... 1.4 5,935,283
----- -----------
NET ASSETS ........................................... 100.0% $415,097,025
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Variable rate daily demand notes are payable upon not more than one
business day's notice. The interest rate shown reflects the rate
currently in effect.
# Amount represents less than 0.1% of net assets.
- -----------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance
Corporation
AMT -- Alternative Minimum Tax
BIGI -- Bond Investors Guarantee Insurance
COP -- Certificates of Participation
CPGAR -- Capital Guaranty
FGIC -- Federal Guaranty Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PCR -- Pollution Control Revenue
SFMR -- Single Family Mortgage Revenue
- -----------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
FLORIDA INSURED MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNCIPAL BONDS AND NOTES -- 102.6%
FLORIDA -- 102.6%
$2,270,000 Broward County, Educational Facilities Authority
Revenue, (CONNIE LEE Insured),
6.000% due 04/01/2008 ........................ $ 2,434,575
1,000,000 Collier County, Industrial Development Authority
Revenue, Southern States Utilities,
6.500% due 10/01/2025 ........................ 980,000
1,940,000 Dade County, Aviation Revenue, Series B, (MBIA
Insured),
6.600% due 10/01/2022 ........................ 2,107,325
1,690,000 Dade County, School Board, COP, Series A, (MBIA
Insured),
5.750% due 05/01/2008 ........................ 1,797,738
1,100,000 Dade County, Seaport Revenue,
(MBIA Insured),
5.750% due 10/01/2015 ........................ 1,145,375
2,000,000 Escambia County, Health Facilities Revenue,
Baptist Hospital, Series B,
6.000% due 10/01/2014 ........................ 1,987,500
1,000,000 Escambia County, PCR,
6.900% due 08/01/2022 ........................ 1,072,500
Florida Housing Finance Agency:
480,000 Landings Boot Ranch, Series K,
(AMBAC Insured),
5.875% due 11/01/2015 ........................ 486,000
715,000 Single Family Mortgage, Series A,
6.650% due 01/01/2024 ........................ 764,156
Florida State Turnpike Authority, Turnpike
Revenue, Department of Transportation, Series
A, (FGIC Insured):
1,000,000 5.000% due 07/01/2014 ........................ 972,500
1,000,000 5.000% due 07/01/2016 ........................ 971,250
1,445,000 Hillsborough County, Capital Improvement
Revenue, Criminal Justice Facilities, (FGIC
Insured),
5.250% due 08/01/2016 ........................ 1,430,550
Hillsborough County, Industrial Development
Authority Revenue,
(MBIA Insured):
1,000,000 Allegheny Health Systems,
6.000% due 12/01/2006 ........................ 1,075,000
1,250,000 University Community Hospital,
6.500% due 08/15/2019 ........................ 1,439,062
1,500,000 Hillsborough County, PCR, (Tampa Electric
Company Project), (MBIA Insured),
6.250% due 12/01/2034 ........................ 1,627,500
2,000,000 Hillsborough County, School Board, COP, (FGIC
Insured),
6.000% due 07/01/2012 ........................ 2,120,000
1,000,000 Jacksonville, Health Facilities Revenue, Baptist
Medical Center, Series A,
(MBIA Insured),
7.300% due 06/01/2019 ........................ 1,101,250
1,530,000 Jacksonville, Port Authority, Airport Revenue,
(AMBAC Insured),
5.250% due 10/01/2017 ........................ 1,486,013
1,500,000 Jacksonville, Water & Sewer Revenue, (United
Water Project),
(AMBAC Insured),
6.350% due 08/01/2025 ........................ 1,616,250
1,350,000 Kissimmee, Utility Authority, Electric Revenue,
(FGIC Insured),
5.250% due 10/01/2018 ........................ 1,334,812
500,000 Lee County, Optional Gas Tax,
(FGIC Insured),
5.750% due 10/01/2020 ........................ 517,500
2,000,000 Melbourne, Airport Revenue,
(MBIA Insured),
6.250% due 10/01/2018 ........................ 2,135,000
1,000,000 Orange County, Housing Finance Authority, Multi-
family Revenue,
(Hands Inc. Project), Series A,
8.000% due 10/01/2025 ........................ 1,022,500
1,000,000 Orange County, Tourist Development Tax Revenue,
Series B, (MBIA Insured),
5.750% due 10/01/2019 ....................... 1,028,750
1,000,000 Orlando & Orange County, Expressway Project,
(FSA Insured),
5.950% due 07/01/2023 ........................ 1,032,500
2,000,000 Polk County, School Board, COP,
(FSA Insured),
5.125% due 01/01/2016 ........................ 1,937,500
1,050,000 Seminole County, School Board, COP,
Series A, (MBIA Insured),
6.125% due 07/01/2014 ........................ 1,118,250
1,000,000 South Miami, Health Facilities Authority,
Hospital Revenue, Baptist Health Systems
Obligation Group, (MBIA Insured),
5.375% due 10/01/2011 ........................ 1,003,750
1,250,000 Village Center Community Development, Flautil
Revenue, (FGIC Insured),
6.000% due 11/01/2018 ........................ 1,381,250
------------
TOTAL INVESTMENTS (COST $36,879,104*)................ 102.6% 39,126,356
OTHER ASSETS AND LIABILITIES (NET) .................. (2.6) (979,343)
----- -----------
NET ASSETS .......................................... 100.0% $38,147,013
===== ===========
- --------------
* Aggregate cost for federal tax purposes.
- -----------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance
Corporation
CONNIE LEE -- College Construction Loan Association
COP -- Certificates of Participation
FGIC -- Federal Guaranty Insurance Corporation
FSA -- Financial Security Assurance
MBIA -- Municipal Bond Investors Assurance
PCR -- Pollution Control Revenue
- -----------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- 97.6%
CALIFORNIA -- 95.2%
$ 380,000 Adelanto, School District, Series B,
(FGIC Insured),
Zero coupon due 09/01/2002 ................... $ 283,100
595,000 Alta Loma, Unified School District,
(AMBAC Insured),
7.250% due 06/01/2002 ........................ 691,688
200,000 Alum Rock, Unified School District,
Series B, (FGIC Insured),
Zero coupon due 09/01/2002 ................... 149,000
625,000 Berkeley, Unified School District, Series C,
(AMBAC Insured),
5.875% due 08/01/2006 ........................ 683,594
985,000 Brea & Olinda, School District, (High School
Refinancing Program), Series A,
(CGIC Insured),
6.000% due 08/01/2009 ........................ 1,040,406
California Education Facilities Authority
Revenue:
745,000 5.800% due 04/01/2002 ........................ 763,625
5.900% due 04/01/2003 ........................ 812,713
California Housing Finance Agency Revenue:
445,000 Series E, (MBIA Insured),
6.050% due 08/01/2006 ........................ 487,831
2,355,000 Home Mortgage, Series B1, AMT,
(AMBAC Insured),
6.200% due 02/01/2007 ........................ 2,566,950
California State, GO:
(AMBAC Insured):
1,000,000 6.200% due 09/01/2002 ........................ 1,101,250
1,490,000 7.250% due 08/01/2003 ........................ 1,743,300
(FGIC Insured):
200,000 7.100% due 05/01/2005 ........................ 236,500
1,000,000 6.200% due 09/01/2005 ........................ 1,113,750
California State, Public Works Board, (Various
California University Projects), Series A:
1,000,000 5.900% due 10/01/2004 ........................ 1,070,000
1,500,000 (AMBAC Insured),
5.900% due 12/01/2003 ........................ 1,631,250
California State University Revenue:
1,495,000 Series AJ, AL, AM, AN, AP, AQ, AR, (AMBAC
Insured),
6.750% due 11/01/2007 ........................ 1,651,975
200,000 Housing System, (FGIC Insured),
7.625% due 11/01/2003 ........................ 239,750
California Statewide Communities Development
Authority:
1,600,000 (Children's Hospital), (AMBAC Insured),
6.000% due 06/01/2007 ........................ 1,742,000
1,000,000 MFHR, Series E,
5.500% due 12/01/2005 ........................ 1,022,500
(Samaritan Health Systems):
690,000 5.600% due 05/01/2003 ........................ 725,362
730,000 5.700% due 05/01/2004 ........................ 771,063
1,255,000 (St. Joseph Health Systems),
(AMBAC Insured),
5.875% due 07/01/2005 ........................ 1,355,400
350,000 Campbell, Housing Facility Revenue,
(San Tomas Gardens Project), Series A,
(GNMA Insured),
5.750% due 10/20/2004 ........................ 364,000
1,000,000 Castaic Lake, Water Agency, COP, (Water Systems
Improvement Project), Series A, (MBIA
Insured),
5.600% due 08/01/2005 ........................ 1,071,250
1,000,000 Desert Hospital District, COP,
(CPGAR Insured),
6.350% due 07/01/2004 ........................ 1,105,000
1,000,000 Foothill Eastern Transportation Corridor Agency,
Toll Road Revenue, Capital Appreciation, Sr.
Lien, Series A,
Zero coupon due 01/01/2004 ................... 623,750
Gilroy, Unified School District, COP,
(FSA Insured):
1,390,000 5.600% due 09/01/2003 ........................ 1,485,562
1,400,000 5.625% due 09/01/2004 ........................ 1,499,750
Los Angeles, Community Redevelopment Agency,
MFHR, (AMBAC Insured):
1,105,000 5.650% due 07/01/2000 ........................ 1,150,581
1,190,000 6.000% due 07/01/2004 ........................ 1,270,325
Los Angeles, Department of Water and Power,
Electric Revenue Bond, (MBIA Insured):
1,500,000 8.500% due 01/15/2002 ........................ 1,816,875
1,000,000 5.400% due 09/01/2006 ........................ 1,043,750
1,000,000 Los Angeles, GO, Series A,
5.700% due 09/01/2008 ........................ 1,042,500
1,500,000 Los Angeles, Unified School District,
Series B, (AMBAC Insured),
6.000% due 12/01/2001 ........................ 1,638,750
775,000 Los Angeles, Wastewater Revenue Bond,
(MBIA Insured),
8.500% due 06/01/2002 ........................ 947,437
2,500,000 Los Angeles County, Capital Asset Leasing
Corporation Leasehold Revenue,
(AMBAC Insured),
6.000% due 12/01/2006 ........................ 2,759,375
694,000 Modesto, Mortgage Revenue Bond,
(GNMA Insured),
5.875% due 12/01/2004 ........................ 721,760
Oakland, Improvement Bond Act of 1915, Medical
Hill Parking Assessment District #3, (MBIA
Insured):
150,000 5.500% due 09/02/1999 ........................ 154,782
250,000 6.000% due 09/02/2004 ........................ 258,000
500,000 Orange County, Local Transit Authority, Sales
Tax Revenue Bond, (FGIC Insured),
5.600% due 02/15/2003 ........................ 525,000
1,000,000 Orange County, Recovery Project, Series A, (MBIA
Insured),
6.000% due 06/01/2008 ........................ 1,056,250
Oxnard, Harbor District Revenue,
(CGIC Insured):
1,075,000 7.000% due 08/01/2001 ........................ 1,218,781
1,155,000 7.000% due 08/01/2002 ........................ 1,326,806
1,240,000 7.000% due 08/01/2003 ........................ 1,439,950
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
CALIFORNIA INSURED INTERMEDIATE MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
CALIFORNIA (CONTINUED)
Paramount, Redevelopment Tax Agency,
(MBIA Insured):
$1,820,000 6.100% due 08/01/2006 ........................ $ 2,004,275
1,925,000 6.100% due 08/01/2007 ........................ 2,100,656
560,000 Pioneers Memorial Hospital District, GO,
7.000% due 10/01/2005 ........................ 669,200
1,300,000 Sacramento, Municipal Utility District, Electric
Revenue, (AMBAC Insured),
5.500% due 05/15/2007 ........................ 1,350,375
1,000,000 San Diego County, Water Authority, COP, Series
A,
6.000% due 05/01/2001 ........................ 1,076,250
1,000,000 San Diego, Unified School District, COP,
(Capital Projects), Series B,
6.000% due 07/01/2003 ........................ 1,076,250
100,000 San Francisco, Airports Commission, San
Francisco International Airport, Second
Series, (MBIA Insured),
6.350% due 05/01/2004 ........................ 111,500
San Francisco, City and County, GO,
(FGIC Insured):
1,000,000 (Public Safety Improvement Project),
Series F,
6.500% due 06/15/2006 ........................ 1,097,500
1,415,000 Series E,
6.500% due 06/15/2008 ........................ 1,535,275
1,360,000 San Jose, Redevelopment Agency, (Merged Area
Redevelopment Project), Tax Allocation Bond,
(MBIA Insured),
6.000% due 08/01/2006 ........................ 1,490,900
1,350,000 Solano County, (Solano Park Hospital Project),
COP, (FSA Insured),
6.500% due 08/01/2006 ........................ 1,527,188
1,500,000 South Orange County, Public Financing Authority,
Special Tax Revenue, Sr. Lien, Series A, (MBIA
Insured),
5.400% due 09/01/2003 ........................ 1,575,000
University of California:
1,070,000 (CONNIE LEE Insured), Series A,
5.500% due 09/01/2006 ........................ 1,095,413
(MBIA Insured):
1,250,000 Housing Systems, Series A,
5.300% due 11/01/2005 ........................ 1,301,563
1,000,000 Multiple Purpose Review Projects,
10.000% due 09/01/2001 ....................... 1,276,250
1,000,000 UCLA Medical Center,
8.000% due 12/01/2000 ........................ 1,163,750
1,040,000 Victor Valley, Joint Union High School District,
(MBIA Insured),
5.600% due 09/01/2004 ........................ 1,119,300
------------
67,973,886
------------
GUAM -- 1.4%
1,000,000 Government of Guam, Series A,
5.900% due 09/01/2005 ........................ 1,001,250
------------
PUERTO RICO -- 1.0%
700,000 Puerto Rico (Commonwealth of), GO,
5.400% due 07/01/2007 ........................ 731,500
------------
Total Municipal Bonds and Notes
(Cost $65,387,136) ........................... 69,706,636
------------
SHORT-TERM MUNICIPAL BOND -- 0.7%
(Cost $500,000)
500,000 California Pollution Control Financing
Authority, PCR, Southern California Edison
Company, Series B,
5.400% due 02/28/2008+ .................... 500,000
------------
TOTAL INVESTMENTS (COST $65,887,136*) ................ 98.3% 70,206,636
OTHER ASSETS AND LIABILITIES (NET) ................... 1.7 1,212,512
----- -----------
NET ASSETS ........................................... 100.0% $71,419,148
===== ===========
- --------------
* Aggregate cost for federal tax purposes.
+ Variable rate daily demand bonds are payable upon not more than one
business day's notice. The interest rate shown reflects the rate
currently in effect.
- -----------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance
Corporation
AMT -- Alternative Minimum Tax
CGIC -- Capital Guaranty Insurance Corporation
CONNIE LEE -- College Construction Loan Association
COP -- Certificates of Participation
CPGAR -- Capital Guaranty
FGIC -- Federal Guaranty Insurance Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
MBIA -- Municipal Bond Investors Assurance
MFHR -- Multi-family Housing Revenue
PCR -- Pollution Control Revenue
- -----------------------------------------------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
NATIONAL MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- 98.6%
ALABAMA -- 2.0%
$ 4,000,000 Courtland, Industrial Development Board of Solid
Waste, (Champion International Corporation
Project), Disposal Revenue, AMT,
7.750% due 01/01/2020 ........................ $ 4,315,000
1,000,000 Mobile, Industrial Development Board, Solid
Waste Disposal Revenue,
6.950% due 01/01/2020 ........................ 1,067,500
------------
5,382,500
------------
ARIZONA -- 0.3%
740,000 Tucson, Airport Authority Inc., Supplemental
Facilities Revenue, AMT,
8.700% due 09/01/2019 ........................ 864,875
------------
CALIFORNIA -- 4.2%
Foothill Eastern Transportation Corridor Agency,
Series A:
20,000,000 Zero coupon due 01/01/2025 ................... 3,250,000
32,000,000 Zero coupon due 01/01/2028 ................... 4,320,000
1,550,000 Los Angeles, Regional Airport Improvement,
Series A, AMT,
6.700% due 01/01/2022 ........................ 1,606,187
2,000,000 Southern California, Public Power Authority,
Transmission Project Revenue, Sub-Series A,
(MBIA Insured),
5.000% due 07/01/2022 ........................ 1,905,000
------------
11,081,187
------------
COLORADO -- 8.6%
Arapahoe County, Highway Revenue:
9,000,000 Zero coupon due 08/31/2015 ................... 2,340,000
19,000,000 Zero coupon due 08/31/2026 ................... 2,113,750
Denver, City and County Airport Revenue, AMT:
Series A:
2,000,000 8.875% due 11/15/2012 ........................ 2,362,500
1,140,000 8.500% due 11/15/2023 ........................ 1,301,025
2,000,000 8.000% due 11/15/2025 ........................ 2,240,000
1,920,000 Series C,
6.600% due 11/15/2004 ........................ 2,083,200
4,500,000 Meridian Metropolitan District, GO,
7.500% due 12/01/2011 ........................ 4,798,125
5,000,000 University of Colorado, Hospital Authority,
Series A, (AMBAC Insured),
6.250% due 11/15/2012 ........................ 5,356,250
------------
22,594,850
------------
DISTRICT OF COLUMBIA -- 1.8%
1,150,000 District of Columbia, COP,
6.875% due 01/01/2003 ........................ 1,175,875
1,500,000 Metropolitan District, Washington D.C., Airport
Authority, General Airport Revenue, Series A,
AMT, (MBIA Insured), 6.625% due 10/01/2019 ... 1,612,500
2,000,000 Metropolitan Transportation Authority,
Series O,
5.750% due 07/01/2007 ........................ 2,085,000
------------
4,873,375
------------
FLORIDA -- 2.8%
$22,520,000 Dade County, Guaranteed Entitlement Revenue,
Capital Appreciation, Series A, (MBIA
Insured),
Zero coupon due 02/01/2018 ................... $ 6,333,750
240,000 Largo, Sun Coast Health Systems,
5.750% due 03/01/2000 ........................ 245,100
610,000 Pinellas County, Health Facilities Authority,
(Sun Coast Health Care Systems Project),
Series A,
8.500% due 03/01/2020 ........................ 719,038
------------
7,297,888
------------
GEORGIA -- 4.0%
1,000,000 Atlanta, Airport Facilities Revenue, AMT,
7.250% due 01/01/2017 ........................ 1,101,250
Monroe, PCR, (Oglethorpe Power Company):
5,000,000 6.700% due 01/01/2009 ........................ 5,668,750
3,410,000 6.750% due 01/01/2010 ........................ 3,870,350
------------
10,640,350
------------
HAWAII -- 1.5%
3,500,000 Hawaii Department of Budget and Finance,
Residual Interest Bond, AMT,
9.082% due 11/01/2021++ .................... 3,963,750
------------
IDAHO -- 0.9%
2,000,000 Idaho Health Facilities Authority Revenue,
(Inverse Floater),
6.760% due 02/15/2021++ .................... 2,327,500
------------
ILLINOIS -- 15.8%
Chicago, O'Hare Airport Supplemental Facilities:
6,000,000 (MBIA Insured),
6.750% due 01/01/2012 ........................ 6,495,000
700,000 Special Series A, AMT,
7.875% due 11/01/2025 ........................ 763,000
805,000 Special Series B,
8.950% due 05/01/2018 ........................ 926,756
United Airlines:
615,000 8.400% due 05/01/2004 ........................ 688,800
150,000 8.500% due 05/01/2018 ........................ 167,813
Cook County, Community High School, Number 217,
(AMBAC Insured):
1,090,000 6.400% due 12/01/2003 ........................ 1,199,000
1,130,000 6.500% due 12/01/2004 ........................ 1,243,000
1,370,000 6.600% due 12/01/2005 ........................ 1,505,288
Cook County, School District, Number 026, (MBIA
Insured):
1,445,000 Zero coupon due 12/01/2003 ................... 986,213
1,020,000 Zero coupon due 12/01/2004 ................... 660,450
1,000,000 Decatur, Hospital Revenue, (Decatur Memorial
Hospital), Series B,
(MBIA Insured),
6.850% due 10/01/2016 ........................ 1,081,250
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
NATIONAL MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
ILLINOIS -- (CONTINUED)
Illinois Health Facilities Authority Revenue:
Glenoak Medical Center, Series D:
$ 210,000 Pre-refunded,
9.500% due 11/15/2015 ........................ $ 260,925
280,000 Unrefunded,
9.500% due 11/15/2015 ........................ 328,650
4,765,000 Hinsdale Hospital, Series B,
9.000% due 11/15/2015 ........................ 5,461,881
2,000,000 Masonic Medical Center,
5.500% due 10/01/2007 ........................ 1,980,000
5,000,000 Residual Interest Bond, (MBIA Insured),
9.187% due 06/01/2015++ .................... 5,956,250
300,000 Riverside Senior Living Center Project, 7.500%
due 11/01/2020 ............................... 328,125
5,000,000 Sarah Bush,
7.250% due 05/15/2022 ........................ 5,287,500
1,230,000 Servantcor, Series A,
8.000% due 08/15/2021 ........................ 1,463,700
3,000,000 St. Luke's Medical, Residual Interest Bond,
(MBIA Insured),
9.311% due 10/01/2024++ .................... 3,607,500
365,000 Illinois Housing Development Authority, Series
A, AMT,
7.350% due 08/01/2010 ........................ 390,550
1,000,000 Illinois State, Toll Highway, GO, Series A,
4.750% due 01/01/2002 ........................ 1,013,750
------------
41,795,401
------------
INDIANA -- 0.8%
2,000,000 Indianapolis, Public Improvement Board, Series
D, (LOC INB National Bank),
6.500% due 02/01/2022 ........................ 2,040,000
------------
KENTUCKY -- 1.4%
3,000,000 Jefferson County, Hospital Revenue, Residual
Interest Bond, (MBIA Insured),
8.394% due 10/01/2008++ .................... 3,592,500
------------
LOUISIANA -- 1.5%
300,000 East Baton Rouge, Sewer Commission Revenue,
9.125% due 09/01/2006 ........................ 333,000
1,500,000 Louisiana Public Facility Authority Revenue,
Series B,
Zero coupon due 12/01/2019 ................... 335,625
10,000,000 Orleans Parish, School Board Revenue,
(FGIC Insured),
Zero coupon due 02/01/2015 ................... 3,387,500
------------
4,056,125
------------
MARYLAND -- 1.8%
3,650,000 Northeast, Waste Disposal Authority Revenue,
Series A,
6.200% due 07/01/2010 ........................ 3,768,625
1,000,000 State of Maryland, Community Development
Administration, Department of Housing, Single
Family Project, AMT,
7.450% due 04/01/2032 ........................ 1,058,750
------------
4,827,375
------------
MASSACHUSETTS -- 3.0%
$ 750,000 Commonwealth of Massachusetts, Consolidated
Loan, Series A,
7.625% due 06/01/2008 ........................ $ 881,250
Commonwealth of Massachusetts, Health and
Educational Facilities Authority:
500,000 Framingham Union Hospital, Series B, 8.500%
due 07/01/2010 ............................... 593,125
2,000,000 Metropolitan West Health Incorporated, Series
C,
6.400% due 11/15/2011 ........................ 2,030,000
3,000,000 Saint Memorial Medical Center, Series A,
6.000% due 10/01/2023 ........................ 2,441,250
400,000 Commonwealth of Massachusetts, Health Finance
Authority, Melrose-Wakefield Hospital, Series
A,
8.625% due 07/01/2018 ........................ 417,564
Massachusetts State, GO:
125,000 Pre-refunded,
7.500% due 12/01/2007 ........................ 145,156
125,000 Unrefunded,
7.500% due 12/01/2007 ........................ 145,156
1,000,000 Plymouth County, COP, Series A,
7.000% due 04/01/2022 ........................ 1,102,500
------------
7,756,001
------------
MICHIGAN -- 1.8%
1,000,000 Michigan Municipal Bond Authority, Revenue
Reference, Series A,
(FGIC Insured),
4.750% due 12/01/2009 ........................ 943,750
Michigan State Hospital Finance Authority
Revenue, Detroit Medical, Series A:
1,500,000 7.500% due 08/15/2011 ........................ 1,661,250
850,000 5.875% due 07/01/2014 ........................ 824,500
500,000 5.875% due 07/01/2018 ........................ 475,000
Reed City, Public Schools Revenue,
(AMBAC Insured):
590,000 Zero coupon due 05/01/2013 ................... 229,363
610,000 Zero coupon due 05/01/2014 ................... 222,650
615,000 Zero coupon due 05/01/2015 ................... 210,637
630,000 Zero coupon due 05/01/2016 ................... 205,537
------------
4,772,687
------------
MINNESOTA -- 0.8%
Southern Minnesota Municipal Power Agency,
(Capital Appreciation), Series A, (MBIA
Insured):
2,830,000 Zero coupon due 01/01/2024 ................... 633,213
7,520,000 Zero coupon due 01/01/2027 ................... 1,391,200
------------
2,024,413
------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
NATIONAL MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
MISSISSIPPI -- 2.3%
$ 5,000,000 Lowndes County, Solid Waste Disposal, PCR,
Residual Interest Bond, Floating Rate Note,
6.760% due 04/01/2022++ .................... $ 5,812,500
200,000 Warren County, Solid Waste Disposal Revenue,
(International Paper Project), Series A, AMT,
7.700% due 11/15/2009 ........................ 219,250
------------
6,031,750
------------
MISSOURI -- 1.7%
1,000,000 Missouri State, Health and Educational
Facilities Authority Revenue,
6.800% due 11/01/2016 ........................ 1,146,250
3,000,000 St. Louis, Parking Facilities Revenue,
6.625% due 12/15/2021 ........................ 3,213,750
------------
4,360,000
------------
MONTANA -- 0.4%
1,000,000 Forsyth, PCR, Series B, AMT,
(AMBAC Insured),
7.250% due 08/01/2021 ........................ 1,110,000
------------
NEBRASKA -- 0.3%
700,000 Nebraska Investment Finance Authority, Single
Family Housing, Residual Interest Bond, AMT,
(GNMA Insured),
9.099% due 09/15/2024++ .................... 762,125
------------
NEVADA -- 1.6%
4,000,000 Clark County, IDR, Series A, AMT,
(FGIC Insured),
6.700% due 06/01/2022 ........................ 4,285,000
------------
NEW HAMPSHIRE -- 0.4%
1,000,000 New Hampshire State Higher Education & Health
Facilities Authority Revenue,
8.250% due 07/01/2013 ........................ 1,093,750
------------
NEW JERSEY -- 1.2%
3,000,000 Bergen County, Utilities Authority Revenue,
(FGIC Insured),
6.500% due 12/15/2012 ** ..................... 3,273,750
------------
NEW YORK -- 14.4%
City of New York, IDR, Industrial Development
Agency, Supplemental Facilities, AMT:
2,000,000 6.000% due 01/01/2015 ........................ 2,030,000
400,000 8.000% due 07/01/2020 ........................ 437,000
3,000,000 Housing of New York Corporation Revenue,
5.000% due 11/01/2013 ........................ 2,838,750
1,000,000 New York, Finance Authority, Series B,
(FSA Insured),
7.000% due 06/01/2014** ...................... 1,185,000
New York, GO:
995,000 Series A,
8.000% due 08/15/2020 ........................ 1,189,025
$ 5,200,000 Series C,
6.500% due 08/01/2005 ........................ $ 5,453,500
Series F:
1,845,000 Pre-refunded,
8.250% due 11/15/2018 ........................ 2,241,675
160,000 Unrefunded,
8.250% due 11/15/2018 ........................ 188,400
1,000,000 New York State Dormitory Authority Revenue, City
University Systems, Series A,
5.625% due 07/01/2016 ........................ 1,007,500
New York State Energy, Research & Development
Authority:
2,500,000 8.295% due 04/01/2020+ ...................... 2,921,875
AMT:
2,200,000 6.000% due 04/01/2000 ........................ 2,307,250
Gas Facilities:
5,225,000 7.125% due 12/01/2020 ........................ 5,453,437
500,000 (MBIA Insured),
7.125% due 03/15/2022 ........................ 525,000
275,000 New York State Medical Care Facilities Finance
Authority,
7.750% due 08/15/2011 ........................ 315,562
2,000,000 New York State Multi-family Mortgage Revenue,
AMT,
6.625% due 08/15/2012 ........................ 2,127,500
State of New York, Urban Development Corporation
Revenue:
1,490,000 5.750% due 01/01/2007 ........................ 1,506,763
6,375,000 5.250% due 01/01/2008 ........................ 6,231,562
------------
37,959,799
------------
OHIO -- 2.2%
650,000 East Liverpool, Hospital Revenue, Series B,
8.125% due 10/01/2011 ........................ 703,625
1,240,000 Lorain County, Hospital Revenue, Series B,
7.200% due 12/15/2011 ........................ 1,364,000
2,500,000 Middleburg Heights, Hospital Revenue, Southwest
General Health Center,
(FSA Insured),
5.700% due 08/15/2010 ........................ 2,615,625
900,000 Westerville, Minerva Place & Blendon Joint
Township Hospital District,
(AMBAC Insured),
6.800% due 09/15/2006 ........................ 1,005,750
------------
5,689,000
------------
OKLAHOMA -- 1.1%
1,905,000 Oklahoma Housing and Finance Authority, Single
Family Revenue, Series B, AMT, (GNMA Insured),
7.997% due 08/01/2018 ........................ 2,145,506
Tulsa, Municipal Airport Revenue, American
Airlines Project, AMT:
500,000 7.375% due 12/01/2020 ........................ 534,375
200,000 7.600% due 12/01/2030 ........................ 215,500
------------
2,895,381
------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
NATIONAL MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
PENNSYLVANIA -- 9.9%
Allegheny County, Hospital Development Revenue:
$ 700,000 5.100% due 04/01/2001 ........................ $ 703,500
735,000 5.300% due 04/01/2002 ........................ 740,512
625,000 5.400% due 04/01/2003 ........................ 628,906
3,000,000 5.875% due 04/01/2011 ........................ 2,951,250
1,960,000 Allentown, Area Hospital Authority Revenue,
6.750% due 11/15/2014 ........................ 1,979,600
Beaver County, IDR, PCR, (Edison Project),
Series A, (FGIC Insured):
3,675,000 7.000% due 06/01/2021 ........................ 4,024,125
300,000 7.750% due 09/01/2024 ........................ 324,000
1,000,000 Harrisburg, Water Revenue Authority,
(FGIC Insured),
5.875% due 06/18/2015 ........................ 1,036,250
300,000 Lancaster County, Solid Waste Authority,
Series A, AMT,
8.375% due 12/15/2004 ........................ 325,125
600,000 Lehigh County, General Purpose Authority, Series
A,
8.100% due 07/15/2010 ........................ 648,750
500,000 McKean County, Hospital Authority Revenue,
8.875% due 10/01/2020 ........................ 604,375
1,250,000 Montgomery County, Higher Education Revenue,
6.875% due 11/15/2020 ........................ 1,292,188
Pennsylvania State Higher Education Revenue,
Student Loan Revenue, Residual Interest Bond,
AMT:
3,000,000 (AMBAC Insured),
9.318% due 09/03/2026++ .................... 3,315,000
3,000,000 Series A,
7.250% due 03/01/2011 ........................ 3,198,750
1,890,000 Series B,
7.250% due 03/01/2005 ........................ 2,036,475
1,000,000 Philadelphia, Municipal Authority Revenue,
Series B, (FGIC Insured),
7.125% due 11/15/2018 ........................ 1,157,500
1,000,000 Philadelphia, Water and Sewer Revenue,
7.500% due 08/01/2010 ........................ 1,170,000
------------
26,136,306
------------
PUERTO RICO -- 0.9%
2,000,000 Puerto Rico (Commonwealth of), Public
Improvement Revenue,
6.800% due 07/01/2021 ........................ 2,302,500
------------
RHODE ISLAND -- 1.0%
$ 200,000 Rhode Island Housing and Mortgage Finance
Corporation, AMT,
7.875% due 10/01/2022 ........................ $ 210,500
2,000,000 Rhode Island State Health and Education Revenue,
Residual Interest Bond,
(FGIC Insured),
9.911% due 08/15/2021++ .................... 2,387,500
------------
2,598,000
------------
TEXAS -- 4.5%
80,000 Bexar County, Housing Finance, GNMA Mortgage,
AMT,
8.100% due 03/01/2024 ........................ 85,100
550,000 Brazos, Higher Educational Facilities Authority,
Series C-2, AMT,
7.100% due 11/01/2004 ........................ 600,875
5,000,000 Dallas-Fort Worth International Airport,
(Facility Improvement Corporate Revenue),
(American Airlines, Inc.),
7.500% due 11/01/2025 ........................ 5,406,250
4,000,000 Texas State, Department of Housing, Community
Affairs, Residual Interest Bond, AMT, (GNMA
Insured),
9.156% due 07/02/2024++ ...................... 4,535,000
779,000 Texas State, Higher Education Coordinating
Board, Student Loan, AMT,
7.700% due 10/01/2025 ........................ 816,976
500,000 West Side Calhoun County, Revenue Bond, AMT,
8.200% due 03/15/2021 ........................ 567,500
------------
12,011,701
------------
VERMONT -- 0.1%
Vermont Housing Finance Agency, Single Family,
Series 1, AMT:
140,000 6.800% due 05/01/2025 ........................ 144,375
220,000 8.150% due 05/01/2025 ........................ 235,950
------------
380,325
------------
WASHINGTON -- 1.7%
4,000,000 Tacoma, Electric System Revenue, Residual
Interest Bond, Series C,
(AMBAC Insured),
8.696% due 01/01/2015++ .................... 4,600,000
------------
WEST VIRGINIA -- 1.4%
2,500,000 Harrison County, GO, Series A, AMT,
6.875% due 04/15/2022 ........................ 2,725,000
150,000 Kanawha County, IDR, Series A, AMT,
8.000% due 08/01/2020 ........................ 167,063
750,000 South Charleston, IDR, Series A, AMT, (Union
Carbide Project),
8.000% due 08/01/2020 ........................ 833,438
------------
3,725,501
------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
NATIONAL MUNICIPAL FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- --------- --------
MUNICIPAL BONDS AND NOTES -- (CONTINUED)
WISCONSIN -- 0.5%
$1,000,000 Madison, IDR, (Madison Gas & Electric Company),
(Project A),
6.750% due 04/01/2027 ........................ $ 1,071,250
250,000 Wisconsin State Health Facilities Authority
Revenue,
7.800% due 03/01/2014 ........................ 260,624
------------
1,331,874
------------
Total Municipal Bonds and Notes
(Cost $236,580,555) .......................... 260,437,539
------------
SHORT-TERM MUNICIPAL BONDS -- 0.3%
ARIZONA -- 0.2%
500,000 Pinal County, Industrial Development Authority,
PCR,
5.950% due 12/01/2009+ .................... 500,000
------------
NEW YORK -- 0.1%
200,000 New York, GO, Sub-Series A-4,
5.950% due 08/01/2022+ .................... 200,000
------------
OHIO -- 0.0% #
100,000 Hamilton County, Health Systems Revenue,
Fransican Sisters Poor Health, Series A,
5.950% due 03/01/2017+ .................... 100,000
------------
Total Short-Term Municipal Bonds
(Cost $800,000) .............................. 800,000
------------
TOTAL INVESTMENTS (COST $237,380,555*) ............... 98.9% 261,237,539
OTHER ASSETS AND LIABILITIES (NET) ................... 1.1 2,863,202
----- ------------
NET ASSETS ........................................... 100.0% $264,100,741
===== ============
- --------------
* Aggregate cost for federal tax purposes.
** Security is pledged as collateral for futures contracts.
+ Variable rate daily demand notes are payable upon not more than
one business day's notice. The interest rate shown reflects the
rate currently in effect.
++ Floating rate note. The interest rate shown reflects the rate
currently in effect.
# Amount represents less than 0.1% of net assets.
NUMBER OF UNREALIZED
CONTRACTS (DEPRECIATION)
- ---------- --------------
FUTURES CONTRACTS -- SHORT POSITION
100 Municipal Bond Future, March 1996 .............. $ (175,177)
============
- -----------------------------------------------------------------------
GLOSSARY OF TERMS
AMBAC -- American Municipal Bond Assurance
Corporation
AMT -- Alternative Minimum Tax
COP -- Certificates of Participation
FGIC -- Federal Guaranty Insurance Corporation
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
GO -- General Obligation Bonds
IDR -- Industrial Development Revenue
LOC -- Letter of Credit
MBIA -- Municipal Bond Investors Assurance
PCR -- Pollution Control Revenue
- -----------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
GROWTH AND INCOME FUND
DECEMBER 31, 1995 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS -- 94.0%
CONSUMER DISCRETIONARY -- 13.4%
98,900 Bausch & Lomb Inc. ............................. $ 3,918,913
137,700 Circus Circus Enterprises Inc.+ ............... 3,838,388
58,000 Colgate-Palmolive Company ...................... 4,074,500
80,900 Cracker Barrel Old Country Store ............... 1,395,525
117,500 Fruit of the Loom, Inc., Class A+ ............. 2,864,063
58,800 General Instrument Corporation+ ............... 1,374,450
54,400 Hechinger Company, Class A ..................... 238,000
192,600 Limited Inc. ................................... 3,346,425
61,500 Melville Corporation ........................... 1,891,125
37,300 Procter & Gamble Company ....................... 3,095,900
52,500 Service Corporation International .............. 2,310,000
55,600 Time Warner, Inc. .............................. 2,105,850
12,900 TJX Companies, Inc. ............................ 243,487
------------
30,696,626
------------
FINANCIAL SERVICES -- 13.1%
77,900 AMBAC Inc. ..................................... 3,651,563
72,700 BankAmerica Corporation ........................ 4,707,325
42,100 Dean Witter, Discover & Company ................ 1,978,700
43,300 First Colony Corporation ....................... 1,098,737
53,600 First Union Corporation ........................ 2,981,500
57,000 Firstar Corporation ............................ 2,258,625
53,700 Fleet Financial Group Inc. (New) ............... 2,188,275
62,100 NationsBank Corporation ........................ 4,323,713
105,100 Providian Corporation .......................... 4,282,825
124,200 SCEcorp ........................................ 2,204,550
7,400 Standard Federal Bancorporation ............... 291,375
------------
29,967,188
------------
TELECOMMUNICATIONS -- 11.7%
76,900 AT&T Corporation ............................... 4,979,275
60,900 GTE Corporation ................................ 2,679,600
60,100 Harris Corporation ............................. 3,282,962
61,300 MCI Communications Corporation ................ 1,601,462
56,900 Motorola, Inc. ................................. 3,243,300
269,000 Tele-Communications Inc., TCI Group,
Class A+ .................................... 5,346,375
33,400 Telefonos de Mexico, Class L, ADR .............. 1,064,625
86,100 U.S. West Inc. ................................. 3,078,075
81,400 U.S. West Media Group+ ........................ 1,566,950
------------
26,842,624
------------
ENERGY -- 10.1%
45,200 Anadarko Petroleum Corporation ................ 2,446,450
50,289 Cooper Cameron Corporation+ ................... 1,785,260
77,300 Diamond Shamrock Inc. .......................... 2,000,137
65,900 Oryx Energy Company+ .......................... 881,413
70,900 Repsol SA, ADR ................................. 2,330,838
22,400 Royal Dutch Petroleum Company, ADR ............. 3,161,200
100,900 Sun Company Inc. ............................... 2,762,137
102,500 Tesoro Petroleum Corporation+ ................. 884,062
57,600 Texaco Inc. .................................... 4,521,600
144,000 Wheelabrator Technologies Inc. ................ 2,412,000
------------
23,185,097
------------
MATERIALS & PROCESSING -- 9.2%
56,000 Aluminum Company of America ................... 2,961,000
54,500 du Pont (E.I.) de Nemours & Company ............ 3,808,187
30,500 Freeport McMoran Copper & Gold Inc., Class A ... 854,000
3,900 Freeport McMoran Copper & Gold Inc., Class B ... 109,687
21,200 Grainger (W.W.) Inc. ........................... 1,404,500
24,000 Reynolds Metals Company ........................ 1,359,000
65,100 Tyco International Ltd. ........................ 2,319,187
89,400 Union Carbide Corporation ...................... 3,352,500
75,100 USG Corporation+ .............................. 2,253,000
115,600 Wellman Inc. ................................... 2,629,900
------------
21,050,961
------------
CONSUMER STAPLES -- 8.4%
86,155 Archer-Daniels-Midland Company ................ 1,550,790
73,000 Nabisco Holdings Corporation, Class A .......... 2,381,625
86,600 PepsiCo Inc. .................................. 4,838,775
52,100 Philip Morris Companies Inc. .................. 4,715,050
116,300 Price/Costco, Inc.+ ........................... 1,773,575
174,300 Wal-Mart Stores Inc. ........................... 3,899,963
------------
19,159,778
------------
HEALTH CARE -- 8.1%
54,550 ALZA Corporation+ ............................. 1,350,113
86,200 Columbia/HCA Healthcare Corporation ............ 4,374,650
25,100 Forest Labs Inc.+ ............................. 1,135,775
49,100 Gensia, Inc.+ ................................. 257,775
55,300 Health Care & Retirement Corporation+ ......... 1,935,500
171,000 Humana Inc.+ .................................. 4,681,125
58,400 Lilly Eli & Company ............................ 3,285,000
16,800 Warner Lambert Company ......................... 1,631,700
------------
18,651,638
------------
AUTOS & TRANSPORTATION -- 7.2%
96,000 Consolidated Freightways Inc. ................. 2,544,000
141,900 Cooper Tire & Rubber Company .................. 3,494,288
94,100 General Motors Corporation ..................... 4,975,537
84,900 Union Pacific Corporation ...................... 5,603,400
------------
16,617,225
------------
PRODUCER DURABLES -- 5.9%
45,000 AlliedSignal Inc. .............................. 2,137,500
169,600 Coltec Industries, Inc.+ ...................... 1,971,600
116,807 Cooper Industries Inc. ......................... 4,292,657
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
GROWTH AND INCOME FUND
DECEMBER 31, 1995 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS -- (CONTINUED)
PRODUCER DURABLES -- (CONTINUED)
50,300 General Electric Company ....................... $ 3,621,600
13,000 ITT Industries, Inc. ........................... 312,000
86,200 Rohr Inc.+ .................................... 1,239,124
------------
13,574,481
------------
TECHNOLOGY -- 4.1%
22,000 Bay Networks Inc.+ ............................ 904,750
14,000 Hewlett-Packard Company ........................ 1,172,500
27,800 International Business Machines Corporation .... 2,550,650
131,100 International Game Technology ................. 1,425,713
56,700 MagneTek Inc.+ ................................ 460,687
207,700 Novell Inc.+ .................................. 2,959,725
------------
9,474,025
------------
UTILITIES -- 2.2%
70,200 Entergy Corporation ............................ 2,053,350
30,400 Illinova Corporation ........................... 912,000
65,800 Western Resources Inc. ......................... 2,196,075
------------
5,161,425
------------
OTHER -- 0.6%
13,000 ITT Corporation (New)+ ........................ 689,000
13,000 ITT Hartford Group, Inc.+ ..................... 628,875
------------
1,317,875
------------
Total Common Stocks (Cost $193,789,057) ........ 215,698,943
------------
PRINCIPAL
AMOUNT
---------
U.S. TREASURY BILLS -- 1.3%
$1,429,000 5.360% due 02/08/1996++ ........................ 1,420,923
989,000 5.310% due 03/07/1996++ ........................ 979,372
715,000 4.910% due 03/14/1996++ ........................ 707,881
16,000 5.290% due 03/21/1996++ ........................ 15,819
------------
Total U.S. Treasury Bills (Cost $3,123,995) .... 3,123,995
------------
U.S. GOVERNMENT AGENCY DISCOUNT NOTES -- 1.3%
225,000 Federal Home Loan Mortgage Corporation (FHLMC),
5.500% due 01/18/1996++ ...................... 224,416
2,745,000 Federal National Mortgage Association (FNMA),
5.650% due 01/19/1996++ ...................... 2,737,245
------------
Total U.S. Government Agency Discount Notes
(Cost $2,961,661) ............................ 2,961,661
------------
CONVERTIBLE BONDS AND NOTES -- 1.3%
$ 230,000 Conner Peripherals Inc., Conv. Sub. Deb.,
6.500% due 03/01/2002 ........................ $ 235,750
375,000 Rohr Inc., Conv. Sub. Note,
7.750% due 05/15/2004 ........................ 570,000
2,478,000 WMX Technologies, Conv. Sub. Note,
2.000% due 01/24/2005 ........................ 2,155,860
------------
Total Convertible Bonds and Notes
(Cost $2,580,530) ............................ 2,961,610
------------
SHARES
------
CONVERTIBLE PREFERRED STOCK -- 1.0%
(Cost $2,213,400)
37,200 Owens-Corning, Conv. Pfd.+++ .................. 2,213,400
------------
TOTAL INVESTMENTS (COST $204,668,643*)................ 98.9% 226,959,609
OTHER ASSETS AND LIABILITIES (NET) ................... 1.1 2,589,330
----- ------------
NET ASSETS ........................................... 100.0% $229,548,939
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
++ Rate represents annualized yield at date of purchase.
+++ Security exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
- -----------------------------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
- -----------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
GROWTH FUND
DECEMBER 31, 1995 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS -- 90.4%
TECHNOLOGY -- 24.1%
42,975 Altera Corporation+ ......................... $ 2,138,006
206,175 Analog Devices Inc.+ ........................ 7,293,441
61,925 Boca Research Inc.+ ......................... 1,641,013
15,100 Brooks Automation Inc.+ ..................... 200,075
108,575 Cisco Systems, Inc.+ ........................ 8,102,409
56,350 Computer Associates International, Inc. ........ 3,204,906
52,500 Comverse Technology Inc.+ ................... 1,050,000
121,025 Digital Equipment Corporation+ .............. 7,760,728
89,025 Fulcrum Technologies Inc. ...................... 2,893,313
19,700 Informix Corporation+ ....................... 591,000
23,550 Intuit, Inc.+ ............................... 1,836,900
18,850 ITI Technologies Inc.+ ...................... 560,787
48,300 Itron Inc.+ ................................. 1,630,125
58,050 Macromedia Inc.+ ............................ 3,033,113
10,575 McAfee Associates, Inc.+ .................... 463,978
8,750 MetaTools+ .................................. 227,500
21,850 National Instruments Corporation+ ........... 442,463
12,900 Novellus Systems Inc.+ ...................... 696,600
79,300 Peoplesoft Inc.+ ............................ 3,409,900
51,650 Pittway Corporation ............................ 3,499,287
32,850 Seagate Technology, Inc.+ ................... 1,560,375
55,650 Sun Microsystems Inc.+ ...................... 2,539,031
------------
54,774,950
------------
FINANCIAL SERVICES -- 17.6%
50,050 Alco Standard Corporation ...................... 2,283,531
45,950 Bank of New York Company, Inc. ................. 2,240,062
108,625 Chase Manhattan Corporation .................... 6,585,391
29,450 Citicorp ....................................... 1,980,513
41,575 Federal National Mortgage Association .......... 5,160,497
82,775 First Data Corporation ......................... 5,535,578
48,700 First Interstate Bancorp ....................... 6,647,550
21,100 General Motors Corporation, Class E ............ 1,097,200
43,675 Glendale Federal Bank+ ........................ 764,313
104,013 Grupo Financiero Inbursa, Series B ............. 284,468
30,250 Keane Inc.+ ................................... 669,281
20,850 Merrill Lynch & Company, Inc. .................. 1,063,350
18,875 North American Mortgage Company ................ 401,094
16,800 Olsten Corporation ............................. 663,600
84,800 UNUM Corporation ............................... 4,664,000
------------
40,040,428
------------
HEALTH CARE -- 16.5%
160,600 Amgen Inc.+ ................................... 9,535,625
30,500 ARV Assisted Living, Inc.+ .................... 358,375
36,500 BioChem Pharmaceuticals Inc.+ ................. 1,464,563
17,850 Coherent, Inc.+ ............................... 722,925
62,750 Corvita Corporation+ .......................... 651,031
48,838 CUC International, Inc. ........................ 1,666,597
39,125 Daig Corporation ............................... 899,875
63,850 Eli Lilly & Company ............................ 3,591,562
63,250 Healthsource Inc.+ ............................ 2,277,000
13,350 Nellcor Inc.+ ................................. 784,313
11,275 Oxford Health Plans, Inc.+ .................... 832,941
61,475 PacifiCare Health System Inc., Class B+ ....... 5,348,325
65,175 Pfizer, Inc. ................................... 4,106,025
54,225 Warner-Lambert Company ......................... 5,266,603
------------
37,505,760
------------
TELECOMMUNICATIONS -- 13.5%
26,045 Arch Communications Group Inc.+ ............... 625,080
51,425 Ascend Communications Inc.+ ................... 4,171,853
28,375 CommNet Cellular Inc.+ ........................ 819,328
96,550 Heartland Wireless Communications Inc.+ ....... 2,872,362
52,650 Millicom International Cellular SA+ ........... 1,605,825
81,680 Nokia AB, Series A ............................. 3,154,393
49,375 Nokia AB, Series A, ADR ........................ 1,919,453
45 NTT Data Communications Systems Corporation .... 1,512,349
187,075 Paging Network Inc.+ .......................... 4,559,953
53,100 Picturetel Corporation+ ....................... 2,289,937
24,500 Premisys Communications, Inc.+ ................ 1,372,000
17,300 Stratacom Inc.+ ............................... 1,271,550
11,675 Tollgrade Communications, Inc.+ ............... 175,125
33,800 US Robotics Corporation+ ...................... 2,965,950
55,000 Westell Technologies, Inc.+ ................... 1,381,875
------------
30,697,033
------------
CONSUMER DISCRETIONARY -- 10.3%
21,500 Baby Superstore, Inc.+ ........................ 1,225,500
25,800 Coleman Company+ .............................. 906,225
154,900 Crown Cork & Seal Inc.+ ....................... 6,467,075
11,040 DavCo Restaurants Inc.+ ....................... 95,220
53,900 FelCor Suite Hotels Inc. ....................... 1,495,725
10,000 Grupo Casa Autrey SA, ADR ...................... 133,750
4,975 Hart Brewing, Inc.+ ........................... 75,869
96,875 Hospitality Franchise Systems, Inc.+ .......... 7,919,531
5,050 Industrie Natuzzi SPA, ADR ..................... 229,144
17,775 La Quinta Inns, Inc. ........................... 486,591
141,400 Renters Choice Inc.+ .......................... 1,944,250
91,525 Singer Company ................................. 2,551,259
------------
23,530,139
------------
PRODUCER DURABLES -- 4.0%
11,350 Cognex Corporation+ ........................... 394,413
29,920 Freeport McMoran, Inc. ......................... 1,107,040
4,282 Metra AB, Series A, Ord. ....................... 176,194
47,570 Metra AB, Series B, Ord. ....................... 1,968,323
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
GROWTH FUND
DECEMBER 31, 1995 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS -- (CONTINUED)
PRODUCER DURABLES -- (CONTINUED)
13,900 PRI Automation Inc.+ .......................... $ 488,238
78,425 UCAR International Inc.+ ...................... 2,646,844
16,275 Xerox Corporation .............................. 2,229,675
------------
9,010,727
------------
MATERIALS & PROCESSING -- 1.4%
38,000 American Standard Companies, Inc.+ ............ 1,064,000
69,425 Arcadian Corporation ........................... 1,345,109
89,583 Arnoldo Mondadori Editore SPA .................. 777,214
3,200 James River Corporation ........................ 77,200
------------
3,263,523
------------
CONSUMER STAPLES -- 0.6%
19,461 Cultor OY, Series 1 ............................ 805,246
13,242 Cultor OY, Series 2 ............................ 547,920
------------
1,353,166
------------
OTHER -- 2.4%
174,334 Kinnevik Investment, Series B .................. 5,447,527
------------
Total Common Stocks
(Cost $176,647,474) .......................... 205,623,253
------------
PREFERRED STOCK -- FOREIGN -- 3.8%
(Cost $6,048,106)
56,650 SAP, AG, Non-Voting, Pfd. ...................... $ 8,572,559
------------
PRINCIPAL
AMOUNT
------
COMMERCIAL PAPER -- 7.1%
$11,100,000 Ford Motor Credit Company,
5.750% due 01/02/1996++ ...................... 11,098,227
5,000,000 General Electric Capital Corporation, 5.750% due
01/03/1996++ ................................. 4,998,403
------------
Total Commercial Paper
(Cost $16,096,630) ......................... 16,096,630
------------
TOTAL INVESTMENTS (COST $198,792,210*)............... 101.3% 230,292,442
OTHER ASSETS AND LIABILITIES (NET) ................. (1.3) (3,018,815)
---- ------------
NET ASSETS .......................................... 100.0% $227,273,627
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
++ Rate represents annualized yield at date of purchase.
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
GROWTH FUND
DECEMBER 31, 1995 (UNAUDITED)
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
<TABLE>
<CAPTION>
CONTRACTS TO RECEIVE NET UNREALIZED
------------------------------------------------------- APPRECIATION/
EXPIRATION LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ----------- ---------------------- ---------- ------------- ---------------
<C> <C> <C> <C> <C> <C>
01/04/1996 ITL 33,157,198 20,900 20,952 $ (52)
01/11/1996 SEK 23,943,000 3,602,098 3,329,209 272,889
01/25/1996 FIM 3,000,000 690,521 694,493 (3,972)
01/25/1996 SEK 800,000 120,184 120,153 31
01/25/1996 SEK 5,500,000 826,262 824,526 1,736
01/31/1996 ITL 247,201,391 155,134 154,141 993
01/31/1996 ITL 215,498,594 135,238 135,442 (204)
02/12/1996 FIM 11,750,000 2,706,473 2,691,648 14,825
03/28/1996 DEM 1,500,000 1,050,751 1,046,390 4,361
03/28/1996 FIM 5,205,000 1,200,844 1,249,490 (48,646)
03/28/1996 GBP 408,000 632,257 645,742 (13,485)
--------
$228,476
--------
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
<CAPTION>
CONTRACTS TO DELIVER NET UNREALIZED
------------------------------------------------------- APPRECIATION/
EXPIRATION LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ----------- ---------------------- ---------- ------------- ---------------
01/11/1996 FIM 3,536,000 813,310 822,708 $ 9,398
01/11/1996 SEK 23,943,000 3,602,098 3,239,919 (362,179)
01/25/1996 FIM 5,211,000 1,199,436 1,211,860 12,424
01/25/1996 SEK 13,800,000 2,073,167 1,863,354 (209,813)
01/25/1996 SEK 9,000,000 1,352,066 1,347,271 (4,795)
02/08/1996 DEM 1,918,000 1,340,500 1,373,630 33,130
02/08/1996 FIM 5,957,000 1,371,914 1,410,375 38,461
02/08/1996 JPY 10,000,000 97,442 99,413 1,971
02/12/1996 DEM 970,000 678,065 694,768 16,703
02/12/1996 FIM 20,710,000 4,770,302 4,894,246 123,944
03/14/1996 JPY 69,500,000 680,508 702,763 22,255
03/28/1996 DEM 4,205,000 2,945,606 2,856,173 (89,433)
03/28/1996 DEM 1,222,000 856,012 866,667 10,655
03/28/1996 FIM 5,205,000 1,200,844 1,200,692 (152)
03/28/1996 GBP 408,000 632,257 640,560 8,303
03/28/1996 SEK 1,995,000 298,309 278,359 (19,950)
05/09/1996 FIM 3,921,000 905,766 927,916 22,150
06/13/1996 DEM 2,650,000 1,863,427 1,847,012 (16,416)
---------
$(403,344)
---------
Net Unrealized Depreciation of Forward
Foreign Currency Contracts ......... $(174,868)
=========
</TABLE>
- -----------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
DEM -- German Deutsche Mark
FIM -- Finnish Markka
GBP -- Great Britain Pound Sterling
ITL -- Italian Lira
JPY -- Japanese Yen
SEK -- Swedish Kroner
- -----------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
EMERGING GROWTH FUND
DECEMBER 31, 1995 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS -- 97.7%
CONSUMER DISCRETIONARY -- 23.7%
200,000 Family Golf Centers Inc.+ ..................... $ 3,650,000
4,159 Fotolabo SA .................................... 1,659,271
114,950 Hospitality Franchise Services, Inc.+ ......... 9,397,163
1,300,167 J.D. Wetherspoon Plc Ord. ...................... 12,963,003
150,000 Katz Media Group Inc.+ ........................ 2,643,750
108,025 Learning Tree International, Inc.+ ............ 1,687,891
74,925 Lone Star Steakhouse & Saloon+ ................ 2,875,247
2,980 Moebel Walther ................................. 97,671
94,650 Nuco2 Inc.+ ................................... 1,230,450
118,475 O'Reilly Automotive Inc.+ ..................... 3,435,775
168,100 Papa John's International Inc.+ ............... 6,923,619
356,450 Petco Animal Supplies Inc.+ ................... 10,426,162
49,050 Primark Corporation+ .......................... 1,471,500
158,675 Quality Dining Inc.+ .......................... 3,847,869
195,824 Renters Choice Inc.+ .......................... 2,692,580
50,000 Viking Office Products Inc.+ .................. 2,325,000
------------
67,326,951
------------
HEALTH CARE -- 18.6%
275,775 ARV Assisted Living Inc.+ ..................... 3,240,356
37,725 CUC International, Inc.+ ...................... 1,287,365
245,975 Depotech Corporation+ ......................... 4,735,019
76,350 Envoy Corporation+ ............................ 1,321,809
82,825 Exogen Inc.+ .................................. 1,594,381
75,525 Gulf South Medical Supply Inc.+ ............... 2,284,631
25,700 Kensey Nash Corporation+ ...................... 321,250
146,075 Medaphis Corporation+ ......................... 5,404,775
69,725 MedPartners/Mullikin Inc.+ .................... 2,300,925
139,725 Omnicare Inc. .................................. 6,252,694
266,250 Quidel Corporation ............................. 1,897,031
296,175 R.P. Scherer Corporation+ ..................... 14,549,597
400,000 TheraTech Inc.+ ............................... 7,200,000
8,250 Total Renal Care Holdings, Inc.+ .............. 243,375
------------
52,633,208
------------
FINANCIAL SERVICES -- 15.6%
60,825 Credit Acceptance Corporation+ ................ 1,262,119
43,175 Data Broadcasting Corporation+ ................ 534,291
1,709,110 Fidelity Federal Bank, Series A+ .............. 3,948,044
51,850 First Commonwealth Inc.+ ...................... 1,348,100
94,675 First Data Corporation ......................... 6,331,391
100,000 Imperial Thrift & Loan Association+ ........... 1,225,000
414,145 Insignia Financial Group Inc., Class A+ ....... 15,944,582
51,625 Meadowbrook Insurance Group, Inc.+ ............ 1,729,438
47,200 PennCorp Financial Group Inc. .................. 1,386,500
31,925 Progressive Corporation of Ohio ................ 1,560,334
88,050 Protective Life Corporation .................... 2,751,562
558,725 World Acceptance Corporation+ ................. 6,285,656
------------
44,307,017
------------
TELECOMMUNICATIONS -- 12.9%
250,000 Arch Communications Group, Inc.+ .............. 6,000,000
262,725 CommNet Cellular Inc.+ ........................ 7,586,184
50,000 Heartland Wireless Communications Inc.+ ....... 1,487,500
43,300 Millicom International Cellular SA+ ........... 1,320,650
150,550 Mobilemedia Corporation+ ...................... 3,349,738
569,625 Paging Network Inc.+ .......................... 13,884,609
218,475 Pricellular Corporation, Class A+ ............. 2,840,175
------------
36,468,856
------------
TECHNOLOGY -- 5.9%
208,696 Ashbourne Plc Ord. ............................. 424,577
87,900 Banctec Inc.+ ................................. 1,626,150
200,000 Bell & Howell Holdings Company+ ............... 5,600,000
296,150 Black Box Corporation+ ........................ 4,849,456
29,175 Cambrex Corporation ............................ 1,207,116
37,500 IDX Systems Corporation+ ...................... 1,303,125
7,250 Pittway Corporation, Class A ................... 491,188
150,975 Techforce Corporation+ ........................ 1,321,031
------------
16,822,643
------------
AUTOS & TRANSPORTATION -- 5.6%
338,225 APS Holding Corporation, Class A+ ............. 7,610,063
41,750 AutoZone Inc.+ ................................ 1,205,531
56,900 Midwest Express Holdings Inc.+ ................ 1,578,975
81,900 Wisconsin Central Transportation Corporation+ .. 5,384,925
------------
15,779,494
------------
PRODUCER DURABLES -- 4.7%
495,115 Catalytica Inc.+ .............................. 2,166,128
214,900 Exide Corporation .............................. 9,858,538
74,750 Southern Energy Homes Inc.+ ................... 1,308,125
------------
13,332,791
------------
MATERIALS & PROCESSING -- 4.5%
38,625 Intertape Polymer Group, Inc. .................. 1,211,859
203,630 Minerals Technologies Inc. ..................... 7,432,495
144,500 Sealed Air Corporation+ ....................... 4,064,062
------------
12,708,416
------------
UTILITIES -- 3.3%
480,375 Trigen Energy Corporation ...................... 9,367,313
------------
CONSUMER STAPLES -- 2.5%
100,000 General Nutrition Companies Inc.+ ............. 2,300,000
250,000 JP Foodservice Inc.+ .......................... 4,875,000
------------
7,175,000
------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
EMERGING GROWTH FUND
DECEMBER 31, 1995 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------ --------
COMMMON STOCKS -- (CONTINUED)
OTHER -- 0.4%
41,425 Global Directmail Corporation+ ................ $ 1,139,188
------------
Total Common Stocks (Cost $220,728,581) ........ 277,060,877
------------
WARRANT -- 1.6% (Cost $2,716,035)
149,770 Littelfuse Inc., Series A, expires
12/27/2001+ ................................. 4,418,215
------------
PREFERRED STOCK -- FOREIGN -- 0.2% (Cost $853,414)
18,432 Moebel Walther, Pfd. ........................... 604,117
------------
PRINCIPAL
AMOUNT
------
COMMERCIAL PAPER -- 2.0% (Cost $5,799,074)
$5,800,000 Ford Motor Credit Company,
5.750% due 01/02/1996++ ...................... 5,799,074
------------
TOTAL INVESTMENTS (COST $230,097,104*) .............. 101.5% 287,882,283
OTHER ASSETS AND LIABILITIES (NET) ................. (1.5) (4,238,831)
---- ------------
NET ASSETS .......................................... 100.0% $283,643,452
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
++ Rate represents annualized yield at date of purchase.
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO BUY
<TABLE>
<CAPTION>
CONTRACTS TO RECEIVE NET UNREALIZED
------------------------------------------------------- APPRECIATION/
EXPIRATION LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ----------- ---------------------- ---------- ------------- ---------------
<C> <C> <C> <C> <C> <C>
01/24/1996 FIM 6,254,550 1,439,577 1,463,733 $(24,156)
01/24/1996 SEK 36,155,350 5,432,105 4,883,224 548,881
01/25/1996 FIM 6,200,000 1,427,078 1,445,140 (18,062)
02/08/1996 DEM 1,300,000 908,577 938,499 (29,922)
02/08/1996 FIM 20,990,000 4,834,058 4,851,764 (17,706)
02/08/1996 SEK 325,000 48,769 45,959 2,810
03/14/1996 DEM 650,000 455,024 459,012 (3,988)
--------
$457,857
--------
<CAPTION>
CONTRACTS TO DELIVER NET UNREALIZED
------------------------------------------------------- APPRECIATION/
EXPIRATION LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ----------- ---------------------- ---------- ------------- ---------------
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
<C> <C> <C> <C> <C> <C>
01/04/1996 DKK 1,585,365 285,512 284,846 $ (666)
01/04/1996 GBP 85,324 132,500 132,960 460
01/05/1995 GBP 22,753 35,332 35,187 (145)
01/11/1995 GBP 483,000 749,895 762,609 12,714
01/24/1996 FIM 6,254,550 1,439,577 1,444,969 5,392
01/24/1996 GBP 854,075 1,325,528 1,364,982 39,454
01/24/1996 SEK 36,155,350 5,432,105 4,745,108 (686,997)
01/25/1996 FIM 6,200,000 1,427,078 1,441,861 14,783
02/08/1996 DEM 1,458,000 1,019,004 1,044,207 25,203
02/08/1996 FIM 20,990,000 4,834,058 4,969,459 135,401
02/08/1996 GBP 95,000 147,384 151,287 3,903
02/08/1996 SEK 325,000 48,769 44,741 (4,028)
02/22/1996 GBP 1,775,000 2,752,762 2,744,061 (8,701)
03/14/1996 DEM 1,450,000 1,015,054 989,086 (25,968)
03/28/1996 GBP 515,000 798,070 786,688 (11,382)
---------
$(500,577)
---------
Net Unrealized Depreciation of Forward
Foreign Currency Contracts ........................... $ (42,720)
=========
</TABLE>
- -------------------------------------------------
GLOSSARY OF TERMS
DEM -- German Deutsche Mark
DKK -- Danish Kroner
FIM -- Finnish Markka
GBP -- Great Britain Pound Sterling
SEK -- Swedish Krona
- -------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
INTERNATIONAL GROWTH FUND
DECEMBER 31, 1995 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS -- 92.4%
JAPAN -- 22.0%
80,000 Achilles Corporation ........................... $ 309,153
24,000 Asahi Bank Limited ............................. 302,179
75,000 Chugai Pharmaceutical .......................... 718,402
60,000 Cosmo Oil ...................................... 327,748
30,000 Dai-Ichi Kangyo Bank ........................... 589,830
30,000 Daido Steel Company ............................ 151,089
10,000 Daito Trust Construction ....................... 120,097
90,000 Daiwa Bank ..................................... 727,845
25,000 Diamond Lease Company .......................... 338,983
140 East Japan Railway Company ..................... 680,678
2,000 Familymart ..................................... 90,266
21,000 Fuji Denki Reiki ............................... 280,678
90,000 Hitachi Ltd. ................................... 906,537
185,000 Hokkaido Takushoku Bank ........................ 548,281
50,000 Honda Motor Company ............................ 1,031,477
72,000 Hoxan Corporation .............................. 505,569
15,000 Industrial Bank of Japan ....................... 454,722
80,000 ISH Ikawajima-Harima Heavy Industry............. 337,046
25,000 Izumiya Company ................................ 399,516
25 Japan Tobacco Inc. ............................. 216,707
110,000 Kanematsu Corporation .......................... 429,346
133,000 Komatsu Forklift Company, Ltd. ................. 882,373
50,000 Kurabo Industries .............................. 191,283
35,000 Matsushita Electric Industrial Company ......... 569,492
90,000 Mitsubishi Cable Industries .................... 479,419
35,000 Mitsui Mining & Smelt Company .................. 140,339
50,000 Mizuno Sportina Corporation .................... 433,414
35,000 NEC Corporation ................................ 427,119
500 Nihon Matai .................................... 3,070
35,000 Nippon Paper Industries Company ................ 243,051
73,000 Nippon Road Company, Ltd. ...................... 615,109
130,000 Nippon Zeon Company Ltd. ....................... 698,789
40,000 Nomura Securities Company Ltd. ................. 871,671
700 Parco Company .................................. 7,390
50,000 Sakura Bank .................................... 634,383
60,000 San-in Godo Bank ............................... 498,015
10,300 Shikoku Electric Power Inc. .................... 237,424
45,000 Snow Brand Milk Products Company, Ltd. ......... 287,651
23,000 Sony Corporation ............................... 1,378,886
30,000 Sumitomo Corporation ........................... 305,085
30,000 Sumitomo Forestry Company ...................... 459,080
230,000 Sumitomo Metal Industries+ .................. 697,240
40,000 Suruga Bank .................................... 269,249
30,000 Takashimaya Company, Ltd. ...................... 479,419
80,000 Tobu Railway Company ........................... 500,533
70,000 Toho Gas Colt .................................. 226,441
9,550 Tohoku Electric & Power Company ................ 230,310
40,000 Tokio Marine & Fire Insurance Company .......... 523,002
5,200 Tokyo Electric Power Company ................... 139,002
50,000 Toyo Trust and Banking Company ................. 441,646
30,000 Toyota Motor Company ........................... 636,320
40,000 Yasuda Trust & Banking ......................... 236,707
------------
23,209,061
------------
FRANCE -- 10.8%
4,202 Air Liquide .................................... 695,332
7,265 Alcatel Alsthom Cie Generale D'Electric ........ 625,848
9,436 AXA Corporation ................................ 635,356
2,991 Bouygues ....................................... 301,053
680 Carrefour ...................................... 412,218
3,125 Christian Dior SA .............................. 336,666
7,250 Credit Commercial de France .................... 369,675
6,000 Credit Local de France ......................... 479,902
4,289 Danone ......................................... 707,103
6,733 Eaux (Cie Generale Des) ........................ 671,651
5,329 Lafarge Coppee SA .............................. 343,052
17,380 La Gardere Groupe .............................. 319,159
1,825 Peugeot SA+ ................................... 240,553
3,050 Promodes ....................................... 716,293
9,100 Renault Ord. ................................... 261,804
8,360 Sanofi ......................................... 535,443
12,800 Seita .......................................... 463,579
7,154 Societe Generale Ord. .......................... 883,120
6,154 Societe National Elf Aquitaine ................. 453,043
6,550 Synthelabo ..................................... 410,027
3,560 Television Francaise ........................... 381,351
13,100 TOTAL, "B" Shares Ord. ......................... 883,401
17,800 Usinor Sacilor ................................. 235,166
------------
11,360,795
------------
UNITED KINGDOM -- 10.4%
182,500 Allied Colloids Ord. ........................... 382,620
6,300 Amersham International Plc. .................... 87,370
76,000 Argyll Group Ord. .............................. 401,295
33,000 Barclays Ord. .................................. 378,730
85,000 B.A.T. Industries Plc Ord. ..................... 749,129
74,700 British Telecommunications Ord. ................ 410,672
124,300 BTR Ord. ....................................... 635,095
109,300 General Electric Company Plc Ord. .............. 602,587
67,900 Glaxo Wellcome Holdings Plc Ord. ............... 964,856
83,500 Guardian Royal Exchange ........................ 357,904
87,100 Guinness Ord. .................................. 641,162
69,350 Kingfisher Ord. ................................ 583,737
87,339 Lloyds Bank .................................... 448,961
48,500 Pearson Ord. ................................... 470,000
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
INTERNATIONAL GROWTH FUND
DECEMBER 31, 1995 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS -- (CONTINUED)
UNITED KINGDOM -- (CONTINUED)
33,000 Reuters Holdings Ord. .......................... $ 302,369
145,000 Rolls Royce .................................... 425,600
27,000 RTZ Corporation Ord. ........................... 392,474
50,200 Shell Transport & Trading Ord. ................. 664,224
65,000 Standard Chartered Bank ........................ 553,179
255,000 Tarmac Plc Ord. ................................ 407,896
126,000 Vodafone Group Ord. ............................ 451,038
39,167 Welsh Water Ord. ............................... 471,400
8,000 Zeneca Group ................................... 154,803
------------
10,937,101
------------
GERMANY -- 7.5%
300 Allianz AG ..................................... 584,937
750 Ava Allgemeine Handels Der Verbr AG............. 253,661
2,070 Bayer AG ....................................... 546,370
700 Bilfinger & Berger Bau AG ...................... 265,063
255 Colonia Konzern AG ............................. 213,389
17,900 Deutsche Bank AG ............................... 848,440
7,720 Deutsche Pfandbrief & Hypothekenbank AG ........ 299,863
1,400 Hoechst AG ..................................... 379,777
1,700 Jungheinrich AG ................................ 241,841
1,500 Lufthansa AG+ ................................. 206,590
1,160 M.A.N. AG ...................................... 313,864
543 Munchener Ruckversicherungs .................... 1,181,423
2,035 Siemens AG ..................................... 1,113,999
1,510 Thyssen AG+ ................................... 274,412
27,750 Veba AG ........................................ 1,178,504
------------
7,902,133
------------
UNITED STATES -- 7.1%
23,678 Asia Cement, GDS+ ............................. 390,695
22,000 Chilectra SA ................................... 1,064,177
30,000 China Steel Corporation, GDS+ ................. 521,250
18,000 Compania Cervecerias, ADR ...................... 418,500
26,000 Grupo Casa Autrey, ADR ......................... 347,750
19,500 Hansol Paper Company, GDS+ .................... 365,625
21,000 Korea Electric Power Corporation, ADR .......... 561,750
109,332 Mavesa SA, ADR ................................. 396,329
8,800 Pick Szeged, GDS+ +++ ......................... 308,000
61,440 President Enterprises Corporation, GDS+ ........ 614,401
15,800 Quilmes Industrial SA .......................... 246,480
12,600 Repsol SA, ADR ................................. 414,225
20,800 Sociedad Quimica Minera SA, ADR ................ 977,600
19,757 Telefonos de Mexico SA, ADR .................... 629,754
172,159 Venepal, GDS+++ ................................ 275,455
------------
7,531,991
------------
NETHERLANDS -- 4.5%
7,600 DSM NV ......................................... $ 625,164
23,000 Elsevier NV .................................... 306,724
10,022 International Nederlanden Groep CVA............. 669,507
10,700 Koninklijke KNP+ .............................. 274,718
9,500 Koninklijke PTT+ .............................. 345,142
13,270 Royal Dutch Petroleum .......................... 1,854,013
5,050 Unilever NV CVA ................................ 709,650
------------
4,784,918
------------
SWITZERLAND -- 4.1%
920 Ciba Geigy AG .................................. 809,887
200 Compagnie Financiere Richemont, Series A ....... 300,087
5,060 Credit Suisse Holdings ......................... 518,946
200 Fischer (George) AG, Bearer .................... 260,191
115 Holderbank Financier Glaris AG ................. 88,270
290 Nestle SA ...................................... 320,937
80 Roche Holdings AG .............................. 633,131
490 Sandoz AG ...................................... 448,777
1,260 Schweizerischer Bankverein ..................... 514,709
1,450 Zurich Versicherungs ........................... 433,868
------------
4,328,803
------------
SINGAPORE -- 3.1%
65,000 Development Bank of Singapore (F) .............. 808,766
239,000 Natsteel Ltd. Ord. ............................. 489,996
98,000 Sembawang Corporation Ltd. ..................... 543,867
72,000 Singapore International Airlines Ltd. (F) ...... 671,898
13,000 Singapore Press Holdings ....................... 229,763
252,000 United Overseas Land ........................... 479,237
------------
3,223,527
------------
HONG KONG -- 3.0%
131,600 Hong Kong Telecommunications ................... 234,863
38,400 HSBC Holdings Ord. ............................. 581,028
39,000 Henderson Land Development Company ............. 235,034
434,000 Luoyang Glass Company Ltd. ..................... 111,692
800 M.C. Packaging Hong Kong Ord. .................. 285
71,000 New World Development Company .................. 309,434
2,098,000 Pacific Concord Holdings Ord. .................. 312,021
72,000 Television Broadcasts Ltd. ..................... 256,528
2,289,120 World Houseware Holdings ....................... 343,405
923,000 Yizheng Chemical Fibre Company Ltd. ............ 207,697
2,200,000 Yue Yeun Industrial Holdings ................... 583,253
------------
3,175,240
------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
INTERNATIONAL GROWTH FUND
DECEMBER 31, 1995 (UNAUDITED)
VALUE
SHARES (NOTE 2)
------ --------
COMMON STOCKS -- (CONTINUED)
BELGIUM -- 3.0%
1,600 Arbed NPV+ .................................... $ 181,040
2,000 Banque Bruxelles Lambert NPV ................... 343,187
11,150 Delhaize ....................................... 462,215
2,140 Electrabel Company NPV ......................... 509,004
4,600 Fortis AG ...................................... 558,784
1,000 Generale de Banque NPV ......................... 354,230
1,200 Petrofina SA NPV ............................... 367,380
650 Solvay Et Cie, Class A, NPV .................... 351,172
------------
3,127,012
------------
AUSTRALIA -- 2.0%
31,210 Broken Hill Property Ord. ...................... 440,740
94,400 CSR Ord. ....................................... 307,313
42,800 National Australia Bank Ltd. Ord. .............. 384,914
97,100 Southcorp Holdings Ltd. ........................ 225,891
50,700 The News Corporation Ord. ...................... 270,562
111,000 TNT Ltd. Ord.+ ................................ 146,851
50,550 Western Mining Corporation Ltd. ................ 324,616
------------
2,100,887
------------
SPAIN -- 1.8%
4,300 Banco Intercontinental Espanol SA .............. 418,302
2,400 Banco Popular Espanol .......................... 442,605
148,000 Fuerzas Electric de Cataluna, Series A.......... 1,055,400
------------
1,916,307
------------
NORWAY -- 1.8%
16,000 Hafslund Nycomed, Class B ...................... 405,780
9,500 Kvaerner Industrier, Class B ................... 318,240
18,400 Norsk Hydro A.S. ............................... 773,384
8,000 Orkla, Class B ................................. 381,762
------------
1,879,166
------------
INDONESIA -- 1.6%
164,100 Indorama Synthetics (F) ........................ 575,947
200,000 International Nickel of Indonesia .............. 384,868
265,000 P.T. Fastfood Indonesia Ord. (F) ............... 243,385
39,000 Unilever Indonesia (F) ......................... 469,058
------------
1,673,258
------------
THAILAND -- 1.5%
21,000 Advanced Information Service Public (F) ........ 368,480
38,200 Bangkok Bank Public Company Ltd. (F)............ 464,041
6,700 Siam Cement Public Company Ltd. (F)............. 371,306
32,300 Siam Commercial Bank Ord. (F) .................. 425,709
------------
1,629,536
------------
GREECE -- 1.5%
15,000 Ergo Bank ...................................... $ 597,760
30,000 Hellenic Bottling Company SA ................... 980,971
------------
1,578,731
------------
MALAYSIA -- 1.4%
30,000 Matsushita Electric Company .................... 256,329
82,000 Nestle Malay Berhad ............................ 600,543
254,000 Sime Darby Berhad .............................. 675,080
------------
1,531,952
------------
MEXICO -- 1.4%
103,500 Cementos Mexicanos SA, Class B ................. 375,632
217,400 Fomento Economico Mexicana SA, Series B ........ 490,312
110,000 Grupo Carso SA de CV, Series A1+ .............. 593,130
------------
1,459,074
------------
SWEDEN -- 1.2%
11,000 Astra AB, Series B ............................. 435,660
8,500 Incentive AB, Series B ......................... 371,207
22,000 Stadshypotek AB ................................ 440,629
------------
1,247,496
------------
PHILLIPINES -- 1.0%
63,000 Manila Electric Company, Class B ............... 513,992
169,000 San Miguel Corporation, Class B ................ 576,649
------------
1,090,641
------------
PORTUGAL -- 0.9%
30,000 Cel-Cat Ptes Fabrices+ ........................ 461,878
18,000 Corporacao Industrial Do Norte ................. 412,678
18,000 Corporacao Industrial Do Norte ................. 150,612
------------
1,025,168
------------
ARGENTINA -- 0.6%
259,660 Sociedad Comercial Del Plata Arpio+ ........... 687,997
------------
AUSTRIA -- 0.2%
5,540 Julius Meinl Investors AG+ .................... 173,700
------------
Total Common Stocks
(Cost $95,990,408) ........................... 97,574,494
------------
PREFERRED STOCK -- 0.3% (Cost $286,570)
3,600 Legrand, Pfd. .................................. 359,927
------------
WARRANTS -- 0.3%
500 United Overseas Land, expire 06/09/1997+ 424
3,920 Volkswagen AG, expire 10/27/1998+ ............. 341,702
------------
Total Warrants (Cost $348,875) ................. 342,126
------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS (CONTINUED)
INTERNATIONAL GROWTH FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------ -------
CORPORATE BONDS -- 1.3%
JPY 80,000,000 Bank of Tokyo Euro Yen,
4.250% due 03/31/2003 ...................... $ 1,069,249
CHF 290,000 Sandoz Capital Ltd., Conv.,
1.250% due 10/23/2002 ...................... 282,958
------------
Total Corporate Bonds
(Cost $1,258,131) ............................ 1,352,207
------------
COMMERCIAL PAPER -- 3.3% (Cost $3,456,000)
$3,456,000 Prudential Securities,
5.900% due 01/02/1996++ ...................... 3,456,000
------------
TOTAL INVESTMENTS (COST $101,339,984*) .............. 97.6% 103,084,754
OTHER ASSETS AND LIABILITIES (NET) .................. 2.4 2,510,077
----- ------------
NET ASSETS ........................................... 100.0% $105,594,831
===== ============
- --------------
* Aggregate cost for federal tax purposes.
+ Non-income producing security.
++ Rate represents annualized yield at date of purchase.
+++ Security exempt from registration under Rule 144A of the Securities Act
of 1933. This security may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
AS OF DECEMBER 31, 1995 SECTOR DIVERSIFICATION WAS AS FOLLOWS:
% OF VALUE
SECTOR DIVERSIFICATION NET ASSETS (NOTE 2)
---------------------- ---------- --------
COMMON STOCKS:
Financial Services ............................ 20.4% $ 21,580,545
Material & Processing ......................... 17.8 18,810,858
Consumer Discretionary ........................ 11.9 12,511,618
Consumer Staples .............................. 9.0 9,451,917
Producer Durables ............................. 6.8 7,194,066
Utilities ..................................... 6.5 6,897,425
Energy ........................................ 5.0 5,284,376
Autos & Transportation ........................ 4.2 4,444,082
Telecommunications ............................ 3.0 3,183,727
Health Care ................................... 2.8 2,979,821
Technology .................................... 1.2 1,204,016
Other ......................................... 3.8 4,032,043
---- -----------
TOTAL COMMON STOCKS ........................... 92.4 97,574,494
PREFERRED STOCK ............................... 0.3 359,927
WARRANTS ...................................... 0.3 342,126
CORPORATE BONDS ............................... 1.3 1,352,207
COMMERCIAL PAPER .............................. 3.3 3,456,000
---- -----------
TOTAL INVESTMENTS ............................. 97.6 103,084,754
OTHER ASSETS AND LIABILITIES (NET) ............ 2.4 2,510,077
---- -----------
NET ASSETS .................................... 100.0% $105,594,831
===== ============
SCHEDULE OF FORWARD FOREIGN CURRENCY CONTRACTS
U.S. FORWARD FOREIGN CURRENCY CONTRACTS TO SELL
<TABLE>
<CAPTION>
CONTRACTS TO DELIVER NET UNREALIZED
------------------------------------------------------- APPRECIATION/
EXPIRATION LOCAL VALUE IN IN EXCHANGE (DEPRECIATION)
DATE CURRENCY U.S. $ FOR U.S. $ OF CONTRACTS
- ----------- ---------------------- ---------- ------------- ---------------
<S> <C> <C> <C> <C>
03/18/1996 FRF 43,731,583 8,934,849 8,724,679 $ (210,170)
03/18/1996 JPY 1,667,839,531 16,339,858 16,628,510 288,652
----------
Net Unrealized Appreciation of
Forward Foreign Currency Contracts ................... $ 78,482
==========
</TABLE>
- ----------------------------------------------------
GLOSSARY OF TERMS
ADR -- American Depositary Receipt
ADS -- American Depositary Shares
CHF -- Swiss Franc
(F) -- Foreign or Alien Shares
FRF -- French Franc
GDS -- Global Depositary Shares
JPY -- Japanese Yen
- ----------------------------------------------------
See Notes to Financial Statements.
<PAGE>
PORTFOLIO OF INVESTMENTS
TARGET MATURITY 2002 FUND
DECEMBER 31, 1995 (UNAUDITED)
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- ---------- --------
U.S. TREASURY OBLIGATION -- 97.6%
U.S. TREASURY STRIP
$4,905,000 Zero coupon due 11/15/2002 ..................... $ 3,377,975
------------
TOTAL INVESTMENTS (COST $3,124,659*) ................. 97.6% 3,377,975
OTHER ASSETS AND LIABILITIES (NET) .................... 2.4 84,352
----- ------------
NET ASSETS ........................................... 100.0% $ 3,462,327
===== ============
- --------------
* Aggregate cost for federal tax purposes.
- -----------------------------------------------------------------------
GLOSSARY OF TERMS
STRIP -- Separate trading of registered interest and
principal of securities
- -----------------------------------------------------------------------
See Notes to Financial Statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
SIERRA TRUST FUNDS
1. ORGANIZATION AND BUSINESS
Sierra Trust Funds (the "Company") was organized under the laws of the
Commonwealth of Massachusetts on February 22, 1989 and is a business entity
commonly known as a "Massachusetts business trust." The Company is registered
under the Investment Company Act of 1940, as amended (the "1940 Act"), as an
open-end management investment company. The Company offers sixteen managed
investment funds (the "Funds"): the Global Money, U.S. Government Money and
California Money Funds (the "Money Funds"); the Short Term High Quality Bond,
Short Term Global Government, U.S. Government, Corporate Income, California
Municipal, Florida Insured Municipal, California Insured Intermediate
Municipal and National Municipal Funds (the "Bond Funds"); the Growth and
Income, Growth, Emerging Growth and International Growth Funds (the "Equity
Funds"); and the Target Maturity 2002 Fund.
Each of the Funds, except the Target Maturity 2002 Fund, offers three classes
of shares, Class A Shares, Class B Shares and Class S Shares. The Target
Maturity 2002 Fund offers only Class A Shares. Class A Shares of non-Money
Funds are subject to an initial sales charge at the time of purchase. Class A
Shares of Money Funds are not subject to an initial sales charge; however,
certain Class A Shares of non-Money Funds purchased without an initial sales
charge and Class A Shares of Money Funds received in exchange for such shares
may be subject to a contingent deferred sales charge ("CDSC") if redeemed
within one year or two years of purchase, depending on the circumstances.
Class B Shares and Class S Shares are not subject to an initial sales charge.
Class B Shares of the Short Term High Quality Bond and Short Term Global
Government Funds (the "Short Term Funds") that are redeemed within four years
of purchase, and Class B Shares of the remaining Funds (the "Long Term Funds")
that are redeemed within six years of purchase will be subject to a CDSC.
Class B Shares of Money Funds are not available for purchase directly and may
be purchased only by exchange for Class B Shares of non-Money Funds. Class S
Shares are subject to a CDSC if redeemed within six years of purchase. Class S
Shares are available only to investors who have Sierra Asset Management
("SAM") accounts or do not redeem their Class S Shares after they close their
SAM accounts.
2. SIGNIFICANT ACCOUNTING POLICIES
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures in the financial statements.
Actual results could differ from those estimates. The following is a summary
of significant accounting policies consistently followed by the Funds in the
preparation of their financial statements.
PORTFOLIO VALUATION:
Money Funds: The investments of each Money Fund are valued on the basis of
amortized cost so long as the Company's Board of Trustees (the "Board of
Trustees") determines that this method constitutes fair value. Amortized cost
involves valuing a portfolio instrument at its cost initially and, thereafter,
assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the instrument. Each Money Fund attempts to maintain a constant net asset
value of $1.00 per share.
Bond Funds and Equity Funds: A security that is primarily traded on a United
States ("U.S.") or foreign exchange (including securities traded through the
NASDAQ National Market System) is valued at the last sale price on that
exchange or, if there were no sales during the day, at the current quoted bid
price. Portfolio securities that are primarily traded on foreign exchanges are
generally valued at the most recent closing values of such securities on their
respective exchanges, except when an occurrence subsequent to the time a value
was so established is likely to have changed the value, then the fair value of
those securities will be determined in good faith through consideration of
other factors by or under the direction of the Board of Trustees or its
delegates. Over-the-counter securities that are not traded through the NASDAQ
National Market System and securities listed or traded on certain foreign
exchanges whose operations are similar to the U.S. over-the-counter market,
are valued on the basis of the bid price at the close of business on each day.
Investments in U.S. Government securities (other than short-term securities)
are valued at the average of the quoted bid and asked prices in the over-the-
counter market. The current market value of an option is the last price on the
principal exchange on which such option is traded or in the absence of a sale,
is the mean between the last bid and offering price. Short-term investments
that mature in 60 days or less are valued at amortized cost; such investments
denominated in foreign currencies are stated at amortized cost as determined
in the foreign currency, translated to U.S. dollars at the current day's
exchange rate.
Corporate debt securities and debt securities of U.S. issuers (other than U.S.
Government securities and short-term investments), including municipal
securities, are valued by an independent pricing service which utilizes market
quotations and transactions, quotations from dealers and various relationships
among securities in determining value. If not valued by a pricing service,
such securities are valued at prices obtained from independent brokers.
Investments with prices that cannot be readily obtained, if any, are carried
at fair value as determined in good faith under consistently applied
procedures established by and under the supervision of the Board of Trustees.
REPURCHASE AGREEMENTS:
Each Fund may engage in repurchase agreement transactions. Under the terms of
a typical repurchase agreement, the Fund through its custodian takes
possession of an underlying debt obligation subject to an obligation of the
seller to repurchase, and the Fund to resell, the obligation at an agreed upon
price and time, thereby determining the yield during the Fund's holding
period. This arrangement results in a fixed rate of return that is not subject
to market fluctuations during the Fund's holding period. The value of the
collateral is at least equal at all times to the total amount of the
repurchase obligation, including interest. In the event of counterparty
default, the Fund has the right to use the collateral to offset losses
incurred. There is potential loss to the Fund in the event the Fund is delayed
or prevented from exercising its right to dispose of the collateral
securities, including the risk of a possible decline in the value of the
underlying securities during the period while the Fund seeks to assert its
rights. Each Fund's respective Sub-advisor, acting under the supervision of
the Company's investment advisor, Sierra Investment Advisors Corporation
("Sierra Advisors"), and the Board of Trustees, reviews the value of the
collateral and the creditworthiness of those banks and dealers with which the
Fund enters into repurchase agreements to evaluate potential risks.
REVERSE REPURCHASE AGREEMENTS:
The Short Term High Quality Bond, Short Term Global Government, U.S.
Government, Corporate Income, California Municipal, Florida Insured Municipal,
California Insured Intermediate Municipal, National Municipal, Growth and
Income, Growth, Emerging Growth, International Growth and Target Maturity 2002
Funds may engage in reverse repurchase agreements. Reverse repurchase
agreements are the same as repurchase agreements except that, in this
instance, the Funds would assume the role of seller/borrower in the
transaction. The Funds may use reverse repurchase agreements to borrow short
term funds. The value of the reverse repurchase agreements that the Funds have
committed to sell are reflected in the Funds' Statements of Assets and
Liabilities. The Funds will maintain segregated accounts with the Trust's
custodian consisting of U.S. Government securities, cash or money market
instruments that at all times are in an amount equal to their obligations
under reverse repurchase agreements. Reverse repurchase agreements involve the
risks that the market value of the securities sold by a Fund may decline below
the repurchase price of the securities and, if the proceeds from the reverse
repurchase agreement are invested in securities, that the market value of the
securities bought may decline below the repurchase price of the securities
sold.
OPTION CONTRACTS:
The Short Term High Quality Bond, Short Term Global Government, U.S.
Government, Corporate Income, California Insured Intermediate Municipal,
Growth and Income, Growth, Emerging Growth and International Growth Funds may
engage in option contracts. The Funds may use option contracts to manage their
exposure to the stock and bond markets and to fluctuations in interest rates
and currency values. The underlying principal amounts and option values are
shown in the Portfolio of Investments under the captions "Call Option
Purchased on U.S. Treasury Bond Futures," "Options Written," "Options on
Foreign Currency Purchased" and "Call Options Written on Foreign Interest Rate
Futures." These amounts reflect each contract's exposure to the underlying
instrument at December 31, 1995. Writing puts and buying calls tends to
increase the Funds' exposure to the underlying instrument. Buying puts and
writing calls tends to either decrease the Funds' exposure to the underlying
instrument, or to hedge other Fund investments.
Upon the purchase of a put option or a call option by the Funds, the premium
paid is recorded as an investment, the value of which is marked-to-market
daily. When a purchased option expires, the Funds will realize a loss in the
amount of the cost of the option. When the Funds enter into a closing sale
transaction, the Funds will realize a gain or loss depending on whether the
sales proceeds from the closing sale transaction are greater or less than the
cost of the option. When the Funds exercise a put option, they will realize a
gain or loss from the sale of the underlying security and the proceeds from
such sale will be decreased by the premium originally paid. When the Funds
exercise a call option, the cost of the security which the Funds purchase upon
exercise will be increased by the premium originally paid.
When the Funds write a call option or a put option, an amount equal to the
premium received by the Funds is recorded as a liability, the value of which
is marked-to-market daily. When a written option expires, the Funds realize a
gain equal to the amount of the premium received. When the Funds enter into a
closing purchase transaction, the Funds realize a gain (or loss if the cost of
the closing purchase transaction exceeds the premium received when the option
was sold) without regard to any unrealized gain or loss on the underlying
security, and the liability related to such option is eliminated. When a call
option is exercised, the Funds realize a gain or loss from the sale of the
underlying security and the proceeds from such sale are increased by the
premium originally received. When a put option is exercised, the amount of the
premium originally received will reduce the cost of the security that the
Funds purchased upon exercise.
The risk associated with purchasing options is limited to the premium
originally paid. Options written by a Fund involve, to varying degrees, risk
of loss in excess of the option value reflected in the Statements of Assets
and Liabilities. The risk in writing a covered call option is that the Funds
may forego the opportunity of profit if the market price of the underlying
security increases and the option is exercised. The risk in writing a covered
put option is that the Funds may incur a loss if the market price of the
underlying security decreases and the option is exercised. In addition, there
is the risk the Funds may not be able to enter into a closing transaction
because of an illiquid secondary market or, for over-the-counter options,
because of the counterparty's inability to perform.
The Short Term High Quality Bond, Short Term Global Government, California
Insured Intermediate Municipal, Growth and International Growth Funds may
engage in options on foreign currency and options on interest rate futures as
a hedge to provide protection against adverse movements in the value of
foreign securities in the portfolio.
Certain risks are associated with the use of options on foreign currency and
options on interest rate futures contracts as hedging devices. The predominant
risk is that the movement in the price of the instrument underlying an option
or futures contract may not correlate perfectly with the movement in the
prices of the assets being hedged. The lack of correlation could render the
Funds' hedging strategy unsuccessful and could result in a loss to the Funds.
In addition, there is the risk the Funds may not be able to enter into a
closing transaction because of an illiquid secondary market or, for over-the-
counter options, because of the counterparty's inability to perform. Options
written by a Fund involve, to varying degrees, risk of loss in excess of the
option value reflected in the Statements of Assets and Liabilities.
FUTURES CONTRACTS:
The Short Term High Quality Bond, Short Term Global Government, U.S.
Government, Corporate Income, California Municipal, Florida Insured Municipal,
California Insured Intermediate Municipal, National Municipal, Growth and
Income, Growth, Emerging Growth and International Growth Funds may engage in
futures transactions. The Funds may use futures contracts to manage their
exposure to the stock and bond markets and to fluctuations in interest rates
and currency values. The underlying value of a futures contract is
incorporated within the unrealized appreciation/(depreciation) shown in the
Portfolio of Investments under the caption "Futures Contracts." This amount
reflects each contract's exposure to the underlying instrument at December 31,
1995. Buying futures contracts tends to increase the Fund's exposure to the
underlying instrument. Selling futures contracts tends to either decrease the
Fund's exposure to the underlying instrument, or to hedge other Fund
investments.
Upon entering into a futures contract, the Fund is required to deposit with
the broker an amount of cash or cash equivalents equal to a certain percentage
of the contract amount. This is known as the "initial margin." Subsequent
payments ("variation margin") are made or received by the Fund each day,
depending on the daily fluctuation of the value of the contract. The daily
changes in contract value are recorded as unrealized gains or losses and the
Fund recognizes a realized gain or loss when the contract is closed. Futures
contracts are valued at the settlement price established by the board of trade
or exchange on which they are traded.
There are several risks in connection with the use of futures contracts as a
hedging device. Futures contracts involve, to varying degrees, risk of loss in
excess of the futures variation margin reflected in the Statements of Assets
and Liabilities. The change in the value of futures contracts primarily
corresponds with the value of their underlying instruments, which may not
correlate with the change in the value of the hedged instruments. In addition,
there is the risk that the Fund may not be able to enter into a closing
transaction because of an illiquid secondary market.
FOREIGN CURRENCY:
The books and records of the Funds are maintained in U.S. dollars. Foreign
currencies, investments and other assets and liabilities are translated into
U.S. dollars at the exchange rates prevailing at the end of the period, and
purchases and sales of investment securities, income and expenses are
translated on the respective dates of such transactions. It is not practicable
to isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the portion that arises from
changes in market prices of investments during the period. Accordingly, all
such changes have been reflected as net gains/(loss) on security transactions
in the Statements of Operations.
Unrealized gains and losses, not relating to securities, which result from
changes in foreign currency exchange rates have been included in unrealized
appreciation/(depreciation) of foreign currency and other assets and
liabilities. Unrealized gains and losses of securities, which result from
changes in foreign currency exchange rates as well as changes in market prices
of securities, have been included in unrealized appreciation/(depreciation) of
securities. Net realized foreign currency gains and losses resulting from
changes in exchange rates include foreign currency gains and losses between
trade date and settlement date on investment securities transactions, gains
and losses on foreign currency transactions and the difference between the
amounts of interest and dividends recorded on the books of the Funds and the
amount actually received. The portion of foreign currency gains and losses
related to fluctuation in exchange rates between the initial purchase trade
date and subsequent sale trade date is included in realized gain/(loss) from
investment securities sold.
FORWARD FOREIGN CURRENCY CONTRACTS:
The Short Term High Quality Bond, Short Term Global Government, Corporate
Income, Growth and Income, Growth, Emerging Growth and International Growth
Funds may enter into forward foreign currency contracts. Forward foreign
currency contracts are agreements to exchange one currency for another at a
future date and at a specified price. The Funds may use forward foreign
currency contracts to facilitate transactions in foreign securities and to
manage the Funds' foreign currency exposure. The U.S. dollar market value,
contract value and the foreign currencies the Funds have committed to buy or
sell are shown in the Portfolio of Investments under the caption "Schedule of
Forward Foreign Currency Contracts." These amounts represent the aggregate
exposure to each foreign currency the Funds have acquired or hedged through
currency contracts at December 31, 1995. Forward foreign currency contracts
that have been offset with different counterparties are reflected as both a
forward foreign currency contract to buy and a forward foreign currency
contract to sell. Forward foreign currency contracts to buy generally are used
to acquire exposure to foreign currencies, while forward foreign currency
contracts to sell are used to hedge the Funds' investments against currency
fluctuations. Also, a forward foreign currency contract to buy or sell can
offset a previously acquired opposite forward foreign currency contract.
Forward foreign currency contracts are marked-to-market daily using foreign
currency exchange rates supplied by an independent pricing service. The change
in a contract's market value is recorded by the Funds as an unrealized gain or
loss. When the contract is closed or delivery is taken, the Funds record a
realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
The use of forward foreign currency contracts does not eliminate fluctuations
in the underlying prices of the Fund's securities, but it does establish a
rate of exchange that can be achieved in the future. These forward foreign
currency contracts involve market risk in excess of the unrealized
appreciation/(depreciation) of forward foreign currency contracts reflected in
the Funds' Statements of Assets and Liabilities. Although forward foreign
currency contracts used for hedging purposes limit the risk of loss due to a
decline in the value of the hedged currency, they also limit any potential
gain that might result should the value of the currency increase. In addition,
the Funds could be exposed to risks if the counterparties to the contracts are
unable to meet the terms of their contracts. Because there is a risk of loss
to the Funds if the counterparties do not complete the transaction, the Fund's
Sub-advisor will enter into forward foreign currency contracts only with
parties approved by the Board of Trustees.
DOLLAR ROLL TRANSACTIONS:
The Short Term High Quality Bond, U.S. Government and Corporate Income Funds,
in order to seek a high level of current income, may enter into dollar roll
transactions with financial institutions to take advantage of opportunities in
the mortgage market. The value of the dollar roll transactions are reflected
in the Funds' Statements of Assets and Liabilities. A dollar roll transaction
involves a sale by the Funds of securities that they hold with an agreement by
the Funds to repurchase similar securities at an agreed upon price and date.
The securities repurchased will bear the same interest as those sold, but
generally will be collateralized at time of delivery by different pools of
mortgages with different prepayment histories than those securities sold. The
Funds are paid a fee for entering into a dollar roll transaction, that is
accrued as income over the life of the dollar roll contract. During the period
between the sale and repurchase, the Funds will not be entitled to receive
interest and principal payments on the securities sold. Management anticipates
that the proceeds of the sale will be invested in additional instruments for
the Funds, and the income from these investments, together with any additional
fee income received on the dollar roll transaction will generate income for
the Funds exceeding the interest that would have been earned on the securities
sold. Dollar roll transactions involve the risk that the market value of the
securities sold by the Funds may decline below the repurchase price of those
similar securities which the Fund is obligated to purchase or that the return
earned by the Fund with the proceeds of a dollar roll may not exceed
transaction costs.
INDEXED SECURITIES:
Each of the Funds, except for the Money Funds, may invest in indexed
securities whose value is linked either directly or inversely to changes in
foreign currencies, interest rates, commodities, indices, or other reference
instruments. Indexed securities may be more volatile than the reference
instrument itself, but any loss is limited to the amount of the original
investment.
ILLIQUID INVESTMENTS:
Up to 15% of the assets of each non-Money Fund, and up to 10% of the assets of
each Money Fund, may be invested in securities that are not readily
marketable, including: (1) repurchase agreements with maturities greater than
seven calendar days; (2) time deposits maturing in more than seven calendar
days; (3) to the extent a liquid secondary market does not exist for the
instruments, futures contracts and options thereon; (4) certain over-the-
counter options; (5) certain variable rate demand notes having a demand period
of more than seven days; and (6) securities, the disposition of which are
restricted under Federal securities laws, excluding certain Rule 144A
securities, as defined below. Illiquid securities generally cannot be sold or
disposed of in the ordinary course of business within seven days at
approximately the value at which the Funds have valued the investments. These
factors may have an adverse effect on the Fund's ability to dispose of
particular illiquid securities at fair market value and may limit the Fund's
ability to obtain accurate market quotations for purposes of valuing the
securities and calculating the net asset value of shares of the Fund. The
Funds may also purchase securities that are not registered under the
Securities Act of 1933, as amended (the "Act"), but that can be sold to
qualified institutional buyers in accordance with Rule 144A under that Act
("Rule 144A securities"). Rule 144A securities generally may be resold only to
other qualified institutional buyers. If a particular investment in Rule 144A
securities is not determined to be liquid under the guidelines established by
the Board of Trustees, that investment will be included within the 15% or 10%
limitation, as applicable, on investment in illiquid securities.
CASH FLOW INFORMATION:
Cash, as used in the Statement of Cash Flows, is the amount reported in the
Statements of Assets and Liabilities and represents cash on hand at the Fund's
custodian bank account and does not include any short term investments as of
December 31, 1995. Information on financial transactions which have been
settled through the receipt or disbursement of cash is presented in the
Statement of Cash Flows. Accounting practices that do not affect reporting
activities on a cash basis include unrealized gain or loss on investment
securities, accretion of income recognized on investment securities and
amortization of deferred organization costs.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME:
Securities transactions are recorded as of the trade date (the date the order
to buy or sell is executed). Realized gains and losses from securities sold
are recorded on the identified cost basis. Interest income is recorded on the
accrual basis and consists of interest accrued and, if applicable, discount
earned less premiums amortized. Dividend income is recorded on the ex-dividend
date, except that certain dividends from foreign securities are recorded as
soon as the Funds are informed of the ex-dividend date. Each Fund's investment
income and realized and unrealized gains and losses are allocated among the
classes of that Fund based upon the relative average net assets of each class.
Securities purchased or sold on a when-issued or delayed-delivery basis may be
settled a month or more after the trade date; interest income is not accrued
until settlement date. Each Fund instructs the custodian to segregate assets
of the Fund in a separate account with a current value at least equal to the
amount of its when-issued purchase commitments.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS:
Dividends from net investment income of the Money Funds and the Bond Funds are
declared daily and paid monthly. Dividends from the net investment income of
the Growth and Income Fund are declared and paid quarterly. Dividends from the
net investment income of the Growth Fund are declared and paid semiannually.
Dividends from the net investment income of the Emerging Growth, International
Growth and Target Maturity 2002 Funds are declared and paid annually.
Distributions of any net long-term capital gains earned by a Fund are made
annually. Distributions of any net short-term capital gains earned by a Fund
are distributed no less frequently than annually at the discretion of the
Board of Trustees. Additional distributions of net investment income and
capital gains for each Fund may be made at the discretion of the Board of
Trustees in order to avoid the application of a 4% non-deductible excise tax
on certain undistributed amounts of ordinary income and capital gains. Income
distributions and capital gain distributions are determined in accordance with
income tax regulations which may differ from generally accepted accounting
principles. These differences are primarily due to differing treatments of
income and gains on various investment securities held by the Funds, timing
differences and differing characterization of distributions made by each Fund
as a whole.
FEDERAL INCOME TAXES:
It is each Fund's policy to qualify as a regulated investment company by
complying with the requirements of the Internal Revenue Code of 1986, as
amended, applicable to regulated investment companies and by, among other
things, distributing substantially all of its taxable and tax-exempt earnings
to its shareholders. Therefore, no Federal income tax provision is required.
EXPENSES:
General expenses of the Company are allocated to all the Funds based upon
relative net assets of each Fund. Operating expenses directly attributable to
a class of shares are charged to the operations of that class. Expenses of
each Fund not directly attributable to the operations of any class of shares
are prorated among the classes to which the expenses relate based on the
relative average net assets of each class.
OTHER:
The California Municipal, Florida Insured Municipal, California Insured
Intermediate Municipal and National Municipal (the "Municipal Funds") and the
Corporate Income Fund may purchase floating rate, inverse floating rate and
variable rate obligations, including municipal securities and participation
interests therein. Floating rate obligations have an interest rate that
changes whenever there is a change in the external interest rate, while
variable rate obligations provide for a specified periodic adjustment in the
interest rate. The interest rate on an inverse floating rate obligation (an
"inverse floater") can be expected to move in the opposite direction from the
market rate of interest to which the inverse floater is indexed. The Funds may
purchase floating rate, inverse floating rate and variable rate obligations
that carry a demand feature which would permit the Funds to tender them back
to the issuer or remarketing agent at par value prior to maturity. Frequently,
floating rate, inverse floating rate and variable rate obligations are secured
by letters of credit or other credit support arrangements provided by banks.
The Corporate Income Fund may purchase mortgage-backed securities that are
floating rate, inverse floating rate and variable rate obligations. Although
variable rate demand notes are frequently not rated by credit rating agencies,
unrated notes purchased by the Funds will be determined by such Fund's Sub-
advisor to be of comparable quality at the time of purchase to rated
instruments that may be purchased by such Fund. Moreover, while there may be
no active secondary market with respect to a particular variable rate demand
note purchased by a Fund, the Fund may, upon the notice specified in the note,
demand payment of the principal of and accrued interest on the note at any
time and may resell the note at any time to a third party. The absence of such
an active secondary market, however, could make it difficult for a Fund to
dispose of a particular variable rate demand note in the event the issuer of
the note defaulted on its payment obligations, and the Fund could, for this or
other reasons, suffer a loss to the extent of the default.
An inverse floater may be considered to be leveraged to the extent that its
interest rate varies by a magnitude that exceeds the magnitude of the change
in the index rate of interest. The higher degree of leverage inherent in
inverse floaters is associated with greater volatility in their market values.
Accordingly, the duration of an inverse floater may exceed its stated final
maturity. Inherent in these instruments is the risk of potential loss should
the Fund be delayed or prevented from exercising the put feature.
3. INVESTMENT ADVISORY, SUB-ADVISORY, ADMINISTRATION FEES AND OTHER
TRANSACTIONS
Sierra Advisors, an indirect wholly-owned subsidiary of Great Western
Financial Corporation ("GWFC"), a publicly held corporation, serves as
investment advisor to the Company. Alliance Capital Management L.P. ("Alliance
Capital"), a limited partnership whose general partner is Alliance Capital
Management Corporation, an indirect wholly-owned subsidiary of The Equitable
Life Assurance Society of the United States, serves as the Sub-advisor to the
U.S. Government Money and California Money Funds. J.P. Morgan Investment
Management Inc. ("J.P. Morgan"), a wholly-owned subsidiary of J.P. Morgan &
Co. Incorporated, a publicly traded company, serves as the Sub-advisor to the
Global Money, Growth and Income and International Growth Funds. Van Kampen
American Capital Management Inc. ("Van Kampen"), a wholly-owned subsidiary of
VK/AC Holding, Inc., which is controlled, through the ownership of a
substantial majority of its common stock, by The Clayton & Dubilier Private
Equity Fund IV Limited Partnership ("C&D L.P."), a Connecticut limited
partnership, serves as the Sub-advisor to the California Municipal, Florida
Insured Municipal, California Insured Intermediate Municipal and National
Municipal Funds. BlackRock Financial Management, Inc. ("BlackRock"), an
indirect wholly-owned subsidiary of PNC Bank, N.A., an indirect wholly-owned
subsidiary of PNC Bank Corp. ("PNC"), a publicly traded multi-bank holding
company, serves as the Sub-advisor to the U.S. Government and Target Maturity
2002 Funds. TCW Funds Management, Inc. ("TCW"), a wholly-owned subsidiary of
The TCW Group, Inc., a privately held company, serves as the Sub-advisor to
the Corporate Income Fund. Scudder, Stevens & Clark, Inc., a privately held
corporation, serves as the Sub-advisor to the Short Term Global Government and
Short Term High Quality Bond Funds. Janus Capital Corporation ("Janus"), an
indirect majority-owned subsidiary of Kansas City Southern Industries, Inc.,
which is a publicly traded holding company, serves as the Sub-advisor to the
Growth and Emerging Growth Funds. Each of the foregoing sub-advisors is
referred to individually as a "Sub-advisor" and collectively as the "Sub-
advisors."
The Company pays Sierra Advisors a monthly fee, in arrears, based on a
percentage of the average daily net assets of each Fund during the month, out
of which Sierra Advisors pays the Sub-advisor of each Fund a monthly fee, in
arrears, at annual rates as follows:
<TABLE>
<CAPTION>
FEES ON
FEES ON ASSETS
ASSETS UP TO EXCEEDING
NAME OF FUND $500 MILLION $500 MILLION
------------ ------------ ------------
<S> <C> <C>
Global Money, U.S. Government Money and California Money Funds+
Sierra Advisors .............................................................................. .35% .25%
Sub-advisor .................................................................................. .15% .15%
--- ---
Total fees paid to Sierra Advisors* ...................................................... .50% .40%
=== ===
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON
FEES ON ASSETS BETWEEN ASSETS
ASSETS UP TO $200 AND EXCEEDING
$200 MILLION $500 MILLION $500 MILLION
------------ ------------ ------------
<S> <C> <C> <C>
Short Term High Quality Bond Fund
Sierra Advisors .......................................................... .35% .35% .30%
Sub-advisor .............................................................. .15% .10% .10%
--- --- ---
Total fees paid to Sierra Advisors* .................................. .50% .45% .40%
=== === ===
Short Term Global Government Fund
Sierra Advisors .......................................................... .37% .55% .45%
Sub-advisor .............................................................. .28%++ .10% .10%
--- --- ---
Total fees paid to Sierra Advisors* .................................. .65% .65% .55%
=== === ===
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
WHEN "COMBINED ASSETS**"
WHEN "COMBINED ASSETS**" ARE BETWEEN $650 MILLION WHEN "COMBINED ASSETS**"
DO NOT EXCEED $650 MILLION AND $1 BILLION EXCEED $1 BILLION
------------------------------- ------------------------------- --------------------------------
FEES ON FEES ON FEES ON FEES ON FEES ON FEES ON
ASSETS UP TO ASSETS EXCEEDING ASSETS UP TO ASSETS EXCEEDING ASSETS UP TO ASSETS EXCEEDING
$500 MILLION $500 MILLION $500 MILLION $500 MILLION $500 MILLION $500 MILLION
------------ ---------------- ------------ ---------------- ------------ --------------
<S> <C> <C> <C> <C> <C> <C>
U.S. Government Fund
Sierra Advisors .......... .415% .315% .45% .35% .50% .40%
Sub-advisor** ............ .185% .185% .15% .15% .10% .10%
---- ---- --- --- --- ---
Total fees paid to
Sierra Advisors*.... .600% .500% .60% .50% .60% .50%
==== ==== === === === ===
</TABLE>
<TABLE>
<CAPTION>
FEES ON
FEES ON ASSETS
ASSETS UP TO EXCEEDING
$500 MILLION $500 MILLION
------------ ------------
<S> <C> <C>
Corporate Income Fund
Sierra Advisors .............................................................................. .35% .25%
Sub-advisor .................................................................................. .30% .25%
--- ---
Total fees paid to Sierra Advisors* ...................................................... .65% .50%
=== ===
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON
FEES ON ASSETS BETWEEN ASSETS
ASSETS UP TO $150 AND EXCEEDING
NAME OF FUND $150 MILLION $500 MILLION $500 MILLION
------------ ------------ ------------ ------------
<S> <C> <C> <C>
California Municipal Fund
Sierra Advisors ......................................................... .45% .50% .35%
Sub-advisor*** .......................................................... .20% .15% .15%
--- --- ---
Total fees paid to Sierra Advisors* ................................. .65% .65% .50%
=== === ===
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON
FEES ON ASSETS BETWEEN ASSETS
ASSETS UP TO $75 AND EXCEEDING
$75 MILLION $500 MILLION $500 MILLION
----------- -------------- ------------
<S> <C> <C> <C>
Florida Insured Municipal Fund
Sierra Advisors ......................................................... .40% .475% .325%
Sub-advisor ............................................................. .20% .125% .125%
--- ---- ----
Total fees paid to Sierra Advisors* ................................. .60% .600% .450%
=== ==== ====
California Insured Intermediate Municipal Fund
Sierra Advisors ......................................................... .45% .525% .375%
Sub-advisor ............................................................. .20% .125% .125%
--- ---- ----
Total fees paid to Sierra Advisors* ................................. .65% .650% .500%
=== ==== ====
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON
FEES ON ASSETS BETWEEN ASSETS
ASSETS UP TO $150 AND EXCEEDING
$150 MILLION $500 MILLION $500 MILLION
------------- -------------- ------------
<S> <C> <C> <C>
National Municipal Fund
Sierra Advisors ......................................................... .40% .45% .30%
Sub-advisor*** .......................................................... .20% .15% .15%
--- --- ---
Total fees paid to Sierra Advisors* ................................. .60% .60% .45%
=== === ===
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON FEES ON FEES ON
FEES ON ASSETS BETWEEN ASSETS BETWEEN ASSETS BETWEEN ASSETS
ASSETS UP TO $100 AND $200 AND $400 AND EXCEEDING
$100 MILLION $200 MILLION $400 MILLION $500 MILLION $500 MILLION
------------ -------------- -------------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Growth and Income Fund
Sierra Advisors ........................... .35% .35% .35% .35% .275%
Sub-advisor ............................... .45% .40% .35% .30% .300%
--- --- --- --- ----
Total fees paid to Sierra Advisors* ... .80% .75% .70% .65% .575%
=== === === === ====
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON
FEES ON ASSETS BETWEEN ASSETS
ASSETS UP TO $100 AND EXCEEDING
$100 MILLION $200 MILLION $200 MILLION
------------ -------------- ------------
<S> <C> <C> <C>
Growth Fund
Sierra Advisors ......................................................... .40% .40% .375%
Sub-advisor ............................................................. .55% .50% .500%
--- --- ----
Total fees paid to Sierra Advisors* ................................. .95% .90% .875%
=== === ====
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON
FEES ON ASSETS BETWEEN ASSETS
ASSETS UP TO $100 AND EXCEEDING
$100 MILLION $500 MILLION $500 MILLION
------------ -------------- ------------
<S> <C> <C> <C>
Emerging Growth Fund
Sierra Advisors ......................................................... .35% .35% .25%
Sub-advisor ............................................................. .55% .50% .50%
--- --- ---
Total fees paid to Sierra Advisors* ................................. .90% .85% .75%
=== === ===
</TABLE>
<TABLE>
<CAPTION>
FEES ON FEES ON
FEES ON ASSETS BETWEEN ASSETS
ASSETS UP TO $50 AND EXCEEDING
$50 MILLION $125 MILLION $125 MILLION
------------ -------------- ------------
<S> <C> <C> <C>
International Growth Fund
Sierra Advisors ......................................................... .35% .35% .25%
Sub-advisor ............................................................. .60% .50% .40%
--- --- ---
Total fees paid to Sierra Advisors* ................................. .95% .85% .65%
=== === ===
</TABLE>
<TABLE>
<CAPTION>
FEES ON
FEES ON ASSETS
ASSETS UP TO EXCEEDING
$500 MILLION $500 MILLION
------------ ------------
<S> <C> <C>
Target Maturity 2002 Fund
Sierra Advisors ........................................................................... .20% .15%
Sub-advisor ............................................................................... .05%+++ .05%
--- ---
Total fees paid to Sierra Advisors* ................................................... .25% .20%
=== ===
</TABLE>
- --------------
* Sierra Advisors retains only the net amount of the fees after sub-
advisory fees have been paid.
** The monthly fee paid to BlackRock is based upon the combined average
daily net assets of the U.S. Government Fund and The Sierra Variable
Trust's U.S. Government Fund (together, the "Combined Assets").
*** Pursuant to the investment sub-advisory agreements with respect to each
of the California Municipal and National Municipal Funds, when the
combined average daily net assets of the California Municipal and
National Municipal Funds (together, the "Combined Assets") exceed $750
million, the Sub-advisor will be paid a fee with respect to each Fund in
proportion to each Fund's average net assets at an annual rate as
follows: .15% of the Combined Assets up to $1 billion; plus .125% of the
Combined Assets over $1 billion.
+ Fees paid to Sierra Advisors are based on aggregate assets in the three
Money Funds.
++ The Sub-advisor receives a minimum annual fee of $137,500.
+++ The Sub-advisor receives a minimum annual fee of $25,000.
Sierra Advisors has contractually agreed to limit the annual management fees
that are payable under the investment advisory agreements with the Funds to
the percentages as set forth below.
Global Money Fund ....................................... .40%
U.S. Government Money Fund .............................. .40%
California Money Fund ................................... .40%
U.S. Government Fund .................................... .55%
California Municipal Fund ............................... .55%
Florida Insured Municipal Fund .......................... .55%
California Insured Intermediate Municipal Fund .......... .55%
National Municipal Fund ................................. .55%
Fees voluntarily waived and expenses absorbed by Sierra Advisors for the six
months ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
NAME OF FUND FEES WAIVED EXPENSES ABSORBED
------------ ----------- -----------------
<S> <C> <C>
Global Money Fund ........................................................ $ 291,932 $ 59,473
U.S. Government Money Fund ............................................... 82,405 --
California Money Fund .................................................... 70,879 --
Short Term High Quality Bond Fund ........................................ 127,900 28,810
Short Term Global Government Fund ........................................ 271,146 --
U.S. Government Fund ..................................................... 1,294,739 134,360
Corporate Income Fund .................................................... 861,107 --
California Municipal Fund ................................................ 720,570 --
Florida Insured Municipal Fund ........................................... 102,572 21,328
California Insured Intermediate Municipal Fund ........................... 191,752 18,274
National Municipal Fund .................................................. 352,691 --
Target Maturity 2002 Fund ................................................ 3,799 18,216
</TABLE>
Sierra Fund Administration Corporation ("Sierra Administration"), an indirect
wholly-owned subsidiary of GWFC serves as administrator and transfer agent to
each Fund. First Data Investor Services Group, Inc., ("FDISG"), formerly The
Shareholder Services Group, Inc., a wholly-owned subsidiary of First Data
Corporation, serves as sub-administrator and sub-transfer agent to each Fund.
Sierra Administration is entitled to a monthly fee at an annual rate of .35%
of each non-Money Fund's average daily net assets and at an annual rate of
.30% of each Money Fund's average daily net assets. Out of its fee, Sierra
Administration pays FDISG for its services as sub-administrator and sub-
transfer agent. FDISG, as sub-administrator, is paid a gross annual fee of
$1.71 million on the first $1.6 billion of aggregate average daily net assets
of the Company, plus fees at the annual rate of .0452% on the next $1.3
billion aggregate average daily net assets of the Company, .0429% on the next
$1.7 billion aggregate average daily net assets of the Company and .0362% on
the next $3.1 billion aggregate average daily net assets of the Company.
Fees voluntarily waived by Sierra Administration for the six months ended
December 31, 1995 are as follows:
<PAGE>
<TABLE>
<CAPTION>
NAME OF FUND FEES WAIVED
------------ -----------
<S> <C>
Global Money Fund ......................................................................... $ 5,352
Short Term High Quality Bond Fund ......................................................... 11,630
Short Term Global Government Fund ......................................................... 15,947
U.S. Government Fund ...................................................................... 127,314
Florida Insured Municipal Fund ............................................................ 20,472
California Insured Intermediate Municipal Fund ............................................ 14,288
Target Maturity 2002 Fund ................................................................. 3,805
</TABLE>
The Company also pays FDISG and Boston Safe Deposit and Trust Company ("Boston
Safe"), the Company's custodian, certain custodial transaction charges
reflected as administration fees. Boston Safe is an indirect wholly-owned
subsidiary of The Boston Company, Inc., which is a wholly-owned subsidiary of
Mellon Bank Corporation.
Custodian fees for certain Funds have been reduced by credits allowed by
Boston Safe for the six months ended December 31, 1995 as follows:
<TABLE>
<CAPTION>
CREDITS ALLOWED
BY THE
NAME OF FUND CUSTODIAN
------------ ---------------
<S> <C>
Global Money Fund ......................................................................... $ 804
U.S. Government Money Fund ................................................................ 1,049
Short Term High Quality Bond Fund ......................................................... 635
Short Term Global Government Fund ......................................................... 49
U.S. Government Fund ...................................................................... 24,539
Corporate Income Fund ..................................................................... 203
California Municipal Fund ................................................................. 12,498
Florida Insured Municipal Fund ............................................................ 2,190
California Insured Intermediate Municipal Fund ............................................ 3,336
National Municipal Fund ................................................................... 3,027
Growth and Income Fund .................................................................... 415
Growth Fund ............................................................................... 2,406
Emerging Growth Fund ...................................................................... 7,553
International Growth Fund ................................................................. 1,057
Target Maturity 2002 Fund ................................................................. 1,561
</TABLE>
No director, officer or employee of Great Western Financial Securities
Corporation ("GW Securities"), a registered broker-dealer, Sierra Investment
Services Corporation ("Sierra Services"), a registered investment adviser and
broker-dealer, Sierra Advisors, Sierra Administration, the Sub-advisors or
FDISG, or any of their affiliates receives any compensation from the Company
for serving as an officer or Trustee of the Company. GW Securities is a
wholly-owned subsidiary (directly held as of January 1, 1996) and Sierra
Services is an indirect wholly-owned subsidiary of GWFC. The Company pays each
Trustee who is not a director, officer or employee of GW Securities, Sierra
Services, Sierra Advisors, the Sub-advisors or FDISG, or any of their
affiliates, $7,500 per annum plus $1,500 per board meeting attended, $1,000
per audit and/or nominating committee meeting attended and reimbursement for
travel and out-of-pocket expenses.
Pursuant to an exemptive order granted by the Securities and Exchange
Commission on October 11, 1995, the Company's eligible Trustees may
participate in a deferred compensation plan (the "Plan") which may be
terminated at any time. Upon termination of the Plan, Trustees that have
deferred accounts under the Plan will be paid benefits not later than the time
the payments would otherwise have been made without regard to such
termination. All benefits provided under these plans are funded and any
payments to plan participants are paid solely out of the Company's assets.
As of December 31, 1995, First Interstate Bank as Trustee for Great Western
Employee Savings Plan - Aggressive Fund owned the following Class A Shares:
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME OF FUND SHARES SHARES
------------ --------- -------------
<S> <C> <C>
Emerging Growth Fund ................................................................... 1,304,210 9.67%
</TABLE>
As of December 31, 1995, First Interstate Bank as Trustee for Great Western
Employee Saving Plan - Balanced Fund owned the following Class A Shares:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME OF FUND SHARES SHARES
------------ --------- -------------
<S> <C> <C>
Growth and Income Fund ................................................................. 878,937 6.00%
</TABLE>
As of December 31, 1995, Sierra Administration owned greater than five percent
of Class S Shares of the following Funds:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME OF FUND SHARES SHARES
------------ --------- -------------
<S> <C> <C>
U.S. Government Money Fund ............................................................. 10,609 13.92%
California Money Fund .................................................................. 10,326 100.00
California Municipal Fund .............................................................. 1,039 100.00
Florida Insured Municipal Fund ......................................................... 1,142 100.00
California Insured Intermediate Municipal Fund ......................................... 1,057 100.00
National Municipal Fund ................................................................ 1,005 100.00
</TABLE>
For the six months ended December 31, 1995, GW Securities and Sierra Services
have informed the Funds that they received $1,205,474 and $521,920,
respectively, representing commissions (front-end sales charges). In addition,
for the six months ended December 31, 1995, Funds Distributor Inc. informed
the Funds that they received $336,458 from CDSC fees.
4. DISTRIBUTION PLAN
Sierra Services serves as distributor for Class A Shares, Class B Shares and
Class S Shares of the Funds. Prior to December 20, 1995, Funds Distributor
Inc., a registered broker-dealer, served as distributor for Class B Shares and
Class S Shares of the Funds.
The Company has adopted a Distribution Plan (the "Class A Plan"), as amended,
pursuant to Rule 12b-1 under the 1940 Act. Under the Class A Plan, Sierra
Services is paid an annual distribution fee of up to .25% of the average daily
net assets of the Class A Shares of each Fund for activities primarily
intended to result in the sale of Fund shares. (The Class A Plan applies to
all Class A Shares of the Funds and all shares of the Funds that were
outstanding at the time of commencement of the offering of Class B Shares or
Class S Shares, which outstanding shares are treated for all purposes as Class
A Shares.) For the Funds which offer Class B Shares and Class S Shares, the
Company has also adopted a Rule 12b-1 distribution plan for each of the Class
B Shares (the "Class B Plan") and Class S Shares (the "Class S Plan") of the
Funds. Under the Class B Plan and the Class S Plan, Sierra Services is paid an
annual distribution fee of up to .75% of the average daily net assets of the
Class B Shares and Class S Shares of a Fund for activities primarily intended
to result in the sale of Class B Shares and Class S Shares of the Fund,
respectively. In addition, under the Class B Plan and the Class S Plan, Class
B Shares and Class S Shares are also subject to a service fee at an annual
rate of .25% of the average daily net assets of the Class B Shares and Class S
Shares of the Fund, respectively. The service fee is paid by the Fund to
Sierra Services, which in turn, pays the service fee to broker/dealers,
including GW Securities, that sell Class B Shares and Class S Shares and
provide services, such as, accepting telephone inquiries and transaction
requests and processing correspondences, new account applications and
subsequent purchases by check, for the shareholders. Under their terms each of
the Class A Plan, Class B Plan and Class S Plan shall remain in effect from
year to year, provided such continuance is approved annually by vote of the
Board of Trustees, including a majority of those Trustees who are not
"interested persons" of the Company, as defined in the 1940 Act, and who have
no direct or indirect financial interest in the operation of such distribution
plans, or any agreements related to such plans, respectively.
For the six months ended December 31, 1995, the Funds incurred the following
fees pursuant to the respective distribution plans described above:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS S
------------ ----------------------- -------------------------
DISTRIBUTION DISTRIBUTION SERVICE DISTRIBUTION SERVICE
NAME OF FUND FEE FEE FEE FEE FEE
------------ ------------ ------------ ------- ------------ -------
<S> <C> <C> <C> <C> <C>
Global Money Fund ............................. $167,208 $ 907 $ 303 $44,842 $14,947
U.S. Government Money Fund .................... 52,480 445 148 703 235
California Money Fund ......................... 62,697 262 87 38 13
Short Term High Quality Bond Fund ............. 55,828 11,948 3,983 12,416 4,139
Short Term Global Government Fund ............. 116,035 5,067 1,689 8,837 2,945
U.S. Government Fund .......................... 559,230 54,399 18,133 33,466 11,155
Corporate Income Fund ......................... 449,274 69,088 23,030 28,116 9,372
California Municipal Fund ..................... 502,998 35,074 11,691 41 14
Florida Insured Municipal Fund ................ 41,324 15,859 5,286 40 14
California Insured Intermediate Municipal Fund. 69,506 52,920 17,640 42 14
National Municipal Fund ....................... 326,558 19,527 6,509 40 14
Growth and Income Fund ........................ 227,495 37,099 12,367 75,681 25,227
Growth Fund ................................... 214,171 39,275 13,092 97,756 32,585
Emerging Growth Fund .......................... 276,255 49,556 16,519 76,918 25,639
International Growth Fund ..................... 109,469 9,837 3,279 52,141 17,380
Target Maturity 2002 Fund ..................... 3,799 -- -- -- --
</TABLE>
5. PURCHASES AND SALES OF SECURITIES
The aggregate cost of purchases and proceeds from sales of securities,
excluding U.S. Government and short-term investments, for the six months ended
December 31, 1995 were as follows:
<TABLE>
<CAPTION>
NAME OF FUND PURCHASES SALES
------------ --------- -----
<S> <C> <C>
Short Term High Quality Bond Fund ................................... $ 13,171,874 $ 12,233,299
Short Term Global Government Fund ................................... 32,921,536 60,168,159
Corporate Income Fund ............................................... 3,418,493 44,988,605
California Municipal Fund ........................................... 34,061,612 52,344,395
Florida Insured Municipal Fund ...................................... 13,525,416 12,787,908
California Insured Intermediate Municipal Fund ...................... 6,640,000 8,756,956
National Municipal Fund ............................................. 23,959,504 44,809,883
Growth and Income Fund .............................................. 78,589,483 69,119,007
Growth Fund ......................................................... 200,768,802 172,617,291
Emerging Growth Fund ................................................ 233,088,108 185,694,241
International Growth Fund ........................................... 30,170,541 38,139,882
</TABLE>
The aggregate cost of purchases and proceeds from sales of U.S. Government
securities, excluding short-term investments, for the six months ended
December 31, 1995 were as follows:
<TABLE>
<CAPTION>
NAME OF FUND PURCHASES SALES
------------ --------- -----
<S> <C> <C>
Short Term High Quality Bond Fund ................................... $ 31,487,841 $ 42,413,192
Short Term Global Government Fund ................................... 1,576,137 1,273,439
U.S. Government Fund ................................................ 728,324,276 748,355,416
Corporate Income Fund ............................................... 47,842,336 61,157,242
Target Maturity 2002 Fund ........................................... 680,487 --
</TABLE>
At December 31, 1995, aggregate gross unrealized appreciation for all
securities in which there is an excess of value over tax cost and aggregate
gross unrealized depreciation for all securities in which there is an excess
of tax cost over value were as follows:
<TABLE>
<CAPTION>
TAX BASIS TAX BASIS
UNREALIZED UNREALIZED
NAME OF FUND APPRECIATION DEPRECIATION
------------ ------------ ------------
<S> <C> <C>
Short Term High Quality Bond Fund ................................... $ 721,135 $ 25,647
Short Term Global Government Fund ................................... 3,183,893 687,548
U.S. Government Fund ................................................ 13,675,243 239,443
Corporate Income Fund ............................................... 37,933,486 35,870
California Municipal Fund ........................................... 31,027,954 18,734
Florida Insured Municipal Fund ...................................... 2,247,252 --
California Insured Intermediate Municipal Fund ...................... 4,319,500 --
National Municipal Fund ............................................. 24,340,763 483,779
Growth and Income Fund .............................................. 29,956,085 7,665,119
Growth Fund ......................................................... 35,143,077 3,642,845
Emerging Growth Fund ................................................ 61,728,570 3,943,391
International Growth Fund ........................................... 10,998,509 9,253,739
Target Maturity 2002 Fund ........................................... 253,316 --
</TABLE>
Option activity for the Short Term Global Government Fund for the six months
ended December 31, 1995 was as follows:
<TABLE>
<CAPTION>
PRINCIPAL
OPTIONS ON FOREIGN CURRENCY: PREMIUM AMOUNT
---------------------------- ----------- --------------
<S> <C> <C>
Options outstanding at June 30, 1995 ............................. $ 793,146 1,025,903,503
Options written .................................................. 1,822,590 40,021,381,205
Options expired .................................................. (129,614) (5,324,896,265)
Options closed ................................................... (2,082,155) (28,849,261,078)
----------- --------------
Options outstanding at December 31, 1995 ......................... $ 403,967 6,873,127,365
=========== ==============
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
OPTIONS ON FOREIGN INTEREST RATE FUTURES: PREMIUM CONTRACTS
----------------------------------------- ------- ---------
<S> <C> <C>
Options outstanding at June 30, 1995 ............................. $ 160,050 120
Options written .................................................. 92,815 76
Options closed ................................................... (252,865) (196)
--------- ---
Options outstanding at December 31, 1995 ......................... $ 0 0
========= ===
</TABLE>
Option activity for the Short Term High Quality Bond Fund for the six months
ended December 31, 1995 was as follows:
<TABLE>
<CAPTION>
NUMBER OF
WRITTEN OPTIONS: PREMIUM CONTRACTS
---------------- ------- ---------
<S> <C> <C>
Options outstanding at June 30, 1995 ............................. $ 0 0
Options written .................................................. 36,867 5,192,611
Options closed ................................................... (36,867) (5,192,611)
-------- ---------
Options outstanding at December 31, 1995 ......................... $ 0 0
======== =========
</TABLE>
Information regarding dollar roll transactions by the U.S. Government and
Corporate Income Funds is as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT CORPORATE
DOLLAR ROLL TRANSACTIONS: FUND INCOME FUND
------------------------- --------------- -----------
<S> <C> <C>
Maximum amount outstanding during the period ..................... $194,156,211 $52,833,656
Average amount outstanding during the period* .................... $133,656,183 $43,623,072
Average monthly shares outstanding during the period ............. 48,378,211 36,261,350
Average debt per share outstanding during the period ............. $2.76 $1.20
</TABLE>
- --------------
* The average amount outstanding during the period was calculated by adding
the borrowings at the end of each day and dividing the sum by the number of
days in the period ended December 31, 1995.
Fee income earned for the six months ended December 31, 1995 by the U.S.
Government and Corporate Income Funds for dollar roll transactions aggregated
$793,115 and $417,994, respectively.
Information regarding reverse repurchase agreement transactions by the U.S.
Government Fund is as follows:
<TABLE>
<CAPTION>
U.S. GOVERNMENT
REVERSE REPURCHASE AGREEMENTS: FUND
------------------------------ ---------------
<S> <C>
Maximum amount outstanding during the period .......................................... $135,105,000
Average amount outstanding during the period* ......................................... $16,365,400
Average monthly shares outstanding during the period .................................. 48,378,211
Average debt per share outstanding during the period .................................. $0.34
</TABLE>
- --------------
* The average amount outstanding during the period was calculated by summing
borrowings at the end of each day and dividing the sum by the number of
days in the period ended December 31, 1995.
Interest rates ranged from 1.25% to 6.10% during the period. Interest paid for
the six months ended December 31, 1995, on borrowings by the Fund under
reverse repurchase agreements, aggregated $412,243.
6. SHARES OF BENEFICIAL INTEREST
The Company may issue an unlimited number of shares of beneficial interest
each without par value.
7. ORGANIZATION COSTS
Expenses incurred in connection with the organization of the Funds, including
the fees and expenses of registering and qualifying its shares for
distribution under Federal and state securities regulations, are being
amortized on a straight-line basis over a period of five years from
commencement of operations of each Fund, respectively. In the event any of the
initial shares of a Fund are redeemed by any holder thereof during the
amortization period, the proceeds of such redemptions will be reduced by an
amount equal to the pro-rata portion of unamortized deferred organizational
expenses in the same proportion as the number of shares being redeemed bears
to the number of initial shares of such Fund outstanding at the time of such
redemption. To the extent that proceeds of the redemptions are less than such
pro-rata portion of any unamortized organizational expenses, Sierra Advisors
has agreed to reimburse the Fund promptly.
8. CAPITAL LOSS CARRYFORWARDS
At June 30, 1995, the following Funds had available for federal income tax
purposes unused capital losses as follows:
<TABLE>
<CAPTION>
EXPIRING IN EXPIRING IN EXPIRING IN EXPIRING IN
NAME OF FUND 2000 2001 2002 2003
------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U.S. Government Money Fund ........................ -- -- $9,246 $ 1,367
California Money Fund ............................. $7,635 $5,715 7,549 1,294
Short Term High Quality Bond Fund ................. -- -- -- 206,653
U.S. Government Fund .............................. -- -- -- 37,871,949
Corporate Income Fund ............................. -- -- -- 22,615,168
California Municipal Fund ......................... -- -- -- 9,970,802
Florida Insured Municipal Fund .................... -- -- -- 1,590,869
Target Maturity 2002 Fund ......................... -- -- -- 6
</TABLE>
Under current tax law, capital losses realized after October 31 may be
deferred and treated as occurring on the first day of the following fiscal
year.
For the fiscal year ended June 30, 1995, the following Funds have elected to
defer losses occurring between November 1, 1994 and June 30, 1995 under these
rules, as follows:
<TABLE>
<CAPTION>
CAPITAL CURRENCY
NAME OF FUND LOSSES DEFERRED LOSSES DEFERRED
------------ --------------- ---------------
<S> <C> <C>
U.S. Government Money Fund ....................................... $ 887 --
California Money Fund ............................................ 18,868 --
Short Term High Quality Bond Fund ................................ 811,659 --
Short Term Global Government Fund ................................ 3,185,777 --
U.S. Government Fund ............................................. 37,363,428 --
Corporate Income Fund ............................................ 8,589,806 --
California Municipal Fund ........................................ 5,828,612 --
Florida Insured Municipal Fund ................................... 1,598,841 --
National Municipal Fund .......................................... 11,227,420 --
International Growth Fund ........................................ -- $2,624,291
</TABLE>
Such deferred losses will be treated as arising on the first day of the fiscal
year ending June 30, 1996.
9. GEOGRAPHIC AND INDUSTRY CONCENTRATION
There are certain risks arising from the California Money Fund, California
Municipal Fund and California Insured Intermediate Municipal Funds'
concentration in California municipal securities. Certain California
constitutional amendments, legislative measures, executive orders,
administrative regulations, court decisions and voter initiatives could result
in certain adverse consequences including impairing the ability of certain
issuers of California municipal securities to pay principal and interest on
their obligations.
In addition, the Global Money Fund may invest at least 25% of its assets in
bank obligations. As a result of this concentration policy, the Fund's
investments may be subject to greater risk than a fund that does not
concentrate in the banking industry. In particular, bank obligations may be
subject to the risks associated with interest rate volatility, changes in
Federal and state laws and regulations governing the banking industry and the
inability of borrowers to pay principal and interest when due. In addition,
foreign banks present risks similar to those investing in foreign securities
generally and are not subject to the same reserve requirements and other
regulations as U.S. banks.
The Florida Insured Municipal Fund primarily invests in debt obligations
issued by the State of Florida and its political subdivisions, agencies and
public authorities to obtain funds for various public purposes. The Florida
Insured Municipal Fund is more susceptible to factors adversely affecting
issuers of Florida municipal securities than is a municipal bond fund that is
not concentrated in these issuers to the same extent. Uncertain economic
conditions may affect the ability of Florida municipal securities issuers to
meet their financial obligations.
The Global Money, Short Term Global Government, Corporate Income, Growth,
Emerging Growth and International Growth Funds invest in securities of foreign
companies and foreign governments. There are certain risks involved in
investing in foreign securities that are in addition to the usual risks
inherent in domestic investments. These risks include those resulting from
future adverse political and economic developments and the possible imposition
of currency exchange blockages or other foreign governmental laws or
restrictions.
10. SUBSEQUENT EVENT
It is anticipated that effective March 1, 1996 the maximum sales charge for
Class A Shares of the Equity Funds will increase from 4.50% to 5.75%.
<PAGE>
- -------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
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- -------------------------------------------------------------------------------
<PAGE>
CONTINUED FROM PAGE 2
market is reasonably priced. In the coming year, however, if earnings
"surprises" are on the negative side, it may result in temporary periods of
market fluctuation or weakness. On the other hand, weak earnings don't always
cause market reaction if such weakness is expected to be temporary.
The U.S. corporate sector has excelled at restructuring, writing off
unproductive assets, downsizing, and merging or spinning off to increase
efficiencies. Although there is a chance that stock prices could be negatively
impacted by over-valuation in certain areas, we remain optimistic over the long
term for strong earnings growth among individual companies.
For example, we see long-term opportunity for many global companies, regardless
of economic cycles domestically. As firms sell into global markets, they start
to protect their businesses from the cyclical conditions of any one market,
accelerate the demand for their products, and thus improve profitability.
POSITIVE LONG-TERM OUTLOOK
Although a more cautious approach to investing may be necessary over the next
year, we see many trends underway that will, over time, strongly support a
positive outlook for not only U.S. companies, but companies around the world as
well.
Over the long term, efforts to balance the federal budget and cut the government
deficit, if successful, should also be positive for the U.S. economy and the
markets. As the borrowing needs of the U.S. government decline, so might
long-term interest rates. Low inflation and stable or declining interest rates
should have a very positive impact on the bond market.
Additionally, the fact that Baby Boomers are reaching their peak earning and
saving years is a longer-term, structural change that could positively impact
financial markets.
Dow Jones Industrial Average
as of December 31, 1995
The Dow Reached New Highs in 1995.
Plot points
Label A
- --------------------------------
Label
- --------------------------------
1 12/31/83 1258.64
2 12/31/84 1211.57
3 12/31/85 1546.67
4 12/31/86 1895.95
5 12/31/87 1938.83
6 12/31/88 2168.57
7 12/31/89 2753.2
8 12/31/90 2633.66
9 12/31/91 3168.8
10 12/31/92 3301.12
11 12/31/93 3754.1
12 12/31/94 3834.44
13 12/31/95 5117.12
Source: Bloomberg Business News
About one-third of the U.S. population is composed of Boomers, a generation
whose members are increasingly taking notice of the need to take personal
responsibility for retirement planning and investing. This group contributed
substantially to last year's surge in the amount of money invested in stock and
bond mutual funds (nearly $2 trillion today, compared to $77 billion in 1982).
Assuming economic fundamentals remain favorable, this source of buying power
should remain strong.
INTERNATIONAL MARKETS
SHOW POTENTIAL
Although not turning in as strong a performance as the U.S. stock market, many
foreign markets posted positive returns in 1995. For the year ending December
31, 1995, international stocks represented by Morgan Stanley Capital
International's EAFE Index returned 11.21% in U.S. dollar terms.
Since 1993, many investors have been disappointed with the relatively slow pace
of economic growth abroad and the resulting lackluster returns on foreign
investments. However, many of these markets are beginning to appear increasingly
undervalued relative to the U.S. stock market. As a result, institutional money
managers, including pension funds and insurers, are beginning to allocate a
slightly larger percentage of their portfolios to foreign markets in 1996.
Japan, representing one of the largest foreign stock markets, showed signs of
stronger economic growth and significant market recovery in the latter part of
1995. One reason for investor optimism is the recent stabilization of the value
of the yen compared to the dollar at levels that appear to allow Japanese
companies to earn a profit on exports to the U.S. In addition, extremely low
interest rates and large-scale government spending in Japan has led economists
to project a 2% increase in GDP in 1996.
Emerging market countries, in large part, recovered during the year from the
massive capital outflows experienced at the end of 1994 and early in 1995.
Emerging markets are expected to receive an increased percentage of
institutional investors' allocations in 1996.
HOW INVESTORS CAN PREPARE
IN 1996 AND BEYOND
The past year provided very positive returns for many mutual fund investors.
However, inevitable market swings, such as those that occurred in 1994,
accompany all long-term investment cycles. Investors' expectations should
therefore be geared for these normal market events.
While you can't eliminate investment risk altogether, you can effectively
manage risk by maintaining a long-term investment perspective, diversifying your
assets among the appropriate combination of investment categories, and
periodically reviewing your portfolio to ensure that it remains on track to
achieve your financial objectives.
Clear objectives and portfolio diversification will help you manage risk and
protect your investments from most unforeseen economic or market changes. The
new year is an ideal time to meet with your Investment Representative to review
your portfolio and ensure that it remains appropriately structured to meet your
goals in any market environment.
<PAGE>
- --------------------------------------------------------------------------------
TIME -- NOT TIMING --
CAN LEAD TO INVESTMENT SUCCESS.
- --------------------------------------------------------------------------------
THE STOCK MARKET'S record-breaking highs in 1995 captured public attention and
contributed to record inflows to stock mutual funds. This surge into equity
funds, at the same time the Dow Jones Industrial Average exceeded the 5,000
level, may suggest that many investors still attempt to "time" the markets when
managing their investments.
One simple fact of investing is true: Markets will rise and markets will
decline. It's no secret, however, that leaping in and out of the market can
negatively impact the most well-intentioned investor. This has left many
investors uneasy, wondering how they can take advantage of today's market
conditions.
For most investors, the best way to achieve financial success is through a
disciplined, long-term investment program that is properly diversified. So when
is the best time to invest? What can today's investor do?
PAY YOURSELF FIRST
By paying your mutual fund first, with the same amount of money each month, you
are actually paying yourself in future earnings. This is known as dollar-cost
averaging -- or systematic investing, and it accomplishes two things:
1. When you invest on a monthly basis, you're buying shares at varying prices;
more shares when prices are low, and fewer shares when prices are on the rise.
Even during periods of market fluctuation, you can benefit from purchasing
shares at lower prices.
The chart below illustrates how your price per share reaches an average
over time, and how this systematic investment method can work to actually lower
your average cost per share over the long term.
2. By owning shares at many different prices, you reduce the risk of buying at
the top of the market. Investing regularly over time helps to even out share
price highs and lows. No matter how much the market fluctuates, you won't be
investing all of your money at one time when share prices are at their steepest.
THE BENEFITS OF
DOLLAR-COST AVERAGING
Dollar-cost averaging actually takes the guesswork out of investment timing.
This, combined with the market's tendency to move upward over time, can give you
the opportunity for better overall returns in the long run.*
Investing systematically is one of the most proficient and convenient ways
to reach long-term financial goals. By investing on a regular basis, you can
ease into the investment markets over time, rather than diving in head first.
Dollar-cost averaging can also be a good way to add a growth component to your
investment portfolio. The fact that growth investments typically fluctuate in
value can actually work to your advantage in a systematic investing program.
SIERRA'S AUTOMATIC
INVESTMENT PLAN
SIERRA TRUST FUNDS offers an automatic investment plan that makes it easy for
shareholders to take advantage of dollar-cost averaging. You determine the
amount you want to set aside each month, as much as you wish, or as little as
$25. Your investment is drawn automatically from your bank account and is placed
directly into your SIERRA TRUST FUNDS account around the 15th of every month.
The minimum for opening a SIERRA Automatic Investment Plan is only $100, and
it's an affordable and convenient way to begin an investment program for
yourself, your children or your grandchildren.
For more information on the SIERRA Automatic Investment Plan, contact your
Investment Representative.
<TABLE>
<CAPTION>
BENEFITS OF DOLLAR-COST AVERAGING
- ------------------------------------------------------------------------------------------------------------------------------
Month Price Per Share Shares Purchased Amount Invested
<S> <C> <C> <C> <C> <C>
Average Price $24.83
January $25 40.00 $1,000 Per Share: ($149 / 6)
- -------------------------------------------------------------------- ---------------------------------------------------
March $24 41.67 $1,000
- -------------------------------------------------------------------- INVESTOR'S AVERAGE $24.73
May $22 45.45 $1,000 COST PER SHARE: ($6,000 / 242.62)
- -------------------------------------------------------------------- ---------------------------------------------------
July $25 40.00 $1,000
- -------------------------------------------------------------------- Value of Shares with
September $26 38.46 $1,000 Lump-Sum Purchase in January: $6,480
- --------------------------------------------------------------------- ---------------------------------------------------
November $27 37.04 $1,000 VALUE OF SHARES USING
- --------------------------------------------------------------------- DOLLAR-COST AVERAGING: $6,551
TOTAL $149 242.62 $6,000
The example above is for illustrative purposes only and is not intended to reflect the return from any SIERRA TRUST FUND or any
other specific investment.
* As with any investment strategy, a program of regular investing will not guarantee a profit nor protect your investment against
depreciation in a declining market. Investors should consider their financial ability to continue to purchase through periods
of low price levels.
</TABLE>
[LOGO]
<PAGE>
[LOGO]
This Semi-Annual Report is published for the general information of the
shareholders of the SIERRA TRUST FUNDS. It is authorized for distribution to
prospective investors only when preceded or accompanied by a current SIERRA
TRUST FUNDS prospectus. A mutual fund's share price and investment return will
vary with market conditions, and the principal value of an investment when you
sell your shares may be more or less than the original cost.
THE SIERRA TRUST FUNDS are not insured by the FDIC. They are not deposits or
obligations of, nor are they guaranteed by the depository institution. These
securities are subject to investment risks, including possible loss of principal
amount invested.
Distributed by
SIERRA INVESTMENT SERVICES CORPORATION
Member NASD
SIERRA TRUST FUNDS Bulk Rate
9301 Corbin Avenue, Suite 333 U.S. Postage
Post Office Box 1160 PAID
Northridge, California 91328-1160 Van Nuys, CA
Permit No. 987
6348 (2/96) 110K
