ALAMEDA CONTRA-COSTA MEDICAL ASSOCIATION
COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
FINANCIAL STATEMENTS
for the years ended December 31, 1996 and 1995
<PAGE>
Firm: Coopers & Lybrand LLP
A Professional Services Firm
Report of Independent Auditors
To the Unitholders and Supervisory Committee of
Alameda-Contra Costa Medical Association Collective
Investment Trust for Retirement Plans:
We have audited the accompanying statements of assets and liabilities
of the funds comprising Alameda-Contra Costa Medical Association
Collective Investment Trust for Retirement Plans, including each
Fund's schedule of investments as of December 31, 1996, and the
related statements of operations for the year then ended, and the
statements of changes in net assets and the financial highlights
for each of the periods presented. These financial statements and
financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements and financial highlights are free to material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements.
Our procedures included confirmation of securities owned as of
December 31, 1996 by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide
a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights
referred to above present fairly, in all material respects, the
financial position of each of the funds comprising Alameda-Contra
Costa Medical Association Collective Investment Trust for
Retirement Plans as of December 31, 1996, the results of their
operations for the year then ended, and the changes in their net
assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting
principles.
Coopers & Lybrand LLP
San Francisco, California
February 11, 1997, except Note 11 for
which the date is February 20, 1997
<PAGE>
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<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1996
<CAPTION>
ASSETS International Growth Value Balanced Long- Short-
Value Equity Equity Equity Intermediate Intermediate Short-Term
Fixed Income Fixed Income Income
<S> <C> <C> <C> <C> <C> <C> <C>
Investments, at cost 1,000,545 3,115,004 20,048,798 3,468,570 4,596,799 4,499,091 3,569,630
Investments, at value 1,095,521 4,081,792 23,356,141 4,570,914 4,720,365 4,466,635 3,559,660
Receivable-units sold 60,000 15,088 70,911 34,493 5,000 0 13,806
Receivable-securities sold 0 69,170 0 0 0 0 0
Accrued dividends
and interest receivable 2,187 3,059 32,979 27,617 58,730 50,755 38,545
_________ _________ _________ _________ _________ _________ _________
Total assets 1,157,708 4,169,109 23,460,031 4,633,024 4,784,095 4,517,390 3,612,011
LIABILITIES AND
NET ASSETS
Accrued expenses:
Administration fees 1,822 6,892 38,808 7,618 8,041 7,648 5,814
Professional fees 1,510 6,997 10,530 9,288 6,290 6,751 3,743
Payable-redemption of units 0 1,250 60,110 7,500 37,000 8,121 30,338
_________ _________ __________ _________ _________ _________ _________
Total liabilities 3,332 15,139 109,448 24,406 51,331 22,520 39,895
Net assets 1,154,376 4,153,970 23,350,583 4,608,618 4,732,764 4,494,870 3,572,116
Units outstanding 103,133 248,695 2,058,779 423,839 453,931 436,883 350,355
Net asset value per unit 11.19 16.70 11.34 10.87 10.43 10.29 10.20
NET ASSETS COMPOSED OF:
Paid-in capital 1,041,778 2,836,101 10,119,670 2,722,593 2,662,488 2,658,759 2,252,224
Accumulated undistributed
net investment income
(loss) 10,451 (96,181) 1,310,456 531,367 1,729,249 1,775,085 1,387,160
Accumulated undistributed
net realized gains
(losses) 7,171 447,262 8,613,114 252,314 217,461 93,482 (57,298)
Unrealized appreciation
(depreciation) on
investments 94,976 966,788 3,307,343 1,102,344 123,566 (32,456) (9,970)
_________ _________ __________ _________ _________ _________ _________
Net assets at value 1,154,376 4,153,970 23,350,583 4,608,618 4,732,764 4,494,870 3,572,116
</TABLE>
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<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
SCHEDULE OF INVESTMENTS
December 31, 1996
<CAPTION>
Shares/
INTERNATIONAL EQUITY PORTFOLIO Face Value Value
<S> <C> <C>
Cash and Cash Equivalents (3.81%)
Wells Fargo Bank Deposit Account 41,733 41,733
(cost 41,733)
American Depository Receipts (96.19%):
Consumer Staples (19.08%):
Allied Domecq 2,850 22,264
BAT Industries 1,500 24,750
Cadbury Schweppes 650 22,181
Compagnie General Des Eaux 1,450 35,869
Grand Metropolitan 700 7,072
Heineken 40 22,138
Kao Corp 180 20,936
Nestle 550 29,431
Unilever 250 24,375
_______
Health (7.99%): 209,016
Astra 500 23,875
Novartis 373 21,293
Rhone Poulenc 1,250 42,344
______
Consumer Durables (7.20%): 87,512
Daimler Benz 380 26,030
Fiat 3,350 26,800
Honda Motors Ltd 460 26,047
______
Process Industry (5.62%): 78,877
Hoechst 900 42,457
NKK Corp 850 19,113
______
Consumer Discretionary (9.38%): 61,570
Aktiebolaget Electrolux 450 25,987
Nintendo Ltd 2,600 23,213
Rank Group 1,600 24,000
Sony Corp 450 29,531
_______
102,731
PAGE
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
INTERNATIONAL EQUITY PORTFOLIO, continued
American Depository Receipts (96.19%) continued
Producer/Manufacturing (7.88%):
Cable and Wireless 1,050 25,856
General Electric 3,300 21,572
Mannesmann 90 38,952
______
Technology (1.79%): 86,380
Matsushita Elec Indl 120 19,590
Energy (8.75%):
ELF Aquitaine ADR 850 38,462
ENI Spa 450 23,231
Royal Dutch Petroleum 200 34,150
______
Telecommunications (6.79%): 95,843
Alcatel Alsthom 1,750 28,000
Ricoh Ltd 450 25,782
WPP Group 480 20,610
______
Financial (13.37%): 74,392
Banco Central 1,050 13,650
Den Danske Bank 300 24,157
Deutsche Bank 670 31,259
HSBC Holdings 105 22,466
Mitsui Marine & Fire Ins Ltd 330 17,712
Tokio Marine & Fire Ins Co 390 18,184
Yasuda Trust and Banking Ltd 450 19,036
_______
Utilities (8.34%): 146,464
British Gas 680 25,925
Empresa Nacional Electric 500 35,000
National Power Plc 900 30,488
_______
91,413
Total American Depository Receipts 1,053,788
(cost 958,812) _________
Total Investments held (cost 1,000,545) 1,095,521
</TABLE>
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<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
SCHEDULE OF INVESTMENTS, continued
December 31,1996
<CAPTION>
Shares/
GROWTH EQUITY PORTFOLIO Face Value Value
<S> <C> <C>
Cash and Cash Equivalents (2.37%)
Wells Fargo Bank Deposit Account 96,865 96,865
(cost 96,865)
Common Stocks (97.63%):
Automotive (2.94%):
Magna International Inc 2,150 119,863
Medical, Hospital Supplies (7.35%):
Elan PLC 3,300 109,725 <F1>
Forest Labs Inc 2,200 72,050 <F1>
Shared Medical Systems Corp 2,400 118,200
_______
Entertainment and Leisure (5.29%): 299,975
Callaway Golf Co 3,350 96,312
Circus Circus Enterprise Inc 3,475 119,453 <F1>
_______
Retailing (8.32%): 215,765
Circuit City Stores Inc 3,750 112,969
Dollar Gen Corp 3,769 120,600
Pep Boys Manny Moe and Mack 3,450 106,087
_______
Business Services (2.55%): 339,656
Sensormatic Electrics Corp 6,205 103,934
Other Services (2.39%):
Manpower Inc 3,000 97,500
<PAGE>
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
GROWTH EQUITY PORTFOLIO, continued
Common Stocks (97.63%), continued
Business Equipment (5.93%):
Cisco Sys Inc 2,300 146,337 <F1>
Newbridge Networks Corp 3,400 95,625 <F1>
_______
Electronics (13.28%): 241,962
EMC Corp 5,000 165,625 <F1>
International Rectifier Corp 6,300 96,075 <F1>
Molex Inc 3,937 140,256
Texas Instruments 2,200 140,250
_______
Specialty Equipment (7.19%): 542,206
American Power Conversion Corp Com 4,800 130,800 <F1>
Novellus Systems Inc 3,000 162,564 <F1>
_______
Software (1.55%): 293,364
Mentor Graphics Corp 6,500 63,375 <F1>
Telecommunications (10.40%):
Andrew Corp 2,000 106,126 <F1>
Nokia Corp 3,150 181,519
US Robotics Corp 1,900 136,800 <F1>
_______
Electrical Equipment (5.80%): 424,445
Solectron Corp 2,490 132,904 <F1>
Symbol Technologies Inc 2,350 103,987 <F1>
_______
Machinery (1.53%): 236,891
Wabash National Corp 3,400 62,475
Banking and Credit (3.59%):
MBNA Corp 3,520 146,520
<PAGE>
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
GROWTH EQUITY PORTFOLIO, continued
Common Stocks (97.63%), continued
Finance and Insurance (12.53%):
Equitable Cos Inc 4,800 118,200
Green Tree Financial 3,380 130,552
MBIA Inc 1,450 146,812
Mercury Finance Co 9,475 116,069
_______
Airlines (2.26%): 511,633
Southwest Airlines Co 4,200 92,400
Telephone (4.73%):
LCI International Inc 4,900 105,963 <F1>
Telephone and Data Sys Inc 2,400 87,000
_________
192,263
Total Common Stocks (cost 3,018,139) 3,984,927
_________
Total invesmtnets held (cost 3,115,004) 4,081,792
<FN>
<F1>
non income producing security
</FN>
</TABLE>
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<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
<CAPTION> Shares/
VALUE EQUITY PORTFOLIO Face Value Value
<S> <C> <C>
Cash and Cash Equivalents (1.70%)
Wells Fargo Bank Deposit Account 396,659 396,659
(cost 396,659)
Common Stocks (98.30)%:
Energy (9.86%):
Mobil Corp 1,700 207,825
Occidental Petroleum Corp 18,000 420,750
Oryx Energy Co 9,000 222,750 <F1>
Pennzoil Co 3,400 192,100
Tosco Corp 2,000 158,250
Trizec Hahn Corp 10,700 235,400
Unocal Corp 11,800 480,850
USX-Marathon Group 16,100 384,387
_________
Industrial (1.41%): 2,302,312
Fluor Corp 2,400 150,600
Jacobs Engineering Group Inc 7,600 179,550
_______
Producer Manufacturing (4.58%): 330,150
Agco Corp 3,300 94,462
Cummins Engine Co Inc 7,800 358,800
ITT Industries Inc 16,000 392,000
Johnson Controls Inc 1,500 124,313
Whitman Corp 4,400 100,650
_________
Process Industries (6.39%): 1,070,225
Albemarle Corp 6,600 119,625
Cabot Corp 7,100 178,388
Mead Corp 3,800 220,875
Owens Illinois Inc 23,700 539,175
Terra Industries Inc 16,500 243,375
Union Carbide Holding Co 4,700 192,112
_________
1,493,550
<PAGE>
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
VALUE EQUITY PORTFOLIO, continued
Common Stocks (98.30%), continued
Commercial Services (1.90%):
Equifax Inc 14,500 444,062
Technology (5.48%):
Avnet 2,100 122,325
Data General Corp 14,500 210,250 <F1>
Litton Industries Inc 8,300 395,288 <F1>
Mitel Corp 16,200 101,250 <F1>
Storage Technology Corp 9,400 450,025 <F1>
_________
Consumer (11.87%): 1,279,138
Chrysler Corp 14,200 468,600
Conagra Inc 2,400 119,400
Coors Adolph Co 5,500 104,500
Darden Restaurants 32,000 280,000
Ford Motor Co 13,200 425,700
Hasbro Inc 10,400 404,300
Honda Motor Ltd ADR 5,700 322,762
Maytag Corp 10,400 205,400
Toll Bros Inc 5,800 113,100 <F1>
Universal Corp 5,900 189,538
Volvo Aktiebolaget ADR 6,400 139,200
_________
Retail (12.61%): 2,772,500
American Stores 5,300 216,637
Charming Shoppes Inc 14,700 74,426 <F1>
Dayton Hudson Corp 9,100 357,175
Eckerd Corp 3,731 119,392 <F1>
Federated Department Stores Inc 9,900 337,837 <F1>
Fingerhut Co Inc 15,800 193,550
K Mart Corp 20,500 212,687 <F1>
Kroger Co 5,000 232,500 <F1>
Meyer Fred Inc 3,600 127,800 <F1>
Pier 1 Imports Inc 6,400 112,800
Price Costco Inc 10,000 251,250 <F1>
Safeway Inc 5,600 239,400 <F1>
Vons Co Inc 3,800 227,525 <F1>
Waban Inc 3,500 91,000 <F1>
Winn Dixie Stores Inc 4,800 151,800
_________
2,945,779
PAGE
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
VALUE EQUITY PORTFOLIO, continued
Common Stocks (98.30%), continued
Health Services (4.65%):
Amerisource Health Corp 4,500 217,125 <F1>
Bergen Brunswig Corp CL-A 5,900 169,625
Cardinal Health Inc 4,200 244,650
Tenet Healthcare Corp 20,800 455,000 <F1>
_________
Transportation (4.28%): 1,086,400
Continental Airlines Inc 7,000 197,750 <F1>
Federal Express Co 5,400 240,300 <F1>
Illinois Central Corp 6,900 220,800
United Airlines 2,000 125,000 <F1>
U S Air Group Inc 9,200 215,050 <F1>
_______
Finance (23.30%): 998,900
Ahmanson H.F. & Co 4,000 130,000
Bank New York Inc 7,600 256,500
Bear Stearns Co Inc 17,305 482,377
City National Corp 7,600 164,350
Commerce Group Inc 10,700 270,175
Equitable Cos Inc 6,600 162,525
Fremont General Corp 6,900 213,900
Great Western Financial Corp 4,200 121,800
Green Tree Financial Corp 13,800 533,025
Hibernia Corp 20,100 266,325
Lehman Bros Holding Co 16,300 511,412
National City Corp 3,000 134,625
Old Republic International Corp 4,900 131,075
Peoples Bank Bridgeport Conn. 10,200 294,525
Reliance Group Holdings Inc 19,800 180,675
Ryder Systems Inc 15,600 438,750
Southtrust Corp 14,200 495,225
UICI 4,800 156,000 <F1>
Washington Mutual Inc 11,500 498,100
_________
5,441,364
PAGE
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
VALUE EQUITY PORTFOLIO, continued
Common Stocks (98.30%), continued
Utilities (11.97%):
Alleghany Power System 6,600 200,475
BCE Inc 4,800 229,200
Coastal Corp 6,300 307,913
Columbia Gas System Inc 5,000 318,125
Entergy Corp 10,200 281,775
Long Island Lighting Co 9,300 205,763
Midamerican Energy Holdings Co 9,900 157,163
NGC Corp 12,800 297,600
Pacific Corp 10,500 215,250
Pinnacle West Capital Corp 11,400 361,950
Public Service Co of New Mexico 5,700 111,863
Washington Water Power Co 5,800 108,025
_________
2,795,102
Total Common Stocks (cost 19,652,139) 22,959,482
__________
Total investments held (cost 20,048,798) 23,356,141
<FN>
<F1>
non income producing security
</FN>
</TABLE>
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<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
<CAPTION> Shares/
BALANCED PORTFOLIO Face Value Value
<S> <C> <C>
Cash and Cash Equivalents (9.20%)
Wells Fargo Bank Deposit Account 420,609 420,609
(cost 420,609)
Common Stocks (61.68%):
Automotive (.70%):
Ford Motor 1,000 32,250
Basic Industry (3.48%):
Caterpiller Inc 1,000 75,250
Champion International 1,000 43,250
Deere & Co 1,000 40,500
_______
Capital Goods (6.01%): 159,000
Black & Decker 2,000 60,250
General Electric 1,000 98,875
Minnesota Mining 1,000 83,000
WMX Technologies 1,000 32,500
_______
Chemical (1.41%): 274,625
Cytec 426 17,306 <F1>
E I Dupont 500 47,062
______
Consumer (7.84%): 64,368
Gillette 2,000 155,500
H J Heinz 1,500 53,625
McDonalds 1,000 45,375
Pepsico 1,000 29,250
Sara Lee 2,000 74,500
_______
Energy (5.22%): 358,250
Chevron 1,000 65,000
Exxon 500 49,000
Mobil Oil Corp 300 36,675
Norfolk & Southern 1,000 88,000
_______
238,675
<PAGE>
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
BALANCED PORTFOLIO, continued
Common Stocks (61.68%), continued
Entertainment and Leisure (3.05%):
Walt Disney 2,000 139,500
Healthcare (6.49%):
American Home Products 1,000 58,625
Amgen 2,000 108,750 <F1>
Bristol Myers 500 54,500
Warner Lambert 1,000 75,000
_______
Finance and Insurance (8.89%): 296,875
Aetna Life 1,000 80,000
American Express 2,000 113,000
Bank America Corp 1,000 99,750
Federal National 1,000 37,625
H & R Block 1,000 29,000
Salomon Inc 1,000 47,125
_______
Media (0.99%): 406,500
Media General 1,500 45,375
Retailers (3.45%):
GAP 2,000 60,250
Price Costco 2,695 67,712 <F1>
Toys-R-Us 1,000 29,875 <F1>
_______
Technology (8.16%): 157,837
EMC Corp 2,000 66,250 <F1>
Intel 1,000 130,938
Sun Microsystems 4,000 102,752 <F1>
Teradyne 3,000 73,125 <F1>
_______
Telecommunications (2.15%): 373,065
MCI Communications 3,000 98,064
<PAGE>
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
BALANCED PORTFOLIO, continued
Common Stocks (61.68%), continued
Utility (3.83%):
AT&T 1,000 43,375
Bell Atlantic 1,000 64,750
Lucent Technologies 324 14,985
SBC Communications 1,000 51,875
_______
174,985
Total Common Stocks (cost 1,744,554) 2,819,369
_________
Corporate Debt Securities (15.79%):
Financial (2.35%):
Merrill Lynch, 8.300%, due 11-01-02 100,000 107,246
Industrial (8.93%):
BP Amer, 9.375%, due 11-01-00 100,000 110,049
GTE Southwest, 6.000%, due 1-15-06 100,000 93,885
IBM, 7.250%, due 11-01-02 100,000 103,039
North Telecom, 6.875%, due 10-01-02 100,000 101,006
_______
International (4.52%): 407,979
Quebec Province, 7.500%, due 07-15-02 100,000 103,370
ELF Aquitaine, 7.750%, due 05-01-99 100,000 103,215
_______
206,585
Total Corporate Debt Securities 721,810
(cost 705,182) _______
<PAGE>
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
BALANCED PORTFOLIO, continued
U.S. Gov't & Agency Obligations (13.33%):
U.S. Treasury Notes:
7.125%, due 10-15-98 200,000 204,000
7.250%, due 02-15-98 100,000 101,344
7.750%, due 12-31-99 100,000 104,563
6.500%, due 08-15-05 100,000 100,688
5.875%, due 11-30-01 100,000 98,531
_________
Total U. S. Government (cost 598,225) 609,126
_________
Total investments held (cost 3,468,570) 4,570,914
<FN>
<F1>
non income producing security
</FN>
</TABLE>
PAGE
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<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
<CAPTION> Shares/
LONG-INTERMEDIATE FIXED INCOME PORTFOLIO Face Value Value
<S> <C> <C>
Cash and Cash Equivalents (10.94%)
Money Market Account (0.35%):
Wells Fargo Bank Deposit Account 16,605 16,605
Commercial Paper (10.59%):
Ford Motor, 5.400%, due 01/06/97 250,000 250,000
GE Capital, 5.500%, due 01/31/97 250,000 250,000
_______
500,000
Total Cash & Cash Equivalents
(cost 516,605) 516,605
Corporate Debt Securities (11.30%):
Industrial (11.30%):
Atlantic Richfield, 8.550%, due 03-01-12 150,000 168,033
Boeing Co DEB, 7.250%, due 06-15-25 150,000 150,474
Caterpillar, 8.100%, due 01-15-04 100,000 107,033
Wal-Mart Stores Inc, 8.625%, due 04-01-01 100,000 107,770
_________
Total Corporate Debt Securities 533,310
(cost 508,489) _________
U.S. Gov't & Agency Obligations (77.76%):
U.S. Treasury Obligations (49.25%)
Bonds:
6.250%, due 08-15-23 250,000 234,298
7.250%, due 05-15-16 500,000 527,970
Notes:
5.000%, due 02-15-99 400,000 392,624
5.875%, due 02-15-04 250,000 243,438
6.375%, due 08-15-02 100,000 100,656
6.500%, due 05-15-05 400,000 402,876
7.750%, due 02-15-01 400,000 422,752
_________
2,324,614
<PAGE>
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
LONG-INTERMEDIATE FIXED INCOME PORTFOLIO,
continued
U.S. Gov't & Agency Obligations (77.76%):
continued
Federal Home Loan Mortgage Notes (4.47%):
8.000%, due 03-15-20 35,110 35,198
7.500%, due 02-01-25 172,450 173,205
10.500%, due 02-01-01 2,501 2,660
_______
Federal National Mortgage Association 211,063
Pooled Notes (11.38%):
9.000%, due 11-01-04 14,383 15,052
6.000%, due 11-01-23 217,757 203,196
6.500%, due 11-01-25 241,322 230,236
8.500%, due 04-25-18 8,170 8,155
7.950%, due 12-25-19 79,357 80,398
_______
Government National Mortgage 537,037
Association Pooled Notes (12.66%):
7.500%, due 05-15-07 51,641 51,673
7.500%, due 07-15-07 37,251 37,275
11.000%, due 07-15-15 10,692 11,942
12.000%, due 06-15-15 1,294 1,486
9.500%, due 09-15-19 29,007 31,336
9.000%, due 12-15-19 36,149 38,092
7.500%, due 12-15-23 212,354 212,485
6.500%, due 11-15-09 215,503 213,447
_______
597,736
Total U.S. Government (cost 3,571,705) 3,670,450
_________
Total investments held (cost 4,596,799) 4,720,365
</TABLE>
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<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
<CAPTION> Shares/
SHORT-INTERMEDIATE FIXED INCOME PORTFOLIO Face Value Value
<S> <C> <C>
Cash and Cash Equivalents (1.64%)
Wells Fargo Bank Deposit Account 73,123 73,123
(cost 73,123)
Corporate Debt Securities (10.03%):
Financial (6.69%):
Beneficial, 6.120%, due 08-27-97 100,000 100,265
Household Fin, 7.500%, due 03-15-97 100,000 100,340
MBNA America, 6.100%, due 12-15-00 100,000 98,356
_______
Industrial (3.34%): 298,961
Hertz Corp, 6.700%, due 06-15-02 150,000 149,178
Total Corporate Debt Securities 448,139
(cost 447,478) _______
U.S. Gov't & Agency Obligations (88.33%):
U.S. Treasury Notes (69.37%):
5.000%, due 02-15-99 400,000 392,624
5.125%, due 04-30-98 750,000 742,267
5.125%, due 12-31-98 200,000 196,688
5.750%, due 08-15-03 400,000 388,000
5.750%, due 10-31-97 325,000 324,594
6.000%, due 10-15-99 500,000 500,000
6.125%, due 07-31-00 300,000 300,000
6.750%, due 05-31-99 250,000 254,220
_________
Federal Home Loan Mortgage Notes (4.02%): 3,098,393
8.000%, due 03-15-20 17,555 17,599
7.500%, due 12-15-05 75,502 75,732
7.000%, due 09-01-99 85,665 86,146
_______
179,477
<PAGE>
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
SHORT-INTERMEDIATE FIXED INCOME PORTFOLIO,
continued
U.S. Gov't & Agency Obligations (88.33%):
continued
Federal National Mortgage Association
Pooled Notes (10.02%):
6.500%, due 10-01-10 230,084 225,912
6.087%, due 08-01-29 222,907 221,862
_______
447,774
Total U.S. Government (cost 3,978,490) 3,945,373
_________
Total investments held (cost 4,499,091) 4,466,635
</TABLE>
<PAGE>
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
SCHEDULE OF INVESTMENTS, continued
December 31, 1996
<CAPTION> Shares/
SHORT-TERM INCOME FUND Face Value Value
<S> <C> <C>
Cash and Cash Equivalents (4.59%)
Wells Fargo Bank Deposit Account 163,539 163,539
(cost 163,539)
U.S. Gov't & Agency Obligations (95.41%):
U.S. Treasury Notes (95.41%):
5.250%, due 12-31-97 575,000 571,228
5.375%, due 11-30-97 375,000 373,125
5.500%, due 07-31-97 400,000 399,500
5.625%, due 06-30-97 400,000 400,000
5.750%, due 09-30-97 400,000 399,752
6.125%, due 03-31-98 600,000 601,314
6.250%, due 01-31-97 250,000 250,078
6.500%, due 04-30-97 400,000 401,124
_________
Total U.S. Government (cost 3,406,091) 3,396,121
_________
Total investments held (cost 3,569,630) 3,559,660
</TABLE>
<PAGE>
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
STATEMENTS OF OPERATIONS
December 31, 1996
<CAPTION>
International Growth Value Balanced Long- Short-
Value Equity Equity Equity Intermediate Intermediate Short-Term
Fixed Income Fixed Income Income
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income:
Interest income 5,605 3,084 47,216 100,004 328,815 318,145 152,160
Dividend income 24,006 <F1> 24,555 510,880 41,064 0 0 0
Other income 0 1,542 1,530 0 0 38 0
_______ _______ _______ _______ _______ _______ _______
Total investment income 29,611 29,181 559,626 141,068 328,815 318,183 152,160
Expenses:
Investment advisory fees 9,537 28,447 193,005 23,745 24,145 27,301 12,632
Administration fees 4,975 18,337 104,737 19,582 23,450 24,713 13,691
Consulting fees 2,047 7,642 43,689 8,110 3,985 4,295 2,232
Custodian fees 1,718 6,748 38,824 7,338 8,771 9,247 4,896
Legal fees 1,102 4,210 24,376 4,531 5,530 6,188 3,071
Audit fees 466 1,746 9,999 1,849 2,286 2,474 1,271
Insurance 289 1,083 6,205 1,147 1,469 1,626 926
Printing 85 306 1,758 312 406 455 209
Miscellaneous 55 213 1,231 215 287 321 152
_________ _________ __________ _________ _________ _________ _________
Total expenses 20,274 68,732 423,824 66,829 70,328 76,620 39,080
Fees paid indirectly (780) (2,614) (43,689) (782) 0 0 0
_________ _________ __________ _________ _________ _________ _________
Net expenses 19,494 66,118 380,135 66,047 70,328 76,620 39,080
_________ _________ __________ _________ _________ _________ _________
Net investment income
(loss) 10,117 (36,937) 179,491 75,021 258,487 241,563 113,080
Realized and unrealized
gain (loss) on investments
Net realized gain
on securities sold 7,171 147,020 2,583,986 33,943 53,493 23,613 4,012
Realized gain on exercised
written option contracts 0 0 0 2,050 0 0 0
________ _________ _______ _______ _______ _________ ________
Total realized gain
on investments 7,171 147,020 2,583,986 35,993 53,493 23,613 4,012
Unrealized appreciation
(depreciation) on
investments 88,295 468,911 852,756 448,358 (238,190) (104,511) (17,432)
_________ _________ __________ _________ _________ _________ _________
Net realized and unrealized
gain (loss) on investments 95,466 615,931 3,436,742 484,351 (184,697) (80,898) (13,420)
_________ _________ __________ _________ _________ _________ _________
Net increase in
net assets resulting
from operations 105,583 578,994 3,616,233 559,372 73,790 160,665 99,660
<FN>
<F1>
Net of foreign taxes withheld in the amount of $4,331
</FN>
</TABLE>
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
STATEMENT OF CHANGES IN NET ASSETS
for the year ended December 31, 1996 and
for the period from December 1, 1995 (inception) through December 31, 1995
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO 1996 1995
<S> <C> <C>
Increase in net assets from operations:
Net investment income 10,117 334
Net realized gain 7,171 0
Net unrealized appreciation 88,295 6,681
_________ _________
Net increase in net assets
resulting from operations 105,583 7,015
Increase in net assets from unitholder
activity (Refer to Note 9.) 243,435 798,343
_________ _________
Total increase in net assets 349,018 805,358
Net assets, beginning of period 805,358 0
_________ _________
Net assets, end of period 1,154,376 805,358
Undistributed net investment income included
in net assets:
Beginning of period 334 0
End of period 10,451 334
</TABLE>
<PAGE>
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
STATEMENT OF CHANGES IN NET ASSETS
for the years ended December 31, 1996 and 1995
<CAPTION>
GROWTH EQUITY PORTFOLIO 1996 1995
<S> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income (36,937) (21,339)
Net realized gain 147,020 75,785
Net unrealized appreciation 468,911 379,367
_________ _________
Net increase in net assets
resulting from operations 578,994 433,813
Increase in net assets from unitholder
activity (Refer to Note 9.) 213,779 388,192
_________ _________
Total increase in net assets 792,773 822,005
Net assets, beginning of year 3,361,197 2,539,192
_________ _________
Net assets, end of year 4,153,970 3,361,197
Undistributed net investment loss included
in net assets:
Beginning of year (59,244) (37,905)
End of year (96,181) (59,244)
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
STATEMENT OF CHANGES IN NET ASSETS
for the years ended December 31, 1996 and 1995
<CAPTION>
VALUE EQUITY PORTFOLIO 1996 1995
<S> <C> <C>
Increase in net assets from operations:
Net investment income 179,491 214,583
Net realized gain 2,583,986 1,690,989
Net unrealized appreciation 852,756 2,336,498
__________ __________
Net increase in net assets
resulting from operations 3,616,233 4,242,070
Decrease in net assets from unitholder
activity (Refer to Note 9.) (546,063) (786,548)
__________ __________
Total increase in net assets 3,070,170 3,455,522
Net assets, beginning of year 20,280,413 16,824,891
__________ __________
Net assets, end of year 23,350,583 20,280,413
Undistributed net investment income included
in net assets:
Beginning of year 1,130,965 916,382
End of year 1,310,456 1,130,965
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
STATEMENT OF CHANGES IN NET ASSETS
for the years ended December 31, 1996 and 1995
<CAPTION>
BALANCED PORTFOLIO 1996 1995
<S> <C> <C>
Increase in net assets from operations:
Net investment income 75,021 80,232
Net realized gain 35,993 6,532
Net unrealized appreciation 448,358 537,745
_________ _________
Net increase in net assets
resulting from operations 559,372 624,509
Increase in net assets from unitholder
activity (Refer to Note 9.) 559,754 378,817
_________ _________
Total increase in net assets 1,119,126 1,003,326
Net assets, beginning of year 3,489,492 2,486,166
_________ _________
Net assets, end of year 4,608,618 3,489,492
Undistributed net investment income included
in net assets:
Beginning of year 456,346 376,114
End of year 531,367 456,346
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
STATEMENT OF CHANGES IN NET ASSETS
for the years ended December 31, 1996 and 1995
<CAPTION>
LONG-INTERMEDIATE FIXED INCOME PORTFOLIO 1996 1995
<S> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income 258,487 236,014
Net realized gain 53,493 6,981
Net unrealized appreciation (depreciation) (238,190) 452,522
_________ _________
Net increase in net assets
resulting from operations 73,790 695,517
Increase (decrease) in net assets from unitholder
activity (Refer to Note 9.) (63,438) 263,582
_________ _________
Total increase in net assets 10,352 959,099
Net assets, beginning of year 4,722,412 3,763,313
_________ _________
Net assets, end of year 4,732,764 4,722,412
Undistributed net investment income included
in net assets:
Beginning of year 1,470,762 1,234,748
End of year 1,729,249 1,470,762
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
STATEMENT OF CHANGES IN NET ASSETS
for the years ended December 31, 1996 and 1995
<CAPTION>
SHORT-INTERMEDIATE FIXED INCOME PORTFOLIO 1996 1995
<S> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income 241,563 288,392
Net realized gain 23,613 1,808
Net unrealized appreciation (depreciation) (104,511) 339,459
_________ _________
Net increase in net assets
resulting from operations 160,665 629,659
Decrease in net assets from unitholder
activity (Refer to Note 9.) (1,738,311) (738,676)
_________ ___________
Total decrease in net assets (1,577,646) (109,017)
Net assets, beginning of year 6,072,516 6,181,533
__________ __________
Net assets, end of year 4,494,870 6,072,516
Undistributed net investment income included
in net assets:
Beginning of year 1,533,522 1,245,130
End of year 1,775,085 1,533,522
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
STATEMENT OF CHANGES IN NET ASSETS
for the years ended December 31, 1996 and 1995
<CAPTION>
SHORT-TERM INCOME FUND 1996 1995
<S> <C> <C>
Increase (decrease) in net assets from operations:
Net investment income 113,080 107,391
Net realized gain 4,012 16,730
Net unrealized appreciation (depreciation) (17,432) 11,965
_________ _________
Net increase in net assets
resulting from operations 99,660 136,086
Increase (decrease) in net assets from unitholder
activity (Refer to Note 9.) 906,691 (285,965)
_________ _________
Total increase (decrease) in net assets 1,006,351 (149,879)
Net assets, beginning of year 2,565,765 2,715,644
_________ _________
Net assets, end of year 3,572,116 2,565,765
Undistributed net investment income included
in net assets:
Beginning of year 1,274,080 1,166,689
End of year 1,387,160 1,274,080
</TABLE>
PAGE
<PAGE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT
TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS
1. Organization:
The Alameda-Contra Costa Medical Association Collective
Investment Trust for Retirement Plans (the Trust) is a collective
investment trust which was established under the laws of the
State of California by the Alameda-Contra Costa Medical
Association (the Associaton) to be managed by a supervisory
comittee with Wells Fargo Bank, National Assocation (Wells
Fargo), acting as the custodial trustee (the Custodial Trustee)
under a Declaration of Trust dated February 9, 1990. The
Association is also administrator of the Trust pursuant to an
Administrative Services agreement between the Trust and the
Association. The Trust is registered with the Securities and
Exchange Commission as an open-end diversified management
investment company. Units of beneficial interest in the
Portfolios (the Units) are sold without a sales charge and are
available only to Retirement Plans.
The Trust offers seven investment portfolios, each with a
different investment objective, for the investment of funds held
in retirement plans. The Prospectus for the Trust includes
certain investment restrictions that cannot be changed for any
portfolios without the approval of a majority of the outstanding
units of that portfolio. The investment objectives of the Portfolios
are as follows:
<TABLE>
<CAPTION>
Capital Growth Growth and Income Fixed Income
<S> <C> <C>
International Value Equity Value Equity Long-Intermediate Fixed Income
Growth Equity Balanced Short-Intermediate Fixed Income
Short-Term Income
</TABLE>
2. Summary of Significant Accounting Policies:
Security Valuation:
Investments for which market quotations are readily available are
stated at market value, which is determined using the last
reported closing price. Securities traded over-the-counter are
stated at the last reported bid price or last current sales
price, as applicable. United States government and agency
obligations are valued at bid quotations from the Federal Reserve
Bank for identical or similar obligations. Short-term money
market instruments are calculated at bid quotations or by
reference to bid quotations for similar instruments of issuers
with similar credit ratings. Debt securities with remaining
maturities of 60 days or less are stated at amortized cost which
approximates market value.
PAGE
<PAGE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT
TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
2. Summary of Significant Accounting Policies:
Security Transactions and Related Investment Income:
Security transactions are accounted for on the trade date (date
the order to buy or sell is executed) and dividend income is
recorded on the ex-dividend date. Interest income is recorded on
the accrual basis. The cost of securities sold is computed on an
average cost basis.
Distributions:
The Trust does not declare and pay dividends on its investment
income or distribute its realized gains. Income earned on assets
in the portfolio is included in the total value of assets of that
portfolio as are realized gains or losses from security
transactions and unrealized appreciation or depreciation on
securities held.
Fund Valuation:
The value of participating units, upon admission to or withdrawal
from the Trust, is based upon the net asset value as of the
current month end date. There are no transaction fees charged.
Taxation:
As a group trust organized for the collective investment of the
assets of Retirement Plans, the Trust is exempt from income tax
pursuant to Revenue Ruling 81-100 of the Internal Revenue
Service.
Accounting Estimates:
The preparation of the financial statements in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the amounts
of income and expense during the reporting period. Actual results
could differ from those estimates.
Expense Allocation:
Common expenses are allocated among the Portfolios based on the ratio
of net assets of each Portfolio to the combined net assets. In all
other respects, expenses are charged directly to the Portfolios to
which they relate.
PAGE
<PAGE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT
TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
3. Covered Call Options:
The Balanced Portfolio writes covered call options in which
premiums received are recorded as a liability which is marked to
market to reflect the current value of the options written. A
covered call option gives the holder the right to purchase the
underlying security which the Balanced Portfolio owns at any time
during the option period at a predetermined exercise price. The
risk in writing a covered call option is that the Balanced
Portfolio gives up the opportunity to participate in any increase
in the price of the underlying security beyond the exercise
price. When an option written expires or the Portfolio enters
into a closing purchase transaction, the liability is extinguished
and the Portfolio realizes a gain or loss. When an option written
is exercised, the proceeds of the sale of the underlying security
are increased by the premium originally received and the Portfolio
realizes a gain or loss. The purpose of this investment strategy
is to create income by selling options for a specified price,
known as a premium, on stocks that in the Investment Manager's
point of view will not be "called" or exercised by the buyer. Or,
the Investment Manager may sell options on the stocks when he
believes the premium, plus the proceeds from the stocks that are
called, will create a greater total rate of return than would be
received if the common stocks alone were to be sold.
<TABLE>
<CAPTION>
3. Covered Call Options, continued Number Cost
<S> <C> <C>
Balance at beginning of the year 0 0
Options written during the year:
Apple Computer Call @ 25, 10-19-96 2,000 2,050
Options exercised during the year:
Apple Computer Call @ 25, 10-19-96 (2,000) (2,050)
_____ _____
Balance at end of year 0 0
</TABLE>
4. Investment Management and Administration:
Under the terms of the Declaration of Trust, the custodial
trustee will maintain possession of the assets of the portfolios
and perform certain other services. The custodial trustee will
be paid a quarterly fee for these services as specified in the
Declaration of Trust.
The Association will provide certain administrative and
accounting services to the Trust in accordance with the terms of
the Administrative Services Agreement. As compensation for its
services, the Association is paid a quarterly fee at the annual
rate of 45/100 of 1% of the aggregate fair market value of the
assets of the combined portfolios determined as of the last
business day of each calendar quarter, plus an additional $1,000
per month.
<PAGE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT
TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
4. Investment Management and Administration, continued
Portfolio management services are provided by various
Investment Managers. Information regarding the Investment
Managers is as follows:
Lazard Freres Asset Management: Lazard is responsible for the overall
management of the International Value Equity Portfolio and is paid a
quarterly management investment fee for its services to such Portfolio
at the annual rate of 1.0% of the aggregate fair market value of the
first $1,000,000 of the average monthly assets of such Portfolio and
.75 of 1.0% of such assets in excess of $1,000,000, determined as of
the last business day of each month.
The Burridge Group LLC: Burridge is responsible for overall
management of the Growth Equity Portfolio and is paid a quarterly
management investment fee for its services to such Portfolio at the
annual rate of .75 of 1.0% of the aggregate fair market value of the
first 10,000,000 of the average monthly assets of such Portfolio, .625
of 1.0% of the next 10,000,000, .50 of 1.0% of the next 20,000,000,
.375 of 1.0% of the next 20,000,000 and .25 of 1.0% of the next
40,000,000 determined as of the last business day of each month.
Towneley Capital Management, Inc: Towneley is responsible for
overall management of the Value Equity Portfolio and is paid a
quarterly investment management fee for its services to such Portfolio
at the annual rate of 1.0% of the aggregate fair market value of the
first 10,000,000, .75 of 1.0% of the next 10,000,000 and .55 of 1.0%
of the balance of the average monthly assets of such Portfolio. The
asset value is determined as of the last business day of each month.
Guardian Investment Management: Guardian is responsible for overall
management of the Balanced Portfolio and is paid a quarterly investment
management fee for its services to the Balanced Portfolio at the annual
rate of 1.0% of the aggregate fair market value of the first $250,000
of the average monthly assets of such Portfolio and .60 of 1.0% of
such assets in excess of $250,000, determined as of the last business
day of each month.
Scudder, Stevens & Clark Inc: Scudder is responsible for overall
management of the Long-Intermediate Fixed Income Portfolio, the Short-
Intermediate Fixed Income Portfolio and the Short-Term Income Fund and
is paid a quarterly investment management fee for its services to these
three Portfolios at the annual rate of .50 of 1.0% of the aggregate fair
market value of the average monthly assets in these Portfolios,
determined as of the last business day of the month.
<PAGE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT
TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
5. Brokerage Commissions Paid to Affiliated Brokers:
During the year ended December 31, 1996, the International Value
Equity, Growth Equity, Value Equity and Balanced Portfolios paid
$2,011, $5,307, $87,802 and $1,650, respectively to Paine Webber for
commissions. A broker for Paine Webber is a consultant for the Trust.
6. Expense Offset Arrangements:
For the year ended December 31, 1996, consulting expense amounts
include a total of $47,856 that has been paid indirectly with
commission dollars.
<TABLE>
7. Purchases and Sales of Investment Securities:
The aggregate cost of purchases and proceeds form sales of investments (excluding short-term and U.S. government
securities) for the year ended December 31, 1996, were as follows:
<CAPTION>
Long- Short-
International Growth Value Intermediate Intermediate Short-Term
Equity Equity Equity Balanced Fixed Income Fixed Income Income
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases 1,010,213 1,121,557 20,576,490 594,530 0 98,711 0
Proceeds 348,569 1,065,463 20,069,025 268,261 0 0 0
</TABLE>
<TABLE>
The aggregate cost of purchases and proceeds from sales of U.S. government securities for the year ended December 31,
1996 were as follows:
<CAPTION>
Long- Short-
International Growth Value Intermediate Intermediate Short-Term
Equity Equity Equity Balanced Fixed Income Fixed Income Income
<S> <C> <C> <C> <C> <C> <C> <C>
Purchases 0 0 0 197,787 1,192,570 1,539,476 3,853,070
Proceeds 0 0 0 0 990,036 2,412,993 2,450,000
</TABLE>
8. Unit Value Adjustments:
On February 22, 1996, the Supervisory Committee approved a unit value
adjustment through a unit split so that as of July 1, 1996, the unit
values of certain Portfolios shall be $10.00. The share amounts shown
in Note 9 and the per unit amounts shown in Note 10 have been restated
to reflect the unit split in accordance with the following ratios:
Value Equity Portfolio - 12.3862 to 1; Balanced Portfolio - 4.8470
to 1; Long-Intermediate Fixed Income Portfolio - 5.5382 to 1; Short-
Intermediate Fixed Income Portfolio - 2.0957 to 1; Short-Term Income
Fund - 4.4817 to 1.
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
9. Unit Activity:
At December 31, 1996, there was an unlimited number of no par value units authorized for the portfolios of the Trust.
Transactions in Trust units for the year ended December 31, 1996, are as follows:
<CAPTION>
Long-
Intermediate
International Equity Growth Equity Value Equity Balanced Fixed Income
Units Amount Units Amount Units Amount Units Amount Units Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales 4,862 50,296 11,537 179,702 62,757 638,900 26,755 274,491 5,446 54,793
Transfers from
other portfolios 30,083 317,000 22,975 366,834 21,550 212,854 36,994 374,542 48,060 495,000
Redemptions (1,286) (14,345) (9,054) (148,174) (66,409) (707,360) (8,306) (89,279) (37,932) (393,650)
Transfers to
other portfolios (10,350) (109,516) (12,316) (184,583) (66,434) (690,457) 0 0 (21,484) (219,581)
______ _______ _______ ________ _______ ________ ______ ________ ______ _______
Net increase
(decrease) 23,309 243,435 13,142 213,779 (48,536) (546,063) 55,443 559,754 (5,910) (63,438)
</TABLE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
9. Unit Activity:, continued
At December 31, 1996, there was an unlimited number of no par value units authorized for the portfolios of the Trust.
Transactions in Trust units for the year ended December 31, 1996, are as follows:
<CAPTION>
Short-
Intermediate
Fixed Income Short-Term Income
Units Amount Units Amount
<S> <C> <C> <C> <C>
Sales 8,209 82,714 33,054 331,027
Transfers from
other portfolios 499 5,000 88,529 898,245
Redemptions (43,071) (432,411) (25,213) (250,857)
Transfers to
other portfolios (137,620) (1,393,614) (7,188) (71,724)
_______ _________ _______ ________
Net increase (decrease) (171,983) (1,738,311) 89,182 906,691
</TABLE>
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
9. Unit Activity:
At December 31, 1995, there was an unlimited number of no par value units authorized for the portfolios of the Trust.
Transactions in Trust units for the year ended December 31, 1995, are as follows:
NOTE: International Value Equity inception date is December 1, 1995.
<CAPTION>
Long-
International Intermediate
Equity Growth Equity Value Equity Balanced Fixed Income
Units Amount Units Amount Units Amount Units Amount Units Amount
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Sales 0 0 5,510 81,588 78,603 675,829 15,695 140,517 8,883 83,084
Transfers from
other portfolios 79,824 798,343 42,756 622,375 22,047 181,391 46,788 411,863 64,226 612,389
Redemptions 0 0 (3,212) (43,693) (53,422) (430,977) (3,688) (33,752) (31,667) (296,865)
Transfers to
other portfolios 0 0 (18,990) (272,078) (135,158) (1,212,791) (15,632) (139,811) (13,757) (135,026)
______ _______ _______ ________ _______ __________ ______ ________ ______ _______
Net increase
(decrease) 79,824 798,343 26,064 388,192 (87,930) (786,548) 43,163 378,817 27,685 263,582
</TABLE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
9. Unit Activity:, continued
At December 31, 1995, there was an unlimited number of no par value units authorized for the portfolios of the Trust.
Transactions in Trust units for the year ended December 31, 1995, are as follows:
<CAPTION>
Short-
Intermediate
Fixed Income Short-Term Income
Units Amount Units Amount
<S> <C> <C> <C> <C>
Sales 5,336 51,213 41,900 403,811
Transfers from
other portfolios 22,286 220,234 22,373 215,759
Redemptions (45,090) (423,834) (19,755) (189,176)
Transfers to
other portfolios (60,904) (586,289) (74,518) (716,359)
_______ ________ _______ ________
Net increase (decrease) (78,372) (738,676) (30,000) (285,965)
</TABLE>
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
10. Financial Highlights:
Financial highlights for each unit outstanding for the year ended
December 31, 1996 and the period December 1, 1995 (inception) through
December 31, 1995, is as follows:
<CAPTION>
INTERNATIONAL EQUITY PORTFOLIO 1996 1995
<S> <C> <C>
Net asset value, beginning of period 10.09 10.00
Net investment income .10 0
Net realized and unrealized gain 1.00 .09
_____ _____
Total from investment operations 1.10 .09
Net asset value, end of period 11.19 10.09
Total Return 10.90% 0.90%
Ratios and Supplemental Data
Ratio of net investment income to
average net assets 1.01% 0.04%
Portfolio turnover rate 40.54% 0%
Average commission rate per share 0.0909 0.0600
Net assets at end of period (in 000's) 1,154 805
Ratio of expenses to average net assets 2.02% <F1> 0.11%
Ratio of net expenses to average
net assets 1.94% <F2> 0.11%
<FN>
<F1>
Ratio has been calculated using the total expense amount which includes
fees paid indirectly.
<F2>
Ratio has been calculated using the net expense amount which excludes
fees paid indirectly.
</FN>
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
10. Financial Highlights:
Financial highlights for each unit outstanding for the years ended
December 31, 1996, 1995, 1994 and 1993, and the period October 1, 1992
(inception) through December 31, 1992, are as follows:
<CAPTION>
GROWTH EQUITY PORTFOLIO 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 14.27 12.12 13.01 11.74 10.00
Net investment loss (.14) (.07) (.11) (.07) (.01)
Net realized and unrealized gain (loss) 2.57 2.22 (.78) 1.34 1.75
_____ _____ _____ _____ _____
Total from investment operations 2.43 2.15 (.89) 1.27 1.74
Net asset value, end of year 16.70 14.27 12.12 13.01 11.74
Total Return 17.03% 17.74% (6.84)% 10.82% 69.60% <F1>
Ratios and Supplemental Data
Ratio of net investment income (loss)
to average net assets (.99)% (.68)% (.72)% (.68)% (.07)%
Portfolio turnover rate 28.97% 33.63% 52.49% 38.58% 12.95%
Average commission rate per share 0.0741 0.1339
Net assets at end of year (in 000's) 4,154 3,361 2,539 3,242 1,660
Ratio of expenses to average net assets 1.84% <F2> 1.67% 1.86% 1.79% .41%
Ratio of net expenses to average
net assets 1.77% <F3> 1.67% 1.86% 1.79% .41%
<FN>
<F1>
annualized
<F2>
Ratio has been calculated using the total expense amount which includes
fees paid indirectly.
<F3>
Ratio has been calculated using the net expense amount which excludes
fees paid indirectly.
</FN>
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
10. Financial Highlights:
Financial highlights for each unit outstanding for the years ended
December 31, 1996, 1995, 1994, 1993 and 1992 are as follows:
<CAPTION>
VALUE EQUITY PORTFOLIO 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 9.62 7.66 7.74 6.71 5.94
Net investment income .10 .12 .02 .06 .13
Net realized and unrealized gain (loss) 1.62 1.84 (.10) .97 .64
_____ ______ _____ _____ _____
Total from investment operations 1.72 1.96 (.08) 1.03 .77
Net asset value, end of year 11.34 9.62 7.66 7.74 6.71
Total Return 17.88% 25.57% (.99)% 15.37% 12.88%
Ratios and Supplemental Data
Ratio of net investment income to
average net assets .84% 1.15% .70% 1.18% 1.75%
Portfolio turnover rate 98.50% 103.58% 116.01% 65.85% 85.40%
Average commission rate per share 0.0601 0.1486
Net assets at end of year (in 000's) 23,351 20,280 16,825 15,518 12,622
Ratio of expenses to average net assets 1.98% <F1> 1.82% 1.99% 1.99% 2.01%
Ratio of net expenses to average
net assets 1.78% <F2> 1.82% 1.99% 1.99% 2.01%
<FN>
<F1>
Ratio has been calculated using the total expense amount which
includes fees paid indirectly.
<F2>
Ratio has been caluclated using the net expense amount which
excludes fees paid indirectly.
</FN>
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
10. Financial Highlights:
Financial highlights for each unit outstanding for the years ended
December 31, 1996, 1995, 1994, 1993, and 1992 are as follows:
<CAPTION>
BALANCED PORTFOLIO 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 9.47 7.64 7.64 7.05 6.70
Net investment income .02 .08 .34 .32 .13
Net realized and unrealized gain (loss) 1.38 1.75 (.34) .27 .22
_____ ______ _____ _____ _____
Total from investment operations 1.40 1.83 0 .59 .35
Net asset value, end of year 10.87 9.47 7.64 7.64 7.05
Total Return 14.78% 23.91% .03% 8.34% 5.26%
Ratios and Supplemental Data
Ratio of net investment income to
average net assets 1.88% 2.68% 3.09% 2.57% 2.59%
Portfolio turnover rate 7.67% 6.30% 5.18% 4.75% 17.78%
Average commission rate per share 0.0825 0.1872
Net assets at end of year (in 000's) 4,609 3,489 2,486 2,854 3,223
Ratio of expenses to average net assets 1.68% <F1> 1.47% 1.63% 1.63% 1.64%
Ratio of net expenses to average
net assets 1.66% <F2> 1.47% 1.63% 1.63% 1.64%
<FN>
<F1>
Ratio has been calculated using the total expense amount which
includes fees paid indirectly.
<F2>
Ratio has been calculated using the net expense amount which
excludes fees paid indirectly.
</FN>
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
10. Financial Highlights:
Financial highlights for each unit outstanding for the years ended
December 31, 1996, 1995, 1994, 1993 and 1992 are as follows:
<CAPTION>
LONG-INTERMEDIATE FIXED INCOME PORTFOLIO 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 10.27 8.71 9.16 8.39 7.89
Net investment income .61 .34 1.08 .53 .55
Net realized and unrealized gain (loss) (.45) 1.22 (1.53) .24 (.05)
_____ ______ _____ _____ _____
Total from investment operations .16 1.56 (.45) .77 .50
Net asset value, end of year 10.43 10.27 8.71 9.16 8.39
Total Return 1.56% 17.93% (4.93)% 9.19% 6.39%
Ratios and Supplemental Data
Ratio of net investment income to
average net assets 5.29% 5.53% 5.64% 5.44% 6.11%
Portfolio turnover rate 17.30% 5.95% 0% 10.68% 9.79%
Net assets at end of year (in 000's) 4,733 4,722 3,763 5,156 4,908
Ratio of expenses to average net assets 1.44% 1.35% 1.49% 1.49% 1.52%
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
10. Financial Highlights:
Financial highlights for each unit outstanding for the years ended
December 31, 1996, 1995, 1994, 1993 and 1992 are as follows:
<CAPTION>
SHORT-INTERMEDIATE FIXED INCOME PORTFOLIO 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 9.97 8.99 9.23 8.68 8.18
Net investment income .49 <F1> .71 .69 .37 .01
Net realized and unrealized gain (loss) (.17) <F1> .27 (.93) .18 .49
_____ ______ _____ _____ _____
Total from investment operations .32 .98 (.24) .55 .50
Net asset value, end of year 10.29 9.97 8.99 9.23 8.68
Total Return 3.21% 10.88% (2.58)% 6.38% 6.06%
Ratios and Supplemental Data
Ratio of net investment income to
average net assets 4.63% 4.76% 4.78% 4.75% 5.16%
Portfolio turnover rate 31.68% 19.21% 0% 25.60% 6.69%
Net assets at end of year (in 000's) 4,495 6,073 6,182 7,575 6,747
Ratio of expenses to average net assets 1.47% 1.37% 1.51% 1.47% 1.47%
<FN>
<F1>
Per share amounts have been calculated using the average shares
outstanding during the period.
</FN>
</TABLE>
PAGE
<PAGE>
<TABLE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
10. Financial Highlights:
Financial highlights for each unit outstanding for the years ended
December 31, 1996, 1995, 1994, 1993 and 1992 are as follows:
<CAPTION>
SHORT-TERM INCOME FUND 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year 9.82 9.33 9.10 8.91 8.63
Net investment income <F1> .40 .39 .26 .32 .38
Net realized and unrealized loss <F1> (.02) .10 (.03) ( .13) ( .10)
_____ _____ _____ _____ _____
Total from investment operations .38 .49 .23 .19 .28
Net asset value, end of year 10.20 9.82 9.33 9.10 8.91
Total Return 3.87% 5.33% 2.50% 2.10% 3.31%
Ratios and Supplemental Data
Ratio of net investment income to
average net assets 4.03% 4.11% 2.87% 3.60% 4.33%
Portfolio turnover rate 0%
Net assets at end of year (in 000's) 3,572 2,566 2,716 2,120 3,481
Ratio of expenses to average net assets 1.39% 1.38% 1.50% 1.59% 1.55%
<FN>
<F1>
Per share amounts have been calculated using the average shares
outstanding during the period.
</FN>
</TABLE>
<PAGE>
ALAMEDA-CONTRA COSTA MEDICAL ASSOCIATION COLLECTIVE INVESTMENT
TRUST FOR RETIREMENT PLANS
NOTES TO FINANCIAL STATEMENTS, continued
11. Subsequent Event:
On February 20, 1997, the Supervisory Committee approved a name change
of one of the Portfolios from the Money Market Portfolio to the Short-
Term Income Fund.
MANAGEMENT'S DISCUSSION OF PORTFOLIO PERFORMANCE
The International Value Equity Portfolio
The Investment Manager of the International Value Equity
Portfolio is Lazard Freres Asset Management. John R. Reinsberg
is the Managing Director responsible for all International/Global
investments. Prior to joining Lazard Freres Asset Management in
1991, Mr. Reinsberg was an Executive Vice President in charge of
Global/International Investments at General Electric Investment
Corporation. Mr. Reinsberg has a B.A. from the University of
Pennsylvania, and an MBA from Columbia University.
Ronald J. Saba is the Portfolio Manager/Analyst responsible for
the day-to-day management of the International Value Equity
Portfolio. Prior to joining Lazard Freres Asset Management in
1996, Mr. Saba was s Senior Vice President, Portfolio
Manager/Analyst for Brandes Investment Partners, Inc. Mr. Saba
has a Bachelor of Commerce degree from McGill University, and an
MBA from the University of Chicago.
<TABLE>
The line graph below compares the performance of the
International Value Equity Portfolio with the MSCI EAFE Index
since the portfolio's inception. The chart assumes a $10,000
investment in the portfolio and charts that performance over each
year since inception. Unlike the International Value Equity
Portfolio, the MSCI EAFE Index is unmanaged and does not incur
any operating expenses. If such expenses had been applied to the
index, its performance would have been lower than as reflected in
the graph.
NOTE: Past performance is not predictive of future performance.
<CAPTION>
Date MSCI EAFE Index Growth Equity Portfolio
<S> <C> <C>
12/01/95 10,000 10,000
12/31/95 10,405 10,090
12/31/96 11,067 11,190
</TABLE>
<TABLE>
The annualized total returns for the International Value Equity
Portfolio are shown below:
<CAPTION>
Period Return
<S> <C>
One Year 10.90%
Since inception 10.97%
</TABLE>
For the 1996 fiscal year, the MSCI EAFE Index was up 6.0%. The
Lazard Freres Asset Management accounts outperformed this index.
Outperformance was due to overweighting of good performing
countries such as France and Germany, and underweighting of Japan
which performed poorly. In addition we had good security
selection in Germany and Japan.
The same forces which drove U. S. equity returns over the past
two years are now in place in many foreign markets and this does
well for international equity investing. Corporate restructuring
(asset redeployment, productivity enhancements, cost reductions,
and deleveraging) is becoming more and more common in Europe and
is beginning to emerge in Japan. Interest rates have been
declining all over the world, and investors who previously
enjoyed high returns on fixed income instruments will now turn to
the equity markets to achieve higher long-term returns.
Increasingly Europeans realize that their "pay as you go" pension
schemes will be insufficient to fund their retirement years. In
all likelihood they too will redirect more and more of their
funds toward their local equity markets in an effort to create
wealth for their retirement. The emergence of a more prevalent
equity culture will also put greater pressure on foreign
corporations to create higher returns.
The Growth Equity Portfolio
The Burridge Group LLC, is the Investment Manager of the Growth
Equity Portfolio. Christopher Fleming is the individual charged
with day-to-day management. Mr. Fleming has been managing the
Growth Equity Portfolio since 1994. Mr. Fleming has fifteen
years of experience as a security analyst and portfolio manager.
With generalist analyst experience, Mr. Fleming has a depth of
knowledge and experience in the capital goods, finance, consumer
non-durable, insurance, recreation and energy industries.
Immediately prior to joining The Burridge Group, LLC, Mr. Fleming
spent five years as co-manager of the Institutional Equities
Group of Harris Associated, L.P., in Chicago. Mr. Fleming
conducted research and shared responsibility for the management
of $800 million in institutional equity portfolios. Mr. Fleming
also spent three years at Oppenheimer Capital, L.P., New York, as
a member of the Investment Committee and Equity Research
Committee with portfolio management responsibility for
institutional and high net worth accounts. He started his career
at the United Bank of Denver, where he was an analyst and
portfolio manager. Mr. Fleming's education includes: a Juris
Doctorate; a Master's degree in Business Administration; and a
Bachelor's degree in Finance from the University of Denver. He
also received a Master's degree of Science from the London School
of Economics and is a Chartered Financial Analyst.
<TABLE>
The line graph below compares the performance of the Growth
Equity Portfolio with the S&P 500 Index since the portfolio's
inception. The chart assumes a $10,000 investment in the
portfolio and charts that performance over each year since
inception. Unlike the Growth Equity Portfolio, the S&P 500 Index
is unmanaged and does not incur any operating expenses. If such
expenses had been applied to the index, its performance would
have been lower than as reflected in the graph.
NOTE: Past performance is not predictive of future performance.
<CAPTION>
Date S&P 500 Index Growth Equity Portfolio
<S> <C> <C>
9/30/92 10,000 10,000
12/31/92 10,510 11,741
12/31/93 11,560 13,007
12/31/94 11,711 12,120
12/31/95 16,095 14,268
12/31/96 19,808 16,703
</TABLE>
<TABLE>
The annualized total returns for the Growth Equity Portfolio are
shown below:
<CAPTION>
Period Return
<S> <C>
One Year 17.03%
Since inception 12.82%
</TABLE>
During 1996, the S&P 500 returned 22.96% versus 19.20% for the
S&P MidCap and 16.5% for the Russell 2000. Large cap stocks were
the beneficiaries of a liquidity driven market and now have
provided better returns versus small and midcap stocks for the
last three years. Our client account benefitted from our
exposure to stocks in the consumer discretionary, financial
services and technology sectors which had returns of 25%, 29% and
34%, respectively. We believe midcap stocks should begin to
outperform the popular indexes in 1997 because of the full
valuation of large cap stocks relative to midcap issues.
The Value Equity Portfolio
The Investment Manager of the Value Equity Portfolio is Towneley
Capital Management, Inc. Wesley G. McCain, Towneley Capital
Management's chairman, directs the investment of the Value Equity
Portfolio in collaboration with a staff of 25 professional and
administrative personnel. Dr. McCain, who holds a doctoral
degree from Stanford University and Master's degree from Columbia
and Stanford, was formerly on the faculty of the Graduate School
of Business of Columbia University. He is also a Chartered
Financial Analyst. Dr. McCain founded Towneley Capital
Management in 1971 and has managed the Value Equity Portfolio
since July of 1990.
Kathy A. O'Connor, Vice President and Portfolio Manager, has been
working closely with Dr. McCain in managing the portfolio. Ms.
O'Connor, who has been an analyst and portfolio manager with
Towneley Capital Management, Inc. since 1987, holds a Master's
degree in Business Administration from Babson College, a
Bachelor's degree in Business from the University of
Massachusetts, and is a Chartered Financial Analyst.
<TABLE>
The line graph below compares the performance of the Value Equity
Portfolio with the S&P 500 Index since the portfolio's inception.
The chart assumes a $10,000 investment in the portfolio and
charts that performance over each year since inception. Unlike
the Value Equity Portfolio, the S&P 500 Index is unmanaged and
does not incur any operating expenses. If such expenses had been
applied to the index, its performance would have been lower than
as reflected in the graph.
NOTE: Past performance is not predictive of future performance.
<CAPTION>
Date S&P 500 Index Value Equity Portfolio
<S> <C> <C>
7/31/90 10,000 10,000
12/31/90 9,424 9,618
12/31/91 12,303 11,660
12/31/92 13,246 13,162
12/31/93 14,570 15,183
12/31/94 14,760 15,032
12/31/95 20,285 18,875
12/31/96 24,965 22,244
</TABLE>
<TABLE>
The annualized total returns for the Value Equity Portfolio are
shown below:
<CAPTION>
Period Return
<S> <C>
One Year 17.88%
Five Years 13.81%
Since inception 13.29%
</TABLE>
Towneley Capital Management pursued its strategy of selecting
individual stocks based on their rank in the firm's quantitative
comparative valuation model. In this process, exposure to
industry sectors is a result of purchases and sales of positions
in specific companies rather than a planned approach driven by
economic forecast. Nevertheless, some degree of industry
concentration may occur. In 1996, the market, as measured by
most equity market indexes, had strong returns. The equity
market strength was due, in large part, to extreme performance in
a few sectors, notably technology and finance. We are value
equity managers and, therefore, we rebalance into undervalued
securities when market momentum creates extreme valuations in
some sectors. We continue to have a significant weight in the
still undervalued retail, energy, minerals, and finance sectors.
The finance sector continues to benefit from low interest rates
and technological improvements. During the year, we reduced our
weight in the technology sector as the market created
extreme valuations.
The Balanced Portfolio
The Investment Manager of the Balanced Portfolio is Guardian
Investment Management. The individuals charged with the
responsibility of managing the portfolio are Robert M. Tomasello
and Donald L. Hansen, who are partners of the firm. Both
partners were Investment Managers from the Bank of America prior
to forming the firm in 1976. Mr. Tomasello holds a Bachelor's
degree in Finance from the University of San Francisco and an
Master's degree in Business Administration from Golden Gate
University. Mr. Hansen has his bachelor's degree from the
University of Iowa and attended the Harvard Management Workshop.
Mr. Tomasello is primarily involved with equity selection of the
portfolio while Mr. Hansen is involved with the fixed income
selections. Both partners share equal responsibility for sector
weightings and place emphasis in this analysis when deciding
equity and fixed income decisions.
<TABLE>
The line graph below compares the performance of the Balanced
Portfolio with the S&P 500 Index and the Merrill Lynch 3-5 Year
Treasuries Index since the portfolio's inception. The chart
assumes a $10,000 investment in the portfolio and charts that
performance over each year since inception. Unlike the Balanced
Portfolio, the S&P 500 Index and the Merrill Lynch 3-5 Year
Treasuries Index are unmanaged and do not incur any operating
expenses. If such expenses had been applied to the indices,
their performance would have been lower than as reflected in the
graph.
NOTE: Past performance is not predictive of future performance.
<CAPTION>
Date Merrill Lynch 3-5 Year S&P 500 Balanced
Treasury Index Index Portfolio
<S> <C> <C> <C>
7/31/90 10,000 10,000 10,000
12/31/90 10,516 9,424 9,468
12/31/91 12,110 12,303 11,211
12/31/92 13,006 13,246 11,803
12/31/93 14,178 14,570 12,785
12/31/94 13,790 14,760 12,790
12/31/95 16,013 20,285 15,848
12/31/96 16,583 24,966 18,192
</TABLE>
<TABLE>
The annualized total returns for the Balanced Portfolio are shown
below:
<CAPTION>
Period Return
<S> <C>
One Year 14.78%
Five Years 10.16%
Since inception 9.81%
</TABLE>
The objective of the Balanced Portfolio is to be invested in a
weighting of a maximum of 60% to 65% in equities and 35% to 40%
in fixed income investments. Cash instruments are included in
the fixed income allocation. However, maximum cash reserves are
to be 10% at any one time of the fixed portion of the portfolio.
Because of strict parameters for the Balanced Portfolio, the
Investment Manager attempts to achieve the highest rate of return
for the least amount of risk. The equity portion of the
portfolio is well diversified in every sector of the S&P 500
Index. Guardian's approach to outperforming the S&P 500 Index is
centered on over-weighting sectors of the market that have higher
earnings growth potential or equities that represent significant
value given their current market valuation. The fixed income
strategy is to own bonds that have maturities less than ten years
with ratings of A or better by the major services.
The 1996 performance was again, as in 1995, competitive with the
indexes because of a large weighting in financial stocks and good
results in technology holdings. The financial sector was 15% of
the equity account. The portfolio turnover was, by all fund
standards, extremely low averaging around 10% for the year.
Fixed income maturities stayed within 10 years and performed
equally to the bond indexes. Equities stayed at about 60% of the
portfolio, which is within the parameters of the fund.
The Long-Intermediate Fixed Income Portfolio
The Investment Manager of the Long-Intermediate Fixed Income
Portfolio is Scudder, Stevens & Clark, Inc. Kristin L. Bradbury
has been charged with the day-to-day management of the portfolio.
Ms. Bradbury is a Vice President of Scudder, Stevens & Clark,
Inc. and has been associated with the firm since July of 1993.
She has over 10 years experience within the investment industry
and is a Chartered Financial Analyst.
<TABLE>
The line graph below compares the performance of the Long-
Intermediate Fixed Income Portfolio with the Lehman Aggregate
Index since the portfolio's inception. The chart assumes a
$10,000 investment in the portfolio and charts that performance
over each year since inception. Unlike the Long-Intermediate
Fixed Income Portfolio, the Lehman Aggregate Index is unmanaged
and does not incur any operating expenses. If such expenses had
been applied to the index, its performance would have been lower
than as reflected in the graph.
NOTE: Past performance is not predictive of future performance.
<CAPTION>
Lehman Aggregate Long-Intermediate
Date Bond Index Fixed Income Portfolio
<S> <C> <C>
7/31/90 10,000 10,000
12/31/90 10,451 10,450
12/31/91 12,123 11,996
12/31/92 13,020 12,763
12/31/93 14,290 13,936
12/31/94 13,872 13,249
12/31/95 16,436 15,624
12/31/96 17,029 15,862
</TABLE>
<TABLE>
The annualized total returns for the Long-Intermediate Fixed
Income Portfolio are shown below:
<CAPTION>
Period Return
<S> <C>
One Year 1.56%
Five Years 5.77%
Since inception 7.46%
</TABLE>
The portfolio's guidelines stipulate that all securities must be
rated A or better, the maximum allowable investment per issuer
(other than Government-related issues) is 5%, the weighted
average maturity must be between 7 and 12 years, and
collateralized mortgage obligations are limited to 15% of the
total portfolio.
During 1996, interest rates experienced significant volatility
as investors tried to gauge the strength of the economy. Spurts
of economic growth early in the year were followed by evidence of
a slowing economy in late summer and, finally, signs of a strong
holiday spending season. All told, the 30-year U. S. Treasury
yield rose from 5.95% as of December 31, 1995, to near 6.64% at
year end.
The Long-Intermediate Fixed Income Portfolio began the year with
an average maturity of 9.4 years. The average maturity was
reduced slightly during the year, to 9.0 years at year end. It
is slightly longer than the average maturity of the Index, at 8.7
years.
The Portfolio is well diversified across U.S. Treasuries,
corporate and mortgage backed securities. As of December 31,
1996, investments in U.S. Treasury securities totaled 49% of the
Portfolio, while mortgage-related securities comprised nearly 30%
of the Portfolio. In order to accommodate potential cash
outflows, approximately 10% of the Portfolio was invested in cash
equivalent securities.
The rise in interest rates in 1996 resulted in an increase in the
Portfolio's yield-to-maturity to 6.6% at year end, up from 6.1%
at the start of the year. The average quality of the portfolio
was AAA throughout the year.
The Short-Intermediate Fixed Income Portfolio
The Investment Manager of the Short-Intermediate Fixed Income
Portfolio is Scudder, Stevens & Clark, Inc. Kristin L. Bradbury
has been charged with the day-to-day management of the portfolio.
Ms. Bradbury is a Vice President of Scudder, Stevens & Clark,
Inc. and has been associated with the firm since July of 1993.
She has over 10 years experience within the investment industry
and is a Chartered Financial Analyst.
<TABLE>
The line graph below compares the performance of the Short-
Intermediate Fixed Income Portfolio with the Merrill Lynch 1-5
Year Government/Corporate Bond Index since the portfolio's
inception. The chart assumes a $10,000 investment in the
portfolio and charts that performance over each year since
inception. Unlike the Short-Intermediate Fixed Income Portfolio,
the Merrill Lynch 1-5 Year Government/Corporate Bond Index is
unmanaged and does not incur any operating expenses. If such
expenses had been applied to the index, its performance would
have been lower than as reflected in the graph.
NOTE: Past performance is not predictive of future performance.
<CAPTION>
Merrill Lynch 1-5 Year Short-Intermediate
Government/Corporate Fixed Income
Date Bond Index Portfolio
<S> <C> <C>
7/31/90 10,000 10,000
12/31/90 10,463 10,382
12/31/91 11,818 11,583
12/31/92 12,626 12,285
12/31/93 13,519 13,069
12/31/94 13,441 12,735
12/31/95 15,174 14,120
12/31/96 15,871 14,566
</TABLE>
<TABLE>
The annualized total returns for the Short-Intermediate Fixed
Income Portfolio are shown below:
<CAPTION>
Period Return
<S> <C>
One Year 3.21%
Five Years 4.70%
Since inception 6.04%
</TABLE>
The investment objective for the Short-Intermediate Fixed Income
Portfolio is current income. The Portfolio operates under
similar guidelines as the Long-Intermediate Fixed Income
Portfolio, the main exception being that the allowable weighted
average maturity is between 1 and 5 years. The shorter maturity
results in less volatility over extended time periods, relative
to the Long-Intermediate Fixed Income Portfolio. This is
illustrated by the difference in returns between the two
portfolios in 1996. The average maturity of the Portfolio was
2.9 years as of December 31, 1996, up slightly from 2.4 years at
the beginning of the year. The average maturity was extended to
take advantage of longer, higher yielding securities.
The yield to maturity of the Portfolio increased to 6.1% as of
December 31, 1996 from 5.4% at the beginning of the year.
Portfolio yield increased as a result of higher interest rates in
general as well as an increased allocation to mortgage-backed
securities. Mortgage related securities comprised 19% of the
Portfolio as of year end compared to 10% at the beginning of the
year. The mortgage sector performed well in 1996 and continues
to offer a significant yield advantage over U.S. Treasuries.
As of December 31, 1996, cash reserves represented 2% of the
Portfolio. Short-term U.S. Treasury securities supplement the
cash position in order to provide for potential cash outflows.
U.S. Treasury holdings comprise roughly 70% of the portfolio.
Portfolio quality remained AAA throughout the year.
The Short-Term Income Fund
The Investment Manager of the Short-Term Income Fund is Scudder,
Stevens & Clark, Inc. Kristin L. Bradbury has been charged with
the day-to-day management of the portfolio. Ms. Bradbury is a
Vice President of Scudder, Stevens & Clark, Inc. and has been
associated with the firm since July of 1993. She has over 10
years experience within the investment industry and is a
Chartered Financial Analyst.
<TABLE>
The line graph below compares the performance of the Short-
Term Income Fund with the Merrill Lynch 182 Day Treasury Bill
Index since the portfolio's inception. The chart assumes a
$10,000 investment in the portfolio and charts that performance
over each year since inception. Unlike the Short-Term Income
Fund, the Merrill Lynch 182 Day Treasury Bill Index is unmanaged
and does not incur any operating expenses. If such expenses had
been applied to the index, its performance would have been lower
than as reflected in the graph.
NOTE: Past performance is not predictive of future performance.
<CAPTION>
Merrill Lynch 182 Day Short-Term
Date Treasury Bill Index Income Fund
<S> <C> <C>
7/31/90 10,000 10,000
12/31/90 10,357 10,294
12/31/91 11,101 10,821
12/31/92 11,575 11,180
12/31/93 11,968 11,414
12/31/94 12,433 11,700
12/31/95 13,246 12,324
12/31/96 13,949 12,790
</TABLE>
<TABLE>
The annualized total returns for the Short-Term Income Fund are
shown below:
<CAPTION>
Period Return
<S> <C>
One Year 3.87%
Five Years 3.40%
Since inception 3.92%
</TABLE>
The Portfolio's guidelines stipulate that, under normal
circumstances, at least 80% of the investments will have a stated
maturity of 13 months or less. All securities must be rate A or
better. The stated objective of this Portfolio is to provide a
high level of current income with equal emphasis on stability and
liquidity of principal.
To this end, 95% of the Portfolio was invested in U.S. Treasury
securities as of December 31, 1996. The remaining 5% was held in
cash equivalents to accommodate potential cash flows. The yield-
to-maturity was 5.0% and the weighted average maturity was just
under nine months.
