<PAGE>
[ASTRA LOGO ]
ASTRA ADJUSTABLE RATE SECURITIES TRUSTS ANNUAL REPORT
Dear Shareholder: December 26, 1996
The Trust's performance during the past fiscal year was influenced by real and
expected changes in U.S. interest rates, mortgage prepayments, and mortgage
defaults. The year began in the midst of the U.S. Federal Reserve's attempt to
stimulate economic growth through decreases in the Fed Funds rate. As a result,
both short term and long term interest rates dropped. However, beginning in late
December 1995, long term interest rates began to rise as investors' perception
of future economic growth increased in conjunction with concerns of rising
inflation brought about by an increase in the price of gold as well as other
commodities. More recently, investors have tempered their expectations for
future economic growth and interest rates have dropped from their high yields
reached in mid-1996. During the year ended October 31, 1996, the U.S. two year
treasury yield increased from 5.61% to 5.73%, an increase of 12 basis points,
while the U.S. thirty year treasury yield increased from 6.33% to 6.64%, an
increase of 31 basis points. Additionally, during the last months of 1995, the
Trusts were somewhat hampered by credit and default risk on the balance of
single-family, subordinated mortgage securities in the portfolio primarily
backed by Southern California real estate.
The Trust improved its NAV stability by investing in higher-quality Agency
issues. Currently, the majority of securities owned by the Trust include Agency
adjustable rate mortgages, U.S. Treasuries, and short term Agency discount notes
with relatively short durations.
However, as the Trusts have experienced an increase in the rate of redemptions,
a portion of its assets will be invested in short term U.S. Government
securities which has the effect of reducing yield.
Sincerely,
Astra Management Corp.
<PAGE>
- ------------------
Astra Adjustable Rate Securities Trusts invest all investable assets in the
Astra Institutional Adjustable Rate Securities Portfolio. The Portfolio seeks to
achieve its investment objective by investing at least 65% of its assets in
adjustable rate mortgage (ARM) securities. A majority of the Portfolio's assets
may be invested in ARM securities that are issued or sponsored by commercial
banks, savings and loan associations, mortgage bankers or other financial
institutions, that have no government guarantee and that are senior or
subordinated to other mortgage securities arising out of the same pool of
mortgages. The Portfolio invests the remainder of its assets in (i) mortgage
securities which are issued or guaranteed by the U.S. Government, its agencies
or instrumentalities, or which are collateralized by or represent an interest in
U.S. Government mortgage securities and (ii) certain other mortgage securities.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST WILL FLUCTUATE. SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
- ------
2
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
- ------------------------------
GENERAL ECONOMIC AND MARKET ENVIRONMENT
The Trust's performance during the past fiscal year was influenced by real and
expected changes in U.S. interest rates, mortgage prepayments, and mortgage
defaults. The Trust's year began in the midst of the U.S. Federal Reserve's
attempt to stimulate economic growth through decreases in the Fed Funds rate. As
a result, both short and long term interest rates dropped. However, beginning in
late December 1995, long term interest rates began to rise as investors'
perception of future economic growth increased in conjunction with concerns of
rising inflation brought about by an increase in the price of gold as well as
other commodities. More recently, investors have tempered their expectations for
future economic growth and interest rates have dropped from high yields reached
in mid-1996. During the twelve months ended October 31, 1996, the U.S. two year
treasury yield increased from 5.61% to 5.73%, an increase of 12 basis points,
while the U.S. thirty year treasury yield increased from 6.33% to 6.64%, an
increase of 31 basis points.
ADJUSTABLE RATE MORTGAGE (ARM) MARKET
The market for adjustable rate mortgage securities was somewhat favorable during
the fiscal year as investors were attracted to the relatively wide yield spread
over U.S. Treasuries versus other short duration assets, such as short
corporates and Agencies. One of the best performing sectors was GNMA ARMs as
investors preferred their high liquidity and relatively cheap prices. During the
majority of the fiscal year, it was preferential to hold higher coupon ARMs with
a shorter duration in order to offset the effects of increasing interest rates
on mortgage prices.
Over the past year, the adjustable rate subordinated mortgage market has
experienced significant structural changes. Historically, the market consisted
of structured mortgage securities packaged with whole loans, divided into
different classes of securities with different cash flow, prepayment, and
default characteristics (senior/subordinated structure). These securities were
the type frequently purchased by the Trust in previous years. However, the
market has now shifted away from this structure, with very few new production
securities of this type being created. The market is now driven by investors who
prefer an original whole loan or an asset-backed security with
overcollateralization, neither type of security which the Trust has owned.
The bulk of subordinated mortgage securities currently owned by the Trusts are
fixed-rate, multi-family subordinated mortgage securities. Over the past year,
these types of securities have performed relatively well with rated-securities
tightening by 0.50-1.00% versus treasuries. However, first loss and/or unrated
securities are predominately purchased by real estate investors and demand
relatively high yields (13-20%). The yield is impacted by factors such as loan
seasoning, default history, interest payment history, LTV ratios, and
final/expected maturity.
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3
<PAGE>
ANALYSIS OF THE ASTRA ADJUSTABLE RATE SECURITIES TRUSTS
As the prospectus outlines, the portfolio in which the Trusts are invested may
purchase subordinated mortgage securities which have generally provided higher
historical yields than U.S. Government securities. However, the risk of loss due
to default on such instruments is higher since they are not guaranteed by the
U.S. Government. If real estate values hold stable or rise, subordinated
mortgages generally provide attractive returns; however, if real estate values
fall or remain at depressed levels, subordinated mortgages can fall sharply in
price. Consequently, performance was significantly hampered during the first
part of the fiscal year by credit and default problems on a number of
subordinated mortgage securities primarily backed by real estate located in
Southern California. Since late 1995, the portfolio has limited its exposure to
these types of securities and as a result total return performance has improved.
Given the previously described scenarios in both the U.S. fixed income and
subordinated mortgage markets, the major focus was to cautiously decrease
exposure to subordinated mortgage securities with the potential for increases in
defaults and delinquencies and selectively add U.S. Government Agency adjustable
rate mortgages, such as higher coupon GNMA securities.
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4
<PAGE>
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ASTRA
ADJUSTABLE RATE SECURITIES TRUST I AND THE SALOMON BROTHERS 1-3 YEAR BBB
CORPORATE BOND INDEX AND THE LEHMAN BROTHERS ARM INDEX
Based on a $10,000 initial investment, the graph below illustrates that the
total return of the Astra Adjustable Rate Securities Trust I underperformed the
total return of the Lehman Brothers ARM Index, as well as the Salomon Brothers
1-3 Year BBB Corporate Bond Index. Note, however, that the bonds included in the
Salomon Index generally have longer average maturities than the interest reset
periods of ARM securities held by the Trust and the Salomon Index does not
contain mortgage securities. Therefore, the Salomon Index was not affected by
the high level of prepayments that affected yields on ARM securities. In
addition, the Lehman Index as well as the Salomon Index have inherent
performance advantages over any fund since they have no cash in their portfolio,
impose no sales charges and incur no operating expenses. Of course, one cannot
invest in an index.
Average Annual Total Returns
October 31, 1996
1 Year Since Inception***
-2.97% -9.93%
Astra Salomon Brothers
Adjustable Rate Lehman Brothers 1-3 Year BBB
Securities Trust I ARM Index** Corporate Bond Index*
------------------ ---------------- ---------------------
Inception 10000 10000
01/01/92 10059 10059 10136
01/31/92 10667 10450 10863
10/31/93 11388 11142 11760
10/31/94 10836 11170 12069
10/31/95 5874 12307 13288
10/31/96 5968 13186 14173
Inception date of the Trust was November 27, 1991
NOTE: INCLUDES ALL SALES CHARGES
Performance data represents past performance. Past performance is not predictive
of future performance. Investment return and principal value of an investment in
the Trust will fluctuate. Shares, when redeemed, may be worth more or less than
their original cost.
* A subset of the Salomon Brothers Broad Investment Grade Bond Index.
** The Lehman Brothers ARM Index commenced January 1, 1992. For comparison
purposes, the initial amount applied to the ARM Index is equal to the value
of the hypothetical Trust I account on such date. All securities in the ARM
Index are government agency guaranteed.
*** In the past, the Trust's manager has voluntarily waived all or a portion of
its management fees or assumed responsibility for other expenses, which
reduced operating expenses and increased total return to shareholders.
Without these reductions, the total return would have been lower.
- ------
5
<PAGE>
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ASTRA
ADJUSTABLE RATE SECURITIES TRUST I-A AND THE SALOMON BROTHERS 1-3 YEAR BBB
CORPORATE BOND INDEX AND THE LEHMAN BROTHERS ARM INDEX
Based on a $10,000 initial investment, the graph below illustrates that the
total return of the Astra Adjustable Rate Securities Trust I-A underperformed
the total return of the Lehman Brothers ARM Index, as well as the Salomon
Brothers 1-3 Year BBB Corporate Bond Index. Note, however, that the bonds
included in the Salomon Index generally have longer average maturities than the
interest reset periods of ARM securities held by the Trust and the Salomon Index
does not contain mortgage securities. Therefore, the Salomon Index was not
affected by the high level of prepayments that affected yields on ARM
securities. In addition, the Lehman Index as well as the Salomon Index have
inherent performance advantages over any fund, since they have no cash in their
portfolio, impose no sales charges and incur no operating expenses. Of course,
one cannot invest in an index.
Average Annual Total Returns
October 31, 1996
1 Year Since Inception***
-4.49% -11.86%
Astra Salomon Brothers
Adjustable Rate Lehman Brothers 1-3 Year BBB
Securities Trust I-A ARM Index** Corporate Bond Index*
-------------------- --------------- ---------------------
Inception 10000 10000
10/31/92 10345 10297 10431
10/31/93 11073 10980 11293
10/31/94 10517 11007 11590
10/31/95 5691 12127 12760
10/31/96 5695 12993 13610
Inception date of the Trust was May 19, 1992
NOTE: INCLUDES ALL SALES CHARGES
Performance data represents past performance. Past performance is not predictive
of future performance. Investment return and principal value of an investment in
the Trust will fluctuate. Shares, when redeemed, may be worth more or less than
their original cost.
* A subset of the Salomon Brothers Broad Investment Grade Bond Index.
** All securities in the ARM Index are government agency guaranteed.
*** In the past, the Trust's manager has voluntarily waived all or a portion of
its management fees or assumed responsibility for other expenses, which
reduced operating expenses and increased total return to shareholders.
Without these reductions, the total return would have been lower.
- ------
6
<PAGE>
COMPARISON OF THE CHANGE IN VALUE OF A $50,000 INVESTMENT IN THE ASTRA
ADJUSTABLE RATE SECURITIES TRUST IV AND THE SALOMON BROTHERS 1-3 YEAR BBB
CORPORATE BOND INDEX AND THE LEHMAN BROTHERS ARM INDEX
Based on a $50,000 initial investment, the graph below illustrates that the
total return of the Astra Adjustable Rate Securities Trust IV underperformed the
total return of the Lehman Brothers ARM Index, as well as the Salomon Brothers
1-3 Year BBB Corporate Bond Index. Note, however, that the bonds included in the
Salomon Index generally have longer average maturities than the interest reset
periods of ARM securities held by the Trust and the Salomon Index does not
contain mortgage securities. Therefore, the Salomon Index was not affected by
the high level of prepayments that affected yields on ARM securities. In
addition, the Lehman Index as well as the Salomon Index have inherent
performance advantages over any fund, since they have no cash in their
portfolio, impose no sales charges and incur no operating expenses. Of course,
one cannot invest in an index.
Average Annual Total Returns
October 31, 1996
1 Year Since Inception***
0.14% -16.32%
Astra Salomon Brothers
Adjustable Rate Lehman Brothers 1-3 Year BBB
Securities Trust IV ARM Index** Corporate Bond Index*
------------------- ---------------- ---------------------
Inception 50000 50000
10/31/93 51773 51210 51599
10/31/94 49452 51336 52956
10/31/95 26811 56563 58305
10/31/96 26848 60601 62189
Inception date of the Trust was May 7, 1993
NOTE: INCLUDES ALL SALES CHARGES
Performance data represents past performance. Past performance is not predictive
of future performance. Investment return and principal value of an investment in
the Trust will fluctuate. Shares, when redeemed, may be worth more or less than
their original cost.
* A subset of the Salomon Brothers Broad Investment Grade Bond Index.
** All securities in the ARM Index are government agency guaranteed.
*** In the past, the Trust's manager has voluntarily waived all or a portion of
its management fees or assumed responsibility for other expenses, which
reduced operating expenses and increased total return to shareholders.
Without these reductions, the total return would have been lower.
- ------
7
<PAGE>
TABLE OF CONTENTS
- ------------------------------
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
Statement of Assets and Liabilities.................................. 9
Statement of Operations.............................................. 9
Statement of Changes in Net Assets................................... 10
Financial Highlights................................................. 11
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
Statement of Assets and Liabilities.................................. 12
Statement of Operations.............................................. 12
Statement of Changes in Net Assets................................... 13
Financial Highlights................................................. 14
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
Statement of Assets and Liabilities.................................. 15
Statement of Operations.............................................. 15
Statement of Changes in Net Assets................................... 16
Financial Highlights................................................. 17
ASTRA ADJUSTABLE RATE SECURITIES TRUSTS
Notes to Financial Statements........................................ 18
Report of Independent Certified Public Accountants................... 23
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
Portfolio of Investments............................................. 24
Statement of Assets and Liabilities.................................. 25
Statement of Operations.............................................. 25
Statement of Changes in Net Assets................................... 26
Financial Highlights................................................. 27
Notes to Financial Statements........................................ 28
Report of Independent Certified Public Accountants................... 31
- ------
8
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value* (identified cost $3,568,036) (Notes 1 and 2A)................ $ 2,062,638
Dividends receivable from Portfolio............................................................... 13,594
Deferred organization expense (net of accumulated amortization of $77,215) (Note 2D).............. 1,187
Prepaid expenses.................................................................................. 2,624
------------
Total Assets.................................................................................. 2,080,043
------------
LIABILITIES:
Payable for capital stock redeemed................................................................ 9,212
Accrued expenses.................................................................................. 10,517
------------
Total Liabilities............................................................................. 19,729
------------
NET ASSETS.......................................................................................... $ 2,060,314
------------
------------
Net asset value per share ($2,060,314 divided by 661,615 shares) (Note 6)........................... $ 3.11
------------
------------
At October 31, 1996 the components of net assets were as follows:
Paid-in capital................................................................................... $ 21,997,797
Accumulated net realized loss on investments...................................................... (18,432,085)
Net unrealized depreciation of investments........................................................ (1,505,398)
------------
Net Assets.................................................................................... $ 2,060,314
------------
------------
</TABLE>
- ------------------
* Investments of Astra Adjustable Rate Securities Trust I consist entirely of
44,803 shares of Astra Institutional Adjustable Rate Securities Portfolio.
Cost for Federal income tax purposes is $3,568,036. See Notes 1 and 2A.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio........................................................................ $ 197,760
Other (Note 4A)................................................................................. 19,249
------------
Total Income.................................................................................. 217,009
------------
EXPENSES:
Amortization of organization expense (Note 2D).................................................. 16,410
Shareholder servicing costs..................................................................... 7,623
Distribution expenses (Note 4A)................................................................. 7,404
Insurance expense............................................................................... 6,082
Registration fees............................................................................... 3,162
Administrative servicing costs (Note 5)......................................................... 2,962
Professional fees............................................................................... 1,516
Miscellaneous expense........................................................................... 1,165
Reports to shareholders......................................................................... 583
Trustees' fees.................................................................................. 291
------------
Total expenses................................................................................ 47,198
------------
Net investment income....................................................................... 169,811
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................ (3,175,937)
Net change in unrealized depreciation of investments............................................ 2,984,783
------------
Net loss on investments....................................................................... (191,154)
------------
Net decrease in net assets resulting from operations........................................ $ (21,343)
------------
------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
9
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 169,811 $ 761,180
Net realized loss on investments........................................... (3,175,937) (14,118,255)
Net change in unrealized depreciation of investments....................... 2,984,783 1,774,675
------------ ------------
Net decrease in net assets resulting from operations....................... (21,343) (11,582,400)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.169 and $0.260 per share,
respectively)............................................................ (186,221) (897,466)
Distributions from paid-in capital ($0.005 and $0.108 per share,
respectively)............................................................ (5,030) (373,209)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (2,531,212) (42,151,566)
------------ ------------
Total decrease in net assets........................................... (2,743,806) (55,004,641)
Net assets at the beginning of the period.................................... 4,804,120 59,808,761
------------ ------------
NET ASSETS at the end of the period.......................................... $ 2,060,314 $ 4,804,120
------------ ------------
------------ ------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- -------------------------------
SHARES VALUE SHARES VALUE
---------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold...................................... -- $ -- 61,778 $ 362,064
Shares issued in reinvestment of distributions to
shareholders................................... 23,488 74,319 79,584 387,089
Shares repurchased............................... (835,943) (2,605,531) (7,917,358) (42,900,719)
---------- -------------- -------------- ---------------
Net decrease................................. (812,455) $ (2,531,212) (7,775,996) $ (42,151,566)
---------- -------------- -------------- ---------------
---------- -------------- -------------- ---------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
10
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
NOVEMBER 27, 1991
(COMMENCEMENT OF
YEAR ENDED OCTOBER 31, OPERATIONS) TO
--------------------------------------------------- OCTOBER 31,
1996 1995 1994 1993 1992
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.... $ 3.260 $ 6.470 $ 7.210 $ 7.250 $ 7.350
--------- --------- --------- --------- ----------
Income (loss) from investment
operations--
Net investment income................. 0.169 0.224 (e) 0.357 0.475 0.524
Net realized and
unrealized loss on
investments......................... (0.145) (3.066)(e) (0.688) (0.002) (0.052)
--------- --------- --------- --------- ----------
Total from investment operations.... 0.024 (2.842) (0.331) 0.473 0.472
--------- --------- --------- --------- ----------
Less distributions--
Distributions from net investment
income.............................. 0.169 0.260 0.409 0.513 0.524
Distributions from paid-in
capital............................. 0.005 0.108 -- -- 0.048
--------- --------- --------- --------- ----------
Total distributions................. 0.174 0.368 0.409 0.513 0.572
--------- --------- --------- --------- ----------
Net asset value, end of period.......... $ 3.110 $ 3.260 $ 6.470 $ 7.210 $ 7.250
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
TOTAL RETURN (f)........................ 0.85% (45.38)% (4.85)% 6.74% 7.18%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)............................ $ 2,060 $ 4,804 $ 59,809 $ 63,121 $ 53,187
Ratio to average net assets--
Expenses.............................. 1.59%(b) 1.32%(b) 1.34%(b) 1.36%(b) 1.38%(a)(b)(c)
Net investment income................. 5.73% 4.68% 5.02% 6.59% 7.63%(a)(d)
Portfolio turnover rate................. 9% 9% 30% 7% 4%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 0.73%, 1.09%, 0.76%, 0.76%
and 0.76%(a), respectively, of expenses of the Portfolio, which reduced
dividends paid to Trust I.
(c) Ratio of expenses to average net assets prior to expense waivers was
1.46%(a).
(d) Ratio of net investment income to average net assets prior to expense waiver
was 7.55%(a).
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
11
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value* (identified cost $11,685,508) (Notes 1 and 2A)............... $ 6,352,418
Dividends receivable from Portfolio............................................................... 41,463
Deferred organization expense (net of accumulated amortization of $46,274) (Note 2D).............. 3,397
Prepaid expenses.................................................................................. 8,101
------------
Total Assets.................................................................................. 6,405,379
------------
LIABILITIES:
Payable for capital stock redeemed................................................................ 119,097
Accrued expenses.................................................................................. 30,538
------------
Total Liabilities............................................................................. 149,635
------------
NET ASSETS.......................................................................................... $ 6,255,744
------------
------------
Net asset value per share ($6,255,744 divided by 2,022,286 shares) (Note 6)......................... $ 3.09
------------
------------
At October 31, 1996 the components of net assets were as follows:
Paid-in capital................................................................................... $ 60,869,420
Accumulated net realized loss on investments...................................................... (49,280,586)
Net unrealized depreciation of investments........................................................ (5,333,090)
------------
Net Assets.................................................................................... $ 6,255,744
------------
------------
</TABLE>
- ------------------
* Investments of Astra Adjustable Rate Securities Trust I-A consist entirely of
137,982 shares of Astra Institutional Adjustable Rate Securities Portfolio.
Cost for Federal income tax purposes is $11,685,508. See Notes 1 and 2A.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio........................................................................ $ 605,054
------------
EXPENSES:
Distribution expenses (Note 4A)................................................................. 90,616
Shareholder servicing costs..................................................................... 44,059
Insurance expense............................................................................... 17,994
Professional fees............................................................................... 13,066
Administrative servicing costs (Note 5)......................................................... 9,062
Amortization of organization expense (Note 2D).................................................. 7,327
Registration fees............................................................................... 6,261
Miscellaneous................................................................................... 3,950
Reports to shareholders......................................................................... 3,646
Trustees' fees.................................................................................. 1,823
------------
Total expenses................................................................................ 197,804
------------
Net investment income....................................................................... 407,250
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................ (8,867,330)
Net change in unrealized depreciation of investments............................................ 8,278,896
------------
Net loss on investments....................................................................... (588,434)
------------
Net decrease in net assets resulting from operations........................................ $ (181,184)
------------
------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
12
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 407,250 $ 1,644,712
Net realized loss on investments........................................... (8,867,330) (37,656,821)
Net change in unrealized depreciation of investments....................... 8,278,896 2,368,536
------------ -------------
Net decrease in net assets resulting from operations....................... (181,184) (33,643,573)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.126 and $0.184 per share,
respectively)............................................................ (414,577) (1,838,392)
Distributions from paid-in capital ($0.039 and $0.163 per share,
respectively)............................................................ (130,045) (1,634,558)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (7,343,974) (102,359,995)
------------ -------------
Total decrease in net assets........................................... (8,069,780) (139,476,518)
Net assets at the beginning of the period.................................... 14,325,524 153,802,042
------------ -------------
NET ASSETS at the end of the period.......................................... $ 6,255,744 $ 14,325,524
------------ -------------
------------ -------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
------------------------------ ---------------------------------
SHARES VALUE SHARES VALUE
-------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold................................ -- $ -- 286,384 $ 1,691,969
Shares issued in reinvestment of
distributions to shareholders............ 80,411 253,592 284,239 1,316,939
Shares repurchased......................... (2,425,657) (7,597,566) (19,919,439) (105,368,903)
-------------- -------------- --------------- ----------------
Net decrease........................... (2,345,246) $ (7,343,974) (19,348,816) $ (102,359,995)
-------------- -------------- --------------- ----------------
-------------- -------------- --------------- ----------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
13
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
MAY 19, 1992
(COMMENCEMENT OF
YEAR ENDED OCTOBER 31, OPERATIONS) TO
------------------------------------------------------ OCTOBER 31,
1996 1995 1994 1993 1992
--------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period... $ 3.280 $ 6.490 $ 7.240 $ 7.260 $ 7.290
--------- --------- ---------- ---------- ----------
Income (loss) from investment
operations--
Net investment income................ 0.126 0.169 (e) 0.348 0.474 0.252
Net realized and
unrealized gain (loss) on
investments........................ (0.151) (3.032)(e) (0.694) 0.018 (0.004)
--------- --------- ---------- ---------- ----------
Total from investment operations... (0.025) (2.863) (0.346) 0.492 0.248
--------- --------- ---------- ---------- ----------
Less distributions--
Distributions from net investment
income............................. 0.126 0.184 0.404 0.512 0.252
Distributions from paid-in
capital............................ 0.039 0.163 -- -- 0.026
--------- --------- ---------- ---------- ----------
Total distributions................ 0.165 0.347 0.404 0.512 0.278
--------- --------- ---------- ---------- ----------
Net asset value, end of period......... $ 3.090 $ 3.280 $ 6.490 $ 7.240 $ 7.260
--------- --------- ---------- ---------- ----------
--------- --------- ---------- ---------- ----------
TOTAL RETURN (f)....................... (0.72)% (45.46)% (5.05)% 7.01% 7.63%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)........................... $ 6,256 $ 14,326 $ 153,802 $ 178,769 $ 57,311
Ratio to average net assets--
Expenses............................. 2.18%(b) 1.76%(b) 1.43%(b) 1.14%(b)(c) 1.18%(a)(b)(c)
Net investment income................ 4.49% 3.51% 4.88% 6.40% 6.86%(a)(d)
Portfolio turnover rate................ 7% 4% 23% 0% 0%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 0.73%, 1.09%, 0.76%, 0.76%
and 0.76%(a), respectively, of expenses of the Portfolio, which reduced
dividends paid to Trust I-A.
(c) Ratio of expenses to average net assets prior to expense waivers was 1.16%
and 1.28%(a).
(d) Ratio of net investment income to average net assets prior to expense waiver
was 6.38% and 6.76%(a), respectively.
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
14
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities, at value* (identified cost $4,060,751) (Notes 1, 2A and 3)............. $ 2,260,228
Dividends receivable from Portfolio............................................................... 14,772
Deferred organization expense (net of accumulated amortization of $36,199) (Note 2D).............. 15,668
Prepaid expenses.................................................................................. 2,827
------------
Total Assets.................................................................................. 2,293,495
------------
LIABILITIES:
Accrued expenses.................................................................................. 12,000
------------
NET ASSETS.......................................................................................... $ 2,281,495
------------
------------
Net asset value per share ($2,281,495 divided by 720,384 shares) (Note 6)........................... $ 3.17
------------
------------
At October 31, 1996 the components of net assets were as follows:
Paid-in capital................................................................................... $ 30,698,278
Accumulated net realized loss on investments...................................................... (26,616,260)
Net unrealized depreciation of investments........................................................ (1,800,523)
------------
Net Assets.................................................................................... $ 2,281,495
------------
------------
</TABLE>
- ------------------
* Investments of Astra Adjustable Rate Securities Trust IV consist entirely of
49,095 shares of Astra Institutional Adjustable Rate Securities Portfolio.
Cost for Federal income tax purposes is $4,060,751. See Notes 1 and 2A.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio........................................................................ $ 198,892
------------
EXPENSES:
Distribution expenses (Note 4B)................................................................. 17,983
Amortization of organization expense (Note 2D).................................................. 10,394
Insurance expense............................................................................... 6,125
Shareholder servicing costs..................................................................... 3,960
Administrative servicing costs (Note 5)......................................................... 2,997
Registration fees............................................................................... 2,404
Professional fees............................................................................... 1,320
Miscellaneous expense........................................................................... 960
Reports to shareholders......................................................................... 528
Trustees' fees.................................................................................. 240
------------
Total expenses................................................................................ 46,911
------------
Net investment income....................................................................... 151,981
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................ (2,666,436)
Net change in unrealized depreciation of investments............................................ 2,479,965
------------
Net loss on investments....................................................................... (186,471)
------------
Net decrease in net assets resulting from operations........................................ $ (34,490)
------------
------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
15
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 151,981 $ 858,115
Net realized loss on investments........................................... (2,666,436) (19,194,377)
Net change in unrealized depreciation of investments....................... 2,479,965 3,619,765
------------ -----------
Net decrease in net assets resulting from operations....................... (34,490) (14,716,497)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.153 and $0.211 per share,
respectively)............................................................ (162,375) (877,272)
Distributions from paid-in capital ($0.019 and $0.166 per share,
respectively)............................................................ (20,078) (686,694)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (2,044,893) (56,587,157)
------------ -----------
Total decrease in net assets........................................... (2,261,836) (72,867,620)
Net assets at the beginning of the period.................................... 4,543,331 77,410,951
------------ -----------
NET ASSETS at the end of the period.......................................... $ 2,281,495 $ 4,543,331
------------ -----------
------------ -----------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- --------------------------------
SHARES VALUE SHARES VALUE
---------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold.................................... -- $ -- 158,416 $ 926,395
Shares issued in reinvestment of distributions
to shareholders.............................. 35,315 113,437 98,614 463,587
Shares repurchased............................. (675,758) (2,158,330) (10,481,720) (57,977,139)
---------- -------------- --------------- ---------------
Net decrease............................... (640,443) $ (2,044,893) (10,224,690) $ (56,587,157)
---------- -------------- --------------- ---------------
---------- -------------- --------------- ---------------
</TABLE>
See Notes to Trusts' Financial Statements
------
16
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
MAY 7, 1993
(COMMENCEMENT
OF
YEAR ENDED OCTOBER 31, OPERATIONS) TO
---------------------------------------- OCTOBER 31,
1996 1995 1994 1993
---------- -------------- ---------- ---------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period................ $ 3.340 $ 6.680 $ 7.400 $ 7.350
--------- --------- --------- -----------
Income (loss) from investment operations--
Net investment income............................. 0.153 0.210 (e) 0.415 0.208
Net realized and
unrealized gain (loss) on
investments..................................... (0.151) (3.173)(e) (0.728) 0.050
--------- --------- --------- -----------
Total from investment operations................ 0.002 (2.963) (0.313) 0.258
--------- --------- --------- -----------
Less distributions--
Distributions from net investment income.......... 0.153 0.211 0.407 0.208
Distributions from paid-in
capital......................................... 0.019 0.166 -- --
--------- --------- --------- -----------
Total distributions............................. 0.172 0.377 0.407 0.208
--------- --------- --------- -----------
Net asset value, end of period...................... 3.170 $ 3.340 $ 6.680 $ 7.400
--------- --------- --------- -----------
--------- --------- --------- -----------
TOTAL RETURN (f).................................... 0.14% (45.78)% (4.47)% 7.28%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)........................................ $ 2,281 $ 4,543 $ 77,411 $ 126,708
Ratio to average net assets--
Expenses.......................................... 1.57%(b) 1.37%(b)(c) 0.65%(b)(c) 0.50%(a)(b)(c)
Net investment income............................. 5.07% 4.26%(d) 5.58%(d) 5.56%(a)(d)
Portfolio turnover rate............................. 10% 3% 70% 0%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 0.73%, 1.09%, 0.76% and
0.76%(a), respectively, of expenses of the Portfolio, which reduced
dividends paid to Trust IV.
(c) Ratio of expenses to average net assets prior to expense waivers was 1.42%,
0.86% and 0.75%(a), respectively.
(d) Ratio of net investment income to average net assets prior to expense waiver
was 4.20%, 5.37% and 5.31%(a), respectively.
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
17
<PAGE>
ASTRA ADJUSTABLE RATE SECURITIES TRUSTS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- ------------------------------
NOTE 1 -- ORGANIZATION
Astra Strategic Investment Series (the 'Company') is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. On September 15, 1994 the Company's shareholders approved a change in
the Company's Declaration of Trust to permit the creation of additional classes
of shares of each of the Trust's series. Currently, the Company has authorized
an unlimited number of shares of beneficial interest without par value and at
October 31, 1996 had outstanding a single class of shares in seven series: Astra
Adjustable Rate Securities Trust I, I-A and IV (collectively, the 'Astra
Adjustable Rate Securities Trusts' or the 'Trusts'), Astra Adjustable U.S.
Government Securities Trust I, I-A, II and IV (collectively, the 'Astra
Adjustable U.S. Government Securities Trusts'), all of which are non-diversified
series. Effective March 1, 1995, the Trusts discontinued the public offering of
their shares.
The Trusts' investment objective is to seek high current income consistent with
low volatility of principal. The Trusts' seek to achieve this objective by
investing all of their investable assets in the Astra Institutional Adjustable
Securities Portfolio (the 'Portfolio'), a non-diversified series of Astra
Institutional Securities Trust ('AIST') with the same investment objective as
the Trusts. The Portfolio seeks to achieve its investment objective by investing
in mortgage securities, issued or sponsored by commercial banks, savings and
loan associations, mortgage bankers or other financial institutions, that have
no government guarantee and that are senior or subordinated to other mortgage
securities arising out of the same pool of mortgages. The Portfolio and Trusts
have experienced a reduction in net asset values per share due to adverse market
conditions for adjustable rate mortgage securities, including subordinated
residential mortgage securities. Although Astra Management Corp. (the 'Manager')
believes that under normal market conditions the Portfolio's and Trusts'
investment objective can be achieved, there can be no assurance that the adverse
market conditions will not continue. In addition, as the Trusts have experienced
a high rate of shareholders redemptions, cash and cash equivalents have been
maintained in order to meet such redemptions, which has the effect of reducing
yield. The Manager intends to maintain this position until such time as the
market for subordinated residential mortgage securities normalizes and
redemption rates stabilize. There can be no assurance that the Trusts' or
Portfolio's investment objective will be achieved.
The value of the Trusts' investment in the Portfolio reflects their
proportionate interest in the net assets of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included in this report and should be read in conjunction with the financial
statements of the Trusts.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
A. SECURITY VALUATION. The investment policy of the Trusts is to invest in
shares of the Portfolio. Shares of the Portfolio held by the Trusts are
valued at the net asset value then determined by the Portfolio. A valuation
committee of the Board of Trustees of AIST is responsible for establishing
security valuation policies, reviewing the valuation of portfolio
securities, monitoring the level of illiquid securities and reviewing
liquidity determinations for securities held by the Portfolio. AIST
considers to be illiquid all securities which cannot be disposed of within
seven days in the ordinary course of business at approximately the amount
at which the Portfolio values the security. Additionally, interest rate
swap contracts, interest-only and principal-only mortgage backed
securities, and special hazard certificates are treated as illiquid
securities in accordance with
- ------
18
<PAGE>
Securities and Exchange Commission policy. Liquid securities are valued
primarily using prices provided by independent pricing services which use
prices provided by market-makers or estimates of market values obtained
from yield and other data relating to instruments or securities with
similar characteristics, and secondarily based upon market quotations
and/or other available information. Securities for which reliable market
information or pricing service quotes are not readily available, including
illiquid securities, are valued at fair value as determined in good faith
by, or under procedures established by, the Board of Trustees of AIST which
procedures may include the delegation of certain responsibilities regarding
valuation to the Manager. The Manager reports, as necessary, to the
Trustees of AIST regarding portfolio valuation determinations.
Short-term securities with less than sixty days remaining to maturity when
acquired by the Portfolio are valued on an amortized cost basis by the
Portfolio when the Trustees of AIST have determined that amortized cost is
fair value.
B. FEDERAL INCOME TAXES. The Trusts intend to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of their taxable income to their shareholders. Therefore,
no Federal income tax provision is required.
C. SECURITY TRANSACTIONS, INCOME AND DISTRIBUTIONS. As is common in the
industry, security transactions of the Portfolio and Trusts are accounted
for on the trade date. Interest income on adjustable rate mortgage
securities is recorded on the accrual basis at current interest rates.
Dividends to shareholders of the Portfolio from net investment income are
declared daily and reinvested monthly.
Dividends to shareholders of the Trusts from net investment income are
declared and paid or reinvested monthly. Discounts and premiums on
Portfolio debt securities are amortized in accordance with the provisions
of the Internal Revenue Code.
D. DEFERRED ORGANIZATION EXPENSES. All of the expenses incurred in connection
with the organization of the Trusts are being borne ratably by the Trusts
and are being amortized on a straight-line basis over periods of five years
from the date of commencement of operations.
E. USE OF ESTIMATES. In preparing financial statements in accordance with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and revenues and
expenses during the period. Actual results could differ from those
estimates.
NOTE 3 -- INVESTMENTS
For the year ended October 31, 1996, the cost of purchases and the proceeds from
sales of investments in the Portfolio were as follows:
PURCHASES SALES
----------- -------------
Trust I.................... $ 272,789 $ 2,876,461
Trust I-A.................. 688,077 8,045,735
Trust IV................... 295,600 2,487,407
At October 31, 1996 the Trusts had capital loss carryforwards for federal income
tax purposes as follows:
CAPITAL LOSS EXPIRES
CARRYFORWARD OCTOBER 31,
-------------- -------------
Trust I.................. $ 15,256,000 2003
3,176,000 2004
--------------
$ 18,432,000
--------------
--------------
Trust I-A................ $ 54,000 2002
40,359,000 2003
8,868,000 2004
--------------
$ 49,281,000
--------------
--------------
Trust IV................. $ 1,212,000 2002
22,738,000 2003
2,666,000 2004
--------------
$ 26,616,000
--------------
--------------
- ------
19
<PAGE>
NOTE 4 -- DISTRIBUTION PLANS
A. TRUST I AND TRUST I-A DISTRIBUTION PLANS. Trust I and Trust I-A have
adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act (the
'Distribution Plans'), whereby they will provide daily compensation to
Astra Fund Distributors Corp., the Trusts' principal underwriter (the
'Principal Underwriter') in the form of sales commissions equal to 4% of
the amount received by Trust I for each share sold and 5% of the amount
received by Trust I-A for each share sold (excluding reinvestment of
dividends and distributions) plus an interest fee calculated by applying
the rate of 1% over prime rate to the outstanding balance of Uncovered
Distribution Charges. Daily compensation payments will be made monthly and
are limited to an annual rate of 0.75% of each Trust's daily net assets.
During the year ended October 31, 1996, the Principal Underwriter earned
daily compensation of $67,962 from Trust I-A. At October 31, 1996,
Uncovered Distribution Charges (cumulative sales commissions and interest
fees reduced by cumulative daily compensation and contingent deferred sales
charges paid to the Principal Underwriter) were $3,263,220 for Trust I-A.
On November 1, 1994, Trust I had no Uncovered Distribution Charges pursuant
to the Distribution Plan and, accordingly, discontinued the accrual of
daily compensation payments. The Distribution Plan also contains provisions
which contractually obligate the Principal Underwriter to reimburse Trust
I, to the extent it has collected contingent deferred sales charges from
redeeming shareholders when there were no such Uncovered Distribution
Charges, for Trust I's pro rata share of the Portfolio's investment
management fee. This management fee is calculated at .65% of the
Portfolio's average daily net assets. During the year ended October 31,
1996, such reimbursement amounted to $19,249 which is included in other
income in the accompanying financial statements of Trust I.
On August 5, 1994, the shareholders of Trust I and Trust I-A approved
changes to their respective distribution plans to provide a method by which
a proportionate amount of Uncovered Distribution Charges will be
transferred from the Trusts upon exchanges to other mutual funds for which
Astra Fund Distributors Corp. serves as Principal Underwriter and which
have substantially the same contingent deferred sales charge structure and
distribution plan.
Pursuant to the requirements of the Securities and Exchange Commission the
daily compensation (sales commission) payments to the Principal Underwriter
pursuant to the Distribution Plan must be reflected as operating expenses
of Trust I and Trust I-A. For periods through December 31, 1994, these
payments were treated as capital transactions and were not deductible for
Federal income tax purposes.
The Distribution Plans also provide for monthly payments to the Principal
Underwriter of a trail or maintenance fee in an amount equal to an annual
rate of 0.25% of the daily net assets of Trust I and Trust I-A. During the
year ended October 31, 1996, the Principal Underwriter earned maintenance
fees of $7,404 from Trust I and $22,654 from Trust I-A.
B. TRUST IV DISTRIBUTION PLAN. Trust IV has adopted a distribution plan
pursuant to Rule 12b-1 under the 1940 Act (the 'Distribution Plan'), whereby
Trust IV may pay up to a maximum annual rate of 0.60% of its average daily
net assets to the Principal Underwriter as reimbursement for expenses
incurred in the distribution of the shares of Trust IV. Pursuant to the
Distribution Plan, the Principal Underwriter is entitled to reimbursement
each month (up to a maximum of 0.60% of Trust IV's daily net assets) for its
actual expenses incurred in the distribution and promotion of Trust IV's
shares, including the printing of prospectuses used for sales purposes,
advertisements, expenses of preparation and printing of sales literature,
and other distribution related expenses, including any distribution
- ------
20
<PAGE>
or service fees paid to security dealers and others who have executed a
distribution or service agreement with the Principal Underwriter. The
Distribution Plan provides that the Principal Underwriter may include as
distribution expenses a portion of its overhead expenses directly
attributable to the distribution of Trust IV's shares, including personnel
and out-of-pocket costs. The Distribution Plan permits the Principal
Underwriter to carryforward for a maximum of three years (without carrying
charges) distribution expenses covered by the Distribution Plans for which
it has not yet received reimbursement. At October 31, 1996, the Principal
Underwriter had incurred $1,470,122 of distribution expenses in excess of
amounts currently reimbursable by Trust IV. During the year ended October
31, 1996, the Principal Underwriter received distribution expense
reimbursements of $17,983 from Trust IV. Distribution expenses incurred by
the Principal Underwriter included $806 for the salaries and related costs
of certain of its employees involved in the sales of Trust IV's shares.
NOTE 5 -- INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trusts invest substantially all of their assets in the Portfolio, which has
the same investment objective as each of the Trusts. The Trustees of AIST
establish the Portfolio's investment policies and supervise and review the
operations and management of the Portfolio. For furnishing the Portfolio with
investment advice and investment management and administrative services with
respect to the Portfolio's assets, including making specific recommendations as
to the purchase and the sale of portfolio securities, furnishing requisite
office space and personnel, and in general supervising and managing the
Portfolio's investments subject to the ultimate supervision and direction of
AIST's Trustees, the Manager is paid monthly a fee equal to 0.65% per annum of
the first $500 million of average daily net assets of the Portfolio. The annual
rate is reduced to 0.60% on net assets from $500 million to $1 billion and to
0.55% on net assets over $1 billion. The management fees paid by the Portfolio
to the Manager are expenses of the Portfolio and reduce the net investment
income available for distribution by the Portfolio to the Trusts. The Manager
has agreed to reimburse the Portfolio and Trusts to the extent required so that
the aggregate expenses do not exceed the expense limitations applicable under
the securities laws or regulations of those states or jurisdictions in which the
Trusts' shares are registered or qualified for sale. Currently, the most
restrictive of such expense limitations would require the Manager to reimburse
the Portfolio and Trusts to the extent required so that the Portfolio's and
Trusts' expenses, as described above, for any fiscal year do not exceed 2.50% of
the first $30 million of average net assets, 2.00% of the next $70 million of
average net assets and 1.50% of the remaining average net assets. The amount of
any such required reimbursement, however, is limited to the management fees paid
by the Portfolio to the Manager. Expenses for purposes of these expense
limitations include the management fee, but exclude distribution expenses,
brokerage commissions and fees, taxes, interest and extraordinary expenses such
as litigation paid or incurred by the Trusts or the Portfolio.
The Trusts have retained Atlas Holdings Group Inc. (The 'Administrator') to
provide administration for the Trusts pursuant to an administraton agreement.
These administrative services include supervising the preparation and filing of
all documents required for compliance by the Trusts with applicable laws and
regulations, supervising the maintenance of books and records and other general
and administrative responsibilities. For providing these services the
Administrator receives a fee equal to 0.10% of each Trust's average daily net
assets.
Certain officers and trustees of the Company are also officers and/or
directors/trustees of AIST, the Administrator, the Manager, and the Principal
Underwriter.
NOTE 6 -- EARLY WITHDRAWAL CHARGES
Shares of Trust I, Trust I-A and Trust IV which are redeemed may be subject to a
contingent deferred sales charge. The contingent deferred sales charge is not
imposed on shares acquired through the
- ------
21
<PAGE>
reinvestment of dividends and distributions or on the appreciation of the value
of shares acquired over their purchase price. Redemption proceeds are applied
first against shares not subject to the contingent deferred sales charge for
purposes of calculating such charge. The contingent deferred sales charges are
paid by the redeeming shareholder to the Principal Underwriter at the time of
redemption. The contingent deferred sales charges for Trust I and Trust I-A are
imposed at the rate of 4% for redemptions in the first year after purchase,
declining to 3%, 2%, and 1% in the second, third and fourth years, respectively.
The contingent deferred sales charges for Trust IV are imposed at the rate of
0.25% of redemptions within 3 months of the date of purchase. During the year
ended October 31, 1996, the Principal Underwriter received contingent deferred
sales charges of $19,249 from redemptions of Trust I shares, all of which was
reimbursed to Trust I (see Note 4A), $140,969 from redemptions of Trust I-A
shares, and $-0- from redemptions of Trust IV shares.
NOTE 7 -- LEGAL MATTERS
Between December 1994 and July 1995, various complaints have been filed by
certain shareholders of the Astra Adjustable Rate Securities Trusts and the
Astra Adjustable U.S. Government Securities Trusts (collectively, the 'Astra
Trusts') in the United States District Court for the Central District of
California and in the Superior Court for the State of California against the
Company and certain of its officers and trustees, AIST and certain of its
officers and trustees, Astra Management Corporation, Astra Fund Distributors
Corporation, and, Atlas Holdings Group Inc. and its principal stockholder and
certain of its employees. These complaints have been consolidated in the United
States District Court for the Central District of California in the matter
referred to as 'In re Pilgrim Securities Litigation.'
The complaints allege violations of the Securities Act of 1933 and the
Investment Company Act of 1940 relating principally to disclosure concerning
pricing and liquidity of portfolio securities held by the Portfolios of AIST.
The complaints seek relief measured by the consideration each shareholder paid
for shares of the Astra Trusts and interest thereon, less the amount of income
received thereon, or in the event the shareholder no longer owns such shares,
for damages, plus interest. Management of the Company believes the complaints
are without merit and intends, and has been advised that each of the other
defendants intends, to vigorously defend these actions.
On December 18, 1996, the Court granted preliminary approval of a tentative
class action settlement which would result in dismissal of the class actions
with prejudice. The tentative settlement would not have a material adverse
effect upon the financial condition of the Astra Trusts or the Portfolios. The
tentative settlement, however, is subject to final court approval, among other
things, and the defendants have the option of terminating the settlement under
certain conditions. Accordingly, the ultimate outcome of these matters cannot
presently be determined and the Astra Trusts have made no provision for any
losses which may result from settlement of these complaints.
- ------
22
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- ------------------------------
To the Shareholders of Astra Adjustable Rate Securities
Trust I, I-A and IV, and the Trustees of Astra Strategic Investment Series
San Diego, California
We have audited the statements of assets and liabilities of Astra Adjustable
Rate Securities Trust I, I-A and IV (each a series of shares of beneficial
interest of Astra Strategic Investment Series) as of October 31, 1996, and the
related statements of operations for the year then ended, and the statements of
changes in net assets for each of the two years in the period then ended and the
financial highlights for each of the periods indicated thereon. These financial
statements and financial highlights are the responsibility of the Trusts'
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 audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 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 Astra
Adjustable Rate Securities Trust I, I-A and IV as of October 31, 1996, and the
results of their operations for the year then ended, and the changes in their
net assets for each of the two years in the period then ended and the financial
highlights for each of the periods indicated thereon, in conformity with
generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
November 19, 1996, except for the third paragraph of Note 7
as to which the date is December 18, 1996.
- ------
23
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF OCTOBER 31, 1996
- ------------------------------
<TABLE>
<CAPTION>
MARKET
PRINCIPAL INTEREST VALUE
AMOUNT RATE* MATURITY (NOTE 2A)
- ------------ ----------- --------- -------------
<S> <C> <C> <C> <C> <C>
ADJUSTABLE RATE MORTGAGE SECURITIES: 98.9%
U.S. GOVERNMENT AGENCY SECURITIES: 98.8%
$ 801,208 Federal Home Loan Mtge. Corp., Pool 845249............... 7.794% 11/01/22 $ 825,372
820,204 Federal Home Loan Mtge. Corp., Pool 635244............... 7.458% 03/01/25 841,222
804,725 Federal National Mtge. Assoc., Pool 124666............... 7.695% 01/01/23 826,351
495,001 Federal National Mtge. Assoc., Pool 190880............... 6.099% 11/01/28 493,144
1,593,988 Government National Mtge. Assoc., Pool 8565.............. 7.000% 12/20/24 1,627,111
2,436,592 Government National Mtge. Assoc., Pool 8793.............. 7.000% 01/20/26 2,486,847
1,971,690 Government National Mtge. Assoc., Pool 8963.............. 7.500% 08/20/26 2,025,912
944,388 Government National Mtge. Assoc., Pool 8984.............. 7.500% 09/20/26 969,915
469,548 Government National Mtge. Assoc., Pool 80001............. 7.500% 10/20/26 481,727
-------------
Total U.S. Government Agency Securities.................. 10,577,601
-------------
SUBORDINATED RESIDENTIAL MORTGAGE SECURITIES: 0.1%
1,553,121 (R) (l) Coast Federal Bank 1991-2, Class B-1..................... 0.552% 11/25/21 7,292
Paine Webber Mortgage Acceptance Corp. 1991-1,
612,337 (R) (l) Class B.................................................. 0.000% 02/21/21 64
-------------
Total Subordinated Residential Mortgage Securities....... 7,356
-------------
Total Adjustable Rate Mortgage Securities
(Cost $12,457,404)....................................... 10,584,957
-------------
SHORT-TERM SECURITIES: 0.9%
U.S. GOVERNMENT & AGENCY OBLIGATIONS: 0.9%
Student Loan Mtge. Assoc., Discount Note (Cost
100,000 $100,000)................................................ 5.530% 11/01/96 100,000
-------------
Total Investments in Securities (Cost $12,557,404**).................. 99.8% 10,684,957
Other Assets in Excess of Liabilities-Net............................. 0.2% 22,330
--------- -------------
Total Net Assets...................................................... 100.0% $ 10,707,287
--------- -------------
--------- -------------
</TABLE>
- ------------------
(R) Restricted securities.
(l) Illiquid securities.
* Rates shown are as of October 31, 1996. Interest rates on adjustable rate
mortgage securities reset periodically.
** Cost for Federal income tax purposes is $12,557,404 and net unrealized
depreciation consists of:
<TABLE>
<S> <C> <C> <C> <C> <C>
Gross Unrealized Appreciation...................................................... $ 42,984
Gross Unrealized Depreciation...................................................... (1,915,431)
-------------
Net Unrealized Depreciation........................................................ $ (1,872,447)
-------------
-------------
</TABLE>
See Notes to Financial Statements
- ------
24
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value (identified cost $12,557,404) (Note 2A)....................... $ 10,684,957
Cash............................................................................................. 38,800
Receivables:
Interest....................................................................................... 73,711
Principal repayments........................................................................... 22,968
Deferred organization expense (net of accumulated amortization of $46,224)(Note 2E).............. 506
-------------
Total Assets................................................................................. 10,820,942
-------------
LIABILITIES:
Distribution payable to Trusts................................................................... 70,031
Accrued expenses................................................................................. 43,624
-------------
Total Liabilities............................................................................ 113,655
-------------
NET ASSETS......................................................................................... $ 10,707,287
-------------
-------------
Net asset value per share ($10,707,287 divided by 232,576 shares).................................. $ 46.04
-------------
-------------
At October 31, 1996 the components of net assets were as follows:
Paid-in capital.................................................................................. $ 126,032,055
Accumulated net realized loss on investments..................................................... (113,452,321)
Net unrealized depreciation of investments....................................................... (1,872,447)
-------------
Net Assets................................................................................... $ 10,707,287
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Interest....................................................................................... $ 1,300,456
-------------
EXPENSES:
Investment management fee (Note 4)............................................................. 110,844
Amortization of organization expense (Note 2E)................................................. 9,043
Recordkeeping fees............................................................................. 2,289
Miscellaneous.................................................................................. 1,358
Professional fees.............................................................................. 666
Custody fees................................................................................... 612
-------------
Total expenses............................................................................... 124,812
-------------
Net investment income...................................................................... 1,175,644
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments............................................................... (12,528,496)
Net change in unrealized depreciation of investments........................................... 11,326,999
-------------
Net loss on investments...................................................................... (1,201,497)
-------------
Net decrease in net assets resulting from operations....................................... $ (25,853)
-------------
-------------
</TABLE>
See Notes to Financial Statements
- ------
25
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 1,175,644 $ 8,581,527
Net realized loss on investments........................................... (12,528,496) (85,991,915)
Net change in unrealized depreciation of investments....................... 11,326,999 11,674,390
------------ --------------
Net decrease in net assets resulting from operations....................... (25,853) (65,735,998)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($2.979 and $2.545 per share,
respectively)............................................................ (1,129,875) (4,981,182)
Distributions from paid-in capital ($0.316 per share)...................... -- (619,391)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (16,303,884) (234,382,963)
------------ --------------
Total decrease in net assets........................................... (17,459,612) (305,719,534)
Net assets at the beginning of the period.................................... 28,166,899 333,886,433
------------ --------------
NET ASSETS at the end of the period.......................................... $ 10,707,287 $ 28,166,899
------------ --------------
------------ --------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
--------------------------- ---------------------------------
SHARES VALUE SHARES VALUE
---------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold.................................. 7,985 $ 374,295 25,199 $ 2,037,744
Shares issued in payment of distributions to
shareholders............................... 22,801 1,060,781 48,815 3,084,153
Shares repurchased........................... (382,230) (17,738,960) (3,211,688) (239,504,860)
---------- --------------- --------------- ----------------
Net decrease............................. (351,444) $ (16,303,884) (3,137,674) $ (234,382,963)
---------- --------------- --------------- ----------------
---------- --------------- --------------- ----------------
</TABLE>
See Notes to Financial Statements
- ------
26
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
NOVEMBER 22, 1991
(COMMENCEMENT OF
YEAR ENDED OCTOBER 31, OPERATIONS) TO
---------------------------------------------------- OCTOBER 31,
1996 1995 1994 1993 1992
--------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period.. $ 48.230 $ 89.710 $ 99.040 $ 99.050 $ 100.000
--------- --------- ---------- ---------- -----------
Income (loss) from investment
operations--
Net investment income............... 3.176 6.049 (d) 6.460 7.804 8.606
Net realized and
unrealized loss on
investments....................... (2.387) (44.668)(d) (9.750) (0.004) (0.950)
--------- --------- ---------- ---------- -----------
Total from investment
operations...................... 0.789 (38.619) (3.290) 7.800 7.656
--------- --------- ---------- ---------- -----------
Less distributions--
Distributions from net investment
income............................ 2.979 2.545 6.040 7.810 8.606
Distributions from paid-in
capital........................... -- 0.316 -- -- --
--------- --------- ---------- ---------- -----------
Total distributions............... 2.979 2.861 6.040 7.810 8.606
--------- --------- ---------- ---------- -----------
Net asset value, end of period........ $ 46.040 $ 48.230 $ 89.710 $ 99.040 $ 99.050
--------- --------- ---------- ---------- -----------
--------- --------- ---------- ---------- -----------
TOTAL RETURN.......................... 1.79% (44.04)% (3.56)% 8.14% 8.51%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).......................... $ 10,707 $ 28,167 $ 333,886 $ 455,802 $ 156,682
Ratio to average net assets--
Expenses............................ 0.73% 1.09% 0.76% 0.76% 0.76%(a)(b)
Net investment income............... 6.89% 8.87% 6.55% 7.61% 9.14%(a)(c)
Portfolio turnover rate............... 311% 45% 61% 107% 254%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets prior to expense waivers was
0.79%(a).
(c) Ratio of net investment income to average net assets prior to expense
waivers was 9.11%(a).
(d) Based upon average shares outstanding throughout the period.
See Notes to Financial Statements
- ------
27
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE RATE SECURITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- ------------------------------
NOTE 1 -- ORGANIZATION
Astra Institutional Securities Trust (the 'Company') is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Company was organized as a Massachusetts Business Trust on
September 4, 1991 with an unlimited number of shares of beneficial interest
without par value. The Company offers shares in two non-diversified series,
Astra Institutional Adjustable Rate Securities Portfolio (the 'Portfolio') and
Astra Institutional Adjustable U.S. Government Securities Portfolio. The
Portfolio is structured to serve as the investment vehicle for three affiliated
open-end management investment companies: Astra Adjustable Rate Securities Trust
I, I-A and IV (collectively, the 'Trusts'). The Trusts invest substantially all
of their net assets in the Portfolio, which has the same investment objectives
as that of the Trusts.
The Portfolio's investment objective is to seek high current income consistent
with low volatility of principal. The Portfolio seeks to achieve its investment
objective by investing in mortgage securities, issued or sponsored by commercial
banks, savings and loan associations, mortgage bankers or other financial
institutions, that have no government guarantee and that are senior or
subordinated to other mortgage securities arising out of the same pool of
mortgages. The Portfolio has experienced a reduction in net asset value per
share due to adverse market conditions for adjustable rate mortgage securities,
including subordinated residential mortgage securities. Although Astra
Management Corp. (the 'Manager') believes that under normal market conditions
the Portfolio's investment objective can be achieved, there can be no assurance
that the adverse market conditions will not continue. In addition, as the Trusts
have experienced a high rate of shareholders redemptions, cash and cash
equivalents have been maintained in order to meet such redemptions, which has
the effect of reducing yield. The Manager intends to maintain this position
until such time as the market for subordinated residential mortgage securities
normalizes and redemption rates stabilize. There can be no assurance that the
Portfolio's investment objective will be achieved.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
A. SECURITY VALUATION. A valuation committee of the Board of Trustees is
responsible for establishing security valuation policies, reviewing the
valuation of portfolio securities, monitoring the level of illiquid
securities and reviewing liquidity determinations. The Company considers to
be illiquid all securities which cannot be disposed of within seven days in
the ordinary course of business at approximately the amount at which the
Portfolio values the security. Additionally, interest rate swap contracts,
interest-only and principal-only mortgage backed securities, and special
hazard certificates are treated as illiquid securities in accordance with
Securities and Exchange Commission policy. Liquid securities are valued
primarily using prices provided by independent pricing services which use
prices provided by market-makers or estimates of market values obtained
from yield and other data relating to instruments or securities with
similar characteristics, and secondarily based upon market quotation and/or
other available information. Securities for which reliable market
information or pricing service quotes are not readily available, including
illiquid securities, are valued at fair value as determined in good faith
by, or under procedures established by, the Board of Trustees, which
procedures may include the delegation of certain responsibilities regarding
valuation to
- ------
28
<PAGE>
the Manager. The Manager reports, as necessary, to the Trustees of the
Company regarding portfolio valuation determinations. Short-term securities
with less than sixty days remaining to maturity when acquired by the
Portfolio are valued on an amortized cost basis by the Portfolio when the
Board of Trustees has determined that amortized cost is fair value.
B. FEDERAL INCOME TAXES. The Portfolio intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore,
no Federal income tax provision is required.
C. SECURITY TRANSACTIONS, INCOME AND DISTRIBUTIONS. As is common in the
industry, security transactions are accounted for on the trade date.
Interest income on adjustable rate mortgage securities is recorded on the
accrual basis at current interest rates. Dividends to shareholders from net
investment income are declared daily and paid or reinvested monthly.
Discounts and premiums on debt securities are amortized in accordance with
the provisions of the Internal Revenue Code.
D. INTEREST RATE SWAP CONTRACTS. The Portfolio may enter into interest rate
swap contracts as a hedging technique. Interest rate swap contracts are
marked-to-market daily using market quotations or independent pricing
services. The change in market value is recorded by the Portfolio as an
unrealized gain or loss. Interest income (expense) is accrued daily on the
contract's notional amount and applicable interest rates.
Interest rate swap contracts may expose the Portfolio to risks resulting
from unanticipated movements in interest rates or the failure of the
counterparty to the agreement to perform in accordance with the terms of
the contract.
E. DEFERRED ORGANIZATION EXPENSES. All of the Portfolio's expenses in
connection with its organization are being borne by the Portfolio and are
amortized on a straight-line basis over a period of five years.
F. USE OF ESTIMATES. In preparing financial statements in accordance with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and revenues and
expenses during the reporting period. Actual results could differ from
those estimates.
NOTE 3 -- INVESTMENTS
For the year ended October 31, 1996, the cost of purchases and the proceeds from
sales of investments and principal repayments, excluding short-term securities,
aggregated $50,425,818 and $55,760,950, respectively.
At October 31, 1996, the Portfolio had a capital loss carryforward for Federal
income tax purposes of $113,452,000 of which $221,000 expires in 2000,
$3,271,000 in 2001, $15,105,000 in 2002, $82,382,000 in 2003 and $12,473,000 in
2004.
NOTE 4 -- INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Manager provides the Portfolio with investment management and administrative
services under an Investment Management Agreement. The Manager furnishes all
investment advice, office space and salaries of personnel needed by the
Portfolio, except those involved with record-keeping, daily net asset value
calculations, placing orders for the execution of portfolio transactions,
shareholder servicing, and maintaining registration of shares under state
securities laws. As compensation for its services, the Manager is paid monthly a
fee which is equal to the annual rate of 0.65% of the first $500 million of
average daily net assets, 0.60% on net assets from $500 million to $1 billion
and 0.55% on net assets over $1 billion.
- ------
29
<PAGE>
The Manager has agreed to reimburse the Portfolio and Trusts to the extent
required so that the aggregate expenses do not exceed the expense limitations
applicable to the Portfolio and Trust under the securities laws or regulations
of those states or jurisdictions in which the Trusts' shares are registered or
qualified for sale. Currently, the most restrictive of such expense limitations
would require the Manager to reimburse the Portfolio and Trusts to the extent
required so that the Portfolio's and Trusts' expenses, as described above, for
any fiscal year do not exceed 2 1/2% of the first $30 million of average daily
net assets, 2% of the next 70 million of average net assets and 1 1/2% of the
remaining average net assets. The amount of any such required reimbursement is
limited to the management fees paid by the Portfolio to the Manager. Expenses
for purposes of this expense limitation include the management fee, but exclude
distribution expenses, brokerage commissions and fees, taxes, interest and
extraordinary expenses such as litigation, paid or incurred by the Portfolio or
Trusts.
Certain officers and trustees of the Company are also officers and/or
trustees/directors of the Trusts and the Manager.
NOTE 5 -- LEGAL MATTERS
Between December 1994 and May 1995, various complaints have been filed by
certain shareholders of Astra Adjustable U.S. Government Securities Trusts I,
I-A, II, III, and IV and Astra Adjustable Rate Securities Trusts I, I-A, II,
III, and IV (collectively, the 'Astra Trusts') in the United States District
Court for the Central District of California and in the Superior Court for the
State of California against the Company and certain of its officers and
trustees, the Astra Trusts and certain of their officers and trustees, Astra
Management Corporation, Astra Fund Distributors Corporation, and Atlas Holding
Group Inc. and its principal stockholder and certain of its employees. These
complaints have been consolidated in the United States District Court for the
Central District of California in the matter referred to as 'In re Pilgrim
Securities Litigation.'
The complaints allege violations of the Securities Act of 1933 and the
Investment Company Act of 1940 relating principally to disclosure concerning
pricing and liquidity of portfolio securities held by the two Portfolios of the
Company. The complaints seek relief measured by the consideration each
shareholder paid for shares of the Astra Trusts with interest thereon, less the
amount of income received thereon, or in the event the shareholder no longer
owns such shares, for damages, plus interest. Management of the Company believes
the complaints are without merit and intends, and has been advised that each of
the other defendants intends, to vigorously defend these actions.
On December 18, 1996, the Court granted preliminary approval of a tentative
class action settlement which would result in dismissal of the class actions
with prejudice. The tentative settlement would not have a material adverse
effect upon the financial condition of the Astra Trusts or the Portfolios. The
tentative settlement, however, is subject to final court approval, among other
things, and the defendants have the option of terminating the settlement under
certain conditions. Accordingly, the ultimate outcome of these matters cannot
presently be determined and the Astra Trusts have made no provision for any
losses which may result from settlement of these complaints.
- ------
30
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- ------------------------------
To the Shareholders of Astra Institutional Adjustable Rate
Securities Portfolio and the Trustees of Astra Institutional Securities Trust
San Diego, California
We have audited the statement of assets and liabilities of Astra Institutional
Adjustable Rate Securities Portfolio (a series of shares of Astra Institutional
Securities Trust), including the portfolio of investments, as of October 31,
1996, and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the four years in the period then
ended and for the period from November 22, 1991 (commencement of operations) to
October 31, 1992. 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 audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free from 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
October 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 Astra
Institutional Adjustable Rate Securities Portfolio as of October 31, 1996, and
the results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the four years in the period then ended and for the
period from November 22, 1991 to October 31, 1992, in conformity with generally
accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
November 19, 1996, except for the third paragraph of Note 5
as to which the date is December 18, 1996.
- ------
31
<PAGE>
ASTRA GROUP
FAMILY OF FUNDS
- ------------------------------
ADJUSTABLE-INCOME FUNDS
- ------------------------------
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
FIXED-INCOME FUNDS
- ------------------------------
ASTRA ALL-AMERICAS GOVERNMENT INCOME TRUST
ASTRA SHORT-TERM MULTI-MARKET INCOME FUND I
ASTRA SHORT-TERM MULTI-MARKET INCOME FUND II
- ------------------
Prospectuses containing more complete information about the Funds, including
charges and expenses, may be obtained from Astra Fund Distributors Corp. Read
the Prospectus carefully before you invest or send money.
- ------
32
<PAGE>
750 B Street
Suite 2350
San Diego, CA 92101
ASTRA ADJUSTABLE
RATE SECURITIES TRUSTS
I, I-A, IV
INVESTMENT MANAGER
Astra Management Corp.
750 B Street
Suite 2350
San Diego, CA 92101
1-619-238-7100
PRINCIPAL UNDERWRITER
Astra Fund Distributors Corp.
750 B Street
Suite 2350
San Diego, CA 92101
1-800-219-1080
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419174
Kansas City, Missouri 64141
1-800-441-7267
TRANSFER AGENT
Investors Fiduciary Trust Company
c/o DST Systems, Inc.
P.O. Box 419174
Kansas City, Missouri 64141
This report is submitted for the general information of the shareholders of the
Trusts. It is not authorized for distribution to prospective investors in the
Trusts unless preceded or accompanied by an effective prospectus which includes
details regarding the Trusts' objectives, policies, sales commissions and other
information.
AARST 1296 2.5 AST 612063
ASTRA
ARM
FUNDS
Annual Report
October 31, 1996
ASTRA ADJUSTABLE
RATE SECURITIES TRUSTS I, I-A, IV
ASTRA LOGO
<PAGE>
[ASTRA LOGO]
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUSTS ANNUAL REPORT
Dear Shareholder: December 26, 1996
The Trust's performance during the past fiscal year was influenced by real and
expected changes in U.S. interest rates, mortgage prepayments, and mortgage
defaults. The year began in the midst of the U.S. Federal Reserve's attempt to
stimulate economic growth through decreases in the Fed Funds rate. As a result,
both short term and long term interest rates dropped. However, beginning in late
December 1995, long term interest rates began to rise as investors' perception
of future economic growth increased in conjunction with concerns of rising
inflation brought about by an increase in the price of gold as well as other
commodities. More recently, investors have tempered their expectations for
future economic growth and interest rates have dropped from their high yields
reached in mid-1996. During the year ended October 31, 1996, the U.S. two year
treasury yield increased from 5.61% to 5.73%, an increase of 12 basis points,
while the U.S. thirty year treasury yield increased from 6.33% to 6.64%, an
increase of 31 basis points. Additionally, during the last months of 1995, the
Trusts were somewhat hampered by credit and default risk on the balance of
single-family, subordinated mortgage securities in the portfolio primarily
backed by Southern California real estate.
The Trust improved its NAV stability by investing in higher-quality Agency
issues. Currently, the majority of securities owned by the Trust include Agency
adjustable rate mortgages, U.S. Treasuries, and short term Agency discount notes
with relatively short durations. At year end, the majority of subordinated
mortgage securities held by the Trust are multi-family mortgages located in New
York and New Jersey.
However, as the Trusts have experienced an increase in the rate of redemptions,
a portion of its assets will be invested in short term U.S. Government
securities which has the effect of reducing yield.
Sincerely,
Astra Management Corp.
<PAGE>
- ------------------
Astra Adjustable U.S. Government Securities Trusts invest all investable assets
in the Astra Institutional Adjustable U.S. Government Securities Portfolio. The
Portfolio seeks to achieve its investment objective by investing at least 65% of
its assets in adjustable rate mortgage (ARM) securities which are issued or
guaranteed by the U.S. Government, its agencies or instrumentalities ('U.S.
Government Mortgage Securities'). The Portfolio invests the remainder of its
assets generally in mortgage securities that are issued or sponsored by
commercial banks, savings and loan associations, mortgage bankers or other
financial institutions, that have no government guarantee and that are senior or
subordinated to other mortgage securities arising out of the same pool of
mortgages ('Multi-Class Residential Mortgage Securities'). The portion of assets
invested in Subordinated Residential Mortgage Securities may entail greater risk
than the portion invested in senior Mortgage Securities or U.S. Government
Mortgage Securities.
PERFORMANCE DATA REPRESENTS PAST PERFORMANCE. INVESTMENT RETURN AND THE
PRINCIPAL VALUE OF AN INVESTMENT IN THE TRUST WILL FLUCTUATE. SHARES, WHEN
REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST.
- ------
2
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
- ------------------------------
GENERAL ECONOMIC AND MARKET ENVIRONMENT
The Trust's performance during the past fiscal year was influenced by real and
expected changes in U.S. interest rates, mortgage prepayments, and mortgage
defaults. The Trust's year began in the midst of the U.S. Federal Reserve's
attempt to stimulate economic growth through decreases in the Fed Funds rate. As
a result, both short and long term interest rates dropped. However, beginning in
late December 1995, long term interest rates began to rise as investors'
perception of future economic growth increased in conjunction with concerns of
rising inflation brought about by an increase in the price of gold as well as
other commodities. More recently, investors have tempered their expectations for
future economic growth and interest rates have dropped from high yields reached
in mid-1996. During the twelve months ended October 31, 1996, the U.S. two year
treasury yield increased from 5.61% to 5.73%, an increase of 12 basis points,
while the U.S. thirty year treasury yield increased from 6.33% to 6.64%, an
increase of 31 basis points.
ADJUSTABLE RATE MORTGAGE (ARM) MARKET
The market for adjustable rate mortgage securities was somewhat favorable during
the fiscal year as investors were attracted to the relatively wide yield spread
over U.S. Treasuries versus other short duration assets, such as short
corporates and Agencies. One of the best performing sectors was GNMA ARMs as
investors preferred their high liquidity and relatively cheap prices. During the
majority of the fiscal year, it was preferential to hold higher coupon ARMs with
a shorter duration in order to offset the effects of increasing interest rates
on mortgage prices.
Over the past year, the adjustable rate subordinated mortgage market has
experienced significant structural changes. Historically, the market consisted
of structured mortgage securities packaged with whole loans, divided into
different classes of securities with different cash flow, prepayment, and
default characteristics (senior/subordinated structure). These securities were
the type frequently purchased by the Trust in previous years. However, the
market has now shifted away from this structure with very few new production
securities of this type being created. The market is now driven by investors who
prefer an original whole loan or an asset-backed security with
overcollateralization, neither type of security which the Trust has owned.
The bulk of subordinated mortgage securities currently owned by the Trust are
fixed-rate, multi-family subordinated mortgage securities. Over the past year,
these types of securities have performed relatively well with rated-securities
tightening by 0.50-1.00% versus treasuries. However, first loss and/or unrated
securities are predominately purchased by real estate investors and demand
relatively high yields (13-20%). The yield is impacted by factors such as loan
seasoning, default history, interest payment history, LTV ratios, and
final/expected maturity. As a final note, these securities are backed by
properties primarily located in New York and New Jersey rather than Southern
California.
- ------
3
<PAGE>
ANALYSIS OF THE ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUSTS
As the prospectus outlines, the portfolio in which the Trusts are invested may
purchase subordinated mortgage securities which have generally provided higher
historical yields than U.S. Government securities. However, the risk of loss due
to default on such instruments is higher since they are not guaranteed by the
U.S. Government. If real estate values hold stable or rise, subordinated
mortgages generally provide attractive returns; however, if real estate values
fall or remain at depressed levels, subordinated mortgages can fall sharply in
price. Consequently, performance was significantly hampered during the first
part of the fiscal year by credit and default problems on a number of
subordinated mortgage securities primarily backed by real estate located in
Southern California. Since late 1995, the portfolio has limited its exposure to
these types of securities and as a result total return performance has improved.
Given the previously described scenarios in both the U.S. fixed income and
subordinated mortgage markets, the major focus was to cautiously decrease
exposure to subordinated mortgage securities with the potential for increases in
defaults and delinquencies and selectively add U.S. Government Agency adjustable
rate mortgages, such as higher coupon GNMA securities.
- ------
4
<PAGE>
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ASTRA
ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I AND THE LEHMAN BROTHERS MUTUAL
FUND SHORT (1-3) U.S. GOVERNMENT INDEX AND THE LEHMAN BROTHERS ARM INDEX
Based on a $10,000 initial investment, the graph below illustrates that the
total return of the Astra Adjustable U.S. Government Securities Trust I Shares
underperformed the total return of the Lehman Brothers Mutual Fund Short (1-3)
U.S. Government Index as well as the Lehman Brothers ARM Index. Note, however,
that Lehman Indices have inherent performance advantages over any fund, since
they have no cash in their portfolio, impose no sales charge and incur no
operating expenses. Of course, one cannot invest in an index.
In the printed version there is a line graph which shows the plot points
shown below:
Average Annual Total Returns
October 31, 1996
1 Year 5 Year Since Inception**
- -0.81% -0.24% 0.82%
Adjustable
U.S. Government Lehman Brothers
Securities Mutual Fund Short(1-3) Lehman Brothers
Trust I U.S. Government Index ARM Index*
--------------- ---------------------- ---------------
Inception 10000 10000
10/31/91 10601 10683
01/01/92 10772 10930 10772
10/31/92 11294 11496 11191
10/31/93 11786 12088 11932
10/31/94 11028 12227 11962
10/31/95 10159 13307 13180
10/31/96 10476 14104 14120
Inception date of the Trust was February 21, 1991
NOTE: INCLUDES ALL SALES CHARGES
Performance data represents past performance. Past performance is not predictive
of future performance. Investment return and principal value of an investment in
the Trust will fluctuate. Shares, when redeemed, may be worth more or less than
their original cost.
* The Lehman Brothers ARM Index commenced on January 1, 1992. For comparison
purposes, the initial amount applied to the ARM Index on its commencement
date is equal to the value of the hypothetical Trust I account on such date.
All securities in the ARM Index are government agency guaranteed.
** In the past, the Trust's manager has voluntarily waived all or a portion of
its management fees or assumed responsibility for other expenses, which
reduced operating expenses and increased total return to shareholders.
Without these reductions, the total return would have been lower.
- ------
5
<PAGE>
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ASTRA
ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A AND THE LEHMAN BROTHERS MUTUAL
FUND SHORT (1-3) U.S. GOVERNMENT INDEX AND THE LEHMAN BROTHERS ARM INDEX
Based on a $10,000 initial investment, the graph below illustrates that the
total return of the Astra Adjustable U.S. Government Securities Trust I-A Shares
underperformed the total return of the Lehman Brothers Mutual Fund Short (1-3)
U.S. Government Index as well as the Lehman Brothers ARM Index. Note, however,
that Lehman Indices have inherent performance advantages over any fund, since
they have no cash in their portfolio, impose no sales charge and incur no
operating expenses. Of course, one cannot invest in an index.
In the printed version there is a line graph which shows the plot points
in the table below:
Average Annual Total Returns
October 31, 1996
1 Year Since Inception**
- -0.49% -1.04%
Adjustable U.S. Lehman Brothers
Government Mutual Fund Short (1-3) Lehman Brothers
Securities Trust I-A U.S. Government Index ARM Index*
Inception 10000 10000 10000
10/31/92 10279 10386 10297
10/31/93 10732 10921 10980
10/31/94 10005 11047 11007
10/31/95 9225 12023 12127
10/31/96 9544 12743 12993
Inception date of the Trust was May 19, 1992
NOTE: INCLUDES ALL SALES CHARGES
Performance data represents past performance. Past performance is not predictive
of future performance. Investment return and principal value of an investment in
the Trust will fluctuate. Shares, when redeemed, may be worth more or less than
their original cost.
* All securities in the ARM Index are government agency guaranteed.
** In the past, the Trust's manager has voluntarily waived all or a portion of
its management fees or assumed responsibility for other expenses, which
reduced operating expenses and increased total return to shareholders.
Without these reductions, the total return would have been lower.
- ------
6
<PAGE>
COMPARISON OF THE CHANGE IN VALUE OF A $10,000 INVESTMENT IN THE ASTRA
ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II AND THE LEHMAN BROTHERS MUTUAL
FUND SHORT (1-3) U.S. GOVERNMENT INDEX AND THE LEHMAN BROTHERS ARM INDEX
Based on a $10,000 initial investment, the graph below illustrates that the
total return of the Astra Adjustable U.S. Government Securities Trust II Shares
underperformed the total return of the Lehman Brothers Mutual Fund Short (1-3)
U.S. Government Index as well as the Lehman Brothers ARM Index. Note, however,
that Lehman Indices have inherent performance advantages over any fund, since
they have no cash in their portfolio, impose no sales charge and incur no
operating expenses. Of course, one cannot invest in an index.
In the printed version there is a line graph which shows the plot points
in the table below:
Average Annual Total Returns
October 31, 1996
1 Year Since Inception**
0.20% -0.57%
Adjustable Lehman Brothers
U.S. Government Mutual Fund Short (1-3) Lehman Brothers
Securities Trust II U.S. Government Index ARM Index*
01/01/92 9810 10000 10000
10/31/92 10338 10518 10389
10/31/93 10870 11059 11077
10/31/94 10191 11187 11104
10/31/95 9403 12175 12235
10/31/96 9720 12904 13108
Inception date of the Trust was November 27, 1991*
NOTE: INCLUDES ALL SALES CHARGES
Performance data represents past performance. Past performance is not predictive
of future performance. Investment return and principal value of an investment in
the Trust will fluctuate. Shares, when redeemed, may be worth more or less than
their original cost.
* The Lehman Brothers ARM Index commenced on January 1, 1992, six weeks after
commencement of the Trust. Accordingly, the first six weeks of Trust
performance is not shown above and the hypothetical comparison commenced on
January 1, 1992. All securities in the ARM Index are government agency
guaranteed.
** In the past, the Trust's manager has voluntarily waived all or a portion of
its management fees or assumed responsibility for other expenses, which
reduced operating expenses and increased total return to shareholders.
Without these reductions, the total return would have been lower.
- ------
7
<PAGE>
COMPARISON OF THE CHANGE IN VALUE OF A $50,000 INVESTMENT IN THE ASTRA
ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV AND THE LEHMAN BROTHERS MUTUAL
FUND SHORT (1-3) U.S. GOVERNMENT INDEX AND THE LEHMAN BROTHERS ARM INDEX
Based on a $50,000 initial investment, the graph below illustrates that the
total return of the Astra Adjustable U.S. Government Securities Trust IV Shares
underperformed the total return of the Lehman Brothers Mutual Fund Short (1-3)
U.S. Government Index as well as the Lehman Brothers ARM Index. Note, however,
that Lehman Indices have inherent performance advantages over any fund, since
they have no cash in their portfolio, impose no sales charge and incur no
operating expenses. Of course, one cannot invest in an index.
In the printed version there is a line graph which shows the plot points
in the table below:
Average Annual Total Returns
October 31, 1996
1 Year Since Inception**
2.44% -3.26%
Adjustable Lehman Brothers
U.S. Government Mutual Fund Short (1-3) Lehman Brothers
Securities Trust IV U.S. Government Index ARM Index*
Inception 50000 50000 50000
10/31/93 51002 50931 51210
10/31/94 47650 51519 51336
10/31/95 43482 56068 56563
10/31/96 44540 59425 60601
Inception date of the Trust was May 7, 1993
NOTE: INCLUDES ALL SALES CHARGES
Performance data represents past performance. Past performance is not predictive
of future performance. Investment return and principal value of an investment in
the Trust will fluctuate. Shares, when redeemed, may be worth more or less than
their original cost.
* All securities in the Lehman Brothers ARM Index are government agency
guaranteed.
** In the past, the Trust's manager has voluntarily waived all or a portion of
its management fees or assumed responsibility for other expenses, which
reduced operating expenses and increased total return to shareholders.
Without these reductions, the total return would have been lower.
- ------
8
<PAGE>
TABLE OF CONTENTS
- ------------------------------
<TABLE>
<S> <C>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
Statement of Assets and Liabilities...................................................................... 10
Statement of Operations.................................................................................. 10
Statement of Changes in Net Assets....................................................................... 11
Financial Highlights..................................................................................... 12
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
Statement of Assets and Liabilities...................................................................... 13
Statement of Operations.................................................................................. 13
Statement of Changes in Net Assets....................................................................... 14
Financial Highlights..................................................................................... 15
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
Statement of Assets and Liabilities...................................................................... 16
Statement of Operations.................................................................................. 16
Statement of Changes in Net Assets....................................................................... 17
Financial Highlights..................................................................................... 18
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
Statement of Assets and Liabilities...................................................................... 19
Statement of Operations.................................................................................. 19
Statement of Changes in Net Assets....................................................................... 20
Financial Highlights..................................................................................... 21
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUSTS
Notes to Financial Statements............................................................................ 22
Report of Independent Certified Public Accountants....................................................... 27
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
Portfolio of Investments................................................................................. 28
Statement of Assets and Liabilities...................................................................... 29
Statement of Operations.................................................................................. 29
Statement of Changes in Net Assets....................................................................... 30
Financial Highlights..................................................................................... 31
Notes to Financial Statements............................................................................ 32
Report of Independent Certified Public Accountants....................................................... 36
</TABLE>
- ------
9
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $58,217,809) (Notes 1, 2A and 3)............ $ 48,593,777
Dividends receivable from Portfolio.............................................................. 284,128
Prepaid expenses................................................................................. 63,309
-------------
Total Assets................................................................................. 48,941,214
-------------
LIABILITIES:
Payable for capital stock redeemed............................................................... 269,991
Accrued expenses................................................................................. 117,410
-------------
Total Liabilities............................................................................ 387,401
-------------
NET ASSETS......................................................................................... $ 48,553,813
-------------
-------------
Net asset value per share ($48,553,813 divided by 8,836,190 shares) (Note 6)....................... $ 5.49
-------------
-------------
At October 31, 1996 the components of net assets were as follows:
Paid-in capital.................................................................................. $ 128,396,233
Accumulated net realized loss on investments..................................................... (70,218,388)
Net unrealized depreciation of investments....................................................... (9,624,032)
-------------
Net Assets................................................................................... $ 48,553,813
-------------
-------------
</TABLE>
- ------------------
* Investments of Astra Adjustable U.S. Government Securities Trust I consist
entirely of 627,990 shares of Astra Institutional Adjustable U.S. Government
Securities Portfolio. Cost for Federal income tax purposes is $58,217,809. See
Notes 1 and 2A.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio....................................................................... $ 4,552,656
-------------
EXPENSES:
Distribution expenses (Note 4A)................................................................ 676,006
Shareholder servicing costs.................................................................... 395,270
Insurance expense.............................................................................. 93,388
Administrative servicing costs (Note 5)........................................................ 67,601
Professional fees.............................................................................. 50,437
Registration fees.............................................................................. 33,345
Trustees' fees................................................................................. 23,299
Reports to shareholders........................................................................ 20,833
Amortization of organization expense (Note 2D)................................................. 17,099
Miscellaneous expense.......................................................................... 8,826
-------------
Total expenses............................................................................... 1,386,104
-------------
Net investment income...................................................................... 3,166,552
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments............................................................... (13,042,726)
Net change in unrealized depreciation of investments........................................... 11,835,902
-------------
Net loss on investments...................................................................... (1,206,824)
-------------
Net increase in net assets resulting from operations....................................... $ 1,959,728
-------------
-------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
10
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 3,166,552 $ 6,883,140
Net realized loss on investments........................................... (13,042,726) (40,720,703)
Net change in unrealized depreciation of investments....................... 11,835,902 13,232,526
------------ --------------
Net increase (decrease) in net assets resulting from operations............ 1,959,728 (20,605,037)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.246 and $0.254 per share,
respectively)............................................................ (3,183,651) (7,287,333)
Distributions from paid-in capital ($0.013 and $0.037 per share,
respectively)............................................................ (162,543) (1,050,656)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (44,973,595) (185,528,148)
------------ --------------
Total decrease in net assets........................................... (46,360,061) (214,471,174)
Net assets at the beginning of the period.................................... 94,913,874 309,385,048
------------ --------------
NET ASSETS at the end of the period.......................................... $ 48,553,813 $ 94,913,874
------------ --------------
------------ --------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------- ---------------------------------
SHARES VALUE SHARES VALUE
------------ --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold................................ 55,038 $ 305,886 168,878 $ 965,700
Shares issued in reinvestment of
distributions to shareholders............ 314,016 1,728,337 755,068 4,387,623
Shares repurchased......................... (8,541,584) (47,007,818) (32,491,157) (190,881,471)
------------ --------------- --------------- ----------------
Net decrease........................... (8,172,530) $ (44,973,595) (31,567,211) $ (185,528,148)
------------ --------------- --------------- ----------------
------------ --------------- --------------- ----------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
11
<PAGE>
ASTRA ADJUSTABLE RATE U.S. GOVERNMENT SECURITIES TRUST I
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------------------------------------------------
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period............ $ 5.580 $ 6.370 $ 7.150 $ 7.290 $ 7.370
--------- --------- ---------- ---------- ----------
Income (loss) from investment operations--
Net investment income......................... 0.246 0.246 (c) 0.270 0.364 0.850
Net realized and
unrealized gain (loss) on
investments................................. (0.077) (0.745)(c) (0.715) (0.055) 0.007
--------- --------- ---------- ---------- ----------
Total from investment operations............ 0.169 (0.499) (0.445) 0.309 0.857
--------- --------- ---------- ---------- ----------
Less distributions--
Distributions from net investment income...... 0.246 0.254 0.321 0.418 0.850
Distributions from paid-in
capital..................................... 0.013 0.037 0.014 0.031 0.087
--------- --------- ---------- ---------- ----------
Total distributions......................... 0.259 0.291 0.335 0.449 0.937
--------- --------- ---------- ---------- ----------
Net asset value, end of period.................. $ 5.490 $ 5.580 $ 6.370 $ 7.150 $ 7.290
--------- --------- ---------- ---------- ----------
--------- --------- ---------- ---------- ----------
TOTAL RETURN (D)................................ 3.13% (8.28)% (6.43)% 4.34% 6.55%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).................................... $ 48,554 $ 94,914 $ 309,385 $ 675,810 $ 783,527
Ratio to average net assets--
Expenses...................................... 2.05%(b) 1.55%(b) 1.22%(b) 1.29%(b) 1.32%(a)
Net investment income......................... 4.68% 4.28% 3.92% 4.91% 6.57%(a)
Portfolio turnover rate......................... 7% 3% 3% 3% 8%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 0.94%, 0.86%, 0.62%, 0.61%
and 0.64%(a), respectively, of expenses of the Portfolio, which reduced
dividends paid to Trust I.
(c) Based upon average shares outstanding throughout the period.
(d) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
12
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $43,638,869) (Notes 1, 2A and 3)............. $ 36,013,047
Dividends receivable from Portfolio............................................................... 213,090
Deferred organization expense (net of accumulated amortization of $82,007) (Note 2D).............. 5,310
Prepaid expenses.................................................................................. 47,923
------------
Total Assets.................................................................................. 36,279,370
------------
LIABILITIES:
Payable for capital stock redeemed................................................................ 137,411
Accrued expenses.................................................................................. 87,582
------------
Total Liabilities............................................................................. 224,993
------------
NET ASSETS.......................................................................................... $ 36,054,377
------------
------------
Net asset value per share ($36,054,377 divided by 6,532,647 shares) (Note 6)........................ $ 5.52
------------
------------
At October 31, 1996 the components of net assets were as follows:
Paid-in capital................................................................................... $ 84,918,863
Accumulated net realized loss on investments...................................................... (41,238,664)
Net unrealized depreciation of investments........................................................ (7,625,822)
------------
Net Assets.................................................................................... $ 36,054,377
------------
------------
</TABLE>
- ------------------
* Investments of Astra Adjustable U.S. Government Securities Trust I-A consist
entirely of 465,406 shares of Astra Institutional Adjustable U.S. Government
Securities Portfolio. Cost for Federal income tax purposes is $43,638,869. See
Notes 1 and 2A.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio........................................................................ $ 3,292,006
------------
EXPENSES:
Distribution expenses (Note 4A)................................................................. 488,925
Shareholder servicing costs..................................................................... 245,744
Insurance expense............................................................................... 64,103
Administrative servicing costs (Note 5)......................................................... 48,893
Professional fees............................................................................... 31,382
Registration fees............................................................................... 20,447
Reports to shareholders......................................................................... 16,415
Trustees' fees.................................................................................. 14,629
Amortization of organization expense (Note 2D).................................................. 12,031
Miscellaneous expense........................................................................... 6,277
------------
Total expenses................................................................................ 948,846
------------
Net investment income....................................................................... 2,343,160
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................ (8,868,150)
Net change in unrealized depreciation of investments............................................ 8,011,039
------------
Net loss on investments....................................................................... (857,111)
------------
Net increase in net assets resulting from operations........................................ $ 1,486,049
------------
------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
13
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IA
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 2,343,160 $ 4,301,319
Net realized loss on investments........................................... (8,868,150) (22,801,404)
Net change in unrealized depreciation of investments....................... 8,011,039 6,044,252
-------------- --------------
Net increase (decrease) in net assets resulting from operations............ 1,486,049 (12,455,833)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.255 and $0.252 per share,
respectively)............................................................ (2,355,191) (4,521,595)
Distributions from paid-in capital ($0.012 and $0.033 per share,
respectively)............................................................ (112,823) (590,146)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (28,844,282) (104,061,756)
-------------- --------------
Total decrease in net assets........................................... (29,826,247) (121,629,330)
Net assets at the beginning of the period.................................... 65,880,624 187,509,954
-------------- --------------
NET ASSETS at the end of the period.......................................... $ 36,054,377 $ 65,880,624
-------------- --------------
-------------- --------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------- ---------------------------------
SHARES VALUE SHARES VALUE
------------ --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Shares sold................................ 84,641 $ 473,520 519,411 $ 3,050,567
Shares issued in reinvestment of
distributions to shareholders............ 222,200 1,227,892 446,584 2,597,827
Shares repurchased......................... (5,528,219) (30,545,694) (18,589,063) (109,710,150)
------------ --------------- --------------- ----------------
Net decrease........................... (5,221,378) $ (28,844,282) (17,623,068) $ (104,061,756)
------------ --------------- --------------- ----------------
------------ --------------- --------------- ----------------
</TABLE>
See Notes to Trusts' Financial Statements
------
14
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IA
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
MAY 22, 1992
(COMMENCEMENT OF
YEAR ENDED OCTOBER 31, OPERATIONS) TO
------------------------------------------------ OCTOBER 31,
1996 1995 1994 1993 1992
---- ---- ---- ---- ---------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period... $ 5.600 $ 6.380 $ 7.180 $ 7.310 $ 7.340
------- ------- ------- ------- -------
Income (loss) from investment
operations--
Net investment income................ 0.255 0.246 (e) 0.256 0.355 0.207
Net realized and
unrealized loss on
investments........................ (0.068) (0.741)(e) (0.726) (0.041) (0.004)
------- ------- ------- ------- -------
Total from investment operations... 0.187 (0.495) (0.470) 0.314 0.203
------- ------- ------- ------- -------
Less distributions--
Distributions from net investment
income............................. 0.255 0.252 0.308 0.410 0.207
Distributions from paid-in
capital............................ 0.012 0.033 0.022 0.034 0.026
------- ------- ------- ------- -------
Total distributions................ 0.267 0.285 0.330 0.444 0.233
------- ------- ------- ------- -------
Net asset value, end of period......... $ 5.520 $ 5.600 $ 6.380 $ 7.180 $ 7.310
------- ------- ------- ------- -------
------- ------- ------- ------- -------
TOTAL RETURN (F)....................... 3.45% (7.79)% (6.77)% 4.53% 6.16%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)........................... $36,054 $65,881 $187,510 $378,912 $220,256
Ratio to average net assets--
Expenses............................. 1.94%(b) 1.58%(b) 1.42%(b) 1.21%(b) 1.36%(a)(b)(c)
Net investment income................ 4.79% 4.27% 3.68% 4.81% 5.59%(a)(d)
Portfolio turnover rate................ 7% 3% 3% 1% 0%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 0.94%, 0.86%, 0.62%, 0.61%
and 0.64%(a), respectively, of expenses of the Portfolio, which reduced
dividends paid to Trust I-A.
(c) Ratio of expenses to average net assets prior to expense waivers was
1.39%(a).
(d) Ratio of net investment income to average net assets prior to expense
waivers was 5.56%(a).
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
15
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $3,672,032) (Notes 1, 2A and 3)............... $ 3,227,023
Dividends receivable from Portfolio................................................................ 18,665
Deferred organization expense (net of accumulated amortization of $91,079) (Note 2D)............... 1,356
Prepaid expenses................................................................................... 4,165
-----------
Total Assets................................................................................... 3,251,209
-----------
LIABILITIES:
Accrued expenses................................................................................... 9,544
-----------
NET ASSETS........................................................................................... $ 3,241,665
-----------
-----------
COMPUTATION OF OFFERING PRICE:
Net asset value and redemption price per share ($3,241,665 divided by 582,070 shares).............. $ 5.57
-----------
-----------
Offering price per share (100/97 of $5.57)(a)...................................................... $ 5.74
-----------
-----------
At October 31, 1996 the components of net assets were as follows:
Paid-in capital.................................................................................... $ 8,102,533
Accumulated net realized loss on investments....................................................... (4,415,859)
Net unrealized depreciation of investments......................................................... (445,009)
-----------
Net Assets..................................................................................... $ 3,241,665
-----------
-----------
</TABLE>
- ------------------
* Investments of Astra Adjustable U.S. Government Securities Trust II consist
entirely of 41,704 shares of Astra Institutional Adjustable U.S. Government
Securities Portfolio. Cost for Federal income tax purposes is $3,672,032. See
Notes 1 and 2A.
(a) On investments of $100,000 or more the offering price is reduced.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio......................................................................... $ 269,751
-----------
EXPENSES:
Shareholder servicing costs...................................................................... 20,202
Amortization of organization expense (Note 2D)................................................... 18,914
Registration fees................................................................................ 10,541
Distribution expenses (Note 4B).................................................................. 10,033
Insurance expense................................................................................ 5,283
Professional fees................................................................................ 4,086
Administrative servicing costs (Note 5).......................................................... 4,013
Miscellaneous expense............................................................................ 1,964
Reports to shareholders.......................................................................... 1,179
Trustees' fees................................................................................... 982
-----------
Total expenses................................................................................. 77,197
-----------
Net investment income........................................................................ 192,554
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................. (484,867)
Net change in unrealized depreciation of investments............................................. 416,752
-----------
Net loss on investments........................................................................ (68,115)
-----------
Net increase in net assets resulting from operations......................................... $ 124,439
-----------
-----------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
16
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 192,554 $ 320,624
Net realized loss on investments........................................... (484,867) (1,281,838)
Net change in unrealized depreciation of investments....................... 416,752 139,950
------------ ------------
Net increase (decrease) in net assets resulting from operations............ 124,439 (821,264)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.285 and $0.260 per share,
respectively)............................................................ (211,468) (339,005)
Distributions from paid-in capital ($0.042 per share)...................... -- (55,052)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (1,804,879) (6,009,841)
------------ ------------
Total decrease in net assets........................................... (1,891,908) (7,225,162)
Net assets at the beginning of the period.................................... 5,133,573 12,358,735
------------ ------------
NET ASSETS at the end of the period.......................................... $ 3,241,665 $ 5,133,573
------------ ------------
------------ ------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- -------------------------------
SHARES VALUE SHARES VALUE
---------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold...................................... 20,757 $ 115,608 68,732 $ 404,493
Shares issued in reinvestment of distributions to
shareholders................................... 27,146 151,488 45,988 270,443
Shares repurchased............................... (371,131) (2,071,975) (1,119,210) (6,684,777)
-------- -------------- ---------- ---------------
Net decrease................................. (323,228) $ (1,804,879) (1,004,490) $ (6,009,841)
-------- -------------- ---------- ---------------
-------- -------------- ---------- ---------------
</TABLE>
See Notes to Trusts' Financial Statements
------
17
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
NOVEMBER 27, 1991
(COMMENCEMENT OF
YEAR ENDED OCTOBER 31, OPERATIONS) TO
----------------------------------------------------- OCTOBER 31,
1996 1995 1994 1993 1992
--------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period...... $ 5.670 $ 6.470 $ 7.240 $ 7.320 $ 7.350
Income (loss) from investment operations--
Net investment income................... 0.285 0.251 (e) 0.293 0.410 0.505
Net realized and
unrealized loss on
investments........................... (0.100) (0.749)(e) (0.730) (0.044) (0.033)
--------- --------- --------- --------- ----------
Total from investment operations...... 0.185 (0.498) (0.437) 0.366 0.472
--------- --------- --------- --------- ----------
Less distributions--
Distributions from net investment
income................................ 0.285 0.260 0.303 0.415 0.502
Distributions from realized gains on
investments........................... -- -- -- 0.003 --
Distributions from paid-in
capital............................... -- 0.042 0.030 0.028 --
--------- --------- --------- --------- ----------
Total distributions................... 0.285 0.302 0.333 0.446 0.502
--------- --------- --------- --------- ----------
Net asset value, end of period............ $ 5.570 $ 5.670 $ 6.470 $ 7.240 $ 7.320
--------- --------- --------- --------- ----------
--------- --------- --------- --------- ----------
TOTAL RETURN (F).......................... 3.38% (7.74)% (6.25)% 5.12% 7.13%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands).............................. $ 3,242 $ 5,134 $ 12,359 $ 98,888 $ 88,901
Ratio to average net assets--
Expenses................................ 1.92%(b) 1.57%(b) 0.76%(b) 0.51%(b) 0.57%(a)(b)(c)
Net investment income................... 4.80% 4.27% 4.27% 5.57% 7.09%(a)(d)
Portfolio turnover rate................... 10% 7% 12% 79% 97%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 0.94%, 0.86%, 0.62%, 0.61%
and 0.64%(a), respectively, of expenses of the Portfolio, which reduced
dividends paid to Trust II.
(c) Ratio of expenses to average net assets prior to expense waivers was
0.59%(a).
(d) Ratio of net investment income to average net assets prior to expense
waivers was 7.07%(a).
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
18
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value* (identified cost $1,707,278) (Notes 1, 2A and 3)............... $ 1,465,615
Dividends receivable from Portfolio................................................................ 8,516
Deferred organization expense (net of accumulated amortization of $36,838) (Note 2D)............... 15,907
Prepaid expenses................................................................................... 2,137
-----------
Total Assets................................................................................... 1,492,175
-----------
LIABILITIES:
Accrued expenses................................................................................... 6,784
-----------
NET ASSETS........................................................................................... $ 1,485,391
-----------
-----------
Net asset value per share ($1,485,391 divided by 268,921 shares) (Note 6)............................ $ 5.52
-----------
-----------
At October 31, 1996 the components of net assets were as follows:
Paid-in capital.................................................................................... $ 6,081,557
Accumulated net realized loss on investments....................................................... (4,354,503)
Net unrealized depreciation of investments......................................................... (241,663)
-----------
Net Assets..................................................................................... $ 1,485,391
-----------
-----------
</TABLE>
- ------------------
* Investments of Astra Adjustable U.S. Government Securities Trust IV consist
entirely of 18,941 shares of Astra Institutional Adjustable U.S. Government
Securities Portfolio. Cost for Federal income tax purposes is $1,707,278. See
Notes 1 and 2A.
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Dividends from Portfolio......................................................................... $ 144,307
-----------
EXPENSES:
Distribution expenses (Note 4B).................................................................. 12,924
Registration fees................................................................................ 12,147
Amortization of organization expense (Note 2D)................................................... 10,553
Shareholder servicing costs...................................................................... 8,177
Reports to shareholders.......................................................................... 4,851
Insurance expense................................................................................ 3,180
Professional fees................................................................................ 2,979
Administrative servicing costs (Note 5).......................................................... 2,154
Miscellaneous expense............................................................................ 1,247
Trustees' fees................................................................................... 457
-----------
Total expenses................................................................................. 58,669
-----------
Net investment income........................................................................ 85,638
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments................................................................. (415,658)
Net change in unrealized depreciation of investments............................................. 376,638
-----------
Net loss on investments........................................................................ (39,020)
-----------
Net increase in net assets resulting from operations......................................... $ 46,618
-----------
-----------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
19
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
STATEMENT OF CHANGES IN NET ASSETS
- ------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 85,638 $ 197,855
Net realized loss on investments........................................... (415,658) (1,626,315)
Net change in unrealized depreciation of investments....................... 376,638 691,045
-------------- --------------
Net increase (decrease) in net assets resulting from operations............ 46,618 (737,415)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($0.237 and $0.218 per share,
respectively)........................................................... (96,191) (208,389)
Distributions from paid-in capital ($0.016 and $0.087 per share,
respectively)........................................................... (6,670) (82,655)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a).................................................. (1,329,010) (8,666,396)
-------------- --------------
Total decrease in net assets.......................................... (1,385,253) (9,694,855)
Net assets at the beginning of the period.................................... 2,870,644 12,565,499
-------------- --------------
NET ASSETS at the end of the period.......................................... $ 1,485,391 $ 2,870,644
-------------- --------------
-------------- --------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
-------------------------- -------------------------------
SHARES VALUE SHARES VALUE
---------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
Shares sold...................................... -- $ -- 28,558 $ 169,566
Shares issued in reinvestment of distributions to
shareholders................................... 9,516 52,864 30,623 181,378
Shares repurchased............................... (249,371) (1,381,874) (1,481,273) (9,017,340)
---------- -------------- -------------- ---------------
Net decrease................................ (239,855) $ (1,329,010) (1,422,092) $ (8,666,396)
---------- -------------- -------------- ---------------
---------- -------------- -------------- ---------------
</TABLE>
See Notes to Trusts' Financial Statements
- ------
20
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
MAY 7, 1993
(COMMENCEMENT OF
YEAR ENDED OCTOBER 31, OPERATIONS) TO
--------------------------------------- OCTOBER 31,
1996 1995 1994 1993
--------- --------- --------- ------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period................ $ 5.640 $ 6.510 $ 7.310 $ 7.350
--------- --------- --------- ----------
Income (loss) from investment operations--
Net investment income............................. 0.237 0.211 (e) 0.300 0.171
Net realized and
unrealized loss on
investments..................................... (0.104) (0.776)(e) (0.764) (0.025)
--------- --------- --------- ----------
Total from investment operations................ 0.133 (0.565) (0.464) 0.146
--------- --------- --------- ----------
Less distributions--
Distributions from net investment income.......... 0.237 0.218 0.302 0.172
Distributions from paid-in
capital......................................... 0.016 0.087 0.034 0.014
--------- --------- --------- ----------
Total distributions............................. 0.253 0.305 0.336 0.186
--------- --------- --------- ----------
Net asset value, end of period...................... $ 5.520 $ 5.640 $ 6.510 $ 7.310
--------- --------- --------- ----------
--------- --------- --------- ----------
TOTAL RETURN (F).................................... 2.44% (8.75)% (6.57)% 4.11%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)........................................ $ 1,485 $ 2,871 $ 12,565 $ 78,145
Ratio to average net assets--
Expenses.......................................... 2.72%(b) 2.19%(b)(c) 0.85%(b)(c) 0.45%(a)(b)(c)
Net investment income............................. 3.98% 3.64%(d) 4.23%(d) 4.71%(a)(d)
Portfolio turnover rate............................. 7% 6% 21% 3%
</TABLE>
- ------------------
(a) Annualized.
(b) Ratio of expenses to average net assets excludes 0.94%, 0.86%, 0.62%, and
0.61%, respectively, of expenses of the Portfolio, which reduced dividends
paid to Trust IV.
(c) Ratio of expenses to average net assets prior to expense waivers were 2.22%,
1.06% and 0.76%(a), respectively.
(d) Ratio of net investment income to average net assets prior to expense
waivers were 3.61%, 4.02% and 4.40%(a).
(e) Based upon average shares outstanding throughout the period.
(f) Calculated without the deduction of sales charges.
See Notes to Trusts' Financial Statements
- ------
21
<PAGE>
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUSTS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- ------------------------------
NOTE 1 -- ORGANIZATION
Astra Strategic Investment Series (the 'Company') is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. On September 15, 1994 the Company's shareholders approved a change in
the Company's Declaration of Trust to permit the creation of additional classes
of shares of each of the Trust's series. Currently, the Company has authorized
an unlimited number of shares of beneficial interest without par value and at
October 31, 1996 offered a single class of shares in seven series: Astra
Adjustable Rate Securities Trust I, I-A and IV (collectively, the 'Astra
Adjustable Rate Securities Trusts'), Astra Adjustable U.S. Government Securities
Trust I, I-A, II and IV (collectively, the 'Astra Adjustable U.S. Government
Securities Trusts' or the 'Trusts'), all of which are non-diversified series.
The Trusts' investment objective is to seek high current income consistent with
low volatility of principal. The Trusts' seek to achieve this objective by
investing all of its investable assets in the Astra Institutional Adjustable
U.S. Government Securities Portfolio (the 'Portfolio'), a non-diversified series
of Astra Institutional Securities Trust ('AIST') with the same investment
objective as the Trusts. The Portfolio seeks to achieve its investment objective
by investing at least 65% of its assets in adjustable rate mortgage securities
which are issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. The Portfolio invests the remainder of its assets generally
in mortgage securities issued or sponsored by commercial banks, savings and loan
associations, mortgage bankers or other financial institutions, that have no
government guarantee and that are senior or subordinated to other mortgage
securities arising out of the same pool of mortgages. The Portfolio and Trusts
have experienced a reduction in net asset values per share due to adverse market
conditions for adjustable rate mortgage securities, including subordinated
residential mortgage securities. Although Astra Management Corp. (the 'Manager')
believes that under normal market conditions the Portfolio's and Trusts'
investment objective can be achieved, there can be no assurance that the adverse
market conditions will not continue. In addition, as the Trusts have experienced
a high rate of shareholders redemptions, cash and cash equivalents have been
maintained in order to meet such redemptions, which has the effect of reducing
yield. The Manager intends to maintain this position until such time as the
market for subordinated residential mortgage securities normalizes and
redemption rates stabilize. There can be no assurance that the Trusts' or
Portfolio's investment objective will be achieved.
The value of the Trusts' investment in shares of the Portfolio reflects their
proportionate interest in the net assets of the Portfolio. The financial
statements of the Portfolio, including the portfolio of investments, are
included in this report and should be read in conjunction with the financial
statements of the Trusts.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
A. SECURITY VALUATION. The investment policy of the Trusts is to invest in
shares of the Portfolio. Shares of the Portfolio held by the Trusts are
valued at the net asset value then determined by the Portfolio. A valuation
committee of the Board of Trustees of AIST is responsible for establishing
security valuation policies, reviewing the valuation of portfolio
securities, monitoring the level of illiquid securities and reviewing
liquidity determinations for securities held by the Portfolio. AIST
considers to be illiquid all securities which cannot be disposed of within
seven days in the ordinary course of business at approximately the amount
at
- ------
22
<PAGE>
which the Portfolio values the security. Additionally, interest rate swap
contracts, interest-only and principal-only mortgage backed securities, and
special hazard certificates are treated as illiquid securities in
accordance with Securities and Exchange Commission policy. Liquid
securities are valued primarily using prices provided by independent
pricing services which use prices provided by market-makers or estimates of
market values obtained from yield and other data relating to instruments or
securities with similar characteristics, and secondarily based upon market
quotations and/or other available information. Securities for which
reliable market information or pricing service quotes are not readily
available, including illiquid securities, are valued at fair value as
determined in good faith by, or under procedures established by, the Board
of Trustees of AIST, which procedures may include the delegation of certain
responsibilities regarding valuation to the Manager. The Manager reports,
as necessary, to the Trustees of AIST regarding portfolio valuation
determinations.
Short-term securities with less than sixty days remaining to maturity when
acquired by the Portfolio are valued on an amortized cost basis by the
Portfolio when the Trustees of AIST have determined that amortized cost is
fair value.
B. FEDERAL INCOME TAXES. The Trusts intend to comply with the requirements of
the Internal Revenue Code applicable to regulated investment companies and
to distribute all of their taxable income to their shareholders. Therefore,
no Federal income tax provision is required.
C. SECURITY TRANSACTIONS, INCOME AND DISTRIBUTIONS. As is common in the
industry, security transactions of the Portfolio and Trusts are accounted
for on the trade date. Interest income on adjustable rate mortgage
securities is recorded on the accrual basis at current interest rates.
Dividends to shareholders of the Portfolio from net investment income are
declared daily and paid or reinvested monthly. Dividends to Shareholders of
the Trusts from net investment income are declared and paid or reinvested
monthly. Discounts and premiums on Portfolio debt securities are amortized
in accordance with the provisions of the Internal Revenue Code.
D. DEFERRED ORGANIZATION EXPENSES. All of the expenses incurred in connection
with the organization of the Trusts are being borne ratably by the Trusts
and are being amortized on a straight-line basis over periods of five years
from the date of commencement of operations.
E. USE OF ESTIMATES. In preparing financial statements in accordance with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and revenues and
expenses during the period. Actual results could differ from those
estimates.
NOTE 3 -- INVESTMENTS
At October 31, 1996 the Portfolio held subordinated residential mortgage
securities which the Valuation Committee of the Board of Trustees of AIST has
determined to be illiquid. These securities are valued at $1,043,924
(representing 1.2% of the Portfolio's net assets). The fair value of these
securities is determined under procedures approved by the Board of Trustees of
AIST in the absence of readily ascertainable market values.
For the year ended October 31, 1996 the cost of purchases and the proceeds from
sales of investments in the Portfolio were as follows:
PURCHASES SALES
------------- --------------
Trust I................. $ 4,763,731 $ 50,212,692
Trust I-A............... 3,568,110 32,738,706
Trust II................ 384,411 2,233,205
Trust IV................ 148,843 1,588,582
- ------
23
<PAGE>
At October 31, 1996 the Trusts had capital loss carryforwards for federal income
tax purposes as follows:
CAPITAL LOSS EXPIRES
CARRYFORWARD OCTOBER 31,
-------------- -------------
Trust I.................. $ 534,000 1999
14,000 2000
7,926,000 2002
48,702,000 2003
13,042,000 2004
--------------
$ 70,218,000
--------------
--------------
Trust I-A................ $ 4,253,000 2002
28,118,000 2003
8,868,000 2004
--------------
$ 41,239,000
--------------
--------------
Trust II................. $ 2,284,000 2002
1,647,000 2003
485,000 2004
--------------
$ 4,416,000
--------------
--------------
Trust IV................. $ 1,896,000 2002
2,043,000 2003
416,000 2004
--------------
$ 4,355,000
--------------
--------------
NOTE 4 -- DISTRIBUTION PLANS
A. TRUST I AND TRUST I-A DISTRIBUTION PLANS. Trust I and Trust I-A have
adopted distribution plans pursuant to Rule 12b-1 under the 1940 Act (the
'Distribution Plans'), whereby they will provide daily compensation to
Astra Fund Distributors Corp., the Trusts' principal underwriter (the
'Principal Underwriter') in the form of sales commissions equal to 4% of
the amount received by Trust I for each share sold and 5% of the amount
received by Trust I-A for each share sold (excluding reinvestment of
dividends and distributions) plus an interest fee calculated by applying
the rate of 1% over prime rate to the outstanding balance of Uncovered
Distribution Charges. Daily compensation payments will be made monthly and
are limited to an annual rate of 0.75% of each Trust's daily net assets.
During the year ended October 31, 1996 the Principal Underwriter earned
daily compensation of $507,005 from Trust I and $366,694 from Trust I-A. At
October 31, 1996 Uncovered Distribution Charges (cumulative sales
commissions and interest fees reduced by cumulative daily compensation and
contingent deferred sales charges paid to the Principal Underwriter) were
$11,621,801 for Trust I and $9,681,679 for Trust I-A.
On August 5, 1994 the shareholders of Trust I and Trust I-A approved
changes to their respective distribution plans to provide a method by which
a proportionate amount of Uncovered Distribution Charges will be
transferred from the Trusts upon exchanges to other mutual funds for which
Astra Fund Distributions Corp. serves as Principal Underwriter and which
have substantially the same contingent deferred sales charge structure and
distribution plan.
Pursuant to the requirements of the Securities and Exchange Commission the
daily compensation (sales commission) payments to the Principal Underwriter
pursuant to the Distribution Plan must be reflected as operating expenses
of Trust I and Trust I-A. For periods through December 31, 1994 these
payments were treated as capital transactions and were not deducted for
Federal income tax purposes.
The Distribution Plans also provide for monthly payments to the Principal
Underwriter of a trail or maintenance fee in an amount equal to an annual
rate of 0.25% of the daily net assets of Trust I and Trust I-A. During the
year ended October 31, 1996 the Principal Underwriter earned maintenance
fees of $169,001 from Trust I and $122,231 from Trust I-A.
B. TRUST II AND TRUST IV DISTRIBUTION PLANS. Trust II and Trust IV have
adopted distribution plans pursuant to rule 12b-1 under the 1940 Act (the
'Distribution Plans'), whereby Trust II may pay up to a maximum annual rate
of 0.25% of its
- ------
24
<PAGE>
average daily net assets and Trust IV may pay up to a maximum annual rate
of 0.60% of its average daily net assets to the Principal Underwriter as
reimbursement for expenses incurred in the distribution of the shares of
Trust II and Trust IV. Pursuant to the Distribution Plans, the Principal
Underwriter is entitled to reimbursement each month (up to a maximum of
0.25% of Trust II's daily net assets and 0.60% of Trust IV's daily net
assets) for its actual expenses incurred in the distribution and promotion
of Trust II's and Trust IV's shares, including the printing of prospectuses
used for sales purposes, advertisements, expenses of preparation and
printing of sales literature, and other distribution related expenses,
including any distribution or service fees paid to security dealers and
others who have executed a distribution or service agreement with the
Principal Underwriter. The Distribution Plans provide that the Principal
Underwriter may include as distribution expenses a portion of its overhead
expenses directly attributable to the distribution of Trust II's and Trust
IV's shares, including personnel and out-of-pocket costs. The Distribution
Plans permit the Principal Underwriter to carryforward for a maximum of
three years (without carrying charges) distribution expenses covered by the
Distribution Plans for which it has not yet received reimbursement. At
October 31, 1996, the Principal Underwriter had incurred $1,199,658 of
distribution expenses in excess of amounts currently reimbursable by Trust
II and $673,700 of distribution expenses in excess of amounts currently
reimbursable by Trust IV. During the year ended October 31, 1996, the
Principal Underwriter received distribution expense reimbursements of
$10,033 from Trust II and $12,924 from Trust IV. Distribution expenses
incurred by the Principal Underwriter included $1,084 and $581 for the
salaries and related costs of certain of its employees involved in the
sales of Trust II's and Trust IV's shares, respectively.
NOTE 5 -- INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trusts invest substantially all of their assets in the Portfolio, which has
the same investment objective as each of the Trusts. The Trustees of AIST
establish the Portfolio's investment policies and supervise and review the
operations and management of the Portfolio. For furnishing the Portfolio with
investment advice and investment management and administrative services with
respect to the Portfolio's assets, including making specific recommendations as
to the purchase and sale of portfolio securities, furnishing requisite office
space and personnel, and in general supervising and managing the Portfolio's
investments subject to the ultimate supervision and direction of AIST's
Trustees, the Manager is paid monthly a fee equal to 0.55% per annum of the
first $500 million of average daily net assets of the Portfolio. The annual rate
is reduced to 0.50% on net assets from $500 million to $1 billion and to 0.45%
on net assets over $1 billion. The management fees paid by the Portfolio to the
Manager are expenses of the Portfolio and reduce the net investment income
available for distribution by the Portfolio to the Trusts. The Manager has
agreed to reimburse the Portfolio and Trusts to the extent required so that the
aggregate expenses do not exceed the expense limitations applicable under the
securities laws or regulations of those states or jurisdictions in which the
Trusts' shares are registered or qualified for sale. Currently, the most
restrictive of such expense limitations would require the Manager to reimburse
the Portfolio and Trusts to the extent required so that the Portfolio's and
Trust's expenses, as described above, for any fiscal year do not exceed 2.50% of
the first $30 million of average net assets, 2.00% of the next $70 million of
average net assets and 1.50% of the remaining average net assets. The amount of
any such required reimbursement, however, is limited to the management fees paid
by the Portfolio to the Manager. Expenses for purposes of these expenses
limitations include the management fee, but exclude distribution expenses,
brokerage commissions and fees, taxes, interest and extraordinary expenses such
as litigation paid or incurred by the Trusts or the Portfolio.
- ------
25
<PAGE>
The Trusts have retained Atlas Holdings Group Inc. (the 'Administrator') to
provide administration for the Trusts pursuant to an administration agreement.
These administrative services include supervising the preparation and filing of
all documents required for compliance by the Trusts with applicable laws and
regulations, supervising the maintenance of books and records and other general
and administrative responsibilities. For providing these services the
Administrator receives a fee equal to 0.10% of each Trust's average daily net
assets.
Certain officers and trustees of the Company are also officers and/or
directors/trustees of AIST, the Administrator, the Manager, and the Principal
Underwriter.
NOTE 6 -- EARLY WITHDRAWAL CHARGES
Shares of Trust I, Trust I-A and Trust IV which are redeemed may be subject to a
contingent deferred sales charge. The contingent deferred sales charge is not
imposed on shares acquired through the reinvestment of dividends and
distributions or on the appreciation of the value of shares acquired over their
purchase price. Redemption proceeds are applied first against shares not subject
to the contingent deferred sales charge for purposes of calculating such charge.
The contingent deferred sales charges are paid by the redeeming shareholder to
the Principal Underwriter at the time of redemption. The contingent deferred
sales charges for Trust I and Trust I-A are imposed at the rate of 4% for
redemptions in the first year after purchase, declining to 3%, 2%, and 1% in the
second, third and fourth years, respectively. The contingent deferred sales
charges for Trust IV are imposed at the rate of 0.25% of redemptions within 3
months of the date of purchase. During the year ended October 31, 1996 the
Principal Underwriter received contingent deferred sales charges of $98,152 from
redemptions of Trust I shares, $331,976 from redemptions of Trust I-A shares,
and $-0- from redemptions of Trust IV shares.
NOTE 7 -- LEGAL MATTERS
Between December 1994 and July 1995, various complaints have been filed by
certain shareholders of the Astra Adjustable U.S. Government Securities Trusts
and the Astra Adjustable Rate Securities Trusts (collectively, the 'Astra
Trusts') in the United States District Court for the Central District of
California and in the Superior Court for the State of California against the
Company and certain of its officers and trustees, AIST and certain of its
officers and trustees, Astra Management Corporation, Astra Fund Distributors
Corporation, and, Atlas Holdings Group Inc. and its principal stockholder and
certain of its employees. These complaints have been consolidated in the United
States District Court for the Central District of California in the matter
referred to as 'In re Pilgrim Securities Litigation.'
The complaints allege violations of the Securities Act of 1933 and the
Investment Company Act of 1940 relating principally to disclosure concerning
pricing and liquidity of portfolio securities held by the Portfolios of AIST.
The complaints seek relief measured by the consideration each shareholder paid
for shares of the Astra Trusts with interest thereon, less the amount of income
received thereon, or in the event the shareholder no longer owns such shares,
for damages, plus interest. Management of the Company believes the complaints
are without merit and intends, and has been advised that each of the other
defendants intends, to vigorously defend these actions.
On December 18, 1996, the Court granted preliminary approval of a tentative
class action settlement which would result in dismissal of the class actions
with prejudice. The tentative settlement would not have a material adverse
effect upon the financial condition of the Astra Trusts or the Portfolios. The
tentative settlement, however, is subject to final court approval, among other
things, and the defendants have the option of terminating the settlement under
certain conditions. Accordingly, the ultimate outcome of these matters cannot
presently be determined and the Astra Trusts have made no provision for any
losses which may result from settlement of these complaints.
- ------
26
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- ------------------------------
To the Shareholders of Astra Adjustable U.S. Government Securities
Trust I, I-A, II and IV, and the Trustees of Astra Strategic Investment Series
San Diego, California
We have audited the statements of assets and liabilities of Astra Adjustable
U.S. Government Securities Trust I, I-A, II and IV (each a series of shares of
beneficial interest of Astra Strategic Investment Series), as of October 31,
1996, and the related statements of operations for the year then ended, and the
statements of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the periods indicated thereon.
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 audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free from 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
October 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 Astra
Adjustable U.S. Government Securities Trust I, I-A, II and IV as of October 31,
1996, and the results of their operations for the year then ended, and the
changes in their net assets for each of the two years in the period then ended
and the financial highlights for each of the periods indicated thereon, in
conformity with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
November 19, 1996, except for the third paragraph of Note 7
as to which the date is December 18, 1996.
- ------
27
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS AS OF OCTOBER 31, 1996
- ------------------------------
<TABLE>
<CAPTION>
MARKET
PRINCIPAL INTEREST VALUE
AMOUNT RATE* MATURITY (NOTE 2A)
- ------------ ADJUSTABLE RATE MORTGAGE SECURITIES: 87.7% ----------- --------- --------------
U.S. GOVERNMENT AGENCIES: 86.5%
<S> <C> <C> <C> <C> <C>
$3,996,640 Federal Home Loan Mtge. Corp., Pool 845249.................. 7.794% 11/01/22 $ 4,117,178
8,970,299 Federal Home Loan Mtge. Corp., Pool 845915.................. 7.718% 10/01/29 9,301,079
4,609,545 Federal Home Loan Mtge. Corp., Pool 635244.................. 7.458% 03/01/25 4,727,665
6,928,383 Federal National Mtge. Assoc., Pool 124666.................. 7.695% 01/01/23 7,114,583
2,475,000 Federal National Mtge. Assoc., Pool 190880.................. 6.099% 11/01/28 2,465,719
4,667,082 Government National Mtge. Assoc., Pool 8565................. 7.000% 12/20/24 4,764,064
4,387,239 Government National Mtge. Assoc., Pool 8730................. 7.500% 10/20/25 4,480,468
5,043,771 Government National Mtge. Assoc., Pool 8777................. 7.000% 12/20/25 5,144,646
7,626,692 Government National Mtge. Assoc., Pool 8793................. 7.000% 01/20/26 7,783,993
5,258,403 Government National Mtge. Assoc., Pool 8818................. 7.000% 02/20/26 5,366,858
4,268,731 Government National Mtge. Assoc., Pool 8963................. 7.500% 08/20/26 4,386,121
3,589,981 Government National Mtge. Assoc., Pool 8984................. 7.500% 09/20/26 3,687,018
5,940,000 Government National Mtge. Assoc., Pool 8991................. 6.500% 10/20/26 6,010,538
7,734,679 Government National Mtge. Assoc., Pool 80001................ 7.500% 10/20/26 7,935,301
--------------
Total U.S. Government Agencies.............................. 77,285,231
--------------
SUBORDINATED RESIDENTIAL MORTGAGE SECURITIES: 1.2%
11,443,856 (R)(I) Coast Federal Savings Bank 1991-1........................... 1.421% 06/01/20 1,017,897
5,189,386 (R)(I) Coast Federal Savings Bank 1991-2, Class B-1................ 0.552% 11/25/21 24,366
15,966,657 (R)(I) Paine Webber Mortgage Acceptance Corp. 1991-1,
Class B................................................... 0.000% 02/21/21 1,661
--------------
Total Subordinated Residential Mortgage
Securities.......................................... 1,043,924
--------------
Total Adjustable Rate Mortgage Securities
(Cost $107,682,619)................................. 78,329,155
--------------
FIXED RATE MORTGAGE SECURITIES: 10.6%
SUBORDINATED RESIDENTIAL MORTGAGE SECURITIES: 10.6%
7,968,857 (R) Citibank NA Multi Family 1992-1, Class B.................... 8.625% 04/20/00 4,666,084
7,771,780 (R) USGI Capital Markets Group Inc. Multi Family 1992-1......... 8.500% 09/30/07 4,802,805
--------------
Total Fixed Rate Mortgage Securities
(Cost $13,132,180).................................. 9,468,889
--------------
SHORT-TERM SECURITIES: 1.2%
U.S. GOVERNMENT AGENCY DISCOUNT NOTES: 1.2%
1,100,000 Student Loan Mtge. Assoc., Discount Note
(Cost $1,099,831)....................................... 5.530% 11/01/96 1,100,000
--------------
Total Investments in Securities (Cost $121,914,630**).................... 99.5% 88,898,044
Other Assets in Excess of Liabilities -- Net............................. 0.5% 454,466
--------- --------------
Total Net Assets......................................................... 100.0% $ 89,352,510
--------- --------------
--------- --------------
</TABLE>
- ------------------
(R) Restricted securities (See Note 3).
(I) Illiquid securities (See Note 3).
* Rates shown are as of October 31, 1996. Interest rates on adjustable rate
mortgage securities reset periodically.
** Cost for Federal income tax purposes is $121,914,630 and net unrealized
depreciation consists of:
<TABLE>
<S> <C> <C>
Gross Unrealized Appreciation........................................................ $ 292,162
Gross Unrealized Depreciation........................................................ (33,308,748)
--------------
Net Unrealized Depreciation.......................................................... $ (33,016,586)
--------------
--------------
</TABLE>
See Notes to Financial Statements
- ------
28
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
ASSETS:
Investments in securities at value (identified cost $121,914,630) (Notes 2A and 3)............... $ 88,898,044
Cash............................................................................................. 42,733
Receivables:
Interest....................................................................................... 701,180
Principal repayments........................................................................... 335,395
Deferred organization expense (net of accumulated amortization of $82,156)(Note 2E).............. 1,047
-------------
Total Assets................................................................................. 89,978,399
-------------
LIABILITIES:
Accrued expenses................................................................................. 101,183
Distributions payable to Trusts.................................................................. 524,706
-------------
Total Liabilities............................................................................ 625,889
-------------
NET ASSETS......................................................................................... $ 89,352,510
-------------
-------------
Net asset value per share ($89,352,510 divided by 1,154,727 shares)................................ $ 77.38
-------------
-------------
At October 31, 1996 the components of net assets were as follows:
Paid-in capital.................................................................................. $ 229,107,716
Accumulated net realized loss on investments..................................................... (106,738,620)
Net unrealized depreciation of investments....................................................... (33,016,586)
-------------
Net Assets................................................................................... $ 89,352,510
-------------
-------------
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED OCTOBER 31, 1996
- ------------------------------
<TABLE>
<S> <C>
INVESTMENT INCOME:
INCOME:
Interest....................................................................................... $ 9,746,504
-------------
EXPENSES:
Investment management fee (Note 4)............................................................. 680,424
Recordkeeping fees............................................................................. 338,003
Custody fees................................................................................... 71,159
Professional fees.............................................................................. 51,392
Amortization of organization expense (Note 2E)................................................. 15,049
Miscellaneous.................................................................................. 5,436
-------------
Total expenses............................................................................... 1,161,463
-------------
Net investment income...................................................................... 8,585,041
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized loss on investments............................................................... (11,996,528)
Net change in unrealized depreciation of investments........................................... 9,539,824
-------------
Net loss on investments...................................................................... (2,456,704)
-------------
Net increase in net assets resulting from operations....................................... $ 6,128,337
-------------
-------------
</TABLE>
See Notes to Financial Statements
- ------
29
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
--------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................................................... $ 8,585,041 $ 20,135,511
Net realized loss on investments........................................... (11,996,528) (62,035,769)
Net change in unrealized depreciation of investments....................... 9,539,824 10,936,142
-------------- --------------
Net increase (decrease) in net assets resulting from operations............ 6,128,337 (30,964,116)
DISTRIBUTIONS TO SHAREHOLDERS:
Distributions from net investment income ($5.207 and $4.828 per share,
respectively)............................................................ (8,326,081) (16,286,136)
CAPITAL SHARE TRANSACTIONS:
Net decrease in net assets derived from the net change in the number of
outstanding shares (a)................................................... (81,042,207) (315,510,221)
-------------- --------------
Total decrease in net assets........................................... (83,239,951) (362,760,473)
Net assets at the beginning of the period.................................... 172,592,461 535,352,934
-------------- --------------
NET ASSETS at the end of the period (including undistributed net investment
income of $0 and $14,888, respectively).................................... $ 89,352,510 $ 172,592,461
-------------- --------------
-------------- --------------
</TABLE>
- ------------------
(a) A summary of capital share transactions is as follows:
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
OCTOBER 31, 1996 OCTOBER 31, 1995
----------------------------- ----------------------------------
SHARES VALUE SHARES VALUE
------------ --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Shares sold.............................. 5,180 $ 399,587 12,991 $ 1,294,478
Shares issued in payment of distributions
to shareholders........................ 109,930 8,539,069 105,611 8,569,781
Shares repurchased....................... (1,158,946) (89,980,863) (3,958,690) (325,374,480)
---------- --------------- ---------- ----------------
Net decrease......................... (1,043,836) $ (81,042,207) (3,840,088) $ (315,510,221)
---------- --------------- ---------- ----------------
---------- --------------- ---------- ----------------
</TABLE>
See Notes to Financial Statements
------
30
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIOS
FINANCIAL HIGHLIGHTS
FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD
- ------------------------------
<TABLE>
<CAPTION>
NOVEMBER 27, 1991
(COMMENCEMENT OF
YEAR ENDED OCTOBER 31, OPERATIONS) TO
---------------------------------------------- OCTOBER 31,
1996 1995 1994 1993 1992
-------- ---------- ---------- ------------ --------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of
period............................ $78.500 $88.650 $98.410 $99.600 $100.000
------- ------- ------- ------- --------
Income (loss) from investment
operations--
Net investment income............. 5.437 5.750 (b) 5.890 6.040 7.539
Net realized and
unrealized loss on
investments..................... (1.350) (11.072)(b) (10.864) (0.601) (0.419)
------- ------- ------- ------- --------
Total from investment
operations.................... 4.087 (5.322) (4.974) 5.439 7.120
------- ------- ------- ------- --------
Less distributions--
Distributions from net investment
income.......................... 5.207 4.828 4.786 6.061 7.520
Distributions from paid-in
capital......................... -- -- -- 0.568
------- ------- ------- ------- --------
Total distributions............. 5.207 4.828 4.786 6.629 7.520
------- ------- ------- ------- --------
Net asset value, end of period...... $77.380 $78.500 $88.650 $98.410 $ 99.600
------- ------- ------- ------- --------
------- ------- ------- ------- --------
TOTAL RETURN........................ 5.41% (6.00)% (5.25)% 5.62% 7.80%(a)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in
thousands)........................ $89,353 $172,592 $535,353 $1,294,248 $1,111,565
Ratio to average net assets--
Expenses.......................... 0.94% 0.86% 0.62% 0.61% 0.64%(a)
Net investment income............. 6.94% 7.14% 6.17% 6.66% 7.90%(a)
Portfolio turnover rate............. 297% 108% 83% 87% 152%
</TABLE>
- ------------------
(a) Annualized.
(b) Based upon average shares outstanding throughout the period.
See Notes to Financial Statements
- ------
31
<PAGE>
ASTRA INSTITUTIONAL ADJUSTABLE U.S. GOVERNMENT SECURITIES PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1996
- ------------------------------
NOTE 1 -- ORGANIZATION
Astra Institutional Securities Trust (the 'Company') is registered under the
Investment Company Act of 1940, as amended, as an open-end management investment
company. The Company was organized as a Massachusetts Business Trust on
September 4, 1991 with an unlimited number of shares of beneficial interest
without par value. The Company offers shares in two non-diversified series,
Astra Institutional Adjustable U.S. Government Securities Portfolio (the
'Portfolio') and Astra Institutional Adjustable Rate Securities Portfolio. The
Portfolio is structured to serve as the investment vehicle for four affiliated
open-end management investment companies: Astra Adjustable U.S. Government
Securities Trust I, I-A, II and IV (collectively, the 'Trusts'). The Trusts
invest substantially all of their net assets in the Portfolio, which has the
same investment objective as that of the Trusts.
The Portfolio's investment objective is to seek high current income consistent
with low volatility of principal. The Portfolio seeks to achieve its investment
objective by investing at least 65% of its assets in adjustable rate mortgage
securities which are issued or guaranteed by the U.S. Government, its agencies
or instrumentalities. The Portfolio invests the remainder of its assets
generally in mortgage securities issued or sponsored by commercial banks,
savings and loan associations, mortgage bankers or other financial institutions,
that have no government guarantee and that are senior or subordinated to other
mortgage securities arising out of the same pool of mortgages. The Portfolio has
experienced a reduction in net asset value per share due to adverse market
conditions for adjustable rate mortgage securities, including subordinated
residential mortgage securities. Although Astra Management Corp. (the 'Manager')
believes that under normal market conditions the Portfolio's investment
objective can be achieved, there can be no assurance that the adverse market
conditions will not continue. In addition, as the Trusts have experienced a high
rate of shareholders redemptions, cash and cash equivalents have been maintained
in order to meet such redemptions, which has the effect of reducing yield. The
Manager intends to maintain this position until such time as the market for
subordinated residential mortgage securities normalizes and redemption rates
stabilize. There can be no assurance that the Portfolio's investment objective
will be achieved.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
A. SECURITY VALUATION. A valuation committee of the Board of Trustees is
responsible for establishing security valuation policies, reviewing the
valuation of portfolio securities, monitoring the level of illiquid
securities and reviewing liquidity determinations. The Company considers to
be illiquid all securities which cannot be disposed of within seven days in
the ordinary course of business at approximately the amount at which the
Portfolio values the security. Additionally, interest rate swap contracts,
interest-only and principal-only mortgage backed securities, and special
hazard certificates are treated as illiquid securities in accordance with
Securities and Exchange Commission policy. Liquid securities are valued
primarily using prices provided by independent pricing services which use
prices provided by market-makers or estimates of market values obtained
from yield and other data relating to instruments or securities with
similar characteristics, and secondarily based upon market quotations
and/or other available information. Securities for which reliable market
information or pricing service quotes are not readily available, including
illiquid securities, are valued at fair value as determined in
- ------
32
<PAGE>
good faith by, or under procedures established by, the Board of Trustees,
which procedures may include the delegation of certain responsibilities
regarding valuation to the Manager. The Manager reports, as necessary, to
the Trustees of the Company regarding portfolio valuation determinations.
Short-term securities with less than sixty days remaining to maturity when
acquired by the Portfolio will be valued on an amortized cost basis by the
Portfolio when the Board of Trustees has determined that amortized cost is
fair value.
B. FEDERAL INCOME TAXES. The Portfolio intends to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Therefore,
no Federal income tax provision is required.
C. SECURITY TRANSACTIONS, INCOME AND DISTRIBUTIONS. As is common in the
industry, security transactions are accounted for on the trade date.
Interest income on adjustable rate mortgage securities is recorded on the
accrual basis at current interest rates. Dividends to shareholders from net
investment income are declared daily and paid or reinvested monthly.
Discounts and premiums on debt securities are amortized in accordance with
the provisions of the Internal Revenue Code.
D. INTEREST RATE SWAP CONTRACTS. The Portfolio may enter into interest rate
swap contracts as a hedging technique. Interest rate swap contracts are
marked-to-market daily using market quotations or independent pricing
services. The change in market value is recorded by the Portfolio as an
unrealized gain or loss. Interest income (expense) is accrued daily on the
contract's notional amount and applicable interest rates. Interest rate
swap contracts may expose the Portfolio to risks resulting from
unanticipated movements in interest rates or the failure of the
counterparty to the agreement to perform in accordance with the terms of
the contract.
E. DEFERRED ORGANIZATION EXPENSES. All of the Portfolio's expenses in
connection with its organization are being borne by the Portfolio and will
be amortized on a straight-line basis over a period of five years.
F. USE OF ESTIMATES. In preparing financial statements in accordance with
generally accepted accounting principles, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements, and revenues and
expenses during the period. Actual results could differ from those
estimates.
NOTE 3 -- INVESTMENTS
For the year ended October 31, 1996, the cost of purchases and the proceeds from
sales of investments and principal repayments, excluding short-term securities,
aggregated $352,171,773 and $390,559,135 respectively.
On October 31, 1996, the Portfolio held restricted securities (i.e., securities
which may not be publicly sold without registration under the Federal Securities
Act of 1933 (the ' '33 Act') or without an exemption under the '33 Act). The
valuation committee of the Board has reviewed the trading markets for certain of
the Portfolio's restricted securities and has determined that they are liquid
and readily marketable. At October 31, 1996 other restricted securities having a
market value of $1,043,924, representing 1.2% of the Portfolio's net assets have
been determined to be illiquid. On October 31, 1996, and on the acquisition
dates of the restricted securities, there were no market quotations available
for unrestricted securities of the same class. Dates of acquisition and costs of
restricted securities are as follows:
- ------
33
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL DATE(S) OF
AMOUNT ACQUISITION COST
- -------------- ----------------------- -------------
<S> <C> <C> <C>
$7,968,857 Citibank NA Multi Family 1992-1, Class B............... 03/25/92 $ 7,001,795
11,443,856 Coast Federal Savings Bank 1991-1...................... 06/27/91 TO 08/02/91 10,263,178
5,189,386 Coast Federal Savings Bank 1991-2, Class B-1........... 12/04/91 4,392,075
15,966,657 PaineWebber Mortgage Acceptance Corp 1991-1, Class B... 10/24/91 TO 12/11/91 15,895,255
7,771,780 USGI Capital Markets Group Inc, Multi Family 1992-1.... 09/28/92 6,130,385
-------------
Total restricted securities (Market Value of
$10,512,813 was 11.8% of net assets at October 31,
1996)................................................ $ 43,682,688
-------------
-------------
</TABLE>
At October 31, 1996 the Portfolio had a capital loss carryforward for Federal
income tax purposes of $106,739,000 of which $6,618,000 expires in 2000,
$4,385,000 in 2001, $25,842,000 in 2002, $58,186,000 in 2003 and $11,708,000 in
2004.
NOTE 4 -- INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Manager provides the Portfolio with investment management and administrative
services under an Investment Management Agreement. The Manager furnishes all
investment advice, office space and salaries of personnel needed by the
Portfolio, except those involved with record-keeping, daily net asset value
calculations, placing orders for the execution of portfolio transactions,
shareholder servicing, and maintaining registration of shares under state
securities laws. As compensation for its services, the Manager is paid monthly a
fee which is equal to the annual rate of 0.55% of the first $500 million of
average daily net assets, 0.50% on net assets from $500 million to $1 billion
and 0.45% on net assets over $1 billion. The Manager has agreed to reimburse the
Portfolio and Trusts to the extent required so that the aggregate expenses do
not exceed the expense limitations applicable to the Portfolio and Trusts under
the securities laws or regulations of those states or jurisdictions in which the
Trusts' shares are registered or qualified for sale. Currently, the most
restrictive of such expense limitations would require the Manager to reimburse
the Portfolio and Trusts to the extent required so that the Portfolio's and
Trusts' expenses, as described above, for any fiscal year do not exceed 2 1/2%
of the first $30 million of average daily net assets, 2% of the next $70 million
of average net assets and 1 1/2% of the remaining average net assets. The amount
of any such required reimbursement is limited to the management fees paid by the
Portfolio to the Manager. Expenses for purposes of this expense limitation
include the management fee, but exclude distribution expenses, brokerage
commissions and fees, taxes, interest and extraordinary expenses such as
litigation, paid or incurred by the Portfolio or Trusts.
Certain officers and trustees of the Company are also officers and/or directors
of the Trusts and the Manager.
NOTE 5 -- LEGAL MATTERS
Between December 1994 and July 1995, various complaints have been filed by
certain shareholders of Astra Adjustable U.S. Government Securities Trusts I,
I-A, II, III and IV and Astra Adjustable Rate Securities Trusts I, I-A, II, III
and IV (collectively, the 'Astra Trusts') in the United States District Court
for the Central District of California and in the Superior Court for the State
of California against the Company and certain of its officers and trustees, the
Astra Trusts and certain of their officers and trustees, Astra Management
Corporation, Astra Fund Distributors Corporation, and, Atlas Holdings Group Inc.
and its principal stockholder and certain of its employees. These complaints
have been consolidated in the United States District Court for the Central
District of California in the matter referred to as 'In re Pilgrim Securities
Litigation.'
- ------
34
<PAGE>
The complaints allege violations of the Securities Act of 1933 and the
Investment Company Act of 1940 relating principally to disclosure concerning
pricing and liquidity of portfolio securities held by the two Portfolios of the
Company. The complaints seek relief measured by the consideration each
shareholder paid for shares of the Astra Trusts with interest thereon, less the
amount of income received thereon, or in the event the shareholder no longer
owns such shares, for damages, plus interest. Management of the Company believes
the complaints are without merit and intends, and has been advised that each of
the other defendants intends, to vigorously defend these actions.
On December 18, 1996, the Court granted preliminary approval of a tentative
class action settlement which would result in dismissal of the class actions
with prejudice. The tentative settlement would not have a material adverse
effect upon the financial condition of the Astra Trusts or the Portfolios. The
tentative settlement, however, is subject to final court approval, among other
things, and the defendants have the option of terminating the settlement under
certain conditions. Accordingly, the ultimate outcome of these matters cannot
presently be determined and the Astra Trusts have made no provision for any
losses which may result from settlement of these complaints.
- ------
35
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- ------------------------------
To the Shareholders of Astra Institutional Adjustable
U.S. Government Securities Portfolio and the
Trustees of Astra Institutional Securities Trust
San Diego, California
We have audited the statement of assets and liabilities of Astra Institutional
Adjustable U.S. Government Securities Portfolio (a series of shares Astra
Institutional Securities Trust), including the portfolio of investments, as of
October 31, 1996, and the related statement of operations for the year then
ended, the statement of changes in net assets for each of the two years in the
period then ended and the financial highlights for each of the four years in the
period then ended and for the period from November 22, 1991 (commencement of
operations) to October 31, 1992. 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 audits to obtain
reasonable assurance about whether the financial statements and financial
highlights are free from 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
October 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 the
Astra Institutional Adjustable U.S. Government Securities Portfolio as of
October 31, 1996, and the results of its operations for the year then ended, and
the changes in its net assets for each of the two years in the period then ended
and the financial highlights for each of the four years in the period then ended
and for the period from November 22, 1991 to October 31, 1992, in conformity
with generally accepted accounting principles.
TAIT, WELLER & BAKER
Philadelphia, Pennsylvania
November 19, 1996, except for the third paragraph of Note 5
as to which the date is December 18, 1996.
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36
<PAGE>
ASTRA GROUP
FAMILY OF FUNDS
- ------------------------------
ADJUSTABLE-INCOME FUNDS
- ------------------------------
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST I-A
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST II
ASTRA ADJUSTABLE U.S. GOVERNMENT SECURITIES TRUST IV
ASTRA ADJUSTABLE RATE SECURITIES TRUST I
ASTRA ADJUSTABLE RATE SECURITIES TRUST I-A
ASTRA ADJUSTABLE RATE SECURITIES TRUST IV
FIXED-INCOME FUNDS
- ------------------------------
ASTRA ALL-AMERICAS GOVERNMENT INCOME TRUST
ASTRA SHORT-TERM MULTI-MARKET INCOME FUND I
ASTRA SHORT-TERM MULTI-MARKET INCOME FUND II
- ------------------
Prospectuses containing more complete information about the Funds, including
charges and expenses, may be obtained from Astra Fund Distributors Corp. Read
the Prospectus carefully before you invest or send money.
- ------
37
<PAGE>
750 B Street
Suite 2350
San Diego, CA 92101
ASTRA ADJUSTABLE U.S.
GOVERNMENT SECURITIES
I, I-A, II, IV
INVESTMENT MANAGER
Astra Management Corp.
750 B Street
Suite 2350
San Diego, CA 92101
1-619-238-7100
PRINCIPAL UNDERWRITER
Astra Fund Distributors Corp.
750 B Street
Suite 2350
San Diego, CA 92101
1-800-219-1080
SHAREHOLDER SERVICING AGENT
DST Systems, Inc.
P.O. Box 419174
Kansas City, Missouri 64141
1-800-441-7267
TRANSFER AGENT
Investors Fiduciary Trust Company
c/o DST Systems, Inc.
P.O. Box 419174
Kansas City, Missouri 64141
This report is submitted for the general information of the shareholders of the
Trusts. It is not authorized for distribution to prospective investors in the
Trusts unless preceded or accompanied by an effective prospectus which includes
details regarding the Trusts' objectives, policies, sales commissions and other
information.
USG 1296 8.5 AST 612064
ASTRA
ARM
FUNDS
Annual Report
October 31, 1996
ASTRA ADJUSTABLE
U.S. GOVERNMENT SECURITIES
TRUSTS I, I-A, II, IV
[IN THE PRINTED ANNUAL REPORT A PHOTOGRAPH OF A HOUSE APPEARS]
[ASTRA LOGO]
