<PAGE>
LIMITED MATURITY FUND
SHORT BOND FUND
U.S. TREASURY FUND
INTERMEDIATE BOND FUND
OPPORTUNITY FUND
Annual Report
October 31, 1995
[LOGO]
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Shareholder Letter................................ 1
Management Discussion............................. 3
Performance Data.................................. 6
Portfolio Highlights.............................. 9
Statements of Assets & Liabilities................ 14
Statements of Operations.......................... 16
Statements of Changes in Net Assets............... 18
Schedules of Portfolio Investments................ 21
Notes to Financial Statements..................... 31
Financial Highlights.............................. 36
Independent Auditors' Report...................... 40
Glossary of Terms................................. 41
</TABLE>
[LOGO]
<PAGE>
October 31, 1995
Dear Fellow Shareholders:
The challenge for investors and fund managers alike during the past twelve
months has been to focus on longer-term investment objectives and not over react
to short-term changes in perception. In retrospect, the period from October 1994
to October 1995 encompassed a cycle that included one of the worst bond markets
in history, but also a period where there was the fastest recovery in bonds. The
panic that prevailed during the second and third quarter of 1994 quickly
dissipated, and a positive tone returned to the market during the first quarter
of 1995. Actually, by March 1995 bonds had earned back what they had lost in
1994, and they have continued to perform very favorably through our current
fiscal year ending October 31, 1995. In the global arena, the U.S. dollar
endured a roller coaster ride of its own, reaching an all time low versus the
Japanese yen and German mark, in April 1995, only to strengthen back to more
neutral levels by the end of the Fund's fiscal year in October.
Our investment strategy was based on a fundamental belief that the global
economies would sustain low to moderate growth without any pick up of inflation.
In fact, we anticipated that a deflationary trend would prevail and continue
throughout 1995. It was our anticipation that perception would change.
The last year also marked key developments for the Payden & Rygel Funds. All
Funds grew in size, with the flagship Global Fixed Income Fund growing another
25% to $540 million by fiscal year end. This makes it one of the largest global
bond mutual funds in the country. As of October 31, 1995, Morningstar awarded
its highest rating of five stars to the Global Fixed Income Fund highlighting
the superior return it has achieved with a low level of risk. We also launched
the U.S. Treasury Fund in January 1995 and the International Bond Fund in April
1995, expanding the range of fixed income vehicles available to our clients.
1
<PAGE>
We are very positive about the prospects for bonds in the coming fiscal
year, as sound fiscal and monetary policies are the key factors in most
developed nations. With the prospect of low inflation, it is very possible that
in the next few years it may be the start of a long-term era in which moderate
growth and contained inflation will allow interest rates to fall even further.
Against this scenario, we also believe that the investor may witness real
returns (adjusted for inflation) higher than has been evidenced in the last
three decades.
We appreciate your investment in our Funds and look forward to another
profitable year in 1996.
Best Wishes,
[SIG]
Joan A. Payden
President and Chairman of the Board
Payden & Rygel Investment Group
2
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
DOMESTIC FUNDS
MANAGEMENT DISCUSSION
THE YEAR IN REVIEW
The past 12 months has been an exemplary period for fixed income investors.
Interest rates fell substantially, almost 1 3/4% in the 30-year bond and 1 1/4%
in the 2-year note. The drop in rates led to excellent performance for the
Payden & Rygel Mutual Funds.
The primary reason for the drop in interest rates was the low inflation
environment in the United States. In February 1995, the Federal Reserve finished
the last of a series of rate hikes which were designed to thwart any
inflationary pressures building in the economy. Today, with inflation running
under 3.0% it appears the Federal Reserve has achieved its objective. Investors
appear willing to concede that inflationary pressures have eased as their
purchases of longer maturity bonds has brought yields down and flattened the
yield curve from a year-ago levels.
YIELD CURVE
10/31/1994 VS 10/31/1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
10/31/95 PERCENT (%) 10/31/94
<S> <C> <C> <C>
3mo 5.50 5.14
6mo 5.55 5.65
1yr 5.54 6.14
2yr 5.60 6.82
3yr 5.68 7.04
5yr 5.80 7.48
10yr 6.02 7.80
30yr 6.33 7.97
</TABLE>
Monetary policy made the transition from one of restraint to neutrality. The
Federal Reserve eased monetary policy in July from 6.0% to the current targeted
rate of 5.75%. This was the first ease since July 1992. The drop in rates was in
response to an inventory buildup that slowed second quarter economic growth
below 2.0%. Currently the economy is expanding at a more modest 2.5 to 3.0%.
This is consistent with projected long-term potential growth for the U.S.
economy. Other factors that
3
<PAGE>
reinforce a moderating domestic economy are the relative weakness in foreign
economies. The Japanese banking crisis, slowing European economic growth and
continued problems associated with the Mexican peso devaluation will restrain
the U.S. economy from expanding at a high rate.
FUND STRATEGIES
One of the keys to our performance advantage over the past year came from
recognizing key economic fundamentals. Early in 1995, real interest rates,
measured as the difference between yields on long Treasury bonds less the
inflation rate, were at attractive levels. The premium demanded by the
marketplace for the perceived inflation risk was relatively high. The
realization that the marketplace was demanding too much of an inflation premium
prompted the Fund's purchase of longer maturing assets that would outperform
when economic fundamentals reasserted themselves. The Opportunity Fund was a
prime example of this strategy as its 12-month return exceeded its benchmark.
Economic fundamentals also prompted an increased weighting in corporate
bonds. The increasing strength in corporate balance sheets due to healthy
profits, productivity increases and increased capital positions are a good
environment for corporate bonds. Corporate bonds were also the positive
recipient of a backlash from 1994's derivative debacle. As investment in
structured securities and derivatives waned, corporate bonds filled the void by
providing extra yield along with the improving credit environment.
REAL INTEREST RATES -- FED FUND MINUS CPI
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INFLATION PREMIUM TOO HIGH.
<S> <C>
Real Interest Rates above 3.0%.
MONTH END PERCENT (%)
31106 4.85
31137 4.65
31167 4.45
31198 4.46
31228 4.21
31259 4.3
31290 4.6
31320 4.4
31351 3.9
31381 3.65
31412 3.15
31443 3.05
31471 3.05
31502 3.55
31532 3.85
31563 3.45
31593 3.2
31624 2.3
31655 1.8
31685 1.7
31716 1.1
31746 0.7
31777 1.05
31808 0.85
31836 1.1
31867 0.85
31897 0.75
31928 1.15
31958 1.35
31989 1.95
32020 2.1
32050 2.1
32081 1.75
32111 1
32142 1.05
32173 1.05
32202 0.65
32233 0.15
32263 0.25
32294 0.05
32324 0.15
32355 0.05
32386 0
32416 -0.2
32447 0
32477 0
32508 -0.1
32539 -0.3
32567 -0.1
32598 -0.2
32628 -0.2
32659 0.1
32689 0.2
32720 0.2
32751 0.2
32781 0.2
32812 0.3
32842 0.3
32873 0.5
32904 0.75
32932 1
32963 1.35
32993 1.95
33024 1.75
33054 1.45
33085 1.85
33116 1.75
33146 2.15
33177 2.8
33207 2.8
33238 2.7
33269 3.1
33297 3.1
33328 2.9
33358 2.8
33389 3
33419 2.85
33450 3.15
33481 3.25
33511 2.95
</TABLE>
4
<PAGE>
LOOKING FORWARD: OPPORTUNITY OR ANOTHER 1994?
As the economy enters its fifth year of economic expansion, the underlying
fundamentals for lower yields remains promising. The increasing globalization of
capital and business formation allows companies to seek out opportunities in
countries that will allow them to be productive and competitive. The ability of
business to remain competitive and control costs, such as labor, are a key
determinant towards low inflation and hence lower interest rates. On the fiscal
front, the political mandate for a balanced budget package has never been
stronger. All of these factors are positive long-term influences on the bond
market. The speculative excesses that caused the poor bond market performance in
1994 are not evident in today's marketplace. Therefore, we believe that the
future holds opportunity for fixed income investors.
5
<PAGE>
LIMITED MATURITY FUND
COMPARISON TO BROAD BASED SECURITIES MARKET INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MERRILL LYNCH 90-DAY
LIMITED MATURITY FUND TREASURY BILL INDEX
<S> <C> <C>
MONTH END VALUE OF $100,000 INVESTED
04/30/94 100,000 100,000
05/30/94 100,230 100,300
07/31/94 101,180 101,070
10/31/94 101,840 102,230
01/31/95 103,080 103,660
04/30/95 104,960 105,180
07/31/95 106,830 106,770
10/31/95 108,390 108,280
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Since Inception
1 Year (May 2, 1994)
----------- ------------------
<S> <C> <C>
Limited Maturity Fund..................... 6.43% 5.51%
Merrill Lynch 90-Day Treasury Bill
Index................................... 5.92 5.43
</TABLE>
- ----------------------------------------------------------------------
SHORT BOND FUND
COMPARISON TO BROAD BASED SECURITIES MARKET INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SHORT BOND FUND MERRILL LYNCH 1-3 YEAR
TREASURY INDEX
<S> <C> <C>
MONTH END VALUE OF $100,000 INVESTED
12/21/93 100,000 100,000
1/31/94 100,510 100,640
4/30/94 98,850 99,150
7/31/94 100,020 100,440
10/31/94 100,210 100,790
1/31/95 101,590 101,970
4/30/95 104,550 104,870
7/31/95 107,540 107,720
10/31/95 109,790 109,810
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Since Inception
1 Year (December 31, 1993)
----------- -----------------------
<S> <C> <C>
Short Bond Fund...................... 9.56% 5.23%
Merrill Lynch 1-3 Year Treasury
Index.............................. 8.95 5.24
</TABLE>
NOTE: PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THIS INFORMATION IS NOT PART OF THE AUDITED FINANCIAL STATEMENTS.
6
<PAGE>
INTERMEDIATE BOND FUND
COMPARISON TO BROAD BASED SECURITIES MARKET INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN INTERMEDIATE
INTERMEDIATE BOND FUND GOVERNMENT/CORPORATE INDEX
<S> <C> <C>
MONTH END VALUE OF $100,000 INVESTED
12/21/93 100,000 100,000
1/1/94 101,180 101,110
4/30/94 96,430 97,310
7/31/94 97,210 98,790
10/31/94 96,480 98,170
1/31/95 98,240 99,720
4/30/95 101,790 103,640
7/31/95 105,320 107,500
10/31/95 108,480 110,480
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Since Inception
1 Year (December 31, 1993)
---------- -----------------------
<S> <C> <C>
Intermediate Bond Fund.............. 12.43% 4.54%
Lehman Intermediate Government/
Corporate Index................... 12.54 5.59
</TABLE>
- ----------------------------------------------------------------------
OPPORTUNITY FUND
COMPARISON TO BROAD BASED SECURITIES MARKET INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OPPORTUNITY FUND LEHMAN GOVERNMENT/ LEHMAN AGGREGATE
CORPORATE INDEX INDEX
<S> <C> <C> <C>
MONTH END VALUE OF $100,000 INVESTED
12/21/93 100,000 100,000 100,000
1/31/94 101,900 101,500 101,350
4/30/94 95,540 96,070 96,360
7/31/94 96,680 97,580 98,040
10/31/94 94,520 96,030 96,630
1/31/95 97,070 98,350 99,010
4/30/95 101,130 102,710 103,400
7/31/95 105,540 107,450 107,950
10/31/95 110,000 111,550 111,750
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Since Inception
1 Year (December 31, 1993)
---------- -----------------------
<S> <C> <C>
Opportunity Fund.................... 16.39% 5.34%
Lehman Government/Corporate Index... 16.16 6.15
Lehman Aggregate Index.............. 15.65 6.25
</TABLE>
NOTE: PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THIS INFORMATION IS NOT PART OF THE AUDITED FINANCIAL STATEMENTS.
7
<PAGE>
U.S. TREASURY FUND
COMPARISON TO BROAD BASED SECURITIES MARKET INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. TREASURY FUND LEHMAN INTERMEDIATE
TREASURY INDEX
<S> <C> <C>
MONTH END VALUE OF $100,000 INVESTED
12/31/94 100,000 100,000
1/31/95 101,300 101,620
2/28/95 102,870 103,560
3/31/95 103,370 104,130
4/30/95 104,600 105,340
5/31/95 107,870 108,310
6/30/95 108,630 109,020
7/31/95 108,430 109,070
8/30/95 109,460 109,950
9/30/95 110,190 110,680
10/31/95 111,610 111,610
</TABLE>
AVERAGE ANNUAL TOTAL RETURN
<TABLE>
<CAPTION>
Since Inception
(January 1, 1995)
-------------------
<S> <C>
U.S. Treasury Fund.............................. 11.61%
Lehman Intermediate Treasury Index.............. 11.92
</TABLE>
NOTE: PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THIS INFORMATION IS NOT PART OF THE AUDITED FINANCIAL STATEMENTS.
8
<PAGE>
PORTFOLIO HIGHLIGHTS
LIMITED MATURITY FUND
KEY STATISTICS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
October 31, 1994 October 31, 1995
---------------- ----------------
<S> <C> <C>
Net Assets: $14,247,889 $18,414,303
Number of Issues: 20 23
Average Maturity: 0.6 years 0.7 years
SEC Yield: 5.43% 5.52%
</TABLE>
SECTOR AND QUALITY COMPOSITION
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CREDIT QUALITY
<S> <C>
AAA 91%
AA 3%
A 6%
SECTOR
Treasury 52%
Corporate 17%
Mortgage 31%
</TABLE>
MATURITY BREAKDOWN
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YEARS TO MATURITY
<S> <C>
0-1 67%
1-2 25%
2-3 8%
</TABLE>
NOTE: PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THIS INFORMATION IS NOT PART OF THE AUDITED FINANCIAL STATEMENTS.
9
<PAGE>
PORTFOLIO HIGHLIGHTS
SHORT BOND FUND
KEY STATISTICS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
October 31, 1994 October 31, 1995
---------------- ----------------
<S> <C> <C>
Net Assets: $2,591,564 $19,156,786
Number of Issues: 11 27
Average Maturity: 1.5 years 2.6 years
SEC Yield: 5.64% 5.62%
</TABLE>
SECTOR AND QUALITY COMPOSITION
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CREDIT QUALITY
<S> <C>
AAA 69%
AA 6%
A 25%
SECTOR
Treasury 55%
Corporate 34%
Mortgage 11%
</TABLE>
MATURITY BREAKDOWN
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YEARS TO MATURITY
<S> <C>
0-1 10%
1-3 56%
3-5 29%
5-7 5%
</TABLE>
NOTE: PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THIS INFORMATION IS NOT PART OF THE AUDITED FINANCIAL STATEMENTS.
10
<PAGE>
PORTFOLIO HIGHLIGHTS
INTERMEDIATE BOND FUND
KEY STATISTICS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
October 31, 1994 October 31, 1995
---------------- ----------------
<S> <C> <C>
Net Assets: $14,311,871 $34,390,923
Number of Issues: 17 28
Average Maturity: 2.2 years 5.9 years
SEC Yield: 6.14% 5.93%
</TABLE>
SECTOR AND QUALITY COMPOSITION
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CREDIT QUALITY
<S> <C>
AAA 65%
AA 3%
A 32%
SECTOR
Treasury 36%
Corporate 39%
Mortgage 25%
</TABLE>
MATURITY BREAKDOWN
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YEARS TO MATURITY
<S> <C>
0-1 4%
1-5 60%
5-10 27%
10+years 9%
</TABLE>
NOTE: PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THIS INFORMATION IS NOT PART OF THE AUDITED FINANCIAL STATEMENTS.
11
<PAGE>
PORTFOLIO HIGHLIGHTS
OPPORTUNITY FUND
KEY STATISTICS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
October 31, 1994 October 31, 1995
---------------- ----------------
<S> <C> <C>
Net Assets: $3,029,966 $25,821,911
Number of Issues: 6 32
Average Maturity: 6.7 years 9.5 years
SEC Yield: 6.25% 5.91%
</TABLE>
SECTOR AND QUALITY COMPOSITION
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CREDIT QUALITY
<S> <C>
AAA 85%
AA 2%
A 13%
SECTOR
Treasury 56%
Corporate 17%
Mortgage 27%
</TABLE>
MATURITY BREAKDOWN
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YEARS TO MATURITY
<S> <C>
0-1 2%
1-5 39%
5-10 37%
10+years 22%
</TABLE>
NOTE: PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THIS INFORMATION IS NOT PART OF THE AUDITED FINANCIAL STATEMENTS.
12
<PAGE>
PORTFOLIO HIGHLIGHTS
U.S. TREASURY FUND
KEY STATISTICS
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
October 31, 1995
----------------
<S> <C>
Net Assets: $10,894,268
Number of Issues: 13
Average Maturity: 4.9 years
SEC Yield: 5.60%
</TABLE>
SECTOR AND QUALITY COMPOSITION
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CREDIT QUALITY
<S> <C>
AAA 100%
SECTOR
Treasury 100%
</TABLE>
MATURITY BREAKDOWN
- ----------------------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
YEARS TO MATURITY
<S> <C>
1-3 22%
3-5 41%
5-7 14%
7-10 23%
</TABLE>
NOTE: PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
THIS INFORMATION IS NOT PART OF THE AUDITED FINANCIAL STATEMENTS.
13
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<CAPTION>
LIMITED SHORT BOND INTERMEDIATE
MATURITY FUND FUND BOND FUND
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investments, at value (cost $18,149,147,
$18,675,599, and $33,109,393,
respectively)............................ $ 18,210,081 $ 18,855,613 $ 34,039,185
Interest receivable....................... 267,561 349,861 488,974
Unamortized organization costs (Note 4)... 1,220 0 0
Deferred expense subsidy (Note 5)......... 141,585 133,920 135,186
------------- ------------- -------------
Total Assets.......................... 18,620,447 19,339,394 34,663,345
------------- ------------- -------------
LIABILITIES:
Accrued expenses and other liabilities:
Investment advisory fees................ 49,529 31,760 84,552
Administration fees..................... 531 598 997
Accounting and transfer agent fees...... 3,365 4,664 4,133
Legal and audit fees.................... 19,479 19,755 20,599
Payable to Payden & Rygel (Note 5)...... 126,002 116,212 150,416
Other................................... 7,238 9,619 11,725
------------- ------------- -------------
Total Liabilities..................... 206,144 182,608 272,422
------------- ------------- -------------
NET ASSETS:
Paid in capital........................... 18,351,052 18,958,028 33,196,940
Undistributed net investment income....... 4,869 4,716 7,265
Net unrealized appreciation on
investments.............................. 60,934 180,014 929,792
Accumulated net realized gains (losses) on
investment transactions.................. (2,552) 14,028 256,926
------------- ------------- -------------
Net Assets............................ $ 18,414,303 $ 19,156,786 $ 34,390,923
------------- ------------- -------------
------------- ------------- -------------
Outstanding shares of beneficial interest... 1,830,050 1,907,327 3,490,147
------------- ------------- -------------
------------- ------------- -------------
NET ASSET VALUE -- offering and redemption
price per share............................ $ 10.06 $ 10.04 $ 9.85
------------- ------------- -------------
------------- ------------- -------------
</TABLE>
See notes to financial statements.
14
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
STATEMENTS OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
<TABLE>
<CAPTION>
OPPORTUNITY U.S. TREASURY
FUND FUND
------------- -------------
<S> <C> <C>
ASSETS:
Investments, at value (cost $24,892,746 and $10,376,263,
respectively)........................................... $ 25,492,518 $ 10,706,637
Interest receivable...................................... 376,906 212,993
Unamortized organization costs (Note 4).................. 0 3,101
Deferred expense subsidy (Note 5)........................ 128,947 75,036
------------- -------------
Total Assets......................................... 25,998,371 10,997,767
------------- -------------
LIABILITIES:
Accrued expenses and other liabilities:
Investment advisory fees............................... 28,357 13,233
Administration fees.................................... 784 324
Accounting and transfer agent fees..................... 3,215 3,156
Legal and audit fees................................... 19,569 19,281
Payable to Payden & Rygel (Note 5)..................... 115,143 58,980
Other.................................................. 9,392 8,525
------------- -------------
Total Liabilities.................................... 176,460 103,499
------------- -------------
NET ASSETS:
Paid in capital.......................................... 25,202,615 10,525,971
Undistributed net investment income...................... 6,090 3,450
Net unrealized appreciation on investments............... 599,772 330,374
Accumulated net realized gains (losses) on investment
transactions............................................ 13,434 34,473
------------- -------------
Net Assets........................................... $ 25,821,911 $ 10,894,268
------------- -------------
------------- -------------
Outstanding shares of beneficial interest.................. 2,591,405 1,026,380
------------- -------------
------------- -------------
NET ASSET VALUE -- offering and redemption price per
share..................................................... $ 9.96 $ 10.61
------------- -------------
------------- -------------
</TABLE>
See notes to financial statements.
15
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SHORT BOND INTERMEDIATE
LIMITED FUND BOND
MATURITY FUND ----------- FUND
------------- FOR THE ----------------
FOR THE YEAR YEAR FOR THE YEAR
ENDED ENDED ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1995 1995
------------- ----------- ----------------
<S> <C> <C> <C>
INVESTMENT INCOME -- Interest.................. $ 931,604 $ 613,611 $ 1,664,292
------------- ----------- ----------------
EXPENSES:
Investment advisory fees (Note 5)............ 44,030 27,936 71,012
Administration fees (Note 5)................. 12,864 7,884 20,487
Custodian and accounting fees (Note 5)....... 28,767 27,008 27,008
Legal and audit fees......................... 18,185 16,157 20,838
Organization costs (Note 4).................. 365 665 665
Trustees' fees and expenses.................. 2,056 1,134 3,419
Transfer agent fees (Note 5)................. 6,733 6,407 6,587
Registration and filing fees................. 12,319 12,976 14,604
Printing costs............................... 5,159 2,874 6,887
Expenses voluntarily reduced by investment
adviser and administrator (Note 5).......... 0 0 0
Expense subsidy (Note 5)..................... (78,022) (62,951) (57,134)
------------- ----------- ----------------
Total Expenses............................. 52,456 40,090 114,373
------------- ----------- ----------------
Net Investment Income.......................... 879,148 573,521 1,549,919
------------- ----------- ----------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment
transactions................................ 999 59,994 471,047
Change in net unrealized appreciation
(depreciation) on investments............... 91,216 201,029 1,010,731
------------- ----------- ----------------
Net realized and unrealized gains on
investments................................... 92,215 261,023 1,481,778
------------- ----------- ----------------
Change in net assets resulting from
operations.................................... $ 971,363 $ 834,544 $ 3,031,697
------------- ----------- ----------------
------------- ----------- ----------------
</TABLE>
See notes to financial statements.
16
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
U.S. TREASURY
OPPORTUNITY FUND
FUND --------------
------------ FOR THE PERIOD
FOR THE YEAR JANUARY 3,
ENDED 1995
OCTOBER 31, TO OCTOBER 31,
1995 1995(A)
------------ --------------
<S> <C> <C>
INVESTMENT INCOME -- Interest................................. $ 569,456 $ 381,053
------------ --------------
EXPENSES:
Investment advisory fees (Note 5)........................... 23,790 15,782
Administration fees (Note 5)................................ 6,731 4,476
Custodian and accounting fees (Note 5)...................... 24,988 22,077
Legal and audit fees........................................ 15,835 23,019
Organization costs (Note 4)................................. 665 825
Trustees' fees and expenses................................. 868 778
Transfer agent fees (Note 5)................................ 6,283 5,477
Registration and filing fees................................ 13,212 21,616
Printing costs.............................................. 2,218 9,664
Expenses voluntarily reduced by
investment adviser and administrator (Note 5).............. 0 (3,315)
Expense subsidy (Note 5).................................... (56,075) (75,036)
------------ --------------
Total Expenses............................................ 38,515 25,363
------------ --------------
Net Investment Income......................................... 530,941 355,690
------------ --------------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS:
Net realized gains on investment
transactions............................................... 202,864 34,473
Change in net unrealized appreciation
(depreciation) on investments.............................. 600,568 330,374
------------ --------------
Net realized and unrealized gains on
investments.................................................. 803,432 364,847
------------ --------------
Change in net assets resulting from
operations................................................... $ 1,334,373 $ 720,537
------------ --------------
------------ --------------
</TABLE>
- ------------------------
(a) Period from commencement of operations.
See notes to financial statements.
17
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LIMITED MATURITY FUND
--------------------------
FOR THE SHORT BOND FUND
PERIOD -------------------------------
YEAR MAY 2, 1994 YEAR FOR THE PERIOD
ENDED TO OCTOBER ENDED DECEMBER 31, 1993
OCTOBER 31, 31, OCTOBER 31, TO OCTOBER 31,
1995 1994 (A) 1995 1994 (A)
----------- ------------- ----------- ------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS:
Net investment income............ $ 879,148 $ 124,644 $ 573,521 $ 79,435
Net realized gains (losses) on
investment transactions......... 999 (3,551) 59,994 (45,966)
Change in net unrealized
appreciation (depreciation) on
investments..................... 91,216 (30,282) 201,029 (21,015)
----------- ------------- ----------- ------------------
Change in net assets resulting from
operations........................ 971,363 90,811 834,544 12,454
----------- ------------- ----------- ------------------
DISTRIBUTIONS TO SHAREHOLDERS --
From net investment income....... (881,648) (117,275) (570,116) (78,124)
----------- ------------- ----------- ------------------
CAPITAL TRANSACTIONS:
Proceeds from shares sold........ 30,816,505 15,771,727 22,625,118 2,579,120
Reinvestment of distributions.... 866,908 117,275 570,116 78,124
Cost of shares redeemed.......... (27,606,714) (1,614,649) (6,894,440) (10)
----------- ------------- ----------- ------------------
Change in net assets from capital
transactions...................... 4,076,699 14,274,353 16,300,794 2,657,234
----------- ------------- ----------- ------------------
Total change in net assets......... 4,166,414 14,247,889 16,565,222 2,591,564
NET ASSETS:
Beginning of period.............. 14,247,889 0 2,591,564 0
----------- ------------- ----------- ------------------
End of period.................... 1$8,414,303 $14,247,889 1$9,156,786 $ 2,591,564
----------- ------------- ----------- ------------------
----------- ------------- ----------- ------------------
CAPITAL SHARE TRANSACTIONS:
Shares sold...................... 3,067,449 1,573,727 2,270,630 259,610
Shares issued in reinvestment of
distributions................... 86,480 11,722 57,274 7,995
Shares redeemed.................. (2,748,189) (161,139) (688,181) (1)
----------- ------------- ----------- ------------------
Change in shares outstanding....... 405,740 1,424,310 1,639,723 267,604
Outstanding at beginning of
period............................ 1,424,310 0 267,604 0
----------- ------------- ----------- ------------------
Outstanding at end of period....... 1,830,050 1,424,310 1,907,327 267,604
----------- ------------- ----------- ------------------
----------- ------------- ----------- ------------------
</TABLE>
- ------------------------
(a) Period from commencement of operations.
See notes to financial statements.
18
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND OPPORTUNITY FUND
------------------------------- -------------------------------
YEAR FOR THE PERIOD YEAR FOR THE PERIOD
ENDED DECEMBER 31, 1993 ENDED DECEMBER 31, 1993
OCTOBER 31, TO OCTOBER 31, OCTOBER 31, TO OCTOBER 31,
1995 1994 (A) 1995 1994 (A)
----------- ------------------ ----------- ------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS OPERATIONS:
Net investment income....... $1,549,919 $ 269,610 $ 530,941 $ 95,845
Net realized gains (losses)
on investment
transactions............... 471,047 (214,121) 202,864 (189,430)
Change in net unrealized
appreciation (depreciation)
on investments............. 1,010,731 (80,939) 600,568 (796)
----------- ------------------ ----------- ----------
Change in net assets resulting
from operations.............. 3,031,697 (25,450) 1,334,373 (94,381)
----------- ------------------ ----------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
--
From net investment
income..................... (1,549,848) (262,416) (526,378) (94,318)
----------- ------------------ ----------- ----------
CAPITAL TRANSACTIONS:
Proceeds from shares sold... 19,805,492 14,500,944 25,177,485 4,104,000
Reinvestment of
distributions.............. 926,921 206,593 524,801 94,317
Cost of shares redeemed..... (2,135,210) (107,800) (3,718,336) (979,652)
----------- ------------------ ----------- ----------
Change in net assets from
capital transactions......... 18,597,203 14,599,737 21,983,950 3,218,665
----------- ------------------ ----------- ----------
Total change in net assets.... 20,079,052 14,311,871 22,791,945 3,029,966
NET ASSETS:
Beginning of period......... 14,311,871 0 3,029,966 0
----------- ------------------ ----------- ----------
End of period............... 3$4,390,923 $ 14,311,871 2$5,821,911 $3,029,966
----------- ------------------ ----------- ----------
----------- ------------------ ----------- ----------
CAPITAL SHARE TRANSACTIONS:
Shares sold................. 2,074,179 1,528,190 2,588,864 429,743
Shares issued in
reinvestment of
distributions.............. 96,175 21,946 54,154 10,135
Shares redeemed............. (218,888) (11,455) (385,105) (106,386)
----------- ------------------ ----------- ----------
Change in shares
outstanding.................. 1,951,466 1,538,681 2,257,913 333,492
Outstanding at beginning of
period....................... 1,538,681 0 333,492 0
----------- ------------------ ----------- ----------
Outstanding at end of
period....................... 3,490,147 1,538,681 2,591,405 333,492
----------- ------------------ ----------- ----------
----------- ------------------ ----------- ----------
</TABLE>
- ------------------------
(a) Period from commencement of operations.
See notes to financial statements.
19
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
U.S. TREASURY
FUND
-----------------
FOR THE PERIOD
JANUARY 3, 1995
TO OCTOBER 31,
1995 (A)
-----------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS OPERATIONS:
Net investment income.............................................. $ 355,690
Net realized gains on investment transactions...................... 34,473
Change in net unrealized appreciation (depreciation) on invest-
ments............................................................. 330,374
-----------------
Change in net assets resulting from operations....................... 720,537
-----------------
DISTRIBUTIONS TO SHAREHOLDERS --
From net investment income......................................... (352,240)
-----------------
CAPITAL TRANSACTIONS:
Proceeds from shares sold.......................................... 11,528,561
Reinvestment of distributions...................................... 351,159
Cost of shares redeemed............................................ (1,353,749)
-----------------
Change in net assets from capital transactions....................... 10,525,971
-----------------
Total change in net assets........................................... 10,894,268
NET ASSETS:
Beginning of period................................................ 0
-----------------
End of period...................................................... $ 10,894,268
-----------------
-----------------
CAPITAL SHARE TRANSACTIONS:
Shares sold........................................................ 1,121,118
Shares issued in reinvestment of distributions..................... 33,655
Shares redeemed.................................................... (128,393)
-----------------
Change in shares outstanding......................................... 1,026,380
Outstanding at beginning of period................................... 0
-----------------
Outstanding at end of period......................................... 1,026,380
-----------------
-----------------
</TABLE>
- ------------------------
(a) Period from commencement of operations.
See notes to financial statements.
20
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
LIMITED MATURITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR SECURITY MARKET
PRINCIPAL AMOUNT DESCRIPTION VALUE
- ---------------- ---------------------------------------------------------- ----------
<C> <S> <C>
ASSET BACKED SECURITIES (8.1%):
967,048 Chase Manhattan Grantor Trust 1995-A, 6.00%, 9/17/01...... $ 968,643
100,423 Ford 94-A Auto Receivables, 6.35%, 5/15/99................ 100,841
273,936 Honda 94-A Auto Receivables, 4.80%, 8/15/99............... 270,977
113,821 Premier 93-6A2 Auto Receivables, 4.65%, 11/2/99........... 112,383
38,070 Premier 94-4A2 Auto Receivables, 5.75%, 11/2/96........... 38,058
----------
Total Asset Backed Securities............................................ 1,490,902
----------
CORPORATE BONDS (9.0%):
Finance (5.6%):
225,000 American General Finance, 7.15%, 5/15/97.................. 228,656
800,000 Norwest Financial, Inc., 8.75%, 4/10/96................... 810,016
----------
1,038,672
----------
Industrial Goods & Services (3.4%):
600,000 Rockwell International, 7.63%, 2/17/98.................... 618,750
----------
Total Corporate Bonds....................................................... 1,657,422
----------
U.S. GOVERNMENT AGENCIES (18.6%):
Federal Home Loan Bank:
1,000,000 5.56%, 2/2/96............................................. 985,530
600,000 6.23%, 4/24/96............................................ 602,166
Federal Home Loan Mortgage Corp.:
1,850,000 5.57%, 11/20/95........................................... 1,844,255
----------
Total U.S. Government Agencies.............................................. 3,431,951
----------
U.S. TREASURY NOTES (59.3%):
1,620,000 5.13%, 11/15/95........................................... 1,619,701
845,000 7.50%, 1/31/96............................................ 849,090
1,025,000 7.88%, 2/15/96............................................ 1,031,581
1,600,000 7.75%, 3/31/96............................................ 1,614,208
250,000 5.50%, 4/30/96............................................ 249,950
950,000 7.63%, 4/30/96............................................ 959,481
700,000 7.38%, 5/15/96............................................ 706,587
2,050,000 6.50%, 11/30/96........................................... 2,068,921
400,000 6.88%, 2/28/97............................................ 406,328
500,000 6.00%, 8/31/97............................................ 503,215
</TABLE>
See notes to financial statements.
21
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
LIMITED MATURITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR SECURITY MARKET
PRINCIPAL AMOUNT DESCRIPTION VALUE
- ---------------- ---------------------------------------------------------- ----------
U.S. TREASURY NOTES (CONTINUED):
<C> <S> <C>
900,000 6.13%, 5/15/98............................................ $ 909,099
----------
Total U.S. Treasury Notes................................................ 10,918,161
----------
INVESTMENT COMPANIES (3.9%):
711,645 Prairie U.S Government Securities Cash Management Fund.... 711,645
----------
Total Investment Companies.................................................. 711,645
----------
Total (Cost - $18,149,147)(a) (98.9%)..................... $18,210,081
----------
----------
</TABLE>
- ------------------------------
Percentages indicated are based on net assets of $18,414,303.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................................... $ 61,328
Unrealized depreciation...................................................... (394)
---------
Net unrealized appreciation.................................................. $ 60,934
---------
---------
</TABLE>
See notes to financial statements.
22
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
SHORT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------------------------------------------------------------------- -----------
<C> <S> <C>
ASSET BACKED SECURITIES (6.2%):
967,048 Chase Manhattan Grantor Trust 1995-A, 6.00%, 9/17/01...... $ 968,643
100,423 Ford 94-A Auto Receivables, 6.35%, 5/15/99................ 100,841
113,821 Premier 93-6A2 Auto Receivables, 4.65%, 11/2/99........... 112,383
-----------
Total Asset Backed Securities........................................ 1,181,867
-----------
CORPORATE BONDS (30.0%):
Automobiles (4.7%):
850,000 General Motors Acceptance Corp., 7.63%, 5/5/03............ 898,875
-----------
Banks (4.0%):
250,000 Citicorp, 6.65%, 5/15/00.................................. 253,437
500,000 Citicorp, 6.60%, 8/1/00................................... 505,625
-----------
759,062
-----------
Consumer Goods & Services (1.0%):
200,000 Wal-Mart, 5.50%, 3/1/98................................... 197,750
-----------
Electric Utility (3.9%):
750,000 Puget Sound Power & Light, 1st Mortgage Bond, 6.50%,
9/14/99.................................................. 756,562
-----------
Finance (1.2%):
225,000 American General Finance, 7.15%, 5/15/97.................. 228,656
-----------
Industrial Goods & Services (5.8%):
900,000 Ingersoll Rand, 6.55%, 8/7/00............................. 912,375
200,000 Rockwell International Corp., 7.63%, 2/17/98.............. 206,250
-----------
1,118,625
Information Technology (2.1%):
400,000 IBM Credit Corp., 6.38%, 6/15/00.......................... 402,000
Printing (2.6%):
500,000 R.R. Donnelly, 6.03%, 6/22/98............................. 501,250
Telecommunications (4.7%):
900,000 AT&T Capital Corp., 5.90%, 7/10/98........................ 894,375
-----------
Total Corporate Bonds................................................ 5,757,155
-----------
U.S. GOVERNMENT AGENCIES (1.1%):
Federal National Mortgage Assoc.:
209,629 7.00%, 8/1/08............................................. $ 211,231
-----------
Total U.S. Government Agencies....................................... 211,231
</TABLE>
See notes to financial statements.
23
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
SHORT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------------------------------------------------------------------- -----------
U.S. TREASURY NOTES (60.0%):
<C> <S> <C>
1,265,000 6.00%, 6/30/96............................................ 1,268,378
200,000 6.88%, 10/31/96........................................... 202,444
770,000 7.25%, 11/15/96........................................... 782,459
585,000 7.50%, 1/31/97............................................ 598,157
3,300,000 6.50%, 5/15/97............................................ 3,341,613
780,000 6.75%, 5/31/97............................................ 792,761
250,000 5.88%, 7/31/97............................................ 251,020
1,700,000 6.50%, 8/15/97............................................ 1,724,633
1,000,000 6.88%, 8/31/99............................................ 1,036,710
400,000 7.50%, 10/31/99........................................... 423,960
1,000,000 7.75%, 1/31/00............................................ 1,071,740
-----------
Total U.S. Treasury Notes............................................ 11,493,875
-----------
INVESTMENT COMPANIES (1.1%):
211,485 Prairie U.S. Government Securities Cash Management Fund... 211,485
-----------
Total Investment Companies........................................... 211,485
-----------
Total (Cost - $18,675,599)(a) (98.4%)..................... $18,855,613
-----------
-----------
</TABLE>
- ------------------------------
Percentages indicated are based on net assets of $19,156,786.
(a) Represents cost for financial reporting purposes and differs from cost
basis for federal income tax purposes by the amount of losses recognized
for financial reporting in excess of federal income tax reporting of
$2,847. Cost for federal income tax purposes differs from value by net
unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................................... $ 177,167
Unrealized depreciation...................................................... 0.00
---------
Net unrealized appreciation.................................................. $ 177,167
---------
---------
</TABLE>
See notes to financial statements.
24
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
INTERMEDIATE BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------------------------------------------------------------------- -----------
<C> <S> <C>
ASSET BACKED SECURITIES (5.8%):
967,048 Chase Manhattan Grantor Trust 1995-A, 6.00%, 9/17/01...... $ 968,643
463,584 Honda 94A Auto Receivables, 4.80%, 8/15/99................ 458,577
392,914 Premier 93-2A3 Auto Receivables, 4.90%, 10/15/98.......... 389,339
190,349 Premier 94-4A2 Auto Receivables, 5.75%, 11/2/96........... 190,291
-----------
Total Asset Backed Securities........................................ 2,006,850
-----------
CORPORATE BONDS (33.2%):
Banking (9.9%):
850,000 Citicorp, 6.65%, 5/15/00.................................. 861,687
1,500,000 First Bank Systems Subordinate Notes, 6.88%, 9/15/07...... 1,501,875
1,000,000 Old Kent Bank Notes, 6.88%, 4/15/98....................... 1,021,250
-----------
3,384,812
-----------
Electric Utility (4.4%):
1,500,000 Puget Sound Power & Light, 6.50%, 9/14/99................. 1,513,125
-----------
Financial (8.7%):
600,000 American General Finance, 7.15%, 5/15/97.................. 609,750
1,500,000 CIT Group Holdings, 6.63%, 6/15/05........................ 1,496,250
850,000 Transamerica Financial Corp., 7.40%, 7/29/99.............. 878,688
-----------
2,984,688
-----------
Industrial Goods & Services (5.9%):
1,000,000 Hanson Overseas, PLC, 6.75%, 9/15/05...................... 1,000,000
1,000,000 Rockwell International Corp., 7.63%, 2/17/98.............. 1,031,250
-----------
2,031,250
-----------
Telecommunications (4.3%):
1,500,000 AT&T Capital Corp., 5.90%, 7/10/98........................ 1,490,625
-----------
Total Corporate Bonds................................................ 11,404,500
-----------
U.S. GOVERNMENT AGENCIES (24.7%):
Federal Home Loan Bank:
2,000,000 8.09%, 12/28/04........................................... 2,240,520
Federal National Mortgage Assoc.:
1,731,719 7.00%, 8/1/08............................................. 1,744,949
1,974,318 7.00%, 2/1/24............................................. 1,958,266
</TABLE>
See notes to financial statements.
25
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
INTERMEDIATE BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------------------------------------------------------------------- -----------
U.S. GOVERNMENT AGENCIES (CONTINUED):
<C> <S> <C>
Government National Mortgage Assoc.:
1,182,576 6.50%, 4/15/24............................................ $ 1,150,481
Tennessee Valley Authority:
1,400,000 6.38%, 6/15/05............................................ 1,405,250
-----------
Total U.S. Government Agencies....................................... 8,499,466
-----------
U.S. TREASURY NOTES (30.3%):
2,000,000 7.50%, 1/31/97............................................ 2,044,980
150,000 7.25%, 2/15/98............................................ 154,968
1,000,000 8.13%, 2/15/98............................................ 1,051,860
500,000 6.13%, 5/15/98............................................ 505,055
3,975,000 6.38%, 1/15/00............................................ 4,059,191
1,000,000 7.75%, 1/31/00............................................ 1,071,740
1,500,000 6.13%, 7/31/00............................................ 1,518,270
-----------
Total U.S. Treasury Notes............................................ 10,406,064
-----------
U.S. TREASURY BONDS (4.2%):
1,200,000 8.13%, 8/15/19............................................ 1,443,504
-----------
Total U.S. Treasury Bonds............................................ 1,443,504
-----------
INVESTMENT COMPANIES (0.8%):
278,801 Prairie U.S. Government Securities Cash Management Fund... 278,801
-----------
Total Investment Companies........................................... 278,801
-----------
Total (Cost - $33,109,393)(a) (99.0%)..................... $34,039,185
-----------
-----------
</TABLE>
- ------------------------------
Percentages indicated are based on net assets of $34,390,923.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................................... $ 930,730
Unrealized depreciation...................................................... (938)
---------
Net unrealized appreciation.................................................. $ 929,792
---------
---------
</TABLE>
See notes to financial statements.
26
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
OPPORTUNITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------------------------------------------------------------------- ----------
<C> <S> <C>
ASSET BACKED SECURITIES (0.9%):
222,658 General Motors Acceptance Corp., 7.15%, 3/15/00........... $ 225,804
----------
Total Asset Backed Securities........................................ 225,804
----------
CORPORATE BONDS (15.2%):
Automobiles (2.1%):
500,000 General Motors Acceptance Corp.: 8.63%, 6/15/99........... 536,250
----------
Banking (2.7%):
200,000 Citicorp, 6.65%, 5/15/00.................................. 202,750
500,000 First Bank Systems Subordinate Notes, 6.88%, 9/15/07...... 500,625
----------
703,375
----------
Consumer Goods & Services (1.2%):
300,000 Wal-Mart Stores, 5.50%, 3/1/98............................ 296,625
----------
Electric Utility (4.0%):
500,000 Union Electric, 6.88%, 8/1/04............................. 516,250
500,000 Virginia Electric Power Co., 7.38%, 7/1/02................ 525,625
----------
1,041,875
----------
Financial (2.3%):
400,000 CIT Group Holdings, 6.63%, 6/15/05........................ 399,000
190,000 Transamerica Financial Corp., 7.40%, 7/29/99.............. 196,412
----------
595,412
----------
Industrial Goods & Services (2.9%):
500,000 Hanson Overseas, PLC, 6.75%, 9/15/05...................... 500,000
250,000 Rockwell International Corp., 7.63%, 2/17/98.............. 257,813
----------
757,813
----------
Total Corporate Bonds................................................ 3,931,350
----------
U.S. GOVERNMENT AGENCIES (34.0%):
Federal Home Loan Bank:
250,000 7.81%, 7/17/96............................................ 254,007
1,300,000 8.09%, 12/28/04........................................... 1,456,338
Federal Home Loan Mortgage Corp.:
1,225,000 6.50%, 10/1/10............................................ 1,216,572
980,000 7.00%, 9/1/25............................................. 972,954
</TABLE>
See notes to financial statements.
27
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
OPPORTUNITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------------------------------------------------------------------- ----------
U.S. GOVERNMENT AGENCIES (CONTINUED):
<C> <S> <C>
Federal National Mortgage Assoc:
493,579 7.00%, 2/1/24............................................. $ 489,567
494,918 7.00%, 6/1/24............................................. 490,969
1,530,000 6.50%, 10/1/25............................................ 1,486,012
Government National Mortgage Assoc:
980,000 6.50%, 1/15/24............................................ 953,540
387,468 6.50%, 4/15/24............................................ 376,953
503,907 6.50%, 5/15/24............................................ 490,055
Tennessee Valley Authority:
600,000 6.38%, 6/15/05............................................ 602,250
----------
Total U.S. Government Agencies....................................... 8,789,217
----------
U.S. TREASURY NOTES (26.5%):
500,000 6.00% 8/31/97............................................. 503,215
1,500,000 6.88%, 8/31/99............................................ 1,555,065
3,050,000 7.75%, 11/30/99........................................... 3,262,311
1,500,000 6.13%, 7/31/00............................................ 1,518,270
----------
Total U.S. Treasury Notes............................................ 6,838,861
----------
U.S. TREASURY BONDS (17.7%):
1,000,000 8.88%, 8/15/17............................................ 1,285,080
800,000 8.13%, 8/15/19............................................ 962,336
1,700,000 8.13%, 8/15/21............................................ 2,056,694
250,000 7.25% 8/15/22............................................. 275,835
----------
Total U.S. Treasury Bonds............................................ 4,579,945
----------
U.S. TREASURY STRIPS (2.0%):
1,760,000 8/15/14................................................... 523,371
----------
Total U.S. Treasury Strips........................................... 523,371
----------
</TABLE>
See notes to financial statements.
28
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
OPPORTUNITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------------------------------------------------------------------- ----------
INVESTMENT COMPANIES (2.4%):
<C> <S> <C>
603,970 Prairie U.S. Government Securities Cash Management Fund... $ 603,970
----------
Total Investment Companies........................................... 603,970
----------
Total (Cost-$24,892,746)(a) (98.7%)....................... $25,492,518
----------
----------
</TABLE>
- ------------------------------
Percentages indicated are based on net assets of $25,821,911.
(a) Represents cost for federal income tax purposes and differs from value by
net unrealized appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation...................................... $ 599,772
Unrealized depreciation...................................... 0.00
---------
Net unrealized appreciation.................................. $ 599,772
---------
---------
</TABLE>
See notes to financial statements.
29
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
U.S. TREASURY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
OCTOBER 31, 1995
<TABLE>
<CAPTION>
SHARES OR
PRINCIPAL SECURITY MARKET
AMOUNT DESCRIPTION VALUE
--------------------------------------------------------------------- -----------
<C> <S> <C>
U.S. TREASURY NOTES (81.8%):
450,000 8.50%, 7/15/97............................................ $ 470,655
850,000 8.63%, 8/15/97............................................ 892,628
500,000 5.88%, 8/15/98............................................ 502,170
1,000,000 7.50%, 10/31/99........................................... 1,059,900
1,440,000 7.75%, 12/31/99........................................... 1,542,067
765,000 7.75%, 1/31/00............................................ 819,881
1,000,000 8.00%, 5/15/01............................................ 1,100,290
500,000 7.25%, 8/15/04............................................ 541,115
780,000 7.88%, 11/15/04........................................... 878,623
1,000,000 7.50%, 2/15/05............................................ 1,102,630
-----------
Total U.S. Treasury Notes............................................ 8,909,959
-----------
U.S. TREASURY STRIPS (12.5%):
1,200,000 8/15/99................................................... 967,680
550,000 8/15/01................................................... 394,350
-----------
Total U.S. Treasury Strips........................................... 1,362,030
-----------
INVESTMENT COMPANIES (4.0%):
434,648 Prairie U.S. Government Securities Cash Management........ 434,648
-----------
Total Investment Companies........................................... 434,648
-----------
Total (Cost - $10,376,263)(a) (98.3%)..................... $10,706,637
-----------
-----------
</TABLE>
- ------------------------------
Percentages indicated are based on net assets of $10,894,268.
(a) Represents cost for financial purposes and differs from cost basis for
federal income tax purposes by the amount of losses recognized for
financial reporting in excess of federal income tax reporting of $3,469.
Cost for federal income tax purposes differs from value by net unrealized
appreciation of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation....................................................... $ 326,905
Unrealized depreciation....................................................... 0
-----------
Net unrealized appreciation................................................... $ 326,905
-----------
-----------
</TABLE>
See notes to financial statements.
30
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
DOMESTIC FUNDS
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995
1. ORGANIZATION
Payden & Rygel Limited Maturity Fund, Payden & Rygel Short Bond Fund, Payden
& Rygel Intermediate Bond Fund, Payden & Rygel Opportunity Fund, and Payden &
Rygel U.S. Treasury Fund ("Funds"), are non-diversified series of Payden & Rygel
Investment Group ("Group"), a Massachusetts business trust organized on January
22, 1992. The Group is registered under the Investment Company Act of 1940, as
amended, as an open-end management investment company. The Funds offer both
Class A and Class B shares; however, as of October 31, 1995 there have been no
Class B shares issued. Class B shares are subject to certain fees under a
shareholder service plan (the "Plan"); Class A shares do not participate in the
Plan. Both classes of shares have identical rights and privileges except with
respect to the shareholder service fees borne by Class B and voting rights on
matters affecting a single class. The Group is authorized to issue an unlimited
number of shares of each class which are units of beneficial interest with a par
value of $.001 per share.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by
the Funds:
SECURITIES VALUATION
Portfolio securities are valued on the basis of quotes obtained from dealers
or from a pricing service with consideration of such factors as
institutional-sized trading in similar groups of securities, quality, yield,
coupon rate, maturity, type of issue, trading characteristics and other market
data. Options, futures, swaps and other similar assets are valued at the last
available bid price in the case of listed securities or on the basis of
information provided by brokers in the case of other securities. Securities for
which market quotations are not readily available are valued at fair value as
determined in good faith pursuant to guidelines established by the Board of
Trustees. Debt securities with remaining maturities of sixty days or less are
valued on an amortized cost basis unless Payden & Rygel (the "Adviser")
determines that such basis does not represent fair value.
31
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
INVESTMENT TRANSACTIONS AND RELATED INCOME
Investment transactions are accounted for on the date the security is
purchased or sold (trade date). Interest income is recognized on the accrual
basis. All premiums or original issue discounts are amortized or accreted for
both financial statement and tax reporting purposes as required by Federal
income tax regulations. Realized gains or losses on investment transactions are
determined on the identified cost basis.
REPURCHASE AGREEMENTS
Each of the Funds may enter into repurchase agreements (agreements to
purchase U.S. Treasury notes and bills, subject to the seller's agreement to
repurchase them at a specified time and price) with well-established registered
securities dealers or banks. Repurchase agreements are the equivalent of loans
by the Funds. With respect to such agreements, it is the Funds' policy to take
possession of the underlying securities and, on a daily basis, mark-to-market
such securities to ensure that the value, including accrued interest, is at
least equal to the amount to be repaid to the Funds under each agreement.
DELAYED DELIVERY TRANSACTIONS
Each of the Funds may purchase securities on a when issued or delayed
delivery basis and sell securities on a delayed delivery basis. These
transactions involve a commitment by a Fund to purchase or sell securities for a
predetermined price or yield with payment and delivery taking place more than
seven days in the future or after a period longer than the customary settlement
period for that type of security. No interest will be earned by a Fund on such
purchases until the securities are delivered; however, the market value may
change prior to delivery. There were no such commitments included in the Funds'
schedules of portfolio investments at October 31, 1995.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-dividend date.
Dividends from net investment income are declared and paid monthly, and
distributable net realized capital gains on investments, if any, are declared
and distributed at least annually. All distributions are paid in the form of
additional shares unless cash payment is requested.
Distributions to shareholders are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
FEDERAL INCOME TAXES
It is the policy of each of the Funds to meet the requirements for
qualification as a regulated investment company as defined in applicable
sections of the Internal Revenue
32
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Code ("Code"), and to make distributions of net investment income and net
realized gains sufficient to relieve it from all Federal income or excise taxes.
Accordingly, no provision for Federal income or excise tax is necessary.
The Funds each file a tax return annually using tax accounting methods
required under provisions of the Code which may differ from generally accepted
accounting principles, the basis on which these financial statements are
prepared. The differences arise primarily from the deferral of certain losses
under Federal income tax regulations. Accordingly, the amount of net investment
income and net realized capital gains or losses reported in these financial
statements may differ from that reported in each Fund's tax return and,
consequently, the character of distributions to shareholders reported in the
financial highlights may differ from that reported to shareholders for Federal
income tax purposes.
OTHER
Shared expenses incurred by the Group are allocated among the series of the
Group on the basis of relative net assets. Series-specific expenses are charged
to each series as incurred. Fund expenses not specific to any class will be
allocated between the classes based upon net assets of each class.
Class-specific expenses will be charged to each class as incurred.
3. PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of securities (excluding short-term securities) for the
year ended October 31, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Limited Maturity Fund......... $15,496,419 $12,040,711
Short Bond Fund............... $31,586,991 $15,330,949
Intermediate Bond Fund........ $70,593,504 $48,154,898
Opportunity Fund.............. $44,757,951 $20,700,453
U.S. Treasury Fund............ $15,252,749 $ 5,315,970
</TABLE>
Purchases and sales of long-term U.S. Government Securities for the year
ended October 31, 1995 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Limited Maturity Fund......... $ 8,969,797 $ 4,438,195
Short Bond Fund............... $23,908,335 $12,638,831
Intermediate Bond Fund........ $57,345,017 $39,691,436
Opportunity Fund.............. $42,648,280 $21,799,089
U.S. Treasury Fund............ $15,252,749 $ 5,315,970
</TABLE>
33
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. UNAMORTIZED ORGANIZATION COSTS
The expenses incurred in connection with the organization and registration
of the Limited Maturity Fund, the Short Bond Fund, the Intermediate Bond Fund,
the Opportunity Fund and the U.S. Treasury Fund ($4,939, $837, $837, $837 and
$3,926, respectively) are being reimbursed to the Adviser. As of October 31,
1995, organization costs of $3,719 for the Limited Maturity Fund and $825 for
the U.S. Treasury fund have been amortized. Organization costs for the Short
Bond Fund, the Intermediate Bond Fund and the Opportunity Fund have been fully
amortized.
5. RELATED PARTY TRANSACTIONS
Investment advisory services are provided to the Funds by Payden & Rygel.
Under the terms of the investment advisory agreement, the Adviser is entitled to
receive fees monthly, computed on the average daily net assets of each of the
Funds at an annualized rate of .28% on net assets up to $1 billion and
decreasing to .25% on net assets over $1 billion. The Adviser has agreed to
limit the total expenses, including advisory fees, of the Limited Maturity Fund
to 0.30%, the Short Bond Fund to .40%, and the total expenses of the
Intermediate Bond Fund, the Opportunity Fund and the U.S. Treasury Fund to .45%
of each Fund's average daily net assets on an annualized basis (exclusive of
interest, taxes, brokerage commissions, blue sky fees, 12b-1 fees [if any such
plan is adopted in the future] and extraordinary expenses). The Funds remain
liable to the Adviser for expenses subsidized in any fiscal year. As of October
31, 1995, the Adviser has subsidized expenses of $141,585, $133,920, $135,186,
$128,947 and $75,036 for the Limited Maturity Fund, the Short Bond Fund, the
Intermediate Bond Fund, the Opportunity Fund and the U.S. Treasury Fund,
respectively. The deferred expense subsidies will be recognized in the statement
of operations in future periods, if expense limits permit.
The Adviser has incurred certain expenses in connection with the offering of
multiple class shares that will be charged to the Group upon the initial sale of
Class B shares to the public. Such expenses, approximately $40,000 as of October
31, 1995, will be allocated to all series of the Group that offer Class B shares
on the basis of relative net assets at the time of the initial sale of Class B
shares, and will be prorated between the classes on the basis of eligible net
assets of each class over a five year period.
Payden & Rygel Distributors Inc., an affiliate of Payden & Rygel, serves as
the distributor for the Funds and is not entitled to receive any fees under the
distribution agreement.
On October 10, 1995, The Winsbury Company Limited Partnership changed its
name to BISYS Fund Services Limited Partnership d/b/a BISYS Fund Services
("BISYS"). BISYS and BISYS Fund Services Ohio, Inc. are subsidiaries of the
BISYS Group, Inc.
34
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
BISYS serves as administrator (the "Administrator") to the Group. Under the
terms of the administration agreement, BISYS receives fees monthly, computed on
the average daily net assets of the Group at an annualized rate of .10% on net
assets up to $250 million and decreasing to .02% on net assets over $1 billion.
From time to time, fees may be permanently reduced on a voluntary basis by
the Adviser and Administrator in order to assist the Group in maintaining
certain specified expense ratios. No fees were waived for the year ended October
31, 1995, for the Limited Maturity Fund, Short Bond Fund, Intermediate Bond
Fund, and Opportunity Fund. For the period January 3, 1995 (commencement of
operations) to October 31, 1995, the Adviser and Administrator waived $2,549 and
$766, respectively, for the U.S. Treasury Fund.
BISYS Fund Services Ohio, Inc., ("Company"), serves as transfer agent to the
Group. Under the terms of the transfer agency agreement, the Company is entitled
to receive fees based upon a specified amount per shareholder with specified
minimum per portfolio amounts and surcharges, plus certain out-of-pocket
expenses. The Company also serves as fund accountant. Under the terms of the
fund accounting agreement, the Company receives fees monthly at an annual rate
of $20,000 for each Fund, plus certain out-of-pocket expenses. Total transfer
agent and fund accounting fees were $29,492 for the Limited Maturity Fund,
$27,407 for the Short Bond Fund, $27,587 for the Intermediate Bond Fund and
$25,263 for the Opportunity Fund for the year ended October 31, 1995. For the
period January 3, 1995 (commencement of operations) to October 31, 1995, total
transfer agent and fund accounting fees were $23,061 for the U.S. Treasury Fund.
Certain officers and trustees of the Group are affiliated with the Adviser
or Administrator. Such officers and trustees receive no fees from the Funds for
serving as officers and trustees of the Group.
Effective January 1, 1996, Treasury Plus Inc., a subsidiary of Payden &
Rygel will serve as administrator to the Group. Effective November 11, 1995,
Investors Fiduciary Trust Company will serve as transfer agent to the Group, and
as of January 1, 1996, they will serve as fund accountant.
6. FEDERAL INCOME TAXES:
At October 31, 1995, the Limited Maturity Fund had capital loss
carryforwards of $1,971 for Federal income tax purposes. These carryforwards,
which expire in the year 2002, are available to offset future capital gains, if
any.
35
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
DOMESTIC FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME FROM DISTRIBUTIONS TO
INVESTMENT ACTIVITIES SHAREHOLDERS
Net
Net Asset Net realized Total From Total Asset
Value, Net and unrealized from net from Value,
Beginning investment gains (losses) investment investment shareholder End of Total
of Period income on investments activities income distributions Period Return
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY
- ------------------------------------------------------------------------------------------------------------------------------
FUND
Year ended $ 10.00 $ 0.56 $ 0.07 $ 0.63 $ (0.57) $ (0.57) $ 10.06 6.43%
October 31, 1995
For the period 10.00 0.19 (0.01) 0.18 (0.18) (0.18) 10.00 1.84%(b)
May 2, 1994 to
October 31, 1994 (a)
- ------------------------------------------------------------------------------------------------------------------------------
SHORT BOND FUND
Year ended 9.68 0.54 0.36 0.90 (0.54) (0.54) 10.04 9.56%
October 31, 1995
For the period 10.00 0.34 (0.32) 0.02 (0.34) (0.34) 9.68 0.21%(b)
December 31, 1993 to
October 31, 1994 (a)
- ------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE BOND
- ------------------------------------------------------------------------------------------------------------------------------
FUND
Year ended 9.30 0.57 0.55 1.12 (0.57) (0.57) 9.85 12.43%
October 31, 1995
For the period 10.00 0.35 (0.70) (0.35) (0.35) (0.35) 9.30 (3.52)%(b)
December 31, 1993 to
October 31, 1994 (a)
<CAPTION>
RATIOS/SUPPLEMENTARY DATA
Ratio Ratio
Net Ratio of net Ratio of net
assets of investment of investment
at end expenses income expenses income
of to to to to
period average average average average Portfolio
(000) net assets net assets net assets* net assets* Turnover
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------
LIMITED MATURITY
- ------------------------------------------------------------------------------------------------------------------------------
FUND
Year ended $ 18,414 0.33% 5.59% 0.83% 5.09% 166.07%
October 31, 1995
For the period 14,248 0.41%(c) 4.74%(c) 2.92%(c) 2.23%(c) 86.35%
May 2, 1994 to
October 31, 1994 (a)
- ------------------------------------------------------------------------------------------------------------------------------
SHORT BOND FUND
Year ended 19,157 0.40% 5.72% 1.03% 5.09% 170.27%
October 31, 1995
For the period 2,592 0.48%(c) 4.47%(c) 4.56%(c) 0.39%(c) 186.85%
December 31, 1993 to
October 31, 1994 (a)
- ------------------------------------------------------------------------------------------------------------------------------
INTERMEDIATE BOND
- ------------------------------------------------------------------------------------------------------------------------------
FUND
Year ended 34,391 0.45% 6.10% 0.68% 5.87% 189.00%
October 31, 1995
For the period 14,312 0.46%(c) 5.39%(c) 2.03%(c) 3.82%(c) 358.23%
December 31, 1993 to
October 31, 1994 (a)
</TABLE>
* During the period, certain expenses were subsidized by the Adviser. If such
expense subsidies had not occurred, the ratios would have been as indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
36 37
<PAGE>
PAYDEN & RYGEL INVESTMENT GROUP
DOMESTIC FUNDS
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
INCOME FROM DISTRIBUTIONS TO
INVESTMENT ACTIVITIES SHAREHOLDERS
Net
Net Asset Net realized Total From Total Asset
Value, Net and unrealized from net from Value,
Beginning investment gains (losses) investment investment shareholder End of Total
of Period income on investments activities income distributions Period Return
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND
Year ended October $ 9.09 $ 0.57 $ 0.87 $ 1.44 $ (0.57) $ (0.57) $ 9.96 16.39%
31, 1995
For the period 10.00 0.37 (0.91) (0.54) (0.37) (0.37) 9.09 (5.49)%(b)
December 31, 1993 to
October 31, 1994 (a)
- -----------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY FUND
For the period 10.00 0.53 0.61 1.14 (0.53) (0.53) 10.61 11.61%(b)
January 3, 1995 to
October 31, 1995 (a)
<CAPTION>
RATIOS/SUPPLEMENTARY DATA
Ratio Ratio
Net Ratio of net Ratio of net
assets of investment of investment
at end expenses income expenses income
of to to to to
period average average average average Portfolio
(000) net assets net assets net assets* net assets* Turnover
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------
OPPORTUNITY FUND
Year ended October $ 25,822 0.45% 6.20% 1.11% 5.55% 252.09%
31, 1995
For the period 3,030 0.49%(c) 5.25%(c) 4.52%(c) 1.22%(c) 513.35%
December 31, 1993 to
October 31, 1994 (a)
- -----------------------------------------------------------------------------------------------------------------------------
U.S. TREASURY FUND
For the period 10,894 0.45%(c) 6.31%(c) 1.84%(c) 4.92%(c) 87.10%
January 3, 1995 to
October 31, 1995 (a)
</TABLE>
* During the period, certain fees were voluntarily reduced and certain
expenses were subsidized by the Adviser. If such voluntary fee reductions
and expense subsidies had not occurred, the ratios would have been as
indicated.
(a) Period from commencement of operations.
(b) Not annualized.
(c) Annualized.
38 39
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Trustees of
Payden & Rygel Limited Maturity Fund
Payden & Rygel Short Bond Fund,
Payden & Rygel Intermediate Bond Fund,
Payden & Rygel Opportunity Fund, and
Payden & Rygel U.S. Treasury Fund:
We have audited the accompanying statements of assets and liabilities of the
Payden & Rygel Limited Maturity Fund, the Payden & Rygel Short Bond Fund, the
Payden & Rygel Intermediate Bond Fund, Payden & Rygel Opportunity Fund, and the
Payden & Rygel U.S. Treasury Fund, including the schedules of portfolio
investments, as of October 31, 1995, and the related statements of operations
for the period then ended, and the statements of changes in net assets and the
financial highlights for the periods presented. These financial statements and
financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free 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, 1995, by correspondence with the Funds' custodian and brokers. 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Payden & Rygel
Limited Maturity Fund, the Payden & Rygel Short Bond Fund, the Payden & Rygel
Intermediate Bond Fund, Payden & Rygel Opportunity Fund, and the Payden & Rygel
U.S. Treasury Fund at October 31, 1995, the results of their operations for the
period then ended, the changes in their net assets, and the financial highlights
for the respective stated periods, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
Dayton, Ohio
December 8, 1995
40
<PAGE>
GLOSSARY OF TERMS
ASSET-BACKED SECURITY
A fixed income investment that is created when a lender pools assets such as
auto loans or credit card receivables and sells interests in the asset pool to
investors. These pools typically mature in less than five years. In order to
receive a AAA credit rating, the issuer of the security will often
overcollateralize the pool by placing more assets in the pool than the value of
the newly created securities.
AVERAGE MATURITY
The amount of time until half of the portfolio will mature. This is computed
by weighting the time to maturity of each investment by the dollars invested.
CALLABLE BOND
A bond in which the issuer has the right to prepay the debt prior to the
stated maturity date. When interest rates fall, many issuers pay off their
existing debt and issue new debt at the lower rate (much like refinancing a
mortgage). Callable bonds are generally not as desirable when interest rates are
falling and thus their prices do not increase as much as non-callable bonds in
market rallies.
COMMERCIAL PAPER
Typically commercial paper does not exceed 270 days to maturity.
CURRENCY EXPOSURE
The potential for gain or loss from changes in currency exchange rates. A
bond denominated in a foreign currency will increase in value as the U.S. dollar
weakens (foreign currency strengthens). Conversely, this same investment will
decrease in value as the U.S. dollar strengthens (foreign currency weakens).
CURRENCY HEDGE
An investment strategy designed to neutralize or change currency exposure.
Using the forward exchange market, or currency options, these strategies can
reduce the effect of changes in currency exchange rates on the portfolio.
DURATION
A mathematical calculation that computes a time-weighted value of each cash
flow to be received from an investment. Duration is somewhat analogous to a
bond's weighted average maturity, and generally increases as the time to
maturity increases. Duration is a measure of price sensitivity. The higher the
duration, the more the price of an investment will move for a given change in
interest rates.
41
<PAGE>
GENERAL OBLIGATION BONDS
Debt issued by a municipality which is backed by the good faith and credit
and general taxing power of the issuer. No specific source of revenue is
earmarked to repay the debt. Interest is generally Federal tax-free to
investors.
NET ASSET VALUE (NAV)
The value of the Fund after the deduction of any liabilities and expenses.
When divided by the number of shares outstanding, this is the price per share
for the Fund.
REVENUE BONDS
Debt issued by a municipality to finance a particular project such as the
construction of roads or airport facilities. The debt is repaid from the
revenues of the project. Investors have no recourse to other assets of the
municipality should the project be unable to repay its debt. Principal and
interest payments are often insured by a third party in order to increase the
credit rating of the debt issue and thus improve its attractiveness to
investors.
TOTAL RETURN
The true return on an investment which is the total of interest earned, all
realized capital gains and any unrealized capital gains.
VARIABLE RATE DEMAND NOTE
A municipal debt issue in which the interest rate is reset to meet market
demand, generally on a daily or weekly basis. The investor has the right to
return the investment at any time at a price of 100 cents on the dollar.
Although the debt may not mature for several years, investors consider this to
be a short-term investment due to the right to return the note.
YIELD CURVE
A graph showing the relationship between bond yields and their time to
maturity. Yield curves are generally constructed using government bonds. Other
fixed income investments, such as corporate bonds or mortgages, are then valued
by adding an additional yield to that of the comparable maturity government
issue. This additional yield is called the "yield spread" of the investment.
42
<PAGE>
[logo]
Payden & Rygel
Investment
Group
333 SOUTH GRAND AVENUE-32ND FLOOR-LOS ANGELES, CALIFORNIA 90071
TELEPHONE (213) 625-1900
