<PAGE> 1
CONTENTS
Letter to Shareholders
-------------------------
1
Management Discussion
US Bond Funds
Global and International
Bond Funds
US Equity Funds
International Stock and
Global Balanced Funds
-------------------------
8
Portfolio Highlights
-------------------------
24
Statements of Assets
and Liabilities
-------------------------
28
Statements of Operations
-------------------------
32
Statements of Changes
in Net Assets
-------------------------
40
Schedules of Portfolio
Investments
-------------------------
107
Notes to Financial Statements
-------------------------
124
Financial Highlights
-------------------------
136
Independent Auditors' Report
-------------------------
<PAGE> 2
Dear Shareholders:
For more than a decade, superior service and compelling investment strategies
have defined Payden & Rygel's success. Our clients and our shareholders have
enjoyed the benefits of low-expense investing and have reached their financial
objectives without having to take undue risks along the way.
I believe that what makes the Payden & Rygel investment style so compelling to
clients and shareholders is our ability to communicate a strong, clear message
about our approach to money management. Simply put, it is this: We never
sacrifice long-term goals for short-term successes in our investments or in our
business. The future of our clients and our investors always comes first.
On the investment side of our business, the major component of that long-term
focus is global investing. For the past 14 years, Payden & Rygel has
concentrated on building a financial advisory business with both domestic and
international investment roots. Domestically, we have managed investments
successfully through a variety of U.S. markets, including the crash of 1987 and
the great bull market of the 1990s. Internationally, Payden & Rygel was among
the first U.S. investment advisors to participate in the world's developed bond
markets as they emerged in the mid-1980s. And Scottish Widows, our international
equity manager, has participated in European markets since its founding in 1815.
Today, we believe that the global markets continue to offer our clients an
opportunity to enhance their returns and to diversify their domestic portfolios.
Significant differences exist in the economic cycles, growth rates, and market
developments of countries around the world. Japan, for example, presents an
investor with a different set of challenges and opportunities today than the
U.S. market. So does Europe, where corporate restructurings, cross border trade,
mergers and acquisitions, and the promise of a single currency have created an
economic environment reminiscent of the U.S. market prior to its boom in 1995
and 1996. Even emerging markets, which still require a high level of
international investment expertise and experience and a great deal of caution,
have nevertheless become a bigger part of the global investment picture.
Over the long-term, as these markets become linked by faster and more efficient
technology, there will be greater demand for those who understand the
fundamentals of the global marketplace and the information that drives it daily.
Already, this link between markets is becoming stronger. Think about the U.S.
stock market's violent reaction to the whipsaw volatility in Hong Kong's stock
market this past October as a vivid example of the growing interconnectivity of
markets.
To see this global investment philosophy in action, take a look at one of our
funds. A good example is Payden & Rygel's first mutual fund, GLOBAL FIXED
INCOME. The fund embodies what's best about our approach. Launched in 1992, it
was the firm's first
<PAGE> 3
[PHOTO OF JOAN PAYDEN]
attempt to share our global investment vision and experience with both
institutional and individual investors. Today, it is one of the largest global
fixed income investment vehicles available to investors and its low-risk
strategy has provided investors with consistent long-term results. In
recognition of its merits, Morningstar added the fund to its top 500 funds list
and the September 1997 issue of Consumer Reports listed it as one of the four
global bond funds in the industry to watch.
The globalization of markets drives the service side as well as the investment
side of our business. Payden & Rygel clients and investors have the flexibility
to invest in stock and bond markets around the world. They also have the
opportunity to access up-to-the-minute global market information and analysis on
all of their portfolios. What's more, our successful long-term global strategies
are available for low annual costs. But don't just take our word for it. The
August 25, 1997 edition of Forbes magazine rated Payden & Rygel as one of the
most cost efficient families in the mutual fund industry.
That kind of recognition gives us great satisfaction. We have worked hard to
deliver shareholder-friendly products and we will continue to offer the same
personal, high-quality service that we always have. We will also continue to
broaden our array of mutual-fund investments. For those interested in new
product launches, look for two new funds to come out at the beginning of 1998: a
dollar-based money market fund and a high-yielding bond fund.
As always, feel free to contact us. We can show you the best ways to reach your
goals or we can give you greater insights into your individual investments.
Remember, we work for you.
Sincerely,
/s/ Joan Payden
Joan Payden
President & CEO
Payden & Rygel Investment Group
<PAGE> 4
MANAGEMENT DISCUSSION AND ANALYSIS
US BOND FUNDS
The one constant in the bond market is interest rate volatility. The past fiscal
year period, November 1, 1996 to October 31, 1997, was no exception. As the
chart below illustrates, 10-year Treasury yields moved between 6% and 7% during
the year. The cause for the fluctuation was alternating market perceptions of a
slow economy, low inflation, and unchanged Federal Reserve policy, or a fast
economy, inflation pressure, and restrictive Federal Reserve policy. While stock
market investors are jubilant over a strong economy and low inflation, the ever
skeptical bond market tries to find the flaw in the argument and then nervously
debates its validity.
10 YEAR U.S. TREASURY YIELD LEVELS
<TABLE>
<S> <C> <C> <C> <C> <C>
1-Nov-96 6.379 8-Nov-96 6.251 15-Nov-96 6.185
22-Nov-96 6.141 29-Nov-96 6.046 6-Dec-96 6.245
13-Dec-96 6.315 20-Dec-96 6.362 27-Dec-96 6.293
3-Jan-97 6.500 10-Jan-97 6.610 17-Jan-97 6.544
24-Jan-97 6.624 31-Jan-97 6.496 7-Feb-97 6.400
14-Feb-97 6.267 21-Feb-97 6.370 28-Feb-97 6.554
7-Mar-97 6.541 14-Mar-97 6.694 21-Mar-97 6.755
28-Mar-97 6.911 4-Apr-97 6.910 11-Apr-97 6.972
18-Apr-97 6.829 25-Apr-97 6.942 2-May-97 6.648
9-May-97 6.673 16-May-97 6.723 23-May-97 6.744
30-May-97 6.661 6-Jun-97 6.490 13-Jun-97 6.430
20-Jun-97 6.378 27-Jun-97 6.455 4-Jul-97 6.311
11-Jul-97 6.224 18-Jul-97 6.247 25-Jul-97 6.183
1-Aug-97 6.184 8-Aug-97 6.371 15-Aug-97 6.240
22-Aug-97 6.362 29-Aug-97 6.341 5-Sep-97 6.352
12-Sep-97 6.285 19-Sep-97 6.094 26-Sep-97 6.083
3-Oct-97 5.990 10-Oct-97 6.145 17-Oct-97 6.160
24-Oct-97 5.983 31-Oct-97 5.833
</TABLE>
The Federal Reserve did make a move toward more restrictive policy, moving
short-term interest rates 0.25% higher on March 25. Later the next month, bond
yields reached their highs for the year of 6.98% on the 10-year Treasury and
6.54% on the 2-year Treasury. Federal Reserve Chairman Greenspan spent much of
the year indicating he, too, is puzzled by the absence of inflation pressure in
such a strong economy with a tight labor market. Whenever Greenspan would make a
speech hinting that he may believe we are in a "new paradigm" economy of
unparalleled productivity, the bond market would embark on a price rally. His
most recent remarks, however, were more closely aligned with the traditional
economic view of capacity constraints and preemptive interest rate increases.
Such an environment caused the Payden & Rygel bond Funds to be more conservative
in their average maturity positions than previously. The Intermediate Bond Fund,
Investment Quality Bond Fund, and Total Return Fund maintained average
maturities consistent with their benchmark indices for much of the year. The
short maturity
ANNUAL REPORT 1
<PAGE> 5
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
Funds, such as the Limited Maturity Fund and the Short Bond Fund, were more
cautiously positioned, as the yield spread between short maturity bonds and the
Federal Funds rate was historically narrow.
Credit markets continued to be strong this year. Investment grade bond yield
spreads remained fairly constant, with some slight narrowing. This was positive
for the Short Bond Fund, Intermediate Bond Fund, and Investment Quality Bond
Fund, as they each held significant allocations to corporate securities. Yield
spreads in below investment grade debt fared better, as they narrowed 50 basis
points to 250 basis points above 10-year Treasury yields. The Total Return Fund
profited from this narrowing, as it held 19% in below investment grade debt.
Next year should be an exciting one for bond investors, as many factors could
positively influence yields. Currency turmoil in Asia could unleash some
powerful deflationary forces, and increased European efficiency from monetary
union could also help keep inflation in check.
CHANGING YIELD CURVES
<TABLE>
<CAPTION>
US Yield Curve
10/31/96 vs. 10/31/97
----------------------
<S> <C> <C>
3 month 5.15 5.20
6 month 5.27 5.32
1 year 5.37 5.36
2 year 5.77 5.62
3 year 5.88 5.69
5 year 6.08 5.75
10 year 6.34 5.83
30 year 6.65 6.15
</TABLE>
Global and International Bond Funds
Three central themes have dominated the global bond markets over the last
12 months: interest rates, credit spreads, and currency levels. Long-term
interest rates have fallen in all markets over this time period, despite solid
to improving economic activity in most regions. In fact, strong growth in the
United States prompted the Federal Reserve to raise interest rates in March of
this year, spooking the world's bond
2 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 6
markets and sending yields higher, albeit temporarily. Yields have since trended
lower, due primarily to the exceptionally stable inflation levels worldwide.
This benign inflation environment has also contributed to the second force
currently driving bond yields: lower risk premiums and the resulting convergence
in yield spreads. Government bond yields of traditionally higher risk countries
such as Canada and Australia have fallen to U.S. Treasury levels, and in many
cases even lower. Across the Atlantic, the onset of European Monetary Union has
officials enacting policy to coordinate economic cycles. Inflation is now
contained to sub 2% levels in most countries, even Italy and Spain. This has
driven bond yields lower as well, with minimal spreads remaining between the
different markets.
Finally, the U.S. dollar has been appreciating steadily against both the German
mark and Japanese yen. On a relative basis, the U.S. economy is structurally
sound due to deregulated markets, a well developed service sector, competitive
industries, and flexible labor markets. Interest rate differentials also favor
the dollar, as investors can earn more on deposits in the U.S. than in either
Japan or Germany. For U.S. investors who invest globally, currency losses may
have impacted performance in the last year, depending on the amount of currency
hedging employed.
WEEKLY SPOT EXCHANGE RATES
<TABLE>
<S> <C> <C> <C>
Deutschmarks Japanese Yen
1-Nov-96 1.5120 1-Nov-96 113.3
8-Nov-96 1.5015 8-Nov-96 111.74
15-Nov-96 1.5090 15-Nov-96 111.05
22-Nov-96 1.5066 22-Nov-96 111.45
29-Nov-96 1.5390 29-Nov-96 113.92
6-Dec-96 1.5470 6-Dec-96 112.95
13-Dec-96 1.5570 13-Dec-96 113.85
20-Dec-96 1.5515 20-Dec-96 114.25
27-Dec-96 1.5530 27-Dec-96 115.25
3-Jan-97 1.5670 3-Jan-97 116.41
10-Jan-97 1.5854 10-Jan-97 116.13
17-Jan-97 1.6172 17-Jan-97 117.36
24-Jan-97 1.6285 24-Jan-97 118.85
31-Jan-97 1.6370 31-Jan-97 121.15
7-Feb-97 1.6620 7-Feb-97 123.15
14-Feb-97 1.6878 14-Feb-97 124.25
21-Feb-97 1.6885 21-Feb-97 122.91
28-Feb-97 1.6900 28-Feb-97 120.33
7-Mar-97 1.7135 7-Mar-97 121.92
14-Mar-97 1.6940 14-Mar-97 123.5
21-Mar-97 1.6863 21-Mar-97 122.6
28-Mar-97 1.6761 28-Mar-97 123.91
4-Apr-97 1.6850 4-Apr-97 124.26
11-Apr-97 1.7204 11-Apr-97 125.87
18-Apr-97 1.7098 18-Apr-97 125.8
25-Apr-97 1.7270 25-Apr-97 126.43
2-May-97 1.7294 2-May-97 126.65
9-May-97 1.6867 9-May-97 120
16-May-97 1.6926 16-May-97 115.59
23-May-97 1.6932 23-May-97 115.62
30-May-97 1.7060 30-May-97 116.32
6-Jun-97 1.7243 6-Jun-97 114.25
13-Jun-97 1.7375 13-Jun-97 114.84
20-Jun-97 1.7274 20-Jun-97 114.76
27-Jun-97 1.7402 27-Jun-97 114.57
4-Jul-97 1.7525 4-Jul-97 113.5
11-Jul-97 1.7820 11-Jul-97 114.17
18-Jul-97 1.7913 18-Jul-97 115.45
25-Jul-97 1.8368 25-Jul-97 116.85
1-Aug-97 1.8624 1-Aug-97 118.4
8-Aug-97 1.8458 8-Aug-97 114.75
15-Aug-97 1.8210 15-Aug-97 117.35
22-Aug-97 1.8202 22-Aug-97 118.24
29-Aug-97 1.8075 29-Aug-97 120.9
5-Sep-97 1.8028 5-Sep-97 121.23
12-Sep-97 1.7730 12-Sep-97 121.01
19-Sep-97 1.7750 19-Sep-97 122.14
26-Sep-97 1.7585 26-Sep-97 121.22
3-Oct-97 1.7562 3-Oct-97 122.03
10-Oct-97 1.7503 10-Oct-97 120.05
17-Oct-97 1.7727 17-Oct-97 120.86
24-Oct-97 1.7769 24-Oct-97 121.9
31-Oct-97 1.7262 31-Oct-97 120.45
</TABLE>
Looking back over the last year, performance in our global bond Funds was
significantly impacted by all three of the trends discussed above. We
aggressively hedged currency exposure in all three of the funds, mitigating all
foreign exchange losses in the Global Fixed Income Fund and the Global Short
Bond Fund. Partial hedging helped reduce the impact of falling currencies on the
International Bond Fund, but performance was negatively affected by the rising
dollar.
ANNUAL REPORT 3
<PAGE> 7
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
In hindsight, the Payden and Rygel global bond Funds would have profited by
holding longer maturity bonds. Our neutral stance in duration was prudent given
the pick-up in global economic activity we foresaw at the beginning of the year.
However, inflation has been contained better than we expected. When yields began
to fall in late summer, a more aggressive duration position would have enhanced
the capital gains earned on the bond positions.
At the same time, the global bond Funds were well positioned to take advantage
of global yield convergence. Country allocations, which remained fairly
consistent during the year, had all three Funds heavily invested in the top
three performing bond markets: the United Kingdom, Australia, and Italy. At the
same time, our concern over the dramatically low yields in Japan kept all three
Funds out of the Japanese bond market, whose performance has ranked near the
bottom of the developed markets.
US EQUITY FUNDS
The stock market headed higher this year, as corporate profits improved and bond
yields remained fairly steady. Any sell-off, such as the 9% decline in March and
early April, proved to be an excellent buying opportunity. The S&P 500 Stock
Index was among the best performers in the world, gaining an impressive 32.1%
from November 1, 1996 to October 31, 1997. October proved to be a jittery month,
as investors marked the 10th anniversary of the great stock market crash in
1987. The doomsayers predicted another debacle this year. They got it, but it
happened in Hong Kong, which declined 29.3% while the U.S. fell only 3.3% in
October.
The Growth & Income Fund, which follows the "dogs of the Dow" theory, lagged the
S&P 500 Index. However, it still earned a respectable 29.2% for the one-year
period from November 1, 1996 to October 31, 1997. The reason it did not beat the
index is primarily the result of two "dogs" that remained dogs over the course
of the year. International Paper began the year as a "dog," then had a great
turnaround, but collapsed in October when Asian currency devaluations were
perceived as seriously aggravating paper pricing pressures. In the end,
International Paper earned only 7.9% for the year. Eastman Kodak, which became a
"dog" in April 1997, really suffered this year as the company's non-film
businesses racked up losses. The stock lost 20.3% for the period, and should
soon reach its value point. Successes of the strategy include AT&T, which gained
51.8%, and Exxon which advanced 42.9%.
The fact that the "dog" stocks did not beat the index this year should not be a
surprise to anyone who has researched the strategy. The strategy does not beat
the S&P 500 Index each and every year, but has accomplished its success over
time. We hope that investors have the same time horizon.
4 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 8
The new tax law has created a slight change in the Growth & Income Fund
methodology. We now hold each stock for 18 months to maximize capital gains. Our
historical research indicates that this increased holding period does not
diminish the strategy's documented effectiveness. The change does allow
shareholders to keep more of the returns for themselves, rather than paying them
in taxes.
INTERNATIONAL STOCK AND GLOBAL BALANCED FUNDS
The past year was one of great change in the international stock markets.
European bourses began to look forward to life as a common currency continent.
Investors generally liked the prospect, as European stock markets surged
forward. Germany gained
WHILE ASIAN STOCK MARKETS FALL...
<TABLE>
<CAPTION>
Nikkei Hang Seng
<S> <C> <C>
11/1/96 20633.1 12529.3
20276.7 13102.7
1/3/97 19361.3 13222.8
17867 13660.5
3/7/97 18198.7 13337.3
17860.6 12204.6
5/2/97 19514.8 13081.7
20485.8 14655.1
7/4/97 19968 14823
19804.4 16379.2
9/5/97 18650.2 14563.5
10/3/97 17647.5 15128
</TABLE>
...EUROPEAN AND US STOCKS GAIN
<TABLE>
<CAPTION>
DAX FTSE 100 S&P 500
<S> <C> <C> <C>
11/1/96 2683.25 3948.5 703.77
2791.96 3963 739.6
1/3/97 2859.28 4089.5 748.03
3138.01 4307.8 789.56
3/7/97 3376.2 4420.3 804.97
3244.93 4236.6 757.9
5/2/97 3460.37 4455.6 812.97
3695.29 4645 858.01
7/4/97 3942.53 4812.8 916.92
4408.79 4899.3 947.14
9/5/97 4100.67 4985.2 929.05
10/3/97 4273.71 5330.8 965.03
</TABLE>
35.7%, the Netherlands was up 48.8%, and France posted a 25.3% gain. Although
the United Kingdom will not participate in the common currency, it nevertheless
joined in the fun and rallied 21.2%. All of this positive stock market action
was good for the International Equity Fund, the European Growth & Income Fund,
and the Global Balanced Fund. Each had significant allocations to the European
region.
Unfortunately, stock market life was not so joyous in Asia. Overheated
economies, resulting from an easy monetary policy which remained so for too
long, finally came crashing back to reality. The Thailand stock market fell 49%,
Indonesia 11.5%, and Malaysia 43.9%. Their currencies were devalued as well,
adding to the woes for a U.S. dollar based investor. Panic spread to markets
thought "safe," such as Hong Kong. The Hang Seng Index of Hong Kong stocks fell
29.3% in October alone, creating a 12.4% decline for the fiscal year. Japan did
not experience a crash, as its Asian neighbors did, so it only lost 14% for the
year.
ANNUAL REPORT 5
<PAGE> 9
MANAGEMENT DISCUSSION AND ANALYSIS (CONTINUED)
It is simple math to see that since the International Equity Fund had on average
a 5% larger allocation to Asia than the index, it was bound to lag the Morgan
Stanley Capital International Europe, Australia, and Far East (MSCI EAFE) index.
The story was the same for the Global Balanced Fund. Equity investors know that
volatility is an inescapable part of buying stocks. Management is confident that
the historic moves in Asia will ultimately serve to make the region stronger,
and this will eventually be reflected in the stock prices of well managed Asian
companies in which our Funds invest.
TAX EXEMPT FUNDS
Municipal yields declined in the year providing positive returns for the Tax
Exempt and Short Duration Tax Exempt Funds. The yield curve flattened by 0.20%,
with long rates declining more than short-term rates. This curve movement
provided positive performance for the Tax Exempt Bond Fund, which has the
majority of its assets in intermediate to long maturities. Yields moved in a
choppy fashion during the year, with a general rising tendency until the Federal
Reserve raised interest rates in a pre-emptive strike in March. After that move,
yields declined steadily through July, at which point the decline was further
fueled by the seasonal need for investors to reinvest coupon payments and
maturities.
After the positive month of July, with municipal yields at lows not seen since
October 1993, many issuers began to prepare to bring refunding issues to the
market. This heavy supply calendar in the late summer months hindered municipals
from rallying along with the Treasury market, which rallied on a wait-and-see
attitude from the Federal Reserve.
On the legislative front, the Taxpayer Relief Act of 1997 had little to no
impact on the municipal bond market. Provisions that would have limited
corporate purchases of municipal bonds were tabled at the last minute in the
discussions. While there was a momentary pause in the market, things resumed to
business as usual. As we mentioned in last year's report, tax reform continues
to be an agenda item for Republican lawmakers, and could have an impact on the
municipal market in the future, regardless of the feasibility of its passage.
6 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 10
Credit spreads continued their collapse during the year, with spreads between
AAA and BBB general obligations moving from 0.6% to 0.3% in the short end of the
curve, and 0.8% to 0.4% in the longer maturities. The strategy in the Funds
continues to focus on high quality credits and straightforward structures. We
have upgraded the overall credit quality in the Funds, as the risk/reward
trade-off clearly favors high quality instruments.
ANNUAL REPORT 7
<PAGE> 11
GLOBAL SHORT BOND FUND
Country Allocation
[PIE CHART]
<TABLE>
<S> <C>
U.S. 20%
Spain 10%
Germany 20%
Australia 20%
Sweden 10%
Italy 20%
</TABLE>
Maturity Composition
[BAR GRAPH]
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Australia 2.7
Sweden 2.5
Spain 2.5
Germany 2.2
Italy 1.8
U.S. 1.3
</TABLE>
FOREIGN CURRENCY
EXPOSURE FULLY HEDGED
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $220,865,000 $28,913,000
Number of Issues: 20 13
Average Maturity: 2.1 years 2.4 years
SEC Yield: 4.94% 5.12%
</TABLE>
<TABLE>
<CAPTION>
Investment Performance
Merrill Lynch 1-3 year Treasury Index Global Short Bond Fund
<S> <C> <C>
Sep 18 '96 10000 10000
10044 10060
10157 10110
10235 10216
10235 10265
Jan '97 10283 10336
10307 10346
10303 10346
10387 10439
10458 10532
10530 10604
10645 10655
10655 10686
10736 10792
Oct 31 '97 10816 10820
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
1-Year Since Inception*
------ ----------------
<S> <C> <C>
Global Short Bond Fund: 7.02% 7.29%
Merrill Lynch 1-3 Year Treasury Index: 6.49% 7.25%
</TABLE>
*Fund Inception was 9/18/96
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
8 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 12
GLOBAL FIXED INCOME FUND
Country Allocation
[PIE CHART]
<TABLE>
<S> <C>
U.S. 30%
Canada 5%
France 10%
U.K. 10%
Germany 15%
Australia 10%
Spain 10%
Italy 10%
</TABLE>
Maturity Composition
[BAR GRAPH]
<TABLE>
<CAPTION>
Years
-----
<S> <C>
U.K. 15.3
Canada 10.6
U.S. 9.7
Australia 6.7
Italy 5.9
Germany 3.8
Spain 3.5
France 1.4
</TABLE>
FOREIGN CURRENCY
EXPOSURE FULLY HEDGED
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $535,644,000 $651,165,000
Number of Issues: 20 21
Average Maturity: 7.3 years 5.7 years
SEC Yield: 5.39% 5.40%
</TABLE>
<TABLE>
<CAPTION>
Investment Performance
JP Morgan Hedged Global Bond Index Global Fixed Income Fund Lehman U.S. Treasury Index
<S> <C> <C> <C>
Sep 1 '92 10000 10000 10000
10142 10048 10146
10166 10031 9997
10142 10002 9976
10286 10079 10146
Jan '93 10440 10201 10364
10635 10389 10572
10657 10515 10607
10703 10588 10690
10722 10618 10677
10941 10730 10916
11029 10834 10980
11257 11138 11225
11303 11138 11269
11399 11222 11311
11391 11201 11187
11537 11405 11230
Jan '94 11575 11470 11385
11330 11090 11140
11171 10891 10890
11088 10820 10805
11017 10789 10792
10948 10850 10768
11068 10940 10964
11014 10935 10967
10961 10902 10813
10981 10988 10806
11056 11049 10784
11070 11061 10850
Jan '95 11222 11240 11051
11406 11474 11287
11571 11775 11358
11738 11941 11506
12143 12241 11972
12157 12249 12066
12239 12295 12021
12354 12282 12161
12516 12470 12277
12669 12648 12467
12912 12908 12660
13052 13049 12841
Jan '96 13184 13105 12922
12994 12816 12658
13022 12829 12548
13093 12829 12468
13141 12817 12448
13265 12968 12606
13340 13029 12635
13447 13162 12609
13702 13391 12816
13948 13587 13098
14208 13837 13325
14173 13800 13188
Jan '97 14294 13854 13201
14358 13868 13217
14257 13706 13074
14431 13883 13262
14528 14034 13376
14742 14198 13526
15056 14489 13914
15003 14376 13773
15255 14656 13982
Oct 31 '97 15423 14788 14225
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
1-Year 5-Years Since Inception*
------ ------- ----------------
<S> <C> <C> <C>
Global Fixed Income Fund: 8.84% 8.07% 7.86%
JP Morgan Hedged Global Bond Index: 10.58% 8.69% 8.74%
Lehman U.S. Treasury Index: 8.61% 7.31% 7.05%
</TABLE>
*Fund Inception was 9/1/92
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
ANNUAL REPORT 9
<PAGE> 13
INTERNATIONAL BOND FUND
Country Allocation
[PIE CHART]
<TABLE>
<S> <C>
Australia 13%
Denmark 15%
U.K. 17%
Spain 10%
Italy 9%
Canada 5%
Sweden 5%
U.S. 4%
Netherlands 2%
Germany 20%
</TABLE>
Maturity Composition
[BAR GRAPH]
<TABLE>
<CAPTION>
Years
-----
<S> <C>
Canada 10.6
U.K. 8.5
Netherlands 7.3
Denmark 7.1
Italy 5.9
Australia 5.5
Sweden 4.8
Spain 4.6
Germany 3.4
U.S. 2.0
</TABLE>
FOREIGN CURRENCY EXPOSURE HEDGED 84%
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $23,698,000 $18,364,000
Number of Issues: 23 23
Average Maturity: 5.9 years 6.6 years
SEC Yield: 5.24% 5.31%
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Investment Performance
J.P. Morgan Non-U.S. Bond Index International Bond Fund
<S> <C> <C>
Apr 1 '95 10000 10000
10185 10212
10408 10398
10462 10415
10562 10435
10015 9961
10332 10182
10404 10243
10495 10366
10619 10444
Jan '96 10394 10290
10417 10125
10441 10166
10414 10146
10439 10136
10513 10218
10806 10445
10884 10486
10885 10548
11098 10702
11244 10929
11179 10894
Jan '97 10723 10611
10595 10559
10530 10412
10331 10360
10678 10695
10799 10821
10526 10610
10578 10589
10860 10863
Oct 31 '97 11112 10970
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
1-Year 2-Years Since Inception*
------ ------- ----------------
<S> <C> <C> <C>
International Bond Fund: 2.51% 3.48% 3.64%
JP Morgan Non-U.S. Bond Index: 0.12% 3.34% 4.16%
</TABLE>
*Fund Inception was 4/1/95
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements. See Note 7 regarding fund
termination.
10 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 14
GLOBAL BALANCED FUND
Country Allocation
[PIE CHART]
<TABLE>
<S> <C>
U.K. 12%
Canada 3%
Europe 42%
Japan 8%
Pacific Rim 8%
U.S. 27%
</TABLE>
Top Equity Holdings
[BAR GRAPH]
<TABLE>
<CAPTION>
Yields (%)
----------
<S> <C>
Ibiden Co. Ltd. 1.3%
General Electric Co. 1.2%
Exxon 1.0%
Allstate 1.0%
Bristol Myers-Squibb 1.0%
Wal-Mart Stores 1.0%
Philips Electronics NV 1.0%
British Aerospace 1.0%
Glaxo Wellcome 1.0%
Tosco 1.0%
</TABLE>
<TABLE>
<S> <C>
EQUITIES 51%
BONDS 46%
CASH 3%
</TABLE>
FOREIGN CURRENCY EXPOSURE HEDGED 57%
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $ 10,312,000 Fund Not In
Number of Issues: 74 Operation
Number of Countries: 18
Average Market Cap (Equities): $29.2 Billion
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Investment Performance
Index Composite** Global Balanced Fund
<S> <C> <C>
Dec 9 '96 10000 10000
9877 10032
9851 9861
9892 10032
9746 9932
9916 10022
10378 10462
10737 10873
11019 11353
10572 10753
11012 11213
Oct 31 '97 10749 10949
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
Since Inception*
----------------
<S> <C>
Global Balanced Fund: 9.49%
Composite Index: 7.49%**
</TABLE>
*Fund Inception was 12/9/96
**Return is from 12/1/96
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
ANNUAL REPORT 11
<PAGE> 15
INTERNATIONAL EQUITY FUND
Country/Region Allocation
[PIE CHART]
<TABLE>
<S> <C>
Europe 41%
Japan 21%
Pacific Rim 10%
South America 4%
Cash 7%
U.K. 17%
</TABLE>
Top Holdings
[BAR GRAPH]
<TABLE>
<S> <C>
Shell Transportation 3.0%
Glaxo Wellcome 2.8%
Ibiden 2.7%
Barclays 2.6%
British Aerospace 2.3%
Bayerische Vereinsbank 2.1%
Roche Holdings AG 2.1%
Philips Electronics 1.9%
Guiness 1.9%
Sankyo 1.8%
</TABLE>
FOREIGN CURRENCY EXPOSURE UNHEDGED
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $ 14,403,000 Fund Not In
Number of Issues: 64 Operation
Number of Countries: 21
Average Market Capitalization: $ 24.1 billion
</TABLE>
<TABLE>
<CAPTION>
Investment Performance
Morgan Stanley EAFE Index** International Equity Fund
<S> <C> <C>
Dec 1 '96 10000 10000
10108 9874
9788 9531
10228 9689
10238 9726
10218 9780
10849 10419
11509 10996
11910 11176
10879 10344
11629 10926
Oct 31 '97 10759 10089
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
Since Inception*
----------------
<S> <C>
International Equity: 7.59%
Morgan Stanley EAFE Index: 0.89%**
</TABLE>
*Fund Inception was 12/9/96
**From 12/1/96
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
12 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 16
EUROPEAN GROWTH & INCOME FUND
Top Holdings by Country
France
[BAR GRAPH]
<TABLE>
<S> <C>
Societe General 2.7%
Eridania Beghin-Say 2.6%
CIE Financiere 2.5%
Thomson CSF 2.4%
Lafarge SA 2.2%
</TABLE>
Netherlands
[BAR GRAPH]
<TABLE>
<S> <C>
ASR Verzekeringsgroep NV 2.9%
Akzo Nobel 2.8%
Royal Dutch Petroleum 2.4%
Elsevier NV 2.4%
Koninklijke PTT Nederlands 2.3%
</TABLE>
Germany
[BAR GRAPH]
<TABLE>
<S> <C>
Bayer Hypoth-Und Wech 2.8%
PWA Papierwerke Waldof 2.8%
BASF AG 2.2%
Douglas Holdings AG 2.2%
Bayer AG 2.1%
</TABLE>
U.K.
[BAR GRAPH]
<TABLE>
<S> <C>
British Telecom PLC 2.8%
Royal & Sun Alliance 2.8%
BTR PLC 2.7%
B.A.T. Industries PLC 2.6%
General Electric PLC 2.5%
</TABLE>
FOREIGN CURRENCY EXPOSURE UNHEDGED
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $13,608,000 Fund Not In
Number of Issues: 55 Operation
Number of Countries: 5
Average Market Cap: $14.4 billion
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
European Growth & Income Fund Morgan Stanley Europe Index
<S> <C> <C>
Jun 27 '97 10000 10000
10370 10471
9940 9875
10680 10836
Oct 31 '97 10190 10287
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
Since Inception*
----------------
<S> <C>
European Growth & Income Fund: 1.90%
Morgan Stanley Europe Index: 2.87%
</TABLE>
*Fund Inception was 6/27/97
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
ANNUAL REPORT 13
<PAGE> 17
GROWTH & INCOME FUND
Top Dividend Yields
[BAR GRAPH]
<TABLE>
<CAPTION>
Yields %
--------
<S> <C>
Philip Morris 4.0%
JP Morgan 3.2%
General Motors 3.2%
Eastman Kodak 2.9%
Chevron 2.8%
</TABLE>
Best Total Return (11/1/96-11/20/97)
[BAR GRAPH]
<TABLE>
<CAPTION>
Total Return (%)
----------------
<S> <C>
AT&T 51.8%
Exxon 42.1%
Philip Morris 33.7%
JP Morgan 32.1%
Chevron 30.2%
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $150,944,000 Fund Not In
Number of Issues: 16 Operation
Gross Dividend Yield*: 2.17%
Dividend Yield/S&P 500 1.69%
</TABLE>
*Prior to fund expenses
(Source: Barrons)
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Investment Performance
Standard & Poor's 500 Index Growth & Income Fund
<S> <C> <C>
Nov 1 '96 10000 10000
10756 10640
10543 10639
Jan '97 11201 11191
11289 11331
10825 10905
11472 11369
12170 12084
12715 12486
13727 13294
12958 12759
13668 13354
Oct 31 '97 13211 12919
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
1-Year Since Inception*
------ ----------------
<S> <C> <C>
Growth & Income Fund: 29.19% 29.19%
S&P 500 Index 32.11% 32.11%
</TABLE>
*Fund Inception was 11/1/96
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
14 Payden & Rygel Investment Group
<PAGE> 18
MARKET RETURN FUND
Portfolio Composition
[PIE CHART]
<TABLE>
<S> <C>
S&P Depositary Receipts 4%
Mortgage Backed 19%
Corporate 13%
Commercial Paper 25%
Treasury/Agency 39%
</TABLE>
Equity
Exposure
<TABLE>
<S> <C>
S&P Futures 96%
S&P Depositary 4%
Receipts
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $20,195,000 $5,789,000
Number of Issues: 43 20
Average Maturity: 0.4 years 2.1 years
SEC Yield: 5.62% 6.03%
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Investment Performance
Market Return Fund Standard & Poor's 500 Index
<S> <C> <C>
Dec 1 '95 10000 10000
10163 10193
Jan '96 10552 10540
10357 10637
10369 10740
10355 10898
10491 11179
10695 11222
10166 10726
10337 10952
10980 11569
11406 11888
12295 12786
11926 12533
Jan '97 12690 13316
12776 13420
12133 12869
12946 13637
13799 14467
14383 15116
15543 16318
14705 15404
15457 16248
Oct 31 '97 15026 15707
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
1-Year Since Inception*
------ ----------------
<S> <C> <C>
Market Return Fund: 31.74% 23.62%
S&P 500 Index: 32.11% 26.49%
</TABLE>
*Fund Inception was 12/1/95
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
Annual Report 15
<PAGE> 19
LIMITED MATURITY FUND
Portfolio Composition
[PIE CHART]
<TABLE>
<S> <C>
Treasury/Agency 9%
Commercial Paper 44%
Mortgage Backed 21%
Cash 1%
Corporate 25%
</TABLE>
Credit
Quality
<TABLE>
<S> <C>
AAA 78%
AA 10%
A 10%
BBB 2%
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $152,429,000 $50,771,000
Number of Issues: 37 27
Average Maturity: 0.4 years 0.7 years
SEC Yield: 5.51% 5.63%
</TABLE>
<TABLE>
<CAPTION>
Investment Performance
Merrill Lynch 90-day Treasury Bill Index Limited Maturity Fund
<S> <C> <C>
May 1 '94 10000 10000
10030 10023
10071 10062
10107 10118
10142 10154
10179 10157
10223 10184
10263 10198
10314 10240
Jan '95 10366 10308
10416 10394
10469 10447
10518 10496
10572 10583
10626 10634
10677 10683
10731 10738
10778 10773
10828 10839
10877 10899
10936 10964
Jan '96 10986 11031
11030 11047
11071 11065
11118 11099
11167 11138
11213 11192
11264 11241
11315 11288
11368 11344
11417 11427
11466 11483
11517 11530
Jan '97 11569 11577
11615 11611
11664 11647
11719 11713
11779 11774
11822 11824
11876 11890
11926 11929
11981 11995
Oct 31 '97 12032 12050
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
1-Year 3-Years Since Inception*
------ ------- ----------------
<S> <C> <C> <C>
Limited Maturity Fund: 5.46% 5.76% 5.47%
Merrill Lynch 90-day Treasury Bill Index: 5.39% 5.58% 5.22%
</TABLE>
*Fund Inception was 5/1/94
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
16 Payden & Rygel Investment Group
<PAGE> 20
SHORT BOND FUND
Portfolio Composition
[PIE CHART]
<TABLE>
<S> <C>
Mortgage Backed 32%
Corporate 24%
Commercial Paper 5%
Cash 1%
Treasury/Agency 38%
</TABLE>
Credit
Quality
<TABLE>
<S> <C>
AAA 68%
AA 10%
A 9%
BBB 13%
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $94,256,000 $97,966,000
Number of Issues: 31 34
Average Maturity: 1.4 years 1.9 years
SEC Yield: 6.05% 5.80%
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Short Bond Fund Merrill Lynch 1-3 Year Treasury Index
<S> <C> <C>
Jan 1 '94 10000 10000
10051 10064
9997 10000
9938 9950
9885 9915
9898 9929
9927 9958
10002 10044
10038 10079
10000 10056
10021 10079
10014 10034
10038 10057
Jan '95 10160 10197
10296 10337
10368 10395
10455 10487
10667 10670
10728 10728
10754 10772
10831 10836
10888 10889
10979 10981
11095 11078
11185 11163
Jan '96 11279 11258
11207 11210
11155 11200
11132 11210
11147 11233
11225 11313
11261 11358
11303 11397
11389 11500
11515 11630
11597 11719
11594 11719
Jan '97 11647 11774
11687 11801
11676 11797
11772 11893
11839 11974
11899 12057
11993 12189
11993 12200
12086 12293
Oct 31 '97 12151 12384
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
Since
1-Year 3-Years Inception*
------ ------- ----------
<S> <C> <C> <C>
Short Bond Fund 5.52% 6.63% 5.21%
Merrill Lynch 1-3 year Treasury Index 6.49% 7.10% 5.73%
</TABLE>
*Fund Inception was 1/1/94
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
Annual Report 17
<PAGE> 21
U.S. TREASURY FUND
Portfolio Composition
[PIE CHART]
<TABLE>
<S> <C>
Treasury/Agency 100%
</TABLE>
Credit
Quality
<TABLE>
<S> <C>
AAA 100%
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $15,479,000 $22,114,000
Number of Issues: 10 13
Average Maturity: 2.7 years 4.7 years
SEC Yield: 5.35% 5.85%
</TABLE>
Investment Performance
Lehman Intermediate Treasury Index U.S. Treasury Fund
<TABLE>
<S> <C> <C>
Jan 1 '95 10000 10000
10162 10130
10356 10287
10413 10337
10533 10460
10831 10787
10902 10863
10907 10843
10995 10946
11068 11019
11191 11161
11328 11329
11442 11473
Jan '96 11540 11568
11416 11372
11361 11251
11327 11185
11322 11166
11434 11279
11469 11328
11483 11334
11630 11496
11820 11743
11962 11897
11897 11816
Jan '97 11941 11842
11959 11880
11889 11805
12022 11919
12116 11999
12218 12081
12447 12272
12397 12228
12532 12328
Oct 31 '97 12679 12460
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
---------------------------
1-Year 2-Years Since Inception*
------ ------- ----------------
<S> <C> <C> <C>
U.S. Treasury Fund: 6.10% 5.65% 8.07%
Lehman Intermediate Treasury Index: 7.27% 6.43% 8.73%
</TABLE>
*Fund Inception was 1/1/95
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
18 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 22
INTERMEDIATE BOND FUND
[PIE CHART]
Portfolio Composition
<TABLE>
<S> <C>
Mortgage Backed 31%
Treasury/Agency 24%
Corporate 41%
Cash 4%
</TABLE>
Credit
Quality
<TABLE>
<S> <C>
AAA 44%
AA 8%
A 27%
BBB 21%
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $80,766,000 $52,767,000
Number of Issues: 39 31
Average Maturity: 4.5 years 3.1 years
SEC Yield: 5.87% 5.74%
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Investment Performance
Lehman Intermediate Government/Corporate Index Intermediate Bond Fund
<S> <C> <C>
Jan 1 '94 10000 10000
10111 10118
9962 9913
9797 9731
9731 9643
9737 9648
9738 9601
9879 9721
9909 9744
9818 9656
9817 9648
9772 9640
9807 9668
Jan '95 9972 9824
10179 10014
10237 10066
10364 10179
10677 10492
10749 10555
10750 10532
10848 10643
10927 10725
11048 10848
11194 11010
11311 11155
Jan '96 11408 11235
11275 11061
11216 10969
11177 10896
11168 10873
11287 10978
11321 10988
11329 11017
11487 11137
11690 11290
11845 11417
11769 11393
Jan '97 11814 11455
11837 11472
11755 11393
11893 11517
11992 11604
12102 11694
12348 11936
12286 11865
12429 12008
Oct 31 '97 12567 12109
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
1-Year 3-Years Since Inception*
------ ------- ----------------
<S> <C> <C> <C>
Intermediate Bond Fund: 7.26% 7.86% 5.12%
Lehman Intermediate
Government/Corporate Index: 7.49% 8.57% 6.14%
*Fund Inception was 1/1/94
</TABLE>
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
Annual Report 19
<PAGE> 23
INVESTMENT QUALITY BOND FUND
[PIE CHART]
Portfolio Composition
<TABLE>
<S> <C>
Corporate 28%
Commercial Paper 2%
Mortgage Backed 29%
Treasury/Agency 38%
Cash 3%
</TABLE>
Credit
Quality
<TABLE>
<S> <C>
AAA 57%
AA 9%
A 9%
BBB 25%
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $94,987,000 $32,304,000
Number of Issues: 49 32
Average Maturity: 6.5 years 6.8 years
SEC Yield: 6.08% 6.63%
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Investment Quality Bond Fund Lehman Aggregate Index
<S> <C> <C>
Jan 1 '94 10000 10000
10190 10135
9877 9959
9642 9713
9554 9636
9545 9635
9506 9613
9668 9804
9632 9816
9479 9672
9452 9663
9483 9642
9531 9708
Jan '95 9707 9900
9916 10136
9989 10198
10114 10341
10557 10741
10616 10819
10555 10795
10698 10925
10833 11032
11001 11175
11208 11343
11410 11502
Jan '96 11465 11578
11135 11377
10999 11298
10891 11234
10849 11212
10979 11362
10983 11393
11113 11374
11216 11572
11536 11829
11738 12031
11609 11919
Jan '97 11646 11956
11660 11986
11535 11853
11709 12030
11803 12144
11930 12288
12257 12619
12170 12512
12357 12696
Oct 31 '97 12510 12880
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
1-Year 3-Years Since Inception*
------ ------- ----------------
<S> <C> <C> <C>
Investment Quality Bond Fund: 8.44% 9.79% 6.01%
Lehman Aggregate Index: 8.89% 10.04% 6.82%
*Fund Inception was 1/1/94
</TABLE>
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
20 Payden & Rygel Investment Group
<PAGE> 24
TOTAL RETURN FUND
Portfolio Composition
<TABLE>
<S> <C>
Mortgage Backed 17%
Cash 1%
Corporate 30%
Treasury/Agency 52%
</TABLE>
Credit
Quality
<TABLE>
<S> <C>
AAA 60%
AA 9%
A 0%
BBB 12%
BB 19%
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $98,863,000 Fund Not In
Number of Issues: 59 Operation
Average Maturity: 6.5 years
SEC Yield: 6.39%
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Investment Performance
Lehman Aggregate Index** Total Return Fund
<S> <C> <C>
Dec 1 '96 10000 10000
9907 9959
9937 9990
9962 10031
9852 9900
9999 10031
10094 10123
10213 10255
10489 10501
10399 10428
10553 10593
Oct 31 '97 10706 10710
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
Since Inception*
----------------
<S> <C>
Total Return Fund: 7.10%
Lehman Aggregate Index: 7.06%**
*Fund Inception was 12/9/96
**From 12/1/96
</TABLE>
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
Annual Report 21
<PAGE> 25
SHORT DURATION TAX EXEMPT FUND
Portfolio Composition
<TABLE>
<S> <C>
General Obligation 17%
Insured Bonds 28%
Pre-Refunded Bonds 12%
Cash 4%
Revenue Bonds 39%
</TABLE>
Credit
Quality
<TABLE>
<S> <C>
AAA 61%
AA 11%
A 20%
BBB 8%
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $38,176,000 $36,336,000
Number of Issues: 37 35
Average Maturity: 2.0 years 2.1 years
SEC Yield: 3.72% 3.76%
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Investment Performance
Short Duration Tax Exempt Fund Lehman 1-year General Obligation Index
<S> <C> <C>
Sep 1 '94 10000 10000
9974 10001
9965 10004
9957 10025
9989 10038
Jan '95 10040 10081
10117 10146
10183 10224
10206 10264
10327 10363
10342 10401
10439 10482
10477 10529
10501 10556
10551 10596
10628 10649
10676 10691
Jan '96 10756 10763
10736 10788
10676 10800
10676 10822
10682 10848
10745 10903
10776 10949
10797 10969
10838 11016
10898 11073
10972 11140
10989 11164
Jan '97 11028 11237
11068 11271
11048 11267
11097 11311
11153 11365
11206 11408
11287 11473
11286 11488
11354 11549
Oct 31 '97 11394 11595
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
1-Year 3-Years Since Inception*
------ ------- ----------------
<S> <C> <C> <C>
Short Duration Tax Exempt Fund: 4.55% 4.56% 4.20%
Lehman 1-Year General Obligation Index: 4.72% 5.04% 4.78%
*Fund Inception was 9/1/94
</TABLE>
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
22 Payden & Rygel Investment Group
<PAGE> 26
TAX EXEMPT BOND FUND
[PIE CHART]
Portfolio Composition
<TABLE>
<S> <C>
Insured Bonds 37%
Cash 5%
Pre-Refunded Bonds 2%
Revenue Bonds 25%
General Obligation 31%
</TABLE>
Credit
Quality
<TABLE>
<S> <C>
AAA 65%
AA 26%
A 5%
BBB 4%
</TABLE>
<TABLE>
<CAPTION>
October 31, 1997 October 31, 1996
---------------- ----------------
<S> <C> <C>
Net Assets: $57,579,000 $49,862,000
Number of Issues: 49 43
Average Maturity: 7.3 years 9.3 years
SEC Yield: 4.08% 4.75%
</TABLE>
Investment Performance
[LINE GRAPH]
<TABLE>
<CAPTION>
Tax Exempt Bond Fund Lehman Quality Intermediate Index**
<S> <C> <C>
Dec 21 '93 10000 10000
10026 10000
10094 10105
9757 9890
9373 9617
9452 9696
9498 9752
9383 9730
9528 9863
9556 9907
9391 9817
9216 9724
9070 9597
9235 9727
Jan '95 9475 9911
9719 10124
9838 10239
9811 10264
10112 10523
9982 10508
10085 10644
10226 10759
10285 10805
10437 10894
10619 11010
10703 11070
Jan '96 10801 11178
10718 11146
10538 11043
10488 11023
10455 11008
10538 11090
10622 11179
10628 11185
10702 11279
10805 11396
10992 11574
10956 11540
Jan '97 10980 11585
11087 11674
10946 11542
10994 11603
11129 11744
11252 11848
11510 12096
11407 12017
11540 12139
Oct 31 '97 11597 12200
</TABLE>
<TABLE>
<CAPTION>
Average Annual Total Return
1-Year 3-Years Since Inception*
------ ------- ----------------
<S> <C> <C> <C>
Tax Exempt Bond Fund: 7.33% 7.95% 3.91%
Lehman Quality Intermediate Index: 7.06% 7.85% 5.32%**
*Fund Inception was 12/21/93
**Since January 1, 1994
</TABLE>
Note: Past performance is not predictive of future performance. This information
is not part of the audited financial statements.
Annual Report 23
<PAGE> 27
STATEMENTS OF ASSETS AND LIABILITIES
October 31, 1997
<TABLE>
<CAPTION>
GLOBAL GLOBAL INTERNATIONAL
SHORT BOND FIXED INCOME BOND
FUND FUND FUND
============ ============ =============
<S> <C> <C> <C>
ASSETS:
Investments, at value*................... $210,861,927 $535,222,496 $23,237,389
Foreign Cash............................. -- 11,569,275 --
Cash..................................... -- 20,893 --
Receivable for:
Interest and dividends................. 4,839,472 10,654,201 688,892
Open forward currency contracts........ 2,221,743 3,988,084 143,628
Closed forward currency contracts...... 85,470 24,848 --
Investments sold....................... 7,263,088 -- --
Open futures and options contracts..... -- -- --
Fund shares sold....................... -- -- --
Unamortized organization costs (Note
4)..................................... 989 -- 1,168
Deferred expense subsidy (Note 5)........ 161,152 -- 124,934
Other assets............................. -- -- --
------------ ----------- -------------
Total Assets........................ 225,433,841 561,479,797 24,196,011
------------ ----------- -------------
LIABILITIES:
Payable for:
Open forward currency contracts........ 4,158,689 12,357,251 371,352
Closed forward currency contracts...... 195,176 1,622,601 --
Investments purchased.................. -- 11,562,625 --
Open futures contracts................. -- -- --
Fund shares redeemed................... -- 1,689 --
Payable to Payden & Rygel (Note 5)....... -- -- --
Accrued expenses:
Investment advisory fees............... 109,128 137,244 86,218
Administration fees.................... 11,221 27,449 12,723
Other expenses......................... 94,454 126,716 28,022
------------ ----------- -------------
Total Liabilities................... 4,568,668 25,835,575 498,315
------------ ----------- -------------
NET ASSETS.......................... $220,865,173 $535,644,222 $23,697,696
============ =========== =============
NET ASSETS:
Paid in capital.......................... $219,668,824 $539,035,736 $23,643,780
Undistributed net investment income...... 48,730 299,249 218,923
Accumulated net realized gains (losses)
from investments....................... (47,635) (4,954,174) 82,057
Net unrealized appreciation
(depreciation) from:
Investments............................ 436,768 7,910,938 417,291
Translation of assets and liabilities
in foreign currencies............... 758,486 (6,647,527) (664,355)
------------ ----------- -------------
NET ASSETS.......................... $220,865,173 $535,644,222 $23,697,696
============ =========== =============
Outstanding shares of beneficial
interest............................... 21,726,743 52,744,225 2,329,367
============ =========== =============
NET ASSET VALUE -- offering and
redemption price per share............. $ 10.17 $ 10.16 $ 10.17
============ =========== =============
- ------------
* Investments, at cost................... $207,906,026 $525,645,214 $23,263,876
</TABLE>
See notes to financial statements.
24 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 28
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL EUROPEAN GROWTH & MARKET
BALANCED EQUITY GROWTH & INCOME RETURN
FUND FUND INCOME FUND FUND FUND
=========== ============= =========== ============ ===========
<S> <C> <C> <C> <C> <C>
$10,184,360 $14,289,461 $13,927,371 $152,143,180 $19,615,156
-- -- 23,053 -- --
-- 1,579 13,000 21,000 209
119,915 26,111 18,379 58,904 67,537
66,964 -- -- -- --
-- -- -- -- 71,010
151,239 321,431 -- -- --
-- -- -- -- 418,000
-- -- 26,547 315,782 13,948
2,714 2,519 4,458 8,054 23,006
80,132 60,139 50,653 118,396 177,212
-- -- -- -- 11,357
----------- ------------- ---------- ------------ -----------
10,605,324 14,701,240 14,063,461 152,665,316 20,397,435
----------- ------------- ---------- ------------ -----------
133,462 3,581 3,544 -- --
7,205 -- -- -- --
68,172 230,373 380,604 1,507,402 --
-- -- -- -- --
-- -- 15,069 90,818 --
20,876 2,573 34,169 -- 122,942
24,327 27,319 7,698 38,734 39,665
5,167 5,417 1,780 14,920 8,500
33,745 29,088 12,225 69,577 30,831
----------- ------------- ---------- ------------ -----------
292,954 298,351 455,089 1,721,451 201,938
----------- ------------- ---------- ------------ -----------
$10,312,370 $14,402,889 $13,608,372 $150,943,865 $20,195,497
=========== ============= ========== ============ ===========
$ 9,457,243 $13,945,094 $13,623,276 $136,970,308 $18,408,873
-- -- -- 400,495 4,911
460,445 -- (6,752) 13,164 2,196,722
488,104 513,371 (613,925) 13,559,898 (415,009)
(93,422) (55,576) 605,773 -- --
----------- ------------- ---------- ------------ -----------
$10,312,370 $14,402,889 $13,608,372 $150,943,865 $20,195,497
=========== ============= ========== ============ ===========
955,640 1,339,997 1,335,240 11,822,224 1,577,496
=========== ============= ========== ============ ===========
$ 10.79 $ 10.75 $ 10.19 $ 12.77 $ 12.80
=========== ============= ========== ============ ===========
$ 9,724,553 $13,830,985 $13,930,727 $138,583,282 $19,575,090
</TABLE>
See notes to financial statements.
ANNUAL REPORT 25
<PAGE> 29
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
LIMITED SHORT U.S.
MATURITY BOND TREASURY
FUND FUND FUND
============ ============ ===========
<S> <C> <C> <C>
ASSETS:
Investments, at value*................... $154,050,041 $ 98,754,052 $15,274,502
Foreign Cash............................. -- -- --
Cash..................................... 141 175,101 --
Receivable for:
Interest and dividends................. 959,219 693,876 205,668
Open forward currency contracts........ -- -- --
Closed forward currency contracts...... -- -- --
Investments sold....................... -- 9,637,328 --
Open futures and options contracts..... -- -- --
Fund shares sold....................... 36,000 -- --
Unamortized organization costs (Note
4)..................................... -- -- 399
Deferred expense subsidy (Note 5)........ 506,371 326,800 173,115
Other assets............................. -- -- --
------------ ------------ -----------
Total Assets........................ 155,551,772 109,587,157 15,653,684
------------ ------------ -----------
LIABILITIES:
Payable for:
Open forward currency contracts........ -- -- --
Closed forward currency contracts...... -- -- --
Investments purchased.................. -- 14,997,617 --
Open futures contracts................. -- -- --
Fund shares redeemed................... 2,614,948 -- --
Payable to Payden & Rygel (Note 5)....... -- -- 8,187
Accrued expenses:
Investment advisory fees............... 358,968 267,318 122,480
Administration fees.................... 76,922 34,437 22,039
Other expenses......................... 71,878 32,127 22,372
------------ ------------ -----------
Total Liabilities................... 3,122,716 15,331,499 175,078
------------ ------------ -----------
NET ASSETS.......................... $152,429,056 $ 94,255,658 $15,478,606
============ ============ ===========
NET ASSETS:
Paid in capital.......................... $152,343,281 $ 94,394,160 $15,437,199
Undistributed net investment income...... 40,535 22,255 4,110
Accumulated net realized gains (losses)
from investments....................... (126,972) (355,099) (153,536)
Net unrealized appreciation
(depreciation) from:
Investments............................ 172,212 194,342 190,833
Translation of assets and liabilities
in foreign currencies............... -- -- --
------------ ------------ -----------
NET ASSETS.......................... $152,429,056 $ 94,255,658 $15,478,606
============ ============ ===========
Outstanding shares of beneficial
interest............................... 15,153,628 9,499,849 1,465,864
============ ============ ===========
NET ASSET VALUE -- offering and
redemption price per share............. $ 10.06 $ 9.92 $ 10.56
============ ============ ===========
- ------------
* Investments, at cost................... $153,877,829 $ 98,559,710 $15,083,669
</TABLE>
See notes to financial statements.
26 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 30
<TABLE>
<CAPTION>
INTERMEDIATE INVESTMENT TOTAL SHORT DURATION TAX EXEMPT
BOND QUALITY BOND RETURN TAX EXEMPT BOND
FUND FUND FUND FUND FUND
============ ============ ============ ============== ===========
<S> <C> <C> <C> <C> <C>
$88,952,145 $117,100,617 $126,249,813 $ 37,572,864 $56,770,341
-- -- -- -- --
125,624 41,563 162,210 -- --
737,839 1,014,500 1,094,489 598,378 812,106
-- -- -- -- --
-- -- 139,203 -- --
-- -- -- -- --
8,125 82,513 36,563 -- --
-- -- -- 5,000 5,000
-- -- 2,128 -- --
236,298 357,854 86,518 243,459 336,238
25,131 10,052 10,052 -- --
----------- ----------- ------------ ------------- ----------
90,085,162 118,607,099 127,780,976 38,419,701 $57,923,685
----------- ----------- ------------ ------------- ----------
-- -- -- -- --
-- -- 36,176 -- --
9,082,924 23,198,319 28,725,013 -- --
-- 61,563 61,563 -- 6,250
-- -- -- -- --
-- 17,918 -- -- --
156,015 264,996 23,524 183,409 272,154
40,603 48,020 5,041 33,481 35,333
40,027 29,718 67,003 26,712 31,353
----------- ----------- ------------ ------------- ----------
9,319,569 23,620,534 28,918,320 243,602 345,090
----------- ----------- ------------ ------------- ----------
$80,765,593 $94,986,565 $ 98,862,656 $ 38,176,099 $57,578,595
=========== =========== ============ ============= ==========
$79,026,124 $93,104,151 $ 97,143,093 $ 37,920,143 $57,242,997
16,277 22,564 139,334 3,382 5,558
477,378 520,404 576,522 24,992 (1,297,225)
1,245,814 1,339,446 1,003,707 227,582 1,627,265
-- -- -- -- --
----------- ----------- ------------ ------------- ----------
$80,765,593 $94,986,565 $ 98,862,656 $ 38,176,099 $57,578,595
=========== =========== ============ ============= ==========
8,314,810 9,488,598 9,642,346 3,788,693 5,932,070
=========== =========== ============ ============= ==========
$ 9.71 $ 10.01 $ 10.25 $ 10.08 $ 9.71
=========== =========== ============ ============= ==========
$87,722,581 $115,765,559 $125,431,588 $ 37,345,282 $55,123,700
</TABLE>
See notes to financial statements.
ANNUAL REPORT 27
<PAGE> 31
STATEMENTS OF OPERATIONS
Year ended October 31, 1997
<TABLE>
<CAPTION>
GLOBAL GLOBAL INTERNATIONAL
SHORT BOND FIXED INCOME BOND
FUND FUND FUND
========== ============ =============
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income......................................... $6,842,229 $37,154,452 $ 1,322,630
Dividend income......................................... -- -- --
Foreign tax withholdings................................ -- -- (6,320)
--------- ----------- ------------
Investment Revenues................................... 6,842,229 37,154,452 1,316,310
--------- ----------- ------------
EXPENSES:
Investment advisory fees (Note 5)....................... 386,216 1,805,589 63,612
Administration fees (Note 5)............................ 77,243 361,118 12,723
Custodian fees.......................................... 52,152 185,939 20,381
Accounting fees (Note 5)................................ 43,991 217,260 13,206
Legal fees.............................................. 3,861 33,122 826
Audit fees.............................................. 12,672 37,867 18,120
Professional fees....................................... -- 25,000 1,000
Insurance............................................... 2,687 70,063 1,617
Organization expenses (Note 4).......................... 524 15,212 2,486
Trustees' fees and expenses............................. 9,956 58,089 1,922
Transfer agent fees (Note 5)............................ 16,407 55,851 9,672
Registration and filing fees............................ 68,467 36,235 4,356
Printing costs.......................................... 13,803 37,168 3,997
Other expenses.......................................... 2,039 3,111 963
Expense previously deferred (Note 5).................... -- -- 2,302
Waived advisory fee (Note 5)............................ -- -- --
Expense subsidy (Note 5)................................ (110,694) -- (8,719)
--------- ----------- ------------
Net Expenses.......................................... 579,324 2,941,624 148,464
--------- ----------- ------------
Net Investment Income.............................. 6,262,905 34,212,828 1,167,846
--------- ----------- ------------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) from:
Investments........................................... 1,249,434 19,839,446 688,468
Foreign currency transactions......................... 129,600 11,433,445 (428,445)
Futures contracts..................................... 6,892 41,210 (26,292)
Options contracts..................................... -- (863,801) --
Change in net unrealized appreciation (depreciation)
from:
Investments........................................... 357,922 (8,680,432) (175,656)
Translation of assets and liabilities in foreign
currencies......................................... 734,998 (5,636,726) (518,577)
Futures contracts..................................... -- -- --
Open options contracts written........................ -- -- --
--------- ----------- ------------
Net realized and unrealized gains (losses)......... 2,478,846 16,133,142 (460,502)
--------- ----------- ------------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS.......... $8,741,751 $50,345,970 $ 707,344
========= =========== ============
- ------------
(a) The Fund commenced operations on December 9, 1996.
(b) The Fund commenced operations on June 27, 1997.
</TABLE>
See notes to financial statements.
28 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 32
<TABLE>
<CAPTION>
GLOBAL INTERNATIONAL EUROPEAN GROWTH & MARKET
BALANCED EQUITY GROWTH & INCOME RETURN
FUND(a) FUND(a) INCOME FUND(b) FUND FUND
========== ============= ============== =========== ==========
<S> <C> <C> <C> <C> <C>
$ 284,614 $ 45,516 $ 25,424 $ 92,143 $ 7,900
66,649 132,185 57,189 1,590,895 651,072
(6,927) (13,908) (10,218) -- --
---------- ------------ ------------ ----------- ----------
344,336 163,793 72,395 1,683,038 658,972
---------- ------------ ------------ ----------- ----------
43,057 54,170 14,831 391,158 31,634
5,167 5,417 1,780 46,939 6,779
21,238 13,489 3,864 19,097 6,426
8,393 8,208 2,592 31,415 9,773
863 848 76 12,930 889
15,186 15,168 10,024 18,650 11,828
-- -- -- -- --
303 6 -- 25 960
1,349 1,280 500 3,393 18,421
948 868 104 6,676 1,009
11,077 11,198 3,832 75,663 11,352
25,868 28,503 35,488 73,556 2,392
1,195 1,178 629 11,375 5,704
5,769 1,061 663 6,449 1,604
-- -- -- -- --
-- -- (2,966) (156,463) --
(80,132) (60,139) (50,653) (118,396) (57,930)
---------- ------------ ------------ ----------- ----------
60,281 81,255 20,764 422,467 50,841
---------- ------------ ------------ ----------- ----------
284,055 82,538 51,631 1,260,571 608,131
---------- ------------ ------------ ----------- ----------
396,524 201,901 (6,752) 13,164 25,947
(309,620) (463,905) (99,424) -- 388
220,308 -- -- -- 2,666,795
18,140 -- -- -- --
488,104 513,371 (613,925) 13,559,898 5,068
(93,422) (55,576) 605,773 -- --
-- -- -- -- (680,850)
-- -- -- -- --
---------- ------------ ------------ ----------- ----------
720,034 195,791 (114,328) 13,573,062 2,017,348
---------- ------------ ------------ ----------- ----------
$1,004,089 $ 278,329 $ (62,697) $14,833,633 $2,625,479
========== ============ ============ =========== ==========
</TABLE>
See notes to financial statements.
ANNUAL REPORT 29
<PAGE> 33
STATEMENTS OF OPERATIONS (CONTINUED)
Year ended October 31, 1997
<TABLE>
<CAPTION>
LIMITED SHORT U.S.
MATURITY BOND TREASURY
FUND FUND FUND
========== ========== ==========
<S> <C> <C> <C>
INVESTMENT INCOME:
Interest income............................................ $6,366,983 $6,659,208 $1,262,998
Dividend income............................................ -- -- --
Foreign tax withholdings................................... -- -- --
---------- ---------- ----------
Investment Revenues...................................... 6,366,983 6,659,208 1,262,998
---------- ---------- ----------
EXPENSES:
Investment advisory fees (Note 5).......................... 305,823 291,286 59,618
Administration fees (Note 5)............................... 65,533 62,419 12,775
Custodian fees............................................. 13,556 10,615 5,091
Accounting fees (Note 5)................................... 43,908 41,517 13,147
Legal fees................................................. 12,004 12,063 806
Audit fees................................................. 16,420 16,297 12,554
Professional fees.......................................... 6,000 4,000 600
Insurance.................................................. 5,282 9,378 1,832
Organization expenses (Note 4)............................. 880 -- 1,946
Trustees' fees and expenses................................ 10,065 10,299 1,651
Transfer agent fees (Note 5)............................... 24,292 17,479 12,168
Registration and filing fees............................... 50,013 19,195 6,735
Printing costs............................................. 15,734 13,906 4,434
Other expenses............................................. 3,664 5,729 1,229
Expenses previously deferred (Note 5)...................... -- -- --
Waived advisory fee (Note 5)............................... -- -- --
Expense subsidy (Note 5)................................... (245,674) (98,059) (38,771)
---------- ---------- ----------
Net Expenses............................................. 327,500 416,124 95,815
---------- ---------- ----------
Net Investment Income................................. 6,039,483 6,243,084 1,167,183
---------- ---------- ----------
REALIZED AND UNREALIZED GAINS (LOSSES):
Net realized gains (losses) from:
Investments.............................................. (126,929) (224,312) (19,304)
Foreign currency transactions............................ -- -- --
Futures contracts........................................ -- -- --
Options contracts........................................ -- -- --
Change in net unrealized appreciation (depreciation) from:
Investments.............................................. 57,988 (425,436) (45,018)
Translation of assets and liabilities in foreign
currencies............................................ -- -- --
Futures contracts........................................ -- -- --
Open options contracts written........................... -- -- --
---------- ---------- ----------
Net realized and unrealized gains (losses)............ (68,941) (649,748) (64,322)
---------- ---------- ----------
CHANGE IN NET ASSETS RESULTING FROM OPERATIONS............. $5,970,542 $5,593,336 $1,102,861
========== ========== ==========
</TABLE>
- ------------
(a) The Fund commenced operations on December 9, 1996.
See notes to financial statements.
30 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 34
<TABLE>
<CAPTION>
INTERMEDIATE INVESTMENT TOTAL SHORT DURATION TAX EXEMPT
BOND QUALITY BOND RETURN TAX EXEMPT BOND
FUND FUND FUND(a) FUND FUND
============ ============ ========== ============== ==========
<S> <C> <C> <C> <C> <C>
$3,475,052 $3,538,169 $2,373,905 $1,491,011 $2,541,267
-- -- -- -- --
-- -- -- -- --
------------ ------------ ---------- ------------- ---------
3,475,052 3,538,169 2,373,905 1,491,011 2,541,267
------------ ------------ ---------- ------------- ---------
153,304 153,572 99,922 113,695 162,255
32,851 32,908 21,412 21,318 30,423
9,087 7,570 11,919 5,731 7,145
24,176 23,302 16,570 18,413 23,276
2,111 2,432 1,361 1,597 2,222
13,264 14,590 15,594 13,334 13,637
3,000 -- -- 1,500 2,000
5,174 3,551 334 2,803 5,820
-- -- 1,127 3,105 6,561
5,017 4,743 2,789 3,432 4,694
14,977 13,981 12,920 12,996 14,511
18,261 16,707 54,021 10,545 11,067
9,555 8,284 5,789 6,639 8,811
3,567 4,888 3,349 4,730 5,893
2,695 2,650 -- -- --
-- -- -- -- --
(50,710) (42,404) (86,518) (60,749) (70,180)
------------ ------------ ---------- ------------- ---------
246,329 246,774 160,589 159,089 228,135
------------ ------------ ---------- ------------- ---------
3,228,723 3,291,395 2,213,316 1,331,922 2,313,132
------------ ------------ ---------- ------------- ---------
451,330 788,145 519,273 68,232 401,779
-- -- (3,476) -- --
56,941 3,972 238,848 -- (224,188)
(16,375) (16,375) (20,250) -- --
779,210 1,077,869 818,225 175,031 969,159
-- -- -- -- --
16,250 5,313 186,094 -- 149,062
-- (925) (612) -- --
------------ ------------ ---------- ------------- ---------
1,287,356 1,857,999 1,738,102 243,263 1,295,812
------------ ------------ ---------- ------------- ---------
$4,516,079 $5,149,394 $3,951,418 $1,575,185 $3,608,944
============ ============ ========== ============= =========
</TABLE>
See notes to financial statements.
ANNUAL REPORT 31
<PAGE> 35
STATEMENTS OF CHANGES IN NET ASSETS
October 31, 1997
<TABLE>
<CAPTION>
GLOBAL SHORT
BOND FUND
======================================
PERIOD ENDED
YEAR ENDED OCTOBER 31, 1996
OCTOBER 31, 1997 (a)
================ ===================
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income........................................ $ 6,262,905 $ 130,720
Net realized gains (losses).................................. 1,385,926 (8)
Change in net unrealized appreciation (depreciation)......... 1,092,920 102,334
--------------- ----------------
Change in net assets resulting from operations............. 8,741,751 233,046
--------------- ----------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income........................................ (7,673,449) (104,999)
Net realized gains from investments.......................... -- --
In excess of net realized gains from investments............. -- --
Return of capital............................................ -- --
--------------- ----------------
Change in net assets from distributions to shareholders.... (7,673,449) (104,999)
--------------- ----------------
FROM CAPITAL TRANSACTIONS:
Proceeds from fund shares sold............................... 222,627,255 28,680,369
Reinvestment of distributions................................ 7,044,107 104,999
Cost of fund shares redeemed................................. (38,787,906)
--------------- ----------------
Change in net assets from capital transactions............. 190,883,456 28,785,368
--------------- ----------------
Total Change in Net Assets.............................. 191,951,758 28,913,415
NET ASSETS:
Beginning of period.......................................... 28,913,415 --
--------------- ----------------
End of period................................................ $220,865,173 $28,913,415
=============== ================
Undistributed net investment income.......................... $ 48,730 $ 25,713
=============== ================
FUND SHARES OF BENEFICIAL INTEREST:
Outstanding shares at beginning of period.................... 2,871,151 --
--------------- ----------------
Shares sold.................................................. 21,965,267 2,860,724
Shares issued in reinvestment of distributions............... 694,777 10,427
Shares redeemed.............................................. (3,804,452) --
--------------- ----------------
Change in shares outstanding................................. 18,855,592 2,871,151
--------------- ----------------
Outstanding shares at end of period.......................... 21,726,743 2,871,151
=============== ================
</TABLE>
- ------------
(a) The Fund commenced operations on September 18, 1996.
(b) The Fund commenced operations on December 9, 1996.
See notes to financial statements.
32 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 36
<TABLE>
<CAPTION>
GLOBAL FIXED INCOME INTERNATIONAL BOND GLOBAL BALANCED INTERNATIONAL
FUND FUND FUND EQUITY FUND
================================= ================================= ================= =================
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, 1997 OCTOBER 31, 1997
1997 1996 1997 1996 (b) (b)
============== ============== ============== ============== ================= =================
<S> <C> <C> <C> <C> <C> <C>
$ 34,212,828 $ 36,295,168 $ 1,167,846 $ 1,048,759 $ 284,055 $ 82,538
30,450,300 476,129 233,731 (956,437) 325,352 (262,004)
(14,317,158) 7,532,019 (694,233) 614,017 394,682 457,795
------------- ------------- ------------- ------------- --------------- ---------------
50,345,970 44,303,316 707,344 706,339 1,004,089 278,329
------------- ------------- ------------- ------------- --------------- ---------------
(60,308,541) (44,142,948) (990,578) (51,924) (42,206) --
-- -- -- (23,827) (106,756) --
-- -- -- (110,019) -- --
-- -- -- -- -- (5,580)
------------- ------------- ------------- ------------- --------------- ---------------
(60,308,541) (44,142,948) (990,578) (185,770) (148,962) (5,580)
------------- ------------- ------------- ------------- --------------- ---------------
59,238,120 230,552,397 7,051,390 4,234,969 10,510,669 14,175,623
26,681,751 40,665,055 969,470 180,026 131,260 3,938
(191,477,656) (160,254,143) (2,404,334) (5,765,447) (1,184,686) (49,421)
------------- ------------- ------------- ------------- --------------- ---------------
(105,557,785) 110,963,309 5,616,526 (1,350,452) 9,457,243 14,130,140
------------- ------------- ------------- ------------- --------------- ---------------
(115,520,356) 111,123,677 5,333,292 (829,883) 10,312,370 14,402,889
651,164,578 540,040,901 18,364,404 19,194,287 -- --
------------- ------------- ------------- ------------- --------------- ---------------
$ 535,644,222 $ 651,164,578 $ 23,697,696 $ 18,364,404 $10,312,370 $14,402,889
============= ============= ============= ============= =============== ===============
$ 299,249 $ 2,668,546 $ 218,923 $ -- $ -- $ --
============= ============= ============= ============= =============== ===============
62,918,935 52,327,237 1,766,919 1,912,673 -- --
------------- ------------- ------------- ------------- --------------- ---------------
5,735,467 22,249,887 700,533 421,938 1,049,707 1,344,022
2,605,537 4,006,005 95,150 17,707 11,941 393
(18,515,714) (15,664,194) (233,235) (585,399) (106,008) (4,418)
------------- ------------- ------------- ------------- --------------- ---------------
(10,174,710) 10,591,698 562,448 (145,754) 955,640 1,339,997
------------- ------------- ------------- ------------- --------------- ---------------
52,744,225 62,918,935 2,329,367 1,766,919 955,640 1,339,997
============= ============= ============= ============= =============== ===============
</TABLE>
See notes to financial statements.
ANNUAL REPORT 33
<PAGE> 37
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
<TABLE>
<CAPTION>
EUROPEAN
GROWTH & GROWTH &
INCOME FUND INCOME FUND
============ ============
PERIOD ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 (d) 1997
============ ============
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income............................................ $ 51,631 $ 1,260,571
Net realized gains (losses)...................................... (106,176) 13,164
Change in net unrealized appreciation (depreciation)............. (8,152) 13,559,898
----------- -----------
Change in net assets resulting from operations................. (62,697) 14,833,633
----------- -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income............................................ -- (860,076)
Net realized gains from investments.............................. -- --
In excess of net realized gains from investments................. -- --
----------- -----------
Change in net assets from distributions to shareholders........ -- (860,076)
----------- -----------
FROM CAPITAL TRANSACTIONS:
Proceeds from fund shares sold................................... 14,157,125 145,410,059
Reinvestment of distributions.................................... 543,287
Cost of fund shares redeemed..................................... (486,056) (8,983,038)
----------- -----------
Change in net assets from capital transactions................. 13,671,069 136,970,308
----------- -----------
Total Change in Net Assets.................................. 13,608,372 150,943,865
NET ASSETS:
Beginning of period.............................................. -- --
----------- -----------
End of period.................................................... $13,608,372 $150,943,865
=========== ===========
Undistributed net investment income.............................. $ -- $ 400,495
=========== ===========
FUND SHARES OF BENEFICIAL INTEREST:
Outstanding shares at beginning of period........................ -- --
----------- -----------
Shares sold...................................................... 1,382,337 12,473,647
Shares issued in reinvestment of distributions................... 42,701
Shares redeemed.................................................. (47,097) (694,124)
----------- -----------
Change in shares outstanding..................................... 1,335,240 11,822,224
----------- -----------
Outstanding shares at end of period.............................. 1,335,240 11,822,224
=========== ===========
</TABLE>
- ------------
(c) The Fund commenced operations on December 1, 1995.
(d) The Fund commenced operations on June 27, 1997.
See notes to financial statements.
34 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 38
<TABLE>
<CAPTION>
MARKET RETURN FUND LIMITED MATURITY FUND SHORT BOND FUND
============================ ============================= =============================
YEAR ENDED PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 (c) 1997 1996 1997 1996
=========== ============ ============ ============ ============ ============
<S> <C> <C> <C> <C> <C> <C>
$ 608,131 $ 171,576 $ 6,039,483 $ 2,049,447 $ 6,243,084 $ 3,057,159
2,693,130 16,524 (126,929) (60,491) (224,312) (353,688)
(675,782) 260,773 57,988 53,290 (425,436) 439,764
----------- ------------ ------------ ------------ ------------ ------------
2,625,479 448,873 5,970,542 2,042,246 5,593,336 3,143,235
----------- ------------ ------------ ------------ ------------ ------------
(605,389) (170,039) (5,948,776) (2,041,488) (6,017,570) (3,039,378)
(512,300) -- -- -- -- (16,883)
-- -- -- -- -- --
----------- ------------ ------------ ------------ ------------ ------------
(1,117,689) (170,039) (5,948,776) (2,041,488) (6,017,570) (3,056,261)
----------- ------------ ------------ ------------ ------------ ------------
13,368,335 5,468,086 184,443,501 111,950,760 34,031,446 95,063,381
1,005,715 141,367 3,221,631 2,027,495 2,184,739 2,857,489
(1,475,545) (99,085) (86,028,649) (81,622,509) (39,502,535) (19,198,388)
----------- ------------ ------------ ------------ ------------ ------------
12,898,505 5,510,368 101,636,483 32,355,746 (3,286,350) 78,722,482
----------- ------------ ------------ ------------ ------------ ------------
14,406,295 5,789,202 101,658,249 32,356,504 (3,710,584) 78,809,456
5,789,202 0 50,770,807 18,414,303 97,966,242 19,156,786
----------- ------------ ------------ ------------ ------------ ------------
$20,195,497 $5,789,202 $152,429,056 $ 50,770,807 $ 94,255,658 $ 97,966,242
=========== ============ ============ ============ ============ ============
$ 4,911 $ 1,537 $ 40,535 $ 12,828 $ 22,255 $ 22,497
=========== ============ ============ ============ ============ ============
532,943 -- 5,047,881 1,830,050 9,829,447 1,907,327
----------- ------------ ------------ ------------ ------------ ------------
1,080,769 528,431 18,330,395 11,140,482 3,426,440 9,562,749
83,247 13,760 320,424 201,954 220,346 287,635
(119,463) (9,248) (8,545,072) (8,124,605) (3,976,384) (1,928,264)
----------- ------------ ------------ ------------ ------------ ------------
1,044,553 532,943 10,105,747 3,217,831 (329,598) 7,922,120
----------- ------------ ------------ ------------ ------------ ------------
1,577,496 532,943 15,153,628 5,047,881 9,499,849 9,829,447
=========== ============ ============ ============ ============ ============
</TABLE>
See notes to financial statements.
ANNUAL REPORT 35
<PAGE> 39
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
U.S. TREASURY FUND
==============================
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1997 1996
============ ===========
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income.............................................. $ 1,167,183 $ 992,553
Net realized gains (losses)........................................ (19,304) (130,766)
Change in net unrealized appreciation
(depreciation)................................................... (45,018) (94,523)
------------ -----------
Change in net assets resulting from operations................... 1,102,861 767,264
------------ -----------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income.............................................. (1,170,369) (988,707)
Net realized gains from investments................................ -- (37,939)
In excess of net realized gains from investments................... -- --
------------ -----------
Change in net assets from distributions to
shareholders.................................................. (1,170,369) (1,026,646)
------------ -----------
FROM CAPITAL TRANSACTIONS:
Proceeds from fund shares sold..................................... 14,417,612 21,850,747
Reinvestment of distributions...................................... 598,123 821,001
Cost of fund shares redeemed....................................... (21,583,263) (11,192,992)
------------ -----------
Change in net assets from capital transactions................... (6,567,528) 11,478,756
------------ -----------
Total Change in Net Assets.................................... (6,635,036) 11,219,374
NET ASSETS:
Beginning of period................................................ 22,113,642 10,894,268
------------ -----------
End of period...................................................... $ 15,478,606 $22,113,642
============ ===========
Undistributed net investment income................................ $ 4,110 $ 7,296
============ ===========
FUND SHARES OF BENEFICIAL INTEREST:
Outstanding shares at beginning of period.......................... 2,098,931 1,026,380
------------ -----------
Shares sold........................................................ 1,365,481 2,071,280
Shares issued in reinvestment of distributions..................... 57,071 78,390
Shares redeemed.................................................... (2,055,619) (1,077,119)
------------ -----------
Change in shares outstanding....................................... (633,067) 1,072,551
------------ -----------
Outstanding shares at end of period................................ 1,465,864 2,098,931
============ ===========
</TABLE>
- ------------
(b) The Fund commenced operations on December 9, 1996.
See notes to financial statements.
36 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 40
<TABLE>
<CAPTION>
TOTAL RETURN
INTERMEDIATE BOND FUND INVESTMENT QUALITY BOND FUND FUND
============================ ============================= ============
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996 1997 (b)
=========== ============ ============ ============ ============
<S> <C> <C> <C> <C> <C>
$ 3,228,723 $ 2,345,073 $ 3,291,395 $ 1,904,675 $ 2,213,316
491,896 (52,914) 775,742 (268,919) 734,395
795,460 (479,438) 1,082,257 (342,583) 1,003,707
----------- ------------ ------------ ------------ -----------
4,516,079 1,812,721 5,149,394 1,293,173 3,951,418
----------- ------------ ------------ ------------ -----------
(3,187,522) (2,340,379) (3,322,442) (1,843,583) (2,231,855)
-- (255,413) -- (13,424) --
-- -- -- -- --
----------- ------------ ------------ ------------ -----------
(3,187,522) (2,595,792) (3,322,442) (1,857,007) (2,231,855)
----------- ------------ ------------ ------------ -----------
66,036,447 32,977,552 105,924,171 25,161,170 100,529,378
2,522,572 1,610,996 3,032,320 1,728,421 1,985,084
(41,888,712) (15,429,671) (48,100,615) (19,843,931) (5,371,369)
----------- ------------ ------------ ------------ -----------
26,670,307 19,158,877 60,855,876 7,045,660 97,143,093
----------- ------------ ------------ ------------ -----------
27,998,864 18,375,806 62,682,828 6,481,826 98,862,656
52,766,729 34,390,923 32,303,737 25,821,911 0
----------- ------------ ------------ ------------ -----------
$80,765,593 $ 52,766,729 $ 94,986,565 $ 32,303,737 $98,862,656
=========== ============ ============ ============ ===========
$ 16,277 $ 11,959 $ 22,564 $ 67,182 $ 139,334
=========== ============ ============ ============ ===========
5,497,972 3,490,147 3,294,124 2,591,405 0
----------- ------------ ------------ ------------ -----------
6,908,211 3,433,330 10,781,572 2,556,961 9,978,479
262,392 166,498 308,738 177,262 195,644
(4,353,765) (1,592,003) (4,895,836) (2,031,504) (531,777)
----------- ------------ ------------ ------------ -----------
2,816,838 2,007,825 6,194,474 702,719 9,642,346
----------- ------------ ------------ ------------ -----------
8,314,810 5,497,972 9,488,598 3,294,124 9,642,346
=========== ============ ============ ============ ===========
</TABLE>
See notes to financial statements.
ANNUAL REPORT 37
<PAGE> 41
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
SHORT DURATION TAX
EXEMPT FUND TAX EXEMPT BOND FUND
========================== ===========================
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1997 1996
============ =========== ============ ============
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income......................... $ 1,331,922 $ 1,063,571 $ 2,313,132 $ 2,353,994
Net realized gains (losses)................... 68,232 (43,242) 177,591 (167,524)
Change in net unrealized appreciation
(depreciation).............................. 175,031 (83,247) 1,118,221 (707,043)
------------ ----------- ------------ ------------
Change in net assets resulting from
operations............................... 1,575,185 937,082 3,608,944 1,479,427
------------ ----------- ------------ ------------
FROM DISTRIBUTIONS TO SHAREHOLDERS:
Net investment income......................... (1,330,765) (1,063,018) (2,313,809) (2,352,923)
Net realized gains from investments........... -- (32,675) -- --
In excess of net realized gains from
investments................................. -- -- -- --
------------ ----------- ------------ ------------
Change in net assets from distributions to
shareholders............................. (1,330,765) (1,095,693) (2,313,809) (2,352,923)
------------ ----------- ------------ ------------
FROM CAPITAL TRANSACTIONS:
Proceeds from fund shares sold................ 25,806,604 28,660,093 17,559,290 19,067,316
Reinvestment of distributions................. 1,017,341 826,992 1,920,237 1,985,629
Cost of fund shares redeemed.................. (25,227,895) (9,011,463) (13,058,170) (10,369,014)
------------ ----------- ------------ ------------
Change in net assets from capital
transactions............................. 1,596,050 20,475,622 6,421,357 10,683,931
------------ ----------- ------------ ------------
Total Change in Net Assets............... 1,840,470 20,317,011 7,716,492 9,810,435
NET ASSETS:
Beginning of period........................... 36,335,629 16,018,618 49,862,103 40,051,668
------------ ----------- ------------ ------------
End of period................................. $ 38,176,099 $36,335,629 $ 57,578,595 $ 49,862,103
============ =========== ============ ============
Undistributed net investment income........... $ 3,382 $ 2,225 $ 5,558 $ 6,235
============ =========== ============ ============
FUND SHARES OF BENEFICIAL INTEREST:
Outstanding shares at beginning of period..... 3,630,620 1,589,820 5,266,366 4,177,567
------------ ----------- ------------ ------------
Shares sold................................... 2,566,567 2,854,221 1,829,792 1,986,272
Shares issued in reinvestment of
distributions............................... 101,327 82,428 200,726 208,658
Shares redeemed............................... (2,509,821) (895,849) (1,364,814) (1,106,131)
------------ ----------- ------------ ------------
Change in shares outstanding.................. 158,073 2,040,800 665,704 1,088,799
------------ ----------- ------------ ------------
Outstanding shares at end of period........... 3,788,693 3,630,620 5,932,070 5,266,366
============ =========== ============ ============
</TABLE>
See notes to financial statements.
38 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 42
(This page intentionally left blank)
<PAGE> 43
GLOBAL SHORT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL FAIR VALUE IN
CURRENCY SECURITY DESCRIPTION U.S. DOLLARS
---------------- --------------------------------------------------- -------------
<C> <S> <C>
AUSTRALIA (AUSTRALIAN DOLLAR) (18.3%)
Government Bonds (15.1%)
11,410,000 Treasury Corporation of Victoria, 10.25%,
09/15/99........................................... $ 8,771,001
24,260,000 13.00%, 07/15/00................................... 20,395,416
4,930,000 Western Australia Treasury Corp., 12.00%,
08/01/01........................................... 4,219,321
-------------
33,385,738
U.S. Government Agencies (3.2%)
10,000,000 Federal Natl. Mortgage Assoc., 5.75%, 09/05/00
(a)................................................ 7,101,761
-------------
Total Australia (Cost -- $41,827,582).................................... 40,487,499
-------------
GERMANY (GERMAN MARK) (19.2%)
Government Bonds (3.7%)
13,300,000 Finland Government Eurobond, 7.50%, 01/27/00....... 8,201,680
Supranational Bonds (7.3%)
10,850,000 IBRD, 7.25%, 10/13/99.............................. 6,634,724
10,500,000 European Economic Com. Note, 6.50%, 03/10/00....... 6,357,238
5,300,000 European Investment Bond, 6.00%, 07/24/00.......... 3,183,943
-------------
16,175,905
Finance (8.2%)
11,000,000 LKB Bad-Wurt Finance, 6.00%, 05/10/1999............ 6,542,977
10,000,000 KFW International Finance, 7.50%, 01/24/00......... 6,167,258
8,700,000 Dresdner Bank, 6.50%, 05/22/00..................... 5,267,425
-------------
17,977,660
-------------
Total Germany (Cost -- $41,132,348)...................................... 42,355,245
-------------
ITALY (ITALIAN LIRA) (19.2%)
Government Bonds (19.2%)
29,200,000,000 8.25%, 07/01/99.................................... 17,994,625
39,650,000,000 7.50%, 10/01/99.................................... 24,286,623
-------------
Total Italy (Cost -- $40,454,461)........................................ 42,281,248
-------------
</TABLE>
See notes to financial statements.
40 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 44
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL FAIR VALUE IN
CURRENCY SECURITY DESCRIPTION U.S. DOLLARS
---------------- --------------------------------------------------- -------------
<C> <S> <C>
SPAIN (SPANISH PESETA) (9.7%)
Government Bonds (9.7%)
2,783,000,000 6.75%, 04/15/00.................................... $ 19,895,261
240,000,000 5.00%, 01/31/01.................................... 1,628,849
-------------
Total Spain (Cost -- $20,869,761)........................................ 21,524,110
-------------
SWEDEN (SWEDISH KRONA) (9.4%)
Government Bonds (9.4%)
139,600,000 10.25%, 05/05/00................................... 20,664,689
-------------
Total Sweden (Cost -- $20,233,555)....................................... 20,664,689
-------------
UNITED STATES (UNITED STATES DOLLAR) (19.7%)
U.S. Treasury Notes (19.0%)
2,200,000 5.875%, 10/31/98................................... 2,205,940
2,100,000 5.500%, 11/15/98................................... 2,097,858
29,500,000 6.500%, 04/30/99................................... 29,857,835
7,500,000 7.750%, 01/31/00................................... 7,816,950
-------------
Total U.S. Treasury Notes................................................ 41,978,583
-------------
Investment Companies (0.7%)
1,570,553 Dreyfus Treasury Cash Management................... 1,570,553
-------------
Total United States (Cost -- $43,388,319)................................ 43,549,136
-------------
TOTAL (COST -- $207,906,026) (b) (95.5%)................................. $ 210,861,927
=============
</TABLE>
- ------------
Percentages indicated are based on net assets of $220,865,173.
(a) All or a portion of the security is held by the custodian in a segregated
account as collateral.
(b) For federal income tax purposes, cost is $209,607,091, and net unrealized
appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation................................................ $ 3,027,308
Unrealized depreciation................................................ (1,772,472)
-----------
Net unrealized appreciation............................................ $ 1,254,836
===========
</TABLE>
See notes to financial statements.
ANNUAL REPORT 41
<PAGE> 45
GLOBAL SHORT BOND FUND
FORWARD CURRENCY CONTRACTS
October 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT CONTRACT VALUE APPRECIATION DELIVERY
CURRENCY PRICE (U.S. DOLLARS) (DEPRECIATION) DATE
- --------------------------------------------- ----------- -------------- -------------- --------
<S> <C> <C> <C> <C>
ASSETS:
Australian Dollar (sell)..................... 1.33803 $ 20,231,306 $ 1,157,062 11/17/97
Australian Dollar (sell)..................... 1.34562 19,344,195 1,002,762 11/17/97
Australian Dollar (sell)..................... 1.39276 3,324,340 61,919 11/17/97
-------------- ------------
$ 42,899,841 $ 2,221,743
============== ============
LIABILITIES:
Australian Dollar (sell)..................... 1.42410 $ 1,517,285 $ (4,754) 11/03/97
German Mark (sell)........................... 1.76315 43,410,940 (1,180,732) 12/12/97
German Mark (sell)........................... 1.73298 1,997,156 (14,247) 11/03/97
Italian Lira (sell).......................... 1,769.10000 17,296,931 (796,588) 12/05/97
Italian Lira (sell).......................... 1,757.17000 20,373,669 (794,031) 12/05/97
Italian Lira (sell).......................... 1,733.65000 3,374,384 (84,672) 12/05/97
Italian Lira (sell).......................... 1,705.00000 1,694,092 (15,643) 11/03/97
Spanish Peseta (sell)........................ 152.93100 19,034,728 (1,005,384) 11/28/97
Spanish Peseta (sell)........................ 149.40000 1,572,959 (44,845) 11/28/97
Spanish Peseta (sell)........................ 147.15300 1,001,440 (12,702) 11/03/97
Swedish Krona (sell)......................... 7.52950 20,784,913 (184,925) 01/09/98
Swedish Krona (sell)......................... 7.59230 698,076 (12,085) 01/09/98
Swedish Krona (sell)......................... 7.54230 997,687 (8,081) 11/03/97
-------------- ------------
$133,754,260 $ (4,158,689)
============== ============
</TABLE>
See notes to financial statements.
42 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 46
GLOBAL FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
IN LOCAL CURRENCY SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
AUSTRALIA (AUSTRALIAN DOLLAR) (10.9%)
Government Bonds (7.4%)
22,170,000 Treasury Corp. of Victoria, 10.25%, 09/15/99..... $ 17,042,339
29,300,000 7.50%, 07/15/05.................................. 22,731,706
--------------
39,774,045
--------------
U.S. Government Agencies (3.5%)
26,250,000 Federal Natl. Mortgage Assoc., 6.375%,
08/15/07........................................ 18,730,877
--------------
Total Australia (Cost -- $59,204,318)................................ 58,504,922
--------------
CANADA (CANADIAN DOLLAR) (4.8%)
Government Bonds (4.8%)
26,800,000 10.00%, 06/01/08................................. 25,706,084
--------------
Total Canada (Cost -- $24,557,628)................................... 25,706,084
--------------
FRANCE (FRENCH FRANC) (9.2%)
Government Bonds (9.2%)
282,000,000 4.75%, 04/12/99.................................. 49,383,076
--------------
Total France (Cost -- $47,492,163)................................... 49,383,076
--------------
GERMANY (GERMAN MARK) (15.0%)
Government Bonds (9.8%)
20,000,000 5.25%, 02/21/01.................................. 11,812,634
47,800,000 Bundesobligation #115, 5.875%, 05/15/00.......... 28,659,999
20,000,000 Treuhandanstalt, 6.25%, 03/04/04................. 12,241,530
--------------
52,714,163
--------------
Finance (5.2%)
20,000,000 LKB Bad-Wurt Finance, 5.25%, 05/15/01............ 11,748,707
28,200,000 Bayerische Vereinsbank Global, 4.50%, 06/24/02... 15,946,185
--------------
27,694,892
--------------
Total Germany (Cost -- $82,898,288).................................. 80,409,055
--------------
GREAT BRITAIN (BRITISH POUND) (10.8%)
Government Bonds (10.8%)
10,080,000 UK Gilt, 11.50%, 03/19/04........................ 19,233,311
18,400,000 UK Gilt, 8.75%, 08/25/17......................... 38,366,703
--------------
Total Great Britain (Cost -- $56,429,096)............................ 57,600,014
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 43
<PAGE> 47
GLOBAL FIXED INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
IN LOCAL CURRENCY SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
ITALY (ITALIAN LIRA) (10.0%)
Government Bonds (10.0%)
78,710,000,000 9.00%, 10/01/03.................................. $ 53,495,218
--------------
Total Italy (Cost -- $52,593,017).................................... 53,495,218
--------------
SPAIN (SPANISH PESETA) (10.1%)
Government Bonds (10.1%)
7,150,000,000 8.40%, 04/30/01(a)............................... 54,145,344
--------------
Total Spain (Cost -- $53,594,884).................................... 54,145,344
--------------
UNITED STATES (UNITED STATES DOLLAR) (29.1%)
U.S. Treasury Notes (20.6%)
14,200,000 6.375%, 05/15/00(a).............................. 14,419,390
52,200,000 7.875%, 08/15/01(a).............................. 55,861,308
35,000,000 5.750%, 08/15/03(a).............................. 34,838,650
5,000,000 6.500%, 10/15/06................................. 5,192,300
--------------
Total U.S. Treasury Notes............................................ 110,311,648
--------------
U.S. Treasury Bonds (7.5%)
40,000,000 6.250%, 08/15/23(a).............................. 40,072,400
Investment Companies (1.0%)
5,594,735 Dreyfus Treasury Cash Management................. 5,594,735
--------------
Total United States (Cost -- $148,875,820)........................... 155,978,783
--------------
TOTAL (COST -- $525,645,214) (B) (99.9%)............................. $ 535,222,496
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $535,644,222.
(a) All or a portion of the security is held by the custodian in a segregated
account as collateral.
(b) This represents cost for federal income tax purposes and differs from value
by unrealized appreciation (depreciation) of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................. $13,052,972
Unrealized depreciation............................................. (3,475,690)
-----------
Net unrealized appreciation......................................... $ 9,577,282
===========
</TABLE>
See notes to financial statements.
44 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 48
GLOBAL FIXED INCOME FUND
FORWARD CURRENCY CONTRACTS
October 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT CONTRACT VALUE APPRECIATION DELIVERY
CURRENCY PRICE (U.S. DOLLARS) (DEPRECIATION) DATE
- ---------------------------------------- ----------- -------------- -------------- --------
<S> <C> <C> <C> <C> <C>
ASSETS:
Australian Dollar....................... (sell) 1.338025 $ 60,522,023 $ 3,461,355 11/17/97
Australian Dollar....................... (sell) 1.416932 592,830 944 11/17/97
Canadian Dollar......................... (sell) 1.380700 26,921,127 525,785 11/07/97
-------------- --------------
$ 88,035,980 $ 3,988,084
============== ==============
LIABILITIES:
British Pound........................... (sell) 0.635494 $ 53,784,794 $ (3,483,124) 11/14/97
French Franc............................ (sell) 5.978100 43,677,757 (1,806,587) 12/11/97
French Franc............................ (sell) 5.920800 5,066,883 (159,000) 12/11/97
German Mark............................. (sell) 1.763150 80,997,080 (2,203,035) 12/12/97
Italian Lira............................ (sell) 1,757.17000 50,251,256 (1,959,780) 12/05/97
Spanish Peseta.......................... (sell) 152.9310 51,984,228 (2,745,725) 11/28/97
-------------- --------------
$285,761,998 $(12,357,251)
============== ==============
</TABLE>
See notes to financial statements.
ANNUAL REPORT 45
<PAGE> 49
INTERNATIONAL BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE IN
IN LOCAL CURRENCY SECURITY DESCRIPTION U.S. DOLLARS
----------------- ------------------------------------------------ ---------------
<C> <S> <C>
AUSTRALIA (AUSTRALIAN DOLLAR) (12.9%)
Government Bonds (10.6%)
830,000 Treasury Corp. of Victoria, 10.25%, 09/15/99.... $ 638,031
1,200,000 Western Australia Treasury Corp., 12.00%,
08/01/01....................................... 1,027,015
1,100,000 7.50%, 07/15/05................................. 853,409
--------------
2,518,455
--------------
U.S. Government Agencies (2.3%)
750,000 Federal Natl. Mortgage Assoc., 6.375%,
08/15/07....................................... 535,168
--------------
Total Australia (Cost -- $2,549,830)................................ 3,053,623
--------------
CANADA (CANADIAN DOLLAR) (4.7%)
Government Bonds (4.7%)
1,150,000 10.00%, 06/01/08................................ 1,103,060
--------------
Total Canada (Cost -- $1,053,780)................................... 1,103,060
--------------
DENMARK (DANISH KRONE) (13.8%)
Government Bonds (13.8%)
20,200,000 7.00%, 12/15/04(a).............................. 3,286,220
--------------
Total Denmark (Cost -- $3,395,071).................................. 3,286,220
--------------
GERMANY (GERMAN MARK) (19.8%)
Supranational Bonds (4.1%)
2,500,000 Bundesobligation #115, 5.875%, 05/15/00......... 1,498,954
1,600,000 IBRD, 7.25%, 10/13/99........................... 978,393
--------------
2,477,347
U.S. Government Agencies (2.2%)
870,000 Federal Natl. Mortgage Assoc., 6.00%,
08/23/00....................................... 522,293
Finance (7.2%)
1,800,000 Bayerische Vereinsbank Global, 4.50%,
06/24/02....................................... 1,017,842
1,125,000 KFW International Finance, 6.25%, 10/15/03...... 683,225
--------------
1,701,067
--------------
Total Germany (Cost -- $4,884,911).................................. 4,700,707
--------------
</TABLE>
See notes to financial statements.
46 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 50
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE IN
IN LOCAL CURRENCY SECURITY DESCRIPTION U.S. DOLLARS
----------------- ------------------------------------------------ ---------------
<C> <S> <C>
GREAT BRITAIN (BRITISH POUND) (17.1%)
Government Bonds (5.0%)
205,000 UK Gilt, 11.50%, 03/19/04....................... $ 391,154
370,000 UK Gilt, 8.75%, 08/25/17........................ 771,504
--------------
1,162,658
--------------
Finance (3.4%)
475,000 General Electric Capital Corp., 8.00%,
12/29/00....................................... 817,281
Supranational Bonds (4.5%)
600,000 European Investment Bank, 7.625%, 12/07/06...... 1,054,686
U.S. Government Agencies (4.2%)
600,000 Federal Home Loan Bank-Global, 6.875%,
06/07/02....................................... 1,002,882
--------------
Total Great Britain (Cost -- $3,842,579)............................ 4,037,507
--------------
ITALY (ITALIAN LIRA) (9.3%)
Government Bonds (9.3%)
3,280,000,000 9.00%, 10/01/03................................. 2,229,251
--------------
Total Italy (Cost -- $2,184,270).................................... 2,229,251
--------------
NETHERLANDS (DUTCH GUILDER) (2.2%)
Government Bonds (2.2%)
875,000 7.75%, 03/01/05................................. 514,122
--------------
Total Netherlands (Cost -- $575,345)................................ 514,122
--------------
SPAIN (SPANISH PESETA) (9.4%)
Government Bonds (9.4%)
270,000,000 10.30%, 06/15/02................................ 2,217,081
--------------
Total Spain (Cost -- $2,193,691).................................... 2,217,081
--------------
SWEDEN (SWEDISH KRONA) (4.9%)
Government Bonds (4.9%)
4,000,000 10.25%, 05/05/00................................ 592,111
4,300,000 6.00%, 02/09/05................................. 566,977
--------------
Total Sweden (Cost -- $1,126,200)................................... 1,159,088
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 47
<PAGE> 51
INTERNATIONAL BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE IN
IN LOCAL CURRENCY SECURITY DESCRIPTION U.S. DOLLARS
----------------- ------------------------------------------------ ---------------
<C> <S> <C>
UNITED STATES (UNITED STATES DOLLAR) (4.0%)
U.S. Treasury Notes (2.9%)
250,000 5.500%, 11/15/98................................ $ 249,745
400,000 7.875%, 08/15/01................................ 428,056
--------------
677,801
Investment Companies (1.1%)
258,929 Dreyfus Treasury Cash Management................ 258,929
--------------
Total United States (Cost -- $931,233).............................. 936,730
--------------
TOTAL (COST -- $23,263,876) (B) (98.1%)............................. $23,237,389
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $23,697,696.
(a) All or a portion of the security is held by the custodian in a segregated
account as collateral.
(b) For federal income tax purposes, cost is $23,289,970, and net unrealized
appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation................................................. $ 338,676
Unrealized depreciation................................................. (391,257)
---------
Net unrealized depreciation............................................. $ (52,581)
=========
</TABLE>
See notes to financial statements.
48 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 52
INTERNATIONAL BOND FUND
FORWARD CURRENCY CONTRACTS
October 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT CONTRACT VALUE APPRECIATION DELIVERY
CURRENCY PRICE (U.S. DOLLARS) (DEPRECIATION) DATE
- --------------------------------------------- ----------- -------------- -------------- --------
<S> <C> <C> <C> <C>
ASSETS:
Australian Dollar (sell)..................... 1.33802 $ 2,264,531 $ 129,512 11/17/97
Australian Dollar (sell)..................... 1.39334 760,762 13,858 11/17/97
Australian Dollar (sell)..................... 1.41693 162,323 258 11/17/97
------------- ------------
$ 3,187,616 $ 143,628
============= ============
LIABILITIES:
British Pound (sell)......................... 0.63549 $ 1,730,933 $ (112,096) 11/14/97
Canadian Dollar (buy)........................ 1.38070 2,317,665 (45,265) 11/07/97
Danish Krone (sell).......................... 7.06310 1,274,228 (100,842) 11/13/97
Italian Lira (sell).......................... 1,757.17000 1,195,103 (46,609) 12/05/97
Japanese Yen (buy)........................... 119.70500 4,469,320 (5,709) 11/21/97
Spanish Peseta (sell)........................ 152.93100 948,140 (50,079) 11/28/97
Swedish Krona (sell)......................... 7.52950 1,208,580 (10,752) 01/09/98
------------- ------------
$ 13,143,969 $ (371,352)
============= ============
</TABLE>
See notes to financial statements.
ANNUAL REPORT 49
<PAGE> 53
GLOBAL BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (44.3%)
AEROSPACE & DEFENSE (1.8%)
1,700 Boeing Company $ 81,388
3,805 British Aerospace PLC 101,236
--------------
Total Aerospace & Defense............................................ 182,624
--------------
BASIC INDUSTRIES (2.4%)
Chemicals (2.4%)
1,051 Air Products & Chemicals Inc..................... 79,876
706 CIBA Specialty Chemicals (c)..................... 69,543
60 Novartis AG...................................... 94,262
--------------
Total Basic Industries............................................... 243,681
--------------
CONGLOMERATES & HOLDING COMPANIES (0.9%)
Diversified Operations (0.5%)
10,600.00 Tomkins PLC...................................... 54,157
Business & Public Service (0.4%)
1,000 Nichii Gakkan Company............................ 40,759
--------------
Total Conglomerates & Holding Companies.............................. 94,916
--------------
DURABLES (3.1%)
Automobiles (1.6%)
842 Daimler-Benz Ag Designs.......................... 57,399
86,400 Qingling Motors Company.......................... 56,452
2,000 Toyota Motor..................................... 55,731
--------------
169,582
--------------
Consumer Products (0.6%)
700 Sony Corporation................................. 58,168
--------------
58,168
--------------
</TABLE>
See notes to financial statements.
50 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 54
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
Transportation (0.9%)
27,000 Cosco Pacific Limited............................ $ 31,440
3,600 Deutsche Lufthansa............................... 63,393
--------------
94,833
--------------
Total Durables....................................................... 322,583
--------------
ENERGY (3.0%)
1,886 Exxon Corporation................................ 115,871
13,513 Shell Transporting & Trading Company PLC......... 95,715
2,960 Tosco Corporation................................ 97,680
--------------
Total Energy......................................................... 309,266
--------------
FINANCE (8.5%)
Banking (5.4%)
3,369 Banco Galicia Y Bueno -- Sp ADR.................. 81,646
17,126 Bank Of East Asia................................ 38,334
1,495 Banque Nationale De Paris........................ 66,242
3,500 Barclays PLC..................................... 88,368
970 Bayerische Vereinsbank AG........................ 56,316
600 Credit Suisse Group-Reg.......................... 84,784
5,000 National Westminster Bank........................ 72,257
11,880 Westpac Banking Corporation...................... 69,289
--------------
557,236
--------------
Financial Services (3.1%)
1,440 Allstate Corp.................................... 119,430
4,050 Assi Gen......................................... 90,738
920 Axa -- UAP....................................... 63,145
4,122 Lloyds TSB Group PLC............................. 50,343
--------------
323,656
--------------
Total Finance........................................................ 880,892
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 51
<PAGE> 55
GLOBAL BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HEALTH (4.0%)
1,500 Abbott Laboratories.............................. $ 91,969
1,206 Bristol-Myers Squibb Company..................... 105,827
4,710 Glaxo Wellcome PLC............................... 100,757
5 Roche Holding AG................................. 44,076
2,000 Sankyo Corporation Limited....................... 66,046
--------------
Total Health......................................................... 408,675
--------------
INDUSTRIAL MACHINERY & EQUIPMENT (1.4%)
2,579 Atlas Copco AB-B Shares.......................... 76,697
792 Electrolux AB.................................... 65,632
--------------
Total Industrial Machinery & Equipment............................... 142,329
--------------
MEDIA & LEISURE (3.0%)
Hotels & Motels (0.6%)
2,880 Scandic Hotels AB (c)............................ 65,440
--------------
Multimedia (2.4%)
4,350 Elsevier NV...................................... 68,382
1,260 Polygram NV...................................... 71,696
6,000 Shochiku......................................... 43,271
5,000 Toppan Printing Corporation Limited.............. 62,802
--------------
246,151
--------------
Total Media & Leisure................................................ 311,591
--------------
NONDURABLES (1.5%)
Food, Beverage & Tobacco (1.5%)
45 Nestle........................................... 63,604
10,150 Guinness PLC..................................... 90,868
--------------
Total Nondurables.................................................... 154,472
--------------
</TABLE>
See notes to financial statements.
52 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 56
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
REAL ESTATE & MINING (0.7%)
7,000 City Developments................................ $ 29,389
9,059 Land and House................................... 6,518
9,300 WMC Limited...................................... 33,082
--------------
Total Real Estate & Mining........................................... 68,989
--------------
RETAIL & WHOLESALE (5.0%)
Drug Stores (1.0%)
3,600 Walgreen Company................................. 101,250
Restaurants (0.2%)
12,600 Kentucky Fried Chicken Holding (Malaysia) Bhd.... 25,238
Retail (3.8%)
1,044 Etam Developpement SA (c)........................ 70,187
1,620 Metro AG......................................... 71,552
1,000 Seven-Eleven Japan............................... 74,863
1,300 Vendex International............................. 71,024
3,000 Wal-Mart Stores, Inc............................. 105,375
--------------
393,001
--------------
Total Retail & Wholesale............................................. 519,489
--------------
TECHNOLOGY (9.0%)
Data Processing (0.4%)
3,000 Ines............................................. 42,672
--------------
Electrical & Electronics (4.9%)
1,872 General Electric Company......................... 120,861
8,000 Ibiden Co. Ltd................................... 133,089
1,000 Murata Manufacturing Corporation Limited......... 40,592
4,200 Nihon Dempa Kogyo................................ 45,067
1,303 Philips Electronics.............................. 102,080
1,271 Schneider SA (Ex Spie Batig)..................... 68,022
--------------
509,711
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 53
<PAGE> 57
GLOBAL BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
Telecommunications (3.7%)
679 Alcatel Alsthom.................................. $ 82,117
6,000 Nippon Comsys Corporation........................ 72,866
7 Nippon Telegraph & Telephone Corporation......... 59,391
936 Telecel -- Communicacoes Pessoai (c)............. 84,708
12,800 Telecom Italia................................... 80,388
--------------
379,470
--------------
Total Technology..................................................... 931,853
--------------
Total Common Stocks (Cost -- $4,194,218)............................. 4,571,360
--------------
BONDS AND NOTES (54.6%)
AUSTRALIA (AUSTRALIAN DOLLAR) (5.3%)
Government Bonds (5.3%)
700,000 7.50%, 07/15/05.................................. 543,078
--------------
Total Australia (Cost -- $554,205)................................... 543,078
--------------
CANADA (CANADIAN DOLLAR) (2.8%)
Government Bonds (2.8%)
300,000 10.00%, 06/01/08................................. 287,755
--------------
Total Canada (Cost -- $274,900)...................................... 287,755
--------------
FRANCE (FRENCH FRANC) (5.1%)
Government Bonds (5.1%)
3,000,000 4.75%, 04/12/99.................................. 525,352
--------------
Total France (Cost -- $504,687)...................................... 525,352
--------------
GERMANY (GERMAN MARK) (7.1%)
Government Bonds (7.1%)
1,225,000 5.25%, 02/21/01 (a).............................. 723,524
--------------
Total Germany (Cost -- $734,719)..................................... 723,524
--------------
</TABLE>
See notes to financial statements.
54 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 58
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
GREAT BRITAIN (BRITISH POUND) (5.7%)
Government Bonds (5.7%)
105,000 UK Gilt, 11.50%, 03/19/04........................ $ 200,347
190,000 UK Gilt, 8.75%, 08/25/17......................... 396,178
--------------
Total Great Britain (Cost -- $584,383)............................... 596,525
--------------
ITALY (ITALIAN LIRA) (5.9%)
Government Bonds (5.9%)
890,000,000 9.00%, 10/01/03.................................. 604,888
--------------
Total Italy (Cost -- $594,687)....................................... 604,888
--------------
SPAIN (SPANISH PESETA) (5.1%)
Government Bonds (5.1%)
70,000,000 8.40%, 04/30/01 (a).............................. 530,094
--------------
Total Spain (Cost -- $524,706)....................................... 530,094
--------------
UNITED STATES (UNITED STATES DOLLAR) (17.5%)
U.S. Treasury Notes (12.6%)
430,000 6.375%, 05/15/00 (a)............................. 436,644
830,000 6.500%, 10/15/06................................. 861,922
--------------
1,298,566
--------------
U.S. Treasury Bonds (2.4%)
250,000 6.250%, 08/15/23 (a)............................. 250,453
Investment Companies (2.5%)
252,765 Dreyfus Treasury Cash Management................. 252,765
--------------
Total United States (Cost -- $1,758,048)............................. 1,801,784
--------------
Total Bonds and Notes (Cost -- $5,530,335)........................... 5,613,000
--------------
TOTAL (COST -- $9,724,553) (B) (98.8%)............................... $10,184,360
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $10,312,370.
See notes to financial statements.
ANNUAL REPORT 55
<PAGE> 59
GLOBAL BALANCED FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
Distribution of investments by country of issue, as a percentage of total value
of investment securities, is as follows:
<TABLE>
<S> <C>
United States............................................ 27.7%
Great Britain............................................ 12.3%
Germany.................................................. 9.5%
France................................................... 8.6%
Japan.................................................... 7.8%
Italy.................................................... 7.6%
Australia................................................ 6.3%
Spain.................................................... 5.2%
Switzerland.............................................. 3.5%
Netherlands.............................................. 3.1%
Canada................................................... 2.8%
Sweden................................................... 2.0%
Hong Kong................................................ 1.2%
Other, less than 1%...................................... 2.4%
-----
100.0%
</TABLE>
(a) All or a portion of the security is held by the custodian in a segregated
account as collateral.
(b) For federal income tax purposes, cost is $9,754,914, and net unrealized
appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................... $ 623,451
Unrealized depreciation............................................... (194,005)
---------
Net unrealized appreciation........................................... $ 429,446
=========
</TABLE>
(c) Non-income producing security.
See notes to financial statements.
56 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 60
GLOBAL BALANCED FUND
FORWARD CURRENCY CONTRACTS
October 31, 1997
<TABLE>
<CAPTION>
UNREALIZED
CONTRACT CONTRACT VALUE APPRECIATION DELIVERY
CURRENCY PRICE (U.S. DOLLARS) (DEPRECIATION) DATE
- --------------------------------------------- ----------- -------------- -------------- --------
<S> <C> <C> <C> <C>
ASSETS:
Australian Dollar (sell)..................... 1.33803 $ 680,107 $ 38,896 11/17/97
Japanese Yen (sell).......................... 113.96000 570,376 28,068 11/21/97
------------- ------------
$1,250,483 $ 66,964
============= ============
LIABILITIES:
British Pound (sell)......................... 0.63549 $1,290,335 $ (83,563) 11/14/97
Dutch Guilder (buy).......................... 1.91050 69,231 (1,060) 11/03/97
French Franc (sell).......................... 5.97810 205,751 (8,510) 12/11/97
Italian Lira (sell).......................... 1,757.17000 369,913 (14,426) 12/05/97
Spanish Peseta (sell)........................ 152.93100 490,417 (25,903) 11/28/97
------------- ------------
$2,425,647 $ (133,462)
============= ============
</TABLE>
See notes to financial statements.
ANNUAL REPORT 57
<PAGE> 61
INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (92.1%)
AEROSPACE & DEFENSE (2.3%)
12,548 British Aerospace PLC............................ $ 333,853
--------------
Total Aerospace & Defense............................................ 333,853
--------------
BASIC INDUSTRIES (4.4%)
Chemicals (4.4%)
2,487 CIBA Specialty Chemicals (b)..................... 244,976
166 Novartis AG...................................... 260,791
2,500 Quimica Y Minera Chil-SP......................... 129,688
--------------
Total Basic Industries............................................... 635,455
--------------
CONGLOMERATES & HOLDING COMPANIES (3.8%)
Diversified Operations (2.7%)
46,100 Tomkins PLC...................................... 235,531
23,000 Hutchison Whampoa................................ 159,206
--------------
394,737
--------------
Business & Public Service (1.1%)
4,000 Nichii Gakkan Company............................ 163,034
--------------
Total Conglomerates & Holding Companies.............................. 557,771
--------------
DURABLES (8.1%)
Automobiles (4.2%)
2,125 Daimler-Benz Ag Designs.......................... 144,861
372,000 Qingling Motors Company.......................... 243,059
8,000 Toyota Motor..................................... 222,925
--------------
610,845
--------------
Consumer Products (1.7%)
3,000 Sony Corporation................................. 249,293
--------------
</TABLE>
See notes to financial statements.
58 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 62
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
Transportation (2.2%)
10,917 Deutsche Lufthansa-Reg........................... $ 192,239
115,000 Cosco Pacific Limited............................ 133,911
--------------
326,150
--------------
Total Durables....................................................... 1,186,288
--------------
ENERGY (6.0%)
1,375 Elf Aquitaine.................................... 170,591
37,784 Eni Spa.......................................... 212,918
45,000 First Philippine Holdings........................ 37,606
61,895 Shell Transporting & Trading Company PLC......... 438,415
--------------
Total Energy......................................................... 859,530
--------------
FINANCE (16.2%)
Banking (13.1%)
6,702 Banco Galicia Y Bueno -- Sp ADR.................. 162,419
6,863 Banco Santander.................................. 192,462
28,567 Bank Of East Asia................................ 63,942
4,867 Banque Nationale De Paris........................ 215,653
15,000 Barclays PLC..................................... 378,721
5,250 Bayerische Vereinsbank AG........................ 304,803
1,633 Credit Suisse Group -- Reg....................... 230,754
11,000 National Westminster Bank........................ 158,966
35,100 Westpac Banking Corporation...................... 204,718
--------------
1,912,438
--------------
Financial Services (3.1%)
2,780 Axa -- UAP....................................... 190,808
21,193 Lloyds TSB Group PLC............................. 258,837
--------------
449,645
--------------
Total Finance........................................................ 2,362,083
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 59
<PAGE> 63
INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
HEALTH (6.7%)
19,100 Glaxo Wellcome PLC............................... $ 408,590
35 Roche Holding AG................................. 308,529
8,000 Sankyo Corporation Limited....................... 264,182
--------------
Total Health......................................................... 981,301
--------------
Industrial Machinery & Equipment (3.5%)
8,049 Atlas Copco AB -- B Shares....................... 239,371
3,147 Electrolux AB.................................... 260,788
--------------
Total Industrial Machinery & Equipment............................... 500,159
--------------
MEDIA & LEISURE (6.8%)
Hotels & Motels (1.4%)
9,000 Scandic Hotels AB (b)............................ 204,499
--------------
Multimedia (5.4%)
14,700 Elsevier......................................... 231,084
3,800 Polygram NV...................................... 216,225
19,000 Shochiku......................................... 137,024
15,000 Toppan Printing Corporation Limited.............. 188,405
--------------
772,738
--------------
Total Media & Leisure................................................ 977,237
--------------
NONDURABLES (3.5%)
Food, Beverage & Tobacco (3.5%)
30,400 Guinness PLC..................................... 272,156
134 Nestle........................................... 189,399
22,000 Ramayana Lestari Sen............................. 37,226
--------------
Total Nondurables.................................................... 498,781
--------------
</TABLE>
See notes to financial statements.
60 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 64
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
REAL ESTATE (3.2%)
23,000 City Developments................................ $ 96,565
198,000 Guangdong Kelon Elec............................. 251,054
21,728 Land and House................................... 15,634
29,100 WMC Limited...................................... 103,515
--------------
Total Real Estate & Mining........................................... 466,768
--------------
RETAIL & WHOLESALE (6.2%)
Restaurants (0.4%)
31,000 KFC Holding (Malaysia) Bhd....................... 62,093
Retail (5.8%)
2,700 Etam Developpement SA (b)........................ 181,517
4,743 Metro AG......................................... 209,489
3,000 Seven -- Eleven Japan............................ 224,588
3,800 Vendex International............................. 207,607
--------------
823,201
--------------
Total Retail & Wholesale............................................. 885,294
--------------
TECHNOLOGY (21.4%)
Data Processing (1.6%)
16,000 Ines............................................. 227,583
--------------
Electrical & Electronics (10.1%)
24,000 Ibiden Co. Ltd................................... 399,268
5,000 Murata Manufacturing Corporation Limited......... 202,961
16,800 Nihon Dempa Kogyo................................ 180,270
3,447 Philips Electronics.............................. 270,046
2,000 Rohm Company..................................... 197,970
3,376 Schneider........................................ 180,679
--------------
1,431,194
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 61
<PAGE> 65
INTERNATIONAL EQUITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
Telecommunications (9.7%)
2,136 Alcatel Alsthom.................................. $ 258,324
21,000 Nippon Comsys Corporation........................ 255,032
25 Nippon Telegraph & Telephone Corporation......... 212,111
2,250 Telebras-Sponsored ADR........................... 227,813
2,155 Telecel -- Communicacoes Pessoai (b)............. 195,028
37,313 Telecom Italia................................... 234,338
--------------
1,382,646
--------------
Total Technology..................................................... 3,041,423
--------------
Total Common Stocks (Cost -- $12,827,467)............................ 13,285,943
--------------
INVESTMENT COMPANIES (7.1%)
1,003,518 Dreyfus Treasury Cash Management................. 1,003,518
--------------
TOTAL (COST -- $13,830,985) (A) (99.2%).............................. $14,289,461
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $14,402,889.
See notes to financial statements.
62 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 66
Distribution of investments by country of issue, as a percentage of total value
of investment securities, is as follows:
<TABLE>
<S> <C>
Japan.................................................... 21.9%
Great Britain............................................ 17.4%
Switzerland.............................................. 8.7%
France................................................... 8.4%
Netherlands.............................................. 6.5%
Germany.................................................. 6.0%
Hong Kong................................................ 6.0%
Sweden................................................... 4.9%
Italy.................................................... 3.1%
Australia................................................ 2.2%
Brazil................................................... 1.6%
Portugal................................................. 1.4%
Spain.................................................... 1.3%
Argentina................................................ 1.1%
Other, less than 1%...................................... 2.5%
United States (cash equivalent).......................... 7.0%
-----
100.0%
=====
</TABLE>
(a) For federal income tax purposes, cost is $13,878,831, and net unrealized
appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation................................................ $1,070,711
Unrealized depreciation................................................ (660,081)
----------
Net unrealized appreciation............................................ $ 410,630
==========
</TABLE>
(b) Non-income producing security.
See notes to financial statements.
ANNUAL REPORT 63
<PAGE> 67
INTERNATIONAL EQUITY FUND
FORWARD CURRENCY CONTRACTS
October 31, 1997
<TABLE>
<CAPTION>
CONTRACT CONTRACT VALUE UNREALIZED DELIVERY
CURRENCY PRICE (U.S. DOLLARS) (DEPRECIATION) DATE
- ----------------------------------------------- -------- -------------- -------------- --------
<S> <C> <C> <C> <C>
LIABILITIES:
Dutch Guilder (buy)............................ 1.91050 $233,954 $(3,581) 11/03/97
</TABLE>
See notes to financial statements.
64 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 68
EUROPEAN GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (98.8%)
BASIC INDUSTRIES (11.6%)
Chemicals (8.8%)
2,134 Akzo Nobel....................................... $ 376,271
8,653 BASF AG.......................................... 298,457
8,095 Bayer AG......................................... 291,678
15,262 Imperial Chemical Inds. PLC...................... 227,466
--------------
1,193,872
--------------
Paper and Related Products (2.8%)
1,961 Papierwerke Waldhof Aschaff...................... 380,872
--------------
Total Basic Industries............................................... 1,574,744
--------------
BUILDING & CONSTRUCTION (7.3%)
296 Bouygues (b)..................................... 27,774
870 Dyckerhoff....................................... 278,590
15,401 Hollandsche Beton................................ 308,782
4,877 Lafarge SA (b)................................... 305,416
803 Suez Lyonnaise................................... 83,579
--------------
Total Building & Construction........................................ 1,004,141
--------------
CONGLOMERATES & HOLDING COMPANIES (10.4%)
Diversified Operations (10.4%)
106,657 BTR PLC.......................................... 363,432
53,660 General Electric................................. 341,402
8,751 Lagardere SCA (b)................................ 252,266
4,963 RWE AG........................................... 218,773
4,197 VEBA AG.......................................... 236,595
--------------
Total Conglomerates & Holding Companies.............................. 1,412,468
--------------
DURABLES (2.3%)
Transportation (2.3%)
9,384 Koninklijke Pakhoed.............................. 307,609
</TABLE>
See notes to financial statements.
ANNUAL REPORT 65
<PAGE> 69
EUROPEAN GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
ENERGY (10.4%)
15,121 ABN Amro Holding................................. $ 304,727
77,893 BG PLC........................................... 340,507
38,509 National Power PLC............................... 319,896
6,119 Royal Dutch Petroleum............................ 323,895
16,243 Scottish Power................................... 121,044
--------------
Total Energy......................................................... 1,410,069
--------------
FINANCE (21.4%)
Banking (11.8%)
16,474 Abbey National Treasury.......................... 261,963
4,032 Banque Nationale De Paris........................ 178,655
9,154 Bayer Hypoth-Und Wechsel Bank.................... 386,227
1,926 Bayerische Vereinsbank........................... 111,819
7,662 Commercial Union................................. 107,516
4,938 Dresdner Bank.................................... 204,614
2,643 Societe Generale (b)............................. 362,810
--------------
1,613,604
--------------
Financial Services (9.6%)
7,425 ASR Verzekeringsgroep............................ 394,173
1,376 Axa -- UAP....................................... 94,443
4,618 CIE Financiere De Paribas (b).................... 336,139
2,416 ING Groep N.V.................................... 101,486
39,371 Royal & Sun Alliance............................. 379,202
--------------
1,305,443
--------------
Total Finance........................................................ 2,919,047
--------------
MEDIA & LEISURE (5.5%)
Advertising (1.8%)
3,809 Havas (b)........................................ 251,507
Hotels & Motels (1.2%)
840 Accor SA......................................... 156,761
</TABLE>
See notes to financial statements.
66 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 70
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
Multimedia (2.5%)
135 Canal Plus (b)................................... $ 23,552
20,363 Elsevier NV...................................... 320,107
--------------
343,659
--------------
Total Media & Leisure................................................ 751,927
--------------
METALS & STEELS (7.5%)
499 Buderus AG....................................... 242,439
79 Preussag......................................... 20,982
5,228 Stork............................................ 226,344
1,032 Thyssen.......................................... 228,807
18,020 Usinor SA (b).................................... 299,029
--------------
Total Metals & Steels................................................ 1,017,601
--------------
NONDURABLES (6.7%)
Food, Beverage & Tobacco (6.7%)
40,121 B.A.T. Industries PLC............................ 352,121
18,396 Bass PLC......................................... 254,437
6,549 Pernod-Ricard (b)................................ 304,179
--------------
Total Nondurables.................................................... 910,737
--------------
MINING (2.0%)
5,572 Koninklijke Hoogovens............................ 255,596
1,444 Rio Tinto PLC.................................... 18,738
--------------
Total Mining......................................................... 274,334
--------------
RETAIL (6.2%)
1,758 Metro............................................ 77,647
8,392 Douglas Holdings................................. 298,965
2,428 Eridania Beghin-Say (b).......................... 350,172
13,459 Sainsbury PLC.................................... 112,143
--------------
Total Retail......................................................... 838,927
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 67
<PAGE> 71
EUROPEAN GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
IN LOCAL CURRENCY FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (CONTINUED)
TECHNOLOGY (7.5%)
Electrical & Electronics (2.4%)
11,963 Thomson CSF...................................... $ 325,942
Telecommunications (5.1%)
50,220 British Telecom PLC.............................. 380,346
8,353 Koninklijke PTT Nederlands....................... 319,448
--------------
699,794
--------------
Total Technology..................................................... 1,025,736
--------------
TOTAL COMMON STOCKS (COST -- $13,450,696)............................ 13,447,340
--------------
INVESTMENT COMPANIES (3.5%)
480,031 Dreyfus Treasury Cash Management................. 480,031
--------------
TOTAL (COST -- $13,930,727) (A) (102.3%)............................. $13,927,371
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $13,608,372.
Distribution of investments by country of issue, as a percentage of total value
of investment securities, is as follows
<TABLE>
<S> <C>
Great Britain............................................ 25.8%
France................................................... 24.0%
Netherlands.............................................. 23.2%
Germany.................................................. 23.5%
United States (cash equivalent).......................... 3.5%
-----
100.0%
=====
</TABLE>
(a) This represents cost for federal income tax purposes and differs from value
by unrealized appreciation (depreciation) of securities as follows
<TABLE>
<S> <C>
Unrealized appreciation............................................... $ 469,493
Unrealized depreciation............................................... (472,849)
---------
Net unrealized depreciation........................................... $ (3,356)
=========
</TABLE>
(b) All or a portion of the security was purchased on a delayed delivery basis
and cost is $117,343 (Note 2).
See notes to financial statements.
68 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 72
EUROPEAN GROWTH & INCOME FUND
FORWARD CURRENCY CONTRACTS
October 31, 1997
<TABLE>
<CAPTION>
CONTRACT CONTRACT VALUE UNREALIZED DELIVERY
CURRENCY PRICE (U.S. DOLLARS) (DEPRECIATION) DATE
- ------------------------------------------------ -------- -------------- -------------- --------
<S> <C> <C> <C> <C>
LIABILITIES:
French Franc (buy).............................. 5.75500 $119,828 $ (941) 11/28/97
British Pound (buy)............................. 1.67650 125,690 (834) 11/05/97
Dutch Guilder (buy)............................. 1.94020 115,578 (1,769) 11/03/97
------------ ----------
$361,096 $(3,544)
============ ==========
</TABLE>
See notes to financial statements.
ANNUAL REPORT 69
<PAGE> 73
GROWTH & INCOME FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ----------------------------------------------- ---------------
<C> <S> <C>
COMMON STOCKS (48.1%)
BASIC INDUSTRIES (8.5%)
Chemicals (4.4%)
115,965 Du Pont (E.I.) De Nemours & Company............ $ 6,595,509
Paper and Related Products (4.1%)
137,740 International Paper Company.................... 6,198,300
--------------
Total Basic Industries............................................... 12,793,809
--------------
CONGLOMERATES & HOLDING COMPANIES (4.6%)
75,635 Minnesota Mining & Manufacturing Company....... 6,920,603
DURABLES (5.0%)
Automobiles (5.0%)
116,445 General Motors Corporation..................... 7,474,313
Energy (11.9%)
95,955 Chevron Corporation............................ 7,958,268
123,205 Exxon Corporation.............................. 7,569,407
42,616 Texaco Incorporated............................ 2,426,449
--------------
17,954,124
--------------
Total Durables....................................................... 25,428,437
--------------
FINANCE (4.7%)
65,195 J.P. Morgan & Company.......................... 7,155,151
HEALTH (0.2%)
2,725 Merck & Co Inc................................. 243,206
INDUSTRIAL MACHINERY & EQUIPMENT (0.2%)
4,950 Caterpillar International...................... 253,688
NONDURABLES (5.0%)
Food, Beverage & Tobacco (4.4%)
166,070 Philip Morris Companies Inc.................... 6,580,524
Auto Tires & Accessories (0.6%)
16,195 Goodyear Tire & Rubber Company................. 1,014,212
--------------
Total Nondurables.................................................... 7,594,736
--------------
</TABLE>
See notes to financial statements.
70 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 74
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
OR SHARES SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ----------------------------------------------- ---------------
<C> <S> <C>
(CONTINUED)TECHNOLOGY (8.0%)
Photo Supplies & Equipment (2.1%)
53,785 Eastman Kodak.................................. $ 3,220,377
Telecommunications (5.9%)
182,910 AT&T Corporation............................... 8,951,158
--------------
Total Technology..................................................... 12,171,535
--------------
Total Common Stocks (Cost -- $67,346,759)............................ 72,561,165
--------------
INVESTMENT COMPANIES (52.7%)
829,340 S&P 500 Depositary Receipt..................... 76,351,114
3,230,901 Dreyfus Treasury Cash Management............... 3,230,901
--------------
Total Investment Companies........................................... 79,582,015
--------------
TOTAL (COST -- $138,583,282) (a) (100.8%)............................ $ 152,143,180
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $150,943,865.
(a) For federal income tax purposes, cost is $138,591,588, and net unrealized
appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................... $14,519,066
Unrealized depreciation............................................... (967,474)
-----------
Net unrealized appreciation........................................... $13,551,592
===========
</TABLE>
See notes to financial statements.
ANNUAL REPORT 71
<PAGE> 75
MARKET RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
ASSET BACKED SECURITIES (3.7%)
29,210 Contimortgage Home Equity 1996-3 A1, 6.76%,
02/15/11 (a).................................... $ 29,365
226,453 Pacific Southwest 97-1, 6.06%, 06/15/02 (a)...... 226,313
500,000 Salomon, Inc., 6.132%, 07/23/01 (a) (d).......... 499,990
--------------
Total Asset Backed Securities........................................ 755,668
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS (14.7%)
Corporate (3.7%)
178,326 Drexel Burnham Lambert, 6.4375%, 05/01/16........ 178,326
170,323 Drexel Burnham Lambert, 6.4875%, 10/01/18 (a).... 171,336
400,000 Merrill Lynch Mortgage, 6.527%, 06/15/16
(a) (d)......................................... 405,360
--------------
755,022
--------------
Federal Home Loan Bank (5.3%)
31,611 8.600%, 06/15/19 (a)............................. 31,555
1,006,855 6.625%, 03/15/21................................. 1,028,566
--------------
1,060,121
--------------
Federal National Mortgage Association (5.7%)
104,768 8.000%, 10/17/00 (a)............................. 107,251
382,504 5.500%, 02/25/14 (a)............................. 380,691
443,099 6.500%, 04/25/17 (a)............................. 441,380
74,064 8.000%, 03/25/18 (a)............................. 74,260
36,654 6.506%, 05/25/18................................. 36,654
118,096 6.106%, 04/25/21 (a)............................. 118,224
--------------
1,158,460
--------------
Total Collateralized Mortgage Obligations............................ 2,973,603
--------------
COMMERCIAL PAPER (24.2%)
AUTOMOBILES (8.4%)
700,000 Mitsubishi, 5.52%, 11/04/97...................... 699,678
1,000,000 Toyota Motor Corp., 5.46%, 12/05/97.............. 994,834
--------------
1,694,512
--------------
</TABLE>
See notes to financial statements.
72 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 76
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMERCIAL PAPER (CONTINUED)
CHEMICALS (4.9%)
1,000,000 Du Pont (E.I.) De Nemours, 5.48%, 11/14/97....... $ 998,021
FINANCIAL (3.5%)
700,000 Merrill Lynch, 5.51%, 11/12/97................... 698,821
COMPUTERS (7.4%)
1,500,000 IBM Credit Corp, 5.49%, 11/12/97................. 1,497,475
--------------
Total Commercial Paper............................................... 4,888,829
--------------
CORPORATE BONDS (12.3%)
DURABLES (0.5%)
Automobiles (0.5%)
100,000 General Motors Acceptance, 9.125%, 07/15/01
(a)............................................. 109,625
FINANCE (2.8%)
Banking (0.8%)
150,000 Nationsbank Corporation, 5.75%, 01/17/01 (a)..... 148,313
Financial (2.0%)
100,000 Lehman Brothers Holdings, 8.38%, 02/15/99 (a).... 103,000
300,000 Lehman Brothers Holdings, 7.63%, 07/15/99 (a).... 307,500
--------------
410,500
--------------
558,813
--------------
MULTIMEDIA (5.0%)
500,000 News American Holdings, 7.45%, 06/01/00.......... 514,375
500,000 Time Warner, 4.90%, 07/29/99 (a) (c)............. 488,750
--------------
1,003,125
--------------
TECHNOLOGY (4.0%)
Telecommunications (4.0%)
300,000 AT&T Capital Corp., 5.61%, 02/01/99 (a).......... 298,875
500,000 TCI Communications, 6.381%, 03/12/01............. 500,780
--------------
799,655
--------------
Total Corporate Bonds................................................ 2,471,218
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 73
<PAGE> 77
MARKET RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (37.6%)
Federal Home Loan Bank (16.6%)
700,000 5.500%, 11/03/97................................. $ 699,786
451,731 6.025%, 01/15/06 (a)............................. 452,846
1,000,000 7.478%, 11/01/18................................. 1,037,344
368,043 6.075%, 06/17/20................................. 370,233
784,613 6.225%, 10/15/20 (a)............................. 796,873
--------------
3,357,082
--------------
Federal National Mortgage Association (20.2%)
1,000,000 5.425%, 11/24/97 (a)............................. 996,534
1,000,000 5.470%, 11/25/97................................. 996,353
500,000 5.400%, 12/17/97................................. 496,550
155,481 5.956%, 09/25/98 (a)............................. 155,509
198,586 11.00%, 10/01/06 (a)............................. 212,016
900,462 7.218%, 06/01/15 -- ARM.......................... 930,852
272,859 7.556%, 06/01/25 -- ARM.......................... 285,479
--------------
4,073,293
--------------
Government National Mortgage Association (0.8%)
26,967 7.993%, 01/16/08 -- ARM (a)...................... 26,985
128,799 7.375%, 06/20/18 -- ARM (a)...................... 132,824
--------------
159,809
--------------
Total U.S. Government Agencies....................................... 7,590,184
--------------
INVESTMENT COMPANIES (4.6%)
9,500 Standard & Poor 500 Depositary Receipt (a)....... 874,594
61,060 Dreyfus Treasury Cash Management................. 61,060
--------------
Total Investment Companies........................................... 935,654
--------------
TOTAL (COST -- $19,575,090) (b) (97.1%).............................. $19,615,156
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $20,195,497.
See notes to financial statements.
74 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 78
(a) All or a portion of the security is held by the custodian in a segregated
account as collateral.
At October 31, 1997, the Fund's open futures contracts were as follows:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION CURRENT UNREALIZED
CONTRACTS CONTRACT TYPE DATE MARKET VALUE DEPRECIATION
--------- -------------------------------- ---------- ------------ ------------
<C> <S> <C> <C> <C>
40 Standard & Poors 500 Index Dec-97 $18,480,000 $ (455,075)
</TABLE>
(b) For federal income tax purposes, cost is $19,582,114, and net unrealized
appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation................................................... $36,770
Unrealized depreciation................................................... (3,728)
-------
Net unrealized appreciation............................................... $33,042
=======
</TABLE>
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period end,
the value of these securities amounted to $488,750 or 2.4% of net assets.
(d) This is a variable rate investment and the rate reflected on the Schedule of
Portfolio Investments is the rate in effect at October 31, 1997.
See notes to financial statements.
ANNUAL REPORT 75
<PAGE> 79
LIMITED MATURITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
ASSET BACKED SECURITIES (3.1%)
294,503 Chase Manhattan Grantor Trust 1995-A, 6.00%,
09/17/01........................................ $ 294,336
417,283 Contimortgage Home Equity, 6.76%, 02/15/11....... 419,507
125,000 MBNA Master Credit Card Trust 1992-1, 7.25%,
06/15/99........................................ 124,778
3,809,366 Olympic Automobile Receivables Trust, 7.88%,
07/15/01........................................ 3,879,877
-------------
Total Asset Backed Securities........................................ 4,718,498
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS (17.8%)
Corporate (4.6%)
6,965,634 Residential Funding 1995-S8 A2, 8.00%,
05/25/25........................................ 6,985,225
Federal Home Loan Mortgage Corporation (6.9%)
590,401 6.500%, 12/15/04................................. 589,356
4,653,710 5.925%, 04/15/08................................. 4,663,110
5,152,601 6.075%, 06/17,20 (c)............................. 5,183,259
-------------
10,435,725
-------------
Federal National Mortgage Association (6.3%)
863,811 6.0000%, 08/25/13................................ 860,849
3,825,038 5.5000%, 02/25/14................................ 3,806,908
5,000,000 6.0000%, 12/25/14................................ 4,987,900
-------------
9,655,657
-------------
Total Collateralized Mortgage Obligations............................ 27,076,607
COMMERCIAL PAPER (44.3%)
AUTOMOBILES (4.6%)
7,000,000 Toyota Motor Corp., 5.46%, 12/05/97.............. 6,963,903
CHEMICALS (4.2%)
6,500,000 Du Pont (E.I.) De Nemours & Co., 5.46%,
12/16/97........................................ 6,455,638
ENERGY (4.9%)
7,500,000 Amoco, 5.48%, 01/05/98........................... 7,425,792
FINANCIAL (4.6%)
7,000,000 American Express, 5.48%, 12/01/97................ 7,000,000
</TABLE>
See notes to financial statements.
76 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 80
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
COMMERCIAL PAPER (CONTINUED)
FOOD, BEVERAGE & TOBACCO (4.8%)
7,500,000 Coca Cola, 5.48%, 01/15/98....................... $ 7,414,375
INDUSTRIAL EQUIPMENT (4.5%)
7,000,000 General Electric Capital Corp, 5.50%, 01/05/98... 6,930,486
MULTIMEDIA (4.9%)
7,500,000 Walt Disney, 5.45%, 12/19/97..................... 7,445,500
TECHNOLOGY (11.8%)
Computers & Office Equipment (8.5%)
7,500,000 IBM Credit Corp, 5.49%, 12/12/97................. 7,453,106
5,500,000 Xerox Credit Corp., 5.49%, 11/07/97.............. 5,494,968
-------------
12,948,074
Telecommunications (3.3%)
5,000,000 AT&T Corporation, 5.46%, 11/25/97................ 4,981,800
-------------
Total Technology..................................................... 17,929,874
-------------
Total Commercial Paper............................................... 67,565,568
-------------
CORPORATE BONDS (25.4%)
AEROSPACE & DEFENSE (2.0%)
3,000,000 Lockheed Martin Corporation, 6.63%, 06/15/98..... 3,012,390
FINANCE (11.5%)
Banking (8.5%)
4,000,000 Comerica Bank, 5.80%, 01/15/98................... 4,001,280
2,000,000 Key Bank, 6.05%, 04/06/98........................ 2,003,260
7,000,000 SBC Glacier Finance Limited, 5.88%, 09/10/02
(b)............................................. 6,997,813
-------------
13,002,353
Financial (3.0%)
4,500,000 International Lease Finance, 8.13%, 01/15/98..... 4,519,575
-------------
Total Finance........................................................ 17,521,928
-------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 77
<PAGE> 81
LIMITED MATURITY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
INDUSTRIAL EQUIPMENT (1.6%)
1,500,000 Ingersoll-Rand, 6.54%, 08/24/98.................. $ 1,505,940
1,000,000 Paccar Financial Corp., 8.03%, 04/15/98.......... 1,010,810
-------------
Total Industrial Equipment........................................... 2,516,750
-------------
INDUSTRIAL GOODS AND SERVICES (0.4%)
600,000 Rockwell International, 7.63%, 02/17/98.......... 603,000
MULTIMEDIA (4.2%)
6,500,000 Time Warner, 4.90%, 07/29/99 (b)................. 6,353,750
NONDURABLES (0.6%)
Food, Beverage & Tobacco (0.6%)
1,000,000 Pepsi Company Inc., 6.13%, 01/15/98.............. 1,000,670
TECHNOLOGY (5.1%)
Telecommunications (5.1%)
2,700,000 AT&T Capital Corporation, 6.39%, 01/22/99........ 2,716,875
5,000,000 TCI Communications, 6.381%, 03/12/01 (c)......... 5,007,800
-------------
Total Technology..................................................... 7,724,675
-------------
Total Corporate Bonds................................................ 38,733,163
-------------
U.S. GOVERNMENT AGENCIES (4.4%)
Federal Home Loan Mortgage Corporation (3.3%)
5,000,000 5.508%, 04/14/98................................. 4,998,454
Federal National Mortgage Association (1.1%)
1,651,405 9.500%, 09/01/24................................. 1,770,603
-------------
Total U.S. Government Agencies....................................... 6,769,057
-------------
U.S. TREASURY NOTES (5.4%)
8,000,000 6.875%, 08/31/99................................. 8,165,680
INVESTMENT COMPANIES (0.7%)
1,021,468 Dreyfus Treasury Cash Management................. 1,021,468
-------------
TOTAL (COST -- $153,877,829) (a) (101.1%)............................ $ 154,050,041
=============
</TABLE>
- ------------
Percentages indicated are based on net assets of $152,429,056.
See notes to financial statements.
78 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 82
(a) For federal income tax purposes, cost is $153,880,041, and net unrealized
appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................... $176,535
Unrealized depreciation............................................... (6,535)
--------
Net unrealized appreciation........................................... $170,000
========
</TABLE>
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period end,
the value of these securities amounted to $13,351,563 or 8.8% of net assets.
(c) This is a variable rate investment and the rate reflected on the Schedule of
Portfolio Investments is the rate in effect at October 31, 1997.
See notes to financial statements.
ANNUAL REPORT 79
<PAGE> 83
SHORT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
ASSET BACKED SECURITIES (4.9%)
358,863 Contimortgage Home Equity, 6.76%, 02/15/11....... $ 360,776
968,576 Fleetwood Credit Grantor Trust 1996-A, 6.75%,
10/17/11........................................ 985,178
3,235,048 Pacific Southwest 97-1, 6.06%, 06/17/02.......... 3,233,042
--------------
Total Asset Backed Securities........................................ 4,578,996
--------------
COLLATERIZED MORTGAGE OBLIGATIONS (27.9%)
Corporate (16.1%)
2,110,000 Capstead Securities Corp. IV 1992-12D, 7.60%,
08/25/07........................................ 2,137,694
3,771,255 Countrywide Home Loans, 7.125%, 09/25/27......... 3,793,647
2,806,092 Paine Webber Mtg. Acceptance Corp., 7.50%,
07/25/23........................................ 2,838,537
1,358,400 Residential Funding, 6.25%, 10/25/23............. 1,359,853
2,401,104 Residential Funding, 7.00%, 08/25/27............. 2,413,110
2,500,000 Westam Mortgage Financial Corp., 9.40%,
12/01/18........................................ 2,594,531
--------------
15,137,372
--------------
Federal Home Loan Mortgage Corporation (0.0%)
32,276 5.500%, 04/15/13................................. 32,199
Federal National Mortgage Association (11.8%)
1,079,764 6.000%, 08/25/13................................. 1,076,061
335,663 7.500%, 01/25/18................................. 334,391
2,909,803 10.00%, 07/01/21................................. 3,172,587
4,266,334 0.000%, 11/25/26................................. 3,475,729
3,027,226 6.2875%, 04/25/27................................ 3,040,607
--------------
11,099,375
--------------
Total Collateralized Mortgage Obligations............................ 26,268,946
--------------
COMMERCIAL PAPER (4.8%)
4,500,000 American Express, 5.55%, 11/21/97................ 4,500,000
--------------
Total Commercial Paper............................................... 4,500,000
--------------
</TABLE>
See notes to financial statements.
80 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 84
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
CORPORATE BONDS (24.9%)
AEROSPACE & DEFENSE (6.3%)
2,500,000 Lockheed Martin Corp., 6.63%, 06/15/98........... $ 2,510,325
3,400,000 Raytheon Corporation, 6.30%, 8/15/00............. 3,417,000
--------------
5,927,325
--------------
FINANCIAL (2.2%)
2,000,000 Salomon, Inc., 7.125%, 08/01/99.................. 2,035,000
HEALTH CARE (3.2%)
2,990,000 Columbia/HCA Health, 6.41%, 06/15/00............. 2,975,050
INDUSTRIAL EQUIPMENT (3.7%)
1,000,000 Caterpillar Finance Inc., 6.41%, 06/11/98........ 1,005,460
2,500,000 Ingersoll-Rand, 6.47%, 08/24/98.................. 2,508,550
--------------
3,514,010
--------------
MULTIMEDIA (2.1%)
2,000,000 Time Warner, 4.90%, 07/29/99 (b)................. 1,955,000
TELECOMMUNICATIONS (7.4%)
3,500,000 AT&T Capital Corporation, 6.57%, 01/21/00........ 3,530,625
3,500,000 TCI Communications, 6.381%, 03/12/01 (c)......... 3,505,460
--------------
7,036,085
--------------
Total Corporate Bonds................................................ 23,442,470
--------------
U.S. GOVERNMENT AGENCIES (20.4%)
Federal Home Loan Mortgage Corporation (13.8%)
13,000,000 5.650%, 11/03/97................................. 12,995,919
Government National Mortgage Association (6.6%)
5,828,939 9.000%, 06/15/09................................. 6,267,931
--------------
Total U.S. Government Agencies....................................... 19,263,850
--------------
U.S. TREASURY NOTES (19.6%)
2,500,000 5.750%, 12/31/98................................. 2,503,375
15,000,000 5.625%, 10/31/99................................. 15,001,050
1,000,000 5.875%, 02/15/00................................. 1,003,370
--------------
Total U.S. Treasury Notes............................................ 18,507,795
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 81
<PAGE> 85
SHORT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
INVESTMENT COMPANIES (2.3%)
2,191,995 Dreyfus Treasury Cash Management................. $ 2,191,995
--------------
TOTAL (COST -- $98,559,710) (a) (104.8%)............................. $98,754,052
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $94,255,658.
(a) For federal income tax purposes, cost is $98,566,585, and net unrealized
appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................... $229,459
Unrealized depreciation............................................... (41,992)
--------
Net unrealized appreciation........................................... $187,467
========
</TABLE>
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period end,
the value of these securities amounted to $1,955,000 or 2.1% of net assets.
(c) This is a variable rate investment and the rate reflected on the Schedule of
Portfolio Investments is the rate in effect at October 31, 1997.
See notes to financial statements.
82 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 86
U.S. TREASURY FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
U.S. TREASURY NOTES (88.8%)
1,000,000 6.000%, 12/31/97................................. $ 1,001,110
3,500,000 5.630%, 01/31/98................................. 3,500,875
1,400,000 5.880%, 08/15/98................................. 1,402,982
500,000 5.880%, 10/31/98................................. 501,350
2,500,000 6.250%, 03/31/99................................. 2,520,900
2,600,000 5.750%, 08/15/03................................. 2,588,014
2,000,000 7.875%, 11/15/04................................. 2,227,000
--------------
Total U.S. Treasury Notes............................................ 13,742,231
--------------
U.S. TREASURY STRIPS (9.9%)
1,200,000 0.000%, 08/15/99................................. 1,087,236
550,000 0.000%, 08/15/01................................. 444,158
--------------
Total U.S. Treasury Strips........................................... 1,531,394
--------------
INVESTMENT COMPANIES (0.01%)
877 Dreyfus Treasury Cash Management................. 877
--------------
TOTAL (COST -- $15,083,669) (a) (98.7%).............................. $15,274,502
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $15,478,606.
(a) For federal income tax purposes, cost is $15,090,388, and net unrealized
appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................... $184,338
Unrealized depreciation............................................... (224)
--------
Net unrealized appreciation........................................... $184,114
========
</TABLE>
See notes to financial statements.
ANNUAL REPORT 83
<PAGE> 87
INTERMEDIATE BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
ASSET BACKED SECURITIES (23.7%)
3,150,000 Chase Manhattan Bank-New, 7.875%, 07/15/06....... $ 3,402,000
3,500,000 First Bank Corp. Card Master Trust, 6.40%,
02/15/03......................................... 3,558,450
1,000,000 First USA Credit Card Master Trust, 5.867%,
06/17/02 (d)..................................... 1,002,600
1,800,000 Green Tree Financial Corp., 6.93%, 07/15/28...... 1,843,875
4,000,000 Green Tree Financial Corp., 7.22%, 03/15/28...... 4,113,750
678,634 Merit Securities Corporation 8-A1, 5.876%,
09/28/30 (d)..................................... 678,210
1,600,000 Navistar Financial Corp 1997-AA3, 6.75%,
03/15/02......................................... 1,622,000
3,000,000 Salomon, Inc., 6.132%, 07/23/01(a)(d)............ 2,999,940
--------------
Total Asset Backed Securities........................................ 19,220,825
--------------
COLLATERALIZED MORTGAGE OBLIGATIONS (9.4%)
Corporate (4.8%)
3,841,767 Residential Funding, 7.00%, 08/25/27 (a)......... 3,860,976
Federal Home Loan Mortgage Corporation (1.7%)
1,380,161 6.075%, 06/17/20 (a) (d)......................... 1,388,373
Federal National Mortgage Association (2.9%)
2,908,864 0.000%, 11/25/26................................. 2,369,815
--------------
Total Collateralized Mortgage Obligations............................ 7,619,164
--------------
CORPORATE BONDS (44.9%)
DURABLES (5.6%)
Automobiles (4.3%)
3,500,000 General Motors Acceptance, 5.75%, 01/05/00....... 3,473,750
Consumer Goods and Services (1.3%)
1,000,000 Disney Global Bond, 6.38%, 03/30/01.............. 1,011,250
--------------
Total Durables....................................................... 4,485,000
--------------
ENERGY (1.8%)
1,500,000 Puget Sound Power & Light, 6.50%, 09/14/99....... 1,511,250
</TABLE>
See notes to financial statements.
84 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 88
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
CORPORATE BONDS (CONTINUED)
FINANCE (14.3%)
Banking (9.2%)
1,500,000 ABN-Amro Bank, 7.25%, 05/31/05................... $ 1,565,250
850,000 Citicorp, 6.65%, 05/15/00........................ 861,688
1,000,000 Old Kent Bank, 6.88%, 04/15/98................... 1,005,130
4,000,000 SBC Glacier Finance LTD, 5.879%,
09/10/02 (a) (c)................................. 3,998,750
--------------
7,430,818
--------------
Financial Services (5.1%)
3,000,000 Grand Metropolitan Investment, 8.63%,
08/15/01 (a)..................................... 3,240,000
850,000 Transamerica Financial Corporation, 7.40%,
07/29/99......................................... 869,125
--------------
4,109,125
--------------
Total Finance........................................................ 11,539,943
--------------
HEALTH CARE (0.6%)
450,000 Columbia/HCA Healthcare Corp., 6.41%, 06/15/00... 447,750
INDUSTRIAL EQUIPMENT (4.4%)
3,500,000 Paccar Financial Corporation, 6.86%, 02/15/00.... 3,565,625
INDUSTRIAL GOODS AND SERVICES (1.6%)
1,250,000 Honeywell Incorporated, 6.60%, 04/15/01.......... 1,268,750
MULTIMEDIA (4.1%)
3,000,000 News American Holdings, 8.625%, 02/01/03 (a)..... 3,273,750
TELECOMMUNICATIONS (12.5%)
2,500,000 AT&T Capital Corporation, 5.90%, 07/10/98 (a).... 2,502,350
4,000,000 TCI Communications, 6.381%, 03/12/01 (a) (d)..... 4,006,240
3,500,000 US West Capital Funding Note, 6.85%,
01/15/02 (a)..................................... 3,583,125
--------------
Total Telecommunications............................................. 10,091,715
--------------
Total Corporate Bonds................................................ 36,183,783
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 85
<PAGE> 89
INTERMEDIATE BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
CORPORATE BONDS (CONTINUED)
U.S. GOVERNMENT AGENCIES (17.6%)
Federal Home Loan Mortgage Corporation (1.3%)
1,000,000 7.000%, 05/01/12 (f)............................. $ 1,014,060
Federal National Mortgage Association (10.2%)
645,945 8.500%, 10/01/19................................. 681,065
1,454,901 10.00%, 07/01/21................................. 1,586,294
6,000,000 7.000%, 10/01/27 (f)............................. 6,005,580
--------------
8,272,939
--------------
Government National Mortgage Association (4.3%)
1,363,501 8.000%, 12/15/26................................. 1,414,632
2,000,000 8.000%, 01/15/27 (f)............................. 2,071,860
--------------
3,486,492
--------------
Other Agencies (1.8%)
1,400,000 Tennessee Valley Authority, 6.3800%, 06/15/05.... 1,421,000
--------------
Total U.S. Government Agencies....................................... 14,194,491
--------------
U.S. TREASURY NOTES (8.8%)
1,000,000 6.130%, 12/31/01 (a)............................. 1,011,880
1,500,000 6.250%, 02/28/02................................. 1,525,485
2,000,000 6.625%, 04/30/02................................. 2,063,920
2,535,478 3.375%, 01/15/07 -- Inflation Index Note (e)..... 2,501,435
--------------
Total U.S. Treasury Notes............................................ 7,102,720
--------------
INVESTMENT COMPANIES (5.7%)
4,631,162 Dreyfus Treasury Cash Management................. 4,631,162
--------------
TOTAL (COST -- $87,722,581) (b) (110.1%)............................. $88,952,145
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $80,765,593.
See notes to financial statements.
86 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 90
(a) All or a portion of the security is held by the custodian in a segregated
account as collateral.
At October 31, 1997, the Fund's open futures contracts were as follows:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION CURRENT UNREALIZED
CONTRACTS CONTRACT TYPE DATE MARKET VALUE APPRECIATION
- --------- -------------------------- ---------- ------------ ------------
<S> <C> <C> <C> <C>
130 U.S. Treasury 10-Year Note Dec-97 $14,527,500 $ 16,250
</TABLE>
(b) This represents cost for federal income tax purposes and differs from value
by unrealized appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation.............................................. $1,231,735
Unrealized depreciation.............................................. (2,171)
----------
Net unrealized appreciation.......................................... $1,229,564
==========
</TABLE>
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $3,998,750 or 5.0% of net
assets.
(d) This is a variable rate investment and the rate reflected on the Schedule
of Portfolio Investments is the rate in effect at October 31, 1997.
(e) Inflation Index Notes are government securities with par values that
increase over time at the annual rate of inflation using the Consumer Price
Index (CPI).
(f) Security was purchased on a delayed delivery basis. Total cost of delayed
delivery transactions is $9,082,924 (Note 2).
See notes to financial statements.
ANNUAL REPORT 87
<PAGE> 91
INVESTMENT QUALITY BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
ASSET BACKED SECURITIES (22.6%)
2,700,000 Green Tree Financial Corp., 6.80%, 10/15/27
(a)............................................. $ 2,773,197
2,500,000 Green Tree Financial Corp., 7.22%, 03/15/28...... 2,571,094
4,500,000 IMC Home Equity Loan Trust 1997-6 A, 5.847%,
01/20/28........................................ 4,500,000
4,220,000 MBNA Master Credit Card Trust, 6.60%, 11/15/04... 4,308,873
1,233,880 Merit Securities Corporation 8-A1, 5.876%,
09/28/30 (a)(d)................................. 1,233,109
2,846,842 Pacific Southwest 97-1, 6.06%, 06/15/02.......... 2,845,077
750,000 Premier Auto Trust 1996-2 A4, 6.575%, 10/6/00.... 758,468
2,500,000 Salomon, Inc., 6.1325%, 07/23/01 (a)............. 2,499,950
-------------
Total Asset Backed Securities........................................ 21,489,768
-------------
COLLATERALIZED MORTGAGE OBLIGATIONS (13.4%)
Corporate (1.6%)
1,412,976 General Electric Capital 92-7A, 8.30%,
07/25/23........................................ 1,464,846
Federal Home Loan Mortgage Corporation (1.9%)
1,840,215 6.075%, 06/17/20 (a) (d)......................... 1,851,164
Federal National Mortgage Association (9.9%)
1,624,234 6.256%, 05/25/99 (a)............................. 1,633,460
1,905,539 6.056%, 02/25/06 (a)............................. 1,909,369
2,424,053 0.000%, 11/25/26................................. 1,974,846
3,960,000 6.500%, 09/01/27................................. 3,890,700
-------------
9,408,375
-------------
Total Collateralized Mortgage Obligations............................ 12,724,385
-------------
COMMERCIAL PAPER (2.1%)
2,000,000 General Electric Capital, 5.10%, 11/10/97 (a).... 2,000,000
-------------
Total Commercial Paper............................................... 2,000,000
-------------
</TABLE>
See notes to financial statements.
88 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 92
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
CORPORATE BONDS (34.1%)
DURABLES (1.6%)
Automobiles (0.5%)
500,000 General Motors Acceptance Corp., 8.625%,
06/15/99........................................ $ 519,375
Consumer Goods and Services (1.1%)
1,000,000 Walt Disney Company, 6.375%, 03/30/01 (a)........ 1,011,250
-------------
Total Durables....................................................... 1,530,625
-------------
ENERGY (1.1%)
500,000 Union Electric, 6.875%, 08/01/04................. 515,000
500,000 Virginia Electric Power Company, 7.375%,
07/01/02........................................ 523,125
-------------
Total Energy......................................................... 1,038,125
-------------
FINANCE (14.5%)
Banking (5.4%)
400,000 ABN -- Amro Bank, 7.25%, 05/31/05................ 417,400
200,000 Citicorp, 6.65%, 05/15/00........................ 202,750
4,000,000 SBC Glacier Finance LTD, 5.879%, 09/10/02 (a)
(c)............................................. 3,998,750
500,000 Swiss Bank Corporation -- N.Y., 7.25%, 09/1/06... 526,250
-------------
5,145,150
-------------
Financial (9.1%)
5,000,000 FC CBO, 8.430%, 06/03/09 (a) (c)................. 5,284,375
1,500,000 Grand Metropolitan PLC, 8.63%, 08/15/01 (a)...... 1,620,000
1,500,000 Salomon Incorporated, 7.25%, 05/01/01............ 1,546,875
190,000 Transamerica Financial Corp., 7.40%, 07/29/99.... 194,275
-------------
8,645,525
-------------
Total Finance........................................................ 13,790,675
-------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 89
<PAGE> 93
INVESTMENT QUALITY BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
CORPORATE BONDS (CONTINUED)
HEALTH CARE (2.1%)
1,900,000 Columbia/HCA Healthcare Corp., 6.87%, 09/15/03... $ 1,947,500
INDUSTRIAL GOODS AND SERVICES (5.1%)
500,000 Hanson Overseas, PLC, 6.75%, 09/15/05............ 508,125
4,000,000 Raytheon Company, 6.75%, 08/15/07 (a)............ 4,070,000
250,000 Rockwell International, 7.63%, 02/17/98.......... 251,250
-------------
Total Industrial Goods and Services.................................. 4,829,375
-------------
MULTIMEDIA (4.4%)
4,000,000 Time Warner, Inc., 7.75%, 06/15/05............... 4,215,000
TELECOMMUNICATIONS (5.3%)
2,500,000 TCI Communications, 6.381%, 03/12/01 (a) (d)..... 2,503,900
2,500,000 US West Capital Funding, 6.85%, 01/15/02 (a)..... 2,559,375
-------------
Total Telecommunications............................................. 5,063,275
-------------
Total Corporate Bonds................................................ 32,414,575
-------------
U.S. GOVERNMENT AGENCIES (39.8%)
Federal Home Loan Mortgage Corporation (19.4%)
1,000,000 5.550%, 11/24/97................................. 996,556
3,414,506 7.000%, 09/01/12 (a)............................. 3,462,514
2,700,000 7.000%, 10/01/12 (e)............................. 2,737,962
1,946,694 8.500%, 06/01/22................................. 2,053,139
2,508,350 7.500%, 08/01/27................................. 2,563,208
2,475,000 7.500%, 10/01/27................................. 2,529,128
4,000,000 7.500%, 10/01/27 (e)............................. 4,086,240
-------------
18,428,747
-------------
Federal National Mortgage Association (17.3%)
10,500,000 7.000%, 10/01/27 (e)............................. 10,509,765
5,700,000 8.000%, 10/01/27 (e)............................. 5,901,267
-------------
16,411,032
-------------
</TABLE>
See notes to financial statements.
90 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 94
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (CONTINUED)
Government National Mortgage Association (3.1%)
2,920,888 7.5000%, 05/15/26................................ $ 2,986,608
-------------
Total U.S. Government Agencies....................................... 37,826,387
-------------
U.S. TREASURY NOTES (2.2%)
1,000,000 6.875%, 08/31/99 (a)............................. 1,020,710
1,014,863 3.375%, 01/15/07................................. 1,000,574
-------------
Total U.S. Treasury Notes............................................ 2,021,284
-------------
U.S. TREASURY BONDS (5.1%)
700,000 6.2500%, 08/15/23 (a)............................ 701,267
4,000,000 6.5000%, 11/15/26................................ 4,174,600
-------------
Total U.S. Treasury Bonds............................................ 4,875,867
-------------
INVESTMENT COMPANIES (4.0%)
3,748,351 Dreyfus Treasury Cash Management................. 3,748,351
--------------
TOTAL (COST -- $115,765,559) (B) (123.3%)............................ $ 117,100,617
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $94,986,565.
(a) All or a portion of the security is held by the custodian in a segregated
account as collateral.
At October 31, 1997, the Fund's open futures contracts were as follows:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION CURRENT UNREALIZED
CONTRACTS CONTRACT TYPE DATE MARKET VALUE APPRECIATION
--------- -------------------------------- ---------- ------------ ------------
<C> <S> <C> <C> <C>
70 U.S. Treasury Bond Future Dec-97 $8,292,813 $5,313
</TABLE>
See notes to financial statements.
ANNUAL REPORT 91
<PAGE> 95
INVESTMENT QUALITY BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
At October 31, 1997, the Fund's open options contracts were as follows:
<TABLE>
<CAPTION>
NUMBER OF EXPIRATION EXERCISE UNREALIZED
CONTRACTS WRITTEN CONTRACT TYPE DATE PRICE DEPRECIATION
----------------- ------------------------------- ---------- -------- ------------
<C> <S> <C> <C> <C>
20 Call Option U.S. Treasury
10 Year 98Mar Feb-98 $111 $ 0
20 Put Option U.S. Treasury
10 Year 98Mar Feb-98 $111 (925)
------- --------
$ (925)
</TABLE>
(b) This represents cost for federal income tax purposes and differs from value
by unrealized appreciation (depreciation) of securities is as follows:
<TABLE>
<S> <C>
Unrealized appreciation................................................ $1,360,754
Unrealized depreciation................................................ (25,696)
----------
Net unrealized appreciation............................................ $1,335,058
==========
</TABLE>
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period end,
the value of these securities amounted to $9,283,125 or 9.8% of net assets.
(d) This is a variable rate investment and the rate reflected on the Schedule of
Portfolio Investments is the rate in effect at October 31, 1997.
(e) Security was purchased on a delayed delivery basis. Total cost of delayed
delivery transactions is $23,198,319 (Note 2).
See notes to financial statements.
92 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 96
TOTAL RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
IN LOCAL CURRENCY SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
ASSET BACKED SECURITIES (10.4%)
390,000 Capstead Securities Corporation IV, 7.60%,
08/25/07........................................ $ 395,119
29,210 Contimortgage Home Equity, 6.76%, 02/15/11....... 29,365
432,036 Daimler-Benz Vehicle Trust, 5.85%, 07/20/03...... 432,239
3,000,000 Evergreen Funding, 7.03%, 11/15/10 (c) (e)....... 3,000,000
1,900,000 Green Tree Financial Corp., 6.93%, 07/15/28
(a)............................................. 1,946,313
3,500,000 Green Tree Financial Corp., 7.22%, 03/15/28...... 3,599,531
246,776 Merit Securities Corp. 8-A1, 5.876%, 09/28/30
(a) (d)......................................... 246,622
161,680 Nationsbank Auto Owner Trust 96A-A2, 6.13%,
07/15/99........................................ 161,745
161,752 Pacific Southwest 97-1, 6.06%, 06/15/02.......... 161,652
306,940 Student Loan Marketing Ass. 96-4A1, 5.60%,
07/25/04 (a).................................... 307,032
--------------
Total Asset Backed Securities........................................ 10,279,618
--------------
COLLATERIZED MORTGAGE OBLIGATIONS (11.5%)
Corporate (3.9%)
600,000 Merrill Lynch Mortgage Investors, 6.527%,
06/15/06 (a) (d)................................ 608,040
3,252,017 Residential Funding, 7.50%, 11/25/25 (a)......... 3,265,545
--------------
3,873,585
--------------
Federal Home Loan Mortgage Corporation (0.5%)
460,054 6.075%, 06/17/20 (a)............................. 462,791
Federal National Mortgage Association (7.1%)
395,958 6.256%, 05/25/99 (a)............................. 398,207
1,939,243 0.000%, 11/25/26 -- Principal Only (a)........... 1,579,877
4,984,045 6.256%, 04/25/27 (a)............................. 5,006,074
--------------
6,984,158
--------------
Total Collateralized Mortgage Obligations............................ 11,320,534
--------------
CORPORATE BONDS (37.9%)
AIRLINES (0.8%)
750,000 Northwest Airlines Corporation, 8.375%,
03/15/04........................................ 779,063
</TABLE>
See notes to financial statements.
ANNUAL REPORT 93
<PAGE> 97
TOTAL RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
IN LOCAL CURRENCY SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
CORPORATE BONDS (CONTINUED)
ENERGY (1.6%)
1,500,000 CAL Energy Company, 9.50%, 09/15/06 (a).......... $ 1,616,250
FINANCE (17.5%)
Banking (0.5%)
475,000 First Nationwide, 9.13%, 11/15/03................ 492,813
Financial (17.0%)
5,000,000 Aeltus Limited 144a, 6.367%, 12/12/08
(a) (c) (d)..................................... 4,997,500
1,000,000 Ares CBO, 7.52%, 11/30/04 (c).................... 1,000,000
1,000,000 Ares CBO, 9.77%, 11/30/04 (c).................... 1,000,000
1,200,000 Contifinanial Corporation, 8.375%, 08/15/03
(a)............................................. 1,257,000
5,000,000 FC CBO, 8.43%, 06/03/09 (a) (c).................. 5,284,375
225,000 Salomon, Inc., 6.625%, 11/30/00.................. 227,250
3,000,000 Salomon, Inc., 6.132%, 07/23/01 (a) (d).......... 2,999,940
--------------
16,766,065
--------------
Total Finance........................................................ 17,258,878
--------------
HEALTH (1.1%)
1,000,000 Tenet Healthcare Corporation, 9.25%, 09/01/02.... 1,095,000
--------------
INDUSTRIAL GOODS AND SERVICES (7.3%)
1,000,000 Calpine Corp., 8.75%, 07/15/07................... 1,002,500
2,050,000 Gulf Canada Resourses Limited, 9.25%, 01/15/04... 2,157,625
1,500,000 Mark IV Industries, 7.50%, 09/01/07 (c).......... 1,503,750
1,000,000 Owens-Ill. Inc., 7.85%, 05/15/04 (a)............. 1,040,000
1,500,000 Ryerson Tull, Inc., 8.50%, 07/15/01.............. 1,554,375
--------------
Total Industrial of Goods and Services............................... 7,258,250
--------------
METALS & STEELS (1.1%)
1,000,000 AK Steel Corp., 9.125%, 12/15/06 (a)............. 1,041,250
MULTIMEDIA (1.0%)
1,000,000 Time Warner Note, 6.10%, 12/30/01 (c)............ 982,500
REAL ESTATE (1.3%)
1,250,000 Kaufman & Bros. Home, 9.625%, 11/15/06 (a)....... 1,306,250
RETAIL & WHOLESALE (1.6%)
1,500,000 Nine West Group, 8.375%, 08/15/05 (c)............ 1,533,750
</TABLE>
See notes to financial statements.
94 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 98
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
IN LOCAL CURRENCY SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
CORPORATE BONDS (CONTINUED)
TELECOMMUNICATIONS (4.6%)
1,000,000 Rogers Cable System, 10.00%, 12/01/07............ $ 1,087,500
3,500,000 TCI Communications, 6.381%, 03/12/01 (a) (d)..... 3,505,460
--------------
Total Telecommunications............................................. 4,592,960
--------------
Total Corporate Bonds................................................ 37,464,151
--------------
U.S. GOVERNMENT AGENCIES (66.5%)
Federal Home Loan Mortgage Corporation (39.3%)
4,000,000 5.500%, 11/03/97................................. 3,998,767
6,000,000 5.400%, 11/14/97................................. 5,988,300
10,200,000 7.000%, 10/01/12 (e)............................. 10,343,412
787,850 8.500%, 04/01/19................................. 824,532
1,127,273 8.500%, 03/01/23................................. 1,190,321
1,259,380 6.587%, 09/15/23 (a)............................. 1,267,251
5,000,000 7.000%, 01/15/27 (e)............................. 5,015,600
6,020,041 7.500%, 08/01/27 (a)............................. 6,151,699
1,968,003 7.500%, 10/01/27................................. 2,011,044
1,980,000 7.500%, 09/01/27................................. 2,023,303
--------------
38,814,229
--------------
Federal National Mortgage Association (22.6%)
2,300,000 5.410%, 11/12/97................................. 2,296,198
1,786,624 6.106%, 03/25/09 (a)............................. 1,794,998
4,000,000 6.000%, 12/25/14 (a)............................. 3,990,320
1,000,000 6.356%, 09/25/22 (a)............................. 1,015,870
4,950,000 6.500%, 10/01/27................................. 4,863,375
5,500,000 7.000%, 10/01/27 (e)............................. 5,505,115
2,800,000 8.000%, 10/01/27 (e)............................. 2,898,868
--------------
22,364,744
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 95
<PAGE> 99
TOTAL RETURN FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT FAIR VALUE
IN LOCAL CURRENCY SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
U.S. GOVERNMENT AGENCIES (CONTINUED)
Government National Mortgage Association (4.6%)
988,698 8.0000%, 07/15/27................................ $ 1,025,774
3,439,824 8.0000%, 08/15/27 (a)............................ 3,568,817
--------------
4,594,591
--------------
Total U.S. Government Agencies....................................... 65,773,564
--------------
U.S. TREASURY NOTES (1.0%)
1,014,863 3.375%, 01/15/07 (a)............................. 1,000,574
INVESTMENT COMPANIES (0.4%)
411,372 Dreyfus Treasury Cash Management................. 411,372
--------------
TOTAL (COST -- $125,431,588) (B) (127.7%)............................ $ 126,249,813
==============
</TABLE>
- ------------
Percentages indicated are based on net assets of $98,862,656.
(a) All or a portion of the security is held by the custodian in a segregated
account as collateral.
At October 31, 1997, the Fund's open futures contracts were as follows:
<TABLE>
<CAPTION>
UNREALIZED
NUMBER OF EXPIRATION CURRENT APPRECIATION/
CONTRACTS CONTRACT TYPE DATE MARKET VALUE (DEPRECIATION)
--------- ------------------------------- ---------- ------------ -------------
<C> <S> <C> <C> <C>
110 U.S. Treasury 10 Year Note
Future Dec-97 $12,292,500 $ (48,125)
95 U.S. Treasury Bond Future Dec-97 11,254,531 234,219
----------- -----------
$23,547,031 $ 186,094
</TABLE>
See notes to financial statements.
96 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 100
At October 31, 1997, the Fund's open options contracts were as follows:
<TABLE>
<CAPTION>
NUMBER OF CURRENT UNREALIZED
CONTRACTS EXPIRATION EXERCISE MARKET APPRECIATION/
WRITTEN CONTRACT TYPE DATE PRICE VALUE (DEPRECIATION)
--------- --------------------------- ---------- -------- ------- ------------
<C> <S> <C> <C> <C> <C>
20 Call Option U.S. Treasury
10 Year 98Mar Feb-98 $111 $35,000 $ 1,250
20 Put Option U.S. Treasury
10 Year 98Mar Feb-98 $111 25,625 (1,862)
------ ----------
$60,625 $ (612)
</TABLE>
(b) This represents cost for federal income tax purposes and differs from value
by unrealized appreciation (depreciation) of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.................................................. $912,930
Unrealized depreciation.................................................. (94,705)
--------
Net unrealized appreciation.............................................. $818,225
========
</TABLE>
(c) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period end,
the value of these securities amounted to $19,301,875 or 19.5% of net
assets.
(d) This is a variable rate investment and the rate reflected on the Schedule of
Portfolio Investments is the rate in effect at October 31, 1997.
(e) Security was purchased on a delayed delivery basis. Total cost of delayed
delivery transactions is $26,725,013 (Note 2).
See notes to financial statements.
ANNUAL REPORT 97
<PAGE> 101
SHORT DURATION TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
GENERAL OBLIGATIONS (39.9%)
Limited (8.0%)
2,000,000 Massachusetts State, 4.75%, 09/01/98 $ 2,015,940
1,000,000 Massachusetts State, 5.00%, 08/01/04 (FGIC) 1,032,500
--------------
3,048,440
--------------
Unlimited (24.0%)
1,000,000 Dade County FL Municipal, 12.00%, 10/01/01
(FGIC).......................................... 1,273,750
1,000,000 Georgia State , 6.50%, 08/01/99.................. 1,043,750
1,000,000 Lewisville, TX Independent School Dist., 6.25%,
08/15/04 (PSF).................................. 1,082,500
2,000,000 Milwaukee County, Wisconsin, 5.125%, 12/01/97
(MBIA).......................................... 2,002,020
700,000 Minnesota State, 6.80%, 08/01/00, Pre-refunded
08/01/98........................................ 715,617
1,000,000 New York, N.Y.,4.75%, 08/01/98................... 1,006,580
1,000,000 North Slope Boro, Alaska, 8.35%, 06/30/98
(MBIA).......................................... 1,028,980
1,000,000 Virginia State, 5.50%, 12/01/98.................. 1,016,300
--------------
9,169,497
--------------
Student Loans (7.9%)
1,000,000 Maine Edl. Loan Mkt. Corp. Student Loan Rev.,
6.50%, 11/01/97................................. 1,000,000
1,000,000 New England Education Loan Marketing Corp. MA
Student Loan, 5.00%, 07/01/100.................. 1,012,500
1,000,000 S. Carolina State Ed. Assistance Auth. Rev.,
4.75%, 09/01/01................................. 1,008,750
--------------
3,021,250
--------------
Total General Obligations............................................ 15,239,187
--------------
</TABLE>
See notes to financial statements.
98 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 102
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
REVENUE (54.2%)
AIRPORT (9.5%)
1,000,000 Denver CO City & County Airport, 4.80%, 11/15/00
(MBIA).......................................... $ 1,018,750
1,500,000 Houston TX Airport Sys. Rev., 7.75%, 07/01/03
(MBIA).......................................... 1,573,455
1,000,000 Washoe County, NV, Airport Authority, 5.25%,
07/1/00 (MBIA).................................. 1,025,000
--------------
3,617,205
--------------
CORRECTIONS (2.8%)
1,000,000 Ohio State Bldg Authority, 7.35%, 08/01/04,
Pre-refunded 8/1/100 (MBIA)..................... 1,073,750
--------------
EDUCATION (5.5%)
1,000,000 University of Texas, 6.30%, 07/01/01............. 1,073,750
1,000,000 VA State Public School Authority Series C, 5.00%,
08/01/98........................................ 1,008,960
--------------
2,082,710
--------------
ELECTRIC (6.9%)
1,000,000 Colorado Springs CO Utilities, 7.00%, 11/15/21,
Pre-refunded 11/15/01........................... 1,120,000
500,000 San Antonio Electric & Gas, 6.00%, 02/01/98
(FGIC).......................................... 502,750
1,000,000 Platte River Power Authority, 5.00%, 06/01/99
(MBIA).......................................... 1,015,000
--------------
2,637,750
--------------
HEALTH (9.7%)
1,000,000 Missouri State Health & Educ. Facilities, 4.25%,
12/01/99........................................ 1,005,000
1,000,000 California Health Facilities Fing Auth. Rev.,
5.10%, 05/15/02................................. 1,016,250
1,000,000 New York State Dormitory Revenues, 6.00%,
02/15/03........................................ 1,063,750
615,000 Philadelphia, PA Hospitals & Higher Education
Facilities Authority, Temple Univ. Hospital,
5.00%, 11/15/00................................. 621,919
--------------
3,706,919
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 99
<PAGE> 103
SHORT DURATION TAX EXEMPT FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
REVENUE (CONTINUED)
HOUSING (8.1%)
450,000 Alaska State Housing Finance Corp., 4.35%,
12/01/98 (MBIA)................................. $ 452,655
655,000 Maryland State Community Development, 4.45%,
04/01/99........................................ 660,731
2,000,000 Ohio Housing Financial Agency, 4.20%, 09/01/30... 2,000,300
--------------
3,113,686
--------------
LEASE (1.2%)
450,000 Phoenix, AZ Civic Plaza Building Corporate,
4.70%, 07/01/98................................. 452,691
--------------
TRANSPORTATION (4.5%)
1,000,000 Delaware Transportation Auth., 5.80%, 07/01/99... 1,030,000
675,000 New Jersey State Turnpike Auth., 6.00%,
01/01/98........................................ 677,383
--------------
1,707,383
--------------
WATER & SEWER (6.0%)
755,000 Ohio State Water Development Auth., 4.95%,
12/01/98 (MBIA)................................. 764,649
435,000 Oregon Portland Sewer, 6.50%, 06/01/00........... 460,556
1,000,000 Orlando, Florida Utilities Commission, 5.70%,
10/01/04........................................ 1,073,750
--------------
2,298,955
--------------
Total Revenue........................................................ 20,691,049
--------------
VARIABLE RATE DEMAND NOTES (2.6%)
1,000,000 Farmington, NM Pollution Revenue, 4.00% (a),
05/01/24........................................ 1,000,000
INVESTMENT COMPANIES (1.7%)
642,628 Dreyfus Tax Exempt Cash Management Fund.......... 642,628
--------------
TOTAL (COST -- $37,345,282) (b) (98.4%).............................. $37,572,864
==============
</TABLE>
- ------------
FGIC: Financial Guaranty Insurance Company
MBIA: MBIA Insurance Corp.
PSF: Permanent School Fund
Percentages indicated are based on net assets of $38,176,099.
See notes to financial statements.
100 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 104
(a) This is a variable rate investment and the rate reflected on the Schedule of
Portfolio Investments is the rate in effect at October 31, 1997.
(b) This represents cost for federal income tax purposes and differs from value
by unrealized appreciation (depreciation) of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation............................................... $228,030
Unrealized depreciation............................................... (448)
--------
Net unrealized appreciation........................................... $227,582
========
</TABLE>
See notes to financial statements.
ANNUAL REPORT 101
<PAGE> 105
TAX EXEMPT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
GENERAL OBLIGATIONS (44.6%)
Limited (8.7%)
700,000 Clark County Nevada School District, 5.875%,
06/15/13 (MBIA) (a)............................. $ 734,125
1,100,000 Dallas, Texas, 5.90%, 02/15/03................... 1,183,875
2,000,000 Massachusetts State, 5.00%, 08/01/07 (FGIC)...... 2,057,500
1,000,000 Port of Seattle, Washington, 5.25%, 05/01/03..... 1,037,500
--------------
5,013,000
--------------
Unlimited (33.3%)
1,500,000 Charleston County, South Carolina, 5.75%,
06/01/08........................................ 1,618,125
1,200,000 Chicago Metropolitan Water Reclamation District,
Pre-refunded 12/01/09, 6.30%, 12/01/09.......... 1,341,000
1,760,000 Dade County FL, 7.70%, 10/01/08 (AMBAC).......... 2,189,000
765,000 Du Page County, Illinois, 5.60%, 01/01/21........ 808,031
1,000,000 Florida State, Dept. of Transit -- Right of Way,
6.00%, 07/01/07................................. 1,108,750
1,000,000 Fort Worth, TX, Independent School Dist., 0.00%,
02/15/06 (PSF).................................. 676,250
1,000,000 Honolulu, Hawaii, City & County, 5.00%,
10/01/02........................................ 1,027,500
1,000,000 Kingsport Tenn. Pub. Impt., 5.60%, 09/01/03...... 1,056,250
2,000,000 Maryland State, 5.00%, 08/01/07.................. 2,070,000
1,000,000 Mississippi State, 5.80%, 06/01/09............... 1,058,750
1,000,000 New York, N.Y., 4.75%, 08/01/98.................. 1,006,580
1,000,000 Pennsylvania State, 5.20%, 06/15/04 (MBIA)....... 1,042,500
1,000,000 Texas Public Finance Authority, 5.38%,
10/01/03........................................ 1,057,500
1,000,000 Texas State, 5.00%, 08/01/21..................... 956,250
1,000,000 Virginia State, 6.10%, 06/01/06.................. 1,098,750
1,000,000 Washington State, 5.25%, 09/01/05................ 1,047,500
--------------
19,162,736
--------------
</TABLE>
See notes to financial statements.
102 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 106
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
GENERAL OBLIGATIONS (CONTINUED)
Student Loans (2.6%)
1,500,000 South Carolina State Ed. Assistance Auth., 4.75%,
09/01/01........................................ $ 1,513,125
--------------
Total General Obligations............................................ 25,688,861
--------------
REVENUE (42.1%)
AIRPORT (5.3%)
700,000 Dade County FL Aviation -- Miami Intl., 5.75%,
10/01/05 (FSA).................................. 748,125
1,200,000 Los Angeles, CA, City Dept of Airports, 5.50%,
05/15/07 (FGIC)................................. 1,267,500
1,010,000 San Francisco, CA, City & County Airports
Commission International Airport, 5.00%,
05/01/06 (FGIC)................................. 1,032,725
--------------
3,048,350
--------------
EDUCATION (9.3%)
1,000,000 Avon, IN Community School Bldg Corp, 5.25%,
01/01/22 (AMBAC)................................ 978,750
1,250,000 New York State Dorm Authority, 6.125%, 07/01/07
(AMBAC)......................................... 1,368,750
2,810,000 University of Texas Permanent University Fund,
5.90%, 07/01/02 (a)............................. 3,010,213
--------------
5,357,713
--------------
ELECTRIC (5.3%)
300,000 City of Knoxville, Tennessee Gas System, 4.85%,
03/01/06 (a).................................... 301,125
2,000,000 Georgia Municipal Electric Authority, 5.55%,
01/01/07 (FGIC)................................. 2,145,000
575,000 Indiana Muni. Power Agency Power Supply, 5.125%,
01/01/01 (MBIA)................................. 590,094
--------------
3,036,219
--------------
</TABLE>
See notes to financial statements.
ANNUAL REPORT 103
<PAGE> 107
TAX EXEMPT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
REVENUE (CONTINUED)
HOUSING (4.8%)
500,000 California Housing Finance Authority, 5.20%,
08/01/26 (MBIA)................................. $ 510,000
1,000,000 Idaho Housing and Finance Association, 5.20%,
07/01/27........................................ 1,025,000
1,000,000 Virginia State Housing Development Authority,
6.30%, 07/01/11................................. 1,052,500
170,000 Wisconsin Housing & Economic Development, 5.30%,
11/01/05........................................ 174,463
--------------
2,761,963
--------------
POLLUTION CONTROL (6.4%)
1,400,000 Minnesota Public Facilities, 6.00%, 03/01/07..... 1,552,250
2,000,000 NY State Environmental Facs. Corp.,
5.50%, 6/15/09 (MBIA)........................... 2,105,000
--------------
3,657,250
--------------
TRANSPORTATION (4.5%)
1,000,000 Massachusetts Bay Transportation Authority,
5.60%, 03/01/08................................. 1,066,250
1,465,000 Port Authority New York & New Jersey, 5.80%,
12/01/12........................................ 1,536,419
--------------
2,602,669
--------------
WATER & SEWER (6.5%)
2,000,000 Cleveland Ohio Waterworks, 5.50%, 01/01/08 (MBIA)
(a)............................................. 2,150,000
1,000,000 Ohio State Water Department Authority, 5.70%,
06/01/09 (AMBAC)................................ 1,070,000
500,000 Oregon Portland Sewer, 6.50%, 06/01/00........... 529,375
--------------
3,749,375
--------------
Total Revenue........................................................ 24,213,539
--------------
</TABLE>
See notes to financial statements.
104 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 108
<TABLE>
<CAPTION>
SHARES OR FAIR VALUE
PRINCIPAL AMOUNT SECURITY DESCRIPTION IN U.S. DOLLARS
----------------- ------------------------------------------------- ---------------
<C> <S> <C>
SPECIAL TAX (6.4%)
900,000 Arapahoe County, Colorado, Capital Improvement,
6.90%, 08/31/15, Pre-refunded 08/31/05.......... $ 1,056,375
1,000,000 Connecticut State Special Tax Obligation Revenue,
6.25%, 10/01/09, Pre-refunded 10/01/01.......... 1,092,500
1,380,000 Washington, D.C., American Assn. Advancement of
Science, 6.00%, 01/01/08 (AMBAC)................ 1,514,550
--------------
Total Special Tax.................................................... 3,663,425
--------------
VARIABLE RATE DEMAND NOTES (5.0%)
400,000 Farmington, NM Pollution Revenue, 3.70%, 04/01/22
(b)............................................. 400,000
500,000 Georgia Municipal Electric Authority, 3.60%,
06/01/20 (b).................................... 500,000
1,000,000 Louisiana State Offshore, 3.80%, 09/01/08 (b).... 1,000,000
1,000,000 Valdez, AK Marine, 3.80%, 12/01/33 (b)........... 1,000,000
--------------
2,900,000
--------------
INVESTMENT COMPANIES (0.5%)
304,516 Dreyfus Tax Exempt Cash Management Fund.......... 304,516
--------------
TOTAL (COST -- $55,123,700) (C) (98.6%).............................. $56,770,341
==============
</TABLE>
- ------------
AMBAC: AMBAC Indemnity Corporation
FGIC: Financial Guaranty Insurance Company
MBIA: MBIA Insurance Corp.
PSF: Permanent School Fund
Percentages indicated are based on net assets of $57,578,595.
(a) All or a portion of the security is held by the custodian in a segregated
account as collateral for open futures contracts.
At October 31, 1997, the Fund's open futures contracts were as follows:
<TABLE>
<CAPTION>
Number of Expiration Current Unrealized
Contracts Contract Type Date Market Value Depreciation
- --------- ------------------------- ---------- ------------ ------------
<C> <S> <C> <C> <C>
20 U.S. Treasury Bond Future Dec-97 $2,369,375 $(19,376)
</TABLE>
(b) This is a variable rate investment and the rate reflected on the Schedule of
Portfolio Investments is the rate in effect at October 31, 1997.
See notes to financial statements.
ANNUAL REPORT 105
<PAGE> 109
TAX EXEMPT BOND FUND
SCHEDULE OF PORTFOLIO INVESTMENTS (CONTINUED)
October 31, 1997
(c) This represents cost for federal income tax purposes and differs from value
by unrealized appreciation (depreciation) of securities as follows:
<TABLE>
<S> <C>
Unrealized appreciation.............................................. $1,653,893
Unrealized depreciation.............................................. (7,252)
----------
Net unrealized appreciation.......................................... $1,646,641
==========
</TABLE>
See notes to financial statements.
106 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 110
NOTES TO FINANCIAL STATEMENTS
October 31, 1997
1. ORGANIZATION
Payden & Rygel Global Short Bond Fund, Payden & Rygel Global Fixed
Income Fund, Payden & Rygel International Bond Fund, Payden & Rygel
Short Duration Tax Exempt Fund, Payden & Rygel Tax Exempt Bond Fund,
Payden & Rygel U.S. Treasury Fund, Payden & Rygel Limited Maturity
Fund, Payden & Rygel Short Bond Fund, Payden & Rygel Intermediate Bond
Fund, Payden & Rygel Investment Quality Bond Fund (formerly the
Opportunity Fund), Payden & Rygel Market Return Fund, Payden & Rygel
Total Return Fund, Payden & Rygel Global Balanced Fund, Payden & Rygel
International Equity Fund, Payden & Rygel European Growth & Income Fund
and Payden & Rygel Growth & Income Fund (the "Funds") are
non-diversified series of Payden & Rygel Investment Group ("Group"), a
no-load, open-end management investment company organized as a
Massachusetts business trust on January 22, 1992 and registered under
the Investment Company Act of 1940, as amended.
The objective of the Global Short Bond, Global Fixed Income,
International Bond, U.S. Treasury, Limited Maturity, Short Bond,
Intermediate Bond, Investment Quality Bond and Total Return Funds is to
realize a high level of total return consistent with preservation of
capital. The Limited Maturity Fund further seeks to earn a total return
that, over time, is greater than that available from money market
funds. In order to achieve these objectives, each Fund invests
primarily in debt obligations. The Limited Maturity, Short Bond,
Intermediate Bond, Investment Quality Bond and Total Return Funds
invest in debt obligations of the U.S. Treasury, U.S. government
agencies, U.S. dollar-denominated foreign and domestic public
corporations and mortgage-backed securities. The U.S. Treasury Fund
primarily invests in U.S. Treasury securities guaranteed by the full
faith and credit of the United States Government.
The Global Short Bond, Global Fixed Income and International Bond Funds
invest primarily in U.S. and foreign government notes and bonds and
U.S. and foreign corporate debt securities. The Global Short Bond,
Global Fixed Income, International Bond and Total Return Funds can also
have substantial investments in foreign currency contracts. The
objective of the Short Duration Tax Exempt and Tax Exempt Bond Funds is
to earn federal tax-free income by investing in debt obligations which
are exempt from federal income tax and consistent with preservation of
capital. The objective of the Market Return Fund is to provide a total
return in excess of the Standard & Poor's 500 Stock Index. To achieve
this objective, the Market Return Fund invests primarily in
equity-based investments, such as stock index futures contracts and
equity swap contracts, as well as in fixed income securities.
ANNUAL REPORT 107
<PAGE> 111
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
The objective of the Global Balanced Fund is to realize a high level of
total return consistent with preservation of capital. The Global
Balanced Fund can also have investments in foreign currency contracts.
This Fund invests in common stocks, bonds and money market instruments
of both domestic and foreign issuers. The objective of the
International Equity Fund is long-term capital appreciation. This Fund
invests in equity securities (common and preferred stock) of issuers
whose corporate headquarters are outside the United States ("foreign
equities").
The Growth & Income Fund, also known as the "Dogs of the Dow," seeks to
provide growth of capital and some current income. To achieve these
objectives the Growth & Income Fund normally invests approximately half
of its assets in the ten stocks in the Dow Jones Industrial Average
with the highest dividend yields. The remaining assets are invested in
securities intended to replicate the total return of the Standard &
Poor's 500 Stock Price Index ("S&P 500 Index"), normally Standard &
Poor's Depository Receipts or additional common stocks.
The European Growth & Income Fund normally invests its assets in common
stocks of approximately ten issuers located in each of France, Germany,
the Netherlands and the United Kingdom. In each country, the Fund
selects the ten stocks with the highest dividend yield. These stocks
come from among the thirty issuers with the largest market
capitalizations which are included in each country's leading stock
index. The Fund, also known as the "Euro Dogs" Fund, follows investment
objectives and policies that are analogous to the Group's Growth &
Income Fund.
There can, however, be no assurance that any of the Funds' investment
objectives will be achieved.
The Funds offer both Class A and Class B shares. 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. Effective December 30, 1997, the
Class A shares of each Fund will be renamed the Class R shares, and the
Class B shares will be renamed the Class S shares.
108 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 112
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed
by the Funds:
Securities Valuation
Domestic and foreign fixed income securities and other assets for which
market quotations are readily available (other than obligations with
remaining maturities of 60 days or less) are valued on the basis of
quotations obtained from dealers or pricing services 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 the institution with which the Fund entered into the transaction in
the case of other securities. Investments in investment companies are
valued at their net asset values as reported by such companies.
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. Non-U.S. dollar securities are translated
into U.S. dollars using the spot exchange rate at the close of the
London market. The differences between cost and market of investments
are reflected as either unrealized appreciation or depreciation.
Equity securities listed or traded on any domestic (U.S.) securities
exchange are valued at the last sale price or, if there have been no
sales during the day, at the last bid prices. Securities traded only on
the over-the-counter market are valued at the latest bid prices.
Foreign equity securities are valued based upon the last sale price on
the foreign exchange or market on which they are principally traded as
of the close of the appropriate exchange or, if there have been no
sales during the day, at the last bid prices.
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 and discounts are amortized or accreted for
both financial statement and tax reporting purposes as required by
Federal income tax regulations. Dividend income is recorded on the
ex-dividend date. Realized gains or losses on investment transactions
are determined on the identified cost basis.
ANNUAL REPORT 109
<PAGE> 113
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
Foreign Currency Translation
The accounting records of the Funds are maintained in U.S. dollars. The
Global Short Bond, Global Fixed Income, International Bond, Global
Balanced and Total Return Funds may purchase debt obligations that are
payable in a foreign currency, and the Global Balanced, International
Equity and European Growth & Income Funds may purchase equity
securities that are payable in a foreign currency. For these Funds,
investment securities, other assets and liabilities denominated in a
foreign currency are translated into U.S. dollars at the current
exchange rate. Purchases and sales of securities, income receipts and
expense payments are translated into U.S. dollars at the rate on the
dates of the transactions.
Each of these Funds isolates that portion of the results of operations
resulting from changes in foreign exchange rates on investments from
the fluctuation arising from changes in market prices of securities
held.
Reported net realized foreign exchange gains or losses arise from sales
and maturities of securities, purchases and sales of foreign
currencies, currency gains or losses realized between the trade and
settlement dates of securities transactions, and the difference between
the amount of interest or expenses recorded on each of these Fund's
books and the U.S. dollar equivalent of the amounts actually received
or paid. Net unrealized foreign exchange gains and losses arise from
changes in the value of assets and liabilities, including investments
in securities, resulting from changes in the exchange rates.
Repurchase Agreements
Any 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 each Fund's policy to take possession of the
underlying securities and, on a daily basis, mark-to-market such
securities to ensure that the value, accrued interest, is at least
equal to the amount to be repaid to each Fund under each agreement.
Options Transactions
When any of the Funds (except the U.S. Treasury Fund which does not
invest in any option transactions) writes a covered call or put option,
an amount equal to the premium received is included in that Fund's
statement of assets and liabilities as a liability. The amount of the
liability is subsequently marked-to-market to reflect the current
market value of the option. If an option expires on its stipulated
expiration date or if the Fund enters into a closing purchase
transaction, a gain or loss is
110 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 114
realized. If a written call option is exercised, a gain or loss is
realized for the sale of the underlying security and the proceeds from
the sale are increased by the premium originally received. If a written
put option is exercised, the cost of the security acquired is decreased
by the premium originally received. As writer of an option, the Fund
has no control over whether the underlying securities are subsequently
sold (call) or purchased (put) and, as a result, bears the market risk
of an unfavorable change in the price of the security underlying the
written option.
When any of the Funds (except the U.S. Treasury Fund which does not
invest in any option transactions) purchases a call or put option, an
amount equal to the premium paid is included in that Fund's statement
of assets and liabilities as an investment, and is subsequently
marked-to-market to reflect the current market value of the option. If
an option expires on the stipulated expiration date or if a Fund enters
into a closing sale transaction, a gain or loss is realized. If a Fund
exercises a call the cost of the security acquired is increased by the
premium paid for the call. If a Fund exercises a put option, a gain or
loss is realized from the sale of the underlying security, and the
proceeds from such sale are decreased by the premium originally paid.
Written and purchased options are non-income producing securities.
The option techniques utilized are to hedge against changes in interest
rates, foreign currency exchange rates or securities prices in order to
establish more definitely the effective return on securities or
currencies held or intended to be acquired by a Fund, to reduce the
volatility of the currency exposure associated with investment in non-
U.S. securities, or as an efficient means of adjusting exposure to the
bond, equity and currency markets and not for speculation.
FUTURES CONTRACTS
Any Fund (except the U.S. Treasury Fund) may purchase or sell futures
contracts and options on futures contracts which provide for the future
sale by one party and purchase by another party of a specified quantity
of a financial instrument or foreign currency at a fixed price on a
future date. Upon entering into such a contract, a Fund is required to
deposit and maintain as collateral such initial margin as required by
the exchange on which the contract is traded. Pursuant to the contract,
that Fund agrees to receive from or pay to the broker an amount equal
to the daily fluctuations in the value of the contract. Such receipts
or payments are known as variation margin and are recorded as
unrealized gains or losses by that Fund. When the contract is closed,
that Fund records a realized gain or loss equal to the difference
between the value of the contract at the time it was opened and the
value at the time it was closed. The Funds invest in futures contracts
to hedge against anticipated future changes in interest or exchange
rates or security prices. The potential risk to
ANNUAL REPORT 111
<PAGE> 115
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
the Funds is that the change in value of the underlying securities may
not correlate to the change in value of the contracts.
The Market Return, Total Return, Global Balanced, Growth & Income,
European Growth & Income and International Equity Funds may invest in
stock index futures contracts, which are an agreement pursuant to which
two parties agree to take or make delivery of an amount of cash equal
the difference between the value of the index at the close of the last
trading day of the contract and the price at which the index contract
was originally written. Variation margin accounting procedures as
discussed above apply to these index futures contracts. Each Fund
invests in these futures contracts to permit a Fund to meet its
objectives at a lower cost than investing directly in equity
securities, while permitting the equivalent of an investment in a
portfolio of equity securities. The risk to a Fund is that the change
in value of the underlying index may not correlate to the change in
value of the contracts.
EQUITY SWAP CONTRACTS
The Market Return, Total Return, Global Balanced, Growth & Income,
European Growth & Income and International Equity Funds may enter into
equity swap transactions, which involve an agreement between the Fund
and another party to exchange payments calculated as if they were
interest on a fictitious ("notional") principal amount. A Fund will
typically pay a floating rate of interest and receive the total return
of a specified equity index. A Fund usually enters into such
transactions on a "net" basis, with the Fund receiving or paying as the
case may be, only the net amounts of the two payment streams. The net
amount of the excess or deficiency, if any, of the Fund's obligations
over its entitlements with respect to each swap is accrued on a daily
basis and is recorded as an unrealized gain or loss by that Fund.
These Funds invest in swap transactions to permit the Funds to meet
their objectives at a lower cost than investing directly in equity
securities, while permitting the equivalent of an investment in a
portfolio of equity securities. The potential risk to a Fund is that
the swap position may correlate imperfectly with the markets or the
asset or liability being hedged.
FORWARD CURRENCY CONTRACTS
The Global Short Bond, Global Fixed Income, International Bond, Total
Return, European Growth & Income, Global Balanced and International
Equity Funds each may enter into forward foreign currency exchange
contracts for the purchase or sale of a specific foreign currency at a
fixed price on a future date. Risks may arise upon entering these
contracts from the potential inability of counter parties to meet the
terms of their contracts and from unanticipated movements in the value
of a foreign
112 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 116
currency relative to the U.S. dollar. These Funds enter into forward
contracts as a hedge against specific transactions or portfolio
positions to protect against adverse currency movements. The forward
foreign currency exchange contracts are adjusted by the daily exchange
rate of the underlying currency and any gains or losses are recorded
for financial statement purposes as unrealized until the contract
settlement date, at which time a Fund records a realized gain or loss
equal to the difference between the value of the contract at the time
it was opened and the value at the time it was closed.
DELAYED DELIVERY TRANSACTIONS
Any 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 three 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.
DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the ex-dividend date.
Dividends from net investment income and net realized gains on foreign
currency transactions are declared and paid monthly, except for those
of the International Bond Fund which are paid quarterly, and net
realized 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 Fund to meet the requirements for
qualification as a regulated investment company as defined in
applicable sections of the Internal Revenue Code (the "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.
Each Fund files 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
treatment of foreign currency transactions and futures
ANNUAL REPORT 113
<PAGE> 117
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
contracts and the deferral of certain losses under Federal income tax
regulations. Accordingly, the amount of net investment income and net
realized 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. Distributions which exceed net investment
income and net realized gains for financial reporting purposes but not
for tax purposes, if any, are shown as distributions in excess of net
investment income and net realized gains in the accompanying
statements. Return of capital distributions and net investment losses
for tax purposes are reclassed to paid in capital.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of income and
expenses during the reporting period. Actual results could differ from
those estimates.
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.
114 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 118
3. PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments (excluding short-term investments
and long-term U.S. Government securities) for the period ended October
31, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- --------------
<S> <C> <C>
Global Short Bond Fund.................. $ 373,655,971 $ 220,500,261
Global Fixed Income Fund................ 1,144,686,670 1,125,853,382
International Bond Fund................. 4,495,621 39,232,196
Global Balanced Fund.................... 18,707,504 10,776,987
International Equity Fund............... 18,534,888 5,600,972
European Growth & Income Fund........... 13,768,893 309,442
Growth & Income Fund.................... 126,726,370 1,387,153
Market Return Fund...................... 15,071,037 3,975,667
Limited Maturity Fund................... 58,595,614 3,000,000
Short Bond Fund......................... 85,955,237 53,998,067
U.S. Treasury Fund...................... 0 0
Intermediate Bond Fund.................. 105,175,139 60,375,139
Investment Quality Bond Fund............ 228,390,505 136,138,779
Total Return Fund....................... 202,609,297 88,878,444
Short Duration Tax Exempt Fund.......... 18,404,481 18,355,415
Tax Exempt Fund......................... 23,250,630 20,034,152
</TABLE>
Purchases and sales of long-term U.S. Government securities for the
period ended October 31, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Global Short Bond Fund.................... $ 76,575,141 $ 39,838,211
Global Fixed Income Fund.................. 531,239,438 615,916,451
International Bond Fund................... 1,963,319 1,522,768
Global Balanced Fund...................... 8,303,325 6,772,764
International Equity Fund................. 0 0
European Growth & Income Fund............. 0 0
Growth & Income Fund...................... 0 0
Market Return Fund........................ 2,947,936 5,382,193
Limited Maturity Fund..................... 61,782,609 59,655,820
Short Bond Fund........................... 114,395,102 137,227,563
U.S. Treasury Fund........................ 32,312,606 44,436,394
Intermediate Bond Fund.................... 24,452,561 38,594,485
Investment Quality Bond Fund.............. 47,121,241 54,660,743
Total Return Fund......................... 989,360 0
Short Duration Tax Exempt Fund............ 0 0
Tax Exempt Fund........................... 0 0
</TABLE>
ANNUAL REPORT 115
<PAGE> 119
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
The Global Balanced Fund's activity in written options for the year
ended October 31, 1997 was as follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACTS
CONTRACTS PREMIUM
--------- ---------
<S> <C> <C>
Options outstanding at beginning of period...... 0 $ 0
Options sold.................................... 38 29,008
Options canceled in closing transactions........ (38) (29,008)
Options expired prior to exercise............... 0 0
-------- --------
Options outstanding at end of period............ 0 $ 0
</TABLE>
The Total Return Fund's activity in written options for the year ended
October 31, 1997 was as follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACTS
CONTRACTS PREMIUM
--------- ---------
<S> <C> <C>
Options outstanding at beginning of period...... 0 $ 0
Options sold.................................... 40 60,950
Options canceled in closing transactions........ 0 0
Options expired prior to exercise............... 0 0
-------- --------
Options outstanding at end of period............ 40 $60,950
</TABLE>
The Investment Quality Fund's activity in written options for the year
ended October 31, 1997 was as follows:
<TABLE>
<CAPTION>
NUMBER OF CONTRACTS
CONTRACTS PREMIUM
--------- ---------
<S> <C> <C>
Options outstanding at beginning of period...... 0 $ 0
Options sold.................................... 40 60,638
Options canceled in closing transactions........ 0 0
Options expired prior to exercise............... 0 0
-------- --------
Options outstanding at end of period............ 40 $60,638
</TABLE>
None of the other Funds had activity in written options for the year
ended October 31, 1997.
4. UNAMORTIZED ORGANIZATION COSTS
The organization costs incurred on behalf of the Funds listed below are
being reimbursed to Payden & Rygel and are being amortized on a
straight-line basis over
116 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 120
a period not exceeding five years. The organization costs and the
amounts reimbursed as of October 31, 1997 are as follows:
<TABLE>
<CAPTION>
CUMULATIVE AMORTIZED
ORGANIZATION ORGANIZATION
COSTS EXPENSES
------------ ------------
<S> <C> <C>
Global Short Bond Fund...................... $ 2,047 $ 1,058
International Bond Fund..................... 5,322 4,154
Global Balanced Fund........................ 4,063 1,349
International Equity Fund................... 3,799 1,280
European Growth & Income Fund............... 4,958 500
Growth & Income Fund........................ 11,447 3,393
Market Return Fund.......................... 49,138 26,132
U.S. Treasury Fund.......................... 3,926 3,527
Total Return Fund........................... 3,255 1,127
</TABLE>
Any redemption by Payden & Rygel of its initial investment of $100,000
will reduce the reimbursement by a prorata portion of any of the then
unamortized organization costs.
5. RELATED PARTY TRANSACTIONS
Investment advisory services are provided to the Funds by Payden &
Rygel. Under the terms of the investment advisory agreement Payden &
Rygel is entitled to receive fees monthly, computed on the average
daily net assets of each of the Funds separately at an annualized rate.
The rate for the Global Short Bond, Global Fixed Income and
International Bond Funds is .30% on net assets up to $2 billion,
decreasing to .25% on net assets over $2 billion. The rate for the
Short Duration Tax Exempt and Tax Exempt Bond Funds is .32% on net
assets up to $500 million, decreasing in increments to .25% on net
assets over $1 billion. The rate for the U.S. Treasury, Limited
Maturity, Short Bond, Intermediate Bond, Investment Quality Bond,
Market Return and Total Return Funds is .28% on net assets up to $1
billion, decreasing to .25% on net assets over $1 billion. The rate for
the Global Balanced Fund is 0.50% on net assets up to $1 billion and
0.40% on net assets over $1 billion. The rate for the International
Equity is 0.60% on net assets up to $1 billion and 0.45% on net assets
over $1 billion. The rate for the Growth & Income Fund is 0.50% on net
assets up to $2 billion and 0.30% on net assets over $2 billion. The
rate for the European Growth & Income Fund is 0.50% on net assets up to
$2 billion and 0.40% on net assets over $2 billion.
ANNUAL REPORT 117
<PAGE> 121
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
Payden & Rygel has voluntarily agreed to permanently waive 0.20% of its
fee for advisory services for the Growth & Income Fund and 0.10% of its
fee for advisory services for the European Growth & Income Fund through
at least October 31, 1997. In addition, Payden & Rygel has agreed to
guarantee that, for so long as it acts as investment adviser to a Fund,
the expenses of the Fund attributable to Class A Shares, including
advisory fees (but excluding interest, taxes, portfolio transaction
expenses, blue sky fees, 12b-1 plan fees [if any such plan is adopted
in the future] and extraordinary expenses) will not exceed the
percentage indicated below of that Fund's average daily net assets on
an annualized basis. In addition, Payden & Rygel has voluntarily agreed
to temporarily limit each Fund's total expenses, including advisory
fees, to the percentage indicated below of that Fund's average daily
net assets on an annualized basis through October 31, 1997 (exclusive
of interest, taxes, portfolio transaction blue sky fees, 12b-1 plan
fees [if any such plan is adopted in the future] and extraordinary
expenses).
<TABLE>
<CAPTION>
VOLUNTARY
EXPENSE EXPENSE
GUARANTEE LIMIT
--------- ---------
<S> <C> <C>
Global Short Bond Fund.......................... 0.70% 0.45%
Global Fixed Income Fund........................ 0.70% n/a
International Bond Fund......................... 0.70% n/a
Global Balanced Fund............................ 0.85% 0.70%
International Equity Fund....................... 1.05% 0.90%
European Growth & Income Fund................... 0.90% 0.70%
Growth & Income Fund............................ 0.80% 0.54%
Market Return Fund.............................. 0.60% 0.45%
Limited Maturity Fund........................... 0.60% 0.30%
Short Bond Fund................................. 0.60% 0.40%
U.S. Treasury Fund.............................. 0.60% 0.45%
Intermediate Bond Fund.......................... 0.60% 0.45%
Investment Quality Bond Fund.................... 0.60% 0.45%
Total Return Fund............................... 0.60% 0.45%
Short Duration Tax Exempt Fund.................. 0.60% 0.45%
Tax Exempt Bond Fund............................ 0.60% 0.45%
</TABLE>
Each Fund remains liable to Payden & Rygel for expenses subsidized in
any fiscal year so long as any reimbursement will not cause the annual
expense ratio for the year in which it is made to exceed the amount of
the expense guarantee or expense limit (whichever is in effect at the
time of reimbursement). The deferred expense subsidies, as identified
in the statements of assets and liabilities, represent the
118 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 122
cumulative amount of expenses subsidized for the Funds and will be
recognized as net expense in the statements of operations as expense
previously deferred in future periods, if expense limits permit.
Payden & Rygel 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 $41,000 as of October 31, 1997, will be allocated to all
series of the Group that are included in the initial offering of Class
B shares and amortized as a class specific expense over a three year
period.
Effective May 30, 1997, Payden & Rygel Distributors, a subsidiary of
Payden & Rygel which serves as the distributor for the Funds, entered
into an agreement with Bank of America providing for the sale of Class
B Shares of certain of the Funds to customers of Bank of America.
However, as of October 31, 1997, no Class B Shares have been sold to
the public through this arrangement.
For the Global Balanced and International Equity Funds, Payden & Rygel
has entered into a sub-advisory agreement with Scottish Widows
Investment Management ("Sub-advisor"). The Sub-Advisor is a wholly
owned subsidiary of Scottish Widows Fund and Life Assurance Society, a
mutual company chartered in 1815. Under terms of the sub-advisor
agreement, the Sub-Advisor receives fees monthly from Payden & Rygel at
a rate of 0.40% on the first $1 billion of average daily net assets and
0.30% on the average daily net assets over $1 billion. In the case of
the Global Balanced Fund, fees are based on the average daily net
assets allocated to the Sub-Advisor. The Sub-Advisor's fee does not
represent a separate or additional charge against the Funds.
Under the distribution agreement with the Group, Payden & Rygel
Distributors is not entitled to receive any fees from the Group.
Treasury Plus, Inc., a wholly owned subsidiary of Payden & Rygel,
serves as administrator to the Group. Under the terms of the
administration agreement, Treasury Plus, Inc. receives fees monthly,
computed on the average daily net assets of the Group at an annualized
rate of .06%.
Investors Fiduciary Trust Company ("IFTC"), a Missouri trust company,
serves as transfer agent to the Funds. Under the terms of the transfer
agency agreement, IFTC is entitled to receive fees based upon a
specified amount per shareholder with specified minimum-per-Fund
amounts and surcharges, plus certain out-of-pocket expenses. IFTC also
serves as fund accountant. Under the terms of the fund
ANNUAL REPORT 119
<PAGE> 123
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
accounting agreement, IFTC receives fees based on specified
minimum-per-Group amounts, plus certain out-of-pocket expenses.
All expenses incurred by the Funds are paid directly by Payden & Rygel
subject to subsequent reimbursement by the Funds. For Funds which have
not fully reimbursed Payden & Rygel for expenses paid on their behalf
as of October 31, 1997, as identified in the Statements of Assets and
Liabilities as deferred expense subsidy, the cumulative amounts of
expenses paid by Payden & Rygel and the reimbursement of expenses by
the Funds are as follows:
<TABLE>
<CAPTION>
CUMULATIVE TOTAL OF CUMULATIVE TOTAL OF
EXPENSES PAID BY REIMBURSEMENT
PAYDEN & RYGEL OF EXPENSES
------------------- -------------------
<S> <C> <C>
Global Balanced Fund........... $ 64,910 $ 44,034
International Equity Fund...... 30,017 27,444
European Growth & Income....... 54,069 19,900
Market Return Fund............. 172,042 49,100
U.S. Treasury Fund............. 207,775 199,588
Investment Quality Fund........ 309,331 291,413
</TABLE>
Certain officers and/or trustees of the Group are affiliated with
Payden & Rygel, Payden & Rygel Distributors and/or Treasury Plus, Inc.
Such officers and trustees receive no fees from the Funds for serving
as officers and/or trustees of the Group.
6. FEDERAL INCOME TAXES
At October 31, 1997, the following Funds had capital loss carryforwards
in the amounts indicated for Federal income tax purposes. These
carryforwards are available to offset future capital gains, if any.
<TABLE>
<CAPTION>
LOSS LOSS LOSS LOSS
CARRY- CARRY- CARRY- CARRY-
FORWARDS FORWARDS FORWARDS FORWARDS
EXPIRING EXPIRING EXPIRING EXPIRING
IN 2002 IN 2003 IN 2004 IN 2005
-------- -------- ---------- --------
<S> <C> <C> <C> <C>
Global Short Bond Fund........ $37,169
Global Fixed Income Fund...... $4,954,175
European Growth & Income
Fund....................... 6,752
Limited Maturity Fund......... $ 1,971 64,303 61,717
Short Bond Fund............... 341,923 6,293
U.S. Treasury Fund............ 121,452 25,368
Tax Exempt Bond Fund.......... 764,165 $92,036 460,399
</TABLE>
120 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 124
The Growth & Income Fund designates 94.53% of distributions eligible
for the dividends received deductions for corporations.
The European Growth & Income Fund elects to pass on the benefits of the
foreign tax credit to its shareholders for the year ended October 31,
1997.
7. FUND TERMINATION
On December 16, 1997, the Board of Trustees approved the closing of the
Payden & Rygel International Bond Fund, anticipated to be effective on
or about January 31, 1998, at which time all portfolio holdings will be
liquidated, expenses owed to service providers will be paid, and a
final distribution of net investment income and net realized capital
gains will be made. Remaining organizational expenses will be waived by
the Advisor.
8. EXEMPT-INTEREST INCOME DESIGNATION (UNAUDITED)
The Group designates the following exempt-interest income for the
taxable year ended October 31, 1997:
<TABLE>
<CAPTION>
EXEMPT-INTEREST
EXEMPT-INTEREST DIVIDENDS
DIVIDENDS PER SHARE
---------------- ----------------
<S> <C> <C>
Short Duration Tax Exempt Fund....... $1,330,765 $ 0.38
Tax Exempt Bond Fund................. 2,313,809 0.44
</TABLE>
The amounts noted above include exempt-interest income from alternative
minimum tax paper in the amounts indicated below:
<TABLE>
<CAPTION>
EXEMPT-INTEREST INCOME
FROM ALTERNATIVE
MINIMUM TAX PAPER
----------------------
<S> <C>
Short Duration Tax Exempt Fund................ $153,173
Tax Exempt Bond Fund.......................... 94,250
</TABLE>
ANNUAL REPORT 121
<PAGE> 125
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1997
The percentage breakdown of the exempt-interest income by state for the
Fund's taxable year ended October 31, 1997 was as follows:
<TABLE>
<CAPTION>
SHORT DURATION
TAX EXEMPT TAX EXEMPT
FUND BOND FUND
-------------- ----------
<S> <C> <C>
Alabama........................ 0.8% 0.0%
Alaska......................... 2.7 0.8
Arizona........................ 1.5 0.0
California..................... 2.4 13.9
Colorado....................... 5.1 1.4
Connecticut.................... 0.0 2.1
Delaware....................... 1.9 0.0
District of Columbia........... 0.0 0.2
Florida........................ 3.5 2.1
Georgia........................ 3.5 5.2
Hawaii......................... 0.0 1.9
Idaho.......................... 0.0 1.1
Illinois....................... 4.3 8.0
Indiana........................ 0.0 3.2
Louisiana...................... 0.1 1.6
Maine.......................... 0.7 0.0
Maryland....................... 4.6 2.8
Massachusetts.................. 7.5 4.1
Michigan....................... 0.8 0.0
Minnesota...................... 2.4 0.0
Mississippi.................... 0.0 2.3
Missouri....................... 2.9 0.0
Nevada......................... 3.4 1.6
New Jersey..................... 2.2 0.0
New York....................... 10.2 9.3
North Carolina................. 0.2 0.1
North Dakota................... 7.3 0.0
Ohio........................... 0.0 6.3
Oregon......................... 2.8 0.9
Pennsylvania................... 1.2 3.6
Puerto Rico.................... 0.0 2.3
</TABLE>
122 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 126
<TABLE>
<CAPTION>
SHORT DURATION
TAX EXEMPT TAX EXEMPT
FUND BOND FUND
-------------- ----------
<S> <C> <C>
South Carolina................. 0.7 4.0
Tennessee...................... 0.8 1.5
Texas.......................... 8.9 11.1
Utah........................... 2.0 0.0
Virginia....................... 6.3 4.9
Washington..................... 2.2 3.3
Wisconsin...................... 7.0 0.4
Wyoming........................ 0.1 0.0
TOTAL....................... 100% 100%
</TABLE>
ANNUAL REPORT 123
<PAGE> 127
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
GLOBAL SHORT
BOND FUND
=============================
YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1997 1996(a)
=========== ============
<S> <C> <C>
Net asset value -- beginning of period.............................. $ 10.07 $ 10.00
---------- ----------
Income (loss) from investment activities:
Net investment income............................................. 0.58 0.05
Net realized and unrealized gains (losses)........................ 0.11 0.06
---------- ----------
Total from investment activities............................. 0.69 0.11
---------- ----------
Distributions to shareholders:
From net investment income........................................ (0.59) (0.04)
From net realized gains...........................................
---------- ----------
Total distributions to shareholders.......................... (0.59) (0.04)
---------- ----------
Net asset value -- end of period.................................... $ 10.17 $ 10.07
========== ==========
Total return........................................................ 7.02% 1.10%*
========== ==========
Ratios/supplemental data:
Net assets, end of period (000)................................... $ 220,865 $ 28,913
Ratio of expenses to average net assets........................... 0.45% 0.45%**
Ratio of net investment income to average net assets.............. 4.84% 4.86%**
Ratio of expenses to average net assets prior to subsidies and
waivers........................................................ 0.53% 2.31%**
Ratio of net investment income to average net assets prior to
subsidies and waivers.......................................... 4.76% 3.00%**
Portfolio turnover rate........................................... 219% 0%**
- ------------
(a) The Fund commenced operations on September 18, 1996.
* Not annualized
** Annualized
</TABLE>
124 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 128
<TABLE>
<CAPTION>
GLOBAL FIXED INCOME FUND
===========================================================================
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1995 1994 1993
=========== =========== =========== =========== ===========
<S> <C> <C> <C> <C> <C>
$ 10.35 $ 10.32 $ 9.77 $ 10.62 $ 9.96
---------- ---------- ---------- ---------- ----------
1.03 0.54 0.89 0.44 0.46
(0.16) 0.19 0.53 (0.65) 0.69
---------- ---------- ---------- ---------- ----------
0.87 0.73 1.42 (0.21) 1.15
---------- ---------- ---------- ---------- ----------
(1.06) (0.70) (0.87) (0.42) (0.46)
(0.22) (0.03)
---------- ---------- ---------- ---------- ----------
(1.06) (0.70) (0.87) (0.64) (0.49)
---------- ---------- ---------- ---------- ----------
$ 10.16 $ 10.35 $ 10.32 $ 9.77 $ 10.62
========== ========== ========== ========== ==========
8.84% 7.41% 15.10% (2.09)% 11.88%
========== ========== ========== ========== ==========
$ 535,644 $ 651,165 $ 540,041 $ 430,210 $ 296,958
0.49% 0.53% 0.50% 0.55% 0.70%
5.69% 5.67% 8.94% 4.24% 4.22%
0.49% 0.53% 0.50% 0.55% 0.68%
5.69% 5.67% 8.94% 4.24% 4.24%
289% 176% 227% 348% 253%
</TABLE>
ANNUAL REPORT 125
<PAGE> 129
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
INTERNATIONAL BOND FUND
==========================================
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1995(c)
=========== =========== ============
<S> <C> <C> <C>
Net asset value -- beginning of period................... $ 10.39 $ 10.04 $ 10.00
---------- ---------- ----------
Income (loss) from investment activities:
Net investment income.................................. 0.57 0.03 0.15
Net realized and unrealized gains (losses)............. (0.32) 0.42 0.09
---------- ---------- ----------
Total from investment activities.................. 0.25 0.45 0.24
---------- ---------- ----------
Distributions to shareholders:
From net investment income............................. (0.47) (0.03) (0.15)
From net realized gains................................ -- (0.01) (0.04)
In excess of net realized gains........................ -- (0.06) (0.01)
---------- ---------- ----------
Total distributions to shareholders............... (0.47) (0.10) (0.20)
---------- ---------- ----------
Net asset value -- end of period......................... $ 10.17 $ 10.39 $ 10.04
========== ========== ==========
Total return............................................. 2.51% 4.47% 2.43%*
========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000)........................ $23,698 $18,364 $ 19.194
Ratio of expenses to average net assets................ 0.70% 0.70% 0.70%**
Ratio of net investment income to average net assets... 5.55% 5.61% 5.24%**
Ratio of expenses to average net assets prior to
subsidies and waivers............................... 0.75% 0.98% 1.64%**
Ratio of net investment income to average net assets
prior to subsidies and waivers...................... 5.50% 5.33% 4.30%**
Portfolio turnover rate................................ 201% 217% 97%**
Average commissions.................................... -- -- --
- ------------
(c) The Fund commenced operations on April 1, 1995.
(d) The Fund commenced operations on December 9, 1996.
(e) The Fund commenced operations on June 27, 1997.
(f ) The Fund commenced operations on November 1, 1996.
* Not annualized
** Annualized
*** Represents the dollar amount of commissions paid on portfolio transactions divided by the total
number of shares purchased and sold for which commissions were charged.
</TABLE>
126 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 130
<TABLE>
<CAPTION>
GLOBAL EUROPEAN
BALANCED INTERNATIONAL GROWTH & GROWTH &
FUND EQUITY FUND INCOME FUND INCOME FUND
============ ============ ============ ===========
PERIOD ENDED PERIOD ENDED PERIOD ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997(d) 1997(d) 1997(e) 1997(f)
============ ============ ============ ===========
<S> <C> <C> <C> <C>
$ 10.00 $ 10.00 $ 10.00 $ 10.00
---------- ---------- ---------- ---------
0.05 (0.28) (0.04) 0.17
0.90 1.04 0.23 2.74
---------- ---------- ---------- ---------
0.95 0.76 0.19 2.91
---------- ---------- ---------- ---------
(0.05) -- -- (0.14)
(0.11) (0.01) -- --
-- -- -- --
---------- ---------- ---------- ---------
(0.16) (0.01) 0.00 (0.14)
---------- ---------- ---------- ---------
$ 10.79 $ 10.75 $ 10.19 $ 12.77
========== ========== ========== =========
9.49%* 7.59%* 1.90%* 29.19%
========== ========== ========== =========
$ 10,312 $ 14,403 $ 13,608 $ 150,944
0.70% 0.90%** 0.69%** 0.54%**
3.32%** 0.92%** 1.72%** 1.60%**
1.64% 1.57%** 2.48%** 0.89%**
2.38%** 0.25%** (0.07)%** 1.25%**
211%** 66%** 9%** 2%**
$ 0.0353*** $ 0.0253*** $ 0.0354*** $ 0.0300***
</TABLE>
ANNUAL REPORT 127
<PAGE> 131
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
MARKET RETURN FUND
=============================
YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31,
1997 1996(g)
=========== ============
<S> <C> <C>
Net asset value -- beginning of period.............................. $ 10.86 $10.00
---------- ---------
Income (loss) from investment activities:
Net investment income............................................. 0.63 0.50
Net realized and unrealized gains (losses)........................ 2.64 0.86
---------- ---------
Total from investment activities............................. 3.27 1.36
---------- ---------
Distributions to shareholders:
From net investment income........................................ (0.63) (0.50)
From net realized gains........................................... (0.70)
---------- ---------
Total distributions to shareholders.......................... (1.33) (0.50)
---------- ---------
Net asset value -- end of period.................................... $ 12.80 $10.86
========== =========
Total return........................................................ 31.74% 14.06%*
========== =========
Ratios/supplemental data:
Net assets, end of period (000)................................... $20,195 $5,789
Ratio of expenses to average net assets........................... 0.45% 0.00%**
Ratio of net investment income to average net assets.............. 5.36% 5.95%**
Ratio of expenses to average net assets prior to subsidies and
waivers........................................................ 0.96% 4.14%**
Ratio of net investment income to average net assets prior to
subsidies and waivers.......................................... 4.85% 1.81%**
Portfolio turnover rate........................................... 140% 146%**
Average commissions............................................... $0.0300***
- ------------
(g) The Fund commenced operations on December 1, 1995.
(h) The Fund commenced operations on May 1, 1994.
* Not annualized
** Annualized
*** Represents the dollar amount of commissions paid on portfolio transactions divided by the total
number of shares purchased and sold for which commissions were charged.
</TABLE>
128 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 132
<TABLE>
<CAPTION>
LIMITED MATURITY FUND
============================================================
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1995 1994(h)
=========== =========== =========== ============
<S> <C> <C> <C> <C>
$ 10.06 $ 10.06 $ 10.00 $ 10.00
---------- ---------- ---------- ----------
0.54 0.53 0.56 0.19
-- -- 0.07 (0.01)
---------- ---------- ---------- ----------
0.54 0.53 0.63 0.18
---------- ---------- ---------- ----------
(0.54) (0.53) (0.57) (0.18)
-- -- -- --
---------- ---------- ---------- ----------
(0.54) (0.53) (0.57) (0.18)
---------- ---------- ---------- ----------
$ 10.06 $ 10.06 $ 10.06 $ 10.00
========== ========== ========== ==========
5.46% 5.41% 6.43% 1.84%*
========== ========== ========== ==========
$ 152,429 $50,771 $18,414 $ 14,248
0.30% 0.30% 0.33% 0.41%**
5.52% 5.45% 5.59% 4.74%**
0.52% 0.62% 0.83% 2.92%**
5.30% 5.13% 5.09% 2.23%**
135% 217% 166% 86%**
-- -- -- --
</TABLE>
ANNUAL REPORT 129
<PAGE> 133
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
U.S. TREASURY FUND
============================================
YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1995(i)
=========== =========== ============
<S> <C> <C> <C>
Net asset value -- beginning of period.......... $ 10.54 $ 10.61 $ 10.00
---------- ---------- ----------
Income (loss) from investment activities:
Net investment income......................... 0.60 0.58 0.53
Net realized and unrealized gains (losses).... 0.02 (0.04) 0.61
---------- ---------- ----------
Total from investment activities......... 0.62 0.54 1.14
---------- ---------- ----------
Distributions to shareholders:
From net investment income.................... (0.60) (0.58) (0.53)
From net realized gains....................... -- (0.03) --
---------- ---------- ----------
Total distributions to shareholders...... (0.60) (0.61) (0.53)
---------- ---------- ----------
Net asset value -- end of period................ $ 10.56 $ 10.54 $ 10.61
========== ========== ==========
Total return.................................... 6.10% 5.20% 11.61%*
========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000)............... $15,479 $22,114 $ 10,894
Ratio of expenses to average net assets....... 0.45% 0.45% 0.45%**
Ratio of net investment income to average net
assets..................................... 5.49% 5.59% 6.31%**
Ratio of expenses to average net assets prior
to subsidies and waivers................... 0.63% 0.78% 1.84%**
Ratio of net investment income to average net
assets prior to subsidies and waivers...... 5.31% 5.26% 4.92%**
Portfolio turnover rate....................... 160% 152% 87%**
- ------------
(d) The Fund commenced operations on December 9, 1996.
(i) The Fund commenced operations on January 1, 1995.
(j) The Fund commenced operations on September 1, 1994.
* Not annualized
** Annualized
</TABLE>
130 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 134
<TABLE>
<CAPTION>
TOTAL RETURN
SHORT BOND FUND FUND
============================================================ ============
YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1995 1994(j) 1997(d)
=========== =========== =========== ============ ============
<S> <C> <C> <C> <C> <C>
$ 9.97 $ 10.04 $ 9.68 $10.00 $ 10.00
---------- ---------- ---------- --------- ----------
0.58 0.54 0.54 0.34 0.46
(0.05) (0.06) 0.36 (0.32) 0.23
---------- ---------- ---------- --------- ----------
0.53 0.48 0.90 0.02 0.69
---------- ---------- ---------- --------- ----------
(0.58) (0.54) (0.54) (0.34) (0.44)
-- (0.01) -- -- --
---------- ---------- ---------- --------- ----------
(0.58) (0.55) (0.54) (0.34) (0.44)
---------- ---------- ---------- --------- ----------
$ 9.92 $ 9.97 $ 10.04 $ 9.68 $ 10.25
========== ========== ========== ========= ==========
5.52% 4.86% 9.56% 0.21%* 7.10%*
========== ========== ========== ========= ==========
$94,256 $97,966 $19,157 $2,592 $ 98,863
0.40% 0.40% 0.40% 0.48%** 0.45%**
6.00% 5.67% 5.72% 4.47%** 6.21%**
0.49% 0.57% 1.03% 4.56%** 0.69%**
5.91% 5.50% 5.09% 0.39%** 5.97%**
208% 212% 170% 187%** 206%**
</TABLE>
ANNUAL REPORT 131
<PAGE> 135
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
INTERMEDIATE BOND FUND
===========================================
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1995
=========== =========== ===========
<S> <C> <C> <C>
Net asset value -- beginning of period........... $ 9.60 $ 9.85 $ 9.30
---------- ---------- ----------
Income (loss) from investment activities:
Net investment income.......................... 0.56 0.56 0.57
Net realized and unrealized gains (losses)..... 0.11 (0.17) 0.55
---------- ---------- ----------
Total from investment activities.......... 0.67 0.39 1.12
---------- ---------- ----------
Distributions to shareholders:
From net investment income..................... (0.56) (0.56) (0.57)
From net realized gains........................ -- (0.08) --
---------- ---------- ----------
Total distributions to shareholders....... (0.56) (0.64) (0.57)
---------- ---------- ----------
Net asset value -- end of period................. $ 9.71 $ 9.60 $ 9.85
========== ========== ==========
Total return..................................... 7.26% 4.06% 12.43%
========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000)................ $80,766 $52,767 $34,391
Ratio of expenses to average net assets........ 0.45% 0.45% 0.45%
Ratio of net investment income to average net
assets...................................... 5.96% 5.90% 6.10%
Ratio of expenses to average net assets prior
to subsidies and waivers.................... 0.55% 0.58% 0.68%
Ratio of net investment income to average net
assets prior to subsidies and waivers....... 5.86% 5.77% 5.87%
Portfolio turnover rate........................ 192% 196% 189%
- ------------
(k) The Fund commenced operations on January 1, 1994.
* Not annualized
** Annualized
</TABLE>
132 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 136
<TABLE>
<CAPTION>
INTERMEDIATE
BOND FUND INVESTMENT QUALITY BOND FUND
============ ============================================================
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1994(k) 1997 1996 1995 1994(k)
============ =========== =========== =========== ============
<S> <C> <C> <C> <C> <C>
$ 10.00 $ 9.81 $ 9.96 $ 9.09 $10.00
---------- ---------- ---------- ---------- -----------
0.35 0.58 0.63 0.57 0.37
(0.70) 0.22 (0.17) 0.87 (0.91)
---------- ---------- ---------- ---------- ---------
(0.35) 0.80 0.46 1.44 (0.54)
---------- ---------- ---------- ---------- ---------
(0.35) (0.60) (0.61) (0.57) (0.37)
-- -- -- -- --
---------- ---------- ---------- ---------- ---------
(0.35) (0.60) (0.61) (0.57) (0.37)
---------- ---------- ---------- ---------- ---------
$ 9.30 $ 10.01 $ 9.81 $ 9.96 $ 9.09
========== ========== ========== ========== =========
(3.52)%* 8.44% 4.86% 16.39% (5.49)%*
========== ========== ========== ========== =========
$ 14,312 $94,987 $32,304 $25,822 $3,030
0.46%** 0.45% 0.00% 0.45% 0.49%**
5.39%** 6.03% 6.41% 6.20% 5.25%**
2.03%** 0.53% 0.64% 1.11% 4.52%**
3.82%** 5.95% 5.77% 5.55% 1.22%**
358%** 317% 197% 252% 513%**
</TABLE>
ANNUAL REPORT 133
<PAGE> 137
FINANCIAL HIGHLIGHTS (CONTINUED)
(For a share outstanding throughout the period)
<TABLE>
<CAPTION>
SHORT DURATION TAX EXEMPT FUND
===========================================
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
1997 1996 1995
=========== =========== ===========
<S> <C> <C> <C>
Net asset value -- beginning of period........... $ 10.01 $ 10.08 $ 9.93
---------- ---------- ----------
Income (loss) from investment activities:
Net investment income.......................... 0.38 0.38 0.42
Net realized and unrealized gains (losses)..... 0.07 (0.06) 0.15
---------- ---------- ----------
Total from investment activities.......... 0.45 0.32 0.57
---------- ---------- ----------
Distributions to shareholders:
From net investment income..................... (0.38) (0.38) (0.42)
From net realized gains........................ -- (0.01) --
---------- ---------- ----------
Total distributions to shareholders....... (0.38) (0.39) (0.42)
---------- ---------- ----------
Net asset value -- end of period................. $ 10.08 $ 10.01 $ 10.08
========== ========== ==========
Total return..................................... 4.55% 3.28% 5.88%
========== ========== ==========
Ratios/supplemental data:
Net assets, end of period (000)................ $38,176 $36,336 $16,019
Ratio of expenses to average net assets........ 0.45% 0.45% 0.45%
Ratio of net investment income to average net
assets...................................... 3.75% 3.81% 4.12%
Ratio of expenses to average net assets prior
to subsidies and waivers.................... 0.62% 0.70% 0.91%
Ratio of net investment income to average net
assets prior to subsidies and waivers....... 3.58% 3.56% 3.66%
Portfolio turnover rate........................ 57% 35% 80%
- ------------
(j) The Fund commenced operations on September 1, 1994.
(l) The Fund commenced operations on December 21, 1993.
* Not annualized
** Annualized
</TABLE>
134 PAYDEN & RYGEL INVESTMENT GROUP
<PAGE> 138
<TABLE>
<CAPTION>
SHORT
DURATION TAX
EXEMPT FUND TAX EXEMPT BOND FUND
============ ============================================================
PERIOD ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1994(j) 1997 1996 1995 1994(l)
============ =========== =========== =========== ============
<S> <C> <C> <C> <C> <C>
$ 10.00 $ 9.47 $ 9.59 $ 8.90 $ 10.00
---------- ---------- ---------- ---------- ----------
0.04 0.44 0.45 0.46 0.33
(0.07) 0.24 (0.12) 0.69 (1.10)
---------- ---------- ---------- ---------- ----------
(0.03) 0.68 0.33 1.15 (0.77)
---------- ---------- ---------- ---------- ----------
(0.04) (0.44) (0.45) (0.46) (0.33)
-- -- -- -- --
---------- ---------- ---------- ---------- ----------
(0.04) (0.44) (0.45) (0.46) (0.33)
---------- ---------- ---------- ---------- ----------
$ 9.93 $ 9.71 $ 9.47 $ 9.59 $ 8.90
========== ========== ========== ========== ==========
(0.35)%* 7.33% 3.52% 13.25% (7.85)%*
========== ========== ========== ========== ==========
$ 20,150 $57,579 $49,862 $40,052 $ 25,474
0.45%** 0.45% 0.45% 0.45% 0.50%**
3.20%** 4.60% 4.73% 4.97% 4.47%**
2.87%** 0.59% 0.61% 0.74% 1.07%**
0.78%** 4.46% 4.57% 4.69% 3.90%**
0%** 42% 23% 42% 98%**
</TABLE>
ANNUAL REPORT 135
<PAGE> 139
INDEPENDENT AUDITORS' REPORT
To the Board of Trustees and Shareholders of
Payden & Rygel Investment Group
We have audited the accompanying statements of assets and liabilities, including
the schedules of portfolio investments, of Payden & Rygel Investment Group,
including Payden & Rygel Global Short Bond Fund, Payden & Rygel Global Fixed
Income Fund, Payden & Rygel International Bond Fund, Payden & Rygel Global
Balanced Fund, Payden & Rygel International Equity Fund, Payden & Rygel European
Growth & Income Fund, Payden & Rygel Growth & Income Fund, Payden & Rygel Market
Return Fund, Payden & Rygel Limited Maturity Fund, Payden & Rygel Short Bond
Fund, Payden & Rygel U.S. Treasury Fund, Payden & Rygel Intermediate Bond Fund,
Payden & Rygel Investment Quality Bond Fund, Payden & Rygel Total Return Fund,
Payden & Rygel Short Duration Tax Exempt Fund and Payden & Rygel Tax Exempt Bond
Fund (the "Funds"), as of October 31, 1997, 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 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, 1997, 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 Funds at October
31, 1997, the results of their operations, 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 9, 1997
136 PAYDEN & RYGEL INVESTMENT GROUP
