Table of Contents
LETTER TO SHAREHOLDERS ......................................... 2
COMMENTS FROM INVESTMENT ADVISOR ............................... 3
PORTFOLIO INVESTMENT RETURNS
Small/Mid Cap Equity Portfolio ........................ 4
Core Equity Portfolio ................................. 5
Balanced Portfolio .................................... 6
Intermediate Fixed Income Portfolio ................... 7
SCHEDULES OF INVESTMENTS
Small/Mid Cap Equity Portfolio ........................ 8
Core Equity Portfolio ................................. 11
Balanced Portfolio .................................... 15
Intermediate Fixed Income Portfolio ................... 20
STATEMENTS OF ASSETS AND LIABILITIES ........................... 22
STATEMENTs OF OPERATIONS ....................................... 23
STATEMENTs OF CHANGES IN NET ASSETS ............................ 24
FINANCIAL HIGHLIGHTS ........................................... 26
NOTES TO FINANCIAL STATEMENTS .................................. 28
INDEPENDENT AUDITORS' REPORT ................................... 30
DIRECTORY OF FUNDS' SERVICE PROVIDERS .......................... 30
INDEX DESCRIPTIONS ............................................. 31
601 Union Street, Suite 2801
Seattle, Washington 98101
(800) 248-6314
This report and the financial statements contained herein are provided for the
general information of the shareholders of the Rainier Investment Management
Mutual Funds. This report is not authorized for distribution to prospective
investors in the Funds unless preceded or accompanied by an effective
prospectus. For more information on any Fund, including charges and expenses,
call (800) 248-6314 for a free prospectus. Read it carefully before you invest
or send money.
<PAGE>
Letter to Shareholders
Dear Shareholders,
As Chairman of Rainier Investment Management No-Load Mutual Funds and a
fellow shareholder in the Funds, I'd like to express my appreciation for your
valued investment in one of the four Portfolios covered in this report. If you
are a new shareholder, welcome! This Annual Report contains audited financial
statements for the year ended March 31, 1996. The audit of the financial
statements was performed by KPMG Peat Marwick LLP, a national accounting firm
with extensive experience auditing the financials of investment companies.
As you review this Annual Report, you will find commentary describing the
general environment of the equity and fixed-income capital markets. Also, you
will see summaries for each of the four Portfolios, which provide performance
information for the last six months, followed by investment total returns.
Finally, this Annual Report contains financial statements detailing the expenses
of the Portfolios and the Portfolio holdings as of March 31, 1996.
I am very pleased to report to the shareholders that the Funds continue to
operate to our satisfaction on all fronts. Asset growth has been steady. The
back office operations are running smoothly. Most importantly, the Portfolio
returns have been very strong, both in absolute terms and relative to other
funds with similar objectives. In fact, the Funds have been the subject of
numerous articles by the national financial media.
Also of importance is the lowering of our minimum investment requirement.
As a result of increased interest and demand from the marketplace, we have
decreased the minimum investment to $25,000 per Fund from $250,000. This change
has no effect on the minimums required for purchases with our national
distribution partners. The Rainier Funds continue to be available to retail
investors at minimums below $25,000 through distributors such as Charles Schwab
OneSource(R) and Fidelity FundsNetwork.(R) Minimums with these services remain
$1,000 and $2,500, respectively.
Recently, Rainier=s strong Code of Ethics was mentioned in a Wall Street
Journal article. By policy, Rainier employees are not allowed to purchase
individual securities for their own accounts. We voluntarily implemented this
Code of Ethics to eliminate the slightest appearance of conflict of interest and
to minimize distractions. The policy, which allows investments in mutual fund
shares, encourages us to be shareholders in the Rainier Investment Management
Mutual Funds. As fellow shareholders, we experience first-hand the investment
results of the Funds.
We are interested in your on-going feedback. If you have any ideas that can
help us improve our service, please call us. Thank you again for your investment
in the Rainier Investment Management Family of No-Load Mutual Funds. We look
forward to the continued challenge and opportunity to meet your investment
needs.
Sincerely,
/S/ J. Glenn Haber
------------------
J. Glenn Haber
Chairman
Rainier Investment Management Mutual Funds
<PAGE>
Comments from Investment Advisor
About the Advisor: The Investment Advisor to the Funds is Rainier
Investment Management, Inc.(R) (RIM) located in Seattle, Washington. RIM is one
of America=s leading investment advisory firms, managing over $2.3 billion of
discretionary assets for primarily institutional clients.
Equity Comments
The fiscal year ended March 31, 1996 marked the conclusion of an
outstanding period of investment returns for stock investors. The Standard &
Poor=s 500 Index registered a gain of 32.1% for the year, with smaller stocks
only 2-3% behind larger capitalization issues. In general, -blue chip- shares
led the advance, especially in the fourth quarter of calendar year 1995, as the
red-hot technology sector cooled off and large consumer-growth issues with
predictable earnings returned to favor. The rally in stocks hit resistance in
March, however, when a surprisingly strong jobs report indicated that the
economy was gaining momentum. Expectations for a higher rate of economic growth
pressured -interest sensitive- sectors of the market, and made cyclical issues
the best performing stocks during the first three months of calendar year 1996.
Some market observers have cautioned that the flow of money into equity
mutual funds may be reaching speculative levels. While we recognize that these
inflows are unprecedented, we note that money market mutual funds also had
strong inflows during the first quarter. There is evidence that many investors
are simply switching from individual stocks to using equity funds. In other
words, we do not see the average investor recklessly throwing money into the
market. Corporations remain active buyers of equities, engaging in stock
buy-back programs and major merger and acquisition activity. We also take some
comfort in the fact that the technology sector, an area prone to speculative
excess, is well below its highs. Finally, our research efforts continue to
uncover stocks that appear to be significantly undervalued.
James R. Margard, CFA
David A. Veterane, CFA
Peter M. Musser, CFA
Fixed Income Comments
Fixed-income returns for the fiscal year ended March 31, 1996 ranged from
high single digits to low double digits, with longer maturity portfolios
performing best. The market environment of the last quarter of the fiscal year,
however, marked a significant turning point. After a strong fourth quarter to
finish calendar year 1995 with memorable double-digit performance, the
fixed-income markets experienced a severe reality check early in the new year.
Total returns in nearly all market sectors turned negative. As 1996 began, it
was no secret that interest rates were running ahead of the actions of the
Federal Reserve to lower rates to prevent a recession. The sentiment for much of
1995 was that current economic activity was lackluster, and inflation continued
to be low. As the first quarter progressed, however, a rising CRB Commodity
Index began to give concern, and strong employment numbers fueled the fire. The
February employment report, released in March, led to a three-point drop in the
bond market in one day. Day-to-day volatility picked up, with traders attempting
to interpret each new piece of data as sentiment began to reverse trend. By the
end of March rates were higher and the yield curve steeper than year-end. What a
roller coaster ride!
Looking ahead we expect to see a choppy trading range with a slight upward
rate bias. The next quarter should not be as volatile as the last, and as the
year progresses, more total return will be added by the coupon component of
bonds.
Patricia L. Frost, CEO
Michael E. Raney, CFA
<PAGE>
Portfolio Investment Returns
Small/Mid Cap Equity Portfolio
Objective: The Small/Mid Cap Equity Portfolio seeks to provide investors with
maximum long-term capital appreciation. The Investment Advisor constructs a
diversified portfolio of small and medium capitalization common stocks.
Commentary: In the last six months, the Portfolio had a positive total
return in every month except October. Financial stocks were strong and well
represented, led by Leader Financial and American Travellers. Strong relative
performance came from select health care stocks such as MiniMed and Multicare.
We modestly emphasized capital goods shares, particularly those related to
agricultural equipment and commercial aerospace, and cut back commodity raw
materials shares. Domestic energy stocks began to enhance performance. Higher
natural gas and oil prices lifted the earnings prospects and equity valuations
of companies such as B.J. Services and Panhandle Eastern. Many technology
equities struggled as investors became increasingly cautious about personal
computer sales and semiconductor demand. We are encouraged by the recent rally
in this smaller capitalization sector, but we also anticipate continued
volatility. We remain dedicated to an emphasis on diversification in undervalued
securities with above-average earnings growth prospects.
COMPARISON OF CHANGE IN VALUE OF $10,000
5/10/94 9/30/95 3/31/96
- -----------------------------------------------------------------------------
Small/Mid Cap Equity Portfolio 10,000 14,508 16,520
Standard & Poor's 500 Stock Index 10,000 13,596 15,190
Russel Mid-Cap(T) Index 10,000 13,285 14,539
Consumer Price Index 10,000 10,394 10,563
<TABLE>
<CAPTION>
Total Returns for Periods Ending March 31, 1996 Inception
3 Months 6 Months 1 Year to 3/31/96*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Small/Mid Cap Equity Portfolio 5.6% 13.9% 38.4% 30.4%
Standard & Poor's 500 Stock Index 5.5 11.7 32.1 24.8
Russell Midcap(T) Index 6.0 9.4 29.1 21.9
Consumer Price Index 1.4 1.6 3.2 3.0
*Average annual return since 5/10/94.
</TABLE>
See page 31 for index descriptions. Total return assumes reinvestment of
dividends and distributions. Past performance is not predictive of future
results. Investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The Advisor is
currently limiting fund expenses, which enhances return.
<PAGE>
Core Equity Portfolio
Objective: The Core Equity Portfolio seeks to maximize long-term capital
appreciation. The Fund invests primarily in a diversified portfolio of common
stocks of U.S. companies.
Commentary: Domestic equities achieved above normal returns for the last
six months, as economic and political events were generally supportive. A rise
in employment in February, however, resulted in a hike in interest rates, which
in turn tested the market. Even so, the market managed to gain 1% in both
February and March. All capitalization groups participated in the rally,
although there was a wide disparity among sectors. Technology shares suffered a
major setback through mid-January but rallied modestly into the end of the
period. Hewlett-Packard and Microsoft were strong Portfolio contributors. We
de-emphasized auto and retail stocks and did not fully enjoy the big move in
these groups. Financial stocks such as American Express and BayBanks continued
to enhance performance. Energy shares began to come alive. Utility stocks
rallied but then collapsed in response to the bond market. High
price-to-earnings stocks were the best performing group from a valuation
standpoint. The Portfolio was modestly handicapped by its focus on growth
companies with below-average P/E ratios.
COMPARISON OF CHANGE IN VALUE OF $10,000
5/10/94 9/30/95 3/31/96
- -----------------------------------------------------------------------------
Core Equity Portfolio 10,000 14,410 16,341
Standard & Poor's 500 Stock Index 10,000 13,596 15,190
Consumer Price Index 10,000 10,394 10,563
<TABLE>
<CAPTION>
Total Returns for Periods Ending March 31, 1996 Inception
3 Months 6 Months 1 Year to 3/31/96*
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Core Equity Portfolio 5.9% 13.4% 38.6% 29.7%
Standard & Poor's 500 Stock Index 5.5 11.7 32.1 24.8
Consumer Price Index 1.4 1.6 3.2 3.0
*Average annual return since 5/10/94.
</TABLE>
See page 31 for index descriptions. Total return assumes reinvestment of
dividends and distributions. Past performance is not predictive of future
results. Investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The Advisor is
currently limiting fund expenses, which enhances return.
<PAGE>
Balanced Portfolio
Objective: The Balanced Portfolio seeks to provide investors with a balance
of long-term capital appreciation and current income. The Fund invests primarily
in a diversified portfolio of common stocks of U.S. companies, investment grade
intermediate-term debt securities and cash equivalent securities.
Commentary: The Portfolio experienced the effects of two opposing forces in
the six-month period ended March 31: A surging stock market and a swooning bond
market. Stocks achieved greater than 5% returns in both quarters. The bond
market, however, performed well in the December quarter, but suffered a negative
return in the March 1996 quarter. The Portfolio did not feel the full brunt of
the weak bond market, however, given its modest 30-35% average fixed-income
weighting. Furthermore, the Portfolio's emphasis on intermediate investment
grade bonds cushioned its exposure to the weak fixed-income market. Equities
faced price corrections early in both quarters and in mid-March when interest
rates surged, only to be followed by a price recovery. We continue to emphasize
diversification across all market capitalizations and economic sectors of the
market, with a focus on undervalued stocks with growth prospects. We anticipate
a continued high level of sector rotation in the stock market and additional
tests of the current market rally.
COMPARISON OF CHANGE IN VALUE OF $10,000
5/10/94 9/30/95 3/31/96
- -----------------------------------------------------------------------------
Balanced Portfolio 10,000 13,596 15,190
Standard & Poor's 500 Stock Index 10,000 12,937 14,094
Balanced Index 10,000 12,357 13,241
Consumer Price Index 10,000 10,394 10,563
<TABLE>
<CAPTION>
Total Returns for Periods Ending March 31, 1996 Inception
3 Months 6 Months 1 Year to 3/31/96*
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balanced Portfolio 2.6% 9.0% 25.6% 19.9%
Balanced Index (50/40/10) 2.5 7.1 20.0 16.0
Standard & Poor's 500 Stock Index 5.5 11.7 32.1 24.8
Lehman Brothers Government/Corporate Intermediate Bond Index (.08) 2.7 9.6 7.0
Consumer Price Index 1.4 1.6 3.2 3.0
*Average annual return since 5/10/94.
</TABLE>
See page 31 for index descriptions. Total return assumes reinvestment of
dividends and distributions. Past performance is not predictive of future
results. Investment return will fluctuate so that an investor=s shares, when
redeemed, may be worth more or less than their original cost. The Advisor is
currently limiting fund expenses, which enhances return.
<PAGE>
Intermediate Fixed Income Portfolio
Objective: The Intermediate Fixed Income Portfolio seeks to provide
investors with current income. The Fund invests primarily in a diversified
portfolio of investment grade, intermediate-term debt securities providing
current income. The Portfolio does not use risky derivative instruments.
Commentary: Returns in the Portfolio over the last six months was a
respectable 2.6%. The strong gains of the December quarter gave way to negative
returns in the March quarter. Fortunately, our high-quality intermediate
maturity strategy helped the Portfolio fare much better during the difficult
March quarter than longer maturity portfolios, where returns approaching -5%
were possible.
As the first quarter 1996 unfolded, the market sentiment that current
economic activity was lackluster and inflation low, was challenged. Rising
commodity prices and a surprisingly strong February employment report led to a
three-point drop in the bond market in one day. Within this uncertain
environment, the Intermediate Fixed Income Portfolio shortened overall duration
and held a higher level of short bonds and cash equivalents to lower volatility
and to protect current income as interest rates rose. The next few months should
not be as volatile as the last. However, trading may be choppy with a slight
upward rate bias.
COMPARISON OF CHANGE IN VALUE OF $10,000
5/10/94 9/30/95 3/31/96
- -------------------------------------------------------------------------------
Intermediate Fixed Income Portfolio 10,000 11,321 11,622
Lehman Intermediate Gov't/Corp Bond Index 10,000 11,135 11,421
Consumer Price Index 10,000 10,394 10,563
<TABLE>
<CAPTION>
Total Returns for Periods Ending March 31, 1996 Inception
3 Months 6 Months 1 Year to 3/31/96*
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Intermidiate Fixed Income Portfolio (0.7)% 2.6% 8.9% 7.3%
Lehman Brothers Government/Corporate Intermediate Bond Index (0.8) 2.7 9.6 7.0
91-Day Treasury Bill Index 1.3 2.7 5.6 5.4
Consumer Price Index 1.4 1.6 3.2 3.0
*Average annual return since 5/10/94.
</TABLE>
See page 31 for index descriptions. Total return assumes reinvestment of
dividends and distributions. Past performance is not predictive of future
results. Investment return will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. The Advisor is
currently limiting fund expenses, which enhances return.
<PAGE>
================================================================================
SCHEDULE OF INVESTMENTS
================================================================================
Small/Mid Cap Equity Portfolio
MARCH 31, 1996
VARIABLE RATE DEMAND NOTES*
(2.34%) Par Value Value
- -------------------------------------------------------------------------------
American Family
5.1149% 08-09-1996 $ 35,000 $ 35,000
General Mills
5.1000% 11-29-1996 766,000 766,000
Pitney Bowes
5.1139% 08-02-1996 100,000 100,000
Sara Lee
5.0937% 08-05-1996 516,490 516,490
Southwestern Bell Corp.
5.0937% 01-28-1997 302,000 302,000
Wisconsin Electric
5.1549% 05-24-1996 140,000 140,000
-----------
TOTAL DEMAND NOTES (cost $1,859,490) $1,859,490
-----------
COMMON STOCKS (98.70%) Shares Value
- -------------------------------------------------------------------------------
Autos and Transportation (1.91%)
Air Transportation (0.83%)
Federal Express** 8,200 $ 572,975
Southwest Airlines Co. 3,000 88,875
-----------
Total Air Transportation 661,850
-----------
Railroads (1.08%)
Illinois Central Corp. 30,000 855,000
-----------
Total Autos and Transportation 1,516,850
-----------
Consumer Discretionary (13.79%)
Consumer Electronics (1.40%)
Harman Int'l Industries Inc. 29,750 1,115,625
-----------
Consumer Products (0.80%)
Lancaster Colony Corp. 17,000 633,250
-----------
Electrical/Household Appliances (0.98%)
The Rival Co. 32,000 776,000
-----------
Hotel/Motel (0.94%)
La Quinta Inns Inc. 25,500 749,063
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Household Equipment and Products (1.61%)
Black & Decker Corp. 33,800 $1,280,175
-----------
Leisure Time (0.78%)
The Coleman Co. Inc.** 14,100 622,163
-----------
Publishing/Miscellaneous (2.09%)
Devon Group Inc.** 24,950 711,075
The McGraw-Hill Companies 11,000 954,250
-----------
Total Publishing/Miscellaneous 1,665,325
-----------
Publishing/Newspapers (0.48%)
A.H. BELO Corp. 11,200 380,800
-----------
Restaurants (1.70%)
Applebee's International Inc. 28,800 720,000
Wendy's International Inc. 35,000 634,375
-----------
Total Restaurants 1,354,375
-----------
Retail (2.29%)
Carson Pirie Scott** 26,450 595,125
The Talbots Inc. 12,000 456,000
Zale Corp.** 44,950 772,578
-----------
Total Retail 1,823,703
-----------
Toys (0.71%)
Cannondale Corp.** 30,750 565,031
-----------
Total Consumer Discretionary 10,965,510
-----------
Consumer Staples (2.67%)
Foods (2.67%)
Iowa Beef Processing Inc. 40,700 1,042,938
Smithfield Foods Inc.** 37,300 1,081,700
-----------
Total Foods 2,124,638
-----------
Total Consumer Staples 2,124,638
-----------
Financial Services (20.46%)
Banks/New York City (0.55%)
Republic New York Corp. 7,350 437,325
-----------
Banks/Outside New York City (8.57%)
BANC ONE CORP. 9,512 338,865
BayBanks Inc. 16,000 1,720,000
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Fleet Financial Group Inc. 4,897 $ 198,329
Magna Group Inc. 36,550 845,219
Meridian Bancorp Inc. 19,450 1,016,263
Northern Trust Corp. 6,450 348,300
SouthTrust Corp. 36,000 994,500
U.S. Bancorp 31,700 1,077,800
Union Bank of California 5,000 274,375
-----------
Total Banks/Outside New York City 6,813,651
-----------
Finance/Small Loan (1.06%)
Student Loan Marketing Association 11,000 841,500
-----------
Financial Miscellaneous (1.16%)
Sotheby's Holdings Inc. 63,150 923,569
-----------
Insurance/Life (0.57%)
The Guarantee Life Companies Inc.** 29,700 456,638
-----------
Insurance/Multi-Line (1.21%)
American Travellers Corp. ** 8,500 251,813
Lincoln National Corp. 14,000 710,500
-----------
Total Insurance/Multi-Line 962,313
-----------
Insurance/Property and Casualty (1.63%)
St. Paul Companies 6,900 382,950
The PMI Group Inc. 21,000 916,125
-----------
Total Insurance/Property Casualty 1,299,075
-----------
Savings and Loan (4.99%)
Great Western Financial 24,450 589,856
Leader Financial Corp. 18,300 805,200
Standard Federal Bank 24,800 1,054,000
Washington Federal Inc. 34,990 761,033
Washington Mutual Inc. 25,350 754,163
-----------
Total Savings and Loan 3,964,252
-----------
Securities Brokerage and Services (0.71%)
Franklin Resources Inc. 9,950 567,150
-----------
Total Financial Services 16,265,473
-----------
Health Care (12.07%)
Biotechnology Research and Production (0.51%)
pathogenesis** 25,000 409,375
-----------
Drugs and Pharmaceuticals (5.91%)
Allergan 23,850 879,469
ALPHARMA Inc. 32,300 750,975
IVAX Corp. 36,000 931,500
Mallinckrodt Group Inc. 28,000 1,053,500
Watson Pharmaceuticals Inc.** 27,000 1,080,000
-----------
Total Drugs and Pharmaceuticals 4,695,444
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Electronics/Medical Systems (1.37%)
DENTSPLY International Inc. 27,100 $1,090,775
-----------
Health and Personal Care (1.86%)
Olsten Corp. 45,900 1,480,275
-----------
Health Care Facilities (0.79%)
Multicare Cos Inc. ** 22,200 629,925
-----------
Medical and Dental Instruments and Supplies (1.62%)
MiniMed Inc.** 27,000 486,000
Vital Signs Inc. 32,800 803,600
-----------
Total Medical and Dental Instruments and Supplies 1,289,600
-----------
Total Health Care 9,595,394
-----------
Integrated Oils (2.19%)
Oils/Integrated Domestic (2.19%)
Coastal Corp. 16,650 657,675
Kerr-McGee Corp. 15,000 952,500
Murphy Oil Corp. 3,000 128,625
-----------
Total Oils/Integrated Domestic 1,738,800
-----------
Materials and Processing (6.17%)
Agriculture Fishing and Ranching (0.93%)
Pioneer Hi-Bred International Inc. 14,000 736,750
-----------
Building/Cement (0.77%)
Southdown Inc. 26,000 614,250
-----------
Chemicals (0.72%)
Sigma-Aldrich Corp. 10,000 572,500
-----------
Diversified Manufacturing (0.11%)
Tyco International Ltd. 2,500 89,375
-----------
Fertilizers (1.09%)
Mississippi Chemical Corp. 42,600 862,650
-----------
Forest Products (0.74%)
Rayonier Inc. 16,250 589,063
-----------
Metal Fabricating (0.59%)
Precision Castparts Corp. 11,800 472,000
-----------
Paper (0.45%)
Willamette Industries 6,000 361,500
-----------
Real Estate (0.77%)
Innkeepers USA Trust 65,000 609,375
-----------
Total Materials and Processing 4,907,463
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- --------------------------------------------------------------------------------
Other (4.83%)
Real Estate Investment Trusts (4.83%)
Alexander Haagen Properties 9,000 $ 103,500
American Health Properties 25,000 562,500
Cali Realty Corp. 21,000 469,875
Equity Residential Properties Trust 21,850 682,813
LTC Properties Inc. 4,200 68,250
Meditrust 27,300 924,788
Nationwide Health Properties Inc. 37,000 777,000
Omega Healthcare Investors Inc. 8,700 249,038
-----------
Total Real Estate Investment Trusts 3,837,764
-----------
Total Other 3,837,764
-----------
Other Energy (5.28%)
Machinery/Oil Well Equipment and Services (1.88%)
BJ Services Co.** 30,000 1,005,000
Smith International Inc.** 19,300 487,325
-----------
Total Machinery/Oil Well Equipment and Services 1,492,325
-----------
Oil/Crude Producers (3.40%)
Benton Oil & Gas Co.** 10,000 157,500
Devon Energy Corp. 41,200 968,200
Oryx Energy Co.** 19,000 263,625
Santa Fe Energy Resources** 46,100 484,050
Union Texas Petroleum Holdings 42,000 829,500
-----------
Total Oil/Crude Producers 2,702,875
-----------
Total Other Energy 4,195,200
-----------
Producer Durables (10.73%)
Aerospace (1.05%)
Sundstrand Corp. 20,400 831,300
-----------
Electronics/Instruments Gauges and Meters (0.97%)
Tektronix Inc. 23,700 770,250
-----------
Homebuilding (0.44%)
Kaufman and Broad Home Corp. 22,000 352,000
-----------
Identification Control and Filter Devices (0.96%)
Pall Corp. 13,800 353,625
Parker Hannifin Corp. 11,000 412,500
-----------
Total Identification Control and Filter Devices 766,125
-----------
Machinery/Agricultural (1.37%)
AGCO Corp. 45,000 1,085,625
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Machinery/Industrial and Specialty (2.83%)
Applied Power 28,000 $ 913,500
Ingersoll-Rand Co. 27,400 1,116,550
Kennametal Inc. 6,000 216,750
-----------
Total Machinery/Industrial and Specialty 2,246,800
-----------
Office Furniture and Business Equipment (0.78%)
Herman Miller Inc. 20,000 620,000
-----------
Production Technology Equipment (2.34%)
KLA Instruments Corp.** 33,000 746,625
Novellus Systems Inc.** 25,000 1,112,500
-----------
Total Production Technology Equipment 1,859,125
-----------
Total Producer Durables 8,531,225
-----------
Technology (10.64%)
Communications Technology (1.69%)
DSC Communications Corp.** 9,400 253,800
Network Equipment Technology Inc.** 35,825 1,088,184
-----------
Total Communications Technology 1,341,984
-----------
Computer Services Software and Systems (0.92%)
Mentor Graphics Corp.** 51,350 731,738
-----------
Computer Technology (0.82%)
Silicon Graphics Inc.** 26,000 650,000
-----------
Electronics (0.82%)
Methode Electronics 40,150 652,438
-----------
Electronics/Semi-Conductors/Components (4.13%)
Atmel Corp.** 18,000 459,000
HADCO Corp.** 32,000 976,000
LSI Logic Corp.** 24,625 658,719
Merix Corp.** 32,250 1,193,250
-----------
Total Electronics/Semi-Conductors/Components 3,286,969
-----------
Electronics/Technology (2.25%)
Symbol Technologies Inc.** 33,000 1,159,125
Watkins-Johnson Co. 17,700 632,775
-----------
Total Electronics/Technology 1,791,900
-----------
Total Technology 8,455,029
-----------
Utilities (7.96%)
Electrical (1.60%)
General Public Utilities 6,000 198,000
New York State Electric & Gas Corp. 35,500 834,250
Oklahoma Gas & Electric 6,000 239,250
-----------
Total Electrical 1,271,500
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- --------------------------------------------------------------------------------
Gas Distributors (3.29%)
Consolidated Natural Gas Co. 17,000 739,500
Eastern Enterprises 26,900 954,950
Panhandle Eastern Corp. 29,500 918,188
-----------
Total Gas Distributors 2,612,638
-----------
Telecommunications (3.08%)
Century Telephone Enterprises 35,000 1,111,250
Compania de Telecomunicaciones de Chile S.A. ADR 7,500 635,625
Tele Danmark ADS 27,000 698,617
-----------
Total Telecommunications 2,445,492
-----------
Total Utilities 6,329,630
-----------
TOTAL COMMON STOCKS
(cost $74,884,818) $78,462,976
------------
TOTAL INVESTMENTS IN SECURITIES (101.04%)
(cost $76,744,308) $80,322,466
------------
LIABILITIES LESS OTHER ASSETS (-1.04%) ($827,836)
-----------
NET ASSETS (100.00%) $79,494,630
============
*The variable rate securities are subject to a demand feature which reduces the
remaining maturity.
**Non-Income Producing Security.
See Accompanying Notes to Financial Statements.
<PAGE>
Core Equity Portfolio
March 31, 1996
VARIABLE RATE DEMAND NOTES*
(2.64%) Par Value Value
- --------------------------------------------------------------------------------
Eli Lilly
4.9607% 10-29-1996 $ 760,000 $ 760,000
General Mills
5.1000% 11-29-1996 260,000 260,000
Pitney Bowes
5.1139% 08-02-1996 58,000 58,000
Sara Lee
5.0937% 08-05-1996 313,730 313,730
Southwestern Bell
5.0937% 01-28-1997 960,000 960,000
Wisconsin Electric
5.1549% 05-24-1996 496,000 496,000
-----------
TOTAL DEMAND NOTES
(cost $2,847,730) $ 2,847,730
------------
CONVERTIBLE BONDS
(0.14%) Par Value Value
- -------------------------------------------------------------------------------
Bank and Bank Holding Co. (0.14%)
American Travellers Corp.
6.5000% 10-01-2005 100,000 $ 145,375
-----------
COMMON STOCKS
(97.22%) Shares Value
- -------------------------------------------------------------------------------
Autos and Transportation (3.38%)
Air Transport (0.99%)
Federal Express** 8,450 $ 590,444
Southwest Airlines Co. 16,000 474,000
-----------
Total Air Transport 1,064,444
-----------
Automobiles (0.63%)
General Motors Corp. 12,750 678,938
-----------
Railroads (0.61%)
Illinois Central Corp. 23,050 656,925
-----------
Tires and Rubber (1.15%)
Goodyear Tire and Rubber 24,350 1,241,850
-----------
Total Autos and Transportation 3,642,157
-----------
Consumer Discretionary (8.19)
Consumer Electronics (0.96%)
Harman Int'l Industries Inc. 27,500 1,031,250
-----------
Consumer Products (0.52%)
Lancaster Colony Corp. 15,000 558,750
-----------
Electrical/Household Appliances (0.45%)
The Rival Co. 20,000 485,000
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- --------------------------------------------------------------------------------
Hotel/Motel (0.63%)
La Quinta Inns Inc. 23,000 $ 675,625
-----------
Household Equipment and Products (1.02%)
Black & Decker Corp. 29,100 1,102,163
-----------
Leisure Time (0.49%)
The Coleman Co. Inc.** 12,000 529,500
-----------
Publishing/Miscellaneous (1.42%)
Devon Group Inc.** 15,500 441,750
The McGraw-Hill Companies 12,500 1,084,375
-----------
Total Publishing/Miscellaneous 1,526,125
-----------
Restaurants (0.44%)
Wendy's International Inc. 26,200 474,875
-----------
Retail (1.96%)
Carson Pirie Scott** 27,000 607,500
The Talbots Inc. 17,250 655,500
Wal-Mart Stores Inc. 11,300 261,313
Zale Corp.** 34,300 589,531
-----------
Total Retail 2,113,844
-----------
Toys (0.30%)
Cannondale Corp.** 17,600 323,400
-----------
Total Consumer Discretionary 8,820,532
-----------
Consumer Staples (8.46%)
Beverage/Soft Drinks (1.83%)
Coca-Cola Co. 3,250 268,531
PepsiCo Inc. 26,925 1,703,006
-----------
Total Beverage/Soft Drinks 1,971,537
-----------
Drug and Grocery Store Chain (0.72%)
Albertson's Inc. 21,000 779,625
-----------
Foods (3.60%)
ConAgra Inc. 18,850 765,781
H J Heinz Co. 16,725 554,016
Iowa Beef Processing Inc. 26,400 676,500
Smithfield Foods Inc.** 33,050 958,450
Sysco Corp. 27,900 917,213
-----------
Total Foods 3,871,960
-----------
Soaps and Household Chemicals (1.33%)
Procter & Gamble Co. 16,875 1,430,156
-----------
Tobacco (0.98%)
Philip Morris Co. Inc. 12,000 1,053,000
-----------
Total Consumer Staples 9,106,278
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Financial Services (13.90%)
Banks/New York City (0.38%)
Republic New York Corp. 6,950 $ 413,525
-----------
Banks/Outside New York City (5.46%)
Banc One Corp. 30,122 1,073,096
BayBanks Inc. 14,400 1,548,000
CoreStates Financial 20,450 866,569
Fleet Financial Group Corp. 9,706 393,093
Magna Group Inc. 10,000 231,250
SouthTrust Corp. 24,900 687,863
U.S. Bancorp 31,700 1,077,800
-----------
Total Banks/Outside New York City 5,877,671
-----------
Diversified Financial Services (0.57%)
American Express Co.** 12,500 617,188
-----------
Finance/Small Loan (0.85%)
Student Loan Marketing Association 12,000 918,000
-----------
Financial Miscellaneous (0.65%)
Sotheby's Holdings Inc. 48,100 703,463
-----------
Insurance/Life (0.06%)
The Guarantee Life Companies Inc.** 4,500 69,188
-----------
Insurance/Multi-Line (2.48%)
American International Group 7,925 741,978
CIGNA Corp. 8,000 914,000
Lincoln National Corp. 20,000 1,015,000
-----------
Total Insurance/Multi-Line 2,670,978
-----------
Insurance/Property and Casualty (0.85%)
St. Paul Companies 4,000 222,000
The PMI Group Inc. 16,000 698,000
-----------
Total Insurance/Property and Casualty 920,000
-----------
Savings and Loan (2.16%)
Great Western Financial 4,500 108,563
Leader Financial Corp. 12,500 550,000
Savings and Loan - Continued
Standard Federal Bank 20,000 850,000
Washington Federal Inc. 23,650 514,388
Washington Mutual Inc. 10,000 297,500
-----------
Total Savings and Loan 2,320,451
-----------
Securities Brokerage and Services (0.42%)
Franklin Resources Inc. 7,950 453,150
-----------
Total Financial Services 5,147,540
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Health Care (13.35%)
Drugs and Pharmaceuticals (10.28%)
Abbott Labs 28,525 $1,162,394
Allergan 12,250 451,719
ALPHARMA Inc. CL A 11,300 262,725
Bristol-Myers Squibb Co. 32,450 2,778,531
IVAX Corp. 34,000 879,750
Mallinckrodt Group Inc. 20,000 752,500
Merck & Co. 18,075 1,125,169
Rhone-Poulenc Rorer Inc. 21,100 1,287,100
Warner-Lambert Co. 12,300 1,269,975
Watson Pharmaceuticals Inc.** 27,500 1,100,000
-----------
Total Drugs and Pharmaceuticals 11,069,863
-----------
Electronics/Medical Systems (0.71%)
DENTSPLY International Inc. 19,000 764,750
-----------
Health and Personal Care (1.37%)
Olsten Corp. 45,825 1,477,856
-----------
Health Care Facilities (0.19%)
Multicare Cos Inc.** 7,300 207,138
-----------
Medical and Dental Instruments (0.79%)
Baxter International Inc. 6,450 291,863
Vital Signs Inc. 23,000 563,500
-----------
Total Medical and Dental Instruments 855,363
-----------
Total Health Care 14,374,970
-----------
Integrated Oils (5.98%)
Oil/Integrated Domestic (4.45%)
Coastal Corp. 23,900 944,050
Kerr-McGee Corp. 21,625 1,373,188
Mobil Corp. 11,950 1,384,706
Murphy Oil Corp. 1,150 49,306
Unocal Corp. 31,200 1,041,300
-----------
Total Oil/Integrated Domestic 4,792,550
-----------
Oil/Integrated International (1.53%)
Exxon Corp. 12,525 1,022,353
YPF Sociedad Anonima ADR 31,000 623,875
-----------
Total Oil/Integrated International 1,646,228
-----------
Total Integrated Oils 6,438,778
-----------
Materials and Processing (4.39%)
Agriculture, Fishing and Ranching (0.56%)
Pioneer Hi-Bred International Inc. 11,500 605,188
-----------
Building/Cement (0.36%)
Southdown Inc. 16,600 392,175
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Chemicals (1.39%)
E.I duPont de Nemours and Co. 11,100 $ 921,300
Sigma-Aldrich Corp. 10,000 572,500
-----------
Total Chemicals 1,493,800
-----------
Fertilizers (0.70%)
Mississippi Chemical Corp. 37,250 754,313
-----------
Forest Products (0.61%)
Rayonier Inc. 18,000 652,500
-----------
Paper (0.22%)
Willamette Industries 4,000 241,000
-----------
Real Estate (0.54%)
Innkeepers USA Trust 62,500 585,938
-----------
Total Materials and Processing 4,724,914
-----------
Other (2.57%)
Miscellaneous (0.19%)
360 Communications Co.** 8,582 204,895
-----------
Real Estate Investment Trusts (2.38%)
Alexander Haagen Properties 4,900 56,350
American Health Properties 10,100 227,250
Cali Realty Corp. 24,000 537,000
Equity Residential Properties Trust 8,000 250,000
LTC Properties Inc. 6,900 112,125
Meditrust 27,600 934,950
Nationwide Health Properties Inc. 11,600 243,600
Omega Healthcare Investors Inc. 6,900 197,513
-----------
Total Real Estate Investment Trusts 2,558,788
-----------
Total Other 2,763,683
-----------
Other Energy (4.01%)
Machinery/Oil Well Equipment and Services (1.22%)
BJ Services Co.** 28,000 $ 938,000
Smith International Inc.** 15,000 378,750
-----------
Total Machinery/Oil Well Equipment and Services 1,316,750
-----------
Oil/Crude Producers (2.79%)
Devon Energy Corp. 15,300 359,550
Occidental Petroleum Corp. 51,850 1,386,988
Santa Fe Energy Resources** 50,900 534,450
Union Texas Petroleum Holdings 36,700 724,825
-----------
Total Oil/Crude Producers 3,005,813
-----------
Total Other Energy 4,322,563
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Producer Durables (11.56%)
Aerospace (0.67%)
Sundstrand Corp. 17,700 $ 721,275
-----------
Diversified Production (2.56%)
General Electric 35,450 2,760,669
-----------
Electronics/Instruments Gauges and Meters (0.91%)
Tektronix Inc. 30,300 984,750
-----------
Homebuilding (0.37%)
Kaufman and Broad Home Corp. 25,000 400,000
-----------
Identification Control and Filter Services (0.21%)
Pall Corp. 9,000 230,625
-----------
Machinery/Agricultural (1.09%)
AGCO Corp. 35,000 844,375
Deere & Co. 8,000 334,000
-----------
Total Machinery/Agricultural 1,178,375
-----------
Machinery/Industrial and Specialty (1.60%)
Applied Power** 14,500 473,063
Ingersoll-Rand Co. 28,500 1,161,375
Kennametal Inc. 2,300 83,088
-----------
Total Machinery/Industrial and Specialty 1,717,526
-----------
Office Furniture and Business Equipment (1.61%)
Herman Miller Inc. 14,500 449,500
Xerox Corp. 10,200 1,280,100
-----------
Total Office Furniture and Business Equipment 1,729,600
-----------
Production Technology Equipment (2.53%)
Applied Materials Inc.** 23,250 810,844
KLA Instruments Corp.** 40,000 905,000
Novellus Systems Inc.** 22,675 1,009,038
-----------
Total Production Technology Equipment 2,724,882
-----------
Total Producer Durables 12,447,702
-----------
Technology (10.36%)
Communications Technology (1.11%)
DSC Communications Corp.** 8,400 226,800
Network Equipment Technology Inc.** 32,025 972,759
-----------
Total Communications Technology 1,199,559
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Computer Services Software and Systems (1.60%)
Mentor Graphics Corp.** 59,000 $ 840,750
Microsoft Corp.** 8,600 886,875
-----------
Total Computer Services Software and Systems 1,727,625
-----------
Computer Technology (3.66%)
Bay Networks Inc.** 20,550 631,913
Hewlett-Packard Co. 10,100 949,400
International Business Machines Corp. 15,865 1,762,998
Silicon Graphics Inc.** 24,000 600,000
-----------
Total Computer Technology 3,944,311
-----------
Electronics (0.38%)
Methode Electronics 25,000 406,250
-----------
Electronics/Semi-Conductor/Components (2.11%)
Atmel Corp.** 20,000 510,000
HADCO Corp.** 13,150 401,075
Intel Corp. 4,850 275,844
LSI Logic Corp.** 10,150 271,513
Merix Corp.** 22,050 815,850
-----------
Total Electronics/Semi-Conductor/Components 2,274,282
-----------
Electronics/Technology (1.49%)
Symbol Technologies Inc.** 28,000 983,500
Watkins-Johnson Co. 17,300 618,475
-----------
Total Electronics/Technology 1,601,975
-----------
Total Technology 11,154,002
-----------
Utilities (11.06%)
Electrical (1.31%)
General Public Utilities 4,400 145,200
New York State Electric & Gas Corp. 37,850 889,475
Oklahoma Gas & Electric 9,500 378,813
-----------
Total Electrical 1,413,488
-----------
Gas Distributors (1.88%)
Consolidated Natural Gas Co. 14,500 630,750
Eastern Enterprises 15,000 532,500
Panhandle Eastern Corp. 27,750 863,719
-----------
Total Gas Distributors 2,026,969
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- -------------------------------------------------------------------------------
Telecommunication (7.87%)
AT&T Corp. 48,050 $2,943,063
Ameritech Corp. 14,200 773,900
Century Telephone Enterprises 27,950 887,413
GTE Corp. 39,075 1,714,416
Sprint 25,750 978,500
Compania de Telecomunicaciones de Chile S.A. ADR 7,000 593,250
Tele Danmark ADS 22,450 580,881
-----------
Total Telecommunication 8,471,423
-----------
Total Utilities 11,911,880
-----------
TOTAL COMMON STOCKS
(cost $98,810,546) $104,671,073
-------------
TOTAL INVESTMENTS IN SECURITIES (100.00%)
(cost $101,758,276) $107,664,178
-------------
OTHER ASSETS LESS LIABILITIES (0.00%) $1,166
-------------
NET ASSETS (100%) $107,665,344
=============
*The variable rate securities are subject to a demand feature which reduces the
remaining maturity.
**Non-Income Producing Security.
<PAGE>
Balanced Portfolio
March 31, 1996
VARIABLE RATE DEMAND NOTES*
(9.62%) Par Value Value
- --------------------------------------------------------------------------------
American Family
5.1149% 08-09-1996 $ 20,000 $ 20,000
General Mills
5.1000% 11-29-1996 800,000 800,000
Pitney Bowes
5.1139% 08-02-1996 319,000 319,000
Sara Lee
5.0937% 08-05-1996 647,972 647,972
Southwestern Bell Corp.
5.0937% 01-28-1997 555,000 555,000
Warner-Lambert Co.
5.0850% 06-18-1996 518,000 518,000
Wisconsin Electric
5.1549% 05-24-1996 225,000 225,000
-----------
TOTAL DEMAND NOTES (cost $3,084,972) $3,084,972
-----------
LONG-TERM DEBT SECURITIES
(30.46%) Par Value Value
- --------------------------------------------------------------------------------
U.S. Treasury Obligations (16.46%)
U.S. Treasury Notes
5.1250% 03-31-1996 $ 100,000 $ 100,031
6.2500% 08-31-1996 125,000 125,430
6.8750% 02-28-1997 200,000 202,500
5.2500% 07-31-1998 100,000 98,719
7.5000% 10-31-1999 400,000 418,375
7.8750% 11-15-1999 200,000 211,687
7.1250% 02-29-2000 400,000 414,500
6.7500% 04-30-2000 300,000 307,031
5.7500% 10-31-2000 700,000 689,938
7.7500% 02-15-2001 270,000 288,563
7.5000% 11-15-2001 200,000 212,312
6.3750% 08-15-2002 475,000 477,672
6.2500% 02-15-2003 425,000 423,672
5.7500% 08-15-2003 700,000 675,718
7.2500% 08-15-2004 600,000 632,437
-----------
Total U.S. Treasury
Obligations 5,278,585
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Par Value Value
- --------------------------------------------------------------------------------
Government/Regional (0.49%)
Ontario Global Bond
7.3750% 01-27-2003 $ 150,000 $ 155,589
-----------
Regional Government/Agency (0.16%)
Hydro Quebec
7.3750% 02-01-2003 50,000 51,398
-----------
CORPORATE BONDS (13.35%)
Asset Backed Security (0.31%)
Discover Card Trust
8.6250% 07-16-1998 100,000 $ 100,628
-----------
Industrials (0.26%) McKesson Corp.
8.6250% 02-01-1998 50,000 52,183
PepsiCo Inc.
7.0000% 11-15-1996 30,000 30,252
-----------
Total Industrials 82,435
-----------
Finance Companies (12.78%)
Allstate Corp.
5.8750% 06-15-1998 150,000 149,237
American General Finance
6.8750% 01-15-2000 50,000 50,638
Associates Corp. of North America
Medium Term Note
8.0000% 10-27-1999 50,000 52,551
6.3750% 06-01-2000 75,000 74,768
Associates Corp. of North America
6.0000% 06-15-2000 25,000 24,584
7.5000% 04-15-2002 100,000 104,069
Beneficial Corp.
8.0500% 04-02-1999 100,000 104,719
Commercial Credit Co.
6.8750% 05-01-2002 200,000 202,515
6.5000% 06-01-2005 500,000 486,310
Dean Witter Discover
6.2500% 03-15-2000 30,000 29,769
6.7500% 08-15-2000 200,000 201,894
Discover Credit Card
7.9700% 05-07-1997 100,000 102,246
Fireman's Fund
9.5000% 06-03-1996 100,000 100,538
Ford Motor Credit Co.
7.5000% 11-15-1999 25,000 25,845
6.3750% 04-15-2000 190,000 188,810
Ford Motor Credit Medium Term Note
5.9000% 06-09-1998 75,000 74,565
General Electric Capital
8.6500% 05-01-2018, Call. 96 75,000 75,165
See Accompanying Notes to Financial Statements.
<PAGE>
Par Value Value
- --------------------------------------------------------------------------------
GMAC Medium Term Notes
8.6500% 05-29-1996 $ 45,000 $ 45,243
6.7500% 07-10-1997 125,000 126,306
7.5000% 11-04-1997 50,000 51,107
Household Financial Medium Term Note
7.0000% 05-15-2000 200,000 203,476
International Lease Finance
8.1250% 01-15-1998 150,000 155,028
Finance Companies - Continued
Merrill Lynch & Co.
6.3750% 03-30-1999 50,000 50,141
7.3750% 08-17-2002 30,000 30,864
7.0500% 04-15-2003 55,000 55,013
Morgan Stanley Notes
5.6500% 06-15-1997 35,000 34,864
9.2500% 03-01-1998 125,000 131,809
5.7500% 02-15-2001 500,000 482,267
6.1250% 10-01-2003 100,000 95,503
6.1250% 10-01-2003 115,000 109,829
Nordstrom Credit
8.7500% 11-16-1996 100,000 101,875
SmithKline Beecham Corp. Medium Term Note
6.6250% 10-01-2005 50,000 49,223
Texaco Capital
7.2500% 08-01-2002 150,000 153,844
Travelers Group Inc.
7.6250% 01-15-1997 25,000 25,278
USLIFE Corp.
6.7500% 01-15-1998 150,000 151,154
-----------
Total Finance Companies 4,101,047
-----------
TOTAL CORPORATE BONDS 4,284,110
-----------
TOTAL LONG-TERM DEBT SECURITIES
(cost $9,753,847) 9,769,682
===========
COMMON STOCKS
(59.25%) Par Value Value
- --------------------------------------------------------------------------------
Autos and Transportation (1.67%)
Air Transportation (0.45%)
Federal Express** 2,050 $ 143,244
-----------
Automobiles (0.25%)
General Motors Corp. 1,500 79,875
-----------
Railroads (0.18%)
Illinois Central Corp. CL A 2,000 57,000
-----------
Tires and Rubber (0.79%)
Goodyear Tire & Rubber 5,000 255,000
-----------
Total Autos and Transportation 535,119
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Par Value Value
- --------------------------------------------------------------------------------
Consumer Discretionary (4.64%)
Consumer Electronics (0.45%)
Harman Int'l Industries Inc. 3,850 $ 144,375
-----------
Consumer Products (0.35%)
Lancaster Colony Corp. 3,000 111,750
-----------
Hotel/Motel (0.27%)
La Quinta Inns Inc. 3,000 88,125
-----------
Household Equipment and Products (0.71%)
Black & Decker Corp. 6,050 229,144
-----------
Leisure Time (0.25%)
The Coleman Co. Inc. ** 1,800 79,425
-----------
Publishing/Miscellaneous (0.83%)
Devon Group Inc.** 2,600 74,100
The McGraw-Hill Companies 2,200 190,850
-----------
Total Publishing/Miscellaneous 264,950
-----------
Restaurants (0.46%)
Applebee's International Inc.** 3,000 75,000
Wendy's International Inc. 4,000 72,500
-----------
Total Restaurants 147,500
-----------
Retail (1.32%)
Carson Pirie Scott** 6,100 137,250
Wal-Mart Stores Inc. 6,400 148,000
Zale Corp.** 8,000 137,500
-----------
Total Retail 422,750
-----------
Total Consumer Discretionary 1,488,019
-----------
Consumer Staples (5.51%)
Beverage/Soft Drinks (1.31%)
Coca-Cola Co. 1,000 82,625
PepsiCo Inc. 5,350 338,388
-----------
Total Beverage/Soft Drinks 421,013
-----------
Drugs and Grocery Store Chains (0.58%)
Albertson's Inc. 5,000 185,625
-----------
Foods (2.12%)
ConAgra Inc. 3,150 127,969
H J Heinz Co. 3,700 122,563
Iowa Beef Processing Inc. 5,550 142,219
Smithfield Foods Inc.** 4,000 116,000
Sysco Corp. 5,225 171,772
-----------
Total Foods 680,523
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Par Value Value
- --------------------------------------------------------------------------------
Soaps and Household Chemical (0.87%)
Procter & Gamble Co. 3,300 $ 279,675
-----------
Tobacco (0.63%)
Philip Morris Co. Inc. 2,300 201,825
-----------
Total Consumer Staples 1,768,661
-----------
Financial Services (7.79%)
Banks/New York City (0.21%)
Republic New York Corp. 1,150 68,425
-----------
Banks/Outside New York City (2.88%)
Banc One Corp. 5,183 184,644
BayBanks Inc. 2,050 220,375
CoreStates Financial 3,400 144,075
Fleet Financial Group Corp. 1,900 76,950
Magna Group Inc. 4,200 97,125
SouthTrust Corp. 3,550 98,069
U.S. Bancorp 3,000 102,000
-----------
Total Banks/Outside New York City 923,238
-----------
Diversified Financial Services (0.46%)
American Express Co.** 3,000 148,125
-----------
Finance/Small Loan (0.48%)
Student Loan Marketing Association 2,000 153,000
-----------
Financial Miscellaneous (0.23%)
Sotheby's Holdings Inc. 5,000 73,125
-----------
Insurance/Multi-Line (1.11%)
American International Group 1,675 156,822
CIGNA Corp. 425 48,556
Lincoln National Corp. 3,000 152,250
-----------
Total Insurance/Multi-Line 357,628
-----------
Insurance/Property Casualty (0.43%)
The PMI Group Inc. 3,150 137,419
-----------
Savings and Loan (1.81%)
Great Western Financial 4,250 102,531
Leader Financial Corp. 1,950 85,800
Standard Federal Bank 3,850 163,625
Washington Federal Inc. 7,810 169,868
Washington Mutual Inc. 2,000 59,500
-----------
Total Savings and Loan 581,324
-----------
Securities Brokerage and Services (0.18%)
Franklin Resources Inc. 1,000 57,000
-----------
Total Financial Services 2,499,284
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- --------------------------------------------------------------------------------
Health Care (8.28%)
Drugs and Pharmaceuticals (5.97%)
Abbott Labs 5,225 $ 212,919
Allergan 1,000 36,875
Bristol-Myers Squibb Co. 5,850 500,906
IVAX Corp. 6,650 172,069
Mallinckrodt Group Inc. 5,850 220,106
Merck & Co. 2,700 168,075
Rhone-Poulenc Rorer Inc. 3,450 210,450
Warner-Lambert Co. 2,350 242,638
Watson Pharmaceuticals Inc.** 3,750 150,000
-----------
Total Drugs and Pharmaceuticals 1,914,038
-----------
Electronics/Medical Systems (0.44%)
DENTSPLY International Inc. 3,500 140,875
-----------
Health and Personal Care (0.80%)
Olsten Corp. 7,950 256,388
-----------
Health Care Facilities (0.24%)
Multicare Cos Inc.** 2,700 76,613
-----------
Medical and Dental Instruments and Supplies (0.84%)
Vital Signs Inc. 11,000 269,500
-----------
Total Health Care 2,657,414
-----------
Integrated Oils (4.20%)
Oil/Integrated Domestic (3.13%)
Coastal Corp. 5,000 197,500
Kerr-McGee Corp. 4,200 266,700
Mobil Corp. 2,500 289,688
Murphy Oil Corp. 1,000 42,875
Unocal Corp. 6,200 206,925
-----------
Total Oil/Integrated Domestic 1,003,688
-----------
Oil/Integrated International (1.08%)
Exxon Corp. 2,475 202,022
YPF Sociedad Anonima ADR 7,100 142,888
-----------
Total Oil/Integrated International 344,910
-----------
Total Integrated Oils 1,348,598
-----------
Materials and Processing (2.24%)
Agriculture, Fishing and Ranching (0.31%)
Pioneer Hi-Bred International Inc. 1,900 99,988
-----------
Building/Cement (0.13%)
Southdown Inc.** 1,700 40,163
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- --------------------------------------------------------------------------------
Chemicals (0.75%)
E.I duPont de Nemours and Co. 2,000 $ 166,000
Sigma-Aldrich Corp. 1,325 75,856
-----------
Total Chemicals 241,856
-----------
Fertilizers (0.43%)
Mississippi Chemical Corp. 6,800 137,700
-----------
Forest Products (0.27%)
Rayonier Inc. 2,400 87,000
-----------
Real Estate (0.35%)
Innkeepers USA Trust 12,000 112,500
-----------
Total Materials and Processing 719,207
-----------
Other (1.80%)
Miscellaneous (0.09%)
360 Communications Co.** 1,150 27,456
-----------
Real Estate Investment Trusts (1.71%)
Alexander Haagen Properties 2,700 31,050
American Health Properties 2,700 60,750
Cali Realty Corp. 4,450 99,569
Equity Residential Properties Trust 2,000 62,500
LTC Properties Inc. 3,400 55,250
Meditrust 4,000 135,500
Nationwide Health Properties Inc. 600 12,600
Omega Healthcare Investors Inc. 3,200 91,600
-----------
Total Real Estate Investment Trusts 548,819
-----------
Total Other 576,275
-----------
Other Energy (2.39%)
Machinery/Oil Well Equipment and Services (0.29%)
Smith International Inc.** 3,700 93,425
-----------
Oil/Crude Producers (2.10%)
Devon Energy Corp. 5,400 126,900
Occidental Petroleum Corp. 11,600 310,300
Santa Fe Energy Resources** 7,200 75,600
Union Texas Petroleum Holdings 8,200 161,950
-----------
Total Oil/Crude Producers 674,750
-----------
Total Other Energy 768,175
-----------
Producer Durables (7.22%)
Aerospace (0.39%)
Sundstrand Corp. 3,100 126,325
-----------
Diversified Production (1.43%)
General Electric Co. 5,900 459,463
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- --------------------------------------------------------------------------------
Electronics/Instruments (0.61%)
Tektronix Inc. 6,000 $ 195,000
-----------
Homebuilding (0.25%)
Kaufman and Broad Home Corp. 5,000 80,000
-----------
Machinery/Agricultural (0.94%)
AGCO Corp. 9,250 223,156
Deere & Co. 1,850 77,238
-----------
Total Machinery/Agricultural 300,394
-----------
Machinery/Industrial and Specialty (0.88%)
Ingersoll-Rand Co. 6,900 281,175
-----------
Office Furniture and Business Equipment (1.15%)
Herman Miller Inc. 4,000 124,000
Xerox Corp. 1,950 244,725
-----------
Total Office Furniture and Business Equipment 368,725
-----------
Production Technology Equipment (1.57%)
Applied Materials Inc.** 4,550 158,681
KLA Instruments Corp.** 6,050 136,881
Novellus Systems Inc.** 4,700 209,150
-----------
Total Production Technology Equipment 504,712
-----------
Total Producer Durables 2,315,794
-----------
Technology (5.82%)
Communications Technology (0.66%)
DSC Communications Corp.** 1,800 48,600
Network Equipment Technology Inc.** 5,350 162,506
-----------
Total Communications Technology 211,106
-----------
Computer Services Software and Systems (1.01%)
Mentor Graphics Corp. 10,900 155,325
Microsoft Corp. 1,650 170,156
-----------
Total Computer Services Software and Systems 325,481
-----------
Computer Technology (2.52%)
Bay Networks Inc.** 3,900 119,925
Hewlett-Packard Co.** 2,425 227,950
International Business Machines Corp. 2,550 283,369
Silicon Graphics Inc.** 7,150 178,750
-----------
Total Computer Technology 809,994
-----------
Electronics (0.25%)
Methode Electronics 5,000 81,250
-----------
See Accompanying Notes to Financial Statements.
<PAGE>
Shares Value
- --------------------------------------------------------------------------------
Electronics/Semi-Conductor/Components (0.53%)
Intel Corp. 1,350 $ 76,781
Merix Corp.** 2,550 94,350
-----------
Total Electronics
/Semi-Conductor/Components 171,131
-----------
Electronics/Technology (0.84%)
Symbol Technologies Inc.** 4,000 140,500
Watkins-Johnson Co. 3,600 128,700
-----------
Total Electronics/Technology 269,200
-----------
Total Technology 1,868,162
-----------
Utilities (7.68%)
Electrical (0.95%)
General Public Utilities 1,350 44,550
New York State Electric & Gas Corp. 4,900 115,150
Oklahoma Gas & Electric 3,600 143,550
-----------
Total Electrical 303,250
-----------
Gas Distributor (1.17%)
Consolidated Natural Gas Co. 1,875 81,563
Eastern Enterprises 3,250 115,375
Panhandle Eastern Corp. 5,700 177,413
-----------
Total Gas Distributor 374,351
-----------
Telecommunication (5.57%)
AT&T Corp. 9,450 578,813
Ameritech Corp. 2,475 134,888
Century Telephone Enterprises 8,350 265,113
GTE Corp. 9,135 400,798
Sprint 3,450 131,100
Compania de Telecomunicaciones de Chile S.A. ADR 1,450 122,888
Tele Danmark ADS 5,900 152,650
-----------
Total Telecommunication 1,786,250
-----------
Total Utilities 2,463,851
-----------
TOTAL COMMON STOCKS
(cost $17,801,939) $19,008,559
------------
TOTAL INVESTMENTS IN SECURITIES (99.33%) $31,863,213
------------
(cost $30,640,758)
OTHER ASSETS LESS LIABILITIES (0.67%) $216,406
-----------
NET ASSETS (100%) $32,079,619
=============
*The variable rate securities are subject to a demand feature which reduces the
remaining maturity.
**Non-Income Producing Security.
See Accompanying Notes to Financial Statements.
<PAGE>
Intermediate Fixed Income Portfolio
VARIABLE RATE DEMAND NOTES*
(23.26%) Par Value Value
- -------------------------------------------------------------------------------
General Mills
5.1000% 11-29-1996 $ 525,000 $ 525,000
Pitney Bowes
5.1139% 08-02-1996 497,608 497,608
Sara Lee Corp.
5.0937% 08-05-1996 149,337 149,337
Southwestern Bell
5.0937% 01-28-1997 525,000 525,000
Warner Lambert Co.
5.0850% 06-18-1996 393,000 393,000
Wisconsin Electric
5.1549% 05-24-1996 175,600 175,600
-----------
TOTAL DEMAND NOTES (cost $2,265,545) $2,265,545
-----------
CERTIFICATES OF DEPOSIT AND
OTHER SHORT TERM INSTRUMENTS (0.50%)
Bank of NY Wilmington
9.1500% 01-06-1998 $ 10,000 $ 10,000
Bankers Trust Company
6.3600%** 09-02-1996 40,000 38,965
-----------
TOTAL CERTIFICATES OF DEPOSIT AND
OTHER SHORT TERM INSTRUMENTS (cost $48,965) $ 48,965
-----------
LONG-TERM DEBT SECURITIES (75.20%)
U.S. Treasury Obligations (46.60%)
Certificate of Accrual Treasury Securities
7.1300%** 11-15-1999 $ 100,000 $ 80,372
U.S. Treasury Notes
8.5000% 05-15-1997 300,000 309,656
6.7500% 05-31-1997 225,000 227,953
9.0000% 05-15-1998 325,000 345,516
6.3750% 01-15-1999 250,000 253,047
7.0000% 04-15-1999 125,000 128,477
See Accompanying Notes to Financial Statements.
<PAGE>
Par Value Value
- -------------------------------------------------------------------------------
7.8750% 11-15-1999 $ 270,000 $ 285,778
7.1250% 02-29-2000 300,000 310,875
6.7500% 04-30-2000 200,000 204,687
7.7500% 02-15-2001 380,000 406,125
7.5000% 11-15-2001 300,000 318,469
6.3750% 08-15-2002 500,000 502,813
6.2500% 02-15-2003 350,000 348,906
5.7500% 08-15-2003 300,000 289,594
7.2500% 05-15-2004 300,000 316,031
7.2500% 08-15-2004 200,000 210,812
-----------
Total U.S. Treasury Obligations 4,539,111
-----------
U.S. Agency Obligations (1.60%)
Federal Farm Credit Bank (FFCB)
Medium Term Note
7.5500% 03-25-1999 150,000 156,106
-----------
Government/Regional (1.49%)
Ontario Global Bond
7.3750% 01-27-2003 140,000 145,216
-----------
Regional Government/Agency (1.32%)
Hydro Quebec
7.3750% 02-01-2003 125,000 128,496
-----------
CORPORATE BONDS (24.19%)
Asset Backed Security (1.50%)
Discover Card Trust
8.6250% 07-16-1998 145,000 145,911
-----------
Industrials (1.92%) PepsiCo Inc.
7.0000% 11-15-1996 185,000 186,556
-----------
Finance Companies (20.78%)
Allstate Corp.
5.8750% 06-15-1998 250,000 248,729
American General Finance
6.8750% 01-15-2000 25,000 25,319
Associates Corp. of North America
Medium Term Note
6.3750% 06-01-2000 25,000 24,923
Associates Corp. of North America
7.5000% 05-15-1999 50,000 51,746
See Accompanying Notes to Financial Statements.
<PAGE>
Par Value Value
- -------------------------------------------------------------------------------
CNA Financial Note
8.8750% 03-01-1998 $ 225,000 $ 235,094
Commercial Credit
6.5000% 06-01-2005 300,000 291,786
Dean Witter Discover
6.2500% 03-15-2000 40,000 39,692
Discover Credit Medium Term Note
8.3500% 05-06-1999 100,000 105,475
Ford Motor Credit Co.
7.5000% 11-15-1999 25,000 25,845
6.3750% 04-15-2000 75,000 74,530
Ford Motor Credit Medium Term Note
5.9000% 06-09-1998 50,000 49,710
General Electric Capital
8.6500% 05-01-2018 130,000 130,285
GMAC Medium Term Note
8.6500% 05-29-1996 85,000 85,459
7.5000% 11-04-1997 135,000 137,988
Merrill Lynch and Co.
7.2500% 05-15-1997 50,000 50,749
6.3750% 03-30-1999 25,000 25,070
7.0500% 04-15-2003 100,000 100,023
Morgan Stanley
6.1250% 10-01-2003 100,000 95,503
6.3750% 12-05-2003 25,000 24,099
USLIFE Corp.
6.7500% 01-15-1998 200,000 201,539
-----------
Total Finance Companies 2,023,564
-----------
TOTAL CORPORATE BONDS 2,356,031
-----------
TOTAL LONG-TERM DEBT SECURITIES
(cost $7,203,516) $7,324,960
-----------
TOTAL INVESTMENTS IN SECURITIES (98.96%)
(cost $9,518,027) $9,639,470
-----------
OTHER ASSETS LESS LIABILITIES (1.04%) $100,855
-----------
NET ASSETS (100.00%) $9,740,325
===========
*The variable rate securities are subject to a demand feature which reduces the
remaining maturity.
** Bond Equivalent Yield
See Accompanying Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
Rainier Investment Management Mutual Funds
March 31, 1996
Small/Mid Intermediate
Cap Equity Core Equity Balanced Fixed Income
Portfolio Portfolio Portfolio Portfolio
-----------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities at market value
(cost of $76,744,308, $101,758,276,
$30,640,758 and $9,518,027, respectively) $80,322,466 $107,664,178 $31,863,213 $9,639,470
Cash -- -- 4,750 --
Receivables
Investment securities sold 944,157 983,549 389,049 --
Dividends and interest 104,300 208,937 225,421 151,324
Net deferred organization costs 14,332 14,332 14,332 14,332
Prepaid expenses 19,341 22,759 9,196 7,012
-----------------------------------------------------------
Total assets 81,404,596 108,893,755 32,505,961 9,812,138
-----------------------------------------------------------
LIABILITIES
Payables for investment securities purchased 1,796,762 1,111,464 204,250 --
Distributions to shareholders -- -- 178,871 45,808
Due to investment adviser (Note 3) 89,970 86,050 21,237 2,169
Other accrued expenses 23,234 30,897 21,984 23,836
-----------------------------------------------------------
Total liabilities 1,909,966 1,228,411 426,342 71,813
-----------------------------------------------------------
NET ASSETS $79,494,630 $107,665,344 $32,079,619 $9,740,325
===========================================================
COMPOSITION OF NET ASSETS
Paid-in capital $71,823,019 $96,057,823 $29,348,150 $9,613,254
Accumulated undistributed (overdistributed)
net investment income 68,557 208,781 431 (7)
Accumulated undistributed net realized gain
on investments 4,024,896 5,492,838 1,508,583 5,635
Net unrealized appreciation
on investments 3,578,158 5,905,902 1,222,455 121,443
-----------------------------------------------------------
Net assets $79,494,630 $107,665,344 $32,079,619 $9,740,325
===========================================================
Number of shares issued and outstanding
(unlimited shares authorized) no par value 4,444,418 6,143,233 2,208,291 789,799
===========================================================
Net asset value per share $17.89 $17.53 $14.53 $12.33
===========================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Small/Mid Intermediate
Cap Equity Core Equity Balanced Fixed Income
Portfolio Portfolio Portfolio Portfolio
----------------------------------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income
Dividend income $604,601 $1,115,881 $293,362 --
Interest income 111,256 124,596 562,734 518,662
----------------------------------------------------------
Total income 715,857 1,240,477 856,096 518,662
Expenses
Investment advisory fees (Note 3) 283,325 393,043 151,624 39,123
Custodian fees 11,658 17,251 7,577 4,067
Administration fees (Note 3) 38,124 52,360 38,060 38,150
Fund accounting fees 18,035 20,621 21,608 21,977
Transfer agent fees 10,006 10,998 9,006 9,020
Legal fees 3,169 5,040 2,739 1,316
Distribution fees (Note 3) 83,331 131,015 54,152 19,561
Insurance 3,850 5,548 3,009 1,268
Audit fees 10,015 10,015 10,015 10,015
Miscellaneous fees 2,008 2,977 2,005 1,489
Reports to shareholders 1,072 1,072 1,072 1,072
Registration fees 17,277 24,191 16,638 13,904
Trustees fees 4,021 4,021 4,021 4,021
Amortization of deferred organization costs 4,260 4,260 4,260 4,260
----------------------------------------------------------
Total expenses 490,151 682,412 325,786 169,243
Less: expenses recouped (reimbursed) (Note 3) 5,715 (6,206) (68,025) (94,910)
----------------------------------------------------------
Net expenses 495,866 676,206 257,761 74,333
----------------------------------------------------------
Net investment income 219,991 564,271 598,335 444,329
==========================================================
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS
Net realized gain on investments 6,469,365 9,962,750 3,064,177 16,825
Net change in unrealized appreciation
of investments 3,113,718 4,750,865 829,555 120,026
----------------------------------------------------------
Net gains on investments 9,583,083 14,713,615 3,893,732 136,851
----------------------------------------------------------
Net increase in net assets resulting
from operations $9,803,074 $15,277,886 $4,492,067 $581,180
==========================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
Rainier Investment Management Mutual Funds
Small/Mid Cap Equity Portfolio Core Equity Portfolio
-----------------------------------------------------------------------------
For the Fiscal Year For the Period For the Fiscal Year For the Period
Ended Ended Ended Ended
03/31/96 03/31/95 * 03/31/96 03/31/95 *
-----------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C> <C> <C>
Operations:
Net investment income $219,991 $52,461 $564,271 $138,918
Net realized gain (loss) on investments sold 6,469,365 769,680 9,962,750 1,074,392
Net change in unrealized appreciation
of investments 3,113,718 464,440 4,750,865 1,155,037
-----------------------------------------------------------------------------
Increase in net assets resulting
from operations 9,803,074 1,286,581 15,277,886 2,368,347
-----------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (174,847) (29,048) (414,862) (79,546)
From net realized gain on investments sold (3,070,420) (143,729) (5,319,129) (225,175)
-----------------------------------------------------------------------------
Total distributions (3,245,267) (172,777) (5,733,991) (304,721)
-----------------------------------------------------------------------------
Capital share transactions:
Proceeds from shares sold 68,177,149 8,870,407 83,183,140 19,778,791
Net asset value of shares issued on
reinvestment of distributions 2,037,533 165,914 5,016,780 304,721
Cost of shares redeemed (7,397,555) (31,429) (10,508,694) (1,717,915)
-----------------------------------------------------------------------------
Net increase from capital share transactions 62,817,127 9,004,892 77,691,226 18,365,597
-----------------------------------------------------------------------------
Net increase in net assets 69,374,934 10,118,696 87,235,121 20,429,223
NET ASSETS
Beginning of period 10,119,696 1,000 20,430,223 1,000
-----------------------------------------------------------------------------
End of period $79,494,630 $10,119,696 $107,665,344 $20,430,223
=============================================================================
CHANGE IN SHARES
Shares sold 4,019,207 717,527 4,981,758 1,587,515
Shares issued on reinvestment of distributions 123,637 13,402 306,462 24,654
Redeemed (427,002) (2,436) (621,227) (136,012)
-----------------------------------------------------------------------------
Net increase 3,715,842 728,493 4,666,993 1,476,157
=============================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
Intermediate
Balanced Portfolio Fixed Income Portfolio
------------------------------------------------------------------------------------
Rainier Investment Management Mutual Funds
For the Fiscal Year For the Period For the Fiscal Year For the Period
Ended Ended Ended Ended
03/31/96 03/31/95 * 03/31/96 03/31/95 *
------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
<S> <C> <C> <C> <C>
Operations:
Net investment income $598,335 $212,414 $444,329 $279,947
Net realized gain (loss) on investments sold 3,064,177 475,460 16,825 (2,936)
Net change in unrealized appreciation
of investments 829,555 392,900 120,026 1,417
------------------------------------------------------------------------------------
Increase in net assets resulting
from operations 4,492,067 1,080,774 581,180 278,428
------------------------------------------------------------------------------------
Distributions to shareholders:
From net investment income (587,477) (222,841) (444,289) (279,994)
From net realized gain on investments sold (1,931,855) (99,199) (8,254) --
------------------------------------------------------------------------------------
Total distributions (2,519,332) (322,040) (452,543) (279,994)
------------------------------------------------------------------------------------
Capital share transactions:
Proceeds from shares sold 16,060,694 12,920,646 4,228,208 6,986,228
Net asset value of shares issued on
reinvestment of distributions 2,334,948 322,040 404,112 275,679
Cost of shares redeemed (2,012,747) (278,431) (1,390,314) (987,659)
------------------------------------------------------------------------------------
Net increase from capital share transactions 16,382,895 12,964,255 3,242,006 6,274,248
------------------------------------------------------------------------------------
Net increase in net assets 18,355,630 13,722,989 3,370,643 6,272,682
NET ASSETS
Beginning of period 13,723,989 1,000 6,369,682 97,000
------------------------------------------------------------------------------------
End of period $32,079,619 $13,723,989 $9,740,325 $6,369,682
====================================================================================
CHANGE IN SHARES
Shares sold 1,124,356 1,055,733 337,423 582,973
Shares issued on reinvestment of distributions 166,862 26,173 32,613 23,117
Redeemed (142,240) (22,676) (111,110) (83,300)
------------------------------------------------------------------------------------
Net increase 1,148,978 1,059,230 258,926 522,790
===================================================================================
<FN>
* For the period May 10, 1994 (commencement of operations) to March 31, 1995.
</FN>
See Accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
Financial Highlights
The following information should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this Annual Report. The
calculations are based on average number of shares outstanding for each period.
Rainier Investment Management Mutual Funds
For a share outstanding throughout the period
<TABLE>
<CAPTION>
Small/Mid Cap Equity Portfolio Core Equity Portfolio
-------------------------------------------------------------------
For the fiscal For the period For the fiscal For the period
year ended ended year ended ended
03/31/96 *03/31/95* 03/31/96 *03/31/95*
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $13.89 $12.00 $13.84 $12.00
Income from investment operations
Net investment income 0.05 0.10 0.11 0.11
Net realized and unrealized gains
on investments 5.17 2.18 5.13 2.00
-------------------------------------------------------------------
Total from investment operations 5.22 2.28 5.23 2.11
-------------------------------------------------------------------
Distributions
From net investment income (0.06) (0.07) (0.11) (0.07)
From net realized gains (1.16) (0.32) (1.44) (0.20)
-------------------------------------------------------------------
Total distributions (1.22) (0.39) (1.55) (0.27)
-------------------------------------------------------------------
Net asset value, end of period $17.89 $13.89 $17.53 $13.84
===================================================================
Total return 38.38% 19.38%** 38.64% 17.87%**
===================================================================
Net assets at end of period (in 000=s) $79,495 $10,120 $107,66 $20,430
===================================================================
Ratio of expenses to average net assets
Before expense reimbursement 1.46% 2.93%*** 1.30% 1.86%***
After expense reimbursement 1.48% 1.48%*** 1.29% 1.29%***
===================================================================
Ratio of net investment income to
average net assets (net of expense
reimbursement/waiver) 0.66% 1.04%*** 1.07% 1.25%***
===================================================================
Portfolio turnover rate 151.37% 152.21% 138.02% 133.18%
===================================================================
Average commission per unit $0.0562 - $0.0575 -
===================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Intermediate Fixed
Balanced Portfolio Income Portfolio
-------------------------------------------------------------------
For the fiscal For the period For the fiscal For the period
year ended ended year ended ended
03/31/96 *03/31/95* 03/31/96 *03/31/95*
-------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $12.96 $12.00 $12.00 $12.00
Income from investment operations
Net investment income 0.38 0.30 0.70 0.57
Net realized and unrealized gains
on investments 2.82 1.13 0.34 -
-------------------------------------------------------------------
Total from investment operations 3.20 1.43 1.04 0.57
Distributions
From net investment income (0.37) (0.31) (0.70) (0.57)
From net realized gains (1.26) (0.16) (0.01) -
-------------------------------------------------------------------
Total distributions (1.63) (0.47) (0.71) (0.57)
-------------------------------------------------------------------
Net asset value, end of period $14.53 $12.96 $12.33 $12.00
===================================================================
Total return 25.58% 12.23%** 8.85% 4.92%**
Net assets at end of period (in 000=s) $32,080 $13,724 $9,740 $6,370
===================================================================
Ratio of expenses to average net assets
Before expense reimbursement 1.50% 2.29%*** 2.17% 2.44%***
After expense reimbursement 1.19% 1.19%*** 0.95% 0.95%***
Ratio of net investment income to ===================================================================
average net assets (net of expense
reimbursement/waiver) 2.76% 3.04%*** 5.69% 5.57%***
===================================================================
Portfolio turnover rate 114.85% 92.40% 15.49% 5.21%
===================================================================
Average commission per unit $0.0587 - - -
===================================================================
<FN>
* From commencement of operations on May 10, 1994
**Not Annualized.
***Annualized.
See Accompanying Notes to Financial Statements.
</FN>
</TABLE>
<PAGE>
Notes to Financial Statements
Rainier Investment Management Mutual Funds
March 31, 1996
Note 1. Organization
Rainier Investment Management Mutual Funds (the "Trust") was organized as a
business trust in Delaware on December 15, 1993 and is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a diversified,
open-end management investment company. The Trust consists of four separate
series of portfolios: Small/Mid Cap Equity Portfolio, Core Equity Portfolio,
Balanced Portfolio, and Intermediate Fixed Income Portfolio (each a "Fund" and
collectively the "Funds").
Note 2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently
followed by the Funds.
A) Securities Valuation: The Funds invest in a range of securities,
generally including equities and U.S. Government securities. Equity securities
are valued at the last sale price (for exchange-listed securites) or last bid
price (if lacking any sales and for over-the-counter securities). Debt
securities generally are valued at the mean between the last bid and asked
prices. Debt securities with 60 days or less remaining to maturity are valued on
an amortized cost basis.
Securities for which market quotations are not readily available are valued
at fair value as determined in good faith by or under the direction of the Board
of Trustees. There were no such trades for the fiscal year ended March 31, 1996.
B) Securities Transactions, Dividends and Distributions: Security
transactions are recorded on trade date. Dividend income is recognized on the
ex-dividend date, and interest income is recorded on an accrual basis. Realized
gains or losses are reported on the basis of identified cost of securities
delivered. Bond discounts are accreted and premiums are amortized. Distributions
to shareholders are recorded on the ex-dividend date.
C) Federal Income Taxes: The Funds intend to comply with the requirements
of the Internal
<PAGE>
Revenue Code applicable to regulated investment companies and to
distribute substantially all of their net investment income and any net realized
capital gain to the shareholders of the Funds. Therefore, no provision is made
for Federal income or excise taxes.
D) Deferred Organization Costs: Organization costs of $22,375 have been
capitalized for each Fund as of April 8, 1994 and are being amortized over a
period of 60 months beginning on the date the Funds= registration became
effective. Rainier Investment Management, Inc.? (the -Investment Advisor-) has
agreed that, in the event any of the initial shares are redeemed during the
60-month period for amortizing the Funds= organization costs, the proceeds will
be reduced for the unamortized balances of such costs in the same proportion as
the number of shares redeemed bears to the number of initial shares outstanding
at the time of redemption.
E) Use of 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 contingency assets and liabilities at the date of
the Financial Statements and the reported amount of revenues and expenses during
the reporting period. Actual results could differ from those estimates.
Note 3. Investment Management Fee And Other Transactions
A) Investment Management Agreement: The Trust, on behalf of the Funds, has
entered into an investment management agreement with the Investment Advisor.
Under the terms of the agreement, the Trust will pay a fee equal to the
following annual percentages of average net assets:
Small/Mid Cap Equity Portfolio 0.85%
Core Equity Portfolio 0.75%
Balanced Portfolio 0.70%
Intermediate Fixed Income Portfolio 0.50%
Although not required to do so, the Investment Advisor has agreed to
reimburse each Fund to the extent necessary so that its ratio of operating
<PAGE>
expenses to average daily net assets will not exceed the following levels.
Overall operating expense for each Fund will not fall below the applicable
percentage limitation until the Investment Advisor has been fully reimbursed for
fees foregone and expenses paid by the Investment Advisor under this agreement:
Small/Mid Cap Equity Portfolio 1.48%
Core Equity Portfolio 1.29%
Balanced Portfolio 1.19%
Intermediate Fixed Income Portfolio 0.95%
These percentages are based on the average daily net assets of the Funds,
exclusive of interest, taxes, brokerage commissions, extraordinary expenses and
sales charges. This agreement may be terminated by either party upon 60 days'
written notice.
B) Distribution Plan: The Trust, on behalf of the Funds, has approved a
Distribution Plan (the -Plan-) in accordance with Rule 12b-1 under the 1940 Act.
The Plan provides that the Funds will pay a fee to the Investment Advisor at an
annual rate of up to 0.25% of each Fund=s average daily net assets. The fee is
paid to the Investment Advisor as reimbursement for, or in anticipation of,
expenses incurred for distribution-related activities.
C) Administrative Service Agreement: The Trust, on behalf of the Funds, has
entered into an administrative services agreement with an unrelated third party.
Under the terms of the agreement, each Fund will pay a monthly fee based on the
greater of $40,000 annual minimum or the annual rate of:
0.10% of first $100 million of average daily net assets
0.05% of next $100 million of average daily net assets
0.03% of average net assets over $200 million.
Note 4. Purchases and Sales of Securities
The aggregate security purchases and sales, other than short-term
obligations and U.S. Government securities, for the year ended March 31, 1996
were as follows:
Fund Purchases Sales
Small/Mid Cap
Equity Portfolio $109,879,715 50,783,799
Core Equity Portfolio 141,526,061 71,406,403
Balanced Portfolio 33,067,514 21,934,912
Intermediate Fixed
Income Portfolio 6,362,300 5,879,083
Balanced Portfolio and Intermediate Fixed Income Portfolio purchased
$3,628,424 and $2,220,286 respectively, and sold $796,685 and $1,444,953,
respectively, of U.S. Government securities. There were no purchases or sales of
U.S. Government securities by the Small/Mid Cap Equity Portfolio and Core Equity
Portfolio.
The aggregate unrealized appreciation and depreciation of portfolio
securities at March 31, 1996, based on costs for federal income tax purposes
which are same as book costs, were as follows:
Gross Gross
Unrealized Unrealized
Fund Appreciation Depreciation
Small/Mid Cap
Equity Portfolio $4,173,389 $595,231
Core Equity Portfolio 6,359,957 454,055
Balanced Portfolio 1,313,022 90,567
Intermediate Fixed
Income Portfolio 121,443 -
Note 5. Related Party Transactions
Certain officers and Trustees of the Funds are also officers and/or
directors of the Investment Advisor. Outside Trustees are compensated by the
Trust at the total rate of $4,000 per year plus $250 for each meeting of the
Board of Trustees attended and any travel expenses incurred in such meetings.
<PAGE>
Independent Auditors Report
The Board of Trustees and Shareholders
Rainier Investment Management Mutual Funds
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Rainier Investment Management Mutual
Funds (comprising, respectively, Small/Mid Cap Equity, Core Equity, Balanced and
Intermediate Fixed Income Portfolios), as of March 31, 1996, and the related
statements of operations for the year then ended, and the statement of changes
in net assets and financial highlights for the year then ended and the period
from May 10, 1994 (commencement of operations) to March 31, 1995. These
financial statements and financial highlights are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of March 31, 1996, by examination and other appropriate
audit procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the aforementioned Funds of Rainier Investment Management Mutual Funds
as of March 31, 1996, the results of their operations, the changes in their net
assets, and their financial highlights for the periods indicated herein in
conformity with generally accepted accounting principles.
/S/ KPMG PEAT MARWICK LLP
- -------------------------
Seattle, Washington
May 3, 1996
<PAGE>
Directory of Funds' Service Providers
Investment Advisor
Rainier Investment Management(R), Inc., 601 Union Street, Suite 2801, Seattle,
WA 98101
Distributor
First Fund Distributors, Inc., 4455 E. Camelback Road, Suite 261-E, Phoenix, AZ
85018
Administrator
Investment Company Administration Corporation, 2025 E. Financial Way, Suite 101,
Glendora, CA 91741
Custodian, Transfer Agent and Fund Accountant
Firstar Trust Company, 615 E. Michigan Street, Milwaukee, WI 53202
Independent Auditors
KPMG Peat Marwick LLP, 3100 Two Union Square, 601 Union Street, Seattle, WA
98101
Legal Counsel
Heller Ehrman White & McAuliffe, 333 Bush Street, San Francisco, CA 94104
<PAGE>
Index Descriptions
------------------
The Standard & Poor's 500 Stock Index is an unmanaged index composed of 500
industrial, utility, transportation, and financial companies of the U.S.
markets. The Index represents about 75% of New York Stock Exchange ("NYSE")
market capitalization and 30% of NYSE issues. It is a capitalization-weighted
index calculated on a total return basis with dividends reinvested.
The Russell Midcap(T) Index is an unmanaged index composed of the equities of
companies ranging in value from approximately $530 million to $5.6 billion, as
of June 30, 1995.
The Lehman Brothers Government/Corporate Intermediate Bond Index ("Lehman
Intermediate Bond Index") is an unmanaged index composed of all bonds covered by
the Lehman Brothers Government/Corporate Index with maturities between one and
9.99 years.
The Consumer Price Index ("CPI") is a measure of change in consumer prices as
determined by a monthly survey of the U.S. Bureau of Labor Statistics.
The Salomon Brothers 3-Month Treasury Bill Index ("91-Day U.S. Treasury Bill
Index") is an unmanaged index of equal dollar amounts of three-month Treasury
bills purchased at the beginning of each of three consecutive months.
The -Balanced Index- consists of 50% Standard & Poor's 500 Stock Index, 40%
Lehman Brothers Government/Corporate Intermediate Bond Index, 10% 91-Day U.S.
Treasury Bill Index.
