TOMORROW FUNDS
----------------
RETIREMENT TRUST
A LIFECYCLE RETIREMENT PROGRAM
SEMI-ANNUAL REPORT
JUNE 30, 1998
(UNAUDITED)
TOMORROW LONG-TERM RETIREMENT FUND
TOMORROW MEDIUM-TERM RETIREMENT FUND
TOMORROW SHORT-TERM RETIREMENT FUND
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
TABLE OF CONTENTS
Ten Largest Holdings............................... 1
(Schedules of Investments)
Tomorrow Long-Term Retirement Fund............ 2
Tomorrow Medium-Term Retirement Fund.......... 6
Tomorrow Short-Term Retirement Fund........... 11
Statements of Assets and Liabilities............... 14
Statements of Operations........................... 15
Statements of Changes in Net Assets................ 16
Notes to Financial Statements...................... 17
Financial Highlights............................... 22
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
TEN LARGEST HOLDINGS AT JUNE 30, 1998* (UNAUDITED)
<TABLE>
<CAPTION>
MARKET PERCENT
LONG-TERM RETIREMENT VALUE OF FUND
- -------------------- ----- -------
US Treasury Note
<S> <C> <C>
6.125%, Due 12/31/01 ............. $ 442,882 5.3%
BT EAFE Equity Index Fund ................ 404,244 4.8%
Standard & Poor's Depository
Receipt .......................... 395,347 4.7%
US Treasury Bond
6.125%, Due 11/15/27 ............. 230,385 2.8%
Conectiv, Inc. ........................... 221,400 2.6%
US Treasury Note
6.500%, Due 8/15/05 .............. 166,739 2.0%
US Treasury Note
5.500%, Due 11/15/98 ............. 156,048 1.9%
US Treasury Bond
7.000%, Due 7/15/06 .............. 136,504 1.6%
FPL Group Inc. ........................... 122,850 1.5%
US Treasury Note
6.125%, Due 8/15/07 .............. 119,654 1.4%
----------- -----
$ 2,396,053 28.6%
=========== =====
SHORT-TERM RETIREMENT
- ---------------------
US Treasury Note
6.125%, Due 12/31/01 ............. $ 3,705,957 12.3%
US Treasury Note
6.500%, Due 10/15/06 ............. 2,160,905 7.1%
US Treasury Note
5.875%, Due 10/31/98 ............. 1,882,933 6.2%
US Treasury Bond
6.125%, Due 11/15/27 ............. 1,318,019 4.4%
Federal Home Loan Mortgage
Corp 7.000% Due 3/15/08 .......... 762,381 2.5%
Standard & Poor's Depository
Receipt .......................... 631,377 2.1%
US Treasury Note
6.125%, Due 8/15/07 .............. 593,068 2.0%
US Treasury Bond
7.000%, Due 7/15/06 .............. 584,236 1.9%
Merrill Lynch & Co. Inc
6.500%, Due 6/1/28 ............... 507,860 1.7%
Salomon Inc
7.300%, Due 5/15/02 .............. 492,148 1.6%
----------- -----
$12,638,884 41.8%
=========== =====
MEDIUM-TERM RETIREMENT
- ----------------------
US Treasury Note
6.125%, Due 12/31/01 ............. $ 1,771,529 10.9%
BT EAFE Equity Index Fund ................ 833,822 5.1%
Standard & Poor's Depository
Receipt .......................... 828,768 5.1%
US Treasury Note
6.500%, Due 8/15/05 .............. 815,755 5.0%
US Treasury Note
6.500%, Due 5/31/01 .............. 810,240 5.0%
US Treasury Bond
6.125%, Due 11/15/27 ............. 610,789 3.7%
US Treasury Note
5.500%, Due 11/15/98 ............. 495,153 3.0%
Conectiv, Inc. ........................... 299,034 1.8%
US Treasury Bond
7.000%, Due 7/15/06 .............. 256,627 1.6%
US Treasury Bond
6.875%, Due 8/15/25 .............. 246,680 1.5%
----------- -----
$ 6,968,397 42.7%
=========== =====
<FN>
* The composition of the largest securities in each portfolio is subject to
change.
</FN>
</TABLE>
Page 1
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW LONG-TERM RETIREMENT FUND
COMMON STOCKS (53.7%)
BASIC MATERIALS (2.1%)
<S> <C> <C>
500 Air Products & Chemicals Inc. .............................. $20,000
200 Cambrex Corp. .............................................. 5,250
50 Carpenter Technology Corp. ................................. 2,512
450 Champion International Corp. ............................... 22,134
116 Delta & Pine Land Co. ...................................... 5,162
350 Dexter Corp. ............................................... 11,134
400 Dow Chemical Co. ........................................... 38,675
90 Medusa Corp. ............................................... 5,648
700 Pope & Talbot Inc. ......................................... 8,181
100 Rayonier Inc. .............................................. 4,600
400 Rohm & Haas Co. ............................................ 41,575
180 +Scotts Co. Cl A ............................................ 6,705
50 Unisource Worldwide Inc. ................................... 541
300 Wellman Inc. ............................................... 6,806
--------
178,923
--------
CONSUMER CYCLICALS (6.1%)
180 +Billing Information Concepts ............................... 2,790
270 +Carmike Cinemas Inc. Cl A .................................. 7,273
270 +Champion Enterprises Inc. .................................. 7,897
141 +Consolidated Stores Corp. .................................. 5,111
1,170 CVS Corp ................................................... 45,557
200 Dayton Hudson Corp. ........................................ 9,700
400 Dillards Inc. Cl A ......................................... 16,575
650 +Dress Barn Inc. ............................................ 16,169
650 Fingerhut Companies Inc. ................................... 21,450
1,400 Ford Motor Co. ............................................. 82,600
100 +Fred Meyer Inc. ............................................ 4,250
1,080 Gannet Inc. ................................................ 76,748
370 +Grand Casinos Inc. ......................................... 6,197
200 +GTECH Holding Corp. ........................................ 6,738
300 +Jones Apparel Group ........................................ 10,969
270 Juno Lighting Inc. ......................................... 6,379
180 Kellwood Co ................................................ 6,435
200 +King World Productions Inc. ................................ 5,100
3 May Department Stores Co. .................................. 196
370 +Nashua Corp. ............................................... 5,781
180 +Nautica Enterprises Inc. ................................... 4,826
100 +Office Max Inc. ............................................ 1,650
100 Ogden Corp. ................................................ 2,769
180 Osh Kosh B'Gosh Cl A ....................................... 8,010
550 Penney (J.C.) Co. .......................................... 39,772
1,460 Ruby Tuesday Inc. .......................................... 22,630
50 +Scholastic Corp. ........................................... 1,994
100 Sears Roebuck & Co. ........................................ 6,106
180 Skyline Corp. .............................................. 5,873
350 +Sports Authority ........................................... 5,228
100 Storage USA ................................................ 3,500
150 TCA Cable TV Inc. .......................................... 9,000
50 +Tommy Hilfiger Corp. ....................................... 3,125
350 Toro Co. ................................................... 11,987
400 VF Corp. ................................................... 20,600
100 Walt Disney Co. ............................................ 10,506
200 +Williams Sonoma Inc ........................................ 6,363
--------
507,854
--------
CONSUMER NON CYCLICALS (4.6%)
200 +Acxiom Corp ................................................ 4,987
150 Avnet Inc. ................................................. 8,203
100 +Brinker International Inc. ................................. 1,925
150 Case Corp .................................................. 7,238
350 Cash America International Inc. ............................ 5,337
800 Coca Cola Co. .............................................. 68,400
550 Coors (Adolph) Cl B ........................................ 18,700
400 Corning Inc. ............................................... 13,900
350 Darden Restaurants Inc. .................................... 5,556
150 Dean Foods ................................................. 8,241
360 +DeVRY Inc. ................................................. 7,898
1,650 Fleming Companies Inc. ..................................... 28,978
50 +General Nutrition Companies Inc. ........................... 1,556
50 Hormel Foods Corp. ......................................... 1,728
75 Lancaster Colony ........................................... 2,841
100 Magna International Inc. Cl A .............................. 6,862
100 McDonald's Corp. ........................................... 6,900
400 McKesson Corp. ............................................. 32,500
200 Miller (Herman) Inc. ....................................... 4,863
180 Oakwood Homes Corp. ........................................ 5,400
300 Philip Morris Companies Inc. ............................... 11,812
300 Premark International ...................................... 9,675
600 Proctor & Gamble Co. ....................................... 54,638
700 Quaker Oats Co ............................................. 38,456
100 Richfood Holdings Inc ...................................... 2,069
200 Unilever NV ADR ............................................ 15,787
300 Universal Foods Corp. ...................................... 6,656
90 +Whole Foods Market Inc. .................................... 5,445
2 WLR Foods Inc. ............................................. 13
--------
386,564
--------
ENERGY (7.1%)
200 +Barrett Resources Corp. .................................... 7,500
200 +BJ Services ................................................ 5,813
650 Chevron Corp ............................................... 53,991
870 Coastal Corp. .............................................. 60,737
10,800 Conectiv, Inc. ............................................. 221,400
1,800 Conectiv Inc. Cl A ......................................... 65,250
270 Cross Timbers Oil Co. ...................................... 5,147
100 Ensco International Inc. ................................... 1,737
190 +EVI Weatherford Inc. ....................................... 7,054
</TABLE>
Page 2 See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW LONG-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
700 Exxon Corp. ................................................ $49,919
1,850 Helmerich & Payne Inc. ..................................... 42,550
270 IMCO Recycling Inc. ........................................ 4,995
452 Marketspan Corp ............................................ 13,532
50 Murphy Oil Corp. ........................................... 2,534
200 +Nabors Industries Inc. ..................................... 3,962
180 +Newfield Exploration Co. ................................... 4,478
234 +Ocean Energy Inc. .......................................... 4,578
920 +Oceaneering International Inc. ............................. 16,330
200 Royal Dutch Petroleum ADR .................................. 10,962
150 +Smith International Inc. ................................... 5,222
100 Texaco Inc. ................................................ 5,969
100 Valero Energy Corp. ........................................ 3,325
--------
596,985
--------
FINANCE (7.8%)
150 ACE Limited ................................................ 5,850
200 AFLAC Inc. ................................................. 6,062
150 Ahmanson H F & Co. ......................................... 10,650
650 Allstate Corp. ............................................. 59,516
200 +AMRESCO Inc. ............................................... 5,825
450 Amsouth Bancorp ............................................ 17,691
366 Associates First Capital Corp. ............................. 28,136
90 Astoria Financial Corp. .................................... 4,815
50 BankAmerica Corp. .......................................... 4,322
400 Bankers Trust N.Y. Corp. ................................... 46,425
8 BSB Bancorp Inc. ........................................... 242
100 Centura Banks Inc. ......................................... 6,250
198 Charter One Financial ...................................... 6,670
400 Chase Manhattan Corp. ...................................... 30,200
300 Cigna Corp. ................................................ 20,700
100 CMAC Investment Corp. ...................................... 6,150
500 Comdisco Inc. .............................................. 9,500
375 Comerica Inc. .............................................. 24,844
135 Commercial Fed Corp. ....................................... 4,269
180 +Compdent Corp. ............................................. 2,812
100 Cullen/Frost Bankers Inc. .................................. 5,425
237 Dime Bancorp Inc. .......................................... 7,095
180 +Envoy Corp. ................................................ 8,528
305 Fidelity National Financial Inc. ........................... 12,143
57 Fleet Financial Group Inc. ................................. 4,759
100 Franchise Finance Corp. ....................................
of America ............................................ 2,594
200 Franklin Resources Inc. .................................... 10,800
90 Fremont General Corp. ...................................... 4,877
99 Frontier Insurance Group Inc. .............................. 2,234
50 Golden West Financial ...................................... 5,316
150 Hartford Financial Services Group .......................... 17,156
270 Hilb, Rogal & Hamilton Co. ................................. 4,219
115 Huntington Bancshares ...................................... 3,852
180 JSB Financial Inc. ......................................... 10,541
180 Keystone Financial Inc. .................................... $ 6,660
116 Legg Mason Inc. ............................................ 6,677
180 Magna Group Inc. ........................................... 10,170
450 Marsh & McLennan Companies ................................. 27,197
100 Merrill Lynch & Co. ........................................ 9,225
100 Morgan J P & Co. ........................................... 11,713
180 Mutual Risk Management ..................................... 6,559
300 National City Corp. ........................................ 21,300
200 NationsBank Corp. .......................................... 15,300
300 Northern Trust Corp. ....................................... 22,875
300 Old Republic International Corp. ........................... 8,794
2 One Valley Bancorp Inc. .................................... 73
180 Orion Capital Corp. ........................................ 10,057
150 Paine Webber Group Inc. .................................... 6,431
90 Provident Financial Group Inc. ............................. 4,106
300 Republic NY Corp. .......................................... 18,881
444 Sovereign Bancorp Inc. ..................................... 7,257
180 St. Paul Bancorp ........................................... 4,067
150 State Street Corp. ......................................... 10,425
100 T. Rowe Price Associates Inc. .............................. 3,756
300 Travelers Group Inc. ....................................... 18,187
180 Trenwick Group Inc. ........................................ 6,992
50 UnionBanCal Corp ........................................... 4,825
90 US Trust Corp. ............................................. 6,863
--------
648,858
--------
HEALTH CARE (5.5%)
1,000 Abbott Laboratories ........................................ 40,875
500 American Home Products Corp. ............................... 25,875
100 Beckman Coulter Inc. ....................................... 5,825
700 Becton Dickinson & Co. ..................................... 54,337
130 Bergen Brunswig Corp. ...................................... 6,029
350 +COR Therapeutics ........................................... 4,856
250 +Cygnus Inc. ................................................ 2,609
257 +Enzo Biochem Inc. .......................................... 3,437
100 +Express Scripts Inc. - Cl A ................................ 8,063
50 +Health Care & Retirement Corp. ............................. 1,972
270 ICN Pharmaceuticals Inc. ................................... 12,336
198 Integrated Health Services Inc. ............................ 7,425
200 Johnson & Johnson .......................................... 14,750
90 Magellan Health Services Inc. .............................. 2,284
180 +Medimmune Inc. ............................................. 11,227
180 Mentor Corp. ............................................... 4,365
700 Merck & Co. Inc. ........................................... 93,625
180 +Orthodontic Centers of America ............................. 3,769
270 Owens & Minor Inc. ......................................... 2,700
180 +Safeskin Corp. ............................................. 7,403
450 Service Corp. International ................................ 19,294
180 +Sola International Inc. .................................... 5,884
90 +Steris Corp. ............................................... 5,723
</TABLE>
See notes to financial statements Page 3
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW LONG-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
240 +Total Renal Care Holdings .................................. $ 8,280
100 United Healthcare Corp. .................................... 6,350
180 +Vertex Pharmaceutical Inc. ................................. 4,050
1,050 Warner Lambert Co. ......................................... 72,844
300 +Wellpoint Health Networks .................................. 22,200
--------
458,387
--------
INDUSTRIAL (5.8%)
200 ABM Industries Inc. ........................................ 5,538
150 +ACNielson Corp. ............................................ 3,788
100 AGCO Corp. ................................................. 2,056
101 Albany International Corp. Cl A ............................ 2,406
320 Birmingham Steel Corp. ..................................... 3,960
200 Brady W H Co. .............................................. 5,562
270 CLARCOR Inc ................................................ 5,670
200 Coca Cola Enterprises Inc. ................................. 7,850
50 Cummins Engine Inc. ........................................ 2,562
90 DEKALB Genetics Corp. Cl B ................................. 8,516
180 Dimon Inc. ................................................. 2,025
500 Dover Corp. ................................................ 17,125
100 Felcor Suite ............................................... 3,138
750 General Electric Co ........................................ 68,250
100 Grainger WW Inc. ........................................... 4,981
136 +Halter Marine Group Inc. ................................... 2,049
250 Hanson PLC ADR ............................................. 7,578
750 Ingersoll Rand Co. ......................................... 33,047
640 +Instituform Technologies Cl A .............................. 8,860
500 Kaydon Corp. ............................................... 17,656
300 Kelly Services Inc. Cl A ................................... 10,612
180 Lilly Industries Inc. Cl A ................................. 3,893
150 Lubrizol Corp. ............................................. 4,537
100 Lyondell Petrochemical Co. ................................. 3,044
270 MacDermid Inc. ............................................. 7,627
90 Manitowoc Inc. ............................................. 3,634
312 Molex Inc .................................................. 7,800
1,450 Pitney Bowes Inc. .......................................... 69,781
180 Quanex Corp. ............................................... 5,456
180 +Read-Rite Corp. ............................................ 1,631
90 Robbins & Myers Inc. ....................................... 2,616
270 Ryland Group Inc. .......................................... 7,087
350 Sotheby's Holdings Cl A .................................... 7,831
460 +Southern Energy Homes ...................................... 4,514
90 +SPS Technologies Inc. ...................................... 5,265
100 Stone & Webster Inc. ....................................... 3,938
50 Sundstrand Corp. ........................................... 2,863
200 Textron Inc. ............................................... 14,337
400 Time Warner Inc. ........................................... 34,175
180 TJ International Inc. ...................................... 5,422
180 +Toll Brothers Inc. ......................................... 5,164
1,280 True North Communications .................................. 37,440
150 Universal Corp. ............................................ 5,606
90 +US Home Corp. .............................................. 3,713
100 USG Corp. .................................................. 5,412
90 +Vantive Corp. .............................................. 1,845
200 Zero Corp. ................................................. 5,675
--------
483,535
--------
REAL ESTATE INVESTMENT TRUST (0.6%)
730 +Anixter International Inc. ................................. 13,916
180 Federal Realty Investors Trust ............................. 4,331
100 General Growth Properties .................................. 3,731
100 Health Care Property Investors ............................. 3,606
100 Indymac Mortgage Holdings .................................. 2,275
100 Liberty Property Trust ..................................... 2,556
100 Mack-Cali Realty Corp. ..................................... 3,438
640 New England Business Service ............................... 20,640
--------
54,493
--------
TECHNOLOGY (8.7%)
555 AAR Corp. .................................................. 16,407
50 ADC Telecommunications Inc. ................................ 1,827
270 +Advanced Tissue Sciences Inc. .............................. 1,198
100 Aliant Communications ...................................... 2,744
50 +Altera Corp. ............................................... 1,478
200 +Aspect Telecommunications .................................. 5,475
200 Automatic Data Processing Inc. ............................. 14,575
1,400 Bell Atlantic Corp. ........................................ 63,875
200 BellSouth Corp. ............................................ 13,425
100 +BMC Software Inc. .......................................... 5,194
100 +Cadence Design Systems Inc. ................................ 3,125
350 +California Microwave Inc. .................................. 6,125
75 Century Telephone Enterprises .............................. 3,441
50 Cincinatti Bell Inc. ....................................... 1,431
180 +Cognex Corp. ............................................... 3,330
100 Communications Satellite Corp. ............................. 2,831
75 Computer Associates
International Inc. .................................... 4,167
300 +Compuware Corp. ............................................ 15,338
100 +Comverse Technology ........................................ 5,188
100 Eaton Corp. ................................................ 7,775
100 +Etec Systems Inc. .......................................... 3,519
550 +General Communication Cl A ................................. 3,334
1,100 General Dynamics Corp. ..................................... 51,150
920 +Geotek Communications Inc. ................................. 144
1,190 Gerber Scientific Inc. ..................................... 27,072
400 Harris Corp. ............................................... 17,875
100 Honeywell Inc. ............................................. 8,356
180 +Input/Output Inc. .......................................... 3,206
400 International Business
Machines Corp. ....................................... 45,925
820 +KEMET Corp. ................................................ 10,788
100 +KLA Instruments Corp. ...................................... 2,769
</TABLE>
Page 4 See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW LONG-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
90 +Kulicke & Soffa Industries Inc. ............................ $ 1,530
90 Life Re Corp. .............................................. 7,459
100 Linear Technology Corp. .................................... 6,031
250 Lockheed Martin Corp ....................................... 26,469
460 +Microchip Technology Inc. .................................. 12,017
600 +Microsoft Corp. ............................................ 65,025
650 Motorola Inc. .............................................. 34,166
200 +NEXTEL Communications Inc. .................................
Cl A .................................................. 4,975
180 +PLATINUM Technology Inc. ................................... 5,141
100 Precision Castparts Corp. .................................. 5,338
250 +Quantum Corp. .............................................. 5,187
180 +Respironics Inc. ........................................... 2,801
180 +S3 Inc. .................................................... 911
180 +Sanmina Corp. .............................................. 7,807
1,840 +Sterling Software Inc. ..................................... 54,395
300 +Storage Technology Corp. ................................... 13,013
50 +Structural Dynamics Research
Corp. .................................................. 1,156
100 +Symantec Corp. ............................................. 2,613
50 +Teradyne Inc. .............................................. 1,337
800 Texas Instruments Inc. ..................................... 46,650
800 Thomas & Betts Corp. ....................................... 39,400
100 Wallace Computer Services Inc. ............................. 2,375
300 Xerox Corp. ................................................ 30,488
--------
729,371
--------
TRANSPORTATION (1.6%)
300 Airborne Freight Corp. ..................................... 10,481
600 +AMR Corp. .................................................. 49,950
180 Breed Technologies Inc. .................................... 2,756
100 GATX Corp. ................................................. 4,388
100 Harley Davidson Inc. ....................................... 3,875
270 Intermet Corp. ............................................. 4,894
180 +Rural/ Metro Corp. ......................................... 2,340
400 Ryder Systems Inc. ......................................... 12,625
300 Union Pacific Corp. ........................................ 13,238
200 Wabash National Corp. ...................................... 5,150
550 Winnebago Industries ....................................... 7,013
750 +Yellow Corp. ............................................... 13,922
--------
130,632
--------
UTILITIES (3.8%)
900 Ameritech Corp. ............................................ 40,388
50 +California Energy Inc. ..................................... 1,503
150 Columbia Gas System Inc. ................................... 8,344
1,560 Eastern Utilities .......................................... 40,950
950 Entergy Corp. .............................................. 27,313
1,950 FPL Group Inc. ............................................. 122,850
750 Montana Power Co. .......................................... 26,062
700 Northwest Natural Gas Co. .................................. 19,578
200 Pinnacle West Capital ...................................... 9,000
550 Public Service Co. of
New Mexico ............................................ 12,478
200 Utilicorp United Inc. ...................................... 7,537
--------
316,003
--------
TOTAL COMMON STOCKS
(Cost $3,862,097)...................................... 4,491,605
----------
OPEN END INVESTMENT COMPANY (4.8%)
(Cost $367,180)
34,879 BT EAFE Equity Index Fund................................... 404,244
----------
UNIT INVESTMENT TRUST (4.7%)
(Cost $322,651)
3,489 Standard & Poor's Depository
Receipt................................................ 395,347
----------
PRINCIPAL
AMOUNT
- ---------
U.S. GOVERNMENT OBLIGATIONS (18.6%)
U.S. TREASURY BONDS (5.2%)
$125,000 7.000% Due 7/15/06.......................................... 136,504
55,000 6.875% Due 8/15/25.......................................... 63,697
215,000 6.125% Due 11/15/27......................................... 230,385
----------
430,586
----------
U.S. TREASURY NOTES (13.4%)
85,000 5.875% Due 10/31/98......................................... 85,133
156,000 5.500% Due 11/15/98......................................... 156,048
90,000 6.500% Due 5/31/01.......................................... 92,306
435,000 6.125% Due 12/31/01......................................... 442,882
158,000 6.500% Due 8/15/05.......................................... 166,739
50,000 6.500% Due 10/15/06......................................... 53,094
115,000 6.125% Due 8/15/07.......................................... 119,654
5,000 8.125% Due 8/15/19.......................................... 6,453
----------
1,122,309
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $1,511,852)...................................... 1,552,895
----------
CORPORATE DEBENTURE (0.3%)
(Cost $25,310)
FINANCE (0.3%)
25,000 Standard C.C. Master Trust
6.800% Due 4/7/99...................................... 25,203
----------
TIME DEPOSIT (9.4%)
(Cost $790,000)
790,000 Societe Generale Bank
5.500% Due 7/1/98...................................... 790,000
----------
</TABLE>
See notes to financial statements Page 5
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
VALUE
-----
TOMORROW LONG-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
TOTAL INVESTMENTS (91.5%)
(Cost $6,879,090)......................................$7,659,294
----------
OTHER ASSETS IN EXCESS
OF LIABILITIES (8.5%)..................................... 710,800
----------
TOTAL NET ASSETS (100.0%)...................................$8,370,094
----------
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
- --------- ------------
FUTURES PURCHASED
2 September S&P 400 Midcap.................................... 20,951
3 September S&P 500 Index..................................... 8,234
----------
29,185
----------
<FN>
+ Non-income producing security.
</FN>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW MEDIUM-TERM RETIREMENT FUND
COMMON STOCK (46.3%)
BASIC MATERIALS (2.2%)
1,200 Air Products & Chemicals Inc. .............................. $48,000
100 Cambrex Corp. .............................................. 2,625
100 Carpenter Technology Corp. ................................. 5,025
1,050 Champion International Corp. ............................... 51,647
66 Delta & Pine Land Co. ...................................... 2,937
700 Dexter Corp. ............................................... 22,269
950 Dow Chemical Co. ........................................... 91,853
50 Medusa Corp. ............................................... 3,137
400 Pope & Talbot Inc. ......................................... 4,675
200 Rayonier Inc. .............................................. 9,200
800 Rohm & Haas Co. ............................................ 83,150
100 +Scotts Co. Cl A ............................................ 3,725
100 Unisource Worldwide Inc. ................................... 1,081
250 USG Corp. .................................................. 13,531
600 Wellman Inc. ............................................... 13,612
----------
356,467
----------
CONSUMER CYCLICALS (5.0%)
100 +Billing Information Concepts .............................. 1,550
100 +Carmike Cinemas Inc. Cl A .................................. 2,694
150 +Champion Enterprises Inc. .................................. 4,387
282 +Consolidated Stores Corp. .................................. 10,222
2,342 CVS Corp. .................................................. 91,192
400 Dayton Hudson Corp. ........................................ 19,400
1,000 Dillards Inc. Cl A ......................................... 41,438
350 +Dress Barn Inc. ............................................ 8,706
1,300 Fingerhut Companies Inc. ................................... 42,900
3,300 Ford Motor Co. ............................................. 194,700
1,300 Gannet Inc. ................................................ 92,381
200 +Grand Casinos Inc. ......................................... 3,350
350 +GTECH Holding Corp. ........................................ 11,791
500 +Jones Apparel Group ........................................ 18,281
150 Juno Lighting Inc. ......................................... 3,544
100 Kellwood Co. ............................................... 3,575
600 +King World Productions Inc. ................................ 15,300
4 May Department Stores Co. .................................. 262
300 +Nashua Corp. ............................................... 4,688
100 +Nautica Enterprises Inc. ................................... 2,681
250 +Office Max Inc. ............................................ 4,125
200 Ogden Corp. ................................................ 5,538
100 Osh Kosh B'Gosh Cl A ....................................... 4,450
1,200 Penney (J.C.) Co. .......................................... 86,775
800 Ruby Tuesday Inc. .......................................... 12,400
150 +Scholastic Corp. ........................................... 5,981
250 Sears Roebuck & Co. ........................................ 15,266
100 Skyline Corp. .............................................. 3,262
200 +Sports Authority ........................................... 2,987
100 Storage USA ................................................ 3,500
350 TCA Cable TV Inc. .......................................... 21,000
</TABLE>
Page 6 See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW MEDIUM-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
50 +Tommy Hilfiger Corp. ....................................... $ 3,125
250 Toro Co. ................................................... 8,563
900 VF Corp. ................................................... 46,350
250 Walt Disney Co. ............................................ 26,266
100 +Williams Sonoma Inc. ....................................... 3,181
----------
825,811
----------
CONSUMER NON CYCLICALS (4.8%)
100 +Acxiom Corp. ............................................... 2,494
350 Avnet Inc. ................................................. 19,141
200 +Brinker International Inc. ................................. 3,850
400 Case Corp. ................................................. 19,300
200 Cash America International Inc. ............................ 3,050
1,900 Coca Cola Co. .............................................. 162,450
1,300 Coors (Adolph) Cl B ........................................ 44,200
900 Corning Inc. ............................................... 31,275
800 Darden Restaurants Inc. .................................... 12,700
250 Dean Foods ................................................. 13,734
200 +DeVRY Inc. ................................................. 4,388
2,200 Fleming Companies Inc. ..................................... 38,637
200 +Fred Meyer Inc. ............................................ 8,500
100 +General Nutrition Companies Inc. ........................... 3,112
100 Hormel Foods Corp. ......................................... 3,456
150 Lancaster Colony ........................................... 5,681
250 Magna International Inc. Cl A .............................. 17,156
300 McDonald's Corp. ........................................... 20,700
700 McKesson Corp. ............................................. 56,875
400 Miller (Herman) Inc. ....................................... 9,725
100 Oakwood Homes Corp. ........................................ 3,000
700 Philip Morris Companies Inc. ............................... 27,563
600 Premark International ...................................... 19,350
1,400 Proctor & Gamble Co. ....................................... 127,487
1,300 Quaker Oats Co. ............................................ 71,419
100 Richfood Holdings Inc. ..................................... 2,069
400 Unilever ADR ............................................... 31,575
700 Universal Foods Corp. ...................................... 15,531
50 +Whole Foods Market Inc. .................................... 3,025
----------
781,443
----------
ENERGY (5.7%)
100 +Barrett Resources Corp. .................................... 3,750
400 +BJ Services ................................................ 11,625
1,600 Chevron Corp. .............................................. 132,900
1,750 Coastal Corp. .............................................. 122,172
14,587 Conectiv, Inc. ............................................. 299,034
2,431 Conectiv Inc. Cl A ......................................... 88,124
150 Cross Timbers Oil Co. ...................................... 2,859
200 Ensco International Inc. ................................... 3,475
332 +EVI Weatherford Inc. ....................................... 12,326
1,500 Exxon Corp ................................................. 106,969
1,900 Helmerich & Payne Inc. ..................................... 43,700
150 IMCO Recycling Inc. ........................................ 2,775
854 Marketspan Corp. ........................................... 25,567
50 Murphy Oil Corp. ........................................... 2,534
450 +Nabors Industries Inc. ..................................... 8,916
100 +Newfield Exploration Co .................................... 2,487
130 +Ocean Energy Inc. .......................................... 2,543
500 +Oceaneering International Inc. ............................. 8,875
450 Royal Dutch Petroleum ADR .................................. 24,666
250 +Smith International Inc. ................................... 8,703
200 Texaco Inc. ................................................ 11,938
250 Valero Energy Corp. ........................................ 8,312
----------
934,250
----------
FINANCE (7.1%)
300 ACE Limited ................................................ 11,700
400 AFLAC Inc .................................................. 12,125
350 Ahmanson H F & Co. ......................................... 24,850
800 Allstate Corp. ............................................. 73,250
100 American Bankers Insurance
Group Inc. ............................................ 6,013
100 +AMRESCO Inc ................................................ 2,913
975 Amsouth Bancorp ............................................ 38,330
864 Associates First Capital Corp. ............................. 66,420
50 Astoria Financial Corp. .................................... 2,675
150 BankAmerica Corp. .......................................... 12,966
850 Bankers Trust N.Y. Corp. ................................... 98,653
10 BSB Bancorp Inc. ........................................... 302
50 Centura Banks Inc. ......................................... 3,125
198 Charter One Financial ...................................... 6,670
1,000 Chase Manhattan Corp. ...................................... 75,500
600 Cigna Corp. ................................................ 41,400
50 CMAC Investment Corp. ...................................... 3,075
1,100 Comdisco Inc. .............................................. 20,900
900 Comerica Inc. .............................................. 59,625
75 Commercial Fed Corp. ....................................... 2,372
100 +Compdent Corp. ............................................. 1,562
50 Cullen/Frost Bankers Inc. .................................. 2,713
437 Dime Bancorp Inc. .......................................... 13,083
100 +Envoy Corp. ................................................ 4,737
165 Fidelity National Financial Inc. ........................... 6,569
57 Fleet Financial Group Inc. ................................. 4,760
100 Franchise Finance Corp. of
America ............................................... 2,594
400 Franklin Resources Inc. .................................... 21,600
50 Fremont General Corp. ...................................... 2,709
55 Frontier Insurance Group Inc. .............................. 1,241
50 General RE Corp. ........................................... 12,812
150 Golden West Financial ...................................... 15,947
</TABLE>
See notes to financial statements Page 7
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW MEDIUM-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
400 Hartford Financial Services Group .......................... $45,750
150 Hilb, Rogal & Hamilton Co. ................................. 2,344
115 Huntington Bancshares ...................................... 3,852
100 JSB Financial Inc. ......................................... 5,856
100 Keystone Financial Inc. .................................... 3,700
66 Legg Mason Inc. ............................................ 3,799
100 Magna Group Inc. ........................................... 5,650
975 Marsh & McLennan Companies ................................. 58,927
250 Merrill Lynch & Co. ........................................ 23,062
300 Morgan J P & Co. ........................................... 35,137
100 Mutual Risk Management ..................................... 3,644
600 National City Corp. ........................................ 42,600
500 NationsBank Corp. .......................................... 38,250
550 Northern Trust Corp. ....................................... 41,938
525 Old Republic International Corp. ........................... 15,389
100 Orion Capital Corp. ........................................ 5,588
50 +Oxford Health Plans Inc. ................................... 766
375 Paine Webber Group Inc. .................................... 16,078
450 Pinnacle West Capital ...................................... 20,250
50 Provident Financial Group Inc. ............................. 2,281
700 Republic NY Corp. .......................................... 44,056
240 Sovereign Bancorp Inc. ..................................... 3,923
100 St. Paul Bancorp ........................................... 2,259
300 State Street Corp. ......................................... 20,850
200 T. Rowe Price Associates Inc. .............................. 7,513
750 Travelers Group Inc. ....................................... 45,469
100 Trenwick Group Inc. ........................................ 3,884
50 UnionBanCal Corp. .......................................... 4,825
50 US Trust Corp. ............................................. 3,813
----------
1,164,644
----------
HEALTH CARE (4.9%)
2,500 Abbott Laboratories ........................................ 102,187
1,200 American Home Products Corp. ............................... 62,100
200 Beckman Coulter Inc. ....................................... 11,650
600 Becton Dickinson & Co. ..................................... 46,575
300 Bergen Brunswig Corp. ...................................... 13,912
200 +COR Therapeutics ........................................... 2,775
150 +Cygnus Inc. ................................................ 1,566
157 +Enzo Biochem Inc. .......................................... 2,100
50 +Express Scripts Inc. Cl A .................................. 4,031
100 +Health Care & Retirement Corp. ............................. 3,944
150 ICN Pharmaceuticals Inc. ................................... 6,853
108 Integrated Health Services Inc. ............................ 4,050
450 Johnson & Johnson .......................................... 33,187
50 Magellan Health Services Inc. .............................. 1,269
100 +Medimmune Inc. ............................................. 6,237
100 Mentor Corp. ............................................... 2,425
1,700 Merck & Co Inc. ............................................ 227,375
100 +Orthodontic Centers of America ............................. 2,094
150 Owens & Minor Inc. ......................................... 1,500
100 +Safeskin Corp. ............................................. 4,113
1,050 Service Corp. International ................................ 45,019
100 +Sola International Inc. .................................... 3,269
50 +Steris Corp. ............................................... 3,180
133 +Total Renal Care Holdings .................................. 4,588
300 United Healthcare Corp. .................................... 19,050
100 +Vertex Pharmaceutical Inc. ................................. 2,250
2,100 Warner Lambert Co. ......................................... 145,687
600 +Wellpoint Health Networks .................................. 44,400
----------
807,386
----------
INDUSTRIAL (4.8%)
100 ABM Industries Inc. ........................................ 2,769
300 +ACNielson Corp. ............................................ 7,575
200 AGCO Corp .................................................. 4,112
251 Albany International Corp. Cl A ............................ 6,014
500 Automatic Data Processing Inc. ............................. 36,438
100 Birmingham Steel Corp. ..................................... 1,237
100 Brady W H Co. .............................................. 2,781
150 CLARCOR Inc. ............................................... 3,150
350 Coca Cola Enterprises Inc. ................................. 13,738
100 Cummins Engine Inc. ........................................ 5,125
50 DEKALB Genetics Corp. Cl B ................................. 4,731
100 Dimon Inc. ................................................. 1,125
1,200 Dover Corp. ................................................ 41,100
100 Felcor Suite ............................................... 3,137
48 +General Cigar Holdings Inc. ................................ 474
1,750 General Electric Co. ....................................... 159,250
300 Grainger WW Inc. ........................................... 14,944
75 +Halter Marine Group Inc. ................................... 1,130
600 Hanson PLC ADR ............................................. 18,187
1,250 Ingersoll Rand Co. ......................................... 55,078
300 +Instituform Technologies Cl A .............................. 4,153
1,100 Kaydon Corp. ............................................... 38,844
650 Kelly Services Inc. Cl A ................................... 22,994
100 Lilly Industries Inc. Cl A ................................. 2,163
300 Lubrizol Corp. ............................................. 9,075
250 Lyondell Petrochemical Co. ................................. 7,609
150 MacDermid Inc. ............................................. 4,237
50 Manitowoc Inc. ............................................. 2,019
625 Molex Inc. ................................................. 15,625
2,100 Pitney Bowes Inc. .......................................... 101,062
100 Quanex Corp. ............................................... 3,031
100 Read-Rite Corp. ............................................ 906
50 Robbins & Myers Inc. ....................................... 1,453
100 Ryland Group Inc. .......................................... 2,625
750 Sotheby's Holdings Cl A .................................... 16,781
250 +Southern Energy Homes ...................................... 2,453
50 Stone & Webster Inc. ....................................... 1,969
</TABLE>
Page 8 See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW MEDIUM-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
70 Sundstrand Corp. ........................................... $ 4,008
500 Textron Inc. ............................................... 35,844
950 Time Warner Inc. ........................................... 81,166
100 TJ International Inc. ...................................... 3,012
100 +Toll Brothers Inc. ......................................... 2,869
700 True North Communications .................................. 20,475
300 Universal Corp. ............................................ 11,213
50 +US Home Corp. .............................................. 2,062
50 +Vantive Corp. .............................................. 1,025
100 Zero Corp. ................................................. 2,838
----------
783,606
----------
REAL ESTATE INVESTMENT TRUST (0.3%)
400 +Anixter International Inc. ................................. 7,625
100 Federal Realty Investors Trust ............................. 2,406
100 General Growth Properties .................................. 3,731
100 Health Care Property Investors ............................. 3,606
100 Highwood Properties Inc. ................................... 3,231
100 Indymac Mortgage Holdings .................................. 2,275
100 Liberty Property Trust ..................................... 2,556
100 Mack-Cali Realty Corp. ..................................... 3,438
350 New England Business Service ............................... 11,288
----------
40,156
----------
TECHNOLOGY (6.8%)
300 AAR Corp. .................................................. 8,869
100 ADC Telecommunications Inc. ................................ 3,653
150 +Advanced Tissue Sciences Inc. .............................. 666
150 Aliant Communications ...................................... 4,116
100 +Altera Corp. ............................................... 2,956
100 +Aspect Telecommunications .................................. 2,738
500 BellSouth Corp. ............................................ 33,562
300 +BMC Software Inc. .......................................... 15,581
100 +Cadence Design Systems Inc. ................................ 3,125
300 +California Microwave Inc. .................................. 5,250
150 Century Telephone Enterprises .............................. 6,881
100 Cincinatti Bell Inc. ....................................... 2,863
100 +Cognex Corp. ............................................... 1,850
300 Communications Satellite Corp. ............................. 8,494
150 Computer Assoc International Inc. .......................... 8,334
600 +Compuware Corp. ............................................ 30,675
50 Comverse Technology ........................................ 2,594
200 Eaton Corp. ................................................ 15,550
50 +Etec Systems Inc. .......................................... 1,759
300 +General Communication Cl A ................................. 1,819
2,140 General Dynamics Corp. ..................................... 99,510
500 +Geotek Communications Inc. ................................. 78
650 Gerber Scientific Inc. ..................................... 14,788
1,000 Harris Corp. ............................................... 44,687
200 Honeywell Inc. ............................................. 16,713
100 +Input/Output Inc. .......................................... 1,781
1,000 International Business
Machines Corp. ........................................ 114,813
450 +KEMET Corp. ................................................ 5,920
200 +KLA Instruments Corp. ...................................... 5,538
50 +Kulicke & Soffa Industries Inc. ............................ 850
50 Life Re Corp. .............................................. 4,144
200 Linear Technology Corp. .................................... 12,062
600 Lockheed Martin Corp. ...................................... 63,525
200 +Microchip Technology Inc. .................................. 5,225
1,400 +Microsoft Corp. ............................................ 151,725
350 Motorola Inc. .............................................. 18,397
350 +NEXTEL Communications Inc. .................................
Cl A .................................................. 8,706
100 +PLATINUM Technology Inc. ................................... 2,856
200 Precision Castparts Corp. .................................. 10,675
500 +Quantum Corp. .............................................. 10,375
100 +Respironics Inc. ........................................... 1,556
100 +S3 Inc. .................................................... 506
100 +Sanmina Corp. .............................................. 4,338
50 +SPS Technologies Inc. ...................................... 2,925
1,100 +Sterling Software Inc. ..................................... 32,519
600 +Storage Technology Corp. ................................... 26,025
150 +Structural Dynamics Research
Corp. ................................................. 3,469
350 +Symantec Corp. ............................................. 9,144
100 +Teradyne Inc. .............................................. 2,675
2,000 Texas Instruments Inc. ..................................... 116,625
1,500 Thomas & Betts Corp. ....................................... 73,875
250 Wallace Computer Services Inc. ............................. 5,937
700 Xerox Corp. ................................................ 71,137
----------
1,104,434
----------
TRANSPORTATION (1.5%)
700 Airborne Freight Corp. ..................................... 24,456
1,400 +AMR Corp. .................................................. 116,550
100 Breed Technologies Inc. .................................... 1,531
200 GATX Corp. ................................................. 8,775
200 Harley Davidson Inc. ....................................... 7,750
150 Intermet Corp. ............................................. 2,719
100 +Rural/ Metro Corp. ......................................... 1,300
1,000 Ryder Systems Inc. ......................................... 31,562
700 Union Pacific Corp. ........................................ 30,888
100 Wabash National Corp. ...................................... 2,575
300 Winnebago Industries ....................................... 3,825
400 +Yellow Corp. ............................................... 7,425
----------
239,356
----------
</TABLE>
See notes to financial statements Page 9
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW MEDIUM-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
UTILITIES (3.2%)
2,100 Ameritech Corp. ............................................ $94,237
3,200 Bell Atlantic Corp. ........................................ 146,000
100 +California Energy Inc. ..................................... 3,006
450 Columbia Gas System Inc. ................................... 25,031
850 Eastern Utilities .......................................... 22,313
2,250 Entergy Corp. .............................................. 64,687
1,000 FPL Group Inc. ............................................. 63,000
1,550 Montana Power Co. .......................................... 53,863
350 Northwest Natural Gas Co. .................................. 9,789
1,150 Public Service Co of New Mexico ............................ 26,091
400 Utilicorp United Inc. ...................................... 15,075
----------
523,092
----------
TOTAL COMMON STOCKS
(Cost $6,185,838) ..................................... 7,560,645
----------
OPEN END INVESTMENT COMPANY (5.1%)
(Cost $730,635)
71,943 BT EAFE Equity Index Fund .................................. 833,822
----------
UNIT INVESTMENT TRUST (5.1%)
(Cost $612,566)
7,314 Standard & Poor's Depository
Receipt ............................................... 828,768
----------
Principal
Amount
U.S. GOVERNMENT OBLIGATIONS (30.8%)
U.S. TREASURY BONDS (6.8%)
$235,000 7.000% Due 7/15/06.......................................... 256,627
213,000 6.875% Due 8/15/25.......................................... 246,680
570,000 6.125% Due 11/15/27......................................... 610,789
----------
1,114,096
----------
U.S. TREASURY NOTES (24.0%)
495,000 5.500% Due 11/15/98......................................... 495,153
790,000 6.500% Due 5/31/01.......................................... 810,240
1,740,000 6.125% Due 12/31/01......................................... 1,771,529
773,000 6.500% Due 8/15/05.......................................... 815,755
30,000 6.125% Due 8/15/07.......................................... 31,214
----------
3,923,891
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $4,906,773)...................................... 5,037,987
----------
CORPORATE DEBENTURES (8.0%)
FINANCE (5.8%)
150,000 Donaldson Lufkin Jenrette
6.500% Due 6/1/08...................................... 149,988
125,000 Liberty Properties
7.500% Due 1/15/18..................................... 127,186
100,000 Lumbermens Mutual
8.450% Due 12/1/97..................................... 110,874
160,000 Merrill Lynch & Co.
6.750% Due 6/1/28...................................... 162,515
150,000 Salomon Inc.
7.300% Due 5/15/02..................................... 155,415
100,000 Salomon Inc.
6.250% Due 1/15/05..................................... 99,862
135,000 Standard C.C. Master Trust
6.800% Due 4/7/99...................................... 136,096
----------
941,936
----------
INDUSTRIAL (0.7%)
125,000 Fortune Brands
6.625% Due 7/15/28..................................... 124,944
----------
REAL ESTATE INVESTMENT TRUST (1.5%)
80,000 EOP Operating Ltd. (144A)
6.763% Due 6/15/07..................................... 80,244
160,000 Health Care Properties
6.875% Due 6/8/05...................................... 160,486
----------
240,730
----------
TOTAL CORPORATE DEBENTURES
(Cost $1,301,081)...................................... 1,307,610
----------
TIME DEPOSIT (4.0%)
(Cost $650,000)
650,000 Societe Generale Bank
5.500% Due 7/1/98...................................... 650,000
----------
TOTAL INVESTMENTS (99.3%)
(Cost $14,386,893).....................................16,218,832
OTHER ASSETS IN EXCESS OF
LIABILITIES (0.7%)..................................... 114,352
----------
TOTAL NET ASSETS (100.0%).............................. $16,333,184
===========
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
- --------- ------------
FUTURES PURCHASED
2 Sept. S&P 500 Index......................................... 12,622
----------
<FN>
+ Non-income producing security.
</FN>
</TABLE>
Page 10 See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW SHORT-TERM RETIREMENT FUND
<S> <C> <C>
COMMON STOCKS (31.1%)
BASIC MATERIALS (1.6%)
3,200 Air Products & Chemicals Inc. .............................. $128,000
2,700 Champion International Corp. ............................... 132,806
1,100 Dow Chemical Co. ........................................... 106,356
1,150 Rohm & Haas Co. ............................................ 119,528
----------
486,690
----------
CONSUMER CYCLICALS (3.5%)
4,800 CVS Corp. .................................................. 186,900
500 Dayton Hudson Corp. ........................................ 24,250
1,150 Dillards Inc. Cl A ......................................... 47,653
3,800 Ford Motor Co. ............................................. 224,200
2,700 Gannet Inc. ................................................ 191,869
3,600 +King World Productions Inc. ................................ 91,800
350 Penney (J.C.) Co. .......................................... 25,309
300 Sears Roebuck & Co. ........................................ 18,319
2,700 VF Corp. ................................................... 139,050
1,000 Walt Disney Co. ............................................ 105,063
----------
1,054,413
----------
CONSUMER NON-CYCLICALS (3.4%)
1,700 Case Corp .................................................. 82,025
2,000 Coca Cola Co ............................................... 171,000
3,900 Coors (Adolph) Cl B ........................................ 132,600
1,050 Corning Inc. ............................................... 36,487
6,750 Darden Restaurants ......................................... 107,156
6,850 Fleming Companies Inc. ..................................... 120,303
350 McDonald's Corp. ........................................... 24,150
800 Philip Morris Companies Inc. ............................... 31,500
1,800 Proctor & Gamble Co. ....................................... 163,913
1,800 Quaker Oats Co. ............................................ 98,887
600 Unilever NV ADR ............................................ 47,363
----------
1,015,384
----------
ENERGY (2.3%)
1,900 Chevron Corp. .............................................. 157,819
2,300 Coastal Corp. .............................................. 160,569
1,800 Exxon Corp. ................................................ 128,362
4,700 Helmerich & Payne Inc. ..................................... 108,100
1,950 Royal Dutch Petroleum Co. ADR .............................. 106,884
300 Texaco Inc. ................................................ 17,906
----------
679,640
----------
FINANCE (5.6%)
1,700 Ahmanson H F & Co. ......................................... 120,700
1,700 Allstate Corp. ............................................. 155,656
995 Associates First Capital Corp. ............................. 76,491
200 BankAmerica Corp. .......................................... 17,287
1,700 Bankers Trust N.Y. Corp. ................................... 197,306
2,400 Chase Manhattan Corp. ...................................... $181,200
750 Cigna Corp. ................................................ 51,750
1,050 Comerica Inc. .............................................. 69,563
50 General Re Corp. ........................................... 12,812
1,100 Golden West Financial ...................................... 116,944
1,300 Hartford Financial Services Group .......................... 148,687
2,475 Marsh & McLennan Companies ................................. 149,583
300 Merrill Lynch & Co. ........................................ 27,675
350 Morgan J P & Co. ........................................... 40,994
1,700 NationsBank Corp. .......................................... 130,050
2,000 Republic NY Corp. .......................................... 125,875
900 Travelers Group Inc. ....................................... 54,562
----------
1,677,135
----------
HEALTH CARE (3.8%)
4,800 Abbott Laboratories ........................................ 196,200
1,400 American Home Products Corp. ............................... 72,450
1,900 Becton Dickinson & Co. ..................................... 147,487
550 Johnson & Johnson .......................................... 40,563
2,000 Merck & Co. Inc. ........................................... 267,500
3,250 Service Corp International ................................. 139,344
1,550 United Healthcare Corp. .................................... 98,425
2,700 Warner Lambert Co. ......................................... 187,312
----------
1,149,281
----------
INDUSTRIAL (2.6%)
150 Cummins Engine Inc. ........................................ 7,687
1,400 Dover Corp. ................................................ 47,950
2,050 General Electric Co. ....................................... 186,550
400 Grainger WW Inc. ........................................... 19,925
700 Hanson PLC ADR ............................................. 21,219
1,800 Ingersoll Rand Co. ......................................... 79,313
4,100 Pitney Bowes Inc. .......................................... 197,312
1,700 Textron Inc. ............................................... 121,869
1,100 Time Warner Inc. ........................................... 93,981
800 Union Pacific Corp. ........................................ 35,300
----------
811,106
----------
TECHNOLOGY (5.5%)
600 Automatic Data Processing Inc. ............................. 43,725
5,400 Bell Atlantic Corp. ........................................ 246,375
600 BellSouth Corp. ............................................ 40,275
1,925 Computer Associates
International Inc. .................................... 106,958
1,050 Eaton Corp. ................................................ 81,638
3,000 General Dynamics Corp. ..................................... 139,500
2,800 Harris Corp. ............................................... 125,125
250 Honeywell Inc. ............................................. 20,891
1,150 International Business Machines
Corp. ................................................. 132,034
1,400 Lockheed Martin Corp. ...................................... 148,225
</TABLE>
See notes to financial Statements Page 11
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
NUMBER
OF SHARES SECURITY VALUE
- --------- -------- -----
TOMORROW SHORT-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
1,600 +Microsoft Corp. ............................................ $173,400
450 Motorola Inc. .............................................. 23,653
2,000 Texas Instruments Inc. ..................................... 116,625
2,100 Thomas & Betts Corp. ....................................... 103,425
1,700 Xerox Corp. ................................................ 172,763
----------
1,674,612
----------
TRANSPORTATION (0.7%)
1,400 +AMR Corp. .................................................. 116,550
3,250 Ryder Systems Inc. ......................................... 102,578
----------
219,128
----------
UTILITIES (2.1%)
2,400 Ameritech Corp. ............................................ 107,700
2,025 Columbia Gas System Inc. ................................... 112,641
5,350 Entergy Corp. .............................................. 153,812
4,250 FPL Group Inc. ............................................. 267,750
----------
641,903
----------
TOTAL COMMON STOCKS
(Cost $8,079,420)...................................... 9,409,292
----------
UNIT INVESTMENT TRUST (2.1%)
(Cost $586,327)
5,572 Standard & Poor's Depository
Receipt................................................ 631,377
----------
PRINCIPAL
AMOUNT
- ---------
U.S. GOVERNMENT OBLIGATIONS (39.5%)
U.S. TREASURY BONDS (8.8%)
$535,000 7.000% Due 7/15/06.......................................... 584,236
410,000 6.875% Due 8/15/25.......................................... 474,829
240,000 6.625% Due 2/15/27.......................................... 271,013
1,230,000 6.125% Due 11/15/27......................................... 1,318,019
----------
2,648,097
----------
U.S. TREASURY NOTES (30.7%)
1,880,000 5.875% Due 10/31/98......................................... 1,882,933
480,000 6.375% Due 5/15/00.......................................... 487,123
3,640,000 6.125% Due 12/31/01......................................... 3,705,957
419,000 6.500% Due 8/15/05.......................................... 442,175
2,035,000 6.500% Due 10/15/06......................................... 2,160,905
570,000 6.125% Due 8/15/07.......................................... 593,068
----------
9,272,161
----------
TOTAL U.S. GOVERNMENT OBLIGATIONS
(Cost $11,635,112).....................................11,920,258
----------
PRINCIPAL
AMOUNT SECURITY VALUE
- --------- -------- -----
CORPORATE DEBENTURES (21.7%)
FINANCE (17.3%)
$230,000 Associates Corp N.A. 6.500% Due 10/15/02 ..................$ 233,130
150,000 Associates Corp N.A. 6.680% Due 9/17/99 ................... 151,311
120,000 Associates Corp N.A. 6.375% Due 8/15/99 ................... 120,604
205,000 Beneficial Corp. 8.170% Due 11/9/99 ....................... 210,996
100,000 Commercial Credit 8.250% Due 11/1/01 ...................... 106,430
475,000 Donaldson Lufkin Jenrette 6.500% Due 6/1/08 ............... 474,962
135,000 Ford Motor Credit Corp. 6.570% Due 3/19/01 ................ 136,793
50,000 Ford Motor Credit Corp. 6.125% Due 1/9/06 ................. 49,824
230,000 Ford Motor Credit Corp. 8.150% Due 3/16/99 ................ 233,452
80,000 GATX Capital Corp. 6.500% Due 11/1/00 ..................... 80,585
46,716 GMAC 1995 7.150% Due 3/15/00 .............................. 46,730
415,000 Hydro Quebec 9.300% Due 10/28/98 .......................... 419,541
375,000 Liberty Properties 7.500% Due 1/15/18 ..................... 81,559
425,000 Lumbermens Mutual 8.450% Due 12/1/97 ...................... 471,213
275,000 Merrill Lynch & Co. 6.620% Due 6/13/00 .................... 278,976
500,000 Merrill Lynch & Co. 6.750% Due 6/1/28 ..................... 507,860
265,000 Norwest Corp. 5.750% Due 11/16/98 ......................... 264,942
475,000 Salomon Inc. 7.300% Due 5/15/02 ........................... 492,148
205,000 Salomon Inc. 6.250% Due 1/15/05 ........................... 204,717
230,000 Standard C.C. Master Trust 6.800% Due 4/7/99 .............. 231,868
120,000 US Capital Corp. 6.500% Due 12/1/03 ....................... 121,685
----------
5,219,326
----------
INDUSTRIAL (1.6%)
90,000 Dupont (EI) de Nemours & Co. 8.750% Due 1/12/01 ........... 96,055
</TABLE>
Page 12 See notes to financial statatements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
SCHEDULE OF INVESTMENTS AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT SECURITY VALUE
- --------- -------- -----
TOMORROW SHORT-TERM RETIREMENT FUND (CONTINUED)
<S> <C> <C>
$375,000 Fortune Brands 6.625% Due 7/15/28.......................... $374,831
----------
470,886
----------
REAL ESTATE INVESTMENT TRUST (2.8%)
380,000 EOP Operating Ltd. (A) 6.763% Due 6/15/07.................. 381,159
475,000 Health Care Properties 6.875% Due 6/8/05................... 476,444
----------
857,603
----------
TOTAL CORPORATE DEBENTURES
(Cost $6,523,954)...................................... 6,547,815
----------
ASSET BACKED SECURITY (2.5%)
(Cost $763,176)
Federal Home Loan Mortgage Corp.
725,000 7.000% Due 3/15/08..................................... 762,381
----------
TIME DEPOSIT (2.3%)
(Cost $700,000)
700,000 Societe Generale Bank 5.300% Due 7/6/98.................... 700,000
----------
TOTAL INVESTMENTS (99.2%)
(Cost $28,287,989).....................................29,971,123
OTHER ASSETS IN EXCESS
OF LIABILITIES (0.8%).................................... 229,821
----------
TOTAL NET ASSETS (100.0%)................................ $30,200,944
===========
NUMBER OF UNREALIZED
CONTRACTS APPRECIATION
- --------- ------------
FUTURES PURCHASED
2 Sept. S&P 500 Index........................................ 8,584
----------
<FN>
+ Non-income producing security.
(A) S.E.C. Rule 144A security. Such security
has limited markets and is traded among
"qualified institutional buyers."
</FN>
</TABLE>
See notes to financial statements Page 13
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
STATEMENTS OF ASSETS AND LIABILITIES AT JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
LONG- MEDIUM- SHORT
TERM TERM TERM
RETIREMENT RETIREMENT RETIREMENT
---------- ---------- ----------
ASSETS
<S> <C> <C> <C>
Investments at value (+) .................................... $ 7,659,294 $ 16,218,832 $ 29,971,123
Cash and cash equivalents ................................... 699,514 75,547 88,183
Receivable from Adviser ..................................... 4,983 3,396 934
Dividends and interest receivable ........................... 23,536 69,171 203,646
Deferred organizational costs and
prepaid expenses .................................... 24,506 24,745 24,838
------------ ------------ ------------
8,411,833 16,391,691 30,288,724
------------ ------------ ------------
LIABILITIES
Payable for Management Fees (Note 2) ........................ 0 10,264 32,322
Accrued distribution fees payable
(Adviser Shares) .................................... 2,582 5,825 7,008
Accrued service fees payable
(Institutional Shares) .............................. 228 404 2,756
Payable for variation margin ................................ 6,675 4,250 4,250
Other accrued expenses ...................................... 32,254 37,764 41,444
------------ ------------ ------------
41,739 58,507 87,780
------------ ------------ ------------
NET ASSETS ............................................. $ 8,370,094 $ 16,333,184 $ 30,200,944
============ ============ ============
NET ASSETS REPRESENTED BY:
Shares of beneficial interest (par $0.001) .................. $ 964 $ 1,697 $ 2,874
Paid-in surplus ............................................. 7,550,743 14,291,103 27,816,894
Accumulated undistributed net investment
income .............................................. 26,188 128,257 396,428
Undistributed/(overdistributed) realized gains in investments (17,191) 67,566 293,030
Net unrealized appreciation on investments .................. 809,390 1,844,561 1,691,718
------------ ------------ ------------
NET ASSETS ............................................ $ 8,370,094 $ 16,333,184 $ 30,200,944
============ ============ ============
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE:
ADVISER SHARES:
Net Assets .................................................. $ 6,836,196 $ 14,224,531 $ 16,434,291
Shares of beneficial interest issued and
outstanding ......................................... 789,633 1,473,505 1,569,008
Net asset value per share ................................... $ 8.66 $ 9.65 $ 10.47
============ ============ ============
INSTITUTIONAL SHARES:
Net Assets .................................................. $ 1,533,898 $ 2,108,653 $ 13,766,653
Shares of beneficial interest issued and
outstanding ......................................... 174,721 223,785 1,305,449
Net asset value per share ................................... $ 8.78 $ 9.42 $ 10.55
============ ============ ============
+Investments at cost ........................................ 6,879,090 14,386,893 28,287,989
UNREALIZED APPRECIATION/(DEPRECIATION): *
Gross appreciation .................................. 976,621 2,069,591 1,924,623
Gross depreciation .................................. (167,231) (225,030) (232,905)
------------ ------------ ------------
NET UNREALIZED APPRECIATION ................................. 809,390 1,844,561 1,691,718
============ ============ ============
<FN>
* Based on cost of securities for Federal Income tax purposes which does not
differ from book cost.
</FN>
</TABLE>
Page 14 See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
LONG-TERM MEDIUM-TERM SHORT-TERM
RETIREMENT RETIREMENT RETIREMENT
---------- ---------- ----------
INVESTMENT INCOME:
<S> <C> <C> <C>
Dividends ................................................. $ 38,519 $ 66,179 $ 70,956
Interest .................................................. 49,714 195,243 515,140
----------- ----------- -----------
88,233 261,422 586,096
----------- ----------- -----------
EXPENSES:
Investment advisory fees - Note 5 ......................... 25,397 56,490 92,903
Fund accounting fees ...................................... 19,836 20,176 21,696
Distribution fees (Adviser Shares) - Note 5 ............... 13,673 32,986 37,875
Professional fees ......................................... 12,695 14,455 15,578
Transfer agent fees and expenses
(Adviser Shares) .................................. 11,901 11,901 11,901
Transfer agent fees and expenses
(Institutional Shares) ............................ 11,901 11,901 11,901
Custodian fees and expenses ............................... 10,957 8,522 6,286
Registration fees and expenses ............................ 9,013 9,053 11,343
Amortization of organization costs ........................ 4,708 4,701 4,701
TrusteesO fees and expenses ............................... 3,720 3,719 3,720
ShareholdersO reports ..................................... 3,149 2,620 2,864
Administration fees - Note 5 .............................. 3,048 6,779 11,148
Service fees (Institutional Shares) - Note 5 .............. 75 146 9,448
Other expenses ............................................ 606 896 1,408
----------- ----------- -----------
TOTAL EXPENSES ............................................ 130,679 184,345 242,772
Less fees waived by Adviser and
Administrator - Note 5 ............................ (28,442) (43,832) (33,832)
Less expenses reimbursed
by adviser - Note 5 ............................... (39,672) (10,187) (4,570)
Less expenses paid indirectly - Note 7 .................... (6,494) (3,067) (2,319)
----------- ----------- -----------
NET EXPENSES .............................................. 56,071 127,259 202,051
----------- ----------- -----------
NET INVESTMENT INCOME ..................................... 32,162 134,163 384,045
----------- ----------- -----------
REALIZED AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS
Net realized gain/(loss) on investments and futures (16,978) 66,323 255,593
Change in unrealized appreciation on
Investments and futures ................... 490,664 1,068,946 1,046,091
----------- ----------- -----------
NET GAIN ON INVESTMENTS ........................... 473,686 1,135,269 1,301,684
----------- ----------- -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS ........................... $ 505,848 $ 1,269,432 $ 1,685,729
=========== =========== ===========
</TABLE>
See notes to financial statements Page 15
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
LONG-TERM MEDIUM-TERM SHORT-TERM
RETIREMENT RETIREMENT RETIREMENT
---------- ---------- ----------
SIX SIX SIX
MONTHS YEAR MONTHS YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
6/30/98* 12/31/97 6/30/98* 12/31/97 6/30/98* 12/31/97
-------- -------- -------- -------- -------- --------
OPERATIONS:
<S> <C> <C> <C> <C> <C> <C>
Net investment income .................... $ 32,162 $ 45,573 $ 134,163 $ 185,259 $ 384,045 $ 307,633
Net realized gain/(loss)
on investments and futures ....... (16,978) 374,798 66,323 878,691 255,593 1,287,442
Change in unrealized appreciation
on investments and futures ...... 490,664 286,101 1,068,946 704,152 1,046,091 565,729
------------ ------------ ----------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........ 505,848 706,472 1,269,432 1,768,102 1,685,729 2,160,804
------------ ------------ ----------- ----------- ----------- -----------
DIVIDENDS TO SHAREHOLDERS FROM NET
INVESTMENT INCOME:
Adviser Shares ................... 0 (37,625) 0 (161,291) 0 (254,014)
Institutional Shares ............. 0 (12,531) 0 (26,581) 0 (39,448)
------------ ------------ ----------- ----------- ----------- -----------
TOTAL DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT INCOME ....... 0 (50,156) 0 (187,872) 0 (293,462)
------------ ------------ ----------- ----------- ----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM NET
REALIZED GAINS:
Adviser Shares ................... 0 (296,298) 0 (769,235) 0 (1,104,962)
Institutional Shares ............. 0 (78,947) 0 (108,096) 0 (142,997)
------------ ------------ ----------- ----------- ----------- -----------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS
FROM NET REALIZED GAINS .......... 0 (375,245) 0 (877,331) 0 (1,247,959)
------------ ------------ ----------- ----------- ----------- -----------
TRANSACTIONS IN SHARES OF
BENEFICIAL INTEREST:
Received on issuance:
Shares sold ...................... 3,500,654 5,046,755 3,867,546 10,697,459 18,519,370 13,042,308
Shares issued in reinvestment
of dividends and distributions 0 425,402 0 1,065,203 0 1,541,421
Shares redeemed .................. (918,572) (1,730,955) (2,455,964) (2,494,576) (5,613,470) (4,356,467)
------------ ------------ ----------- ----------- ----------- -----------
NET INCREASE FROM
CAPITAL SHARE TRANSACTIONS ....... 2,582,082 3,741,202 1,411,582 9,268,086 12,905,900 10,227,262
------------ ------------ ----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS ............. 3,087,930 4,022,273 2,681,014 9,970,985 14,591,629 10,846,645
NET ASSETS:
Beginning of period ...................... 5,282,164 1,259,891 13,652,170 3,681,185 15,609,315 4,762,670
------------ ------------ ----------- ----------- ----------- -----------
End of period+ ........................... $ 8,370,094 $ 5,282,164 $16,333,184 $13,652,170 $30,200,944 $15,609,315
============ ============ =========== =========== =========== ===========
+ Includes undistributed/
(overdistributed) net
investment income ..................... $ 26,188 ($ 5,974) $ 128,257 ($ 5,906) $ 396,428 $ 12,383
============ ============ =========== =========== ========== ===========
<FN>
* Unaudited.
</FN>
</TABLE>
Page 16 See notes to financial statements
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. GENERAL
The Tomorrow Long-Term Retirement Fund ("Long-Term Fund"), Tomorrow
Medium-Term Retirement Fund ("Medium-Term Fund") and Tomorrow Short-Term
Retirement Fund ("Short-Term Fund"), are separate funds of the Tomorrow Funds
Retirement Trust (the "Trust"). The Trust is a Delaware business trust
registered under the Investment Company Act of 1940, as amended (the "Act"), as
an open-end investment company. All of the funds are diversified. The
accompanying financial statements and notes relate to the Long-Term Fund,
Medium-Term Fund and Short-Term Fund only (collectively the "Funds").
The Trust offers two classes of shares: Adviser Class Shares and
Institutional Class Shares. Adviser Shares and Institutional Shares are
substantially the same except that Adviser Shares bear the fees payable under a
plan adopted by the Trust's Board of Trustees pursuant to Rule 12b-1 under the
Act (the "Distribution Plan") at an annual rate of up to 0.50% of the average
daily net assets attributable to the Adviser Shares; Institutional Shares bear
the fees that are payable under a Service Plan (the "Service Plan") at an annual
rate of up to 0.25% of the average daily net assets attributable to the
Institutional Shares. In addition to fees paid pursuant to the Distribution Plan
and Service Plan, each class also bears the expense associated with transfer
agent fees.
Investment income, expenses (other than expenses incurred under the
Distribution Plan, the Service Plan and transfer agent fees and expenses), and
realized and unrealized gains and losses on investments of a Fund are allocated
to the separate classes of shares based upon their relative net asset value on
the date income is earned or expenses and realized and unrealized gains and
losses are incurred.
The Funds first commenced offering Adviser Shares on March 7, 1996 and
Institutional Shares on April 2, 1996.
2. SIGNIFICANT ACCOUNTING POLICIES
PORTFOLIO VALUATION
- -------------------
COMMON STOCK - Securities listed or admitted to trading on a national
securities exchange, including options, are valued at the last sale price on
such exchange as of the close of regular trading on the New York Stock Exchange
("NYSE") on each day that the Funds calculate their net asset values. Unlisted
securities and listed securities for which there are no sales reported on the
valuation date are valued at the mean between the most recent bid and ask
prices.
BONDS - Bonds and other fixed income securities (other than short-term
obligations but including listed issues) in the Funds' portfolios are valued by
a pricing service which utilizes both dealer-supplied valuations and electronic
data processing techniques which take into account appropriate factors such as
institutional-size trading in similar groups of securities, yield, quality,
coupon rate, maturity, type of issue, trading characteristics and other market
data, without exclusive reliance upon quoted prices, exchange or
over-the-counter prices, when such valuations are believed to reflect the market
value of such securities.
MONEY MARKET SECURITIES - Investments in money market and other short-term
(60 days or less) securities are valued at amortized cost, which has been
determined by the Trust's Board of Trustees to represent the fair market value
of such securities.
FOREIGN SECURITIES - Securities listed or admitted to trading on an
international securities exchange, including options, are valued at the last
sale price, at the close of the primary international exchange on the day that
the Fund's calculate their net asset values. Unlisted foreign securities and
listed foreign securities for which there are no sales reported on the valuation
date are valued at the mean between the most recent bid and asked prices.
Certain risks result from investing in foreign securities in addition to
the usual risk inherent in domestic investments. Such risks include future
political, economical and currency exchange developments including restrictions
and changes in foreign law.
SECURITY TRANSACTIONS AND INVESTMENT INCOME
- -------------------------------------------
Security transactions are recorded on a trade date basis. Realized gains
and losses from security transactions are recorded utilizing the identifiecation
method. Interest income is recognized on an accrual basis and dividend income is
recognized on ex-dividend date. Discounts on fixed income securities are
accreted to interest income over the life of the security or until an applicable
call date if sooner, with a corresponding increase in cost basis.
During the six months ended June 30, 1998, none of the Funds in the Trust
entered into the following transactions: futures, options, forward currency
contracts or foreign currency transactions.
Page 17
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)-- (CONTINUED)
FEDERAL INCOME TAXES
- --------------------
Each Fund's policy is to comply with the requirements of the Internal
Revenue Code that are applicable to regulated investment companies and to
distribute all of its taxable income to its shareholders. Accordingly, no
federal tax or excise tax provisions are required.
The federal income tax basis of investments approximates cost.
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------
Dividends from Net investment Income - Dividends from net investment income
are declared and paid annually when available for each Fund and are recorded on
ex-dividend date.
DISTRIBUTIONS FROM CAPITAL GAINS - Distributions from capital gains are
declared by December 31 of the year in which they are earned and are paid by
January 31 of the following year. However, to the extent that the net realized
gains of a Fund can be offset by capital loss carryovers of that Fund, such
gains will not be distributed.
The amounts of dividends from net investment income and distributions from
net realized gains are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
These "book/tax" differences are either considered temporary or permanent in
nature. To the extent these differences are permanent in nature, such amounts
are reclassified within the composition of net assets based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions to shareholders which exceed net investment income
and net realized capital gains for financial reporting purposes but not for tax
purposes are reported as dividends in excess of net investment income or net
distributions in excess of net realized gains. To the extent they exceed net
investment income and net realized gains for tax purposes, they are reported as
distributions of capital.
USE OF ESTIMATES
- ----------------
Estimates and assumptions are required to be made regarding assets,
liabilities and changes in net assets resulting from operations when financial
statements are prepared. Changes in the economic environment, financial markets
and any other parameters used in determining these estimates could cause actual
results to differ from these amounts.
3. ORGANIZATIONAL EXPENSES
Weiss, Peck & Greer. L.L.C. ("WPG"), the Funds' investment Adviser, paid
the organizational expenses of the Funds in the amount of approximately $141,000
($47,000 each for the Long-Term, Medium-Term and Short-Term Funds). The Funds
will reimburse WPG for these expenses which have been deferred and are being
amortized by the Funds on a straight line method over a period of five years
from the commencement of operations.
4. EXPENSES
The Trust accounts separately for the assets, liabilities and operations of
each Fund. Direct expenses of a Fund are charged to that Fund while general
Trust expenses are allocated among the Trust's respective Funds.
5. INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The Trust, with respect to each Fund, has entered into an Investment
Advisory Agreement with WPG which entitles WPG to receive a fee, which is
accrued daily and paid monthly, at an annual rate of 0.75% of each Fund's
average daily net assets. For the six months ended June 30, 1998 WPG voluntarily
agreed not to impose its entire advisory fee applicable to the Long-Term Fund,
and waived $37,053 and $22,684 from the Medium-Term Fund and Short-Term Fund,
respectively.
WPG has agreed to voluntarily limit each Fund's total operating expenses,
(excluding taxes, brokerage commissions, interest, dividends paid on securities
sold short and extraordinary legal fees and expenses) to 1.75% of the average
daily net assets for the Adviser Class Shares and 1.50% of the average daily net
assets for the Institutional class shares. WPG will reduce its advisory fee (but
not below $0) when the total operating expenses exceed these limits.
Page 18
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)-- (CONTINUED)
The Trust has entered into an Administration Agreement with WPG. For its
administrative services, WPG is entitled to receive a fee, which is accrued
daily and paid monthly, at an annual rate of 0.09% of each Fund's average daily
net assets. WPG voluntarily agreed not to impose its entire administration
services fee applicable to the Funds for the six months ended June 30, 1998.
The Trust with respect to the Adviser Class of each Fund has adopted a
Distribution Plan pursuant to Rule 12b-1 under the Act. Under the Distribution
Plan, each Fund pays distribution and service fees at an aggregate annual rate
of up to 0.50% of the daily average net assets attributable to the Adviser Class
Shares. Up to 0.25% of this fee is for service fees and is intended to be
compensation for personnel services and/or account maintenance services. The
remaining amount is for distribution fees and is intended to compensate WPG for
its services and expenses associated with serving as principal underwriter of
the Adviser Class. These payments are borne solely by the Adviser Class Shares.
For the six months ended June 30, 1998 payments pursuant to the Distribution
Plan from the Long-Term Fund, Medium-Term Fund and Short-Term Fund amounted to
$13,673, $32,986 and $37,875, respectively. Of these amounts, WPG earned $6,850,
$16,495 and $18,887, respectively.
The Trust with respect to the Institutional Class of each Fund has also
adopted a Service Plan (the "Institutional Service Plan") pursuant to which each
Fund has agreed to pay fiduciaries of retirement plans investing in the Funds a
fee for various services and/or account maintenance services relating to the
Institutional Class Shares. The Institutional Service Plan fee is accrued daily
and paid monthly at an annual rate of up to 0.25% of the average daily net asset
value attributable to the Institutional Class Shares of each Fund, and is borne
solely by the Institutional Class Shares.
6. SECURITIES TRANSACTIONS
Sale proceeds, cost of securities purchased, (other than short term
investments and options written), total commissions and commissions received by
WPG on such transactions for the six months ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
PROCEEDS COST COMMISSIONS
OF SECURITIES SECURITIES TOTAL RECEIVED
SOLD PURCHASED COMMISSIONS BY WPG
---- --------- ----------- ------
<S> <C> <C> <C> <C>
Long-Term .......... 707,302 2,310,750 $ 755 $ 651
Medium-Term ........ 6,658,790 8,182,676 285 253
Short-Term ......... 22,650,067 33,627,898 636 585
</TABLE>
7. CUSTODIAN FEES
Each Fund has entered into an expense offset arrangement with its custodian
wherein it receives credit toward the reduction of custodian fees whenever there
are uninvested cash balances. The Funds' custodian fee and related offset for
the six months ended June 30, 1998 were as follows:
<TABLE>
<CAPTION>
CUSTODIAN FEE OFFSET CREDIT
------------- -------------
<S> <C> <C>
Long-Term .......... $10,957 $6,494
Medium-Term ........ 8,522 3,067
Short-Term ......... 6,286 2,319
</TABLE>
The Funds could have invested its cash balances elsewhere if it had not
agreed to a reduction in fees under the expense offset agreement with its
custodian.
Page 19
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)-- (CONTINUED)
8. CAPITAL SHARE TRANSACTIONS
Transaction in shares of the Funds are summarized below:
<TABLE>
<CAPTION>
LONG-TERM
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 (UNAUDITED) DECEMBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
ADVISER CLASS SHARES
<S> <C> <C> <C> <C>
Sold ............................. 337,372 $ 2,858,970 517,001 $ 4,000,125
Reinvested from dividends
and distributions ........ -- -- 41,845 333,924
Redeemed ......................... (73,304) (611,658) (173,325) (1,350,497)
-------- ----------- -------- -----------
Net increase - Adviser Class ..... 264,068 2,247,312 385,521 2,983,552
-------- ----------- -------- -----------
INSTITUTIONAL CLASS SHARES
Sold ............................. 75,732 641,684 130,869 1,046,630
Reinvested from dividends
and distributions ........ -- -- 11,350 91,478
Redeemed ......................... (35,838) (306,914) (47,406) (380,458)
-------- ----------- -------- -----------
Net increase - Institutional Class 39,894 334,770 94,813 757,650
-------- ----------- -------- -----------
Net increase in Fund ............. 303,962 $ 2,582,082 480,334 $ 3,741,202
-------- ----------- -------- -----------
</TABLE>
<TABLE>
<CAPTION>
MEDIUM-TERM
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 (UNAUDITED) DECEMBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
ADVISER CLASS SHARES
<S> <C> <C> <C> <C>
Sold ............................. 349,706 $ 3,240,489 1,067,650 $ 9,105,586
Reinvested from dividends
and distributions ........ -- -- 105,144 930,526
Redeemed ......................... (229,972) (2,157,346) (242,410) (2,140,638)
-------- ----------- -------- -----------
Net increase - Adviser Class ..... 119,734 1,083,143 930,384 7,895,474
-------- ----------- -------- -----------
INSTITUTIONAL CLASS SHARES
Sold ............................. 63,529 627,057 184,045 1,591,873
Reinvested from dividends
and distributions ........ -- -- 15,624 134,677
Redeemed ......................... (32,732) (298,618) (40,414) (353,938)
-------- ----------- -------- -----------
Net increase - Institutional Class 30,797 328,439 159,255 1,372,612
-------- ----------- -------- -----------
Net increase in Fund ............. 150,531 $ 1,411,582 1,089,639 $ 9,268,086
-------- ----------- -------- -----------
</TABLE>
Page 20
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)-- (CONTINUED)
<TABLE>
<CAPTION>
SHORT-TERM
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1998 (UNAUDITED) DECEMBER 31, 1997
SHARES AMOUNT SHARES AMOUNT
------ ------ ------ ------
ADVISER CLASS SHARES
<S> <C> <C> <C> <C>
Sold ............................. 529,393 $ 5,363,637 1,186,636 $ 11,350,629
Reinvested from dividends
and distributions ........ -- -- 139,097 1,358,976
Redeemed ......................... (370,138) (3,792,174) (402,581) (4,019,735)
-------- ------------ --------- ------------
Net increase - Adviser Class ..... 159,255 1,571,463 923,152 8,689,870
-------- ------------ --------- ------------
Institutional Class Shares
Sold ............................. 1,295,811 13,155,733 167,729 1,691,679
Reinvested from dividends
and distributions ........ -- -- 18,598 182,445
Redeemed ......................... (176,029) (1,821,296) (33,676) (336,732)
-------- ------------ --------- ------------
Net increase - Institutional Class 1,119,782 11,334,437 152,651 1,537,392
--------- ------------ --------- ------------
Net increase in Fund ............. 1,279,037 $ 12,905,900 1,075,803 $ 10,227,262
--------- ------------ --------- ------------
</TABLE>
Page 21
<PAGE>
TOMORROW FUNDS RETIREMENT TRUST
FINANCIAL HIGHLIGHTS
$ PER SHARE
<TABLE>
<CAPTION>
NET
REALIZED TOTAL DIVIDENDS
NET AND INCOME FROM DISTR- NET
ASSET NET UNREAL- FROM NET BUTIONS ASSET
VALUE AT INVEST- IZED INVEST- INVEST- FROM TOTAL VALUE AT NET
BEGINNING MENT GAINS MENT MENT CAPITAL DISTRI- END OF TOTAL ASSETS
OF PERIOD INCOME SECURI- OPER- INCOME GAINS BUTIONS PERIOD RETURN (000'S)
TIES TIONS
-------------------------------------------------------------------------------
LONG-TERM RETIREMENT
ADVISER SHARES
For the period March 7, 1996*
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
through December 31, 1996 $ 6.50 0.04 0.55 0.59 (0.06) (0.05) (0.11) $ 6.98 9.08% $978
For the year ended
December 31, 1997 ....... 6.98 0.09 1.62 1.71 (0.08) (0.63) (0.71) 7.98 24.50% 4,194
For the six months ended
June 30, 1998 ** ........ 7.98 0.03 0.65 0.68 0.00 0.00 0.00 8.66 8.52% 6,836
INSTITUTIONAL SHARES
For the period April 2, 1996*
through December 31, 1996 6.51 0.04 0.55 0.59 0.00 (0.05) (0.05) 7.05 9.03% 282
For the year ended
December 31, 1997 ....... 7.05 0.06 1.69 1.75 (0.10) (0.63) (0.73) 8.07 24.84% 1,088
For the six months ended
June 30, 1998 ** ........ 8.07 0.04 0.67 0.71 0.00 0.00 0.00 8.78 8.80% 1,534
MEDIUM-TERM RETIREMENT
ADVISER SHARES
For the period March 7, 1996*
through December 31, 1996 7.50 0.04 0.63 0.67 (0.03) (0.07) (0.10) 8.07 8.89% 3,416
For the year ended
December 31, 1997 ....... 8.07 0.13 1.40 1.53 (0.13) (0.62) (0.75) 8.85 18.96% 11,987
For the six months ended
June 30, 1998 ** ........ 8.85 0.07 0.73 0.80 0.00 0.00 0.00 9.65 9.04% 14,225
INSTITUTIONAL SHARES
For the period April 2, 1996*
through December 31, 1996 7.53 0.10 0.55 0.65 (0.25) (0.07) (0.32) 7.86 8.54% 265
For the year ended
December 31, 1997 ....... 7.86 0.24 1.29 1.53 (0.15) (0.61) (0.76) 8.63 19.48% 1,165
For the six months ended
June 30, 1998 ** ........ 8.63 0.15 0.64 0.79 0.00 0.00 0.00 9.42 9.15% 2,109
SHORT-TERM RETIREMENT
ADVISER SHARES
For the period March 7, 1996*
through December 31, 1996 8.50 0.06 0.72 0.78 (0.06) (0.06) (0.12) 9.16 8.54% 4,459
For the year ended
December 31, 1997 ....... 9.16 0.22 1.47 1.69 (0.20) (0.87) (1.07) 9.78 18.46% 13,786
For the six months ended
June 30, 1998 ** ........ 9.78 0.14 0.55 0.69 0.00 0.00 0.00 10.47 7.06% 16,434
INSTITUTIONAL SHARES
For the period March 7, 1996*
through December 31, 1996 8.51 0.00 0.70 0.70 0.00 0.00 0.00 9.21 8.23% 304
For the year ended
December 31, 1997 ....... 9.21 0.17 1.55 1.72 (0.24) (0.87) (1.11) 9.82 18.69% 1,823
For the six months ended
June 30, 1998 ** ........ 9.82 0.19 0.54 0.73 0.00 0.00 0.00 10.55 7.43% 13,767
</TABLE>
<TABLE>
<CAPTION>
RATIOS
RATIO INFORMATION
ASSUMING NO FEE WAIVERS,
REIMBURSEMENTS OR
RATIO OF CUSTODY FEE
NET EARNINGS CREDIT RECEIVED
RATIO OF INVESTMENT RATIO OF
EXPENSES INCOME TO AVERAGE RATIO OF NET INVEST-
TO AVERAGE AVERAGE PORTFOLIO COMMIS- EXPENSES MENT INCOME
NET NET TURNOVER SIONS TO AVERAGE TO AVERAGE
ASSETS ASSETS RATE PER SHARE NET ASSETS NET ASSETS
-----------------------------------------------------------------
LONG-TERM RETIREMENT
ADVISER SHARES
For the period March 7, 1996*
<S> <C> <C> <C> <C> <C> <C>
through December 31, 1996 1.75%+ 1.63%+ 25.09% 0.03 45.36%+ -41.98%+
For the year ended
December 31, 1997 ....... 1.75% 1.30% 66.64% 0.03 5.61% -2.56%
For the six months ended
June 30, 1998 ** ........ 1.75%+ 0.86%+ 11.72% 0.04 3.68%+ -1.07%+
INSTITUTIONAL SHARES
For the period April 2, 1996*
through December 31, 1996 1.50%+ 1.97%+ 25.09% 0.03 40.49%+ -37.02%+
For the year ended
December 31, 1997 ....... 1.45% 1.67% 66.64% 0.03 7.52% -4.40%
For the six months ended
June 30, 1998 ** ........ 1.26%+ 1.34%+ 11.72% 0.04 4.59%+ -1.99%+
MEDIUM-TERM RETIREMENT
ADVISER SHARES
For the period March 7, 1996*
through December 31, 1996 1.75%+ 1.73%+ 22.56% 0.03 15.88%+ -12.40%+
For the year ended
December 31, 1997 ....... 1.75% 1.80% 90.67% 0.03 2.92% 0.64%
For the six months ended
June 30, 1998 ** ........ 1.75%+ 1.72%+ 46.09% 0.03 2.37%+ 1.10%+
INSTITUTIONAL SHARES
For the period April 2, 1996*
through December 31, 1996 1.50%+ 1.96%+ 22.56% 0.03 20.86%+-17.40%+
For the year ended
December 31, 1997 ....... 1.39% 2.33% 90.67% 0.03 4.41% -0.69%
For the six months ended
June 30, 1998 ** ........ 1.26%+ 2.21%+ 46.09% 0.03 2.98%+ 0.49%+
SHORT-TERM RETIREMENT
ADVISER SHARES
For the period March 7, 1996*
through December 31, 1996 1.75%+ 2.08%+ 14.16% 0.03 15.68%+ -11.85%+
For the year ended
December 31, 1997 ....... 1.75% 2.41% 145.44% 0.0 2.65% 1.51%
For the six months ended
June 30, 1998 ** ........ 1.75%+ 2.98%+ 104.59% 0.0 2.08%+ 2.65%+
INSTITUTIONAL SHARES
For the period March 7, 1996*
through December 31, 1996 1.50%+ 2.31%+ 14.16% 0.03 19.10%+ -15.29%+
For the year ended
December 31, 1997 ....... 1.44% 2.87% 145.44% 0.0 4.01% 0.30%
For the six months ended
June 30, 1998 ** ........ 1.45%+ 3.29%+ 104.59% 0.0 1.78%+ 2.96%+
<FN>
+ Annualized
* Commencement of operations.
** Unaudited.
</FN>
</TABLE>
See notes to financial statements
Page 22
<PAGE>
PAGE IS LEFT BLANK
<PAGE>
TOMORROW FUNDS
-------------------------------
R E T I R E M E N T T R U S T
A Lifecycle Retirement Program
---------------------------------------
ONE NEW YORK PLAZA, NEW YORK, NY 10004
(800) 223-3332
INDEPENDENT TRUSTEES AND MEMBERS
OF AUDIT COMMITTEE
Raymond R. Herrmann, Jr.
Lawrence J. Israel
Graham E. Jones
OFFICERS
Roger J. Weiss
Chairman of the Board, President and Trustee
Jay C. Nadel
Executive Vice President and Secretary
Francis H. Powers
Executive Vice President and Treasurer
Daniel Cardell
Vice President
Joseph J. Reardon
Vice President
Daniel S. Vandivort
Vice President
Joseph Parascondola
Assistant Vice President
Therese Hogan
Assistant Secretary
INVESTMENT ADVISER
Weiss, Peck & Greer, L.L.C.
One New York Plaza
New York, NY 10004
CUSTODIAN
Boston Safe Deposit and Trust Company
One Exchange Place
Boston, MA 02109
DIVIDEND DISBURSING AND
TRANSFER AGENT
First Data Investor Services Group, Inc.
4400 Computer Drive
Westboro, MA 01581-5120
LEGAL COUNSEL
Hale and Dorr
60 State Street
Boston, MA 02109
This report is submitted for the general information of shareholders and is not
authorized for distribution to prospective investors unless preceded or
accompanied by an effective prospectus. Nothing herein is to be considered an
offer of sale or solicitation of an offer to buy shares of the Tomorrow Funds
Retirement Trust. Such offering is made only by prospectus, which includes
details as to offering and other material information.
