-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, cz1F4mwhwgDurU9l1z7M6vOs7LK+9tffkU3KUFDuJk4ckoXUk8cyp91kEpHCWMJK K2We0Izp0fE2nnWrhKsmTw== 0000950007-95-000136.txt : 19950830 0000950007-95-000136.hdr.sgml : 19950830 ACCESSION NUMBER: 0000950007-95-000136 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950829 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA MUNI FUND CENTRAL INDEX KEY: 0000715756 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 136828244 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-03674 FILM NUMBER: 95567931 BUSINESS ADDRESS: STREET 1: 90 WASHINGTON ST - 19TH FL CITY: NEW YORK STATE: NY ZIP: 10006 BUSINESS PHONE: 2126353005 N-30D 1 SEMI-ANNUAL The California Muni Fund Dear Fellow Shareholder: Fixed income security prices began to recover in the first half of calendar 1995. The benchmark Treasury 7.5% "long bond" rose 15.9% after dropping 11.3% last year. The Bond Buyer Index of forty actively traded investment grade municipal bonds rose by a smaller 7.3% over this period. After 1994's irrational decline in fixed income securities prices, sanity began to return with the new year. Actually securities prices bottomed coincidentally with the November 1994 Congressional elections, as financial markets seemed to take heart from Republican promises to balance the federal budget and reverse fifty years of "New Deal" legislation. As the new year progressed, financial markets became increasingly secure upon mounting evidence that legislators were actually keeping their promises. Significant progress toward a balanced budget probably will not be evident until 1998. But importantly, it appears that the glide path toward balance is set. Meanwhile, economic growth slowed significantly during this year's first half, and as growth has slowed, fears of a rise in inflation receded. Interestingly, despite the bond market's fear of higher inflation in 1994, not only did inflation not rise, but prospects began to improve for an actual further decline in future price pressures. These developments not only eliminated fears that the Federal Reserve would endlessly tighten credit, but it actually gave rise to an expectation that some of last year's restraint would be reversed. And indeed, the Federal Reserve slightly eased its tight grip on credit early in July. With interest rate pressures reversing, and bond prices appreciating, California Muni Fund racked up a 20.7% total return for the six month period ending June 30, 1995. This far exceeded the 7.3% increase in the Bond Buyer municipal index, and it was the highest return of all municipal bond funds. While the Fund's yield has been relatively low, the Fund's portfolio yield tends to be sensitive to short term interest rates. So, with short term rates now moving lower, the Fund's yield can be expected to rise in the period ahead. California Muni Fund benefitted from the big decline in municipal issuance that has been in progress over the past two years. But like all municipal bonds, California state securities were negatively impacted during the spring as government officials began discussing reforms to the federal income tax system. The so-called "flat tax" seemed to receive the most attention. In a flat tax system all income would be taxed at the same rate, and in its most extreme form all deductions would be eliminated, including those for real estate taxes, mortgage interest, municipal bond interest, and state and local income taxes. The "Flat tax" is far from being enacted, and in our view it is unlikely to ever be enacted. But merely mentioning the elimination of municipal bond interest deductions hurt the municipal bond market, and it caused municipal bonds to underperform. We think this is creating an opportunity for investors because municipal bond prices have already adjusted to a flat tax. So, as tax hysteria subsides, it is reasonable to believe that municipal bonds will perform on a par with Treasuries, with the distinct possibility that municipals will outperform Treasuries going forward. 1 For California investors the Orange County default has cast a shadow over all California issues. Indeed, California municipal securities are weaker than ever before relative to other states' municipal credits. But the fact is that California is fundamentally sound, and the Orange County default is likely to be resolved with full payment to bondholders. California Muni Fund does not own any securities directly affected by the Orange County situation. But because all California credits have been affected indirectly, we believe they are grossly undervalued. Thus, we expect California to outperform the municipal market generally. Easing fears of tax reform, a relative scarcity of tax-free securities, and the positive fundamentals of slow economic growth and low inflation should enable the fixed income market and the California Muni Fund to generate strong returns for the remainder of the year. We thank you for your continued trust, and we look forward to continuing to serve you in the future. Sincerely, Dr. Vincent J. Malanga President 2 The California Muni Fund Portfolio Composition June 30, 1995 By Type (50.2%) FCLT (6.7%) FCSI (29.4%) LRIB (4.7%) INLT By Rating(D) (51.8%) AAA (1.7%) AA (11.0%) A (20.5%) BBB (1.1%) BB (4.4%) B (9.6%) NR FIXED COUPON BONDS FCLT -- Long Term (maturity > 15 years) (includes long zero coupons) FCSI -- Short or Intermediate Term - (maturity (LT) 15 years) (includes zero coupon bonds) VARIABLE RATE BONDS RIB (Residential Interest Bond) type inverse floaters. These are leveraged bonds whose coupon varies inversely with rates on short term companion issues, and whose value will fluctuate by some multiple of the fluctuations in value of a fixed rate bond with the same maturity and coupon as the underlying bond. LRIB -- Long Term (maturity > 15 years) SRIB -- Short or Intermediate Term ((LT) 15 year maturity) IN (Index) based inverse floaters are bonds whose interest coupons vary inversely with an index of short term interest rates and then revert to a fixed rate mode. The duration and fluctuations on these bonds will be similar to fixed rate bonds with the same maturity. INLT -- Long Term (maturity > 15 years) INSI -- Short or Intermediate Term (maturity (LT) 15 years) (D)If a security has a split rating, the highest applicable rating is used, including published ratings on identical credits for individual securities not individually rated. 3 Left Column THE CALIFORNIA MUNI FUND STATEMENT OF ASSETS AND LIABILITIES June 30, 1995 (Unaudited) - -------------------------------------------------------------------------------- ASSETS Investment in securities at value (cost $16,763,478) ........ $16,169,103 Interest receivable ................. 276,790 ----------- Total assets ..................... 16,445,893 ----------- LIABILITIES Note payable (Note 6) ............... 2,517,039 Payables Dividends .......................... 19,382 Investment securities purchased .... 1,574,330 Accrued expenses and other payables . 113,304 ----------- Total liabilities ................ 4,224,055 ----------- NET ASSETS consisting of: Accumulated net realized loss ....... $ (406,401) Unrealized depreciation of securities ......................... (594,375) Paid-in-capital applicable to 1,463,377 shares of beneficial interest (Note 4) .................. 13,222,614 ----------- ----------- $12,221,838 =========== NET ASSET VALUE PER SHARE ............. $8.35 ===== Right Column STATEMENT OF OPERATIONS For the Six Months Ended June 30, 1995 (Unaudited) - -------------------------------------------------------------------------------- INVESTMENT INCOME Interest income .................................................. $ 525,145 EXPENSES (Notes 2 and 3) Management fee ....................... $30,899 Custodian and accounting fees ........ 32,279 Transfer agent fees .................. 12,591 Professional fees .................... 49,398 Printing and postage ................. 14,317 Interest ............................. 24,769 Distribution expenses ................ 17,690 Shareholder communication ............ 6,000 Trustees' fees ....................... 2,533 Miscellaneous ........................ 12,257 ------- Total expenses .................... 202,733 ---------- Net investment income ............. 321,412 ---------- REALIZED AND UNREALIZED GAIN ON INVESTMENTS Net realized gain on investments ..... 119,269 Unrealized appreciation of investments for the period .......... 1,830,170 ---------- Net gain on investments ........... 1,949,439 ---------- NET INCREASE IN NET ASSETS FROM OPERATIONS ........................... $2,270,851 ========== STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended Year Ended June 30, 1995 December 31, (Unaudited) 1994 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM: OPERATIONS Net investment income .............................................. $ 321,412 $ 947,323 Net realized gain (loss) on investments ............................ 119,269 (525,670) Unrealized appreciation (depreciation) of investments for the period 1,830,170 (3,571,076) ----------- ----------- Net increase (decrease) in net assets from operations ........... 2,270,851 (3,149,423) DIVIDENDS PAID TO SHAREHOLDERS FROM Investment income .................................................. (321,412) (947,323) CAPITAL SHARE TRANSACTIONS (Note 4) ................................. (285,273) (1,625,159) ----------- ----------- Total increase (decrease) ....................................... 1,664,166 (5,721,905) NET ASSETS: Beginning of period ................................................ 10,557,672 16,279,577 ----------- ----------- End of period ...................................................... $12,221,838 $10,557,672 =========== ===========
See Notes to Financial Statements. 4 THE CALIFORNIA MUNI FUND STATEMENT OF INVESTMENTS June 30, 1995 (Unaudited) - -------------------------------------------------------------------------------
Principal Market Amount Issue(000) Type(0) Rating(00) Value - ----------- ---------- ------- ---------- ------ $ 200,000 Albany, PFA, Library/Community Center Project, RB, 6.900, 9/01/12 ........ FCLT BAA1 $ 204,962 100,000 (DD)Arvin Development Corporation, COP, RB, 8.750, 9/01/18 ............... FCLT NR 24,015 9,395,000 (D)Bakersfield, COP, ETM, CAB, 4/15/21 ................................... FCLT AAA 1,999,538 200,000 (D)Beverly Hills, PFA, RB, IFRN*, MBIA Insured, 6/01/15 .................. LRIB AAA 178,318 250,000 Big Independent Cities, Pooled Insurance Program, RB, Series A, 8.250, 3/01/09 .......................................................... FCLT NR 259,233 100,000 CSAC Finance Corp, COP, Sutter County Health Facilities Project, 7.800, 1/01/21 ................................................. FCLT BAA1 101,284 5,000 (D)California HFA, RB, Series A, 9.200, 8/01/15 .......................... FCLT AA 5,226 15,000 (D)California HFA, RB, Series A, CAB, 8/01/16 ............................ FCLT AA 1,572 710,000 California Health Facilities Authority, Valley Presbyterian Hospital Project, RB, Series A, 9.000, 5/01/12 .......................... FCLT B- 709,950 200,000 (D)California Public Works Board, California State Universities Project, 6.000, 9/01/15 FCLT A+ 193,846 70,000 (D)California State Military Department, RB, Series A, 9.750, 8/01/12 .... FCLT A+ 70,692 300,000 California Statewide Communities Development Authority, Cedars Sinai Medical Project, COP, RB, IFRN*, 11/01/15 .................. LRIB A1 206,742 100,000 Capitola, Improvement Bonds, 8.100, 9/02/04 .............................. FCSI NR 103,243 20,000 Corona City, CRA, SFRM, RB, 9.000, 11/15/12 .............................. FCLT AA 20,302 300,000 (D)East Bay, Wastewater System Project, RB, Refunding, AMBAC Insured, IFRN*, 6/01/20 ................................................. LRIB AAA 255,390 500,000 Foothill / Eastern Transportation Corridor Agency, Toll Road Revenue, CAB, 1/01/26 ................................................... FCLT BBB- 57,800 250,000 Garden Grove, Community Development Agency, TAR, 5.875, 10/01/23 ......... FCLT A 225,265 1,170,000 Hawaiian Gardens, CRA, TAR, CAB, 12/01/16 ................................ FCLT BBB 251,889 250,000 Hawthorne, CRA, TAR, 6.750, 9/01/24 ...................................... FCLT BAA 251,243 200,000 Lake Elsinore, USD, Refunding, COP, 6.900, 2/01/20 ....................... FCLT BBB 202,638 2,250,000 Los Angeles, COP, Disney Parking Project, CAB, 9/01/16 ................... FCLT A- 516,893 1,125,343 Los Angeles, HFA, MFH Project C, CAB, RB, 12/01/29 ....................... FCLT NR 1,125,343 15,000 Los Angeles, Home Mortgage, RB, 9.000, 6/15/18 ........................... FCLT A 15,415 300,000 Los Angeles, Multiple Capital Facilities Project III, COP, IFRN*, 11/01/11 INLT A- 295,653 730,000 Madera, USD, COP, Educational Facilities Project, 5.750, 9/01/13 ......... FCLT BAA1 661,227 35,000 Modesto, Valley Oak Project, RB, 10.60, 5/01/09 .......................... FCSI NR 35,968 350,000 (D)New Haven, USD, AMBAC Insured, CAB, 8/01/16 ........................... FCLT AAA 95,606 225,000 New Haven, USD, COP, 7.500, 12/01/05 ..................................... FCSI BBB+ 237,737 250,000 (D)Northern California Power Agency, Multiple Capital Facilities, RB, MBIA Insured, IFRN*, 8/01/25 ........................................ LRIB AAA 261,628 250,000 (D)Northern California Transmission Agency, CA-ORE Transmission Project, RB, MBIA insured, IFRN*, 4/29/24 .................. LRIB AAA 210,085 250,000 Orange County, LTA, RB, IFRN*, 2/14/11 ................................... LRIB AA 253,433 250,000 Orange County, LTA, RB, IFRN*, 2/14/11 ................................... LRIB AAA 245,498
5 THE CALIFORNIA MUNI FUND STATEMENT OF INVESTMENTS (continued) June 30, 1995 (Unaudited) - -------------------------------------------------------------------------------
Principal Market Amount Issue(000) Type(0) Rating(00) Value - ----------- ---------- ------- ---------- ------ $ 250,000 (D)Palmdale, SFRM, Series A, CAB, 3/01/17 ................................ FCLT AAA $ 62,908 200,000 Panoche, Water District, COP, 7.500, 12/01/08 ............................ FCSI BBB 215,290 250,000 (D)Rancho, Water District Financing Authority, RB, Prerefunded @ 104, AMBAC Insured, IFRN*, 8/17/21 .................................... LRIB AAA 308,310 250,000 (D)Redding, Electric System, COP, Series A, FGIC Insured, IFRN*, 6/01/19 . LRIB AAA 222,970 500,000 (D)Rio, USD,COP, FSA Insured, Convertible, CAB, 9/01/28 .................. FCLT AAA 321,055 175,000 Riverside, HFA, Riverside Apartment Project, RB, 7.875, 1/01/19 .......... FCSI BB 181,675 300,000 Riverside, USD, 8.250, 11/01/08 .......................................... FCSI BBB 310,749 2,000,000 Salinas, Redevelopment Agency, TAB, CGIC Insured, Central City Project, CAB, 11/01/22 ............................................. FCLT AAA 375,840 500,000 (D)San Bernardino, COP, Series B, MBIA Insured, IFRN*, 7/01/16 ........... INLT AAA 464,530 900,000 (D)San Bernardino, COP, Series PA-38, MBIA Insured, IFRN*, 7/01/16 ....... LRIB AAA 793,305 200,000 (D)San Diego Water Authority, COP, FGIC Insured, IFRN*, 4/22/09 LRIB AAA 201,074 250,000 San Joaquin Hills, RB, Transportation Corridor Agency, 7.000, 1/01/30 .... FCLT BBB 250,843 250,000 San Joaquin, COP, General Hospital Project, 6.625, 9/01/20 ............... FCLT A- 246,060 1,440,000 San Jose, CRA, TAB, MBIA Insured, IFRN*, 8/01/16 ......................... LRIB AAA 1,001,750 500,000 Santa Clara, HFA, MFH, Elana Gardens Project, GNMA Collateralized, 6.40%, 6/20/35 .......................................... FCLT AAA 498,555 250,000 Solana County, IHFA, Northbay Hospital, COP, 7.750, 11/01/19 ............. FCLT BBB- 257,635 500,000 (D)Southern California Public Power Authority, AMBAC Insured, IFRN*, 7/01/15 .......................................................... LRIB AAA 403,225 250,000 (D)Southern California Public Power Authority, FGIC Insured, IFRN*, 7/01/17 .......................................................... LRIB AAA 215,345 250,000 (D)Tri City, HFA, FNMA/GNMA Collateralized, AMT, 6.450, 12/01/28 ......... FCLT AAA 253,578 200,000 (D)Trinity County, Public Uilities District, COP, AMT, 6.750, 4/01/23 .... FCLT BBB- 200,472 100,000 Upland, HFA, RB, 7.850, 7/01/20 .......................................... FCLT BBB 106,300 ----------- Total Investments (Cost $16,763,478**) ............................... $16,169,103 ===========
* Inverse Floating Rate Notes (IFRN) are instruments whose interest rates bear an inverse relationship to the interest rate on another security or the value of an index. (see Note 5). ** Cost is the same for Federal income tax purposes. (D) Approximately $6,718,673 market value of securities are segregated in whole or in part as collateral securing a line of credit. (DD) Non-income producing security. 6 THE CALIFORNIA MUNI FUND STATEMENT OF INVESTMENTS (continued) June 30, 1995 (Unaudited) - ------------------------------------------------------------------------------- Legend (0)Type FCLT -Fixed Coupon Long Term FCSI -Fixed Coupon Short or Intermediate Term LRIB -Residual Interest Bond Long Term SRIB -Residual Interest Bond Short or Intermediate Term INLT -Indexed Inverse Floating Rate Bond Long Term INSI -Indexed Inverse Floating Rate Bond Short or Intermediate Term (00)Ratings If a security has a split rating the highest applicable rating is used, including published ratings on identicial credits for individual securities not individually rated. NR -Not Rated (000)Issue AMBAC American Municipal Bond Assurance Corporation AMT Alternative Minimum Tax CAB Capital Appreciation Bond CFA California Financing Authority CGIC Capital Guaranty Insurance Company COP Certificate of Participation CRA California Redevelopment Agency ETM Escrowed to Maturity FGIC Financial Guaranty Insurance Corporation FNMA Federal National Mortgage Association FSA Financial Security Assurance, Inc. GNMA Government National Mortgage Association HFA Housing Finance Authority IHFA Intercommunity Hospital Financing Authority LTA Local Transportation Authority MBIA Municipal Bond Insurance Assurance Corporation MFH Multi Family Housing PFA Public Financing Authority RB Revenue Bond SFRM Single Family Residential Mortgage TAB Tax Allocation Bond TAR Tax Allocation Refunding USD Unified School District 7 THE CALIFORNIA MUNI FUND NOTES TO FINANICAL STATEMENTS - ------------------------------------------------------------------------------- Left Column 1. Significant Accounting Policies The California Muni Fund (the Fund) was organized as a Massachusetts business trust and is registered as an open end management investment company under the Investment Company Act of 1940. The following is a summary of significant accounting policies followed in the preparation of its financial statements: Valuation of Securities-Investments are stated at value based on prices provided by a pricing service when such prices are believed to reflect the fair market value of such securities. Securities not priced in this manner are at the mean of the last reported bid and asked prices provided by principal market makers and recognized dealers in such securities. Other assets and securities for which no quotations are readily available are valued in good faith using methods determined by the Board of Trustees. Federal Income Taxes-It is the Fund's policy to comply with the requirements of the Internal Revenue Code applicable to "regulated investment companies" and to distribute all of its taxable and tax exempt income to its shareholders. Therefore, no provision for federal income tax is required. Distributions-The Fund declares dividends daily from its net investment income and pays such dividends on the last business day of each month. Distributions of net capital gains, if any, realized on sales of investments are made annually, as declared by the Fund's Board of Trustees. Dividends are reinvested at the net asset value unless shareholders request payment in cash. General-Securities transactions are accounted for on a trade date basis. Interest income is accrued as earned. Premiums and original issue discount on securities purchased are amortized over the life of the respective securities. Realized gains and losses from the sale of securities are recorded on an identified cost basis. 2. Investment Advisory Fees and Other Transactions With Affiliates Under a Management Agreement, the Fund pays an investment management fee to Fundamental Portfolio Advisors, Inc. (the Manager) equal to 0.5% of the Fund's average daily net asset value up to $100 million and decreasing by .02% of each $100 million increase in net assets down to 0.4% of net assets in excess of $500 million. Under the Agreement, the Manager is required to reimburse to the Fund an amount not exceeding the amount of fees payable to the Manager under the Agreement for any fiscal year, if, and to the extent that the aggregate operating expenses of the Fund for any fiscal year (including the fees payable to the Manager, but excluding interest expense, taxes, brokerage fees and commissions, extraordinary expenses beyond the control of the Manager and other fees and expenses properly excludable from the definition of "aggregate annual expenses" under California law) exceed any expense limitation imposed under California law. No such reimbursements was required during the six months ended June 30, 1995. Right Column Pursuant to a Distribution Plan (the Plan) adopted pursuant to Rule12b-1, promulgated under the Investment Company Act of 1940, the Fund may pay certain promotional and advertising expenses and may compensate certain registered securities dealers and financial institutions for services provided in connection with the processing of orders for purchase or redemption of the Fund's shares and furnishing other shareholder services. Payments by the Fund shall not in the aggregate, in any fiscal year, exceed 0.5% of the average daily net assets of the Fund. Under a Distribution Agreement with Fundamental Service Corporation (FSC), an affiliate of the Manager, amounts are paid under the Plan to compensate FSC for the services it provides and the expenses it bears in distributing the Fund's shares to investors. Fees for those services aggregated $9,600 for the six months ended June 30, 1995. The Fund compensates Fundamental Shareholder Services, Inc., an affiliate of the Manager, for the services it provides under a Transfer Agent and Service Agreement. Transfer agent fees for the six months ended June 30, 1995 are set forth in the statement of operations. 3. Trustees' Fees All of the Trustees of the Fund are also directors or trustees of two other affiliated mutual funds for which the Manager acts as investment adviser. For services and attendance at board meetings and meetings of committees which are common to each Fund, each Trustee who is not affiliated with the Manager is compensated at the rate of $6,500 per quarter pro rated among the funds based on their respective average net assets. 4. Shares of Beneficial Interest As of June 30, 1995 there were an unlimited number of shares of beneficial interest (no par value) authorized and capital paid in amounted to $13,222,614. Transactions in shares were as follows:
Six Months Ended Year Ended June 30, 1995 December 31, 1994 ---------------------------------- --------------------------------- Shares Amount Shares Amount ------ ------ ------ ------ Shares sold ............................. 1,624,738 $13,314,100 1,971,607 $15,716,250 Shares issued on reinvestment of dividends .............................. 31,024 244,827 69,822 570,507 Shares redeemed ......................... (1,679,320) (13,844,200) (2,270,355) (17,911,916) ---------- ----------- ---------- ----------- Net increase (decrease) ................. (23,558) ($285,273) (228,926) ($1,625,159) ========== =========== ========== ===========
5. Complex Securities and Investment Transactions Inverse Floating Rate Notes: The Fund invests in variable rate securities commonly called "inverse floaters". The interest rates on these securities have an inverse relationship to the interest rate of other securities or the value of an index. Changes in interest rate on the other security or index inversely affect the rate paid on the inverse floater, and the inverse floater's price will be more volatile than that of a fixed rate bond. 8 THE CALIFORNIA MUNI FUND NOTES TO FINANICAL STATEMENTS (continued) - ------------------------------------------------------------------------------- Left Column Recent interest rate movements and other market factors have substantially reduced the liquidity of certain IFRN's. Investment Transactions: During the six months ended June 30, 1995, the cost of purchases and proceeds from sales of investment securities, other than short-term obligations, were $6,390,036 and $3,977,694 respectively. As of June 30, 1995 the net unrealized depreciation of portfolio securities amounted to $594,375 composed of unrealized appreciation of $362,198 and unrealized depreciation of $956,573. 6. Line of Credit The Fund has a line of credit agreement with its custodian bank collateralized by portfolio securities. Borrowings under this agreement bear interest linked to the bank's prime rate. The maximum month end and the average borrowings outstanding during the period ended June 30, 1995, were $2,517,039 and $598,473, respectively. The average interest rate for the period was 8.50%. Right Column 7. Litigation The Fund has been named as a defendant in a class action lawsuit alleging that the Fund invested in certain derivative financial instruments that were inconsistent with the Fund's stated investment objectives. The suit claims that the defendants, which include the Fund's advisor, distributor, and certain control persons, are liable for damages because there existed material misstatements or omissions in the prospectuses that rendered them misleading. Management has entered into negotiations with the plaintiffs who have consented to a series of adjournments of all operative dates in the litigation. Management is hopeful that these negotiations will lead to a resolution; if that is not possible, the Fund intends to contest the case vigorously. This lawsuit is in a preliminary state and involves significant complexities which result in an inability to determine whether any liability will result and if so, whether any such liability would be significant to the financial position of the Fund. Accordingly, no amount has been accrued in the financial statements with resect to this matter. 9 THE CALIFORNIA MUNI FUND NOTES TO FINANICAL STATEMENTS (continued) - -------------------------------------------------------------------------------
8. Selected Financial Information Six Months Years Ended December 31, Ended ---------------------------------------- June 30, 1995 1994 1993 1992 1991 ------------- ---- ---- ---- ---- (Unaudited) PER SHARE OPERATING PERFORMANCE (for a share outstanding throughout the period) Net Asset Value, Beginning of Period ........................ $ 7.10 $ 9.49 $ 8.81 $ 8.80 $ 8.64 ------ ------ ------ ------ ------ Income from investment operations: Net investment income ....................................... .208 .553 .563 .604 .571 Net realized and unrealized gains (losses) on investments ............................................ 1.250 (2.390) .876 .010 .160 ------ ------ ------ ------ ------ Total from investment operations .................... 1.458 (1.837) 1.439 .614 .731 ------ ------ ------ ------ ------ Less Distributions: Dividends from net investment income ........................ (.208) (.553) (.563) (.604) (.571) Dividends from net realized gains ........................... - - (.196) - - ------ ------ ------ ------ ------ Total distributions ................................. (.208) (.553) (.759) (.604) (.571) ------ ------ ------ ------ ------ Net Asset Value, End of Period .............................. $ 8.35 $ 7.10 $ 9.49 $ 8.81 $ 8.80 ====== ====== ====== ====== ====== Total Return ................................................ 20.69% (19.89%) 16.80% 7.23% 8.75% RATIOS/SUPPLEMENTAL DATA Net Assets, End of Period (000) ............................. 12,222 10,558 16,280 11,549 9,669 Ratios to Average Net Assets: Interest expense .......................................... .40%** .98% .39% .16% .14% Operating expenses 2.88%** 2.50% 1.77%* 1.47%* 2.24% ------ ------ ------ ------ ------ Total expenses ...................................... 3.28%** 3.48% 2.16%* 1.63%* 2.38% ====== ====== ====== ====== ====== Net investment income ............................... 2.58% 6.80% 6.04%* 6.87%* 6.58%* Portfolio turnover rate ..................................... 36.81% 15.88% 51.26% 18.91% 47.34% BANK LOANS Amount outstanding at end of period (000 omitted) ........... $2,517 $1,292 $3,714 $ 0 645 Average amount of bank loans outstanding during the period (000 omitted) ............................................. $ 598 $1,690 $ 958 274 155(D) Average number of shares outstanding during the period (000 omitted) ............................................. 1,547 1,711 1,517 1,214 1,115(D) Average amount of debt per share during the period .......... $ .39 $ .95 $ .63 $ .23 $ .14 (D) Monthly average. * These ratios are after expense reimbursement of .50% for each of the years ended December 31, 1993, and 1992. ** Annualized.
10 (Left Column) THE CALIFORNIA MUNI FUND 90 Washington Street New York NY 10006 1-800-322-6864 This report and the financial statements contained herein are submitted for the general information of the shareholders of the Fund. The report is not authorized for distribution to prospective investors in the Fund unless preceded or accompanied by an effective prospectus. (Right Column) - ----------------------------------- THE CALIFORNIA MUNI FUND Semi-Annual Report June 30, 1995 (Unaudited) THE CALIFORNIA (LOGO) MUNI FUND Double Tax-Free Investing (LOGO) FUNDAMENTAL Fundamental Family of Funds -----END PRIVACY-ENHANCED MESSAGE-----