<Page>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: 033-50208
PACIFIC GLOBAL FUND INC. D/B/A PACIFIC ADVISORS FUND INC.
(Exact name of registrant as specified in charter)
206 NORTH JACKSON STREET, SUITE 301 GLENDALE, CALIFORNIA 91206
(Address of principal executive offices)
GEORGE A. HENNING 206 N. JACKSON ST., SUITE 301 GLENDALE, CA 91206
(Name and address of agent for service)
Registrant's telephone number, including area code: 818-242-6693
Date of fiscal year end: DECEMBER 31
Date of reporting period: DECEMBER 31, 2002
<Page>
Item 1. Report to Shareholders (filed herewith).
Item 2. Not applicable.
Item 3. Not applicable.
Item 4. (Reserved)
Item 5. (Reserved)
Item 6. (Reserved)
Item 7. (Reserved)
Item 8. (Reserved)
Item 9. Controls and Procedures. Omitted pursuant to transitional
provisions Release 34-47262.
Item 10. Exhibits
(a) Not applicable.
(b) Certifications (filed herewith).
<Page>
[GRAPHIC]
ANNUAL REPORT -- DECEMBER 31, 2002
[LOGO]
PACIFIC
ADVISORS
-
FUND INC.
GOVERNMENT SECURITIES fund
INCOME AND EQUITY fund
BALANCED fund
GROWTH fund
MULTI-CAP VALUE fund
SMALL CAP fund
<Page>
PACIFIC ADVISORS
table of contents
MESSAGE FROM THE CHAIRMAN......................................................1
GOVERNMENT SECURITIES FUND.....................................................2
INCOME AND EQUITY FUND.........................................................5
BALANCED FUND..................................................................8
GROWTH FUND...................................................................11
MULTI-CAP VALUE FUND..........................................................14
SMALL CAP FUND................................................................17
SCHEDULE OF INVESTMENTS.......................................................21
STATEMENT OF ASSETS AND LIABILITIES...........................................38
STATEMENT OF OPERATIONS.......................................................40
STATEMENT OF CHANGES IN NET ASSETS............................................42
NOTES TO FINANCIAL STATEMENTS.................................................46
FINANCIAL HIGHLIGHTS..........................................................52
<Page>
MESSAGE
from the chairman
[GRAPHIC]
Fellow Shareholders,
Silver linings were challenging to find in 2002 as U.S. equity markets
continued their downward march. The year began with corporate scandals involving
Enron, WorldCom, and Adelphia which were followed by the bankruptcies of US Air
and United Airlines. Unfortunately, these kinds of incidents are typical fallout
from a market bubble. Though painful to experience as an investor, these
corrections are necessary to root out corporate graft, corruption, and
inefficiency in order to lay the foundation for a new beginning.
A new beginning may take a while to gain momentum. The weak performance in
the U.S. markets reflects the uncertainty related to the impact of slowing
economies in Europe and Asia, as well as, the on-going turmoil in the Middle
East and North Korea. Once the market sees resolution of these issues, the seeds
for a stronger U.S. economy can take root.
Although the news focused on the dismal performance of the U.S. equity
markets, there were several bright spots. The fixed income and U.S. housing
markets both had a banner year. The Federal Reserve lowered interest rates to a
41-year low which enabled many homeowners to refinance their homes fueling a
strong housing market. These new found consumer dollars kept spending strong and
helped the economy grow at a moderate pace of 2.8%. And even with stronger
economic growth inflation remained low.
In an encouraging sign, during the fourth quarter, business spending showed
modest growth and over 85% of the S&P 500 companies reporting earnings met or
exceeded expectations. U.S. Government spending also increased significantly to
stimulate the economy and fight the war on terrorism. At present, the projected
deficits appear reasonable and appropriate. It will, however, be important to
monitor Washington's ability to manage spending in light of national, local and
global capital needs.
In 2002, the markets recorded their third consecutive year of declining
valuations. The Nasdaq, S&P 500 and DJIA were down -31.53%, -23.37% and -16.76%,
respectively. The equity market experienced a deep correction in July followed
by a retesting in October, a typical sign of a bear market bottom. Investors,
however, largely remained on the sidelines concerned about the possibility of
more corporate scandals and demanding resolution in geopolitical hotspots.
For the past three years, our investment policy focused on capital
preservation and effective risk management. The increased risk abatement focus
in our family of funds will significantly help set the stage for improved
performance. During these difficult market conditions, we believe a strategy of
"safety first" is key to positioning the funds for better performance ahead.
With many bond funds and the housing market coming off of a stellar year,
investors may believe that these markets offer the best opportunities in the
coming year. We believe that much of the current appreciation potential has
already been realized. As the economy improves, we anticipate that interest
rates will rise to counter inflation concerns. Therefore, we believe it is an
important to avoid making investment decisions based simply on past performance.
We encourage you to speak to your financial adviser to determine how best to
allocate into these markets.
As we progress into 2003, we expect the silver linings of the past year to
shine brighter. The foundation of a longer-term market recovery is being
established. We encourage you to use this down time to meet with your financial
adviser to review your investment goals and risk tolerance. Now is a good time
to rebalance your portfolio to be well positioned to participate in a market
recovery.
[SIGNATURE]
George A. Henning
Chairman of the Board and President
1
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PACIFIC ADVISORS
Government Securities Fund
INVESTS PRIMARILY IN FIXED-INCOME SECURITIES GUARANTEED BY THE U.S. GOVERNMENT
OR ITS INSTRUMENTALITIES. THE FUND MAY ALSO INVEST IN OTHER INCOME PRODUCING
INSTRUMENTS, INCLUDING DIVIDEND-PAYING COMMON STOCKS, FOR INCOME AND CAPITAL
APPRECIATION.
INTERVIEW WITH PORTFOLIO MANAGERS
R. "KELLY" KELLY, CIC
RYAN KELLY
FOR THE YEAR ENDED DECEMBER 31, 2002, THE FUND HAD A TOTAL RETURN OF 2.78% FOR
CLASS A SHARES, AND 1.98% FOR CLASS C SHARES. THE FUND'S BENCHMARK, THE LEHMAN
INTERMEDIATE TREASURY BOND INDEX(1), INCREASED 9.29% DURING THE SAME PERIOD.
Q WHAT ECONOMIC CHALLENGES AND INTEREST RATE RISKS DID THE FUND FACE IN
2002?
A Persistent economic and market uncertainty posed the greatest challenge
to the Fund in 2002. An economic stimulus package by the government and dramatic
interest rate cuts by the Federal Reserve in 2001 seemed to foreshadow a strong
economic recovery in 2002. Despite economic and fiscal stimulus, business
spending failed to increase while consumer spending slowed. A lack of
confidence, caused by a number of factors including geopolitical tensions, the
declining dollar and a weak job market, prevented a much-needed increase in
spending. As a result, economic growth remained inconsistent throughout the
year.
This economic uncertainty also produced interest rate uncertainty. Early
signs of economic improvement suggested a rise in interest rates might be on the
horizon. As economic growth remained uneven, concerns about a double-dip
recession emerged adding the possibility of additional interest rate cuts. This
increased the interest rate risk for both short and long-term bonds.
Q HOW DID THE FUND IMPLEMENT ITS UNIQUE BARBELL STRATEGY LAST YEAR?
A In response to increased economic and market uncertainty, the Fund
heightened its focus on preserving principal and managing risk during 2002. In
general, the Fund seeks to adapt to interest rate changes by using a barbell
investment strategy. When rates decline, the Fund concentrates its holdings in
long-term bonds to lock in higher yields and the potential for capital
appreciation. Conversely, when rates rise, the Fund shifts to a more defensive
position by moving into short-term bonds.
This barbell strategy differs significantly from the traditional laddered
approach where a fund buys equal amounts of bonds at different maturities
spanning a set period of time. While this strategy performed well over the past
few years, the risk for intermediate and long-term laddered portfolios increased
significantly as a result of historically low interest rates.
During 2002, intermediate-term bonds offered some of the best yield
opportunities. These bonds also carried increasing risk as rates continued to
fall. Therefore, the Fund created an intermediate-term barbell using a
combination of short and long-term bonds. This strategy enhanced the Fund's
yield and total return without exposing it to significant interest rate risk. In
addition to treasuries, the Fund also invested a portion of its portfolio in
government agency bonds, which offered more attractive yield opportunities. With
this adaptive strategy, the Fund successfully managed risk and preserved
principal while achieving modest growth.
Q HOW IS THE FUND USING EQUITY POSITIONS IN THE PORTFOLIO?
A Equity investments remain an important part of the Fund's investment
strategy. The Fund can invest up to 20% of its portfolio in high-quality,
dividend-paying common stocks. These positions offer additional income and help
provide a hedge against inflation.
In the first six months of the year, the Fund reduced its equity exposure
in response to the impact of corporate scandals on the equity market. Market
lows reached in July and October presented the Fund with a number of
opportunities to acquire stocks at attractive prices. In the 4th quarter, the
Fund began taking advantage of these opportunities and increased its equity
exposure. This provided the Fund with additional income as well as the
opportunity for capital appreciation as the equity market recovers.
2
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Q WHAT ARE THE INTEREST RATE RISKS AS THE ECONOMY RECOVERS?
A The long-term outlook continues to favor an increase in interest rates.
Economic growth is expected to accelerate in 2003 as a result of increased
government spending, historically low interest rates and improved productivity.
At some point, accelerating economic growth will increase the threat of
inflation leading the Fed to raise short-term interest rates. The Fed could
begin raising rates by late 2003. When this occurs, interest rates on short-term
bonds will experience the most volatility.
In the meantime, as we near the bottom of the interest rate cycle,
intermediate and long-term bonds and bond funds are the most susceptible to
price depreciation. FOR EXAMPLE, IF INTEREST RATES ROSE ONLY 1/2%, A 20-YEAR
ZERO COUPON BOND WOULD DECLINE IN VALUE BY APPROXIMATELY 10%.
As these economic and interest rate shifts occur, different areas of the
bond market will lead in performance, which illustrates the benefit of the
Fund's dynamic barbell strategy. By adapting to interest rate changes, the Fund
can take advantage of the best opportunities for income and capital appreciation
while minimizing its position in the areas of the bond market with the greatest
interest rate risk.
Q WHAT OPPORTUNITIES HAS THE FUND CREATED FOR ITSELF GOING INTO 2003?
A As we head into the New Year, the economic environment remains uncertain.
While we expect economic recovery will continue, until corporate and consumer
spending increases, it will likely remain sluggish and inconsistent. Once we
receive greater clarity in the situation with Iraq and other geopolitical
conflicts, we should see an increase in spending and economic growth. In
addition, we expect the approaching presidential election will increase the
pressure for effective economic and fiscal stimulus providing a major catalyst
to economic growth.
The first six months of the year will likely bring a continuation of
market volatility and interest rate uncertainty. By mid-year, we expect to see
greater improvement in the economy, which would be followed by a rise in
long-term interest rates. Depending on the strength of the recovery, the Fed may
begin raising short-term rates by year-end. The Fund will continue to maintain
an adaptive investment strategy in the coming year and is well positioned to
manage continued uncertainty in the market.
-------------------------------------------------------
INVESTMENT MIX as of 12/31/02
[GRAPHIC]
<Table>
1. U.S. TREASURY BONDS 39.16%
2. U.S. GOVERNMENT AGENCIES 31.44%
3. U.S. TREASURY BILLS 14.28%
4. EQUITIES 10.53%
5. CASH 3.90%
6. U.S. TREASURY NOTES 0.69%
</Table>
1 The Lehman Treasury Bond Index is an unmanaged index of intermediate term
government bonds since 12/31/80.
3
<Page>
PACIFIC ADVISORS
Government Securities Fund continued
CHANGE IN VALUE OF $10,000 INVESTMENT(1)
This chart shows the growth of a $10,000 investment made in Pacific Advisors
Government Securities Fund, Class A shares, on February 8, 1993 compared to the
growth of the Lehman Intermediate T-Bond Index(2).
GOVERNMENT SECURITIES FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
GOVERNMENT SECURITIES FUND LEHMAN T-BOND INDEX
Feb-1993 $9,525 $10,000
Dec-1993 $9,557 $10,826
Dec-1994 $9,543 $10,604
Dec-1995 $11,600 $12,140
Dec-1996 $11,235 $12,622
Dec-1997 $12,552 $13,590
Dec-1998 $14,789 $14,764
Dec-1999 $14,065 $14,829
Dec-2000 $16,656 $16,339
Dec-2001 $16,574 $17,643
12/31/2002 $17,035 $19,282
</Table>
Average Annual Compounded Return for period ending December 31, 2002 (Class A
shares)
<Table>
One Year -2.14%
Five Year 5.24%
Inception 5.51%
</Table>
- ----------------------------------
1 Performance figures represent the change in value of an investment over the
periods shown, and have been restated to include the maximum 4.75% initial sales
charge, assuming reinvestment of dividends and capital gains at net asset value
and after expense reimbursements. Past performance does not guarantee future
results. Share price and returns fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost.
2 The Lehman T-Bond Index is an unmanaged index of intermediate government
bonds since 12/31/80.
4
<Page>
PACIFIC ADVISORS
Income and Equity Fund
INVESTS PRIMARILY IN INVESTMENT-GRADE FIXED-INCOME SECURITIES. THE FUND MAY ALSO
INVEST IN STOCKS FOR LONG-TERM CAPITAL APPRECIATION.
INTERVIEW WITH PORTFOLIO MANAGERS
THOMAS H. HANSON
STEPHEN K. BACHE, CFA
FOR THE YEAR ENDED DECEMBER 31, 2002, THE FUND HAD A TOTAL RETURN OF -0.92% FOR
CLASS A SHARES, AND -1.60% FOR CLASS C SHARES. THE FUND'S BENCHMARK, THE LEHMAN
INTERMEDIATE TREASURY BOND INDEX(1), RETURNED 9.29% DURING THE SAME PERIOD.
Q WHY DID THE FUND'S PERFORMANCE DIFFER SIGNIFICANTLY FROM THAT OF ITS
BENCHMARK?
A The Lehman Intermediate Treasury Bond Index is a good performance
benchmark for the fixed income portion of the Fund, but it does not reflect the
impact of equity investments on the Fund's portfolio. The Fund's investment
strategy has always included maintaining approximately 20% of its assets in
high-quality, dividend-paying common stocks. This provides the more conservative
investor with additional capital appreciation potential as a hedge against
inflation. In 2002, the Lehman Intermediate T-Bond Index, returned 9.29% while
the S&P 500, a common measure of overall performance in the equity market,
returned -23.37%. Since such a significant portion of the portfolio is invested
in equities, the Fund's return would be more accurately compared to a blend of
these two indices.
Q WHAT CHALLENGES DID THE FUND FACE DURING 2002?
A In 2002, the greatest challenge was managing ongoing market volatility. A
wave of corporate scandals touched off a market decline in the second quarter.
Uneven economic growth, coupled with geopolitical concerns, continued to create
an uncertain economic environment throughout the remainder of the year. These
conditions required an adaptive investment strategy focused on preserving
principal and managing risk.
The equity market suffered the most as a result of persistent economic
uncertainty. As the year progressed, investors grew increasingly pessimistic and
eager to sell at the first sign of bad news. As a result, market leadership
rotated frequently and equity values remained depressed throughout the year.
The uncertain economic outlook also created an unpredictable interest
rate environment. At the beginning of the year, early signs of economic
improvement led the market to anticipate an eventual rise in interest rates.
Inconsistent economic data and concerns about a double-dip recession soon made
further interest rate cuts a possibility as well. These conditions resulted in a
weak and uneven recovery in the corporate bond market.
Q WHAT WAS THE FUND'S INVESTMENT STRATEGY LAST YEAR?
A On the bond side of the portfolio, the Fund concentrated its holdings in
intermediate-term (5-7 years), investment grade corporate bonds. Given the
tentative interest rate environment, these bonds offered the most attractive
yields with the lowest price volatility. The Fund also committed a portion of
its bond portfolio to short-term (0-2 years) corporate bonds as a substitute for
low-yielding money market investments. These short-term positions also provide
the Fund with the liquidity necessary to take advantage of new opportunities
when the economy stabilizes and interest rates begin to rise.
In response to indefinite market volatility, the Fund reduced its equity
exposure during 2002. The Fund also managed risk by rebalancing its equity
portfolio to move out of weaker performing stocks or sectors and into stronger
areas of the market. While implementing this strategy, the Fund continued to
concentrate its equity holdings in high-quality companies with above average
dividends such as HOSPITALITY PROPERTIES, CAREMARK RX and KELLOGG.
Over the course of the year, the Fund also added significantly to its
preferred stock position.
5
<Page>
PACIFIC ADVISORS
Income and Equity Fund continued
The Fund looked to increase portfolio income with high quality preferred stocks
such as ING CAPITAL FUNDING and FARMERS GROUP CAPITAL.
Market conditions led the Fund to focus on preservation of capital and
implement a more defensive strategy during the course of the year. This strategy
helped the Fund successfully manage risk and limit losses while leaving the Fund
well positioned to benefit from a market recovery.
Q WHAT ROLE SHOULD THE INCOME AND EQUITY FUND PLAY IN AN INVESTOR'S
PORTFOLIO?
A The Income and Equity Fund provides conservative investors with a unique
investment opportunity. Many funds offer a large equity portfolio supplemented
by a smaller corporate bond component. These funds typically assume more risk as
a result of greater exposure to the equity market.
Few funds, however, offer a bond portfolio supplemented by a conservative
equity component. The Fund's equity component adds to the Fund's income, helps
act as a hedge against inflation and provides additional diversification. The
Fund limits its equity exposure to approximately 20% and focuses on large,
well-established companies with strong earnings growth. Therefore, the Fund's is
able to benefit from the equity market without substantially increasing risk.
For the older or more conservative investors, the Income and Equity Fund
could serve as a core investment. Younger and more aggressive investors should
consider investing a portion of their portfolio in the Fund to gain exposure to
the corporate bond market and achieve greater diversification.
Q HOW WILL THE FUND CAPITALIZE ON IMPROVING ECONOMIC CONDITIONS IN 2003?
A The economy began to recover last year, albeit at a slow and uneven pace.
Economic growth improved dramatically from 0.3% in 2001 to 2.8% in 2002. Low
interest rates, low inflation, and improving productivity should lead to
continued economic improvement in 2003.
Despite a long awaited recovery in corporate earnings and modest economic
growth, the market did not improve much during 2002. Corporate scandals and
geopolitical concerns overshadowed these improvements and stalled recovery. A
number of indicators suggest the market is near a bottom and well positioned for
a rally. A sustainable uptrend, however, will not occur until the market sees
some resolution to the conflict with Iraq and other geopolitical situations.
While we expect improved market performance next year, we also expect continued
volatility as recovery progresses.
Continued economic recovery should lead to an eventual rise in interest
rates. When rates rise, the Fund will take advantage of opportunities to lock in
higher yields. The Fund's equity portfolio is well positioned in companies that
should benefit early on from a market recovery. Improved market conditions and
an adaptive investment strategy should provide the Fund with the opportunity for
improved performance in the coming year.
-------------------------------------------------------
INVESTMENT MIX as of 12/31/02
[GRAPHIC]
<Table>
1. CORPORATE BONDS 63.58%
2. EQUITIES 15.86%
3. PREFERRED STOCK 10.92%
4. CASH 8.25%
5. FOREIGN BONDS 1.39%
</Table>
1 The Lehman Treasury Bond Index is an unmanaged index of intermediate term
government bonds since 12/31/80.
6
<Page>
CHANGE IN VALUE OF $10,000 INVESTMENT(1)
This chart shows the growth of a $10,000 investment made in Pacific Advisors
Income & Equity Fund, Class A shares, on February 8, 1993 compared to the growth
of the Lehman Intermediate T-Bond Index(2).
INCOME AND EQUITY FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
INCOME AND EQUITY FUND LEHMAN T-BOND INDEX
Feb-1993 $9,525 $10,000
Dec-1993 $9,630 $10,826
Dec-1994 $9,725 $10,604
Dec-1995 $10,905 $12,140
Dec-1996 $11,100 $12,622
Dec-1997 $12,166 $13,590
Dec-1998 $13,643 $14,764
Dec-1999 $13,685 $14,829
Dec-2000 $14,510 $16,339
Dec-2001 $14,892 $17,643
12/31/2002 $14,755 $19,282
</Table>
Average Annual Compounded Return for period ending December 31, 2002 (Class A
shares)
<Table>
One Year -5.59%
Five Year 2.89%
Inception 3.99%
</Table>
- ----------------------------------
1 Performance figures represent the change in value of an investment over the
periods shown, and have been restated to include the maximum 4.75% initial sales
charge, assuming reinvestment of dividends and capital gains at net asset value
and after expense reimbursements. Past performance does not guarantee future
results. Share price and returns fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost.
2 The Lehman T-Bond Index is an unmanaged index of intermediate government
bonds since 12/31/80.
7
<Page>
PACIFIC ADVISORS
Balanced Fund
INVESTS PRIMARILY IN LARGE AND MEDIUM CAP COMMON STOCKS WITH AT LEAST 25% OF THE
ASSETS INVESTED IN FIXED-INCOME SECURITIES.
INTERVIEW WITH PORTFOLIO MANAGER
STEPHEN K. BACHE, CFA
FOR THE YEAR ENDED DECEMBER 31, 2002, THE FUND HAD A TOTAL RETURN OF -5.05% FOR
CLASS A SHARES, AND -5.49% FOR CLASS C SHARES. DURING THE SAME PERIOD, THE
FUND'S BENCHMARKS, THE S&P 500 INDEX(1) AND THE LEHMAN INTERMEDIATE TREASURY
BOND INDEX(2), RETURNED -23.37% AND 9.29%, RESPECTIVELY.
Q WHAT WAS THE FUND'S INVESTMENT STRATEGY IN 2002?
A The equity market suffered through another disappointing year in 2002.
Despite modest economic improvement and renewed growth in corporate earnings,
investors remained pessimistic. Corporate scandals and escalating geopolitical
tensions created volatile market conditions throughout the year.
The Fund continued to manage its equity portfolio with a defensive
strategy. The Fund reduced its exposure to the market by keeping its equity
position around 50%. The Fund continued to maintain and select equity
investments in high-quality companies offering growth at a reasonable price.
Over the course of the year, the Fund sold some weaker performing positions and,
when available, took advantage of the opportunity to acquire attractive
positions at discounted prices. New additions to the Fund included H&R BLOCK,
SEALED AIR, and ELECTRONIC DATA SYSTEMS.
Signs of economic recovery earlier in the year led to the anticipation of
higher interest rates. In response, the Fund rotated out of some long-term bond
positions and concentrated its bond holdings in intermediate-term, investment
grade corporate bonds. When adding new positions, the Fund looked for bonds
poised to benefit from a corporate turnaround or an improved credit rating, such
as ILLINOIS POWER and PACIFIC GAS TRANSMISSION. Although economic uncertainty
prevented rates from rising, these intermediate positions provided the Fund with
attractive yields while limiting its exposure to interest rate risk.
During the course of the year, the Fund also increased its position in
short-term (0-2 years) corporate bonds as a substitute for cash. These positions
provided the Fund with liquidity and investment flexibility while offering a
higher yield than money market instruments. When interest rates eventually rise,
this liquidity will allow the Fund to lock in higher yields and capital
appreciation by purchasing longer-term bonds.
The Fund will continue to maintain a more defensive equity strategy and
adaptive bond strategy until volatility subsides and gives way to a more
predictable course in both the bond and equity markets.
Q THE FUND SIGNIFICANTLY OUTPERFORMED THE OVERALL MARKET AND THE CATEGORY
AVERAGE OF -11.72% FOR ALL BALANCED FUNDS. HOW DID THE FUND MANAGE RISK SO
SUCCESSFULLY?
A Volatile market conditions in 2002 created few star performances. Given
this environment, the Fund focused on protecting principal, minimizing risk and
positioning itself to benefit from a market recovery. Successful risk management
often requires a slightly different strategy on the bond and equity sides of the
portfolio since the bond and equity markets behave differently.
On the bond side, the Fund managed interest rate risk by managing to the
yield curve. The Fund focused on intermediate-term bonds, which tend to be less
sensitive to interest rate movements. The Fund also managed risk by maintaining
and acquiring higher quality bonds less sensitive to price volatility.
On the equity side, the Fund managed risk through careful stock selection
and diversification. The Fund has always sought to invest in well-established,
high-quality companies with good earnings and stable growth, such as VIACOM,
BRISTOL MYERS SQUIBB, and RELIANCE STEEL. These positions benefited the Fund
last year by maintaining their
8
<Page>
valuations in a difficult market. While market volatility increased the number
of stocks trading at historical lows, not all of these price declines
represented true buying opportunities. The Fund only added to its portfolio when
it found positions that met its other investment criteria.
Q WHAT ARE THE CURRENT MARKET RISKS?
A Economic growth improved but remained sluggish and uneven in 2002.
Despite better economic conditions and an end to the corporate profit recession,
investors remained pessimistic. A number of problems, ranging from corporate
scandals to geopolitical concerns, led to persistent market volatility.
A number of factors could prevent or delay market recovery in the coming
year. Stalled economic growth would alter the outlook for corporate profits and
keep investors on the sidelines. While economic growth should continue, factors
such as a substantial rise in inflation or a terrorist attack could halt growth.
Prolonged geopolitical uncertainty would also have a profound impact on the
market. At present, investors are most concerned with the situation in Iraq, but
tensions in other areas of the world, such as North Korea, could create
additional concerns. Investors will remain hesitant to take on additional market
risk until these uncertainties subside. Finally, a number of countries from
Latin America to Europe and Asia are facing economic problems or crises.
Depending on how severe these problems become, they could impact U.S. markets.
Q WHAT IS THE OUTLOOK FOR THE MARKET AND THE ECONOMY NEXT YEAR?
A Once again, we anticipate continued economic improvement in 2003. But
until businesses and consumers feel confident enough to increase spending,
economic growth will remain uneven. And confidence will not improve until we see
some resolution to present geopolitical conflicts. By mid-year, greater
geopolitical certainty should provide a significant catalyst to economic
recovery. We expect these developments will give way to improved market
performance, but the market will likely remain volatile as it enters a recovery
phase.
The Fund will continue to employ a defensive equity strategy until
volatility subsides. As it did in 2002, the Fund will look to take advantage of
buying opportunities when they arise. While interest rates did not rise as soon
as initially expected, we continue to anticipate an eventual increase once
economic recovery stabilizes. As rates rise, the Fund will gradually rotate out
of its short-term bond positions and lock in higher yields with longer-term
bonds.
-------------------------------------------------------
INVESTMENT MIX as of 12/31/02
[GRAPHIC]
<Table>
1. CORPORATE BONDS 49.45%
2. EQUITIES 45.58%
3. CASH 4.97%
</Table>
1 The Standard & Poor's 500 Index is an unmanaged, market capitalization
weighted measure of 500 widely held common stocks listed on the New York Stock
Exchange, American Stock Exchange and The Nasdaq Stock Market. The Index returns
assume reinvestment of dividends, but, unlike the Fund's returns, do not reflect
the effects of management fees or expenses.
2 The Lehman Treasury Bond Index is an unmanaged index of intermediate term
government bonds since 12/31/80.
9
<Page>
PACIFIC ADVISORS
Balanced Fund continued
CHANGE IN VALUE OF $10,000 INVESTMENT(1)
This chart shows the growth of a $10,000 investment made in Pacific Advisors
Balanced Fund, Class A shares, on February 8, 1993 compared to the growth of the
S&P 500(2) and Lehman Intermediate T-Bond(3) Indices.
BALANCED FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
BALANCED FUND S&P 500 INDEX LEHMAN T-BOND INDEX
Feb-1993 $9,425 $10,000 $10,000
Dec-1993 $9,423 $10,706 $10,826
Dec-1994 $9,195 $10,541 $10,604
Dec-1995 $9,996 $14,137 $12,140
Dec-1996 $11,587 $17,348 $12,622
Dec-1997 $13,353 $22,728 $13,590
Dec-1998 $14,379 $28,789 $14,764
Dec-1999 $16,206 $34,412 $14,829
Dec-2000 $17,825 $30,922 $16,339
Dec-2001 $16,978 $26,890 $17,643
12/31/2002 $16,120 $20,606 $19,282
</Table>
Average Annual Compounded Return for period ending December 31, 2002 (Class A
shares)
<Table>
One Year -10.46%
Five Year 2.62%
Inception 4.95%
</Table>
- ----------------------------------
1 Performance figures represent the change in value of an investment over the
periods shown, and have been restated to include the maximum 5.75% initial sales
charge, assuming reinvestment of dividends and capital gains at net asset value
and after expense reimbursements. Past performance does not guarantee future
results. Share price and returns fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost.
2 The Standard & Poor's 500 Index is an unmanaged, market capitalization
weighted measure of 500 widely held common stocks listed on the New York Stock
Exchange, American Stock Exchange and The Nasdaq Stock Market. The Index returns
assume reinvestment of dividends, but, unlike the Fund's returns, do not reflect
the effects of management fees or expenses.
3 The Lehman Treasury Bond Index is an unmanaged index of intermediate
government bonds since 12/31/80.
10
<Page>
PACIFIC ADVISORS
Growth Fund
INVESTS PRIMARILY IN COMPANIES THAT ARE A PART OF THE S&P 500 COMPOSITE INDEX(1)
OR THE NASDAQ 100 INDEX(2).
INTERVIEW WITH PORTFOLIO MANAGER
THOMAS H. HANSON
FOR THE YEAR ENDED DECEMBER 31, 2002, THE FUND HAD A LOSS OF -22.16% FOR
CLASS A SHARES, AND -22.64% FOR CLASS C SHARES. THE FUND'S BENCHMARKS, THE S&P
500 AND THE NASDAQ 100, DECLINED -23.37% AND -37.58%, RESPECTIVELY, DURING THE
SAME PERIOD.
Q WHAT WAS THE FUND'S INVESTMENT STRATEGY DURING THE PAST YEAR?
A In 2002, the market remained event driven resulting in persistent
volatility and a lack of sustained market leadership. Last year marked the third
straight year of decline for the equity markets, a first for the market in over
60 years. Growth stocks in particular continued to perform poorly. In response,
the Fund maintained a defensive and adaptive investment strategy to manage risk
and minimize losses.
The Fund's strategy has always been to follow market leadership by
rotating out of weaker stocks and sectors and moving into those stocks and
sectors representing new leadership in the market. The frequent change in market
leadership during 2002 significantly accelerated the pace of the Fund's buy and
hold strategy. For example, the Fund invested in the oil services and energy
sector when it was leading the market in March of last year. When that sector
began to weaken early in the 4th quarter, the Fund left that area of the market
and moved into the stronger and more defensive healthcare sector.
While implementing this adaptive strategy, the Fund worked to manage risk
through diversification. The Fund diversified across sectors and market
capitalizations to limit its exposure in any one area of the market. As a result
of this adaptive strategy, the Fund successfully managed increased market risk
and achieved better performance than its benchmarks, the S&P 500 and the Nasdaq
100.
Q WHAT IS THE RELATIONSHIP BETWEEN RISK AND REWARD WHEN INVESTING IN GROWTH
STOCKS?
A Since growth stocks represent companies with accelerating earnings
growth, they typically comprise one of the more aggressive areas of the equity
market. As we saw in the late '90s, growth stocks can offer high reward
potential. And, as we have been painfully reminded in last several years, the
greater the reward the greater the risk. As a result of the unprecedented
overvaluation of growth stocks in the '90s, the current correction has been
particularly steep and prolonged.
While risk management cannot prevent loss, it can help limit losses
during periods of poor performance. If it becomes evident a stock cannot sustain
its growth rate and meet performance expectations, the Fund sells its position.
Diversification and a willingness to take profits helped the fund limit losses
and take advantage of limited opportunities for capital appreciation in 2002.
Q WHEN WILL WE SEE A RECOVERY IN THE GROWTH AREA OF THE MARKET?
A Economic recovery progressed much slower than anticipated in 2002.
Nevertheless, we did see promising signs including improved economic growth, a
recovery in corporate earnings, improved productivity and early signs of an
increase in business spending. With interest rates at historic lows and the
government committed to providing any necessary stimulus, economic recovery
should continue in 2003. A resolution to geopolitical uncertainty would provide
a strong catalyst for a market recovery. As uncertainties subside and the market
begins to fully appreciate these developments, performance for growth stocks and
the Fund should improve.
Q SHOULD INVESTORS CONTINUE TO INVEST IN GROWTH STOCKS?
A The last few years have been difficult and frustrating for growth
investors to say the least. These conditions make it tempting to dismiss the
value of growth stocks altogether. Growth stocks,
11
<Page>
PACIFIC ADVISORS
Growth Fund continued
however, still play an important role in a diversified portfolio. The amount of
an investor's portfolio allocated to growth stocks should depend on the
investor's individual risk/reward profile.
Different areas of the market perform well at different times and under
different conditions. Growth companies, and by extension growth stocks, perform
best when economic growth is strong. In 2002, the economy began to recover and
corporate earnings began to improve. As recovery continues, growth stocks should
receive greater market recognition and experience improved performance. Most
gains associated with a recovery occur early in the recovery cycle. Investors
sitting on the sidelines waiting for confirmation of a recovery can miss this
valuable opportunity.
-------------------------------------------------------
INVESTMENT MIX as of 12/31/02
[GRAPHIC]
<Table>
1. EQUITIES 80.09%
2. CASH 19.91%
</Table>
1 The Standard & Poor's 500 Index is an unmanaged, market capitalization
weighted measure of 500 widely held common stocks listed on the New York Stock
Exchange, American Stock Exchange and The Nasdaq Stock Market. The Index returns
assume reinvestment of dividends but, unlike the Fund's returns, do not reflect
the effects of management fees or expenses.
2 The Nasdaq 100 Stock Index is an unmanaged, weighted measure of the 100
largest non-financial domestic and international common stocks listed on The
Nasdaq Stock Market. The Index returns assume reinvestment of dividends, but,
unlike the Fund, do not reflect management fees or expenses.
12
<Page>
CHANGE IN VALUE OF $10,000 INVESTMENT(1)
This chart shows the growth of a $10,000 investment made in Pacific Advisors
Growth Fund, Class A shares, on May 1, 1999 compared to the growth of the S&P
500(2) and Nasdaq 100(3) Indices.
GROWTH FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
GROWTH FUND S&P 500 INDEX NASDAQ 100 INDEX
May-1999 $10,000 $10,000 $10,000
Dec-1999 $11,875 $11,953 $20,109
Dec-2000 $10,002 $10,741 $12,701
Dec-2001 $7,163 $9,340 $8,554
12/31/2002 $5,576 $7,158 $5,339
</Table>
Average Annual Compounded Return for period ending December 31, 2002 (Class A
shares)
<Table>
One Year -26.74%
Inception -16.49%
</Table>
- ----------------------------------
1 Performance figures represent the change in value of an investment over the
periods shown, and have been restated to include the maximum 5.75% initial sales
charge, assuming reinvestment of dividends and capital gains at net asset value
and after expense reimbursements. Past performance does not guarantee future
results. Share price and returns fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost.
2 The Standard & Poor's 500 Index is an unmanaged, market capitalization
weighted measure of 500 widely held common stocks listed on the New York Stock
Exchange, American Stock Exchange and The Nasdaq Stock Market. The Index returns
assume reinvestment of dividends, but, unlike the Fund's returns, do not reflect
the effects of management fees or expenses.
3 The Nasdaq 100 Stock Index is an unmanaged, weighted measure of the 100
largest non-financial domestic and international common stocks listed on The
Nasdaq Stock Market. The Index returns assume reinvestment of dividends, but,
unlike the Fund, do not reflect management fees or expenses.
13
<Page>
PACIFIC ADVISORS
Multi-Cap Value Fund
INVESTS IN A DIVERSIFIED PORTFOLIO OF LARGE TO SMALL CAPITALIZATION COMPANIES
USING AN ACTIVELY MANAGED, VALUE-BASED INVESTMENT APPROACH.
INTERVIEW WITH PORTFOLIO MANAGER
SHELLY J. MEYERS
THE MULTI-CAP VALUE FUND BEGAN OPERATIONS ON APRIL 1, 2002. THIS FUND IS FOR
INVESTORS WITH A LONG-TERM INVESTMENT HORIZON SEEKING AN ACTIVELY MANAGED FUND
WITH A VALUE-STYLE INVESTMENT STRATEGY. THE FUND INVESTS AT LEAST 60% OF ITS
ASSETS IN EQUITY SECURITIES OF COMPANIES WITH MARKET CAPITALIZATIONS OF AT LEAST
$2 BILLION, BUT MAY INVEST IN COMPANIES IN ALL RANGES OF MARKET CAPITALIZATION.
FROM APRIL 1 THROUGH DECEMBER 31, 2002, CLASS A SHARES RETURNED -20.50% AND
CLASS C SHARES RETURNED -20.90%. FOR THE YEAR ENDED DECEMBER 31, 2002, THE
FUND'S BENCHMARK, THE S&P 500(1), RETURNED -23.37%.
Q WHAT IS THE FUND'S INVESTMENT STRATEGY?
A The Fund aims to achieve long-term capital appreciation by investing in
undervalued small, mid and large cap stocks. Companies are considered or
selected for investment when analysis demonstrates strong fundamentals, high
intrinsic value and the presence of a price catalyst.
Investment selection begins by looking for companies with solid
fundamentals including, a strong balance sheet, competent management team and
sound business strategy. Next, the Fund looks at a company's market valuation.
The Fund specifically looks for companies undervalued by the market which
provide an attractive opportunity for capital appreciation. Finally, the Fund
looks for a price catalyst, an internal or external event, that will help the
company gain market recognition and capital appreciation. The Fund monitors its
investments to ensure that they continue to meet these criteria and add value to
the Fund.
This strategy stems from the belief that, in the long run, the market
always recognizes and rewards value. As a result, the Fund maintains a long-term
focus and will not chase short-term market trends. As long as they continue to
meet the Fund's investment criteria, positions are typically held for a period
of 1-3 years to allow sufficient time for the market to reward value. While the
Fund operates with a long-term perspective, it does not ignore the impact of
changing market conditions. The Fund seeks to minimize market risk by
maintaining a disciplined strategy and a well diversified portfolio.
Q WHAT WERE THE CHALLENGES OF STARTING A NEW FUND IN 2002?
A In 2002, prolonged economic uncertainty and market volatility presented
the Fund with unique challenges and opportunities. Early in the year, as the
Fund built its portfolio, the greatest challenge was sifting through the
casualties of the market retreat to select the best buying opportunities. The
Fund acquired a number of solid companies with the ability to add value to the
Fund over time including, CISCO SYSTEMS, EMC, GAP, and SOLA INTERNATIONAL. As a
new fund, the Fund benefited from its large cash position, which allowed it to
take advantage of these opportunities and create a diversified portfolio.
As the portfolio grew, the Fund focused on risk management. An important
part of this process was remaining focused on, and committed to, the Fund's
long-term investment strategy. This allowed the Fund to adapt to short-term
market conditions while continuing to make investment decisions that would help
the Fund achieve its long-term investment objective. The Fund also managed risk
through diversification and careful stock selection. We believe this strategy
successfully minimized the Fund's risk while positioning the Fund for long-term
success.
Q WHAT ARE THE ADVANTAGES OF INVESTING IN A NEW FUND?
A Investing in a new fund during 2002 provided investors with the
opportunity to enter the market near its bottom. This typically puts investors
in a good position to benefit from improved market
14
<Page>
conditions without trying to time the market. As the market correction has
persisted, the opportunity to take advantage of this benefit still exists.
Q WHEN DO YOU EXPECT AN IMPROVEMENT IN MARKET PERFORMANCE?
A Despite tumultuous conditions last year, the economy and the market
showed some improvement. Economic growth rose to 2.8% and a number of indicators
late in the year suggested the market was nearing a bottom. With low inflation,
low interest rates and improving productivity, the environment is right for
continued improvement heading into 2003. A resolution to existing geopolitical
uncertainties would serve as a major catalyst to economic recovery while
providing greater market predictability.
While we expect improved market performance, heightened market volatility
will remain until present geopolitical uncertainties dissipate. Market
conditions last year allowed the Fund to acquire a solid portfolio of value
companies at discounted prices. The Fund is well positioned to benefit from
improving market conditions and take advantage of additional investment
opportunities in the coming year.
-------------------------------------------------------
INVESTMENT MIX as of 12/31/02
[GRAPHIC]
<Table>
1. EQUITIES 90.42%
2. CASH 9.58%
</Table>
1 The Standard & Poor's 500 Index is an unmanaged, market capitalization
weighted measure of 500 widely held common stocks listed on the New York Stock
Exchange, American Stock Exchange and The Nasdaq Stock Market. The Index returns
assume reinvestment of dividends, but, unlike the Fund's returns, do not reflect
the effects of management fees or expenses.
15
<Page>
PACIFIC ADVISORS
Multi-Cap Value Fund continued
CHANGE IN VALUE OF $10,000 INVESTMENT(1)
This chart shows the growth of a $10,000 investment made in Pacific Advisors
Multi-Cap Value Fund, Class A shares, on April 1, 2002 compared to the growth of
the S&P 500(2).
MULTI-CAP VALUE FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
MULTI-CAP VALUE FUND S&P 500 INDEX
Apr-2002 $10,000 $10,000
12/31/2002 $7,493 $7,663
</Table>
Average Annual Compounded Return for period ending December 31, 2002 (Class A
shares)
<Table>
Inception -31.92%
</Table>
- ----------------------------------
1 Performance figures represent the change in value of an investment over the
periods shown, and have been restated to include the maximum 5.75% initial sales
charge, assuming reinvestment of dividends and capital gains at net asset value
and after expense reimbursements. Past performance does not guarantee future
results. Share price and returns fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost.
2 The Standard & Poor's 500 Index is an unmanaged, market capitalization
weighted measure of 500 widely held common stocks listed on the New York Stock
Exchange, American Stock Exchange and The Nasdaq Stock Market. The Index returns
assume reinvestment of dividends, but, unlike the Fund's returns, do not reflect
the effects of management fees or expenses.
16
<Page>
PACIFIC ADVISORS
Small Cap Fund
INVESTS PRIMARILY IN SMALL COMPANY VALUE STOCKS WITH AN AVERAGE MARKET CAP BELOW
$500M. THE FUND FOCUSES ON COMPANIES WITH STRONG EARNINGS AND GROWTH POTENTIAL.
INTERVIEW WITH PORTFOLIO MANAGERS
GEORGE A. HENNING
THOMAS H. HANSON
FOR THE YEAR ENDED DECEMBER 31, 2002, THE FUND HAD A TOTAL RETURN OF -32.20% FOR
CLASS A SHARES, AND -33.27% FOR CLASS C SHARES. THE FUND'S BENCHMARK, THE
RUSSELL 2000 STOCK INDEX(1), RETURNED -21.58% FOR THE SAME PERIOD.
Q AFTER A STRONG YEAR IN 2001, WHY DID SMALL CAP STOCKS UNDERPERFORM IN
2002?
A Small cap stocks started the year on a good note with strong performance
in the 1st quarter. In March, a wave of corporate scandals touched off a market
decline. Market sentiment grew increasingly pessimistic as inconsistent economic
data and emerging geopolitical threats raised additional concerns. The market
deteriorated, reaching a low in July. After a brief rebound, the market bottomed
again in October and went on to record its third consecutive year of negative
performance.
As is typical in this kind of event-driven market, investors sold on any
sign of bad news, whether real or perceived. For example, when economic data
indicated weaker than expected economic growth, investors assumed business would
suffer across the board without considering individual company fundamentals.
Even with double digit growth in revenues and earnings, SONIC AUTOMOTIVE, one of
the Fund's largest positions, lost 50% of its value due to this phenomenon.
Despite the lack current market recognition, Sonic's solid fundamentals and
strong growth potential make it the kind of company the Fund seeks to invest in.
A similar situation developed in the aftermath of the corporate scandals.
In light of new accounting standards, many companies initiated independent
reviews of past earnings. The market punished these companies for "guilt by
association" despite no actual presence of fraud. Another one of the Fund's
positions, CARREKER CORPORATION, fell victim to these circumstances. While it
will restate its revenues in response to new accounting requirements, its
position as one of the leading providers of software solutions to financial
institutions remains unchanged.
In many cases, small cap stocks continued to report solid growth in
revenue and earnings. Market conditions, however, made it difficult for these
companies to receive their due recognition. As a result, small cap stocks
performed poorly in 2002.
Q HOW DID THE FUND IMPLEMENT ITS INVESTMENT STRATEGY LAST YEAR?
A Volatile market conditions led the Fund to maintain a defensive
investment strategy last year. The Fund concentrated its holdings in sectors
expected to perform well in a slower economy. These positions included CARBO
CERAMICS and CHESAPEAKE ENERGY in the energy sector, financial companies such as
NARA BANK and EAST WEST BANK and healthcare issues such as AMERICA SERVICE
GROUP. When possible, the Fund took advantage of opportunities to add to these
positions and acquire other attractive companies including CALLAWAY GOLF and
TEAM, INC.
Many of these companies continued to report record growth in earnings
while maintaining dominant positions in their respective industries. Poor market
conditions, however, prevented them from receiving greater market recognition
and price appreciation. A full reassessment of the portfolio has shown that the
Fund's positions are being overly discounted by the market, but the inherent
values of these companies remain exceptional.
Q WHAT POSITIONS PERFORMED WELL FOR THE FUND IN 2002?
A One of the Fund's strongest performances last year came from AMERICA
SERVICE GROUP (ASGR), a leading provider of healthcare services to correctional
facilities. ASGR made a solid recovery
17
<Page>
PACIFIC ADVISORS
Small Cap Fund continued
last year after renegotiating their contracts to guarantee revenue and protect
against losses. In addition, ASGR experienced record growth and remained a
leader in their industry.
Investors remained skeptical and hesitant to commit to stocks, even
stocks with good performance, throughout 2002. As a result, the market produced
few superstars last year. Many of the Fund's positions, such as FIRST CASH
FINANCIAL SERVICES and ELCOR, added value to the Fund by simply maintaining or
achieving modest improvement in their valuations.
Q WHAT IS THE OUTLOOK FOR SMALL CAP STOCKS IN THE COMING YEAR?
A In 2002, we saw the beginning of an economic recovery as evidenced by a
significant improvement in economic growth and an end to the corporate profit
recession. The market failed to fully appreciate these achievements because of
concerns raised by corporate scandals and geopolitical tensions.
Economic growth is expected to accelerate next year in response to low
interest rates, improving productivity and the government's commitment to
providing economic stimulus. Technical indicators in the latter part of 2002
suggest that the market is also poised for a recovery in the coming year. Strong
and sustained improvement in both the economy and the market, however, will
depend heavily on greater clarity in the situation with Iraq and other
geopolitical conflicts.
While the market will likely remain volatile as it transitions into a
recovery phase, we do expect improved performance next year. Although large cap
stocks may be the first to benefit from a recovery, we anticipate improved
performance in small cap stocks as well. The Fund will continue to maintain a
defensive strategy until market volatility subsides. The Fund is well positioned
to benefit from further economic improvement with companies that will perform
well in a slow or recovering economy.
-------------------------------------------------------
INVESTMENT MIX as of 12/31/02
[GRAPHIC]
<Table>
1. EQUITIES 100.00%
</Table>
1 The Russell 2000 Stock Index is an unmanaged, market-weighted measure of
stock market performance. It contains stocks of the 2,000 smallest publicly
traded companies of the Russell 3000 Index. The Russell 2000 Stock Index does
not take capital gains into consideration, and, unlike the Fund, does not
reflect the effects of management fees or expenses.
18
<Page>
CHANGE IN VALUE OF $10,000 INVESTMENT(1)
This chart shows the growth of a $10,000 investment made in Pacific Advisors
Small Cap Fund, Class A shares, on February 8, 1993 compared to the growth of
the Russell 2000 Index(2).
SMALL CAP FUND
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<Table>
<Caption>
SMALL CAP FUND RUSSELL 2000 INDEX
Feb-1993 $9,425 $10,000
Dec-1993 $11,319 $11,700
Dec-1994 $10,870 $11,328
Dec-1995 $12,771 $14,297
Dec-1996 $18,352 $16,407
Dec-1997 $19,628 $19,774
Dec-1998 $16,379 $19,092
Dec-1999 $13,800 $22,837
Dec-2000 $15,570 $21,878
Dec-2001 $18,720 $22,103
12/31/2002 $12,692 $17,334
</Table>
Average Annual Compounded Return for period ending December 31, 2002 (Class A
shares)
<Table>
One Year -36.10%
Five Year -9.45%
Inception 3.03%
</Table>
- ----------------------------------
1 Performance figures represent the change in value of an investment over the
periods shown, and have been restated to include the maximum 5.75% initial sales
charge, assuming reinvestment of dividends and capital gains at net asset value
and after expense reimbursements. Past performance does not guarantee future
results. Share price and returns fluctuate, so that your shares, when redeemed,
may be worth more or less than their original cost.
2 The Russell 2000 Stock Index is an unmanaged, market weighted measure of
stock market performance. It contains stocks of the 2,000 smallest publicly
traded companies of the Russell 3000 Index. The Russell 2000 Stock Index does
not take capital gains into consideration, and, unlike the Fund, does not
reflect the effects of management fees or expenses.
19
<Page>
PACIFIC ADVISORS
financial statements
[GRAPHIC]
20
<Page>
PACIFIC ADVISORS GOVERNMENT SECURITIES FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ----------------------------------------------------------------
US GOVERNMENT SECURITIES - 83.93%
US Treasury Bonds
US Treasury Bond 7.125%
02/15/23 $ 660,000 $ 849,904
US Treasury Bond 7.50% 11/15/24 600,000 809,227
US Treasury Bond 7.625%
11/15/22 600,000 811,219
US Treasury Bond 7.625%
02/15/25 600,000 820,031
US Treasury Bond 8.125%
08/15/19 670,000 933,237
US Treasury Bond 8.125%
08/15/21 650,000 914,723
US Treasury Bond 8.75% 11/15/08 580,000 616,227
- ----------------------------------------------------------------
5,754,568
- ----------------------------------------------------------------
US Treasury Note
US Treasury Note 3.875%
07/31/03 100,000 101,531
- ----------------------------------------------------------------
US Treasury Bill
US Treasury Bill 01/23/03 2,100,000 2,098,637
- ----------------------------------------------------------------
US Government Agencies
Federal Farm Credit Bank 6.125%
12/29/15 520,000 596,939
Federal Home Loan Bank 11/14/11 830,000 805,100
Federal Home Loan Bank 5.00%
02/14/03 750,000 753,238
Federal Home Loan Bank 5.50%
08/15/16 700,000 756,658
Federal Home Loan Bank 6.25%
10/15/31 53,497 53,460
Federal National Mortgage
Association 6.05% 03/27/09 500,000 505,129
Federal National Mortgage
Association 6.40% 05/14/09 500,000 527,124
Federal National Mortgage
Association 6.60% 07/16/07 580,000 622,942
- ----------------------------------------------------------------
4,620,590
- ----------------------------------------------------------------
TOTAL US GOVERNMENT SECURITIES
(Cost: $12,388,206) 12,575,326
-----------
<Caption>
Number of
Shares Value
- ----------------------------------------------------------------
COMMON STOCK - 10.33%
Communications
SK Telecom ADR 10,000 213,500
- ----------------------------------------------------------------
Telephone Systems
Telecom Corporation New Zealand
ADR 13,500 258,120
Telefonos De Mexico 8,500 271,830
- ----------------------------------------------------------------
529,950
- ----------------------------------------------------------------
Utilities - Electric
Nisource, Inc. 14,700 294,000
Pepco Holding, Inc. 12,500 242,375
- ----------------------------------------------------------------
536,375
- ----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
21
<Page>
PACIFIC ADVISORS GOVERNMENT SECURITIES FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- ----------------------------------------------------------------
COMMON STOCK CONTINUED
Utilities - Water
Philadelphia Suburban
Corporation 13,000 $ 267,800
- ----------------------------------------------------------------
TOTAL COMMON STOCK
(Cost: $1,534,378) 1,547,625
-----------
TOTAL INVESTMENT SECURITIES - 94.26%
(Cost: $13,922,584) $14,122,951
-----------
SHORT-TERM INVESTMENTS - 3.83%
United Missouri Bank Money
Market Fund 573,495
OTHER ASSETS LESS LIABILITIES - 1.91% 286,546
-----------
TOTAL NET ASSETS - 100% $14,982,992
- ----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
22
<Page>
PACIFIC ADVISORS INCOME AND EQUITY FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- -----------------------------------------------------------------
CORPORATE BONDS - 63.84%
Aerospace & Defense
McDonnell Douglas 9.75%
04/01/12 $ 75,000 $ 93,919
- -----------------------------------------------------------------
Banks - Regional
First Union Corporation 6.824%
08/01/26 25,000 29,444
Wells Fargo Company 7.20%
05/01/03 50,000 50,911
- -----------------------------------------------------------------
80,355
- -----------------------------------------------------------------
Cosmetic/Personal Care
Scott Paper Company 10.00%
03/15/05 60,000 69,938
- -----------------------------------------------------------------
Entertainment
Time Warner, Inc. 8.11%
08/15/06 100,000 107,637
- -----------------------------------------------------------------
Financial Services
Associates Corporation N.A.
8.55% 07/15/09 50,000 59,240
Ford Motor Credit Corporation
7.375% 10/28/09 50,000 49,543
General Motors Acceptance
Corporation 4.60% 10/15/03 35,000 35,262
General Motors Acceptance
Corporation 5.75% 11/10/03 33,000 33,547
General Motors Acceptance
Corporation 5.875% 01/22/03 146,000 146,209
General Motors Acceptance
Corporation 7.125% 05/01/03 78,000 78,860
- -----------------------------------------------------------------
402,661
- -----------------------------------------------------------------
Financial Services - Diversified
General Electric Capital
Corporation 7.875% 11/22/04 24,000 26,612
General Electric Capital
Corporation 8.50% 07/24/08 46,000 56,182
General Electric Capital
Corporation 8.65% 05/15/09 40,000 50,151
General Electric Capital
Corporation 8.875% 05/15/09 85,000 107,633
Norwest Financial Notes 6.00%
02/01/04 85,000 88,628
- -----------------------------------------------------------------
329,206
- -----------------------------------------------------------------
Food Retailers
Safeway, Inc. 9.875% 03/15/07 229,000 278,191
- -----------------------------------------------------------------
Heavy Machinery
Deere & Company 8.95% 6/15/19 55,000 65,746
- -----------------------------------------------------------------
Industrial
Caterpillar, Inc. 9.375%
08/15/11 84,000 112,027
Honeywell, Inc. 7.00% 03/15/07 80,000 90,390
- -----------------------------------------------------------------
202,417
- -----------------------------------------------------------------
Insurance - Full Line
Transamerica Corporation 9.375%
03/01/08 100,000 123,518
- -----------------------------------------------------------------
Insurance - Life
American General Finance
Corporation 8.125% 08/15/09 191,000 223,650
- -----------------------------------------------------------------
Insurance - Specialty
MBIA, Inc. 9.375% 02/15/11 50,000 62,621
- -----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
23
<Page>
PACIFIC ADVISORS INCOME AND EQUITY FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- -----------------------------------------------------------------
CORPORATE BONDS CONTINUED
Oil - Integrated Majors
Atlantic Richfield 9.125%
03/01/11 $ 165,000 $ 215,135
- -----------------------------------------------------------------
Retailers - Broadline
Dayton Hudson Company 10.00%
01/01/11 150,000 200,882
- -----------------------------------------------------------------
Telephone Systems
Ameritech Capital 6.30%
10/15/04 40,000 42,666
Bellsouth Capital Funding
Corporation 6.04% 11/15/26 85,000 93,878
Bellsouth Telecom 6.25%
05/15/03 25,000 25,409
GTE Corporation 9.10% 06/01/03 40,000 41,009
GTE Hawaiian Telecom 6.75%
02/15/05 175,000 188,347
New England Telephone 6.25%
03/15/03 25,000 25,201
New Jersey Bell Telephone
4.625% 06/01/05 39,000 39,121
- -----------------------------------------------------------------
455,631
- -----------------------------------------------------------------
Utilities - Electric
Baltimore Gas & Electric 5.50%
04/15/04 45,000 46,587
Baltimore Gas & Electric 6.125%
07/01/03 102,000 103,885
Baltimore Gas & Electric 8.54%
09/18/06 100,000 115,790
Niagara Mohawk Power 9.75%
11/01/05 20,000 23,405
Public Service Electric & Gas
6.875% 01/01/03 65,000 65,000
Public Service Electric & Gas
8.875% 06/01/03 25,000 25,558
Public Service Electric & Gas
9.125% 07/01/05 136,000 156,271
- -----------------------------------------------------------------
536,496
- -----------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost: $3,249,376) 3,448,003
-----------
FOREIGN BONDS - 1.40%
Foreign Government
Ontario Province Canada 7.625%
06/22/04 70,000 75,643
- -----------------------------------------------------------------
TOTAL FOREIGN BONDS
(Cost: $74,104) 75,643
-----------
<Caption>
Number of
Shares Value
- -----------------------------------------------------------------
COMMON STOCK - 15.92%
Automobile Parts
Genuine Parts Company 2,000 61,600
- -----------------------------------------------------------------
Diversified Companies
General Electric 2,000 48,700
- -----------------------------------------------------------------
Financial Services - Specialty
Freddie Mac 1,000 59,050
- -----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
24
<Page>
PACIFIC ADVISORS INCOME AND EQUITY FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- -----------------------------------------------------------------
COMMON STOCK CONTINUED
Food
Del Monte Foods* 446 $ 3,434
Heinz Corporation 1,000 32,870
Kellogg Company 1,000 34,270
- -----------------------------------------------------------------
70,574
- -----------------------------------------------------------------
Healthcare Provider
HCA, Inc. 1,000 41,500
- -----------------------------------------------------------------
Industrial Diversified
Tyco International, Ltd. 2,000 34,160
- -----------------------------------------------------------------
Insurance - Property
American International
Group, Inc. 1,000 57,850
Chubb Corporation 500 26,100
- -----------------------------------------------------------------
83,950
- -----------------------------------------------------------------
Insurance - Specialty
Caremark RX, Inc. 2,000 32,500
- -----------------------------------------------------------------
Medical & Biotechnology
Johnson & Johnson 2,000 107,420
- -----------------------------------------------------------------
Medical Equipment
Becton, Dickinson and Company 1,200 36,828
- -----------------------------------------------------------------
Pipelines
El Paso Energy Corporation 1,000 6,960
- -----------------------------------------------------------------
Pharmaceuticals
Pfizer, Inc. 2,500 76,425
- -----------------------------------------------------------------
Real Estate Investment Trusts
Hospitality Properties Trust 4,000 140,800
- -----------------------------------------------------------------
Utilities
American Electric Power
Company, Inc. 1,000 27,330
Public Service Enterprise
Group, Inc. 1,000 32,100
- -----------------------------------------------------------------
59,430
- -----------------------------------------------------------------
TOTAL COMMON STOCK
(Cost: $1,056,676) 859,897
-----------
PREFERRED STOCK - 10.97%
Financial Services
Citigroup Capital VII 7.125%
07/31/31 2,000 52,980
- -----------------------------------------------------------------
Insurance - Full Line
ING Capital Funding Trust II 2,500 69,875
- -----------------------------------------------------------------
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
25
<Page>
PACIFIC ADVISORS INCOME AND EQUITY FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- -----------------------------------------------------------------
PREFERRED STOCK CONTINUED
Insurance - Life
American General Preferred C
7.875% 1,000 $ 26,750
Northwestern Capital Financing 1,000 14,700
Phoenix Companies, Inc. 7.45%
01/15/32 3,500 75,775
Westpac Capital Trust 8.00% 3,000 77,700
- -----------------------------------------------------------------
194,925
- -----------------------------------------------------------------
Insurance - Property
Farmers Group Capital II 8.25% 1,000 25,290
- -----------------------------------------------------------------
Real Estate Investment Trusts
Price Legacy Corporation
Preferred A 8.75% 15,000 249,000
- -----------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost: $580,175) 592,070
-----------
COMMERCIAL PAPER - 1.04%
Financial Services
Salomon, Inc. 56,000 56,118
- -----------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost: $56,000) 56,118
-----------
TOTAL INVESTMENT SECURITIES - 93.17%
(Cost: $5,016,331) $ 5,031,731
-----------
SHORT-TERM INVESTMENTS - 7.24%
United Missouri Bank Money
Market Fund 391,240
OTHER ASSETS LESS LIABILITIES - (0.41%) (22,340)
-----------
TOTAL NET ASSETS - 100% $ 5,400,631
- -----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
26
<Page>
PACIFIC ADVISORS BALANCED FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- ------------------------------------------------------------------
COMMON STOCK - 43.89%
Advertising
Interpublic Group 10,000 $ 140,800
- ------------------------------------------------------------------
Biotechnology
Cambrex Corporation 9,000 271,890
- ------------------------------------------------------------------
Chemicals - Specialty
Cabot Corporation 4,000 106,160
Cabot Micro Electronics, Inc. 2,500 118,000
- ------------------------------------------------------------------
224,160
- ------------------------------------------------------------------
Communications
Nokia Corporation ADR 10,000 155,000
- ------------------------------------------------------------------
Computers & Related Equipment
Electronic Data Systems
Corporation 15,000 276,450
- ------------------------------------------------------------------
Containers/Packaging
Sealed Air Corporation 5,000 186,500
- ------------------------------------------------------------------
Diversified Companies
General Electric 15,000 365,250
- ------------------------------------------------------------------
Electric
Duke Energy Corporation 7,500 146,550
- ------------------------------------------------------------------
Entertainment
AT&T - Liberty Media Group
Class A 12,000 107,280
Viacom, Inc.* 5,000 203,800
- ------------------------------------------------------------------
311,080
- ------------------------------------------------------------------
Financial Services
H&R Block 10,000 402,000
- ------------------------------------------------------------------
Financial Services - Diversified
Convergys Corporation* 9,000 136,350
- ------------------------------------------------------------------
Financial Services - Specialty
Federal Home Loan Mortgage
Corporation 3,000 177,150
- ------------------------------------------------------------------
Food
Cadbury Schweppes 6,000 153,660
JM Smucker Company 5,000 199,050
- ------------------------------------------------------------------
352,710
- ------------------------------------------------------------------
Forest Products
Rayonier, Inc. 6,000 271,500
- ------------------------------------------------------------------
Healthcare Provider
Manor Care, Inc. 7,500 139,575
- ------------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
27
<Page>
PACIFIC ADVISORS BALANCED FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- ------------------------------------------------------------------
COMMON STOCK CONTINUED
Industrial - Diversified
Coorstek, Inc. 5,000 $ 127,750
Tyco International, Ltd. 15,000 256,200
- ------------------------------------------------------------------
383,950
- ------------------------------------------------------------------
Industrial & Commercial Services
GATX Corporation 7,500 171,150
Reliance Steel 8,000 166,720
- ------------------------------------------------------------------
337,870
- ------------------------------------------------------------------
Insurance - Full Line
Berkshire Hathaway, Inc. -
Class A 2 145,500
- ------------------------------------------------------------------
Insurance - Life
MetLife, Inc. 7,500 202,800
- ------------------------------------------------------------------
Media
AOL Time Warner 12,000 157,200
- ------------------------------------------------------------------
Medical & Biotechnology
Bristol Myers Squibb Company 7,500 173,625
Inverness Medical Technology* 12,000 157,800
Johnson & Johnson 5,000 268,550
Wyeth 5,000 187,000
- ------------------------------------------------------------------
786,975
- ------------------------------------------------------------------
Medical Equipment
Perkin Elmer 15,000 123,750
- ------------------------------------------------------------------
Oil Refinery & Drilling
Royal Dutch Petroleum Company 4,000 176,080
- ------------------------------------------------------------------
Pharmaceuticals
Pharmaceutical Resources, Inc. 6,000 178,800
Pharmacia Corporation 4,286 179,155
- ------------------------------------------------------------------
357,955
- ------------------------------------------------------------------
Pollution/Waste Management
Waste Management 6,000 137,520
- ------------------------------------------------------------------
Publishing
Moodys Corporation 5,000 206,450
R H Donnelley Corporation* 6,000 175,860
Scholastic Corporation 3,000 107,850
- ------------------------------------------------------------------
490,160
- ------------------------------------------------------------------
Precious Metals
Newmont Mining Corporation 5,000 145,150
- ------------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
28
<Page>
PACIFIC ADVISORS BALANCED FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- ------------------------------------------------------------------
COMMON STOCK CONTINUED
Real Estate
Catellus Development
Corporation* 12,000 $ 238,200
- ------------------------------------------------------------------
Retailers - Specialty
Gap, Inc. 10,000 155,200
- ------------------------------------------------------------------
Software & Computer Processing Equipment
Microsoft* 2,000 103,400
Reynolds & Reynolds 8,000 203,760
- ------------------------------------------------------------------
307,160
- ------------------------------------------------------------------
Technology
Lucent Technologies 50,000 63,000
- ------------------------------------------------------------------
Utilities - Water
Vivendi Environnement ADR 6,000 139,860
- ------------------------------------------------------------------
TOTAL COMMON STOCK
(Cost: $6,871,012) 7,905,295
------------
<Caption>
Principal
Amount Value
- ------------------------------------------------------------------
CORPORATE BONDS - 50.62%
Aerospace & Defense
McDonnell Douglas 9.75%
04/01/12 $ 416,000 520,934
- ------------------------------------------------------------------
Banks - Money Center
Swiss Bank Corporation - NY
7.00% 10/15/15 225,000 257,821
- ------------------------------------------------------------------
Financial Services
General Electric Capital 8.125%
05/15/02 450,000 553,237
General Motors Acceptance
Corporation 7.125% 05/01/03 155,000 156,545
General Motors Acceptance
Corporation 7.15% 06/15/03 50,000 50,879
General Motors Acceptance
Corporation 8.75% 07/15/05 550,000 598,277
National Rural Utilities 6.00%
01/15/04 104,000 107,920
Texaco Capital 8.50% 02/15/03 75,000 75,579
- ------------------------------------------------------------------
1,542,437
- ------------------------------------------------------------------
Food Retailers
Safeway, Inc. 9.30% 02/01/07 167,000 198,391
Safeway, Inc. 9.65% 01/15/04 125,000 133,987
Safeway, Inc. 9.875% 03/15/07 445,000 540,589
- ------------------------------------------------------------------
872,967
- ------------------------------------------------------------------
Gas
Southern California Gas 5.75%
11/15/03 101,000 104,132
- ------------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
29
<Page>
PACIFIC ADVISORS BALANCED FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ------------------------------------------------------------------
CORPORATE BONDS CONTINUED
Industrial
Tenneco Packaging PTV 8.00%
04/15/07 $ 60,000 $ 68,378
Tyco International Group 4.95%
08/01/03 380,000 374,300
- ------------------------------------------------------------------
442,678
- ------------------------------------------------------------------
Insurance - Full Line
Cigna Corporation 8.25%
01/01/07 286,000 309,128
Cigna Corporation 7.40%
01/15/03 61,000 61,074
Cigna Corporation 7.40%
05/15/07 145,000 155,809
Transamerica Corporation 9.375%
03/01/08 100,000 123,519
- ------------------------------------------------------------------
649,530
- ------------------------------------------------------------------
Insurance - Life
American General Finance
Corporation 7.50% 07/15/25 230,000 281,294
- ------------------------------------------------------------------
Oil - Integrated Majors
Atlantic Richfield 9.125%
03/01/11 530,000 691,040
Enron Oil & Gas 6.70% 11/15/06 107,000 116,324
Phillips Petroleum 6.375%
03/30/09 65,000 72,168
- ------------------------------------------------------------------
879,532
- ------------------------------------------------------------------
Pipelines
PGE Gas Transmission 7.80%
06/01/25 140,000 112,000
- ------------------------------------------------------------------
Semiconductor & Related Products
Gerber Products 9.00% 10/15/06 85,000 101,125
- ------------------------------------------------------------------
Telephone Systems
Ameritech Capital 6.30%
10/15/04 85,000 90,666
New Jersey Bell Telephone
4.625% 06/01/05 128,000 128,396
NYNEX Capital Fund 8.23%
10/15/09 350,000 408,798
NYNEX Corporation 9.55%
05/01/10 310,283 354,976
Pacific Bell 5.875% 02/15/06 55,000 60,229
SBC Communications 6.55%
10/07/08 300,000 343,449
- ------------------------------------------------------------------
1,386,514
- ------------------------------------------------------------------
Utilities - Electric
Baltimore Gas & Electric 6.50%
02/15/03 100,000 100,439
Baltimore Gas & Electric 5.50%
04/15/04 25,000 25,882
Cleveland Electric Illuminating
9.50% 05/15/05 143,000 143,476
Illinois Power 7.50% 07/15/25 40,000 30,000
Niagara Mohawk Power 8.00%
06/01/04 30,000 32,224
Niagara Mohawk Power 9.75%
11/01/05 410,000 479,822
Potomac Electric Power 6.50%
03/15/08 82,000 92,817
Public Services Electric & Gas
7.375% 03/01/14 373,000 398,763
Public Services Electric & Gas
6.25% 01/01/07 84,000 92,262
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
30
<Page>
PACIFIC ADVISORS BALANCED FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Principal
Amount Value
- ------------------------------------------------------------------
CORPORATE BONDS CONTINUED
Tampa Electric 6.125% 05/01/03 $ 90,000 $ 90,989
Toledo Edison Company 7.875%
08/01/04 452,000 479,600
- ------------------------------------------------------------------
1,966,274
- ------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost: $8,712,990) 9,117,238
------------
<Caption>
Number of
Shares Value
- ------------------------------------------------------------------
PREFERRED STOCK - 2.76%
Real Estate Investment Trusts
Price Legacy Corporation
Preferred A 8.75% 30,000 498,000
- ------------------------------------------------------------------
TOTAL PREFERRED STOCK
(Cost: $420,630) 498,000
------------
COMMERCIAL PAPER - 2.58%
Financial Services
Salomon, Inc. 463,000 463,972
- ------------------------------------------------------------------
TOTAL COMMERCIAL PAPER
(Cost: $457,930) 463,972
------------
TOTAL INVESTMENT SECURITIES - 99.85%
(Cost: $16,462,562) $ 17,984,505
------------
SHORT-TERM INVESTMENTS - 2.51%
United Missouri Bank Money
Market Fund 452,460
OTHER ASSETS LESS LIABILITIES - (2.36%) (424,934)
------------
TOTAL NET ASSETS - 100% $ 18,012,031
- ------------------------------------------------------------------
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
31
<Page>
PACIFIC ADVISORS GROWTH FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- ----------------------------------------------------------------
COMMON STOCK - 80.08%
Biotechnology
Cambrex Corporation 500 $ 15,105
- ----------------------------------------------------------------
Commercial Services
Tetra Technologies, Inc. 1,250 15,250
- ----------------------------------------------------------------
Computers & Related Equipment
International Business Machines
Corporation 200 15,500
- ----------------------------------------------------------------
Consumer Cyclical
Harman International
Industries, Inc. 300 17,850
- ----------------------------------------------------------------
Containers/Packaging
Pactiv Corporation 500 10,930
- ----------------------------------------------------------------
Diversified Companies
General Electric 1,000 24,350
- ----------------------------------------------------------------
Entertainment
Mattel, Inc. 1,000 19,150
- ----------------------------------------------------------------
Financial Services
Household International
Corporation 300 8,343
- ----------------------------------------------------------------
Food
Performance Food Group Company 1,000 33,959
- ----------------------------------------------------------------
Home Furnishings
Furniture Brands, Inc. 500 11,925
- ----------------------------------------------------------------
Industrial - Diversified
Tyco International, Ltd. 1,000 17,080
- ----------------------------------------------------------------
Insurance - Specialty
Advance PCS* 700 15,547
- ----------------------------------------------------------------
Medical & Biotechnology
Amgen, Inc. 500 24,170
Johnson & Johnson 800 42,968
McKesson Corporation
HBOC, Inc. 500 13,515
Quest Diagnostics, Inc. 300 17,070
- ----------------------------------------------------------------
97,723
- ----------------------------------------------------------------
Medical Equipment, Devices & Supplies
Becton, Dickinson and Company 1,000 30,690
St. Jude Medical, Inc. 1,200 47,664
Zimmer Holdings, Inc.* 500 20,760
- ----------------------------------------------------------------
99,114
- ----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
32
<Page>
PACIFIC ADVISORS GROWTH FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- ----------------------------------------------------------------
COMMON STOCK CONTINUED
Oil - Integrated Majors
Apache Corporation 330 $ 18,807
Exxon Mobil Corporation 400 13,976
- ----------------------------------------------------------------
32,783
- ----------------------------------------------------------------
Pharmaceuticals
Pfizer, Inc. 1,200 36,684
- ----------------------------------------------------------------
Restaurants
AppleBee's International 750 17,393
- ----------------------------------------------------------------
Retailers - Specialty
Linens 'n Things, Inc. 1,000 22,600
- ----------------------------------------------------------------
Software & Computer Processing Equipment
Oracle Corporation* 800 8,640
Siebel Systems, Inc. 500 3,740
- ----------------------------------------------------------------
12,380
- ----------------------------------------------------------------
TOTAL COMMON STOCK
(Cost: $650,625) 523,666
----------
TOTAL INVESTMENT SECURITIES - 80.08%
(Cost: $650,625) $ 523,666
----------
SHORT-TERM INVESTMENTS - 19.91%
United Missouri Bank Money
Market Fund 130,206
OTHER ASSETS LESS LIABILITIES - 0.01% 47
----------
TOTAL NET ASSETS - 100% $ 653,919
- ----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
33
<Page>
PACIFIC ADVISORS MULTI-CAP VALUE FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- -----------------------------------------------------------------
COMMON STOCK - 91.11%
Banks - Regional
Bay View Capital Corporation 5,000 $ 28,750
FleetBoston Financial
Corporation 2,500 60,750
- -----------------------------------------------------------------
89,500
- -----------------------------------------------------------------
Building Materials
Home Depot, Inc. 2,000 47,920
- -----------------------------------------------------------------
Communications
AT&T Corporation 900 23,499
Comcast Corporation 1,440 33,941
- -----------------------------------------------------------------
57,440
- -----------------------------------------------------------------
Computers & Related Equipment
Cisco Systems, Inc. 5,000 65,500
EMC Corporation* 10,000 61,400
Unisys Corporation 5,000 49,500
- -----------------------------------------------------------------
176,400
- -----------------------------------------------------------------
Electrical Components & Equipment
Arrow Electronics, Inc. 4,000 51,160
Calpine Corporation* 10,000 32,600
Qualcomm, Inc. 1,500 54,585
- -----------------------------------------------------------------
138,345
- -----------------------------------------------------------------
Entertainment
Vivendi Universal 5,000 80,350
- -----------------------------------------------------------------
Financial Services
Nationwide Financial
Services, Inc. 1,000 28,650
- -----------------------------------------------------------------
Investment Companies
Goldman Sachs Group, Inc. 1,000 68,100
- -----------------------------------------------------------------
Media
AOL Time Warner 5,000 65,500
- -----------------------------------------------------------------
Medical & Biotechnology
Bristol Myers Squibb Company 3,000 69,450
Serlogicals Corporation 5,000 55,000
Watson Pharmaceutical 1,500 42,405
- -----------------------------------------------------------------
166,855
- -----------------------------------------------------------------
Pharmaceuticals
Pfizer, Inc. 2,000 61,140
Schering-Plough Corporation 2,400 53,280
- -----------------------------------------------------------------
114,420
- -----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
34
<Page>
PACIFIC ADVISORS MULTI-CAP VALUE FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- -----------------------------------------------------------------
COMMON STOCK CONTINUED
Retailers - Broadline
Duane Reade Inc. 2,000 $ 34,000
Pier 1 Imports, Inc. 3,000 56,790
Target Corporation 2,000 60,000
- -----------------------------------------------------------------
150,790
- -----------------------------------------------------------------
Retailers - Drug Based
Sola International, Inc. 5,000 65,000
- -----------------------------------------------------------------
Retailers - Specialty
Gap, Inc. 5,000 77,600
Radio Shack 2,500 46,850
- -----------------------------------------------------------------
124,450
- -----------------------------------------------------------------
Semiconductor & Related
Intel Corporation 3,000 46,710
- -----------------------------------------------------------------
Technology
Lucent Technologies 50,000 63,000
- -----------------------------------------------------------------
Telephone Systems
AT&T Wireless Services, Inc.* 10,000 56,500
SBC Communications 2,000 54,220
- -----------------------------------------------------------------
110,720
- -----------------------------------------------------------------
TOTAL COMMON STOCK
(Cost: $1,731,717) 1,594,150
-----------
TOTAL INVESTMENT SECURITIES - 91.11%
(Cost: $1,731,717) $ 1,594,150
-----------
SHORT-TERM INVESTMENTS - 9.64%
United Missouri Bank Money
Market Fund 168,815
OTHER ASSETS LESS LIABILITIES - (0.75%) (13,273)
-----------
TOTAL NET ASSETS - 100% $ 1,749,692
- -----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
35
<Page>
PACIFIC ADVISORS SMALL CAP FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- -----------------------------------------------------------------
COMMON STOCK - 106.57%
Apparel
Ashworth, Inc.* 34,000 $ 217,600
- -----------------------------------------------------------------
Auto Manufacturers
Sonic Automotive, Inc. 23,000 342,010
- -----------------------------------------------------------------
Banks - Regional
East West Bancorp, Inc. 8,000 288,640
Nara Bank National Association 19,000 394,630
- -----------------------------------------------------------------
683,270
- -----------------------------------------------------------------
Building Materials
Elcor Corporation 15,000 259,500
- -----------------------------------------------------------------
Computers & Related Equipment
Intervoice, Inc.* 130,000 280,800
Tyler Technologies 40,000 166,800
- -----------------------------------------------------------------
447,600
- -----------------------------------------------------------------
Commercial Services
Team, Inc.* 10,000 77,500
- -----------------------------------------------------------------
Communications
Bell Microproducts, Inc.* 28,000 155,120
Clearone Communications, Inc.* 15,000 66,750
- -----------------------------------------------------------------
221,870
- -----------------------------------------------------------------
Construction - Building
Modtech Holding, Inc. 10,000 97,000
- -----------------------------------------------------------------
Containers/Packaging
Mobile Mini, Inc.* 25,000 391,750
- -----------------------------------------------------------------
Financial Services
First Cash Financial
Services, Inc.* 30,200 308,372
- -----------------------------------------------------------------
Food
Monterey Pasta Company * 25,000 93,750
- -----------------------------------------------------------------
Footwear
Genesco, Inc.* 12,000 223,560
- -----------------------------------------------------------------
Golfing Equipment
Callaway Golf Company 10,000 132,500
- -----------------------------------------------------------------
Healthcare Provider
America Service Group* 22,000 371,800
United American Health Care 50,000 54,000
- -----------------------------------------------------------------
425,800
- -----------------------------------------------------------------
Home Furnishings
Haverty Furniture 14,000 194,600
- -----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
36
<Page>
PACIFIC ADVISORS SMALL CAP FUND
SCHEDULE OF INVESTMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Number of
Shares Value
- -----------------------------------------------------------------
COMMON STOCK CONTINUED
Insurance - Full Line
Gainsco, Inc.* 20,000 $ 1,700
- -----------------------------------------------------------------
Insurance - Specialty
Warrantech Corporation * 30,000 37,500
- -----------------------------------------------------------------
Oil - Integrated Majors
Chesapeake Energy Corporation 30,000 232,200
Remington Oil & Gas Corporation 12,000 196,920
- -----------------------------------------------------------------
429,120
- -----------------------------------------------------------------
Oilfield Equipment & Services
Carbo Ceramics, Inc. 6,000 202,200
Seitel, Inc.* 25,000 13,750
- -----------------------------------------------------------------
215,950
- -----------------------------------------------------------------
Railroads
Railamerica, Inc.* 70,000 501,900
- -----------------------------------------------------------------
Semiconductor & Related
Camtek Limited 85,000 26,350
- -----------------------------------------------------------------
Software & Processing
Carreker Corporation * 43,000 194,790
- -----------------------------------------------------------------
Technology
MKS Instruments, Inc. 8,000 131,440
- -----------------------------------------------------------------
TOTAL COMMON STOCK
(Cost: $5,931,906) 5,655,432
-----------
TOTAL INVESTMENT SECURITIES - 106.57%
(Cost: $5,931,906) $ 5,655,432
-----------
OTHER ASSETS LESS LIABILITIES - (6.57%) (348,818)
-----------
TOTAL NET ASSETS - 100% $ 5,306,614
- -----------------------------------------------------------------
</Table>
* Non-income producing
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
37
<Page>
PACIFIC ADVISORS FUND INC.
STATEMENT OF ASSETS AND LIABILITIES
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
INCOME
GOVERNMENT AND
SECURITIES EQUITY
FUND FUND
------------ ------------
ASSETS
Investment Securities
At cost $13,922,584 $ 5,016,331
=========== ===========
At market value $14,122,951 $ 5,031,731
Short-term investments, at cost, which is
equal to market 573,495 391,240
Accrued income receivable 154,319 79,655
Receivable from investment manager (Note 3) 48,528 27,698
Receivable for investments sold - -
Receivable for capital shares sold 121,833 10,147
Other assets 51 24
----------- -----------
Total assets 15,021,177 5,540,495
----------- -----------
LIABILITIES
Bank Overdraft - -
Payable for investments purchased - 83,500
Payable for fund shares redeemed - 34,271
Accounts payable 31,011 19,045
Accounts payable to related parties (Note 3) 6,674 3,048
Payable to Investment Manager (Note 3) 500 -
----------- -----------
Total liabilities 38,185 139,864
----------- -----------
NET ASSETS $14,982,992 $ 5,400,631
----------- -----------
SUMMARY OF SHAREHOLDERS' EQUITY
Paid in capital 14,768,291 5,535,002
Accumulated undistributed net investment
income 12,976 13,868
Accumulated undistributed net realized gains
(losses) on security transactions 1,358 (163,639)
Net unrealized appreciation (depreciation) of
investments 200,367 15,400
----------- -----------
Net assets at December 31, 2002 $14,982,992 $ 5,400,631
----------- -----------
CLASS A:
Net assets $ 4,124,740 $ 2,116,633
=========== ===========
Shares authorized 50,000,000 50,000,000
Shares outstanding 404,428 213,590
Net asset value and redemption price per share $ 10.20 $ 9.91
=========== ===========
Maximum offering price per share $ 10.71 $ 10.40
Sales load 4.75% 4.75%
CLASS C: 10.20 9.91
Net assets $10,858,252 $ 3,283,998
=========== ===========
Shares authorized 50,000,000 50,000,000
Shares outstanding 1,091,664 342,002
Net asset value and redemption price per share $ 9.95 $ 9.60
=========== ===========
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
38
<Page>
- --------------------------------------------------------------------------------
<Table>
<Caption>
MULTI-CAP SMALL
BALANCED GROWTH VALUE CAP
FUND FUND FUND FUND
------------ ------------ ------------ ------------
ASSETS
Investment Securities
At cost $16,462,562 $ 650,625 $ 1,731,717 $ 5,931,906
=========== =========== =========== ===========
At market value $17,984,505 $ 523,666 $ 1,594,150 $ 5,655,432
Short-term investments, at cost, which is
equal to market 452,460 130,206 168,815 -
Accrued income receivable 202,375 828 4,771 2,900
Receivable from investment manager (Note 3) - 13,022 16,356 -
Receivable for investments sold - - - 168,092
Receivable for capital shares sold 189,627 2,107 500 704
Other assets 69 - - 135
----------- ----------- ----------- -----------
Total assets 18,829,036 669,829 1,784,592 5,827,263
----------- ----------- ----------- -----------
LIABILITIES
Bank Overdraft - - - 488,071
Payable for investments purchased 756,014 - - -
Payable for fund shares redeemed 2,850 11,504 27,300 -
Accounts payable 38,827 3,128 6,294 24,549
Accounts payable to related parties (Note 3) 8,068 1,278 1,306 4,543
Payable to Investment Manager (Note 3) 11,246 - - 3,486
----------- ----------- ----------- -----------
Total liabilities 817,005 15,910 34,900 520,649
----------- ----------- ----------- -----------
NET ASSETS $18,012,031 $ 653,919 $ 1,749,692 $ 5,306,614
----------- ----------- ----------- -----------
SUMMARY OF SHAREHOLDERS' EQUITY
Paid in capital 16,563,134 1,498,538 2,001,317 5,585,895
Accumulated undistributed net investment
income - - - -
Accumulated undistributed net realized gains
(losses) on security transactions (73,046) (717,660) (114,058) (2,807)
Net unrealized appreciation (depreciation) of
investments 1,521,943 (126,959) (137,567) (276,474)
----------- ----------- ----------- -----------
Net assets at December 31, 2002 $18,012,031 $ 653,919 $ 1,749,692 $ 5,306,614
----------- ----------- ----------- -----------
CLASS A:
Net assets $ 3,976,576 $ 464,036 $ 502,518 $ 4,763,439
=========== =========== =========== ===========
Shares authorized 50,000,000 50,000,000 50,000,000 50,000,000
Shares outstanding 290,467 84,608 63,181 461,729
Net asset value and redemption price per share $ 13.69 $ 5.48 $ 7.95 $ 10.32
=========== =========== =========== ===========
Maximum offering price per share $ 14.53 $ 5.81 $ 8.44 $ 10.95
Sales load 5.75% 5.75% 5.75% 5.75%
CLASS C: 13.69 5.48 7.95 10.32
Net assets $14,035,455 $ 189,883 $ 1,247,174 $ 543,175
=========== =========== =========== ===========
Shares authorized 50,000,000 50,000,000 50,000,000 50,000,000
Shares outstanding 1,047,451 35,621 157,741 56,280
Net asset value and redemption price per share $ 13.40 $ 5.33 $ 7.91 $ 9.65
=========== =========== =========== ===========
</Table>
39
<Page>
PACIFIC ADVISORS FUND INC.
STATEMENT OF OPERATIONS
For the year ended December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
INCOME
GOVERNMENT AND
SECURITIES EQUITY
FUND FUND
----------- ----------
INVESTMENT INCOME
Dividends $ 42,301 $ 56,365
Interest 433,786 188,618
---------- ---------
Total Income 476,087 244,983
---------- ---------
EXPENSES
Investment Management
Fees 72,784 34,224
Transfer Agent Fees 41,077 37,755
Fund Accounting Fees 58,324 24,672
Legal Fees 37,703 13,871
Audit Fees 30,813 13,283
Registration Fees 12,966 7,051
Printing 9,271 6,284
Custody Fees 10,248 9,018
Director
Fees/Meetings 3,222 1,466
Distribution Fees
(Note 3) 72,732 27,942
Other Expense 4,728 2,840
---------- ---------
Total Expenses,
before
reimbursements 353,868 178,406
Less fees waived and
expenses
reimbursed
(Note 3) 124,695 78,506
---------- ---------
Net Expenses 229,173 99,900
---------- ---------
NET INVESTMENT INCOME
(LOSS) 246,914 145,083
---------- ---------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net Realized gain
(loss) on
investments 20,145 (92,115)
Net Unrealized
appreciation
(depreciation) of
investments 39,088 (88,821)
---------- ---------
59,233 (180,936)
---------- ---------
NET INCREASE (DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS $ 306,147 $ (35,853)
---------- ---------
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
40
<Page>
- --------------------------------------------------------------------------------
<Table>
<Caption>
MULTI-CAP SMALL
BALANCED GROWTH VALUE CAP
FUND FUND FUND FUND
--------- ---------- ---------- ------------
INVESTMENT INCOME
Dividends $116,551 $ 3,713 $ 9,686 $ 26,850
Interest 435,161 490 1,229 8,655
-------- --------- --------- -----------
Total Income 551,712 4,203 10,915 35,505
-------- --------- --------- -----------
EXPENSES
Investment Management
Fees 106,589 5,911 10,497 52,227
Transfer Agent Fees 75,256 28,727 25,778 74,323
Fund Accounting Fees 77,676 16,413 11,773 41,373
Legal Fees 56,443 2,043 3,747 34,249
Audit Fees 42,674 2,096 2,350 21,446
Registration Fees 24,839 1,099 645 20,888
Printing 38,165 3,497 3,911 33,831
Custody Fees 11,358 7,345 6,149 22,990
Director
Fees/Meetings 5,106 187 384 3,131
Distribution Fees
(Note 3) 107,980 4,116 8,298 22,759
Other Expense 7,443 1,099 406 3,896
-------- --------- --------- -----------
Total Expenses,
before
reimbursements 553,529 72,533 73,938 331,113
Less fees waived and
expenses
reimbursed
(Note 3) - 49,893 42,053 -
-------- --------- --------- -----------
Net Expenses 553,529 22,640 31,885 331,113
-------- --------- --------- -----------
NET INVESTMENT INCOME
(LOSS) (1,817) (18,437) (20,970) (295,608)
-------- --------- --------- -----------
NET REALIZED AND
UNREALIZED GAIN
(LOSS) ON INVESTMENTS
Net Realized gain
(loss) on
investments 28,521 (71,061) (114,058) (712)
Net Unrealized
appreciation
(depreciation) of
investments (716,764) (116,670) (137,567) (2,490,446)
-------- --------- --------- -----------
(688,243) (187,761) (251,625) (2,491,158)
-------- --------- --------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS $(690,060) $(206,198) $(272,595) $(2,786,766)
-------- --------- --------- -----------
</Table>
41
<Page>
PACIFIC ADVISORS FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
GOVERNMENT SECURITIES FUND
--------------------------------------
Year ended Year ended
December 31, 2002 December 31, 2001
------------------ ------------------
INCREASE (DECREASE) IN
NET ASSETS
FROM OPERATIONS
Net investment income
(loss) $ 246,914 $ 281,325
Net realized gain
(loss) on
investments 20,145 391,275
Change in net
unrealized
appreciation
(depreciation) of
investments 39,088 (727,872)
------------- -------------
Increase (decrease)
in net assets
resulting from
operations 306,147 (55,272)
------------- -------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS
Class A:
Net investment
income (102,475) (188,071)
Net capital
gains (5,601) (236,533)
Class C:
Net investment
income (132,819) (96,121)
Net capital
gains (14,669) (153,142)
------------- -------------
Decrease in net
assets resulting
from distributions (255,564) (673,867)
------------- -------------
FROM CAPITAL SHARE
TRANSACTIONS
(NOTE 5)
Proceeds from shares
sold 7,573,729 3,747,786
Proceeds from shares
purchased by
reinvestment of
dividends 212,774 476,293
Cost of shares
repurchased (3,513,492) (1,587,968)
------------- -------------
Increase (decrease)
in net assets
derived from
capital share
transactions 4,273,011 2,636,111
------------- -------------
INCREASE (DECREASE)
IN NET ASSETS 4,323,594 1,906,972
NET ASSETS
Beginning of period 10,659,398 8,752,426
------------- -------------
End of period $ 14,982,992 $ 10,659,398
------------- -------------
</Table>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
42
<Page>
- --------------------------------------------------------------------------------
<Table>
<Caption>
INCOME AND EQUITY FUND BALANCED FUND
-------------------------------------- --------------------------------------
Year ended Year ended Year ended Year ended
December 31, 2002 December 31, 2001 December 31, 2002 December 31, 2001
------------------ ------------------ ------------------ ------------------
INCREASE (DECREASE) IN
NET ASSETS
FROM OPERATIONS
Net investment income
(loss) $ 145,083 $ 150,391 $ (1,817) $ 23,993
Net realized gain
(loss) on
investments (92,116) (3,647) 28,521 (97,966)
Change in net
unrealized
appreciation
(depreciation) of
investments (88,820) (83,355) (716,764) (528,712)
------------- ------------- ------------- -------------
Increase (decrease)
in net assets
resulting from
operations (35,853) 63,389 (690,060) (602,685)
------------- ------------- ------------- -------------
FROM DISTRIBUTIONS TO
SHAREHOLDERS
Class A:
Net investment
income (67,712) (103,899) (289) (29,846)
Net capital
gains - - - -
Class C:
Net investment
income (66,254) (46,153) (1,031) (12,112)
Net capital
gains - - - -
------------- ------------- ------------- -------------
Decrease in net
assets resulting
from distributions (133,966) (150,052) (1,320) (41,958)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE
TRANSACTIONS
(NOTE 5)
Proceeds from shares
sold 2,399,131 1,639,965 8,404,741 4,492,256
Proceeds from shares
purchased by
reinvestment of
dividends 113,190 88,310 1,320 33,535
Cost of shares
repurchased (1,014,874) (600,068) (2,119,375) (1,965,499)
------------- ------------- ------------- -------------
Increase (decrease)
in net assets
derived from
capital share
transactions 1,497,447 1,128,207 6,286,686 2,560,292
------------- ------------- ------------- -------------
INCREASE (DECREASE)
IN NET ASSETS 1,327,628 1,041,544 5,595,306 1,915,649
NET ASSETS
Beginning of period 4,073,003 3,031,459 12,416,725 10,501,076
------------- ------------- ------------- -------------
End of period $ 5,400,631 $ 4,073,003 $ 18,012,031 $ 12,416,725
------------- ------------- ------------- -------------
</Table>
43
<Page>
PACIFIC ADVISORS FUND INC.
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<Table>
<Caption>
GROWTH FUND
--------------------------------------
Year ended Year ended
December 31, 2002 December 31, 2001
------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income (loss) $ (18,437) $ (21,948)
Net realized gain (loss) on
investments (71,062) (638,048)
Change in net unrealized
appreciation (depreciation) of
investments (116,699) 189,580
------------- -------------
Increase (decrease) in net assets
resulting from operations (206,198) (470,416)
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Class A:
Net investment income - -
Net capital gains - -
Class C:
Net investment income - -
Net capital gains - -
------------- -------------
Decrease in net assets resulting
from distributions - -
------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 5)
Proceeds from shares sold 122,458 302,279
Proceeds from shares purchased by
reinvestment of dividends - -
Cost of shares repurchased (289,881) (356,953)
------------- -------------
Increase (decrease) in net assets
derived from capital share
transactions (167,423) (54,674)
------------- -------------
INCREASE (DECREASE) IN NET ASSETS (373,621) (525,090)
NET ASSETS
Beginning of period 1,027,540 1,552,630
------------- -------------
End of period $ 653,919 $ 1,027,540
------------- -------------
</Table>
(c) Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
44
<Page>
- --------------------------------------------------------------------------------
<Table>
<Caption>
MULTI-CAP VALUE FUND SMALL CAP FUND
-------------------------------------- --------------------------------------
April 1, 2002(c)
to Year ended Year ended Year ended
December 31, 2002 December 31, 2001 December 31, 2002 December 31, 2001
------------------ ------------------ ------------------ ------------------
INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS
Net investment income (loss) $ (20,970) N/A $ (295,608) $ (299,360)
Net realized gain (loss) on
investments (114,058) N/A (712) 673,794
Change in net unrealized
appreciation (depreciation) of
investments (137,567) N/A (2,490,446) 981,573
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from operations (272,595) N/A (2,786,766) 1,356,007
------------- ------------- ------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Class A:
Net investment income - N/A - -
Net capital gains - N/A (2,964) (424,341)
Class C:
Net investment income - N/A - -
Net capital gains - N/A (359) (51,047)
------------- ------------- ------------- -------------
Decrease in net assets resulting
from distributions - N/A (3,323) (475,388)
------------- ------------- ------------- -------------
FROM CAPITAL SHARE TRANSACTIONS
(NOTE 5)
Proceeds from shares sold 2,141,908 N/A 1,054,134 6,321,864
Proceeds from shares purchased by
reinvestment of dividends - N/A 3,323 352,143
Cost of shares repurchased (119,621) N/A (1,561,561) (5,949,108)
------------- ------------- ------------- -------------
Increase (decrease) in net assets
derived from capital share
transactions 2,022,287 N/A (504,104) 724,899
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS 1,749,692 N/A (3,294,193) 1,605,518
NET ASSETS
Beginning of period - N/A 8,600,807 6,995,289
------------- ------------- ------------- -------------
End of period $ 1,749,692 N/A $ 5,306,614 $ 8,600,807
------------- ------------- ------------- -------------
</Table>
(c) Commencement of operations
45
<Page>
PACIFIC ADVISORS FUND INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
- --------------------------------------------------------------------------------
NOTE 1. ORGANIZATION
Pacific Advisors Fund Inc. (the "Company") is an open-end diversified
investment management company registered under the Investment Company Act of
1940, as amended. The Company currently offers six Funds: Government Securities
Fund, Income and Equity Fund, Balanced Fund, Growth Fund, Multi-Cap Value Fund
(commencement of operations April 1, 2002) and Small Cap Fund. Each Fund is a
separate investment portfolio of the Company with a distinct investment
objective, investment program, policies and restrictions. The Government
Securities Fund seeks to provide high current income, preservation of capital,
and rising future income, consistent with prudent investment risk. The Income
and Equity Fund seeks to provide current income and secondarily, long-term
capital appreciation. The Balanced Fund seeks to achieve long-term capital
appreciation and income consistent with reduced market risk. The Growth Fund
seeks to achieve long-term capital appreciation through investment in medium to
large capitalization companies. The Multi-Cap Value Fund seeks long-term capital
appreciation by investing in a diversified portfolio of large to small
capitalization companies. The Small Cap Fund seeks to provide capital
appreciation through investment in small capitalization companies.
Effective April 1, 1998, the Funds offer Class A and Class C shares,
each of which has equal rights as to assets and voting privileges except that
Class A and Class C each has exclusive voting rights with respect to its
distribution plan. Investment income, realized and unrealized capital gains and
losses, and the common expenses of each Fund are allocated on a pro rata basis
to each class based on the relative net assets of each class to the total net
assets of the Fund. Each Class of shares differs in its respective service and
distribution expenses and may differ in its transfer agent, registration, and
certain other class-specific fees and expenses.
NOTE 2. SIGNIFICANT ACCOUNTING POLICIES
A. SECURITY VALUATION. Securities listed on a national securities
exchange and certain over-the counter ("OTC") issues traded on the NASDAQ
national market system are valued at the last quoted sale price at the close of
the New York Stock Exchange. OTC issues not quoted on the NASDAQ system and
other equity securities for which no sale price is available, are valued at the
last bid price as obtained from published sources (including Quotron), where
available, and otherwise from brokers who are market makers for such securities.
Debt securities with a maturity of less than 60 days are valued on an amortized
cost basis. Premium or discount on debt securities are amortized.
B. SECURITY TRANSACTIONS AND INVESTMENT INCOME. Security transactions
are accounted for on the trade date. The cost of investments sold is determined
by use of the specific identification method for both financial reporting and
Federal Income tax purposes. Dividends are recorded on the ex-dividend date.
Interest income is recorded on an accrual basis.
C. DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS. The Government
Securities Fund and Income and Equity Fund declare and distribute dividends of
their net investment income, if any, quarterly. The Balanced Fund, Growth Fund,
Multi-Cap Value Fund and Small Cap Fund declare and distribute dividends of
their net investment income, if any, annually. The Board of Directors will
determine the amount and timing of such payments. Income dividends and capital
gains distributions are determined in accordance with income tax regulations
which may differ from generally accepted accounting principles. These
differences are primarily due to differing treatments of income and gain on
various investment securities held by the Funds, timing differences and
differing characterization of distributions made by the Fund.
D. FEDERAL INCOME TAX. The Funds intend to comply with the requirements
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of their taxable income to their shareholders. Therefore, no
federal income tax provision is required.
At December 31, 2002, components of distributable earnings/(deficit) on
a tax basis were as follows:
<Table>
<Caption>
Government Income and Multi-Cap
Securities Equity Balanced Growth Value Small Cap
Fund Fund Fund Fund Fund Fund
Undistributed ordinary
income $ 12,976 $ 13,868 $ - $ - $ - $ -
Undistributed long-term
gains 5,792 - 3,593 - - 9,462
Capital loss
carryforward* (4,427) (112,465) (33,962) (717,544) (114,058) -
Net unrealized
appreciation
(depreciation) on
investments 200,360 (35,774) 1,479,266 (127,075) (137,567) (288,743)
---------- ---------- ---------- --------- --------- ---------
Distributable
earnings/(deficit) 214,701 (134,371) 1,448,897 (844,619) (251,625) (279,281)
</Table>
Difference between book basis and tax basis unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
* At December 31, 2002, the following had accumulated net realized
losses on investment transactions that represent capital loss carryforwards for
federal income tax purposes, which expire as follows:
<Table>
<Caption>
Capital losses expiring in:
--------------------------------------------
2008 2009 2010 Total
Income and Equity Fund $ 33,944 $ - $ 78,521 $112,465
Growth Fund 6,793 619,017 54,158 679,968
Multi-Cap Value Fund - - 98,841 98,841
</Table>
The Government Securities Fund, Balanced Fund, Growth Fund, and
Multi-Cap Value Fund have elected to defer post October losses as though the
losses were incurred on the first day of the calendar year. The amounts deferred
were $4,427, $33,962, $37,576, and $15,217, respectively.
46
<Page>
PACIFIC ADVISORS FUND INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
- --------------------------------------------------------------------------------
E. USE OF ESTIMATES. The preparation of financial statements in
conformity with accounting principles generally accepted in the United States
requires management to make estimates and assumptions that affect the reported
amounts in the financial statements and footnotes. Actual results could differ
from those estimates.
F. RECLASSIFICATION OF CAPITAL ACCOUNTS. The Funds account for and
report distributions to shareholders in accordance with the American Institute
of Certified Public Accountant's Statement of Position 93-2: Determination,
Disclosure, and Financial Statement Presentation of income, Capital Gain and
Return of Capital Distribution by Investment Companies. Distributions of net
investment income and realized gains are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are due to differing treatments for items such as wash sales,
net operating losses, and capital loss carryforwards. In the event that
distributions exceed the aggregate amount of undistributed net investment income
and net realized gains, the excess distribution is reclassified as a reduction
of paid-in capital, thus reducing the tax basis of shareholders' interest in the
Funds.
For the Year ended December 31, 2002, reclassifications among the
components of net assets are as follows:
<Table>
<Caption>
Accumulated
undistributed
net investment Paid in
Income Capital
Balanced Fund $ 1,817 $ (1,817)
Growth Fund 18,437 (18,437)
Multi-Cap Value Fund 20,970 (20,970)
Small Cap Fund 295,608 (295,608)
</Table>
NOTE 3. INVESTMENT MANAGEMENT, DISTRIBUTOR AND OTHER RELATED PARTY TRANSACTIONS.
The Company and the Funds have entered into investment management
agreements ("Management Agreements") with Pacific Global Investment Management
Company, Inc. ("Investment Manager").
The Management Agreements provide for investment management fees,
payable monthly, and calculated at the maximum annual rate of 0.65% of average
net assets for the Government Securities Fund, 0.75% of average net assets for
the Income and Equity, Balanced, Growth and Small Cap Funds and 1.00% of average
net assets for the Multi-Cap Value Fund. The Investment Manager has entered into
sub-advisory agreements ("Sub-Advisory Agreement") with Bache Capital
Management, Spectrum Asset Management, Inc. and Meyers Capital Management, LLC
("Advisors") for the Balanced, Government Securities and Multi-Cap Value Funds,
respectively. It has also entered into co-management agreement ("Co-management
Agreement") with Bache Capital Management ("Advisor") for the Income and Equity
Fund. The Investment Manager is solely responsible for the payment of these fees
to the Advisors.
In accordance with Expense Limitation agreements with the Company, the
Investment Manager is required to waive fees and/or reimburse expenses in
amounts necessary to keep the total Fund operating expenses of certain Funds (as
a percentage of average net assets) at or below the percentages shown below:
<Table>
<Caption>
Class A Class C
Government Securities Fund 1.65% 2.40%
Income and Equity Fund 1.85% 2.60%
Growth Fund 2.50% 3.25%
Multi-Cap Value Fund 2.50% 3.25%
</Table>
These agreements may be terminated by either party. In addition, from
time to time, the Investment Manager and Advisors may voluntarily waive their
management and sub-advisory fees, and/or absorb certain expenses for the Funds.
Pursuant to the Expense Limitation Agreements, voluntary waiver of fees
and the assumption of expenses by the Investment Manager, the following amounts
were waived or reimbursed for the year ended December 31, 2002.
<Table>
<Caption>
Management Expense
Fees Reimbursements
Government Securities Fund $ 66,628 $ 58,067
Income and Equity Fund 34,224 44,282
Growth Fund 5,911 43,982
Multi-Cap Value Fund 10,497 31,556
</Table>
With the exception of the Growth Fund, these waived and reimbursed
expenses may be subject to future recoupment by the Investment Manager.
Fund operating expenses may not fall below the current expense levels in
subsequent years until the Investment Manager has fully recouped fees forgone
and expenses paid or assumed, as each fund will reimburse the Investment Manager
in subsequent years during which the Fund's total assets are greater than
$20,000,000. Such recoupments, if any, are limited to a period of five years
from the date on which the first reimbursement is made to the Investment Manager
on a fund by fund basis. As of December 31, 2002, no reimbursements have been
made. The cumulative amounts unrecouped by the Investment Manager since the
commencement of operations are:
<Table>
Government Securities Fund $914,483
Income and Equity Fund 665,149
Balanced Fund 330,893
Multi-Cap Value Fund 42,053
Small Cap Fund 217,445
</Table>
For the year ended December 31, 2002, Pacific Global Fund
Distributors, Inc. ("PGFD"), the principal underwriter for the Company, received
commissions on sales of
47
<Page>
PACIFIC ADVISORS FUND INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
- --------------------------------------------------------------------------------
capital stock, after deducting amounts allowed to authorized distributors as
commissions. The amounts are as follows:
<Table>
<Caption>
Underwriting
Fees Commissions
Retained Paid
Government Securities Fund $ 999 $ 5,215
Income and Equity Fund 194 1,035
Balanced Fund 1,420 7,143
Growth Fund 626 2,960
Multi-Cap Value fund 2,474 12,120
Small Cap Fund 2,418 11,442
</Table>
PGFD is a wholly-owned subsidiary of the Investment Manager.
The Company and the Funds have entered into agreements with Pacific
Global Investor Services, Inc. ("PGIS") to provide fund accounting services at
the monthly fee of three basis points for the first one hundred million in net
assets or a minimum of $1,250. In addition, agreements to provide transfer agent
services has also been entered into at a rate of $18.00 per year per open
account and $2.00 per year per closed account with minimum charges of $1,250 per
month and $750 per month, respectively, for the A and C share accounts. PGIS is
a wholly owned subsidiary of the Investment Manager.
Accounts payable to related parties consists of management fees payable
to the Investment Manager and fund accounting and transfer agent fees payable to
PGIS.
The Company has adopted a plan of distribution, whereby the Funds may
pay a service fee to qualified recipients in an amount up to 0.25% and 1.00% per
annum of each Fund's daily net assets for A shares and C shares, respectively.
For the period ended December 31, 2002, total service fees were:
<Table>
Government Securities Fund $72,732
Income and Equity Fund 27,942
Balanced Fund 107,980
Growth Fund 4,116
Small Cap Fund 22,759
Multi-Cap Value Fund 8,298
</Table>
NOTE 4. PURCHASE AND SALES OF SECURITIES
The following summarizes purchases and sales of investment securities,
other than short-term investments, and aggregate gross unrealized appreciation
and depreciation on tax basis by each Fund for the year ended and as of
December 31, 2002.
<Table>
<Caption>
As of December 31 2002
Year ended December 31 2002 Gross Gross Net Unrealized
Cost of Proceeds Unrealized Unrealized Appreciation
Purchases From Sales Appreciation Depreciation (Depreciation)
Government Securities
Fund $13,634,737 $35,713,826 $ 253,405 $ 53,045 $ 200,360
Income and Equity Fund 3,532,579 3,308,229 200,919 236,663 (35,744)
Balanced Fund 13,307,195 7,298,751 1,961,127 481,861 1,479,266
Growth Fund 623,973 471,776 24,172 151,247 (127,075)
Multi-Cap Value Fund 1,911,802 66,026 71,633 209,200 (137,567)
Small Cap Fund 1,753,222 2,707,044 1,427,125 1,715,868 (288,743)
</Table>
48
<Page>
PACIFIC ADVISORS FUND INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
- --------------------------------------------------------------------------------
NOTE 5. CAPITAL SHARE TRANSACTIONS
<Table>
<Caption>
Year ended Year ended
December 31, 2002 December 31, 2001
-------------------- --------------------
Shares Amount Shares Amount
-------- ---------- -------- ----------
GOVERNMENT SECURITIES FUND
CLASS A
Shares Sold 34,514 $ 344,746 183,496 $1,958,761
Reinvestment of Distributions 6,725 67,376 23,157 239,011
-------- ---------- -------- ----------
41,239 412,122 206,653 2,197,772
Shares Repurchased (275,743) (2,761,975) (125,468) (1,327,580)
-------- ---------- -------- ----------
Net Increase (decrease) (234,504) $(2,349,853) 81,185 $ 870,192
======== ========== ======== ==========
CLASS C
Shares Sold 734,170 $7,228,983 170,695 $1,789,025
Reinvestment of Distributions 14,769 145,398 23,526 237,282
-------- ---------- -------- ----------
748,939 7,374,381 194,221 2,026,307
Shares Repurchased (76,231) (751,517) (24,999) (260,388)
-------- ---------- -------- ----------
Net Increase 672,708 $6,622,864 169,222 $1,765,919
======== ========== ======== ==========
</Table>
<Table>
<Caption>
Year ended Year ended
December 31, 2002 December 31, 2001
-------------------- --------------------
Shares Amount Shares Amount
-------- ---------- -------- ----------
INCOME AND EQUITY FUND
CLASS A
Shares Sold 21,069 $ 212,796 81,153 $ 865,675
Reinvestment of Distributions 4,889 48,737 4,103 43,103
-------- ---------- -------- ----------
25,958 261,533 85,256 908,778
Shares Repurchased (75,086) (759,225) (35,101) (375,038)
-------- ---------- -------- ----------
Net Increase (decrease) (49,128) $ (497,692) 50,155 $ 533,740
======== ========== ======== ==========
CLASS C
Shares Sold 225,675 $2,186,335 73,799 $ 774,290
Reinvestment of Distributions 6,684 64,453 4,414 45,207
-------- ---------- -------- ----------
232,359 2,250,788 78,213 819,497
Shares Repurchased (26,493) (255,649) (21,469) (225,030)
-------- ---------- -------- ----------
Net Increase 205,866 $1,995,139 56,744 $ 594,467
======== ========== ======== ==========
</Table>
49
<Page>
PACIFIC ADVISORS FUND INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
Year ended Year ended
December 31, 2002 December 31, 2001
-------------------- --------------------
Shares Amount Shares Amount
-------- ---------- -------- ----------
BALANCED FUND
CLASS A
Shares Sold 26,018 $ 361,430 52,024 $ 785,572
Reinvestment of Distributions 21 289 1,525 21,789
-------- ---------- -------- ----------
26,039 361,719 53,549 807,361
Shares Repurchased (83,109) (1,156,538) (96,396) (1,459,083)
-------- ---------- -------- ----------
Net Decrease (57,070) $ (794,819) (42,847) $ (651,722)
======== ========== ======== ==========
CLASS C
Shares Sold 597,800 $8,043,311 252,091 $3,706,684
Reinvestment of Distributions 77 1,031 836 11,746
-------- ---------- -------- ----------
597,877 8,044,342 252,927 3,718,430
Shares Repurchased (72,607) (962,837) (34,806) (506,416)
-------- ---------- -------- ----------
Net Increase 525,270 $7,081,505 218,121 $3,212,014
======== ========== ======== ==========
</Table>
<Table>
<Caption>
Year ended Year ended
December 31, 2002 December 31, 2001
-------------------- --------------------
Shares Amount Shares Amount
-------- ---------- -------- ----------
GROWTH FUND
CLASS A
Shares Sold 15,090 $ 93,215 15,377 $ 125,475
Reinvestment of Distributions - - - -
15,090 93,215 15,377 125,475
Shares Repurchased (14,076) (91,777) (15,660) (116,875)
-------- ---------- -------- ----------
Net Increase (decrease) 1,014 $ 1,438 (283) $ 8,600
======== ========== ======== ==========
CLASS C
Shares Sold 4,662 $ 29,243 20,796 $ 176,804
Reinvestment of Distributions - - - -
4,662 29,243 20,796 176,804
Shares Repurchased (32,761) (198,104) (32,100) (240,078)
-------- ---------- -------- ----------
Net Decrease (28,099) $ (168,861) (11,304) $ (63,274)
======== ========== ======== ==========
</Table>
50
<Page>
PACIFIC ADVISORS FUND INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
- --------------------------------------------------------------------------------
<Table>
<Caption>
April 1, 2002 (c)
to Year ended
December 31, 2002 December 31, 2001
-------------------- --------------------
Shares Amount Shares Amount
-------- ---------- -------- ----------
MULTI-CAP VALUE FUND
CLASS A
Shares Sold 66,523 $ 603,547 NA NA
Reinvestment of Distributions - - NA NA
66,523 603,547 NA NA
Shares Repurchased (3,342) (27,691) NA NA
-------- ---------- -------- ----------
Net Increase 63,181 $ 575,856 NA NA
======== ========== ======== ==========
CLASS C
Shares Sold 169,379 $1,538,361 NA NA
Reinvestment of Distributions - - NA NA
-------- ---------- -------- ----------
169,379 1,538,361 NA NA
Shares Repurchased (11,638) (91,930) NA NA
-------- ---------- -------- ----------
Net Increase 157,741 $1,446,431 NA NA
======== ========== ======== ==========
</Table>
<Table>
<Caption>
Year ended Year ended
December 31, 2002 December 31, 2001
-------------------- --------------------
Shares Amount Shares Amount
-------- ---------- -------- ----------
SMALL CAP FUND
CLASS A
Shares Sold 60,959 $ 843,468 389,300 $5,904,727
Reinvestment of Distributions 283 2,964 20,818 307,699
-------- ---------- -------- ----------
61,242 846,432 410,118 6,212,426
Shares Repurchased (105,947) (1,342,073) (391,052) (5,865,605)
-------- ---------- -------- ----------
Net Increase (decrease) (44,705) $ (495,641) 19,066 $ 346,821
======== ========== ======== ==========
CLASS C
Shares Sold 16,170 $ 210,665 28,912 $ 417,137
Reinvestment of Distributions 37 359 3,166 44,444
-------- ---------- -------- ----------
16,207 211,024 32,078 461,581
Shares Repurchased (21,161) (219,488) (5,668) (83,503)
-------- ---------- -------- ----------
Net Increase (decrease) (4,954) $ (8,464) 26,410 $ 378,078
======== ========== ======== ==========
</Table>
(c) Commencement of operations
51
<Page>
PACIFIC ADVISORS FUND INC.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<Table>
<Caption>
GOVERNMENT SECURITIES FUND
------------------------------------------------
Class A
------------------------------------------------
For the year ended December 31,
------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 10.15 $ 10.88 $ 9.74 $ 10.59 $ 9.87
------- ------- ------- ------- -------
Income from investing operations
Net investment income 0.31 0.31 0.35 0.30 0.34
Net realized and unrealized gains
(losses) on securities (0.04) (0.37) 1.41 (0.84) 1.38
------- ------- ------- ------- -------
Total from investment operations 0.27 (0.06) 1.76 (0.54) 1.72
------- ------- ------- ------- -------
Less distributions
From net investment income (0.21) (0.29) (0.34) (0.29) (0.33)
From net capital gains (0.01) (0.38) (0.28) (0.02) (0.67)
------- ------- ------- ------- -------
Total distributions (0.22) (0.67) (0.62) (0.31) (1.00)
------- ------- ------- ------- -------
Net asset value, end of period $ 10.20 $ 10.15 $ 10.88 $ 9.74 $ 10.59
------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN (b) 2.78% (0.49)% 18.42% (5.04)% 17.82%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 4,125 $ 6,487 $ 6,071 $ 5,220 $ 5,456
Ratio of net investment income to
average net assets
With expense reductions 2.57% 3.01% 3.46% 2.99% 3.32%
Without expense reductions 1.42% 2.22% 2.08% 1.02% 1.04%
Ratio of expenses to average net assets
With expense reductions 1.65% 1.65% 1.65% 1.60% 1.66%
Without expense reductions 2.80% 2.43% 3.03% 3.57% 3.94%
Fund portfolio turnover rate 212.10% 75.81% 22.21% 147.01% 41.98%
</Table>
<Table>
<Caption>
Class C
----------------------------------------------------------
For the year ended December 31, April 2, 1998(c)
-------------------------------------- to
2002 2001 2000 1999 December 31, 1998
----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 9.96 $ 10.74 $ 9.63 $ 10.50 $ 10.24
------- ------- ------- ------- ----------------
Income from investing operations
Net investment income 0.23 0.25 0.29 0.27 0.23
Net realized and unrealized gains
(losses) on securities (0.04) (0.38) 1.38 (0.88) 1.02
------- ------- ------- ------- ----------------
Total from investment operations 0.19 (0.13) 1.67 (0.61) 1.25
------- ------- ------- ------- ----------------
Less distributions
From net investment income (0.19) (0.27) (0.28) (0.24) (0.32)
From net capital gains (0.01) (0.38) (0.28) (0.02) (0.67)
------- ------- ------- ------- ----------------
Total distributions (0.20) (0.65) (0.56) (0.26) (0.99)
------- ------- ------- ------- ----------------
Net asset value, end of period $ 9.95 $ 9.96 $ 10.74 $ 9.63 $ 10.50
------- ------- ------- ------- ----------------
TOTAL INVESTMENT RETURN (b) 1.98% (1.21)% 17.57% (5.77)% 12.48%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $10,858 $ 4,172 $ 2,682 $ 1,923 $ 795
Ratio of net investment income to
average net assets
With expense reductions 1.90% 2.25% 2.79% 2.18% 2.05%(a)
Without expense reductions 0.81% 1.28% 1.23% 0.22% 0.63%(a)
Ratio of expenses to average net assets
With expense reductions 2.40% 2.40% 2.36% 2.38% 1.06%(a)
Without expense reductions 3.49% 3.37% 3.92% 4.34% 2.48%(a)
</Table>
- --------------------------------------------------------------------------------
(a) Not annualized
(b) The Fund's maximum sales charge is not included in the total return
computation
(c) Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
52
<Page>
PACIFIC ADVISORS FUND INC.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<Table>
<Caption>
INCOME AND EQUITY FUND
------------------------------------------------
Class A
------------------------------------------------
For the year ended December 31,
------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 10.31 $ 10.43 $ 10.39 $ 10.74 $ 9.98
------- ------- ------- ------- -------
Income from investing operations
Net investment Income 0.39 0.42 0.52 0.43 0.37
Net realized and unrealized gains
(losses) on securities (0.49) (0.14) 0.07 (0.39) 0.83
------- ------- ------- ------- -------
Total from investment operations (0.10) 0.28 0.59 0.04 1.20
------- ------- ------- ------- -------
Less distributions
From net investment income (0.30) (0.40) (0.55) (0.37) (0.34)
From net capital gains - - - (0.02) (0.10)
------- ------- ------- ------- -------
Total distributions (0.30) (0.40) (0.55) (0.39) (0.44)
------- ------- ------- ------- -------
Net asset value, end of period $ 9.91 $ 10.31 $ 10.43 $ 10.39 $ 10.74
------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN (b) (0.92)% 2.63% 6.03% 0.19% 12.14%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 2,117 $ 2,708 $ 2,217 $ 2,664 $ 2,646
Ratio of net investment income to
average net assets
With expense reductions 3.43% 4.28% 4.67% 4.08% 3.68%
Without expense reductions 1.75% 2.66% 2.76% 1.86% 0.83%
Ratio of expenses to average net assets
With expense reductions 1.85% 1.85% 1.83% 1.85% 1.83%
Without expense reductions 3.53% 3.47% 3.75% 4.06% 4.67%
Fund portfolio turnover rate 91.50% 43.38% 21.83% 37.34% 16.72%
</Table>
<Table>
<Caption>
Class C
----------------------------------------------------------
For the year ended December 31, April 2, 1998(c)
-------------------------------------- to
2002 2001 2000 1999 December 31, 1998
----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 10.03 $ 10.26 $ 10.15 $ 10.62 $ 10.39
------- ------- ------- ------- ----------------
Income from investing operations
Net investment Income 0.34 0.42 0.35 0.41 0.22
Net realized and unrealized gains
(losses) on securities (0.51) (0.22) 0.10 (0.43) 0.43
------- ------- ------- ------- ----------------
Total from investment operations (0.17) 0.20 0.45 (0.02) 0.65
------- ------- ------- ------- ----------------
Less distributions
From net investment income (0.26) (0.43) (0.34) (0.43) (0.32)
From net capital gains - - - (0.02) (0.10)
------- ------- ------- ------- ----------------
Total distributions (0.26) (0.43) (0.34) (0.45) (0.42)
------- ------- ------- ------- ----------------
Net asset value, end of period $ 9.60 $ 10.03 $ 10.26 $ 10.15 $ 10.62
------- ------- ------- ------- ----------------
TOTAL INVESTMENT RETURN (b) (1.60)% 1.81% 4.32% (0.02)% 6.41%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 3,284 $ 1,365 $ 815 $ 1,850 $ 702
Ratio of net investment income to
average net assets
With expense reductions 2.95% 3.58% 3.90% 3.45% 2.16%(a)
Without expense reductions 1.15% 1.65% 1.88% 1.65% 0.31%(a)
Ratio of expenses to average net assets
With expense reductions 2.60% 2.60% 2.55% 2.51% 1.43%(a)
Without expense reductions 4.39% 4.54% 4.57% 4.30% 3.28%(a)
</Table>
- --------------------------------------------------------------------------------
(a) Not annualized
(b) The Fund's maximum sales charge is not included in the total return
computation
(c) Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
53
<Page>
PACIFIC ADVISORS FUND INC.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<Table>
<Caption>
BALANCED FUND
------------------------------------------------
Class A
------------------------------------------------
For the year ended December 31,
------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 14.42 $ 15.22 $ 14.04 $ 12.69 $ 12.06
------- ------- ------- ------- -------
Income from investing operations
Net investment income 0.06 0.10 0.21 0.12 0.03
Net realized and unrealized gains
(losses) on securities (0.79) (0.81) 1.19 1.47 0.90
------- ------- ------- ------- -------
Total from investment operations (0.73) (0.71) 1.40 1.59 0.93
------- ------- ------- ------- -------
Less distributions
From net investment income - (0.09) (0.15) (0.12) -
From net capital gains - - (0.07) (0.12) (0.30)
------- ------- ------- ------- -------
Total distributions - (0.09) (0.22) (0.24) (0.30)
------- ------- ------- ------- -------
Net asset value, end of period $ 13.69 $ 14.42 $ 15.22 $ 14.04 $ 12.69
------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN (b) (5.05)% (4.69)% 9.99% 12.61% 7.76%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 3,977 $ 5,013 $ 5,942 $ 7,008 $ 6,420
Ratio of net investment income to
average net assets
With expense reductions 0.30% 0.55% 1.15% 0.91% 0.22%
Without expense reductions 0.30% 0.55% 0.74% 0.51% (0.18)%
Ratio of expenses to average net assets
With expense reductions 3.47% 3.22% 2.88% 3.22% 3.48%
Without expense reductions 3.47% 3.22% 3.28% 3.62% 3.88%
Fund portfolio turnover rate 57.74% 42.20% 43.30% 52.47% 53.97%
</Table>
<Table>
<Caption>
Class C
----------------------------------------------------------
For the year ended December 31, April 2, 1998(c)
-------------------------------------- to
2002 2001 2000 1999 December 31, 1998
----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 14.18 $ 14.99 $ 13.91 $ 12.61 $ 13.09
------- ------- ------- ------- ----------------
Income from investing operations
Net investment income 0.01 0.01 0.07 0.03 (0.04)
Net realized and unrealized gains
(losses) on securities (0.79) (0.80) 1.17 1.42 (0.13)
------- ------- ------- ------- ----------------
Total from investment operations (0.78) (0.79) 1.24 1.45 (0.17)
------- ------- ------- ------- ----------------
Less distributions
From net investment income - (0.02) (0.09) (0.03) (0.01)
From net capital gains - - (0.07) (0.12) (0.30)
------- ------- ------- ------- ----------------
Total distributions - (0.02) (0.16) (0.15) (0.31)
------- ------- ------- ------- ----------------
Net asset value, end of period $ 13.40 $ 14.18 $ 14.99 $ 13.91 $ 12.61
------- ------- ------- ------- ----------------
TOTAL INVESTMENT RETURN (b) (5.49)% (5.25)% 8.92% 11.57% (1.28)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $14,035 $ 7,404 $ 4,559 $ 1,552 $ 378
Ratio of net investment income to
average net assets
With expense reductions (0.16)% (0.08)% 0.39% 0.01% (0.64)%(a)
Without expense reductions (0.16)% (0.08)% (0.01)% (0.39)% (0.91)%(a)
Ratio of expenses to average net assets
With expense reductions 4.15% 3.99% 3.63% 4.07% 3.12%(a)
Without expense reductions 4.15% 3.99% 4.03% 4.47% 3.39%(a)
</Table>
- --------------------------------------------------------------------------------
(a) Not annualized
(b) The Fund's maximum sales charge is not included in the total return
computation
(c) Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
54
<Page>
PACIFIC ADVISORS FUND INC.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<Table>
<Caption>
GROWTH FUND
------------------------------------------------------
Class A
------------------------------------------------------
For the year ended December 31, May 3, 1999(c)
---------------------------------- to
2002 2001 2000 December 31, 1999
------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 7.04 $ 9.83 $ 11.67 $ 10.00
------- ------- ------- ----------------
Income from investing operations
Net investment expense (0.12) (0.11) (0.01) (0.02)
Net realized and unrealized gains
(losses) on securities (1.44) (2.68) (1.83) 1.69
------- ------- ------- ----------------
Total from investment operations (1.56) (2.79) (1.84) 1.67
------- ------- ------- ----------------
Less distributions
From net investment income - - - -
From net capital gains - - - -
------- ------- ------- ----------------
Total distributions - - - -
------- ------- ------- ----------------
Net asset value, end of period $ 5.48 $ 7.04 $ 9.83 $ 11.67
------- ------- ------- ----------------
TOTAL INVESTMENT RETURN (b) (22.16)% (28.38)% (15.77)% 16.70%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 464 $ 588 $ 825 $ 328
Ratio of net investment income to
average net assets
With expense reductions (1.97)% (1.26)% (0.24)% (0.27)%(a)
Without expense reductions (8.25)% (5.44)% (3.98)% (8.40)%(a)
Ratio of expenses to average net assets
With expense reductions 2.50% 2.44% 2.50% 1.63%(a)
Without expense reductions 8.77% 6.62% 6.23% 9.75%(a)
Fund portfolio turnover rate 78.06% 57.61% 16.00% 0.00%
</Table>
<Table>
<Caption>
Class C
------------------------------------------------------
For the year ended December 31, May 3, 1999(c)
---------------------------------- to
2002 2001 2000 December 31, 1999
------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 6.89 $ 9.70 $ 11.61 $ 10.00
------- ------- ------- ----------------
Income from investing operations
Net investment expense (0.44) (0.22) (0.06) (0.04)
Net realized and unrealized gains
(losses) on securities (1.12) (2.59) (1.85) 1.65
------- ------- ------- ----------------
Total from investment operations (1.56) (2.81) (1.91) 1.61
------- ------- ------- ----------------
Less distributions
From net investment income - - - -
From net capital gains - - - -
------- ------- ------- ----------------
Total distributions - - - -
------- ------- ------- ----------------
Net asset value, end of period $ 5.33 $ 6.89 $ 9.70 $ 11.61
------- ------- ------- ----------------
TOTAL INVESTMENT RETURN (b) (22.64)% (28.97)% (16.45)% 16.10%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 190 $ 439 $ 728 $ 278
Ratio of net investment income to
average net assets
With expense reductions (2.75)% (2.04)% (0.97)% (0.61)%(a)
Without expense reductions (8.67)% (5.59)% (4.04)% (8.74)%(a)
Ratio of expenses to average net assets
With expense reductions 3.25% 3.23% 3.25% 2.16%(a)
Without expense reductions 9.17% 6.77% 6.32% 10.28%(a)
</Table>
- --------------------------------------------------------------------------------
(a) Not annualized
(b) The Fund's maximum sales charge is not included in the total return
computation
(c) Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
55
<Page>
PACIFIC ADVISORS FUND INC.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<Table>
<Caption>
MULTI-CAP VALUE FUND
--------------------
Class A
--------------------
April 1, 2002(c)
to
December 31, 2002
--------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 10.00
-------------------
Income from investing operations
Net investment expense (0.07)
Net realized and unrealized gains
(losses) on securities (1.98)
-------------------
Total from investment operations (2.05)
-------------------
Less distributions
From net investment income -
From net capital gains -
-------------------
Total distributions -
-------------------
Net asset value, end of period $ 7.95
-------------------
TOTAL INVESTMENT RETURN (b) (20.50)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 503
Ratio of net investment income to
average net assets
With expense reductions (1.09)%(a)
Without expense reductions (4.27)%(a)
Ratio of expenses to average net assets
With expense reductions 1.88%(a)
Without expense reductions 5.06%(a)
Fund portfolio turnover rate 6.22%(a)
</Table>
<Table>
<Caption>
Class C
--------------------------
April 1, 2002(c)
to
December 31, 2002
--------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 10.00
-------------------------
Income from investing operations
Net investment expense (0.52)
Net realized and unrealized gains
(losses) on securities (1.57)
-------------------------
Total from investment operations (2.09)
-------------------------
Less distributions
From net investment income -
From net capital gains -
-------------------------
Total distributions -
-------------------------
Net asset value, end of period $ 7.91
-------------------------
TOTAL INVESTMENT RETURN (b) (20.90)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 1,247
Ratio of net investment income to
average net assets
With expense reductions (1.66)%(a)
Without expense reductions (4.60)%(a)
Ratio of expenses to average net assets
With expense reductions 2.44%(a)
Without expense reductions 5.38%(a)
</Table>
- --------------------------------------------------------------------------------
(a) Not annualized
(b) The Fund's maximum sales charge is not included in the total return
computation
(c) Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
56
<Page>
PACIFIC ADVISORS FUND INC.
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
- --------------------------------------------------------------------------------
<Table>
<Caption>
SMALL CAP FUND
------------------------------------------------
Class A
------------------------------------------------
For the year ended December 31,
------------------------------------------------
2002 2001 2000 1999 1998
------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 15.23 $ 13.42 $ 11.98 $ 14.23 $ 17.51
------- ------- ------- ------- -------
Income from investing operations
Net investment expense (0.85) (0.42) (0.79) (0.61) (0.58)
Net realized and unrealized gains
(losses) on securities (4.05) 3.11 2.32 (1.63) (2.34)
------- ------- ------- ------- -------
Total from investment operations (4.90) 2.69 1.53 (2.24) (2.92)
------- ------- ------- ------- -------
Less distributions
From net investment income - - - - -
From net capital gains (0.01) (0.88) (0.09) (0.01) (0.36)
------- ------- ------- ------- -------
Total distributions (0.01) (0.88) (0.09) (0.01) (0.36)
------- ------- ------- ------- -------
Net asset value, end of period $ 10.32 $ 15.23 $ 13.42 $ 11.98 $ 14.23
------- ------- ------- ------- -------
TOTAL INVESTMENT RETURN (b) (32.20)% 20.23% 12.83% (15.75)% (16.66)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 4,763 $ 7,715 $ 6,541 $ 6,976 $ 9,331
Ratio of net investment income to
average net assets
With expense reductions (4.01)% (3.44)% (3.20)% (3.36)% (3.71)%
Without expense reductions (4.01)% (3.44)% (3.20)% (3.36)% (3.71)%
Ratio of expenses to average net assets
With expense reductions 4.52% 3.74% 3.58% 3.92% 4.02%
Without expense reductions 4.52% 3.74% 3.58% 3.92% 4.02%
Fund portfolio turnover rate 23.39% 43.89% 44.82% 68.18% 49.63%
</Table>
<Table>
<Caption>
Class C
----------------------------------------------------------
For the year ended December 31, April 2, 1998(c)
-------------------------------------- to
2002 2001 2000 1999 December 31, 1998
----------------------------------------------------------
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period $ 14.47 $ 13.04 $ 11.93 $ 14.24 $ 19.70
------- ------- ------- ------- ----------------
Income from investing operations
Net investment expense (0.88) (0.08) (0.78) (0.18) (0.29)
Net realized and unrealized gains
(losses) on securities (3.93) 2.39 1.98 (2.12) (4.81)
------- ------- ------- ------- ----------------
Total from investment operations (4.81) 2.31 1.20 (2.30) (5.10)
------- ------- ------- ------- ----------------
Less distributions
From net investment income - - - - -
From net capital gains (0.01) (0.88) (0.09) (0.01) (0.36)
------- ------- ------- ------- ----------------
Total distributions (0.01) (0.88) (0.09) (0.01) (0.36)
------- ------- ------- ------- ----------------
Net asset value, end of period $ 9.65 $ 14.47 $ 13.04 $ 11.93 $ 14.24
------- ------- ------- ------- ----------------
TOTAL INVESTMENT RETURN (b) (33.27)% 17.91% 10.11% (16.16)% (25.88)%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of year (000's) $ 543 $ 886 $ 454 $ 459 $ 239
Ratio of net investment income to
average net assets
With expense reductions (5.47)% (5.48)% (5.52)% (3.78)% (3.68)%(a)
Without expense reductions (5.47)% (5.48)% (5.52)% (3.78)% (3.68)%(a)
Ratio of expenses to average net assets
With expense reductions 5.97% 5.78% 5.90% 4.38% 3.85%(a)
Without expense reductions 5.97% 5.78% 5.90% 4.38% 3.85%(a)
</Table>
- --------------------------------------------------------------------------------
(a) Not annualized
(b) The Fund's maximum sales charge is not included in the total return
computation
(c) Commencement of operations
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
57
<Page>
PACIFIC ADVISORS FUND INC.
REPORT OF INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
Board of Directors and Shareholders
Pacific Advisors Fund Inc.
We have audited the statements of assets and liabilities, including the
schedules of investments, of Pacific Advisors Fund Inc. (comprising,
respectively, the Government Securities Fund, Income and Equity Fund, Balanced
Fund, Growth Fund, Multi-Cap Value Fund and Small Cap Fund) ("the Fund"), as of
December 31, 2002, the related statements of operations, the statements of
changes in net assets and the financial highlights for the respective periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 2002, by correspondence with the custodian and brokers.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective funds constituting Pacific Advisors Fund Inc. as of
December 31, 2002, the results of their operations, the changes in their net
assets and their financial highlights for the periods indicated therein, in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
Los Angeles, California
January 24, 2003
58
<Page>
PACIFIC ADVISORS FUND INC.
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITIONS(S) TERM OF OFFICES PRINCIPAL OCCUPATIONS FUND COMPLEX
HELD WITH THE AND LENGTH OF DURING OVERSEEN BY OTHER DIRECTORSHIPS
NAME, ADDRESS AND AGE COMPANY TIME SERVED PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------------------------------------------
Thomas M. Brinker (69) Director Since 1992 1970 - Present: President 6 Pacific Advisors None
1 North Ormond Avenue Fringe Benefits,Inc/ Mutual Funds
Havertown, PA 19083 Financial Foresight,
Ltd.,
d/b/a The Brinker
Organization (Financial
Services Companies)
Victoria Breen (51) Director Since 1992 1992 - Present: Assistant 6 Pacific Advisors None
603 West Ojai Avenue and Assistant Secretary and Director, Mutual Funds
Ojai, CA 93023 Secretary Pacific Global Investment
Management Company,
Pacific Global Investor
Services, Inc.
1994 - Present: General
Agent, Transamerica Life
Companies and Registered
Principal, Transamerica
Financial
Resources, Inc.
1986 - Present: Branch
Manager, Derby & Derby
Inc. (Financial Services
Company)
Thomas H. Hanson (52) Vice Since 1992 1992 - Present: Executive 6 Pacific Advisors None
206 North Jackson Street President Vice President and Mutual Funds
Suite 301 and Secretary Director, Pacific Global
Glendale, CA 91206 Investment Management
Company; President and
Director, Pacific Global
Fund Distributors, Inc.;
President and Director,
Pacific Global Investor
Services, Inc.
1997 - 2001: Vice
President and Director,
Pacific Global Investment
Fund Ltd.
1993 - Present: Owner,
Director, Chairman,
President and CEO of
TriVest Capital
Management, Inc.
</Table>
59
<Page>
PACIFIC ADVISORS FUND INC.
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITIONS(S) TERM OF OFFICES PRINCIPAL OCCUPATIONS FUND COMPLEX
HELD WITH THE AND LENGTH OF DURING OVERSEEN BY OTHER DIRECTORSHIPS
NAME, ADDRESS AND AGE COMPANY TIME SERVED PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------------------------------------------
Catherine L. Henning (25) Assistant Since 2002 2002 - Present: Assistant 6 Pacific Advisors None
206 North Jackson Street Secretary Secretary, Pacific Global Mutual Funds
Suite 301 Investment Management
Glendale, CA 91206 Company, Pacific Global
Fund Distributors, Inc.
and Pacific Global
Investor Services, Inc.
1999 - Present: Marketing
Coordinator, Pacific
Global Investment
Management Company
George A. Henning (55) President and Since 1992 1991 - Present: Chairman, 6 Pacific Advisors None
206 North Jackson Street Chairman President, and Director, Mutual Funds
Suite 301 Pacific Global Investment
Glendale, CA 91206 Management Company;
Chairman and Director,
Pacific Global Fund
Distributors, Inc.;
Chairman and Director,
Pacific Global Investor
Services, Inc.
1997 - 2001: Chairman and
Director, Pacific Global
Investment Fund, Ltd.
Pacific Advisors Fund
Inc.
Barbara A. Kelley (49) Treasurer Since 2001 2001 - Present: Executive 6 Pacific Advisors None
206 North Jackson Street Vice President, Mutual Funds
Suite 301 Treasurer, Pacific Global
Glendale, CA 91206 Investment Management
Company; Treasurer and
Director, Pacific Global
Fund Distributors, Inc.;
President and Treasurer,
Pacific Global Investor
Services, Inc.
1999 - Present: Director,
Pacific Global Investment
Management Company
1990 - 1999: President,
Transamerica Financial
Resources
</Table>
60
<Page>
PACIFIC ADVISORS FUND INC.
DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
<Table>
<Caption>
NUMBER OF
PORTFOLIOS IN
POSITIONS(S) TERM OF OFFICES PRINCIPAL OCCUPATIONS FUND COMPLEX
HELD WITH THE AND LENGTH OF DURING OVERSEEN BY OTHER DIRECTORSHIPS
NAME, ADDRESS AND AGE COMPANY TIME SERVED PAST 5 YEARS TRUSTEE HELD BY TRUSTEE
- ---------------------------------------------------------------------------------------------------------------------------------
L. Michael Haller (59) Director Since 1992 2002 - Present: Executive 6 Pacific Advisors None
5924 Colodny Vice President, Sammy Mutual Funds
Agoura, CA 91301 Studios, Inc.
(Entertainment Company)
2001 - 2002: Vice
President and Executive
Producer, Electronic
Arts; President,
International Media
Group, Inc.
(Entertainment Company)
1978 - 2001: Consultant,
Asahi Broadcasting Corp.
(Entertainment Company)
Takashi Makinodan, Ph.D Director Since 1995 1992 - Present: Director, 6 Pacific Advisors None
(78) Medical Treatment Mutual Fund
107 S. Barrington Place Effectiveness Program
Los Angeles, CA 90049 (MEDTEP), Center on Asian
and Pacific Islanders
1991 - Present: Associate
Director of Research,
Geriatric Research
Education Clinic Center,
VA Medical Center
Gerald E. Miller (73) Director Since 1992 1992 - Present: Retired 6 Pacific Advisors None
5262 Bridgetown Place Mutual Funds
Westlake Village, CA 91362
Louise K. Taylor, Ph.D (57) Director Since 1992 1991 - Present: 6 Pacific Advisors None
325 East Huntington Dr. Superintendent, Monrovia Mutual Funds
Monrovia, CA 91016 Unified School District
</Table>
Each director is elected to serve until the next annual shareholders meeting and
until his or her successor is elected or appointed. The Company does not hold
regular annual shareholders meetings to elect Directors. Vacancies on the Board
can be filled by the action of a majority of the Directors, provided that at
least two-thirds of the Directors have been elected by the shareholders. Certain
Directors are considered interested persons of the Company as defined in the
1940 Act. All directors oversee all five Funds of the Company.
61
<Page>
PACIFIC ADVISORS
Fund Inc
[GRAPHIC]
DIRECTORS
GEORGE A. HENNING, CHAIRMAN
VICTORIA L. BREEN
THOMAS M. BRINKER
L. MICHAEL HALLER III
TAKASHI MAKINODAN, PH.D.
GERALD E. MILLER
LOUISE K. TAYLOR, PH.D.
OFFICERS
GEORGE A. HENNING, PRESIDENT
THOMAS H. HANSON, VICE PRESIDENT AND
SECRETARY
VICTORIA L. BREEN, ASSISTANT SECRETARY
CATHERINE L. HENNING, ASSISTANT SECRETARY
BARBARA A. KELLEY, TREASURER
INVESTMENT MANAGER
PACIFIC GLOBAL INVESTMENT MANAGEMENT
COMPANY
206 NORTH JACKSON STREET, SUITE 301
GLENDALE, CALIFORNIA 91206
BALANCED FUND ADVISER
BACHE CAPITAL MANAGEMENT, INC.
206 NORTH JACKSON STREET, SUITE 201
GLENDALE, CALIFORNIA 92106
GOVERNMENT SECURITIES FUND ADVISER
SPECTRUM ASSET MANAGEMENT, INC.
1301 DOVE STREET, SUITE 970
NEWPORT BEACH, CALIFORNIA 92660
MULTI-CAP VALUE FUND ADVISER
MEYERS CAPITAL MANAGEMENT LLC
8901 WILSHIRE BOULEVARD
BEVERLY HILLS, CALIFORNIA 90211
TRANSFER AGENT AND ADMINISTRATOR
PACIFIC GLOBAL INVESTOR SERVICES, INC.
206 NORTH JACKSON STREET, SUITE 301
GLENDALE, CALIFORNIA 91206
DISTRIBUTOR
PACIFIC GLOBAL FUND DISTRIBUTORS, INC.
206 NORTH JACKSON STREET, SUITE 301
GLENDALE, CALIFORNIA 91206
(800) 989-6693
This report is submitted for the general information of the shareholders of the
Fund. It is not authorized for distribution to prospective investors unless
accompanied or preceded by a current effective prospectus of the Fund, which
contains information concerning the investment policies of the Fund as well as
other pertinent information.
<Page>
<Table>
PACIFIC GLOBAL FUND DISTRIBUTORS, INC.
[LOGO] 206 NORTH JACKSON STREET, SUITE 301 PRSRT STD
GLENDALE, CALIFORNIA 91206 U. S. POSTAGE
PAID
GLENDALE, CA
PERMIT NO. 1090
</Table>
pg101.898