TWENTIETH CENTURY
INVESTORS, INC.
Equity Funds
Semiannual Report
April 30,
1996
[company logo]
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TABLE OF CONTENTS
Our Message to You .................................................. 1
Investment Philosophy ............................................... 2
Period Overview ..................................................... 3
Investment Review
Select Investors ............................................... 4
Heritage Investors ............................................. 7
Growth Investors ............................................... 10
Ultra Investors ................................................ 13
Vista Investors ................................................ 16
Balanced Investors ............................................. 19
Schedules of Investments
Select Investors ............................................... 22
Heritage Investors ............................................. 24
Growth Investors ............................................... 26
Ultra Investors ................................................ 29
Vista Investors ................................................ 32
Balanced Investors ............................................. 33
Statements of Assets and Liabilities ................................ 38
Statements of Operations ............................................ 40
Statements of Changes in Net Assets ................................. 42
Notes to Financial Statements ....................................... 44
Financial Highlights ................................................ 50
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INDICES USED FOR PERFORMANCE COMPARISON
THE S&P 500 INDEX is an index created by Standard & Poor's Corporation that is
considered to represent the performance of the stock market generally. It is not
an investment product available for purchase.
NASDAQ COMPOSITE INDEX is a market capitalization price-only index that reflects
the aggregate performance of domestic common stocks traded on the regular NASDAQ
market, as well as national market system-traded foreign common stocks and ADRs.
It is not an investment product available for purchase.
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April 30, 1996
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OUR MESSAGE TO YOU
The strength of the U.S. equity markets has persisted into 1996, with the
result that many mutual fund investors have continued to enjoy strong returns.
In fact, as reflected by the performance of the Standard & Poor 500 stock index,
investors in the domestic stock market have had average annual returns of 13.94%
for the last decade, well ahead of the 10.59% average annual gains the S&P has
posted since 1926.
How much longer the bull market will last is the subject of debate. One
school of thought holds that demographics are destiny for the market--that aging
baby boomers saving for retirement may support stronger equity markets for the
next decade. Others wait for the correction they consider long overdue.
[photo of James E. Stowers and James E. Stowers III on left side of page]
In the face of strong arguments on either side, individual investors can
understandably be concerned about making wise financial decisions. In our
experience there are no easy answers about what the future holds. However, at
Twentieth Century we have long believed that investors are best served by
adopting a long-term plan and investing regularly in line with their goals.
A number of studies in recent years have demonstrated that investors who
try to time the market--moving in and out--are likely to underperform the market
averages. Although it is tempting to run for cover during periods of market
uncertainty, history has shown that equity investors are usually better served
by staying the course.
This is why Twentieth Century's growth funds maintain a policy to be fully
invested in the market at all times. We have repeatedly seen that while severe
market downturns may occur unexpectedly, so too do sharp market increases. Our
experience has demonstrated that historically significant opportunities for gain
have occurred during brief periods of time--sometimes measured in single days.
To be out of the market at these times can significantly reduce an investor's
returns.
Looking ahead, the balance of 1996 promises to bring a number of positive
changes for the Twentieth Century family of funds and our shareholders. After a
year and a half of behind-the-scenes planning and effort, we'll complete our
merger with The Benham Group of mutual funds this fall. When our organizations
are fully combined, shareholders will have access to a total of over 60 funds
with a single phone call.
We are confident that the expanded investment choices and service
improvements arising from the combination of our two strong fund families will
benefit you, the shareholder, for years to come. We appreciate your confidence
in Twentieth Century and we remain dedicated to your success.
Sincerely,
/s/James E. Stowers /s/James E. Stowers III
James E. Stowers James E. Stowers III
Chairman of the Board and Founder President
1
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INVESTMENT PHILOSOPHY
The philosophy behind Twentieth Century's growth funds focuses on three
important principles. Chiefly, the funds seek to own highly successful
companies, which we define as those whose earnings and revenues are growing at
accelerating rates. We attempt to keep the funds fully invested, regardless of
short-term market activity. Experience has shown that market gains can occur in
unpredictable spurts and that missing even some of those opportunities
significantly limits potential for gain. Finally, Twentieth Century funds are
managed by teams, rather than by one "star." We believe this allows us to make
better, more consistent management decisions.
In addition to these principles, each fund has its own characteristics:
SELECT INVESTORS seeks large, established companies that show accelerating
growth rates; also, at least 80% of the fund's assets must be invested in
securities that pay regular dividends or otherwise produce income. These
dividends, and the established nature of the companies in which Select invests,
help lessen the fund's short-term price fluctuations.
HERITAGE INVESTORS seeks firms showing accelerating growth rates, and at
least 80% of its assets must be invested in securities that pay regular
dividends or otherwise produce income. This fund generally owns smaller and
mid-sized stocks. While Heritage's dividend requirement should make the fund
less volatile than funds without dividends, it should also display somewhat more
price variability--and greater long-term growth potential--than Select.
GROWTH INVESTORS invests in larger, more established firms that exhibit
accelerating growth. Because the value of established firms tends to change
relatively slowly, Growth can ordinarily be expected to show more moderate price
fluctuations than the funds that invest in smaller or mid-sized firms.
ULTRA INVESTORS generally invests in mid-sized and larger companies that
exhibit accelerating growth. It will typically have significant price
fluctuations.
VISTA INVESTORS invests mainly in smaller or medium-sized firms with
accelerating growth. Although Vista has been one of Twentieth Century's more
volatile funds over the short term, it has also offered high long-term potential
for investment growth.
BALANCED INVESTORS seeks to provide long-term growth with moderate
volatility. The fund keeps about 60% of its assets in the stocks of large,
established firms with accelerating growth rates, some of which pay dividends.
The remaining assets are held in quality, intermediate-term bonds.
2
April 30, 1996
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PERIOD OVERVIEW
Changing investor expectations for economic growth dominated the six month
period ended April 30, 1996. In late 1995, slowing corporate earnings seemed to
indicate a possible recession in 1996. Federal budget battles, which led to two
government shutdowns, increased economic uncertainty. To boost the economy, the
Federal Reserve (the Fed) reduced a key short-term interest rate, the federal
funds rate, from 5.75 percent to 5.5 percent in December and to 5.25 percent in
January.
The environment in late 1995 was inhospitable to several segments of the
equity market. The stocks of cyclical companies, which do well in stronger
economic environments, struggled in the midst of perceived economic weakness.
The stocks of smaller companies in fast-growing industries also declined as
established businesses with stable earnings assumed market leadership.
However, the economic environment changed considerably in early 1996. The
February payroll employment report, showing the strongest job creation in 12
years, was the first of a series of indicators that suggested the economy was
actually getting stronger, not weaker as feared. Inflation remained modest while
corporate earnings generally met investors' expectations.
The first four months of 1996 saw a rotation in market leadership. The
smaller companies and cyclicals that had been out of favor replaced large, blue
chip companies as top performing investments. Toward the end of the period,
especially in April, the market began to favor growth-oriented themes, including
many companies with accelerating earnings and revenues.
The technology sector moved in and out of favor during the period. From
last November through mid-January, technology stocks experienced a significant
decline. The decline was led by semiconductor stocks, which were hit by slowing
computer sales and the cancellation of several large computer microchip orders.
However, while earnings reports were weaker than expected for some firms, many
other technology companies continued to post strong earnings gains.
Telecommunications stocks also climbed in response to the passage of the
telecommunications deregulation bill, which allows these companies to invest in
vast new markets. Software, networking, and Internet-related companies led a
spring rebound in share prices.
In the healthcare sector, competition forced many HMOs and medical care
facilities to cut prices in the past year, but faster government approvals of
new drugs and devices have strongly benefited pharmaceutical, biotechnology and
medical technology companies. Healthcare reform legislation, once a prominent
part of the Clinton Administration's agenda, has not yet surfaced as a major
theme of the Presidential campaigns. Waning support for a federally-mandated
healthcare program could lead to a sharply improved environment for healthcare
companies for the remainder of 1996.
Energy stocks performed very well during the period, while other
economically-sensitive issues gained in price as the economy showed signs of
improvement. With interest rates rising in the last three months of the period,
the performance of financial stocks was inconsistent. Good performance accrued
to the banks and insurance companies that have decreased their liabilities and
broadened their earnings growth in the midst of a modestly growing economy,
while weaker financial institutions struggled with the increase in interest
rates.
Finally, retail stocks showed signs of recovering from a two-year lull.
While improvements in retail demand aided a variety of firms in this sector,
many others benefited from internal cost cutting and restructuring their
businesses and product lines.
Looking ahead, we believe the outlook is favorable for growth-stock
investors. In a slow-growth, low-inflation economy, firms that can generate
superior earnings growth have increased potential to outperform slower-growing
firms. On the other hand, if economic growth picks up and inflation increases,
we believe that companies with accelerating growth rates will benefit from a
pricing power advantage.
3
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SELECT INVESTORS
MANAGEMENT Q & A
An interview with Chuck Duboc, a portfolio manager on the Select Investors
management team.
Q: WHAT WAS THE PERFORMANCE OF SELECT INVESTORS OVER THE SIX MONTHS ENDED
APRIL 30, 1996?
A: Select produced a 10.24% total return, falling short of the 13.75% return
posted by its benchmark S&P 500 Index. Although Select lagged the index for the
six months as a whole, the fund's performance improved as the period progressed,
so that at the end of April we were ahead of the S&P for the calendar
year-to-date.
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AVERAGE ANNUAL TOTAL RETURNS (as of April 30, 1996)
SELECT INVESTORS S&P 500 Index
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6 Months* 10.24% 13.75%
1 Year 19.77% 29.95%
5 Year 9.45% 14.92%
10 Year 10.83% 14.23%
20 Year 18.42% 14.19%
*Actual
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$10,000 OVER A 20-YEAR PERIOD (as of April 30, 1996)
[mountain graph]
$10,000 investment made 4/30/76 Value on 04/30/96:
SELECT S & P $294,222 SELECT INVESTORS
DATE ACCT VALUE ACCT VALUE $142,177 S & P 500 INDEX
04/30/76 $10,000 $10,000
04/30/77 $10,710 $10,082
04/30/78 $15,443 $10,427
04/30/79 $19,869 $11,546
04/30/80 $25,791 $12,737
04/30/81 $43,193 $16,715
04/30/82 $38,938 $15,493
04/30/83 $71,188 $23,076
04/30/84 $64,171 $23,459
04/30/85 $73,291 $27,594
04/30/86 $105,181 $37,581
04/30/87 $131,910 $47,552
04/30/88 $118,446 $44,490
04/30/89 $139,198 $54,624
04/30/90 $161,355 $60,327
04/30/91 $187,349 $70,921
04/30/92 $207,180 $80,888
04/30/93 $220,453 $88,343
04/30/94 $229,087 $93,048
04/30/95 $245,420 $109,254
04/30/96 $294,222 $142,177
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
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QUICK FUND FACTS
SELECT INVESTORS
STRATEGY:
Growth over time through investments
in larger companies, 80% of
which pay dividends or produce income.
INCEPTION DATE:
October 31, 1958
SIZE: $4.0 billion
(as of April 30, 1996)
INVESTMENT APPROACH:
Conservative Growth
TICKER:
TWCIX
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4
April 30, 1996
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SELECT INVESTORS
Q: WHAT ACCOUNTS FOR THE FUND'S PERFORMANCE VERSUS ITS BENCHMARK INDEX?
A: We were overweighted in technology companies late last year, when
technology stocks suffered a significant decline in price. Because so many
technology firms were reporting accelerating earnings through most of 1995, we
had close to 20% of the fund in these stocks late last year, including such
well-known names as IBM, Intel Corp. and Hewlett-Packard. Even though earnings
for many technology companies continued to accelerate, the entire group was
caught in the sell-off that adversely affected Select's performance. As
technology stocks weakened, large consumer products companies replaced them as
market leaders. Although we owned some of these companies, we didn't own enough
to fully participate in this rotation in market leadership because their
earnings and revenues were not growing fast enough to meet our selection
criteria. However, by the end of April many of our remaining technology holdings
had rebounded to reach new highs.
Q: LAST FALL SELECT SHAREHOLDERS APPROVED A CHANGE IN ITS INVESTMENT POLICY,
SO THAT THE FUND IS NOW ALLOWED TO INVEST UP TO 20% OF ITS ASSETS IN
NON-DIVIDEND PAYING STOCKS. HOW DID THIS CHANGE AFFECT PERFORMANCE?
A: We believe the change in dividend policy is a real plus for the fund
because of the added flexibility we have. At the end of April, 13% of the fund's
assets were in non-dividend paying stocks, which included some of our
best-performing stocks for this period. For example, two of our technology
holdings, Microsoft and Cisco Systems, were major contributors to performance.
In addition, the fund benefited from owning several smaller companies in the oil
services industry that don't pay dividends. For example, Reading & Bates, which
operates a large fleet of drilling rigs used in global exploration of offshore
oil and gas fields, contributed favorably to fund performance. Looking at the
impact of the policy change long term, we believe the added flexibility will
contribute to improved shareholder returns.
Q: WHAT OTHER FACTORS CONTRIBUTED POSITIVELY TO SELECT'S PERFORMANCE FOR THE
PERIOD?
A: Select's largest industry concentration at the end of April was in
pharmaceutical companies. During the last six months we nearly doubled our
holdings in this industry in response to strong corporate fundamentals. A recent
wave of mergers and acquisitions has fostered significant cost-cutting and
restructuring efforts at the same time that many companies are developing and
bringing attractive new products to market.
A related theme has been the growth of generic drug manufacturers. The
major pharmaceutical companies have a number of drugs coming off patent, which
the generic manufacturers are then able to copy and sell at a significantly
lower cost. Demand for low-cost generic drugs has grown, leading to increased
sales for manufacturers such as Teva Pharmaceuticals and IVAX.
TOP FIVE INDUSTRIES (as of April 30, 1996)
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% of fund's
investments in
% of fund these industries
investments six months ago
Pharmaceuticals 12.8% 6.7%
Energy (Production & Marketing) 8.2% 3.9%
Energy (Services) 7.9% 3.0%
Aerospace & Defense 6.9% 4.7%
Banking 6.4% 2.1%
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5
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SELECT INVESTORS
Q: FINANCIAL STOCKS ARE ALSO A LARGE ELEMENT OF SELECT'S PORTFOLIO. WHAT
ATTRACTED YOU TO THESE ISSUES?
A: Banks, financial services and insurance companies all contributed
positively to performance for the period. Many of these companies have
restructured internal operations and improved their balance sheets, enabling
them to take better advantage of external growth opportunities.
For example, the 1991 recession led to serious, industry-wide loan
repayment problems for banks. Those we now own have reduced their delinquencies
and established large reserves against loan losses. At the same time, a more
robust economy has helped fuel accelerating earnings growth at such established,
dividend-paying firms as BankAmerica and Bank of New York.
TOP TEN HOLDINGS (as of April 30, 1996)
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% of fund's
investments in
% of fund these stocks
investments six months ago
Tyco International, Ltd. 3.0% 2.0%
Hewlett-Packard Co. 3.0% 3.1%
Halliburton Co. 2.8% 1.8%
Teva Pharmaceuticals
Industries Ltd. 2.8% 2.4%
Cisco Systems Inc. 2.5% 6.7%
MCI Communications Corp. 2.2% 1.4%
United Technologies Corp. 2.1% 1.4%
Microsoft Corp. 2.1% 1.4%
SmithKline Beecham plc 2.0% 1.6%
CIGNA Corp. 1.9% 1.6%
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Q: WHAT TYPES OF INTERNATIONAL STOCKS DID SELECT INVEST IN DURING THE PERIOD?
A: Our approach overseas is to try to find larger companies with accelerating
earnings that will outperform comparable domestic stocks. We also stay
relatively well diversified. Our largest country weighting at the end of the
period was in England, at about 4% of assets. Two of Select's three English
holdings were multinationals with significant U.S. and global
operations--pharmaceutical producer SmithKline Beecham, and oil giant British
Petroleum.
INVESTMENTS BY COUNTRY
expressed as a percentage of
total value of investments
---------------------------------
% of fund
investments
England 4.1%
Germany 1.0%
Ireland 1.6%
Israel 2.8%
Italy 0.3%
Japan 2.8%
Mexico 0.5%
Spain 0.8%
Sweden 1.6%
Switzerland 2.4%
United States 82.1%
-----
100.0%
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Select Investors' schedule of investments begins on page 22.
[company logo]
6
April 30, 1996
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HERITAGE INVESTORS
MANAGEMENT Q & A
An interview with Nancy Prial, a portfolio manager on the Heritage
Investors management team.
Q: HOW DID HERITAGE PERFORM FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1996?
A: Heritage enjoyed a 9.18% gain for the period, but did not keep pace with
the S&P 500 Index's 13.75% gain. A large position in technology stocks at the
end of 1995, when the sector experienced a severe decline, kept Heritage's gain
for the period behind those of the S&P 500 Index. Another factor contributing to
performance was the fact that the companies Heritage invests in are
mid-sized--considerably smaller than those in the S&P 500. In the last six
months, big companies generally fared better than their smaller brethren.
However, since the beginning of 1996, the fund has outpaced the S&P 500 Index.
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AVERAGE ANNUAL TOTAL RETURNS (as of April 30, 1996)
HERITAGE INVESTORS S&P 500 Index
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6 Months* 9.18% 13.75%
1 Year 24.88% 29.95%
5 Year 14.89% 14.92%
Inception (11-10-87 to 4-30-96) 16.41% 16.16%
*Actual
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$10,000 OVER LIFE OF FUND (as of April 30, 1996)
[mountain graph]
$10,000 investment made 11/30/87
HERITAGE S & P
DATE ACCT VALUE ACCT VALUE Value on 04/30/96:
11/10/87 $10,000 $10,000 $36,213 HERITAGE INVESTORS
04/30/88 $11,948 $11,128 $35,562 S & P 500 INDEX
04/30/89 $14,677 $13,663
04/30/90 $16,004 $15,089
04/30/91 $18,092 $17,739
04/30/92 $20,872 $20,232
04/30/93 $24,174 $22,097
04/30/94 $27,350 $23,273
04/30/95 $28,962 $27,327
04/30/96 $36,213 $35,562
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
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QUICK FUND FACTS
HERITAGE INVESTORS
STRATEGY:
Growth over time through
investments in smaller companies,
80% of which pay dividends
or produce income.
INCEPTION DATE:
November 10, 1987
SIZE:
$1.1 billion
(as of April 30, 1996)
INVESTMENT APPROACH:
Growth
TICKER:
TWHIX
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7
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HERITAGE INVESTORS
Q: WHAT FACTORS HAD THE MOST IMPACT ON THE FUND'S PERFORMANCE?
A: Although we continued to see the same accelerating earnings in many areas
of the technology sector through April that we saw through all of 1995, stock
prices did not always follow the trend in earnings. Electronic component stocks,
chiefly semiconductor issues, declined sharply in December and January, when
computer chip inventories showed signs of climbing. The low prices that resulted
from this sell-off helped set the stage for a rebound in these issues,
particularly in April. We believe that semiconductors are the building blocks of
a vast array of new products and, as of now, we don't anticipate a significant
decrease in demand. Therefore, we maintained our positions in this industry
throughout the period.
Furthermore, we continued to see outstanding growth opportunities in other
segments of technology. For example, there is a worldwide shortage of telephone
equipment. As more countries have developed their local economies, the demand
for advanced communications equipment has become intense. We invested
significantly in global telecommunications suppliers, such as the Israeli
company ECI Telecom. As an added bonus for the fund, many of the overseas
companies in this industry also pay dividends.
TOP TEN HOLDINGS (as of April 30, 1996)
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% of fund's
investments in
% of fund these stocks
investments six months ago
Guidant Corp. 2.8% --
Perkin-Elmer Corp. 2.4% --
Liz Claiborne, Inc. 2.3% --
Omnicare Incorporated 1.9% 2.0%
ECI Telecom Ltd. 1.6% --
Sunamerica, Inc. 1.6% --
Paychex, Inc. 1.5% 1.3%
Harley-Davidson, Inc. 1.5% --
Tidewater, Inc. 1.4% 1.4%
BMC Industries, Inc. 1.4% --
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Q: WHY WERE BUSINESS SERVICES STOCKS ATTRACTIVE TO THE FUND?
Today large companies that are in the process of downsizing or
restructuring are frequently choosing to "outsource" noncentral parts of their
businesses. As a result, work previously done in-house is now performed by
outside suppliers. This trend toward "outsourcing" has created enormous
opportunities for specialty service companies. One of the fund's holdings is
Paychex, a company that handles complex payroll and employee benefit paperwork
for businesses that don't want to build extensive human resource expertise in
house. Our research indicates that demand for these services may grow rapidly in
the coming years, no matter what the overall business environment is.
Q: WHERE ELSE DID YOU FIND EARNINGS ACCELERATION DURING THE PERIOD?
A: Healthcare and financial services companies showed acceleration, and we had
relatively large positions in these sectors. But some of our best-performing
holdings in early 1996 were in the apparel sector, where we held such companies
as Liz Claiborne, Fila and Adidas. These companies achieved accelerating
earnings by improving their operations, balance sheets and market share. Liz
Claiborne, for example, gained greater market share by improving its merchandise
mix, which contributed to wider profit margins.
8
April 30, 1996
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HERITAGE INVESTORS
Q: DID YOU OWN RETAIL STOCKS AS WELL?
A: All told, retail stocks from a broad spectrum of industries represented
10.5% of the portfolio at the end of the period. Consumer spending improved
modestly and there has been some consolidation in the industry, which has helped
reduce an oversupply of retail outlets. In addition, some companies, such as
Gucci, have capitalized on increased demand for luxury goods both in the U.S.
and the Pacific Rim.
TOP FIVE INDUSTRIES (as of April 30, 1996)
- ------------------------------------------------------------
% of fund's
investments in
% of fund these industries
investments six months ago
Medical Equipment & Supplies 9.5% 6.6%
Computer Peripherals 8.6% 2.0%
Communications Equipment 6.9% 6.4%
Financial Services 6.7% 5.5%
Business Services & Supplies 6.2% 3.9%
- ------------------------------------------------------------
Q: WHAT WERE HERITAGE'S INTERNATIONAL HOLDINGS?
A: We invest in overseas companies if their results compare favorably to
similar domestic companies. Just as in the U.S., our decisions are based on
earnings acceleration criteria, rather than macroeconomic analysis or country
allocation. At the end of the period, Heritage had about 18% of assets in
international stocks. The bulk of our holdings were in Japan, where we
identified a number of companies that are benefiting from early signs of growth
after a four-year recession.
INVESTMENTS BY COUNTRY
expressed as a percentage of
total value of investments
-------------------------------
% of fund
investments
England 0.9%
Germany 0.9%
Ireland 1.6%
Italy 1.3%
Japan 8.7%
Netherlands 2.7%
Norway 1.0%
Sweden 0.9%
United States 82.0%
-----
100.0%
=====
-------------------------------
Heritage Investors' schedule of investments begins on page 24.
[company logo]
9
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GROWTH INVESTORS
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MANAGEMENT Q & A
An interview with Derek Felske, a portfolio manager on the Growth Investors
management team.
Q: HOW DID GROWTH INVESTORS PERFORM FOR THE SIX-MONTH PERIOD ENDED APRIL 30?
A: Growth had a 0.38% gain. While improved performance in April helped the
fund recover from negative territory, our investment results were disappointing
when compared with the strong gains of the market, as represented by the S&P 500
Index, which returned 13.75% for the six months.
Q: WHAT MARKET CONDITIONS AFFECTED FUND PERFORMANCE?
A: The six-month period can be divided into two distinct segments. The
first, from October 1995 to February 1996, saw a dramatic sell-off in many
fast-growing sectors, such as technology. Investors, (continued on next page)
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AVERAGE ANNUAL TOTAL RETURNS (as of April 30, 1996)
GROWTH INVESTORS S&P 500 Index
---------------- -------------
6 Months* 0.38% 13.75%
1 Year 16.22% 29.95%
5 Year 10.85% 14.92%
10 Year 13.05% 14.23%
20 Year 19.74% 14.19%
*Actual
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$10,000 OVER A 20-YEAR PERIOD (as of April 30, 1996)
[mountain graph]
$10,000 investment made 4/30/76
GROWTH S & P
DATE ACCT VALUE ACCT VALUE Value on 04/30/96:
04/30/76 $10,000 $10,000 $367,054 GROWTH INVESTORS
04/30/77 $10,914 $10,082 $142,177 S & P 500 INDEX
04/30/78 $16,273 $10,427
04/30/79 $23,957 $11,546
04/30/80 $32,730 $12,737
04/30/81 $61,700 $16,715
04/30/82 $47,158 $15,493
04/30/83 $76,409 $23,076
04/30/84 $66,589 $23,459
04/30/85 $71,813 $27,594
04/30/86 $107,692 $37,581
04/30/87 $142,481 $47,552
04/30/88 $124,347 $44,490
04/30/89 $151,493 $54,624
04/30/90 $174,196 $60,327
04/30/91 $219,274 $70,921
04/30/92 $263,335 $80,888
04/30/93 $259,758 $88,343
04/30/94 $296,221 $93,048
04/30/95 $315,576 $109,254
04/30/96 $367,054 $142,177
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
- --------------------------------------------------------------------------------
QUICK FUND FACTS
GROWTH INVESTORS
STRATEGY:
Growth over time through
investments in larger companies
regardless of dividend potential.
INCEPTION DATE:
October 31, 1958
SIZE:
$4.8 billion
(as of April 30, 1996)
INVESTMENT APPROACH:
Growth
TICKER:
TWCGX
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10
April 30, 1996
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GROWTH INVESTORS
fearful of an economic recession, rotated into the stocks of companies less
affected by recessionary forces, such as food and drug firms.
The second segment, beginning in March 1996, has seen a reemergence of
interest in those sectors with above average earnings as fears of recession have
passed. Areas such as semiconductors, networking, software and
telecommunications equipment providers have bounced sharply off their lows.
Q: WHY DID GROWTH UNDERPERFORM THE S&P 500 INDEX?
A: Going into the period, Growth held large positions in technology stocks, as
well as in financial services companies. Many of these positions corrected
sharply during the winter. Growth's substantial weighting in semiconductor
companies, approximately 16% of the fund last October, suffered the greatest
losses. In addition, the fund's holdings of recession resistant stocks, whose
prices held up well during the sell-off, were limited due to their relative lack
of earnings growth.
Q: HOW DID YOU REACT TO THESE DECLINES?
A: Growth faced a difficult challenge at the end of 1995. While it was clear
to us that some technology sectors were vulnerable to an earnings slowdown, we
did not see what we consider more attractive opportunities elsewhere in the
market, particularly among the larger companies Growth typically owns. We
remained invested in companies with accelerating growth characteristics, though
that decision hurt fund performance through March. Then, in April, many of these
holdings bounced back strongly in price, as market leadership shifted back to
growth-oriented themes.
TOP TEN HOLDINGS (as of April 30, 1996)
- ------------------------------------------------------------
% of fund's
investments in
% of fund these stocks
investments six months ago
Boeing Co. 2.5% 1.8%
Cisco Systems Inc. 2.4% 3.5%
Tellabs, Inc. 2.3% --
Glenayre Technologies, Inc. 2.2% 1.6%
Newbridge Networks Corp. 2.1% --
Chiron Corp 2.0% 0.9%
ADC Telecommunications, Inc. 1.8% 1.5%
Mirage Resorts, Inc. 1.8% 1.0%
Sears, Roebuck & Co. 1.8% 1.2%
Morgan Stanley Group Inc. 1.7% 1.6%
- ------------------------------------------------------------
Q: DID YOU EVENTUALLY CHANGE THE FUND'S POSITIONING?
A: Yes. We trimmed our semiconductor weighting sharply in early 1996.
However, we felt that it was crucial to maintain positions in those companies
which we believed did have sustainable earnings acceleration, even if their
stock prices had fallen.
For example, Motorola has a large semiconductor business, and declined
sharply in January. But Motorola also has a growing telecommunications equipment
business that is contributing to continued earnings growth. We continued to own
Motorola, as well as other companies with equally attractive earnings. This
decision began to pay off in April, when a number of these holdings rallied
strongly, Motorola included.
Q: HOW IS GROWTH POSITIONED FOR THE NEXT SIX MONTHS?
A: We are enthusiastic about the opportunities in the telecommunications
industry. Because President (continued on next page)
TOP FIVE INDUSTRIES (as of April 30, 1996)
- --------------------------------------------------------------------
% of fund's
investments in
% of fund these industries
investments six months ago
Computer Software & Services 9.5% 7.0%
Financial Services 9.5% 10.8%
Communications Equipment 9.5% 7.6%
Electrical & Electronic Components 7.0% 15.9%
Pharmaceuticals 6.2% 1.7%
- --------------------------------------------------------------------
11
- --------------------------------------------------------------------------------
GROWTH INVESTORS
Clinton signed a telecommunications bill in February deregulating the industry,
several of the large telephone, cable and cellular providers are now racing to
establish themselves in new markets, both domestically and abroad. Many of these
companies have dramatically increased their capital spending budgets in an
effort to strengthen their competitive positions. We already see accelerating
orders and earnings in the telecommunications equipment sector, and think the
likelihood of strong future growth is high.
Q: WHAT OTHER COMPANIES INTEREST YOU?
A: Retail companies have made a comeback in recent months. With the economy
showing some signs of strength, consumer demand has improved modestly, and some
of the well positioned larger firms appear likely to benefit. Gap Incorporated,
for example, has been very successful after making merchandising changes in 1995
designed to broaden its customer base. We have also been impressed with the
remarkably consistent earning growth posted by Home Depot, which has
methodically chosen new geographic markets and thrived in almost all of them.
Retail firms have been weak stock market performers for two years, and it is
difficult to predict whether this recent improvement can be maintained. Yet, we
feel strongly that the bottom has been reached and the industry's prospects are
distinctly better.
Q: WHAT IS GROWTH'S INTERNATIONAL WEIGHTING?
A: Currently, Growth has a 12.7% weighting in international firms,
predominantly in Japan. While our Japanese holdings have performed well in
recent months, a strengthening dollar (which pushes down the value of holdings
denominated in foreign currencies) negated much of the benefit from these
holdings. Nonetheless, we have maintained our positions. A stable U.S. economy
and an improving economic situation in Japan should provide substantial earnings
growth potential for strong, globally oriented Japanese firms like Honda and
Toyota.
Q: ARE YOU PLANNING MORE SIGNIFICANT CHANGES TO IMPROVE GROWTH'S PERFORMANCE?
A: The recent performance of Growth has not been up to our expectations.
Therefore, we are carefully reviewing the fund's investment policies and
staffing to ensure that we are offering shareholders the best possible
opportunities for long-term capital growth. This effort will not cease until
the problem is rectified.
INVESTMENTS BY COUNTRY
expressed as a percentage of
total value of investments
--------------------------------
% of fund
investments
Canada 2.8%
Japan 8.0%
Mexico 0.9%
Sweden 1.0%
United States 87.3%
-----
100.0%
=====
--------------------------------
Growth Investors' schedule of investments begins on page 26.
[company logo]
12
April 30, 1996
- --------------------------------------------------------------------------------
ULTRA INVESTORS
- --------------------------------------------------------------------------------
MANAGEMENT Q & A
An interview with Jim Stowers III, President of Twentieth Century and a
portfolio manager on the Ultra Investors management team.
Q: WHAT WAS ULTRA'S PERFORMANCE FOR THE SIX MONTHS ENDED APRIL 30, 1996?
A: Ultra posted a 4.45% gain for the six month period, compared with a 13.75%
total return for the S&P 500 Index. As an aggressive growth fund, Ultra's
performance can be volatile, and short-term periods of underperformance in
comparison to the S&P 500 Index are not unusual. Over the one-year period ended
April 30, 1996, Ultra's 36.19% gain is ahead of the S&P's 29.95% gain. The
fund's long-term performance continues to be very strong. For the five and
10-year periods, its returns are substantially better than those of the S&P 500
Index.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (as of April 30, 1996)
ULTRA INVESTORS S&P 500 Index NASDAQ
--------------- ------------- ------
6 Months* 4.45% 13.75% 14.91%
1 Year 36.19% 29.95% 40.80%
5 Year 19.49% 14.92% 19.69%
10 Year 18.40% 14.23% 12.00%
*Actual
- --------------------------------------------------------------------------------
$10,000 OVER A 10-YEAR PERIOD (as of April 30, 1996)
[mountain graph]
$10,000 investment made 4/30/86 Value on 04/30/96:
$54,161 ULTRA INVESTORS
$37,833 S & P 500 INDEX
$31,065 NASDAQ
ULTRA S & P NASDAQ
DATE ACCT VALUE ACCT VALUE ACCT VALUE
04/30/86 $10,000 $10,000 $10,000
04/30/87 $13,165 $12,653 $10,902
04/30/88 $11,228 $11,839 $ 9,895
04/30/89 $14,126 $14,535 $11,156
04/30/90 $14,207 $16,053 $10,961
04/30/91 $22,235 $18,872 $12,648
04/30/92 $26,764 $21,524 $15,100
04/30/93 $30,846 $23,508 $17,259
04/30/94 $37,380 $24,760 $19,148
04/30/95 $39,701 $29,072 $22,022
04/30/96 $54,161 $37,833 $31,065
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
- --------------------------------------------------------------------------------
QUICK FUND FACTS
ULTRA INVESTORS
STRATEGY:
Aggressively seeks growth
by investing in fast-growing
medium-sized and larger companies.
INCEPTION DATE:
November 2, 1981
SIZE:
$16.8 billion
(as of April 30, 1996)
INVESTMENT APPROACH:
Aggressive Growth
TICKER:
TWCUX
- --------------------------------------------------------------------------------
13
- --------------------------------------------------------------------------------
ULTRA INVESTORS
Q: WHAT FACTORS AFFECTED ULTRA'S PERFORMANCE FOR THE SIX MONTHS?
A: The six-month period ending April 30 captures a time in which a trend that
benefited the fund in the prior six months reversed itself. Ultra's large
position in technology-related companies produced impressive gains through most
of 1995. However, last winter's technology sell-off hit those positions hard.
Semiconductor stocks, in which the fund had several large positions, were the
hardest hit. Although Ultra's performance improved in the last three months of
the period, the fund was not able to recover sufficiently to beat the S&P for
the period.
Q: AT THE END OF APRIL, ABOUT HALF OF ULTRA'S PORTFOLIO WAS IN TECHNOLOGY
STOCKS. WHY DID YOU CONTINUE TO OWN A LARGE POSITION IN THIS SECTOR?
A: Our mission is to invest in companies that exhibit accelerating earnings
and revenues, and in our view the technology sector continues to offer very
attractive relative rates of growth. Even during the sharp sell-off in
technology stocks this past winter, many of our technology-oriented holdings
continued to forge ahead. The share price of Cisco Systems, for example,
declined by almost a third despite reporting revenue and earnings growth in
excess of 70%. Yet, we held on to the stock because the company continued to
meet our investment criteria. The shares have since recovered from the setback
and moved to new all-time highs.
Q: WHICH SEGMENTS OF THE TECHNOLOGY SECTOR APPEAL TO YOU MOST?
A: At the end of April, we had large positions in the networking, computer
systems and software industries. We were attracted to them in large part due to
strong growth in Internet usage, as well as the popularity of Intranet systems
used as internal communication tools within large organizations. The development
of these systems has resulted in large increases in capital spending by business
for various types of networking equipment. U.S. Robotics, for example, has
experienced sharp increases in demand for its high-speed modems and other access
products.
A change we made during the period was to substantially reduce the fund's
position in semiconductor companies due to changing supply/demand
characteristics in that business.
Q: WHAT OTHER SECTORS DID YOU FIND ATTRACTIVE?
A: Ultra had sizable stake in the industries supporting healthcare, including
companies involved in information management, medical equipment and
biotechnology. As a group, these sectors benefited when governmental healthcare
reform proposals foundered in 1995. The Food and Drug Administration (FDA) has
also accelerated the approval process for new drugs and equipment, making it
easier for companies to bring effective new products to market quickly. Pfizer
and Merck were two (continued on next page)
TOP TEN HOLDINGS (as of April 30, 1996)
- ------------------------------------------------------------
% of fund's
investments in
% of fund these stocks
investments six months ago
Cisco Systems Inc. 4.7% 3.3%
Sun Microsystems, Inc. 4.3% 2.3%
Ascend Communications, Inc. 3.4% 1.2%
U.S. Robotics Corp. 3.4% --
Merck & Co., Inc. 3.1% 2.1%
Pfizer Inc. 2.7% 2.6%
Citicorp 2.4% 1.6%
Johnson & Johnson 2.4% 2.0%
Amgen Inc. 2.1% 2.6%
3Com Corp. 2.1% 4.1%
- ------------------------------------------------------------
14
April 30, 1996
- --------------------------------------------------------------------------------
ULTRA INVESTORS
significant beneficiaries of the improved political and regulatory environment
for healthcare firms.
We have also established a position in financial services companies. The
moderate-growth, low-inflation economic environment in the U.S. has been
beneficial for financial stocks. In addition, widespread industry consolidation
has led to a renewed focus on cost reduction and improving shareholder value.
Citicorp, for example, has invested heavily in technology to lower its cost
structure and improve profitability. It has also aggressively bought back its
own stock, thereby reducing the number of shares outstanding.
Q: HOW DOES ULTRA'S SIZE AFFECT THE FUND'S INVESTMENT STRATEGY?
A: Ultra's assets under management have grown substantially in the past
several years, and we now hold a larger percentage of assets in mid-cap and
larger companies than was the case when the fund was smaller.
Nonetheless, we recognize that, in some cases, smaller firms have greater
growth potential than larger capitalization issues. Therefore, we have sought to
achieve a mix in the size of the companies we own. We hold many larger companies
with attractive growth prospects and greater liquidity as well as smaller firms
for added growth potential. Specifically, we have tried to establish positions
early in the life cycle of fast-growing companies that have the potential to
become large fund holdings. For example, Ascend Communications, whose products
enable its customers to build Internet access systems among other uses, was once
a relatively small position in Ultra. But the company's strong growth and solid
stock-price gains have given Ascend a medium-sized capitalization. Ultra now has
a 3.4% position in the company's stock.
TOP FIVE INDUSTRIES (as of April 30, 1996)
- ------------------------------------------------------------
% of fund's
investments in
% of fund these industries
investments six months ago
Computer Peripherals 17.4% 16.9%
Computer Software & Services 12.6% 15.0%
Pharmaceuticals 11.4% 8.9%
Communication Equipment 8.5% 7.2%
Computer Systems 6.8% 8.2%
- ------------------------------------------------------------
Q: WHAT WAS ULTRA'S POSITION IN FOREIGN STOCKS?
A: Ultra had a modest 5.2% position in international stocks. For most of
the past year, we have kept Ultra's investments in foreign companies low.
While there are many attractive growth opportunities overseas, we have limited
our foreign holdings given the strength of the U.S. market and the relative
attractiveness of our domestic holdings.
INVESTMENTS BY COUNTRY
expressed as a percentage of
total value of investments
-----------------------------
% of fund
investments
Canada 1.5%
England 0.3%
Hong Kong 1.2%
Italy 1.0%
Japan 0.2%
Sweden 0.9%
Switzerland 0.1%
United States 94.8%
-----
100.0%
=====
-----------------------------
Ultra Investors' schedule of investments begins on page 29.
[company logo]
15
- --------------------------------------------------------------------------------
VISTA INVESTORS
- --------------------------------------------------------------------------------
MANAGEMENT Q & A
An interview with Glenn Fogle, a portfolio manager on the Vista Investors
management team.
Q: HOW DID VISTA INVESTORS PERFORM FOR THE SIX-MONTH PERIOD ENDED APRIL 30,
1996?
A: Vista had a 10.78% gain for the period, while the S&P 500 Index gained
13.75% and the NASDAQ Composite Index rose 14.91%. Vista experienced both sharp
gains and declines during the past six months. The bulk of its losses came in
December and early January, when a large stake in semiconductor companies
suffered from a steep stock-price correction. However, improvements in the
fortunes of the technology industry as a whole helped the fund post a very sharp
gain in April 1996.
Over the one-year period, Vista outperformed both the S&P 500 and NASDAQ
Indices.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (as of April 30, 1996)
VISTA INVESTORS S&P 500 Index NASDAQ
--------------- ------------- ------
6 Months* 10.78% 13.75% 14.91%
1 Year 47.11% 29.95% 40.80%
5 Year 18.70% 14.92% 19.69%
10 Year 14.99% 14.23% 12.00%
*Actual
- --------------------------------------------------------------------------------
$10,000 OVER A 10-YEAR PERIOD (as of April 30, 1996)
[mountain graph]
$10,000 investment made 4/30/86 Value on 04/30/96:
$40,423 VISTA INVESTORS
$37,833 S & P 500 INDEX
$31,065 NASDAQ
VISTA S & P NASDAQ
DATE ACCT VALUE ACCT VALUE ACCT VALUE
04/30/86 $10,000 $10,000 $10,000
04/30/87 $13,832 $12,653 $10,902
04/30/88 $10,778 $11,839 $ 9,895
04/30/89 $13,016 $14,535 $11,156
04/30/90 $14,977 $16,053 $10,967
04/30/91 $17,152 $18,872 $12,648
04/30/92 $20,170 $21,524 $15,100
04/30/93 $20,861 $23,508 $17,259
04/30/94 $22,576 $24,760 $19,148
04/30/95 $27,420 $29,072 $22,022
04/30/96 $40,423 $37,833 $31,065
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
- --------------------------------------------------------------------------------
QUICK FUND FACTS
VISTA INVESTORS
STRATEGY:
Aggressively seeks growth
by investing in fast-growing
small and medium-sized companies.
INCEPTION DATE:
November 25, 1983
SIZE:
$2.2 billion
(as of April 30, 1996)
INVESTMENT APPROACH:
Aggressive Growth
TICKER:
TWCVX
- --------------------------------------------------------------------------------
16
April 30, 1996
- --------------------------------------------------------------------------------
VISTA INVESTORS
Q: DID THE SHARP LOSSES IN TECHNOLOGY-RELATED STOCKS THIS WINTER CAUSE YOU
TO CUT BACK ON VISTA'S LARGE STAKE IN THIS SECTOR?
A: While it lasted, the correction in technology stocks was damaging to fund
performance. However, our investment discipline requires us to try to stay fully
invested in the market at all times. It also prevents us from chasing
hot-performing issues if they are not showing solid earnings acceleration.
Therefore, when the market fell, we continued to own the firms that, in our
view, offered the best earnings acceleration. Our investment approach is
designed to position the fund for strong market recoveries, and indeed, Vista
was very well positioned when technology stocks rebounded in April. That said,
however, we did make changes within the portfolio, and especially in our
technology positions, over the course of the period.
Q: WHAT CHANGES DID YOU MAKE?
A: It became clear to us in the fourth quarter of 1995 that the earnings
growth of semiconductor manufacturers, while still rapid, was nonetheless
weakening. The decline in acceleration occurred as the pace of new orders slowed
and semiconductor inventories grew. Therefore, we eliminated several
semiconductor issues from the portfolio, reducing our position in these stocks
from nearly 19% six months ago to about 6.5% on April 30.
TOP TEN HOLDINGS (as of April 30, 1996)
- ------------------------------------------------------------
% of fund's
investments in
% of fund these stocks
investments six months ago
Pairgain Technologies, Inc. 4.8% 1.4%
HFS, Inc. 4.3% 2.7%
HBO & Co. 3.8% 2.2%
Centocor, Inc. 2.8% --
Corporate Express, Inc. 2.8% 1.9%
Shiva Corp. 2.4% --
Medaphis Corp. 2.4% 2.3%
Healthsource, Inc. 2.4% 2.1%
Cognos Incorporated ADR 2.3% 1.2%
OfficeMax, Inc. 2.3% 2.4%
- ------------------------------------------------------------
As we wound down our position in semiconductor shares, we transferred some
of the proceeds into two other technology areas: software and telecommunications
equipment. The current economic climate is driven by change, and innovations
that allow professionals to do their jobs faster, more accurately, and less
expensively are in high demand. Our software holdings are good examples of this
concept. We built positions in companies that provide customized tools for
specific audiences. Cognos, Inc., for example, has developed "data mining"
tools. These are software programs that business people can use to compile
reports or otherwise manipulate the information in a database without requiring
programming skills--or a programmer. For several years, hardware manufacturers
have made great strides in increasing computing power. Companies like Cognos
have developed the software that can take advantage of those capabilities.
Q: AT THE END OF THE PERIOD, TECHNOLOGY-RELATED COMPANIES STILL REPRESENTED
NEARLY 40% OF VISTA'S ASSETS. WHY?
A: We continued to see the most innovation and the greatest potential for
earnings acceleration in the (continued on next page)
TOP FIVE INDUSTRIES (as of April 30, 1996)
- ------------------------------------------------------------
% of fund's
investments in
% of fund these industries
investments six months ago
Business Services & Supplies 20.1% 8.6%
Computer Software & Services 17.2% 11.9%
Communication Equipment 8.7% 3.9%
Healthcare 8.0% 6.8%
Pharmaceuticals 7.4% 1.6%
- ------------------------------------------------------------
17
- --------------------------------------------------------------------------------
VISTA INVESTORS
technology sector. We were also attracted by the continuous development of new
markets and opportunities within the sector. A direct broadcast satellite
service developed by a telecommunications company, for example, sells to a
completely different market than a software company's new data mining products.
However, we also found excellent opportunities in other types of companies. In
particular, we built up positions in retail, healthcare, and business services
companies.
Q: WHAT TYPE OF BUSINESS SERVICES COMPANIES DID VISTA OWN?
A: As the corporate trend toward downsizing and outsourcing has grown, new
opportunities have opened up for small, niche firms that can provide bulk
services to larger companies. One good example is temporary help companies.
Firms like Accustaff and Employee Solutions enable client companies to keep
their payrolls down. They also manage employee paperwork for their clients,
including government filings and tax withholdings. And, as large employers,
these temporary help companies can get better group rates on health insurance
and other employee benefits than a small business could. Currently 20.1% of
assets is in business services.
Q: HOW MUCH OF VISTA WAS IN INTERNATIONAL STOCKS AT THE END OF THE PERIOD?
A: About 7%. Vista owned a number of companies headquartered outside of
the U.S., but not because we were trying to take advantage of any economic
trends in foreign countries. Our international holdings are mostly
multinational businesses with sizable operations in the U.S. and a large
number of U.S. shareholders. Software maker Business Objects, for example, is
headquartered in France but is a global company. About half of its sales come
from the United States.
INVESTMENTS BY COUNTRY
expressed as a percentage of
total value of investments
-------------------------------
% of fund
investments
Canada 4.2%
France 1.4%
Netherlands 1.7%
United States 92.7%
-----
100.0%
=====
-------------------------------
Vista Investors' schedule of investments begins on page 32.
[company logo]
18
April 30, 1996
- --------------------------------------------------------------------------------
BALANCED INVESTORS
MANAGEMENT Q & A
An interview with Chuck Duboc, a portfolio manager on the Balanced
Investors management team.
Q: HOW DID BALANCED INVESTORS PERFORM FOR THE SIX-MONTH PERIOD ENDED APRIL
30, 1996?
A: Balanced Investors had a 5.45% total return for the past six months. That
return reflects the combined performance of Balanced's stock component of
approximately 60%, and its 40% bond segment. It was a relatively volatile period
for both stocks and bonds, as interest rates changed direction and leadership
rotated through different sectors of the equity market. The S&P 500, which does
not have a bond segment, returned 13.75% for the same period.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (as of April 30, 1996)
BALANCED INVESTORS S&P 500 Index
------------------ -------------
6 Months* 5.45% 13.75%
1 Year 17.40% 29.95%
5 Year 10.04% 14.92%
Inception (10-20-88 to 4-30-96) 11.91% 15.19%
*Actual
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND (as of April 30, 1996)
[mountain graph]
$10,000 investment made 10/20/88
BALANCED S & P
DATE ACCT VALUE ACCT VALUE Value on 04/30/96:
10/20/88 $10,000 $10,000 $23,323 BALANCED INVESTORS
04/30/89 $10,527 $11,137 $28,989 S & P 500 INDEX
04/30/90 $11,954 $12,300
04/30/91 $14,457 $14,460
04/30/92 $16,842 $16,492
04/30/93 $17,192 $18,012
04/30/94 $18,582 $18,971
04/30/95 $19,848 $22,276
04/30/96 $23,323 $28,989
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
- --------------------------------------------------------------------------------
QUICK FUND FACTS
BALANCED INVESTORS
STRATEGY:
A mix of growth stocks
and intermediate bonds, with
approximately 60% allocated
to stocks.
INCEPTION DATE:
October 20, 1988
SIZE:
$838 million
(as of April 30, 1996)
INVESTMENT APPROACH:
Growth
TICKER:
TWBIX
- --------------------------------------------------------------------------------
19
- --------------------------------------------------------------------------------
BALANCED INVESTORS
Q: WHAT FACTORS CONTRIBUTED TO THE PERFORMANCE OF THE FUND'S STOCK COMPONENT?
A: The biggest positive contributor to total return came from the energy
sector, where we increased our holdings from about 4% six months ago to 17% of
the stock portfolio. The industry has also increased exploration activity
significantly, resulting in an extremely strong market for drilling rigs and
other oil service equipment. In addition, the fund benefited from good results
in pharmaceuticals, our largest weighting, and favorable returns from aerospace,
financial services and health care holdings.
However, Balanced had a relatively high weighting in technology-related
companies early in the period, which hurt the fund when technology stocks
corrected last winter. But when some of these stocks rebounded this spring, our
9.3% position in computer software and services meant the fund was well
positioned in one of the better performing segments of this rapidly expanding
industry.
TOP TEN HOLDINGS (as of April 30, 1996)
- ----------------------------------------------------------------
% of fund's equity
% of fund's investments in
equity these stocks
investments six months ago
HFS, Inc. 3.5% 1.6%
Hewlett-Packard Co. 3.0% 3.7%
Halliburton Co. 2.8% 2.2%
Boeing Co. 2.8% 1.2%
Johnson & Johnson 2.7% 0.8%
United Technologies Corp. 2.5% 1.3%
Microsoft Corp. 2.5% 1.7%
NIKE, Inc. 2.4% 2.1%
Falcon Drilling Company, Inc. 2.4% 0.0%
Pfizer, Inc. 2.4% 1.9%
- ----------------------------------------------------------------
Q: WHY DID BALANCED HAVE SUCH A LARGE POSITION IN PHARMACEUTICAL COMPANIES?
A: After several years of limited new product introductions, there has been a
significant level of new product activity in the past year or so. New products
typically offer higher profits because they provide more effective treatments
than existing remedies, and they are usually patent protected. The fund owns
Pfizer, for example, whose pipeline of new products is among the strongest in
the industry. Among the other positive contributors in this category are blue
chip Johnson & Johnson and Amgen, a leading biotechnology firm.
Q: WHAT OTHER SECTORS CONTRIBUTED MEANINGFULLY TO THE FUND'S PERFORMANCE?
A: I'd point again to the fund's increased weighting in energy services and
producers as the single biggest contributor to returns. Companies like
Halliburton, our largest energy holding, as well as smaller firms like Falcon
Drilling and Global Marine, were strong contributors to performance. Given the
heavy demand for energy products in the developing nations of Southeast Asia and
China, and the trend toward larger, less fuel-efficient sport utility vehicles
and vans in the U.S., the future continues to look bright for the energy sector.
There's another interesting theme in the aerospace industry, where we've
increased our holdings. The big aerospace and defense contractors, for example,
have been adjusting to President Clinton's cuts in the defense budget by
trimming costs and restructuring their businesses. Lockheed Martin, a leading
aerospace firm, has made strategic acquisitions to achieve dominant size in its
industry and to create complete systems without having to subcontract other
firms.
20
April 30, 1996
- --------------------------------------------------------------------------------
BALANCED INVESTORS
Q: WHAT FACTORS AFFECTED THE PERFORMANCE OF BALANCED'S BOND COMPONENT?
A: During the six months ended April 30, 1996, the bond market showed an
unusual level of volatility. The yield on 30-year Treasury bonds fluctuated
considerably, falling from 6.40% to 5.95% in early February, and then rising
sharply to 6.95% between mid-February and April. Bond prices move inversely to
bond yields, meaning that bonds have fallen back in price since mid-February.
The decline was triggered by failed budget talks, and subsequently fueled by a
stream of economic releases that indicate underlying strength in the U.S.
economy. Because economic strength is typically accompanied by increasing
inflationary pressures, bond investors began to anticipate tight monetary
policy, rising interest rates and declining bond prices. We lengthened duration
to capture gains in bond prices when interest rates were declining in December
and January, and shortened duration in February, March and April to protect the
fund from losses when interest rates rose and bond prices started to decline.
QUALITY DIVERSIFICATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
(Moody's ratings) % of fixed income investments
AAA 40.0%
AA 12.0%
A 31.0%
BBB 17.0%
100.0%
AVERAGE PORTFOLIO MATURITIES (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 5.5
Average years to maturity indicates the average time until the principal on the
Fund's bonds is expected to be repaid, weighted by dollar amount.
DURATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 4.0
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
Q: WHAT TYPE OF BONDS DID BALANCED OWN?
A: At April 30, 1996, Balanced's bond portfolio was 57% invested in corporate
bonds and 30% in Treasuries, with the remainder in mortgage- and asset-backed
securities. This breakdown represents little change from the fund's holdings six
months ago. All the bonds in the fund are investment grade, meaning they have
ratings of AAA (the highest rating), AA, A or BBB (the lowest rating that is
still investment grade) from firms that rate bonds for their credit quality. We
selectively increased our weightings in bonds with A and BBB ratings to take
advantage of what we consider to be favorable credit trends in specific
securities.
INVESTMENTS BY COUNTRY
expressed as a percentage of
total value of investments
--------------------------------
% of fund
investments
Canada 1.3%
Finland 0.3%
Japan 1.8%
Mexico 0.5%
Switzerland 0.7%
United Kingdom 1.1%
United States 94.3%
-----
100.0%
=====
--------------------------------
TOP FIVE INDUSTRIES (as of April 30, 1996)
- ------------------------------------------------------------------
% of fund's equity
% of fund's investments in
equity these industries
investments six months ago
Pharmaceuticals 11.0% 2.0%
Computer Software & Services 9.3% 5.8%
Energy (Services) 9.1% 1.2%
Energy (Production & Marketing) 8.2% 2.8%
Healthcare 7.4% 3.6%
- ------------------------------------------------------------------
Balanced Investors' schedule of investments begins on page 33.
[company logo]
21
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS April 30, 1996 (Unaudited)
SELECT INVESTORS
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS
AEROSPACE & DEFENSE--6.9%
750,000 AlliedSignal Inc. $ 43,594
800,000 Boeing Co. 65,700
150,000 Lockheed Martin Corp. 12,094
43,700 McDonnell-Douglas Corp. 4,217
775,000 Textron Inc. 66,456
777,800 United Technologies Corp. 85,947
----------
278,008
----------
AUTOMOBILES & AUTO PARTS--2.5%
800,000 Chrysler Corp. 50,200
6,150,000 Nissan Motor Company ORD 51,826
----------
102,026
----------
BANKING--6.4%
1,100,000 Bank of New York Co., Inc. 53,350
600,000 BankAmerica Corp. 45,450
875,000 Chase Manhattan Corp. 60,266
850,000 Northern Trust Corp. 47,972
140,000 Schweizerischer Bankverein
ORD1 52,331
----------
259,369
----------
BROADCASTING--1.1%
700,000 Grupo Televisa ADR1 21,700
1,350,000 Tokyo Broadcasting System ORD 22,521
----------
44,221
----------
COMMUNICATIONS SERVICES--3.3%
650,000 Compania De Telefonia
Espana SA ADR 34,206
3,075,000 MCI Communications Corp. 90,328
2,000,000 Societa Finanziaria
Telefonica p.a. ORD 6,765
----------
131,299
----------
COMPUTER PERIPHERALS--2.5%
1,925,000 Cisco Systems Inc.1 99,980
----------
COMPUTER SOFTWARE & SERVICES--4.1%
827,939 First Data Corp. 62,923
752,300 Microsoft Corp.1 85,151
562,500 Oracle Systems Corp.1 18,949
----------
167,023
----------
COMPUTER SYSTEMS--4.8%
150,000 Digital Equipment Corporation1 8,962
1,150,000 Hewlett-Packard Co. 121,756
600,000 International Business
Machines Corp. 64,500
----------
195,218
----------
CONSTRUCTION--1.3%
800,000 Fluor Corp. 52,900
----------
DIVERSIFIED COMPANIES--4.0%
1,100,000 Morton International, Inc. 38,913
3,159,200 Tyco International, Ltd. 122,024
----------
160,937
----------
ELECTRICAL & ELECTRONIC COMPONENTS--2.6%
46,600 Asea "A" Shares ORD 4,776
573,400 Asea "B" Shares ORD 58,263
75,000 Siemens AG ORD 41,080
----------
104,119
----------
ENERGY (PRODUCTION & MARKETING)--8.2%
690,600 Anadarko Petroleum Corp. 40,227
2,005,200 Apache Corp. 58,151
603,925 British Petroleum Co. p.l.c. ADR 65,979
1,500,000 Enron Oil & Gas Co. 39,750
111,000 Ente Nazionale Idrocarburi,
S.p.A. ADR1 4,717
577,000 Kerr-McGee Corp. 36,856
17,500 Louisiana Land & Exploration Co. 947
600,000 Sonat Inc. 26,175
675,000 Texaco Inc. 57,713
----------
330,515
----------
ENERGY (SERVICES)--7.9%
450,000 BJ Services Co.1 17,269
1,500,000 Baker Hughes Inc. 47,625
2,000,000 Halliburton Co. 114,750
2,500,000 Reading & Bates Corp.1 61,250
350,000 Schlumberger Ltd. 30,888
775,000 Western Atlas Inc.1 46,500
----------
318,282
----------
FINANCIAL SERVICES--2.8%
1,000,000 Bear Stearns Companies, Inc. 25,125
1,250,000 Federal National Mortgage
Association 38,281
660,400 Student Loan Marketing
Association 48,374
----------
111,780
----------
See Notes to Financial Statements
22
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
FOOD & BEVERAGE--1.1%
535,200 Dole Food Company, Inc. $ 21,408
350,000 PepsiCo, Inc. 22,225
----------
43,633
----------
HEALTHCARE--6.2%
1,479,200 Baxter International, Inc. 65,455
865,000 Cardinal Health, Inc. 54,279
1,200,000 Columbia/HCA Healthcare Corp. 63,750
1,100,000 United HealthCare Corp. 64,350
----------
247,834
----------
INSURANCE--3.7%
664,400 CIGNA Corp. 75,326
250,000 ITT Hartford Group Inc. 12,219
260,000 Marsh & McLennan Cos., Inc. 24,440
500,000 Transamerica Corporation 38,000
----------
149,985
----------
OFFICE EQUIPMENT--1.1%
300,000 Xerox Corp. 43,950
----------
PHARMACEUTICALS--12.8%
40,000 Ciba-Geigy AG ORD 46,334
950,000 Elan Corp., plc ADR1 62,819
1,707,200 Ivax Corp. 49,722
525,000 Johnson & Johnson 48,563
1,000,000 Pfizer, Inc. 68,875
1,530,500 SmithKline Beecham plc ADR 82,647
2,509,000 Teva Pharmaceuticals Industries
Ltd. ADR 112,591
400,000 Warner-Lambert Co. 44,700
----------
516,251
----------
PUBLISHING--1.4%
1,325,000 Times Mirror Co. 56,478
----------
RETAIL (APPAREL)--1.8%
850,000 NIKE, Inc. 74,375
----------
RETAIL (GENERAL MERCHANDISE)--4.7%
1,500,000 Federated Department Stores,
Inc.1 50,063
1,300,000 May Department Stores
Co. (The) 66,300
1,500,000 Sears, Roebuck & Co. 74,813
----------
191,176
----------
RETAIL (SPECIALITY)--1.4%
1,000,000 TJX Companies, Inc. 29,500
1,000,000 Toys "R" Us, Inc.1 27,875
----------
57,375
----------
MISCELLANEOUS--1.4%
400,000 Asatsu ORD 17,541
3,500,000 Cookson Group Plc ORD 16,631
2,500,000 Tokyu Corp. ORD 20,329
----------
54,501
----------
TOTAL COMMON STOCKS--94.0% 3,791,235
(Cost $3,065,525) ----------
TEMPORARY CASH INVESTMENTS
$137,000 par value FHLB Discount Notes,
5.15%-5.20%, 5-1-96 through 6-17-96 136,600
$70,000 par value FNMA Discount Notes,
5.16%-5.24%, 5-7-96 through 5-22-96 69,853
Repurchase Agreement (J. P. Morgan
Securities, Inc.), 5.30%, due 5-1-96;
collateralized by $27,361 par value
U.S. Treasury Bonds, 9.125%, due 5-15-18
(Delivery value $34,005) 34,000
Repurchase Agreement (Goldman Sachs
& Co., Inc.), 5.25%, due 5-1-96;
collateralized by $1,140 par value U.S.
Treasury Bonds, 9.00%, due 11-15-18
(Delivery value $1,400) 1,400
----------
TOTAL TEMPORARY CASH INVESTMENTS--6.0% 241,853
(Cost $241,853) ----------
TOTAL INVESTMENT SECURITIES--100.0% $4,033,088
(Cost $3,307,378) ==========
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Dates Value Gain(Loss)
- ------------------ ----------- -------- ----------
37,432,500 CHF 5/31/96 $30,179 $184
31,434,480 DEM 5/31/96 20,574 21
7,032,038,735 JPY 5/31/96 67,320 (1,100)
------- ------
$118,073 $(895)
(Receivable Amount $117,178) ======= ======
See Notes to Financial Statements
23
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
HERITAGE INVESTORS
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS
AEROSPACE & DEFENSE--2.9%
600,000 EG&G, Inc. $ 13,200
240,000 Precision Castparts Corp. 10,410
250,000 Sundstrand Corporation 9,188
----------
32,798
----------
AIRLINES--1.3%
400,000 Comair Holdings, Inc. 14,825
----------
BIOTECHNOLOGY--2.4%
200,000 Agouron Pharmaceuticals, Inc.1 8,150
250,000 Arris Pharmaceutical Corp.1 3,906
60,000 Chiron Corp.1++ 5,775
350,000 Isis Pharmaceuticals, Inc.1 4,419
275,000 SEQUUS Pharmaceuticals, Inc.1 4,813
----------
27,063
----------
BROADCASTING--0.8%
500,000 Comcast Corp. 8,719
----------
BUILDING & HOME IMPROVEMENTS--1.7%
400,000 Belden Inc. 11,900
140,000 York International Corporation 6,720
----------
18,620
----------
BUSINESS SERVICES & SUPPLIES--6.2%
190,000 Alco Standard Corp. 10,996
206,021 Information Resources, Inc.1 2,974
260,000 Norrell Corp. 10,075
70,384 Oce-van der Grinten N.V. ORD 6,468
250,000 Paychex, Inc. 16,906
325,000 Reynolds & Reynolds Co. 15,031
125,000 SITEL Corp.1 6,969
----------
69,419
----------
COMMUNICATIONS EQUIPMENT--6.9%
250,000 ADC Telecommunications, Inc.1 10,437
200,000 Allen Group Inc. (The) 4,950
675,000 ECI Telecom Ltd. ADR 17,719
475,000 Ericsson (L.M.) Telephone
Co. ADR 9,648
350,000 First Chicago Nextel Decs 6,650
300,000 Nera AS ADR1 10,969
400,000 Scientific-Atlanta, Inc. 7,400
165,000 Tellabs, Inc. 1 9,137
----------
76,910
----------
COMMUNICATIONS SERVICES--1.1%
150,000 Cincinnati Bell Inc. 7,387
255,000 MobileMedia Corp. 1 5,068
----------
12,455
----------
COMPUTER PERIPHERALS--8.6%
590,000 BMC Industries, Inc. 15,782
68,400 Dialogic Corp. 1 3,155
270,000 Madge Networks N.V. ADR 1 7,982
360,000 Mylex Corp. 1 8,820
280,000 National Computer Systems, Inc. 6,125
145,000 Raychem Corp. 11,292
350,000 SCI Systems, Inc. 1 15,028
500,000 Telxon Corp. 11,563
185,000 VeriFone, Inc. 1 7,770
350,000 Zoom Telephonics, Inc. 1++ 8,094
----------
95,611
----------
COMPUTER SOFTWARE & SERVICES--6.0%
84,100 BDM International Inc. 1 3,932
575,000 Borland International, Inc. 1 9,380
65,000 Getronics Geveke N.V. ORD1 4,513
100,000 HBO & Co. ++ 11,900
420,000 Ines Corp. ORD1 7,888
375,000 Sybase, Inc. 1++ 10,266
450,000 System Software Associates, Inc. 10,659
310,000 Technology Solutions Co. 1 8,370
----------
66,908
----------
CONSUMER PRODUCTS--0.8%
180,000 Amway Japan Limited ORD 9,249
----------
CONTROL & MEASUREMENT--6.2%
200,000 Advantest Corporation ORD 9,895
225,000 KLA Instruments Corp. 1 6,525
675,000 LTX Corporation1 6,539
485,000 Perkin-Elmer Corp. 26,614
100,000 Tektronix, Inc. 3,963
270,000 Varian Associates, Inc. 15,424
----------
68,960
----------
ELECTRICAL & ELECTRONIC COMPONENTS--3.7%
200,000 AVX Technology 4,750
190,000 Augat Inc. 3,657
250,000 Hoya Corp. ORD 8,818
250,000 Lattice Semiconductor Corp. 1++ 8,172
150,000 Linear Technology Corp. 5,175
450,000 Pioneer Standard
Electronics, Inc. 7,313
88,000 Wyle Electronics 3,685
----------
41,570
----------
See Notes to Financial Statements
24
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
ENERGY (PRODUCTION & MARKETING)--4.6%
150,000 Newpark Resources, Inc. 1 $ 4,706
270,000 Sonat Offshore Drilling, Inc. 14,816
380,000 Tidewater, Inc. 16,150
285,000 Tosco Corp. 15,248
----------
50,920
----------
FINANCIAL SERVICES--6.7%
445,000 Credit Saison Co., Ltd. ORD 10,987
325,000 Daiwa Securities, Co., Ltd. ORD 4,988
230,000 Franklin Resources, Inc. 13,167
275,000 Invesco PLC ADR 10,175
330,000 Kokusai Securities Co., Ltd. ORD 5,348
550,000 Lehman Brothers Holdings Inc. 13,956
315,000 State Street Boston Corp. 15,711
----------
74,332
----------
FOOD & BEVERAGE--0.8%
285,000 Richfood Holdings, Inc. 9,316
----------
INDUSTRIAL EQUIPMENT & MACHINERY--2.5%
150,000 Pall Corp. 4,200
131,500 Roper Industries, Inc. 6,197
160,000 SMC Corp. ORD 12,431
155,000 Valmont Industries, Inc. 4,999
----------
27,827
----------
INSURANCE--2.7%
350,000 Conseco, Inc. 12,775
325,000 Sunamerica, Inc. 17,713
----------
30,488
----------
LEISURE--4.3%
130,000 Adidas AG ORD1 9,895
370,000 Harley-Davidson, Inc. 16,326
150,000 Harrah's Entertainment1 5,175
1,075,000 Konica Corp. ORD 8,403
450,000 Yamaha Corp. ORD 8,065
----------
47,864
----------
MEDICAL EQUIPMENT & SUPPLIES--9.5%
440,000 ADAC Laboratories 7,232
335,000 Advanced Technology
Laboratories, Inc. 1 10,887
200,000 AmeriSource Health Corp. 1 7,100
170,600 Biomatrix, Inc. 1 2,399
555,000 Guidant Corp. 31,149
175,000 Hillenbrand Industries, Inc. 6,650
460,000 Invacare Corp. 11,845
485,000 Kinetic Concepts, Inc. 7,214
355,000 Omnicare, Inc. 21,300
----------
105,776
----------
PHARMACEUTICALS--0.5%
240,000 A.L. Pharma Inc. 5,880
----------
PRINTING & PUBLISHING--2.0%
205,000 Deluxe Corp. 7,175
125,000 Media General, Inc. 4,813
300,000 New York Times Co. Cl A 9,750
----------
21,738
----------
RESTAURANTS--0.8%
325,000 Apple South, Inc. 8,491
----------
RETAIL (APPAREL)--4.6%
200,000 Gucci Group ADR 1 10,875
500,000 Intimate Brands, Inc. 10,562
700,000 Liz Claiborne, Inc. 25,463
350,000 Wacoal Corp. ORD 4,738
----------
51,638
----------
RETAIL (GENERAL MERCHANDISE)--1.6%
300,000 Dillard Department Stores, Inc. 12,037
386,000 Takashimaya Company,
Limited ORD 6,292
----------
18,329
----------
RETAIL (SPECIALTY)--4.3%
725,000 Bombay Co., Inc. 1 8,428
250,000 Circuit City Stores, Inc. 7,937
210,000 Fila Holding S.p.A. ADR 14,333
350,000 Heilig-Meyers Co. 7,219
300,000 Lowe's Companies, Inc. 9,713
----------
47,630
----------
TOBACCO--0.6%
400,000 DiMon Inc. 6,800
----------
TRANSPORTATION--0.8%
350,000 Airborne Freight Corp. 9,231
----------
MISCELLANEOUS--1.5%
130,000 DEKALB Genetics Corp. 10,741
125,000 Hanna (M.A.) Co. 4,312
50,000 Manor Care, Inc. 2,006
----------
17,059
----------
TOTAL COMMON STOCKS--96.4% 1,076,426
(Cost $862,315) ----------
See Notes to Financial Statements
25
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
HERITAGE INVESTORS (continued)
- --------------------------------------------------------------------------------
Value
Principal Amount ($ In Thousands)
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS
BIOTECHNOLOGY--0.2%
$ 2,000 Chiron Corp., 1.90%, 11-17-20+ ++ $ 1,910
----------
ELECTRICAL & ELECTRONIC COMPONENTS--1.6%
2,850 LSI Logic Corp., 5.50%, 3-15-01+ ++ 8,507
10,000 Xilinx, Inc., 5.25%, 11-1-02+ 9,738
----------
18,245
----------
PUBLISHING--0.6%
6,000 Scholastic Corp., 5.00%, 8-15-05+ 6,630
----------
TOTAL CONVERTIBLE BONDS--2.4% 26,785
(Cost $25,986) ----------
TEMPORARY CASH INVESTMENTS
$3,345 par value FNMA Discount Note,
5.20%, 5-1-96 3,344
Repurchase Agreement (Goldman Sachs
& Co., Inc.), 5.25%, due 5-1-96;
collateralized by $7,130 par value
U.S. Treasury Bonds, 9.125%-12.375%,
due 5-15-04 through 5-15-18
(Delivery value $9,651) 9,650
----------
TOTAL TEMPORARY CASH INVESTMENTS--1.2% 12,994
(Cost $12,994) ----------
TOTAL INVESTMENT SECURITIES--100.0% $1,116,205
(Cost $901,295) ==========
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Dates Value Gain(Loss)
----------------- ---------- -------- ------------
12,145,323 DEM 5/31/96 $ 7,949 $8
7,977,879,882 JPY 5/31/96 76,375 (1,244)
------ ------
$84,324 $(1,236)
(Receivable Amount $83,088) ====== ======
GROWTH INVESTORS
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS
AEROSPACE & DEFENSE--2.5%
1,450,000 Boeing Co. $ 119,081
----------
AIRLINES--1.1%
1,800,000 Southwest Airlines Co. 53,550
----------
AUTOMOBILES & AUTO PARTS--2.1%
2,600,000 Honda Motor Co. Ltd. ORD 59,237
1,900,000 Toyota Motor Corp. ORD 43,289
----------
102,526
----------
BANKING--3.0%
900,000 Citicorp 70,875
400,000 Morgan (J.P.) & Co. Inc. 33,650
160,000 Wells Fargo & Co. 38,820
----------
143,345
----------
BIOTECHNOLOGY--2.5%
800,500 Cephalon, Inc. 1++ 23,014
1,000,000 Chiron Corp. 1++ 96,250
----------
119,264
----------
COMMUNICATIONS EQUIPMENT--9.5%
2,100,000 ADC Telecommunications, Inc. 1 87,675
1,000,000 Ericsson (L.M.) Telephone
Co. ADR 20,312
2,250,000 Glenayre Technologies, Inc. 1 104,625
1,195,000 Lucent Technologies Inc. 1 41,974
700,000 Motorola, Inc. 42,875
1,100,000 Octel Communications Corp. 1 49,500
1,960,000 Tellabs, Inc. 1 108,535
----------
455,496
----------
COMMUNICATIONS SERVICES--6.1%
1,300,000 AT&T Corp. 79,625
1,000,000 MFS Communications, Inc. 1 34,562
3,000,000 Nextel Communications Inc. 1 54,000
500,000 SBC Communications Inc. 25,000
1,400,000 Tele-Communications, Inc. 1 26,863
500,000 Telefonos de Mexico, S.A. ADR 17,000
1,175,000 Worldcom Inc. 1 55,152
----------
292,202
----------
COMPUTER PERIPHERALS--5.5%
2,200,000 Cisco Systems Inc. 1 114,263
See Notes to Financial Statements
26
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
1,550,000 Newbridge Networks Corp. ADR1 $ 99,781
900,000 Seagate Technology1 52,200
----------
266,244
----------
COMPUTER SOFTWARE & SERVICES--9.5%
900,000 Autodesk, Inc. 36,900
100,000 CSK Corporation ORD 3,098
1,000,000 Cerner Corp. 1++ 20,438
700,000 Computer Associates
International, Inc. 51,363
747,000 Computer Sciences Corp. 1 55,278
500,000 Filenet Corp. 1++ 27,875
700,000 First Data Corp. 53,200
700,000 Microsoft Corp. 1 79,231
1,837,500 Oracle Systems Corp. 1 61,901
2,500,000 Sybase, Inc. 1++ 68,438
----------
457,722
----------
COMPUTER SYSTEMS--3.4%
600,000 Compaq Computer Corp. 1 27,975
500,000 Digital Equipment Corporation1 29,875
500,000 International Business
Machines Corp. 53,750
1,000,000 Sun Microsystems, Inc. 1++ 54,188
----------
165,788
----------
CONSUMER PRODUCTS--1.1%
700,000 Colgate-Palmolive Co., Inc. 53,638
----------
DIVERSIFIED COMPANIES--1.7%
500,000 ITO-Yokado Co., Ltd ORD 29,409
850,000 Thermo Electron Corp. 1 52,381
----------
81,790
----------
ELECTRICAL & ELECTRONIC COMPONENTS--7.0%
275,000 General Electric Co. 21,313
400,000 Honeywell Inc. 21,050
800,000 Intel Corp. 54,250
2,307,200 International Game Technology 35,762
76,600 Komag, Inc. 1 2,576
1,350,000 LSI Logic Corp. 1++ 48,600
951,500 Linear Technology Corp. 32,827
550,000 Matsushita Communications
Industrial Co., Ltd. ORD 14,681
600,000 Rockwell International Corp. 35,100
450,000 Texas Instruments Inc.++ 25,425
1,300,000 Xilinx, Inc. 1 48,019
----------
339,603
----------
ENERGY (PRODUCTION & MARKETING)--1.3%
600,000 ENSCO International
Incorporated1 18,000
500,000 Texaco Inc. 42,750
----------
60,750
----------
ENERGY (SERVICES)--1.0%
550,000 Schlumberger Ltd 48,538
----------
FINANCIAL SERVICES--9.5%
550,000 Alex Brown Inc. 29,769
450,000 American Express Credit Corp. 21,825
900,000 Dean Witter, Discover & Co. 49,050
850,000 Donaldson, Lufkin &
Jenrette, Inc. 28,687
1,200,000 Merrill Lynch & Co., Inc. 72,450
1,600,200 Morgan Stanley Group Inc. 80,410
1,614,000 Nomura Securities Co. Ltd. ORD 35,080
750,000 Norwest Corp. 27,094
417,500 Price (T. Rowe) Associates, Inc. 23,380
900,000 Schwab (Charles) Corp. 22,050
1,100,000 Travelers Corp. 67,650
----------
457,445
----------
FOOD & BEVERAGE--1.0%
800,000 PepsiCo, Inc. 50,800
----------
HEALTHCARE--1.1%
525,000 Health Care & Retirement Corp. 1 19,359
825,000 Tenet Healthcare Corp. 1 16,912
500,000 Vencor, Inc. 1 16,875
----------
53,146
----------
INDUSTRIAL EQUIPMENT & MACHINERY--2.4%
1,150,000 Applied Materials, Inc. 1++ 45,856
400,000 Caterpillar Inc. 25,600
450,000 Lam Research Corp. 1++ 18,225
1,700,000 Nikon Corporation ORD 22,850
131,000 Tokyo Electron Limited ORD 4,858
----------
117,389
----------
INSURANCE--0.6%
320,000 American International
Group, Inc. 29,240
----------
LEISURE--2.7%
600,000 Circus Circus Enterprises, Inc. 1 22,050
450,000 Marriott International 21,937
1,650,000 Mirage Resorts, Inc. 1 86,419
----------
130,406
----------
See Notes to Financial Statements
27
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
GROWTH INVESTORS (continued)
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES--0.9%
375,000 Becton, Dickinson & Co. $ 30,234
400,000 U.S. Surgical Corp. 14,800
----------
45,034
----------
METALS & MINING--1.1%
475,000 Barrick Gold Corp. 14,547
650,000 Newmont Mining Corporation 37,619
----------
52,166
----------
OFFICE EQUIPMENT--1.7%
2,000,000 Canon Inc. ORD 39,657
2,000,000 Ricoh Co. Ltd ORD 23,451
2,800,000 Sanyo Electric Company
Ltd. ORD 17,830
----------
80,938
----------
PAPER & FOREST PRODUCTS--0.6%
1,500,000 Kimberly-Clark De Mexico
SA DE CV ORD 27,530
----------
PHARMACEUTICALS--6.2%
900,000 Abbott Laboratories 36,562
375,000 American Home Products Corp. 39,562
450,000 BioChem Pharma Inc. ADR 1 20,447
800,000 Centocor, Inc. 1 32,050
500,000 Interneuron Pharmaceuticals, Inc. 1 19,562
450,000 Lilly (Eli) & Co. 26,550
1,000,000 Liposome Co., Inc. 1 24,562
1,200,000 Merck & Co., Inc. 72,600
700,000 Pharmacia & Upjohn, Inc. 26,775
----------
298,670
----------
RESTAURANTS--0.9%
1,430,000 Boston Chicken, Inc. 1 45,671
----------
RETAIL (APPAREL)--3.5%
1,689,300 Aoyama Trading Co., Ltd. ORD 52,982
2,631,000 Gap, Inc. 79,259
500,000 Nautica Enterprises Inc. 1 23,125
800,000 Onward Kashiyama ORD 13,498
----------
168,864
----------
RETAIL (GENERAL MERCHANDISE)--2.4%
600,000 Nordstrom, Inc. 30,450
1,696,800 Sears, Roebuck & Co. 84,628
----------
115,078
----------
RETAIL (SPECIALTY)--4.3%
605,000 Autozone, Inc. 1 22,082
450,000 Avon Products, Inc. 39,994
750,500 Borders Group, Inc. 1 24,016
275,000 CDW Computer Centers, Inc. 1 21,244
1,600,000 Home Depot, Inc. 75,800
1,050,000 Marui Co., Ltd ORD 23,122
----------
206,258
----------
STEEL--0.9%
750,000 Nucor Corp. 42,187
----------
TOBACCO--1.2%
621,300 Philip Morris Companies Inc. 55,995
----------
MISCELLANEOUS--0.8%
500,000 Time Warner Inc. 20,438
330,000 WM. Wrigley Jr. Company 17,366
----------
37,804
----------
TOTAL COMMON STOCKS--99.1% 4,774,158
(Cost $3,933,550) ----------
TEMPORARY CASH INVESTMENTS
$14,000 par value FHLB Discount
Note, 5.15%, 5-13-96 13,976
Repurchase Agreement (Goldman Sachs
& Co., Inc.), 5.25%, due 5-1-96; collateralized
by $19,420 par value U. S. Treasury
Bonds, 11.875%-12.375%, due 11-15-03
through 5-15-04 (Delivery value $26,504) 26,500
Repurchase Agreement (Merrill Lynch &
Co., Inc.), 5.25%, due 5-1-96;
collateralized by $2,240 par value
U. S. Treasury Bonds, 5.75%, due
9-30-97 (Delivery value $2,200) 2,200
----------
TOTAL TEMPORARY CASH INVESTMENTS--0.9% 42,676
(Cost $42,676) ----------
TOTAL INVESTMENT SECURITIES--100.0% $ 4,816,834
(Cost $3,976,226) ==========
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Date Value (Loss)
- ------------------- ---------- --------- ----------
33,164,951,109 JPY 5/31/96 $317,499 $(5,595)
======== =======
(Receivable Amount $311,904)
See Notes to Financial Statements
28
- --------------------------------------------------------------------------------
ULTRA INVESTORS
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS
AEROSPACE & DEFENSE--1.5%
900,000 Boeing Co. $ 73,912
1,300,000 General Motors Corp. Cl "H" 79,463
900,000 United Technologies Corp. 99,450
----------
252,825
----------
AIRLINES--0.6%
1,650,000 Northwest Airlines Corp. 1 74,766
2,200,500 Swire Pacific Limited ORD 18,775
----------
93,541
----------
BANKING--6.1%
1,600,000 Bank of Boston Corp. 77,400
4,512,000 Chase Manhattan Corp. 310,764
5,263,000 Citicorp 414,461
1,550,000 Mellon Bank Corp. 83,313
2,000,000 NationsBank Corp. 159,500
----------
1,045,438
----------
BIOTECHNOLOGY--3.7%
6,250,000 Amgen Inc. 1 358,984
1,900,000 Biogen Inc. 1++ 125,163
1,000,000 Chiron Corp. 1++ 96,250
1,000,000 Genzyme Corp. 1++ 56,500
----------
636,897
----------
BROADCASTING--0.8%
350,000 Clear Channel
Communications, Inc. 1 23,713
1,515,000 Evergreen Media Corporation 1++ 60,032
1,800,000 Infinity Broadcasting Corp. 1 52,200
----------
135,945
----------
BUSINESS SERVICES & SUPPLIES--1.0%
9,000,000 New World Development Co.,
Ltd. ORD 40,373
850,000 Paychex, Inc. 57,481
7,500,000 Sun Hung Kai Properties
Limited ORD 71,507
----------
169,361
----------
CHEMICAL & RESINS--1.6%
2,700,000 IMC Global, Inc. 99,563
500,000 Monsanto Co. 75,750
1,450,000 Potash Corp. of Saskatchewan
Inc. ADR 102,225
----------
277,538
----------
COMMUNICATIONS EQUIPMENT--8.5%
1,200,000 Andrew Corp. 1 57,450
1,000,000 Aspect Telecommunications
Corp. 1 57,500
2,500,000 General Instrument Corp. 1 81,875
5,050,000 Lucent Technologies Inc. 1 177,381
1,950,000 Northern Telecom Ltd. ADR 100,425
3,200,000 Picturetel Corp. 1++ 108,400
2,600,000 QUALCOMM Inc. 1++ 100,750
3,250,000 StrataCom, Inc. 1++ 169,203
7,000,000 Telecom Italia Mobile ORD1 15,471
3,650,000 U.S. Robotics Corp. 1++ 571,681
----------
1,440,136
----------
COMMUNICATIONS SERVICES--3.4%
173,800 ADTRAN, Inc. 1 9,276
1,000,000 GTE Corp. 43,375
3,250,000 MCI Communications Corp. 95,469
2,600,000 Paging Network, Inc. 1 61,425
3,100,000 Sprint Corp. 130,587
4,950,000 Worldcom Inc. 1 232,341
366,666 360 Communications Company1 8,617
----------
581,090
----------
COMPUTER PERIPHERALS--17.4%
1,815,000 Adaptec, Inc. 1 104,589
9,550,000 Ascend Communications, Inc. 1++ 585,534
5,288,000 Bay Networks, Inc. 1++ 166,572
650,000 Cabletron Systems, Inc. 1 48,994
3,450,000 Cascade Communications 1++ 346,294
15,416,000 Cisco Systems Inc. 1 800,669
2,850,000 FORE Systems, Inc. 1++ 224,616
2,800,000 Iomega Corporation 1++ 152,950
1,600,000 Network General Corp. 1++ 70,800
150,000 Newbridge Networks Corp. ADR 1 9,656
1,750,000 Seagate Technology1 101,500
7,750,000 3Com Corp. 1++ 356,984
----------
2,969,158
----------
COMPUTER SOFTWARE & SERVICES--12.6%
3,700,000 America Online Inc. 1++ 236,800
800,000 Automatic Data Processing Inc. 31,100
1,500,300 BMC Software, Inc. 1 91,612
100,400 Borland International, Inc. 1 1,638
1,750,000 Cadence Design Systems, Inc. 1 91,437
280,300 Citrix Systems, Inc. 1 22,039
2,000,000 Computer Associates
International, Inc. 146,750
250,000 Electronics for Imaging, Inc. 1++ 15,344
See Notes to Financial Statements
29
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1995 (Unaudited)
ULTRA INVESTORS (continued)
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
1,705,000 HBO & Co.++ $ 202,895
3,200,000 Informix Corp. 1++ 84,200
800,000 Medic Computer Systems, Inc. 1++ 74,900
1,925,000 Microsoft Corp. 1 217,886
10,500,000 Oracle Systems Corp. 1 353,719
4,900,000 Parametric Technology Corp. 1 196,919
2,750,000 Peoplesoft, Inc. 1++ 173,594
1,300,000 Quarterdeck Office Systems, Inc. 1++ 19,987
1,100,000 Sterling Commerce, Inc. 1++ 38,500
1,050,000 Sterling Software, Inc. 1 81,637
2,200,000 Structural Dynamics
Research Corp. 1++ 70,125
----------
2,151,082
----------
COMPUTER SYSTEMS--6.8%
1,450,000 Hewlett-Packard Co. 153,519
2,600,000 International Business
Machines Corp. 279,500
13,450,000 Sun Microsystems, Inc. 1++ 728,822
----------
1,161,841
----------
ELECTRICAL & ELECTRONIC COMPONENTS--1.7%
1,700,000 Analog Devices, Inc.1 43,775
3,236,000 C-Cube Microsystems Inc. 1++ 159,373
2,250,000 Oak Technology, Inc.1++ 40,359
400,000 Rohm Co., Ltd. ORD 25,396
610,000 SCI Systems, Inc. 1 26,192
----------
295,095
----------
ENERGY (PRODUCTION & MARKETING)--0.8%
850,000 Triton Energy Corp. 46,750
1,700,000 Williams Companies, Inc. (The) 86,912
----------
133,662
----------
ENERGY (SERVICES)--0.4%
855,900 Baker Hughes Inc. 27,175
450,000 Schlumberger Ltd. 39,712
----------
66,887
----------
FINANCIAL SERVICES--3.2%
3,700,000 American Express Credit Corp. 179,450
8,400,000 Cheung Kong (Holdings)
Limited ORD 59,998
2,200,000 Countrywide Credit
Industries, Inc. 47,575
1,699,700 Federal National Mortgage
Association 52,053
2,800,000 Green Tree Financial Corp. 94,500
750,000 Household International, Inc. 51,844
2,000,000 MBNA Corp. 56,750
150,000 Reuters Holdings PLC ADR 10,153
----------
552,323
----------
HEALTHCARE--3.7%
1,650,000 Columbia/HCA Healthcare Corp. 87,656
2,260,000 Healthsouth Rehabilitation Corp. 1 83,903
600,000 OrNda HealthCorp 1 16,500
3,200,000 Oxford Health Plans, Inc.1++ 162,200
850,000 PacifiCare Health Systems,
Inc. Cl B 1++ 71,400
1,175,000 Phycor, Inc. 1++ 57,722
2,500,000 United HealthCare Corp. 146,250
----------
625,631
----------
INDUSTRIAL EQUIPMENT & MACHINERY--1.1%
1,500,000 Case Equipment Corp. 75,750
3,050,000 Deere & Co. 118,569
----------
194,319
----------
INSURANCE--1.0%
800,000 American International
Group, Inc. 73,100
2,000,000 HealthCare COMPARE Corp. 1++ 94,375
----------
167,475
----------
LEISURE--1.6%
1,400,000 Harley-Davidson, Inc. 61,775
600,000 Hilton Hotels Corporation 63,300
1,335,000 ITT Corporation 81,268
2,175,000 Matel, Inc. 56,550
----------
262,893
----------
MEDICAL EQUIPMENT & SUPPLIES--1.7%
550,000 Boston Scientific Corp. 1 23,719
1,600,000 Guidant Corp. 89,800
2,461,800 Medtronic, Inc. 130,783
1,350,000 VISX, Incorporated 1++ 45,900
----------
290,202
----------
PERSONAL SERVICES--0.5%
1,550,000 Service Corporation 82,344
----------
PHARMACEUTICALS--11.4%
2,150,000 Alza Corp. Cl A1 61,275
1,300,000 American Home Products Corp. 137,150
3,250,000 Astra "A" Shares ORD 144,716
16,800 Ciba-Geigy AG ORD 19,460
See Notes to Financial Statements
30
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
4,450,000 Johnson & Johnson $ 411,625
1,100,000 Lilly (Eli) & Co. 64,900
8,850,000 Merck & Co., Inc. 535,425
6,600,000 Pfizer, Inc. 454,575
1,500,000 Schering-Plough Corp. 86,062
450,000 Watson Pharmaceuticals1++ 21,488
----------
1,936,676
----------
PUBLISHING--1.0%
500,000 Gannett Co. 34,187
744,400 Presstek, Inc. 1++ 103,379
465,000 Scholastic Corp 1 30,574
----------
168,140
----------
RETAIL (APPAREL)--0.7%
1,300,000 NIKE, Inc. 113,750
----------
RETAIL (GENERAL MERCHANDISE)--0.9%
900,000 Federated Department
Stores, Inc. 1 30,037
1,196,800 Sears, Roebuck & Co. 59,690
1,900,000 Walgreen Co. 60,800
----------
150,527
----------
RETAIL (SPECIALTY)--1.7%
1,780,000 Bed Bath & Beyond Inc. 1++ 105,131
500,000 Just For Feet, Inc. 1 23,906
2,692,800 Starbucks Corp. 1 73,379
1,500,000 Sunglass Hut International, Inc. 1++ 44,250
675,000 Viking Office Products, Inc. 1 40,205
----------
286,871
----------
UTILITIES (ELECTRIC)--0.6%
1,625,000 Ameritech Corporation 94,859
----------
MISCELLANEOUS--0.9%
2,500,000 Bombardier, Inc. "B" Shares ORD 35,144
700,000 Fritz Companies, Inc. 1 26,075
700,000 Hutchison Whampoa
Limited ORD 4,344
400,000 Philip Morris Companies Inc. 36,050
9,000,000 Rolls-Royce plc ORD 32,176
600,000 The Kroger Co. 1 24,675
----------
158,464
----------
TOTAL COMMON STOCKS--96.9% 16,494,970
(Cost $11,154,216) ----------
TEMPORARY CASH INVESTMENTS
$5,000 par value FFCB Discount Note,
5.17%, 6-24-96 4,961
$199,585 par value FHLB Discount Notes,
5.15%-5.23%, 5-6-96 through 6-17-96 198,876
$174,000 par value FHLMC Discount
Notes, 5.19%-5.23%, 5-6-96 through 6-19-96 173,229
$99,500 par value FNMA Discount
Notes, 5.20%-5.24%, 5-15-96 through 6-12-96 99,074
Repurchase Agreement (Goldman
Sachs & Co., Inc.), 5.25%, due 5-1-96;
collateralized by $970 par value U.S.
Treasury Bonds, 7.625%, due 2-15-07
(Delivery value $1,000) 1,000
Repurchase Agreement (J.P. Morgan
Securities, Inc.), 5.30%, due 5-1-96;
collateralized by $9,657 par value
U.S. Treasury Bonds, 9.125%, due
5-15-18 (Delivery value $12,002) 12,000
Repurchase Agreement (Merrill Lynch
& Co., Inc.), 5.25%, due 5-1-96;
collateralized by $45,730 par value
U.S. Treasury Bonds, 5.75%, due
9-30-97 (Delivery value $45,007) 45,000
----------
TOTAL TEMPORARY CASH INVESTMENTS--3.1% 534,140
(Cost $534,140) ----------
TOTAL INVESTMENT SECURITIES--100.0% $17,029,110
(Cost $11,688,356) ==========
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Date Value (Loss)
- ------------------- ----------- ------- -----------
2,160,000,000 JPY 5/31/96 $20,678 $(328)
====== =====
(Receivable Amount $20,350)
See Notes to Financial Statements
31
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
VISTA INVESTORS
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS
BIOTECHNOLOGY--5.1%
172,800 Advanced Tissue Sciences, Inc. 1 $ 2,938
690,000 Alliance Pharmaceuticals, Inc. 1 12,592
900,000 Cephalon, Inc. 1++ 25,875
280,000 Genetics Institute, Inc. 1 19,950
940,000 IDEC Pharmaceuticals Corp.1++ 27,143
500,000 Interneuron Pharmaceuticals, Inc. 1 19,563
140,000 Neurex Corp.1 3,220
----------
111,281
----------
BUSINESS SERVICES & SUPPLIES--20.1%
1,000,000 Accustaff Inc. 1 29,812
240,000 APAC TeleServices, Inc. 1 18,600
1,000,000 Ceridian Corp. 1 47,750
1,600,000 Corporate Express, Inc. 1 59,900
700,000 Corrections Corp. of America1 44,625
700,000 Employee Solutions, Inc. 1 27,037
300,000 Gartner Group, Inc. 1 10,313
1,800,000 HFS, Inc. 1 92,475
170,000 MSC Industrial Direct Co., Inc. 1 6,184
1,116,700 Medaphis Corp. 1 51,438
650,000 Quintiles Transnational Corp. 1 47,531
----------
435,665
----------
COMMUNICATIONS EQUIPMENT--8.7%
650,000 Cable Design Technologies Corp. 1 21,287
71,800 MRV Communications, Inc. 1 3,007
800,000 MicroCom, Inc. 1++ 19,600
1,100,000 Pairgain Technologies, Inc. 1++ 105,325
500,000 Premisys Communications, Inc. 1 21,813
265,000 Westell Technologies, Inc. 1 18,948
----------
189,980
----------
COMMUNICATIONS SERVICES--2.2%
988,100 MobileMedia Corp. 1 19,638
550,000 Omnipoint Corporation 1 16,603
350,000 PanAmSat Corporation1 11,550
----------
47,791
----------
COMPUTER PERIPHERALS--4.3%
603,000 Madge Networks N.V. ADR 1 17,826
375,000 Seagate Technology1 21,750
880,000 Shiva Corp. 1++ 52,800
----------
92,376
----------
COMPUTER SOFTWARE & SERVICES--17.2%
395,000 Aspen Technology, Inc. 1 21,824
300,000 Baan Co., N.V. ADR 1 17,962
350,000 Business Objects S. A. ADR1 30,100
750,000 Cognos Incorporated ADR 1 50,531
319,500 Computer Horizons Corp. 1 16,095
700,000 HBO & Co. 83,300
500,000 Hummingbird Communications
Ltd. ADR 1++ 21,000
500,000 Macromedia, Inc. 1++ 18,844
700,000 Mcafee Associates, Inc. 1++ 42,962
1,000,000 PC Docs Group International,
Inc. ADR 1++ 20,625
200,000 Physician Computer Network, Inc. 1 2,225
900,000 Rational Software Corp. 1++ 47,925
----------
373,393
----------
ELECTRICAL & ELECTRONIC COMPONENTS--6.5%
900,000 Atmel Corp. 1++ 35,944
950,000 California Amplifier, Inc. 1++ 33,962
850,000 DSP Communications, Inc. 1++ 33,894
325,000 Level One Communications 1 8,612
800,000 Sanmina Corp. 1 28,200
----------
140,612
----------
ENVIRONMENTAL SERVICES--3.2%
1,200,000 USA Waste Services, Inc. 1 31,200
685,000 United Waste Systems, Inc. 1 37,932
----------
69,132
----------
HEALTHCARE--8.0%
415,000 Access Health Inc. 1 23,032
320,000 Genzyme Tissue Repair 1++ 4,460
1,150,000 Health Management
Associates, Inc. 1 36,800
1,500,000 Healthsource, Inc. 1 51,188
500,000 Orthodontic Centers of
America Inc. 1 19,625
1,400,000 Physician Sales & Service, Inc. 1++ 38,325
----------
173,430
----------
LEISURE--0.7%
375,000 Regal Cinemas, Inc. 1 15,352
----------
MEDICAL EQUIPMENT & SUPPLIES--4.5%
1,000,000 IDEXX Laboratories, Inc. 1 44,625
340,000 Thermo Cardiosystems, Inc. 1 24,140
900,000 Thermolase Corp. 1 29,813
----------
98,578
----------
See Notes to Financial Statements
32
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
PHARMACEUTICALS--7.4%
1,500,000 Centocor, Inc. 1 $ 60,094
900,000 Dura Pharmaceuticals, Inc. 1++ 48,487
900,000 Jones Medical Industries, Inc.++ 47,025
450,000 Noven Pharmaceuticals, Inc. 1 5,484
----------
161,090
----------
RETAIL (SPECIALTY)--6.0%
1,151,200 CompUSA Inc. 1 39,860
1,900,000 OfficeMax, Inc. 1 49,875
1,400,000 Sunglass Hut International, Inc. 1++ 41,300
----------
131,035
----------
TOTAL COMMON STOCKS--93.9% 2,039,715
(Cost $1,396,866) ----------
TEMPORARY CASH INVESTMENTS
$50,000 par value FHLB Discount Notes,
5.15%-5.18%, 5-15-96 through 5-20-96 49,882
$25,000 par value FHLMC Discount Note,
5.30%, 5-1-96 25,000
$10,130 par value FNMA Discount Note,
5.18%, 5-14-96 10,111
Repurchase Agreement (J.P. Morgan
Securities, Inc.), 5.25%, due 5-1-96;
collateralized by $41,862 par value U.S.
Treasury Bonds, 8.25%-10.375%, due
5-15-05 through 5-15-12 (Delivery
value $48,307) 48,300
----------
TOTAL TEMPORARY CASH INVESTMENTS--6.1% 133,293
(Cost $133,293) ----------
TOTAL INVESTMENT SECURITIES--100.0% $ 2,173,008
(Cost $1,530,159) ==========
BALANCED INVESTORS
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS
AEROSPACE & DEFENSE--3.6%
167,000 Boeing Co. $ 13,715
48,000 Lockheed Martin Corp. 3,870
113,000 United Technologies Corp. 12,486
----------
30,071
----------
AUTOMOBILES & AUTO PARTS--1.9%
130,000 Chrysler Corp. $8,158
925,000 Nissan Motor Company ORD 7,795
----------
15,953
----------
BANKING--3.9%
66,500 Banc One Corp. 2,311
133,000 Bank of New York Co., Inc. 6,451
105,000 BankAmerica Corp. 7,954
95,360 Chase Manhattan Corp. 6,568
115,000 Citicorp 9,056
----------
32,340
----------
BIOTECHNOLOGY--1.2%
175,000 Amgen Inc. 1 10,052
----------
BROADCASTING--0.5%
127,500 Grupo Televisa ADR 1 3,953
----------
BUSINESS SERVICES & SUPPLIES--2.1%
340,000 HFS, Inc. 1 17,468
----------
CHEMICALS & RESINS--0.4%
41,000 du Pont (E.I.) de Nemours & Co. 3,295
----------
COMMUNICATIONS EQUIPMENT--1.0%
55,000 U.S. Robotics Corp. 1++ 8,614
----------
COMMUNICATIONS SERVICES--2.8%
315,000 MCI Communications Corp. 9,253
465,000 Nextel Communications Inc. 1 8,370
300,000 Tele-Communications, Inc. 1 5,756
----------
23,379
----------
COMPUTER SOFTWARE & SERVICES--5.5%
105,000 DST Systems, Inc. 1 3,859
105,293 First Data Corp. 8,002
110,000 Microsoft Corp. 1 12,451
330,000 Oracle Systems Corp. 1 11,117
265,000 Parametric Technology Corp. 1 10,650
----------
46,079
----------
COMPUTER SYSTEMS--2.9%
22,000 Digital Equipment Corporation1 1,314
140,000 Hewlett-Packard Co. 14,822
75,000 International Business
Machines Corp. 8,062
----------
24,198
----------
ELECTRICAL & ELECTRONIC COMPONENTS--0.6%
90,000 Rockwell International Corp. 5,265
----------
See Notes to Financial Statements
33
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
BALANCED INVESTORS (continued)
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
ENERGY (PRODUCTION & MARKETING)--4.9%
110,000 Anadarko Petroleum Corp. $ 6,408
80,253 British Petroleum Co. p.l.c. ADR 8,768
385,000 Enron Oil & Gas Co. 10,202
23,000 Mobil Corp. 2,645
50,000 Sonat Inc. 2,181
120,000 Texaco Inc. 10,260
----------
40,464
----------
ENERGY (SERVICES)--5.4%
165,000 Diamond Offshore Drilling, Inc. 1 8,209
435,000 Falcon Drilling Company, Inc. 1 11,772
975,000 Global Marine Inc. 1 11,091
240,000 Halliburton Co. 13,770
----------
44,842
----------
FINANCIAL SERVICES--2.5%
68,000 Bear Stearns Companies, Inc. 1,708
200,000 Lehman Brothers Holdings Inc. 5,075
318,000 Nomura Securities Co. Ltd. ORD 6,912
230,000 United Companies Financial Corp. 7,389
----------
21,084
----------
FOOD & BEVERAGE--0.3%
35,000 Coca-Cola Company (The) 2,853
----------
HEALTHCARE--4.4%
185,000 Baxter International, Inc. 8,186
95,000 Cardinal Health, Inc. 5,961
220,000 Columbia/HCA Healthcare Corp. 11,688
185,000 United HealthCare Corp. 10,823
----------
36,658
----------
INSURANCE--2.0%
82,000 CIGNA Corp. 9,297
32,000 Marsh & McLennan Cos., Inc. 3,008
133,000 TIG Holdings, Inc. 4,040
----------
16,345
----------
LEISURE--0.7%
200,000 Promus Companies Inc. 1 5,675
----------
OFFICE EQUIPMENT--0.7%
37,000 Xerox Corp. 5,421
----------
PHARMACEUTICALS--6.6%
5,300 Ciba-Geigy AG ORD 6,139
145,000 Johnson & Johnson 13,413
90,000 Lilly (Eli) & Co. 5,310
113,000 Merck & Co., Inc. 6,836
170,000 Pfizer, Inc. 11,709
214,195 U.S. Bioscience, Inc. 1 4,016
65,000 Warner-Lambert Co. 7,264
----------
54,687
----------
PUBLISHING--0.9%
175,000 Times Mirror Co. 7,459
----------
RETAIL (APPAREL)--1.4%
135,000 NIKE, Inc. 11,812
----------
RETAIL (GENERAL MERCHANDISE)--2.8%
215,000 Federated Department Stores, Inc. 1 7,175
170,000 Kohl's Corp. 1 5,844
200,000 Sears, Roebuck & Co. 9,975
----------
22,994
----------
RETAIL (SPECIALTY)--0.5%
150,000 Toys "R" Us, Inc. 1 4,181
----------
TOTAL COMMON STOCKS--59.5% 495,142
(Cost $388,932) ----------
FIXED INCOME SECURITIES
U.S. TREASURY SECURITIES
$20,000 U. S. Treasury Notes,
8.00%, 1-15-97 20,337
10,000 U. S. Treasury Notes,
8.875%, 11-15-97 10,428
23,500 U. S. Treasury Notes,
6.125%, 3-1-98 23,538
11,000 U. S. Treasury Notes,
5.50%, 11-15-98 10,831
5,200 U. S. Treasury Notes,
5.00%, 2-15-99 5,046
5,000 U. S. Treasury Notes,
6.25%, 8-31-00 4,972
5,000 U. S. Treasury Notes,
5.625%, 11-30-00 4,848
2,000 U. S. Treasury Notes,
5.625%, 2-28-01 1,936
3,000 U. S. Treasury Notes,
6.375%, 3-31-01 2,993
2,000 U. S. Treasury Notes,
5.75%, 8-15-03 1,902
10,500 U. S. Treasury Notes,
6.50%, 8-15-05 10,355
600 U. S. Treasury Notes,
5.875%, 11-15-05 566
See Notes to Financial Statements
34
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Principal Amount ($ In Thousands)
- --------------------------------------------------------------------------------
$2,500 U. S. Treasury Notes,
5.625%, 2-15-06 $ 2,317
----------
TOTAL U.S. TREASURY SECURITIES--12.0% 100,069
(Cost $103,288) ----------
MORTGAGE-BACKED SECURITIES*
2,256 FHLMC Series 1239-EPAC
REMIC, 6.80%, 10-15-96 2,259
1,287 FHLMC Series 106-EPAC
REMIC, 6.95%, 7-15-98 1,283
2,000 FHLMC Series 77-HPAC
REMIC, 8.50%, 7-15-08 2,043
645 FNMA 89 Series 39-BPAC
PO REMIC, 5.76%**, 6-25-96 640
104 FNMA 89 Series 66-EPAC
REMIC, 8.00%, 6-25-96 104
1,107 FNMA 89 Series 85-DPAC
REMIC, 7.60%, 4-25-97 1,114
2,969 FNMA 90 Series 98-HPAC
REMIC, 7.50%, 8-25-97 2,982
8,435 FNMA Pool #50985, 6.00%, 7-25-01 8,039
----------
TOTAL MORTGAGE-BACKED SECURITIES--2.2% 18,464
(Cost $18,833) ----------
OTHER ASSET-BACKED SECURITIES*
2,000 Standard Credit Card Trust, Series
1995-2 Cl A, 8.625%, 12-7-99 2,041
5,000 United Companies Financial
Corp. Home Equity Loan, Series
1995-1 A2, 6.20%, 11-10-98 4,903
----------
TOTAL OTHER ASSET-BACKED SECURITIES--0.8% 6,944
(Cost $6,999) ----------
CORPORATE BONDS
AUTOMOBILES & AUTO PARTS--1.5%
1,000 Ford Motor Credit Corp., 6.75%,
5-15-05 966
7,000 General Motors Acceptance
Corp. MTN, 6.375%, 10-12-99 6,947
5,000 General Motors Acceptance
Corp. MTN, 5.45%, 2-22-00 4,788
----------
12,701
----------
BANKING--4.5%
2,000 Citicorp MTN, 7.125%, 9-1-05 1,985
5,000 Citicorp MTN, 7.75%, 6-15-06 5,169
5,000 First Union Corp., 8.77%, 11-15-04 5,256
8,150 First Union Corp., 6.18%, 2-15-36 7,569
3,000 Merita Ltd., 6.50%, 1-15-06 2,805
4,730 National Bank of Canada,
8.125%, 8-15-04 4,937
5,000 NationsBank Corp., 6.875%, 2-15-05 4,875
5,000 Republic New York Corporation,
7.25%, 7-15-02 5,081
----------
37,677
----------
COMMUNICATIONS SERVICES--0.7%
3,000 GTE South, 7.25%, 8-1-02 3,060
3,000 Tele-Communications, Inc.,
8.25%, 1-15-03 3,030
----------
6,090
----------
DIVERSIFIED COMPANIES--0.6%
5,000 Hanson Overseas BV,
6.75%, 9-15-05 4,769
----------
ENERGY (PRODUCTION & MARKETING)--1.4%
5,000 Dresser Industries, Inc.,
6.25%, 6-1-00 4,913
6,000 Union Texas Petroleum Holdings,
Inc., 8.375%, 3-15-05 6,352
----------
11,265
----------
FINANCIAL SERVICES--4.9%
5,000 ADVANTA Corp. MTN,
7.00%, 5-1-01 4,969
3,000 Greyhound Financial Corp.,
6.75%, 3-25-99 3,011
5,000 Household Finance Co.,
8.95%, 9-15-99 5,350
10,700 Lehman Brothers Holdings Inc.,
7.25%, 4-15-03 10,620
6,795 Merrill Lynch & Co. Inc.,
7.00%, 3-15-06 6,659
6,000 Norwest Financial, Inc.,
6.25%, 11-1-02 5,820
4,700 Salomon Brothers Inc., VRN,
6.488%, 5-15-96, resets monthly
off the 1-month LIBOR plus
1.00% with no caps, final
maturity 2-27-97 4,700
----------
41,129
----------
INDUSTRIAL EQUIPMENT & MACHINERY--0.6%
5,000 Caterpillar Financial Services
Corp. MTN, 6.09%, 5-10-99 4,937
----------
See Notes to Financial Statements
35
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
BALANCED INVESTORS (continued)
- --------------------------------------------------------------------------------
Value
Principal Amount ($ In Thousands)
- --------------------------------------------------------------------------------
INSURANCE--1.1%
$5,000 American General Corp.,
7.70%, 10-15-99 $ 5,156
3,750 Nationwide Mutual Insurance
Co., 6.50%, 2-15-04 + 3,558
----------
8,714
----------
PHARMACEUTICALS--1.3%
10,000 Lilly (Eli) & Co., 8.375%, 2-7-05 10,863
----------
PUBLISHING--0.7%
5,750 Time Warner Inc., 8.11%, 8-15-06 5,793
----------
REAL ESTATE--0.6%
5,000 Spieker Properties, Inc., 6.80%,
12-15-01 4,819
----------
RETAIL (GENERAL MERCHANDISE)--2.6%
2,500 Dayton Hudson Corp.,
9.25%, 3-1-01* 2,681
6,000 Dayton Hudson Corp.,
9.75%, 7-1-02 6,742
4,000 Sears, Roebuck & Co. MTN,
5.72%, 2-6-01 3,840
4,500 Sears, Roebuck & Co. MTN,
8.23%, 10-21-04 4,776
4,000 Wal-Mart Stores Inc., 6.75%,
5-15-02 3,995
----------
22,034
----------
UTILITIES (ELECTRIC)--1.7%
4,931 Connecticut Light & Power Co.,
7.625%, 4-1-97 4,937
2,000 Kansas Power & Light Co.,
8.875%, 3-1-00 2,130
5,000 Public Service Electric & Gas
Co., 7.125%, 11-1-97 5,063
2,000 Texas Utilities Electric Co.,
8.125%, 2-1-02 2,092
----------
14,222
----------
TOTAL CORPORATE BONDS--23.0% 191,656
(Cost $194,600) ----------
SOVEREIGN GOVERNMENTS
$6,750 China Light & Power Co. Ltd.,
7.50%, 4-15-06 6,643
6,000 Hydro-Quebec MTN, 7.02%,
3-23-05 5,865
5,000 Korea Electric Power, 6.375%,
12-1-03 4,763
----------
TOTAL SOVEREIGN GOVERNMENTS--2.1% 17,271
(Cost $10,592) ----------
TEMPORARY CASH INVESTMENTS--1.2%
Repurchase Agreement (Goldman Sachs
& Co., Inc.), 5.25%, due 5-1-96;
collateralized by $8,310 par value
U.S. Treasury Bonds, 7.25%-9.125%, due
5-15-16 through 5-15-18 (Delivery
value $10,201) 10,200
----------
(Cost $10,200)
TOTAL INVESTMENT SECURITIES--100.0% $ 833,103
(Cost $733,444) ==========
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Date Value (Loss)
- ------------------ ---------- -------- -----------
970,674,300 JPY 5/31/96 $9,293 $(154)
===== =====
(Receivable Amount $9,139)
See Notes to Financial Statements
36
- --------------------------------------------------------------------------------
NOTES TO SCHEDULES OF INVESTMENTS
ADR = American Depositary Receipt
FFCB = Federal Farm Credit Banks
FHLB = Federal Home Loan Banks
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
MTN = Medium Term Note
ORD = Foreign Ordinary Notes
1 Non-income producing
* Expected remaining maturity indicated and used for purposes of calculating the
weighted average portfolio maturity.
**Rate disclosed for this security represents effective yield to maturity at
purchase.
+ The following securities were purchased under Rule 144A of the Securities Act
of 1933 and, unless registered under the Act or exempted from registration,
may only be sold to qualified institutional investors.
<TABLE>
<CAPTION>
APRIL 30, 1996
--------------------------
Fund/ Acquisition Average Market Percentage of
Issuer Date Cost Per Share Value Net Assets
- -------------------------------------------------------------------------------------------
HERITAGE INVESTORS
<S> <C> <C> <C> <C>
Chiron Corp., 1.90%, 11-17-20 3-21-96 $ 97.00 $ 1,910 0.2%
LSI Logic Corp., 7-12-95 to
5.50%, 3-15-01 2-13-96 319.98 8,507 0.7%
Scholastic Corp., 5.00%, 8-4-95 to
8-15-05 8-29-95 100.10 6,630 0.6%
Xilinx, Inc., 5.25%, 11-1-02 1-10-96 89.19 9,738 0.9%
------ ------
$26,785 2.4%
====== ======
BALANCED INVESTORS
Nationwide Mutual Insurance
Co., 6.50%, 2-15-04 2-9-96 $100.84 $3,558 0.4%
====== ======
</TABLE>
++ Affiliated Company: represents ownership of at least 5% of the voting
securities of the issuer and is, therefore, an affiliate as defined in the
Investment Company Act of 1940. See Note 4 in Financial Statements for a
summary of transactions for each issuer who is or was an affiliate at or
during the period ended April 30, 1996.
See Notes to Financial Statements
37
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
April 30, 1996 (Unaudited) SELECT INVESTORS HERITAGE INVESTORS
- ----------------------------------------------------------------------------------------------------------
($ In Thousands, Except Per-Share Amounts)
<S> <C> <C> <C>
ASSETS
Investment securities, at value (identified
cost of $3,307,378, $901,295, $3,976,226,
$11,688,356, $1,530,159 and $733,444,
respectively) (Note 3).................................... $4,033,088 $1,116,205
Cash......................................................... 1,379 2,753
Receivable for investments sold.............................. 35,987 20,567
Receivable for capital shares sold........................... 166 15
Dividends and interest receivable............................ 3,949 1,314
--------- ---------
4,074,569 1,140,854
--------- ---------
LIABILITIES
Disbursements in excess of demand deposit cash............... 7,793 2,094
Payable for forward foreign currency
exchange contracts........................................ 895 1,236
Payable for investments purchased............................ 75,937 16,749
Payable for capital shares redeemed.......................... 3,029 885
Accrued management fees (Note 2)............................. 3,225 889
Other liabilities............................................ 135 29
--------- ---------
91,014 21,882
--------- ---------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES........................................ $3,983,555 $1,118,972
========== ==========
-----------(Shares In Thousands)-----------
CAPITAL SHARES, $.01 PAR VALUE
Authorized................................................... 500,000 500,000
========== ==========
Outstanding.................................................. 104,238 92,515
========== ==========
Net Asset Value Per Share.................................... $38.22 $12.10
========== ==========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus)...................... $3,069,000 $844,914
Undistributed net investment income (loss).................. 6,700 (493)
Accumulated undistributed net realized
gain from investment and foreign
currency transactions..................................... 183,063 60,879
Net unrealized appreciation on investments
and translation of assets and liabilities in
foreign currencies (Note 3)............................... 724,792 213,672
--------- ---------
$3,983,555 $1,118,972
========== ==========
</TABLE>
See Notes to Financial Statements
38
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
April 30, 1996 (Unaudited) GROWTH INVESTORS ULTRA INVESTORS VISTA INVESTORS BALANCED INVESTORS
- ------------------------------------------------------------------------------------------------------------------------------------
($ In Thousands, Except Per-Share Amounts)
<S> <C> <C> <C> <C>
ASSETS
Investment securities, at value (identified
cost of $3,307,378, $901,295, $3,976,226,
$11,688,356, $1,530,159 and $733,444,
respectively) (Note 3)............................. $4,816,834 $17,029,110 $2,173,008 $833,103
Cash.................................................. 10,863 23,446 5,271 431
Receivable for investments sold....................... 84,548 27,703 29,348 7,570
Receivable for capital shares sold.................... 70 994 409 101
Dividends and interest receivable..................... 4,948 8,199 49 5,409
---------- ---------- ---------- ----------
4,917,263 17,089,452 2,208,085 846,614
---------- ---------- ---------- ----------
LIABILITIES
Disbursements in excess of demand deposit cash........ 7,454 18,074 2,247 1,143
Payable for forward foreign currency
exchange contracts................................. 5,595 328 -- 154
Payable for investments purchased..................... 87,321 211,317 38,055 5,775
Payable for capital shares redeemed................... 5,332 12,161 1,324 762
Accrued management fees (Note 2)...................... 3,866 13,214 1,643 682
Other liabilities..................................... 128 314 56 41
---------- ---------- ---------- ----------
109,696 255,408 43,325 8,557
---------- ---------- ---------- ----------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES................................. $4,807,567 $16,834,044 $2,164,760 $838,057
========== ========== ========== ==========
-------------------------------(Shares In Thousands)------------------------
CAPITAL SHARES, $.01 PAR VALUE
Authorized............................................ 1,000,000 1,500,000 1,000,000 200,000
========== ========== ========== ==========
Outstanding........................................... 233,269 604,984 133,298 48,260
========== ========== ========== ==========
Net Asset Value Per Share............................. $20.61 $27.83 $16.24 $17.37
========== ========== ========== ==========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus)............... $3,960,192 $10,937,135 $1,395,534 $705,533
Undistributed net investment income (loss)........... (5,773) (20,992) (5,121) 1,620
Accumulated undistributed net realized
gain from investment and foreign
currency transactions.............................. 18,076 577,478 131,497 31,400
Net unrealized appreciation on investments
and translation of assets and liabilities in
foreign currencies (Note 3)........................ 835,072 5,340,423 642,850 99,504
---------- ---------- ---------- ----------
$4,807,567 $16,834,044 $2,164,760 $838,057
========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements
39
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
Six Months Ended April 30, 1996 (Unaudited) SELECT INVESTORS HERITAGE INVESTORS
- ----------------------------------------------------------------------------------------------------------
($ In Thousands)
<S> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends (net of foreign taxes withheld
of $957, $113, $591, $214, $0, and $194,
respectively)......................................... $29,317 $3,869
Interest................................................ 3,151 1,169
---------- ----------
32,468 5,038
---------- ----------
EXPENSES:
Management fees (Note 2)................................ 19,709 5,098
Directors' fees and expenses............................ 21 6
---------- ----------
19,730 5,104
---------- ----------
NET INVESTMENT INCOME (LOSS)............................... 12,738 (66)
---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES (Note 3)
Net realized gain during the period on:
Investments............................................. 173,240 56,497
Foreign currency transactions........................... 10,618 5,677
---------- ----------
183,858 62,174
---------- ----------
Change in net unrealized appreciation
(depreciation) during the period on:
Investments............................................. 191,731 33,253
Translation of assets and liabilities in
foreign currencies.................................... (1,753) (1,617)
---------- ----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY........................... 189,978 31,636
---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS.................................. 373,836 93,810
---------- ----------
$386,574 $93,744
========== ==========
</TABLE>
See Notes to Financial Statements
40
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (CONTINUED)
Six Months Ended April 30, 1996 (Unaudited) GROWTH INVESTORS ULTRA INVESTORS VISTA INVESTORS BALANCED INVESTORS
- ------------------------------------------------------------------------------------------------------------------------------------
($ In Thousands)
<S> <C> <C> <C> <C>
INVESTMENT INCOME (LOSS)
Income:
Dividends (net of foreign taxes withheld
of $957, $113, $591, $214, $0, and $194,
respectively).................................... $17,909 $39,463 $80 $2,618
Interest........................................... 3,551 15,968 3,672 12,019
---------- ---------- ---------- ----------
21,460 55,431 3,752 14,637
---------- ---------- ---------- ----------
EXPENSES:
Management fees (Note 2)........................... 24,174 75,465 8,864 4,073
Directors' fees and expenses....................... 26 81 9 4
---------- ---------- ---------- ----------
24,200 75,546 8,873 4,077
---------- ---------- ---------- ----------
NET INVESTMENT INCOME (LOSS).......................... (2,740) (20,115) (5,121) 10,560
---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCIES (Note 3)
Net realized gain during the period on:
Investments........................................ 927 581,612 135,282 30,585
Foreign currency transactions...................... 36,457 9,357 -- 1,153
---------- ---------- ---------- ----------
37,384 590,969 135,282 31,738
---------- ---------- ---------- ----------
Change in net unrealized appreciation
(depreciation) during the period on:
Investments........................................ (22,147) 172,320 83,035 2,479
Translation of assets and liabilities in
foreign currencies............................... (8,504) (1,185) -- (244)
---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY...................... (30,651) 171,135 83,035 2,235
---------- ---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS............................. 6,733 762,104 218,317 33,973
---------- ---------- ---------- ----------
$3,993 $741,989 $213,196 $44,533
========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements
41
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended April 30, 1996 (Unaudited)
and Year Ended October 31, 1995 SELECT INVESTORS HERITAGE INVESTORS
- ---------------------------------------------------------------------------------------------------------------
($ In Thousands)
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (loss).......................... $12,738 $37,201 $(66) $4,026
Net realized gain on investments
and foreign currency transactions.................. 183,858 455,886 62,174 53,285
Change in net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
in foreign currencies.............................. 189,978 76,341 31,636 110,287
---------- ---------- ---------- ----------
Net increase in net assets resulting
from operations.................................... 386,574 569,428 93,744 167,598
---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............................ (26,726) (31,233) (4,182) (2,831)
From net realized gains
from investment transactions....................... (455,886) (305,635) (53,227) (43,922)
In excess of net realized gains
from investment transactions....................... (7,002) (13,877) -- (2,558)
---------- ---------- ---------- ----------
Decrease in net assets from
distributions...................................... (489,614) (350,745) (57,409) (49,311)
---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold............................. 220,756 388,235 155,071 257,588
Proceeds from reinvestment of distributions........... 471,144 339,791 56,470 48,601
Payments for shares redeemed.......................... (613,743) (1,216,114) (137,227) (312,916)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets from
capital share transactions......................... 78,157 (488,088) 74,314 (6,727)
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS................. (24,883) (269,405) 110,649 111,560
NET ASSETS
Beginning of period................................... 4,008,438 4,277,843 1,008,323 896,763
---------- ---------- ---------- ----------
End of period......................................... $3,983,555 $4,008,438 $1,118,972 $1,008,323
========== ========== ========== ==========
Undistributed net investment
income (loss)..................................... $6,700 $20,688 $(493) $3,755
========== ========== ========== ==========
TRANSACTIONS IN SHARES OF THE FUNDS:
(In thousands)
Sold.................................................. 5,911 10,704 13,520 23,942
Issued in reinvestment of distributions............... 13,373 10,375 5,129 5,317
Redeemed.............................................. (16,480) (33,197) (11,971) (30,345)
---------- ---------- ---------- ----------
Net increase (decrease)............................... 2,804 (12,118) 6,678 (1,086)
========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements
42
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS (CONTINUED)
Six Months Ended April 30, 1996 (Unaudited)
and Year Ended October 31, 1995 GROWTH INVESTORS ULTRA INVESTORS VISTA INVESTORS BALANCED INVESTORS
- ------------------------------------------------------------------------------------------------------------------------------------
($ In Thousands)
1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (loss)............... $(2,740) $17,621 $(20,115) $(36,254) $(5,121) $(7,194) $10,560 $21,719
Net realized gain on investments
and foreign currency transactions....... 37,384 642,082 590,969 619,125 135,282 111,473 31,738 47,518
Change in net unrealized appreciation
(depreciation) on investments and
translation of assets and liabilities
in foreign currencies................... (30,651) 276,216 171,135 3,146,594 83,035 328,626 2,235 45,137
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Net increase in net assets resulting
from operations......................... 3,993 935,919 741,989 3,729,465 213,196 432,905 44,533 114,374
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income................. (14,900) (9,560) -- -- -- -- (10,994) (21,381)
From net realized gains
from investment transactions............(642,082) (602,573) (619,125) (308,428) (111,473) (1,747) (46,792) (12,064)
In excess of net realized gains
from investment transactions............ (16,967) (7,489) (64,334) -- (1,788) (414) -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Decrease in net assets from
distributions...........................(673,949) (619,622) (683,459) (308,428) (113,261) (2,161) (57,786) (33,445)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold.................. 446,561 734,417 3,064,579 3,318,033 738,206 1,139,754 109,131 185,512
Proceeds from reinvestment of
distributions........................... 659,168 607,262 669,555 301,508 109,654 2,085 56,885 32,925
Payments for shares redeemed...............(758,100) (891,558) (1,334,522) (3,008,949) (458,952) (689,009) (130,276) (187,662)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Net increase (decrease) in net assets
from capital share transactions......... 347,629 450,121 2,399,612 610,592 388,908 452,830 35,740 30,775
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
NET INCREASE (DECREASE) IN NET ASSETS......(322,327) 766,418 2,458,142 4,031,629 488,843 883,574 22,487 111,704
NET ASSETS
Beginning of period.......................5,129,894 4,363,476 14,375,902 10,344,273 1,675,917 792,343 815,570 703,866
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
End of period............................$4,807,567 $5,129,894 $16,834,044 $14,375,902 $2,164,760 $1,675,917 $838,057 $815,570
========== ========== =========== =========== ========== ========== ======== ========
Undistributed net investment
income (loss).......................... $(5,773) $11,867 $(20,992) -- $(5,121) -- $1,620 $2,054
========== ========== =========== =========== ========== ========== ======== ========
TRANSACTIONS IN SHARES OF THE FUNDS:
(In thousands)
Sold....................................... 21,645 34,079 115,356 143,246 50,149 88,066 (6,307) 11,370
Issued in reinvestment of distributions.... 34,403 32,932 26,782 15,606 7,805 203 3,399 2,073
Redeemed................................... (37,584) (42,012) (49,964) (134,889) (31,198) (54,178) (7,529) (11,520)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------
Net increase (decrease).................... 18,464 24,999 92,174 23,963 26,756 34,091 2,177 1,923
========== ========== ========== ========== ========== ========== ========== =========
</TABLE>
See Notes to Financial Statements
43
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (Unaudited)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization--
Twentieth Century Investors, Inc. (the Corporation) is registered under the
Investment Company Act of 1940 as an open-end diversified management investment
company. Sixteen series of shares are currently issued, seven of which invest
primarily in common stocks: Select Investors, Heritage Investors, Growth
Investors, Ultra Investors, Vista Investors, Giftrust Investors and Balanced
Investors. The following significant accounting policies related to Select
Investors, Heritage Investors, Growth Investors, Ultra Investors, Vista
Investors and Balanced Investors (the Funds) are in accordance with accounting
policies generally accepted in the investment company industry.
Security Valuations--
Portfolio securities traded primarily on a principal securities exchange
are valued at the last reported sales price, or the mean between the latest bid
and asked prices where no last sales price is available. Securities traded
over-the-counter are valued at the mean of the latest bid and asked prices or,
in the case of certain foreign securities, at the last reported sales price.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the mean of the most
recent bid and asked prices. Short-term securities are valued at amortized cost,
which approximates value. When valuations are not readily available, securities
are valued at fair value as determined in good faith by the board of directors.
Security Transactions--
Security transactions are accounted for on the date purchased or sold. Net
realized gains and losses are determined on the identified cost basis, which is
also used for federal income tax purposes.
Investment Income--
Dividend income less foreign taxes withheld (if any) is recorded as of the
ex-dividend date or upon receipt of ex-dividend notification in the case of
certain foreign securities. Interest income is recognized on the accrual basis
and includes amortization of discounts and premiums.
Foreign Currency Transactions--
The accounting records of the Funds are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities, dividend and interest income, and certain expenses are
translated at the rates of exchange prevailing on the respective dates of such
transactions.
The Funds do not isolate that portion of the results of operations
resulting from changes in the foreign exchange rates on investments from the
fluctuations arising from changes in the market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss on
investments.
Net realized foreign currency exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference between
asset and liability amounts initially stated in foreign currencies and the U.S.
dollar value of the amounts actually received or paid. Net unrealized foreign
currency exchange gains or losses arise from changes in the value of assets and
liabilities other than portfolio securities at the end of the reporting period,
resulting from changes in the exchange rates.
Forward Foreign Currency Exchange Contracts--
The Funds may enter into forward foreign currency exchange contracts for
the purpose of settling specific purchases or sales of securities denominated in
a foreign currency or to hedge the Funds' exposure to foreign currency exchange
rate
44
- --------------------------------------------------------------------------------
fluctuations. The net U.S. dollar value of foreign currency underlying all
contractual commitments held by the Funds and the resulting unrealized
appreciation or depreciation are determined daily using prevailing exchange
rates. Forward contracts involve elements of market risk in excess of the amount
reflected in the Statements of Assets and Liabilities. The Funds bear the risk
of an unfavorable change in the foreign currency exchange rate underlying the
forward contract. Additionally, losses may arise if the counterparties do not
perform under the contract terms.
Repurchase Agreements--
Securities pledged as collateral for repurchase agreements are held by the
Federal Reserve Bank and are designated as being held on the Funds' behalf by
its custodian under a book-entry system. The Funds monitor the adequacy of the
collateral daily and can require the seller to provide additional collateral in
the event the market value of the securities pledged falls below the carrying
value of the repurchase agreement.
Income Tax Status--
It is the policy of the Funds to distribute all taxable income and capital
gains to shareholders and to otherwise qualify as a regulated investment company
under provisions of the Internal Revenue Code. Accordingly, no provision has
been made for federal or state taxes.
Distributions to Shareholders--
Distributions to shareholders are recorded on the ex-dividend date.
Distributions from net investment income are declared and paid annually, with
the exception of Balanced Investors which is declared and paid quarterly.
Distributions from net realized gains are declared and paid annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences are primarily due to differing
treatments for foreign currency transactions and wash sales.
Supplementary Information--
Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of Twentieth Century
Companies, Inc., the parent of the Corporation's investment manager, Investors
Research Corporation (IRC).
2. MANAGEMENT AGREEMENT
The Management Agreement with IRC provides for a monthly management fee
computed by multiplying the applicable fee for each Fund by the average daily
closing value of such Fund's net assets during the previous month. The Agreement
further provides that all expenses of the Funds, except brokerage commissions,
taxes, interest, expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including counsel
fees) and extraordinary expenses, will be paid by IRC. The agreement may be
terminated by either party upon 60 days' written notice.
The current annual management fee for each Fund is 1%.
45
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) April 30, 1996 (Unaudited)
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the period ended
April 30, 1996, were as follows:
<TABLE>
<CAPTION>
SELECT HERITAGE GROWTH ULTRA VISTA BALANCED
-----------------------------------------------------------------------------------
----------------------------------($ In Thousands)---------------------------------
PURCHASES
<S> <C> <C> <C> <C> <C> <C>
Common Stocks $1,801,707 $585,122 $2,968,121 $9,310,551 $1,215,121 $285,953
Preferred Stocks 76 5,798 -- -- -- --
U.S. Treasury & Agency Obligations -- -- -- -- -- 123,176
Other Debt Obligations -- 18,307 -- -- -- 177,248
PROCEEDS FROM SALES
Common Stocks $2,227,067 $532,402 $3,181,933 $7,066,118 $952,739 $283,833
Preferred Stocks 35,444 17,613 -- -- -- --
U.S. Treasury & Agency Obligations -- -- -- -- -- 105,160
Other Debt Obligations -- 9,983 -- -- -- 157,352
</TABLE>
On April 30, 1996, the composition of unrealized appreciation and (depreciation)
of investment securities based on the aggregate cost of investments for federal
income tax purposes was as follows:
APPRECIATION (DEPRECIATION) NET FEDERAL TAX COST
-------------------------------------------------------------------
------------------------($ In Thousands)---------------------------
SELECT $735,624 $(10,562) $725,062 $3,308,026
HERITAGE 229,217 (16,318) 212,899 903,306
GROWTH 902,136 (100,499) 801,637 4,015,197
ULTRA 5,442,749 (120,955) 5,321,794 11,707,316
VISTA 668,712 (27,650) 641,062 1,531,946
BALANCED 110,630 (11,297) 99,333 733,770
4. AFFILIATED COMPANY TRANSACTIONS
A summary of transactions for each issuer who is or was an affiliate at or
during the period ended April 30, 1996, follows:
<TABLE>
<CAPTION>
SHARE/PRINCIPAL REALIZED -----APRIL 30, 1996----
SERIES OF BALANCE PURCHASE SALES GAIN SHARE/PRINCIPAL MARKET
SHARES/ISSUER 10/31/95 COST COST (LOSS) INCOME BALANCE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
------------------------------------($ In Thousands)--------------------------------------
SELECT INVESTORS
<S> <C> <C> <C> <C> <C> <C> <C>
Applied Materials, Inc. 600,000 $18,688 $48,690 $(14,592) -- -- --
Lattice Semiconductor Corp. -- 32,727 32,727 (7,418) -- -- --
Texas Instruments Inc. 1,650,000 350 108,359 (28,263) $282 -- --
------- -------- -------- ------- ------- -------
$51,765 $189,776 $(50,273) $282 --
======= ======== ======== ======= =======
</TABLE>
46
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
SHARE/PRINCIPAL REALIZED -----APRIL 30, 1996----
SERIES OF BALANCE PURCHASE SALES GAIN SHARE/PRINCIPAL MARKET
SHARES/ISSUER 10/31/95 COST COST (LOSS) INCOME BALANCE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
-------------------------------------($ In Thousands)-------------------------------------
HERITAGE INVESTORS
<S> <C> <C> <C> <C> <C> <C> <C>
Bay Networks, Inc. 50,000 $3,681 $6,259 $(1,816) -- -- --
Chiron Corp. -- 6,244 -- -- -- 60,000 $5,775
Chiron Corp., 1.90%, 11-17-20 -- 1,940 -- -- $5 $2,000 1,910
Cirrus Logic, Inc. 160,000 2,718 11,004 (5,376) -- -- --
HBO & Co. 350,000 -- 6,917 12,728 13 100,000 11,900
LSI Logic Corp., 5.50%, 3-15-01 $1,200 5,608 1,297 (255) 56 $2,850 8,507
Lattice Semiconductor Corp. 130,000 3,781 -- -- -- 250,000 8,172
Sybase, Inc. 200,000 15,359 10,358 (3,529) -- 375,000 10,266
Zoom Telephonics, Inc. -- 6,387 -- -- -- 350,000 8,094
------- ------- ------- ------- -------
$45,718 $35,835 $ 1,752 $74 $54,624
======= ======= ======= ======= =======
GROWTH INVESTORS
Applied Materials, Inc. 2,200,000 $5,503 $57,402 $(17,360) -- 1,150,000 $45,856
Bay Networks, Inc. 1,551,800 -- 45,503 33,980 -- -- --
Cephalon, Inc. -- 28,526 3,373 (1,352) -- 800,500 23,014
Cerner Corp. 300,000 36,799 20,451 (5,504) -- 1,000,000 20,438
Chiron Corp. 550,000 42,975 -- -- -- 1,000,000 96,250
Cirrus Logic, Inc. 1,000,000 -- 49,431 (27,034) -- -- --
Filenet Corp. 600,000 5,968 8,808 759 -- 500,000 27,875
LSI Logic Corp. 975,000 40,376 35,843 (16,234) -- 1,350,000 48,600
Lam Research Corp. 450,000 11,525 11,794 (4,168) -- 450,000 18,225
QUALCOMM Inc. 1,300,000 -- 60,354 (8,497) -- -- --
Sun Microsystems, Inc. -- 48,436 -- -- -- 1,000,000 54,188
Sybase, Inc. 3,044,200 41,270 62,819 (19,631) -- 2,500,000 68,438
Tamura Electric Works ORD 1,800,000 -- 24,137 (3,101) $22 -- --
Texas Instruments Inc. 1,611,800 4,601 70,907 (9,445) 425 450,000 25,425
-------- -------- --------- -------- --------
$265,979 $450,822 $ (77,587) $447 $428,309
======== ======== ========= ======== ========
ULTRA INVESTORS
Adobe Systems Inc. 2,300,000 $101,271 $195,423 $(54,924) $141 -- --
Altera Corp. 2,100,000 50,572 118,653 38,345 -- -- --
America Online Inc. 2,750,000 -- 35,774 47,811 -- 3,700,000* $236,800
Applied Materials, Inc. 6,700,000 33,074 125,752 131,930 -- -- --
Ascend Communications, Inc. 2,670,000 149,393 -- -- -- 9,550,000* 585,534
Atmel Corp. 1,650,000 37,538 69,599 207 -- -- --
Bay Networks, Inc. 6,750,000 66,209 197,904 (13,955) -- 5,288,000* 166,572
Bed Bath & Beyond Inc. -- 77,381 -- -- -- 1,780,000 105,131
Biogen Inc. 2,325,000 23,145 48,478 (1,861) -- 1,900,000 125,163
C-Cube Microsystems Inc. -- 155,518 6,980 25 -- 3,236,000* 159,373
Cascade Communications 2,150,000 13,895 -- -- -- 3,450,000* 346,294
Chiron Corp. -- 113,945 -- -- -- 1,000,000 96,250
Cirrus Logic, Inc. 3,000,000 -- 79,512 (2,990) -- -- --
Dell Computer Corp. 7,000,000 -- 109,299 85,208 -- -- --
Diamond Multimedia
Systems, Inc. -- 43,664 43,664 (23,978) -- -- --
</TABLE>
47
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) April 30, 1996 (Unaudited)
SHARE/PRINCIPAL REALIZED -----APRIL 30, 1996----
SERIES OF BALANCE PURCHASE SALES GAIN SHARE/PRINCIPAL MARKET
SHARES/ISSUER 10/31/95 COST COST (LOSS) INCOME BALANCE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
-------------------------------------($ In Thousands)-------------------------------------
ULTRA INVESTORS (cont.)
<S> <C> <C> <C> <C> <C> <C>
Electronics for Imaging, Inc. 549,500 $50,434 $76,855 $ (8,759) -- 250,000 $15,344
Evergreen Media Corporation -- 53,724 -- -- -- 1,515,000 60,032
FORE Systems, Inc. 1,900,000 57,737 -- -- -- 2,850,000 224,616
Genzyme Corp. 2,170,000 -- 54,018 5,398 -- 1,000,000 56,500
HBO & Co. 600,000 90,940 -- -- $108 1,705,000 202,895
HealthCare COMPARE Corp. 1,200,000 38,598 -- -- -- 2,000,000 94,375
Informix Corp. 6,450,000 34,491 92,947 (5,693) -- 3,200,000 84,200
Intuit Inc. 3,500,000 -- 126,818 37,415 -- -- --
Iomega Corporation -- 66,274 -- -- -- 2,800,000 152,950
LSI Logic Corp. 4,292,100 -- 75,446 59,517 -- -- --
Lam Research Corp. 1,834,300 -- 64,503 28,055 -- -- --
Medic Computer Systems, Inc. -- 61,647 -- -- -- 800,000 74,900
NETCOM On-Line
Communication Services, Inc. 115,000 58,045 64,348 (36,041) -- -- --
Network General Corp. 1,450,000 6,480 -- -- -- 1,600,000 70,800
Oak Technology, Inc. 1,425,000 27,348 41,122 (12,251) -- 2,250,000* 40,359
Oxford Health Plans, Inc. 1,400,000 27,949 5,046 8,050 -- 3,200,000* 162,200
PacifiCare Health Systems,
Inc. Cl B -- 135,829 61,449 (8,937) -- 850,000 71,400
Peoplesoft, Inc. 1,225,000 13,023 -- -- -- 2,750,000* 173,594
Phycor, Inc. 1,725,000 9,931 23,682 9,479 -- 1,175,000 57,722
Picturetel Corp. 1,600,000 -- -- -- -- 3,200,000* 108,400
Presstek, Inc. -- 59,846 5,092 507 -- 744,400 103,379
QUALCOMM Inc. 2,950,000 47,309 68,134 (22,945) -- 2,600,000 100,750
Quarterdeck Office Systems, Inc. 1,000,000 51,739 46,045 (26,557) -- 1,300,000 19,987
S3 Incorporated 2,700,000 1,878 47,709 (12,053) -- -- --
Silicon Valley Group, Inc. 1,575,000 16,322 74,873 (25,933) -- -- --
Softkey International Inc. 1,125,000 -- 30,046 967 -- -- --
Spyglass, Inc. -- 46,306 46,306 (21,925) -- -- --
Sterling Commerce, Inc. -- 32,122 -- -- -- 1,100,000 38,500
StrataCom, Inc. 2,400,000 -- 26,994 39,791 -- 3,250,000* 169,203
Structural Dynamics
Research Corp. -- 68,395 -- -- -- 2,200,000 70,125
Sun Microsystems, Inc. 4,150,000 224,917 -- -- -- 13,450,000* 728,822
Sunglass Hut International, Inc. -- 46,600 -- -- -- 1,500,000 44,250
3Com Corp. 12,400,000 -- 81,944 101,785 -- 7,750,000 356,984
Tamura Electric Works ORD 1,000,000 -- 13,791 (230) -- -- --
Tencor Instruments 950,000 -- 33,845 (11,908) -- -- --
Texas Instruments Inc. 6,300,000 -- 430,962 (112,183) 417 -- --
Trident Microsystems, Inc. -- 29,737 29,737 (15,519) -- -- --
U.S. Robotics Corp. 3,450,000 20,136 -- -- -- 3,650,000 571,681
UUNET Technologies Inc. 600,000 80,971 109,342 (49,588) -- -- --
VISX, Incorporated -- 46,665 -- -- -- 1,350,000 45,900
Watson Pharmaceuticals 775,000 31,443 44,028 (5,438) -- 450,000 21,488
---------- ---------- -------- ------- ----------
$2,402,441 $2,806,120 $120,822 $666 $5,742,473
========== ========== ======== ======= ==========
</TABLE>
48
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) April 30, 1996 (Unaudited)
SHARE/PRINCIPAL REALIZED -----APRIL 30, 1996----
SERIES OF BALANCE PURCHASE SALES GAIN SHARE/PRINCIPAL MARKET
SHARES/ISSUER 10/31/95 COST COST (LOSS) INCOME BALANCE VALUE
- ---------------------------------------------------------------------------------------------------------------------------
--------------------------------------($ In Thousands)------------------------------------
VISTA INVESTORS
<S> <C> <C> <C> <C> <C> <C> <C>
Applied Materials, Inc. 330,000 $14,517 $32,380 $ (10,067) -- -- --
Atmel Corp. 1,500,000 19,911 27,185 9,061 -- 900,000 $ 35,944
Boca Research, Inc. 540,000 4,139 16,440 (3,393) -- -- --
California Amplifier, Inc. -- 24,520 -- -- -- 950,000* 33,962
Cephalon, Inc. -- 26,690 -- -- -- 900,000 25,875
Cognos Incorporated ADR 600,000 6,947 -- -- -- 750,000 50,531
DSP Communications, Inc. -- 25,279 -- -- -- 850,000 33,894
Diamond Multimedia
Systems, Inc. 650,000 1,528 15,448 (804) -- -- --
Dura Pharmaceuticals, Inc. 750,000 7,031 -- -- -- 900,000 48,487
FSI International, Inc. 1,150,000 -- 23,038 (6,343) -- -- --
Genzyme Tissue Repair 800,000 1,187 7,494 128 -- 320,000 4,460
HBO & Co. 520,000 19,155 -- -- $43 700,000 83,300
Hummingbird Communications
Ltd. ADR -- 25,059 -- -- -- 500,000 21,000
IDEC Pharmaceuticals Corp. -- 19,362 -- -- -- 940,000 27,143
Jones Medical Industries, Inc. -- 38,881 -- -- -- 900,000 47,025
LSI Logic Corp. 1,850,000 -- 24,970 28,174 -- -- --
Macromedia, Inc. 1,800,000 -- 20,947 29,689 -- 500,000 18,844
Mcafee Associates, Inc. -- 43,813 11,927 (737) -- 700,000 42,962
MicroCom, Inc. -- 19,420 -- -- -- 800,000 19,600
PC Docs Group International,
Inc. ADR 937,000 1,119 -- -- -- 1,000,000 20,625
Pairgain Technologies, Inc. 550,000 37,396 -- -- -- 1,100,000 105,325
Physician Sales & Service, Inc. -- 31,260 -- -- -- 1,400,000 38,325
Rational Software Corp. -- 38,073 -- -- -- 900,000 47,925
S3 Incorporated 1,550,000 -- 13,665 5,709 -- -- --
Shiva Corp. -- 32,344 -- -- -- 880,000* 52,800
Softkey International Inc. 400,000 -- 9,794 2,705 -- -- --
STERIS Corp. 1,500,000 -- 37,148 11,948 -- -- --
StrataCom, Inc. 380,000 3,005 6,325 22,713 -- -- --
Sunglass Hut International, Inc. 1,800,000 9,827 15,808 407 -- 1,400,000 41,300
Tencor Instruments 780,000 -- 19,250 (5,303) -- -- --
Ultratech Stepper, Inc. 940,000 -- 23,806 (6,665) -- -- --
-------- -------- ------- ------- --------
$450,463 $305,625 $77,222 $43 $799,327
======== ======== ======= ======= ========
BALANCED INVESTORS
Intuit Inc. 160,000 $1,450 $6,907 $1,811 -- -- --
Lattice Semiconductor Corp. 180,000 2,014 7,682 (1,087) -- -- --
Texas Instruments Inc. 200,000 -- 13,899 (4,245) $34 -- --
U.S. Robotics Corp. -- 7,264 -- -- -- 55,000 $8,614
------- ------- ------- ------- ------
$10,728 $28,488 $(3,521) $34 $8,614
======= ======= ======= ======= ======
</TABLE>
*Includes adjustments for shares received from stock split and/or stock spinoff
during the period.
49
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
SELECT INVESTORS
Six months Years ended October 31,
ended April 30, ------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD......................... $39.52 $37.67 $45.76 $39.18 $40.79 $34.19
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income................................... .12(2) .33(2) .40 .46 .53 .63
Net Realized
and Unrealized
Gains (Losses)........................... 3.51 4.68 (3.59) 7.94 .34 8.17
------ ------ ------ ------ ------ ------
Total from
Investment Operations.................... 3.63 5.01 (3.19) 8.40 .87 8.80
------ ------ ------ ------ ------ ------
DISTRIBUTIONS
From Net
Investment Income........................ (.27) (.281) (.432) (.495) (.653) (.652)
From Net Realized
Gains on Investment
Transactions............................. (4.59) (2.750) (4.466) (1.313) (1.823) (1.551)
In Excess of Net
Realized Gains........................... (.07) (.125) -- (.016) -- --
------ ------ ------ ------ ------ ------
Total Distributions......................... (4.93) (3.156) (4.898) (1.824) (2.476) (2.203)
------ ------- ------- ------- ------- -------
NET ASSET VALUE,
END OF PERIOD............................... $38.22 $39.52 $37.67 $45.76 $39.18 $40.79
====== ====== ====== ====== ====== ======
TOTAL RETURN1............................... 10.24% 15.02% (7.37)% 22.20% 1.76% 27.05%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets....................... .99%3 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment
Income to Average
Net Assets............................... .6%3 .9% 1.0% 1.1% 1.4% 1.7%
Portfolio Turnover Rate 46% 106% 126% 82% 95% 84%
Average Commission
Paid per Share Traded.................... $.0382 $.0460 -- -- -- --
Net Assets, End
of Period (in millions).................. $3,984 $4,008 $4,278 $5,160 $4,534 $4,163
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Computed using average shares outstanding throughout the period.
3 Annualized
See Notes to Financial Statements
50
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
HERITAGE INVESTORS
Six months Years ended October 31,
ended April 30, -------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD......................... $11.75 $10.32 $11.03 $9.30 $8.59 $6.55
------ ------ ------ ----- ----- -----
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income................................... --2 .05(2) .07 .07 .10 .11
Net Realized
and Unrealized
Gains (Losses)........................... 1.02 1.96 (.21) 2.43 .72 2.04
------ ------ ------ ----- ----- -----
Total from
Investment Operations.................... 1.02 2.01 (.14) 2.50 .82 2.15
------ ------ ------ ----- ----- -----
DISTRIBUTIONS
From Net
Investment Income........................ (.05) (.033) (.068) (.093) (.113) (.110)
From Net Realized
Gains on Investment
Transactions............................. (.62) (.514) (.500) (.679) -- --
In Excess of Net
Realized Gains........................... -- (.030) (.006) -- -- --
------ ------ ------ ----- ----- -----
Total Distributions......................... (.67) (.577) (.574) (.772) (.113) (.110)
------ ------ ------ ----- ----- -----
NET ASSET VALUE,
END OF PERIOD............................... $12.10 $11.75 $10.32 $11.03 $9.30 $8.59
====== ====== ====== ====== ====== ======
TOTAL RETURN1............................... 9.18% 21.04% (1.13%) 28.64% 9.65% 32.25%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets....................... .97%3 .99% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment
Income to Average
Net Assets............................... --3 .5% .7% .7% 1.1% 1.5%
Portfolio Turnover Rate..................... 55% 121% 136% 116% 119% 146%
Average Commission
Paid per Share Traded.................... $.0473 $.0420 -- -- -- --
Net Assets, End
of Period (in millions).................. $1,119 $1,008 $897 $702 $369 $269
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Computed using average shares outstanding throughout the period.
3 Annualized
See Notes to Financial Statements
51
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
GROWTH INVESTORS
Six months Years ended October 31,
ended April 30, -------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD......................... $23.88 $22.99 $25.27 $23.64 $22.32 $14.81
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income (Loss)............................ (.01)2 .08(2) .06 .06 (.02) .04
Net Realized
and Unrealized
Gains (Losses)........................... (.13) 4.08 .48 1.94 1.35 8.47
------ ------ ------ ------ ------ ------
Total from
Investment Operations.................... (.14) 4.16 .54 2.00 1.33 8.51
------ ------ ------ ------ ------ ------
DISTRIBUTIONS
From Net
Investment Income........................ (.07) (.051) (.056) -- (.013) (.111)
From Net Realized
Gains on Investment
Transactions............................. (2.99) (3.183) (2.764) (.353) -- (.891)
In Excess of Net
Realized Gains........................... (.07) (.040) (.002) (.013) -- --
------ ------ ------ ------ ------ ------
Total Distributions......................... (3.13) (3.274) (2.822) (.366) (.013) (1.002)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................... $20.61 $23.88 $22.99 $25.27 $23.64 $22.32
====== ====== ====== ====== ====== ======
TOTAL RETURN1............................... .38% 22.31% 2.66% 8.48% 5.96% 60.64%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets....................... .99%3 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment
Income to Average
Net Assets............................... (.1%)3 .4% .3% .2% (.1%) (.2%)
Portfolio Turnover Rate 62% 141% 100% 94% 53% 69%
Average Commission
Paid per Share Traded.................... $.0333 $.0400 -- -- -- --
Net Assets, End
of Period (in millions).................. $4,808 $5,130 $4,363 $4.641 $4,472 $3,193
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Computed using average shares outstanding throughout the period.
3 Annualized
See Notes to Financial Statements
52
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
ULTRA INVESTORS
Six months Years ended October 31,
ended April 30, -------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD......................... $28.03 $21.16 $21.61 $15.46 $15.53 $7.73
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
(Loss)................................... (.04)2 (.07)2 (.03) (.09) (.05) (.03)
Net Realized
and Unrealized
Gains (Losses)........................... 1.14 7.58 (.42) 6.24 (.02) 7.86
------ ------ ------ ------ ------ ------
Total from
Investment Operations.................... 1.10 7.51 (.45) 6.15 (.07) 7.83
------ ------ ------ ------ ------ ------
DISTRIBUTIONS
From Net Realized
Gains on Investment
Transactions............................. (1.19) (.645) -- -- -- (.028)
In Excess of Net
Realized Gains........................... (.11) -- -- -- -- --
------ ------ ------ ------ ------ ------
Total Distributions......................... (1.30) (.645) -- -- -- (.028)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................... $27.83 $28.03 $21.16 $21.61 $15.46 $15.53
====== ====== ====== ====== ====== ======
TOTAL RETURN1............................... 4.45% 36.89% (2.08%) 39.78% (0.45%) 101.51%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets....................... .98%3 1.00% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment
Income to Average
Net Assets............................... (.26%)3 (.3%) (.1%) (.6%) (.4%) (.5%)
Portfolio Turnover Rate..................... 47% 87% 78% 53% 59% 42%
Average Commission
Paid per Share Traded.................... $0.0302 $.0330 -- -- -- --
Net Assets, End
of Period (in millions).................. $16,834 $14,376 $10,344 $8,037 $4,275 $2,148
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Computed using average shares outstanding throughout the period.
3 Annualized
See Notes to Financial Statements
53
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
VISTA INVESTORS
Six months Years ended October 31,
ended April 30, -------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD......................... $15.73 $10.94 $12.24 $11.01 $10.53 $6.28
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
(Loss)................................... (.04)2 (.08)2 (.08) (.07) (.04) (.02)
Net Realized
and Unrealized
Gains.................................... 1.58 4.90 .45 1.95 .52 4.27
------ ------ ------ ------ ------ ------
Total from
Investment Operations.................... 1.54 4.82 .37 1.88 .48 4.25
------ ------ ------ ------ ------ ------
DISTRIBUTIONS
From Net Realized
Gains on Investment
Transactions............................. (1.02) (.030) (1.663) (.641) -- --
In Excess of Net
Realized Gains........................... (.01) -- (.012) (.006) -- --
------ ------ ------ ------ ------ ------
Total Distributions......................... (1.03) (.030) (1.675) (.647) -- --
------ ------ ------- ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................... $16.24 $15.73 $10.94 $12.24 $11.01 $10.53
====== ====== ====== ====== ====== ======
TOTAL RETURN1............................... 10.78% 44.20% 4.16% 17.71% 4.55% 67.67%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets....................... .96%3 .98% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment
Income to Average
Net Assets............................... (.6%)3 (.6%) (.8%) (.6%) (.4%) (.3%)
Portfolio Turnover Rate..................... 55% 89% 111% 133% 87% 92%
Average Commission
Paid per Share Traded.................... $.0267 $.0330 -- -- -- --
Net Assets, End
of Period (in millions).................. $2,165 $1,676 $792 $847 $830 $622
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Computed using average shares outstanding throughout the period.
3 Annualized
See Notes to Financial Statements
54
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
BALANCED INVESTORS
Six months Years ended October 31,
ended April 30, -------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD......................... $17.70 $15.94 $16.52 $14.89 $15.11 $10.89
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income................................... .22(2) .48(2) .42 .38 .33 .38
Net Realized
and Unrealized
Gains (Losses)........................... .69 2.03 (.58) 1.62 (.23) 4.22
--- ---- ----- ---- ----- ----
Total from
Investment Operations.................... .91 2.51 (.16) 2.00 .10 4.60
--- ---- ----- ---- --- ----
DISTRIBUTIONS
From Net
Investment Income........................ (.23) (.475) (.416) (.375) (.322) (.384)
From Net Realized
Gains on Investment
Transactions............................. (1.01) (.274) -- -- -- --
------ ------ ------ ------ ------ ------
Total Distributions......................... (1.24) (.416) (.416) (.375) (.322) (.384)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD............................... $17.37 $17.70 $15.94 $16.52 $14.89 $15.11
====== ====== ====== ====== ====== ======
TOTAL RETURN1............................... 5.45% 16.36% (.93%) 13.64% .63% 42.92%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets....................... .97%3 .98% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment
Income to Average
Net Assets............................... 2.5%3 2.9% 2.7% 2.4% 2.4% 3.1%
Portfolio Turnover Rate..................... 72%5 85%4 94% 95% 100% 116%
Average Commission
Paid per Share Traded.................... $.0426 $.0390 -- -- -- --
Net Assets, End
of Period (in millions).................. $838 $816 $704 $706 $654 $255
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Computed using average shares outstanding throughout the period.
3 Annualized
4 The portfolio turnover rates of the equity and fixed income components of the
portfolio were 90% and 71%, respectively.
5 The portfolio turnover rates of the equity and fixed income components of the
portfolio were 59% and 95%,
respectively.
See Notes to Financial Statements
55
IMPORTANT NOTICE FOR ALL IRA AND 403(B) SHAREHOLDERS
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at Twentieth Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount, unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Conversions/ Redemptions form or an IRS Form W-4P. Call Twentieth Century for
either form. Your written election is valid for only six months from the date of
receipt at Twentieth Century. You may revoke your election at any time by
sending a written notice to us.
Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.
56
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57
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59
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60
TWENTIETH CENTURY INVESTORS, INC. TWENTIETH CENTURY INVESTORS, INC.
INVESTMENT MANAGER Equity Funds
INVESTORS RESEARCH CORPORATION Semiannual Report
KANSAS CITY, MISSOURI
April 30, 1996
THIS REPORT AND THE FINANCIAL
STATEMENTS CONTAINED HEREIN
ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS.
THE REPORT IS NOT AUTHORIZED FOR
DISTRIBUTION TO PROSPECTIVE INVESTORS
UNLESS PRECEDED OR ACCOMPANIED BY AN
EFFECTIVE PROSPECTUS.
[COMPANY LOGO]
INVESTMENTS THAT WORK(TM)
- ----------------------------------------------
P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
- ----------------------------------------------
PERSON-TO-PERSON ASSISTANCE:
1-800-345-2021 OR 816-531-5575
- ----------------------------------------------
AUTOMATED INFORMATION LINE:
1-800-345-8765
- ----------------------------------------------
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-753-1865
- ----------------------------------------------
FAX: 816-340-7962
- ----------------------------------------------
[company logo]
================================================================================
- --------------------------------------------------------------------------------
SH-BKT-4894
9605 Recycled
<PAGE>
TWENTIETH CENTURY
INVESTORS, INC.
Giftrust Investors Semiannual Report
April 30,
1996
[Giftrust logo]
<PAGE>
THIS PAGE LEFT BLANK
<PAGE>
- --------------------------------------------------------------------------------
TABLE OF CONTENTS April 30, 1996
Our Message to You .................................................... 2
Period Overview ....................................................... 3
Investment Philosophy ................................................. 4
Investment Review ..................................................... 5
Schedule of Investments ............................................... 9
Statement of Assets and Liabilities ................................... 12
Statement of Operations ............................................... 13
Statements of Changes in Net Assets ................................... 14
Notes to Financial Statements ......................................... 15
Financial Highlights .................................................. 20
- --------------------------------------------------------------------------------
INDICES USED FOR PERFORMANCE COMPARISON
THE S&P 500 INDEX is an index created by Standard & Poor's Corporation that is
considered to represent the performance of the stock market generally. It is not
an investment product available for purchase.
NASDAQ COMPOSITE INDEX is a market capitalization price-only index that reflects
the aggregate performance of domestic common stocks traded on the regular NASDAQ
market, as well as national market system-traded foreign common stocks and
American Depositary Receipts. It is not an investment product available for
purchase.
- --------------------------------------------------------------------------------
1
- --------------------------------------------------------------------------------
OUR MESSAGE TO YOU
The strength of the U.S. equity markets has persisted into 1996, with the
result that many mutual fund investors have continued to enjoy strong returns.
In fact, as reflected by the performance of the Standard & Poor's 500 stock
index as of the first quarter of '96, investors in the domestic stock market
have had average annual returns of 13.94% for the last decade, well ahead of the
10.59% average annual gains the S&P has posted since 1926.
How much longer the bull market will last is the subject of debate. One
school of thought holds that demographics are destiny for the market -- that
aging baby boomers saving for retirement may support stronger equity markets for
the next decade. Others wait for the correction they consider long overdue.
[photo of James E. Stowers and James E. Stowers III on left side of page]
In the face of strong arguments on either side, individual investors can
understandably be concerned about making wise financial decisions. In our
experience there are no easy answers about what the future holds. However, at
Twentieth Century we have long believed that investors are best served by
adopting a long-term plan and investing regularly in line with their goals.
A number of studies in recent years have suggested that investors who try
to time the market -- moving in and out -- are likely to underperform the market
averages. Although it is tempting to run for cover during periods of market
uncertainty, history has shown that equity investors are usually better served
by staying the course.
This is why Twentieth Century's growth funds maintain a policy to be fully
invested in the market at all times. We have repeatedly seen that while severe
market downturns may occur unexpectedly, so too do sharp market increases. Our
experience has demonstrated that historically, many significant opportunities
for gain have occurred during brief periods of time -- sometimes measured in
single days. To be out of the market at these times can substantially reduce an
investor's returns.
Looking ahead, the balance of 1996 promises to bring a number of positive
changes for the Twentieth Century family of funds and our shareholders. After a
year and a half of behind-the-scenes planning and effort, we'll complete our
merger with The Benham Group this fall. When our organizations are fully
combined, shareholders will have access to a total of over 60 funds with a
single phone call.
We are confident that the expanded investment choices and service
improvements arising from this combination of our two strong fund families will
benefit you, the shareholder, for years to come. We appreciate your confidence
in Twentieth Century, and we remain dedicated to your success.
Sincerely,
/s/James E. Stowers /s/James E. Stowers III
James E. Stowers James E. Stowers III
Chairman of the Board and Found President
2
- --------------------------------------------------------------------------------
PERIOD OVERVIEW April 30, 1996
Changing investor expectations for economic growth dominated the six-month
period ended April 30, 1996. In late 1995, slowing corporate earnings seemed to
indicate a possible recession in 1996. Federal budget battles, which led to two
government shutdowns, increased economic uncertainty. To boost the economy, the
Federal Reserve (the Fed) reduced a key short-term interest rate, the federal
funds rate, from 5.75 percent to 5.5 percent in December and to 5.25 percent in
January.
The environment in late 1995 was inhospitable to several segments of the
equity markets. The stocks of cyclical companies, which typically do well in
stronger economic environments, struggled in the midst of perceived economic
weakness. The stocks of smaller companies in fast-growing industries also
declined as established businesses with stable earnings assumed market
leadership.
However, the economic environment changed considerably in early 1996. The
February payroll employment report, showing the strongest job creation in 12
years, was the first of a series of indicators that suggested the economy was
actually getting stronger, not weaker as feared. Inflation remained modest while
corporate earnings generally met investors' expectations.
The first four months of 1996 saw a rotation in market leadership. The
smaller companies and cyclicals that had been out of favor replaced large, blue
chip companies as top-performing investments. Toward the end of the period,
especially in April, the market began to favor many companies with accelerating
earnings and revenues--the kind of companies Twentieth Century's growth funds
seek out.
The technology sector moved in and out of favor during the period. From
last November through mid-January, technology stocks experienced a significant
decline. The decline was led by semiconductor stocks, which were hit by slowing
computer sales and the cancellation of several large computer microchip orders.
However, while earnings reports were weaker than expected for some firms, many
other technology companies continued to post strong earnings gains. Software,
networking, and Internet-related companies led a spring rebound in share prices.
Telecommunications stocks also climbed in response to the February passage of
the telecommunications deregulation bill, which allows these companies to invest
in vast new markets.
In the healthcare sector, competition forced many HMOs and medical care
facilities to cut prices and lose some earnings in the past year, faster
government approvals of new drugs and devices have strongly benefited
pharmaceutical, biotechnology and medical devices companies. Healthcare reform
legislation, once a prominent part of the Clinton administration's agenda, has
not yet surfaced as an element of the upcoming Presidential elections. Waning
support for a federally mandated healthcare program could lead to an improved
environment for healthcare companies for the remainder of 1996.
Energy stocks performed very well during the period, while other
economically sensitive issues gained
3
- --------------------------------------------------------------------------------
PERIOD OVERVIEW
(CONTINUED)
in price as the economy showed signs of improvement. With interest rates rising
in the last three months of the period, the performance of financial stocks was
inconsistent. Good performance accrued to the banks and insurance companies that
have decreased their liabilities and broadened their earnings growth in the
midst of a modestly growing economy.
Finally, retail stocks showed signs of recovering from a two-year lull.
While improvements in retail demand aided many firms in this sector, many others
benefited from internal cost cutting and restructuring their businesses and
product lines.
Looking ahead, we believe the outlook is favorable for growth-stock
investors. In a slow-growth, low-inflation economy, those firms that can
generate superior relative earnings growth have a strong potential to outperform
more slower-growing firms. On the other hand, if the economy improves and
inflation increases, we believe that companies with accelerating growth will be
able to benefit by raising prices on their products and increasing revenues.
Twentieth Century's growth stock selection process seeks to identify just these
types of companies. Therefore, we look to the future with optimism that our
disciplines will serve shareholders well.
INVESTMENT PHILOSOPHY
The philosophy behind Twentieth Century's growth funds focuses on three
important principles. Chiefly, the funds seek to own highly successful
companies, which we define as those whose earnings and revenues are growing at
accelerating rates. We attempt to keep the funds fully invested, regardless of
short-term market activity. Experience has shown that the greatest market gains
occur in unpredictable spurts and that missing those opportunities significantly
limits potential for gain. Finally, Twentieth Century funds are managed by
teams, rather than by one "star." We believe this allows us to make better, more
consistent management decisions.
In addition to these principles, each of our funds, including Giftrust
Investors, has its own characteristics:
GIFTRUST INVESTORS ordinarily invests in small stocks with accelerating
growth. Shares of Giftrust can only be given as a gift, and all investments must
remain in the fund for a minimum of 10 years. Giftrust is a volatile investment
with high long-term growth potential.
4
- --------------------------------------------------------------------------------
INVESTMENT REVIEW April 30, 1996
- --------------------------------------------------------------------------------
MANAGEMENT Q & A
A discussion with Glenn Fogle, a portfolio manager on the Giftrust
Investors management team.
Q: WHAT WAS THE PERFORMANCE OF GIFTRUST INVESTORS FOR THE SIX-MONTH PERIOD
ENDED APRIL 30, 1996?
A: During the period, Giftrust posted a 13.80% gain, just ahead of the S&P 500
index's performance for the same period. Over the five- and 10- year periods,
Giftrust's returns are well ahead of both the S&P 500 and the NASDAQ Composite
indices.
Q: WHAT EVENTS CHARACTERIZED FUND PERFORMANCE OVER THE PERIOD?
A: Between October 31 and April 30, Giftrust experienced both sharp gains and
losses. The bulk of the fund's losses came in November, December and early
January, when its large stake in semiconductor companies suffered from a steep
technology-stock correction. Our challenges were magnified because some of the
small companies that Giftrust holds posted especially sharp losses. However, by
the end of the period, small-cap stocks in general and technology stocks in
particular rebounded, leading to a very sharp gain in April 1996. Our earnings
acceleration approach helped us identify several good-performing companies, such
as telemarketing specialists APAC Teleservices, before they were widely
recognized by the market.
Q: DID GIFTRUST'S PORTFOLIO CHANGE IN RESPONSE TO THE WINTER DECLINE IN
TECHNOLOGY STOCKS?
A: The technology-stock plunge was damaging to fund performance while it
lasted. However, we believe in staying fully invested in the market at all
times, and not chasing hot-performing issues if they are not showing solid
earnings acceleration. Therefore, when the market fell, we continued to own the
technology firms that, in our view, offered the best earnings acceleration. That
left the fund very well positioned for a recovery that began in mid-January. The
most substantial change that occurred was that we sold off many of Giftrust's
semiconductor holdings to pursue (continued on next page)
TOP FIVE INDUSTRIES (as of April 30, 1996)
- --------------------------------------------------------------
% of fund's
investments in
% of fund these industries
investments 6 months ago
Computer Software & Services 19.2% 20.3%
Business Services & Supplies 15.8% 1.6%
Computer Peripherals 11.6% 11.2%
Medical Equipment & Supplies 10.2% 2.3%
Biotechnology 6.9% 1.2%
5
- --------------------------------------------------------------------------------
INVESTMENT REVIEW (CONTINUED)
other companies both within and outside the technology field, including
software, telecommunications and healthcare firms.
Q: WHY DID GIFTRUST CUT BACK ON ITS HOLDINGS IN SEMICONDUCTOR COMPANIES?
A: It became clear to us in the fourth quarter of 1995 that the earnings
growth of semiconductor manufacturers, while still rapid, was nonetheless
weakening. After two years of tremendous capacity (continued on next page)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
GIFTRUST INVESTORS S&P 500 NASDAQ
------------------ ------- ------
6 Months 13.80% 13.75% 14.91%
1 Year 39.90% 29.95% 40.80%
5 Years 31.48% 14.92% 19.69%
10 Years 22.29% 14.23% 12.00%
- --------------------------------------------------------------------------------
$10,000 OVER A 10-YEAR PERIOD (as of April 30, 1996)
[mountain graph]
Value on 04/30/96: $74,783 GIFTRUST INVESTORS
$37,833 S&P 500 Index
$31,065 NASDAQ Composite Index
$10,000 investment made 4/30/86
GIFTRUST S&P 500 NASDAQ
DATE INVESTORS INDEX COMPOSITE INDEX
04/30/86 $10,000 $10,000 $10,000
04/30/87 $13,794 $12,653 $10,902
04/30/88 $12,078 $11,839 $ 9,895
04/30/89 $14,476 $14,535 $11,156
04/30/90 $16,388 $16,053 $10,961
04/30/91 $19,031 $18,872 $12,648
04/30/92 $24,701 $21,524 $15,100
04/30/93 $31,074 $23,508 $17,259
04/30/94 $40,348 $24,760 $19,148
04/30/95 $53,354 $29,072 $22,022
04/30/96 $74,783 $37,833 $31,065
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
- --------------------------------------------------------------------------------
QUICK FUND FACTS
GIFTRUST INVESTORS
STRATEGY:
Aggressively seeks growth by investing
in fast-growing smaller companies.
INCEPTION DATE: November 25, 1983
SIZE: $799 million
(as of April 30, 1996)
INVESTMENT APPROACH:
Aggressive Growth
TICKER:
TWGTX
- --------------------------------------------------------------------------------
6
- --------------------------------------------------------------------------------
April 30, 1996
expansion, computer microchip supply finally caught up with demand. For many
companies in the sector, prices began to fall rapidly, inventories climbed and
earnings began to lose their momentum. This slowdown also affected companies in
related industries, such as Mattson Technology, which sells semiconductor
manufacturing equipment. With the earnings acceleration waning, we redirected
our focus to more attractive businesses, some of which were found in other areas
of the technology sector.
Q: WHICH TECHNOLOGY SECTORS OFFERED THE BEST EARNINGS ACCELERATION?
A: We saw many outstanding opportunities among software companies. Computer
hardware companies have developed tremendous computing power, and many software
companies are finding customized ways to use it. We were especially interested
in companies that have developed innovative solutions to specific problems.
McAfee Associates, for example, built its business on products that protect
computer networks from destructive viruses.
In addition, new legislation was passed during the period that deregulated
the telecommunications industry. The new laws will make it easier for telephone,
cable and cellular companies to enter new markets. Many of the same companies
are also taking advantage of increasing demand for telecommunications products
overseas. As a result, our investment in these industries grew substantially
during the period.
Q: WHAT NONTECHNOLOGY BUSINESSES DID YOU PURCHASE?
A: Healthcare-related companies were an important part of Giftrust's
portfolio throughout the period. A modest position in pharmaceutical (continued
on next page)
TOP TEN HOLDINGS (as of April 30, 1996)
- --------------------------------------------------------------------------------
% of fund's
investments in
% of fund these stocks
investments 6 months ago
Shiva Corp. 4.0% 2.7%
U.S. Office Products Company 3.8% --
APAC Teleservices, Inc. 3.4% 1.1%
Security Dynamics Technologies Inc. 3.1% 3.2%
PMT Services, Inc. 3.0% --
Computer Horizons Corp. 3.0% --
CBT Group Plc ADR 2.5% 1.5%
Centocor, Inc. 2.5% --
ABR Information Services, Inc. 2.1% --
Neuromedical Systems, Inc. 2.1% --
7
- --------------------------------------------------------------------------------
INVESTMENT REVIEW (CONTINUED)
firms contributed greatly to performance in 1995's fourth quarter, when
semiconductor stocks were declining. But other areas within healthcare have
attracted even more of our attention. Some biotechnology labs and medical
equipment manufacturers have benefited from an accelerated approval process at
the Food & Drug Administration (FDA). We also found some of our best ideas among
medical service providers that are focused on a specific niche, such as NCS
HealthCare, which provides pharmacy services for long-term care centers.
Retail was another area of interest to us. While we refrained from buying
well-known retail companies for the portfolio, we found attractive opportunities
among specialty firms, in particular those that provide services to other
businesses. Giftrust's second largest holding, for example, was U.S. Office
Products. This company has grown by consolidating a number of small, regional
suppliers into one large nationwide office products clearinghouse. Looking
ahead, we anticipate that more opportunities may develop among these specialty
retailers.
INVESTMENTS BY COUNTRY
expressed as a percentage of
total value of investments
------------------------------------
% of fund
investments
Bahamas 1.1%
Belgium .6%
Canada 2.9%
Ireland 2.5%
Israel 1.4%
Singapore 1.4%
United States 90.1%
------
100.0%
======
------------------------------------
[company logo]
8
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
COMMON STOCKS
BIOTECHNOLOGY -- 6.9%
325,000 Advanced Tissue Sciences, Inc.1 $ 5,525
175,000 Incyte Pharmaceuticals, Inc.1 5,600
275,000 Martek Biosciences Corp.1 9,556
460,000 Matrix Pharmaceutical, Inc.1 12,075
325,000 Myriad Genetics, Inc.1 10,725
540,000 Neurex Corp.1 12,420
----------
55,901
----------
BUSINESS SERVICES & SUPPLIES -- 15.8%
275,000 ABR Information Services, Inc.1 17,325
350,000 APAC Teleservices, Inc.1 27,125
300,000 Gartner Group, Inc.1 10,312
840,000 PMT Services, Inc.1+ 24,150
55,900 PAREXEL International Corporation1 2,746
400,000 Pre-Paid Legal Services, Inc.1 7,750
852,300 U.S. Office Products Company1+ 30,683
135,000 Wackenhut Corrections Corp.1 7,223
----------
127,314
----------
COMMUNICATIONS EQUIPMENT -- 4.7%
340,000 P-COM, Inc.1 8,521
275,000 Premiere Technologies, Inc.1 10,484
120,000 Proxim, Inc.1 3,330
325,000 Teltrend, Inc.1+ 15,925
----------
38,260
----------
COMMUNICATIONS SERVICES -- 1.9%
190,000 Premisys Communications, Inc.1 8,289
400,000 Tel-Save Holdings, Inc.1 6,675
----------
14,964
----------
COMPUTER PERIPHERALS -- 11.6%
260,000 Data Translation, Inc.1+ 6,272
440,000 Network Appliances, Inc.1 14,300
436,500 Pinnacle Systems, Inc.1+ 11,240
300,000 Security Dynamics Technologies Inc.1 25,200
540,000 Shiva Corp.1+ 32,400
201,000 Xeikon, N.V. ADR1 4,623
----------
94,035
----------
COMPUTER SOFTWARE & SERVICES -- 19.2%
200,000 Applix, Inc.1 7,725
300,000 Astea International, Inc.1 8,925
See Notes to Financial Statements
9
- --------------------------------------------------------------------------------
SCHEDULE OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
275,000 CBT Group Plc ADR1 $ 20,178
300,000 Clarify, Inc.1 11,888
475,000 Computer Horizons Corp.1 23,928
165,000 EPIC Design Technology1 5,589
250,000 HCIA1 13,313
265,000 Hummingbird Communications Ltd. ADR1+ 11,130
240,000 McAfee Associates, Inc.1+ 14,730
135,000 Project Software & Development, Inc.1 4,801
200,000 Pure Software, Inc.1 7,975
120,000 Remedy Corp.1 9,330
200,000 The Indus Group, Inc.1 4,150
210,000 Transactions Systems Architects, Inc.1 11,287
----------
154,949
----------
ELECTRICAL & ELECTRONIC COMPONENTS -- 6.4%
400,000 DSP Communications, Inc.1+ 15,950
300,000 Flextronics International, Ltd. ADR1 11,513
500,000 HMT Technology Corporation1 11,031
310,000 Kent Electronics Corp.1 13,059
----------
51,553
----------
HEALTHCARE -- 6.9%
380,000 Compdent Corporation1 16,768
375,000 OccuSystems, Inc.1 10,922
175,000 Pediatrix Medical Group, Inc.1 8,444
124,800 Prime Medical Services, Inc.1 1,958
200,000 Total Renal Care Holdings, Inc.1 7,650
250,000 United Dental Care, Inc.1 9,875
----------
55,617
----------
INDUSTRIAL MATERIALS -- 1.1%
120,000 Zoltek Companies, Inc.1 9,285
----------
LEISURE -- 3.5%
250,000 Imax Corporation1 8,344
400,000 Studio Plus Hotels, Inc.1+ 11,200
210,000 Sun International Hotels Limited ADR1 8,977
----------
28,521
----------
MEDICAL EQUIPMENT & SUPPLIES -- 10.2%
200,000 Arterial Vascular Engineering, Inc.1 8,700
250,000 ESC Medical Systems Ltd. ADR1 11,125
130,700 Endosonics Corporation1 2,254
150,000 Heartport, Inc.1 5,362
420,000 Hologic, Inc.1+ 12,285
80,000 Lunar Corp.1 3,410
775,000 Neuromedical Systems, Inc.1 16,953
360,000 Orthologic Corp.1 12,532
175,000 Target Therapeutics, Inc.1 9,472
----------
82,093
----------
See Notes to Financial Statements
10
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Value
Shares ($ In Thousands)
- --------------------------------------------------------------------------------
PHARMACEUTICALS -- 5.4%
125,000 Biovail Corporation International ADR1 $ 3,531
500,000 Centocor, Inc.1 20,031
250,000 NCS HealthCare, Inc.1 8,281
195,000 Omnicare, Inc. 11,700
----------
43,543
RETAIL (SPECIALITY) -- 3.5%
110,000 Garden Ridge Corporation1 6,133
112,500 Petco Animal Supplies, Inc.1 3,263
60,000 Renters Choice, Inc.1 1,294
405,000 Veterinary Centers of America, Inc.1 12,302
240,000 Wilmar Industries, Inc.1 5,610
----------
28,602
MISCELLANEOUS -- 0.8%
275,000 RISCORP, Inc.1 6,411
----------
TOTAL COMMON STOCKS-- 97.9% 791,048
(Cost $539,298) ----------
TEMPORARY CASH INVESTMENTS
$5,000 par value FHLB Discount Note, 5.18%, 6-17-96 4,966
Repurchase Agreement (Goldman Sachs & Co., Inc.), 5.25%,
due 5-1-96; collateralized by $8,435 par value U.S.
Treasury Bonds, 12.375%, due 5-15-04
(Delivery value $11,602) 11,600
----------
TOTAL TEMPORARY CASH INVESTMENTS-- 2.1% 16,566
(Cost $16,566) ----------
TOTAL INVESTMENT SECURITIES-- 100.0% $ 807,614
(Cost $555,864) ==========
NOTES TO SCHEDULES OF INVESTMENTS
ADR = American Depositary Receipt
FHLB = Federal Home Loan Banks
1 Non-income producing.
+ Affiliated Company: represents ownership of at least 5% of the voting
securities of the issuer and is, therefore, an affiliate as defined in the
Investment Company Act of 1940. See Note 4 in Notes to Financial Statements
for a summary of transactions for each issuer who is or was an affiliate at or
during the period ended April 30, 1996.
See Notes to Financial Statements
11
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
($ In Thousands,
Except Per-Share Amounts)
ASSETS
Investment securities, at value (identified
cost of $555,864) (Note 3).......................... $807,614
Cash................................................... 4,070
Receivable for investments sold........................ 6,281
Dividends and interest receivable...................... 31
----------
817,996
----------
LIABILITIES
Disbursements in excess of demand
deposit cash........................................ 55
Payable for investments purchased...................... 18,242
Payable for capital shares redeemed.................... 7
Accrued management fees (Note 2)....................... 586
Other liabilities...................................... 1
----------
18,891
----------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES.................................. $799,105
==========
(Shares In Thousands)
CAPITAL SHARES, $.01 PAR VALUE
Authorized............................................. 200,000
==========
Outstanding............................................ 29,874
==========
NET ASSET VALUE PER SHARE.............................. $26.75
==========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus)................ $553,892
Undistributed net investment (loss).................... (2,111)
Accumulated undistributed net realized
(loss) from investment transactions................. (4,426)
Net unrealized appreciation on
investments (Note 3)............................... 251,750
----------
$799,105
==========
See Notes to Financial Statements
12
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
Six Months Ended April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
($ In Thousands)
INVESTMENT INCOME (LOSS)
Income:
Dividends........................................... $ 11
Interest............................................ 882
----------
893
----------
Expenses:
Management fees (Note 2)............................ 3,001
Directors' fees and expenses........................ 3
----------
3,004
----------
Net investment (loss).................................. (2,111)
----------
REALIZED AND UNREALIZED GAIN
(LOSS) (Note 3)
Net realized (loss) during the period on investments... (4,373)
Change in net unrealized appreciation
during the period on investments..................... 106,612
----------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS............................................ 102,239
----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS........................... $100,128
==========
See Notes to Financial Statements
13
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended April 30, 1996 (Unaudited)
and Year Ended October 31, 1995
- --------------------------------------------------------------------------------
($ In Thousands)
1996 1995
----------- -----------
INCREASE (DECREASE)
IN NET ASSETS
OPERATIONS
Net investment (loss).......................... $ (2,111) $ (2,756)
Net realized gain (loss) on investments........ (4,373) 50,818
Change in net unrealized appreciation
on investments.............................. 106,612 66,656
---------- ----------
Net increase in net assets
resulting from operations................... 100,128 114,718
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net realized gains
from investment transactions................ (48,108) (14,781)
---------- ----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold...................... 144,826 183,953
Proceeds from reinvestment of distributions.... 48,108 14,781
Payments for shares redeemed................... (6,961) (3,160)
---------- ----------
Net increase in net assets from capital
share transactions.......................... 185,973 195,574
---------- ----------
NET INCREASE IN NET ASSETS..................... 237,993 295,511
NET ASSETS
Beginning of period............................ 561,112 265,601
---------- ----------
End of period.................................. $ 799,105 $ 561,112
========== ==========
Undistributed net investment (loss)............ $ (2,111) --
========== ==========
TRANSACTIONS IN SHARES OF THE FUND:
(In thousands)
Sold........................................... 6,202 8,277
Issued in reinvestment of distributions........ 2,075 816
Redeemed....................................... (299) (153)
---------- ----------
Net increase................................... 7,978 8,940
========== ==========
See Notes to Financial Statements
14
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (Unaudited)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization--
Twentieth Century Investors, Inc. (the Corporation) is registered under the
Investment Company Act of 1940 as an open-end diversified management investment
company. Giftrust Investors, which invests primarily in common stocks, is one of
16 series of shares issued by the Corporation. The following significant
accounting policies related to Giftrust (the Fund) are in accordance with
accounting policies generally accepted in the investment company industry.
Security Valuations--
Portfolio securities traded primarily on a principal securities exchange
are valued at the last reported sales price, or the mean between the latest bid
and asked prices where no last sales price is available. Securities traded
over-the-counter are valued at the mean of the latest bid and asked prices or,
in the case of certain foreign securities, at the last reported sales price.
Debt securities not traded on a principal securities exchange are valued through
valuations obtained from a commercial pricing service or at the mean of the most
recent bid and asked prices. Short-term securities are valued at amortized cost
which approximates value. When valuations are not readily available, securities
are valued at fair value as determined in good faith by the board of directors.
Security Transactions--
Security transactions are accounted for on the date purchased or sold. Net
realized gains and losses are determined on the identified cost basis, which is
also used for federal income tax purposes.
Investment Income--
Dividend income less foreign taxes withheld (if any) is recorded as of the
ex-dividend date or upon receipt of ex-dividend notification in the case of
certain foreign securities. Interest income is recognized on the accrual basis
and includes amortization of discounts and premiums.
Repurchase Agreements--
Securities pledged as collateral for repurchase agreements are held by the
Federal Reserve Bank and are designated as being held on the Fund's behalf by
its custodian under a book-entry system. The Fund monitors the adequacy of the
collateral daily and can require the seller to provide additional collateral in
the event the market value of the securities pledged falls below the carrying
value of the repurchase agreement.
Income Tax Status--
It is the policy of the Fund to distribute all taxable income and capital
gains to shareholders and to otherwise qualify as a regulated investment company
under provisions of the Internal Revenue Code. Accordingly, no provision has
been made for federal or state taxes.
(continued on next page)
15
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
1. Organization and Summary of Significant Accounting Policies (continued)
Distributions to Shareholders--
Distributions to shareholders are recorded on the ex-dividend date.
Distributions from net investment income and net realized gains are declared and
paid annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences are primarily due to differing
treatments for wash sales.
Supplementary Information--
Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of Twentieth Century
Companies, Inc., the parent of the Corporation's investment manager, Investors
Research Corporation (IRC).
2. Management Agreement
The Management Agreement with IRC provides for a monthly management fee
computed by multiplying the applicable fee for the Fund by the average daily
closing value of such Fund's net assets during the previous month. The Agreement
further provides that all expenses of the Fund, except brokerage commissions,
taxes, interest, expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including counsel
fees) and extraordinary expenses, will be paid by IRC. The agreement may be
terminated by either party upon 60 days' written notice.
The current annual management fee for the Fund is 1%.
16
- --------------------------------------------------------------------------------
3. Investment Transactions
Purchases and sales of common stock for the six months ended April 30,
1996, were $598,985 and $422,369, respectively. On April 30, 1996, accumulated
net unrealized appreciation on investment securities, based on the aggregate
cost of investments of $556,841 for federal income tax purposes, was $250,773,
consisting of $251,931 unrealized appreciation and $1,158 unrealized
depreciation.
(continued on next page)
17
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
April 30, 1996 (Unaudited)
4. Affiliated Company Transactions
A summary of transactions for each issuer who is or was an affiliate at or
during the period ended April 30, 1996, follows:
<TABLE>
<CAPTION>
SHARE REALIZED ----APRIL 30, 1996----
SERIES OF SHARES/ BALANCE PURCHASE SALES GAIN DIVIDEND SHARE MARKET
ISSUER 10/31/95 COST COST (LOSS) INCOME BALANCE VALUE
- ------------------ -------- ---------- -------- --------- --------- --------- ---------
---------------------------------------($ In Thousands)-------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Applied Materials, Inc. 220,000 $ 1,985 $14,301 $ (5,006) -- -- --
Asyst Technologies, Inc. 330,000 -- 11,874 (3,315) -- -- --
Atmel Corp. 440,000 7,146 11,207 8,169 -- -- --
Bio-Vascular, Inc. 500,000 -- 8,188 (3,738) -- -- --
Brooks Automation, Inc. 475,000 -- 6,920 (1,224) -- -- --
Cascade Communications -- 7,476 7,476 651 -- -- --
Cirrus Logic, Inc. 200,000 -- 9,862 (4,077) -- -- --
Cyberoptics Corporation 425,000 1,794 12,327 (1,191) -- -- --
DSP Communications, Inc. 300,000 -- 2,900 461 -- 400,000 $15,950
Data Translation, Inc. 500,000 -- 3,683 682 -- 260,000 6,272
Hologic, Inc. -- 10,171 2,188 31 -- 420,000 12,285
Hummingbird
Communications Ltd. ADR 350,000 -- 3,120 (241) -- 265,000 11,130
McAfee Associates, Inc. 125,000 5,538 3,025 191 -- 240,000 14,730
PMT Services, Inc. -- 20,130 -- -- -- 840,000 24,150
Pinnacle Systems, Inc. 440,000 -- 93 (32) -- 436,500 11,240
Pri Automation, Inc. 350,000 -- 8,778 (1,401) -- -- --
Rent-Way, Inc. 262,500 -- 2,573 (500) -- -- --
ResMed, Inc. 375,000 -- 4,108 214 -- -- --
Robotic Visions Systems, Inc. 700,000 -- 10,493 390 -- -- --
Semtech Corporation 230,000 -- 3,787 1,118 -- -- --
Shiva Corp. 250,000 1,315 -- -- -- 540,000 32,400
Studio Plus Hotels, Inc. 300,000 2,525 -- -- -- 400,000 11,200
Sun Microsystems, Inc. -- 8,991 8,991 242 -- -- --
Teltrend, Inc. -- 13,804 -- -- -- 325,000 15,925
Tencor Instruments 480,000 -- 5,163 3,927 -- -- --
U.S. Office Products Company -- 23,780 -- -- -- 852,300 30,683
Ultratech Stepper, Inc. 450,000 1,501 6,385 3,015 -- -- --
-------- -------- -------- ------ --------
$106,156 $147,442 $ (1,634) -- $185,965
======== ======== ======== ====== ========
</TABLE>
18 & 19
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
(For a Share Outstanding Throughout the Period)
GIFTRUST INVESTORS
Six Months Year ended October 31,
Ended -------------------------------------------------------
April 30, 1996
(Unaudited) 1995 1994 1993 1992 1991
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.............$25.63 $20.50 $19.23 $13.57 $12.94 $7.25
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment (Loss)........ (.08)2 (.16)2 (.10) (.09) (.08) (.06)
Net Realized
and Unrealized
Gains (Losses)............... 3.30 6.37 3.28 7.18 1.41 5.77
------ ------ ------ ------ ------ ------
Total from
Investment Operations........ 3.22 6.21 3.18 7.09 1.33 5.71
------ ------ ------ ------ ------ ------
DISTRIBUTIONS
From Net Realized
Gains on Investment
Transactions................. (2.10) (1.085) (1.911) (1.425) (.697) (.025)
In Excess of Net
Realized Gains............... -- -- -- (.007) -- --
------ ------ ------ ------ ------ ------
Total Distributions.......... (2.10) (1.085) (1.911) (1.432) (.697) (.025)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD...................$26.75 $25.63 $20.50 $19.23 $13.57 $12.94
------ ------ ------ ------ ------ ------
TOTAL RETURN1................ 13.80% 32.52% 18.75% 55.84% 10.32% 79.04%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets........... .93%3 .98% 1.00% 1.00% 1.00% 1.00%
Ratio of Net Investment
Income to Average
Net Assets................... (.7%)3 (.7%) (.7%) (.7%) (.7%) (.6%)
Portfolio Turnover Rate...... 68% 105% 115% 143% 134% 143%
Average Commission
Paid per Share Traded........$.0226 $.0260 -- -- -- --
Net Assets, End
of Period (in millions)...... $799 $561 $266 $154 $78 $55
- -----------------------------------------------------------------------------------------------------
</TABLE>
1 Actual total return for periods indicated.
2 Computed using net investment income and average shares outstanding for the
period.
3 Annualized.
See Notes to Financial Statements
20
[company logo]
Investments That WorkTM
---------------------------------------
P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
---------------------------------------
Person-to-person assistance:
1-800-345-2021 OR 816-531-5575
---------------------------------------
Automated information line:
1-800-345-8765
---------------------------------------
Telecommunications Device for the Deaf:
1-800-634-4113 OR 816-753-1865
---------------------------------------
Fax: 816-340-7962
---------------------------------------
SH-BKT-4878
9606 Recycled
<PAGE>
TWENTIETH CENTURY
INVESTORS, INC.
FIXED INCOME FUNDS
SEMIANNUAL REPORT
APRIL 30,
1996
[company logo]
================================================================================
- --------------------------------------------------------------------------------
<PAGE>
INDICES USED FOR PERFORMANCE COMPARISON
CONSUMER PRICE INDEX is a measure of the average change in prices over time in a
fixed market basket of goods and services.
MERRILL LYNCH GOVERNMENT (1-3 YEAR) INDEX is based on the price fluctuations of
U.S. Treasury notes with maturities of one to three years.
MERRILL LYNCH MUNI (0-3 YEAR) INDEX is a market value weighted index composed of
short-term municipal debt issues with an overall maturity of approximately 1.5
years.
MERRILL LYNCH GOVERNMENT/CORPORATE (1-5 YEAR) INDEX is a market value weighted
index composed of corporate and Treasury debt with an overall maturity of
approximately three years. The index consists of approximately 23% corporate
debt and 76% government debt. The corporate debt issues are all rated BBB or
better by Standard & Poor's.
LEHMAN INTERMEDIATE GOVERNMENT BOND INDEX is made up of more than 855 issues
with an average maturity of 3.8 years and an average yield of 7.1%.
Approximately 87% of the index is U.S. Treasury issues--the other 13% is U.S.
government agency issues.
LEHMAN INTERMEDIATE GOVERNMENT/CORPORATE INDEX includes the Lehman Government
and Corporate Bond Indices, which reflect the price fluctuations of U.S.
Treasury and government agency securities, corporate bonds and Yankee bonds with
1-10 year maturities.
LEHMAN AGGREGATE BOND INDEX is composed of the Lehman Government/Corporate Index
and the Lehman Mortgage-Backed Securities Index, which reflect the price
fluctuations of Treasury issues, agency issues, corporate bond issues and
mortgage-backed securities.
LEHMAN 5-YEAR GENERAL OBLIGATION INDEX is a municipal bond index composed of
more than 11,000 bonds with maturities of four to six years. The bonds are rated
BBB or higher by Standard & Poor's, with an average rating of AA. The average
maturity of the index is five years.
LEHMAN MUNI BOND INDEX is composed of 8,000 actual municipal bonds. The bonds
are all investment-grade, fixed-rate, long-term maturities (greater than two
years) and are selected from issues larger than $50 million dated since January
1994.
i
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Our Message to You .................................................. 1
Investment Objectives and Strategy .................................. 2
Period Overview ..................................................... 3
Investment Review--Taxable Funds
Cash Reserve .................................................... 4
U.S.Governments Short-Term ...................................... 5
U.S.Governments Intermediate-Term ............................... 6
Limited-Term Bond ............................................... 7
Intermediate-Term Bond .......................................... 8
Long-Term Bond .................................................. 9
Investment Review--Tax-Exempt Funds
Tax-Exempt Short-Term ........................................... 10
Tax-Exempt Intermediate-Term .................................... 11
Tax-Exempt Long-Term ............................................ 12
Schedules of Investments
Cash Reserve .................................................... 13
U.S.Governments Short-Term ...................................... 15
U.S. Governments Intermediate-Term .............................. 16
Limited-Term Bond ............................................... 17
Intermediate-Term Bond .......................................... 18
Long-Term Bond .................................................. 20
Tax-Exempt Short-Term ........................................... 21
Tax-Exempt Intermediate-Term .................................... 23
Tax-Exempt Long-Term ............................................ 26
Statements of Assets and Liabilities ................................ 30
Statements of Operations ............................................ 32
Statements of Changes in Net Assets ................................. 34
Notes to Financial Statements ....................................... 36
Financial Highlights ................................................ 39
- --------------------------------------------------------------------------------
IMPORTANT NOTICE FOR ALL IRA AND 403(B) SHAREHOLDERS
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at Twentieth Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount, unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Conversions/Redemptions form or an IRS Form W-4P. Call Twentieth Century for
either form. Your written election is valid for only six months from the date of
receipt at Twentieth Century. You may revoke your election at any time by
sending a written notice to us.
Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.
- --------------------------------------------------------------------------------
ii
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
OUR MESSAGE TO YOU
The interest rate environment shifted dramatically during the six months
ended April 30, 1996. After falling throughout 1995 amid weak economic
conditions, interest rates reversed course abruptly in early 1996 as evidence of
renewed economic growth sparked fears of rising inflation (see the new expanded
Period Overview on page 3 for more details). The interest rate volatility during
the six-month period had the most substantial impact on the returns of long-term
fixed-income securities--two-year Treasury notes provided a modest total return
of 1.84%, while 30-year Treasury bonds suffered overall price declines during
the period and returned -5.05%.
[photo of James E. Stowers and James E. Stowers III on left side of page]
Against this backdrop, the Twentieth Century Investors, Inc. fixed-income
funds produced returns comparable to their respective markets and maturity
sectors. The funds' performance figures can be found in the individual fund
reports on pages 4-12.
The funds' steady performance reflects the benefits of the funds'
management team joining forces with the fixed-income management team at The
Benham Group. The funds' managers relocated to Benham's northern California
headquarters in September 1995 to work more closely with their Benham
colleagues. The joint management group now consists of 17 fixed-income managers
working within three distinct teams--government, corporate and municipal
bonds--with support from eight credit analysts. Sharing information within this
group has provided the management teams with a greater flow of information and
more extensive market analysis and research capabilities. This structure should
enhance the combined company's ability to manage your fixed-income investment.
After a year and a half of behind-the-scenes planning and effort, the
Twentieth Century and Benham fund families will come together as a fully
integrated company in September. As the integration date approaches, you will
receive more details about the combined company's broader menu of investment
choices and expanded array of shareholder services.
We are confident that these investment management and service improvements
will continue to benefit you, the shareholder, in the years to come. We
appreciate your continued support of the Twentieth Century family of funds.
Sincerely,
/s/James E. Stowers /s/James E. Stowers III
James E. Stowers James E. Stowers III
Chairman of the Board and Founder President
1
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVES AND STRATEGY
Twentieth Century introduced its first fixed-income fund in 1982. Today,
there are 12 Twentieth Century fixed-income offerings, ranging from money market
funds to long-term bond funds, and they include both taxable and tax-exempt
funds.
o Cash Reserve, which was established on March 1, 1985, is a money market fund.1
It seeks to provide current income while also seeking to maintain a stable
share price by investing in a diversified portfolio of short-term money market
securities. The fund must maintain a weighted average maturity of 90 days or
less.
o U.S. Governments Short-Term, which was established on December 15, 1982, is
designed for investors seeking income with limited price fluctuations. The
fund invests in securities of the U.S. government and its agencies and seeks
to maintain a weighted average maturity of three years or less.
o U.S. Governments Intermediate-Term, which was established on March 1, 1994, is
designed for investors who seek a higher level of current income and can
accept a greater degree of price fluctuation. The fund invests in securities
of the U.S. government and its agencies and seeks to maintain a weighted
average maturity of threeto 10 years.
o Limited-Term Bond, which was established on March 1, 1994, is designed for
investors seeking above-average income with limited price fluctuations. The
fund invests primarily in investment-grade2 corporate securities and other
debt instruments, and it seeks to maintain a weighted average maturity of five
years or less.
o Intermediate-Term Bond, which was established on March 1, 1994, is designed
for investors who seek a higher level of income than that provided by
Limited-Term Bond but are willing to accept somewhat greater price volatility.
The fund invests in investment-grade securities and seeks to maintain a
weighted average maturity of three to 10 years.
o Long-Term Bond, which was established on March 2, 1987, is designed for
investors who seek higher income and can accept the greater price volatility
associated with long-term bonds. The fund invests primarily in
investment-grade corporate bonds and other debt instruments, and it seeks to
maintain a weighted average maturity of 10 years or more.
o Tax-Exempt Short-Term, which was established on March 1, 1993, is designed for
investors who seek tax-exempt income and can accept some fluctuation in
principal. The fund invests primarily in short-term municipal bonds and seeks
to maintain a weighted average maturity of three years or less.
o Tax-Exempt Intermediate-Term, which was established on March 2, 1987, is
designed for investors who can accept fluctuation in the value of their
investment in order to earn a higher level of tax-exempt income than is
generally available from short-term bonds. The fund invests in tax-exempt
bonds and seeks to maintain a weighted average maturity of three to 10 years.
o Tax-Exempt Long-Term, which was established on March 2, 1987, is designed for
investors who seek a higher level of tax-exempt income and can accept the
greater degree of price volatility associated with longer-term bonds. The fund
invests in longer-term tax-exempt bonds and seeks to maintain a weighted
average maturity of 10 years or more.
1 An investment in Cash Reserve is neither insured nor guaranteed by the U.S.
government. Yields will fluctuate, and there can be no assurance that the
fund will be able to maintain a stable net asset value of $1 per share.
2 Securities rated Baa or above by Moody's Investors Service, Inc. and BBB or
above by Standard &Poor's Corporation are considered to be investment-grade.
2
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
PERIOD OVERVIEW
U.S. ECONOMIC REVIEW
A significant shift in economic growth expectations occurred during the
six-month period ended April 30, 1996. In late 1995, economic signals seemed to
indicate a possible recession in 1996. Federal budget battles, which led to two
government shutdowns, furthered the recessionary notion. The shutdowns also
delayed key economic reports, causing confusion. To boost the economy, the
Federal Reserve (the Fed) reduced a key short-term interest rate benchmark, the
federal funds rate target, from 5.75% to 5.50% in December and to 5.25% in
January. Amid the confusion and recession expectations, the February payroll
employment report--showing the strongest job creation in 12 years--triggered a
bond sell-off and higher interest rates. The March payroll employment report and
the government's estimate of first-quarter U.S. economic growth were also
unexpectedly strong. The strength of these reports seemed to indicate increasing
economic momentum, with no need for lower interest rates.
FIXED-INCOME REVIEW
TREASURY SECURITIES (TREASURIES)
Treasuries were whipsawed by interest rate movements and increased supply
during the period. From October 1995 through January 1996, Treasuries rallied
and yields fell in response to weak economic conditions. The 30-year Treasury
bond yield fell from 6.35% in October to 6.02% in January, while the three-month
Treasury bill yield fell from 5.40% to 5.00%. Then, in response to increasing
supply (caused by Treasury auctions in February and the unwinding of large
currency trades involving Treasuries) and inflation fears, Treasury prices fell
and yields rose between February and April. Long-maturity bonds suffered the
biggest losses; the 30-year Treasury bond yield soared to nearly 7%.
CORPORATE SECURITIES (CORPORATES)
Corporates slightly outperformed Treasuries during the period as the
difference (spread) between traditionally higher corporate yields and lower
Treasury yields narrowed. Downsizing and improved efficiencies by corporations
made it easier for them to manage their finances and led to higher corporate
credit ratings.
MUNICIPAL SECURITIES (MUNIS)
Munis outperformed Treasuries during the period. Concerns that the proposed
flat tax would strip munis of their tax-exempt advantage restrained muni prices
at the beginning of the period. But by late 1995, support for the flat tax
waned. Munis also benefited from favorable supply and demand factors. New muni
issuance remained well behind the issuance levels of the early 1990s. A large
amount of maturing munis in early 1996 further reduced existing supply and
released billions of dollars for reinvestment. This additional demand helped
stabilize muni yields relative to rising Treasury yields.
THE MANAGEMENT TEAM'S OUTLOOK
While we believe that recent economic reports have ruled out near-term
interest rate cuts by the Fed, we don't think that there will be a sudden
inflation increase or that the Fed will raise interest rates. We think it's more
likely that the Fed will hold a steady interest rate course to see which turn
the economy takes. The economy still doesn't feel robust--layoffs and personal
bankruptcies are at high levels, wages are stagnant and capital expenditures are
slowing. We believe the evidence still suggests moderate economic growth and low
inflation in 1996. If so, it could be a "coupon-clipping" year for fixed-income
investors, with performance coming mostly from interest income rather than price
changes.
3
- --------------------------------------------------------------------------------
CASH RESERVE
Cash Reserve continued to meet its investment objective of seeking a high
level of current income consistent with principal preservation. The fund posted
a 2.50% total return for the six months ended April 30, 1996, compared to a
2.55% total return for three-month Treasury bills.
The fund's yield declined during the six months ended April 30, but so did
the yields of its peers and of U.S. money market instruments in general.
Recessionary expectations in late 1995 and early 1996 (see page 3) caused U.S.
money market rates and yields to fall. The fund's seven-day current yield fell
from 5.16% on October 31, 1995, to 4.78% on April 30, 1996.
We responded to falling interest rates by extending the fund's average
maturity to lock in higher rates. Whereas "neutral" for the fund is typically 50
to 60 days, we extended the average maturity out beyond 70 days by the end of
1995. Later, as rates climbed, we shortened the average maturity so the
portfolio would respond more quickly to rate increases. By March, the average
maturity had been reined back into neutral territory,(around 60 days), and it
ended the period at 50 days. We plan to continue the fund's neutral stance until
a clearer picture of the direction of the economy and the nature of future Fed
policy emerges. The inflation indicator we watch most closely is wages, which
have remained stagnant. Stronger job growth could put upward pressure on wages,
so we also are watching labor market indicators such as weekly jobless claims
and the monthly employment reports.
The fund continues to own an approximately 3% position in taxable
variable-rate notes issued by Orange County, California that was discussed in
the fund's October 31, 1995 annual report. The fund is expected to hold the
notes until they mature on June 30, 1996, because we believe that the notes will
mature at par. The county plans to issue up to $800 billion in bonds in May and
use a portion of the proceeds to pay off the notes at their maturity date.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of April 30, 1996)
AVERAGE MONEY-
CASH RESERVE MARKET FUND
------------ --------------
1 Year 5.26% 5.17%
5 Year 3.97% 4.01%
10 Year 5.47% 5.57%
- --------------------------------------------------------------------------------
SEVEN-DAY SEC YIELD (as of April 30, 1996)
Cash Reserve 4.78%
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of April 30, 1996)
[pie chart]
Commercial Paper 73%
U.S. Government Agencies 14%
Certificates of Deposit 5%
Other Corporate Debt 5%
Municipal Obligations 3%
Percent of fund investments.
An investment in CashReserve is neither insured nor guaranteed by the U.S.
government. Yields will fluctuate, and there can be no assurance that the fund
will be able to maintain a stable net asset value of $1 per share.
4
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
U.S. GOVERNMENTS SHORT-TERM
U.S. Governments Short-Term posted a 1.60% total return for the six months
ended April 30, 1996, compared to the 2.08% return for the fund's benchmark, the
Merrill Lynch Government (1-3 Year) Index.
The fund is managed to provide higher yields than fixed-price money market
funds but lower yields than longer-term bond funds. As of April 30, 1996, the
fund's 30-day SEC yield was 5.29%, compared with the 4.78% seven-day current
yield for Cash Reserve and the 5.78% 30-day SEC yield for U.S. Governments
Intermediate-Term. Matching the Treasury whipsaw pattern (see page 3), the
fund's 30-day SEC yield fell from 5.18% on October 31, 1995, to 4.72% on January
31, 1996, then soared to 5.29% in April.
We responded to the rally at the beginning of the period by extending the
fund's average maturity to almost three years to lock in higher rates. During
the bond sell-off later in the period, we shortened the average maturity to
limit the fund's losses. By March, the average maturity was back to neutral,
around two years.
Going forward, we plan to continue the fund's neutral stance until a
clearer economic picture emerges. Because we believe that the Fed will not
change short-term interest rates in the near term, we doubled the fund's
holdings of mortgage-backed securities, which tend to outperform Treasuries when
interest rates are relatively stable.
QUALITY DIVERSIFICATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
(Moody's ratings) % of fund investments
AAA 100%
WEIGHTED AVERAGE MATURITY (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 2.0
Weighted average maturity indicates the average time until the principal on
the Fund's bonds is expected to be repaid, weighted by dollar amount.
DURATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 1.8
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of April 30, 1996)
U.S. GOVERNMENTS MERRILL LYNCH GOVT.
SHORT-TERM (1-3 YEAR) INDEX
---------------- -------------------
1 Year 6.22% 6.87%
5 Year 5.41% 6.33%
10 Year 6.21% 7.31%
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of April 30, 1996)
[pie chart]
Treasury 72%
Mortgage-Backed 26%
Temporary Cash Investment 2%
Percent of fund investments.
- --------------------------------------------------------------------------------
$10,000 OVER A 10-YEAR PERIOD
[mountain graph]
$10,000 investment made on 4/30/86
U.S. Govt. Merrill Lynch Govt.
CPI* Short-Term (1-3 Year) Index
4-30-86 to 6-30-86 $10,000 $10,000 $10,000
Sep-1986 $10,130 $10,253 $10,058
Dec-1986 $10,396 $10,520 $10,128
Mar-1987 $10,576 $10,706 $10,156
Jun-1987 $10,693 $10,840 $10,201
Sep-1987 $10,645 $10,911 $10,329
Dec-1987 $10,571 $10,931 $10,459
Mar-1988 $10,980 $11,311 $10,499
Jun-1988 $11,271 $11,609 $10,599
Sep-1988 $11,375 $11,730 $10,735
Dec-1988 $11,533 $11,900 $10,900
Mar-1989 $11,599 $12,015 $10,963
Jun-1989 $11,714 $12,164 $11,126
Sep-1989 $12,315 $12,769 $11,290
Dec-1989 $12,431 $12,955 $11,372
Mar-1990 $12,759 $13,321 $11,472
Jun-1990 $12,718 $13,439 $11,709
Sep-1990 $13,027 $13,816 $11,817
Dec-1990 $13,271 $14,145 $12,073
Mar-1991 $13,720 $14,616 $12,173
Jun-1991 $13,947 $14,938 $12,282
Sep-1991 $14,185 $15,232 $12,373
Dec-1991 $14,717 $15,744 $12,482
Mar-1992 $15,318 $16,323 $12,546
Jun-1992 $15,189 $16,349 $12,674
Sep-1992 $15,604 $16,819 $12,756
Dec-1992 $16,056 $17,320 $12,856
Mar-1993 $15,990 $17,352 $12,910
Jun-1993 $16,294 $17,735 $13,065
Sep-1993 $16,433 $17,926 $13,138
Dec-1993 $16,605 $18,183 $13,201
Mar-1994 $16,658 $18,291 $13,264
Jun-1994 $16,487 $18,200 $13,392
Sep-1994 $16,446 $18,215 $13,464
Dec-1994 $16,584 $18,394 $13,592
Mar-1995 $16,575 $18,395 $13,619
Jun-1995 $17,102 $19,013 $13,638
Sep-1995 $17,622 $19,622 $13,738
Dec-1995 $17,866 $19,916 $13,801
Mar-1996 $18,318 $20,418 $13,828
Apr-1996 $18,308 $20,486 $14,026
Apr-1996 $18,266 $20,257 $14,081
Value on 4/30/96:
$18,266 U.S. Governments Short-Term
$20,257 Merrill Lynch Govt. (1-3 Year)
$14,081 Consumer Price Index*
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost. *Source: Lipper Analytical Services, Inc.
5
- --------------------------------------------------------------------------------
U.S. GOVERNMENTS INTERMEDIATE-TERM
U.S. Governments Intermediate-Term posted a -0.26% total return for the six
months ended April 30, 1996, compared to the 1.23% return for the fund's
benchmark, the Lehman Brothers Intermediate Government Bond Index.
The fund is managed to provide the potential for higher yields than
short-term bond funds. But will, over the long term, likely experience lower
yields than long-term bond funds. As of April 30, 1996, the fund's 30-day SEC
yield was 5.78%. Matching the Treasury whipsaw pattern (see page 3), the fund's
30-day SEC yield fell from 5.39% on October 31, 1995, to 4.93% on January 31,
1996, then soared to 5.78% in April.
We responded to the rally at the beginning of the period by extending the
fund's average maturity to 6.5 years to capture more price appreciation. During
the bond sell-off later in the period, we shortened the average maturity to a
more neutral 6.0 years to limit the fund's losses.
Going forward, we plan to continue the fund's neutral stance until a
clearer economic picture emerges. Because we believe that the Fed will not
change short-term interest rates in the near term, we doubled the fund's
holdings of mortgage-backed securities, which tend to outperform Treasuries when
interest rates are relatively stable.
QUALITY DIVERSIFICATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
(Moody's ratings) % of fund investments
AAA 100%
WEIGHTED AVERAGE MATURITY (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 6.0
Weighted average maturity indicates the average time until the principal on
the Fund's bonds is expected to be repaid, weighted by dollar amount.
DURATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 4.3
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of April 30, 1996)
U.S. GOVERNMENTS LEHMAN INTERMEDIATE
INTERMEDIATE-TERM GOVT. BOND INDEX
------------------ -------------------
1 Year 6.17% 7.54%
Inception 4.58% 5.27%
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of April 30, 1996)
[pie chart]
Treasury 71%
Mortgage-Backed 25%
Temporary Cash Investment 4%
Percent of fund investments
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND
[mountain graph]
$10,000 investment made on 3/1/94
(Inception date)
U.S. Govt. Lehman Intmdt.Govt.
CPI* Intermediate-Term Bond Index
$10,000 $10,000 $10,000
Mar 15, 94 $9,895 $9,854 $10,034
Apr-1994 $9,851 $9,790 $10,048
May-1994 $9,854 $9,797 $10,055
Jun-1994 $9,846 $9,799 $10,089
Jul-1994 $9,962 $9,927 $10,117
Aug-1994 $9,979 $9,956 $10,157
Sep-1994 $9,892 $9,873 $10,184
Oct-1994 $9,899 $9,875 $10,192
Nov-1994 $9,854 $9,831 $10,205
Dec-1994 $9,893 $9,863 $10,205
Jan-1995 $10,030 $10,024 $10,246
Feb-1995 $10,216 $10,217 $10,286
Mar-1995 $10,271 $10,274 $10,320
Apr-1995 $10,377 $10,393 $10,355
May-1995 $10,687 $10,686 $10,375
Jun-1995 $10,749 $10,754 $10,396
Jul-1995 $10,726 $10,760 $10,396
Aug-1995 $10,822 $10,849 $10,423
Sep-1995 $10,905 $10,922 $10,444
Oct-1995 $11,046 $11,042 $10,478
Nov-1995 $11,196 $11,177 $10,471
Dec-1995 $11,323 $11,287 $10,463
Jan-1996 $11,408 $11,382 $10,525
Feb-1996 $11,198 $11,261 $10,559
Mar-1996 $11,103 $11,210 $10,614
Apr-1996 $11,017 $11,177 $10,655
Value on 4/30/96:
$11,017 U.S. Governments Intermediate-Term
$11,177 Lehman Govt. Bond Index
$10,655 Consumer Price Index*
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
*Source: Lipper Analytical Services, Inc.
6
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
LIMITED-TERM BOND
Limited-Term Bond posted a 1.91% total return for the six months ended
April 30, 1996. The Merrill Lynch Government/Corporate (1-5 Year) Index returned
1.78% for the same period. The fund outperformed the index because we shifted
the fund to a more defensive posture, shortening its duration and its average
maturity in early 1996.
The fund continued to provide higher yields than money market funds but
lower yields than longer-term bond funds. As of April 30, 1996, the fund's
30-day SEC yield was 5.60%, compared to the 4.78% seven-day current yield of
Cash Reserve and the 6.02% 30-day SEC yield of Intermediate-Term Bond.
Improvements in corporate credit quality due to corporate downsizing and
increased efficiencies caused the yield spread between corporate and Treasury
securities to narrow significantly. Strong demand for high-grade, short-term
corporate securities kept prices relatively high. As a result, we decreased the
fund's corporate holdings from 56% to 42% in favor of short-term Treasuries.
This led to a corresponding increase in the fund's percentage of AAA-rated
securities.
Going forward, we will look for opportunities to increase the fund's
holdings in investment-grade corporate securities, which typically offer higher
yields than similar-maturity government securities.
QUALITY DIVERSIFICATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
(Moody's ratings) % of fund investments
AAA 58%
AA 3%
A 23%
BBB 16%
---
100%
===
WEIGHTED AVERAGE MATURITY (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 2.1
Weighted average maturity indicates the average time until the principal on
the Fund's bonds is expected to be repaid, weighted by dollar amount.
DURATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 1.8
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of April 30, 1996)
LIMITED-TERM MERRILL LYNCH GOVT./
BOND CORP. (1-5 YEAR) INDEX
------------ ----------------------
1 Year 6.69% 7.41%
Inception 4.89% 5.64%
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of April 30, 1996)
[pie chart]
Corporate 42%
Treasury 35%
Mortgage-Backed 12%
Asset-Backed 5%
Temporary Cash Investment 5%
U.S. Government Agencies 1%
Percent of fund investments.
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND
[mountain graph]
$10,000 investment made on 3/1/94
(Inception date)
Merrill Lynch
Limited-Term Govt./Corp.
Bond (1-5 Year) Index CPI*
$10,000 $10,000 $10,000
3/1/94 $9,933 $9,909 $10,034
Apr-1994 $9,888 $9,851 $10,048
May-1994 $9,887 $9,865 $10,055
Jun-1994 $9,907 $9,885 $10,089
Jul-1994 $9,999 $9,990 $10,117
Aug-1994 $10,030 $10,026 $10,157
Sep-1994 $9,990 $9,974 $10,184
Oct-1994 $9,992 $9,988 $10,192
Nov-1994 $9,958 $9,935 $10,205
Dec-1994 $9,980 $9,961 $10,205
Jan-1995 $10,102 $10,113 $10,246
Feb-1995 $10,230 $10,285 $10,287
Mar-1995 $10,291 $10,347 $10,321
Apr-1995 $10,393 $10,454 $10,355
May-1995 $10,582 $10,699 $10,375
Jun-1995 $10,621 $10,763 $10,396
Jul-1995 $10,650 $10,791 $10,396
Aug-1995 $10,722 $10,865 $10,423
Sep-1995 $10,795 $10,927 $10,444
Oct-1995 $10,881 $11,035 $10,478
Nov-1995 $10,986 $11,152 $10,471
Dec-1995 $11,072 $11,252 $10,463
Jan-1996 $11,169 $11,353 $10,525
Feb-1996 $11,108 $11,274 $10,559
Mar-1996 $11,098 $11,242 $10,614
Apr-1996 $11,089 $11,262 $10,655
Value on 4/30/96:
$11,089 Limited-Term Bond
$11,262 Merrill Lynch Govt./Corp. (1-5 Year) Index
$10,655 Consumer Price Index*
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
*Source: Lipper Analytical Services, Inc.
7
- --------------------------------------------------------------------------------
INTERMEDIATE-TERM BOND
Intermediate-Term Bond's total return for the six months ended April 30,
1996, was 0.67%, compared to the 1.16% return of the Lehman Intermediate
Government/Corporate Index. To protect the fund's 1995 gains in the face of
rising interest rates, we moved toward a more defensive posture, shortening the
fund's average maturity and duration during the latter half of the six-month
period.
The fund continued to provide higher yields than money market funds but
lower yields than longer-term bond funds. As of April 30, 1996, the fund's
30-day SEC yield was 6.02%, compared to the 5.60% 30-day SEC yield of
Limited-Term Bond and the 6.47% 30-day SEC yield of Long-Term Bond.
Improvements in corporate credit quality due to corporate downsizing and
increased efficiencies caused the yield spread between corporate and Treasury
securities to narrow significantly. Strong demand and a moderate supply of
high-grade corporate securities kept prices relatively high. As a result, we
decreased the portfolio's corporate holdings from 61% to 50% in favor of
intermediate-term Treasuries.
Going forward, we will look for opportunities to increase the fund's
holdings in investment-grade corporate securities, which typically offer higher
yields than similar-maturity government securities.
QUALITY DIVERSIFICATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
(Moody's ratings) % of fund investments
AAA 46%
AA 7%
A 28%
BBB 19%
---
100%
===
WEIGHTED AVERAGE MATURITY (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 5.8
Weighted average maturity indicates the average time until the principal on
the Fund's bonds is expected to be repaid, weighted by dollar amount.
DURATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 3.9
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of April 30, 1996)
INTERMEDIATE- LEHMAN INTERMEDIATE
TERM BOND GOVT./CORP. INDEX
------------- -------------------
1 Year 7.57% 7.84%
Inception 5.17% 5.46%
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of April 30, 1996)
[pie chart]
Corporate 50%
Treasury 36%
Mortgage-Backed 5%
Asset-Backed 4%
Sovereign Governments & Agencies 4%
Temporary Cash Investment 1%
Percent of fund investments.
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND
[mountain graph]
$10,000 investment made on 3/1/94
(Inception date)
Intermediate-Term Lehman Intmdt.Govt.
Bond Corp. Index CPI*
$10,000 $10,000 $10,000
3/15/94 $9,856 $9,835 $10,034
Apr-1994 $9,784 $9,768 $10,048
May-1994 $9,798 $9,775 $10,055
Jun-1994 $9,800 $9,776 $10,089
Jul-1994 $9,926 $9,917 $10,117
Aug-1994 $9,950 $9,947 $10,157
Sep-1994 $9,881 $9,856 $10,184
Oct-1994 $9,876 $9,855 $10,192
Nov-1994 $9,840 $9,811 $10,205
Dec-1994 $9,879 $9,845 $10,205
Jan-1995 $10,014 $10,011 $10,246
Feb-1995 $10,200 $10,219 $10,287
Mar-1995 $10,264 $10,277 $10,321
Apr-1995 $10,369 $10,403 $10,355
May-1995 $10,701 $10,717 $10,375
Jun-1995 $10,753 $10,789 $10,396
Jul-1995 $10,743 $10,790 $10,396
Aug-1995 $10,863 $10,888 $10,423
Sep-1995 $10,949 $10,967 $10,444
Oct-1995 $11,080 $11,089 $10,478
Nov-1995 $11,232 $11,234 $10,471
Dec-1995 $11,372 $11,352 $10,463
Jan-1996 $11,472 $11,449 $10,525
Feb-1996 $11,286 $11,315 $10,559
Mar-1996 $11,215 $11,258 $10,614
Apr-1996 $11,154 $11,220 $10,655
Value on 4/30/96:
$11,154 Intermediate-Term Bond
$11,220 Lehman Intermediate Govt./Corp. Index
$10,655 Consumer Price Index*
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
*Source: Lipper Analytical Services, Inc.
8
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
LONG-TERM BOND
Long-Term Bond posted a -0.22% total return for the six months ended April
30, 1996. Its slightly longer duration caused it to underperform its benchmark,
the Lehman Aggregate Bond Index, which returned 0.53% for the period. To protect
the fund's 1995 gains in the face of rising interest rates, we shifted from a
relatively aggressive position to a more defensive posture, shortening the
fund's average maturity and duration during the latter half of the six-month
period.
The fund continued to provide higher yields than shorter-term bond funds.
As of April 30, 1996, the fund's 30-day SEC yield was 6.47%, compared to the
6.02% yield of Intermediate-Term Bond.
Improvements in corporate credit quality due to corporate downsizing and
increased efficiencies caused the yield spread between corporate and Treasury
securities to narrow significantly. As a result, mortgage-backed securities
became more attractive, offering a yield advantage over comparable corporate
securities. We decreased the fund's corporate holdings from 66% to 56% as we
moved assets into mortgage-backed securities.
Going forward, we plan to keep about 65% of the fund's assets invested in
high-grade corporate securities, which typically offer higher yields than
similar-maturity government securities.
QUALITY DIVERSIFICATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
(Moody's ratings) % of fund investments
AAA 40%
AA 10%
A 35%
BBB 15%
----
100%
====
WEIGHTED AVERAGE MATURITY (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 10.9
Weighted average maturity indicates the average time until the principal on
the Fund's bonds is expected to be repaid, weighted by dollar amount.
DURATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 5.3
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of April 30, 1996)
LONG-TERM LEHMAN AGGREGATE
BOND BOND INDEX
--------- ----------------
1 Year 8.92% 8.64%
5 Year 8.04% 8.13%
Inception 7.54% 8.32%
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of April 30, 1996)
[pie chart]
Corporate 56%
Treasury 26%
Mortgage-Backed 13%
Sovereign Governments & Agencies 4%
U.S. Government Agencies 1%
Percent of fund investments.
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND
[mountain graph]
$10,000 investment made on 3/2/87
(Inception date)
Lehman
Long-Term Aggregate
Bond Bond Index CPI*
$10,000 $10,000 $10,000
Mar-1987 $9,890 $9,955 $10,045
Jun-1987 $9,620 $9,777 $10,171
Sep-1987 $9,109 $9,510 $10,299
Dec-1987 $9,790 $10,062 $10,338
Mar-1988 $10,207 $10,441 $10,436
Jun-1988 $10,259 $10,564 $10,571
Sep-1988 $10,455 $10,774 $10,732
Dec-1988 $10,606 $10,856 $10,795
Mar-1989 $10,642 $10,980 $10,956
Jun-1989 $11,612 $11,855 $11,117
Sep-1989 $11,651 $11,989 $11,198
Dec-1989 $12,089 $12,435 $11,296
Mar-1990 $11,657 $12,335 $11,529
Jun-1990 $12,086 $12,786 $11,636
Sep-1990 $12,036 $12,896 $11,888
Dec-1990 $12,820 $13,548 $11,986
Mar-1991 $13,086 $13,926 $12,094
Jun-1991 $13,233 $14,154 $12,184
Sep-1991 $14,123 $14,958 $12,291
Dec-1991 $15,063 $15,717 $12,353
Mar-1992 $14,739 $15,516 $12,479
Jun-1992 $15,349 $16,143 $12,561
Sep-1992 $16,027 $16,837 $12,659
Dec-1992 $15,905 $16,882 $12,712
Mar-1993 $16,596 $17,579 $12,864
Jun-1993 $17,024 $18,045 $12,936
Sep-1993 $17,547 $18,516 $12,998
Dec-1993 $17,519 $18,527 $13,061
Mar-1994 $16,949 $17,996 $13,186
Jun-1994 $16,671 $17,810 $13,257
Sep-1994 $16,706 $17,919 $13,383
Dec-1994 $16,733 $17,987 $13,410
Mar-1995 $17,621 $18,893 $13,563
Jun-1995 $18,869 $20,044 $13,662
Sep-1995 $19,252 $20,437 $13,725
Dec-1995 $20,128 $21,308 $13,752
Mar-1996 $19,637 $20,930 $13,949
Apr-1996 $19,468 $20,812 $14,003
Value on 4/30/96:
$19,468 Long-Term Bond
$20,812 Lehman Aggregate Bond Index
$14,003 Consumer Price Index*
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
*Source: Lipper Analytical Services, Inc.
9
- --------------------------------------------------------------------------------
TAX-EXEMPT SHORT-TERM
Tax-Exempt Short-Term had a total return of 1.83% during the six months
ended April 30, 1996, closely tracking the 1.90% return for the fund's
benchmark, the Merrill Lynch Municipal (0-3 Year) Index. The fund's return for
the period includes a waiver of management fees through February 29, 1996. Had
the waiver not been in effect, returns would have been lower. As of March 1,
1996, the fund began paying management fees at an annual rate of 0.60% of net
assets.
As interest rates fell in the fourth quarter of 1995, we extended the
fund's weighted average maturity out to nearly 3.0 years to capture additional
price appreciation. To accomplish this, we added more AAA-rated securities to
the fund's portfolio. AAA-rated securities give up a little yield compared to
AA- and A-rated securities, but they tend to follow market moves more closely.
We balanced these purchases with higher-yielding BBB-rated securities to
maintain the fund's yield. Toward the end of the six-month period, we shortened
the fund's average maturity back to a neutral position of 2.4 years as the
interest rate environment changed abruptly.
Looking ahead, we intend to maintain the fund's current neutral position.
We expect municipal bond returns over the next six months to come primarily from
coupon interest, so we plan to add more higher-yielding securities to the fund's
portfolio to enhance the fund's interest income.
QUALITY DIVERSIFICATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
(Moody's ratings) % of fund investments
AAA 42%
AA 22%
A 21%
BBB 15%
---
100%
===
WEIGHTED AVERAGE MATURITY (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 2.4
Weighted average maturity indicates the average time until the principal on
the Fund's bonds is expected to be repaid, weighted by dollar amount.
DURATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 2.1
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of April 30, 1996)
TAX-EXEMPT MERRILL LYNCH MUNI
SHORT-TERM (0-3 YEAR) INDEX
---------- ------------------
1 Year 5.08% 5.45%
Inception 4.14% 4.05%
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of April 30, 1996)
[pie chart]
General Obligation 36%
Other Revenue 29%
Electric Facility Revenue 18%
Educational Facility Revenue 4%
Hospital Revenue 4%
Industrial Development Revenue 3%
Water & Sewer Revenue 3%
Housing Revenue 2%
Variable Rate Demand Obligations 1%
Percent of fund investments.
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND
[mountain graph]
$10,000 investment made on 3/1/93
(Inception date)
Tax-Exempt Merrill Lynch
Short-Term Muni (0-3 Year) Index CPI*
$10,000 $10,000 $10,000
Mar 1, 93 $10,014 $9,993 $10,035
Jun-1993 $10,132 $10,112 $10,091
Sep-1993 $10,227 $10,151 $10,140
Dec-1993 $10,336 $10,323 $10,188
Mar-1994 $10,322 $10,320 $10,286
Jun-1994 $10,426 $10,397 $10,342
Sep-1994 $10,524 $10,500 $10,440
Dec-1994 $10,592 $10,459 $10,461
Mar-1995 $10,791 $10,694 $10,580
Jun-1995 $10,965 $10,905 $10,657
Sep-1995 $11,111 $11,065 $10,706
Dec-1995 $11,307 $11,214 $10,728
Mar-1996 $11,365 $11,326 $10,881
Apr-1996 $11,370 $11,340 $10,924
Value on 4/30/96:
$11,370 Tax-Exempt Short-Term
$11,340 Merrill Lynch Muni (0-3 Year) Index
$10,924 Consumer Price Index*
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
*Source: Lipper Analytical Services, Inc.
10
April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
TAX-EXEMPT INTERMEDIATE-TERM
Tax-Exempt Intermediate-Term had a total return of 1.14% during the six
months ended April 30, 1996, compared to the 1.58% return for the fund's
benchmark, the Lehman Brothers Five-Year General Obligation Index.
We kept the fund's average maturity fairly steady at around 7.5 years for
most of the six-month period. This longer average maturity enabled the fund to
reap greater price gains as interest rates fell during the fourth quarter of
1995. When interest rates rose abruptly in early 1996, we began to shorten the
fund's average maturity, and it ended the period at 7.3 years.
The fund continued to hold about two-thirds of its portfolio in AAA-rated
securities. Much of the intermediate-term municipal market consists of insured
securities (which carry a AAA rating), and obtaining secondary insurance has
become increasingly less expensive. As a result, we were able to maintain a high
degree of credit quality in the fund's portfolio without giving up much yield.
Looking ahead, we expect municipal bond returns over the next six months to
come primarily from coupon interest. With this outlook in mind, we plan to add
more higher-yielding securities to the fund's portfolio to enhance the fund's
interest income. We also intend to keep the fund's average maturity near its
current level.
QUALITY DIVERSIFICATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
(Moody's ratings) % of fund investments
AAA 69%
AA 14%
A 14%
BBB 3%
---
100%
===
WEIGHTED AVERAGE MATURITY (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 7.3
Weighted Average maturity indicates the average time until the principal on
the Fund's bonds is expected to be repaid, weighted by dollar amount.
DURATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 5.5
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of April 30, 1996)
TAX-EXEMPT LEHMAN 5-YEAR GEN.
INTERMEDIATE-TERM OBLIGATION INDEX
----------------- -----------------
1 Year 6.59% 7.19%
5 Year 6.34% 6.70%
Inception 5.90% 6.36%
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of April 30, 1996)
Other Revenue 35%
General Obligation 21%
Hospital Revenue 14%
Water & Sewer Revenue 11%
Electric Facility Revenue 9%
Educational Facility Revenue 6%
Housing Revenue 3%
Variable Rate Demand Obligations 1%
Percent of fund investments
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND
$10,000 investment made on 3/2/87
(Inception date)
Lehman 5-Year
Tax-Exempt General Obligation
Intermediate-Term Index CPI*
$10,000 $10,000 $10,000
Mar-1987 $9,958 $9,943 $10,045
Jun-1987 $9,856 $9,852 $10,171
Sep-1987 $9,720 $9,649 $10,299
Dec-1987 $10,036 $10,017 $10,338
Mar-1988 $10,235 $10,328 $10,436
Jun-1988 $10,402 $10,371 $10,571
Sep-1988 $10,521 $10,489 $10,732
Dec-1988 $10,640 $10,553 $10,795
Mar-1989 $10,630 $10,524 $10,956
Jun-1989 $10,964 $11,018 $11,117
Sep-1989 $11,070 $11,141 $11,198
Dec-1989 $11,349 $11,474 $11,296
Mar-1990 $11,394 $11,529 $11,529
Jun-1990 $11,575 $11,787 $11,636
Sep-1990 $11,700 $11,912 $11,888
Dec-1990 $12,062 $12,307 $11,986
Mar-1991 $12,316 $12,572 $12,094
Jun-1991 $12,505 $12,792 $12,184
Sep-1991 $12,885 $13,246 $12,291
Dec-1991 $13,275 $13,690 $12,353
Mar-1992 $13,348 $13,679 $12,479
Jun-1992 $13,720 $14,124 $12,561
Sep-1992 $13,976 $14,475 $12,659
Dec-1992 $14,228 $14,705 $12,712
Mar-1993 $14,581 $15,079 $12,864
Jun-1993 $14,925 $15,435 $12,936
Sep-1993 $15,305 $15,768 $12,998
Dec-1993 $15,518 $15,962 $13,061
Mar-1994 $14,969 $15,459 $13,186
Jun-1994 $15,142 $15,667 $13,257
Sep-1994 $15,262 $15,793 $13,383
Dec-1994 $15,198 $15,741 $13,410
Mar-1995 $15,832 $16,380 $13,563
Jun-1995 $16,194 $16,798 $13,662
Sep-1995 $16,575 $17,257 $13,725
Dec-1995 $17,011 $17,572 $13,752
Mar-1996 $16,927 $17,629 $13,949
Apr-1996 $16,908 $17,607 $14,003
Value on 4/30/96:
$16,908 Tax-Exempt Intermediate-Term
$17,607 Lehman 5-Year General Obligation Index
$14,003 Consumer Price Index*
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
*Source: Lipper Analytical Services, Inc.
11
- --------------------------------------------------------------------------------
TAX-EXEMPT LONG-TERM
Tax-Exempt Long-Term had a total return of 0.20% during the six months
ended April 30, 1996, compared to the 1.11% return for the fund's benchmark, the
Lehman Brothers Municipal Bond Index.
We maintained the fund's average maturity at around 18.5 years for most of
the six-month period. This longer average maturity enabled the fund to reap
greater price gains as interest rates fell during the fourth quarter of 1995.
However, when interest rates rose abruptly in early 1996, we shortened the
fund's average maturity--slightly at first, but then more aggressively. By the
end of the period, the fund's average maturity was around 17 years.
The fund continued to hold approximately 60% of its portfolio in AAA-rated
securities. During the six-month period, strong demand for long-term,
lower-rated securities caused their yield advantage to narrow. We felt that the
yield gain from these lower-rated securities wasn't enough compensation for the
greater credit risk.
Looking ahead, we expect municipal bond returns over the next six months to
come primarily from coupon interest. With this outlook in mind, we will continue
to monitor lower-rated securities, taking advantage of any opportunities to
boost the fund's interest income. We also intend to keep the fund's average
maturity near its current level.
QUALITY DIVERSIFICATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
(Moody's ratings) % of fund investments
AAA 59%
AA 29%
A 10%
BBB 2%
---
100%
===
WEIGHTED AVERAGE MATURITY (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 16.9
Weighted average maturity indicates the average time until the principal on
the Fund's bonds is expected to be repaid, weighted by dollar amount.
DURATION (as of April 30, 1996)
- --------------------------------------------------------------------------------
Years 8.2
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
(as of April 30, 1996)
TAX-EXEMPT LEHMAN MUNI
LONG-TERM BOND INDEX
---------- -----------
1 Year 7.09% 7.95%
5 Year 7.21% 7.73%
Inception 6.92% 7.44%
- --------------------------------------------------------------------------------
ASSET ALLOCATION (as of April 30, 1996)
[pie chart]
Other Revenue 31%
General Obligation 27%
Electric Facility Revenue 10%
Water & Sewer Revenue 10%
Variable Rate Demand Obligations 7%
Educational Facility Revenue 4%
Industrial Development Revenue 4%
Hospital Revenue 4%
Housing Revenue 2%
Temporary Cash Investments 1%
Percent of fund investments.
- --------------------------------------------------------------------------------
$10,000 OVER LIFE OF FUND
[mountain graph]
$10,000 investment made on 3/2/87
(Inception date)
Tax-Exemppt Lehman Muni
Long-Term Bond Index CPI*
$10,000 $10,000 $10,000
Mar-1987 $9,962 $9,894 $10,045
Jun-1987 $9,562 $9,625 $10,171
Sep-1987 $9,179 $9,385 $10,299
Dec-1987 $9,852 $9,805 $10,338
Mar-1988 $10,094 $10,142 $10,436
Jun-1988 $10,289 $10,339 $10,571
Sep-1988 $10,572 $10,604 $10,732
Dec-1988 $10,872 $10,802 $10,795
Mar-1989 $10,919 $10,873 $10,956
Jun-1989 $11,570 $11,517 $11,117
Sep-1989 $11,470 $11,525 $11,198
Dec-1989 $11,910 $11,967 $11,296
Mar-1990 $11,821 $12,021 $11,529
Jun-1990 $12,124 $12,302 $11,636
Sep-1990 $12,017 $12,310 $11,888
Dec-1990 $12,644 $12,840 $11,986
Mar-1991 $12,838 $13,131 $12,094
Jun-1991 $13,054 $13,412 $12,184
Sep-1991 $13,594 $13,933 $12,291
Dec-1991 $14,163 $14,400 $12,353
Mar-1992 $14,175 $14,443 $12,479
Jun-1992 $14,713 $14,991 $12,561
Sep-1992 $15,080 $15,389 $12,659
Dec-1992 $15,240 $15,670 $12,712
Mar-1993 $15,786 $16,251 $12,864
Jun-1993 $16,282 $16,782 $12,936
Sep-1993 $16,863 $17,349 $12,998
Dec-1993 $17,092 $17,592 $13,061
Mar-1994 $16,159 $16,627 $13,186
Jun-1994 $16,267 $16,809 $13,257
Sep-1994 $16,368 $16,925 $13,383
Dec-1994 $16,137 $16,683 $13,410
Mar-1995 $17,215 $17,863 $13,563
Jun-1995 $17,577 $18,293 $13,662
Sep-1995 $18,065 $18,818 $13,725
Dec-1995 $19,122 $19,596 $13,752
Mar-1996 $18,596 $19,360 $13,949
Apr-1996 $18,460 $19,304 $14,003
Value on 4/30/96:
$18,460 Tax-Exempt Long-Term
$19,304 Lehman Muni Bond Index
$14,003 Consumer Price Index*
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
*Source: Lipper Analytical Services, Inc.
12
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS April 30, 1996 (Unaudited)
CASH RESERVE
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
COMMERCIAL PAPER***
AGRICULTURE--0.9%
$ 12,400 Cargill Financial Services
Corp., 5.25%, 7-9-96
(Acquired 11-7-95;
Cost $11,942)+ $ 12,270
----------
AUTOMOBILES & AUTO PARTS--2.5%
33,200 Ford Motor Credit Co.,
5.29%, 5-16-96 33,127
----------
BANKING--3.1%
11,800 Queensland Alumina Ltd.,
5.29%, 5-10-96 11,785
30,330 Toronto-Dominion Bank,
5.25%-5.29%, 6-4-96
through 6-24-96 30,135
----------
41,920
----------
CHEMICALS & RESINS--3.8%
24,000 Ciba-Geigy Corp., 5.30%-5.33%,
5-6-96 through 5-20-96 23,968
27,500 du Pont (E.I.) de Nemours
& Co., 5.27%, 8-1-96
(Acquired 8-10-95;
Cost $26,000)+ 27,113
----------
51,081
----------
COMMUNICATIONS SERVICES--3.7%
50,000 Ameritech Capital Funding
Corp., 5.25%, 6-24-96
through 7-3-96 49,549
----------
DIVERSIFIED COMPANIES--1.1%
15,000 General Electric Capital Corp.,
5.29%, 5-23-96 14,952
----------
EDUCATION--2.4%
17,000 Stanford University,
5.25%, 6-17-96 16,884
15,000 Yale University, 5.20%, 5-1-96 15,000
----------
31,884
----------
ELECTRICAL & ELECTRONIC
COMPONENTS--1.7%
23,500 Siemens Corp., 5.29%,
5-24-96 through 5-30-96 23,418
----------
ENERGY--0.9%
1,900 Koch Industries Inc.,
5.35%, 5-1-96 (Acquired
4-30-96; Cost $1,900)+ 1,900
9,675 Mobil Australia Finance Co.,
5.29%, 5-8-96
(Acquired 4-4-96;
Cost $9,627)+ 9,665
----------
11,565
----------
FINANCIAL SERVICES--12.2%
40,200 American Express Credit Corp.,
5.20%-5.29%, 5-2-96
through 6-3-96 40,146
25,000 Goldman Sachs Group, L.P.,
5.29%, 5-16-96
through 5-24-96 24,934
23,000 Hitachi Credit America Corp.,
5.25%, 6-14-96
through 7-10-96 22,819
33,400 Merrill Lynch & Co. Inc.,
5.29%, 5-20-96 33,307
43,400 Morgan Stanley Group, Inc.,
5.29%, 5-17-96
through 5-21-96 43,290
----------
164,496
----------
FOOD & BEVERAGE--2.7%
17,100 Coca-Cola Co., 5.20%-5.29%,
5-3-96 through 5-17-96 17,074
20,000 Nestle Holdings, Inc., 5.20%,
5-3-96 19,994
----------
37,068
----------
GENERAL HARDWARE--2.7%
36,500 Vermont American Corp.,
5.29%, 5-14-96 (Acquired
4-2-96; Cost $36,274)+ 36,430
----------
INDUSTRIAL EQUIPMENT
& MACHINERY--2.3%
31,300 Dover Corp., 5.29%, 5-8-96
through 5-24-96
(Acquired 4-4-96 through
4-25-96; Cost $31,153)+ 31,228
----------
See Notes to Financial Statements
13
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
CASH RESERVE (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
INSURANCE--8.1%
$ 8,700 American Family Financial
Services Inc., 5.29%, 6-7-96 $ 8,653
62,916 Metlife Funding Inc.,
5.29%, 5-17-96
through 6-13-96 62,608
8,000 SAFECO Credit Co. Inc.,
5.29%, 5-23-96 7,974
31,000 USAA Capital Corp., 5.29%,
5-9-96 through 5-13-96 30,954
----------
110,189
----------
METALS & MINING--2.5%
34,200 RTZ America Inc., 5.25%-5.29%,
5-21-96 through 6-27-96
(Acquired 4-4-96 through
4-11-96; Cost $33,960)+ 34,073
----------
MOTION PICTURE
& VIDEOTAPE PRODUCTION--0.7%
9,500 Disney (Walt), 5.25%, 6-18-96 9,433
----------
OFFICE EQUIPMENT & SUPPLIES--3.0%
41,400 Pitney Bowes Credit Corp.,
5.29%, 5-22-96
through 6-11-96 41,203
----------
PHARMACEUTICALS--7.4%
25,000 Bayer AG, 5.25%, 7-12-96 24,737
53,500 Sandoz Corp., 5.25%-5.29%,
5-7-96 through 7-1-96
(Acquired 4-3-96 through
4-29-96; Cost $53,162)+ 53,298
22,700 Warner-Lambert Co., 5.20%-5.25%,
5-3-96 through 6-17-96 22,593
----------
100,628
----------
PUBLISHING--1.8%
18,000 Gannett Co., Inc., 5.29%, 5-21-96 17,947
3,100 Knight-Ridder, Inc., 5.25%, 7-11-96
(Acquired 4-18-96;
Cost $3,062)+ 3,068
3,400 Reed Elsevier Inc., 5.29%, 6-7-96
(Acquired 4-29-96;
Cost $3,381)+ 3,381
----------
24,396
SOVEREIGN GOVERNMENTS
& AGENCIES--3.9%
18,500 Royal Bank of Canada,
5.25%, 6-17-96 18,372
35,000 Sweden (Kingdom of), 5.25%,
7-8-96 through 11-15-96 34,460
----------
52,832
----------
TELECOMMUNICATIONS
& EQUIPMENT--2.8%
25,000 Lucent Technologies, Inc.,
5.29%, 5-16-96 24,944
13,000 U.S. West Communications, Inc.,
5.27%, 7-29-96 12,831
----------
37,775
----------
TRANSPORTATION & EQUIPMENT--0.7%
10,000 Paccar Financial Corp., 5.25%-5.29%,
6-13-96 through 6-14-96 9,937
----------
UTILITIES (ELECTRIC)--1.9%
26,000 National Rural Utilities
Cooperative Finance Corp.,
5.29%, 5-7-96 25,977
----------
TOTAL COMMERCIAL PAPER--72.8% 985,431
----------
CERTIFICATES OF DEPOSIT--5.6%
17,000 Abbey National PLC,
5.72%, 10-21-96 17,000
30,000 ABN Amro Bank Chicago,
5.54%, 11-6-96 30,002
11,000 Deutsche Bank Financial,
5.07%, 6-7-96 10,999
17,700 Societe Generale,
5.37%, 6-5-96 17,700
----------
75,701
----------
MUNICIPAL OBLIGATIONS--2.8%
38,500 Orange County, CA, VRN,
5.44% plus bonus of .95%,
5-1-96, resets monthly
off the 1-month LIBOR,
final maturity 6-30-96++ 38,500
----------
OTHER CORPORATE DEBT--4.9%
7,000 Abbey National Treasury,
VRN, 5.35%, 5-21-96,
resets monthly off the
1-month LIBOR minus .10%,
final maturity 2-21-97 6,997
----------
See Notes to Financial Statements
14
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
CASH RESERVE (CONTINUED)
$ 15,000 Bayerische Landesbank, VRN,
5.29%, 5-1-96, resets monthly
off the 1-month LIBOR minus
.15%, final maturity 3-3-97 $ 14,986
10,000 General Electric Capital,
7.85%, 7-17-96 10,049
8,720 Toyota Motor Credit, VRN,
5.49%, 5-1-96, resets daily
off the Fed Funds rate plus
.24%, final maturity 8-30-96 8,724
25,000 Wachovia Bank of NC, VRN, 5.31%,
5-7-96, resets monthly
off the 1-month LIBOR minus
.125%, final maturity 1-3-97 24,984
----------
65,740
----------
U.S. GOVERNMENT
AGENCY DISCOUNT NOTES***--1.0%
13,500 FNMA Discount Note,
5.16%, 11-20-96 13,106
----------
OTHER U.S. GOVERNMENT
AGENCY SECURITIES***--12.9%
40,000 FFCB, VRN, 5.29%, 5-17-96,
resets monthly off the
1-month LIBOR minus .20%,
final maturity 3-17-97 39,959
18,100 FNMA, 5.59%, 7-1-96 18,097
24,500 FNMA, 5.76%, 9-3-96 24,500
27,500 FNMA, MTN, 5.60%, 11-1-96 27,500
25,000 FNMA, 5.31%, 12-11-96 25,063
30,000 FNMA, MTN, VRN, 5.42%,
5-1-96, resets daily off the
Fed Funds rate plus .01%,
final maturity 5-5-97 29,973
10,000 SLMA, MTN, VRN, 5.48%, 7-4-96,
resets quarterly off the 3-month
LIBOR plus .01%, final maturity 10-4-96 10,000
----------
175,092
----------
TOTAL INVESTMENT SECURITIES--100.0% $ 1,353,570
==========
U.S. GOVERNMENTS SHORT-TERM
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
U.S. TREASURY SECURITIES***--71.8%
$ 5,715 U.S. Treasury Notes,
8.00%, 1-15-97 $ 5,812
21,600 U.S. Treasury Notes,
7.50%, 1-31-97 21,904
12,400 U.S. Treasury Notes,
6.75%, 2-28-97 12,515
21,400 U.S. Treasury Notes,
8.50%, 4-15-97 21,959
38,440 U.S. Treasury Notes,
6.50%, 4-30-97 38,745
18,200 U.S. Treasury Notes,
6.50%, 5-15-97 18,346
28,700 U.S. Treasury Notes,
6.75%, 5-31-97 29,001
10,500 U.S. Treasury Notes,
6.125%, 5-31-97 10,543
14,000 U.S. Treasury Notes,
8.50%, 7-15-97 14,434
24,800 U.S. Treasury Notes,
5.875%, 7-31-97 24,816
18,000 U.S. Treasury Notes,
6.50%, 8-15-97 18,141
25,580 U.S. Treasury Notes,
7.25%, 2-15-98 26,098
13,180 U.S. Treasury Notes,
5.25%, 7-31-98 12,949
7,115 U.S. Treasury Notes,
4.75%, 8-31-98 6,908
(Cost $261,624) ----------
262,171
----------
MORTGAGE-BACKED
SECURITIES*--26.2%
13,000 FHLMC Series 1472 E PAC
REMIC, 6.25%, 2-15-99 12,861
6,650 FHLMC Series 1822 B PAC
REMIC, 6.50%, 9-15-99 6,607
6,500 FHLMC Series 1836 C PAC
REMIC, 6.25%, 10-15-99 6,406
14,935 FHLMC Series 1834 A PAC
REMIC, 7.00%, 5-15-00 14,887
9,759 FHLMC Gold Pool #334108,
6.00%, 7-25-01 9,256
15,107 FHLMC Gold Pool #G10418,
6.50%, 3-15-02 14,676
9,000 FHLMC Series 1684 F PAC
REMIC, 5.75%, 3-15-02 8,452
See Notes to Financial Statements
15
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
U.S. GOVERNMENTS SHORT-TERM (CONT.)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
$ 12,319 FHLMC Gold Pool #E63092,
6.00%, 8-15-02 $ 11,682
5,000 FNMA 93 Series 185 PB PAC
REMIC, 4.90%, 2-25-97 4,945
6,343 FNMA Pool #190518,
6.00%, 5-25-01 6,050
(Cost $98,147) ----------
95,822
----------
TEMPORARY
CASH INVESTMENTS--2.0%
Repurchase Agreement
(J. P. Morgan Securities, Inc.),
5.30%, due 5-1-96; collateralized
by $5,797 par value U.S. Treasury
Bonds, 9.125%, due 5-15-18
(Delivery value $7,204) 7,203
(Cost $7,203) ----------
TOTAL INVESTMENT SECURITIES--100.0% $ 365,196
(Cost $366,974) ==========
U.S. GOVERNMENTS INTERMEDIATE-TERM
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
U.S. TREASURY SECURITIES***--71.3%
$ 305 U.S. Treasury Notes,
7.875%, 1-15-98 $ 314
1,160 U.S. Treasury Notes,
8.25%, 7-15-98 1,211
1,270 U.S. Treasury Notes,
8.00%, 8-15-99 1,333
1,625 U.S. Treasury Notes,
6.875%, 8-31-99 1,653
485 U.S. Treasury Notes,
7.125%, 9-30-99 497
500 U.S. Treasury Notes,
6.125%, 7-31-00 495
975 U.S. Treasury Notes,
6.25%, 8-31-00 969
1,000 U.S. Treasury Notes,
6.125%, 9-30-00 990
725 U.S. Treasury Notes,
5.75%, 10-31-00 707
600 U.S. Treasury Notes,
5.50%, 12-31-00 578
1,395 U.S. Treasury Notes,
7.50%, 11-15-01 1,460
600 U.S. Treasury Notes,
7.50%, 5-15-02 630
960 U.S. Treasury Notes,
6.375%, 8-15-02 952
1,060 U.S. Treasury Notes,
11.625%, 11-15-04 1,396
1,000 U.S. Treasury Notes,
6.50%, 8-15-05 986
1,100 U.S. Treasury Notes,
5.875%, 11-15-05 1,038
905 U.S. Treasury Notes,
9.125%, 5-15-09 1,033
830 U.S. Treasury Notes,
9.25%, 2-15-16 1,021
(Cost $17,652) ----------
17,263
----------
MORTGAGE-BACKED
SECURITIES*--25.1%
300 FHLMC Series 1576 PD PAC
REMIC, 5.50%, 2-15-98 295
324 FHLMC Series 1702-B TA PAC
REMIC, 5.85%, 4-15-98 320
300 FHLMC Series 1684 D PAC
REMIC, 5.35%, 9-15-98 292
207 FHLMC Pool #E00279,
6.50%, 4-15-01 202
585 FHLMC Gold Pool #G10418,
6.50%, 3-15-02 568
1,000 FHLMC Series 1684 F PAC
REMIC, 5.75%, 3-15-02 939
1,093 FHLMC Gold Pool #E63092,
6.00%, 8-15-02 1,036
536 FHLMC Gold Pool #G10461,
5.50%, 8-15-02 498
452 FNMA Pool #190518,
6.00%, 5-25-01 431
1,485 FNMA Series 1993-5 G PAC
REMIC, 7.15%, 6-25-01 1,482
(Cost $6,220) ----------
6,063
----------
See Notes to Financial Statements
16
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
U.S. GOVERNMENTS INTERMEDIATE-TERM (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
TEMPORARY
CASH INVESTMENTS--3.6%
Repurchase Agreement
(Goldman Sachs & Co., Inc.), 5.25%,
due 5-1-96; collateralized by $785
par value U.S. Treasury Bonds, 8.125%,
due 8-15-21 (Delivery value $870) $ 870
(Cost $870) ----------
TOTAL INVESTMENT SECURITIES--100.0% $ 24,196
(Cost $24,742) ==========
LIMITED-TERM BOND
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
U.S. TREASURY SECURITIES***--34.5%
$ 900 U.S. Treasury Notes,
7.50%, 1-31-97 $ 912
200 U.S. Treasury Notes,
5.625%, 6-30-97 200
700 U.S. Treasury Notes,
6.125%, 3-31-98 701
200 U.S. Treasury Notes,
5.50%, 11-15-98 197
200 U.S. Treasury Notes,
5.00%, 2-15-99 194
200 U.S. Treasury Notes,
5.75%, 10-31-00 195
100 U.S. Treasury Notes,
5.625%, 2-28-01 97
100 U.S. Treasury Notes,
6.375%, 3-31-01 100
(Cost $2,612) ----------
2,596
----------
U.S. GOVERNMENT AGENCY
DISCOUNT NOTES***--1.3%
100 FNMA Discount Note,
5.15%, 5-1-96 100
(Cost $100) ----------
MORTGAGE-BACKED
SECURITIES*--12.3%
564 FHLMC Series 1239 E PAC
REMIC, 6.80%, 10-15-96 565
365 FNMA Series 1991-21 G PAC
REMIC, 6.00%, 8-25-97 363
(Cost $927) ----------
928
----------
ASSET-BACKED SECURITIES*--5.3%
200 Standard Credit Card Trust,
Series 1995-2 Cl A,
8.625%, 12-7-99 204
200 United Companies Financial
Corp. Home Equity Loan,
Series 1995-D1 Cl A2,
6.20%, 11-10-98 196
(Cost $400) ----------
400
----------
CORPORATE BONDS
AUTOMOBILES & AUTO PARTS--6.1%
200 Ford Motor Credit Co.,
7.75%, 10-1-99 207
250 General Motors Acceptance
Corp., MTN, 7.30%, 2-2-98 254
----------
461
----------
BANKING--5.5%
200 Chase Manhattan Corp.,
8.80%, 2-1-00 204
200 Golden West Financial Corp.,
9.15%, 5-23-98 211
----------
415
----------
FINANCIAL SERVICES--11.9%
100 Commercial Credit Group Inc.,
5.75%, 7-15-00 96
275 Lehman Brothers Holdings Inc.,
MTN, 8.875%, 2-15-00 292
200 Paine Webber Group Inc., MTN,
7.96%, 4-28-00 206
300 Salomon Brothers Inc.,
VRN, 6.488%, 5-15-96, resets
monthly off the 1-month
LIBOR plus 1.00%,
final maturity 2-27-97 300
----------
894
----------
INSURANCE--2.7%
200 American General Corp.,
7.70%, 10-15-99 206
----------
PAPER & FOREST PRODUCTS--2.7%
200 Boise Cascade Co., 7.375%, 8-1-97 202
----------
REAL ESTATE--2.6%
200 Spieker Properties Inc.,
6.80%, 12-15-01 193
----------
See Notes to Financial Statements
17
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
LIMITED-TERM BOND (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
RETAIL (GENERAL MERCHANDISE)--1.4%
$ 100 Dayton Hudson Corp.,
9.25%, 3-1-01* $ 107
----------
STEEL--2.7%
200 USX Corp., MTN, 7.75%, 1-21-98 203
----------
TOBACCO PRODUCTS--4.0%
100 Philip Morris Companies Inc.,
7.50%, 3-15-97 101
200 Philip Morris Companies Inc.,
7.375%, 2-15-99 204
----------
305
----------
UTILITIES--2.6%
200 Cincinnati Gas & Electric Co.,
5.80%, 2-15-99 196
----------
TOTAL CORPORATE BONDS--42.2% 3,182
(Cost $3,175) ----------
TEMPORARY
CASH INVESTMENTS--4.4%
Repurchase Agreement
(Goldman Sachs & Co., Inc.),
5.25%, due 5-1-96;
collateralized by
$255 par value U.S. Treasury Bonds,
13.375%, due 8-15-01
(Delivery value $329)
(Cost $329) 329
----------
TOTAL INVESTMENT SECURITIES--100.0% $ 7,535
(Cost $7,543) ==========
INTERMEDIATE-TERM BOND
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
U.S. TREASURY SECURITIES***--35.5%
$ 750 U.S. Treasury Notes,
7.50%, 1-31-97 $ 761
1,500 U.S. Treasury Notes,
6.125%, 3-1-98 1,502
300 U.S. Treasury Notes,
5.50%, 11-15-98 295
350 U.S. Treasury Notes,
5.00%, 2-15-99 340
450 U.S. Treasury Notes,
5.75%, 10-31-00 439
650 U.S. Treasury Notes,
5.625%, 11-30-00 630
300 U.S. Treasury Notes,
5.625%, 2-28-01 290
400 U.S. Treasury Notes,
6.375%, 3-31-01 399
100 U.S. Treasury Notes,
5.75%, 8-15-03 95
400 U.S. Treasury Notes,
6.50%, 8-15-05 395
300 U.S. Treasury Notes,
5.875%, 11-15-05 283
----------
(Cost $5,512) 5,429
----------
MORTGAGE-BACKED
SECURITIES*--5.3%
829 FHLMC Pool #E00279,
6.50%, 4-15-01 808
(Cost $832) ----------
ASSET-BACKED SECURITIES*--3.6%
300 Standard Credit Card Trust,
Series 1995-2 Cl A,
8.625%, 12-7-99 306
250 United Companies Financial
Corp. Home Equity Loan,
Series 1995-D1 Cl A-2,
6.20%, 11-10-98 245
----------
(Cost $550) 551
----------
CORPORATE BONDS
AUTOMOBILES & AUTO PARTS--3.5%
200 Ford Motor Credit Co.,
7.75%, 10-1-99 207
300 General Motors Corp. Global
Notes, 9.625%, 12-1-00 332
----------
539
----------
BANKING--11.8%
500 BankAmerica Corp.,
7.75%, 7-15-02 519
200 Chase Manhattan Corp.,
8.80%, 2-1-00 204
See Notes to Financial Statements
18
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
INTERMEDIATE-TERM BOND (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
$ 350 First Union National Bank
N C Charlotte, 6.18%,
2-15-36 $ 325
250 Merita Bank LTD,
6.50%, 1-15-06 234
300 National Bank of Canada,
Series B, 8.125%, 8-15-04 313
200 Wells Fargo & Co.,
8.375%, 5-15-02 215
----------
1,810
----------
COMMUNICATIONS SERVICES--1.3%
200 Tele-Communications, Inc.,
8.25%, 1-15-03 202
----------
DIVERSIFIED COMPANIES--1.9%
300 Hanson Overseas BV,
6.75%, 9-15-05 286
----------
ENERGY--4.8%
250 Coastal Corp., 10.25%, 10-15-04 294
200 Occidental Petroleum Corp.,
10.125%, 11-15-01 229
200 Texaco Capital Inc., 9.45%, 3-1-00 219
----------
742
----------
FINANCIAL SERVICES--5.5%
100 Commercial Credit Group Inc.,
5.75%, 7-15-00 96
200 Merrill Lynch & Co. Inc.,
7.00%, 3-15-06 196
250 Norwest Financial Inc.,
6.25%, 11-1-02 242
300 Paine Webber Group Inc., MTN,
7.96%, 4-28-00 309
----------
843
----------
INSURANCE--4.8%
200 American General Corp.,
7.70%, 10-15-99 206
300 Delphi Financial Group, Inc.,
8.00%, 10-1-03 285
250 Nationwide Mutual Insurance Co.,
6.50%, 2-15-04 (Acquired
2-9-96; Cost $252)+ 237
----------
728
----------
PUBLISHING--1.6%
250 Time Warner Inc.,
8.11%, 8-15-06 252
----------
REAL ESTATE--1.9%
300 Spieker Properties Inc.,
6.80%, 12-15-01 289
----------
RETAIL (GENERAL MERCHANDISE)--5.7%
300 Dayton Hudson Corp.,
9.25%, 3-1-01*, 322
200 Sears, Roebuck & Co., Inc.,
MTN, 8.29%, 6-10-02 212
125 Sears, Roebuck & Co., Inc.,
MTN, 8.23%, 10-21-04 133
200 Wal-Mart Stores, Inc.,
6.75%, 5-15-02 200
----------
867
----------
STEEL--2.0%
300 USX Corp., MTN, 7.75%, 1-21-98 305
----------
TOBACCO PRODUCTS--2.0%
100 Philip Morris Companies Inc.,
7.50%, 3-15-97 101
200 Philip Morris Companies Inc.,
7.375%, 2-15-99 204
----------
305
----------
UTILITIES--3.6%
250 Idaho Power Co., 8.65%, 1-1-00 266
300 Pacific Gas & Electric Co.,
Series 93C, 6.25%, 8-1-03 285
----------
551
----------
TOTAL CORPORATE BONDS--50.4% 7,719
(Cost $7,870) ----------
SOVEREIGN GOVERNMENTS
& AGENCIES--3.9%
400 China Light & Power Co. Ltd.,
7.50%, 4-15-06 394
200 Hydro-Quebec, 7.375%, 2-1-03 203
----------
(Cost $603) 597
----------
TEMPORARY
CASH INVESTMENTS--1.3%
Repurchase Agreement
(Goldman Sachs & Co., Inc.), 5.25%,
due 5-1-96; collateralized by
$160 par value U.S. Treasury
Bonds, 10.75%, due 5-15-03
(Delivery value $195) 195
(Cost $195) ----------
TOTAL INVESTMENT SECURITIES--100.0% $ 15,299
(Cost $15,562) ==========
See Notes to Financial Statements
19
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
LIMITED-TERM BOND
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
U.S. TREASURY SECURITIES***--25.7%
$ 5,000 U.S. Treasury Notes,
5.625%, 6-30-97 $ 4,993
4,000 U.S. Treasury Notes,
5.875%, 7-31-97 4,003
4,000 U.S. Treasury Notes,
5.75%, 9-30-97 3,992
5,000 U.S. Treasury Notes,
5.625%, 10-31-97 4,979
2,000 U.S. Treasury Notes,
5.125%, 2-28-98 1,969
3,000 U.S. Treasury Notes,
5.75%, 10-31-00 2,925
6,000 U.S. Treasury Notes,
5.50%, 12-31-00 5,782
2,000 U.S. Treasury Notes,
5.25%, 1-31-01 1,908
5,000 U.S. Treasury Notes,
6.375%, 3-31-01 4,988
----------
(Cost $35,975) 35,539
----------
U.S. GOVERNMENT AGENCIES***--1.3%
2,000 Tennesse Valley Authority,
6.875%, 12-15-43 1,773
(Cost $1,854) ----------
MORTGAGE-BACKED
SECURITIES*--12.7%
1,374 FHLMC Series 19 E PAC REMIC,
8.00%, 3-15-98 1,384
1,000 FHLMC Series 116 F PAC REMIC,
8.50%, 8-15-99 1,041
1,761 FNMA 91 Series 21 G PAC REMIC,
6.00%, 8-25-97 1,750
1,398 FNMA 90 Series 88 H PAC REMIC,
7.75%, 9-25-97 1,416
1,346 FNMA 89 Series 35 G Sequential
Payer REMIC, 9.50%, 4-15-01 1,399
4,932 FNMA Pool #250452,
6.50%, 2-25-06 4,633
6,034 GNMA Pool #313107,
7.00%, 6-15-05 5,859
----------
(Cost $17,258) 17,482
----------
CORPORATE BONDS
AEROSPACE & DEFENSE--1.5%
2,000 Boeing Co., 7.875%, 4-15-43 2,067
----------
AIRLINES--2.5%
3,500 Delta Air Lines Inc.,
Equipment Trust Certificates,
7.541%, 10-11-11 3,425
----------
AUTOMOBILES & AUTO PARTS--2.1%
3,000 Ford Motor Credit Co.,
7.75%, 6-15-43 2,955
----------
BANKING--9.7%
5,000 Citicorp Euro, 7.00%, 1-2-04 4,944
3,000 First Union Corp.,
8.77%, 11-15-04 3,154
5,000 National Bank of Canada,
Series B, 8.125%, 8-15-04 5,219
----------
13,317
----------
CHEMICALS & RESINS--4.6%
5,000 ARCO Chemical Co.,
10.25%, 11-1-10 6,306
----------
COMMUNICATIONS SERVICES--2.8%
4,000 Motorola Inc., 6.50%, 9-1-25 3,910
----------
ENERGY--4.2%
3,000 Coastal Corp., 10.25%, 10-15-04 3,525
2,000 Texaco Capital Inc., 8.625%, 4-1-32 2,262
----------
5,787
----------
FINANCIAL SERVICES--7.2%
4,000 Lehman Brothers Holdings Inc.,
6.625%, 11-15-00 3,930
3,000 Merrill Lynch & Co. Inc.,
7.00%, 3-15-06 2,940
3,000 Paine Webber Group Inc.,
MTN, 7.96%, 4-28-00 3,090
----------
9,960
----------
INSURANCE--3.8%
2,000 Delphi Financial Group, Inc.,
8.00%, 10-1-03 1,900
3,000 Lincoln National Corp.,
9.125%, 10-1-24 3,319
----------
5,219
----------
See Notes to Financial Statements
20
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
PAPER & FOREST PRODUCTS--2.5%
$ 2,000 Boise Cascade Co.,
9.45%, 11-1-09 $ 2,275
1,000 Georgia-Pacific Corp.,
9.50%, 12-1-11 1,140
----------
3,415
----------
PUBLISHING--1.4%
2,000 Time Warner Inc., 6.85%, 1-15-26 1,932
----------
RETAIL (GENERAL MERCHANDISE)--4.2%
5,000 Sears, Roebuck & Co., Inc.,
9.375%, 11-1-11 5,806
----------
STEEL--2.8%
4,000 USX Corp., 7.20%, 2-15-04 3,920
----------
UTILITIES--6.5%
5,000 Pacific Gas & Electric Co.,
5.50%, 6-1-99 4,838
4,000 Union Electric Co., 7.65%, 7-15-03 4,205
----------
9,043
----------
TOTAL CORPORATE BONDS--55.8% 77,062
(Cost $77,531) ----------
SOVEREIGN GOVERNMENTS
& AGENCIES--4.4%
3,000 Hydro-Quebec, 8.05%, 7-7-24 3,195
3,000 Korea Electric Power,
6.375%, 12-1-03 2,858
----------
(Cost $6,269) 6,053
----------
TEMPORARY
CASH INVESTMENTS--0.1%
Repurchase Agreement (Goldman
Sachs & Co., Inc.), 5.25%, due
5-1-96; collateralized by
$120 par value U.S. Treasury
Bonds, 10.75%, due 5-15-03
(Delivery value $148) 148
(Cost $148) ----------
TOTAL INVESTMENT SECURITIES--100.0% $ 138,057
(Cost $139,035) ==========
TAX-EXEMPT SHORT-TERM
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
MUNICIPAL BONDS
ALABAMA--2.0%
$ 1,000 Alabama GO, 5.70%, 3-1-98 $ 1,028
ARIZONA--3.1%
1,000 Maricopa County Community
College District GO,
6.80%, 7-1-98 1,054
535 Tuscon Certificates
of Participation,
5.25%, 1-1-97 (Asset Guaranty) 540
----------
1,594
----------
CALIFORNIA--12.7%
1,190 California Educational
Facilities Auth. Rev.,
4.10%, 12-1-96 1,192
2,000 California GO, 11.00%, 3-1-98 2,238
2,000 Long Beach Harbor Rev.,
6.50%, 5-1-99 (MBIA) 2,110
1,000 Los Angeles Municipal
Improvement Corp.
Certificates of Participation,
4.50%, 6-1-96 1,001
----------
6,541
----------
COLORADO--1.9%
1,000 Denver Colorado City
& County Airport Rev.,
5.25%, 11-15-02 (MBIA) 1,004
----------
CONNECTICUT--4.0%
2,000 Connecticut State Special
Tax Obligation Rev.,
5.50%, 10-1-00 (FGIC) 2,078
----------
FLORIDA--2.4%
1,200 Florida Housing Finance
Agency Rev., 5.50%,
Mandatory Put 11-1-96 (FSA)** 1,212
----------
See Notes to Financial Statements
21
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
TAX-EXEMPT SHORT-TERM (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
GEORGIA--4.0%
$ 1,000 Gwinnett County Water
and Sewer Rev., 6.50%,
Prerefunded 8-1-98
at 102% of Par** $ 1,068
1,000 Metropolitan Atlanta
Rapid Transit Auth. Sales
Tax Rev., 6.80%, 7-1-96 1,005
----------
2,073
----------
GUAM--3.0%
1,000 Government of Guam GO,
5.50%, 8-15-97 1,017
500 Guam Power Auth. Rev.,
5.20%, 10-1-97 507
----------
1,524
----------
ILLINOIS--2.1%
1,015 Cook County GO,
5.75%, 11-15-99 (MBIA) 1,060
INDIANA--3.9%
1,960 Indiana Transportation
Finance Auth. Highway Rev.,
6.70%, 6-1-97 2,018
----------
LOUISIANA--2.9%
1,500 Louisiana Public Facilities
Auth. Rev. (Browning-
Ferris Project), 3.85%, 11-1-96 1,497
----------
MARYLAND--3.0%
1,500 Baltimore County GO,
5.00%, 8-1-01 1,536
----------
MICHIGAN--2.0%
500 Michigan Hospital Finance
Auth. Rev. (Genesys
Health Systems),
6.10%, 10-1-96 504
500 Michigan Hospital Finance
Auth. Rev.(Genesys
Health Systems),
6.40%, 10-1-97 512
----------
1,016
----------
MINNESOTA--4.6%
1,200 Minneapolis Hospital Rev.
(Lifespan Inc. - Abbot
Northwestern), 7.00%,
Prerefunded 12-1-99 at
102% of Par** 1,321
1,000 Minnesota GO, 6.40%, 8-1-98 1,049
----------
2,370
----------
NEVADA--2.0%
1,010 Washoe County Hospital
Facility Rev. (Washoe
Medical Center, Inc.),
4.55%, 6-1-96 (AMBAC) 1,011
----------
NEW JERSEY--3.5%
1,750 West Windsor Plainsboro GO,
5.25%, 12-1-02 (FGIC) 1,806
----------
NEW YORK--4.8%
1,000 New York State Certificates
of Participation,
5.50%, 9-1-96 1,004
1,000 New York State Dormitory
Auth. Lease Rev.,
4.875%, 7-1-00 994
445 Port Auth. of New York
and New Jersey Rev.
Consolidated Notes,
Series SS, 4.90%, 9-1-97 445
----------
2,443
----------
OREGON--5.2%
1,000 Oregon GO, 5.30%, 4-15-98 1,023
1,610 Washington County Unified
Sewer Agency Rev.,
4.80%, 10-1-98 (AMBAC) 1,630
----------
2,653
----------
PENNSYLVANIA--4.0%
2,000 Philadelphia Gas Works Rev.,
5.40%, 7-1-98 2,037
PUERTO RICO--2.5%
1,280 Puerto Rico Electric Power
Auth. Rev., 4.25%, 7-1-97 1,283
----------
See Notes to Financial Statements
22
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
SOUTH CAROLINA--2.1%
$ 1,000 Piedmont Municipal Power
Agency Electric Rev.,
6.00%, 1-1-02 $ 1,061
----------
TENNESSEE--2.6%
1,300 Metropolitan Nashville
Airport Rev., 6.125%,
7-1-98 (FGIC) 1,347
----------
TEXAS--9.8%
1,780 Brownsville Utility
System Rev., 5.00%,
9-1-00(AMBAC) 1,816
1,000 Colorado River Municipal
Water District Rev.,
8.50%, Prerefunded
1-1-01 at Par (AMBAC)** 1,160
1,000 Houston Hotel Occupancy
Tax Rev., 5.00%,
7-1-97 (FSA) 1,012
1,000 Texas Public Finance Auth. GO,
8.00%, 10-1-97 1,057
----------
5,045
----------
UTAH--3.2%
1,600 Utah GO, 5.50%, 7-1-98 1,648
----------
WASHINGTON--5.2%
1,680 Snohomish County Public
Utility District #1
Electric Rev.,
4.75%, 1-1-00 1,671
1,000 Washington Public Power
Supply System Rev.
(Nuclear Project #2),
3.75%, 7-1-97 996
----------
2,667
----------
WEST VIRGINIA--1.9%
1,000 West Virginia School
Building Auth. Capital
Improvement Rev.,
6.25%, 7-1-96 1,004
----------
TOTAL MUNICIPAL BONDS--98.4% 50,556
(Cost $50,278) ----------
SHORT-TERM TAX-EXEMPT SECURITIES
IOWA--1.4%
$ 700 Iowa Finance Auth.
Solid Waste Disposal Rev.,
4.15%, VRDO, 5-1-96,
resets daily, final
maturity 7-1-23
(LOC: Swiss Bank) 700
(Cost $700) ----------
TEMPORARY
CASH INVESTMENTS--0.2%
111 Units of Participation in
Provident Institutional Funds
(Muni Fund Portfolio) 111
(Cost $111) ----------
TOTAL INVESTMENT SECURITIES--100.0% $ 51,367
(Cost $51,089) ==========
TAX-EXEMPT INTERMEDIATE-TERM
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
MUNICIPAL BONDS
ALABAMA--2.0%
$ 1,525 City of Huntsville GO,
5.50%, 2-1-05 $ 1,576
----------
CALIFORNIA--1.3%
1,000 Central Valley Financing
Auth. Rev. (Carson
Ice - Generation Project),
5.00%, 7-1-98 1,001
----------
COLORADO--1.4%
1,000 Denver Sales Tax Rev.
(Major League Baseball
Stadium District),
6.10%, 10-1-01 (FGIC) 1,071
----------
CONNECTICUT--1.4%
1,040 Connecticut State Special
Tax Obligation Rev.,
6.10%, 10-1-01 1,110
----------
See Notes to Financial Statements
23
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
TAX-EXEMPT INTERMEDIATE-TERM (CONT.)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
DISTRICT OF COLUMBIA--5.2%
$ 1,750 District of Columbia GO,
4.65%, 6-1-02 (MBIA) $ 1,724
1,000 District of Columbia Hospital
Rev. (Medlantic Health
Care Group),
5.25%, 8-15-02 (MBIA) 1,021
1,275 Metropolitan Airport
Auth. General Rev.,
6.30%, 10-1-03 (MBIA) 1,375
----------
4,120
----------
FLORIDA--2.6%
1,000 Dade County Florida Seaport
Rev., 6.20%, 10-1-10 (MBIA) 1,077
1,000 Miami Beach Water and Sewer
Rev., 5.10%, 9-1-05 (FSA) 1,009
----------
2,086
----------
GEORGIA--2.7%
1,000 City of Atlanta Airport Facilities
Rev., 7.00%, 1-1-01 1,085
1,000 Metropolitan Atlanta Rapid
Transit Auth. Sales
Tax Rev., 6.05%, 7-1-01 1,058
----------
2,143
----------
ILLINOIS--5.6%
2,000 Chicago O'Hare International
Airport Rev., 5.00%,
1-1-00 (MBIA) 2,028
2,250 Illinois GO, 6.00%, 10-1-01 2,382
----------
4,410
----------
IOWA--1.2%
1,000 Iowa Finance Auth.
Rev., 4.90%, 6-15-05 986
----------
LOUISIANA--1.3%
1,000 Louisiana GO, 7.00%, 8-1-02 1,052
----------
MARYLAND--1.3%
1,000 Maryland Health and Higher
Education Facilities Auth. Rev.
(Francis Scott Key Hospital),
5.00%, 7-1-03 (FGIC) 1,009
----------
MASSACHUSETTS--9.6%
2,605 Massachusetts Bay
Transportation Auth. Rev.,
5.40%, 3-1-00 2,680
1,500 Massachusetts GO,
5.40%, 11-1-07 (MBIA) 1,530
2,000 Massachusetts Housing Finance
Agency Rev., 5.90%,
1-1-03 (AMBAC) 2,056
1,000 Massachusetts State Refunding
GO, 4.95%, 8-1-05 (AMBAC) 995
360 Massachusetts Water Resources
Auth. Rev., 6.90%, 4-1-97** 371
----------
7,632
----------
MISSISSIPPI--2.6%
2,000 Mississippi Hospital Equipment
and Facilities Auth. Rev.
(North Miss. Health Service),
5.00%, 5-15-00 (AMBAC) 2,023
----------
MISSOURI--2.6%
1,000 City of St. Louis Missouri Rev.
(Lambert International Airport),
4.75%, 7-1-01(FGIC) 990
1,000 Missouri Board of Public
Buildings Special Obligation
Rev., 6.30%, 12-1-05 1,060
----------
2,050
----------
NEBRASKA--2.6%
2,000 Nebraska Investment Finance
Auth. Hospital Rev.
(Methodist Health),
6.55%, 3-1-99 (MBIA) 2,109
----------
NEW JERSEY--8.8%
1,030 Atlantic City Board of Education
GO, 6.00%, 12-1-06 (AMBAC) 1,091
1,410 New Jersey Educational Facility
Auth. Rev. (New Jersey
Institute of Technology),
5.90%, 7-1-08 (MBIA) 1,479
1,000 New Jersey Health Care
Facilities Financing Auth. Rev.
(Atlantic City Medical Center),
6.15%, 7-1-99 1,038
1,000 New Jersey Transportation
System Trust Fund Auth. Rev.,
6.25%, 12-15-03 1,087
See Notes to Financial Statements
24
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
TAX-EXEMPT INTERMEDIATE-TERM (CONT.)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
$ 1,000 New Jersey Turnpike Auth. Rev.,
6.20%, 1-1-00 $ 1,044
1,200 New Jersey Wastewater
Treatment Trust Rev.,
7.25%, 5-15-02 1,269
----------
7,008
----------
NEW YORK--6.8%
1,950 New York City University
(John Jay College)
Certificates of Participation,
5.00%, 8-15-09 (AMBAC) 1,853
1,500 New York State Dormitory
Auth. Rev., 6.50%, 5-15-04 1,603
1,895 New York State Medical Care
Facilities Finance Agency
Rev., 5.95%, 8-15-09 (FHA) 1,914
----------
5,370
----------
OHIO--6.3%
1,450 Ohio Higher Educational
Facility Community Rev.
(University of Dayton),
5.55%, 12-1-07 (FGIC) 1,480
3,320 Ohio Water Development
Auth. Pollution Control Rev.,
6.00%, 12-1-05 (MBIA) 3,556
----------
5,036
----------
OREGON--3.8%
1,805 Lane County School District
#19 GO, 6.375%, 10-15-05
(MBIA) 1,985
1,000 Oregon State Department of
Transportation Rev.,
5.50%, 6-1-00 (MBIA) 1,038
----------
3,023
----------
PENNSYLVANIA--9.6%
1,000 Harrisburg Lease Rev.,
6.25%, 6-1-00
(Subject to Crossover
Refunding 7-1-96) (CGIC) 1,046
1,500 Pennsylvania Turnpike
Commission Rev., 6.25%,
6-1-01 (AMBAC) 1,606
2,000 Philadelphia Gas Works Rev.,
5.70%, 7-1-00 (CGIC) 2,079
2,000 Philadelphia Water and
Wastewater Rev.,
5.15%, 6-15-04 (FGIC) 1,978
1,000 Philadelphia Water and
Wastewater Rev.,
5.00%, 6-15-12 (FGIC) 914
----------
7,623
----------
PUERTO RICO--1.3%
1,000 Puerto Rico Electric
Power Auth. Rev.,
5.70%, 7-1-00 1,035
----------
SOUTH CAROLINA--1.2%
1,000 Richland Lexington South
Carolina Airport District Rev.,
5.25%, 1-1-06 (AMBAC) 979
----------
TEXAS--12.2%
535 Austin Utility System Rev.,
7.50%, 11-15-98** 577
2,000 Brazos Higher Education Auth.
Student Loan Rev.,
5.50%, 12-1-98 2,051
1,875 Brownsville Utility System Rev.,
6.00%, 9-1-08 (AMBAC) 1,999
1,000 City of Dallas-Fort Worth
Regional Airport Rev.,
5.90%, 11-1-08 (MBIA) 1,034
1,340 Harris County Health Facility
Development Corp.
Hospital Rev.
(St. Luke's Episcopal Hosp.),
6.40%, 2-15-00 1,414
1,000 Tarrant County Texas
Health Facilities Development
Corp., Health System Rev.,
5.00%, 9-1-07 (AMBAC) 963
1,500 Texas State Public Finance
Auth. Building Rev.,
6.25%, 8-1-09 (MBIA) 1,634
----------
9,672
----------
UTAH--1.3%
1,000 Salt Lake County Municipal
Building Auth. Lease Rev.,
6.00%, 10-1-07 (MBIA) 1,055
----------
See Notes to Financial Statements
25
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
TAX-EXEMPT INTERMEDIATE-TERM (CONT.)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
WASHINGTON--2.7%
$ 1,000 Tacoma Washington
Electric System Rev.,
6.10%, 1-1-07 (FGIC) $ 1,063
1,000 Washington Public Power
Supply System Rev. (Nuclear
Project #2), 7.30%, 7-1-00 1,091
----------
2,154
----------
WISCONSIN--2.0%
1,590 Wisconsin State Health and
Educational Facility Auth.
Rev., 6.00%, 11-15-10 (FSA) 1,634
----------
TOTAL MUNICIPAL BONDS--99.4% 78,967
(Cost $77,644) ----------
SHORT-TERM TAX-EXEMPT SECURITIES
ARIZONA--0.6%
500 Pinal County Arizona Industrial
Development Auth. Pollution
Control Rev., 4.00%, VRDO,
5-1-96, resets daily, final
maturity 12-1-09 (LOC:
National Westminster PL) 500
(Cost $500) ----------
TOTAL INVESTMENT SECURITIES--100.0% $ 79,467
(Cost $78,144) ----------
TAX-EXEMPT LONG-TERM
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
MUNICIPAL BONDS
ALASKA--0.1%
$ 75 Alaska Housing Finance Corp.
Rev., 8.75%, 12-1-16
(LOC: Swiss Bank) $ 79
----------
CALIFORNIA--12.6%
$ 1,000 California Public Works Board
Lease Rev., 6.20%, 10-1-08$ 1,036
2,000 California Public Works Board
Lease Rev., 5.00%, 12-1-19
(AMBAC) 1,785
1,000 Los Angeles County Sanitation
District Financing Auth. Rev.,
5.25%, 10-1-10 (MBIA) 964
1,500 Metropolitan Water District Rev.
(Southern California
Waterworks), 5.75%, 7-1-21 1,481
1,850 Northern California Power
Agency Rev. (Hydroelectric
Project #1), 6.25%, 7-1-12
(MBIA) 1,915
----------
7,181
----------
COLORADO--0.6%
300 Colorado Housing Finance
Auth. Rev., 8.70%, 9-1-07 317
----------
CONNECTICUT--5.3%
1,000 Connecticut GO, 6.00%, 3-15-12 1,052
1,880 Connecticut State Development
Auth. Rev.,6.375%,
10-15-24 1,944
----------
2,996
----------
DISTRICT OF COLUMBIA--1.8%
1,000 Washington D.C. Metropolitan
Area Transportation Auth.
Rev., 6.00%, 7-1-10 (FGIC) 1,048
----------
FLORIDA --7.9%
1,200 Florida State Municipal Power
Agency Rev.,
4.50%, 10-1-27 (AMBAC) 945
1,000 Florida State Turnpike Auth.
Rev., 5.00%, 7-1-19 (FGIC) 889
1,500 Reedy Creek Improvement
District Utility Rev.,
5.00%, 10-1-19 (MBIA) 1,332
1,350 Tampa Sports Auth. Sales
Tax Rev. (Tampa Bay Arena
Project), 5.75%,
10-1-25 (MBIA) 1,351
----------
4,517
----------
GEORGIA--1.7%
1,000 DeKalb County GO, 5.50%, 1-1-16 952
----------
See Notes to Financial Statements
26
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996
- --------------------------------------------------------------------------------
TAX-EXEMPT LONG-TERM (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
ILLINOIS--14.5%
$ 1,000 City of Chicago Rev.
(Peoples Gas, Light and
Coke Co.), 7.50%, 3-1-15 $ 1,079
2,000 Cook County GO,
5.00%, 11-15-23 (MBIA) 1,719
2,000 Cook County GO, 7.00%,
Prerefunded 11-1-00 at 102%
of Par (MBIA)** 2,229
500 Illinois Dedicated Tax Rev.
(Civic Center), 6.25%, 12-15-20 521
1,500 Illinois GO, 6.25%, 10-1-06 1,599
1,000 Illinois Regional Transportation
Auth. Rev., 7.20%, 11-1-20
(AMBAC) 1,168
----------
8,315
----------
INDIANA--3.5%
1,000 Indiana State Toll Finance
Auth. Rev., 6.875%,
7-1-12 (FGIC) 1,034
1,000 Indiana University Student
Fee Rev., 5.10%, 8-1-08 974
----------
2,008
----------
KANSAS--1.8%
1,000 Kansas City Utility System Rev.,
6.375%, 9-1-23 (FGIC) 1,037
KENTUCKY--2.5%
1,000 Carroll County Pollution
Control Rev. (Kentucky
Utilities Co. Project),
7.45%, 9-15-16 1,129
310 Kentucky Housing Corp. Rev.,
7.90%, 1-1-21 (FHA) 326
----------
1,455
----------
MARYLAND--1.5%
1,000 Maryland Health and Higher
Education Facility Auth. Rev.
(Anne Arundel Medical Center),
5.00%, 7-1-23 (AMBAC) 871
----------
MASSACHUSETTS--7.0%
1,000 Boston GO, Series B,
5.875%, 8-1-12 (AMBAC) 1,016
1,000 Boston GO, Series B,
5.875%, 8-1-13 (AMBAC) 1,013
1,000 Massachusetts GO, Series A,
5.40%, 11-1-06 1,018
1,000 Massachusetts Water Resources
Auth. Rev., 5.50%, 11-1-15 930
----------
3,977
----------
MICHIGAN--4.1%
1,500 Detroit Michigan Sewer Disposal
Rev., 5.25%, 7-1-21 (MBIA) 1,374
1,000 University of Michigan Hospital
Rev., 5.75%, 12-1-12 992
----------
2,366
----------
MONTANA--3.1%
460 Montana State Board Investment
Payroll Tax Rev.,
6.875%, 6-1-20** 501
1,190 Montana State Board Investment
Payroll Tax Rev.,
6.875%, 6-1-20 (MBIA) 1,278
----------
1,779
----------
NEW YORK--7.4%
1,000 Municipal Assistance Corp.
Rev., 7.625%, 7-1-08 1,097
1,000 New York Local Government
Assistance Corp. Rev.,
6.75%, 4-1-07 1,086
1,000 New York State Environmental
Facilities Corp. Pollution
Control Rev.,
6.30%, 6-15-02 1,078
1,000 New York State Medical Care
Facility Financing Agency
Rev., 5.25%, 8-15-08 (FSA) 983
----------
4,244
----------
NORTH CAROLINA--2.9%
520 North Carolina Eastern
Municipal Power Agency
System Rev., 7.50%, 1-1-10** 605
1,000 North Carolina Municipal
Power Agency Rev.
(Catawba Electric),
6.00%, 1-1-10 (MBIA) 1,052
----------
1,657
----------
OHIO--2.3%
500 Ohio Higher Education Facility
Commission Rev.
(University of Dayton Project),
5.80%, 12-1-14 (FGIC) 499
See Notes to Financial Statements
27
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) April 30, 1996 (Unaudited)
TAX-EXEMPT LONG-TERM (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
($ In Thousands)
$ 750 Ohio Higher Education Facility
Commission Rev. (Case
Western Reserve University),
6.50%, 10-1-20 $ 810
----------
1,309
----------
PENNSYLVANIA--5.0%
1,125 Pennsylvania Intergovernmental
Cooperative Auth. Special
Tax Rev., 5.00%, 6-15-22 (MBIA) 980
1,000 Philadelphia Gas Works Rev.,
5.375%, 8-1-07 (FSA) 997
1,000 Philadelphia Water and
Wastewater Rev.,
5.25%, 6-15-23 (MBIA) 908
----------
2,885
----------
PUERTO RICO--0.9%
500 Puerto Rico Commonwealth
GO, 6.45%, 7-1-17 516
----------
RHODE ISLAND--1.8%
1,000 Rhode Island Depositors
Economic Protection Corp.
Special Obligation Rev.,
6.25%, 8-1-16 (MBIA) 1,046
----------
TEXAS--1.9%
1,000 Alliance Airport Auth.
Special Facilities Rev.
(American Airlines Project),
7.00%, 12-1-11 1,077
----------
UTAH--0.4%
215 Utah Housing Finance Agency
Rev., 8.50%, 7-1-04 222
----------
VIRGINIA--1.0%
500 Norfolk Industrial Development
Auth. Hospital Rev.
(Children's Hospital),
7.00%, Prerefunded 6-1-01
at 102% of Par (AMBAC)** 560
----------
WYOMING--0.4%
230 Wyoming Community
Development Auth. Rev.,
8.125%, 6-1-21 $ 238
----------
TOTAL MUNICIPAL BONDS--92.0% 52,651
(Cost $51,338) ----------
SHORT-TERM
TAX-EXEMPT SECURITIES
IOWA--4.4%
2,500 Iowa Finance Auth. Solid
Waste Disposal Rev., 4.15%,
VRDO, 5-1-96, resets daily,
final maturity 7-1-23
(LOC: Swiss Bank) 2,500
----------
WASHINGTON--2.6%
1,500 Port St. Helens Oregon Pollution
Control Rev., 4.00%, VRDO,
5-1-96, resets daily, final
maturity 4-1-10
(LOC: Canadian Imperial Bank) 1,500
----------
TOTAL SHORT-TERM
TAX-EXEMPT SECURITIES--7.0% 4,000
(Cost $4,000) ----------
TEMPORARY
CASH INVESTMENTS--1.0%
569 Units of Participation in
Provident Institutional Funds
(Muni Fund Portfolio) 569
(Cost $569) ----------
TOTAL INVESTMENT SECURITIES--100.0% $ 57,221
(Cost $55,907) ==========
28
- --------------------------------------------------------------------------------
NOTES TO SCHEDULES OF INVESTMENTS
AMBAC = AMBAC Indemnity Corp.
CGIC = Capital Guaranty Insurance Company
FGIC = Financial Guaranty Insurance Company
FHA = Federal Housing Authority
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
FSA = Financial Security Association
GNMA = Government National Mortgage Association
GO = General Obligation
LOC = Letter of Credit
MBIA = Municipal Bond Insurance Association
MTN = Medium Term Note
resets = The frequency with which a fixed-income security's coupon changes,
based on current market conditions or an underlying index. The more
frequently a security resets, the less risk the investor is taking that
the coupon will vary significantly from current market rates.
VRDO = Variable Rate Demand Obligation. Interest reset dates are indicated and
used in calculating the weighted average maturity of the portfolio.
Rates shown were effective at 4-30-96.
VRN = Variable Rate Note. Interest reset dates are indicated and used in
calculating the weighted average maturity of the portfolio. Rates shown
were effective at 4-30-96. None of these securities have interest rate
caps.
+ Private placement securities exempt from registration under rule 144A of the
Securities Act of 1933. These securities may only be resold in transactions
exempt from registration, normally to qualified institutional investors. The
aggregate value of these securities at April 30, 1996, was $212,426 for Cash
Reserve and $237 for Limited Term Bond, which represents 16.1% and 3.1% of the
net assets of each fund respectively.
++This security has been downgraded by both Moody's and S&P, due to the
bankruptcy filing of Orange County, California. The Board of Directors made
the determination that it was not in the best interest of the Fund to dispose
of this security. This security was originally due to mature on July 10, 1995.
The terms of this security were revised in 1995 to extend the maturity to June
30, 1996. The revised terms also included an increase in the security's
interest rate and an interest payment schedule requiring partial payments of
interest prior to June 30, 1996, with the remaining interest payments due at
maturity. The market value of this security on April 30, 1996 was $37,922,500.
* Remaining expected average life is indicated and used for calculating the
weighted average maturity of the fund.
**Escrowed in U.S. Government securities.
***The rates for U.S. Government Agency discount notes and commercial paper are
the yield to maturity at April 30, 1996. The rates for U.S. Government Agency
securities and U.S. Treasury securities are the stated coupon rates.
29
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
U.S. GOVT. U.S. GOVT. LIMITED-TERM
April 30, 1996 (Unaudited) CASH RESERVE SHORT-TERM INTERMEDIATE-TERM BOND
- ------------------------------------------------------------------------------------------------------------------------------------
--------------------($ In Thousands, Except Per-Share Amounts)-----------------
<S> <C> <C> <C> <C>
ASSETS
Investment securities, at value (amortized
cost for Cash Reserve; identified cost of
$366,974, $24,742, $7,543, $15,562, $139,035,
$51,089, $78,144, and $55,907,
respectively) (Note 3)......................... $1,353,570 $365,196 $24,196 $7,535
Cash............................................. 2,090 142 -- 2
Receivable for investments sold.................. -- -- -- --
Interest receivable.............................. 5,209 4,504 382 93
---------- ---------- ---------- ----------
1,360,869 369,842 24,578 7,630
---------- ---------- ---------- ----------
LIABILITIES
Disbursements in excess
of demand deposit cash......................... 6,200 1,653 129 2
Payable for investments purchased................ 29,974 -- -- --
Payable for capital shares redeemed.............. 3,572 425 29 --
Dividends payable................................ 712 217 14 5
Accrued management fees (Note 2)................. 870 242 16 4
Other liabilities................................ 5 1 -- --
---------- ---------- ---------- ----------
41,333 2,538 188 11
---------- ---------- ---------- ----------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES............................ $1,319,536 $367,304 $24,390 $7,619
---------- ---------- ---------- ----------
----------------------------- Shares In Thousands --------------------------
CAPITAL SHARES, $.01 PAR VALUE
Authorized....................................... 4,000,000 200,000 200,000 200,000
---------- ---------- ---------- ----------
Outstanding...................................... 1,319,616 39,027 2,518 772
---------- ---------- ---------- ----------
NET ASSET VALUE PER SHARE........................ $ 1.00 $ 9.41 $ 9.69 $ 9.87
---------- ---------- ---------- ----------
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus).......... $1,319,616 $ 386,935 $ 24,625 $7,615
Accumulated undistributed net realized
gain (loss) from security transactions......... (80) (17,853) 311 12
Net unrealized appreciation (depreciation)
on investments (Note 3)........................ -- (1,778) (546) (8)
---------- ---------- ---------- ----------
$1,319,536 $367,304 $ 24,390 $7,619
---------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
30
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
INTERMEDIATE- LONG-TERM TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
April 30, 1996 (Unaudited) TERM BOND BOND SHORT-TERM INTERMEDIATE-TERM LONG-TERM
- ------------------------------------------------------------------------------------------------------------------------------------
--------------------------($ In Thousands, Except Per-Share Amounts)-----------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investment securities, at value (amortized
cost for Cash Reserve; identified cost
of $366,974, $24,742, $7,543, $15,562,
$139,035, $51,089, $78,144, and
$55,907, respectively) (Note 3)........ $15,299 $138,057 $51,367 $79,467 $57,221
Cash..................................... 6 -- 361 -- 218
Receivable for investments sold.......... -- 43 -- -- --
Interest receivable...................... 229 2,337 838 1,324 920
---------- ---------- ---------- ---------- ----------
15,534 140,437 52,566 80,791 58,359
---------- ---------- ---------- ---------- ----------
LIABILITIES
Disbursements in excess
of demand deposit cash................. 11 529 24 367 58
Payable for investments purchased........ -- -- 315 -- --
Payable for capital shares redeemed...... -- 163 120 53 3
Dividends payable........................ 9 95 24 41 32
Accrued management fees (Note 2)......... 11 106 26 40 29
Other liabilities........................ -- 2 -- 1 --
---------- ---------- ---------- ---------- ----------
31 895 509 502 122
---------- ---------- ---------- ---------- ----------
NET ASSETS APPLICABLE
TO OUTSTANDING SHARES.................... $15,503 $139,542 $52,057 $80,289 $58,237
---------- ---------- ---------- ---------- ----------
-------------------------------Shares In Thousands -----------------------------------
CAPITAL SHARES, $.01 PAR VALUE
Authorized............................... 200,000 200,000 200,000 200,000 200,000
---------- ---------- ---------- ---------- ----------
Outstanding.............................. 1,589 14,767 5,178 7,828 5,653
---------- ---------- ---------- ---------- ----------
NET ASSET VALUE PER SHARE................$ 9.76 $ 9.45 $ 10.05 $ 10.26 $10.30
---------- ---------- ---------- ---------- ----------
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus)..$ 15,667 $ 138,928 $ 51,753 $ 78,815 $ 56,838
Accumulated undistributed net realized
gain (loss) from security transactions. 99 1,592 26 151 85
Net unrealized appreciation (depreciation)
on investments (Note 3)................ (263) (978) 278 1,323 1,314
$15,503 $ 139,542 $ 52,057 $ 80,289 $ 58,237
---------- ---------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
31
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
Six Months Ended U.S. GOVT. U.S. GOVT. LIMITED-TERM
April 30, 1996 (Unaudited) CASH RESERVE SHORT-TERM INTERMEDIATE-TERM BOND
- ------------------------------------------------------------------------------------------------------------------------------------
-------------------------------($ In Thousands)----------------------------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest $39,319 $11,501 $ 740 $235
---------- ---------- ---------- ----------
Expenses:
Management fees (Note 2) 4,818 1,322 88 25
Directors' fees and expenses 7 2 -- --
Fees waived by manager (Note 2) -- -- -- --
---------- ---------- ---------- ----------
4,825 1,324 88 25
---------- ---------- ---------- ----------
NET INVESTMENT INCOME 34,494 10,177 652 210
---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (Note 3)
Net realized gain
on investments -- 1,766 312 23
Change in net unrealized (depreciation)
during the year on investments -- (5,460) (1,100) (91)
---------- ---------- ---------- ----------
NET REALIZED AND UNREALIZED
(LOSS) ON INVESTMENTS -- (3,694) (788) (68)
---------- ---------- ---------- ----------
NET INCREASE
(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $34,494 $ 6,483 $(136) $142
---------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
32
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS (CONTINUED)
Six Months Ended INTERMEDIATE- LONG-TERM TAX-EXEMPT TAX-EXEMPT TAX-EXEMPT
April 30, 1996 (Unaudited) TERM BOND BOND SHORT-TERM INTERMEDIATE-TERM LONG-TERM
- ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------($ In Thousands)-------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Income:
Interest.......................... $ 464 $ 5,159 $ 1,311 $ 2,114 $ 1,661
---------- ---------- ---------- ---------- ----------
Expenses:
Management fees (Note 2).......... 52 578 168 243 176
Directors' fees and expenses...... -- 1 -- -- --
Fees waived by manager (Note 2)... -- -- (115) -- --
---------- ---------- ---------- ---------- ----------
52 579 53 243 176
---------- ---------- ---------- ---------- ----------
NET INVESTMENT INCOME................. 412 4,580 1,258 1,871 1,485
---------- ---------- ---------- ---------- ----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS (Note 3)
Net realized gain
on investments.................... 100 1,629 33 152 112
Change in net unrealized (depreciation)
during the year on investments.... (470) (6,521) (215) (1,198) (1,522)
NET REALIZED AND UNREALIZED
(LOSS) ON INVESTMENTS................. (370) (4,892) (182) (1,046) (1,410)
---------- ---------- ---------- ---------- ----------
NET INCREASE
(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS............. $ 42 $ (312) $ 1,076 $ 825 $ 75
---------- ---------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
33
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended
April 30, 1996 (Unaudited) U.S. GOVT. U.S. GOVT. LIMITED-TERM
and Year Ended October 31, 1995 CASH RESERVE SHORT-TERM INTERMEDIATE-TERM BOND
- ------------------------------------------------------------------------------------------------------------------------------------
-----------($ In Thousands, Except Per-Share Amounts)--------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE)
IN NET ASSETS 1996 1995 1996 1995 1996 1995 1996 1995
--------- --------- --------- --------- --------- --------- --------- ---------
OPERATIONS
Net investment income............. $34,494 $71,777 $10,177 $21,486 $652 $840 $210 $337
Net realized gain (loss)
on investments................ -- (80) 1,766 506 312 200 23 15
Change in net unrealized appreciation
(depreciation) on investments. -- -- (5,460) 9,263 (1,100) 629 (91) 167
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations..... 34,494 71,697 6,483 31,255 (136) 1,669 142 519
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income........ (34,494) (71,777) (10,177) (21,486) (652) (840) (210) (337)
From net realized gains
from security transactions.... -- -- -- -- (131) -- -- --
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net (decrease) in net assets
from distributions............ (34,494) (71,777) (10,177) (21,486) (783) (840) (210) (337)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold........1,001,620 1,917,043 43,440 86,423 11,862 21,446 1,578 3,681
Proceeds from reinvestment
of distributions............. 33,365 69,197 9,600 20,147 759 805 202 325
Payments for shares redeemed....(1,184,995) (1,815,596) (73,373) (121,761) (9,293) (7,379) (1,286) (1,370)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net
assets from capital share
transactions................. (150,010) 170,644 (20,333) (15,191) 3,328 14,872 494 2,636
NET INCREASE (DECREASE)
IN NET ASSETS.................... (150,010) 170,564 (24,027) (5,422) 2,409 15,701 426 2,818
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET ASSETS
Beginning of period..............1,469,546 1,298,982 391,331 396,753 21,981 6,280 7,193 4,375
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
End of period...................$1,319,536 $1,469,546 $367,304 $391,331 $24,390 $21,981 $7,619 $7,193
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
TRANSACTIONS IN SHARES OF
THE FUNDS:
(In thousands)
Sold.............................1,001,620 1,917,043 4,558 9,240 1,185 2,205 158 377
Issued in reinvestment of
distributions................ 33,365 69,197 1,008 2,152 76 82 20 33
Redeemed........................(1,184,995) (1,815,596) (7,707) (13,034) (933) (754) (128) (140)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease).......... (150,010) (170,644) (2,141) (1,642) 328 1,533 50 270
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
34
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
Six Months Ended
April 30, 1996 (Unaudited) INTERMEDIATE- LONG-TERM TAX-EXEMPT
and Year Ended October 31, 1995 TERM BOND BOND SHORT-TERM
- ------------------------------------------------------------------------------------------------------------------------------------
-------------------------------($ In Thousands)-------------------------------------
INCREASE (DECREASE)
IN NET ASSETS 1996 1995 1996 1995 1996 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net investment income...................... $412 $490 $4,580 $8,667 $1,258 $2,614
Net realized gain (loss)
on investments......................... 100 152 1,629 412 33 25
Change in net unrealized appreciation
(depreciation) on investments.......... (470) 340 (6,521) 12,096 (215) 829
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations.............. 42 982 (312) 21,175 1,076 3,468
---------- ---------- ---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income................. (412) (490) (4,580) (8,667) (1,258) (2,614)
From net realized gains
from security transactions............. (132) -- (228) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Net (decrease) in net assets
from distributions..................... (544) (490) (4,808) (8,667) (1,258) (2,614)
---------- ---------- ---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold.................. 6,124 10,476 30,327 56,502 11,614 30,735
Proceeds from reinvestment
of distributions....................... 490 456 4,474 7,979 1,130 2,326
Payments for shares redeemed............... (3,436) (2,859) (39,362) (48,778) (19,342) (35,935)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease) in net assets
from capital share transactions........ 3,178 8,073 (4,561) 15,703 (6,598) (2,874)
---------- ---------- ---------- ---------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS.............................. 2,676 8,565 (9,681) 28,211 (6,780) (2,020)
NET ASSETS
Beginning of period........................ 12,827 4,262 149,223 121,012 58,837 60,857
---------- ---------- ---------- ---------- ---------- ----------
End of period.............................. $15,503 $12,827 $139,542 $149,223 $52,057 $58,837
---------- ---------- ---------- ---------- ---------- ----------
TRANSACTIONS IN SHARES OF
THE FUNDS:
(In thousands)
Sold ...................................... 609 1,072 3,097 6,052 1,147 3,071
Issued in reinvestment of
distributions.......................... 49 47 458 855 112 232
Redeemed................................... (343) (292) (4,039) (5,244) (1,910) (3,589)
---------- ---------- ---------- ---------- ---------- ----------
Net increase (decrease).................... 315 827 (484) 1,663 (651) (286)
---------- ---------- ---------- ---------- ---------- ----------
(table continued below)
(table continued)
Six Months Ended
April 30, 1996 (Unaudited) TAX-EXEMPT TAX-EXEMPT
and Year Ended October 31, 1995 INTERMEDIATE TERM LONG-TERM
- ------------------------------------------------------------------------------------------------------------------------------------
--------------------------------($ In Thousands)------------------------------------
INCREASE (DECREASE)
IN NET ASSETS 1996 1995 1996 1995
--------- --------- --------- ---------
OPERATIONS
Net investment income............................ $1,871 $3,764 $1,485 $2,801
Net realized gain (loss)
on investments............................... 152 553 112 (24)
Change in net unrealized appreciation
(depreciation) on investments................ (1,198) 3,482 (1,522) 4,424
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations.................... 825 7,799 75 7,201
---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income....................... (1,871) (3,764) (1,485) (2,801)
From net realized gains
from security transactions................... (549) (639) -- (225)
---------- ---------- ---------- ----------
Net (decrease) in net assets
from distributions........................... (2,420) (4,403) (1,485) (3,026)
---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold........................ 10,030 15,630 12,957 19,427
Proceeds from reinvestment
of distributions............................. 2,077 3,755 1,273 2,594
Payments for shares redeemed..................... (10,471) (23,933) (12,580) (19,163)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets
from capital share transactions.............. 1,636 4,548 1,650 2,858
---------- ---------- ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS.................................... 41 (1,152) 240 7,033
NET ASSETS
Beginning of period.............................. 80,248 81,400 57, 997 50,964
---------- ---------- ---------- ----------
End of period.................................... $80,289 $80,248 $58,237 $57,997
---------- ---------- ---------- ----------
TRANSACTIONS IN SHARES OF
THE FUNDS:
(In thousands)
Sold............................................. 958 1,538 1,218 1,921
Issued in reinvestment of
distributions................................ 199 371 120 258
Redeemed......................................... (1,006) (2,366) (1,188) (1,906)
---------- ---------- ---------- ----------
Net increase (decrease).......................... 151 (457) 150 273
---------- ---------- ---------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes to Financial Statements
35
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS April 30, 1996 (Unaudited)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization--
Twentieth Century Investors, Inc. (the Corporation) is registered under the
Investment Company Act of 1940 as an open-end diversified investment company.
Sixteen series of shares are currently issued, nine of which invest primarily in
fixed income securities: Cash Reserve, U.S. Governments Short-Term, U.S.
Governments Intermediate-Term, Limited-Term Bond, Intermediate-Term Bond,
Long-Term Bond, Tax-Exempt Short-Term, Tax-Exempt Intermediate-Term and
Tax-Exempt Long-Term (the Funds). The following significant accounting policies
are in accordance with accounting policies generally accepted in the investment
company industry.
Security Valuations--
Debt securities of all Funds except Cash Reserve are valued through
valuations obtained by a commercial pricing service or at the mean of the bid
and asked prices. The portfolio securities of Cash Reserve and short-term
investments of all other Funds are valued at amortized cost, which approximates
current value. When valuations are not readily available, securities are valued
at fair value as determined in good faith by the board of directors.
Security Transactions--
Security transactions are accounted for on the date purchased or sold. Net
realized gains and losses are determined on the identified cost basis, which
also is used for federal income tax purposes.
Investment Income--
Interest income is recorded on the accrual basis and includes
amortization of premiums and discounts.
Repurchase Agreements--
Securities pledged as collateral for repurchase agreements are held by the
Federal Reserve Bank and are designated as being held on the Funds' behalf by
its custodian under a book-entry system. The Funds monitor the adequacy of the
collateral daily and can require the seller to provide additional collateral in
the event the market value of the securities pledged falls below the carrying
value of the repurchase agreement.
Income Tax Status--
It is the policy of the Funds to distribute all taxable income and capital
gains to shareholders and to otherwise qualify as a regulated investment company
under provisions of the Internal Revenue Code. Accordingly, no provision has
been made for federal or state taxes.
Distributions to Shareholders--
Net investment income dividends from all Funds are declared daily and
distributed monthly. Cash Reserve does not expect to realize any long-term
capital gains, and accordingly, does not expect to pay any capital gains
distributions. Net realized gains in excess of available capital loss carryovers
for all other Funds will be distributed each December.
At October 31, 1995, accumulated net realized capital loss carryovers of
$19,619,040 for U.S. Governments Short-Term, $10,706 for Limited-Term Bond,
$7,254 for Tax-Exempt Short-Term and $27,014 for Tax-Exempt Long-Term (expiring
1998 through 2003) may be used to offset future taxable gains.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes due to differences in the recognition of income and
expense items for financial statement and tax purposes.
Supplementary Information--
Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of Twentieth Century
Companies, Inc., the parent of the Corporation's investment manager, Investors
Research Corporation (IRC).
36
- --------------------------------------------------------------------------------
2. MANAGEMENT AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
The Management Agreement with IRC provides for a monthly management fee
computed by multiplying the applicable fee for each Fund by the average daily
closing value of such Fund's net assets during the previous month. The Agreement
further provides that all expenses of the Fund, except brokerage commissions,
taxes, interest, expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including counsel
fees) and extraordinary expenses, will be paid by IRC. The Agreement may be
terminated by either party upon 60 days' written notice.
The current annual management fee for each Fund is as follows:
Cash Reserve .70% Long-Term Bond .80%
U.S. Governments Short-Term .70% Tax-Exempt Short-Term .60%*
U.S. Governments Intermediate-Term .75% Tax-Exempt Intermediate-Term .60%
Limited-Term Bond .70% Tax-Exempt Long-Term .60%
Intermediate-Term Bond .75%
* The fee had been voluntarily waived by IRC through February 29, 1996. From
November 1, 1995 through February 29, 1996, the management fees absorbed by
IRC were $114,790.
37
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED) April 30, 1996 (Unaudited)
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the period were
as follows:
<TABLE>
<CAPTION>
U.S.
U.S. GOVERNMENTS LIMITED-
GOVERNMENTS INTERMEDIATE- TERM INTERMEDIATE- LONG-TERM
SHORT-TERM TERM BOND TERM BOND BOND
----------- ------------- --------- ------------- ----------
--------------------------($ In Thousands)---------------------
<S> <C> <C> <C> <C> <C>
PURCHASES
U.S. Treasury &
Agency Obligations $435,981 $17,423 $3,794 $7,763 $50,674
Other Debt Obligations 817 5,710 45,811
PROCEEDS FROM SALES
U.S. Treasury &
Agency Obligations $495,783 $14,263 $3,884 $5,824 $38,116
Other Debt Obligations 1,477 4,687 58,784
</TABLE>
TAX-EXEMPT
TAX-EXEMPT INTERMEDIATE- TAX-EXEMPT
SHORT-TERM TERM LONG-TERM
---------- ------------- ----------
---------------($ In Thousands)--------------
PURCHASES
Municipal Debt Obligations $12,250 $12,086 $13,875
PROCEEDS FROM SALES
Municipal Debt Obligations $ 22,236 $ 9,709 $15,918
On April 30, 1996, the composition of unrealized appreciation and
(depreciation) of investment securities based on the aggregate cost of
investments for federal income tax purposes was as follows:
<TABLE>
<CAPTION>
FEDERAL
APPRECIATION (DEPRECIATION) NET TAX COST
------------ -------------- --------- ---------
------------------------($ In Thousands)---------------------
<S> <C> <C> <C> <C>
U.S. Governments Short-Term $ 894 $(2,672) $(1,778) $366,974
U.S. Governments Intermediate-Term 86 (632) (546) 24,742
Limited-Term Bond 28 (39) (11) 7,546
Intermediate-Term Bond 38 (313) (275) 15,574
Long-Term Bond 1,656 (2,634) (978) 139,035
Tax-Exempt Short-Term 360 (82) 278 51,089
Tax-Exempt Intermediate-Term 1,686 (363) 1,323 78,144
Tax-Exempt Long-Term 1,875 (561) 1,314 55,907
</TABLE>
38
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
CASH RESERVE
Six months Years Ended October 31,
Ended April 30, ----------------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income............................ .03 .05 .03 .02 .04 .06
--- --- --- --- --- ---
DISTRIBUTIONS
From Net
Investment Income................. (.03) (.052) (.032) (.023) (.037) (.058)
----- ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD..................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ------ ----- -----
TOTAL RETURN1..................... 2.50% 5.38% 3.21% 2.30% 3.74% 5.95%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets................ .70%2 .70% .80% 1.00% .98%3 .97%3
Ratio of Net Investment
Income to Average
Net Assets........................ 5.02%2 5.27% 3.18% 2.30% 3.62% 5.75%
Net Assets, End
of Period (in thousands).........$1,319,536 $1,469,546 $1,298,982 $1,256,012 $1,487,961 $1,236,309
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Annualized.
3 Expenses are shown net of management fees waived by Investors Research
Corporation for low-balance account fees collected during period.
See Notes to Financial Statements
39
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
U.S. GOVERNMENTS SHORT-TERM
Six months Years Ended October 31,
Ended April 30, -----------------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $9.51 $9.27 $9.67 $9.61 $9.41 $9.08
----- ----- ----- ----- ----- -----
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income............................ .25 .52 .40 .36 .44 .63
Net Realized
and Unrealized
Gains (Losses).................... (.10) .24 (.40) (.26) .20 .33
----- ----- ----- ----- ----- -----
Total from
Investment Operations............. .15 .76 -- .10 .64 .96
----- ----- ----- ----- ----- -----
DISTRIBUTIONS
From Net
Investment Income................. (.25) (.519) (.402) (.036) (.441) (.635)
----- ----- ----- ----- ----- -----
NET ASSET VALUE,
END OF PERIOD..................... $9.41 $9.51 $9.27 $9.67 $9.61 $9.41
----- ----- ----- ----- ----- -----
TOTAL RETURN1..................... 1.60% 8.42% .07% 4.45% 6.85% 10.99%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets................ .69%2 .70% .81% 1.00% .99%3 .99%3
Ratio of Net Investment
Income to Average
Net Assets........................ 5.32%2 5.53% 4.17% 3.73% 4.62% 6.88%
Portfolio
Turnover Rate..................... 124% 128% 470% 413% 391% 779%
Net Assets, End
of Period (in thousands)........$367,304 $391,331 $396,753 $511,981 $569,430 $534,515
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Annualized.
3 Expenses are shown net of management fees waived by Investors Research
Corporation for low-balance account fees collected during period.
See Notes to Financial Statements
40
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
U.S. GOVERNMENTS INTERMEDIATE-TERM
Six months Year Ended March 1, 1994
Ended April 30, October 31, (inception) through
1996 (Unaudited) 1995 October 31, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $10.04 $9.55 $10.00
------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income............................ .27 .58 .34
Net Realized
and Unrealized
Gains (Losses).................... (.29) .49 (.45)
------ ------ ------
Total from
Investment Operations............. (.02) 1.07 (.11)
------ ------ ------
DISTRIBUTIONS
From Net
Investment Income................. (.27) (.583) (.343)
From Net Realized
Gains on Investment
Transactions...................... (.06) -- --
------ ------ ------
Total Distributions............... (.33) (.583) (.343)
------ ------ ------
NET ASSET VALUE,
END OF PERIOD..................... $ 9.69 $10.04 $9.55
------ ------ ------
TOTAL RETURN1..................... (.26%) 11.58% (1.01%)
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets................ .74%2 .74% .75%2
Ratio of Net Investment
Income to Average
Net Assets........................ 5.48%2 5.99% 5.43%2
Portfolio
Turnover Rate..................... 63% 137% 205%
Net Assets, End
of Period (in thousands).......... $24,390 $21,981 $6,280
- ----------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Annualized.
3 Expenses are shown net of management fees waived by Investors Research
Corporation for low-balance account fees collected during period.
See Notes to Financial Statements
41
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
LIMITED-TERM BOND
Six months Year Ended March 1, 1994
Ended April 30, October 31, (inception) through
1996 (Unaudited) 1995 October 31, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $9.96 $9.68 $10.00
------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income............................ .28 .56 .31
Net Realized
and Unrealized
Gains (Losses).................... (.09) .28 (.32)
------ ------ ------
Total from
Investment Operations............. .19 .84 (.01)
------ ------ ------
DISTRIBUTIONS
From Net
Investment Income................. (.28) (.557) (.312)
------ ------ ------
NET ASSET VALUE,
END OF PERIOD..................... $9.87 $9.96 $9.68
------ ------ ------
TOTAL RETURN1..................... 1.91% 8.89% (.08%)
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets................ .66%2 .69% .70%2
Ratio of Net Investment
Income to Average
Net Assets........................ 5.62%2 5.70% 4.79%2
Portfolio
Turnover Rate..................... 73% 116% 48%
Net Assets, End
of Period (in thousands).......... $7,619 $7,193 $4,375
- ----------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Annualized.
3 Expenses are shown net of management fees waived by Investors Research
Corporation for low-balance account fees collected during period.
See Notes to Financial Statements
42
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
INTERMEDIATE-TERM BOND
Six months Year Ended March 1, 1994
Ended April 30, October 31, (inception) through
1996 (Unaudited) 1995 October 31, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $10.07 $9.53 $10.00
------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income............................ .28 .59 .34
Net Realized
and Unrealized
Gains (Losses).................... (.21) .54 (.47)
------ ------ ------
Total from
Investment Operations............. .07 1.13 (.13)
------ ------ ------
DISTRIBUTIONS
From Net
Investment Income................. (.28) (.587) (.337)
From Net Realized
Gains on Investment
Transactions...................... (.10) -- --
------ ------ ------
Total Distributions............... (.38) (.587) (.337)
------ ------ ------
NET ASSET VALUE,
END OF PERIOD..................... $9.76 $10.07 $9.53
------ ------ ------
TOTAL RETURN1..................... .67% 12.19% (1.24%)
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets................ .72%2 .74% .75%2
Ratio of Net Investment
Income to Average
Net Assets........................ 5.73%2 6.05% 5.23%2
Portfolio
Turnover Rate..................... 81% 133% 48%
Net Assets, End
of Period (in thousands).......... $15,503 $12,827 $4,262
- ----------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Annualized.
3 Expenses are shown net of management fees waived by Investors Research
Corporation for low-balance account fees collected during period.
See Notes to Financial Statements
43
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
LONG-TERM BOND
Six months Years Ended October 31,
Ended April 30, ----------------------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......... $9.78 $8.91 $10.21 $9.92 $9.56 $8.90
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income....................... .30 .61 .58 .66 .63 .75
Net Realized
and Unrealized
Gains (Losses)............... (.32) .87 (1.12) 1.88 .35 .66
------ ------ ------ ------ ------ ------
Total from
Investment Operations........ (.02) 1.48 (.54) 2.54 .98 1.41
------ ------ ------ ------ ------ ------
DISTRIBUTIONS
From Net
Investment Income............ (.30) (6.11) (.576) (.662) (.622) (.746)
From Net Realized
Gains on Investment
Transactions................. (.01) -- (.186) (1.587) -- --
------ ------ ------ ------ ------ ------
Total Distributions.......... (.31) (.611) (.762) (2.249) (.622) (.746)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD................ $9.45 $9.78 $8.91 $10.21 $9.92 $9.56
------ ------ ------ ------ ------ ------
TOTAL RETURN1................ .22% 17.16% (5.47%) 11.81% 10.40% 16.44%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets........... .78%2 .78% .88% 1.00% .98%3 .96%3
Ratio of Net Investment
Income to Average
Net Assets................... 6.17%2 6.53% 6.07% 6.54% 6.30% 8.06%
Portfolio
Turnover Rate................ 67% 105% 78% 113% 186% 219%
Net Assets, End
of Period (in thousands)....$139,542 $149,223 $121,012 $172,120 $154,031 $114,342
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Annualized.
3 Expenses are shown net of management fees waived by Investors Research
Corporation for low-balance account fees collected during period.
See Notes to Financial Statements
44
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
TAX-EXEMPT SHORT-TERM
Six months Years Ended October 31, March 1, 1993
Ended April 30, ----------------------------------- (inception) through
1996 (Unaudited) 1995 1994 October 31, 1993
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD............... $10.09 $9.95 $10.04 $10.00
------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income............................ .22 .44 .36 .21
Net Realized
and Unrealized
Gains (Losses).................... (.04) .14 (.09) .04
------ ------ ------ ------
Total from
Investment Operations............. .18 .58 .27 .25
------ ------ ------ ------
DISTRIBUTIONS
From Net
Investment Income................. (.22) (.440) (.362) (.214)
------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD..................... $10.05 $10.09 $9.95 $10.04
------ ------ ------ ------
TOTAL RETURN1..................... 1.83% 5.95% 2.75% 2.55%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets................ .57%3 -- -- --
Ratio of Net Investment
Income to Average
Net Assets........................ 4.48%2 4.38% 3.62% 3.09%2
Portfolio
Turnover Rate..................... 22% 78% 42% 3%
Net Assets, End
of Period (in thousands).......... $52,057 $58,837 $60,857 $52,265
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Annualized.
3 Expenses are shown net of management fees waived by Investors Research
Corporation for low-balance account fees collected during period.
See Notes to Financial Statements
45
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
TAX-EXEMPT INTERMEDIATE-TERM
Six months Years Ended October 31,
Ended April 30, ---------------------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......... $10.45 $10.01 $10.75 $10.27 $10.06 $9.66
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income....................... .24 .49 .48 .48 .48 .54
Net Realized
and Unrealized
Gains (Losses)............... (.12) .52 (.61) .55 .21 .40
------ ------ ------ ------ ------ ------
Total from
Investment Operations........ .12 1.01 (.13) 1.03 .69 .94
------ ------ ------ ------ ------ ------
DISTRIBUTIONS
From Net
Investment Income............ (.24) (.487) (.476) (.476) (.481) (.536)
From Net Realized
Gains on Investment
Transactions................ (.07) (.082) (.133) (.078) -- --
------ ------ ------ ------ ------ ------
Total Distributions.......... (.31) (.569) (.609) (.554) (.481) (.536)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD................ $10.26 $10.45 $10.01 $10.75 $10.27 $10.06
------ ------ ------ ------ ------ ------
TOTAL RETURN1................ 1.14% 10.41% (1.25%) 10.25% 7.00% 9.91%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets........... .60%2 .60% .60% .72% .98%3 .96%3
Ratio of Net Investment
Income to Average
Net Assets................... 4.60%2 4.77% 4.59% 4.51% 4.68% 5.40%
Portfolio
Turnover Rate................ 12% 32% 74% 38% 36% 62%
Net Assets, End
of Period (in thousands)..... $80,289 $80,248 $81,400 $98,740 $76,745 $45,359
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Annualized.
3 Expenses are shown net of management fees waived by Investors Research
Corporation for low-balance account fees collected during period.
See Notes to Financial Statements
46
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED) (For a Share Outstanding Throughout the Period)
TAX-EXEMPT LONG-TERM
Six months Years Ended October 31,
Ended April 30, -------------------------------------------------------------------------------------
1996 (Unaudited) 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD.......... $10.54 $9.75 $11.10 $10.36 $10.23 $9.62
------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment
Income....................... .27 .53 .52 .53 .53 .57
Net Realized
and Unrealized
Gains (Losses)............... (.24) .83 (1.01) .90 .22 .61
------ ------ ------ ------ ------ ------
Total from
Investment Operations........ .03 1.36 (.49) 1.43 .75 1.18
------ ------ ------ ------ ------ ------
DISTRIBUTIONS
From Net
Investment Income............ (.27) (.532) (.519) (.529) (.530) (.572)
In Excess of Net
Investment Income............ -- -- -- (.003) -- --
From Net Realized
Gains on Investment
Transactions................. -- (.044) (.342) (.161) (.088) --
------ ------ ------ ------ ------ ------
Total Distributions.......... (.27) (.576) (.861) (.693) (.618) (.572)
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD................ $10.30 $10.54 $9.75 $11.10 $10.36 $10.23
------ ------ ------ ------ ------ ------
TOTAL RETURN1................ .20% 14.45% (4.70%) 14.32% 7.43% 12.54%
RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets........... .59%2 .59% .60% .73% .98%3 .96%3
Ratio of Net Investment
Income to Average
Net Assets................... 5.02%2 5.24% 5.00% 4.90% 5.07% 5.73%
Portfolio
Turnover Rate................ 24% 61% 66% 81% 88% 110%
Net Assets, End
of Period (in thousands)..... $58,237 $57,997 $50,964 $70,757 $61,825 $39,229
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Total returns for periods less than one year are not annualized. Total return
assumes reinvestment of dividends and capital gains distributions, if any.
2 Annualized.
3 Expenses are shown net of management fees waived by Investors Research
Corporation for low-balance account fees collected during period.
See Notes to Financial Statements
47
TWENTIETH CENTURY INVESTORS, INC.
INVESTMENT MANAGER TWENTIETH CENTURY
INVESTORS RESEARCH CORPORATION INVESTORS, INC.
KANSAS CITY, MISSOURI
FIXED INCOME FUNDS
THIS REPORT AND THE FINANCIAL SEMIANNUAL REPORT
STATEMENTS CONTAINED HEREIN
ARE SUBMITTED FOR THE GENERAL APRIL 30, 1996
INFORMATION OF OUR SHAREHOLDERS.
THIS REPORT IS NOT AUTHORIZED
FOR DISTRIBUTION TO PROSPECTIVE
INVESTORS UNLESS PRECEDED
OR ACCOMPANIED BY A CURRENT
PROSPECTUS.
[company logo]
Investments That Work(TM)
- ----------------------------------------------
P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
- ----------------------------------------------
Person-to-person assistance:
1-800-345-2021 OR 816-531-5575
- ----------------------------------------------
Automated information line:
1-800-345-8765
- ----------------------------------------------
Telecommunications Device for the Deaf:
1-800-634-4113 OR 816-753-1865
- ----------------------------------------------
Fax: 816-340-7962
- ----------------------------------------------
[company logo]
================================================================================
- --------------------------------------------------------------------------------
SH-BKT-4832
9606 Recycled
