<PAGE> 1
Diversified Investors
Strategic
Allocation Funds
1996 Annual Report
Aggressive
Strategic Allocation Fund
Moderate
Strategic Allocation Fund
Conservative
Strategic Allocation Fund
(LOGO)
DIVERSIFIED
INVESTMENT
ADVISORS
<PAGE> 2
DIVERSIFIED INVESTORS STRATEGIC ALLOCATION FUNDS
AVERAGE ANNUAL TOTAL RETURNS
1996
<TABLE>
<CAPTION>
MEASUREMENT PERIOD LEHMAN BROS. GOV/CORP.
(FISCAL YEAR COVERED) CONSERVATIVE FUND BOND INDEX
<S> <C> <C>
4/96 10000 10000
1996 10545 10535
</TABLE>
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) MODERATE FUND AGGRESSIVE FUND S&P 500 INDEX
<S> <C> <C> <C>
4/96 10000 10000 10000
1996 10559 10565 11689
</TABLE>
The charts shown above represent the growth in value of an initial
hypothetical investment of $10,000 in each fund of the Diversified Investors
Strategic Allocation Funds for the period since April 15, 1996 (inception date)
through December 31, 1996.
All indices are shown for the period from the funds' inception through
December 31, 1996.
Past performance is not indicative of future performance.
1
<PAGE> 3
ECONOMIC AND MARKET REVIEW
CONSERVATIVE STRATEGIC ALLOCATION FUND
The bond market continued to rally early in the fourth quarter on weak
economic numbers, low inflation and no Federal Reserve action to raise interest
rates. Housing activity, after being very weak early in the quarter,
strengthened in December resulting in a bond market sell off. Bonds were ahead
for the quarter as they recouped some of their earlier year losses.
The Portfolio gained for the quarter rallying strongly in October and
November and declining slightly in December. High yield bonds contributed most
to the Fund's performance for the quarter. High yield bond had gains every month
including December when other bonds and stocks sold off. The small component in
stocks and the position in longer term bonds also helped performance during the
period.
This year should start much like 1996 ended with the economy continuing to
grow slowly amid much speculation as to whether it is slowing or accelerating.
Inflation remains benign but may begin to move up slightly during the first
half. Stocks should continue to rally early in the year and long term interest
rates should remain in trading range of near 6.25% on the low side and 7% on the
upside.
As long as the economy continues to grow modestly with low inflation, the
strategy for the fund will be to increase duration when rates are near 6.8% or
higher and reduce duration when rates decline toward 6.25%. If economic growth
accelerates and inflation appears to be rising, a more defensive posture will be
established. If it begins to appear that the economy is slowing significantly,
duration will be increased in anticipation of declining interest rates. At this
time we feel that a pickup in economic growth and inflation is more likely.
MODERATE STRATEGIC ALLOCATION FUND
Both stocks and bonds were up during the fourth quarter. Bonds were up
strongly in October, continued to rally in November and then sold off in
December. Stocks were more mixed as large cap stocks rallied in October while
small cap stocks and international declined. In November large cap stocks picked
up steam while small cap stocks and international rose but at a more moderate
pace. In December large cap stocks sold off as small cap stocks and
international continued to rally modestly.
The Portfolio was up in October and November and then declined slightly in
December. In October performance was aided by being fully invested in large cap
stocks while holding cash in lieu of fully invested positions in small cap
stocks and international stocks. In October and November cash was reduced and
large cap stocks and international were increased. This move helped as large cap
stocks had the best performance followed by international. Longer term bonds and
high yield bonds also performed well during October and November. In December
only small cap stocks which remained underweighted and high yield bonds
performed well. Large cap stocks was down the most.
As we enter 1997, the economy is growing at a moderate pace and inflation
remains subdued. Large cap stocks should continue to lead the market higher.
Small cap stocks could rebound from their slow pace of the second half of 1996.
Interest rates may remain in a trading range of approximately 6.25% to 7% until
economic growth either falters or accelerates.
The Portfolio is overweighted in stocks, primarily in large cap stocks with
a normal weighting in small cap stocks and slightly under in international. Cash
is low and bond duration will be extended if interest rates near 7% and be
reduced if rates decline toward 6.25%. If it appears that economic growth is
accelerating and inflation is picking up, bond duration will be shortened and
stocks will be reduced shifting to cash. If economic growth is faltering, bonds
should rally while stocks are hurt by slowing revenues. In that case positions
will be shifted from stocks to bonds.
AGGRESSIVE STRATEGIC ALLOCATION FUND
The stock market rallied in the fourth quarter led by large cap stocks as
had been the case since mid year. Both the Dow Jones and Standard and Poor's
indices outpaced the broader market in 1996. Investors are
2
<PAGE> 4
getting nervous after two very strong years of stock market performance and are
moving into larger, more liquid stocks. This provides greater flexibility for
reducing stock exposure in any market downturn.
The Portfolio is diversified across large cap stocks, small cap stocks and
international stocks. It was overinvested in large cap stocks throughout the
quarter. In October, the Portfolio held cash and was underinvested in small cap
stocks and international stocks both of which declined. During October and
November cash was shifted into large cap stocks and international. This paid off
in November as large cap stocks continued to outperform and international
equities bounced back. In December large cap stocks and international declined
while small cap stocks rallied.
The first part of 1997 may look like a continuation of 1996. The economy
should continue to grow moderately with little inflationary pressure. Large cap
stocks should continue to lead the stock market higher. Small cap stocks could
rebound from their sluggish pace in the second half of 1996 while international
stocks continue to lag. The stock market should correct (probably toward
mid-year) if either the economy accelerates pushing up inflation and interest
rates or if it slows significantly causing revenues and profits to decline. We
expect that stronger growth is the more likely scenario.
The Portfolio remains overinvested in large cap stocks and has
underweighted international. Small cap stocks started the year at a normal
weighting while cash positions have been minimized. A more defensive posture
will be established if the market rallies to a more overvalued level and a
selloff in stocks appears imminent.
3
<PAGE> 5
DIVERSIFIED INVESTORS STRATEGIC ALLOCATION FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1996
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
STRATEGIC ALLOCATION STRATEGIC ALLOCATION STRATEGIC ALLOCATION
FUND FUND FUND
-------------------- -------------------- --------------------
<S> <C> <C> <C>
ASSETS:
Investments at value (cost, $743,749,
$2,845,172 and $2,177,177 respectively).... $736,792 $2,816,678 $2,167,236
Accounts receivable for shares sold.......... 5,448 3,798 6,468
-------- ---------- ----------
Total Assets................................. 742,240 2,820,476 2,173,704
-------- ---------- ----------
LIABILITIES:
Accrued expenses............................. 113 404 342
-------- ---------- ----------
Net assets................................... $742,127 $2,820,072 $2,173,362
======== ========== ==========
Net assets consist of:
Paid-in capital............................ 749,114 2,848,443 2,182,229
Accumulated (distributions in excess of)
net realized gains...................... (30) 123 1,074
Net unrealized depreciation on
investments............................. (6,957) (28,494) (9,941)
-------- ---------- ----------
Net assets................................... $742,127 $2,820,072 $2,173,362
======== ========== ==========
Outstanding shares of capital stock of
$.00001 par value per share, unlimited
number of shares of beneficial interest
authorized................................. 71,754 273,203 210,921
======== ========== ==========
Net asset value per share.................... $ 10.34 $ 10.32 $ 10.30
======== ========== ==========
</TABLE>
See Notes to Financial Statements.
4
<PAGE> 6
DIVERSIFIED INVESTORS STRATEGIC ALLOCATION FUNDS
STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM APRIL 15, 1996 TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
STRATEGIC ALLOCATION STRATEGIC ALLOCATION STRATEGIC ALLOCATION
FUND* FUND* FUND*
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Income distribution earned............... $ 11,569 $ 27,904 $ 6,851
Investment advisory fee.................. (188) (675) (602)
------- ------- -------
Net investment income.................. 11,381 27,229 6,249
------- ------- -------
Realized and unrealized gains (losses) on
investments:
Capital gain distribution earned....... 979 28,706 35,519
Net realized gains on investments...... 804 7,181 12,447
Net change in unrealized depreciation
on investments...................... (6,957) (28,494) (9,941)
------- ------- -------
Net realized and unrealized gains
(losses) on investments............. (5,174) 7,393 38,025
------- ------- -------
Net increase in net assets resulting from
operations............................. $ 6,207 $ 34,622 $ 44,274
======= ======= =======
</TABLE>
- ---------------
* Commencement of Operations, April 15, 1996
See Notes to Financial Statements.
5
<PAGE> 7
DIVERSIFIED INVESTORS STRATEGIC ALLOCATION FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM APRIL 15, 1996 TO DECEMBER 31, 1996
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
STRATEGIC ALLOCATION STRATEGIC ALLOCATION STRATEGIC ALLOCATION
FUND* FUND* FUND*
-------------------- -------------------- --------------------
<S> <C> <C> <C>
From operations:
Net income distribution earned......... $ 11,381 $ 27,229 $ 6,249
Capital gain distribution earned....... 979 28,706 35,519
Net realized gains on investments...... 804 7,181 12,447
Net change in unrealized depreciation
on investments...................... (6,957) (28,494) (9,941)
-------- ---------- ----------
Net increase in net assets resulting
from operations..................... 6,207 34,622 44,274
-------- ---------- ----------
Dividends and distributions to
shareholders:
Dividends from net investment income... (12,215) (34,611) (18,975)
Distributions from realized capital
gains............................... (949) (28,382) (34,166)
Distributions in excess of realized
gains............................... (30) -- --
Distributions from tax return of
capital............................. (969) -- --
-------- ---------- ----------
Total dividends and distributions...... (14,163) (62,993) (53,141)
-------- ---------- ----------
From capital share transactions:
Proceeds from issuance of shares....... 738,255 2,803,239 2,133,687
Proceeds from dividends and
distributions reinvested............ 14,163 62,993 53,141
Value of shares redeemed............... (2,335) (17,789) (4,599)
-------- ---------- ----------
Net increase in net assets from capital
share transactions.................. 750,083 2,848,443 2,182,229
-------- ---------- ----------
Net assets end of period................. $742,127 $2,820,072 $2,173,362
======== ========== ==========
Shares outstanding beginning of period... -- -- --
Shares issued during period.............. 70,611 268,797 206,179
Shares issued from reinvestment of
dividends and distributions............ 1,368 6,112 5,179
Shares redeemed during period............ (225) (1,706) (437)
-------- ---------- ----------
Shares outstanding end of period......... 71,754 273,203 210,921
======== ========== ==========
</TABLE>
- ---------------
* Commencement of Operations, April 15, 1996
See Notes to Financial Statements.
6
<PAGE> 8
CONSERVATIVE STRATEGIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PERCENT OF
SHARES VALUE NET ASSETS
- ------- -------- ----------
<C> <S> <C> <C>
INVESTMENTS IN REGULATED INVESTMENT COMPANIES
4,803 Diversified Investors Funds Group -- Equity Income Fund.... $ 73,250
22,709 Diversified Investors Funds Group -- Government/Corporate
Bond Fund................................................ 265,473
12,227 Diversified Investors Funds Group -- High Quality Bond
Fund..................................................... 133,153
9,728 Diversified Investors Funds Group -- High Yield Bond
Fund..................................................... 103,891
12,969 Diversified Investors Funds Group -- Intermediate
Government Bond Fund..................................... 132,419
2,829 Diversified Investors Funds Group -- Money Market Fund..... 28,606
--------
Total Investments (Cost $743,749).......................... 736,792 99.28%
Other assets less liabilities.............................. 5,335 0.72%
-------- ------
NET ASSETS................................................. $742,127 100.00%
======== ======
The aggregate cost of investments for federal income tax
purposes at December 31, 1996 is $743,779.
The following amount is based on costs for federal income
tax purposes:
Gross unrealized appreciation............................ $ 812
Gross unrealized depreciation............................ (7,799)
--------
Net unrealized depreciation.............................. $ (6,987)
========
</TABLE>
See Notes to Financial Statements.
7
<PAGE> 9
MODERATE STRATEGIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PERCENT OF
SHARES VALUE NET ASSETS
- ------- ---------- ----------
<C> <S> <C> <C>
INVESTMENTS IN REGULATED INVESTMENT COMPANIES
8,566 Diversified Investors Funds Group -- Aggressive Equity
Fund.................................................... $ 80,693
15,925 Diversified Investors Funds Group -- Equity Growth Fund... 230,915
20,660 Diversified Investors Funds Group -- Equity Income Fund... 315,071
7,075 Diversified Investors Funds Group -- Equity Value Fund.... 76,056
59,885 Diversified Investors Funds Group -- Government/Corporate
Bond Fund............................................... 700,055
16,024 Diversified Investors Funds Group -- Growth and Income
Fund.................................................... 220,815
20,690 Diversified Investors Funds Group -- High Quality Bond
Fund.................................................... 225,315
21,112 Diversified Investors Funds Group -- High Yield Bond
Fund.................................................... 225,474
16,432 Diversified Investors Funds Group -- Intermediate
Government Bond Fund.................................. 167,774
17,736 Diversified Investors Funds Group -- International Equity
Fund.................................................... 199,880
8,689 Diversified Investors Funds Group -- Money Market Fund.... 87,845
16,781 Diversified Investors Funds Group -- Special Equity
Fund.................................................... 286,785
----------
Total Investments (Cost $2,845,172)....................... 2,816,678 99.88%
Other assets less liabilities............................. 3,394 0.12%
----------
------
NET ASSETS................................................ $2,820,072 100.00%
========== ======
The aggregate cost of investments for federal income tax
purposes at December 31, 1996 is $2,845,373.
The following amount is based on costs for federal income
tax purposes:
Gross unrealized appreciation........................... $ 7,627
Gross unrealized depreciation........................... (36,322)
----------
Net unrealized depreciation............................. $ (28,695)
==========
</TABLE>
See Notes to Financial Statements.
8
<PAGE> 10
AGGRESSIVE STRATEGIC ALLOCATION FUND
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PERCENT OF
SHARES VALUE NET ASSETS
- ------- ---------- ----------
<C> <S> <C> <C>
INVESTMENTS IN REGULATED INVESTMENT COMPANIES
10,958 Diversified Investors Funds Group -- Aggressive Equity
Fund.................................................... $ 103,228
18,202 Diversified Investors Funds Group -- Equity Growth Fund... 263,934
30,796 Diversified Investors Funds Group -- Equity Income Fund... 469,644
18,093 Diversified Investors Funds Group -- Equity Value Fund.... 194,496
23,097 Diversified Investors Funds Group -- Growth and Income
Fund.................................................... 318,271
29,158 Diversified Investors Funds Group -- International Equity
Fund.................................................... 328,608
4,850 Diversified Investors Funds Group -- Money Market Fund.... 49,033
25,747 Diversified Investors Funds Group -- Special Equity
Fund.................................................... 440,022
----------
Total Investments (Cost $2,177,177)....................... 2,167,236 99.72%
Other assets less liabilities............................. 6,126 0.28%
---------- ---------
NET ASSETS $2,173,362 100.00%
========== =========
The aggregate cost of investments for federal income tax purposes
at December 31, 1996 is $2,177,456.
The following amount is based on costs for federal income
tax purposes:
Gross unrealized appreciation........................... $ 15,749
Gross unrealized depreciation........................... (25,969)
----------
Net unrealized depreciation............................. $ (10,220)
==========
</TABLE>
See Notes to Financial Statements.
9
<PAGE> 11
DIVERSIFIED INVESTORS STRATEGIC ALLOCATION FUNDS
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION
The Diversified Investors Strategic Allocation Funds (the "Trust"), a
Massachusetts business trust, is registered under the Investment Company Act of
1940 (the "1940 Act"), as amended, as an open-end management investment company.
The Trust is composed of three different series that are, in effect, separate
investment funds: Conservative Strategic Allocation Fund, Moderate Strategic
Allocation Fund, and Aggressive Strategic Allocation Fund (collectively, the
"Funds"). The Trust established and designated each of the Funds as separate
series on April 15, 1996. Each Fund seeks to achieve its investment objective by
investing all of its investable assets among the Diversified Investors Funds
Group (the "Funds Group"). The Funds Group is an open-end management investment
company registered under the 1940 Act.
2. SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATION:
The value of any Fund's investment in a corresponding fund of the Funds
Group are valued at the net asset value per share of each fund determined as of
the close of the New York Stock Exchange on the valuation date.
B. INVESTMENT INCOME:
Income and capital gains distributions earned are recorded on ex-dividend
date.
C. ORGANIZATION EXPENSES:
Costs incurred by the Funds in connection with their organization and
initial registration were borne by Diversified Investment Advisors, Inc. (the
"Advisor").
D. DIVIDENDS AND DISTRIBUTION:
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Dividends from net investment income and distributions from net realized
capital gains will normally be declared annually and reinvested in additional
full and fractional shares.
Income distributions and capital gain distributions are determined in
accordance with federal income tax regulations which may differ from generally
accepted accounting principles. The effect of these differences, which resulted
from realized capital gains, for the period ended December 31, 1996 are as
follows:
<TABLE>
<CAPTION>
DECREASED
INCREASED ACCUMULATED NET
UNDISTRIBUTED NET REALIZED GAIN (LOSS) DECREASED
INVESTMENT INCOME ON INVESTMENTS PAID-IN-CAPITAL
----------------- -------------------- ---------------
<S> <C> <C> <C>
Conservative Strategic Allocation
Fund................................. 834 135 (969)
Moderate Strategic Allocation Fund..... 7,382 (7,382) --
Aggressive Strategic Allocation Fund... 12,726 (12,726) --
</TABLE>
These restatements did not affect net investment income (loss), net realized
gains (losses) on investments, or net assets.
E. FEDERAL INCOME TAXES:
Each Fund is a separate entity for federal income tax purposes and intends
to comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its taxable income to
shareholders. Therefore, no federal income tax provision is required.
10
<PAGE> 12
DIVERSIFIED INVESTORS STRATEGIC ALLOCATION FUNDS
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
F. OPERATING EXPENSES:
The Trust accounts separately for the assets, liabilities and operations of
each Fund. Each fund will indirectly bear its pro rata share of fees and
expenses incurred by the Funds Group.
G. OTHER:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
3. FEES AND TRANSACTIONS WITH AFFILIATES
The Trust has entered into an Administrative Services Agreement with the
Advisor, an indirect, wholly-owned subsidiary of AEGON USA, Inc., under which
the Advisor provides administration, transfer agency and shareholder services.
For providing these services, facilities and for bearing the related expenses,
the Advisor receives a monthly fee from each Fund at an annual rate equal to
0.20% of the average daily net assets of each Fund.
Certain trustees and officers of the Trust are also directors, officers or
employees of the Advisor or its affiliates. None of the trustees so affiliated
receive compensation for services as trustees of the Trust. Similarly, none of
the Trust's officers receive compensation from the Funds.
4. PURCHASE AND SALES OF INVESTMENTS
The aggregate cost of investments purchased and proceeds from the sales for
the period ended December 31, 1996 were as follows:
<TABLE>
<CAPTION>
COST OF PURCHASES PROCEEDS FROM SALES
----------------- -------------------
<S> <C> <C>
Conservative Strategic Allocation Fund............. $ 1,680,756 $ 937,811
Moderate Strategic Allocation Fund................. 6,397,739 3,559,748
Aggressive Strategic Allocation Fund............... 4,938,970 2,774,240
</TABLE>
11
<PAGE> 13
DIVERSIFIED INVESTORS STRATEGIC ALLOCATION FUNDS
FINANCIAL HIGHLIGHTS
For one share outstanding throughout the period from April 15, 1996 to December
31, 1996:
<TABLE>
<CAPTION>
CONSERVATIVE MODERATE AGGRESSIVE
STRATEGIC ALLOCATION STRATEGIC ALLOCATION STRATEGIC ALLOCATION
FUND FUND FUND
-------------------- -------------------- --------------------
<S> <C> <C> <C>
Net asset value, beginning of period......... $ 10.00 $ 10.00 $ 10.00
-------- ---------- ----------
Income from investment operations:
Net investment income...................... 0.18 0.13 0.09
Net gains on investments (both realized and
unrealized)............................. 0.36 0.42 0.47
-------- ---------- ----------
Total from investment operations............. 0.54 0.55 0.56
-------- ---------- ----------
Less dividends and distributions:
From net investment income................. 0.18 0.13 0.09
From net realized gains on investments..... 0.01 0.10 0.17
In excess of realized gains on
investments............................. 0.00** -- --
From tax return of capital................. 0.01 -- --
-------- ---------- ----------
Total from dividends and
distributions.................... 0.20 0.23 0.26
-------- ---------- ----------
Net asset value, end of period............... $ 10.34 $ 10.32 $ 10.30
======== ========== ==========
Total Return*................................ 7.74% 7.94% 8.02%
Ratio/Supplemental data:
Net assets end of period..................... $742,127 $2,820,072 $2,173,362
======== ========== ==========
Ratio of expenses to average net assets*..... .20% .20% .20%
Ratio of net investment income to average net
assets*.................................... 11.60% 7.88% 2.03%
Portfolio turnover rate...................... 466% 469% 418%
Average commission rate paid per share+...... -- -- --
</TABLE>
- ---------------
* Annualized, Commencement of Operations, April 15, 1996
+ The Funds do not pay commissions on investment transactions.
** Less than one penny per share.
12
<PAGE> 14
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Owners of Beneficial Interest of the
Diversified Investors Strategic Allocation Funds:
We have audited the accompanying statements of assets and liabilities,
including the portfolio of investments, of Diversified Investors Strategic
Allocation Funds (comprising, respectively, the Conservative Strategic
Allocation Fund, Moderate Strategic Allocation Fund and Aggressive Strategic
Allocation Fund) (collectively, the "Funds") as of December 31, 1996, and the
related statements of operations, statements of changes in net assets and the
financial highlights for the period April 15, 1996 (commencement of operations)
to December 31, 1996. These financial statements and financial highlights are
the responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1996, by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
respective Funds constituting Diversified Investors Strategic Allocation Funds
as of December 31, 1996, the results of their operations, the changes in their
net assets, and the financial highlights for the period referred to above, in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
February 12, 1997
13
<PAGE> 15
This report is not to be construed as an
offering for sale of any shares of the
Diversified Investors Strategic Allocation
Funds, or as a solicitation as an offer to
buy such shares unless preceded by or
accompanied by a current prospectus
which contains the complete information of
charges and expenses.
<PAGE> 16
THE DIVERSIFIED INVESTORS STRATEGIC ALLOCATION FUNDS
4 Manhattanville Road, Purchase, New York 10577
(914) 697-8000
2854 (2/97)
