Table of Contents
USAA Family of Funds 1
Message from the President 2
Investment Review 4
Financial Information:
USAA S&P 500 Index Fund
Statement of Assets and Liabilities 6
Statement of Operations 7
Statements of Changes in Net Assets 8
Financial Highlights 9
Notes to Financial Statements 10
Equity 500 Index Portfolio
Statement of Net Assets 13
Statement of Operations 21
Statements of Changes in Net Assets 22
Financial Highlights 23
Notes to Financial Statements 24
Important Information
Through our ongoing efforts to reduce expenses and respond to shareholder
requests, your annual and semiannual report mailings are streamlined. One copy
of each report is sent to each address, rather than to every registered owner.
For many shareholders and their families, this eliminates duplicate copies,
saving paper and postage costs to the Fund.
If you are the primary shareholder on at least one account, prefer not to
participate in streamlining, and would like to continue receiving one report per
registered account owner, you may request this in writing to:
USAA Investment Management Company
Attn: Report Mail
9800 Fredericksburg Road
San Antonio, TX 78284-8916
or phone a Mutual Fund Representative at 1-800-531-8448 during business hours.
This report is for the information of the shareholders and others who have
received a copy of the currently effective prospectus of the USAA S&P 500 Index
Fund, managed by USAA Investment Management Company (IMCO). It may be used as
sales literature only when preceded or accompanied by a current prospectus which
gives further details about the Fund.
USAA with the eagle is registered in the U.S. Patent & Trademark Office.
(Copyright)1999, USAA. All rights reserved.
USAA Family of Funds Summary
Fund Minimum
Type/Name Volatility Investment
========================================================
CAPITAL APPRECIATION
- --------------------------------------------------------
Aggressive Growth Very high $3,000
Emerging Markets Very high $3,000
First Start Growth Moderate to high $3,000
Gold Very high $3,000
Growth Moderate to high $3,000
Growth & Income Moderate $3,000
International Moderate to high $3,000
S&P 500(Registered
Trademark) Index Moderate $3,000
Science & Technology Very high $3,000
Small Cap Stock Very high $3,000
World Growth Moderate to high $3,000
========================================================
ASSET ALLOCATION
- --------------------------------------------------------
Balanced Strategy Moderate $3,000
Cornerstone Strategy Moderate $3,000
Growth and Tax
Strategy Moderate $3,000
Growth Strategy Moderate to high $3,000
Income Strategy Low to moderate $3,000
========================================================
INCOME - TAXABLE
- --------------------------------------------------------
GNMA Low to moderate $3,000
High-Yield
Opportunities High $3,000
Income Moderate $3,000
Income Stock Moderate $3,000
Intermediate-Term
Bond Low to moderate $3,000
Short-Term Bond Low $3,000
========================================================
INCOME - TAX EXEMPT
- --------------------------------------------------------
Long-Term Moderate $3,000
Intermediate-Term Low to moderate $3,000
Short-Term Low $3,000
State Bond Income Moderate $3,000
========================================================
MONEY MARKET
- --------------------------------------------------------
Money Market Very low $3,000
Tax Exempt
Money Market Very low $3,000
Treasury Money
Market Trust Very low $3,000
State Money Market Very low $3,000
- --------------------------------------------------------
Foreign investing is subject to additional risks, which are discussed in the
funds' prospectuses.
S&P 500(Registered Trademark)is a trademark of The McGraw-Hill Companies, Inc.
and has been licensed for use. The Product is not sponsored, sold or promoted
by Standard & Poor's, and Standard & Poor's makes no representation regarding
the advisability of investing in the Product.
Some income may be subject to state or local taxes or the federal alternative
minimum tax.
An investment in a money market fund is not insured or guaranteed by the FDIC or
any other government agency. Although the fund seeks to preserve the value of
your investment at $1 per share, it is possible to lose money by investing in
the fund.
The Science & Technology Fund may be more volatile than a fund that diversifies
across many industries.
The InveStart(Registered Trademark) program is available for investors without
the $3,000 initial investment required to open an IMCO mutual fund account. A
mutual fund account can be opened with no initial investment if you elect to
have monthly automatic investments of at least $50 from a bank account.
InveStart is not available on tax-exempt funds or the S&P 500 Index Fund. The
minimum initial investment for IRAs is $250, except for the $2,000 minimum
required for the S&P 500 Index Fund. IRAs are not available for tax-exempt
funds. The Growth and Tax Strategy Fund is not available as an investment for
your IRA because the majority of its income is tax exempt.
California, Florida, New York, Texas, and Virginia funds available to residents
only.
Non-deposit investment products are not insured by the FDIC, are not deposits or
other obligations of, or guaranteed by, USAA Federal Savings Bank, are subject
to investment risks, and may lose value.
For more complete information about the mutual funds managed and distributed by
USAA Investment Management Company, including charges and operating expenses,
please call 1-800-531-8181 for a prospectus. Read it carefully before you
invest.
Message from the President
[PHOTOGRAPH OF PRESIDENT AND VICE CHAIRMAN OF THE BOARD, MICHAEL J.C. ROTH, CFA,
APPEARS HERE]
It's mid-1999 and the stock markets, as always, are quite interesting.
Generally, returns are good. This in itself is interesting since we were all
treated in the last few years to dire warnings of the effects of the Y2K
computer problem. I have long noted that if we can sit around USAA's offices and
discuss a topic in great detail, then that topic is already in the market. By
that I mean that buyers and sellers all over the country have digested this and
the effect is reflected in the prices they are demanding or are willing to pay
for securities. By now, Y2K is surely in the market, and the people are saying,
"This doesn't look like a big problem." In six months we'll very quickly be able
to assess the market's wisdom.
The other interesting thing about the market in mid-1999 is how different kinds
of stocks are performing. While your USAA S&P 500 Index Fund has had a quite
respectable six months, other types of portfolios have done better than our
Index Fund, especially better than in the past few years. The USAA Growth &
Income Fund, which has a sizeable part of its portfolio devoted to value stocks,
is performing better than the Index Fund. The USAA Income Stock Fund, an equity
income vehicle, has a return very close to that of the Index Fund. These are
major turnarounds from last year, and they demonstrate an important point. No
one I know of called this turnaround. In fact I have noted that there were
articles all around the financial press early this year promoting the ideas that
value investing and asset allocation were no longer useful.
Good investing driven by good discipline never goes out of style. In a given
year a discipline other than yours may do better, but in this business, hard
work and discipline generally pay off in the long run. That's why a combination
of an index fund with other disciplines, like aggressive growth, equity income,
or value, may form a great investment strategy. We have the funds to help you do
just that.
Sincerely,
Michael J.C. Roth, CFA
President and
Vice Chairman of the Board
The USAA S&P 500 Index Fund's average annual total returns for the six-month and
one-year periods and since inception ending June 30, 1999, were 12.20%, 22.76%,
and 29.06%, respectively.
The USAA Growth & Income Fund's average annual total returns for the six-month,
one-, and five-year periods and since inception ending June 30, 1999, were
16.04%, 12.53%, 21.38%, and 17.56%, respectively.
The USAA Income Stock Fund's average annual total returns for the six-month,
one-, five-, and ten-year periods ending June 30, 1999, were 10.86%, 12.85%,
19.16%, and 14.51%, respectively.
"S&P 500(Registered Trademark)" is a trademark of The McGraw-Hill Companies,
Inc. and has been licensed for use. The product is not sponsored, sold, or
promoted by Standard and Poor's and Standard and Poor's makes no representation
regarding the advisability of investing in the product.
The data quoted represents past performance. The investment return and principal
value of an investment will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost.
For more complete information about the mutual funds managed and distributed by
USAA Investment Management Company, including charges and operating expenses,
please call for a prospectus. Read it carefully before investing.
Investment Review
USAA S&P 500 INDEX FUND*
OBJECTIVE: To match, as closely as possible (before the deduction of expenses),
the performance of the S&P 500 Index, which emphasizes stocks of large U.S.
companies.
INVESTMENT INSTRUMENTS: Invests all assets in the Equity 500 Index Portfolio, a
separate registered investment company, with the same investment objective as
the Fund; the Portfolio, in turn, invests at least 80% of its assets in common
stocks of companies which compose the S&P 500 Index.
- --------------------------------------------------------------------------------
6/30/99 6/30/98
- --------------------------------------------------------------------------------
Net Assets $2,873.4 Million $1,855.9 Million
Net Asset Value Per Share $21.47 $19.27
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS AS OF 6/30/99
- --------------------------------------------------------------------------------
12/31/98 to 6/30/99 1 Year Since Inception on 5/1/96
12.20% (+) 22.76% 29.06% (++)
- --------------------------------------------------------------------------------
(+) Total returns for periods of less than one year are not annualized. This
six-month return is cumulative and does not include the account maintenance
fee.
(++) Includes the $10 annual account maintenance fee through December 31, 1996.
Total return equals income yield plus share price change and assumes
reinvestment of all dividends and capital gain distributions. No adjustment has
been made for taxes payable by shareholders on their reinvested income dividends
and capital gains distributions. The performance data quoted represent past
performance and are not an indication of future results. Investment return and
principal value of an investment will fluctuate, and an investor's shares, when
redeemed, may be worth more or less than their original cost.
CUMULATIVE PERFORMANCE COMPARISON
A chart in the form of a line graph appears here, illustrating the comparison of
a $10,000 hypothetical investment in the USAA S&P 500 Index Fund to the S&P 500
Index for the period of 05/02/96 through 06/30/99. The data points from the
graph are as follows:
USAA S&P 500
Index Fund S&P 500 Index
-------------- -------------
05/02/96 $10,000 $10,000
06/96 10,442 10,467
12/96 11,669 11,688
06/97 14,057 14,095
12/97 15,523 15,585
06/98 18,249 18,345
12/98 19,966 20,039
06/99 22,402 22,519
Data from 5/2/96** through 6/30/99
The graph illustrates how a $10,000 hypothetical investment in the USAA S&P 500
Index Fund so closely tracks the S&P 500 Index that its results are not visible
in the graph. The S&P 500 Index is an unmanaged index representing the weighted
average performance of a group of 500 widely held, publicly traded stocks. It is
not possible to invest directly in the S&P 500 Index.
* S&P 500(Registered Trademark) is a trademark of The McGraw-Hill Companies,
Inc., and has been licensed for use. The Product is not sponsored, sold or
promoted by Standard & Poor's, and Standard & Poor's makes no representation
regarding the advisability of investing in the Product.
** Date the Fund initially invested in securities represented by the Index.
PORTFOLIO SECTOR DIVERSIFICATION
% OF COMMON STOCK MARKET VALUE
A pie chart is shown here depicting the Portfolio Mix as of June 30, 1999 of the
USAA S&P 500 Index Fund to be:
Consumer Non-Durables - 22%; Finance & Building - 17%; Utilities - 11%;
Healthcare - 11%; Business Equipment & Service - 8%; Consumer Durables - 7%;
Retail Trade - 7%; Capital Goods - 6%; Energy - 6%; Other - 3%; and Chemicals -
2%.
------------------------------------------------------
TEN LARGEST
STOCK HOLDINGS
------------------------------------------------------
1. Microsoft Corp. 6. Lucent Technologies
2. General Electric Corp. 7. Intel
3. International Business 8. Exxon Corp.
Machines 9. AT&T Corp.
4. Wal-Mart Stores, Inc. 10. Merck & Co.
5. Cisco Systems
------------------------------------------------------
* * * * *
The USAA S&P 500 Index Fund received an overall star rating of
five stars in the domestic equity fund category from Morningstar Rating
(Trademark) for the period ended June 30, 1999.*
*Past performance is no guarantee of future results.
Morningstar proprietary ratings reflect historical risk-adjusted performance as
of June 30, 1999. The ratings are subject to change every month. Morningstar
ratings are calculated from the fund's 3-, 5-, and 10-year average annual
returns in excess of 90-day Treasury bill returns with appropriate fee
adjustments, and a risk factor that reflects fund performance below 90-day
T-bill returns. The Morningstar overall rating is a weighted average of a fund's
3-, 5-, and 10-year ratings as applicable. The USAA S&P 500 Index Fund received
5 stars for the 3-year period. The top 10% of the funds in a broad asset class
receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars,
the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The fund was
rated among 3,043 funds in the domestic equity fund category for the 3-year
period.
USAA S&P 500 INDEX FUND
STATEMENT OF ASSETS AND LIABILITIES
June 30, 1999
(Unaudited)
ASSETS
Investment in Equity 500 Index Portfolio, at Value $ 2,898,193,913
Receivable for Capital Shares Sold 2,267,140
----------------
Total Assets 2,900,461,053
----------------
LIABILITIES
Payable for Capital Shares Redeemed 26,392,395
USAA Investment Management Company 478,958
Accounts Payable and Accrued Expenses 233,407
----------------
Total Liabilities 27,104,760
----------------
Net Assets Applicable to Capital Shares Outstanding $ 2,873,356,293
================
REPRESENTED BY:
Paid-in Capital $ 2,224,629,247
Accumulated Undistributed Net Investment Income 2,856,051
Accumulated Net Realized Loss from Investments
and Futures Transactions (4,365,469)
Net Unrealized Appreciation on Investments and Futures
Contracts 650,236,464
----------------
Net Assets Applicable to Capital Shares Outstanding $ 2,873,356,293
================
Capital Shares Outstanding ($.01 par value per share,
175,000,000 shares authorized) 133,811,558
================
Net Asset Value, Redemption Price, and Offering Price
Per Share $ 21.47
================
See Notes to Financial Statements on page 10.
USAA S&P 500 INDEX FUND
STATEMENT OF OPERATIONS
Six-month period ended June 30, 1999
(Unaudited)
INVESTMENT INCOME
Income Allocated from Equity 500 Index Portfolio, net $ 19,160,709
----------------
EXPENSES
Administration Fees 741,312
Custodian's Fees 13,681
Postage 147,871
Shareholder Reporting Fees 20,275
Directors' Fees 2,175
Registration Fees 302,252
Professional Fees 10,625
Other 18,022
----------------
Total Expenses 1,256,213
----------------
Net Investment Income 17,904,496
----------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURES CONTRACTS
Net Realized Loss from Investment Transactions (7,408,422)
Net Realized Gain from Futures Transactions 3,042,689
Net Change in Unrealized Appreciation/Depreciation on
Investments and Futures Contracts 271,326,376
----------------
Net Realized and Unrealized Gain on Investments and Futures
Contracts 266,960,643
----------------
Net Increase in Net Assets from Operations $ 284,865,139
================
See Notes to Financial Statements on page 10.
USAA S&P 500 INDEX FUND
STATEMENTS OF CHANGES IN NET ASSETS
Six-month period ended June 30, 1999, and
year ended December 31, 1998
(Unaudited)
6/30/99 12/31/98
--------------------------------
FROM OPERATIONS
Net Investment Income $ 17,904,496 $ 16,609,994
Net Realized Gain (Loss) from Investment
and Futures Transactions (4,365,733) 10,738,420
Net Change in Unrealized Appreciation/
Depreciation on Investments and Futures
Contracts 271,326,376 281,497,244
--------------------------------
Net Increase in Net Assets from Operations 284,865,139 308,845,658
--------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net Investment Income (15,710,322) (16,008,199)
--------------------------------
Net Realized Gains (3,137,051) -
--------------------------------
FROM CAPITAL SHARE TRANSACTIONS
Proceeds from Shares Sold 915,798,980 1,192,785,880
Shares Issued for Dividends Reinvested 11,715,579 11,488,944
Cost of Shares Redeemed (176,030,907) (271,875,937)
--------------------------------
Net Increase in Net Assets from
Capital Share Transactions 751,483,652 932,398,887
--------------------------------
Net Increase in Net Assets 1,017,501,418 1,225,236,346
NET ASSETS:
Beginning of Period 1,855,854,875 630,618,529
--------------------------------
End of Period $2,873,356,293 $1,855,854,875
================================
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME
End of Period $ 2,856,051 $ 661,877
================================
CHANGE IN SHARES OUTSTANDING
Shares Sold 45,571,457 70,104,665
Shares Issued for Dividends Reinvested 566,039 646,762
Shares Redeemed (8,621,526) (16,046,032)
--------------------------------
Increase in Shares Outstanding 37,515,970 54,705,395
================================
See Notes to Financial Statements on page 10.
USAA S&P 500 INDEX FUND
FINANCIAL HIGHLIGHTS
June 30, 1999
(Unaudited)
Contained below are selected ratios and supplemental data for the periods
indicated for the USAA S&P 500 Index Fund.
<TABLE>
<CAPTION>
Six Months Eight Months
Ended Years Ended Ended
June 30, December 31, December 31,
----------------------------------------------------
1999 1998 1997 1996*
----------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE OPERATING
PERFORMANCE
Net Asset Value at Beginning of Period $ 19.27 $ 15.16 $ 11.57 $ 10.00
----------------------------------------------------
Income from Investment Operations:
Net Investment Income .13 .21 .21 .12
Net Realized and Unrealized Gain
on Investments and
Futures Transactions 2.21 4.11 3.59 1.57
----------------------------------------------------
Total from Investment Operations 2.34 4.32 3.80 1.69
Distributions from Net
Investment Income (.12) (.21) (.21) (.12)
Distributions of Realized Capital Gains (.02) - - -
----------------------------------------------------
Net Asset Value at End of Period $ 21.47 $ 19.27 $ 15.16 $ 11.57
====================================================
Total Return (%)** 12.20 28.62 33.03 16.90
SUPPLEMENTAL DATA
AND RATIOS
Net Assets at End of Period (000) $2,873,356 $1,855,855 $ 630,619 $ 179,073
Ratios to Average Net Assets:
Net Investment Income (%) 1.42(a) 1.40 1.64 2.09(a)
Expenses, including Expenses of the
Equity 500 Index Portfolio(%) .18(a) .18 .18 .18(a)
Decrease Reflected in Above Expense
Ratio Due to Absorption of Expenses
by Bankers Trust and the Manager (%) - .02 .07 .15(a)
</TABLE>
(a) Annualized. The ratio is not necessarily indicative of 12 months of
operations.
* Fund commenced operations May 1, 1996.
** Assumes reinvestment of all dividend income distributions during the period;
does not reflect $10 annual account maintenance fee.
See Notes to Financial Statements on page 10.
USAA S&P 500 INDEX FUND
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
USAA MUTUAL FUND, INC. (the Company), registered under the Investment Company
Act of 1940 (the Act), as amended, is a diversified, open-end management
investment company incorporated under the laws of Maryland consisting of
thirteen separate funds. The information presented in this semiannual report
pertains only to the USAA S&P 500 Index Fund (the Fund). The Fund's primary
investment objective is to match, as closely as possible, (before the deduction
of expenses), the performance of the S&P 500 Index, which emphasizes stocks of
large U.S. companies. The Fund seeks to achieve its objective by investing all
its investable assets in the Equity 500 Index Portfolio (the Portfolio), which
is a separate registered investment company advised by Bankers Trust Company
with an identical investment objective. At June 30, 1999, the Fund's investment
was 40.67% of the Portfolio.
The financial statements of the Portfolio, including the Statement of Net
Assets, are contained elsewhere in this report and should be read in conjunction
with the Fund's financial statements.
A. Valuation of Investments - The Fund records its investment in the Portfolio
at value which reflects its proportionate interest in the net assets of the
Portfolio. Valuation of the securities held by the Portfolio is discussed in the
notes to the Portfolio's financial statements included elsewhere in this report.
B. Investment Income and Expenses - The Fund records daily its pro rata share
of the Portfolio's income, expenses, and realized and unrealized gains and
losses. In addition, the Fund accrues its own expenses.
C. Federal Taxes - The Fund's policy is to comply with the requirements of the
Internal Revenue Code applicable to regulated investment companies and to
distribute substantially all of its income to its shareholders. Therefore, no
federal income or excise tax provision is required. The Fund may periodically
make reclassifications among certain of its capital accounts as a result of the
timing and characterization of certain income and capital gains distributions
determined annually in accordance with federal tax regulations which may differ
from generally accepted accounting principles.
D. Distributions - Distributions to shareholders are recorded on the
ex-dividend date. Distributions of net investment income are made quarterly.
Distributions of the Fund's pro rata share of the Portfolio's realized gains
from security transactions not offset by capital losses are made in the
succeeding fiscal year or as otherwise required to avoid the payment of federal
taxes.
E. Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that may affect the reported amounts in the financial
statements. Actual results could differ from those estimates.
(2) LINES OF CREDIT
The Fund participates with other USAA funds in three joint short-term revolving
loan agreements totaling $850 million, two with USAA Capital Corporation
(CAPCO), an affiliate of the Manager ($250 million committed and $500 million
uncommitted), and one with Bank of America ($100 million committed). The purpose
of the agreements is to meet temporary or emergency cash needs, including
redemption requests that might otherwise require the untimely disposition of
securities. Subject to availability under both agreements with CAPCO, the Fund
may borrow from CAPCO an amount up to 5% of the Fund's total assets at CAPCO's
borrowing rate with no markup. Subject to availability under its agreement with
Bank of America, the Fund may borrow from Bank of America, at Bank of America's
borrowing rate plus a markup, an amount which, when added to outstanding
borrowings under the CAPCO agreements, does not exceed 25% of the Fund's total
assets. The Fund had no borrowings under any of these agreements during the
six-month period ended June 30, 1999.
(3) TRANSACTIONS WITH MANAGER
A. Administrative Fees - The Fund has entered into an Administration Agreement
with USAA Investment Management Company (the Manager) under which the Manager
provides administrative services to the Fund. The Fund pays the Manager a
monthly administrative fee which on an annual basis is equal to the lesser of
.06% of the average daily net assets of the Fund or the amount that brings the
total Fund and Portfolio annual operating expenses up to .18% of the Fund's
average net assets.
The Manager is contractually entitled to receive fees from the Fund only to the
extent that the aggregate annual operating expenses of the Fund and the
Portfolio do not exceed .18% of the Fund's average net assets.
B. Transfer Agent's Fees - The Fund has entered into a Transfer Agency
Agreement with USAA Transfer Agency Company, d/b/a USAA Shareholder Account
Services, an affiliate of the Manager, under which transfer agency services are
provided to the Fund. The Fund does not pay for these services. The Transfer
Agent assesses shareholders an annual account maintenance fee of $10 to cover
costs of maintaining shareholder accounts. This fee is waived on accounts with a
balance of $10,000 or more.
C. Underwriting Agreement - The Manager provides exclusive underwriting and
distribution of the Fund's shares on a continuing best efforts basis. The
Manager receives no commissions or fees for this service.
D. Management Agreement - The Manager serves as investment adviser to the Fund
and is responsible for monitoring the services provided to the Portfolio by
Bankers Trust. While the Fund maintains its investment in the Portfolio, the
Manager receives no fee for this service.
(4) TRANSACTIONS WITH AFFILIATES
USAA Investment Management Company is indirectly wholly owned by United Services
Automobile Association (the Association), a large, diversified financial
services institution. At June 30, 1999, the Association and its affiliates owned
47,996,498 shares (35.87%) of the Fund.
Certain directors and officers of the Fund are also directors, officers, and/or
employees of the Manager. None of the affiliated directors or Fund officers
received any compensation from the Fund.
(5) YEAR 2000
Like other mutual funds, the Fund could be adversely affected if the computer
systems used by the Manager and the Fund's other service providers are not able
to perform their intended functions effectively after 1999 because of the
inability of computer software to distinguish the year 2000 from the year 1900.
The Manager has taken steps to address this potential year 2000 problem with
respect to the computer systems that it uses and to obtain satisfactory
assurances that comparable steps are being taken by the Fund's other major
service providers. At this time, however, there can be no assurance that these
steps will be sufficient to avoid any adverse impact to the Fund from this
problem.
EQUITY 500 INDEX PORTFOLIO
STATEMENT OF NET ASSETS
June 30, 1999
(Unaudited)
Shares Description Value
- -----------------------------------------------------------------------
COMMON STOCKS - 101.3%
226,000 3Com Corp.(1) $ 6,031,375
970,744 Abbott Laboratories 44,168,852
39,000 Adobe Systems, Inc. 3,204,096
23,368 Adolph Coors Co. - Class B 1,156,716
90,941 Advanced Micro Devices, Inc.(1) 1,642,622
130,000 AES Corp.(1) 7,556,250
92,059 Aetna, Inc. 8,233,527
170,100 Aflac, Inc.(1) 8,143,537
147,908 Air Products and Chemicals, Inc. 5,953,297
18,398 Alberto-Culver Co. - Class B 489,847
275,323 Albertson's, Inc. 14,196,351
139,736 Alcan Aluminum Ltd. 4,462,818
237,500 Alcoa, Inc. 14,695,312
129,494 Allegheny Teledyne, Inc. 2,929,802
45,201 Allergan, Inc. 5,017,311
357,212 AlliedSignal, Inc. 22,504,356
517,698 Allstate Corp. 18,572,416
177,900 Alltel Corp. 12,719,850
64,034 ALZA Corp.(1) 3,257,730
62,493 Amerada Hess Corp. 3,718,333
84,620 Ameren Corp. 3,247,292
693,400 America Online, Inc.(1) 76,620,700
132,910 American Electric Power Co. 4,992,432
290,216 American Express Co. 37,764,357
161,637 American General Corp. 12,183,389
57,314 American Greetings Corp. - Class A 1,726,584
859,192 American Home Products Corp. 49,403,540
794,405 American International Group, Inc. 92,995,035
711,904 Ameritech Corp. 52,324,944
326,380 Amgen, Inc.(1) 19,868,382
98,404 AMR Corp.(1) 6,716,073
114,450 Amsouth Banc Corp. 2,653,809
81,100 Anadarko Petroleum Corp. 2,985,494
51,376 Andrew Corp.(1) 972,933
306,480 Anheuser Busch Companies, Inc. 21,740,925
157,875 AON Corp. 6,512,344
63,300 Apache Corp. 2,468,700
89,642 Apple Computer, Inc. 4,151,545
237,200 Applied Materials, Inc.(1) 17,523,150
419,647 Archer-Daniels-Midland Co. 6,478,301
26,783 Armstrong World Industries, Inc. 1,548,392
20,849 Asarco, Inc. 392,222
32,987 Ashland, Inc. 1,323,603
457,422 Associates First Capital Corp. - Class A 20,269,512
2,040,706 AT&T Corp. 113,896,904
209,250 Atlantic Richfield Co. 17,485,453
35,814 Autodesk, Inc. 1,058,751
403,524 Automatic Data Processing, Inc. 17,755,056
87,800 Autozone, Inc.(1) 2,644,975
74,530 Avery Dennison Corp. 4,499,749
171,356 Avon Products, Inc. 9,510,258
209,713 Baker Hughes, Inc. 7,025,385
18,754 Ball Corp. 792,356
767,348 Banc One Corp. 45,705,165
1,109,639 Bank of America Corp. 81,350,409
487,800 Bank of New York Co., Inc. 17,896,162
190,034 BankBoston Corp. 9,715,488
275,500 Barrick Gold Corp. 5,337,812
162,300 Battle Mountain Gold Co.(1) 395,606
36,123 Bausch & Lomb, Inc. 2,763,409
183,463 Baxter International, Inc. 11,122,444
176,900 BB&T Corp. 6,490,019
71,795 Bear Stearns Companies, Inc. 3,356,416
165,164 Becton, Dickinson & Co. 4,954,920
995,280 Bell Atlantic Corp. 65,066,430
1,214,464 BellSouth Corp. 56,928,000
25,431 Bemis Co., Inc. 1,010,882
129,700 Best Buy Inc.(1) 8,754,750
186,860 Bestfoods 9,249,570
89,049 Bethlehem Steel Corp.(1) 684,564
72,150 Biomet, Inc.(1) 2,867,962
57,571 Black & Decker Corp. 3,634,169
138,400 BMC Software, Inc.(1) 7,473,600
613,946 Boeing Co. 27,128,739
38,403 Boise Cascade Corp. 1,646,529
250,700 Boston Scientific Corp.(1) 11,015,131
25 BP Amoco Plc - Sponsored ADR 2,713
15,582 Briggs & Stratton Corp. 899,860
1,274,456 Bristol-Myers Squibb Co. 89,769,494
30,019 Brown-Forman Corp. - Class B 1,956,864
105,235 Browning-Ferris Industries, Inc. 4,525,105
58,842 Brunswick Corp. 1,640,221
303,536 Burlington Northern Santa Fe Corp. 9,409,616
120,039 Burlington Resources, Inc. 5,191,687
34,577 C.R. Bard, Inc. 1,653,213
110,600 Cabletron Systems, Inc.(1) 1,437,800
270,454 Campbell Soup Co. 12,542,304
126,100 Capital One Financial Corp. 7,022,194
169,997 Cardinal Health, Inc. 10,901,058
390,500 Carnival Corp. - Class A 18,939,250
77,628 Carolina Power & Light Co. 3,323,449
47,400 Case Corp. 2,281,125
237,964 Caterpillar, Inc. 14,277,840
452,810 CBS Corp.(1) 19,668,934
503,534 Cendant Corp.(1) 10,322,447
38,180 Centex Corp. 1,434,136
136,630 Central & South West Corp. 3,193,726
95,000 Centurytel, Inc. 3,776,250
88,104 Ceridian Corp. 2,879,899
65,028 Champion International Corp. 3,113,215
252,050 Charles Schwab Corp. 27,693,994
546,464 Chase Manhattan Corp. 47,337,444
418,566 Chevron Corp. 39,842,251
108,572 Chubb Corp. 7,545,754
132,399 CIGNA Corp. 11,783,511
96,700 Cincinnati Financial Corp. 3,632,294
105,122 Cinergy Corp. 3,363,904
66,846 Circuit City Stores, Inc. 6,216,678
2,059,050 Cisco Systems, Inc.(1) 132,808,725
2,163,924 Citigroup 102,786,390
199,100 Clear Channel Communications, Inc.(1) 13,725,456
75,204 Clorox Co. 8,032,727
74,300 CMS Energy 3,111,312
149,432 Coastal Corp. 5,977,280
1,581,442 Coca-Cola Co. 98,840,125
264,300 Coca-Cola Enterprises, Inc. 7,862,925
187,702 Colgate-Palmolive Co. 18,535,572
53,502 Columbia Energy Group 3,353,907
368,122 Columbia/HCA Healthcare Corp. 8,397,783
488,824 Comcast Corp. - Special Class A 18,789,172
99,660 Comerica, Inc. 5,923,541
1,075,984 Compaq Computer Corp. 25,487,371
350,875 Computer Associates International, Inc. 19,298,125
101,872 Computer Sciences Corp.(1) 7,048,269
238,300 Compuware Corp.(1) 7,580,919
308,832 ConAgra, Inc. 8,222,652
203,468 Conseco, Inc. 6,193,057
149,736 Consolidated Edison, Inc. 6,775,554
61,405 Consolidated Natural Gas Co. 3,730,354
70,600 Consolidated Stores Corp.(1) 1,906,200
88,825 Constellation Energy Group, Inc. 2,631,441
61,248 Cooper Industries, Inc. 3,184,896
53,951 Cooper Tire & Rubber Co. 1,274,592
156,514 Corning, Inc. 10,975,544
139,899 Costco Companies, Inc.(1) 11,200,664
72,900 Countrywide Credit Industries, Inc. 3,116,475
42,449 Crane Co. 1,334,490
81,650 Crown Cork & Seal Co., Inc. 2,327,025
155,232 CSX Corp. 7,033,950
20,334 Cummins Engine Co., Inc. 1,161,580
248,588 CVS Corp. 12,615,841
66,894 Cyprus Amax Minerals Co. 1,015,953
107,147 Dana Corp. 4,935,459
94,700 Danaher Corp. 5,504,437
88,319 Darden Restaurants, Inc. 1,926,458
23,045 Data General Corp.(1) 335,593
282,616 Dayton Hudson Corp. 18,370,040
153,923 Deere & Co. 6,099,199
1,643,900 Dell Computer Corp.(1) 60,824,300
349,125 Delphi Automotive Systems 6,480,633
90,798 Delta Air Lines, Inc. 5,232,235
51,591 Deluxe Corp. 2,008,825
64,997 Dillard Department Stores, Inc. - Class A 2,283,020
151,406 Dollar General Corp. 4,390,774
125,206 Dominion Resources, Inc. 5,422,985
144,008 Dover Corp. 5,040,280
145,076 Dow Chemical Co. 18,406,517
48,172 Dow Jones & Co., Inc. 2,556,127
104,876 DTE Energy Co. 4,195,040
726,492 Du Pont (E.I.) de Nemours & Co. 49,628,485
232,295 Duke Power Co. 12,631,041
105,979 Dun & Bradstreet Corp. 3,755,631
15,642 Eastern Enterprises 621,769
62,781 Eastman Chemical Co. 3,248,917
208,826 Eastman Kodak Co. 14,147,961
52,382 Eaton Corp. 4,819,144
73,800 Ecolab, Inc. 3,219,525
226,470 Edison International, Inc. 6,058,072
31,125 EG & G, Inc. 1,108,828
316,000 Electronic Data Systems Corp. 17,873,750
89 Elf Aquitaine-Sponsored ADR 6,547
705,140 Eli Lilly & Co. 50,505,652
643,680 EMC Corp.(1) 35,402,400
298,000 Emerson Electric Co. 18,736,750
84,308 Engelhard Corp. 1,907,468
219,066 Enron Corp. 17,908,645
158,407 Entergy Corp. 4,950,219
90,800 Equifax, Inc. 3,240,425
1,559,034 Exxon Corp. 120,240,497
672,114 Fannie Mae 45,955,795
189,710 FDX Corp.(1) 10,291,767
141,100 Federated Department Stores, Inc.(1) 7,469,481
170,567 Fifth Third Bancorp 11,353,366
283,900 First Data Corp. 13,893,356
623,085 First Union Corp. 29,284,995
442,400 Firstar Corp. 12,387,200
152,384 FirstEnergy Corp. 4,723,904
394,888 Fleet Financial Group, Inc. 17,523,155
22,406 Fleetwood Enterprises, Inc. 592,359
62,700 Florida Progress Corp. 2,590,294
47,681 Fluor Corp. 1,931,080
20,850 FMC Corp.(1) 1,424,316
782,644 Ford Motor Co. 44,170,471
138,985 Fort James Corp. 5,264,057
111,574 Fortune Brands, Inc. 4,616,374
30,738 Foster Wheeler Corp. 434,174
117,794 FPL Group, Inc. 6,434,497
172,120 Franklin Resources, Inc. 6,992,375
435,714 Freddie Mac 25,271,412
79,700 Freeport-McMoRan Copper & Gold, Inc.
- Class B(1) 1,429,619
114,100 Frontier Corp. 6,731,900
46,300 Fruit of the Loom, Inc. - Class A(1) 451,425
180,592 Gannett Company, Inc. 12,889,754
548,334 Gap, Inc. 27,622,325
89,200 Gateway, Inc.(1) 5,262,800
81,744 General Dynamics Corp. 5,599,464
2,101,744 General Electric Co. 237,497,072
103,100 General Instrument Corp.(1) 4,381,750
98,269 General Mills, Inc. 7,898,371
419,634 General Motors Corp. 27,695,844
115,226 Genuine Parts Co. 4,032,910
112,802 Georgia-Pacific Corp. 5,343,995
711,316 Gillette Co. 29,163,956
37,317 Golden West Financial Corp. 3,657,066
47,752 Goodrich (B.F.) Co. 2,029,460
100,136 Goodyear Tire & Rubber Co. 5,889,248
64,400 GPU, Inc. 2,716,875
24,525 Great Atlantic & Pacific Tea Co., Inc. 829,252
37,796 Great Lakes Chemical Corp. 1,740,978
623,636 GTE Corp. 47,240,427
204,400 Guidant Corp.(1) 10,513,825
69,735 H & R Block, Inc. 3,486,750
259,525 H.J. Heinz Co. 13,008,691
281,962 Halliburton Co. 12,758,780
38,839 Harcourt General, Inc. 2,002,636
58,815 Harrah's Entertainment, Inc.(1) 1,293,930
55,742 Harris Corp. 2,184,390
146,546 Hartford Financial Services Group, Inc. 8,545,464
123,470 Hasbro, Inc. 3,449,443
68,900 HCR Manor Care, Inc.(1) 1,666,519
252,500 Healthsouth Corp.(1) 3,771,719
31,616 Helmerich and Payne 752,856
70,514 Hercules, Inc. 2,772,082
81,894 Hershey Foods Corp. 4,862,456
650,840 Hewlett-Packard Co. 65,409,420
166,541 Hilton Hotels Corp. 2,362,800
953,152 Home Depot, Inc. 61,418,732
149,343 Homestake Mining Co. 1,222,746
83,119 Honeywell, Inc. 9,631,414
309,585 Household International, Inc. 14,666,589
105,000 Humana, Inc.(1) 1,358,437
135,070 Huntington Bancshares, Inc. 4,727,450
81,162 Ikon Office Solutions, Inc. 1,217,430
151,192 Illinois Tool Works, Inc. 12,397,744
220,858 IMS Health, Inc. 6,901,812
80,266 Inco, Ltd.(1) 1,444,788
105,946 Ingersoll-Rand Co. 6,846,760
2,133,956 Intel Corp. 126,970,382
1,163,764 International Business Machines Corp. 150,416,497
65,287 International Flavors & Fragrances, Inc. 2,897,111
265,474 International Paper Co. 13,406,437
83,360 Interpublic Group of Companies, Inc. 7,221,060
59,423 ITT Industries 2,265,502
169,550 J.C. Penney Co., Inc. 8,233,772
67,965 Jefferson-Pilot Corp. 4,498,433
862,396 Johnson & Johnson 84,514,808
47,154 Johnson Controls, Inc. 3,268,362
7,839 Jostens, Inc. 165,109
70,400 Kansas City Southern Inds. 4,492,400
29,045 Kaufman & Broad Home Corp. 722,494
252,314 Kellogg Co. 8,326,362
60,831 Kerr-McGee Corp. 3,052,956
319,000 KeyCorp 10,247,875
347,406 Kimberly-Clark Corp. 19,802,142
47,512 King World Productions, Inc.(1) 1,654,011
58,800 KLA/Tencor Corp.(1) 3,814,650
315,503 Kmart Corp.(1) 5,186,081
58,826 Knight-Ridder, Inc. 3,231,753
98,800 Kohls Corp.(1) 7,626,125
513,740 Kroger Co. 14,352,611
153,900 Laidlaw, Inc. 1,135,012
75,700 Lehman Brothers, Inc. 4,712,325
133,741 Limited, Inc. 6,068,498
138,020 Lincoln National Corp. 7,220,171
44,403 Liz Claiborne, Inc. 1,620,709
251,610 Lockheed Martin Corp. 9,372,472
63,300 Loews Corp. 5,008,612
24,926 Longs Drug Stores, Inc. 861,505
74,958 Louisiana-Pacific Corp. 1,780,252
236,688 Lowe's Companies, Inc. 13,417,251
85,000 LSI Logic Corp.(1) 3,920,625
1,924,321 Lucent Technologies, Inc. 129,771,431
38 Lyondell Chemical Co. 784
49,702 Mallinckrodt Group, Inc. 1,807,910
155,680 Marriott International 5,818,540
179,286 Marsh and McLennan 13,536,093
225,022 Masco Corp. 6,497,510
267,265 Mattel, Inc. 7,065,818
216,447 May Department Stores Co. 8,847,271
58,812 Maytag Corp. 4,098,461
63,700 MBIA, Inc. 4,124,575
514,137 MBNA Corp. 15,745,446
37,087 McDermott International, Inc. 1,047,708
867,728 McDonald's Corp. 35,848,013
137,960 McGraw-Hill, Inc. 7,441,217
1,193,213 MCI WorldCom, Inc.(1) 102,914,621
178,773 McKesson HBOC, Inc. 5,743,083
65,902 Mead Corp. 2,751,408
389,228 MediaOne Group(1) 28,948,832
374,704 Medtronic, Inc. 29,180,074
334,848 Mellon Bank Corp. 12,180,096
101,000 Mercantile Banc Corp, Inc. 5,769,625
1,513,794 Merck & Co., Inc. 112,020,756
33,372 Meredith Corp. 1,155,505
66 Meritor Automotive 1,683
228,976 Merrill Lynch & Co., Inc. 18,303,769
75,300 MGIC Investment Corp. 3,661,462
152,700 Micron Technology, Inc. 6,155,719
3,263,800 Microsoft Corp.(1) 294,353,962
19,447 Milacron, Inc. 359,769
28,492 Millipore Corp. 1,155,707
258,178 Minnesota Mining & Manufacturing Co. 22,445,350
126,100 Mirage Resorts, Inc.(1) 2,112,175
508,642 Mobil Corp. 50,355,558
52 Momentum Business Applications(1) 367
398,620 Monsanto Co. 15,720,576
370,433 Morgan Stanley Dean Witter Discover & Co. 37,969,382
112,960 Morgan, (J.P.) & Co., Inc. 15,870,880
384,842 Motorola, Inc. 36,463,780
211,000 Nabisco Group Holdings 4,127,688
3,827 NACCO Industries, Inc. - Class A 281,285
41,925 Nalco Chemical Co. 2,174,859
210,600 National City Corp. 13,794,300
106,826 National Semiconductor Corp.(1) 2,704,033
31,826 National Service Industries, Inc. 1,145,736
39,758 Navistar International Corp. 1,987,900
46,700 Network Appliance, Inc.(1) 2,609,363
71,000 New Century Energies, Inc. 2,755,688
123,468 New York Times Co. - Class A 4,545,166
183,096 Newell Rubbermaid, Inc. 8,513,964
118,810 Newmont Mining Corp. 2,361,349
184,500 Nextel Communications, Inc. - Class A(1) 9,259,594
78,242 Niagara Mohawk Power Corp. 1,256,762
35,869 NICOR, Inc. 1,365,264
179,348 Nike, Inc. 11,354,970
94,558 Nordstrom, Inc. 3,167,693
243,453 Norfolk Southern Corp. 7,334,022
431,662 Nortel Networks Corp. 37,473,657
77,088 Northern States Power Co. 1,864,566
73,500 Northern Trust Corp. 7,129,500
55,579 Northrop Grumman Corp. 3,685,582
222,092 Novell, Inc.(1) 5,885,438
57,094 Nucor Corp. 2,708,397
221,814 Occidental Petroleum Corp. 4,685,821
232,300 Office Depot, Inc.(1) 5,125,119
112,500 Omnicom Group, Inc. 9,000,000
17,791 Oneok, Inc. 564,864
935,084 Oracle Corp.(1) 34,714,994
34,750 Owens Corning 1,194,531
97,500 Owens-Illinois, Inc.(1) 3,187,031
83,307 PP & L Resources 2,561,690
63,980 Paccar, Inc. 3,414,933
253,389 Pacificorp 4,656,023
89,900 Paine Webber Group, Inc. 4,202,825
80,664 Pall Corp. 1,789,733
187,000 Parametric Technology Corp.(1) 2,594,625
84,414 Parker-Hannifin Corp. 3,861,941
165,150 Paychex, Inc. 5,264,156
32,225 PE Corp. - PE Biosystems Group 3,697,819
126,384 PECO Energy 5,292,330
22,655 People's Energy Corp. 853,810
149,300 Peoplesoft, Inc.(1) 2,575,425
33,612 Pep Boys (Manny, Moe & Jack) 726,860
941,994 PepsiCo, Inc. 36,443,393
832,228 Pfizer, Inc. 91,337,023
257,305 PG&E Corp. 8,362,413
325,732 Pharmacia & Upjohn, Inc. 18,505,649
37,108 Phelps Dodge Corp. 2,298,377
1,558,198 Phillip Morris Companies 62,620,082
162,006 Phillips Petroleum Co. 8,150,927
153,520 Pioneer Hi-Bred International, Inc. 5,977,685
174,796 Pitney Bowes, Inc. 11,230,643
151,104 Placer Dome, Inc. 1,784,916
194,133 PNC Bank Corp. 11,186,914
33,582 Polaroid Corp. 927,703
18,501 Potlatch 812,888
112,342 PPG Industries, Inc. 6,635,199
101,115 Praxair, Inc. 4,948,315
851,240 Procter & Gamble Co. 75,973,170
46,450 Progressive Corporation of Ohio 6,735,250
62 Prologis Trust 1,256
85,800 Provident Cos., Inc. 3,432,000
90,797 Providian Financial Corp. 8,489,520
143,294 Public Service Enterprise Group 5,857,142
29,832 Pulte Corp. 688,001
94,184 Quaker Oats Co. 6,251,463
86,052 R.R. Donnelley & Sons Co. 3,189,302
207,815 Ralston Purina Group 6,325,369
51,976 Raychem Corp. 1,923,112
217,114 Raytheon Co. - Class B 15,279,398
35,129 Reebok International Ltd.(1) 654,278
136,170 Regions Financial Corp. 5,234,034
169,592 Reliant Energy 4,684,979
76,600 Republic New York Corp. 5,223,163
49,249 Reynolds Metals Co. 2,905,691
183,502 Rite Aid Corp. 4,518,737
66 RJ Reynolds Tobacco Hldgs. 2,079
135,424 Rockwell International Corp. 8,227,008
134,491 Rohm & Haas Co. 5,766,330
51,700 Rowan Cos., Inc.(1) 953,219
1,363,504 Royal Dutch Petroleum Co. 82,151,116
23,111 Russell Corp. 450,665
46,017 Ryder Systems, Inc. 1,196,442
93,902 Safeco 4,143,426
326,500 Safeway, Inc.(1) 16,161,750
583,554 Sara Lee Corp. 13,239,381
1,254,428 SBC Communications, Inc. 72,756,824
942,432 Schering-Plough Corp. 49,948,896
352,562 Schlumberger Ltd. 22,453,792
48,438 Scientific-Atlanta, Inc. 1,743,768
156,400 Seagate Technology, Inc.(1) 4,007,750
286,737 Seagram Co. Ltd. 14,444,376
53,605 Sealed Air Corp.(1) 3,477,624
245,609 Sears, Roebuck & Co. 10,944,951
132,514 Sempra Energy 2,998,129
175,992 Service Corp. International 3,387,846
17,074 Shared Medical Systems Corp. 1,114,079
115,474 Sherwin-Williams Co. 3,204,404
65,600 Sigma Aldrich Corp. 2,259,100
119,215 Silicon Graphics, Inc.(1) 1,952,146
106,200 SLM Holding Corp. 4,865,288
41,094 Snap-On Tools Corp. 1,487,089
161,500 Solectron Corp.(1) 10,770,031
68,910 Sonat, Inc. 2,282,644
447,458 Southern Co. 11,857,637
118,200 Southtrust Corp. 4,535,925
215,800 Southwest Airlines Co. 6,716,775
7,104 Springs Industries, Inc. - Class A 309,912
583,064 Sprint Corp. 30,793,068
278,791 Sprint PCS(1) 15,925,936
50,588 St. Jude Medical, Inc. 1,802,198
151,228 St. Paul Cos., Inc. 4,810,941
54,830 Stanley Works 1,764,841
314,200 Staples, Inc.(1) 9,720,563
102,700 State Street Corp. 8,768,013
119,100 Summit Bancorp 4,979,869
499,912 Sun Microsystems, Inc.(1) 34,431,439
62,745 Sunoco, Inc. 1,894,115
205,460 Suntrust Banks, Inc. 14,266,629
73,940 SuperValu, Inc. 1,899,334
146,950 Synovus Financial Corp. 2,920,631
213,420 Sysco Corp. 6,362,584
126,932 Tandy Corp. 6,203,802
30,207 Tektronix, Inc. 911,874
249,150 Tellabs, Inc.(1) 16,833,197
41,122 Temple Inland, Inc. 2,806,577
193,410 Tenet Healthcare Corp.(1) 3,590,173
118,234 Tenneco, Inc. 2,822,837
361,622 Texaco, Inc. 22,601,375
248,756 Texas Instruments, Inc. 36,069,620
182,127 Texas Utilities Co. 7,512,739
97,606 Textron, Inc. 8,034,194
96,300 Thermo Electron Corp.(1) 1,932,019
39,400 Thomas & Betts Corp. 1,861,650
755,830 Time Warner, Inc. 55,553,505
46,329 Times Mirror Co. - Class A 2,744,993
35,396 Timken Co. 690,222
215,816 TJX Cos., Inc. 7,189,371
87,068 Torchmark Corp. 2,971,196
168,118 Toys `R' Us, Inc.(1) 3,477,941
80,786 Transamerica Corp. 6,058,950
76,096 Tribune Co. 6,629,864
98,899 Tricon Global Restaurants, Inc.(1) 5,352,908
76,772 TRW, Inc. 4,212,864
36,896 Tupperware Corp. 940,848
516,606 Tyco International Ltd. 48,948,419
476,637 U.S. Bancorp 16,205,658
322,755 U.S. West, Inc. 18,961,856
170,225 Unicom Corp. 6,564,302
351,346 Unilever NV 24,506,384
85,152 Union Carbide Corp. 4,151,160
158,747 Union Pacific Corp. 9,256,934
160,948 Union Pacific Resources Group, Inc. 2,625,464
83,200 Union Planters Corp. 3,718,000
160,499 Unisys Corp.(1) 6,249,430
119,500 United Healthcare Corp. 7,483,688
310,324 United Technologies Corp. 22,246,352
154,737 Unocal Corp. 6,131,454
89,800 UNUM Corp. 4,916,550
48,715 US Airways Group, Inc.(1) 2,122,147
123,407 UST, Inc. 3,609,655
62,377 USX - U.S. Steel Group 1,684,179
193,064 USX Marathon Group 6,286,647
76,930 V.F. Corp. 3,288,758
450,898 Viacom, Inc. - Class B(1) 19,839,512
65,100 Vulcan Materials Co. 3,141,075
47,049 W.R. Grace & Co.(1) 864,525
61,530 W.W. Grainger, Inc. 3,311,083
125,710 Wachovia Corp. 10,756,062
2,837,496 Wal-Mart Stores, Inc. 136,909,182
626,136 Walgreen Co. 18,392,745
1,318,271 Walt Disney Co. 40,619,225
544,358 Warner-Lambert Co. 37,764,836
379,172 Washington Mutual, Inc. 13,413,210
390,151 Waste Management, Inc. 20,970,616
58,600 Watson Pharmaceuticals(1) 2,054,663
40,400 Wellpoint Health Networks(1) 3,428,950
1,054,236 Wells Fargo Co. 45,068,589
84,662 Wendy's International, Inc. 2,396,993
62,760 Westvaco Corp. 1,820,040
128,594 Weyerhaeuser Co. 8,840,838
49,839 Whirlpool Corp. 3,688,086
65,100 Willamette Industries, Inc. 2,998,669
301,036 Williams Cos., Inc. 12,812,845
76,880 Winn Dixie Stores, Inc. 2,839,755
74,392 Wm. Wrigley, Jr. Co. 6,695,280
56,579 Worthington Industries, Inc. 930,017
420,470 Xerox Corp. 24,834,009
----------------
Total Common Stock
(Cost $4,624,473,581) 7,219,251,149
----------------
SHORT TERM INSTRUMENTS - 2.3%
Mutual Fund - 2.1%
149,053,427 BT Institutional Cash Management Fund 149,053,427
----------------
Principal
Amount
- --------------
U.S. TREASURY BILLS - 0.2%
$ 11,500,000 4.37%, 7/22/99(2) 11,471,187
1,075,000 4.12%, 7/22/99(2) 1,072,429
----------------
12,543,616
----------------
Total Short Term Instruments
(Cost $161,597,043) 161,597,043
----------------
Total Investments
(Cost $4,786,070,624) 103.6% 7,380,848,192
Liabilities in Excess
of Other Assets (3.6)% (253,903,135)
----------------------------------
Net Assets 100.0% $7,126,945,057
==================================
- ----------------------------------
(1) Non-income producing security.
(2) Held as collateral for futures contracts.
See Notes to Financial Statements on page 24.
EQUITY 500 INDEX PORTFOLIO
STATEMENT OF OPERATIONS
Six-month period ended June 30, 1999
(Unaudited)
INVESTMENT INCOME
Dividends (net of foreign withholding tax of $853,040) $ 50,446,337
Interest 230,889
--------------
Total Investment Income 50,677,226
--------------
EXPENSES
Advisory Fees 2,388,171
Administration and Services Fees 139,626
Professional Fees 17,157
Trustees Fees 1,613
Miscellaneous 815
--------------
Total Expenses 2,547,382
--------------
Net Investment Income 48,129,844
--------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FUTURES CONTRACTS
Net Realized Loss from Investment Transactions (20,205,629)
Net Realized Gain from Futures Transactions 7,878,722
Net Change in Unrealized Appreciation/Depreciation
on Investments 692,807,362
Net Change in Unrealized Appreciation/Depreciation on
Futures Contracts 4,463,160
--------------
Net Realized and Unrealized Gain on Investments and
Futures Contracts 684,943,615
--------------
Net Increase in Net Assets from Operations $733,073,459
==============
See Notes to Financial Statements on page 24.
EQUITY 500 INDEX PORFTOLIO
STATEMENTS OF CHANGES IN NET ASSETS
Six-month period ended June 30, 1999, and
Year ended December 31, 1998
(Unaudited)
6/30/99 12/31/98
-----------------------------------
INCREASE (DECREASE) IN NET ASSETS FROM:
OPERATIONS
Net Investment Income $ 48,129,844 $ 58,364,731
Net Realized Gain/(Loss) from Investment
Transactions and Futures Transactions (12,326,907) 35,274,688
Net Change in Unrealized Appreciation on
Investments and Futures Contracts 697,270,522 895,089,518
-----------------------------------
Net Increase in Net Assets from Operations 733,073,459 988,728,937
-----------------------------------
CAPITAL TRANSACTIONS
Proceeds from Capital Invested 2,666,490,800 2,853,940,069
Value of Capital Withdrawn (1,473,123,612) (1,445,251,067)
-----------------------------------
Net Increase in Net Assets from
Capital Transactions 1,193,367,188 1,408,689,002
-----------------------------------
Total Increase in Net Assets 1,926,440,647 2,397,417,939
NET ASSETS
Beginning of Period 5,200,504,410 2,803,086,471
-----------------------------------
End of Period $7,126,945,057 $5,200,504,410
===================================
See Notes to Financial Statements on page 24.
EQUITY 500 INDEX PORTFOLIO
FINANCIAL HIGHLIGHTS
June 30, 1999
(Unaudited)
Contained below are selected supplemental data and ratios to average net assets
for the periods indicated for the Equity 500 Index Portfolio.
<TABLE>
<CAPTION>
Six Months Ended Year Ended December 31,
--------------------------------------------------------------------
June 30, 1999 1998 1997 1996 1995 1994
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Supplemental Data and Ratios:
Net Assets, End of
Period (000) $7,126,945 $5,200,504 $2,803,086 $1,925,224 $1,080,736 $ 559,772
Ratios to Average
Net Assets:
Net Investment
Income (%) 1.51(a) 1.50 1.76 2.20 2.52 2.84
Expenses (%) .08(a) .08 .08 .10 .10 .10
Decrease Reflected
in Above Expense
Ratio Due to
Absorption of
Expenses by
Bankers Trust (%) - .02 .07 .05 .05 .06
Portfolio Turnover
Rate (%) 10 4 19 15 6 21
(a) Annualized.
</TABLE>
See Notes to Financial Statements on page 24.
EQUITY 500 INDEX PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
(1) ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. Organization
The Equity 500 Index Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940 (the Act), as amended, as an open-end management
investment company. The Portfolio was organized on December 11, 1991, as an
unincorporated trust under the laws of New York and commenced operations on
December 31, 1992. The Declaration of Trust permits the Board of Trustees (the
Trustees) to issue beneficial interests in the Portfolio.
B. Security Valuation
The Portfolio's investments are valued each business day by an independent
pricing service approved by the Trustees. Securities traded on national
exchanges or traded in the NASDAQ National Market System are valued at the last
sales prices reported at the close of business each day. Over-the-counter
securities not included in the NASDAQ National Market System and listed
securities for which no sale was reported are valued at the mean of the bid and
asked prices. Short-term obligations with remaining maturities of 60 days or
less are valued at amortized cost that, with accrued interest, approximates
value. Securities for which quotations are not available are stated at fair
value as determined by the Trustees.
C. Security Transactions and Interest Income
Security transactions are accounted for on a trade date basis. Dividend income
is recorded on the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of premium and accretion of discount on
investments. Realized gains and losses from securities transactions are recorded
on the identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from the security transactions of the Portfolio are allocated pro rata among the
investors in the Portfolio at the time of such determination.
D. Futures Contracts
The Portfolio may enter into financial futures contracts which are contracts to
buy a standard quantity of securities at a specified price on a future date. The
Portfolio is required to deposit either cash or securities in an amount equal to
a certain percentage of the contract amount. Variation margin payments are made
or received by the Portfolio each day, dependent on the daily fluctuations in
the value of the underlying security, and are recorded for financial statement
purposes as unrealized gains or losses by the Portfolio.
Futures contracts are valued at the settlement price established each day by the
board of trade or exchange on which they are traded.
E. Federal Income Taxes
The Portfolio is considered a partnership under the Internal Revenue Code.
Therefore, no federal income tax provision is required.
F. 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 in the financial statements. Actual results could
differ from those estimates.
(2) FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company (Bankers Trust). The Administration and Services Agreement
provides for the Portfolio to pay the Adviser a fee, accrued daily and paid
monthly, computed as a percentage of the average daily net assets of the
Portfolio which on an annual basis is equal to the lesser of (1) .005%, or (2)
the amount that brings the total annual operating expenses as a percentage of
the Portfolio's average daily net assets up to .08%. For the period January 1,
1998, to May 6, 1998, the Administration and Services fee was .05% on an annual
basis. For the six months ended June 30, 1999, Administration and Services Fees
amounted to $139,626.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, the Portfolio pays Bankers Trust an advisory fee
computed daily and paid monthly at an annual rate of .075% of the Portfolio's
average daily net assets. For the period January 1, 1998, to May 6, 1998, the
Advisory fee was .10%. For the six months ended June 30, 1999, Advisor Fees
amounted to $2,388,171, of which $267,757 was payable at the end of the period.
Bankers Trust has voluntarily undertaken to waive its fees and reimburse
expenses of the Portfolio, to the extent necessary, to limit all expenses to
.08% of the average daily net assets of the Portfolio.
The Portfolio may invest in the BT Institutional Cash Management Fund (the
Fund), an open-end management investment company managed by Bankers Trust
Company (the Company). The Fund is offered as a cash management option to the
Portfolio and other accounts managed by the Company. Distributions from the Fund
to the Portfolio as of June 30, 1999, amounted to $3,787,178 and are included in
dividend income.
The Portfolio is a participant with other affiliated entities in a revolving
credit facility in the amount of $100,000,000, which expires April 29, 2000. A
commitment fee of .10% per annum on the average daily amount of the available
commitment is payable on a quarterly basis and apportioned equally among all
participants. Amounts borrowed under the credit facility will bear interest at a
rate per annum equal to the Federal Funds Rate plus .50%. No amounts were drawn
down or outstanding under the credit facility as of and for the six months ended
June 30, 1999.
For the six months ended June 30, 1999, the Portfolio paid affiliated brokerage
commissions of $16,526.
Bankers Trust Company is a wholly owned subsidiary of Bankers Trust Corporation.
In November 1998, Bankers Trust Corporation (BT Corp.), Deutsche Bank AG
(Deutsche Bank) and Circle Acquisition Corporation (Circle) entered into an
Agreement and Plan of Merger which was consummated on June 4, 1999. As a result
of the transaction, BT Corp. became a wholly-owned subsidiary of Deutsche Bank.
(3) PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the six months ended June 30, 1999, were
$1,976,610,265 and $615,765,892, respectively. For federal income tax purposes,
the tax basis of investments held at June 30, 1999, was $4,804,171,277. The
aggregate gross unrealized appreciation was $2,665,663,652, and the aggregate
gross unrealized depreciation was $88,986,737 for all investments as of June 30,
1999. Payable for securities purchased at June 30, 1999, amounted to
$318,781,154.
(4) FUTURES CONTRACTS
A summary of obligations under these financial instruments at June 30, 1999, is
as follows:
Market Unrealized
Type of Future Expiration Contracts Position Value Appreciation
- --------------------------------------------------------------------------------
S&P 500 Index Futures Sept. 1999 592 Long $204,491,600 $5,603,496
At June 30, 1999, the Portfolio segregated approximately $12,540,000 to cover
margin requirements on open futures contracts.
(5) NET ASSETS
Paid-in Capital $ 4,526,563,993
Net Unrealized Appreciation on Investments and Futures 2,600,381,064
----------------
Total Net Assets $ 7,126,945,057
================
DIRECTORS
Robert G. Davis, Chairman of the Board
Michael J. C. Roth, President and Vice Chairman of the Board
John W. Saunders, Jr., Vice President
Barbara B. Dreeben
Howard L. Freeman, Jr.
Robert L. Mason
Richard A. Zucker
INVESTMENT ADVISER, UNDERWRITER AND DISTRIBUTOR
USAA Investment Management Company
9800 Fredericksburg Road
San Antonio, Texas 78288
TRANSFER AGENT
USAA Shareholder Account Services
9800 Fredericksburg Road
San Antonio, Texas 78288
CUSTODIAN
Bankers Trust Company
Four Albany Street
New York, New York 10006
LEGAL COUNSEL
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
INDEPENDENT AUDITORS
PricewaterhouseCoopers LLP
250 West Pratt Street
Baltimore, Maryland 21201
Telephone Assistance Hours
Call toll free - Central Time
Monday - Friday 7:30 a.m. to 8:00 p.m.
Saturdays 8:30 a.m. to 5:00 p.m.
For Additional Information on Mutual Funds
1-800-531-8181, (in San Antonio) 456-7211
For account servicing, exchanges or redemptions
1-800-531-8448, (in San Antonio) 456-7202
Recorded Mutual Fund Price Quotes
24-Hour Service (from any phone)
1-800-531-0866, (in San Antonio) 498-8066
Mutual Fund USAA TouchLine(Registered Trademark)
(from Touchtone phones only)
For account balance, last transaction or fund prices
1-800-531-8777, (in San Antonio) 498-8777
