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SIGNATURE WILLIAM J. KELLY
TITLE OFFICER
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001026708
<NAME> HORACE MANN GROWTH FUND
<SERIES>
<NUMBER> 1
<NAME> GROWTH
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<S> <C>
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<INVESTMENTS-AT-VALUE> 598,093
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<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001026708
<NAME> HORACE MANN BALANCED FUND
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<NAME> BALANCED
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<TABLE> <S> <C>
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<CIK> 0001026708
<NAME> HORACE MANN INCOME FUND
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<NUMBER> 3
<NAME> INCOME
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<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001026708
<NAME> HORACE SHORT-TERM FUND
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<NUMBER> 4
<NAME> SHORT-TERM
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<S> <C>
<PERIOD-TYPE> YEAR
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<EXPENSES-NET> 6
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<NET-CHANGE-IN-ASSETS> (78)
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<GROSS-EXPENSE> 6
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001026708
<NAME> HORACE MANN SMALL CAP FUND
<SERIES>
<NUMBER> 5
<NAME> SMALL CAP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
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<PAID-IN-CAPITAL-COMMON> 15,906
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<SHARES-COMMON-PRIOR> 40
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<ACCUMULATED-NET-GAINS> (496)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,115
<NET-ASSETS> 16,525
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<EXPENSES-NET> (61)
<NET-INVESTMENT-INCOME> (15)
<REALIZED-GAINS-CURRENT> (496)
<APPREC-INCREASE-CURRENT> 1,115
<NET-CHANGE-FROM-OPS> 604
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<NUMBER-OF-SHARES-SOLD> 17,210
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15,881
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 61
<AVERAGE-NET-ASSETS> 7,825
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> (.02)
<PER-SHARE-GAIN-APPREC> 1.72
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<PER-SHARE-NAV-END> 11.70
<EXPENSE-RATIO> .78
<AVG-DEBT-OUTSTANDING> 0
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001026708
<NAME> HORACE MANN INTERNATIONAL EQUITY FUND
<SERIES>
<NUMBER> 6
<NAME> INTERNATIONAL
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 5,173
<INVESTMENTS-AT-VALUE> 5,198
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<TOTAL-ASSETS> 5,243
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<TOTAL-LIABILITIES> 29
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 5,258
<SHARES-COMMON-STOCK> 508
<SHARES-COMMON-PRIOR> 40
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (69)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 25
<NET-ASSETS> 5,214
<DIVIDEND-INCOME> 28
<INTEREST-INCOME> 31
<OTHER-INCOME> 0
<EXPENSES-NET> 15
<NET-INVESTMENT-INCOME> 44
<REALIZED-GAINS-CURRENT> (71)
<APPREC-INCREASE-CURRENT> 24
<NET-CHANGE-FROM-OPS> (3)
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,782
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<SHARES-REINVESTED> 14
<NET-CHANGE-IN-ASSETS> 5,218
<ACCUMULATED-NII-PRIOR> 0
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<GROSS-EXPENSE> 15
<AVERAGE-NET-ASSETS> 3,376
<PER-SHARE-NAV-BEGIN> 10.00
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<PER-SHARE-DIVIDEND> .08
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.27
<EXPENSE-RATIO> .46
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0001026708
<NAME> HORACE MANN SOCIALLY RESPONSIBLE
<SERIES>
<NUMBER> 7
<NAME> SOCIALLY RESPONSIBLE
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<INVESTMENTS-AT-COST> 8,615
<INVESTMENTS-AT-VALUE> 9,196
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<SENIOR-EQUITY> 0
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<SHARES-COMMON-PRIOR> 40
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<OVERDISTRIBUTION-NII> 0
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<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 582
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<INTEREST-INCOME> 8
<OTHER-INCOME> 0
<EXPENSES-NET> 22
<NET-INVESTMENT-INCOME> 74
<REALIZED-GAINS-CURRENT> 73
<APPREC-INCREASE-CURRENT> 581
<NET-CHANGE-FROM-OPS> 728
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 80
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8,945
<NUMBER-OF-SHARES-REDEEMED> 450
<SHARES-REINVESTED> 102
<NET-CHANGE-IN-ASSETS> 9,172
<ACCUMULATED-NII-PRIOR> 0
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<OVERDIST-NET-GAINS-PRIOR> 0
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<GROSS-EXPENSE> 22
<AVERAGE-NET-ASSETS> 4,469
<PER-SHARE-NAV-BEGIN> 10.00
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> 2.20
<PER-SHARE-DIVIDEND> .10
<PER-SHARE-DISTRIBUTIONS> .10
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 12.10
<EXPENSE-RATIO> .49
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
The Board of Trustees and Shareholders of
Horace Mann Mutual Funds:
In planning and performing our audits of the financial statements of the Horace
Mann Mutual Funds (the Funds), consisting of the Growth Fund, Balanced Fund,
Income Fund, Short-Term Investment Fund for the year ended December 31,
1997 and the Small Cap Growth Fund, International Equity Fund and Socially
Responsible Fund for the period March 10, 1997 through December 31, 1997, we
considered their internal control structure, including procedures for
safeguarding securities, in order to determine our auditing procedures for the
purpose of expressing our opinion on the financial statements and to comply
with the requirements of Form N-SAR, not to provide assurance of the internal
control structure.
The management of the Funds is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgements by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures. Two of
the objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit the
preparation of financial statements in accordance with generally accepted
accounting principles.
Because of inherent limitations in any system of internal control structure,
errors or irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that it
may become inadequate because of changes in conditions or that the effectiveness
of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be material
weaknesses under standards established by the American Institute of Certified
Public Accountants. A material weakness is a condition in which the design or
operation of the specific internal control structure elements does not reduce
to a relatively low level the risk that errors or irregularities in amounts that
would be material in relation to the financial statements being audited may
occur and not be detected within a timely period by employees in the normal
course of performing their assigned functions. However, we noted no matters
involving the internal control structure, including procedures for safeguarding
securities, that we consider to be material weaknesses as defined above as of
December 31, 1997.
This report is intended solely for the information and use of management and the
Securities and Exchange Commission.
KPMG Peat Marwick, LLP
January 28, 1998
