Investors Mark Series Fund Annual Report
Message from the Chairman
1999 was another remarkable year for the financial markets, not only for the
extraordinary valuations put on dot.com internet companies with negligible
sales and heavy losses, but also for the huge bifurcation that
continues to exist between "growth" stocks and "value" stocks. The unmanaged
Standard & Poor's 500 Stock Index posted an unprecedented fifth consecutive
year of 20%+ returns, but those numbers do not tell the whole story. Again the
large capitalization technology companies set the pace for performance.
According to the David L. Babson firm of Cambridge, Massachusetts, nine of the
top ten performers in the S&P 500 last year were technology stocks, and the 50
largest stocks in the S&P 500 earned an incredible 106.2% for the year, while
the other 450 stocks earned 11.4%.
The tremendous gap that has opened up in the performance of growth stocks
versus value stocks is evident in both the large-cap and the small-cap
universes. If you analyze the 1000 largest stocks in the Russell 3000 Index,
and break them down between growth and value, you find that the Russell 1000
Growth Index earned an excellent 33.2% return for 1999, while the Russell 1000
Value Index was up only 7.4%. Going a step further, when you analyze the 2000
smallest companies in the Russell 3000 universe, the performance gap is truly
extraordinary. The Russell 2000 Growth Index was up just over 43% for 1999,
while the Russell 2000 Value Index was actually down -1.5%! The high growth
sectors of technology and telecommunications have been bid up to extraordinary
valuations, while the value sectors, with the characteristics of relatively low
price-to-earnings and price-to-book value ratios, are selling at historically
attractive valuations.
International equities, as measured by the Morgan Stanley EAFE (Europe,
Australia, and Far East) Index, had a very respectable return of 27.3% for all
of 1999; however, the EAFE Index still significantly lags the S&P 500 Index
over longer time periods. Looking out over reasonable time horizons of five to
seven years, investors should consider allocating part of their equity
portfolios to international stocks. In fact, this is a good time to re-
emphasize the theme of prudent diversification for your securities portfolios,
since so much attention lately has been focused on technology and
telecommunication stocks. A portfolio with well managed funds representing
different sectors and styles, such as value as well as growth, small-cap as
well as large-cap, and international as well as domestic, provides the
opportunity for attractive risk-adjusted rates of return over a reasonable time
horizon.
I urge you to read carefully the commentary of your portfolio managers in the
following pages. Their narrative will provide added insight into their
investment styles and strategies. The better informed you are as an investor,
the better able you are to develop and monitor an investment program that will
help you reach your goals. As always, we welcome your comments and questions.
Sincerely,
/s/Robert N. Sawyer
Robert N. Sawyer
Chairman
Large Cap Value
What we have referred to as "the stock market's choppy summer" of 1999 became
an explosive growth market in the fourth quarter. With the notable exception of
the major value indices, many broad market and growth benchmarks achieved all-
time highs on or close to the last day of the year.
Technology stocks continued to be the driving force in these record-setting
indices, and that sector was the best performing of the unmanaged Standard &
Poor's 500 Stock Index - gaining 34% in the fourth quarter and 75% for the full
year. Of the top ten performing stocks in the S&P 500 in the fourth quarter,
eight were technology stocks. For the entire year, that number climbed to nine.
The median yield for these stocks was 0.0%, the median price-to-earnings on
estimated 2000 earnings was 87 times, and the median price-to-book was 17. On a
more general note, a recent study found that stocks of companies with no
reported earnings were up 52% in 1999, on average, whereas stocks of companies
with earnings were down an average of 2%. Our value holdings have reported or
are expected to report meaningful earnings for 1999. Our value disciplines
simply do not allow us to invest in the kinds of companies that have recently
dominated market performance.
Being invested in a true value discipline during the past two years has been
extremely frustrating, and certainly not as rewarding as we would have liked or
expected. However, our philosophy has always been to remain consistent "deep
value" investors, as we believe the primary driver of long-term performance is
valuation.
We thank you for your patience, and we look forward to reporting our progress
to you, especially when the market focus shifts to an emphasis on investing in
companies like those in the Portfolio - companies with earnings, assets, and
dividends that are selling at compelling valuation levels.
David L. Babson & Co. Inc.
CHART - LARGE CAP VALUE PORTFOLIO VERSUS S&P 500
Schedule of Investments
DECEMBER 31, 1999
LARGE CAP VALUE
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 106.09%
BASIC MATERIALS - 18.27%
1,480 duPont (E.I.) deNemours & Co. $ 97,495
470 Martin Marietta Materials, Inc. 19,270
2,140 Millennium Chemicals, Inc. 42,265
2,340 Potlatch Corp. 104,423
3,670 USX-U.S. Steel Group 121,110
1,480 Weyerhaeuser Co. 106,282
1,990 Willamette Industries, Inc. 92,411
583,256
CAPITAL GOODS - 10.57%
2,070 Boeing Co. 86,034
1,220 Hanson PLC 49,334
3,010 Lockheed Martin Corp. 65,844
2,440 Raytheon Co. Cl. B 64,813
4,290 Wallace Computer Services, Inc. 71,321
337,346
CONSUMER CYCLICAL - 15.51%
2,930 Dana Corp. 87,717
2,180 Harcourt General, Inc. 87,745
8,880 Kmart Corp. 89,355
2,130 The Limited, Inc. 92,256
656 Neiman Marcus Group Cl. B* 17,671
1,400 Penney (J.C.), Inc. 27,913
2,870 Sears, Roebuck & Co. 87,355
304 Too, Inc.* 5,244
495,256
CONSUMER STAPLES - 4.85%
2,770 Albertson's, Inc. 89,332
2,052 Diageo PLC 65,664
154,996
ENERGY - 5.28%
950 Atlantic Richfield Co. 82,175
1,430 Royal Dutch Petroleum Co. 86,425
168,600
FINANCIAL - 27.22%
3,390 Allstate Corp. 81,360
590 American Express Co. 98,087
31 Berkshire Hathaway, Inc. Cl. B* 56,730
1,210 Chase Manhattan Corp. 94,002
1,965 Citigroup, Inc. 109,180
3,500 National City Corp. 82,906
1,860 SLM Holding Corp. 78,585
450 Student Loan Corp. 22,444
2,520 Travelers Property Casualty Corp. 86,310
3,480 U.S. Bancorp 82,867
1,890 Wells Fargo & Co. 76,427
868,898
HEALTHCARE - 9.55%
1,730 Aetna, Inc. 96,556
5,180 Tenet Healthcare Corp. 121,730
1,630 United Healthcare Corp. 86,594
304,880
TECHNOLOGY - 7.85%
880 Apple Computer, Inc. 90,475
770 International Business Machines Corp. 83,160
3,400 Xerox Corp. 77,138
250,773
TRANSPORTATION & SERVICES - 4.34%
2,100 CSX Corp. 65,887
2,914 KLM Royal Dutch Airlines 72,668
138,555
UTILITIES - 2.65%
2,380 Texas Utilities Co. 84,639
TOTAL COMMON STOCKS 3,387,199
(Cost $3,512,400)
TOTAL INVESTMENTS - 106.09% 3,387,199
(Cost $3,512,400)
Other assets less liabilities - (6.09%) (194,477)
TOTAL NET ASSETS - 100.00% $ 3,192,722
For federal income tax purposes, the identified cost of investments owned at
December 31, 1999 was $3,585,870.
Net unrealized depreciation for federal income tax purposes was $198,671, which
is comprised of unrealized appreciation of $379,995 and unrealized depreciation
of $578,666.
*Non-income producing security
See accompanying Notes to Financial Statements.
Large Cap Growth
December closed an exceptional quarter and year for the U.S. equity markets,
but the euphoria of record highs was not shared by all. In fact, only in the
technology-dominated NASDAQ Index, which returned 48.2% in the fourth quarter
and 86.1% for the year, did a majority of the stocks rise in 1999. Rising
interest rates played a role in sub-par returns among the laggards, most
dynamic, rapidly growing companies simply shrugged off negative macro-
environment developments.
Outside of the technology sector, the market's narrow breadth made competing
with the major indices difficult for diversified portfolios. Earnings growth
divergence continued to spur stock prices among non-technology issues. Despite
the rising interest rate environment, firms with rapidly growing earnings were
rewarded in the marketplace.
The Portfolio outperformed the unmanaged Standard & Poor's 500 Stock Index for
the fourth quarter and the year due to its technology holdings and its
diversification in rapidly growing firms. During the course of 1999, the
technology weighting of the portfolio grew from 29% to 50% as long-time
holdings increased in market value. Long-time Portfolio member Cisco Systems
rose 50% in the quarter and 130% for the year due to continued strong demand
for its network routers. Outside of the technology sector, Home Depot saw its
earnings per share grow approximately 46% in 1999, fueling a 50% return in the
fourth quarter and a 68% return for the year.
Looking ahead, we believe that the market will continue to reward firms that
are rapidly growing their bottom lines. This will be true for technology and
non-technology firms alike. The Portfolio's diversification, particularly into
consumer stocks, should contribute to performance as the strong economic
fundamentals of the domestic economy continue. Given the macro-environment for
stocks, the Portfolio should continue to benefit from its blue-chip, high-
quality growth holdings.
Stein Roe & Farnham Incorporated
CHART - LARGE CAP GROWTH PORTFOLIO VERSUS S&P 500
Schedule of Investments
DECEMBER 31, 1999
LARGE CAP GROWTH
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 97.55%
CAPITAL GOODS - 7.50%
1,500 Applied Materials, Inc. $ 190,031
4,000 Tyco International Ltd. 155,500
345,531
CONSUMER CYCLICAL - 11.81%
1,100 General Electric Co. 170,225
2,700 Home Depot, Inc. 185,119
1,400 Kohl's Corp. 101,062
3,000 Walgreen Co. 87,750
544,156
CONSUMER STAPLES - 3.80%
1,500 Coca-Cola Co. 87,375
800 Procter & Gamble Co. 87,650
175,025
FINANCIAL - 7.14%
1,500 American International Group, Inc. 162,187
3,000 Citigroup, Inc. 166,688
328,875
HEALTHCARE - 7.05%
4,000 Medtronic, Inc. 145,750
3,000 Pfizer, Inc. 97,312
1,000 Warner-Lambert Co. 81,938
325,000
MEDIA & ENTERTAINMENT - 3.69%
3,000 AT&T Corp. Liberty Media Group 170,250
TECHNOLOGY - 50.15%
1,500 America Online, Inc. 113,156
2,700 Cisco Systems, Inc. 289,238
1,500 Clear Channel Communications, Inc. 133,875
2,400 Comcast Corp. Cl. A (non-voting) 120,600
1,700 EMC Corp. 185,725
3,000 L.M. Ericsson 197,063
1,500 LSI Logic Corp. 101,250
2,000 Lucent Technologies 149,625
3,000 MCI Worldcom, Inc. 159,187
1,400 Microsoft Corp. 163,450
1,200 Motorola, Inc. 176,700
600 Nokia Corp. 114,000
1,700 Oracle Corp. 190,506
1,500 Texas Instruments, Inc. 145,313
500 Veritas Software Corp. 71,562
2,311,250
TRANSPORTATION - 3.04%
1,400 Omnicom Group 140,000
UTILITIES - 3.37%
3,500 Enron Corp. 155,313
TOTAL COMMON STOCKS 4,495,400
(Cost $2,709,443)
TOTAL INVESTMENTS - 97.55% 4,495,400
(Cost $2,709,443)
Other assets less liabilities - 2.45% 112,715
TOTAL NET ASSETS - 100.00% $ 4,608,115
For federal income tax purposes, the identified cost of investments owned at
December 31, 1999 was $2,714,278.
Net unrealized appreciation for federal income tax purposes was $1,781,122,
which is comprised of unrealized appreciation of $1,781,884 and unrealized
depreciation of $762.
See accompanying Notes to Financial Statements.
Mid Cap Equity
Performance in the third quarter was poor, with the Mid Cap Equity Portfolio
returning -6.2%, but rebounded in the fourth quarter, up 9.2%. Relative to the
unmanaged Standard & Poor's Mid Cap Index the reverse was true with good
performance in the third quarter and poor results in the fourth quarter. For
the year ended December 31, 1999, the Portfolio had a return of 2.3% compared
to the index return of 14.7%. This underperformance relative to the benchmark
in both the second half and for the year was primarily due to the strong
returns from the highest price/earnings (P/E) stocks in our universe.
Our approach is to buy stocks that offer "growth at a reasonable price." What
worked in the last quarter of 1999 was "growth at any price" with the highest
P/E stocks outperforming the market by a wide margin. This perverse return to
value has been a consistent theme over the past two years. Since the Portfolio
does not generally invest in very high P/E stocks, this theme has clearly hurt
relative performance. We are confident that this trend will reverse, and that
investors will inevitably return to focusing on valuation measures. When they
do, we believe that the Portfolio is well positioned relative to the market.
We continue to expect the U.S. economy to grow, and for inflation to remain
under control. There will be increasing pressure on the inflation front, and we
expect the Federal Reserve to continue raising rates to slow the economy. Both
the economic expansion and the bull market in stocks have lasted far longer
than the historic norms. In addition, stock valuations (especially large cap
growth and internet issues) are at extremes. Given this environment, we believe
that a stock market correction is not improbable. However, we continue to
expect positive returns from stocks over the intermediate term.
Standish, Ayer & Wood, Inc.
CHART - MID CAP EQUITY PORTFOLIO VERSUS S&P MID CAP 400 INDEX
Schedule of Investments
DECEMBER 31, 1999
MID CAP EQUITY
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 98.28%
BASIC MATERIALS - 2.81%
400 OM Group, Inc. $ 13,775
1,200 Westvaco Corp. 39,150
1,500 Worthington Industries, Inc. 24,844
77,769
CAPITAL GOODS - 1.88%
700 Ingersoll-Rand Co. 38,544
300 Lafarge Corp. 8,287
100 Southdown, Inc. 5,162
51,993
CONSUMER CYCLICAL - 20.39%
300 Avery Dennison Corp. 21,862
1,000 Brinker International, Inc. 24,000
800 Federated Department Stores, Inc.* 40,450
3 Flowers Industries, Inc. 48
600 Furniture Brands International* 13,200
1,600 Interim Services, Inc.* 39,600
1,200 Jones Apparel Group, Inc.* 32,550
600 Linens `n Things, Inc.* 17,775
1,200 Mohawk Industries, Inc.* 31,650
1,300 Navistar International* 61,588
500 Omnicom Group 50,000
500 Paychex, Inc. 20,000
800 Ross Stores, Inc. 14,350
1,200 Safeway, Inc.* 42,675
1,000 Supervalu, Inc. 20,000
1,200 TJX Companies, Inc. 24,525
800 Tommy Hilfiger Corp.* 18,650
1,300 U.S. Foodservice* 21,775
1,000 Valassis Communications, Inc.* 42,250
400 Whirlpool Corp. 26,025
2 Xerox Corp. 45
563,018
CONSUMER STAPLES - 6.84%
300 Ball Corp. 11,812
700 Bestfoods 36,794
500 Earthgrain Co. 8,063
300 Gannett, Inc. 24,469
500 IBP, Inc. 9,000
600 Kaufman & Broad Home Corp. 14,512
700 Knight-Ridder, Inc. 41,650
400 Quaker Oats Co. 26,250
804 Universal Foods Corp. 16,382
188,932
ENERGY - 8.56%
1,600 American Power Conversion Corp.* 42,200
6 BP Amoco PLC 356
400 Chevron Corp. 34,650
1,500 Coastal Corp. 53,156
900 Constellation Energy Corp.* 26,100
600 Dynergy, Inc. 14,587
1,200 El Paso Energy Corp. 46,575
900 Energy East Corp. 18,731
236,355
FINANCIAL - 18.18%
400 AMBAC Financial Group 20,875
1,000 Americredit Corp.* 18,500
2,250 AmSouth Bancorp. 43,453
3 Chase Manhattan Corp. 233
1,000 Conseco, Inc. 17,875
600 Cullen/Frost Bankers, Inc. 15,450
300 Federal Home Loan Mortgage Corp. 14,119
300 Federal National Mortgage Assn. 18,731
600 Fleet Boston Financial Corp. 20,888
200 General Growth Properties 5,600
600 Golden West Financial Co. 20,100
415 Liberty Property Trust 10,064
618 North Fork BanCorp. 10,815
1,100 Paine Webber Group, Inc. 42,694
600 PMI Group, Inc. 29,287
400 PNC Bank Corp. 17,800
600 Prentiss Properties Trust 12,600
600 Protective Life Corp. 19,087
1 Reliastar Financial Corp. 39
300 SouthTrust Corp. 11,344
1,400 Standard & Poor's 400 Mid-Cap Depository Receipts 113,575
202 Standard & Poor's 500 Depository Receipts 29,669
400 Webster Financial Corp. 9,425
502,223
HEALTHCARE - 7.40%
500 Abbott Laboratories 18,156
800 Amerisource Health Corp. Cl. A* 12,150
1,100 Biomet, Inc.* 44,000
700 Genzyme Corp.* 31,500
300 Lam Research Corp.* 33,469
1,400 Sybron Corp.* 34,562
300 Watson Pharmaceutical, Inc.* 10,744
300 Wellpoint Health Networks, Inc.* 19,781
204,362
TECHNOLOGY - 23.19%
300 Adaptec, Inc.* 14,963
400 Adobe Systems, Inc. 26,900
500 Analog Devices, Inc.* 46,500
500 Apple Computer* 51,406
1 AT&T Corp.* 51
400 Black Box Corp.* 26,800
900 Burr-Brown Corp.* 32,512
600 Computer Association International, Inc. 41,963
1,400 Cypress Semiconductor Corp.* 45,325
1,200 Integrated Device Technology, Inc.* 34,800
300 Lexmark International Group Cl. A* 27,150
400 Microchip Technology, Inc.* 27,375
300 Novellus Systems, Inc.* 36,759
300 Pinnacle West Capital Corp. 9,169
500 Symantec Corp.* 29,313
450 Symbol Technologies 28,603
400 Synopsys, Inc.* 26,700
600 Unisys Corp.* 19,163
300 U.S. Cellular Corp.* 30,281
400 United Technologies 26,000
400 Waters Corp.* 21,200
500 Xircom, Inc.* 37,500
640,433
TRANSPORTATION & SERVICES - 2.34%
500 General Dynamics Corp. 26,375
800 USFreightways Corp. 38,300
64,675
UTILITIES - 6.69%
400 AES Corp.* 29,900
621 BellSouth Corp.* 29,071
600 Calpine Corp. 38,400
1,050 CenturyTel, Inc. 49,744
300 Dominion Resources, Inc. 11,775
602 FPL Group, Inc. 25,773
184,663
TOTAL COMMON STOCKS 2,714,423
(Cost $2,392,042)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 0.69%
$ 19,000 State Street Bank and Co., 2.50% due 1/03/00
(Collateralized by U.S. Treasury Notes,
8.75% due 8/15/00 with a value of $20,975) 19,000
(Cost $19,000)
TOTAL INVESTMENTS - 98.97% 2,733,423
(Cost $2,411,042)
Other assets less liabilities - 1.03% 28,344
TOTAL NET ASSETS - 100.00% $ 2,761,767
For federal income tax purposes, the identified cost of investments owned at
December 31, 1999 was $2,411,042.
Net unrealized appreciation for federal income tax purposes was $322,381, which
is comprised of unrealized appreciation of $442,041 and unrealized depreciation
of $119,660.
*Non-income producing security
See accompanying Notes to Financial Statements.
Small Cap Equity
The domestic equity market enjoyed another exceptional year in 1999, but did
present challenges to the average investor. Beyond robust technology stocks,
the market's narrow focus meant tracking the major indices somewhat difficult
for a highly diversified portfolio. The underlying theme in the divergence
between the haves and have-nots continues to be earnings growth. Despite rising
interest rates that dampened many companies' prospects, rapidly growing firms
remained buoyant in a sometimes-difficult environment. As growth investors with
an emphasis in dynamic industries, the prevailing market trends favored our
investment style, setting the foundation for strong 1999 returns.
Fourth quarter results can be characterized by three primary market factors:
investors' very positive sentiment towards growth stocks, the extended
technology sector rally, and a favorable initial public offering market for
small cap companies. Each of these trends benefited the portfolio in 1999, and
particularly the fourth quarter. We increased our technology weighting in the
portfolio from 29% to 37% during the year's last three months, through both
stock price appreciation in current holdings and additional allocations to the
sector. We also had nine stocks, held throughout the quarter, which advanced by
more than 100% in price. Finally, twelve of our one hundred and forty-one
holdings at year-end came in as new ideas from the late-1999 IPO market.
Highlighting one stock outside of the technology sector, Independent Energy
advanced 74% in the quarter and, at 3.0%, is the portfolio's largest holding.
The company continues to make significant inroads into the United Kingdom's
deregulated market for natural gas and electricity, and is poised for rapid
growth in the years ahead. We are also enthusiastic about one of our recent
purchases, Dusa Pharmaceuticals (0.4% of total assets). Dusa has received FDA
approval for a light-based treatment (photodynamic) used to destroy pre-
cancerous skin lesions. Dermatologists are expected to rapidly adopt the
company's technology, and we believe there are other cancer markets where
photodynamic therapy will work.
Stein Roe & Farnham Incorporated
CHART - SMALL CAP EQUITY PORTFOLIO VERSUS S&P 600 INDEX
Schedule of Investments
DECEMBER 31, 1999
SMALL CAP EQUITY
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 93.47%
BASIC MATERIALS - 1.17%
900 Geon Co. $ 29,250
250 Stillwater Mining Co. 7,969
37,219
CAPITAL GOODS - 1.61%
800 Astec Industries 15,050
400 Kemet Corp. 18,025
500 Tetra Technology 7,688
594 Westinghouse Air Brake Co. 10,543
51,306
CONSUMER CYCLICAL - 8.77%
400 Ames Department Stores, Inc.* 11,525
400 Ann Taylor Stores Corp.* 13,775
500 Applebee's International, Inc. 14,750
200 Catalina Marketing Corp. 23,150
750 CEC Entertainment 21,281
450 Ethan Allen Interiors 14,428
500 Harte-Hanks, Inc. 10,875
500 Linens 'n Things, Inc. 14,813
700 Mohawk Industries, Inc. 18,463
300 99 Cents Only Stores 11,475
1,000 O'Reilly Automotive 21,500
200 Radio One, Inc.* 18,400
500 Ruby Tuesday, Inc.* 9,094
300 Scotts Co. Ohio Cl. A* 12,075
1,000 Towere Automotive, Inc. 15,437
800 Tuesday Morning Corp. 14,750
450 Westwood One, Inc.* 34,200
279,991
CONSUMER STAPLES - 3.02%
1,300 Aptargroup, Inc. 32,663
400 Canadaigua Brands, Inc. Cl. A 20,400
600 Smithfield Foods, Inc. 14,400
600 Zale Corp.* 29,025
96,488
ENERGY - 2.82%
500 Barrett Resources Co.* 14,719
600 Cal Dive International, Inc.* 19,875
1,100 Pogo Producing Co. 22,550
1,800 Santa Fe Snyder Corp. 14,400
800 UTI Energy Corp. 18,450
89,994
FINANCIAL - 7.14%
500 Choicepoint, Inc. 20,688
250 Commerce Bancorp. 10,109
800 Cullen Frost Bankers, Inc. 20,600
200 E.W. Blanch Holdings, Inc. 12,250
700 Legg Mason, Inc. 25,375
1,200 Pinnacle Holdings, Inc.* 50,850
200 SEI Investments 23,803
800 U.S. Trust Corp. 64,150
227,825
HEALTHCARE - 9.39%
300 Alkermes, Inc.* 14,738
300 Allscripts, Inc.* 13,200
900 Alpharma, Inc. 27,675
900 Chromavision Medical Systems 13,725
400 Cytyc Corp. 24,425
500 Dusa Pharmaceuticals, Inc.* 14,250
200 IDEC Pharmaceuticals Corp. 19,650
300 Idexx Laboratories, Inc. 4,838
900 Jones Pharma, Inc. 39,094
600 Medicis Pharmaceutical Cl. A 25,537
200 Medimmune, Inc. 33,175
400 Medquist, Inc. 10,325
300 Priority Healthcare Corp. Cl. B 8,681
600 Renal Care Group, Inc. 14,025
730 Shire Pharmaceuticals Group* 21,257
400 Zoll Medical Corp.* 15,275
299,870
MEDIA & ENTERTAINMENT - 6.06%
400 AVT Corp. 18,800
300 ACME Communications, Inc.* 9,975
1,100 Alaska Communications Systems Group* 13,613
300 Art Technology Group, Inc. 38,437
600 Cumulus Media, Inc. Cl. A* 30,450
900 Focal Communications Corp.* 21,712
400 InterVoice-Brite, Inc. 9,300
500 Primus Telecommunications Group, Inc. 19,125
400 Radio Unica Communications* 11,550
900 Salem Communications Corp. Cl. A* 20,363
193,325
MISCELLANEOUS - 8.90%
600 American Management Systems, Inc. 18,825
700 Concord Camera Corp.* 15,925
300 Certicom Corp. 17,836
400 Cybersource Corp* 20,700
600 DeVry, Inc. 11,175
500 Dionex Corp. 20,594
500 Insituform Technologies, Inc. Cl. A* 14,125
400 Intervu, Inc.* 42,000
500 Iron Mountain, Inc. 19,656
1,000 MRV Communications, Inc. 62,875
300 Profit Recovery Group International, Inc. 7,969
200 QRS Corp. 20,862
100 Rudolph Technologies, Inc.* 3,350
200 Sonicwall, Inc.* 8,050
283,942
TECHNOLOGY - 36.77%
1,200 Actuate Software Corp. 51,450
400 BISYS Group* 26,100
200 Bluestone Software, Inc.* 23,000
200 Broadvision, Inc. 34,013
1,050 Burr Brown Corp. 37,931
600 C-Cube Microsystems, Inc. 37,350
100 Cacheflow, Inc.* 13,069
400 Clarus Corp.* 26,400
600 Clickaction, Inc.* 17,663
150 Comverse Technology, Inc. 21,713
400 CTS Corp. 30,150
200 El Sitio, Inc.* 7,350
400 Entrust Technologies, Inc.* 23,975
200 Espeed, Inc. Cl. A* 7,113
600 Gentex Corp. 16,650
500 Getthere.com, Inc.* 20,125
500 ITC Deltacom, Inc. 13,812
700 Integrated Systems, Inc. 23,494
1,000 Inter-Tel, Inc. 25,000
100 Interwoven, Inc.* 12,162
200 Intraware, Inc.* 15,800
500 ION Networks, Inc. 11,188
300 JNI Corp.* 19,800
200 Jones Intercable, Inc.* 13,862
250 Kronos, Inc. 15,000
200 LAM Research Corp. 22,312
900 LTX Corp.* 20,137
700 Lightpath Technologies, Inc.* 13,081
500 Macromedia, Inc. 36,562
300 Management Network Group* 9,787
200 Maxygen, Inc.* 14,200
500 Media 100, Inc. 13,219
500 Mercury Interactive Corp. 53,969
400 Micrel Semiconductor, Inc. 22,775
600 National Computer Systems, Inc. 22,575
600 National Instruments Corp. 22,950
200 Novellus Systems 24,506
500 Official Payments Corp.* 26,000
450 Orbotech Ltd. 34,875
500 Plexus 22,000
200 Qlogic Corp. 31,975
300 Saleslogix Corp.* 12,319
100 Sensar Corp. 5,950
500 Silicon Valley Bancshares 24,750
300 SPSS, Inc.* 7,575
700 Symantec Corp. 41,037
400 Telecorp PCS, Inc.* 15,200
400 Titan Corp.* 18,850
200 Transwitch Corp. 14,513
400 TSI International Software Ltd. 22,650
400 Verity, Inc. 17,025
400 Vitesse Semiconductor Corp. 20,975
500 Xircom, Inc.* 37,500
1,173,437
TRANSPORTATION & SERVICES - 4.39%
800 American Freightways Corp. 12,950
1,200 Circle International Group, Inc. 26,700
600 Expeditors International 26,287
400 Lason, Inc.* 4,400
1,300 SkyWest, Inc. 36,400
700 U.S. Freightways Corp. 33,513
140,250
UTILITIES - 3.43%
200 Calpine Corp. 12,800
2,900 Independent Energy Holdings* 96,606
109,406
TOTAL COMMON STOCKS 2,983,053
(Cost $2,051,551)
FACE
AMOUNT DESCRIPTION MARKET VALUE
REPURCHASE AGREEMENT - 6.89%
$220,000 UMB Bank, n.a.,
3.00%, due 1/03/00 (Collateralized by Federal
National Mortgage Discount Notes, due 1/26/00
with a value of $225,091) 220,000
(Cost $220,000)
TOTAL INVESTMENTS - 100.36% 3,203,053
(Cost $2,271,551)
Other assets less liabilities - (0.36%) (11,408)
TOTAL NET ASSETS - 100.00% $ 3,191,645
For federal income tax purposes, the identified cost of investments owned at
December 31, 1999 was $2,273,579.
Net unrealized appreciation for federal income tax purposes was $929,474, which
is comprised of unrealized appreciation of $1,006,011 and unrealized
depreciation of $76,537.
*Non-income producing security
See accompanying Notes to Financial Statements.
Growth & Income
Evidence of a global economic recovery emerged early in 1999. By mid-year, it
became apparent that global economic conditions were generally improving, as
reflected in increasing demand for commodities such as paper, metals and
chemicals. Much of the global rebound could be attributed to the Federal
Reserve Board's last interest rate cut in the autumn of 1998 and rapid
increases in the monetary supply in an attempt to pump liquidity into many of
the world's faltering economies. As global markets continued to improve
throughout 1999, the Federal Reserve Board decided that this stimulus was no
longer needed, resulting in a series of fall rate hikes that have normalized
U.S. interest rates from their record lows last year. Overall, GDP growth in
the U.S. remained strong throughout the period, with a healthy labor market
resulting in steady production and income gains.
Rising interest rates in recent months caused the following leadership shift in
the stocks of large companies: interest-rate-sensitive sectors such as electric
utilities and financial services underperformed, whereas technology stocks
demonstrated tremendous relative strength despite their high valuations. Over
the course of the year, the Portfolio remained underweighted in the financial
services sector, in anticipation of rising interest rates. Likewise, we were
well positioned to benefit from the leadership position of the technology
sector, with select holdings generating strong gains. We also increased our
exposure in basic materials industries, in anticipation of further global
economic recovery throughout 2000 and 2001.
We expect to see global economic growth continue throughout the coming year. In
response, we are adding holdings in companies that this recovery is likely to
favor, such as those producing basic materials and capital goods. In the U.S.,
some signs are emerging that the economy may be moderating. With a diminished
risk of significant future U.S. interest rate hikes, we are reconsidering
financial services stocks, many of which display solid fundamentals at
attractive prices. We believe that any possibility of a future interest rate
increase is already reflected in the low stock prices of these companies.
Lord, Abbett & Co.
CHART - GROWTH & INCOME PORTFOLIO VERSUS S&P 500
Schedule of Investments
DECEMBER 31, 1999
GROWTH & INCOME FUND
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 95.14%
BASIC MATERIALS - 11.12%
1,100 Alcoa, Inc. $ 91,300
600 Dow Chemical Co. 80,175
1,700 International Paper Co. 95,944
1,000 Phelps Dodge Corp. 67,125
1,300 Rohm & Haas Co. 52,894
500 USX-U.S. Steel Group 16,500
403,938
CAPITAL GOODS - 6.77%
1,500 Deere & Co. 65,063
900 Emerson Electric Co. 51,637
1,400 Honeywell International, Inc. 80,791
2,000 Loral Space & Communications, Ltd.* 48,625
246,116
CONSUMER CYCLICAL - 7.51%
2,300 Consolidated Stores Corp. 37,375
1,000 Dow Jones & Company, Inc. 68,000
1,000 Federated Department Stores, Inc.* 50,563
600 Ford Motor Co. 32,062
600 Gannett Company, Inc. 48,938
800 Seagram Co. Ltd. 36,000
272,938
CONSUMER STAPLES - 5.58%
4,200 Archer-Daniels-Midland Co. 51,188
900 Black & Decker Corp. 47,025
500 Minnesota Mining & Mfg. Co. 48,937
2,000 Ralston-Ralston Purina Group 55,750
202,900
ENERGY - 11.13%
400 Atlantic Richfield Co. 34,600
1,000 BP Amoco PLC 59,312
1,500 Coastal Corp. 53,156
1,100 Exxon Mobil Corp. 88,619
1,000 Schlumberger Ltd. 56,250
800 Texaco, Inc. 43,450
900 Total Fina SA 62,325
194 Transocean Sedco Forex, Inc. 6,522
404,234
FINANCIAL - 18.46%
3,600 ACE Ltd. 60,075
600 Aetna, Inc. 33,488
1,100 American General Corp. 83,463
1,800 Aon Corp. 72,000
1,000 Bank One Corp. 32,062
800 Chase Manhattan Corp. 62,150
1,200 Ceridian Corp. 25,875
500 Cigna Corp. 40,281
700 Federal National Mortgage Association 43,706
1,500 Fleet Boston Financial Corp. 52,219
700 Jefferson Pilot Corp. 47,775
400 Morgan Stanley Dean Witter & Co. 57,100
1,500 Wells Fargo Co. 60,656
670,850
HEALTHCARE - 4.62%
1,700 American Home Products Corp. 67,044
1,600 Columbia/HCA Healthcare Corp. 46,900
1,200 Pharmacia & UpJohn, Inc. 54,000
167,944
MEDIA & ENTERTAINMENT - 0.42%
200 MediaOne Group, Inc. 15,362
TECHNOLOGY - 19.37%
1,600 AT&T Corp. 81,200
300 Apple Computer, Inc. 30,844
900 CBS Corp. 57,544
2,500 Cadence Design Systems, Inc. 60,000
1,600 Compaq Computer Corp. 43,300
900 First Data Corp. 44,381
600 International Business Machines Corp. 64,800
1,050 MCI WorldCom, Inc. 55,716
800 Oracle Corp. 89,650
700 Sun Microsystems, Inc. 54,206
600 Texas Instruments, Inc. 58,125
2,000 Unisys Corp. 63,875
703,641
UTILITIES - 10.16%
800 Alltel Corp. 66,150
1,000 Bell Atlantic Corp. 61,562
800 Carolina Power & Light Co. 24,350
1,300 Dominion Resources, Inc. 51,025
1,300 Duke Energy Corp. 65,163
2,300 FirstEnergy Corp. 52,181
1,000 SBC Communications, Inc. 48,750
369,181
TOTAL COMMON STOCKS 3,457,104
(Cost $2,900,763)
PREFERRED STOCK - 1.33%
400 Houston Industries 48,200
(Cost $32,468)
TOTAL INVESTMENTS - 96.47% 3,505,304
(Cost $2,933,231)
Other assets less liabilities - 3.53% 128,218
TOTAL NET ASSETS - 100.00% $ 3,633,522
For federal income tax purposes, the identified cost of investments owned at
December 31, 1999 was $2,937,898.
Net unrealized appreciation for federal income tax purposes was $567,406, which
is comprised of unrealized appreciation of $691,202 and unrealized depreciation
of $123,796.
*Non-income producing security
See accompanying Notes to Financial Statements.
Balanced
The Balanced Portfolio generated a total return (price change and reinvested
distributions) of 8.21% for the year ended December 31, 1999. Since inception
(November 13, 1997), the Portfolio's annualized total return has been 0.88%.
The average balanced fund, as measured by Lipper Analytical Services,
registered a return of 8.98% for the year. The Portfolio started the year with
a relatively low allocation to common stocks (42%), but built its position in
stocks to 59% by year-end. The Portfolio's slight underperformance was due to a
combination of lower than peer average exposure to stocks during the year and
weak performance by some of the Portfolio's convertible and corporate bond
holdings.
Particularly hard hit early in the year were technology and energy corporate
and convertible bonds. Our investment in semiconductor, disk drive and computer
capital equipment convertibles proved to be early, but the yields at purchase
were attractive and we have been paid a handsome income to wait for the next
industry upturn. The good news is that these securities started to perform
better in the fourth quarter of 1999, and the outlook is positive for 2000. The
same holds true for our exposure to energy. The huge rise in oil prices in the
second half of 1999 has improved the outlook for energy bonds materially moving
into the new year.
The Portfolio gradually moved to a higher exposure in common stocks in response
to the strong U.S. economy and our belief that corporate profit growth would
accelerate. As interest rates rose during the year, the remaining bonds in the
Portfolio were negatively impacted. Interest rates have now risen further than
we anticipated and are creating a scenario where it may make sense to allocate
some money back to bonds. While we will not likely return near-term to our
historical combination of roughly 1/3 blue chip stocks, 1/3 high yield
corporate bonds and 1/3 high yield convertible securities, stock exposure will
likely be reduced somewhat and portfolio income will be boosted.
Our outlook for the coming year is mostly positive. Corporate earnings continue
to be the bright spot and should receive a further boost by improved exports.
Foreign economies are clearly on the mend, which is very positive for U.S.-
based multinationals. The one concern is how far the Federal Reserve is willing
to further boost interest rates in spite of relatively tame inflation numbers.
They are clearly uncomfortable with GDP growth above 5%, and what they view as
rampant speculation in internet and most technology stocks. However, they also
seem to recognize the higher productivity potential of corporate America. They
are clearly walking a fine line. At present, we don't believe they will move so
aggressively on rates that they risk recession or a stock market crash.
Kornitzer Capital Management, Inc.
CHART - BALANCED PORTFOLIO VERSUS S&P 500 AND MERRILL LYNCH BOND FUND INDEX
WEIGHTED AVERAGE
Schedule of Investments
DECEMBER 31, 1999
BALANCED
SHARES COMPANY MARKET VALUE
COMMON STOCKS - 58.42%
CONSUMER CYCLICAL - 13.73%
1,250 Carnival Corp. $ 59,766
3,500 Elcor Corp. 105,438
3,000 Ethan Allen Interiors, Inc. 96,187
2,000 Mirage Resorts, Inc. 30,625
3,000 ServiceMaster Co. 36,937
4,000 Strayer Education, Inc. 79,000
407,953
CONSUMER STAPLES - 2.85%
500 McDonald's Corp. 20,156
1,000 PepsiCo, Inc. 35,250
1,000 Walt Disney Co. 29,250
84,656
ENERGY - 4.30%
14,000 Frontier Oil Corp.* 94,500
2,000 McDermott International, Inc. 18,125
250 Royal Dutch Petroleum Co. 15,109
127,734
FINANCIAL - 10.83%
750 American Express Co. 124,688
2,250 Kansas City Southern Industries, Inc. 167,907
500 UnumProvident Corp. 16,031
500 Washington Mutual, Inc. 13,000
321,626
HEALTHCARE - 7.78%
250 Abbott Laboratories 9,078
1,000 American Home Products Corp. 39,437
1,500 Merck & Company, Inc. 100,594
1,000 Quintiles Transnational Corp. 18,688
1,500 Schering-Plough Corp. 63,281
231,078
TECHNOLOGY - 11.59%
250 Analog Devices, Inc. 23,250
500 Atmel Corp. 14,781
500 Cisco Systems, Inc. 53,563
750 Hewlett-Packard Co. 85,453
1,000 Intel Corp. 82,313
250 Microsoft Corp. 29,187
1,000 Scientific Atlantic, Inc. 55,625
344,172
TRANSPORTATION - 4.66%
2,000 FDX Corp. 81,875
3,500 Southwest Airlines Co. 56,656
138,531
UTILITIES - 2.68%
1,000 Enron Corp. 44,375
500 GTE Corp. 35,281
79,656
TOTAL COMMON STOCKS 1,735,406
(Cost $1,564,785)
CONVERTIBLE PREFERRED STOCKS - 7.44%
2,000 Bethlehem Steel 63,000
2,000 Freeport-McMoRan Oil and Gas Royalty Trust 38,125
6,000 ICO, Inc. 78,000
250 Kmart Financing 10,937
800 Texas Industries, Inc. 30,800
TOTAL CONVERTIBLE PREFERRED STOCKS 220,862
(Cost $281,082)
FACE
AMOUNT DESCRIPTION MARKET VALUE
CORPORATE BONDS - 14.58%
$25,000 Argosy Gaming, 10.75% due 6/01/09 26,438
15,000 Callon Petroleum, 10.00% due 12/15/01 14,738
100,000 Eagle Geophysical, Inc.,* 10.75% due 7/15/08 8,500
50,000 Frontier Oil Corp., 9.125% due 2/15/06 45,250
30,000 Kmart Funding, Series G, 9.44% due 7/01/18 28,458
75,000 Kaiser Aluminum & Chemical Corp., 12.75% due 2/01/03 75,375
50,000 Republic Group, 9.50% due 7/15/08 47,250
50,000 Specialty Retailers, Inc., 9.00% due 7/15/07 29,375
125,000 United Refining Co., 10.75% due 6/15/07 79,375
100,000 Wiser Oil Co., 9.5% due 5/15/07 78,500
TOTAL CORPORATE BONDS 433,259
(Cost $614,262)
CONVERTIBLE CORPORATE BONDS - 18.11%
55,000 Allwaste, Inc., 7.25% due 6/01/14 4,400
175,000 HMT Technology Corp., 5.75% due 1/15/04 69,344
125,000 Integrated Device Technologies, 5.50% due 6/01/02 137,812
100,000 Intervac, Inc., 6.50% due 3/01/04 55,000
125,000 Key Energy Group, 5.00% due 9/15/04 86,250
101,000 Lomak Petroleum, 6.00% due 2/01/07 61,610
50,000 Micron Technology, 7.00% due 7/01/04 64,562
75,000 Sunrise Assisted Living, 5.50% due 6/15/02 59,063
TOTAL CONVERTIBLE CORPORATE BONDS 538,041
(Cost $697,435)
TOTAL INVESTMENTS - 98.55% 2,927,568
(Cost $3,157,564)
Other assets less liabilities - 1.45% 43,071
TOTAL NET ASSETS - 100.00% $ 2,970,639
For federal income tax purposes, the identified cost of investments owned at
December 31, 1999 was $3,157,564.
Net unrealized depreciation for federal income tax purposes was $229,996, which
is comprised of unrealized appreciation of $358,172 and unrealized depreciation
of $588,168.
*Non-income producing security
See accompanying Notes to Financial Statements.
Intermediate Fixed Income
The Investor's Mark Intermediate Fixed Income Portfolio outperformed its
benchmark in 1999 by a substantial margin*, but fixed income results for the
year were disappointing on an absolute basis as interest rates rose due to the
domestic economy's strength. The year began strongly as the bond market rallied
after the difficulties of 1998 in emerging markets and domestic hedge funds.
Yet, by mid-year, the rally was cut off as bond investors grew worried about
the extraordinary strength of the domestic economy, the recovery of
international economies, the potential for a resurgence of inflation, and Y2K
fears. The Portfolio's neutral duration and heavy reliance on corporates and
mortgages allowed it to weather these negative factors.
The Portfolio's trading activity was focused earlier in the year on reducing
duration (or interest rate sensitivity) and major sector shifts which gave way
by the last quarter to trading which centered on issue swaps. The first quarter
was characterized by very heavy positions in corporates and mortgages which
represented great opportunity for return after 1998's difficulties. As the year
progressed and these non-Treasury holdings did well on a relative basis and as
economic fears arose, we reduced the size of the Portfolio's holdings in such
issues and increased Treasuries. We further filled in our trading with swapping
of issues that would benefit or suffer as the economy moved toward its tenth
year of the recovery with a transition to lower growth.
Our outlook for the economy is one of reduced, but positive growth with
contained inflation. In the case of interest rates, their recent rise, as
exemplified by the 30 year U.S. Treasury which is now hovering around 6.7%, is
predicated on levels of growth and surging inflation which we do not see, but
rather only fear at this time. Although the Fed most probably will raise rates,
the weakness in bonds is overextended and leads to a condition of undervaluation
for both corporates and mortgages which are the key positions in a duration
neutral portfolio as we enter a promising, new year.
Total Return as of December 31, 1999*
SINCE COMMENCEMENT
ONE YEAR NOVEMBER 13, 1997
Portfolio -0.19% 2.91%
Lehman Brothers Aggregate
Bond Index -0.82% 4.26%
Standish, Ayer & Wood, Inc.
Schedule of Investments
DECEMBER 31, 1999
INTERMEDIATE FIXED INCOME
SHARES COMPANY MARKET VALUE
CONVERTIBLE PREFERRED STOCK - 0.71%
500 Equity Office Properties $ 18,000
(Cost $25,000)
FACE
AMOUNT DESCRIPTION MARKET VALUE
CORPORATE BONDS - 38.88%
$ 10,000 American Standard, 7.125% due 2/15/03 9,600
25,000 Aramark Services, 6.75% due 8/01/04 23,493
25,000 Bank of Boston Home, 6.14% due 6/25/13 23,273
25,000 Capital One Master Trust, 5.43% due 1/15/07 23,716
25,000 Chase Commercial Mortgage, 7.37% due 12/19/07 22,531
50,000 Conseco Financial, 6.80% due 6/15/05 46,578
25,000 Cox Communications, 7.75% due 8/15/06 25,261
25,000 CSC Holdings, 8.125% due 7/15/09 24,878
25,000 CSX Corp., 7.25% due 5/01/04 24,778
25,000 CVS Corp., 5.50% due 2/15/04 23,328
25,000 Daimler Chrysler, 6.90% due 9/01/04 24,636
25,000 Ford Motor Credit, 7.375% due 10/28/09 24,663
25,000 Fort James Corp., 6.875% due 9/15/07 23,717
15,000 GS Escrow Corp., 7.00% due 8/01/03 13,865
30,000 GS Escrow Corp., 7.125% due 8/01/05 26,804
25,000 ICI Wilmington, 6.95% due 9/15/04 24,391
25,000 Lear Corp., 7.96% due 5/15/05 23,936
50,000 Lehman Brothers, 6.625% due 12/27/02 48,960
50,000 MMI Cap Trust, 7.625% due 12/15/27 42,733
25,000 National Westminster Bank, 7.75% due 4/29/49 24,233
25,000 News America Holdings, 7.75% due 12/1/45 22,861
25,000 North Fork Cap Trust, 8.00% due 12/15/27 21,752
25,000 NVR, Inc., 8.00% due 6/01/05 23,750
25,000 Owens Illinois, Inc., 7.50% due 5/15/10 22,242
25,000 Panamsat Corp., 6.00% due 1/15/03 23,282
25,000 Qwest Communications, 7.50% due 11/01/08 24,625
25,000 Republic Service, 7.125% due 5/15/09 22,414
25,000 Safeway Stores, 6.05% due 11/15/03 23,875
75,000 Simon Debartolo, 7.125% due 6/24/05 70,796
15,000 Smithfield Foods, Inc., 7.625% due 2/15/08 13,575
50,000 Tenet Healthcare Corp., 8.625% due 12/01/03 49,393
25,000 Tricon Global Restaurants, Inc., 7.45% due 5/15/05 24,063
25,000 TRW, Inc., 6.625% due 6/01/04 24,126
25,000 Tyco International, 6.875% due 9/05/02 24,566
25,000 United Technologies, 6.625% due 11/15/04 24,396
25,000 UPM-Kymmene Corp., 7.45% due 11/26/27 22,602
25,000 U.S. Bancorp, 6.00% due 5/15/04 23,757
TOTAL CORPORATE BONDS 987,449
(Cost $1,036,748)
FOREIGN GOVERNMENT SPONSORED - 0.96%
25,000 Quebec Province of Canada,
7.50% due 9/15/29 24,421
(Cost $24,407)
U.S. GOVERNMENT SECURITIES - 17.12%
U.S. Treasury Bonds
$ 170,000 8.125% due 5/15/21 194,969
U.S. Treasury Inflation Index Bonds
21,005 3.625% due 7/15/02 20,808
51,179 3.875% due 1/15/09 49,483
U.S. Treasury Notes
175,000 6.00% due 8/15/09 169,586
TOTAL U.S. GOVERNMENT SECURITIES 434,846
(Cost $455,483)
U.S. GOVERNMENT SPONSORED - 37.59%
Federal National Mortgage Assn.
50,000 5.59% due 1/19/00 49,860
25,000 5.125% due 2/13/04 23,506
125,000 5.625% due 5/14/04 119,453
24,821 7.00% due 10/01/14 24,563
24,759 7.00% due 11/01/14 24,519
13,770 9.00% due 11/01/25 14,365
100,000 7.50% due 1/01/30 98,875
Government National Mortgage Assn.
29,961 9.00% due 12/15/17 31,609
22,591 7.00% due 2/15/26 21,871
22,302 7.00% due 11/15/27 21,556
22,524 7.00% due 3/15/28 21,749
24,424 7.00% due 4/15/28 23,584
175,256 7.00% due 7/15/28 169,298
24,529 6.50% due 3/15/29 23,019
161,117 8.00% due 7/15/29 162,678
48,961 7.50% due 8/15/29 48,410
25,002 8.00% due 11/15/29 25,252
50,002 8.00% due 12/15/29 50,494
TOTAL GOVERNMENT SPONSORED 954,661
(Cost $977,876)
COLLATERALIZED MORTGAGE OBLIGATIONS - 1.83%
$ 25,000 GMAC Mtg. Oakwood Mortgage Inv.,
6.853% due 9/15/06 24,447
25,000 Green Tree Financial Corp.,
7.14% due 2/01/21 21,953
TOTAL COLLATERALIZED MORTGAGE OBLIGATIONS 46,400
(Cost $51,075)
REPURCHASE AGREEMENT - 2.76%
70,000 State Street Bank and Trust Co., 2.50% due 1/03/00
(Collateralized by U.S. Treasury Bills,
10.625 due 8/15/15 with a value of $77,138) 70,000
(Cost $70,000)
TOTAL INVESTMENTS - 99.85% 2,535,777
(Cost $2,640,589)
Other assets less liabilities - 0.15% 3,890
TOTAL NET ASSETS - 100.00% $ 2,539,667
For federal income tax purposes, the identified cost of investments owned at
December 31, 1999 was $2,667,848.
Net unrealized depreciation for federal income tax purposes was $132,071, which
is comprised of unrealized appreciation of $84 and unrealized depreciation
of $132,155.
*Non-income producing security
See accompanying Notes to Financial Statements.
Global Fixed Income
Most global bond markets were able to squeeze out a positive performance for
the final quarter of 1999 in what proved to be the most difficult year for
bonds since the bear market of 1994.
The J.P. Morgan Hedged Global Government Bond Index returned 0.55% for the
fourth quarter and 0.73% for the year ended December 31, 1999. The Investors
Mark Series Fund Global Portfolio returned 0.13% (price change and reinvested
distributions) for the fourth quarter and -0.27% for the year ended December
31, 1999. The Portfolio's underweight position in Japan was the most
significant drag on performance relative to the benchmark. For 1999, Japan
returned 10.59%, by far the best result of any developed country. Absent Japan,
the global hedged index produced negative returns for the year.
The Global Portfolio continues to be positioned with a modest overweight in the
U.S., a modest overweight in Europe (particularly Scandinavian bonds), and an
underweight position in Japan. The underweight position in Japan continues to
be the main source of performance drag relative to the benchmark. However, our
country and security selections in corporate credits and spread products were
positive contributors to performance.
U.S. bond yields are becoming more attractive, even though the Fed is in a
tightening cycle, because nominal yields are relatively high and investor's
inflation expectations are very well contained. The Fed is not going to let
inflation get out of control.
Within Europe, corporate restructuring, fiscal restraint and low short-term
interest rates make for an attractive combination of both low inflation and
steep yield curves that offer very high yields on a currency-hedged basis.
Japanese bond yields face considerable long-term risks. Either the economy
recovers and there is cyclical pressure on bond yields, or the economy doesn't
recover and there is increased debt supply.
Overall portfolio duration is neutral to the index. We are comfortable with a
neutral duration position because bonds moved from being rich at the start of
1999 to relatively cheap at the start of 2000.
We have no major currency positions at this time. Spread products, like
Agencies and corporate credit were good performers in the quarter as the desire
for riskier assets dominated global financial markets.
Standish International Management Co., L.P.
CHART - GLOBAL FIXED INCOME PORTFOLIO VERSUS JP MORGAN HEDGED GLOBAL GOVERNMENT
BOND INDEX
Schedule of Investments
DECEMBER 31, 1999
GLOBAL FIXED INCOME
SHARES COMPANY MARKET VALUE
CONVERTIBLE PREFERRED STOCK - 0.71%
500 Equity Office Properties $ 18,000
(Cost $25,000)
FACE
AMOUNT DESCRIPTION MARKET VALUE
CORPORATE BONDS - 34.52%
AUSTRALIA - 0.89%
75,000 GE Capital 6.50% due 12/03/01 48,951
DENMARK - 3.53%
143,000 Danske Kredit, 5.00% due 10/01/29 16,827
124,000 Denmark NYCredit, 5.00% due 10/01/29 14,603
1,000 Denmark Realkredit, 8.00% due 10/01/26 141
747,000 Denmark Realkredit, 6.00% due 10/01/29 94,065
548,000 Denmark Unicredit, 6.00% due 10/01/29 69,006
194,642
FINLAND - 0.45%
25,000 UPM-Kymmene, 6.35% due 10/01/09 24,906
FRANCE - 0.44%
25,000 LaFarge Corp., 5.125% due 6/26/06 24,478
GERMANY - 0.74%
15,000 DBR, 6.50% due 7/04/27 16,143
25,000 Depfa Pfandbrief, 5.50% due 1/15/10 24,813
40,956
MEXICO - 0.93%
50,000 Mexico Global, 6.542% due 4/07/04 51,383
NETHERLANDS - 0.89%
50,000 KPN-Qwest B.V., 7.125% due 6/01/09 49,116
UNITED KINGDOM - 5.07%
14,000 Abbey National, 7.75% due 12/31/03 23,141
40,000 Lehman Brothers, 6.95% due 6/22/04 61,829
35,000 Merrill Lynch, 7.375% due 12/17/07 57,423
70,000 National Westminster, 5.125% due 6/30/11 63,219
75,000 Tate & Lyle, 5.75% due 10/06/06 74,056
279,668
UNITED STATES - 21.58%
10,000 American Standard, 7.125% due 2/15/03 9,600
50,000 American Standard, 7.125% due 6/01/06 50,375
25,000 Aramark Services, 6.75% due 8/01/04 23,493
15,000 Avalon Bay Commercial, 6.50% due 7/15/03 14,398
50,000 City National Corp., 6.375% due 1/15/08 44,900
50,000 Conseco Financial Notes, 6.80% due 6/15/05 46,578
50,000 Diageo PLC, 6.625% due 6/24/04 48,897
50,000 Enron Corp., 4.375% due 4/08/05 47,135
45,000 Ford Motor Credit, 3.75% due 7/12/04 42,555
50,000 Ford Motor Credit, 6.70% due 7/16/04 49,057
60,000 Fort James Corp., 4.75% due 6/29/04 57,736
15,000 GS Escrow Corp., 7.00% due 8/01/03 13,865
85,000 GS Escrow Corp., 7.125% due 8/01/05 75,945
50,000 Lehman Brothers, 6.625% due 12/27/02 48,960
50,000 MMI Cap Trust, 7.625% due 12/15/27 42,733
50,000 National Westminster Bank, 7.75% due 4/29/49 48,467
25,000 News Amer Holdings, 7.75% due 12/01/45 22,861
25,000 Niagra Mohawk Power, 7.75% due 10/01/08 25,027
25,000 NVR, Inc., 8.00% due 6/01/05 23,750
25,000 Paine Webber, 6.375% due 5/15/04 23,894
60,000 Panama, 8.875% due 9/30/27 50,250
25,000 Panamsat Corp., 6.125% due 1/15/05 22,330
25,000 Qwest Communications, 0% due 2/01/08 19,438
25,000 Qwest Communications, 7.50% due 11/01/08 24,625
25,000 Safeway Stores, 6.05% due 11/15/03 23,875
75,000 Simon Debartolo, 7.125% due 6/24/05 70,796
25,000 Smithfield Foods, Inc., 7.625% due 2/15/08 22,625
25,000 Speedway Motors, 8.50% due 8/15/07 23,508
25,000 Time Warner, Inc., 7.75% due 6/15/05 25,361
25,000 Tricon Global Rest, 7.65% due 5/15/08 23,713
25,000 Tyco International, 6.875% due 9/05/02 24,566
30,000 UCFC Home Equity, 6.315% due 4/15/30 27,900
25,000 Union Planters, 6.50% due 3/15/18 22,495
25,000 UPM-Kymmene Corp., 7.45% due 11/26/27 22,602
25,000 Wellsford REIT, 9.375% due 2/01/02 25,870
1,190,180
TOTAL CORPORATE BONDS 1,904,280
(Cost $2,019,472)
GOVERNMENT BONDS - 39.12%
ARGENTINA - 0.58%
20,000 Argentina Govt., 11.50% due 8/14/01 32,024
CANADA - 1.44%
50,000 Ontario Province of Canada, 6.375% due 6/10/04 79,413
DENMARK - 2.77%
1,000,000 Denmark Govt., 8.00% due 3/15/06 152,899
FRANCE - 0.70%
38,112 France OAT, 6.00% due 10/25/25 38,538
GERMANY - 9.31%
100,000 Deutschland Republic, 6.50% due 10/14/05 108,185
250,000 Deutschland Republic, 4.75% due 7/04/08 242,541
30,000 Deutschland Republic, 6.25% due 1/04/24 31,358
115,000 Treuhandanstalt, 7.125% due 1/29/03 123,873
6,693 Treuhandanstalt, 7.50% due 9/09/04 7,471
513,428
ITALY - 4.80%
50,000 BTPS, 4.00% due 10/01/03 48,964
100,000 BTPS, 3.25% due 4/15/04 94,009
50,000 Italy Govt., 5.00% due 2/15/03 50,854
75,000 Italy Govt., 3.25% due 2/01/04 70,734
264,561
JAPAN - 7.49%
5,000,000 Italy Euroyen, 5.125% due 7/29/03 56,738
12,000,000 Italy Euroyen, 3.75% due 6/08/05 133,859
3,000,000 South Africa, 3.35% due 6/17/04 29,753
10,000,000 Spanish Kingdom Euroyen, 4.75% due 3/14/05 116,252
7,000,000 Spanish Kingdom Euroyen, 3.10% due 9/20/06 76,472
413,074
MEXICO - 1.08%
6,000,000 United Mexican, 3.10% due 4/24/02 59,339
NETHERLANDS - 0.19%
10,000 Netherland Govt., 5.75% due 9/15/02 10,359
NEW ZEALAND - 1.47%
150,000 New Zealand Govt., 8.00% due 4/15/04 81,166
SINGAPORE - 1.43%
90,000 Singapore Govt., 3.50% due 2/01/04 53,660
40,000 Singapore Govt., 5.125% due 11/15/04 25,266
78,926
SWEDEN - 3.59%
400,000 Sweden Govt., 5.50% due 4/12/02 47,492
1,300,000 Sweden Govt., 5.00% due 1/15/04 150,784
198,276
UNITED KINGDOM - 3.85%
50,000 UK Gilt Treasury, 10.00% due 9/08/03 90,460
30,000 UK Gilt Treasury, 7.75% due 9/08/06 53,188
25,000 UK Gilt Treasury, 9.00% due 10/13/08 49,101
10,000 UK Gilt Treasury, 6.00% due 12/07/28 19,815
212,564
URUGUAY - 0.42%
45,000 Banco Comercial, 8.25% due 10/04/00 23,358
TOTAL GOVERNMENT BONDS 2,157,925
(Cost $2,224,934)
U.S. GOVERNMENT SECURITIES - 9.87%
U.S. Treasury Bonds
75,000 8.125% due 5/15/21 86,015
U.S. Treasury Inflation Index Bonds
63,017 3.625% due 7/15/02 62,426
26,542 3.375% due 1/15/07 25,024
U.S. Treasury Notes
305,000 7.875% due 11/15/04 322,728
50,000 6.00% due 8/15/09 48,453
TOTAL U.S. GOVERNMENT SECURITIES 544,646
(Cost $554,312)
U.S. GOVERNMENT SPONSORED - 11.09%
Federal Home Loan Mortgage Corp.
150,000 5.68% due 1/19/00 149,574
125,000 5.75% due 3/15/09 114,190
Federal National Mortgage Assn.
100,000 5.82% due 1/21/00 99,676
125,000 5.58% due 3/07/00 123,721
Government National Mortgage Assn.
23,017 8.00% due 7/15/29 23,240
100,000 8.00% due 1/25/30 101,000
TOTAL U.S. GOVERNMENT SPONSORED 611,401
(Cost $613,640)
SHARES COMPANY MARKET VALUE
CONVERTIBLE PREFERRED STOCK - 0.33%
500 Equity Office Properties 18,000
(Cost $25,000)
FACE AMOUNT*
OR SHARES EXPIRATION DATE/EXERCISE PRICE MARKET VALUE
CALL OPTIONS PURCHASED - 0.47%
Euro
55,000 Aug 00 /.950 522
100,000 Jul 01 /.890 750
German Government Bond
80,000 Jan 00 / 111.260 -
75,000 Jan 00 / 112.070 -
100,000 Jan 00 / 112.080 -
50,000 Feb 00 / 106.990 -
50,000 Apr 00 / 99.150 -
50,000 Jun 00 / 96.260 48
100,000 Jul 00 / 93.990 345
50,000 Jul 00 / 95.430 76
50,000 Aug 00 / 99.010 95
50,000 Aug 00 / 101.200 46
50,000 Sept 00 / 85.930 801
100,000 Sept 00 / 90.200 937
50,000 Sept 00 / 91.050 407
50,000 Oct 00 / 94.760 574
50,000 Oct 00 / 95.540 463
50,000 Nov 00 / 95.420 448
Japanese Government Bond
15,000,000 May 00 / 104.669 435
20,000,000 Jun 00 / 110.430 880
Japanese Yen
50,000 Feb 00 / 125.00 -
50,000 Mar 00 / 122.000 5
50,000 Apr 00 / 121.500 5
50,000 Aug 00 / 115.800 185
100,000 Aug 00 / 125.000 252
50,000 Sept 00 / 115.000 210
50,000 Nov 01 / 120.000 520
525,000 Dec 01 / 110.250 14,546
50,000 Feb 01 / 150.000 5
United States Dollar
50,000 Mar 00 / 94.375 6
75,000 Aug 00 / 98.781 862
50,000 Sept 00 / 99.260 563
25,000 Sept 00 / 100.000 268
53,000 Sept 00 / 100.750 315
100,000 Oct 00 / 99.875 844
50,000 Dec 00 / 98.250 650
TOTAL CALL OPTIONS PURCHASED 26,063
(Cost $54,614)
PUT OPTIONS PURCHASED - 0.82%
Australian Dollar
75,000 Jul 00 / .644 837
Euro
98,420 Apr 00 / 146.70 42,638
Italian Government Bond
182,500,000 Jul 97 / 107.690 1,095
90,000,000 Jul 97 / 105.290 90
90,000,000 Feb 00 / 105.490 90
United States Dollar
50,000 Oct 00 / 1.420 585
TOTAL PUT OPTIONS PURCHASED 45,335
(Cost $25,622)
FACE
AMOUNT DESCRITPION MARKET VALUE
REPURCHASE AGREEMENT - 2.16%
$ 119,000 State Street Bank and Co., 2.50% due 1/03/00
(Collateralized by U.S. Treasury Bills, 6.50%
due 11/15/26 with a value of $122,969) 119,000
(Cost $119,000)
TOTAL INVESTMENTS - 98.38% 5,426,650
(Cost $5,636,594)
Other assets less liabilities - 1.62% 89,333
TOTAL NET ASSETS - 100.00% $ 5,515,983
For federal income tax purposes, the identified cost of investments owned at
December 31, 1999 was $5,689,537.
Net unrealized depreciation for federal income tax purposes was $262,887, which
is comprised of unrealized appreciation of $93,266 and unrealized depreciation
of $356,153.
* Face amount is reflected in local currency while market value is reflected in
U.S. Dollars.
See accompanying Notes to Financial Statements.
Money Market
Money market issuers, seeking to ensure funding into the year 2000, boosted
yields on securities that mature in the first quarter of 2000 to entice money
market investors. While this helped to ensure adequate funding for the issuers,
money market investors had an opportunity to pick up 50-60 basis points by
extending from December 1999 to January and February of 2000.
The U.S. economy continues to expand. Third quarter Gross Domestic Product
expanded at a 5.7% annual pace from 1.9% in the second quarter. In addition,
rising wages remains a threat and oil prices are double over the last twelve
months. These developments pushed interest rates 85-180 basis points higher
along the yield curve from the beginning of the year. The three month Treasury
bill rose from 4.45% to 5.30% over the course of 1999. Given the economic
fundamentals, the Federal Reserve increased the Federal Funds rate (currently
5.50%) by 25 basis points at each of the June, August and November meetings in
an effort to offset potential inflationary pressures. Despite these strong
economic fundamentals, inflation remains well behaved. In fact, the Consumer
Price Index has risen a modest 2.6% over the last twelve months ended November
1999.
There remains adequate concern among Fed members regarding tight employment,
strong economic activity and rising commodity prices, to maintain a heightened
level of vigilance toward inflationary pressures. Additional action by the Fed
is possible as we turn into the new year. Consequently, short-term interest
rates are likely to rise through the second quarter.
Average annual compounded total returns for one year and the life of the
Portfolio (commencement November 13, 1997) as of December 31, 1999, were 4.60%
and 4.87%, respectively. Performance data contained in this report is for past
periods only. Past performance is not predictive of future performance. An
investment in this Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Portfolio seeks to preserve the value of your investment at $1.00 per share, it
is possible to lose money by investing in the Portfolio.
Standish, Ayer & Wood, Inc.
Schedule of Investments
DECEMBER 31, 1999
MONEY MARKET
FACE
AMOUNT DESCRIPTION MARKET VALUE
U.S.GOVERNMENT SECURITIES - 12.89%
U.S. TREASURY BILLS
$ 29,000 4.73% due 3/30/00 $ 28,640
180,000 5.17% due 3/30/00 177,699
TOTAL U.S. GOVERNMENT SECURITIES 206,339
(Cost $206,339)
U.S. GOVERNMENT SPONSORED - 76.24%
FEDERAL FARM CREDIT BANKS
DISCOUNT NOTES
80,000 5.55% due 1/18/00 79,790
100,000 5.63% due 2/01/00 99,515
134,000 5.75% due 2/16/00 133,016
FEDERAL HOME LOAN BANKS
DISCOUNT NOTES
150,000 5.68% due 1/19/00 149,574
100,000 5.63% due 2/04/00 99,468
125,000 5.64% due 3/09/00 123,669
FEDERAL HOME LOAN MORTGAGE
CORPORATION DISCOUNT NOTES
130,000 5.47% due 1/10/00 129,822
100,000 5.53% due 1/31/00 99,539
FEDERAL NATIONAL MORTGAGE
ASSOCIATION DISCOUNT NOTES
200,000 5.58% due 1/21/00 199,389
108,000 5.635% due 3/02/00 106,948
TOTAL U.S. GOVERNMENT SPONSORED 1,220,730
(Cost $1,220,730)
SHORT-TERM CORPORATE NOTES - 10.90%
$75,000 World Bank, 5.55% due 1/18/00 74,803
100,000 World Bank, 5.58% due 1/21/00 99,690
TOTAL SHORT-TERM CORPORATE NOTES 174,493
(Cost $174,493)
TOTAL INVESTMENTS - 100.03% 1,601,562
(Cost $1,601,562)
Other assets less liabilities - (0.03%) (403)
TOTAL NET ASSETS - 100.00% $ 1,601,159
For federal income tax purposes, the identified cost of investments owned at
December 31, 1999 was $1,601,562.
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
DECEMBER 31, 1999
LARGE CAP LARGE CAP MID CAP
VALUE GROWTH EQUITY
</CAPTION>
<S> <C> <C> <C>
ASSETS:
Investments, at value (identified cost
$3,512,400, $2,709,443, $2,411,042,
$2,271,551, $2,933,231, $3,157,564,
$2,640,589, $5,636,594, and
$1,601,562, respectively) $ 3,387,199 $ 4,495,400 $2,733,423
Cash - 115,430 24,412
Dividends receivable 4,488 856 5,871
Interest receivable - - -
Unrealized appreciation on forward foreign
currency contracts - - -
Receivables for investments sold - - -
Other receivables - - -
Total assets 3,391,687 4,611,686 2,763,706
LIABILITIES AND NET ASSETS:
Cash overdraft 196,220 - -
Fees payable 2,745 3,571 1,939
Options written - - -
Payable for fund shares redeemed - - -
Payable for investments purchased - - -
Total liabilities 198,965 3,571 1,939
NET ASSETS $ 3,192,722 $ 4,608,115 $2,761,767
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 3,391,393 $ 2,695,537 $2,460,639
Undistributed (overdistributed)
net investment income - - 4,957
Accumulated undistributed net realized gain
(loss) on sale of investments
and foreign currency transactions (73,470) 126,621 (26,210)
Net unrealized appreciation (depreciation) in
value of investments and translation of
assets and liabilities in foreign currency (125,201) 1,785,957 322,381
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 3,192,722 $ 4,608,115 $ 2,761,767
Capital shares, $.001 par value
Authorized 500,000,000 500,000,000 500,000,000
Outstanding 339,655 255,517 244,320
NET ASSET VALUE PER SHARE $ 9.40 $ 18.03 $ 11.30
</TABLE>
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
DECEMBER 31, 1999
SMALL CAP GROWTH
EQUITY & INCOME BALANCED
</CAPTION>
<S> <C> <C> <C>
ASSETS:
Investments, at value (identified cost
$3,512,400, $2,709,443, $2,411,042,
$2,271,551, $2,933,231, $3,157,564,
$2,640,589, $5,636,594, and
$1,601,562, respectively) $ 3,203,053 $ 3,505,304 $ 2,927,568
Cash 4,803 137,003 -
Dividends receivable 285 3,653 3,981
Interest receivable 54 - 37,416
Unrealized appreciation on forward foreign
currency contracts - - -
Receivables for investments sold 8,349 - 101,950
Other receivables - - -
Total assets 3,216,544 3,645,960 3,070,915
LIABILITIES AND NET ASSETS:
Cash overdraft - - 97,890
Fees payable 2,706 2,807 2,386
Options written - - -
Payable for fund shares redeemed - - -
Payable for investments purchased 22,193 9,631 -
Total liabilities 24,899 12,438 100,276
NET ASSETS $ 3,191,645 $ 3,633,522 $ 2,970,639
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 2,338,414 $ 3,015,574 $ 3,217,131
Undistributed (overdistributed)
net investment income - 1,539 -
Accumulated undistributed net realized
gain (loss) on sale of investments
and foreign currency transactions (78,271) 44,336 (16,496)
Net unrealized appreciation (depreciation)
in value of investments and translation of
assets and liabilities in foreign currency 931,502 572,073 (229,996)
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 3,191,645 $ 3,633,522 $ 2,970,639
Capital shares, $.001 par value
Authorized 500,000,000 500,000,000 500,000,000
Outstanding 241,826 286,695 327,214
NET ASSET VALUE PER SHARE $ 13.20 $ 12.67 $ 9.08
</TABLE>
See accompanying Notes to Financial Statements.
Statements of Assets and Liabilities
<TABLE>
<CAPTION>
DECEMBER 31, 1999
INTERMEDIATE GLOBAL MONEY
FIXED INCOME FIXED INCOME MARKET
</CAPTION>
<S> <C> <C> <C>
ASSETS:
Investments, at value (identified cost
$3,512,400, $2,709,443, $2,411,042,
$2,271,551, $2,933,231, $3,157,564,
$2,640,589, $5,636,594, and
$1,601,562, respectively) $ 2,535,777 $ 5,426,650 $ 1,601,562
Cash 406 501 304
Dividends receivable - - -
Interest receivable 30,575 99,240 -
Unrealized appreciation on forward foreign
currency contracts - 94,431 -
Receivables for investments sold 74,221 117,447 -
Other receivables - 6,314 -
Total assets 2,640,979 5,744,583 1,601,866
LIABILITIES AND NET ASSETS:
Cash overdraft - - -
Fees payable 1,605 4,340 525
Options written - 123,260 -
Payable for fund shares redeemed - - 182
Payable for investments purchased 99,707 101,000 -
Total liabilities 101,312 228,600 707
NET ASSETS $ 2,539,667 $ 5,515,983 $ 1,601,159
NET ASSETS CONSIST OF:
Capital (capital stock and paid-in capital) $ 2,731,544 $ 5,828,910 $ 1,601,201
Undistributed (overdistributed)
net investment income 3,100 (60,134) -
Accumulated undistributed net realized gain
(loss) on sale of investments
and foreign currency transactions (90,165) (81,568) (42)
Net unrealized appreciation (depreciation)
in value of investments and translation of
assets and liabilities in foreign currency (104,812) (171,225) -
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES $ 2,539,667 $ 5,515,983 $ 1,601,159
Capital shares, $.001 par value
Authorized 500,000,000 500,000,000 500,000,000
Outstanding 273,673 598,625 1,601,201
NET ASSET VALUE PER SHARE $ 9.28 $ 9.21 $ 1.00
</TABLE>
See accompanying Notes to Financial Statements.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
LARGE CAP LARGE CAP MID CAP
VALUE GROWTH EQUITY
</CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (net of foreign tax withheld) $ 98,768 $ 16,300 $ 29,360
Interest 4,138 7,322 2,770
102,906 23,622 32,130
EXPENSES (NOTE 2):
Management fees 28,257 28,408 20,106
Custody and accounting fees 2,678 2,690 16,428
Professional fees 14,066 14,066 14,012
Directors' fees 3,183 3,183 3,183
Contractholder reports 3,388 3,388 3,388
Other expenses 1,276 1,275 1,412
Total expenses before reimbursement 52,848 53,010 58,529
Less: expense reimbursement (21,059) (21,051) (35,909)
Net expenses 31,789 31,959 22,620
Net investment income (loss) 71,117 (8,337) 9,510
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, OPTIONS WRITTEN AND FOREIGN
CURRENCY TRANSACTIONS:
Realized gain (loss) from:
Investment transactions 43,613 243,944 41,765
Foreign currency transactions - - -
Option contracts written - - -
Net realized gain (loss) from investments,
options written
and foreign currency transactions 43,613 243,944 41,765
Change in net unrealized appreciation
(depreciation) from:
Investments (107,418) 961,190 16,246
Options written - - -
Translation of assets and liabilities in
foreign currencies - - -
Net unrealized appreciaton (depreciation) (107,418) 961,190 16,246
Net gain (loss) on investments, options
written and foreign currency
transactions (63,805) 1,205,134 58,011
Increase (decrease) in net assets resulting
from operations $ 7,312 $ 1,196,797 $ 67,521
</TABLE>
See accompanying Notes to Financial Statements
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
SMALL CAP GROWTH
EQUITY & INCOME BALANCED
</CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (net of foreign tax withheld) $ 4,452 $ 53,975 $ 43,723
Interest 4,652 3,042 121,548
9,104 57,017 165,271
EXPENSES (NOTE 2):
Management fees 19,709 25,049 22,791
Custody and accounting fees 10,969 5,455 2,631
Professional fees 14,066 14,066 14,066
Directors' fees 3,183 3,183 3,183
Contractholder reports 3,388 3,388 3,388
Other expenses 1,275 1,275 3,094
Total expenses before reimbursement 52,590 52,416 49,153
Less: expense reimbursement (30,807) (24,236) (23,513)
Net expenses 21,783 28,180 25,640
Net investment income (loss) (12,679) 28,837 139,631
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, OPTIONS WRITTEN AND FOREIGN
CURRENCY TRANSACTIONS:
Realized gain (loss) from:
Investment transactions 500,845 295,605 (1,822)
Foreign currency transactions 48 - -
Option contracts written - - -
Net realized gain (loss) from investments,
options written and foreign currency
transactions 500,893 295,605 (1,822)
Change in net unrealized appreciation
(depreciation) from:
Investments 713,163 157,639 83,757
Options written - - -
Translation of assets and liabilities in
foreign currencies - - -
Net unrealized appreciaton (depreciation) 713,163 157,639 83,757
Net gain (loss) on investments, options
written and foreign currency
transactions 1,214,056 453,244 81,935
Increase (decrease) in net assets resulting
from operations $ 1,201,377 $ 482,081 $ 221,566
</TABLE>
See accompanying Notes to Financial Statements
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1999
INTERMEDIATE GLOBAL MONEY
FIXED INCOME FIXED INCOME MARKET
</CAPTION>
<S> <C> <C> <C>
INVESTMENT INCOME:
Income:
Dividends (net of foreign tax withheld) $ 1,313 $ 888 $ -
Interest 171,796 339,931 63,208
173,109 340,819 63,208
EXPENSES (NOTE 2):
Management fees 15,231 41,445 5,024
Custody and accounting fees 17,350 20,817 7,572
Professional fees 13,888 14,118 13,101
Directors' fees 3,183 3,183 3,183
Contractholder reports 3,388 3,388 3,388
Other expenses 4,131 9,225 1,928
Total expenses before reimbursement 57,171 92,176 34,196
Less: expense reimbursement (36,863) (36,916) (27,916)
Net expenses 20,308 55,260 6,280
Net investment income (loss) 152,801 285,559 56,928
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS, OPTIONS WRITTEN AND FOREIGN
CURRENCY TRANSACTIONS:
Realized gain (loss) from:
Investment transactions (89,948) (68,930) (42)
Foreign currency transactions - 2,452 -
Option contracts written - (49,032) -
Net realized gain (loss) from investments,
options written and foreign currency
transactions (89,948) (115,510) (42)
Change in net unrealized appreciation
(depreciation) from:
Investments (68,697) (127,152) -
Options written - (54,658) -
Translation of assets and liabilities in
foreign currencies - (2,624) -
Net unrealized appreciaton (depreciation) (68,697) (184,434) -
Net gain (loss) on investments, options
written and foreign currency transactions (158,645) (299,944) (42)
Increase (decrease) in net assets resulting
from operations (5,844) (14,385) 56,886
</TABLE>
See accompanying Notes to Financial Statements
Statements of Changes in Net Assets
LARGE CAP VALUE
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
OPERATIONS:
Net investment income (loss) $ 71,117 $ 40,974
Net realized gain (loss) from investments,
options written and foreign currency
transactions 43,613 38,317
Net unrealized appreciation (depreciation)
on investments and translation of
assets and liabilities in foreign currencies (107,418) 60,044
Net increase (decrease) in net assets
resulting from operations 7,312 139,335
DISTRIBUTIONS TO CONTRACTHOLDERS:
Net investment income (70,858) (44,421)
Net realized gain from investment transactions (106,447) (47,594)
Total distributions to contractholders (177,305) (92,015)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 339,750 650,325
Reinvested distributions 177,305 92,015
517,055 742,340
Shares repurchased (380,023) (8,087)
Net increase from capital share transactions 137,032 734,253
Net increase (decrease) in net assets (32,961) 781,573
NET ASSETS:
Beginning of year 3,225,683 2,444,110
End of year $ 3,192,722 $ 3,225,683
Undistributed net investment income
at end of year $ - $ -
*Fund share transactions:
Shares sold 32,458 65,647
Reinvested distributions 19,024 9,555
51,482 75,202
Shares repurchased (38,400) (773)
Net increase in fund shares 13,082 74,429
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
LARGE CAP GROWTH
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
OPERATIONS:
Net investment income (loss) $ (8,337) $ (500)
Net realized gain (loss) from investments,
options written and foreign currency
transactions 243,944 (117,323)
Net unrealized appreciation (depreciation)
on investments and translation of
assets and liabilities in foreign currencies 961,190 684,602
Net increase (decrease) in net assets
resulting from operations 1,196,797 566,779
DISTRIBUTIONS TO CONTRACTHOLDERS:
Net investment income - (923)
Net realized gain from investment transactions - (811)
Total distributions to contractholders - (1,734)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 691,561 275,032
Reinvested distributions - 1,734
691,561 276,766
Shares repurchased (273,386) (5,169)
Net increase from capital share transactions 418,175 271,597
Net increase (decrease) in net assets 1,614,972 836,642
NET ASSETS:
Beginning of year 2,993,143 2,156,501
End of year $ 4,608,115 $ 2,993,143
Undistributed net investment income at
end of year $ - $ -
*Fund share transactions:
Shares sold 46,743 23,665
Reinvested distributions - 136
46,743 23,801
Shares repurchased (16,078) (397)
Net increase in fund shares 30,665 23,404
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
MID CAP EQUITY
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
OPERATIONS:
Net investment income (loss) $ 9,510 $ 8,524
Net realized gain (loss) from investments,
options written and foreign currency
transactions
Net unrealized appreciation (depreciation) 41,765 (48,813)
on investments and translation of
assets and liabilities in foreign currencies 67,521 173,428
Net increase (decrease) in net assets
resulting from operations 67,521 173,428
DISTRIBUTIONS TO CONTRACTHOLDERS:
Net investment income (6,561) (6,592)
Net realized gain from investment transactions (8,020) (17,578)
Total distributions to contractholders (14,581) (24,170)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 240,982 180,028
Reinvested distributions 14,581 24,169
255,563 204,197
Shares repurchased (14,350) (4,756)
Net increase from capital share transactions 241,213 199,441
Net increase (decrease) in net assets 294,153 348,699
NET ASSETS:
Beginning of year 2,467,614 2,118,915
End of year $ 2,761,767 $ 2,467,614
Undistributed net investment income at
end of year $ 4,957 $ 2,305
*Fund share transactions:
Shares sold 22,359 18,144
Reinvested distributions 1,304 2,331
23,663 20,475
Shares repurchased (1,357) (433)
Net increase in fund shares 22,306 20,042
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
SMALL CAP EQUITY
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
OPERATIONS:
Net investment income (loss) $ (12,679) $ (9,650)
Net realized gain (loss) from investments,
options written and foreign currency
transactions
Net unrealized appreciation (depreciation) 500,893 (573,464)
on investments and translation of
assets and liabilities in foreign currencies 713,163 269,804
Net increase (decrease) in net assets
resulting from operations 1,201,377 (313,310)
DISTRIBUTIONS TO CONTRACTHOLDERS:
Net investment income - (768)
Net realized gain from investment transactions - -
Total distributions to contractholders - (768)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 220,277 140,968
Reinvested distributions - 768
220,277 141,736
Shares repurchased (16,292) (1,121)
Net increase from capital share transactions 203,985 140,615
Net increase (decrease) in net assets 1,405,362 (173,463)
NET ASSETS:
Beginning of year 1,786,283 1,959,746
End of year $ 3,191,645 $ 1,786,283
Undistributed net investment income at
end of year $ - $ -
*Fund share transactions:
Shares sold 23,943 17,933
Reinvested distributions - 101
23,943 18,034
Shares repurchased (1,642) (130)
Net increase in fund shares 22,301 17,904
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
GROWTH & INCOME
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
OPERATIONS:
Net investment income $ 28,837 $ 31,164
Net realized gain (loss) from investments,
options written and foreign currency
transactions 295,605 (72,218)
Net unrealized appreciation (depreciation) on
investments and translation of
assets and liabilities in foreign currencies 157,639 332,012
Net increase (decrease) in net assets
resulting from operations 482,081 290,958
DISTRIBUTIONS TO CONTRACTHOLDERS:
Net investment income (29,168) (30,378)
Net realized gain from investment transactions (179,051) -
Return of capital - -
Total distributions to contractholders (208,219) (30,378)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 410,275 380,120
Reinvested distributions 208,219 30,378
618,494 410,948
Shares repurchased (24,163) (6,893)
Net increase from capital share transactions 594,331 403,605
Net increase in net assets 868,193 664,185
NET ASSETS:
Beginning of year 2,765,329 2,101,144
End of year $ 3,633,522 $ 2,765,329
Undistributed (overdistributed) net investment
income at end of year $ 1,539 $ 1,870
*Fund share transactions:
Shares sold 32,130 35,979
Reinvested distributions 16,631 2,720
48,761 38,699
Shares repurchased (1,902) (614)
Net increase in fund shares 46,859 38,085
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
BALANCED
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
OPERATIONS:
Net investment income $ 139,631 $ 132,900
Net realized gain (loss) from investments,
options written and foreign currency
transactions (1,822) 6,441
Net unrealized appreciation (depreciation)
on investments and translation of
assets and liabilities in foreign currencies 83,757 (303,573)
Net increase (decrease) in net assets
resulting from operations 221,566 (164,232)
DISTRIBUTIONS TO CONTRACTHOLDERS:
Net investment income (139,144) (132,856)
Net realized gain from investment transactions (23,809) -
Return of capital - -
Total distributions to contractholders (162,953) (132,856)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 258,313 294,538
Reinvested distributions 162,953 132,856
421,266 427,394
Shares repurchased (152,797) (4,447)
Net increase from capital share transactions 268,469 422,947
Net increase in net assets 327,082 125,859
NET ASSETS:
Beginning of year 2,643,557 2,517,698
End of year $ 2,970,639 $ 2,643,557
Undistributed (overdistributed) net investment
income at end of year $ - $ 1,233
*Fund share transactions:
Shares sold 27,668 30,307
Reinvested distributions 18,006 15,253
45,674 45,560
Shares repurchased (16,248) (461)
Net increase in fund shares 29,426 45,099
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
INTERMEDIATE FIXED INCOME
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
OPERATIONS:
Net investment income $ 152,801 $ 130,082
Net realized gain (loss) from investments,
options written and foreign currency
transactions (89,948) 29,696
Net unrealized appreciation (depreciation)
on investments and translation of
assets and liabilities in foreign currencies (68,697) (47,397)
Net increase (decrease) in net assets
resulting from operations (5,844) 112,381
DISTRIBUTIONS TO CONTRACTHOLDERS:
Net investment income (152,919) (127,884)
Net realized gain from investment transactions (14,064) (15,985)
Return of capital - -
Total distributions to contractholders (166,983) (143,869)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 266,136 269,098
Reinvested distributions 166,983 143,869
433,119 412,967
Shares repurchased (136,055) (4,087)
Net increase from capital share transactions 297,064 408,880
Net increase in net assets 124,237 377,392
NET ASSETS:
Beginning of year 2,415,430 2,038,038
End of year $ 2,539,667 $ 2,415,430
Undistributed (overdistributed) net investment
income at end of year $ 3,100 $ 3,371
*Fund share transactions:
Shares sold 26,735 26,057
Reinvested distributions 17,955 14,445
44,690 40,502
Shares repurchased (13,670) (401)
Net increase in fund shares 31,020 40,101
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
GLOBAL FIXED INCOME
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
OPERATIONS:
Net investment income $ 285,559 $ 285,533
Net realized gain (loss) from investments,
options written and foreign currency
transactions (115,510) 136,328
Net unrealized appreciation (depreciation)
on investments and translation of
assets and liabilities in foreign currencies (184,434) (52,157)
Net increase (decrease) in net assets
resulting from operations (14,385) 369,704
DISTRIBUTIONS TO CONTRACTHOLDERS:
Net investment income (381,181) (271,758)
Net realized gain from investment transactions - (30,394)
Return of capital - (153,753)
Total distributions to contractholders (381,181) (455,905)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 50,185 15,852
Reinvested distributions 381,181 455,905
431,366 471,757
Shares repurchased (2,433) (1,805)
Net increase from capital share transactions 428,933 469,952
Net increase in net assets 33,367 383,751
NET ASSETS:
Beginning of year 5,482,616 5,098,865
End of year $ 5,515,983 $ 5,482,616
Undistributed (overdistributed) net investment
income at end of year $ (60,134) $ 70,592
*Fund share transactions:
Shares sold 5,070 1,540
Reinvested distributions 41,343 45,911
46,413 47,451
Shares repurchased (247) (171)
Net increase in fund shares 46,166 47,280
See accompanying Notes to Financial Statements.
Statements of Changes in Net Assets
MONEY MARKET
YEAR ENDED YEAR ENDED
12/31/99 12/31/98
OPERATIONS:
Net investment income $ 56,928 $ 52,828
Net realized gain (loss) from investments,
options written and foreign currency
transactions (42) -
Net unrealized appreciation (depreciation)
on investments and translation of
assets and liabilities in foreign currencies - -
Net increase (decrease) in net assets
resulting from operations 56,886 52,828
DISTRIBUTIONS TO CONTRACTHOLDERS:
Net investment income (56,928) (52,828)
Net realized gain from investment transactions - -
Return of capital - -
Total distributions to contractholders (56,928) (52,828)
CAPITAL SHARE TRANSACTIONS:*
Shares sold 2,417,415 398,043
Reinvested distributions 56,748 52,817
2,474,163 450,860
Shares repurchased (2,143,409) (199,682)
Net increase from capital share transactions 330,754 251,178
Net increase in net assets 330,712 251,178
NET ASSETS:
Beginning of year 1,270,447 1,019,269
End of year $ 1,601,159 $ 1,270,447
Undistributed (overdistributed) net investment
income at end of year $ - $ -
*Fund share transactions:
Shares sold 2,417,415 398,043
Reinvested distributions 56,748 52,817
2,474,163 450,860
Shares repurchased (2,143,409) (199,682)
Net increase in fund shares 330,754 251,178
See accompanying Notes to Financial Statements.
NOTES TO FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES:
Investors Mark Series Fund (the Fund) is registered under the Investment
Company Act of 1940 (as amended) as a diversified open-end management
investment company of the series type. The Fund is required to account for the
assets of each series separately and to allocate general liabilities of the
Fund to each series based upon the net asset value of each series. Shares of
the Fund are distributed to a variable annuity separate account of Business
Men's Assurance Company of America. The following is a summary of significant
accounting policies consistently followed by the Fund in the preparation of its
financial statements.
A. INVESTMENT VALUATION - Securities traded on U.S. or foreign securities
exchanges or included in a national market system are valued at the last quoted
sales price; securities for which there were no sales reported are valued at
the mean between the bid and ask prices; exchange listed options are valued at
the last sales price; bonds and other securities for which market quotations
are not readily available are valued at fair value according to methods
selected in good faith by the Board of Directors. Securities with maturities of
60 days or less when acquired or subsequently within 60 days of maturity are
valued at amortized cost, which approximates market value.
Generally, trading in foreign securities markets is substantially completed
each day at various times prior to the close of the New York Stock Exchange.
The values of foreign securities are determined as of the close of such foreign
markets or the close of the New York Stock Exchange, if earlier. All
investments quoted in foreign currency are valued in U.S. dollars on the basis
of the foreign currency exchange rates prevailing at the close of business.
Investment in foreign securities may involve risks not present in domestic
investments. Since foreign securities may be denominated in a foreign currency
and involve settlement and pay interest or dividends in foreign currencies,
changes in the relationship of these foreign currencies to the U.S. dollar can
significantly affect the value of the investments and earnings of the Fund.
Foreign investments may also subject the Fund to foreign government exchange
restrictions, expropriation, taxation or other political, social or economic
developments, all of which could affect the market and/or credit risk of the
investments.
Pursuant to Rule 2a-7 of the Investment Company Act of 1940 (as amended),
securities in the Money Market Portfolio are valued at amortized cost, which
approximates market value.
B. OPTIONS - When a call or put option is written, an amount equal to the
premium received is recorded as a liability. The liability is marked-to-market
daily to reflect the current market value of the option written. When a
written option expires, a gain is realized in the amount of the premium
originally received. If a closing purchase contract is entered into, a gain
or loss is realized in the amount of the original premium less the cost of
the closing transaction. If a written call is exercised, a gain or loss is
realized from the sale of the underlying security, and the proceeds from
such sale are increased by the premium originally received. If a written put
option is exercised, the amount of the premium originally received reduces
the cost of the security which is purchased upon exercise of the option.
Purchased options are recorded as investments and marked-to-market daily to
reflect the current market value of the option contract. If a purchased
option expires, a loss is realized in the amount of the cost of the option.
If a closing transaction is entered into, a gain or loss is realized, to the
extent that the proceeds from the sale are greater or less than the cost of
the option. If a put option is exercised, a gain or loss is realized from
the sale of the underlying security by adjusting the proceeds from such sale
by the amount of the premium originally paid. If a call option is exercised,
the cost of the security purchased upon exercise is increased by the premium
originally paid.
C. FOREIGN CURRENCY TRANSLATION - All assets and liabilities expressed in
foreign currencies are converted into U.S. dollars based on current exchange
rates at the end of the period. Purchases and sales of investments in
securities, dividend and interest income, and certain expenses are translated
at the rates of exchange prevailing on the respective dates of such
transactions. The Portfolios of the Fund do not isolate that portion of the
results of operations resulting from changes in foreign exchange rates on
investments from the fluctuations arising from changes in market prices of
securities held. Such fluctuations are included with the net realized and
unrealized gain or loss from investments.
D. FORWARD FOREIGN CURRENCY CONTRACTS - The Global Fixed Income Portfolio may
enter into forward foreign currency contracts as a way of managing foreign
exchange rate risk. The portfolio may enter into these contracts to fix the
U.S. dollar value of a security that it has agreed to buy or sell for the
period between the date the trade was entered into and the date the security
is delivered and paid for. These contracts may also be used to hedge the U.S.
dollar value of securities owned which are denominated in foreign currencies.
Forward foreign currency contracts are valued each day at the close of the New
York Stock Exchange at the forward rate, and are marked-to-market daily. The
change in market value is recorded as an unrealized gain or loss. When the
contract is closed, a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and closed is recorded.
The use of forward foreign currency contracts does not eliminate fluctuations
in the underlying prices of the securities, but it does establish a rate of
exchange that can be achieved in the future. Although forward foreign currency
contracts limit the risk of loss due to a decline in the value of the hedged
currency, they also limit any potential gain that might result should the value
of the currency increase. These contracts involve market risk in excess of the
amount reflected in the Statement of Assets and Liabilities. The face or
contract amount in U.S. dollars reflects the total exposure the portfolio has
in that particular currency contract. In addition, there could be exposure to
risks (limited to the amount of unrealized gains) if the counterparties to the
contracts are unable to meet the terms of their contracts.
E. EXPENSE LIMITATIONS - Investors Mark Advisor, LLC. (the Advisor), has
voluntarily agreed to pay certain operating expenses in an amount that limits
the total operating expenses of the portfolios to an annual rate of .50% of
average daily net assets for the Money Market Portfolio; .80% of average daily
net assets for the Intermediate Fixed Income Portfolio; .90% of the average
daily net assets for Mid Cap Equity, Large Cap Value, Large Cap Growth, Growth
& Income and Balanced Portfolios; 1.00% of average daily net assets for the
Global Fixed Income Portfolio and 1.05% of average daily net assets for the
Small Cap Equity Portfolio. This expense limitation may be modified or
terminated at the discretion of the Advisor at any time without notice to
contractholders. The Advisor may be reimbursed by the Portfolios for such
expenses at a later date. This may be done only if such reimbursement does not
cause a Portfolio's expenses to exceed the expense cap percentage shown above.
F. DISTRIBUTIONS TO CONTRACTHOLDERS - Distributions to contractholders are
recorded on the ex-dividend date. The character of distributions made during
the year from net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. These differences
are primarily due to differing treatments for expiration of net operating
losses and recharacterization of foreign currency gains and losses.
G. FEDERAL INCOME TAXES - The Fund complied with the requirements of the
Internal Revenue Code applicable to regulated investment companies
and therefore, no provision for federal or state tax is required.
For the year ended December 31, 1999 for federal income tax
purposes, the Large Cap Value, Growth & Income, and Intermediate Fixed Income
Portfolios has designated capital gain dividends of $82,080, $179,051, and
$7,416, respectively. As of December 31, 1999, the Mid Cap Equity, Small Cap
Equity, Balanced, Intermediate Fixed Income, Global Fixed Income, and Money
Market Portfolios have an accumulated net realized loss on sales of investments
for federal income tax purposes of $26,210, $76,243, $16,496, $62,906, $28,625,
and $42, respectively, expiring in 2007, 2006, 2007, 2007, 2007, and 2007,
respectively, which are available to offset future taxable gains.
For the year ended December 31, 1999 for corporate contractholders, the
following percentages of ordinary income distributions qualify for the
corporate dividends received deduction:
PORTFOLIO PERCENTAGE
Large Cap Value 97%
Mid Cap Equity 100%
Growth & Income 83%
Balanced 31%
Intermediate Fixed Income 1%
H. SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are
accounted for on the date the securities are purchased or sold. Dividend income
and distributions to contractholders are recorded on the ex-dividend date.
Realized gains and losses from investment transactions are determined on the
identified cost basis.
I. USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from such estimates.
2. ADVISORY FEES
Advisory fees are paid to the Advisor based on an annual percentage of average
daily net assets. Listed below are advisory fees as a percentage of average
daily net assets.
% OF NET ASSETS
Large Cap Value 0.80%
Large Cap Growth 0.80%
Mid Cap Equity 0.80%
Small Cap Equity 0.95%
Growth & Income 0.80%
Balanced 0.80%
Intermediate Fixed Income 0.60%
Global Fixed Income 0.75%
Money Market 0.40%
3. INVESTMENT TRANSACTIONS
Investment transactions for the year ended December 31, 1999, (excluding
maturities of short-term commercial notes and repurchase agreements) are
as follows:
PROCEEDS
PORTFOLIO PURCHASES FROM SALES
Large Cap Value $ 1,160,567 $ 813,873
Large Cap Growth 3,138,990 2,563,455
Mid Cap Equity 2,613,491 2,393,479
Small Cap Equity 2,819,516 2,576,824
Growth & Income 2,398,892 2,012,794
Balanced 1,552,416 1,204,230
Intermediate Fixed Income 3,965,529 3,511,732
Global Fixed Income 8,784,005 8,800,288
4. OPTIONS WRITTEN
The following options written were outstanding for the Global Fixed Income
Portfolio as of December 31, 1999:
PUT OPTIONS WRITTEN
<TABLE>
<CAPTION>
Issuer/Currency Expiration Date Exercise Price Number of Contracts Market Value
</CAPTION>
<S> <C> <C> <C> <C>
Australian Dollar Jul-00 0.608 750 $ 197
Euro Apr-00 146.700 984 42,394
Euro Dec-01 90.000 5,250 24,596
German Deutschemark Jun-00 106.300 700 8,734
German Deutschemark Jul-00 91.080 500 1,305
German Deutschemark Nov-00 91.670 500 851
Japanese Yen Jun-00 105.430 200,000 580
Japanese Yen Apr-00 135.000 650 -
United States Dollar Jul-00 122.000 640 14,400
United States Dollar Jul-00 113.750 973 14,442
United States Dollar Mar-00 87.250 500 2,552
United States Treasury Dec-00 93.625 500 909
United States Treasury Aug-00 94.250 750 1,481
United States Treasury Oct-00 94.000 1,000 1,781
United States Treasury Sep-00 94.100 500 702
United States Treasury Sep-00 94.344 250 393
United States Treasury Sep-00 95.125 530 1,110
Total put options outstanding
premiums received, $60,008 $116,427
</TABLE>
CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
Issuer/Currency Expiration Date Exercise Price Number of Contracts Market Value
</CAPTION>
<S> <C> <C> <C> <C>
Australian Dollar Jul-00 0.667 750 $ 394
British Pound Sep-00 126.700 325 2,354
German Deutschemark Nov-00 99.170 500 126
German Deutschemark Oct-00 99.260 500 131
German Deutschemark Sep-00 94.450 1,000 181
Japanese Yen Jul-00 106.500 319 2,793
United States Dollar Aug-00 130.200 500 50
United States Dollar Mar-00 101.633 500 -
United States Treasury Dec-00 102.875 500 164
United States Treasury Aug-00 103.313 750 211
United States Treasury Oct-00 105.375 1,000 188
United States Treasury Sep-00 105.100 500 120
United States Treasury Sep-00 105.500 250 55
United States Treasury Sep-00 106.250 530 66
United States Dollar Apr-00 135.000 500 -
United States Dollar Mar-99 140.000 500 -
Total call options outstanding
premiums received, $8,594 $ 6,833
</TABLE>
Transactions in options written for the Global Fixed Income Portfolio for the
year ended December 31, 1999, were as follows:
NUMBER OF PREMIUM
CONTRACTS AMOUNT
PUT OPTIONS WRITTEN
Balance at December 31, 1998 32,475 $ 33,333
Opened 589,290 116,941
Expired (4,700) (3,760)
Closed (402,088) (86,506)
Balance at December 31, 1999 214,977 $ 60,008
CALL OPTIONS WRITTEN
Balance at December 31, 1998 21,000 $ 38,088
Opened 379,732 26,709
Expired (16,800) (38,286)
Closed (375,008) (17,917)
Balance at December 31, 1999 8,924 $ 8,594
5. FORWARD FOREIGN CURRENCY CONTRACTS
Following is a summary of forward foreign currency contracts that were
outstanding at December 31, 1999 for the Global Fixed Income Portfolio:
CONTRACTS TO SELL CURRENCY:
<TABLE>
<CAPTION>
FOREIGN AMOUNT TO BE NET UNREALIZED
SETTLEMENT CURRENCY RECEIVED IN U.S. $ VALUE APPRECIATION
DATE TO BE DELIVERED U.S. $ AS OF 12/31/99 DEPRECIATION
</CAPTION>
<S> <C> <C> <C> <C> <C>
Australian Dollar 3/15/00 75,000 $ 47,555 $ 49,322 $ (1,767)
British Pound 1/18/00-2/7/00 323,106 531,900 521,285 10,615
Danish Krone 1/13/00-2/7/00 2,844,086 403,134 385,993 17,141
Euro 1/14/00-1/25/00 1,928,799 2,055,328 1,948,290 107,038
Hong Kong Dollar 1/14/00-8/13/01 633,170 80,000 81,209 (1,209)
Japanese Yen 1/18/00-5/17/01 64,199,838 607,590 636,322 (28,732)
New Zealand Dollar 1/14/00-1/18/00 373,299 194,530 194,659 (129)
Poland Zlotty 7/24/00 82,198 19,506 18,856 650
Singapore Dollar 1/14/00 135,177 80,726 81,187 (461)
Swedish Krona 1/18/00 2,406,042 295,280 283,507 11,773
Thai Bat 9/11/00 2,029,000 50,000 54,062 (4,062)
$ 4,365,549 $ 4,254,692 $ 110,857
</TABLE>
CONTRACTS TO BUY CURRENCY:
<TABLE>
<CAPTION>
FOREIGN AMOUNT TO BE NET UNREALIZED
SETTLEMENT CURRENCY PAID IN U.S. $ VALUE APPRECIATION
DATE TO BE RECEIVED U.S. $ AS OF 12/31/99 DEPRECIATION
</CAPTION>
<S> <C> <C> <C> <C> <C>
Argentine Peso 1/19/00-3/9/00 105,305 $ 105,000 $ 105,310 $ 310
British Pound 1/18/00 5,000 8,136 8,067 (69)
Canadian Dollar 3/16/00 75,000 50,827 51,878 1,051
Euro 1/14/00-1/19/00 650,887 679,370 657,406 (21,964)
Hong Kong Dollar 1/14/00 193,593 24,811 24,903 92
Japanese Yen 1/18/00-1/19/00 37,659,238 366,782 369,296 2,514
New Zealand Dollar 1/14/00-1/18/00 208,299 104,578 108,618 4,040
Poland Zlotty 7/24/00 82,198 20,000 18,856 (1,144)
Swedish Krona 1/18/00 840,000 100,533 98,978 (1,555)
Thai Bat 9/11/00 949,500 25,000 25,299 299
$ 1,485,037 $ 1,468,611 $ (16,426)
</TABLE>
Financial Highlights
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
LARGE CAP GROWTH
FOR THE PERIOD
FROM 11/13/97
YEARS ENDED DECEMBER 31, (COMMENCEMENT)
1999 1998 TO 12/31/97
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.88 $ 9.69 $ 10.00
Income from investment operations:
Net investment income (loss) 0.22 0.13 0.02
Net gains (losses) on securities
(both realized and unrealized) (0.15) 0.35 (0.31)
Total income (loss) from investment operations 0.07 0.48 (0.29)
Less distributions:
Dividends from net investment income (0.22) (0.14) (0.02)
Distributions from capital gains (0.33) (0.15) -
Total distributions (0.55) (0.29) (0.02)
Net asset value, end of period $ 9.40 $ 9.88 $ 9.69
Total return* 0.79% 5.03% (2.86%)
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 3,193 $ 3,226 $ 2,444
Ratio of expenses to average net assets** 0.90% 0.90% 0.90%
Ratio of net investment income (loss)
to average net assets** 2.00% 1.44% 2.21%
Ratio of expenses to average net assets before
voluntary expense reimbursement ** 1.49% 1.55% 2.78%
Ratio of net investment income (loss) to average
net assets before voluntary expense
reimbursement ** 1.41% 0.79% 0.33%
Portfolio turnover rate 23% 18% -
*Total return not annualized for periods less
than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
LARGE CAP GROWTH
FOR THE PERIOD
FROM 11/13/97
YEARS ENDED DECEMBER 31, (COMMENCEMENT)
1999 1998 TO 12/31/97
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.31 $ 10.71 $ 10.00
Income from investment operations:
Net investment income (loss) (0.03) - -
Net gains (losses) on securities
(both realized and unrealized) 4.75 2.61 0.71
Total income (loss) from investment operations 4.72 2.61 0.71
Less distributions:
Dividends from net investment income - (0.01) -
Distributions from capital gains - - -
Total distributions - (0.01) -
Net asset value, end of period $ 18.03 $ 13.31 $ 10.71
Total return* 35.46% 24.35% 7.10%
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 4,608 $ 2,993 $ 2,157
Ratio of expenses to average net assets** 0.90% 0.90% 0.90%
Ratio of net investment income (loss)
to average net assets** (0.23%) (0.02%) 0.33%
Ratio of expenses to average net assets before
voluntary expense reimbursement ** 1.49% 1.66% 3.19%
Ratio of net investment income (loss) to average
net assets before voluntary expense
reimbursement ** (0.82%) (0.78%) (1.96%)
Portfolio turnover rate 72% 49% -
*Total return not annualized for periods less
than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
MID CAP EQUITY
FOR THE PERIOD
FROM 11/13/97
YEARS ENDED DECEMBER 31, (COMMENCEMENT)
1999 1998 TO 12/31/97
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.11 $ 10.49 $ 10.00
Income from investment operations:
Net investment income (loss) 0.04 0.04 0.02
Net gains (losses) on securities
(both realized and unrealized) 0.21 0.69 0.49
Total income (loss) from investment operations 0.25 0.73 0.51
Less distributions:
Dividends from net investment income (0.03) (0.03) (0.02)
Distributions from capital gains (0.03) (0.08) -
Total distributions (0.06) (0.11) (0.02)
Net asset value, end of period $ 11.30 $ 11.11 $ 10.49
Total return* 2.26% 7.03% 5.07%
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 2,762 $ 2,468 $ 2,119
Ratio of expenses to average net assets** 0.90% 0.90% 0.90%
Ratio of net investment income (loss)
to average net assets** 0.38% 0.38% 1.34%
Ratio of expenses to average net assets before
voluntary expense reimbursement ** 2.33% 2.38% 3.40%
Ratio of net investment income (loss) to average
net assets before voluntary expense
reimbursement ** (1.05%) (1.10%) (1.16%)
Portfolio turnover rate 97% 166% 13%
*Total return not annualized for periods less
than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
SMALL CAP EQUITY
FOR THE PERIOD
FROM 11/13/97
YEARS ENDED DECEMBER 31, (COMMENCEMENT)
1999 1998 TO 12/31/97
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 8.14 $ 9.72 $ 10.00
Income from investment operations:
Net investment income (loss) (0.05) (0.05) -
Net gains (losses) on securities
(both realized and unrealized) 5.11 (1.53) (0.28)
Total income (loss) from investment operations 5.06 (1.58) (0.28)
Less distributions:
Dividends from net investment income - - -
Distributions from capital gains - - -
Total distributions - - -
Net asset value, end of period $ 13.20 $ 8.14 $ 9.72
Total return* 62.16% (16.22%) (2.80%)
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 3,192 $ 1,786 $ 1,960
Ratio of expenses to average net assets** 1.05% 1.05% 1.05%
Ratio of net investment income (loss) to average
net assets** (0.61%) (0.52%) 0.29%
Ratio of expenses to average net assets before
voluntary expense reimbursement ** 2.53% 2.29% 3.49%
Ratio of net investment income (loss) to
average net assets before voluntary
expense reimbursement ** (2.09%) (1.76%) (2.15%)
Portfolio turnover rate 123% 132% 8%
*Total return not annualized for periods less
than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
GROWTH & INCOME
FOR THE PERIOD
FROM 11/13/97
YEARS ENDED DECEMBER 31, (COMMENCEMENT)
1999 1998 TO 12/31/97
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 11.53 $ 10.41 $ 10.00
Income from investment operations:
Net investment income (loss) 0.11 0.13 0.02
Net gains (losses) on securities
(both realized and unrealized) 1.80 1.12 0.40
Total income (loss) from investment operations 1.91 1.25 0.42
Less distributions:
Dividends from net investment income (0.11) (0.13) (0.01)
Distributions from capital gains (0.66) - -
Total distributions (0.77) (0.13) (0.01)
Net asset value, end of period $ 12.67 $ 11.53 $ 10.41
Total return* 16.65% 12.03% 4.25%
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 3,634 $ 2,765 $ 2,101
Ratio of expenses to average net assets** 0.90% 0.90% 0.90%
Ratio of net investment income (loss)
to average net assets** 0.92% 1.23% 1.50%
Ratio of expenses to average net assets before
voluntary expense reimbursement ** 1.67% 1.75% 3.19%
Ratio of net investment income (loss) to average
net assets before voluntary expense
reimbursement ** 0.15% 0.38% (0.79%)
Portfolio turnover rate 66% 76% -
*Total return not annualized for periods less
than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
BALANCED
FOR THE PERIOD
FROM 11/13/97
YEARS ENDED DECEMBER 31, (COMMENCEMENT)
1999 1998 TO 12/31/97
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 8.88 $ 9.96 $ 10.00
Income from investment operations:
Net investment income (loss) 0.45 0.47 0.06
Net gains (losses) on securities
(both realized and unrealized) 0.28 (1.08) (0.04)
Total income (loss) from investment operations 0.73 (0.61) 0.02
Less distributions:
Dividends from net investment income (0.45) (0.47) (0.06)
Distributions from capital gains (0.08) - -
Total distributions (0.53) (0.47) (0.06)
Net asset value, end of period $ 9.08 $ 8.88 $ 9.96
Total return* 8.21% (6.03%) 0.18%
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 2,971 $ 2,644 $ 2,518
Ratio of expenses to average net assets** 0.90% 0.90% 0.90%
Ratio of net investment income (loss)
to average net assets** 4.88% 5.00% 4.78%
Ratio of expenses to average net assets before
voluntary expense reimbursement ** 1.72% 1.59% 2.78%
Ratio of net investment income (loss) to average
net assets before voluntary expense
reimbursement ** 4.06% 4.31% 2.90%
Portfolio turnover rate 43% 73% -
*Total return not annualized for periods less
than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
INTERMEDIATE FIXED
FOR THE PERIOD
FROM 11/13/97
YEARS ENDED DECEMBER 31, (COMMENCEMENT)
1999 1998 TO 12/31/97
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.95 $ 10.06 $ 10.00
Income from investment operations:
Net investment income 0.60 0.57 0.07
Net gains (losses) on securities
(both realized and unrealized) (0.62) (0.05) 0.06
Total income (loss) from investment operations (0.02) 0.52 0.13
Less distributions:
Dividends from net investment income (0.60) (0.56) (0.07)
Dividends from capital gains (0.05) (0.07) -
Tax return of capital - - -
Total distributions (0.65) (0.63) (0.07)
Net asset value, end of period $ 9.28 $ 9.95 $ 10.06
Total return* (0.19%) 5.16% 1.27%
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 2,540 $ 2,415 $ 2,038
Ratio of expenses to average net assets** 0.80% 0.80% 0.80%
Ratio of net investment income (loss) to average
net assets** 6.01% 5.75% 5.40%
Ratio of expenses to average net assets before
voluntary expense reimbursement ** 2.25% 1.97% 3.09%
Ratio of net investment income (loss) to average
net assets before voluntary expense
reimbursement ** 4.56% 4.58% 3.11%
Portfolio turnover rate 147% 132% 39%
*Total return not annualized for periods less
than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
GLOBAL FIXED
FOR THE PERIOD
FROM 11/13/97
YEARS ENDED DECEMBER 31, (COMMENCEMENT)
1999 1998 TO 12/31/97
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 9.92 $ 10.09 $ 10.00
Income from investment operations:
Net investment income (loss) 0.51 0.84 0.09
Net gains (losses) on securities
(both realized and unrealized) (0.54) (0.11) 0.08
Total income (loss) from investment operations (0.03) 0.73 0.17
Less distributions:
Dividends from net investment income (0.68) (0.54) (0.08)
Distributions from capital gains - (0.06) -
Tax return of capital - (0.30) -
Total distributions (0.68) (0.90) (0.08)
Net asset value, end of period $ 9.21 $ 9.92 $ 10.09
Total return* (0.27%) 7.23% 1.70%
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 5,516 $ 5,483 $ 5,099
Ratio of expenses to average net assets** 1.00% 1.00% 1.00%
Ratio of net investment income (loss)
to average net assets** 5.17% 5.40% 5.29%
Ratio of expenses to average net assets before
voluntary expense reimbursement ** 1.67% 1.47% 2.28%
Ratio of net investment income (loss) to average 4.50% 4.93% 4.01%
net assets before voluntary expense
reimbursement** 167% 185% 25%
Portfolio turnover rate
*Total return not annualized for periods less
than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
Financial Highlights
Condensed data for a share of capital stock
outstanding throughout each period.
<TABLE>
<CAPTION>
MONEY MARKET
FOR THE PERIOD
FROM 11/13/97
YEARS ENDED DECEMBER 31, (COMMENCEMENT)
1999 1998 TO 12/31/97
</CAPTION>
<S> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00
Income from investment operations:
Net investment income (loss) 0.05 0.05 0.01
Net gains (losses) on securities
(both realized and unrealized) - - -
Total income (loss) from investment operations 0.05 0.05 0.01
Less distributions:
Dividends from net investment income (0.05) (0.05) (0.01)
Distributions from capital gains - - -
Tax return of capital - - -
Total distributions (0.05) (0.05) (0.01)
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00
Total return* 4.60% 5.05% 0.71%
Ratios/Supplemental Data
Net assets, end of period (in thousands) $ 1,601 $ 1,270 $ 1,019
Ratio of expenses to average net assets** 0.50% 0.50% 0.50%
Ratio of net investment income (loss)
to average net assets** 4.52% 4.93% 5.26%
Ratio of expenses to average net assets before
voluntary expense reimbursement ** 2.72% 2.89% 4.90%
Ratio of net investment income (loss) to average
net assets before voluntary expense
reimbursement ** 2.30% 2.54% 0.86%
Portfolio turnover rate - - -
*Total return not annualized for periods less
than one full year
**Annualized for periods less than one full year
</TABLE>
See accompanying Notes to Financial Statements.
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Contractholders of Investors Mark Series Fund, Inc.
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of Investors Mark Series Fund, Inc.
(the Fund) (comprised of the Large Cap Value, Large Cap Growth, Mid Cap Equity,
Small Cap Equity, Growth & Income, Balanced, Intermediate Fixed Income, Global
Fixed Income and Money Market Portfolios) as of December 31, 1999, and the
related statements of operations for the year then ended, the statements of
changes in net assets for each of the two years in the period then ended and
the financial highlights for the periods indicated therein. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
and financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements and financial highlights. Our procedures included
confirmation of investments owned as of December 31, 1999, by correspondence
with the custodian and brokers. As to certain securities relating to uncompleted
transactions, we performed other auditing procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the portfolios of the Fund at December 31, 1999, the results of their
operations, the changes in their net assets and financial highlights for the
periods indicated therein in conformity with accounting principles generally
accepted in the United States.
/S/Ernst & Young LLP
Kansas City, Missouri
February 2, 2000
This report has been prepared for the information of the Contractholders of
Investors Mark Series Fund, Inc. and is not to be construed as an offering of
the shares of the Fund. Shares of the Fund are offered only by the Prospectus,
a copy of which may be obtained from Business Men's Assurance Company of
America.
