A MESSAGE TO PRINCIPAL VARIABLE LIFE AND VARIABLE ANNUITY CONTRACT OWNERS
Dear Contract Owner:
The U.S. stock market achieved its fourth-consecutive year of strong returns in
1998 after staging one of the century's most rapid recoveries from a steep
descent. However, the fourth-quarter recovery was led by a relatively small
number of blue chip growth companies, and investors had to sustain significant
volatility to achieve these returns.*
Domestic bond market returns last year varied widely across sectors. The highest
quality, longer-maturity bonds produced the best results. This reflected the
decline in interest rates and the `flight to quality' caused by Asian economic
problems, the Russian financial crisis and concerns about currency stability in
Latin America, particularly Brazil. Yield spreads between mortgage-backed
securities, high-yield bonds, municipal bonds, and emerging market debt relative
to Treasury bonds reached high levels.
Also of interest, European markets provided competitive returns to the U.S.
market, despite the Asian and Russian struggles and a severe slowdown in Latin
America. And inflation, as measured by the Consumer Price Index, rose 1.61
percent. This is the second lowest inflation rate in the last 33 years.
We hope you are pleased with the performance of your Variable Contracts Fund
account. Thank you for investing with the Principal. We look forward to serving
all your future investment needs.
* Past performance does not guarantee future results.
CONTENTS
Page
Financial Statements and Highlights
Statements of Assets and Liabilities........................ 2
Statements of Operations ................................... 6
Statements of Changes in Net Assets......................... 10
Notes to Financial Statements............................... 18
Schedules of Investments
Aggressive Growth Account.............................. 28
Asset Allocation Account............................... 29
Balanced Account....................................... 34
Bond Account........................................... 38
Capital Value Account.................................. 41
Government Securities Account.......................... 43
Growth Account......................................... 44
High Yield Account..................................... 46
International Account.................................. 48
International SmallCap Account......................... 50
MicroCap Account....................................... 52
MidCap Account......................................... 53
MidCap Growth Account.................................. 56
Money Market Account................................... 58
Real Estate Account.................................... 61
SmallCap Account....................................... 62
SmallCap Growth Account................................ 64
SmallCap Value Account................................. 65
Utilities Account...................................... 69
Financial Highlights........................................ 70
Report of Independent Auditors.................................. 80
<PAGE>
December 31, 1998
STATEMENTS OF ASSETS AND LIABILITIES
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
<TABLE>
<CAPTION>
Aggressive Asset
Growth Allocation Balanced Bond
Account Account Account Account
<S> <C> <C> <C> <C>
Investment in securities -- at cost................... $183,100,669 $71,049,361 $180,402,688 $115,199,389
Assets
Investment in securities -- at value (Note 4)......... $224,139,620 $79,912,171 $200,947,155 $119,543,178
Cash ................................................. 1,920,891 3,535,835 52,531 50,000
Receivables:
Dividends and interest........................... 202,331 579,868 1,214,677 2,104,005
Investment securities sold....................... 2,787,930 159,808 -- --
Capital Stock sold............................... 40,020 188,734 424,855 329,173
Total Assets 229,090,792 84,376,416 202,639,218 122,026,356
Liabilities
Accrued expenses...................................... 146,293 74,777 97,141 51,937
Payables:
Investment securities purchased.................. 4,737,499 212,354 3,935,756 --
Net payable for foreign currency
contract (Note 5) .......................... -- -- -- --
Capital Stock reacquired......................... 148,934 -- 3,027 1,644
Total Liabilities 5,032,726 287,131 4,035,924 53,581
Net Assets Applicable to Outstanding Shares ....... $224,058,066 $84,089,285 $198,603,294 $121,972,775
Net Assets Consist of:
Capital Stock......................................... $ 122,242 $ 68,365 $ 122,213 $ 101,454
Additional paid-in capital............................ 181,993,409 74,701,416 176,139,831 117,495,871
Accumulated undistributed net investment income....... 11,545 43,376 72,566 132,464
Accumulated undistributed net realized
gain (loss) from investment and foreign
currency transactions ........................... 891,919 413,318 1,724,217 (100,803)
Net unrealized appreciation (depreciation)
of investments................................... 41,038,951 8,862,810 20,544,467 4,343,789
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currencies............................... -- -- -- --
Total Net Assets $224,058,066 $84,089,285 $198,603,294 $121,972,775
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 100,000,000 100,000,000 100,000,000
Shares issued and outstanding......................... 12,224,216 6,836,518 12,221,316 10,145,370
Net Asset Value Per Share .......................... $18.33 $12.30 $16.25 $12.02
</TABLE>
<TABLE>
<CAPTION>
Capital Government High
Value Securities Growth Yield
Account Account Account Account
<S> <C> <C> <C> <C>
Investment in securities -- at cost................... $303,531,858 $135,528,077 $186,398,324 $14,389,360
Assets
Investment in securities -- at value (Note 4)......... $395,755,832 $141,284,092 $260,951,527 $13,586,549
Cash ................................................. 80,003 50,871 50,460 144,433
Receivables:
Dividends and interest........................... 443,278 1,143,644 231,496 320,572
Investment securities sold....................... 13,854,988 -- -- --
Capital Stock sold............................... 849,064 520,150 523,325 195
Total Assets 410,983,165 142,998,757 261,756,808 14,051,749
Liabilities
Accrued expenses...................................... 139,463 59,877 99,293 9,117
Payables:
Investment securities purchased.................. 25,057,619 1,603,661 1,799,551 --
Net payable for foreign currency
contract (Note 5) .......................... -- -- -- --
Capital Stock reacquired......................... 62,290 17,993 30,351 --
Total Liabilities 25,259,372 1,681,531 1,929,195 9,117
Net Assets Applicable to Outstanding Shares ....... $385,723,793 $141,317,226 $259,827,613 $14,042,632
Net Assets Consist of:
Capital Stock......................................... $ 103,728 $ 128,377 $ 127,005 $ 17,432
Additional paid-in capital............................ 288,568,599 135,662,266 183,781,520 15,591,837
Accumulated undistributed net investment income....... 151,505 156,200 45,662 24,710
Accumulated undistributed net realized
gain (loss) from investment and foreign
currency transactions ........................... 4,675,987 (385,632) 1,320,223 (788,536)
Net unrealized appreciation (depreciation)
of investments................................... 92,223,974 5,756,015 74,553,203 (802,811)
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currencies............................... -- -- -- --
Total Net Assets $385,723,793 $141,317,226 $259,827,613 $14,042,632
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 100,000,000 100,000,000 100,000,000
Shares issued and outstanding......................... 10,372,811 12,837,749 12,700,511 1,743,204
Net Asset Value Per Share .......................... $37.19 $11.01 $20.46 $8.06
</TABLE>
<TABLE>
<CAPTION>
International
International SmallCap MicroCap
Account Account Account
<S> <C> <C> <C>
Investment in securities -- at cost................... $137,036,257 $13,472,896 $5,311,580
Assets
Investment in securities -- at value (Note 4)......... $153,136,025 $12,729,834 $4,571,917
Cash ................................................. 45,597 252,609 802,429
Receivables:
Dividends and interest........................... 260,725 15,826 3,055
Investment securities sold....................... -- 33,860 29,009
Capital Stock sold............................... 330,087 58,763 11,156
Total Assets 153,772,434 13,090,892 5,417,566
Liabilities
Accrued expenses...................................... 113,993 15,740 8,365
Payables:
Investment securities purchased.................. -- -- 25,602
Net payable for foreign currency
contract (Note 5) .......................... 42,167 -- --
Capital Stock reacquired......................... 28,359 -- --
Total Liabilities 184,519 15,740 33,967
Net Assets Applicable to Outstanding Shares ....... $153,587,915 $13,075,152 $5,383,599
Net Assets Consist of:
Capital Stock......................................... $ 105,857 $ 14,528 $ 6,586
Additional paid-in capital............................ 134,035,530 14,123,090 6,398,493
Accumulated undistributed net investment income....... 98,613 1,409 254
Accumulated undistributed net realized
gain (loss) from investment and foreign
currency transactions ........................... 3,286,505 (321,166) (282,071)
Net unrealized appreciation (depreciation)
of investments................................... 16,099,768 (743,062) (739,663)
Net unrealized appreciation (depreciation) on
translation of assets and liabilities in
foreign currencies............................... (38,358) 353 --
Total Net Assets $153,587,915 $13,075,152 $5,383,599
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 100,000,000 100,000,000
Shares issued and outstanding......................... 10,585,657 1,452,751 658,550
Net Asset Value Per Share .......................... $14.51 $9.00 $8.17
</TABLE>
December 31, 1998
STATEMENTS OF ASSETS AND LIABILITIES (Continued)
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
<TABLE>
<CAPTION>
MidCap Money Real
MidCap Growth Market Estate
Account Account Account Account
<S> <C> <C> <C> <C>
Investment in securities -- at cost................... $218,884,350 $7,115,840 $80,479,277 $11,643,889
Assets
Investment in securities -- at value (Note 4)......... $262,516,978 $7,985,058 $80,479,277 $10,786,039
Cash ........................................... 50,000 626,936 15,718 9,002
Receivables:
Dividends and interest........................... 126,385 5,568 165,966 113,550
Investment securities sold....................... -- 45,632 -- --
Capital Stock sold............................... 311,808 25,294 2,654,093 10,050
Total Assets 263,005,171 8,688,488 83,315,054 10,918,641
Liabilities
Accrued expenses...................................... 129,431 10,164 35,248 9,885
Payables:
Investment securities purchased.................. 3,367,533 144,813 -- --
Capital Stock reacquired......................... 37,999 -- 16,984 --
Total Liabilities 3,534,963 154,977 52,232 9,885
Net Assets Applicable to Outstanding Shares ....... $259,470,208 $8,533,511 $83,262,822 $10,908,756
Net Assets Consist of:
Capital Stock......................................... $ 75,488 $ 8,839 $ 832,628 $ 12,034
Additional paid-in capital............................ 210,156,265 8,389,555 82,430,194 11,879,828
Accumulated undistributed net investment income....... 54,439 -- -- 46,645
Accumulated undistributed net realized
gain (loss) on investment transactions........... 5,551,388 (734,101) -- (171,901)
Net unrealized appreciation (depreciation)
of investments................................... 43,632,628 869,218 -- (857,850)
Total Net Assets $259,470,208 $8,533,511 $83,262,822 $10,908,756
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 100,000,000 500,000,000 100,000,000
Shares issued and outstanding......................... 7,548,803 883,925 83,262,822 1,203,354
Net Asset Value Per Share .......................... $34.37 $9.65 $1.000 $9.07
</TABLE>
<TABLE>
<CAPTION>
SmallCap SmallCap
SmallCap Growth Value Utilities
Account Account Account Account
<S> <C> <C> <C> <C>
Investment in securities -- at cost................... $13,478,578 $6,187,503 $6,930,474 $17,298,085
Assets
Investment in securities -- at value (Note 4)......... $11,884,832 $7,498,780 $6,617,308 $18,876,261
Cash ........................................... 50,424 1,265,714 575,884 50,482
Receivables:
Dividends and interest........................... 5,333 1,292 10,784 36,832
Investment securities sold....................... 276,578 415,175 14,338 --
Capital Stock sold............................... 50,335 63,590 14,950 1,817
Total Assets 12,267,502 9,244,551 7,233,264 18,965,392
Liabilities
Accrued expenses...................................... 10,947 10,430 11,647 10,858
Payables:
Investment securities purchased.................. 162,250 771,493 326,231 636,369
Capital Stock reacquired......................... -- -- -- 20,091
Total Liabilities 173,197 781,923 337,878 667,318
Net Assets Applicable to Outstanding Shares ....... $12,094,305 $8,462,628 $6,895,386 $18,298,074
Net Assets Consist of:
Capital Stock......................................... $ 14,733 $ 8,376 $ 8,265 $ 16,747
Additional paid-in capital............................ 13,744,023 7,882,153 7,697,018 16,713,190
Accumulated undistributed net investment income....... 455 -- 2,269 5,402
Accumulated undistributed net realized
gain (loss) on investment transactions........... (71,160) (739,178) (499,000) (15,441)
Net unrealized appreciation (depreciation)
of investments................................... (1,593,746) 1,311,277 (313,166) 1,578,176
Total Net Assets $12,094,305 $8,462,628 $6,895,386 $18,298,074
Capital Stock (par value: $.01 a share)
Shares authorized..................................... 100,000,000 100,000,000 100,000,000 100,000,000
Shares issued and outstanding......................... 1,473,324 837,627 826,513 1,674,705
Net Asset Value Per Share .......................... $8.21 $10.10 $8.34 $10.93
</TABLE>
<PAGE>
Year Ended December 31, 1998, Except as Noted
STATEMENTS OF OPERATIONS
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
<TABLE>
<CAPTION>
Aggressive Asset
Growth Allocation Balanced Bond
Account Account Account Account
<S> <C> <C> <C> <C>
Net Investment Income
Income:
Dividends............................................ $ 1,573,929 $ 927,631 $ 1,793,161 $ --
Withholding tax on foreign dividends................. -- -- -- --
Interest............................................. 302,158 1,838,721 4,750,511 6,809,666
Total Income 1,876,087 2,766,352 6,543,672 6,809,666
Expenses:
Management and investment advisory fees (Note 3)..... 1,436,590 650,963 958,526 488,898
Custodian fees....................................... 16,129 59,376 5,665 2,782
Directors' fees...................................... 7,275 7,285 7,300 7,275
Other................................................ -- 3,654 212 358
Total Expenses 1,459,994 721,278 971,703 499,313
Net Investment Income 416,093 2,045,074 5,571,969 6,310,353
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currencies
Net realized gain (loss) from:
Investment transactions.............................. 8,924,147 2,109,740 6,127,300 171,543
Foreign currency transactions........................ -- -- -- --
Change in unrealized appreciation/depreciation of:
Investments ......................................... 21,906,942 2,810,389 6,919,746 665,410
Translation of assets and liabilities in
foreign currencies................................. -- -- -- --
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currencies 30,831,089 4,920,129 13,047,046 836,953
Net Increase (Decrease) in Net Assets
Resulting from Operations $31,247,182 $6,965,203 $18,619,015 $7,147,306
</TABLE>
<TABLE>
<CAPTION>
Capital Government High
Value Securities Growth Yield
Account Account Account Account
<S> <C> <C> <C> <C>
Net Investment Income
Income:
Dividends............................................ $7,755,471 $ -- $ 2,099,468 $ --
Withholding tax on foreign dividends................. -- -- -- --
Interest............................................. 722,422 7,808,045 1,540,032 1,368,381
Total Income 8,477,893 7,808,045 3,639,500 1,368,381
Expenses:
Management and investment advisory fees (Note 3)..... 1,480,275 576,926 989,512 87,806
Custodian fees....................................... 3,584 5,748 4,909 2,996
Directors' fees...................................... 7,275 7,247 7,276 7,276
Other................................................ 887 366 406 815
Total Expenses 1,492,021 590,287 1,002,103 98,893
Net Investment Income 6,985,872 7,217,758 2,637,397 1,269,488
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currencies
Net realized gain (loss) from:
Investment transactions.............................. 16,930,138 (13,992) 3,840,296 (124,849)
Foreign currency transactions........................ -- -- -- --
Change in unrealized appreciation/depreciation of:
Investments ......................................... 17,291,388 2,037,737 33,717,501 (1,237,225)
Translation of assets and liabilities in
foreign currencies................................. -- -- -- --
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currencies 34,221,526 2,023,745 37,557,797 (1,362,074)
Net Increase (Decrease) in Net Assets
Resulting from Operations $41,207,398 $9,241,503 $40,195,194 $ (92,586)
<FN>
(a) Period from April 16, 1998 (date operations commenced) through December 31,
1998.
(b) Period from April 9, 1998 (date operations commenced) through December 31,
1998.
</FN>
</TABLE>
<TABLE>
<CAPTION>
International
International SmallCap MicroCap
Account Account(a) Account(b)
<S> <C> <C> <C>
Net Investment Income
Income:
Dividends............................................ $3,549,563 $ 98,729 $ 14,649
Withholding tax on foreign dividends................. (421,967) (7,291) --
Interest............................................. 526,821 51,036 58,830
Total Income 3,654,417 142,474 73,479
Expenses:
Management and investment advisory fees (Note 3)..... 1,045,627 94,388 36,591
Custodian fees....................................... 39,026 5,259 7,459
Directors' fees...................................... 7,290 5,731 5,746
Other................................................ 363 42 23
Total Expenses 1,092,306 105,420 49,819
Net Investment Income 2,562,111 37,054 23,660
Net Realized and Unrealized Gain (Loss) on
Investments and Foreign Currencies
Net realized gain (loss) from:
Investment transactions.............................. 8,280,664 (319,902) (282,071)
Foreign currency transactions........................ (46,381) (1,264) --
Change in unrealized appreciation/depreciation of:
Investments ......................................... 1,297,192 (743,062) (739,663)
Translation of assets and liabilities in
foreign currencies................................. (37,605) 353 --
Net Realized and Unrealized Gain (Loss)
on Investments and Foreign Currencies 9,493,870 (1,063,875) (1,021,734)
Net Increase (Decrease) in Net Assets
Resulting from Operations $12,055,981 $(1,026,821) $ (998,074)
<FN>
(a) Period from April 16, 1998 (date operations commenced) through December 31,
1998.
(b) Period from April 9, 1998 (date operations commenced) through December 31,
1998.
</FN>
</TABLE>
Year Ended December 31, 1998, Except as Noted
STATEMENTS OF OPERATIONS (Continued)
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
<TABLE>
<CAPTION>
MidCap Money Real
MidCap Growth Market Estate
Account Account(a) Account Account(a)
<S> <C> <C> <C> <C>
Net Investment Income
Income:
Dividends.......................................... $ 1,611,521 $ 38,365 $ -- $ 327,291
Interest........................................... 1,456,505 10,727 3,422,636 131,242
Total Income 3,068,026 49,092 3,422,636 458,533
Expenses:
Management and investment
advisory fees (Note 3)......................... 1,504,567 36,858 306,233 64,493
Custodian fees..................................... 4,695 9,234 8,333 1,534
Directors' fees.................................... 7,275 5,746 7,201 5,661
Other.............................................. -- 32 64 68
Total Expenses 1,516,537 51,870 321,831 71,756
Net Investment Income (Operating Loss) 1,551,489 (2,778) 3,100,805 386,777
Net Realized and Unrealized Gain (Loss) on
Investments
Net realized gain (loss) from investment transactions... 19,861,967 (734,101) -- (171,901)
Change in unrealized appreciation/depreciation
of investments .................................... (14,225,511) 869,218 -- (857,850)
Net Realized and Unrealized
Gain (Loss) on Investments 5,636,456 135,117 -- (1,029,751)
Net Increase (Decrease) in Net Assets
Resulting from Operations $ 7,187,945 $132,339 $3,100,805 $ (642,974)
<FN>
(a) Period from April 23, 1998 (date operations commenced) through December 31,
1998.
(b) Period from April 9, 1998 (date operations commenced) through December 31,
1998.
(c) Period from April 2, 1998 (date operations commenced) through December 31,
1998.
(d) Period from April 16, 1998 (date operations commenced) through December 31,
1998.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SmallCap SmallCap
SmallCap Growth Value Utilities
Account(b) Account(c) Account(d) Account(c)
<S> <C> <C> <C> <C>
Net Investment Income
Income:
Dividends.......................................... $ 38,923 $ 608 $ 75,151 $307,534
Interest........................................... 33,075 23,508 13,711 46,222
Total Income 71,998 24,116 88,862 353,756
Expenses:
Management and investment
advisory fees (Note 3)......................... 60,975 42,319 42,234 56,185
Custodian fees..................................... 3,619 6,132 11,475 2,357
Directors' fees.................................... 5,746 5,736 5,826 5,746
Other.............................................. 42 178 25 42
Total Expenses 70,382 54,365 59,560 64,330
Net Investment Income (Operating Loss) 1,616 (30,249) 29,302 289,426
Net Realized and Unrealized Gain (Loss) on
Investments
Net realized gain (loss) from investment transactions... (71,160) (739,178) (499,000) (15,441)
Change in unrealized appreciation/depreciation
of investments .................................... (1,593,746) 1,311,277 (313,166) 1,578,176
Net Realized and Unrealized
Gain (Loss) on Investments (1,664,906) 572,099 (812,166) 1,562,735
Net Increase (Decrease) in Net Assets
Resulting from Operations $(1,663,290) $ 541,850 $(782,864) $1,852,161
<FN>
(a) Period from April 23, 1998 (date operations commenced) through December 31,
1998.
(b) Period from April 9, 1998 (date operations commenced) through December 31,
1998.
(c) Period from April 2, 1998 (date operations commenced) through December 31,
1998.
(d) Period from April 16, 1998 (date operations commenced) through December 31,
1998.
</FN>
</TABLE>
<PAGE>
Years Ended December 31
STATEMENTS OF CHANGES IN NET ASSETS
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
<TABLE>
<CAPTION>
Aggressive Growth Asset Allocation
Account Account
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Operations
Net investment income.................................. $ 416,093 $ 334,315 $ 2,045,074 $ 1,806,929
Net realized gain from investment transactions......... 8,924,147 18,939,200 2,109,740 7,276,506
Change in unrealized appreciation/depreciation
of investments.................................... 21,906,942 11,334,210 2,810,389 2,460,767
Net Increase in Net Assets
Resulting from Operations 31,247,182 30,607,725 6,965,203 11,544,202
Dividends and Distributions to Shareholders
From net investment income............................. (414,827) (323,456) (2,028,007) (1,780,479)
From net realized gain on investments.................. (10,737,997) (19,132,644) (2,641,599) (7,456,569)
Excess distribution of net realized gain
on investments.................................... -- -- -- --
Total Dividends and Distributions (11,152,824) (19,456,100) (4,669,606) (9,237,048)
Capital Share Transactions (Note 6)
Shares sold............................................ 72,833,445 52,190,051 14,893,506 13,556,305
Shares issued in reinvestment of dividends
and distributions................................. 11,077,348 18,759,779 3,422,465 5,515,569
Shares redeemed........................................ (29,129,088) (23,025,001) (13,326,727) (6,205,722)
Net Increase in Net Assets from
Capital Share Transactions 54,781,705 47,924,829 4,989,244 12,866,152
Total Increase 74,876,063 59,076,454 7,284,841 15,173,306
Net Assets
Beginning of year...................................... 149,182,003 90,105,549 76,804,444 61,631,138
End of year (including undistributed net
investment income as set forth below)............. $224,058,066 $149,182,003 $84,089,285 $76,804,444
Undistributed Net Investment Income ............... $ 11,54 5 $ 10,859 $ 43,376 $ 26,450
</TABLE>
<TABLE>
<CAPTION>
Balanced Bond
Account Account
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Operations
Net investment income.................................. $5,571,969 $3,652,948 $ 6,310,353 $ 4,921,450
Net realized gain from investment transactions......... 6,127,300 9,950,708 171,543 63,897
Change in unrealized appreciation/depreciation
of investments.................................... 6,919,746 4,838,411 665,410 2,497,226
Net Increase in Net Assets
Resulting from Operations 18,619,015 18,442,067 7,147,306 7,482,573
Dividends and Distributions to Shareholders
From net investment income............................. (5,549,524) (3,557,005) (6,229,921) (4,869,227)
From net realized gain on investments.................. (6,200,923) (8,195,329) -- --
Excess distribution of net realized gain
on investments.................................... -- -- (64,690) --
Total Dividends and Distributions (11,750,447) (11,752,334) (6,294,611) (4,869,227)
Capital Share Transactions (Note 6)
Shares sold............................................ 58,745,324 43,172,395 43,746,705 21,482,406
Shares issued in reinvestment of dividends
and distributions................................. 11,678,013 11,645,810 6,235,729 4,476,033
Shares redeemed........................................ (12,515,718) (20,838,500) (10,783,022) (10,037,678)
Net Increase in Net Assets from
Capital Share Transactions 57,907,619 33,979,705 39,199,412 15,920,761
Total Increase 64,776,187 40,669,438 40,052,107 18,534,107
Net Assets
Beginning of year...................................... 133,827,107 93,157,669 81,920,668 63,386,561
End of year (including undistributed net
investment income as set forth below)............. $198,603,294 $133,827,107 $121,972,775 $81,920,668
Undistributed Net Investment Income ............... $ 72,566 $ 95,943 $ 132,464 $ 52,223
</TABLE>
<TABLE>
<CAPTION>
Capital Value
Account
1998 1997
<S> <C> <C>
Operations
Net investment income.................................. $ 6,985,872 $ 5,195,057
Net realized gain from investment transactions......... 16,930,138 13,829,214
Change in unrealized appreciation/depreciation
of investments.................................... 17,291,388 42,661,757
Net Increase in Net Assets
Resulting from Operations 41,207,398 61,686,028
Dividends and Distributions to Shareholders
From net investment income............................. (6,911,025) (5,118,399)
From net realized gain on investments.................. (13,164,503) (20,307,620)
Excess distribution of net realized gain
on investments.................................... -- --
Total Dividends and Distributions (20,075,528) (25,426,019)
Capital Share Transactions (Note 6)
Shares sold............................................ 79,577,822 72,054,366
Shares issued in reinvestment of dividends
and distributions................................. 19,989,935 25,282,153
Shares redeemed........................................ (20,207,043) (53,383,847)
Net Increase in Net Assets from
Capital Share Transactions 79,360,714 43,952,672
Total Increase 100,492,584 80,212,681
Net Assets
Beginning of year...................................... 285,231,209 205,018,528
End of year (including undistributed net
investment income as set forth below)............. $385,723,793 $285,231,209
Undistributed Net Investment Income ............... $ 151,505 $ 76,658
</TABLE>
Years Ended December 31, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
<TABLE>
<CAPTION>
Government Securities Growth
Account Account
1998 1997 1998 1997
Operations
<S> <C> <C> <C> <C>
Net investment income.................................. $ 7,217,758 $ 5,437,912 $ 2,637,397 $ 1,787,589
Net realized gain (loss) from investment and
foreign currency transactions..................... (13,992) 245,732 3,840,296 952,935
Change in unrealized appreciation/depreciation of
investments and translation of assets and
liabilities in foreign currencies................. 2,037,737 2,856,039 33,717,501 28,003,238
Net Increase (Decrease) in Net Assets
Resulting from Operations 9,241,503 8,539,683 40,195,194 30,743,762
Dividends and Distributions to Shareholders
From net investment income............................. (7,115,164) (5,429,722) (2,591,736) (1,784,426)
From net realized gain on investments and foreign
currency transactions............................. -- -- (2,466,719) (955,318)
Excess distribution of net realized gain on
investments...................................... -- -- -- (50,744)
Total Dividends and Distributions (7,115,164) (5,429,722) (5,058,455) (2,790,488)
Capital Share Transactions (Note 6)
Shares sold............................................ 46,958,873 14,071,280 62,174,313 40,230,411
Shares issued in reinvestment of dividends
and distributions................................. 7,060,788 5,369,352 5,025,050 2,766,751
Shares redeemed........................................ (9,151,234) (13,327,991) (10,668,882) (2,401,953)
Net Increase (Decrease) in Net Assets
from Capital Share Transactions 44,868,427 6,112,641 56,530,481 40,595,209
Total Increase (Decrease) 46,994,766 9,222,602 91,667,220 68,548,483
Net Assets
Beginning of period.................................... 94,322,460 85,099,858 168,160,393 99,611,910
End of period (including undistributed net
investment income as set forth below)............. $141,317,226 $94,322,460 $259,827,613 $168,160,393
Undistributed Net Investment Income ............... $ 156,200 $ 53,935 $ 45,662 $ 3,164
<FN>
(a) Period from April 16, 1998 (date operations commenced) through December 31,
1998
</FN>
</TABLE>
<TABLE>
<CAPTION>
High Yield International
Account Account
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Operations
Net investment income.................................. $ 1,269,488 $ 1,244,723 $ 2,562,111 $ 1,990,607
Net realized gain (loss) from investment and
foreign currency transactions..................... (124,849) 265,486 8,234,283 3,748,024
Change in unrealized appreciation/depreciation of
investments and translation of assets and
liabilities in foreign currencies................. (1,237,225) (25,873) 1,259,587 3,039,056
Net Increase (Decrease) in Net Assets
Resulting from Operations (92,586) 1,484,336 12,055,981 8,777,687
Dividends and Distributions to Shareholders
From net investment income............................. (1,258,071) (1,242,776) (2,463,498) (2,090,724)
From net realized gain on investments and foreign
currency transactions............................. -- -- (5,106,126) (3,741,391)
Excess distribution of net realized gain on
investments...................................... -- -- -- --
Total Dividends and Distributions (1,258,071) (1,242,776) (7,569,624) (5,832,115)
Capital Share Transactions (Note 6)
Shares sold............................................ 538,125 986,023 27,355,505 47,871,924
Shares issued in reinvestment of dividends
and distributions................................. 1,258,071 1,242,776 7,505,035 5,772,912
Shares redeemed........................................ (2,239,690) (373,919) (11,047,756) (2,983,649)
Net Increase (Decrease) in Net Assets
from Capital Share Transactions (443,494) 1,854,880 23,812,784 50,661,187
Total Increase (Decrease) (1,794,151) 2,096,440 28,299,141 53,606,759
Net Assets
Beginning of period.................................... 15,836,783 13,740,343 125,288,774 71,682,015
End of period (including undistributed net
investment income as set forth below)............. $14,042,632 $15,836,783 $153,587,915 $125,288,774
Undistributed Net Investment Income ............... $ 24,710 $13,326 $ 98,613 $ 61,967
<FN>
(a) Period from April 16, 1998 (date operations commenced) through December 31,
1998
</FN>
</TABLE>
<TABLE>
<CAPTION>
International SmallCap
Account(a)
1998
<S> <C>
Operations
Net investment income.................................. $ 37,054
Net realized gain (loss) from investment and
foreign currency transactions..................... (321,166)
Change in unrealized appreciation/depreciation of
investments and translation of assets and
liabilities in foreign currencies................. (742,709)
Net Increase (Decrease) in Net Assets
Resulting from Operations (1,026,821)
Dividends and Distributions to Shareholders
From net investment income............................. (35,645)
From net realized gain on investments and foreign
currency transactions............................. --
Excess distribution of net realized gain on
investments...................................... --
Total Dividends and Distributions (35,645)
Capital Share Transactions (Note 6)
Shares sold............................................ 14,424,171
Shares issued in reinvestment of dividends
and distributions................................. 10,645
Shares redeemed........................................ (297,198)
Net Increase (Decrease) in Net Assets
from Capital Share Transactions 14,137,618
Total Increase (Decrease) 13,075,152
Net Assets
Beginning of period.................................... --
End of period (including undistributed net
investment income as set forth below)............. $13,075,152
Undistributed Net Investment Income ............... $ 1,409
<FN>
(a) Period from April 16, 1998 (date operations commenced) through December 31,
1998
</FN>
</TABLE>
Years Ended December 31, 1998, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
<TABLE>
<CAPTION>
MicroCap MidCap
Account(a) Account
1998 1998 1997
<S> <C> <C> <C>
Operations
Net investment income (operating loss)................. $ 23,660 $ 1,551,489 $ 1,451,019
Net realized gain (loss) from investment transactions.. (282,071) 19,861,967 4,081,051
Change in unrealized appreciation/depreciation
of investments................................... (739,663) (14,225,511) 30,028,222
Net Increase (Decrease) in Net Assets
Resulting from Operations (998,074) 7,187,945 35,560,292
Dividends and Distributions to Shareholders
From net investment income............................. (23,406) (1,523,502) (1,424,135)
From net realized gain on investments.................. -- (14,343,647) (4,499,721)
Total Dividends and Distributions (23,406) (15,867,149) (5,923,856)
Capital Share Transactions (Note 6)
Shares sold............................................ 6,619,971 42,184,795 59,474,006
Shares issued in reinvestment of dividends
and distributions................................. 5,406 15,782,083 5,886,597
Shares redeemed........................................ (220,298) (14,447,105) (7,528,281)
Net Increase in Net Assets from
Capital Share Transactions 6,405,079 43,519,773 57,832,322
Total Increase 5,383,599 34,840,569 87,468,758
Net Assets
Beginning of period.................................... -- 224,629,639 137,160,881
End of period (including undistributed net
investment income as set forth below)............. $5,383,599 $259,470,208 $224,629,639
Undistributed Net Investment Income ............... $ 254 $ 54,439 $ 26,884
<FN>
(a) Period from April 9, 1998 (date operations commenced) through December 31,
1998.
(b) Period from April 23, 1998 (date operations commenced) through December 31,
1998.
</FN>
</TABLE>
<TABLE>
<CAPTION>
MidCap Growth Money Market
Account(b) Account
1998 1998 1997
<S> <C> <C> <C>
Operations
Net investment income (operating loss)................. $ (2,778) $ 3,100,805 $ 2,299,105
Net realized gain (loss) from investment transactions.. (734,101) -- --
Change in unrealized appreciation/depreciation
of investments................................... 869,218 -- --
Net Increase (Decrease) in Net Assets
Resulting from Operations 132,339 3,100,805 2,299,105
Dividends and Distributions to Shareholders
From net investment income............................. -- (3,100,805) (2,299,105)
From net realized gain on investments.................. -- -- --
Total Dividends and Distributions -- (3,100,805) (2,299,105)
Capital Share Transactions (Note 6)
Shares sold............................................ 8,559,386 130,878,349 70,744,074
Shares issued in reinvestment of dividends
and distributions................................. -- 3,052,413 2,250,232
Shares redeemed........................................ (158,214) (97,982,858) (71,923,637)
Net Increase in Net Assets from
Capital Share Transactions 8,401,172 35,947,904 1,070,669
Total Increase 8,533,511 35,947,904 1,070,669
Net Assets
Beginning of period.................................... -- 47,314,918 46,244,249
End of period (including undistributed net
investment income as set forth below)............. $8,533,511 $83,262,822 $47,314,918
Undistributed Net Investment Income ............... $ -- $ -- $ --
<FN>
(a) Period from April 9, 1998 (date operations commenced) through December 31,
1998.
(b) Period from April 23, 1998 (date operations commenced) through December 31,
1998.
</FN>
</TABLE>
<TABLE>
<CAPTION>
Real Estate
Account(b)
1998
<S> <C>
Operations
Net investment income (operating loss)................. $ 386,777
Net realized gain (loss) from investment transactions.. (171,901)
Change in unrealized appreciation/depreciation
of investments................................... (857,850)
Net Increase (Decrease) in Net Assets
Resulting from Operations (642,974)
Dividends and Distributions to Shareholders
From net investment income............................. (340,132)
From net realized gain on investments.................. --
Total Dividends and Distributions (340,132)
Capital Share Transactions (Note 6)
Shares sold............................................ 11,895,162
Shares issued in reinvestment of dividends
and distributions................................. 54,131
Shares redeemed........................................ (57,431)
Net Increase in Net Assets from
Capital Share Transactions 11,891,862
Total Increase 10,908,756
Net Assets
Beginning of period.................................... --
End of period (including undistributed net
investment income as set forth below)............. $10,908,756
Undistributed Net Investment Income ............... $ 46,645
<FN>
(a) Period from April 9, 1998 (date operations commenced) through December 31,
1998.
(b) Period from April 23, 1998 (date operations commenced) through December 31,
1998.
</FN>
</TABLE>
Year Ended December 31, 1998, Except as Noted
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
<TABLE>
<CAPTION>
SmallCap SmallCap Growth
Account(a) Account(b)
1998 1998
<S> <C> <C>
Operations
Net investment income (operating loss)................. $ 1,616 $ (30,249)
Net realized (loss) from investment transactions....... (71,160) (739,178)
Change in unrealized appreciation/depreciation
of investments................................... (1,593,746) 1,311,277
Net Increase (Decrease) in Net Assets
Resulting from Operations (1,663,290) 541,850
Dividends to Shareholders
from Net Investment Income: (1,161) --
Capital Share Transactions (Note 6)
Shares sold............................................ 13,867,996 8,080,818
Shares issued in reinvestment of dividends
and distributions................................. 362 --
Shares redeemed........................................ (109,602) (160,040)
Net Increase in Net Assets from
Capital Share Transactions 13,758,756 7,920,778
Total Increase 12,094,305 8,462,628
Net Assets
Beginning of period.................................... -- --
End of period (including undistributed net investment
income as set forth below)........................ $12,094,305 $8,462,628
Undistributed Net Investment Income ............... $ 455 $ --
<FN>
(a) Period from April 9, 1998 (date operations commenced) through December 31,
1998.
(b) Period from April 2, 1998 (date operations commenced) through December 31,
1998.
(c) Period from April 16, 1998 (date operations commenced) through December 31,
1998.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SmallCap Value Utilities
Account(c) Account(b)
1998 1998
<S> <C> <C>
Operations
Net investment income (operating loss)................. $ 29,302 $ 289,426
Net realized (loss) from investment transactions....... (499,000) (15,441)
Change in unrealized appreciation/depreciation
of investments................................... (313,166) 1,578,176
Net Increase (Decrease) in Net Assets
Resulting from Operations (782,864) 1,852,161
Dividends to Shareholders
from Net Investment Income: (27,033) (284,024)
Capital Share Transactions (Note 6)
Shares sold............................................ 7,875,091 17,143,864
Shares issued in reinvestment of dividends
and distributions................................. 10,433 108,024
Shares redeemed........................................ (180,241) (521,951)
Net Increase in Net Assets from
Capital Share Transactions 7,705,283 16,729,937
Total Increase 6,895,386 18,298,074
Net Assets
Beginning of period.................................... -- --
End of period (including undistributed net investment
income as set forth below)........................ $6,895,386 $18,298,074
Undistributed Net Investment Income ............... $ 2,269 $ 5,402
<FN>
(a) Period from April 9, 1998 (date operations commenced) through December 31,
1998.
(b) Period from April 2, 1998 (date operations commenced) through December 31,
1998.
(c) Period from April 16, 1998 (date operations commenced) through December 31,
1998.
</FN>
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Principal Variable Contracts Fund, Inc.
<TABLE>
<S> <C> <C>
Aggressive Growth Account High Yield Account Money Market Account
Asset Allocation Account International Account Real Estate Account
Balanced Account International SmallCap Account SmallCap Account
Bond Account MicroCap Account SmallCap Growth Account
Capital Value Account MidCap Account SmallCap Value Account
Government Securities Account MidCap Growth Account Utilities Account
Growth Account
</TABLE>
Note 1 -- Significant Accounting Policies
Principal Variable Contracts Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940, as amended, as an open-end diversified
management investment company and operates in the mutual fund industry. The Fund
currently consists of 19 accounts (Aggressive Growth Account, Asset Allocation
Account, Balanced Account, Bond Account, Capital Value Account, Government
Securities Account, Growth Account, High Yield Account, International Account,
International SmallCap Account, MicroCap Account, MidCap Account, MidCap Growth
Account, Money Market Account, Real Estate Account, SmallCap Account, SmallCap
Growth Account, SmallCap Value Account and Utilities Account) (known as the
"Accounts").
Effective January 1, 1998 the following mutual funds were reorganized into the
Principal Variable Contracts Fund, Inc. as follows:
Former Fund Name Current Account Name
Principal Aggressive Growth Fund, Inc. Aggressive Growth Account
Principal Asset Allocation Fund, Inc. Asset Allocation Account
Principal Balanced Fund, Inc. Balanced Account
Principal Bond Fund, Inc. Bond Account
Principal Capital Accumulation Fund, Inc. Capital Value Account
Principal Government Securities Fund, Inc. Government Securities Account
Principal Growth Fund, Inc. Growth Account
Principal High Yield Fund, Inc. High Yield Account
Principal World Fund, Inc. International Account
Principal Emerging Growth Fund, Inc. MidCap Account
Principal Money Market Fund, Inc. Money Market Account
During April 1998, Principal Life Insurance Company (See Note 3)(formerly known
as Principal Mutual Life Insurance Company) made initial purchases of Capital
Shares of eight new accounts as follows:
Date Capital
Operations Shares
Commenced Account Name Purchased
April 2, 1998 SmallCap Growth Account 500,000
April 2, 1998 Utilities Account 1,000,000
April 9, 1998 MicroCap Account 500,000
April 9, 1998 SmallCap Account 1,000,000
April 16, 1998 International SmallCap Account 1,000,000
April 16, 1998 SmallCap Value Account 500,000
April 23, 1998 MidCap Growth Account 500,000
April 23, 1998 Real Estate Account 1,000,000
The Accounts (with the exception of the Money Market Account) value securities
for which market quotations are readily available at market value, which is
determined using the last reported sale price or, if no sales are reported, as
is regularly the case for some securities traded over-the-counter, the last
reported bid price. When reliable market quotations are not considered to be
readily available, which may be the case, for example, with respect to certain
debt securities, preferred stocks and foreign securities, the investments are
valued by using prices provided by market makers or estimates of market values
obtained from yield data and other factors relating to instruments or securities
with similar characteristics in accordance with procedures established in good
faith by the Fund's Board of Directors. Securities with remaining maturities of
60 days or less are valued at amortized cost, which approximates market.
Generally, trading in foreign securities is substantially completed each day at
various times prior to the close of the New York Stock Exchange. The values of
such securities used in computing net asset value per share are usually
determined as of such times. Occasionally, events which affect the values of
such securities and foreign currency exchange rates may occur between the times
at which they are generally determined and the close of the New York Stock
Exchange and would therefore not be reflected in the computation of each
account's net asset value. If events materially affecting the value of such
securities occur during such period, then these securities are valued at their
fair value as determined in good faith by Principal Management Corporation
(formerly known as Princor Management Corporation) (the "Manager") under
procedures established and regularly reviewed by the Fund's Board of Directors.
To the extent each account invests in foreign securities listed on foreign
exchanges which trade on days on which an account does not determine its net
asset value, for example Saturdays and other customary national U.S. holidays,
each account's net asset value could be significantly affected on days when
shareholders do not have access to the account.
Certain securities issued by companies in emerging market countries may have
more than one quoted valuation at any given point in time, sometimes referred to
as a "local" price and a "premium" price. The premium price is often a
negotiated price which may not consistently represent a price at which a
specific transaction can be effected. It is the policy of the International and
International SmallCap Accounts to value such securities at prices at which it
is expected those shares may be sold, and the Manager or any sub-advisor is
authorized to make such determinations subject to such oversight by the Fund's
Board of Directors as may occasionally be necessary.
The Money Market Account values its securities at amortized cost, which
approximates market. Under the amortized cost method, a security is valued by
applying a constant yield to maturity of the difference between the principal
amount due at maturity and the cost of the security to the account.
With respect to the International and International SmallCap Accounts, the value
of foreign securities in foreign currency amounts is expressed in U.S. dollars
at the closing daily rate of exchange. The identified cost of the portfolio
holdings is translated at approximate rates prevailing when acquired. Income and
expense amounts are translated at approximate rates prevailing when received or
paid, with daily accruals of such amounts reported at approximate rates
prevailing at the date of valuation. Since the carrying amount of the foreign
securities is determined based on the exchange rate and market values at the
close of the period, it is not practicable to isolate that portion of the
results of operations arising as a result of changes in the foreign exchange
rates from the fluctuations arising from changes in the market prices of
securities during the period.
The Accounts record investment transactions generally one day after the trade
date, except for short-term investment transactions which are recorded generally
on the trade date. The identified cost basis has been used in determining the
net realized gain or loss from investment transactions and unrealized
appreciation or depreciation of investments. The Accounts record dividend income
on the ex-dividend date, except dividend income from foreign securities whereby
the ex-dividend date has passed; such dividends are recorded as soon as the
Accounts are informed of the ex-dividend date. Interest income is recognized on
an accrual basis.
With respect to the International and International SmallCap Accounts, reported
net realized foreign exchange gains or losses arise from sales of foreign
currencies, currency gains or losses realized between trade and settlement dates
on security transactions, and the difference between the amount of dividends and
foreign withholding taxes recorded on the books and the U.S. dollar equivalent
of the amounts actually received or paid. Net unrealized appreciation or
depreciation on translation of assets and liabilities in foreign currencies
arise from changes in the exchange rate relating to assets and liabilities,
other than investments in securities, purchased and held in non-U.S. denominated
currencies.
The Accounts may, pursuant to an exemptive order issued by the Securities and
Exchange Commission, transfer uninvested funds into a joint trading account. The
order permits the Accounts' cash balances to be deposited into a single joint
account along with the cash of other registered investment companies managed by
Principal Management Corporation. These balances may be invested in one or more
short-term instruments.
With respect to the Money Market Account, all net investment income and any
realized gains and losses from investment transactions are declared as dividends
daily to shareholders of record as of that day. Dividends and distributions to
shareholders of the other accounts are recorded on the ex-dividend date.
Dividends and distributions to shareholders from net investment income and net
realized gain from investments and foreign currency transactions are determined
in accordance with federal income tax regulations, which may differ from
generally accepted accounting principles. Permanent book and tax basis
differences are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Reclassifications made for the High Yield Account, the International Account and
the SmallCap Growth Account for the period ended December 31, 1998 aggregated
$66,211, $61,967 and $30,249, respectively. Reclassifications made for the
International Account for the year ended December 31, 1997 aggregated $146,989.
Other reclassifications made for the periods ended December 31, 1998 and 1997
were not material.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes, but not for tax purposes, are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains. To the extent distributions exceed current
and accumulated earnings and profits for federal income tax purposes, they are
reported as tax return of capital distributions.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2 -- Federal Income Taxes
No provision for federal income taxes is considered necessary because each
account is qualified as a "regulated investment company" under the Internal
Revenue Code and intends to distribute each year substantially all of its net
investment income and realized capital gains to shareholders. The cost of
investments for federal income tax reporting purposes approximates that used for
financial reporting purposes.
At December 31, 1998, the following Accounts had approximate net capital loss
carryforwards as follows:
Government
Securities High Yield
Net Capital Loss Carryforwards Expire In: Account Account
1999 $ -- $123,000
2000 -- 14,000
2001 -- 246,000
2002 331,000 114,000
2003 41,000 49,000
2006 14,000 --
$386,000 $546,000
<TABLE>
<CAPTION>
International MidCap
SmallCap MicroCap Growth
Net Capital Loss Carryforwards Expire In: Account Account Account
<S> <C> <C> <C>
2006 $320,000 $155,000 $734,000
</TABLE>
<TABLE>
<CAPTION>
SmallCap
Real Estate SmallCap Growth
Net Capital Loss Carryforwards Expire In: Account Account Account
<S> <C> <C> <C>
2006 $172,000 $71,000 $739,000
</TABLE>
<TABLE>
<CAPTION>
SmallCap
Value Utilities
Net Capital Loss Carryforwards Expire In: Account Account
<S> <C> <C>
2006 $240,000 $15,000
</TABLE>
Note 3 -- Management Agreement and Transactions With Affiliates
The Fund has agreed to pay investment advisory and management fees to Principal
Management Corporation (wholly owned by Princor Financial Services Corporation,
a subsidiary of Principal Life Insurance Company) computed at an annual
percentage rate of each account's average daily net assets. The annual rate used
in this calculation for the Accounts is as follows:
Net Assets Value of Accounts
(in millions)
First Next Next Next Over
$100 $100 $100 $100 $400
Aggressive Growth Account .80% .75% .70% .65% .60%
Asset Allocation Account .80 .75 .70 .65 .60
Balanced Account .60 .55 .50 .45 .40
Bond Account .50 .45 .40 .35 .30
Capital Value Account .50 .45 .40 .35 .30
Government Securities Account .50 .45 .40 .35 .30
Growth Account .50 .45 .40 .35 .30
High Yield Account .60 .55 .50 .45 .40
International Account .75 .70 .65 .60 .55
International SmallCap Account 1.20 1.15 1.10 1.05 1.00
MicroCap Account 1.00 .95 .90 .85 .80
MidCap Account .65 .60 .55 .50 .45
MidCap Growth Account .90 .85 .80 .75 .70
Money Market Account .50 .45 .40 .35 .30
Real Estate Account .90 .85 .80 .75 .70
SmallCap Account .85 .80 .75 .70 .65
SmallCap Growth Account 1.00 .95 .90 .85 .80
SmallCap Value Account 1.10 1.05 1.00 .95 .90
Utilities Account .60 .55 .50 .45 .40
No brokerage commissions were paid by the Fund to Princor Financial Services
Corporation during the periods ended December 31, 1998 and 1997. Brokerage
commissions were paid to other affiliates by the following accounts:
Periods Ended Year Ended
December 31, December 31,
1998 1997
Aggressive Growth Account $ 64,877 $ --
Asset Allocation Account 23,297 2,974
Balanced Account 8,115 18,197
Capital Value Account 8,995 9,465
Growth Account 14,714 5,997
International Account 52,568 10,411
International SmallCap Account 7,121 N/A
MicroCap Account 3,594 N/A
MidCap Account 3,928 2,250
MidCap Growth Account 4,141 N/A
Real Estate Account 6,955 N/A
SmallCap Account 640 N/A
SmallCap Growth Account 325 N/A
SmallCap Value Account 158 N/A
All of the shares of the Fund are owned by Principal Life Insurance Company
and/or one or more Separate Account sponsored by Principal Life Insurance
Company.
Note 4 -- Investment Transactions
For the periods ended December 31, 1998, the cost of investment securities
purchased and proceeds from investment securities sold (not including short-term
investments and U.S. government securities) by the Accounts were as follows:
Purchases Sales
Aggressive Growth Account $330,723,721 $280,719,752
Asset Allocation Account 99,960,966 98,809,392
Balanced Account 79,443,137 36,283,591
Bond Account 63,989,269 25,587,217
Capital Value Account 134,025,109 71,319,704
Government Securities Account 47,450,777 9,814,573
Growth Account 88,783,453 16,665,337
High Yield Account 12,072,124 12,636,976
International Account 70,314,871 45,096,133
International SmallCap Account 17,915,591 4,089,022
MicroCap Account 6,865,366 1,271,714
MidCap Account 94,701,533 59,650,816
MidCap Growth Account 11,379,626 3,529,686
Real Estate Account 12,093,848 269,121
SmallCap Account 15,573,321 2,814,157
SmallCap Growth Account 12,762,675 5,835,994
SmallCap Value Account 9,264,533 1,835,058
Utilities Account 17,164,329 760,870
At December 31, 1998, net unrealized appreciation (depreciation) of investments
by the Accounts was composed of the following:
<TABLE>
<CAPTION>
Net Unrealized
Appreciation
Gross Unrealized (Depreciation)
Appreciation (Depreciation) of Investments
<S> <C> <C> <C>
Aggressive Growth Account $ 44,277,263 $ (3,238,312) $41,038,951
Asset Allocation Account 11,274,687 (2,411,877) 8,862,810
Balanced Account 26,198,683 (5,654,216) 20,544,467
Bond Account 4,771,361 (427,572) 4,343,789
Capital Value Account 105,104,085 (12,880,111) 92,223,974
Government Securities Account 5,803,493 (47,478) 5,756,015
Growth Account 82,295,403 (7,742,200) 74,553,203
High Yield Account 301,056 (1,103,867) (802,811)
International Account 32,296,721 (16,196,953) 16,099,768
International SmallCap Account 1,417,980 (2,161,042) (743,062)
MicroCap Account 375,271 (1,114,934) (739,663)
MidCap Account 73,230,787 (29,598,159) 43,632,628
MidCap Growth Account 1,250,313 (381,095) 869,218
Real Estate Account 130,272 (988,122) (857,850)
SmallCap Account 976,319 (2,570,065) (1,593,746)
SmallCap Growth Account 1,724,228 (412,951) 1,311,277
SmallCap Value Account 529,363 (842,529) (313,166)
Utilities Account 1,947,074 (368,898) 1,578,176
</TABLE>
The Accounts may trade portfolio securities on a "to-be-announced" (TBA) basis.
In a TBA transaction, the account commits to purchase or sell securities for
which all specific information is not known at the time of the trade. Securities
purchased on a TBA basis are not settled until they are delivered to the
account, normally 15 to 30 days later. These transactions are subject to market
fluctuations and their current value is determined in the same manner as for
other portfolio securities. As of December 31, 1998, the Balanced Account had a
TBA purchase commitment involving a security with a face amount of $1,000,000,
cost of $987,344 and market value of $987,714. The account has set aside
investment securities and other assets in excess of the commitment to serve as
collateral.
At December 31, 1998, the Accounts held the following securities which were
purchased in private placement transactions and may require registration, or an
exemption therefrom, in order to effect a sale in the ordinary course of
business.
<TABLE>
<CAPTION>
Value at Value as a
Date of December 31, Percentage
Security Description Acquisition Cost 1998 of Net Assets
<S> <C> <C> <C> <C> <C>
Asset Allocation AESOP Funding II LLC, Series 1997-1,
Account Class A1 5/5/98 $ 503,008 $ 507,265 0.60%
Israel Electric Corp. Senior Notes 12/11/96 249,525 260,062 0.31
Liberty Mutual Surplus Notes 4/29/98 275,913 283,850 0.34
Monsanto Co. Notes 12/4/98 249,338 249,427 0.30
Prudential Insurance Co. Senior Notes 7/16/98 298,674 308,917 0.37
Wellsford Real Properties, Inc. 6/2/97 161,471 161,669 0.19
6/18/97 1,115 1,031 0.00
1,772,221 2.11
Bond Account John Hancock Mutual Life Insurance Co.
Surplus Notes 1/8/97 958,440 1,083,954 0.89
Marlin Water Trust Senior Secured Notes 12/8/98 2,500,000 2,511,643 2.06
Marriott International, Inc. Notes 11/10/98 2,495,200 2,496,953 2.05
12/3/98 506,335 499,390 0.41
Qwest Communications International
Senior Notes 10/28/98 1,191,888 1,239,000 1.02
12/15/98 1,042,500 1,032,500 0.84
Raytheon Co. Notes 12/9/98 1,991,740 1,974,918 1.62
10,838,358 8.89
High Yield Account BE Aerospace Senior Subordinated Notes 10/28/98 $250,000 265,000 1.89%
Cenargo International PLC First Mortgage
Notes 10/22/98 435,000 480,625 3.42
Chancellor Media Corp. Unsecured Notes 11/11/98 247,878 255,625 1.82
11/12/98 250,937 255,625 1.82
Level 3 Communications, Inc. Step-up
Senior Discount Notes 12/18/98 276,250 291,250 2.07
Qwest Communications International
Senior Notes 10/28/98 297,972 309,750 2.21
Special Devices, Inc. Senior Subordinated
Notes 12/11/98 500,000 507,500 3.61
Station Casinos, Inc. Senior Subordinated
Notes 11/25/98 247,965 253,750 1.81
York Power Funding Ltd. Senior Secured
Bonds 7/31/98 100,000 93,750 0.67
2,712,875 19.32
International Account Kemira OY 12/9/96 314,077 187,428 0.12
12/10/96 131,955 76,413 0.05
12/11/96 241,385 139,850 0.10
2/26/97 322,301 201,845 0.13
4/10/97 294,742 201,845 0.13
807,381 0.53
International
SmallCap Account Bure Investment Aktiebolaget AB 6/25/98 104,616 90,802 0.69
8/5/98 24,821 24,119 0.19
8/27/98 16,819 18,444 0.14
10/20/98 36,165 42,564 0.33
Computacenter PLC 5/21/98 104,970 70,279 0.54
9/21/98 10,459 10,249 0.08
9/28/98 17,959 16,106 0.12
9/30/98 25,683 21,962 0.17
Industrial & Financial Systems 4/17/98 135,320 143,038 1.09
12/4//98 15,375 35,760 0.27
12/7/98 8,852 9,228 0.07
12/9/98 27,951 28,838 0.22
Newsquest PLC 4/17/98 153,267 122,289 0.94
8/26/98 35,000 31,795 0.24
11/3/98 22,623 23,235 0.18
688,708 5.27
</TABLE>
The Accounts' investments are with various issuers in various industries. The
Schedules of Investments contained herein summarize concentrations of credit
risk by issuer and industry.
Note 5 -- Foreign Currency Contracts
At December 31, 1998, International Account owned a forward contract to sell
Hong Kong Dollars ("HKD") at a specified future date at a fixed exchange rate.
Forward foreign currency contracts are valued at the forward rate, and are
marked-to-market daily. The change in market value is recorded by the account as
an unrealized gain or loss. When the contract is closed, the account will record
a realized gain or loss equal to the difference between the value of the
contract at the time it was opened and the value at the time it was closed.
<TABLE>
<CAPTION>
Value at
Contracts In Exchange Settlement December 31, Net Unrealized
to Deliver For Date 1998 (Depreciation)
<S> <C> <C> <C> <C> <C>
International Account 7,068,750 HKD $870,000 3/1/99 $912,167 $(42,167)
</TABLE>
The use of forward foreign currency contracts does not eliminate fluctuations in
underlying prices of each account's portfolio 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. In addition, the account could be exposed to
risks if the counterparties to the contract are unable to meet the terms of
their contract.
Note 6 -- Capital Share Transactions
Transactions in Capital Stock by account were as follows:
<TABLE>
<CAPTION>
Aggressive Asset Allocation Balanced Bond
Growth Account Account Account Account
<S> <C> <C> <C> <C>
Year Ended December 31, 1998:
Shares sold................................... 4,174,437 1,198,581 3,640,419 3,555,266
Shares issued in reinvestment of
dividends and distributions.................. 633,179 283,810 732,853 520,091
Shares redeemed............................... (1,736,629) (1,080,275) (780,615) (885,965)
Net Increase 3,070,987 402,116 3,592,657 3,189,392
Year Ended December 31, 1997:
Shares sold................................... 3,229,319 1,086,950 2,742,809 1,818,413
Shares issued in reinvestment of
dividends and distributions.................. 1,197,848 473,612 758,805 380,615
Shares redeemed............................... (1,478,619) (495,530) (1,325,111) (839,651)
Net Increase 2,948,548 1,065,032 2,176,503 1,359,377
</TABLE>
<TABLE>
<CAPTION>
Capital Government Growth High Yield
Value Account Securities Account Account Account
<S> <C> <C> <C> <C>
Year Ended December 31, 1998:
Shares sold................................... 2,141,605 4,214,130 3,240,321 59,266
Shares issued in reinvestment of
dividends and distributions.................. 547,565 643,690 253,331 155,723
Shares redeemed............................... (558,554) (820,547) (562,472) (251,388)
Net Increase (Decrease) 2,130,616 4,037,273 2,931,180 (36,399)
Year Ended December 31, 1997:
Shares sold................................... 2,210,809 1,306,805 2,535,060 105,429
Shares issued in reinvestment of
dividends and distributions.................. 777,056 501,475 163,713 139,336
Shares redeemed............................... (1,615,306) (1,263,266) (151,784) (40,585)
Net Increase 1,372,559 545,014 2,546,989 204,180
</TABLE>
<TABLE>
<CAPTION>
International International MicroCap MidCap
Account SmallCap Account Account Account
<S> <C> <C> <C> <C>
Periods Ended December 31, 1998:
Shares sold................................... 1,812,604 1,487,078 685,987 1,146,275
Shares issued in reinvestment of
dividends and distributions.................. 526,699 1,240 685 488,971
Shares redeemed............................... (770,282) (35,567) (28,122) (419,667)
Net Increase 1,569,021 1,452,751 658,550 1,215,579
Year Ended December 31, 1997:
Shares sold................................... 3,295,232 N/A N/A 1,770,659
Shares issued in reinvestment of
dividends and distributions.................. 422,856 N/A N/A 172,918
Shares redeemed............................... (205,446) N/A N/A (222,142)
Net Increase 3,512,642 1,721,435
</TABLE>
<TABLE>
<CAPTION>
MidCap Money Real Estate SmallCap
Growth Account Market Account Account Account
<S> <C> <C> <C> <C>
Periods Ended December 31, 1998:
Shares sold................................... 902,426 130,878,349 1,203,458 1,487,369
Shares issued in reinvestment of
dividends and distributions................. -- 3,052,413 6,110 46
Shares redeemed............................... (18,501) (97,982,858) (6,214) (14,091)
Net Increase 883,925 35,947,904 1,203,354 1,473,324
Year Ended December 31, 1997:
Shares sold................................... N/A 70,744,074 N/A N/A
Shares issued in reinvestment of
dividends and distributions.................. N/A 2,250,232 N/A N/A
Shares redeemed............................... N/A (71,923,637) N/A N/A
Net Increase 1,070,669
</TABLE>
<TABLE>
<CAPTION>
SmallCap SmallCap Utilities
Growth Account Value Account Account
<S> <C> <C> <C>
Periods Ended December 31, 1998:
Shares sold................................... 856,088 847,411 1,715,892
Shares issued in reinvestment of
dividends and distributions.................. -- 1,312 10,086
Shares redeemed............................... (18,461) (22,210) (51,273)
Net Increase 837,627 826,513 1,674,705
</TABLE>
Note 7 -- Line of Credit
The Accounts participate with other funds and portfolios managed by Principal
Management Corporation in an unsecured joint line of credit with a bank, which
allows them to borrow up to $60,000,000, collectively. Borrowings are made
solely to facilitate the handling of unusual and/or unanticipated short-term
cash requirements. Interest is charged to each participant, based on its
borrowings, at a rate equal to the Fed Funds Rate plus .50%. Additionally, a
commitment fee is charged at the annual rate of .08% on the average unused
portion of the line of credit. The commitment fee is allocated among the
participating funds, accounts and portfolios in proportion to their average net
assets during each quarter. At December 31, 1998, the Accounts had no
outstanding borrowings under the line of credit.
<PAGE>
SCHEDULES OF INVESTMENTS
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
AGGRESSIVE GROWTH ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (99.67%)
Air Transportation, Scheduled (1.02%)
Continental Airlines, Inc. 68,100(a) $ 2,281,350
Aircraft & Parts (9.00%)
Gulfstream Aerospace Corp. 84,800(a) 4,515,600
Textron, Inc. 31,100 2,361,656
United Technologies Corp. 122,100 13,278,375
20,155,631
Beverages (2.25%)
Coca-Cola Co. 28,400 1,899,250
Coca-Cola Enterprises 87,700 3,135,275
5,034,525
Cable & Other Pay TV Services (2.18%)
Comcast Corp. 30,900 1,813,444
Comcast Corp., Class A 20,700 1,188,956
Tele-Communications, Inc. 34,100(a) 1,886,156
4,888,556
Commercial Banks (1.00%)
First Union Corp. 17,500 1,064,219
Fleet Financial Group, Inc. 26,100 1,166,344
2,230,563
Communications Equipment (0.23%)
Lucent Technologies 4,700 517,000
Computer & Data Processing
Services (5.83%)
America Online, Inc. 20,800(a) 3,226,600
Microsoft Corp. 55,300(a) 7,669,419
Novell, Inc. 53,100(a) 962,437
Oracle Systems Corp. 27,800(a) 1,198,875
13,057,331
Computer & Office Equipment (7.82%)
Cisco Systems 61,925(a) 5,747,414
Compaq Computer Corp. 68,300 2,864,331
Dell Computer Corp. 27,600(a) 2,019,975
International Business Machines Corp. 16,900 3,122,275
Pitney Bowes, Inc. 56,800 3,752,350
17,506,345
Consumer Products (2.68%)
Philip Morris Cos., Inc. 112,300 6,008,050
Drugs (9.40%)
Amgen, Inc. 31,900(a) 3,335,544
Genzyme Corp. - General Division 48,500(a) 2,412,875
Johnson & Johnson 15,500 1,300,062
Lilly (Eli) & Co. 32,500 2,888,437
Merck & Co., Inc. 38,200 5,641,662
Pfizer, Inc. 43,600 5,469,075
21,047,655
Eating & Drinking Places (0.16%)
Brinker International, Inc. 12,400(a) $ 358,050
Electronic Components &
Accessories (2.87%)
Intel Corp. 54,300 6,437,944
Electronic Distribution
Equipment (2.85%)
General Electric Co. 62,600 6,389,112
Family Clothing Stores (1.72%)
Gap, Inc. 68,700 3,864,375
Fire, Marine & Casualty
Insurance (10.59%)
Allstate Corp. 35,100 1,355,737
American Bankers Insurance Group 10,100 488,588
Berkshire Hathaway, Inc., Class A 47(a) 3,290,000
Berkshire Hathaway, Inc., Class B 1,911(a) 4,490,850
CitiGroup, Inc. 48,300 2,390,850
Loews Corp. 110,500 10,856,625
Progressive Corp. 5,100 863,812
23,736,462
General Industrial Machinery (5.10%)
Tyco International Ltd. 151,500 11,428,781
Grain Mill Products (1.66%)
Quaker Oats Co. 26,600 1,582,700
Ralston-Ralston Purina Group 65,700 2,127,038
3,709,738
Guided Missiles, Space Vehicles &
Parts (0.68%)
Cordant Technologies, Inc. 40,800 1,530,000
Life Insurance (0.90%)
Reinsurance Group of America, Inc. 33,100 2,010,825
Lumber & Other Building
Materials (1.74%)
Home Depot, Inc. 63,700 3,897,644
Management & Public Relations (0.53%)
Nielsen Media Research 66,400(a) 1,195,200
Measuring & Controlling Devices (0.19%)
Uniphase Corp. 6,200(a) 430,125
Miscellaneous Shopping Goods
Stores (1.29%)
Staples, Inc. 27,800(a) 1,214,512
Toys 'R' Us, Inc. 99,900(a) 1,685,813
2,900,325
Miscellaneous Transportation (1.38%)
General Motors Corp. - Class H 78,100(a) 3,099,594
Motion Picture Production (3.20%)
Liberty Media Group 76,000(a) 3,500,750
Time Warner, Inc. 59,300 3,680,306
7,181,056
Newspapers (0.60%)
Pulitzer Publishing Co. 15,600 $ 1,351,350
Office Furniture (1.28%)
Knoll, Inc. 96,700(a) 2,864,738
Ophthalmic Goods (1.18%)
Bausch & Lomb 43,900 2,634,000
Personal Credit Institutions (2.53%)
American Express Co. 55,400 5,664,650
Petroleum Refining (0.51%)
Exxon Corp. 15,700 1,148,063
Photographic Equipment &
Supplies (0.57%)
Eastman Kodak Co. 17,800 1,281,600
Public Warehousing & Storage (0.48%)
Costco Companies, Inc. 14,800(a) 1,068,375
Radio & Television Broadcasting (6.57%)
Chancellor Media Corp. 54,400(a) 2,604,400
Clear Channel Communications 222,400(a) 12,120,800
14,725,200
Search & Navigation Equipment (2.69%)
Litton Industries, Inc. 74,500(a) 4,861,125
Loral Space & Communications Ltd. 65,200(a) 1,161,375
6,022,500
Security & Commodity Services (0.51%)
Pimco Advisors Holding LP 37,000 1,151,625
Security Brokers & Dealers (0.60%)
Merrill Lynch & Co., Inc. 20,100 1,341,675
Surety Insurance (0.64%)
Ace Ltd. 41,700 1,436,044
Telephone Communication (5.24%)
AT&T Corp. 72,700 5,470,675
MCI Worldcom, Inc. 52,400(a) 3,759,700
Motorola, Inc. 41,000 2,503,563
11,733,938
Total Common Stocks 223,319,995
Preferred Stock (0.37%)
Newspapers (0.37%)
News Corp Ltd. ADR 33,200 819,625
Total Portfolio Investments (100.04%) 224,139,620
Liabilities, net of cash and receivables (-0.04%) (81,554)
Total Net Assets (100.00%) $224,058,066
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
ASSET ALLOCATION ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (56.55%)
Advertising (0.80%)
Outdoor Systems, Inc. 9,000(a) $ 270,000
R.H. Donnelley Corp. 27,820 405,129
675,129
Aerospace Industries (0.29%)
Cordant Technologies, Inc. 6,500 243,750
Air Transportation, Scheduled (0.56%)
British Airways PLC ADR 1,400 94,938
Continental Airlines, Inc. 4,200(a) 140,700
KLM Royal Dutch Airlines 7,737 232,110
467,748
Aircraft & Parts (0.65%)
Gulfstream Aerospace Corp. 3,100(a) 165,075
Indigo Aviation AB Sponsored ADR 4,800(a) 39,600
Northrop Grumman Corp. 400 29,250
United Technologies Corp. 2,900 315,375
549,300
Beverages (0.15%)
Bass PLC ADR 8,928 128,340
Blast Furnace & Basic Steel
Products (0.09%)
Australian National Industries 8,960 25,281
British Steel PLC ADR 3,500 51,187
76,468
Cable & Other Pay TV Services (1.09%)
Tele-Communications, Inc. 11,000(a) 608,438
United Video Satellite Group, Inc. 13,200(a) 311,850
920,288
Cement, Hydraulic (0.20%)
Southdown, Inc. 2,800 165,725
Chemicals & Allied Products (0.92%)
Asahi Chemical Industry Co. ADR 4,100 195,919
Bayer AG Sponsored ADR 10,735 448,280
Mitsubishi Chemical Corp. ADR 6,100 128,709
772,908
Combination Utility Services (1.51%)
Montana Power Co. 19,000 1,074,688
Nipsco Industries, Inc. 6,400 194,800
1,269,488
Commercial Banks (4.31%)
ABN-AMRO Holdings NV ADR 30,851 671,009
Allied Irish Banks ADR 2,900 320,088
Banco Central ADR 19,500 234,000
BankAmerica Corp. 2,621 157,588
BankBoston Corp. 6,300 245,306
Bankers Trust Corp. 750 64,078
Barclays PLC ADR 5,571 501,390
Chase Manhattan Corp. 3,780 257,276
Commerzbank AG ADR 3,600 113,910
Fleet Financial Group, Inc. 4,700 210,031
HSBC Holdings ADR 600 $ 149,477
Mellon Bank Corp. 2,300 158,125
National Westminster ADR 1,900 225,150
PNC Financial Corp. 2,900 156,963
Westpac Banking ADR 4,900 163,538
3,627,929
Commercial Printing (0.21%)
DAI Nippon Printing Co. 1,100 175,731
Communications Equipment (2.43%)
Alcatel Alsthom ADR 4,700 114,856
Associated Group, Inc., Class B 24,500(a) 1,041,250
Commscope, Inc. 35,600(a) 598,525
Harris Corp. 4,000 146,500
Matsushita Electrical ADR 800 139,600
Omniamerica, Inc. 100(a) 3,200
2,043,931
Communications Services, NEC (0.86%)
L-3 Communications Holdings, Inc. 600(a) 27,938
NTL, Inc. 12,300 694,181
722,119
Computer & Data Processing
Services (0.17%)
America Online, Inc. 300 46,537
Primark Corp. 3,500(a) 94,938
141,475
Computer & Office Equipment (1.72%)
3COM Corp. 7,300(a) 327,131
Compaq Computer Corp. 7,100 297,756
Hitachi Ltd. ADR 2,900 175,269
Pitney Bowes, Inc. 9,800 647,413
1,447,569
Concrete, Gypsum & Plaster
Products (0.17%)
Italcementi Fabriche SPA ADR 13,000 143,490
Concrete Work (0.06%)
Pioneer International Ltd. ADR 25,000 52,902
Construction & Related Machinery (0.14%)
Komatsu Ltd. ADR 5,500 115,660
Consumer Products (0.11%)
Philip Morris Cos., Inc. 1,650 88,275
Crude Petroleum & Natural Gas (0.42%)
Petrofina SA ADR 2,900 131,225
Societe Generale ADR 3,600 116,649
USX-Marathon Group, Inc. 3,400 102,425
350,299
Dance Studios, Schools & Halls (0.13%)
Marquee Group, Inc. 25,200(a) 113,400
Department Stores (0.13%)
Marui Corp. ADRC 2,800 107,981
Drugs (3.32%)
Amgen, Inc. 5,700(a) $ 596,006
Forest Laboratories, Inc. 9,600(a) 510,600
Genzyme Corp. - General Division 13,500(a) 671,625
Medicis Pharmaceutical Corp. 1,300(a) 77,513
Novartis AG Sponsored ADR 2,879 282,978
Novo Nordisk ADR 3,200 212,800
Nycomed Amersham PLC ADR 8,569 286,526
Smithkline Beecham PLC ADR 2,200 152,900
2,790,948
Drugs, Proprietaries & Sundries (0.04%)
Amway Japan Ltd. ADR 6,833 36,726
Eating & Drinking Places (0.39%)
P.F. Changs China Bistro, Inc. 1,000(a) 22,750
Papa John's International, Inc. 700(a) 30,888
Sonic Corp. 7,600(a) 189,050
Tricon Global Restaurants, Inc. 1,700(a) 85,212
327,900
Electric Services (0.58%)
Endesa SA ADR 5,600 151,200
EVN AG ADR 3,600(a) 101,996
National Power ADR 3,422 125,759
Pinnacle West Capital Corp. 1,800 76,275
Shandong Huaneng Power 8,000 36,500
491,730
Electronic Components &
Accessories (0.41%)
Dionex Corp. 3,400(a) 124,525
Kyocera Corp. ADR 3,000 155,812
Texas Instruments 748 64,001
344,338
Electronic Distribution Equipment (0.80%)
Phillips NV ADR 9,969 674,777
Family Clothing Stores (0.68%)
Gap, Inc. 4,650 261,563
TJX Cos., Inc. 10,700 310,300
571,863
Farm & Garden Machinery (0.19%)
Case Corp. 7,400 161,412
Finance Services (1.06%)
Cincinnati Financial Corp. 19,500 714,188
Nomura Securities Co. Ltd. ADR 2,000 174,651
888,839
Fire, Marine & Casualty Insurance (4.14%)
Allstate Corp. 6,700 258,788
American Bankers Insurance Group 17,300 836,888
Berkshire Hathaway, Inc., Class B 95(a) 222,075
Horace Mann Educators 800 22,800
Loews Corp. 16,000 1,572,000
Mercury General Corp. 1,300 56,956
Mutual Risk Management Ltd. 3,000 117,375
St. Paul Cos., Inc. 3,200 111,200
Tokio Marine & Fire Insurance ADR 4,600 279,450
3,477,532
Footwear, Except Rubber (1.05%)
Olivetti & Co. SPA ADR 253,968 885,637
Gas Production & Distribution (0.06%)
Transcanada Pipelines Ltd. 3,484 $ 51,388
General Industrial Machinery (0.24%)
Amergroup Ltd. ADR 5,500(a) 28,623
SKF AB ADR 15,370 176,755
205,378
Groceries & Related Products (0.58%)
Performance Food Group Co. 500(a) 14,063
U.S. Foodservice, Inc. 9,700(a) 475,300
489,363
Grocery Stores (0.14%)
Koninklijke Bijenkorf Beheer NV ADR 2,400 114,906
Hotels & Motels (0.22%)
Crestline Capital Corp. 160(a) 2,460
Host Marriott Corp. 1,600 22,100
John Q. Hammons Hotels, Inc. 3,200(a) 11,800
Ladbroke Group ADR 18,500 147,747
184,107
Household Audio & Video
Equipment (0.21%)
Sony Corp. ADR 2,500 179,375
Industrial Inorganic Chemicals (0.67%)
Akzo ADR 8,566 382,258
Usec, Inc. 12,800 177,600
559,858
Iron & Steel Foundries (0.06%)
Kubota Corp. ADR 850 49,088
Laundry, Cleaning & Garment
Services (0.01%)
Unifirst Corp. 200 4,562
Life Insurance (1.67%)
American General Corp. 2,600 202,800
Lincoln National Corp. 3,400 278,163
Protective Life Corp. 700 27,869
Reinsurance Group of America, Inc. 900 63,000
Reinsurance Group of America, Inc.,
Non-voting 13,700 832,275
1,404,107
Mailing, Reproduction, Stenographic (0.02%)
Advo, Inc. 500(a) 13,188
Management & Public Relations (2.06%)
Nielsen Media Research 91,100(a) 1,639,800
Ogden Corp. 3,700 92,731
1,732,531
Meat Products (0.72%)
Groupe Danone 10,764 605,475
Men's & Boys' Clothing Stores (1.00%)
Abercrombie & Fitch Co. 11,600(a) 820,700
Dave & Busters, Inc. 800(a) 18,450
839,150
Metalworking Machinery (0.16%)
Makita Corp. ADR 13,000 138,125
Miscellaneous Amusement, Recreation
Service (1.50%)
Cedar Fair, L.P. 5,600 $ 145,600
Harrahs Entertainment, Inc. 7,800(a) 122,363
SFX Entertainment, Inc. 18,100(a) 993,237
1,261,200
Miscellaneous Business Services (0.33%)
Nova Corp. 696 9,092
Viad Corp. 8,800 267,300
276,392
Miscellaneous Chemical Products (0.15%)
Millenium Chemicals, Inc. 6,200 123,225
Miscellaneous Durable Goods (0.01%)
SCP Pool Corp. 400(a) 6,050
Miscellaneous Electrical Equipment &
Supplies (0.30%)
TDK Corp. ADR 2,800 252,700
Miscellaneous Equipment Rental &
Leasing (0.05%)
Renters Choice, Inc. 1,200(a) 38,100
Miscellaneous Food & Kindred
Products (0.26%)
Nestle Reg. ADR 2,000 217,695
Miscellaneous Investing (2.19%)
Apartment Investment & Management Co. 500 18,594
Archstone Communities Trust 2,352 47,628
Avalonbay Communities, Inc. 2,300 78,775
Bedford Property Investors 2,200 37,125
Boston Properties, Inc. 300 9,150
Brandywine Realty Trust 3,300 58,988
Burnham Pacific Properties, Inc. 10,700 129,069
Carramerica Realty Corp. 2,000 48,000
Charles E. Smith
Residential Realty, Inc. 1,200 38,550
Chateau Properties 3,253 95,354
Crescent Real Estate Equities Co. 2,300 52,900
Equity Office Properties Trust 2,019 48,456
Equity Residential Properties Trust 1,074 43,430
Essex Property Trust, Inc. 1,900 56,525
Federal Realty Investment Trust 2,300 54,338
Great Lakes REIT, Inc. 5,300 83,144
Irvine Apartment Communities, Inc. 4,300 137,062
Manufactured Home Communities, Inc. 1,000 25,062
Pan Pacific Retail Properties, Inc. 1,700 33,893
Patriot American Hospitality, Inc. 1,500 9,000
Pennsylvania Real Estate 2,500 48,594
Philips Intl. Realty Corp. 200 3,075
Prime Group Realty Trust, Inc. 9,200 139,150
Public Storage, Inc. 2,200 59,537
Ramco-Gershenson Properties 100 1,450
Regency Realty Corp. 1,000 22,250
Starwood Hotels & Resorts 1,290 29,267
Storage Trust Realty 800 18,700
Sun Communities, Inc. 900 31,331
Taubman Centers, Inc. 7,100 97,625
Urban Shopping Centers, Inc. 2,300 75,325
Vornado Realty Trust 1,400 47,250
Wellsford Real Properties, Inc. 15,777(a)(b) 162,700
1,841,297
Miscellaneous Shopping Goods
Stores (0.18%)
Toys `R' Us, Inc. 9,200(a) $ 155,250
Motion Picture Production (1.26%)
Liberty Media Group 23,000(a) 1,059,437
Motor Vehicles & Equipment (1.35%)
Fiat SPA ADR 5,170 91,121
General Motors Corp. 2,100 150,281
Meritor Automotive, Inc. 9,966 211,155
Toyota Motor Corp. ADR 8,600 457,413
Volkswagen AG ADR 14,000 223,594
1,133,564
Newspapers (0.22%)
Harte-Hanks, Inc. 400 11,400
Pulitzer Publishing Co. 2,000 173,250
184,650
Non-Classifiable Establishments (0.03%)
Keppel Corp. Ltd. ADR 5,375 28,798
Office Furniture (0.14%)
Knoll, Inc. 4,000(a) 118,500
Ophthalmic Goods (0.22%)
Bausch & Lomb 3,150 189,000
Petroleum Refining (0.48%)
Ashland, Inc. 1,400 67,725
Conoco, Inc., Class A 8,600(a) 179,525
Mobil Corp. 200 17,425
Total SA IE Francaise ADR 2,800 139,300
403,975
Photographic Equipment &
Supplies (0.72%)
Eastman Kodak Co. 1,100 79,200
Fuji Photo Film 8,800 322,300
OCE NV 5,600 201,600
603,100
Professional & Commercial
Equipment (0.07%)
Ingram Micro, Inc. 1,800(a) 62,775
Radio & Television Broadcasting (2.47%)
American Tower Corp., Class A 3,300(a) 97,556
Chancellor Media Corp. 7,400(a) 354,275
Clear Channel Communications 14,600(a) 795,700
Cox Radio, Inc. 700(a) 29,575
Emmis Communications Corp. 700(a) 30,363
Metro Networks, Inc. 700(a) 29,838
USA Networks, Inc. 22,300(a) 738,687
2,075,994
Radio, Television & Computer Stores (0.54%)
Circuit City Stores - Circuit City Group9,100 454,430
Railroads (0.13%)
Nagoya Railroad Co. Ltd. 2,900 105,410
Real Estate Agents & Managers (0.02%)
Atlantic Gulf Communities Co. 15,700(a) $ 11,775
Security Capital Group, Inc. 200(a) 2,713
14,488
Real Estate Operators & Lessors (0.60%)
Arden Realty Group, Inc. 4,000 92,750
Brookfield Properties Corp. 6,100 73,934
Pacific Gulf Properties 4,700 94,294
Sekisui House Ltd. ADR 2,300 243,668
504,646
Savings Institutions (0.03%)
Golden State Bancorp., Inc. 1,400(a) 23,275
Search & Navigation Equipment (0.23%)
Litton Industries, Inc. 2,900(a) 189,225
Security & Commodity Services (0.20%)
Pimco Advisors Holdings LP 5,500 171,187
Security Brokers & Dealers (0.04%)
Bear Stearns Cos., Inc. 1,000 37,375
Soap, Cleaners & Toilet Goods (0.76%)
KAO Corp. ADR 2,200 497,355
Shiseido Co. Ltd. ADR 11,000 141,600
638,955
Structural Clay Products (0.01%)
Dal-Tile International, Inc. 500(a) 5,187
Sugar & Confectionery Products (0.15%)
Tootsie Roll Industries, Inc. 3,212 125,670
Surety Insurance (0.09%)
CMAC Investment Corp. 1,600 73,500
Telephone Communication (3.76%)
Associated Group, Inc., Class A 8,600(a) 369,800
AT&T Corp. 8,200 617,050
BCE, Inc. 17,180 651,766
Bell Atlantic Corp. 4,400 249,975
Cellular Communications
International, Inc. 6,450(a) 438,600
Sprint Corp. 2,900 243,963
Sprint PCS Group 2,550(a) 58,969
Telefonica SA Sponsored ADR 2,500 338,437
U.S. West, Inc. 3,000 193,875
3,162,435
Tires & Inner Tubes (0.30%)
Bridgestone ADR 1,100 250,140
Water Transportation of
Freight, NEC (0.16%)
Penninsular & Oriental Steamships ADR 5,850 138,212
Total Common Stocks 47,548,045
Preferred Stocks (0.10%)
Newspapers (0.04%)
News Corp Ltd. ADR 1,500 $ 37,031
Real Estate Agents & Managers (0.06%)
Atlantic Gulf Communities 4,809(a) 48,099
Total Preferred Stocks 85,130
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds (9.03%)
Business Credit Institutions (1.29%)
AT&T Capital Corp. Medium-Term
Notes; 5.85%; 1/15/1999 $ 330,000 $ 330,000
Ford Credit Auto Owner Trust
Asset Backed Series 1998-B,
Class A3; 5.85%; 10/15/2001 500,000 504,350
Ford Motor Credit Notes;
6.13%; 4/28/2003 250,000 254,165
1,088,515
Collateralized Mortgage
Obligations (0.60%)
AESOP Funding II LLC Series 1997-1,
Class A1; 6.22%; 10/20/2001 500,000(b) 507,265
Commercial Banks (2.18%)
Asian Development Bank Global Bonds;
5.75%; 5/19/2003 500,000 507,277
First Plus Home Loan Trust Asset Backed
Series 1997-4, Class A4;
6.57%; 4/10/2013 150,000 150,906
First Union - Lehman Brothers
Commercial, Class 2 A1;
6.48%; 3/18/2004 312,118 317,324
Lehman Large Loan Series 1997-LLI,
Class A1; 6.79%; 6/12/2004 486,851 507,649
Merrill Lynch & Co. Notes;
6.00%; 2/12/2003 350,000 353,248
1,836,404
Electrical Goods (0.39%)
Empresa Nacional Electric Yankee
Notes; 7.75%; 7/15/2008 350,000 330,041
Electronic Distribution
Equipment (0.31%)
Israel Electric Corp. Senior Notes;
7.25%; 12/15/2006 250,000(b) 260,062
Finance Services (0.31%)
Team Fleet Finance Corp. Notes;
7.35%; 5/15/2003 250,000 257,132
Fire, Marine & Casualty
Insurance (0.37%)
Prudential Insurance Co. Senior Notes;
6.38%; 7/23/2006 300,000(b) 308,917
Household Audio & Video
Equipment (0.30%)
Sony Corp. Notes;
6.13%; 3/4/2003 $ 250,000 $ 256,396
Industrial Inorganic Chemicals (0.30%)
Monsanto Co. Notes;
5.75%; 12/1/2005 250,000(b) 249,427
Life Insurance (0.34%)
Liberty Mutual Surplus Notes;
8.20%; 5/4/2007 250,000(b) 283,850
Miscellaneous Equipment Rental &
Leasing (0.29%)
Oil Enterprises Ltd. Global
Bonds; 6.24%; 6/30/2008 240,847 242,374
Miscellaneous Investing (0.30%)
Simon Debartolo Medium-Term
Notes; 7.13%; 9/20/2007 250,000 251,743
Motor Vehicles, Parts & Supplies (0.34%)
Mid-State Trust Pass-Through
Series 4, Class A;
8.33%; 4/1/2030 262,492 286,403
Personal Credit Institutions (0.30%)
GMAC Medium-Term Notes;
6.10%; 12/6/2000 250,000 253,095
Security Brokers & Dealers (0.98%)
CNA Financial Notes;
6.50%; 4/15/2005 250,000 251,520
Donaldson Lufkin & Jenrette
Medium-Term Notes;
6.90%; 10/1/2007 250,000 257,051
Salomon, Inc. Senior Notes;
7.30%; 5/15/2002 300,000 313,070
821,641
Telephone Communication (0.43%)
WorldCom Inc. Senior Notes;
6.40%; 8/15/2005 350,000 362,757
Total Bonds 7,596,022
U.S. Government Treasury Notes & Bonds (24.27%)
Treasury Notes & Bonds
5.75%; 10/31/2000 1,500,000 1,528,595
6.38%; 3/31/2001 2,500,000 2,591,407
6.25%; 2/28/2002 2,500,000 2,612,500
5.75%; 8/15/2003 6,000,000 6,262,500
7.25%; 8/15/2004 2,000,000 2,249,376
6.50%; 8/15/2005 2,500,000 2,746,875
8.75%; 5/15/2020 1,000,000 1,422,813
19,414,066
Treasury Inflation-Protection Security
3.38%; 1/15/2007 1,035,040 997,520
Total U.S. Government Treasury Notes & Bonds 20,411,586
- --------------------------------------------------------------------------------
Principal
Type Rate Maturity Amount Value
- --------------------------------------------------------------------------------
Federal National Mortgage Association
(FNMA) Certificates (1.56%)
FNMA 8.00% 2/1/2012 $ 321,463 $ 332,377
FNMA 6.00% 4/1/2013 974,091 976,839
Total FNMA 1,309,216
Federal Home Loan Mortgage Corporation
(FMLMC) Certificates (3.52%)
FHLMC 6.00% 12/1/2013 1,980,002 1,984,334
FHLMC 6.00% 4/1/2028 990,001 977,838
Total FHLMC 2,962,172
Total Portfolio Investments (95.03%) 79,912,171
Cash and receivables, net of liabilities (4.97%) 4,177,114
Total Net Assets (100.00%) $84,089,285
(a) Non-income producing security - No dividend paid during the past twelve
months.
(b) Restricted security - See Note 4 to the financial statements.
<PAGE>
BALANCED ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (54.28%)
Auto & Home Supply Stores (0.92%)
Autozone, Inc. 55,700(a) $ 1,834,619
Bakery Products (0.39%)
Sara Lee Corp. 27,600 777,975
Beverages (1.21%)
Pepsico, Inc. 58,900 2,411,219
Business Credit Institutions (0.19%)
Associates First Capital 'A' 8,728 369,849
Chemicals & Allied Products (0.43%)
Dow Chemical Co. 9,300 845,719
Commercial Banks (4.08%)
BankAmerica Corp. 29,700 $ 1,785,712
BankBoston Corp. 23,000 895,563
Bankers Trust Corp. 16,200 1,384,087
Chase Manhattan Corp. 19,000 1,293,188
First Union Corp. 24,708 1,502,555
Fleet Financial Group, Inc. 5,400 241,313
PNC Financial Corp. 18,500 1,001,312
8,103,730
Commercial Printing (0.46%)
R. R. Donnelley & Sons Co. 20,700 906,919
Communications Equipment (0.52%)
General Instrument Corp. 30,300(a) 1,028,306
Computer & Data Processing
Services (2.96%)
Adobe Systems, Inc. 32,600 1,524,050
Electronic Data Systems Corp. 46,100 2,316,525
First Data Corp. 64,200 2,034,337
5,874,912
Computer & Office Equipment (3.53%)
3COM Corp. 17,500(a) 784,219
Cabletron Systems, Inc. 55,000(a) 460,625
Compaq Computer Corp. 41,400 1,736,212
Hewlett-Packard Co. 21,900 1,496,044
International Business Machines Corp. 13,700 2,531,075
7,008,175
Consumer Products (2.61%)
Fortune Brands, Inc. 36,600 1,157,475
Philip Morris Cos., Inc. 30,100 1,610,350
RJR Nabisco Holdings Corp. 40,300 1,196,406
UST, Inc. 35,300 1,231,087
5,195,318
Crude Petroleum & Natural Gas (0.72%)
Texaco, Inc. 27,100 1,432,913
Department Stores (0.51%)
Dillard's, Inc., Class A 35,400 1,004,475
Drugs (4.01%)
Abbott Laboratories 16,600 813,400
American Home Products Corp. 30,800 1,734,425
Johnson & Johnson 23,300 1,954,287
Merck & Co., Inc. 15,600 2,303,925
Pharmacia & Upjohn, Inc. 20,500 1,160,813
7,966,850
Electric Services (2.36%)
Central & Southwest Corp. 64,900 1,780,693
Dominion Resources, Inc. 23,700 1,107,975
Houston Industries, Inc. 32,200 1,034,425
Potomac Electric Power Co. 29,500 776,219
4,699,312
Electrical Industrial Apparatus (0.66%)
Emerson Electric Co. 20,900 1,307,556
Electronic Components &
Accessories (0.39%)
National Semiconductor Corp. 57,800(a) 780,300
Electronic Distribution Equipment (0.56%)
General Electric Co. 10,800 1,102,275
Fats & Oils (0.63%)
Archer Daniels Midland Co. 72,865 $ 1,252,367
Federal & Federally Sponsored
Credit (0.26%)
Federal National Mortgage Association 7,000 518,000
Fire, Marine & Casualty Insurance (3.24%)
Berkshire Hathaway, Inc., Class A 21(a) 1,470,000
Berkshire Hathaway, Inc., Class B 11(a) 24,675
Citigroup, Inc. 41,000 2,029,500
Loews Corp. 15,600 1,532,700
Safeco Corp. 32,400 1,391,175
6,448,050
General Industrial Machinery (0.70%)
Pall Corp. 54,900 1,389,656
Grain Mill Products (0.68%)
Ralston-Ralston Purina Group 41,700 1,350,038
Groceries & Related Materials (0.88%)
Sysco Corp. 63,900 1,753,256
Grocery Stores (1.58%)
Albertson's, Inc. 19,200 1,222,800
American Stores Co. 51,800 1,913,362
3,136,162
Household Appliances (0.17%)
Sunbeam Corp. 47,300 331,100
Industrial Inorganic Chemicals (0.59%)
Eastman Chemical Co. 5,450 243,887
Praxair Inc. 26,600 937,650
1,181,537
Jewlery, Silverware & Plated Ware (0.13%)
Jostens, Inc. 9,700 254,019
Life Insurance (0.57%)
Lincoln National Corp. 13,800 1,129,013
Machinery, Equipment & Supplies (0.64%)
Grainger (W. W.), Inc. 30,400 1,265,400
Management & Public Relations (0.42%)
Dun & Bradstreet Corp. 26,600 839,563
Meat Products (0.39%)
Tyson Foods, Inc. 36,300 771,375
Medical Instruments & Supplies (0.69%)
St. Jude Medical, Inc. 49,850(a) 1,380,222
Medical Services & Health
Insurance (2.16%)
AON Corp. 13,125 726,797
Conseco, Inc. 37,200 1,136,925
Foundation Health Systems, Inc.,
Class A 95,340(a) 1,138,121
Pacificare Health Systems, Inc.,
Class B 16,200(a) 1,287,900
4,289,743
Metal Forgings & Stampings (0.37%)
Newell Co. 17,600 $ 726,000
Miscellaneous Converted Paper (0.72%)
Minnesota Mining & Mfg. Co. 20,000 1,422,500
Miscellaneous Food &
Kindred Products (0.48%)
Universal Foods Corp. 34,400 943,850
Miscellaneous Transportation
Equipment (0.44%)
FMC Corp. 15,500(a) 868,000
Motor Vehicles & Equipment (0.49%)
Ford Motor Co. 16,654 977,382
Oil & Gas Field Services (0.34%)
Diamond Offshore Drilling 28,700 679,831
Paper Mills (2.33%)
Fort James Corp. 26,300 1,052,000
Kimberly Clark Corp. 38,400 2,092,800
Union Camp Corp. 22,200 1,498,500
4,643,300
Petroleum Refining (2.87%)
Amerada Hess Corp. 27,900 1,388,025
Amoco Corp. 18,300 1,104,862
Atlantic Richfield Co. 23,600 1,539,900
Exxon Corp. 22,800 1,667,250
5,700,037
Plastic Materials & Synthetics (0.33%)
Du Pont (E.I.) De Nemour 12,200 647,363
Plumbing & Heating,
Except Electric (0.10%)
Masco Corp. 7,000 201,250
Pulp Mills (0.36%)
Boise Cascade Corp. 22,800 706,800
Rubber & Plastics Footwear (0.47%)
Nike, Inc. 23,000 932,938
Sanitary Services (1.68%)
Browning-Ferris Industries, Inc. 38,800 1,103,375
Waste Management, Inc. 47,705 2,224,245
3,327,620
Security Brokers & Dealers (0.17%)
Bear Stearns Cos., Inc. 8,900 332,638
Telephone Communication (2.56%)
AT&T Corp. 20,500 1,542,625
GTE Corp. 21,800 1,470,137
Motorola, Inc. 24,000 1,465,500
SBC Communications, Inc. 11,500 616,688
5,094,950
Variety Stores (0.33%)
Wal-Mart Stores, Inc. 8,000 651,500
Total Common Stocks 107,795,882
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds (27.14%)
Beverages (0.50%)
Seagram Co., Ltd. Notes;
6.50%; 4/1/2003 $1,000,000 $ 998,812
Blast Furnace & Basic Steel
Products (0.96%)
Carpenter Technology Corp.
Medium-Term Notes;
6.99%; 4/20/2018 1,700,000 1,707,007
Quanex Corp. Convertible
Subordinated Debentures;
6.88%; 6/30/2007 200,000 193,000
1,900,007
Business Credit Institutions (2.30%)
CIT Group Holdings Senior
Medium-Term Notes;
6.38%; 10/1/2002 1,500,000 1,535,085
Ford Motor Credit Co. Notes;
7.75%; 3/15/2005 1,400,000 1,543,184
Heller Financial, Inc. Notes;
6.44%; 10/6/2002 1,500,000 1,508,526
4,586,795
Commercial Banks (1.94%)
NationsBank Corp. Subordinated
Notes; 7.80%; 9/15/2016 1,700,000 1,949,232
J.P. Morgan & Co., Inc.
Subordinated Notes;
6.70%; 11/1/2007 1,800,000 1,901,376
3,850,608
Communications Equipment (0.75%)
Motorola, Inc. Debentures;
7.50%; 5/15/2025 1,300,000 1,480,326
Computer & Office Equipment (1.44%)
IBM Corp. Debentures;
7.00%; 10/30/2025 1,700,000 1,885,190
Seagate Technology, Inc.
Senior Notes;
7.37%; 3/1/2007 1,000,000 983,712
2,868,902
Consumer Products (1.03%)
Philip Morris Cos., Inc. Notes;
7.25%; 9/15/2001 1,000,000 1,041,222
6.15%; 3/15/2000 1,000,000 1,007,530
2,048,752
Department Stores (0.73%)
Dillards, Inc.
Notes; 7.38%; 6/1/2006 $ 670,000 $ 709,862
Fred Meyer, Inc. Senior Notes;
7.38%; 3/1/2005 700,000 741,229
1,451,091
Farm & Garden Machinery (0.93%)
Deere & Co. Senior Debentures;
8.50%; 1/9/2022 1,500,000 1,845,600
Finance Services (0.52%)
Lehman Brothers, Inc.
Senior Subordinated Notes;
7.25%; 4/15/2003 1,000,000 1,030,059
Fire, Marine & Casualty
Insurance (0.52%)
St. Paul Cos., Inc.
Medium Term Notes; Series C
6.38%; 12/15/2008 1,000,000 1,028,335
Forest Products (0.76%)
Weyerhaeuser Co. Debentures;
6.95%; 10/1/2027 1,500,000 1,515,444
General Government, NEC (0.82%)
Province of Quebec, Canada
Debentures; 7.00%; 1/30/2007 1,500,000 1,621,995
Miscellaneous Investing (1.27%)
Federal Realty Investment Trust
Notes; 8.88%; 1/15/2000 1,000,000 1,031,655
Kimco Realty Corp. Senior Notes;
6.50%; 10/1/2003 1,525,000 1,490,906
2,522,561
Mortgage Bankers & Brokers (0.86%)
Countrywide Funding Corp.
Medium-Term Notes;
6.54%; 4/14/2000 1,700,000 1,716,254
Motion Picture Production &
Services (0.38%)
Viacom, Inc. Guaranteed Senior Notes;
7.75%; 6/1/2005 700,000 764,343
Motor Vehicles & Equipment (1.76%)
Chrysler Corp. Debentures;
7.45%; 3/1/2027 1,800,000 2,076,359
General Motors Corp. Debentures;
7.70%; 4/15/2016 1,250,000 1,417,384
3,493,743
Paper & Paper Products (0.39%)
Boise Cascade Office Products
Corp. Notes; 7.05%; 5/15/2005 $ 800,000 $ 770,558
Paper Mills (0.51%)
International Paper Co. Notes;
6.88%; 7/10/2000 1,000,000 1,013,824
Personal Credit Institutions (1.31%)
Associates Corp. of North America
Senior Notes; 6.45%; 10/15/2001 1,500,000 1,538,060
General Electric Capital Corp. Notes;
6.50%; 11/1/2006 1,000,000 1,062,407
2,600,467
Petroleum & Petroleum
Products (0.78%)
Enron Corp. Notes;
6.75%; 9/1/2004 1,500,000 1,543,050
Plumbing & Heating, Except
Electricity (0.52%)
Masco Corp. Notes; 6.13%; 9/15/20031,000,000 1,024,273
Railroads (1.57%)
Norfolk Southern Debentures;
9.00%; 3/1/2021 1,500,000 1,937,961
Union Pacific Corp. Notes;
7.00%; 6/15/2000 1,160,000 1,181,896
3,119,857
Security Brokers & Dealers (1.86%)
Bear Stearns Cos., Inc. Senior Notes;
6.13%; 2/1/2003 1,600,000 1,605,110
Lehman Brothers, Inc. Senior
Subordinated Notes;
6.13%; 2/1/2001 1,000,000 998,594
Morgan Stanley Group, Inc.
Debentures; 8.88%; 10/15/2001 1,000,000 1,080,891
3,684,595
Surety Insurance (1.92%)
Allstate Corp. Debentures;
6.75%; 5/15/2018 2,650,000 2,760,118
MBIA, Inc. Debentures;
7.00%; 12/15/2025 1,000,000 1,045,401
3,805,519
Trucking & Courier Services,
Except Air (0.03%)
Builders Transport, Inc. Convertible
Subordinated Debentures;
6.50%; 5/1/2011 306,000(b) 65,790
Trusts (0.78%)
Salomon Smith Barney Holdings, Inc.
Notes; 7.98%; 3/1/2000 1,500,000 1,539,906
Total Bonds 53,891,466
- --------------------------------------------------------------------------------
Principal
Type Rate Maturity Amount Value
- --------------------------------------------------------------------------------
Federal National Mortgage Association (FNMA)
Certificates (0.76%)
FNMA 6.50% 8/1/2028 $1,494,283 $ 1,504,569
Federal Home Loan Mortgage Corporation (FHLMC)
Certificates (3.68%)
FHLMC 6.00 12/1/2029 1,000,000 987,714
FHLMC 6.50 9/1/2027-2/1/2028 4,552,306 4,586,379
FHLMC 7.00 12/1/27 1,704,526 1,738,068
Total FHLMC Certificates 7,312,161
Government National Mortgage Association (GNMA)
Certificates (2.66%)
GNMA II 6.00 9/20/2026-7/20/2028 5,360,653 5,286,820
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Asset-Backed Securities (6.25%)
Mortgage Pass-Through Securities (3.96%)
Chase Commercial Mortgage Securities
Corp. Mortgage Pass-Through
Cert., Series 1998-1, Class B;
6.56%; 5/15/2008 $2,800,000 $ 2,876,580
DLJ Commercial Mortgage Corp.,
Mortgage Pass-Through Cert.,
Series 1998-CF1, Class A-1B;
6.41%; 2/18/2008 2,900,000 2,979,228
LB Commercial Mortgage Trust,
Mortgage Pass-Through Cert.,
Series 1998-C4, Class A-1B;
6.21%; 10/15/2008 2,000,000 2,007,500
7,863,308
Motor Vehicles & Equipment (1.27%)
GMAC Commercial Mortgage Securities,
Inc., Mortgage Pass-Through Cert.,
Series 1998-C2, Class C; 6.50%;
8/15/2008 2,500,000 2,523,175
Personal Credit Institutions (1.02%)
Chase Manhattan Credit Card Master
Trust Asset-Backed Cert.
Series 97-2, Class A; 6.30%; 4/15/2003
$2,000,000 2,033,020
Total Asset-Backed Securities 12,419,503
Commercial Paper (6.41%)
Business Credit Institutions (1.31%)
American Express Credit Corp.;
6.10%; 1/5/1999 $2,600,000 $2,598,239
Personal Credit Institutions (5.10%)
Investment in Joint Trade Account;
Associates Corp.;
5.20%; 1/4/1999 8,949,325 8,949,325
Ford Motor Credit Co.;
4.91%; 1/7/1999 675,000 674,448
Household Finance Corp.;
6.00%; 1/4/1999 515,000 514,742
10,138,515
Total Commercial Paper 12,736,754
Total Portfolio Investments (101.18%) 200,947,155
Liabilities, net of cash and receivables (-1.18%) (2,343,861)
Total Net Assets (100.00%) $198,603,294
(a) Non-income producing security - No dividend paid during the past twelve
months.
(b) Non-income producing security - Security in default.
<PAGE>
BOND ACCOUNT
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds (94.87%)
Air Transportation, Scheduled (0.69%)
Federal Express Corp.,
Pass-Through Cert.;
7.96%; 3/28/2017 $ 282,311 $ 304,150
7.58%; 7/2/2019 500,000 538,470
842,620
Aircraft & Parts (0.27%)
Textron, Inc. Medium-Term Notes,
Series C; 9.55%; 3/19/2001 300,000 324,717
Bakery Products (0.80%)
Nabisco, Inc. Notes;
7.05%; 7/15/2007 950,000 981,532
Beverages (1.41%)
Joseph E. Seagram & Sons
Guaranteed Debentures;
8.88%; 9/15/2011 1,500,000 1,718,925
Broadwoven Fabric Mills,
Cotton (1.31%)
Burlington Industries, Inc. Notes;
7.25%; 9/15/2005 $1,500,000 $ 1,596,855
Business Credit Institutions (0.82%)
Case Credit Corp. Medium-Term Notes;
5.95%; 8/1/2000 1,000,000 1,000,836
Cable & Other Pay TV
Services (2.16%)
CSC Holdings, Inc. Senior
Notes; 7.25%; 7/15/2008 1,500,000 1,498,950
TCI Communications, Inc. Senior
Notes; 8.00%; 8/1/2005 1,000,000 1,130,468
2,629,418
Cash Grains (0.25%)
Aktiebolaget SKF Senior Notes;
7.63%; 7/15/2003 300,000 314,953
Combination Utility Services (5.06%)
MidAmerican Energy Co.
Medium-Term Notes;
6.38%; 6/15/2006 3,000,000 3,078,891
Public Service Electric & Gas
Medium-Term Notes;
8.16%; 5/26/2009 250,000 294,271
Puget Sound Power & Light Co.
First Mortgage Medium-Term Notes,
Series A; 7.75%; 2/1/2007 2,500,000 2,801,070
6,174,232
Commercial Banks (2.97%)
NationsBank Corp. Subordinated
Notes; 6.38%; 2/15/2008 3,500,000 3,639,447
Communications Equipment (1.86%)
Qwest Communications International
Senior Notes; 7.50%; 11/1/2008 2,200,000(a) 2,271,500
Computer & Office Equipment (1.61%)
Seagate Technology, Inc.
Senior Notes;
7.37%; 3/1/2007 2,000,000 1,967,424
Consumer Products (0.68%)
Philip Morris Cos. Notes;
6.80%; 12/1/2003 500,000 523,586
RJR Nabisco Capital Corp. Senior
Notes; 8.75%; 4/15/2004 300,000 311,625
835,211
Copper Ores (0.25%)
Asarco, Inc. Notes; 7.38%; 2/1/2003 300,000 303,317
Crude Petroleum & Natural Gas (0.66%)
Occidental Petroleum Corp.
Medium-Term Notes;
9.73%; 6/15/2001 250,000 268,240
Union Oil of California
Medium-Term Notes;
7.77%; 4/19/2005 500,000 535,166
803,406
Department Stores (3.36%)
Fred Meyer, Inc. Senior Notes;
7.38%; 3/1/2005 $1,500,000 $1,588,349
Harcourt General, Inc. Subordinated
Notes; 9.50%; 3/15/2000 350,000 361,489
J.C. Penney Co., Inc. Medium-Term
Notes, Series A;
6.88%; 10/15/2015 1,500,000 1,513,305
Sears Roebuck Co. Medium-Term
Notes; 9.05%; 2/6/2012 500,000 633,771
4,096,914
Drug Stores & Proprietary
Stores (1.28%)
Rite Aid Corp. Senior Debentures;
6.88%; 8/15/2013 1,500,000 1,555,610
Electric Services (1.71%)
Commonwealth Edison Co.
Debentures; 6.95%; 7/15/2018 1,000,000 1,040,383
Southern California Edison Co.
Notes; 6.38%; 1/15/2006 1,000,000 1,043,250
2,083,633
Engines & Turbines (0.83%)
Brunswick Corp. Debentures;
7.38%; 9/1/2023 1,000,000 1,013,698
Fabricated Rubber Products,
NEC (0.23%)
M.A. Hanna Co. Senior Notes;
9.38%; 9/15/2003 250,000 282,972
Farm & Garden Machinery (1.24%)
Case Corp. Notes; 7.25%; 1/15/2016 1,500,000 1,509,648
Federal & Federally Sponsored
Credit (0.84%)
FNMA Benchmark Notes;
5.75%; 4/15/2003 1,000,000 1,027,154
Gas Production & Distribution (0.65%)
Enron Corp. Notes;
7.13%; 5/15/2007 750,000 789,044
General Government, NEC (0.97%)
Ontario Hydro Debentures;
7.45%; 3/31/2013 500,000 577,765
Province of Saskatchewan, Canada
Global Notes; 8.00%; 2/1/2013 500,000 601,220
1,178,985
General Industrial Machinery (0.85%)
Timken Co. Medium-Term Notes;
6.20%; 1/15/2008 1,000,000 1,032,006
Gold & Silver Ores (0.59%)
Placer Dome, Inc. Notes;
7.13%; 6/15/2007 750,000 714,184
Grain Mill Products (0.92%)
Ralston Purina Co. Debentures;
7.75%; 10/1/2015 1,000,000 1,116,341
Groceries & Related Products (1.26%)
Supervalu, Inc. Medium-Term Notes,
Series B; 6.49%; 12/12/2005 $ 1,500,000 $1,536,276
Grocery Stores (1.84%)
American Stores Co. Bonds;
8.00%; 6/1/2026 1,000,000 1,151,834
Food Lion, Inc. Notes;
7.55%; 4/15/2007 1,000,000 1,096,528
2,248,362
Highway & Street Construction (1.45%)
Foster Wheeler Corp. Notes;
6.75%; 11/15/2005 1,900,000 1,772,341
Hospitals (0.44%)
Columbia/HCA Healthcare Corp.
Medium-Term Notes;
8.70%; 2/10/2010 500,000 539,065
Hotels & Motels (3.71%)
Hilton Hotels Corp. Notes;
7.70%; 7/15/2002 1,500,000 1,526,879
Marriott International, Inc. Notes;
6.63%; 11/15/2003 3,000,000(a) 2,996,343
4,523,222
Household Furniture (0.44%)
Masco Corp. Debentures;
7.13%; 8/15/2013 500,000 532,718
Industrial Inorganic Chemicals (1.46%)
FMC Corp.
Senior Notes; 6.38%; 9/1/2003 200,000 195,259
Debentures; 7.75%; 7/1/2011 1,500,000 1,587,260
1,782,519
Life Insurance (0.89%)
John Hancock Mutual Life Insurance
Co. Surplus Notes;
7.38%; 2/15/2024 1,000,000(a) 1,083,954
Lumber & Construction
Materials (1.41%)
Crane Co. Notes; 8.50%; 3/15/2004 1,524,000 1,722,783
Machinery, Equipment &
Supplies (0.64%)
AAR Corp. Notes; 7.25%; 10/15/2003 750,000 780,967
Management & Public Relations (0.86%)
ServiceMaster Co. Ltd. Notes;
6.95%; 8/15/2007 1,000,000 1,049,318
Millwork, Plywood & Structural
Members (0.10%)
Georgia-Pacific Corp.
Debentures; 9.50%; 12/1/2011 100,000 125,164
Miscellaneous Chemical
Products (0.38%)
Ferro Corp. Senior Debentures;
7.63%; 5/1/2013 400,000 459,519
Miscellaneous Investing (3.09%)
First Industrial LP Medium-Term
Notes; 7.00%; 12/1/2006 $2,000,000 $ 1,981,456
Washington REIT Senior Notes;
7.25%; 8/13/2006 1,000,000 1,007,258
Weingarten Realty Investors
Medium-Term Notes;
7.29%; 5/23/2005 750,000 782,537
3,771,251
Miscellaneous Metal Ores (0.87%)
Cyprus Amax Minerals Notes;
7.38%; 5/15/2007 650,000 668,748
Cyprus Minerals Co. Notes;
10.13%; 4/1/2002 350,000 391,125
1,059,873
Mortgage Bankers & Brokers (1.67%)
Chase Commercial Mortgage
Securities Corp. Class C Notes;
6.60%; 12/19/2007 2,000,000 2,032,320
Motor Vehicles & Equipment (0.74%)
TRW, Inc. Medium-Term Notes;
9.25%; 12/30/2011 700,000 906,963
Newpapers (1.38%)
News America Holdings, Inc.
Guaranteed Senior Notes;
8.50%; 2/15/2005 1,500,000 1,684,724
Oil & Gas Field Services (2.12%)
Petroleum Geo-Services ASA
Notes; 7.50%; 3/31/2007 2,000,000 2,126,988
R&B Falcon Senior Notes;
6.75%; 4/15/2005 500,000 455,753
2,582,741
Operative Builders (1.66%)
Pulte Corp.
Senior Notes; 8.38%; 8/15/2004 1,000,000 1,057,119
Notes; 7.63%; 10/15/2017 1,000,000 966,725
2,023,844
Paper & Paper Products (1.18%)
Boise Cascade Office Products Corp.
Notes; 7.05%; 5/15/2005 1,500,000 1,444,797
Paper Mills (1.65%)
Bowater, Inc. Debentures;
9.38%; 12/15/2021 200,000 254,033
Champion International Corp. Notes;
9.88%; 6/1/2000 250,000 263,314
7.10%; 9/1/2005 875,000 910,325
Potlatch Corp. Medium-Term
Notes; 8.75%; 1/14/2022 500,000 584,346
2,012,018
Personal Credit Institutions (5.11%)
Commercial Credit Co. Notes;
6.75%; 7/1/2007 $2,000,000 $2,125,228
General Motors Acceptance Corp.
Medium-Term Notes;
8.25%; 2/24/2004 500,000 558,220
Notes; 6.63%; 10/15/2005 500,000 527,316
Household Finance Corp.
5.88%; 11/1/2002 3,000,000 3,019,710
6,230,474
Petroleum Refining (3.38%)
Ashland, Inc. Medium-Term Notes
Series F; 8.54%; 1/13/2005 250,000 278,592
7.71%; 5/11/2007 500,000 544,507
7.73%; 7/15/2013 250,000 278,951
Phillips Petroleum Co. Notes;
9.38%; 2/15/2011 500,000 642,433
Sun Co., Inc.
Notes; 7.13%; 3/15/04 200,000 209,775
Debentures; 9.00%; 11/1/2024 500,000 616,069
Tosco Corp. Notes; 7.25%; 1/1/07 1,500,000 1,557,098
4,127,425
Plastic Materials & Synthetics (1.62%)
Geon Co. Notes;
6.88%; 12/15/2005 2,000,000 1,974,690
Pulp Mills (0.17%)
International Paper Co. Medium-Term
Notes; 9.70%; 8/15/2000 200,000 211,596
Railroads (1.66%)
Union Pacific Corp.
Notes; 6.40%; 2/1/2006 1,000,000 1,011,966
Debentures; 7.00%; 2/1/2016 1,000,000 1,008,134
2,020,100
Rental of Railroad Cars (0.85%)
Gatx Capital Corp. Medium-Term
Notes, Series C; 6.86%;
10/13/2005 1,000,000 1,035,732
Sanitary Services (1.33%)
Laidlaw, Inc. Senior Notes;
7.88%; 4/15/2005 1,045,000 1,097,642
WMX Technologies, Inc. Notes;
7.00%; 10/15/2006 500,000 527,735
1,625,377
Search & Navigation Equipment (1.62%)
Raytheon Co. Notes;
6.40%; 12/15/2018 2,000,000(a) 1,974,918
Security Brokers & Dealers (3.85%)
Bear Stearns Co., Inc. Senior Notes;
7.00%; 3/1/2007 2,500,000 2,601,223
Lehman Brothers, Inc.
Senior Subordinated Notes;
7.38%; 1/15/2007 2,000,000 2,093,922
4,695,145
Telephone Communication (9.55%)
Airtouch Communications, Inc. Notes;
6.65%; 5/1/2008 $2,500,000 $ 2,651,735
GTE Corp. Notes; 6.36%; 4/15/2006 2,500,000 2,628,723
Sprint Capital Corp. Notes;
5.70%; 11/15/2003 3,000,000 2,999,508
8.13%; 7/15/2002 500,000 544,789
WorldCom, Inc. Notes;
7.75%; 4/1/2007 2,500,000 2,820,215
11,644,970
Variety Stores (0.16%)
Dayton-Hudson Corp. Debentures;
9.63%; 2/1/2008 150,000 189,841
Water Supply (2.06%)
Marlin Water Trust
Senior Secured Notes;
7.09%; 12/15/2001 2,500,000(a) 2,511,643
Total Bonds 115,721,224
Asset-Backed Securities (1.74%)
Security Brokers & Dealers (1.74%)
Merrill Lynch Mortgage Investors, Inc.
Collateralized Mortgage-Backed
Security, Series 95-C3, Class C;
7.34%*; 12/26/2025 2,000,000 2,117,020
Commercial Paper (1.40%)
Personal Credit Institutions (1.40%)
Investment in Joint Trade Account;
Associates Corp.; 5.20%; 1/4/19991,704,934 1,704,934
Total Portfolio Investments (98.01%) 119,543,178
Cash and receivables, net of liabilities (1.99%) 2,429,597
Total Net Assets (100.00%) $121,972,775
(a) Restricted security - See Note 4 to the financial statements.
* Variable rate.
<PAGE>
CAPITAL VALUE ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (97.50%)
Bakery Products (1.43%)
Sara Lee Corp. 196,200 $ 5,530,388
Beverages (4.43%)
Anheuser-Busch Cos., Inc. 135,000 8,859,375
Pepsico, Inc. 200,800 8,220,250
17,079,625
Books (0.51%)
McGraw-Hill Cos., Inc. 19,300 1,966,187
Combination Utility Services (1.10%)
Montana Power Co. 75,000 $ 4,242,188
Commercial Banks (18.04%)
Bank One Corp. 152,434 7,783,661
BankAmerica Corp. 101,800 6,120,725
BankBoston Corp. 76,600 2,982,612
Chase Manhattan Corp. 160,000 10,890,000
Comerica, Inc. 142,500 9,716,719
First Union Corp. 166,420 10,120,416
Keycorp 206,000 6,592,000
Summit Bancorp. 175,300 7,658,419
Union Planters Corp. 170,600 7,730,313
69,594,865
Commercial Printing (0.87%)
R. R. Donnelley & Sons Co. 77,000 3,373,562
Communications Equipment (2.48%)
Harris Corp. 261,500 9,577,438
Computer & Office Equipment (1.50%)
Hewlett-Packard Co. 33,400 2,281,638
International Business Machines Corp. 19,000 3,510,250
5,791,888
Crude Petroleum & Natural Gas (1.08%)
Texaco, Inc. 78,800 4,166,550
Department Stores (2.42%)
Sears, Roebuck & Co. 219,800 9,341,500
Drugs (7.25%)
Abbott Laboratories 51,900 2,543,100
American Home Products Corp. 174,100 9,804,006
Merck & Co., Inc. 37,000 5,464,438
Pharmacia & Upjohn, Inc. 179,000 10,135,875
27,947,419
Electric Lighting & Wiring
Equipment (1.61%)
Cooper Industries, Inc. 130,200 6,208,912
Electric Services (3.08%)
Dominion Resources, Inc. 44,400 2,075,700
FPL Group, Inc. 38,500 2,372,563
Houston Industries, Inc. 231,000 7,420,875
11,869,138
Electrical Industrial Apparatus (0.88%)
Emerson Electric Co. 54,180 3,389,636
Electronic Distribution Equipment (0.66%)
General Electric Co. 25,000 2,551,562
Fats & Oils (0.91%)
Archer Daniels Midland Co. 203,973 3,505,786
Grain Mill Products (2.93%)
Kellogg Co. 250,200 8,538,075
Ralston-Ralston Purina Group 85,800 2,777,775
11,315,850
Greeting Cards (1.91%)
American Greetings Corp. 179,000 7,350,187
Groceries & Related Products (1.97%)
Sysco Corp. 277,200 $ 7,605,675
Grocery Stores (1.15%)
American Stores Co. 120,000 4,432,500
Life Insurance (2.59%)
American General Corp. 128,000 9,984,000
Machinery, Equipment &
Supplies (2.54%)
Grainger (W. W.), Inc. 235,100 9,786,038
Management & Public Relations (1.72%)
Dun & Bradstreet Corp. 209,900 6,624,969
Meat Products (0.73%)
Tyson Foods, Inc. 132,000 2,805,000
Medical Instruments & Supplies (0.38%)
St. Jude Medical, Inc. 53,100(a) 1,470,206
Medical Services & Health
Insurance (0.67%)
AON Corp. 46,575 2,579,091
Metal Cans and Shipping
Containers (3.28%)
Ball Corp. 80,200 3,669,150
Crown Cork & Seal Co., Inc. 291,600 8,984,925
12,654,075
Metal Forgings & Stamping (1.77%)
Newell Co. 165,500 6,826,875
Miscellaneous Converted
Paper Products (4.92%)
Avery Dennison Corp. 244,700 11,026,794
Minnesota Mining & Mfg. Co. 111,900 7,958,887
18,985,681
Miscellaneous Food &
Kindred Products (0.24%)
Universal Foods Corp. 34,400 943,850
Miscellaneous Manufacturers (0.00%)
Tyco International Ltd. 3 226
Paper Mills (2.78%)
Kimberly Clark Corp. 196,900 10,731,050
Petroleum Refining (5.35%)
Amoco Corp. 4,000 241,500
Atlantic Richfield Co. 102,400 6,681,600
Chevron Corp. 100,000 8,293,750
Exxon Corp. 74,000 5,411,250
20,628,100
Plumbing & Heating,
Except Electric (2.21%)
Masco Corp. 296,400 $ 8,521,500
Rental of Railroad Cars (2.16%)
Gatx Corp. 220,000 8,332,500
Sanitary Services (2.33%)
Browning-Ferris Industries, Inc. 316,000 8,986,250
Telephone Communication (7.62%)
AT&T Corp. 121,500 9,142,875
SBC Communications, Inc. 195,384 10,477,467
U.S. West, Inc. 151,000 9,758,375
29,378,717
Total Common Stocks 376,078,984
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Commercial Paper (5.10%)
Business Credit Institutions (0.21%)
Household Finance Corp.;
6.00%; 1/4/1999 $ 805,000 $ 804,597
Personal Credit Institutions (4.89%)
Investment in Joint Trade Account,
Associates Corp.; 5.20%;
1/4/1999 18,157,736 18,157,736
American Express Credit Corp.;
6.10%; 1/5/1999 715,000 714,515
18,872,251
Total Commercial Paper 19,676,848
Total Portfolio Investments (102.60%) 395,755,832
Liabilities, net of cash and receivables (-2.60%) (10,032,039)
Total Net Assets (100.00%) $385,723,793
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
GOVERNMENT SECURITIES ACCOUNT
- --------------------------------------------------------------------------------
Principal
Type Rate Maturity Amount Value
- --------------------------------------------------------------------------------
Government National Mortgage Association (GNMA)
Certificates (25.47%)
GNMA I 6.50% 5/15/2026-8/15/2028 $ 2,837,339 $ 2,865,572
GNMA I 7.00 1/15/2024-5/15/2028 5,526,961 5,655,573
GNMA I 7.50 1/15/2027-2/15/2027 1,524,432 1,571,346
GNMA I 8.00 10/15/2016-6/15/2017 919,505 963,982
GNMA II 6.00 5/20/2024-7/20/2028 21,929,719 21,628,118
GNMA II 6.50 12/15/2025-2/20/2026 3,297,705 3,312,785
Total GNMA Certificates 35,997,376
Federal National Mortgage Association (FNMA)
Certificates (15.12%)
FNMA 5.50 5/1/2024 1,052,982 1,019,583
FNMA 6.00 11/1/2023-11/1/2028 5,396,876 5,325,946
FNMA 6.50 11/1/2023-9/1/2028 8,934,800 8,996,149
FNMA 7.00 8/1/2023-11/1/2027 3,816,949 3,895,661
FNMA 7.50 4/1/2022-7/1/2027 1,306,008 1,341,776
FNMA Gold 6.50 8/15/2025 774,921 779,781
Total FNMA Certificates 21,358,896
Federal Home Loan Mortgage Corporation (FHLMC)
Certificates (28.04%)
FHLMC 6.50% 6/1/2018 966,882 977,768
FHLMC 7.50 3/1/2023 176,603 179,867
FHLMC Gold 5.50 2/15/2024-3/1/2024 1,210,027 1,171,721
FHLMC Gold 6.00 12/1/2023-1/1/2026 2,477,266 2,449,930
FHLMC Gold 6.50 4/1/2024-12/1/2028 16,796,904 16,922,070
FHLMC Gold 7.00 9/1/2023-10/1/2028 15,406,361 15,712,134
FHLMC Gold 7.50 2/1/2022-12/1/2027 2,157,980 2,216,697
Total FHLMC Certificates 39,630,187
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Student Loan Marketing Association (SLMA)
Certificates (14.17%)
Student Loan Marketing Association
Debentures;
7.30%; 8/1/2012 $10,000,000 $11,756,880
8.47%; 12/1/2008 1,000,000 1,240,465
9.15%; 12/1/2004 1,200,000 1,437,648
Global Notes;
5.89%; 11/17/1999 1,500,000 1,511,161
6.05%; 9/14/2000 1,000,000 1,016,710
Medium-Term Notes;
5.57%; 3/17/2000 1,000,000 1,006,640
Notes;
6.13%; 12/1/2005 1,560,000 1,642,742
9.25%; 6/1/2004 350,000 415,218
Total SLMA Certificates 20,027,464
Private Export Funding Corporation (PEFCO)
Certificates (13.90%)
Private Export Funding Corp.
Notes;
7.90%; 3/31/2000 $1,550,000 $ 1,603,590
8.40%; 7/31/2001 1,000,000 1,080,115
Secured Notes;
6.62%; 10/1/2005 2,000,000 2,155,278
9.45%; 12/31/1999 5,200,000 5,422,040
Series KK, Senior Secured Notes;
8.75%; 6/30/2003 1,123,000 1,278,696
Series SS, Senior Secured Notes;
5.50%; 3/15/2001 3,375,000 3,407,427
5.80%; 2/1/2004 2,200,000 2,248,323
7.03%; 10/31/2003 2,275,000 2,449,256
Total PEFCO Certificates 19,644,725
Other Federal Agencies (2.11%)
Agency-Backed Bonds (2.11%)
Tennessee Valley Authority Bonds;
6.50%; 8/20/2001 1,000,000 1,035,868
Tennessee Valley Authority
Global Notes; 0.00%; 5/1/2000 1,000,000(a) 937,549
Tennessee Valley Authority
Notes; 5.28%; 9/14/2001 1,000,000 1,005,743
Total Other Federal Agencies 2,979,160
Federal Agency Short-Term Obligations (1.17%)
Federal & Federally Sponsored
Credit (1.17%)
Investment in Joint Trading Account,
Federal Home Loan Bank System;
4.30%; 1/4/1999 1,646,874 1,646,284
Total Portfolio Investments (99.98%) 141,284,092
Cash and receivables, net of liabilities (0.02%) 33,134
Total Net Assets (100.00%) $141,317,226
(a) Non-income producing security - zero-coupon bond.
<PAGE>
GROWTH ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (97.01%)
Advertising (1.53%)
Interpublic Group of Cos., Inc. 50,000 $ 3,987,500
Beverages (2.47%)
Coca-Cola Co. 9,600 642,000
Pepsico, Inc. 140,900 5,768,094
6,410,094
Carpets & Rugs (0.51%)
Shaw Industries, Inc. 54,800 1,328,900
Cash Grains (0.93%)
Pioneer Hi-Bred International, Inc. 89,700 2,421,900
Commercial Banks (10.62%)
Bank One Corp. 110,300 5,632,194
BankAmerica Corp. 60,751 3,652,654
Chase Manhattan Corp. 78,100 5,315,681
Firstar Corp. of Wisconsin 24,852 2,317,449
FirstMerit Corp. 43,800 1,177,125
National City Corp. 22,980 1,666,050
US Bancorp. 164,000 5,822,000
Wells Fargo Co. 50,000 1,996,875
27,580,028
Communications Equipment (3.56%)
General Instrument Corp. 82,700(a) 2,806,631
Lucent Technologies 40,000 4,400,000
Northern Telecom Ltd. 40,800 2,045,100
9,251,731
Computer & Data Processing (2.71%)
GTECH Holdings Corp. 82,100(a) 2,103,813
Microsoft Corp. 35,600(a) 4,937,275
7,041,088
Computer & Office Equipment (6.46%)
Automatic Data Processing, Inc. 54,800 4,394,275
Ceridian Corp. 81,800(a) 5,710,663
Compaq Computer Corp. 31,752 1,331,599
Hewlett-Packard Co. 30,000 2,049,375
International Business Machines Corp. 11,000 2,032,250
Pitney Bowes, Inc. 19,200 1,268,400
16,786,562
Consumer Products (1.57%)
Philip Morris Cos., Inc. 76,000 4,066,000
Department Stores (1.37%)
Federated Department Stores 40,000(a) 1,742,500
May Department Stores 30,000 1,811,250
3,553,750
Drugs (16.16%)
American Home Products Corp. 107,200 $ 6,036,700
Bristol-Myers Squibb Co. 30,800 4,121,425
Forest Laboratories, Inc. 71,200(a) 3,786,950
Genzyme Corp. - General Division 43,300(a) 2,154,175
Johnson & Johnson 71,400 5,988,675
Lilly (Eli) & Co. 43,600 3,874,950
Merck & Co., Inc. 38,000 5,612,125
Pharmacia & Upjohn, Inc. 104,000 5,889,000
Smithkline Beecham PLC ADR 65,100 4,524,450
41,988,450
Eating & Drinking Places (0.22%)
McDonald's Corp. 7,600 582,350
Electrical Goods (0.35%)
Avnet, Inc. 15,000 907,500
Electronic Components &
Accessories (4.06%)
Intel Corp. 57,800 6,852,913
Linear Technology Corp. 41,200 3,689,975
10,542,888
Electronic Distribution Equipment (0.43%)
General Electric Co. 10,900 1,112,481
Federal & Federally Sponsored
Credit (3.23%)
Federal Home Loan Mortgage Corp. 42,500 2,738,594
Federal National Mortgage Association 76,500 5,661,000
8,399,594
Fire, Marine & Casualty
Insurance (2.13%)
Citigroup, Inc. 111,598 5,524,101
Footwear, Except Rubber (0.62%)
Stride Rite Corp. 184,700 1,616,125
General Industrial Machinery (3.59%)
Ingersoll-Rand Co. 45,450 2,133,309
Tyco International Ltd. 95,200 7,181,650
9,314,959
Grain Mill Products (2.74%)
General Mills, Inc. 20,000 1,555,000
Ralston-Ralston Purina Group 171,700 5,558,787
7,113,787
Groceries & Related Products (1.59%)
Sysco Corp. 151,000 4,143,063
Grocery Stores (0.21%)
Casey's General Stores, Inc. 42,400 552,525
Hospitals (1.23%)
Humana, Inc. 49,600(a) 883,500
Universal Health Services, Inc., Class B44,500(a) 2,308,437
3,191,937
Hotels & Motels (2.16%)
Marriott International, Inc., Class A193,900 5,623,100
Investment Offices (0.96%)
AMVESCAP PLC Sponsored ADR 65,000 $ 2,502,500
Lumber & Other
Building Materials (2.11%)
Home Depot, Inc. 89,600 5,482,400
Medical Instruments & Supplies (2.52%)
Becton, Dickinson & Co. 74,000 3,158,875
Boston Scientific Corp. 126,200(a) 3,383,738
6,542,613
Medical Services &
Health Insurance (2.01%)
AON Corp. 25,950 1,436,981
Foundation Health Systems, Inc.,
Class A 105,000(a) 1,253,438
Pacificare Health Systems, Inc.,
Class B 11,011(a) 875,374
Torchmark Corp. 10,000 353,125
United Healthcare Corp. 30,000 1,291,875
5,210,793
Miscellaneous Investing (2.00%)
Cendant Corp. 273,108(a) 5,206,121
Miscellaneous Converted
Paper Products (0.44%)
Minnesota Mining & Mfg. Co. 16,100 1,145,112
Miscellaneous Fabricated
Metal Products (0.50%)
Parker-Hannifin Corp. 39,750 1,301,813
Miscellaneous Food &
Kindred Products (0.50%)
Bestfoods 24,200 1,288,650
Miscellaneous Plastics
Products, NEC (0.13%)
Rubbermaid, Inc. 10,900 342,669
Miscellaneous Shopping
Goods Stores (0.17%)
Toys `R' Us, Inc. 26,000(a) 438,750
Motor Vehicles & Equipment (0.71%)
Dana Corp. 45,100 1,843,462
Oil & Gas Field Service (0.89%)
Schlumberger Ltd. 50,000 2,306,250
Petroleum Refining (1.37%)
Atlantic Richfield Co. 18,200 1,187,550
Exxon Corp. 32,300 2,361,938
3,549,488
Plumbing & Heating,
Except Electric (0.84%)
Masco Corp. 76,200 2,190,750
Radio, Television &
Computer Stores (0.16%)
Tandy Corp. 10,000 411,875
Refrigeration & Service
Machinery (0.30%)
Tecumseh Products Co. 16,800 $ 783,300
Sanitary Services (0.62%)
Browning-Ferris Industries, Inc. 32,000 910,000
Waste Management, Inc. 15,225 709,866
1,619,866
Soap, Cleaners & Toilet Goods (2.60%)
Colgate-Palmolive Co. 25,500 2,368,312
Ecolab, Inc. 121,200 4,385,925
6,754,237
Sugar & Confectionery Products (0.86%)
Wrigley (Wm.) Jr. Co. 25,000 2,239,062
Telephone Communication (5.00%)
AT&T Corp. 42,435 3,193,234
MCI Worldcom, Inc. 111,295(a) 7,985,416
Motorola, Inc. 29,800 1,819,663
12,998,313
Toys & Sporting Goods (0.48%)
Mattel, Inc. 54,250 1,237,578
Variety Stores (0.65%)
Wal-Mart Stores, Inc. 20,800 1,693,900
Women's & Children's
Undergarments (0.74%)
Warnaco Group 76,100 1,921,525
Total Common Stocks 252,051,440
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Commercial Paper (3.42%)
Personal Credit Institutions (3.42%)
Investment in Joint Trade Account,
Associates Corp.;
5.20%; 1/4/1999 $8,900,087 $ 8,900,087
Total Portfolio Investments (100.43%) 260,951,527
Liabilities, net of cash and receivables (-0.43%) (1,123,914)
Total Net Assets (100.00%) $259,827,613
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
HIGH YIELD ACCOUNT
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Bonds (92.25%)
Advertising (3.81%)
Lamar Advertising Co.
Senior Subordinated Notes;
9.63%; 12/1/2006 $500,000 $ 535,000
Aircraft & Parts (1.89%)
BE Aerospace Senior
Subordinated Notes; 9.50%;
11/1/2008 250,000(a) 265,000
Cable & Other Pay TV
Services (6.71%)
Century Communications Senior
Notes; 8.75%; 10/1/2007 100,000 110,000
Fox/Liberty Networks, Inc. Senior
Notes; 8.88%; 8/15/2007 500,000 510,000
Jones Intercable, Inc. Senior Notes;
9.63%; 3/15/2002 300,000 322,500
942,500
Cogeneration - Small Power
Producer (5.03%)
AES Corp. Senior Subordinated
Notes; 8.38%; 8/15/2007 500,000 503,750
Calpine Corp. Senior Notes;
8.75%; 7/15/2007 200,000 202,000
705,750
Communications Equipment (2.78%)
FWT, Inc. Senior Subordinated Notes;
9.88%; 11/15/2007 200,000 80,000
Qwest Communications International
Senior Notes; 7.50%; 11/1/2008 300,000(a) 309,750
389,750
Communications Services, NEC (2.07%)
Level 3 Communications, Inc. Step-up
Senior Discount Notes;
12/1/2008 500,000(a)(c)* 291,250
Computer & Data Processing
Services (1.64%)
DecisionOne Corp. Senior
Subordinated Notes;
9.75%; 8/1/2007 500,000 230,000
Crude Petroleum & Natural Gas (4.05%)
Chesapeake Energy Corp. Senior
Notes, Series A;
9.63%; 5/1/2005 500,000 375,000
Ocean Energy, Inc. Senior
Subordinated Notes;
8.88%; 7/15/2007 200,000 194,000
569,000
Eating & Drinking Places (4.34%)
Cafeteria Operators L.P. Senior
Secured Notes; 12.00%;
12/31/2001 $500,000 $ 510,000
Foodmaker, Inc. Senior
Subordinated Notes;
8.38%; 4/15/2008 100,000 100,000
610,000
Electric Services (0.67%)
York Power Funding Ltd.
Senior Secured Bonds;
12.00%; 10/30/2007 100,000(a) 93,750
Finance Services (1.41%)
DVI, Inc. Senior Notes;
9.88%; 2/1/2004 200,000 198,500
Fuel Dealers (2.05%)
Petroleum Heat & Power Co., Inc.
Senior Subordinated Debentures;
12.25%; 2/1/2005 300,000 288,000
Funeral Service & Crematories (3.14%)
Loewen Group International, Inc.
Senior Guaranteed Notes;
7.50%; 4/15/2001 500,000 441,250
Grocery Stores (1.49%)
Marsh Supermarkets Senior
Subordinated Notes;
8.88%; 8/1/2007 200,000 209,000
Heavy Construction, Except
Highway (3.44%)
Mastec, Inc. Senior Subordinated
Notes; 7.75%; 2/1/2008 500,000 482,500
Hotels & Motels (3.73%)
HMH Properties, Inc. Senior Notes;
7.88%; 8/1/2008 250,000 241,250
John Q. Hammons Hotels, L.P. &
Finance Corp. First Mortgage
Notes; 8.88%; 2/15/2004 300,000 282,000
523,250
Industrial Inorganic Chemicals (0.36%)
PT Tri Polyta Indonesia TBK
Guaranteed Secured Notes;
11.38%; 12/1/2003 200,000(b) 50,000
Men's & Boys' Clothing Stores (0.96%)
Edison Brothers Stores, Inc. Senior
Notes; 11.00%; 9/26/2007 300,000 135,000
Miscellaneous Amusement,
Recreation Service (5.64%)
Rio Hotel & Casino, Inc. Senior
Subordinated Notes;
9.50%; 4/15/2007 $300,000 $ 331,500
Station Casinos, Inc. Senior
Subordinated Notes, Series B
9.63%; 6/1/2003 200,000 207,280
Station Casinos, Inc. Senior
Subordinated Notes,
8.88%; 12/1/2008 250,000(a) 253,750
792,530
Miscellaneous Equipment Rental &
Leasing (3.48%)
Rental Service Corp. Senior
Subordinated Notes;
9.00%; 5/15/2008 500,000 488,750
Miscellaneous Shopping Goods
Stores (0.69%)
Zale Corp. Senior Notes;
8.50%; 10/1/2007 100,000 96,500
Motor Vehicles, Parts & Supplies (3.61%)
Special Devices, Inc. Senior
Subordinated Notes;
11.38%; 12/15/2008 500,000(a) 507,500
Newspapers (1.50%)
Hollinger International Publishing, Inc.
Senior Subordinated Notes;
9.25%; 3/15/2007 200,000 211,000
Nursing & Personal Care
Facilities (1.33%)
Integrated Health Services, Inc.
Senior Subordinated Notes;
9.25%; 1/15/2008 200,000 187,000
Paper Mills (0.77%)
Indah Kiat Finance Mauritius Ltd.
Guaranteed Senior Notes;
10.00%; 7/1/2007 200,000 108,000
Personal Credit Institutions (1.00%)
MacSaver Financial Services, Inc. Notes;
7.60%; 8/1/2007 200,000 140,000
Petroleum Refining (2.05%)
Crown Central Petroleum Corp.
Senior Notes; 10.88%; 2/1/2005 300,000 288,000
Pulp Mills (1.26%)
Pen-Tab Industries, Inc. Senior
Subordinated Notes;
10.88%; 2/1/2007 200,000 177,000
Radio & Television
Broadcasting (4.25%)
Antenna TV S.A. Senior Notes;
9.00%; 8/1/2007 $100,000 $ 85,000
Chancellor Media Corp.
Unsecured Notes;
8.00%; 11/1/2008 500,000(a) 511,250
596,250
Retail Stores, NEC (1.47%)
Cole National Group, Inc.
Senior Subordinated Notes;
9.88%; 12/31/2006 200,000 207,000
Telephone Communication (12.21%)
Comcast Cellular Holdings Senior
Notes; 9.50%; 5/1/2007 500,000 530,000
Intermedia Communications, Inc.
Senior Notes; 8.50%; 1/15/2008 200,000 190,000
Lenfest Communications Senior
Notes; 8.38%; 11/1/2005 200,000 216,000
NEXTLINK Communications, Inc.
Senior Notes; 9.00%; 3/15/2008 200,000 188,000
Rogers Cablesystems, Ltd. Senior
Secured Second Priority Notes;
9.63%; 8/1/2002 250,000 270,000
Rogers Cantel, Inc. Senior Secured
Debentures; 9.75%; 6/1/2016 300,000 321,000
1,715,000
Water Transportation
of Freight, NEC (3.42%)
Cenargo International PLC
First Mortgage Notes;
9.75%; 6/15/2008 500,000(a) 480,625
Total Bonds 12,954,655
Commercial Paper (4.50%)
Personal Credit Institutions (4.50%)
Investment in Joint Trade Account,
Associates Corp.; 5.20%; 1/4/1999 631,894 631,894
Total Portfolio Investments (96.75%) 13,586,549
Cash and receivables, net of liabilities (3.25%) 456,083
Total Net Assets (100.00%) $14,042,632
(a) Restricted security - See Note 4 to the financial statements.
(b) Non-income producing security - Security in default
(c) Non-income producing security - Zero-step coupon bond
* Variable Rate
<PAGE>
INTERNATIONAL ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (95.47%)
Advertising (1.98%)
WPP Group PLC 502,100 $ 3,040,833
Beverages (0.90%)
PanAmerican Beverages, Inc. ADR 63,100 1,376,369
Blast Furnace & Basic Steel
Products (0.21%)
Tubos De Acero De Mexico SA ADR 50,000 321,875
Central Reserve Depositories (2.58%)
National Westminster Bank 123,421 2,377,927
Union Bank of Norway 81,840 1,589,801
3,967,728
Commercial Banks (13.15%)
Australia & New Zealand Banking Group 386,000 2,528,564
Bank of Ireland 166,833 3,666,790
Barclays PLC 54,748 1,177,790
Kapital Holdings 20,188 999,195
Merita PLC, Class A 462,460 2,941,016
National Australia Bank Ltd. 110,986 1,674,628
Royal Bank of Canada Montreal, Quebec 36,000 1,794,209
San Paolo-IMI SPA 147,345 2,609,311
Svenska Handelsbanken AB Free 56,500 2,167,838
Svenska Handelsbanken, Class A 15,000 632,900
20,192,241
Communications Equipment (2.06%)
ECI Telecommunications Ltd. ADR 89,000 3,170,625
Communications Services, NEC (1.78%)
Koninklijke KPN NV 54,450 2,727,335
Computer & Office Equipment (1.48%)
Orbotech Ltd. ADR 48,000(a) 2,274,000
Concrete, Gypsum & Plaster
Products (1.49%)
Lafarge SA 24,000 2,281,415
Consumer Products (5.90%)
Imasco Ltd. 158,869 3,382,299
Imperial Tobacco Group PLC 119,500 1,282,415
Societe Nationale D'Exploitation
Industrielle Des Tabacs
et Allumettes 34,000 2,130,323
Swedish Match Co. 623,000 2,267,400
9,062,437
Copper Ores (0.77%)
Trelleborg AB, Class B 145,000 1,180,674
Deep Sea Foreign Transportation
of Freight (0.45%)
Van Ommeren NV 22,288 $ 694,768
Drugs (3.85%)
Novartis AG 1,668 3,278,965
Pharmacia & Upjohn, Inc. 46,500 2,633,063
5,912,028
Electric Services (0.92%)
Enersis SA ADR 55,000 1,419,688
Electrical Goods (0.98%)
Smiths Industries PLC 107,000 1,498,983
Electronic Components &
Accessories (1.11%)
Elec & Eltek
International Co. Ltd. ADR 294,800 1,591,920
Varitronix International Ltd. 63,000 117,912
1,709,832
Electronic Distribution
Equipment (2.64%)
Phillips Electronics 60,400 4,055,275
Engines & Turbines (0.83%)
RHI AG 31,000 808,197
Scapa Group PLC 281,000 465,190
1,273,387
Farm & Garden Machinery (0.77%)
New Holland NV 86,000 1,177,125
Finance Services (1.14%)
Takefuji Corp. 24,000 1,755,372
Gas Production & Distribution (0.87%)
OMV AG 14,150 1,334,330
Industrial Inorganic Chemicals (0.53%)
Kemira OY 112,000(b) 807,381
Investment Offices (1.51%)
AMVESCAP PLC 298,800 2,311,716
Life Insurance (0.90%)
QBE Insurance Group Ltd. 332,685 1,377,376
Meat Products (5.39%)
Danisco AS 44,700 2,423,108
Orkla ASA, Class A 52,000 774,666
Orkla ASA, Class B 122,000 1,593,303
Unilever NV 40,820 3,491,088
8,282,165
Miscellaneous Chemical Products (1.37%)
Hoechst AG 51,000 2,109,786
Miscellaneous Converted Paper
Products (1.20%)
Bunzl PLC 472,000 1,849,413
Miscellaneous Food &
Kindred Products (2.16%)
Bols Wessanen (KON) CVA NL 142,000 $ 1,831,119
Greencore Group PLC 328,000 1,484,375
3,315,494
Miscellaneous Non-Durable
Goods (2.37%)
Desc S.A., Series B 1,160,000 973,537
Diageo PLC 237,205 2,665,939
3,639,476
Miscellaneous Primary
Metal Products (0.23%)
Charter PLC 64,000 347,135
Miscellaneous Textile Goods (1.00%)
Esprit Holdings Ltd. 3,552,000 1,535,916
Miscellaneous Transportation
Equipment (1.28%)
Autoliv, Inc. 25,000 897,534
Autoliv, Inc. ADR 28,700 1,067,281
1,964,815
Motor Vehicles & Equipment (3.67%)
Daimlerchrysler AG 17,000 1,689,258
E.C.I.A. Equipment & Composants 8,300 1,112,906
Lucasvarity PLC 461,000 1,518,683
Mayflower Corp. PLC 617,000 1,334,533
5,655,380
Newspapers (0.68%)
Publishing & Broadcasting Ltd. 240,000 1,049,582
Oil & Gas Field Services (0.93%)
ENI SPA 217,000 1,421,318
Paperboard Containers & Boxes (0.83%)
Buhrmann NV 71,200 1,274,771
Personnel Supply Services (1.38%)
Vedior NV 107,490 2,119,252
Petroleum Refining (3.61%)
Repsol Petroleo SA 32,860 1,755,578
Sasol Ltd. 294,000 1,112,005
YPF Sociedad Anonima ADR 96,000 2,682,000
5,549,583
Plastic Materials & Synthetics (1.11%)
Astra AB 84,000 1,709,941
Pulp Mills (2.35%)
Lassila & Tikanoja Ltd. OY 73,200 1,807,126
UPM-Kymmene OY 64,140 1,798,807
3,605,933
Radio & Television Broadcasting (2.54%)
Carlton Communications PLC 286,000 2,621,915
Mirror Group PLC 516,000 1,283,488
3,905,403
Security Brokers & Dealers (0.00%)
Peregrine Investment Holdings Ltd. 685,000(a)(c) 0
Soap, Cleaners & Toilet Goods (2.99%)
Benckiser NV, Class B 36,150 $ 2,369,333
Reckitt & Colman PLC 167,945 2,218,649
4,587,982
Special Industry Machinery (1.49%)
Cookson Group 1,057,000 2,286,227
Sugar & Confectionery Products (2.19%)
Nestle 1,545 3,363,386
Telephone Communication (7.56%)
Hellenic Telecom Organization SA ADR 185,000 2,451,250
Nokia Corp., Class A ADR 23,600 2,842,325
Telecom Corp. of New Zealand Ltd. 564,000 2,457,983
Telecom Italia-DI 612,575 3,863,672
11,615,230
Watches, Clocks, Watchcases &
Parts (0.34%)
Tag Heuer International SA 7,600 523,458
Total Common Stocks 146,634,439
Preferred Stock (0.74%)
Commercial Banks (0.74%)
National Australia Bank ECU 40,500 1,128,938
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Commercial Paper (3.50%)
Business Credit Institutions (3.50%)
General Electric Capital Corp.;
5.25%; 1/4/1999 $5,375,000 $ 5,372,648
Total Portfolio Investments (99.71%) 153,136,025
Cash and receivables, net of liabilities (0.29%) 451,890
Total Net Assets (100.00%) $153,587,915
(a) Non-income producing security - No dividend paid during the period.
(b) Restricted security - See Note 4 to the financial statements.
(c) On January 12, 1998 Peregrine Investment Holdings filed a plan of
liquidation.
International Account
Investments by Country
- --------------------------------------------------------------------------------
Total Percentage of
Country Value Total Value
- --------------------------------------------------------------------------------
Argentina $ 2,682,000 1.75%
Australia 7,759,087 5.07
Austria 2,142,527 1.40
Canada 5,176,508 3.38
Chile 1,419,687 0.93
Denmark 3,422,303 2.23
Finland 10,196,655 6.66
France 5,524,644 3.61
Germany, Federal Republic 3,799,045 2.48
Greece 2,451,250 1.60
Hong Kong 1,653,828 1.08
Israel 5,444,625 3.56
Italy 7,894,301 5.16
Japan 1,755,372 1.15
Mexico 2,671,781 1.74
Netherlands 19,740,066 12.88
New Zealand 2,457,982 1.61
Norway 3,957,771 2.58
Singapore 1,591,920 1.04
South Africa 1,112,005 0.73
Spain 1,755,578 1.15
Sweden 9,923,569 6.48
Switzerland 7,165,809 4.68
United Kingdom 33,432,001 21.82
United States 8,005,711 5.23
Total $153,136,025 100.00%
<PAGE>
INTERNATIONAL SMALLCAP ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (97.36%)
Advertising (2.99%)
Industrial & Financial Systems 18,800(a)(b)$ 216,864
United Group Ltd. 98,000 174,317
391,181
Air Transportation, Scheduled (1.91%)
Ryanair Holdings PLC ADR 6,600(a) 249,150
Airports, Flying Fields &
Services (3.62%)
Aeroporti Di Roma 11,600 101,304
Auckland International Airport Ltd. 194,000(a) 271,577
Virgin Express Holdings ADR 12,500(a) 100,000
472,881
Bakery Products (1.02%)
Kamps AG 2,100(a) 133,652
Central Reserve Depositories (0.86%)
Union Bank of Norway 5,760 $ 111,892
Commercial Banks (1.39%)
Banco Pastor SA 2,900 182,157
Communications Equipment (2.27%)
Gilat Satellite Networks Ltd. 1,100(a) 60,638
Research in Motion Ltd. 35,300(a) 235,572
296,210
Communications Services, NEC (1.60%)
RSL Communications Ltd. 7,100(a) 209,450
Computer & Data Processing
Services (9.12%)
Computacenter PLC 16,200(a)(b) 118,596
Computershare Ltd. 38,800 190,696
Ecsoft Group PLC ADR 4,800(a) 169,200
Equant ADR 4,600(a) 311,937
Intentia International AB 2,100(a) 71,248
IXOS Software AG 600(a) 135,093
Merkantildata ASA 10,600 104,348
New Dimension Software Ltd. 1,900(a) 91,438
1,192,556
Computer & Office Equipment (2.07%)
Orbotech Ltd. ADR 5,700(a) 270,038
Drugs (1.37%)
Fabrica Espanola De Productos 11,000 178,557
Electric Services (3.00%)
Independent Energy Holdings ADR 20,400(a) 183,600
Vestas Wind Systems 3,900(a) 208,961
392,561
Electrical Industrial Apparatus (0.54%)
Doncasters PLC ADR 4,400(a) 71,225
Electrical Work (2.25%)
Internatio-Muller NV 2,800 69,379
Telesystem International Wireless, Inc.17,900(a) 224,341
293,720
Electronic Components &
Accessories (2.65%)
Celestica, Inc. 6,800(a) 167,875
Elec & Eltek International ADR 33,000 178,200
346,075
Electronic Distribution
Equipment (4.15%)
C/TAC NV 6,300(a) 129,917
JOT Automation Group OYJ 3,200(a) 133,352
Techtronic Industries Co. 758,000 135,020
Vtech Holdings Ltd. 33,000 143,973
542,262
Fabricated Rubber
Products, NEC (1.68%)
Semperit AG Holding 2,000 219,789
Grocery Stores (0.95%)
Superdiplo SA 4,400(a) 124,058
Hose, Belting, Gaskets &
Packing (1.61%)
Phoenix AG 11,100 209,934
Hotels & Motels (0.50%)
Choice Hotels Scandinavia 47,000(a) $ 66,008
Household Furniture (0.56%)
Ekornes ASA 9,200 73,660
Hunting, Trapping &
Game Propagation (1.58%)
Rapala Normark Corp. 23,800(a) 206,822
Investment Offices (0.76%)
Tyndall Australia Ltd. 64,952 99,597
Life Insurance (1.01%)
Scor SA 2,000 132,295
Measuring & Controlling Devices (0.75%)
Sensonor ASA 37,600(a) 98,704
Meat Products (0.87%)
Perkins Foods PLC 49,000 113,321
Medical & Dental Laboratories (0.59%)
QIAGEN NV 1,200(a) 77,669
Medical Instruments & Supplies (1.08%)
Cochlear Ltd. 25,000 141,073
Metalworking Machinery (1.80%)
Mikron Holding AG 1,180 235,831
Miscellaneous Amusement,
Recreation Services (2.17%)
Aristocrat Leisure Ltd. 15,000 63,483
Tab Ltd. 110,700(a) 219,992
283,475
Miscellaneous Business Services (0.36%)
Enator AB 1,700 47,190
Miscellaneous Electrical Equipment &
Supplies (2.07%)
Kaba Holding AG, Class B 550 270,298
Miscellaneous Food & Kindred
Products (1.30%)
Greencore Group PLC 37,700 170,613
Miscellaneous Manufacturers (0.91%)
Docdata NV 11,600(a) 118,678
Miscellaneous Non-Durable
Goods (2.23%)
Austria Tabakwerke AG 3,800 291,533
Miscellaneous Plastics
Products, NEC (1.21%)
Airspray NV 5,600(a) 158,153
Miscellaneous Primary Metal
Products (0.00%)
YBM Magnex International, Inc. 13,300(a) 87
Miscellaneous Transportation
Services (0.38%)
ASG AB, Class B 2,600 49,238
Motor Vehicles & Equipment (1.95%)
E.C.I.A. Equipment & Composants 700 $ 93,859
Mayflower Corp. PLC 74,700 161,572
255,431
Newspapers (1.36%)
Newsquest PLC 43,500(b) 177,319
Non-Classifiable Establishments (1.35%)
Bure Investment Aktiebolaget AB 12,400(b) 175,929
Non-Residential Building
Construction (0.88%)
Algeco 1,300 115,664
Oil & Gas Field Services (3.37%)
Cie Generale De Geophysique 1,400(a) 81,629
Det Sondenfjelds-Norske
Dampskibsselskab 7,900(a) 62,215
Fortum Corp. 33,400(a) 224,281
Hydralift ASA, A Shares 8,400 37,487
Petrolia Drilling ASA 30,400(a) 35,512
441,124
Personnel Supply Services (2.74%)
Dis Deutshcer Industries Service AG 1,400 65,565
Unique International NV 12,800 293,286
358,851
Pulp Mills (2.66%)
Lassila & Tikanoja Ltd. OY 8,600 212,312
Miquel Y Costas 4,000 135,506
347,818
Real Estate Agents & Managers (1.12%)
Tornet Fastighet 10,000 146,196
Sanitary Services (1.62%)
De Sammensluttede Vognmand AS 2,400 211,176
Security Brokers & Dealers (4.11%)
AOT NV 16,500 202,220
Kempen & Co. NV 4,250 226,012
Van Der Moolen Holdings 1,700 109,609
537,841
Services To Buildings (0.48%)
Spotless Group Ltd. 27,000 62,434
Special Industry Machinery (1.24%)
Aixtron 880 161,943
Telephone Communication (8.45%)
Aapt Ltd. 77,800(a) 200,422
Esat Telecom Group PLC ADR 5,300(a) 204,050
Esprit Telecom Group PLC ADR 4,400(a) 205,700
Metronet Communications ADR, Class B 14,800(a) 495,800
1,105,972
Trusts (0.85%)
NHP PLC 44,000 110,543
Total Portfolio Investments (97.36%) 12,729,834
Cash and receivables, net of liabilities (2.64%) 345,318
Total Net Assets (100.00%) $13,075,152
(a) Non-income producing security - No dividend paid during the period.
(b) Restricted security - See Note 4 to the financial statements.
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
INTERNATIONAL SMALLCAP ACCOUNT (Continued)
International SmallCap Account
Investments by Country
- --------------------------------------------------------------------------------
Total Percentage of
Country Value Total Value
- --------------------------------------------------------------------------------
Australia $ 1,152,014 9.05%
Austria 511,322 4.02
Belgium 100,000 0.79
Canada 1,123,675 8.83
Denmark 420,137 3.30
Finland 776,768 6.10
France 423,448 3.33
Germany 706,186 5.55
Hong Kong 278,993 2.19
Ireland 453,200 3.56
Israel 422,113 3.32
Italy 101,304 0.80
Netherlands 1,696,861 13.32
New Zealand 271,577 2.13
Norway 589,825 4.63
Singapore 178,200 1.40
Spain 620,278 4.87
Sweden 706,665 5.55
Switzerland 506,130 3.98
United Kingdom 1,691,138 13.28
Total $12,729,834 100.00%
<PAGE>
MICROCAP ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (84.92%)
Aircraft & Parts (1.81%)
Avteam, Inc. 9,000(a) $ 34,875
Tristar Aerospace Co. 8,900 62,300
97,175
Blast Furnace & Basic Steel
Products (1.45%)
Titan International, Inc. 8,200 77,900
Broadwoven Fabric Mills, Cotton (1.15%)
Burlington Industries, Inc. 5,600(a) 61,600
Colleges & Universities (1.00%)
Career Education Corp. 1,800(a) 54,000
Commercial Banks (3.08%)
Pacific Century Financial Corp. 6,800 165,750
Computer & Office Equipment (2.64%)
Banctec, Inc. 5,900(a) 74,119
Black Box Corp. 1,800(a) 68,175
142,294
Crude Petroleum & Natural Gas (1.98%)
Swift Energy Co. 10,800 $ 79,650
Tesoro Petroleum Corp. 2,200 26,675
106,325
Cutlery, Handtools, & Hardware (0.98%)
American Safety Razor Co. 4,400(a) 52,800
Drugs (1.54%)
Perrigo Co. 9,400 82,838
Eating & Drinking Places (1.79%)
Friendly Ice Cream Corp. 4,600(a) 28,175
Morton Restaurant Group, Inc. 3,600 67,950
96,125
Electric Services (2.07%)
CMP Group, Inc. 5,900 111,362
Electrical Industrial Apparatus (2.95%)
Carbide Graphite Group, Inc. 2,800(a) 41,300
Ucar International, Inc. 6,600 117,562
158,862
Electronic Components &
Accessories (7.71%)
General Semiconductor, Inc. 10,300(a) 84,331
Kemet Corp. 8,400 94,500
Memc Electronic Materials, Inc. 13,300 113,050
Vishay Intertechnology, Inc. 8,500 123,250
415,131
Engineering & Architectural
Services (1.48%)
Stone & Webster, Inc. 2,400 79,800
Family Clothing Stores (1.25%)
Syms Corp. 7,500 67,500
Fire, Marine & Casualty
Insurance (2.43%)
American Safety Insurance Group, Ltd. 4,000(a) 38,500
Pxre Corp. 3,400 85,213
Symons International Group, Inc. 1,000 7,250
130,963
Freight Transportation
Arrangement (0.94%)
Hub Group, Inc., Class A 2,600(a) 50,375
Groceries & Related Products (0.48%)
Fleming Cos., Inc. 2,500 25,937
Health & Allied Services, NEC (1.51%)
American Physician Partners, Inc. 12,900(a) 81,431
Home Health Care Services (1.81%)
Matria Healthcare, Inc. 33,800 97,175
Hotels & Motels (3.18%)
Prime Hospitality Corp. 16,200 171,113
Industrial Machinery, NEC (1.02%)
Denison International PLC 4,400(a) 55,000
Industrial Organic Chemicals (0.24%)
Methanex Corp. 2,600 $ 13,162
Insurance Agents, Brokers &
Services (3.07%)
Healthplan Services Corp. 12,800 147,200
The Seibels Bruce Group, Inc. 5,400 18,225
165,425
Life Insurance (0.99%)
Arm Financial Corp. 2,400 53,250
Medical & Dental Laboratories (2.55%)
Quest Diagnostics, Inc. 7,700 137,156
Medical Services & Health
Insurance (1.15%)
Penn Treaty American Corp. 2,300 61,956
Miscellaneous Investing (2.03%)
Prime Retail, Inc. 4,400 43,175
RFS Hotel Investors, Inc. 5,400 66,150
109,325
Miscellaneous Manufacturers (0.95%)
Lydall, Inc. 4,300 51,063
Miscellaneous Plastics
Products, NEC (0.45%)
Spartech Corp. 1,100 24,200
Miscellaneous Shopping Goods (3.54%)
Finlay Enterprises, Inc. 1,800(a) 18,225
Friedmans, Inc., Class A 16,800(a) 172,200
190,425
Miscellaneous Textile Goods (1.42%)
Belden, Inc. 3,600 76,275
Non-Ferrous Foundries (Casting) (1.01%)
Wolverine Tube, Inc. 2,600 54,600
Non-Store Retailers (1.35%)
MDC Communications Corp., Class A 7,900 72,705
Nursing & Personal Care
Facilities (3.70%)
Integrated Health Services, Inc. 9,600 135,600
Mariner Post-Acute Network, Inc. 13,900 63,419
199,019
Oil & Gas Field Services (0.38%)
BJ Services Co. 1,300(a) 20,313
Professional & Commercial
Equipment (1.99%)
Vanstar Corp. 11,600 107,300
Real Estate Operators & Lessors (0.87%)
Insignia/Esg Holdings, Inc. 3,866 46,875
Retail Stores, NEC (1.08%)
Brookstone, Inc. 3,400(a) 58,225
Rooming & Boarding Houses (0.18%)
Bridgestreet Accomodations, Inc. 3,000(a) $ 9,563
Secondary Non-Ferrous Metals (0.69%)
Ispat International NV 4,800 37,200
Shoe Stores (1.17%)
J. Baker, Inc. 11,000 63,250
Special Industry Machinery (1.14%)
Unova, Inc. 3,400 61,625
Surety Insurance (6.10%)
Amerin Corp. 5,300(a) 125,212
Esg Re Ltd. 7,200 145,800
Scpie Holdings, Inc. 1,900 57,594
328,606
Trucking & Courier Services,
Except Air (2.79%)
Allied Holdings, Inc. 7,600(a) 109,250
Landstar System, Inc. 1,000 40,750
150,000
Watches, Clocks, Watchcases &
Parts (1.53%)
Movado Group, Inc. 3,100 82,537
Women's & Children's
Undergarments (0.30%)
Tefron Ltd. 2,500 16,406
Total Portfolio Investments (84.92%) 4,571,917
Cash and receivables, net of liabilities (15.08%) 811,682
Total Net Assets (100.00%) $5,383,599
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
MIDCAP ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (93.43%)
Blast Furnace & Basic Steel
Products (1.07%)
Carpenter Technology Corp. 81,500 $2,765,906
Business Credit Institutions (1.25%)
C.I.T. Group, Inc. - Class A 102,300 3,254,419
Carpets & Rugs (1.21%)
Shaw Industries, Inc. 130,000 3,152,500
Chemicals & Allied Products (0.24%)
Sigma-Aldrich Corp. 21,300 625,688
Commercial Banks (8.28%)
Associated Banc-Corp. 140,483 $ 4,802,763
First Federal Capital Corp. 129,594 2,122,102
Independent Bank Corp. Michigan 69,770 1,412,842
Mercantile Bancorp., Inc. 33,390 1,540,114
Merchants Bancorp., Inc. 45,800 1,293,850
North Fork Bancorp., Inc. 188,220 4,505,516
Peoples Heritage Financial
Group, Inc. 125,800 2,516,000
Princeton National Bancorp., Inc. 54,000 884,250
Summit Bancorp. 55,250 2,413,734
21,491,171
Commercial Printing (0.35%)
Merrill Corp. 47,400 915,413
Computer & Data Processing
Services (9.29%)
American Management Systems, Inc. 53,100(a) 2,124,000
Cadence Design Systems, Inc. 128,100(a) 3,810,975
Cerner Corp. 123,500(a) 3,303,625
HBO & Co. 142,000 4,073,625
ICG Communications, Inc. 69,000(a) 1,483,500
Microsoft Corp. 27,600(a) 3,827,775
Synopsys, Inc. 101,000(a) 5,479,250
24,102,750
Computer & Office Equipment (4.18%)
3COM Corp. 80,000(a) 3,585,000
Cabletron Systems, Inc. 125,000(a) 1,046,875
EMC Corp. 73,000(a) 6,205,000
10,836,875
Construction & Related
Machinery (0.33%)
Cooper Cameron Corp. 35,000(a) 857,500
Crude Petroleum & Natural Gas (1.81%)
Devon Energy Corp. 85,000 2,608,437
Newfield Exploration Co. 100,000(a) 2,087,500
4,695,937
Dairy Products (0.23%)
Dreyer's Grand Ice Cream, Inc. 38,600 583,825
Department Stores (1.42%)
Saks, Inc. 116,440(a) 3,675,138
Drugs (5.58%)
Centocor, Inc. 76,600(a) 3,456,575
Dura Pharmaceuticals, Inc. 151,500(a) 2,300,906
Genzyme Corp. - General Division 45,060(a) 2,241,735
Pharmacia & Upjohn, Inc. 34,400 1,947,900
Watson Pharmaceuticals 72,000(a) 4,527,000
14,474,116
Electronic Components &
Accessories (3.14%)
Intel Corp. 31,100 $ 3,687,294
Linear Technology Corp. 30,900 2,767,481
Solectron Corp. 18,300(a) 1,700,756
8,155,531
Engineering & Architectural
Services (1.29%)
Paychex, Inc. 64,900 3,338,294
Fabricated Rubber
Products, NEC (0.91%)
Weatherford International 122,000(a) 2,363,750
Fire, Marine & Casualty
Insurance (1.02%)
Berkley (W.R.) Corp. 77,400 2,636,437
Footwear, Except Rubber (0.61%)
Nine West Group, Inc. 101,700(a) 1,582,706
General Industrial Machinery (3.81%)
Flow International Corp. 101,500(a) 983,281
Kaydon Corp. 97,000 3,886,063
Pentair, Inc. 58,000 2,309,125
Roper Industries, Inc. 132,400 2,697,650
9,876,119
Grocery Stores (0.78%)
Casey's General Stores, Inc. 155,400 2,025,056
Holding Offices (0.47%)
ISB Financial Corp. 55,700 1,232,363
Hose, Belting, Gaskets &
Packing (0.44%)
Mark IV Industries 88,218 1,146,834
Hospitals (2.53%)
Humana, Inc. 134,000(a) 2,386,875
Universal Health Services,
Inc., Class B 80,400(a) 4,170,750
6,557,625
Hotels & Motels (2.23%)
Four Seasons Hotel, Inc. 112,400 3,287,700
Marriott International, Inc.,
Class A 86,500 2,508,500
5,796,200
Household Appliances (1.78%)
Maytag Corp. 74,400 4,631,400
Industrial Inorganic Chemicals (0.18%)
ICN Pharmaceuticals, Inc. 20,346 460,328
Industrial Machinery, NEC (1.62%)
Coltec Industries 215,000(a) 4,192,500
Insurance Agents, Brokers &
Services (1.65%)
Equifax, Inc. 125,400 4,287,113
Investment Offices (1.23%)
AMVESCAP PLC Sponsored ADR 83,220 $ 3,203,970
Iron & Steel Foundries (1.29%)
Atchison Casting Corp. 61,200(a) 566,100
Precision Castparts Corp. 62,700 2,774,475
3,340,575
Knitting Mills (0.78%)
Russell Corp. 100,000 2,031,250
Laundry, Cleaning, & Garment
Services (0.81%)
G&K Services, Inc. 39,525 2,104,706
Measuring & Controlling Devices (0.95%)
ISCO, Inc. 1 3
Millipore Corp. 86,700 2,465,531
2,465,534
Meat Products (1.17%)
Michael Foods, Inc. 101,200 3,036,000
Medical Instruments & Supplies (2.34%)
Boston Scientific Corp. 90,400(a) 2,423,850
Steris Corp. 128,000(a) 3,640,000
6,063,850
Medical Services & Health
Insurance (5.75%)
Alternative Living Services 127,300(a) 4,360,025
Foundation Health Systems, Inc.,
Class A 235,750(a) 2,814,266
Orthofix International NV 77,600(a) 1,086,400
Pacificare Health Systems, Inc., Class B27,898(a) 2,217,891
Torchmark Corp. 70,900 2,503,656
United Healthcare Corp. 45,000 1,937,812
14,920,050
Miscellaneous Non-Metallic
Mineral Products (0.46%)
Hexcel Corp. 143,000(a) 1,197,625
Miscellaneous Business Services (0.11%)
Cendant Corp. 14,437(a) 275,205
Miscellaneous Chemical Products (0.87%)
Cytec Industries 51,200(a) 1,088,000
Fuller (H.B.) Co. 24,400 1,174,250
2,262,250
Miscellaneous Plastics
Products, NEC (0.97%)
Rubbermaid, Inc. 79,700 2,505,569
Office Furniture (0.49%)
Chromcraft Revington, Inc. 77,000(a) 1,275,313
Offices & Clinics of Medical
Doctors (0.39%)
Phycor, Inc. 149,700(a) 1,019,831
Oil & Gas Field Services (0.91%)
Diamond Offshore Drilling 100,000 2,368,750
Operative Builders (1.70%)
D. R. Horton, Inc. 159,500 $ 3,668,500
Pulte Corp. 26,842 746,543
4,415,043
Paints & Allied Products (0.68%)
RPM, Inc. 109,750 1,756,000
Personal Credit Institutions (0.09%)
Firstplus Financial Group, Inc. 82,000(a) 225,500
Plastic Materials & Synthetics (0.47%)
A. Schulman, Inc. 54,200 1,229,663
Plumbing, Heating,
Air-Conditioning (1.20%)
Apogee Enterprises, Inc. 276,100 3,106,125
Public Building &
Related Furniture (1.04%)
BE Aerospace, Inc. 128,800(a) 2,704,800
Refrigeration & Service
Machinery (0.27%)
Tecumseh Products Co., Class A 15,300 713,362
Sanitary Services (1.63%)
Browning-Ferris Industries, Inc. 62,800 1,785,875
Republic Services, Inc., Class A 132,400(a) 2,441,125
4,227,000
Savings Institutions (4.90%)
Greenpoint Financial Corp. 127,400 4,474,925
Sterling Financial Corp. 62,000(a) 1,054,000
TCF Financial Corp. 202,600 4,900,388
WSFS Financial Corp. 135,000 2,278,125
12,707,438
Security Brokers & Dealers (1.01%)
Jefferies Group, Inc. 52,800 2,620,200
Telephone Communication (2.86%)
Hyperion Telecommunications, Inc.,
Class A 100,000(a) 1,512,500
McLeod USA, Inc. 118,900(a) 3,715,625
Winstar Communications, Inc. 56,000(a) 2,184,000
7,412,125
Toys & Sporting Goods (0.48%)
Mattel, Inc. 55,000 1,254,687
Trucking & Courier Services,
Except Air (0.50%)
J.B. Hunt Transport Services, Inc. 56,900 1,308,700
Women's & Children's
Undergarments (0.38%)
Warnaco Group, Class A 38,556 973,539
Total Common Stocks 242,438,154
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Commercial Paper (7.74%)
Personal Credit Institutions (7.74%)
Investment In Joint Trade
Account, Associates Corp.;
5.20%; 1/4/1999 $10,048,841 $10,048,841
Household Finance Corp.;
6.00%; 1/4/1999 10,035,000 10,029,983
Total Commercial Paper 20,078,824
Total Portfolio Investments (101.17%) 262,516,978
Liabilities, net of cash and receivables (-1.17%) (3,046,770)
Total Net Assets (100.00%) $259,470,208
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
MIDCAP GROWTH ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (93.57%)
Advertising (1.43%)
Snyder Communications, Inc. 2,550(a) $ 86,063
Young & Rubicam, Inc. 1,100(a) 35,612
121,675
Air Transportation, Scheduled (0.36%)
Alaska Air Group, Inc. 700(a) 30,975
Aircraft & Parts (1.05%)
Gulfstream Aerospace Corp. 1,000(a) 53,250
Sunstrand Corp. 700 36,313
89,563
Automotive Rentals, No Drivers (1.36%)
Hertz Corp., Inc. 2,550 116,344
Bakery Products (0.33%)
Earthgrains Co. 900 27,844
Cement, Hydraulic (0.43%)
Centex Construction Products 900 36,563
Combination Utility Services (4.38%)
Commonwealth Energy Systems 1,600 $ 64,800
KeySpan Energy 2,100 65,100
Montana Power Co. 1,950 110,297
SCANA Corp. 2,850 91,912
Sierra Pacific Resources 1,100 41,800
373,909
Commercial Banks (7.42%)
Centura Banks, Inc. 400 29,750
City National Corp. 2,650 110,306
Cullen Frost Bankers 700 38,413
First Tennessee National Corp. 2,450 93,253
Mercantile Bankshares Corp. 2,450 94,325
Old Kent Financial Corp. 2,100 97,650
Regions Financial Corp. 2,200 88,688
Wilmington Trust Corp. 400 24,650
Zions Bancorp. 900 56,137
633,172
Communications Equipment (1.08%)
Qualcom, Inc. 200 10,363
Tellabs, Inc. 1,200(a) 82,275
92,638
Computer & Data Processing
Services (10.78%)
America Online, Inc. 2,400 372,300
BMC Software, Inc. 1,800(a) 80,213
Computer Task Group 800 21,700
Compuware Corp. 2,650(a) 207,031
DST Systems, Inc. 500(a) 28,531
J.D. Edwards & Co. 700(a) 19,863
Network Associates 1,550 102,687
Sterling Software 2,350(a) 63,597
VERITAS Software Corp. 400(a) 23,975
919,897
Computer & Office Equipment (2.41%)
Apple Computer, Inc. 800(a) 32,750
International Game Technology 2,250 54,703
Lexmark International 800(a) 80,400
NCR Corp. 900 37,575
205,428
Crude Petroleum & Natural Gas (0.91%)
Vastar Resources, Inc. 1,800 77,737
Crushed & Broken Stone (0.46%)
Vulcan Materials Co. 300 39,469
Drugs (4.33%)
Biogen, Inc. 2,450(a) 203,350
Elan Corp. PLC ADR 500(a) 34,781
Watson Pharmaceuticals 2,100(a) 132,038
370,169
Drugs, Proprietaries & Sundries (0.83%)
McKesson Corp. 900 71,156
Eating & Drinking Places (0.33%)
IHOP Corp. 700(a) 27,956
Electric Services (4.44%)
BEC Energy 2,950 $ 121,503
Ipalco Enterprises, Inc. 2,000 110,875
Pinnacle West Capital Corp. 2,550 108,056
TECO Energy, Inc. 1,350 38,053
378,487
Electrical Goods (0.70%)
Arrow Electronics, Inc. 2,250(a) 60,047
Electrical Industrial Apparatus (0.77%)
American Power Conversion 1,350(a) 65,391
Electronic Components &
Accessories (4.77%)
Advanced Micro Devices, Inc. 1,650(a) 47,747
Altera Corp. 2,450(a) 149,144
Linear Technology Corp. 1,200 107,475
Maxim Integrated Products, Inc. 2,350 102,665
407,031
Family Clothing Stores (2.45%)
Ross Stores, Inc. 2,550 100,406
TJX Cos., Inc. 3,750 108,750
209,156
Fire, Marine & Casualty
Insurance (0.21%)
Renaissance Holdings Ltd. 500 18,312
Forest Products (0.25%)
Georgia Timber Group 900 21,431
Gas Production & Distribution (2.21%)
El Paso Natural Gas 2,200 76,587
National Fuel Gas Co. 1,350 61,003
Questar Corp. 2,650 51,344
188,934
General Industrial Machinery (0.35%)
Graco, Inc. 1,000 29,500
Groceries & Related Materials (1.11%)
SUPERVALU, Inc. 1,800 50,400
U.S. Foodservice, Inc. 900(a) 44,100
94,500
Health & Allied Services, NEC (1.13%)
Lincare Holdings, Inc. 1,350 54,759
Total Renal Care Holdings, Inc. 1,400(a) 41,388
96,147
Household Furniture (1.45%)
Furniture Brands International, Inc. 2,750(a) 74,938
Leggett & Platt, Inc. 2,200 48,400
123,338
Iron Ores (0.09%)
Cleveland-Cliffs, Inc. 200 8,062
Life Insurance (0.67%)
Nationwide Financial Services 1,100 56,856
Lumber & Construction
Materials (0.46%)
Crane Co. 1,300 $ 39,244
Measuring & Controlling Devices (0.82%)
Waters Corp. 800(a) 69,800
Medical Instruments & Supplies (2.90%)
Arterial Vascular Engineering 700(a) 36,750
Biomet, Inc. 2,200 88,550
Steris Corp. 4,300(a) 122,281
247,581
Medical Services & Health
Insurance (2.01%)
Aflac, Inc. 3,000 132,000
Pacificare Health Systems, Inc.,
Class B 500 39,750
171,750
Men's & Boys' Clothing Stores (0.66%)
Abercrombie & Fitch Co. 800(a) 56,600
Men's & Boys' Furnishings (0.82%)
Nautica Enterprises, Inc. 900 13,500
V.F. Corp. 1,200 56,250
69,750
Metal Cans & Shipping
Containers (1.18%)
Ball Corp. 2,200 100,650
Miscellaneous Chemical Products (1.24%)
Cytec Industries 2,300(a) 48,875
Solutia, Inc. 2,550 57,056
105,931
Miscellaneous Food & Kindred
Products (1.24%)
Universal Foods Corp. 3,850 105,634
Miscellaneous Plastics
Products, NEC (0.65%)
Premark International, Inc. 1,600 55,400
Miscellaneous Shopping Goods
Stores (1.94%)
Dollar Tree Stores, Inc. 1,750(a) 76,453
Zale Corp. 2,750(a) 88,688
165,141
Motion Picture Distribution &
Services (0.21%)
King World Productions 600(a) 17,663
Motor Vehicles & Equipment (1.15%)
Federal Mogul Corp. 700 41,650
Magna International, Inc. 300 18,600
Meritor Automotive, Inc. 1,800 38,138
98,388
Motorcycles, Bicycles & Parts (0.56%)
Harley Davidson, Inc. 1,000 47,375
Newspapers (1.59%)
Harte-Hanks, Inc. 1,300 $ 37,050
Knight Ridder, Inc. 600 30,675
Pulitzer Publishing Co. 500 43,313
The McClatchy Co., Class A 700 24,762
135,800
Non-Ferrous Rolling & Drawing (0.24%)
General Cable Corp. 1,000 20,500
Oil & Gas Field Services (0.95%)
ENSCO International, Inc. 2,000 21,375
Helmerich & Payne 2,550 49,406
R & B Falcon Corp. 1,360 10,370
81,151
Paper & Paper Products (0.40%)
United Stationers, Inc. 1,300(a) 33,800
Paperboard Mills (0.95%)
Caraustar Industries, Inc. 2,850 81,403
Passenger Transportation
Arrangement (1.38%)
Sabre Group Holdings, Inc. 2,650(a) 117,925
Petroleum Refining (0.85%)
Sunoco, Inc. 2,000 72,125
Plastic Materials & Synthetics (1.44%)
Crompton & Knowles 2,950 61,028
Rohm & Haas Co. 2,050 61,756
122,784
Preserved Fruits & Vegtables (0.83%)
International Home Foods, Inc. 2,300(a) 38,813
Lancaster Colony 1,000 32,125
70,938
Professional & Commercial
Equipment (0.65%)
Ingram Micro, Inc. 1,100(a) 38,363
Patterson Dental Co. 400 17,400
55,763
Radio, Television & Computer
Stores (0.43%)
Best Buy, Inc. 600(a) 36,825
Railroad Equipment (0.90%)
Trinity Industries, Inc. 2,000 77,000
Railroads (0.69%)
Kansas City Southern Industries, Inc. 1,200 59,025
Research & Testing Services (0.84%)
Quintiles Transnational Corp. 1,350 72,056
Savings Institutions (0.59%)
Dime Bancorp., Inc. 1,900 50,231
Schools & Educational
Services, NEC (0.39%)
Sylvan Learning Systems, Inc. 1,100(a) $ 33,550
Security & Commodity Services (0.98%)
Price (T. Rowe) Associates 2,450 83,912
Security Brokers & Dealers (0.26%)
Edwards (A.G.), Inc. 600 22,350
Soap, Cleaners & Toilet Goods (1.21%)
Dial Corp. 2,100 60,638
Estee Lauder Co., Class A 500 42,750
103,388
Surety Insurance (0.79%)
CMAC Investment Corp. 600 27,563
The PMI Group, Inc. 800 39,500
67,063
Telephone Communication (2.18%)
Century Telephone Enterprises 2,750 185,625
Water Transportation of
Passengers (0.48%)
Royal Caribbean Cruises Ltd. 1,100 40,700
Water Transportation Services (0.22%)
Tidewater, Inc. 800 18,550
Total Portfolio Investments (93.57%) 7,985,058
Cash and receivables, net of liabilities (6.43%) 548,453
Total Net Assets (100.00%) $8,533,511
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
MONEY MARKET ACCOUNT
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Commercial Paper (83.08%)
Asset Backed Securities (18.23%)
CXC Inc.;
5.48%; 1/13/1999 $1,000,000 $ 998,173
5.40%; 1/19/1999 1,000,000 997,300
5.35%; 1/25/1999 450,000 448,395
5.30%; 2/10/1999 825,000 820,142
5.30%; 2/10/1999 450,000 447,350
Ciesco, L.P.;
5.38%; 1/5/1999 700,000 699,582
5.30%; 1/6/1999 1,500,000 1,498,896
Corporate Asset Funding Co.;
5.35%; 1/5/1999 975,000 974,420
5.20%; 2/24/1999 1,000,000 992,200
Corporate Receivables Corp.;
5.28%; 1/12/1999 $1,150,000 $ 1,148,145
5.38%; 1/14/1999 800,000 798,447
5.38%; 2/1/1999 1,000,000 995,372
5.30%; 2/11/1999 800,000 795,171
Receivables Capital Corp.;
5.50%; 1/04/1999 800,000 799,633
5.21%; 1/11/1999 645,000 644,067
5.15%; 1/13/1999 750,000 748,712
5.21%; 1/21/1999 275,000 274,204
5.40%; 1/29/1999 1,100,000 1,095,380
15,175,589
Business Credit Institutions (6.11%)
American Express Credit Corp.;
5.85%; 1/6/1999 2,375,000 2,373,070
General Electric Capital Corp.;
5.44%; 1/15/1999 200,000 199,577
5.44%; 1/15/1999 300,000 299,365
5.50%; 1/22/1999 250,000 249,198
5.43%; 2/19/1999 300,000 297,783
5.45%; 3/8/1999 190,000 188,101
5.42%; 3/12/1999 300,000 296,838
4.78%; 9/3/1999 300,000 290,241
International Lease Finance Corp.;
5.06%; 2/18/1999 900,000 893,928
5,088,101
Commercial Banks (1.19%)
J.P. Morgan & Co., Inc.;
5.02%; 3/25/1999 1,000,000 988,426
Crude Petroleum & Natural Gas (2.39%)
Chevron Oil Finance Co.;
5.33%; 1/21/1999 1,500,000 1,495,558
Chevron U.K. Investment PLC
4.90%; 3/18/1999 500,000 494,828
1,990,386
Department Stores (3.02%)
Penney (J.C.) Funding Corp.;
5.14%; 2/23/1999 1,000,000 992,433
Sears Roebuck Acceptance Corp.;
5.15%; 1/22/1999 500,000 498,498
5.14%; 1/27/1999 775,000 772,123
5.12%; 1/29/1999 250,000 249,004
2,512,058
Electric Services (6.80%)
Commed Fuel Co., Inc.;
LOC Canadian Imperial
Bank of Commerce;
5.20%; 1/22/1999 300,000 299,090
Duke Energy Corp.;
5.25%; 1/4/1999 3,750,000 3,748,359
Florida Power Corp.;
4.91%; 2/2/1999 500,000 497,818
Potomac Electric Power Co.;
5.50%; 1/28/1999 345,000 343,577
Southern California Edison;
5.20%; 3/20/1999 250,000 247,833
Tampa Electric Co.;
5.20%; 2/1/1999 525,000 522,649
5,659,326
Farm & Garden Machinery (0.67%)
Deere & Co.;
4.80%; 6/14/1999 $ 575,000 $ 562,427
Fire, Marine & Casualty
Insurance (0.76%)
General Reinsurance;
5.25%; 1/28/1999 639,000 636,484
Gas Production & Distribution (0.77%)
Washington Gas Light Co.;
5.15%; 1/19/1999 640,000 638,352
Insurance Agents, Brokers &
Services (2.26%)
Marsh & McLennan Cos.;
5.45%; 2/26/1999 850,000 842,794
5.00%; 3/25/1999 300,000 296,542
5.06%; 3/26/1999 750,000 741,145
1,880,481
Investment Offices (3.51%)
Morgan Stanley Group, Inc.;
5.21%; 1/14/1999 700,000 698,683
5.30%; 2/25/1999 625,000 619,939
4.90%; 3/26/1999 500,000 494,283
4.93%; 4/1/1999 625,000 617,297
4.84%; 4/23/1999 500,000 492,471
2,922,673
Life Insurance (6.40%)
AON Corp.;
5.45%; 1/19/1999 1,075,000 1,072,071
5.30%; 2/19/1999 800,000 794,229
American General Corp.;
5.40%; 1/4/1999 1,875,000 1,874,156
5.34%; 1/7/1999 700,000 699,377
5.34%; 1/8/1999 400,000 399,585
4.82%; 4/29/1999 500,000 492,101
5,331,519
Miscellaneous Electrical Equipment &
Supplies (0.79%)
Motorola, Inc.;
4.90%; 4/14/1999 670,000 660,607
Miscellaneous Investing (3.38%)
Delaware Funding Corp.;
5.30%; 1/20/1999 1,500,000 1,495,804
5.33%; 1/26/1999 500,000 498,149
5.50%; 2/4/1999 825,000 820,715
2,814,668
Miscellaneous Manufacturers (3.67%)
Dover Corp.;
5.45%; 1/7/1999 375,000 374,659
5.22%; 1/14/1999 690,000 688,700
5.50%; 1/25/1999 1,000,000 996,333
5.60%; 1/27/1999 1,000,000 995,956
3,055,648
Miscellaneous Plastics
Products, NEC (1.16%)
Illinois Tool Works, Inc.;
5.10%; 3/30/1999 975,000 962,845
Mortgage Bankers & Brokers (4.12%)
Countrywide Home Loan, Inc.;
5.50%; 1/12/1999 $ 400,000 $ 399,328
5.22%; 2/11/1999 1,275,000 1,267,420
5.22%; 2/12/1999 1,175,000 1,167,844
5.30%; 2/12/1999 600,000 596,290
3,430,882
Personal Credit Institutions (9.47%)
Associates First Capital Corp.;
5.31%; 1/11/1999 1,000,000 998,525
5.35%; 1/12/1999 750,000 748,774
5.02%; 3/12/1999 225,000 222,804
4.93%; 5/3/1999 560,000 550,644
4.94%; 5/4/1999 425,000 417,827
4.90%; 6/1/1999 200,000 195,889
4.93%; 6/18/1999 500,000 488,497
Avco Financial Services;
5.05%; 3/26/1999 600,000 592,930
Commercial Credit Co.;
5.19%; 1/22/1999 750,000 747,729
Comoloco, Inc.;
5.50%; 2/23/1999 500,000 495,906
5.48%; 3/5/1999 100,000 99,041
5.42%; 5/14/1999 400,000 391,991
4.72%; 5/20/1999 300,000 294,533
4.62%; 7/23/1999 250,000 243,487
4.88%; 8/27/1999 450,000 435,482
4.80%; 9/17/1999 500,000 482,733
4.91%; 9/24/1999 500,000 481,860
7,888,652
Pipelines, Except Natural Gas (0.36%)
Cortez Capital Corp.;
5.32%; 1/28/1999 300,000 298,803
Security Brokers & Dealers (8.02%)
Bear Stearns Cos., Inc.;
5.03%; 4/23/1999 1,300,000 1,279,656
Goldman Sachs Group, L.P.;
5.40%; 1/4/1999 1,350,000 1,349,393
5.32%; 2/5/1999 1,300,000 1,293,276
5.22%; 3/12/1999 350,000 346,447
5.10%; 3/19/1999 500,000 494,546
Merrill Lynch & Co., Inc.;
5.18%; 1/26/1999 1,125,000 1,120,953
5.51%; 2/8/1999 250,000 248,546
5.45%; 2/22/1999 350,000 347,245
5.48%; 3/8/1999 200,000 197,991
6,678,053
Total Commercial Paper 69,175,980
Bonds (13.58%)
Business Credit Institutions (4.14%)
American Express Credit Senior
Notes;
7.38%; 2/1/1999 $ 100,000 $ 100,133
CIT Group Holdings, Inc.
Notes; 6.25%; 10/25/1999 250,000 252,210
Senior Notes; 6.38%; 5/21/1999 800,000 801,726
John Deere Capital Corp. Notes;
6.30%; 6/1/1999 150,000 150,362
Ford Motor Credit Co. Notes;
5.63%; 1/15/1999 235,000 234,979
8.00%; 1/15/1999 101,000 101,078
7.25%; 5/15/1999 1,033,000 1,038,901
6.38%; 9/15/1999 150,000 151,192
7.75%; 10/1/1999 115,000 116,678
Morgan Guaranty Trust Co. Notes;
5.75%; 10/8/1999 500,000 502,357
3,449,616
Consumer Products (0.12%)
Philip Morris Notes;
7.38%; 2/15/1999 100,000 100,196
Department Stores (0.43%)
J.C. Penney Co. Notes;
6.88%; 6/15/99 351,000 352,607
Electric Services (0.54%)
Southern California Edison Co. 1st
Ref. Mortgage Bonds;
7.50%; 4/15/1999 450,000 452,293
Fire, Marine & Casualty
Insurance (0.24%)
Commercial Credit Co. Debentures;
9.60%; 5/15/1999 100,000 101,284
6.70%; 8/1/1999 100,000 100,480
201,764
Investment Offices (0.35%)
Morgan Stanley Group, Inc. Notes;
7.50%; 9/1/1999 289,000 292,691
Life Insurance (0.48%)
Transamerica Financial Corp. Senior
Notes; 6.80%; 3/15/1999 400,000 400,824
Miscellaneous Equipment Rental &
Leasing (0.90%)
International Lease Finance
Corp. Notes;
5.75%; 1/15/1999 500,000 500,039
7.50%; 3/1/1999 150,000 150,485
6.50%; 8/15/1999 100,000 100,781
751,305
Motor Vehicles & Equipment (1.56%)
General Motors Acceptance Corp.
Notes;
8.63%; 6/15/1999 825,000 836,097
8.40%; 10/15/1999 450,000 460,694
1,296,791
Personal Credit Institutions (4.82%)
American General Finance Corp.
Senior Notes; 6.88%; 7/1/1999 $ 155,000 $ 155,777
American General Corp. Notes;
7.70%; 10/15/1999 100,000 101,957
Associates Corp. of North America
Senior Notes;
6.25%; 3/15/1999 920,000 920,851
7.50%; 5/15/1999 500,000 502,956
7.25%; 9/1/1999 280,000 282,787
8.25%; 12/1/1999 100,000 102,676
General Motors Acceptance Corp.
Notes;
6.55%; 4/23/1999 300,000 301,220
5.63%; 2/1/1999 200,000 199,992
7.13%; 6/1/1999 723,000 727,242
Household Finance Co. Notes;
7.63%; 6/15/1999 100,000 100,727
Norwest Financial, Inc.;
Notes; 6.05%; 11/19/1999 500,000 503,937
Senior Notes; 6.25%; 3/15/1999 105,000 105,088
4,005,210
Total Bonds 11,303,297
Total Portfolio Investments (96.66%) 80,479,277
Cash and receivables, net of liabilities (3.34%) 2,783,545
Total Net Assets (100.00%) $83,262,822
<PAGE>
REAL ESTATE ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (98.88%)
Apartment REITs (23.85%)
Apartment Investment &
Management Co. 4,000 $ 148,750
Archstone Communities Trust 16,000 324,000
Avalonbay Communities, Inc. 10,000 342,500
BRE Properties, Inc. 8,800 217,800
Camden Property Trust 9,000 234,000
Equity Residential Properties Trust 8,000 323,500
Gables Residential Trust 11,300 262,019
Irvine Apartment Communities, Inc. 16,700 532,313
Walden Residential Properties, Inc. 10,600 216,637
2,601,519
Factory Outlet REITs (1.96%)
Chelsea GCA Realty, Inc. 6,000 213,750
Hotel REITs (9.65%)
Crestline Capital Corp. 2,270 34,901
Felcor Lodging Trust, Inc. 7,000 161,437
Host Marriott Corp. 22,700 313,544
Meristar Hospitality Corp. 18,000 334,125
Sunstone Hotel Investors, Inc. 22,100 208,569
1,052,576
Mall REITs (12.26%)
CBL & Associates Properties, Inc. 10,600 $ 273,613
General Growth Properties, Inc. 6,000 227,250
Rouse Co. 8,700 239,250
Simon Property Group, Inc. 11,900 339,150
Taubman Centers, Inc. 18,800 258,500
1,337,763
Manufactured Housing REITs (3.29%)
Manufactured Home Communities, Inc. 6,000 150,375
Sun Communities, Inc. 6,000 208,875
359,250
Mortgage, Mixed Use &
Miscellaneous REITs (5.73%)
Bradley Real Estate, Inc. 21,200 434,600
Eastgroup Properties, Inc. 10,300 189,906
624,506
Net Lease REITs (2.45%)
Trinet Corporate Realty Trust, Inc. 10,000 267,500
Office & Industrial REITs (31.37%)
Arden Realty Group, Inc. 6,400 148,400
Cabot Industrial Trust 22,600 461,888
Carramerica Realty Corp. 17,100 410,400
Cornerstone Properties 12,000 187,500
Duke Realty Investments, Inc. 11,200 260,400
Equity Office Properties Trust 7,800 187,200
First Industrial Realty Trust, Inc. 16,100 431,681
Highwoods Properties, Inc. 10,300 265,225
Kilroy Realty Corp. 10,000 230,000
Liberty Property Trust 8,300 204,387
Mack-Cali Realty Corp. 6,100 188,337
Prologis Trust 10,000 207,500
Spieker Properties, Inc. 6,900 238,913
3,421,831
Self Storage REITs (2.96%)
Storage USA, Inc. 10,000 323,125
Shopping Center REITs (5.36%)
AMB Property Corp. 2,600 57,200
Burnham Pacific Properties, Inc. 14,900 179,731
Federal Realty Investment Trust 14,700 347,288
584,219
Total Portfolio Investments (98.88%) 10,786,039
Cash and receivables, net of liabilities (1.12%) 122,717
Total Net Assets (100.00%) $10,908,756
<PAGE>
SMALLCAP ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (91.73%)
Blast Furnace & Basic Steel
Products (1.41%)
Carpenter Technology Corp. 4,100 $ 139,144
NS Group, Inc. 7,100(a) 31,506
170,650
Commercial Banks (3.01%)
Associated Banc-Corp. 3,550 121,366
First Federal Capital Corp. 9,300 152,287
Valley National Bancorp. 3,200 90,200
363,853
Commercial Printing (2.17%)
Bowne & Co., Inc. 8,200 146,575
World Color Press, Inc. 3,800(a) 115,662
262,237
Communications Equipment (3.78%)
DSP Communications, Inc. 13,700(a) 209,781
Sawtek, Inc. 9,500(a) 166,250
Spectrian Corp. 6,400(a) 82,400
458,431
Communications Services, NEC (0.12%)
Smartalk Teleservices, Inc. 5,250(a) 13,945
Computer & Data Processing
Services (7.47%)
Advanced Communication System, Inc. 7,750(a) 96,875
Barra, Inc. 4,100(a) 96,862
Cotelligent, Inc. 9,000(a) 191,813
GTECH Holdings Corp. 3,100(a) 79,437
Hypercom Corp. 8,400(a) 82,950
ICG Communications, Inc. 4,000(a) 86,000
SPSS, Inc. 4,000(a) 75,500
Synopsys, Inc. 3,600(a) 195,300
904,737
Computer & Office Equipment (2.39%)
FORE Systems, Inc. 10,000(a) 183,125
Smart Modular Technologies, Inc. 3,800(a) 105,450
288,575
Construction & Related
Machinery (1.32%)
JLG Industries, Inc. 10,200 159,375
Crude Petroleum & Natural Gas (1.08%)
Nuevo Energy Co. 11,400(a) 131,100
Drugs (3.79%)
Chirex, Inc. 6,700(a) 143,213
Dura Pharmaceuticals, Inc. 6,600(a) 100,237
Inhale Therapeutic Systems, Inc. 5,300(a) 174,900
Matritech, Inc. 24,000(a) 39,750
458,100
Eating & Drinking Places (2.30%)
CEC Entertainment, Inc. 3,600(a) $ 99,900
Ruby Tuesday, Inc. 8,400 178,500
278,400
Electric Services (1.41%)
TNP Enterprises, Inc. 4,500 170,719
Electronic Components &
Accessories (5.09%)
DII Group, Inc. 14,100(a) 328,706
Hadco Corp. 2,600(a) 91,000
Microchip Technology, Inc. 5,300(a) 196,100
615,806
Family Clothing Stores (0.57%)
Pacific Sunwear of California, Inc. 4,200(a) 68,775
Fire, Marine & Casualty
Insurance (2.16%)
Berkley (W.R.) Corp. 3,900 132,844
HCC Insurance Holdings, Inc. 7,300 128,662
261,506
Footwear, Except Rubber (1.15%)
Wolverine World Wide, Inc. 10,500 139,125
Furniture & Home Furnishing
Stores (0.93%)
Cost Plus, Inc. 3,600(a) 112,950
Gas Production & Distribution (1.08%)
Piedmont Natural Gas Co. 3,600 130,050
General Industrial Machinery (2.34%)
Kaydon Corp. 3,400 136,212
Regal-Beloit Corp. 6,400 147,200
283,412
Grain Mill Products (1.13%)
Ralcorp Holdings, Inc. 7,500(a) 136,875
Groceries & Related Materials (1.07%)
Universal Corp. 3,700 129,963
Hospitals (1.12%)
Universal Health Services, Inc., Class B2,600(a) 134,875
Hotels & Motels (0.25%)
Lodgian, Inc. 6,200(a) 30,225
Industrial Machinery, NEC (0.40%)
Industrial Distribution Group, Inc. 6,300(a) 48,037
Industrial Organic Chemicals (0.64%)
CFC International, Inc. 9,600(a) 76,800
Life Insurance (1.06%)
MONY Group Inc. 4,100(a) 128,381
Measuring & Controlling Devices (1.85%)
Integrated Measurement Systems, Inc. 9,300(a) 69,750
Quickturn Design Systems, Inc. 10,750(a) 153,859
223,609
Medical & Dental Laboratories (0.84%)
Urocor, Inc. 15,900(a) $ 101,363
Medical Instruments & Supplies (2.29%)
Adac Laboratories 5,000(a) 99,844
Focal, Inc. 4,900(a) 47,163
Hologic, Inc. 10,700(a) 129,737
276,744
Medical Services & Health
Insurance (0.00%)
FPA Medical Management 8,800(a) 9
Men's & Boy's Clothing Stores (2.04%)
Abercrombie & Fitch Co. 2,800(a) 198,100
Hot Topic, Inc. 3,800(a) 48,925
247,025
Men's & Boys' Furnishings (3.06%)
Nautica Enterprises, Inc. 4,700(a) 70,500
Tommy Hilfiger Corp. 5,000(a) 300,000
370,500
Metal Forgings & Stampings (1.06%)
Varlen Corp. 5,575 128,573
Metal Services, NEC (0.91%)
BMC Industries, Inc. 17,600 110,000
Miscellaneous Apparel &
Accessory Stores (1.19%)
The Buckle, Inc. 6,000(a) 144,000
Miscellaneous Chemical Products (1.15%)
H.B. Fuller Co. 2,900 139,562
Miscellaneous Converted Paper
Products (1.22%)
Shorewood Packaging Corp. 7,200(a) 147,600
Miscellaneous Electrical Equipment &
Supplies (0.47%)
Motorcar Parts & Accessories 5,000(a) 57,187
Miscellaneous Equipment Rental &
Leasing (0.37%)
T & W Financial Corp. 4,000(a) 45,000
Miscellaneous Fabricated Metal
Products (1.09%)
Watts Industries, Inc. 7,900 131,338
Miscellaneous Manufacturers (1.17%)
Russ Berrie & Co. 6,000 141,000
Miscellaneous Shopping Goods
Stores (0.83%)
Zale Corp. 3,100(a) 99,975
Miscellaneous Textile Goods (1.03%)
Kellwood Co. 5,000 125,000
Miscellaneous Non-Metallic
Mineral Products (0.22%)
Hexcel Corp. 3,200(a) $ 26,800
Motor Vehicles & Equipment (0.62%)
United Auto Group, Inc. 8,200(a) 75,338
Motor Vehicles, Parts & Supplies (1.13%)
Keystone Automotive Industries, Inc. 6,500(a) 136,094
Non-Ferrous Rolling & Drawing (0.27%)
Titanium Metals Corp. 3,800 32,300
Non-Store Retailers (1.02%)
USA Floral Products, Inc. 10,700(a) 123,050
Office Furniture (0.99%)
Kimball International, Inc., Class B 6,300 119,700
Oil & Gas Field Services (1.37%)
Marine Drilling Co., Inc. 4,700(a) 36,131
Pride International, Inc. 18,300(a) 129,244
165,375
Personal Credit Institutions (0.07%)
Firstplus Financial Group, Inc. 3,000(a) 8,250
Personnel Supply Services (0.69%)
RemedyTemp, Inc. 5,500(a) 83,188
Petroleum Refining (0.73%)
IRI International Corp. 22,000(a) 88,000
Photographic Equipment &
Supplies (1.54%)
Imax Corp. 5,900(a) 186,588
Plumbing, Heating &
Air Conditioning (1.06%)
Apogee Enterprises, Inc. 11,400 128,250
Public Building & Related
Furniture (0.47%)
BE Aerospace, Inc. 2,700(a) 56,700
Rubber & Plastics Footwear (0.72%)
Vans, Inc. 12,700(a) 87,313
Savings Institutions (0.99%)
Community First Bankshares, Inc. 5,700 120,056
Security Brokers & Dealers (1.15%)
Jefferies Group, Inc. 2,800 138,950
Soap, Cleaners & Toilet Goods (1.63%)
Carter-Wallace, Inc. 6,900 135,413
Digene Corp. 11,200(a) 62,300
197,713
Surety Insurance (1.07%)
Enhance Financial Services Group, Inc. 4,300 129,000
Telephone Communication (1.01%)
Audiovox Corp., Class A 20,500(a) $ 121,719
Trucking & Courier Services (1.07%)
Werner Enterprises, Inc. 7,300 129,119
Women's Accessory &
Specialty Stores (1.22%)
Claire's Stores, Inc. 7,200 147,600
Women's Clothing Stores (2.88%)
St. John Knits, Inc. 4,900 127,400
Wet Seal, Inc., Class A 7,300(a) 220,369
347,769
Total Common Stocks 11,094,259
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Federal Agency Short-Term Obligations (6.54%)
Federal & Federally Sponsored
Credit (6.54%)
Investment in Joint Trade Account;
Federal Home Loan Bank System;
4.30%; 01/04/1999 $790,856 $ 790,573
Total Portfolio Investments (98.27%) 11,884,832
Cash and receivables, net of liabilities (1.73%) 209,473
Total Net Assets (100.00%) $12,094,305
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
SMALLCAP GROWTH ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (88.61%)
Accounting, Auditing &
Bookkeeping (1.44%)
Profit Recovery Group
International, Inc 3,250(a) $ 121,672
Advertising (1.89%)
TMP Worldwide, Inc. 3,800(a) 159,600
Apparel, Piece Goods & Notions (1.63%)
Men's Wearhouse, Inc. 4,350(a) $ 138,113
Business Credit Institutions (0.71%)
Resource America, Inc. 6,650 60,266
Communications Equipment (1.48%)
RF Micro Devices, Inc. 2,700(a) 125,213
Computer & Data Processing
Services (27.92%)
Aspen Technology, Inc. 7,200(a) 104,400
Axent Technologies, Inc. 3,250(a) 99,328
Ciber, Inc. 5,450(a) 152,259
CMGI, Inc. 300(a) 31,950
Eclipsys Corp. 2,850(a) 82,650
Engineering Animation, Inc. 900(a) 48,600
ICG Communications, Inc. 3,300(a) 70,950
Icon CMT Corp. 2,800(a) 44,800
Infoseek Corp. 1,300(a) 64,187
Lycos, Inc. 900(a) 50,006
Macromedia, Inc. 4,350(a) 146,541
Mercury Interactive Corp. 2,200(a) 139,150
Metro Information Services, Inc. 3,800(a) 114,000
Mindspring Enterprises, Inc. 800(a) 48,850
New Era of Networks, Inc. 3,300(a) 145,200
PRI Automation, Inc. 5,450(a) 141,700
Quadramed Corp. 3,900(a) 79,950
Sapient Corp. 1,500(a) 84,000
Software Ag Systems, Inc. 4,300(a) 77,937
Spyglass, Inc. 7,650(a) 168,300
Tier Technologies, Class B 9,350(a) 161,288
TSI International Software Ltd. 3,600(a) 172,350
USWeb Corp. 5,100(a) 134,512
2,362,908
Computer & Office Equipment (1.26%)
Micros Systems, Inc. 3,250(a) 106,844
Crude Petroleum & Natural Gas (0.81%)
Basin Exploration, Inc. 5,450(a) 68,466
Dairy Farms (0.80%)
Horizon Organic Holding Corp. 4,350(a) 67,425
Drugs (1.69%)
Theragenics Corp. 8,500(a) 142,906
Electronic Components &
Accessories (3.38%)
American Xtal Technology, Inc. 6,550(a) 59,769
Applied Micro Circuits Corp. 4,350(a) 147,764
Dupont Photomasks, Inc. 1,850(a) 78,509
286,042
Engineering & Architectural
Services (1.96%)
Tetra Tech, Inc. 6,125(a) 165,758
Fuel Dealers (1.43%)
Blue Rhino Corp. 5,450(a) 121,263
Health & Allied Services, NEC (1.40%)
Renal Care Group, Inc. 4,100(a) 118,131
Management & Public Relations (6.97%)
AHL Services, Inc. 3,250(a) $ 101,562
Diamond Technology Partners, Inc. 8,700(a) 166,388
First Consulting Group, Inc. 6,550(a) 134,275
Whitman-Hart, Inc. 6,800(a) 187,850
590,075
Measuring & Controlling Devices (0.15%)
North American Scientific 1,400(a) 12,775
Medical & Dental Laboratories (1.38%)
Idexx Lab, Inc. 4,350(a) 117,042
Medical Services &
Health Insurance (2.20%)
Province Healthcare Co. 5,200(a) 186,550
Miscellaneous Business Services (1.14%)
Forrester Research, Inc. 2,200(a) 96,250
Miscellaneous Durable Goods (1.62%)
HA-LO Industries, Inc. 3,650(a) 137,331
Miscellaneous Special Trade
Contractors (2.19%)
Dycom Industries, Inc. 3,250(a) 185,656
Non-Ferrous Rolling & Drawing (1.73%)
AFC Cable Systems, Inc. 4,350(a) 146,269
Oil & Gas Field Services (1.46%)
Atwood Oceanics, Inc. 1,950(a) 33,150
Paradigm Geophysical Ltd. 3,800(a) 19,475
Veritas DGC, Inc. 5,450(a) 70,850
123,475
Personnel Supply Services (2.84%)
Labor Ready, Inc. 6,500(a) 127,969
On Assignment, Inc. 3,250(a) 112,125
240,094
Radio & Television Broadcasting (2.49%)
Emmis Communications Corp. 1,750(a) 75,906
SBS Broadcasting S.A. 5,000(a) 135,000
210,906
Radio, Television &
Computer Stores (0.87%)
Guitar Center, Inc. 3,000(a) 73,875
Research & Testing Services (1.99%)
Pharmaceutical Product
Development, Inc. 5,600(a) 168,350
Sanitary Services (3.75%)
Casella Waste Systems, Inc. 2,200(a) 81,675
Stericycle, Inc. 5,450(a) 87,881
US Liquids, Inc. 6,550(a) 147,375
316,931
Savings Institutions (1.75%)
Telebanc Financial Corp. 4,350(a) 147,900
Special Industry Machinery (2.70%)
Asyst Technologies, Inc. 6,500(a) 132,437
Brooks Automation, Inc. 6,550(a) 95,794
228,231
Telephone Communication (4.29%)
Concentric Network Corp. 4,350(a) $ 144,638
Metromedia Fiber Networks, Inc. 4,200(a) 140,700
Viatel, Inc. 3,400(a) 77,775
363,113
Used Merchandise Stores (1.29%)
Cash America International, Inc. 7,200 109,350
Total Portfolio Investments (88.61%) 7,498,780
Cash and receivables, net of liabilities (11.39%) 963,848
Total Net Assets (100.00%) $8,462,628
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
SMALLCAP VALUE ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (95.97%)
Advertising (0.13%)
DoubleClick, Inc. 200(a) $ 9,112
Auto & Home Supply Stores (0.07%)
O'Reilly Automotive, Inc. 100(a) 4,725
Beverages (0.36%)
Adolph Coors Co., Class B 200 11,288
Beringer Wine Estates 300(a) 13,406
24,694
Business Credit Institutions (0.21%)
Heller Financial, Inc. 500(a) 14,688
Carpets & Rugs (0.19%)
Interface, Inc. 1,400 12,994
Combination Utility Services (2.21%)
Central Hudson Gas & Electric Corp. 3,400 152,150
Commercial Banks (7.68%)
BancorpSouth, Inc. 300 5,419
Bank Of Commerce 2,500 41,875
Colonial Bank Group, Inc. 10,700 128,400
GBC Bancorp. 100 2,575
Hamilton Bancorp., Inc. 300(a) 8,006
HUBCO, Inc. 1,800 54,225
Investors Financial Services 200 11,925
National Commerce Bancorp. 3,500 65,844
Prime Bancshares, Inc. 1,200 20,700
Republic Banking Corp. of Florida 2,300 24,437
Southwest Bancorp. of Texas, Inc. 600(a) 10,725
Summit Bancshares, Inc. 1,800 33,300
Sun Bancorp., Inc. 300(a) 5,550
TrustCo Bank Corp. 3,160 94,800
Westamerica Bancorp. 600 22,050
529,831
Commercial Printing (0.32%)
Banta Corp. 800 $ 21,900
Communications Equipment (0.65%)
ANTEC Corp. 500(a) 10,063
Excel Switching Corp. 700(a) 26,600
Lifeline Systems, Inc. 100(a) 2,500
PairGain Technologies, Inc. 300(a) 2,306
Tekelec 200(a) 3,312
44,781
Communications Services, NEC (0.52%)
ITC DeltaCom, Inc. 200(a) 3,050
L-3 Communications Holdings, Inc. 700(a) 32,594
35,644
Computer & Data Processing
Services (2.47%)
Aspect Development, Inc. 100(a) 4,431
Aspen Technology, Inc. 100(a) 1,450
BindView Development Corp. 500(a) 13,750
BroadVision, Inc. 100(a) 3,200
CNET, Inc. 100(a) 5,481
Cognex Corp. 300(a) 6,000
Concur Technologies, Inc. 100(a) 3,050
Condor Technology Solutions, Inc. 300(a) 3,000
CSG Systems International, Inc. 100(a) 7,900
Cyberian Outpost, Inc. 100(a) 2,750
Digital River, Inc. 100(a) 3,550
Eclipsys Corp. 100(a) 2,900
Equant ADR 200(a) 13,563
Exchange Applications, Inc. 100(a) 1,962
HNC Software, Inc. 100(a) 4,044
IDX Systems Corp. 200(a) 8,800
Incyte Pharmaceuticals, Inc. 200(a) 7,475
Legato Systems, Inc. 100(a) 6,594
Macromedia, Inc. 100(a) 3,369
MAPICS, Inc. 200(a) 3,300
Maxtor Corp. 1,900(a) 26,600
Metro Information Services, Inc. 100(a) 3,000
MicroStrategy, Inc. 100(a) 3,150
New Era of Networks, Inc. 100(a) 4,400
Pegasus Systems, Inc. 200(a) 7,200
Source Information Management Co. 500(a) 5,813
Transaction Systems Architects, Inc. 100(a) 5,000
TSI International Software Ltd. 100(a) 4,787
Visio Corp. 100(a) 3,656
170,175
Computer & Office Equipment (0.59%)
HMT Technology Corp. 1,400(a) 17,938
Proxim, Inc. 700(a) 18,681
Visual Networks, Inc. 100(a) 3,750
40,369
Construction & Related
Machinery (0.26%)
Smith International, Inc. 700(a) 17,631
Crude Petroleum & Natural Gas (1.61%)
Devon Energy Corp. 1,600 $ 49,100
Newfield Exploration Co. 2,800(a) 58,450
St. Mary Land & Exploration 200 3,700
111,250
Cut Stone & Stone Products (0.04%)
Rock of Ages Corp. 200(a) 2,850
Drugs (0.51%)
Human Genome Sciences, Inc. 200(a) 7,112
IDEC Pharmaceuticals 100(a) 4,700
Kos Pharmaceuticals, Inc. 200(a) 1,175
Ligand Pharmaceuticals, Class B 900(a) 10,463
Millenium Pharmaceuticals 300(a) 7,763
SangStat Medical Corp. 200(a) 4,250
35,463
Eating & Drinking Places (0.40%)
CEC Entertainment, Inc. 500(a) 13,875
P.F. Chang's China Bistro, Inc. 200(a) 4,550
Papa John's International, Inc. 200(a) 8,825
27,250
Electric Services (1.99%)
Central Louisiana Electric 4,000 137,250
Electrical Goods (0.56%)
Anixter International, Inc. 1,900(a) 38,594
Electronic Components &
Accessories (1.74%)
Applied Micro Circuits Corp. 400(a) 13,588
ATMI, Inc. 1,100(a) 27,775
Exar Corp. 100(a) 1,612
Hutchinson Technology, Inc. 300(a) 10,688
Integrated Device Technology, Inc. 1,500(a) 9,187
SDL, Inc. 1,000(a) 39,625
SIPEX Corp. 500(a) 17,563
120,038
Electronic Distribution
Equipment (0.30%)
Magnatek, Inc. 1,800(a) 20,812
Elementary & Secondary Schools (0.35%)
Education Management Corp. 600(a) 14,175
ITT Educational Services 300(a) 10,200
24,375
Family Clothing Stores (0.44%)
Urban Outfitters, Inc. 1,800(a) 30,375
Fire, Marine & Casualty
Insurance (1.59%)
Renaissance Holdings Ltd. 3,000 109,875
Freight Transportation
Arrangement (0.49%)
C. H. Robinson Worldwide, Inc. 1,300 33,719
Gas Production & Distribution (4.13%)
Atmos Energy Corp. 4,100 132,225
Public Service Co. of North Carolina 1,100 28,600
Wicor, Inc. 5,700 124,331
285,156
General Industrial Machinery (0.64%)
IDEX Corp. 1,800 $ 44,100
Health & Allied Services, NEC (0.27%)
Renal Care Group, Inc. 650(a) 18,728
Home Health Care Services (0.26%)
Pediatrix Medical Group, Inc. 300(a) 17,981
Hotels & Motels (1.59%)
Extended Stay Of America 8,100(a) 85,050
LaSalle Hotel Properties 700 7,262
Meristar Hotels & Resorts, Inc. 310(a) 814
MGM Grand, Inc. 600(a) 16,275
109,401
Household Furniture (0.90%)
Bush Industries 2,000 24,875
Select Comfort Corp. 100(a) 2,644
Stanley Furniture Co., Inc. 1,900(a) 34,675
62,194
Individual & Family Services (0.15%)
Sunrise Assisted Living, Inc. 200(a) 10,375
Industrial Inorganic Chemicals (3.79%)
Albemarle Corp. 6,900 163,875
General Chemical Group, Inc. 1,600 22,200
Mineral Technologies, Inc. 700 28,656
TETRA Technologies, Inc. 2,500(a) 27,344
USEC, Inc. 1,400 19,425
261,500
Industrial Machinery, NEC (0.33%)
Applied Power, Inc. 600 22,650
Industrial Organic Chemicals (2.15%)
Bush Boake Allen, Inc. 4,200(a) 148,050
Laundry, Cleaning & Garment
Services (0.46%)
Steiner Leisure Ltd. 1,000(a) 32,000
Life Insurance (1.90%)
Annuity & Life Re (Holdings), Ltd. 3,000 81,000
ARM Financial Corp. 2,100 46,594
MONY Group, Inc. 100(a) 3,131
130,725
Machinery, Equipment &
Supplies (1.15%)
National Oilwell, Inc. 1,600(a) 17,900
Willis Lease Financial Corp. 3,900(a) 61,425
79,325
Management & Public Relations (0.08%)
Wackenhut Corrections Corp. 200(a) 5,725
Measuring & Controlling Devices (0.70%)
Input/Output, Inc. 1,800(a) 13,163
Quickturn Design Systems, Inc. 600(a) 8,587
Veeco Instruments, Inc. 500(a) 26,563
48,313
Medical Instruments & Supplies (0.95%)
Affymetrix, Inc. 100(a) $ 2,438
CONMED Corp. 300(a) 9,900
Endocardial Solutions, Inc. 200(a) 2,000
Focal, Inc. 300(a) 2,887
Kensey Nash Corp. 1,400(a) 11,288
ResMed, Inc. 200(a) 9,075
Ventana Medical Systems 1,200(a) 25,950
Vital Signs, Inc. 100 1,750
65,288
Medical Services & Health
Insurance (0.69%)
Alternative Living Services 1,400(a) 47,950
Men's & Boys' Furnishings (0.10%)
Columbia Sportswear Co. 400(a) 6,750
Metal Forgings & Stamping (0.25%)
ABC Rail Products Corp. 1,400(a) 17,062
Metals & Minerals, Except
Petroleum (1.65%)
Commercial Metals Co. 4,100 113,775
Miscellaneous Business Services (0.54%)
Century Business Services, Inc. 800(a) 11,500
Pinkertons, Inc. 1,200(a) 25,575
37,075
Miscellaneous Durable Goods (0.33%)
HA-LO Industries, Inc. 600(a) 22,575
Miscellaneous Equipment Rental &
Leasing (0.15%)
Aaron Rents, Inc. 700 10,587
Miscellaneous Fabricated Metal
Products (0.55%)
Amcast Industrial Corp. 1,400 26,775
Shaw Group, Inc. 1,400(a) 11,200
37,975
Miscellaneous Food & Kindred
Products (0.27%)
American Italian Pasta 700(a) 18,463
Miscellaneous Investing (10.50%)
Burnham Pacific Properties, Inc. 5,100 61,519
CBL & Associates Properties, Inc. 2,200 56,788
Charles E. Smith Residential Realty, Inc.700 22,487
Cousins Properties, Inc. 2,700 87,075
ElderTrust 500 5,750
Federal Realty Investment Trust 200 4,725
Manufactured Home Communities, Inc. 2,600 65,163
Meristar Hospitality Corp. 2,764 51,307
Mills Corp. 1,600 31,800
National Golf Properties, Inc. 1,800 52,087
Post Properties, Inc. 3,700 142,219
The Macerich Co. 1,300 33,312
Weeks Corp. 3,900 109,931
724,163
Miscellaneous Plastics
Products, NEC (0.24%)
Aptargroup, Inc. 600 $ 16,837
Mortgage Bankers & Brokers (1.41%)
AMRESCO, Inc. 2,400(a) 21,000
Litchfield Financial Corp. 4,000 76,000
97,000
Motion Picture Production &
Services (0.07%)
Cinar Films, Inc., Class B 200(a) 5,075
Motor Vehicles & Equipment (1.31%)
Modine Manufacturing Co. 1,600 58,000
Wabash National Corp. 1,600 32,500
90,500
Motor Vehicles, Parts & Supplies (0.13%)
Sauer, Inc. 1,200 9,075
New & Used Car Dealers (1.47%)
Lithia Motors, Inc. 2,600(a) 42,900
Sonic Automotive, Inc. 1,700(a) 58,544
101,444
Newspapers (0.04%)
Journal Register Co. 200(a) 3,000
Non-Ferrous Rolling & Drawing (1.65%)
Mueller Industries, Inc. 5,600(a) 113,750
Non-Store Retailers (0.36%)
Fingerhut Cos., Inc. 1,600 24,700
Operative Builders (1.63%)
D. R. Horton, Inc. 4,900 112,700
Ophthalmic Goods (0.45%)
Sola International, Inc. 1,800(a) 31,050
Paper & Paper Products (0.09%)
School Specialty, Inc. 300(a) 6,412
Paperboard Containers & Boxes (0.54%)
Ivex Packaging Corp. 1,600(a) 37,200
Paperboard Mills (3.85%)
Caraustar Industries, Inc. 9,300 265,631
Personnel Supply Services (0.10%)
On Assignment, Inc. 200(a) 6,900
Petroleum & Petroleum Products (0.33%)
Plains Resources, Inc. 1,600(a) 22,500
Petroleum Refining (0.30%)
Tesoro Petroleum Corp. 1,700(a) 20,612
Photographic Equipment &
Supplies (1.11%)
Avid Technology 300(a) $ 7,013
Imax Corp. 1,400(a) 44,275
Pinnacle Systems, Inc. 700(a) 25,025
76,313
Plastic Materials & Synthetics (1.37%)
Geon Co. 4,100 94,300
Plumbing, Heating,
Air-Conditioning (0.08%)
Comfort Systems USA, Inc. 300(a) 5,362
Radio & Television Broadcasting (0.77%)
American States Water Co. 1,800 49,050
Emmis Communications Corp.100(a) 4,338
53,388
Real Estate Operators & Lessors (0.84%)
Arden Realty Group, Inc. 2,500 57,969
Research & Testing Services (0.25%)
Applied Analytical Industry 900(a) 15,638
U.S. Bioscience, Inc. 200(a) 1,437
17,075
Retail Stores, NEC (0.31%)
Computer Literacy, Inc. 100(a) 1,344
PETsMART, Inc. 1,800(a) 19,800
21,144
Savings Institutions (7.14%)
Bank United Corp. 4,000 157,000
Commercial Federal Corp. 2,000 46,375
Community First Bankshares, Inc. 3,300 69,506
Firstfed Financial Corp. 5,400(a) 96,525
Flagstar Bancorp., Inc. 2,900 75,763
Ocwen Financial Corp. 3,000(a) 36,937
TeleBanc Financial Corp. 300(a) 10,200
492,306
Sawmills & Planning Mills (2.53%)
Universal Forest Products 8,700 174,544
Search & Navigation Equipment (1.03%)
Orbital Sciences Corp. 1,600(a) 70,800
Special Trade Contractors (0.13%)
Service Experts, Inc. 300(a) 8,775
Telephone Communication (2.19%)
Concentric Network Corp. 1,800(a) 59,850
Exodus Communications, Inc. 100(a) 6,425
Global Crossing Ltd. 800(a) 36,100
Intermedia Communications, Inc. 200(a) 3,450
Metronet Communications ADR, Class B 1,000(a) 33,500
NEXTLINK Communications 100(a) 2,837
Teligent, Inc. 300(a) 8,625
150,787
Trucking & Courier Services,
Except Air (2.25%)
Allied Holdings, Inc. 4,000(a) 57,500
American Freightways Corp. 1,800(a) 20,756
Jevic Transportation, Inc. 200(a) 1,575
Werner Enterprises, Inc. 4,250 75,172
155,003
Trusts (0.20%)
Allied Capital Corp. 800 $ 13,850
Variety Stores (0.68%)
ShopKo Stores, Inc. 1,400(a) 46,550
Water Supply (0.96%)
E'Town Corp. 1,400 66,325
Total Portfolio Investment (95.97%) 6,617,308
Cash and receivables, net of liabilities (4.03%) 278,078
Total Net Assets (100.00%) $6,895,386
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
UTILITIES ACCOUNT
- --------------------------------------------------------------------------------
Shares
Held Value
- --------------------------------------------------------------------------------
Common Stocks (98.19%)
Combination Utility Services (21.45%)
Baltimore Gas & Electric Co. 12,500 $ 385,937
Citizens Utilities 65,996 536,218
Montana Power Co. 6,100 345,031
Nipsco Industries, Inc. 18,400 560,050
Pacificorp 18,900 398,081
Scana Corp. 10,800 348,300
Utilicorp United, Inc. 14,600 535,638
Washington Water Power Co. 20,800 400,400
Wisconsin Energy Corp. 13,200 414,975
3,924,630
Electric Services (40.26%)
Allegheny Energy 13,300 458,850
Carolina Power & Light Co. 8,700 409,444
Dominion Resources, Inc. 8,800 411,400
DQE, Inc. 12,000 527,250
Duke Energy Corp. 6,000 384,375
Edison International 18,800 524,050
Enron Corp. 9,500 542,094
FPL Group, Inc. 8,200 505,325
GPU, Inc. 11,800 521,413
Houston Industries, Inc. 15,500 497,937
Ipalco Enterprises, Inc. 6,600 365,887
MidAmerican Energy Holdings Co. 14,900 400,437
Pinnacle West Capital Corp. 13,100 555,113
Southern Co. 17,200 499,875
Teco Energy, Inc. 13,300 374,894
Texas Utilities Holdings 8,300 387,506
7,365,850
Gas Production & Distribution (2.58%)
AGL Resources, Inc. 5,000 115,312
New Jersey Resources Corp. 4,900 193,550
Peoples Energy Corp. 4,100 163,488
472,350
Telephone Communication (33.90%)
Ameritech Corp. 11,400 $ 722,475
AT&T Corp. 10,200 767,550
Bell Atlantic Corp. 12,200 693,113
Bellsouth Corp. 14,600 728,175
GTE Corp. 10,100 681,119
MCI Worldcom, Inc. 10,163 729,195
RCN Corp. 22,000(a) 389,125
Sprint Corp. 8,100 681,412
Sprint PCS Group 3,500(a) 80,937
U.S. West, Inc. 11,300 730,263
6,203,364
Total Common Stocks 17,966,194
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------------------------------------------------------------------------------
Federal Agency Short-Term Obligations (4.97%)
Federal & Federally Sponsored
Credit (4.97%)
Investment In Joint Trade Account;
Federal Home Loan Bank System;
4.30%; 1/4/1999 $910,067 $ 910,067
Total Portfolio Investments (103.16%) 18,876,261
Liabilities, net of cash and receivables (-3.16%) (578,187)
Total Net Assets (100.00%) $18,298,074
(a) Non-income producing security - No dividend paid during the past twelve
months.
<PAGE>
FINANCIAL HIGHLIGHTS
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
Selected data for a share of Capital Stock outstanding throughout
each year ended December 31 (except as noted):
<TABLE>
<CAPTION>
AGGRESSIVE GROWTH ACCOUNT(a) 1998 1997 1996 1995 1994(b)
- ------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $16.30 $14.52 $12.94 $10.11 $9.92
Income from Investment Operations:
Net Investment Income............................... .04 .04 .11 .13 .05
Net Realized and Unrealized Gain (Loss) on Investments 2.99 4.26 3.38 4.31 .24
Total from Investment Operations 3.03 4.30 3.49 4.44 .29
Less Dividends and Distributions:
Dividends from Net Investment Income................ (.04) (.04) (.11) (.13) (.05)
Distributions from Capital Gains.................... (.96) (2.48) (1.80) (1.48) (.05)
Total Dividends and Distributions (1.00) (2.52) (1.91) (1.61) (.10)
Net Asset Value, End of Period......................... $18.33 $16.30 $14.52 $12.94 $10.11
Total Return........................................... 18.95% 30.86% 28.05% 44.19% 2.59%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $224,058 $149,182 $90,106 $33,643 $13,770
Ratio of Expenses to Average Net Assets............. .78% .82% .85% .90% 1.03%(d)
Ratio of Net Investment Income to Average Net Assets .22% .29% 1.05% 1.34% 1.06%(d)
Portfolio Turnover Rate............................. 155.6% 172.6% 166.9% 172.9% 105.6%(d)
</TABLE>
<TABLE>
<CAPTION>
ASSET ALLOCATION ACCOUNT(a) 1998 1997 1996 1995 1994(b)
- ------------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $11.94 $11.48 $11.11 $9.79 $9.98
Income from Investment Operations:
Net Investment Income............................... .31 .30 .36 .40 .23
Net Realized and Unrealized Gain (Loss) on Investments .76 1.72 1.06 1.62 (.18)
Total from Investment Operations 1.07 2.02 1.42 2.02 .05
Less Dividends and Distributions:
Dividends from Net Investment Income................ (.31) (.30) (.36) (.40) (.23)
Distributions from Capital Gains.................... (.40) (1.26) (.69) (.30) --
Excess Distributions from Capital Gains(e).......... -- -- -- -- (.01)
Total Dividends and Distributions (.71) (1.56) (1.05) (.70) (.24)
Net Asset Value, End of Period......................... $12.30 $11.94 $11.48 $11.11 $9.79
Total Return........................................... 9.18% 18.19% 12.92% 20.66% .52%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $84,089 $76,804 $61,631 $41,074 $28,041
Ratio of Expenses to Average Net Assets............. .89% .89% .87% .89% .95%(d)
Ratio of Net Investment Income to Average Net Assets 2.51% 2.55% 3.45% 4.07% 4.27%(d)
Portfolio Turnover Rate............................. 162.7% 131.6% 108.2% 47.1% 60.7%(d)
See accompanying notes.
</TABLE>
Selected data for a share of Capital Stock outstanding
throughout each year ended December 31:
<TABLE>
<CAPTION>
BALANCED ACCOUNT(a) 1998 1997 1996 1995 1994
- ---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $15.51 $14.44 $13.97 $11.95 $12.77
Income from Investment Operations:
Net Investment Income............................... .49 .46 .40 .45 .37
Net Realized and Unrealized Gain (Loss) on Investments 1.33 2.11 1.41 2.44 (.64)
Total from Investment Operations 1.82 2.57 1.81 2.89 (.27)
Less Dividends and Distributions:
Dividends from Net Investment Income................ (.49) (.45) (.40) (.45) (.37)
Distributions from Capital Gains.................... (.59) (1.05) (.94) (.42) (.18)
Total Dividends and Distributions (1.08) (1.50) (1.34) (.87) (.55)
Net Asset Value, End of Period......................... $16.25 $15.51 $14.44 $13.97 $11.95
Total Return........................................... 11.91% 17.93% 13.13% 24.58% (2.09)%
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $198,603 $133,827 $93,158 $45,403 $25,043
Ratio of Expenses to Average Net Assets............. .59% .61% .63% .66% .69%
Ratio of Net Investment Income to Average Net Assets 3.37% 3.26% 3.45% 4.12% 3.42%
Portfolio Turnover Rate............................. 24.2% 69.7% 22.6% 25.7% 31.5%
</TABLE>
<TABLE>
<CAPTION>
BOND ACCOUNT(a) 1998 1997 1996 1995 1994
- ------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $11.78 $11.33 $11.73 $10.12 $11.16
Income from Investment Operations:
Net Investment Income............................... .66 .76 .68 .62 .72
Net Realized and Unrealized Gain (Loss) on Investments .25 .44 (.40) 1.62 (1.04)
Total from Investment Operations .91 1.20 .28 2.24 (.32)
Less Dividends and Distributions:
Dividends from Net Investment Income................ (.66) (.75) (.68) (.63) (.72)
Excess Distributions from Capital Gains(e).......... (.01) -- -- -- --
Total Dividends and Distributions (.67) (.75) (.68) (.63) (.72)
Net Asset Value, End of Period......................... $12.02 $11.78 $11.33 $11.73 $10.12
Total Return........................................... 7.69% 10.60% 2.36% 22.17% (2.90)%
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $121,973 $81,921 $63,387 $35,878 $17,108
Ratio of Expenses to Average Net Assets............. .51% .52% .53% .56% .58%
Ratio of Net Investment Income to Average Net Assets 6.41% 6.85% 7.00% 7.28% 7.86%
Portfolio Turnover Rate............................. 26.7% 7.3% 1.7% 5.9% 18.2%
</TABLE>
FINANCIAL HIGHLIGHTS (Continued)
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
Selected data for a share of Capital Stock outstanding
throughout each year ended December 31:
<TABLE>
<CAPTION>
CAPITAL VALUE ACCOUNT(a) 1998 1997 1996 1995 1994
- --------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $34.61 $29.84 $27.80 $23.44 $24.61
Income from Investment Operations:
Net Investment Income............................... .71 .68 .57 .60 .62
Net Realized and Unrealized Gain (Loss) on Investments 3.94 7.52 5.82 6.69 (.49)
Total from Investment Operations 4.65 8.20 6.39 7.29 .13
Less Dividends and Distributions:
Dividends from Net Investment Income................ (.71) (.67) (.58) (.60) (.61)
Distributions from Capital Gains.................... (1.36) (2.76) (3.77) (2.33) (.69)
Total Dividends and Distributions (2.07) (3.43) (4.35) (2.93) (1.30)
Net Asset Value, End of Period......................... $37.19 $34.61 $29.84 $27.80 $23.44
Total Return........................................... 13.58% 28.53% 23.50% 31.91% .49%
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $385,724 $285,231 $205,019 $135,640 $120,572
Ratio of Expenses to Average Net Assets............. .44% .47% .49% .51% .51%
Ratio of Net Investment Income to Average Net Assets 2.07% 2.13% 2.06% 2.25% 2.36%
Portfolio Turnover Rate............................. 22.0% 23.4% 48.5% 49.2% 44.5%
</TABLE>
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES ACCOUNT(a) 1998 1997 1996 1995 1994
- ----------------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $10.72 $10.31 $10.55 $9.38 $10.61
Income from Investment Operations:
Net Investment Income............................... .60 .66 .59 .60 .76
Net Realized and Unrealized Gain (Loss) on Investments .28 .41 (.24) 1.18 (1.24)
Total from Investment Operations .88 1.07 .35 1.78 (.48)
Less Dividends from Net Investment Income.............. (.59) (.66) (.59) (.61) (.75)
Net Asset Value, End of Period......................... $11.01 $10.72 $10.31 $10.55 $9.38
Total Return........................................... 8.27% 10.39% 3.35% 19.07% (4.53)%
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $141,317 $94,322 $85,100 $50,079 $36,121
Ratio of Expenses to Average Net Assets............. .50% .52% .52% .55% .56%
Ratio of Net Investment Income to Average Net Assets 6.15% 6.37% 6.46% 6.73% 7.05%
Portfolio Turnover Rate............................. 11.0% 9.0% 8.4% 9.8% 23.2%
See accompanying notes.
</TABLE>
Selected data for a share of Capital Stock outstanding throughout
each year ended December 31 (except as noted):
<TABLE>
<CAPTION>
GROWTH ACCOUNT(a) 1998 1997 1996 1995 1994(f)
- -------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $17.21 $13.79 $12.43 $10.10 $9.60
Income from Investment Operations:
Net Investment Income............................... .21 .18 .16 .17 .07
Net Realized and Unrealized Gain (Loss) on Investments 3.45 3.53 1.39 2.42 .51
Total from Investment Operations 3.66 3.71 1.55 2.59 .58
Less Dividends and Distributions:
Dividends from Net Investment Income................ (.21) (.18) (.16) (.17) (.08)
Distributions from Capital Gains.................... (.20) (.10) (.03) (.09) --
Excess Distributions from Capital Gains(e).......... -- (.01) -- -- --
Total Dividends and Distributions (.41) (.29) (.19) (.26) (.08)
Net Asset Value, End of Period......................... $20.46 $17.21 $13.79 $12.43 $10.10
Total Return........................................... 21.36% 26.96% 12.51% 25.62% 5.42%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $259,828 $168,160 $99,612 $42,708 $13,086
Ratio of Expenses to Average Net Assets............. .48% .50% .52% .58% .75%(d)
Ratio of Net Investment Income to Average Net Assets 1.25% 1.34% 1.61% 2.08% 2.39%(d)
Portfolio Turnover Rate............................. 9.0% 15.4% 2.0% 6.9% 0.9%(d)
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD ACCOUNT(a) 1998 1997 1996 1995 1994
- ------------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $8.90 $8.72 $8.39 $7.91 $8.62
Income from Investment Operations:
Net Investment Income............................... .80 .76 .80 .76 .77
Net Realized and Unrealized Gain (Loss) on Investments (.85) .18 .30 .51 (.72)
Total from Investment Operations (.05) .94 1.10 1.27 .05
Less Dividends and Distributions:
Dividends from Net Investment Income................ (.79) (.76) (.77) (.77) (.76)
Excess Distributions from Net Investment Income(e).. -- -- -- (.02) --
Total Dividends and Distributions (.79) (.76) (.77) (.79) (.76)
Net Asset Value, End of Period......................... $8.06 $8.90 $8.72 $8.39 $7.91
Total Return........................................... (.56)% 10.75% 13.13% 16.08% .62%
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $14,043 $15,837 $13,740 $11,830 $9,697
Ratio of Expenses to Average Net Assets............. .68% .68% .70% .73% .73%
Ratio of Net Investment Income to Average Net Assets 8.68% 8.50% 9.21% 9.09% 9.02%
Portfolio Turnover Rate............................. 87.8% 32.0% 32.0% 35.1% 30.6%
</TABLE>
FINANCIAL HIGHLIGHTS (Continued)
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
Selected data for a share of Capital Stock outstanding throughout
each year ended December 31 (except as noted):
<TABLE>
<CAPTION>
INTERNATIONAL ACCOUNT(a) 1998 1997 1996 1995 1994(f)
- --------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $13.90 $13.02 $10.72 $9.56 $9.94
Income from Investment Operations:
Net Investment Income............................... .26 .23 .22 .19 .03
Net Realized and Unrealized Gain (Loss) on Investments 1.11 1.35 2.46 1.16 (.33)
Total from Investment Operations 1.37 1.58 2.68 1.35 (.30)
Less Dividends and Distributions:
Dividends from Net Investment Income................ (.25) (.23) (.22) (.18) (.05)
Excess Distributions from Net Investment Income(e).. -- -- -- -- (.02)
Distributions from Capital Gains.................... (.51) (.47) (.16) (.01) (.01)
Total Dividends and Distributions (.76) (.70) (.38) (.19) (.08)
Net Asset Value, End of Period......................... $14.51 $13.90 $13.02 $10.72 $9.56
Total Return........................................... 9.98% 12.24% 25.09% 14.17% (3.37)%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $153,588 $125,289 $71,682 $30,566 $13,746
Ratio of Expenses to Average Net Assets............. .77% .87% .90% .95% 1.24%(d)
Ratio of Net Investment Income to Average Net Assets 1.80% 1.92% 2.28% 2.26% 1.31%(d)
Portfolio Turnover Rate............................. 33.9% 22.7% 12.5% 15.6% 14.4%(d)
</TABLE>
INTERNATIONAL SMALLCAP ACCOUNT 1998(g)
- ------------------------------ ----
Net Asset Value, Beginning of Period................... $9.97
Income from Investment Operations:
Net Investment Income............................... .01
Net Realized and Unrealized Gain (Loss) on Investments (.95)
Total from Investment Operations (.94)
Less Dividends from Net Investment Income.............. (.03)
Net Asset Value, End of Period......................... $9.00
Total Return........................................... (10.37)%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $13,075
Ratio of Expenses to Average Net Assets............. 1.34%(d)
Ratio of Net Investment Income to Average Net Assets .24%(d)
Portfolio Turnover Rate............................. 60.3%(d)
See accompanying notes.
Selected data for a share of Capital Stock outstanding throughout
each year ended December 31 (except as noted):
MICROCAP ACCOUNT 1998(g)
- ---------------- ----
Net Asset Value, Beginning of Period................... $10.04
Income from Investment Operations:
Net Investment Income............................... .03
Net Realized and Unrealized Gain (Loss) on Investments (1.86)
Total from Investment Operations (1.83)
Less Dividends from Net Investment Income.............. (.04)
Net Asset Value, End of Period......................... $8.17
Total Return........................................... (18.42)%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $5,384
Ratio of Expenses to Average Net Assets............. 1.38%(d)
Ratio of Net Investment Income to Average Net Assets 0.57%(d)
Portfolio Turnover Rate............................. 55.3%(d)
<TABLE>
<CAPTION>
MIDCAP ACCOUNT(a) 1998 1997 1996 1995 1994
- -------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $35.47 $29.74 $25.33 $19.97 $20.79
Income from Investment Operations:
Net Investment Income............................... .22 .24 .22 .22 .14
Net Realized and Unrealized Gain (Loss) on Investments .94 6.48 5.07 5.57 .03
Total from Investment Operations 1.16 6.72 5.29 5.79 .17
Less Dividends and Distributions:
Dividends from Net Investment Income................ (.22) (.23) (.22) (.22) (.14)
Distributions from Capital Gains.................... (2.04) (.76) (.66) (.21) (.85)
Total Dividends and Distributions (2.26) (.99) (.88) (.43) (.99)
Net Asset Value, End of Period......................... $34.37 $35.47 $29.74 $25.33 $19.97
Total Return........................................... 3.69% 22.75% 21.11% 29.01% .78%
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $259,470 $224,630 $137,161 $58,520 $23,912
Ratio of Expenses to Average Net Assets............. .62% .64% .66% .70% .74%
Ratio of Net Investment Income to Average Net Assets .63% .79% 1.07% 1.23% 1.15%
Portfolio Turnover Rate............................. 26.9% 7.8% 8.8% 13.1% 12.0%
</TABLE>
FINANCIAL HIGHLIGHTS (Continued)
PRINCIPAL VARIABLE CONTRACTS FUND, INC.
Selected data for a share of Capital Stock outstanding throughout
each year ended December 31 (except as noted):
MIDCAP GROWTH ACCOUNT 1998(g)
- --------------------- ----
Net Asset Value, Beginning of Period................... $9.94
Income from Investment Operations:
Net Investment Income (Operating Loss).............. (.01)
Net Realized and Unrealized Gain (Loss) on Investments (.28)
Total from Investment Operations (.29)
Net Asset Value, End of Period......................... $9.65
Total Return........................................... (3.40%)(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $8,534
Ratio of Expenses to Average Net Assets............. 1.27%(d)
Ratio of Net Investment Income to Average Net Assets (.14)%(d)
Portfolio Turnover Rate............................. 91.9%(d)
<TABLE>
<CAPTION>
MONEY MARKET ACCOUNT(a) 1998 1997 1996 1995 1994
- -------------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period................... $1.000 $1.000 $1.000 $1.000 $1.000
Income from Investment Operations:
Net Investment Income............................... .051 .051 .049 .054 .037
Net Realized and Unrealized Gain (Loss) on Investments -- -- -- -- --
Total from Investment Operations .051 .051 .049 .054 .037
Less Dividends from Net Investment Income.............. (.051) (.051) (.049) (.054) (.037)
Net Asset Value, End of Period......................... $1.000 $1.000 $1.000 $1.000 $1.000
Total Return........................................... 5.20% 5.04% 5.07% 5.59% 3.76%
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $83,263 $47,315 $46,244 $32,670 $29,372
Ratio of Expenses to Average Net Assets............. .52% .55% .56% .58% .60%
Ratio of Net Investment Income to Average Net Assets 5.06% 5.12% 5.00% 5.32% 3.81%
</TABLE>
REAL ESTATE ACCOUNT 1998(g)
- ------------------- ----
Net Asset Value, Beginning of Period................... $10.01
Income from Investment Operations:
Net Investment Income............................... .32
Net Realized and Unrealized Gain (Loss) on Investments (.97)
Total from Investment Operations (.65)
Less Dividends from Net Investment Income.............. (.29)
Net Asset Value, End of Period......................... $9.07
Total Return........................................... (6.56)%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $10,909
Ratio of Expenses to Average Net Assets............. 1.00%(d)
Ratio of Net Investment Income to Average Net Assets 5.40%(d)
Portfolio Turnover Rate............................. 5.6%(d)
See accompanying notes.
Selected data for a share of Capital Stock outstanding throughout the
periods ended December 31 (except as noted):
SMALLCAP ACCOUNT 1998(g)
- ---------------- ----
Net Asset Value, Beginning of Period................... $10.27
Income from Investment Operations:
Net Investment Income............................... --
Net Realized and Unrealized Gain (Loss) on Investments (2.06)
Total from Investment Operations (2.06)
Net Asset Value, End of Period......................... $8.21
Total Return........................................... (20.51)%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $12,094
Ratio of Expenses to Average Net Assets............. .98%(d)
Ratio of Net Investment Income to Average Net Assets (.05)%(d)
Portfolio Turnover Rate............................. 45.2%(d)
SMALLCAP GROWTH ACCOUNT 1998(g)
- ----------------------- ----
Net Asset Value, Beginning of Period................... $9.84
Income from Investment Operations:
Net Investment Income (Operating Loss).............. (.04)
Net Realized and Unrealized Gain (Loss) on Investments .30
Total from Investment Operations .26
Net Asset Value, End of Period......................... $10.10
Total Return........................................... 2.96%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $8,463
Ratio of Expenses to Average Net Assets............. 1.31%(d)
Ratio of Net Investment Income to Average Net Assets (.80)%(d)
Portfolio Turnover Rate............................. 166.5%(d)
SMALLCAP VALUE ACCOUNT 1998(g)
- ---------------------- ----
Net Asset Value, Beginning of Period................... $9.84
Income from Investment Operations:
Net Investment Income............................... .03
Net Realized and Unrealized Gain (Loss) on Investments (1.50)
Total from Investment Operations (1.47)
Less Dividends from Net Investment Income.............. (.03)
Net Asset Value, End of Period......................... $8.34
Total Return........................................... (15.06)%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $6,895
Ratio of Expenses to Average Net Assets............. 1.56%(d)
Ratio of Net Investment Income to Average Net Assets .73%(d)
Portfolio Turnover Rate............................. 53.4%(d)
UTILITIES ACCOUNT 1998(g)
- ----------------- ----
Net Asset Value, Beginning of Period................... $9.61
Income from Investment Operations:
Net Investment Income............................... .15
Net Realized and Unrealized Gain (Loss) on Investments 1.35
Total from Investment Operations 1.50
Less Dividends from Net Investment Income.............. (.18)
Net Asset Value, End of Period......................... $10.93
Total Return........................................... 15.36%(c)
Ratio/Supplemental Data:
Net Assets, End of Period (in thousands)............ $18,298
Ratio of Expenses to Average Net Assets............. .69%(d)
Ratio of Net Investment Income to Average Net Assets 2.93%(d)
Portfolio Turnover Rate............................. 9.5%(d)
FINANCIAL HIGHLIGHTS (Continued)
Notes to Financial Highlights
(a) Effective January 1, 1998 the following mutual funds were reorganized into
the Principal Variable Contracts Fund, Inc. as follows:
Former Fund Name Current Account Name
Principal Aggressive Growth Fund, Inc. Aggressive Growth Account
Principal Asset Allocation Fund, Inc. Asset Allocation Account
Principal Balanced Fund, Inc. Balanced Account
Principal Bond Fund, Inc. Bond Account
Principal Capital Accumulation Fund, Inc. Capital Value Account
Principal Government Securities Fund, Inc. Government Securities Account
Principal Growth Fund, Inc. Growth Account
Principal High Yield Fund, Inc. High Yield Account
Principal World Fund, Inc. International Account
Principal Emerging Growth Fund, Inc. MidCap Account
Principal Money Market Fund, Inc. Money Market Account
(b) Period from June 1, 1994, date shares first offered to public, through
December 31, 1994. Net investment income, aggregating $.01 per share for
the Aggressive Growth Account and $.01 per share for the Asset Allocation
Account for the period from the initial purchase of shares on May 23, 1994
through May 31, 1994, was recognized, none of which was distributed to the
sole shareholder, Principal Life Insurance Company, during the period.
Additionally, the Aggressive Growth Account and the Asset Allocation
Account incurred unrealized losses on investments of $.09 and $.03 per
share, respectively, during the initial interim period. This represented
activities of each account prior to the initial public offering of account
shares.
(c) Total return amounts have not been annualized.
(d) Computed on an annualized basis.
(e) Dividends and distributions which exceed net investment income and net
realized gains for financial reporting purposes but not for tax purposes
are reported as dividends in excess of net investment income or
distributions in excess of net realized gains on investments. To the extent
distributions exceed current and accumulated earnings and profits for
federal income tax purposes, they are reported as tax return of capital
distributions.
(f) Period from May 1, 1994, date shares first offered to the public, through
December 31, 1994. Net investment income, aggregating $.01 per share for
the Growth Account and $.04 per share for the International Account for the
period from the initial purchase of shares on March 23, 1994 through April
30, 1994, was recognized, none of which was distributed to the sole
shareholder, Principal Life Insurance Company, during the period.
Additionally, the Growth Account and the International Account incurred
unrealized losses on investments of $.41 and $.10 per share, respectively,
during the initial interim period. This represented activities of each
account prior to the initial public offering of account shares.
(g) Period from May 1, 1998, date shares first offered to the public, through
December 31, 1998. Per share net investment income and realized and
unrealized gains (losses) for the period from the initial purchase of
shares through April 30, 1998, were recognized as follows, none of which
was distributed to the sole shareholder, Principal Life Insurance Company,
during the period. This represents activities of each account prior to the
initial public offering.
Date Net
Operations Investment
Account Commenced Income
International SmallCap Account April 16, 1998 $.02
MicroCap Account April 9, 1998 .01
MidCap Growth Account April 23, 1998 .01
Real Estate Account April 23, 1998 .01
SmallCap Account April 9, 1998 --
SmallCap Growth Account April 2, 1998 --
SmallCap Value Account April 16, 1998 .01
Utilities Account April 2, 1998 .04
REPORT OF INDEPENDENT AUDITORS
The Boards of Directors and Shareholders
Principal Variable Contracts Fund, Inc.
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of Principal Variable Contracts Fund, Inc.
(comprised of the Aggressive Growth, Asset Allocation, Balanced, Bond, Capital
Value, Government Securities, Growth, High Yield, International, International
SmallCap, MicroCap, MidCap, MidCap Growth, Money Market, Real Estate, SmallCap,
SmallCap Growth, SmallCap Value and Utilities Accounts) as of December 31, 1998,
and the related statements of operations, statements of changes in net assets
and financial highlights for each of 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of December 31, 1998, by correspondence with the custodians
and brokers. As to securities relating to uncompleted transactions, we performed
other audit 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 respective accounts constituting the Principal Variable Contracts Fund,
Inc. at December 31, 1998, and the results of their operations, the changes in
their net assets and the financial highlights for each of the periods indicated
therein, in conformity with generally accepted accounting principles.
/S/ERNST & YOUNG LLP
Des Moines, Iowa
January 22, 1999
