<PAGE>
MEMBER OF
ANALYTIC OPTIONED 100% NO-LOAD-Trademark- MUTUAL FUND
EQUITY FUND COUNCIL
- -------------------
February 6, 1996
Dear Fellow Shareholders:
For the quarter ending December 31, 1995, your Fund's net asset value
increased 3.3% per share, while the S&P 500 increased 6.0%, both with dividends
reinvested. At year end, the Fund's share price was $13.26 after paying its 70th
consecutive quarterly dividend from net investment income of $0.06.
The Fund's net total return (dividends plus appreciation) was 532.9%, after
all expenses, including management fees, over the seventeen and one half years
since inception on July 1, 1978. Over the most recent ten years, the net total
return was 154.6%. This ten year return is equivalent to an annualized compound
growth rate of 9.8%, well ahead of the 3.4% average annual rate of inflation
(consumer price index) over this period. Although the S&P 500 was also well
ahead of inflation (14.9%), the Fund's return was achieved with 43% less risk
(volatility) as measured by standard deviation.
The Fund's capitalization weighting at quarter end showed 89% of the Fund in
large capitalization stocks, with 11% in mid-capitalization stocks. Large
capitalization is defined as companies with over $5 billion total market value
and mid-capitalization as companies between $200 million and $5 billion total
market value. The Fund currently has less than 1% of its portfolio in small
capitalization (under $200 million) issues.
Should you have any questions regarding your Fund's investment strategy or
results, please do not hesitate to call (800) 374-2633.
The Fund continues committed to its proven strategy of remaining virtually
fully invested in a well diversified portfolio of hedged, higher quality stocks.
The fund is well positioned to protect against market declines and to gain
substantially from market advances.
WE APPRECIATE AND THANK YOU FOR INVESTING WITH US.
/s/ ALAN L. LEWIS
Alan L. Lewis /s/ CHARLES L. DOBSON
PRESIDENT Charles L. Dobson
EXECUTIVE VICE PRESIDENT &
PORTFOLIO MANAGER
ANALYTIC OPTIONED EQUITY FUND
AVERAGE ANNUAL COMPOUND TOTAL RETURN
(GROWTH RATE)(1), PERIODS ENDING 12/29/95, PERCENT
<TABLE>
<S> <C>
One Year 21.5
Five Years 9.8
Ten Years 9.8
</TABLE>
(1) The investment returns quoted in this letter represent past returns, net of
all fees and expenses. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost.
2222 Martin Street, Suite 230, Irvine, California 92715-1454 - (800) 374-2633 -
Fax: (714) 833-8049
<PAGE>
We are pleased to announce that three of Analytic's mutual funds now appear
in the WALL STREET JOURNAL. They can be found under the bold print heading
"Analytic." The funds are: the Analytic Optioned Equity ("AOEF"); Master Fixed
Income Portfolio; and the Short Term Government Portfolio. The Enhanced Equity
Portfolio is not yet included, however it is tracked by several services that
provide Mutual Fund data to various publications. Because the total number of
mutual funds is now approximately 7,000, local newspapers limit the number of
funds they list. Should your local paper not include our funds, please call our
800 number for a daily price.
ECONOMIC OUTLOOK
U.S. stock markets had a record setting year, with the Dow Jones passing two
1000 point milestones, 4000 and 5000, the first time this has occurred in one
year. The returns for 1995 were the best since 1958 for the S&P 500, which was
up 6.02% for the quarter, and 37.58% for the year. The S&P MidCap 400 was up
1.41% for the quarter, and 30.94% for the year. The NASDAQ 100 Index was down
1.41% for the quarter, but up 43.20% for the year. All of the above are with
dividends reinvested in the indices.
Interest rates will continue to be a key to 1996 stock and bond market
returns. A continued trend toward lower yields will influence investors out of
the bond and money markets and into the domestic and international stock
markets. The inflation rate and federal budget accord will be a key to the bond
market as well as to the direction of rates. Slow economic growth is keeping
labor and raw material supplies in line, thus preventing a resurgence in
inflation. This should allow the Federal Reserve Board to continue to lower
short-term interest rates.
INVESTMENT RESULTS
1995 witnessed one of the largest yearly gains in stock market history. The
AOEF returned 21.5% for the year, net of all fees and expenses. Although this
return is significantly below the S&P 500, it is within a reasonable band of
expectation given your Fund's risk reducing strategy. (See yearly risk
comparison chart.) The AOEF has never had a negative calendar year from its
inception in 1978. This is a track record that only four other equity fund
managers equal over the same time period (SOURCE: MORNINGSTAR). For the risk
averse investor, or as part of an overall asset allocation, we believe the AOEF
is a good investment.
There were no short or long term capital gain distributions in 1995. To
understand how this can happen in a strong UP market, recall that one of the
AOEF's basic strategies is to buy a stock and sell a call option on that stock.
When the market rises, we buy back those options generally at a loss. When the
stocks on which options were sold appreciate rapidly, the value of the options
sold also appreciate. Buying back the appreciated options generates a short term
loss. However, your total return also reflects the appreciation of the
underlying stock: it may just not be realized. In flat, down or slightly rising
markets, the call options we sell generally expire worthless. When this occurs,
the dollar amount received from their sale is distributed to shareholders as a
short-term capital gain at year end.
SHAREHOLDER SERVICES (800) 374-2633
COMPLETE INVESTMENT RECORD FROM INCEPTION ON 7/1/78 TO 12/31/95
(PERCENTAGE)
<TABLE>
<CAPTION>
CPI
AOEF S&P 500 Index (Inflation)
--------- ------------- -------------
<S> <C> <C> <C>
Total Return....................... 532.9 1,189.5 134.7
Growth Rate........................ 11.1 15.7 5.0
Standard Deviation (Risk Level).... 8.1 14.7 1.2
Beta............................... 0.6 1.0 N/A
</TABLE>
<PAGE>
ANALYTIC OPTIONED EQUITY FUND TOTAL RETURN
Growth of $10,000 Investment 1/1/86 - 12/31/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AOEF S & P 500 CPI
<S> <C> <C> <C>
START 10.00 10.00 10.00
Mar-86 10.4193 11.4071 9.95723
Jun-86 10.8295 12.0814 10.0153
Sep-86 10.5500 11.2396 10.0855
Dec-86 11.0478 11.8471 10.1130
Mar-87 12.0639 14.3737 10.2596
Jun-87 12.4828 15.1122 10.3879
Sep-87 12.9804 16.1132 10.5192
Dec-87 11.5202 12.4667 10.5589
Mar-88 12.0871 13.1990 10.6596
Jun-88 12.7022 14.0695 10.7968
Sep-88 12.9296 14.1239 10.9615
Dec-88 13.3178 14.5623 11.0256
Mar-89 13.8810 15.5857 11.1903
Jun-89 14.5398 16.9567 11.3549
Sep-89 15.4979 18.7626 11.4373
Dec-89 15.6798 19.1481 11.5380
Mar-90 15.6195 18.5696 11.7759
Jun-90 15.9601 19.7376 11.8856
Sep-90 14.7815 17.0172 12.1418
Dec-90 15.9214 18.5406 12.2425
Mar-91 17.0033 21.2400 12.3523
Jun-91 17.0168 21.1961 12.4438
Sep-91 17.6410 22.3370 12.5536
Dec-91 18.0375 24.2047 12.6176
Mar-92 18.1109 23.5870 12.7457
Jun-92 18.4359 24.0506 12.8281
Sep-92 18.6586 24.7963 12.9287
Dec-92 19.1512 26.0612 12.9836
Mar-93 19.8391 27.1779 13.1392
Jun-93 19.9839 27.3177 13.2124
Sep-93 20.3078 28.0163 13.2764
Dec-93 20.4383 28.6647 13.3405
Mar-94 20.0453 27.5712 13.4686
Jun-94 20.3032 27.6837 13.5418
Sep-94 21.0641 29.0468 13.6699
Dec-94 20.9423 29.0394 13.6973
Mar-95 22.2418 31.8666 13.8529
Jun-95 23.5289 34.8904 13.9535
Sep-95 24.6521 37.6642 14.0085
Dec-95 25.4541 39.9087 14.0634
Average Annual Compound Total Return
1 Year 5 Years 10 Years
21.50% 9.80% 9.80%
Past performance is not predictive of future performance.
</TABLE>
YEARLY RISK COMPARISON
1/1/86 - 12/31/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AOEF S&P 500
<S> <C> <C>
86 10.4485 17.9359
87 16.7847 30.5012
88 5.40993 10.0717
89 7.09326 12.3535
90 11.1993 18.3895
91 8.47336 15.8044
92 4.06443 7.36764
93 3.64349 6.11632
94 6.92063 10.5374
95 3.53907 5.18414
</TABLE>
2
<PAGE>
ILLUSTRATION OF AN ASSUMED INVESTMENT OF $100,000
<TABLE>
<CAPTION>
Value After
Withdrawing
$2,500
Each Quarter or
End of Value Without Value of Value With 10% per Year of
Calendar Total Distributions Reinvested Distributions Intial
Quarter Return, % Reinvested Distributions Reinvested Investment
<S> <C> <C> <C> <C> <C> <C>
1986 I 4.19% $ 95,825 $ 8,365 $ 104,190 $ 101,690
II 3.94% 101,684 6,612 108,295 103,197
III -2.58% 98,451 7,050 105,501 98,034
IV 4.72% 92,256 18,225 110,481 100,161
1987 I 9.20% 96,970 23,675 120,645 106,876
II 3.47% 99,663 25,168 124,831 108,085
III 3.99% 102,963 26,849 129,812 109,897
IV -11.25% 76,633 38,575 115,208 95,034
1988 I 4.92% 79,394 41,483 120,876 97,210
II 5.09% 82,761 44,268 127,029 99,658
III 1.79% 83,636 45,667 129,303 98,941
IV 3.00% 81,212 51,970 133,182 99,410
1989 I 4.20% 83,704 55,072 138,776 101,085
II 4.70% 86,869 58,429 145,298 103,336
III 6.60% 91,785 63,103 154,888 107,656
IV 1.20% 87,542 69,204 156,746 106,448
1990 I -0.38% 86,465 69,686 156,151 103,543
II 2.18% 87,542 72,013 159,555 103,301
III -7.38% 80,337 67,443 147,780 93,177
IV 7.71% 80,269 78,904 159,174 97,861
1991 I 6.80% 85,051 84,947 169,997 102,016
II 0.08% 84,444 85,689 170,133 99,597
III 3.67% 86,869 89,509 176,377 100,752
IV 2.25% 82,761 97,585 180,346 100,519
1992 I 0.41% 82,559 98,526 181,085 98,431
II 1.79% 83,636 100,690 184,327 97,693
III 1.21% 84,175 102,382 186,557 96,375
IV 2.64% 80,606 110,876 191,482 96,420
1993 I 3.59% 83,030 115,326 198,356 97,381
II 0.73% 83,098 116,707 199,804 95,592
III 1.63% 83,838 119,223 203,061 94,650
IV 0.65% 80,539 123,842 204,381 92,765
1994 I -1.92% 78,519 121,938 200,457 88,484
II 1.29% 79,057 123,985 203,043 87,126
III 3.75% 81,481 129,175 210,657 87,893
IV -0.58% 74,882 134,553 209,435 84,883
1995 I 6.21% 79,125 143,316 222,441 87,655
II 5.79% 83,232 152,088 235,320 90,230
III 4.77% 86,801 159,744 246,545 92,034
IV 3.23% 89,293 165,216 254,508 92,506
</TABLE>
3
<PAGE>
ANALYTIC OPTIONED EQUITY FUND, INC. PORTFOLIO OF INVESTMENTS DECEMBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Oustanding Options
(*Indicates Put)
-----------------------------------------------------------
Investments Market Value
------------------------- ----------------------
Number of Market Shares Expiration Exercise Options Options
COMMON STOCKS Shares Value Optioned Date Price Bought Sold
----------- ------------ ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
AEROSPACE & DEFENSE--2.34%
Boeing Co. 6,000 $ 470,250 3,000 Feb 96 70 27,000
3,000 May 96 75 22,500
General Dynamics Corporation 10,500 620,812 7,000 Feb 96 55 32,812
3,500 May 96 60 11,812
------------ ---------
1,091,062 94,124
------------ ---------
AUTO RELATED--0.60%
T R W, Inc. 3,500 271,250 3,500 Apr 96 75 16,406
------------ ---------
271,250 16,406
------------ ---------
AUTOS & TRUCKS--2.58%
Chrysler Corp. 8,500 470,687 5,000 Jan 96 60 625
3,500 Apr 96 60 4,375
Ford Motor Co. 6,000 174,000
General Motors Corp. 9,100 481,162 4,100 Mar 96 55 5,637
5,000 Jun 96 55 13,125
------------ ---------
1,125,849 23,762
------------ ---------
BANKS/SAVINGS & LOANS--6.59%
Bankamerica Corp. 8,500 550,375 3,000 Jan 96 60 15,750
5,500 Apr 96 70 11,000
Barnett's Bank, Inc. 3,000 177,000 3,000 Jan 96 60 3,000
Bank of New York, Inc. 5,100 248,625 5,100 Apr 96 50 11,156
Bankers Trust New York,
Corporation 6,000 399,000 3,000 Jan 96 70 1,500
3,000 Apr 96 75 3,375
Citicorp 5,500 369,875 5,500 Apr 96 75 9,281
First Interstate Bancorp 9,200 1,255,800 3,600 Jan 96 85 187,200
5,600 Jan 96 90 263,200
J.P. Morgan & Co. 4,000 321,000 4,000 Mar 96 85 6,250
------------ ---------
3,321,675 511,712
------------ ---------
BREWERY/SPIRITS & TOBACCO--1.23%
American Brands, Inc. 5,300 236,512
U S T, Inc. 4,000 133,500 4,000 Feb 96 30 15,750
Seagram Co., Ltd. 5,000 173,125 5,000 Feb 96 37.5 2,187
------------ ---------
543,137 17,937
------------ ---------
BROADCAST RADIO & TELEVISION--0.11%
Viacom, Inc., Class A** 800 37,000
Viacom, Inc., Class B** 226 10,707
------------
47,707
------------
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Oustanding Options
(*Indicates Put)
-----------------------------------------------------------
Investments Market Value
------------------------- ----------------------
Number of Market Shares Expiration Exercise Options Options
COMMON STOCKS (CONTINUED) Shares Value Optioned Date Price Bought Sold
----------- ------------ ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
BUILDING/PACKAGE MATERIALS--(0.01%)
Masco Corp. $ 3,000 Jan 96 30* 1,312
3,000 Apr 96 30* 4,312
---------
5,624
---------
CHEMICALS--3.60%
Du Pont (E.I.) De Nemours
Co. 6,000 419,250 6,000 Apr 96 70 22,500
Grace (W R) & Co. 5,000 295,625 5,000 Feb 96 60 10,938
Hercules, Inc. 5,000 281,875 5,000 Mar 96 55 19,063
Monsanto Co. 4,000 490,000 4,000 Apr 96 105 77,000
Union Carbide Corp. 5,000 187,500 5,000 Apr 96 40 8,125
------------ ---------
1,674,250 137,626
------------ ---------
COMPUTER SERVICES/SOFTWARE--3.21%
Computer Associates Interna-
tional 5,000 284,375 5,000 Apr 96 55 36,250
Cisco Systems, Inc. 6,000 447,750 3,000 Jan 96 80 4,500
3,000 Apr 96 85 16,125
Microsoft Corp.** 6,000 526,500 3,000 Jan 96 105 187
3,000 Apr 96 105 6,000
Oracle Corp.** 5,000 211,875 5,000 Jun 96 45 23,125
3,500 Mar 96 45 * 17,063
------------ ---------
1,470,500 103,250
------------ ---------
COMPUTERS--2.38%
Compaq Computer Corp.** 7,500 360,000 2,500 Jan 96 50 2,813
5,000 Jan 96 55 937
International Business
Machines Corp. 5,800 532,150 2,900 Jan 96 105 362
2,900 Apr 96 105 4,894
Silicon Graphic, Inc. 5,000 137,500 5,000 Feb 96 35 3,750
------------ ---------
1,029,650 12,756
------------ ---------
COSMETICS & PERSONAL CARE--1.02%
Gillette Co. 4,000 208,500 4,000 Mar 96 50 14,500
International Flavors & Fra-
grances 5,000 240,000
------------ ---------
448,500 14,500
------------ ---------
</TABLE>
5
<PAGE>
ANALYTIC OPTIONED EQUITY FUND, INC. PORTFOLIO OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Oustanding Options
(*Indicates Put)
-----------------------------------------------------------
Investments Market Value
------------------------- ----------------------
Number of Market Shares Expiration Exercise Options Options
COMMON STOCKS (CONTINUED) Shares Value Optioned Date Price Bought Sold
----------- ------------ ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
ELECTRIC/GAS/WATER UTILITIES--3.98%
Dominion Resources, Inc. 10,000 $ 412,500
Duke Power Co. 5,000 236,875
Consolidated Edison of New
York 3,300 105,600
Pacific Gas & Electric 8,000 227,000
Public Service Enterprise
Group, Inc. 6,000 183,750
Southern Co. 22,000 541,750 6,000 Feb 96 22.5 12,000
------------ ---------
1,707,475 12,000
------------ ---------
ELECTRICAL EQUIPMENT--0.96%
General Instrument
Corporation 2,500 58,437 2,500 Mar 96 27.5 1,562
Honeywell, Inc. 8,000 389,000 5,000 Feb 96 45 22,813
3,000 Aug 96 50 12,188
------------ ---------
447,437 36,563
------------ ---------
ELECTRONICS--6.59%
General Electric Co. 12,700 914,400 1,200 Jan 96 65 8,625
6,000 Mar 96 75 11,250
5,500 Jun 96 70 30,250
Hewlett-Packard Co. 6,000 502,500 3,000 Jan 96 80 15,000
3,000 Feb 96 95 3,750
Intel Corp. 10,000 567,500 5,000 Jan 96 67.5 625
5,000 Apr 96 70 6,250
Motorola, Inc. 9,000 513,000 4,500 Apr 96 60 16,875
4,500 Apr 96 70 5,344
Texas Instruments, Inc. 8,000 414,000 4,000 Jan 96 75 250
4,000 Apr 96 85 1,125
------------ ---------
2,911,400 99,344
------------ ---------
ENTERTAINMENT/ADVERTISING--1.49%
Disney (Walt) Co. 7,000 413,000 3,500 Jan 96 65 437
3,500 Apr 96 65 4,375
King World Productions,
Inc.** 6,000 233,250 6,000 Feb 96 40 5,250
------------ ---------
646,250 10,062
------------ ---------
ENVIRONMENTAL CONTROL--0.86%
WMX Technologies, Inc. 12,000 358,500 6,000 Feb 96 30 * 7,125
------------ -----------
358,500 7,125
------------ -----------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Oustanding Options
(*Indicates Put)
-----------------------------------------------------------
Investments Market Value
------------------------- ----------------------
Number of Market Shares Expiration Exercise Options Options
COMMON STOCKS (CONTINUED) Shares Value Optioned Date Price Bought Sold
----------- ------------ ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
FINANCIAL SERVICES & BROKERS--2.51%
American Express Co. 5,000 $ 206,875 5,000 Apr 96 42.5 10,000
Dean Witter Discover and Co. 5,000 235,000 5,000 Apr 96 60 1,875
3,000 Apr 96 50* 13,125
Merrill Lynch & Co. 6,000 306,000 3,000 Jan 96 60 187
3,000 Apr 96 60 2,812
Salomon, Inc. 10,000 355,000 5,000 Jan 96 40 313
5,000 Apr 96 40 3,750
------------ ---------
1,102,875 32,062
------------ ---------
FOOD PROCESSING & WHOLESALE--5.71%
Campbell Soup Co. 6,000 360,000 3,000 Jan 96 50 32,813
3,000 May 96 55 20,438
Heinz (H.J.) Co. 17,550 581,344 4,500 Jan 96 33.375 984
9,000 Mar 96 33.375 10,125
Kellogg Co. 5,000 Mar 96 70 41,875
Coca-Cola Co. 10,000 742,500 5,000 Jan 96 70 22,500
5,000 Feb 96 75 13,125
Philip Morris Companies,
Inc. 3,500 316,750 3,500 Mar 96 80 41,781
Quaker Oats Co. 4,200 144,900 4,200 Apr 96 40 3,150
Ralston-Ralston Purina Group 6,000 374,250
Wrigley, Wm. Jr. Co. 5,000 Mar 96 50 19,063
------------ ----------- ---------
2,519,744 60,938 144,916
------------ ----------- ---------
FOREST PRODUCTS & PAPER--1.68%
Champion International 3,500 147,000 3,500 Mar 96 55 547
Georgia-Pacific Corp. 3,000 205,875 3,000 Apr 96 90 750
International Paper Co. 10,000 378,750 5,000 Jan 96 37.5 5,625
5,000 Apr 96 40 6,563
------------ ---------
731,625 13,485
------------ ---------
HOME--CONSTRUCTION/TOOLS/FURNISHINGS--0.41%
Snap On, Inc. 1,000 45,250 1,000 Mar 96 45 1,813
Whirlpool Corp. 2,500 133,125 2,500 Mar 96 60 938
------------ ---------
178,375 2,751
------------ ---------
HOUSEHOLD PRODUCTS/WARES--1.56%
Procter & Gamble Co. 5,000 415,000 5,000 Jan 96 75 44,375
Premark International, Inc. 6,000 303,750 6,000 Jan 96 55 750
Rubbermaid, Inc. 3,500 Feb 96 27.5 * 6,563
------------ ---------
718,750 51,688
------------ ---------
</TABLE>
7
<PAGE>
ANALYTIC OPTIONED EQUITY FUND, INC. PORTFOLIO OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Oustanding Options
(*Indicates Put)
-----------------------------------------------------------
Investments Market Value
------------------------- ----------------------
Number of Market Shares Expiration Exercise Options Options
COMMON STOCKS (CONTINUED) Shares Value Optioned Date Price Bought Sold
----------- ------------ ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
INSURANCE--2.20%
Allstate Corpration 9,270 $ 381,229 5,000 Apr 96 40 15,625
Cigna Corporation 3,500 361,375 3,500 Apr 96 95 37,625
Loews Corporation 3,800 Mar 96 77.5* 11,638
Torchmark Corporation 6,000 271,500 3,000 Feb 96 45 4,500
3,000 May 96 45 8,438
------------ ---------
1,014,104 77,826
------------ ---------
IRON & STEEL--0.73%
Nucor Corp. 6,000 342,750 3,500 Jan 96 50 23,625
2,500 Jan 96 55 6,406
------------ ---------
342,750 30,031
------------ ---------
MACHINE CONSTRUCTIONS/DIVERSIFIED--0.43%
Caterpillar, Inc. 3,200 188,000 3,200 May 96 70 3,200
------------ ---------
188,000 3,200
------------ ---------
MEDICAL SUPPLIES & SERVICES--0.57%
St. Jude Medical, Inc.** 3,750 161,250 3,750 Jan 96 40 13,125
United Healthcare Corpora-
tion** 5,000 Jan 96 50 73,125
United States Surgical
Corporation 1,000 21,375
------------ ----------- ---------
182,625 73,125 13,125
------------ ----------- ---------
METALS & MINING--1.18%
Aluminum Company of America 6,000 317,250 3,000 Apr 96 55 7,875
3,000 Apr 96 65 1,125
Barrick Gold, Corporation 5,000 Apr 96 25 12,500
Alcan Aluminum 6,000 186,750 6,000 Jun 96 35 6,000
------------ ----------- ---------
504,000 12,500 15,000
------------ ----------- ---------
MISCELLANEOUS MANUFACTURING--1.79%
Eastman Kodak Co. 7,000 469,000 3,500 Jul 96 75 6,562
3,500 Jan 96 60 * 438
Minnesota Mining & Manufac-
turing 5,000 331,250 5,000 Jan 96 60 28,750
------------ ----------- ---------
800,250 438 35,312
------------ ----------- ---------
OFFICE/BUSINESS EQUIPMENT--0.77%
Xerox Corporation 2,500 342,500 2,500 Apr 96 140 15,937
------------ ---------
342,500 15,937
------------ ---------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Oustanding Options
(*Indicates Put)
-----------------------------------------------------------
Investments Market Value
------------------------- ----------------------
Number of Market Shares Expiration Exercise Options Options
COMMON STOCKS (CONTINUED) Shares Value Optioned Date Price Bought Sold
----------- ------------ ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
OIL/GAS DOMESTIC--2.26%
Atlantic Richfield Co. 5,000 $ 553,750 5,000 Jan 96 115 1,875
Phillips Petroleum 5,000 May 96 32.5 13,437
Pennzoil Co. 2,000 84,500 2,000 Jan 96 55 250
Tenneco, Inc. 6,300 312,637
------------ ----------- ---------
950,887 13,437 2,125
------------ ----------- ---------
OIL/GAS INTERNATIONAL--7.39%
Amoco Corp. 4,500 323,437 4,500 May 96 75 7,875
Chevron Corp. 11,500 603,750 5,000 Jan 96 50 14,688
6,500 Mar 96 50 21,125
Exxon Corp. 12,500 1,001,563 6,500 Apr 96 75 52,813
6,000 Apr 96 85 10,500
Mobil Corp. 6,000 672,000 3,000 May 96 110 20,625
2,000 May 96 120 5,000
Shell Transporation &
Trading 5,000 406,875 5,000 Feb 96 80 15,000
Texaco, Inc. 4,000 314,000 4,000 Apr 96 75 21,250
------------ ---------
3,321,625 168,876
------------ ---------
OIL EQUIPMENT/EXPLORATION & SERVICES--0.44%
Schlumberger, Ltd. 3,000 Feb 96 65 * 2,250
Triton Energy Corp.** 3,500 200,813 3,500 Jan 96 55 11,812
------------ ---------
200,813 14,062
------------ ---------
PHARMACEUTICALS & BIOTECHNOLOGY--6.83%
Amgen, Inc.** 5,000 296,875 5,000 Apr 96 50 56,250
Bristol Myers Squibb Co. 4,000 343,500 4,000 Mar 96 80 25,500
Genentech** 10,000 530,000 5,000 Jan 96 45 * 156
5,000 Apr 96 50 * 938
Medtronic, Inc. 7,000 391,125 3,500 Feb 96 55 9,188
3,500 May 96 60 9,625
Merck & Co. 15,000 986,250 7,500 Jan 96 55 82,500
7,500 Apr 96 65 30,000
Molecular Biosystems, Inc.** 16 110
Pfizer, Inc. 5,000 Jan 96 60 * 3,750
Pharmacia and Upjohn Co. 11,600 449,500 4,000 Jan 96 40 66,000
4,000 Apr 96 50 28,500
Warner-Lambert Co. 2,500 242,813 2,500 Jan 96 90 18,750
------------ ----------- ---------
3,240,173 1,094 330,063
------------ ----------- ---------
PUBLISHING--0.55%
Dun & Bradstreet Corp. 4,000 259,000 4,000 Feb 96 60 22,000
McGraw-Hill, Inc. 3,000 Feb 96 85 * 3,938
------------ ---------
259,000 25,938
------------ ---------
</TABLE>
9
<PAGE>
ANALYTIC OPTIONED EQUITY FUND, INC. PORTFOLIO OF INVESTMENTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Oustanding Options
(*Indicates Put)
-----------------------------------------------------------
Investments Market Value
------------------------- ----------------------
Number of Market Shares Expiration Exercise Options Options
COMMON STOCKS (CONTINUED) Shares Value Optioned Date Price Bought Sold
----------- ------------ ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
RAILROAD/TRUCKING/MISCELLANEOUS--1.60%
Consolidated Rail
Corporation 5,000 $ 350,000 5,000 Jan 96 70 11,250
Kansas City Southern
Industries 7,500 343,125
------------ ---------
693,125 11,250
------------ ---------
RESTAURANTS & LODGING--0.76%
Hilton Hotels Corporation 2,500 153,750 2,500 Jan 97 60 * 10,781
Marriott International Inc. 3,500 Jan 96 35 11,594
McDonald's Corp. 3,500 157,938 3,500 Mar 96 45 7,875
------------ ----------- ---------
311,688 22,375 7,875
------------ ----------- ---------
RETAIL--GENERAL/DEPARTMENT--3.31%
Dayton-Hudson Corporation 3,000 225,000 3,000 Apr 96 80 6,937
Gap, Inc. 9,000 378,000 5,000 Feb 96 50 2,187
Penney (J.C.) Co. 5,500 261,937 5,500 May 96 50 11,000
Melville Corporation 6,000 184,500 6,000 May 96 30 14,250
Sears Roebuck & Co. 10,000 390,000 5,000 Jan 96 35 * 625
5,000 Apr 96 35 * 4,375
------------ ----------- ---------
1,439,437 5,000 34,374
------------ ----------- ---------
RETAIL--GROCERY/DRUG STORES--0.25%
Albertsons, Inc. 1,900 62,463
Great Atlantic & Pacific Tea
Co. 2,000 46,000
------------
108,463
------------
SPECIALTY RETAIL/WHOLESALE--1.64%
Home Depot Inc. 5,000 239,375 2,500 Jan 96 42.5 13,750
Lowe's Companies 7,000 234,500 3,000 Jan 96 40 188
4,000 Apr 96 30 19,500
Mattel, Inc. 1,000 30,750
Nike 2,000 Apr 96 65 * 4,250
Toys R Us, Inc.** 11,000 239,250 5,000 Jan 96 30 156
5,000 Mar 96 22.5 6,875
------------ ---------
743,875 44,719
------------ ---------
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Oustanding Options
(*Indicates Put)
-----------------------------------------------------------
Investments Market Value
------------------------- ----------------------
Number of Market Shares Expiration Exercise Options Options
COMMON STOCKS (CONTINUED) Shares Value Optioned Date Price Bought Sold
----------- ------------ ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
TELECOMMUNICATION UTILITIES--8.03%
Bellsouth Corp. 18,400 $ 800,400 9,200 Jan 96 32.5 102,350
G.T.E. Corp. 7,500 330,000
Hong Kong Telecom, Ltd. 2,000 35,500
M.C. I. Communications 3,000 78,375 3,000 Jan 96 22.5 11,250
Nynex Corp. 8,500 459,000
S.B.C. Communications, Inc. 9,000 517,500
American Telephone & Tele-
graph 18,600 1,204,350 4,100 Jan 96 60 21,525
5,000 Jan 96 70 625
5,000 Apr 96 60 33,125
4,500 Apr 96 70 5,063
Telefonos de Mexico SA--
Class L ADR 5,500 175,313 5,500 Jan 96 40 172
------------ ---------
3,600,438 174,110
------------ ---------
TELECOMMUNICATIONS & EQUIPMENT--0.85%
British Telecommunication
PLC-ADR 3,500 197,750
D.S.C. Communications ** 5,000 184,375 5,000 Apr 96 40 19,375
------------ ---------
382,125 19,375
------------ ---------
TOTAL COMMON STOCK--96.07%
(Cost $32,821,305) 40,971,889
------------
TOTAL OPTIONS PURCHASED--0.46%
(Cost $152,764) 196,032
TOTAL INVESTMENTS--96.53%
(Cost $32,974,069) 41,167,921
------------
TOTAL OPTIONS SOLD--(5.54%)
(Premiums $1,554,349) (2,363,766)
OTHER ASSETS AND LIABILITIES--9.01%
Cash Equivalents 4,390,275
Other Assets and Liabilities
(net) (546,821)
------------
NET ASSETS--100.00% $ 42,647,609
------------
------------
</TABLE>
** NON-INCOME PRODUCING SECURITY
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
ANALYTIC OPTIONED EQUITY FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1995
<TABLE>
<S> <C>
ASSETS:
Securities portfolio at market value (identified cost $32,974,069)............................... $ 41,167,921
Cash equivalents (includes cash reserved for short puts options of $1,758,250)................... 4,390,275
Dividends receivable............................................................................. 74,023
Interest receivable.............................................................................. 19,861
-------------
Total assets................................................................................... 45,652,080
-------------
LESS LIABILITIES:
Options outstanding at market value (premiums received $1,554,349)............................... 2,363,766
Payable for capital shares redeemed.............................................................. 640,705
-------------
Total liabilities.............................................................................. 3,004,471
-------------
Net assets....................................................................................... $ 42,647,609
-------------
-------------
REPRESENTED BY:
Paid-in capital.................................................................................. $ 35,441,148
Net unrealized appreciation of investments....................................................... 7,384,435
Undistributed net investment income.............................................................. 6,544
Undistributed realized losses.................................................................... (184,518)
-------------
$ 42,647,609
-------------
-------------
Net asset value, purchase and redemption price per outstanding share (100,000,000 shares of no
par capital shares authorized; 3,216,021 shares outstanding)................................... $ 13.26
-------------
-------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
December 31, 1995 December 31, 1994
------------------ ------------------
<S> <C> <C>
OPERATIONS:
Net investment income................................................... $ 862,933 $ 1,555,699
Net realized (loss) gain on investments and options..................... (185,575) 3,322,273
Change in unrealized appreciation (depreciation) of investments and
options............................................................... 8,394,839 (3,439,646)
------------------ ------------------
Increase in net assets from operations................................ 9,072,197 1,438,326
------------------ ------------------
DISTRIBUTION TO SHAREHOLDERS:
From net investment income.............................................. (847,716) (1,563,910)
From net realized gains................................................. 0 (3,322,273)
------------------ ------------------
Decrease in net assets from distributions............................. (847,716) (4,886,183)
------------------ ------------------
FUND SHARE TRANSACTIONS:
Proceeds from sales of 424,638 and 468,127 capital shares............... 5,108,441 5,645,507
Proceeds from 64,633 and 413,939 capital shares issued in reinvestment
of distributions...................................................... 805,478 4,672,168
Redemption of 1,614,600 and 2,973,016 capital shares.................... (19,744,905) (35,563,841)
------------------ ------------------
Decrease in net assets from fund share transactions..................... (13,830,986) (25,246,166)
------------------ ------------------
Net decrease in net assets.............................................. (5,606,505) (28,694,023)
Net assets, beginning of period....................................... 48,254,114 76,948,137
------------------ ------------------
Net assets, end of period............................................. $ 42,647,609 $ 48,254,114
------------------ ------------------
------------------ ------------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
ANALYTIC OPTIONED EQUITY FUND, INC.
STATEMENT OF OPERATIONS
DECEMBER 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends..................................................... $ 1,215,950
Interest...................................................... 210,648
-----------
Total investment income..................................... 1,426,598
-----------
EXPENSES:
FEES PAID TO ANALYTIC INVESTMENT MANAGEMENT (THE ADVISER):
Investment advisory and management fees....................... 346,095
Transfer agent and accounting fees............................ 127,600
Audit fees.................................................... 49,875
Custodian fees................................................ 29,799
Directors' fees and expenses.................................. 20,120
Shareholder services, reports and notices..................... 21,755
Registration fees, insurance and other expenses............... 30,679
Legal fees.................................................... 10,840
-----------
Total expenses.............................................. 636,763
Expenses paid indirectly...................................... (73,098)
-----------
Net expenses.................................................. 563,665
-----------
Net investment income......................................... 862,933
-----------
REALIZED & UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND OPTIONS:
Realized gains (losses):
Proceeds from sales of investments............................ $ 32,545,178
Cost of investments sold...................................... 31,103,112
------------
Realized net gain on investments.............................. 1,442,066
-----------
Premiums received on options closed........................... 1,756,160
Cost of closing purchase transactions......................... 4,572,301
------------
Realized net loss on options closed........................... (2,816,141)
Premiums received on options expired.......................... 1,188,500
-----------
Realized net loss on options.................................. (1,627,641)
-----------
Total realized net loss..................................... (185,575)
Unrealized gains (losses):
Change in unrealized appreciation of investments.............. 9,375,904
Change in unrealized depreciation of options outstanding...... (981,065)
------------
Net change in unrealized appreciation....................... 8,394,839
-----------
Net realized and unrealized gain on investments and
options................................................... 8,209,264
-----------
Net increase in net assets from operations................ $ 9,072,197
-----------
-----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
ANALYTIC OPTIONED EQUITY FUND, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Analytic Optioned Equity Fund, Inc. (the Fund) is registered under the
Investment Company Act of 1940, as amended, as a diversified, no-load, open-end
management investment company. The following is a summary of the Fund's
significant accounting policies.
SECURITIES VALUATION--Investments and outstanding options (collectively referred
to as securities) are stated at market value. Securities traded on securities
exchanges are valued at the last sale price on the days of valuation or, in the
absence of a sale that day, at the mean between the last current bid and asked
prices.
INVESTMENT INCOME AND SECURITIES TRANSACTIONS--Dividend income is recorded on
the ex-dividend date and interest income is accrued as earned. Interest income
on bonds is not reduced by amortization of premium paid but is increased by
amortization of any discount. Securities transactions are accounted for on the
trade date (the date the order to buy or sell is executed). Realized gains on
losses from securities transactions are reported on an identified cost basis for
both financial statement and Federal income tax purposes.
OPTION ACCOUNTING PRINCIPLES--When the Fund writes a call or put options, an
amount equal to the premium received by the Fund is included in the Fund's
Statement of Assets and Liabilities as an asset and an equivalent liability. The
amount of the liability will be subsequently marked-to-market to reflect the
current market value of the option written. The current market value of a traded
option is the last sale price or, in the absence of a sale, the mean between the
last current bid and asked prices.
When a call expires on its stipulated expiration date, or if the Fund enters
into a closing purchase transaction, the Fund will realize a gain (or loss if
the cost of a closing purchase transaction exceeds the premium received when the
call option was written) without regard to any unrealized gain or loss on the
underlying security, and the liability related to such option will be
extinguished. When a call option is exercised, the Fund will realize a gain or
loss from the sale of the underlying security and the proceeds of the sale are
increased by the premium originally received.
When the Fund writes a put option, cash equal to the exercise price is placed in
an interest bearing escrow account to secure the outstanding put option. When a
put option expires, or if the Fund enters into a closing purchase transaction,
the Fund will realize a gain or loss on the option transaction, the cash is
released from escrow and the liability related to such option is extinguished.
When a put option is exercised, the Fund uses the cash in escrow to purchase the
security, the cost of the security is reduced by the premium originally received
and no gain or loss is recognized.
FUND SHARE VALUATION--Fund shares are sold and redeemed on a continuing basis at
net asset value. Net asset value per share is determined daily as of the close
of trading of the New York Stock Exchange on each day the Exchange is open for
trading by dividing the total value of the Fund's investments and other assets,
less the sum of liabilities and the value of the outstanding options, by the
number of Fund shares outstanding.
FEDERAL INCOME TAXES--It is the Fund's intention to continue to comply with the
provisions of the Internal Revenue Code enabling it to qualify as a regulated
investment company and, in the manner provided therein, to distribute all of its
taxable income to its shareholders. Accordingly, no provision for income taxes
has been made.
14
<PAGE>
The Analytic Optioned Equity Fund had unused capital loss carryforwards of
$185,664, at December 31, 1995. These realized losses are intended to be used to
offset future net capital gains.
The cost of investments and options for Federal income tax purposes at December
31, 1995 was $32,974,069. Net unrealized appreciation of $7,384,435 was
comprised of aggregate gross unrealized appreciation of $9,791,738 less
aggregate gross depreciation of $2,407,303. During the year ended December 31,
1995, the Fund realized, on a federal tax basis and for financial reporting
purposes, net losses of $185,575.
2. DISTRIBUTIONS OF REALIZED GAINS
There were no capital gains distributed for the year ended December 31, 1995.
3. INVESTMENT ADVISORY AGREEMENT AND "AFFILIATED PERSONS"
Analytic Investment Management, Inc. is the investment adviser (the "Adviser")
of the Fund. The Adviser is a wholly owned subsidiary of United Asset Management
Corporation, a holding company that purchased all of the voting common stock of
the Adviser on May 9, 1985. The Adviser, subject to the control and direction of
the Fund's board of directors, manages and supervises the investment operations
of the Fund and the composition of its portfolio, including the writing of
options and making recommendations to the Fund's board of directors as to
investment policies.
As compensation for furnishing investment advisory, management, and other
services, and costs and expenses assumed, pursuant to the Investment Management
Agreement, the Fund pays the Adviser an annual fee equal to 0.75% of the first
$100,000,000 of average daily net assets, 0.65% of the next $100,000,000 of
average daily net assets, and 0.55% of average daily net assets in excess of
$200,000,000. The Adviser also acts as the Fund's transfer agent, dividend
disbursing agent, and shareholder relations servicing agent for which the Fund
pays a fee based on the number of accounts and net assets. The Fund also pays
the Adviser a fee based on its net assets to calculate its daily share price and
maintain its general accounting records. In order to comply with the
registration requirements of certain states, the Adviser has agreed that, in any
fiscal year, if the expenses of the Fund (including the advisory fee but
excluding interest, taxes, brokerage commissions, backup withholding,
litigation, indemnity and extraordinary expenses) exceed the limits set by
applicable regulations of state securities commission, the Adviser will reduce
its fee by the amount of such excess. Any such reductions are subject to
readjustment during the year. Currently, the Fund believes that the most
restrictive applicable expense limitation of state securities commissions is
2.50% of the Funds $30,000,000 of the average net assets, 2.0% of the next
$70,000,000 of such average net assets, and 1.50% of the average net assets in
excess of $100,000,00. Additionally, the Adviser has agreed to absorb all costs
of marketing the shares of the Fund, although the Adviser is not required to do
so by the investment advisory agreement. At December 31, 1995, 7 officers and 1
director of the Fund are also officers and directors of the Adviser.
15
<PAGE>
4. INVESTMENT ACTIVITY
For the year ended December 31, 1995, the cost basis of purchases and proceeds
of sales of investments aggregated $14,333,211 (reduced by $39,310 of premiums
for put options exercised), and $32,545,178 (including $807,376 of premiums for
call options exercised), respectively. Transactions in options contracts written
were as follows:
<TABLE>
<CAPTION>
Number of
Contracts Premiums
----------- --------------
<S> <C> <C>
Outstanding at beginning of period................ 8,506 $ 1,852,142
Options written................................... 15,199 3,494,951
Options terminated in closing purchase
transactions.................................... (7,452) (1,756,160)
Options expired................................... (6,821) (1,188,500)
Options exercised................................. (3,460) (848,083)
----------- --------------
Outstanding at December 31, 1995.................. 5,972 $ 1,554,350
----------- --------------
----------- --------------
</TABLE>
As of December 31, 1995, portfolio securities valued at $33,045,838 were held in
escrow by the custodian in connection with covered call options written by the
Fund.
5. REIMBURSED EXPENSES
The Fund has entered into an agreement whereby certain operating expenses of the
Fund are reimbursed by a broker, based upon a percentage of commissions earned
by the broker for execution of portfolio transactions. For the year ended
December 31, 1995, such expenses amounted to $73,098. Gross commission rates for
this broker are consistent with those of other brokers utilized by the Fund.
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
Year Ended December 31
-----------------------------------------------------------
1995 1994 1993 1992 1991
---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............... $ 11.12 $ 11.96 $ 11.97 $ 12.29 $ 11.92
Income from investment operations:
Net investment income............................ 0.24 0.31 0.33 0.27 0.40
Net gains or losses on securities (both realized
and unrealized)................................ 2.14 (0.02) 0.48 0.48 1.17
---------- ---------- ---------- ---------- -----------
Total from investment operations............... 2.38 0.29 0.81 0.75 1.57
Less distributions:
Dividends (from net investment income)........... 0.24 0.31 0.33 0.29 0.40
Distributions (from capital gains)............... 0.00 0.82 0.49 0.78 0.80
---------- ---------- ---------- ---------- -----------
Total distributions.............................. 0.24 1.13 0.82 1.07 1.20
---------- ---------- ---------- ---------- -----------
Net asset value, end of period..................... $ 13.26 $ 11.12 $ 11.96 $ 11.97 $ 12.29
---------- ---------- ---------- ---------- -----------
---------- ---------- ---------- ---------- -----------
Total return....................................... 21.52% 2.47% 6.73% 6.17% 13.29%
---------- ---------- ---------- ---------- -----------
Ratios/supplemental data
Net assets, end of period (000).................... $ 42,648 $ 48,254 $ 76,948 $ 91,561 $ 100,548
Ratio of expenses to average net assets............ 1.38% 1.10% 1.07% 1.02% 1.10%
Ratio of net investment income to average net
assets............................................ 1.87% 3.45% 2.51% 2.33% 3.05%
Portfolio turnover rate............................ 32.37% 48.71% 36.19% 81.73% 75.83%
Average commission rate(1)......................... 0.0442
</TABLE>
(1) The formula for calculating the average commission rate is total commissions
paid divided by total shares purchased and sold. Each option contract is 100
shares.
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF THE ANALYTIC OPTIONED EQUITY FUND, INC.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of portfolio investments and options, of Analytic Optioned Equity
Fund, Inc. as of December 31, 1995, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
five years in the period then ended. 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. Our procedures included confirmation of securities owned and
outstanding options at December 31, 1995 by correspondence with the custodian
and brokers. 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
Analytic Optioned Equity Fund, Inc. as of December 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the five years in the period then ended, in conformity with generally accepted
accounting principles.
DELOITTE & TOUCHE LLP
COSTA MESA, CALIFORNIA
FEBRUARY 2, 1996
18
<PAGE>
<TABLE>
<S> <C>
OFFICERS AND DIRECTORS
CHAIRMAN OF THE
BOARD OF DIRECTORS........... Dr. Sheen T. Kassouf
PRESIDENT.................... Alan L. Lewis
EXECUTIVE VICE PRESIDENT
AND SECRETARY................ Charles L. Dobson
TREASURER.................... Alan R. Adelman
SENIOR VICE PRESIDENT........ Deborah D. Boedicker
VICE PRESIDENT AND PRINCIPAL
ACCOUNTING OFFICER........... Ricardo R. Porras
VICE PRESIDENT............... Deborah Sheflin
DIRECTOR..................... Michael D. Butler
DIRECTOR..................... Michael Koehn
DIRECTOR..................... Dr. Robert E. Villagrana
DIRECTOR..................... Robertson Whittemore
</TABLE>
INVESTMENT ADVISER
Analytic Investment Management, Inc.
2222 Martin Street, Suite 230
Irvine, California 92715-1454
TRANSFER AGENT, DIVIDEND DISBURSEMENT AGENT,
AND SHAREHOLDER RELATIONS SERVICING AGENT
Analytic Investment Management, Inc.
2222 Martin Street, Suite 230
Irvine, California 92715-1454
CUSTODIAN
Bank of California, N.A.
Mutual Fund Services, 15th Floor
475 Sansome Street
San Francisco, California 94111
INDEPENDENT ACCOUNTANTS
Deloitte & Touche LLP
695 Town Center Drive, Suite 1200
Costa Mesa, California 92626
COUNSEL
Paul, Hastings, Janofsky & Walker
555 South Flower Street, 22nd Floor
Los Angeles, California 90071
ANALYTIC OPTIONED EQUITY FUND
2222 Martin Street, Suite 230
Irvine, California 92715-1454
Phone: (800) 374-2633
Fax: (714) 833-8049
ANALYTIC
OPTIONED EQUITY
FUND
ANNUAL REPORT AND
SEVENTEEN AND
ONE-HALF YEAR REVIEW
DECEMBER 31, 1995
[LOGO]
MEMBER OF
100% NO-LOAD-Trademark-
MUTUAL FUND COUNCIL
