[LOGO OF VANTAGE INVESTMENT ADVISORS]
Lincoln National
Growth and Income Fund, Inc.
Semi-Annual Report
June 30, 2000
<PAGE>
Lincoln National Growth and Income Fund, Inc.
Index
Commentary
Statement of Net Assets
Statement of Operations
Statements of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
<PAGE>
Lincoln National
Growth and Income Fund, Inc.
Managed by: [LOGO OF VANTAGE INVESTMENT ADVISORS]
For the six-month period ended June 30, 2000, the Fund returned -1.9% (net of
fees) lagging its benchmark, the S&P 500 Index, return of -0.5%.
Uncertainty around the future direction of interest rates and the sustainability
of corporate earnings fueled unprecedented volatility for equity markets in the
first half of the year. After a shaky start in January with investors taking
profits and sending markets down, February looked a lot like 1999. Technology
stocks and growth stocks dominated old economy stocks and value stocks. A
reversal took place in March and technology stocks crumbled in the second
quarter. Some investors took money off the table while others fled to value
stocks for safety.
While fundamentally sound companies returned to favor in the second quarter,
year-to-date, high priced growth companies still prevailed.
Our emphasis on value as measured by price-to-earnings resulted in a deeper
value orientation then the index causing the year-to-date under performance.
The Vantage Investment Team
Growth and Income Fund 1
<PAGE>
Lincoln National
Growth and Income Fund, Inc.
Statement of Net Assets - Unaudited
June 30, 2000
Investments:
Number Market
Common Stock: of Shares Value
---------------------------------------------------------------------------
Aerospace & Defense: 0.9%
---------------------------------------------------------------------------
General Dynamics 506,600 $ 26,469,850
Northrop 90,000 5,962,500
United Technologies 70,500 4,150,688
---------------------------------------------------------------------------
36,583,038
Automobiles & Auto Parts: 1.5%
---------------------------------------------------------------------------
AutoNation* 727,800 5,140,088
Ford Motor 831,800 35,767,400
General Motors 174,400 10,126,100
Hertz Class A 135,900 3,813,694
Navistar International* 205,900 6,395,769
Visteon* 108,910 1,320,538
---------------------------------------------------------------------------
62,563,589
Banking, Finance & Insurance: 13.1%
---------------------------------------------------------------------------
Allstate 689,058 15,331,541
Ambac Financial Group 155,000 8,495,938
American International Group 62,200 7,308,500
Associates First Capital Class A 442,202 9,866,632
Bank One 914,627 24,294,780
Bank of America 548,900 23,602,700
Bear Stearns 145,600 6,060,600
Chase Manhattan 492,000 22,662,750
Citigroup 1,542,098 92,911,405
Comerica 425,050 19,074,119
Conseco 1,259,200 12,277,200
Dime Bancorp 681,800 10,738,350
Donaldson Lufkin & Jenrette 224,200 9,514,488
Federal Home Loan 145,400 5,888,700
Federal National Mortgage 74,900 3,908,844
Firstar 188,000 3,959,750
Fleet Boston Financial 993,830 33,790,220
Knight Trading Group* 138,400 4,126,050
Lehman Brothers Holdings 181,300 17,144,181
Loews 83,700 5,022,000
Marsh & McLennan 166,300 17,367,956
MBIA 236,400 11,391,525
Merrill Lynch 234,500 26,967,500
Metris 213,357 5,360,595
MGIC Investment 135,000 6,142,500
Morgan (J.P.) 232,900 25,648,113
Morgan Stanley Dean Witter 410,200 34,149,150
Paine Webber Group 735,850 33,481,175
SLM Holding 609,650 22,823,772
St. Paul 216,000 7,371,000
Unionbancal Corporation 239,000 4,436,438
Washington Mutual 742,560 21,441,420
---------------------------------------------------------------------------
552,559,892
Buildings & Materials: 0.3%
---------------------------------------------------------------------------
American Standard* 116,800 4,788,800
USG 249,300 7,572,488
---------------------------------------------------------------------------
12,361,288
Business Services: 0.4%
---------------------------------------------------------------------------
Deluxe 175,300 4,130,506
Manpower 182,800 5,849,600
Young & Rubicam 106,100 6,067,594
---------------------------------------------------------------------------
16,047,700
Cable, Media & Publishing: 4.6%
---------------------------------------------------------------------------
Central Newspapers Class A 145,200 9,183,900
Donnelley & Sons 417,400 9,417,588
Dow Jones 120,000 8,790,000
Gannett 499,500 29,876,344
Harte-Hanks 172,000 4,300,000
Number Market
Cable, Media & Publishing (Cont.) of Shares Value
---------------------------------------------------------------------------
InterPublic Group 239,400 $ 10,294,200
Knight-Ridder 513,500 27,311,781
McGraw-Hill 335,500 18,117,000
New York Times 693,600 27,397,200
Omnicom Group 250,000 22,265,625
Reynolds & Reynolds Class A 433,200 7,905,900
Valassis Communications* 128,050 4,881,906
Viacom Class B* 210,815 14,374,948
---------------------------------------------------------------------------
194,116,392
Chemicals: 1.4%
---------------------------------------------------------------------------
Avery Dennison 67,100 4,504,088
Beckman Coulter 72,200 4,214,675
Cytec Industries* 169,100 4,174,656
Dow Chemical 1,026,000 30,972,375
Eastman Chemical 95,000 4,536,250
FMC* 90,000 5,220,000
Lubrizol 218,700 4,592,700
---------------------------------------------------------------------------
58,214,744
Computers & Technology: 20.3%
---------------------------------------------------------------------------
3Com* 219,400 12,642,925
Adobe Systems 157,900 20,527,000
America Online* 659,500 34,788,625
Apple Computer* 362,200 18,970,225
Autodesk 109,000 3,780,938
BMC Software* 92,300 3,367,508
Cisco Systems* 2,492,800 158,448,600
CMGI* 71,200 3,261,850
Compaq Computer 633,400 16,191,288
Computer Associates International 520,000 26,617,500
Compuware* 404,900 4,200,838
Dell Computer* 722,540 35,630,254
Electronic Data Systems 282,100 11,636,625
EMC* 294,200 22,635,013
First Data 419,300 20,807,763
Hewlett-Packard 312,500 39,023,438
Infospace.com* 79,200 4,375,800
International Business Machines 636,700 69,758,444
Linear Technology 98,200 6,278,663
Macromedia* 127,500 12,327,656
Michron Technology* 172,800 15,217,200
Microsoft* 1,210,100 96,808,000
Oracle* 881,400 74,092,688
PerkinElmer 78,300 5,177,588
Pitney Bowes 131,200 5,248,000
Priceline.com* 87,500 3,323,633
Quantum - Hard Disk Drive* 354,700 3,923,869
Scient* 78,000 3,441,750
SDL* 23,800 6,787,463
Siebel Systems* 71,300 11,662,006
Sun Microsystems* 637,600 57,981,750
Symantec* 137,500 7,416,406
Teradyne* 70,800 5,203,800
Unisys* 183,600 2,673,675
VeriSign* 24,725 4,363,963
Veritas Software* 45,200 5,108,306
WebMethods* 48,000 7,545,000
Xerox 267,800 5,556,850
Yahoo* 74,300 9,203,913
---------------------------------------------------------------------------
856,006,813
Consumer Products: 2.5%
---------------------------------------------------------------------------
Avon Products 169,600 7,547,200
Clorox 260,900 11,691,581
Corning 195,100 52,652,613
Kimberly-Clark 267,800 15,365,025
Minnesota Mining & Manufacturing 70,300 5,799,750
Procter & Gamble 230,300 13,184,675
---------------------------------------------------------------------------
106,240,844
Electronics & Electrical Equipment: 12.4%
---------------------------------------------------------------------------
Advanced Micro Devices* 92,300 7,130,175
Agilent Technologies* 119,187 8,790,041
Analog Devices* 151,400 11,506,400
Applied Micro Circuits* 36,900 3,643,875
Atmel* 101,900 3,757,563
AVNET 56,900 3,371,325
Growth and Income Fund 2
<PAGE>
Electronics & Number Market
Electrical Equipment (Cont.) of Shares Value
---------------------------------------------------------------------------
AVX 252,000 $ 5,780,250
Broadcom-Class A* 26,500 5,801,844
Conexant Systems* 96,500 4,692,313
Eaton 105,700 7,081,900
General Electric 3,061,200 162,243,600
Intel 1,186,000 158,553,375
JDS Uniphase* 140,000 16,782,500
LSI Logic* 79,100 4,281,288
Molex 81,100 3,902,938
Motorola 1,325,511 38,522,663
National Semiconductor* 200,000 11,350,000
Novellus Systems* 153,000 8,654,063
PMC - Sierra* 24,300 4,317,806
SCI Systems* 90,100 3,530,794
Symbol Technologies 83,200 4,492,800
Texas Instruments 552,800 37,970,450
Vishay Intertechnology* 120,900 4,586,644
---------------------------------------------------------------------------
520,744,607
Energy: 6.6%
---------------------------------------------------------------------------
Amerada Hess 68,000 4,199,000
Apache 78,400 4,610,900
Ashland 122,000 4,277,625
BP Amoco ADR 391,140 22,123,856
Coastal 133,400 8,120,725
Conoco 75,800 1,667,600
Conoco Class B 336,800 8,272,650
Enron 300,000 19,350,000
Exxon Mobil 1,143,500 89,764,750
Kerr-McGee 193,516 11,405,349
Occidental Petroleum 1,327,400 27,958,363
Phillips Petroleum 239,400 12,134,588
Royal Dutch Petroleum 330,000 20,315,625
Texaco 364,800 19,425,600
USX-Marathon Group 904,900 22,679,056
---------------------------------------------------------------------------
276,305,687
Food, Beverage & Tobacco: 3.0%
---------------------------------------------------------------------------
ConAgra 309,600 5,901,750
Fortune Brands 169,400 3,906,788
General Mills 555,600 21,251,700
Heinz (H.J.) 723,550 31,655,313
Philip Morris 1,599,900 42,497,344
Quaker Oats 79,500 5,972,438
RJ Reynolds Tobacco Holdings 386,500 10,797,844
Universal Foods 285,200 5,276,200
---------------------------------------------------------------------------
127,259,377
Healthcare & Pharmaceuticals: 12.0%
---------------------------------------------------------------------------
Allergan 128,200 9,550,900
American Home Products 81,900 4,811,625
Amgen 148,500 10,432,125
Baxter International 164,200 11,545,313
Boston Scientific* 208,900 4,582,744
Bristol-Myers Squibb 860,800 50,141,600
Cardinal Health 306,500 22,681,000
Genzyme-General Division* 88,700 5,272,106
ICN Pharmaceuticals 191,100 5,314,969
Johnson & Johnson 383,200 39,038,500
Lilly (Eli) 353,500 35,305,813
Mallinckrodt 156,900 6,815,344
Medtronic 218,834 10,900,669
Merck & Company 1,016,600 77,896,975
Millipore 62,400 4,703,400
Oxford Health Plans* 231,600 5,514,975
Pfizer 2,764,250 132,684,000
Schering-Plough 1,305,600 65,932,800
---------------------------------------------------------------------------
503,124,858
Industrial Machinery: 0.8%
---------------------------------------------------------------------------
Applied Materials* 293,600 26,607,500
Ingersoll-Rand 194,400 7,824,600
---------------------------------------------------------------------------
34,432,100
Number Market
Leisure, Lodging & Entertainment: 0.9% of Shares Value
---------------------------------------------------------------------------
Carnival Cruise Lines 440,200 $ 8,583,900
Eastman Kodak 163,800 9,746,100
Hasbro 145,300 2,188,581
Walt Disney 421,100 16,343,944
---------------------------------------------------------------------------
36,862,525
Metals & Mining: 0.1%
---------------------------------------------------------------------------
USX-U.S. Steel Group 190,200 3,530,588
---------------------------------------------------------------------------
Miscellaneous: 0.2%
---------------------------------------------------------------------------
Dover 230,000 9,329,375
---------------------------------------------------------------------------
Paper & Forest Products: 0.3%
---------------------------------------------------------------------------
Georgia-Pacific 136,300 3,577,875
Temple-Inland 86,800 3,645,600
Weyerhaeuser 126,400 5,435,200
---------------------------------------------------------------------------
12,658,675
Retail: 4.3%
---------------------------------------------------------------------------
Albertson's 133,500 4,438,875
Best Buy* 59,800 3,782,350
Home Depot 589,050 29,415,684
Lowe's 243,000 9,978,188
Radioshack 97,000 4,595,375
Ross Stores 367,300 6,267,056
Safeway* 229,300 10,347,163
Sears, Roebuck 225,100 7,343,888
Sherwin-Williams 169,700 3,595,519
Staples* 451,125 6,936,047
Tiffany 68,300 4,610,250
TJX Companies - New 1,117,600 20,955,000
Tupperware 219,000 4,818,000
Wal-Mart Stores 1,082,400 62,373,300
---------------------------------------------------------------------------
179,456,695
Telecommunications: 10.2%
---------------------------------------------------------------------------
ADC Telecommunications* 82,000 6,877,750
A T & T 1,372,950 43,419,544
Bell Atlantic* 822,312 41,783,729
BellSouth 1,147,200 48,899,400
Ciena* 32,000 5,334,000
Copper Mountain Networks* 86,100 7,587,563
GTE 603,200 37,549,200
Lucent Technologies 1,239,700 73,452,225
Network Appliance* 65,200 5,248,600
Qualcomm* 210,500 12,630,000
SBC Communications 1,606,800 69,494,100
Scientific-Atlanta* 73,000 5,438,500
Tellabs 96,800 6,624,750
U.S. West 616,200 52,839,150
Worldcom* 242,850 11,140,744
---------------------------------------------------------------------------
428,319,255
Textiles, Apparel & Furniture: 0.2%
---------------------------------------------------------------------------
Johnson Controls 149,600 7,676,350
Spring Industries Class A 64,900 2,088,969
---------------------------------------------------------------------------
9,765,319
Transportation & Shipping: 1.2%
---------------------------------------------------------------------------
Burlington Northern Santa Fe 182,100 4,176,919
Canadian National Railway 700,000 20,431,250
CNF Transportation 160,700 3,655,925
Continental Airlines Class B* 102,600 4,822,200
Delta Air Lines 82,400 4,166,350
Ryder System 196,300 3,717,431
Union Pacific 239,200 8,895,250
---------------------------------------------------------------------------
49,865,325
Growth and Income Fund 3
<PAGE>
Number Market
Utilities: 2.1% of Shares Value
---------------------------------------------------------------------------
Energy East 1,050,800 $ 20,030,875
General Public Utilities 657,150 17,784,122
Public Service Enterprise Group 227,000 7,859,852
Sprint 190,500 9,715,500
TXU 569,700 16,806,150
Unicom 412,800 15,970,200
---------------------------------------------------------------------------
88,166,699
Total Common Stock: 99.3%
(Cost $2,891,075,713) 4,174,515,385
---------------------------------------------------------------------------
Par
Money Market Instruments: Amount
---------------------------------------------------------------------------
Associates Corp North America
6.85%, 7/3/00 $8,000,000 8,000,000
Gillette
7.03%, 7/5/00 6,800,000 6,800,000
International Lease
6.62%, 7/5/00 4,100,000 4,100,000
Sony Capital
6.57%, 7/10/00 8,300,000 8,286,409
---------------------------------------------------------------------------
Total Money Market Instruments: 0.6%
(Cost $27,186,409) 27,186,409
---------------------------------------------------------------------------
Total Investments: 99.9%
(Cost $2,918,262,122) 4,201,701,794
---------------------------------------------------------------------------
Other Assets Over Liabilities: 0.1% 3,201,787
---------------------------------------------------------------------------
Net Assets: 100.0%
(Equivalent to $ 47.477 per share
based on 88,566,895 shares
issued and outstanding) 4,204,903,581
---------------------------------------------------------------------------
Components of Net Assets at June 30, 2000:
---------------------------------------------------------------------------
Common Stock, $.01 par value 150,000,000
authorized shares $ 885,669
Paid in capital in excess of par value
of shares issued 2,242,091,645
Undistributed net investment income 28,782,032
Accumulated net realized gain on investments 649,704,563
Net unrealized appreciation of investments 1,283,439,672
---------------------------------------------------------------------------
Total Net Assets $4,204,903,581
---------------------------------------------------------------------------
* Non-income producing security.
ADR - American Depository Reciept
See accompanying notes to financial statements.
Growth and Income Fund 4
<PAGE>
Lincoln National Growth and Income Fund, Inc.
Statement of Operations - Unaudited
Six months ended June 30, 2000
Investment income:
Dividends $ 29,446,758
------------------------------------------------------------------------------
Interest 453,726
------------------------------------------------------------------------------
Total investment income 29,900,484
------------------------------------------------------------------------------
Expenses:
Management fees 6,725,065
------------------------------------------------------------------------------
Accounting fees 688,440
------------------------------------------------------------------------------
Printing and postage 135,831
------------------------------------------------------------------------------
Other 45,064
------------------------------------------------------------------------------
Legal fees 19,367
------------------------------------------------------------------------------
Custody fees 2,972
------------------------------------------------------------------------------
Directors fees 2,100
------------------------------------------------------------------------------
7,618,839
------------------------------------------------------------------------------
Less expenses paid indirectly (2,972)
------------------------------------------------------------------------------
Total expenses 7,615,867
------------------------------------------------------------------------------
Net investment income 22,284,617
------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investments:
------------------------------------------------------------------------------
Net realized gain on investment transactions 609,206,271
------------------------------------------------------------------------------
Net change in unrealized
appreciation/depreciation of investments (725,014,233)
------------------------------------------------------------------------------
Net realized and unrealized loss on investments (115,807,962)
------------------------------------------------------------------------------
Net decrease in net assets resulting from operations $(93,523,345)
------------------------------------------------------------------------------
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six months ended
6/30/00 Year ended
(Unaudited) 12/31/99
--------------------------------
<S> <C> <C>
Changes from operations:
Net investment income $ 22,284,617 $ 46,754,536
----------------------------------------------------------------------------------
Net realized gain on investment transactions 609,206,271 273,402,762
----------------------------------------------------------------------------------
Net change in unrealized appreciation/
depreciation of investments (725,014,233) 403,783,094
----------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (93,523,345) 723,940,392
----------------------------------------------------------------------------------
Distributions to shareholders from:
Net investment income - (45,733,824)
----------------------------------------------------------------------------------
Net realized gain on investment transactions (276,576,520) (177,205,883)
----------------------------------------------------------------------------------
Total distributions to shareholders (276,576,520) (222,939,707)
----------------------------------------------------------------------------------
Net decrease in net assets
resulting from capital share transactions (134,683,384) (54,871,056)
----------------------------------------------------------------------------------
Total increase (decrease) in net assets (504,783,249) 446,129,629
----------------------------------------------------------------------------------
Net Assets, at beginning of period 4,709,686,830 4,263,557,201
----------------------------------------------------------------------------------
Net Assets, at end of period $4,204,903,581 $4,709,686,830
----------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.
Growth and Income Fund 5
<PAGE>
Lincoln National Growth and Income Fund, Inc.
Financial Highlights
(Selected data for each capital share outstanding throughout each period)
<TABLE>
<CAPTION>
Six months
ended
6/30/00 Year ended December 31,
(Unaudited) 1999 1998 1997 1996 1995
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $51.710 $46.288 $41.949 $33.110 $29.756 $23.297
Income from investment operations:
Net investment income 0.254 0.509 0.607 0.649 0.683 0.701
Net realized and unrealized gain (loss)
on investments (1.165) 7.356 7.371 9.331 4.943 7.680
----------------------------------------------------------------------------------
Total from investment operations (0.911) 7.865 7.978 9.980 5.626 8.381
----------------------------------------------------------------------------------
Less dividends and distributions:
Dividends from net investment income - (0.497) (1.164) - (0.683) (0.701)
Distributions from net realized gain on
investment transactions (3.322) (1.946) (2.475) (1.141) (1.589) (1.221)
----------------------------------------------------------------------------------
Total dividends and distributions (3.322) (2.443) (3.639) (1.141) (2.272) (1.922)
----------------------------------------------------------------------------------
Net asset value, end of period $47.477 $51.710 $46.288 $41.949 $33.110 $29.756
----------------------------------------------------------------------------------
Total Return(1) (1.89%) 17.55% 20.33% 30.93% 18.76% 38.81%
Ratios and supplemental data:
Ratio of expenses to average net assets 0.35%(2) 0.36% 0.35% 0.35% 0.36% 0.35%
Ratio of net investment income
to average net assets 1.04%(2) 1.05% 1.44% 1.79% 2.23% 2.64%
Portfolio Turnover 23.24% 15.91% 33.55% 32.09% 46.70% 51.76%
Net assets, end of period (000 omitted) $4,204,904 $4,709,687 $4,263,557 $3,540,862 $2,465,224 $1,833,450
</TABLE>
(1) Total return percentages in this table are calculated on the basis
prescribed by the Securities and Exchange Commission. These percentages are
based on the underlying mutual fund shares. The total return percentages in
the table are NOT calculated on the same basis as the performance
percentages in the letter at the front of this booklet (those percentages
are based upon the change in unit value).
(2) Annulized
See accompanying notes to financial statements.
Growth and Income Fund 6
<PAGE>
Lincoln National Growth and Income Fund, Inc.
Notes to Financial Statements - Unaudited
June 30, 2000
The Fund: Lincoln National Growth and Income Fund, Inc. (the "Fund") is
registered as an open-end, diversified management investment company under the
Investment Company Act of 1940, as amended. The Fund's shares are sold only to
The Lincoln National Life Insurance Company and Lincoln Life & Annuity Company
of New York (the "Companies") for allocation to their variable annuity products.
The Fund's investment objective is to maximize long-term capital appreciation.
The Fund buys stocks of established companies.
1. Significant Accounting Policies
Investment Valuation: All equity securities are valued at the last quoted sales
price as of the close of the New York Stock Exchange (NYSE) on the valuation
date. If on a particular day an equity security does not trade, then the mean
between the bid and asked prices will be used. Money market instruments having
less than 60 days to maturity are valued at amortized cost, which approximates
market value. Other securities and assets for which market quotations are not
readily available are valued at fair value as determined in good faith by or
under the direction of the Fund's Board of Directors.
Investment Transactions and Investment Income: Investment transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date and interest income is recorded on the accrual basis and includes
amortization of any premium and discount. Realized gains or losses from
investment transactions are reported on an identified cost basis.
Use of Estimates: The preparation of financial statements in conformity with
accounting principles generally accepted in the United States 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 increases and
decreases in net assets from operations during the reporting period. Actual
results could differ from those estimates.
Expenses: The custodian bank of the Fund has agreed to waive its custodial fees
when the Fund maintains a prescribed amount of cash on deposit in certain
non-interest bearing accounts. For the six months ended June 30, 2000, the
custodial fees offset arrangements amounted to $2,972.
Taxes: The Fund has complied with the special provisions of the Internal Revenue
Code for regulated investment companies. As such, the Fund is not subject to
U.S. federal income taxes to the extent that it distributes all of its taxable
income for its fiscal year.
2. Management Fees and Other Transactions With Affiliates
Lincoln Investment Management Company (the "Advisor") and its affiliates manage
the Fund's investment portfolios and maintain its accounts and records. For
these services, the Advisor receives a management fee at an annual rate of .48%
of the first $200,000,000 of the average daily net assets of the Fund, .40% of
the next $200,000,000, and .30% of the average daily net assets of the Fund in
excess of $400,000,000. The sub-advisor, Vantage Investment Advisor, an
affiliate of the Advisor, is paid directly by the Advisor. As of July 1, 2000,
Goldman Sachs Asset Management has replaced Vantage Investment Advisor as the
sub-advisor of the Fund.
Delaware Service Company ("Delaware"), an affiliate of the Advisor, provides
accounting services and other administration support to the Fund. For these
services, the Fund pays Delaware a monthly fee based on average net assets,
subject to certain minimums.
If the aggregate annual expenses of the Fund, including the management fee, but
excluding taxes, interest, brokerage commissions relating to the purchase or
sale of portfolio securities and extraordinary non-recurring expenses, exceed
1.50% of the average daily net assets of the Fund, the Advisor will reimburse
the Fund in the amount of such excess. No reimbursement was due for the six
months ended June 30, 2000.
Certain officers and directors of the Fund are also officers or directors of the
Companies and receive no compensation from the Fund. The compensation of
unaffiliated directors of the Fund is borne by the Fund.
Growth and Income Fund 7
<PAGE>
Notes to Financial Statements - Unaudited - (Continued)
3. Investments
The cost of investments for federal income tax purposes approximates cost for
book purposes. The aggregate cost of investments purchased and the aggregate
proceeds from investments sold for the six months ended June 30, 2000 and the
aggregate gross unrealized appreciation, the aggregate gross unrealized
depreciation and the net unrealized appreciation at June 30, 2000 are as
follows:
<TABLE>
<CAPTION>
Aggregate Aggregate Gross Gross Net
Cost of Proceeds Unrealized Unrealized Unrealized
Purchases From Sales Appreciation Depreciation Appreciation
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$1,004,565,660 $1,379,272,974 $1,552,520,009 $(269,080,337) $1,283,439,672
</TABLE>
4. Summary of Changes From Capital Share Transactions
<TABLE>
<CAPTION>
Shares Issued Upon Net Increase (Decrease)
Capital Reinvestment of Capital Shares Resulting From Capital
Shares Sold Dividends Redeemed Share Transactions
---------------------------------------------------------------------------------------------------------
Shares Amount Shares Amount Shares Amount Shares Amount
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Six months ended
June 30, 2000
(Unaudited): 205,617 $10,235,242 5,708,140 $276,576,520 (8,425,868) $(421,495,146) (2,512,111) $(134,683,384)
Year ended
December 31, 1999: 1,183,242 $56,313,347 4,726,164 $222,939,708 (6,939,216) $(334,124,111) (1,029,810) $ (54,871,056)
</TABLE>
5. Distributions to Shareholders
The Fund declares and distributes dividends, if any, on net investment income
semi-annually. Distributions of net realized gains, if any, are declared and
distributed annually.
Growth and Income Fund 8
