Funds with separate
goals and objectives
to provide investment
flexibility with no initial
sales charge.
Retirement
Annuity Mutual Funds
1998 SEMIANNUAL REPORT
American Express Financial Advisors
Managed by IDS Life Insurance Company
<PAGE>
The Retirement Annuity Mutual Funds provide several alternatives to consider for
investment through your annuity contracts.
Contents
From the chairman 3
Capital Resource Fund
From the portfolio manager 4
The Fund's ten largest holdings 5
Special Income Fund
From the portfolio manager 6
The Fund's ten largest holdings 7
Managed Fund
From the portfolio managers 8
The Fund's ten largest holdings 9
Moneyshare Fund
From the portfolio manager 10
International Equity Fund
From the portfolio manager 11
The Fund's ten largest holdings 12
Aggressive Growth Fund
From the portfolio manager 13
The Fund's ten largest holdings 14
Global Yield Fund
From the portfolio manager 15
The Fund's ten largest holdings 16
Growth Dimensions Fund
From the portfolio manager 17
The Fund's ten largest holdings 18
Income Advantage Fund
From the portfolio manager 19
The Fund's ten largest holdings 20
All Funds
Financial statements 21
Notes to financial statements 32
Investments in securities 54
<PAGE>
To our contract owners
From the chairman
The past six months was a positive period for financial assets, especially
U.S. stocks and bonds. As a result, the IDS Life Retirement Annuity Mutual
Funds that invest primarily in U.S. securities experienced gains during
the period, which ran from September 1997 through February 1998.
While the stock and bond markets can be volatile on a short-term basis,
they historically have provided attractive returns over the long term. A
focus on long-term financial objectives and a balanced investment program
are good guidelines for investing in today's economic environment.
The group of IDS Life Retirement Annuity Mutual Funds allow you to take
advantage of long-term opportunities through a variety of investment
avenues. Your American Express financial advisor can tell you about the
role each fund can play in meeting your long-term financial objectives.
Your advisor also can help make sure your investment and protection
strategies continue to fit your financial situation. As your objectives
and time horizons change, talk to your advisor about the broad range of
American Express products and services designed to help you meet a variety
of investment and protection needs.
William R. Pearce
(picture of) William R. Pearce
William R. Pearce
Chairman of the board
<PAGE>
To our contract owners
Capital Resource Fund
From the portfolio manager
Thanks to a well-positioned portfolio, Capital Resource Fund registered a
substantial gain during the first half of the fiscal year -- September
1997 through February 1998. For the six months, the Fund's value
appreciated 12.7%, essentially matching a powerful performance by the
stock market as a whole. (This figure does not reflect expenses that apply
to the variable accounts, subaccounts, or the annuity contract.)
Supported by the positive fundamentals of solid economic growth, low
inflation, falling long-term interest rates and good corporate profits,
the market got off to a strong start in September. The good times came to
an abrupt end in October, though, when a financial crisis in Southeast
Asia sent shock waves through stock markets worldwide. But within weeks
the U.S. market had shrugged off the setback, then went on to record
positive returns through the winter, finishing the period with a flourish
in February.
For much of the six months, large-capitalization stocks led the way for
the market. Because such stocks comprised a sizable portion of the
portfolio, the Fund's performance benefited accordingly. As for stock
sectors, technology-related issues, although they were highly volatile,
and financial services issues, including those of insurance and brokerage
firms, enjoyed especially good gains. I maintained a heavy exposure to
those sectors and, fortunately, held what turned out to be several of the
top-performing stocks during the period. Retailing, another substantial
area of investment for the Fund, also proved to be a big winner.
Because I was basically optimistic about stocks' prospects heading into
the period, I kept cash reserves at a low level. This strategy also worked
in the Fund's favor, as stocks generated a far-better return than
cash-equivalent investments. As for changes to the portfolio, they were
modest. For example, I sold out of some technology companies that appeared
particularly vulnerable to the Asian situation. In short, the changes
amounted to shifts among stocks within certain sectors, rather than major
asset moves in and out of sectors.
Although the effect of the Asian situation may linger in the months ahead,
I think the underlying investment environment remains favorable. I have
increased the Fund's holdings among consumer products manufacturers and
industrial companies, which I think may benefit most from what will likely
continue to be a healthy economy. I'm also emphasizing companies that do
the bulk of their business in the U.S.
Joseph M. Barsky
(picture of) Joseph M. Barsky
Joseph M. Barsky
Portfolio manager
<PAGE>
The Fund's ten largest holdings
Capital Resource Fund
Percent Value
(of Fund's net assets) (as of Feb. 28, 1998)
General Electric 2.49% $132,175,000
Microsoft 2.07 110,175,000
ACE 2.04 108,762,500
Merck & Co 2.04 108,428,125
Wal-Mart Stores 1.92 101,887,500
Tyco Intl 1.91 101,500,000
Carnival Cl A 1.88 100,087,500
CBS 1.74 92,812,500
Progressive Corp 1.74 92,700,000
USA Waste Services 1.72 91,575,000
(icon of) pie chart
The ten holdings listed here make up 19.55% of the Fund's net assets
<PAGE>
To our contract owners
Special Income Fund
From the portfolio manager
A strong U.S. bond market provided the foundation for a positive
performance by the Fund during the past six months. For the first half of
the fiscal year -- September 1997 through February 1998 -- the Fund's
value increased 4.8%. (This figure does not reflect expenses that apply to
the variable accounts, subaccounts, or the annuity contract.)
Thanks to ongoing reports of remarkably low inflation, long-term interest
rates in the U.S. declined through mid-January, boosting bond prices along
the way. The trend was positive for the Fund, as the majority of its
holdings consisted of U.S. Treasury and corporate bonds, including a
healthy amount of high-yield "corporates." The latter group got additional
support from the continued strength of the economy, and performed
especially well. Also having a positive effect on Fund performance was the
portfolio's longer-than-average duration, a strategy that increases the
Fund's sensitivity to interest-rate swings.
Investments in emerging markets (smaller markets in developing foreign
countries) proved to be another matter, however. Sparked by financial
turmoil in Southeast Asia last fall, emerging market bonds suffered a
sharp decline. This was especially true in Russia and Latin America, which
had previously been stellar performers for the Fund. Those markets began
to rebound late in the period, though, and, over the longer term, I expect
them to make a positive contribution to Fund performance. In a world
characterized by generally low inflation and declining interest rates, the
high interest paid by emerging market bonds clearly enhances the Fund's
income level.
As for changes to the Fund's portfolio, I reduced the exposure to certain
U.S. mortgage-backed bonds, whose performance lags when interest rates
come down. Most of that money went into U.S. Treasury bonds and corporate
bonds, which perform better in a falling-rate environment. They also
generally provide greater income.
Looking toward the second half of the fiscal year, I expect little, if
any, help from U.S. interest rates. My outlook is that long-term rates
will experience only moderate moves up or down. Therefore, I'm continuing
to emphasize investments that offer healthy income, as I believe that will
be the chief contributor to Fund performance in the months ahead.
Steven C. Merrell
(picture of) Steven C. Merrell
Steven C. Merrell
Portfolio manager
<PAGE>
The Fund's ten largest holdings
Special Income Fund
Percent Value
(of Fund's net assets) (as of Feb. 28, 1998)
Resolution Funding 3.02% $58,791,054
8.125% 2019
Hydro-Quebec 1.22 23,858,199
8.50% 2029
Time Warner 1.09 21,252,800
7.57% 2024
Republic of Brazil 1.08 21,092,499
10.125% 2027
Republic of Argentina 1.03 20,129,999
8.75% 2002
United Kingdom Treasury .86 16,837,268
13.17% 2003
Univision Network .79 15,361,325
15.18% 2002
Wal-Mart CRAVE Trust .71 13,821,195
7.00% 2006
Govt of Canada .70 13,646,564
7.37% 2001
Tenet Healthcare .67 12,980,000
10.125% 2005
Excludes U.S. Treasury and government agency holdings.
(icon of) pie chart
The ten holdings listed here make up 11.17% of the Fund's net assets
<PAGE>
To our contract owners
Managed Fund
From the portfolio managers
Taking advantage of a generally good period for U.S. stocks and bonds, the
Fund produced a double-digit gain during the past six months. For the
first half of the fiscal year -- September 1997 through February 1998, the
Fund's value appreciated 10.7%. (This figure does not reflect expenses
that apply to the variable accounts, subaccounts, or the annuity
contract.)
Buoyed by ongoing low inflation, falling long-term interest rates and
solid economic growth, the stock market responded with a sharp rally in
September. Although that strong start was reversed in October by fallout
from financial turmoil in Asia, stocks recovered over the winter and
finished the period with another positive spurt in February.
The U.S. bond market enjoyed more consistent performance, as a steady
decline in long-term interest rates drove up bond values through
mid-January. However, bonds issued in emerging markets, especially
Southeast Asia, were hard hit last fall. While the Fund had only modest
holdings in that region, the severity of the downturn did hurt performance
in the ensuing months. On the other hand, the long duration structure of
our bond holdings in the U.S. (a long duration makes the value of the
Fund's bonds more sensitive to interest-rate swings) enhanced performance
for most of the six months.
Most of the Fund's stock investments focused on the technology, financial
services, health care and consumer products sectors. Technology stocks
lost considerable value during the Asian crisis, during which time we
pared back those holdings. Encouragingly, they did rebound late in the
period. The other sectors experienced relatively little volatility, and
provided very good overall performance.
Given our belief that the prospects for U.S. stock gains may prove less
positive in 1998, we gradually shifted more money into U.S. bonds,
especially Treasury issues, during January and February. At the end of the
period, the asset mix stood at approximately 65% stocks and 35% bonds. Our
stock emphasis remained on U.S. companies with consistent earnings growth
and little vulnerability to potential problems stemming from Asia. Unless
there's a marked change in the investment environment, we plan to stay
with that strategy in the months ahead.
Alfred Henderson
(Picture of) Alfred Henderson
Alfred Henderson
Portfolio manager
Deborah L. Pederson
(picture of) Deborah L. Pederson
Deborah L. Pederson
Portfolio manager
<PAGE>
The Fund's ten largest holdings
Managed Fund
Percent Value
(of Fund's net assets) (as of Feb. 28, 1998)
Merck & Co 2.32% $114,168,437
Intel 2.27 111,660,937
General Electric 1.82 89,412,500
Washington Mutual 1.71 83,906,249
Travelers Group 1.68 82,649,375
Compaq Computer 1.65 81,220,724
Tyco Intl 1.34 65,975,000
Morgan Stanley, Dean Witter, Discover & Co 1.32 64,809,375
Microsoft 1.16 57,019,799
AirTouch Communications 1.03 50,397,406
Excludes U.S. Treasury and government agency holdings.
(icon of) pie chart
The ten holdings listed here make up 16.30% of the Fund's net assets
<PAGE>
To our contract owners
Moneyshare Fund
From the portfolio manager
Moneyshare Fund's yield was little changed during the past six months
(September 1997 through February 1998), reflecting largely stable
short-term interest rates over the period.
For the seven-day period ended Feb. 28, 1998, the Fund's compound
annualized yield was 5.18%, and the simple annualized yield was 5.05%. In
keeping with its objective, the Fund maintained a $1 per share price
throughout the six months. (Although the Fund seeks to maintain a stable
$1 per share price, there is no assurance that it will be able to do so.
An investment in the fund is neither insured nor guaranteed by the U.S.
government.)
With inflation remaining subdued and the economy showing no signs of
either overheating or falling into recession, the Federal Reserve Board
(the Fed) elected to leave short-term interest rates unchanged through
last fall and winter. Concern about potentially higher inflation was also
eased by the financial crisis in Asia, which many observers believed would
restrain U.S. economic growth and, thus, temper a possible increase in
consumer prices. Short-term interest rates did rise briefly in early
January without prompting by the Fed, but quickly returned to former
levels.
Because I was expecting the Fed to raise rates, I kept the average
maturity of the Fund's investments somewhat short -- generally around 40
days. This strategy is based on the fact that the longer the Fund's
average maturity, the longer it takes the Fund's yield to respond to a
change in interest rates. Therefore, when rates rise, a shorter maturity
allows me to more quickly add new, higher-yielding investments, which
modestly increases the income paid to shareholders. On the other hand,
should rates decline, a shorter maturity results in slightly less income.
As always, the entire portfolio remained invested in first-rated
commercial paper, bank letters of credit and certificates of deposit.
As for the rest of the fiscal year, at this point (mid-March) I continue
to believe that the Fed is more likely to raise short-term interest rates
than to lower them, though it may take some time before it decides any
adjustment is necessary. In light of that outlook, I plan to stay with a
moderately short portfolio maturity until action by the Fed merits a
change.
Terry Fettig
(picture of) Terry Fettig
Terry Fettig
Portfolio manager
<PAGE>
To our contract owners
International Equity Fund
From the portfolio manager
In a highly volatile environment for foreign stocks, the Fund managed to
generate positive results during the past six months. For the first half
of the fiscal year -- September 1997 through February 1998 -- the Fund's
value appreciated 6.9%. (This figure does not reflect expenses that apply
to the variable accounts, subaccounts, or the annuity contract.)
The period got off to a very strong start, as several markets, including
those in Europe, Hong Kong and Southeast Asia, rallied sharply. In fact,
the Fund's gain in September essentially equaled the return for the entire
six months.
The environment changed abruptly the next month, as a currency crisis in
Southeast Asia ultimately led to major downturns in financial markets
worldwide, especially in the so-called emerging markets of Asia, Latin
America and Eastern Europe. Although the Fund's investments in these
markets was relatively modest, the severity of the declines erased the
Fund's September gain and actually put it in negative territory for the
first two months.
From that point, the "Asian flu" dissipated somewhat, allowing some
emerging markets to recover their footing and, in certain cases, even
regain some lost ground. By February, the worst of the situation seemed to
have passed, enabling the Fund to finish the period with a healthy gain
and put it solidly in the plus column for the six months.
Fortunately for the Fund's performance, most of its holdings were
concentrated in Europe over the period, including United Kingdom, Italy,
France, the Netherlands and Germany. Those markets weathered last fall's
upheaval better than most, and were the Fund's most consistent
contributors over the six months. The primary investment theme in Europe
was corporate restructuring -- focusing on companies that were
strengthening their business positions through cost reduction and other
streamlining efforts.
As the second half of the fiscal year begins, I think the outlook for
foreign investing is still bright, although volatility is likely to stay
with us. The Fund's primary emphasis remains on Europe, where I still see
ample opportunity for longer-term gain.
John O'Brien
(picture of) John O'Brien
John O'Brien
Portfolio manager
<PAGE>
The Fund's ten largest holdings
International Equity Fund
Percent Value
(of Fund's net assets) (as of Feb. 28, 1998)
Telecom Italia (Italy) 4.23% $90,643,094
Rhone-Poulenc Cl A (France) 4.10 87,758,710
Novartis (Switzerland) 3.78 80,866,190
ING Groep (Netherlands) 3.50 75,020,033
Banque Natl de Paris (France) 3.27 70,045,268
Bayerische Vereinsbank (Germany) 2.86 61,141,400
Instituto Bancario San Paolo di Torino (Italy)2.69 57,496,505
Schweizer Bankgesellschaft (Switzerland) 2.51 53,682,069
Great Universal Stores (United Kingdom) 2.49 53,269,048
Banca Intesa (Italy) 2.28 48,888,003
(icon of) pie chart
The ten holdings listed here make up 31.71% of the Fund's net assets
<PAGE>
To our contract owners
Aggressive Growth Fund
From the portfolio manager
It was a highly volatile six months for small-capitalization stocks, but,
in the end, the Fund recorded a positive return for the period. For the
first half of the fiscal year -- September 1997 through February 1998 --
the Fund's value appreciated 9.9%. (This figure does not reflect expenses
that apply to the variable accounts, subaccounts, or the annuity
contract.)
The period began on a resoundingly strong note, as small-cap stocks
powered their way to a big gain in September. Unfortunately, the trend was
short-lived, as, in late October, financial turmoil in Asia raised
concerns that U.S. companies doing business in those markets would
experience a drop-off in earnings.
Most vulnerable, it was assumed, were technology-related companies, a
substantial component of the small-cap sector and the largest area of
investment for the Fund. With this cloud hanging over their heads, small
stocks in general and technology stocks in particular suffered sharp price
declines. The difficult environment lingered through most of the winter.
February brought a welcome relief, though, as small stocks and the Fund
reacted quite positively to renewed optimism in the market.
In response to last fall's upheaval in the market, I reduced the Fund's
holdings of stocks representing companies, both foreign and domestic, with
ties to Asia, especially in the technology and electronics areas. By
January, all foreign stocks had been eliminated from the portfolio. In
addition, prior to that, I substantially raised the cash reserves in the
Fund, again to provide a buffer against further fallout from the Asian
situation.
Looking toward the second half of the fiscal year, I expect the market
volatility we've seen during the past six months to continue. In light of
that, I'm maintaining the higher-then-normal cash level in the portfolio,
which will allow me to add stocks of promising companies should they
experience price declines. In the long run, I believe that strategy will
yield rewards in what I still see as a fundamentally positive environment
for stocks.
Martin G. Hurwitz
(picture of) Martin G. Hurwitz
Martin G. Hurwitz
Portfolio manager
<PAGE>
The Fund's ten largest holdings
Aggressive Growth Fund
Percent Value
(of Fund's net assets) (as of Feb. 28, 1998)
HBO & Co 2.96% $78,914,250
Chancellor Media 1.51 40,275,000
Outdoor Systems 1.51 40,246,875
Family Dollar Stores 1.34 35,624,999
Guidant 1.23 32,821,875
Rexall Sundown 1.15 30,525,000
Network Associates 1.09 29,081,249
CBS 1.05 27,843,750
Steiner Leisure .99 26,400,000
Watson Pharmaceuticals .94 25,112,500
(icon of) pie chart
The ten holdings listed here make up 13.77% of the Fund's net assets
<PAGE>
To our contract owners
Global Yield Fund
From the portfolio manager
Generally good bond markets in the U.S. and Europe set the stage for a
healthy gain by the Fund during the past six months. For the first half of
the fiscal year -- September 1997 through February 1998 -- the Fund's
value appreciated 4.9%. (This figure does not reflect expenses that apply
to the variable accounts, subaccounts, or the annuity contact.)
With low inflation prevailing in the U.S. and Europe, long-term interest
rates followed an overall declining path through much of the period,
boosting bond values in the process. Because the portfolio was
concentrated in those markets and had a longer-than-average duration -- an
investment strategy that increases its sensitivity to interest-rate
changes -- the Fund enjoyed especially good performance from the rate
drop.
The only real trouble spot was the emerging markets, where 10%-15% of the
portfolio was invested. A financial crisis in Southeast Asia last fall
sent many emerging markets into a nose dive. Although the Fund's
emerging-market investments were relatively small and were largely
confined to Latin America, the downturn did detract somewhat from
performance over the winter. It is encouraging to note, however, that
these markets began to rebound late in the period and continue to offer
above-average return potential.
As has been the case for some time, I kept the majority of assets invested
in U.S. bonds and foreign bonds denominated in dollars or hedged back into
dollars. This strategy lessens the portfolio's exposure to changes in
currency values, which can help or hurt the Fund's return. Because I
expected the dollar to remain strong against most foreign currencies,
which it did, I wanted to limit any potential erosion of the Fund's gain.
Also beneficial to performance was a decision to virtually eliminate
exposure to bonds issued in Japan, whose economic malaise continued during
the past six months.
Given that inflation remains quite low throughout much of the world, I
continue to be optimistic about the outlook for global bond investing.
While we may not enjoy the same boost provided by falling interest rates
during the past six months, bonds in most markets should fare reasonably
well. At this point (mid-March), I am maintaining the emphasis on U.S.
dollar investments, both here and in Europe.
Ray Goodner
(picture of) Ray Goodner
Ray Goodner
Portfolio manager
<PAGE>
The Fund's ten largest holdings
Global Yield Fund
Percent Value
(of Fund's net assets) (as of Feb. 28, 1998)
U.S. Treasury 8.83% $13,991,111
7.50% 2016
U.S. Treasury 3.90 6,175,120
7.50% 2005
Federal Republic of Germany 3.30 5,236,140
6.50% 2027
Federal Republic of Germany 3.13 4,953,723
6.00% 2016
U.S. Treasury 2.85 4,524,885
5.875% 2000
Govt of Canada 2.40 3,802,226
8.00% 2023
United Kingdom Treasury 2.35 3,721,922
8.00% 2003
Govt of Italy 2.20 3,493,375
8.50% 2004
Govt of Norway 2.17 3,432,646
9.0% 1999
United Kingdom Treasury 2.16 3,424,302
9.00% 2000
Note: Certain foreign investment risks include: changes in currency
exchange rates, adverse political or economic order, and lack of similar
regulatory requirements followed by U.S. companies.
(icon of) pie chart
The ten holdings listed here make up 33.29% of the Fund's net assets
<PAGE>
To our contract owners
Growth Dimensions Fund
From the portfolio manager
Despite a sharp decline last fall, the Fund recorded a double-digit gain
during the past six months. For the September 1997 through February 1998
period, the Fund's value increased 13.9%. (This figure does not reflect
expenses that apply to the variable accounts, subaccounts, or the annuity
contract.)
The period got off to a strong start, as falling long-term interest rates
enhanced what was already a positive environment for stocks. But in
October, currencies and stocks markets in Asia went into a virtual
free-fall. The result was severely weakened economies in many countries
that had been substantial buyers of U.S. goods, particularly
technology-related products. This unstable situation immediately cast
doubt on American companies' ability to sustain their earnings growth and
soon spawned a wave of stock-selling.
Although that cloud of concern hung over the U.S. stock market in the
ensuing months, a steady decline in long-term interest rates and ongoing
reports of tame inflation and solid economic growth provided support for
stocks through the winter. In fact, February proved to the Fund's
strongest month of the period.
As has been the case for some time, I kept most of the Fund's assets
invested in large-capitalization stocks in the
technology/telecommunications, health care and financial/ business
services sectors, which continued to generate much of corporate America's
greatest earnings growth. I also continued to avoid foreign stocks, which
proved to be beneficial last fall. I did moderately reduce holdings in the
technology sector in light of the Asian turmoil, but that was the only
notable change to the portfolio during the six months.
Although the stock market's strength in the first two months of 1998 has
been gratifying, I suspect that the year won't be all smooth sailing. The
fallout from the Asian situation may well resurface at some point, and
there could be more upward pressure on inflation and, thus, interest rates
in the months ahead.
That notwithstanding, the resilience the market has demonstrated in recent
years can't be ignored. Therefore, I plan to maintain the Fund's emphasis
on large-capitalization stocks in the sectors that I think continue to
offer the best potential: technology/ telecommunications, financial/
business services and health care.
Gordon Fines
(picture of) Gordon Fines
Gordon Fines
Portfolio manager
<PAGE>
The Fund's ten largest holdings
Growth Dimensions Fund
Percent Value
(of Fund's net assets) (as of Feb. 28, 1998)
General Electric 3.72% $70,674,750
Pfizer 2.89 55,038,149
Norwest 2.83 53,865,562
Cisco Systems 2.28 43,332,575
Intel 2.14 40,771,937
Travelers Group 2.10 40,022,924
Deere & Co 2.08 39,596,188
Compaq Computer 2.02 38,349,956
Microsoft 1.81 34,459,350
BellSouth 1.76 33,574,399
(icon of) pie chart
The ten holdings listed here make up 23.63% of the Fund's net assets
<PAGE>
To our contract owners
Income Advantage Fund
From the portfolio manager
Falling interest rates and solid demand for high-yield bonds resulted in a
productive six months for the Fund. For the first of the fiscal year --
September 1997 through February 1998 -- the Fund's value appreciated 6.3%.
(This figure does not reflect expenses that apply to the variable
accounts, subaccounts, or the annuity contract.)
Sparked mainly by ongoing reports of low inflation and the prospect of a
balanced federal budget, long-term interest rates moved steadily lower
through mid-January. Bond prices responded, as they naturally do when
rates fall, by moving higher, augmenting the Fund's return. For high-yield
bonds, the already positive environment was complemented by solid, ongoing
economic growth and generally healthy corporate profits.
As it has for some time, demand for high-yield bonds remained robust for
much of the six months. The only slowdown came last fall, in the wake of
the financial crisis in Asia, which drove some investors toward the
perceived safe haven offered by U.S. Treasury bonds. By January, though,
demand picked up and remained strong through the end of the period.
Although the Fund's holdings were spread over a wide range of business
sectors, three substantial areas of investment -- media,
telecommunications and gaming -- provided particularly good performance.
Conversely, the Fund's small exposure to what proved to be ill-fated bond
markets in emerging, or developing, countries (including Asia and Latin
America) also worked to its benefit.
With the U.S. economy appearing to still be on solid ground and inflation
yet to become a threat, I think high-yield bonds should be able to provide
a relatively good return in the months ahead. Therefore, I plan to keep
the Fund essentially fully invested in wide range of bonds issued almost
exclusively by U.S. companies.
Jack Utter
(picture of) Jack Utter
Jack Utter
Portfolio manager
<PAGE>
The Fund's ten largest holdings
Income Advantage Fund
Percent Value
(of Fund's net assets) (as of Feb. 28, 1998)
Cablevision Systems 1.16% $5,534,535
11.125% Pay-in-kind Series M
Comcast Cellular Holdings 1.10 5,275,000
9.50% 2007
Adelphia Communications .94 4,499,999
8.375% 2008
Outdoor Systems .84 4,004,250
8.875% 2007
Tenet Healthcare .75 3,575,000
10.125% 2005
Crown Paper .72 3,428,750
11.00% 2005
Paracelsus Healthcare .71 3,404,375
10.00% 2006
Pathmark Stores .71 3,395,000
11.625% 2002
Riverwood Intl .70 3,363,750
10.25% 2006
First Nationwide Holdings .68 3,281,600
10.625% 2003
(icon of) pie chart
The ten holdings listed here make up 8.31% of the Fund's net assets
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of assets and liabilities
Retirement Annuity Mutual Funds
Feb. 28, 1998 (Unaudited)
Assets
Capital Special Managed
Resource Income Fund
Fund Fund
<S> <C> <C> <C>
Investments in securities, at value (Note 1):
(identified cost, $4,059,189,209; $1,919,793,396
and $3,854,346,218, respectively) $5,373,396,309 $1,993,521,625 $4,977,747,514
Receivable for investment securities sold 59,670,470 4,221,487 31,162,772
Dividends and accrued interest receivable 4,331,688 30,866,644 29,081,394
Unrealized appreciation on foreign currency contracts
held, at value (Notes 1 and 4) -- 52,357 --
U.S. government securities held as collateral for
securities loaned (Note 5) -- 25,954,135 12,565,009
Receivable for capital stock sold -- 9,589,187 17,853,753
------------- --------- ----------
Total assets 5,437,398,467 2,064,205,435 5,068,410,442
============= ============= =============
Liabilities
Disbursements in excess of cash on demand deposit 6,164,656 167,141 209,067
Dividends payable to shareholders (Note 1) 5,662,291 10,956,438 28,706,774
Payable for investment securities purchased 89,250,567 15,129,256 52,026,140
Accrued investment management and services fee 2,539,357 971,018 2,276,369
Payable upon return of securities loaned (Note 5) 11,966,000 85,860,135 70,518,689
Payable for capital stock redeemed 2,317,242 1,522,997 43,661
Other accrued expenses 555,979 204,143 480,367
------- ------- -------
Total liabilities 118,456,092 114,811,128 154,261,067
----------- ----------- -----------
Net assets applicable to outstanding capital stock 5,318,942,375 1,949,394,307 4,914,149,375
============= ============= =============
Represented by
Capital stock-- $.01 par value ($.001 for Managed Fund) (Note 1) 1,729,800 1,642,901 257,958
Additional paid-in capital 3,861,119,701 1,872,434,429 3,571,267,409
Undistributed (excess of distributions over)
net investment income (61,479) 2,564,200 (2,928,862)
Accumulated net realized gain (loss) 141,947,223 (834,673) 222,151,751
Unrealized appreciation (depreciation) on investments and on
translation of assets and liabilities in foreign
currencies (Notes 4 and 7) 1,314,207,130 73,587,450 1,123,401,119
------------- ---------- -------------
Total-- representing net assets applicable to outstanding
capital stock $5,318,942,375 $1,949,394,307 $4,914,149,375
============== ============== ==============
Shares outstanding 172,979,959 164,290,133 257,957,665
Net asset value per share of outstanding capital stock $ 30.75 $ 11.87 $ 19.05
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of assets and liabilities (continued)
Retirement Annuity Mutual Funds
Feb. 28, 1998 (Unaudited)
Assets
Moneyshare International Aggressive
Fund Equity Growth
Fund Fund
<S> <C> <C> <C>
Investments in securities, at value (Note 1):
Investments in securities of unaffiliated
issuers (identified cost, $386,998,289;
$2,023,140,167 and $2,161,938,798, respectively) $386,998,289 $2,387,507,490 $2,657,458,554
Investments in securities of affiliated issuers
(identified cost, $17,471,260 for Aggressive Growth) -- -- 37,455,000
Cash in bank on demand deposit -- 459,829 74,035
Receivable for investment securities sold -- 68,546,285 37,087,777
Dividends and accrued interest receivable 463,103 2,127,518 919,203
Unrealized appreciation on foreign currency contracts
held, at value (Notes 1 and 4) -- 40,946 --
U.S. government securities held as collateral for
securities loan (Note 5) -- 8,981,438 8,113,574
Receivable for capital stock sold 2,369,330 207,782 --
--------- ------- ---------
Total assets 389,830,722 2,467,871,288 2,741,108,143
=========== ============= =============
Liabilities
Disbursements in excess of cash on demand deposit 26,127 -- --
Dividends payable to shareholders (Note 1) 1,518,512 1,909,488 2,918,279
Payable for investment securities purchased -- 83,041,709 51,936,739
Accrued investment management and services fee 162,303 1,330,115 1,272,133
Unrealized depreciation on foreign currency
contracts held, at value (Notes 1 and 4) -- 95,105 --
Payable upon return of securities loaned (Note 5) -- 235,745,938 18,038,574
Payable for capital stock redeemed 3,111,331 4,629,522 3,428,816
Other accrued expenses 43,213 300,957 218,115
------ ------- -------
Total liabilities 4,861,486 327,052,834 77,812,656
--------- ----------- ----------
Net assets applicable to outstanding capital stock $384,969,236 $2,140,818,454 $2,663,295,487
============ ============== ==============
Represented by
Capital stock-- $.01 par value (Note 1) $ 3,850,010 $ 1,451,685 $ 1,546,677
Additional paid-in capital 381,120,743 1,773,530,834 2,008,798,905
Undistributed (excess of distributions over)
net investment income 80 (9,262,965) 17,449
Accumulated net realized gain (loss) (1,597) 10,654,955 137,428,960
Unrealized appreciation (depreciation) on investments
and on translation of assets and liabilities in foreign
currencies (Note 4) -- 364,443,945 515,503,496
--------- ----------- -----------
Total-- representing net assets applicable to
outstanding capital stock $384,969,236 $2,140,818,454 $2,663,295,487
============ ============== ==============
Shares outstanding 385,001,033 145,168,483 154,667,685
Net asset value per share of outstanding capital stock $ 1.00 $ 14.75 $ 17.22
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of assets and liabilities (continued)
Retirement Annuity Mutual Funds
Feb. 28, 1998 (Unaudited)
Assets
Global Growth Income
Yield Dimensions Advantage
Fund Fund Fund
<S> <C> <C> <C>
Investments in securities, at value (Note 1):
(identified cost, $159,797,829;
$1,547,202,115 and $462,550,681, respectively) $162,852,183 $1,909,671,286 $474,682,763
Cash in bank on demand deposit 179,332 -- --
Receivable for investment securities sold -- 4,253,056 1,210,127
Dividends and accrued interest receivable 3,014,215 1,704,914 8,338,355
Unrealized appreciation on foreign currency
contracts held, at value (Notes 1 and 4) 36,008 -- --
U.S. government securities held as collateral for
securities loaned (Note 5) -- 2,923,127 --
Receivable for capital stock sold 978,758 5,459,509 4,284,590
------- --------- ---------
Total assets 167,060,496 1,924,011,892 488,515,835
=========== ============= ===========
Liabilities
Disbursements in excess of cash on demand deposit -- 71,674 7,717
Dividends payable to shareholders (Note 1) 521,078 3,092,299 3,325,080
Payable for investment securities purchased 4,710,815 6,482,218 6,249,094
Accrued investment management and services fee 107,163 935,375 237,459
Unrealized depreciation on foreign currency
contracts held, at value (Notes 1 and 4) 16,022 -- --
Payable upon return of securities loaned (Note 5) 3,220,000 10,168,127 --
Other accrued expenses 11,913 107,092 38,325
Open option contracts written at value (Premium received,
$226,496 for Growth Dimensions Fund) (Note 8) -- 251,562 --
-------- ------- -------
Total liabilities 8,586,991 21,108,347 9,857,675
--------- ---------- ---------
Net assets applicable to outstanding capital stock $158,473,505 $1,902,903,545 $478,658,160
============ ============== ============
Represented by
Capital stock-- $.01 par value (Note 1) $ 151,187 $ 1,294,867 $ 454,256
Additional paid-in capital 155,393,341 1,531,310,193 462,545,436
Undistributed (excess of distributions over) net investment income 165,923 (8) (65,666)
Accumulated net realized gain (loss) (Note 9) (292,497) 7,854,388 3,592,052
Unrealized appreciation (depreciation)on investments and
on translation of assets and liabilities in foreign currencies 3,055,551 362,444,105 12,132,082
--------- ----------- ----------
Total-- representing net assets applicable to outstanding
capital stock $158,473,505 $1,902,903,545 $478,658,160
============ ============== ============
Shares outstanding 15,118,710 129,486,735 45,525,566
Net asset value per share of outstanding capital stock $ 10.48 $ 14.70 $ 10.51
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of operations
Retirement Annuity Mutual Funds
Six months ended Feb. 28, 1998 (Unaudited)
Investment income
Capital Special Managed
Resource Income Fund
Fund Fund
<S> <C> <C> <C>
Income:
Dividends (including $1,076,510 earned from affiliates for
Managed Fund) $ 24,071,068 $ 795,849 $ 15,470,075
Interest 5,568,378 73,713,608 54,720,190
Less foreign taxes withheld (107,361) -- (187,094)
-------- --------
Total income 29,532,085 74,509,457 70,003,171
---------- ---------- ----------
Expenses (Note 2):
Investment management services fee 15,165,347 5,880,643 13,540,383
Administrative services fees and expenses 883,859 397,774 745,884
Custodian fees and expenses 225,304 109,220 247,850
Compensation of board members and officers 17,933 10,244 15,461
Printing and postage 215,955 69,547 193,573
Audit fees 10,750 11,250 10,000
Other 10,741 38,947 14,341
------ ------ ------
Total expenses 16,529,889 6,517,625 14,767,492
---------- --------- ----------
Investment income (loss)-- net 13,002,196 67,991,832 55,235,679
---------- ---------- ----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) 190,916,998 6,487,312 226,653,448
Financial futures contracts (Note 7) -- (544,319) --
Foreign currency transactions -- (47,395) (6,314)
Option contracts written (Note 8) -- -- 105,167
-------
Net realized gain (loss) on investments 190,916,998 5,895,598 226,752,301
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and liabilities
in foreign currencies 403,507,766 16,874,394 195,441,988
----------- ---------- -----------
Net gain (loss) on investments and foreign currencies 594,424,764 22,769,992 422,194,289
----------- ---------- -----------
Net increase (decrease) in net assets resulting from operations $607,426,960 $ 90,761,824 $477,429,968
------------ ------------- ------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of operations (continued)
Retirement Annuity Mutual Funds
Six months ended Feb. 28, 1998 (Unaudited)
Investment income
Moneyshare International Aggressive
Fund Equity Growth
Fund Fund
Income:
<S> <C> <C> <C>
Dividends $ -- $ 8,311,374 $ 3,545,776
Interest 11,431,036 5,891,048 8,021,359
Less foreign taxes withheld -- (854,405) (7,270)
-------- ------
Total income 11,431,036 13,348,017 11,559,865
---------- ---------- ----------
Expenses (Note 2):
Investment management services fee 1,034,156 8,630,558 7,626,687
Administrative services fees and expenses 51,584 488,304 472,941
Custodian fees and expenses 29,600 483,100 101,194
Compensation of board members and officers 5,230 24,937 10,975
Printing and postage 7,114 102,188 63,930
Audit fees 8,000 9,750 8,250
Other -- -- 10,616
------
Total expenses 1,135,684 9,738,837 8,294,593
--------- --------- ---------
Investment income (loss)-- net 10,295,352 3,609,180 3,265,272
---------- --------- ---------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (including $736,344 realized gain
on investments of affiliated issuers
for Aggressive Growth Fund) (Note 3) (957) 1,892,241 143,135,229
Foreign currency transactions -- 9,973,675 (17,409)
Option contracts written (Note 8) -- -- (3,551,587)
----------
Net realized gain (loss) on investments (957) 11,865,916 139,566,233
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and liabilities
in foreign currencies -- 124,025,327 98,101,875
----------- ----------
Net gain (loss) on investments and foreign currencies (957) 135,891,243 237,668,108
---- ----------- -----------
Net increase (decrease) in net assets resulting from operations $10,294,395 $139,500,423 $240,933,380
----------- ------------ ------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
Financial statements
Section continued title
Statements of operations (continued)
Retirement Annuity Mutual Funds
Six months ended Feb. 28, 1998 (Unaudited)
Investment income
Global Growth Income
Yield Dimensions Advantage
Fund Fund Fund
<S> <C> <C> <C>
Income:
Dividends $ -- $ 7,141,440 $ 1,445,605
Interest 4,696,985 4,475,068 16,878,559
--------- --------- ----------
Total income 4,696,985 11,616,508 18,324,164
--------- ---------- ----------
Expenses (Note 2):
Investment management services fee 593,955 5,020,524 1,252,197
Administrative services fees and expenses 35,538 250,423 71,875
Custodian fees and expenses 12,335 216,217 16,673
Compensation of board members and officers 4,778 5,753 4,917
Printing and postage 1,287 16,421 7,116
Audit fees 6,500 7,500 7,000
Other 1,725 2,363 9,591
----- ----- -----
Total expenses 656,118 5,519,201 1,369,369
------- --------- ---------
Investment income (loss)-- net 4,040,867 6,097,307 16,954,795
--------- --------- ----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (262,071) 19,587,230 3,595,167
Foreign currency transactions 100,798 -- --
------- ---------- --------
Net realized gain (loss) on investments (161,273) 19,587,230 3,595,167
Net change in unrealized appreciation (depreciation)
on investments and on translation of assets and liabilities
in foreign currencies 2,605,880 186,344,261 3,116,104
--------- ----------- ---------
Net gain (loss) on investments and foreign currencies 2,444,607 205,931,491 6,711,271
--------- ----------- ---------
Net increase (decrease) in net assets resulting from operations $6,485,474 $212,028,798 $23,666,066
========== ============ ===========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Retirement Annuity Mutual Funds
Operations and distributions
Capital Resource Fund Special Income Fund
Six months ended Year ended Six months ended Year ended
Feb. 28, 1998 Aug. 31, 1997 Feb. 28, 1998 Aug. 31, 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Investment income (loss)-- net $ 13,002,196 $ 27,736,768 $ 67,991,832 $ 138,447,393
Net realized gain (loss) on investments 190,916,998 64,476,008 5,895,598 36,389,635
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies 403,507,766 1,057,213,832 16,874,394 48,544,163
----------- ------------- ---------- ----------
Net increase (decrease) in net assets
resulting from operations 607,426,960 1,149,426,608 90,761,824 223,381,191
----------- ------------- ---------- -----------
Distributions to shareholders from:
Net investment income (14,513,937) (25,649,850) (68,085,677) (136,327,556)
Net realized gain (108,000,072) (671,576,858) (42,097,397) (11,869,083)
Excess distributions of net investment
income (Note 1) (61,479) (2,087,182) -- (1,098,015)
------- ---------- ----------
Total distributions (122,575,488) (699,313,890) (110,183,074) (149,294,654)
------------ ------------ ------------ ------------
Capital share transactions (Note 6)
Proceeds from sales 47,128,593 93,527,775 44,882,644 80,830,509
Reinvested distributions at net asset value 122,575,488 699,313,890 110,183,074 149,294,654
Payments for redemptions (202,204,255) (748,232,170) (109,567,775) (292,741,712)
------------ ------------ ------------ ------------
Increase (decrease) in net assets from
capital share transactions (32,500,174) 44,609,495 45,497,943 (62,616,549)
----------- ---------- ---------- -----------
Total increase (decrease) in net assets 452,351,298 494,722,213 26,076,693 11,469,988
Net assets at beginning of period 4,866,591,077 4,371,868,864 1,923,317,614 1,911,847,626
------------- ------------- ------------- -------------
Net assets at end of period $5,318,942,375 $4,866,591,077 $1,949,394,307 $1,923,317,614
============== ============== ============== ==============
Undistributed (excess of distributions
over) net investment income (61,479) 1,511,741 2,564,200 2,658,045
------- --------- --------- ---------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Section continued title
Statements of changes in net assets (continued)
Retirement Annuity Mutual Funds
Operations and distributions
Managed Fund Moneyshare Fund
Six months ended Year ended Six months ended Year ended
Feb. 28, 1998 Aug. 31, 1997 Feb. 28, 1998 Aug. 31, 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Investment income (loss)-- net $ 55,235,679 $ 106,188,571 $ 10,295,352 $ 18,045,404
Net realized gain (loss) on investments 226,752,301 349,723,816 (957) 75
Net change in unrealized appreciation
(depreciation) on investments and
on translation of assets and liabilities
in foreign currencies 195,441,988 533,911,315 -- --
----------- ----------- --------- ---------
Net increase (decrease) in net assets
resulting from operations 477,429,968 989,823,702 10,294,395 18,045,479
----------- ----------- ---------- ----------
Distributions to shareholders from:
Net investment income (52,316,649) (103,963,520) (10,295,352) (18,045,405)
Net realized gain (354,443,189) (229,851,535) -- --
Excess distributions of net investment
income (Note 1) (2,928,862) (2,233,237) -- --
---------- ---------- ---------- ----------
Total distributions (409,688,700) (336,048,292) (10,295,352) (18,045,405)
------------ ------------ ----------- -----------
Capital share transactions (Note 6)
Proceeds from sales 86,184,189 165,143,091 166,001,765 381,728,848
Reinvested distributions at net asset value 409,688,700 336,048,292 10,295,352 18,045,405
Payments for redemptions (94,067,094) (192,281,775) (212,675,702) (266,545,406)
----------- ------------ ------------ ------------
Increase (decrease) in net assets from
capital share transactions 401,805,795 308,909,608 (36,378,585) 133,228,847
----------- ----------- ----------- -----------
Total increase (decrease) in net assets 469,547,063 962,685,018 (36,379,542) 133,228,921
Net assets at beginning of period 4,444,602,312 3,481,917,294 421,348,778 288,119,857
------------- ------------- ----------- -----------
Net assets at end of period $4,914,149,375 $4,444,602,312 $384,969,236 $421,348,778
============== ============== ============ ============
Undistributed (excess of distributions over)
net investment income $ (2,928,862) $ (2,919,030) $ 80 $ 80
-------------- -------------- ------------ ------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets (continued)
Retirement Annuity Mutual Funds
Operations and distributions
International Equity Fund Aggressive Growth Fund
Six months ended Year ended Six months ended Year ended
Feb. 28, 1998 Aug. 31, 1997 Feb. 28, 1998 Aug. 31, 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Investment income (loss)-- net $ 3,609,180 $ 26,417,287 $ 3,265,272 $ 10,202,090
Net realized gain (loss) on investments 11,865,916 28,172,219 139,566,233 211,414,428
Net change in unrealized appreciation
(depreciation) of investments and on
translation of assets and liabilities in
foreign currencies 124,025,327 124,342,284 98,101,875 167,575,911
----------- ----------- ---------- -----------
Net increase (decrease) in net assets
resulting from operations 139,500,423 178,931,790 240,933,380 389,192,429
----------- ----------- ----------- -----------
Distributions to shareholders from:
Net investment income (4,319,890) (24,686,010) (3,247,868) (10,201,144)
Net realized gain (28,337,541) (39,674,522) (212,438,792) (213,792,618)
Excess distributions of net investment
income (Note 1) (9,262,965) (611,057) -- --
---------- -------- ----------- -----------
Total distributions (41,920,396) (64,971,589) (215,686,660) (223,993,762)
Capital share transactions (Note 6)
Proceeds from sales 51,317,004 187,607,054 78,450,416 221,900,102
Reinvested distributions at net asset value 41,920,396 64,971,589 215,686,660 223,993,762
Payments for redemptions (154,974,205) (136,014,005) (83,515,734) (124,759,988)
------------ ------------ ----------- ------------
Increase (decrease) in net assets from
capital share transactions (61,736,805) 116,564,638 210,621,342 321,133,876
----------- ----------- ----------- -----------
Total increase (decrease) in net assets 35,843,222 230,524,839 235,868,062 486,332,543
Net assets at beginning of period 2,104,975,232 1,874,450,393 2,427,427,425 1,941,094,882
------------- ------------- ------------- -------------
Net assets at end of period $2,140,818,454 $2,104,975,232 $2,663,295,487 $2,427,427,425
============== ============== ============== ==============
Undistributed (excess of distributions over)
net investment income $ (9,262,965) $ 710,710 $ 17,449 $ 45
-------------- -------------- -------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Financial statements
Statements of changes in net assets (continued)
Retirement Annuity Mutual Funds
Operations and distributions
Global Yield Growth Dimensions Fund
Six months ended Year ended Six months ended Year ended
Feb. 28, 1998 Aug. 31, 1997 Feb. 28, 1998 Aug. 31, 1997
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Investment income (loss)-- net $ 4,040,867 $ 3,905,294 $ 6,097,307 $ 7,598,882
Net realized gain (loss) on investments (161,273) (728,768) 19,587,230 (11,294,834)
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies 2,605,880 320,947 186,344,261 176,292,119
--------- ------- ----------- -----------
Net increase (decrease) in net assets
resulting from operations 6,485,474 3,497,473 212,028,798 172,596,167
--------- --------- ----------- -----------
Distributions to shareholders from:
Net investment income (3,881,221) (2,750,769) (6,097,307) (7,598,890)
Net realized gains on securities (557,107) -- -- --
-------- --------- --------- ---------
Total distributions (4,438,328) (2,750,769) (6,097,307) (7,598,890)
---------- ---------- ---------- ----------
Capital share transactions (Note 6)
Proceeds from sales 35,470,634 95,993,878 393,148,379 971,525,218
Reinvested distributions at net asset value 4,438,328 2,750,769 6,097,307 7,598,890
Payments for redemptions (2,660,326) (1,244,579) (9,100,616) (8,114,944)
---------- ---------- ---------- ----------
Increase (decrease) in net assets from capital
share transactions 37,248,636 97,500,068 390,145,070 971,009,164
---------- ---------- ----------- -----------
Total increase (decrease) in net assets 39,295,782 98,246,772 596,076,561 1,136,006,441
Net assets at beginning of period 119,177,723 20,930,951 1,306,826,984 170,820,543
----------- ---------- ------------- -----------
Net assets at end of period $158,473,505 $119,177,723 $1,902,903,545 $1,306,826,984
============ ============ ============== ==============
Undistributed (excess of distributions over)
net investment income $ 165,923 $ 6,277 $ (8) $ (8)
------------ ------------ -------------- --------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets (continued)
Retirement Annuity Mutual Funds
Operations and distributions
Income Advantage Fund
Six months ended Year ended
Feb. 28, 1998 Aug. 31, 1997
(Unaudited)
<S> <C> <C>
Investment income (loss)-- net $ 16,954,795 $ 15,331,448
Net realized gain (loss) on investments 3,595,167 1,950,076
Net change in unrealized appreciation
(depreciation) on investments and on
translation of assets and liabilities in
foreign currencies 3,116,104 9,362,691
--------- ---------
Net increase (decrease) in net assets
resulting from operations 23,666,066 26,644,215
---------- ----------
Distributions to shareholders from:
Net investment income (16,954,795) (15,331,448)
Net realized gain (1,952,622) --
---------- ----------
Total distributions (18,907,417) (15,331,448)
----------- -----------
Capital share transactions (Note 6)
Proceeds from sales 138,561,061 247,490,767
Reinvested distributions at net asset value 18,907,417 15,331,448
Payments for redemptions (3,886,263) (2,655,838)
---------- ----------
Increase (decrease) in net assets from
capital share transactions 153,582,215 260,166,377
Total increase (decrease) in net assets 158,340,864 271,479,144
Net assets at beginning of period 320,317,296 48,838,152
----------- ----------
Net assets at end of period $478,658,160 $320,317,296
============ ============
Undistributed (excess of distributions over)
net investment income $ (65,666) $ (65,666)
------------- -------------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Retirement Annuity Mutual Funds
(Unaudited as to Feb. 28, 1998)
1
Summary of significant
accounting policies
Each Fund is registered under the Investment Company Act of 1940 (as
amended) as a diversified, (non-diversified for Global Yield) open-end
management investment company. Each Fund has 10 billion authorized shares
of capital stock.
The investment objectives of each Fund are as follows:
Capital Resource invests primarily in U.S. common stocks;
Special Income invests primarily in investment grade bonds;
Managed invests in stocks, convertible securities, bonds and money
market instruments; Moneyshare invests in money market securities;
International Equity invests primarily in common stocks of foreign
issuers; Aggressive Growth invests primarily in stocks of small- and
medium-sized companies; Global Yield invests primarily in debt
securities of U.S. and foreign issuers; Growth Dimensions invests
primarily in common stocks of U.S. and foreign companies showing
potential for significant growth; and Income Advantage invests
primarily in long-term, high-yielding, high-risk debt securities
below investment grade issued by U.S. and foreign corporations.
Shares of each Fund are sold through the purchase of an annuity contract
offered by IDS Life Insurance Company (IDS Life) or its affiliates.
The significant accounting policies followed by the Funds are summarized
as follows:
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the 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 increase and decrease in
net assets from operations during the period. Actual results could differ
from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities
traded on national securities exchanges or included in national market
systems are valued at the last quoted sales price. Debt securities are
generally traded in the over-the-counter market and are valued at a price
deemed best to reflect fair value as quoted by dealers who make markets in
these securities or by an independent pricing service. Securities for
which market quotations are not readily available are valued at fair value
according to methods selected in good faith by the board. Short-term
securities in all Funds, except Moneyshare Fund, maturing in more than 60
days from the valuation date are valued at the market price or approximate
market value based on the current interest rates; those maturing in 60
days or less are valued at amortized cost. Pursuant to Rule 2a-7 of the
1940 Act, all securities in Moneyshare Fund are valued at amortized cost
which approximates market value in order to maintain a constant net asset
value of $1 per share.
Option transactions
In order to produce incremental earnings, protect gains and facilitate
buying and selling of securities for investment purposes, the Funds,
except Moneyshare Fund, may buy and sell put and call options and write
covered call options on portfolio securities and write cash-secured puts.
The risk in writing a call option is that the Funds give up the
opportunity for profit if the market price of the security increases. The
risk in writing a put option is that the Funds may incur a loss if the
market price of the security decreases and the option is exercised. The
risk in buying an option is that the Funds pay a premium whether or not
the option is exercised. The Funds also have the additional risk of not
being able to enter into a closing transaction if a liquid secondary
market does not exist. The Funds also may write over-the-counter options
where the completion of the obligation is dependent upon the credit
standing of the other party.
Option contracts are valued daily and unrealized appreciation or
depreciation is recorded. The Funds will realize a gain or loss upon
expiration or closing of the option transaction. When an option is
exercised, the proceeds on sales for a written call option, the purchase
cost for a written put option or the cost of a security for a purchased
put or call option is adjusted by the amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market,
the Funds, except Moneyshare Fund, may buy and sell financial futures
contracts. The Funds also may buy or write put and call options on futures
contracts. Risks of entering into futures contracts and related options
include the possibility that there may be an illiquid market and a change
in the value of the contract or option may not correlate with changes in
the value of the underlying securities.
Upon entering into a futures contract, the Funds may be required to
deposit either cash or securities in an amount (initial margin) equal to a
certain percentage of the contract value. Subsequent payments (variation
margin) are made or received by the Funds each day. The variation margin
payments are equal to the daily changes in the contract value and recorded
as unrealized gains and losses. The Funds recognize a realized gain or
loss when the contract is closed or expires.
Foreign currency translations and foreign currency contracts
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities and income and expenses are translated at the exchange rate on
the transaction date. In the statement of operations, net realized gains
or losses from foreign currency transactions may arise from sales of
foreign currency, closed forward contracts, exchange gains or losses
realized between the trade date and settlement dates on securities
transactions, and other translation gains or losses on dividends, interest
income and foreign withholding taxes.
The Funds, except Moneyshare Fund, also may enter into forward foreign
currency exchange contracts for operational purposes. The net U.S. dollar
value of foreign currency underlying all contractual commitments held by
the Funds and the resulting unrealized appreciation and/or depreciation
are determined using foreign currency exchange rates from an independent
pricing service. The Funds are subject to the credit risk that the other
party will not complete the obligations of the contract.
Illiquid securities
At Feb. 28, 1998, investments in securities for Special Income Fund,
Managed Fund, and Income Advantage Fund included issues that are illiquid.
The Funds currently limit investments in illiquid securities to 10% of the
net assets, at market value, at the time of purchase. The aggregate value
of such securities at Feb. 28, 1998, was $11,519,500, $15,271,275, and
$3,000,000 that represents 0.59%, 0.31%, and 0.63% of net assets for
Special Income Fund, Managed Fund and Income Advantage Fund respectively.
Pursuant to guidelines adopted by the board, certain unregistered
securities are determined to be liquid and are not included within the
limitations specified above.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by Special
Income Fund on a forward-commitment or when-issued basis can take place
one month or more after the transaction date. During this period, such
securities are subject to market fluctuations and they may affect the
Fund's net assets the same as owned securities. The Fund designates cash
or liquid high-grade short-term debt securities at least equal to the
amount of its commitment. As of Feb. 28, 1998, the Fund had entered into
outstanding when-issued or forward commitments of $9,579,684.
Federal taxes
Since each Fund intends to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to
distribute all of its taxable income to the Variable Accounts, no
provision for income or excise taxes is required. Each Fund is treated as
a separate entity for federal income tax purposes.
Net investment income (loss) and net realized gains (losses) may differ
for financial statement and tax purposes primarily because of the deferral
of losses on certain futures contracts, the recognition of certain foreign
currency gains (losses) as ordinary income (loss) for tax purposes, the
timing and amount of market discount recognized as ordinary income,
foreign tax credits and losses deferred due to "wash sale" transactions.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. The effect on dividend
distributions of certain book-to-tax differences is presented as "excess
distributions" in the statement of changes in net assets. Also, due to the
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains
(losses) are recorded by the Funds.
Dividends
At Feb. 28, 1998, dividends declared for each Fund payable March 2, 1998
are as follows:
Capital Resource $0.033
Special Income $0.067
Managed $0.112
Moneyshare $0.004
International Equity $0.013
Aggressive Growth $0.019
Global Yield $0.035
Growth Dimensions $0.024
Income Advantage $0.076
Distributions to the Variable Accounts are recorded as of the close of
business on the record date and are payable on the first business day
following the record date. Dividends from net investment income are
declared daily and paid monthly for Special Income, Moneyshare, Global
Yield and Income Advantage Funds and declared and paid quarterly for
Capital Resource, Managed, International Equity, Aggressive Growth and
Growth Dimensions Funds. Capital gain distributions, if any, will be made
annually. However, an additional capital gain distribution may be made
during the fiscal year in order to comply with the Internal Revenue Code,
as applicable to regulated investment companies.
Other
Security transactions are accounted for on the date the securities are
purchased or sold. Dividend income is recognized on the ex-dividend date
and interest income, including amortization of premium and discount on a
level yield basis, is accrued daily.
2
Investment
management and
service agreement
The Funds have entered into an agreement with IDS Life for managing
investments, record keeping and other services that are based solely on
the assets of each Fund. The management fee is a percentage of each Fund's
average daily net assets in reducing percentages annually as follows:
Fund Percentage Range
Capital Resource 0.630% to 0.570%
Special Income 0.610% to 0.535%
Managed 0.630% to 0.550%
Moneyshare 0.510% to 0.440%
International Equity 0.870% to 0.795%
Aggressive Growth 0.650% to 0.575%
Global Yield 0.840% to 0.780%
Growth Dimensions 0.630% to 0.570%
Income Advantage 0.620% to 0.545%
IDS Life, in turn, pays to American Express Financial Corporation (AEFC) a
fee based on a percentage of each Fund's average daily net assets for the
year. This fee is equal to 0.35% for International Equity Fund and 0.25%
for each remaining Fund. In addition to paying its own management fee,
brokerage commissions, taxes and costs of certain legal services, each
Fund will reimburse IDS Life an amount equal to the cost of certain
expenses incurred and paid by IDS Life in connection with each Fund's
operations. The Funds also pay custodian fees to American Express Trust
Company, an affiliate of IDS Life. The reimbursement paid by Moneyshare
Fund will be limited to 0.25% of the Fund's average daily net assets.
AEFC has a Sub-investment Advisory Agreement with American Express Asset
International Inc. (International), a wholly-owned subsidiary of AEFC.
The Funds have also entered into an Administrative Services Agreement with
AEFC. Under this agreement, each Fund pays AEFC a fee for administration
and accounting services at a percentage of each Fund's average daily net
assets in reducing percentages annually as follows:
Fund Percentage Range
Capital Resource 0.050% to 0.030%
Special Income 0.050% to 0.025%
Managed 0.040% to 0.020%
Moneyshare 0.030% to 0.020%
International Equity 0.060% to 0.035%
Aggressive Growth 0.060% to 0.035%
Global Yield 0.060% to 0.040%
Growth Dimensions 0.050% to 0.030%
Income Advantage 0.050% to 0.025%
Additional administrative service expenses paid by the Funds are office
expenses, consultants' fees and compensation of officers and employees.
Under this agreement, the Funds also pay taxes, audit and certain legal
fees, registration fees for shares, compensation of board members,
corporate filing fees, organizational expenses and any other expenses
properly payable by the Funds and approved by the board.
3
Securities
transactions
For the six months ended Feb. 28, 1998, cost of purchases and proceeds
from sales of securities aggregated, respectively, $1,190,905,054 and
$1,228,348,137 for Moneyshare Fund. Cost of purchases and proceeds from
sales of securities (other than short-term obligations) aggregated for
each Fund are as follows:
Fund Purchases Proceeds
Capital Resource $1,853,779,773 $1,921,428,009
Special Income 588,764,134 382,523,865
Managed 1,385,511,057 1,226,230,331
International Equity 1,024,375,006 1,127,648,778
Aggressive Growth 2,144,431,178 2,219,831,225
Global Yield 57,404,663 10,293,517
Growth Dimensions 641,857,399 254,536,577
Income Advantage 263,442,868 127,222,141
Net realized gains and losses on investment sales are determined on an
identified cost basis.
Brokerage commissions paid to brokers affiliated with IDS Life for the six
months ended Feb. 28, 1998 are as follows:
Capital Resource $343,011
Managed 77,016
Aggressive Growth 286,941
Growth Dimensions 38,376
<PAGE>
<TABLE>
<CAPTION>
4
Foreign currency
contracts
At Feb. 28, 1998, Special Income, International Equity Fund and Global
Yield Fund had entered into foreign currency exchange contracts that
obligate the Funds to deliver currencies at a specified future date. The
unrealized appreciation and/or depreciation on these contracts is included
in the accompanying financial statements. See Summary of significant
accounting policies. The terms of the open contracts are as follows:
Special Income Fund
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
<S> <C> <C> <C> <C>
March 16, 1998 4,730,779 600,000,000 $24,521 $ --
U.S. Dollar Japanese Yen
March 20, 1998 33,189,506 5,485,869
Russian Ruble U.S. Dollar 27,836 --
------ -----
$52,357 $ --
International Equity Fund
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
March 2, 1998 12,726,400 8,972,363 $34,343 $ --
Canadian Dollar U.S. Dollar
March 2, 1998 3,313,861 2,010,350 -- 4,222
U.S. Dollar British Pound
March 2, 1998 3,855 6,279 20 --
U.S. Dollar Singapore Dollar
March 2, 1998 8,406,890 1,291,298,335 -- 8,748
U.S. Dollar Spanish Peseta
March 2, 1998 14,378,631 21,076,197 -- 21,548
U.S. Dollar Swiss Franc
March 3, 1998 16,198,494 26,620,606 -- 46,976
British Pound U.S. Dollar
March 3, 1998 9,777,456 17,744,127 -- 7,806
U.S. Dollar Deutsche Mark
March 3, 1998 5,568,453 855,871,181 -- 2,173
U.S. Dollar Spanish Peseta
March 3, 1998 3,554,533 5,212,723 -- 3,632
U.S. Dollar Swiss Franc
March 4, 1998 7,413,064 4,505,409 4,190 --
U.S. Dollar British Pound
March 5, 1998 2,127,381 1,293,673 2,393 --
----- -----
U.S. Dollar British Pound
$40,946 $95,105
Global Yield Fund
Exchange date Currency to Currency to Unrealized Unrealized
be delivered be received appreciation depreciation
March 3, 1998 3,218,895 5,837,417 $ -- $ 4,900
U.S. Dollar Deutsche Mark
March 3, 1998 12,000,000 6,648,199 35,682 --
Deutsche Mark U.S. Dollar
March 20, 1998 2,700,000,000 1,503,090 -- 7,148
Italian Lira U.S. Dollar
March 20, 1998 155,000,000 1,004,537 -- 3,974
Spanish Peseta U.S. Dollar
March 20, 1998 45,000,000 357,827 326 --
--- -----
Japanese Yen U.S. Dollar
$36,008 $16,022
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
5
Lending of
portfolio securities
Presented below is information regarding securities on loan at Feb. 28, 1998.
Capital Special
Resource Income Managed
<S> <C> <C> <C>
Value of securities on loan to brokers $12,546,957 $83,669,700 $69,019,623
Collateral received for securities loaned:
Cash $11,966,000 $59,906,000 $57,953,680
U.S. government securities, at value -- 25,954,135 12,565,009
Total collateral received for securities
loaned $13,000,000 $85,860,135 $70,518,689
International Aggressive Global Growth
Equity Growth Yield Dimensions
Value of securities on loan to brokers $230,925,244 $22,392,150 $3,125,620 $10,240,230
Collateral received for securities loaned:
Cash $226,764,500 $9,925,000 $3,220,000 $7,245,000
U.S. government securities, at value 8,981,438 8,113,574 -- 2,923,127
Total collateral received for securities
loaned $235,745,938 $22,500,000 $3,220,000 $10,500,000
Income from securities lending amounted to $348,251, $252,361, $359,358,
$652,824, $74,299, $4,893 and $29,283 for Capital Resource, Special
Income, Managed, International Equity, Aggressive Growth, Global Yield,
and Growth Dimensions, respectively, for the six months ended Feb. 28,
1998.
The risks to each Fund of securities lending are that the borrower may not
provide additional collateral when required or return the securities when
due.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
6
Capital share
transactions
Transactions in shares of each Fund for the six months ended Feb. 28, 1998 and the year ended Aug. 31, 1997 were as follows:
Six months ended Feb. 28, 1998
Capital Special
Resource Income Managed
<S> <C> <C> <C>
Sold 1,639,594 3,754,831 4,637,162
Issued for reinvested
distributions 4,372,384 9,288,850 22,824,383
Redeemed (7,020,195) (9,151,722) (5,039,417)
---------- ---------- ----------
Net increase (decrease) (1,008,217) 3,891,959 22,422,128
---------- --------- ----------
Six months ended Feb. 28, 1998
International Aggressive
Moneyshare Equity Growth
Sold 166,015,792 3,666,925 4,625,839
Issued for reinvested
distributions 10,296,252 3,162,559 13,658,450
Redeemed (212,694,036) (11,108,812) (5,020,084)
------------ ----------- ----------
Net increase (decrease) (36,381,992) (4,279,328) 13,264,205
----------- ---------- ----------
Six months ended Feb. 28, 1998
Global Growth Income
Yield Dimensions Advantage
Sold 3,394,430 28,811,546 13,171,686
Issued for reinvested
distributions 425,194 426,706 1,804,132
Redeemed (254,628) (638,540) (370,157)
-------- -------- --------
Net increase (decrease) 3,564,996 28,599,712 14,605,661
--------- ---------- ----------
Year ended Aug. 31, 1997
Capital Special
Resource Income Managed
Sold 3,671,546 6,809,483 9,338,045
Issued for reinvested
distributions 28,934,823 12,551,003 19,555,272
Redeemed (29,616,371) (24,673,816) (10,968,268)
----------- ----------- -----------
Net increase (decrease) 2,989,998 (5,313,330) 17,925,049
--------- ---------- ----------
Year ended Aug. 31, 1997
International Aggressive
Moneyshare Equity Growth
Sold 381,761,377 13,555,355 13,876,397
Issued for reinvested
distributions 18,046,948 4,698,005 14,394,788
Redeemed (266,568,205) (9,718,319) (7,863,764)
------------ ---------- ----------
Net increase (decrease) 133,240,120 8,535,041 20,407,421
----------- --------- ----------
Year ended Aug. 31, 1997
Global Growth Income
Yield Dimensions Advantage
Sold 9,330,407 83,748,124 24,570,862
Issued for reinvested
distributions 267,366 622,770 1,512,556
Redeemed (120,645) (663,937) (261,858)
-------- -------- --------
Net increase (decrease) 9,477,128 83,706,957 25,821,560
--------- ---------- ----------
</TABLE>
<PAGE>
7
Interest rate
futures contracts
At Feb. 28, 1998, investments in securities for Special Income Fund
included securities valued at $6,944,781 that were pledged as collateral
to cover initial margin deposits on 100 open sales contracts. The market
value of the open sales contracts at Feb. 28, 1998 was $11,268,750 with a
net unrealized loss of $151,563. See summary of significant accounting
policies.
8
Options contracts
written
The number of contracts and premium amounts associated with option
contracts written by Aggressive Growth Fund during the six months ended
Feb. 28, 1998 is as follows:
Calls
Contracts Premium
Balance Aug. 31, 1997 6,350 $ 1,388,808
Opened 14,490 4,597,593
Closed or expired (15,840) (5,469,024)
Exercised (5,000) (517,377)
------ --------
Balance Feb. 28, 1998 -- $ --
------ ------------
See summary of significant accounting policies.
The number of contracts and premium amounts associated with option
contracts written by Growth Dimensions Fund during the six months ended
Feb. 28, 1998 is as follows:
Calls
Contracts Premium
Balance Aug. 31, 1997 -- $ --
Opened 2,300 226,496
Closed or expired -- --
Exercised -- --
----- -------
Balance Feb. 28, 1998 2,300 $226,496
----- --------
See summary of significant accounting policies.
9
Capital loss
carryover
For federal income tax purposes, Growth Dimensions Fund had a capital loss
carryover at Aug. 31, 1997 of $11,186,489 that will expire in 2004 to 2006
if not offset by subsequent capital gains. It is unlikely the board will
authorize a distribution of any net realized capital gains for a Fund
until its capital loss carryover has been offset or expires.
<PAGE>
<TABLE>
<CAPTION>
10
Financial highlights
Capital Resource Fund
Financial Highlights
The tables below show certain important financial information for
evaluating each Fund's results.
Fiscal period ended Aug. 31,
Per share income and capital changes(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998(b) 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net asset value, $27.97 $25.57 $24.42 $23.43 $24.58 $23.90 $23.15 $17.54 $20.17 $15.06
beginning of period
Income from investment operations:
Net investment income (loss) .08 .16 .30 .29 .29 .23 .21 .40 .52 .39
Net gains (losses) on securities (both 3.41 6.45 1.22 3.70 1.56 1.89 1.75 6.61 (2.06) 5.38
realized and unrealized)
Total from investment operations 3.49 6.61 1.52 3.99 1.85 2.12 1.96 7.01 (1.54) 5.77
Less distributions:
Dividends from net investment income (.08) (.15) (.29) (.29) (.29) (.23) (.21) (.40) (.52) (.39)
Distributions from realized gains (.63) (4.05) (.07) (2.71) (2.71) (1.21) (1.00) (1.00) (.57) (.27)
Excess distributions from net investment -- (.01) (.01) -- -- -- -- -- -- --
income
Total distributions (.71) (4.21) (.37) (3.00) (3.00) (1.44) (1.21) (1.40) (1.09) (.66)
Net asset value, end of period $30.75 $27.97 $25.57 $24.42 $23.43 $24.58 $23.90 $23.15 $17.54 $20.17
Ratios/supplemental data
1998(b) 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of $5,319 $4,867 $4,372 $3,845 $2,899 $2,308 $1,681 $1,191 $702 $660
period (in millions)
Ratio of expenses to .66%c .67% .68% .69% .68% .68% .70% .70% .70% .73%
average daily net assets
Ratio of net income (loss) to .52%c .61% 1.15% 1.22% 1.20% .94% .91% 1.94% 2.69% 2.22%
average daily net assets
Portfolio turnover rate (excluding 39% 110% 131% 88% 85% 65% 63% 74% 82% 42%
short-term securities)
Total returnd 12.7% 28.5% 6.2% 17.2% 7.6% 8.9% 8.5% 40.7% (7.8)% 38.7%
Average brokerage commission rate(e) $.0552 $.0492 $.0565 -- -- -- -- -- -- --
a For a share outstanding throughout the period.Rounded to the nearest cent.
b Six months ended Feb. 28, 1998 (Unaudited).
c Adjusted to an annual basis.
d Total return does not reflect payment of the expenses that apply to the
variable accounts or any annuity charges.
e Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which
commissions are charged. The comparability of this information may be
affected by the fact that commission rates per share vary significantly
among foreign countries.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Special Income Fund
Financial highlights
Fiscal period ended Aug. 31,
Per share income and capital changes(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998(b) 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net asset value,
beginning of period $11.99 $11.54 $11.58 $11.05 $12.08 $11.26 $10.72 $10.10 $11.11 $10.88
Income from investment operations:
Net investment income (loss) .42 .85 .88 .88 .84 .85 .90 .97 .99 1.03
Net gains (losses) on securities (both
realized and unrealized) .15 .52 (.07) .56 (.99) .82 .54 .62 (1.01) .23
Total from investment operations .57 1.37 .81 1.44 (.15) 1.67 1.44 1.59 (.02) 1.26
Less distributions:
Dividends from net investment income (.42) (.84) (.85) (.87) (.85) (.85) (.90) (.97) (.99) (1.03)
Distributions from realized gains (.27) (.07) -- (.02) (.02) -- -- -- -- --
Excess distributions from net investment
income -- (.01) -- (.02) (.01) -- -- -- -- --
Total distributions (.69) (.92) (.85) (.91) (.88) (.85) (.90) (.97) (.99) (1.03)
Net asset value,
end of period $11.87 $11.99 $11.54 $11.58 $11.05 $12.08 $11.26 $10.72 $10.10 $11.11
Ratios/supplemental data:
1998(b) 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of
period (in millions) $1,949 $1,923 $1,912 $1,703 $1,559 $1,551 $1,136 $800 $641 $565
Ratio of expenses to
average daily net assets .68%d .68% .68% .68% .67% .69% .71% .70% .71% .73%
Ratio of net income (loss) to
average daily net assets 7.05%d 7.18% 7.47% 8.08% 7.20% 7.41% 8.22% 9.31% 9.42% 9.37%
Portfolio turnover rate
(excluding short-term
securities) 21% 73% 56% 56% 57% 77% 92% 97% 118% 132%
Total return(c) 4.8% 12.2% 7.1% 13.8% (1.3%) 15.5% 14.0% 16.5% (.1%) 12.2%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Feb. 28, 1998 (Unaudited).
c Total return does not reflect payment of the expenses that apply to the
variable accounts or any annuity charges.
d Adjusted to an annual basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Managed Fund
Financial highlights
Fiscal period ended Aug. 31,
Per share income and capital changes(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998(b) 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net asset value,
beginning of period $18.87 $16.00 $14.85 $13.65 $14.32 $13.08 $12.59 $10.93 $12.08 $9.87
Income from investment operations:
Net investment income (loss) .23 .46 .46 .40 .47 .49 .56 .58 .65 .48
Net gains (losses) on securities (both
realized and unrealized) 1.67 3.93 1.15 1.20 (.26) 1.60 .95 2.11 (.67) 2.25
Total from investment operations 1.90 4.39 1.61 1.60 .21 2.09 1.51 2.69 (.02) 2.73
Less distributions:
Dividends from net investment income (.21) (.45) (.46) (.40) (.47) (.49) (.56) (.58) (.65) (.48)
Distributions from realized gains (1.50) (1.06) -- -- (.41) (.36) (.46) (.45) (.48) (.04)
Excess distributions from net
investment income (.01) (.01) -- -- -- -- -- -- -- --
Total distributions (1.72) (1.52) (.46) (.40) (.88) (.85) (1.02) (1.03) (1.13) (.52)
Net asset value,
end of period $19.05 $18.87 $16.00 $14.85 $13.65 $14.32 $13.08 $12.59 $10.93 $12.08
Ratios/supplemental data
1998(b) 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of period (in millions) $4,914 $4,445 $3,482 $3,044 $2,499 $1,858 $1,169 $810 $545 $462
Ratio of expenses to
average daily net assets .64%c .64% .65% .68% .68% .69% .71% .70% .71% .73%
Ratio of net income (loss) to
average daily net assets 2.39%c 2.65% 2.94% 2.96% 3.46% 3.70% 4.35% 4.86% 5.42% 5.06%
Portfolio turnover rate (excluding
short-term securities) 27% 72% 85% 72% 79% 58% 50% 52% 37% 69%
Total returnd 10.7% 28.5% 11.0% 11.9% 1.5% 16.3% 12.1% 25.2% (.2%) 28.5%
Average brokerage commission rate(e) $.0221 $.0334 $.0606 -- -- -- -- -- -- --
a For a share outstanding throughout the period. Rounded to the nearest
cent.
b Six months ended Feb. 28, 1998 (Unaudited).
c Adjusted to an annual basis.
d Total return does not reflect payment of the expenses that apply
to the variable accounts or any annuity charges.
e Effective fiscal year 1996, the Fund is required to disclose an
average brokerage commission rate per share for security trades on
which commissions are charged. The comparability of this information
may be affected by the fact that commission rates per share vary
significantly among foreign countries.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Moneyshare Fund
Financial highlights
Fiscal period ended Aug. 31,
Per share income and capital changes(a)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1998(b) 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net asset value, $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
beginning of period
Income from investment operations:
Net investment income (loss) .03 .05 .05 .05 .03 .03 .04 .07 .08 .09
Less distributions:
Dividends from net (.03) (.05) (.05) (.05) (.03) (.03) (.04) (.07) (.08) (.09)
investment income
Net asset value, $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
end of period
Ratios/supplemental data
1998b 1997 1996 1995 1994 1993 1992 1991 1990 1989
Net assets, end of period $385 $421 $288 $227 $179 $180 $246 $285 $274 $160
(in millions)
Ratio of expenses to .56%c .57% .56% .59% .57% .60% .60% .57% .62% .54%
average daily net assets
Ratio of net income (loss) to 5.12%c 4.97% 5.02% 5.23% 3.12% 2.67% 3.93% 6.55% 7.85% 8.68%
average daily net assets
Total return(d) 2.6% 5.1% 5.2% 5.3% 3.2% 2.7% 4.0% 6.8% 8.2% 9.0%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Feb. 28, 1998 (Unaudited).
c Adjusted to annual basis.
d Total return does not reflect payment of the expenses that apply to the
variable accounts or any annuity charges.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
International Equity Fund
Financial highlights
Fiscal period ended Aug. 31,
Per share income and capital changes(a)
<S> <C> <C> <C> <C> <C> <C> <C>
1998(b) 1997 1996 1995 1994 1993 1992(c)
Net asset value, $14.09 $13.30 $12.55 $12.91 $11.60 $10.01 $10.00
beginning of period
Income from investment operations:
Net investment income (loss) .03 .18 .20 .17 .14 .15 .05
Net gains (losses) on securities .91 1.06 1.01 (.37) 1.61 1.81 .01
(both realized and unrealized)
Total from investment operations .94 1.24 1.21 (.20) 1.75 1.96 .06
Less distributions:
Dividends from net investment income (.03) (.17) (.44) (.16) (.08) (.15) (.05)
Distributions from realized gains (.19) (.28) (.02) -- (.29) (.22) --
Excess distributions from realized gains (.06) -- -- -- (.07) -- --
Total distributions (.28) (.45) (.46) (.16) (.44) (.37) (.05)
Net asset value, end of period $14.75 $14.09 $13.30 $12.55 $12.91 $11.60 $10.01
Ratios/supplemental data
1998b 1997 1996 1995 1994 1993 1992c
Net assets, end of period $2,141 $2,105 $1,874 $1,442 $1,111 $291 $39
(in millions)
Ratio of expenses to .93%f .97% .96% 1.03% .98% 1.10% 1.57%f
average daily net assets
Ratio of net income (loss) to .35%f 1.30% 1.28% 1.56% 1.09% 1.37% .93%f
average daily net assets
Portfolio turnover rate 54% 91% 58% 38% 51% 62% 22%
(excluding short-term securities)
Total returnd 6.9% 9.3% 9.6% (1.8%) 15.1% 19.8% .6%
Average brokerage commission $.0228 $.0187 $.0186 -- -- -- --
rate(e)
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Feb. 28, 1998 (Unaudited).
c Commencement of operations. Period from Jan. 13, 1992 to Aug. 31, 1992.
d Total return does not reflect payment of the expenses that apply to the
variable accounts or any annuity charges.
e Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions
are charged. The comparability of this information may be affected by the
fact that commission rates per share vary significantly among foreign
countries.
f Adjusted to an annual basis.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Aggressive Growth Fund
Financial highlights
Fiscal period ended Aug. 31,
Per share income and capital changes(a)
<S> <C> <C> <C> <C> <C> <C> <C>
1998(c) 1997 1996 1995 1994 1993 1992(b)
Net asset value,
beginning of period $17.17 $16.04 $14.44 $11.46 $11.68 $9.00 $10.00
Income from investment operations:
Net investment income (loss) .02 .08 .10 .08 .01 .02 .02
Net gains (losses) on securities (both
realized and unrealized) 1.54 2.84 1.60 2.98 (.22) 2.68 (1.00)
Total from investment operations 1.56 2.92 1.70 3.06 (.21) 2.70 (.98)
Less distributions:
Dividends from net investment income (.02) (.08) (.10) (.08) (.01) (.02) (.02)
Distributions from realized gains (1.49) (1.71) -- -- -- -- --
Total distributions (1.51) (1.79) (.10) (.08) (.01) (.02) (.02)
Net asset value,
end of period $17.22 $17.17 $16.04 $14.44 $11.46 $11.68 $9.00
Ratios/supplemental data
1998c 1997 1996 1995 1994 1993 1992b
Net assets, end of period
(in millions) $2,663 $2,427 $1,941 $1,412 $763 $299 $57
Ratio of expenses to
average daily net assets .66%d .68% .69% .70% .69% .75% .98%d
Ratio of net income (loss) to
average daily net assets .26%d .47% .65% .72% .14% .28% .21%d
Portfolio turnover rate
(excluding short-term 97% 18% 189% 116% 59% 55% 28%
securities)
Total return (e) 9.9% 18.6% 11.8% 26.8% (1.8%) 30.0% (9.8%)
Average brokerage commission rate(f) $.0551 $.0430 $.0531 -- -- -- --
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Commencement of operations. Period from Jan. 13, 1992 to Aug. 31, 1992.
c Six months ended Feb. 28, 1998 (Unaudited).
d Adjusted to an annual basis.
e Total return does not reflect payment of the expenses that apply to the
variable accounts or any annuity charges.
f Effective fiscal year 1996, the Fund is required to disclose an average
brokerage commission rate per share for security trades on which commissions
are charged. The comparability of this information may be affected by the
fact that commission rates per share vary significantly among foreign
countries.
</TABLE>
<PAGE>
Global Yield Fund
Financial highlights
Fiscal period ended Aug. 31,
Per share income and capital changes(a)
1998(b) 1997 1996(c)
Net asset value,
beginning of period $10.32 $10.08 $10.00
Income from investment operations:
Net investment income (loss) .30 .51 .12
Net gains on securities (both
realized and unrealized) .19 .14 .07
Total from investment operations .49 .65 .19
Less distributions:
Dividends from net investment income (.29) (.41) (.11)
Distributions from realized gains (.04) -- --
Total distributions (.33) (.41) (.11)
Net asset value,
end of period $10.48 $10.32 $10.08
Ratios/supplemental data 1998b 1997 1996c
Net assets, end of period $158 $119 $21
(in millions)
Ratio of expenses to .94%d .97% 1.77%d
average daily net assets
Ratio of net income (loss) to 5.78%d 5.66% 4.96%d
average daily net assets
Portfolio turnover rate 8% 36% 4%
(excluding short-term
securities)
Total return(e) 4.9% 6.5% 2.0%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Six months ended Feb. 28, 1998 (Unaudited).
c Commencement of operations. Period from May 1, 1996 to Aug. 31, 1996.
d Adjusted to an annual basis.
e Total return does not reflect payment of the expenses that apply to the
variable accounts or any annuity charges.
<PAGE>
Growth Dimensions Fund
Financial highlights
Fiscal period ended Aug. 31,
Per share income and capital changes(a)
1998(c) 1997 1996(b)
Net asset value,
beginning of period $12.95 $9.94 $10.00
Income from investment operations:
Net investment income (loss) .05 .10 .03
Net gains (losses) on securities (both
realized and unrealized) 1.75 3.01 (.06)
Total from investment operations 1.80 3.11 (.03)
Less distributions:
Dividends from net investment income (.05) (.10) (.03)
Net asset value,
end of period $14.70 $12.95 $9.94
Ratios/supplemental data
1998c 1997 1996b
Net assets, end of period
(in millions) $1,903 $1,307 $171
Ratio of expenses to
average daily net assets .71%d .72% 1.04%d
Ratio of net income (loss) to
average daily net assets .78%d 1.04% 1.69%d
Portfolio turnover rate
(excluding short-term
securities) 18% 29% 4%
Total return(e) 13.9% 31.4% (.2%)
Average brokerage commission rate(f) $.0373 $.0321 $.0559
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Commencement of operations. Period from May 1, 1996 to Aug. 31, 1996.
c Six months ended Feb. 28, 1998 (Unaudited).
d Adjusted to an annual basis.
e Total return does not reflect payment of the expenses that apply to the
variable accounts or any annuity charges.
f The Fund is required to disclose an average brokerage commission rate per
share for security trades on which commissions are charged. The comparability
of this information may be affected by the fact that commission rates per
share vary significantly among foreign countries.
<PAGE>
Income Advantage Fund
Financial highlights
Fiscal period ended Aug. 31,
Per share income and capital changes(a)
1998(c) 1997 1996(b)
Net asset value,
beginning of period 10.39 $9.77 $10.00
Income from investment operations:
Net investment income (loss) .45 .88 .18
Net gains (losses) on securities (both
realized and unrealized) .17 .62 (.23)
Total from investment operations .62 1.50 (.05)
Less distributions:
Dividends from net investment income (.45) (.88) (.18)
Distributions from realzied gains (.05) -- --
Total distributions (.50) (.88) (.18)
Net asset value,
end of period $10.51 $10.39 $9.77
Ratios/supplemental data
1998c 1997 1996b
Net assets, end of period
(in millions) $479 $320 $49
Ratio of expenses to
average daily net assets .69%e .69% 1.53%e
Ratio of net income (loss) to
average daily net assets 8.59%e 8.88% 8.14%e
Portfolio turnover rate
(excluding short-term 34% 104% 22%
securities)
Total return(d) 6.3% 16.8% (.5%)
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Commencement of operations. Period from May 1, 1996 to Aug. 31, 1996.
c Six months ended Feb. 28, 1998 (Unaudited).
d Total return does not reflect payment of the expenses that apply to the
variable accounts or any annuity charges.
e Adjusted to an annual basis.
<PAGE>
Investments in securities
Retirement Annuity Mutual Funds
Capital Resource Fund
Feb. 28, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Common stocks - 96.9%
Issuer Shares Value(a)
Airlines - 0.4%
AMR 150,000(b) $18,984,375
Automotive & related - 1.0%
Lear 1,000,000(b) 52,875,000
Banks and savings & loans - 5.3%
First Union 1,000,000 52,687,500
Norwest 1,800,000 73,687,500
State Street 1,400,000 86,537,500
Washington Mutual 1,000,000 67,125,000
Total 280,037,500
Building materials & construction - 4.8%
Masco 1,300,000 70,687,500
Sherwin-Williams 2,500,000 83,593,750
Tyco Intl 2,000,000 101,500,000
Total 255,781,250
Chemicals - 4.3%
BetzDearborn 1,250,000 80,234,375
Du Pont (EI) de Nemours 400,000 24,525,000
Monsanto 600,000 30,525,000
USA Waste Services 2,200,000(b) 91,575,000
Total 226,859,375
Communications equipment & services - 1.1%
Lucent Technologies 400,000 43,350,000
Motorola 300,000 16,725,000
Total 60,075,000
Computers & office equipment - 11.7%
Automatic Data Processing 500,000 30,531,250
Bay Networks 743,560(b) 25,188,095
BMC Software 200,000(b) 15,300,000
Cambridge Technology
Partners 1,000,000(b) 45,500,000
Cisco Systems 900,000(b) 59,287,500
Compaq Computer 1,300,000 41,681,250
Hewlett-Packard 450,000 30,150,000
Microsoft 1,300,000(b) 110,175,000
Network Associates 800,000(b) 51,700,000
Parametric Technology 900,000(b) 54,506,250
PeopleSoft 1,200,000(b) 53,625,000
Platinum Technology 1,300,000(b) 32,987,500
Solectron 1,500,000(b) 72,562,500
Total 623,194,345
Electronics - 4.2%
Analog Devices 1,500,000(b) $48,375,000
Intel 800,000 71,750,000
Molex 1,500,000 45,375,000
Thomas & Betts 1,000,000 56,687,500
Total 222,187,500
Energy - 3.8%
Anadarko Petroleum 550,000 35,475,000
Exxon 1,200,000 76,650,000
Mobil 500,000 36,218,750
Tosco 1,500,000 55,687,500
Total 204,031,250
Energy equipment & services - 0.5%
Transocean Offshore 600,000 25,800,000
Financial services - 7.0%
Associates First
Capital Cl A 475,000 38,000,000
Fannie Mae 1,000,000 63,812,500
Franklin Resources 1,200,000 61,200,000
MBNA 1,000,000 35,812,500
Morgan Stanley, Dean
Witter, Discover & Co 1,300,000 90,593,750
Travelers Group 1,500,000 83,625,000
Total 373,043,750
Food - 0.8%
General Mills 600,000 43,162,500
Foreign - 3.9%(e)
ACE 1,100,000 108,762,500
Royal Dutch Petroleum 1,000,000 54,312,500
Schlumberger 575,000 43,340,625
Total 206,415,625
Health care - 8.2%
American Home Products 550,000 51,562,500
Arterial Vascular
Engineering 400,000(b) 32,750,000
Bristol-Myers Squibb 800,000 80,150,000
Guidant 800,000 58,350,000
Lilly (Eli) 450,000 29,615,625
Merck & Co 850,000 108,428,125
Pfizer 850,000 75,225,000
Total 436,081,250
Health care services - 1.7%
Tenet Healthcare 1,800,000(b) 67,162,500
United Healthcare 400,000 24,275,000
Total 91,437,500
Household products - 3.5%
Colgate-Palmolive 500,000 40,593,750
Gillette 800,000 86,300,000
Proctor & Gamble 700,000 59,456,250
Total 186,350,000
Industrial equipment & services - 3.6%
Deere & Co 1,400,000 78,575,000
Illinois Tool Works 1,500,000 89,906,250
Ingersoll-Rand 433,000 20,621,625
Total 189,102,875
Insurance - 3.5%
American Intl Group 500,000 60,093,750
Progressive Corp 800,000 92,700,000
SunAmerica 750,000 33,984,375
Total 186,778,125
Leisure time & entertainment - 2.5%
Brunswick 1,000,000 31,750,000
Carnival Cl A 1,700,000 100,087,500
Total 131,837,500
Media - 3.5%
CBS 3,000,000 92,812,500
Clear Channel
Communications 400,000(b) 36,250,000
Univision Communications
Cl A 700,000(b) 26,862,500
US WEST Media Group 1,000,000(b) 32,187,500
Total 188,112,500
Multi-industry conglomerates - 3.4%
Emerson Electric 400,000 25,525,000
General Electric 1,700,000 132,175,000
Minnesota Mining & Mfg 250,000 21,328,125
Total 179,028,125
Paper & packaging - 2.8%
Crown Cork & Seal 1,200,000 64,800,000
Sealed Air 400,000(b,d)26,925,000
Willamette Inds 1,600,000 59,100,000
Total 150,825,000
Retail - 14.3%
American Stores 1,600,000 40,300,000
Cendant 1,000,000(b) 37,500,000
Circuit City Stores 1,839,000 71,031,374
CVS 500,000 37,031,250
Dayton Hudson 900,000 69,581,250
Gap 1,500,000 67,031,250
Kohl's 900,000(b) 72,168,750
Meyer (Fred) 700,000(b) 31,106,250
Office Depot 2,200,000(b) 60,500,000
Rite Aid 2,500,000 80,937,500
Safeway 2,600,000(b) 90,675,000
Wal-Mart Stores 2,200,000 101,887,500
Total 759,750,124
Utilities -- telephone - 1.1%
AT&T 1,000,000 60,875,000
Total common stocks
(Cost: $3,838,418,369) $5,152,625,469
Short-term securities - 4.2%
U.S. government agencies - 0.3%
Federal Home Loan Bank Disc Nt
03-18-98 5.41% $15,000,000 $14,959,574
Federal Home Loan Mtge Corp Disc Nt
03-24-98 5.43 1,000,000 996,400
Total 15,955,974
Commercial paper - 3.4%
BBV Finance (Delaware)
04-01-98 5.53 12,400,000 12,339,268
Bell Atlantic
03-16-98 5.57 10,000,000 9,975,289
CAFCO
04-02-98 5.53 10,000,000(c) 9,949,583
Campbell Soup
03-27-98 5.56 12,600,000(c)12,547,647
Delaware Funding
03-17-98 5.52 9,000,000(c) 8,976,625
Dresdner US Finance
03-02-98 5.50 4,100,000 4,098,750
Fleet Funding
03-13-98 5.53 10,000,000(c) 9,980,139
Gateway Fuel
03-20-98 5.50 6,400,000 6,380,516
General Electric
03-30-98 5.51 10,000,000 9,954,333
Goldman Sachs Group
03-24-98 5.50 5,700,000 5,679,176
Heinz (HJ)
04-22-98 5.54 10,000,000 9,919,028
Natl Australia Funding (Delaware)
04-01-98 5.53 10,000,000 9,951,022
Natl Rural Utilities Cooperative
04-14-98 5.52 13,000,000 12,910,950
Paccar Financial
03-05-98 5.49% $3,200,000 $3,197,569
Pacific Life Insurance
03-02-98 5.68 3,000,000 2,999,053
03-04-98 5.51 12,000,000 11,992,667
03-06-98 5.51 2,900,000 2,897,347
Reed Elsevier
03-06-98 5.53 3,800,000(c) 3,796,517
SBC Communications Capital
03-23-98 5.50 7,500,000(c) 7,473,742
04-20-98 5.53 12,500,000(c)12,402,781
Toyota Motor Credit
03-26-98 5.50 6,300,000 6,275,066
Xerox Credit
04-01-98 5.51 3,200,000 3,184,413
Total 176,881,481
Letters of credit - 0.5%
Bank of America-
AES Hawaii
03-06-98 5.52 13,000,000 12,988,082
Student Loan Marketing Assn -
Nebraska Higher Education
03-13-98 5.52 6,000,000 5,988,083
03-31-98 5.54 9,000,000 8,957,220
Total 27,933,385
Total short-term securities
(Cost: $220,770,840) $220,770,840
Total investments in securities
(Cost $4,059,189,209)(f) $5,373,396,309
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Commercial paper sold within terms of a private placement memorandum, exempt
under Section 4(2) of the Securities Act of 1933, as amended, and may be sold
only to dealers in that program or other "accredited investors." This security
has been determined to be liquid under guidelines established by the board.
(d) Security is partially or fully on loan. See Note 5 to the financial
statements.
(e) Foreign security values are stated in U.S. dollars.
(f) At Feb. 28, 1998, the cost of securities for federal income tax purposes was
approximately $4,059,189,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation.....................................$1,327,463,000
Unrealized depreciation........................................(13,256,000)
Net unrealized appreciation.................................$1,314,207,000
See accompanying notes to investments in securities.
<PAGE>
Investments in securities
Retirement Annuity Mutual Funds
Special Income Fund
Feb. 28, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Bonds - 93.0%
Issuer Coupon Principal Value(a)
rate amount
U.S. government obligations - 19.3%
U.S. Treasury
11-15-00 5.75% $5,000,000 $5,020,550
05-15-02 7.50 6,170,000 6,598,075
06-30-02 6.25 17,000,000 17,398,140
08-15-02 6.375 10,900,000 11,219,806
08-15-04 7.25 23,200,000 25,182,904
11-15-05 5.875 50,000,000 50,503,000
05-15-16 7.25 12,700,000 14,472,666
11-15-16 7.50 46,750,000 54,620,829
07-15-06 7.00 30,000,000 32,502,300
08-15-19 8.125 42,200,000 52,879,132
02-15-21 7.875 3,700,000 4,553,035
08-15-27 6.375 40,000,000(f) 42,405,200
Resolution Funding
10-15-19 8.125 48,059,000 58,791,054
Total 376,146,691
Mortgage-backed securities - 7.7%
Federal Home Loan Mtge Corp
05-01-07 9.00 7,055,633 7,334,824
03-01-10 5.50 5,000,000(l) 4,828,125
08-01-24 8.00 3,200,345 3,329,799
08-01-24 8.00 3,897,742 4,055,406
01-01-25 9.00 2,027,871 2,162,948
10-01-26 8.50 15,199,824 15,889,287
01-01-27 8.50 8,231,183 8,604,550
Collateralized Mtge Obligation
03-15-22 7.00 10,455,000 10,761,018
04-15-22 8.50 10,000,000 11,075,900
07-15-22 7.00 12,940,000 13,213,034
Federal Natl Mtge Assn
09-01-07 8.50 7,706,000 8,003,683
11-01-21 8.00 590,600 616,261
04-01-22 8.00 4,183,813 4,362,964
04-01-23 8.50 7,301,088 7,712,139
06-01-24 9.00 7,460,429 8,018,021
02-01-27 7.50 18,415,164 18,930,788
Collateralized Mtge Obligation
05-18-26 5.00 10,000,000 9,050,000
Govt Natl Mtge Assn
06-20-24 7.00 5,650,399 5,788,128
07-20-27 6.50 9,568,276 9,733,902
Total 153,470,777
Aerospace & defense - 0.5%
BE Aerospace
Sr Sub Nts Series B
02-01-06 9.875 5,000,000 5,306,250
K&F Inds
Sr Sub Nts
10-15-07 9.25 2,000,000(d) 2,120,000
L-3 Communications
Sr Sub Nts Series B
05-01-07 10.375 1,710,000(d) 1,885,275
Newport News Shipbuilding
Sr Nts
12-01-06 8.625 1,250,000 1,334,375
Total 10,645,900
Airlines - 0.2%
AMR
05-15-01 9.50% $4,500,000 $4,928,040
Automotive & related - 1.3%
Arvin Capital
Company Guaranty
02-01-27 9.50 5,000,000 5,575,550
Ford Motor Credit
01-15-03 7.50 5,000,000 5,285,950
GMAC
Medium-term Nts
12-14-98 5.95 10,000,000 10,016,200
Hayes Lemmerz Intl
Company Guaranty Series B
07-15-07 9.125 3,000,000 3,187,500
Tower Automotive
08-01-04 5.00 1,000,000(d) 1,100,000
Total 25,165,200
Banks and savings & loans - 2.7%
Banca Commercial Italian
07-15-07 8.25 5,000,000 5,563,600
BankBoston Capital
Company Guaranty Series B
12-15-26 8.25 5,000,000 5,395,250
Crestar Capital
Company Guaranty
12-15-26 8.16 5,000,000 5,417,500
Cullen/Frost Capital
Series A
02-01-27 8.42 5,000,000 5,281,625
First Nationwide Holdings
Sr Sub Nts
10-01-03 10.625 2,940,000 3,292,800
Fleet/Norstar Financial Group
Sub Nts
06-15-01 9.90 5,000,000 5,551,600
12-01-01 9.00 5,000,000 5,472,500
Greenpoint Capital
Company Guaranty
06-01-27 9.10 2,500,000 2,765,675
Mellon Capital
Company Guaranty Series A
12-01-26 7.72 2,000,000 2,085,220
US Trust Capital
02-01-27 8.41 3,500,000(d) 3,822,280
Washington Mutual Capital
Company Guaranty
06-01-27 8.375 3,000,000(d) 3,274,560
Wilshire Financial Services
08-15-04 13.00 6,000,000(d) 6,390,000
Total 54,312,610
Building materials & construction - 0.5%
AAF-McQuay
Sr Nts
02-15-03 8.875% $5,080,000 $5,029,200
Masco
10-01-01 9.00 5,000,000 5,464,050
Total 10,493,250
Chemicals - 0.5%
General Chemical
Sr Sub Nts
08-15-03 9.25 5,000,000 5,200,000
ISP Holdings
Sr Nts Series B
02-15-02 9.75 1,733,000 1,858,643
USA Waste Services
Cv Sub Nts
02-01-02 4.00 2,700,000 3,088,125
Total 10,146,768
Communications equipment & services - 1.6%
Comcast Cellular Holdings
Sr Nts Series B
05-01-07 9.50 3,000,000 3,165,000
Facilicom Intl
Sr Nts
01-15-08 10.50 4,250,000 4,345,625
Interamericas Communications
10-27-07 14.00 1,250,000(d) 1,262,500
Nextel Communications
Zero Coupon Sr Disc Nts
01-15-04 22.79 4,000,000(k) 3,880,000
NTL
Zero Coupon Sr Nts Series B
02-01-06 11.48 5,000,000(d,k)4,012,500
PhoneTel Technologies
Sr Nts
12-15-06 12.00 3,500,000 3,683,750
Price Communications Cellular Holdings
Zero Coupon Sr Disc Nts
08-01-07 13.50 6,700,000(d,k)4,455,500
RCN
Zero Coupon Sr Disc Nts
02-15-03 9.80 2,870,000(d,k)1,761,463
Unifi Communications
Sr Nts
03-01-04 14.00 7,000,000(d) 4,550,000
Total 31,116,338
Computers & office equipment - 0.7%
Hewlett-Packard
Zero Coupon Cv Sub Nts
10-15-17 3.12% $10,000,000(d,j)$5,387,500
Learning
Cv Sr Nts
11-01-00 5.50 5,000,000 4,487,500
Read-Rite
Sub Nts
09-01-04 6.50 2,450,000 2,021,250
Solectron
Cv Sub Nts
03-01-06 6.00 1,200,000 1,861,500
Total 13,757,750
Electronics - 0.2%
Thomas & Betts
01-15-06 6.50 4,500,000 4,504,995
Energy - 1.7%
Forcenergy
Sr Sub Nts
11-01-06 9.50 2,100,000 2,231,250
Occidental Petroleum
Medium-term Nts
06-01-00 10.98 5,000,000 5,509,750
Medium-term Nts
with attached put
08-01-19 9.25 8,725,000 10,931,116
Oryx Energy
04-01-01 10.00 5,000,000 5,493,300
PDV America
Sr Nts
08-01-03 7.875 7,500,000 7,791,150
Transamerica Energy
Zero Coupon
06-15-02 13.00 2,100,000(k) 1,764,000
Transamerican Energy
06-15-02 11.50 1,000,000 1,010,000
Total 34,730,566
Energy equipment & services - 0.8%
DI Inds
Sr Nts
07-01-07 8.875 2,250,000 2,368,125
Diamond Offshore Drilling
Cv Sr Sub Nts
09-15-07 3.125 4,000,000 3,915,000
Global Marine
09-01-07 7.125 10,000,000(d) 10,358,700
Total 16,641,825
Financial services - 2.0%
Arcadia Financial
Sr Nts
03-15-07 11.50% $3,645,000 $3,626,775
Beneficial
Medium-term Nts
02-18-13 6.25 10,000,000 9,922,900
Ford Capital
05-15-02 9.88 5,000,000 5,680,950
Household Finance
04-01-00 9.55 6,500,000 6,949,865
Ohio Savings Capital
Company Guaranty
06-03-27 9.50 5,000,000 5,588,550
Salomon
Medium-term Sr Nts Series D
10-06-99 6.99 5,000,000 5,069,800
Sasco
02-25-28 6.76 2,500,000 2,519,531
Total 39,358,371
Food - 0.2%
Ameriserve Food
Company Guaranty
07-15-07 10.125 2,500,000 2,700,000
Fine Host
Cv Sub Nts
11-01-04 5.00 2,000,000(d) 1,310,000
Total 4,010,000
Foreign - 24.7%(c)
Airplanes GPA Cl D
(U.S. Dollar) Series 1
03-15-19 10.875 2,750,000 3,075,353
Alcan Aluminum
(U.S. Dollar)
01-15-22 8.875 6,750,000 7,376,063
APP Finance VI Mauritius
(U.S. Dollar) Zero Coupon Cv
11-18-12 10.50 8,350,000(j) 1,920,500
APP Intl Finance
(U.S. Dollar)
10-01-05 11.75 5,000,000 4,437,500
Australis Media
(U.S. Dollar)
11-01-00 14.00 916,899 640,954
(U.S. Dollar) Zero Coupon
05-15-03 5.30 10,081,000(k) 3,024,300
Azteca Holdings
(U.S. Dollar)
06-15-02 11.00 3,500,000 3,679,375
Celcaribe
Zero Coupon Sr Nts
03-15-98 16.23 1,700,000(k) 1,751,000
Zero Coupon Units
03-15-98 5.96 1,450,000(d,k)2,682,500
City of Moscow
(Russian Ruble) Zero Coupon
07-01-98 22.80% $4,461,260(j) $4,150,756
12-31-98 21.80 6,153,151(j) 5,193,259
Dao Heng Bank
(U.S. Dollar) Sub Nts
01-24-07 7.75 9,000,000(d) 7,432,200
Daya Guna
(U.S. Dollar) Company Guaranty
06-01-07 10.00 4,750,000(d) 3,942,500
Delphes 2
(U.S. Dollar)
05-05-09 7.75 4,500,000 4,494,375
Equador
(U.S. Dollar)
02-27-15 6.69 14,216,280 9,080,649
Espirito Santo Centrais
(U.S. Dollar) Sr Nts
07-15-07 10.00 3,000,000(d) 2,797,500
Govt of Algeria
(U.S. Dollar)
09-04-06 7.06 6,000,000 4,980,000
(U.S. Dollar) Zero Coupon
12-31-20 1.27 6,700,000 4,028,375
Govt of Bulgaria
(U.S. Dollar)
07-28-11 6.31 3,000,000(i) 2,302,500
Govt of Canada
(Canadian Dollar)
03-01-01 7.37 17,000,000 13,646,564
Govt of Poland
(Polish Zloty)
06-12-02 12.00 18,900,000(i) 4,425,624
(U.S. Dollar)
10-27-24 2.75 10,000,000 6,337,500
Govt of Russia
(Russian Ruble)
09-27-00 2.31 25,337,218 3,046,666
(Russian Ruble) Zero Coupon
03-04-98 28.22 37,164,000(j) 6,137,574
03-18-98 16.23 33,189,506(j) 5,481,193
(U.S. Dollar)
07-28-00 10.375 10,000,000 8,600,000
(U.S. Dollar) Zero Coupon
12-29-49 6.60 4,750,000(j) 3,265,625
Greater Beijing
(U.S. Dollar) Sr Nts
06-15-04 9.25 3,500,000(d) 2,821,245
06-15-07 9.50 5,000,000(d) 3,994,100
Groupe Videotron
(U.S. Dollar) Sr Nts
02-15-05 10.625% 2,000,000 2,245,000
Grupo Industrial Durango
(U.S. Dollar)
08-01-03 12.625 4,000,000 4,560,000
Grupo Iusacell Sa De
(U.S. Dollar)
07-15-04 10.00 1,500,000 1,563,750
Grupo Televisa
(U.S. Dollar) Sr Nts Series A
05-15-03 11.375 250,000 276,875
Guangdong Enterprises
(U.S. Dollar) Sr Nts
05-22-07 8.875 3,600,000(d) 2,939,184
Gulf Canada Resources
(U.S. Dollar)
08-15-99 9.00 5,000,000 5,195,550
Honam Oil Refinery
(U.S. Dollar)
10-15-05 7.125 9,000,000(d) 7,425,000
Hutchison Whampo Finance
(U.S. Dollar) Company Guaranty
08-01-17 7.45 2,000,000(d) 1,799,360
08-01-27 7.50 3,850,000(d) 3,370,598
Hydro-Quebec
(U.S. Dollar) Local Govt Guaranty Series HH
12-01-29 8.50 20,000,000 23,858,199
Hyundai Semiconductor
(U.S. Dollar) Sr Nts
05-15-07 8.625 10,000,000(d) 7,862,900
Imexsa Export Trust
(U.S. Dollar)
05-31-03 10.125 5,000,000(d) 5,225,000
Jasmine Submarine Telecom
(U.S. Dollar) Sr Nts
05-30-11 8.48 3,894,308(d) 3,139,513
Korea Electric Power
(U.S. Dollar)
02-01-27 7.00 6,200,000 5,228,708
MDC Communications
(U.S. Dollar) Sr Sub Nts
12-01-06 10.50 1,700,000 1,836,000
Mexican Cetes
(Mexican Peso) Zero Coupon
06-04-98 20.59 42,580,000(j) 5,035,085
07-02-98 19.05 48,250,000(j) 5,277,103
Ministry Finance Russia
(U.S. Dollar)
11-27-01 9.25 12,100,000(d) 11,676,500
06-26-07 10.00 12,500,000(d) 11,546,875
Morgan (JP)
(U.S. Dollar) Sr Sub Nts Series A
02-15-12 4.00 13,400,000 12,451,280
Natl Power
(U.S. Dollar) Foreign Govt Guaranty
12-15-16 8.40 7,500,000 6,824,775
Nationwide CSN Trust
(U.S. Dollar)
02-15-25 9.875% 10,500,000(d) 12,609,030
Navigator Gas Transportation
(U.S. Dollar)
06-30-0710.50 3,000,000(d) 3,195,000
Netia Holdings
(U.S. Dollar) Company Guaranty
11-01-0710.25 2,000,000(d) 2,027,500
Philippine Long Distance Telephone
(U.S. Dollar)
03-06-07 7.85 3,000,000(d) 2,704,950
(U.S. Dollar) Medium-term Nts Series E
03-06-17 8.35 3,000,000(d) 2,662,020
Pindo Deli Finance Mauritius
(U.S. Dollar) Company Guaranty
10-01-0710.75 2,200,000(d) 1,716,000
PLD Telekom
(U.S. Dollar) Zero Coupon
06-01-04 3.73 5,000,000(j) 5,000,000
Plitt Theatres
(U.S. Dollar) Sr Sub Nts
06-15-0410.875 5,000,000 5,475,000
Province of Mendoza
(U.S. Dollar)
09-04-0710.00 4,000,000(d) 3,880,000
PTC Intl Finance
(U.S. Dollar) Zero Coupon Company Guaranty
07-01-0710.75 6,000,000(j) 4,102,500
Repap New Brunswick
(U.S. Dollar) Sr Nts
07-15-00 9.875 2,000,000 2,045,000
Republic of Argentina
(Argentine Peso)
07-10-02 8.75 22,000,000 20,129,999
02-12-0711.75 4,500,000 4,758,750
(U.S. Dollar)
07-10-02 8.75 5,000,000(d) 4,575,000
Republic of Brazil
(U.S. Dollar)
04-15-14 8.00 5,701,300 4,607,363
05-15-2710.125 22,000,000(f) 21,092,499
Republic of Panama
(U.S. Dollar)
02-13-02 7.875 2,500,000(d) 2,508,725
Republic of South Africa
(South African Rand)
02-28-05 2.43 48,500,000 9,270,813
Rogers Cablesystems
(Canadian Dollar)
01-15-14 6.78 2,700,000 2,011,746
Rogers Cantel
(U.S. Dollar) Deb
06-01-08 9.375 4,650,000 4,963,875
Southern Peru Copper
(U.S. Dollar)
05-30-07 7.90 2,000,000 2,050,920
Tarkett Intl
(U.S. Dollar) Sr Sub Nts
03-01-02 9.00% 4,000,000 4,060,000
Tatneft Finance
(U.S. Dollar) Company Guaranty
10-29-02 9.00 7,400,000(d) 6,419,500
Telekom Malaysia
(U.S. Dollar)
08-01-25 7.875 10,000,000(d) 8,339,200
Telesystem Intl Wireless
(U.S.Dollar) Zero Coupon Sr Disc Nts
06-30-07 12.19 11,000,000(d,k)7,480,000
Texon Intl
(Deutsche Mark) Sr Nts
02-01-08 5.61 4,000,000 2,279,422
Tjiwi Kimia
(U.S. Dollar)
08-01-04 10.00 4,350,000(d) 3,349,500
TU Electric Capital
(U.S. Dollar) Company Guaranty
01-30-37 8.175 10,000,000 10,534,500
TV Azteca
(U.S. Dollar)
02-15-07 10.50 2,500,000 2,687,500
United Kingdom Treasury
(British Pound)
06-10-03 13.17 9,500,000 16,837,268
United Mexican States
(U.S. Dollar)
05-15-26 11.50 8,000,000(f) 9,785,000
Veninfotel
(U.S. Dollar) Cv Pay-in-kind
03-01-02 10.00 5,000,000(d,e,o)7,500,000
03-01-02 10.00 750,000(d,e,o)1,125,000
Veritas Holdings
(U.S. Dollar) Sr Nts
12-15-03 9.625 2,545,000 2,732,694
WMC Finance USA
(U.S. Dollar)
11-15-13 7.25 10,000,000 10,587,700
Zhuhai Highway
(U.S. Dollar) Sub Nts
07-01-08 11.50 10,000,000(d) 9,115,400
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 3,750,000(d) 4,132,013
Total 492,434,392
Furniture & appliances - 0.3%
Interface
Sr Sub Nts Series B
11-15-05 9.50 5,000,000 5,368,750
Health care - 0.6%
Dura Pharmaceuticals
Cv Sub Nts
07-15-02 3.50 1,700,000 1,496,000
Lilly (Eli)
01-01-36 6.77% 10,000,000 10,305,300
Total 11,801,300
Health care services - 1.6%
Columbia/HCA Healthcare
06-15-25 7.69 4,260,000 3,800,942
Magellan Health Services
Sr Sub Nts
02-15-08 9.00 2,500,000(d) 2,537,500
Novacare
Cv Sub Deb
01-15-00 5.50 3,000,000 2,872,500
Owens & Minor
Company Guaranty
06-01-06 10.875 4,550,000 5,096,000
Tenet Healthcare
Sr Sub Nts
03-01-05 10.125 11,800,000 12,980,000
Vencor
Sr Sub Nts
07-15-07 8.625 4,000,000 4,440,000
Total 31,726,942
Household products - 0.6%
Revlon Consumer Products
Sr Nts
02-01-06 8.125 4,250,000(d) 4,250,000
Revlon Consumer Products
Sr Nts Series B
04-01-01 9.375 2,500,000 2,600,000
Revlon Worldwide
Zero Coupon Sr Disc Nts Series B
03-15-98 12.00 5,000,000(j) 4,987,500
Total 11,837,500
Industrial equipment & services - 1.2%
AGCO
Sr Sub Nts
03-15-06 8.50 2,800,000 2,915,500
Borg-Warner Security
03-15-07 9.63 2,200,000 2,285,250
Case
08-01-05 7.25 5,475,000 5,722,744
Clark Equipment
03-01-01 9.75 5,000,000 5,444,500
IDEX
Sr Sub Nts
09-15-02 9.75 3,000,000 3,112,500
Thermo Electron
Cv Sub Deb
01-01-03 4.25 1,400,000(d) 1,660,750
Tyco Intl
Zero Coupon Cv Sub Nts
07-06-10 6.50 1,350,000(j) 1,812,375
Total 22,953,619
Insurance - 1.2%
Americo Life
Sr Sub Nts
06-01-05 9.25% 4,500,000 4,623,750
Executive Risk Capital
Company Guaranty Series B
02-01-27 8.68 3,500,000 3,888,430
New England Mutual
02-15-24 7.875 5,000,000(d) 5,494,200
SAFECO Capital
Company Guaranty
07-15-37 8.07 10,000,000 10,560,400
Total24,566,780
Leisure time & entertainment - 2.7%
Coast Hotels & Casino
Company Guaranty Series B
12-15-02 13.00 1,600,000 1,844,000
Hammons (JQ) Hotels
1st Mtge
02-15-04 8.875 3,400,000 3,493,500
HMH Properties
07-15-07 8.875 4,600,000 4,893,250
Icon Fitness
Zero Coupon Sr Disc Nts Series B
11-15-06 15.76 8,130,000(j) 4,766,213
Speedway Motorsports
08-15-07 8.50 4,000,000 4,180,000
Time Warner
02-01-24 7.57 20,000,000 21,252,800
01-15-28 6.95 5,000,000 4,894,750
Trump Holdings & Funding
Sr Nts
06-15-05 15.50 2,500,000 2,912,500
United Artists Theatre
Series 1995A
07-01-15 9.30 4,823,446 4,968,149
Total 53,205,162
Media - 4.3%
Ackerly Communications
Sr Nts Series B
10-01-03 10.75 2,500,000 2,668,750
American Telecasting
Zero Coupon Sr Disc Nts Series B
08-15-05 9.66 3,700,000(k) 994,375
Cablevision Systems
Sr Sub Deb
05-15-16 10.50 5,000,000 5,812,500
Cox Communications
06-15-25 7.625 10,000,000 10,831,900
Heritage Media
Sr Sub Nts
02-15-06 8.75 2,000,000 2,135,000
Jacor Communications
Zero Coupon Cv
02-09-18 4.49 5,500,000(j) 2,399,375
Lamar Advertising
Company Guaranty
12-01-06 9.625% $1,350,000 $1,473,188
Liberty Group
Sr Sub Nts
02-01-08 9.375 3,750,000 3,825,000
News America Holdings
10-15-12 10.125 10,000,000 11,679,500
TCI Communications
08-01-15 8.75 10,000,000 11,644,000
Time Warner
08-15-04 7.98 1,500,000 1,617,390
08-15-06 8.11 3,000,000 3,291,600
08-15-07 8.18 3,000,000 3,326,880
Time Warner Entertainment
Sr Nts
07-15-33 8.375 2,500,000 2,895,875
Univision Network Holdings LP
Zero Coupon
12-17-02 15.18 14,390,000(k) 15,361,325
Viacom
Sub Deb
07-07-06 8.00 3,000,000 3,067,500
Viacom Intl
07-01-03 7.00 2,500,000 2,449,850
Total 85,474,008
Metals - 0.4%
Bar Technologies
Company Guaranty
04-01-01 13.50 4,500,000(d) 4,938,750
EnviroSource
Sr Nts
06-15-03 9.75 2,100,000 2,139,375
06-15-03 9.75 890,000 906,688
Total 7,984,813
Miscellaneous - 2.9%
Adams Outdoor Advertising
Sr Nts
03-15-06 10.75 4,500,000 5,006,250
Alliance Imaging
Sr Sub Nts
12-15-05 9.625 3,000,000 3,135,000
Bistro Trust
12-31-02 9.50 10,000,000(d) 10,018,999
BTI Telecommunications
Sr Nts
09-15-07 10.50 2,675,000 2,902,375
California Infrastructure
Series 1997-1
03-25-02 6.14 9,235,000 9,254,394
Colonial Capital
Company Guaranty Series A
01-15-27 8.92 3,000,000 3,301,320
Doskocil Mfg
Sr Sub Nts
09-15-07 10.125 5,000,000 5,250,000
Holt Group
Sr Nts
01-15-06 9.75% $2,490,000 $2,533,575
Imperial Holly
Sr Sub Nts
12-15-07 9.75 2,250,000(d) 2,320,313
MSX Intl
Sr Sub Nts
01-15-08 11.375 2,450,000 2,535,750
Outsourcing Solutions
Sr Sub Nts Series B
11-01-06 11.00 1,775,000 1,956,938
Packaged Ice
Sr Nt
02-01-05 9.75 4,600,000(d) 4,715,000
Roche Holdings
Zero Coupon
05-16-12 4.95 3,300,000(j) 1,670,625
SFX Entertainment
Sr Sub Nts
02-01-08 9.125 2,400,000 2,400,000
Total 57,000,539
Multi-industry conglomerates - 1.1%
Corestaff
Cv Sub Nts
08-15-04 2.94 2,000,000 1,825,000
Pierce Leahy
Sr Sub Nts
07-15-06 11.13 812,000(d) 931,770
Prime Succession
Sr Sub Nts
08-15-04 10.75 2,125,000 2,342,813
Tenneco
06-15-07 7.625 6,000,000 6,472,380
USI American Holdings
Sr Nts Series B
12-01-06 7.25 5,000,000 5,066,900
Westinghouse Electric
06-01-01 8.875 5,000,000 5,321,750
Total 21,960,613
Municipal bond - 0.4%(n)
New Jersey Economic Development
Authority State Pension Funding
Revenue Bond (MBIA Insured)
02-15-29 7.43 7,000,000 7,664,300
Paper & packaging - 2.3%
Chesapeake
05-01-03 9.875 5,000,000 5,745,000
Crown Cork & Seal
04-15-23 8.00 5,000,000 5,315,600
Gaylord Container
Sr Nts
06-15-07 9.375 5,000,000(d) 4,937,500
06-15-07 9.75 2,200,000(d) 2,222,000
Graham Packaging/GPC Capital
Sr Sub Nts
01-15-08 8.75% 2,500,000 2,550,000
Owens-Illinois
Sr Nts
05-15-04 7.85 5,000,000 5,238,000
Riverwood Intl
Company Guaranty
08-01-07 10.625 3,750,000 3,975,000
Scotia Pacific Holding
Collateralized Mtge Obligation
07-20-15 7.95 6,023,220 6,337,210
Silgan Holdings
06-01-09 9.00 4,125,000 4,300,313
Stone Container
Sr Nts
07-15-98 12.625 1,500,000 1,556,250
Stone Container
Sr Sub Deb
04-01-02 12.25 3,000,000 3,075,000
Total 45,251,873
Real estate investment trust - 0.2%
First Union RE Eq SBI
Sr Nts
10-01-03 8.875 4,000,000 4,130,000
Retail - 1.5%
Costco
Zero Coupon Cv Sub Nts
08-01-17 14.37 2,475,000(d,j)1,577,813
Dayton Hudson
12-01-22 8.50 3,000,000 3,253,920
Eye Care Centers
Sr Nts
10-01-03 12.00 3,000,000 3,240,000
Kroger
Sr Nts
07-15-06 8.15 3,000,000 3,270,000
Office Depot
Zero Coupon Cv Nt
11-01-08 3.79 4,400,000(j) 3,157,000
Rite Aid
Cv Sub Nts
09-15-02 5.25 1,400,000 1,613,500
Wal-Mart CRAVE Trust
07-17-06 7.00 13,442,258(d) 13,821,195
Total 29,933,428
Textiles & apparel - 0.4%
VF Corp
05-01-01 9.50 5,000,000 5,496,000
WestPoint Stevens
12-15-01 8.75 2,500,000 2,625,000
Total 8,121,000
Utilities -- electric - 4.4%
AEP Generating
Series F
12-07-22 9.82% 2,484,422 2,995,841
AES
Sr Sub Nts
11-01-07 8.50 3,200,000 3,304,000
Boston Edison
06-01-20 9.875 5,000,000 5,593,700
Cleveland Electric Illuminating
07-01-00 7.19 5,000,000 5,089,900
07-01-04 7.67 2,000,000 2,060,000
1st Mtge Series B
05-15-05 9.50 6,000,000 6,713,460
CMS Energy
Sr Nts
05-15-02 8.125 5,000,000 5,153,200
Connecticut Light & Power
1st Mtge Series C
06-01-02 7.75 5,000,000 5,087,200
Indiana & Michigan Power
Sale Lease-backed Obligation Series F
12-07-22 9.82 2,484,419 2,995,837
Long Island Lighting
Gen Ref Mtge
04-15-04 8.625 3,000,000 3,221,820
07-01-24 9.625 6,000,000 6,107,460
Midland Cogeneration
Series 1991-C
07-23-02 10.33 1,423,125 1,531,639
Midland Funding
Series 1994-C
07-23-02 10.33 1,225,918 1,319,394
Series A
07-23-05 11.75 5,000,000 5,893,750
Niagara Mohawk Power
1st Mtge
05-15-06 7.75 10,500,000 11,124,120
Sithe Independence Funding
Series A
12-30-13 9.00 7,500,000 8,821,500
Texas Utilities Electric
Medium-term Nts 1st Mtge Series B
03-01-02 9.70 6,000,000 6,730,260
Texas-New Mexico Power
1st Mtge Series U
09-15-00 9.25 3,500,000 3,675,000
Total 87,418,081
Utilities -- telephone - 3.2%
Bell Atlantic
08-01-31 9.00 7,500,000 8,603,250
Bell Telephone of Pennsylvania
03-15-33 7.375 10,000,000 10,081,300
CCPR Services
Company Guaranty
02-01-07 10.00% 1,500,000 1,505,625
Geotek Communications
Cv Sr Sub Nts
02-15-01 12.00 4,135,000(e) 2,894,500
Geotek Communications
Zero Coupon Sr Disc Nts Series B
07-15-05 18.71 5,000,000(k) 2,500,000
GTE
11-01-20 10.25 7,000,000 7,856,940
Intermedia Communications
Sr Nts
11-01-07 8.875 1,600,000(d) 1,692,000
Metrocall
Sr Sub Nts
10-01-07 10.375 3,000,000 3,090,000
Omnipoint
Sr Nts
08-15-06 11.625 10,000,000 10,975,000
U S WEST Communications
11-10-26 7.20 6,000,000 6,064,800
Worldcom
04-01-07 7.75 7,000,000 7,567,280
Total 62,830,695
Total bonds
(Cost: $1,787,470,964) $1,861,092,876
Common stocks - 0.1%
Issuer Shares Value(a)
BayCorp Holdings 28(b) $180
Celcaribe 276,420(b,c,d)1,105,680
Intermedia Communications 508(b) 38,799
Methanex 200,000(b) 1,625,000
Nextel Communications Cl A 6,197(b) 183,199
Specialty Foods 15,000(b) 5,625
Total common stocks
(Cost: $3,283,425) $2,958,483
Preferred stocks & other - 1.9%
Issuer Shares Value(a)
Airtouch Communications 44,000 $2,959,000
Cv Series C
Bar Technologies 4,500(d) 247,500
Warrants
California Federal Bank 25,000 2,834,375
11.50%
Cendant 60,000(g) 3,007,500
Cv PRIDES
Cooper Inds 107,100 1,880,944
Cv
Dairy Mart 10,000(d) $5,000
Warrants
Eye Care Center 3,000(d) 15,000
Warrants
Finova Finance Trust 1,450 112,013
5.50% Cv
Geotek Communications 250,000(d) 250,000
Warrants
Glenborough Realty Trust 57,375 1,520,438
Cv Series A
Houston Inds 27,200(r) 1,683,000
7% Cv ACES
Intermedia Communication 50,000 1,743,750
Cv Series E
KMC Telecomm Holdings 3,000 1,672,500
Warrants
Loral Space & Communication 25,000 1,753,125
Cv
Martin Media 25,000(d) 2,500,000
Occidental Petroleum 21,200 1,568,800
Cv
Paxson Communications 38,250(o) 3,920,624
12.50% Pay-in-kind
Price Communications 23,048 230,480
Warrants
Sanwa Bank 200,000(d,l) 4,849,045
Sinclair Broadcast Group 1,700 114,113
Cv
Sprint 18,125 996,875
Cv
TCI Communications 23,000 1,569,750
Cv Series A
Unifi Communications 7,000 105,000
Warrants
WBK Strypes Trust 85,000 2,879,375
Cv
Total preferred stocks & other
(Cost: $37,986,948) $38,418,207
Short-term securities - 4.6%
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies - 0.5%
Federal Home Loan Mtge Corp Disc Nts
03-12-98 5.42% $4,300,000 $4,292,253
03-20-98 5.46 4,700,000 4,685,769
Total 8,978,022
Commercial paper - 3.6%
Bell Atlantic
03-09-98 5.50 5,000,000 4,993,150
Ciesco LP
03-19-98 5.53 5,400,000 5,384,325
Colgate-Palmolive
03-20-98 5.50 2,300,000(p) 2,292,998
Kredietbank North America Finance
03-09-98 5.49 6,700,000 6,690,838
Natl Australia Funding (Delaware)
04-01-98 5.53 5,700,000 5,672,083
Paccar Financial
03-05-98 5.49 5,000,000 4,996,201
03-05-98 5.52 4,500,000 4,496,562
Pacific Life Insurance
03-12-98 5.51 2,500,000 2,495,425
Toyota Motor Credit
03-09-98 5.48 5,200,000 5,192,902
03-26-98 5.50 11,700,000 11,653,694
Xerox Credit
03-24-98 5.49 11,400,000 11,358,428
04-01-98 5.51 6,600,000 6,567,851
Total 71,794,457
Letter of credit - 0.5%
Bank of America-
AES Hawaii
03-13-98 5.51 10,300,000 10,279,580
Total short-term securities
(Cost: $91,052,059) $91,052,059
Total investments in securities
(Cost: $1,919,793,396)(s) $1,993,521,625
See accompanying notes to investments in securities.
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing. For long-term debt securities, items identified are in
default as to payment of interest or principal.
(c) Foreign securities values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(e) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Feb. 28, 1998, is as follows:
Acquisition Purchase
Security date cost
Geotek Communications*
12.00% Cv 2001 03-04-96 $4,135,000
Veninfotel*
(U.S. Dollar) 10.00% Cv
Pay-in-kind 2002 03-05-97 thru 07-23-97 5,750,000
*Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(f) Security is partially or fully on loan. See Note 5 to the financial
statements.
(g) Partially pledged as initial margin deposit on the following open interest
rate futures contract (See Note 7 to the financial statements):
Type of security Notional amount
Sales contracts
U.S. Treasury Notes March 1998 $10,000,000
(h) Adjustable rate mortgage; interest rate varies to reflect current market
conditions; rate shown is the effective rate on Feb. 28, 1998.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Feb. 28, 1998.
(j) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(k) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(l) At Feb. 28, 1998, the cost securities purchased, including interest
purchased, on a when-issued basis was $9,579,684.
(m) U.S. Treasury inflation-protection securities (TIPS) are securities in which
the principal amount is adjusted for inflation and the semi-annual interest
payments equal a fixed percentage of the inflation-adjusted principal amount.
(n) The following abbreviation is used in portfolio descriptions to identify the
issuer or issue:
MBIA-Municipal Bond Investors Assurance
(o) Pay-in-kind securities are securities in which the issuer has the options to
make interest or dividend payments in cash or in additional securities. These
securities issued as interest or dividends, usually have the same terms,
including maturity date, as the pay-in-kind securities.
(p) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(q) PRIDES (Preferred Redeemable Increased Dividend Equity Securities ) are
structured as convertible preferred securities. Investors receive an enhanced
yield but based upon a specific formula, potential appreciation is limited.
PRIDES pay dividends, have voting rights, are noncallable for three years and
upon maturity, convert into shares of common stock.
(r) ACES are automatically convertible equity securities.
(s) At Feb. 28, 1998, the cost of securities for federal income tax purposes
was approximately $1,914,337,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation......................................... $117,425,000
Unrealized depreciation...........................................(38,240,000)
Net unrealized appreciation.......................................$79,185,000
<PAGE>
Investments in securities
Retirement Annuity Mutual Funds
Managed Fund
Feb. 28, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Common stocks - 62.4%
Issuer Shares Value(a)
Aerospace & defense - 1.5%
Allied Signal 450,000 $19,153,125
Boeing 325,000 17,631,250
Lockheed Martin 132,802 15,496,333
United Technologies 225,000 20,095,313
Total 72,376,021
Airlines - 0.7%
Southwest Airlines 1,260,000 36,146,250
Automotive & related - 0.8%
Tower Automotive 836,300(b) 37,999,381
Banks and savings & loans - 4.3%
Citicorp 230,000 30,475,000
Corestates Financial 150,000 12,665,625
First Union 737,850 38,875,472
Norwest 1,050,000 42,984,375
Washington Mutual 1,250,000 83,906,249
Total 208,906,721
Beverages & tobacco - 1.7%
Coca-Cola 680,000 46,707,500
Philip Morris 845,000 36,704,688
Total 83,412,188
Building materials & construction - 2.8%
American Standard 750,000(b) 33,375,000
Clayton Homes 623,750 12,397,031
Masco450,000 24,468,750
Tyco Intl 1,300,000 65,975,000
Total 136,215,781
Communications equipment & services - 1.2%
ADC Telecommunications 1,450,000(b) 37,428,125
Loral Space &
Communications 871,800(b) 22,285,388
Total 59,713,513
Computers & office equipment - 7.5%
American Power Conversion 1,500,000(b) 43,500,000
Cisco Systems 562,500(b) 37,054,688
Compaq Computer 2,533,200 81,220,724
Computer Associates Intl 837,500 39,467,188
Hewlett-Packard 685,000 45,895,000
IKON Office Solutions 1,000 32,688
Learning Co 769,500(b) 13,081,500
Microsoft 672,800(b) 57,019,799
Paymentech 628,900(b) 10,376,850
Solectron 900,000(b) 43,537,500
Total 371,185,937
Electronics - 3.8%
Analog Devices 900,000(b) 29,025,000
Applied Materials 325,000(b) 11,964,063
Intel 1,245,000 111,660,937
KLA-Tencor 235,000(b) 10,846,719
Maxim Integrated Products 600,000(b) 24,225,000
Total 187,721,719
Energy - 0.8%
Anadarko Petroleum 350,000 22,575,000
Apache 440,000 14,960,000
Total 37,535,000
Energy equipment & services - 0.4%
ENSCO Intl 675,000 19,659,375
Financial services - 4.2%
Fannie Mae 525,000 33,501,563
MBNA 700,000 25,068,750
Morgan Stanley, Dean
Witter, Discover & Co 930,000 64,809,375
Travelers Group 1,482,500 82,649,375
Total 206,029,063
Food - 0.6%
JP Foodservice 868,955(b) 28,729,825
Foreign - 5.7%(c)
Asia Pulp & Paper 1,000(b) 11,938
BCE 1,150,000 40,896,875
Companhia Paranaense 1,500,000 19,125,000
de Energia ADR
Elan ADR 737,200(b,d)45,752,474
Ericsson (LM) 750,000 33,984,375
Kimberly-Clark de Mexico 2,000,000 9,076,518
Northern Telecom 670,000 35,719,375
Petroleo Brasileiro- 530,000(b) 12,005,402
Petrobras ADR
Royal Dutch Petroleum 700,000 38,018,750
SmithKline Beecham ADR 475,000 29,390,625
Telecomunicacoes
Brasileiras-Telebras ADR 130,000 15,916,875
Total 279,898,207
Furniture & appliances - 0.5%
Leggett & Platt 500,000 25,093,750
Health care - 3.9%
Amgen125,000(b) 6,640,625
Boston Scientific 336,000(b) 20,076,000
Bristol-Myers Squibb 175,000 17,532,813
Merck & Co 895,000 114,168,437
Pfizer 400,000 35,400,000
Total 193,817,875
Health care services - 3.0%
AmeriSource Health Cl A 485,400(b) 28,395,900
Cardinal Health 175,000 14,328,125
HEALTHSOUTH
Rehabilitation 1,350,000(b) 36,450,000
Service Corp Intl 850,000 32,193,750
United Healthcare 575,000 34,895,313
Total 146,263,088
Household products - 2.1%
Gillette 355,000 38,295,625
Kimberly-Clark 345,000 19,212,188
Procter & Gamble 540,030 45,868,798
Total 103,376,611
Industrial equipment & services - 1.3%
Deere & Co 400,000 22,450,000
Illinois Tool Works 660,000 39,558,750
Total 62,008,750
Insurance - 0.8%
Travelers Property Casualty
Cl A 903,300 37,035,300
UNUM 1,000 51,438
Total 37,086,738
Leisure time & entertainment - 1.4%
Disney (Walt) 290,000 32,461,875
Mattel 900,000 38,081,250
Total 70,543,125
Media - 1.0%
Time Warner 550,000 37,125,000
Univision
Communications Cl A 325,000(b) 12,471,875
Total 49,596,875
Metals - 1.0%
Martin Marietta Materials 1,294,622 49,276,550
Miscellaneous - 0.2%
Century Business Services 750,000(b,d,j)11,531,250
Multi-industry conglomerates - 2.4%
Emerson Electric 475,000 30,310,938
General Electric 1,150,000 89,412,500
Total 119,723,438
Restaurants & lodging - 0.6%
Extended Stay America 2,200,000(b) 30,800,000
Retail - 5.3%
Cendant 950,000(b) 35,625,000
Dollar General 294,218 13,570,805
Home Depot 697,500 44,509,218
Nordstrom 500,000 28,671,875
OfficeMax 1,287,300(b) 21,481,819
Republic Inds 1,774,915(b) 41,932,367
Rite Aid 1,060,000 34,317,500
U.S. Office Products 1,000(b) 18,500
Wal-Mart Stores 830,000 38,439,375
Total 258,566,459
Utilities -- telephone - 2.9%
AirTouch Communications 1,121,500(b) 50,397,406
MCI Communications 550,000 26,296,875
US WEST Communications
Group 398,400 20,741,700
WorldCom 1,225,000(b,e)46,779,688
Total 144,215,669
Total common stocks
(Cost: $2,001,141,883) $3,067,429,159
Preferred stocks & other - 2.6%
Issuer Shares Value(a)
Allegiance Telecommunications 2,450 1,310,750
Warrants
California Federal Bank 20,000 2,267,500
11.50%
Globalstar
Telecommunications 170,000 19,252,500
6.50% Cv
IKON Office Solutions 349,250 26,499,344
$5.04 Cv Series BB ACES
KMC Telecommunications
Holdings 2,800 1,561,000
Warrants
Loral Space &
Communications 400,000(b,d)27,900,000
6.00% Cv
Mexico Value 1,000(k) --
Rights
Pinto Totta Intl Finance 50,000(b,d) 4,846,280
Primus Telecommunications 2,300 64,400
Warrants
Sinclair Capital 30,000 3,285,000
11.625%
Time Warner 7,136(i) 8,108,280
10.25% Pay-in-kind Series M
Unifi Communications 2,000(d) 30,000
Warrants
UNUM 632,602(b) 31,709,175
Total preferred stocks & other
(Cost: $110,510,766) $126,834,229
<PAGE>
<TABLE>
<CAPTION>
Bonds - 34.4%
Issuer Maturity Coupon Principal Value(a)
date rate amount
U.S. government obligations - 12.3%
<S> <C> <C> <C> <C> <C>
Govt Trust Certs Israel 11-15-01 9.25% $ 2,237,409 $ 2,320,887
Resolution Funding 07-15-20 6.55 5,000,000 1,264,800
U.S. Treasury 04-30-98 5.88 25,000,000 25,019,000
05-31-98 5.38 33,000,000 32,994,390
02-28-99 5.88 103,000,000 103,365,650
01-31-00 5.38 25,000,000 24,922,750
02-15-00 8.50 40,000,000 42,138,400
03-31-01 6.38 126,000,000 128,720,340
08-15-03 5.75 63,300,000 63,679,167
02-15-04 5.88 12,500,000(e) 12,677,750
11-15-04 7.88 5,000,000 5,604,100
05-15-05 6.46 18,000,000 11,990,880
05-15-05 6.50 9,000,000(e) 9,424,890
10-15-06 6.50 22,000,000 23,137,840
08-15-22 7.25 1,000,000 1,156,360
02-15-23 7.13 21,500,000 24,577,510
08-15-23 6.25 2,000,000 2,064,740
11-15-24 7.50 35,000,000 41,940,500
08-15-27 6.38 8,000,000(f) 8,481,040
U.S. Treasury
(U.S. Dollar) 11-15-16 7.50 22,000,000 25,703,920
TIPS 07-15-02 3.63 10,000,000(l) 10,020,464
Total 601,205,378
Mortgage-backed securities - 4.3%
Federal Home Loan Mtge Corp 08-01-24 8.00 4,268,015 4,446,802
11-01-25 6.50 8,162,009 8,142,012
10-01-26 8.50 7,599,912 7,944,644
Federal Home Loan Mtge Corp
Trust Series Z 05-15-23 6.50 6,089,658(g) 5,857,521
Federal Natl Mtge Assn 07-01-04 7.40 10,000,000 10,842,000
01-01-09 5.50 15,266,039 14,907,287
01-01-09 5.50 7,890,872 7,705,437
06-01-10 6.50 8,335,682 8,394,031
08-01-11 8.50 8,842,106 9,289,737
04-01-22 8.00 4,538,373 4,732,706
04-01-23 8.50 4,867,560 5,141,604
05-01-23 6.50 2,250,958 2,249,674
05-01-24 6.00 5,832,191 5,699,684
06-01-24 9.00 2,888,718 3,104,621
01-01-25 8.50 1,603,524 1,681,776
02-01-25 8.50 3,281,558 3,441,698
05-01-25 8.50 4,230,397 4,436,840
09-01-25 6.50 5,214,114 5,193,205
11-01-25 7.50 8,054,896 8,298,073
02-01-26 7.00 8,716,020 8,834,819
07-01-26 7.50 7,998,355 8,222,309
02-01-27 7.50 9,115,506 9,370,740
Federal Natl Mtge Assn
Collateralized Mtge Obligation
Trust Series Z 02-25-24 6.00 7,582,861(g) 6,758,073
Govt Natl Mtge Assn 12-01-08 7.00 15,592,980 15,953,489
05-15-24 7.00 21,204,829 21,527,354
Merrill Lynch Mtge Investors 06-15-21 8.17 1,444,613 1,445,065
Standard Credit Card Trust 10-07-04 5.95 3,000,000 2,970,900
Total 212,347,688
Aerospace & defense - 0.2%
BE Aerospace
Sr Sub Nts Series B 02-01-06 9.88 2,500,000 2,653,125
L-3 Communications
Sr Sub Nts Series B 05-01-07 10.38 690,000 760,725
Newport News Shipbuilding
Sr Nts 12-01-06 8.63 1,000,000 1,067,500
Northrop-Grumman 03-01-06 7.00 3,750,000 3,896,138
Total 8,377,488
Airlines - 0.3%
Continental Airlines
Series 1996A 04-15-15 6.94 4,901,592 5,019,769
Continental Airlines
Series 974B 01-02-17 6.90 5,000,000 5,062,100
Northwest Airlines
Company Guaranty 1st Series 1991 01-02-15 8.07 1,967,172 2,140,047
01-02-15 8.97 977,052 1,068,563
Total 13,290,479
Automotive & related - 0.2%
Arvin Capital
Company Guaranty 02-01-27 9.50 3,000,000 3,345,330
GMAC 07-16-98 5.95 7,000,000 7,004,340
Walbro
Sr Nts 12-15-07 10.13 1,500,000 1,530,000
Total 11,879,670
Banks and savings & loans - 1.4%
BankAmerica
Series B 12-31-26 7.70 3,700,000(d) 3,804,007
CAF 02-01-03 7.10 5,200,000 5,363,592
Crestar Capital
Company Guaranty 12-15-26 8.16 7,000,000 7,584,500
Cullen/Frost Capital
Series A 02-01-27 8.42 3,200,000 3,380,240
First Nationwide Holdings
Sr Sub Nts 10-01-03 10.63 2,970,000 3,326,400
Firstar Capital
(U.S. Dollar) Company Guaranty
Series B 12-15-26 8.32 3,000,000 3,242,970
Fleet Financial Group
Sub Deb 01-15-28 6.88 2,200,000 2,203,916
Greenpoint Capital
Company Guaranty 06-01-27 9.10 2,000,000 2,212,540
Mellon Capital
Company Guaranty Series A 12-01-26 7.72 1,800,000 1,876,698
Norwest
Sr Nts 09-15-02 6.38 5,800,000 5,859,856
Riggs Natl
Sub Nts 02-01-06 8.50 4,900,000 5,194,000
Socgen Real Estate LLC 12-29-49 7.64 10,000,000(d) 9,934,599
Union Planters Capital
Company Guaranty 12-15-26 8.20 5,000,000 5,335,400
US Capital 02-01-27 8.41 3,000,000(d) 3,276,240
Washington Mutual Capital
Company Guaranty 06-01-27 8.38 2,900,000(d) 3,165,408
Wilshire Financial Services
Nts 08-15-04 13.00 1,500,000(d) 1,597,500
Total 67,357,866
Building materials & construction - 0.1%
AAF-McQuay
Sr Nts 02-15-03 8.88 2,285,000 2,262,150
Owens-Corning Fiberglass 06-01-12 9.38 1,500,000 1,770,990
Southdown
Sr Sub Nts Series B 03-01-06 10.00 1,400,000 1,550,500
Total 5,583,640
Chemicals - 0.1%
USA Waste Services
Sr Nts 10-01-07 7.13 4,500,000 4,688,055
Communications equipment & services - 0.2%
Facilicom Intl
Sr Nts 01-15-08 10.50 1,000,000 1,022,500
Iridium LLC/Capital
Sr Nts 07-15-05 11.25 1,600,000(d) 1,640,000
Jordan Telecommunications Products
Sr Nts Series B 08-01-07 9.88 1,600,000 1,696,000
Jordan Telecommunications Products
Zero Coupon Sr Disc Nts Series B 08-01-07 11.75 2,000,000(f) 1,695,000
RCN
Zero Coupon Sr Disc Nts 02-15-08 9.88 2,400,000(d,f) 1,473,000
Unifi Communications
Sr Nts 03-01-04 14.00 2,000,000 1,300,000
Total 8,826,500
Computers & office equipment - 0.3%
Cooperative Computing
Sr Sub Nts 02-01-08 9.00 2,000,000(d) 1,975,000
Learning
Cv Sr Nts 11-01-00 5.50 15,000,000 13,462,500
Total 15,437,500
Electronics - 0.1%
Prestolite Electric 02-01-08 9.63 6,000,000(d) 6,165,000
Energy - 0.1%
Forcenergy
Sr Sub Nts 11-01-06 9.50 1,000,000 1,062,500
Parker & Parsley Petroleum
Sr Nts 08-15-07 8.25 4,200,000 4,712,568
Total 5,775,068
Energy equipment & services - 0.3%
DI Inds
Sr Nts 07-01-07 8.88 1,500,000 1,578,750
Foster Wheeler 11-15-05 6.75 6,100,000 6,219,987
Global Marine 09-01-07 7.13 4,500,000(d) 4,661,415
Total 12,460,152
Financial services - 0.8%
Arcadia Financial
Sr Nts 03-15-07 11.50 1,575,000 1,567,125
Associates Corp of North America
Sr Nts 10-15-02 6.38 10,000,000 10,100,299
Avco Financial Services
Sr Nts 07-15-99 7.25 4,750,000 4,841,058
Bat-Crave-800 08-12-00 6.68 5,000,000(d) 5,047,650
08-12-00 6.86 3,000,000 3,028,500
KFW Intl Finance 02-15-10 8.00 4,000,000 4,574,480
Merrill Lynch Mtge Investors Cl D
Series 1996-C2 12-21-28 6.96 7,500,000 7,467,188
Salomon
Sr Nts 01-15-06 6.75 4,000,000 4,089,960
Total 40,716,260
Food - 0.1%
Ameriserve Food
Company Guaranty 07-15-07 10.13 1,750,000 1,890,000
Ameriserve Food Distributions
Company Guaranty 10-15-06 8.88 1,000,000 1,035,000
Total 2,925,000
Foreign - 4.7%(e)
Airplanes GPA Cl D
(U.S. Dollar) Series 1 03-15-19 10.88 1,750,000 1,957,043
APP Finance VI Mauritius
(U.S. Dollar) Zero Coupon Cv 11-18-12 11.03 150,000,000(f) 34,500,000
APP Intl Finance
(U.S. Dollar) 10-01-05 11.75 3,000,000 2,662,500
Argentina Govt Natl
(U.S. Dollar) 09-19-27 9.75 4,000,000(g) 3,975,000
Banco General
(U.S. Dollar) 08-01-02 7.70 3,750,000(d) 3,723,338
Celcaribe
(U.S. Dollar) Zero Coupon Cv 03-15-04 13.50 1,450,000(d,h) 2,682,500
City of Moscow
(Russian Ruble) Zero Coupon 07-01-98 22.92 1,672,973(f) 1,556,534
12-31-98 21.80 3,691,890(f) 3,115,955
(U.S. Dollar) 05-31-00 9.50 5,000,000(d) 4,818,750
Comp Paranaense De Energ
(U.S. Dollar) 05-02-05 9.75 2,000,000(d) 1,977,500
Dao Heng Bank
(U.S. Dollar) Sub Nts 01-24-07 7.75 8,500,000(d) 7,019,300
Daya Guna
(U.S. Dollar) Company Guaranty 06-01-07 10.00 1,200,000(d) 996,000
Delphes 2
(U.S. Dollar) 05-05-09 7.75 9,000,000 8,988,750
Espirito Santo Centrais
(U.S. Dollar) Sr Nts 07-15-07 10.00 2,400,000(d) 2,238,000
Govt of Algeria
(U.S. Dollar) 09-04-06 7.06 2,000,000 1,660,000
(U.S. Dollar) Zero Coupon 12-31-20 1.28 1,300,000(f) 781,625
Govt of Poland
(U.S. Dollar) 10-27-24 6.69 3,000,000 2,932,500
Govt of Russia
(U.S. Dollar) 07-28-00 10.38 3,000,000 2,580,000
Greater Beijing
(U.S. Dollar) Sr Nts 06-15-04 9.25 6,120,000(d) 4,933,148
06-15-07 9.50 2,500,000(d) 1,997,050
Grupo Iusacell
(U.S. Dollar) 07-15-04 10.00 1,250,000 1,303,125
Grupo Televisa
(U.S. Dollar) Sr Nts 05-15-06 11.88 1,250,000 1,443,750
Guangdong Enterprises
(U.S. Dollar) Sr Nts 05-22-07 8.88 4,000,000(d) 3,265,760
Honam Oil Refinery
(U.S. Dollar) 10-15-05 7.13 5,750,000(d) 4,743,750
Hutchison Whampo Finance
(U.S. Dollar) Company Guaranty 08-01-17 7.45 1,275,000(d) 1,147,092
08-01-27 7.50 1,250,000(d) 1,094,350
Hyundai Semiconductor
(U.S. Dollar) Sr Nts 05-15-07 8.63 4,000,000(d) 3,145,160
Imexsa Export Trust
(U.S. Dollar) 05-31-03 10.13 3,000,000(d) 3,135,000
Israel Electric
(U.S. Dollar) Sr Nts 12-15-06 7.25 2,700,000 2,756,808
Jasmine Submarine Telecom
(U.S. Dollar) Sr Nts 05-30-11 8.48 2,841,130(d) 2,290,462
Korea Electric Power
(U.S. Dollar) 12-01-03 6.38 4,000,000 3,443,000
MDC Communications
(U.S. Dollar) Sr Sub Nts 12-01-06 10.50 1,350,000 1,458,000
Mexican Cetes
(Mexican Peso) Zero Coupon 06-04-98 20.44 17,030,000(f) 2,013,798
Microcell Telecommunications
(U.S. Dollar) Zero Coupon Sr Disc Nts10-15-07 18.05 3,040,000(d,f) 1,281,670
Ministry Finance Russia
(U.S. Dollar) 11-27-01 9.25 2,050,000(d) 1,978,250
06-26-07 10.00 5,000,000(d) 4,618,750
Morgan (JP)
(U.S. Dollar) Sr Sub Nts Series A 02-15-12 4.00 5,000,000(e) 4,646,000
Nationwide CSN Trust
(U.S. Dollar) 02-15-25 9.88 9,000,000(d) 10,807,740
Netia Holdings
(U.S. Dollar) Company Guaranty 11-01-07 10.25 1,600,000(d) 1,622,000
People's Republic of China
(U.S. Dollar) 07-03-01 7.38 2,000,000 2,037,500
01-15-96 9.00 2,500,000 2,770,375
Petrozuata Finance
(U.S. Dollar) 04-01-17 8.22 7,000,000(d) 7,315,210
Philippine Long Distance Telephone
(U.S. Dollar) 03-06-07 7.85 1,500,000(d) 1,352,475
(U.S. Dollar) Medium-term Nts Series E 03-06-17 8.35 1,500,000(d) 1,331,010
Plitt Theatres
(U.S. Dollar) Sr Sub Nts 06-15-04 10.88 3,000,000 3,285,000
Quno Corp
(U.S. Dollar) Sr Nts 05-15-05 9.13 2,500,000 2,618,750
Ras Laffan
(U.S. Dollar) 03-15-14 8.29 6,000,000 6,138,360
Repap New Brunswick
(U.S. Dollar) Sr Nts 04-15-05 10.63 3,000,000 2,955,000
Republic of Argentina
(Argentine Peso) 07-10-02 8.75 1,000,000(d) 915,000
02-12-07 11.75 1,000,000 1,057,500
Republic of Brazil
(U.S. Dollar) 04-15-14 8.00 7,411,690 5,989,572
Republic of Panama
(U.S. Dollar) 02-13-02 7.88 1,000,000(d) 1,003,490
09-30-27 8.88 2,000,000 1,981,180
Rogers Cablesystems
(Canadian Dollar) 01-15-14 6.78 5,000,000 3,725,455
Rogers Cantel
(U.S. Dollar) 06-01-08 9.38 2,800,000 2,989,000
Russia Federal Loan Bond 09-27-00 2.31 30,008,878 3,608,408
Tatneft Finance
(U.S. Dollar) Company Guaranty 10-29-02 9.00 2,600,000(d) 2,255,500
Texas Utilities Electric
(U.S. Dollar) 08-01-07 7.17 5,000,000 5,221,850
TU Electric Capital
(U.S. Dollar) Company Guaranty 01-30-37 8.18 5,000,000 5,267,250
United Mexican States
(U.S. Dollar) 12-31-19 6.25 4,000,000 3,365,000
Venezuela DCB Trust
(U.S. Dollar) 12-18-07 6.75 1,904,762 1,698,810
Veritas Holdings
(U.S. Dollar) Sr Nts 12-15-03 9.63 2,386,000 2,561,968
Zhuhai Highway
(U.S. Dollar) Sub Nts 07-01-08 11.50 5,000,000(d) 4,557,700
Zurich Capital
(U.S. Dollar) Company Guaranty 06-01-37 8.38 3,750,000(d) 4,132,013
Total 231,423,334
Furniture & appliances - 0.1%
Interface
Sr Sub Nts Series B 11-15-05 9.50 1,500,000 1,610,625
Lifestyle Furnishings
Company Guaranty 08-01-06 10.88 2,150,000 2,413,375
Total 4,024,000
Health care - 0.0%
Alaris Medical Systems
Company Guaranty 12-01-06 9.75 1,600,000 1,700,000
Health care services - 0.5%
Extendicare Health Services 12-15-07 9.35 2,000,000(d) 2,085,000
La Petite Holdings
Sr Nts 08-01-01 9.63 2,185,000 2,283,325
Magellan Health Services
Sr Sub Nts 02-15-08 9.00 2,000,000(d) 2,030,000
Manor Care
Sr Nts 06-15-06 7.50 6,000,000 6,394,440
Owens & Minor
Company Guaranty 06-01-06 10.88 1,200,000 1,344,000
Paracelsus Healthcare
Sr Sub Nts 08-15-06 10.00 1,000,000 1,047,500
Physician Sales & Service
Company Guaranty 10-01-07 8.50 1,050,000 1,084,125
Tenet Healthcare
Sr Nts 12-01-03 8.63 2,500,000 2,637,500
Sr Sub Nts 03-01-05 10.13 2,000,000 2,200,000
Vencor
Sr Sub Nts 07-15-07 8.63 2,500,000 2,775,000
Total 23,880,890
Household products - 0.1%
Revlon Consumer Products
Sr Nts 02-01-06 8.13 2,750,000(d) 2,750,000
Industrial equipment & services - 0.2%
AGCO
Sr Sub Nts 03-15-06 8.50 2,200,000 2,290,750
Borg-Warner Security 03-15-07 9.63 1,300,000 1,350,375
Case 08-01-05 7.25 5,000,000 5,226,250
Total 8,867,375
Insurance - 0.9%
American United Life Insurance 03-30-26 7.75 2,500,000(d,j) 2,581,525
Americo Life
Sr Sub Nts 06-01-05 9.25 1,600,000 1,644,000
Arkwright CSN Trust 08-15-26 9.63 3,000,000(d) 3,626,040
Conseco Financing Trust
Company Guaranty 11-15-26 8.70 3,800,000 4,241,066
Executive Risk Capital
Company Guaranty Series B 02-01-27 8.68 3,000,000 3,332,940
Leucadia Natl
Sr Sub Nts 10-15-06 7.88 5,000,000 5,239,350
Metropolitan Life Insurance 11-01-25 7.80 6,900,000(d) 7,315,035
Minnesota Mutual Life 09-15-25 8.25 2,700,000(d) 3,105,810
New England Mutual 02-15-24 7.88 2,000,000(d) 2,197,680
Principal Mutual 03-01-44 8.00 2,500,000(d) 2,698,975
SAFECO Capital
Company Guaranty 07-15-37 8.07 5,000,000 5,280,200
SunAmerica 08-30-05 7.34 5,000,000 5,282,200
Total 46,544,821
Leisure time & entertainment - 0.4%
AMC Entertainment
Sr Sub Nts 03-15-09 9.50 2,000,000 2,100,000
Riviera Holdings
Company Guaranty 08-15-04 10.00 2,250,000(e) 2,317,500
Time Warner 02-01-24 7.57 5,900,000 6,269,576
01-15-28 6.95 5,000,000 4,894,750
Trump Atlantic City Assn/Funding
Company Guaranty 05-01-06 11.25 1,000,000 1,036,250
United Artists Theatres
Series 1995A 07-01-15 9.30 1,929,378 1,987,260
Venetian Casino/LV Sands
Mtge 11-15-04 12.25 2,410,000(d) 2,452,175
Total 21,057,511
Media - 1.5%
Adelphia Communications
Sr Nts 02-01-08 8.38 3,000,000 3,000,000
Antenna TV 08-01-07 9.00 3,000,000 3,063,750
Cablevision Systems
Sr Sub Nts 11-01-05 9.25 2,000,000 2,145,000
Cox Communications 11-15-15 7.25 5,000,000 5,239,350
06-15-25 7.63 5,000,000 5,415,950
Lamar Advertising
Company Guaranty 12-01-06 9.63 1,100,000 1,200,375
News America Holdings 03-01-00 7.50 4,000,000 4,110,280
Outdoor Systems
Company Guaranty 10-15-06 9.38 2,500,000 2,687,500
TCI Communications 08-01-15 8.75 20,000,000 23,288,000
Tele-Communications 02-15-23 8.75 3,500,000 3,773,490
Time Warner Entertainment
Sr Nts 07-15-33 8.38 10,000,000 11,583,500
Viacom
Sub Deb 07-07-06 8.00 4,000,000 4,090,000
Viacom Intl 07-01-03 7.00 2,000,000 1,959,880
Total 71,557,075
Miscellaneous - 1.6%
Adams Outdoor Advertising
Sr Nts 03-15-06 10.75 2,000,000 2,225,000
American General Institute Capital
Company Guaranty Series A 12-01-45 7.57 14,350,000(d) 14,880,663
Bayou Steel
1st Mtge 03-01-01 10.25 2,750,000 2,835,938
Bistro Trust 12-31-02 9.50 5,000,000(d) 5,009,500
12-31-02 9.50 7,000,000(d) 7,013,300
BTI Telecommunications
Sr Nts 09-15-07 10.50 2,200,000 2,387,000
Coty
Sr Sub Nts 05-01-05 10.25 1,500,000 1,601,250
DTI Holdings 03-01-08 12.50 4,760,000(d) 2,594,200
ESI Tractebel Acquisitions 12-30-11 7.99 1,250,000 1,254,688
First Empire Capital
Company Guaranty 02-01-27 8.23 4,000,000 4,309,440
Grant Geophysical
Sr Nts 02-15-08 9.75 1,925,000 1,915,375
Hyperion Telecommunications
Sr Nts Series B 09-01-04 12.25 1,500,000 1,706,250
M & I Capital Trust A
Company Guaranty 12-01-26 7.65 5,700,000 5,923,440
MSX Intl
Sr Sub Nts 01-15-08 11.38 1,485,000 1,536,975
Nationwide Credit
Sr Nts 01-15-08 10.25 1,000,000(d) 1,032,500
Norcal Waste Systems
Company Guaranty Series B 11-15-05 13.50 2,000,000 2,327,500
Oshkosh Truck 03-01-08 8.75 3,000,000(d) 3,030,000
Outsourcing Solutions
Sr Sub Nts Series B 11-01-06 11.00 1,125,000 1,240,313
Packaged Ice
Sr Nt 02-01-05 9.75 3,400,000(d) 3,485,000
SC Intl 09-01-07 9.25 2,000,000 2,100,000
SFX Entertainment
Sr Sub Nts 02-01-08 9.13 2,400,000 2,400,000
Stellex Inds
Sr Sub Nts 11-01-07 9.50 2,000,000(d) 2,055,000
Vesta Capital 01-15-27 8.53 5,000,000(d) 5,639,850
Total 78,503,182
Multi-industry conglomerates - 0.4%
American Banknote 12-01-07 11.25 2,000,000 2,030,000
Crane 06-15-99 7.25 2,000,000 2,032,840
Pierce Leahy
Sr Sub Nts 07-15-06 11.13 812,000(d) 931,770
Prime Succession
Sr Sub Nts 08-15-04 10.75 1,275,000 1,405,688
USI American Holdings
Sr Nts Series B 12-01-06 7.25 3,350,000 3,394,823
Westinghouse Electric 06-01-01 8.88 9,750,000 10,377,412
Total 20,172,533
Paper & packaging - 0.3%
Gaylord Container
Sr Nts 06-15-07 9.38 3,250,000(d) 3,209,375
06-15-07 9.75 1,750,000 1,767,500
Graham Packaging/GPC Capital
Sr Sub Nts 01-15-08 8.75 2,000,000 2,040,000
Owens-Illinois
Sr Nts 05-15-07 8.10 4,350,000 4,642,407
Riverwood Intl
Company Guaranty 04-01-06 10.25 2,000,000 2,070,000
Silgan Holdings 06-01-09 9.00 1,650,000 1,720,125
Tekni-Plex
Sr Sub Nts 03-01-08 9.25 1,375,000 1,392,188
Total 16,841,595
Retail - 0.5%
Maxim Group
Company Guaranty Series B 10-15-07 9.25 2,500,000 2,531,250
Pep Boys-Manny, Moe & Jack 06-01-05 7.00 4,200,000 4,341,204
Pueblo Xtra Intl
Sr Nts 08-01-03 9.50 1,000,000 942,500
U.S. Office Products 05-15-03 5.50 16,000,000 13,760,000
Wal-Mart CRAVE Trust 07-17-06 7.00 4,480,753(d) 4,607,065
Total 26,182,019
Textiles & apparel - 0.1%
Galey & Lord
Sr Sub Nts 03-01-08 9.13 3,000,000(d) 3,015,000
Loomis Fargo 01-15-04 10.00 500,000 502,500
Total 3,517,500
Transportation - 0.2%
Atlas Air 01-02-10 8.01 10,000,000 10,002,800
Utilities -- electric - 1.6%
AES
Sr Sub Nts 11-01-07 8.50 2,500,000 2,581,250
Alabama Power
1st Mtge 12-01-24 9.00 2,200,000 2,438,128
Arizona Public Service 12-30-15 8.00 3,600,000 3,974,076
CalEnergy
Sr Nts 09-15-06 9.50 1,325,000 1,437,625
Cleveland Electric Illuminating 07-01-04 7.67 6,500,000 6,695,000
1st Mtge Series B 05-15-05 9.50 7,000,000 7,832,369
CMS Energy
Sr Nts 05-15-02 8.13 5,000,000 5,153,200
11-15-04 7.63 2,500,000 2,526,250
Connecticut Light & Power
1st Mtge Series C 06-01-02 7.75 5,000,000 5,087,200
El Paso Electric
1st Mtge Series D 02-01-06 8.90 2,750,000 3,062,813
First PV Funding
Series 1986B 01-15-16 10.15 1,121,000 1,188,260
Jersey Central Power & Light
1st Mtge 11-01-25 6.75 7,200,000 6,971,760
Long Island Lighting
Gen Ref Mtge 05-01-21 9.75 2,500,000 2,544,525
Niagara Mohawk Power
1st Mtge 05-15-06 7.75 5,500,000 5,826,920
Public Services Electric & Gas
1st & Ref Mtge 01-01-16 6.75 2,600,000 2,637,466
Salton Sea Funding
Series C 05-30-10 7.84 1,325,000 1,408,753
Sithe Independence Funding
Series A 12-30-13 9.00 1,500,000 1,764,300
Texas Utilities Electric 04-01-98 5.88 5,000,000 4,999,550
Virginia Electric & Power 02-01-07 6.75 5,000,000 5,123,850
Western Massachusetts Electric
1st Mtge Series B 07-01-01 7.38 2,750,000 2,769,223
Wisconsin Electric Power 12-01-95 6.88 2,800,000 2,847,152
Total 78,869,670
Utilities -- gas - 0.1%
Columbia Gas System
Series E 11-28-10 7.32 7,000,000 7,240,520
Utilities -- telephone - 0.4%
360 Communications 04-01-09 7.60 3,000,000 3,196,410
Geotek Communications
Cv Sr Sub Nts 02-15-01 12.00 1,655,000(d,j) 1,158,500
Intermedia Communications
Sr Nts 11-01-07 8.88 1,000,000(d) 1,057,500
Metrocall
Sr Sub Nts 11-01-07 9.75 1,000,000(d) 1,010,000
Primus Telecommunications Group
Sr Nts 08-01-04 11.75 2,300,000 2,564,500
U S WEST Communications 11-10-26 7.20 5,000,000 5,054,000
WorldCom 04-01-07 7.75 4,000,000 4,324,160
Sr Nts 01-15-04 9.38 2,614,000 2,803,513
Total 21,168,583
Total bonds
(Cost: $1,650,542,381) $1,691,339,158
Short-term securities - 1.9%
Issuer Maturity Annualized Amount Value(a)
date yield on payable at
date of maturity
purchase
U.S. government agencies - 0.3%
Federal Home Loan Mtge Corp Disc Nts 03-18-98 5.42% $1,600,000 $1,595,680
03-20-98 5.44 10,000,000 9,969,833
03-20-98 5.46 2,400,000 2,392,733
Total 13,958,246
Certificate of deposit - 0.6%
ABN Amro Yankee 04-21-98 6.22 30,000,000 29,992,563
Commercial paper - 1.0%
Bell Atlantic 03-17-98 5.51 5,800,000 5,784,991
Ciesco LP 04-20-98 5.54 4,500,000 4,464,937
Commerzbank U.S. Finance 03-13-98 5.50 4,200,000 4,191,689
Michigan Consolidated Gas 03-17-98 5.51 5,200,000 5,186,519
NBD Bank Canada 03-10-98 5.52 9,600,000 9,585,333
Paccar Financial 03-03-98 5.50 9,000,000 8,995,890
Xerox Credit 03-10-98 5.49 10,000,000 9,984,806
Total 48,194,165
Total short-term securities
(Cost: $92,151,188) $92,144,974
Total investments in securities
(Cost: $3,854,346,218)(m) $4,977,747,514
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(e) Security is partially or fully on loan. See Note 5 to the financial
statements.
(f) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(g) This security is a collateralized mortgage obligation that pays no interest
or principal during its initial accrual period until payment of a previous
series within the trust have been paid off. Interest is accrued at an effective
yield.
(h) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Feb. 28, 1998.
(i) Pay-in-kind securities are securities in which the issuer has the option to
make interest payments in cash or in additional securities. The securities
issued as interest usually have the same terms, including maturity date, as the
pay-in-kind securities.
(j) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Feb. 28, 1998, is as follows:
Security Acquisition Purchase
date cost
American United Life Insurance*
7.75% 2026 02-13-96 $2,500,000
Geotek Telecommunications
12% Cv Sr Sub Nts 2001 03-04-96 2,000,000
Century Business Services 02-04-98 9,937,500
*Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(k) Negligible market value.
(l) U.S. Treasury inflation-protection securities (TIPS) are securities in which
the principal amount is adjusted for inflation and the semi-annual interest
payments equal a fixed percentage of the inflation-adjusted principal amount.
(m) At Feb. 28, 1998, the cost of securities for federal income tax purposes was
approximately $3,851,760,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation......................................$1,169,366,000
Unrealized depreciation.........................................(43,378,000)
Net unrealized appreciation..................................$1,125,988,000
<PAGE>
Investments in securities
Retirement Annuity Mutual Funds
Moneyshare Fund
Feb. 28, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
Certificates of deposit - 1.0%
ABN Amro Yankee
05-15-98 6.08% $1,000,000 $999,960
Bank of New York
03-03-98 5.83 3,000,000 2,999,993
Total certificates of deposit
(Cost: $3,999,953) $3,999,953
Commercial paper - 79.9%
Automotive & related - 8.3%
Daimler-Benz
05-07-98 5.52 5,800,000 5,740,183
05-08-98 5.53 5,000,000 4,947,579
Ford Motor Credit
03-06-98 5.57 7,000,000 6,993,560
04-09-98 5.55 9,300,000 9,243,373
Toyota Motor Credit
03-25-98 5.51 5,000,000 4,980,938
Total 31,905,633
Banks and savings & loans - 11.7%
Bank of America
10-22-98 6.00 2,000,000 1,999,382
02-26-99 5.67 1,000,000 999,619
BBV Finance (Delaware)
04-07-98 5.56 10,900,000 10,836,835
04-08-98 5.49 6,200,000 6,163,596
First Bank Minneapolis
03-06-98 5.30 2,000,000(c) 1,999,987
Harris Trust
03-05-98 5.50 12,300,000 12,299,999
Morgan Guaranty
06-22-98 6.01 2,000,000 1,999,791
Societe Generale North America
03-16-98 5.48 8,600,000 8,579,245
Total 44,878,454
Commercial finance - 7.9%
CAFCO
03-19-98 5.50 5,000,000(b) 4,985,592
03-23-98 5.52 6,900,000(b) 6,875,930
Ciesco LP
03-12-98 5.50 10,000,000(b) 9,981,800
New Center Asset Trust
04-13-98 5.50 8,500,000 8,443,588
Total 30,286,910
Financial services - 23.8%
Associates Corp North America
03-03-98 5.50 6,000,000 5,997,265
03-12-98 5.54 4,700,000 4,691,368
Avco Financial Services
05-14-98 5.53% $2,200,000 $2,175,021
Beneficial
03-02-98 5.49 6,800,000 6,797,937
03-05-98 5.50 6,000,000 5,995,442
CIT Group Holdings
03-27-98 5.63 6,200,000 6,174,146
Commercial Credit
03-13-98 5.51 15,000,000 14,970,425
Goldman Sachs Group
04-06-98 5.53 3,000,000 2,983,165
04-09-98 5.64 15,900,000 15,801,773
Household Finance
03-11-98 5.51 10,400,000 10,382,586
Intl Lease Finance
04-02-98 5.52 2,700,000 2,686,437
Merrill Lynch
05-26-98 5.59 2,000,000(c) 2,000,000
11-27-98 5.58 2,000,000(c) 2,000,000
01-19-99 5.57 1,000,000(c) 1,000,000
01-25-99 5.58 2,000,000(c) 2,000,000
Morgan Stanley, Dean Witter, Discover & Co
05-06-98 5.53 4,900,000 4,850,117
Natl Rural Utilities Cooperative
05-12-98 5.56 1,700,000 1,681,040
Total 92,186,722
Health care - 0.9%
Glaxo Wellcome PLC
03-04-98 5.50 3,300,000(b) 3,297,983
Household products - 2.2%
Clorox
04-17-98 5.49 8,500,000 8,438,573
Industrial equipment & services - 1.2%
ABB Treasury Center USA
03-25-98 5.51 4,700,000(b) 4,682,081
Insurance - 4.8%
American General
03-03-98 5.50 5,000,000 4,997,721
03-13-98 5.50 5,000,000 4,990,142
American General Finance
03-11-98 5.53 8,500,000 8,485,715
Total 18,473,578
Metals - 5.0%
BHP Finance
03-04-98 5.50 13,300,000 13,291,916
05-12-98 5.54 6,000,000 5,933,327
Total 19,225,243
Miscellaneous - 3.1%
Delaware Funding
04-07-98 5.53% $3,900,000(b)$3,877,441
Natl Australia Funding (Delaware)
04-15-98 5.50 8,000,000 7,944,493
Total 11,821,934
Multi-industry conglomerates - 5.4%
BOC Group
03-02-98 5.83 10,000,000 9,996,800
General Electric
03-20-98 5.53 2,700,000 2,691,750
General Electric Capital
03-05-98 5.50 5,000,000 4,996,201
05-12-98 5.53 3,000,000 2,966,785
Total 20,651,536
Utilities -- telephone - 5.6%
Bell Atlantic Finance
03-09-98 5.54 10,000,000 9,986,225
SBC Communications Capital
04-21-98 5.53 11,500,000(b)11,408,806
Total 21,395,031
Total commercial paper
(Cost: $307,243,678) $307,243,678
Letters of credit - 19.6%
ABN Amro-
US Prime Property
03-31-98 5.50 4,000,000 3,981,056
Bank of New York-
River Fuel Trust 2
04-14-98 5.53 5,000,000(b) 4,965,812
Canadian Imperial Bank-
Commed Fuel
04-24-98 5.49 3,600,000 3,569,805
Credit Agricole-
Louis Dreyfus II
04-06-98 5.53 10,000,000 9,943,164
Dresdner Bank-
Contifinancial
03-03-98 5.52 10,000,000 9,995,417
03-13-98 5.52 8,000,000 7,984,053
First Bank -
Midwest Commercial Paper
04-03-98 5.57 4,500,000 4,476,455
First Chicago-
Commed Fuel
04-16-98 5.54 3,100,000 3,077,821
Societe Generale-
Nafinsa
04-17-98 5.65 5,000,000 4,962,333
Union Bank of Switzerland-
River Fuel Trust 3
04-14-98 5.50 12,900,000(b)12,812,442
Westpac Banking-
US Prime
03-09-98 5.48 10,000,000 9,986,300
Total 75,754,658
Total letters of credit
(Cost: $75,754,658) $75,754,658
Total investments in securities
(Cost $386,998,289)(d) $386,998,289
See accompanying notes to investments in securities.
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(c) Interest rate varies to reflect current market conditions; rate shown is the
effective rate on Feb. 28, 1998.
(d) Also represents the cost of securities for federal income tax purposes at
Feb. 28, 1998.
<PAGE>
Investments in securities
Retirement Annuity Mutual Funds
International Equity Fund
Feb. 28, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Common stocks - 93.4%
Issuer Shares Value(a)
Argentina - 0.5%
Utilities -- telephone - 0.5%
Telefonica de Argentina
ADR 309,000(c) $11,124,000
Australia - 2.4%
Banks and savings & loans - 1.5%
Westpac Banking 4,592,000 31,757,280
Metals - 0.3%
MIM Holdings 11,469,709 6,389,396
Multi-industry conglomerates - 0.4%
Pacific Dunlop 4,363,000(b) 7,706,411
Paper & packaging - 0.2%
Amcor 925,000 4,028,036
Brazil - 0.8%
Energy - 0.4%
Petroleo Brasileiro ADR 425,000(c) 9,626,974
Utilities -- electric - 0.4%
Centrais Eletricas Brasileiras 366,000(c)8,225,774
Canada - 6.7%
Airlines - 0.2%
Air Canada 406,300(b) 3,723,858
Banks and savings & loans - 1.7%
Toronto-Dominion Bank 861,500 36,423,992
Communications equipment & services - 1.9%
Newbridge Networks 214,600(b) 5,026,449
Northern Telecom 676,000(c) 36,039,250
Total 41,065,699
Energy - 1.9%
Canadian Occidental 441,000 8,796,151
Petroleum
Petro-Canada 1,743,000 32,317,449
Total 41,113,600
Multi-industry conglomerates - 1.0%
Bombardier Cl B 988,800 21,250,301
Chile - 0.2%
Utilities -- telephone - 0.2%
Cia de Telecomunicaciones
de Chile ADR 150,000(c) 4,106,250
France - 12.4%
Automotive & related - 1.4%
Michelin Cl B 481,996 29,867,273
Banks and savings & loans - 3.3%
Banque Natl de Paris 1,158,031 70,045,268
Energy - 1.7%
TOTAL Cl B 338,807 37,199,716
Household products - 4.1%
Rhone-Poulenc Cl A 1,902,794(b) 87,758,710
Leisure time & entertainment - 1.9%
Accor178,153 41,170,795
Germany - 8.1%
Banks and savings & loans - 2.9%
Bayerische Vereinsbank 980,990(c) 61,141,400
Chemicals - 1.9%
Henkel KGaA 643,000 41,598,072
Industrial equipment - 0.5%
Mannesmann 16,900 10,142,326
Metals - 1.0%
SGL Carbon 185,000 21,899,518
Textiles & apparel - 1.8%
Adidas 250,139 39,113,270
Hong Kong - 2.1%
Communications equipment & services - 0.5%
China Telecom 6,300,000(b) 11,432,352
Financial services - 1.1%
Cheung Kong Holdings 1,700,000 11,911,526
Sun Hung Kai Properties 1,650,000 12,360,348
Total 24,271,874
Utilities -- telephone - 0.5%
Hong Kong
Telecommunications
5,100,000 $10,736,841
Italy - 11.4%
Banks and savings & loans - 7.2%
Banca Intesa 10,662,896(c) 48,888,003
Credito Italiano 12,552,100(c) 48,244,888
Instituto Bancario
San Paolo di Torino 4,893,774(c) 57,496,505
Total 154,629,396
Utilities -- telephone - 4.2%
Telecom Italia 16,680,400(c) 90,643,094
Japan - 8.1%
Banks and savings & loans - 1.0%
Sakura Bank 5,370,000(c) 22,471,646
Computers & office equipment - 1.0%
Fujitsu 1,840,000 20,707,746
Electronics - 3.5%
Fujikura 2,290,000(c) 16,134,811
NEC 1,930,000 21,567,663
Rohm 226,000 22,389,538
Tokyo Electron 435,000 15,652,070
Total 75,744,082
Financial services - 1.2%
Sumitomo Realty
& Development 3,733,000 24,704,218
Media - 1.4%
Sony 330,000 29,815,732
Malaysia - 0.1%
Energy - 0.1%
Petronas Gas Berhad 598,000 1,658,224
Mexico - 1.6%
Beverages & tobacco - 1.2%
Coca-Cola Femsa ADR 494,400 9,455,400
Fomento Economico
Mexicano Cl B 1,225,000 9,121,959
Panamerican Beverages
Cl A 180,000 6,558,750
Total 25,136,109
Financial services - 0.4%
Grupo Financiero
Bancomer Cl B 13,435,800(b) $7,783,386
Netherlands - 10.7%
Chemicals - 0.5%
Akzo Nobel 50,886 10,326,137
Computers & office equipment - 0.9%
Baan 430,302(b,c)19,448,797
Household products - 1.7%
Unilever 3,999,892 36,563,317
Industrial equipment - 2.1%
Philips Electronics 590,833 45,902,835
Insurance - 3.5%
ING Groep 1,417,657 75,020,033
Retail - 2.0%
Vendex Intl 687,620 43,309,090
Russia - 0.9%
Energy - 0.4%
Lukoil Holding ADR 125,000(c) 9,054,012
Utilities -- electric - 0.5%
Mosenergo ADR 275,000(b) 10,587,500
Singapore - 1.1%
Banks and savings & loans - 0.8%
Oversea-Chinese Banking 1,236,000 7,360,321
United Overseas Bank 1,685,000(b) 9,150,261
Total 16,510,582
Building materials & construction - 0.3%
Singapore Technologies
Engineering 5,746,000(b) 5,673,307
Financial services - 0.0%
City Developments 179,000 811,879
South Korea - 0.6%
Electronics - 0.6%
Samsung Electronics 204,000(b) 11,805,266
Spain - 2.1%
Banks and savings & loans - 2.1%
Argentaria 602,753(b) 44,924,228
Sweden - 2.0%
Banks and savings & loans - 0.9%
Nordbanken Holding 3,183,828(c) 20,077,586
Communications equipment & services - 1.1%
Ericsson (LM) Cl B 501,515 22,795,851
Switzerland - 7.9%
Banks and savings & loans - 4.1%
Credit Suisse Group 188,892 34,098,351
Schweizer Bankgesellschaft 34,473(b) 53,682,069
Total 87,780,420
Health care - 3.8%
Novartis 44,345 80,866,190
Taiwan - 0.5%
Chemicals - 0.2%
Nan Ya Plastics 1,971,360 3,875,059
Electronics - 0.3%
Compal Electronics 1,340,000(b) 5,686,114
United Kingdom - 13.2%
Airlines - 1.0%
British Airways ADR 2,170,943 20,532,753
Banks and savings & loans - 1.3%
Barclays 963,466 28,804,544
Chemicals - 1.3%
Imperial Chemical Inds 1,556,692 28,164,960
Energy - 1.2%
Shell Transport & Trading 3,716,828 26,571,804
Financial services - 1.8%
General Electric 5,885,592(b) 38,733,558
Health care - 1.5%
SmithKline Beecham 2,629,277 32,983,751
Retail - 2.5%
Great Universal Stores 4,172,385 53,269,048
Utilities -- gas - 1.6%
BG 6,969,518(b) 34,880,688
Utilities -- telephone - 1.0%
Vodafone Group 2,313,600(b) 20,625,073
Total common stocks
(Cost: $1,653,548,796) $2,001,797,001
Other - 1.0%
Issuer Shares Value(a)
Rhone-Poulenc
Warrants 404,814 $1,706,688
Banca Intesa
Warrants 10,662,896 9,336,144
Banque Natl de Paris
Warrants 347,900 9,366,540
Total other
(Cost: $4,281,689) $20,409,372
Short-term securities - 17.1%
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies - 1.0%
Federal Natl Mtge Assn Disc Nt
03-18-98 5.43% $2,100,000 $2,094,319
Federal Home Loan Mtge Corp Disc Nts
03-12-98 5.43 10,500,000 10,481,065
03-27-98 5.44 9,500,000 9,461,383
Total 22,036,767
Commercial paper - 14.5%
Associates Corp North America
03-26-98 5.50 16,300,000 16,235,489
Bell Atlantic
03-02-98 5.53 7,000,000 6,997,853
03-11-98 5.53 10,000,000 9,983,133
BellSouth Telecommunications
04-08-98 5.58 15,000,000 14,909,813
BOC Group
03-13-98 5.52 4,400,000 4,391,261
Commerzbank U.S. Finance
03-13-98 5.50 15,400,000 15,369,525
Daimler-Benz
04-23-98 5.52 5,000,000 4,958,900
Delaware Funding
03-25-98 5.52 11,600,000(d)11,555,775
Deutsche Bank Financial
03-19-98 5.52 10,000,000 9,970,972
03-23-98 5.52 13,300,000 13,253,265
Dresdner U.S. Finance
03-02-98 5.50 9,000,000 8,997,255
Emerson Electric
04-13-98 5.56 8,900,000 8,839,846
Fleet Funding
04-17-98 5.57 12,800,000(d)12,705,621
Household Finance
04-06-98 5.57 10,000,000 9,943,061
Kredietbank North America Finance
04-27-98 5.52 8,600,000 8,520,834
Morgan Stanley, Dean Witter, Discover & Co
03-06-98 5.50 7,000,000 6,993,618
Motorola
03-26-98 5.58 8,900,000 8,864,262
Natl Australia Funding (Delaware)
04-02-98 5.51 3,600,000 3,581,916
Natl Rural Utilities
03-06-98 5.53 5,200,000 5,195,233
NBD Bank Canada
03-10-98 5.52 5,900,000 5,890,986
03-11-98 5.52 12,000,000 11,979,833
Paccar Financial
03-26-98 5.55 8,100,000 8,067,649
Pacific Life Insurance
03-12-98 5.51 15,400,000 15,371,819
Pfizer
03-09-98 5.53 8,100,000(d) 8,088,863
Reed Elsevier
04-02-98 5.56 10,000,000(d) 9,949,217
SBC Communications Capital
04-23-98 5.53 13,000,000(d)12,892,945
Societe Generale North America
03-17-98 5.50 10,400,000 10,367,977
Toyota Motor Credit
03-02-98 5.49 13,900,000 13,895,776
UBS Finance (Delaware)
03-09-98 5.51 10,000,000 9,986,275
Xerox Credit
04-01-98 5.51 7,100,000 7,065,415
04-09-98 5.52 15,000,000 14,908,500
Total 309,732,887
Letters of credit - 1.6%
Bank of America-
AES Hawaii
03-06-98 5.52 8,200,000 8,192,483
04-03-98 5.51 10,100,000 10,047,727
First Chicago-
Commed Fuel
03-11-98 5.51 15,000,000 14,974,883
Student Loan Marketing Assn-
Nebraska Higher Education
03-13-98 5.52 317,000 316,370
Total 33,531,463
Total short-term securities
(Cost: $365,309,682) $365,301,117
Total investments in securities
(Cost: $2,023,140,167)(e) $2,387,507,490
See accompanying notes to investments in securities.
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Security is partially or fully on loan. See Note 5 to the financial
statements.
(d) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(e) At Feb. 28, 1998, the cost of securities for federal income tax purposes was
approximately $2,023,140,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation.................................$423,923,000
Unrealized depreciation..................................(59,556,000)
Net unrealized appreciation.............................$364,367,000
<PAGE>
Investments in securities
Retirement Annuity Mutual Funds
Aggressive Growth Fund
Feb. 28, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Common stocks - 88.2%
Issuer Shares Value(a)
Aerospace & defense - 0.9%
Hexcel 425,100(b) $11,185,444
Howmet Intl 750,000(b) 13,500,000
Total 24,685,444
Airlines - 0.9%
Comair Holdings 450,000 11,981,250
Northwest Airlines Cl A 200,000(b) 11,775,000
Total 23,756,250
Automotive & related - 0.2%
Dollar Thrifty Automotive
Group 220,000(b) 4,400,000
Banks and savings & loans - 1.8%
Franchise Mtge Acceptance 400,000(b) 7,200,000
LINC Capital 125,000(b) 2,187,500
TCF Financial 660,000 21,821,250
Washington Mutual 260,000 17,452,500
Total 48,661,250
Building materials & construction - 1.8%
Lennar 500,000 13,968,750
Toll Brothers 400,000(b) 12,000,000
Tyco Intl 440,000 22,330,000
Total 48,298,750
Chemicals - 0.6%
Crompton & Knowles 520,000 15,665,000
Commercial finance - 0.7%
Finova Group 319,900 17,594,500
Communications equipment & services - 2.4%
ADC Telecommunications 625,000(b) 16,132,813
Advanced Fibre
Communications 500,000(b) 14,968,750
ANTEC 170,000(b) 2,008,125
Ascend Communications 310,000(b) 11,605,625
IDT 97,800(b) 3,386,325
P-COM 750,000(b) 15,187,500
Total 63,289,138
Computers & office equipment - 16.5%
American Management
Systems 600,000(b) 15,675,000
Bay Networks 297,400(b) 10,074,425
BEA Systems 510,000(b) 13,706,250
BMC Software 190,000(b) 14,535,000
Cambridge Technology
Partners 420,000(b) 19,110,000
Cisco Systems 225,000(b) 14,821,875
Comdisco 300,000 12,506,250
Computer Sciences 135,000(b) 14,132,813
Computer Task Group 450,000 18,365,625
Compuware 415,000(b) 17,481,875
DAOU Systems 465,000(b) 12,264,375
Fiserv 330,000(b) 18,067,500
GeoTel Communications 250,000(b) 5,718,750
Information Advantage 290,000(b) 2,265,625
Intuit 275,000(b) 12,787,500
Legato Systems 340,000(b) 16,660,000
Metzler Group 206,150(b) 8,812,913
Network Associates 450,000(b) 29,081,249
PeopleSoft 360,000(b) 16,087,500
Pervasive Software 400,000(b) 4,450,000
Platinum Software 425,000(b) 8,075,000
Platinum Technology 600,000(b) 15,225,000
Policy Management
Systems 250,000(b) 18,093,750
Renaissance Worldwide 325,000(b) 19,296,875
Safeguard Scientifics 117,100(b) 4,215,600
Secure Computing 650,000(b) 7,475,000
Sterling Commerce 410,000(b) 18,706,250
Storage Technology 250,000(b) 17,062,500
Technology Solutions 600,000(b) 19,499,999
Transition Systems 130,000(b) 2,535,000
Viasoft 240,000(b) 6,480,000
Whittman-Hart 400,000(b) 13,200,000
Xylan 625,000(b,e)15,078,125
Total 441,547,624
Electronics - 2.1%
CIENA 330,000(b) 13,839,375
Maxim Integrated Products 300,000(b) 12,112,500
Sawtek 300,000(b) 7,687,500
Transcrypt Intl 660,000(b,d)11,055,000
Uniphase 300,000(b) 12,018,750
Total 56,713,125
Energy - 0.6%
Anadarko Petroleum 230,600 14,873,700
Energy equipment & services - 0.4%
Tidewater 225,000 10,012,500
Financial services - 4.1%
Allmerica Financial 225,000 13,837,500
Apartment Investment
& Management 200,000 7,287,500
Associates First Capital Cl A300,000 24,000,000
Boston Properties 350,000 11,900,000
Glenborough Realty Trust 350,000 9,975,000
H&R Block 450,000 21,178,125
Providian Financial 235,700(b) 13,375,975
Vornado Realty Trust 186,000 7,893,375
Total 109,447,475
Food - 1.8%
American Italian Pasta Cl A 300,000(b) 8,981,250
Hormel Foods 250,000 9,281,250
JP Foodservice 425,000(b) 14,051,563
Suiza Foods 250,000(b) 16,203,125
Total 48,517,188
Foreign - 4.8%(g)
ACE 100,000 9,887,500
BioChem Pharma 550,000(b) 12,340,625
Check Point Software
Technologies 538,000(b) 20,746,625
Elan ADR 400,000(b,e)24,825,000
EXEL 225,000 14,892,188
Petroleum Geo-Services ADR 224,700(b) 12,751,725
Steiner Leisure 660,000(b,d)26,400,000
Tefron 230,000(b) 5,261,250
Total 127,104,913
Furniture & appliances - 2.0%
Chicago Miniature Lamp 170,000(b) 7,947,500
Ethan Allen Interiors 125,000 6,968,750
Leggett & Platt 500,000 25,093,749
Sunbeam 350,000 14,481,250
Total 54,491,249
Health care - 5.1%
Arterial Vascular Engineering225,000(b) 18,421,875
ChiRex 450,000(b) 6,918,750
Dura Pharmaceuticals 500,000(b) 12,562,500
ESC Medical Systems 250,000(b) 8,531,250
Guidant 450,000 32,821,875
Protein Design Labs 225,000(b) 9,675,000
Respironics 350,000(b) 9,493,750
Sofamor Danek Group 150,000(b) 11,287,500
Watson Pharmaceuticals 700,000(b) 25,112,500
Total 134,825,000
Health care services - 4.7%
HBO & Co 1,458,000 78,914,250
Health Management
Associates Cl A 900,000(b) 25,031,250
Health Management Systems 290,000(b) 3,135,625
Province Healthcare 75,000(b) 1,556,250
Shared Medical Systems 220,000 16,816,250
Total 125,453,625
Industrial equipment & services - 0.7%
JLG Inds 400,000 6,250,000
Terex 550,000(b) 13,131,250
Total 19,381,250
Insurance - 2.4%
Nationwide Financial
Services Cl A 450,000 19,800,000
Provident Cos 480,000 17,280,000
SunAmerica 400,000 18,125,000
UICI 300,000(b) 9,637,500
Total 64,842,500
Leisure time & entertainment - 1.2%
Carnival Cl A 240,000 14,130,000
Harley-Davidson 460,000 13,340,000
Royal Olympic Cruise Lines 250,000 3,750,000
Total 31,220,000
Media - 7.4%
CBS 900,000 27,843,750
Chancellor Media 900,000(b) 40,275,000
Clear Channel
Communications 206,000(b) 18,668,750
Gartner Group Cl A 300,000(b) 11,962,500
Outdoor Systems 1,350,000(b) 40,246,875
Sinclair Broadcast
Group Cl A 350,000(b) 19,796,875
Snyder Communications 550,000(b) 22,584,375
Univision Communications
Cl A 400,000(b) 15,350,000
Total 196,728,125
Metals - 0.5%
Reynolds Metals 200,000 12,462,500
Multi-industry conglomerates - 1.9%
AccuStaff 573,700(b) 16,207,025
Apollo Group Cl A 250,000(b) 10,593,750
ImageMAX 194,000(b) 1,600,500
NCO Group 388,750(b) 9,815,938
Robert Half Intl 300,000(b) 13,575,000
Total 51,792,213
Restaurants & lodging - 1.1%
CapStar Hotel 348,400(b) 11,758,500
Promus Hotel 338,367(b) 16,326,208
Total 28,084,708
Retail - 13.2%
Best Buy 239,500(b) 14,280,188
BJ's Wholesale Club 400,000(b) 13,550,000
CDW Computer Centers 85,000(b) 5,822,500
Costco Cos 400,000(b) 19,550,000
DM Management 90,000(b) 1,698,750
Dollar General 425,000 19,603,125
Family Dollar Stores 1,000,000 35,624,999
Food Lion Cl A 1,315,000 13,273,281
Kohl's 250,000(b) 20,046,875
Lowe's Cos 300,000 17,531,250
Meyer (Fred) 500,000(b) 22,218,750
Movado Group 202,000 4,343,000
Office Depot 900,000(b) 24,750,000
OfficeMax 800,000(b) 13,350,000
Pier 1 Imports 450,000 12,037,500
Reade (Duane) 43,300(b) 968,838
Rexall Sundown 825,000(b,e)30,525,000
Rite Aid 770,000 24,928,750
Safeway 550,000(b) 19,181,250
Stage Stores 440,000(b) 18,480,000
Stein Mart 332,500(b) 10,743,906
USA Floral Products 425,000(b) 10,146,875
Total 352,654,837
Textiles & apparel - 0.8%
Abercrombie & Fitch 440,000(b) 15,180,000
Ashworth 350,000(b) 4,878,125
Total 20,058,125
Utilities -- electric - 0.2%
Northeast Utilities 400,000(b) 5,000,000
Utilities -- telephone - 7.4%
American Communications
Services 300,000(b) 4,200,000
Cincinnati Bell 425,000 13,600,000
Frontier 400,000 11,075,000
Global TeleSystems Group 370,000(b,e)13,551,250
ICG Communications 500,000(b) 16,812,500
Intermedia Communications 225,000(b) 17,184,375
MetroNet Communications 325,000(b) 7,759,375
Mobile Telecommunication
Technologies 500,000(b) 11,250,000
Nextel Communications Cl A 575,000(b) 16,998,438
Orbital Sciences 200,000(b) 7,625,000
Premiere Technologies 500,000(b) 15,687,500
Primus Telecommunications
Group 40,000(b) $1,040,000
STARTEC Global
Communications 250,000(b) 6,203,125
Telephone & Data Systems 275,000 11,979,688
WinStar Communications 500,000(b) 21,031,249
WorldCom 550,000(b) 21,003,124
Total197,000,624
Total common stocks
(Cost: $1,834,101,375) $2,348,561,613
Preferred stock & other - 0.3%
Issuer Shares Value(a)
DocuCorp Intl
Rights 15,000(b) 58,125
EVI
5.00% 200,000(b) 9,250,000
Total preferred stock & other
(Cost: $9,150,050) $9,308,125
Bonds - 1.1%
Issuer Maturity Coupon Principal Value(a)
date rate amount
Altera
Cv Sr Sub Nts 06-15-02 5.75% $4,000,000 $6,820,000
Continucare
Cv Sr Sub Nts 10-31-02 8.00 4,000,000 3,510,000
Diamond Offshore Drilling
Cv Sr Sub Nts 09-15-07 3.13 12,400,000 12,136,500
Xilinx
Cv Sr Sub Nts 11-01-02 5.25 6,000,000 6,442,500
Total bonds
(Cost: $28,020,356) $28,909,000
Short-term securities - 11.6%
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies - 0.6%
Federal Home Loan Bank Disc Nt
03-18-98 5.41% $9,200,000 $9,175,206
Federal Natl Mtge Assn Disc Nts
03-18-98 5.43 500,000 498,648
03-18-98 5.44 6,400,000 6,382,656
Total 16,056,510
Certificate of deposit - 0.4%
US Bank Minneapolis
03-25-98 5.52 11,000,000 11,000,000
Commercial paper - 10.0%
Abbott Laboratories
03-25-98 5.52 12,000,000 11,954,166
American General Finance
03-11-98 5.53 10,000,000 9,983,194
Bell Atlantic
03-11-98 5.53 10,000,000 9,983,133
BellSouth Telecommunications
03-03-98 5.52 1,800,000 1,799,175
Beneficial
03-02-98 5.49 9,100,000 9,097,240
BOC Group
03-16-98 5.53 10,000,000(c) 9,975,556
Ciesco LP
03-25-98 5.53 10,800,000 10,758,675
Commercial Credit
04-16-98 5.53 10,000,000 9,928,325
Commerzbank U.S. Finance
03-25-98 5.51 10,000,000 9,961,875
Delaware Funding
03-17-98 5.52 9,000,000(c) 8,976,625
Emerson Electric
04-13-98 5.56 3,400,000 3,377,020
Fleet Funding
04-17-98 5.57 12,800,000(c)12,705,620
Gateway Fuel
03-10-98 5.50 10,000,000 9,984,806
General Electric
03-20-98 5.53 6,300,000 6,280,750
03-30-98 5.51 10,000,000 9,954,333
Heinz (HJ)
04-22-98 5.54 6,700,000 6,645,749
Household Finance
03-11-98 5.51 10,000,000 9,983,256
Kredietbank North America Finance
04-27-98 5.52 9,000,000 8,917,152
Merrill Lynch
03-16-98 5.52 10,000,000 9,975,644
Morgan Stanley, Dean Witter, Discover & Co
03-02-98 5.50 10,000,000 9,996,961
03-05-98 5.50 10,800,000 10,791,795
Natl Australia Funding (Delaware)
04-02-98 5.51 9,100,000 9,054,288
Novartis Finance
03-03-98 5.50 6,900,000(c) 6,896,849
Paccar Financial
03-27-98 5.54 7,000,000 6,971,020
Pfizer
03-09-98 5.53 2,400,000(c) 2,396,700
Reed Elsevier
03-27-98 5.51 2,800,000(c) 2,788,492
SBC Communications Capital
03-23-98 5.50 8,000,000(c) 7,971,991
04-23-98 5.53 10,000,000(c) 9,917,650
Toyota Motor Credit
03-20-98 5.57 10,000,000 9,969,111
USAA Capital
03-04-98 5.50 10,000,000 9,993,922
Xerox Credit
04-09-98 5.52 10,000,000 9,939,000
Total 266,930,073
Letters of credit - 0.6%
Bank of America-
AES Hawaii
03-06-98 5.52 4,100,000 4,096,242
Student Loan Marketing Assn-
Nebraska Higher Education
03-31-98 5.54 10,100,000 10,051,991
Total 14,148,233
Total short-term securities
(Cost: $308,138,277) $308,134,816
Total investments in securities
(Cost $2,179,410,058)(g) $2,694,913,554
See accompanying notes to investments in securities.
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(d) Investments representing 5% or more of the outstanding voting securities of
the issuer. Transactions with companies that are or were affiliates during the
period ended Feb. 28, 1998 are as follows:
<PAGE>
<TABLE>
<CAPTION>
Issuer Beginning Purchases Sales Ending Dividend Value(a)
cost cost cost cost income
<S> <C> <C> <C> <C> <C> <C>
Dave & Buster's* $11,941,176 $ -- $11,941,176 $ -- $-- $ --
Steiner Leisure 7,506,250 -- 325,000 7,181,250 -- 26,400,000
Transcrypt Intl* 2,595,010 7,695,000 -- 10,290,010 -- 11,055,000
Total $22,042,436 $7,695,000 $12,266,176 $17,471,260 $-- $37,455,000
*Issuer was not an affiliate for the entire period.
(e) Security is partially or fully on loan. See Note 5 to the financial
statements.
(f) Foreign security values are stated in U.S. dollars.
(g) At Feb. 28, 1998, the cost of securities for federal income tax purposes was
approximately $2,179,410,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation ...................................... $545,915,000
Unrealized depreciation..........................................(30,411,000)
Net unrealized appreciation.....................................$515,504,000
</TABLE>
<PAGE>
Investments in securities
Retirement Annuity Mutual Funds
Global Yield Fund
Feb. 28, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Bonds - 93.3%(b)
Issuer Coupon Principal Value(a)
rate amount
Argentina - 3.4%
Argentina Republic
(Japenese Yen)
03-27-01 5.50% $110,000,000 $887,933
(U.S. Dollar)
03-31-05 6.69 1,440,000 1,308,960
01-30-17 11.375 1,000,000 1,135,630
Comp Nav Perez Companc
(U.S. Dollar)
01-30-04 9.00 1,000,000(d) 1,045,000
Province of Mendoza
(U.S. Dollar)
09-04-07 10.00 1,000,000(d) 970,000
Total 5,347,523
Brazil - 1.5%
Espirito Santo Centrais
(U.S. Dollar) Sr Nts
07-15-07 10.00 1,000,000(d) 932,500
Republic of Brazil
(U.S. Dollar)
05-15-27 10.125 1,500,000(f) 1,438,125
Total 2,370,625
Canada - 3.2%
Govt of Canada
(Canadian Dollar)
06-01-23 8.00 4,200,000 3,802,226
Rogers Communication
(Canadian Dollar) Sr Nts
07-24-07 8.75 2,000,000 1,346,701
Total 5,148,927
Denmark - 3.2%
Govt of Denmark
(Danish Krone)
05-15-03 8.00 7,700,000 1,274,540
03-15-06 8.00 7,500,000 1,286,105
11-10-24 7.00 15,000,000 2,541,417
Total 5,102,062
France - 0.3%
Govt of France
(European Currency Unit)
04-25-05 7.50 400,000 503,784
Germany - 7.9%
Federal Republic of Germany
(Deutsche Mark)
11-11-04 7.50 3,430,000 2,186,135
06-20-16 6.00 8,300,000 4,953,723
07-04-27 6.50 8,300,000 5,236,140
Total 12,375,998
Hong Kong - 1.6%
Dao Heng Bank
(U.S. Dollar) Sub Nts
01-24-07 7.75 1,000,000(d) 825,800
Hutchison Whampo Finance
(U.S. Dollar) Company Guaranty
08-01-27 7.50 2,000,000(d) 1,750,960
Total 2,576,760
Indonesia - 0.6%
Tjiwi Kimia
(U.S. Dollar)
08-01-04 10.00 1,300,000(d) 1,001,000
Israel - 0.7%
Israel Electric
(U.S. Dollar)
12-15-26 7.875 1,000,000(d) 1,037,530
Italy - 4.4%
Govt of Italy
(Italian Lira)
09-15-01 7.75 2,450,000,000 1,498,714
01-01-04 8.50 5,340,000,000 3,493,375
11-01-26 7.25 3,050,000,000 2,049,356
Total 7,041,445
Japan - 0.9%
Sony Global
(U.S. Dollar)
03-04-03 6.125 1,500,000 1,499,670
Malaysia - 1.2%
Petronas
(U.S. Dollar)
08-15-15 7.75 2,000,000 1,878,440
Mexico - 2.6%
Banco Nacional de Comercio Exterior
(U.S. Dollar)
02-02-04 7.25 2,000,000(g) 1,902,500
United Mexican States
(Japenese Yen)
08-17-98 5.00 30,000,000 240,879
(U.S. Dollar)
09-15-16 11.375 550,000 653,469
05-15-26 11.50 1,050,000(f,g)1,284,281
Total 4,081,129
Norway - 2.2%
Govt of Norway
(Norwegian Krone)
01-31-99 9.00 25,000,000 3,432,646
Panama - 0.6%
Banco General
(U.S. Dollar)
08-01-02 7.70 1,000,000(d) 992,890
Peru - 0.6%
Southern Peru Copper
(U.S. Dollar)
05-30-07 7.90 1,000,000 1,025,460
Philippines - 0.7%
Philippine Long Distance Telephone
(U.S. Dollar)
03-06-07 7.85 1,200,000(d) 1,081,980
Russia - 1.0%
Ministry Finance Russia
(U.S. Dollar)
11-27-01 9.25 1,000,000(d) 965,000
Tatneft Finance
(U.S. Dollar) Company Guaranty
10-29-02 9.00 800,000(d) 694,000
Total 1,659,000
Slovenia - 1.9%
Republic of Slovenia
(Deutsche Mark)
06-16-04 5.75 5,500,000 3,083,740
South Africa - 1.2%
Escom
(South Africa Rand)
09-01-01 8.00 11,200,000 1,934,977
South Korea - 0.9%
Korea Development Bank
(U.S. Dollar)
05-15-06 7.25 1,500,000 1,381,500
Spain - 1.7%
Govt of Spain
(Spanish Peseta)
04-30-99 9.40 200,000,000 1,370,966
04-30-06 8.80 170,000,000 1,337,798
Total 2,708,764
Sweden - 3.4%
Govt of Sweden
(Swedish Krona)
02-09-05 6.00 15,000,000 1,952,804
08-15-07 8.00 16,600,000 2,457,569
Paulson Enteprenad
(Swedish Krona)
12-15-00 8.29 9,000,000 1,043,064
Total 5,453,437
United Kingdom - 9.2%
United Kingdom Treasury
(British Pound)
03-03-00 9.00 2,000,000 3,424,302
06-07-02 7.00 1,000,000 1,687,457
06-10-03 8.00 2,100,000 3,721,922
12-07-05 8.50 1,500,000 2,815,943
09-08-06 7.75 1,500,000 2,715,622
Total 14,365,246
United States - 36.7%
EES Coke Battery
(U.S. Dollar) Sr Nts
04-15-02 7.125 1,413,750(d) 1,427,704
Federal Natl Mtge Assn
(U.S. Dollar)
02-01-27 7.50 914,782 940,396
03-01-27 7.50 1,887,628 1,940,482
06-01-27 7.50 1,873,680 1,926,143
Federated Dept Stores
(U.S. Dollar)
02-15-28 7.00 1,500,000 1,485,060
First Union-
Lehman Brothers Commercial Mtge Trust
(U.S. Dollar) Series 1997-C1
04-18-29 7.50 1,150,000 1,187,016
Firstar Capital
(U.S. Dollar) Company Guaranty Series B
12-15-26 8.32 1,000,000 1,080,990
Ford Motor Credit Global
(U.S. Dollar)
09-10-02 6.55 3,000,000 3,045,450
GTE North
(U.S. Dollar)
02-15-10 6.375 2,000,000 1,994,120
MGM Grand
(U.S. Dollar)
02-01-05 6.95 1,500,000 1,476,525
Morgan (JP)
(U.S. Dollar) Sr Sub Nts Series A
02-15-12 4.00 1,000,000(e) 929,200
Nationwide CSN Trust
(U.S. Dollar)
02-15-25 9.875% $1,500,000(d)$1,801,290
New York Life Insurance
(U.S. Dollar)
12-15-23 7.50 1,000,000(d) 1,043,200
Pacific Gas & Electric
(U.S. Dollar)
06-25-03 6.16 1,050,000 1,055,906
Railcar Leasing
(U.S. Dollar)
01-15-13 7.125 3,000,000(d) 3,158,670
Texas Utilities Electric
(U.S. Dollar)
08-01-07 7.17 2,000,000 2,088,740
TU Electric Capital
(U.S. Dollar) Company Guaranty
01-30-37 8.175 1,000,000(e) 1,053,450
U.S. Treasury
(U.S. Dollar)
02-15-00 5.875 4,500,000 4,524,885
11-15-01 7.50 1,650,000 1,752,762
02-15-05 7.50 5,600,000 6,175,120
11-15-16 7.50 11,975,000 13,991,111
(U.S. Dollar) TIPS
01-15-07 3.375 3,000,000(f) 2,981,488
Zurich Capital
(U.S. Dollar) Company Guaranty
06-01-37 8.38 1,000,000(d) 1,101,870
Total 58,161,578
Venezuela - 1.7%
Govt of Venezuela
(U.S. Dollar) Series A
03-31-07 6.75 904,762(e) 810,893
(U.S. Dollar) Series B
03-31-07 6.75 452,381(e) 405,446
(U.S. Dollar) Series DM
03-31-07 2.42 2,980,000(e) 1,419,255
Total 2,635,594
Total bonds
(Cost: $144,827,351) $147,881,705
Short-term securities - 9.4%
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies - 6.8%
Federal Home Loan Mtge Corp Disc Nts
03-12-98 5.43% $4,400,000 $4,392,065
03-20-98 5.44 2,900,000 2,891,252
03-24-98 5.43 600,000 597,840
Federal Natl Mtge Assn Disc Nt
03-18-98 5.44 2,900,000 2,892,141
Total 10,773,298
Commercial paper - 2.6%
Reed Elsevier
03-11-98 5.50 1,100,000(c) 1,098,158
UBS Finance (Delaware)
03-02-98 5.68 3,100,000 3,099,022
Total 7,881,157
Total short-term securities
(Cost: $14,970,478) $14,970,478
Total investments in securities
(Cost $159,797,829)(h) $162,852,183
See accompanying notes to investments in securities.
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Foreign securities values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(c) Commercial paper sold within terms of a private placement memorandum, exempt
under Section 4(2) of the Securities Act of 1933, as amended, and may be sold
only to dealers in that program or other "accredited investors." This security
has been determined to be liquid under guidelines established by the board.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(e) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Feb. 28, 1998.
(f) U.S. Treasury inflation-protection securities (TIPS) are securities in which
the principal amount is adjusted for inflation and the semi-annual interest
payments equal a fixed percentage of the inflation-adjusted principal amount.
(g) Security is partially or fully on loan. See Note 5 to the financial
statements.
(h) At Feb. 28, 1998, the cost of securities for federal income tax purposes was
approximately $159,700,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation......................................$5,255,000
Unrealized depreciation......................................(2,103,000)
Net unrealized appreciation..................................$3,152,000
<PAGE>
Retirement Annuity Mutual Funds
Growth Dimensions Fund
Feb. 28, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Common stocks - 92.4%
Issuer Shares Value(a)
Aerospace & defense - 1.6%
Boeing 158,900 $8,620,325
United Technologies 239,200 21,363,550
Total 29,983,875
Airlines - 2.1%
AMR 239,200(b) 30,273,750
Southwest Airlines 311,000 8,921,813
Total 39,195,563
Banks and savings & loans - 7.2%
BankAmerica 167,450 12,977,375
Citicorp 239,400 31,720,499
Norwest 1,315,800 53,865,562
State Street 478,700 29,589,644
Wachovia 119,500 9,500,250
Total 137,653,330
Beverages & tobacco - 1.3%
Coca-Cola 299,100 20,544,431
Fortune Brands 119,800 4,754,563
Total 25,298,994
Building materials & construction - 1.3%
Tyco Intl 478,472 24,282,454
Chemicals - 2.1%
Air Products & Chemicals 110,100 9,241,519
Monsanto 211,900 10,780,413
USA Waste Services 478,400(b) 19,913,399
Total 39,935,331
Communications equipment & services - 3.1%
ADC Telecommunications 254,100(b) 6,558,956
Lucent Technologies 157,200 17,036,550
Motorola 61,200 3,411,900
Northern Telecom 309,800 16,516,213
Tellabs 263,000(b) 15,878,625
Total 59,402,244
Computers & office equipment - 11.2%
Automatic Data Processing 77,700 4,744,556
BMC Software 155,613(b) 11,904,395
Cisco Systems 657,800(b) 43,332,575
Compaq Computer 1,196,100(f) 38,349,956
Computer Associates Intl 243,850 11,491,431
Hewlett-Packard 393,600 26,371,200
Intl Business Machines 239,200 24,981,450
Microsoft 406,600(b) 34,459,350
PeopleSoft 119,500(b) 5,340,156
Xerox 119,500 10,598,156
Total 211,573,225
Electronics - 3.0%
AMP 111,200 4,913,650
Applied Materials 119,800(b) 4,410,138
Intel 454,600 40,771,937
Texas Instruments 119,400 6,910,275
Total 57,006,000
Energy - 1.8%
Exxon 275,200 17,578,400
Mobil 239,200 17,327,050
Total 34,905,450
Energy equipment & services - 0.6%
Baker Hughes 276,900 11,335,594
Financial services - 5.9%
Associates First Capital Cl A119,500 9,560,000
Fannie Mae 191,300 12,207,331
MBNA 598,000 21,415,875
Morgan Stanley, Dean Witter,
Discover & Co 358,990 25,017,116
Paychex 95,700 4,940,513
Travelers Group 717,900 40,022,924
Total 113,163,759
Food - 1.1%
ConAgra 557,400 16,722,000
General Mills 60,000 4,316,250
Total 21,038,250
Foreign - 6.1%(e)
ACE 287,000 28,377,125
Elan ADR 179,300(b,f)11,127,806
Royal Dutch Petroleum 478,500 25,988,531
Schlumberger 274,300 20,675,363
SmithKline Beecham ADR 496,000 30,690,000
Total 116,858,825
Health care - 9.0%
Bristol-Myers Squibb 251,100 25,157,081
Genentech 3,400(b) 229,713
Johnson & Johnson 358,600 27,074,300
Medtronic 367,600 19,528,750
Merck & Co 239,100 30,500,194
Pfizer 621,900 55,038,149
Schering-Plough 143,700 10,930,181
Total 168,458,368
Health care services - 3.3%
Cardinal Health 203,400 16,653,375
HBO & Co 334,900 18,126,462
HEALTHSOUTH
Rehabilitation 322,800(b) 8,715,600
Service Corp Intl 239,200 9,059,700
United Healthcare 167,400 10,159,088
Total 62,714,225
Household products - 2.3%
Gillette 215,400 23,236,275
Procter & Gamble 239,300 20,325,544
Total 43,561,819
Industrial equipment & services - 2.6%
Deere & Co 705,500 39,596,188
Illinois Tool Works 179,600 10,764,775
Total 50,360,963
Insurance - 2.1%
Allstate 107,600 10,033,700
American Intl Group 179,475 21,570,652
UNUM 179,500 9,233,031
Total 40,837,383
Leisure time & entertainment - 1.7%
Marriott Intl 358,900 27,186,675
Mirage Resorts 219,833(b) 5,028,680
Total 32,215,355
Media - 2.8%
CBS 550,240 17,023,050
Clear Channel
Communications 99,400(b) 9,008,125
Gannett 323,186 20,865,696
Univision Communications
Cl A 174,000(b) 6,677,250
Total 53,574,121
Metals - 0.5%
Aluminum Co of America 128,700 9,443,363
Multi-industry conglomerates - 6.3%
AccuStaff 322,700(b) 9,116,275
Emerson Electric 442,500 28,237,031
General Electric 909,000 70,674,750
Minnesota Mining & Mfg 138,800 11,841,375
Total 119,869,431
Restaurants & lodging - 0.5%
Promus Hotel 203,400(b) 9,814,050
Retail - 6.0%
Cendant 490,383(b) 18,389,363
CVS 215,200 15,938,250
Dayton Hudson 191,400 14,797,613
Kroger 143,700(b) 6,071,325
Safeway 957,200(b) 33,382,349
Wal-Mart Stores 550,200 25,481,138
Total 114,060,038
Transportation - 0.4%
CNF Transportation 179,200 7,011,200
Utilities -- electric - 0.8%
CMS Energy 358,900 15,881,325
Utilities -- gas - 0.9%
El Paso Natural Gas 263,000 17,456,625
Utilities -- telephone - 4.8%
AirTouch Communications 239,000(b) 10,740,063
Ameritech 119,700 4,989,994
AT&T 167,600 10,202,650
BellSouth 550,400 33,574,399
Cincinnati Bell 239,000 7,648,000
U S WEST Communications
Group 255,500 13,301,969
WorldCom 263,300(b) 10,054,769
Total 90,511,844
Total common stocks
(Cost: $1,394,930,752) $1,757,403,004
Short-term securities - 8.0%
Issuer Annualized Amount Value(a)
yield on payable at
date of maturity
purchase
U.S. government agencies - 0.7%
Federal Home Loan Bank Disc Nt
03-18-98 5.41% $3,600,000 $3,590,298
Federal Home Loan Mtge Corp Disc Nt
03-12-98 5.43 10,000,000 9,981,983
Total 13,572,281
Commercial paper - 6.20%
AIG Funding
03-02-98 5.51 6,500,000 6,498,010
Bell Atlantic
03-11-98 5.53 10,000,000 9,983,133
03-17-98 5.51 2,500,000 2,493,531
BellSouth Capital Funding
03-16-98 5.51 10,100,000 10,075,311
Ciesco LP
03-17-98 5.50 2,700,000 2,693,026
Commerzbank U.S. Finance
03-13-98 5.50 3,000,000 2,994,063
Consolidated Natural Gas
03-03-98 5.54 8,100,000 8,096,267
Delaware Funding
03-25-98 5.52 2,900,000(c) 2,888,944
Fleet Funding
03-05-98 5.52 5,200,000(c) 5,196,028
Gateway Fuel
04-28-98 5.55 3,100,000 3,071,591
Kredietbank North America Finance
04-27-98 5.52 6,800,000 6,737,404
Natl Australia Funding
04-02-98 5.51 8,000,000 7,959,813
Natl Rural Utilities Cooperative
03-06-98 5.53 6,000,000 5,994,500
Paccar Financial
03-12-98 5.50 4,000,000 3,992,693
Pacific Life Insurance
03-06-98 5.51 4,000,000 3,996,340
03-10-98 5.51 8,200,000 8,187,495
Reed Elsevier
03-06-98 5.53 2,200,000(c) 2,197,983
Toyota Motor Credit
03-26-98 5.55 9,600,000 9,561,659
UBS Finance (Delaware)
03-09-98 5.50 7,000,000 6,990,410
Xerox Credit
03-19-98 5.50 7,600,000 7,578,019
Total 117,186,220
Letters of credit - 1.1%
Student Loan Marketing Assn-
Nebraska Higher Education
03-13-98 5.52 4,500,000 4,491,062
03-31-98 5.54 17,100,000 17,018,719
Total 21,509,781
Total short-term securities
(Cost: $152,271,362) $152,268,282
Total investments in securities
(Cost $1,547,202,115)(g) $1,909,671,286
See accompanying notes to investments in securities.
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing.
(c) Commercial paper sold within terms of a private placement memorandum, exempt
under Section 4(2) of the Securities Act of 1933, as amended, and may be sold
only to dealers in that program or other "accredited investors." This security
has been determined to be liquid under guidelines established by the board.
(d) Security is partially or fully on loan. See Note 5 to the financial
statements.
(e) Foreign security values are stated in U.S. dollars.
(f) At Feb. 28, 1998, securities valued at $7,374,375 were held to cover open
call options written as follows:
Issuer Shares Exercise Expiration Value
price date
Compaq Computer 1,196,100 $35 April 1998 $251,562
(g) At Feb. 28, 1998, the cost of securities for federal income tax purposes was
approximately $1,547,202,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation.......................................$371,750,000
Unrealized depreciation.........................................(9,281,000)
Net unrealized appreciation...................................$362,469,000
<PAGE>
<TABLE>
<CAPTION>
Retirement Annuity Mutual Funds
Income Advantage Fund
Feb. 28, 1998 (Unaudited)
(Percentages represent
value of investments
compared to net assets)
Bonds - 84.1%
Issuer Maturity Coupon Principal Value(a)
date rate amount
Aerospace & defense - 1.0%
K&F Inds
<S> <C> <C> <C> <C>
Sr Sub Nts 10-15-07 9.25% $500,000(d) $530,000
L-3 Communications
Sr Sub Nts Series B 05-01-07 10.375 1,560,000 1,719,900
Sequa 10-15-99 9.625 2,500,000 2,581,250
Total 4,831,150
Automotive & related - 0.8%
Hayes Lemmerz Intl
Company Guaranty Series B 07-15-07 9.125 1,000,000 1,062,500
Oxford Automotive
Company Guaranty 06-15-07 10.125 2,000,000 2,140,000
Walbro
Sr Nts 12-15-07 10.125 750,000 765,000
Total 3,967,500
Banks and savings & loans - 1.1%
First Nationwide Holdings
Sr Sub Nts 10-01-03 10.625 2,930,000 3,281,600
Wilshire Financial Services
Nts 01-01-04 13.00 1,500,000 1,597,500
08-15-04 13.00 450,000(d) 479,250
Total 5,358,350
Chemicals - 0.7%
Freedom Chemicals
Sr Sub Nts 10-15-06 10.625 900,000 1,057,500
ISP Holdings
Sr Nts Series B 02-15-02 9.75 2,000,000 2,145,000
Total 3,202,500
Communications equipment & services - 7.9%
21st Century Telecom Group
Zero Coupon Sr Disc Nts 02-15-03 12.25 1,500,000(f) 804,375
Comcast Cellular Holdings
Sr Nts Series B 05-01-07 9.50 5,000,000 5,275,000
EchoStar DBS
Company Guaranty 07-01-02 12.50 2,000,000 2,230,000
Facilicom Intl
Sr Nts 01-15-08 10.50 500,000 511,250
Focal Communications
Zero Coupon Sr Disc Nts 02-15-08 5.97 1,150,000(e) 628,188
Globalstar LP/Capital
Sr Nts 02-15-04 11.375 1,500,000 1,552,500
06-15-04 11.25 1,250,000 1,290,625
GST Equipment Funding
Sr Nts 05-01-07 13.25 750,000 888,750
GST Telecommunications
Sr Sub Nts 11-15-07 12.75 750,000 896,250
IMPSAT
Company Guaranty 07-15-03 12.125 1,000,000 1,063,750
Intl Wireless Communications
Zero Coupon Sr Disc Nts 08-15-01 13.43 1,500,000(e) 596,250
Iridium LLC/Capital
Company Guaranty Series A 07-15-05 13.00 2,200,000 2,403,500
Sr Nts 07-15-05 11.25 300,000(d) 307,500
Jordan Telecommunications Products
Sr Nts Series B 08-01-07 9.875 800,000 848,000
Zero Coupon Sr Disc Nts Series B 08-01-00 9.72 1,250,000(f) 1,059,375
Mastec
Sr Sub Nts 02-01-08 7.75 500,000 506,250
Nextel Communications
Zero Coupon Sr Disc Nts 01-15-99 8.67 2,500,000(f) 2,425,000
02-15-99 11.84 500,000(f) 478,750
NEXTLINK Communications
Sr Nts 04-15-06 12.50 1,000,000 1,152,500
NTL
Sr Nts Series B 02-15-07 10.00 2,000,000 2,170,000
Zero Coupon Sr Nts Series B 02-01-01 9.30 4,000,000(f) 3,210,000
PhoneTel Technologies
Sr Nts 12-15-06 12.00 2,130,000 2,241,825
Price Communications Cellular Holdings
Zero Coupon Sr Disc Nts 08-01-02 13.50 1,300,000(d,f) 864,500
RCN
Zero Coupon Sr Disc Nts 02-15-08 4.85 1,200,000(d,e) 736,500
Unifi Communications
Sr Nts 03-01-04 14.00 1,000,000 650,000
Unisite
Zero Coupon Sub Nts 12-15-00 0.00 1,000,000(d,f) 1,000,000
Vialog
Company Guaranty 11-15-01 12.75 2,075,000(d) 2,116,500
Total 37,907,138
Computers & office equipment - 1.8%
Anacomp
Sr Sub Nts Series B 04-01-04 10.875 2,000,000 2,112,500
Cooperative Computing
Sr Sub Nts 02-01-08 9.00 2,250,000(d) 2,221,875
Decisionone Holdings
Zero Coupon 08-01-08 4.18 2,000,000(e) 1,220,000
Unisys
Sr Nts 10-15-04 11.75 2,525,000 2,941,625
Total 8,496,000
Consumer finance -- personal loans - 0.7%
Crown Paper
Sr Sub Nts 09-01-05 11.00 3,250,000 3,428,750
Energy - 2.9%
Belco Oil & Gas
Sr Sub Nts Series B 09-15-07 8.875 600,000 611,250
Clark R&M
Sr Sub Nts 11-15-07 8.875 1,500,000(d) 1,530,000
Costilla Energy
Sr Nts 10-01-06 10.25 3,000,000 3,090,000
Energy Corp of America
Sr Sub Nts Series A 05-15-07 9.50 1,000,000 1,007,500
Forcenergy
Sr Sub Nts 11-01-06 9.50 500,000 531,250
Sr Sub Nts Series B 02-15-07 8.50 1,500,000 1,528,125
HarCor Energy
Sr Secured Nts Series B 07-15-02 14.875 500,000 600,000
Houston Exploration
Sr Sub Nts 01-01-08 8.625 1,500,000(d) 1,488,750
HS Resources
Sr Sub Nts 12-01-03 9.875 1,400,000 1,454,250
Rayovac
Sr Sub Nts Series B 11-01-06 10.25 1,137,000 1,253,543
Transamerican Energy 06-15-02 11.50 600,000 606,000
Total 13,700,668
Energy equipment & services - 0.7%
Dailey Intl
Sr Nts 02-15-08 9.50 1,000,000 1,015,000
DI Inds
Sr Nts 07-01-07 8.875 500,000 526,250
Plains Resources
Company Guaranty Series D 03-15-06 10.25 1,000,000 1,082,500
Pride Intl
Sr Nts 05-01-07 9.375 750,000 810,000
Total 3,433,750
Financial services - 0.6%
Arcadia Financial
Sr Nts 03-15-07 11.50 1,380,000 1,373,100
Gemini 12-23-01 13.50 1,500,000(d,i,j) 1,500,000
Total 2,873,100
Food - 3.0%
Ameriserve Food
Company Guaranty 07-15-07 10.13 800,000 864,000
Aurora Foods
Sr Sub Nts Series B 02-15-07 9.875 400,000 429,000
Sr Sub Nts Series D 02-15-07 9.875 2,000,000 2,145,000
CFP Holdings
Sr Nts Series B 01-15-04 11.625 1,250,000(d) 1,237,500
Chiquita Brands Intl
Sr Nts 01-15-04 9.625 1,000,000 1,063,750
Gorges/Quik to Fix Food
Sr Sub Nts Series B 12-01-06 11.50 2,250,000 2,385,000
Specialty Foods
Sr Nts Series B 08-15-01 10.25 1,100,000 1,106,875
Stroh Brewery
Sr Sub Nts 07-01-06 11.10 3,261,000 2,934,900
Twin Laboratories
Sr Sub Nts 05-15-06 10.25 2,150,000 2,354,250
Total 14,520,275
Foreign - 15.0%(c)
Australis Holdings
(U.S. Dollar) Zero Coupon Sr Disc Nts11-01-00 13.55 2,260,000(f) 1,130,000
Australis Media
(U.S. Dollar) 11-01-00 14.00 616,647 431,064
(U.S. Dollar) Zero Coupon 05-15-00 12.26 4,536,000(f) 1,360,800
05-15-03 8.65 11,162(e) 3,320
Autopistas Del Sol
(U.S. Dollar) Sr Nts 08-01-09 10.25 1,500,000(d) 1,458,750
Call-Net Enterprises
(U.S. Dollar) Zero Coupon Sr Disc Nts08-15-02 9.27 500,000(f) 353,125
Canadian Forest Oil
(U.S. Dollar) Company Guaranty 09-15-07 8.75 1,000,000 1,017,500
CEI Citicorp Holdings
(Argentine Peso) 02-14-07 11.25 500,000(d) 450,000
Centaur Mining & Exploration
(U.S. Dollar) Company Guaranty 12-01-07 11.00 1,000,000(d) 1,017,500
City of Moscow
(Russian Ruble) Zero Coupon 07-01-98 22.80 1,115,315(e) 1,037,689
(U.S. Dollar) 05-31-00 9.50 1,000,000(d) 963,750
COLT Telecommunications Group
(U.S. Dollar) Zero Coupon 12-15-01 5.72 1,000,000(f) 880,000
Daya Guna
(U.S. Dollar) Company Guaranty 06-01-07 10.00 1,250,000(d) 1,037,500
Doman Inds
(U.S. Dollar) 03-15-04 8.75 1,000,000 982,500
(U.S. Dollar) Sr Nts 11-15-07 9.25 350,000(d) 346,500
Espirito Santo Centrais
(U.S. Dollar) Sr Nts 07-15-07 10.00 900,000(d) 839,250
Esprit Telecom Group
(U.S. Dollar) Sr Nts 12-15-07 11.50 1,250,000 1,365,625
Fresh Del Monte Produce
(U.S. Dollar) Sr Nts Series B 05-01-03 10.00 3,100,000 3,270,499
Govt of Russia
(U.S. Dollar) 07-28-00 10.375 500,000 430,000
Greater Beijing
(U.S. Dollar) Sr Nts 06-15-04 9.25 350,000(d) 282,125
06-15-07 9.50 500,000(d) 399,410
Grupo Industrial Durango
(U.S. Dollar) 08-01-03 12.625 1,000,000 1,140,000
Grupo Iusacell
(U.S. Dollar) 07-15-04 10.00 600,000 625,500
Grupo Televisa
(U.S. Dollar) Sr Nts 05-15-06 11.875 2,250,000 2,598,750
Guangdong Enterprises
(U.S. Dollar) Sr Nts 05-22-07 8.875 400,000(d) 326,576
Gulf Canada Resources
(U.S. Dollar) Sr Sub Debs 01-15-04 9.25 1,500,000 1,575,000
Hurricane Hydrocarbons
(U.S. Dollar) Sr Nts 11-01-04 11.75 2,250,000(d) 2,210,625
Hutchison Whampo Finance
(U.S. Dollar) Company Guaranty 08-01-17 7.45 250,000(d) 224,920
Hyundai Semiconductor
(U.S. Dollar) Sr Nts 05-15-07 8.625 1,500,000(d) 1,179,435
Imexsa Export Trust
(U.S. Dollar) 05-31-03 10.125 1,000,000(d) 1,045,000
Ionica
(U.S. Dollar) Sr Nts 08-15-06 13.50 1,000,000 820,000
MDC Communications
(U.S. Dollar) Sr Sub Nts 12-01-06 10.50 1,750,000 1,890,000
MetroNet Communications
(U.S. Dollar) Sr Nts 08-15-07 12.00 750,000 871,875
(U.S. Dollar) Zero Coupon Sr Disc Nts11-01-02 10.74 1,300,000(d,f) 856,375
Mexican Cetes
(Mexican Peso) Zero Coupon06-04-98 9.258,520,800(e)1,007,585
Microcell Telecommunications
(U.S. Dollar) Zero Coupon Sr Disc Nts10-15-02 17.90 1,210,000(d,f) 510,138
(U.S. Dollar) Zero Coupon Sr Disc Nts
Series B 06-01-06 5.15 1,000,000(e) 703,750
Netia Holdings
(U.S. Dollar) Company Guaranty 11-01-07 10.25 1,725,000(d) 1,748,719
Newsquest Capital
(U.S. Dollar) Sr Sub Nts Series B 05-01-06 11.00 900,000 1,012,500
Panda Global Energy
(U.S. Dollar) Company Guaranty 04-15-04 12.50 2,745,000(d) 2,556,281
Philippine Long Distance Telephone
(U.S. Dollar) 03-06-07 7.85 750,000(d) 676,238
(U.S. Dollar) Medium-term Nt Series E03-06-17 8.35 750,000(d) 665,505
PLD Telekom
(U.S. Dollar) Zero Coupon 06-01-01 3.85 100,000(f) 100,000
Plitt Theatres
(U.S. Dollar) Sr Sub Nts 06-15-04 10.875 2,250,000 2,463,750
Poland Telecom Finance
(U.S. Dollar) 12-01-07 14.00 222,500(d) 2,380,750
Polysindo Intl Finance
(U.S. Dollar) Company Guaranty 06-15-06 11.375 1,495,000 822,250
07-30-07 9.375 700,000 385,000
Repap New Brunswick
(U.S. Dollar) Sr Nts 07-15-00 9.875 1,200,000 1,227,000
04-15-05 10.625 3,250,000 3,201,249
Republic of Argentina
(Argentine Peso) 07-10-02 8.75 1,000,000(d) 915,000
Rogers Cablesystems
(U.S. Dollar) Sr Secured Nts 08-01-02 9.625 1,000,000 1,085,000
RSL Communications
(U.S. Dollar) Company Guaranty 11-15-06 12.25 1,750,000 1,995,000
Satelites Mexicanos
(U.S. Dollar) Sr Nts 11-01-04 10.125 2,000,000(d) 2,076,280
Stone Container
(U.S. Dollar) Sr Nts 08-01-16 12.58 2,000,000 2,175,000
Stone Container Finance-Canada
(U.S. Dollar) Company Guaranty 08-15-06 11.50 1,500,000(d) 1,580,625
Telewest Communication
(U.S. Dollar) Debs 10-01-06 9.625 1,500,000 1,612,500
Tjiwi Kimia
(U.S. Dollar) 08-01-04 10.00 3,000,000(d) 2,310,000
Tri Polyta Finance BV
(U.S. Dollar) Company Guaranty 12-01-03 11.375 1,000,000 580,000
United Mexican States
(U.S. Dollar) 05-15-26 11.50 500,000 611,563
Veninfotel
(U.S. Dollar) Cv Pay-in-kind 03-01-02 10.00 1,000,000(d,h,j) 1,500,000
Veritas Holdings
(U.S. Dollar) Sr Nts 12-15-03 9.625 1,591,000 1,708,336
Total 72,030,982
Furniture & appliances - 0.2%
Lifestyle Furnishings
Company Guaranty 08-01-06 10.875 1,000,000 1,122,500
Health care services - 2.9%
La Petite Holdings
Sr Nts 08-01-01 9.625 1,100,000 1,149,500
Magellan Health Services
Sr Sub Nts 02-15-08 9.00 1,500,000(d) 1,522,500
Paracelsus Healthcare
Sr Sub Nts 08-15-06 10.00 3,250,000 3,404,375
Tenet Healthcare
Sr Nts 01-15-05 8.00 1,500,000 1,544,295
Sr Sub Nts 03-01-05 10.125 3,250,000 3,575,000
Vencor
Sr Sub Nts 07-15-07 8.625 2,250,000 2,497,500
Total 13,693,170
Household products - 0.3%
Revlon Worldwide
Zero Coupon Sr Disc Nts Series B 03-15-01 10.59 2,000,000(e) 1,480,000
Industrial equipment & services - 1.9%
Borg-Warner Security 03-15-07 9.625 1,900,000 1,973,625
Clark Materials Handling
Company Guaranty 11-15-06 10.75 1,500,000 1,620,000
Motors & Gears
Sr Nts 11-15-06 10.75 500,000 546,250
Sr Nts Series B 11-15-06 10.75 2,250,000 2,458,125
Specialty Equipment
Sr Sub Nts 12-01-03 11.375 2,500,000 2,693,750
Total 9,291,750
Insurance - 0.3%
Americo Life
Sr Sub Nts 06-01-05 9.25 1,500,000 1,541,250
Leisure time & entertainment - 5.9%
Affinity Group Holding
Sr Nts 04-01-07 11.00 1,000,000 1,080,000
AMC Entertainment
Sr Sub Nts 03-15-09 9.50 2,500,000 2,624,999
CLN Holdings
Zero Coupon Company Guaranty 05-15-01 11.05 3,750,000(e) 2,732,812
Zero Coupon Sr Disc Nts 05-15-01 12.87 500,000(e) 340,000
Coast Hotels & Casino
Company Guaranty Series B 12-15-02 13.00 1,900,000 2,189,750
Hammons (JQ) Hotels
1st Mtge 02-15-04 8.875 1,500,000 1,541,250
HMH Properties 07-15-07 8.875 700,000 744,625
Hollywood Theaters
Sr Sub Nts 08-01-07 10.625 600,000(d) 654,000
Icon Fitness
Zero Coupon Sr Disc Nts Series B 11-15-01 14.00 2,250,000(f) 1,319,063
IHF Holdings
Zero Coupon Sr Disc Nts Series B 11-15-99 6.56 3,000,000(f) 2,580,000
Lodgenet Entertainment
Sr Nts 12-15-06 10.25 2,000,000 2,070,000
Riviera Holdings
Company Guaranty 08-15-04 10.00 1,250,000 1,287,500
Trump Atlantic City Assn/Funding
Company Guaranty 05-01-06 11.25 2,550,000 2,642,437
Trump Holdings & Funding
Sr Secured Nts 06-15-05 15.50 1,200,000 1,398,000
United Artists Theatres
Series 1995A 07-01-15 9.30 1,688,213 1,738,860
Venetian Casino/LV Sands
Mtge 11-15-04 12.25 1,525,000(d) 1,551,688
Sr Sub Nts 11-15-05 10.00 600,000(d,i) 567,000
Waterford Gaming/LLC
Sr Nts 11-15-03 12.75 1,230,000 1,357,613
Total 28,419,597
Media - 8.5%
Ackerly Communications
Sr Secured Nts Series B 10-01-03 10.75 1,500,000 1,601,250
Adelphia Communications
Sr Nts 02-01-08 8.375 4,500,000 4,499,999
Sr Nts Pay-in-kind Series B 02-15-04 9.50 356,875(h) 373,827
Benedek Communications
Zero Coupon Sr Disc Nts 05-15-01 11.89 1,250,000(f) 987,500
Big Flower Press
Sr Sub Nts 07-01-07 8.875 500,000 520,000
Big Flower Press Holdings
Sr Sub Nts 07-01-07 8.875 500,000(d) 520,000
CBS 08-01-12 8.625 500,000 539,325
Sr Deb 06-01-22 8.875 750,000 820,470
Chancellor Media
Sr Sub Nts 10-01-04 9.375 1,500,000 1,565,625
12-15-07 8.125 1,250,000(d) 1,268,750
EchoStar Satellite Broadcasting
Zero Coupon Sr Disc Nts 03-15-00 12.66 2,150,000(f) 1,905,438
Garden State Newspapers
Sr Sub Nts Series B 10-01-09 8.75 1,000,000 1,027,500
Jacor Communications
Company Guaranty 12-15-06 9.75 2,250,000 2,475,000
James Cable Partners LP
Sr Nts Series B 08-15-04 10.75 2,000,000 2,150,000
Marcus Cable Operating
Zero Coupon Sr Disc Nts 08-01-99 5.44 2,600,000(f) 2,463,500
OpTel
Sr Nts Series B 02-15-05 13.00 2,250,000 2,469,375
Outdoor Systems
Company Guaranty 06-15-07 8.875 3,800,000 4,004,250
Paxson Communications
Sr Sub Nts 10-01-02 11.625 1,750,000 1,907,500
Pegasus Communications
Sr Nts 10-15-05 9.625 750,000(d) 783,750
Pegasus Media & Communications
Series B 07-01-05 12.50 1,500,000 1,710,000
Price Communications Wireless
Sr Sub Nts 07-15-07 11.75 2,500,000 2,756,250
Spanish Broadcasting Systems
Zero Coupon Sr Nts 06-15-02 12.50 1,000,000 1,145,000
TransWestern Publishing/Capital
Sr Sub Nts 11-15-07 9.625 500,000(d) 528,750
Viacom
Sub Deb 07-07-06 8.00 2,500,000 2,556,250
Total 40,579,309
Metals - 1.7%
Bar Technologies
Company Guaranty 04-01-01 13.50 1,500,000(d) 1,646,250
EnviroSource
Sr Nts 06-15-03 9.75 3,000,000 3,056,250
Maxxam Group Holdings
Sr Nts Series B 08-01-03 12.00 1,000,000 1,105,000
Renco Steel Holdings
Sr Nts 02-01-05 10.875 2,000,000 2,040,000
WCI Steel
Sr Nts Series B 12-01-04 10.00 400,000 420,000
Total 8,267,500
Miscellaneous - 9.1%
Adams Outdoor Advertising
Sr Nts 03-15-06 10.75 2,000,000 2,225,000
Axiohm Transaction Solutions
Sr Sub Nts 10-01-07 9.75 500,000(d) 510,000
Bistro Trust 12-31-02 9.50 1,000,000(d) 1,001,900
Booth Creek Ski Holdings
Sr Nts Series B 03-15-07 12.50 1,343,000 1,373,218
BTI Telecommunications
Sr Nts 09-15-07 10.50 1,100,000 1,193,500
Comforce Operating
Sr Nts 12-01-07 12.00 900,000(d) 963,000
Concentric Network 12-15-07 12.75 600,000 690,000
Coty
Sr Sub Nts 05-01-05 10.25 1,000,000 1,067,500
Crown Castle Intl
Zero Coupon Sr Disc Nts 11-15-07 5.23 1,500,000(d,e) 1,001,250
DeepTech Intl
Sr Nts 12-15-00 12.00 1,000,000 1,066,250
DTI Holdings 03-01-08 12.50 2,380,000(d) 1,297,100
ESI Tractebel Acquisitions 12-30-11 7.99 500,000 501,875
Grant Geophysical
Sr Nts 02-15-08 9.75 725,000 721,375
Holt Group
Sr Nts 01-15-06 9.75 640,000 651,200
Hyperion Telecommunications
Sr Nts Series B 09-01-04 12.25 1,500,000 1,706,250
Imperial Holly
Sr Sub Nts 12-15-07 9.75 850,000(d) 876,563
Isle of Capri/Capital
1st Mtge Series B 08-31-04 13.00 1,750,000 1,789,375
Knology Holdings
Zero Coupon 10-15-02 11.87 100,000(d,f) 555,000
Magnaquench
Pay-in-kind 12-30-06 12.00 1,000,000(d,h,i) 1,020,000
MSX Intl
Sr Sub Nts 01-15-08 11.375 1,225,000 1,267,875
Nationwide Credit
Sr Nts 01-15-08 10.25 1,000,000(d) 1,032,500
Norcal Waste Systems
Company Guaranty Series B 11-15-05 13.50 2,475,000 2,880,280
Omnipoint Communications
Sr Nts 02-17-06 8.875 1,500,000(d,i) 1,498,500
Outsourcing Solutions
Sr Sub Nts Series B 11-01-06 11.00 2,575,000 2,838,938
Packard Bioscience
Sr Sub Nts 03-01-07 9.375 500,000 487,500
Park-Ohio Inds
Sr Sub Nts 12-01-07 9.25 1,500,000(d) 1,571,250
Resource America 08-01-04 12.00 1,000,000(d) 1,027,500
SC Intl 09-01-07 9.25 2,250,000 2,362,500
SFX Entertainment
Sr Sub Nts 02-01-08 9.125 975,000 975,000
Sheffield Steel
1st Mtge 12-01-05 11.50 1,000,000(d) 1,042,500
Stellex Inds
Sr Sub Nts 11-01-07 9.50 1,300,000(d) 1,335,750
Talton Holdings
Company Guaranty 06-30-07 11.00 750,000(d) 826,875
Viasystems
Sr Sub Nts 06-01-07 9.75 600,000 630,000
Wells Aluminum
Sr Nts Series B 06-01-05 10.125 2,250,000 2,430,000
XCL05-01-04 13.50 1,000,000(d) 1,200,000
Total 43,617,324
Multi-industry conglomerates - 1.7%
American Banknote 12-01-07 11.25 750,000 761,250
Communications & Power Inds
Sr Sub Nts Series B 08-01-05 12.00 1,000,000 1,118,750
Jordan Inds
Zero Coupon Sr Sub Debs Series B 04-01-02 11.75 1,608,386(f) 979,105
Pierce Leahy
Sr Sub Nts 07-15-07 9.125 2,000,000 2,145,000
Prime Succession
Sr Sub Nts 08-15-04 10.75 2,675,000 2,949,187
Total 7,953,292
Paper & packaging - 3.1%
Bear Island LLC/Finance
Sr Nts 12-01-07 10.00 1,550,000(d) 1,584,875
BPC Holding
Sr Secured Nts Pay-in-kind Series B 06-15-06 12.50 1,600,000(h) 1,760,000
Bway
Sr Sub Nts 04-15-07 10.25 500,000(d) 544,375
Gaylord Container
Sr Nts 06-15-07 9.75 800,000 808,000
Sr Sub Nts 02-15-08 9.875 2,000,000(d) 1,955,000
Graham Packaging Capital
Zero Coupon Sr Disc Nts 01-15-09 4.79 500,000(d,e) 312,500
Riverwood Intl
Company Guaranty 04-01-06 10.25 3,250,000 3,363,750
08-01-07 10.625 500,000 530,000
Silgan Holdings 06-01-09 9.00 825,000 860,063
Tekni-Plex
Sr Sub Nts 03-01-08 9.25 690,000 698,625
Warren (SD)
Sr Sub Nts Series B 12-15-04 12.00 2,000,000 2,237,500
Total 14,654,688
Restaurants & lodging - 0.6%
American Restaurant Group
Sr Nts 02-15-03 11.50 1,000,000(d) 1,010,000
Prime Hospitality
Sr Sub Nts Series B 04-01-07 9.75 1,550,000 1,681,750
Total 2,691,750
Retail - 2.6%
Dairy Mart Convenience Stores
Sr Sub Nts 03-15-04 10.25 2,500,000 2,481,250
Food 4 Less
Sr Sub Debs Pay-in-kind 06-15-07 13.625 1,388,569(h) 1,687,111
Maxim Group
Company Guaranty Series B 10-15-07 9.25 1,500,000 1,518,750
Pathmark Stores
Sr Sub Nts 05-01-03 9.625 1,500,000 1,470,000
Sub Nts 06-15-02 11.625 3,500,000 3,395,000
Pueblo Xtra Intl
Sr Nts 08-01-03 9.50 900,000 848,250
Sr Nts Series C 08-01-03 9.50 1,000,000 942,500
Total 12,342,861
Textiles & apparel - 1.3%
Anvil Knitwear
Sr Nts Series B 03-15-07 10.875 1,500,000 1,582,500
Galey & Lord
Sr Sub Nts 03-01-08 9.125 1,000,000(d) 1,005,000
GFSI
Sr Sub Nts Series B 03-01-07 9.625 1,000,000(d) 1,045,000
GFSI Holdings
Zero Coupon Sr Disc Nts Series B 09-15-09 11.375 700,000 749,000
Hosiery Corp of America
Sr Sub Nts 08-01-02 13.75 1,000,000 1,100,000
Pillowtex
Sr Sub Nts 12-15-07 9.00 500,000(d) 523,750
Total 6,005,250
Transportation - 0.7%
Global Ocean Carriers
Sr Nts 07-15-07 10.25 2,500,000 2,287,500
Trico Marine Services
Company Guaranty Series 14 08-01-05 8.50 1,000,000(d) 1,012,500
Total 3,300,000
Utilities -- electric - 0.5%
AES
Sr Sub Nts 11-01-07 8.50 1,280,000 1,321,600
Niagara Mohawk Power
1st Mtge 07-01-05 6.625 1,000,000 985,950
Total 2,307,550
Utilities -- gas - 0.4%
Bellwether Exploration
Sr Nts 04-01-07 10.875 1,000,000 1,080,000
Empire Gas
Zero Coupon Sr Nts 07-15-04 7.00 1,000,000(i) 911,250
Total 1,991,250
Utilities -- telephone - 6.2%
CCPR Services
Company Guaranty 02-01-07 10.00 2,250,000 2,258,438
Geotek Communications
Cv Sr Sub Nts 02-15-01 12.00 500,000(d) 350,000
Zero Coupon Sr Disc Nts Series B 07-15-00 11.82 1,250,000(f) 625,000
Intermedia Communications
Sr Nts 11-01-07 8.875 1,475,000(d) 1,559,813
Zero Coupon Sr Disc Nts Series B 07-15-02 11.25 1,625,000(f) 1,190,313
ITC Deltacom
Sr Nts 06-01-07 11.00 2,350,000 2,620,249
03-01-08 8.875 1,600,000(d) 1,608,000
Metrocall
Sr Sub Nts 10-01-07 10.375 1,750,000 1,802,500
Omnipoint
Sr Nts 08-15-06 11.625 2,750,000 3,018,124
Sr Nts Series A 08-15-06 11.625 1,000,000 1,097,500
Pagemart Nationwide
Zero Coupon Sr Disc Nts 02-01-00 12.51 2,500,000(f) 2,175,000
Peoples Telephone
Sr Nts 07-15-02 12.25 1,250,000 1,331,250
PriCellular Wireless
Sr Disc Nts Series B 11-15-01 14.00 1,500,000 1,676,250
Zero Coupon Sr Disc Nts 10-01-98 12.25 1,000,000(f) 1,030,000
Primus Telecommunications Group
Sr Nts 08-01-04 11.75 1,175,000 1,310,125
Pronet
Sr Sub Nts 06-15-05 11.875 2,000,000 2,160,000
Qwest Communications Intl
Zero Coupon Sr Disc Nts 02-01-08 4.10 3,000,000(d,e) 1,998,750
WorldCom
Sr Nts 01-15-04 9.375 1,699,000 1,822,178
Total 29,633,490
Total bonds
(Cost: $392,145,265) $402,642,694
</TABLE>
<PAGE>
Common stocks - 0.2%
Issuer Shares Value(a)
CORE Cap 22,223(d) $444,459
Global TeleSystems Group 5,900(b) 216,088
HarCor Energy 20,000(b) 27,500
Imperial Credit Commercial
Mtge Investment 7,800 119,925
Nextel Communications Cl A 2,323(b) 68,674
OpTel 2,250(b,d) 23
Total common stocks
(Cost: $908,531) $876,669
Preferred stocks & other - 8.7%
Issuer Shares Value(a)
21st Century Telecom Group 400(g) $419,000
13.75% Pay-in-kind
Allegiance Telecom 2,400 1,284,000
Warrants
American Radio Systems 10,528(g) 1,263,360
11.375% Pay-in-kind Series B
American Restaurant Group 500(g) 507,500
12.00% Pay-in-kind
Asia Pulp & Paper 4,075 3,117,374
12.00%
Australis Holdings 1,760 18
Warrants
Benedek Communications 8,000(h) 1,096,000
15.00% Pay-in-kind
Cablevision Systems 48,022(h) 5,534,535
11.125% Pay-in-kind Series M
California Federal Bank 16,000 1,814,000
11.50%
Communications & Power Inds 26,780(g) 2,905,630
14.00% Pay-in-kind Series B
CORE Cap 22,223(d) 564,242
10.00% Cv Series A/I
EchoStar Communications 1,287(h) 1,422,135
12.125% Pay-in-kind Series B
Fairfield Mfg 1,300(h) 1,423,500
11.25% Pay-in-kind
Geotek Communications 40,000 40,000
Warrants
Globalstar Telecommunications 1,500(d) 161,250
Warrants
Hyperion Telecommunications 517(g) 585,503
12.875% Pay-in-kind Series B
Intermedia Communications 13,720(h) 1,680,700
13.50% Pay-in-kind Series B
Iridium World Communications 1,700 272,000
Warrants
IXC Communications 531(g) 610,650
12.50% Pay-in-kind Series B
KMC Telecomm Holdings 1,500 836,250
Warrants
Liberty Group Publishing 35,000 910,000
14.75%
Martin Media 15,000(d) 1,500,000
14.00%
MetroNet Communications 750 1,875
Warrants
Nebco Evans Holding 15,000(h) 1,500,000
11.25% Pay-in-kind
Nextel Communications 1,000(g) 1,030,000
11.125% Pay-in-kind
NTL 532(d,g) 627,760
13.00% Pay-in-kind Series B
Paxson Communications 22,730(h) 2,329,825
12.50% Pay-in-kind
Pegasus Communications 7,450(h) 864,200
12.75% Pay-in-kind
12.75% Pay-in-kind Series A 79(g) 88,875
Price Communications 4,472 44,720
Warrants
Primus Telecommunications 1,175 32,900
Warrants
RSL Communications 1,250 112,500
Warrants
SFX Broadcasting 2,657(g) 314,855
12.625% Pay-in-kind Series E
SGW Holding 10,602(d,g) 181,400
12.50% Pay-in-kind Series B
12.75% Cv Series A 9,677(d) 99,996
Warrants 250(d) 78,900
Sinclair Capital 20,000 2,190,000
11.625%
Time Warner 1,025 1,164,656
10.25% Series M
Unifi Communications 1,000 15,000
Warrants
Unisite 500(d,k) --
Warrants
Unisite CI C 540(d) 250,090
Vialog 2,075 124,500
Warrants
Warren (SD) 49,500 2,450,250
14.00% Series B
Total preferred stocks & other
(Cost: $39,783,434) $41,449,949
<PAGE>
<TABLE>
<CAPTION>
Short-term securities - 6.2%
Issuer Maturity Annualized Amount Value(a)
date yield on payable at
date of maturity
purchase
U.S. government agencies - 3.7%
<S> <C> <C> <C> <C> <C>
Federal Home Loan Bank Disc Nt 03-18-98 5.41% $2,100,000 $2,094,341
Federal Home Loan Mtge Corp Disc Nts 03-12-98 5.42 1,900,000 1,896,577
03-20-98 5.44 6,400,000 6,380,693
03-24-98 5.43 6,200,000 6,177,680
Federal Natl Mtge Assn Disc Nt 03-18-98 5.43 1,200,000 1,196,754
Total 17,746,045
Commercial paper - 2.5%
Cargill 03-05-98 5.52 1,700,000 1,698,699
Delaware Funding 03-17-98 5.52 2,000,000(l) 1,994,805
Fleet Funding 04-17-98 5.57 1,600,000(l) 1,588,203
Paccar Financial 03-23-98 5.51 1,100,000 1,096,143
UBS Finance (Delaware) 03-02-98 5.68 4,100,000 4,098,706
Xerox Credit 04-09-98 5.52 1,500,000 1,490,850
Total 11,967,406
Total short-term securities
(Cost: $29,713,451) $29,713,451
Total investments in
securities
(Cost: $462,550,681)(m) $474,682,763
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Non-income producing. For long-term debt securities, item identified is in
default as to payment of interest and/or principal.
(c) Foreign security values are stated in U.S. dollars. For debt securities,
principal amounts are denominated in the currency indicated.
(d) Represents a security sold under Rule 144A, which is exempt from
registration under the Securities Act of 1933, as amended. This security has
been determined to be liquid under guidelines established by the board.
(e) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(f) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(g) Pay-in-kind securities are securities in which the issuer has the option to
make interest payments in cash or in additional securities. The securities
issued as interest usually have the same terms, including maturity date, as the
pay-in-kind securities.
(h) Pay-in-kind securities are securities in which the issuer makes interest
payments in additional securities. These securities usually have the same terms
as the original holdings.
(i) Interest rate varies either based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on Feb. 28, 1998.
(j) Identifies issues considered to be illiquid as to their marketability
(see Note 1 to the financial statements). Information concerning such security
holdings at Feb. 28, 1998, is as follows:
Security Acquisition Purchase
date cost
Gemini*
13.50% 2001 12-23-96 $1,500,000
Veninfotel*
10.00% Cv Pay-in-Kind 2002 03-05-97 1,000,000
*Represents a security sold under Rule 144A, which is exempt from registration
under the Securities Act of 1933, as amended.
(k) Negligible market value.
(l) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accredited investors."
This security has been determined to be liquid under guidelines established by
the board.
(m) At Feb. 28, 1998, the cost of securities for federal income tax purposes was
approximately $461,988,000 and the approximate aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation......................................$20,120,000
Unrealized depreciation.......................................(7,425,000)
Net unrealized appreciation..................................$12,695,000
<PAGE>
AMERICAN EXPRESS Financial Advisors
Retirement Annuity Mutual Funds
IDS Tower 10
Minneapolis, MN 55440-0010
