<PAGE>
<TABLE> <C>
<S>
T H E P R U D E N T I A L I N S U R A N C E C O M P A N Y OF A M E R I C A
------------------------------------
T H E
M E D L E Y
P R O G R A M
--------------------------------------------------
COMMITTED TO PROVIDING
SUPERIOR INVESTMENT,
ADMINISTRATIVE AND
RECORDKEEPING SERVICES
TO INSTITUTIONAL CLIENTS
---------------------------------------------------------------------------
Prudential Defined Contribution Services
30 Scranton Office Park
Moosic, PA 18507-1789
(1) 800-458-6333
J U N E 3 0, 1 9 9 5 R E P O R T T O P A R T I C I P A N T S
</TABLE>
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
VCA-10 Capital Growth Account 3
VCA-11 Money Market Account 13
VCA-24 Investment Performance
Financial Statements 21
The Prudential Series Fund, 28
Inc.
</TABLE>
This report is for the information of persons participating in The Prudential
Variable Contract Account-10 (VCA-10), The Prudential Variable Contract
Account-11 (VCA-11), and The Prudential Variable Contract Account-24 (VCA-24)
(The MEDLEY Program). The report is not authorized for distribution to
prospective investors unless preceded or accompanied by a current prospectus for
the MEDLEY program. VCA-10, VCA-11 and VCA-24 are distributed by Prudential
Retirement Services, Inc., an affiliate of Prudential Defined Contribution
Services.
GP-4401
<PAGE>
INVESTMENT OBJECTIVES OF THE ACCOUNTS
The investment objective of VCA-10 is the long-term appreciation of the assets
held in the Account. Since no federal income tax will be payable upon dividend
income or realized capital gains, consideration will be given to both potential
income and capital gains opportunities in selecting investments. Investments
will be made primarily in established corporations according to the standards of
a prudent investor concerned primarily with preserving the real value of capital
by achieving a rate of growth in the value of investments commensurate with the
rate of growth in the economy and the prevailing rate of inflation.
The investment objective of VCA-11 is to seek as high a level of current income
as is consistent with the preservation of capital and liquidity.
Each Subaccount of VCA-24 will invest in the corresponding portfolio of The
Prudential Series Fund, Inc. (the "Fund"). Of the portfolios comprising the
Fund, seven portfolios are presently available to the Participants of VCA-24.
The Common Stock Subaccount invests in the Common Stock Portfolio, the Bond
Subaccount in the Bond Portfolio, the Aggressively Managed Flexible Subaccount
in the Aggressively Managed Flexible Portfolio, the Conservatively Managed
Flexible Subaccount in the Conservatively Managed Flexible Portfolio, the Stock
Index Subaccount in the Stock Index Portfolio, the Global Equity Subaccount in
the Global Equity Portfolio, and the Government Securities Subaccount in the
Government Securities Portfolio. Additional Subaccounts and Fund portfolios may
be available in the future. The investment objectives of the seven Fund
portfolios available for investment through VCA-24 are:
COMMON STOCK PORTFOLIO--Capital appreciation through investment primarily
in common stocks of companies, including major established corporations as
well as smaller capitalization companies, that appear to offer attractive
prospects of price appreciation that is superior to broadly-based stock
indices. Current income, if any, is incidental.
BOND PORTFOLIO--A high level of income over the longer term while providing
reasonable safety of capital through investment primarily in readily
marketable intermediate and long-term fixed income securities that provide
attractive yields but do not involve substantial risk of loss of capital
through default.
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO--Achievement of a high total return
consistent with a portfolio having an aggressively managed mix of money
market instruments, fixed income securities, and common stocks, in
proportions believed by the investment manager to be appropriate for an
investor desiring diversification of investment who is willing to accept a
relatively high risk of loss in an effort to achieve greater appreciation.
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO--Achievement of a favorable total
investment return consistent with a portfolio having a conservatively
managed mix of money market instruments, fixed income securities, and
common stocks of established companies, in proportions believed by the
investment manager to be appropriate for an investor desiring
diversification of investment who prefers a relatively lower risk of loss
than that associated with the Aggressively Managed Flexible Portfolio while
recognizing that this reduces the chances of greater appreciation.
STOCK INDEX PORTFOLIO--Achievement of investment results that correspond to
the price and yield performance of publicly traded common stocks in the
aggregate by following a policy of attempting to duplicate the price and
yield performance of the Standard & Poor's 500 Composite Stock Price Index.
GLOBAL EQUITY PORTFOLIO--Long-term growth of capital through investment
primarily in common stock and common stock equivalents of foreign and
domestic issuers. Current income, if any, is incidental.
GOVERNMENT SECURITIES PORTFOLIO--A high level of income over the longer
term consistent with the preservation of capital through investment
primarily in U.S. Government securities, including intermediate and
long-term U.S. Treasury securities and debt obligations issued by agencies
of or instrumentalities established, sponsored or guaranteed by the U.S.
Government. At least 65% of the total assets of the Portfolio will be
invested in U.S. Government securities.
There is no assurance that the investment objective of VCA-10, VCA-11, or any
Fund portfolio will be attained. Nor is there any guarantee that the amount
available to a Participant will equal or exceed the total contributions made on
that Participant's behalf. The value of the investments held in VCA-10, VCA-11,
and in each Fund portfolio may fluctuate daily and is subject to the risks of
both changing economic conditions and the selection of investments necessary to
meet the Accounts' or portfolios' objectives.
2
<PAGE>
VCA-10
INVESTMENT ENVIRONMENT
The S&P 500 picked up where it left off in the first quarter, charging ahead
9.5% in the second quarter, resulting in a 20.2% return for the first six months
of 1995. Driving the market higher were good corporate earnings, an economy
which appeared to be slowing just enough, subdued inflation, and falling
interest rates.
Far and away, the best performing sector was Technology, up 24% for the quarter
and 39% for the year-to-date. This reflects the proliferation of technological
integration taking place on both a business and a personal level. Business has
increased spending on technology in its attempt to become more efficient, while
individuals have become more acclimated to and found more uses for home
computers. Also driving the Technology sector was the excitement generated by
Microsoft's new operating system "Windows 95", and company earnings within the
sector showing enough momentum to make it through the economic slowdown
unscathed. The Finance sector was the second best performing sector of the
quarter and year-to-date, as it was helped by both falling interest rates and
merger/takeover activity in the banking industry.
Lagging sectors for the quarter included Energy and Consumer Cyclical. Energy
companies were hurt by falling prices, especially in the natural gas area, where
heavy supply adversely affected pricing. In addition, a warm winter and early
summer have held down demand. Poor performance in housing-related stocks dragged
down performance in the Consumer Cyclical sector, as investors were disappointed
with the lack of an expected snapback in housing activity as interest rates
declined.
STOCK MARKET RETURNS
(with dividends reinvested)
<TABLE>
<CAPTION>
PERIODS ENDED JUNE 30,
1995
SIX MONTHS ONE YEAR
<S> <C> <C>
S&P 500 20.2% 26.1%
Returns by Economic Sector
Energy 14.7 18.9
Utility 13.3 12.0
Technology 39.0 66.4
Finance 26.8 21.3
Basic Industry 18.4 20.5
Consumer Cyclical 11.9 4.9
Consumer Growth 19.4 35.5
</TABLE>
3
<PAGE>
INVESTMENT ACTIVITY
During the first half of 1995, VCA-10's significant overweighting in the
Industrial sector was increased while its overweighting in the Financial sector
was reduced somewhat. The Account retained its underweighting in Utilities and
the underweightings in Technology and Consumer Growth stocks were increased. The
Account's underweighting in the Energy sector was reduced, while its neutral bet
in the Consumer Cyclical sector shifted to a slight underweight.
Significant purchases during the first six months of 1995 included several from
the Industrial sector, notably the chemical companies Uniroyal Chemical Corp.
and EI DuPont. Occidental Petroleum, an oil and gas company, was also a major
purchase during the period. Significant sales during the half included the
railroad holding company Chicago & Northwest, which was purchased by Union
Pacific, and Mead, whose price increase dictated some profit-taking. Consumer
growth stocks such as ATM manufacturer, Diebold, Inc. and Caesars World, which
was acquired by ITT Corp., were also sold. In the Technology sector, National
Data was sold, as was Ply Gem Industries from the Consumer Cyclical sector and a
regional bank, Keycorp. In addition, Healthtrust Inc. was acquired by the
healthcare service provider, Columbia HCA, increasing the Account's position in
the latter.
INVESTMENT OUTLOOK
It appears quite possible that, when all is said and done, the Fed will have
steered the economy to a path of sustainable growth and subdued inflation. The
recent easing by the Fed shows its resolve not to let the economy slow too much,
as well as its conviction that inflation is under control.
Market returns are not expected to continue at the pace of the first six months.
Valuations are at fair to slightly overvalued levels and sentiment has become
decidedly positive. Therefore, while a significant downside isn't expected
because the chances of a recession are low, neither is a significant upside
anticipated.
INVESTMENT PERFORMANCE
VCA-10 was up 12.3% during the first six months of 1995, underperforming the S&P
500 index by 7.9%. This was primarily the result of poor relative performance
and an underweighting within the Technology sector, the top performer during the
first half of the year. A lack of computer hardware holdings, underweightings in
the software & services and electronics industries and poor stock selection in
aerospace/defense each contributed. Underperformance in the Consumer Growth
sector also hurt the Account. This was principally a result of underweightings
in several of the sector's strongly performing industries, such as foods,
beverages, drugs & medical supplies and tobacco. Offsetting some of the
Account's relative underperformance was good relative performance in the
Consumer Cyclical sector, especially in the autos & trucks, housing related and
textile/apparel industries.
4
<PAGE>
Condensed Financial Information for VCA-10
INCOME AND CAPITAL CHANGES PER UNIT
(For a Unit outstanding throughout the period)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
SIX
MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER
1995 31, 1994
-----------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME................................. $ .0314 $ .0563
-----------------------------------------------------------------------
EXPENSES
For investment management fee................... .0044 .0083
For administrative expenses not covered by the
annual account charge......................... .0131 .0251
-----------------------------------------------------------------------
NET INVESTMENT INCOME............................. .0139 .0229
-----------------------------------------------------------------------
CAPITAL CHANGES
Net realized gain on investments................ .1328 .1947
Net unrealized appreciation/(depreciation) of
investments................................... .2649 (.2148)
-----------------------------------------------------------------------
NET INCREASE IN UNIT VALUE........................ .4116 .0028
-----------------------------------------------------------------------
UNIT VALUE
Beginning of period............................. 3.3604 3.3576
End of period................................... $3.7720 $3.3604
-----------------------------------------------------------------------
SUM OF AVERAGE RATIOS for the period of (a) charge
for investment management fee to net assets*,
and (b) charge for administrative expenses not
covered by the annual account charge to net
assets*......................................... .4927% .9965%
-----------------------------------------------------------------------
AVERAGE RATIO for the period of net investment
income to net assets............................ .3909% .6791%
-----------------------------------------------------------------------
PORTFOLIO TURNOVER RATE........................... 20.49% 31.50%
-----------------------------------------------------------------------
NUMBER OF UNITS OUTSTANDING for
Participants at end of period (000 omitted)..... 78,582 79,189
-----------------------------------------------------------------------
</TABLE>
*These calculations exclude The Prudential's equity in VCA-10.
The above table does not reflect the annual account charge, which does not
affect the Unit Value of VCA-10. This charge is made by reducing Participants'
accounts by a number of Units equal in value to the charge.
While both income and capital changes are shown above, the distinction between
these sources of change in VCA-10 is not particularly significant to
Participants. There is no distinction between income and realized and
unrealized gains and losses on investments in determining the amount of the
Participant's benefits and the taxes payable by the Participant on them.
5
<PAGE>
Financial Statements of VCA-10
Statement of Net Assets (Unaudited) June 30, 1995
<TABLE>
<CAPTION>
COMMON STOCK
INVESTMENTS [NOTE 2] SHARES MARKET VALUE
--------------------------------------------------------------------
<S> <C> <C>
AEROSPACE/DEFENSE (2.6%)
Gen Corp. 137,700 $ 1,480,275
General Motors Corp. (Class 'H' Stock) 67,000 2,646,500
Litton Industries, Inc.+ 81,200 2,994,250
UNC, Inc.+ 127,600 685,850
------------
7,806,875
---------------------------------------------------
AUTOS & TRUCKS (2.2%)
A.O. Smith Corp. 72,000 1,692,000
Automotive Industries Holding, Inc.+ 120,000 3,255,000
Modine Manufacturing Co. 40,400 1,484,700
------------
6,431,700
---------------------------------------------------
CHEMICALS (5.5%)
Cytec Industries, Inc.+ 43,500 1,783,500
E.I. Dupont De Nemours & Co. 50,300 3,458,125
Imperial Chemical Industries (ADRs) 76,600 3,734,250
Mississippi Chemical Corp. 76,300 1,521,231
Uniroyal Chemical Corp.+ 284,000 3,230,500
W.R. Grace & Co. 42,000 2,577,750
------------
16,305,356
---------------------------------------------------
COMMERCIAL SERVICES (0.5%)
Banner Aerospace+ 272,500 1,362,500
---------------------------------------------------
COMPUTER SOFTWARE & SERVICES (0.7%)
General Motors Corp. (Class 'E' Stock) 46,000 2,001,000
---------------------------------------------------
CONSUMER SERVICES (0.5%)
ADT Ltd.+ 126,500 1,486,375
---------------------------------------------------
CONTAINERS & PACKAGING (0.5%)
Owens Illinois, Inc.+ 120,400 1,565,200
---------------------------------------------------
COSMETICS & SOAPS (0.6%)
Bush Boake Allen, Inc.+ 55,000 1,670,625
---------------------------------------------------
DIVERSIFIED CONSUMER PRODUCTS (2.0%)
Eastman Kodak Co. 26,300 1,594,437
Whitman Corp. 231,500 4,485,313
------------
6,079,750
---------------------------------------------------
DRUGS & MEDICAL SUPPLIES (4.4%)
Gelman Sciences, Inc.+ 162,500 3,067,188
Schering Plough Corp. 70,400 3,106,400
Warner Lambert Co. 46,000 3,973,250
Zeneca Group PLC (ADRs) 57,600 2,952,000
------------
13,098,838
---------------------------------------------------
<CAPTION>
COMMON STOCK
INVESTMENTS [NOTE 2] SHARES MARKET VALUE
--------------------------------------------------------------------
<S> <C> <C>
ELECTRICAL EQUIPMENT (2.3%)
Belden, Inc. 108,800 $ 2,937,600
Cable Design Technologies+ 151,700 3,261,550
Littelfuse, Inc.+ 48,000 1,503,000
------------
7,702,150
---------------------------------------------------
ELECTRONICS (3.7%)
ITEL Corp.+ 84,700 3,303,300
Marshall Industries+ 100,000 3,350,000
Methode Electronics, Inc. 225,000 4,387,500
------------
11,040,800
---------------------------------------------------
ENGINEERING & CONSTRUCTION (1.1%)
Giant Cement Holding, Inc.+ 259,900 3,183,775
---------------------------------------------------
EXPLORATION & PRODUCTION (4.6%)
Basin Exploration, Inc.+ 225,500 1,338,906
Cabot Oil & Gas Corp. 133,000 1,828,750
Enron Oil & Gas 95,000 2,066,250
Mesa Incorporated+ 179,200 851,200
Murphy Oil Corp. 48,000 1,968,000
Oryx Energy Co.+ 200,600 2,758,250
Parker & Parsley Development Co. 100,000 1,962,500
Seagull Energy+ 59,200 976,800
------------
13,750,656
---------------------------------------------------
FINANCIAL SERVICES (3.3%)
American Express Co. 67,600 2,382,900
Dean Witter Discover & Co. 110,300 5,184,100
Financial Security Assurance Holding 56,800 1,420,000
ITT Corp. 6,700 787,250
------------
9,774,250
---------------------------------------------------
FOOD/DRUG RETAIL (0.6%)
Rite Aid Corp. 70,000 1,793,750
---------------------------------------------------
FOREST PRODUCTS (0.5%)
Mead Corp. 27,500 1,632,813
---------------------------------------------------
HOSPITAL MANAGEMENT (3.9%)
Columbia HCA Healthcare Corp. 114,792 4,964,754
Community Health Systems+ 54,000 1,829,250
Tenet Healthcare+ 329,300 4,733,688
------------
11,527,692
---------------------------------------------------
HOUSING RELATED (2.9%)
Interco, Inc.+ 275,000 1,615,625
Leggett & Platt, Inc. 17,300 761,200
Mueller Industries, Inc.+ 80,000 3,940,000
Owens Corning Fiberglas Corp.+ 60,000 2,212,500
------------
8,529,325
---------------------------------------------------
</TABLE>
6
<PAGE>
FINANCIAL STATEMENTS OF VCA-10
STATEMENT OF NET ASSETS (UNAUDITED) JUNE 30, 1995
<TABLE>
<CAPTION>
COMMON STOCK
INVESTMENTS [NOTE 2] SHARES MARKET VALUE
--------------------------------------------------------------------
<S> <C> <C>
INSURANCE (6.9%)
Emphesys Financial Group 62,800 $ 1,483,650
Equitable of Iowa Companies 85,000 2,794,375
NAC Re Corp. 53,600 1,668,300
National Re Corp. 74,400 2,492,400
Reinsurance Group of America 96,400 2,759,450
TIG Holdings, Inc. 114,000 2,622,000
Trenwick Group, Inc. 50,000 2,125,000
Western National Corp. 229,200 2,836,350
W.R. Berkley Corp. 48,000 1,704,000
------------
20,485,525
---------------------------------------------------
INTEGRATED PRODUCERS (1.5%)
Elf Aquitaine (ADRs) 44,490 1,657,252
Occidental Petroleum Corp. 120,500 2,756,438
------------
4,413,690
---------------------------------------------------
MACHINERY (6.5%)
Applied Power Co. (Class 'A' Stock) 165,000 4,764,375
Bearings, Inc. Ohio 20,950 641,594
Donaldson, Inc. 100,000 2,612,500
Idex Corp. 105,000 3,517,500
Indresco, Inc.+ 200,800 3,112,400
Parker Hannifan Corp. 48,000 1,740,000
Regal Beloit Corp. 186,400 2,889,200
------------
19,277,569
---------------------------------------------------
MEDIA (8.3%)
American Publishing Co. (Class 'A'
Stock) 136,400 1,466,300
Comcast Corp. (Class 'A' Stock) 75,000 1,364,062
Comcast Corp. Special (Class 'A' Stock) 37,500 696,094
Cox Communication (Class 'A' Stock)+ 113,213 2,193,502
E.W. Scripps Co. (Class 'A' Stock) 60,000 1,935,000
Harcourt General, Inc. 40,800 1,734,000
Lee Enterprises 80,000 3,050,000
Pulitzer Publishing Co. 31,000 1,321,375
Telecommunication (New) (Class 'A'
Stock)+ 170,000 3,984,375
Time-Warner, Inc. 115,000 4,743,750
Times Mirror Co. (Series A) 99,637 2,378,833
------------
24,867,291
---------------------------------------------------
<CAPTION>
COMMON STOCK
INVESTMENTS [NOTE 2] SHARES MARKET VALUE
--------------------------------------------------------------------
<S> <C> <C>
MISCELLANEOUS-INDUSTRIAL (10.4%)
Alltrista Corp.+ 66,500 $ 1,280,125
Ametek, Inc. 110,000 1,980,000
Coltec Industries, Inc.+ 65,900 1,136,775
Crane Co. 38,700 1,402,875
Danaher Corp. 70,800 2,159,400
Figgie International Holdings, Inc.
(Class 'A' Stock)+ 300,000 2,587,500
Honeywell, Inc. 33,600 1,449,000
Jason, Inc.+ 180,700 1,852,175
Mark IV Industries, Inc. 138,965 3,005,118
Material Sciences Corp.+ 110,900 2,259,587
Pentair, Inc. 100,000 4,350,000
Rockwell International Corp. 32,000 1,464,000
United Technologies, Inc. 19,300 1,507,813
Varlen Corp. 94,875 2,229,562
Wolverine Tube, Inc.+ 76,800 2,467,200
------------
31,131,130
---------------------------------------------------
MONEY CENTER BANKS (1.1%)
First Interstate Bancorp 40,000 3,210,000
---------------------------------------------------
RAILROADS (1.9%)
Greenbrier Companies, Inc. 237,200 3,113,250
Illinois Central Corp. 73,600 2,539,200
------------
5,652,450
---------------------------------------------------
REGIONAL BANKS (5.4%)
Bank of Boston Corp. 58,800 2,205,000
Cullen Frost Bankers, Inc. 75,000 3,037,500
First Bank System, Inc. 111,900 4,587,900
Norwest Corp. 190,900 5,488,375
Summit Bancorp 35,000 743,750
------------
16,062,525
---------------------------------------------------
RESTAURANTS (1.5%)
Morrison Restaurants, Inc. 65,300 1,567,200
Sbarro, Inc. 90,000 2,092,500
Shoney's, Inc.+ 80,100 941,175
------------
4,600,875
---------------------------------------------------
RETAIL (0.6%)
Ethan Allen Interiors, Inc.+ 50,000 887,500
Haverty Furniture, Inc. 99,000 1,014,750
------------
1,902,250
---------------------------------------------------
SPECIALTY CHEMICALS (2.9%)
Ferro Corp. 134,800 3,572,200
M. A. Hanna Co. 97,200 2,527,200
OM Group, Inc. 89,000 2,536,500
------------
8,635,900
---------------------------------------------------
</TABLE>
7
<PAGE>
FINANCIAL STATEMENTS OF VCA-10
STATEMENT OF NET ASSETS (UNAUDITED) JUNE 30, 1995
<TABLE>
<CAPTION>
COMMON STOCK
INVESTMENTS [NOTE 2] SHARES MARKET VALUE
--------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATION SERVICES (3.4%)
Airtouch Communication, Inc.+ 33,500 $ 954,750
Century Telephone Enterprises, Inc. 80,000 2,270,000
Frontier Corporation 170,600 4,073,075
MCI Communications Corp. 126,000 2,772,000
------------
10,069,825
---------------------------------------------------
TEXTILES/APPAREL (0.9%)
Fieldcrest Cannon, Inc.+ 118,800 2,569,050
---------------------------------------------------
TOTAL COMMON STOCKS (93.7%)
(Cost: $232,900,567) $279,621,510
---------------------------------------------------
PREFERRED STOCK INVESTMENTS [NOTE 2]
---------------------------------------------------
MEDIA (0.4%)
Times Mirror CV 42,562 $ 1,016,168
---------------------------------------------------
TOTAL PREFERRED STOCK INVESTMENTS (0.4%)
(Cost: $909,859)
1,016,168
---------------------------------------------------
<CAPTION>
PRINCIPAL MARKET
SHORT-TERM INVESTMENTS [NOTE 2] AMOUNT VALUE
<S> <C> <C>
---------------------------------------------------
REPURCHASE AGREEMENT Morgan Stanley &
Co., 5.97% yield, 06/30/95 - 07/03/95,
Amount Due - $18,888,392
(collateralized by $19,214,231 U.S.
Treasury Notes, 7.0%, Due 04/15/99) $18,879,000 $ 18,882,131
---------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (6.3%)
(Cost: $18,879,000) 18,882,131
---------------------------------------------------
TOTAL INVESTMENTS (100.4%)
(Cost: $252,689,426) $299,519,809
---------------------------------------------------
OTHER ASSETS, LESS LIABILITIES
Bank Overdraft (1,448,763)
Dividends and Interest Receivable 225,935
Receivables for Investments Sold 330,413
Pending Transfers (403,889)
---------------------------------------------------
TOTAL OTHER ASSETS, LESS LIABILITIES (-0.4%)
(1,296,304)
---------------------------------------------------
NET ASSETS (100%)
$298,223,505
---------------------------------------------------
NET ASSETS, REPRESENTING:
Equity of Participants 78,582,385 Accumulation Units
at an Accumulation Unit Value of $3.7720 (rounded)
$296,412,207
Equity of The Prudential Insurance Company of America
1,811,298
---------------------------------------------------
$298,223,505
--------------------------------------------------------------------
--------------------------------------------------------------------
</TABLE>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipts
PLC Public Limited Company
+No cash dividend was paid on these securities during the twelve month period
from July 1, 1994 through June 30, 1995.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
FINANCIAL STATEMENTS OF VCA-10
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30 1995
------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME [NOTE 2]
Dividends $ 2,076,761
Interest 388,592
------------------------------------------------------------------------------------------------------------
2,465,353
EXPENSES [NOTE 3]
Fees Charged to Participants for Investment Management Services 353,093
Fees Charged to Participants for Administrative Expenses 1,059,282
------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME--NET 1,052,978
------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS--NET
Realized Gain on Investments--Net 10,469,958
Unrealized Increase in Value of Investments--Net 20,993,613
------------------------------------------------------------------------------------------------------------
NET GAIN ON INVESTMENTS 31,463,571
------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
Resulting From Operations $32,516,549
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
Investment Income--Net $ 1,052,978 $ 1,862,646
Realized Gain on Investments--Net 10,469,958 14,911,860
Unrealized Increase/(Decrease) In Value of
Investments--Net 20,993,613 (16,570,990)
-------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 32,516,549 203,516
-------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Purchase Payments and Transfers In [Note 9] 25,281,949 56,061,218
Withdrawals and Transfers Out [Note 9] (27,052,307) (36,915,465)
Annual Account Charges Deducted from
Participants' Accounts [Note 4] (8,033) (69,867)
Deferred Sales Charge [Note 5] (135,874) (24,016)
-------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS (1,914,265) 19,051,870
-------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 30,602,284 19,255,386
NET ASSETS
Beginning of Period 267,621,221 248,365,835
-------------------------------------------------------------------------------------------------------
End of Period $ 298,223,505 $ 267,621,221
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF VCA-10 (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
NOTE 1: GENERAL
The Prudential Variable Contract Account-10 (VCA-10 or the Account) was
established by The Prudential Insurance Company of America (The
Prudential) under the laws of the State of New Jersey and is registered
as an open-end, diversified management investment company under the
Investment Company Act of 1940, as amended. VCA-10 has been designed
for use by employers (Contract-holders) in making retirement
arrangements on behalf of their employees (Participants). Its
investments are composed primarily of common stocks. All contractual
and other obligations arising under contracts participating in VCA-10
are general corporate obligations of The Prudential, although
Participants' payments from the Account will depend upon the investment
experience of the Account.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. INVESTMENTS
EQUITY SECURITIES
The value of securities (except options and fixed income securities
including convertible bonds) held in VCA-10 will be determined once
daily as of 5:00 P.M., New York time ("Valuation Time") using composite
pricing which reflects prices as of the close of business on all major
exchanges, on each day on which the New York Stock Exchange ("NYSE") is
open for trading and, as provided below, on any other day in which
there is sufficient trading in VCA-10's portfolio securities to result
in a material change in the value of the Account. A security that is
traded on a national securities exchange will be valued at the last
sale price for such security on any major exchange on which such
security is traded as of Valuation Time, or, in the absence of recorded
sales on such exchange on the valuation date, at the average of readily
available bid and asked prices on such exchange at the Valuation Time.
Any security not traded on a national securities exchange but traded in
the over-the-counter market for which quotations are furnished through
the nationwide automated quotation system approved by the National
Association of Securities Dealers, Inc. ("NASDAQ") will be valued based
on the last sale price as of the Valuation Time on each day on which
the NYSE is open for trading, or, in the absence of recorded sales on
such day, at the average of readily available bid and asked prices, as
established by NASDAQ at the Valuation Time. Unlisted securities not
quoted on NASDAQ are valued at the average of the quoted bid and asked
prices in the over-the-counter market at the Valuation Time. Portfolio
securities for which market quotations are not readily available will
be valued at fair value as determined in good faith under the direction
of the Account's Committee.
FIXED INCOME SECURITIES
Fixed income securities including convertible bonds are valued based on
prices provided by an industry-recognized pricing service when such
prices are believed to reflect the fair market value of such
securities. Fixed income securities including convertible bonds not
priced in this manner are valued at the mean of the last reported bid
and asked prices provided by principal market makers and recognized
securities dealers in such securities.
SHORT-TERM INVESTMENTS
Short-term investments having maturities of sixty days or less are
valued at amortized cost, which approximates market value. Amortized
cost is computed using the cost on the date of purchase, adjusted for
constant accrual of discount or amortization of premium to maturity.
REPURCHASE AGREEMENTS
Repurchase agreements may be considered loans of money to the seller of
the underlying security. VCA-10 will not enter into repurchase
agreements unless the agreement is fully collateralized, i.e., the
value of the underlying collateral securities is, and during the entire
term of the agreement remains, at least equal to the amount of the
'loan' including accrued interest. VCA-10 will take possession of the
collateral and will value it daily to assure that this condition is
met. In the event that a seller defaults on a repurchase agreement,
VCA-10 may incur a loss in the market value of the collateral as well
as disposition costs; and, if a party with whom VCA-10 had entered into
a repurchase agreement becomes insolvent, VCA-10's ability to realize
on the collateral may be limited or delayed and a loss may be incurred
if the collateral securing the repurchase agreement declines in value
during the insolvency proceedings.
10
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF VCA-10 (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
OPTIONS
Options on stocks and stock indices traded on national securities
exchanges are valued as of the close of options trading on such
exchanges (which is currently 4:10 P.M., New York time) on the
valuation date. Stock index futures and options thereon which are
traded on commodities exchanges are valued as of the close of such
commodity exchanges (which is currently 4:15 P.M., New York time) on
the valuation date. The value of the option or future is based upon the
last sale price on the exchange on which the contract is traded or as
provided by NASDAQ or at the mean between the last bid and asked price
if such bid and asked price are of a more recent day than the last
trade price.
B. INCOME RECOGNITION
Income and realized and unrealized gains and losses on investments are
allocated to the Participants and The Prudential on a daily basis in
proportion to their respective equities in VCA-10. Realized gains and
losses from equity transactions are determined and accounted for on the
basis of average cost. Realized gains and losses from convertible bond
transactions are determined and accounted for on the basis of
identified cost. Dividend income is recorded on the ex-dividend date at
declared value. Interest income is accrued daily. Equity, long-term
bond and option transactions are recorded on the first business day
following the trade date, except that transactions on the last business
day of the year are recorded on that date. Short-term security
transactions are recorded on trade date.
C. TAXES
The operations of VCA-10 are part of, and are taxed with, the
operations of The Prudential. Under the current provisions of the
Internal Revenue Code, The Prudential does not expect to incur federal
income taxes on earnings of VCA-10 to the extent the earnings are
credited under the Contracts. As a result, the Unit Value of VCA-10 has
not been reduced by federal income taxes.
NOTE 3: EXPENSES
A daily charge, at an effective annual rate of 1.00% of the current
value of the Participant's equity in VCA-10, is paid to The Prudential.
Three quarters of this charge (0.75%) is for administrative expenses
not covered by the annual account charge, and one quarter (0.25%) is
for investment management services.
NOTE 4: ANNUAL ACCOUNT CHARGE
An annual account charge is deducted from the account of each
Participant at the time of withdrawal of the value of all of the
Participant's accounts or at the end of the accounting year by
cancelling Units. The charge will first be made against a Participant's
account under a fixed dollar annuity companion contract or fixed rate
option of the non-qualified combination contract. If the Participant
has no account under a companion contract or the fixed rate option, or
if the amount under the companion contract or the fixed rate option is
too small to pay the charge, the charge will be made against the
Participant's account in VCA-11. If the Participant has no VCA-11
account, or if the amount under that account is too small to pay the
charge, the charge will then be made against the Participant's VCA-10
account. If the Participant has no VCA-10 account, or if it is too
small to pay the charge, the charge will then be made against any one
or more of the Participant's accounts in VCA-24. The annual account
charge will not be greater than $20 and is paid to The Prudential.
NOTE 5: DEFERRED SALES CHARGE
A deferred sales charge is imposed upon that portion of certain
withdrawals which represents a return of contributions. The charge is
designed to compensate The Prudential for sales and other marketing
expenses. The maximum deferred sales charge is 7% on contributions
withdrawn from an account during the first two years of participation,
6% on contributions withdrawn during the third through fifth years, 4%
on contributions withdrawn during the sixth through tenth years, and 3%
on contributions withdrawn during the eleventh through fifteenth years.
No deferred sales charge is imposed upon contributions withdrawn for
any reason after fifteen years of participation in the Program. In
addition, no deferred sales charge is imposed upon contributions
withdrawn to purchase an annuity under a Contract, to provide a death
benefit, pursuant to a systematic withdrawal plan, to provide a minimum
distribution payment, or in cases of financial hardship or disability
retirement as determined pursuant to provisions of the employer's
retirement arrangement. Further, for all plans other than IRAs, no
deferred sales charge is imposed upon contributions withdrawn due to
resignation or retirement by the Participant or termination of the
Participant by the Contract-Holder. Contributions transferred among
VCA-10, VCA-11, the Subaccounts of VCA-24 and a Companion Contract are
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF VCA-10 (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
considered to be withdrawals from the Account or Subaccount from which
the transfer is made, but no deferred sales charge is imposed upon
them.
NOTE 6: PURCHASES AND SALES OF PORTFOLIO SECURITIES
For the six months ended June 30, 1995, excluding short-term
investments and U.S. government securities, the aggregate cost of
purchases and the proceeds from sales of securities were $54,859,099
and $68,846,557, respectively.
NOTE 7: UNIT TRANSACTIONS
The number of Units issued and redeemed for the six months ended June
30, 1995 and the year ended December 31, 1994 is as follows:
<TABLE>
<S> <C> <C>
1995 1994
--------------------------------------------
Units issued 7,171,459 16,685,518
--------------------------------------------
Units redeemed 7,777,798 11,065,712
--------------------------------------------
</TABLE>
NOTE 8: RELATED PARTY TRANSACTIONS
For the six months ended June 30, 1995, Prudential Securities
Incorporated, an indirect, wholly-owned subsidiary of The Prudential,
earned $0 in brokerage commissions from portfolio transactions executed
on behalf of VCA-10.
NOTE 9: PARTICIPANT LOANS
Loans are considered to be withdrawals from the Account from which the
loan amount was deducted, however no deferred sales charge is imposed
upon them. The principal portion of any loan repayment, however, will
be treated as a contribution to the receiving Account for purposes of
calculating any deferred sales charge imposed upon any subsequent
withdrawal. If the Participant defaults on the loan, for example by
failing to make required payments, the outstanding balance of the loan
will be treated as a withdrawal for purposes of the deferred sales
charge. The deferred sales charge will be withdrawn from the same
Accumulation Accounts, and in the same proportions, as the loan amount
was withdrawn. If sufficient funds do not remain in those Accumulation
Accounts, the deferred sales charge will be withdrawn from the
Participant's other Accumulation Accounts as well.
Withdrawals, transfers and loans from VCA-10 are considered to be
withdrawals of contributions until all of the Participant's
contributions to the Account have been withdrawn, transferred or
borrowed. No deferred sales charge is imposed upon withdrawals of any
amount in excess of contributions.
For the six months ended June 30, 1995, $529,383 in participant loans
has been withdrawn from VCA-10 and $136,207 of principal has been
repaid to VCA-10. For the year ended December 31, 1994, $938,733 in
participant loans had been withdrawn from VCA-10 and $90,587 of
principal had been repaid to VCA-10. Loan repayments are invested in
Participant's account(s) as chosen by the Participant, which may not
necessarily be VCA-10. The initial loan proceeds may not necessarily
have originated solely from VCA-10.
12
<PAGE>
VCA-11
INVESTMENT ENVIRONMENT
The first half of 1995 was marked by a dramatic about-face in market sentiment.
Robust growth in 1994 prompted the Federal Reserve to raise short term interest
rates in several steps, culminating on February 1, 1995 with an increase in
federal funds (the interbank overnight lending rate) from 5.5% to 6%.
Expectations of further rate increases then began to dissipate as signs of a
stalling economy emerged. Industrial production fell. Consumer sentiment and
spending languished. The Index of Leading Indicators moved into negative
territory. It was unclear whether the slowdown was the desired "soft landing"
reaction to the tight monetary policy cycle, or whether the Fed had acted too
boldly in its attempt to temper an overheated economy and had created the risk
of a future recession.
As the economic data revealed the slowdown, investors began to expect a
reduction in short-term interest rates by the Federal Reserve instead of the
increases expected earlier in the year. By the time the last Wall Street
economists were withdrawing their predictions of more rate hikes in 1995, many
were already forecasting a rate decrease by summertime. In fact, the Federal
Reserve did lower the federal funds rate on July 6, 1995 from 6.0% back to
5.75%, the first monetary easing since September 1992.
INVESTMENT ACTIVITY
The portfolio manager was able to take advantage of the decline in yields this
period by selecting somewhat longer securities and extending the weighted
average maturity of the VCA-11 portfolio. The weighted average maturity reached
a maximum of 63 days. This strategy enabled the portfolio to benefit from
locking in higher yields for a longer time.
INVESTMENT OUTLOOK
There is much uncertainty regarding the future level of interest rates. The
Federal Reserve ease on July 6, 1995 can be analyzed in several ways. Some
economists believe the reduction in the federal funds rate was simply a
"fine-tuning" of the previous tightening cycle, and interest rates can be
expected to remain at current levels. Others believe there has been a definitive
shift in monetary policy from a period of tightening to a period of easing,
which would signal still lower interest rates by year-end. Still others argue
the Federal Reserve was premature in its attempt to stimulate an economy that
may well not have needed a boost and are calling for a Fed tightening of
monetary policy, therefore higher interest rates, by year end.
VCA-11's portfolio manager believes interest rates will trend lower in light of
indications of a slowing economy. Unless there is a significant rebound in
economic strength later this year, another ease of monetary policy by early 1996
is anticipated.
INVESTMENT PERFORMANCE
VCA-11 returned 2.6% for the six months ended June 30, 1995. The 3 month
Treasury Bill Index returned 2.9% over the same period. The Treasury Bill Index
is a broad market gauge and not an actively managed portfolio, and therefore is
not reduced for these expenses. The Account has expenses and management fees (of
approximately 37 basis points over the period), which would have placed its
performance in line with that of the Index.
13
<PAGE>
CONDENSED FINANCIAL INFORMATION FOR VCA-11
Income and Capital Changes Per Unit
(For a Unit outstanding throughout the period)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------
SIX
MONTHS YEAR
ENDED ENDED
JUNE 30, DECEMBER
1995 31, 1994
-----------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME................................. $ .0655 $ .0912
-----------------------------------------------------------------------
EXPENSES
For investment management fee................... .0026 .0052
For administrative expenses not covered by the
annual account charge......................... .0079 .0154
-----------------------------------------------------------------------
NET INCREASE IN UNIT VALUE........................ .0550 .0706
-----------------------------------------------------------------------
UNIT VALUE
Beginning of period............................. 2.1056 2.0350
End of period................................... $2.1606 $2.1056
-----------------------------------------------------------------------
SUM OF AVERAGE RATIOS for the period of (a) charge
for investment management fee to net assets*,
and (b) charge for administrative expenses not
covered by the annual account charge to net
assets*......................................... .4943% .9966%
-----------------------------------------------------------------------
AVERAGE RATIO for the period of net investment
income to net assets............................ 2.5756% 3.4176%
-----------------------------------------------------------------------
NUMBER OF UNITS OUTSTANDING
for Participants at end of period (000
omitted)........................................ 34,510 35,448
-----------------------------------------------------------------------
</TABLE>
*These calculations exclude The Prudential's equity in VCA-11.
The above table does not reflect the annual account charge, which does not
affect the Unit Value of VCA-11. This charge is made by reducing Participants'
accounts by a number of Units equal in value to the charge.
14
<PAGE>
Financial Statements of VCA-11
Statement of Net Assets (Unaudited) June 30, 1995
<TABLE>
<CAPTION>
SHORT-TERM PRINCIPAL
INVESTMENTS [NOTE 2] AMOUNT VALUE
--------------------------------------------------------------------
<S> <C> <C>
COMMERCIAL PAPER--U.S. (39.4%)
Aristar, Inc., 6.032% Notes, Due
07/03/95 $ 1,700,000 $ 1,699,433
Aristar, Inc., 6.055% Notes, Due
07/06/95 2,000,000 1,998,328
Caterpillar Financial Services Corp.,
5.823% Notes, Due 11/21/95 500,000 488,739
Coca Cola Enterprises, Inc., 6.133%
Notes, Due 11/20/95 2,000,000 1,953,061
Countrywide Funding Corp., 6.056% Notes,
Due 07/25/95 460,000 458,154
Countrywide Funding Corp., 6.093% Notes,
Due 08/04/95 873,000 868,012
Duracell, Inc., 6.098% Notes, Due
07/11/95 2,280,000 2,276,175
Duracell, Inc., 6.091% Notes, Due
08/07/95 1,070,000 1,063,402
Duracell, Inc., 6.049% Notes, Due
09/06/95 400,000 395,570
Falcon Asset Securitization Corp.,
6.122% Notes, Due 07/17/95 300,000 299,187
Finova Capital Corp., 6.037% Notes, Due
07/13/95 2,500,000 2,495,000
GTE Finance Corp., 6.109% Notes, Due
07/26/95 2,124,000 2,115,032
Pennsylvania Power & Light Energy,
6.110% Notes, Due 08/07/95 685,000 680,762
Pennsylvania Power & Light Energy,
6.139% Notes, Due 07/12/95 2,614,000 2,609,168
Pennsylvania Power & Light Energy,
6.055% Notes, Due 07/19/95 470,000 468,584
Pepsico, Inc., 6.403% Notes, Due
10/31/95 100,000 97,906
Preferred Receivables Funding Corp.,
6.023% Notes, Due 07/11/95 375,000 374,378
Public Service Electric & Gas Co.,
5.941% Notes, Due 09/01/95 1,000,000 989,908
Sears Roebuck Acceptance Corp., 6.047%
Notes, Due 07/17/95 410,000 408,903
<CAPTION>
SHORT-TERM PRINCIPAL
INVESTMENTS [NOTE 2] AMOUNT VALUE
--------------------------------------------------------------------
<S> <C> <C>
Sears Roebuck Acceptance Corp., 6.039%
Notes, Due 07/10/95 $ 1,109,000 $ 1,107,331
US West Communications, 6.054% Notes,
Due 07/10/95 500,000 499,250
Whirlpool Corp., 6.144% Notes, Due
07/19/95 560,000 558,306
Whirlpool Corp., 6.143% Notes, Due
07/19/95 840,000 837,459
Whirlpool Financial Corp., 6.145% Notes,
Due 07/19/95 2,322,000 2,314,976
Xerox Credit Corp., 6.048% Notes, Due
07/17/95 2,959,000 2,951,083
Xerox Credit Corp., 6.041% Notes, Due
07/18/95 136,000 135,613
------------ ------------
30,287,000 30,143,720
---------------------------------------------------
OTHER CORPORATE DEBT--U.S. (30.7%)
(MASTER NOTES, MEDIUM TERM NOTES, ASSET BACKED SECURITIES, CORPORATE
BONDS)
Associates Corp. of North America,
5.931% Corporate Bond, Due 02/15/96 100,000 99,129
Associates Corp. of North America,
6.506% Medium Term Note, Due 03/29/96 400,000 394,800
Beneficial Corp., 4.557% Medium Term
Note, Due 07/19/95# 1,000,000 999,964
Ford Motor Credit Corp., 6.280%
Corporate Bond, Due 12/15/95 400,000 405,022
Ford Motor Credit Corp., 6.602%
Corporate Bond, Due 03/15/96 1,000,000 1,015,300
Ford Motor Credit Corp., 5.894%
Corporate Bond, Due 05/15/96 1,500,000 1,529,553
General Motors Acceptance Corp., 6.497%
Medium Term Note, Due 11/15/95 2,900,000 2,882,106
General Motors Acceptance Corp., 6.099%
Corporate Bond, Due 02/01/96 460,000 466,849
</TABLE>
15
<PAGE>
FINANCIAL STATEMENTS OF VCA-11
STATEMENT OF NET ASSETS (UNAUDITED) JUNE 30, 1995
<TABLE>
<CAPTION>
SHORT-TERM PRINCIPAL
INVESTMENTS [NOTE 2] AMOUNT VALUE
--------------------------------------------------------------------
<S> <C> <C>
General Motors Acceptance Corp., 6.097%
Medium Term Note, Due 02/05/96 $ 400,000 $ 406,769
Goldman Sachs Group L.P., 5.375% Medium
Term Note, Due 07/22/96# 3,000,000 3,000,000
Household Finance Corp., 6.559%
Corporate Bond, Due 02/15/96 1,300,000 1,321,756
International Lease Finance Corp.,
6.211% Corporate Bond, Due 12/15/95 570,000 571,685
John Deere Owner Trust, 6.000% Asset
Backed Security, Due 02/15/96# 2,777,552 2,777,552
Lehman Brothers Holdings, Inc., 6.263%
Master Note, Due 11/20/95# 2,000,000 2,000,000
Merrill Lynch & Co. Inc., 4.842% Medium
Term Note, Due 09/22/95# 1,000,000 999,955
Merrill Lynch & Co. Inc., 4.905% Medium
Term Note, Due 10/02/95# 1,500,000 1,499,925
Money Market Auto Loan Trust, 3.330%
Asset Backed Security, Due 05/31/96# 1,000,000 1,000,000
Morgan Stanley Group, Inc., 3.592%
Corporate Bond, Due 06/17/96# 1,000,000 1,000,000
Morgan Stanley Group, Inc., 3.530%
Corporate Bond, Due 06/17/96# 1,000,000 1,000,000
Shell Oil Company, 6.072% Corporate
Bond, Due 09/15/95 150,000 150,254
------------ ------------
23,457,552 23,520,619
---------------------------------------------------
OTHER BANK RELATED INSTRUMENTS--U.S. (6.1%)
(BANK NOTES)
American Express Centurion Bank, 4.823%
Bank Note, Due 08/18/95# 1,000,000 999,986
First National Bank of Chicago, 5.900%
Bank Note, Due 09/28/95 500,000 500,452
Nationsbank Texas, 7.150% Bank Note, Due
02/06/96 2,000,000 1,998,169
<CAPTION>
SHORT-TERM PRINCIPAL
INVESTMENTS [NOTE 2] AMOUNT VALUE
--------------------------------------------------------------------
<S> <C> <C>
Society National Bank Cleveland, 5.735%
Bank Note, Due 04/15/96 $ 400,000 $ 402,906
Society National Bank Cleveland, 6.499%
Bank Note, Due 04/15/96 750,000 747,063
------------ ------------
4,650,000 4,648,576
---------------------------------------------------
COMMERCIAL PAPER--FOREIGN (5.2%)
American Honda Finance Corp., 6.132%
Notes, Due 07/10/95 823,000 821,755
American Honda Finance Corp., 6.129%
Notes, Due 07/24/95 2,900,000 2,888,791
Anz (Delaware), Inc., 6.094% Notes, Due
08/08/95 143,000 142,087
Bat Capital Corp., 6.130% Notes, Due
07/26/95 100,000 99,576
------------ ------------
3,966,000 3,952,209
---------------------------------------------------
CERTIFICATES OF DEPOSIT--FOREIGN (17.0%)
Dai-Ichi Kangyo Bank, Ltd., 6.070%
Certificate of Deposit, Due 07/03/95 2,000,000 1,999,989
Industrial Bank of Japan, Ltd., 6.050%
Certificate of Deposit, Due 07/17/95 3,000,000 3,000,000
Mitsubishi Bank, Ltd., 6.030% Euro
Certificate of Deposit, Due 08/07/95 2,000,000 1,999,646
National Westminster Bank PLC, 6.100%
Euro Certificate of Deposit, Due
07/14/95 1,000,000 999,960
Norinchukin Bank, 6.050% Certificate of
Deposit, Due 07/20/95 3,000,000 3,000,017
Sanwa Bank, Ltd., 6.070% Certificate of
Deposit, Due 07/17/95 2,000,000 2,000,090
------------ ------------
13,000,000 12,999,702
---------------------------------------------------
EURO TIME DEPOSIT--FOREIGN (0.2%)
Mitsubishi Bank, Ltd., 6.483% Euro Time
Deposit, Due 07/03/95 126,000 126,000
---------------------------------------------------
TOTAL SHORT-TERM INVESTMENTS (98.6%) (Cost:
$75,390,826) $75,390,826
---------------------------------------------------
</TABLE>
16
<PAGE>
FINANCIAL STATEMENTS OF VCA-11
STATEMENT OF NET ASSETS (UNAUDITED) JUNE 30, 1995
<TABLE>
<CAPTION>
SHORT-TERM
INVESTMENTS [NOTE 2] VALUE
--------------------------------------------------------------------
<S> <C> <C>
OTHER ASSETS, LESS LIABILITIES
Cash $ 620,795
Interest Receivable 375,930
Pending Transfers 65,702
---------------------------------------------------
TOTAL OTHER ASSETS, LESS LIABILITIES (1.4%)
$1,062,427
---------------------------------------------------
NET ASSETS (100%) $76,453,253
---------------------------------------------------
<CAPTION>
SHORT-TERM
INVESTMENTS [NOTE 2] VALUE
--------------------------------------------------------------------
<S> <C> <C>
NET ASSETS, REPRESENTING:
Equity of Participants
34,509,674 Units at a Unit Value of
$2.1606 (rounded) $74,560,531
Equity of The Prudential Insurance
Company of America 1,892,722
---------------------------------------------------
$76,453,253
--------------------------------------------------------------------
--------------------------------------------------------------------
</TABLE>
#Indicates a variable rate security.
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
FINANCIAL STATEMENTS OF VCA-11
STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<S> <C>
------------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30 1995
------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME [NOTE 2]
Interest $2,291,939
------------------------------------------------------------------------------------------------------------
EXPENSES [NOTE 3]
Fees Charged to Participants for Investment Management Services 89,839
Fees Charged to Participants for Administrative Expenses 269,517
------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,932,583
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31, 1994
-------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,932,583 $ 2,390,610
-------------------------------------------------------------------------------------------------------
CAPITAL TRANSACTIONS
Purchase Payments and Transfers In [Note 7] 36,918,073 52,961,340
Withdrawals and Transfers Out [Note 7] (38,846,768) (40,440,037)
Annual Account Charges Deducted from Participants'
Accounts
[Note 4] (2,736) (34,832)
Deferred Sales Charge [Note 5] (11,194) (16,777)
-------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM CAPITAL TRANSACTIONS (1,942,625) 12,469,694
-------------------------------------------------------------------------------------------------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS (10,042) 14,860,304
NET ASSETS
Beginning of Period 76,463,295 61,602,991
-------------------------------------------------------------------------------------------------------
End of Period $ 76,453,253 $ 76,463,295
-------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
Notes to Financial Statements of VCA-11 (Unaudited)
Six Months Ended June 30, 1995 and Year Ended December 31, 1994
--------------------------------------------------------------------------------
NOTE 1: GENERAL
The Prudential Variable Contract Account-11 (VCA-11 or the Account) was
established by The Prudential Insurance Company of America (The
Prudential) under the laws of the State of New Jersey and is registered
as an open-end, diversified management investment company under the
Investment Company Act of 1940, as amended. VCA-11 has been designed
for use by employers (Contract-holders) in making retirement
arrangements on behalf of their employees (Participants). Its
investments are primarily composed of short-term securities. All
contractual and other obligations arising under contracts participating
in VCA-11 are general corporate obligations of The Prudential, although
Participants' payments from the Account will depend upon the investment
experience of the Account.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. SHORT-TERM INVESTMENTS
Pursuant to an exemptive order from the Securities and Exchange
Commission, securities having a remaining maturity of 397 days or less
are valued at amortized cost which, with accrued interest, approximates
market value. Amortized cost is computed using the cost on the date of
purchase adjusted for constant accrual of discount or amortization of
premium to maturity. The rate displayed is the effective yield from the
date of purchase to the date of maturity.
B. INCOME RECOGNITION
Income on investments is allocated to the Participants and The
Prudential on a daily basis in proportion to their respective equities
in VCA-11. Interest income is accrued daily. Security transactions are
recorded on trade date.
C. TAXES
The operations of VCA-11 are part of, and are taxed with, the
operations of The Prudential. Under the current provisions of the
Internal Revenue Code, The Prudential does not expect to incur federal
income taxes on earnings of VCA-11 to the extent the earnings are
credited under the contracts. As a result, the Unit Value of VCA-11 has
not been reduced by federal income taxes.
NOTE 3: EXPENSES
A daily charge, at an effective annual rate of 1.00% of the current
value of the Participant's equity in VCA-11, is paid to The Prudential.
Three quarters of this charge (0.75%) is for administrative expenses
not covered by the annual account charge, and one quarter (0.25%) is
for investment management services.
NOTE 4: ANNUAL ACCOUNT CHARGE
An annual account charge is deducted from the account of each
Participant at the time of withdrawal of the value of all of the
Participant's accounts or at the end of the accounting year by
cancelling Units. The charge will first be made against a Participant's
account under a fixed dollar annuity companion contract or fixed rate
option of the non-qualified combination contract. If the Participant
has no account under a companion contract or the fixed rate option, or
if the amount under the companion contract or the fixed rate option is
too small to pay the charge, the charge will be made against the
Participant's account in VCA-11. If the Participant has no VCA-11
account, or if the amount under that account is too small to pay the
charge, the charge will then be made against the Participant's VCA-10
account. If the Participant has no VCA-10 account, or if it is too
small to pay the charge, the charge will then be made against any one
or more of the Participant's accounts in VCA-24. The annual account
charge will not be greater than $20 and is paid to The Prudential.
NOTE 5: DEFERRED SALES CHARGE
A deferred sales charge is imposed upon that portion of certain
withdrawals which represents a return of contributions. The charge is
designed to compensate The Prudential for sales and other marketing
expenses. The maximum deferred sales charge is 7% on contributions
withdrawn from an account during the first two years of participation,
6% on contributions withdrawn during the third through fifth years, 4%
on contributions withdrawn during the sixth through tenth years, and 3%
on contributions withdrawn during the eleventh through fifteenth years.
No deferred sales charge is imposed upon contributions withdrawn for
any reason after fifteen years of participation in the Program. In
addition, no deferred sales charge is imposed upon contributions
withdrawn to purchase an annuity under a Contract, to provide a death
benefit, pursuant to a
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF VCA-11 (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
systematic withdrawal plan, to provide a minimum distribution payment,
or in cases of financial hardship or disability retirement as
determined pursuant to provisions of the employer's retirement
arrangement. Further, for all plans other than IRAs, no deferred sales
charge is imposed upon contributions withdrawn due to resignation or
retirement by the Participant or termination of the Participant by the
Contract-Holder. Contributions transferred among VCA-10, VCA-11, the
Subaccounts of VCA-24 and a Companion Contract are considered to be
withdrawals from the Account or Subaccount from which the transfer is
made, but no deferred sales charge is imposed upon them.
NOTE 6: UNIT TRANSACTIONS
The number of Units issued and redeemed for the six months ended June
30, 1995 and the year ended December 31, 1994 is as follows:
<TABLE>
<S> <C> <C>
1995 1994
--------------------------------------------
Units issued 17,353,151 25,656,212
--------------------------------------------
Units redeemed 18,291,718 19,628,580
--------------------------------------------
</TABLE>
NOTE 7: PARTICIPANT LOANS
Loans are considered to be withdrawals from the Account from which the
loan amount was deducted though are not considered a withdrawal from
the Program. Therefore, no deferred sales charge is imposed upon them.
The principal portion of any loan repayment, however, will be treated
as a contribution to the receiving Account for purposes of calculating
any deferred sales charge imposed upon any subsequent withdrawal. If
the Participant defaults on the loan, for example by failing to make
required payments, the outstanding balance of the loan will be treated
as a withdrawal for purposes of the deferred sales charge. The deferred
sales charge will be withdrawn from the same Accumulation Accounts, and
in the same proportions, as the loan amount was withdrawn. If
sufficient funds do not remain in those Accumulation Accounts, the
deferred sales charge will be withdrawn from the Participant's other
Accumulation Accounts as well.
Withdrawals, transfers and loans from VCA-11 are considered to be
withdrawals of contributions until all of the Participant's
contributions to the Account have been withdrawn, transferred or
borrowed. No deferred sales charge is imposed upon withdrawals of any
amount in excess of contributions.
For the six months ended June 30, 1995 $248,708 in participant loans
has been withdrawn from VCA-11 and $27,307 of principal has been repaid
to VCA-11. For the year ended December 31, 1994, $379,019 in
participant loans had been withdrawn from VCA-11 and $27,165 of
principal had been repaid to VCA-11. Loan repayments are invested in
Participant's account(s) as chosen by the Participant, which may not
necessarily be VCA-11. The initial loan proceeds may not necessarily
have originated solely from VCA-11.
20
<PAGE>
VCA-24
INVESTMENT PERFORMANCE
Each of the Subaccounts in VCA-24 invests in a corresponding Portfolio of The
Prudential Series Fund, Inc. A portfolio review, discussion of factors affecting
performance and the financial statements for each of these Portfolios is
presented on the pages following the VCA-24 financial statements. The rates of
return presented for the Portfolios include the deduction of investment
managements fees and other expenses charged to each portfolio, but do not
include the administrative fee deducted in calculating the VCA-24 Contract unit
value. The total return results for the six month period ended June 30, 1995 for
each VCA-24 Subaccount, including the deduction of the administrative fee, is
shown below:
<TABLE>
<S> <C>
Bond 11.67%
Government Securities 11.56%
Conservatively Managed Flexible 9.43%
Aggressively Managed Flexible 11.75%
Stock Index 19.52%
Common Stock 16.15%
Global Equity 9.05%
</TABLE>
These returns do not take into account a deferred sales charge or the imposition
of an annual account charge, if any.
21
<PAGE>
CONDENSED FINANCIAL INFORMATION
ACCUMULATION UNIT VALUE INFORMATION PER VCA-24 UNIT
<TABLE>
<CAPTION>
SUBACCOUNTS
--------------------------------------------------
COMMON STOCK BOND
------------------------ ------------------------
01/01/95 01/01/94 01/01/95 01/01/94
TO TO TO TO
06/30/95 12/31/94 06/30/95 12/31/94
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Beginning of period (rounded)...................................... $ 2.0541 $ 2.0136 $ 1.6746 $ 1.7435
End of period (rounded)............................................ $ 2.3859 $ 2.0541 $ 1.8700 $ 1.6746
Accumulation Units
Outstanding at end of period (000 omitted)....................... 108,583 99,323 15,655 14,575
<CAPTION>
AGGRESSIVELY CONSERVATIVELY
MANAGED FLEXIBLE MANAGED FLEXIBLE
------------------------ ------------------------
01/01/95 01/01/94 01/01/95 01/01/94
TO TO TO TO
06/30/95 12/31/94 06/30/95 12/31/94
<S> <C> <C> <C> <C>
----------- ----------- ----------- -----------
Beginning of period (rounded)...................................... $ 1.7886 $ 1.8609 $ 1.7175 $ 1.7473
End of period (rounded)............................................ $ 1.9987 $ 1.7886 $ 1.8795 $ 1.7175
Accumulation Units
Outstanding at end of period (000 omitted)....................... 47,679 44,729 45,065 43,594
<CAPTION>
STOCK INDEX GLOBAL EQUITY
------------------------ ------------------------
01/01/95 01/01/94 01/01/95 01/01/94
TO TO TO TO
06/30/95 12/31/94 06/30/95 12/31/94
<S> <C> <C> <C> <C>
----------- ----------- ----------- -----------
Beginning of period (rounded)...................................... $ 2.0123 $ 2.0072 $ 1.3020 $ 1.3791
End of period (rounded)............................................ $ 2.4052 $ 2.0123 $ 1.4198 $ 1.3020
Accumulation Units
Outstanding at end of period (000 omitted)....................... 44,653 40,522 22,521 21,739
<CAPTION>
GOVERNMENT SECURITIES
------------------------
01/01/95 01/01/94
TO TO
06/30/95 12/31/94
<S> <C> <C> <C> <C>
----------- -----------
Beginning of period (rounded)...................................... $ 1.2421 $ 1.3196
End of period (rounded)............................................ $ 1.3857 $ 1.2421
Accumulation Units
Outstanding at end of period (000 omitted)....................... 16,281 16,140
</TABLE>
22
<PAGE>
FINANCIAL STATEMENTS OF VCA-24
STATEMENTS OF NET ASSETS (UNAUDITED)
June 30, 1995
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------
AGGRESSIVELY CONSERVATIVELY
COMMON MANAGED MANAGED STOCK
STOCK BOND FLEXIBLE FLEXIBLE INDEX
-------------- ------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
Investment in Shares of The
Prudential Series Fund, Inc.
Portfolios at Net Asset Value [Note
2]............................... $ 259,943,422 $ 29,418,571 $ 95,632,848 $ 84,989,302 $ 107,413,256
Pending Transfers.................... (230,862) 124,343 41,542 83,637 365,560
-------------- ------------- -------------- ---------------- --------------
NET ASSETS........................... 259,712,560 29,542,914 95,674,390 85,072,939 107,778,816
NET ASSETS, REPRESENTING:
Equity of Participants............. 259,070,750 29,273,854 95,297,805 84,700,387 107,398,920
Equity of The Prudential Insurance
Company of America............... 641,810 269,060 376,585 372,552 379,896
-------------- ------------- -------------- ---------------- --------------
$ 259,712,560 $ 29,542,914 $ 95,674,390 $ 85,072,939 $ 107,778,816
-------------- ------------- -------------- ---------------- --------------
-------------- ------------- -------------- ---------------- --------------
<CAPTION>
GLOBAL GOVERNMENT
EQUITY SECURITIES
------------- -------------
<S> <C> <C>
Investment in Shares of The
Prudential Series Fund, Inc.
Portfolios at Net Asset Value [Note
2]............................... $ 31,818,707 $ 22,677,168
Pending Transfers.................... 237,786 114,987
------------- -------------
NET ASSETS........................... 32,056,493 22,792,155
NET ASSETS, REPRESENTING:
Equity of Participants............. 31,974,945 22,561,298
Equity of The Prudential Insurance
Company of America............... 81,548 230,857
------------- -------------
$ 32,056,493 $ 22,792,155
------------- -------------
------------- -------------
</TABLE>
STATEMENTS OF OPERATIONS (UNAUDITED)
Six months ended June 30, 1995
<TABLE>
<CAPTION>
SUBACCOUNTS
-------------------------------------------------------------------------------
AGGRESSIVELY CONSERVATIVELY
COMMON MANAGED MANAGED STOCK
STOCK BOND FLEXIBLE FLEXIBLE INDEX
-------------- ------------- -------------- ---------------- --------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Distribution Received..... $ 2,253,464 $ 664,280 $ 976,113 $ 1,173,800 $ 655,408
EXPENSES [NOTE 3]
Fees Charged to Participants for
Administrative Expenses.......... 870,383 100,254 323,323 294,987 350,493
-------------- ------------- -------------- ---------------- --------------
INVESTMENT INCOME--NET............... 1,383,081 564,026 652,790 878,813 304,915
Realized and Unrealized Gain/ (Loss)
on Investments--Net
Realized Gain/(Loss)on
Investments--Net................... (53,564) (126,067) (258,741) (167,006) 102,831
Unrealized Increase in Value of
Investments--Net................... 33,019,670 2,545,885 9,319,977 6,395,433 16,276,439
-------------- ------------- -------------- ---------------- --------------
NET GAIN ON INVESTMENTS.............. 32,966,106 2,419,818 9,061,236 6,228,427 16,379,270
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................... $ 34,349,187 $ 2,983,844 $ 9,714,026 $ 7,107,240 $ 16,684,185
-------------- ------------- -------------- ---------------- --------------
-------------- ------------- -------------- ---------------- --------------
<CAPTION>
GLOBAL GOVERNMENT
EQUITY SECURITIES
------------- -------------
<S> <C> <C>
INVESTMENT INCOME
Dividend Distribution Received..... $ 48,995 $ 491,138
EXPENSES [NOTE 3]
Fees Charged to Participants for
Administrative Expenses.......... 108,742 79,021
------------- -------------
INVESTMENT INCOME--NET............... (59,747) 412,117
Realized and Unrealized Gain/ (Loss)
on Investments--Net
Realized Gain/(Loss)on
Investments--Net................... (233,352) (121,797)
Unrealized Increase in Value of
Investments--Net................... 2,912,215 2,020,226
------------- -------------
NET GAIN ON INVESTMENTS.............. 2,678,863 1,898,429
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS.................... $ 2,619,116 $ 2,310,546
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
FINANCIAL STATEMENTS OF VCA-24
STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)
<TABLE>
<CAPTION>
SUBACCOUNTS
----------------------------------------------------------------------------------------------------------------
AGGRESSIVELY CONSERVATIVELY
MANAGED MANAGED
COMMON BOND FLEXIBLE FLEXIBLE
STOCK -------------------------- -------------------------- --------------------------
---------------------------- JANUARY 1 TO JANUARY 1 TO JANUARY 1 TO JANUARY 1 TO JANUARY 1 TO JANUARY 1 TO
JANUARY 1 TO JANUARY 1 TO JUNE 30, DEC. 31, JUNE 30, DEC. 31, JUNE 30, DEC. 31,
JUNE 30, 1995 DEC. 31, 1994 1995 1994 1995 1994 1995 1994
------------- ------------- ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET
INCREASE/(DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS...... $ 34,349,187 $ 3,683,694 $ 2,983,844 $ (950,397) $ 9,714,026 $(2,808,337) $ 7,107,240 $(1,186,990)
ACCUMULATION UNIT
TRANSACTIONS
Purchase
Payments and
Transfers In
[Note 8]...... 37,097,211 65,892,826 5,433,184 8,453,804 12,644,911 27,554,349 9,882,612 21,956,428
Withdrawals and
Transfers Out
[Note 8]...... (16,274,674) (26,512,808) (3,487,884) (8,339,324) (6,974,753) (11,787,729) (7,088,721) (10,391,865)
Annual Account
Charges
Deducted from
Participants'
Accumulation
Accounts [Note
4]............ (4,211) (62,784) (805) (8,160) (1,725) (23,750) (2,323) (25,350)
Deferred Sales
Charge [Note
5]............ (52,706) (26,031) (7,087) (2,855) (12,769) (6,972) (16,290) (7,805)
------------- ------------- ------------ ------------ ------------ ------------ ------------ ------------
INCREASE IN NET
ASSETS RESULTING
FROM
ACCUMULATION
UNIT
TRANSACTIONS.... 20,765,620 39,291,203 1,937,408 103,465 5,655,664 15,735,898 2,775,278 11,531,408
------------- ------------- ------------ ------------ ------------ ------------ ------------ ------------
TOTAL
INCREASE/(DECREASE)
IN NET ASSETS... 55,114,807 42,974,897 4,921,252 (846,932) 15,369,690 12,927,561 9,882,518 10,344,418
NET ASSETS
Beginning of
Period........ 204,597,753 161,622,856 24,621,662 25,468,594 80,304,700 67,377,139 75,190,421 64,846,003
------------- ------------- ------------ ------------ ------------ ------------ ------------ ------------
End of Period... $259,712,560 $204,597,753 $29,542,914 $24,621,662 $95,674,390 $80,304,700 $85,072,939 $75,190,421
------------- ------------- ------------ ------------ ------------ ------------ ------------ ------------
------------- ------------- ------------ ------------ ------------ ------------ ------------ ------------
<CAPTION>
SUBACCOUNTS
------------------------------------------------------------------------------------
GLOBAL GOVERNMENT
STOCK EQUITY SECURITIES
INDEX -------------------------- --------------------------
---------------------------- JANUARY 1 TO JANUARY 1 TO JANUARY 1 TO JANUARY 1 TO
JANUARY 1 TO JANUARY 1 TO JUNE 30, DEC. 31, JUNE 30, DEC. 31,
JUNE 30, 1995 DEC. 31, 1994 1995 1994 1995 1994
------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET
INCREASE/(DECREASE)
IN NET ASSETS
RESULTING FROM
OPERATIONS...... $ 16,684,185 $ 284,135 $ 2,619,116 $(1,661,352) $ 2,310,546 $(1,281,648)
ACCUMULATION UNIT
TRANSACTIONS
Purchase
Payments and
Transfers In
[Note 8]...... 16,702,194 28,168,953 11,177,384 26,544,981 2,780,238 7,998,321
Withdrawals and
Transfers Out
[Note 8]...... (7,510,423) (11,473,983) (10,179,905) (13,664,123) (2,552,343) (7,191,336)
Annual Account
Charges
Deducted from
Participants'
Accumulation
Accounts [Note
4]............ (1,058) (13,939) (488) (2,860) (318) (2,516)
Deferred Sales
Charge [Note
5]............ (6,987) (14,227) (5,193) (1,968) (6,709) (2,287)
------------- ------------- ------------ ------------ ------------ ------------
INCREASE IN NET
ASSETS RESULTING
FROM
ACCUMULATION
UNIT
TRANSACTIONS.... 9,183,726 16,666,804 991,798 12,876,030 220,868 802,182
------------- ------------- ------------ ------------ ------------ ------------
TOTAL
INCREASE/(DECREASE)
IN NET ASSETS... 25,867,911 16,950,939 3,610,914 11,214,678 2,531,414 (479,466)
NET ASSETS
Beginning of
Period...... 81,910,905 64,959,966 28,445,579 17,230,901 20,260,741 20,740,207
------------- ------------- ------------ ------------ ------------ ------------
End of
Period...... $107,778,816 $ 81,910,905 $32,056,493 $28,445,579 $22,792,155 $20,260,741
------------- ------------- ------------ ------------ ------------ ------------
------------- ------------- ------------ ------------ ------------ ------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF VCA-24 (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
NOTE 1: GENERAL
The Prudential Variable Contract Account-24 (VCA-24 or the Account) was
established by The Prudential Insurance Company of America (The
Prudential) under the laws of the State of New Jersey and is registered
as a unit investment trust under the Investment Company Act of 1940, as
amended. VCA-24 has been designed for use by employers
(Contract-holders) in making retirement arrangements on behalf of their
employees (Participants).
The Account is comprised of seven Subaccounts. Each of the Subaccounts
invests in a corresponding portfolio of The Prudential Series Fund,
Inc. (the Fund). The Common Stock Subaccount invests in the Common
Stock Portfolio, the Bond Subaccount invests in the Bond Portfolio, the
Aggressively Managed Flexible Subaccount invests in the Aggressively
Managed Flexible Portfolio, the Conservatively Managed Flexible
Subaccount invests in the Conservatively Managed Flexible Portfolio,
the Stock Index Subaccount invests in the Stock Index Portfolio, the
Global Equity Subaccount invests in the Global Equity Portfolio, and
the Government Securities Subaccount invests in the Government
Securities Portfolio. All contractual and other obligations arising
under contracts participating in VCA-24 are general corporate
obligations of The Prudential, although Participants' payments from the
Account will depend upon the investment experience of the Account.
NOTE 2: INVESTMENT INFORMATION
The number of shares of each portfolio of the Fund, the Net Asset Value
(NAV) per share for each portfolio held by the Subaccounts of VCA-24,
and the aggregate cost of investments in such shares as of June 30,
1995 are as follows:
<TABLE>
<CAPTION>
AGGRESSIVELY CONSERVATIVELY
COMMON MANAGED MANAGED STOCK GLOBAL GOVERNMENT
STOCK BOND FLEXIBLE FLEXIBLE INDEX EQUITY SECURITIES
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Number of Shares 10,885,371 2,675,581 5,559,432 5,567,213 6,022,989 2,097,816 1,978,648
-----------------------------------------------------------------------------------------------------------------------
NAV per Share $ 23.8801 $ 10.9952 $ 17.2019 $ 15.2660 $ 17.8339 $ 15.1675 $ 11.4609
-----------------------------------------------------------------------------------------------------------------------
Cost at 6-30-95 $215,965,917 $28,544,327 $ 88,229,299 $ 79,446,072 $ 85,484,195 $ 27,378,290 $21,949,567
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 3: EXPENSES
A daily charge at an effective annual rate of 0.75% of the Net Asset
Value of each Subaccount of VCA-24 is paid to The Prudential for
administrative expenses not covered by the annual account charge.
NOTE 4: ANNUAL ACCOUNT CHARGE
An annual account charge is deducted from the account of each
Participant at the time of withdrawal of the value of all of the
Participant's accounts or at the end of the accounting year by
cancelling Units. The charge will first be made against a Participant's
account under a fixed dollar annuity companion contract or fixed rate
option of the non-qualified combination contract. If the Participant
has no account under a companion contract or the fixed rate option, or
if the amount under the companion contract or the fixed rate option is
too small to pay the charge, the charge will be made against the
Participant's account in VCA-11. If the Participant has no VCA-11
account or if the amount under that account is too small to pay the
charge, the charge will then be made against the Participant's VCA-10
account. If the Participant has no VCA-10 account, or if it is too
small to pay the charge, the charge will then be made against any one
or more of the Participant's accounts in VCA-24. The annual account
charge will not exceed $20 and is paid to The Prudential.
NOTE 5: DEFERRED SALES CHARGE
A deferred sales charge is imposed upon the withdrawal of certain
purchase payments to compensate The Prudential for sales and other
marketing expenses. The maximum deferred sales charge is 7% on
contributions withdrawn during the first two years of participation, 6%
on contributions withdrawn during the third through fifth years, 4% on
contributions withdrawn during the sixth through tenth years, and 3% on
contributions withdrawn during the eleventh through fifteenth years. No
deferred sales charge is imposed upon contributions withdrawn for any
reason after fifteen years of participation in a Program. In addition,
no deferred sales charge is imposed upon contributions withdrawn to
purchase an annuity under a Contract, to provide a death benefit,
pursuant to a systematic withdrawal plan, to provide a minimum
distribution payment, or in
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF VCA-24 (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
cases of financial hardship or disability retirement as determined
pursuant to provisions of the employer's retirement arrangement.
Further, for all plans other than IRAs, no deferred sales charge is
imposed upon contributions withdrawn due to resignation or retirement
by the Participant or termination of the Participant by the
Contract-holder. Contributions transferred among VCA-10, VCA-11, the
Subaccounts of VCA-24, the companion contract, and the fixed rate
option of the non-qualified combination contract are considered to be
withdrawals from the Account or Subaccount from which the transfer is
made, but no deferred sales charge is imposed upon them.
NOTE 6: TAXES
The operations of VCA-24 are part of, and are taxed with, the
operations of The Prudential. Under the current provisions of the
Internal Revenue Code, The Prudential does not expect to incur federal
income taxes on earnings of VCA-24 to the extent the earnings are
credited under the Contract. As a result, the Unit Value of VCA-24 has
not been reduced by federal income taxes.
NOTE 7: UNIT TRANSACTIONS
The number of units issued and redeemed during the six months ended
June 30, 1995 is as follows:
1995
<TABLE>
<CAPTION>
AGGRESSIVELY CONSERVATIVELY
COMMON MANAGED MANAGED STOCK GLOBAL GOVERNMENT
STOCK BOND FLEXIBLE FLEXIBLE INDEX EQUITY SECURITIES
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units issued 16,691,463 3,106,962 6,772,682 5,533,025 7,566,599 8,615,095 2,123,483
---------------------------------------------------------------------------------------------------------------
Units redeemed 7,431,507 2,027,643 3,822,296 4,061,557 3,435,560 7,833,035 1,982,003
---------------------------------------------------------------------------------------------------------------
</TABLE>
The number of units issued and redeemed during the year ended December
31, 1994 is as follows:
1994
<TABLE>
<CAPTION>
AGGRESSIVELY CONSERVATIVELY
COMMON MANAGED MANAGED STOCK GLOBAL GOVERNMENT
STOCK BOND FLEXIBLE FLEXIBLE INDEX EQUITY SECURITIES
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Units issued 32,467,788 5,000,706 15,263,070 12,718,412 14,115,039 19,450,002 6,275,588
---------------------------------------------------------------------------------------------------------------
Units redeemed 13,129,215 4,906,946 6,568,889 6,056,615 5,771,986 10,078,803 5,691,522
---------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE 8: PARTICIPANT LOANS
Loans are considered to be withdrawals from the Subaccount from which
the loan amount was deducted, however, no deferred sales charge is
imposed upon them. The principal portion of any loan repayment,
however, will be treated as a contribution to the receiving Subaccount
for purposes of calculating any deferred sales charge imposed upon any
subsequent withdrawal. If the Participant defaults on the loan by, for
example failing to make required payments, the outstanding balance of
the loan will be treated as a withdrawal for purposes of the deferred
sales charge. The deferred sales charge will be withdrawn from the same
Accumulation Accounts, and in the same proportions, as the loan amount
was withdrawn. If sufficient funds do not remain in those Accumulation
Accounts, the deferred sales charge will be withdrawn from the
Participant's other Accumulation Accounts as well.
Withdrawals, transfers and loans from each Subaccount of VCA-24 are
considered to be withdrawals of contributions until all of the
Participant's contributions to the Subaccount have been withdrawn,
transferred or borrowed. No deferred sales charge is imposed upon
withdrawals of any amount in excess of contributions.
For the six months ended June 30, 1995, the amount of participant loans
that has been withdrawn from the Subaccounts and the amount of
principal that has been repaid to the Subaccounts is as follows:
1995
<TABLE>
<CAPTION>
AGGRESSIVELY CONSERVATIVELY
COMMON MANAGED MANAGED STOCK GLOBAL GOVERNMENT
STOCK BOND FLEXIBLE FLEXIBLE INDEX EQUITY SECURITIES
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Loans $ 433,773 $ 81,123 $ 266,239 $139,744 $ 154,451 $ 76,416 $ 54,601
---------------------------------------------------------------------------------------------------------------
Repayments $ 101,622 $ 13,688 $ 56,338 $ 54,764 $ 62,681 $ 42,872 $ 4,994
---------------------------------------------------------------------------------------------------------------
</TABLE>
26
<PAGE>
NOTES TO FINANCIAL STATEMENTS OF VCA-24 (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 1995 AND YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------------------
For the year ended December 31, 1994, the amount of participant loans
that was withdrawn from the Subaccounts and the amount of principal
that was repaid to the Subaccounts was as follows:
1994
<TABLE>
<CAPTION>
AGGRESSIVELY CONSERVATIVELY
COMMON MANAGED MANAGED STOCK GLOBAL GOVERNMENT
STOCK BOND FLEXIBLE FLEXIBLE INDEX EQUITY SECURITIES
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Loans $ 619,162 $ 100,860 $ 331,831 $274,301 $ 315,157 $ 183,069 $ 51,430
---------------------------------------------------------------------------------------------------------------
Repayments $ 65,846 $ 10,295 $ 33,864 $ 25,486 $ 26,259 $ 17,114 $ 4,043
---------------------------------------------------------------------------------------------------------------
</TABLE>
Loan repayments are invested in Participant's account(s) as chosen by
the Participant, which may not necessarily be the Subaccount from which
the loan amount was deducted. The initial loan proceeds may not
necessarily have originated solely from the Subaccounts of VCA-24.
27
<PAGE>
The Prudential Series Fund, Inc.
SIX MONTHS ENDED JUNE 30, 1995
Dear MEDLEY Participant:
Over the past six months, both the U.S. stock and bond markets enjoyed
their best performance in nine years. After 1994's weak showing, both markets
came roaring back in the first six months of this year with double-digit
returns. These results show why it may be helpful to stay the course.
History shows that stocks tend to perform better than other investments
in the long run -- despite short-term volatility. Bonds can perform better
than fixed interest accounts, too. But that's advice easier to give than to
take. So we appreciate the confidence you have shown in us by entrusting your
retirement assets to The MEDLEY Program.
We've written this report to explain the investment strategies and
performance of your Portfolios over the last six months. We conclude with our
outlook for the second half of 1995. In short, we expect the positive
momentum to continue, albeit at a much slower pace. We do not expect a repeat
of the first half's unusually robust performance any time soon.
Stock & Bond Markets
REVIEW
STOCKS SOAR; BONDS REBOUND IN BEST SIX MONTHS IN 9 YEARS.
Stocks and bonds both soared during the first half of 1995, with stocks
powered primarily by higher corporate profits and bonds by lower interest
rates.
Both stocks and bonds posted double-digit returns for the six months
ended June 30, their best six months since the period ending in April 1986.
The Standard & Poor's 500 Stock Index, a broad measure of the U.S. stock
market, rose 20%, while the Lehman Brothers Aggregate Bond Index rose 11%.
Foreign markets also fared well (although not as well as the U.S.), with the
Morgan Stanley World Index gaining 9% in dollar terms. Last year's investment
of choice, money market funds, finished in last place as 3-month U.S.
Treasury bills earned just 3% in total return.
WHY DID INTEREST RATES FALL?
DIDN'T THEY JUST RISE?
Interest rates peaked last fall when an inflation scare drove the yield
of the 30-year U.S. Treasury bond to 8.2%. Eight months later on June 30,
that yield had plummeted to 6.6%, falling almost as rapidly as it rose last
year. Why the sharp change in sentiment? Last year the Federal Reserve
started driving up short-term interest rates, doubling them to 6% by February
1995, to try to slow the rapidly growing economy. When economic growth did
slow and the inflation threat did break, interest rates began declining.
The last interest rate to fall was the very short-term overnight lending
rate, or federal funds target rate, which is set by the Federal Reserve. The
rate was reduced on July 5, by a quarter of a percentage point, to 5.75%.
Thus, money market rates peaked in the first half of the year, along with
consumer lending rates, like the prime rate.
IMPORTANT NOTE:
This information supplements the financial statements and other
information included in this Report to Participants in The MEDLEY Program. It
highlights the investment performance of the seven Portfolios of The
Prudential Series Fund, Inc., which are available through the Prudential
Variable Contract Account-24. The rates of return quoted on the following
pages reflect deduction of investment management fees and fund expenses but
not product charges. They reflect the reinvestment of dividends and capital
gain distributions. They are not an estimate or a guarantee of future
performance. Contract unit values increase or decrease based on the
performance of the Portfolio. Changes in contract values depend not only on
the investment performance of the Portfolio but also on the insurance,
administrative charges and applicable sales charges, if any, under a
contract. These contract charges effectively reduce the dollar amount of any
net gains or increase the dollar amount of any net losses.
28
<PAGE>
U.S. Stocks
REVIEW
STOCKS FOLLOW BONDS HIGHER; DOW HITS 4000, THEN 4500.
Stocks were propelled higher by strong corporate earnings and lower
interest rates, which typically reduce operating costs and spark consumer
spending. Technology, financial services and energy stocks led the market.
The Dow Jones Industrial Average, a very narrow but frequently cited market
average, set new records of 4000 in March and 4500 in June. Just to put the
first half's highly unusual performance in perspective, consider that the
stock market's rise in 1995 to date is more than its increase in all of 1993
and 1994 combined.
/ / TECHNOLOGY stocks were turbo-charged, returning 39%, as a group. In
companies around the globe, improving technology has helped increase
productivity and has kept wages under control. As a result, worldwide demand
is surging for technology-related goods and services. In addition, home
computer sales have risen dramatically in the U.S. as CD-ROM and memory
prices have fallen. Many analysts believe that technolgoy shares have now
risen so far, so fast, that they may be vulnerable to a correction. However,
the underlying business fundamentals continue to improve and do not show
signs of weakening.
/ / FINANCIAL stocks, including banks, insurance and financial services
companies, returned 27% as a group. Financial services stocks were direct
beneficiaries of lower long-term interest rates, which made the cost of their
raw material -- money -- cheaper. Bank stocks also benefited from continuing
industry-wide consolidation.
/ / ENERGY stocks rose as demand for energy from industries around the world
began to outstrip supply for the first time in years. In addition, the number
of oil rigs in service has decreased dramatically, increasing the value of
oil exploration and production companies.
What didn't do as well?
/ / RETAIL stocks did not match the market's torrid pace, falling victim to
a slump in consumer spending. Personal income grew only moderately, while
baby boomers appeared to be less interested in fashion and more concerned
with saving.
/ / AUTO stocks fell back from their highs to their near-recessionary price
levels of 1990, and did not recover. Even though interest rates were
falling, recession-wary investors were not inclined to spend on big-ticket
items like cars.
U.S. Bonds
REVIEW
A ROUT TURNED INTO A RALLY.
After one of its worst years on record in 1994, the bond market
rebounded in a stunning rally, turning in its best performance in years. The
yield on the 30-year U.S. Treasury bond fell to 6.6% by June 30, pushing
prices up to levels unseen since early 1994. Virtually all bonds more than
made up the ground they had lost last year.
Long-term bonds performed best, since they appreciated most when
interest rates fell. Long-term U.S. corporate bonds returned 17% over the six
months, as measured by Lehman. Investment-grade corporate bonds were the
leading sector, followed by high yield and government bonds. Mortgage backed
securities did well early in the year but trailed later as lower interest rates
raised prepayment fears.
Foreign Stocks
REVIEW
FOREIGN MARKETS TRAIL U.S. FOR FIRST TIME IN TWO YEARS.
For the first time in two years, foreign stock markets lagged the U.S.
market, with the Morgan Stanley World Index gaining 9.4% in U.S. dollars. The
leading regions overseas were Europe, where stocks rose 13%, and the Pacific
Basin (excluding Japan), where stocks rose 7%. While Japan's stock market led
the world in 1994, prices fell by 8% this year.
There were plenty of reasons. Foreign markets were unnerved by the
bankruptcy of Baring Securities PLC, the Kobe earthquake in Japan and the
Mexican currency crisis. In Japan, the rising yen hurt exports, and political
uncertainty and a banking crisis sent stock prices lower. And despite
stronger corporate earnings, stock markets in Europe and the Pacific Rim
languished until the second quarter, when investor confidence improved.
Opportunities in Europe And the Pacific Basin.
U.S. stocks are now at all-time highs at a time when economic growth is
expected to slow. Overseas, the situation is reversed: the economies of many
countries are starting to pick up, while their stock markets appear
underpriced. Foreign corporate earnings are rising faster than U.S. earnings;
they are projected to rise 20% to 25% this year overseas, and only 10% in
the U.S., as measured by the S&P 500. Of course, foreign stocks pose a higher
level of risk than U.S. stocks. But we believe that the long-term advantages
offered by foreign stocks warrant consideration in a well-diversified
portfolio held by more aggressive investors. Investing in foreign securities
carries additional risks that are not normally associated with domestic
investing -- including currency risk, liquidity risk and event risk.
29
<PAGE>
BOND PORTFOLIO
The BOND PORTFOLIO delivered 12.1% in total return in the first half of 1995
as interest rates fell sharply. The Portfolio placed 14th in a field of 39
BBB-rated corporate bond funds in variable life/annuity products. (SOURCE:
LIPPER ANALYTICAL SERVICES, INC.)
The Bond Portfolio is well-diversified across all sectors of the bond market,
holding intermediate- and long-term U.S. government and corporate bonds as
well as mortgage backed securities.
This Portfolio performed better than the average fund by holding as much as
71% of assets in corporate and dollar-denominated foreign bonds when strong
corporate earnings helped these sectors lead the market.
We will watch our corporate exposure as the economy slows. Corporate sales
and earnings will continue to do well as long as the economy does not slow
too much.
The Portfolio held an intermediate-term effective maturity ranging from 6.4
to 7.5 years. Generally, bonds in this maturity range rise in value more
slowly than longer term bonds as interest rates fall, and hold their value
better than long-term bonds as interest rates rise.
--------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN BOND PORTFOLIO VS. LEHMAN AGGREGATE INDEX AND
LIPPER VIP CORPORATE BOND AVERAGE OVER TEN YEARS(1)
$30,000 - - - LB Aggregate Index $25,961
----- Lipper VIP Corp BBB $24,650
25,000 ===== Bond Portfolio $ $24,796
20,000
15,000
10,000
85 86 87 88 89 90 91 92 93 94
--------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
<TABLE>
<CAPTION>
SIX RANK ONE RANK THREE RANK FIVE RANK TEN RANK
MONTH YEAR YEARS YEARS YEARS
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Portfolio 12.1% 14/39 12.8% 17/39 7.6% 16/32 9.6% 11/29 9.5% 6/11
Lipper VIP Corp BBB(2) 11.8 12.7 7.8 9.3 9.5
Lehman Aggregate Index 11.4 12.6 7.5 9.4 10.0
INCEPTION DATE: 5/1/83
</TABLE>
(1) Past performance is not predictive of future performance. Portfolio
performance does not reflect Separate Account expenses or other product
charges.
(2) Lipper provides data on a monthly basis, so for comparative purposes, the
Lipper Average and Index inception returns reflect the fund's first full
calendar month of performance.
The Lehman Aggregate Index (LAI) is comprised of 5,088 government and
corporate bonds. The LAI is an unmanaged index and includes the reinvestment
of all dividends, but does not reflect the payment of transaction costs and
advisory fees associated with an investment in the Portfolio. The securities
that comprise the LAI may differ substantially from the securities in the
Portfolio. The LAI is not the only index that may be used to characterize
performance of income funds and other indices may portray different
comparative performance.
The Lipper Variable Insurance Products (VIP) Average is calculated by Lipper
Analytical Services, Inc. and reflects the investment return of portfolios
underlying variable life and insurance products. These returns are net of
investment fees and fund expenses but not product charges.
DATA BANK
PORTFOLIO MANAGER
BARBARA KENWORTHY
-------------------
THE PORTFOLIO CHANGES
AS WE FIND OPPORTUNITIES.
NOW: AS OF 6/30/95.
Corporate .............. 52%
Foreign (US$) .......... 19
Treasury ............... 19
Agency ................. 5
Mortgage ............... 4
Asset-backed ........... 1
Cash ................... 0
LAST YEAR: AS OF 12/31/94.
Corporate .............. 29%
Foreign (US$)........... 20
Treasury ............... 32
Agency ................. 2
Mortgage ............... 13
Asset-backed ........... 1
Cash ................... 3
CORPORATE:
Bonds issued by major U.S. corporations.
FOREIGN:
Dollar-denominated bonds issued by foreign
companies or governments.
TREASURY:
Backed by the full faith and credit of the
U.S. government.
AGENCY:
Issued by U.S. government agencies, with implied
U.S. government guarantee.
MORTGAGE:
Bonds backed by pools of home mortgages.
ASSET-BACKED:
Backed by pools of loan receivables, such as
credit card and auto loans.
------------------------------------------------------
THE PORTFOLIO'S CREDIT QUALITY.
AS OF 6/30/95.
AAA ............... 30
AA ................ 5
A ................. 21
Baa ............... 23
Ba ................ 17
B ................. 0
Non-Rated ......... 4
Cash .............. 0%
30
<PAGE>
GOVERNMENT SECURITIES PORTFOLIO
The GOVERNMENT SECURITIES PORTFOLIO provided a total return of 12% for the
six months ended June 30, ranking 4th out of 26 variable life/annuity U.S.
Government portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES, INC.)
The Government Securities Portfolio invests in intermediate- and long-term
bonds issued by the U.S. government and its agencies. (Neither the market
value of U.S. government securities nor the Portfolio's shares are guaranteed
by the U.S. government.)
The Portfolio performed much better than its competition because it held a
slightly longer effective maturity. When interest rates decline, bonds with
longer maturities appreciate faster than those with shorter maturities. Over
the last six months, the Portfolio's effective maturity has ranged from 7.5
to 8.4 years.
A new manager was appointed in May: Barbara Kenworthy, who also manages the
Prudential Series Fund Bond Portfolio. Barbara has more than 20 years
experience managing bond investments. She joined The Prudential last year
from the Dreyfus Corp. where she managed several bond funds rated four and
five stars by Morningstar. Barbara also manages several Prudential mutual
funds, including the $1.5 billion Prudential Government Income Fund and the
new Prudential Diversified Bond Fund.
--------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN GOVERNMENT SECURITIES PORTFOLIO VS. LEHMAN
GOVERNMENT INDEX AND LIPPER VIP U.S. GOVERNMENT AVERAGE SINCE INCEPTION(1)
$20,000 - - - LB Government Index $17,682
----- Lipper VIP US Government Avg $17,103
18,000 ===== Government Securities Portfolio $ $17,431
16,000
14,000
12,000
10,000
88 89 90 91 92 93 94
--------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
<TABLE>
<CAPTION>
SIX RANK ONE RANK THREE RANK FIVE RANK SINCE RANK
MONTH YEAR YEARS YEARS INCEPTION
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Gov't Sec. Portfolio 12.0% 4/26 12.5% 4/24 7.9% 1/19 9.1% 7/14 9.4% 5/12
Lipper VIP US Gov't Avg(2) 10.7 11.3 6.9 8.9 9.0
Lehman Gov't Index 11.2 12.1 7.7 9.4 9.4
INCEPTION DATE: 5/1/89
</TABLE>
Some U.S. government securities are guaranteed as to timely payment of
principal and interest. The underlying securities in the Portfolio carry this
guarantee; not the Portfolio itself. Mortgage backed securities entail
additional prepayment and extension risk.
(1) Past performance is not predictive of future performance. Portfolio
performance does not reflect Separate Account expenses or other product
charges.
(2) Lipper provides data on a monthly basis, so for comparative purposes, the
Lipper Average and Index inception returns reflect the fund's first full
calendar month of performance.
The Lehman Government Index is a weighted index comprised of securities
issued or backed by the U.S. government, its agencies and instrumentalities
with a remaining maturity of one to 30 years. The LGI is an unmanaged index
and includes the reinvestment of all dividends, but does not reflect the
payment of transaction costs and advisory fees associated with an investment
in the Portfolio. The securities that comprise the LGI may differ
substantially from the securities in the Portfolio. The LGI is not the only
index that may be used to characterize performance of income funds and other
indices may portray different comparative performance.
The Lipper Variable Insurance Products (VIP) Average is calculated by Lipper
Analytical Services, Inc. and reflects the investment return of portfolios
underlying variable life and insurance products. These returns are net of
investment fees and fund expenses but not product charges.
DATA BANK
PORTFOLIO MANAGER
BARBARA KENWORTHY
--------------------------
THE PORTFOLIO CHANGES
AS WE FIND OPPORTUNITIES
NOW: AS OF 6/30/95
Treasury ................. 53%
Mortgage ................. 29
Agency ................... 11
Asset-backed ............. 3
CMO ...................... 0
Cash ..................... 4
LAST YEAR: AS OF 12/31/94
Treasury ................. 33%
Mortgage ................. 12
Agency ................... 37
Asset-backed ............. 8
CMO ...................... 2
Cash ..................... 8
TREASURY:
Backed by the full faith and credit of the
U.S. government.
MORTGAGE:
Bonds backed by pools of home mortgages.
AGENCY:
Issued by U.S. government agencies, with implied
U.S. government guarantee.
ASSET-BACKED:
Bonds backed by pools of collateralized loan
receivables, such as credit card and auto loans.
CMO:
Collateralized mortgage obligations,
parts of MBS pools.
----------------------------------------------------
THE PORTFOLIO IS HIGH QUALITY.
How It Rated as of 6/30/95
AAA .................. 96.5%
AA ................... 0.0
Non-Rated ............ 0.0
Cash ................. 3.5
31
<PAGE>
CONSERVATIVELY / AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIOS
--------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO VS.
S&P 500, LEHMAN AGGREGATE INDEX AND LIPPER VIP FLEX AVERAGE OVER TEN YEARS(1)
$40,000 - - - S&P 500 $39,255
----- Lipper VIP Flex Avg $29,656
35,000 LB Aggregate Index $25,962
===== Conservatively Mgd Flex Portfolio $26,703
30,000
25,000
20,000
15,000
10,000
85 86 87 88 89 90 91 92 93 94
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
<TABLE>
<CAPTION>
SIX RANK ONE RANK THREE RANK FIVE RANK TEN RANK
MONTH YEAR YEARS YEARS YEAR
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Conservatively Mgd Flex Port 9.8% 54/62 11.4% 53/59 9.0% 37/51 9.6% 35/47 10.3% 9/11
Lipper VIP Flex Avg(2) 13.1 15.8 10.1 10.6 11.5
S&P 500 20.2 26.1 13.3 12.1 14.7
Lehman Aggregate Index 11.4 12.6 7.5 9.4 10.0
INCEPTION DATE: 5/1/83
</TABLE>
--------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO VS.
S&P 500, LEHMAN AGGREGATE INDEX AND LIPPER VIP FLEX AVERAGE OVER TEN YEARS(1)
$40,000 - - - S&P 500 $39,255
----- Lipper VIP Flex Avg $29,656
35,000 LB Aggregate Index $25,962
===== Aggressively Mgd Flex Portfolio $29,765
30,000
25,000
20,000
15,000
10,000
85 86 87 88 89 90 91 92 93 94
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
<TABLE>
<CAPTION>
SIX RANK ONE RANK THREE RANK FIVE RANK TEN RANK
MONTH YEAR YEARS YEARS YEAR
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressively Mgd Flex Port 12.2% 40/62 14.9% 35/59 11.4% 11/51 11.1% 11/47 11.5% 6/11
Lipper VIP Flex Avg(2) 13.1 15.8 10.1 10.6 11.5
S&P 500 20.2 26.1 13.3 12.1 14.7
Lehman Aggregate Index 11.4 12.6 7.5 9.4 10.0
INCEPTION DATE: 5/1/83
</TABLE>
(1) Past performance is not predictive of future performance. Portfolio
performance does not reflect Separate Account expenses or other product
charges.
(2) Lipper provides data on a monthly basis, so for comparative purposes, the
Lipper Average and Index inception returns reflect the fund's first full
calendar month of performance.
The S&P 500 is a capital weighted index, representing the aggregate market
value of the common equity of 500 stocks primarily traded on the New York
Stock Exchange. The S&P 500 is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of
transaction costs and advisory fees associated with an investment in the
Portfolio. The securities that comprise the S&P 500 may differ substantially
from the securities in the Portfolio. The S&P 500 is not the only index that
may be used to characterize performance of this Portfolio and other indexes
may portray different comparative performance.
The Lehman Aggregate Index (LAI) is comprised of 5,088 government and
corporate bonds. The LAI is an unmanaged index and includes the reinvestment
of all dividends, but does not reflect the payment of transaction costs and
advisory fees associated with an investment in the Portfolio. The securities
that comprise the LAI may differ substantially from the securities in the
Portfolio. The LAI is not the only index that may be used to characterize
performance of income funds and other indices may portray different
comparative performance.
The Lipper Variable Insurance Products (VIP) Flex Average is calculated by
Lipper Analytical Services, Inc. and reflects the investment return of
portfolios underlying variable life and insurance products. These returns are
net of investment fees and fund expenses but not product charges.
---------------------------------
PORTFOLIO MANAGER
MARK STUMPP
THE CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO rose 9.8% in the six months
ended June 30, ranking 54 out of 62 variable life/annuity flexible
portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES, INC.)
The Conservatively Managed Flexible Portfolio invests in a mix of stocks,
bonds and money market securities. As of June 30, it held 41% of assets in
large company stocks, 33% in bonds and 26% in cash. It generally holds more
cash and fewer stocks than its aggressive counterpart.
Portfolio Manager Mark Stumpp is reluctantly bullish on the stock market:
bullish because interest rates have fallen this year, but reluctant because
stock prices have already risen steadily. He believes that stock prices can
continue to rise as long as interest rates don't.
THE AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO appreciated 12.2% during the six
months ended June 30, ranking 40 out of 62 variable life/annuity flexible
portfolios. (Source: Lipper Analytical Services)
The Portfolio invests in a mix of stocks, bonds and money market securities.
On June 30, it held 56% of assets in large company stocks, 12% in small
company stocks, 28% in bonds and 4% in cash.
The Aggressively Managed Flexible Portfolio generally holds more assets in
stocks, including small company stocks, and less in cash than the
Conservatively Managed Flexible Portfolio.
32
<PAGE>
STOCK INDEX PORTFOLIO
The STOCK INDEX PORTFOLIO gained 20% in the first six months of the year, in
line with the 20% gain of the S&P 500, the unmanaged stock market index this
Portfolio is designed to track. Investment management fees account for the
slight difference in returns.
The Portfolio holds all 500 stocks included in the S&P 500 Index, and
attempts to duplicate its performance. Portfolio Manager John Moschberger
manages the Portfolio by investing funds received daily while trying to
minimize transaction costs.
During the first half of the year, the S&P 500 rose more than it did in all
of 1993 and 1994. Also in the first half, index funds invested in the S&P 500
performed better than nine out of ten mutual funds managed by professional
stock pickers, according to Lipper Analytical Services, Inc.
The best industries in the S&P 500 in the first six months of the year -- and
therefore in this Portfolio as well -- were technology, finance and consumer
growth stocks. Technology and consumer growth stocks were also among the top
performers last year, along with energy.
--------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN STOCK INDEX PORTFOLIO VS. S&P 500 AND LIPPER VIP
GROWTH & INCOME AVERAGE SINCE INCEPTION(1)
$30,000 - - - S&P 500 $27,609
----- Lipper VIP Gro & Inc Avg $26,042
25,000 ===== Stock Index Portfolio $28,872
20,000
15,000
10,000
86 87 88 89 90 91 92 93 94
--------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
<TABLE>
<CAPTION>
SIX ONE THREE FIVE SINCE
MONTH YEAR YEARS YEARS INCEPTION
------------------------------------------------
<S> <C> <C> <C> <C> <C>
Stock Index Portfolio* 20.0% 25.6% 12.8% 11.6% 14.8%
Lipper VIP Grow & Income Avg(2) 16.6 20.6 12.4 11.5 13.2
S&P 500 20.2 26.1 13.3 12.1 14.2
INCEPTION DATE: 10/19/87
</TABLE>
(1) Past performance is not predictive of future performance. Portfolio
performance does not reflect Separate Account expenses or other product
charges.
(2) Lipper provides data on a monthly basis, so for comparative purposes, the
Lipper Average and Index inception returns reflect the fund's first full
calendar month of performance.
*Lipper lists the Stock Index Portfolio in its S&P 500 Index Universe. For
purposes of the Contractowner Letter, we compared the Portfolio to Lipper's
Growth & Income Universe: therefore, no ranks are given.
The S&P 500 is a capital weighted index, representing the aggregate market
value of the common equity of 500 stocks primarily traded on the New York
Stock Exchange. The S&P 500 is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of
transaction costs and advisory fees associated with an investment in the
Portfolio. The securities that comprise the S&P 500 may differ substantially
from the securities in the Portfolio. The S&P 500 is not the only index that
may be used to characterize performance of this Portfolio and other indexes
may portray different comparative performance.
The Lipper Variable Insurance Products (VIP) Average is calculated by Lipper
Analytical Services, Inc. and reflects the investment return of portfolios
underlying variable life and insurance products. These returns are net of
investment fees and fund expenses but not product charges.
DATA BANK
PORTFOLIO MANAGER
JOHN MOSCHBERGER
-------------------------------------------------
THE S&P 500: WHAT'S IN IT?
SECTORS OF THE INDEX
AS OF 6/30/95
Consumer Growth ................ 28%
Industrial ..................... 17
Utility ........................ 13
Technology ..................... 12
Financial ...................... 12
Energy ......................... 10
Consumer Cyclical .............. 8
-------------------------------------------------
SECTOR RETURNS
NOW: SIX MONTHS ENDED 6/30/95
Technology ..................... 39%
Finance ........................ 27
Consumer Growth ................ 19
Industrial ..................... 18
Energy ......................... 15
Utility ........................ 13
Consumer Cyclical .............. 12
0 5 10 15 20 25 30 35 40
LAST YEAR: YEAR ENDED 1994
Technology ..................... 20
Consumer Growth ................ 8
Energy ......................... 4
Industrial ..................... -1
Finance ........................ -3
Utility ........................ -8
Consumer Cyclical...............-12%
-15 -10 -5 0 5 10 15 20
33
<PAGE>
COMMON STOCK PORTFOLIO
The COMMON STOCK PORTFOLIO climbed 16.6% over the six months ended June 30.
It ranked 47th among 85 variable life/annuity growth portfolios this year.
(SOURCE: LIPPER ANALYTICAL SERVICES, INC.)
Portfolio Manager Tom Jackson adheres to a value investment style: he looks
for large company stocks with prices that are low compared to the company's
potential earnings, cash flow and book value.
As a typical "value" investor, Jackson held as much as 20% of assets in cash
last year, when he was having trouble finding undervalued stocks to buy. Late
in the year, he started to put that cash to work by buying stocks. He
selectively added to positions in financial stocks whose prices had fallen as
interest rates rose. This was a good move: financial stocks were among the
best performers in the market in the first half of the year. The Portfolio
holds more than twice as much in financial stocks as the S&P 500 average. By
June 30, cash had fallen to 13% of assets.
Jackson maintained large positions in industrial and consumer-oriented
cyclical stocks in the auto and retail industries, as well. These represent
attractive values that Jackson believes will appreciate over time.
------------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN COMMON STOCK PORTFOLIO VS. S&P 500 AND LIPPER
GROWTH AVERAGE OVER TEN YEARS (1)
$45,000 - - - S&P 500 $39,255
----- Lipper VIP Growth Avg $35,380
40,000 ===== Common Stock Portfolio $40,297
35,000
30,000
25,000
20,000
15,000
10,000
85 86 87 88 89 90 91 92 93 94
------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
<TABLE>
<CAPTION>
SIX ONE THREE FIVE TEN
MONTHS RANK YEAR RANK YEARS RANK YEARS RANK YEARS RANK
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Common Stock Portfolio 16.6% 47/85 22.2% 37/83 16.1% 10/51 14.7% 8/43 15.0% 6/24
-------------------------------------------------------------------------------------------------
Lipper VIP Growth Avg (2) 17.6 23.0 13.3 11.9 13.6
-------------------------------------------------------------------------------------------------
S&P 500 20.2 26.1 13.3 12.1 14.7
-------------------------------------------------------------------------------------------------
INCEPTION DATE: 5/1/83
</TABLE>
(1) Past performance is not predictive of future performance. Portfolio
performance does not reflect Separate Account expenses or other product
charges.
(2) Lipper provides data on a monthly basis, so for comparative purposes, the
Lipper Average and Index inception returns reflect the fund's first calendar
month of performance.
The S&P 500 is a capital weighted index, representing the aggregate market
value of the common equity of 500 stocks primarily traded on the New York
Stock Exchange. The S&P 500 is an unmanaged index and includes the
reinvestment of all dividends, but does not reflect the payment of
transaction costs and advisory fees associated with an investment in the
Portfolio. The securities that comprise the S&P 500 may differ substantially
from the securities in the Portfolio. The S&P 500 is not the only index that
may be used to characterize performance of this Portfolio and other indexes
may portray different comparative performance.
The Lipper Variable Insurance Products (VIP) Average is calculated by Lipper
Analytical Services, Inc. and reflects the investment return of portfolios
underlying variable life and insurance products. These returns are net of
investment fees and fund expenses but not product charges.
Growth Funds: invests in companies whose long-term earnings are expected to
grow significantly faster than the earnings of the stocks represented in the
major unmanaged indices.
PORTFOLIO MANAGER
TOM JACKSON
Q. THE STOCK MARKET HAS RISEN VERY FAR, VERY FAST THIS YEAR. WHY?
A. Interest rates rose last year, people got nervous, and stocks went
nowhere. This year, it looks like the Federal Reserve has beaten back
inflation. So investors are happy again, and they are bidding up stock
prices, hoping that the Federal Reserve will be cutting interest rates soon.
Q. HOW DO YOU INVEST IN THIS TYPE OF MARKET?
A. I don't invest in the market -- I invest in the stocks. I'm a value
investor. I look for companies that are priced too cheap not to own. Last
year, I had trouble finding bargains. This year, I haven't had any trouble.
Q. WHAT ARE YOUR FAVORITE KINDS OF STOCKS NOW?
A. I like financial services, retail and auto stocks. Financial stocks were
hurt last year by rising interest rates. Retail and auto stocks have been
depressed by concerns of a slower-growing economy. So far this year,
financial stocks have performed well. I expect that retail and auto stocks
will follow suit, once consumer confidence rises again.
34
<PAGE>
GLOBAL EQUITY PORTFOLIO
The GLOBAL EQUITY PORTFOLIO advanced 9.5%, ranking 7 out of 31 variable
life/annuity global equity portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES,
INC.)
The Portfolio seeks long-term capital appreciation by investing primarily in
common stocks and common stock equivalents of foreign and domestic
corporations.
The Portfolio benefited from investments in the U.S., where good stock
selection helped us outperform the U.S. market. We also received good
performance from our European stocks, which did well after a slow start.
A broadening economic recovery, relaxed trade barriers and a wave of
corporate restructurings helped make Europe the leading region overseas in
the first half of the year, and we expect that to continue. Our largest
investment now is in Europe, at 26% of total assets.
The Portfolio was fortunate to hold fewer assets (13%) in Japan than many
other funds, since Japanese stocks have tumbled this year after leading the
world in 1994.
The Portfolio was hurt by the poor performance of the smaller Pacific Rim
countries, where we held 20% of assets. Over the long term, though, we remain
confident that some of the world's best growth opportunities are to be found
there.
------------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN GLOBAL EQUITY PORTFOLIO VS. MORGAN STANLEY WORLD
INDEX AND LIPPER VIP GLOBAL AVERAGE SINCE INCEPTION (1)
$30,000 - - - MSCI World Index $17,654
----- Lipper VIP Global Avg $18,474
25,000 ===== Global Equity Portfolio $18,007
20,000
15,000
10,000
88 89 90 91 92 93 94
------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
<TABLE>
<CAPTION>
SIX ONE THREE FIVE SINCE
MONTHS RANK YEAR RANK YEARS RANK YEARS RANK INCEPTION RANK
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Global Equity Portfolio 9.5% 7/31 8.3% 13/28 12.9% 5/16 7.7% 7/12 9.1% 5/8
---------------------------------------------------------------------------------------------
Lipper VIP Global Avg (2) 6.1 8.2 10.7 7.8 9.9
---------------------------------------------------------------------------------------------
Morgan Stanley World Index 9.4 11.2 13.1 7.7 8.7
---------------------------------------------------------------------------------------------
INCEPTION DATE: 9/19/88
</TABLE>
(1) Past performance is not predictive of future performance. Portfolio
performance does not reflect Separate Account expenses or other product
charges.
(2) Lipper provides data on a monthly basis, so for comparative purposes, the
Lipper Average and Index inception returns reflect the fund's first calendar
month of performance.
Foreign investments are subject to the risks of currency fluctuation and the
impact of social, political and economic change.
The Morgan Stanley Index is a weighted index comprised of approximately 1500
companies listed on the stock exchanges of the U.S.A., Europe, Canada,
Australia, New Zealand and the Far East. The combined market capitalization
of these companies represents approximately 60% of the aggregate market value
of the stock exchanges in the countries comprising the World Index. The World
Index is an unmanaged index and includes the reinvestment of all dividends,
but does not reflect the payment of transaction costs and advisory fees
associated with an investment in the Portfolio. The securities that comprise
the World Index may differ substantially from the securities in the
Portfolio. The World Index is not the only index that may be used to
characterize performance of global funds and other indexes may portray
different comparative performance.
The Lipper Variable Insurance Products (VIP) Average is calculated by Lipper
Analytical Services, Inc. and reflects the investment return of portfolios
underlying variable life and insurance products. These returns are net of
investment fees and fund expenses but not product charges.
PORTFOLIO MANAGER
DAN DUANE
Q. WHAT HAS HELD BACK PERFORMANCE OF FOREIGN MARKETS THIS YEAR AFTER THEIR
GOOD SHOWINGS OVER THE LAST TWO YEARS?
A. Within a short six-month period, foreign investors faced an unexpected
drastic decline in the Mexican stock market, the Kobe earthquake, the
bankruptcy of Baring Securities and successive all-time lows for the dollar
against the Japanese yen and German mark. These events worried global
investors, sending them to more established markets like the U.S. or even
the perceived security of cash. These events show why global investors must
keep in mind that foreign investing involves risks above and beyond those of
U.S. investments, including social, political, currency and economic risks.
Q. ARE YOU STILL LOOKING FOR THE BULK OF YOUR GROWTH OPPORTUNITIES OUTSIDE
JAPAN?
A. Yes, the Portfolio holds a fairly small percentage of assets in Japan.
Japanese stocks have been hurt by the strong yen, a stagnant economy and a
severe political crisis. I'm looking for better long-term growth
opportunities in the smaller southeast Pacific markets, particularly in
Singapore. I think the last six months have created some real values in these
markets, the best in recent memory.
35
<PAGE>
INVESTMENT ADVISOR'S OUTLOOK
WE'VE HAD A HIGHLY UNUSUAL RETURN FOR STOCKS IN A SIX-MONTH PERIOD -- THE
BEST IN NINE YEARS. WE THINK IT WILL BE NEARLY IMPOSSIBLE TO REPEAT ANYTIME
SOON. WE'RE EXPECTING RETURNS TO BE IN THE RANGE OF 8-10% A YEAR FROM THE
STOCK MARKET IN THE NEXT FEW YEARS, AND ENCOURAGE YOU TO ADJUST YOUR
EXPECTATIONS AS WELL.
WE ARE STICKING WITH OUR BIAS TOWARD BONDS FOR THE REMAINDER OF THE YEAR. WE
THINK THEY OFFER THE BEST COMBINATION OF RISK AND REWARD RIGHT NOW. WE'RE
NOT SURE THAT STOCKS WILL CONTINUE TO DO BETTER THAN BONDS -- IN FACT, WE
THINK THEY WILL PROVIDE ROUGHLY THE SAME RETURNS AS BONDS THROUGH THE REST OF
THE YEAR.
U.S. BONDS OUTLOOK
Bond investors like a slowing economy. Why? Slower growth generally leads to
lower inflation because manufacturers find it hard to raise prices when
people have less money to spend. Low inflation makes it easier for interest
rates to fall and lower interest rates mean higher bond prices.
/ / In Treasury securities, the intermediate and long maturities are our
favorites now, since they would benefit most as interest rates fall.
/ / Corporate bonds, both investment grade and high yield, should be watched
carefully as the economy slows. Corporate sales and earnings will continue to
do well as long as the economy does not slow too much.
GLOBAL STOCKS OUTLOOK
While the U.S. stock market has done well so far this year, many of the
foreign markets have lagged far behind. As a result we see opportunity in
foreign stocks.
/ / We expect economic growth in Europe will be the strongest in the
developed world, which bodes well for corporate profits.
/ / The Asian emerging markets look particularly appealing to us; their
economies continue to develop at a rapid pace, but stock valuations are very
attractive.
/ / The outlook for Japan is less promising, but we are finding that the
stocks of many good companies are selling at very cheap prices.
/ / We continue to avoid Latin America, which continues to recover from the
consequences of the Mexican peso's devaluation in December.
U.S. STOCKS OUTLOOK
We think the stock market's risk level has gone up, not just because stock
prices are higher now than they were at the beginning of the year, but also
because the economy may be slowing down. Stocks generally don't thrive in a
slow economy, which usually is accompanied by lower corporate earnings.
/ / We still like financial stocks; these companies will profit as the
economy slows and interest rates fall.
/ / Electric utilities can benefit from falling interest rates. And a
slowdown in the pace of competition-enhancing regulatory changes continues to
help prices. We believe this is only a short-term phenomenon, however.
/ / We like consumer cyclical stocks, like retailers and automobile
manufacturers because they have already discounted a recession and are priced
to benefit as the stock market begins to anticipate another pickup in
economic growth later this year or early next year.
S95-0638
36
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
BOND PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$568,846,782)............................ $ 583,703,096
Cash....................................... 3,038
Interest receivable........................ 10,521,941
Receivable for securities sold............. 15,772,127
Receivable for portfolio shares sold....... 26,671
--------------
Total Assets............................. 610,026,873
--------------
LIABILITIES
Accrued expenses and other liabilities..... 60,851
Payable for securities purchased........... 20,763,395
Payable to investment adviser.............. 628,592
--------------
Total Liabilities........................ 21,452,838
--------------
NET ASSETS................................... $ 588,574,035
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 535,301
Paid-in capital, in excess of par........ 579,664,823
--------------
580,200,124
Undistributed net investment income........ 7,043,034
Accumulated net realized loss.............. (13,525,437)
Net unrealized appreciation................ 14,856,314
--------------
Net assets, June 30, 1995.................. $ 588,574,035
--------------
--------------
Net asset value per share of 53,530,051
outstanding shares of common stock
(authorized 200,000,000 shares).......... $ 10.9952
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Interest................................... $ 21,299,117
---------------
EXPENSES
Investment management fee.................. 1,112,208
Shareholders' reports...................... 61,861
Accounting fees............................ 41,272
Custodian expense -- net................... 16,429
Professional fees.......................... 10,561
Directors' expense......................... 1,095
Miscellaneous expenses..................... 823
S.E.C. fees................................ (3,513)
---------------
1,240,736
---------------
NET INVESTMENT INCOME........................ 20,058,381
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss on investments --
Securities transactions.................. (2,670,097)
Options written.......................... (48,047)
Net realized loss on investments......... (2,718,144)
Net unrealized gain on investments....... 46,788,462
---------------
NET GAIN ON INVESTMENTS.................... 44,070,318
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 64,128,699
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 20,058,381 $ 36,112,155
Net realized loss on investments....................................................... (2,718,144) (4,246,256)
Net unrealized gain (loss) on investments.............................................. 46,788,462 (50,839,016)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ 64,128,699 (18,973,117)
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (13,396,357) (35,627,999)
Net realized gain from investment transactions......................................... 0 (1,267,553)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (13,396,357) (36,895,552)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [863,885 and 3,414,897 shares, respectively]........................ 9,143,528 36,662,212
Reinvestment of dividend distributions [1,217,276 and 3,610,015 shares,
respectively]......................................................................... 13,396,357 36,895,552
Capital stock repurchased [(2,509,016) and (4,963,909) shares, respectively]........... (26,346,791) (52,266,357)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. (3,806,906) 21,291,407
------------------ -------------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS............................................................................ 46,925,436 (34,577,262)
NET ASSETS:
Beginning of period.................................................................... 541,648,599 576,225,861
------------------ -------------------
End of period.......................................................................... $ 588,574,035 $ 541,648,599
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
37
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$451,860,188)............................ $ 475,207,360
Cash....................................... 880
Interest receivable........................ 7,341,861
--------------
Total Assets............................. 482,550,101
--------------
LIABILITIES
Accrued expenses........................... 5,046
Payable to investment adviser.............. 508,960
Payable for portfolio shares redeemed...... 22,977
--------------
Total Liabilities........................ 536,983
--------------
NET ASSETS................................... $ 482,013,118
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 420,570
Paid-in capital, in excess of par........ 477,564,780
--------------
477,985,350
Undistributed net investment income........ 6,424,398
Accumulated net realized losses............ (25,743,802)
Net unrealized appreciation................ 23,347,172
--------------
Net assets, June 30, 1995.................. $ 482,013,118
--------------
--------------
Net asset value per share of 42,057,044
outstanding shares of common stock
(authorized 100,000,000 shares).......... $ 11.4609
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Interest................................... $ 16,992,837
---------------
EXPENSES
Investment management fee.................. 939,386
Shareholders' reports...................... 52,453
Accounting fees............................ 35,024
Custodian expense -- net................... 27,878
Professional fees.......................... 4,502
Directors' expense......................... 1,097
Miscellaneous expenses..................... 742
S.E.C. fees................................ (11,433)
---------------
1,049,649
---------------
NET INVESTMENT INCOME........................ 15,943,188
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss on investments........... (14,819,989)
Net unrealized gain on investments......... 52,290,741
NET GAIN ON INVESTMENTS...................... 37,470,752
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 53,413,940
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 15,943,188 $ 33,431,928
Net realized loss on investments....................................................... (14,819,989) (10,380,614)
Net unrealized gain (loss) on investments.............................................. 52,290,741 (52,690,952)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ 53,413,940 (29,639,638)
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (10,450,285) (32,955,665)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [282,892 and 3,591,224 shares, respectively]........................ 3,122,625 41,656,912
Reinvestment of dividend distributions [909,163 and 3,094,061 shares, respectively].... 10,450,285 32,955,665
Capital stock repurchased [(5,742,230) and (5,912,961) shares, respectively]........... (62,097,752) (64,569,681)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. (48,524,842) 10,042,896
------------------ -------------------
TOTAL DECREASE IN NET ASSETS............................................................. (5,561,187) (52,552,407)
NET ASSETS:
Beginning of period.................................................................... 487,574,305 540,126,712
------------------ -------------------
End of period.......................................................................... $ 482,013,118 $ 487,574,305
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
38
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$3,516,904,743).......................... $3,734,903,668
Cash....................................... 12,412
Interest and dividends receivable.......... 27,514,725
Receivable for securities sold............. 60,620,257
Receivable for portfolio shares sold....... 42,217
--------------
Total Assets............................. 3,823,093,279
--------------
LIABILITIES
Accrued expenses and other liabilities..... 414,926
Payable for securities purchased........... 101,908,062
Payable to investment adviser.............. 5,170,543
--------------
Total Liabilities........................ 107,493,531
--------------
NET ASSETS................................... $3,715,599,748
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 2,433,899
Paid-in capital, in excess of par........ 3,417,738,513
--------------
3,420,172,412
Undistributed net investment income........ 24,833,383
Accumulated net realized gains............. 52,595,028
Net unrealized appreciation................ 217,998,925
--------------
Net assets, June 30, 1995.................. $3,715,599,748
--------------
--------------
Net asset value per share of 243,389,851
outstanding shares of common stock
(authorized 300,000,000 shares).......... $ 15.2660
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividends (net of $295,694 foreign
withholding tax)......................... $ 11,701,176
Interest................................... 77,685,355
---------------
89,386,531
---------------
EXPENSES
Investment management fee.................. 9,790,665
Shareholders' reports...................... 369,989
Accounting fees............................ 88,010
Custodian expense -- net................... 48,660
Professional fees.......................... 36,660
Miscellaneous expenses..................... 5,325
Directors' expense......................... 1,736
S.E.C. fees................................ (20,409)
---------------
10,320,636
---------------
NET INVESTMENT INCOME........................ 79,065,895
---------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments........... 65,206,605
Net unrealized gain on investments......... 192,922,800
NET GAIN ON INVESTMENTS...................... 258,129,405
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 337,195,300
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 79,065,895 $ 122,670,711
Net realized gain on investments....................................................... 65,206,605 30,751,021
Net unrealized gain (loss) on investments.............................................. 192,922,800 (184,854,002)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ 337,195,300 (31,432,270)
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (51,639,099) (120,740,360)
Net realized gain from investment transactions......................................... 0 (37,214,012)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (51,639,099) (157,954,372)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [2,829,445 and 34,889,459 shares, respectively]..................... 41,722,491 514,344,688
Reinvestment of dividend distributions [3,386,272 and 11,198,868 shares,
respectively]......................................................................... 51,639,099 157,954,372
Capital stock repurchased [(11,219,884) and (5,887,371) shares, respectively].......... (164,422,329) (84,977,146)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. (71,060,739) 587,321,914
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 214,495,462 397,935,272
NET ASSETS:
Beginning of period.................................................................... 3,501,104,286 3,103,169,014
------------------ -------------------
End of period.......................................................................... $ 3,715,599,748 $ 3,501,104,286
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
39
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$3,453,563,650).......................... $3,838,279,662
Cash....................................... 4,998
Interest and dividends receivable.......... 25,228,203
Receivable for securities sold............. 158,965,243
Receivable for portfolio shares sold....... 79,584
--------------
Total Assets............................. 4,022,557,690
--------------
LIABILITIES
Accrued expenses and other liabilities..... 484,965
Payable for securities purchased........... 188,433,210
Payable to investment adviser.............. 5,754,953
--------------
Total Liabilities........................ 194,673,128
--------------
NET ASSETS................................... $3,827,884,562
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 2,225,267
Paid-in capital, in excess of par........ 3,372,809,156
--------------
3,375,034,423
Undistributed net investment income........ 17,240,117
Accumulated net realized gains............. 50,894,010
Net unrealized appreciation................ 384,716,012
--------------
Net assets, June 30, 1995.................. $3,827,884,562
--------------
--------------
Net asset value per share of 222,526,686
outstanding shares of common stock
(authorized 300,000,000 shares).......... $ 17.2019
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividends (net of $396,229 foreign
withholding tax)......................... $ 23,605,192
Interest................................... 52,031,461
---------------
75,636,653
---------------
EXPENSES
Investment management fee.................. 10,774,708
Shareholders' reports...................... 381,729
Custodian expense -- net................... 103,213
Accounting fees............................ 94,494
Professional fees.......................... 42,424
Miscellaneous expenses..................... 5,294
Directors' expense......................... 1,748
S.E.C. fees................................ (9,458)
---------------
11,394,152
---------------
NET INVESTMENT INCOME........................ 64,242,501
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES
Net realized gain (loss) on investments and
foreign currencies--
Securities transactions.................. 99,609,113
Foreign currency transactions............ (1,080)
Futures contracts........................ 554,055
---------------
Net realized gain on investments and
foreign currencies....................... 100,162,088
---------------
Net unrealized gain on investments and
foreign currencies--
Securities............................... 254,022,132
Foreign currency translations............ 1,637
---------------
Net unrealized gain on investments and
foreign currencies....................... 254,023,769
---------------
NET GAIN ON INVESTMENTS AND FOREIGN
CURRENCIES................................... 354,185,857
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 418,428,358
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 64,242,501 $ 98,878,114
Net realized gain on investments and foreign currency transactions..................... 100,162,088 23,838,273
Net unrealized gain (loss) on investments and foreign currency translations............ 254,023,769 (230,571,359)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ 418,428,358 (107,854,972)
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (39,231,762) (96,126,295)
Net realized gain from investment transactions......................................... 0 (98,311,584)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (39,231,762) (194,437,879)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [2,988,839 and 22,611,559 shares, respectively]..................... 48,651,140 370,947,414
Reinvestment of dividend distributions [2,285,065 and 12,531,550 shares,
respectively]......................................................................... 39,231,762 194,437,879
Capital stock repurchased [(7,420,508) and (4,617,224) shares, respectively]........... (120,735,235) (73,719,278)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. (32,852,333) 491,666,015
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 346,344,263 189,373,164
NET ASSETS:
Beginning of period.................................................................... 3,481,540,299 3,292,167,135
------------------ -------------------
End of period.......................................................................... $ 3,827,884,562 $ 3,481,540,299
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
40
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
STOCK INDEX PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$631,457,411)............................ $ 833,016,338
Cash....................................... 464
Interest and dividends receivable.......... 1,810,111
Receivable for securities sold............. 48,315
Receivable for portfolio shares sold....... 90,641
--------------
Total Assets............................. 834,965,869
--------------
LIABILITIES
Accrued expenses........................... 61,036
Payable for securities purchased........... 3,501,416
Payable to investment adviser.............. 724,138
Payable for daily variation margin on open
futures contracts (see Note 2)........... 64,350
--------------
Total Liabilities........................ 4,350,940
--------------
NET ASSETS................................... $ 830,614,929
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 465,751
Paid-in capital, in excess of par........ 621,155,726
--------------
621,621,477
Undistributed net investment income........ 3,398,313
Accumulated net realized gains............. 3,550,987
Net unrealized appreciation
Securities................................. 201,558,927
Futures contracts.......................... 485,225
--------------
Net assets, June 30, 1995.................. $ 830,614,929
--------------
--------------
Net asset value per share of 46,575,103
outstanding shares of common stock
(authorized 100,000,000 shares).......... $ 17.8339
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividends (net of $63,660 foreign
withholding tax)......................... $ 9,528,189
Interest................................... 769,653
---------------
10,297,842
---------------
EXPENSES
Investment management fee.................. 1,284,240
Shareholders' reports...................... 71,682
Accounting fees............................ 41,114
Custodian expense -- net................... 11,655
Professional fees.......................... 8,536
Directors' expense......................... 1,108
Miscellaneous expenses..................... 1,173
---------------
1,419,508
---------------
NET INVESTMENT INCOME........................ 8,878,334
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments --
Securities transactions.................. 1,024,002
Futures contracts........................ 3,830,700
---------------
Net realized gain on investments........... 4,854,702
---------------
Net unrealized gain (loss) on investments
--
Securities............................... 120,586,637
Futures contracts........................ (29,925)
---------------
Net unrealized gain on investments......... 120,556,712
---------------
NET GAIN ON INVESTMENTS...................... 125,411,414
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 134,289,748
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 8,878,334 $ 15,899,579
Net realized gain (loss) on investments................................................ 4,854,702 (811,766)
Net unrealized gain (loss) on investments.............................................. 120,556,712 (8,435,032)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... 134,289,748 6,652,781
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (5,031,539) (15,754,398)
Net realized gain from investment transactions......................................... 0 (958,203)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (5,031,539) (16,712,601)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [2,677,708 and 4,553,644 shares, respectively]...................... 44,950,546 68,598,345
Reinvestment of dividend distributions [282,662 and 1,130,115 shares, respectively].... 5,031,539 16,712,601
Capital stock repurchased [(814,719) and (1,718,830) shares, respectively]............. (13,159,572) (25,854,984)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 36,822,513 59,455,962
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 166,080,722 49,396,142
NET ASSETS:
Beginning of period.................................................................... 664,534,207 615,138,065
------------------ -------------------
End of period.......................................................................... $ 830,614,929 $ 664,534,207
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
41
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
COMMON STOCK PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$2,639,342,095).......................... $3,230,898,022
Cash....................................... 666
Interest and dividends receivable.......... 8,977,312
Receivable for securities sold............. 6,001,370
Receivable for portfolio shares sold....... 1,614,855
--------------
Total Assets............................. 3,247,492,225
--------------
LIABILITIES
Accrued expenses........................... 329,362
Payable for securities purchased........... 10,708,126
Payable to investment adviser.............. 3,571,892
--------------
Total Liabilities........................ 14,609,380
--------------
NET ASSETS................................... $3,232,882,845
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 1,353,800
Paid-in capital, in excess of par........ 2,569,281,781
--------------
2,570,635,581
Undistributed net investment income........ 9,497,826
Accumulated net realized gains............. 61,193,511
Net unrealized appreciation................ 591,555,927
--------------
Net assets, June 30, 1995.................. $3,232,882,845
--------------
--------------
Net asset value per share of 135,379,969
outstanding shares of common stock
(authorized 200,000,000 shares).......... $ 23.8801
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividends (net of $457,920 foreign
withholding tax)......................... $ 30,243,299
Interest................................... 11,123,684
---------------
41,366,983
---------------
EXPENSES
Investment management fee.................. 6,536,397
Shareholders' reports...................... 269,464
Accounting fees............................ 58,113
Professional fees.......................... 25,116
Custodian expense -- net................... 23,106
S.E.C. fees................................ 13,790
Miscellaneous expenses..................... 3,982
Directors' expense......................... 1,513
---------------
6,931,481
---------------
NET INVESTMENT INCOME........................ 34,435,502
---------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments........... 66,586,888
Net unrealized gain on investments......... 345,084,382
NET GAIN ON INVESTMENTS...................... 411,671,270
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 446,106,772
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 34,435,502 $ 57,699,769
Net realized gain on investments....................................................... 66,586,888 84,713,465
Net unrealized gain (loss) on investments.............................................. 345,084,382 (76,779,978)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... 446,106,772 65,633,256
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (19,218,827) (56,757,732)
Net realized gain from investment transactions......................................... (8,727,841) (106,046,594)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (27,946,668) (162,804,326)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [8,501,255 and 19,167,446 shares, respectively]..................... 191,180,493 412,393,503
Reinvestment of dividend distributions [1,169,361 and 7,934,974 shares,
respectively]......................................................................... 27,946,668 162,804,326
Capital stock repurchased [(983,304) and (2,170,186) shares, respectively]............. (22,176,437) (46,752,467)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 196,950,724 528,445,362
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 615,110,828 431,274,292
NET ASSETS:
Beginning of period.................................................................... 2,617,772,017 2,186,497,725
------------------ -------------------
End of period.......................................................................... $ 3,232,882,845 $ 2,617,772,017
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
42
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
GLOBAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$327,186,791)............................ $ 369,110,287
Foreign currency, at value (cost:
$12,080)................................. 12,222
Cash....................................... 134,068
Dividends and interest receivable.......... 697,588
Net unrealized appreciation on forward
foreign exchange contracts............... 57,592
Receivable for securities sold............. 375,001
Receivable for portfolio shares sold....... 414,868
Other assets............................... 170,132
--------------
Total Assets............................. 370,971,758
--------------
LIABILITIES
Accrued expenses........................... 747,254
Payable for securities purchased........... 134,000
Payable to investment adviser.............. 679,672
Payable for portfolio shares redeemed...... 288,120
--------------
Total Liabilities........................ 1,849,046
--------------
NET ASSETS................................... $ 369,122,712
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 243,364
Paid-in capital, in excess of par........ 330,908,950
--------------
331,152,314
Undistributed net investment income........ 463,951
Accumulated net realized losses............ (4,491,771)
Net unrealized appreciation................ 41,998,218
--------------
Net assets, June 30, 1995.................. $ 369,122,712
--------------
--------------
Net asset value per share of 24,336,367
outstanding shares of common stock
(authorized 100,000,000 shares).......... $ 15.1675
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C> <C>
INVESTMENT INCOME
Dividends (net of $308,048 foreign
withholding tax)......................... $ 2,943,188
Interest................................... 250,317
---------------
3,193,505
---------------
EXPENSES
Investment management fee.................. $ 1,317,798
Custodian expense -- net................... 468,726
Accounting fees............................ 67,753
Shareholders' reports...................... 3,827
Miscellaneous expenses..................... 3,146
Directors' expense......................... 1,016
Professional fees.......................... 880
---------------
1,863,146
---------------
NET INVESTMENT INCOME........................ 1,330,359
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
SECURITIES AND FOREIGN CURRENCIES
Net realized loss on securities and foreign
currency transactions.................... (3,661,405)
Net unrealized gain on securities and
foreign currency translations............ 35,110,383
NET GAIN ON SECURITIES AND FOREIGN
CURRENCIES................................... 31,448,978
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 32,779,337
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. 1,330,359 474,722
Net realized loss on securities and foreign currency transactions...................... (3,661,405) (578,250)
Net unrealized gain on securities and foreign currency translations.................... 35,110,383 (16,334,560)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ 32,779,337 (16,438,088)
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (559,732) (499,141)
Net realized gain from investment transactions......................................... 0 (394,438)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (559,732) (893,579)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [1,248,673 and 17,513,960 shares, respectively]..................... 17,167,583 254,421,899
Reinvestment of dividend distributions [36,974 and 64,991 shares, respectively]........ 559,732 893,579
Capital stock repurchased [(1,859,895) and (751,122) shares, respectively]............. (26,558,186) (10,781,034)
Initial capitalization repurchased [0 and (735,674) shares, respectively].............. 0 (10,558,000)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. (8,830,871) 233,976,444
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 23,388,734 216,644,777
NET ASSETS:
Beginning of period.................................................................... 345,733,978 129,089,201
------------------ -------------------
End of period.......................................................................... $ 369,122,712 $ 345,733,978
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
43
<PAGE>
THE PRUDENTIAL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
BOND PORTFOLIO
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 98.3% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 21.5%
Advanta Mortgage Loan Trust, Series 1994-3
8.490%, 01/25/26.............................. $ 8,500,000 $ 8,797,500
Aristar, Inc.,
5.750%, 07/15/98.............................. 2,000,000 1,965,120
7.500%, 07/01/99.............................. 2,000,000 2,068,400
Associates Corp. of North America,
8.375%, 01/15/98.............................. 500,000 522,585
%Baybanks, Inc.,
6.125%, 09/30/97.............................. 5,000,000 4,956,500
Capital One Bank, M.T.N.,
8.125%, 02/27/98, Tranche #TR00032............ 5,000,000 5,141,000
Chase Manhattan Corp.,
8.000%, 06/15/99.............................. 2,000,000 2,092,740
Chemical Bank,
6.625%, 08/15/05.............................. 2,000,000 1,938,340
Chrysler Financial Corp.,
9.500%, 12/15/99.............................. 5,000,000 5,499,850
Chrysler Financial Corp., M.T.N.,
5.260%, 07/06/95, Tranche #TR00029............ 900,000 900,000
5.340%, 07/05/95, Tranche #TR00028............ 2,300,000 2,300,000
Citicorp, M.T.N.,
8.500%, 02/24/97, Tranche #TR00128............ 3,000,000 3,108,870
Coles Myer Finance USA Ltd., M.T.N.,
5.560%, 02/15/99, Tranche #TR00018............ 6,000,000 5,821,080
Enterprise Rent-A-Car USA Finance Co., M.T.N.,
7.875%, 03/15/98, Tranche #TR00003............ 5,000,000 5,168,906
**8.750%, 12/15/99, Tranche #TR00001.......... 3,000,000 3,236,644
Equitable of Iowa Companies,
8.500%, 02/15/05.............................. 5,000,000 5,452,850
Ford Motor Credit Co.,
6.250%, 02/26/98.............................. 3,000,000 2,992,260
Geico Corp.,
7.500%, 04/15/05.............................. 5,000,000 5,240,600
General Motors Acceptance Corp.,
8.400%, 10/15/99.............................. 3,700,000 3,930,991
General Motors Acceptance Corp., M.T.N.,
7.500%, 11/04/97, Tranche #TR00598............ 2,000,000 2,046,260
**Liberty Mutual Insurance Co.,
8.500%, 05/15/25.............................. 3,750,000 3,827,513
Los Angeles County, California,
Zero Coupon, 06/30/08......................... 15,000,000 5,854,050
**Manufacturers Life Insurance Co.,
7.875%, 04/15/05.............................. 4,000,000 4,134,500
**Massachusetts Mutual Life Insurance,
7.625%, 11/15/23.............................. 2,000,000 1,941,820
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Mellon Financial Co.,
6.500%, 12/01/97.............................. $ 2,000,000 $ 2,008,700
**Nationwide CSN Trust,
9.875%, 02/15/25.............................. 5,000,000 5,566,600
**Potomac Capital Investment Corp., M.T.N.,
6.190%, 04/28/97, Series B.................... 3,500,000 3,485,869
**Principal Mutual Life Insurance,
7.875%, 03/01/24.............................. 5,000,000 4,783,350
Republic New York Corp.,
9.125%, 05/15/21.............................. 2,850,000 3,346,526
%Salomon, Inc., M.T.N.,
6.975%, 02/14/96.............................. 10,000,000 10,012,000
Santander Financial Issuances, Ltd.,
7.875%, 04/15/05.............................. 5,000,000 5,252,600
Union Bank of Finland, Ltd.,
5.250%, 06/15/96.............................. 3,000,000 2,960,850
--------------
126,354,874
--------------
FOREIGN -- 11.2%
Australia & New Zealand Banking Group, Ltd.,
6.250%, 02/01/04.............................. 3,000,000 2,864,520
**Banco de Commercio Exterior, SA, M.T.N.,
8.625%, 06/02/00, Tranche #TR00001............ 2,000,000 2,020,000
**Banco Ganadero, SA, M.T.N.,
9.750%, 08/26/99, Tranche #TR00001............ 4,100,000 4,094,875
**Cemex, SA,
8.875%, 06/10/98.............................. 5,000,000 4,287,500
Central Puerto and Cent Negue, SA,
10.750%, 11/02/97............................. 3,000,000 2,880,000
**Compania Sud Americana de Vapores, SA,
7.375%, 12/08/03.............................. 4,000,000 3,720,000
**Financiera Energetica Nacional, SA, M.T.N.,
9.000%, 11/08/99.............................. 1,500,000 1,537,500
Kansallis-Osake Pankki, N.Y.,
**%8.650%, 12/29/49........................... 5,000,000 5,237,500
10.000%, 05/01/02............................. 5,000,000 5,796,850
National Australia Bank, Ltd.,
9.700%, 10/15/98.............................. 1,700,000 1,860,956
Nippon Telegraph & Telephone Corp.,
9.500%, 07/27/98.............................. 1,800,000 1,966,986
Noranda, Inc.,
8.125%, 06/15/04.............................. 2,000,000 2,131,760
Nova Scotia, Province of Canada,
8.875%, 07/01/19.............................. 3,000,000 3,384,330
Ontario, Province of Canada,
15.750%, 03/15/12............................. 3,475,000 4,168,124
**%Petroleos Mexicanos,
5.563%, 03/08/99.............................. 2,500,000 2,050,000
Republic of Argentina,
8.375%, 12/20/03.............................. 3,000,000 2,212,500
</TABLE>
44
<PAGE>
BOND PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Republic of Columbia,
7.250%, 02/23/04.............................. $ 2,500,000 $ 2,312,500
8.750%, 10/06/99.............................. 2,000,000 2,070,000
**Republic of Trinidad and Tobago,
11.750%, 10/03/04............................. 1,600,000 1,696,000
Saskatchewan, Province of Canada,
8.000%, 07/15/04.............................. 4,000,000 4,308,640
**Tenaga Nasional Berhad,
7.875%, 06/15/04.............................. 3,000,000 3,182,400
United States of Mexico with Rights,
6.250%, 12/31/19, Class B..................... 4,000,000 2,425,000
--------------
66,207,941
--------------
INDUSTRIAL -- 35.5%
Arkla, Inc., M.T.N.,
9.320%, 12/18/00, Tranche #TR00043............ 2,000,000 2,129,560
9.380%, 03/15/96, Tranche #TR00018............ 1,300,000 1,322,230
Auburn Hills Trust,
12.000%, 05/01/20............................. 10,000,000 14,629,500
Boeing Co.,
7.250%, 06/15/25.............................. 5,000,000 4,950,350
Boise Cascade Corp.,
9.875%, 02/15/01.............................. 1,000,000 1,070,230
Canadian Pacific Forest Products Ltd.,
10.250%, 01/15/03............................. 4,000,000 4,456,000
Canadian Pacific Forest Products Ltd., M.T.N.,
9.250%, 06/15/02.............................. 3,000,000 3,135,960
Centex Corp.,
7.375%, 06/01/05.............................. 3,750,000 3,689,363
Columbia/HCA Healthcare Corp.,
6.910%, 06/15/05.............................. 4,950,000 4,887,581
Comsat Corp.,
8.125%, 04/01/04.............................. 4,000,000 4,312,520
Crane Co.,
7.250%, 06/15/99.............................. 3,000,000 3,044,160
Delta Air Lines, Inc.,
9.875%, 05/15/00.............................. 6,000,000 6,593,880
Delta Air Lines, Inc., M.T.N.,
7.790%, 12/01/98.............................. 1,000,000 1,020,140
8.380%, 06/12/98, Tranche #TR00017............ 2,000,000 2,063,180
Federal Express Corp.,
9.650%, 06/15/12.............................. 3,000,000 3,527,250
Fleming Companies, Inc.,
10.625%, 12/15/01............................. 5,000,000 5,262,500
J.C. Penney Co., Inc.,
9.750%, 06/15/21.............................. 6,400,000 7,333,312
Louisiana Land and Exploration Co.,
7.650%, 12/01/23.............................. 9,000,000 8,734,050
Lubrizol Corp.,
7.250%, 06/15/25.............................. 5,000,000 4,959,200
Nabisco, Inc.,
7.550%, 06/15/15.............................. 3,000,000 2,978,580
News America Holdings, Inc.,
7.450%, 06/01/00.............................. 6,000,000 6,116,940
8.625%, 02/01/03.............................. 5,000,000 5,392,600
Noble Affiliates, Inc.,
7.250%, 10/15/23.............................. 2,000,000 1,825,080
Occidental Petroleum Corp.,
10.125%, 11/15/01............................. 5,000,000 5,812,100
11.125%, 08/01/10............................. 5,000,000 6,578,200
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Oryx Energy Co., M.T.N.,
6.050%, 02/01/96, Tranche #TR00013............ $ 3,000,000 $ 2,981,100
Paramount Communications, Inc.,
7.500%, 01/15/02.............................. 5,000,000 4,999,650
Parker & Parsley Petroleum Co.,
8.875%, 04/15/05.............................. 4,000,000 4,287,920
Price/Costco, Inc.,
7.125%, 06/15/05.............................. 5,000,000 5,023,300
PT Alatief Freeport Financial Co.,
9.750%, 04/15/01.............................. 5,750,000 5,908,125
RJR Nabisco, Inc.,
6.700%, 06/15/02.............................. 2,000,000 1,979,180
8.000%, 01/15/00.............................. 5,000,000 5,212,200
Rogers Cablesystems Ltd.,
10.000%, 03/15/05, Series B................... 3,500,000 3,596,250
Royal Caribbean Cruises Ltd.,
11.375%, 05/15/02............................. 5,000,000 5,475,000
Tele-Communications, Inc.,
10.125%, 04/15/22............................. 5,000,000 5,664,650
Time Warner, Inc.,
**6.050%, 07/01/95............................ 2,500,000 2,500,000
7.750%, 06/15/05.............................. 5,000,000 4,963,750
Transco Energy Co.,
9.125%, 05/01/98.............................. 3,000,000 3,191,940
9.375%, 08/15/01.............................. 6,000,000 6,735,600
United Air Lines, Inc.,
10.670%, 05/01/04, Series A................... 10,200,000 11,750,910
Viacom, Inc.,
7.750%, 06/01/05.............................. 7,050,000 7,117,961
Westinghouse Electric Corp.,
8.375%, 06/15/02.............................. 2,000,000 2,090,580
Westvaco Corp.,
9.750%, 06/15/20.............................. 5,000,000 6,318,600
Whitman Corp.,
7.500%, 08/15/01.............................. 3,000,000 3,114,690
--------------
208,735,872
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 26.4%
Federal Farm Credit Bank,
8.650%, 10/01/99, Series A.................... 150,000 163,383
Federal Farm Credit Bank, M.T.N.,
7.900%, 03/01/96.............................. 2,800,000 2,836,652
Federal Home Loan Bank,
9.800%, 03/25/96.............................. 4,000,000 4,116,240
Federal Home Loan Mortgage Corp.,
6.820%, 06/29/05.............................. 10,000,000 9,878,100
Federal National Mortgage Association,
9.000%, 10/01/16-09/01/21..................... 761,882 802,296
Government National Mortgage Association,
7.500%, 05/20/02-12/15/09..................... 21,959,251 22,368,382
International Bank for Reconstruction and
Development,
12.375%, 10/15/02............................. 750,000 998,558
Resolution Funding Corp.,
Zero Coupon, 10/15/15......................... 17,100,000 4,120,758
8.125%, 10/15/19.............................. 700,000 802,046
8.625%, 01/15/21.............................. 200,000 241,718
United States Treasury Bonds,
8.750%, 08/15/20.............................. 8,400,000 10,430,448
11.250%, 02/15/15............................. 12,100,000 18,153,750
12.000%, 08/15/13............................. 26,000,000 38,350,000
</TABLE>
45
<PAGE>
BOND PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
United States Treasury Notes,
6.500%, 05/15/05.............................. 3,275,000 3,344,593
7.500%, 02/29/96-02/15/05..................... 18,350,000 19,211,665
7.875%, 07/31/96.............................. 7,000,000 7,149,870
9.250%, 01/15/96.............................. 12,000,000 12,213,720
--------------
155,182,179
--------------
UTILITIES -- 3.7%
%Central Maine Power Co., M.T.N.,
5.978%, 08/03/95, Tranche #TR00036............ $ 4,000,000 $ 4,000,000
Consolidated Edison of New York, Inc.,
9.700%, 12/01/25.............................. 2,100,000 2,282,301
Niagara Mohawk Power Corp.,
7.750%, 05/15/06.............................. 5,000,000 5,086,700
Norsk Hydro A.S.,
7.750%, 06/15/23.............................. 5,000,000 5,130,750
Pennsylvania Power & Light Co.,
9.375%, 07/01/21.............................. 1,150,000 1,292,439
Texas Utilities Electric Co.,
5.875%, 04/01/98.............................. 4,000,000 3,923,040
--------------
21,715,230
--------------
TOTAL LONG-TERM BONDS
(Cost $563,339,782)............................................ 578,196,096
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 0.9% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
6.102%, 07/03/95 (see Note 4)................. $ 5,507,000 $ 5,507,000
--------------
OTHER ASSETS -- 0.8%
(net of liabilities)........................................... 4,870,939
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 588,574,035
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
M.T.N. Medium Term Note
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
**Indicates a restricted security; the aggregate cost of the restricted
securities is $56,777,698. The aggregate value, $57,302,071 is
approximately 9.7% of net assets. (See Note 2)
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
46
<PAGE>
GOVERNMENT SECURITIES PORTFOLIO
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 95.6% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 3.2%
%Chase Manhattan Credit Card Trust,
6.193%, 08/15/01, Series 1995-2, Class A...... $ 12,500,000 $ 12,496,094
Equicon Home Equity Loan Trust, CMO,
7.850%, 03/18/14, Series 1994-2, Class A2..... 3,000,000 3,083,906
--------------
15,580,000
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 92.4%
Federal Home Loan Mortgage Corp.,
%6.306%, 06/01/25............................. 20,000,000 20,381,250
6.710%, 06/11/02.............................. 5,000,000 5,014,250
6.820%, 06/29/05.............................. 5,000,000 4,939,050
6.970%, 06/16/05.............................. 15,000,000 15,018,750
Federal National Mortgage Association,
8.500%, 05/01/24-04/01/25..................... 46,251,796 47,697,164
9.000%, 02/01/25-04/01/25..................... 21,089,791 21,966,282
Government National Mortgage Association,
7.000%, 09/15/22-06/15/24..................... 49,591,984 48,801,488
Resolution Funding Corp.,
Zero Coupon, 07/15/20......................... 22,500,000 3,876,300
8.125%, 10/15/19, Principal Only Class A...... 4,200,000 4,812,276
Student Loan Market Association,
7.500%, 03/08/00.............................. 12,000,000 12,630,000
Student Loan Market Association, M.T.N.,
7.620%, 04/18/00.............................. 6,000,000 6,112,080
United States Treasury Bonds,
7.500%, 11/15/24.............................. 40,000,000 44,256,400
8.125%, 08/15/19.............................. 55,000,000 63,989,200
United States Treasury Notes,
5.000%, 01/31/99.............................. 16,000,000 15,515,040
6.375%, 08/15/02.............................. 8,000,000 8,094,960
7.750%, 12/31/99.............................. 57,000,000 60,856,620
7.875%, 11/15/04.............................. 55,000,000 61,256,250
--------------
445,217,360
--------------
TOTAL LONG-TERM BONDS
(Cost $437,450,188)............................................ 460,797,360
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 3.0% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
6.102%, 07/03/95 (see Note 4)................. 14,410,000 14,410,000
--------------
OTHER ASSETS -- 1.4%
(net of liabilities)........................................... 6,805,758
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 482,013,118
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
CMO Collateralized Mortgage Obligations
M.T.N. Medium Term Note
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
47
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 40.6% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 1.2%
+Coltec Industries, Inc......................... 311,000 $ 5,364,750
GenCorp, Inc.................................... 676,800 7,275,600
Loral Corp...................................... 338,100 17,496,675
Rockwell International Corp..................... 253,100 11,579,325
+UNC, Inc....................................... 289,100 1,553,913
--------------
43,270,263
--------------
AIRLINES -- 0.5%
+AMR Corp....................................... 100,000 7,462,500
+UAL Corp....................................... 28,000 3,927,000
+USAir Group, Inc............................... 675,000 7,846,875
--------------
19,236,375
--------------
AUTOS - CARS & TRUCKS -- 3.0%
A.O. Smith Corp................................. 466,800 10,969,800
Chrysler Corp................................... 500,000 23,937,500
Ford Motor Co................................... 318,300 9,469,425
General Motors Corp............................. 500,000 23,437,500
General Motors Corp. (Class 'E' Stock).......... 243,900 10,609,650
General Motors Corp. (Class 'H' Stock).......... 465,900 18,403,050
Titan Wheel International, Inc.................. 498,900 12,846,675
--------------
109,673,600
--------------
BANKS AND SAVINGS & LOANS -- 2.8%
First Bank System, Inc.......................... 490,900 20,126,900
First Interstate Bancorp........................ 300,000 24,075,000
KeyCorp......................................... 937,400 29,410,925
Norwest Corp.................................... 1,060,200 30,480,750
--------------
104,093,575
--------------
CHEMICALS -- 1.3%
Imperial Chemical Industries, PLC, ADR.......... 371,300 18,100,875
OM Group, Inc................................... 308,400 8,789,400
W.R. Grace & Co................................. 318,800 19,566,350
--------------
46,456,625
--------------
CHEMICALS - SPECIALTY -- 0.8%
Ferro Corp...................................... 655,200 17,362,800
M.A. Hanna Co................................... 489,700 12,732,200
--------------
30,095,000
--------------
COMPUTER SERVICES -- 0.8%
National Data Corp.............................. 620,100 14,339,813
+Paxar Corp..................................... 818,343 14,627,881
--------------
28,967,694
--------------
CONSTRUCTION -- 0.5%
+J. Ray McDermott, SA........................... 500,000 11,062,500
Ply-Gem Industries, Inc......................... 400,000 7,100,000
--------------
18,162,500
--------------
CONTAINERS -- 0.2%
+Sealed Air Corp................................ 145,200 6,388,800
--------------
DIVERSIFIED GAS -- 0.1%
+Basin Exploration, Inc......................... 148,000 878,750
Tidewater, Inc.................................. 73,600 1,849,200
Western Gas Resources, Inc...................... 162,100 2,796,225
--------------
5,524,175
--------------
ELECTRICAL EQUIPMENT -- 0.4%
Belden, Inc..................................... 524,300 14,156,100
--------------
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
ELECTRONICS -- 0.3%
+ADT Ltd........................................ 620,000 $ 7,285,000
+IMO Industries, Inc............................ 596,900 5,372,100
--------------
12,657,100
--------------
FINANCIAL SERVICES -- 1.6%
American Express Co............................. 319,000 11,204,875
Dean Witter, Discover & Co...................... 736,500 34,615,500
Reinsurance Group of America, Inc............... 487,800 13,963,275
--------------
59,783,650
--------------
FOREST PRODUCTS -- 0.8%
Louisiana-Pacific Corp.......................... 395,100 10,371,375
Mead Corp....................................... 350,800 20,828,750
--------------
31,200,125
--------------
FURNITURE -- 0.2%
Leggett & Platt, Inc............................ 190,100 8,364,400
--------------
GAS PIPELINES -- 0.5%
Enron Oil & Gas Co.............................. 332,700 7,236,225
+Global Marine, Inc............................. 615,800 3,540,850
+Seagull Energy Corp............................ 387,200 6,388,800
--------------
17,165,875
--------------
HOSPITAL MANAGEMENT -- 0.7%
Columbia/HCA Healthcare Corp.................... 321,816 13,918,542
+Tenet Healthcare Corp.......................... 825,000 11,859,375
--------------
25,777,917
--------------
HOUSING RELATED -- 0.8%
+Giant Cement Holdings, Inc..................... 415,200 5,086,200
+Owens-Corning Fiberglas Corp................... 662,800 24,440,750
--------------
29,526,950
--------------
INSURANCE -- 2.5%
Emphesys Financial Group, Inc................... 314,600 7,432,425
Equitable of Iowa Companies..................... 372,700 12,252,513
Financial Security Assurance Holdings, Ltd...... 226,200 5,655,000
National Re Corp................................ 207,600 6,954,600
PennCorp Financial Group, Inc................... 638,400 11,810,400
Provident Life & Accident Insurance Co. (Class
'B' Stock).................................... 177,200 4,119,900
TIG Holdings, Inc............................... 588,300 13,530,900
Trenwick Group, Inc............................. 276,200 11,738,500
W.R. Berkley Corp............................... 192,800 6,844,400
Western National Corp........................... 900,000 11,137,500
--------------
91,476,138
--------------
MACHINERY -- 0.8%
Case Corp....................................... 475,300 14,140,175
DT Industries, Inc.............................. 234,500 2,755,375
+INDRESCO, Inc.................................. 390,700 6,055,850
Parker-Hannifin Corp............................ 204,750 7,422,188
--------------
30,373,588
--------------
MEDIA -- 2.2%
Central Newspapers, Inc. (Class 'A' Stock)...... 331,700 9,826,613
Comcast Corp. (Class 'A' Stock)................. 362,500 6,592,969
Comcast Corp. (Special Class 'A' Stock)......... 9,600 178,200
+Cox Communications, Inc. (Class 'A' Stock)..... 246,115 4,768,478
Lee Enterprises, Inc............................ 168,700 6,431,687
Media General, Inc. (Class 'A' Stock)........... 123,600 3,769,800
</TABLE>
48
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
+Tele-Communications, Inc. (Class 'A' Stock).... 848,200 $ 19,879,687
Time Warner, Inc................................ 599,500 24,654,437
Times Mirror Co. (Class 'A' Stock).............. 280,276 6,691,590
--------------
82,793,461
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 4.3%
American Publishing Co. (Class 'A' Stock)....... 161,400 1,735,050
BW/IP, Inc. (Class 'A' Stock)................... 379,200 7,015,200
Danaher Corp.................................... 455,600 13,781,900
Donaldson Company, Inc.......................... 400,400 10,460,450
+Enterra Corp................................... 380,300 7,986,300
+FMC Corp....................................... 110,800 7,451,300
+IDEX Corp...................................... 285,600 9,567,600
+Itel Corp...................................... 168,700 6,579,300
+Jan Bell Marketing, Inc........................ 1,000,000 2,312,500
+Litton Industries, Inc......................... 259,700 9,576,437
Mark IV Industries, Inc......................... 572,565 12,310,147
Mascotech, Inc.................................. 650,000 8,043,750
Pentair, Inc.................................... 472,950 20,573,325
+SPS Transaction Services, Inc.................. 192,800 6,675,700
Textron, Inc.................................... 96,400 5,603,250
Trinity Industries, Inc......................... 385,500 12,817,875
+Wolverine Tube, Inc............................ 279,500 8,978,938
York International Corp......................... 199,000 8,955,000
--------------
160,424,022
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 1.1%
Eastman Kodak Co................................ 372,300 22,570,688
Whitman Corp.................................... 913,400 17,697,125
--------------
40,267,813
--------------
PETROLEUM -- 1.0%
Amerada Hess Corp............................... 100,000 4,887,500
Cabot Oil & Gas Corp. (Class 'A' Stock)......... 594,400 8,173,000
Elf Aquitaine, ADR.............................. 530,100 19,746,225
Parker & Parsley Petroleum Co................... 257,800 5,059,325
--------------
37,866,050
--------------
PETROLEUM SERVICES -- 2.3%
Baker Hughes, Inc............................... 300,000 6,150,000
+Coflexip, ADR.................................. 361,700 9,178,138
+ENSCO International, Inc....................... 600,000 9,525,000
+Hornbeck Offshore Services, Inc................ 208,000 3,276,000
+ICO, Inc....................................... 500,000 2,875,000
+Marine Drilling Co., Inc....................... 309,800 1,219,837
+Mesa, Inc...................................... 1,008,400 4,789,900
Murphy Oil Corp................................. 190,800 7,822,800
Noble Affiliates, Inc........................... 200,000 5,100,000
+Noble Drilling Corp............................ 800,000 5,900,000
+Oryx Energy Co................................. 849,400 11,679,250
+Pride Petroleum Services, Inc.................. 360,100 2,700,750
+Rowan Companies, Inc........................... 269,400 2,188,875
+Western Atlas, Inc............................. 300,000 13,312,500
--------------
85,718,050
--------------
RAILROADS -- 0.9%
Burlington Northern, Inc........................ 259,000 16,414,125
Illinois Central Corp........................... 440,000 15,180,000
--------------
31,594,125
--------------
REAL ESTATE DEVELOPMENT -- 0.8%
Zeneca Group, PLC, ADR.......................... 607,200 31,119,000
--------------
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
RESTAURANTS -- 0.4%
Morrison Restaurants, Inc....................... 350,300 $ 8,407,200
+Shoney's, Inc.................................. 530,100 6,228,675
--------------
14,635,875
--------------
RETAIL -- 2.6%
+Best Products Company, Inc..................... 1,094,500 8,824,406
+Burlington Coat Factory Warehouse.............. 244,600 2,537,725
+Caldor Corp.................................... 454,400 8,122,400
Charming Shoppes, Inc........................... 2,000,000 10,500,000
Dillard Department Stores, Inc. (Class 'A'
Stock)........................................ 500,000 14,687,500
+Filene's Basement Corp......................... 160,000 560,000
K mart Corp..................................... 1,058,700 15,483,487
Rite Aid Corp................................... 258,200 6,616,375
Sears, Roebuck & Co............................. 139,800 8,370,525
TJX Companies, Inc.............................. 914,900 12,122,425
Woolworth Corp.................................. 600,000 9,075,000
--------------
96,899,843
--------------
RUBBER -- 0.3%
Goodyear Tire & Rubber Co....................... 269,800 11,129,250
--------------
STEEL -- 1.9%
+Bethlehem Steel Corp........................... 1,000,000 16,250,000
+LTV Corp....................................... 1,500,000 21,937,500
+Material Sciences Corp......................... 675,000 13,753,125
+National Steel Corp. (Class 'B' Stock)......... 300,000 4,650,000
USX-U.S. Steel Group............................ 450,000 15,468,750
--------------
72,059,375
--------------
TELECOMMUNICATIONS -- 1.6%
+Airtouch Communications, Inc................... 385,500 10,986,750
Century Telephone Enterprises, Inc.............. 337,300 9,570,887
Frontier Corp................................... 797,700 19,144,800
MCI Communications Corp......................... 661,100 14,544,200
+Nextel Communications, Inc. (Class 'A'
Stock)........................................ 495,400 6,997,525
--------------
61,244,162
--------------
TEXTILES -- 1.4%
+Farah, Inc..................................... 258,500 1,680,250
+Fieldcrest Cannon, Inc......................... 460,000 9,947,500
+Fruit of the Loom, Inc. (Class 'A' Stock)...... 500,000 10,562,500
+Owens-Illinois, Inc............................ 552,700 7,185,100
Phillips-Van Heusen Corp........................ 600,000 9,300,000
+Tultex Corp.................................... 579,000 3,256,875
V.F. Corp....................................... 154,600 8,309,750
--------------
50,241,975
--------------
TOTAL COMMON STOCKS
(Cost $1,308,041,989).......................................... 1,508,343,451
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 0.1% SHARES VALUE
------------- --------------
<S> <C> <C>
MEDIA
Times Mirror Co. (Cum. Conv.), Series B......... 119,724 2,858,410
--------------
(Cost $2,807,626)
</TABLE>
49
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 31.8% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 6.7%
Associates Corp. of North America,
6.875%, 01/15/97.............................. $ 5,250,000 $ 5,294,940
8.375%, 01/15/98.............................. 1,100,000 1,149,687
Banc One Credit Card Master Trust,
7.750%, 12/15/99, Series 1994-B, Class B...... 5,100,000 5,232,243
Capital One Bank, M.T.N.,
6.740%, 05/31/99, Tranche #TR00038............ 33,500,000 33,433,000
8.125%, 02/27/98, Tranche #TR00032............ 6,500,000 6,683,300
Chrysler Financial Corp., M.T.N.,
5.390%, 08/27/96, Tranche #TR00041............ 7,300,000 7,234,081
CIGNA Mortgage Securities, Inc.,
9.400%, 01/15/02, Series 1988-1, Class A2..... 2,698,315 2,761,979
Citicorp, M.T.N.,
8.500%, 02/24/97, Tranche #TR00128............ 5,100,000 5,285,078
Discover Card Trust,
7.875%, 04/16/98, Series 1991-C, Class B...... 10,000,000 10,106,200
Federal Express Corp., M.T.N.,
10.010%, 06/01/98, Tranche #SR00067........... 3,000,000 3,244,110
10.050%, 06/15/99, Tranche #SR00068........... 500,000 552,165
%Finova Capital Corp.,
6.500%, 03/06/98.............................. 13,000,000 12,980,500
First Union Corp.,
9.450%, 06/15/99.............................. 4,000,000 4,357,560
%Ford Motor Credit Co., M.T.N.,
6.438%, 02/01/99, Tranche #TR00137............ 35,000,000 34,911,450
General Motors Acceptance Corp.,
8.250%, 08/01/96.............................. 5,000,000 5,097,400
General Motors Acceptance Corp., M.T.N.,
6.300%, 09/10/97, Tranche #TR00532............ 5,000,000 4,991,200
6.500%, 06/10/96.............................. 13,000,000 13,051,480
7.375%, 07/20/98, Tranche #TR00667............ 4,650,000 4,755,090
7.500%, 11/04/97, Tranche #TR00598............ 15,000,000 15,346,950
7.850%, 03/05/97, Tranche #TR00187............ 3,300,000 3,380,982
**Liberty Mutual Insurance Co.,
8.500%, 05/15/25.............................. 4,125,000 4,210,264
**Manufacturers Life Insurance Co.,
7.875%, 04/15/05.............................. 10,000,000 10,336,250
Mellon Financial Co.,
6.500%, 12/01/97.............................. 1,650,000 1,657,178
%OKOBank,
7.938%, 09/27/49.............................. 12,500,000 12,531,250
**Pacific Mutual Life Insurance,
7.900%, 12/30/23.............................. 4,250,000 4,086,843
**Principal Mutual Life Insurance,
7.875%, 03/01/24.............................. 2,500,000 2,391,675
8.000%, 03/01/44.............................. 5,000,000 4,672,000
Santander Financial Issuances, Ltd.,
7.875%, 04/15/05.............................. 6,750,000 7,091,010
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Standard Credit Card Master Trust,
5.950%, 10/07/04. Series 1993-2A.............. $ 4,650,000 $ 4,421,825
Union Bank of Finland, Ltd.,
5.250%, 06/15/96.............................. 16,650,000 16,432,717
Westinghouse Credit Corp., M.T.N.,
8.750%, 06/03/96, Tranche #TR00248............ 2,600,000 2,645,812
--------------
250,326,219
--------------
FOREIGN -- 4.3%
**Banco de Commercio Exterior, SA, M.T.N.,
8.625%, 06/02/00.............................. 5,500,000 5,555,000
Banco Ganadero, SA, M.T.N.,
9.750%, 08/26/99.............................. 2,300,000 2,297,125
**9.750%, 08/26/99, Tranche #TR00001.......... 5,000,000 4,993,750
**%Cemex, SA,
6.250%, 10/25/95, Series B.................... 4,250,000 4,212,813
**Cemex, SA, M.T.N.,
9.500%, 09/20/01, Tranche #TR00010............ 12,500,000 9,609,375
**Compania Sud Americana de Vapores, SA,
7.375%, 12/08/03.............................. 10,000,000 9,300,000
Controladora Commercial Mexicana, SA,
8.750%, 04/21/98.............................. 5,190,000 3,944,400
Empresa Columbia de Petroleos,
7.250%, 07/08/98.............................. 8,250,000 8,043,750
Financiera Energetic Nacional, SA,
6.625%, 12/13/96.............................. 5,000,000 4,962,500
**Financiera Energetic Nacional, SA, M.T.N.,
9.000%, 11/08/99.............................. 7,500,000 7,687,500
Fomento Economico Mexicano, SA,
9.500%, 07/22/97.............................. 5,150,000 4,673,625
**Grupo Condumex, SA, M.T.N.,
6.250%, 07/27/96.............................. 4,300,000 3,913,000
Grupo Embotellador Mexicana,
10.750%, 11/19/97............................. 8,015,000 7,494,025
Grupo Televisa, SA,
10.000%, 11/09/97............................. 7,250,000 6,778,750
**%Kansallis-Osake Pankki, N.Y.,
8.650%, 12/29/49.............................. 10,000,000 10,475,000
Kansallis-Osake Pankki, N.Y., C.D.,
6.125%, 05/15/98.............................. 6,160,000 6,144,600
Kansallis-Osake-Pankki, N.Y.,
9.750%, 12/15/98.............................. 16,950,000 18,493,805
Quebec, Province of Canada,
7.500%, 07/15/23.............................. 3,750,000 3,631,463
Republic of Columbia,
7.125%, 05/11/98.............................. 2,775,000 2,768,063
7.250%, 02/23/04.............................. 5,400,000 4,995,000
8.750%, 10/06/99.............................. 4,825,000 4,993,875
Republic of Italy,
6.875%, 09/27/23.............................. 16,250,000 14,424,150
**Republic of Trinidad and Tobago,
11.750%, 10/03/04............................. 3,750,000 3,975,000
United Mexican States,
5.820%, 06/28/01.............................. 1,375,000 893,750
6.970%, 08/12/00.............................. 2,300,000 1,679,000
8.500%, 09/15/02.............................. 6,850,000 5,171,750
--------------
161,111,069
--------------
</TABLE>
50
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
INDUSTRIAL -- 9.8%
AMR Corp.,
9.880%, 06/15/20.............................. $ 9,565,000 $ 10,939,776
Arkla, Inc., M.T.N.,
9.250%, 12/18/97, Tranche #TR00027............ 3,000,000 3,119,730
Auburn Hills Trust,
12.000%, 05/01/20............................. 11,550,000 16,897,072
Blockbuster Entertainment Corp.,
6.625%, 02/15/98.............................. 3,625,000 3,601,764
Boeing Co.,
8.625%, 11/15/31.............................. 3,625,000 4,172,266
8.750%, 09/15/31.............................. 7,500,000 8,748,300
Canadian Pacific Forest Products Ltd., M.T.N.,
9.250%, 06/15/02.............................. 10,500,000 10,975,860
Centex Corp.,
7.375%, 06/01/05.............................. 7,875,000 7,747,661
Coca-Cola Enterprises, Inc.,
6.500%, 11/15/97.............................. 3,750,000 3,778,163
Columbia/HCA Healthcare Corp.,
6.910%, 06/15/05.............................. 9,300,000 9,182,727
Delta Air Lines, Inc.,
9.250%, 03/15/22.............................. 7,300,000 7,776,471
9.750%, 05/15/21.............................. 10,000,000 11,148,600
Fleming Companies, Inc.,
10.625%, 12/15/01............................. 3,750,000 3,946,875
Hanson Overseas Corp.,
5.500%, 01/15/96.............................. 2,000,000 1,993,980
Hertz Corp.,
9.500%, 05/15/98.............................. 10,000,000 10,777,200
K mart Corp., M.T.N.,
7.770%, 07/02/02, Tranche #TR00044............ 3,000,000 3,128,550
8.190%, 11/24/03, Tranche #TR00019............ 2,500,000 2,667,850
Magma Copper Co.,
8.700%, 05/15/05.............................. 15,000,000 14,925,000
Nabisco, Inc.,
7.550%, 06/15/15.............................. 6,150,000 6,106,089
News America Holdings, Inc.,
7.450%, 06/01/00.............................. 3,500,000 3,568,215
7.500%, 03/01/00.............................. 6,500,000 6,655,350
8.625%, 02/01/03.............................. 7,250,000 7,819,270
9.125%, 10/15/99.............................. 12,500,000 13,558,124
Oryx Energy Co., M.T.N.,
6.050%, 02/01/96, Tranche #TR00013............ 12,000,000 11,924,400
PT Alatief Freeport Financial Co.,
9.750%, 04/15/01.............................. 8,950,000 9,196,125
RJR Nabisco, Inc.,
6.700%, 06/15/02.............................. 2,500,000 2,473,975
7.625%, 09/15/03.............................. 3,000,000 2,895,270
8.625%, 12/01/02.............................. 6,250,000 6,420,250
Rogers Cablesystems Ltd.,
10.000%, 03/15/05............................. 5,375,000 5,522,813
Royal Caribbean Cruises, Ltd.,
8.250%, 04/01/05.............................. 5,475,000 5,768,077
Sears, Roebuck & Co., M.T.N.,
9.420%, 04/01/96, Series IV................... 1,000,000 1,050,533
Sears, Roebuck Acceptance Corp.,
9.000%, 09/15/96.............................. 2,000,000 2,062,280
Service Corp. International,
7.000%, 06/01/15.............................. 2,500,000 2,536,600
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Tele-Communications, Inc.,
9.250%, 04/15/02.............................. $ 10,784,000 $ 11,693,091
Time Warner Entertainment Co., L.P.,
9.625%, 05/01/02.............................. 6,640,000 7,441,249
Time Warner, Inc.,
**6.050%, 07/01/95............................ 8,000,000 8,000,000
7.750%, 06/15/05.............................. 12,500,000 12,409,375
United Air Lines, Inc.,
9.750%, 08/15/21.............................. 7,500,000 8,093,175
10.670%, 05/01/04............................. 19,250,000 22,176,963
11.210%, 05/01/14............................. 2,500,000 3,036,175
USX Corp.,
9.800%, 07/01/01.............................. 13,303,000 14,774,179
Viacom, Inc.,
7.750%, 06/01/05.............................. 50,675,000 51,163,506
Westinghouse Electric Corp., M.T.N.,
8.700%, 06/20/96, Tranche #TR00029............ 2,950,000 3,004,133
--------------
364,877,062
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 10.1%
Federal National Mortgage Association,
9.050%, 04/10/00.............................. 14,000,000 15,614,340
United States Treasury Bonds,
7.500%, 11/15/24.............................. 18,550,000 20,523,906
11.250%, 02/15/15............................. 115,100,000 172,685,680
12.000%, 08/15/13............................. 32,100,000 47,347,500
United States Treasury Notes,
6.000%, 11/30/97.............................. 61,700,000 61,825,251
6.250%, 05/31/00-02/15/03..................... 8,050,000 8,121,561
6.500%, 05/15/05.............................. 6,750,000 6,893,438
7.250%, 11/15/96-02/15/98..................... 31,000,000 31,708,620
7.500%, 11/15/01-02/15/05..................... 7,975,000 8,620,988
--------------
373,341,284
--------------
UTILITIES -- 0.9%
%Texas Utilities Electric Co.,
6.563%, 05/01/99.............................. 35,000,000 35,014,000
--------------
TOTAL LONG-TERM BONDS
(Cost $1,167,022,955).......................................... 1,184,669,634
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 28.0% AMOUNT VALUE
------------- --------------
<S> <C> <C>
BANK-RELATED INSTRUMENTS -- 5.7%
Bank of Montreal, T.D.,
5.990%, 07/05/95.............................. $ 20,000,000 $ 20,000,000
Bank of New York, C.D.,
6.150%, 07/03/95.............................. 3,000,000 3,000,000
6.270%, 10/31/95.............................. 2,000,000 2,000,446
Caisse Nationale de Credit Agricole, C.D.,
6.220%, 11/02/95.............................. 8,000,000 8,000,498
Fuji Bank, Ltd., T.D.,
6.000%, 07/10/95.............................. 40,000,000 40,000,000
Industrial Bank of Japan, Ltd., T.D.,
6.020%, 07/05/95.............................. 24,000,000 24,000,000
6.125%, 07/05/95.............................. 5,738,000 5,738,000
Mitsubishi Bank, Ltd., C.D.,
6.125%, 07/12/95.............................. 23,000,000 23,000,000
Mitsubishi Bank, Ltd., T.D.,
6.188%, 07/07/95.............................. 25,000,000 25,000,000
</TABLE>
51
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
National Westminster Bank, PLC, C.D.,
5.850%, 12/26/95.............................. $ 2,000,000 $ 2,000,000
Norinchukin Bank, C.D.,
6.060%, 07/20/95.............................. 14,000,000 14,000,065
Societe Generale Bank, C.D.,
7.650%, 01/08/96.............................. 3,000,000 3,014,878
Sumitomo Bank, Ltd., C.D.,
6.000%, 07/10/95.............................. 28,000,000 28,000,000
6.060%, 07/05/95.............................. 9,000,000 9,000,020
Sumitomo Bank, Ltd., T.D.,
6.060%, 07/14/95.............................. 6,000,000 6,000,018
--------------
212,753,925
--------------
COMMERCIAL PAPER -- 13.9%
Abbey National North America Corp.,
5.820%, 09/15/95.............................. 8,000,000 7,904,293
American Express Credit Corp.,
5.900%, 10/16/95.............................. 15,000,000 14,741,875
6.180%, 08/21/95.............................. 10,000,000 9,915,883
American General Financial Corp.,
5.850%, 09/18/95.............................. 5,000,000 4,937,438
American Home Food Products, Inc.,
5.970%, 07/11/95-07/28/95..................... 10,000,000 9,972,638
American Home Products Corp.,
5.950%, 07/27/95.............................. 12,143,000 12,094,833
5.980%, 07/27/95.............................. 7,000,000 6,972,093
American Honda Finance Corp.,
5.880%, 09/05/95.............................. 1,000,000 989,547
6.050%, 07/31/95.............................. 5,000,000 4,976,472
Aristar, Inc.,
6.020%, 07/05/95.............................. 3,345,000 3,343,881
Associates Corp. of North America,
5.910%, 08/29/95.............................. 6,000,000 5,943,855
5.960%, 08/02/95.............................. 2,000,000 1,990,067
6.000%, 07/05/95.............................. 26,000,000 25,991,333
AT&T Capital Corp.,
5.830%, 09/08/95.............................. 2,000,000 1,978,299
AT&T Corp.,
5.830%, 09/12/95.............................. 4,000,000 3,954,008
Bank of New York,
5.980%, 07/05/95.............................. 2,000,000 1,999,336
BHF Finance, Inc.,
5.800%, 09/22/95.............................. 7,000,000 6,908,650
Bradford & Bingley Building Society,
5.900%, 09/13/95.............................. 4,000,000 3,952,800
Bridgestone/Firestone, Inc.,
6.350%, 07/05/95.............................. 7,310,000 7,307,421
CIT Group Holdings, Inc.,
5.850%, 09/18/95.............................. 4,000,000 3,949,950
5.900%, 09/11/95.............................. 12,000,000 11,862,333
6.000%, 07/05/95.............................. 3,500,000 3,498,833
Coca Cola Enterprises, Inc.,
6.000%, 07/07/95-11/03/95..................... 3,610,000 3,567,927
Commerzbank U.S. Finance, Inc.,
5.850%, 09/21/95.............................. 4,300,000 4,244,100
Countrywide Funding Corp.,
6.020%, 07/28/95.............................. 14,000,000 13,941,472
Dean Witter, Discover & Company,
5.970%, 07/05/95.............................. 7,000,000 6,997,678
Duracell, Inc.,
5.980%, 08/11/95.............................. 2,000,000 1,987,043
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Falcon Asset Securitization Corp.,
5.930%, 08/23/95.............................. $ 2,354,000 $ 2,334,224
Finova Capital Corp.,
5.980%, 08/03/95.............................. 7,000,000 6,963,954
6.000%, 08/21/95.............................. 4,451,000 4,414,650
6.020%, 08/11/95.............................. 5,000,000 4,967,392
6.030%, 07/31/95.............................. 2,000,000 1,990,620
6.050%, 07/27/95-08/07/95..................... 5,000,000 4,976,136
Ford Motor Credit Co.,
5.950%, 07/14/95.............................. 27,900,000 27,849,276
6.070%, 01/05/96.............................. 14,300,000 13,851,528
6.200%, 09/12/95.............................. 6,000,000 5,926,633
General Electric Capital Corp.,
6.050%, 10/17/95-10/18/95..................... 12,000,000 11,785,225
6.530%, 10/30/95.............................. 14,000,000 13,697,806
General Motors Acceptance Corp.,
6.150%, 07/12/95-07/13/95..................... 53,339,000 53,255,542
GTE Finance Corp.,
5.980%, 08/11/95.............................. 2,000,000 1,987,043
Hanson Finance, PLC,
5.830%, 09/20/95-09/22/95..................... 5,000,000 4,935,060
5.900%, 09/21/95.............................. 10,000,000 9,868,889
Household Finance Corp.,
5.820%, 09/26/95.............................. 5,000,000 4,931,292
ITT Hartford Group, Inc.,
5.960%, 07/14/95.............................. 7,000,000 6,987,252
6.000%, 07/27/95.............................. 9,000,000 8,964,000
Maguire/Thomas Partners,
6.000%, 07/17/95.............................. 2,000,000 1,995,333
McKenna Triangle National Corp.,
5.900%, 07/27/95.............................. 2,000,000 1,992,133
5.980%, 07/27/95.............................. 8,000,000 7,968,107
Merrill Lynch & Co., Inc.,
5.970%, 07/11/95.............................. 11,000,000 10,985,407
Morgan Stanley Group, Inc.,
5.850%, 10/02/95.............................. 10,000,000 9,852,125
Norwest Financial, Inc.,
6.000%, 07/05/95.............................. 4,000,000 3,998,667
Orix America, Inc.,
6.000%, 07/17/95.............................. 3,000,000 2,993,000
Paribas Finance, Inc.,
6.000%, 08/01/95.............................. 4,000,000 3,980,667
Pennsylvania Power & Light Co.,
5.950%, 07/17/95.............................. 2,333,000 2,327,602
Philip Morris Capital Corp.,
5.900%, 08/18/95.............................. 3,000,000 2,977,383
Philip Morris Companies, Inc.,
6.020%, 07/13/95.............................. 10,000,000 9,983,279
PNC Funding Corp.,
5.960%, 08/18/95.............................. 6,000,000 5,954,307
Preferred Receivables Funding Corp.,
5.850%, 09/20/95.............................. 2,850,000 2,813,413
Sears Roebuck Acceptance Corp.,
5.980%, 07/11/95.............................. 6,000,000 5,992,027
Sherwood Medical Co.,
5.950%, 07/27/95.............................. 19,000,000 18,924,633
5.970%, 07/21/95.............................. 5,000,000 4,985,075
Sumitomo Corp. of America,
6.020%, 07/31/95.............................. 13,955,000 13,889,660
U.S. West Communications, Inc.,
5.850%, 08/30/95.............................. 5,000,000 4,952,875
WCP Funding, Inc.,
5.950%, 08/15/95.............................. 3,000,000 2,978,679
</TABLE>
52
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Whirlpool Corp.,
5.970%, 07/10/95.............................. $ 11,000,000 $ 10,987,231
Whirlpool Financial Corp.,
6.000%, 07/31/95.............................. 4,900,000 4,877,134
Xerox Credit Corp.,
5.820%, 09/14/95.............................. 4,000,000 3,952,793
--------------
514,972,110
--------------
LOAN PARTICIPATIONS -- 0.1%
Morgan Stanley Group, Inc.,
6.080%, 07/07/95.............................. 3,373,000 3,373,000
--------------
TERM NOTES -- 6.5%
Abbey National Treasury Services, PLC,
6.400%, 05/17/96.............................. 16,000,000 16,000,000
%American Express Centurion Bank,
4.500%, 08/04/95, Tranche #TR00037............ 4,000,000 3,999,965
Associates Corp. of North America,
8.800%, 03/01/96.............................. 2,000,000 2,029,359
Atlantic Richfield Co.,
10.375%, 07/15/95............................. 2,000,000 2,002,414
Bank One Indianapolis N.A.,
7.180%, 02/05/96, Tranche #TR00002............ 6,000,000 6,013,961
Bank One Milwaukee N.A.,
5.980%, 07/31/95, Tranche #TR00010............ 47,000,000 46,999,892
%Corestates Capital Corp.,
6.020%, 07/19/95, Tranche #TR00076............ 10,000,000 10,000,169
Exxon Capital Corp.,
7.875%, 04/15/96.............................. 5,500,000 5,574,623
Ford Motor Credit Co.,
9.850%, 02/27/96, Tranche #TR00018............ 5,000,000 5,103,674
%General Electric Capital Corp.,
6.000%, 09/28/95, Tranche #TR00291............ 11,550,000 11,550,500
Huntington National Bank,
6.200%, 11/03/95.............................. 5,000,000 5,001,388
Mellon Bank N.A.,
6.200%, 11/01/95, Tranche #TR00005............ 4,000,000 3,999,739
NationsBank of Texas N.A.,
6.820%, 10/31/95, Tranche #TR00048............ 3,000,000 3,001,492
7.000%, 02/06/96, Tranche #TR00050............ 40,000,000 40,013,733
7.300%, 01/26/96, Tranche #TR00043............ 4,000,000 4,009,420
7.550%, 01/09/96, Tranche #TR00037............ 8,500,000 8,535,040
Northern Trust Company,
6.600%, 11/17/95, Tranche #TR00023............ 25,000,000 25,029,138
PepsiCo, Inc.,
15.000%, 11/08/95, Tranche #TR00057........... 5,000,000 5,148,491
%Salomon, Inc.,
6.975%, 02/14/96.............................. 25,000,000 25,000,000
State Street Bank & Trust Co.,
6.010%, 09/20/95, Tranche #TR00419............ 3,000,000 2,999,943
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
USX Corp.,
7.063%, 02/15/96.............................. $ 7,500,000 $ 7,513,512
--------------
239,526,453
--------------
PROMISSORY NOTES -- 1.3%
%General Electric Capital Corp.,
5.969%, 10/23/95.............................. 15,000,000 15,000,000
%Lehman Brothers Holdings, Inc.,
6.263%, 11/20/95.............................. 26,000,000 26,000,000
Paribas Finance, Inc.,
5.840%, 09/28/95.............................. 3,000,000 2,957,660
5.940%, 07/26/95.............................. 5,000,000 4,981,025
--------------
48,938,685
--------------
REPURCHASE AGREEMENTS -- 0.5%
Joint Repurchase Agreement Account,
6.102%, 07/03/95 (see Note 4)................. 19,468,000 19,468,000
--------------
TOTAL SHORT-TERM INVESTMENTS..................................... 1,039,032,173
--------------
LIABILITIES -- (0.5%)
(net of other assets).......................................... (19,303,920)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $3,715,599,748
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
C.D. Certificates of Deposit
L.P. Limited Partnership
M.T.N. Medium Term Note
PLC Public Limited Company (British Corporation)
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
T.D. Time Deposit
**Indicates a restricted security; the aggregate cost of the restricted
securities is $94,969,153. The aggregate value, $93,418,470 is
approximately 2.5% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending June 30,
1995.
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
53
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 65.7% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 1.3%
Boeing Co....................................... 382,600 $ 23,960,325
+Coltec Industries, Inc......................... 550,400 9,494,400
United Technologies Corp........................ 190,900 14,914,063
--------------
48,368,788
--------------
AUTOS - CARS & TRUCKS -- 2.0%
Chrysler Corp................................... 429,200 20,547,950
General Motors Corp............................. 550,000 25,781,250
General Motors Corp. (Class 'E' Stock).......... 702,700 30,567,450
--------------
76,896,650
--------------
BANKS AND SAVINGS & LOANS -- 4.1%
Bank of New York Company, Inc................... 1,549,400 62,557,025
J.P. Morgan & Co., Inc.......................... 556,800 39,045,600
NationsBank Corp................................ 520,000 27,885,000
Norwest Corp.................................... 997,800 28,686,750
--------------
158,174,375
--------------
CHEMICALS -- 3.8%
A. Schulman, Inc................................ 390,800 11,235,500
Agrium, Inc..................................... 1,351,700 45,773,623
E.I. Du Pont de Nemours & Co.................... 692,600 47,616,250
Eastman Chemical Co............................. 404,600 24,073,700
+McWhorter Technologies, Inc.................... 243,950 3,659,250
+Mississippi Chemical Corp...................... 278,700 5,574,000
OM Group, Inc................................... 301,700 8,598,450
--------------
146,530,773
--------------
CHEMICALS - SPECIALTY -- 1.1%
+IMC Global, Inc................................ 751,400 40,669,525
--------------
COMMERCIAL SERVICES -- 0.6%
ServiceMaster, L.P.............................. 540,850 14,535,343
Sotheby's Holdings, Inc. (Class 'A' Stock)...... 465,100 6,336,988
--------------
20,872,331
--------------
COMPUTER SERVICES -- 2.2%
+American Management Systems, Inc............... 382,050 9,599,005
Automatic Data Processing, Inc.................. 740,400 46,552,650
First Data Corp................................. 422,500 24,029,688
National Data Corp.............................. 174,700 4,039,938
--------------
84,221,281
--------------
DIVERSIFIED GAS -- 0.4%
+Basin Exploration, Inc......................... 235,400 1,397,688
Cross Timbers Oil Co............................ 810,000 12,858,750
--------------
14,256,438
--------------
DIVERSIFIED OFFICE EQUIPMENT -- 0.7%
International Business Machines Corp............ 290,500 27,887,999
--------------
DRUGS AND HOSPITAL SUPPLIES -- 2.3%
Abbott Laboratories............................. 345,200 13,980,600
American Home Products Corp..................... 400,000 30,950,000
Baxter International, Inc....................... 725,000 26,371,875
Schering-Plough Corp............................ 400,000 17,650,000
--------------
88,952,475
--------------
ELECTRICAL EQUIPMENT -- 0.7%
Baldor Electric Co.............................. 501,640 14,359,445
Belden, Inc..................................... 519,900 14,037,300
--------------
28,396,745
--------------
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
ELECTRONICS -- 3.0%
+ADT Ltd........................................ 1,641,200 $ 19,284,100
Emerson Electric Co............................. 1,093,800 78,206,700
Teleflex, Inc................................... 400,000 17,200,000
--------------
114,690,800
--------------
FINANCIAL SERVICES -- 5.3%
Dean Witter, Discover & Co...................... 1,087,600 51,117,200
Federal Home Loan Mortgage Corp................. 898,500 61,771,875
First USA, Inc.................................. 610,300 27,082,062
Manufactured Home Communities, Inc.............. 717,900 11,037,713
MBNA Corp....................................... 841,100 28,387,125
Morgan Stanley Group, Inc....................... 300,000 24,300,000
--------------
203,695,975
--------------
FOODS -- 1.9%
Archer-Daniels-Midland Co....................... 2,031,140 37,829,983
Pioneer Hi-Bred International, Inc.............. 788,200 33,104,400
--------------
70,934,383
--------------
FOREST PRODUCTS -- 1.5%
Caraustar Industries, Inc....................... 419,500 7,551,000
Willamette Industries, Inc...................... 903,200 50,127,600
--------------
57,678,600
--------------
GAS PIPELINES -- 0.2%
+Seagull Energy Corp............................ 535,400 8,834,099
--------------
HEALTHCARE -- 0.3%
+Sybron International Corp...................... 260,200 10,375,474
--------------
HOSPITAL MANAGEMENT -- 1.9%
+Apria Healthcare Group, Inc.................... 323,600 9,141,700
Columbia/HCA Healthcare Corp.................... 898,362 38,854,157
+Health Care and Retirement Corp................ 590,800 17,280,900
+Tenet Healthcare Corp.......................... 583,600 8,389,250
--------------
73,666,007
--------------
INSURANCE -- 3.5%
American International Group, Inc............... 491,800 56,065,200
Chubb Corp...................................... 309,500 24,798,688
General Re Corp................................. 332,000 44,446,500
NAC Re Corp..................................... 277,400 8,634,075
--------------
133,944,463
--------------
LEISURE -- 3.4%
+Bally Entertainment Corp....................... 1,704,000 20,874,000
Carnival Corp. (Class 'A' Stock)................ 2,000,000 46,750,000
Hasbro, Inc..................................... 433,600 13,766,800
+MGM Grand, Inc................................. 426,700 11,680,913
+Mirage Resorts, Inc............................ 600,400 18,387,250
+Players International, Inc..................... 550,000 11,000,000
Royal Caribbean Cruise, Ltd..................... 411,400 9,050,800
--------------
131,509,763
--------------
MACHINERY -- 0.1%
+Thermo Fibertek, Inc........................... 225,300 4,477,837
--------------
MEDIA -- 2.9%
Comcast Corp. (Class 'A' Stock)................. 710,100 $ 12,914,944
Gannett Co., Inc................................ 364,700 19,784,975
+Heritage Media Corp. (Class 'A' Stock)......... 297,700 8,596,088
Shaw Communications, Inc. (Class 'B' Stock)..... 703,700 4,227,889
</TABLE>
54
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
+Tele-Communications, Inc. (Class 'A'Stock)..... 1,642,100 $ 38,486,718
+Viacom, Inc. (Class 'B' Stock)................. 533,800 24,754,975
--------------
108,765,589
--------------
MINERAL RESOURCES -- 2.6%
Pittston Services Group......................... 350,000 8,400,000
Potash Corp. of Saskatchewan, Inc............... 1,027,600 57,417,150
+Sante Fe Pacific Gold Corp..................... 974,000 11,809,750
Vigoro Corp..................................... 483,100 20,048,650
--------------
97,675,550
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 6.6%
+American Business Information, Inc............. 540,100 14,582,700
Danaher Corp.................................... 226,200 6,842,550
Expeditors International of Washington, Inc..... 254,000 5,715,000
General Electric Co............................. 677,300 38,182,787
Illinois Tool Works, Inc........................ 960,000 52,800,000
Libbey, Inc..................................... 494,000 10,250,500
Martin Marietta Materials, Inc.................. 647,600 12,952,000
Modine Manufacturing Co......................... 316,600 11,635,050
Pentair, Inc.................................... 263,200 11,449,200
+Thermo Electron Corp........................... 865,650 34,842,413
TJ International, Inc........................... 229,800 4,308,750
Trinity Industries, Inc......................... 291,300 9,685,725
Tyco International Ltd.......................... 403,600 21,794,400
York International Corp......................... 400,000 18,000,000
--------------
253,041,075
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.6%
+DeVRY, Inc..................................... 779,200 15,584,000
Kellwood Co..................................... 533,900 9,076,300
--------------
24,660,300
--------------
PETROLEUM -- 2.7%
Exxon Corp...................................... 410,000 28,956,250
Royal Dutch Petroleum Co., ADR.................. 606,300 73,892,813
--------------
102,849,063
--------------
PETROLEUM SERVICES -- 1.2%
Baker Hughes, Inc............................... 581,700 11,924,850
+Mesa, Inc...................................... 537,800 2,554,550
+Oryx Energy Co................................. 575,100 7,907,625
Total SA, ADR................................... 757,500 22,914,375
--------------
45,301,400
--------------
RAILROADS -- 2.2%
Illinois Central Corp........................... 682,000 23,529,000
Kansas City Southern Industries, Inc............ 900,000 33,525,000
Norfolk Southern Corp........................... 420,000 28,297,500
--------------
85,351,500
--------------
REAL ESTATE DEVELOPMENT -- 0.8%
Crescent Real Estate Equities, Inc.............. 492,600 15,701,625
Duke Realty Investments, Inc.................... 444,800 12,565,600
Equity Residential Properties Trust............. 43,300 1,206,988
--------------
29,474,213
--------------
RETAIL -- 1.2%
Harcourt General, Inc........................... 480,500 20,421,250
+Mikasa, Inc.................................... 205,800 3,061,275
+Toys 'R' Us, Inc............................... 775,000 22,668,750
--------------
46,151,275
--------------
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
STEEL -- 0.5%
Broken Hill Proprietary Co., Ltd., ADR.......... 200,000 $ 9,875,000
+Material Sciences Corp......................... 164,300 3,347,613
Worthington Industries, Inc..................... 320,000 6,540,000
--------------
19,762,613
--------------
TELECOMMUNICATIONS -- 1.7%
+Airtouch Communications, Inc................... 641,100 18,271,350
AT&T Corp....................................... 596,200 31,673,125
TCA Cable TV, Inc............................... 494,300 13,346,100
--------------
63,290,575
--------------
TEXTILES -- 0.2%
Unifi, Inc...................................... 272,500 6,539,999
--------------
TOBACCO -- 2.2%
Philip Morris Companies, Inc.................... 438,900 32,643,188
RJR Nabisco Holdings Corp....................... 1,905,000 53,101,875
--------------
85,745,063
--------------
TOTAL COMMON STOCKS
(Cost $2,144,802,833).......................................... 2,513,642,996
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 0.6% SHARES VALUE
------------- --------------
<S> <C> <C>
MEDIA
News Corp., Ltd., ADR........................... 1,140,000 22,800,000
--------------
(Cost $17,330,010)
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 27.9% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 7.0%
Banc One Credit Card Master Trust,
7.750%, 12/15/99, Series 1994-B, Class B...... $ 5,000,000 $ 5,129,650
Capital One Bank, M.T.N.,
6.740%, 05/31/99, Tranche #TR00038............ 33,500,000 33,433,000
8.125%, 02/27/98, Tranche #TR00032............ 6,500,000 6,683,300
Chase Manhattan Credit Card Trust,
7.400%, 05/15/00, Series 1992-1, Class A...... 5,000,000 5,079,650
%Finova Capital Corp.,
6.500%, 03/06/98.............................. 46,500,000 46,430,250
%First USA Bank, M.T.N.,
6.463%, 03/07/97, Tranche #TR00009............ 20,000,000 20,058,400
Ford Motor Credit Co., M.T.N.,
%6.438%, 02/01/99, Tranche #TR00137........... 28,000,000 27,929,160
%6.463%, 06/02/98, Tranche #TR00810........... 14,000,000 14,003,360
%6.525%, 05/26/98, Tranche #TR00803........... 10,000,000 10,005,100
General Motors Acceptance Corp., M.T.N.,
6.500%, 06/10/96.............................. 10,000,000 10,039,600
7.000%, 05/19/97, Tranche #TR00041............ 10,000,000 10,118,200
7.000%, 06/02/97, Tranche #TR00476............ 6,000,000 6,071,220
</TABLE>
55
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
7.375%, 07/20/98, Tranche #TR00667............ $ 4,500,000 $ 4,601,700
7.850%, 03/05/97.............................. 3,200,000 3,278,528
7.875%, 03/15/00, Tranche #TR00187............ 5,000,000 5,226,500
**Liberty Mutual Insurance Co.,
8.500%, 05/15/25.............................. 4,125,000 4,210,264
**Manufacturers Life Insurance Co.,
7.875%, 04/15/05.............................. 10,000,000 10,336,250
%MBNA Master Credit Card Trust,
5.745%, 01/15/02, Series 1994-A, Class B...... 7,500,000 7,514,025
%OKOBank,
7.938%, 09/27/49.............................. 12,500,000 12,531,250
**Pacific Mutual Life Insurance,
7.900%, 12/30/23.............................. 4,250,000 4,086,842
Principal Mutual Life Insurance,
**7.875%, 03/01/24............................ 2,500,000 2,391,675
**8.000%, 03/01/44............................ 5,000,000 4,672,000
Santander Financial Issuances, Ltd.,
7.875%, 04/15/05.............................. 6,750,000 7,091,010
Standard Credit Card Master Trust,
5.950%, 10/07/04, Series 1993-2A.............. 4,500,000 4,279,185
Westinghouse Credit Corp., M.T.N.,
8.750%, 06/03/96, Tranche #TR00248............ 3,330,000 3,388,675
--------------
268,588,794
--------------
FOREIGN -- 4.3%
**Banco de Commercio Exterior, SA, M.T.N.,
8.625%, 06/02/00, Tranche #TR00001............ 5,500,000 5,555,000
Banco Ganadero, SA, M.T.N.,
9.750%, 08/26/99.............................. 2,300,000 2,297,125
**9.760%, 08/26/99, Tranche #TR00001.......... 5,000,000 4,993,750
**Cemex, SA,
8.875%, 06/10/98.............................. 5,000,000 4,287,500
**Cemex, SA, M.T.N.,
9.500%, 09/20/01, Tranche #TR00010............ 12,500,000 9,609,375
**Compania Sud Americana de Vapores, SA,
7.375%, 12/08/03.............................. 7,250,000 6,742,500
Controladora Commercial Mexicana, SA,
8.750%, 04/21/98.............................. 15,100,000 11,476,000
Empresa Columbia de Petroleos,
7.250%, 07/08/98.............................. 8,250,000 8,043,750
Empresas La Moderna, SA,
10.250%, 11/12/97............................. 2,000,000 1,835,000
Financiera Energetic Nacional, SA,
6.625%, 12/13/96.............................. 5,100,000 5,061,750
**Financiera Energetic Nacional, SA, M.T.N.,
9.000%, 11/08/99.............................. 7,500,000 7,687,500
Fomento Economico Mexicano, SA,
9.500%, 07/22/97.............................. 6,300,000 5,717,250
Grupo Embotellador Mexicana,
10.750%, 11/19/97............................. 8,020,000 7,498,700
Grupo Televisa, SA,
10.000%, 11/09/97............................. 4,000,000 3,740,000
**%Kansallis-Osake Pankki, N.Y.,
8.650%, 12/29/49.............................. 9,000,000 9,427,500
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Kansallis-Osake-Pankki, N.Y.,
9.750%, 12/15/98.............................. $ 16,760,000 $ 18,286,501
New Zealand Government,
9.875%, 01/15/11.............................. 7,300,000 9,251,728
Quebec, Province of Canada,
7.500%, 07/15/23.............................. 3,750,000 3,631,462
Republic of Columbia,
7.125%, 05/11/98.............................. 2,700,000 2,693,250
7.250%, 02/23/04.............................. 4,100,000 3,792,500
8.750%, 10/06/99.............................. 4,800,000 4,968,000
Republic of Italy,
6.875%, 09/27/23.............................. 17,250,000 15,311,790
**Republic of Trinidad and Tobago,
11.750%, 10/03/04............................. 3,650,000 3,869,000
United Mexican States,
5.820%, 06/28/01.............................. 1,375,000 893,750
6.970%, 08/12/00.............................. 2,300,000 1,679,000
8.500%, 09/15/02.............................. 6,925,000 5,228,375
--------------
163,578,056
--------------
INDUSTRIAL -- 10.0%
Auburn Hills Trust,
12.000%, 05/01/20............................. 11,050,000 16,165,598
Blockbuster Entertainment Corp.,
6.625%, 02/15/98.............................. 3,625,000 3,601,764
Boeing Co.,
8.625%, 11/15/31.............................. 3,625,000 4,172,266
8.750%, 09/15/31.............................. 2,500,000 2,916,100
Canadian Pacific Forest Products Ltd., M.T.N.,
9.250%, 06/15/02.............................. 10,600,000 11,080,392
Centex Corp.,
7.375%, 06/01/05.............................. 7,875,000 7,747,661
Columbia/HCA Healthcare Corp.,
6.910%, 06/15/05.............................. 9,250,000 9,133,358
Delta Air Lines, Inc.,
9.250%, 03/15/22.............................. 8,709,000 9,277,436
9.750%, 05/15/21.............................. 34,956,000 38,971,046
9.875%, 01/01/98.............................. 6,000,000 6,370,680
Fleming Companies, Inc.,
10.625%, 12/15/01............................. 24,000,000 25,260,000
K mart Corp., M.T.N.,
7.770%, 07/02/02, Tranche #TR00044............ 3,000,000 3,128,550
8.190%, 11/24/03, Tranche #TR00019............ 2,500,000 2,667,850
Magma Copper Co.,
8.700%, 05/15/05.............................. 15,000,000 14,925,000
Nabisco, Inc.,
6.700%, 06/15/02.............................. 2,500,000 2,473,975
7.550%, 06/15/15.............................. 6,150,000 6,106,089
News America Holdings, Inc.,
7.450%, 06/01/00.............................. 3,500,000 3,568,215
7.500%, 03/01/00.............................. 6,500,000 6,655,350
8.625%, 02/01/03.............................. 7,250,000 7,819,270
9.125%, 10/15/99.............................. 12,500,000 13,558,125
Oryx Energy Co.,
9.300%, 05/01/96.............................. 2,350,000 2,381,490
Oryx Energy Co., M.T.N.,
6.050%, 02/01/96, Tranche #TR00013............ 10,500,000 10,433,850
PT Alatief Freeport Financial Co.,
9.750%, 04/15/01.............................. 7,600,000 7,809,000
</TABLE>
56
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
RJR Nabisco, Inc.,
7.625%, 09/15/03.............................. $ 3,000,000 $ 2,895,270
8.625%, 12/01/02.............................. 6,250,000 6,420,250
Rogers Cablesystems Ltd.,
10.000%, 03/15/05............................. 5,375,000 5,522,813
Royal Caribbean Cruises, Ltd.,
8.250%, 04/01/05.............................. 5,475,000 5,768,077
Service Corp. International,
7.000%, 06/01/15.............................. 2,500,000 2,536,600
Tele-Communications, Inc.,
9.250%, 04/15/02.............................. 10,775,000 11,683,333
Time Warner Entertainment Co., L.P.,
9.625%, 05/01/02.............................. 6,640,000 7,441,249
Time Warner, Inc.,
7.750%, 06/15/05.............................. 12,500,000 12,409,375
Transco Energy Co.,
9.125%, 05/01/98.............................. 14,000,000 14,895,720
United Air Lines, Inc.,
9.750%, 08/15/21.............................. 7,500,000 8,093,175
10.670%, 05/01/04, Series A................... 19,250,000 22,176,962
11.210%, 05/01/14, Series B................... 2,500,000 3,036,175
USX Corp.,
9.800%, 07/01/01.............................. 13,270,000 14,737,529
Viacom, Inc.,
7.750%, 06/01/05.............................. 50,675,000 51,163,506
--------------
385,003,099
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 5.3%
Federal National Mortgage Association,
Zero Coupon, 10/09/19......................... 11,800,000 2,087,066
Government National Mortgage Association,
8.950%, 10/15/28, Pool #222286................ 4,015,529 4,085,175
United States Treasury Bonds,
7.500%, 11/15/24.............................. 5,000,000 5,532,050
8.875%, 08/15/17.............................. 12,200,000 15,189,000
9.250%, 02/15/16.............................. 16,200,000 20,771,478
11.250%, 02/15/15............................. 80,300,000 120,474,893
United States Treasury Notes,
6.125%, 05/15/98.............................. 20,300,000 20,433,168
6.250%, 02/15/03.............................. 1,250,000 1,253,325
6.500%, 05/15/05.............................. 6,750,000 6,893,438
7.500%, 11/15/01-02/15/05..................... 4,475,000 4,809,802
--------------
201,529,395
--------------
UTILITIES -- 1.3%
%Texas Utilities Electric Co.,
6.563%, 05/01/99.............................. 50,650,000 50,670,260
--------------
TOTAL LONG-TERM BONDS
(Cost $1,058,963,745).......................................... 1,069,369,604
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 6.1% AMOUNT VALUE
------------- --------------
<S> <C> <C>
BANK-RELATED INSTRUMENTS -- 0.8%
Bank of Montreal, T.D.,
5.990%, 07/05/95.............................. 5,000,000 5,000,000
Bank of New York, C.D.,
6.150%, 07/03/95.............................. 1,000,000 1,000,000
Caisse Nationale de Credit Agricole, C.D.,
6.220%, 11/02/95.............................. 1,000,000 1,000,062
Fuji Bank, Ltd., T.D.,
6.000%, 07/10/95.............................. 6,000,000 6,000,000
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Industrial Bank of Japan, Ltd., T.D.,
6.020%, 07/05/95.............................. $ 3,000,000 $ 3,000,000
Lloyds Bank, C.D. PLC,
6.750%, 07/11/95.............................. 1,500,000 1,500,093
Mitsubishi Bank, Ltd., C.D.,
6.125%, 07/12/95.............................. 2,000,000 2,000,000
Sanwa Bank, Ltd., C.D.,
5.950%, 07/06/95.............................. 4,000,000 3,999,983
6.020%, 07/03/95.............................. 2,000,000 2,000,000
Sumitomo Bank, Ltd., C.D.,
6.000%, 07/10/95.............................. 2,000,000 2,000,000
Sumitomo Bank, Ltd., T.D.,
6.060%, 07/14/95.............................. 4,000,000 4,000,012
--------------
31,500,150
--------------
COMMERCIAL PAPER -- 1.6%
Abbey National North America Corp.,
5.820%, 09/15/95.............................. 1,000,000 988,037
American Express Credit Corp.,
5.850%, 09/19/95.............................. 3,000,000 2,961,975
American Home Food Products,
5.980%, 07/27/95.............................. 2,178,000 2,169,317
American Home Products Corp.,
5.950%, 07/27/95.............................. 1,357,000 1,351,617
5.970%, 08/10/95.............................. 3,000,000 2,981,095
American Honda Finance Corp.,
6.050%, 07/31/95.............................. 1,000,000 995,294
Aristar, Inc.,
6.020%, 07/05/95.............................. 130,000 129,957
Associates Corp. of North America,
6.000%, 07/05/95.............................. 3,000,000 2,999,000
AT&T Corp.,
5.830%, 09/12/95.............................. 1,000,000 988,502
Bradford & Bingley Building Society,
5.900%, 09/13/95.............................. 1,000,000 988,200
CIT Group Holdings, Inc.,
5.850%, 09/18/95.............................. 1,000,000 987,488
5.900%, 09/11/95.............................. 2,000,000 1,977,056
Commerzbank U.S. Finance, Inc.,
5.850%, 09/21/95.............................. 1,000,000 987,000
Countrywide Funding Corp.,
5.960%, 07/20/95.............................. 1,000,000 997,186
5.980%, 07/19/95.............................. 1,000,000 997,342
6.020%, 07/28/95.............................. 1,000,000 995,819
Dean Witter, Discover & Company,
5.970%, 07/05/95.............................. 1,000,000 999,668
Finova Capital Corp.,
5.980%, 07/31/95.............................. 650,000 646,977
6.020%, 08/11/95.............................. 1,000,000 993,478
6.030%, 08/01/95.............................. 1,000,000 995,143
6.120%, 07/11/95.............................. 700,000 699,048
Ford Motor Credit Co.,
5.950%, 07/14/95.............................. 2,400,000 2,395,637
General Motors Acceptance Corp.,
6.150%, 07/12/95-07/13/95..................... 8,963,000 8,948,824
Hanson Finance, PLC,
5.830%, 09/22/95.............................. 1,000,000 986,883
5.900%, 09/21/95.............................. 1,000,000 986,889
Household Finance Corp.,
5.820%, 09/26/95.............................. 1,000,000 986,258
ITT Hartford Group, Inc.,
5.960%, 07/14/95.............................. 2,000,000 1,996,358
6.000%, 07/27/95.............................. 2,000,000 1,992,000
</TABLE>
57
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
McKenna Triangle National Corp.,
5.970%, 08/01/95.............................. $ 1,500,000 $ 1,492,786
5.980%, 07/27/95.............................. 1,000,000 996,013
Merrill Lynch & Co., Inc.,
5.970%, 08/03/95.............................. 4,000,000 3,979,437
National Australia Fund,
6.350%, 08/04/95.............................. 1,000,000 994,356
Norwest Financial, Inc.,
6.000%, 07/05/95.............................. 1,000,000 999,667
Orix America, Inc.,
6.000%, 07/17/95.............................. 2,000,000 1,995,333
Philip Morris Capital Corp.,
5.950%, 08/11/95.............................. 1,200,000 1,192,265
PNC Funding Corp.,
5.960%, 08/18/95.............................. 1,000,000 992,384
Sears Roebuck Acceptance Corp.,
5.980%, 07/11/95.............................. 1,000,000 998,671
Sumitomo Corp. of America,
6.020%, 07/31/95.............................. 1,045,000 1,040,107
U.S. West Communications, Inc.,
5.850%, 08/30/95.............................. 1,000,000 990,575
Xerox Credit Corp.,
5.820%, 09/14/95.............................. 1,000,000 988,197
--------------
62,781,839
--------------
TERM NOTES -- 1.7%
Abbey National Treasury Services, PLC,
6.400%, 05/17/96.............................. 2,000,000 2,000,000
Associates Corp. of North America,
%4.500%, 02/15/96............................. 3,200,000 3,156,137
8.800%, 03/01/96.............................. 2,000,000 2,029,359
Bank One Indianapolis N.A.,
7.180%, 02/05/96, Tranche #TR00002............ 1,000,000 1,002,327
Bank One Milwaukee N.A.,
5.980%, 07/31/95, Tranche #TR00010............ 3,000,000 2,999,993
Ford Motor Credit Co.,
%5.150%, 03/15/96, Tranche #TR00690........... 2,000,000 1,981,916
8.250%, 05/15/96.............................. 2,300,000 2,347,561
%General Electric Capital Corp.,
6.000%, 09/28/95.............................. 3,000,000 3,000,130
Huntington National Bank,
6.200%, 11/03/95.............................. 1,000,000 1,000,278
NationsBank of Texas N.A.,
6.820%, 10/31/95.............................. 9,000,000 9,002,438
Northern Trust Company,
6.600%, 11/17/95, Tranche #TR00023............ 2,000,000 2,002,331
%Salomon, Inc.,
Zero Coupon, 02/14/96......................... 25,000,000 25,000,000
USX Corp.,
7.063%, 02/15/96.............................. 7,500,000 7,513,511
--------------
63,035,981
--------------
PROMISSORY NOTES -- 0.3%
%General Electric Capital Corp.,
5.969%, 10/23/95.............................. 5,000,000 5,000,000
%Lehman Brothers Holdings, Inc.,
6.263%, 11/20/95.............................. 4,000,000 4,000,000
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Paribas Finance, Inc.,
5.840%, 09/28/95.............................. $ 1,000,000 $ 985,887
5.940%, 07/26/95.............................. 1,000,000 996,205
--------------
10,982,092
--------------
REPURCHASE AGREEMENTS -- 1.7%
Joint Repurchase Agreement Account,
6.102%, 07/03/95 (see Note 4)................. 64,167,000 64,167,000
--------------
TOTAL SHORT-TERM INVESTMENTS..................................... 232,467,062
--------------
LIABILITIES -- (0.3%)
(net of other assets).......................................... (10,395,100)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $3,827,884,562
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
C.D. Certificates of Deposit
L.P. Limited Partnership
M.T.N. Medium Term Note
PLC Public Limited Company (British Corporation)
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
T.D. Time Deposit
**Indicates a restricted security; the aggregate cost of the restricted
securities is $87,297,121. The aggregate value, $85,367,856 is
approximately 2.2% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending June 30,
1995.
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
58
<PAGE>
STOCK INDEX PORTFOLIO
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 96.4% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 2.3%
AlliedSignal, Inc............................... 56,900 $ 2,532,050
Boeing Co....................................... 67,950 4,255,369
General Dynamics Corp........................... 12,100 536,937
Lockheed Martin Corp............................ 42,349 2,673,280
Loral Corp...................................... 17,000 879,750
McDonnell Douglas Corp.......................... 23,600 1,811,300
Northrop Grumman Corp........................... 10,000 521,250
Raytheon Co..................................... 24,800 1,925,100
Rockwell International Corp..................... 43,400 1,985,550
United Technologies Corp........................ 24,700 1,929,687
--------------
19,050,273
--------------
AIRLINES -- 0.3%
+AMR Corp....................................... 15,100 1,126,838
Delta Air Lines, Inc............................ 9,900 730,125
Southwest Airlines Co........................... 29,000 692,375
+USAir Group, Inc............................... 10,500 122,062
--------------
2,671,400
--------------
ALUMINUM -- 0.5%
Alcan Aluminum, Ltd............................. 45,050 1,362,762
Aluminum Co. of America......................... 35,400 1,774,425
Reynolds Metals Co.............................. 12,800 662,400
--------------
3,799,587
--------------
AUTOS - CARS & TRUCKS -- 2.4%
Chrysler Corp................................... 74,300 3,557,113
Cummins Engine Co., Inc......................... 8,300 362,088
Dana Corp....................................... 20,100 575,363
Echlin, Inc..................................... 11,800 410,050
Ford Motor Co................................... 205,800 6,122,550
General Motors Corp............................. 149,400 7,003,125
Genuine Parts Co................................ 24,550 929,831
Johnson Controls, Inc........................... 8,100 457,650
+Navistar International Corp.................... 14,500 219,313
Safety Kleen Corp............................... 11,050 178,180
--------------
19,815,263
--------------
BANKS AND SAVINGS & LOANS -- 5.6%
Banc One Corp................................... 80,022 2,580,710
Bank of Boston Corp............................. 22,300 836,250
Bank of New York Company, Inc................... 37,500 1,514,062
BankAmerica Corp................................ 74,348 3,912,564
Bankers Trust NY Corp........................... 15,300 948,600
Barnett Banks, Inc.............................. 19,400 994,250
Boatmen's Bancshares, Inc....................... 25,700 905,925
Chase Manhattan Corp............................ 36,886 1,733,641
Chemical Banking Corp........................... 48,382 2,286,050
Citicorp........................................ 79,100 4,577,913
CoreStates Financial Corp....................... 28,000 976,500
First Chicago Corp.............................. 18,400 1,101,700
First Fidelity Bancorp.......................... 16,300 961,700
First Interstate Bancorp........................ 15,500 1,243,875
First Union Corp................................ 35,100 1,588,275
Fleet Financial Group, Inc...................... 27,800 1,032,075
Golden West Financial Corp...................... 12,200 574,925
Great Western Financial Corp.................... 26,000 536,250
H.F. Ahmanson & Co.............................. 23,900 525,800
J.P. Morgan & Co., Inc.......................... 37,150 2,605,144
KeyCorp......................................... 47,100 1,477,762
Mellon Bank Corp................................ 28,650 1,192,556
NationsBank Corp................................ 54,939 2,946,104
NBD Bancorp, Inc................................ 31,525 1,008,800
Norwest Corp.................................... 64,500 1,854,375
PNC Bank Corp................................... 47,000 1,239,625
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Shawmut National Corp........................... 25,600 $ 816,000
Suntrust Banks, Inc............................. 23,100 1,345,575
U.S. Bancorp.................................... 18,900 454,781
Wachovia Corp................................... 33,400 1,194,050
Wells Fargo & Co................................ 10,400 1,874,600
--------------
46,840,437
--------------
BEVERAGES -- 3.6%
Adolph Coors Co. (Class 'B' Stock).............. 7,100 116,262
Anheuser-Busch Companies, Inc................... 51,100 2,906,313
Brown-Forman Corp. (Class 'B' Stock)............ 15,300 510,638
Coca-Cola Co.................................... 254,700 16,237,125
PepsiCo, Inc.................................... 157,800 7,199,625
Seagram Co., Ltd................................ 74,200 2,569,175
--------------
29,539,138
--------------
CHEMICALS -- 2.6%
Air Products & Chemicals, Inc................... 22,400 1,248,800
Dow Chemical Co................................. 55,000 3,953,125
E.I. Du Pont de Nemours & Co.................... 110,700 7,610,625
Eastman Chemical Co............................. 16,500 981,750
Hercules, Inc................................... 23,400 1,140,750
Mallinckrodt Group, Inc......................... 14,800 525,400
Monsanto Co..................................... 22,900 2,063,863
Nalco Chemical Co............................... 13,900 505,612
Rohm & Haas Co.................................. 13,100 718,862
Sigma-Aldrich Corp.............................. 9,800 481,425
Union Carbide Corp.............................. 29,900 997,912
W.R. Grace & Co................................. 18,500 1,135,438
--------------
21,363,562
--------------
CHEMICALS - SPECIALTY -- 0.4%
Engelhard Corp.................................. 18,850 808,194
First Mississippi Corp.......................... 3,700 126,262
Great Lakes Chemical Corp....................... 13,700 825,425
Morton International, Inc....................... 29,300 857,025
Praxair, Inc.................................... 27,400 685,000
Raychem Corp.................................... 8,600 330,025
--------------
3,631,931
--------------
COMMERCIAL SERVICES -- 0.5%
+CUC International, Inc......................... 22,700 953,400
Deluxe Corp..................................... 16,500 546,562
Dun & Bradstreet Corp........................... 34,060 1,788,150
John H. Harland Co.............................. 5,900 134,963
Moore Corp., Ltd................................ 20,200 446,925
Ogden Corp...................................... 9,300 203,438
--------------
4,073,438
--------------
COMPUTER SERVICES -- 3.5%
Autodesk, Inc................................... 9,700 417,100
Automatic Data Processing, Inc.................. 28,800 1,810,800
+Cabletron Systems, Inc......................... 14,100 750,825
+Ceridian Corp.................................. 9,200 339,250
+Cisco Systems, Inc............................. 53,500 2,705,094
Computer Associates International, Inc.......... 32,350 2,191,713
+Computer Sciences Corp......................... 11,200 637,000
First Data Corp................................. 24,400 1,387,750
+Intergraph Corp................................ 7,600 84,550
+Lotus Development Corp......................... 9,600 612,000
+Microsoft Corp................................. 116,500 10,528,688
+Novell, Inc.................................... 73,500 1,465,405
+Oracle Corp.................................... 86,950 3,358,444
+Silicon Graphics, Inc.......................... 31,700 1,264,038
</TABLE>
59
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
+Sun Microsystems, Inc.......................... 19,300 $ 936,050
+Tandem Computers, Inc.......................... 22,900 369,262
--------------
28,857,969
--------------
CONSTRUCTION -- 0.2%
Fluor Corp...................................... 16,300 847,600
Foster Wheeler Corp............................. 6,800 239,700
Kaufman & Broad Home Corp....................... 6,366 92,307
Pulte Corp...................................... 5,100 142,800
--------------
1,322,407
--------------
CONTAINERS -- 0.2%
Ball Corp....................................... 6,300 219,713
Bemis Co., Inc.................................. 10,000 260,000
+Crown Cork & Seal Co., Inc..................... 18,100 907,262
--------------
1,386,975
--------------
COSMETICS & SOAPS -- 2.3%
Alberto Culver Co. (Class 'B' Stock)............ 5,000 151,250
Avon Products, Inc.............................. 13,900 931,300
Clorox Co....................................... 10,400 678,600
Colgate Palmolive Co............................ 29,000 2,120,625
Gillette Co..................................... 88,800 3,962,700
International Flavors & Fragrances, Inc......... 22,300 1,109,425
Procter & Gamble Co............................. 137,752 9,900,925
--------------
18,854,825
--------------
DIVERSIFIED GAS -- 0.2%
Ashland, Inc.................................... 12,600 442,575
Coastal Corp.................................... 21,100 640,912
Eastern Enterprises............................. 4,100 122,488
ENSERCH Corp.................................... 14,400 246,600
NICOR, Inc...................................... 10,300 276,812
ONEOK, Inc...................................... 4,600 98,325
--------------
1,827,712
--------------
DIVERSIFIED OFFICE EQUIPMENT -- 2.4%
Alco Standard Corp.............................. 10,888 869,678
Avery Dennison Corp............................. 10,500 420,000
+COMPAQ Computer Corp........................... 52,500 2,382,188
Honeywell, Inc.................................. 25,800 1,112,625
International Business Machines Corp............ 116,500 11,184,000
Pitney Bowes, Inc............................... 30,500 1,170,438
+Unisys Corp.................................... 33,100 359,962
Xerox Corp...................................... 21,382 2,507,040
--------------
20,005,931
--------------
DRUGS AND HOSPITAL SUPPLIES -- 8.0%
Abbott Laboratories............................. 159,900 6,475,950
Allergan, Inc................................... 12,100 328,212
+ALZA Corp...................................... 17,000 397,375
American Home Products Corp..................... 61,900 4,789,512
+Amgen, Inc..................................... 26,600 2,139,638
Bausch & Lomb, Inc.............................. 11,300 468,950
Baxter International, Inc....................... 55,800 2,029,725
Becton, Dickinson & Co.......................... 14,000 815,500
+Biomet, Inc.................................... 23,500 364,250
+Boston Scientific Corp......................... 30,500 972,188
Bristol-Myers Squibb Co......................... 101,640 6,924,225
C.R. Bard, Inc.................................. 9,900 297,000
Eli Lilly & Co.................................. 58,500 4,592,250
Johnson & Johnson............................... 129,300 8,743,912
Medtronic, Inc.................................. 22,900 1,766,162
Merck & Co., Inc................................ 249,550 12,227,950
Pfizer, Inc..................................... 63,300 5,847,338
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Schering-Plough Corp............................ 74,300 $ 3,278,488
St. Jude Medical, Inc........................... 9,300 466,162
United States Surgical Corp..................... 10,500 219,188
Upjohn Co....................................... 34,700 1,314,263
Warner-Lambert Co............................... 27,100 2,340,762
--------------
66,799,000
--------------
ELECTRICAL EQUIPMENT -- 0.4%
+Applied Materials, Inc......................... 16,700 1,446,638
W.W. Grainger, Inc.............................. 9,900 581,625
Westinghouse Electric Corp...................... 72,000 1,053,000
--------------
3,081,263
--------------
ELECTRONICS -- 5.1%
+Advanced Micro Devices, Inc.................... 21,800 792,975
+Amdahl Corp.................................... 23,300 259,213
AMP, Inc........................................ 42,200 1,782,950
Apple Computer, Inc............................. 24,000 1,114,500
+Cray Research, Inc............................. 4,700 114,563
+Data General Corp.............................. 5,400 51,975
+Digital Equipment Corp......................... 29,200 1,189,900
EG&G, Inc....................................... 11,800 197,650
Emerson Electric Co............................. 46,500 3,324,750
Harris Corp..................................... 8,100 418,162
Hewlett-Packard Co.............................. 102,200 7,613,900
Intel Corp...................................... 166,000 10,509,875
Micron Technology, Inc.......................... 41,200 2,260,850
Motorola, Inc................................... 117,900 7,914,037
+National Semiconductor Corp.................... 25,300 702,075
Perkin-Elmer Corp............................... 8,100 287,550
Tandy Corp...................................... 14,965 776,309
Tektronix, Inc.................................. 6,400 315,200
Texas Instruments, Inc.......................... 18,800 2,516,850
Thomas & Betts Corp............................. 4,000 273,500
+Zenith Electronics Corp........................ 8,300 61,213
--------------
42,477,997
--------------
ENVIRONMENTAL SERVICES -- 0.1%
Laidlaw, Inc. (Class 'B' Stock)................. 53,800 517,825
--------------
FINANCIAL SERVICES -- 2.8%
American Express Co............................. 98,900 3,473,863
Beneficial Corp................................. 10,500 462,000
Dean Witter, Discover & Co...................... 33,845 1,590,715
Federal Home Loan Mortgage Corp................. 36,250 2,492,187
Federal National Mortgage Association........... 54,500 5,143,437
H & R Block, Inc................................ 20,600 847,175
Household International , Inc................... 19,100 945,450
MBNA Corp....................................... 28,900 975,375
Merrill Lynch & Co., Inc........................ 37,200 1,953,000
National City Corp.............................. 29,500 866,563
Salomon, Inc.................................... 20,600 826,575
Transamerica Corp............................... 14,200 827,150
Travelers, Inc.................................. 63,831 2,792,605
--------------
23,196,095
--------------
FOODS -- 2.9%
Archer-Daniels-Midland Co....................... 102,664 1,912,117
Campbell Soup Co................................ 50,100 2,454,900
ConAgra, Inc.................................... 49,700 1,733,288
CPC International, Inc.......................... 29,400 1,815,450
Fleming Companies, Inc.......................... 7,400 196,100
General Mills, Inc.............................. 31,700 1,628,588
Giant Food, Inc. (Class 'A' Stock).............. 12,200 346,175
H.J. Heinz & Co................................. 48,800 2,165,500
Hershey Foods Corp.............................. 16,900 933,725
</TABLE>
60
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Kellogg Co...................................... 44,200 $ 3,154,775
Pioneer Hi-Bred International, Inc.............. 16,600 697,200
Quaker Oats Co.................................. 27,100 890,912
Ralston-Ralston Purina Group.................... 19,940 1,016,940
Sara Lee Corp................................... 96,100 2,738,850
Sysco Corp...................................... 36,100 1,064,950
W. M. Wrigley, Jr. Co........................... 23,100 1,071,262
--------------
23,820,732
--------------
FOREST PRODUCTS -- 1.8%
Boise Cascade Corp.............................. 9,886 400,383
Champion International Corp..................... 18,700 974,738
Federal Paper Board Co., Inc.................... 8,500 300,688
Georgia-Pacific Corp............................ 18,000 1,561,500
International Paper Co.......................... 25,200 2,160,900
James River Corp. of Virginia................... 15,900 439,238
Kimberly-Clark Corp............................. 32,000 1,916,000
Louisiana Pacific Corp.......................... 22,300 585,375
Mead Corp....................................... 11,700 694,687
Potlatch Corp................................... 5,800 242,150
Scott Paper Co.................................. 30,600 1,514,700
+Stone Container Corp........................... 18,866 400,902
Temple Inland, Inc.............................. 11,300 538,162
Union Camp Corp................................. 14,400 833,400
Westvaco Corp................................... 13,300 588,525
Weyerhaeuser Co................................. 40,900 1,927,412
--------------
15,078,760
--------------
GAS PIPELINES -- 0.5%
+Columbia Gas System, Inc....................... 9,500 301,625
Consolidated Natural Gas Co..................... 18,800 709,700
Enron Corp...................................... 50,400 1,770,300
NorAm Energy Corp............................... 21,100 137,150
Panhandle Eastern Corp.......................... 29,890 728,569
Peoples Energy Corp............................. 6,400 165,600
Williams Companies, Inc......................... 19,900 694,012
--------------
4,506,956
--------------
HOSPITAL MANAGEMENT -- 0.7%
+Beverly Enterprises, Inc....................... 17,000 210,375
Columbia/HCA Healthcare Corp.................... 88,532 3,829,009
Community Psychiatric Centers................... 7,900 88,875
Manor Care, Inc................................. 11,850 345,130
Service Corp. International..................... 19,100 604,038
Shared Medical Systems Corp..................... 4,700 188,588
+Tenet Healthcare Corp.......................... 39,000 560,625
--------------
5,826,640
--------------
HOUSING RELATED -- 0.5%
Armstrong World Industries, Inc................. 7,800 390,975
Centex Corp..................................... 6,000 169,500
Fleetwood Enterprises, Inc...................... 8,700 171,825
Lowe's Companies, Inc........................... 32,200 961,975
Masco Corp...................................... 31,300 845,100
Maytag Corp..................................... 20,500 328,000
+Owens-Corning Fiberglas Corp................... 9,700 357,688
Skyline Corp.................................... 1,000 18,125
Stanley Works................................... 9,000 340,875
Whirlpool Corp.................................. 14,800 814,000
--------------
4,398,063
--------------
INSURANCE -- 2.9%
Aetna Life & Casualty Co........................ 22,700 1,427,263
Alexander & Alexander Services, Inc............. 8,500 202,938
American General Corp........................... 41,500 1,400,625
American International Group, Inc............... 63,325 7,219,050
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Chubb Corp...................................... 17,200 $ 1,378,150
CIGNA Corp...................................... 14,600 1,133,325
General Re Corp................................. 16,350 2,188,855
Jefferson-Pilot Corp............................ 9,650 528,338
Lincoln National Corp........................... 19,000 831,250
Marsh & McLennan Companies, Inc................. 14,600 1,184,425
Providian Corp.................................. 19,500 706,875
SAFECO Corp..................................... 12,800 735,200
St. Paul Companies, Inc......................... 16,700 822,475
Torchmark Corp.................................. 13,900 524,725
U.S. Healthcare, Inc............................ 32,600 998,375
United Healthcare Corp.......................... 34,400 1,423,300
UNUM Corp....................................... 14,500 679,687
USF&G Corp...................................... 19,600 318,500
USLIFE Corp..................................... 4,600 185,150
--------------
23,888,506
--------------
LEISURE -- 1.0%
+Bally Entertainment Corp....................... 7,200 88,200
Brunswick Corp.................................. 18,300 311,100
Handleman Co.................................... 5,850 56,306
Hasbro, Inc..................................... 17,500 555,625
+King World Productions, Inc.................... 7,550 305,775
Mattel, Inc..................................... 44,445 1,155,570
Outboard Marine Corp............................ 3,900 76,538
Walt Disney Co.................................. 104,400 5,807,250
--------------
8,356,364
--------------
LODGING -- 0.5%
Hilton Hotels Corp.............................. 9,400 660,350
Loews Corp...................................... 11,600 1,403,600
Marriott International, Inc..................... 24,700 886,113
+Promus Companies, Inc.......................... 20,850 813,150
--------------
3,763,213
--------------
MACHINERY -- 1.2%
Briggs & Stratton Corp.......................... 5,200 179,400
Caterpillar, Inc................................ 40,200 2,582,850
Cincinnati Milacron, Inc........................ 6,900 186,300
Cooper Industries, Inc.......................... 23,000 908,500
Deere & Co...................................... 17,300 1,481,313
Dover Corp...................................... 11,200 814,800
Eaton Corp...................................... 15,500 900,938
Giddings & Lewis, Inc........................... 6,900 123,337
Harnischfeger Industries, Inc................... 9,500 328,938
Ingersoll-Rand Co............................... 20,700 791,775
PACCAR, Inc..................................... 7,730 361,377
Parker-Hannifin Corp............................ 14,850 538,313
Snap-On, Inc.................................... 8,000 310,000
SPX Corp........................................ 1,500 17,062
Timken Co....................................... 6,400 295,200
+Varity Corp.................................... 8,810 387,640
--------------
10,207,743
--------------
MEDIA -- 2.6%
Capital Cities/ABC, Inc......................... 30,600 3,304,800
CBS, Inc........................................ 12,150 814,050
Comcast Corp. (Special Class 'A' Stock)......... 46,500 863,156
Dow Jones & Co., Inc............................ 19,200 708,000
Gannett Co., Inc................................ 27,800 1,508,150
Interpublic Group of Companies, Inc............. 15,300 573,750
Knight-Ridder, Inc.............................. 10,500 597,188
McGraw-Hill, Inc................................ 9,900 751,162
Meredith Corp................................... 5,800 147,175
</TABLE>
61
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
New York Times Co. (Class 'A' Stock)............ 19,800 $ 465,300
R. R. Donnelley & Sons Co....................... 30,600 1,101,600
+Tele-Communications, Inc. (Class 'A' Stock).... 130,800 3,065,625
Time Warner, Inc................................ 76,140 3,131,258
Times Mirror Co. (Class 'A' Stock).............. 24,000 573,000
Tribune Co...................................... 13,100 804,012
+Viacom, Inc. (Class 'B' Stock)................. 71,667 3,323,557
--------------
21,731,783
--------------
MINERAL RESOURCES -- 1.0%
ASARCO, Inc..................................... 8,700 265,350
Barrick Gold Corporation........................ 70,300 1,775,075
Burlington Resources, Inc....................... 25,500 940,313
Cyprus Amax Minerals Co......................... 19,000 541,500
Echo Bay Mines, Ltd............................. 21,800 196,200
Homestake Mining Co............................. 26,300 433,950
Inco, Ltd....................................... 23,500 663,875
Newmont Mining Corp............................. 17,000 711,875
Phelps Dodge Corp............................... 13,900 820,100
Pittston Services Group......................... 8,600 206,400
Placer Dome, Inc................................ 47,500 1,240,938
Sante Fe Pacific Gold Corp...................... 34,916 423,356
--------------
8,218,932
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 4.2%
Bassett Furniture Industries, Inc............... 2,612 73,136
Browning-Ferris Industries, Inc................. 42,400 1,531,700
Crane Co........................................ 5,500 199,375
Ecolab, Inc..................................... 13,400 328,300
+FMC Corp....................................... 7,400 497,650
General Electric Co............................. 339,700 19,150,588
General Signal Corp............................. 9,262 368,165
Illinois Tool Works, Inc........................ 22,800 1,254,000
ITT Corp........................................ 21,500 2,526,250
+JWP, Inc....................................... 4,200 0
Millipore Corp.................................. 5,500 371,250
Morrison Knudsen Corp........................... 5,800 39,150
NACCO Industries, Inc. (Class 'A' Stock)........ 1,600 95,800
Pall Corp....................................... 23,400 520,650
PPG Industries Inc.............................. 41,300 1,775,900
Teledyne, Inc................................... 11,800 289,100
Textron, Inc.................................... 17,400 1,011,375
Trinova Corp.................................... 5,600 196,000
TRW, Inc........................................ 12,700 1,014,412
Tyco International Ltd.......................... 15,200 820,800
WMX Technologies, Inc........................... 96,800 2,746,700
Zurn Industries, Inc............................ 2,000 40,000
--------------
34,850,301
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 2.2%
American Greetings Corp. (Class 'A' Stock)...... 14,900 437,688
Black & Decker Corp............................. 16,500 509,438
Corning, Inc.................................... 45,500 1,490,125
Dial Corp....................................... 19,100 472,725
Eastman Kodak Co................................ 68,500 4,152,813
Jostens, Inc.................................... 8,100 172,125
Minnesota Mining & Manufacturing Co............. 84,100 4,814,725
Polaroid Corp................................... 9,500 387,125
Premark International, Inc...................... 12,300 638,062
Rubbermaid, Inc................................. 31,900 885,225
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Unilever N.V., ADR.............................. 32,100 $ 4,177,012
Whitman Corp.................................... 21,700 420,437
--------------
18,557,500
--------------
PETROLEUM -- 8.2%
Amerada Hess Corp............................... 18,200 889,525
Amoco Corp...................................... 99,730 6,644,511
Atlantic Richfield Co........................... 32,285 3,543,279
Chevron Corp.................................... 130,600 6,089,225
Exxon Corp...................................... 249,000 17,585,625
Kerr-McGee Corp................................. 10,600 568,425
Louisiana Land & Exploration Co................. 6,500 259,188
Mobil Corp...................................... 79,300 7,612,800
Occidental Petroleum Corp....................... 63,200 1,445,700
Pennzoil Co..................................... 9,100 428,838
Phillips Petroleum Co........................... 52,800 1,762,200
Royal Dutch Petroleum Co., ADR.................. 107,400 13,089,375
+Santa Fe Energy Resources, Inc................. 17,970 170,715
Sun Co., Inc.................................... 21,000 574,875
Tenneco, Inc.................................... 37,100 1,706,600
Texaco, Inc..................................... 52,100 3,419,062
Unocal Corp..................................... 48,800 1,348,100
USX-Marathon Group.............................. 59,200 1,169,200
--------------
68,307,243
--------------
PETROLEUM SERVICES -- 0.8%
Baker Hughes, Inc............................... 28,400 582,200
Dresser Industries, Inc......................... 36,600 814,350
Halliburton Co.................................. 22,700 811,525
Helmerich & Payne, Inc.......................... 5,100 150,450
McDermott International, Inc.................... 10,900 262,963
+Oryx Energy Co................................. 18,600 255,750
+Rowan Companies, Inc........................... 15,200 123,500
Schlumberger, Ltd............................... 48,900 3,037,912
Sonat, Inc...................................... 17,100 521,550
+Western Atlas, Inc............................. 10,500 465,938
--------------
7,026,138
--------------
RAILROADS -- 1.0%
Burlington Northern, Inc........................ 17,800 1,128,075
Conrail Inc..................................... 15,700 873,313
CSX Corp........................................ 21,156 1,589,345
Norfolk Southern Corp........................... 26,800 1,805,650
Santa Fe Pacific Gold Corp...................... 29,286 746,792
Union Pacific Corp.............................. 41,200 2,281,450
--------------
8,424,625
--------------
RESTAURANTS -- 0.8%
+Darden Restaurants, Inc........................ 31,000 337,125
Luby's Cafeterias, Inc.......................... 4,550 91,569
McDonald's Corp................................. 138,700 5,426,638
+Ryan's Family Steak Houses, Inc................ 8,500 66,937
+Shoney's, Inc.................................. 7,900 92,825
Wendy's International, Inc...................... 19,700 352,137
--------------
6,367,231
--------------
RETAIL -- 5.6%
Albertson's, Inc................................ 50,600 1,505,350
American Stores Co.............................. 30,400 855,000
Brown Group, Inc................................ 3,000 68,250
Bruno's, Inc.................................... 13,700 159,263
Charming Shoppes, Inc........................... 18,300 96,075
Circuit City Stores, Inc........................ 19,900 629,338
Dayton-Hudson Corp.............................. 14,114 1,012,680
Dillard Department Stores, Inc. (Class 'A'
Stock)........................................ 23,250 682,969
</TABLE>
62
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Great Atlantic & Pacific Tea Co., Inc........... 7,000 $ 184,625
Harcourt General, Inc........................... 15,406 654,755
Home Depot, Inc................................. 90,449 3,674,491
J.C. Penney Co., Inc............................ 46,300 2,222,400
K mart Corp..................................... 90,400 1,322,100
+Kroger Co...................................... 23,500 631,563
Liz Claiborne, Inc.............................. 15,600 331,500
Longs Drug Stores, Inc.......................... 3,600 135,000
May Department Stores Co........................ 50,100 2,085,412
Melville Corp................................... 21,200 726,100
Mercantile Stores Co., Inc...................... 7,100 330,150
Newell Co....................................... 31,500 771,750
Nike, Inc. (Class 'B' Stock).................... 14,500 1,218,000
Nordstrom, Inc.................................. 16,200 670,275
Pep Boys-Manny, Moe & Jack...................... 11,700 312,975
+Price/Costco, Inc.............................. 42,566 691,697
Reebok International, Ltd....................... 15,600 530,400
Rite Aid Corp................................... 17,100 438,187
Sears, Roebuck & Co............................. 77,600 4,646,300
Sherwin-Williams Co............................. 17,200 612,750
Stride Rite Corp................................ 9,400 97,525
Supervalu, Inc.................................. 13,700 399,012
The Gap, Inc.................................... 28,300 986,962
The Limited, Inc................................ 72,000 1,584,000
TJX Companies, Inc.............................. 14,300 189,475
+Toys 'R' Us, Inc............................... 56,150 1,642,387
Wal-Mart Stores, Inc............................ 460,600 12,321,050
Walgreen Co..................................... 24,400 1,223,050
Winn Dixie Stores, Inc.......................... 14,900 860,475
Woolworth Corp.................................. 26,400 399,300
--------------
46,902,591
--------------
RUBBER -- 0.2%
B.F. Goodrich Co................................ 5,400 289,575
Cooper Tire & Rubber Co......................... 17,400 424,125
Goodyear Tire & Rubber Co....................... 30,500 1,258,125
--------------
1,971,825
--------------
STEEL -- 0.3%
+Armco, Inc..................................... 19,500 131,625
+Bethlehem Steel Corp........................... 21,000 341,250
Inland Steel Industries, Inc.................... 8,900 271,450
Nucor Corp...................................... 17,100 914,850
USX-U.S. Steel Group............................ 15,040 517,000
Worthington Industries, Inc..................... 19,100 390,356
--------------
2,566,531
--------------
TELECOMMUNICATIONS -- 4.9%
+Airtouch Communications, Inc................... 98,100 2,795,850
Alltel Corp..................................... 38,500 976,938
Ameritech Corp.................................. 111,100 4,888,400
+Andrew Corp.................................... 7,350 425,381
AT&T Corp....................................... 317,173 16,849,815
+DSC Communications Corp........................ 23,100 1,074,150
+M/A-Com, Inc................................... 2,300 27,025
MCI Communications Corp......................... 136,600 3,005,200
Northern Telecom, Ltd........................... 50,700 1,850,550
SBC Communications, Inc......................... 121,800 5,800,725
Scientific-Atlanta, Inc......................... 14,500 319,000
Sprint Corp..................................... 70,000 2,353,750
--------------
40,366,784
--------------
TEXTILES -- 0.2%
+Fruit of the Loom, Inc. (Class 'A' Stock)...... 15,400 325,325
National Service Industries, Inc................ 9,500 274,313
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Russell Corp.................................... 8,400 $ 241,500
Springs Industries, Inc......................... 3,700 137,825
V.F. Corp....................................... 13,118 705,092
--------------
1,684,055
--------------
TOBACCO -- 1.8%
American Brands, Inc............................ 39,000 1,550,250
Philip Morris Companies, Inc.................... 169,400 12,599,125
UST, Inc........................................ 38,600 1,148,350
--------------
15,297,725
--------------
TRUCKING/SHIPPING -- 0.2%
Consolidated Freightways, Inc................... 8,300 183,638
+Federal Express Corp........................... 11,500 698,625
Roadway Services, Inc........................... 8,400 396,900
Ryder System, Inc............................... 16,000 382,000
Yellow Corp..................................... 6,000 108,750
--------------
1,769,913
--------------
UTILITY - COMMUNICATIONS -- 3.3%
Bell Atlantic Corp.............................. 87,400 4,894,400
BellSouth Corp.................................. 99,400 6,311,900
GTE Corp........................................ 194,420 6,634,583
NYNEX Corp...................................... 84,800 3,413,200
Pacific Telesis Group........................... 85,300 2,281,775
U S West, Inc................................... 93,700 3,900,262
--------------
27,436,120
--------------
UTILITY - ELECTRIC -- 3.7%
American Electric Power Co., Inc................ 37,400 1,313,675
Baltimore Gas & Electric Co..................... 29,050 726,250
Carolina Power & Light Co....................... 31,800 961,950
Central & South West Corp....................... 37,800 992,250
CINergy Corp.................................... 30,539 801,649
Consolidated Edison Co. of NY, Inc.............. 47,400 1,398,300
Detroit Edison Co............................... 29,600 873,200
Dominion Resources, Inc......................... 34,950 1,275,675
Duke Power Co................................... 41,000 1,701,500
Entergy Corp.................................... 45,300 1,092,863
FPL Group, Inc.................................. 36,800 1,421,400
General Public Utilities Corp................... 23,400 696,150
Houston Industries, Inc......................... 26,300 1,107,888
Niagara Mohawk Power Corp....................... 28,300 417,425
Northern States Power Co........................ 13,700 631,912
Ohio Edison Co.................................. 29,800 674,225
Pacific Enterprises............................. 15,700 384,650
Pacific Gas & Electric Co....................... 86,500 2,508,500
PacifiCorp...................................... 58,100 1,089,375
PECO Energy Co.................................. 43,900 1,212,738
Public Service Enterprise Group, Inc............ 48,400 1,343,100
SCEcorp......................................... 90,200 1,544,675
Southern Co..................................... 134,200 3,002,725
Texas Utilities Co.............................. 44,929 1,544,433
Unicom Corp..................................... 42,400 1,128,900
Union Electric Company.......................... 20,600 767,350
--------------
30,612,758
--------------
TOTAL COMMON STOCKS
(Cost $599,496,147)............................................ 801,052,061
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 0.0% SHARES VALUE
------------- --------------
<S> <C> <C>
MISCELLANEOUS - BASIC INDUSTRY
Teledyne, Inc. (Cum.), Series E................. 206 3,013
--------------
(Cost $0)
</TABLE>
63
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 3.9% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS -- 3.7%
Joint Repurchase Agreement Account,
6.102%, 07/03/95 (see Note 4)................. $ 30,676,000 $ 30,676,000
--------------
U. S. GOVERNMENT & AGENCY OBLIGATIONS -- 0.2%
++US Treasury Bills,
5.590%, 09/14/95.............................. 1,300,000 1,285,264
--------------
TOTAL SHORT-TERM INVESTMENTS..................................... 31,961,264
--------------
##
VARIATION MARGIN ON OPEN FUTURES CONTRACTS -- 0.0%...............
(64,350)
--------------
LIABILITIES -- (0.3%)
(net of other assets).......................................... (2,337,059)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 830,614,929
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
+No dividend was paid on this security during the 12 months ending June 30,
1995.
++Entire amount pledged as collateral for futures transactions (See Note 2).
##Open futures contracts as of June 30, 1995 are as follows:
PAR VALUE
COVERED BY CONTRACT TYPE EXPIRATION DATE VALUE OF CONTRACTS
$26,598,700 S&P 500 Index Futures Sept 95 $27,083,925
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
64
<PAGE>
COMMON STOCK PORTFOLIO
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 86.2% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 3.7%
AAR Corp........................................ 650,000 $ 11,618,750
Lockheed Martin Corp............................ 338,877 21,391,610
Loral Corp...................................... 900,000 46,575,000
United Technologies Corp........................ 500,000 39,062,500
--------------
118,647,860
--------------
ALUMINUM -- 1.2%
+Alumax, Inc.................................... 267,500 8,325,938
Aluminum Co. of America......................... 600,000 30,075,000
--------------
38,400,938
--------------
AUTOS - CARS & TRUCKS -- 4.1%
Chrysler Corp................................... 1,963,910 94,022,191
General Motors Corp............................. 700,000 32,812,500
+Navistar International Corp.................... 395,200 5,977,400
--------------
132,812,091
--------------
BANKS AND SAVINGS & LOANS -- 7.7%
Bank of New York Company, Inc................... 900,000 36,337,500
BankAmerica Corp................................ 550,000 28,943,750
Bankers Trust NY Corp........................... 300,000 18,600,000
Chase Manhattan Corp............................ 600,000 28,200,000
Comerica, Inc................................... 1,000,000 32,125,000
First of America Bank Corp...................... 187,000 6,942,375
Great Western Financial Corp.................... 1,000,000 20,625,000
J.P. Morgan & Co., Inc.......................... 395,400 27,727,425
Mellon Bank Corp................................ 276,398 11,505,067
Mercantile Bankshares Corp...................... 279,600 6,291,000
NationsBank Corp................................ 600,000 32,175,000
--------------
249,472,117
--------------
CHEMICALS -- 0.8%
Eastman Chemical Co............................. 466,550 27,759,725
--------------
CHEMICALS - SPECIALTY -- 1.5%
+ESSEF Corp..................................... 110,000 1,787,500
IMC Global, Inc................................. 705,500 38,185,188
Witco Corp...................................... 268,800 8,668,800
--------------
48,641,488
--------------
COMMERCIAL SERVICES -- 0.4%
Wellman, Inc.................................... 550,000 15,056,250
--------------
COMPUTER SERVICES -- 1.1%
Comdisco, Inc................................... 900,000 27,337,500
Gerber Scientific, Inc.......................... 419,800 7,031,650
+Harris Computer Systems Corp................... 15,000 206,250
--------------
34,575,400
--------------
DIVERSIFIED OFFICE EQUIPMENT -- 0.9%
International Business Machines Corp............ 300,000 28,800,000
--------------
DRUGS AND HOSPITAL SUPPLIES -- 2.9%
Baxter International, Inc....................... 2,100,000 76,387,500
Upjohn Co....................................... 450,000 17,043,750
--------------
93,431,250
--------------
ELECTRICAL EQUIPMENT -- 0.0%
+Rexel, Inc..................................... 107,199 1,018,391
--------------
ELECTRONICS -- 6.8%
+Amdahl Corp.................................... 2,818,500 31,355,812
+Digital Equipment Corp......................... 2,500,000 101,875,000
Harris Corp..................................... 300,000 15,487,500
Tandy Corp...................................... 1,323,500 68,656,563
Zero Corp....................................... 120,500 1,807,500
--------------
219,182,375
--------------
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
FINANCIAL SERVICES -- 7.7%
American Express Co............................. 2,100,000 $ 73,762,500
Dean Witter, Discover & Co...................... 1,600,000 75,200,000
Lehman Brothers Holdings, Inc................... 900,000 19,687,500
Republic New York Corp.......................... 225,000 12,600,000
Salomon, Inc.................................... 700,000 28,087,500
Travelers, Inc.................................. 900,000 39,375,000
--------------
248,712,500
--------------
FOREST PRODUCTS -- 6.0%
International Paper Co.......................... 415,000 35,586,250
James River Corp. of Virginia................... 560,000 15,470,000
Rayonier, Inc................................... 125,000 4,437,500
Scott Paper Co.................................. 2,834,200 140,292,900
--------------
195,786,650
--------------
GAS PIPELINES -- 0.3%
NorAm Energy Corp............................... 1,300,000 8,450,000
--------------
HEALTHCARE -- 1.0%
+Foundation Health Corp......................... 1,150,000 31,050,000
--------------
HOSPITAL MANAGEMENT -- 2.0%
Columbia/HCA Healthcare Corp.................... 400,000 17,300,000
+Tenet Healthcare Corp.......................... 3,237,832 46,543,835
--------------
63,843,835
--------------
HOUSING RELATED -- 0.5%
Centex Corp..................................... 600,000 16,950,000
--------------
INSURANCE -- 10.1%
Alexander & Alexander Services, Inc............. 1,050,000 25,068,750
American General Corp........................... 1,000,000 33,750,000
Chubb Corp...................................... 700,000 56,087,500
Citizens Corp................................... 700,000 11,462,500
Emphesys Financial Group, Inc................... 441,400 10,428,075
Equitable Companies, Inc........................ 1,600,000 33,400,000
First Colony Corp............................... 1,253,600 30,086,400
Old Republic International Corp................. 1,000,590 26,140,414
Providian Corp.................................. 340,500 12,343,125
SAFECO Corp..................................... 800,000 45,950,000
SCOR U.S. Corp.................................. 195,600 1,760,400
St. Paul Companies, Inc......................... 400,000 19,700,000
Western National Corp........................... 1,624,300 20,100,712
--------------
326,277,876
--------------
LODGING -- 2.2%
Loews Corp...................................... 600,000 72,600,000
--------------
MINERAL RESOURCES -- 1.4%
+Amax Gold, Inc................................. 131,342 722,381
Cyprus Amax Minerals Co......................... 1,533,200 43,696,200
+Nord Resources Corp............................ 130,500 440,438
--------------
44,859,019
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 1.6%
American Water Works Co., Inc................... 135,000 4,286,250
ITT Corp........................................ 400,000 47,000,000
+Worldtex, Inc.................................. 107,199 629,794
--------------
51,916,044
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.9%
Eastman Kodak Co................................ 500,000 30,312,500
--------------
PETROLEUM -- 4.3%
Amerada Hess Corp............................... 325,000 15,884,374
Atlantic Richfield Co........................... 250,000 27,437,500
</TABLE>
65
<PAGE>
COMMON STOCK PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Elf Aquitaine, ADR.............................. 1,855,133 $ 69,103,704
Occidental Petroleum Corp....................... 1,100,000 25,162,500
--------------
137,588,078
--------------
PETROLEUM SERVICES -- 2.0%
+B.J. Services Co............................... 500,000 11,375,000
+Oryx Energy Co................................. 1,600,000 22,000,000
Total SA, ADR................................... 717,640 21,708,610
Union Texas Petroleum Holdings, Inc............. 504,500 10,657,563
--------------
65,741,173
--------------
RAILROADS -- 0.6%
+Southern Pacific Rail Corp..................... 1,300,000 20,475,000
--------------
RETAIL -- 7.6%
Dayton-Hudson Corp.............................. 119,600 8,581,300
Dillard Department Stores, Inc. (Class 'A'
Stock)........................................ 1,991,700 58,506,188
+Federated Department Stores, Inc............... 700,000 18,025,000
Gibson Greetings, Inc........................... 750,000 10,031,250
K mart Corp..................................... 4,000,000 58,500,000
Liz Claiborne, Inc.............................. 1,200,000 25,500,000
Petrie Stores Corp.............................. 540,000 3,645,000
TJX Companies, Inc.............................. 1,509,300 19,998,224
+Toys 'R' Us, Inc............................... 800,000 23,400,000
+Waban, Inc..................................... 1,300,000 19,337,500
--------------
245,524,462
--------------
STEEL -- 0.9%
+Bethlehem Steel Corp........................... 500,000 8,125,000
Birmingham Steel Corp........................... 873,500 16,159,750
Carpenter Technology Corp....................... 50,000 3,406,250
--------------
27,691,000
--------------
TELECOMMUNICATIONS -- 3.3%
Sprint Corp..................................... 1,700,000 57,162,500
Telefonica de Espana, SA, ADR................... 1,300,000 50,375,000
--------------
107,537,500
--------------
TOBACCO -- 1.4%
RJR Nabisco Holdings Corp....................... 1,600,000 44,600,000
--------------
TRUCKING/SHIPPING -- 0.6%
+OMI Corp....................................... 1,000,000 6,625,000
Overseas Shipholding Group, Inc................. 600,000 12,450,000
--------------
19,075,000
--------------
UTILITY - ELECTRIC -- 0.7%
American Electric Power Co., Inc................ 180,000 6,322,500
General Public Utilities Corp................... 500,000 14,875,000
--------------
21,197,500
--------------
TOTAL COMMON STOCKS
(Cost $2,194,930,485).......................................... 2,787,986,022
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 0.8% SHARES VALUE
------------- --------------
<S> <C> <C>
TOBACCO
RJR Nabisco Holdings Corp. (Conv.).............. 4,000,000 24,500,000
--------------
(Cost $25,999,610)
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 12.9% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
6.102%, 07/03/95 (see Note 4)................. 418,412,000 $ 418,412,000
--------------
OTHER ASSETS -- 0.1%
(net of liabilities)........................................... 1,984,823
--------------
TOTAL NET ASSETS -- 100.0%....................................... $3,232,882,845
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
+No dividend was paid on this security during the 12 months ending June 30,
1995.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
66
<PAGE>
GLOBAL EQUITY PORTFOLIO
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 98.5% SHARES VALUE
------------- --------------
<S> <C> <C>
AUSTRALIA -- 7.2%
Brambles Industries, Ltd.
(Miscellaneous - Basic Industry).............. 393,500 $ 3,728,833
Broken Hill Proprietary Co., Ltd.
(Metals - Diversified)........................ 422,177 5,194,153
BTR Nylex, Ltd.
(Miscellaneous - Basic Industry).............. 1,753,644 3,350,935
Coca-Cola Amatil, Ltd.
(Foods)....................................... 984,418 6,083,746
Publishing and Broadcasting, Ltd.
(Media)....................................... 152,400 453,598
Western Mining Corp. Holdings, Ltd.
(Metals - Diversified)........................ 1,370,812 7,536,872
--------------
26,348,137
--------------
BELGIUM -- 1.1%
Bekaert, SA
(Miscellaneous - Basic Industry).............. 4,900 3,910,217
--------------
FEDERAL REPUBLIC OF GERMANY -- 1.8%
Bilfinger & Berger Bau, AG
(Construction)................................ 4,444 2,053,625
Linde, AG
(Machinery)................................... 8,040 4,771,513
--------------
6,825,138
--------------
FINLAND -- 5.3%
Kymmene Corp.
(Forest Products)............................. 101,400 3,162,860
Nokia Corp. (Class 'A' Stock)
(Telecommunications).......................... 279,700 16,399,206
--------------
19,562,066
--------------
FRANCE -- 7.1%
Carrefour Supermarche
(Retail)...................................... 9,400 4,821,508
Guyenne et Gascogne
(Retail)...................................... 3,100 895,815
Imetal
(Mineral Resources)........................... 41,180 4,844,956
**Lafarge
(Construction)................................ 1,100 85,643
Lafarge
(Construction)................................ 56,810 4,423,083
Legrand
(Electrical Equipment)........................ 33,000 5,244,853
Plastic Omnium
(Autos - Cars & Trucks)....................... 7,265 736,285
Valeo, SA
(Autos - Cars & Trucks)....................... 105,785 5,150,870
--------------
26,203,013
--------------
HONG KONG -- 3.8%
Cdl Hotels International, Ltd.
(Real Estate Development)..................... 4,887,174 2,384,280
Guoco Group, Ltd.
(Financial Services).......................... 1,553,000 7,245,380
Hung Hing Printing Group, Ltd.
(Miscellaneous - Basic Industry).............. 3,452,000 753,946
Hutchison Whampoa, Ltd.
(Miscellaneous - Basic Industry).............. 761,000 3,688,063
--------------
14,071,669
--------------
INDONESIA -- 0.5%
PT Kabelmetal Indonesia (Foreign)
(Telecommunications).......................... 1,099,400 1,851,257
--------------
JAPAN -- 13.2%
Aiwa
(Electronics)................................. 222,000 5,373,081
Autobacs Seven
(Retail)...................................... 53,800 5,240,260
Daibiru Corp.
(Real Estate Development)..................... 170,000 1,982,999
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
DDI Corp.
(Telecommunications).......................... 460 $ 3,693,034
Keyence Corp.
(Electrical Equipment)........................ 41,000 4,598,583
Kyocera Corp.
(Electrical Equipment)........................ 81,000 6,675,089
Murata Manufacturing Co., Ltd.
(Electronics)................................. 500 18,949
Nichiei Co., Ltd.
(Financial Services).......................... 96,300 5,946,269
Nintendo Corp. Ltd.
(Other Technology)............................ 97,000 5,577,214
Nissen Co., Ltd.
(Retail)...................................... 68,520 2,062,881
Omron Corp.
(Electronics)................................. 208,000 3,978,276
Sony Music Entertainment
(Leisure)..................................... 82,600 3,500,992
--------------
48,647,627
--------------
MALAYSIA -- 4.7%
I.J.M. Corp. Berhad
(Construction)................................ 1,098,000 4,369,835
Renong Berhad
(Miscellaneous - Basic Industry).............. 2,727,000 5,079,629
Resorts World Berhad
(Leisure)..................................... 670,000 3,930,989
Technology Resources Industries Berhad
(Miscellaneous - Basic Industry).............. 1,402,000 4,026,587
United Merchant Group Berhad
(Financial Services).......................... 666 1,098
--------------
17,408,138
--------------
MEXICO -- 1.4%
Apasco SA de CV
(Miscellaneous - Basic Industry).............. 469,700 1,862,280
Cifra, SA de CV (Class 'B' Stock)
(Retail)...................................... 1,387,800 1,908,086
Fomento Economico Mexicano, SA de CV (Class 'B'
Stock)
(Miscellaneous - Basic Industry).............. 665,100 1,552,432
--------------
5,322,798
--------------
NETHERLANDS -- 1.4%
Heineken, N.V.
(Beverages)................................... 34,225 5,186,032
--------------
NEW ZEALAND -- 1.5%
Fletcher Challenge, Ltd.
(Forest Products)............................. 1,967,800 5,522,926
--------------
REPUBLIC OF KOREA -- 2.3%
Pohang Iron & Steel Co., Ltd.
(Steel)....................................... 4,000 345,006
Samsung Electronics Co.
(Electronics)................................. 41,530 6,682,044
Samsung Electronics Co. (New)
(Electronics)................................. 5,810 923,317
Shinsegae Department Store
(Retail)...................................... 4,900 368,994
Shinsegae Department Store (New)
(Retail)...................................... 1,454 101,631
--------------
8,420,992
--------------
SINGAPORE -- 5.6%
Fraser & Neave, Ltd.
(Beverages)................................... 318,000 3,664,066
I.J.M. Corp. Berhad
(Construction)................................ 810,000 3,223,189
Overseas Union Bank, Ltd. (Foreign)
(Banks and Savings & Loans)................... 925,000 5,825,521
Sembawang Maritime, Ltd.
(Trucking/Shipping)........................... 883,500 3,667,287
</TABLE>
67
<PAGE>
GLOBAL EQUITY PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
United Overseas Bank, Ltd. (Foreign)
(Banks and Savings & Loans)................... 227,200 $ 2,146,311
Wing Tai Holdings, Ltd.
(Miscellaneous - Basic Industry).............. 1,070,250 2,060,382
--------------
20,586,756
--------------
SPAIN -- 3.4%
Acerinox, SA
(Steel)....................................... 38,360 4,720,534
Banco Popular Espanol, SA
(Banks and Savings & Loans)................... 23,800 3,545,284
Centros Commerciales Pryca, SA
(Retail)...................................... 116,762 2,174,132
Dragados Y Construcciones, SA
(Construction)................................ 141,500 2,060,965
--------------
12,500,915
--------------
SWEDEN -- 4.8%
Astra, AB (Series 'B' Free)
(Drugs and Hospital Supplies)................. 181,350 5,467,246
Hennes & Mauritz (Series 'B' Free)
(Retail)...................................... 71,000 4,163,657
Mo Och Domsjo, AB (Series 'B' Free)
(Forest Products)............................. 64,700 3,736,312
Volvo, AB (Series 'B' Free)
(Autos - Cars & Trucks)....................... 237,800 4,533,865
--------------
17,901,080
--------------
THAILAND -- 1.0%
Land & House Public Co., Ltd. (Foreign)
(Construction)................................ 30,700 646,709
Sahaviriya Steel Industry
(Metals - Diversified)........................ 54,300 133,083
Sahaviriya Steel Industry (Foreign)
(Metals - Diversified)........................ 1,255,400 3,076,836
--------------
3,856,628
--------------
UNITED KINGDOM -- 9.2%
Barclays, PLC
(Banks and Savings & Loans)................... 294,000 3,165,437
Britannic Assurance, PLC
(Insurance)................................... 28,000 244,122
British Sky Broadcasting Group, PLC
(Media)....................................... 738,900 3,232,876
Carlton Communications
(Communications).............................. 229,300 3,481,209
Commercial Union, PLC
(Insurance)................................... 324,000 3,021,078
GKN, PLC
(Autos - Cars & Trucks)....................... 536,170 5,477,994
**Guest Kean & Nettlefolds, PLC
(Autos - Cars & Trucks)....................... 22,870 233,660
J. Sainsbury, PLC
(Retail)...................................... 356,700 2,510,122
Siebe, PLC
(Machinery)................................... 596,340 5,978,684
Vodafone Group, PLC
(Telecommunications).......................... 1,790,700 6,664,549
--------------
34,009,731
--------------
UNITED STATES -- 23.2%
+Applied Materials, Inc.
(Electrical Equipment)........................ 67,600 5,855,850
Mattel, Inc.
(Leisure)..................................... 280,887 7,303,062
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
McDonald's Corp.
(Restaurants)................................. 125,100 $ 4,894,538
MCI Communications Corp.
(Telecommunications).......................... 251,800 5,539,600
+Microsoft Corp.
(Computer Services)........................... 95,700 8,648,888
+Mirage Resorts, Inc.
(Leisure)..................................... 157,000 4,808,125
Mobil Corp.
(Petroleum)................................... 63,700 6,115,200
Motorola, Inc.
(Electronics)................................. 139,100 9,337,088
+Nextel Communications, Inc. (Class 'A' Stock)
(Telecommunications).......................... 218,300 3,083,487
Norwest Corp.
(Banks and Savings & Loans)................... 203,600 5,853,500
+Oracle Corp.
(Computer Services)........................... 132,000 5,098,500
Pohang Iron & Steel Co., Ltd., ADR
(Steel)....................................... 53,900 1,590,050
+Silicon Graphics, Inc.
(Computer Services)........................... 207,300 8,266,087
Time Warner, Inc.
(Media)....................................... 135,800 5,584,775
+Viacom, Inc. (Class 'A' Stock)
(Media)....................................... 77,600 3,608,400
--------------
85,587,150
--------------
TOTAL COMMON STOCKS
(Cost $320,035,926)............................................ 363,722,270
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 0.6% SHARES VALUE
------------- --------------
<S> <C> <C>
FEDERAL REPUBLIC OF GERMANY
Krones, AG
(Machinery)................................... 4,368 2,083,312
--------------
(Cost $3,406,550)
<CAPTION>
MARKET
RIGHTS AND WARRANTS -- 0.9% SHARES VALUE
------------- --------------
<S> <C> <C>
AUSTRALIA -- 0.1%
Coca-Cola Amatil Ltd. (Rights),
(Foods)....................................... 246,104 297,194
--------------
FEDERAL REPUBLIC OF GERMANY -- 0.1%
)Nissen Co., Ltd. (Warrants),
(Retail)...................................... 316 373,689
--------------
FRANCE -- 0.0%
**Lafarge (Warrants),
(Construction)................................ 1,000 2,580
--------------
SINGAPORE -- 0.6%
United Overseas Bank Ltd. (Warrants),
(Banks and Savings & Loans)................... 486,800 2,299,349
--------------
SWITZERLAND -- 0.1%
\Nitori Co., Ltd. (Warrants),
(Furniture)................................... 2,950 161,580
--------------
UNITED STATES -- 0.0%
#Autobacs Seven Warrants 96 #2,
(Retail)...................................... 35 36,313
--------------
TOTAL RIGHTS AND WARRANTS
(Cost $3,610,315).............................................. 3,170,705
--------------
</TABLE>
68
<PAGE>
GLOBAL EQUITY PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 0.0% AMOUNT VALUE
------------- --------------
<S> <C> <C>
UNITED STATES
'First Boston,
6.130%, 7/3/95................................ $ 134,000 $ 134,000
--------------
+UNREALIZED APPRECIATION ON FORWARD FOREIGN EXCHANGE CONTRACTS -
0.0%........................................................... 57,592
LIABILITIES -- 0.0%
(net of other assets).......................................... (45,167)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 369,122,712
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
AB Aktiebolag (Swedish Stock Company)
ADR American Depository Receipt
AG Aktiengesellschaft (West German Stock Company)
CV Corporation of Variable Capital
N.V. Naamloze Vennootschap (Dutch Corporation)
PLC Public Limited Company (British Corporation)
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
#These are American warrants with an underlying Japanese security.
)These are German warrants with an underlying Japanese security.
\These are Swiss warrants with an underlying Japanese security.
**Indicates a restricted security; the aggregate cost of the restricted
securities is $321,883. The aggregate value, 216,115 is approximately .1%
of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending June 30,
1995.
+Forward Foreign Exchange Contracts as of June 30, 1995:
FOREIGN
CURRENCY
SOLD
JAPANESE EXPIRATION
YEN DATE UNREALIZED APPRECIATION/(DEPRECIATION)
$1,125,000,000 May 15, 1996 $ (44,702)
415,000,000 May 30, 1996 102,294
$ 57,592
'First Boston, 6.130%, entered 06/30/95; maturing 07/03/95 in the amount of
$134,000; Collateralized by $445,076 United States Treasury Bonds, 7.500%,
11/15/16; $86,000 United States Treasury Bonds, 7.250%, 5/16/16.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES 70 THROUGH 77.
69
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF THE BOND, COMMON STOCK,
AGGRESSIVELY MANAGED FLEXIBLE, CONSERVATIVELY MANAGED FLEXIBLE,
STOCK INDEX, GLOBAL EQUITY AND GOVERNMENT SECURITIES PORTFOLIOS OF
THE PRUDENTIAL SERIES FUND, INC.
FOR THE PERIODS ENDED JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
NOTE 1: GENERAL
The Prudential Series Fund, Inc. ("Series Fund"), a Maryland corporation,
organized on November 15, 1982, is a diversified open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Series Fund is composed of fourteen Portfolios, each with a separate series of
capital stock. The Bond, Common Stock, Aggressively Managed Flexible,
Conservatively Managed Flexible, Stock Index, Global Equity, and Government
Securities portfolios presented herein are available only for investment by
VCA-24 and other various separate accounts of The Prudential Insurance Company
of America ("The Prudential"), Pruco Life Insurance Company and Pruco Life
Insurance Company of New Jersey (together referred to as the "Companies") to
fund benefits under certain variable life insurance and variable annuity
contracts issued by the Companies.
The shareholders of Pruco Life Series Fund, Inc. ("Pruco Fund") and the Series
Fund approved the merger of the Pruco Fund into the Series Fund as of November
1, 1986. The merger combined five portfolios with identical investment
strategies (Money Market, Bond, Common Stock, Aggressively Managed Flexible and
Conservatively Managed Flexible) of the Pruco Fund with their counterpart in the
Series Fund. The merger was effected by converting the net assets of the Pruco
Fund at the merger date into shares of the Series Fund at the share price of
that day and was accounted for as a pooling of interest.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SECURITIES VALUATION: Equity securities are valued at market. Securities traded
on a national securities exchange are valued at the last sales price on such
exchange as of the close of the New York Stock Exchange or, in the absence of
recorded sales, at the mean between the most recently quoted bid and asked
prices. For any securities not traded on a national securities exchange but
traded in the over-the-counter market, the securities are valued at the mean
between the most recently quoted bid and asked prices, except that securities
for which quotations are furnished through a nationwide automated quotation
system approved by the National Association of Securities Dealers, Inc.
("NASDAQ") are valued at the last sales price or if there was no sale on such
day, at the mean between the most recently quoted bid and asked prices.
Convertible debt securities are valued at the mean between the most recently
quoted bid and asked prices provided by principal market makers. High yield
bonds are valued either by quotes received from principal market makers or by an
independent pricing service which determines prices by analysis of quality,
coupon, maturity and other adjustment factors. Long-term bonds are valued at
market, based on valuation prices by an independent pricing service which
determines prices by analysis of quality, coupon, maturity and other adjustment
factors. Short-term investments are valued at amortized cost, which with accrued
interest approximates market value. Amortized cost is computed using the cost on
the date of purchase adjusted for constant amortization of discount or premium
to maturity. The interest rates shown for Commercial Paper, Promissory Notes,
and certain U.S. Government Agency Obligations on the Schedules of Investments
are the discount rates paid at the time of purchase. Any security for which a
quotation is unavailable is valued at fair value as determined in good faith by
or under the direction of the Series Fund's Board of Directors.
The ability of issuers of debt securities held by specific Portfolios of the
Series Fund to meet their obligations may be affected by economic developments
in a specific country or industry.
The portfolios of the Fund may invest up to 15% of their total assets in
securities which are subject to legal or contractual restrictions on resale or
for which no readily available market exists ("restricted securities").
Restricted securities are valued pursuant to the valuation procedures noted
above.
DERIVATIVE FINANCIAL INSTRUMENTS: The Series Fund may engage in various
portfolio strategies to seek increased returns by hedging the portfolios against
adverse movements in the equity, debt, and currency markets. Losses may arise
due to changes in the value of the contract or if the counterparty does not
perform under the contract.
OPTION WRITING: When the Series Fund sells an option, an amount equal to the
premium received is recorded as a liability and is subsequently adjusted to the
current market value of the option written. Premiums received
70
<PAGE>
from writing options which expire unexercised are treated on the expiration date
as gains from the sale of securities. As to options which are closed, the
difference between the premium and the amount paid on effecting a closing
purchase transaction, including brokerage commissions, is also treated as a
gain, or if the premium received is less than the amount paid for the closing
purchase transaction, as a loss. If a call option is exercised, the premium is
added to the proceeds from the sale in determining whether a gain or loss has
been realized.
The Series Fund's use of written options involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the Series
Fund's involvement in these financial instruments. Risks arise from the possible
movements in foreign exchange rates and securities values underlying these
instruments.
STOCK INDEX FUTURES: Portfolios of the Fund may attempt to reduce the risk of
investment in equity securities by hedging a portion of their equity portfolios
through the use of stock index futures traded on a commodities exchange or board
of trade. A stock index futures contract is an agreement in which the seller of
the contract agrees to deliver to the buyer an amount of cash equal to a
specific dollar amount times the difference between the value of a specific
stock index at the close of the last trading day of the contract and the price
at which the agreement was made. Upon entering into a futures contract, a
Portfolio is required to pledge to the broker liquid assets equal to the minimum
"initial margin," approximately 5% of the contract amount. The Portfolio further
agrees to receive or pay to the broker an amount of cash equal to the futures
contract's daily fluctuation in value. These receipts or payments are known as
the "variation margin" and are recorded as unrealized gains or losses. When a
futures contract is closed, the Portfolio records a realized gain or loss equal
to the difference between the value of the contract at the time it was opened
and the value at the time it was closed.
FOREIGN CURRENCY TRANSACTIONS: The books and records of the Series Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and liabilities at the
mid daily rate of exchange as reported by a major New York City bank;
(ii) purchases and sales of investment securities, income and expenses at the
rate of exchange prevailing on the respective dates of such transactions.
Since the net assets of the Series Fund are presented at the foreign exchange
rates and market values at the close of the fiscal period, it is not practical
to isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the fluctuations arising from change
in the market prices of securities held at the end of the fiscal period.
Similarly, it is not practical to isolate the effect of changes in foreign
exchange rates from the fluctuations arising from changes in the market prices
of equities sold during the fiscal year.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability and
the level of government supervision and regulation of foreign security markets.
The Global Equity Portfolio may invest up to 100% of its total assets in common
stock and convertible securities denominated in a foreign currency and issued by
foreign or domestic issuers. The Bond Portfolio may invest up to 20% of its
assets in United States currency denominated debt securities issued outside the
United States by foreign or domestic issuers. In addition, the bond components
of the Conservatively Managed Flexible and Aggressively Managed Flexible
Portfolios may each invest up to 20% of their assets in such securities.
Further, the Aggressively Managed Flexible Portfolio may invest up to 30% of its
total assets in debt and equity securities denominated in a foreign currency and
issued by foreign or domestic issuers. In addition, the Common Stock Portfolio
may invest up to 30% of its total assets in non-United States currency
denominated common stock and fixed-income securities convertible into common
stock of foreign and U.S. issuers.
Net realized gains and losses on foreign currency transactions represent net
foreign exchange gains and losses from holding of foreign currencies; currency
gains or losses realized between the trade and settlement dates on security
transactions; and the difference between the amounts of the dividends and
foreign taxes recorded on the Series Fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net currency gains and losses from valuing
foreign currency denominated assets and liabilities at fiscal period end
exchange rates are reflected as a component of unrealized loss on foreign
currencies.
71
<PAGE>
FORWARD FOREIGN EXCHANGE CONTRACTS: The Series Fund is authorized to enter into
forward foreign exchange contracts as a hedge against either specific
transactions or portfolio positions. Such contracts are not entered on the
Series Fund's records. However, the effect on operations is recorded from the
date the Series Fund enters into such contracts. Premium or discount is
amortized over the life of the contracts.
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Dividend income is recorded on
the ex-dividend date. Interest income is accrued daily on both long-term bonds,
and short-term investments. Interest income also includes net amortization from
the purchase of fixed-income securities. Long-term security and option
transactions are recorded on the first business day following the trade date,
except that transactions on the last business day of the reporting cycle are
recorded on that date. Short-term security and futures transactions are recorded
on trade date. Realized gains and losses from security transactions are
determined and accounted for on the basis of identified cost.
DISTRIBUTIONS AND TAXES: The Portfolios of the Series Fund intend to continue
to qualify for and elect the special tax treatment afforded regulated investment
companies under Subchapter M of the Internal Revenue Code, thereby relieving the
Series Fund of Federal income taxes. To so qualify, the Series Fund intends to
distribute substantially all of its net investment income and net realized
capital gains, if any, less any available capital loss carry forward. As of
December 31, 1994, (based on an October 31 measurement period) the Bond
Portfolio had a net capital loss carry forward of $643,550 (expiring in 2002).
The Global Equity Portfolio had a net capital loss carry forward of $6,265,350
(expiring in 2002). These amounts will be available to offset any future taxable
gains.
EXPENSES: Each Portfolio pays for certain expenses incurred in its individual
operation, and also pays a portion of the Series Fund's general administrative
expenses allocated on the basis of the asset size of the respective Portfolios.
The Series Fund has an arrangement with Chemical Banking Corporation, a
custodian bank. On a daily basis, cash funds which are not invested earn a
credit which is used to offset custody charges on a Portfolio basis, exclusive
of the Global Equity Portfolio, for which Brown Brothers Harriman & Co. is the
custodian bank. For the six months ended June 30, 1995, the total of the credits
used was:
<TABLE>
<S> <C>
Conservatively Managed Flexible Portfolio..................... $ 14,487
Aggressively Managed Flexible Portfolio....................... 13,113
Bond Portfolio................................................ 1,099
</TABLE>
NOTE 3: INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGEMENT AND ACCOUNTING FEES: Pursuant to an investment advisory
agreement (the "Agreement"), The Prudential receives an investment management
fee, calculated daily, at an effective annual rate of 0.35% of the average daily
net assets of the Stock Index Portfolio: 0.40% of the average daily net assets
of the Bond and Government Securities Portfolios; 0.45% of average daily net
assets of the Common Stock Portfolio; 0.55% of the average daily net assets of
the Conservatively Managed Flexible Portfolio; 0.60% of the average daily net
assets of the Aggressively Managed Flexible Portfolio; and 0.75% of the average
daily net assets of the Global Equity Portfolio. Under the Agreement, The
Prudential has agreed to refund to a portfolio (other than the Global Equity
Portfolio), the portion of the management fee for that Portfolio equal to the
amount that the aggregate annual ordinary operating expenses (excluding
interest, taxes and brokerage commissions) exceeds 0.75% of the Portfolio's
average daily net assets. The Agreement also requires the Series Fund to
reimburse The Prudential for the cost of maintaining staff and personnel who
provide daily accounting services for the operation of the Series Fund with the
exception of the Global Equity Portfolio.
DIRECTORS' EXPENSES: The Series Fund pays for the fees and expenses of those
members of the Series Fund's Board of Directors who are not officers or
employees of The Prudential or its affiliates.
BROKERAGE COMMISSIONS: For the six month period ended June 30, 1995, Prudential
Securities Inc., an indirect, wholly-owned subsidiary of The Prudential, earned
$484,213 in brokerage commissions from Portfolio transactions executed on behalf
of the Series Fund.
OTHER TRANSACTIONS WITH AFFILIATES: As of June 30, 1995, The Prudential had
investments of $1,267,821 in the Global Equity Portfolio.
72
<PAGE>
NOTE 4: JOINT REPURCHASE AGREEMENT ACCOUNT
The Portfolios of the Series Fund transfer uninvested cash balances into a
single joint account, the daily aggregate balance of which is invested in one or
more repurchase agreements collateralized by U.S. Government obligations. The
Series Fund's undivided interest in the joint repurchase agreement account
represented $635,002,000 in the principal amount as of June 30, 1995. The
Portfolios of the Series Fund with cash in the joint account had the following
percentage participation in the account:
<TABLE>
<S> <C>
Common Stock Portfolio........................................ 65.89%
Aggressively Managed Flexible Portfolio....................... 10.11%
Stock Index Portfolio......................................... 4.83%
Conservatively Managed Flexible Portfolio..................... 3.06%
Government Securities Portfolio............................... 2.27%
Bond Portfolio................................................ .87%
All other portfolios (currently not available to VCA-24)...... 12.97%
----------
100.00%
</TABLE>
As of such date, each repurchase agreement in the joint account and the
collateral thereof were as follows:
Bear Stearns Repurchase Agreement, dated 6/30/95, in the principal amount of
$170,000,000, repurchase price $170,086,768, due 7/3/95; collateralized by
$9,945,000 U.S. Treasury Bonds, 12.00%, due 5/15/05; $25,400,000 U.S. Treasury
Bonds, 8.75%, due 5/15/17; $100,000,000 U.S. Treasury Bonds, 8.875%, due
8/15/17.
Morgan Stanley and Company Repurchase Agreement, dated 6/30/95, in the principal
amount of $145,002,000, repurchase price $145,074,870, due 7/3/95;
collateralized by $45,550,000 U.S. Treasury Notes, 5.00%, due 1/31/99;
$79,260,000 U.S. Treasury Notes, 7.375%, due 11/15/97; $18,805,000 U.S. Treasury
Notes, 8.625%, due 8/15/97.
Nomura Securities Repurchase Agreement, dated 6/30/95, in the principal amount
of $150,000,000, repurchase price $150,076,561, due 7/3/95; collateralized by
$143,665,000 U.S. Treasury Notes, 7.75%, due 12/31/99.
Smith Barney Repurchase Agreement, dated 6/30/95, in the principal amount of
$170,000,000, repurchase price $170,086,698, due 7/3/95; collateralized by
$38,530,000 U.S. Treasury Notes, 7.375%, due 11/15/97; $50,000,000 U.S. Treasury
Notes, 6.875%, due 10/31/96; $38,000,000 U.S. Treasury Notes, 9.25%, due
1/15/96; $41,000,000 U.S. Treasury Notes, 9.50%, due 11/15/95.
NOTE 5: PURCHASE AND SALE OF SECURITIES
The aggregate cost of purchase and the proceeds from the sales of securities
(excluding short-term issues) for the six months ended June 30, 1995 were as
follows:
Cost of Purchases:
<TABLE>
<CAPTION>
CONSERVATIVELY AGGRESSIVELY
GOVERNMENT MANAGED MANAGED STOCK COMMON GLOBAL
BOND SECURITIES FLEXIBLE FLEXIBLE INDEX STOCK EQUITY
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Debt Securities.......... $737,173,814 $817,150,470 2$,114,041,085 2$,320,071,155 $ 0 $ 0 $ 0
Equity Securities........ $ 0 $ 0 $333,620,116 1$,036,861,353 $ 45,168,572 $295,512,477 $118,366,013
</TABLE>
Proceeds From Sales:
<TABLE>
<CAPTION>
CONSERVATIVELY AGGRESSIVELY
GOVERNMENT MANAGED MANAGED STOCK COMMON GLOBAL
BOND SECURITIES FLEXIBLE FLEXIBLE INDEX STOCK EQUITY
------------- ------------- ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Debt Securities.......... $730,397,021 $831,886,931 1$,968,359,775 2$,187,809,579 $ 0 $ 0 $ 185,142
Equity Securities........ $ 0 $ 0 $214,856,938 $817,036,749 $ 5,062,818 $217,400,661 $ 88,454,900
</TABLE>
73
<PAGE>
The federal income tax basis and unrealized appreciation/depreciation of the
Fund's investments as of June 30, 1995 were as follows:
<TABLE>
<CAPTION>
CONSERVATIVELY AGGRESSIVELY
GOVERNMENT MANAGED MANAGED STOCK COMMON GLOBAL
BOND SECURITIES FLEXIBLE FLEXIBLE INDEX STOCK EQUITY
----------- ----------- ------------ ------------ ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Unrealized Appreciation... $19,683,791 $24,390,207 $285,816,603 $422,435,005 $211,839,975 $ 653,802,734 $67,802,486
Gross Unrealized Depreciation... (4,827,477) (1,043,035) (67,817,678) (37,718,993) (10,281,048) (62,246,807) (25,804,268)
Total Net Unrealized............ 14,856,314 23,347,172 217,998,925 384,716,012 201,558,927 591,555,927 41,998,218
Tax Basis....................... $568,846,782 $451,860,188 $3,516,904,743 $3,453,583,650 $631,457,411 $2,639,342,095 $327,198,871
</TABLE>
NOTE 6: FINANCIAL HIGHLIGHTS
The following average per share data, ratios and supplemental information by
Portfolio have been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
BOND
-------------------------------------------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86
TO TO TO TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86*
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $10.038 $11.103 $10.829 $11.002 $10.332 $10.321 $ 9.942 $10.038 $ 11.048 $ 10.967
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income.... 0.377 0.682 0.686 0.761 0.797 0.825 0.886 0.875 0.859 0.904
Net realized gains
(losses)and unrealized
appreciation
(depreciation) on
investments............ 0.836 (1.040) 0.398 0.013 0.842 (0.004) 0.424 (0.069) (0.821) 0.607
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations........... 1.213 (0.358) 1.084 0.774 1.639 0.821 1.310 0.806 0.038 1.511
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.256) (0.683) (0.657) (0.728) (0.779) (0.810) (0.854) (0.902) (0.990) (0.909)
Distributions from net
realized gains......... 0.000 (0.024) (0.153) (0.219) (0.190) 0.000 (0.077) 0.000 (0.058) (0.521)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions........ (0.256) (0.707) (0.810) (0.947) (0.969) (0.810) (0.931) (0.902) (1.048) (1.430)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net increase (decrease)
in Net Asset Value..... 0.957 (1.065) 0.274 (0.173) 0.670 0.011 0.379 (0.096) (1.010) 0.081
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value at end of
period................. $10.995 $10.038 $11.103 $10.829 $11.002 $10.332 $10.321 $ 9.942 $ 10.038 $ 11.048
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total Investment Rate of
Return:**.............. 12.08 % (3.23 %) 10.13 % 7.19 % 16.44 % 8.32 % 13.49 % 8.19 % 0.29 % 14.45 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $588.6 $541.6 $576.2 $428.8 $318.7 $227.7 $191.1 $148.8 $139.5 $110.1
Ratio of expenses net of
reimbursement to
average net assets..... 0.22 % 0.45 % 0.46 % 0.47 % 0.49 % 0.47 % 0.53 % 0.53 % 0.53 % 0.51 %
Ratio of net investment
income to average net
assets................. 3.58 % 6.41 % 6.05 % 6.89 % 7.43 % 8.06 % 8.56 % 8.52 % 8.15 % 8.11 %
Portfolio turnover
rate................... 138.06 % 31.57 % 41.12 % 60.53 % 131.01 % 42.10 % 272.85 % 222.20 % 238.41 % 246.82 %
Number of shares
outstanding at end of
period (in millions)... 53.5 54.0 51.9 39.6 29.0 22.0 18.5 15.0 13.9 10.0
</TABLE>
All calculations are based on average month-end shares outstanding, where
applicable.
*The per share information of the Portfolios of The Prudential Series Fund,
Inc. has not been restated to reflect the operations of the Pruco Life Series
Fund, Inc. prior to the November 1, 1986 merger.
**Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.
74
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES
-----------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 05/01/89
TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $10.461 $11.784 $11.094 $11.133 $10.146 $10.324 $10.017
-------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income.... 0.370 0.703 0.700 0.731 0.736 0.791 0.545
Net realized and
unrealized gains
(losses) on
investments............ 0.884 (1.311) 0.678 (0.092) 0.847 (0.177) 0.613
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations........... 1.254 (0.608) 1.378 0.639 1.583 0.614 1.158
-------- -------- -------- -------- -------- -------- --------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.254) (0.723) (0.642) (0.593) (0.596) (0.769) (0.489)
Distributions from net
realized gains......... 0.000 0.008 (0.046) (0.085) 0.000 (0.023) (0.362)
-------- -------- -------- -------- -------- -------- --------
Total
distributions........ (0.254) (0.715) (0.688) (0.678) (0.596) (0.792) (0.851)
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in Net Asset Value..... 1.000 (1.323) 0.690 (0.039) 0.987 (0.178) 0.307
-------- -------- -------- -------- -------- -------- --------
Net Asset Value at end of
period................. $11.461 $10.461 $11.784 $11.094 $11.133 $10.146 $10.324
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Total Investment Rate of
Return:**.............. 11.98 % (5.16 %) 12.56 % 5.85 % 16.11 % 6.34 % 11.60 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $482.0 $487.6 $540.1 $315.5 $95.0 $23.7 $17.0
Ratio of expenses net of
reimbursement to
average net assets..... 0.22 % 0.45 % 0.46 % 0.53 % 0.58 % 0.74 % 0.50 %
Ratio of net investment
income to average net
assets................. 3.36 % 6.30 % 5.91 % 6.58 % 6.97 % 7.86 % 5.06 %
Portfolio turnover
rate................... 185.77 % 34.19 % 18.59 % 80.71 % 127.18 % 379.45 % 208.86 %
Number of shares
outstanding at end of
period (in millions)... 42.1 46.6 45.8 28.3 8.5 2.3 1.6
</TABLE>
<TABLE>
<CAPTION>
CONSERVATIVELY MANAGED FLEXIBLE
-----------------------------------------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86
TO TO TO TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86*
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $14.095 $14.905 $14.243 $14.318 $13.060 $13.361 $12.295 $11.889 $ 12.571 $ 12.173
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income.... 0.324 0.528 0.486 0.558 0.687 0.821 0.891 0.773 0.656 0.652
Net realized gains
(losses) and unrealized
appreciation
(depreciation) on
investmentss........... 1.062 (0.679) 1.229 0.410 1.738 (0.143) 1.155 0.424 (0.399) 1.046
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations........... 1.386 (0.151) 1.715 0.968 2.425 0.678 2.046 1.197 0.257 1.698
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.215) (0.505) (0.468) (0.533) (0.668) (0.812) (0.887) (0.791) (0.709) (0.517)
Distributions from net
realized gains......... 0.000 (0.154) (0.585) (0.510) (0.499) (0.167) (0.093) 0.000 (0.230) (0.783)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions........ (0.215) (0.659) (1.053) (1.043) (1.167) (0.979) (0.980) (0.791) (0.939) (1.300)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net increase (decrease)
in Net Asset Value..... 1.171 (0.810) 0.662 (0.075) 1.258 (0.301) 1.066 0.406 (0.682) 0.398
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value at end of
period................. $15.266 $14.095 $14.905 $14.243 $14.318 $13.060 $13.361 $12.295 $ 11.889 $ 12.571
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total Investment Rate of
Return:**.............. 9.84 % (0.97 %) 12.20 % 6.95 % 19.07 % 5.27 % 16.99 % 10.19 % 1.54 % 14.17 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $3,715.6 $3,501.1 $3,103.2 $2,114.0 $1,500.0 $1,100.2 $976.0 $815.6 $803.9 $375.4
Ratio of expenses net of
reimbursement to
average net assets..... 0.29 % 0.61 % 0.60 % 0.62 % 0.63 % 0.65 % 0.64 % 0.65 % 0.66 % 0.64 %
Ratio of net investment
income to average net
assets................. 2.20 % 3.61 % 3.22 % 3.88 % 4.89 % 6.21 % 6.81 % 6.22 % 5.05 % 5.10 %
Portfolio turnover
rate................... 93.03 % 125.18 % 79.46 % 62.07 % 115.35 % 44.04 % 153.92 % 110.67 % 140.69 % 207.78 %
Number of shares
outstanding at end of
period (in millions)... 243.4 248.4 208.2 148.4 104.8 84.2 73.0 66.3 67.6 29.9
</TABLE>
All calculations are based on average month-end shares outstanding, where
applicable.
*The per share information of the Portfolios of The Prudential Series Fund,
Inc. has not been restated to reflect the operations of the Pruco Life Series
Fund, Inc. prior to the November 1, 1986 merger.
**Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.
75
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
AGGRESSIVELY MANAGED FLEXIBLE
-----------------------------------------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86
TO TO TO TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86*
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $15.496 $16.957 $16.005 $16.288 $13.996 $14.446 $13.123 $12.326 $ 13.555 $ 12.810
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income.... 0.288 0.473 0.566 0.583 0.650 0.715 0.813 0.724 0.577 0.611
Net realized gains
(losses) and unrealized
appreciation
(depreciation) on
investments............ 1.596 (1.021) 1.882 0.607 2.809 (0.466) 1.989 0.840 (0.753) 1.342
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations........... 1.884 (0.548) 2.448 1.190 3.459 0.249 2.802 1.564 (0.176) 1.953
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.178) (0.451) (0.567) (0.559) (0.654) (0.699) (0.813) (0.767) (0.673) (0.456)
Distributions from net
realized gains......... 0.000 (0.462) (0.929) (0.914) (0.513) 0.000 (0.666) 0.000 (0.380) (0.752)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions........ (0.178) (0.913) (1.496) (1.473) (1.167) (0.699) (1.479) (0.767) (1.053) (1.208)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net increase (decrease)
in Net Asset Value..... 1.706 (1.461) 0.952 (0.283) 2.292 (0.450) 1.323 0.797 (1.229) 0.745
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value at end of
period................. $17.202 $15.496 $16.957 $16.005 $16.288 $13.996 $14.446 $13.123 $ 12.326 $ 13.555
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total Investment Rate of
Return:**.............. 12.16 % (3.16 %) 15.58 % 7.61 % 25.43 % 1.91 % 21.77 % 12.83 % (1.83 %) 15.48 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $3,827.9 $3,481.5 $3,292.2 $2,435.6 $1,990.7 $1,507.8 $1,386.5 $1,103.9 $1,062.4 $593.6
Ratio of expenses net of
reimbursement to
average net assets..... 0.31 % 0.66 % 0.66 % 0.67 % 0.67 % 0.69 % 0.69 % 0.70 % 0.71 % 0.67 %
Ratio of net investment
income to average net
assets................. 1.77 % 2.90 % 3.30 % 3.63 % 4.23 % 5.13 % 5.66 % 5.52 % 4.09 % 4.43 %
Portfolio turnover
rate................... 94.46 % 123.63 % 62.99 % 59.03 % 93.13 % 51.87 % 141.04 % 128.45 % 123.83 % 133.76 %
Number of shares
outstanding at end of
period (in millions)... 222.5 224.7 194.1 152.2 122.2 107.7 96.0 84.1 86.2 43.8
</TABLE>
<TABLE>
<CAPTION>
STOCK INDEX
-------------------------------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 10/19/87
TO TO TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
-------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $14.957 $15.202 $14.218 $13.605 $10.760 $11.732 $ 9.454 $ 8.531 $ 8.071
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Income From Investment
Operations:
Net investment income.... 0.197 0.377 0.361 0.350 0.351 0.357 0.326 0.357 0.047
Net realized gains
(losses) and unrealized
appreciation
(depreciation) on
investments............ 2.789 (0.231) 1.002 0.600 2.814 (0.792) 2.570 0.951 0.548
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total from investment
operations........... 2.986 0.146 1.363 0.950 3.165 (0.435) 2.896 1.308 0.595
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.109) (0.368) (0.346) (0.329) (0.307) (0.309) (0.354) (0.385) (0.135)
Distributions from net
realized gains......... 0.000 (0.023) (0.033) (0.008) (0.013) (0.228) (0.264) 0.000 0.000
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total
distributions........ (0.109) (0.391) (0.379) (0.337) (0.320) (0.537) (0.618) (0.385) (0.135)
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Net increase (decrease)
in Net Asset Value..... 2.877 (0.245) 0.984 0.613 2.845 (0.972) 2.278 0.923 0.460
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Net Asset Value at end of
period................. $17.834 $14.957 $15.202 $14.218 $13.605 $10.760 $11.732 $ 9.454 $ 8.531
-------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total Investment Rate of
Return:**.............. 19.97 % 1.01 % 9.66 % 7.13 % 29.72 % (3.63 %) 30.93 % 15.44 % 7.35 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $830.6 $664.5 $615.1 $433.5 $236.9 $104.5 $53.8 $36.0 $24.5
Ratio of expenses net of
reimbursement to
average net assets..... 0.19 % 0.42 % 0.42 % 0.46 % 0.47 % 0.60 % 0.69 % 0.78 % 0.45 %
Ratio of net investment
income to average net
assets................. 1.20 % 2.50 % 2.43 % 2.56 % 2.82 % 3.23 % 2.95 % 3.87 % 0.53 %
Portfolio turnover
rate................... 0.71 % 1.74 % 0.60 % 0.43 % 1.10 % 17.80 % 14.54 % 15.62 % 0.47 %
Number of shares
outstanding at end of
period (in millions)... 46.6 44.4 40.5 30.5 17.4 9.7 4.6 3.8 2.9
</TABLE>
All calculations are based on average month-end shares outstanding, where
applicable.
*The per share information of the Portfolios of The Prudential Series Fund,
Inc. has not been restated to reflect the operations of the Pruco Life Series
Fund, Inc. prior to the November 1, 1986 merger.
**Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.
76
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86
TO TO TO TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86*
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $20.662 $21.487 $18.903 $17.905 $15.449 $18.539 $15.463 $13.620 $ 14.815 $ 14.634
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income.... 0.264 0.512 0.417 0.444 0.482 0.577 0.474 0.402 0.393 0.448
Net realized gains
(losses) and unrealized
appreciation
(depreciation) on
investments............ 3.164 0.054 3.666 2.050 3.414 (1.573) 4.064 1.909 (0.065) 1.765
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations........... 3.428 0.566 4.083 2.494 3.896 (0.996) 4.538 2.311 0.328 2.213
Distributions to
Shareholders:
Distributions from net
investment income...... (0.189) (0.487) (0.404) (0.439) (0.478) (0.563) (0.503) (0.468) (0.496) (0.275)
Distributions from net
realized gains......... (0.021) (0.904) (1.095) (1.057) (0.962) (1.531) (0.959) 0.000 (1.027) (1.757)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions........ (0.210) (1.391) (1.499) (1.496) (1.440) (2.094) (1.462) (0.468) (1.523) (2.032)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net increase (decrease)
in Net Asset Value..... 3.218 (0.825) 2.584 0.998 2.456 (3.090) 3.076 1.843 (1.195) 0.181
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value at end of
period................. $23.880 $20.662 $21.487 $18.903 $17.905 $15.449 $18.539 $15.463 $ 13.620 $ 14.815
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total Investment Rate of
Return:**.............. 16.58 % 2.78 % 21.87 % 14.17 % 26.01 % (5.21 %) 29.73 % 17.05 % 1.67 % 15.10 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $3,232.9 $2,617.8 $2,186.5 $1,416.6 $1,032.8 $700.5 $675.5 $500.1 $451.0 $247.9
Ratio of expenses net of
reimbursement to
average net assets..... 0.24 % 0.55 % 0.53 % 0.53 % 0.51 % 0.56 % 0.56 % 0.57 % 0.51 % 0.52 %
Ratio of net investment
income to average net
assets................. 1.18 % 2.39 % 1.99 % 2.33 % 2.66 % 3.37 % 2.66 % 2.67 % 2.34 % 2.90 %
Portfolio turnover
rate................... 8.54 % 6.90 % 12.95 % 15.70 % 20.85 % 84.84 % 73.54 % 62.35 % 79.91 % 117.15 %
Number of shares
outstanding at end of
period (in millions)... 135.4 126.7 101.8 74.9 57.7 45.3 36.4 32.3 33.1 16.7
</TABLE>
<TABLE>
<CAPTION>
GLOBAL EQUITY
---------------------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 09/19/88
TO TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period $13.879 $14.639 $10.368 $10.792 $ 9.866 $11.547 $10.508 $ 9.818
-------- -------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income.... 0.053 0.028 0.023 0.051 0.096 0.203 0.079 0.052
Net realized gains
(losses) and unrealized
appreciation
(depreciation) on
investments............ 1.259 (0.744) 4.433 (0.419) 1.020 (1.802) 1.806 0.787
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations........... 1.312 (0.716) 4.456 (0.368) 1.116 (1.599) 1.885 0.839
-------- -------- -------- -------- -------- -------- -------- --------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.023) (0.019) (0.079) (0.056) (0.100) (0.067) (0.073) (0.149)
Distributions from net
realized gains......... 0.000 (0.025) (0.106) 0.000 (0.090) (0.015) (0.773) 0.000
-------- -------- -------- -------- -------- -------- -------- --------
Total
distributions........ (0.023) (0.044) (0.185) (0.056) (0.190) (0.082) (0.846) (0.149)
-------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in Net Asset Value..... 1.289 (0.760) 4.271 (0.424) 0.926 (1.681) 1.039 0.690
-------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value at end of
period................. $15.168 $13.879 $14.639 $10.368 $10.792 $ 9.866 $11.547 $10.508
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Total Investment Rate of
Return:**.............. 9.45 % (4.89 %) 43.14 % (3.42 %) 11.39 % (12.91 %) 18.82 % 8.57 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $369.1 $345.7 $129.1 $34.0 $34.3 $26.2 $29.4 $26.9
Ratio of expenses net of
reimbursement to
average net assets..... 0.53 % 1.23 % 1.44 % 1.87 % 1.62 % 1.67 % 1.47 % 0.42 %
Ratio of net investment
income to average net
assets................. 0.38 % 0.20 % 0.18 % 0.49 % 0.92 % 1.92 % 0.70 % 0.51 %
Portfolio turnover
rate................... 26.37 % 37.46 % 54.54 % 78.16 % 136.21 % 43.12 % 47.95 % 6.40 %
Number of shares
outstanding at end of
period (in millions)... 24.3 24.9 8.8 3.3 3.2 2.7 2.5 2.6
</TABLE>
All calculations are based on average month-end shares outstanding, where
applicable.
**Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.
77
<PAGE>
(This page intentionally left blank.)
78
<PAGE>
(This page intentionally left blank.)
79
<PAGE>
The Prudential Insurance Company of America
c/o Prudential Defined Contribution Services
30 Scranton Office Park
Moosic, Pennsylvania 18507-1789
BULK RATE
U.S. POSTAGE
PAID
PERMIT No. 2145
Newark, N.J.
ADDRESS CORRECTION REQUESTED
FORWARDING AND
RETURN POSTAGE GUARANTEED
Prudential Defined Contribution Services
A Unit of The Prudential
<PAGE>
Graph 1: (Bond Portfolio)
Graph represents the growth of $10,000 invested in the Bond Portfolio
compared with the Lehman Aggregate Index and the Lipper VIP Corporate Bond
Average. In the ten years ended 6/30/95, an investment of $10,000 would have
a value of $24,796, $25,961, and $24,650 respectively.
Graph 2: (Government Securities Portfolio)
Graph represents the growth of $10,000 invested in the Government Securities
Portfolio compared with the Lehman Government Index and the Lipper VIP U.S.
Government Average. In the six years ended 6/30/95, an investment of $10,000
would have a value of $17,431, $17,682 and $17,103 respectively.
Graph 3: (Conservatively Managed Flexible Portfolio)
Graph represents the growth of $10,000 invested in the Conservatively Managed
Flexible Portfolio compared with the S&P 500, Lehman Aggregate Index, and the
Lipper VIP Flexible Average. In the ten years ended 6/30/95, an investment of
$10,000 would have a value of $26,703, $39,255, $25,962, and $29,656
respectively.
Graph 4: (Aggressively Managed Flexible Portfolio)
Graph represents the growth of $10,000 invested in the Aggressively Managed
Flexible Portfolio compared with the S&P 500 Lehman Aggregate Index, and the
Lipper VIP Flexible Average. In the ten years ended 6/30/95, an investment of
$10,000 would have a value of $29,765, $39,255, $25,962, and $29,656
respectively.
Graph 5: (Stock Index Portfolio)
Graph represents the growth of $10,000 invested in the Stock Index Portfolio
compared with the S&P 500 and Lipper VIP Growth and Income Average. In the
eight years ended 6/30/95, an investment of $10,000 would have a value of
$28,872, $27,609, and $26,042 respectively.
Graph 6: (Common Stock Portfolio)
Graph represents the growth of $10,000 invested in the Common Stock Portfolio
compared with the S&P 500 and Lipper VIP Growth Average. In the ten years
ended 6/30/95, an investment of $10,000 would have a value of $40,297,
$39,255, and $35,380 respectively.
Graph 7: (Global Equity Portfolio)
Graph represents the growth of $10,000 invested in the Global Equity
Portfolio compared with the Morgan Stanley World Index and Lipper VIP Global
Average. In the seven years ended 6/30/95, an investment of $10,000 would
have a value of $18,007, $17,654, and $18,474 respectively.
