<PAGE>
----------------------------------------------------
PENN SERIES FUNDS, INC.
SEMI-ANNUAL REPORT
JUNE 30, 1996
<PAGE>
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PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
QUALITY BOND FUND
Interest rates continued to move up across the yield curve. The bear market in
bonds was pushed further along by strong economic growth, which threatens
inflation and brings about fears of Federal Reserve tightening.
Although longer term interest rates have moved up 100-150 basis points this
year, there has been very little signs of economic slowdown. Housing, the most
sensitive economic sector to changes in interest rates, continues on its upward
trend with forward measures of housing strength still in evidence. Employment
growth accelerated in the second quarter bringing along with it improvements in
income and consumer confidence. Indeed, the unemployment rate at 5.3% is the
lowest since 1989. These factors make it hard to predict a slowdown in
consumption. Production is still playing catch-up with the strong consumer
spending of the first half of 1996. Inventories are now near historical lows
relative to sales. The economy would get an additional boost if manufacturers
decided to actually build inventories rather than simply respond to large
drawdowns.
Notwithstanding the aforementioned strong economic data, Alan Greenspan at
the Humphrey-Hawkins testimony before Congress, indicated that no change in
monetary policy would be likely in the very near term. It appears that because
of the favorable inflation data seen in this cycle that there would not be the
pre-emptive tightening bias that the FOMC used in 1994. However, Mr. Greenspan
is expecting an economic slowdown in the second half of the year and if none
materializes and/or the inflation data do worsen then a hike in the short term
rates would be expected.
Performance has been good on both an absolute and relative basis. The Penn
Series Quality Bond Fund continues to outperform the competition, besting the
Lipper A average by 27 basis points in the second quarter. Since year-end the
Fund has beaten the Lipper average by 183 basis points, which ranks the Fund #7
out of 119 bond funds in that category. Over the past 12 months, the Fund
outperformed the average by 211 basis points, ranking the Penn Series Fund 5th
out of 116.
Our longer term outlook for the bond market remains negative. We still think
that the 30 year Treasury Bond will reach 7.50%. Our duration is still
positioned roughly neutral as it has been since April but we think time is
running out on this relative period of calmness in the fixed income markets.
INDEPENDENCE CAPITAL MANAGEMENT, INC.
INVESTMENT ADVISER
HIGH YIELD BOND FUND
The six months ended June 30 offered a textbook illustration of the differences
between high-yield and high-grade bond dynamics. When the economy slowed and
interest rates fell in the second half of 1995, high-grade bonds outperformed
lower-quality bonds. But when the economy picked up and rates rose as 1996
progressed, the reverse was true, and high-yield bonds led the fixed income
market.
The high-yield bond market and your fund performed well during the first
half. While the overall high-yield bond market was stronger in the first
quarter, the fund had better relative results in the second quarter. For the
first half of 1996, the fund was generally in line with its Lipper peer group.
Market Environment
The months following the start of 1996 were a mirror image of the preceding six
months. In the second half of 1995, the economy looked weak, federal deficit
reduction seemed likely, the Federal Reserve was accommodative, and interest
rates declined. As frequently happens in such an environment, investors favored
high-quality bonds.
In 1996, everything changed. The economy strengthened, payroll employment
rose sharply, and inflation increased. These were favorable developments for
issuers of lower-quality bonds, because stronger growth could be expected to
bolster corporate cash flows and rising inflation has the effect of easing the
burden of debt service.
Within the high-yield market, trends also reversed after the start of the
year. Whereas the "upper quality tier" had the best results in 1995 because of
its greater interest-rate sensitivity, the opposite was true after the turn of
the year for the same reason. Issues rated B and lower posted the best year-to-
date returns.
Strategy Review
Our portfolio had a conservative tilt as we entered 1996 and was also
positioned to capture appreciation as rates fell. While this emphasis had
proved beneficial in the slow-growth, falling rate environment of 1995, it was
a disadvantage when growth picked up and market conditions changed in 1996.
Therefore, since we expected the economy to remain healthy over the coming
months, we gradually shifted our focus from BB-rated bonds to single B issues,
eliminated our zero coupon holdings, and trimmed our most defensive-type
holdings, such as the media sector. In addition, we added investments in some
cyclical industries, particularly consumer products and textiles, which should
continue to do well if the economy maintains its momentum. Some of these also
represent interesting value situations. The remaining sector change worth
noting was a greater commitment to gaming, particularly higher-quality
companies in Las Vegas and Atlantic City, to take advantage of that industry's
consolidation trend.
Outlook
If the economy continues to perform well, which we expect, the environment
should be generally favorable for high-yield bonds and the default rate should
remain low. At the same time, we have grown more cautious in recent weeks, as
the support provided by a buoyant stock market seems to be wavering. In
summary, we are not optimistic enough to take a more aggressive stance in the
portfolio, but neither do we see an immediate need to retrench. We will remain
vigilant and attempt to provide solid exposure to high-yield bonds without
undue risk, but shareholders should always keep in mind the greater credit risk
of this area of the bond market.
T. ROWE PRICE ASSOCIATES, INC.
INVESTMENT ADVISER
GROWTH EQUITY FUND
Over the eighteen month period ended June 30, 1996, the S & P 500 generated a
total return (appreciation plus dividends) of over 51%. During that time only
one month saw the index post a negative return and that month's return of -
0.29% was barely noticeable. Given this phenomenal run we would not be
surprised by a 5% to 10% pull-back
2
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GROWTH EQUITY FUND (CONT'D)
in the stock market at any time. Already the bond market, which saw only one
negative month from November 1994 through January 1996 while advancing over
20%, has produced negative returns four of the past five months. As is often
the case, the stock market may soon follow the bond market's lead.
The Growth Equity Fund advanced 8.85% in the first half of 1996 which
compares with the 7.99% return of the Lipper Growth Index, the 8.93% average
return for the six comparable funds used as a benchmark and the 10.08% return
for the broad-based Lipper Growth Fund average. The S&P 500, also, returned
10.08% for the six month period.
For the twelve month period ended June 30, a period roughly corresponding to
the tenure of the current managers, the Growth Equity Fund has earned a return
of 21.51%. This return is ahead of the Lipper Growth Index (20.68%) and is
nearly one full percentage point better than the 20.54% average return for the
comparable funds. The return is, also, competitive with the Lipper Growth Fund
average return of 22.20%. Again, growth funds underperformed the S&P 500
(25.92%).
The Fund's first half improvement came primarily from strength in the Energy
(+16.9%), Financials (+14.8%), Capital Goods (+13.2%), Consumer Cyclical
(+12.2%), Consumer Staples (+12.0%), and Technology (+11.2%) sectors.
Performance was negatively impacted by declines in Utility shares (-5.9%) and
underperformance from Healthcare (+3.1%), Basic Material (+3.8%) and
Transportation (6.0%) stocks.
Over the past year the Growth Equity Fund has evolved into large
capitalization fund, oriented toward identifying above-average earnings growth
among, primarily, America's dominant companies. As a result, the Fund's list of
current holdings is replete with those companies capable of consistently
outpacing their peers. Examples of long-held companies meeting our criteria are
Pfizer, Microsoft, Intel, Nike, Paychex, Home Depot, Gillette, American
International Group, Cisco Systems, Oracle and Merck. Additionally, the Fund's
managers are continually striving to identify attractive new investment
opportunities. Typical of recent purchases in the portfolio are Price-Costco,
Gap Stores, Parametric Technology, Safeway, and CUC International. All of these
companies are leaders in their respective industries and have market
capitalizations of $4 billion and up.
For months, concern has been building in the financial markets about the
prospects for strength in the U.S. economy and the resultant rekindling of
inflation. As noted above, this concern has negatively affected the bond market
and would, if confirmed by Federal Reserve action during the summer or fall,
impact the stock market as well. Particularly troublesome have been various
employment reports pointing toward a tightening labor market. A tight labor
market increases the probability that increases in labor costa may outpace
improvements in labor productivity thereby creating inflationary pressure.
Importantly, total labor costs to this point are being held in check by
continued layoffs and slower growth in benefit costs, which are now rising at a
pace below that of wages and salaries. If inflationary pressures in the economy
can be contained corporate profit margins should hold up reasonably well and
reported earnings should continue to, on balance, match or exceed expectations.
Concerns about accelerating growth may be diminishing as evidenced by the
retreat in commodity prices, a halt to the rise in interest rates, and relative
strength in growth stocks versus cyclicals. If earnings are on target,
inflation remains subdued, and consequently the Fed does not boost interest
rates, the stock market should resume its advance. Similarly, the long and
intermediate-term areas of the bond market would take heart in the Fed's
indication that inflation is not an imminent worry and likely rally from
current levels. This would be positive for stocks, but uncertainty about the
economy makes it imperative that investors focus on owning shares of those
companies most likely to generate earnings in line with or above levels
presently forecast.
INDEPENDENCE CAPITAL MANAGEMENT, INC.
INVESTMENT ADVISER
VALUE EQUITY FUND
The Penn Series Value Equity Portfolio was in line with the market in the
second quarter providing a total return of 2.9%. The stock market has now risen
for nearly six years without as much as a 10% market decline, consistently
defying predictions that it is overdue for a correction. Rather than attempting
to predict the market, which we believe is virtually impossible, we focus on
individual securities. We invest in superior companies at reasonable valuations
and, by doing so, seek to minimize losses in down markets and match or exceed
the popular indexes when prices are rising. Our approach has worked well
through a variety of market conditions, providing above-average returns with
below-average risk.
The portfolio owns a diverse group of quality undervalued stocks, including
many insurance, banking and financial service company issues. Our ownership of
these financial companies is not an interest rate bet nor is it a sector bet.
Instead, these stocks are a somewhat eclectic group of companies, each with
individual strengths, that we believe to be valued inexpensively by the market.
Most are investments of long standing that appear undervalued to us regardless
of the interest rate environment.
On balance, we believe the market is highly valued to overvalued. But when
and whether it will take a tumble is another matter altogether. Predicting
market turns is notoriously difficult, and even overvalued markets sometimes
have a way of extending their gains well beyond reason.
And so the beat goes on -- sustained economic expansion with low inflation
fueling investor confidence resulting in an even greater commitment to stocks.
But the margin for error is less. In many ways, the Fed is trying to thread the
needle of just the right amount of economic growth. This may prove difficult
given the elevated state of the equity market. If the Federal Reserve is forced
to tighten, the economic liquidity needed to sustain the bull market may
evaporate.
Market speculation may already be correcting itself, although it never did
reach the type of stocks we own. This provides a certain comfort level and
offers opportunities for sustained investment
3
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PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
VALUE EQUITY FUND (CONT'D)
returns, even if it is not quite as much fun. Thus, we will continue to do what
we do best, which is to find stocks offering value and solid prospects for
growth.
OP CAP ADVISORS
INVESTMENT ADVISER
FLEXIBLY MANAGED FUND
The fund came out of the starting blocks just fine--befitting this Olympic
year. First-quarter results for the fund and stocks in general were strong.
Both were still running well in the second quarter despite some loss of
momentum, and returns remained reasonable. Your fund has always taken a
measured approach to investing, and we are pacing ourselves in an effort to
maintain some performance consistency when the bull market eventually falters.
Unfortunately, our conservative equity posture has prevented our full
participation in the stock run-up, but should limit the damage when the markets
become less favorable.
Market Environment
By the end of June, the market had completed six consecutive positive quarters.
The principal driver of this success is never quite certain, but we suspect
that the usual factors--interest rates, corporate profits, dividend growth--
were neutral at best. The major impetus probably came from the flood of money
into equity mutual funds.
Most stock groups moved higher, with small companies doing particularly well.
Electric utilities were one of the few groups that had negative returns, due
largely to the jump in interest rates. High-quality bonds, of course, were hurt
by the rate rise.
Portfolio Highlights
Our asset allocation among common stocks, preferred stocks, and convertible and
other bonds was little changed over the period. We drew down cash reserves to
fund the purchase of convertible bonds offering more upside potential. During
the first half, all five asset classes in the fund had positive returns, which
was especially pleasing in light of the weak bond market.
Four of our equity holdings were gold medal winners. Ciba-Geigy, Teledyne,
New York Times, and Schuller all appreciated by more than 25% and had a
significant effect on our performance. We had some losers, but none of serious
magnitude. Centerior Energy drifted lower, and we used the decline to build it
into the fund's largest position. Our investment there is about 60% common
stock and 40% preferred. In the past, we have had great returns from troubled
electric utilities and anticipate similar success with Centerior.
Managing Risk
We have always attempted to minimize and control risk consistent with our
capital appreciation objective. The principal tools we use for risk management
are as follows
. Asset allocation: Typically, when factors other than interest rates are
driving the market, a broad asset diversification can buffer the returns
of the portfolio from extreme swings.
. Value approach: Companies that sell at low price/earnings, price/book
value ratios and high dividend yields tend to be less volatile in down
markets. While their financial profiles may be less outstanding than
those of blue chips, the potential for sudden investor disenchantment is
much less.
. Unusual securities: These are uncovered by intensive research. There may
be situations bypassed by other investors but ones in which we see a
catalyst for positive performance. They have usuallly provided good
returns for us in up and down markets.
. Convertibles: These offer value as fixed income investments as well as
potential appreciation.
Outlook
Valuations are the big negatives; corporate profits, inflation, and interest
rates are tough to call but probably neutral. Only the economy
looks good, in our view. The next several months will be unduly influenced by
the election. We intend as always to focus our efforts on finding promising
individual securities.
T. ROWE PRICE ASSOCIATES, INC.
INVESTMENT ADVISER
INTERNATIONAL EQUITY FUND
For the second quarter of 1996, the Fund gained a total return of 3.59% vs. the
EAFE Index at 1.58%. Year to date, the Fund posted a positive return of 9.61%
outperforming the EAFE Index at 4.51%. At June 30, total net assets amounted to
$87,675,384, an increase of almost 12% for the quarter.
Prevailing negative sentiment was premature as international equity markets
extended last year's good performance through the first half of 1996. Going
forward, the biggest concern will continue to be the direction of US rates.
With interest rate cuts supporting the liquidity picture, most major European
markets posted double-digit local currency returns year to date, and
outperformed the broad US market for the period. Europe's best performers were
Spain +17%, France +16%, the Netherlands, +16%, Sweden +15% and Ireland +13%
(all local currency returns). The US dollar's strength against the continental
European currencies reduced some of these gains to single-digit dollar returns,
e.g., the German market, up 12% year to date in local currency, produced a 5.3%
return to US investors. The UK market's 1% gain also made for a 1% dollar
return as the pound held its own against the US currency.
The Japanese market hit a four-year high during the second quarter, but the
currency effect produced only a 1% US$ return year to date. The Pacific region
fared less well as dollar-clone markets like Hong Kong and Singapore registered
their customary sensitivity to rising US interest rates. Overall, the region,
excluding Japan, produced a 2.5% gain for the first half vs. Europe at 5.3%.
4
<PAGE>
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INTERNATIONAL EQUITY FUND (CONT'D)
Our top-down valuation model continued to indicate a shift in expected
returns as several markets approached fair value, like Japan, or experienced a
pronounced change in liquidity conditions, like Australia. Our large weighting
in Japan, and Asia/Pacific in general, was no longer justified from a valuation
perspective, especially with Europe continuing to offer good value. We
therefore shifted assets out of this region, and increased our Europe weighting
by about 9%.
VONTOBEL, USA
INVESTMENT ADVISER
SMALL CAPITALIZATION FUND
Small-cap stocks as a group slightly outperformed large-cap issues in the
second quarter, driven in April and May by technology issues and a speculative
initial public offering environment. As speculative excesses began to unwind in
June, prices declined toward the quarter. Because of our more conservative
approach and below-average volatility we underperformed in June. The market
appears to be moving toward a renewed focus on company fundamentals, which
favors our investment style.
We continue to perform the rigorous, in-depth analysis to identify quality
businesses where the value of the franchise is underpriced in the market.
WestPoint Stevens, one of our largest holdings, is the leading U.S.
manufacturer of sheets and towels, with strong brand names such as Martex and
Utica. It also holds an exclusive license to the Ralph Lauren brand name in
towels and sheets. We like this company because of its high cash generation,
strong business franchise and reasonable valuation. The company generates about
$3 per share of free cash flow, which is being used to repurchase stock, make
acquisitions and reduce debt. Even though the stock was up about 25% in the
second quarter, it still trades at a modest eight times free cash flow.
In June, we added to United Dominion Industries, now one of our largest
positions. We reduced Martin Marietta Materials, which previously was in our
top ten.
OP CAP ADVISORS
INVESTMENT ADVISER
5
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PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED)
THE MONEY MARKET FUND
<TABLE>
<CAPTION>
SHORT TERM PAR
MATURITY RATINGS (000) VALUE
-------- ----------- ------ -----------
<S> <C> <C> <C> <C>
COMMERCIAL PAPER (30.6%)
- ------------------------
BROKERAGE (4.1%)
Merrill Lynch &
Co., Inc.
5.33%................................ 07/01/96 A-1+/P-1 $ 900 $ 900,000
5.40%................................ 07/10/96 A-1/P-2/F-1 340 339,541
-----------
1,239,541
-----------
FINANCIAL SERVICES (12.0%)
American Express
Credit Corp. 4.88%................... 08/09/96 A-1/P-1 350 348,150
Countrywide Funding
Corp.
5.42%................................ 07/03/96 A-1/P-2/F-1 700 699,789
5.38%................................ 07/08/96 A-1/P-2/F-1 500 499,477
General Motors
Acceptance Corp.
5.35%................................ 07/03/96 A-2/P-1/D-1 500 499,851
IBM Credit Corp.
5.36%................................ 07/09/96 A-1/P-1 500 499,404
New York City General
Obligation 5.35%..................... 08/02/96 N/A 600 600,000
New York City (Societe
General) 5.72%....................... 08/02/96 N/A 500 500,000
-----------
3,646,671
-----------
MISCELLANEOUS (4.0%)
Emory University
5.54%................................ 07/18/96 N/A 1,200 1,200,000
-----------
TELECOMMUNICATIONS (3.4%)
Bell Atlantic Corp.
5.36%................................ 07/12/96 A-1/P-1 500 499,181
BellSouth
Telecommunications
5.35%................................ 07/24/96 A1/P+ 535 533,171
-----------
1,032,352
-----------
UTILITIES - ELECTRIC AND GAS (7.1%)
Potomac Electric Power
Co. 5.38%............................ 07/08/96 A-1/P-1 750 749,216
San Diego Gas &
Electric Co. 5.70%................... 08/15/96 A2/P-1 1,400 1,400,000
-----------
2,149,216
-----------
TOTAL COMMERCIAL PAPER
(Cost $9,267,780)................................................. 9,267,780
-----------
<CAPTION>
LONG TERM
RATINGS
-----------
<S> <C> <C> <C> <C>
CORPORATE BONDS (15.0%)
- -----------------------
Ford Motor Credit
Corp. 8.00%.......................... 10/01/96 A1 800 805,158
General Motors Corp.
7.625%........... 02/15/97 A3 1,000 1,010,456
Hertz Corp. 9.125%..................... 08/01/96 Baa1 650 652,023
Morgan Stanley 8.00%................... 10/15/96 A1 300 302,276
Transamerica Financial
5.85%................................ 07/15/96 A2 500 500,081
Wells Fargo & Co.
8.20%................................ 11/01/96 A1 1,250 1,261,513
-----------
TOTAL CORPORATE BONDS
(Cost $4,531,507)................................................. 4,531,507
-----------
MEDIUM TERM NOTES (1.7%)
- ------------------------
Discover Credit Corp.
8.73%
(Cost $501,660)...................... 08/15/96 A2 500 501,660
-----------
</TABLE>
<TABLE>
<CAPTION>
SHORT TERM PAR
MATURITY RATINGS (000) VALUE
-------- ---------- ------ -----------
<S> <C> <C> <C> <C>
VARIABLE RATE DEMAND NOTES (43.8%)+
- -----------------------------------
Alabama State
Development
Authority (LOC-First
Fidelity Bank)
5.80%................................. 07/07/96 A-1/P-1 $ 650 $ 650,000
Barton Healthcare
(LOC-American
National Bank &
Trust) 5.60%.......................... 07/07/96 A-1/P-1 480 480,000
Baylis Group
Partnership (LOC-
Kredietbank) 5.65%.................... 07/03/96 A-1/P-1 700 700,000
Berks County Industrial
Development
Authority (LOC-
Meridian Bank)
5.55%................................. 07/07/96 A-1/P-1 545 545,000
Bloomfield New
Mexico (LOC-
LaSalle National
Bank & Trust)
5.80%................................. 07/07/96 A-1/P-1 600 600,000
Columbia County
Georgia Development
Authority (LOC-
Trust Co. Bank)
5.60%................................. 07/03/96 A-1/P-1 470 470,000
Community Health
Systems, Inc. (LOC-
First Union National
Bank) 5.70%........................... 07/07/96 A-1/P-1 765 765,000
Durham Risk
Management Co.
(LOC-Wachovia
Bank) 5.54%........................... 07/07/96 A-1+/P-1 500 500,000
Fairview Hospital and
Healthcare Services
(MBIA Insurance)
5.55%................................ 07/07/96 A-1+/P-1 500 500,000
GMG Warehouse
(LOC-American
National Bank &
Trust) 5.60%.......................... 07/03/96 A-1/P-1 1,050 1,050,000
Health Insurance Plan
of Greater NY (LOC-
Morgan Guaranty)
5.55%................................. 07/07/96 A-1+/P-1 1,000 1,000,000
Illinois Development
Finance Authority
(LOC-Harris Trust &
Savings) 5.60%........................ 07/07/96 A-1/P-1 200 200,000
Liliha Partners (LOC-
First Hawaiian Bank)
5.95%................................. 07/03/96 A-1/P-1 800 800,000
Montgomery County,
PA Industrial
Development
Authority (LOC-
Meridian Bank)
5.55%................................. 07/07/96 A-1/P-1 805 805,000
New York, New York
(FGIC Securities)
5.20%................................. 08/13/96 A-1/P-1 1,000 1,000,000
</TABLE>
6
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<TABLE>
<CAPTION>
SHORT TERM PAR
MATURITY RATINGS (000) VALUE
-------- ---------- ------ -----------
<S> <C> <C> <C> <C>
Poplar Bluff, Missouri
Public Building Corp.
Revenue Bonds
(MBIA Insurance)
5.55%................................. 09/01/96 A-1/P-1 $ 410 $ 410,000
Richmond County,
Georgia Industrial
Development
Authority (Monsanto)
6.01%................................. 06/01/97 A-1+/P-1 1,000 1,000,000
San Bernardino, County
California (LOC-
Canadian Imperial
Bank) 5.55%........................... 07/07/96 A-1+/P-1 700 700,000
Saint Francis Health
(LOC-First Hawaiian
Bank) 5.85%........................... 07/07/96 A-1/P-1 490 490,000
Silver City, New
Mexico (LOC-
LaSalle National
Bank & Trust)
5.80%................................. 07/07/96 A-1/P-1 600 600,000
-----------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $13,265,000)................................................ 13,265,000
-----------
AGENCY OBLIGATIONS (7.2%)
- -------------------------
Federal Home Loan
Bank Discount Note
5.52%................................. 07/01/96 N/A 1,400 1,400,000
Federal National
Mortgage Assoc.
Discount Note
8.00%................................. 07/10/96 N/A 785 785,414
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $2,185,414)................................................. 2,185,414
-----------
</TABLE>
<TABLE>
<CAPTION>
SHORT TERM PAR
MATURITY RATINGS (000) VALUE
-------- ---------- ------ -----------
<S> <C> <C> <C> <C>
VARIABLE RATE OBLIGATIONS (1.7%)++
- ----------------------------------
Student Loan
Marketing Assoc.
5.41%
(Cost $499,768)...................... 07/02/96 A-1/P-1 $ 500 $ 499,768
-----------
<CAPTION>
SHARES
------
<S> <C> <C> <C> <C>
SHORT TERM INVESTMENTS (0.0%)
- -----------------------------
Temporary Investment
Fund Class B
(Cost $5,591)......................... 5,591 5,591
-----------
TOTAL INVESTMENTS (100.0%)
(Cost $30,256,720)(a)............................................. $30,256,720
-----------
</TABLE>
- -------
(a) Cost for Federal income tax purposes.
+ Reset Demand Notes - The rate shown is the rate as of June 30, 1996, and the
maturity shown is the next interest readjustment date.
++ Variable Rate Obligations - The rate shown is the rate as of June 30, 1996,
and the maturity shown is the next interest readjustment date.
The Standard & Poor's Corporation, Moody's Investors Service, Fitch
Investors Service and Duff & Phelps Credit Rating Co. ratings are the most
recent ratings available at June 30, 1996.
<TABLE>
<CAPTION>
PERCENTAGE OF PORTFOLIO
MATURITY -----------------------
SCHEDULE AMOUNT PAR (CUM)
-------- ----------- -----
<S> <C> <C> <C>
1 - 7 days $14,855,000 49.1% 49.1%
8 - 14 days 3,375,000 11.2% 60.3%
15 - 30 days 2,235,000 7.4% 67.7%
31 - 60 days 5,000,000 16.5% 84.2%
61 - 90 days 410,000 1.4% 85.6%
91 - 120 days 1,100,000 3.6% 89.2%
121 - 150 days 1,250,000 4.2% 93.4%
Over 150 days 2,000,000 6.6% 100.0%
----------- -----------
$30,225,000 100.0%
=========== ===========
</TABLE>
Average Weighted Maturity - 39 days
The accompanying notes are an integral part of these financial statements.
7
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PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED)
THE QUALITY BOND FUND
<TABLE>
<CAPTION>
PAR
MATURITY RATING (000) VALUE
-------- ------ ------ -----------
<S> <C> <C> <C> <C>
CORPORATE BONDS (25.0%)
- -----------------------
BROADCASTING (2.1%)
News America Holdings
8.50%..................................... 02/23/25 BBB $ 360 $ 384,300
9.25%..................................... 02/01/13 BBB 400 435,500
-----------
819,800
-----------
CANADIAN GOV'T AGENCY (4.1%)
Hydro Quebec
7.50%..................................... 04/01/16 A+ 400 388,500
8.05%..................................... 07/07/24 A+ 1,150 1,221,875
-----------
1,610,375
-----------
ELECTRIC POWER (1.9%)
Korea Electric Power
7.75%..................................... 04/01/13 AA- 500 492,500
Minnesota Power & Light
First Mortgage 7.375%..................... 03/01/97 BBB+ 250 251,875
-----------
744,375
-----------
FINANCE & CREDIT (0.7%)
American Express Credit
Corp. Senior Note
7.75% .................................... 03/01/97 A+ 250 252,990
-----------
FINANCIAL (7.2%)
African Development Bank
6.875%.................................... 10/15/15 AA- 500 468,125
Associates Corp. N.A.
7.75%..................................... 02/15/05 AA- 500 518,125
General Electric Capital
Corp. 6.66%............................... 05/01/18 AAA 1,000 996,250
8.125%.................................... 02/01/99 AAA 500 519,375
General Motors
Acceptance Corp. Note
6.40%..................................... 07/30/97 A- 300 300,840
-----------
2,802,715
-----------
INDUSTRIAL - OTHERS (0.6%)
Cargill, Inc. 7.375%....................... 10/01/25 AA- 250 242,500
-----------
INSURANCE (4.6%)
John Hancock Surplus
Notes 7.375%............................. 02/15/24 AA- 1,000 923,750
Metropolitan Life
Insurance Co. 7.00%...................... 11/01/05 AA- 875 847,656
-----------
1,771,406
-----------
MANUFACTURING (1.2%)
ITT Industries 7.40%....................... 11/15/25 BBB 500 472,500
-----------
RAILROADS (0.7%)
Union Pacific Co. 8.35%.................... 05/01/25 BBB 250 255,625
-----------
RETAIL (0.5%)
Penney (J.C.) Inc. Note
9.45%..................................... 07/15/02 A+ 175 188,781
-----------
SERVICES - EQUIPMENT RENTING & LEASING (0.2%)
Service Co. International
7.00%..................................... 06/01/15 BBB+ 100 99,000
-----------
TELEPHONE (1.2%)
U.S. West Communications
7.20%...................................... 11/10/26 A+ 500 462,500
-----------
TOTAL CORPORATE BONDS
(Cost $9,751,341)................................................. 9,722,567
-----------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY RATING (000) VALUE
-------- ------ ------ -----------
<S> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS (55.3%)
- ---------------------------------
U.S. Treasury Notes
8.00%..................................... 10/15/96 N/A $ 10 $ 10,074
6.38%..................................... 07/15/99 N/A 4,500 4,512,690
7.88%..................................... 11/15/99 N/A 750 783,915
7.75%..................................... 12/31/99 N/A 1,000 1,043,000
6.75%..................................... 04/30/00 N/A 500 505,800
6.25%..................................... 05/31/00 N/A 500 497,230
7.88%..................................... 11/15/04 N/A 3,500 3,764,495
7.50%..................................... 02/15/05 N/A 1,240 1,304,864
6.50%..................................... 05/15/05 N/A 750 740,498
5.88%..................................... 11/15/05 N/A 3,500 3,298,750
6.88%..................................... 05/15/06 N/A 2,250 2,274,615
-----------
18,735,931
-----------
U.S. Treasury Bond
7.25%..................................... 05/15/16 N/A 2,700 2,768,607
-----------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $21,494,602)................................................ 21,504,538
-----------
AGENCY OBLIGATIONS (14.2%)
- --------------------------
Federal Home Loan Bank
5.52%..................................... 07/01/96 N/A 900 900,000
Federal National Mortgage
Assoc. 6.50% due
11/01/25 to 12/01/25...................... N/A 1,871 1,750,859
Government National
Mortgage Assoc. 8.00%
due 06/15/23 to
12/15/25.................................. N/A 2,375 2,397,581
Sasco 96-CFL Class B
6.30%..................................... 02/25/28 N/A 500 476,953
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $5,677,039)................................................. 5,525,393
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<S> <C> <C>
PREFERRED STOCK (1.2%)
- ----------------------
Cleveland Electric Illuminating 9.125%
(Cost $448,695)......................................... 4,515 450,936
-----------
SHORT TERM INVESTMENTS (4.3%)
- -----------------------------
Temporary Investment Fund Class B
(Cost $1,666,573)....................................... 1,666,573 1,666,573
-----------
TOTAL INVESTMENTS (100.0%)
(Cost $39,038,250)(a).............................................. $38,870,007
===========
</TABLE>
- -------
(a) At June 30, 1996, the cost for Federal income tax purposes was $39,038,595.
The excess of value over tax cost was $242,582, and the excess of tax cost
over value was $411,170.
The Standard & Poors Corporation ratings are the most recent ratings
available at June 30, 1996.
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED)
THE HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
PAR
MATURITY RATING (000) VALUE
-------- ------ ----- -----------
<S> <C> <C> <C> <C>
COLLATERALIZED MORTGAGE SECURITIES (1.3%)
- -----------------------------------------
Airplanes Pass Through
Trust 10.875%
(Cost $496,300)............................. 03/15/19 BB $490 $ 509,600
-----------
CORPORATE BONDS (93.2%)
- -----------------------
AEROSPACE & DEFENSE (4.8%)
BE Aerospace, Inc. 9.875%.................... 02/01/06 B 500 491,250
K & F Industries, Inc.
11.875%.................................... 12/01/03 B+ 550 588,500
Tracor, Inc. 10.875%......................... 08/15/01 B 250 263,750
UNC, Inc. 11.00%............................. 06/01/06 B 500 505,000
-----------
1,848,500
-----------
AUTOMOBILES & RELATED (1.6%)
Collins & Aikman Products
11.50%..................................... 04/15/06 B 500 506,250
Hayes Wheels International,
Inc. 11.00%................................ 07/15/06 B 100 101,250
-----------
607,500
-----------
BEVERAGES (2.8%)
Dr. Pepper Bottling
Holdings, Inc. 0.00%....................... 02/15/03 CCC+ 700 593,250
Texas Bottling Group, Inc.
9.00%...................................... 11/15/03 B+ 500 485,000
-----------
1,078,250
-----------
BROADCASTING (2.8%)
Chancellor Broadcasting
9.375%..................................... 10/01/04 B- 500 472,500
Heritage Media Corp.
11.00%..................................... 10/01/02 B 550 580,250
# Spectravision, Inc. 12.65%.................. 12/01/02 D 204 21,420
-----------
1,074,170
-----------
BUILDING & REAL ESTATE (1.3%)
B.F. Saul REIT 11.625%....................... 04/01/02 B- 500 512,500
-----------
BUILDING PRODUCTS (2.3%)
Maxxam Group, Inc.
11.25%..................................... 08/01/03 B- 500 500,000
Overhead Door Corp.
12.25%..................................... 02/01/00 B- 375 377,812
-----------
877,812
-----------
CABLE OPERATORS (1.3%)
Fundy Cable Limited
11.00%..................................... 11/15/05 BB 500 505,000
-----------
COMMUNICATIONS SERVICES (1.4%)
Communication & Power
Industries 12.00%.......................... 08/01/05 NR 500 528,750
-----------
CONGLOMERATES (4.0%)
Alpine Group, Inc. 12.25%.................... 07/15/03 B 500 503,750
Interlake Corp. 12.125%...................... 03/01/02 CCC+ 475 475,000
Jordan Industries, Inc.
10.375%.................................... 08/01/03 B+ 600 570,000
-----------
1,548,750
-----------
CONTAINER (5.6%)
Gaylord Container 12.75%..................... 05/15/05 B- 350 368,813
Plastic Containers 10.75%.................... 04/01/01 B+ 750 743,438
Portola Packaging, Inc.
10.75%..................................... 10/01/05 B 500 508,750
Silgan Corp. 11.75%.......................... 06/15/02 B- 500 507,500
-----------
2,128,501
-----------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY RATING (000) VALUE
-------- ------ ----- -----------
<S> <C> <C> <C> <C>
ELECTRONIC COMPONENTS (1.3%)
Exide Electronics Group
11.50%.................................... 03/15/06 B $500 $ 500,000
-----------
ENERGY SERVICES (2.7%)
Mesa Operating Co.
10.625%................................... 07/01/06 B 500 510,000
Petroleum Heat & Power,
Inc. 12.25%............................... 02/01/05 B+ 500 545,000
-----------
1,055,000
-----------
ENTERTAINMENT & LEISURE (1.3%)
Six Flags Theme Parks
2.4799%**................................. 06/15/05 B 600 504,000
-----------
EXPLORATION & PRODUCTION (2.2%)
Dual Drilling Co. 9.875%.................... 01/15/04 B- 500 522,500
Tuboscope Vetco
International, Inc.
10.75%..................................... 04/15/03 B 300 309,000
-----------
831,500
-----------
FOOD/PROCESSING (1.4%)
Mac Andrews & Forbes Co.
11.875%................................... 11/15/02 B 500 527,500
-----------
GAS TRANSMISSION (0.8%)
Ferrellgas Partners L.P.
9.375%.................................... 06/15/06 B+ 300 291,000
-----------
HEALTHCARE (4.8%)
Dade International, Inc.
11.125%.................................... 05/01/06 NR 500 517,500
Owens & Minor, Inc.
10.875%.................................... 06/01/06 B+ 500 506,875
Regency Health Services
9.875%..................................... 10/15/02 B- 350 336,000
Wright Medical
Technology, Inc. 10.75%.................... 07/01/00 NR 500 492,500
-----------
1,852,875
-----------
HOTELS & GAMING (7.4%)
#Capital Gaming
International, Inc.
45.6951%**................................ 08/01/96 NR 5 450
Courtyards by Marriott
10.75%.................................... 02/01/08 NR 350 342,125
Grand Casinos, Inc.
10.125%................................... 12/01/03 BB 500 512,500
Majestic Star Casino LLC
12.75%.................................... 05/15/03 NR 200 216,500
Players International, Inc.
10.875%................................... 04/15/05 BB 500 508,750
President Riverboat
Casinos, Inc. 13.00%...................... 09/15/01 B 500 410,000
Stratosphere Corp. 14.25%................... 05/15/02 B 250 277,500
Trump Atlantic City
11.25%.................................... 05/01/06 BB- 575 577,875
-----------
2,845,700
-----------
INDUSTRIAL - OTHER (3.4%)
Coda Energy, Inc. 10.50%.................... 04/01/06 B- 250 246,875
Doane Products Co.
10.625%................................... 03/01/06 B+ 500 500,000
HMC Acquisition Properties
9.00%..................................... 12/15/07 NR 400 364,000
Plains Resources, Inc.
10.25%.................................... 03/15/06 B- 200 197,500
-----------
1,308,375
-----------
</TABLE>
9
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED) (CONTINUED)
THE HIGH YIELD BOND FUND
<TABLE>
<CAPTION>
PAR
MATURITY RATING (000) VALUE
-------- ------ ------ -----------
<S> <C> <C> <C> <C>
MANUFACTURING (2.0%)
Coltec Industries, Inc. 10.25%.............. 04/01/02 BB- $750 $ 761,250
-----------
MISCELLANEOUS (4.1%)
Coleman Holdings, Inc. 9.1752%**............ 05/27/98 B 650 543,562
First Nationwide Holdings 9.125%............ 01/15/03 B 500 475,000
Herff Jones, Inc. 11.00%.................... 08/15/05 B 500 515,000
Intermedia Communications 13.50%............ 06/01/05 B- 50 56,000
-----------
1,589,562
-----------
MISCELLANEOUS CONSUMER PRODUCTS (4.6%)
American Safety Razor 9.875%................ 08/01/05 BB- 500 505,000
International Semi-Tech 7.5545%**........... 08/15/03 B+ 400 229,000
Marvel Holdings 12.6892%**.................. 04/15/98 B- 650 520,000
Revlon Worldwide Corp. 12.3999%**........... 03/15/98 B- 600 498,750
-----------
1,752,750
-----------
NATURAL RESOURCE (1.3%)
Gulf Canada Resources Limited 9.625%........ 07/01/05 B+ 500 495,000
-----------
PAPER & PAPER PRODUCTS (3.2%)
Container Corp. 11.25%...................... 05/01/04 B+ 250 258,125
Repap Wisconsin, Inc. 9.875%................ 05/01/06 B+ 500 445,000
S.D. Warren Co. 12.00%...................... 12/15/04 B+ 500 527,500
-----------
1,230,625
-----------
RETAIL (2.2%)
Hills Store Co. 12.50%...................... 07/01/03 NR 500 490,000
Loehmann's, Inc. 11.875%.................... 05/15/03 B 350 362,250
-----------
852,250
-----------
SAVINGS & LOAN ASSOCIATIONS (1.3%)
First Federal Financial Corp. 11.75%........ 10/01/04 B+ 500 497,500
-----------
SERVICE (1.7%)
Coinmach Corp. 11.75%....................... 11/15/05 B+ 632 662,020
-----------
SPECIALTY CHEMICALS (4.8%)
Agricultural Minerals, Inc. 10.75%.......... 09/30/03 B+ 750 787,500
Arcadian Partners L.P. 10.75%............... 05/01/05 BB- 500 540,000
IMC Fertilizer Group, Inc. 9.45%............ 12/15/11 BB- 500 502,500
-----------
1,830,000
-----------
SPECIALTY MERCHANDISERS (1.2%)
Barry's Jewelers, Inc. 11.00%............... 12/22/00 NR 500 462,500
-----------
SPECIALTY RETAILER (1.7%)
Michaels Stores, Inc. 10.875%............... 06/15/06 BB 650 663,000
-----------
SUPERMARKETS (1.3%)
Brunos, Inc. 10.50%......................... 08/01/05 B- 500 493,125
-----------
TELECOMMUNICATIONS (4.4%)
Echostar Satellite 6.4354%**................ 03/15/04 B- 700 432,250
Pricellular Wireless Corp. 4.4398%**........ 10/01/03 CCC+ 600 471,000
Pronet, Inc. 11.875%........................ 06/15/05 B- 500 490,000
Wireless One, Inc. 13.00%................... 10/15/03 B- 275 284,625
-----------
1,677,875
-----------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY RATING (000) VALUE
-------- ------ ------ -----------
<S> <C> <C> <C> <C>
TEXTILES & APPAREL (3.0%)
Dan River, Inc. 10.125%.................... 12/15/03 B $500 $ 480,000
# Plaid Clothing Corp. 11.00%................ 08/01/03 D 375 28,125
Synthetic Industries 12.75%................ 12/01/02 B- 600 634,500
-----------
1,142,625
-----------
TOBACCO CONSOLIDATED (2.0%)
Consolidated Cigar Corp. 10.50%............ 03/01/03 B 750 778,125
-----------
TRANSPORTATION - MISCELLANEOUS (1.2%)
Sea Containers Limited 12.50%.............. 12/01/04 BB- 400 448,000
-----------
TOTAL CORPORATE BONDS
(Cost $36,035,942)................................................ 35,761,890
-----------
COMMERCIAL PAPER (1.3%)
- -----------------------
Bell Atlantic Financial Services, Inc.
5.40%..................................... 07/26/96 NR 317 315,811
National Rural Utilities Coop Financial
5.34%..................................... 07/08/96 NR 165 164,829
-----------
TOTAL COMMERCIAL PAPER
(Cost $480,640)................................................... 480,640
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
--------
<S> <C> <C>
COMMON STOCK (3.2%)
- -------------------
* Berg Electronics Corp............................ 7,498 178,078
Borg Warner Automotive, Inc...................... 6,100 240,950
* Capital Gaming International, Inc................ 13,335 1,867
* Dr. Pepper Bottling Holdings, Inc., Class A...... 53,000 437,250
* Dr. Pepper Bottling Holdings, Inc., Class B...... 7,000 57,750
* Gaylord Containers Corp., Class A................ 7,500 58,594
* Loehmanns Holdings, Inc.......................... 7,091 146,386
* Loehmanns Holdings, Inc., Class B................ 2,475 51,094
* Protection One, Inc.............................. 4,200 68,775
-----------
TOTAL COMMON STOCK
(Cost $550,143)............................................ 1,240,744
-----------
PREFERRED STOCK (0.9%)
- ----------------------
Kelley Oil & Gas (Cost $265,425) 14,700 330,750
-----------
<CAPTION>
WARRANTS
--------
<S> <C> <C>
WARRANTS (0.1%)
- ---------------
* Capital Gaming International, Inc................ 11,375 796
* Exide Electronics 144A........................... 500 12,500
* Intermedia Communicaton.......................... 50 2,000
* President Riverboat Casinos, Inc................. 7,415 3,311
* Wireless One, Inc.,.............................. 825 6,188
* Wright Medical Technology, Inc................... 2,676 34,794
-----------
TOTAL WARRANTS
(Cost $86,446)............................................. 59,589
-----------
TOTAL INVESTMENTS (100.0%)
(Cost $37,914,896)(a)(b)................................... $38,383,213
===========
</TABLE>
- -------
* Non-income Producing.
** Effective Yield.
# Securities in default.
(a) Cost for Federal income tax purposes.
(b) At June 30, 1996, the excess of value over tax cost was $1,653,952, and the
excess of tax cost over value was $1,185,635.
The Standard & Poor's Corporation ratings are the most recent ratings
available at June 30, 1996.
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED)
THE GROWTH EQUITY FUND
<TABLE>
<CAPTION>
SHARES VALUE
--------- -----------
<S> <C> <C>
COMMON STOCK (97.8%)
- --------------------
AEROSPACE - DEFENSE (3.1%)
Boeing Co. ............................................ 15,000 $ 1,306,875
United Technologies Corp. ............................. 15,000 1,725,000
-----------
3,031,875
-----------
AIRLINES (1.8%)
* AMR Corp. ............................................. 10,000 910,000
Delta Air Lines, Inc. ................................. 10,000 830,000
-----------
1,740,000
-----------
AUTOMOBILES - CARS (1.3%)
Chrysler Corp. ........................................ 20,000 1,240,000
-----------
BEVERAGES - SOFT DRINKS (1.4%)
PepsiCo, Inc. ......................................... 40,000 1,415,000
-----------
CHEMICALS (1.2%)
Du Pont (E.I.) de Nemours & Co. ....................... 15,000 1,186,875
-----------
COMMERCIAL SERVICES (1.7%)
* CUC International, Inc. ............................... 20,000 710,000
Paychex, Inc. ......................................... 20,000 961,250
-----------
1,671,250
-----------
COMPUTER SOFTWARE & SERVICES (9.1%)
* Cisco Systems, Inc. ................................... 20,000 1,133,750
Computer Associates International, Inc. ............... 15,000 1,068,750
* Computer Sciences Corp. ............................... 10,000 747,500
Electronic Data Systems Corp. ......................... 15,000 806,250
First Data Corp. ...................................... 20,000 1,592,500
* Microsoft Corp. ....................................... 15,000 1,800,938
Oracle Corp. .......................................... 25,000 985,938
* Parametric Technology Corp. ........................... 20,000 866,250
-----------
9,001,876
-----------
COMPUTER SYSTEMS (4.4%)
* Ceridian Corp. ........................................ 20,000 1,010,000
* Dell Computer Corp. ................................... 15,000 744,750
Hewlett-Packard Co. ................................... 10,000 996,250
* 3Com Corp. ............................................ 35,000 1,599,063
-----------
4,350,063
-----------
CONTAINER (0.8%)
* Sealed Air Corp. ...................................... 25,000 840,625
-----------
COSMETICS (1.0%)
Gillette Co. .......................................... 15,000 935,625
-----------
ELECTRICAL EQUIPMENT (1.1%)
Raychem Corp. ......................................... 15,000 1,078,125
-----------
ELECTRONICS (1.3%)
General Electric Co. .................................. 15,000 1,297,500
-----------
ELECTRONICS - SEMICONDUCTORS (4.0%)
* Adaptec, Inc. ......................................... 30,000 1,419,375
* Atmel Corp. ........................................... 30,000 905,625
Intel Corp. ........................................... 10,000 734,375
Motorola, Inc. ........................................ 15,000 943,125
-----------
4,002,500
-----------
ENTERTAINMENT (2.0%)
Mattel, Inc. .......................................... 35,000 1,001,875
The Walt Disney Co. ................................... 15,000 943,125
-----------
1,945,000
-----------
ENVIRONMENTAL CONTROL (0.9%)
* U.S.A. Waste Services, Inc. ........................... 30,000 888,750
-----------
FINANCIAL BANKS, COMMERCIAL (1.7%)
First Bank Systems, Inc. .............................. 15,000 870,000
MBNA Corp. ............................................ 30,000 855,000
-----------
1,725,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- -----------
<S> <C> <C>
FINANCIAL SERVICES (10.6%)
Advanta Corp., Class B.................................. 25,000 $ 1,140,625
American Express Co. ................................... 25,000 1,115,625
Citicorp................................................ 20,000 1,652,500
Federal National Mortgage Association................... 25,000 837,500
First USA, Inc. ........................................ 20,000 1,100,000
Green Tree Financial Corp. ............................. 40,000 1,250,000
* Imperial Credit Industries, Inc. ....................... 35,000 1,069,687
The Money Store, Inc. .................................. 50,000 1,096,875
Wells Fargo & Co. ...................................... 5,000 1,194,375
-----------
10,457,187
-----------
FOOD - PROCESSING (1.1%)
CPC International, Inc. ................................ 15,000 1,080,000
-----------
HOSPITAL MANAGEMENT (2.4%)
* HEALTHSOUTH Corp. ...................................... 30,000 1,080,000
United Healthcare Corp. ................................ 20,000 1,010,000
* Universal Health Services, Inc. ........................ 10,000 261,250
-----------
2,351,250
-----------
HOUSEHOLD PRODUCTS (1.4%)
Procter & Gamble Co. ................................... 15,000 1,359,375
-----------
INSURANCE (1.0%)
American International Group, Inc. ..................... 10,000 986,250
-----------
MACHINERY - DIVERSIFIED (0.6%)
* Thermo Electron Corp. .................................. 15,000 624,375
-----------
MANUFACTURING - DIVERSIFIED (3.0%)
Eastman Kodak Co. ...................................... 20,000 1,555,000
* Oakley, Inc. ........................................... 30,000 1,365,000
-----------
2,920,000
-----------
MEDICAL SUPPLIES (1.9%)
Guidant Corp. .......................................... 15,000 738,750
Medtronic, Inc. ........................................ 20,000 1,120,000
-----------
1,858,750
-----------
OFFICE EQUIPMENT & SERVICE (1.9%)
Alco Standard Corp. .................................... 20,000 905,000
Danka Business Systems PLC ADR.......................... 35,000 1,021,562
-----------
1,926,562
-----------
OIL/GAS - DOMESTIC (1.0%)
Williams Cos., Inc. .................................... 20,000 990,000
-----------
OIL/GAS - EQUIPMENT & SERVICE (3.1%)
* Global Marine, Inc. .................................... 70,000 971,250
Halliburton Co. ........................................ 15,000 832,500
Schlumberger Limited.................................... 15,000 1,263,750
-----------
3,067,500
-----------
OIL/GAS - EXPLORATION (0.8%)
Sonat Offshore Drilling, Inc. .......................... 15,000 757,500
-----------
OIL - INTEGRATED INTERNATIONAL (2.0%)
Amoco Corp. ............................................ 15,000 1,085,625
Chevron Corp. .......................................... 15,000 885,000
-----------
1,970,625
-----------
PAPER & FOREST PRODUCTS (0.9%)
International Paper Co. ................................ 25,000 921,875
-----------
PHARMACEUTICALS (10.1%)
American Home Products Corp. ........................... 20,000 1,202,500
* Amgen, Inc. ............................................ 20,000 1,077,500
Johnson & Johnson, Inc. ................................ 30,000 1,485,000
Merck & Co., Inc. ...................................... 20,000 1,292,500
Pfizer, Inc. ........................................... 25,000 1,784,375
Schering-Plough Corp. .................................. 15,000 941,250
Warner-Lambert Co. ..................................... 20,000 1,100,000
* Watson Pharmaceuticals, Inc. ........................... 30,000 1,136,250
-----------
10,019,375
-----------
</TABLE>
11
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED) (CONTINUED)
THE GROWTH EQUITY FUND
<TABLE>
<CAPTION>
SHARES VALUE
--------- -----------
<S> <C> <C>
RAILROADS (0.8%)
Burlington Northern, Santa Fe Corp. .................... 10,000 $ 808,750
-----------
RESTAURANTS (1.9%)
* Lone Star Steakhouse & Saloon........................... 20,000 753,750
McDonald's Corp. ....................................... 25,000 1,168,750
-----------
1,922,500
-----------
RETAIL STORES - DEPARTMENT (2.1%)
* Federated Department Stores, Inc. ...................... 30,000 1,023,750
* Kohl's Corp. ........................................... 30,000 1,098,750
-----------
2,122,500
-----------
RETAIL STORES - FOOD (0.8%)
* Safeway, Inc. .......................................... 25,000 825,000
-----------
RETAIL STORES - GENERAL MERCHANDISE (1.1%)
* Price/Costco, Inc. ..................................... 50,000 1,075,000
-----------
RETAIL - SPECIALTY (3.3%)
Gap, Inc. .............................................. 30,000 963,750
Home Depot, Inc. ....................................... 25,000 1,350,000
* OfficeMax, Inc. ........................................ 40,000 955,000
-----------
3,268,750
-----------
SHOES (1.0%)
Nike, Inc. ............................................. 10,000 1,027,500
-----------
TELECOMMUNICATIONS (6.3%)
Ameritech Corp. ........................................ 15,000 890,625
* Glenayre Technologies, Inc. ............................ 15,000 749,062
MCI Communications Corp. ............................... 30,000 766,875
NYNEX Corp. ............................................ 15,000 712,500
SBC Communications, Inc. ............................... 15,000 738,750
* Tellabs, Inc. .......................................... 15,000 1,003,125
* U.S. Robotics Corp. .................................... 10,000 853,750
* WorldCom, Inc. ......................................... 10,000 553,125
-----------
6,267,812
-----------
TEXTILE - APPAREL (1.9%)
Liz Claiborne, Inc. .................................... 30,000 1,038,750
* Tommy Hilfiger Corp. ................................... 15,000 804,375
-----------
1,843,125
-----------
TOTAL COMMON STOCK
(Cost $81,539,028)................................................. 96,801,625
-----------
SHORT TERM INVESTMENTS (2.2%)
- -----------------------------
Temporary Investment Fund Class B (Cost $2,132,300)..... 2,132,300 2,132,300
-----------
TOTAL INVESTMENTS (100.0%)
(Cost $83,671,328)(a)(b)........................................... $98,933,925
===========
</TABLE>
- -------
* Non-Income Producing.
(a) Cost for Federal income tax purposes.
(b) At June 30, 1996, the excess of value over tax cost was $16,482,946, and
the excess of tax cost over value was $1,220,349.
The accompanying notes are an integral part of these financial statements.
12
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED)
THE VALUE EQUITY FUND
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (84.9%)
- --------------------
AEROSPACE & DEFENSE (5.2%)
Lockheed Martin Corp................................ 45,000 $ 3,780,000
McDonnell Douglas Corp.............................. 93,000 4,510,500
------------
8,290,500
------------
AIRLINES (2.6%)
* AMR Corp............................................ 46,000 4,186,000
------------
AUTOMOTIVE PARTS - EQUIPMENT (3.0%)
* Varity Corp......................................... 99,000 4,764,375
------------
CHEMICALS (4.0%)
DuPont (E.I.) de Nemours & Co....................... 30,000 2,373,750
Hercules, Inc....................................... 21,000 1,160,250
Monsanto Co......................................... 85,000 2,762,500
------------
6,296,500
------------
COSMETICS (1.4%)
Avon Products, Inc.................................. 50,000 2,256,250
------------
ELECTRONICS (3.7%)
* Arrow Electronics, Inc.............................. 53,000 2,285,625
General Electric Co................................. 42,000 3,633,000
------------
5,918,625
------------
FINANCIAL BANKS (7.5%)
Citicorp............................................ 75,000 6,196,875
Wells Fargo & Co.................................... 24,333 5,812,545
------------
12,009,420
------------
FINANCIAL SERVICES (8.1%)
American Express Co................................. 39,000 1,740,375
Countrywide Credit Industries, Inc.................. 210,000 5,197,500
Federal Home Loan Mortgage Corp..................... 69,000 5,899,500
------------
12,837,375
------------
HOSPITAL MANAGEMENT (4.2%)
Columbia/HCA Healthcare Corp........................ 55,000 2,935,625
* Tenet Healthcare Corp............................... 175,000 3,740,625
------------
6,676,250
------------
INSURANCE (23.1%)
Ace Limited......................................... 161,000 7,567,000
AFLAC, Inc.......................................... 105,375 3,148,078
American International Group, Inc................... 37,500 3,698,438
Everest Reinsurance Holdings, Inc................... 160,000 4,140,000
Exel Limited........................................ 103,800 7,317,900
General Re Corp..................................... 13,000 1,979,250
Mid Ocean Limited................................... 83,000 3,397,813
Progressive Corp., Ohio............................. 63,000 2,913,750
Transamerica Corp................................... 33,000 2,673,000
------------
36,835,229
------------
MACHINERY AND MINING (2.5%)
Caterpillar, Inc.................................... 59,000 3,997,250
------------
MANUFACTURING (1.9%)
AlliedSignal, Inc................................... 52,000 2,970,500
------------
MEDICAL SUPPLIES (3.4%)
Becton, Dickinson & Co.............................. 67,000 5,376,750
------------
METALS (0.9%)
Freeport-McMoRan Copper & Gold, Inc.
Class B............................................. 47,016 1,498,635
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
OIL/GAS - EXPLORATION (1.6%)
* Triton Energy Corp.................................... 52,000 $ 2,528,500
------------
PAPER & FOREST PRODUCTS (0.5%)
Champion International Corp........................... 20,000 835,000
------------
PHARMACEUTICALS (0.9%)
Warner Lambert Co..................................... 26,000 1,430,000
------------
RAILROADS (1.1%)
Union Pacific Corp.................................... 24,000 1,677,000
------------
RETAIL - DEPARTMENT STORE (3.7%)
May Department Stores Co.............................. 134,000 5,862,500
------------
TELECOMMUNICATIONS (2.4%)
Sprint Corp........................................... 72,250 3,034,500
* Tele-Communications, Inc.............................. 40,000 725,000
------------
3,759,500
------------
TEXTILES (1.1%)
Shaw Industries, Inc.................................. 140,000 1,837,500
------------
TOYS (2.1%)
Mattel, Inc........................................... 114,531 3,278,450
------------
TOTAL COMMON STOCK
(Cost $96,766,432)............................................... 135,122,109
------------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY (000)
-------- ------
<S> <C> <C> <C>
COMMERCIAL PAPER (12.1%)
- ------------------------
Ford Motor Credit Co. 5.26%...................... 07/03/96 $6,100 6,098,217
John Deere Credit Corp. 5.30%.................... 07/10/96 4,000 3,994,700
Household Finance Corp. 5.31%.................... 07/17/96 5,200 5,187,728
Norwest Financial Corp. 5.35%.................... 07/24/96 4,000 3,986,328
------------
TOTAL COMMERCIAL PAPER
(Cost $19,266,973)................................................ 19,266,973
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<S> <C> <C> <C>
SHORT TERM INVESTMENTS (3.0%)
- -----------------------------
Temporary Investment Fund Class B
(Cost $4,834,155)................................. 4,834,155 4,834,155
------------
TOTAL INVESTMENTS (100.0%)
(Cost $120,867,560) (a) (b)................................... $159,223,237
============
</TABLE>
- -------
* Non-income Producing.
(a) Cost for Federal income tax purposes.
(b) At June 30, 1996, the excess of value over tax cost was $38,474,533, and
the excess of tax cost over value was $118,856.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED)
THE FLEXIBLY MANAGED FUND
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
COMMON STOCK (50.4%)
- --------------------
CHEMICALS (0.8%)
Great Lakes Chemical Corp. ............................ 40,000 $ 2,490,000
Petrolite Corp. ....................................... 1,000 31,750
------------
2,521,750
------------
COMMERCIAL SERVICES (1.2%)
PHH Corp. ............................................. 70,000 3,990,000
------------
COMPUTERS (0.5%)
International Business Machines Corp. ................. 17,000 1,683,000
------------
CONSTRUCTION (1.1%)
* Schuller Corp. ........................................ 345,000 3,579,375
------------
ELECTRIC UTILITIES (5.2%)
Centerior Energy Corp. ................................ 1,410,000 10,398,750
Entergy Corp. ......................................... 150,000 4,256,250
Public Service Co. of New Mexico....................... 105,000 2,152,500
------------
16,807,500
------------
ELECTRONICS (1.1%)
Polaroid Corp. ........................................ 80,000 3,650,000
------------
FINANCIAL SERVICES (4.1%)
American Express Co. .................................. 72,000 3,213,000
Federal National Mortgage Assoc. ...................... 70,000 2,345,000
Fund American Enterprises Holdings, Inc. .............. 24,000 1,944,000
Green Point Financial Corp. ........................... 10,000 282,500
Salomon, Inc. ......................................... 25,000 1,100,000
Student Loan Marketing Assoc. ......................... 60,000 4,440,000
------------
13,324,500
------------
FOOD/PROCESSING (1.2%)
McCormick & Co., Inc. ................................. 12,000 264,000
Philip Morris Companies, Inc. ......................... 35,000 3,640,000
------------
3,904,000
------------
HOLDING COMPANY - DIVERSIFIED (2.9%)
Hanson PLC ADR......................................... 35,000 498,750
Loews Corp. ........................................... 104,000 8,203,000
Lonrho PLC............................................. 252,000 724,104
------------
9,425,854
------------
HOSPITAL SUPPLIES/ HOSPITAL MANAGEMENT (0.0%)
* Lynx Therapeutics, Inc. ............................... 162 324
------------
INSURANCE (1.7%)
Harleysville Group, Inc. .............................. 30,000 870,000
Home Beneficial Corp. Class B.......................... 25,000 643,750
Unitrin, Inc. ......................................... 45,000 2,115,000
Willis Corroon Group PLC ADR........................... 70,000 831,250
* Zurich Reinsurance Centre Holdings, Inc. .............. 35,300 1,111,950
------------
5,571,950
------------
LEISURE TIME (1.2%)
* Chris-Craft Industries, Inc. .......................... 85,000 3,740,000
------------
MANUFACTURING (1.2%)
Cross (A.T.) Co. Class A............................... 38,000 674,500
Teledyne, Inc. ........................................ 90,000 3,251,250
------------
3,925,750
------------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
--------- ------------
<S> <C> <C>
MINING (2.4%)
* Hecla Mining Co. ....................................... 60,000 $ 420,000
Homestake Mining Co. ................................... 40,000 685,000
Newmont Mining Corp. ................................... 115,000 5,678,125
Santa Fe Pacific Gold Corp. ............................ 80,000 1,130,000
------------
7,913,125
------------
MISCELLANEOUS (0.2%)
Republic of Austria Stock Index Growth Notes............ 37,100 728,088
------------
MISCELLANEOUS CONSUMER DURABLES (0.9%)
Corning, Inc. .......................................... 75,000 2,878,125
------------
OIL/GAS (3.6%)
Atlantic Richfield Co. ................................. 35,000 4,147,500
Kerr McGee Corp. ....................................... 6,000 365,250
Murphy Oil Corp. ....................................... 105,000 4,764,375
Pennzoil Co. ........................................... 26,000 1,202,500
Sun Company, Inc. ...................................... 35,000 1,063,125
------------
11,542,750
------------
OIL/GAS - EXPLORATION (2.6%)
Mitchell Energy & Development Corp. Class B............. 78,000 1,482,000
* Oryx Energy Co. ........................................ 100,000 1,625,000
Petro-Canada............................................ 175,000 2,173,077
Union Texas Petroleum Holding, Inc. .................... 142,000 2,769,000
Unocal Corp. ........................................... 10,000 337,500
------------
8,386,577
------------
OIL/GAS - INTERNATIONAL (1.9%)
Helmerich & Payne, Inc. ................................ 34,000 1,245,250
Texaco, Inc. ........................................... 60,000 5,032,500
------------
6,277,750
------------
PAPER & FOREST PRODUCTS (1.2%)
International Paper Co. ................................ 28,000 1,032,500
Weyerhaeuser Co. ....................................... 70,000 2,975,000
------------
4,007,500
------------
PHARMACEUTICALS (6.1%)
Ciba-Geigy AG........................................... 6,700 8,172,692
* Genetech, Inc. Special Common........................... 190,000 9,951,250
Schering-Plough Corp. .................................. 25,000 1,568,750
------------
19,692,692
------------
PUBLISHING NEWS (5.1%)
New York Times Co., Class A............................. 280,000 9,135,000
Times Mirror Co., Class A............................... 23,500 1,022,250
Washington Post Co., Class B............................ 20,000 6,480,000
------------
16,637,250
------------
PUBLISHING/PRINTING (0.7%)
Harland, (John H.) Co. ................................. 14,000 344,750
Meredith Corp. ......................................... 47,000 1,962,250
------------
2,307,000
------------
RETAIL - SPECIALITY (0.2%)
* Toys 'R' Us, Inc. ...................................... 25,000 712,500
------------
RETAIL STORES - DEPARTMENT (0.3%)
* Hills Stores Co. ....................................... 65,000 576,875
Wal-Mart Stores, Inc. .................................. 10,000 253,750
------------
830,625
------------
</TABLE>
14
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
------------ ------------
<S> <C> <C>
SHOES (1.1%)
Reebok International Ltd. .......................... 105,000 $ 3,530,625
------------
TEXTILES & APPAREL (0.8%)
* Petrie Stores Corp. ................................ 900,000 2,475,000
------------
TRANSPORTATION - MISCELLANEOUS (1.1%)
Overseas Shipholding Group, Inc. ................... 85,000 1,540,625
Ryder System, Inc. ................................. 70,000 1,968,750
------------
3,509,375
------------
TOTAL COMMON STOCK
(Cost $130,664,786).............................................. 163,552,985
------------
PREFERRED STOCK (4.3%)
- ----------------------
Cleveland Electric Illum. Series L 7.00%............ 33,260 2,378,090
Cleveland Electric Illum. Series R 8.80%............ 1,850 1,743,625
Cleveland Electric Illum. Series S
9.00%.............................................. 2,650 2,471,125
Entergy Gulf States Utilities, Inc. Series B 7.20%.. 15,553 739,740
Kemper Co. Series E 5.75%........................... 100,000 5,200,000
Niagara Mohawk Power Corp. Series A 6.50%........... 24,000 384,000
Niagara Mohawk Power Corp. Series B 7.50%........... 7,000 122,500
Niagara Mohawk Power Corp. Series C 7.20%........... 29,500 523,625
Teledyne, Inc. Series E $1.20....................... 3,670 56,426
Unocal Corp. 7.0% Convertible....................... 4,000 226,716
------------
TOTAL PREFERRED STOCK
(Cost $12,999,967)............................................... 13,845,847
------------
<CAPTION>
NUMBER
OF CONTRACTS
------------
<S> <C> <C>
PUT OPTIONS (0.2%)
- ------------------
* Allegheny Ludlam $20 January 18,1997................ 45 11,250
* Allegheny Ludlam $22.50 October 19, 1996............ 135 51,469
* Allegheny $22.50 January 18, 1997................... 45 19,406
* Aud $45 August 17, 1996............................. 50 31,875
* Automatic Data Processing, Inc.
$40 October 16, 1996.............................. 100 23,125
* IBM $120 July 20, 1996.............................. 50 103,125
* IBM $100 July 20, 1996.............................. 50 16,875
* IBM $130 October 19, 1996........................... 100 311,250
* Kerr McGee $70 July 20, 1996........................ 30 27,375
* Phillip Morris $105 September 22, 1996.............. 32 15,800
* Times Mirror $40 September 22, 1996................. 30 2,625
* Times Mirror $45 December 21, 1996.................. 50 17,812
* Toys R US $35 December 21, 1996..................... 195 127,969
* Toys R US $30 September 21, 1996.................... 30 6,375
* Unocal $32.5 July 20, 1996.......................... 80 3,000
------------
TOTAL PUT OPTIONS
(Cost $667,344).................................................. 769,331
------------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY RATING (000)
-------- ------ -----
<S> <C> <C> <C> <C>
U.S. TREASURY OBLIGATIONS (2.1%)
- --------------------------------
U.S. Treasury Bill
5.00%...................................... 08/29/96 N/A $ 315 312,307
U.S. Treasury Notes
5.75%...................................... 10/31/97 N/A 2,500 2,493,750
7.375%..................................... 11/15/97 N/A 2,000 2,035,620
6.75%...................................... 05/31/99 N/A 2,000 2,023,120
------------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $6,820,153)................................................ 6,864,797
------------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY RATING (000) VALUE
-------- ------ ------- ------------
<S> <C> <C> <C> <C>
MEDIUM TERM NOTES (0.5%)
- ------------------------
FNMA Medium Term Note 5.37%
(Cost $1,576,000)...................... 02/07/01 N/R $ 1,600 $ 1,519,856
------------
COMMERCIAL PAPER (20.2%)
- ------------------------
Bell Atlantic Financial 5.35%........... 07/18/96 A+ 9,500 9,475,999
Cargill, Inc. 5.35%..................... 07/10/96 AA- 10,000 9,986,625
Ciesco
5.27%.................................. 07/08/96 AAA 1,181 1,179,790
5.35%.................................. 08/07/96 AAA 650 646,426
Corporate Asset Funding
5.27%.................................. 07/08/96 AAA 3,119 3,115,804
5.32%.................................. 07/16/96 AAA 1,000 997,783
Ford Motor Credit Co. 5.34%............. 07/29/96 A+ 5,000 4,979,233
H.J. Heinz Co. 5.35%.................... 07/23/96 A+ 2,400 2,392,153
Home Depot 5.35%........................ 07/01/96 AA- 500 500,000
Northern States Power
5.30%.................................. 07/09/96 AA- 5,840 5,833,122
Norfolk Southern Corp.
5.40%.................................. 07/02/96 AA 12,000 11,998,200
Mobil Australia Finance
5.30%.................................. 07/26/96 AA 1,450 1,444,663
Preferred Receivable Funding 5.35%...... 08/05/96 NR 13,000 12,931,255
------------
TOTAL COMMERCIAL PAPER
(Cost $65,482,181).............................................. 65,481,053
------------
CONVERTIBLE BONDS (22.0%)
- -------------------------
Automatic Data Processing, Inc.
5.1212%**.............................. 02/20/12 AA 29,500 15,303,125
Cellular Communications 6.7496%**....... 07/27/99 B+ 2,800 2,275,000
CHUBB Capital Euro Bond 6.00%........... 05/15/98 AA 2,400 2,863,848
Comcast Corp. 3.375%.................... 09/09/05 BB- 2,500 2,337,500
Cooper Industries, Inc. 7.05%........... 01/01/15 BBB+ 594 637,065
Ensearch Corp. 6.375%................... 04/01/02 BBB+ 1,815 1,794,019
Food Lion, Inc. 5.00%................... 06/01/03 NR 1,300 1,391,806
Gencorp, Inc. 8.00%..................... 08/01/02 BB- 350 378,875
Grand Metropolitan PLC Euro Bond 6.50%.. 01/31/00 A+ 1,300 1,417,000
Grand Metropolitan PLC 6.50%............ 01/31/00 A+ 1,300 1,417,000
Homestake Mining Co. 5.50%.............. 06/23/00 BBB- 3,750 3,712,500
Istituto Nazionale Delle Assicurazioni
(Republic of Italy) 5.00%.............. 06/28/01 AA 1,250 1,275,000
Lonhro Conv. Euro Bond 6.00%............ 02/27/04 NR 1,250 1,953,738
McKesson Corp. 4.50%.................... 03/01/04 A 650 568,750
Office Depot, Inc. 4.2615%**............ 11/01/08 BB- 1,500 881,265
Outboard Marine Corp. 7.00%............. 07/01/02 B+ 1,850 1,863,875
Pennzoil Co. 4.75%...................... 10/01/03 BBB 1,000 1,085,430
Potomac Electric Power Co. 5.00%........ 09/01/02 A- 2,100 1,890,000
</TABLE>
15
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED) (CONTINUED)
THE FLEXIBLY MANAGED FUND
<TABLE>
<CAPTION>
PAR
MATURITY RATING (000) VALUE
-------- ------ ------- ------------
<S> <C> <C> <C> <C>
Price Co. Subordinated Debenture
6.75%.................................... 03/01/01 BBB $ 1,750 $ 1,894,375
5.50%.................................... 02/28/12 BBB 1,800 1,872,000
Rouse Company Euro Bond 5.75%............. 07/23/02 BBB- 6,300 6,221,250
Turner Broadcasting 7.1717%**............. 02/13/07 BB- 9,500 4,465,000
U.S. West, Inc. 7.1386%**................. 06/25/11 BBB 16,000 5,560,000
UBS Finance 2.00%......................... 12/15/00 AAA 300 297,252
USF&G Corp. 4.3663%**..................... 03/03/09 BBB- 7,000 4,077,500
WMX Technologies 2.00%.................... 01/24/05 A 4,500 4,140,000
------------
TOTAL CONVERTIBLE BONDS
(Cost $67,659,736)................................................ 71,573,173
------------
<CAPTION>
SHARES
-------
<S> <C> <C> <C> <C>
SHORT TERM INVESTMENTS (0.3%)
- -----------------------------
Temporary Investment Fund Class B
(Cost $955,262) ......................................... 955,262 955,262
------------
TOTAL INVESTMENTS (100.0%)
(Cost $286,825,429) (a)........................................... $324,562,304
------------
</TABLE>
- -------
* Non-income producing.
** Effective Yield.
(a) At June 30, 1996, the cost for Federal income tax purposes was
$286,874,156. The excess of value over tax cost was $40,232,375, and the
excess of tax cost over value was $2,972,219.
The Standard & Poors Corporation ratings are the most recent ratings
available at June 30, 1996.
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED)
THE INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES VALUE
------- -----------
<S> <C> <C>
COMMON STOCK (94.7%)
- --------------------
AUSTRALIA (1.6%)
Broken Hill Proprietary Co. Limited....................... 40,000 $ 552,385
M.I.M. Holdings Limited................................... 140,000 180,461
News Corp. Limited........................................ 120,846 684,823
-----------
1,417,669
-----------
BRAZIL (1.5%)
Centrais Eletrocas Barsileiras SA (ADR) Preferred B....... 35,000 508,935
Centrais Eletrocas Brasileiras SA (ADR) Common............ 5,000 69,220
Telecomunicacoes Brasileiras SA (ADR) -
Telebras................................................. 10,000 696,250
-----------
1,274,405
-----------
FINLAND (0.9%)
Cultor Oy, Series II...................................... 15,000 771,225
-----------
FRANCE (8.8%)
AXA SA.................................................... 18,434 1,009,513
Carrefour Supermarche SA.................................. 2,100 1,177,807
Compagnie Generale des Eaux............................... 6,628 741,156
* Dassault Systemes SA...................................... 12,500 392,033
Grand Optical-Photoservice................................ 3,750 483,509
LVMH (Moet-Hennessy Louis Vuitton)........................ 3,500 831,081
Marine-Wendel SA.......................................... 6,050 501,215
Societe BIC SA............................................ 9,000 1,279,438
Total SA-B................................................ 11,000 816,748
Valeo SA.................................................. 8,000 428,619
-----------
7,661,119
-----------
GERMANY (7.4%)
Adidas AG................................................. 11,000 916,908
Bayer AG.................................................. 30,000 1,056,491
Bayerische Motoren Werke (BMW) AG......................... 600 346,837
CKAG Colonia Konzern AG................................... 440 351,572
Gehe AG................................................... 1,000 679,995
Muenchener Rueckversicherungs-Gesellschaft................ 150 246,613
Muenchener Rueckversicherungs-Gesellschaft E95............ 14 28,633
SGL Carbon AG............................................. 12,800 1,506,774
Siemens AG................................................ 12,000 643,799
VEBA AG................................................... 12,000 638,432
-----------
6,416,054
-----------
HONG KONG (2.3%)
Bank of East Asia, Limited................................ 1 3
Cheung Kong Holdings Limited.............................. 115,000 828,273
Dah Sing Financial Group.................................. 165,000 499,871
Sun Hung Kai Properties Limited........................... 70,000 707,642
-----------
2,035,789
-----------
IRELAND (2.5%)
Allied Irish Banks PLC.................................... 136,777 715,932
CRH PLC................................................... 60,715 612,025
Greencore Group PLC....................................... 170,000 889,831
-----------
2,217,788
-----------
ITALY (0.9%)
Danieli & Co. ............................................ 132,000 469,766
Stet (Societa Finanziaria Telefonica)..................... 80,000 270,602
-----------
740,368
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------- -----------
<S> <C> <C>
JAPAN (29.2%)
Bank of Tokyo-Mitsubishi................................. 11,550 $ 268,236
Bridgestone Corp. ....................................... 75,000 1,433,208
Canon, Inc. ............................................. 40,000 833,867
Ezaki Glico Co. Limited.................................. 75,000 836,610
Fuji Photo Film Co. Limited.............................. 32,000 1,012,343
Hitachi Limited (Hitachi Seisakusho)..................... 75,000 699,461
Hitachi Maxell Limited................................... 20,000 418,762
Ito-Yokado Co. Limited................................... 12,000 725,245
JUSCO Co. Limited........................................ 42,000 1,378,623
Komatsu Limited.......................................... 80,000 789,979
Kyocera Corp. ........................................... 9,000 637,743
Kyushu Electric Power Co., Inc. ......................... 39,000 880,772
Mitsubishi Electric Corp. ............................... 100,000 698,546
Mitsubishi Heavy Industries Limited...................... 230,000 2,004,114
Mitsui & Co. Limited..................................... 100,000 907,927
Murata Manufacturing Co. Limited......................... 18,000 683,003
Nippon Steel Corp. ...................................... 320,000 1,100,119
Nippon Telegraph & Telephone Corp. ...................... 100 742,434
Omron Corp. ............................................. 80,000 1,704,306
Promise Co. Limited...................................... 8,000 394,989
Rohm Co. Limited......................................... 17,000 1,125,354
SMC Corp. ............................................... 8,000 620,280
Sony Corp. .............................................. 8,700 573,530
Suzuki Motor Co. Limited................................. 47,000 618,817
Taisho Pharmaceutical Co. Limited........................ 60,000 1,300,174
Toda Construction Co. Limited............................ 35,000 342,416
Tokyo Broadcasting System, Inc. ......................... 30,000 532,139
Tokyo Denpa Co. Limited.................................. 7,000 288,013
Tokyu Corp. ............................................. 120,000 916,156
Yamato Transport Co. Limited............................. 80,000 943,586
-----------
25,410,752
-----------
MALAYSIA (3.0%)
Genting Berhad........................................... 75,000 586,172
Malayan Banking Berhad................................... 80,000 769,539
Sime Darby Berhad........................................ 132,000 365,050
Telekom Malaysia Berhad.................................. 60,000 533,868
United Engineers (Malaysia) Limited...................... 50,000 346,693
-----------
2,601,322
-----------
NETHERLANDS (7.7%)
Aegon N.V. (ADR)......................................... 9,681 446,536
Aegon N.V. .............................................. 10,137 467,395
Ahrend N.V. ............................................. 15,000 673,139
Elsevier N.V. ........................................... 110,000 1,671,262
Hagemeyer N.V. .......................................... 9,000 641,990
Oce-Van Der Griten N.V. ................................. 10,000 1,060,597
PolyGram N.V. ........................................... 6,000 354,784
PolyGram N.V. (ADR)...................................... 5,000 293,125
Vendex International N.V. ............................... 30,000 1,047,105
-----------
6,655,933
-----------
PHILIPPINES (0.6%)
Manila Electric Co. - B.................................. 52,500 551,260
-----------
SINGAPORE (3.0%)
City Developments Limited................................ 66,000 514,529
Cycle & Carriage Limited................................. 50,000 535,082
Development Bank of Singapore Limited (Foreign).......... 10,000 124,734
Keppel Corp. Limited..................................... 70,000 585,400
United Overseas Bank Limited (Foreign)................... 85,000 813,253
-----------
2,572,998
-----------
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED) (CONTINUED)
THE INTERNATIONAL EQUITY FUND
<TABLE>
<CAPTION>
SHARES VALUE
------- -----------
<S> <C> <C>
SPAIN (1.5%)
Banco Intercontinental Espanol SA......................... 2,600 $ 291,146
Banco Popular Espanol SA.................................. 2,500 446,198
Empresa Nacional de Electridad SA (ADR)................... 8,000 501,000
Omsa Alimentacion SA...................................... 24,000 81,019
-----------
1,319,363
-----------
SWEDEN (3.6%)
Astra AB B-F.............................................. 33,000 1,440,221
Foreningsbanken AB-A...................................... 125,000 411,513
Hennes & Mauritz AB-B..................................... 4,000 371,495
OM Gruppen AB............................................. 15,000 412,268
Telefonaktiebolaget LM Ericsson-B......................... 25,000 539,875
-----------
3,175,372
-----------
SWITZERLAND (7.0%)
Nestle AG................................................. 500 571,509
*Pharma Vision 2000 AG..................................... 305 1,422,292
Roche Holding AG-Genusshein............................... 360 2,748,520
Union Bank of Switzerland B............................... 1,352 1,324,748
-----------
6,067,069
-----------
THAILAND (0.6%)
Bangkok Bank Public Co. Limited (Foreign)................. 30,000 406,700
Siam Cement Co. Limited (Foreign)......................... 3,000 147,310
-----------
554,010
-----------
UNITED KINGDOM (12.6%)
BAA PLC................................................... 80,723 586,775
British Petroleum Co. PLC (ADR)........................... 4,000 427,500
Dixons Group PLC.......................................... 140,000 1,150,304
General Accident PLC...................................... 88,166 894,217
GKN PLC................................................... 82,504 1,266,079
HSBC Holdings PLC......................................... 51,875 812,171
PowerGen PLC.............................................. 75,463 552,057
Powerscreen International PLC............................. 115,000 814,501
Rank Organisation PLC..................................... 130,000 1,005,545
Reuters Holdings PLC...................................... 80,000 967,957
Siebe PLC................................................. 65,000 922,759
Smiths Industries PLC..................................... 60,000 656,074
THORN EMI PLC............................................. 32,000 891,664
-----------
10,947,603
-----------
TOTAL COMMON STOCK
(Cost $68,793,438)................................................ 82,390,099
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<S> <C> <C>
WARRANTS (0.8%)
- ---------------
* Bank Vision 01/15/97....................................... 15,000 $ 260,958
* Pharma Vision 10/10/96..................................... 30,000 220,765
* Roche Holding 12/18/98..................................... 4,000 236,762
-----------
TOTAL WARRANTS
(Cost $892,214).................................................... 718,485
-----------
</TABLE>
<TABLE>
<CAPTION>
PAR
MATURITY (000)
-------- -----
<S> <C> <C> <C>
CORPORATE BONDS (0.0%)
- ----------------------
Michelin France 2.50%
(Cost $8,599)...................................... 01/01/01 $10 11,163
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
---------
<S> <C> <C>
SHORT TERM INVESTMENTS (4.5%)
- -----------------------------
Temporary Cash Investment Fund, Inc..................... 1,959,591 1,959,591
Temporary Investment Fund, Inc.......................... 1,959,490 1,959,490
-----------
TOTAL SHORT TERM INVESTMENTS
(Cost $3,919,081)................................................. 3,919,081
-----------
TOTAL INVESTMENTS (100.0%)
(Cost $73,613,332)(a)(b).......................................... $87,038,828
===========
</TABLE>
- -------
* Non-income Producing.
(a) Cost for Federal Income tax purposes.
(b) At June 30, 1996, the excess of value over tax cost was $14,090,165 and the
excess of tax cost over value was $664,669.
ADR--American Depository Receipt
The accompanying notes are an integral part of these financial statements.
18
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED)
THE SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<S> <C> <C>
COMMON STOCK (86.5%)
- --------------------
ADVERTISING (1.5%)
* Katz Media Group, Inc.................................. 12,300 $ 176,812
-----------
AGRICULTURE (0.6%)
Sylvan, Inc. .......................................... 4,900 65,231
-----------
AUTO-PARTS/EQUIPMENT (1.6%)
Borg-Warner Automotive, Inc. .......................... 1,600 63,200
* Jason, Inc. ........................................... 15,100 123,631
-----------
186,831
-----------
BUILDING MATERIALS (4.0%)
Carlisle Companies, Inc. .............................. 3,800 201,875
* Falcon Building Products, Inc. ........................ 13,100 157,200
Martin Marietta Materials, Inc. ....................... 4,000 97,000
-----------
456,075
-----------
CHEMICALS (1.2%)
* McWhorter Technologies, Inc............................ 4,000 71,000
* Sybron Chemicals, Inc.................................. 5,400 76,275
-----------
147,275
-----------
COMPUTER SERVICES & SOFTWARE (3.7%)
* BancTec, Inc........................................... 17,600 356,400
* Exabyte Corp........................................... 6,400 83,600
-----------
440,000
-----------
ELECTRICAL EQUIPMENT (1.2%)
AVX Corp............................................... 2,700 49,950
* Exide Electronics Group, Inc. ......................... 9,900 94,669
-----------
144,619
-----------
ELECTRONICS (9.3%)
EG&G, Inc.............................................. 25,000 534,375
* Oak Industries, Inc.................................... 19,060 564,653
-----------
1,099,028
-----------
ELECTRONICS - SEMICONDUCTORS (4.6%)
* Exar Corp.............................................. 19,000 244,625
* Marshall Industries.................................... 10,400 291,200
-----------
535,825
-----------
FINANCIAL BANKS - COMMERCIAL (0.6%)
First Financial Corp.................................... 3,300 74,662
-----------
FINANCIAL SERVICES (0.5%)
First Financial Caribbean Corp.......................... 3,200 64,400
-----------
FURNITURE - HOME APPLIANCES (0.4%)
Singer Co. NV........................................... 2,300 46,575
-----------
HOLDING COMPANY - DIVERSIFIED (3.3%)
Crane Co................................................ 9,600 393,600
-----------
HOSPITAL SUPPLIES/HOSPITAL MANAGEMENT (5.1%)
* Magellan Health Services, Inc.......................... 21,600 464,400
* Summit Care Corp. ..................................... 6,300 140,963
-----------
605,363
-----------
HOUSEHOLD PRODUCTS (1.8%)
Armor All Products Corp................................. 6,400 96,000
Libbey, Inc............................................. 4,200 116,550
-----------
212,550
-----------
INSURANCE (13.8%)
Ace Limited............................................ 4,900 230,300
Capitol American Financial Corp. ...................... 6,300 158,287
* Capsure Holdings Corp.................................. 6,300 112,612
* Delphi Financial Group, Inc. Class A................... 7,000 187,250
E.W. Blanch Holdings, Inc. ............................ 11,800 234,525
Everest Re Holdings, Inc............................... 6,400 165,600
Horace Mann Educators Corp. ........................... 4,900 155,575
</TABLE>
<TABLE>
<CAPTION>
SHARES VALUE
------ -----------
<S> <C> <C>
Protective Life Corp...................................... 3,500 $ 122,938
United Wisconsin Services, Inc............................ 2,700 70,200
W.R. Berkley Corp......................................... 4,700 197,988
-----------
1,635,275
-----------
MACHINERY (DIVERSIFIED) (4.8%)
Baldwin Technology Co., Inc. Class A...................... 34,100 119,350
Briggs & Stratton Corp.................................... 2,400 98,700
United Dominion Industries Limited........................ 14,900 342,700
-----------
560,750
-----------
MANUFACTURED HOUSING (0.9%)
McGrath Rentcorp.......................................... 4,500 100,687
-----------
MANUFACTURING (1.0%)
* Alltrista Corp............................................ 2,600 60,775
Harmon Industries, Inc. .................................. 3,800 60,800
-----------
121,575
-----------
MEDICAL SUPPLIES (4.5%)
Dentsply International, Inc............................... 1,200 50,775
* SpaceLabs Medical, Inc.................................... 20,800 478,400
-----------
529,175
-----------
METAL FABRICATE/HARDWARE (1.0%)
Easco, Inc................................................ 15,100 119,856
-----------
OFFICE EQUIPMENT & SERVICES (1.0%)
* NU-Kote Holdings, Inc. Class A............................ 6,900 113,419
-----------
OIL & GAS (3.6%)
* Belden & Blake Corp....................................... 7,400 156,325
* Global Natural Resources, Inc............................. 4,200 68,775
* Nuevo Energy Co. ......................................... 3,700 119,325
St. Mary Land & Exploration Co. .......................... 5,000 82,813
-----------
427,238
-----------
PACKAGING & PAPER PRODUCTS (1.4%)
* Shorewood Packaging Corp. ................................ 11,000 168,438
-----------
PAPER & FOREST PRODUCTS (1.0%)
* Repap Enterprises, Inc.................................... 31,300 121,288
-----------
PRINTING/PUBLISHING (2.1%)
* International Imaging Materials, Inc. .................... 10,700 251,450
-----------
REAL ESTATE (2.3%)
Security Capital Industrial Trust......................... 5,400 95,175
Security Capital Pacific Trust............................ 8,300 180,525
-----------
275,700
-----------
RETAIL - SPECIAL LINE (2.0%)
Blair Corp................................................ 1,500 35,437
* Maxim Group, Inc.......................................... 6,600 94,050
Petroleum Heat & Power Co., Inc........................... 15,000 113,438
-----------
242,925
-----------
TELECOMMUNICATIONS (1.1%)
ECI Telecommunications Limited............................ 5,400 125,212
-----------
TEXTILES (3.2%)
Culp, Inc. ............................................... 3,900 53,625
Dyersberg Corp. .......................................... 3,400 17,425
* WestPoint Stevens, Inc.................................... 12,900 309,600
-----------
380,650
-----------
TRANSPORTATION (1.6%)
Interpool, Inc............................................ 4,000 73,000
* MTL, Inc.................................................. 6,500 112,125
-----------
185,125
-----------
WHOLESALE - SPECIAL LINE (1.8%)
* Arrow Electronics, Inc.................................... 4,800 207,000
-----------
TOTAL COMMON STOCK
(Cost $9,659,697)................................................ 10,214,609
-----------
</TABLE>
19
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
SCHEDULE OF INVESTMENTS - JUNE 30, 1996 (UNAUDITED) (CONTINUED)
THE SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
PAR
MATURITY (000) VALUE
-------- ----- -----------
<S> <C> <C> <C>
AGENCY OBLIGATIONS (11.4%)
- --------------------------
Federal Farm Credit Bank
5.20%.............................................. 07/17/96 $255 $ 254,401
Federal Home Loan Bank
5.24%.............................................. 08/07/96 395 392,837
Federal Home Loan Mortgage Corp. 5.17%.............. 07/05/96 85 84,951
5.26%.............................................. 08/16/96 350 347,610
Federal National Mortgage Assoc. 5.17%.............. 08/16/96 270 268,188
-----------
TOTAL AGENCY OBLIGATIONS
(Cost $1,348,099).................................................. 1,347,987
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
-------
<S> <C> <C>
SHORT TERM INVESTMENTS (2.1%)
- -----------------------------
Temporary Investment Fund Class B (Cost $252,318) ........ 252,318 $ 252,318
-----------
TOTAL INVESTMENTS (100.0%)
(Cost $11,260,114)(a)(b).......................................... $11,814,914
===========
</TABLE>
- -------
* Non-income producing.
(a) Cost for Federal income tax purposes.
(b) At June 30, 1996, the excess of value over tax cost was $841,069, and the
excess of tax cost over value was 286,269.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
STATEMENT OF ASSETS AND LIABILITIES - JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
MONEY QUALITY HIGH YIELD GROWTH EQUITY
MARKET FUND BOND FUND BOND FUND FUND
----------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at value (1). $30,256,720 $38,870,007 $38,383,213 $98,933,925
Cash..................... -- 270 533 --
Interest, dividends and
reclaims receivable..... 260,066 584,930 794,467 84,506
Receivable for investment
securities sold......... -- -- 378,436 1,930,903
Receivable for capital
stock sold.............. -- 87,909 -- --
Net unrealized apprecia-
tion on forward foreign
currency contracts...... -- -- -- --
Other assets............. 576 403 377 1,033
----------- ----------- ----------- -----------
Total Assets............ 30,517,362 39,543,519 39,557,026 100,950,367
----------- ----------- ----------- -----------
LIABILITIES:
Cash overdraft........... 52,494 -- -- 6,807
Payable for investment
securities purchased.... -- -- 951,790 2,568,687
Payable for capital stock
redeemed................ -- 1,890 40,010 30,217
Dividends payable........ 119,356 -- -- --
Payable to the investment
advisor................. 9,868 14,554 15,800 40,800
Payable to The Penn Mu-
tual Life Insurance
Co. .................... 11,026 14,889 14,149 36,859
Other liabilities........ 2,846 5,355 9,593 18,805
----------- ----------- ----------- -----------
Total Liabilities....... 195,590 36,688 1,031,342 2,702,175
----------- ----------- ----------- -----------
NET ASSETS................ $30,321,772 $39,506,831 $38,525,684 $98,248,192
=========== =========== =========== ===========
Shares of $.10 par value
capital stock issued and
outstanding.............. 30,323,268 3,875,847 4,359,359 4,511,746
NET ASSET VALUE, OFFERING
AND REDEMPTION PRICE PER
SHARE.................... $ 1.00 $ 10.19 $ 8.84 $ 21.78
NET ASSETS CONSIST OF:
Capital paid in.......... 30,323,268 39,229,988 40,900,078 77,547,148
Undistributed net invest-
ment income............. -- 1,210,234 1,401,196 306,386
Accumulated net realized
gain (loss) on invest-
ment transactions and
foreign exchange........ (1,496) (765,148) (4,243,907) 5,132,061
Net unrealized apprecia-
tion (depreciation) in
value of investments,
futures contracts and
foreign currency related
items................... -- (168,243) 468,317 15,262,597
----------- ----------- ----------- -----------
TOTAL NET ASSETS.... $30,321,772 $39,506,831 $38,525,684 $98,248,192
=========== =========== =========== ===========
(1) Investments at cost... $30,256,720 $39,038,250 $37,914,896 $83,671,328
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLEXIBLY SMALL
VALUE EQUITY MANAGED INTERNATIONAL CAPITALIZATION
FUND FUND EQUITY FUND FUND
- ------------ ------------ ------------- --------------
<S> <C> <C> <C>
$159,223,237 $324,562,304 $87,038,828 $11,814,914
-- -- -- --
87,980 1,109,545 385,250 6,449
-- 1,000,327 1,466,705 96,359
135,098 411,877 71,615 2,265
-- -- 222,945 --
1,563 2,134 987 65
- ------------ ------------ ----------- -----------
159,447,878 327,086,187 89,186,330 11,920,052
- ------------ ------------ ----------- -----------
-- -- -- --
1,654,545 277,173 1,316,814 317,457
-- 223,477 13,170 5,399
-- -- -- --
64,330 132,120 52,516 3,322
56,599 117,052 30,880 3,432
168,564 40,562 44,925 5,845
- ------------ ------------ ----------- -----------
1,944,038 790,384 1,458,305 335,455
- ------------ ------------ ----------- -----------
$157,503,840 $326,295,803 $87,728,025 $11,584,597
============ ============ =========== ===========
8,718,656 17,524,097 5,530,501 961,669
$ 18.07 $ 18.62 $ 15.86 $ 12.05
115,047,839 275,665,839 70,095,635 10,739,387
956,492 6,973,766 (215,444) 30,595
3,143,832 5,919,323 4,195,562 259,815
38,355,677 37,736,875 13,652,272 554,800
- ------------ ------------ ----------- -----------
$157,503,840 $326,295,803 $87,728,025 $11,584,597
============ ============ =========== ===========
$120,867,560 $286,825,429 $73,613,332 $11,260,114
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
STATEMENT OF OPERATIONS - FOR THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
MONEY QUALITY HIGH YIELD GROWTH
MARKET FUND BOND FUND BOND FUND EQUITY FUND
----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.................... $ -- $ 30,603 $1,538,647 $ 590,817
Interest..................... 787,165 1,323,038 18,049 93,826
Foreign tax withheld......... -- -- -- (340)
-------- ----------- ---------- ----------
Total investment income..... 787,165 1,353,641 1,556,696 684,303
-------- ----------- ---------- ----------
EXPENSES:
Investment advisory fees
(Note 3).................... 53,187 84,623 93,121 233,114
Administration fees (Note 3). 21,018 29,586 27,936 73,004
Accounting fees.............. 10,493 14,796 13,986 36,474
Custodian fees and expenses.. 5,193 6,554 7,797 14,092
Other expenses............... 5,947 7,848 12,660 21,233
-------- ----------- ---------- ----------
Total expenses.............. 95,838 143,407 155,500 377,917
Less: Expense waivers....... -- -- -- --
-------- ----------- ---------- ----------
Net expenses................ 95,838 143,407 155,500 377,917
-------- ----------- ---------- ----------
NET INVESTMENT INCOME......... $691,327 $ 1,210,234 $1,401,196 $ 306,386
-------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) on
investment transactions..... 36 13,490 (229,663) 5,132,061
Net realized foreign exchange
gain (loss)................. -- -- -- --
Change in net unrealized ap-
preciation (depreciation) of
investments, futures con-
tracts and foreign currency
related items............... -- (1,422,246) 568,529 2,864,379
-------- ----------- ---------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS... 36 (1,408,756) 338,866 7,996,440
-------- ----------- ---------- ----------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERA-
TIONS ....................... $691,363 $ (198,522) $1,740,062 $8,302,826
======== =========== ========== ==========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FLEXIBLY SMALL
VALUE MANAGED INTERNATIONAL CAPITALIZATION
EQUITY FUND FUND EQUITY FUND FUND
- ----------- ----------- ------------- --------------
<S> <C> <C> <C>
$ 855,229 $ 4,636,839 $ 814,385 $ 33,297
660,401 3,500,368 131,483 35,753
-- (21,699) (74,380) --
- ----------- ----------- ---------- --------
1,515,630 8,115,508 871,488 69,050
- ----------- ----------- ---------- --------
357,655 743,869 292,523 19,242
107,296 223,165 58,507 5,772
48,197 86,129 55,230 13,443
13,243 29,697 33,153 3,306
32,747 58,882 20,453 2,776
- ----------- ----------- ---------- --------
559,138 1,141,742 459,866 44,539
-- -- -- (6,084)
- ----------- ----------- ---------- --------
559,138 1,141,742 459,866 38,455
- ----------- ----------- ---------- --------
$ 956,492 $ 6,973,766 $ 411,622 $ 30,595
- ----------- ----------- ---------- --------
3,143,832 5,759,421 3,386,973 262,411
-- (1,797) 1,867,223 --
10,475,311 6,992,761 1,485,939 388,614
- ----------- ----------- ---------- --------
13,619,143 12,750,385 6,740,135 651,025
- ----------- ----------- ---------- --------
$14,575,635 $19,724,151 $7,151,757 $681,620
=========== =========== ========== ========
</TABLE>
- --------------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
25
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
MONEY MARKET FUND QUALITY BOND FUND
-------------------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
6/30/96 ENDED 6/30/96 ENDED
(UNAUDITED) 12/31/95 (UNAUDITED) 12/31/95
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
OPERATIONS:
Net investment income.. $ 691,327 $ 1,042,271 $ 1,210,234 $ 2,141,403
Net realized gain
(loss) on investment
transactions.......... 36 (416) 13,490 2,350,516
Net realized foreign
exchange loss......... -- -- -- --
Net change in
unrealized
appreciation
(depreciation) of
investments and
foreign currency
related items......... -- -- (1,422,246) 1,752,675
------------ ------------ ------------ ------------
NET INCREASE
(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS........... 691,363 1,041,855 (198,522) 6,244,594
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHARE-
HOLDERS FROM:
Net investment income.. (691,327) (1,042,271) -- (2,141,403)
Net realized capital
gains................. -- -- -- --
In excess of net in-
vestment income....... -- -- -- (28,700)
------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS... (691,327) (1,042,271) -- (2,170,103)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSAC-
TIONS:
Net increase (decrease)
in net assets from
capital share
transactions (Note 4). 5,596,143 8,194,917 1,656,948 2,636,284
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET
ASSETS............... 5,596,179 8,194,501 1,458,426 6,710,775
Net Assets, beginning of
period................. 24,725,593 16,531,092 38,048,405 31,337,630
------------ ------------ ------------ ------------
NET ASSETS, END OF PERI-
OD..................... $ 30,321,772 $ 24,725,593 $ 39,506,831 $ 38,048,405
============ ============ ============ ============
<CAPTION>
VALUE EQUITY FUND FLEXIBLY MANAGED FUND
-------------------------- --------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
6/30/96 ENDED 6/30/96 ENDED
(UNAUDITED) 12/31/95 (UNAUDITED) 12/31/95
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS:
OPERATIONS:
Net investment income.. $ 956,492 $ 1,794,849 $ 6,973,766 $ 7,533,134
Net realized gain
(loss) on investment
transactions.......... 3,143,832 6,520,338 5,759,421 9,328,518
Net realized foreign
exchange gain (loss).. -- -- (1,797) (3,841)
Net change in
unrealized apprecia-
tion (depreciation) of
investments and for-
eign currency related
items................. 10,475,311 23,682,719 6,992,761 25,862,516
------------ ------------ ------------ ------------
NET INCREASE IN NET
ASSETS RESULTING FROM
OPERATIONS........... 14,575,635 31,997,906 19,724,151 42,720,327
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHARE-
HOLDERS FROM:
Net investment income.. -- (1,794,912) -- (7,533,134)
Net realized capital
gains................. -- (6,520,338) -- (9,122,820)
In excess of net in-
vestment income....... -- -- -- (189,189)
------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS... -- (8,315,250) -- (16,845,143)
------------ ------------ ------------ ------------
CAPITAL SHARE TRANSAC-
TIONS
Net increase in net as-
sets from capital
share transactions
(Note 4).............. 15,668,355 24,556,320 40,015,545 70,833,754
------------ ------------ ------------ ------------
TOTAL INCREASE IN NET
ASSETS............... 30,243,990 48,238,976 59,739,696 96,708,938
Net Assets, beginning of
period................. 127,259,850 79,020,874 266,556,107 169,847,169
------------ ------------ ------------ ------------
NET ASSETS, END OF PERI-
OD..................... $157,503,840 $127,259,850 $326,295,803 $266,556,107
============ ============ ============ ============
</TABLE>
- -----------------------
* For the period from March 1, 1995 (commencement of operations) through
December 31, 1995.
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
HIGH YIELD BOND FUND GROWTH EQUITY FUND
- ---------------------------------- ---------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED YEAR
6/30/96 ENDED 6/30/96 ENDED
(UNAUDITED) 12/31/95 (UNAUDITED) 12/31/95
- -------------- ------------- ------------- ------------
<S> <C> <C> <C>
$ 1,401,196 $ 3,148,730 $ 306,386 $ 382,247
(229,663) (1,070,877) 5,132,061 12,597,090
-- -- -- --
568,529 3,034,116 2,864,379 7,613,791
- ------------- ------------- ------------ ------------
1,740,062 5,111,969 8,302,826 20,593,128
- ------------- ------------- ------------ ------------
-- (3,148,730) -- (382,247)
-- -- -- (12,597,090)
-- (15,253) -- --
- ------------- ------------- ------------ ------------
-- (3,163,983) -- (12,979,337)
- ------------- ------------- ------------ ------------
343,886 2,412,668 (5,647,928) 7,901,598
- ------------- ------------- ------------ ------------
2,083,948 4,360,654 2,654,898 15,515,389
36,441,736 32,081,082 95,593,294 80,077,905
- ------------- ------------- ------------ ------------
$ 38,525,684 $ 36,441,736 $ 98,248,192 $ 95,593,294
============= ============= ============ ============
<CAPTION>
INTERNATIONAL EQUITY FUND SMALL CAPITALIZATION FUND
- ---------------------------------- ---------------------------------
SIX MONTHS SIX MONTHS
ENDED YEAR ENDED PERIOD
6/30/96 ENDED 6/30/96 ENDED
(UNAUDITED) 12/31/95 (UNAUDITED) 12/31/95*
- -------------- ------------- ------------- ------------
<S> <C> <C> <C>
$ 411,622 $ 559,922 $ 30,595 $ 37,156
3,386,973 (551,350) 262,411 116,284
1,867,223 331,107 -- --
1,485,939 7,975,550 388,614 186,186
- ------------- ------------- ------------ ------------
7,151,757 8,315,229 681,620 319,626
- ------------- ------------- ------------ ------------
-- (559,922) -- (37,156)
-- -- (21,218) (97,682)
-- (1,014,490)
- ------------- ------------- ------------ ------------
-- (1,574,412) (21,218) (134,818)
- ------------- ------------- ------------ ------------
11,045,533 3,397,112 6,096,288 4,643,099
- ------------- ------------- ------------ ------------
18,197,290 10,137,929 6,756,690 4,827,907
69,530,735 59,392,806 4,827,907 0
- ------------- ------------- ------------ ------------
$ 87,728,025 $ 69,530,735 $ 11,584,597 $ 4,827,907
============= ============= ============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE MONEY MARKET FUND
The table below sets forth financial data for a share outstanding throughout
each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 ------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
---------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period.......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income.... 0.0246 0.0538 0.0365 0.0250 0.0306 0.0536
-------- -------- -------- -------- -------- --------
Total from investment
operations............. 0.0246 0.0538 0.0365 0.0250 0.0306 0.0536
-------- -------- -------- -------- -------- --------
LESS DIVIDENDS:
Dividends from net in-
vestment income......... (0.0246) (0.0538) (0.0365) (0.0250) (0.0306) (0.0536)
-------- -------- -------- -------- -------- --------
Total dividends......... (0.0246) (0.0538) (0.0365) (0.0250) (0.0306) (0.0536)
-------- -------- -------- -------- -------- --------
Net asset value, end of
period.................. $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
======== ======== ======== ======== ======== ========
Total return............. 2.48% 5.51% 3.71% 2.53% 3.08% 5.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(in thousands).......... $ 30,322 $ 24,726 $ 16,531 $ 13,005 $ 11,862 $ 12,811
-------- -------- -------- -------- -------- --------
Ratio of expenses to av-
erage net assets........ 0.69%(a) 0.69%(b) 0.73%(b) 0.74%(b) 0.77%(b) 0.79%(b)
-------- -------- -------- -------- -------- --------
Ratio of net investment
income average net as-
sets.................... 4.94%(a) 5.37%(b) 3.74%(b) 2.51%(b) 3.07%(b) 5.47%(b)
-------- -------- -------- -------- -------- --------
</TABLE>
- -----------------------
(a) Annualized.
(b) Had fees not been waived by the investment advisor and administrator of the
Fund, the ratios of expenses to average net assets would have been .74%,
.79%, .82%, .84%, and .83%, and the ratios of net investment income to
average net assets would have been 5.32%, 3.68%, 2.43%, 3.00%, and 5.43%
for the years ended December 31, 1995, 1994, 1993, 1992 and 1991,
respectively.
- --------------------------------------------------------------------------------
THE QUALITY BOND FUND
The table below sets forth financial data for a share outstanding throughout
each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 -------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 10.24 $ 9.04 $ 10.19 $ 10.03 $ 10.51 $ 9.73
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income... 0.31 0.61 0.61 0.46 0.75 0.71
Net realized and
unrealized gain (loss)
on investment
transactions........... (0.36) 1.21 (1.15) 0.71 (0.06) 0.81
------- ------- ------- ------- ------- -------
Total from investment
operations............ (0.05) 1.82 (0.54) 1.17 0.69 1.52
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividend from net
investment income...... -- (0.61) (0.61) (0.46) (0.75) (0.71)
Distribution from net
realized gain.......... -- -- -- (0.54) (0.42) (0.03)
Distribution in excess
of net realized gain... -- (0.01) -- (0.01) -- --
------- ------- ------- ------- ------- -------
Total distributions.... -- (0.62) (0.61) (1.01) (1.17) (0.74)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 10.19 $ 10.24 $ 9.04 $ 10.19 $ 10.03 $ 10.51
======= ======= ======= ======= ======= =======
Total return............ (0.49%) 20.14% (5.29%) 11.67% 6.57% 15.62%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (in thousnds)... $39,507 $38,048 $31,338 $33,027 $20,314 $21,153
------- ------- ------- ------- ------- -------
Ratio of expenses to
average net assets..... 0.73%(a) 0.73%(b) 0.78%(b) 0.79%(b) 0.84%(b) 0.83%
------- ------- ------- ------- ------- -------
Ratio of net investment
income to average net
assets................. 6.14%(a) 6.20%(b) 6.14%(b) 5.21%(b) 6.25%(b) 7.41%
------- ------- ------- ------- ------- -------
Portfolio turnover rate. 66.7% 449.2% 380.9% 389.4% 190.8% 44.1%
------- ------- ------- ------- ------- -------
</TABLE>
- -----------------------
(a) Annualized.
(b) Had fees not been waived by the investment advisor and administrator of the
Fund, the ratio of expenses to average net assets would have been .78%,
.83%, .84% and .87%, and the ratio of net investment income to average net
assets would have been 6.15%, 6.09%, 5.16% and 6.22% for the years ended
December 31, 1995, 1994, 1993 and 1992, respectively.
28
<PAGE>
- -------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------------------
THE HIGH YIELD BOND FUND
The table below sets forth financial data for a share outstanding throughout
each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 ----------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 8.44 $ 7.94 $ 9.55 $ 8.63 $ 8.23 $ 6.70
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income... 0.32 0.80 0.90 0.77 0.87 0.93
Net realized and
unrealized gain (loss)
on investment
transactions........... 0.08 0.50 (1.60) 0.94 0.43 1.55
------- ------- ------- ------- ------- -------
Total from investment
operations............ 0.40 1.30 (0.70) 1.71 1.30 2.48
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividend from net
investment income...... -- (0.80) (0.90) (0.77) (0.87) (0.93)
Distribution in excess
of net investment
income................. -- -- (0.01) (0.02) (0.03) (0.02)
------- ------- ------- ------- ------- -------
Total distributions.... -- (0.80) (0.91) (0.79) (0.90) (0.95)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 8.84 $ 8.44 $ 7.94 $ 9.55 $ 8.63 $ 8.23
======= ======= ======= ======= ======= =======
Total return............ 4.74% 16.41% 7.33% 19.81% 15.80% 37.01%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (in thousands).. $38,526 $36,442 $32,081 $35,305 $19,840 $15,304
------- ------- ------- ------- ------- -------
Ratio of expenses to
average net assets..... 0.98%(a) 0.87% 0.86% 0.87% 0.88%(b) 0.90%(b)
------- ------- ------- ------- ------- -------
Ratio of net investment
income to average net
assets................. 8.80%(a) 9.20% 9.18% 9.21% 9.87%(b) 11.37%(b)
------- ------- ------- ------- ------- -------
Portfolio turnover rate. 64.9% 84.3% 90.7% 118.7% 94.3% 83.7%
------- ------- ------- ------- ------- -------
</TABLE>
- -----------------------
(a) Annualized.
(b) Had fees not been waived by the investment advisor and administrator of
the Fund, the ratios of expenses to average net assets would have been
.93% and .98%, and the ratios of net investment income to average net
assets would have been 9.82% and 11.29% for the years ended December 31,
1992 and 1991, respectively.
- -------------------------------------------------------------------------------
THE GROWTH EQUITY FUND
The table below sets forth financial data for a share outstanding throughout
each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 -------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
---------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 20.00 $ 18.30 $ 20.49 $ 18.82 $ 21.47 $ 16.35
------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income... 0.07 0.09 0.13 0.06 0.16 0.23
Net realized and
unrealized gain (loss)
on investment
transactions........... 1.71 4.75 (1.80) 2.28 1.12 5.45
------- ------- ------- ------- ------- -------
Total from investment
operations............ 1.78 4.84 (1.67) 2.34 1.28 5.68
------- ------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividend from net
investment income...... -- (0.09) (0.13) (0.06) (0.16) (0.23)
Distribution from
capital gains.......... -- (3.05) (0.39) (0.61) (3.77) (0.33)
------- ------- ------- ------- ------- -------
Total distributions.... -- (3.14) (0.52) (0.67) (3.93) (0.56)
------- ------- ------- ------- ------- -------
Net asset value, end of
period................. $ 21.78 $ 20.00 $ 18.30 $ 20.49 $ 18.82 $ 21.47
======= ======= ======= ======= ======= =======
Total return............ 8.90% 26.45% 8.12% 12.43% 5.96% 34.74%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (in thousands).. $98,248 $95,593 $80,078 $83,938 $73,977 $59,670
------- ------- ------- ------- ------- -------
Ratio of expenses to
average net assets..... 0.78%(a) 0.77%(b) 0.79%(b) 0.77%(b) 0.88%(b) 0.87%
------- ------- ------- ------- ------- -------
Ratio of net investment
income to average net
assets................. 0.63%(a) 0.43%(b) 0.70%(b) 0.30%(b) 0.81%(b) 1.28%
------- ------- ------- ------- ------- -------
Portfolio turnover rate. 78.9% 169.8% 156.2% 185.3% 120.7% 41.7%
------- ------- ------- ------- ------- -------
Average commission rate
paid (c)............... $0.0767 -- -- -- -- --
------- ------- ------- ------- ------- -------
</TABLE>
- -----------------------
(a) Annualized.
(b) Had fees not been waived by the investment advisor and administrator of
the Fund, the ratio of expenses to average net assets would have been
.82%, .84%, .82%, and .89% and the ratio of net investment income to
average net assets would have been .38%, .65%, .25% and .80% for the years
ended December 31, 1995, 1994, 1993 and 1992, respectively.
(c) Computed by dividing the total amount of commissions paid by total number
of shares purchased and sold during the period for which commissions were
charged, as required by the SEC beginning after September 1, 1995.
29
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE VALUE EQUITY PORTFOLIO
The table below sets forth financial data for a share outstanding throughout
each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 -------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
---------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period......... $ 16.28 $ 12.67 $ 12.68 $ 12.14 $ 11.89 $ 9.68
-------- -------- -------- -------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income... 0.11 0.25 0.20 0.17 0.45 0.47
Net realized and
unrealized gain (loss)
on investment transac-
tions.................. 1.68 4.50 0.17 0.69 1.32 2.21
-------- -------- -------- -------- ------- -------
Total from investment
operations............ 1.79 4.75 0.37 0.86 1.77 2.68
-------- -------- -------- -------- ------- -------
LESS DISTRIBUTIONS:
Dividend from net in-
vestment income........ -- (0.25) (0.20) (0.17) (0.45) (0.47)
Distribution from net
realized gain.......... -- (0.89) (0.18) (0.15) (1.07) --
-------- -------- -------- -------- ------- -------
Total distributions.... -- (1.14) (0.38) (0.32) (1.52) (0.47)
-------- -------- -------- -------- ------- -------
Net asset value, end of
period................. $ 18.07 $ 16.28 $ 12.67 $ 12.68 $ 12.14 $ 11.89
======== ======== ======== ======== ======= =======
Total return........... 11.00% 37.48% 2.92% 7.08% 14.89% 27.69%
RATIOS/SUPPLEMENTAL DA-
TA:
Net assets, end of pe-
riod (in thousands).... $157,504 $127,260 $ 79,021 $ 69,980 $49,199 $33,610
-------- -------- -------- -------- ------- -------
Ratio of expenses to av-
erage net assets....... 0.78%(a) 0.80% 0.82% 0.83% 0.88%(b) 0.88%
-------- -------- -------- -------- ------- -------
Ratio of net investment
income to average net
assets................. 1.34%(a) 1.71% 1.59% 1.49% 3.87%(b) 4.44%
-------- -------- -------- -------- ------- -------
Portfolio turnover rate. 16.8% 34.3% 30.6% 17.2% 117.4% 32.4%
-------- -------- -------- -------- ------- -------
Average commission rate
paid (c)............... $ 0.0581 -- -- -- -- --
-------- -------- -------- -------- ------- -------
- -----------------------
(a) Annualized.
(b) Had fees not been waived by the investment advisor and administrator of the
Fund, the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been .90% and 3.85%,
respectively, for the year ended December 31, 1992.
(c) Computed by dividing the total amount of commissions paid by total number
of shares purchased and sold during the period for which commissions were
charged, as required by the SEC beginning after September 1, 1995.
- ---------------------------------------------------------------------------------------------
THE FLEXIBLY MANAGED FUND
The table below sets forth financial data for a share outstanding throughout
each period
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 -------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
---------------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, begin-
ning of period......... $ 17.40 $ 15.19 $ 15.70 $ 14.31 $ 13.73 $ 12.30
-------- -------- -------- -------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income... 0.40 0.53 0.43 0.34 0.58 0.52
Net realized and
unrealized gain (loss)
on investment transac-
tions.................. 0.82 2.86 0.22 1.92 0.74 2.14
-------- -------- -------- -------- ------- -------
Total from investment
operations............ 1.22 3.39 0.65 2.26 1.32 2.66
-------- -------- -------- -------- ------- -------
LESS DISTRIBUTIONS:
Dividend from net in-
vestment income........ -- (0.53) (0.43) (0.34) (0.58) (0.52)
Distribution in excess
of net investment in-
come................... -- (0.01) (0.02) -- -- --
Distribution from capi-
tal gains.............. -- (0.64) (0.71) (0.53) (0.16) (0.71)
-------- -------- -------- -------- ------- -------
Total distributions.... -- (1.18) (1.16) (0.87) (0.74) (1.23)
-------- -------- -------- -------- ------- -------
Net asset value, end of
period................. $ 18.62 $ 17.40 $ 15.19 $ 15.70 $ 14.31 $ 13.73
======== ======== ======== ======== ======= =======
Total return........... 7.01% 22.28% 4.14% 15.79% 9.61% 21.63%
RATIOS/SUPPLEMENTAL DA-
TA:
Net assets, end of pe-
riod (in thousands).... $326,296 $266,556 $169,847 $113,492 $70,979 $47,141
-------- -------- -------- -------- ------- -------
Ratio of expenses to av-
erage net assets....... 0.77%(a) 0.79% 0.82% 0.85% 0.89%(b) 0.91%
-------- -------- -------- -------- ------- -------
Ratio of net investment
income to average net
assets................. 4.69%(a) 3.45% 3.14% 2.62% 4.56%(b) 4.45%
-------- -------- -------- -------- ------- -------
Portfolio turnover rate. 15.6% 37.2% 37.3% 42.6% 29.5% 53.6%
-------- -------- -------- -------- ------- -------
Average commission rate
paid (c)............... $ 0.0585 -- -- -- -- --
-------- -------- -------- -------- ------- -------
</TABLE>
- -----------------------
(a) Annualized.
(b) Had fees not been waived by the investment advisor and administrator of the
Fund, the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been .90% and 4.55%,
respectively, for the year ended December 31, 1992.
(c) Computed by dividing the total amount of commissions paid by total number
of shares purchased and sold during the period for which commissions were
charged, as required by the SEC beginning after September 1, 1995.
30
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
THE INTERNATIONAL EQUITY PORTFOLIO
The table below sets forth financial data for a share outstanding throughout
each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 1996 ---------------------------------------------
(UNAUDITED) 1995 1994 1993 1992*
---------------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 14.47 $ 13.01 $ 13.94 $ 10.12 $ 10.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)................. (0.04) 0.13 0.09 0.03 0.03
Net realized and
unrealized gain on
investments and foreign
currency related
transactions........... 1.43 1.67 (0.97) 3.83 0.17
------- ------- ------- ------- -------
Total from investment
operations............ 1.39 1.80 (0.88) 3.86 0.20
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividend from net
investment income...... -- (0.12) (0.02) (0.01) (0.03)
Distribution in excess
of net investment
income................. -- (0.22) -- -- (0.05)
Distribution from
capital gains.......... -- -- -- (0.03) --
Distribution from
capital................ -- -- (0.03) -- --
------- ------- ------- ------- -------
Total distributions.... -- (0.34) (0.05) (0.04) (0.08)
------- ------- ------- ------- -------
Net asset value, end of
period................. $ 15.86 $ 14.47 $ 13.01 $ 13.94 $ 10.12
======= ======= ======= ======= =======
Total return............ 9.61% 13.80% 6.31% 38.14% 2.00%
RATIOS/SUPPLEMENTAL
DATA:
Net assets, end of
period (in thousands).. $87,728 $69,531 $59,393 $40,798 $11,137
------- ------- ------- ------- -------
Ratio of expenses to
average net assets..... 1.18%(a) 1.23% 1.22% 1.21% 1.54%(a)(b)
------- ------- ------- ------- -------
Ratio of net investment
income to average net
assets................. 1.06%(a) 0.91% 0.82% 0.63% 1.56%(a)(b)
------- ------- ------- ------- -------
Portfolio turnover rate. 30.5% 62.5% 15.6% 11.1% --
------- ------- ------- ------- -------
Average commission rate
paid (c)............... $0.0409 -- -- -- --
------- ------- ------- ------- -------
</TABLE>
- -----------------------
(a) Annualized.
(b) Had fees not been waived by the investment advisor and administrator of the
Fund, the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been 1.90% annualized
and 1.20% annualized, respectively, for the period ended December 31, 1992.
(c) Computed by dividing the total amount of commissions paid by total number
of shares purchased and sold during the period for which commissions were
charged, as required by the SEC beginning after September 1, 1995.
* For the period from November 2, 1992 (commencement of operations) to
December 31, 1992.
- --------------------------------------------------------------------------------
THE SMALL CAPITALIZATION FUND
The table below sets forth financial data for a share outstanding throughout
each period
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
JUNE 30, 1996 DECEMBER 31,
(UNAUDITED) 1995*
---------------- -------------
<S> <C> <C>
Net asset value, beginning of period....... $ 10.96 $10.00
------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income...................... 0.03 0.09
Net realized and unrealized gain (loss) on
investment transactions................... 1.10 1.19
------- ------
Total from investment operations.......... 1.13 1.28
------- ------
LESS DISTRIBUTIONS:
Dividend from net investment income........ -- (0.09)
Distribution from capital gains............ (0.04) (0.23)
------- ------
Total distributions....................... (0.04) (0.32)
------- ------
Net asset value, end of period............. $ 12.05 $10.96
======= ======
Total return.............................. 10.30% 12.76%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands)... $11,585 $4,828
------- ------
Ratio of expenses to average net assets.... 1.00%(a)(b) 1.00%(a)(b)
------- ------
Ratio of net investment income to average
net assets................................ 0.80%(a)(b) 1.53%(a)(b)
------- ------
Portfolio turnover rate.................... 24.3% 64.3%
------- ------
Average commission rate paid (c)........... $0.0466 --
------- ------
</TABLE>
- -----------------------
(a) Annualized.
(b) Had fees not been waived by the investment advisor and administrator of the
Fund, the ratio of expenses to average net assets and the ratio of net
investment income to average net assets would have been 1.16% and 1.29%,
respectively, for the period ended June 30, 1996 and the year ended
December 31, 1995.
(c) Computed by dividing the total amount of commissions paid by total number
of shares purchased and during the period for which commissions were
charged, as required by the SEC beginning after September 1, 1995.
* For the period from March 1, 1995 (commencement of operations) through
December 31, 1995.
31
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
1 - SIGNIFICANT ACCOUNTING POLICIES
Penn Series Funds, Inc. (Penn Series) was incorporated in Maryland on April
22, 1982. Penn Series is registered under the Investment Company Act of 1940,
as amended, as an open-end, diversified management investment company.
Penn Series is presently offering shares in its Money Market, Quality Bond,
High Yield Bond, Growth Equity, Value Equity, Flexibly Managed, International
Equity and Small Capitalization Funds (the Funds). It is authorized under its
Articles of Incorporation to issue a separate class of shares in each of two
additional funds. Each Fund would have its own investment objective and policy.
The following is a summary of significant accounting policies followed by
Penn Series in the preparation of its financial statements. The preparation of
financial statements requires the use of management's estimates.
INVESTMENT VALUATION:
MONEY MARKET FUND - Investments in securities are valued under the amortized
cost method, which approximates current market value. Under this method,
securities are valued at cost on the date of purchase and thereafter a
proportionate amortization of any discount or premium until maturity is
assumed. Penn Series has agreed to maintain a dollar weighted average portfolio
maturity appropriate to the objective of maintaining a stable net asset value
per share. The Penn Series Board of Directors (The Board) has established
procedures reasonably designed to stabilize the net asset value per share for
purposes of sales and redemptions at $1.00. The Board performs regular review
and monitoring of the valuation in an attempt to avoid dilution or unfair
results to shareholders.
QUALITY BOND, HIGH YIELD BOND, GROWTH EQUITY, VALUE EQUITY, FLEXIBLY MANAGED,
INTERNATIONAL EQUITY AND SMALL CAPITALIZATION FUNDS - Portfolio securities
listed on a national securities exchange are valued at the last sale price on
the securities exchange or securities market on which such securities primarily
are traded or, if there has been no sale on that day, at the mean between the
current closing bid and asked prices. All other securities for which over-the-
counter market quotations are readily available will be valued on the basis of
the mean between the last current bid and asked prices. When market quotation
are not readily available, or when restricted or other assets are being valued,
the securities or assets will be valued at fair value as determined by The
Board.
The high yield securities in which the High Yield Bond Fund may invest are
predominantly speculative as to the issuer's continuing ability to meet
principal and interest payments. The value of the lower quality securities in
which the High Yield Bond Fund may invest will be affected by the credit
worthiness of individual issuers, general economic and specific industry
conditions, and will fluctuate inversely with changes in interest rates. In
addition, the secondary trading market for lower quality bonds may be less
active and less liquid than the trading market for higher quality bonds.
FOREIGN CURRENCY TRANSLATION - The books and records of the Funds are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis: market value of investment securities, assets
and liabilities at the current rate of exchange, purchases and sales of
investment securities, income and expenses at the relevant rates of exchange
prevailing on the respective dates of such transactions.
The Funds do not isolate that portion of realized and unrealized gains and
losses on investments in equity securities which are due to changes in the
foreign exchange rate from that which is due to changes in market prices of
equity securities.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of U.S. dollar denominated
transactions as a result of, among other factors, the level of governmental
supervision and regulation of foreign securities markets and the possibility of
political or economic instability.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Security transactions are
accounted for on the trade date. Dividend income is recorded on the ex-dividend
date and interest income is accrued as earned. The cost of investment
securities sold is determined by using the specific identification method for
both financial reporting and income tax purposes.
DIVIDENDS TO SHAREHOLDERS: Dividends of investment income and realized
capital gains of the Quality Bond, High Yield Bond, Growth Equity, Value
Equity, Flexibly Managed, International Equity and Small Capitalization Funds
will be declared and paid annually. Dividends of net investment income of the
Money Market Fund are declared daily and paid monthly. Income distributions and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for mortgage-backed
securities, market discount and foreign currency transactions.
FEDERAL INCOME TAXES: It is the policy of each of the Funds to comply with
the requirements of the Internal Revenue Code applicable to regulated
investment companies and to distribute all of its taxable income, including
realized gains, to its shareholders. Therefore, no provision is made for
federal income or excise taxes.
32
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
2 - DERIVATIVE FINANCIAL INSTRUMENTS
OFF-BALANCE SHEET RISK
The Funds may trade financial instruments with off-balance sheet risk in the
normal course of investing activities and to assist in managing exposure to
market risks such as interest rates and foreign currency exchange rates. These
financial instruments include written options, forward foreign currency
exchange contracts and futures contracts.
The notional or contractual amounts of these instruments represent the
investment the Funds have in particular classes of financial instruments and do
not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transaction are considered.
DERIVATIVE FINANCIAL INSTRUMENTS HELD OR ISSUED FOR PURPOSES OTHER THAN TRADING
FUTURES CONTRACTS - Each of the Funds, other than Money Market, may enter
into financial futures contracts for the delayed delivery of securities,
currency or contracts based on financial indices on a future date. A Fund is
required to deposit either in cash or securities an amount equal to a certain
percentage of the contract amount. Subsequent payments are made or received by
a Fund each day, dependent on daily fluctuations in the value of the underlying
security, and are recorded for financial statement purposes as unrealized gains
or losses by a Fund. A Fund's investment in financial futures contracts is
designed only to hedge against anticipated future changes in interest or
exchange rates. Should interest or exchange rates move unexpectedly, a Fund may
not achieve the anticipated benefits of the financial futures contracts and may
realize a loss. The Quality Bond Fund has entered into futures contracts during
the six months ended June 30, 1996. There were no open futures contracts at
June 30, 1996.
WRITTEN OPTIONS - Each of the Funds, other than Money Market, may write
covered calls. Additionally, each of the Funds may buy put or call options for
which premiums are paid whether or not the option is exercised. Premiums
received from writing options which expire are treated as realized gains.
Premiums received from writing options which are exercised or are closed are
offset against the proceeds or amount paid on the transaction to determine the
realized gain or loss. If a put option is exercised the premium increases the
cost basis of the securities purchased by a Fund. As writer of an option, the
Fund may have no control over whether the underlying securities may be sold
(call) and, as a result, bears the market risk of an unfavorable change in the
price of the securities underlying the written option. The Flexibly Managed
Fund has entered into put options during the six months ended June 30, 1996.
Purchased put options open and outstanding at June 30, 1996 are disclosed in
the schedule of investments.
FORWARD FOREIGN CURRENCY CONTRACTS - The Funds may enter into forward foreign
currency exchange contracts as a way of managing foreign exchange rate risk. A
Fund may enter into these contracts to fix the U.S. dollar value of a security
that it has agreed to buy or sell for the period between the date the trade was
entered into and the date the security is delivered and paid for. A Fund may
also use these contracts to hedge the U.S. dollar value of securities it
already owns denominated in foreign currencies.
Forward foreign currency contracts are valued at the forward rate, and are
marked-to-market daily. The change in market value is recorded by the Fund as
an unrealized gain or loss. When the contract is closed, the Fund 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.
The use of forward foreign currency contracts does not eliminate fluctuations
in the underlying prices of the Fund's portfolio securities, but it does
establish a rate of exchange that can be achieved in the future. Although
forward foreign currency contracts limit the risk of loss due to a decline in
the value of the hedged currency, they also limit any potential gain the might
result should the value of the currency increase. In addition, the Funds could
be exposed to risks if the counterparties to the contracts are unable to meet
the terms of their contracts. The Flexibly Managed and International Equity
funds have entered into forward foreign currency contracts for the six months
ended June 30, 1996. At June 30, 1996 there were no open contracts in the
Flexibly Managed Fund. Open forward foreign currency contracts held by the
International Equity Fund at June 30, 1996 were as follows:
<TABLE>
<CAPTION>
UNREALIZED
FOREIGN FOREIGN
FORWARD SETTLEMENT CURRENCY CONTRACT CONTRACT EXCHANGE
CURRENCY CONTRACT DATE TO BE SOLD AMOUNT VALUE GAIN/(LOSS)
----------------- ---------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Deutsh Mark............. 07/01/96 1,058,990 $ 696,475 $ 696,548 $ (73)
French Franc............ 08/23/96 5,000,000 960,338 975,212 (14,874)
British Pound........... 08/23/96 2,500,000 3,773,875 3,880,850 (106,975)
Swiss Francs............ 08/23/96 4,000,000 3,168,819 3,214,633 (45,814)
Deutsh Mark............. 08/23/96 6,000,000 3,906,504 3,952,335 (45,831)
Japanese Yen............ 08/28/96 1,900,000,000 18,005,382 17,528,835 476,547
Swiss Francs............ 09/06/96 2,000,000 1,604,107 1,608,493 (4,386)
British Pound........... 09/06/96 1,750,000 2,705,325 2,716,525 (11,200)
Deutsh Mark............. 09/06/96 3,750,000 2,464,025 2,475,819 (11,794)
French Franc............ 09/06/96 7,500,000 1,452,306 1,463,566 (11,260)
----------- ----------- ---------
$38,737,156 $38,512,816 $ 224,340
=========== =========== =========
</TABLE>
33
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
2 - DERIVATIVE FINANCIAL INSTRUMENTS, CONTINUED
<TABLE>
<CAPTION>
UNREALIZED
FOREIGN FOREIGN
FORWARD SETTLEMENT CURRENCY CONTRACT CONTRACT EXCHANGE
CURRENCY CONTRACT DATE TO BE BOUGHT AMOUNT VALUE LOSS
----------------- ---------- ------------ -------- -------- ----------
<S> <C> <C> <C> <C> <C>
French Franc............ 07/31/96 1,514,771 $296,345 $294,950 $(1,395)
</TABLE>
- --------------------------------------------------------------------------------
3 - INVESTMENT ADVISORY AND OTHER CORPORATE SERVICES
INVESTMENT ADVISORY SERVICES
Under investment advisory agreements, the following advisors manage the
investments of their respective Fund and provide guidance on certain accounting
matters:
<TABLE>
<CAPTION>
ADVISOR PENN SERIES FUND
------- ----------------
<S> <C>
Independence Capital Management, Inc. Money Market Fund
(A wholly owned subsidiary of Penn Quality Bond Fund
Mutual) Growth Equity Fund
T. Rowe Price Associates Flexibly Managed Fund
High Yield Bond Fund
Vontobel USA, Inc. International Equity Fund
OpCap Advisors Value Equity Fund
Small Capitalization Fund
</TABLE>
Each of the Funds pays their respective advisors, on a monthly basis, an
annual advisory fee based on the average daily net assets of each Fund, at the
following rates pursuant to the investment advisory agreements: Money Market
Fund: 0.40% for first $100 million and 0.35% thereafter; Quality Bond Fund:
0.45% for first $100 million and 0.40% thereafter; Growth Equity Fund: 0.50%
for the first $100 million and 0.45% thereafter; Flexibly Managed Fund: 0.50%;
High Yield Bond Fund: 0.50%; International Equity Fund: 0.75%; Value Equity
Fund: 0.50%; Small Capitalization Fund: 0.50%.
ADMINISTRATIVE AND CORPORATE SERVICES
Under an administrative and corporate services agreement, The Penn Mutual
Life Insurance Company ("Penn Mutual") serves as administrative and corporate
services agent for Penn Series. Each of the Funds pays Penn Mutual, on a
quarterly basis, an annual fee equal to 0.15% of each of the Fund's average
daily net assets.
EXPENSES AND LIMITATIONS THEREON
The investment advisors and Penn Mutual have each voluntarily agreed to waive
fees or reimburse expenses to the extent each of the Fund's expense ratio
(excluding interest, taxes, brokerage, other capitalized expenses, but
including investment advisory and administrative and corporate services fees)
exceeds the applicable expense limitations for each Fund. The expense
limitations for the Funds are as follows: Money Market, 0.80%; Quality Bond:
0.90%; High Yield Bond: 0.90%; Growth Equity: 1.00%; Value Equity: 1.00%;
Flexibly Managed:1.00%; International Equity: 1.50%; and Small Capitalization
1.00%.
Fees were paid to non-affiliated Directors of Penn Series for the six months
ended June 30, 1996. However, no person received compensation from Penn Series
who is an officer, director, or employee of Penn Series, the investment
advisors, administrator, accounting agent or any parent or subsidiary thereof.
34
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
4 - CAPITAL STOCK
At June 30, 1996, there were one billion shares of $.10 par value capital
stock authorized for Penn Series. The shares are divided into ten classes of
100 million shares of capital stock. Eight of the classes designated are Penn
Series Money Market Fund Common Stock, Penn Series Quality Bond Fund Common
Stock, Penn Series High Yield Bond Fund Common Stock, Penn Series Growth Equity
Fund Common Stock, Penn Series Value Equity Fund Common Stock, Penn Series
Flexibly Managed Fund Common Stock, Penn Series International Equity Fund
Common Stock and Penn Series Small Capitalization Fund Common Stock. Two of the
classes of common stock are presently designated Class H and I, and no shares
have been issued.
Transactions in capital stock of the Money Market Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold............. 20,560,192 $ 20,560,192 24,631,336 $ 24,631,336
Shares issued to
shareholders in
reinvestment of net
investment income...... 683,369 683,369 1,003,043 1,003,043
Shares reacquired....... (15,647,418) (15,647,418) (17,439,462) (17,439,462)
----------- ------------ ----------- ------------
5,596,143 $ 5,596,143 8,194,917 $ 8,194,917
----------- ------------ ----------- ------------
Transactions in capital stock of the Quality Bond Fund were as follows:
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold............. 576,400 $ 5,875,325 503,916 $ 5,106,936
Shares issued to
shareholders in
reinvestment of
Net investment income.. 0 0 211,924 2,170,103
Net realized gain from
investment
transactions.......... 0 0 0 0
Shares reacquired....... (416,538) (4,218,377) (465,354) (4,640,755)
----------- ------------ ----------- ------------
159,862 $ 1,656,948 250,486 $ 2,636,284
----------- ------------ ----------- ------------
Transactions in capital stock of the High Yield Bond Fund were as follows:
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold............. 481,776 $ 4,159,171 598,550 $ 5,210,863
Shares issued to
shareholders in
reinvestment of net
investment income...... 0 0 374,880 3,163,983
Shares reacquired....... (440,613) (3,815,285) (695,380) (5,962,178)
----------- ------------ ----------- ------------
41,163 $ 343,886 278,050 $ 2,412,668
----------- ------------ ----------- ------------
Transactions in capital stock of the Growth Equity Fund were as follows:
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Shares sold............. 135,411 $ 2,886,369 255,618 $ 5,537,105
Shares issued to
shareholders in
reinvestment of
Net investment income.. 0 0 19,112 382,248
Net realized gain from
investment
transactions.......... 0 0 629,855 12,597,090
Shares reacquired....... (404,350) (8,534,297) (500,318) (10,434,845)
----------- ------------ ----------- ------------
(268,939) $ (5,647,928) 404,267 $ 7,901,598
=========== ============ =========== ============
</TABLE>
35
<PAGE>
- --------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 1996 (UNAUDITED)
- --------------------------------------------------------------------------------
4 - CAPITAL STOCK, CONTINUED
Transactions in capital stock of the Value Equity Fund were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Shares sold................... 1,129,839 $19,677,974 1,658,765 $ 25,527,797
Shares issued to shareholders
in reinvestment of
Net investment income........ 0 0 110,253 1,794,912
Net realized gain from in-
vestment transactions....... 0 0 400,512 6,520,338
Shares reacquired............. (229,248) (4,009,619) (588,540) (9,286,727)
--------- ----------- --------- ------------
900,591 $15,668,355 1,580,990 $ 24,556,320
--------- ----------- --------- ------------
Transactions in capital stock of the Flexibly Managed Fund were as follows:
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Shares sold................... 2,586,671 $46,905,238 3,828,143 $ 65,639,740
Shares issued to shareholders
in reinvestment of
Net investment income........ 0 0 443,812 7,722,323
Net realized gain from in-
vestment transactions....... 0 0 524,300 9,122,820
Shares reacquired............. (379,118) (6,889,693) (662,762) (11,651,129)
--------- ----------- --------- ------------
2,207,553 $40,015,545 4,133,493 $ 70,833,754
--------- ----------- --------- ------------
Transactions in capital stock of the International Equity Fund were as follows:
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995*
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Shares sold................... 932,863 $14,174,726 980,799 $ 13,291,658
Shares issued to shareholders
in reinvestment of
Net investment income........ 0 0 108,805 1,574,412
Shares reacquired............. (206,066) (3,129,193) (852,234) (11,468,958)
--------- ----------- --------- ------------
726,797 $11,045,533 237,370 $ 3,397,112
--------- ----------- --------- ------------
Transactions in capital stock of the Small Capitalization Fund were as follows:
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ----------- --------- ------------
<S> <C> <C> <C> <C>
Shares sold................... 571,232 $ 6,691,794 433,221 $ 4,564,368
Shares issued to shareholders
in reinvestment of
Net investment income........ 1,891 21,218 3,390 37,156
Net realized gain from in-
vestment transactions....... 0 0 8,911 97,662
Shares reacquired............. (51,829) (616,724) (5,147) (56,087)
--------- ----------- --------- ------------
521,294 $ 6,096,288 440,375 $ 4,643,099
--------- ----------- --------- ------------
</TABLE>
* For the period from March 1, 1995 (commencement of operations) through
December 31, 1995.
36
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5 - PURCHASES AND SALES OF INVESTMENTS
During the six months ended June 30, 1996, the Funds made the following
purchases and sales of portfolios securities:
<TABLE>
<CAPTION>
QUALITY BOND FUND HIGH YIELD BOND FUND
----------------------- -------------------------
PURCHASES SALES PURCHASES SALES
----------- ----------- -------------------------
<S> <C> <C> <C> <C>
Long Term U.S. Govt. and
Agency Obligations.......... $25,857,901 $19,297,628 $ 0 $ 0
Other Long-Term Securities... 2,368,365 3,691,410 25,877,844 23,539,383
----------- ----------- ------------ ------------
Totals...................... $28,226,266 $22,989,038 $ 25,877,844 $ 23,539,383
----------- ----------- ------------ ------------
<CAPTION>
GROWTH EQUITY FUND VALUE EQUITY FUND
----------------------- -------------------------
PURCHASES SALES PURCHASES SALES
----------- ----------- -------------------------
<S> <C> <C> <C> <C>
Long Term U.S. Govt. and
Agency Obligations.......... $ 0 $ 0 $ 0 $ 0
Other Long-Term Securities... 74,591,819 77,466,876 34,357,386 20,120,254
----------- ----------- ------------ ------------
Totals...................... $74,591,819 $77,466,876 $ 34,357,386 $ 20,120,254
----------- ----------- ------------ ------------
<CAPTION>
FLEXIBLY MANAGED FUND INTERNATIONAL EQUITY FUND
----------------------- -------------------------
PURCHASES SALES PURCHASES SALES
----------- ----------- -------------------------
<S> <C> <C> <C> <C>
Long Term U.S. Govt. and
Agency Obligations.......... $ 2,087,500 $ 0 $ 0 $ 0
Other Long-Term Securities... 82,678,828 36,346,207 33,562,263 22,345,064
----------- ----------- ------------ ------------
Totals...................... $84,766,328 $36,346,207 $ 33,562,263 $ 22,345,064
----------- ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
SMALL
CAPITALIZATION FUND
---------------------
PURCHASES SALES
---------- ----------
<S> <C> <C>
Long Term U.S. Govt. and Agency Obligations.............. $ 0 $ 0
Other Long-Term Securities............................... 7,781,819 1,622,716
---------- ----------
Totals.................................................. $7,781,819 $1,622,716
---------- ----------
</TABLE>
- --------------------------------------------------------------------------------
6 - CAPITAL LOSS CARRYOVERS
Capital loss carryovers for the Funds expire as follows:
<TABLE>
<CAPTION>
MONEY QUALITY HIGH YIELD INTERNATIONAL
MARKET BOND BOND EQUITY
FUND FUND FUND FUND
------- --------- ----------- -------------
<S> <C> <C> <C> <C>
1997............................. $ (62) $ 0 $ 0 $ 0
1998............................. (1,116) 0 0 0
1999............................. 0 0 (1,355,386) 0
2000............................. (61) 0 0 0
2001............................. (183) 0 0 0
2002............................. 0 (940,727) (1,572,728) (64,796)
2003............................. (416) 0 (1,086,129) (1,002,513)
------- --------- ----------- -----------
Total........................... $(1,838) $(940,727) $(4,014,243) $(1,067,309)
------- --------- ----------- -----------
</TABLE>
37
