<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
QUALITY BOND FUND
Performance for the first half of 2000 was good on an absolute basis; very good
relative to our peers but underperformed the indices. Spread volatility drove
the relative performance. From March through May turmoil reigned, spreads
widened considerably and we were relatively long spread product vs. the indices.
However, we were less long and/or had better bond selection than our competitors
and that is what drove our 1st quartile standing within the Lipper universe.
While June witnessed improvement in both treasury yields and spread product
performance it was the interim period that drove results for the first half. Our
12-month, 3-year, 5-year and 7-year results remain outstanding with the Quality
Bond Fund posting top 5% performance within the Lipper "A" bond fund category in
each of those periods.
Over the past two years the course of spreads in the fixed income market have
been broadly associated with the outlook for Federal Reserve policy. We
attribute this correlation to the view that there is a rising systemic risk to
the spread markets associated with a growing concern with defaults. Federal
Reserve monetary policy, having a significant influence on the macro-economy
naturally would be correlated with these types of concerns.
Currently at a 5.88% rate as measured by S&P, junk bond default rates are
already at the highest level since the last recession. This is doubly concerning
when this level of defaults is happening at a time of economic boom. Junk bond
defaults were actually higher than junk bonds issued in the second quarter. For
the broader corporate fixed income arena, default rates are not as threatening
but the pace of leveraging in the corporate community adds to the sense of
concern. Corporate management is more clearly aligned with equity holders this
economic cycle and thus much more willing to apply leverage for share buy-backs
as well as capital spending than in previous decades. The corporate financing
gap is the widest and the leverage ratios are the highest in post war history.
We remain concerned that potential weakness in the economy will spill over to
higher default rates than seen in previous cycles.
Over the next several years we expect that spread volatility will remain very
high, at least as high as in treasury yields. Consequently, forecasting skills
that can anticipate spread movements will be highly valuable. Given the phasing
out of long term treasury debt issuance from projected U.S. government budget
<PAGE>
surpluses, Federal Reserve policy forecasts may be at least as useful as a
spread forecasting tool than for forecasting the direction of long term treasury
yields.
Our longer term outlook is for treasury yields to continue their downward slide
over the next six - twelve months. We would expect double-digit returns for the
Quality Bond Fund over this period and continuation of relative outperformance
vs our peers.
Independence Capital Management, Inc.
Investment Adviser
LIMITED MATURITY BOND FUND
Independence Capital Management Inc. (ICMI) began managing the Penn Series
Limited Maturity Bond Fund on May 1, 2000. Before ICMI became the fund manager,
the fund was managed by Neuberger and Berman. The Limited Maturity Bond fund has
$11.0 million in assets as of 6/30/00.
The Limited Maturity Bond fund will be benchmarked against the Salomon Brothers
1 to 5 year Treasury and Agency Index. The fund will be a complementary product
to the Penn Series Money Market Fund and the Penn Series Quality Bond Fund. The
Fund will have less price risk than the Quality Bond Fund, but offer a higher
potential return than the Money Market Fund. The Limited Maturity Bond fund will
be a high quality fund investing in higher rated government and government
supported securities as well as other AAA rated securities. The fund at times
may invest in other lower rated securities when opportunities in the market
allow the fund to achieve excess return.
The Salomon Brothers 1 to 5 year Treasury and Agency Index has a duration of
2.21 years as of June 30, 2000. The index is comprised of 70.4% of Treasury
securities and 29.6% of Agency securities (FNMA and Freddie Mac securities
primarily). The indexes average quality is AAA.
As of 6/30/00 the fund was overweight duration by approximately 20% and
underweight spread product (Agencies) by 15%. Since quarter end the duration
overweight has been removed after generating a 1+ point gain on the trade. The
fund currently has three positions that should lead to the fund outperforming
the index in the coming months. The fund currently has 18% of assets in Treasury
Inflation Protection Securities (TIPs). We believe that TIPs are cheap to other
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
Treasury securities. With inflation pressures increasing within the economy, the
inflation adjustment component of TIPs is currently attractive. TIPs should
offer a 1.6% yield pickup over other Treasury securities during July because of
the expected large increase in the Consumer Price Index due to energy prices.
The 4% real yield (yield before inflation) is very attractive on a historical
basis.
The fund also has been positioned to benefit if the yield curve flattens. The
fund currently owns 8% of assets in 10 year Treasury securities. These
securities are not in the index, but with the entire Treasury yield curve
trading less than the fed funds rate and the risk of more fed tightening still
looming the 10 year part of the yield curve should outperform on any perception
of more fed tightenings.
The Limited Maturity Fund currently has no straight agency securities. In place
of agency securities the fund owns 9% in GNMA mortgage backed securities that
carry a government guarantee. The continued headline pressures on agency
securities from the legislative risk of removing the implicit government support
for Fannie Mae and Freddie Mac have us concerned about potential
underperformance of these securities.
Performance in the fund for the first two months has been slightly below the
index. The fund has returned 1.50% for May and June while the index has returned
1.65%. We expect the performance of the fund to improve as some of the funds
positions pay off in the months ahead.
Independence Capital Management, Inc.
Investment Adviser
HIGH YIELD BOND FUND
Market Environment
The past six months were generally not kind to bonds or bond funds. Investors
showed an overwhelming preference for stocks, and most bond funds suffered net
cash outflows. In addition, rising interest rates sent bond prices lower,
undermining total returns. To forestall a pickup in inflation as the economy
surged, the Federal Reserve kept upward pressure on interest rates by raising
the key federal funds target rate three times this year after three increases
last year.
High-yield bonds suffered from these developments as well as from additional
negatives. One was a rising default rate, which might seem surprising given the
economy's strength. However, this was the almost inevitable result of the
<PAGE>
abnormally large supply of new high-yield bond issues that came to market in the
last three years, many of which were of marginal quality. The combination of
weak business plans and leveraged balance sheets equals higher defaults, and
higher defaults create nervous investors who flee from any company that reveals
the slightest problem. The other development that hurt the high-yield market in
the spring was the sharp correction in the Nasdaq stock market, home to most of
the New Economy, technology-driven companies that had spearheaded the bull
market. The primary link between the Nasdaq and high-yield markets is through
the telecommunications sector, which, as the largest issuer of high-yield
securities, has become a barometer of that market's health. Thus, the slide in
telecom stock prices cast a pall over high-yield bonds.
A result of these developments has been a steady rise in yield spreads between
high-yield and Treasury bonds. The spread of more than six percentage points for
B rated bonds as of June 30, 2000 was almost unprecedented, and spreads on
lower-rated bonds were even higher. As often happens in this market, however,
wide yield spreads eventually begin to attract investors. We are beginning to
see signs of this in improved cash flows into high-yield mutual funds and
renewed institutional demand.
Performance and Strategy Review
The bad news was that your fund was not immune to the difficult market
conditions, and absolute returns were lackluster. The good news was that
performance compared favorably with the First Boston benchmark index and with
the losses suffered by the average high-yield fund. The fund's comparatively
good showing reflected our thorough research, risk control procedures, and an
active "sell" discipline, which helped minimize losses. In addition, our focus
remained on B rated bonds, which held up better than lower-rated issues. Lastly,
when the Nasdaq declined in the spring, the portfolio was not hit quite as hard
as some funds in our peer group that had moved substantial assets into stocks
and convertible securities.
Our strategy was essentially unchanged over the past six months, continuing to
emphasize credit research, wide diversification, and balanced sector allocation.
Telecom, representing just over one-quarter of fund assets, remained the largest
sector exposure because of its excellent prospects. Wireline communications
(part of the telecom sector) increased to about 10% of net assets. Allegiance
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
Telecom and Focal Communications were some names added to this area. Wireless
communications continued to compose roughly 10% of net assets. Nextel
Communications is our largest holding in the wireless area, and we added several
wireless affiliates of Sprint PCS and AT&T. In the cable industry, we purchased
some bonds of cable operators in western Europe, where the industry's
development is several years behind the U.S., but is combining cable, telephone,
and Internet services.
We continued to find good values in so-called Old Economy sectors that have
remained largely out of favor with investors despite steady performance. In
gaming, for example, where earnings have been dependable and the competitive
environment has stabilized, we added International Game Technology. Our energy
holdings (about 7% of net assets) also did quite well as oil prices remained
high.
The fund's credit quality diversification was not significantly changed. B rated
bonds continued to dominate the portfolio at approximately 60% of net assets,
and another 18% of assets consisted of higher-rated securities. This posture
benefited the fund versus its average competitor in the current bearish
environment, but if the high-yield sector were to rally sharply, results could
lag because low-rated bonds (CCC and below) often outperform in the early stages
of a rebound. The fund has navigated the mines of rising defaults quite well,
with only two small holdings receiving direct hits in late 1999: Safelite Glass
and Pathmark (victim of an aborted merger offer).
Outlook
Six months ago we had hoped the high-yield market would turn the corner in the
first half of 2000, but the improved scenario did not come to pass. The market
was beaten up a little more, but that has created even more compelling yields
and values in the sector, so we continue to look for a turnaround in the second
half of the year. The new issues market, which had previously weighed on the
sector, has almost totally dried up even as demand shows signs of reviving. This
shift in fundamentals should be beneficial.
Even if we see the high-yield market strengthen, we do not expect to increase
the fund's risk profile. The improved environment will bring an increase in
supply, and, more important, the economy may finally be showing signs of
slowing. So now is not a time to take significantly more risk by purchasing
bonds in our market's lower-quality tier. We will continue our efforts to
<PAGE>
provide high income while moderating risk in this increasingly volatile part of
the bond market.
Independence Capital Management, Inc.
Investment Adviser
T. Rowe Price Associates, Inc.
Investment Sub-Adviser
GROWTH EQUITY FUND
It's important to realize that the stock market this year has been far from
homogenous in its behavior. Focusing only on the S&P 500 and the NASDAQ
Composite indices we see two very distinct patterns emerging. The NASDAQ
Composite, reflective in large measure of the large capitalization
technology-related companies, more than doubled in value from early August 1999
until its peak in March 2000 with an incredible acceleration over the last two
months of last year and the early part of this year. Its decline, as noted
above, was much more precipitous than other indices and it appears that a
recovery to new highs may take a good while to unfold.
The S&P 500, on the other hand, has taken a more orderly path with a series of
higher highs and higher lows framing the index's advance since last October. At
this time, the S&P 500 appears poised for a potential move back toward its
previous highs, but that will depend on economics. If additional economic
releases confirm an economic slowdown it may be, in the words of one noted stock
market commentator, "Full speed ahead...more signs of slowing." We'll obviously
have to wait and see.
The Penn Series Growth Equity Fund's first half returns were mildly
disappointing with the Fund producing a return of -1.02% for the six months
ended June 30, 2000 versus benchmark returns of -0.47% for the S&P 500, 0.23%
for the Lipper Large Cap Growth Index and 2.58% for the S&P 500/Barra Growth
Index. That being said, the Fund's twelve-month return remained ahead of these
same benchmarks. For the twelve month period ended June 30, 2000 the Fund gained
21.09%, while the S&P 500's return was 7.24%, the Lipper Large Cap Growth Index
grew 20.67% and the S&P 500/Barra Growth Index advanced 18.55%.
For the three year period ended June 30, 2000 the Penn Series Growth Equity Fund
generated an annualized return of 27.15% versus 19.66% for the S&P 500, 27.03%
for the S&P 500/BARRA Growth Index and 26.30% for the Lipper Large Cap Growth
Index.
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
The second quarter of 2000 saw one particular change in performance that
may warrant monitoring. Small-cap value (Russell 2000 Value) was the clear
winner in the second quarter's performance sweepstakes. A similar divergence in
performance also took place among mid-cap stocks with value clearly outpacing
growth (-1.68% vs. -7.41%). We will be monitoring this trend to see if it begins
to creep up the capitalization ladder and begins to impact on the larger-cap
companies. To this point there is no evidence that it has. Indeed the second
quarter's large-cap performance essentially halted a one-month trend begun in
March when the Russell 1000 Value Index posted a 12.20% return, outpacing the
7.16% return for the 1000 Growth Index. It is clear to see the advantage growth
stocks have provided relative to value stocks over the past six and twelve month
periods.
The Technology, Capital Goods and Health Care sectors contributed the most to
the first half's performance, while the Consumer Cyclical, Consumer Staples and
Financial Service sectors had the greatest negative impact.
The Growth Equity Fund continues to be managed with a commitment from the Fund's
management team to invest in those companies generating consistent and
sustainable earnings and sales growth. Our disciplined analysis and evaluation
of reported and forecast earnings trends for individual companies continues to
enable us to maintain a significant edge in identifying firms that produce
positive earnings surprises and subsequently report growth at rates above
historical trends. Growth appears most robust among select technology, health
care, and financial service companies.
Outlook
As the economy and the investment markets prepare to move into the second half
of the year there are still many questions whose unfolding answers will
dramatically impact how the year 2000 will be remembered. At the core of
virtually all these questions is whether or not the Federal Reserve will be
successful in engineering a soft landing for the economy. A hopeful sign that
the Fed is feeling a bit more confident in this regard came late in June when
the Fed opted to leave its Federal Funds rate unchanged at 6.5%. In a statement
following its meeting, the Fed indicated that it saw some signs of weakness. The
central bank also added that although some signs of inflation were emerging,
rising productivity has helped cool inflation.
<PAGE>
But the Fed's decision to stand pat on interest rates at its last meeting is
viewed by many observers as a pause rather than an end to the Fed's one-year run
of tightening moves aimed at slowing down a charging economy. Consider that over
the past twelve months the central bank has raised the funds rate six times by a
total of 1.75 percentage points, effectively pushing the prime rate to 9.5%, its
highest level in almost a decade, but economic growth remains above target.
While growth in real gross domestic product has drifted down from a 7.3% annual
pace for the fourth quarter of 1999, to 5.4% in the first quarter of 2000 and is
likely to slow further to just over 4% for the second quarter of the year, it is
still above the 3.5%-to-3.75% range the Fed has stated it views as consistent
with low inflation.
Progress has been made, but the Fed warned that it might raise rates again in an
effort to bring the economy back within its target range as it "believes the
risks continue to be weighted mainly toward conditions that may generate
heightened inflation pressures in the foreseeable future." In mid-June the
President of the Federal Reserve Bank of San Francisco stated this case:
"Although phenomenal gains in productivity have expanded supply beyond our
expectations, we're seeing signs that demand may be gaining even faster. That
imbalance spells inflationary pressures." At present, one would have to assume
that it is better than even money that the Fed will hike rates again at its next
meeting on August 22nd.
While we cannot conclude that a rate hike in August, if it occurs, would be the
Fed's last for this cycle, we believe it is safe to presume that the central
bank is close to the end of its tightening efforts. The Fed will be closely
watching the actual GDP growth numbers for the second quarter to see if they, in
fact, come in a little below current consensus putting that growth within the
range of the Fed's low inflation targets. Importantly, inflation outside the
volatile energy sector has remained dormant but the Fed needs to see how the
impact of $32 oil, the highest price in a decade and up more than 179% from its
low in only 18 months, works its way through the system as both an inflation
factor and a potential deterrent to economic growth.
On balance, the Fed's decision to leave rates unchanged in June reflects the
sentiments of Fed Governor Edward Gramlich who suggests that the "jury is still
out. We have taken action...its hard to tell, given the lag, what the effect is.
Some of it hasn't happened yet, maybe a lot hasn't happened yet."
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
The stock market, following the recovery from its deep correction, is taking its
lead from the Federal Reserve and assuming a "wait and see" posture. The primary
concern of market participants is that earnings growth, despite being critical
to the long-term health of any stock's price, would not be sufficient to
overcome the negative short-term impact of a Fed decision to continue to raise
rates aggressively if economic reports were to be surprisingly robust. Investors
do not want to get caught holding the proverbial bag and are treading very
carefully into the market. That being said, we continue to see investors being
most consistently drawn toward those companies that have not disappointed them
with negative pre-announcements or a quarter or two of below expectation
reports. While the technology sector holds out the most promise for finding
sustainable earnings growth, key companies in virtually all economic sectors are
being revisited to determine which ones hold out the greatest likelihood of
meeting or exceeding Wall Street's expectations.
We remain cautiously optimistic that the second half of 2000 will produce
positive returns for patient and focused investors.
Independence Capital Management, Inc.
Investment Adviser
MID CAP GROWTH FUND
The Penn Series Midcap Growth Fund's performance in the period from May 1 to
June 30 was the equivalent of a successful Hail-Mary pass in a football game's
final seconds. Midcap Growth suffered weak early performance and markedly
trailed the Russell Midcap Growth Index until June; indeed, it pulled close to
the index in the last two days of the period. Altogether, Midcap Growth
generated a 6.90% return that handily outperformed the Russell Midcap Growth
Index's 2.55% gain.
Contributing the most by far to Midcap Growth's quarterly results was a sizable
position (a weighting of more than 40%) in the technology sector, which
outperformed its corresponding Russell Midcap Growth sector. Some of our best
performers were stocks of wireless-communications, optical-fiber,
data-networking, semiconductor capital-equipment, and software companies. In our
judgment, these companies continue to be well-positioned to capitalize on the
<PAGE>
highly profitable convergence of telecommunications, computer, and television
technologies. Altogether, seven of our 10 sector positions outperformed their
corresponding index sectors.
Detracting the most from performance were subpar relative returns in health-care
and consumer-discretionary/services stocks. In health care we didn't own enough
laboratory-diagnostic, biotechnology, and pharmaceutical stocks, which did well.
Our consumer-discretionary/services holdings were victims of higher interest
rates.
In our judgment, corporate earnings prospects continue to be attractive; we
anticipate that most mid-cap companies will report earnings for the remainder of
the year that are either in line with or better than Wall Street's expectations.
We continue to emphasize the stocks of leading companies that, in our analysis,
can sustain their earnings growth. In the market downturn earlier in the year,
the stocks that were hit hardest were those with the least solid fundamentals.
Independence Capital Management, Inc.
Investment Adviser
Turner Investment Partners, Inc.
Investment Sub-Adviser
LARGE CAP VALUE FUND
The Fund returned -3.47% (net of fees) for the 2-month period 5/1/00-6/30/00,
outperforming the Russell 1000 Value Index, which lost -4.56% in the same
period.
Positive sector allocation, mainly in health care and communications services,
contributed to strong relative performance; 8 of 12 sectors added to returns.
Favorable stock selection, while strongest in consumer staples, was broadly
distributed across 8 of 12 sectors. In those sectors in which stock selection
was weak versus the benchmark, underperformance was not significant.
Performance was strongest in stocks with lower price-to-earnings and
price-to-book ratios; this reflected a market shift toward value-oriented stocks
in contrast to the strong momentum orientation of previous quarters.
OUTLOOK AND STRATEGY
We are beginning to see signs of moderating growth in the U.S. economy and we
believe that the Fed will diligently maintain its commitment to directing the
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
economy toward a slower pace of expansion. As a cooling economy puts pressure on
earnings, many investors accustomed to momentum strategies will likely shift
investment strategies.
The following factors could have an impact on stock prices in the near term:
-- Investors are likely to maintain their interest in technology and related
stocks due to the sector's strong growth potential. However, recent volatility,
combined with the possibility of an earnings slowdown, may temper investors'
confidence in these sectors. Therefore, we do not anticipate a return to the
nearly unprecedented advances of 1999 in the second half of year 2000.
-- Labor shortages may be less of a threat in a slowing economic environment.
However, such a scenario introduces the possibility of rising credit and
delinquency problems, given the high levels of consumer debt and the economy's
decade-long up cycle.
-- Energy prices will likely remain firm throughout 2000; OPEC has thus far been
able to maintain a higher-priced supply/demand balance and inventories remain
below historic levels. Meanwhile, spot shortages of electricity are considered a
possibility in some parts of the country, as surplus-generation capacity has
failed to keep pace with consumption growth.
Despite the strong performance of value equities in the second quarter, we
continue to believe -- especially given today's extended valuations -- that a
value-oriented approach will provide investors with an attractive combination of
risk and return in the U.S. equity markets over the coming years.
Independence Capital Management, Inc.
Investment Adviser
Putnam Investment Management, Inc.
Investment Sub-Adviser
GROWTH & INCOME FUND
It's important to realize that the stock market this year has been far from
homogenous in its behavior. Focusing only on the S&P 500 and the NASDAQ
Composite indices we see two very distinct patterns emerging. The NASDAQ
Composite, reflective in large measure of the large capitalization
technology-related companies, more than doubled in value from early August 1999
until its peak in March 2000 with an incredible acceleration over the last two
months of last year and the early part of this year. Its decline, as noted
<PAGE>
above, was much more precipitous than other indices and it appears that a
recovery to new highs may take a good while to unfold.
The S&P 500, on the other hand, has taken a more orderly path with a series of
higher highs and higher lows framing the index's advance since last October. At
this time, the S&P 500 appears poised for a potential move back toward its
previous highs, but that will depend on economics. If additional economic
releases confirm an economic slowdown it may be, in the words of one noted stock
market commentator, "Full speed ahead...more signs of slowing." We'll obviously
have to wait and see.
The Penn Series Growth and Income Fund commenced operations on May 1, 2000,
having received most of the assets of the Penn Mutual Separate Account D, the
Equity Income Fund. The initial benchmarks for this fund are the S&P 500 Stock
Index and the Lipper Large Cap Core Index. For the period May 1, 2000 through
June 30, 2000 the Fund returned -0.80%. This return compared with the 0.35% gain
for the S&P 500 and the 1.02% return of the Lipper Large Cap Core Index.
Going forward the Penn Series Growth and Income Fund will principally be
reviewed within the context of the S&P 500 and its corollary indices the S&P
500/BARRA Growth(R) and S&P 500/BARRA Value(R) indices. In addition, an analysis
of the Russell 1000(R) Index may be included.
The Growth and Income Fund will also be reviewed against its peers beginning
with the September 30, 2000 quarter, when a full quarter's comparison will be
possible.
For the short two-month period concerned the Health Care sector, with a return
of 9.28%, contributed the most to the Fund's performance. Other positive
contributions were made by investments in the Financial (+4.38%), Consumer
Staples (+3.38%), Energy (2.92%) and Capital Goods (0.60%) sectors. Negatively
impacting performance were the Consumer Cyclical (-11.26%), Communication
Services (-10.54%), Technology (-5.41%) and Utilities (-3.72%) sectors.
Convertible bonds contributed positively (+4.99%) while convertible preferred
holdings generated a negative return (-11.71%).
The portfolio characteristics of the Fund's holdings demonstrate the commitment
of the Fund's management team to investing in those companies generating
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
consistent and sustainable earnings and sales growth while also maintaining a
portfolio yield consistent with the S&P 500. By applying our disciplined
analysis and evaluation to reported and forecast earnings trends for individual
companies we have been able to maintain a significant edge in identifying firms
that do produce positive earnings surprises and subsequently report growth at
rates above historical trends. Growth remains most robust among select
technology, health care, and financial service companies.
Outlook
As the economy and the investment markets prepare to move into the second half
of the year there are still many questions whose unfolding answers will
dramatically impact how the year 2000 will be remembered. At the core of
virtually all these questions is whether or not the Federal Reserve will be
successful in engineering a soft landing for the economy. A hopeful sign that
the Fed is feeling a bit more confident in this regard came late in June when
the Fed opted to leave its Federal Funds rate unchanged at 6.5%. In a statement
following its meeting, the Fed indicated that it saw some signs of weakness. The
central bank also added that although some signs of inflation were emerging,
rising productivity has helped cool inflation.
But the Fed's decision to stand pat on interest rates at its last meeting is
viewed by many observers as a pause rather than an end to the Fed's one-year run
of tightening moves aimed at slowing down a charging economy. Consider that over
the past twelve months the central bank has raised the funds rate six times by a
total of 1.75 percentage points, effectively pushing the prime rate to 9.5%, its
highest level in almost a decade, but economic growth remains above target.
While growth in real gross domestic product has drifted down from a 7.3% annual
pace for the fourth quarter of 1999, to 5.4% in the first quarter of 2000 and is
likely to slow further to just over 4% for the second quarter of the year, it is
still above the 3.5%-to-3.75% range the Fed has stated it views as consistent
with low inflation.
Progress has been made, but the Fed warned that it might raise rates again in an
effort to bring the economy back within its target range as it "believes the
risks continue to be weighted mainly toward conditions that may generate
heightened inflation pressures in the foreseeable future." In mid-June the
President of the Federal Reserve Bank of San Francisco stated this case:
"Although phenomenal gains in productivity have expanded supply beyond our
<PAGE>
expectations, we're seeing signs that demand may be gaining even faster. That
imbalance spells inflationary pressures." At present, one would have to assume
that it is better than even money that the Fed will hike rates again at its next
meeting on August 22nd.
While we cannot conclude that a rate hike in August, if it occurs, would be the
Fed's last for this cycle, we believe it is safe to presume that the central
bank is close to the end of its tightening efforts. The Fed will be closely
watching the actual GDP growth numbers for the second quarter to see if they, in
fact, come in a little below current consensus putting that growth within the
range of the Fed's low inflation targets. Importantly, inflation outside the
volatile energy sector has remained dormant but the Fed needs to see how the
impact of $32 oil, the highest price in a decade and up more than 179% from its
low in only 18 months, works its way through the system as both an inflation
factor and a potential deterrent to economic growth.
On balance, the Fed's decision to leave rates unchanged in June reflects the
sentiments of Fed Governor Edward Gramlich who suggests that the "jury is still
out. We have taken action...its hard to tell, given the lag, what the effect is.
Some of it hasn't happened yet, maybe a lot hasn't happened yet."
The stock market, following the recovery from its deep correction, is taking its
lead from the Federal Reserve and assuming a "wait and see" posture. The primary
concern of market participants is that earnings growth, despite being critical
to the long-term health of any stock's price, would not be sufficient to
overcome the negative short-term impact of a Fed decision to continue to raise
rates aggressively if economic reports were to be surprisingly robust. Investors
do not want to get caught holding the proverbial bag and are treading very
carefully into the market. That being said, we continue to see investors being
most consistently drawn toward those companies that have not disappointed them
with negative pre-announcements or a quarter or two of below expectation
reports. While the technology sector holds out the most promise for finding
sustainable earnings growth, key companies in virtually all economic sectors are
being revisited to determine which ones hold out the greatest likelihood of
meeting or exceeding Wall Street's expectations.
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
We remain cautiously optimistic that the second half of 2000 will produce
positive returns for patient and focused investors.
Independence Capital Management, Inc.
Investment Adviser
MID CAP VALUE FUND
Market Developments
Although major stock market performance averages declined only modestly during
the second quarter of 2000, the markets experienced high levels of day-to-day
volatility. For example, while the Standard & Poor's 500 Composite Stock Index
("S&P 500") ended the quarter with a 2.66% decline, it had been down almost 9.5%
in mid-April. These exaggerated price swings were primarily the result of shifts
in investor sentiment as high-priced technology growth stocks fell out of favor,
and investors shifted investment assets to other market sectors, including
health care and utilities. On average, large-cap and mid-cap value-oriented
stocks continued to languish, with the Russell 1000 Value Index down 4.69% for
the quarter.
Performance
Penn Series Mid Cap Value returned 1.70% from its inception, May 1st, through
June 30th, out-performing its benchmark the Russell MidCap Value Index which
lost 2.07% during the period.
Portfolio Highlights
Our holdings in the Financial and Healthcare Sectors performed well since the
inception of the fund. The Financial Sector, our most heavily weighted sector
contributed 188 basis points to the overall return of the portfolio. Four of the
top ten largest positive contributors to the portfolio's overall total return
came from the Financial Sector; student loan provider SLM Holding Corp.,
insurance and financial services companies XL Capital Corp. and Metlife, and
Insurance broker Aon Corp.
In the Portfolio's Healthcare Sector, biotechnology firm Genzyme General Corp.
led the way with its solid performance and promising new drug Fabrazyme. The
company sent Fabrazyme to the FDA for approval at the end of June. St. Jude
Medical, another strong Healthcare company in the portfolio, designs,
manufactures, and markets medical devices primarily for cardiac care.
Unfortunately, a few of our Technology holdings were hit hard by negative
sentiment within the sector. Technology services Company Comdisco was one drag
<PAGE>
on portfolio returns, and satellite communications company Loral Space &
Communications was another.
Outlook
We are cautiously optimistic regarding the stock market's future prospects. Over
the near term, economic uncertainty is expected to create continued volatility.
If the Federal Reserve Board's interest-rate hikes ultimately slow the economy
without triggering a recession, value-oriented and cyclical stocks could rally.
If the Federal Reserve Board's policies result in a recession, however, stock
prices are likely to decline further. Over the longer term, the major trends
that have driven the market higher -- including technological advances, greater
productivity and global competition -- should continue to create growth
opportunities for long-term investors, in our opinion.
Independence Capital Management, Inc.
Investment Adviser
Neuberger Berman Management, Inc.
Investment Adviser
FLEXIBLY MANAGED FUND
U.S. markets surged through mid-March, fueled by investor enthusiasm for
technology--especially Internet--stocks. At that point, however, stocks
corrected sharply, as investors finally reacted to the sky-high tech valuations
and the ongoing series of interest rate hikes by the Federal Reserve. The Fed
has raised short-term interest rates three times in 2000 (six times since June
1999) in an effort to lessen inflationary pressures in the economy. Although the
tech-heavy Nasdaq Composite posted the largest drop, stocks outside the sector
also suffered. The S&P 500 Stock Index finished the first six months of the year
with a decline of 0.42%.
Your fund performed well during this volatile period, posting positive returns
and outdistancing the S&P 500 and the average fund in our Lipper category. This
solid performance was a result both of our risk-averse strategy and individual
stock selection. Although large-company stocks as a group lost ground in the
downturn, many investors finally began seeking stocks that represented good
value. Since this is a hallmark of our stock-picking approach, the fund
benefited from this change in investor sentiment. In addition, the portfolio has
an approximate 40% allocation to convertibles, bonds, and cash reserves, which
provided additional protection from the stock market downdraft. Strong returns
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
from some of our largest sectors, particularly energy and from several top
holdings boosted returns.
A number of our best performers were in our sizable utilities and energy
sectors. Strong contributors from the utilities area included Unisource Energy
and FirstEnergy. The energy sector was buoyed by high oil prices, and our
substantial commitment to these companies paid off with significant gains from
such holdings as Mitchell Energy & Development and Amerada Hess. Holdings in
other sectors that did well - in some cases even when their sector did not -
included White Mountains Insurance Group, Reebok, Philip Morris, and the
convertible preferred stock of Rouse. Disappointing holdings included Washington
Post and New York Times in the media area, Newmont Mining in the generally weak
metals sector, and specialty chemicals producers Imperial Chemical, Octel, and
Great Lakes Chemical.
Our search for attractive but undervalued securities was aided by the market
drop. Significant purchases during the first half included USX-Marathon and
USX-Capital Trust; Hasbro, a toy company; Ryder System, a transportation
services company; and, in the energy area, Vastar Resources and convertible
securities of Baker Hughes. We trimmed positions in a number of holdings that
had generated nice gains, including Amerada Hess, Smith & Nephew (in hospital
services), and Overseas Shipholding Group.
Outlook
Although the economy showed signs of slowing at the end of June, the Fed may
raise rates further in the months to come. As long as the Fed continues to
tighten, stocks are unlikely to stage a major advance. But the downturn has
eliminated some excesses in the market and refocused attention on fundamentals.
A continuation of this trend should be positive for the fund and provide
attractive long-term returns for shareholders with reduced risk.
Independence Capital Management, Inc.
Investment Adviser
T. Rowe Price Associates, Inc.
Investment Sub-Adviser
INTERNATIONAL EQUITY FUND
Vontobel International Equity Fund lost 12.07% during the first half of 2000, as
its TMT holdings gave back some of the gains that accounted for the fund's
outperformance last year. The fund's net asset value at June 30th was $24.63,
<PAGE>
and net assets totaled $160,804,202, vs. $28.01 and $192,537,291, respectively,
at December 31, 1999. The fund's benchmark, Morgan Stanley Capital
International's EAFE Index, posted a first-half decline of 4.05%.
As bottom-up investors, we generally avoid making frequent changes from a
country or sector standpoint. Last year's strong returns posed a valuation risk
that exceeded our margin of safety. At year-end 1999, the fund was valued at 40x
PE with EPS growth of 26%. We reduced our TMT weighting by approximately 14% in
the first quarter and another 10% in the second, but maintain approximately 24%
in TMT firms whose growth prospects and market leadership, we believe, justify
their selling at a premium to intrinsic worth. For some of our core TMT
positions like Vodafone and Philips, business conditions are better than ever,
with top-line growth and operating margins expanding at double-digit rates. The
sector rebalancing didn't reduce the fund's growth profile; based on our
estimates at June 30 it was valued at 24x with EPS growth of 22%.
We did most of our trimming in Japan, last year's best-performing market and the
worst performer year to date (-14%). We sold NTT Data, where government
contracts made earnings and revenue estimates less predictable than in the past,
and reduced such core positions as Murata, Rohm, NTT DoCoMo, all great companies
whose position size had grown beyond our risk management parameters due to their
exceptional performance in 1999. One new purchase was Fujitsu, a major producer
of flash memory chips, trading at a 10% discount to intrinsic worth. The
Japanese stocks in our investable universe remain highly attractive: sales
growth is up 5%, average margins are rising, operating profits are up 12% and
recurring profits up 23%. At June 30 the fund had an underweight of
approximately 21% in Japan, vs. 27% for the MSCI EAFE.
Due to the multiple contraction in TMT stocks, we were able to buy back or
invest in some high-quality firms with consistent growth numbers, like SAP, NTT
DoCoMo and ATOS, France's second-largest IT consultant and the fifth-largest in
Europe. SAP, which we had sold back in January, is expected to deliver 20%
top-line revenue growth in ERP (enterprise resource planning) and CRM (customer
relationship management). After two years of investment in personnel and
development, SAP should be able to maintain its global leadership, and its
partnership with Commerce One will expand its customer base. Having taken
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
profits in NTT DoCoMo, we added back to the position during its 40% selloff in
the second quarter. We're staying focused on investing in quality firms with
strong records in execution, solid financial records, and positive cash flow
numbers, and we control our risk by keeping our positions in these firms to only
about 1%-1.5% of portfolio assets at this point.
With the proceeds of our TMT sales, we increased our exposure to financials this
year by about 6%, by adding to some of our existing holdings like Credit Suisse,
Swiss Re, Allianz, Munich Re, Axa and establishing positions in the UK firms
Royal Bank of Scotland, Prudential and Abbey National. Royal Bank of Scotland,
purchased at a discount to book, has an 8-year track record of consistent
revenue growth is growing earnings at over 15%. Due to multiple expansion or
stock price appreciation, our financial sector weighting is now higher than that
of the EAFE.
At quarter end we reduced some of these holdings by realizing profits, but we
intend to hold on to our core positions in financial companies, so long as they
avoid asset provisioning, credit deterioration and revenue risk. Among our
largest financial holdings are Axa and Aegon, the world's best-run life
insurance firms after AIG in the US.
Historically we've been able to add value through our currency hedging
techniques, which have contributed to returns and reduced overall portfolio
volatility, but this year the technical tools we use for currency hedging gave
us a number of false signals. Despite the collapse in US financial markets
driven by the Nasdaq and a reacceleration of growth in Europe, the dollar,
defying logic, remained strong. We went from being fully unhedged to fully
hedged, which we define as a 50% hedge ratio against the euro, Swiss franc, yen
and pound sterling. At June 30 the fund was hedged only against the pound
sterling.
Day-to-day sentiment changes but our investment process stays the same. We
invest in firms with defensible franchises that are growing at much more
reliable rates than their competitors, and we invest with a 5-year time horizon.
The environment for bottom-up investors has become increasingly challenging, but
we haven't lacked for highly attractive candidates for our investable universe.
This year we added about 30 new stocks that we've been following over the last
3-5 years; they all have strong franchises and are generating better than 15%
growth in cash flow and earnings. While our repositioning of the fund's holdings
has not yet benefited returns, the fundamentals in international markets remain
<PAGE>
very attractive. Given their ongoing restructuring and enhanced use of balance
sheets, which for the most part are much stronger than those of their US
counterparts, we believe our holdings have great potential for improved
profitability, as expressed in higher returns on equity and returns on capital.
Independence Capital Management, Inc.
Investment Adviser
Vontobel USA, Inc.
Investment Sub-Adviser
SMALL CAP VALUE FUND
Royce & Associates began managing the Penn Series Small Cap Value Fund on May 1,
2000. The Fund will be benchmarked against the Russell 2000 Index.
Although the tenure was short, we were pleased with the opening period
performance for the Fund. From the date Royce & Associates assumed investment
management responsibility (May 1, 2000) through June 30, 2000, the Fund was up
4.66%. This compared favorably to both small cap benchmarks, the Russell 2000
and Russell 2000 Value Indices, which were up 2.38% and 1.35%, respectively. In
addition, the Fund also outperformed the large cap S&P 500 Index, which was up
0.37% for the same period.
The portfolio that Royce & Associates inherited from the previous manager has
been totally remade and reflects numerous changes. The primary change relates to
portfolio concentration in terms of position weighting and in terms of the
number of portfolio holdings. The prior portfolio contained approximately 40
holdings and its top position represented almost 5% of portfolio assets. The
Fund is now more diversified (131 holdings at 6/30/00) and less concentrated in
terms of its position weighting - its top holding, Annuity and Life Re,
represented 1.4% of assets as of 6/30/00. Portfolio sector weightings have also
changed - Industrial Products (32.4%), Technology (17.7%), and Industrial
Services (16.8%) are now the Fund's largest sector weightings.
Contributing to the Fund's early success were nice gains from the Health,
Industrial Products, and Financial Intermediaries sectors. Inside the Health
sector, Shared Medical Systems was the largest contributor to the Fund's
performance. Inside the Industrial Products sector, specialty chemicals
manufacturer Lilly Industries and specialty materials manufacturer SPS
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
Technologies were two of the Fund's better performers. Inside the Financial
Intermediaries sector, insurer Annuity and Life Re and banking concern, Enhance
Financial Services Group, were substantial contributors to the Fund's opening
period performance.
Independence Capital Management, Inc.
Investment Adviser
Royce & Associates, Inc.
Invesment Sub-Adviser
EMERGING GROWTH FUND
We weathered a very tough second quarter and have ended the first half of 2000
in solid shape. In the second quarter, the Penn Series Emerging Growth portfolio
declined 9.65% (net of fees) against a 7.37% decline in the benchmark Russell
2000 Growth. Bolstered by strong first quarter performance, the Penn Series
portfolio was up 6.02% (net of fees) at midyear against a slight increase of
1.23% in the Russell 2000 Growth. This performance helped us maintain our
longer-term performance advantage over the benchmark. For the last twelve months
ending June 30, 2000, the portfolio is up 96.82% (net of fees) against a rise of
28.39% in the benchmark.
Sparked by a break in biotech stocks in early March, smaller fast growing stocks
declined precipitously in March and entered into a period of volatility in April
and May in which the general trend was downward. Measuring the daily close of
the Russell 2000 Growth we calculate the index declined 35.01% from a peak on
March 10, 2000 to a low on May 25, 2000. In that same time period the Emerging
Growth composite declined 49.66%. This correction ranks as one of the sharpest
in small cap history.
While we endured a fast, sharp decline in March, the first two months of the
second quarter brought a slower, longer kind of pain. Fortunately, sensing at
least some of the selling was overdone, investors returned to our market segment
in June and the Russell 2000 Growth finished June with a one month advance of
12.92%. The portfolio posted a strong 32.12 % (net of fees) return for June.
Historically we have focused on "upgrading" the portfolio with the highest
quality, fastest growing, small growth stocks coming out of a correction. When
stocks get beaten up significantly, we see little incremental risk in owning
quality stocks that may be more expensive than the rest of the universe. We have
found that investors often look to these names when they return to the market.
<PAGE>
Thus in April and May we bolstered positions in stocks from the hardware,
networking, and software sectors. We expanded our position in SonicWall, a
provider of Internet security products. SonicWall has seen a significant
increase in demand for its security product serving the broadband market. This
demand has driven triple digit revenue and earnings growth over the last several
quarters. The company is at the confluence of two key investment premises: the
expanding need for Internet security, and the rapid growth of broadband access.
Despite the rally in many small cap stocks, we endured our share of
disappointments in the quarter as well. Exchange Applications, a small company
that provides customer management software for e-commerce and e-marketing
initiatives, has been a strong contributor to performance over the last several
quarters. This software area presents a huge growth opportunity and Exchange
Applications has been an attractive way to invest. The company has a smaller
market capitalization and more attractive valuation than competitors E.piphany
and Broadbase Software. However, the stock corrected in the March decline, and
fell again in April and May. While Exchange Applications reported strong numbers
in the first quarter, the market perceived that too large a percentage of
Exchange Applications revenue came from one relationship. Additionally, a holder
of the company's stock was forced to sell a large slug of Exchange Applications
stock into an already weak market. We believe Exchange Applications is remedying
the customer concentration issue. They have launched a new product set that has
proven very popular and has them on track for a strong third quarter. Thus we
purchased more stock on weakness early in the second quarter, and longer term
think the company will continue to succeed.
The Exchange Applications example helps to confirm why we believe running a
diversified portfolio is the most prudent way to participate in the small growth
area. The stock was a significant position, and detracted from performance in
the quarter, but in our broadly diversified portfolio, it did not drag down our
results too significantly.
Despite the volatility of the market, and the strong correction many Internet
related stocks have endured, we are optimistic about business opportunities in
many segments of the market. We see great opportunities in wireless, broadband
<PAGE>
PENN SERIES FUNDS, INC.
MANAGEMENT'S DISCUSSION OF FUND PERFORMANCE
-------------------------------------------
access, the continued build-out of the Internet, and Internet content delivery.
The decline of the on-line retailers should not surprise investors, and we don't
sense that the decline will have a long term impact on other fast growth
sectors. While we are optimistic at the company level, we do expect that we will
endure more volatility throughout the remainder of the year.
Independence Capital Management, Inc.
Investment Adviser
RS Investment Management, Inc.
Investment Sub-Adviser
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE MONEY MARKET FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
COMMERCIAL PAPER--44.7%
--------------------------------------------------------------------------------
Alabama Power Co.
6.820%, 07/06/00 1,436 $ 1,435
Allstate Corp.
6.520%, 07/10/00 1,500 1,498
Allstate Corp.
6.530%, 07/10/00 2,000 1,997
American Express Credit Corp.
6.750%, 07/06/00 100 100
6.700%, 07/10/00 3,500 3,495
Baltimore Gas & Electric
6.650%, 07/13/00 722 721
Coca-Cola Co.
6.800%, 07/06/00 400 400
6.670%, 07/07/00 500 500
Duke Capital Corp.
6.630%, 08/17/00 2,015 1,998
Emerson Electric Co.
6.700%, 07/05/00 500 500
6.500%, 07/06/00 530 530
6.750%, 07/06/00 2,500 2,499
Fleet Funding Corp.
6.600%, 07/05/00 1,350 1,350
Florida Power & Light Co.
6.520%, 07/10/00 2,000 1,997
6.530%, 07/10/00 1,000 999
General Electric Capital Corp.
6.750%, 07/05/00 300 300
6.550%, 07/12/00 1,794 1,791
6.600%, 07/12/00 300 299
General Mills, Inc.
6.850%, 07/03/00 450 450
6.520%, 07/10/00 500 499
General Motors Acceptance Corp.
6.700%, 07/12/00 861 859
GTE Corp.
6.820%, 07/14/00 1,550 1,547
6.580%, 07/21/00 1,000 997
Honeywell, International
6.570%, 07/05/00 259 259
IBM Credit Corp.
6.700%, 07/10/00 200 200
International Lease Finance Corp.
6.550%, 07/12/00 1,000 998
Kimberly-Clark
6.550%, 08/10/00 1,000 993
Lucent Technology
6.700%, 07/10/00 1,220 1,218
6.700%, 07/12/00 325 324
Merrill Lynch & Co., Inc.
6.700%, 07/12/00 100 100
Natural Fuel Gas
6.900%, 07/03/00 400 400
7.050%, 07/06/00 600 600
6.650%, 07/11/00 3,000 2,996
New York, New York
6.150%, 07/10/00 2,430 2,430
<PAGE>
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PG&E Corp.
6.540%, 07/11/00 460 $ 459
Sherwin-Williams Co.
6.550%, 07/12/00 500 499
-------
TOTAL COMMERCIAL PAPER
(Cost $38,237) 38,237
-------
--------------------------------------------------------------------------------
CORPORATE BONDS--19.6%
--------------------------------------------------------------------------------
ALCOA, Inc.
5.750%, 02/01/01 725 720
American Express Credit Corp.
6.500%, 08/01/00 1,829 1,829
Associates Corp.
6.250%, 09/15/00 475 475
6.625%, 05/15/01 400 398
6.700%, 05/29/01 260 259
AT&T Capital Corp.
6.875%, 01/16/01 500 501
Bank of America Corp.
6.625%, 05/30/01 50 49
Boeing Co.
8.375%, 02/15/01 750 755
Boston Edison Co.
6.050%, 08/15/00 1,019 1,018
Chrysler Financial Co., LLC
6.625%, 08/15/00 1,619 1,619
5.875%, 02/07/01 300 298
Consolidated Edison
7.375%, 09/15/00 150 150
Donnelley (R.R.) & Sons
9.125%, 12/01/00 335 338
Duke Power Co.
5.875%, 06/01/01 25 25
Ford Motor Credit Corp.
6.850%, 08/15/00 1,330 1,331
6.375%, 10/06/00 744 744
6.250%, 11/08/00 805 804
5.750%, 01/25/01 591 588
General Electric Capital Corp.
8.375%, 03/01/01 812 820
General Motors Acceptance Corp.
5.625%, 02/15/01 515 511
GTE California, Inc.
5.625%, 02/01/01 105 104
GTE Northwest, Inc.
7.375%, 05/01/01 300 300
Household Finance Corp.
6.450%, 03/15/01 300 299
International Lease Finance Corp.
6.625%, 08/15/00 400 400
Kimberly-Clark Corp.
8.625%, 05/01/01 245 248
Merrill Lynch & Co., Inc.
6.700%, 08/01/00 375 375
6.000%, 01/15/01 284 283
6.000%, 03/01/01 550 546
1
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE MONEY MARKET FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Morgan Stanley Dean Witter
6.750%, 08/15/00 100 $ 100
NationsBank Corp.
5.750%, 03/15/01 528 523
Northern State Power Minnesota
5.750%, 12/01/00 375 374
-------
TOTAL CORPORATE BONDS
(Cost $16,784) 16,784
-------
--------------------------------------------------------------------------------
AGENCY OBLIGATIONS--0.6%
--------------------------------------------------------------------------------
Federal Home Loan Bank
7.050%, 05/17/01
(Cost $500) 500 500
-------
--------------------------------------------------------------------------------
VARIABLE RATE DEMAND NOTES--17.6%
--------------------------------------------------------------------------------
Alabama State Industrial Development Authority
6.780%, 11/01/15 950 950
Avalon Hotel Associates
7.283%, 03/01/08 435 435
Barton Healthcare, LLC
6.700%, 02/15/25 410 410
Berks County, PA, Industrial Development Authority
6.830%, 06/01/15 455 455
Bloomfield, NM
6.700%, 11/15/10 600 600
Columbia County, GA, Development Authority
6.700%, 03/01/10 1,600 1,600
Community Health Systems, Inc.
6.850%, 10/01/03 1,725 1,725
Durham, NC, Certificates of Participation
6.600%, 07/01/03 500 500
Espanola, NM
6.700%, 11/15/10 600 600
Fairview Hospital & Healthcare Services
6.850%, 11/01/15 500 500
GMG Warehouse, LLC
6.700%, 05/15/25 1,000 1,000
Health Insurance Plan of Greater NY
6.800%, 07/01/16 500 500
Illinois Development Finance Authority
6.700%, 11/01/14 600 600
Liliha Parking LP
6.850%, 08/01/24 2,155 2,155
Montgomery County, PA, Industrial
Development Authority
6.830%, 03/01/10 1,055 1,055
Silver City, NM
6.700%, 11/15/10 600 600
St. Francis Healthcare Foundation
6.850%, 08/01/12 1,375 1,375
-------
TOTAL VARIABLE RATE DEMAND NOTES
(Cost $15,060) 15,060
-------
--------------------------------------------------------------------------------
MEDIUM TERM NOTES--11.0%
--------------------------------------------------------------------------------
Associates Corp. NA
6.670%, 07/28/00 200 200
<PAGE>
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Beneficial Corp.
6.330%, 12/18/00 100 $ 100
6.600%, 06/22/01 100 99
Chrysler Financial Co., LLC
5.900%, 01/26/01 100 99
Ford Motor Credit Co.
6.650%, 08/07/00 200 200
5.760%, 01/24/01 250 249
6.360%, 01/30/01 100 100
5.760%, 02/12/01 20 20
6.290%, 03/05/01 100 100
General Electric Capital Corp.
6.000%, 09/13/00 150 150
5.190%, 01/16/01 125 124
5.500%, 01/16/01 500 496
General Motors Acceptance Corp.
7.500%, 07/24/00 150 150
6.210%, 09/19/00 120 120
6.150%, 01/16/01 700 696
6.200%, 01/16/01 115 115
6.600%, 01/17/01 300 300
6.800%, 04/17/01 100 100
5.350%, 05/04/01 400 395
IBM Corp.
5.755%, 07/10/00 250 250
6.037%, 08/07/00 700 700
International Lease Finance Corp.
6.420%, 09/11/00 145 145
6.450%, 09/11/00 100 100
6.090%, 09/25/00 100 100
6.210%, 11/20/00 750 749
6.200%, 11/06/00 150 150
6.590%, 12/01/00 750 750
John Deere Capital Corp.
6.390%, 09/18/00 500 499
5.220%, 10/19/00 500 497
Merrill Lynch & Co., Inc.
5.930%, 03/23/01 100 99
6.020%, 05/11/01 250 247
Morgan Stanley Dean Witter
5.250%, 02/08/01 110 109
6.700%, 05/01/01 115 115
NationsBank Corp.
5.700%, 02/12/01 300 297
Norwest Corp.
5.625%, 02/05/01 200 199
Norwest Financial Inc.
6.200%, 02/15/01 150 149
Pacific Gas & Electric
6.110%, 01/08/01 95 95
Wells Fargo & Co.
6.875%, 05/10/01 325 324
-----
TOTAL MEDIUM TERM NOTES
(Cost $9,387) 9,387
-----
2
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE MONEY MARKET FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--7.1%
--------------------------------------------------------------------------------
Janus Money Market Fund, Inc. 4,054,110 $ 4,054
Provident Institutional Fund, Inc. 1,968,884 1,969
-------
TOTAL SHORT-TERM INVESTMENTS
(Cost $6,023) 6,023
-------
TOTAL INVESTMENTS--100.6%
(Cost $85,991) (a) 85,991
LIABILITIES IN EXCESS
OF OTHER ASSETS--(0.6%) (502)
-------
NET ASSETS APPLICABLE TO 85,491,651
ISSUED AND OUTSTANDING--100.0% $85,489
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $1.00
=======
--------------------------------------------------------------------------------
(a) Cost for Federal income tax purposes.
** The rate shown is the rate as of June 30, 2000, and the maturity is the next
interest readjustment date.
Percentage of Portfolio
Maturity Amount ------------------------
Schedule Par (000) (cum)
--------------------------------------------------------------------------------
1 - 7 days $23,885 29.8% 29.8%
8 - 14 days 25,212 31.5% 61.3%
15 - 30 days 1,350 1.7% 63.0%
31 - 60 days 10,587 13.2% 76.2%
61 - 90 days 1,740 2.2% 78.4%
91 - 120 days 1,244 1.6% 80.0%
121 - 150 days 1,705 2.1% 82.1%
over 150 days 14,355 17.9% 100.0%
------- ------
$80,078 100.0%
Average Weighted Maturity -- 55 days
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE QUALITY BOND FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
CORPORATE BONDS--5.0%
--------------------------------------------------------------------------------
Canadian Government Agency--2.0%
Hydro-Quebec
8.400%, 01/15/22 420 $ 445
8.050%, 07/07/24 1,365 1,449
-------
1,894
-------
Transportation--3.0%
CSX Corp.
7.050%, 05/01/02 2,810 2,779
-------
TOTAL CORPORATE BONDS
(Cost $4,571) 4,673
-------
--------------------------------------------------------------------------------
MEDIUM TERM NOTES--9.8%
--------------------------------------------------------------------------------
Diversified Financial Services--9.8%
Associates Corp. N.A.
7.750%, 02/15/05 1,000 998
General Electric Cap Corp.
7.250%, 05/03/04 8,265 8,283
-------
TOTAL MEDIUM TERM NOTES
(Cost $9,259) 9,281
-------
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--45.6%
--------------------------------------------------------------------------------
U.S. Treasury Bonds--11.1%
6.125%, 08/15/29 10,305 10,424
-------
U.S. Treasury Notes--27.8%
6.250%, 02/15/03 800 798
5.500%, 05/31/03 3,275 3,202
6.750%, 05/15/05 5,800 5,938
6.500%, 02/15/10 7,855 8,115
7.250%, 05/15/16 7,460 8,211
-------
26,264
-------
U.S. Treasury Notes Inflation Index--6.7%
3.625%, 07/15/02 6,000 6,374
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $42,497) 43,062
-------
--------------------------------------------------------------------------------
AGENCY OBLIGATIONS--31.8%
--------------------------------------------------------------------------------
Federal Government Loan Mortgage Corporation--9.1%
8.000%, 07/01/30 8,500 8,542
-------
Federal National Mortgage Association--22.7%
6.825%, 09/01/07 2,638 2,579
6.600%, 11/01/07 487 468
6.620%, 11/01/07 1,867 1,797
6.500%, 07/01/30 5,900 5,555
7.000%, 07/01/30 3,000 2,892
8.500%, 07/01/30 8,000 8,145
-------
21,436
-------
TOTAL AGENCY OBLIGATIONS
(Cost $30,035) 29,978
-------
--------------------------------------------------------------------------------
COLLATERALIZED MORTGAGE OBLIGATION--0.9%
--------------------------------------------------------------------------------
Morgan Stanley Capital I
6.950%, 12/12/05
(Cost $900) 901 859
-------
<PAGE>
Par Value
(000) (000)
--------------------------------------------------------------------------------
ASSET BACKED SECURITIES--28.8%
--------------------------------------------------------------------------------
Capital Auto Receivables Asset Trust
6.810%, 02/15/03 5,400 $ 5,387
Chase Credit Card Master Trust
6.683%, 08/15/05 3,500 3,507
Discover Card Master Trust I
6.643%, 09/16/05 4,500 4,502
First USA Credit Card Master Trust
6.664%, 01/18/06 2,500 2,498
Fleet Credit Card Master Trust II
6.653%, 07/15/05 3,550 3,557
Illinois Power Special Purpose Trust
5.380%, 06/25/07 4,500 4,231
MBNA Master Credit Card Trust I
6.693%, 10/15/05 1,500 1,503
Railcar Leasing L.L.C.
7.125%, 01/15/13 2,000 1,957
-------
TOTAL ASSET BACKED SECURITIES
(Cost $27,340) 27,142
-------
Number Value
of Shares (000)
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--3.5%
--------------------------------------------------------------------------------
Janus Money Market Fund 3,298,645 3,299
Provident Institutional Fund 20,325 20
---------
TOTAL SHORT-TERM INVESTMENTS
(Cost $3,319) 3,319
---------
TOTAL INVESTMENTS--125.4%
(Cost $117,921) (a) 118,314
RECEIVABLE FOR SECURITIES
SOLD --25.4% 23,942
PAYABLE FOR SECURITIES
PURCHASED --(51.9%) (48,980)
OTHER ASSETS IN EXCESS
OF OTHER LIABILITIES--1.1% 1,058
---------
NET ASSETS APPLICABLE TO 9,228,457
SHARES OF COMMON STOCK ISSUED
AND OUTSTANDING -- 100.0% $ 94,334
=========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 10.22
=========
---------------
(a) At June 30, 2000, the cost for Federal income tax purposes was
$118,007,885. Net unrealized appreciation was $306,168. This consisted
of aggregate gross unrealized appreciation for all securities in which there
was an excess of market value over tax cost of $915,125 and aggregate
gross unrealized depreciation for all securities in which there was an
excess of tax cost over market value of $608,957.
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE HIGH YIELD BOND FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
CORPORATE BONDS--84.3%
--------------------------------------------------------------------------------
Aerospace & Defense--1.7%
Anteon Corp.
12.000%, 05/15/09 200 $ 184
BE Aerospace
8.000%, 03/01/08 125 106
Communications & Power Industries
12.000%, 08/01/05 450 340
Dyncorp, Inc.
9.500%, 03/01/07 275 221
L-3 Communications Corp.
10.375%, 05/01/07 200 204
-------
1,055
-------
Automobiles & Related--2.1%
Advance Stores Co., Inc.
10.250%, 04/15/08 250 204
Aftermarket Technology Corp.
12.000%, 08/01/04 175 176
Hayes Lemmerz International, Inc.
8.250%, 12/15/08 200 170
Hayes Wheels International, Inc.
9.125%, 07/15/07 75 67
Lear Corp.
7.960%, 05/15/05 125 117
8.110%, 05/15/09 125 114
MSX International, Inc.
11.375%, 01/15/08 200 190
Venture Holdings Trust
9.500%, 07/01/05 350 268
-------
1,306
-------
Broadcast/Media--2.8%
ACME Television/Finance Corp.
11.297%**, 09/30/04 400 384
Benedek Communications Corp.
17.481%**, 05/15/06 200 149
Capstar Broadcasting Partners
12.000%, 07/01/09 380 441
Chancellor Media Corp.
8.750%, 06/15/07 150 152
Radio Unica Corp.
15.585%**, 08/01/06 250 162
Sinclair Broadcast Group
10.000%, 09/30/05 200 193
Spanish Broadcasting System
9.625%, 11/01/09 275 273
-------
1,754
-------
Building Products--3.2%
American Builders & Contractors Supply Co., Inc.
10.625%, 05/15/07 375 309
Associated Materials, Inc.
9.250%, 03/01/08 600 567
ISG Resources, Inc.
10.000%, 04/15/08 500 459
Lennar Corp.
9.950%, 05/01/10 500 492
Nortek, Inc.
9.875%, 03/01/04 200 191
-------
2,018
-------
Cable Operators--5.6%
Callahan Nordrhein West
14.000%, 07/15/10 300 288
Charter Communications Holdings L.L.C.
12.225%**, 04/01/11 150 86
<PAGE>
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Coaxial Communications, Inc.
10.000%, 08/15/06 200 $ 192
Coaxial L.L.C.
13.680%**, 08/15/08 300 193
Frontiervision Holdings L.P.
11.819%**, 09/15/07 400 349
International Cabletel, Inc.
11.791%**, 02/01/06 550 509
Northland Cable Television
10.250%, 11/15/07 250 209
NTL, Inc.
12.860%**, 04/01/08 75 47
Telewest Communication PLC
11.248%**, 10/01/07 200 192
9.875%**, 02/01/10 250 240
United International Holdings
12.174%**, 02/15/08 1,125 782
United Pan-Europe Communications NV
10.875%, 08/01/09 100 89
15.346%, 02/01/10 650 312
-------
3,488
-------
Containers--1.9%
BWAY Corp.
10.250%, 04/15/07 500 477
U.S. Can Corp.
10.125%, 10/15/06 700 724
-------
1,201
-------
Electronic Components--2.7%
Amkor Technologies, Inc.
9.250%, 05/01/06 500 495
10.500%, 05/01/09 75 76
Asat Finance L.L.C.
12.500%, 11/01/06 225 242
Chippac International Ltd.
12.750%, 08/01/09 75 82
Flextronics International Ltd.
9.875%, 07/01/10 500 509
Intersil Corp.
13.250%, 08/15/09 32 37
SCG Holdings & Semiconductor Corp.
12.000%, 08/01/09 230 247
-------
1,688
-------
Energy Services--8.0%
Amerigas Partners L.P.
10.125%, 04/15/07 400 404
Canadian Forest Oil Ltd.
8.750%, 09/15/07 300 283
Comstock Resources, Inc.
11.250%, 05/01/07 475 484
Continental Resources, Inc.
10.250%, 08/01/08 275 247
Denbury Management, Inc.
9.000%, 03/01/08 75 69
Energy Corp. of America
9.500%, 05/15/07 600 387
Eott Energy Partners
11.000%, 10/01/09 100 101
Forest Oil Corp.
10.500%, 01/15/06 200 204
Frontier Oil Corp.
11.750%, 11/15/09 350 352
5
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE HIGH YIELD BOND FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Nuevo Energy Co.
9.500%, 06/01/08 250 $ 247
Orion Power Holdings, Inc.
12.000%, 05/01/10 300 316
PDVSA Finance Ltd.
6.800%, 11/15/08 300 247
Plains Resources, Inc.
10.250%, 03/15/06 150 152
Pride Petroleum Services, Inc.
9.375%, 05/01/07 425 427
Stone Energy Corp.
8.750%, 09/15/07 500 477
Swift Energy Co.
10.250%, 08/01/09 300 305
YPF Sociedad Anonima
10.000%, 11/02/28 300 324
-------
5,026
-------
Entertainment & Leisure--1.4%
AMC Entertainment, Inc.
9.500%, 02/01/11 75 36
Cinemark USA, Inc.
8.500%, 08/01/08 125 59
Premier Parks, Inc.
9.250%, 04/01/06 150 143
9.750%, 06/15/07 250 242
11.647%**, 04/01/08 250 172
Yankeenets L.L.C.
12.750%, 03/01/07 200 194
-------
846
-------
Finance--1.2%
Euronet Services, Inc. @
18.814%**, 07/01/06 500 147
Lodgian Finance Corp.
12.250%, 07/15/09 200 155
RBF Finance Co.
11.000%, 03/15/06 400 432
-------
734
-------
Food/Tobacco--2.2%
B&G Foods, Inc.
9.625%, 08/01/07 600 423
Doane Pet Care Co.
9.750%, 05/15/07 500 427
International Home Foods, Inc.
10.375%, 11/01/06 100 107
Luigino's, Inc.
10.000%, 02/01/06 150 118
New World Pasta Co.
9.250%, 02/15/09 500 292
-------
1,367
-------
Healthcare Services--2.8%
Bio Rad Labs
11.625%, 02/15/07 200 207
Dade International, Inc.
11.125%, 05/01/06 100 56
Fresenius Medical Capital Trust II
7.875%, 02/01/08 100 91
Lifepoint Hospitals Holdings, Inc.
10.750%, 05/15/09 350 361
Mariner Post-Accute Network, Inc. #
106.823%**, 11/01/07 650 10
Quest Diagnostic, Inc.
10.750%, 12/15/06 350 364
<PAGE>
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Tenet Healthcare Corp.
8.000%, 01/15/05 300 $ 290
Triad Hospital Holdings, Inc.
11.000%, 05/15/09 375 386
------
1,765
------
Hotels & Gaming--5.2%
Arogosy Gaming Co.
10.750%, 06/01/09 375 390
Courtyard by Marriott II
10.750%, 02/01/08 600 592
HMH Properties, Inc.
7.875%, 08/01/08 300 271
Hollywood Casino Shreveport
13.000%, 08/01/06 350 372
Horseshoe Gaming L.L.C.
9.375%, 06/15/07 500 497
8.625%, 05/15/09 50 47
International Game Technology
8.375%, 05/15/09 500 481
Station Casinos, Inc.
10.125%, 03/15/06 300 306
Venetian Casino
14.250%, 11/15/05 300 287
------
3,243
------
Internet Service Providers--2.7%
Covad Communications Group
17.422%**, 03/15/08 400 222
Cybernet Internet Services
14.000%, 07/01/09 150 66
Exodus Communications, Inc.
11.250%, 07/01/08 150 149
10.750%, 12/15/09 350 340
Globix Corp.
12.500%, 02/01/10 250 207
PSINet, Inc.
11.500%, 11/01/08 150 143
Verio, Inc.
11.250%, 12/01/08 300 335
10.625%, 11/15/09 200 221
------
1,683
------
Long Distance Telecommunication--2.1%
Hermes Europe Railtel BV
11.500%, 08/15/07 100 88
10.375%, 01/15/09 150 125
IPCS, Inc.
13.199%**, 07/15/10 300 162
Metromedia Fiber Network, Inc.
10.000%. 11/15/08 200 199
Primus Telecomm Group
12.750%, 10/15/09 250 201
RSL Communications plc
9.125%, 03/01/08 100 65
12.000%, 11/01/08 50 37
Viatel, Inc.
11.500%, 03/15/09 100 77
Williams Communications Group, Inc.
10.875%, 10/01/09 150 147
Worldwide Fiber, Inc.
12.000%, 08/01/09 250 239
------
1,340
------
Manufacturing--1.8%
Hawk Corp.
10.250%, 12/01/03 375 363
6
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE HIGH YIELD BOND FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
HCC Industries, Inc. @
10.750%, 05/15/07 400 $ 170
International Wire Group, Inc.
111.750%, 06/01/05 600 605
------
1,138
------
Metals & Mining--2.1%
Bethlehem Steel
110.375%, 09/01/03 150 149
Better Minerals & Aggregates
113.000%, 09/15/09 350 343
Golden Northwest Aluminum
112.000%, 12/15/06 350 352
Kaiser Aluminum and Chemical Corp.
112.750%, 02/01/03 200 181
Russel Metals, Inc.
110.000%, 06/01/09 300 287
------
1,312
------
Miscellaneous Consumer Products--1.9%
Bally Total Fitness Holdings
19.875%, 10/15/07 425 389
Corning Consumer Product
19.625%, 05/01/08 150 101
Hedstrom Holdings, Inc. @ #
1125.146%**, 06/01/09 500 1
Holmes Products Corp.
19.875%, 11/15/07 75 53
Jostens, Inc.
112.750%, 05/01/10 175 174
Sleepmaster
111.000%, 05/15/09 500 473
------
1,191
------
Paper & Paper Products--3.0%
Ainsworth Lumber Co.
112.500%, 07/15/07 100 101
Four M Corp.
112.000%, 06/01/06 250 236
Kappa Beheer BV
110.625%, 07/15/09 500 509
Millar Western Forest
19.875%, 05/15/08 100 94
Norampac, Inc.
19.500%, 02/01/08 25 24
Paperboard Industries International, Inc.
18.375%, 09/15/07 250 214
Repap New Brunswick
111.500%, 06/01/04 375 384
Riverwood International Co.
110.875%, 04/01/08 300 266
U.S. Timberlands Klam/Finance
19.625%, 11/15/07 50 45
------
1,873
------
Printing & Publishing--1.5%
Hollinger International Publishing, Inc.
19.250%, 03/15/07 400 397
Sun Media Corp.
19.500%, 02/15/07 275 268
TDL Infomedia Group Ltd.
112.125%, 10/15/09 125 193
Transwestern Holdings, L.P.
112.297%**, 11/15/08 100 74
------
932
------
<PAGE>
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Rental Auto - Equipment--0.8%
Universal Compression, Inc.
10.955%**, 02/15/08 700 $ 508
------
Restaraunts--1.3%
Foodmaker Corp.
9.750%, 11/01/03 500 501
Foodmaker, Inc.
8.375%, 04/15/08 100 95
Sbarro, Inc.
11.000%, 09/15/09 200 205
------
801
------
Retail--0.0%
Safelite Glass Corp.
9.875%, 12/15/06 300 4
------
Satellites--0.6%
Orbital Imaging Corp.
11.625%, 03/01/05 100 66
Pegasus Communications Corp.
9.625%, 10/15/05 200 194
9.750%, 12/01/06 100 97
------
357
------
Savings & Loan--0.3%
Bank United Capital Trust @
10.250%, 12/31/26 250 211
------
Services--2.9%
AP Holdings, Inc. @
47.137%**, 03/15/08 200 21
Avis Group Holdings, Inc.
11.000%, 05/01/09 500 524
Coinmach Corp.
11.750%, 11/15/05 307 296
Global Imaging Systems, Inc.
10.750%, 02/15/07 200 173
Intertek Finance plc
10.250%, 11/01/06 375 309
Iron Mountain, Inc.
11.125%, 07/15/06 500 519
------
1,842
------
Specialty Chemicals--2.7%
American Pacific Corp. @
9.250%, 03/01/05 350 348
Ineos Acrylics Finance
10.250%, 05/15/10 50 50
ISP Holdings, Inc.
9.750%, 02/15/02 500 485
Koppers Industry, Inc.
9.875%, 12/01/07 500 468
Octel Developments plc
10.000%, 05/01/06 400 364
------
1,715
------
Supermarkets--0.6%
Jitney-Jungle Stores of America, Inc. #
12.000%, 03/01/06 250 39
10.375%, 09/15/07 250 3
Pantry, Inc.
10.250%, 10/15/07 350 333
Pathmark Stores #
10.750%, 11/01/03 400 22
------
397
------
7
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE HIGH YIELD BOND FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Textiles & Apparel--1.5%
Dan River, Inc.
10.125%, 12/15/03 300 $ 293
Delta Mills, Inc.
9.625%, 09/01/07 400 340
Dyersburg Corp.
9.750%, 09/01/07 450 47
Westpoint Stevens, Inc.
7.875%, 06/15/05 300 252
-------
932
-------
Transportation--1.4%
Petro Stopping Centers
10.500%, 02/01/07 300 267
Travelcenters of America
10.250%, 04/01/07 600 608
-------
875
-------
Wireless Communications--9.3%
Airgate PCS, Inc.
13.018%**, 10/01/09 700 417
Centennial Cellular Corp.
10.750%, 12/15/08 250 251
Clearnet Communications, Inc. @
10.125%, 07/07/07 500 495
Leap Wireless
12.500%, 04/15/10 175 150
McCaw International Ltd.
13.584%**, 04/15/07 350 271
Microcell Telecommunications
11.364%**, 06/01/06 250 233
Millicom International Cellular, Inc.
14.331%**, 06/01/06 550 470
Nextel Communcations, Inc.
12.000%, 11/01/08 50 54
Nextel International, Inc.
13.591%**, 04/15/08 50 33
Nextel Partners, Inc.
12.140%**, 02/01/09 450 315
Price Communications Wireless, Inc.
9.125%, 12/15/06 350 355
11.750%, 07/15/07 100 109
Rogers Cantel, Inc
9.750%, 06/01/16 350 372
Telecorp PCS, Inc.
11.396%**, 04/15/09 600 398
Triton PCS, Inc.
11.065%**, 05/01/08 800 588
Ubiquitel Operating Co.
13.949%**, 04/15/10 900 473
Voicestream Wireless Corp.
11.500%, 09/15/09 250 273
10.375%, 11/15/09 125 131
10.455%, 11/15/09 675 456
-------
5,844
-------
Wireline Telecommunications--7.0%
Alaska Communications
9.375%, 05/15/09 350 326
Allegiance Telecom, Inc.
11.882%**, 02/15/08 525 386
Colt Telecom Group plc
11.059%**, 12/15/06 750 664
Completel Europe NV
14.000%, 04/15/10 150 138
<PAGE>
Par Value
(000) (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Focal Communications Corp.
11.875%, 01/15/10 250 $ 250
Hyperion Telecommunications, Inc.
11.681%**, 04/15/03 175 164
ICG Holdings, Inc.
13.800%**, 09/15/05 450 433
Jazztel plc
14.000%,04/01/09 350 327
14.000%, 07/15/10 175 169
KMC Telecom Holdings, Inc.
19.132%**, 02/15/08 350 173
McLeodUSA, Inc.
10.787%**, 03/01/07 350 291
Netia Holdings
10.250%, 11/01/07 200 167
NEXTLINK Communications, Inc.
12.500%, 04/15/06 250 264
Tele1 Europe BV
13.000%, 05/15/09 300 303
Versatel Telecom BV
13.250%, 05/15/08 300 308
-------
4,363
-------
TOTAL CORPORATE BONDS
(Cost $57,198) 52,809
-------
--------------------------------------------------------------------------------
COMMERCIAL PAPER--3.0%
--------------------------------------------------------------------------------
Anheuser Busch Co., Inc.
6.800%, 07/03/00 376 376
Park Avenue Receivables Corp.
6.530%, 07/07/00 500 499
Sand Dollar Funding L.L.C.
6.600%, 08/24/00 1,000 989
-------
TOTAL COMMERCIAL PAPER
(Cost $1,865) 1,864
-------
--------------------------------------------------------------------------------
Number
COMMON STOCK--1.5% of Shares
--------------------------------------------------------------------------------
AT&T Canada, Inc.* @ 514 15
Dr. Pepper Bottling Holdings, Inc.* @ 14,800 370
Gaylord Container Corp.* 7,500 20
Hedstrom Holdings, Inc.* @ 6,065 0
Intermedia Communications, Inc.* 183 5
ITC / \ DeltaCom, Inc.* 6,000 134
McLeodUSA, Inc.* 7,000 145
Microcell Telecommunications, Inc.* @ 1,717 62
Nextel Communications, Inc.* 464 28
Premier Parks, Inc.* 2,800 64
Tele1 Europe Holding AB (ADR)* 9,903 119
-------
TOTAL COMMON STOCK
(Cost $634) 962
-------
--------------------------------------------------------------------------------
PREFERRED STOCK--8.9%
--------------------------------------------------------------------------------
Broadcast/Media--1.0%
Citadel Broadcasting Co. 1,907 210
Cumulus Media, Inc. 130 107
Sinclair Capital 3,250 307
-------
624
-------
Cable Operators--2.2%
CSC Holdings, Inc. 12,871 1,371
-------
8
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE HIGH YIELD BOND FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Computer Services & Software--0.1%
Rhythms Netconnections, Inc. 1,700 $ 78
-------
Industrial - Other--0.5%
Anvil Holdings, Inc. @ 18,295 242
Clarke USA, Inc. 3,288 74
-------
316
-------
Long Distance--0.7%
Global Crossing Holdings Ltd. 4,250 420
-------
Metals & Mining--0.3%
International Utility Structures, Inc. * 292 204
-------
Satellites--0.4%
Pegasus Communications Corp. 246 248
-------
Wireless Communications--2.8%
Dobson Communications Corp. 417 422
Nextel Communications, Inc. 4,904 972
Rural Cellular Corp. 367 350
-------
1,744
-------
Wireline Communications--0.9%
E. Spire Communications, Inc. 2,014 37
Intermedia Communications, Inc. 13,429 129
Nextlink Communications 7,259 381
-------
547
-------
TOTAL PREFERRED STOCK
(Cost $6,143) 5,552
-------
--------------------------------------------------------------------------------
Number
Warrants--0.1% of Warrants Value
--------------------------------------------------------------------------------
Allegiance Telecom, Inc.* @ 250 43
Asat Finance* 100 20
Cybernet Internet Services* 150 3
KMC Telecom Holdings, Inc.* @ 200 1
UIH Australia* @ 175 3
Wright Medical Technology, Inc.* @ 2,676 0
-------
TOTAL WARRANTS
(Cost $62) 70
-------
<PAGE>
Value
(000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TOTAL INVESTMENT--97.8%
(Cost $65,902)(a) $61,257
OTHER ASSETS IN EXCESS
OF LIABILITIES--2.2% 1,414
-------
NET ASSETS APPLICABLE TO 7,287,287
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING--100.0% $62,671
=======
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 8.60
=======
---------------
* Non-Income Producing Security
** Effective Yield
@ Restricted Security
# Security in Default
ADR - American Depository Receipt
(a) At June 30, 2000, the cost for Federal income tax purposes was $66,031,277.
Net unrealized depreciation was $4,774,629. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $1,136,035 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $5,910,664.
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE GROWTH EQUITY FUND
Number Value
of Shares (000)
-------------------------------------------------------------------------------
COMMON STOCK--94.6%
-------------------------------------------------------------------------------
Computer - Network Products & Services--11.5%
Cisco Systems, Inc.* 300,000 $ 19,059
Oracle Corp.* 150,000 12,605
Sun Microsystems, Inc.* 150,000 13,645
--------
45,309
--------
Computer Services & Software--3.9%
EMC Corp.* 200,000 15,387
--------
Finance--8.5%
Citigroup, Inc. 350,000 21,088
Morgan Stanley Dean Witter & Co. 150,000 12,487
--------
33,575
--------
Diversified Manufacturing Operations--11.2%
General Electric Co. 400,000 20,400
Tyco International Ltd. 500,000 23,687
--------
44,087
--------
Electronics-Semiconductors--14.7%
Analog Devices, Inc.* 125,000 9,500
Applied Materials, Inc.* 200,000 18,131
Texas Instruments, Inc. 250,000 17,172
Vitesse Semiconductor Corp.* 175,000 12,879
--------
57,682
--------
Fiber Optics--8.0%
Corning , Inc. 50,000 13,494
JDS Uniphase Corp.* 150,000 17,977
--------
31,471
--------
Medical--5.4%
Amgen, Inc.* 300,000 21,084
--------
Medical Products--2.6%
Johnson & Johnson 100,000 10,188
--------
Oil & Gas - Equipment & Services--3.4%
Transocean Sedco Forex, Inc. 250,000 13,359
--------
Pharmaceuticals--9.6%
Merck & Co., Inc. 150,000 11,494
Pfizer, Inc. 550,000 26,400
--------
37,894
--------
Retail--2.5%
Home Depot, Inc. 200,000 9,988
--------
<PAGE>
Number Value
of Shares (000)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Telecommunications--13.3%
Nextel Communications, Inc* 350,000 $ 21,405
Nokia Corp. ( ADR) 275,000 13,733
Nortel Networks Corp. 250,000 17,063
----------
52,201
----------
TOTAL COMMON STOCK
(Cost $281,661) 372,225
----------
-----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--2.5%
-----------------------------------------------------------------------------
Temporary Cash Investment Fund, Inc. 4,821,201 4,821
Temporary Investment Fund, Inc. 4,821,201 4,821
----------
TOTAL SHORT-TERM INVESTMENTS
(Cost $9,642) 9,642
----------
TOTAL INVESTMENTS--97.1%
(Cost $291,303) (a) 381,867
OTHER ASSETS IN EXCESS
OF LIABILITIES--2.9% 11,559
----------
NET ASSETS APPLICABLE TO 11,068,689
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING--100.0% $ 393,426
==========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 35.54
==========
------------------------------------
* Non-Income Producing Security
ADR - American Depository Receipt
(a) At June 30, 2000 the cost for Federal Income tax purposes was $292,535,662.
Net unrealized appreciation was $89,330,959. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess market
value over tax cost of $92,283,862 and aggregate gross unrealized depreciation
for all securities in which there was an excess of tax cost over market value of
$2,952,903.
The accompanying notes are an integral part of these financial statements.
10
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE LARGE CAP VALUE FUND
Number of Value
Shares (000)
----------------------------------------------------------------------------
COMMON STOCK--97.1%
----------------------------------------------------------------------------
Aerospace & Defense--1.0%
Boeing Co. 57,300 $ 2,396
-------
Air Transportation--0.5%
Delta Air Lines, Inc. 22,500 1,138
-------
Automobiles & Related--0.9%
Ford Motor Co. 44,400 1,909
Visteon Corp. 5,813 70
-------
1,979
-------
Banking--10.4%
Bank of America Corp. 87,000 3,741
BB&T Corp. 74,300 1,774
Charter One Financial, Inc. 90,300 2,077
Comerica, Inc. 52,200 2,342
Firstar Corp. 92,400 1,946
FleetBoston Financial Corp. 70,394 2,393
M&T Bank Corp. 400 180
Mellon Financial Corp. 36,700 1,337
National City Corp. 48,200 822
PNC Financial Services Group 46,200 2,166
Synovus Financial Corp. 58,300 1,028
U.S. Bancorp 73,100 1,407
Wells Fargo & Co. 66,830 2,590
-------
23,803
-------
Beverages--2.2%
Anheuser-Busch Cos., Inc. 31,100 2,323
Brown-Forman Corp. 12,600 677
Coca-Cola Co. 19,000 1,091
Pepsi Bottling Group, Inc. 30,700 896
-------
4,987
-------
Chemicals--2.9%
Dow Chemical Co. 34,500 1,042
Du Pont (E. I.) de Nemours and Co. 49,000 2,144
Engelhard Corp. 60,100 1,025
PPG Industries, Inc. 31,900 1,414
Praxair, Inc. 25,400 951
-------
6,576
-------
Computer Services & Software--1.1%
Computer Associates International, Inc. 24,400 1,249
Electronic Data Systems Corp. 31,900 1,316
-------
2,565
-------
Computers & Office Equipment--2.8%
Hewlett-Packard Co. 27,300 3,409
International Business Machines Corp. 19,500 2,136
Xerox Corp. 44,100 882
-------
6,427
-------
Consumer Products--3.4%
Fortune Brands, Inc. 66,800 1,541
Johnson & Johnson 27,500 2,802
Philip Morris Cos., Inc. 126,600 3,363
-------
7,706
-------
<PAGE>
Number of Value
Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Containers--0.3%
Owens-Illinois, Inc.* 53,900 $ 630
------
Cosmetics & Toiletries--0.8%
Kimberly-Clark Corp. 32,300 1,853
------
Distribution Services--0.3%
Grainger (W.W.), Inc. 20,900 644
------
Diversified Manufacturing Operations--3.1%
Cooper Industries, Inc. 36,500 1,189
Eaton Corp. 17,000 1,139
Honeywell International, Inc. 23,700 798
Illinois Tool Works, Inc. 32,300 1,841
Minnesota Mining & Manufacturing Co. 25,300 2,087
------
7,054
------
Electric Products--1.4%
Emerson Electric Co. 53,400 3,224
------
Energy Resources & Services--7.9%
Cinergy Corp. 43,800 1,114
Constellation Energy Group 37,100 1,208
CP& L Energy, Inc. 51,300 1,638
Dominion Resources, Inc. 30,300 1,299
DPL, Inc. 74,800 1,641
Duke Energy Corp. 43,200 2,435
Entergy Corp. 69,800 1,898
PG&E Corp. 47,000 1,157
Reliant Energy, Inc. 34,300 1,014
Sempra Energy 84,500 1,437
TXU Corp. 51,500 1,519
Williams Cos., Inc. 41,400 1,726
------
18,086
------
Entertainment & Leisure--1.0%
The Walt Disney Co. 58,500 2,271
------
Finance--8.1%
Bear Stearns Cos., Inc. 39,200 1,632
Capital One Financial Corp. 4,200 187
Chase Manhattan Corp. 41,700 1,921
Citigroup, Inc. 83,450 5,028
Fannie Mae 79,200 4,133
Household International, Inc. 43,900 1,825
MBNA Corp. 23,900 648
Paine Webber Group, Inc. 42,100 1,916
Washington Mutual, Inc. 39,000 1,126
------
18,416
------
11
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE LARGE CAP VALUE FUND
Number of Value
Shares (000)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Foods--4.0%
Albertson's, Inc. 49,200 $ 1,636
Archer-Daniels-Midland Co. 66,900 656
General Mills, Inc. 45,100 1,725
Heinz (H.J.) Co. 45,100 1,973
Sara Lee Corp. 64,000 1,236
SYSCO Corp. 47,800 2,014
-------
9,240
-------
Healthcare--0.8%
HCA - The Healthcare Corp. 39,100 1,188
HEALTHSOUTH Corp.* 90,800 653
-------
1,841
-------
Hotels & Resorts--1.3%
Marriott International, Inc. 35,900 1,295
Starwood Hotels & Resorts Worldwide, Inc. 50,700 1,651
-------
2,946
-------
Insurance--4.6%
AFLAC, INC. 2,450 113
Allstate Corp. 37,000 823
American General Corp. 35,800 2,184
Aon Corp. 4,200 130
CIGNA Corp. 21,500 2,010
Hartford Financial Services Group, Inc. 54,400 3,043
Lincoln National Corp. 26,500 957
Torchmark Corp. 46,200 1,141
-------
10,401
-------
Machinery--0.5%
Caterpillar, Inc. 31,900 1,080
-------
Medical Products--1.1%
Baxter International, Inc. 24,500 1,723
Mallinckrodt Inc. 20,000 869
-------
2,592
-------
Metals--0.4%
Alcoa, Inc. 33,800 980
-------
Oil & Gas--11.8%
BP Amoco plc (ADR) 44,400 2,511
Chevron Corp. 31,400 2,663
Conoco, Inc. 97,400 2,266
Exxon Mobil Corp. 99,400 7,803
Royal Dutch Petroleum Co. 64,900 3,996
Schlumberger Ltd. 17,400 1,299
Tosco Corp. 28,500 816
Total Fina Elf SA (ADR) 22,200 1,709
Transocean Offshore, Inc. 28,200 1,507
Union Pacific Resources Group, Inc. 83,200 1,830
Weatherford International, Inc.* 10,900 434
-------
26,834
-------
<PAGE>
Number of Value
Shares (000)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Paper & Forest Products--1.4%
Mead Corp. 48,200 $ 1,217
Weyerhaeuser Co. 47,100 2,025
-------
3,242
-------
Pharmaceuticals--4.4%
Abbott Laboratories 59,000 2,629
Bristol-Myers Squibb Co. 43,300 2,522
Pharmacia Corp. 59,300 3,065
Schering-Plough Corp. 34,800 1,757
-------
9,973
-------
Photography Equipment & Supplies--0.7%
Eastman Kodak Co. 27,100 1,612
-------
Printing & Publishing--1.1%
McGraw-Hill Cos., Inc. 29,400 1,588
Tribune Co. 24,000 840
-------
2,428
-------
Retail--2.4%
CVS Corp. 30,100 1,204
Federated Department Stores, Inc.* 56,200 1,897
KMart Corp.* 84,800 578
Sears, Roebuck & Co. 32,200 1,051
Staples, Inc.* 46,500 716
-------
5,446
-------
Telecommunications--11.5%
ALLTEL Corp. 39,300 2,434
AT&T Corp. 119,450 3,778
Bell Atlantic Corp. 81,400 4,136
BellSouth Corp. 89,600 3,819
GTE Corp. 50,700 3,156
SBC Communications, Inc. 147,600 6,384
Sprint Corp. 50,200 2,560
-------
26,267
-------
Textiles--0.5%
Shaw Industries, Inc. 83,700 1,046
-------
Toys--0.2%
Hasbro, Inc. 37,500 565
-------
Transportation--0.9%
Union Pacific Corp. 58,600 2,179
-------
Waste Management--0.9%
Republic Services, Inc.* 24,300 389
Waste Management, Inc. 86,900 1,651
-------
2,040
-------
Wireless Communications--0.5%
Motorola, Inc. 41,400 1,203
-------
TOTAL COMMON STOCK 221,670
(Cost $226,847) -------
12
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE LARGE CAP VALUE FUND
Number of Value
Shares (000)
-------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REIT)--2.3%
-------------------------------------------------------------------------------
Apartments--1.5%
Equity Residential Properties Trust 71,200 $ 3,275
---------
Office Property--0.8%
Equity Office Properties Trust 69,000 1,902
---------
Total REITS 5,177
(Cost $5,145) ---------
-------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--1.0%
-------------------------------------------------------------------------------
Temporary Cash Investment Fund, Inc. 1,204,126 1,204
Temporary Investment Fund, Inc. 1,204,125 1,204
---------
TOTAL SHORT-TERM INVESTMENTS 2,408
(Cost $2,408) ---------
TOTAL INVESTMENTS--100.4% 229,255
(Cost $234,400) (a)
LIABILITIES IN EXCESS
OF OTHER ASSETS--(0.4%) (885)
---------
NET ASSETS APPLICABLE TO 12,827,904
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING--100.0% $ 228,370
=========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 17.80
=========
-------------------------------------------
* Non-Income Producing Security
ADR - American Depository Receipt
(a) At June 30, 2000, the cost for Federal income tax purposes was $234,695,577.
Net unrealized depreciation was $5,440,580. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $11,989,387 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $17,429,967.
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE FLEXIBLY MANAGED FUND
Number Value
of Shares (000)
-----------------------------------------------------------------------------
COMMON STOCK--57.0%
-----------------------------------------------------------------------------
Banking--0.2%
Bank Fuer International Zahlungs 190 $ 946
-------
Building & Building Supplies--1.4%
Johns Manville Corp. 442,600 5,837
-------
Chemicals--4.4%
Cabot Corp. 221,000 6,022
Great Lakes Chemical Corp. 162,000 5,103
Imperial Chemical Industries PLC (ADR) 116,000 3,574
Octel Corp.* 503,000 3,930
-------
18,629
-------
Consumer Products--2.4%
Fortune Brands, Inc. 43,000 992
Philip Morris Cos., Inc. 200,000 5,312
Reebok International Ltd.* 229,000 3,650
-------
9,954
-------
Diversified Operations--0.0%
Lonrho Africa PLC 305,000 88
-------
Energy & Resources--8.4%
FirstEnergy Corp. 320,000 7,480
Kansas City Power & Light Co. 73,000 1,642
Niagara Mohawk Holdings, Inc. 1,286,000 17,924
Questar Corp. 81,000 1,569
UniSource Energy Corp. 434,000 6,510
-------
35,125
-------
Food Processing--0.5%
McCormick & Co., Inc. 65,000 2,112
-------
Hotels & Gaming--1.1%
Mandalay Resort Group* 237,000 4,740
-------
Insurance--7.1%
Aetna, Inc. 19,000 1,220
Berkley (W.R.) Corp. 36,000 674
Leucadia National Corp. 162,000 3,696
Loews Corp. 294,000 17,640
Unitrin, Inc. 51,000 1,500
White Mountains Insurance Group, Inc. 32,100 5,136
-------
29,866
-------
Media & Communications--4.1%
Chris-Craft Industries, Inc.* 192,000 12,684
Meredith Corp. 132,000 4,455
-------
17,139
-------
Medical--1.1%
Smith and Nephew PLC 1,230,000 4,469
-------
Mining - Gold--3.4%
Homestake Mining Co. 305,000 2,097
Newmont Mining Corp. 555,000 12,002
-------
14,099
-------
Oil & Gas--12.5%
Amerada Hess Corp. 323,000 19,945
Murphy Oil Corp. 146,500 8,708
Mitchell Energy & Development Corp. 335,700 10,784
Texaco, Inc. 180,000 9,585
<PAGE>
Number Value
of Shares (000)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
USX - Marathon Group 38,000 $ 952
Vastar Resources, Inc. 27,500 2,260
--------
52,234
--------
Paper & Forest Products--0.7%
Georgia-Pacific Corp. 32,500 703
Potlatch Corp. 9,600 318
Weyerhaeuser Co. 46,000 1,978
--------
2,999
--------
Photography Equipment & Supplies--0.5%
Polaroid Corp. 106,000 1,915
--------
Printing & Publishing--4.8%
Donnelley (R.R.) & Sons Co. 57,000 1,286
New York Times Co. 189,000 7,465
Washington Post Co. 23,400 11,185
--------
19,936
--------
Retail--1.6%
J.C. Penney Co., Inc. 71,000 1,309
Petrie Stores Corp.* 1,380,000 1,682
Toys "R" Us, Inc.* 250,000 3,641
--------
6,632
--------
Toys--0.3%
Hasbro, Inc. 81,000 1,220
--------
Transportation--2.5%
Canadian Pacific Ltd. 156,000 4,085
Overseas Shipholding Group, Inc. 192,000 4,728
Ryder System, Inc. 91,000 1,723
--------
10,536
--------
TOTAL COMMON STOCK
(Cost $208,037) 238,476
--------
-------------------------------------------------------------------------------
PREFERRED STOCK--6.1%
-------------------------------------------------------------------------------
Cleveland Electric Illum. 7.00% 10,500 1,029
Entergy Gulf States Utilities, Inc. 7.00% 13,500 645
Hercules Trust II 6.50% 18,000 988
Niagara Mohawk Power Co. 6.50% 16,000 392
Niagara Mohawk Power Co. 7.00% 3,000 73
Niagara Mohawk Power Co. 7.50% 1,500 38
Owens - Illinois, Inc. 4.75% 57,000 1,268
Rouse Co. $3 295,000 10,546
Sinclair Broadcasting Group, Inc. 6.00% 11,000 343
Union Pacific Capital Trust 6.25% 210,000 8,242
USX Capital Trust 6.75% 54,000 1,806
--------
TOTAL PREFERRED STOCK
(Cost $30,325) 25,370
--------
-------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST--1.4%
-------------------------------------------------------------------------------
Regional Malls--1.4%
Rouse Co.
(Cost $5,195) 231,000 5,717
--------
-------------------------------------------------------------------------------
OPTIONS--0.0%
-------------------------------------------------------------------------------
Tribune Co. $40, 11/18/00*
(Cost $18) 30 19
--------
14
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE FLEXIBLY MANAGED FUND
Par Value
(000) (000)
----------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--2.5%
----------------------------------------------------------------------------
U.S. Treasury Notes
6.125%, 07/31/00 1,250 $ 1,251
6.250%, 04/30/01 2,500 2,497
6.250%, 10/31/01 2,500 2,494
5.875%, 09/30/02 4,275 4,230
-------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $10,602) 10,472
-------
----------------------------------------------------------------------------
AGENCY OBLIGATIONS--8.4%
----------------------------------------------------------------------------
FNMA
6.375%, 01/16/02 3,200 3,174
Tennessee Valley Authority
5.880%, 04/01/36 1,880 17,899
5.980%, 04/01/36 4,600 4,510
6.235%, 07/15/45 9,950 9,908
-------
32,317
TOTAL AGENCY OBLIGATIONS
(Cost $37,080) 35,491
-------
----------------------------------------------------------------------------
MEDIUM TERM NOTE--0.4%
----------------------------------------------------------------------------
FNMA
5.370%, 02/07/01
(Cost $1,576) 1,600 1,586
-------
----------------------------------------------------------------------------
MUNICIPAL BOND--0.7%
----------------------------------------------------------------------------
California State
5.85%, 10/01/11
(Cost $3,267) 2,925 3,037
-------
----------------------------------------------------------------------------
CORPORATE BOND--1.0%
----------------------------------------------------------------------------
BellSouth Telecommunications
5.850%, 11/15/45
(Cost $3,776) 3,800 3,782
-------
----------------------------------------------------------------------------
COVERTIBLE BONDS--12.8%
----------------------------------------------------------------------------
Battle Mountain Gold Co.
6.000%, 01/04/05 570 470
Exide Corp.
2.900%, 12/15/05 1,250 568
HealthSouth Corp.
3.250%, 04/01/03 5,700 4,567
Hilton Hotels Corp.
5.000%, 05/15/06 13,945 11,156
Inco Ltd.
5.75%, 07/01/04 10,800 9,693
Loews Corp.
3.125%, 09/15/07 7,400 6,218
McKesson Corp.
4.500%, 03/01/04 1,500 1,283
Ogden Corp.
5.75%, 10/20/02 250 212
Phycor, Inc.
4.500%, 02/15/03 3,250 553
Potomac Electric Power Co.
5.000%, 09/01/02 2,800 2,667
Rite Aid Corp.
5.25%, 09/15/02 820 489
<PAGE>
Par Value
(000) (000)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Teck Corp.
3.75%, 07/15/06 7,700 $ 5,852
Texaco Capital, Inc.
3.500%, 08/05/04 1,700 1,584
Waste Management, Inc.
4.000%, 02/01/02 8,825 8,171
TOTAL COVERTIBLE BONDS ---------
(Cost $57,792) 53,483
---------
-----------------------------------------------------------------------------
ZERO COUPON BONDS--2.7%
-----------------------------------------------------------------------------
Baker Hughes, Inc.
3.622%**, 05/05/08 1,450 1,124
Lennar Corp.
3.085%**, 07/29/18 4,700 1,966
Pep Boys, Inc.
7.281%**, 09/20/11 4,650 2,604
Roche Holdings, Inc.
6.291%**, 05/06/12 10,500 5,040
Times Mirror Co.
4.534%**, 04/15/17 850 465
TOTAL ZERO COUPON BONDS ---------
(Cost $11,764) 11,199
---------
Number
of Shares
-----------------------------------------------------------------------------
RIGHTS--0.0%
-----------------------------------------------------------------------------
Hills Stores Co.*
(Cost $0) 93,000 -
---------
-----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--6.0%
-----------------------------------------------------------------------------
Reserve Investment Fund
(Cost $25,505) 25,505 25,505
TOTAL INVESTMENTS -- 99.0% ---------
(Cost $394,937) 414,137
OTHER ASSETS IN EXCESS
OF LIABILITIES -- 1.0% 4,210
---------
NET ASSETS APPICABLE TO 23,180,599
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING -- 100.0% $ 418,347
=========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 18.05
=========
--------------------------------------------
* Non-Income producing Security
** Efective Yield
ADR - American Depository Receipt
(a) At June 30, 2000, the cost for Federal income tax purposes was $395,872,198.
Net unrealized appreciation was $18,264,468. This consisted of aggregated gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $54,509,540 and aggregate gross unrealized
depreciation for all securites in which there was an excess of tax cost over
market value of $36,245,072.
The accompanying notes are an integral part of these financial statements.
15
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE INTERNATIONAL EQUITY FUND
Number Value
of Shares (000)
----------------------------------------------------------------------------
COMMON STOCK--95.5%
----------------------------------------------------------------------------
Australia--3.1%
Computershare, Ltd. 162,400 $ 838
Macquarie Bank, Ltd. 78,400 1,228
PowerLan, Ltd. 962,300 1,009
Westfield Holdings, Ltd. 290,600 2,003
Woodside Petroleum, Ltd. 199,900 1,560
-------
6,638
-------
Denmark--1.0%
Novo Nordisk A/S-B 12,000 2,051
-------
Finland--2.6%
Nokia Corp. (ADR) 85,900 4,290
Perlos OYJ 42,900 1,361
-------
5,651
-------
France--9.8%
Altran Technologies SA 13,000 2,556
Atos SA* 14,500 1,362
AXA 17,000 2,689
Cap Gemini SA 5,100 902
Carrefour SA 26,000 1,785
Compagnie Generale d'Industrie
et de Participations 35,200 1,505
Dassault Systemes SA 16,500 1,545
L'Oreal SA 1,600 1,391
Publicis SA 2,800 1,103
Sidel SA 11,600 945
Societe Generale A 15,500 936
STMicroelectronics NV 22,500 1,424
Total Fina SA-B 18,035 2,776
-------
20,919
-------
Germany--2.8%
Allianz AG 7,308 2,608
Bayerische Motoren
Werke (BMW) AG 41,600 1,272
Muenchener Rueckversicherungs
Gesellschaft AG 6,804 2,139
-------
6,019
-------
Hong Kong--2.0%
Dah Sing Financial Group 172,100 693
Hutchison Whampoa, Ltd. 132,000 1,660
SmarTone Telecommunications Holdings, Ltd. 215,000 476
Sun Hung Kai Properties, Ltd. 195,000 1,401
-------
4,230
-------
Ireland--2.0%
Allied Irish Banks PLC 100,290 904
CRH PLC 49,021 890
Elan Corp. PLC (ADR)* 50,500 2,446
-------
4,240
-------
Italy--4.0%
ENI SpA 266,200 1,544
Parmalat Finanziaria SpA 818,000 1,159
Pininfarina SpA 56,500 956
Pirelli SpA 800,000 2,113
Telecom Italia Mobile SpA 150,000 1,539
<PAGE>
Number Value
of Shares (000)
---------------------------------------------------------------------------
---------------------------------------------------------------------------
Telecom Italia SpA 85,000 $ 1,173
-------
8,484
-------
Japan--20.0%
Asatsu-DK, Inc. 25,000 1,028
Benesse Corp. 17,000 1,181
Fuji Photo Film Co., Ltd. 18,000 738
Fujitsu, Ltd. 87,000 3,018
Fujitsu Support & Service, Inc. 6,100 605
Hikari Tsushin, Inc. 2,300 95
Hoya Corp. 16,000 1,437
Mikuni Coca-Cola Bottling Co., Ltd. 34,000 495
Murata Manufacturing Co., Ltd. 18,000 2,589
Nichiei Co., Ltd. 31,800 523
Nintendo Co., Ltd. 16,500 2,888
Nippon Telegraph & Telephone Corp. 20,000 267
Nippon Television Network Corp. 2,700 1,761
NTT DoCoMo, Inc. 115,000 3,119
Rohm Co., Ltd. 13,500 3,955
Ryohin Keikaku Co., Ltd. 13,500 1,723
Secom Co., Ltd. 22,000 1,611
Seven-Eleven Japan Co., Ltd. 15,000 1,258
Shin-Etsu Chemical Co., Ltd. 41,000 2,085
Shohkoh Fund & Co., Ltd. 8,200 1,852
Sony Corp. 19,700 1,843
Takeda Chemical Industries, Ltd. 50,000 3,289
Tokyo Broadcasting System, Inc. 62,000 2,684
Tokyo Electron, Ltd. 15,000 2,059
Yasuda Fire & Marine
Insurance Co., Ltd. 145,000 766
-------
42,869
-------
Malaysia--0.3%
Malayan Banking Berhad 160,000 648
-------
Netherlands--6.9%
Aegon N.V. 81,680 2,918
Aegon N.V. (ARS) 20,252 722
ASM Lithography Holding N.V.* 59,600 2,572
Getronics N.V. 67,000 1,037
Heineken N.V. 39,100 2,390
Koninklijke Philips Electronics N.V. 75,120 3,557
Unilever N.V. 36,800 1,695
-------
14,891
-------
Norway--1.7%
Nycomed Amersham PLC 162,000 1,573
Tomra Systems ASA 76,600 2,039
-------
3,612
-------
Singapore--2.2%
Datacraft Asia, Ltd. 140,400 1,236
DBS Group Holdings, Ltd. 110,000 1,412
Singapore Press Holdings, Ltd. 140,000 2,186
-------
4,834
-------
Spain--1.0%
Banco Santander Central Hispano SA 100,000 1,059
Telefonica SA 50,000 1,078
-------
2,137
-------
16
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE INTERNATIONAL EQUITY FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Sweden--7.3%
Assa Abloy AB-B 170,623 $ 3,444
Ericsson LM-B 154,800 3,080
Investor AB-B 61,600 846
Modern Times Group MTG AB - B* 26,900 1,288
Nordic Baltic Holding (NBH) AB 374,700 2,841
Securitas AB - B 75,900 1,618
Skandia Forsakrings AB 96,000 2,550
--------
15,667
--------
Switzerland--9.0%
Credit Suisse Group 21,000 4,191
Givaudan* 558 170
Nestle SA 1,150 2,309
Pharma Vision 2000 AG* 1,000 670
PSP Swiss Property AG* 11,500 1,061
Rieter Holding AG 6,800 2,300
Roche Holding AG 518 5,129
Swiss Re 1,000 2,045
Zurich Allied AG 3,000 1,487
--------
19,362
--------
United Kingdom--19.8%
3i Group PLC 100,576 2,069
Abbey National PLC 100,000 1,196
Amvescap PLC 195,000 3,129
AstraZeneca Group PLC 53,000 2,475
BP Amoco plc (ADR) 26,934 1,523
Capita Group PLC 146,500 3,586
Compass Group PLC 245,500 3,235
Glaxo Wellcome PLC 75,000 2,188
Hays PLC 220,000 1,227
HSBC Holdings PLC 190,000 2,173
Invensys PLC 424,360 1,593
LASMO PLC 650,000 1,378
Logica PLC 63,000 1,492
Misys PLC 111,940 946
New Dixons Group PLC 370,952 1,511
Provident Financial PLC 81,334 848
Prudential PLC 150,000 2,198
Royal Bank of Scotland Group PLC 95,000 1,591
Vodafone AirTouch PLC 1,000,599 4,045
WPP Group PLC 275,000 4,018
--------
42,421
TOTAL COMMON STOCK
(Cost $163,144) 204,673
--------
<PAGE>
Number Value
of Shares (000)
----------------------------------------------------------------------------
PREFERRED STOCK--1.4%
----------------------------------------------------------------------------
Germany--1.4%
ProSieben Media AG 12,000 $ 1,438
SAP AG 8,500 1,595
--------
TOTAL PREFERRED STOCK
(Cost $3,033) 3,033
--------
----------------------------------------------------------------------------
WARRANTS--0.3%
----------------------------------------------------------------------------
Germany--0.0%
Muenchener Rueckversicherungs* 104 8
--------
Switzerland--0.3%
Zuercher Kantonalbank* 900,000 587
--------
TOTAL WARRANTS (Cost $576) 595
--------
----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--2.3%
----------------------------------------------------------------------------
Temporary Cash Investment Fund, Inc. 2,427,621 2,428
Temporary Investment Fund, Inc. 2,427,621 2,428
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $4,856) 4,856
--------
TOTAL INVESTMENTS--99.4%
(Cost $171,609) (a) 213,157
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.6% 1,180
--------
NET ASSETS APPLICABLE TO 10,061,949
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING--100% $214,337
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 21.30
========
----------------------------------------
* - Non-Income Producing Security
ADR - American Depository Receipt
ARS - American Registered Share
(a) At June 30, 2000, the cost for Federal income tax purposes was $172,038,049.
Net unrealized appreciation was $41,119,055. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $52,013,238 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $10,894,183.
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE INTERNATIONAL EQUITY FUND
------------------------------------------------------------------------------
% of Market Value
Value (000's)
------------------------------------------------------------------------------
COMMON AND PREFERRED STOCK
SECTOR DIVERSIFICATION
------------------------------------------------------------------------------
Financial Services 11.60% $ 24,165
Telecommunications 10.30% 21,405
Insurance 9.70% 20,122
Pharmaceuticals 8.50% 17,578
Electronics 8.10% 16,789
Computer Services & Software 7.70% 15,913
Oil 4.20% 8,782
Media Communications 3.50% 7,171
Retail Diversified 3.00% 6,275
Advertising 3.00% 6,149
Diversified Food Products 2.50% 5,163
Metal Processors & Fabricators 2.40% 4,948
Investment Companies 2.20% 4,646
Real Estate Development 2.10% 4,465
Human Resources 1.70% 3,586
Diversified Operations 1.60% 3,253
Machinery - General Industry 1.60% 3,245
Catering Services 1.50% 3,235
Security Services 1.50% 3,230
Toys 1.40% 2,888
Beverages 1.40% 2,884
Engineering Services 1.20% 2,556
Diversified Commercial Services 1.20% 2,408
Automobile Manufacturing 1.10% 2,229
Publishing 1.00% 2,186
Tire & Rubber 1.00% 2,113
Diversified Chemicals 1.00% 2,085
Recycling 1.00% 2,039
Medical Procucts 0.80% 1,573
Cosmetics 0.70% 1,561
Optical Equipment 0.70% 1,436
Building Materials 0.40% 890
Photographic Equipment 0.40% 738
------- ----------
100.00% $ 207,706
======= ==========
18
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE SMALL CAP VALUE FUND
Number Value
of Shares (000)
------------------------------------------------------------------------------
COMMON STOCK--96.9%
------------------------------------------------------------------------------
Aerospace & Defense--6.7%
AAR CORP. 31,000 $ 372
Curtiss-Wright Corp. 10,000 374
DRS Technologies, Inc.* 36,000 418
Ducommun, Inc. 29,000 346
EDO Corp. 48,200 304
HEICO Corp. 30,000 427
Kaman Corp. 40,000 424
Moog, Inc.* 20,000 530
-------
3,195
-------
Agricultural Operations--0.3%
Cadiz, Inc.* 20,000 157
-------
Air Transportation--0.6%
Mesa Air Group, Inc.* 50,000 276
-------
Banking--3.9%
American Financial Holdings, Inc. 12,500 198
Banknorth Group, Inc. 30,000 457
East West Bancorp, Inc. 33,000 470
Enhance Financial Services Group, Inc. 30,000 424
Sterling Bancorp 20,000 315
-------
1,864
-------
Building & Building Supplies--2.2%
Encompass Services Corp.* 70,000 402
Fleetwood Enterprises, Inc. 19,000 271
Modtech Holdings, Inc.* 34,600 361
-------
1,034
-------
Chemicals--3.7%
Arch Chemicals, Inc. 27,500 602
Chemfab Corp.* 30,000 356
Olin Corp. 19,900 328
Quaker Chemical Corp. 25,000 434
Terra Industries, Inc.* 50,000 53
-------
1,773
-------
Computer-Network Products & Services--1.2%
Auspex Systems, Inc.* 60,000 298
UNOVA, Inc.* 40,000 293
-------
591
-------
Computer Services & Software--3.1%
AlphaNet Solutions, Inc.* 31,000 134
Computer Task Group, Inc. 45,000 228
Epicor Software Corp.* 55,000 138
MSC Software Corp. 40,000 373
Technology Solutions Co.* 95,000 592
-------
1,465
-------
Computers & Office Equipment--3.9%
Boca Research, Inc.* 40,000 214
Evans & Sutherland Computer Corp.* 22,400 144
Maxwell Technologies, Inc. 15,000 206
Mentor Graphics Corp.* 17,500 347
MTS Systems Corp. 40,000 251
Sigma Designs, Inc.* 65,000 297
Wallace Computer Services, Inc. 41,700 412
-------
1,871
-------
<PAGE>
Number Value
of Shares (000)
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Consumer Products--2.1%
Applied Extrusion Technologies, Inc.* 64,300 $ 351
Central Garden & Pet Co.* 30,000 270
Herbalife International, Inc. 45,000 380
------
1,001
------
Containers--0.8%
Longview Fibre Co. 36,000 398
------
Distribution Services--1.0%
Bell Microproducts, Inc.* 25,000 465
------
Diversified Operations--5.8%
Calgon Carbon Corp. 65,000 504
Deswell Industries, Inc. 20,000 263
Lydall, Inc. 25,000 266
Ogden Corp.* 50,000 450
Smith (A.O.) Corp. 17,500 366
SPS Technologies, Inc.* 13,000 534
Volt Information Sciences, Inc.* 12,000 395
------
2,778
------
Electronic Components--4.2%
BMC Industries, Inc. 70,000 284
Chyron Corp. 85,000 244
Cubic Corp. 23,700 427
ESS Technology, Inc.* 20,000 289
Planar Systems, Inc.* 43,000 555
Sheldahl, Inc.* 40,000 215
------
2,014
------
Electronic Systems--3.3%
Analogic Corp. 6,000 238
GenRad, Inc. 57,500 517
LeCroy Corp.* 20,000 196
Paxar Corp.* 24,400 291
Robotic Vision Systems, Inc.* 20,000 366
------
1,608
------
Entertainment & Leisure--2.0%
AMC Entertainment, Inc. 65,000 248
Carmike Cinemas, Inc.* 75,000 291
Vail Resorts, Inc.* 25,000 408
------
947
------
Health Care--1.9%
CorVel Corp.* 15,000 371
Spacelabs Medical, Inc.* 32,500 325
Weider Nutrition International, Inc. 80,000 240
------
936
------
Insurance--4.4%
Annuity and Life Re (Holdings), Ltd. 27,000 654
Fremont General Corp. 60,000 236
Horace Mann Educators Corp. 24,800 372
RenaissanceRe Holdings Ltd. 9,500 414
Trenwick Group, Inc. 30,000 437
------
2,113
------
Machinery--7.3%
Albany International Corp. 29,933 428
Chart Industries, Inc.* 75,000 366
CMI Corp. 50,000 141
19
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE SMALL CAP VALUE FUND
Number Value
of Shares (000)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
DT Industries, Inc.* 30,000 $ 276
Flowserve Corp. 25,000 378
FSI International, Inc.* 20,000 433
JLG Industries, Inc. 35,000 416
Lindsay Manufacturing Co. 20,000 392
Stewart & Stevenson Services, Inc. 37,000 560
Tokheim Corp. 82,500 134
------
3,524
------
Manufacturing--11.1%
A.T. Cross Co.* 30,000 146
Baldwin Technology Co., Inc. 90,000 191
Brush Engineered Materials, Inc. 17,500 273
Burlington Industries, Inc.* 100,000 169
Cannondale Corp.* 30,000 195
CoorsTek, Inc.* 7,000 322
Donna Karan International, Inc.* 55,000 333
Esterline Technologies Corp.* 27,600 409
G & K Services, Inc. 20,000 501
Griffon Corp.* 65,000 362
Hexcel Corp. 50,000 475
Kaydon Corp. 20,000 420
Osmonics, Inc.* 27,500 254
Steinway Musical Instruments, Inc.* 29,000 479
Todd Shipyards Corp.* 39,800 313
Toro Co. 15,000 494
------
5,336
------
Medical --1.3%
Acuson Corp.* 30,000 405
QuadraMed Corp.* 90,000 236
------
641
------
Metal Components & Products--4.4%
Atchison Casting Corp.* 23,000 132
Carpenter Technology Corp. 20,000 422
Century Aluminum Co. 31,500 344
Penn Engineering & Manufacturing Corp. 10,500 370
Precision Castparts Corp. 10,000 453
Timken Co. 22,500 419
------
2,140
------
Oil & Gas--2.5%
Cabot Oil & Gas Corp. 20,000 424
Forcenergy, Inc.* 28,100 566
St. Mary Land & Exploration Co. 5,500 231
------
1,221
------
Printing & Publishing--2.0%
Banta Corp. 25,500 483
Houghton Mifflin Co. 10,800 504
------
987
------
Retail--6.9%
Brown Shoe Co., Inc. 35,000 455
Burlington Coat Factory Warehouse Corp. 40,000 432
Good Guys, Inc.* 65,000 232
Noodle Kidoodle, Inc.* 80,000 243
Nu Skin Enterprises, Inc.* 60,000 345
Sharper Image Corp.* 28,000 341
ShopKo Stores, Inc. 35,000 538
<PAGE>
Number Value
of Shares (000)
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Spiegel, Inc. 67,000 $ 564
The Bombay Co., Inc.* 60,000 176
-------
3,326
-------
Telecommunications--3.2%
Allen Telecom, Inc.* 25,000 442
Channell Commercial Corp.* 15,000 180
Comtech Telecommunications Corp.* 32,100 531
Salient 3 Communications, Inc. 30,000 363
-------
1,516
-------
Transportation--6.6%
Alexander & Baldwin, Inc. 20,000 442
Arkansas Best Corp.* 30,000 299
Circle International Group, Inc. 24,000 602
Fritz Cos., Inc. 40,000 411
Interpool, Inc. 59,200 577
OMI Corp.* 60,000 326
Overseas Shipholding Group, Inc. 20,000 493
-------
3,150
-------
Waste Management--0.5%
GTS Duratek, Inc.* 26,100 219
-------
TOTAL COMMON STOCK
(Cost $48,137) 46,546
-------
-----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--4.7%
-----------------------------------------------------------------------------
RBB Sansom Street Fund - Money Market 1,120,464 1,120
Temporary Cash Investment Fund, Inc. 1,121,638 1,122
TOTAL SHORT-TERM INVESTMENTS -------
(Cost $2,242) 2,242
-------
TOTAL INVESTMENTS--101.6%
(Cost $50,379) (a) 48,788
LIABILITIES IN EXCESS
OF OTHER ASSETS--(1.6%) (763)
-------
NET ASSETS APPLICABLE TO 3,506,254
SHARES OF COMMIN STOCK
ISSUED AND OUTSTANDING --100.0% $48,025
=======
NET ASSET VALUE. OFFERING AND
REDEMPTION PRICE PER SHARE $ 13.70
=======
-------------------------------------------
* Non-Income Producing Security
(a) At June 30, 2000, the cost for Federal income tax purposes was $50,479,465.
Net unrealized depreciation was $1,691,158. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $3,827,619 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $5,518,777.
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE EMERGING GROWTH FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
COMMON STOCK--93.6%
--------------------------------------------------------------------------------
Advertising--0.6%
Lamar Advertising Co.* 24,200 $ 1,049
TMP Worldwide, Inc.* 6,900 509
--------
1,558
--------
Broadcast/Media--2.9%
Citadel Communications Corp.* 25,300 883
Cox Radio, Inc.* 49,500 1,386
Entercom Communications Corp.* 25,500 1,243
Hispanic Broadcasting Corp.* 30,400 1,007
Macrovision Corp.* 24,800 1,585
Spanish Broadcasting System, Inc.* 40,200 825
--------
6,929
--------
Computer - Internet - Content Service--4.1%
24 / 7 Media, Inc.* 50,000 780
coolsavings.com, inc.* 16,700 101
Critical Path, Inc.* 24,000 1,399
HomeStore.com, Inc.* 78,250 2,294
LifeMinders, Inc.* 20,450 605
MyPoints.com, Inc.* 63,150 1,200
NaviSite, Inc.* 45,100 1,889
NetCreations, Inc.* 18,100 830
SportsLine.com, Inc.* 44,700 764
--------
9,862
--------
Computer - Internet Services & Software--26.0%
Alteon Websystems, Inc.* 27,750 2,776
Art Technology Group, Inc.* 17,100 1,727
Be Free, Inc.* 58,200 4,131
Check Point Software Technologies Ltd.* 10,000 2,123
Digex, Inc.* 28,100 1,910
Digital Island, Inc.* 45,350 2,204
DSL.net, Inc.* 69,450 718
eSPEED, Inc.* 41,850 1,819
FirePond, Inc.* 71,500 2,576
Internap Network Services Corp.* 11,200 462
ITXC Corp.* 27,500 974
Kana Communications, Inc.* 26,710 1,654
Keynote Systems, Inc.* 16,100 1,124
Macromedia, Inc.* 30,100 2,909
Netcentives, Inc.* 61,600 1,149
Netopia, Inc.* 27,400 1,102
Portal Software, Inc.* 28,200 1,802
Primus Knowledge Solutions, Inc.* 33,550 1,519
Proxicom, Inc.* 53,400 2,555
PSINet, Inc.* 62,200 1,561
RealNetworks, Inc.* 39,800 2,011
Register.com, Inc.* 8,000 245
Retek, Inc.* 68,200 2,182
Scient Corp.* 21,400 954
Software.com, Inc.* 28,200 3,663
SonicWALL, Inc.* 18,400 1,620
TIBCO Software, Inc.* 22,200 2,380
Verio, Inc.* 30,100 1,670
VeriSign, Inc.* 27,627 4,872
Viant Corp.* 58,800 1,744
Vignette Corp.* 21,450 1,116
Vitria Technology, Inc.* 21,900 1,339
WatchGuard Technologies, Inc.* 23,450 1,289
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
webMethods, Inc.* 2,700 $ 425
--------
62,305
--------
Computer - Network Products & Services--4.6%
Cobalt Networks, Inc.* 70,700 4,094
Extreme Networks, Inc.* 17,100 1,798
Foundry Networks, Inc.* 6,800 750
ISS Group, Inc.* 38,500 3,801
Stratos Lightwave, Inc.* 1,500 42
Turnstone Systems, Inc.* 2,800 464
--------
10,949
--------
Computer Services & Software--12.1%
Acxiom Corp.* 39,300 1,098
BEA Systems, Inc.* 43,700 2,159
Business Objects S.A. (ADR)* 13,900 1,224
Caminus Corp.* 49,700 1,221
Cysive, Inc.* 59,900 1,436
Digimarc Corp.* 15,300 589
Exchange Applications, Inc.* 77,600 2,061
Informatica Corp.* 82,000 6,714
Informix Corp.* 79,100 591
Interactive Intelligence, Inc.* 25,200 943
Mercator Software, Inc.* 24,800 1,704
NetIQ Corp.* 58,250 3,473
NVIDIA Corp* 26,600 1,690
OnDisplay, Inc.* 6,800 557
Peregrine Systems, Inc.* 31,000 1,079
Quest Software, Inc.* 26,100 1,449
StorageNetworks, Inc.* 300 27
Sykes Enterprises, Inc.* 26,300 339
The BISYS Group, Inc.* 12,700 785
Virage, Inc.* 500 9
--------
29,148
--------
Computers--0.2%
Handspring, Inc.* 1,000 27
Immersion Corp.* 18,600 557
--------
584
--------
Electronics--1.8%
Interlink Electronics, Inc.* 51,650 2,166
Manufacturers' Services Ltd.* 2,800 58
Molecular Devices Corp.* 6,300 436
Photon Dynamics, Inc.* 7,200 538
Power Integrations, Inc.* 43,300 1,024
--------
4,222
--------
Electronics-Semiconductors--6.6%
Alpha Industries, Inc. 9,600 423
Applied Micro Circuits Corp.* 19,900 1,965
Cree, Inc.* 14,100 1,885
Exar Corp.* 17,050 1,488
GlobeSpan, Inc.* 19,000 2,315
Integrated Device Technology, Inc.* 29,600 1,776
LTX Corp.* 35,500 1,241
Marvell Technology Group Ltd.* 300 17
Microsemi Corp.* 66,800 2,265
PLX Technology, Inc.* 59,600 2,472
--------
15,847
--------
21
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE EMERGING GROWTH FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Fiber Optics--2.2%
Avanex Corp.* 10,650 $ 1,018
CIENA Corp.* 16,200 2,700
Exfo Electro-Optical Engineering, Inc.* 1,300 57
Metromedia Fiber Network, Inc.* 39,200 1,556
--------
5,331
--------
Finance--1.2%
Financial Federal Corp.* 34,900 606
Knight Trading Group, Inc.* 25,100 748
NextCard, Inc.* 29,800 252
Waddell & Reed Financial, Inc. 41,600 1,365
--------
2,971
--------
Healthcare--0.9%
Community Health Care* 11,400 185
Province Healthcare Co.* 20,400 736
Sunrise Assisted Living, Inc.* 70,700 1,312
--------
2,233
--------
Hotels--0.9%
Four Seasons Hotels, Inc. 34,100 2,121
--------
Human Resources--0.6%
On Assignment, Inc.* 43,400 1,340
--------
Medical Supplies & Equipment--5.4%
Charles River Laboratories International, Inc.* 5,350 119
Cytyc Corp.* 58,400 3,115
Protein Design Labs, Inc.* 23,300 3,841
ResMed, Inc.* 71,400 1,910
SurModics, Inc.* 50,900 1,346
Techne Corp.* 6,000 786
Thoratec Laboratories Corp.* 31,450 506
Visible Genetics, Inc.* 27,300 1,230
--------
12,853
--------
Pharmaceuticals--0.6%
Cubist Pharmaceuticals, Inc.* 28,800 1,419
--------
Research & Development--1.3%
Albany Molecular Research, Inc.* 13,800 751
Aurora Biosciences Corp.* 35,900 2,440
--------
3,191
--------
Retail--1.1%
Bed, Bath & Beyond, Inc* 38,800 1,405
Factory 2-U Stores, Inc.* 34,500 1,308
--------
2,713
--------
Services - Commercial--0.8%
MemberWorks, Inc.* 18,900 634
Student Advantage, Inc.* 65,300 480
TeleTech Holdings, Inc.* 27,600 856
--------
1,970
--------
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Services - Consulting--1.6%
Forrester Research, Inc.* 17,150 $ 1,248
Professional Detailing, Inc.* 78,050 2,473
--------
3,721
--------
Telecommunications--10.9%
Allegiance Telecom, Inc.* 35,850 2,295
Anaren Microwave, Inc.* 7,650 1,003
AudioCodes Ltd.* 12,100 1,462
CapRock Communications Corp.* 27,250 538
Crown Castle International Corp.* 27,900 1,018
Ditech Communications Corp.* 22,500 2,132
Dobson Communications Corp.* 01,500 1,960
EchoStar Communications Corp.* 41,000 1,357
Efficient Networks, Inc.* 26,700 1,965
Electric Lightwave, Inc.* 57,700 1,076
McLeodUSA, Inc.* 89,400 1,852
Metrocall, Inc.* 209,400 1,881
Next Level Communications, Inc.* 8,100 695
NEXTLINK Communications, Inc.* 65,112 2,468
Primus Telecommunications Group, Inc.* 27,000 673
Superconductor Technologies, Inc.* 22,700 892
Viatel, Inc.* 19,600 559
West TeleServices Corp.* 13,900 352
--------
26,204
--------
Therapeutics--3.5%
Abgenix, Inc.* 21,500 2,577
Gilead Sciences, Inc.* 17,500 1,245
Medarex, Inc.* 33,200 2,806
Pharmacyclics, Inc.* 19,900 1,212
PRAECIS Pharmaceuticals, Inc.* 22,550 630
--------
8,470
--------
Transportation Services--0.4%
Forward Air Corp.* 26,550 1,057
--------
Wireless Communications--3.3%
American Tower Corp. 69,600 2,901
Metawave Communications Corp.* 27,400 730
Netro Corp.* 32,900 1,888
Powerwave Technologies, Inc.* 13,200 581
Spectrasite Holdings, Inc.* 45,000 1,278
WebLink Wireless, Inc.* 29,900 395
--------
7,773
--------
TOTAL COMMON STOCK
(Cost $161,460) 224,771
--------
--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUST--0.8%
--------------------------------------------------------------------------------
Diversified--0.8%
Pinnacle Holdings, Inc.*
(Cost $690) 35,250 1,890
--------
22
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE EMERGING GROWTH FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--5.2%
--------------------------------------------------------------------------------
Temporary Cash Investment Fund, Inc. 6,190,949 $ 6,191
Temporary Investment Fund, Inc. 6,190,822 6,191
--------
TOTAL SHORT-TERM INVESTMENTS
(Cost $12,382) 12,382
--------
TOTAL INVESTMENTS--99.6%
(Cost $174,532)(a) 239,043
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.4% 944
--------
NET ASSETS APPLICABLE TO 5,462,762
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING--100.0% $239,987
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 43.93
========
---------------
* Non-Income Producing Security
ADR - American Depository Receipt
(a) At June 30, 2000, the cost for Federal income tax purposes was $174,864,191.
Net unrealized appreciation was $ 64,178,866. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $79,947,845 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $15,768,979.
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE LIMITED MATURITY BOND FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--86.3%
--------------------------------------------------------------------------------
U.S. Treasury Notes--67.0%
6.500%, 08/31/01 $ 1,000 $ 1,000
6.625%, 03/31/02 1,000 1,002
5.500%, 01/31/03 2,000 1,959
5.875%, 11/15/04 2,200 2,167
6.500%, 02/15/10 1,190 1,229
--------
7,357
--------
U.S. Treasury Notes Inflation Indexed Notes--19.3%
3.625%, 07/15/02 2,000 2,125
--------
TOTAL U.S. TREASURY OBLIGATIONS
(Cost $9,439) 9,482
--------
--------------------------------------------------------------------------------
AGENCY OBLIGATION--9.2%
--------------------------------------------------------------------------------
Government National Mortgage Associaton
8.000%, 06/01/30
(Cost $1,006) 1,000 1,011
--------
--------------------------------------------------------------------------------
ASSET BACKED SECURITIES--10.9%
--------------------------------------------------------------------------------
Discover Card Master Trust I
6.643%, 09/16/05 500 500
First USA Credit Card Master Trust
6.729%, 01/18/06 200 200
MBNA Master Credit Card Trust
6.693%, 10/15/05 500 501
--------
TOTAL ASSET BACKED SECURITIES
(Cost $1,200) 1,201
--------
Number of
Shares
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS--1.6%
--------------------------------------------------------------------------------
Janus Money Market Fund 173,765 174
Provident Institutional Fund 830 1
TOTAL SHORT-TERM INVESTMENTS
(Cost $175) 175
--------
TOTAL INVESTMENTS--108.0% 11,869
(Cost $11,820)(a)
LIABILITIES IN EXCESS
OF OTHER ASSETS--(8.0%) (880)
--------
NET ASSETS APPLICABLE TO 1,082,127
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING--100% $10,989
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 10.15
========
---------------
(a)At June 30, 2000, the cost for Federal income tax purposes was $11,820,382.
Net unrealized appreciation was $48,308. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $59,379 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $11,071.
The accompanying notes are an integral part of these financial statements.
24
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE GROWTH AND INCOME FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
CONVERTIBLE BOND -- 2.5%
--------------------------------------------------------------------------------
Telecommunications--2.5%
Nextel Communications, Inc.
5.250%, 01/15/10
(Cost $1,025) 1,000 $ 1,015
--------
Number of
Shares
--------------------------------------------------------------------------------
COMMON STOCK -- 87.9%
--------------------------------------------------------------------------------
Banking--1.7%
Chase Manhattan Corp. 15,000 691
--------
Beverages--1.1%
PepsiCo, Inc. 10,000 444
--------
Computer - Network Products & Services--7.2%
Cisco Systems, Inc.* 15,000 953
Oracle Corp.* 13,000 1,092
Sun Microsystems, Inc.* 10,000 910
--------
2,955
--------
Computer Services & Software--4.9%
Automatic Data Processing, Inc. 20,000 1,071
EMC Corp.* 12,000 923
--------
1,994
--------
Computers & Office Equipment--4.2%
Hewlett-Packard Co. 5,000 624
International Business Machines Corp. 10,000 1,096
--------
1,720
--------
Consumer Products--1.3%
Johnson & Johnson 5,000 509
--------
Cosmetics & Toiletries--4.3%
Colgate-Palmolive Co. 20,000 1,198
Kimberly-Clark Corp. 10,000 574
--------
1,772
--------
Diversified Manufacturing Operations--6.4%
General Electric Co. 30,000 1,530
Tyco International Ltd. 23,000 1,090
--------
2,620
--------
Electronic Components--0.7%
Agilent Technologies, Inc.* 4,000 295
--------
Electronics - Semiconductors--6.2%
Applied Materials, Inc.* 10,000 907
Intel Corp. 6,000 802
Texas Instruments, Inc. 12,000 824
--------
2,533
--------
Energy Resources & Services--1.4%
Duke Energy Corp. 10,000 564
--------
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Finance--11.2%
Citigroup, Inc. 22,000 $ 1,326
MBNA Corp. 40,000 1,085
Merrill Lynch & Co. , Inc. 10,000 1,150
Morgan Stanley Dean Witter & Co. 12,000 999
--------
4,560
--------
Insurance--3.2%
American International Group, Inc. 11,000 1,293
--------
Medical--5.3%
Amgen, Inc.* 20,000 1,406
Medtronic, Inc. 15,000 747
--------
2,153
--------
Oil & Gas - Equipment & Services--8.0%
Exxon Mobil Corp. 15,000 1,178
Halliburton Co. 15,000 708
Schlumberger Ltd. 15,000 1,119
Transocean Sedco Forex, Inc. 5,000 267
--------
3,272
--------
Pharmaceuticals--6.0%
Merck & Co., Inc. 15,000 1,149
Pfizer, Inc. 27,500 1,320
--------
2,469
--------
Retail--5.6%
Home Depot, Inc. 10,000 499
Wal-Mart Stores, Inc. 20,000 1,153
Walgreen Co. 20,000 644
--------
2,296
--------
Telecommunications--7.8%
Nokia Corp. (ADR) 15,000 749
Nortel Networks Corp. 10,000 683
Vodafone AirTouch plc ( ADR) 20,000 829
WorldCom, Inc.* 20,000 918
--------
3,179
--------
Wireless Communications--1.4%
Motorola, Inc. 20,000 581
--------
TOTAL COMMON STOCK
(Cost $28,470) 35,900
--------
--------------------------------------------------------------------------------
PREFERRED STOCK -- 1.7%
--------------------------------------------------------------------------------
Retail--1.7%
CVS Automatic Common Exchange Traces
(Cost $736) 10,000 708
--------
25
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE GROWTH AND INCOME FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 9.9%
--------------------------------------------------------------------------------
Temporary Investment Fund, Inc. 2,022,359 $ 2,022
Temporary Cash Investment Fund, Inc. 2,022,361 2,022
---------
TOTAL SHORT-TERM INVESTMENTS
(Cost $4,044) 4,044
---------
TOTAL INVESTMENTS--102.0% 41,667
(Cost $34,275) (a)
LIABILITIES IN EXCESS
OF OTHER ASSETS--(2.0%) (804)
---------
NET ASSETS APPLICABLE TO 4,117,347
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING--100.0% $ 40,863
=========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 9.92
=========
---------------
* Non-Income Producing Security
ADR - American Depository Receipt
(a) At June 30, 2000, the cost for Federal income tax purposes was $34,274,784.
Net unrealized appreciation was $7,391,998. This consisted of aggregate gross
appreciation for all securities in which there was an excess of market value
over tax cost of $8,033,753 and aggregate gross unrealized depreciation for all
securities in which there was an excess of tax cost over market value of
$641,755.
The accompanying notes are an integral part of these financial statements.
26
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE INDEX 500 FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
COMMON STOCK--96.7%
--------------------------------------------------------------------------------
Advertising--0.2%
Interpublic Group of Cos., Inc. 5,400 $ 232
Omnicom Group, Inc. 3,200 285
Young & Rubicam, Inc. 1,300 74
------
591
------
Aerospace & Defense--0.8%
B.F. Goodrich Co. 1,900 65
Boeing Co. 16,100 673
General Dynamics Corp. 3,600 188
Lockheed Martin Corp. 7,100 176
Northrop Grumman Corp. 1,200 79
Raytheon Co. 6,000 115
United Technologies Corp. 8,400 495
------
1,791
------
Air Transportation--0.2%
AMR Corp. 2,700 71
Delta Air Lines, Inc. 2,200 111
Southwest Airlines Co. 8,800 167
US Airways Group, Inc.* 1,200 47
------
396
------
Autos, Tires, & Accessories--1.0%
Cooper Tire & Rubber Co. 1,300 14
Dana Corp. 2,700 57
Delphi Automotive Systems Corp. 10,000 147
Ford Motor Co. 21,400 920
General Motors Corp. 9,500 552
Genuine Parts Co. 3,100 62
Goodyear Tire & Rubber Co. 2,800 56
Harley-Davidson, Inc. 5,400 208
Navistar International Corp. 1,100 34
PACCAR, Inc. 1,400 56
Rockwell International Corp. 3,300 104
TRW, Inc. 2,200 95
Visteon Corp.* 2,300 28
------
2,333
------
Banking--4.1%
AmSouth Bancorporation 7,000 110
Bank of America Corp. 29,500 1,268
Bank of New York Co., Inc. 13,100 609
Bank One Corp. 20,400 542
BB&T Corp. 6,200 148
Charter One Financial, Inc. 3,700 85
Chase Manhattan Corp. 22,000 1,013
Comerica, Inc. 2,800 126
Fifth Third Bancorp. 5,500 348
First Union Corp. 17,400 432
Firstar Corp. 17,300 364
FleetBoston Financial Corp. 16,000 544
Huntington Bancshares, Inc. 3,900 62
KeyCorp. 7,700 136
Mellon Financial Corp. 8,700 317
National City Corp. 10,800 184
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Northern Trust Corp. 4,000 $ 260
Old Kent Financial Corp. 2,415 65
PNC Financial Services Group 5,200 244
Regions Financial Corp. 3,900 77
SouthTrust Corp. 3,000 68
State Street Corp. 2,900 308
Summit Bancorp. 3,100 76
SunTrust Banks, Inc. 5,400 247
Synovus Financial Corp. 5,000 88
U.S. Bancorp 13,400 258
Union Planters Corp. 2,400 67
Wachovia Corp. 3,600 195
Wells Fargo & Co. 28,700 1,112
------
9,353
------
Beverages--2.0%
Adolph Coors Co. 700 42
Anheuser-Busch Cos., Inc. 8,000 597
Brown-Forman Corp. 1,200 64
Coca-Cola Co. 44,000 2,527
Coca-Cola Enterprises, Inc. 7,500 122
PepsiCo, Inc. 25,600 1,138
------
4,490
------
Broadcast/Media--2.0%
Clear Channel Communications, Inc.* 6,000 450
Meredith Corp. 900 30
Seagram Co. Ltd. 7,800 452
Time Warner, Inc. 23,400 1,778
Viacom, Inc.* 27,100 1,848
------
4,558
------
Building & Building Supplies--0.2%
Armstrong Holdings, Inc. 700 11
Centex Corp. 1,100 26
Ecolab, Inc. 2,300 90
Kaufman & Broad Home Corp. 900 18
Masco Corp. 8,000 144
Owens Corning 1,000 9
Pulte Corp. 700 15
Sherwin-Williams Co. 2,900 61
Vulcan Materials Co. 1,800 77
------
451
------
Cable Operators--0.6%
Comcast Corp.* 16,000 648
MediaOne Group, Inc.* 11,000 733
------
1,381
------
Chemicals--0.9%
Air Products & Chemicals, Inc. 4,100 126
Ashland, Inc. 1,300 46
Dow Chemical Co. 12,000 362
Du Pont (E.I.) de Nemours and Co. 18,600 814
Eastman Chemical Co. 1,400 67
Engelhard Corp. 2,300 39
27
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE INDEX 500 FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Great Lakes Chemical Corp. 1,000 $ 31
Hercules, Inc. 1,900 27
PPG Industries, Inc. 3,100 137
Praxair, Inc. 2,800 105
Rohm & Haas Co. 3,900 135
Sigma-Aldrich Corp. 1,500 44
Union Carbide Corp. 2,400 119
W.R. Grace & Co.* 1,200 15
-------
2,067
-------
Computer - Internet Services & Software--1.5%
America Online, Inc.* 40,900 2,157
Yahoo! Inc.* 9,700 1,202
-------
3,359
-------
Computer Network Products & Services--6.8%
3COM Corp.* 6,200 357
Adaptec, Inc.* 1,800 41
Cabletron Systems, Inc.* 3,200 81
Cisco Systems, Inc.* 123,800 7,865
Network Appliance, Inc.* 5,400 435
Oracle Corp.* 50,500 4,244
Sun Microsystems, Inc.* 28,200 2,565
-------
15,588
-------
Computer Services & Software--6.6%
Adobe Systems, Inc. 2,100 273
Autodesk, Inc. 1,000 35
Automatic Data Processing, Inc. 11,200 600
BMC Software, Inc.* 4,300 157
Ceridian Corp. 2,600 63
Citrix Systems, Inc.* 3,300 63
Computer Associates International, Inc. 10,500 537
Computer Sciences Corp.* 3,000 224
Compuware Corp.* 6,400 66
Deluxe Corp. 1,300 31
Electronic Data Systems Corp. 8,300 342
EMC Corp.* 38,600 2,970
First Data Corp. 7,300 362
Mercury Interactive Corporation* 1,400 135
Microsoft Corp.* 93,600 7,485
NCR Corp.* 1,700 66
Novell, Inc.* 5,900 55
Parametric Technology Corp.* 4,900 54
PeopleSoft, Inc.* 4,900 82
Sapient Corp.* 1,000 107
Siebel Systems, Inc.* 3,600 589
Unisys Corp. 5,500 80
VERITAS Software Corp.* 7,000 791
-------
15,167
-------
Computers & Office Equipment--4.5%
Apple Computer, Inc.* 5,800 304
Avery Dennison Corp. 2,000 134
Compaq Computer Corp. 30,200 772
Dell Computer Corp.* 45,800 2,260
Gateway, Inc.* 5,700 323
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Hewlett-Packard Co. 17,800 $ 2,223
International Business Machines Corp. 31,500 3,451
Lexmark International Group, Inc.* 2,300 155
Pitney Bowes, Inc. 4,600 184
Seagate Technology, Inc.* 4,000 220
Xerox Corp. 11,900 238
-------
10,264
-------
Consumer Products--0.9%
American Greetings Corp. 1,100 21
Brunswick Corp. 1,600 26
Clorox Co. 4,200 188
Fortune Brands, Inc. 2,800 65
Mattel, Inc. 7,600 100
Maytag Corp. 1,400 52
Newell Rubbermaid, Inc. 4,700 121
NIKE, Inc. 4,900 195
Philip Morris Cos., Inc. 40,700 1,081
Reebok International, Ltd.* 1,000 16
Russell Corp. 600 12
Tupperware Corp. 1,000 22
UST, Inc. 2,900 43
V.F. Corp. 2,000 48
Whirlpool Corp. 1,300 61
-------
2,051
-------
Containers--0.1%
Ball Corp. 500 16
Bemis Co., Inc. 900 30
Crown Cork & Seal Co., Inc. 2,300 34
Owens-Illinois, Inc.* 2,600 30
Pactiv Corp.* 3,000 24
Sealed Air Corp.* 1,500 79
-------
213
-------
Cosmetics & Toiletries--1.5%
Alberto-Culver Co. 1,000 31
Avon Products, Inc. 4,200 187
Colgate-Palmolive Co. 10,300 617
Gillette Co. 18,600 650
International Flavors & Fragrances, Inc. 1,800 54
Kimberly-Clark Corp. 9,900 568
Procter & Gamble Co. 23,300 1,334
-------
3,441
-------
Cruise Lines--0.1%
Carnival Corp. 10,800 211
-------
Diversified Manufacturing Operations--5.4%
Cooper Industries, Inc. 1,700 55
Crane Co. 1,100 27
Danaher Corp. 2,500 124
Eaton Corp. 1,300 87
FMC Corp. 500 29
General Electric Co. 176,000 8,976
Honeywell International, Inc. 14,200 478
Illinois Tool Works, Inc. 5,400 308
28
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE INDEX 500 FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ITT Industries, Inc. 1,600 $ 49
Leggett & Platt, Inc. 3,500 58
Minnesota Mining & Manufacturing Co. (3M) 7,000 577
National Service Industries, Inc. 700 14
Textron, Inc. 2,600 141
Tyco International Ltd. 30,000 1,421
-------
12,344
-------
Electronic Components--0.7%
Agilent Technologies, Inc.* 8,000 590
Sanmina Corp.* 2,600 222
Solectron Corp.* 10,600 444
Tektronix, Inc.* 900 65
Teradyne, Inc.* 3,100 228
Thomas & Betts Corp. 1,000 19
-------
1,568
-------
Electronics-Semiconductors--6.7%
Advanced Micro Devices, Inc.* 2,700 209
Altera Corp.* 3,500 357
Analog Devices, Inc.* 6,300 479
Applied Materials, Inc.* 14,400 1,305
Conexant Systems, Inc.* 3,900 190
Intel Corp. 59,600 7,966
KLA-Tencor Corp.* 3,300 193
Linear Technology Corp. 5,500 351
LSI Logic Corp.* 5,500 298
Maxim Integrated Products, Inc.* 5,000 340
Micron Technology, Inc. 9,900 872
National Semiconductor Corp.* 3,100 176
Novellus Systems, Inc.* 2,300 130
Texas Instruments, Inc. 29,100 1,999
Xilinx, Inc.* 5,700 471
-------
15,336
-------
Energy Resources & Services--2.6%
AES Corp. 7,600 347
Ameren Corp. 2,400 81
American Electric Power Co., Inc. 7,920 235
American Power Conversion Corp.* 3,400 139
Cinergy Corp. 2,800 71
CMS Energy Corp. 2,000 44
Columbia Energy Group 1,400 92
Consolidated Edison, Inc. 3,800 113
Constellation Energy Group 2,700 88
CP& L Energy, Inc. 2,800 89
Dominion Resources, Inc. 4,200 180
DTE Energy Co. 2,500 76
Duke Energy Corp. 6,500 366
Edison International 5,900 121
El Paso Energy Corp. 4,100 209
Emerson Electric Co. 7,600 459
Enron Corp. 13,000 838
Entergy Corp. 4,100 111
FirstEnergy Corp. 4,100 96
Florida Progress Corp. 1,800 84
FPL Group, Inc. 3,200 158
GPU, Inc. 2,200 60
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Molex, Inc. 3,500 $ 169
New Century Energies, Inc. 2,100 64
Niagara Mohawk Holdings, Inc. 3,100 43
Northern States Power Co. 2,800 57
PECO Energy Co. 3,000 121
PG&E Corp. 6,900 170
Pinnacle West Capital Corp. 1,500 51
PPL Corp. 2,600 57
Public Service Enterprise Group, Inc. 3,800 132
Reliant Energy, Inc. 5,300 157
Southern Co. 11,500 268
TXU Corp. 4,700 139
Unicom Corp. 3,200 124
Williams Cos., Inc. 7,900 329
-------
5,938
-------
Engines--0.0%
Briggs & Stratton Corp. 400 14
Cummins Engine Co., Inc. 700 19
-------
33
-------
Entertainment & Leisure--0.6%
Harrah's Entertainment, Inc.* 2,200 46
The Walt Disney Co. 37,000 1,436
-------
1,482
-------
Fiber Optics--0.6%
Corning , Inc. 4,900 1,322
-------
Finance--5.7%
American Express Co. 23,800 1,241
Associates First Capital Corp. 13,000 290
Bear Stearns Cos. 2,000 83
Capital One Financial Corp. 3,500 156
Charles Schwab Corp. 24,200 814
Citigroup, Inc. 60,000 3,615
Countrywide Credit Industries, Inc. 2,000 61
Dun & Bradstreet Corp. 2,900 83
Equifax, Inc. 2,500 66
Fannie Mae 17,900 934
Franklin Resources, Inc. 4,300 131
Freddie Mac 12,400 502
Golden West Financial Corp. 2,800 114
H&R Block, Inc. 1,800 58
Hartford Financial Services Group, Inc. 3,800 213
Household International, Inc. 8,400 349
J.P. Morgan & Co., Inc. 2,900 319
Lehman Brothers Holdings, Inc. 2,200 208
MBNA Corp. 14,300 388
Merrill Lynch & Co., Inc. 6,900 793
Morgan Stanley Dean Witter & Co. 20,100 1,673
Paine Webber Group, Inc. 2,600 118
Paychex, Inc. 6,600 277
Providian Financial Corp. 2,500 225
SLM Holding Corp. 2,800 105
T. Rowe Price Associates, Inc. 2,100 89
Washington Mutual, Inc. 9,700 280
-------
13,185
-------
29
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE INDEX 500 FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Foods--1.6%
Archer-Daniels-Midland Co. 10,700 $ 105
Bestfoods 4,900 339
Campbell Soup Co. 7,500 218
ConAgra, Inc. 8,800 168
General Mills, Inc. 5,200 199
H.J. Heinz Co. 6,300 276
Hershey Foods Corp. 2,400 117
Kellogg Co. 7,200 214
Nabisco Group Holdings Corp. 5,800 150
Quaker Oats Co. 2,300 173
Ralston-Ralston Purina Group 5,500 110
Safeway, Inc.* 8,800 397
Sara Lee Corp. 15,500 299
SUPERVALU, Inc. 2,300 44
SYSCO Corp. 5,900 249
Unilever NV 10,200 439
Wm. Wrigley Jr., Co. 2,000 160
------
3,657
------
Healthcare--0.5%
HCA-The Healthcare Corp 9,900 301
HEALTHSOUTH Corp.* 6,900 50
Humana, Inc.* 3,000 16
IMS Health, Inc. 5,300 95
Manor Care, Inc.* 1,800 13
McKesson HBOC, Inc. 5,000 105
Tenet Healthcare Corp.* 5,600 151
UnitedHealth Group, Inc. 2,900 249
Wellpoint Health Networks, Inc.* 1,100 80
------
1,060
------
Hotels & Resorts--0.1%
Hilton Hotels Corporation 6,600 62
Marriott International, Inc. 4,300 155
------
217
------
Instruments-Controls--0.1%
Johnson Controls, Inc. 1,500 77
Parker-Hannifin Corp. 2,000 68
Thermo Electron Corp.* 2,800 59
------
204
------
Instruments - Scientific--0.2%
Millipore Corp. 800 60
PerkinElmer, Inc. 900 60
PE Corp.- PE Biosystems Group 3,700 244
------
364
------
Insurance--2.8%
Aetna, Inc. 2,500 160
AFLAC, INC. 4,700 216
Allstate Corp. 13,200 294
American General Corp. 4,400 268
American International Group, Inc. 27,400 3,219
Aon Corp. 4,600 143
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Chubb Corp. 3,100 $ 191
CIGNA Corp. 2,900 271
Cincinnati Financial Corp. 2,900 91
Conseco, Inc. 5,800 57
Jefferson-Pilot Corp. 1,800 102
Lincoln National Corp. 3,400 123
Loews Corp. 1,800 108
Marsh & McLennan Cos., Inc. 4,800 501
MBIA, Inc. 1,800 87
MGIC Investment Corp. 1,900 86
Progressive Corp. 1,300 96
SAFECO Corp. 2,300 46
St. Paul Cos., Inc. 3,800 130
Torchmark Corp. 2,300 57
UnumProvident Corp. 4,300 86
------
6,332
------
Machinery--0.3%
Black & Decker Corp. 1,500 59
Caterpillar, Inc. 6,200 210
Deere & Co. 4,200 155
Dover Corp. 3,600 146
Ingersoll-Rand Co. 2,900 117
McDermott International, Inc. 1,100 10
Pall Corp. 2,200 42
Snap-On, Inc. 1,000 28
Stanley Works 1,600 38
------
805
------
Medical--0.6%
Amgen, Inc.* 18,300 1,286
Biogen, Inc.* 2,600 168
------
1,454
------
Medical Supplies & Equipment--2.1%
Baxter International, Inc. 5,200 366
Becton, Dickinson & Co. 4,500 129
Biomet, Inc.* 2,100 81
Boston Scientific Corp.* 7,300 160
C.R. Bard, Inc. 900 43
Guidant Corp.* 5,500 272
Johnson & Johnson 24,700 2,516
Mallinckrodt Inc. 1,200 52
Medtronic, Inc. 21,300 1,061
St. Jude Medical, Inc. 1,500 69
------
4,749
------
Metal Components & Products--0.4%
Alcan Aluminum Ltd. 3,900 121
Alcoa, Inc. 15,400 447
Allegheny Technologies, Inc. 1,500 27
Bethlehem Steel Corp.* 2,300 8
Freeport-McMoRan Copper & Gold, Inc.* 2,800 26
Inco, Ltd. 3,200 49
Nucor Corp. 1,500 50
Phelps Dodge Corp. 1,400 52
30
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE INDEX 500 FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Timken Co. 1,100 $ 20
USX-U.S. Steel Group 1,600 30
Worthington Industries, Inc. 1,500 16
-------
846
-------
Mining - Gold--0.1%
Barrick Gold Corp. 7,000 127
Homestake Mining Co.* 4,600 32
Newmont Mining Corp. 3,000 65
Placer Dome, Inc. 5,800 55
-------
279
-------
Oil & Gas--5.4%
Amerada Hess Corp. 1,600 99
Anadarko Petroleum Corp. 2,300 113
Apache Corp. 2,000 118
Baker Hughes, Inc. 5,900 189
Burlington Resources, Inc. 3,800 145
Chevron Corp. 11,600 984
Coastal Corp. 3,800 231
Conoco, Inc. 11,100 273
Eastern Enterprises 500 31
Exxon Mobil Corp. 61,900 4,863
Halliburton Co. 7,900 373
Kerr-McGee Corp. 1,700 100
NICOR, Inc. 800 26
Occidental Petroleum Corp. 6,600 139
ONEOK, Inc. 500 13
Peoples Energy Corp. 600 19
Phillips Petroleum Co. 4,500 228
Rowan Cos., Inc.* 1,700 52
Royal Dutch Petroleum Co. 38,200 2,352
Schlumberger Ltd. 10,100 754
Sempra Energy 3,600 61
Sunoco, Inc. 1,600 47
Texaco, Inc. 9,800 522
Tosco Corp. 2,600 74
Transocean Sedco Forex, Inc. 3,700 198
Union Pacific Resources Group, Inc. 4,500 99
Unocal Corp. 4,300 142
-------
USX - Marathon Group 5,500 12,383
-------
Optical Supplies--0.1%
Allergan, Inc. 2,300 171
Bausch & Lomb, Inc. 900 70
-------
241
-------
Paper & Related Products--0.3%
Boise Cascade Corp. 1,000 26
Fort James Corp. 3,700 86
Georgia-Pacific Group 3,000 79
International Paper Co. 8,600 256
Louisiana-Pacific Corp. 1,900 21
Mead Corp. 1,800 45
Potlatch Corp. 500 17
Temple-Inland, Inc. 900 38
Westvaco Corp. 1,800 45
Weyerhaeuser Co. 4,100 176
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Willamette Industries, Inc. 2,000 $ 54
-------
843
-------
Pharmaceuticals--8.0%
Abbott Laboratories 27,600 1,230
ALZA Corp.* 1,800 106
American Home Products Corp. 23,200 1,363
Bristol-Myers Squibb Co. 35,100 2,045
Cardinal Health, Inc. 4,900 363
Eli Lilly & Co. 20,100 2,007
MedImmune, Inc.* 3,700 274
Merck & Co., Inc. 40,900 3,134
Pharmacia Corp. 22,600 1,168
Pfizer, Inc. 10,900 5,323
Schering-Plough Corp. 26,100 1,318
Watson Pharmaceuticals, Inc.* 1,700 91
-------
18,422
-------
Photography Equipment & Supplies--0.1%
Eastman Kodak Co. 5,500 327
Polaroid Corp. 800 14
-------
341
-------
Printing & Publishing--0.5%
Donnelley (R.R.) & Sons Co. 2,200 50
Dow Jones & Co., Inc. 1,600 117
Harcourt General, Inc. 1,300 71
Gannett Co., Inc. 4,700 281
Knight-Ridder, Inc. 1,400 74
McGraw-Hill Cos., Inc. 3,500 189
New York Times Co. 3,000 118
Times Mirror Co. 400 36
Tribune Co. 5,500 192
-------
1,128
-------
Restaurants--0.5%
Darden Restaurants, Inc. 2,200 36
McDonald's Corp. 23,800 784
Starbucks Corp.* 3,300 126
Tricon Global Restaurants, Inc.* 2,600 73
Wendy's International, Inc. 2,000 36
-------
1,055
-------
Retail--5.1%
Albertson's, Inc. 7,500 249
Autozone, Inc.* 2,400 53
Bed, Bath & Beyond, Inc.* 2,500 91
Best Buy Co., Inc.* 3,600 228
Circuit City Stores - Circuit City Group 3,600 119
Consolidated Stores Corp.* 2,000 26
CVS Corp. 6,900 276
Dillard's, Inc. 1,700 21
Dollar General Corp. 5,900 115
Federated Department Stores, Inc.* 3,800 128
Gap, Inc. 15,100 472
Great Atlantic & Pacific Tea Co., Inc. 700 12
Hasbro, Inc. 3,100 47
31
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE INDEX 500 FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Home Depot, Inc. 41,200 $ 2,057
J.C. Penney Co., Inc. 4,600 85
Kmart Corp.* 8,600 59
Kohl's Corp.* 5,800 323
Kroger Co. 14,900 329
Limited, Inc. 7,600 164
Liz Claiborne, Inc. 1,000 35
Longs Drug Stores Corp. 700 15
Lowe's Cos., Inc. 6,800 279
May Department Stores Co. 5,900 142
Nordstrom, Inc. 2,400 58
Office Depot, Inc.* 5,600 35
RadioShack Corp. 3,300 156
Rite Aid Corp.* 4,600 30
Sears, Roebuck & Co. 6,300 206
Staples, Inc.* 8,600 132
Target Corp. 8,100 470
Tiffany & Co. 1,300 88
TJX Cos., Inc. 5,300 99
Toys "R" Us, Inc.* 3,800 55
Wal-Mart Stores, Inc. 79,300 4,570
Walgreen Co. 17,900 576
Winn-Dixie Stores, Inc. 2,600 37
--------
11,837
--------
Services-Commercial--0.1%
Cendant Corp.* 12,800 179
Convergys Corp.* 2,700 140
Quintiles Transnational Corp.* 2,000 28
--------
347
--------
Services-Consulting--0.0%
Fluor Corp. 1,400 44
--------
Telecommunications--10.5%
ADC Telecommunications, Inc.* 6,000 503
ALLTEL Corp. 5,600 347
Andrew Corp.* 1,400 47
AT&T Corp. 56,750 1,795
Bell Atlantic Corp. 27,500 1,397
BellSouth Corp. 33,500 1,428
CenturyTel, Inc. 2,500 72
Comverse Technology, Inc.* 2,700 251
Global Crossing, Ltd.* 15,700 414
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
GTE Corp. 17,100 $ 1,064
Lucent Technologies, Inc. 57,900 3,431
Nextel Communications, Inc.* 13,500 826
Nortel Networks Corp. 52,700 3,597
QUALCOMM, Inc.* 13,200 792
SBC Communications, Inc. 60,500 2,617
Scientific-Atlanta, Inc. 2,800 209
Sprint Corp. 15,600 796
Sprint Corp. (PCS Group)* 16,300 970
Tellabs, Inc.* 7,300 500
US WEST, Inc. 9,000 772
WorldCom, Inc.* 50,900 2,337
--------
24,165
--------
Textile--0.0%
Springs Industries, Inc. 300 10
--------
Transportation & Related Services--0.4%
Burlington Northern Santa Fe Corp. 7,600 174
CSX Corp. 3,900 83
FedEx Corp.* 5,200 198
Kansas City Southern Industries, Inc. 2,000 177
Norfolk Southern Corp. 6,800 101
Ryder System, Inc. 1,100 21
--------
Union Pacific Corp. 4,400 918
--------
Travel Services--0.0%
Sabre Holdings Corp.* 2,300 66
--------
Waste Management--0.1%
Allied Waste Industries, Inc.* 3,400 34
Waste Management, Inc.* 11,100 211
--------
245
--------
Wholesale Distributor--0.1%
Costco Wholesale Corp.* 7,900 261
W.W. Grainger, Inc. 1,700 52
--------
313
--------
Wireless Communications--0.5%
Motorola, Inc. 38,300 1,113
--------
TOTAL COMMON STOCK
(Cost $222,385) 222,351
--------
32
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE INDEX 500 FUND
Par Value
(000) (000)
--------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS--0.1%
--------------------------------------------------------------------------------
U.S. Treasury Bills--0.1%
5.850%, 02/01/00 [Sagittarius] 120 $ 116
5.900%, 02/01/01 [Sagittarius] 20 19
5.920%, 02/01/02 [Sagittarius] 60 58
5.930%, 02/01/03 [Sagittarius] 160 154
TOTAL U.S. TREASURY OBLIGATIONS
--------
(Cost $347) 347
--------
Number
of Shares
--------------------------------------------------------------------------------
Short-Term Investments--2.9%
--------------------------------------------------------------------------------
Temporary Cash Investment Fund, Inc.
(Cost $6,682) 6,681,910 6,682
--------
TOTAL INVESTMENTS--99.7%
(Cost $229,414) (a) 229,380
OTHER ASSETS IN EXCESS
OF LIABILITIES--0.3% 623
--------
NET ASSETS APPLI CABLE TO 22,969,671
SHARES OF COMMON STOCK ISSUED
AND OUTSTANDING--100.0% $230,003
========
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 10.01
========
---------------
* Non-Income Producing Security
[Sagittarius] $347,412 market value held as collateral for the open futures
contract
(a) At June 20, 2000, the cost for Federal income tax purposes was $229,414,418.
Net unrealized depreciation was $34,495. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $12,199,177 and aggregate gross unrealized
depreciation for all securities in which there was an excess of tax cost over
market value of $12,233,672.
The accompanying notes are an integral part of these financial statements.
33
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE MID CAP GROWTH FUND
Number of Value
Shares (000)
--------------------------------------------------------------------------------
COMMON STOCK--96.5%
--------------------------------------------------------------------------------
Advertising--2.6%
Getty Images, Inc.* 7,210 $ 267
Interpublic Group of Cos., Inc. 9,850 424
TMP Worldwide, Inc.* 7,450 550
-----------------
1,241
-----------------
Banking--1.3%
Charter One Financial, Inc. 8,810 203
Northern Trust Corp. 6,560 427
-----------------
630
-----------------
Broadcast/Media--2.6%
Gemstar International Group Ltd.* 5,030 309
Hispanic Broadcasting Corp.* 6,240 207
Polycom, Inc.* 2,840 267
TV Guide, Inc.* 7,900 271
Westwood One, Inc.* 6,130 209
-----------------
1,263
-----------------
Computer - Internet - Content Service--3.5%
CMGI, Inc.* 5,920 271
InfoSpace, Inc.* 8,820 488
Internet Capital Group, Inc.* 6,250 231
LookSmart Ltd.* 11,670 216
Lycos, Inc.* 3,540 191
VerticalNet, Inc.* 9,030 334
-----------------
1,731
-----------------
Computer - Internet Services & Software--11.5%
Agile Software Corp.* 5,680 402
Ariba, Inc.* 3,630 356
Art Technology Group, Inc.* 4,120 416
BEA Systems, Inc.* 10,080 498
Exodus Communications, Inc.* 13,820 637
Inktomi Corp.* 4,830 571
Macromedia, Inc.* 2,300 222
Phone.com, Inc.* 2,790 182
Portal Software, Inc.* 7,590 485
Proxicom, Inc.* 6,150 294
RealNetworks, Inc.* 5,980 302
TIBCO Software, Inc.* 4,850 520
VeriSign, Inc.* 3,963 699
-----------------
5,584
-----------------
Computer - Network Products & Services--4.8%
Extreme Networks, Inc.* 5,090 535
Foundry Networks, Inc.* 3,060 338
Micromuse, Inc.* 2,870 475
Network Appliance, Inc.* 5,380 433
Redback Networks, Inc.* 3,210 575
-----------------
2,356
-----------------
Computer Services & Software--9.9%
CheckFree Holdings Corp.* 4,600 238
Electronic Arts, Inc.* 4,680 341
Fiserv, Inc.* 9,900 428
Integrated Circuit Systems, Inc.* 18,370 316
<PAGE>
Number of Value
Shares (000)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
ISS Group, Inc.* 2,890 $ 285
Mercury Interactive Corp.* 2,400 232
Quest Software, Inc.* 4,770 265
Rational Software Corp.* 4,030 374
SanDisk Corp.* 6,060 371
Sapient Corp.* 3,080 329
Symantec Corp.* 3,970 214
The BISYS Group, Inc.* 3,360 208
VERITAS Software Corp. 11,000 1,243
---------------
4,844
---------------
Containers--0.5%
Sealed Air Corp.* 4,760 249
---------------
Cosmetics & Toiletries--0.1%
Estee Lauder Cos., Inc. 1,060 52
---------------
Electronic Components--3.4%
American Power Conversion Corp.* 7,920 323
Celestica, Inc.* 7,390 367
Jabil Circuit, Inc.* 7,200 357
Sanmina Corp.* 3,890 332
Tektronix, Inc.* 3,640 265
---------------
1,644
---------------
Electronics - Semiconductors--11.8%
Applied Micro Circuits Corp.* 5,940 587
Atmel Corp.* 6,360 234
Broadcom Corp.* 2,640 578
Cree , Inc.* 1,450 194
Cypress Semiconductor Corp.* 7,660 324
GlobeSpan, Inc.* 4,590 559
KLA-Tencor Corp.* 5,470 321
Lam Research Corp.* 5,560 209
National Semiconductor Corp.* 3,850 219
Novellus Systems, Inc.* 6,250 354
PMC-Sierra, Inc.* 2,580 458
Rambus, Inc.* 2,870 296
Silicon Laboratories, Inc.* 4,650 249
TriQuint Semiconductor, Inc.* 3,350 320
Vitesse Semiconductor Corp.* 5,620 414
Xilinx, Inc.* 5,330 440
---------------
5,756
---------------
Energy Services--1.4%
AES Corp. 7,780 355
Dynegy, Inc. 4,710 322
---------------
677
---------------
Fiber Optics--7.1%
Avanex Corp.* 1,800 172
CIENA Corp.* 3,020 503
Exfo Electro-Optical Engineering, Inc.* 1,280 56
JDS Uniphase Corp.* 17,890 2,144
Metromedia Fiber Network, Inc.* 6,570 261
SDL, Inc.* 1,110 317
---------------
3,453
---------------
34
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Continued)
THE MID CAP GROWTH FUND
Number of Value
Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Finance--2.6%
Capital One Financial Corp. 8,330 $ 372
Lehman Brothers Holdings, Inc. 3,600 340
Paychex, Inc. 12,985 545
-----------------
1,257
-----------------
Foods & Beverages--1.7%
Keebler Foods Co. 5,930 220
Suiza Foods Corp.* 5,060 247
SYSCO Corp. 8,040 339
-----------------
806
-----------------
Healthcare--1.0%
Tenet Healthcare Corp.* 9,850 266
UnitedHealth Group, Inc. 2,790 239
-----------------
505
-----------------
Human Resources--0.6%
Manpower, Inc. 9,080 291
-----------------
Instruments - Scientific--1.8%
PE Corp.- PE Biosystems Group 8,070 532
Waters Corp.* 2,910 363
-----------------
895
-----------------
Machinery--0.3%
SPX Corp. 1,320 160
-----------------
Medical Supplies & Equipment--4.0%
Allergan, Inc. 5,090 379
MedImmune, Inc.* 7,470 553
MiniMed, Inc.* 2,470 291
St. Jude Medical, Inc. 9,040 415
Sybron International Corp.* 15,620 309
-----------------
1,947
-----------------
Motorcycles--0.7%
Harley-Davidson, Inc. 9,270 357
-----------------
Office Supplies--0.6%
Avery Dennison Corp. 4,350 292
-----------------
Oil & Gas--2.6%
Cooper Cameron Corp.* 5,240 346
Nabors Industries, Inc.* 5,750 239
Tidewater, Inc. 6,370 229
Weatherford International, Inc.* 11,930 475
-----------------
1,289
-----------------
Pharmaceuticals--2.1%
Biovail Corp.* 4,840 268
<PAGE>
Number of Value
Shares (000)
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Forest Laboratories, Inc.* 3,980 $ 402
King Pharmaceuticals, Inc.* 8,390 368
---------------
1,038
---------------
Publishing - Newspapers--0.8%
Dow Jones & Co., Inc. 5,020 368
---------------
Retail--4.4%
Bed, Bath & Beyond, Inc.* 9,240 335
CDW Computer Centers, Inc.* 4,020 251
Dollar Tree Stores, Inc.* 9,060 358
Insight Enterprises, Inc.* 4,460 265
Kohl's Corp.* 6,470 360
Priceline.com, Inc.* 8,020 304
Tiffany & Co. 3,810 257
---------------
2,130
---------------
Services - Commercial--1.0%
Concord EFS, Inc.* 8,800 229
Quanta Services, Inc.* 4,310 237
---------------
466
---------------
Services - Consulting--0.5%
Diamond Technology Partners, Inc.* 2,940 259
---------------
Telecommunications--6.9%
Allegiance Telecom, Inc.* 3,810 244
McLeodUSA, Inc.* 15,360 318
Nextel Communications, Inc.* 7,330 448
NEXTLINK Communications, Inc.* 8,840 335
RCN Corp.* 12,380 314
Scientific-Atlanta, Inc. 3,590 267
Sonus Networks, Inc.* 1,900 300
Terayon Communication Systems, Inc.* 5,030 323
VoiceStream Wireless Corp.* 3,390 394
Western Wireless Corp.* 8,050 438
---------------
3,381
---------------
Transportation--0.5%
Atlas Air, Inc.* 6,550 235
---------------
Wireless Communications--3.9%
Aether Systems, Inc.* 2,320 475
American Tower Corp. 6,610 276
Nextel Partners, Inc.* 13,460 439
Powerwave Technologies, Inc.* 7,930 349
RF Micro Devices, Inc.* 4,230 370
---------------
1,909
---------------
TOTAL COMMON STOCK
(Cost $43,855) 47,065
---------------
35
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE MID CAP GROWTH FUND
--------------------------------------------------------------------------------
SHORT-TERM INVESTMENT--3.5%
--------------------------------------------------------------------------------
RBB Sansom Street Fund - Money Market
(Cost $1,716) 1,715,820 $1,716
-----------------
TOTAL INVESTMENTS--100.0%
(Cost $45,571) (a) 48,781
LIABILITIES IN EXCESS
OF OTHER ASSETS--0.0% (20)
-----------------
NET ASSETS APPLICABLE TO 4,561,932
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING-- 100.0% $48,761
=================
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $10.69
=================
---------------------------------------------
* Non-Income Producing Security
(a) At June 30, 2000, the cost for Federal income tax purposes was $45,571,293.
Net unrealized appreciation was $3,210,012. This consisted of aggregate
gross unrealized appreciation for all securities in which there was an
excess of market value over tax cost of $5,200,235 and aggregate gross
unrealized depreciation for all securities in which there was an excess of
tax cost over market value of $1,990,223.
36
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED)
THE MID CAP VALUE FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
COMMON STOCKS -- 94.4%
--------------------------------------------------------------------------------
Aerospace & Defense--1.9%
General Dynamics Corp. 18,600 $ 972
----------------
Air Transportation--2.2%
Continental Airlines, Inc.* 14,000 658
Southwest Airlines Co. 25,000 473
----------------
1,131
----------------
Automotive Parts - Equipment--1.2%
Lear Corp.* 30,300 606
----------------
Banking--2.9%
IndyMac Mortgage Holdings, Inc.* 52,900 717
M&T Bank Corp. 1,200 540
Valley National Bancorp 8,925 218
----------------
1,475
----------------
Broadcast/Media--4.3%
A. H. Belo Corp. 58,100 1,006
E. W. Scripps Co. 12,700 625
Emmis Communications Corp. 5,800 240
Gemstar International Group, Ltd.* 5,100 313
----------------
2,184
----------------
Building Products--1.1%
American Standard Cos., Inc.* 13,900 570
----------------
Computer Services & Software--3.4%
Ceridian Corp. 30,600 736
Compuware Corp.* 28,000 290
Intuit, Inc.* 6,700 277
StorageNetworks, Inc.* 100 9
SunGard Data Systems, Inc.* 12,800 397
----------------
1,709
----------------
Computers--1.6%
Apple Computer, Inc.* 6,600 346
Gateway, Inc.* 8,300 471
----------------
817
----------------
Containers --1.0%
Sealed Air Corp.* 9,600 503
----------------
Data Processing/Management--2.8%
ChoicePoint, Inc.* 13,700 574
Fiserv, Inc.* 5,600 242
Iron Mountain, Inc.* 17,600 577
----------------
1,393
----------------
Diversified Manufacturing Operations--4.8%
Crane Co. 19,100 464
Danaher Corp. 9,000 445
Eaton Corp. 7,800 523
FMC Corp. 10,400 603
Pall Corp. 20,800 393
----------------
2,428
----------------
Electric --3.5%
AES Corp. 22,200 1,013
Unicom Corp. 19,200 743
----------------
1,756
----------------
<PAGE>
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Electronics--1.3%
Energizer Holdings, Inc.* 16,400 $ 299
Flextronics International, Ltd.* 5,300 364
------------------
663
------------------
Energy Products & Services--3.1%
Dynegy, Inc. 7,000 478
Kinder Morgan, Inc. 12,100 418
Williams Cos., Inc. 15,700 654
------------------
1,550
------------------
Finance--13.0%
Ambac Financial Group, Inc. 11,800 647
Bear Stearns Cos., Inc. 17,600 733
Countrywide Credit Industries, Inc. 21,000 637
Dun & Bradstreet Corp. 23,800 681
Franklin Resources, Inc. 16,500 501
Household International, Inc. 16,900 702
John Hancock Financial Services, Inc.* 6,800 161
Nationwide Financial Services, Inc. 26,700 878
Providian Financial Corp. 7,100 639
SLM Holding Corp. 26,800 1,003
------------------
6,582
------------------
Foods--2.3%
Hershey Foods Corp. 11,500 560
Nabisco Holdings Corp. 11,800 620
------------------
1,180
------------------
Healthcare--4.0%
HEALTHSOUTH Corp.* 68,000 489
Tenet Healthcare Corp.* 33,800 913
Wellpoint Health Networks, Inc.* 8,900 645
------------------
2,047
------------------
Hotels & Resorts--2.0%
Starwood Hotels & Resorts Worldwide, Inc. 30,500 986
------------------
Instruments - Scientific --0.7%
Waters Corp. 2,700 337
------------------
Insurance --8.7%
ACE Ltd. 33,400 935
Aon Corp. 21,100 656
MetLife, Inc.* 62,100 1,308
UnumProvident Corp. 33,100 664
XL Capital Ltd. 15,800 855
------------------
4,418
------------------
Machinery --1.8%
SPX Corp. 7,700 931
------------------
Medical - Biomedical/Gene--2.7%
Charles River Laboratories International, Inc.* 12,100 269
Genzyme Corp.* 18,000 1,072
------------------
1,341
------------------
Medical Supplies & Equipment--3.2%
Becton, Dickinson & Co. 14,900 427
C.R. Bard, Inc. 14,900 717
St. Jude Medical, Inc. 10,800 495
------------------
1,639
------------------
37
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF NET ASSETS -- JUNE 30, 2000 (UNAUDITED) (Concluded)
THE MID CAP VALUE FUND
Number Value
of Shares (000)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Mining - Gold--1.1%
Homestake Mining Co. 78,700 $ 541
-------------------
Oil & Gas--7.4%
Anadarko Petroleum Corp. 13,600 671
Apache Corp. 9,700 571
Coastal Corp. 8,500 517
Noble Drilling Corp.* 7,800 321
Santa Fe International Corp. 11,100 388
Transocean Sedco Forex, Inc. 13,200 705
USX - Marathon Group 22,600 566
----------------
3,739
----------------
Paper & Related Products--0.7%
Bowater, Inc. 8,400 371
----------------
Retail--4.5%
AnnTaylor Stores Corp.* 6,900 228
Consolidated Stores Corp.* 29,700 384
Insight Enterprises, Inc.* 10,900 647
Kroger Co. 32,600 719
Tiffany & Co. 4,100 277
----------------
2,255
----------------
Satellite Telecommunication--2.0%
General Motors Corp. 4,700 412
Loral Space & Communications Ltd.* 88,100 611
----------------
1,023
----------------
Specialty Chemicals --1.5%
Engelhard Corp. 13,800 236
Praxair, Inc. 14,100 528
----------------
764
----------------
Services - Consulting--0.8%
Comdisco, Inc. 18,400 411
----------------
Transportation - Rail Freight --1.5%
Kansas City Southern Industries, Inc. 8,800 780
----------------
Wireless Communications--1.4%
American Tower Corp. 16,600 692
----------------
TOTAL COMMON STOCK
(Cost $46,939) 47,794
----------------
<PAGE>
Value
(000)
--------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS (REITS)--4.2%
--------------------------------------------------------------------------------
Office Property--2.8%
Boston Properties, Inc. 20,700 $ 791
Spieker Properties, Inc. 13,500 638
------------------
1,429
------------------
Shopping Centers--1.4%
Vornado Realty Trust 20,700 719
------------------
TOTAL REITS
(Cost $2,083) 2,148
------------------
SHORT-TERM INVESTMENTS -- 2.9%
Federal Fund 731,964 732
Trust For Federal Securities T-Fund 731,964 732
------------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $1,464) 1,464
------------------
TOTAL INVESTMENTS -- 101.5%
(Cost $50,486) (a) 51,406
LIABILITIES IN EXCESS OF
OTHER ASSETS --(1.5%) (773)
------------------
NET ASSETS APPLICABLE TO 4,977,061
SHARES OF COMMON STOCK
ISSUED AND OUTSTANDING -- 100.0% $50,633
==================
NET ASSET VALUE, OFFERING AND
REDEMPTION PRICE PER SHARE $ 10.17
==================
--------------------------------------------------------
* Non-Income Producing Security
(a) At June 30, 2000, the cost for Federal income tax purposes was $50,485,942.
Net unrealized appreciation was $920,579. This consisted of aggregate gross
unrealized appreciation for all securities in which there was an excess of
market value over tax cost of $2,979,327 and aggregate gross unrealized
depreciation for all securites in which there was an excess of tax cost
over market value of $2,058,748.
The accompanying notes are an integral part of these financial statements.
38
<PAGE>
THIS PAGE LEFT INTENTIONALLY BLANK
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(Dollar Amounts in Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Inter-
Money Quality High Yield national
Market Bond Bond Equity
Fund Fund Fund Fund
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Investment Income:
Dividends .................................................................... $ -- $ -- $ 317 $ 1,358
Interest ..................................................................... 2,490 2,206 3,164 229
Foreign tax withheld ......................................................... -- -- -- (110)
-------- -------- -------- --------
Total investment income ............................................... 2,490 2,206 3,481 1,477
-------- -------- -------- --------
Expenses:
Investment advisory fees ..................................................... 131 133 161 834
Administration fees .......................................................... 60 49 48 160
Accounting fees .............................................................. 30 25 24 76
Custodian fees and expenses .................................................. 19 15 12 51
Other expenses ............................................................... 19 12 34 43
-------- -------- -------- --------
Total expenses ........................................................ 259 234 279 1,164
Less: Expense waivers ................................................. -- -- -- --
-------- -------- -------- --------
Net expenses .................................................... 259 234 279 1,164
-------- -------- -------- --------
Net investment income (loss) ................................................. 2,231 1,972 3,202 313
-------- -------- -------- --------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investment transactions ...................... -- (911) (1,797) 21,500
Net realized foreign exchange loss ....................................... -- -- (80) (410)
Change in net unrealized appreciation/depreciation of investments, futures
contracts and foreign currency related items .......................... -- 1,668 (1,943) (47,912)
-------- -------- -------- --------
Net realized and unrealized gain (loss) on investments ....................... -- 757 (3,820) (26,822)
-------- -------- -------- --------
Net Increase (Decrease) in Net Assets Resulting from Operations .............. $ 2,231 $ 2,729 ($ 618) ($26,509)
======== ======== ======== ========
</TABLE>
<PAGE>
[RESTUBED TABLE FOR ABOVE]
<TABLE>
<CAPTION>
Limited
Small Cap Emerging Maturity
Value Growth Bond
Fund** Fund Fund+
-------- -------- --------
<S> <C> <C> <C>
Investment Income:
Dividends .................................................................... $ 191 $ 1 $ --
Interest ..................................................................... 150 348 130
Foreign tax withheld ......................................................... -- -- --
-------- -------- --------
Total investment income ............................................... 341 349 130
-------- -------- --------
Expenses:
Investment advisory fees ..................................................... 139 787 6
Administration fees .......................................................... 33 165 3
Accounting fees .............................................................. 17 67 1
Custodian fees and expenses .................................................. 16 33 1
Other expenses ............................................................... 10 25 1
-------- -------- --------
Total expenses ........................................................ 215 1,077 12
Less: Expense waivers ................................................. 9 -- --
-------- -------- --------
Net expenses .................................................... 206 1,077 12
-------- -------- --------
Net investment income (loss) ................................................. 135 (728) 118
-------- -------- --------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investment transactions ...................... 4,655 26,922 4
Net realized foreign exchange loss ....................................... -- -- --
Change in net unrealized appreciation/depreciation of investments, futures
contracts and foreign currency related items .......................... (922) (20,320) 48
-------- -------- --------
Net realized and unrealized gain (loss) on investments ....................... 3,733 6,602 52
-------- -------- --------
Net Increase (Decrease) in Net Assets Resulting from Operations .............. $ 3,868 $ 5,874 $ 170
======== ======== ========
</TABLE>
* Prior to May 1, 2000, the Large Cap Value Fund was named the Value Equity
Fund.
** Prior to May 1, 2000, the Small Cap Value Fund was named the Small
Capitalization Fund.
+ For the period from May 1, 2000 (commencement of operations) through
June 30, 2000.
The accompanying notes are an integral part of these financial statements
39
<PAGE>
<TABLE>
<CAPTION>
Growth Large Cap Flexibly Growth and
Equity Value Managed Income
Fund Fund* Fund Fund+
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Investment Income:
Dividends .................................................................... $ 508 $ 2,399 $ 3,612 $ 42
Interest ..................................................................... 279 124 4,613 26
Foreign tax withheld ......................................................... (19) (28) (37) (2)
-------- -------- -------- --------
Total investment income ............................................... 768 2,495 8,188 66
-------- -------- -------- --------
Expenses:
Investment advisory fees ..................................................... 855 656 1,156 33
Administration fees .......................................................... 244 185 325 10
Accounting fees .............................................................. 91 74 107 5
Custodian fees and expenses .................................................. 24 22 41 2
Other expenses ............................................................... 46 62 106 2
-------- -------- -------- --------
Total expenses ........................................................ 1,260 999 1,735 52
Less: Expense waivers ................................................. -- -- -- --
-------- -------- -------- --------
Net expenses .................................................... 1,260 999 1,735 52
-------- -------- -------- --------
Net investment income (loss) ................................................. (492) 1,496 6,453 14
-------- -------- -------- --------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investment transactions ...................... 36,206 28,295 5,886 158
Net realized foreign exchange loss ....................................... -- -- (411) --
Change in net unrealized appreciation/depreciation of investments, futures
contracts and foreign currency related items .......................... (42,839) (44,049) 3,848 (495)
-------- -------- -------- --------
Net realized and unrealized gain (loss) on investments ....................... (6,633) (15,754) 9,323 (337)
-------- -------- -------- --------
Net Increase (Decrease) in Net Assets Resulting from Operations .............. $ (7,125) ($14,258) $ 15,776 $ (323)
======== ======== ======== ========
</TABLE>
<PAGE>
[RESTUBED TABLE FOR ABOVE]
<TABLE>
<CAPTION>
Index Mid Cap Mid Cap
500 Growth Value
Fund+ Fund+ Fund+
-------- -------- --------
<S> <C> <C> <C>
Investment Income:
Dividends .................................................................... $ 499 $ 8 $ 112
Interest ..................................................................... 39 36 49
Foreign tax withheld ......................................................... (6) -- --
-------- -------- --------
Total investment income ............................................... 532 44 161
-------- -------- --------
Expenses:
Investment advisory fees ..................................................... 26 49 46
Administration fees .......................................................... 55 11 12
Accounting fees .............................................................. 22 5 6
Custodian fees and expenses .................................................. 10 8 6
Other expenses ............................................................... 13 3 3
-------- -------- --------
Total expenses ........................................................ 126 76 73
Less: Expense waivers ................................................. 34 6 --
-------- -------- --------
Net expenses .................................................... 92 70 73
-------- -------- --------
Net investment income (loss) ................................................. 440 (26) 88
-------- -------- --------
Net Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) on investment transactions ...................... (28) 137 (141)
Net realized foreign exchange loss ....................................... -- -- --
Change in net unrealized appreciation/depreciation of investments, futures
contracts and foreign currency related items .......................... (95) 3,210 921
-------- -------- --------
Net realized and unrealized gain (loss) on investments ....................... (123) 3,347 780
-------- -------- --------
Net Increase (Decrease) in Net Assets Resulting from Operations .............. $ 317 $ 3,321 $ 868
======== ======== ========
</TABLE>
* Prior to May 1, 2000, the Large Cap Value Fund was named the Value Equity
Fund.
** Prior to May 1, 2000, the Small Cap Value Fund was named the Small
Capitalization Fund.
+ For the period from May 1, 2000 (commencement of operations) through
June 30, 2000.
The accompanying notes are an integral part of these financial statements
40
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
(Dollar Amounts in Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Money Market Fund High Yield Bond Fund
-------------------------- --------------------------
Six months Year Six months Year
ended ended ended ended
06/30/99 December 31, 06/30/99 December 31,
(Unaudited) 1999 (Unaudited) 1999
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss) ............................................. $ 2,231 $ 3,028 $ 3,202 $ 6,477
Net realized gain (loss) on investment transactions ...................... -- (1,797) (966) 36,206
Net realized foreign exchange gain (loss) ................................ -- -- (80) 10
Net change in unrealized appreciation/depreciation of investments, futures
contracts and foreign currency related items .......................... -- -- (1,943) (2,556)
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting from operations .... 2,231 3,028 (618) 2,965
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income .................................................... (2,231) (3,028) (6,503) --
Net realized capital gains ............................................... -- -- -- --
--------- --------- --------- ---------
Total distributions ................................................ (2,231) (3,028) (6,503) --
--------- --------- --------- ---------
Capital Share Transactions:
Net increase (decrease) in net assets from capital share transactions (1,092) 32,955 (136) (2,040)
--------- --------- --------- ---------
Total Increase (Decrease) in Net Assets .................................. (1,092) 32,955 (7,257) 925
Net Assets, beginning of period .......................................... 86,581 53,626 69,928 69,003
--------- --------- --------- ---------
Net Assets, end of period ................................................ $ 85,489 $ 86,581 $ 62,671 $ 69,928
========= ========= ========= =========
</TABLE>
<PAGE>
[RESTUBED TABLE FOR ABOVE]
<TABLE>
<CAPTION>
Growth Equity Fund Large Cap Value Fund*
--------------------------- -------------------------
Six months Year Six months Year
ended ended ended ended
06/30/99 December 31, 06/30/99 December 31,
(Unaudited) 1999 (Unaudited) 1999
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss) ............................................. $ (492) $ (317) $ 1,496 $ 2,812
Net realized gain (loss) on investment transactions ...................... 36,418 28,295 42,806
Net realized foreign exchange gain (loss) ................................ -- -- -- --
Net change in unrealized appreciation/depreciation of investments, futures
contracts and foreign currency related items .......................... (42,839) 35,596 (44,049) (47,874)
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting from operations .... (7,125) 71,697 (14,258) (2,256)
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income .................................................... -- -- (2,812) --
Net realized capital gains ............................................... (37,281) -- (43,070) --
--------- --------- --------- ---------
Total distributions ................................................ (37,281) -- (45,882) --
--------- --------- --------- ---------
Capital Share Transactions:
Net increase (decrease) in net assets from capital share transactions 153,569 16,874 (2,427) (42,285)
--------- --------- --------- ---------
Total Increase (Decrease) in Net Assets .................................. 109,163 88,571 (62,567) (44,541)
Net Assets, beginning of period .......................................... 284,263 195,692 290,937 335,478
--------- --------- --------- ---------
Net Assets, end of period ................................................ $ 393,426 $ 284,263 $ 228,370 $ 290,937
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
41
<PAGE>
<TABLE>
<CAPTION>
Quality Bond Fund Flexibly Managed Fund
-------------------------- --------------------------
Six months Year Six months Year
ended ended ended ended
06/30/99 December 31, 06/30/99 December 31,
(Unaudited) 1999 (Unaudited) 1999
----------- ------------ ----------- ------------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income .................................................... $ 1,972 $ 2,909 $ 6,453 $ 16,465
Net realized gain (loss) on investment transactions ...................... (911) (1,147) 5,886 39,425
Net realized foreign exchange gain (loss) ................................ -- -- (411) (124)
Net change in unrealized appreciation/depreciation of investments, futures
contracts and foreign currency related items .......................... 1,668 66) 3,848 (20,797)
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting from operations .... 2,729 (4) 15,776 34,969
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income .................................................... (2,913) -- (18,517) --
Net realized capital gains ............................................... -- -- (37,919) --
--------- --------- --------- ---------
Total distributions ................................................ (2,913) -- (56,436) --
--------- --------- --------- ---------
Capital Share Transactions:
Net increase (decrease) in net assets from capital share transactions 38,543 2,474 (23,849) (97,599)
--------- --------- --------- ---------
Total Increase (Decrease) in Net Assets .................................. 38,359 2,470 (64,509) (62,630)
Net Assets, beginning of period .......................................... 55,975 53,505 482,856 545,486
--------- --------- --------- ---------
Net Assets, end of period ................................................ $ 94,334 $ 55,975 $ 418,347 $ 482,856
========= ========= ========= =========
</TABLE>
<PAGE>
[RESTUBBED TABLE FOR ABOVE]
<TABLE>
<CAPTION>
International Equity Fund Small Cap Value Fund**
--------------------------- -------------------------
Six months Year Six months Year
ended ended ended ended
06/30/99 December 31, 06/30/99 December 31,
(Unaudited) 1999 (Unaudited) 1999
----------- ------------ ---------- -----------
<S> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income .................................................... $ 313 $ 322 $ 135 $ 281
Net realized gain (loss) on investment transactions ...................... 21,500 19,002 4,655 (1,244)
Net realized foreign exchange gain (loss) ................................ (410) 1,127 -- --
Net change in unrealized appreciation/depreciation of investments, futures
contracts and foreign currency related items .......................... (47,912) 49,269 (922) 447
--------- --------- --------- ---------
Net increase (decrease) in net assets resulting from operations .... (26,509) 69,720 3,868 (516)
--------- --------- --------- ---------
Distributions to shareholders from:
Net investment income .................................................... (1,125) -- (281) --
Net realized capital gains ............................................... (18,823) -- -- --
--------- --------- --------- ---------
Total distributions ................................................ (19,948) -- (281) --
--------- --------- --------- ---------
Capital Share Transactions:
Net increase (decrease) in net assets from capital share transactions 45,482 (8,230) (501) 1,820
--------- --------- --------- ---------
Total Increase (Decrease) in Net Assets .................................. (975) 61,490 3,086 1,304
Net Assets, beginning of period .......................................... 215,312 153,822 44,939 43,635
--------- --------- --------- ---------
Net Assets, end of period ................................................ $ 214,337 $ 215,312 $ 48,025 $ 44,939
========= ========= ========= =========
</TABLE>
* Prior to May 1, 2000, the Large Cap Value Fund was named the Value Equity
Fund.
** Prior to May 1, 2000, the Small Cap Value Fund was named the Small
Capitalization Fund.
+ For the period from May 1, 2000, (commencement of operations) through
June 30, 2000.
The accompanying notes are an integral part of these financial statements
42
<PAGE>
PENN SERIES FUNDS, INC.
STATEMENT OF CHANGES IN NET ASSETS (UNAUDITED)
(Dollar Amounts in Thousands)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Index Mid Cap Mid Cap
Emerging Growth Fund 500 Fund Growth Fund Value Fund
------------------------- ------------ ------------ ------------
Six months Year Six months Six months Six months
ended ended ended ended ended
06/30/99 December 31, 06/30/99 06/30/99 06/30/99
(Unaudited) 1999 (Unaudited)+ (Unaudited)+ (Unaudited)+
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss) .................................. $ (728) $ (573) $ 440 $ (26) $ 88
Net realized gain (loss) on investment transactions ........... 26,922 32,707 (28) 137 (141)
Net realized foreign exchange gain (loss) ..................... -- -- -- -- --
Net change in unrealized appreciation/depreciation of
investments, futures contracts and foreign currency
related items .............................................. (20,320) 393 (95) 3,210 921
--------- --------- --------- --------- ---------
Net increase in net assets resulting from operations .... 5,874 105,527 317 3,321 868
--------- --------- --------- --------- ---------
Distributions to shareholders from:
Net investment income ......................................... -- -- -- -- --
Net realized capital gains .................................... (30,231) -- -- -- --
--------- --------- --------- --------- ---------
Total distributions ..................................... (30,231) -- -- -- --
--------- --------- --------- --------- ---------
Capital Share Transactions:
Net increase in net assets from capital share
transactions ............................................... 80,931 39,222 229,686 45,440 49,765
--------- --------- --------- --------- ---------
Total Increase in Net Assets .................................. 56,574 144,749 230,003 48,761 50,633
Net Assets, beginning of period ............................... 183,413 38,664 -- -- --
--------- --------- --------- --------- ---------
Net Assets, end of period ..................................... $ 239,987 $ 183,413 $ 230,003 $ 48,761 $ 50,633
========= ========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements
43
<PAGE>
<TABLE>
<CAPTION>
Limited Maturity Growth and
Bond Fund Income Fund
---------------- -------------
Six months Six months
ended ended
06/30/99 06/30/99
(Unaudited)+ (Unaudited)+
---------------- -------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income .................................................... $ 118 $ 14
Net realized gain (loss) on investment transactions ...................... 4 158
Net realized foreign exchange gain (loss) ................................ -- --
Net change in unrealized appreciation/depreciation of investments, futures
contracts and foreign currency related items .......................... 48 (495)
-------- --------
Net increase (decrease) in net assets resulting from operations .... 170 (323)
-------- --------
Distributions to shareholders from:
Net investment income .................................................... -- --
Net realized capital gains ............................................... -- --
-------- --------
Total distributions ................................................ -- --
-------- --------
Capital Share Transactions:
Net increase in net assets from capital share transactions ............ 10,819 41,186
-------- --------
Total Increase in Net Assets ............................................. 10,989 40,863
Net Assets, beginning of period .......................................... -- --
-------- --------
Net Assets, end of period ................................................ $ 10,989 $ 40,863
======== ========
</TABLE>
* Prior to May 1, 2000, the Large Cap Value Fund was named the Value Equity
Fund.
** Prior to May 1, 2000, the Small Cap Value Fund was named the Small
Capitalization Fund.
+ For the period from May 1, 2000, (commencement of operations) through
June 30, 2000.
The accompanying notes are an integral part of these financial statements
44
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
THE MONEY MARKET FUND
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
June 30, 2000 ----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------ ---------- ---------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------ ---------- ---------- ----------- ---------- ---------
Income from investment operations:
Net investment income .................... 0.0274 0.0456 0.0489 0.0503 0.0489 0.0538
------------ ---------- ---------- ----------- ---------- ---------
Total from investment operations ...... 0.0274 0.0456 0.0489 0.0503 0.0489 0.0538
------------ ---------- ---------- ----------- ---------- ---------
Less dividends:
Dividends from net investment income ..... (0.0274) (0.0456) (0.0489) (0.0503) (0.0489) (0.0538)
------------ ---------- ---------- ----------- ---------- ---------
Total dividends ....................... (0.0274) (0.0456) (0.0489) (0.0503) (0.0489) (0.0538)
------------ ---------- ---------- ----------- ---------- ---------
Net asset value, end of period ........... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
============ ========== ========== =========== ========== =========
Total return .......................... 2.77% 4.66% 5.00% 5.15% 5.00% 5.51%
Ratios/Supplemental data:
Net assets, end of period (in thousands).. $85,489 $86,581 $53,626 $37,476 $34,501 $24,726
============ ========== ========== =========== ========== =========
Ratio of expenses to average net assets .. 0.65%(a) 0.72% 0.72% 0.70% 0.73%(b) 0.69%(b)
============ ========== ========== =========== ========== =========
Ratio of net investment income
to average net assets ................. 5.60%(a) 4.60% 4.88% 5.04% 4.88%(b) 5.37%(b)
============ ========== ========== =========== ========== =========
</TABLE>
----------------
(a) Annualized.
(b) Had fees not been waived by the investment adviser and administrator of the
Fund, the ratio of expenses to average net assets would have been 0.74%,
and 0.74%, and the ratio of net investment income to average net assets
would have been 4.87%, and 5.32% for the years ended December 31,1996 and
1995, respectively.
<PAGE>
--------------------------------------------------------------------------------
THE QUALITY BOND FUND
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
June 30, 2000 ----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------ ---------- ------------ ------------ ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $10.40 $10.40 $10.20 $10.00 $10.24 $ 9.04
------------ --------- ------------ ------------ ----------- ---------
Income from investment operations:
Net investment income ....................... 0.21 0.54 0.51 0.60 0.66 0.61
Net realized and unrealized gain (loss)
on investment transactions ............... 0.15 (0.54) 0.53 0.20 (0.24) 1.21
------------ --------- ------------ ------------ ----------- ---------
Total from investment operations ......... 0.36 0.00 1.04 0.80 0.42 1.82
------------ --------- ------------ ------------ ----------- ---------
Less distributions:
Dividend from net investment income ......... (0.54) 0.00 (0.51) (0.60) (0.66) (0.61)
Distribution from net realized gain ......... 0.00 0.00 (0.33) 0.00 0.00 0.00
Distribution in excess of net realized gain.. 0.00 0.00 0.00 0.00 0.00 (0.01)
------------ --------- ------------ ------------ ----------- ---------
Total distributions ...................... (0.54) 0.00 (0.84) (0.60) (0.66) (0.62)
------------ --------- ------------ ------------ ----------- ---------
Net asset value, end of period .............. $10.22 $10.40 $10.40 $10.20 $10.00 $10.24
============ ========= ============ ============ =========== =========
Total return ............................. 3.68% 0.00 10.17% 8.03% 4.14% 20.14%
Ratios/Supplemental data:
Net assets, end of period (in thousands) .... $94,334 $55,975 $53,505 $40,077 $37,611 $38,048
============ ========= ============ ============ =========== =========
Ratio of expenses to average net assets ..... 0.71%(a) 0.77% 0.77% 0.75% 0.77%(b) 0.73%(b)
============ ========= ============ ============ =========== =========
Ratio of net investment income
to average net assets .................... 6.00%(a) 5.21% 5.26% 5.87% 6.03%(b) 6.20%(b)
============ ========= ============ ============ =========== =========
Portfolio turnover rate ..................... 425.7% 815.1% 477.2% 317.3% 107.6% 449.2%
============ ========= ============= ============ =========== =========
</TABLE>
----------------
(a) Annualized.
(b) Had fees not been waived by the investment adviser and administrator of the
Fund, the ratio of expenses to average net assets would have been 0.78%,
and 0.78%, and the ratio of net investment income to average net assets
would have been 6.02% and 6.15% for the years ended December 31, 1996 and
1995, respectively.
45
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
THE HIGH YIELD BOND FUND
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
June 30, 2000 --------------------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
----------- ----------- ------------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $9.58 $9.19 $9.52 $8.91 $8.44 $7.94
--------- ----------- ------------- ----------- ----------- ----------
Income (loss) from investment operations:
Net investment income ..................... 0.44 0.89 0.79 0.80 0.70 0.80
Net realized and unrealized gain (loss)
on investment transactions ............. (0.53) (0.50) (0.33) 0.61 0.47 0.50
--------- ----------- ------------- ----------- ----------- ---------
Total from investment operations ....... (0.09) 0.39 0.46 1.41 1.17 1.30
--------- ----------- ------------- ----------- ----------- ---------
Less distributions:
Dividend from net investment income ....... (0.89) 0.00 (0.79) (0.80) (0.70) (0.80)
Distribution in excess of net
investment income ...................... 0.00 0.00 0.00 0.00 0.00 0.00
--------- ----------- ------------- ----------- ----------- ----------
Total distributions .................... (0.89) 0.00 (0.79) (0.80) (0.70) (0.80)
--------- ----------- ------------- ----------- ----------- ----------
Net asset value, end of period ............ $8.60 $9.58 $9.19 $9.52 $8.91 $8.44
========= =========== ============= =========== =========== ==========
Total return ........................... (0.93%) 4.24% 4.79% 15.78% 13.87% 16.41%
Ratios/Supplemental data:
Net assets, end of period (in thousands) .. $62,671 $69,928 $69,003 $59,138 $44,042 $36,442
========= =========== ============= =========== =========== ==========
Ratio of expenses to average net assets ... 0.87%(a) 0.85% 0.82% 0.81% 0.84% 0.87%
========= =========== ============= =========== =========== ==========
Ratio of net investment income
to average net assets .................. 9.95%(a) 9.11% 8.30% 8.96% 8.14% 9.20%
========= =========== ============= =========== =========== ==========
Portfolio turnover rate ................... 37.6% 78.2% 82.7% 111.3% 118.5% 84.3%
========= =========== ============= =========== =========== ==========
</TABLE>
--------------------
(a) Annualized.
<PAGE>
--------------------------------------------------------------------------------
THE GROWTH EQUITY FUND
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
June 30, 2000 -----------------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
----------- ----------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ...... $41.41 $30.88 $24.37 $21.46 $20.00 $18.30
---------- ---------- ------------ ---------- ---------- ----------
Income (loss) from investment operations:
Net investment income (loss) .............. (0.04) (0.05) 0.02 0.10 0.11 0.09
Net realized and unrealized gain (loss)
on investment transactions ............. (0.35) 10.58 10.12 5.64 3.85 4.75
---------- ---------- ------------ ---------- ---------- ----------
Total from investment operations ....... (0.39) 10.53 10.14 5.74 3.96 4.84
---------- ---------- ------------ ---------- ---------- ----------
Less distributions:
Dividend from net investment income ....... 0.00 0.00 (0.02) (0.10) (0.11) (0.09)
Distribution from net realized gains ...... (5.48) 0.00 (3.61) (2.73) (2.39) (3.05)
---------- ---------- ------------ ---------- ---------- ----------
Total distributions .................... (5.48) 0.00 (3.63) (2.83) (2.50) (3.14)
---------- ---------- ------------ ---------- ---------- ----------
Net asset value, end of period ............ $35.54 $41.41 $30.88 $24.37 $21.46 $20.00
========== ========== ============ ========== ========== ==========
Total return ........................... (1.02%) 34.10% 41.67% 26.74% 19.76% 26.45%
Ratios/Supplemental data:
Net assets, end of period (in thousands) .. $393,426 $284,263 $195,692 $136,058 $106,039 $95,593
========== ========== ============ ========== ========== ==========
Ratio of expenses to average net assets ... 0.77%(a) 0.73% 0.76% 0.77% 0.80%(b) 0.77%(b)
========== ========== ============ ========== ========== ==========
Ratio of net investment income (loss)
to average net assets .................. (0.30%)(a) (0.14%) .0.08% 0.39% 0.48%(b) 0.43%(b)
========== ========== ============ ========== ========== ==========
Portfolio turnover rate ................... 170.6% 209.1% 161.3% 169.1% 177.1% 169.8%
========== ========== ============ ========== ========== ==========
</TABLE>
------------------
(a) Annualized.
(b) Had fees not been waived by the investment adviser and administrator of the
Fund, the ratio of expenses to average net assets would have been 0.81%,
and 0.82%, and the ratio of net investment income to average net assets
would have been 0.47% and 0.38% for the years ended December 31, 1996 and
1995 respectively.
46
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
THE LARGE CAP VALUE FUND
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
06/30/2000* -----------------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
------------- ------------ ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $22.21 $22.39 $22.55 $19.32 $16.28 $12.67
------------ ------------ ---------- ---------- ---------- ---------
Income (loss) from investment operations:
Net investment income .................... 0.11 0.21 0.31 0.29 0.22 0.25
Net realized and unrealized gain (loss)
on investment transactions ............ (1.02) (0.39) 1.85 4.53 3.88 4.50
------------ ------------ ---------- ---------- ---------- ---------
Total from investment operations ...... (0.91) (0.18) 2.16 4.82 4.10 4.75
------------ ------------ ---------- ---------- ---------- ---------
Less distributions:
Dividend from net investment income ...... (0.21) 0.00 (0.31) (0.29) (0.22) (0.25)
Distribution from net realized gains ..... (3.29) 0.00 (2.01) (1.30) (0.84) (0.89)
------------ ------------ ---------- ---------- ---------- ---------
Total distributions ................... (3.50) 0.00 (2.32) (1.59) (1.06) (1.14)
------------ ------------ ---------- ---------- ---------- ---------
Net asset value, end of period ........... $17.80 $22.21 $22.39 $22.55 $19.32 $16.28
============ ============ ========== ========== ========== =========
Total return .......................... (4.85%) (0.80%) 9.59% 24.98% 25.19% 37.48%
Ratios/Supplemental data:
Net assets, end of period (in thousands).. $228,370 $290,937 $335,479 $302,960 $200,674 $127,260
============ ============ ========== ========== ========== =========
Ratio of expenses to average net assets .. 0.81%(a) 0.76% 0.76% 0.76% 0.78% 0.80%
============ ============ ========== ========== ========== =========
Ratio of net investment income
to average net assets ................. 1.21%(a) 0.88% 1.27% 1.43% 1.38% 1.71%
============ ============ ========== ========== ========== =========
Portfolio turnover rate .................. 108.2% 67.6% 24.0% 18.7% 25.0% 34.3%
============ ============ ========== ========== ========== =========
</TABLE>
----------------
* Prior to May 1, 2000, the Large Cap Value Fund was named Value Equity Fund.
(a) Annualized.
--------------------------------------------------------------------------------
<PAGE>
THE FLEXIBLY MANAGED FUND
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
June 30, 2000 ---------------------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
----------- ----------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $19.62 $18.31 $19.83 $18.74 $17.40 $15.19
---------- ----------- ---------- ---------- ----------- ------------
Income from investment operations:
Net investment income .................... 0.28 0.67 0.60 0.61 0.65 0.53
Net realized and unrealized gain
on investment transactions ............ 0.44 0.64 0.61 2.33 2.19 2.86
---------- ----------- ---------- ---------- ----------- ------------
Total from investment operations ...... 0.72 1.31 1.21 2.94 2.84 3.39
---------- ----------- ---------- ---------- ----------- ------------
Less distributions:
Dividend from net investment income ...... (0.75) 0.00 (0.60) (0.61) (0.65) (0.53)
Distribution in excess of net
investment income ..................... 0.00 0.00 0.00 0.00 0.00 (0.01)
Distribution from net realized gains ..... (1.54) 0.00 (2.13) (1.24) (0.85) (0.64)
---------- ----------- ---------- ---------- ----------- ------------
Total distributions ................... (2.29) 0.00 (2.73) (1.85) (1.50) (1.18)
---------- ----------- ---------- ---------- ----------- ------------
Net asset value, end of period ........... $18.05 $19.62 $18.31 $19.83 $18.74 $17.40
========== =========== ========== ========== =========== ============
Total return .......................... 4.20% 7.15% 6.09% 15.65% 16.37% 22.28%
Ratios/Supplemental data:
Net assets, end of period (in thousands).. $418,347 $482,856 $545,486 $516,139 $398,544 $266,556
========== =========== ========== ========== =========== ============
Ratio of expenses to average net assets .. 0.80%(a) 0.76% 0.76% 0.76% 0.77% 0.79%
========== =========== ========== ========== =========== ============
Ratio of net investment income
to average net assets ................. 2.97%(a) 3.25% 2.78% 3.10% 3.90% 3.45%
========== =========== ========== ========== =========== ============
Portfolio turnover rate .................. 11.4% 31.0% 48.0% 37.1% 32.9% 37.2%
========== =========== ========== ========== =========== ============
</TABLE>
---------------------
(a) Annualized.
47
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
THE INTERNATIONAL EQUITY FUND
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
June 30, 2000 --------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995
----------- --------- ------------ ------------ ------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $26.78 $18.37 $16.13 $15.61 $14.47 $13.01
------ -------- ----------- ----------- ----------- --------
Income (loss) from investment operations:
Net investment income 0.06 0.03 0.10 0.58 0.63 0.13
Net realized and unrealized gain (loss) on
investments and foreign currency related
transactions (3.06) 8.38 2.93 1.04 1.81 1.67
------ -------- ----------- ----------- ----------- --------
Total from investment operations (3.00) 8.41 3.03 1.62 2.44 1.80
------ -------- ----------- ----------- ----------- --------
Less distributions:
Dividend from net investment income (0.14) 0.00 (0.10) (0.53) (0.56) (0.12)
Distribution in excess of net
investment income 0.00 0.00 (0.08) 0.00 (0.74) (0.22)
Distribution from net realized gains (2.34) 0.00 (0.61) (0.57) 0.00 0.00
------ -------- ----------- ----------- ----------- --------
Total distributions (2.48) 0.00 (0.79) (1.10) (1.30) (0.34)
------ -------- ----------- ----------- ----------- --------
Net asset value, end of period $21.30 $26.78 $18.37 $16.13 $15.61 $14.47
====== ======== =========== =========== ========== ========
Total return (11.70%) 45.78% 18.85% 10.41% 16.87% 13.80%
Ratios/Supplemental data
Net assets, end of period (in thousands) $214,337 $215,312 $153,822 $129,638 $104,418 $69,531
====== ======== =========== =========== =========== =========
Ratio of expenses to average net assets 1.09%(a) 1.08% 1.08% 1.13% 1.17% 1.23%
====== ======== =========== =========== =========== =========
Ratio of net investment income
to average net assets (0.88%)(a) 0.20% 0.45% 0.62% 0.66% 0.91%
====== ======== =========== =========== =========== =========
Portfolio turnover rate 35.6% 45.0% 43.5% 35.7% 54.8% 62.5%
====== ======== =========== =========== =========== =========
</TABLE>
---------------------
(a) Annualized.
--------------------------------------------------------------------------------
<PAGE>
--------------------------------------------------------------------------------
THE SMALL CAP VALUE FUND
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
June 30, 2000* -----------------------------------------------------------------
(Unaudited) 1999 1998 1997 1996 1995**
------------ ----------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period ........ $12.64 $12.81 $14.43 $12.53 $10.96 $10.00
---------- ----------- ---------- ---------- ----------- ------------
Income (loss) from investment operations:
Net investment income ....................... 0.04 0.08 .08 0.07 0.07 0.09
Net realized and unrealized gain (loss)
on investment transactions ............... 1.10 (0.25) (1.41) 2.81 2.09 1.19
---------- ----------- ---------- ---------- ----------- -----------
Total from investment operations ......... 1.14 (0.17) (1.33) 2.88 2.16 1.28
---------- ----------- ---------- ---------- ----------- -----------
Less distributions:
Dividend from net investment income ......... (0.08) 0.00 (0.08) (0.07) (0.07) (0.09)
Distribution from net realized gains ........ 0.00 0.00 (0.21) (0.91) (0.52) (0.23)
---------- ----------- ---------- ---------- ----------- -----------
Total distributions ...................... (0.08) 0.00 (0.29) (0.98) (0.59) (0.32)
---------- ----------- ---------- ---------- ----------- -----------
Net asset value, end of period .............. $13.70 $12.64 $12.81 $14.43 $12.53 $10.96
========== =========== ========== ========== =========== ===========
Total return ............................. 9.07% (1.33%) (9.16%) 23.02% 19.76% 12.76%(c)
Ratios/Supplemental data:
Net assets, end of period (in thousands) .... $48,025 $44,939 $43,635 $38,726 $16,134 $4,828
========== =========== ========== ========== ========== ===========
Ratio of expenses to average net assets ..... 0.92%(a) 0.81% 0.82% 0.85% 0.99%(b) 1.00%(a)(b)
========== =========== ========== ========== ========== ===========
Ratio of net investment income
to average net assets .................... 0.61%(a) 0.65% 0.65% 0.66% 0.85%(b) 1.53%(a)(b)
========== =========== ========== ========== ========== ===========
Portfolio turnover rate ..................... 114.7% 102.8% 61.9% 71.1% 39.2% 64.3%
========== =========== ========== ========== ========== ===========
</TABLE>
----------------------------------------
* Prior to May 1, 2000, the Small Cap Value Fund was named Small
Capitalization Fund.
** For the period from March 1, 1995 (commencement of operations) through
December 31, 1995.
(a) Annualized.
(b) Had fees not been waived by the investment adviser and administrator of the
Fund, the ratio of expenses to average net assets would have been 0.92%,
1.06% and 1.29%, and the ratio of net investment income to average net
assets would have been 0.65%, 0.78% and 1.24%, respectively, for the period
ended June 30, 2000, for the year ended December 31, 1996 and the period
ended December 31, 1995.
(c) Not annualized.
48
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
THE EMERGING GROWTH FUND
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended Year ended December 31,
June 30, 2000 --------------------------------------------------------------
(Unaudited) 1999 1998 1997*
------------ ------------------ ----------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $49.68 $17.43 $12.85 $10.00
----------- ----------------- ---------------- --------------
Income from investment operations:
Net investment loss ...................... (0.13) (0.11) (0.06) 0.00
Net realized and unrealized gain
on investment transactions ............ 2.72 32.36 4.65 3.92
----------- ----------------- ---------------- --------------
Total from investment operations ...... 2.59 32.25 4.59 3.92
----------- ----------------- ---------------- --------------
Less distributions:
Distribution from net realized gains ..... (8.34) 0.00 (0.01) (1.07)
----------- ----------------- ---------------- --------------
Net asset value, end of period ........... $43.93 $49.68 $17.43 $12.85
=========== ================= ================ ==============
Total return .......................... 6.02% 185.03% 35.70% 39.22%(c)
Ratios/Supplemental data:
Net assets, end of period (in thousands).. $239,987 $183,413 $38,664 $17,942
=========== ================= ================ ==============
Ratio of expenses to average net assets .. 0.98%(a) 1.04% 1.15%(b) 1.15%(a)(b)
=========== ================= ================ ==============
Ratio of net investment loss
to average net assets ................. (0.66%)(a) (0.68%) (0.66%)(b) (0.73%)(a)(b)
=========== ================= ================ ==============
Portfolio turnover rate .................. 56.8% 172.4% 240.9% 392.3%
=========== ================= ================ ==============
</TABLE>
-----------------
* For the period from May 1, 1997 (commencement of operations) through
December 31, 1997.
(a) Annualized.
(b) Had fees not been waived by the investment adviser and administrator of the
Fund, the ratio of expenses to average net assets would have been 1.21% and
1.41%, and the ratio of net investment income to average net assets would
have been (0.73%) and (0.99%), respectively, for the year ended December
31,1998 and the period ended December 31, 1997.
(c) Not annualized.
<PAGE>
--------------------------------------------------------------------------------
For a Share Outstanding During the Period
<TABLE>
<CAPTION>
Six months ended June 30, 2000*
(Unaudited)
------------------------------------------------------------------------------------
The Limited The Growth The Index The Mid The Mid
Maturity and 500 Cap Cap
Bond Income Fund Growth Value
Fund Fund Fund Fund
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $10.00 $10.00 $10.00 $10.00 $10.00
--------- ---------- -------------- -------------- ---------
Income (loss) from investment operations:
Net investment gain (loss) ............... 0.11 0.00 0.02 (0.01) 0.02
Net realized and unrealized gain (loss)
on investment transactions ............ 0.04 (0.08) (0.01) 0.70 0.15
--------- ---------- -------------- -------------- ---------
Total from investment operations ...... 0.15 (0.08) 0.01 0.69 0.17
--------- ---------- -------------- -------------- ---------
Less distributions:
Distribution from net realized gains ..... 0.00 0.00 0.00 0.00 0.00
--------- ---------- -------------- -------------- ---------
Total distributions ................... 0.00 0.00 0.00 0.00 0.00
--------- ---------- -------------- -------------- ---------
Net asset value, end of period ........... $10.15 $9.92 $10.01 $10.69 $10.17
========= ========== ============== ============== =========
Total return .......................... 1.50% (0.80%) 0.10% 6.90% 1.70%
Ratios/Supplemental data:
Net assets, end of period (in thousands).. $10,989 $40,863 $230,003 $48,761 $50,633
========= ========== ============== ============== =========
Ratio of expenses to average net assets .. 0.63%(a) 0.79%(a) 0.25%(a)(b) 1.00%(a)(b) 0.88%(a)
========= ========== ============== ============== =========
Ratio of net investment gain
to average net assets ................. 6.40%(a) 0.22%(a) 1.20%(a)(b) (0.37%)(a)(b) 1.06%(a)
========= =========== ============== ============== =========
Portfolio turnover rate .................. 41.0% 32.8% 1.5% 52.7% 88.7%
========= ============ ============== ============== =========
</TABLE>
-------------------------------------------------------------------------
* For the period from May 1, 2000 (commencement of operations) through June
30, 2000.
(a) Annualized.
(b) Had fees not been waived by the administrator of the Fund, the ratio of
expenses to average net assets would have been 0.29% and 1.04%, and the
ratio of net investment income to average net assets would have been 1.16%
and (0.42%), respectively, for the Index 500 Fund and the Mid Cap Growth
Fund during the period ended June 30, 2000.
49
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2000 (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, Large Cap Value, Flexibly Managed, International
Equity, Small Cap Value, Emerging Growth, Limited Maturity Bond, Growth and
Income, Index 500, Mid Cap Growth and Mid Cap Value Funds (the Funds). It is
authorized under its Articles of Incorporation to issue a separate class of
shares in one additional fund. The 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 in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those 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 maintains 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, Large Cap Value, Flexibly
Managed, International Equity, Small Cap Value, Emerging Growth, Limited
Maturity Bond, Growth and Income, Index 500, Mid Cap Growth, and Mid Cap Value
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 quotations 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 the portion of realized and unrealized gains and
losses on investments which is due to changes in the foreign exchange rate from
that which is due to changes in market prices of equity securities. Such
fluctuations are included with net realized and unrealized gain or loss from
investments.
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.
50
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS: Dividends of investment income and realized
capital gains of the Quality Bond, High Yield Bond, Growth Equity, Large Cap
Value, Flexibly Managed, International Equity, Small Cap Value, Emerging Growth,
Limited Maturity Bond, Growth and Income, Index 500, Mid Cap Growth and Mid Cap
Value Funds will be declared and paid within 30 days of the Funds' year end,
December 31, as permitted by federal income tax regulations. Dividends of net
investment income of the Money Market Fund are declared daily and paid monthly.
Dividends from net investment income and distributions from net realized gains
are determined in accordance with federal income tax regulations which may
differ from net investment income and net realized capital gains recorded in
accordance with generally accepted accounting principles. To the extent these
differences are permanent, such amounts are reclassified within the capital
accounts based on their federal tax basis treatment; temporary differences do
not require such reclassification. Distributions from net realized gains for
book purposes may involve short-term capital gains, which are included as
ordinary income for tax purposes.
FEDERAL INCOME TAXES: The Funds intend to continue to qualify as regulated
investment companies under Subchapter M of the Internal Revenue code and to
distribute all of their taxable income, including realized gains, to their
shareholders. Therefore, no federal income tax provision is required.
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 transactions 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 and the Index 500 Fund has entered into
futures contracts during the six-month period ended June 30, 2000. Open futures
contracts held by the Index 500 Fund at June 30, 2000 were as follows:
<TABLE>
<CAPTION>
Futures Expiration Unit Closing Current Value
Types Contract Date (@250 per Unit) Price (in thousands)
---------------- ---------------- -------------- --------------------- ------------ ----------------------
<S> <C> <C> <C> <C> <C>
Buy/Long S&P 500 Index 9/16/00 15 $1,468 $5,505
</TABLE>
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 and call options during the six-month period ended June 30, 2000.
Purchased put options open and outstanding at June 30, 2000 are disclosed in the
statement of net assets. Losses on options written during the six-month period
ended June 30, 2000 of $39,943 have been included with those from investment
transactions on the Statement of Operations.
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.
51
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
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 that 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 High Yield Bond, Flexibly Managed and
International Equity Funds have entered into forward foreign currency contracts
during the six-month period ended June 30, 2000. At June 30, 2000 there were no
open contracts in the High Yield Bond and Flexibly Managed Funds. Open forward
foreign currency contracts held by the International Equity Fund at June 30,
2000 were as follows:
<TABLE>
<CAPTION>
Unrealized
Foreign U.S. U.S. Foreign
Currency Contract Contract Exchange
Forward Foreign Expiration Contract Forward Amount Value Gain/Loss
Currency Date (000s) Rate (000s) (000s) (000s)
------------------ ----------- -------------- ----------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Sell European Currency 07/27/00 26,000 1.04135 $24,003 $24,968 ($965)
Sell Japanese Yen 08/22/00 1,200,000 104.75948 $11,139 $11,455 (316)
Sell Pounds Sterling 08/22/00 11,000 0.65992 $16,312 $16,669 (357)
Sell Swiss Franc 08/02/00 12,000 1.62057 $7,021 $7,405 (384)
Buy European Currency 07/27/00 26,000 1.04135 $24,076 $24,967 891
Buy Japanese Yen 08/22/00 1,200,000 104.75948 $12,016 $11,455 (561)
Buy Swiss Franc 08/02/00 12,000 1.62057 $7,117 $7,405 288
--------
Net unrealized foreign exchange depreciation ($1,404)
========
</TABLE>
3 - INVESTMENT ADVISORY AND OTHER CORPORATE SERVICES
Investment Advisory Services
Effective May 1, 1998 Independence Capital Management, Inc. ("ICMI") serves
as investment adviser to each of the funds. ICMI is a wholly owned subsidiary of
The Penn Mutual Life Insurance Company.
T. Rowe Price Associates, Inc. ("Price Associates") is sub-adviser to the
Flexibly Managed and the High Yield Bond Funds pursuant to an investment
sub-advisory agreement entered into by ICMI and Price Associates on May 1, 1998.
As sub-adviser, Price Associates provides investment management services to the
Funds.
Putnam Investment Management, Inc. ("Putnam") is sub-adviser to the Large
Cap Value Fund pursuant to an investment sub-advisory agreement entered into by
ICMI and Putnam on May 1, 2000. As sub-adviser, Putnam provides investment
management services to the Fund.
Wells Capital Management Incorporated ("Wells") is sub-adviser to the Index
500 Fund pursuant to an investment sub-advisory agreement entered into by ICMI
and Wells on May 1, 2000. As sub-adviser, Wells provides investment management
services to the Fund.
Turner Investment Partners, Inc. ("Turner") is sub-adviser to the Mid Cap
Growth Fund pursuant to an investment sub-advisory agreement entered into by
ICMI and Turner on May 1, 2000. As sub-advisor, Turner provides investment
management services to the Fund.
Neuberger Berman Management, Inc. ("Neuberger Berman") is sub-adviser to the
Mid Cap Value Fund pursuant to an investment sub-advisory agreement entered into
by ICMI and Neuberger Berman on May 1, 2000. As sub-advisor, Neuberger Berman
provides investment management services to the Fund.
Royce & Associates, Inc. ("Royce") is sub-adviser to the Small Cap Value
Fund pursuant to an investment sub-advisory agreement entered into by ICMI and
Royce on May 1, 2000. As sub-advisor, Royce provides investment management
services to the Fund.
Vontobel USA Inc. ("Vontobel") is sub-adviser to the International Equity
Fund pursuant to an investment sub-advisory agreement entered into by ICMI and
Vontobel on May 1, 1998. As sub-adviser, Vontobel provides investment management
services to the Fund. Vontobel is a wholly owned subsidiary of Vontobel Holding
AG, an affiliate of Bank Vontobel AG.
52
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
RS Investment Management, Inc. (formerly Robertson Stephens Investment
Management, Inc.) ("RSIM") is sub-adviser to the Emerging Growth Fund pursuant
to an investment sub-advisory agreement entered into by ICMI and RSIM on April
26, 1998. As sub-adviser, RSIM provides investment management services to the
Fund.
Each of the Funds pay ICMI, on a monthly basis, an 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: 0.20% for first $100 million
and 0.15% thereafter; Quality Bond Fund: 0.35% for first $100 million and 0.30%
thereafter; Growth Equity Fund: 0.65% for the first $100 million and 0.60%
thereafter; Flexibly Managed Fund: 0.60%; High Yield Bond Fund: 0.50%;
International Equity Fund: 0.85%; Large Cap Value Fund: 0.60%; Small Cap Value
Fund: 0.85%; Emerging Growth Fund: 0.80% for the first $25 million, 0.75% for
next $25 million and 0.70% thereafter; Limited Maturity Bond Fund: 0.30%; Growth
and Income Fund: 0.50%; Index 500 Fund: 0.07%; Mid Cap Growth Fund: 0.70% and
Mid Cap Value Fund: 0.55% for the first $250 million, 0.525% for next $250
million, 0.50% for next $250 million, 0.475% for next $250 million, 0.45% for
next $500 million and 0.425% thereafter.
For providing investment management services to the Funds, ICMI pays the
sub-advisers, on a monthly basis, a sub-advisory fee.
Administrative and Corporate Services
Under an administrative and corporate service 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
Each Fund bears all expenses of its operations other than those incurred by
the investment adviser and sub-advisers under their respective investment
advisory agreements and those incurred by Penn Mutual under its administrative
and corporate service agreement. The investment adviser, sub-advisers and Penn
Mutual have agreed to waive fees or reimburse expenses to the extent the Fund's
total expense ratio (excluding interest, taxes, brokerage, other capitalized
expenses, but including investment advisory and administrative and corporate
services fees) exceeds the applicable expense limitation for the 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%; Large Cap Value:
1.00%; Flexibly Managed: 1.00%; International Equity: 1.50%; Small Cap Value:
1.15%; Emerging Growth: 1.15%; Limited Maturity Bond: 0.90%; Growth and Income:
1.00%; Index 500: 0.40% (Penn Mutual currently intends to voluntarily waive its
fees and reimburse expenses so that total expenses do not exceed 0.25%); Mid Cap
Growth: 1.00% and Mid Cap Value: 1.00%.
Fees were paid to non-affiliated Directors of Penn Series for the six-month
period ended June 30, 2000. However, no person received compensation from Penn
Series who is an officer, director, or employee of Penn Series, the investment
adviser, sub-advisers, administrator, accounting agent or any parent or
subsidiary thereof.
53
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
4 - CAPITAL STOCK
At June 30, 2000, there were two billion and five hundred million shares of $.10
par value capital stock and two billion and seven hundred million shares of
$0.0001 shares of capital stock authorized for Penn Series. The capital stock is
divided into classes as set forth in the following table:
Class Par Value Number of
Shares
------------------------------------------------------------------------
Money Market Fund Common Stock $0.10 500,000,000
------------------------------------------------------------------------
Quality Bond Fund Common Stock $0.10 250,000,000
------------------------------------------------------------------------
High Yield Bond Fund Common Stock $0.10 250,000,000
------------------------------------------------------------------------
Growth Equity Fund Common Stock $0.10 250,000,000
------------------------------------------------------------------------
Large Cap Value Fund Common Stock $0.10 250,000,000
------------------------------------------------------------------------
Flexibly Managed Fund Common Stock $0.10 250,000,000
------------------------------------------------------------------------
International Equity Fund Common Stock $0.10 250,000,000
------------------------------------------------------------------------
Small Cap Value Fund Common Stock $0.10 250,000,000
------------------------------------------------------------------------
Emerging Growth Fund Common Stock $0.10 250,000,000
------------------------------------------------------------------------
Limited Maturity Bond Fund Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Growth and Income Fund Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Index 500 Fund Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Mid Cap Growth Fund Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Mid Cap Value Fund Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Class A Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Class B Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Class C Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Class D Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Class E Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
Class F Common Stock $0.0001 250,000,000
------------------------------------------------------------------------
54
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2000
--------------------------------------------------------------------------------
Transactions in capital stock of Penn Series Funds, Inc. were as follows:
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
The Six Months Ended June 30, 2000:
-----------------------------------------------------------------------------------------------------
Received for Shares Issued for Paid for
Shares Sold Reinvestment Shares Redeemed
----------- ----------------- ---------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund 126,341 $126,341 2,121 $2,121 129,554 $129,554
Quality Bond Fund 4,749 $47,629 297 $2,912 1,200 $11,998
High Yield Bond Fund 666 $5,727 756 $6,504 1,436 $12,367
Growth Equity Fund 3,660 $134,863 1,052 $37,281 508 $18,575
Large Cap Value Fund * 582 $10,628 2,452 $45,882 3,307 $58,937
Flexibly Managed Fund 815 $14,047 3,264 $56,436 5,511 $94,332
International Equity Fund 3,625 $82,183 885 $19,948 2,488 $56,649
Small Cap Value Fund ** 444 $5,749 22 $281 515 $6,531
Emerging Growth Fund 1,737 $79,764 734 $30,231 701 $29,064
Limited Maturity Bond Fund + 1,301 $13,024 - - 219 $2,205
Growth and Income Fund + 4,302 $43,017 - - 185 $1,831
Index 500 Fund + 23,663 $236,588 - - 694 $6,902
Mid Cap Growth Fund + 4,742 $47,242 - - 180 $1,802
Mid Cap Value Fund + 5,186 $51,885 - - 209 $2,120
The Six Months Ended June 30, 2000:
-----------------------------------------------------------------------------------------------------
Received for Shares Issued for Paid for
Shares Sold Reinvestment Shares Redeemed
----------- ----------------- ---------------
Shares Amount Shares Amount Shares Amount
------ ------ ------ ------ ------ ------
Money Market Fund 188,666 $188,666 2,909 $2,909 158,620 $158,620
Quality Bond Fund 1,479 $15,329 - - 1,239 $12,855
High Yield Bond Fund 1,695 $15,956 - - 1,904 $17,996
Growth Equity Fund 1,313 $43,595 - - 786 $26,721
Value Equity Fund 1,101 $24,742 - - 2,982 $67,027
Flexibly Managed Fund 1,513 $29,126 - - 6,691 $126,725
International Equity Fund 4,438 $89,854 - - 4,769 $98,084
Small Capitalization Fund 878 $10,900 - - 730 $9,080
Emerging Growth Fund 2,067 $58,019 - - 593 $18,797
</TABLE>
* Prior to May 1, 2000, the Large Cap Value Fund was named the Value Equity
Fund.
** Prior to May 1, 2000, the Small Cap Value Fund was named the Small
Capitalization Fund.
+ For the period from May 1, 2000 (commencement of operations) through June
30, 2000.
5 - COMPONENTS OF NET ASSETS
(Dollar Amounts in Thousands)
At June 30, 2000, Net Assets consisted of the following:
<TABLE>
<CAPTION>
Money Quality High Yield Growth Large Cap Flexibly International
Market Bond Bond Equity Value Managed Equity
Fund Fund Fund Fund Fund* Fund Fund
---- ---- ---- ---- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Capital paid in ........................ $85,492 $93,719 $68,605 $296,384 $204,020 $388,151 $154,050
Undistributed net investment
income (loss) ........................ - 1,972 3,202 (492) 1,496 6,453 (939)
Accumulated net realized gain
(loss) on investment transactions
and foreign exchange ................. (3) (2,099) (4,486) 34,974 27,999 4,540 21,090
Net unrealized appreciation
(depreciation) in value of
investments, futures contracts
and foreign currency related items .. - 742 (4,650) 62,560 (5,145) 19,203 40,136
------------------------------------------------------------------------------------------
Total Net Assets .................. $85,489 $94,334 $62,671 . $393,426 $228,370 $418,347 $214,337
==========================================================================================
</TABLE>
55
<PAGE>
--------------------------------------------------------------------------------
PENN SERIES FUNDS, INC.
NOTES TO FINANCIAL STATEMENTS - JUNE 30, 2000
--------------------------------------------------------------------------------
5 - COMPONENTS OF NET ASSETS (Continued)
(Dollar Amounts in Thousands)
At June 30, 2000, Net Assets consisted of the following:
<TABLE>
<CAPTION>
Small Cap Emerging Limited Growth and Index Mid Cap Mid Cap
Value Growth Maturity Bond Income 500 Growth Value
Fund** Fund Fund+ Fund+ Fund+ Fund+ Fund+
------ ---- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Capital paid in ........................ $46,078 $149,618 $10,819 $41,186 $229,686 $45,440 $49,765
Undistributed net investment
income (loss) ........................ 135 (728) 118 14 440 (26) 88
Accumulated net realized gain
(loss) on investment transactions
and foreign exchange ................. 3,402 26,586 4 158 (28) 137 (141)
Net unrealized appreciation
(depreciation) in value of
investments, futures contracts
and foreign currency related items .. (1,590) 64,511 48 (495) (95) 3,210 921
------------------------------------------------------------------------------------------
Total Net Assets .................. $48,025 $239,987 $10,989 $40,863 $230,003 $48,761 $50,633
==========================================================================================
</TABLE>
* Prior to May 1, 2000, the Large Cap Value Fund was named the Value Equity
Fund.
** Prior to May 1, 2000, the Small Cap Value Fund was named the Small
Capitalization Fund.
+ For the period from May 1, 2000 (commencement of operations) through June
30, 2000.
6 - PURCHASES AND SALES OF INVESTMENTS
(Dollar Amounts in Thousands)
During the six months ended June 30, 2000, the Funds made the following
purchases and sales of portfolio securities, excluding U.S. Government and
Agency Obligations and short term securities:
Purchases Sales
--------- -----
Quality Bond Fund $150,343 $144,072
High Yield Bond Fund $23,454 $25,756
Growth Equity Fund $534,177 $534,349
Large Cap Value Fund* $262,052 $302,671
Flexibly Managed Fund $47,347 $88,982
International Equity Fund $96,353 $74,298
Small Cap Value Fund** $50,437 $46,553
Emerging Growth Fund $157,374 $117,777
Limited Maturity Bond Fund+ $1,201 -
Growth and Income Fund+ $12,752 $12,601
Index 500 Fund+ $4,677 $3,369
Mid Cap Growth Fund+ $66,353 $22,634
Mid Cap Value Fund+ $51,633 $43,251
* Prior to May 1, 2000, the Large Cap Value Fund was named the Value Equity
Fund.
** Prior to May 1, 2000, the Small Cap Value Fund was named the Small
Capitalization Fund.
+ For the period from May 1, 2000 (commencement of operations) through June
30, 2000.
7 - CAPITAL LOSS CARRYOVERS
Capital loss carryovers expire as follows:
Money Quality High Yield Small Cap
Market Bond Bond Value
Fund Fund Fund Fund*
-----------------------------------------------------------------
2000 .......... $61 $0 $0 $0
2001 .......... 183 0 0 0
2003 .......... 416 0 1,052,436 0
2004 .......... 0 0 525,647 0
2005 .......... 225 0 0 0
2006 .......... 992 0 14,558 0
2007 .......... 0 965,951 861,638 956,303
-----------------------------------------------------------------
Total .... $1,877 $965,951 $2,454,279 $956,303
* Prior to May 1, 2000, the Small Cap Value Fund was named the Small
Capitalization Fund.
56
