<PAGE>
THE PRUDENTIAL [Logo]
Semi-Annual
Report to
Contract
Owners
June 30, 1995
Pruco Life's
PRUvider-Service Mark-
[Logo]
The Prudential Series Fund, Inc.
and
Pruco Life PRUvider Variable Appreciable Account
<PAGE>
TABLE OF CONTENTS
NOTE: **The back inside cover provides important toll-free
telephone numbers for customer service.
PAGE
I. LETTER TO CONTRACT OWNERS
Summarizes the results of The Prudential Series Fund, Inc. and
provides an economic overview..................................... 1
II. THE PRUDENTIAL SERIES FUND, INC.
The Pruco Life PRUvider Variable Appreciable Account is one of
several Accounts investing in The Prudential Series Fund, Inc.
1. FINANCIAL STATEMENTS............................................ A1
2. INVESTMENT OBJECTIVES........................................... B1
3. SCHEDULE OF INVESTMENTS
Lists the holdings in each of the investment options of The
Prudential Series Fund, Inc. ................................... B2
4. NOTES TO THE FINANCIAL STATEMENTS............................... C1
III. APPENDIX
1. GLOSSARY........................................................ i
2. BOARDS OF DIRECTORS............................................. iii
Please note: This Semi-Annual Report includes the financial statements of The
Prudential Series Fund. It does not include the financial statements for the
separate account that corresponds to your product. Product financial statements
will be included in the Annual Report dated December 31, 1995. If you would like
separate account financial statements as of June 30, 1995, please call the
appropriate number shown inside the back cover of this Report.
This Report may be used with the public only when preceded or accompanied by
current prospectuses for The Prudential Series Fund, the applicable variable
life or annuity product, and the current Performance Data Update for the
applicable product. The Performance Data Update shows historical investment
performance after the deduction of all product related expenses. The
prospectuses contain more information concerning charges and expenses and should
be read carefully before you invest or send money.
Variable life and annuity products are offered by Pruco Securities Corp., a
subsidiary of The Prudential. The principal business address of Pruco Securities
is 1111 Durham Avenue, South Plainfield, NJ 07080.
<PAGE>
STOCK & BOND MARKETS
REVIEW
STOCKS SOAR; BONDS REBOUND
IN BEST SIX MONTHS IN 9 YEARS.
---------------------------------------------------
WHY DID INTEREST RATES FALL? DIDN'T THEY JUST RISE?
---------------------------------------------------
Stocks and bonds both soared during the first half of 1995, with stocks powered
primarily by higher corporate profits and bonds by lower interest rates.
Both stocks and bonds posted double-digit returns for the six months ended June
30, their best six months since the period ending in April 1986. The Standard &
Poor's 500 Stock Index, a broad measure of the U.S. stock market, rose 20%,
while the Lehman Brothers Aggregate Bond Index rose 11%. Foreign markets also
fared well (although not as well as the U.S.), with the Morgan Stanley World
Index gaining 9% in dollar terms. Last year's investment of choice, money market
funds, finished in last place as 3-month U.S. Treasury bills earned just 3% in
total return.
Interest rates peaked last fall when an inflation scare drove the yield of the
30-year U.S. Treasury bond to 8.2%. Eight months later on June 30, that yield
had plummeted to 6.6%, falling almost as rapidly as it rose last year. Why the
sharp change in sentiment? Last year the Federal Reserve started driving up
short-term interest rates, doubling them to 6% by February 1995, to try to slow
the rapidly growing economy. When economic growth did slow and the inflation
threat did break, interest rates began declining.
The last interest rate to fall was the very short-term overnight lending rate,
or federal funds target rate, which is set by the Federal Reserve. The rate was
reduced on July 5, by a quarter of a percentage point, to 5.75%. Thus, money
market rates peaked in the first half of the year, along with consumer lending
rates, like the prime rate.
IMPORTANT NOTE:
THE RATES OF RETURN QUOTED ON THE FOLLOWING PAGES REFLECT DEDUCTION OF
INVESTMENT MANAGEMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES. THEY
REFLECT THE REINVESTMENT OF DIVIDEND AND CAPITAL GAIN DISTRIBUTIONS. THEY ARE
NOT AN ESTIMATE OR A GUARANTEE OF FUTURE PERFORMANCE. CONTRACT UNIT VALUES
INCREASE OR DECREASE BASED ON THE PERFORMANCE OF THE PORTFOLIO. CHANGES IN
CONTRACT VALUES DEPEND NOT ONLY ON THE INVESTMENT PERFORMANCE OF THE PORTFOLIO,
BUT ALSO ON THE INSURANCE AND ADMINISTRATIVE CHARGES, APPLICABLE SALES CHARGES,
AND THE MORTALITY AND EXPENSE RISK CHARGE APPLICABLE UNDER A CONTRACT. THESE
CONTRACT CHARGES EFFECTIVELY REDUCE THE DOLLAR AMOUNT OF ANY NET GAINS AND
INCREASE THE DOLLAR AMOUNT OF ANY NET LOSSES. YOUR PRUDENTIAL/PRUCO SECURITIES
REPRESENTATIVE CAN PROVIDE YOU WITH ACTUAL RATES OF RETURN FOR YOUR VARIABLE
LIFE INSURANCE OR ANNUITY CONTRACT, SHOWING THE EFFECT OF THESE CHARGES.
THE PRUVIDER
SEMI-ANNUAL REPORT
SIX MONTHS ENDED JUNE 30, 1995
DEAR CONTRACT OWNER:
OVER THE PAST SIX MONTHS, BOTH THE U.S. STOCK AND BOND MARKETS ENJOYED THEIR
BEST PERFORMANCE IN NINE YEARS. AFTER 1994'S WEAK SHOWING, BOTH MARKETS CAME
ROARING BACK IN THE FIRST SIX MONTHS OF THIS YEAR WITH DOUBLE-DIGIT RETURNS.
THESE RESULTS SHOW WHY IT MAY BE HELPFUL TO STAY THE COURSE.
HISTORY SHOWS THAT STOCKS TEND TO PERFORM BETTER THAN OTHER INVESTMENTS IN THE
LONG RUN -- DESPITE SHORT-TERM VOLATILITY. BONDS CAN PERFORM BETTER THAN FIXED
INTEREST ACCOUNTS, TOO. BUT THAT'S ADVICE EASIER TO GIVE THAN TO TAKE. SO WE
APPRECIATE THE CONFIDENCE YOU HAVE SHOWN IN US BY ENTRUSTING YOUR LIFE INSURANCE
AND ANNUITY ASSETS TO THE CONSERVATIVELY MANAGED FLEXIBLE AND AGGRESSIVELY
MANAGED FLEXIBLE PORTFOLIOS OF THE PRUDENTIAL SERIES FUND, INC.
WE'VE WRITTEN THIS REPORT TO EXPLAIN THE INVESTMENT STRATEGIES AND PERFORMANCE
OF YOUR PORTFOLIOS OVER THE LAST SIX MONTHS. WE CONCLUDE WITH OUR OUTLOOK FOR
THE SECOND HALF OF 1995. IN SHORT, WE EXPECT THE POSITIVE MOMENTUM TO CONTINUE,
ALBEIT AT A MUCH SLOWER PACE. WE DO NOT EXPECT A REPEAT OF THE FIRST HALF'S
UNUSUALLY ROBUST PERFORMANCE ANY TIME SOON.
<PAGE>
CONSERVATIVELY / AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIOS
-------------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO VS. S&P
500, LEHMAN AGGREGATE INDEX AND LIPPER VIP FLEX AVERAGE OVER TEN YEARS(1)
$40,000
35,000 - - - S&P 500 $39,255
----- Lipper VIP Flex Avg $29,656
30,000 ----- LB Aggregate Index $25,962
===== Conservatively Mgd Flex Portfolio $26,703
25,000
20,000
15,000
10,000
85 86 87 88 89 90 91 92 93 94
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Six Rank One Rank Three Rank Five Rank Ten Rank
Month Year Years Years Year
Conservatively Mgd
Flex Port 9.8% 54/62 11.4% 53/59 9.0% 37/51 9.6% 35/47 10.3% 9/11
Lipper VIP
Flex Avg(2) 13.1 15.8 10.1 10.6 11.5
S&P 500 20.2 26.1 13.3 12.1 14.7
Lehman Aggregate
Index 11.4 12.6 7.5 9.4 10.0
</TABLE>
Inception date: 5/1/83
-------------------------------------------------------------------------------
VALUE OF $10,000 INVESTED IN AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO VS. S&P
500, LEHMAN AGGREGATE INDEX AND LIPPER VIP FLEX AVERAGE OVER TEN YEARS(1)
$40,000
35,000 - - - S&P 500 $39,255
----- Lipper VIP Flex Avg $29,656
30,000 ----- LB Aggregate Index $25,962
===== Aggressively Mgd Flex Portfolio $29,765
25,000
20,000
15,000
10,000
85 86 87 88 89 90 91 92 93 94
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS THROUGH JUNE 30, 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Six Rank One Rank Three Rank Five Rank Ten Rank
Month Year Years Years Year
Aggressively Mgd
Flex Port 12.2% 40/62 14.9% 35/59 11.4% 11/51 11.1% 11/47 11.5% 6/11
Lipper VIP
Flex Avg(2) 13.1 15.8 10.1 10.6 11.5
S&P 500 20.2 26.1 13.3 12.1 14.7
Lehman Aggregate
Index 11.4 12.6 7.5 9.4 10.0
</TABLE>
Inception date: 5/1/83
1 Past performance is not predictive of future performance. Portfolio
performance does not reflect Separate Account expenses or other product charges.
2 Lipper provides data on a monthly basis, so for comparative purposes, the
Lipper Average and Index inception returns reflect the fund's first full
calendar month of performance.
The S&P 500 is a capital weighted index, representing the aggregate market value
of the common equity of 500 stocks primarily traded on the New York Stock
Exchange. The S&P 500 is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs and advisory
fees associated with an investment in the Portfolio. The securities that
comprise the S&P 500 may differ substantially from the securities in the
Portfolio. The S&P 500 is not the only index that may be used to characterize
performance of this Portfolio and other indexes may portray different
comparative performance.
The Lehman Aggregate Index (LAI) is comprised of 5,088 government and corporate
bonds. The LAI is an unmanaged index and includes the reinvestment of all
dividends, but does not reflect the payment of transaction costs and advisory
fees associated with an investment in the Portfolio. The securities that
comprise the LAI may differ substantially from the securities in the Portfolio.
The LAI is not the only index that may be used to characterize performance of
income funds and other indices may portray different comparative performance.
The Lipper Variable Insurance Products (VIP) Flex Average is calculated by
Lipper Analytical Services, Inc. and reflects the investment return of
portfolios underlying variable life and insurance products. These returns are
net of investment fees and fund expenses but not product charges.
PORTFOLIO MANAGER
MARK STUMPP
THE CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO rose 9.8% in the six months ended
June 30, ranking 54 out of 62 variable life/annuity flexible portfolios.
(Source: Lipper Analytical Services, Inc.)
The Conservatively Managed Flexible Portfolio invests in a mix of stocks, bonds
and money market securities. As of June 30, it held 41% of assets in large
company stocks, 33% in bonds and 26% in cash. It generally holds more cash and
fewer stocks than its aggressive counterpart.
Portfolio Manager Mark Stumpp is reluctantly bullish on the stock market:
bullish because interest rates have fallen this year, but reluctant because
stock prices have already risen steadily. He believes that stock prices can
continue to rise as long as interest rates don't.
The AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO appreciated 12.2% during the six
months ended June 30, ranking 40 out of 62 variable life/annuity flexible
portfolios. (Source: Lipper Analytical Services)
The Portfolio invests in a mix of stocks, bonds and money market securities. On
June 30, it held 56% of assets in large company stocks, 12% in small company
stocks, 28% in bonds and 4% in cash.
The Aggressively Managed Flexible Portfolio generally holds more assets in
stocks, including small company stocks, and less in cash than the Conservatively
Managed Flexible Portfolio.
<PAGE>
INVESTMENT ADVISOR'S OUTLOOK
WE'VE HAD A HIGHLY UNUSUAL RETURN FOR STOCKS IN A SIX-MONTH PERIOD -- THE BEST
IN NINE YEARS. WE THINK IT WILL BE NEARLY IMPOSSIBLE TO REPEAT ANYTIME SOON.
WE'RE EXPECTING RETURNS TO BE IN THE RANGE OF 8-10% A YEAR FROM THE STOCK MARKET
IN THE NEXT FEW YEARS, AND ENCOURAGE YOU TO ADJUST YOUR EXPECTATIONS AS WELL.
WE ARE STICKING WITH OUR BIAS TOWARD BONDS FOR THE REMAINDER OF THE YEAR. WE
THINK THEY OFFER THE BEST COMBINATION OF RISK AND REWARD RIGHT NOW. WE'RE NOT
SURE THAT STOCKS WILL CONTINUE TO DO BETTER THAN BONDS -- IN FACT, WE THINK THEY
WILL PROVIDE ROUGHLY THE SAME RETURNS AS BONDS THROUGH THE REST OF THE YEAR.
U.S. BONDS
OUTLOOK
Bond investors like a slowing economy. Why? Slower growth generally leads to
lower inflation because manufacturers find it hard to raise prices when people
have less money to spend. Low inflation makes it easier for interest rates to
fall and lower interest rates mean higher bond prices.
- In Treasury securities, the intermediate and long maturities are our
favorites now, since they would benefit most as interest rates fall.
- Corporate bonds, both investment grade and high yield, should be watched
carefully as the economy slows. Corporate sales and earnings will continue
to do well as long as the economy does not slow too much.
GLOBAL STOCKS
OUTLOOK
While the U.S. stock market has done well so far this year, many of the foreign
markets have lagged far behind. As a result we see opportunity in foreign
stocks.
- We expect economic growth in Europe will be the strongest in the developed
world, which bodes well for corporate profits.
- The Asian emerging markets look particularly appealing to us; their
economies continue to develop at a rapid pace, but stock valuations are
very attractive.
S95-0638
- The outlook for Japan is less promising, but we are finding that the stocks
of many good companies are selling at very cheap prices.
- We continue to avoid Latin America, which continues to recover from the
consequences of the Mexican peso's devaluation in December.
U.S. STOCKS
OUTLOOK
We think the stock market's risk level has gone up, not just because stock
prices are higher now than they were at the beginning of the year, but also
because the economy may be slowing down. Stocks generally don't thrive in a slow
economy, which usually is accompanied by lower corporate earnings.
- We still like financial stocks; these companies will profit as the economy
slows and interest rates fall.
- Electric utilities can benefit from falling interest rates. And a slowdown
in the pace of competition-enhancing regulatory changes continues to help
prices. We believe this is only a short-term phenomenon, however.
- We like consumer cyclical stocks, like retailers and automobile
manufacturers because they have already discounted a recession and are
priced to benefit as the stock market begins to anticipate another pickup
in economic growth later this year or early next year.
CAN WE HELP?
WE HOPE THE FIRST HALF OF THE YEAR HAS BEEN GOOD TO YOU, AND WISH YOU CONTINUED
HAPPY RETURNS FOR THE REST OF 1995.
YOUR PRUDENTIAL/PRUCO SECURITIES REPRESENTATIVE STANDS READY TO DISCUSS THESE
ISSUES AND TO ASSIST YOU IN ANY WAY HE OR SHE CAN. WE BELIEVE THAT YOUR PERSONAL
FINANCIAL REPRESENTATIVE -- THE ONE WHO UNDERSTANDS YOU AND YOUR LONG-TERM
INVESTMENT NEEDS -- IS A VERY VALUABLE RESOURCE GIVEN TODAY'S OFTEN VOLATILE
FINANCIAL MARKETS. WE URGE YOU TO TAKE ADVANTAGE OF YOUR REPRESENTATIVE'S
TRAINING AND EXPERIENCE TO HELP YOU MANAGE YOUR INSURANCE NEEDS IN A MANNER MOST
BENEFICIAL TO YOU AND YOUR FAMILY.
ALL OF US AT THE PRUDENTIAL THANK YOU FOR YOUR BUSINESS AND LOOK FORWARD TO
HELPING YOU PROVIDE FOR YOUR FUTURE FINANCIAL SECURITY.
E. MICHAEL CAULFIELD
PRESIDENT
THE PRUDENTIAL SERIES FUND, INC.
ROBERT P. HILL
CHAIRMAN
THE PRUDENTIAL SERIES FUND, INC.
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$3,516,904,743).......................... $3,734,903,668
Cash....................................... 12,412
Interest and dividends receivable.......... 27,514,725
Receivable for securities sold............. 60,620,257
Receivable for portfolio shares sold....... 42,217
--------------
Total Assets............................. 3,823,093,279
--------------
LIABILITIES
Accrued expenses and other liabilities..... 414,926
Payable for securities purchased........... 101,908,062
Payable to investment adviser.............. 5,170,543
--------------
Total Liabilities........................ 107,493,531
--------------
NET ASSETS................................... $3,715,599,748
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 2,433,899
Paid-in capital, in excess of par........ 3,417,738,513
--------------
3,420,172,412
Undistributed net investment income........ 24,833,383
Accumulated net realized gains............. 52,595,028
Net unrealized appreciation................ 217,998,925
--------------
Net assets, June 30, 1995.................. $3,715,599,748
--------------
--------------
Net asset value per share of 243,389,851
outstanding shares of common stock
(authorized 300,000,000 shares).......... $ 15.2660
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividends (net of $295,694 foreign
withholding tax)......................... $ 11,701,176
Interest................................... 77,685,355
---------------
89,386,531
---------------
EXPENSES
Investment management fee.................. 9,790,665
Shareholders' reports...................... 369,989
Accounting fees............................ 88,010
Custodian expense -- net................... 48,660
Professional fees.......................... 36,660
Miscellaneous expenses..................... 5,325
Directors' expense......................... 1,736
S.E.C. fees................................ (20,409)
---------------
10,320,636
---------------
NET INVESTMENT INCOME........................ 79,065,895
---------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on investments........... 65,206,605
Net unrealized gain on investments......... 192,922,800
---------------
NET GAIN ON INVESTMENTS...................... 258,129,405
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 337,195,300
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 79,065,895 $ 122,670,711
Net realized gain on investments....................................................... 65,206,605 30,751,021
Net unrealized gain (loss) on investments.............................................. 192,922,800 (184,854,002)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ 337,195,300 (31,432,270)
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (51,639,099) (120,740,360)
Net realized gain from investment transactions......................................... 0 (37,214,012)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (51,639,099) (157,954,372)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [2,829,445 and 34,889,459 shares, respectively]..................... 41,722,491 514,344,688
Reinvestment of dividend distributions [3,386,272 and 11,198,868 shares,
respectively]......................................................................... 51,639,099 157,954,372
Capital stock repurchased [(11,219,884) and (5,887,371) shares, respectively].......... (164,422,329) (84,977,146)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. (71,060,739) 587,321,914
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 214,495,462 397,935,272
NET ASSETS:
Beginning of period.................................................................... 3,501,104,286 3,103,169,014
------------------ -------------------
End of period.......................................................................... $ 3,715,599,748 $ 3,501,104,286
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C1 THROUGH C5.
A1
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(UNAUDITED)
June 30, 1995
<S> <C>
ASSETS
Investments, at value (cost:
$3,453,563,650).......................... $3,838,279,662
Cash....................................... 4,998
Interest and dividends receivable.......... 25,228,203
Receivable for securities sold............. 158,965,243
Receivable for portfolio shares sold....... 79,584
--------------
Total Assets............................. 4,022,557,690
--------------
LIABILITIES
Accrued expenses and other liabilities..... 484,965
Payable for securities purchased........... 188,433,210
Payable to investment adviser.............. 5,754,953
--------------
Total Liabilities........................ 194,673,128
--------------
NET ASSETS................................... $3,827,884,562
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 2,225,267
Paid-in capital, in excess of par........ 3,372,809,156
--------------
3,375,034,423
Undistributed net investment income........ 17,240,117
Accumulated net realized gains............. 50,894,010
Net unrealized appreciation................ 384,716,012
--------------
Net assets, June 30, 1995.................. $3,827,884,562
--------------
--------------
Net asset value per share of 222,526,686
outstanding shares of common stock
(authorized 300,000,000 shares).......... $ 17.2019
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(UNAUDITED)
Six Months Ended June 30, 1995
<S> <C>
INVESTMENT INCOME
Dividends (net of $396,229 foreign
withholding tax)......................... $ 23,605,192
Interest................................... 52,031,461
---------------
75,636,653
---------------
EXPENSES
Investment management fee.................. 10,774,708
Shareholders' reports...................... 381,729
Custodian expense -- net................... 103,213
Accounting fees............................ 94,494
Professional fees.......................... 42,424
Miscellaneous expenses..................... 5,294
Directors' expense......................... 1,748
S.E.C. fees................................ (9,458)
---------------
11,394,152
---------------
NET INVESTMENT INCOME........................ 64,242,501
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES
Net realized gain (loss) on investments and
foreign currencies--
Securities transactions.................. 99,609,113
Foreign currency transactions............ (1,080)
Futures contracts........................ 554,055
---------------
Net realized gain on investments and
foreign currencies....................... 100,162,088
---------------
Net unrealized gain on investments and
foreign currencies--
Securities............................... 254,022,132
Foreign currency translations............ 1,637
---------------
Net unrealized gain on investments and
foreign currencies....................... 254,023,769
---------------
NET GAIN ON INVESTMENTS AND FOREIGN
CURRENCIES................................... 354,185,857
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 418,428,358
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 64,242,501 $ 98,878,114
Net realized gain on investments and foreign currency transactions..................... 100,162,088 23,838,273
Net unrealized gain (loss) on investments and foreign currency translations............ 254,023,769 (230,571,359)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ 418,428,358 (107,854,972)
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (39,231,762) (96,126,295)
Net realized gain from investment transactions......................................... 0 (98,311,584)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (39,231,762) (194,437,879)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [2,988,839 and 22,611,559 shares, respectively]..................... 48,651,140 370,947,414
Reinvestment of dividend distributions [2,285,065 and 12,531,550 shares,
respectively]......................................................................... 39,231,762 194,437,879
Capital stock repurchased [(7,420,508) and (4,617,224) shares, respectively]........... (120,735,235) (73,719,278)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. (32,852,333) 491,666,015
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 346,344,263 189,373,164
NET ASSETS:
Beginning of period.................................................................... 3,481,540,299 3,292,167,135
------------------ -------------------
End of period.......................................................................... $ 3,827,884,562 $ 3,481,540,299
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C1 THROUGH C5.
A2
<PAGE>
THE PRUDENTIAL SERIES FUND, INC.
INVESTMENT OBJECTIVES
(Schedule of Investments appear on the following pages)
--------------------------------------------------------------------------------
BALANCED PORTFOLIOS
CONSERVATIVELY A favorable total return through investment in a blend of
MANAGED FLEXIBLE money market instruments, fixed income securities and
common stocks managed towards a lower potential risk of
loss than the Aggressively Managed Flexible Portfolio and
correspondingly lower potential for appreciation.
AGGRESSIVELY MANAGED Higher total return through investment in a blend of money
FLEXIBLE market instruments, fixed income securities and common
stocks managed with a higher degree of risk of loss in
order to attain potentially higher results than the
Conservatively Managed Flexible Portfolio.
--------------------------------------------------------------------------------
B1
<PAGE>
THE PRUDENTIAL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 40.6% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 1.2%
+Coltec Industries, Inc......................... 311,000 $ 5,364,750
GenCorp, Inc.................................... 676,800 7,275,600
Loral Corp...................................... 338,100 17,496,675
Rockwell International Corp..................... 253,100 11,579,325
+UNC, Inc....................................... 289,100 1,553,913
--------------
43,270,263
--------------
AIRLINES -- 0.5%
+AMR Corp....................................... 100,000 7,462,500
+UAL Corp....................................... 28,000 3,927,000
+USAir Group, Inc............................... 675,000 7,846,875
--------------
19,236,375
--------------
AUTOS - CARS & TRUCKS -- 3.0%
A.O. Smith Corp................................. 466,800 10,969,800
Chrysler Corp................................... 500,000 23,937,500
Ford Motor Co................................... 318,300 9,469,425
General Motors Corp............................. 500,000 23,437,500
General Motors Corp. (Class 'E' Stock).......... 243,900 10,609,650
General Motors Corp. (Class 'H' Stock).......... 465,900 18,403,050
Titan Wheel International, Inc.................. 498,900 12,846,675
--------------
109,673,600
--------------
BANKS AND SAVINGS & LOANS -- 2.8%
First Bank System, Inc.......................... 490,900 20,126,900
First Interstate Bancorp........................ 300,000 24,075,000
KeyCorp......................................... 937,400 29,410,925
Norwest Corp.................................... 1,060,200 30,480,750
--------------
104,093,575
--------------
CHEMICALS -- 1.3%
Imperial Chemical Industries, PLC, ADR.......... 371,300 18,100,875
OM Group, Inc................................... 308,400 8,789,400
W.R. Grace & Co................................. 318,800 19,566,350
--------------
46,456,625
--------------
CHEMICALS - SPECIALTY -- 0.8%
Ferro Corp...................................... 655,200 17,362,800
M.A. Hanna Co................................... 489,700 12,732,200
--------------
30,095,000
--------------
COMPUTER SERVICES -- 0.8%
National Data Corp.............................. 620,100 14,339,813
+Paxar Corp..................................... 818,343 14,627,881
--------------
28,967,694
--------------
CONSTRUCTION -- 0.5%
+J. Ray McDermott, SA........................... 500,000 11,062,500
Ply-Gem Industries, Inc......................... 400,000 7,100,000
--------------
18,162,500
--------------
CONTAINERS -- 0.2%
+Sealed Air Corp................................ 145,200 6,388,800
--------------
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
DIVERSIFIED GAS -- 0.1%
+Basin Exploration, Inc......................... 148,000 $ 878,750
Tidewater, Inc.................................. 73,600 1,849,200
Western Gas Resources, Inc...................... 162,100 2,796,225
--------------
5,524,175
--------------
ELECTRICAL EQUIPMENT -- 0.4%
Belden, Inc..................................... 524,300 14,156,100
--------------
ELECTRONICS -- 0.3%
+ADT Ltd........................................ 620,000 7,285,000
+IMO Industries, Inc............................ 596,900 5,372,100
--------------
12,657,100
--------------
FINANCIAL SERVICES -- 1.6%
American Express Co............................. 319,000 11,204,875
Dean Witter, Discover & Co...................... 736,500 34,615,500
Reinsurance Group of America, Inc............... 487,800 13,963,275
--------------
59,783,650
--------------
FOREST PRODUCTS -- 0.8%
Louisiana-Pacific Corp.......................... 395,100 10,371,375
Mead Corp....................................... 350,800 20,828,750
--------------
31,200,125
--------------
FURNITURE -- 0.2%
Leggett & Platt, Inc............................ 190,100 8,364,400
--------------
GAS PIPELINES -- 0.5%
Enron Oil & Gas Co.............................. 332,700 7,236,225
+Global Marine, Inc............................. 615,800 3,540,850
+Seagull Energy Corp............................ 387,200 6,388,800
--------------
17,165,875
--------------
HOSPITAL MANAGEMENT -- 0.7%
Columbia/HCA Healthcare Corp.................... 321,816 13,918,542
+Tenet Healthcare Corp.......................... 825,000 11,859,375
--------------
25,777,917
--------------
HOUSING RELATED -- 0.8%
+Giant Cement Holdings, Inc..................... 415,200 5,086,200
+Owens-Corning Fiberglas Corp................... 662,800 24,440,750
--------------
29,526,950
--------------
INSURANCE -- 2.5%
Emphesys Financial Group, Inc................... 314,600 7,432,425
Equitable of Iowa Companies..................... 372,700 12,252,513
Financial Security Assurance Holdings, Ltd...... 226,200 5,655,000
National Re Corp................................ 207,600 6,954,600
PennCorp Financial Group, Inc................... 638,400 11,810,400
Provident Life & Accident Insurance Co. (Class
'B' Stock).................................... 177,200 4,119,900
TIG Holdings, Inc............................... 588,300 13,530,900
Trenwick Group, Inc............................. 276,200 11,738,500
W.R. Berkley Corp............................... 192,800 6,844,400
Western National Corp........................... 900,000 11,137,500
--------------
91,476,138
--------------
MACHINERY -- 0.8%
Case Corp....................................... 475,300 14,140,175
DT Industries, Inc.............................. 234,500 2,755,375
</TABLE>
B2
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
+INDRESCO, Inc.................................. 390,700 $ 6,055,850
Parker-Hannifin Corp............................ 204,750 7,422,188
--------------
30,373,588
--------------
MEDIA -- 2.2%
Central Newspapers, Inc. (Class 'A' Stock)...... 331,700 9,826,613
Comcast Corp. (Class 'A' Stock)................. 362,500 6,592,969
Comcast Corp. (Special Class 'A' Stock)......... 9,600 178,200
+Cox Communications, Inc. (Class 'A' Stock)..... 246,115 4,768,478
Lee Enterprises, Inc............................ 168,700 6,431,687
Media General, Inc. (Class 'A' Stock)........... 123,600 3,769,800
+Tele-Communications, Inc. (Class 'A' Stock).... 848,200 19,879,687
Time Warner, Inc................................ 599,500 24,654,437
Times Mirror Co. (Class 'A' Stock).............. 280,276 6,691,590
--------------
82,793,461
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 4.3%
American Publishing Co. (Class 'A' Stock)....... 161,400 1,735,050
BW/IP, Inc. (Class 'A' Stock)................... 379,200 7,015,200
Danaher Corp.................................... 455,600 13,781,900
Donaldson Company, Inc.......................... 400,400 10,460,450
+Enterra Corp................................... 380,300 7,986,300
+FMC Corp....................................... 110,800 7,451,300
+IDEX Corp...................................... 285,600 9,567,600
+Itel Corp...................................... 168,700 6,579,300
+Jan Bell Marketing, Inc........................ 1,000,000 2,312,500
+Litton Industries, Inc......................... 259,700 9,576,437
Mark IV Industries, Inc......................... 572,565 12,310,147
Mascotech, Inc.................................. 650,000 8,043,750
Pentair, Inc.................................... 472,950 20,573,325
+SPS Transaction Services, Inc.................. 192,800 6,675,700
Textron, Inc.................................... 96,400 5,603,250
Trinity Industries, Inc......................... 385,500 12,817,875
+Wolverine Tube, Inc............................ 279,500 8,978,938
York International Corp......................... 199,000 8,955,000
--------------
160,424,022
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 1.1%
Eastman Kodak Co................................ 372,300 22,570,688
Whitman Corp.................................... 913,400 17,697,125
--------------
40,267,813
--------------
PETROLEUM -- 1.0%
Amerada Hess Corp............................... 100,000 4,887,500
Cabot Oil & Gas Corp. (Class 'A' Stock)......... 594,400 8,173,000
Elf Aquitaine, ADR.............................. 530,100 19,746,225
Parker & Parsley Petroleum Co................... 257,800 5,059,325
--------------
37,866,050
--------------
PETROLEUM SERVICES -- 2.3%
Baker Hughes, Inc............................... 300,000 6,150,000
+Coflexip, ADR.................................. 361,700 9,178,138
+ENSCO International, Inc....................... 600,000 9,525,000
+Hornbeck Offshore Services, Inc................ 208,000 3,276,000
+ICO, Inc....................................... 500,000 2,875,000
+Marine Drilling Co., Inc....................... 309,800 1,219,837
+Mesa, Inc...................................... 1,008,400 4,789,900
Murphy Oil Corp................................. 190,800 7,822,800
Noble Affiliates, Inc........................... 200,000 5,100,000
+Noble Drilling Corp............................ 800,000 5,900,000
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
+Oryx Energy Co................................. 849,400 $ 11,679,250
+Pride Petroleum Services, Inc.................. 360,100 2,700,750
+Rowan Companies, Inc........................... 269,400 2,188,875
+Western Atlas, Inc............................. 300,000 13,312,500
--------------
85,718,050
--------------
RAILROADS -- 0.9%
Burlington Northern, Inc........................ 259,000 16,414,125
Illinois Central Corp........................... 440,000 15,180,000
--------------
31,594,125
--------------
REAL ESTATE DEVELOPMENT -- 0.8%
Zeneca Group, PLC, ADR.......................... 607,200 31,119,000
--------------
RESTAURANTS -- 0.4%
Morrison Restaurants, Inc....................... 350,300 8,407,200
+Shoney's, Inc.................................. 530,100 6,228,675
--------------
14,635,875
--------------
RETAIL -- 2.6%
+Best Products Company, Inc..................... 1,094,500 8,824,406
+Burlington Coat Factory Warehouse.............. 244,600 2,537,725
+Caldor Corp.................................... 454,400 8,122,400
Charming Shoppes, Inc........................... 2,000,000 10,500,000
Dillard Department Stores, Inc. (Class 'A'
Stock)........................................ 500,000 14,687,500
+Filene's Basement Corp......................... 160,000 560,000
K mart Corp..................................... 1,058,700 15,483,487
Rite Aid Corp................................... 258,200 6,616,375
Sears, Roebuck & Co............................. 139,800 8,370,525
TJX Companies, Inc.............................. 914,900 12,122,425
Woolworth Corp.................................. 600,000 9,075,000
--------------
96,899,843
--------------
RUBBER -- 0.3%
Goodyear Tire & Rubber Co....................... 269,800 11,129,250
--------------
STEEL -- 1.9%
+Bethlehem Steel Corp........................... 1,000,000 16,250,000
+LTV Corp....................................... 1,500,000 21,937,500
+Material Sciences Corp......................... 675,000 13,753,125
+National Steel Corp. (Class 'B' Stock)......... 300,000 4,650,000
USX-U.S. Steel Group............................ 450,000 15,468,750
--------------
72,059,375
--------------
TELECOMMUNICATIONS -- 1.6%
+Airtouch Communications, Inc................... 385,500 10,986,750
Century Telephone Enterprises, Inc.............. 337,300 9,570,887
Frontier Corp................................... 797,700 19,144,800
MCI Communications Corp......................... 661,100 14,544,200
+Nextel Communications, Inc. (Class 'A'
Stock)........................................ 495,400 6,997,525
--------------
61,244,162
--------------
TEXTILES -- 1.4%
+Farah, Inc..................................... 258,500 1,680,250
+Fieldcrest Cannon, Inc......................... 460,000 9,947,500
+Fruit of the Loom, Inc. (Class 'A' Stock)...... 500,000 10,562,500
+Owens-Illinois, Inc............................ 552,700 7,185,100
Phillips-Van Heusen Corp........................ 600,000 9,300,000
+Tultex Corp.................................... 579,000 3,256,875
V.F. Corp....................................... 154,600 8,309,750
--------------
50,241,975
--------------
TOTAL COMMON STOCKS
(Cost $1,308,041,989).......................................... 1,508,343,451
--------------
</TABLE>
B3
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
PREFERRED STOCKS -- 0.1% SHARES VALUE
------------- --------------
<S> <C> <C>
MEDIA
Times Mirror Co. (Cum. Conv.), Series B......... 119,724 $ 2,858,410
--------------
(Cost $2,807,626)
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 31.8% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 6.7%
Associates Corp. of North America,
6.875%, 01/15/97.............................. $ 5,250,000 $ 5,294,940
8.375%, 01/15/98.............................. 1,100,000 1,149,687
Banc One Credit Card Master Trust,
7.750%, 12/15/99, Series 1994-B, Class B...... 5,100,000 5,232,243
Capital One Bank, M.T.N.,
6.740%, 05/31/99, Tranche #TR00038............ 33,500,000 33,433,000
8.125%, 02/27/98, Tranche #TR00032............ 6,500,000 6,683,300
Chrysler Financial Corp., M.T.N.,
5.390%, 08/27/96, Tranche #TR00041............ 7,300,000 7,234,081
CIGNA Mortgage Securities, Inc.,
9.400%, 01/15/02, Series 1988-1, Class A2..... 2,698,315 2,761,979
Citicorp, M.T.N.,
8.500%, 02/24/97, Tranche #TR00128............ 5,100,000 5,285,078
Discover Card Trust,
7.875%, 04/16/98, Series 1991-C, Class B...... 10,000,000 10,106,200
Federal Express Corp., M.T.N.,
10.010%, 06/01/98, Tranche #SR00067........... 3,000,000 3,244,110
10.050%, 06/15/99, Tranche #SR00068........... 500,000 552,165
%Finova Capital Corp.,
6.500%, 03/06/98.............................. 13,000,000 12,980,500
First Union Corp.,
9.450%, 06/15/99.............................. 4,000,000 4,357,560
%Ford Motor Credit Co., M.T.N.,
6.438%, 02/01/99, Tranche #TR00137............ 35,000,000 34,911,450
General Motors Acceptance Corp.,
8.250%, 08/01/96.............................. 5,000,000 5,097,400
General Motors Acceptance Corp., M.T.N.,
6.300%, 09/10/97, Tranche #TR00532............ 5,000,000 4,991,200
6.500%, 06/10/96.............................. 13,000,000 13,051,480
7.375%, 07/20/98, Tranche #TR00667............ 4,650,000 4,755,090
7.500%, 11/04/97, Tranche #TR00598............ 15,000,000 15,346,950
7.850%, 03/05/97, Tranche #TR00187............ 3,300,000 3,380,982
**Liberty Mutual Insurance Co.,
8.500%, 05/15/25.............................. 4,125,000 4,210,264
**Manufacturers Life Insurance Co.,
7.875%, 04/15/05.............................. 10,000,000 10,336,250
Mellon Financial Co.,
6.500%, 12/01/97.............................. 1,650,000 1,657,178
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
%OKOBank,
7.938%, 09/27/49.............................. $ 12,500,000 $ 12,531,250
**Pacific Mutual Life Insurance,
7.900%, 12/30/23.............................. 4,250,000 4,086,843
**Principal Mutual Life Insurance,
7.875%, 03/01/24.............................. 2,500,000 2,391,675
8.000%, 03/01/44.............................. 5,000,000 4,672,000
Santander Financial Issuances, Ltd.,
7.875%, 04/15/05.............................. 6,750,000 7,091,010
Standard Credit Card Master Trust,
5.950%, 10/07/04. Series 1993-2A.............. 4,650,000 4,421,825
Union Bank of Finland, Ltd.,
5.250%, 06/15/96.............................. 16,650,000 16,432,717
Westinghouse Credit Corp., M.T.N.,
8.750%, 06/03/96, Tranche #TR00248............ 2,600,000 2,645,812
--------------
250,326,219
--------------
FOREIGN -- 4.3%
**Banco de Commercio Exterior, SA, M.T.N.,
8.625%, 06/02/00.............................. 5,500,000 5,555,000
Banco Ganadero, SA, M.T.N.,
9.750%, 08/26/99.............................. 2,300,000 2,297,125
**9.750%, 08/26/99, Tranche #TR00001.......... 5,000,000 4,993,750
**%Cemex, SA,
6.250%, 10/25/95, Series B.................... 4,250,000 4,212,813
**Cemex, SA, M.T.N.,
9.500%, 09/20/01, Tranche #TR00010............ 12,500,000 9,609,375
**Compania Sud Americana de Vapores, SA,
7.375%, 12/08/03.............................. 10,000,000 9,300,000
Controladora Commercial Mexicana, SA,
8.750%, 04/21/98.............................. 5,190,000 3,944,400
Empresa Columbia de Petroleos,
7.250%, 07/08/98.............................. 8,250,000 8,043,750
Financiera Energetic Nacional, SA,
6.625%, 12/13/96.............................. 5,000,000 4,962,500
**Financiera Energetic Nacional, SA, M.T.N.,
9.000%, 11/08/99.............................. 7,500,000 7,687,500
Fomento Economico Mexicano, SA,
9.500%, 07/22/97.............................. 5,150,000 4,673,625
**Grupo Condumex, SA, M.T.N.,
6.250%, 07/27/96.............................. 4,300,000 3,913,000
Grupo Embotellador Mexicana,
10.750%, 11/19/97............................. 8,015,000 7,494,025
Grupo Televisa, SA,
10.000%, 11/09/97............................. 7,250,000 6,778,750
**%Kansallis-Osake Pankki, N.Y.,
8.650%, 12/29/49.............................. 10,000,000 10,475,000
Kansallis-Osake Pankki, N.Y., C.D.,
6.125%, 05/15/98.............................. 6,160,000 6,144,600
Kansallis-Osake-Pankki, N.Y.,
9.750%, 12/15/98.............................. 16,950,000 18,493,805
Quebec, Province of Canada,
7.500%, 07/15/23.............................. 3,750,000 3,631,463
Republic of Columbia,
7.125%, 05/11/98.............................. 2,775,000 2,768,063
7.250%, 02/23/04.............................. 5,400,000 4,995,000
8.750%, 10/06/99.............................. 4,825,000 4,993,875
</TABLE>
B4
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Republic of Italy,
6.875%, 09/27/23.............................. $ 16,250,000 $ 14,424,150
**Republic of Trinidad and Tobago,
11.750%, 10/03/04............................. 3,750,000 3,975,000
United Mexican States,
5.820%, 06/28/01.............................. 1,375,000 893,750
6.970%, 08/12/00.............................. 2,300,000 1,679,000
8.500%, 09/15/02.............................. 6,850,000 5,171,750
--------------
161,111,069
--------------
INDUSTRIAL -- 9.8%
AMR Corp.,
9.880%, 06/15/20.............................. 9,565,000 10,939,776
Arkla, Inc., M.T.N.,
9.250%, 12/18/97, Tranche #TR00027............ 3,000,000 3,119,730
Auburn Hills Trust,
12.000%, 05/01/20............................. 11,550,000 16,897,072
Blockbuster Entertainment Corp.,
6.625%, 02/15/98.............................. 3,625,000 3,601,764
Boeing Co.,
8.625%, 11/15/31.............................. 3,625,000 4,172,266
8.750%, 09/15/31.............................. 7,500,000 8,748,300
Canadian Pacific Forest Products Ltd., M.T.N.,
9.250%, 06/15/02.............................. 10,500,000 10,975,860
Centex Corp.,
7.375%, 06/01/05.............................. 7,875,000 7,747,661
Coca-Cola Enterprises, Inc.,
6.500%, 11/15/97.............................. 3,750,000 3,778,163
Columbia/HCA Healthcare Corp.,
6.910%, 06/15/05.............................. 9,300,000 9,182,727
Delta Air Lines, Inc.,
9.250%, 03/15/22.............................. 7,300,000 7,776,471
9.750%, 05/15/21.............................. 10,000,000 11,148,600
Fleming Companies, Inc.,
10.625%, 12/15/01............................. 3,750,000 3,946,875
Hanson Overseas Corp.,
5.500%, 01/15/96.............................. 2,000,000 1,993,980
Hertz Corp.,
9.500%, 05/15/98.............................. 10,000,000 10,777,200
K mart Corp., M.T.N.,
7.770%, 07/02/02, Tranche #TR00044............ 3,000,000 3,128,550
8.190%, 11/24/03, Tranche #TR00019............ 2,500,000 2,667,850
Magma Copper Co.,
8.700%, 05/15/05.............................. 15,000,000 14,925,000
Nabisco, Inc.,
7.550%, 06/15/15.............................. 6,150,000 6,106,089
News America Holdings, Inc.,
7.450%, 06/01/00.............................. 3,500,000 3,568,215
7.500%, 03/01/00.............................. 6,500,000 6,655,350
8.625%, 02/01/03.............................. 7,250,000 7,819,270
9.125%, 10/15/99.............................. 12,500,000 13,558,124
Oryx Energy Co., M.T.N.,
6.050%, 02/01/96, Tranche #TR00013............ 12,000,000 11,924,400
PT Alatief Freeport Financial Co.,
9.750%, 04/15/01.............................. 8,950,000 9,196,125
RJR Nabisco, Inc.,
6.700%, 06/15/02.............................. 2,500,000 2,473,975
7.625%, 09/15/03.............................. 3,000,000 2,895,270
8.625%, 12/01/02.............................. 6,250,000 6,420,250
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Rogers Cablesystems Ltd.,
10.000%, 03/15/05............................. $ 5,375,000 $ 5,522,813
Royal Caribbean Cruises, Ltd.,
8.250%, 04/01/05.............................. 5,475,000 5,768,077
Sears, Roebuck & Co., M.T.N.,
9.420%, 04/01/96, Series IV................... 1,000,000 1,050,533
Sears, Roebuck Acceptance Corp.,
9.000%, 09/15/96.............................. 2,000,000 2,062,280
Service Corp. International,
7.000%, 06/01/15.............................. 2,500,000 2,536,600
Tele-Communications, Inc.,
9.250%, 04/15/02.............................. 10,784,000 11,693,091
Time Warner Entertainment Co., L.P.,
9.625%, 05/01/02.............................. 6,640,000 7,441,249
Time Warner, Inc.,
**6.050%, 07/01/95............................ 8,000,000 8,000,000
7.750%, 06/15/05.............................. 12,500,000 12,409,375
United Air Lines, Inc.,
9.750%, 08/15/21.............................. 7,500,000 8,093,175
10.670%, 05/01/04............................. 19,250,000 22,176,963
11.210%, 05/01/14............................. 2,500,000 3,036,175
USX Corp.,
9.800%, 07/01/01.............................. 13,303,000 14,774,179
Viacom, Inc.,
7.750%, 06/01/05.............................. 50,675,000 51,163,506
Westinghouse Electric Corp., M.T.N.,
8.700%, 06/20/96, Tranche #TR00029............ 2,950,000 3,004,133
--------------
364,877,062
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 10.1%
Federal National Mortgage Association,
9.050%, 04/10/00.............................. 14,000,000 15,614,340
United States Treasury Bonds,
7.500%, 11/15/24.............................. 18,550,000 20,523,906
11.250%, 02/15/15............................. 115,100,000 172,685,680
12.000%, 08/15/13............................. 32,100,000 47,347,500
United States Treasury Notes,
6.000%, 11/30/97.............................. 61,700,000 61,825,251
6.250%, 05/31/00-02/15/03..................... 8,050,000 8,121,561
6.500%, 05/15/05.............................. 6,750,000 6,893,438
7.250%, 11/15/96-02/15/98..................... 31,000,000 31,708,620
7.500%, 11/15/01-02/15/05..................... 7,975,000 8,620,988
--------------
373,341,284
--------------
UTILITIES -- 0.9%
%Texas Utilities Electric Co.,
6.563%, 05/01/99.............................. 35,000,000 35,014,000
--------------
TOTAL LONG-TERM BONDS
(Cost $1,167,022,955).......................................... 1,184,669,634
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 28.0% AMOUNT VALUE
------------- --------------
<S> <C> <C>
BANK-RELATED INSTRUMENTS -- 5.7%
Bank of Montreal, T.D.,
5.990%, 07/05/95.............................. $ 20,000,000 $ 20,000,000
Bank of New York, C.D.,
6.150%, 07/03/95.............................. 3,000,000 3,000,000
6.270%, 10/31/95.............................. 2,000,000 2,000,446
Caisse Nationale de Credit Agricole, C.D.,
6.220%, 11/02/95.............................. 8,000,000 8,000,498
</TABLE>
B5
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Fuji Bank, Ltd., T.D.,
6.000%, 07/10/95.............................. $ 40,000,000 $ 40,000,000
Industrial Bank of Japan, Ltd., T.D.,
6.020%, 07/05/95.............................. 24,000,000 24,000,000
6.125%, 07/05/95.............................. 5,738,000 5,738,000
Mitsubishi Bank, Ltd., C.D.,
6.125%, 07/12/95.............................. 23,000,000 23,000,000
Mitsubishi Bank, Ltd., T.D.,
6.188%, 07/07/95.............................. 25,000,000 25,000,000
National Westminster Bank, PLC, C.D.,
5.850%, 12/26/95.............................. 2,000,000 2,000,000
Norinchukin Bank, C.D.,
6.060%, 07/20/95.............................. 14,000,000 14,000,065
Societe Generale Bank, C.D.,
7.650%, 01/08/96.............................. 3,000,000 3,014,878
Sumitomo Bank, Ltd., C.D.,
6.000%, 07/10/95.............................. 28,000,000 28,000,000
6.060%, 07/05/95.............................. 9,000,000 9,000,020
Sumitomo Bank, Ltd., T.D.,
6.060%, 07/14/95.............................. 6,000,000 6,000,018
--------------
212,753,925
--------------
COMMERCIAL PAPER -- 13.9%
Abbey National North America Corp.,
5.820%, 09/15/95.............................. 8,000,000 7,904,293
American Express Credit Corp.,
5.900%, 10/16/95.............................. 15,000,000 14,741,875
6.180%, 08/21/95.............................. 10,000,000 9,915,883
American General Financial Corp.,
5.850%, 09/18/95.............................. 5,000,000 4,937,438
American Home Food Products, Inc.,
5.970%, 07/11/95-07/28/95..................... 10,000,000 9,972,638
American Home Products Corp.,
5.950%, 07/27/95.............................. 12,143,000 12,094,833
5.980%, 07/27/95.............................. 7,000,000 6,972,093
American Honda Finance Corp.,
5.880%, 09/05/95.............................. 1,000,000 989,547
6.050%, 07/31/95.............................. 5,000,000 4,976,472
Aristar, Inc.,
6.020%, 07/05/95.............................. 3,345,000 3,343,881
Associates Corp. of North America,
5.910%, 08/29/95.............................. 6,000,000 5,943,855
5.960%, 08/02/95.............................. 2,000,000 1,990,067
6.000%, 07/05/95.............................. 26,000,000 25,991,333
AT&T Capital Corp.,
5.830%, 09/08/95.............................. 2,000,000 1,978,299
AT&T Corp.,
5.830%, 09/12/95.............................. 4,000,000 3,954,008
Bank of New York,
5.980%, 07/05/95.............................. 2,000,000 1,999,336
BHF Finance, Inc.,
5.800%, 09/22/95.............................. 7,000,000 6,908,650
Bradford & Bingley Building Society,
5.900%, 09/13/95.............................. 4,000,000 3,952,800
Bridgestone/Firestone, Inc.,
6.350%, 07/05/95.............................. 7,310,000 7,307,421
CIT Group Holdings, Inc.,
5.850%, 09/18/95.............................. 4,000,000 3,949,950
5.900%, 09/11/95.............................. 12,000,000 11,862,333
6.000%, 07/05/95.............................. 3,500,000 3,498,833
Coca Cola Enterprises, Inc.,
6.000%, 07/07/95-11/03/95..................... 3,610,000 3,567,927
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Commerzbank U.S. Finance, Inc.,
5.850%, 09/21/95.............................. $ 4,300,000 $ 4,244,100
Countrywide Funding Corp.,
6.020%, 07/28/95.............................. 14,000,000 13,941,472
Dean Witter, Discover & Company,
5.970%, 07/05/95.............................. 7,000,000 6,997,678
Duracell, Inc.,
5.980%, 08/11/95.............................. 2,000,000 1,987,043
Falcon Asset Securitization Corp.,
5.930%, 08/23/95.............................. 2,354,000 2,334,224
Finova Capital Corp.,
5.980%, 08/03/95.............................. 7,000,000 6,963,954
6.000%, 08/21/95.............................. 4,451,000 4,414,650
6.020%, 08/11/95.............................. 5,000,000 4,967,392
6.030%, 07/31/95.............................. 2,000,000 1,990,620
6.050%, 07/27/95-08/07/95..................... 5,000,000 4,976,136
Ford Motor Credit Co.,
5.950%, 07/14/95.............................. 27,900,000 27,849,276
6.070%, 01/05/96.............................. 14,300,000 13,851,528
6.200%, 09/12/95.............................. 6,000,000 5,926,633
General Electric Capital Corp.,
6.050%, 10/17/95-10/18/95..................... 12,000,000 11,785,225
6.530%, 10/30/95.............................. 14,000,000 13,697,806
General Motors Acceptance Corp.,
6.150%, 07/12/95-07/13/95..................... 53,339,000 53,255,542
GTE Finance Corp.,
5.980%, 08/11/95.............................. 2,000,000 1,987,043
Hanson Finance, PLC,
5.830%, 09/20/95-09/22/95..................... 5,000,000 4,935,060
5.900%, 09/21/95.............................. 10,000,000 9,868,889
Household Finance Corp.,
5.820%, 09/26/95.............................. 5,000,000 4,931,292
ITT Hartford Group, Inc.,
5.960%, 07/14/95.............................. 7,000,000 6,987,252
6.000%, 07/27/95.............................. 9,000,000 8,964,000
Maguire/Thomas Partners,
6.000%, 07/17/95.............................. 2,000,000 1,995,333
McKenna Triangle National Corp.,
5.900%, 07/27/95.............................. 2,000,000 1,992,133
5.980%, 07/27/95.............................. 8,000,000 7,968,107
Merrill Lynch & Co., Inc.,
5.970%, 07/11/95.............................. 11,000,000 10,985,407
Morgan Stanley Group, Inc.,
5.850%, 10/02/95.............................. 10,000,000 9,852,125
Norwest Financial, Inc.,
6.000%, 07/05/95.............................. 4,000,000 3,998,667
Orix America, Inc.,
6.000%, 07/17/95.............................. 3,000,000 2,993,000
Paribas Finance, Inc.,
6.000%, 08/01/95.............................. 4,000,000 3,980,667
Pennsylvania Power & Light Co.,
5.950%, 07/17/95.............................. 2,333,000 2,327,602
Philip Morris Capital Corp.,
5.900%, 08/18/95.............................. 3,000,000 2,977,383
Philip Morris Companies, Inc.,
6.020%, 07/13/95.............................. 10,000,000 9,983,279
PNC Funding Corp.,
5.960%, 08/18/95.............................. 6,000,000 5,954,307
Preferred Receivables Funding Corp.,
5.850%, 09/20/95.............................. 2,850,000 2,813,413
Sears Roebuck Acceptance Corp.,
5.980%, 07/11/95.............................. 6,000,000 5,992,027
</TABLE>
B6
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Sherwood Medical Co.,
5.950%, 07/27/95.............................. $ 19,000,000 $ 18,924,633
5.970%, 07/21/95.............................. 5,000,000 4,985,075
Sumitomo Corp. of America,
6.020%, 07/31/95.............................. 13,955,000 13,889,660
U.S. West Communications, Inc.,
5.850%, 08/30/95.............................. 5,000,000 4,952,875
WCP Funding, Inc.,
5.950%, 08/15/95.............................. 3,000,000 2,978,679
Whirlpool Corp.,
5.970%, 07/10/95.............................. 11,000,000 10,987,231
Whirlpool Financial Corp.,
6.000%, 07/31/95.............................. 4,900,000 4,877,134
Xerox Credit Corp.,
5.820%, 09/14/95.............................. 4,000,000 3,952,793
--------------
514,972,110
--------------
LOAN PARTICIPATIONS -- 0.1%
Morgan Stanley Group, Inc.,
6.080%, 07/07/95.............................. 3,373,000 3,373,000
--------------
TERM NOTES -- 6.5%
Abbey National Treasury Services, PLC,
6.400%, 05/17/96.............................. 16,000,000 16,000,000
%American Express Centurion Bank,
4.500%, 08/04/95, Tranche #TR00037............ 4,000,000 3,999,965
Associates Corp. of North America,
8.800%, 03/01/96.............................. 2,000,000 2,029,359
Atlantic Richfield Co.,
10.375%, 07/15/95............................. 2,000,000 2,002,414
Bank One Indianapolis N.A.,
7.180%, 02/05/96, Tranche #TR00002............ 6,000,000 6,013,961
Bank One Milwaukee N.A.,
5.980%, 07/31/95, Tranche #TR00010............ 47,000,000 46,999,892
%Corestates Capital Corp.,
6.020%, 07/19/95, Tranche #TR00076............ 10,000,000 10,000,169
Exxon Capital Corp.,
7.875%, 04/15/96.............................. 5,500,000 5,574,623
Ford Motor Credit Co.,
9.850%, 02/27/96, Tranche #TR00018............ 5,000,000 5,103,674
%General Electric Capital Corp.,
6.000%, 09/28/95, Tranche #TR00291............ 11,550,000 11,550,500
Huntington National Bank,
6.200%, 11/03/95.............................. 5,000,000 5,001,388
Mellon Bank N.A.,
6.200%, 11/01/95, Tranche #TR00005............ 4,000,000 3,999,739
NationsBank of Texas N.A.,
6.820%, 10/31/95, Tranche #TR00048............ 3,000,000 3,001,492
7.000%, 02/06/96, Tranche #TR00050............ 40,000,000 40,013,733
7.300%, 01/26/96, Tranche #TR00043............ 4,000,000 4,009,420
7.550%, 01/09/96, Tranche #TR00037............ 8,500,000 8,535,040
Northern Trust Company,
6.600%, 11/17/95, Tranche #TR00023............ 25,000,000 25,029,138
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
PepsiCo, Inc.,
15.000%, 11/08/95, Tranche #TR00057........... $ 5,000,000 $ 5,148,491
%Salomon, Inc.,
6.975%, 02/14/96.............................. 25,000,000 25,000,000
State Street Bank & Trust Co.,
6.010%, 09/20/95, Tranche #TR00419............ 3,000,000 2,999,943
USX Corp.,
7.063%, 02/15/96.............................. 7,500,000 7,513,512
--------------
239,526,453
--------------
PROMISSORY NOTES -- 1.3%
%General Electric Capital Corp.,
5.969%, 10/23/95.............................. 15,000,000 15,000,000
%Lehman Brothers Holdings, Inc.,
6.263%, 11/20/95.............................. 26,000,000 26,000,000
Paribas Finance, Inc.,
5.840%, 09/28/95.............................. 3,000,000 2,957,660
5.940%, 07/26/95.............................. 5,000,000 4,981,025
--------------
48,938,685
--------------
REPURCHASE AGREEMENTS -- 0.5%
Joint Repurchase Agreement Account,
6.102%, 07/03/95 (see Note 4)................. 19,468,000 19,468,000
--------------
TOTAL SHORT-TERM INVESTMENTS..................................... 1,039,032,173
--------------
LIABILITIES -- (0.5%)
(net of other assets).......................................... (19,303,920)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $3,715,599,748
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
C.D. Certificates of Deposit
L.P. Limited Partnership
M.T.N. Medium Term Note
PLC Public Limited Company (British Corporation)
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
T.D. Time Deposit
**Indicates a restricted security; the aggregate cost of the restricted
securities is $94,969,153. The aggregate value, $93,418,470 is
approximately 2.5% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending June 30,
1995.
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C1 THROUGH C5.
B7
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 65.7% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 1.3%
Boeing Co....................................... 382,600 $ 23,960,325
+Coltec Industries, Inc......................... 550,400 9,494,400
United Technologies Corp........................ 190,900 14,914,063
--------------
48,368,788
--------------
AUTOS - CARS & TRUCKS -- 2.0%
Chrysler Corp................................... 429,200 20,547,950
General Motors Corp............................. 550,000 25,781,250
General Motors Corp. (Class 'E' Stock).......... 702,700 30,567,450
--------------
76,896,650
--------------
BANKS AND SAVINGS & LOANS -- 4.1%
Bank of New York Company, Inc................... 1,549,400 62,557,025
J.P. Morgan & Co., Inc.......................... 556,800 39,045,600
NationsBank Corp................................ 520,000 27,885,000
Norwest Corp.................................... 997,800 28,686,750
--------------
158,174,375
--------------
CHEMICALS -- 3.8%
A. Schulman, Inc................................ 390,800 11,235,500
Agrium, Inc..................................... 1,351,700 45,773,623
E.I. Du Pont de Nemours & Co.................... 692,600 47,616,250
Eastman Chemical Co............................. 404,600 24,073,700
+McWhorter Technologies, Inc.................... 243,950 3,659,250
+Mississippi Chemical Corp...................... 278,700 5,574,000
OM Group, Inc................................... 301,700 8,598,450
--------------
146,530,773
--------------
CHEMICALS - SPECIALTY -- 1.1%
+IMC Global, Inc................................ 751,400 40,669,525
--------------
COMMERCIAL SERVICES -- 0.6%
ServiceMaster, L.P.............................. 540,850 14,535,343
Sotheby's Holdings, Inc. (Class 'A' Stock)...... 465,100 6,336,988
--------------
20,872,331
--------------
COMPUTER SERVICES -- 2.2%
+American Management Systems, Inc............... 382,050 9,599,005
Automatic Data Processing, Inc.................. 740,400 46,552,650
First Data Corp................................. 422,500 24,029,688
National Data Corp.............................. 174,700 4,039,938
--------------
84,221,281
--------------
DIVERSIFIED GAS -- 0.4%
+Basin Exploration, Inc......................... 235,400 1,397,688
Cross Timbers Oil Co............................ 810,000 12,858,750
--------------
14,256,438
--------------
DIVERSIFIED OFFICE EQUIPMENT -- 0.7%
International Business Machines Corp............ 290,500 27,887,999
--------------
DRUGS AND HOSPITAL SUPPLIES -- 2.3%
Abbott Laboratories............................. 345,200 13,980,600
American Home Products Corp..................... 400,000 30,950,000
Baxter International, Inc....................... 725,000 26,371,875
Schering-Plough Corp............................ 400,000 17,650,000
--------------
88,952,475
--------------
ELECTRICAL EQUIPMENT -- 0.7%
Baldor Electric Co.............................. 501,640 14,359,445
Belden, Inc..................................... 519,900 14,037,300
--------------
28,396,745
--------------
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
ELECTRONICS -- 3.0%
+ADT Ltd........................................ 1,641,200 $ 19,284,100
Emerson Electric Co............................. 1,093,800 78,206,700
Teleflex, Inc................................... 400,000 17,200,000
--------------
114,690,800
--------------
FINANCIAL SERVICES -- 5.3%
Dean Witter, Discover & Co...................... 1,087,600 51,117,200
Federal Home Loan Mortgage Corp................. 898,500 61,771,875
First USA, Inc.................................. 610,300 27,082,062
Manufactured Home Communities, Inc.............. 717,900 11,037,713
MBNA Corp....................................... 841,100 28,387,125
Morgan Stanley Group, Inc....................... 300,000 24,300,000
--------------
203,695,975
--------------
FOODS -- 1.9%
Archer-Daniels-Midland Co....................... 2,031,140 37,829,983
Pioneer Hi-Bred International, Inc.............. 788,200 33,104,400
--------------
70,934,383
--------------
FOREST PRODUCTS -- 1.5%
Caraustar Industries, Inc....................... 419,500 7,551,000
Willamette Industries, Inc...................... 903,200 50,127,600
--------------
57,678,600
--------------
GAS PIPELINES -- 0.2%
+Seagull Energy Corp............................ 535,400 8,834,099
--------------
HEALTHCARE -- 0.3%
+Sybron International Corp...................... 260,200 10,375,474
--------------
HOSPITAL MANAGEMENT -- 1.9%
+Apria Healthcare Group, Inc.................... 323,600 9,141,700
Columbia/HCA Healthcare Corp.................... 898,362 38,854,157
+Health Care and Retirement Corp................ 590,800 17,280,900
+Tenet Healthcare Corp.......................... 583,600 8,389,250
--------------
73,666,007
--------------
INSURANCE -- 3.5%
American International Group, Inc............... 491,800 56,065,200
Chubb Corp...................................... 309,500 24,798,688
General Re Corp................................. 332,000 44,446,500
NAC Re Corp..................................... 277,400 8,634,075
--------------
133,944,463
--------------
LEISURE -- 3.4%
+Bally Entertainment Corp....................... 1,704,000 20,874,000
Carnival Corp. (Class 'A' Stock)................ 2,000,000 46,750,000
Hasbro, Inc..................................... 433,600 13,766,800
+MGM Grand, Inc................................. 426,700 11,680,913
+Mirage Resorts, Inc............................ 600,400 18,387,250
+Players International, Inc..................... 550,000 11,000,000
Royal Caribbean Cruise, Ltd..................... 411,400 9,050,800
--------------
131,509,763
--------------
MACHINERY -- 0.1%
+Thermo Fibertek, Inc........................... 225,300 4,477,837
--------------
MEDIA -- 2.9%
Comcast Corp. (Class 'A' Stock)................. 710,100 12,914,944
Gannett Co., Inc................................ 364,700 19,784,975
+Heritage Media Corp. (Class 'A' Stock)......... 297,700 8,596,088
Shaw Communications, Inc. (Class 'B' Stock)..... 703,700 4,227,889
</TABLE>
B8
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
+Tele-Communications, Inc. (Class 'A'Stock)..... 1,642,100 $ 38,486,718
+Viacom, Inc. (Class 'B' Stock)................. 533,800 24,754,975
--------------
108,765,589
--------------
MINERAL RESOURCES -- 2.6%
Pittston Services Group......................... 350,000 8,400,000
Potash Corp. of Saskatchewan, Inc............... 1,027,600 57,417,150
+Sante Fe Pacific Gold Corp..................... 974,000 11,809,750
Vigoro Corp..................................... 483,100 20,048,650
--------------
97,675,550
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 6.6%
+American Business Information, Inc............. 540,100 14,582,700
Danaher Corp.................................... 226,200 6,842,550
Expeditors International of Washington, Inc..... 254,000 5,715,000
General Electric Co............................. 677,300 38,182,787
Illinois Tool Works, Inc........................ 960,000 52,800,000
Libbey, Inc..................................... 494,000 10,250,500
Martin Marietta Materials, Inc.................. 647,600 12,952,000
Modine Manufacturing Co......................... 316,600 11,635,050
Pentair, Inc.................................... 263,200 11,449,200
+Thermo Electron Corp........................... 865,650 34,842,413
TJ International, Inc........................... 229,800 4,308,750
Trinity Industries, Inc......................... 291,300 9,685,725
Tyco International Ltd.......................... 403,600 21,794,400
York International Corp......................... 400,000 18,000,000
--------------
253,041,075
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.6%
+DeVRY, Inc..................................... 779,200 15,584,000
Kellwood Co..................................... 533,900 9,076,300
--------------
24,660,300
--------------
PETROLEUM -- 2.7%
Exxon Corp...................................... 410,000 28,956,250
Royal Dutch Petroleum Co., ADR.................. 606,300 73,892,813
--------------
102,849,063
--------------
PETROLEUM SERVICES -- 1.2%
Baker Hughes, Inc............................... 581,700 11,924,850
+Mesa, Inc...................................... 537,800 2,554,550
+Oryx Energy Co................................. 575,100 7,907,625
Total SA, ADR................................... 757,500 22,914,375
--------------
45,301,400
--------------
RAILROADS -- 2.2%
Illinois Central Corp........................... 682,000 23,529,000
Kansas City Southern Industries, Inc............ 900,000 33,525,000
Norfolk Southern Corp........................... 420,000 28,297,500
--------------
85,351,500
--------------
REAL ESTATE DEVELOPMENT -- 0.8%
Crescent Real Estate Equities, Inc.............. 492,600 15,701,625
Duke Realty Investments, Inc.................... 444,800 12,565,600
Equity Residential Properties Trust............. 43,300 1,206,988
--------------
29,474,213
--------------
RETAIL -- 1.2%
Harcourt General, Inc........................... 480,500 20,421,250
+Mikasa, Inc.................................... 205,800 3,061,275
+Toys 'R' Us, Inc............................... 775,000 22,668,750
--------------
46,151,275
--------------
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
STEEL -- 0.5%
Broken Hill Proprietary Co., Ltd., ADR.......... 200,000 $ 9,875,000
+Material Sciences Corp......................... 164,300 3,347,613
Worthington Industries, Inc..................... 320,000 6,540,000
--------------
19,762,613
--------------
TELECOMMUNICATIONS -- 1.7%
+Airtouch Communications, Inc................... 641,100 18,271,350
AT&T Corp....................................... 596,200 31,673,125
TCA Cable TV, Inc............................... 494,300 13,346,100
--------------
63,290,575
--------------
TEXTILES -- 0.2%
Unifi, Inc...................................... 272,500 6,539,999
--------------
TOBACCO -- 2.2%
Philip Morris Companies, Inc.................... 438,900 32,643,188
RJR Nabisco Holdings Corp....................... 1,905,000 53,101,875
--------------
85,745,063
--------------
TOTAL COMMON STOCKS
(Cost $2,144,802,833).......................................... 2,513,642,996
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 0.6% SHARES VALUE
------------- --------------
<S> <C> <C>
MEDIA
News Corp., Ltd., ADR........................... 1,140,000 22,800,000
--------------
(Cost $17,330,010)
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 27.9% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 7.0%
Banc One Credit Card Master Trust,
7.750%, 12/15/99, Series 1994-B, Class B...... $ 5,000,000 $ 5,129,650
Capital One Bank, M.T.N.,
6.740%, 05/31/99, Tranche #TR00038............ 33,500,000 33,433,000
8.125%, 02/27/98, Tranche #TR00032............ 6,500,000 6,683,300
Chase Manhattan Credit Card Trust,
7.400%, 05/15/00, Series 1992-1, Class A...... 5,000,000 5,079,650
%Finova Capital Corp.,
6.500%, 03/06/98.............................. 46,500,000 46,430,250
%First USA Bank, M.T.N.,
6.463%, 03/07/97, Tranche #TR00009............ 20,000,000 20,058,400
Ford Motor Credit Co., M.T.N.,
%6.438%, 02/01/99, Tranche #TR00137........... 28,000,000 27,929,160
%6.463%, 06/02/98, Tranche #TR00810........... 14,000,000 14,003,360
%6.525%, 05/26/98, Tranche #TR00803........... 10,000,000 10,005,100
General Motors Acceptance Corp., M.T.N.,
6.500%, 06/10/96.............................. 10,000,000 10,039,600
7.000%, 05/19/97, Tranche #TR00041............ 10,000,000 10,118,200
7.000%, 06/02/97, Tranche #TR00476............ 6,000,000 6,071,220
</TABLE>
B9
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
7.375%, 07/20/98, Tranche #TR00667............ $ 4,500,000 $ 4,601,700
7.850%, 03/05/97.............................. 3,200,000 3,278,528
7.875%, 03/15/00, Tranche #TR00187............ 5,000,000 5,226,500
**Liberty Mutual Insurance Co.,
8.500%, 05/15/25.............................. 4,125,000 4,210,264
**Manufacturers Life Insurance Co.,
7.875%, 04/15/05.............................. 10,000,000 10,336,250
%MBNA Master Credit Card Trust,
5.745%, 01/15/02, Series 1994-A, Class B...... 7,500,000 7,514,025
%OKOBank,
7.938%, 09/27/49.............................. 12,500,000 12,531,250
**Pacific Mutual Life Insurance,
7.900%, 12/30/23.............................. 4,250,000 4,086,842
Principal Mutual Life Insurance,
**7.875%, 03/01/24............................ 2,500,000 2,391,675
**8.000%, 03/01/44............................ 5,000,000 4,672,000
Santander Financial Issuances, Ltd.,
7.875%, 04/15/05.............................. 6,750,000 7,091,010
Standard Credit Card Master Trust,
5.950%, 10/07/04, Series 1993-2A.............. 4,500,000 4,279,185
Westinghouse Credit Corp., M.T.N.,
8.750%, 06/03/96, Tranche #TR00248............ 3,330,000 3,388,675
--------------
268,588,794
--------------
FOREIGN -- 4.3%
**Banco de Commercio Exterior, SA, M.T.N.,
8.625%, 06/02/00, Tranche #TR00001............ 5,500,000 5,555,000
Banco Ganadero, SA, M.T.N.,
9.750%, 08/26/99.............................. 2,300,000 2,297,125
**9.760%, 08/26/99, Tranche #TR00001.......... 5,000,000 4,993,750
**Cemex, SA,
8.875%, 06/10/98.............................. 5,000,000 4,287,500
**Cemex, SA, M.T.N.,
9.500%, 09/20/01, Tranche #TR00010............ 12,500,000 9,609,375
**Compania Sud Americana de Vapores, SA,
7.375%, 12/08/03.............................. 7,250,000 6,742,500
Controladora Commercial Mexicana, SA,
8.750%, 04/21/98.............................. 15,100,000 11,476,000
Empresa Columbia de Petroleos,
7.250%, 07/08/98.............................. 8,250,000 8,043,750
Empresas La Moderna, SA,
10.250%, 11/12/97............................. 2,000,000 1,835,000
Financiera Energetic Nacional, SA,
6.625%, 12/13/96.............................. 5,100,000 5,061,750
**Financiera Energetic Nacional, SA, M.T.N.,
9.000%, 11/08/99.............................. 7,500,000 7,687,500
Fomento Economico Mexicano, SA,
9.500%, 07/22/97.............................. 6,300,000 5,717,250
Grupo Embotellador Mexicana,
10.750%, 11/19/97............................. 8,020,000 7,498,700
Grupo Televisa, SA,
10.000%, 11/09/97............................. 4,000,000 3,740,000
**%Kansallis-Osake Pankki, N.Y.,
8.650%, 12/29/49.............................. 9,000,000 9,427,500
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Kansallis-Osake-Pankki, N.Y.,
9.750%, 12/15/98.............................. $ 16,760,000 $ 18,286,501
New Zealand Government,
9.875%, 01/15/11.............................. 7,300,000 9,251,728
Quebec, Province of Canada,
7.500%, 07/15/23.............................. 3,750,000 3,631,462
Republic of Columbia,
7.125%, 05/11/98.............................. 2,700,000 2,693,250
7.250%, 02/23/04.............................. 4,100,000 3,792,500
8.750%, 10/06/99.............................. 4,800,000 4,968,000
Republic of Italy,
6.875%, 09/27/23.............................. 17,250,000 15,311,790
**Republic of Trinidad and Tobago,
11.750%, 10/03/04............................. 3,650,000 3,869,000
United Mexican States,
5.820%, 06/28/01.............................. 1,375,000 893,750
6.970%, 08/12/00.............................. 2,300,000 1,679,000
8.500%, 09/15/02.............................. 6,925,000 5,228,375
--------------
163,578,056
--------------
INDUSTRIAL -- 10.0%
Auburn Hills Trust,
12.000%, 05/01/20............................. 11,050,000 16,165,598
Blockbuster Entertainment Corp.,
6.625%, 02/15/98.............................. 3,625,000 3,601,764
Boeing Co.,
8.625%, 11/15/31.............................. 3,625,000 4,172,266
8.750%, 09/15/31.............................. 2,500,000 2,916,100
Canadian Pacific Forest Products Ltd., M.T.N.,
9.250%, 06/15/02.............................. 10,600,000 11,080,392
Centex Corp.,
7.375%, 06/01/05.............................. 7,875,000 7,747,661
Columbia/HCA Healthcare Corp.,
6.910%, 06/15/05.............................. 9,250,000 9,133,358
Delta Air Lines, Inc.,
9.250%, 03/15/22.............................. 8,709,000 9,277,436
9.750%, 05/15/21.............................. 34,956,000 38,971,046
9.875%, 01/01/98.............................. 6,000,000 6,370,680
Fleming Companies, Inc.,
10.625%, 12/15/01............................. 24,000,000 25,260,000
K mart Corp., M.T.N.,
7.770%, 07/02/02, Tranche #TR00044............ 3,000,000 3,128,550
8.190%, 11/24/03, Tranche #TR00019............ 2,500,000 2,667,850
Magma Copper Co.,
8.700%, 05/15/05.............................. 15,000,000 14,925,000
Nabisco, Inc.,
6.700%, 06/15/02.............................. 2,500,000 2,473,975
7.550%, 06/15/15.............................. 6,150,000 6,106,089
News America Holdings, Inc.,
7.450%, 06/01/00.............................. 3,500,000 3,568,215
7.500%, 03/01/00.............................. 6,500,000 6,655,350
8.625%, 02/01/03.............................. 7,250,000 7,819,270
9.125%, 10/15/99.............................. 12,500,000 13,558,125
Oryx Energy Co.,
9.300%, 05/01/96.............................. 2,350,000 2,381,490
Oryx Energy Co., M.T.N.,
6.050%, 02/01/96, Tranche #TR00013............ 10,500,000 10,433,850
PT Alatief Freeport Financial Co.,
9.750%, 04/15/01.............................. 7,600,000 7,809,000
</TABLE>
B10
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
RJR Nabisco, Inc.,
7.625%, 09/15/03.............................. $ 3,000,000 $ 2,895,270
8.625%, 12/01/02.............................. 6,250,000 6,420,250
Rogers Cablesystems Ltd.,
10.000%, 03/15/05............................. 5,375,000 5,522,813
Royal Caribbean Cruises, Ltd.,
8.250%, 04/01/05.............................. 5,475,000 5,768,077
Service Corp. International,
7.000%, 06/01/15.............................. 2,500,000 2,536,600
Tele-Communications, Inc.,
9.250%, 04/15/02.............................. 10,775,000 11,683,333
Time Warner Entertainment Co., L.P.,
9.625%, 05/01/02.............................. 6,640,000 7,441,249
Time Warner, Inc.,
7.750%, 06/15/05.............................. 12,500,000 12,409,375
Transco Energy Co.,
9.125%, 05/01/98.............................. 14,000,000 14,895,720
United Air Lines, Inc.,
9.750%, 08/15/21.............................. 7,500,000 8,093,175
10.670%, 05/01/04, Series A................... 19,250,000 22,176,962
11.210%, 05/01/14, Series B................... 2,500,000 3,036,175
USX Corp.,
9.800%, 07/01/01.............................. 13,270,000 14,737,529
Viacom, Inc.,
7.750%, 06/01/05.............................. 50,675,000 51,163,506
--------------
385,003,099
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 5.3%
Federal National Mortgage Association,
Zero Coupon, 10/09/19......................... 11,800,000 2,087,066
Government National Mortgage Association,
8.950%, 10/15/28, Pool #222286................ 4,015,529 4,085,175
United States Treasury Bonds,
7.500%, 11/15/24.............................. 5,000,000 5,532,050
8.875%, 08/15/17.............................. 12,200,000 15,189,000
9.250%, 02/15/16.............................. 16,200,000 20,771,478
11.250%, 02/15/15............................. 80,300,000 120,474,893
United States Treasury Notes,
6.125%, 05/15/98.............................. 20,300,000 20,433,168
6.250%, 02/15/03.............................. 1,250,000 1,253,325
6.500%, 05/15/05.............................. 6,750,000 6,893,438
7.500%, 11/15/01-02/15/05..................... 4,475,000 4,809,802
--------------
201,529,395
--------------
UTILITIES -- 1.3%
%Texas Utilities Electric Co.,
6.563%, 05/01/99.............................. 50,650,000 50,670,260
--------------
TOTAL LONG-TERM BONDS
(Cost $1,058,963,745).......................................... 1,069,369,604
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 6.1% AMOUNT VALUE
------------- --------------
<S> <C> <C>
BANK-RELATED INSTRUMENTS -- 0.8%
Bank of Montreal, T.D.,
5.990%, 07/05/95.............................. $ 5,000,000 $ 5,000,000
Bank of New York, C.D.,
6.150%, 07/03/95.............................. 1,000,000 1,000,000
Caisse Nationale de Credit Agricole, C.D.,
6.220%, 11/02/95.............................. 1,000,000 1,000,062
Fuji Bank, Ltd., T.D.,
6.000%, 07/10/95.............................. 6,000,000 6,000,000
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Industrial Bank of Japan, Ltd., T.D.,
6.020%, 07/05/95.............................. $ 3,000,000 $ 3,000,000
Lloyds Bank, C.D. PLC,
6.750%, 07/11/95.............................. 1,500,000 1,500,093
Mitsubishi Bank, Ltd., C.D.,
6.125%, 07/12/95.............................. 2,000,000 2,000,000
Sanwa Bank, Ltd., C.D.,
5.950%, 07/06/95.............................. 4,000,000 3,999,983
6.020%, 07/03/95.............................. 2,000,000 2,000,000
Sumitomo Bank, Ltd., C.D.,
6.000%, 07/10/95.............................. 2,000,000 2,000,000
Sumitomo Bank, Ltd., T.D.,
6.060%, 07/14/95.............................. 4,000,000 4,000,012
--------------
31,500,150
--------------
COMMERCIAL PAPER -- 1.6%
Abbey National North America Corp.,
5.820%, 09/15/95.............................. 1,000,000 988,037
American Express Credit Corp.,
5.850%, 09/19/95.............................. 3,000,000 2,961,975
American Home Food Products,
5.980%, 07/27/95.............................. 2,178,000 2,169,317
American Home Products Corp.,
5.950%, 07/27/95.............................. 1,357,000 1,351,617
5.970%, 08/10/95.............................. 3,000,000 2,981,095
American Honda Finance Corp.,
6.050%, 07/31/95.............................. 1,000,000 995,294
Aristar, Inc.,
6.020%, 07/05/95.............................. 130,000 129,957
Associates Corp. of North America,
6.000%, 07/05/95.............................. 3,000,000 2,999,000
AT&T Corp.,
5.830%, 09/12/95.............................. 1,000,000 988,502
Bradford & Bingley Building Society,
5.900%, 09/13/95.............................. 1,000,000 988,200
CIT Group Holdings, Inc.,
5.850%, 09/18/95.............................. 1,000,000 987,488
5.900%, 09/11/95.............................. 2,000,000 1,977,056
Commerzbank U.S. Finance, Inc.,
5.850%, 09/21/95.............................. 1,000,000 987,000
Countrywide Funding Corp.,
5.960%, 07/20/95.............................. 1,000,000 997,186
5.980%, 07/19/95.............................. 1,000,000 997,342
6.020%, 07/28/95.............................. 1,000,000 995,819
Dean Witter, Discover & Company,
5.970%, 07/05/95.............................. 1,000,000 999,668
Finova Capital Corp.,
5.980%, 07/31/95.............................. 650,000 646,977
6.020%, 08/11/95.............................. 1,000,000 993,478
6.030%, 08/01/95.............................. 1,000,000 995,143
6.120%, 07/11/95.............................. 700,000 699,048
Ford Motor Credit Co.,
5.950%, 07/14/95.............................. 2,400,000 2,395,637
General Motors Acceptance Corp.,
6.150%, 07/12/95-07/13/95..................... 8,963,000 8,948,824
Hanson Finance, PLC,
5.830%, 09/22/95.............................. 1,000,000 986,883
5.900%, 09/21/95.............................. 1,000,000 986,889
Household Finance Corp.,
5.820%, 09/26/95.............................. 1,000,000 986,258
ITT Hartford Group, Inc.,
5.960%, 07/14/95.............................. 2,000,000 1,996,358
6.000%, 07/27/95.............................. 2,000,000 1,992,000
</TABLE>
B11
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
McKenna Triangle National Corp.,
5.970%, 08/01/95.............................. $ 1,500,000 $ 1,492,786
5.980%, 07/27/95.............................. 1,000,000 996,013
Merrill Lynch & Co., Inc.,
5.970%, 08/03/95.............................. 4,000,000 3,979,437
National Australia Fund,
6.350%, 08/04/95.............................. 1,000,000 994,356
Norwest Financial, Inc.,
6.000%, 07/05/95.............................. 1,000,000 999,667
Orix America, Inc.,
6.000%, 07/17/95.............................. 2,000,000 1,995,333
Philip Morris Capital Corp.,
5.950%, 08/11/95.............................. 1,200,000 1,192,265
PNC Funding Corp.,
5.960%, 08/18/95.............................. 1,000,000 992,384
Sears Roebuck Acceptance Corp.,
5.980%, 07/11/95.............................. 1,000,000 998,671
Sumitomo Corp. of America,
6.020%, 07/31/95.............................. 1,045,000 1,040,107
U.S. West Communications, Inc.,
5.850%, 08/30/95.............................. 1,000,000 990,575
Xerox Credit Corp.,
5.820%, 09/14/95.............................. 1,000,000 988,197
--------------
62,781,839
--------------
TERM NOTES -- 1.7%
Abbey National Treasury Services, PLC,
6.400%, 05/17/96.............................. 2,000,000 2,000,000
Associates Corp. of North America,
%4.500%, 02/15/96............................. 3,200,000 3,156,137
8.800%, 03/01/96.............................. 2,000,000 2,029,359
Bank One Indianapolis N.A.,
7.180%, 02/05/96, Tranche #TR00002............ 1,000,000 1,002,327
Bank One Milwaukee N.A.,
5.980%, 07/31/95, Tranche #TR00010............ 3,000,000 2,999,993
Ford Motor Credit Co.,
%5.150%, 03/15/96, Tranche #TR00690........... 2,000,000 1,981,916
8.250%, 05/15/96.............................. 2,300,000 2,347,561
%General Electric Capital Corp.,
6.000%, 09/28/95.............................. 3,000,000 3,000,130
Huntington National Bank,
6.200%, 11/03/95.............................. 1,000,000 1,000,278
NationsBank of Texas N.A.,
6.820%, 10/31/95.............................. 9,000,000 9,002,438
Northern Trust Company,
6.600%, 11/17/95, Tranche #TR00023............ 2,000,000 2,002,331
%Salomon, Inc.,
Zero Coupon, 02/14/96......................... 25,000,000 25,000,000
USX Corp.,
7.063%, 02/15/96.............................. 7,500,000 7,513,511
--------------
63,035,981
--------------
PROMISSORY NOTES -- 0.3%
%General Electric Capital Corp.,
5.969%, 10/23/95.............................. 5,000,000 5,000,000
%Lehman Brothers Holdings, Inc.,
6.263%, 11/20/95.............................. 4,000,000 4,000,000
</TABLE>
JUNE 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Paribas Finance, Inc.,
5.840%, 09/28/95.............................. $ 1,000,000 $ 985,887
5.940%, 07/26/95.............................. 1,000,000 996,205
--------------
10,982,092
--------------
REPURCHASE AGREEMENTS -- 1.7%
Joint Repurchase Agreement Account,
6.102%, 07/03/95 (see Note 4)................. 64,167,000 64,167,000
--------------
TOTAL SHORT-TERM INVESTMENTS..................................... 232,467,062
--------------
LIABILITIES -- (0.3%)
(net of other assets).......................................... (10,395,100)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $3,827,884,562
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
C.D. Certificates of Deposit
L.P. Limited Partnership
M.T.N. Medium Term Note
PLC Public Limited Company (British Corporation)
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
T.D. Time Deposit
**Indicates a restricted security; the aggregate cost of the restricted
securities is $87,297,121. The aggregate value, $85,367,856 is
approximately 2.2% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending June 30,
1995.
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES C1 THROUGH C5.
B12
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF THE
CONSERVATIVELY MANAGED FLEXIBLE AND AGGRESSIVELY MANAGED FLEXIBLE
PORTFOLIOS OF THE PRUDENTIAL SERIES FUND, INC.
FOR THE PERIODS ENDED JUNE 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
NOTE 1: GENERAL
The Prudential Series Fund, Inc. ("Series Fund"), a Maryland corporation,
organized on November 15, 1982, is a diversified open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Series Fund is composed of sixteen Portfolios, each with a separate series of
capital stock. Shares in the Series Fund are currently sold only to certain
separate accounts of The Prudential Insurance Company of America ("The
Prudential"), Pruco Life Insurance Company and Pruco Life Insurance Company of
New Jersey (together referred to as the "Companies") to fund benefits under
certain variable life insurance and variable annuity contracts issued by the
Companies. The Portfolio options available to PRUvider contract owners are the
Conservatively Managed Flexible and the Aggressively Managed Flexible
Portfolios.
The shareholders of Pruco Life Series Fund, Inc. ("Pruco Fund") and the Series
Fund approved the merger of the Pruco Fund into the Series Fund as of November
1, 1986. The merger combined five portfolios with identical investment
strategies (including the Conservatively Managed Flexible and Aggressively
Managed Flexible Portfolios) of the Pruco Fund with their counterpart in the
Series Fund. The merger was effected by converting the net assets of the Pruco
Fund at the merger date into shares of the Series Fund at the share price of
that day and was accounted for as a pooling of interest.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SECURITIES VALUATION: Equity securities are valued at market. Securities traded
on a national securities exchange are valued at the last sales price on such
exchange as of the close of the New York Stock Exchange or, in the absence of
recorded sales, at the mean between the most recently quoted bid and asked
prices. For any securities not traded on a national securities exchange but
traded in the over-the-counter market, the securities are valued at the mean
between the most recently quoted bid and asked prices, except that securities
for which quotations are furnished through a nationwide automated quotation
system approved by the National Association of Securities Dealers, Inc.
("NASDAQ") are valued at the last sales price or if there was no sale on such
day, at the mean between the most recently quoted bid and asked prices.
Convertible debt securities are valued at the mean between the most recently
quoted bid and asked prices provided by principal market makers. High yield
bonds are valued either by quotes received from principal market makers or by an
independent pricing service which determines prices by analysis of quality,
coupon, maturity and other adjustment factors. Long-term bonds are valued at
market, based on valuation prices by an independent pricing service which
determines prices by analysis of quality, coupon, maturity and other adjustment
factors. Short-term investments are valued at amortized cost, which with accrued
interest approximates market value. Amortized cost is computed using the cost on
the date of purchase adjusted for constant amortization of discount or premium
to maturity. The interest rates shown for Commercial Paper, Promissory Notes,
and certain U.S. Government Agency Obligations on the Schedules of Investments
are the discount rates paid at the time of purchase. Any security for which a
quotation is unavailable is valued at fair value as determined in good faith by
or under the direction of the Series Fund's Board of Directors.
The ability of issuers of debt securities held by specific Portfolios of the
Series Fund to meet their obligations may be affected by economic developments
in a specific country or industry.
Each portfolio, other than the Money Market Portfolio, may invest up to 15% of
its net assets in securities which are subject to legal or contractual
restrictions on resale or for which no readily available market exists
("restricted securities"). The Money Market Portfolio may invest up to 10% of
its net assets in restricted securities. Restricted securities are valued
pursuant to the valuation procedure noted above.
DERIVATIVE FINANCIAL INSTRUMENTS: The Series Fund may engage in various
portfolio strategies to seek increased returns by hedging the portfolios against
adverse movements in the equity, debt, and currency markets. Losses may arise
due to changes in the value of the contract or if the counterparty does not
perform under the contract.
OPTION WRITING: When the Series Fund sells an option, an amount equal to the
premium received is recorded as a liability and is subsequently adjusted to the
current market value of the option written. Premiums received
C1
<PAGE>
from writing options which expire unexercised are treated on the expiration date
as gains from the sale of securities. As to options which are closed, the
difference between the premium and the amount paid on effecting a closing
purchase transaction, including brokerage commissions, is also treated as a
gain, or if the premium received is less than the amount paid for the closing
purchase transaction, as a loss. If a call option is exercised, the premium is
added to the proceeds from the sale in determining whether a gain or loss has
been realized.
The Series Fund's use of written options involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the Series
Fund's involvement in these financial instruments. Risks arise from the possible
movements in foreign exchange rates and securities values underlying these
instruments.
STOCK INDEX FUTURES: Portfolios of the Fund may attempt to reduce the risk of
investment in equity securities by hedging a portion of their equity portfolios
through the use of stock index futures traded on a commodities exchange or board
of trade. A stock index futures contract is an agreement in which the seller of
the contract agrees to deliver to the buyer an amount of cash equal to a
specific dollar amount times the difference between the value of a specific
stock index at the close of the last trading day of the contract and the price
at which the agreement was made. Upon entering into a futures contract, a
Portfolio is required to pledge to the broker liquid assets equal to the minimum
"initial margin," approximately 5% of the contract amount. The Portfolio further
agrees to receive or pay to the broker an amount of cash equal to the futures
contract's daily fluctuation in value. These receipts or payments are known as
the "variation margin" and are recorded as unrealized gains or losses. When a
futures contract is closed, the Portfolio records a realized gain or loss equal
to the difference between the value of the contract at the time it was opened
and the value at the time it was closed.
FOREIGN CURRENCY TRANSACTIONS: The books and records of the Series Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and liabilities at the
mid daily rate of exchange as reported by a major New York City bank;
(ii) purchases and sales of investment securities, income and expenses at the
rate of exchange prevailing on the respective dates of such transactions.
Since the net assets of the Series Fund are presented at the foreign exchange
rates and market values at the close of the fiscal period, it is not practical
to isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the fluctuations arising from change
in the market prices of securities held at the end of the fiscal period.
Similarly, it is not practical to isolate the effect of changes in foreign
exchange rates from the fluctuations arising from changes in the market prices
of equities sold during the fiscal year.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability and
the level of government supervision and regulation of foreign security markets.
The bond components of the Conservatively Managed Flexible and Aggressively
Managed Flexible Portfolios may each invest up to 20% of their assets in United
States currency denominated debt securities issued outside the United States by
foreign or domestic issuers. Further, the Aggressively Managed Flexible
Portfolio may invest up to 30% of its total assets in debt and equity securities
denominated in a foreign currency and issued by foreign or domestic issuers.
Net realized gains and losses on foreign currency transactions represent net
foreign exchange gains and losses from holding of foreign currencies; currency
gains or losses realized between the trade and settlement dates on security
transactions; and the difference between the amounts of the dividends and
foreign taxes recorded on the Series Fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net currency gains and losses from valuing
foreign currency denominated assets and liabilities at fiscal period end
exchange rates are reflected as a component of unrealized loss on foreign
currencies.
FORWARD FOREIGN EXCHANGE CONTRACTS: The Series Fund is authorized to enter into
forward foreign exchange contracts as a hedge against either specific
transactions or portfolio positions. Such contracts are not entered on the
Series Fund's records. However, the effect on operations is recorded from the
date the Series Fund enters into such contracts. Premium or discount is
amortized over the life of the contracts.
C2
<PAGE>
SECURITIES TRANSACTIONS AND INVESTMENT INCOME: Dividend income is recorded on
the ex-dividend date. Interest income is accrued daily on both long-term bonds
and short-term investments. Interest income also includes net amortization from
the purchase of fixed-income securities. Long-term security and option
transactions are recorded on the first business day following the trade date,
except that transactions on the last business day of the reporting cycle are
recorded on that date. Short-term security and futures transactions are recorded
on trade date. Realized gains and losses from security transactions are
determined and accounted for on the basis of identified cost.
DISTRIBUTIONS AND TAXES: The Portfolios of the Series Fund intend to continue
to qualify for and elect the special tax treatment afforded regulated investment
companies under Subchapter M of the Internal Revenue Code, thereby relieving the
Series Fund of Federal income taxes. To so qualify, the Series Fund intends to
distribute substantially all of its net investment income and net realized
capital gains, if any, less any available capital loss carry forward.
EXPENSES: Each Portfolio pays for certain expenses incurred in its individual
operation, and also pays a portion of the Series Fund's general administrative
expenses allocated on the basis of the asset size of the respective Portfolios.
The Series Fund has an arrangement with Chemical Banking Corporation, a
custodian bank. On a daily basis, cash funds which are not invested earn a
credit which is used to offset custody charges on a Portfolio basis. For the six
month period ended June 30, 1995, the total of the credit used was:
<TABLE>
<S> <C>
Conservatively Managed Flexible Portfolio..................... $ 14,487
Aggressively Managed Flexible Portfolio....................... 13,113
</TABLE>
NOTE 3: INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH
AFFILIATES
INVESTMENT MANAGEMENT AND ACCOUNTING FEES: Pursuant to an investment advisory
agreement (the "Agreement"), The Prudential receives an investment management
fee, calculated daily, at an effective annual rate of 0.55% of the average daily
net assets of the Conservatively Managed Flexible Portfolio and 0.60% of the
average daily net assets of the Aggressively Managed Flexible Portfolio. Under
the Agreement, The Prudential has agreed to refund to a portfolio the portion of
the management fee for that Portfolio equal to the amount that the aggregate
annual ordinary operating expenses (excluding interest, taxes and brokerage
commissions) exceeds 0.75% of the Portfolio's average daily net assets.
DIRECTORS' EXPENSES: The Series Fund pays for the fees and expenses of those
members of the Series Fund's Board of Directors who are not officers or
employees of The Prudential or its affiliates.
BROKERAGE COMMISSIONS: For the six month period ended June 30, 1995, Prudential
Securities Inc., an indirect, wholly-owned subsidiary of The Prudential, earned
$484,213 in brokerage commissions from Portfolio transactions executed on behalf
of the Series Fund.
NOTE 4: JOINT REPURCHASE AGREEMENT ACCOUNT
The Portfolios of the Series Fund transfer uninvested cash balances into a
single joint account, the daily aggregate balance of which is invested in one or
more repurchase agreements collateralized by U.S. Government obligations. The
Series Fund's undivided investment in the joint repurchase agreement account
represented, in principal, $635,002,000 as of June 30, 1995. The Portfolios of
the Series Fund with cash invested in the joint account had the following
percentage participation in the account:
<TABLE>
<S> <C>
Conservatively Managed Flexible Portfolio..................... 3.06%
Aggressively Managed Flexible Portfolio....................... 10.11%
All other portfolios (currently not available to PRUvider).... 86.83%
----------
100.00%
</TABLE>
C3
<PAGE>
As of such date, each repurchase agreement in the joint account and the
collateral thereof were as follows:
Bear Stearns Repurchase Agreement, dated 6/30/95, in the principal amount of
$170,000,000, repurchase price $170,086,768, due 7/3/95; collateralized by
$9,945,000 U.S. Treasury Bonds, 12.00%, due 5/15/05; $25,400,000 U.S. Treasury
Bonds, 8.75%, due 5/15/17; $100,000,000 U.S. Treasury Bonds, 8.875%, due
8/15/17.
Morgan Stanley and Company Repurchase Agreement, dated 6/30/95, in the principal
amount of $145,002,000, repurchase price $145,074,870, due 7/3/95;
collateralized by $45,550,000 U.S. Treasury Notes, 5.00%, due 1/31/99;
$79,260,000 U.S. Treasury Notes, 7.375%, due 11/15/97; $18,805,000 U.S. Treasury
Notes, 8.625%, due 8/15/97.
Nomura Securities Repurchase Agreement, dated 6/30/95, in the principal amount
of $150,000,000, repurchase price $150,076,561, due 7/3/95; collateralized by
$143,665,000 U.S. Treasury Notes, 7.75%, due 12/31/99.
Smith Barney Repurchase Agreement, dated 6/30/95, in the principal amount of
$170,000,000, repurchase price $170,086,698, due 7/3/95; collateralized by
$38,530,000 U.S. Treasury Notes, 7.375%, due 11/15/97; $50,000,000 U.S. Treasury
Notes, 6.875%, due 10/31/96; $38,000,000 U.S. Treasury Notes, 9.25%, due
1/15/96; $41,000,000 U.S. Treasury Notes, 9.50%, due 11/15/95.
NOTE 5: PURCHASE AND SALE OF SECURITIES
The aggregate cost of purchase and the proceeds from the sales of securities
(excluding short-term issues) for the six month period ended June 30, 1995 were
as follows:
Cost of Purchases:
<TABLE>
<CAPTION>
CONSERVATIVELY AGGRESSIVELY
MANAGED MANAGED
FLEXIBLE FLEXIBLE
-------------- --------------
<S> <C> <C>
Debt Securities................. $2,114,041,085 $2,320,071,155
Equity Securities............... $ 333,620,116 $1,036,861,353
</TABLE>
Proceeds From Sales:
<TABLE>
<CAPTION>
CONSERVATIVELY AGGRESSIVELY
MANAGED MANAGED
FLEXIBLE FLEXIBLE
-------------- --------------
<S> <C> <C>
Debt Securities................. $1,968,359,775 $2,187,809,579
Equity Securities............... $ 214,856,938 $ 817,036,749
</TABLE>
The federal income tax basis and unrealized appreciation/depreciation of the
Fund's investments as of June 30, 1995 were as follows:
<TABLE>
<CAPTION>
CONSERVATIVELY AGGRESSIVELY
MANAGED MANAGED
FLEXIBLE FLEXIBLE
-------------- --------------
<S> <C> <C>
Gross Unrealized Appreciation... $ 285,816,603 $ 422,435,005
Gross Unrealized Depreciation... (67,817,678 ) (37,718,993 )
Total Net Unrealized............ 217,998,925 384,716,012
Tax Basis....................... 3,516,904,743 3,453,563,650
</TABLE>
C4
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS
The following average per share data, ratios and supplemental information by
Portfolio have been derived from information provided in the financial
statements.
<TABLE>
<CAPTION>
CONSERVATIVELY MANAGED FLEXIBLE
-----------------------------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89
TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at beginning of
period........................ $ 14.095 $ 14.905 $ 14.243 $ 14.318 $ 13.060 $ 13.361 $ 12.295
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income From Investment
Operations:
Net investment income........... 0.324 0.528 0.486 0.558 0.687 0.821 0.891
Net realized and unrealized
gains (losses) on
investments................... 1.062 (0.679) 1.229 0.410 1.738 (0.143) 1.155
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations.................. 1.386 (0.151) 1.715 0.968 2.425 0.678 2.046
----------- ----------- ----------- ----------- ----------- ----------- -----------
Distributions to Shareholders:
Distributions from net
investment income............. (0.215) (0.505) (0.468) (0.533) (0.668) (0.812) (0.887)
Distributions from net realized
gains......................... 0.000 (0.154) (0.585) (0.510) (0.499) (0.167) (0.093)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total distributions......... (0.215) (0.659) (1.053) (1.043) (1.167) (0.979) (0.980)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in Net
Asset Value................... 1.171 (0.810) 0.662 (0.075) 1.258 (0.301) 1.066
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value at end of
period........................ $ 15.266 $ 14.095 $ 14.905 $ 14.243 $ 14.318 $ 13.060 $ 13.361
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Investment Rate of
Return:**..................... 9.84% (0.97%) 12.20 % 6.95 % 19.07 % 5.27 % 16.99%
Ratios/Supplemental Data:
Net assets at end of period (in
millions)..................... $3,715.6 $3,501.1 $3,103.2 $2,114.0 $1,500.0 $1,100.2 $976.0
Ratio of expenses net of
reimbursement to average net
assets........................ 0.29 % 0.61 % 0.60 % 0.62 % 0.63 % 0.65 % 0.64%
Ratio of net investment income
to average net assets......... 2.20 % 3.61 % 3.22 % 3.88 % 4.89 % 6.21 % 6.81%
Portfolio turnover rate......... 93.03 % 125.18 % 79.46 % 62.07 % 115.35 % 44.04 % 153.92%
Number of shares outstanding at
end of period (in millions)... 243.4 248.4 208.2 148.4 104.8 84.2 73.0
<CAPTION>
01/01/88 01/01/87 01/01/86
TO TO TO
12/31/88 12/31/87 12/31/86*
----------- ----------- -----------
<S> <C> <C> <C>
Net Asset Value at beginning of
period........................ $ 11.889 $ 12.571 $ 12.173
----------- ----------- -----------
Income From Investment
Operations:
Net investment income........... 0.773 0.656 0.652
Net realized and unrealized
gains (losses) on
investments................... 0.424 (0.399) 1.046
----------- ----------- -----------
Total from investment
operations.................. 1.197 0.257 1.698
----------- ----------- -----------
Distributions to Shareholders:
Distributions from net
investment income............. (0.791) (0.709) (0.517)
Distributions from net realized
gains......................... 0 (0.230) (0.783)
----------- ----------- -----------
Total distributions......... (0.791) (0.939) (1.300)
----------- ----------- -----------
Net increase (decrease) in Net
Asset Value................... 0.406 (0.682) 0.398
----------- ----------- -----------
Net Asset Value at end of
period........................ $ 12.295 $ 11.889 $ 12.571
----------- ----------- -----------
----------- ----------- -----------
Total Investment Rate of
Return:**..................... 10.19 % 1.54 % 14.17 %
Ratios/Supplemental Data:
Net assets at end of period (in
millions)..................... $815.6 $803.9 $375.4
Ratio of expenses net of
reimbursement to average net
assets........................ 0.65 % 0.66 % 0.64 %
Ratio of net investment income
to average net assets......... 6.22 % 5.05 % 5.10 %
Portfolio turnover rate......... 110.67 % 140.69 % 207.78 %
Number of shares outstanding at
end of period (in millions)... 66.3 67.6 29.9
</TABLE>
<TABLE>
<CAPTION>
AGGRESSIVELY MANAGED FLEXIBLE
-----------------------------------------------------------------------------------------
01/01/95 01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89
TO TO TO TO TO TO TO
06/30/95 12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at beginning of
period........................ $ 15.496 $ 16.957 $ 16.005 $ 16.288 $ 13.996 $ 14.446 $ 13.123
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income From Investment
Operations:
Net investment income........... 0.288 0.473 0.566 0.583 0.650 0.715 0.813
Net realized and unrealized
gains (losses) on
investments................... 1.596 (1.021) 1.882 0.607 2.809 (0.466) 1.989
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations.................. 1.884 (0.548) 2.448 1.190 3.459 0.249 2.802
----------- ----------- ----------- ----------- ----------- ----------- -----------
Distributions to Shareholders:
Distributions from net
investment income............. (0.178) (0.451) (0.567) (0.559) (0.654) (0.699) (0.813)
Distributions from net realized
gains......................... 0.000 (0.462) (0.929) (0.914) (0.513) 0 (0.666)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total distributions......... (0.178) (0.913) (1.496) (1.473) (1.167) (0.699) (1.479)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease) in Net
Asset Value................... 1.706 (1.461) 0.952 (0.283) 2.292 (0.450) 1.323
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Asset Value at end of
period........................ $ 17.202 $ 15.496 $ 16.957 $ 16.005 $ 16.288 $ 13.996 $ 14.446
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Total Investment Rate of
Return:**..................... 12.16% (3.16%) 15.58 % 7.61 % 25.43 % 1.91 % 21.77%
Ratios/Supplemental Data:
Net assets at end of period (in
millions)..................... $3,827.9 $3,481.5 $3,292.2 $2,435.6 $1,990.7 $1,507.8 $1,386.5
Ratio of expenses net of
reimbursement to average net
assets........................ 0.31 % 0.66 % 0.66 % 0.67 % 0.67 % 0.69 % 0.69%
Ratio of net investment income
to average net assets......... 1.77 % 2.90 % 3.30 % 3.63 % 4.23 % 5.13 % 5.66%
Portfolio turnover rate......... 94.46 % 123.63 % 62.99 % 59.03 % 93.13 % 51.87 % 141.04%
Number of shares outstanding at
end of period (in millions)... 222.5 224.7 194.1 152.2 122.2 107.7 96.0
<CAPTION>
01/01/88 01/01/87 01/01/86
TO TO TO
12/31/88 12/31/87 12/31/86*
----------- ----------- -----------
<S> <C> <C> <C>
Net Asset Value at beginning of
period........................ $ 12.326 $ 13.555 $ 12.810
----------- ----------- -----------
Income From Investment
Operations:
Net investment income........... 0.724 0.577 0.611
Net realized and unrealized
gains (losses) on
investments................... 0.840 (0.753) 1.342
----------- ----------- -----------
Total from investment
operations.................. 1.564 (0.176) 1.953
----------- ----------- -----------
Distributions to Shareholders:
Distributions from net
investment income............. (0.767) (0.673) (0.456)
Distributions from net realized
gains......................... 0 (0.380) (0.752)
----------- ----------- -----------
Total distributions......... (0.767) (1.053) (1.208)
----------- ----------- -----------
Net increase (decrease) in Net
Asset Value................... 0.797 (1.229) 0.745
----------- ----------- -----------
Net Asset Value at end of
period........................ $ 13.123 $ 12.326 $ 13.555
----------- ----------- -----------
----------- ----------- -----------
Total Investment Rate of
Return:**..................... 12.83 % (1.83 %) 15.48 %
Ratios/Supplemental Data:
Net assets at end of period (in
millions)..................... $1,103.9 $1,062.4 $593.6
Ratio of expenses net of
reimbursement to average net
assets........................ 0.70 % 0.71 % 0.67 %
Ratio of net investment income
to average net assets......... 5.52 % 4.09 % 4.43 %
Portfolio turnover rate......... 128.45 % 123.83 % 133.76 %
Number of shares outstanding at
end of period (in millions)... 84.1 86.2 43.8
</TABLE>
All calculations are based on average month-end shares outstanding, where
applicable.
*The per share information of the Portfolios of The Prudential Series Fund,
Inc. has not been restated to reflect the operations of the Pruco Life Series
Fund, Inc. prior to the November 1, 1986 merger.
**Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.
C5
<PAGE>
GLOSSARY OF TERMS FOR THE REPORT TO CONTRACT OWNERS
(NOTE: ADDITIONAL EXPLANATIONS WILL BE FOUND IN NOTES TO FINANCIAL STATEMENTS)
ACCUMULATION UNIT -- The measure for determining the Contract owner's share in
the separate account of a deferred variable annuity during the accumulation
period before annuity benefits begin to be paid. Contract owner transactions
such as purchase payments, transfers, and withdrawals result in changes to the
number of accumulation units credited to the Contract owner. Investment results
and daily charges affect the value of the accumulation unit.
ANNUITY UNIT -- The measure of the fixed number of benefit units purchased by
the accumulation units when annuitizing via a variable payout annuity.
AMERICAN DEPOSITORY RECEIPT (ADR) -- A certificate issued by an American bank to
evidence ownership of a block of foreign shares. The certificate can be traded
like a share of stock.
BOND -- A debt security which obligates the issuer to pay interest at specific
intervals and to redeem the bond for a specified amount on the maturity date. A
bond can be categorized based on the time interval between issue date and
maturity date. Short-term bond: 2 years or less; medium-term bond: 2 - 10 years;
long-term bond: 10 years or more.
CERTIFICATE OF DEPOSIT (CD) -- A short-term, interest-bearing bond issued by a
bank or a savings and loan.
COMMERCIAL PAPER -- A short-term, unsecured promissory note issued by either a
corporation or bank.
COMMON STOCK -- The basic unit of ownership of a public corporation which
entitles stockholders to dividend payments, although amount and frequency of
dividends are not guaranteed. (see also Stock)
CONVERTIBLE BOND -- A bond that is exchangeable for another type of security
(usually common stock).
COUPON RATE -- The annual rate of interest the issuer of a bond will pay
bondholders.
DEFAULTED SECURITY -- A bond which fails to make interest payments in a timely
manner.
FUTURES CONTRACT -- A contract calling for the delivery of a specified quantity
of cash, a financial security or a commodity. The contract includes a specific
price and future time at which the exchange may take place.
LOAN PARTICIPATION -- A loan to a corporation which is sold by a bank in the
form of a short-term, unsecured promissory note.
NET ASSETS -- The term used to designate the total value of securities owned,
cash, receivables, and other assets less any liabilities.
MARKET VALUE -- The dollar value of a security on a given day, usually based on
the last sales price of that given day.
OPTION CONTRACT -- A contract giving the investor the right to buy or sell an
underlying security at a fixed price before the expiration date. An option which
grants the investor the right to buy the underlying security is a Call Option; a
Put Option gives the investor the right to sell the underlying security.
PIK BOND/STOCK (PAY IN KIND) -- A security which has the option to pay interest
or dividends in the form of either additional bonds or shares of stock.
PREFERRED STOCK -- A high quality unit of ownership of a public corporation
which entitles the holder to preference over common stock holders in the payment
of dividends. (see also Stock)
PORTFOLIO TURNOVER -- A measure of portfolio trading activity.
REALIZED GAIN/LOSS -- The amount of profit or loss from the sale of securities.
Calculated as the sale price minus the purchase price.
I
<PAGE>
REPURCHASE AGREEMENT -- An agreement where an investor loans cash to a bank in
exchange for a Treasury security held as collateral and interest on the loan.
The agreement indicates that the cash and collateral are exchanged back the
following day. These securities are used to invest idle cash.
RESTRICTED SECURITY -- A security which is sold privately because it is not
registered with the SEC.
RIGHT -- Privilege granted to stockholders of a company to buy shares of a new
issue of common stock (at a price below the public offering price) before it is
offered to the public.
STOCK -- Unit of ownership in a public corporation. The value of a share of
stock varies, according to how buyers and sellers of the stock view the
corporation's future success. Shareholders generally receive dividend payments,
which are their part of the corporation's earnings. (see also Common Stock;
Preferred Stock)
TIME DEPOSIT (TD) -- A non-negotiable short-term, interest bearing bond issued
by a bank or savings & loan. The maturity period can be from 1 day to 6 months.
UNREALIZED GAIN/LOSS -- The increase or decrease in the value of a security,
based on its daily market price and its original purchase price. A gain or loss
is "unrealized" until the sale of the security.
VARIATION MARGIN -- A term used in the daily valuation of futures contracts. It
refers to the difference between the current and previous day's settling price.
WARRANT -- A security which entitles the holder to buy additional shares of
common stock at a specified price (usually higher than the market price at the
time of issuance), over a period of years.
II
<PAGE>
BOARD OF
DIRECTORS THE PRUDENTIAL SERIES FUND, INC.
ROBERT P. HILL W. SCOTT McDONALD, JR., E. MICHAEL CAULFIELD
EXECUTIVE VICE PhD. CEO,
PRESIDENT, EXECUTIVE VICE PRUDENTIAL PREFERRED
THE PRUDENTIAL PRESIDENT, FINANCIAL SERVICES;
INSURANCE FAIRLEIGH DICKINSON PRESIDENT, SERIES FUND
COMPANY OF AMERICA UNIVERSITY
CHAIRMAN OF THE BOARD,
SERIES FUND
SAUL K. FENSTER, PhD. JOSEPH WEBER, PhD.
PRESIDENT, NEW JERSEY VICE PRESIDENT,
INSTITUTE OF TECHNOLOGY INTERCLASS
(INTERNATIONAL
CORPORATE LEARNING)
--------------------------------------------------------------------------------
BOARD OF
DIRECTORS PRUCO LIFE INSURANCE COMPANY
E. MICHAEL CAULFIELD GARNETT L. KEITH, JR. I. EDWARD PRICE
CEO, VICE CHAIRMAN, CEO,
PRUDENTIAL PREFERRED THE PRUDENTIAL PRUDENTIAL
FINANCIAL SERVICES INSURANCE COMPANY OF INTERNATIONAL INSURANCE
ROBERT P. HILL AMERICA
EXECUTIVE VICE IRA J. KLEINMAN
PRESIDENT, PRESIDENT,
THE PRUDENTIAL PRUDENTIAL SELECT
INSURANCE COMPANY OF MARKETING COMPANY
AMERICA ESTHER H. MILNES
CHAIRMAN OF THE BOARD SENIOR VICE PRESIDENT,
OF PRUDENTIAL INSURANCE
PRUCO LIFE AND PRUCO AND
LIFE OF NEW JERSEY FINANCIAL SERVICES;
PRESIDENT, PRUCO LIFE
AND
PRUCO LIFE OF NEW
JERSEY
III
<PAGE>
The toll-free numbers shown below can be used to make transfers and
reallocations. Unit values for each investment option are available to all
contract owners from the 800 number.
However, you must be enrolled to allocate premiums, transfer funds or get the
following information by telephone:
- How your premiums are being allocated
- Current investment option values in your contract.
The phone lines are open each business day during the hours shown.
Please be sure to have your contract number available when you call.
[MAP]
-
1-800-634-7879
8am-4pm Central Time
-
1-800-356-4050
8am-4pm Eastern Time
-
1-800-635-9587
8am-4pm Eastern Time
--------------------------------------------------------------------------------
In the past, contract owners who held several contracts of the same type, at the
same address,
received multiple copies of Annual Reports and Semi-Annual Reports. In an effort
to lessen waste
and to reduce your Fund's expense of postage and printing, we will now mail only
one copy of each
contract owner report for your related contracts at the same address. No action
on your part is
necessary. Upon request, we will furnish you with additional reports. The above
toll-free numbers
should be used to request any additional copies. Proxy material and tax
information will continue to
be sent to each account of record.
This annual report is authorized for use with prospective investors only when
preceded or accompanied by a current
prospectus for The Prudential Series Fund, Inc. and for the applicable variable
life insurance or annuity contract. These
products are available through Pruco Securities Corp., Newark, NJ, a subsidiary
of The Prudential. These prospectuses
contain more information concerning charges and expenses and should be read
carefully before you invest or send money.
<PAGE>
PEACE OF MIND. IT COMES WITH EVERY PIECE OF THE
ROCK.
Since 1875, The Prudential has been helping
individuals and families meet their financial
needs. Changing times mean changing needs. Whether
providing superior insurance protection for home,
family, and business, providing for future
education and retirement expenses, or offering
innovations like our Living Needs
Benefit-Registered Trademark- and Critical Care
Access, Prudential people have always been able to
deliver something more: personal service, quality,
attention to detail, and the financial strength of
The Rock.
If you have questions regarding your contract(s),
please contact your Prudential/Pruco Securities
representative or your local office.
BULK RATE
U.S. Postage
PAID
Jersey City, N.J.
Permit No. 60
[Logo]
Printed in the U.S.A. on recycled
paper using soybean ink
PRUvider SAR 6/95
<PAGE>
Graph 1: (Conservatively Managed Flexible Portfolio)
Graph represents the growth of $10,000 invested in the Conservatively Managed
Flexible Portfolio compared with the S&P 500, Lehman Aggregate Index, and the
Lipper VIP Flexible Average. In the ten years ended 6/30/95, an investment of
$10,000 would have a value of $26,703, $39,255, $25,962, and $29,656
respectively.
Graph 2: (Aggressively Managed Flexible Portfolio)
Graph represents the growth of $10,000 invested in the Aggressively Managed
Flexible Portfolio compared with the S&P 500, Lehman Aggregate Index, and the
Lipper VIP Flexible Average. In the ten years ended 6/30/95, an investment of
$10,000 would have a value of $29,765, $39,255, $25,962, and $29,656
respectively.
