<PAGE>
The PRUDENTIAL [Logo]
Semi-Annual
Report to
Contract
Owners
June 30, 1995
PRUCO LIFE'S
PRUSELECT 1-Service Mark- AND
PRUSELECT II-Service Mark-
[Logo]
The Prudential Series Fund, Inc.
and
Pruco Life Variable Universal 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 Variable Universal 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>
THE PRUDENTIAL SERIES FUND, INC. Year Ended December 31, 1994
DEAR CONTRACT OWNER:
AS A POLICYHOLDER OF THE PRUDENTIAL OR ONE OF ITS SUBSIDIARIES, YOU'VE ENTRUSTED
THE PRUDENTIAL SERIES FUND, INC. WITH YOUR VARIABLE LIFE OR ANNUITY ASSETS. WE
APPRECIATE THE CONFIDENCE YOU HAVE SHOWN IN US.
AS YOU MAY KNOW, DRAMATICALLY RISING INTEREST RATES MADE 1994 A DIFFICULT YEAR
IN THE FINANCIAL MARKETS. FOR THE FIRST TIME IN FOUR YEARS, SHORT-TERM MONEY
MARKET INVESTMENTS EARNED MORE THAN U.S. STOCKS OR BONDS LAST YEAR. IN OUR VIEW,
1995 WON'T BE A YEAR FOR TAKING RISKS, EITHER. BE PREPARED FOR A YEAR OF MODEST
RETURNS.
THAT'S WHY WE'VE WRITTEN THIS REPORT. WE WANT TO REVIEW WITH YOU WHAT HAS
HAPPENED IN THE STOCK AND BOND MARKETS OVER THE LAST YEAR, INCLUDING A
PORTFOLIO-BY-PORTFOLIO DESCRIPTION OF INVESTMENT ACTIVITY. WE CONCLUDE THIS
LETTER WITH OUR OUTLOOK FOR THE FINANCIAL MARKETS IN 1995 -- WE LOOK FOR STABLE
LONG-TERM INTEREST RATES AND RETURNS IN THE STOCK MARKET THAT ARE CLOSER
TO LONG-TERM, HISTORICAL AVERAGES.
U.S. FINANCIAL MARKETS REVIEW
THE BEST OF TIMES. THE WORST OF TIMES.
For the economy, 1994 was the best of times. Employment surged, manufacturing
output rose and consumer confidence was at its highest in years. It was a good
year to look for a job.
INTEREST RATES ROSE
HIGHER AND HIGHER.
For the U.S. stock and bond markets, though, it felt like the worst of times.
The Standard & Poor's 500 Stock Index gained only 1.3% on a total return basis.
The Lehman Brothers Aggregate Bond Index fell 2.9%. The investment of choice was
a short-term money market fund. U.S. Treasury bills topped both stocks and
bonds, earning 3.9%.
What happened? While optimists thought the economy was soaring like a rocket,
the Federal Reserve saw an unguided missile. As commodity prices began to climb
in late 1993 and early 1994, the nation's central bank feared higher inflation.
So the Federal Reserve raised short-term interest rates in 1994: not once, but
six times, from 3% to 5.5%.
Ironically, it was the fear of inflation, not real inflation, that drove the
markets, since actual reported inflation never rose above 3% in 1994. Inflation
not only erodes our purchasing power, it also reduces the value of financial
assets: stock prices sag because corporate costs climb and bond prices fall as
interest rates rise.
Let's look a little closer at the stock and bond markets:
STOCKS: A TUG-OF-WAR.
In the stock market, simultaneously rising corporate earnings and higher
interest rates puzzled investors throughout the year. As corporate earnings
improved, so did the price of stocks. As the Federal Reserve pushed interest
rates higher, though, stock prices declined.
Despite this volatility, your portfolio managers were able to find some
opportunities:
- INDUSTRIAL company stocks benefited from increasing economic activity
around the world. Demand for steel, paper and chemicals surged, and as
their prices rose, so did the stock prices of companies that produced
them.
- TECHNOLOGY stocks performed well as foreign companies tried to catch
up to the U.S.'s prowess in technology.
- FINANCIAL stocks, including banks and insurance companies, fell
because of fears of rising interest rates and did not recover as much
as we had hoped once rates stabilized. Real estate investment trusts
performed well as real estate prices came out of a prolonged
recession.
- ENERGY stock prices dipped as winter got off to a warm start in the
Northeast. Believing that winter would eventually arrive, we added to
natural gas holdings as they fell, although prices have not yet
improved.
BONDS: SHORTER WAS BETTER.
1994 was the worst year for the bond market since 1927. After several years of
double-digit total returns, long-term U.S. government bonds lost 7.7% on a total
return basis, while one- to three-year government notes gained 0.5%, as measured
by Lehman Brothers. Short-term maturities fared better because their prices fall
less than those of longer-term bonds as interest rates rise.
FOREIGN STOCK MARKET REVIEW
THE WORLD: REAWAKENING FROM RECESSION.
ONCE AGAIN, FOREIGN
STOCKS FARED BETTER
THAN U.S. STOCKS.
While the U.S. stock and bond markets were grappling with rising interest rates,
the rest of the world was beginning to shrug off the effects of a global
recession. This helped foreign stock markets outperform U.S. stocks for the
second year in a row. For the year, the Morgan Stanley Capital International
(MSCI) World Index gained 5.6% in U.S. dollars.
While rising interest rates prompted inflation worries in the U.S. stock
market, the concern worldwide was more that these rising rates could stifle the
global economic recovery. In Japan and Asia, which are heavily dependent on U.S.
growth and spending, stocks fell late in the year after rising in the first
half. It was just the opposite in Europe, where the four-year long recession is
officially over. Stocks there rose in the second half after a tough first half.
--------------------------------------------------------------------------------
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. NEITHER THE MONEY MARKET PORTFOLIO
NOR THE GOVERNMENT SECURITIES PORTFOLIO IS GUARANTEED BY THE U.S. GOVERNMENT.
4
<PAGE>
Investment Review
MONEY MARKET PORTFOLIO
PORTFOLIO MANAGER Gail Schlifer
[Photo]
Propelled by higher short-term interest rates, the Money Market Portfolio
outperformed all other Portfolios in the Series Fund during 1994. The Portfolio
provided a total return of 4.1%, according to Lipper Analytical Services. At
December 31, its 7-day yield had risen to 5.5%, up from 4.0% on June 30 and 3.0%
at year-end 1993. (SOURCE: IBC-DONOGHUE ALL TAXABLE FUNDS AVERAGE.)
Portfolio Manager Gail Schlifer reduced the Portfolio's weighted average
maturity to take advantage of rising short-term interest rates. At year end, the
weighted average maturity was 33 days, down from 43 days at the beginning of
the year. The securities in the Portfolio were all of the highest quality.
The Portfolio does not invest in any risky derivatives that the SEC has
suggested are inappropriate for money market funds, such as inverse floaters,
dual index floaters or cost of funds index floaters. We emphasize a
conservative, quality-oriented investment approach.
PORTFOLIO MANAGER Q&A: GAIL SCHLIFER
Since derivatives have been in the news in recent months, we talked to Money
Market Portfolio Manager Gail Schlifer about them:
Q: WHAT IS A DERIVATIVE?
A: A derivative is a financial instrument whose value is derived from the
value of an underlying asset, like a stock, bond, commodity, currency, or
from an index. That covers just about all financial instruments except
plain stocks or bonds.
Q: WHAT DERIVATIVES ARE USED BY THE MONEY MARKET PORTFOLIO?
A: We use adjustable rate securities and occasionally liquidity puts, which
are considered derivatives. Liquidity puts simply allow us to resell a
security for cash to the issuer or a third party on a specified date. The
adjustable rate securities we purchase for the Portfolio have interest
rates which are pegged to a money market index, such as LIBOR (London
Interbank Offered Rate), the three-month U.S. Treasury Bill or the federal
funds rate. We do not invest in those derivative-related securities that
the SEC has suggested are inappropriate for money market funds, such as
inverse floaters, dual index floaters or cost of funds index floaters.
Q: IS THERE A DANGER OF THE MONEY MARKET PORTFOLIO BREAKING THE $10.00 PER
SHARE NET ASSET VALUE?
A: While there is never a guarantee that the Portfolio will maintain its
$10.00 share value, the Money Market Portfolio emphasizes a conservative,
quality oriented investment approach. We continue to believe that
preservation of capital and liquidity can not be sacrificed for additional
yield.
RISING INTEREST RATES PUSH MONEY MARKET RATES HIGHER
----------------------------------------------------
HISTORICAL YIELD CURVE
[Graph] #1
Source: Bloomberg, L.P.
HOW MONEY MARKETS FARED COMPARED WITH OTHER ASSET CLASSES
---------------------------------------------------------
1994 INVESTMENT TOTAL RETURNS
[Graph] #2
Source: Prudential Investment Corporation. For purposes of comparison only.
Bonds as measured by the Lehman Brothers Government/Corporate Aggregate. U.S.
stocks as measured by the S&P 500 Index. Global stocks as measured by the Morgan
Stanley Capital International-World Index. U.S. money markets as measured by
IBC-Donoghue's All Taxable Funds Average.
5
<PAGE>
Investment Review
BOND PORTFOLIO
PORTFOLIO MANAGER Barbara Kenworthy
[Photo]
THE BOND PORTFOLIO declined 3.2% in total return in 1994 as interest rates rose,
placing 14 in a field of 39 BBB-rated corporate bond funds in variable
life/annuity products. (SOURCE: LIPPER ANALYTICAL SERVICES)
The Portfolio has a new manager: Barbara Kenworthy. Barbara has more than 20
years experience in portfolio management, and joined the Prudential last year
from the Dreyfus Corp. where she managed several bond funds rated four and five
stars by Morningstar. She also manages the Prudential Government Income Fund and
the Prudential Diversified Bond Fund.
The Bond Portfolio outperformed the average fund by holding an
intermediate-term effective maturity of roughly six years. Bonds in this
maturity range hold their value better than long-term bonds as interest rates
rise.
On December 31, the Portfolio held 49% of assets in corporate bonds, 35% in U.S.
government bonds, and 13% in mortgage-backed securities. The Portfolio
maintained an overall "AA" credit quality.
In the last six months, the Portfolio increased its investments in corporate
bonds from 40% to 49% to take advantage of their higher coupons. The cash
position was more than halved, from 7% to 3%, to lock in today's higher yields.
VALUE OF $10,000 INVESTED IN BOND PORTFOLIO VS. LEHMAN AGGREGATE INDEX AND
LIPPER VIP CORPORATE BOND AVERAGE
OVER TEN YEARS
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR
OTHER PRODUCT CHARGES.
[Graph] #3
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK TEN RANK
YEAR YEARS YEARS YEARS
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bond Portfolio -3.2% 14 4.5% 20 7.6% 12 9.2% 7
-----------------------------------------------------------------------------------------------------------
Lipper VIP Corp BBB* -3.8 39 4.7 31 7.5 27 9.4 9
-----------------------------------------------------------------------------------------------------------
Lehman Aggregate Index -2.9 4.6 7.7 10.0
-----------------------------------------------------------------------------------------------------------
<FN>
* 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.
</TABLE>
--------------------------------------------------------------------------------
PORTFOLIO MANAGER Q&A: BARBARA KENWORTHY
We talked to Bond Portfolio Manager Barbara Kenworthy about her investment
philosophy:
Q: DO YOU CONCENTRATE ON ANY ONE AREA OF THE GOVERNMENT BOND MARKET?
A: I like to have the flexibility to explore all the sectors in the government
bond market and I think you'd call me an active trader. In a typical day, I'll
evaluate market conditions and look for opportunities at what I consider a fair
risk level. For instance, before the Fed's last rate hike I shifted as much
money out of short-term Treasurys as possible because they were losing value
fast in the face of higher expected short-term rates. I found value instead in
some discounted mortgages and in longer maturity Treasury bonds.
Q: HOW ABOUT MATURITIES? WILL YOU STAY IN THE INTERMEDIATE-TERM RANGE?
A: I certainly believe intermediate-term bonds offer good value for investors
right now, but I also like longer-term securities because they'll appreciate the
most if a rally materializes. I know investors don't want to see their net asset
value fall, so I'm cautious. I might consider moving
the Portfolio's effective maturity out as far as 10 years, for instance.
On the other hand, I won't hesitate to pull those maturities in if the market
turns more bearish. You might see an effective maturity as low as six years if
bond prices start falling again.
Q: DO YOU PLAN TO INVEST IN DERIVATIVES?
A: Derivatives can be a good way to defend a portfolio's net asset value
against extreme price swings, but I would only consider using traditional
derivatives, like put and call options, which can help me improve total return
without too much risk to principal. These products have been around long enough
to be tested in many different market environments; they shouldn't result in
unpleasant surprises. I'm more cautious about the more exotic securities that
are largely untested and could lead to big price swings if the markets become
more turbulent. I'd put both IOs and POs (interest only and principal only
mortgage-backed securities) in this category. But I never say never. When used
prudently as part of an overall portfolio strategy, even these securities can
add value.
--------------------------------------------------------------------------------
THE LEHMAN AGGREGATE INDEX (LAI) IS COMPRISED OF 4,842 GOVERNMENT AND CORPORATE
BONDS. THE LAI IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL
DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY
FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT
COMPRISE THE LAI MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO.
THE LAI IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF
INCOME FUNDS AND OTHER INDICES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE.
THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER
ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS
UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF
INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
6
<PAGE>
Investment Review
GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO MANAGER David Graham
[Photo]
THE GOVERNMENT SECURITIES PORTFOLIO held a long-term maturity in 1994, so it
lost ground as interest rates rose. Its 5.5% decline in total return ranked 20
of 25 variable life/annuity U.S. Government portfolios. (SOURCE: LIPPER
ANALYTICAL SERVICES)
Effective in January, the Portfolio has a new manager: David Graham. David also
manages four mutual funds for Prudential: the GNMA Fund, the Adjustable Rate
Securities Fund, the Government Securities Trust: Intermediate Term Series and
the U.S. Government Fund.
The Government Securities Portfolio invests in intermediate- and long-term bonds
issued by the U.S. government and its agencies. (Neither the market value of
U.S. government securities nor the Portfolio's shares are guaranteed by the U.S.
government.)
At year end, 37% of assets were invested in agencies, 33% in U.S. Treasurys, 14%
in mortgages, 8% in asset-backed securities and 8% was in cash.
The Portfolio should fare better now that long term bond yields appear to be
near their peak for this market cycle.
VALUE OF $10,000 INVESTED IN GOVERNMENT SECURITIES PORTFOLIO
vs. LEHMAN GOVERNMENT INDEX AND LIPPER VIP U.S. GOVERNMENT AVERAGE SINCE
INCEPTION
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR
OTHER PRODUCT CHARGES.
[Graph] #4
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK SINCE
YEAR YEARS YEARS INCEPTION
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Gov't Sec. Portfolio -5.2% 20 4.2% 10 7.0% 10 8.1%
-----------------------------------------------------------------------------------------------------------
Lipper VIP US Gov't* -4.0 25 4.0 17 7.1 14 7.5
-----------------------------------------------------------------------------------------------------------
Lehman Gov't Index -3.4 4.7 7.5 8.5
-----------------------------------------------------------------------------------------------------------
INCEPTION DATE: 5/1/89
<FN>
* LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE
LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR
MONTH OF PERFORMANCE.
</TABLE>
THE PORTFOLIO IS WELL DIVERSIFIED.
----------------------------------
How It Looked as of 12/31/94
[Pie Chart]
Agency 37%
Treasury 33%
Mortgage 12%
Asset-backed 8%
CMO 2%
Cash 8%
AGENCY: Issued by U.S. government agencies, with implied guarantee
TREASURY: Backed by the full faith and credit of the U.S. government
MORTGAGE: Bonds backed by pools of mortgages
ASSET-BACKED: Bonds backed by pools of collateralized loan receivables
CMO: Collateralized mortgage obligations, parts of MBS pools
THE PORTFOLIO IS HIGH QUALITY.
------------------------------
How It Rated as of 12/31/94
AAA. . . . . . . . . . . 91.0%
AA . . . . . . . . . . . 1.4
Non-Rated. . . . . . . . 0.0
Cash . . . . . . . . . . 7.6
SOME U.S. GOVERNMENT SECURITIES ARE GUARANTEED AS TO TIMELY PAYMENT OF PRINCIPAL
AND INTEREST. THE UNDERLYING SECURITIES IN THE PORTFOLIO CARRY THIS GUARANTY;
NOT THE PORTFOLIO ITSELF. MORTGAGE-BACKED SECURITIES ENTAIL ADDITIONAL
PREPAYMENT AND EXTENSION RISK.
--------------------------------------------------------------------------------
THE LEHMAN GOVERNMENT INDEX IS A WEIGHTED INDEX COMPRISED OF SECURITIES ISSUED
OR BACKED BY THE U.S. GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES WITH A
REMAINING MATURITY OF ONE TO 30 YEARS. THE LGI IS AN UNMANAGED INDEX AND
INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF
TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE
PORTFOLIO. THE SECURITIES THAT COMPRISE THE LGI MAY DIFFER SUBSTANTIALLY FROM
THE SECURITIES IN THE PORTFOLIO. THE LGI IS NOT THE ONLY INDEX THAT MAY BE USED
TO CHARACTERIZE PERFORMANCE OF INCOME FUNDS AND OTHER INDICES MAY PORTRAY
DIFFERENT COMPARATIVE PERFORMANCE.
THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER
ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS
UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF
INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
7
<PAGE>
Investment Review
ZERO COUPON BOND PORTFOLIO
PORTFOLIO MANAGER May Ngai
[Photo]
(CURRENTLY ONLY AVAILABLE IN DISCOVERY LIFE PLUS AND PRUDENTIAL VARIABLE
APPRECIABLE LIFE POLICIES)
Rising interest rates in 1994 sharply reduced the market value of zero coupon
bonds (and these Portfolios), just as falling rates in 1993 led to rising
prices. As rates stabilize, the prices in this sector of the market should
stabilize, as well. Zero coupon bonds do not pay current income, but instead are
issued at a deep discount to their face value. They mature at face value, so the
difference is their return to the investor. Prior to maturity, they tend to be
more sensitive to interest rate movements than bonds with periodic coupon
payments. As of January 1995, the Portfolios have a new manager: May Ngai. May
has been with Prudential since 1991, most recently as a mortgage strategist. She
holds an MBA from the University of California at Davis.
ZERO COUPON BOND 1995 PORTFOLIO
The ZERO COUPON BOND 1995 PORTFOLIO was flat in 1994. The relatively short
maturity of the Portfolio helped it outperform the other two zero coupon bond
Portfolios. Short- and intermediate-term bonds are less sensitive to interest
rate movements than long-term bonds.
This Portfolio currently has an average maturity of less than one year.
It matures on November 15, 1995. BY THIS MATURITY DATE, POLICYHOLDERS SHOULD
SELECT ANOTHER PORTFOLIO INTO WHICH THE PRUDENTIAL CAN REINVEST THEIR PROCEEDS.
SHOULD WE NOT RECEIVE INSTRUCTIONS, WE WILL AUTOMATICALLY TRANSFER THESE FUNDS
TO THE MONEY MARKET PORTFOLIO.
ZERO COUPON BOND 2000 PORTFOLIO
The ZERO COUPON BOND 2000 PORTFOLIO declined 7.2% in total return in 1994. This
Portfolio currently has an average maturity of approximately six years, maturing
on November 15, 2000. This Portfolio has an intermediate-term maturity and thus
held its value better than the 2005 Portfolio but not as well as the 1995
Portfolio.
ZERO COUPON BOND 2005 PORTFOLIO
The ZERO COUPON BOND 2005 PORTFOLIO declined 9.6% in total return in 1994. This
Portfolio currently has an average maturity of approximately 11 years, maturing
on November 15, 2005. Its relatively longer maturity caused it to underperform
the other two Zero Coupon Portfolios in 1994 as interest rates rose. Conversely,
it outperformed the other Portfolios in 1993 when interest rates fell.
VALUE OF $10,000 INVESTED IN ZERO COUPON BOND 1995 PORTFOLIO vs. LEHMAN
GOVERNMENT INDEX AND LIPPER VIP TARGET MATURITY AVERAGE OVER TEN
YEARS
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE
DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES.
[Graph] #5
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK SINCE
YEAR YEARS YEARS INCEPTION
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Zero Coupon 1995 Port 0.0% 3 5.0% 9 7.9% 8 9.2%
-----------------------------------------------------------------------------------------------------------
Lipper VIP Target Mat* -5.6 11 5.8 10 8.3 9 8.8
-----------------------------------------------------------------------------------------------------------
Lehman Gov't Index -3.4 4.7 7.5 8.0
-----------------------------------------------------------------------------------------------------------
INCEPTION DATE: 2/12/86
</TABLE>
VALUE OF $10,000 INVESTED IN ZERO COUPON BOND 2000 PORTFOLIO
VS. LEHMAN GOVERNMENT INDEX AND LIPPER VIP TARGET MATURITY AVERAGE OVER TEN
YEARS
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE
DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES.
[Graph] #6
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK SINCE
YEAR YEARS YEARS INCEPTION
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Zero Coupon 2000 Port -7.2% 8 5.4% 6 8.2% 7 10.5%
-----------------------------------------------------------------------------------------------------------
Lipper VIP Target Mat* -5.2 11 5.8 10 8.7 9 8.8
-----------------------------------------------------------------------------------------------------------
Lehman Gov't Index -3.4 4.7 7.5 8.0
-----------------------------------------------------------------------------------------------------------
INCEPTION DATE: 2/12/86
</TABLE>
VALUE OF $10,000 INVESTED IN ZERO COUPON BOND 2005 PORTFOLIO vs. LEHMAN
GOVERNMENT INDEX AND LIPPER VIP TARGET MATURITY AVERAGE SINCE INCEPTION
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE
DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES.
[Graph] #7
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK SINCE
YEAR YEARS YEARS INCEPTION
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Zero Coupon 2005 Port -9.6% 10 6.5% 3 8.5% 2 9.6%
-----------------------------------------------------------------------------------------------------------
Lipper VIP Target Mat* -5.2 11 5.8 10 8.3 9 9.1
-----------------------------------------------------------------------------------------------------------
Lehman Gov't Index -3.4 4.7 7.5 8.5
-----------------------------------------------------------------------------------------------------------
INCEPTION DATE: 5/1/89
<FN>
* 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.
</TABLE>
--------------------------------------------------------------------------------
THE LEHMAN GOVERNMENT INDEX IS A WEIGHTED INDEX COMPRISED OF SECURITIES ISSUED
OR BACKED BY THE U.S. GOVERNMENT, ITS AGENCIES AND INSTRUMENTALITIES WITH A
REMAINING MATURITY OF ONE TO 30 YEARS. THE LGI IS AN UNMANAGED INDEX AND
INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF
TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH AN INVESTMENT IN THE
PORTFOLIO. THE SECURITIES THAT COMPRISE THE LGI MAY DIFFER SUBSTANTIALLY FROM
THE SECURITIES IN THE PORTFOLIO. THE LGI IS NOT THE ONLY INDEX THAT MAY BE USED
TO CHARACTERIZE PERFORMANCE OF INCOME FUNDS AND OTHER INDICES MAY PORTRAY
DIFFERENT COMPARATIVE PERFORMANCE.
THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER
ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS
UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF
INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
8
<PAGE>
Investment Review
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO
PORTFOLIO MANAGER Mark Stumpp
[Photo]
The CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO declined 1.0% in 1994, ranking 22
of 57 variable life/annuity flexible portfolios. (SOURCE: LIPPER ANALYTICAL
SERVICES)
The Conservatively Managed Flexible Portfolio invests in a mix of stocks, bonds
and money market securities, adjusting the blend as market conditions change. It
generally holds a greater cash position than its aggressive
counterpart, has no small company stocks, and its bond portion generally has an
intermediate-term maturity. At December 31, it held 36% of assets in large
company stocks, 31% in bonds and 33% in cash.
Mark Stumpp became Portfolio Manager of the Conservatively Managed Flexible
Portfolio in November 1994. Previously, he was the Portfolio's managing director
of research. Stumpp holds a Ph.D. in economics from
Brown University.
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
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR
OTHER PRODUCT CHARGES.
[Graph] #8
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK TEN RANK
YEAR YEARS YEARS YEARS
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Conserv. Man. Flex Port -1.0% 22 5.9% 23 8.3% 19 10.4% 8
Lipper VIP Flex* -1.9 57 5.8 50 8.6 41 11.4 10
S & P 500 1.3 6.3 8.7 14.4
Lehman Aggregate Index -2.9 4.6 7.7 10.0
</TABLE>
--------------------------------------------------------------------------------
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO
PORTFOLIO MANAGER Mark Stumpp
The AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO declined 3.2% in 1994, ranking 41 of
57 variable life/annuity flexible portfolios. (SOURCE: LIPPER ANALYTICAL
SERVICES)
The Portfolio invests in a mix of stocks, bonds and money market securities, and
adjusts its allocations among the sectors to benefit from changing
market conditions. At December 31, it held 51% of assets in large company
stocks, 11% in small company stocks, 31% in bonds and 7% in cash.
Mark Stumpp became Portfolio Manager of the Aggressively Managed Flexible
Portfolio in November 1994. Previously, he was the Portfolio's
managing director of research. Stumpp holds a Ph.D. in economics from Brown
University.
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. The Portfolio emphasized stocks and cash during
1994, and reduced the average maturity of its holdings in bonds when it became
apparent that interest rates would rise. Toward year end, Stumpp sold some
stocks to buy bonds when it appeared that interest rates were near their highs.
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
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE. PORTFOLIO PERFORMANCE
DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER PRODUCT CHARGES.
[Graph] #9
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK TEN RANK
YEAR YEARS YEARS YEARS
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Agress. Man. Flex Port -3.2% 41 6.4% 19 9.0% 12 11.7% 6
-----------------------------------------------------------------------------------------------------------
Lipper VIP Flex* -1.9 57 5.8 50 8.6 41 11.4 10
-----------------------------------------------------------------------------------------------------------
S & P 500 1.3 6.3 8.7 14.4
-----------------------------------------------------------------------------------------------------------
Lehman Aggregate Index -2.9 4.6 7.7 10.0
-----------------------------------------------------------------------------------------------------------
<FN>
* LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE
LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR
MONTH OF PERFORMANCE.
</TABLE>
--------------------------------------------------------------------------------
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 4,842 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 AND OTHER INDICES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE.
THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER
ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS
UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF
INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
9
<PAGE>
Investment Review
HIGH YIELD BOND PORTFOLIO
PORTFOLIO CO-MANAGERS Lars Berkman and Mike Snyder
[Photos]
The HIGH YIELD BOND PORTFOLIO declined 2.7% in 1994, ranking 14 in a field of 27
high yield portfolios in variable life/annuity products. (SOURCE: LIPPER
ANALYTICAL SERVICES)
This Portfolio has two new co-managers: Lars Berkman and Mike Snyder. Since
1991, Lars has managed the $3.6 billion Prudential High Yield Fund, the largest
high yield bond mutual fund in the country. Mike is co-manager of the High Yield
Income Fund and has managed several institutional high yield funds.
This Portfolio invests primarily in non-investment grade bonds rated below Baa.
These bonds have higher coupons than better quality bonds, which help cushion
the decline in prices that come from rising rates. In return for these higher
yields, these bonds have significantly more credit risk than higher quality
bonds. We manage that risk by keeping the Portfolio diversified across
industries and issuers, and by focusing on B-rated bonds of companies that have
improving earnings and the prospect of a credit rating upgrade over the next
several years.
Late in the year, the managers took advantage of the attractive yields available
on newly issued high yield bonds. They added several B-rated new issues with
coupons of 12% to 13%. Last fall, bonds of similar quality were offered at much
lower yields, in the 9% to 9.5% range.
VALUE OF $10,000 INVESTED IN HIGH YIELD BOND PORTFOLIO VS. LEHMAN HIGH YIELD
INDEX AND LIPPER VIP HIGH YIELD AVERAGE SINCE INCEPTION
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR
OTHER PRODUCT CHARGES.
[Graph] #10
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
ONE RANK THREE RANK FIVE RANK SINCE
YEAR YEARS YEARS INCEPTION
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
High Yield Bond Port -2.7% 14 11.0% 10 10.8% 11 7.5%
----------------------------------------------------------------------------------------------------
Lipper VIP High Yield* -3.3 27 9.8 25 10.6 24 8.9
----------------------------------------------------------------------------------------------------
Lehman High Yield -1.0 10.3 12.1 9.2
----------------------------------------------------------------------------------------------------
INCEPTION DATE: 2/23/87
<FN>
* LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE
LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR
MONTH OF PERFORMANCE.
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
STOCK INDEX PORTFOLIO
PORTFOLIO MANAGER John Moschberger
[Photo]
The Stock Index Portfolio gained 1.0% in 1994, in line with the 1.3% gain of the
S&P 500, the unmanaged stock market index this Portfolio is designed to track.
Investment management fees account for the slight difference in returns.
The Portfolio holds all 500 stocks included in the S&P 500 Index, and attempts
to duplicate its performance. Portfolio Manager John Moschberger manages the
Portfolio by investing funds received daily while trying to minimize commissions
and transaction costs.
* LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE
LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR
MONTH OF PERFORMANCE.
** LIPPER LISTS THE STOCK INDEX PORTFOLIO IN ITS S&P 500 INDEX UNIVERSE. FOR
PURPOSES OF THE CONTRACT OWNER LETTER, WE COMPARED THE PORTFOLIO TO LIPPER'S
GROWTH & INCOME UNIVERSE; THEREFORE, NO RANKS ARE GIVEN.
VALUE OF $10,000 INVESTED IN STOCK INDEX PORTFOLIO VS. S&P 500 AND LIPPER VIP
GROWTH AND INCOME AVERAGE SINCE INCEPTION
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR
OTHER PRODUCT CHARGES.
[Graph] #11
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
----------------------------------------------------------------------
ONE THREE FIVE SINCE
YEAR YEARS YEARS INCEPTION
----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Stock Index Port** 1.0% 5.9% 8.2% 13.0%
----------------------------------------------------------------------
Lipper VIP Growth & Income* -0.4 7.1 8.8 11.9
----------------------------------------------------------------------
S&P 500 1.3 6.3 8.7 12.3
----------------------------------------------------------------------
INCEPTION DATE: 10/19/87
</TABLE>
--------------------------------------------------------------------------------
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 HIGH YIELD INDEX (LHYI) IS COMPRISED OF 766 NONINVESTMENT GRADE
BONDS. THE LHYI 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 LHYI MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO.
THE LHYI IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF
INCOME FUNDS AND OTHER INDICES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE.
THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER
ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS
UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF
INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
10
<PAGE>
Investment Review
HIGH DIVIDEND STOCK PORTFOLIO
PORTFOLIO MANAGER Warren Spitz
[Photo]
The HIGH DIVIDEND STOCK PORTFOLIO performed better than the broad stock market
in 1994. It advanced 1.4% for the year, ranking second of six equity income
variable life/annuity portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES)
This Portfolio invests primarily in stocks that tend to pay higher-than-average
dividends. These are theoretically less volatile than other stocks because their
generous dividend payments can help cushion price losses. Energy and utility
stocks are traditionally considered high dividend stocks.
Since rising interest rates can slice the earnings potential of high dividend
stocks, Portfolio Manager Warren Spitz last year looked to non-traditional high
yield stocks that should benefit from an improving economy, such as industrial
stocks. Spitz also had substantial holdings in the finance sector, including
real estate investment trusts, financial services and insurance, where rising
interest rates may have produced value opportunities. The Portfolio's return was
held back by its large positions in natural gas companies, which did not perform
well. Since supplies of natural gas have not grown in recent years, though,
Spitz believes these stocks should benefit as worldwide demand for gas
increases.
VALUE OF $10,000 INVESTED IN HIGH DIVIDEND STOCK PORTFOLIO VS. S&P 500 AND
LIPPER VIP EQUITY INCOME AVERAGE SINCE INCEPTION
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER
PRODUCT CHARGES.
[Graph] #12
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
ONE RANK THREE RANK FIVE RANK SINCE
YEAR YEARS YEARS INCEPTION
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
High Divid Stock Port 1.4% 2 11.0% 2 10.9% 1 12.8%
----------------------------------------------------------------------------------------------------
Lipper VIP Equity Inc* -0.3 6 7.9 5 8.6 5 10.7
----------------------------------------------------------------------------------------------------
S&P 500 1.3 6.3 8.7 11.7
----------------------------------------------------------------------------------------------------
INCEPTION DATE: 2/23/87
<FN>
* LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE
LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR
MONTH OF PERFORMANCE.
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
PORTFOLIO MANAGER Q&A: WARREN SPITZ
We talked with High Divided Stock Portfolio Manager Warren Spitz about his
favorite areas of the stock market.
Q: WHY DO YOU EXPECT INDUSTRIAL STOCKS TO CONTINUE TO OUTPERFORM CONSUMER
STOCKS?
A: Many industrial companies manufactured goods at levels far below their
maximum output potential--known as capacity utilization--during the 1980s. Now
that the economy is expanding at a healthy clip, that situation has reversed
itself and many are reaching their peak capacity. That gives them pricing power,
or the ability to charge higher prices because their goods are becoming more
valuable, and higher prices should translate to higher stock prices. As long as
the U.S. economy keeps expanding this way, I expect companies in the industrial
sector, particularly in the chemicals, paper and steel industries, to benefit.
At the same time, consumer-oriented companies are still feeling the pricing
pressure that will keep their stock prices in check for the near future.
Q: WHAT OPPORTUNITIES DO YOU SEE IN REAL ESTATE INVESTMENT TRUSTS (REITS)?
A: In the current market environment, where rising interest rates have put
pressure on traditional high dividend sectors, REITs offer some of the best
opportunities for above-average dividend and price appreciation. Rising interest
rates have also reduced prices in this sector, which has created some good
opportunities to buy securities that are undervalued. We also expect that any
increase in the amount of REITs issued will be readily absorbed by pension funds
and insurers. Traditionally, these companies bought real estate directly, but
after being burned by falling prices in the 1980s and early 1990s, they're
beginning to prefer this more-liquid real estate investment option.
Q: WHAT'S YOUR OUTLOOK FOR ENERGY STOCKS?
A: For the past five or ten years, energy companies have drastically reduced
their budgets for research and development, especially in oil exploration and
production. Now, there's growing demand and stagnant supply of oil, mostly as a
result of this underinvestment, and that may put upward pressure on energy
prices. The most direct beneficiaries? I believe it will be oil exploration and
oil services stocks; consequently, I continue to explore opportunities in these
industries.
--------------------------------------------------------------------------------
THE S&P 500 IS A CAPITAL WEIGHTED INDEX, REPRESENTING THE AGGREGATE MARKET VALUE
OF THE COMMON EQUITY OF 500 STOCKS PRIMARILY TRADED ON THE NEW YORK STOCK
EXCHANGE. THE S&P 500 IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL
DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY
FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT
COMPRISE THE S&P 500 MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE
PORTFOLIO. THE S&P 500 IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE
PERFORMANCE OF THIS PORTFOLIO AND OTHER INDEXES MAY PORTRAY DIFFERENT
COMPARATIVE PERFORMANCE.
THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER
ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS
UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF
INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
*EQUITY INCOME FUNDS: SEEKS RELATIVELY HIGH CURRENT INCOME AND GROWTH OF INCOME
THROUGH INVESTING 60% OR MORE OF ITS PORTFOLIO IN EQUITIES.
11
<PAGE>
Investment Review
COMMON STOCK PORTFOLIO
PORTFOLIO MANAGER Tom Jackson
The COMMON STOCK PORTFOLIO outperformed the S&P 500 Index and the average
variable life/annuity growth portfolio in 1994. The Portfolio rose 2.8% over the
year, ranking 10 among 71 similar funds. (SOURCE: LIPPER ANALYTICAL SERVICES)
Portfolio Manager Tom Jackson adheres to a value investment style: he looks for
stocks with prices that are low when compared with potential earnings, cash
flow and book value. That led him to selectively add to positions in finance
stocks whose prices had fallen as interest rates rose. He also continued to hold
large positions in industrial and consumer-oriented cyclical stocks in the auto
and retail industries to reap the benefit of a growing economy.
Jackson had built up a relatively large 20% cash position before stocks tumbled
earlier in the year. He then spent much of the end of the year taking advantage
of low prices, buying selectively to bring cash down to 11%. Major purchases
toward year-end included Chrysler, Dean Witter Discover, JP Morgan, and Lehman
Brothers.
VALUE OF $10,000 INVESTED IN COMMON STOCK PORTFOLIO VS. S&P 500 AND LIPPER
GROWTH AVERAGE OVER TEN YEARS
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER
PRODUCT CHARGES.
[Graph] #13
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK TEN RANK
YEAR YEARS YEARS YEARS
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Common Stock Port 2.8% 10 12.7% 2 11.3% 8 15.0% 4
-----------------------------------------------------------------------------------------------------------
Lipper VIP Growth Avg. -1.0 71 6.5 48 9.1 43 13.5 21
-----------------------------------------------------------------------------------------------------------
S&P 500 1.3 6.3 8.7 14.4
-----------------------------------------------------------------------------------------------------------
<FN>
* LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE
LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR
MONTH OF PERFORMANCE.
</TABLE>
--------------------------------------------------------------------------------
PORTFOLIO MANAGER Q&A: TOM JACKSON
We talked with Common Stock Portfolio Manager Tom Jackson about the mood of the
stock market.
Q: WHY HAVE YOU DECIDED IT'S A GOOD TIME TO PUT YOUR CASH TO WORK IN THE STOCK
MARKET?
A: I see many attractively priced stocks out there right now. In the current
market, there is an inordinate amount of stocks selling at price-to-earnings
multiples that I think make them bargains.
Q: WHY DO YOU THINK SO MANY OF THOSE BARGAINS ARE FOUND IN THE FINANCE SECTOR?
A: Money and credit are the raw materials for financial service products and
rising interest rates are viewed by the market as rising costs that may
negatively impact the profitability of the companies in these businesses. At
current prices, I believe that these rates are largely discounted. In the
meantime, an aging population with increased savings needs, combined with the
globalization of finance, provides attractive opportunities for growth in a
broad array of financial services.
Q: WHAT DO YOU LOOK FOR AS SIGNS A COMPANY IS TAKING STEPS TO IMPROVE ITS
STOCK PRICE?
A: There are many clues that a company with sound fundamentals may be taking
steps to get back on track: replacing poor management, restructuring to increase
competitiveness, selling an unprofitable old business or acquiring a profitable
new one, or introducing an exciting new product.
Q: HOW LONG DOES IT TAKE FOR A STOCK TO REACH ITS TRUE VALUE?
A: Patience is a virtue. A stock's price may be down temporarily for
legitimate reasons, while I feel the company is taking steps necessary to turn
things around. It's important to be patient and disciplined in the meantime and
to stick to your strategy while you wait for the price to appreciate. If the
market provides the opportunity to buy the business at a significant discount to
its true worth, the buyer can afford to be a patient holder. I think high
portfolio turnover is a negative for the investor. Trading involves commissions,
which are a cost, and to the degree that gains are realized, taxes must be paid.
--------------------------------------------------------------------------------
THE S&P 500 IS A CAPITAL WEIGHTED INDEX, REPRESENTING THE AGGREGATE MARKET VALUE
OF THE COMMON EQUITY OF 500 STOCKS PRIMARILY TRADED ON THE NEW YORK STOCK
EXCHANGE. THE S&P 500 IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL
DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY
FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT
COMPRISE THE S&P 500 MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE
PORTFOLIO. THE S&P 500 IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE
PERFORMANCE OF THIS PORTFOLIO AND OTHER INDEXES MAY PORTRAY DIFFERENT
COMPARATIVE PERFORMANCE.
THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER
ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS
UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF
INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
*GROWTH FUNDS: INVESTS IN COMPANIES WHOSE LONG-TERM EARNINGS ARE EXPECTED TO
GROW SIGNIFICANTLY FASTER THAN THE EARNINGS OF THE STOCKS REPRESENTED IN THE
MAJOR UNMANAGED INDICES.
12
<PAGE>
Investment Review
GLOBAL EQUITY PORTFOLIO
PORTFOLIO MANAGER Dan Duane
[Photo]
In 1994 the GLOBAL EQUITY PORTFOLIO declined 4.9%, ranking 21 of 26 variable
life/annuity global equity portfolios. (SOURCE: LIPPER ANALYTICAL SERVICES.)
The Portfolio's performance trailed the Morgan Stanley World Index because it
held fewer assets in Japan, which led the world in total return measured in U.S.
dollars. The Portfolio holds 17% of assets in Japan, while the World Index
allocation is 28%. In addition, the Portfolio holds more assets in other smaller
Pacific Basin countries than the index, and stocks there fell more than
elsewhere in the world.
By region, the Portfolio held 20% of assets in the Pacific Basin
(excluding Japan), 19% in Europe, 17% in Japan and 17% in the U.S. as of
December 31.
The Portfolio did profit from its performance in Europe, where the
economy is coming out of a long and deep recession, and in Korea, because of the
growth of the electronics industry. In continental Europe, we held positions in
discount retailers, technology firms and parts and equipment suppliers. In
Korea, our holdings in Samsung Electronics have benefited from the PC-led boom
in demand for semiconductor memories.
VALUE OF $10,000 INVESTED IN GLOBAL EQUITY PORTFOLIO VS. MORGAN STANLEY WORLD
INDEX AND LIPPER VIP GLOBAL AVERAGE SINCE INCEPTION
[Graph] #14
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR
OTHER PRODUCT CHARGES.
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK SINCE
YEAR YEARS YEARS INCEPTION
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Global Equity Port -4.9% 21 9.6% 7 5.0% 7 8.3%
----------------------------------------------------------------------------------------------------
Lipper VIP Global Avg* -0.7 26 8.8 15 7.4 8 9.7
----------------------------------------------------------------------------------------------------
MSCI World Index 5.6 7.4 4.2 7.9
----------------------------------------------------------------------------------------------------
INCEPTION DATE: 9/19/88
<FN>
* LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE
LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR
MONTH OF PERFORMANCE.
</TABLE>
--------------------------------------------------------------------------------
PORTFOLIO MANAGER Q&A: DAN DUANE
Since the value of the U.S. dollar versus other currencies affects returns of
foreign stocks to U.S. investors, we talked with Global Equity Portfolio Manager
Dan Duane about how the foreign markets are reacting to the weak U.S. dollar.
Q: HOW DOES THE WEAK U.S. DOLLAR IMPACT RETURNS?
A: Generally, investors believe the dollar's movements have more impact on
total returns than they actually do. It's true that when the U.S. dollar is
weak, returns from stocks denominated in a foreign currency are enhanced when
translated back into U.S. dollars. One French franc, for instance, buys more
dollars. When we value our holdings every day, or when they pay dividends or we
take profits in them, we translate the value of our holdings into U.S. dollars.
Since one unit of foreign money now buys more dollars, our dollar value
automatically rises.
Q: WHAT HAPPENS IF THE DOLLAR STARTS RISING?
A: We are looking for companies that will benefit from a rising dollar. These
are generally companies that have their assets or revenues denominated in
dollars and their costs denominated in a foreign currency. That steers us to
producers of commodities, since most enjoy revenues that are priced in dollars
(metals, oil, gold, timber). In addition, most technology and telecommunications
company revenues are priced in dollars. So companies from all these sectors are
important in our Portfolio for two reasons--because the global recovery should
stimulate demand for their products and because their stocks are a good hedge
against a rising dollar.
--------------------------------------------------------------------------------
THE MORGAN STANLEY INDEX IS A WEIGHTED INDEX COMPRISED OF APPROXIMATELY 1500
COMPANIES LISTED ON THE STOCK EXCHANGES OF THE U.S.A., EUROPE, CANADA,
AUSTRALIA, NEW ZEALAND AND THE FAR EAST. THE COMBINED MARKET CAPITALIZATION OF
THESE COMPANIES REPRESENTS APPROXIMATELY 60% OF THE AGGREGATE MARKET VALUE OF
THE STOCK EXCHANGES IN THE COUNTRIES COMPRISING THE WORLD INDEX. THE WORLD INDEX
IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL DIVIDENDS, BUT DOES
NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY FEES ASSOCIATED WITH
AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT COMPRISE THE WORLD INDEX MAY
DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE PORTFOLIO. THE WORLD INDEX IS
NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE PERFORMANCE OF GLOBAL FUNDS
AND OTHER INDEXES MAY PORTRAY DIFFERENT COMPARATIVE PERFORMANCE.
THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER
ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS
UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF
INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
13
<PAGE>
Investment Review
NATURAL RESOURCES PORTFOLIO
PORTFOLIO MANAGER Leigh Goehring
[Photo]
The NATURAL RESOURCES PORTFOLIO declined 4.3% in 1994. The Portfolio ranked
fifth of six variable life/annuity natural resources portfolios. (SOURCE:
LIPPER ANALYTICAL SERVICES.)
Portfolio Manager Leigh Goehring held a 44% concentration in energy stocks that
included natural gas companies and oil producers that did not perform as well
as the broader market. These holdings are expected to perform well if worldwide
demand and prices for oil and gas rise.
The Portfolio was also invested in diversified resources stocks such as
fertilizer companies, in base and precious metal stocks, and in forest and paper
stocks. As commodity and product prices rise, so should the stocks.
TOP FIVE HOLDINGS
Potash Corp. . . . . . . . . . . . . . . . . . . . .4.8
(fertilizer)
IMC Global Inc. . . . . . . . . . . . . . . . . . .3.0
(fertilizer)
ELF Aquitaine . . . . . . . . . . . . . . . . . . .2.9
(oil production)
Santa Fe Pacific . . . . . . . . . . . . . . . . .2.5
(gold)
American Barrick . . . . . . . . . . . . . . . . . .2.5
(gold)
VALUE OF $10,000 INVESTED IN NATURAL RESOURCES PORTFOLIO VS. S&P 500 AND LIPPER
VIP NATURAL RESOURCES AVERAGE SINCE INCEPTION
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
PORTFOLIO PERFORMANCE DOES NOT REFLECT SEPARATE ACCOUNT EXPENSES OR OTHER
PRODUCT CHARGES.
[Graph] #15
AVERAGE ANNUAL RETURNS THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>
ONE RANK THREE RANK FIVE RANK SINCE
YEAR YEARS YEARS INCEPTION
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Natural Resources Port -4.3% 5 8.7% 4 6.0% 1 10.2%
----------------------------------------------------------------------------------------------------
Lipper VIP Natl Res* -2.8 6 8.7 6 3.0 6 1.7
----------------------------------------------------------------------------------------------------
S&P 500 1.3 6.3 8.7 12.4
----------------------------------------------------------------------------------------------------
INCEPTION DATE: 5/01/88
<FN>
* LIPPER PROVIDES DATA ON A MONTHLY BASIS, SO FOR COMPARATIVE PURPOSES, THE
LIPPER AVERAGE AND INDEX INCEPTION RETURNS REFLECT THE FUND'S FIRST CALENDAR
MONTH OF PERFORMANCE.
</TABLE>
--------------------------------------------------------------------------------
THE PORTFOLIO IS DIVERSIFIED.
-----------------------------
How It Looked as of 12/31/94
[Pie Chart]
/ / Energy (oil, natural gas) 44%
/ / Precious Metals (gold, silver) 18%
/ / Base Metal (aluminum, nickel) 18%
/ / Diversified Resources (fertilizer) 12%
/ / Forest Products (paper) 5%
/ / Cash 3%
--------------------------------------------------------------------------------
THE S&P 500 IS A CAPITAL WEIGHTED INDEX, REPRESENTING THE AGGREGATE MARKET VALUE
OF THE COMMON EQUITY OF 500 STOCKS PRIMARILY TRADED ON THE NEW YORK STOCK
EXCHANGE. THE S&P 500 IS AN UNMANAGED INDEX AND INCLUDES THE REINVESTMENT OF ALL
DIVIDENDS, BUT DOES NOT REFLECT THE PAYMENT OF TRANSACTION COSTS AND ADVISORY
FEES ASSOCIATED WITH AN INVESTMENT IN THE PORTFOLIO. THE SECURITIES THAT
COMPRISE THE S&P 500 MAY DIFFER SUBSTANTIALLY FROM THE SECURITIES IN THE
PORTFOLIO. THE S&P 500 IS NOT THE ONLY INDEX THAT MAY BE USED TO CHARACTERIZE
PERFORMANCE OF THIS PORTFOLIO AND OTHER INDEXES MAY PORTRAY DIFFERENT
COMPARATIVE PERFORMANCE.
THE LIPPER VARIABLE INSURANCE PRODUCTS (VIP) AVERAGE IS CALCULATED BY LIPPER
ANALYTICAL SERVICES, INC. AND REFLECTS THE INVESTMENT RETURN OF PORTFOLIOS
UNDERLYING VARIABLE LIFE AND INSURANCE PRODUCTS. THESE RETURNS ARE NET OF
INVESTMENT FEES AND FUND EXPENSES BUT NOT PRODUCT CHARGES.
14
<PAGE>
Investment Advisor's Outlook
1995 MAY BE A BETTER YEAR FOR INVESTORS THAN 1994. BUT IT WON'T BE A YEAR FOR
TAKING BIG RISKS. IN OUR VIEW, BONDS ARE THE DOMESTIC ASSET CLASS OF CHOICE.
U.S. STOCKS AND BONDS ARE LIKELY TO PRODUCE SIMILAR RETURNS, AND THAT MAKES
BONDS MORE ATTRACTIVE ON A RISK-ADJUSTED BASIS. SO LOOK FOR BARGAINS, CONSIDER
FOREIGN SECURITIES AND BE PREPARED FOR A YEAR OF AVERAGE RETURNS.
GROWTH AND INFLATION
/ / In 1995, we're looking for more moderate growth from the U.S. economy. This
means Gross Domestic Product should slow from the 4.0% range--a manageable rate
and one that shouldn't cause concern in either the bond or stock markets.
/ / Inflation, 1994's big concern, will likely creep up next year. Much of that
increase has already been discounted by the markets and shouldn't have a
significant impact on long-term interest rates.
THE BIGGEST RISK TO OUR OUTLOOK? THE FEDERAL RESERVE'S INTEREST RATE HIKES COULD
CHOKE OFF GROWTH, OR THERE COULD BE A BIG CHANGE IN THE AVAILABILITY OF CERTAIN
COMMODITIES (POSSIBLY BECAUSE OF A WAR OR NATURAL DISASTER) THAT COULD RAISE THE
INFLATION ANTE.
THE U.S. STOCK MARKET
/ / The U.S. stock market appears headed for an average year in 1995. That
means total returns possibly in the high single digits. Of course, we haven't
thought for awhile that the handsome double-digit returns we enjoyed in the
1980s would materialize again any time soon, so anything in excess of inflation
looks pretty fair. And if inflation remains relatively benign as we expect,
market returns after inflation will be close to historic averages.
/ / Corporate earnings growth and investor demand should play a big role in
stock performance in 1995. If either is tepid, expect our return forecast to
fall accordingly. Stock values are still a bit ahead of earnings, as well, which
could indicate some type of correction is likely. This is a year when stock
selection is crucial.
/ / We anticipate the demand for bonds will be another factor affecting stock
prices. If rates rise higher, stocks will be vulnerable.
ON THE OTHER HAND? IF ECONOMIC GROWTH STALLS OUT, EXPECT STOCK PRICES TO FALL.
THE GLOBAL MARKET
/ / Foreign economies should fare better than the U.S. Most countries climbed
out of the world-wide recession after the U.S. did -- and they have farther to
go since the recession was worse overseas than it was in the U.S.
/ / That means respectable foreign stock returns, possibly in excess of U.S.
returns. And if U.S. interest rates stabilize, European stock prices should
benefit.
/ / We really like the stronger companies that produce commodities. Not only
should they benefit from a surge in demand, but their goods are usually priced
in dollars. That means they won't be hurt if the dollar starts to gain ground
against foreign currencies.
/ / Our favorite regions are Europe, where the economies are really revving up,
and the Pacific Basin. Even though valuations tend to be high there, this area
is in transition to a more developed one; we see healthier, growing economies on
the horizon as a result.
WHAT COULD HOLD BACK RETURNS? IF THE U.S. ECONOMY REVERSES COURSE AND HEADS INTO
NEGATIVE TERRITORY, THE WORLD'S OTHER ECONOMIES WOULD PROBABLY FOLLOW. AND ALL
STOCK MARKETS COULD BE LACKLUSTER PERFORMERS EVEN IF THIS SCENARIO REMAINS ONLY
A THREAT.
THE BOND MARKET
/ / After being beaten down badly in 1994, bonds are beginning to look
attractive. With long-term U.S. Treasury yields in the 8% range, bonds will be a
tough competitor for all domestic asset classes. We expect bonds to earn their
coupon and deliver modest capital gains.
/ / Bond returns will continue to be driven by the strength of the economy and
the Federal Reserve's response, at least until mid-year. We anticipate at least
one more Fed move before it quits and considers its anti-inflationary campaign
of 1994 a success.
/ / Due to the Fed's aggressive actions in 1994, we believe yields on long-term
bonds are near their peaks for this market cycle, and will begin to decline as
the economy slows in the second half of 1995. Thus, while we anticipate some
volatility during the first half of 1995, long-term Treasury yields are likely
to end the year at 7.5% or lower.
/ / In that kind of market, the best performing bond sectors can change from
day to day. Diversification will help keep returns competitive while limiting
risk.
OUR WORRIES? CREDIT QUALITY MAY BEGIN TO DETERIORATE IF THE ECONOMY SLOWS
DOWN, WHICH MAY NOT BODE WELL FOR THE STOCK MARKET. IF THE STOCK MARKET CORRECTS
SHARPLY AS A RESULT, HIGH YIELD BONDS MIGHT NOT FARE WELL. IN ADDITION, IF THE
ECONOMY CONTINUES TO RACE AHEAD AT A 4.0% CLIP, INTEREST RATES WILL LIKELY
CONTINUE TO CLIMB.
/ / / / / /
THAT COMPLETES OUR REVIEW OF 1994 AND OUR OUTLOOK FOR 1995. WE HOPE YOU FOUND IT
HELPFUL.
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
TURBULENT FINANCIAL MARKETS. WE URGE YOU TO TAKE ADVANTAGE OF YOUR
REPRESENTATIVE'S TRAINING AND EXPERTISE TO HELP YOU MANAGE YOUR INVESTMENTS 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.
ROBERT P. HILL E. MICHAEL CAULFIELD
CHAIRMAN PRESIDENT
THE PRUDENTIAL SERIES FUND, INC. THE PRUDENTIAL SERIES FUND, INC.
15
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
MONEY MARKET PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments................................ $ 581,582,129
Cash....................................... 892
Interest receivable........................ 2,410,515
--------------
Total Assets............................. 583,993,536
--------------
LIABILITIES
Accrued expenses........................... 130,371
Payable to investment adviser.............. 581,688
--------------
Total Liabilities........................ 712,059
--------------
NET ASSETS................................... $ 583,281,477
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 583,281
Paid-in capital, in excess of par........ 582,698,196
--------------
Net assets, December 31, 1994.............. $ 583,281,477
--------------
--------------
Net asset value per share of 58,328,148
outstanding shares of common stock
(authorized 200,000,000 shares).......... $ 10.0000
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Interest................................... $ 24,040,312
---------------
EXPENSES
Investment management fee.................. 2,145,819
Shareholders' reports...................... 160,709
Accounting fees............................ 72,868
Custodian expense -- net................... 39,561
S.E.C. fees................................ 36,474
Professional fees.......................... 33,486
Directors' expense......................... 2,034
Miscellaneous expenses..................... 28
---------------
2,490,979
---------------
NET INVESTMENT INCOME........................ 21,549,333
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 21,549,333
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 21,549,333 $ 14,815,991
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (21,549,333) (14,815,991)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [18,862,200 and 9,104,900 shares, respectively]..................... 188,622,000 91,049,000
Reinvestment of dividend distributions [2,154,934 and 1,481,599 shares,
respectively]......................................................................... 21,549,333 14,815,991
Capital stock repurchased [(10,162,500) and (15,984,800) shares, respectively]......... (101,625,000) (159,848,000)
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS.............. 108,546,333 (53,983,009)
------------------ -------------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS............................................................................ 108,546,333 (53,983,009)
NET ASSETS:
Beginning of year...................................................................... 474,735,144 528,718,153
------------------ -------------------
End of year............................................................................ $ 583,281,477 $ 474,735,144
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A1
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
BOND PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$563,227,825)............................ $ 531,295,677
Cash....................................... 702
Interest receivable........................ 11,014,524
--------------
Total Assets............................. 542,310,903
--------------
LIABILITIES
Accrued expenses........................... 39,255
Payable to investment adviser.............. 579,489
Payable for portfolio shares redeemed...... 43,560
--------------
Total Liabilities........................ 662,304
--------------
NET ASSETS................................... $ 541,648,599
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 539,579
Paid-in capital, in excess of par........ 583,467,451
--------------
584,007,030
Undistributed net investment income........ 381,010
Accumulated net realized losses............ (10,807,293)
Net unrealized depreciation................ (31,932,148)
--------------
Net assets, December 31, 1994.............. $ 541,648,599
--------------
--------------
Net asset value per share of 53,957,906
outstanding shares of common stock
(authorized 200,000,000 shares).......... $ 10.0384
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Interest................................... $ 38,674,225
---------------
EXPENSES
Investment management fee.................. 2,251,096
Shareholders' reports...................... 180,661
Accounting fees............................ 77,978
Custodian expense -- net................... 28,771
Professional fees.......................... 21,380
Directors' expense......................... 2,086
Miscellaneous expenses..................... 98
---------------
2,562,070
---------------
NET INVESTMENT INCOME........................ 36,112,155
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss on investments........... (4,246,256)
Net unrealized loss on investments......... (50,839,016)
---------------
NET LOSS ON INVESTMENTS...................... (55,085,272)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... ($ 18,973,117)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 36,112,155 $ 31,295,792
Net realized gain (loss) on investments................................................ (4,246,256) 8,958,204
Net unrealized gain(loss) on investments............................................... (50,839,016) 7,179,211
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (18,973,117) 47,433,207
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (35,627,999) (31,001,007)
Net realized gain from investment transactions......................................... (1,267,553) (7,690,651)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (36,895,552) (38,691,658)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [3,414,897 and 9,888,368 shares, respectively]...................... 36,662,212 111,911,952
Reinvestment of dividend distributions [3,610,015 and 3,457,814 shares,
respectively]......................................................................... 36,895,552 38,691,658
Capital stock repurchased [(4,963,909) and (1,044,056) shares, respectively]........... (52,266,357) (11,890,355)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 21,291,407 138,713,255
------------------ -------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS.................................................. (34,577,262) 147,454,804
NET ASSETS:
Beginning of year...................................................................... 576,225,861 428,771,057
------------------ -------------------
End of year............................................................................ $ 541,648,599 $ 576,225,861
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A2
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
COMMON STOCK PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$2,419,493,392).......................... $2,665,964,937
Cash....................................... 155
Interest and dividends receivable.......... 5,114,347
Receivable for securities sold............. 391,399
--------------
Total Assets............................. 2,671,470,838
--------------
LIABILITIES
Accrued expenses........................... 239,413
Payable for securities purchased........... 50,317,741
Payable to investment adviser.............. 2,947,775
Payable for portfolio shares redeemed...... 193,892
--------------
Total Liabilities........................ 53,698,821
--------------
NET ASSETS................................... $2,617,772,017
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 1,266,927
Paid-in capital, in excess of par........ 2,372,417,930
--------------
2,373,684,857
Accumulated distributions in excess of net
investment income........................ (5,718,849)
Accumulated net realized gains............. 3,334,464
Net unrealized appreciation................ 246,471,545
--------------
Net assets, December 31, 1994.............. $2,617,772,017
--------------
--------------
Net asset value per share of 126,692,657
outstanding shares of common stock
(authorized 200,000,000 shares).......... $ 20.6624
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 50,216,245
Interest................................... 20,648,244
---------------
70,864,489
---------------
EXPENSES
Investment management fee.................. 10,874,059
Foreign withholding tax.................... 1,200,006
Shareholders' reports...................... 651,725
S.E.C. fees................................ 144,182
Accounting fees............................ 143,460
Custodian expense -- net................... 77,177
Professional fees.......................... 71,071
Directors' expense......................... 2,913
Miscellaneous expenses..................... 127
---------------
13,164,720
---------------
NET INVESTMENT INCOME........................ 57,699,769
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments........... 84,713,465
Net unrealized loss on investments......... (76,779,978)
---------------
NET GAIN ON INVESTMENTS...................... 7,933,487
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 65,633,256
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 57,699,769 $ 36,054,825
Net realized gain on investments....................................................... 84,713,465 124,861,589
Net unrealized gain (loss) on investments.............................................. (76,779,978) 185,462,685
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... 65,633,256 346,379,099
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (56,757,732) (36,692,128)
Net realized gain from investment transactions......................................... (106,046,594) (103,435,491)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (162,804,326) (140,127,619)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [19,167,446 and 21,331,255 shares, respectively].................... 412,393,503 447,667,281
Reinvestment of dividend distributions [7,934,974 and 6,632,819 shares,
respectively]......................................................................... 162,804,326 140,127,619
Capital stock repurchased [(2,170,186) and (1,143,204) shares, respectively]........... (46,752,467) (24,126,373)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 528,445,362 563,668,527
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 431,274,292 769,920,007
NET ASSETS:
Beginning of year...................................................................... 2,186,497,725 1,416,577,718
------------------ -------------------
End of year............................................................................ $ 2,617,772,017 $ 2,186,497,725
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A3
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$3,347,362,272).......................... $3,478,056,152
Cash....................................... 1,392
Interest and dividends receivable.......... 23,489,135
Receivable for securities sold............. 35,026,977
--------------
Total Assets............................. 3,536,573,656
--------------
LIABILITIES
Accrued expenses........................... 323,207
Payable for securities purchased........... 49,250,851
Payable to investment adviser.............. 5,363,453
Payable for portfolio shares redeemed...... 95,846
--------------
Total Liabilities........................ 55,033,357
--------------
NET ASSETS................................... $3,481,540,299
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 2,246,733
Paid-in capital, in excess of par........ 3,405,640,023
--------------
3,407,886,756
Accumulated distributions in excess of net
investment income........................ (7,770,622)
Accumulated distributions in excess of net
realized gains........................... (49,268,078)
Net unrealized appreciation (depreciation)
Securities............................... 130,693,880
Foreign currency translations............ (1,637)
--------------
Net assets, December 31, 1994.............. $3,481,540,299
--------------
--------------
Net asset value per share of 224,673,289
outstanding shares of common stock
(authorized 300,000,000 shares).......... $ 15.4960
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 40,972,935
Interest................................... 80,410,745
---------------
121,383,680
---------------
EXPENSES
Investment management fee.................. 20,399,604
Shareholders' reports...................... 895,362
Foreign withholding tax.................... 571,581
Accounting fees............................ 231,918
Custodian expense -- net................... 153,924
S.E.C. fees................................ 129,279
Professional fees.......................... 120,289
Directors' expense......................... 3,420
Miscellaneous expenses..................... 189
---------------
22,505,566
---------------
NET INVESTMENT INCOME........................ 98,878,114
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCIES
Net realized gain (loss) on investments --
Securities transactions.................. 23,860,613
Futures contracts........................ (22,340)
---------------
Net realized gain on investments........... 23,838,273
---------------
Net unrealized loss on investments and
foreign currencies--
Securities............................... (230,569,722)
Foreign currency translations............ (1,637)
---------------
Net unrealized loss on investments and
foreign currencies....................... (230,571,359)
---------------
NET LOSS ON INVESTMENTS AND FOREIGN
CURRENCIES................................... (206,733,086)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... ($ 107,854,972)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 98,878,114 $ 94,441,961
Net realized gain on investments....................................................... 23,838,273 202,429,143
Net unrealized gain(loss) on investments and foreign currency translations............. (230,571,359) 106,972,046
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (107,854,972) 403,843,150
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (96,126,295) (96,961,144)
Net realized gain from investment transactions......................................... (98,311,584) (167,511,713)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (194,437,879) (264,472,857)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [22,611,559 and 28,416,647 shares, respectively].................... 370,947,414 490,167,019
Reinvestment of dividend distributions [12,531,550 and 15,710,066 shares,
respectively]......................................................................... 194,437,879 264,472,857
Capital stock repurchased [(4,617,224) and (2,154,837) shares, respectively]........... (73,719,278) (37,398,394)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 491,666,015 717,241,482
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 189,373,164 856,611,775
NET ASSETS:
Beginning of year...................................................................... 3,292,167,135 2,435,555,360
------------------ -------------------
End of year............................................................................ $ 3,481,540,299 $ 3,292,167,135
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A4
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$3,443,877,594).......................... $3,468,953,719
Cash....................................... 2,043
Interest and dividends receivable.......... 24,063,629
Receivable for securities sold............. 20,886,513
--------------
Total Assets............................. 3,513,905,904
--------------
LIABILITIES
Accrued expenses........................... 304,995
Payable for securities purchased........... 7,467,333
Payable to investment adviser.............. 4,963,479
Payable for portfolio shares redeemed...... 65,811
--------------
Total Liabilities........................ 12,801,618
--------------
NET ASSETS................................... $3,501,104,286
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 2,483,940
Paid-in capital, in excess of par........ 3,488,749,211
--------------
3,491,233,151
Distributions in excess of net investment
income................................... (2,593,413)
Accumulated distributions in excess of net
realized gains........................... (12,611,577)
Net unrealized appreciation................ 25,076,125
--------------
Net assets, December 31, 1994.............. $3,501,104,286
--------------
--------------
Net asset value per share of 248,394,018
outstanding shares of common stock
(authorized 300,000,000 shares).......... $ 14.0950
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 21,577,417
Interest................................... 121,932,781
---------------
143,510,198
---------------
EXPENSES
Investment management fee.................. 18,730,421
Shareholders' reports...................... 982,095
Foreign withholding tax.................... 524,162
Accounting fees............................ 216,958
S.E.C. fees................................ 165,214
Custodian expense -- net................... 114,541
Professional fees.......................... 102,549
Directors' expense......................... 3,365
Miscellaneous expenses..................... 182
---------------
20,839,487
---------------
NET INVESTMENT INCOME........................ 122,670,711
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments --
Securities transactions.................. 30,566,616
Futures contracts........................ 184,405
---------------
Net realized gain on investments........... 30,751,021
Net unrealized loss on investments......... (184,854,002)
---------------
NET LOSS ON INVESTMENTS...................... (154,102,981)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... ($ 31,432,270)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 122,670,711 $ 83,594,970
Net realized gain on investments....................................................... 30,751,021 116,251,058
Net unrealized gain(loss) on investments............................................... (184,854,002) 86,497,365
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (31,432,270) 286,343,393
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (120,740,360) (84,057,597)
Net realized gain from investment transactions......................................... (37,214,012) (113,728,724)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (157,954,372) (197,786,321)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [34,889,459 and 48,698,296 shares, respectively].................... 514,344,688 736,447,769
Reinvestment of dividend distributions [11,198,868 and 13,291,624 shares,
respectively]......................................................................... 157,954,372 197,786,321
Capital stock repurchased [(5,887,371) and (2,225,762) shares, respectively]........... (84,977,146) (33,653,303)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 587,321,914 900,580,787
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 397,935,272 989,137,859
NET ASSETS:
Beginning of year...................................................................... 3,103,169,014 2,114,031,155
------------------ -------------------
End of year............................................................................ $ 3,501,104,286 $ 3,103,169,014
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A5
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
ZERO COUPON BOND 1995 PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$17,721,753)............................. $ 17,758,646
Cash....................................... 5,351
--------------
Total Assets............................. 17,763,997
--------------
LIABILITIES
Accrued expenses........................... 5,142
Payable to investment adviser.............. 25,223
--------------
Total Liabilities........................ 30,365
--------------
NET ASSETS................................... $ 17,733,632
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 16,741
Paid-in capital, in excess of par........ 17,695,936
--------------
17,712,677
Distributions in excess of net investment
income................................... (15,516)
Distributions in excess of net realized
gains.................................... (422)
Net unrealized appreciation................ 36,893
--------------
Net assets, December 31, 1994.............. $ 17,733,632
--------------
--------------
Net asset value per share of 1,674,113
outstanding shares of common stock
(authorized 25,000,000 shares)........... $ 10.5929
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Interest................................... $ 1,119,611
---------------
EXPENSES
Investment management fee.................. 60,662
Accounting fees............................ 18,250
Custodian expense -- net................... 5,694
Shareholders' reports...................... 4,264
Directors' expense......................... 1,816
S.E.C. fees................................ 1,006
Professional fees.......................... 493
---------------
92,185
---------------
NET INVESTMENT INCOME........................ 1,027,426
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments........... 1,948
Net unrealized loss on investments......... (1,029,896)
---------------
NET LOSS ON INVESTMENTS...................... (1,027,948)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... ($ 522)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 1,027,426 $ 965,547
Net realized gain on investments....................................................... 1,948 7,307
Net unrealized gain(loss) on investments............................................... (1,029,896) 111,542
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (522) 1,084,396
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (1,001,231) (972,442)
Net realized gain from investment transactions......................................... (3,573) 0
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (1,004,804) (972,442)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [301,289 and 111,174 shares, respectively].......................... 3,295,000 1,287,000
Reinvestment of dividend distributions [94,042 and 85,653 shares, respectively]........ 1,004,804 972,442
Capital stock repurchased [(52,950) and (31,181) shares, respectively]................. (592,000) (360,000)
Initial capitalization repurchased [(18,027) and (35,953) shares, respectively]........ (197,000) (416,000)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 3,510,804 1,483,442
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 2,505,478 1,595,396
NET ASSETS:
Beginning of year...................................................................... 15,228,154 13,632,758
------------------ -------------------
End of year............................................................................ $ 17,733,632 $ 15,228,154
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A6
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
ZERO COUPON BOND 2000 PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$20,000,846)............................. $ 20,665,896
Cash....................................... 2,106
--------------
Total Assets............................. 20,668,002
--------------
LIABILITIES
Accrued expenses........................... 3,844
Payable to investment adviser.............. 29,162
--------------
Total Liabilities........................ 33,006
--------------
NET ASSETS................................... $ 20,634,996
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 17,396
Paid-in capital, in excess of par........ 19,986,241
--------------
20,003,637
Distributions in excess of net investment
income................................... (34,092)
Accumulated net realized gains............. 401
Net unrealized appreciation................ 665,050
--------------
Net assets, December 31, 1994.............. $ 20,634,996
--------------
--------------
Net asset value per share of 1,739,587
outstanding shares of common stock
(authorized 25,000,000 shares)........... $ 11.8620
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Interest................................... $ 1,521,379
---------------
EXPENSES
Investment management fee.................. 84,265
Accounting fees............................ 18,250
Shareholders' reports...................... 5,206
Directors' expense......................... 1,819
Miscellaneous expenses..................... 535
Custodian expense -- net................... (3,054)
---------------
107,021
---------------
NET INVESTMENT INCOME........................ 1,414,358
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments........... 38,776
Net unrealized loss on investments......... (3,049,221)
---------------
NET LOSS ON INVESTMENTS...................... (3,010,445)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... ($ 1,596,087)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 1,414,358 $ 1,247,229
Net realized gain on investments....................................................... 38,776 8,483
Net unrealized gain(loss) on investments............................................... (3,049,221) 1,576,324
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (1,596,087) 2,832,036
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (1,398,377) (1,258,808)
Net realized gain from investment transactions......................................... (38,912) (7,940)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (1,437,289) (1,266,748)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [102,167 and 397,878 shares, respectively].......................... 1,340,000 5,460,000
Reinvestment of dividend distributions [118,462 and 92,723 shares, respectively]....... 1,437,289 1,266,748
Capital stock repurchased [(60,345) and (121,421) shares, respectively]................ (787,000) (1,675,000)
Initial capitalization repurchased [(38,338) and (80,105) shares, respectively]........ (507,000) (1,105,000)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 1,483,289 3,946,748
------------------ -------------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS............................................................................ (1,550,087) 5,512,036
NET ASSETS:
Beginning of year...................................................................... 22,185,083 16,673,047
------------------ -------------------
End of year............................................................................ $ 20,634,996 $ 22,185,083
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A7
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
HIGH YIELD BOND PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$326,056,650)............................ $ 299,082,997
Cash....................................... 219
Interest and dividends receivable.......... 7,505,266
Receivable for securities sold............. 1,590,651
--------------
Total Assets............................. 308,179,133
--------------
LIABILITIES
Accrued expenses........................... 38,417
Payable for securities purchased........... 1,457,852
Payable to investment adviser.............. 458,151
--------------
Total Liabilities........................ 1,954,420
--------------
NET ASSETS................................... $ 306,224,713
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 415,757
Paid-in capital, in excess of par........ 340,891,135
--------------
341,306,892
Accumulated distributions in excess of net
investment income........................ (1,410,346)
Accumulated net realized losses............ (6,698,180)
Net unrealized depreciation................ (26,973,653)
--------------
Net assets, December 31, 1994.............. $ 306,224,713
--------------
--------------
Net asset value per share of 41,575,673
outstanding shares of common stock
(authorized 100,000,000 shares).......... $ 7.3655
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 1,451,223
Interest................................... 30,539,834
---------------
31,991,057
---------------
EXPENSES
Investment management fee.................. 1,683,950
Accounting fees............................ 140,525
Shareholders' reports...................... 108,517
Custodian expense -- net................... 25,191
S.E.C. fees................................ 14,855
Professional fees.......................... 6,374
Directors' expense......................... 1,962
Miscellaneous expenses..................... 17
---------------
1,981,391
---------------
NET INVESTMENT INCOME........................ 30,009,666
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss on investments........... (4,761,509)
Net unrealized loss on investments......... (34,417,342)
---------------
NET LOSS ON INVESTMENTS...................... (39,178,851)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... ($ 9,169,185)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
(AS RESTATED)
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 30,009,666 $ 21,969,043
Net realized gain (loss) on investments................................................ (4,761,509) 9,902,123
Net unrealized gain (loss) on investments.............................................. (34,417,342) 6,056,112
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (9,169,185) 37,927,278
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (30,650,298) (22,294,669)
Net realized gain from investment transactions......................................... (228) (156)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (30,650,526) (22,294,825)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [7,836,280 and 12,700,848 shares, respectively]..................... 64,526,000 105,011,000
Reinvestment of dividend distributions [4,067,658 and 2,686,600 shares,
respectively]......................................................................... 30,650,526 22,294,825
Capital stock repurchased [(3,976,156) and (1,650,203) shares, respectively]........... (31,985,000) (13,774,000)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 63,191,526 113,531,825
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 23,371,815 129,164,278
NET ASSETS:
Beginning of year...................................................................... 282,852,898 153,688,620
------------------ -------------------
End of year............................................................................ $ 306,224,713 $ 282,852,898
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A8
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
STOCK INDEX PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$584,600,736)............................ $ 665,573,026
Cash....................................... 125
Interest and dividends receivable.......... 1,826,860
--------------
Total Assets............................. 667,400,011
--------------
LIABILITIES
Accrued expenses........................... 43,939
Payable for securities purchased........... 1,961,738
Payable to investment adviser.............. 594,419
Payable for daily variation margin on open
futures contracts (see Note 2)........... 178,025
Payable for portfolio shares redeemed...... 87,683
--------------
Total Liabilities........................ 2,865,804
--------------
NET ASSETS................................... $ 664,534,207
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 444,295
Paid-in capital, in excess of par........ 584,354,669
--------------
584,798,964
Accumulated distributions in excess of net
investment income........................ (448,482)
Distributions in excess of net realized
gains.................................... (1,303,715)
Net unrealized appreciation
Securities............................... 80,972,290
Futures contracts........................ 515,150
--------------
Net assets, December 31, 1994.............. $ 664,534,207
--------------
--------------
Net asset value per share of 44,429,452
outstanding shares of common stock
(authorized 100,000,000 shares).......... $ 14.9571
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 17,703,412
Interest................................... 848,482
---------------
18,551,894
---------------
EXPENSES
Investment management fee.................. 2,223,022
Shareholders' reports...................... 169,859
Foreign withholding tax.................... 104,365
Accounting fees............................ 92,457
Custodian expense -- net................... 25,969
Professional fees.......................... 17,287
S.E.C. fees................................ 17,213
Directors' expense......................... 2,108
Miscellaneous expenses..................... 35
---------------
2,652,315
---------------
NET INVESTMENT INCOME........................ 15,899,579
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain (loss) on investments --
Securities transactions.................. 225,124
Futures contracts........................ (1,036,890)
---------------
Net realized loss on investments........... (811,766)
---------------
Net unrealized gain (loss) on investments
--
Securities............................... (8,921,232)
Futures contracts........................ 486,200
---------------
Net unrealized loss on investments......... (8,435,032)
---------------
NET LOSS ON INVESTMENTS...................... (9,246,798)
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 6,652,781
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 15,899,579 $ 12,982,334
Net realized gain (loss) on investments................................................ (811,766) 2,033,345
Net unrealized gain (loss) on investments.............................................. (8,435,032) 33,892,763
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... 6,652,781 48,908,442
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (15,754,398) (13,030,262)
Net realized gain from investment transactions......................................... (958,203) (1,280,819)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (16,712,601) (14,311,081)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [4,553,644 and 10,331,253 shares, respectively]..................... 68,598,345 152,405,579
Reinvestment of dividend distributions [1,130,115 and 959,900 shares, respectively].... 16,712,601 14,311,081
Capital stock repurchased [(1,718,830) and (1,313,029) shares, respectively]........... (25,854,984) (19,639,158)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 59,455,962 147,077,502
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 49,396,142 181,674,863
NET ASSETS:
Beginning of year...................................................................... 615,138,065 433,463,202
------------------ -------------------
End of year............................................................................ $ 664,534,207 $ 615,138,065
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A9
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
HIGH DIVIDEND STOCK PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$873,043,522)............................ $ 859,427,250
Cash....................................... 763
Interest and dividends receivable.......... 4,068,061
--------------
Total Assets............................. 863,496,074
--------------
LIABILITIES
Accrued expenses........................... 94,060
Payable for securities purchased........... 2,875,386
Payable to investment adviser.............. 855,376
--------------
Total Liabilities........................ 3,824,822
--------------
NET ASSETS................................... $ 859,671,252
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 593,526
Paid-in capital, in excess of par........ 873,328,334
--------------
873,921,860
Undistributed net investment income........ 145,759
Distributions in excess of net realized
gains.................................... (780,095)
Net unrealized depreciation................ (13,616,272)
--------------
Net assets, December 31, 1994.............. $ 859,671,252
--------------
--------------
Net asset value per share of 59,352,571
outstanding shares of common stock
(authorized 100,000,000 shares).......... $ 14.4842
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 28,264,031
Interest................................... 5,609,616
---------------
33,873,647
---------------
EXPENSES
Investment management fee.................. 3,061,395
Foreign withholding tax.................... 442,666
Shareholders' reports...................... 222,968
S.E.C. fees................................ 90,342
Accounting fees............................ 75,849
Custodian expense -- net................... 39,777
Professional fees.......................... 8,495
Directors' expense......................... 2,142
Miscellaneous expenses..................... 37
---------------
3,943,671
---------------
NET INVESTMENT INCOME........................ 29,929,976
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments........... 41,343,251
Net unrealized loss on investments......... (64,632,006)
---------------
NET LOSS ON INVESTMENTS...................... (23,288,755)
---------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ 6,641,221
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 29,929,976 $ 14,507,277
Net realized gain on investments....................................................... 41,343,251 21,045,993
Net unrealized gain(loss) on investments............................................... (64,632,006) 35,871,500
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................... 6,641,221 71,424,770
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (29,421,933) (14,844,865)
Net realized gain from investment transactions......................................... (44,325,396) (18,679,382)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (73,747,329) (33,524,247)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [16,514,586 and 19,384,187 shares, respectively].................... 261,909,000 300,016,000
Reinvestment of dividend distributions [5,080,100 and 2,176,775 shares,
respectively]......................................................................... 73,747,329 33,524,247
Capital stock repurchased [(746,813) and (196,958) shares, respectively]............... (11,659,000) (3,017,000)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 323,997,329 330,523,247
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 256,891,221 368,423,770
NET ASSETS:
Beginning of year...................................................................... 602,780,031 234,356,261
------------------ -------------------
End of year............................................................................ $ 859,671,252 $ 602,780,031
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A10
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
NATURAL RESOURCES PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$227,082,786)............................ $ 230,156,734
Cash....................................... 204
Interest and dividends receivable.......... 455,179
--------------
Total Assets............................. 230,612,117
--------------
LIABILITIES
Accrued expenses........................... 37,673
Payable for securities purchased........... 3,040,439
Payable to investment adviser.............. 260,076
--------------
Total Liabilities........................ 3,338,188
--------------
NET ASSETS................................... $ 227,273,929
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 157,357
Paid-in capital, in excess of par........ 222,958,907
--------------
223,116,264
Undistributed net investment income........ 36,877
Accumulated net realized gains............. 1,046,840
Net unrealized appreciation................ 3,073,948
--------------
Net assets, December 31, 1994.............. $ 227,273,929
--------------
--------------
Net asset value per share of 15,735,726
outstanding shares of common stock
(authorized 100,000,000 shares).......... $ 14.4432
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 2,919,308
Interest................................... 547,273
---------------
3,466,581
---------------
EXPENSES
Investment management fee.................. 917,600
Foreign withholding tax.................... 155,276
Shareholders' reports...................... 56,649
Accounting fees............................ 45,569
Custodian expense -- net................... 28,357
S.E.C. fees................................ 27,962
Professional fees.......................... 4,165
Directors' expense......................... 1,894
Miscellaneous expenses..................... 10
---------------
1,237,482
---------------
NET INVESTMENT INCOME........................ 2,229,099
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized gain on investments --
Securities transactions.................. 4,039,297
Options written.......................... 32,757
---------------
Net realized gain on investments........... 4,072,054
Net unrealized loss on investments......... (16,859,455)
---------------
NET LOSS ON INVESTMENTS...................... (12,787,401)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... ($ 10,558,302)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 2,229,099 $ 1,708,004
Net realized gain on investments....................................................... 4,072,054 4,531,550
Net unrealized gain (loss) on investments.............................................. (16,859,455) 15,555,589
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (10,558,302) 21,795,143
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (2,145,214) (1,727,285)
Net realized gain from investment transactions......................................... (4,370,759) (3,710,814)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (6,515,973) (5,438,099)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [5,475,055 and 4,020,200 shares, respectively]...................... 85,097,000 61,876,000
Reinvestment of dividend distributions [446,624 and 360,819 shares, respectively]...... 6,515,973 5,438,099
Capital stock repurchased [(393,177) and (161,277) shares, respectively]............... (6,107,000) (2,363,000)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 85,505,973 64,951,099
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 68,431,698 81,308,143
NET ASSETS:
Beginning of year...................................................................... 158,842,231 77,534,088
------------------ -------------------
End of year............................................................................ $ 227,273,929 $ 158,842,231
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A11
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
GLOBAL EQUITY PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$333,259,423)............................ $ 340,065,997
Foreign currency, at value (cost:
$7,107,458).............................. 7,169,111
Dividends and interest receivable.......... 240,756
Receivable for securities sold............. 2,036,391
Receivable for portfolio shares sold....... 5,435
Other assets............................... 163,813
--------------
Total Assets............................. 349,681,503
--------------
LIABILITIES
Bank overdraft............................. 151,478
Accrued expenses........................... 507,759
Payable for securities purchased........... 2,689,594
Payable to investment adviser.............. 598,694
--------------
Total Liabilities........................ 3,947,525
--------------
NET ASSETS................................... $ 345,733,978
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 249,106
Paid-in capital, in excess of par........ 339,734,079
--------------
339,983,185
Distributions in excess of net investment
income................................... (306,676)
Accumulated net realized losses............ (830,366)
Net unrealized appreciation on securities
and foreign currency translations........ 6,887,835
--------------
Net assets, December 31, 1994.............. $ 345,733,978
--------------
--------------
Net asset value per share of 24,910,615
outstanding shares of common stock
(authorized 100,000,000 shares).......... $ 13.8790
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Dividends.................................. $ 2,857,120
Interest................................... 602,579
---------------
3,459,699
---------------
EXPENSES
Investment management fee.................. 1,798,467
Custodian expense -- net................... 695,706
Income taxes -- foreign.................... 284,990
Accounting fees............................ 101,774
S.E.C. fees................................ 82,504
Shareholders' reports...................... 17,205
Professional fees.......................... 2,375
Directors' expense......................... 1,886
Miscellaneous expenses..................... 70
---------------
2,984,977
---------------
NET INVESTMENT INCOME........................ 474,722
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
SECURITIES AND FOREIGN CURRENCIES
Net realized loss on securities and foreign
currency transactions.................... (578,250)
Net unrealized loss on securities and
foreign currency translations............ (16,334,560)
---------------
NET LOSS ON SECURITIES AND FOREIGN
CURRENCIES................................... (16,912,810)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... $ (16,438,088)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 474,722 $ 113,317
Net realized gain (loss) on securities and foreign currency transactions............... (578,250) 2,342,360
Net unrealized gain (loss) on securities and foreign currency translations............. (16,334,560) 21,161,913
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (16,438,088) 23,617,590
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (499,141) (403,351)
Net realized gain from investment transactions......................................... (394,438) (839,910)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (893,579) (1,243,261)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [17,513,960 and 5,977,164 shares, respectively]..................... 254,421,899 78,356,145
Reinvestment of dividend distributions [64,991 and 90,677 shares, respectively]........ 893,579 1,243,261
Capital stock repurchased [(751,122) and (141,366) shares, respectively]............... (10,781,034) (1,761,681)
Initial capitalization repurchased [(735,674) and (391,272) shares, respectively]...... (10,558,000) (5,164,000)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 233,976,444 72,673,725
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 216,644,777 95,048,054
NET ASSETS:
Beginning of year...................................................................... 129,089,201 34,041,147
------------------ -------------------
End of year............................................................................ $ 345,733,978 $ 129,089,201
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A12
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
GOVERNMENT SECURITIES PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$507,031,047)............................ $ 478,087,478
Cash....................................... 329
Interest receivable........................ 8,947,544
Receivable for portfolio shares sold....... 1,059,634
--------------
Total Assets............................. 488,094,985
--------------
LIABILITIES
Accrued expenses........................... 5,192
Payable to investment adviser.............. 515,488
--------------
Total Liabilities........................ 520,680
--------------
NET ASSETS................................... $ 487,574,305
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 466,072
Paid-in capital, in excess of par........ 526,044,120
--------------
526,510,192
Undistributed net investment income........ 931,495
Accumulated net realized losses............ (10,923,813)
Net unrealized depreciation................ (28,943,569)
--------------
Net assets, December 31, 1994.............. $ 487,574,305
--------------
--------------
Net asset value per share of 46,607,219
outstanding shares of common stock
(authorized 100,000,000 shares).......... $ 10.4614
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Interest................................... $ 35,819,887
---------------
EXPENSES
Investment management fee.................. 2,125,130
Shareholders' reports...................... 168,609
Accounting fees............................ 73,159
Custodian expense -- net................... 13,387
Professional fees.......................... 9,127
Directors' expense......................... 2,077
Miscellaneous expenses..................... 31
S.E.C. fees................................ (3,561)
---------------
2,387,959
---------------
NET INVESTMENT INCOME........................ 33,431,928
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net realized loss on investments........... (10,380,614)
Net unrealized loss on investments......... (52,690,952)
---------------
NET LOSS ON INVESTMENTS...................... (63,071,566)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... ($ 29,639,638)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 33,431,928 $ 25,803,560
Net realized gain (loss) on investments................................................ (10,380,614) 884,434
Net unrealized gain(loss) on investments............................................... (52,690,952) 19,594,824
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (29,639,638) 46,282,818
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (32,955,665) (25,487,269)
Net realized gain from investment transactions......................................... 0 (1,904,203)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (32,955,665) (27,391,472)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [3,591,224 and 15,693,270 shares, respectively]..................... 41,656,912 185,551,898
Reinvestment of dividend distributions [3,094,061 and 2,328,874 shares,
respectively]......................................................................... 32,955,665 27,391,472
Capital stock repurchased [(5,912,961) and (449,498) shares, respectively]............. (64,569,681) (5,251,752)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 10,042,896 207,691,618
------------------ -------------------
TOTAL INCREASE (DECREASE)
IN NET ASSETS............................................................................ (52,552,407) 226,582,964
NET ASSETS:
Beginning of year...................................................................... 540,126,712 313,543,748
------------------ -------------------
End of year............................................................................ $ 487,574,305 $ 540,126,712
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A13
<PAGE>
FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
ZERO COUPON BOND 2005 PORTFOLIO
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1994
<S> <C>
ASSETS
Investments, at value (cost:
$16,718,218)............................. $ 16,531,317
Cash....................................... 971
Interest receivable........................ 404
--------------
Total Assets............................. 16,532,692
--------------
LIABILITIES
Accrued expenses........................... 3,464
Payable to investment adviser.............. 23,530
--------------
Total Liabilities........................ 26,994
--------------
NET ASSETS................................... $ 16,505,698
--------------
--------------
Net assets were comprised of:
Common stock, at $0.01 par value......... $ 15,363
Paid-in capital, in excess of par........ 16,654,038
--------------
16,669,401
Undistributed net investment income........ 23,198
Net unrealized depreciation................ (186,901)
--------------
Net assets, December 31, 1994.............. $ 16,505,698
--------------
--------------
Net asset value per share of 1,536,257
outstanding shares of common stock
(authorized 50,000,000 shares)........... $ 10.7441
--------------
--------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
Year Ended December 31, 1994
<S> <C>
INVESTMENT INCOME
Interest................................... $ 1,042,827
---------------
EXPENSES
Investment management fee.................. 57,716
Accounting fees............................ 18,250
Custodian expense -- net................... 4,522
Shareholders' reports...................... 3,767
Directors' expense......................... 1,816
S.E.C. fees................................ 1,318
Miscellaneous expenses..................... 262
---------------
87,651
---------------
NET INVESTMENT INCOME........................ 955,176
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized loss on investments......... (2,370,041)
---------------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... ($ 1,414,865)
---------------
---------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31
---------------------------------------
1994 1993
------------------ -------------------
<S> <C> <C>
OPERATIONS:
Net investment income.................................................................. $ 955,176 $ 751,943
Net realized gain on investments....................................................... 0 6,214
Net unrealized gain(loss) on investments............................................... (2,370,041) 1,440,496
------------------ -------------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS........................ (1,414,865) 2,198,653
------------------ -------------------
DIVIDENDS TO SHAREHOLDERS FROM:
Net investment income.................................................................. (938,283) (751,577)
Net realized gain from investment transactions......................................... (3,855) (2,358)
------------------ -------------------
TOTAL DIVIDENDS TO SHAREHOLDERS........................................................ (942,138) (753,935)
------------------ -------------------
CAPITAL TRANSACTIONS:
Capital stock sold [461,883 and 442,819 shares, respectively].......................... 5,262,071 5,590,000
Reinvestment of dividend distributions [86,081 and 60,299 shares, respectively]........ 942,138 753,935
Capital stock repurchased [(31,239) and (169,578) shares, respectively]................ (366,000) (2,099,000)
Initial capitalization repurchased [(122,127) and (82,494) shares, respectively]....... (1,448,071) (1,040,000)
------------------ -------------------
NET INCREASE IN NET ASSETS RESULTING FROM CAPITAL TRANSACTIONS......................... 4,390,138 3,204,935
------------------ -------------------
TOTAL INCREASE IN NET ASSETS............................................................. 2,033,135 4,649,653
NET ASSETS:
Beginning of year...................................................................... 14,472,563 9,822,910
------------------ -------------------
End of year............................................................................ $ 16,505,698 $ 14,472,563
------------------ -------------------
------------------ -------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
A14
<PAGE>
THE PRUDENTIAL SERIES FUND, INC.
INVESTMENT OBJECTIVES
(Schedule of Investments appear on the following pages)
--------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS
MONEY MARKET Maximum current income, stability of capital and
maintenance of liquidity through investment in high
quality short-term debt instruments.
BOND A high level of income over the longer term, providing
reasonable safety of capital through investment in readily
marketable intermediate and long-term fixed income
securities.
GOVERNMENT High level of income, over the longer term, through
SECURITIES investment primarily in U.S. Government securities,
including intermediate and long-term Treasury bonds, and
other debt obligations issued by U.S. Government agencies
and instrumentalities. Any investment in the portfolio is
neither guaranteed, nor insured, by the U.S. Government.
ZERO COUPON BONDS Highest predictable compound investment return consistent
with safety of capital, if held to maturity, through
investment primarily in debt obligations of the U.S.
Treasury and investment grade corporations.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
HIGH YIELD BOND PORTFOLIOS
HIGH YIELD BONDS Seeks a high total return through investment in a
diversified portfolio of low to medium quality (high
yield) fixed income securities. Such securities have
speculative characteristics, and generally involve greater
risks of loss than higher quality securities.
--------------------------------------------------------------------------------
DIVERSIFIED STOCK PORTFOLIOS
STOCK INDEX Seeks results that correspond to the price and yield
performance of the broad, publicly-traded stock market by
trying to duplicate the performance of the Standard and
Poor's 500 Composite Stock Price Index.
HIGH DIVIDEND STOCK Seeks both current income and capital appreciation by
investing primarily in stocks and convertible securities
with prospects for income returns above those of the S&P
500 Index or New York Stock Exchange indices.
COMMON STOCK The portfolio seeks capital appreciation through
investment primarily in stocks and convertible securities
of major, established corporations as well as stocks of
smaller companies. Income from dividends from the
portfolio's investments will be incidental.
GLOBAL EQUITY Seeks long-term capital growth through investment
primarily in common stock and common stock equivalents of
foreign and domestic corporations.
--------------------------------------------------------------------------------
SPECIALIZED PORTFOLIOS
NATURAL RESOURCES Seeks long term growth of capital by investing primarily
in stocks and convertible securities of companies that
operate within the natural resources sector of the
economy.
B1
<PAGE>
THE PRUDENTIAL SERIES FUND, INC.
SCHEDULE OF INVESTMENTS
MONEY MARKET PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 99.7% AMOUNT VALUE
------------- --------------
<S> <C> <C>
BANK-RELATED INSTRUMENTS -- 17.0%
Bank of Montreal, C.D.,
5.800%, 01/30/95.............................. $ 25,000,000 $ 25,000,000
Bank of Tokyo, Ltd., C.D.,
6.460%, 03/30/95.............................. 10,000,000 10,000,000
Fuji Bank, Ltd, C.D.,
5.906%, 01/20/95.............................. 10,000,000 10,000,000
Industrial Bank of Japan, Ltd., T.D.,
6.375%, 03/28/95.............................. 10,000,000 10,000,000
Mitsubishi Bank, Ltd, T.D.,
7.000%, 01/03/95.............................. 4,047,000 4,047,000
Republic National Bank of New York, C.D.,
4.300%, 03/08/95.............................. 10,000,000 9,994,761
Sanwa Bank, Ltd., C.D.,
5.950%, 01/30/95.............................. 11,000,000 11,000,000
6.040%, 02/02/95.............................. 6,000,000 6,000,000
Societe Generale, C.D.,
5.650%, 02/07/95.............................. 5,000,000 5,000,000
Sumitomo Bank, Ltd., C.D.,
5.960%, 01/30/95.............................. 5,000,000 5,000,000
Sumitomo Bank, Ltd., T.D.,
6.060%, 02/01/95.............................. 3,000,000 3,000,000
--------------
99,041,761
--------------
COMMERCIAL PAPER -- 68.9%
American Express Centurion Bank,
%4.500%, 08/04/95, Tranche #TR00037........... 2,000,000 1,999,883
%4.813%, 08/18/95, Tranche #TR00039........... 3,000,000 2,999,813
American Home Products Corp.,
5.900%, 01/31/95.............................. 28,000,000 27,871,511
American Honda Finance Corp.,
5.980%, 01/31/95.............................. 4,000,000 3,981,396
6.150%, 01/30/95.............................. 2,000,000 1,990,775
Aristar, Inc.,
5.540%, 01/23/95.............................. 1,000,000 996,922
5.940%, 02/01/95.............................. 1,700,000 1,691,866
6.040%, 02/01/95.............................. 1,000,000 995,134
Asset Securitization Cooperative Corp.,
5.500%, 01/17/95-01/23/95..................... 14,000,000 13,965,472
5.520%, 01/23/95.............................. 6,000,000 5,981,600
5.970%, 02/01/95.............................. 6,000,000 5,971,145
Associates Corp. of North America,
5.770%, 01/31/95.............................. 8,000,000 7,964,098
%Avco Financial Services, Inc.,
4.677%, 09/13/95.............................. 4,000,000 4,000,000
Bankers Trust New York Corp.,
5.440%, 01/24/95.............................. 20,000,000 19,936,533
Chrysler Financial Corp.,
5.750%, 01/18/95.............................. 11,000,000 10,973,646
CIT Group Holdings, Inc.,
6.270%, 03/13/95.............................. 9,000,000 8,891,843
Coca-Cola Enterprises, Inc.,
6.015%, 02/01/95.............................. 10,000,000 9,951,546
6.170%, 03/07/95.............................. 5,000,000 4,946,013
Commercial Credit Co.,
5.750%, 01/31/95.............................. 2,000,000 1,991,056
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Corporate Asset Funding Co., Inc.,
5.500%, 01/11/95.............................. $ 1,000,000 $ 998,778
Dean Witter, Discover & Co.,
5.780%, 01/23/95.............................. 373,000 371,802
5.970%, 02/01/95.............................. 1,397,000 1,390,282
Duracell, Inc.,
6.300%, 02/10/95.............................. 1,000,000 993,350
Falcon Asset Securitization Corp.,
6.170%, 02/06/95-03/07/95..................... 15,725,000 15,608,336
First National Bank of Chicago,
5.688%, 02/22/95, Tranche #TR00087............ 2,000,000 2,000,000
Ford Motor Credit Co.,
5.780%, 02/01/95.............................. 8,000,000 7,962,751
6.000%, 01/23/95.............................. 1,423,000 1,418,257
6.050%, 01/17/95.............................. 1,000,000 997,647
Fuji Bank, Ltd.,
6.200%, 02/10/95.............................. 3,000,000 2,980,367
General Electric Capital Corp.,
5.430%, 01/11/95.............................. 2,000,000 1,997,587
5.850%, 01/30/95.............................. 5,000,000 4,978,063
6.450%, 04/13/95.............................. 9,650,000 9,477,104
General Mills, Inc.,
5.600%, 02/03/95.............................. 2,870,000 2,856,160
General Motors Acceptance Corp.,
5.740%, 01/17/95.............................. 27,400,000 27,338,837
Golden Peanut Co.,
5.600%, 02/01/95.............................. 3,000,000 2,986,467
Greyhound Financial Corp.,
6.200%, 01/13/95.............................. 1,000,000 998,278
6.290%, 02/08/95.............................. 3,000,000 2,981,130
6.300%, 01/27/95.............................. 5,000,000 4,979,000
Hanson Finance, PLC,
5.470%, 01/17/95.............................. 1,000,000 997,873
6.260%, 03/03/95.............................. 2,000,000 1,979,481
6.280%, 03/01/95.............................. 2,000,000 1,980,113
Heller Financial, Inc.,
6.300%, 03/13/95-03/14/95..................... 5,000,000 4,939,275
Household Finance Corp.,
5.500%, 01/12/95.............................. 4,000,000 3,994,500
International Lease Finance Corp.,
5.750%, 01/18/95.............................. 2,000,000 1,995,208
ITT Financial Corp.,
6.200%, 01/20/95.............................. 14,000,000 13,959,011
Maguire/Thomas Partners,
6.125%, 01/13/95.............................. 1,715,000 1,712,082
6.360%, 03/21/95.............................. 5,000,000 5,000,000
MCA Funding Corp.,
5.100%, 01/09/95.............................. 7,800,000 7,793,370
McKenna Triangle National Corp.,
6.250%, 03/08/95.............................. 4,000,000 3,955,556
Merrill Lynch & Co., Inc.,
5.750%, 01/17/95.............................. 15,000,000 14,966,458
5.870%, 01/31/95.............................. 3,000,000 2,986,303
Money Market Auto Loan Trust
1990-1,
%3.325%, 11/30/95............................. 2,300,000 2,300,000
%3.375%, 11/30/95............................. 5,000,000 5,000,000
</TABLE>
B2
<PAGE>
MONEY MARKET PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Money Market Credit Card Trust 1989-1,
%3.720%, 06/10/96............................. $ 2,368,182 $ 2,368,070
%3.830%, 06/10/96............................. 1,090,909 1,090,909
%4.420%, 06/10/96............................. 986,364 986,364
Morgan Stanley Group, Inc.,
%3.530%, 12/15/95, Tranche #TR00102........... 5,000,000 5,000,000
%3.593%, 12/15/95, Tranche #TR00102........... 2,000,000 2,000,000
6.270%, 03/01/95.............................. 2,500,000 2,475,181
National Australia Funding, Inc.,
5.600%, 02/01/95.............................. 3,330,000 3,314,978
NationsBank Corp. of North Carolina,
5.400%, 01/23/95.............................. 1,560,000 1,555,320
PNC Bank N.A.,
5.520%, 01/06/95, Tranche #TR00010............ 19,000,000 18,999,874
PNC Bank of Ohio,
3.500%, 01/31/95, Tranche #TR00002............ 2,000,000 1,999,805
Preferred Receivables Funding Corp.,
5.650%, 01/11/95.............................. 4,000,000 3,994,978
Republic National Bank of New York,
5.750%, 02/01/95.............................. 2,000,000 1,999,994
Sears, Roebuck Acceptance Corp.,
5.870%, 01/27/95.............................. 3,000,000 2,988,260
6.050%, 02/06/95.............................. 14,000,000 13,920,006
Sumitomo Corp. of America,
5.125%, 01/09/95.............................. 4,000,000 3,996,583
WCP Funding, Inc.,
6.280%, 03/06/95.............................. 2,000,000 1,978,369
Westpac Capital Corp.,
5.500%, 01/17/95.............................. 2,000,000 1,995,721
6.280%, 03/14/95.............................. 3,000,000 2,963,367
Whirlpool Corp.,
5.570%, 01/09/95.............................. 3,500,000 3,496,750
5.660%, 02/02/95.............................. 1,000,000 995,283
Whirlpool Financial Corp.,
5.500%, 01/12/95.............................. 13,000,000 12,982,125
5.600%, 02/06/95-02/09/95..................... 2,000,000 1,988,956
5.610%, 02/10/95.............................. 2,000,000 1,988,156
WMX Technologies,
5.225%, 02/07/95.............................. 3,000,000 2,984,760
--------------
402,037,487
--------------
MEDIUM TERM NOTES -- 10.7%
%American Express Centurion Bank, M.T.N.,
4.813%, 09/19/95, Tranche #TR00080............ 2,000,000 1,999,861
%Beneficial Corp., M.T.N.,
4.487%, 07/19/95, Tranche #TR00768............ 7,000,000 6,997,412
Fifth Third Bank, M.T.N.,
6.200%, 02/07/95, Tranche #TR00075............ 4,000,000 4,000,188
Ford Motor Credit Co.,
9.300%, 03/15/95.............................. 2,000,000 2,017,850
General Motors Acceptance Corp., M.T.N.,
6.900%, 05/08/95, Tranche #TR00347............ 500,000 501,829
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
**Goldman Sachs Group L.P., M.T.N.,
5.375%, 01/11/96, Series A.................... $ 28,000,000 $ 28,000,000
Merrill Lynch & Co., Inc., M.T.N.,
%4.823%, 09/22/95, Tranche #TR00106........... 3,000,000 2,999,580
4.885%, 10/02/95, Tranche #TR00110............ 6,500,000 6,499,055
%Morgan Stanley Group, Inc., M.T.N.,
3.405%, 01/16/96, Tranche #TR00010............ 4,000,000 4,000,000
Society Bank of North America, M.T.N.,
3.550%, 01/20/95, Tranche #TR00005............ 2,500,000 2,499,810
Toyota Motor Credit Corp., M.T.N.,
5.700%, 01/23/95, Tranche #TR00029............ 3,000,000 2,998,996
--------------
62,514,581
--------------
PROMISSORY NOTES -- 3.1%
Lehman Brothers Holdings, Inc.,
5.028%, 05/23/95.............................. 15,000,000 15,000,000
Orix America, Inc.,
5.850%, 01/27/95.............................. 3,000,000 2,988,300
--------------
17,988,300
--------------
TOTAL SHORT-TERM INVESTMENTS..................................... 581,582,129
--------------
OTHER ASSETS -- 0.3%
(net of liabilities)........................................... 1,699,348
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 583,281,477
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
C.D. Certificates of Deposit
L.P. Limited Partnership
M.T.N. Medium Term Note
PLC Public Limited Company (British Corporation)
T.D. Time Deposit
**Indicates a restricted security; the aggregate cost of the restricted
securities is $28,000,000. The aggregate value, $28,000,000 is
approximately 4.8% of net assets. (See Note 2)
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B3
<PAGE>
BOND PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 95.3% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 14.4%
Abbey National First Capital,
8.200%, 10/15/04.............................. $ 3,000,000 $ 2,928,630
Aristar, Inc.,
5.750%, 07/15/98.............................. 2,000,000 1,837,600
7.500%, 07/01/99.............................. 2,000,000 1,919,440
Associates Corp. of North America,
8.375%, 01/15/98.............................. 500,000 499,995
8.800%, 01/14/95.............................. 1,000,000 1,000,380
Chase Manhattan Corp.,
8.000%, 06/15/99.............................. 2,000,000 1,964,800
Chemical Bank,
6.625%, 08/15/05.............................. 2,000,000 1,713,160
Chrysler Finance Corp., M.T.N.,
5.260%, 07/06/95, Tranche #TR00029............ 900,000 890,334
5.340%, 07/05/95, Tranche #TR00028............ 2,300,000 2,276,356
Chrysler Financial Corp.,
9.500%, 12/15/99.............................. 5,000,000 5,187,800
Citicorp, M.T.N.,
8.500%, 02/24/97, Tranche #TR00128............ 3,000,000 3,018,390
Coles Myer Finance USA, Ltd., M.T.N.,
5.560%, 02/15/99, Tranche #TR00018............ 6,000,000 5,413,140
Countrywide Funding Corp., M.T.N.,
6.880%, 08/03/98, Tranche #TR00025............ 4,000,000 3,811,040
Equicredit Home Equity Loan Trust, CMO,
7.850%, 08/15/07, Series 1994-3, Class A-3.... 5,000,000 4,823,438
First Fidelity Bancorp,
9.750%, 05/25/95.............................. 5,000,000 5,049,300
Ford Motor Credit Co.,
6.250%, 02/26/98.............................. 3,000,000 2,826,090
General Motors Acceptance Corp.,
8.400%, 10/15/99.............................. 3,700,000 3,698,483
General Motors Acceptance Corp., M.T.N.,
7.500%, 11/04/97, Tranche #TR00598............ 2,000,000 1,946,940
Goldman Sachs Group, L.P.,
6.100%, 04/15/98.............................. 2,000,000 1,856,980
**John Hancock Mutual Life Insurance Co.,
7.375%, 02/15/24.............................. 3,000,000 2,414,670
Mellon Financial Co.,
6.500%, 12/01/97.............................. 2,000,000 1,912,200
NationsBank Corp. of North Carolina,
6.625%, 01/15/98.............................. 3,000,000 2,859,210
%Nomura Asset Securities Corp., CMO,
8.026%, 12/15/06, 1994 MDA, Class A-3......... 3,000,000 2,821,875
**Potomac Capital Investment Corp., M.T.N.,
6.190%, 04/28/97, Series B.................... 3,500,000 3,466,627
Republic New York Corp.,
9.125%, 05/15/21.............................. 2,850,000 2,978,591
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Sovereign Bancorp, Inc.
6.750%, 09/01/00.............................. $ 5,000,000 $ 4,475,000
Union Bank Finland, Ltd.,
5.250%, 06/15/96.............................. 3,000,000 2,872,530
Zurich Reinsurance Centre Holdings, Inc.,
7.125%, 10/15/23.............................. 2,000,000 1,587,680
--------------
78,050,679
--------------
FOREIGN -- 15.7%
Australia & New Zealand Banking Group, Ltd.,
6.250%, 02/01/04.............................. 3,000,000 2,566,560
**Banco Del Estado-Chile,
8.390%, 08/01/01.............................. 2,100,000 1,979,250
**Banco Ganadero, SA, M.T.N.,
9.750%, 08/26/99, Tranche #TR00001............ 4,100,000 3,977,000
Canadian Pacific Forest Products Ltd.,
10.250%, 01/15/03............................. 4,000,000 3,963,390
Carter Holt Harvey, Ltd.,
8.875%, 12/01/04.............................. 2,500,000 2,524,150
**Cemex, SA,
8.875%, 06/10/98.............................. 6,000,000 5,265,000
Central Puerto and Cent Negue, SA,
10.750%, 11/02/97............................. 3,000,000 2,872,500
**Compania Sud Americana de Vapores, SA,
7.375%, 12/08/03.............................. 4,000,000 3,275,000
%Hydro-Quebec,
3.438%, 09/30/49, Series G-1E4................ 3,000,000 2,507,813
**Kansallis-Osake Pankki, N.Y.,
8.650%, 12/29/49.............................. 5,000,000 4,837,500
Korea Development Bank,
8.090%, 10/06/04.............................. 5,400,000 5,284,940
National Australia Bank, Ltd.,
9.700%, 10/15/98.............................. 1,700,000 1,774,970
Nippon Telegraph & Telephone Corp.,
9.500%, 07/27/98.............................. 1,800,000 1,869,588
Noranda, Inc.,
8.125%, 06/15/04.............................. 2,000,000 1,912,380
Nova Scotia, Province of Canada,
8.875%, 07/01/19.............................. 3,000,000 2,900,460
Ontario, Province of Canada,
15.750%, 03/15/12............................. 3,475,000 4,139,280
**%Petroleos Mexicanos,
5.563%, 03/08/99.............................. 2,500,000 2,375,000
Republic of Argentina,
8.375%, 12/20/03.............................. 4,000,000 2,850,000
Republic of Columbia,
7.250%, 02/23/04.............................. 2,500,000 2,059,375
8.750%, 10/06/99.............................. 3,500,000 3,338,125
Republic of Italy,
6.875%, 09/27/23.............................. 4,000,000 3,150,880
Republic of South Africa,
9.625%, 12/15/99.............................. 4,000,000 3,961,250
**Republic of Trinidad and Tobago,
11.750%, 10/03/04............................. 4,000,000 4,050,000
Saskatchewan, Province of Canada,
8.000%, 07/15/04.............................. 4,000,000 3,872,560
Svenska Handelsbanken,
8.125%, 08/15/07.............................. 2,500,000 2,350,225
</TABLE>
B4
<PAGE>
BOND PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
**Tenaga Nasional Berhad,
7.875%, 06/15/04.............................. $ 3,000,000 $ 2,856,570
United States of Mexico with Rights,
6.250%, 12/31/19, Class B..................... 4,000,000 2,175,000
--------------
84,688,766
--------------
INDUSTRIAL -- 17.2%
Arkla, Inc., M.T.N.,
9.320%, 12/18/00, Tranche #TR00043............ 2,000,000 1,962,460
9.380%, 03/15/96, Tranche #TR00018............ 1,300,000 1,308,567
Boise Cascade Corp.,
9.875%, 02/15/01.............................. 1,000,000 1,002,040
Borden, Inc.,
7.875%, 02/15/23.............................. 2,000,000 1,463,680
Carnival Cruise Lines, Inc.,
5.750%, 03/15/98.............................. 3,000,000 2,766,810
Comsat Corp.,
8.125%, 04/01/04.............................. 4,000,000 3,898,480
Crane Co.,
7.250%, 06/15/99.............................. 3,000,000 2,842,020
Delta Air Lines, Inc., M.T.N.,
7.790%, 12/01/98.............................. 1,000,000 928,400
8.380%, 06/12/98, Tranche #TR00017............ 2,000,000 1,897,680
Enterprise Rent A Car, M.T.N.,
8.750%, 12/15/99 Tranche #TR00001............. 3,000,000 2,989,650
Federal Express Corp.,
9.650%, 06/15/12.............................. 3,000,000 3,164,610
Fleming Companies, Inc., C.D.,
10.625%, 12/15/01............................. 4,000,000 4,000,000
Georgia-Pacific Corp.,
9.625%, 03/15/22.............................. 1,500,000 1,515,075
J.C. Penney Co., Inc.,
9.750%, 06/15/21.............................. 6,400,000 6,902,144
Laidlaw, Inc.,
8.250%, 05/15/23.............................. 2,500,000 2,177,225
News America Holdings, Inc.,
7.450%, 06/01/00.............................. 3,000,000 2,796,330
7.750%, 02/01/24.............................. 3,300,000 2,684,352
Noble Affiliates, Inc.,
7.250%, 10/15/23.............................. 2,000,000 1,596,200
Oryx Energy Co., M.T.N.,
6.050%, 02/01/96, Tranche #TR00013............ 3,000,000 2,887,500
Philip Morris Companies, Inc.,
7.500%, 01/15/02.............................. 2,500,000 2,343,100
9.000%, 01/01/01.............................. 4,800,000 4,858,032
Procter & Gamble Co., ESOP,
9.360%, 01/01/21, Series A.................... 4,900,000 5,286,120
PT Alatief Freeport Financial Co.,
9.750%, 04/15/01.............................. 5,750,000 5,606,250
Royal Caribbean Cruises Ltd.,
11.375%, 05/15/02............................. 4,000,000 4,250,000
Sears, Roebuck & Co.,
9.375%, 11/01/11.............................. 2,000,000 2,090,040
**Shurgard Securities Trust, CMO,
8.240%, 06/15/04.............................. 3,000,000 2,882,813
Tele-Communications, Inc.,
10.125%, 04/15/22............................. 5,000,000 5,015,400
Time Warner, Inc.,
**6.050%, 07/01/95............................ 2,500,000 2,479,075
7.450%, 02/01/98.............................. 2,200,000 2,096,885
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Transco Energy Co.,
11.250%, 07/01/99............................. $ 2,500,000 $ 2,659,375
Westinghouse Electric Corp.,
8.375%, 06/15/02.............................. 2,000,000 1,858,260
Whitman Corp.,
7.500%, 08/15/01.............................. 3,000,000 2,852,100
--------------
93,060,673
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 45.5%
Federal Farm Credit Bank,
8.650%, 10/01/99, Series A.................... 150,000 153,375
Federal Farm Credit Bank, M.T.N.,
7.900%, 03/01/96.............................. 2,800,000 2,816,744
Federal Home Loan Mortgage Corporation,
9.800%, 03/25/96.............................. 4,000,000 4,095,000
Federal Home Loan Mortgage Corporation, CMO,
6.800%, 08/15/05, Series 1224, Class 1224-F... 5,000,000 4,757,800
Federal Home Loan Mortgage Corporation, REMIC,
6.500%, 10/15/06, Series 1194, Class 1194-G... 5,000,000 4,428,100
7.500%, 09/15/05, Series 1295, Class 1295-G... 8,300,000 7,934,219
Federal National Mortgage Association,
7.000%, 10/01/13-01/01/24..................... 33,044,696 30,002,267
9.000%, 10/01/16-09/01/21..................... 792,613 797,724
11.000%, 11/01/20............................. 6,159,127 6,647,977
Federal National Mortgage Association, REMIC,
Zero Coupon, 09/25/15, Tranche #TR1989-102,
Class 102A.................................. 1,387,991 1,027,113
6.500%, 07/25/20, Tranche #TR1992-138, Class
D........................................... 5,000,000 4,492,150
8.600%, 04/25/03, Series 1989-92, Class
92-D........................................ 1,086,155 1,087,849
9.000%, 03/25/20, Series 1990-24, Class
24-E........................................ 2,000,000 2,028,120
Government National Mortgage Association,
7.500%, 05/20/02.............................. 690,383 649,823
International Bank for Reconstruction and
Development,
12.375%, 10/15/02............................. 750,000 923,213
Resolution Funding Corp.,
Zero Coupon, 10/15/15......................... 17,100,000 3,219,075
8.125%, 10/15/19, Class A..................... 700,000 703,283
8.625%, 01/15/21.............................. 200,000 211,562
United States Treasury Bonds,
6.250%, 08/15/23.............................. 4,800,000 3,902,256
8.125%, 08/15/19.............................. 8,250,000 8,359,560
10.750%, 08/15/05............................. 10,800,000 12,973,500
11.250%, 02/15/15............................. 6,400,000 8,456,000
11.625%, 11/15/04............................. 15,130,000 18,950,325
12.000%, 08/15/13............................. 6,000,000 7,978,140
United States Treasury Notes,
3.875%, 09/30/95.............................. 7,000,000 6,837,040
6.250%, 02/15/03.............................. 6,000,000 5,426,220
6.375%, 08/15/02, Series 2002................. 4,200,000 3,845,604
6.875%, 03/31/97, Series 1997................. 1,500,000 1,472,805
7.250%, 08/15/04.............................. 1,100,000 1,055,824
7.500%, 02/29/96, Series 1996................. 9,300,000 9,310,137
</TABLE>
B5
<PAGE>
BOND PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
7.875%, 02/15/96-07/31/96, Series 1996........ $ 36,000,000 $ 36,151,740
8.875%, 11/15/97, Series 1997................. 20,370,000 20,907,972
9.000%, 05/15/98, Series B-1998............... 3,000,000 3,100,770
9.250%, 01/15/96, Series 1996................. 12,000,000 12,228,720
9.250%, 08/15/98, Series D-1998............... 9,300,000 9,703,992
--------------
246,635,999
--------------
UTILITIES -- 2.5%
%Central Maine Power Co., M.T.N.,
5.978%, 08/03/95, Tranche #TR00036............ 4,000,000 4,000,000
Consolidated Edison of New York, Inc.,
9.700%, 12/01/25.............................. 2,100,000 2,273,922
Pennsylvania Power & Light Co.,
9.375%, 07/01/21.............................. 1,150,000 1,179,268
Southern Union Co.,
7.600%, 02/01/24.............................. 3,000,000 2,511,450
Texas Utilities Electric Co.,
5.875%, 04/01/98.............................. 4,000,000 3,702,920
--------------
13,667,560
--------------
TOTAL LONG-TERM BONDS
(Cost $548,035,825)............................................ 516,103,677
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 2.8% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
5.720%, 01/03/95, (see Note 4)................ 15,192,000 15,192,000
--------------
OTHER ASSETS -- 1.9%
(net of liabilities)........................................... 10,352,922
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 541,648,599
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
C.D. Certificates of Deposit
CMO Collateralized Mortgage Obligations
ESOP Employee Stock Ownership Plan
L.P. Limited Partnership
M.T.N. Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
**Indicates a restricted security; the aggregate cost of the restricted
securities is $42,727,259. The aggregate value, $39,858,505 is
approximately 7.4% of net assets. (See Note 2)
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B6
<PAGE>
COMMON STOCK PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 87.3% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 3.4%
AAR Corp........................................ 650,000 $ 8,693,750
Lockheed Corp................................... 207,900 15,098,738
Loral Corp...................................... 900,000 34,087,500
United Technologies Corp........................ 500,000 31,437,500
--------------
89,317,488
--------------
ALUMINUM -- 1.3%
+Alumax, Inc.................................... 267,500 7,590,313
Aluminum Co. of America......................... 300,000 25,987,500
--------------
33,577,813
--------------
AUTOS - CARS & TRUCKS -- 4.0%
Chrysler Corp................................... 975,000 47,775,000
Ford Motor Co................................... 800,000 22,400,000
General Motors Corp............................. 700,000 29,575,000
+Navistar International Corp.................... 395,200 5,977,400
--------------
105,727,400
--------------
BANKS AND SAVINGS & LOANS -- 5.9%
Bank of New York Company, Inc................... 900,000 26,100,000
BankAmerica Corp................................ 550,000 21,725,000
Chase Manhattan Corp............................ 600,000 20,625,000
Comerica, Inc................................... 700,000 17,062,500
First of America Bank Corp...................... 187,000 5,610,000
Great Western Financial Corp.................... 1,000,000 16,000,000
J.P. Morgan & Co., Inc.......................... 300,000 16,800,000
Mellon Bank Corp................................ 276,398 8,464,689
Mercantile Bankshares Corp...................... 279,600 5,487,150
NationsBank Corp................................ 350,000 15,793,750
--------------
153,668,089
--------------
CHEMICALS -- 0.9%
Eastman Chemical Co............................. 466,550 23,560,774
--------------
CHEMICALS - SPECIALTY -- 1.5%
+ESSEF Corp..................................... 110,000 1,677,500
IMC Global, Inc................................. 705,500 30,512,875
Witco Corp...................................... 268,800 6,619,200
--------------
38,809,575
--------------
COMMERCIAL SERVICES -- 0.6%
Wellman, Inc.................................... 550,000 15,537,500
--------------
COMPUTER SERVICES -- 1.0%
Comdisco, Inc................................... 900,000 20,812,500
Gerber Scientific, Inc.......................... 419,800 5,457,400
+Harris Computer Systems Corp................... 15,000 183,750
--------------
26,453,650
--------------
CONSTRUCTION -- 0.0%
+Willcox & Gibbs, Inc........................... 107,199 629,793
--------------
DIVERSIFIED OFFICE EQUIPMENT -- 0.8%
International Business Machines Corp............ 300,000 22,050,000
--------------
DRUGS AND HOSPITAL SUPPLIES -- 2.8%
Baxter International, Inc....................... 2,100,000 59,325,000
Upjohn Co....................................... 450,000 13,837,500
--------------
73,162,500
--------------
ELECTRONICS -- 7.7%
Amdahl Corp..................................... 850,000 9,350,000
+Digital Equipment Corp......................... 2,500,000 83,125,000
Harris Corp..................................... 300,000 12,750,000
Hewlett-Packard Co.............................. 175,000 17,478,125
Tandy Corp...................................... 1,418,000 71,077,250
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Varian Associates, Inc.......................... 145,000 $ 5,075,000
Zero Corp....................................... 120,500 1,687,000
--------------
200,542,375
--------------
FINANCIAL SERVICES -- 6.8%
American Express Co............................. 2,100,000 61,950,000
Dean Witter, Discover & Co...................... 1,200,000 40,650,000
Lehman Brothers Holdings, Inc................... 900,000 13,275,000
Republic New York Corp.......................... 225,000 10,181,250
Salomon, Inc.................................... 700,000 26,250,000
Travelers, Inc.................................. 800,000 26,000,000
--------------
178,306,250
--------------
FOREST PRODUCTS -- 6.1%
International Paper Co.......................... 415,000 31,280,625
James River Corp. of Virginia................... 560,000 11,340,000
Rayonier, Inc................................... 125,000 3,812,500
Scott Paper Co.................................. 1,650,000 114,056,250
--------------
160,489,375
--------------
GAS PIPELINES -- 0.3%
NorAm Energy Corp............................... 1,300,000 6,987,500
--------------
HEALTHCARE -- 1.1%
+Foundation Health Corp......................... 950,000 29,450,000
--------------
HOSPITAL MANAGEMENT -- 3.2%
+American Medical Holdings, Inc................. 649,600 15,671,600
+Beverly Enterprises, Inc....................... 39,300 564,938
Columbia / HCA Healthcare Corp.................. 400,000 14,600,000
+Hillhaven Corp................................. 459,400 9,762,250
National Medical Enterprises, Inc............... 2,965,000 41,880,625
--------------
82,479,413
--------------
HOUSING RELATED -- 0.5%
Centex Corp..................................... 600,000 13,650,000
--------------
INSURANCE -- 13.0%
Alexander & Alexander Services, Inc............. 1,050,000 19,425,000
American General Corp........................... 1,000,000 28,250,000
Chubb Corp...................................... 700,000 54,162,500
Citizens Corp................................... 500,000 8,500,000
Continental Corp................................ 2,300,000 43,700,000
Emphesys Financial Group, Inc................... 441,400 14,014,450
Equitable Companies, Inc........................ 1,518,700 27,526,438
First Colony Corp............................... 1,253,600 28,049,300
John Alden Financial Corp....................... 141,000 4,053,750
Old Republic International Corp................. 1,000,590 21,262,538
Providian Corp.................................. 340,500 10,512,937
SAFECO Corp..................................... 800,000 41,600,000
SCOR U.S. Corp.................................. 195,600 1,638,150
St. Paul Companies, Inc......................... 400,000 17,900,000
Western National Corp........................... 1,528,200 19,675,575
--------------
340,270,638
--------------
LODGING -- 2.0%
Loews Corp...................................... 600,000 52,125,000
--------------
MINERAL RESOURCES -- 1.6%
Amax Gold, Inc.................................. 131,342 788,052
Cyprus Amax Minerals Co......................... 1,533,200 40,054,850
+Nord Resources Corp............................ 130,500 831,938
--------------
41,674,840
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 1.8%
American Water Works Co., Inc................... 135,000 3,645,000
ITT Corp........................................ 500,000 44,312,500
+Worldtex, Inc.................................. 107,199 388,596
--------------
48,346,096
--------------
</TABLE>
B7
<PAGE>
COMMON STOCK PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 1.8%
Avnet, Inc...................................... 310,000 $ 11,470,000
Eastman Kodak Co................................ 500,000 23,875,000
Gibson Greetings, Inc........................... 750,000 11,062,500
--------------
46,407,500
--------------
PETROLEUM -- 4.8%
Amerada Hess Corp............................... 325,000 14,828,125
Atlantic Richfield Co........................... 250,000 25,437,500
Elf Aquitaine, ADR.............................. 1,836,033 64,720,163
Occidental Petroleum Corp....................... 1,100,000 21,175,000
--------------
126,160,788
--------------
PETROLEUM SERVICES -- 2.3%
+B.J. Services Co............................... 500,000 8,437,500
Oryx Energy Co.................................. 1,600,000 19,000,000
Total SA, ADR................................... 717,640 21,170,380
Union Texas Petroleum Holdings, Inc............. 504,500 10,468,375
--------------
59,076,255
--------------
RAILROADS -- 0.9%
+Southern Pacific Rail Corp..................... 1,300,000 23,562,500
--------------
RETAIL -- 5.7%
Dayton-Hudson Corp.............................. 119,600 8,461,700
Dillard Department Stores, Inc. (Class 'A'
Stock)........................................ 1,300,000 34,775,000
+Federated Department Stores, Inc............... 700,000 13,475,000
K mart Corp..................................... 2,300,000 29,900,000
Petrie Stores Corp.............................. 540,000 12,082,500
U.S. Shoe Corp.................................. 1,491,600 27,967,500
+Waban, Inc..................................... 1,300,000 23,075,000
--------------
149,736,700
--------------
STEEL -- 0.5%
+Bethlehem Steel................................ 500,000 9,000,000
Carpenter Technology Corp....................... 50,000 2,800,000
--------------
11,800,000
--------------
TELECOMMUNICATIONS -- 3.5%
Sprint Corp..................................... 1,700,000 46,962,500
Telefonica de Espana, SA, ADR................... 1,300,000 45,662,500
--------------
92,625,000
--------------
TRUCKING/SHIPPING -- 0.8%
OMI Corp........................................ 1,000,000 6,625,000
Overseas Shipholding Group, Inc................. 600,000 13,800,000
--------------
20,425,000
--------------
UTILITY - ELECTRIC -- 0.7%
American Electric Power Co., Inc................ 180,000 5,917,500
General Public Utilities Corp................... 500,000 13,125,000
--------------
19,042,500
--------------
TOTAL COMMON STOCKS
(Cost $2,039,308,682).......................................... 2,285,652,312
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 1.4% SHARES VALUE
------------- --------------
<S> <C> <C>
AUTOS - CARS & TRUCKS -- 0.5%
**Chrysler Corp. (Conv. Pfd.)................... 95,000 13,050,625
--------------
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
PREFERRED STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
TOBACCO -- 0.9%
RJR Nabisco Holdings Corp. (Conv. Pfd.)......... 4,000,000 $ 24,000,000
--------------
TOTAL PREFERRED STOCKS
(Cost $36,922,710)............................................. 37,050,625
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 13.1% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
5.720%, 01/03/95 (see Note 4)................. 343,262,000 343,262,000
--------------
LIABILITIES -- (1.8%)
(net of other assets).......................................... (48,192,920)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $2,617,772,017
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
**Indicates a restricted security; the aggregate cost of the restricted
securities is $10,923,100. The aggregate value, $13,050,625 is
approximately 0.5% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending December
31, 1994.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B8
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 58.8% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 0.8%
Boeing Co....................................... 287,200 $ 13,426,600
Loral Corp...................................... 392,000 14,847,000
--------------
28,273,600
--------------
ALUMINUM -- 1.1%
Aluminum Co. of America......................... 426,700 36,962,888
--------------
AUTOS - CARS & TRUCKS -- 1.2%
Ford Motor Co................................... 442,900 12,401,200
General Motors Corp. (Class 'E' Stock).......... 814,600 31,362,100
--------------
43,763,300
--------------
BANKS AND SAVINGS & LOANS -- 1.9%
Bank of New York Company, Inc................... 1,549,400 44,932,600
Norwest Corp.................................... 597,800 13,973,575
Washington Mutual, Inc.......................... 407,800 6,881,625
--------------
65,787,800
--------------
BEVERAGES -- 0.3%
+Dr. Pepper/Seven-Up Cos., Inc.................. 467,300 11,974,563
--------------
CHEMICALS -- 2.4%
A. Schulman, Inc................................ 189,400 5,208,500
Air Products & Chemicals, Inc................... 470,900 21,013,913
Dow Chemical Co................................. 316,800 21,304,800
Eastman Chemical Co............................. 326,500 16,488,250
Imperial Chemical Industries, PLC, ADR.......... 275,400 12,806,100
+McWhorter Technologies, Inc.................... 243,950 3,628,756
OM Group, Inc................................... 183,700 4,408,800
--------------
84,859,119
--------------
CHEMICALS - SPECIALTY -- 0.9%
IMC Global, Inc................................. 699,100 30,236,075
--------------
COMMERCIAL SERVICES -- 1.0%
First Financial Management Corp................. 156,700 9,656,638
ServiceMaster, L.P.............................. 443,550 10,811,531
Southeby's Holdings, Inc. (Class 'A' Stock)..... 465,100 5,348,650
Wellman, Inc.................................... 355,300 10,037,225
--------------
35,854,044
--------------
COMPUTER SERVICES -- 2.7%
+American Management Systems, Inc............... 673,100 12,957,175
Automatic Data Processing, Inc.................. 690,400 40,388,400
First Data Corp................................. 509,800 24,151,775
+Microsoft Corp................................. 161,300 9,859,463
National Data Corp.............................. 232,200 5,979,150
--------------
93,335,963
--------------
COSMETICS & SOAPS -- 0.3%
Gillette Co..................................... 125,700 9,396,075
--------------
DIVERSIFIED GAS -- 0.4%
+Basin Exploration, Inc......................... 281,700 3,098,700
Cross Timbers Oil Co............................ 810,000 12,150,000
--------------
15,248,700
--------------
DIVERSIFIED OFFICE EQUIPMENT -- 0.8%
International Business Machines Corp............ 381,000 28,003,500
--------------
DRUGS AND HOSPITAL SUPPLIES -- 2.6%
Abbott Laboratories............................. 580,700 18,945,338
Baxter International, Inc....................... 725,000 20,481,250
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Pfizer, Inc..................................... 285,300 $ 22,039,425
Schering-Plough Corp............................ 350,100 25,907,400
+Thermotrex Corp................................ 354,100 4,780,350
--------------
92,153,763
--------------
ELECTRICAL EQUIPMENT -- 1.2%
Baldor Electric Co.............................. 489,440 13,214,880
Belden, Inc..................................... 409,700 9,115,825
W.W. Grainger, Inc.............................. 177,600 10,256,400
Westinghouse Electric Corp...................... 674,200 8,258,950
--------------
40,846,055
--------------
ELECTRONICS -- 2.0%
+ADT Ltd........................................ 1,314,400 14,129,800
Emerson Electric Co............................. 883,800 55,237,500
--------------
69,367,300
--------------
FINANCIAL SERVICES -- 2.2%
Dean Witter, Discover & Co...................... 903,400 30,602,675
Federal Home Loan Mortgage Corp................. 403,700 20,386,850
GFC Financial Corp.............................. 232,400 7,378,700
Manufactured Home Communities, Inc.............. 717,900 14,268,262
T. Rowe Price & Associates...................... 170,200 5,106,000
--------------
77,742,487
--------------
FOODS -- 2.4%
Archer-Daniels-Midland Co....................... 3,512,040 72,435,825
Pioneer Hi-Bred International, Inc.............. 301,500 10,401,750
--------------
82,837,575
--------------
FOREST PRODUCTS -- 1.8%
Caraustar Industries, Inc....................... 419,500 9,333,875
International Paper Co.......................... 134,800 10,160,550
Willamette Industries, Inc...................... 881,200 41,857,000
--------------
61,351,425
--------------
GAS PIPELINES -- 0.3%
+Seagull Energy Corp............................ 535,400 10,239,525
--------------
HEALTHCARE -- 0.2%
+Sybron International Corp...................... 205,100 7,075,950
--------------
HOSPITAL MANAGEMENT -- 2.1%
Columbia / HCA Healthcare Corp.................. 840,442 30,676,132
+Health Care and Retirement Corp................ 576,400 17,364,050
+Healthtrust, Inc.-The Hospital Co.............. 374,700 11,896,725
+Homedco Group, Inc............................. 111,500 4,195,188
National Medical Enterprises, Inc............... 583,600 8,243,350
--------------
72,375,445
--------------
INSURANCE -- 3.4%
American International Group, Inc............... 411,800 40,356,400
CCP Insurance, Inc.............................. 74,800 1,524,050
Chubb Corp...................................... 302,000 23,367,250
General Re Corp................................. 323,900 40,082,625
NAC Re Corp..................................... 277,400 9,292,900
PennCorp Financial Group, Inc................... 256,100 3,361,313
--------------
117,984,538
--------------
LEISURE -- 1.3%
Carnival Corp. (Class 'A' Stock)................ 1,755,500 37,304,375
Royal Caribbean Cruise, Ltd..................... 233,600 6,657,600
--------------
43,961,975
--------------
MACHINERY -- 0.1%
+Thermo Fibertek, Inc........................... 219,800 3,489,325
--------------
</TABLE>
B9
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
MEDIA -- 3.4%
American Media, Inc. (Class 'A' Stock).......... 408,600 $ 6,639,750
Capital Cities/ABC, Inc......................... 347,400 29,615,850
Comcast Corp. (Class 'A' Stock)................. 276,000 4,243,500
Gannett Co., Inc................................ 400,000 21,300,000
+Rogers Communications, Inc. (Class 'B'
Stock)........................................ 350,100 4,679,441
Shaw Communications, Inc. (Class 'B' Stock)..... 703,700 5,016,572
+Tele-Communications, Inc. (Class 'A' Stock).... 1,107,200 24,081,600
Tribune Co...................................... 420,400 23,016,900
--------------
118,593,613
--------------
MINERAL RESOURCES -- 1.8%
Placer Dome, Inc................................ 912,000 19,836,000
Potash Corp. of Saskatchewan, Inc............... 876,500 29,801,000
+Sante Fe Pacific Gold Corp..................... 950,300 12,235,112
--------------
61,872,112
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 6.1%
+American Business Information, Inc............. 624,500 11,553,250
Danaher Corp.................................... 110,300 5,763,175
Expeditors International of Washington, Inc..... 359,000 7,808,250
General Electric Co............................. 660,800 33,700,800
Illinois Tool Works, Inc........................ 936,600 40,976,250
Libbey, Inc..................................... 323,600 5,663,000
Martin Marietta Materials, Inc.................. 631,800 11,214,450
Modine Manufacturing Co......................... 308,900 8,880,875
Pentair, Inc.................................... 258,200 10,908,950
+Scholastic Corp................................ 139,800 7,129,800
The Rival Co.................................... 181,700 3,179,750
+Thermo Electron Corp........................... 563,100 25,269,113
Tyco International Ltd.......................... 881,600 41,876,000
--------------
213,923,663
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.7%
+DeVRY, Inc..................................... 380,100 11,783,100
Kellwood Co..................................... 533,900 11,211,900
--------------
22,995,000
--------------
PETROLEUM -- 2.5%
Amoco Corp...................................... 401,000 23,709,125
Royal Dutch Petroleum Co., ADR.................. 586,300 63,027,250
--------------
86,736,375
--------------
PETROLEUM SERVICES -- 0.8%
+Mesa, Inc...................................... 1,037,800 5,059,275
Total SA, ADR................................... 739,100 21,803,450
--------------
26,862,725
--------------
RAILROADS -- 0.3%
Illinois Central Corp........................... 372,700 11,460,525
--------------
REAL ESTATE DEVELOPMENT -- 1.6%
Crescent Real Estate Equities, Inc.............. 480,600 13,036,275
Duke Realty Investments, Inc.................... 434,000 12,260,500
Equity Residential Properties Trust............. 451,100 13,533,000
Federal Realty Investment Trust................. 285,200 5,882,250
Weingarten Realty Investors..................... 306,800 11,620,050
--------------
56,332,075
--------------
RESTAURANTS -- 0.2%
Sbarro, Inc..................................... 342,900 8,915,400
--------------
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
RETAIL -- 2.0%
Dayton-Hudson Corp.............................. 307,400 $ 21,748,550
Edison Brothers Stores.......................... 143,400 2,652,900
Harcourt General, Inc........................... 468,800 16,525,200
Tiffany & Co.................................... 203,300 7,928,700
+Toys 'R' Us, Inc............................... 707,400 21,575,700
--------------
70,431,050
--------------
STEEL -- 2.1%
Broken Hill Proprietary Co., Ltd., ADR.......... 539,050 33,218,955
+LTV Corp....................................... 933,000 15,161,250
Worthington Industries, Inc..................... 1,206,100 24,122,000
--------------
72,502,205
--------------
TELECOMMUNICATIONS -- 2.4%
+Airtouch Communications, Inc................... 527,900 15,375,088
AT&T Corp....................................... 846,200 42,521,550
TCA Cable TV, Inc............................... 482,300 10,490,025
Telecomunicacoes Brasileiras, SA, ADR........... 39,700 1,776,455
Telefonos de Mexico (Class 'L' Stock), ADR...... 290,000 11,890,000
--------------
82,053,118
--------------
TEXTILES -- 0.4%
Russell Corp.................................... 168,900 5,299,237
Unifi, Inc...................................... 272,500 6,948,750
--------------
12,247,987
--------------
TOBACCO -- 1.1%
Philip Morris Companies, Inc.................... 438,900 25,236,750
UST, Inc........................................ 463,400 12,859,350
--------------
38,096,100
--------------
TOTAL COMMON STOCKS
(Cost $1,884,990,437).......................................... 2,046,142,938
--------------
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 24.6% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 3.1%
Associates Corp. of North America,
8.250%, 12/01/99.............................. $ 33,900,000 $ 33,701,685
Banc One Credit Card Master Trust, CMO,
7.750%, 12/15/99, Series 1994-B, Class B...... 5,000,000 4,937,500
Chase Manhattan Credit Card Trust,
7.400%, 05/15/00, Series 1992-1............... 5,000,000 4,921,850
Ford Credit Grantor Trust, CMO,
7.300%, 10/15/99, TR 1994-8, Class A.......... 13,614,932 13,449,000
Ford Motor Credit Co.,
7.750%, 11/15/02.............................. 2,815,000 2,684,468
General Motors Acceptance Corp., M.T.N.,
6.500%, 06/10/96.............................. 10,000,000 9,789,200
7.000%, 05/19/97, Tranche #TR00401............ 10,000,000 9,683,700
7.000%, 06/02/97, Tranche #TR00476............ 6,000,000 5,806,980
7.375%, 07/20/98, Tranche #TR00667............ 4,500,000 4,329,855
7.850%, 03/05/97, Tranche #TR00187............ 3,200,000 3,161,153
</TABLE>
B10
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
%MBNA Master Credit Card Trust, CMO,
5.495%, 01/15/02, Series 1994-1, Class A...... $ 7,500,000 $ 7,480,313
Standard Credit Card Master Trust, CMO,
7.250%, 04/07/08, Series 1994-2A, Class A..... 4,500,000 4,100,625
Westinghouse Credit Corp., M.T.N.,
8.750%, 06/03/96, Tranche #TR00248............ 3,330,000 3,338,924
--------------
107,385,253
--------------
FOREIGN -- 4.4%
**Banco Del Estado-Chile,
8.390%, 08/01/01.............................. 3,500,000 3,298,750
Banco Ganadero, SA, M.T.N.,
9.750%, 08/26/99, Tranche #TR00001............ 7,300,000 7,081,000
**Cemex, SA,
8.875%, 06/10/98.............................. 5,000,000 4,387,500
**Cemex, SA, M.T.N.,
9.500%, 09/20/01, Tranche #TR00010............ 12,500,000 10,625,000
**Compania Sud Americana de Vapores, SA,
7.375%, 12/08/03.............................. 7,250,000 5,935,938
Controladora Commercial Mexicana, SA,
8.750%, 04/21/98.............................. 15,100,000 12,835,000
Empresa Columbia de Petroleos,
7.250%, 07/08/98.............................. 8,250,000 7,342,500
Empresas La Moderna, SA,
10.250%, 11/12/97............................. 2,000,000 1,750,000
Financiera Energetic Nacional,
6.625%, 12/13/96.............................. 5,100,000 4,896,000
**Financiera Energetic Nacional, M.T.N.,
9.000%, 11/08/99.............................. 9,900,000 9,420,432
Fomento Economico Mexicano, SA,
9.500%, 07/22/97.............................. 3,700,000 3,669,359
**Grupo Embotellador Mexicana,
10.750%, 11/19/97............................. 8,020,000 7,137,800
Grupo Televisa, SA,
10.000%, 11/09/97............................. 4,000,000 3,620,000
**Kansallis-Osake Pankki, N.Y.,
8.650%, 12/29/49.............................. 9,000,000 8,707,500
Korea Development Bank,
5.875%, 12/01/98.............................. 1,900,000 1,727,290
6.750%, 12/01/05.............................. 8,000,000 6,778,080
9.250%, 06/15/98.............................. 10,400,000 10,565,672
Korea Electric Power Corp.,
7.750%, 04/01/13.............................. 2,225,000 1,929,921
New Zealand Government,
9.875%, 01/15/11.............................. 7,300,000 8,225,713
Republic of Columbia,
7.125%, 05/11/98.............................. 2,700,000 2,479,782
7.250%, 02/23/04.............................. 4,100,000 3,377,375
8.750%, 10/06/99.............................. 900,000 858,375
Republic of South Africa,
9.625%, 12/15/99.............................. 8,300,000 8,219,593
**Republic of Trinidad and Tobago,
11.750%, 10/03/04............................. 9,000,000 9,112,500
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
United Mexican States,
5.820%, 06/28/01.............................. $ 1,375,000 $ 976,250
6.970%, 08/12/00.............................. 2,300,000 1,771,000
8.500%, 09/15/02.............................. 6,925,000 5,574,625
--------------
152,302,955
--------------
INDUSTRIAL -- 5.3%
Avenor, Inc.,
9.375%, 02/15/04.............................. 11,100,000 10,472,156
Columbia/HCA Healthcare Corp., M.T.N.,
8.850%, 01/01/07, Tranche #TR00009............ 15,400,000 15,369,200
Delta Air Lines, Inc.,
7.710%, 05/14/97.............................. 1,300,000 1,238,328
9.750%, 05/15/21.............................. 10,790,000 9,918,384
9.875%, 01/01/98.............................. 27,650,000 27,964,381
10.375%, 02/01/11............................. 6,950,000 6,794,807
Enterprise Rent A Car, M.T.N.,
8.750%, 12/15/99, Tranche #TR00001............ 13,750,000 13,702,563
Fleming Companies, Inc., C.D.,
10.625%, 12/15/01............................. 28,000,000 28,000,000
Ford Motor Co.,
9.000%, 09/15/01.............................. 3,000,000 3,061,140
News America Holdings, Inc.,
7.750%, 01/20/24.............................. 4,650,000 3,797,981
%Occidental Petroleum Corp., M.T.N.,
6.312%, 11/04/99.............................. 5,000,000 4,960,460
Oryx Energy Co.,
9.300%, 05/01/96.............................. 2,350,000 2,330,355
Oryx Energy Co., M.T.N.,
6.050%, 02/01/96, Tranche #TR00013............ 10,500,000 10,106,250
PT Alatief Freeport Financial Co.,
9.750%, 04/15/01.............................. 7,600,000 7,410,000
RJR Nabisco, Inc.,
8.625%, 12/01/02.............................. 14,080,000 13,059,621
8.750%, 08/15/05.............................. 2,500,000 2,279,300
Tele-Communications, Inc.,
7.875%, 08/01/13.............................. 7,000,000 5,830,650
9.875%, 06/15/22.............................. 4,700,000 4,606,657
Transco Energy,
9.125%, 05/01/98.............................. 14,000,000 14,017,500
--------------
184,919,733
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 11.8%
Federal National Mortgage Association,
Zero Coupon, 07/05/14......................... 10,000,000 2,035,200
Government National Mortgage Association,
8.950%, 10/15/28, Pool #222286................ 4,024,004 4,000,514
United States Treasury Bonds,
6.250%, 08/15/23.............................. 21,510,000 17,486,985
8.875%, 08/15/17.............................. 53,900,000 58,717,043
8.875%, 02/15/19, Series 2019................. 29,800,000 32,537,726
9.250%, 02/15/16, Series 2016................. 16,200,000 18,227,592
11.250%, 02/15/15............................. 119,750,000 158,219,688
12.000%, 08/15/13............................. 17,250,000 22,937,153
United States Treasury Notes,
6.500%, 08/15/97.............................. 15,000,000 14,545,350
7.500%, 10/31/99, Series 1999................. 42,250,000 41,642,445
</TABLE>
B11
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
7.750%, 11/30/99.............................. $ 16,125,000 $ 16,064,530
7.875%, 11/15/04.............................. 24,750,000 24,819,547
--------------
411,233,773
--------------
TOTAL LONG-TERM BONDS
(Cost $886,300,335)............................................ 855,841,714
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 16.5% AMOUNT VALUE
------------- --------------
<S> <C> <C>
BANK-RELATED INSTRUMENTS -- 1.1%
Bank of Tokyo, Ltd., C.D.,
6.460%, 03/30/95.............................. 5,000,000 5,000,000
Banque Nationale De Paris, C.D.,
6.010%, 02/01/95.............................. 15,000,000 15,000,000
Fuji Bank, Ltd, C.D.,
5.906%, 01/20/95.............................. 14,000,000 14,000,000
Sanwa Bank, Ltd., C.D.,
6.040%, 02/02/95.............................. 4,000,000 4,000,000
--------------
38,000,000
--------------
COMMERCIAL PAPER -- 5.2%
American Home Products Corp.,
5.900%, 01/31/95.............................. 16,000,000 15,926,578
American Honda Finance Corp.,
5.980%, 01/31/95.............................. 2,000,000 1,990,698
American Telephone & Telegraph Co.,
6.300%, 03/24/95.............................. 500,000 493,000
Asset Securitization Cooperative Corp.,
5.970%, 02/02/95.............................. 4,000,000 3,980,100
6.050%, 02/01/95.............................. 3,100,000 3,084,892
Bankers Trust New York Corp.,
5.150%, 04/03/95.............................. 5,000,000 4,935,625
5.440%, 01/24/95.............................. 7,800,000 7,775,248
Chemical Bank,
6.000%, 01/23/95.............................. 250,000 249,167
6.250%, 01/03/95.............................. 656,000 656,000
CIT Group Holdings, Inc.,
5.500%, 01/17/95.............................. 11,000,000 10,976,472
Coca-Cola Enterprises, Inc.,
6.170%, 03/07/95.............................. 16,000,000 15,827,240
Corporate Asset Funding Co., Inc.,
5.500%, 01/11/95.............................. 3,000,000 2,996,333
Dean Witter, Discover & Co.,
5.970%, 02/01/95.............................. 16,000,000 15,923,053
First National Bank of Chicago,
5.180%, 02/27/95, Tranche #TR00072............ 1,000,000 999,143
5.688%, 02/22/95, Tranche #TR00087............ 5,000,000 5,000,000
Ford Motor Credit Co.,
6.070%, 01/31/95.............................. 4,335,000 4,314,534
Gateway Fuel Corp.,
5.800%, 01/20/95.............................. 1,082,000 1,079,037
General Electric Capital Corp.,
5.500%, 01/12/95.............................. 4,000,000 3,994,500
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
General Motors Acceptance Corp.,
5.740%, 01/17/95.............................. $ 16,100,000 $ 16,064,061
Greyhound Financial Corp.,
6.300%, 01/27/95.............................. 2,000,000 1,991,600
Hanson Finance, PLC,
6.280%, 03/01/95.............................. 1,000,000 990,057
Household Finance Corp.,
5.500%, 01/12/95.............................. 5,000,000 4,993,125
International Lease Finance Corp.,
6.200%, 03/20/95.............................. 5,000,000 4,934,556
ITT Corp.,
5.820%, 01/17/95.............................. 2,000,000 1,995,473
ITT Financial Corp.,
6.200%, 01/23/95.............................. 6,000,000 5,979,333
Konica Finance USA Corp.,
6.200%, 01/10/95.............................. 1,000,000 998,794
McKenna Triangle National Corp.,
6.150%, 01/17/95.............................. 100,000 99,761
Merrill Lynch & Co., Inc.,
5.750%, 01/17/95.............................. 5,000,000 4,988,819
Morgan Guaranty Trust Co.,
6.500%, 05/18/95.............................. 259,200 252,882
NationsBank Corp. of North Carolina,
5.400%, 01/23/95.............................. 11,000,000 10,967,000
Newell Co.,
6.000%, 01/05/95.............................. 8,946,000 8,943,018
Public Service Electric & Gas Co.,
6.020%, 01/10/95.............................. 8,700,000 8,689,816
Sears, Roebuck Acceptance Corp.,
6.050%, 02/06/95.............................. 10,000,000 9,942,861
Transamerica Corp.,
6.150%, 01/20/95.............................. 350,000 348,984
--------------
182,381,760
--------------
MEDIUM TERM NOTES -- 0.6%
NationsBank Corp. of Texas, M.T.N.,
6.030%, 01/31/95, Tranche #TR00023............ 5,000,000 5,000,000
PNC Bank N.A., M.T.N.,
5.150%, 02/22/95, Tranche #TR00005............ 5,000,000 5,000,033
%Xerox Credit Corp., M.T.N.,
6.800%, 06/02/95, Tranche #TR00016............ 10,000,000 10,002,050
--------------
20,002,083
--------------
PROMISSORY NOTES -- 0.1%
SRD Finance, Inc.,
6.150%, 01/12/95.............................. 3,000,000 2,995,388
Sumitomo Electric Finance U.S.A., Inc.,
6.050%, 01/26/95.............................. 2,000,000 1,992,269
--------------
4,987,657
--------------
</TABLE>
B12
<PAGE>
AGGRESSIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS -- 9.5%
Joint Repurchase Agreement Account,
5.720%, 01/03/95 (see Note 4)................. $ 330,700,000 $ 330,700,000
--------------
TOTAL SHORT-TERM INVESTMENTS..................................... 576,071,500
--------------
OTHER ASSETS -- 0.1%
(net of liabilities)........................................... 3,484,147
--------------
TOTAL NET ASSETS -- 100.0%....................................... $3,481,540,299
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
C.D. Certificates of Deposit
CMO Collateralized Mortgage Obligations
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)
**Indicates a restricted security; the aggregate cost of the restricted
securities is $63,175,092. The aggregate value, $58,625,420 is
approximately 1.7% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending December
31, 1994.
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B13
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 34.8% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 1.1%
+Coltec Industries, Inc......................... 311,000 $ 5,325,875
GenCorp, Inc.................................... 676,800 8,037,000
Loral Corp...................................... 338,100 12,805,538
Rockwell International Corp..................... 253,100 9,048,325
+UNC, Inc....................................... 289,100 1,734,600
--------------
36,951,338
--------------
AUTOS - CARS & TRUCKS -- 1.9%
A.O. Smith Corp................................. 466,800 11,436,600
Ford Motor Co................................... 318,300 8,912,400
General Motors Corp............................. 192,800 8,145,800
General Motors Corp. (Class 'E' Stock).......... 325,600 12,535,600
General Motors Corp. (Class 'H' Stock).......... 465,900 16,248,263
Titan Wheel International, Inc.................. 332,600 9,229,650
--------------
66,508,313
--------------
BANKS AND SAVINGS & LOANS -- 2.4%
First Bank System, Inc.......................... 490,900 16,322,425
First Interstate Bancorp........................ 300,000 20,287,500
KeyCorp......................................... 937,400 23,435,000
Norwest Corp.................................... 1,060,200 24,782,175
--------------
84,827,100
--------------
CHEMICALS -- 1.1%
Imperial Chemical Industries, PLC, ADR.......... 371,300 17,265,450
OM Group, Inc................................... 308,400 7,401,600
W.R. Grace & Co................................. 318,800 12,313,650
--------------
36,980,700
--------------
CHEMICALS - SPECIALTY -- 0.8%
Ferro Corp...................................... 655,200 15,642,900
M.A. Hanna Co................................... 464,000 11,020,000
--------------
26,662,900
--------------
COMMERCIAL SERVICES -- 0.2%
+Welbilt Corp................................... 168,600 5,627,025
--------------
COMPUTER SERVICES -- 0.5%
National Data Corp.............................. 413,400 10,645,050
+Paxar Corp..................................... 818,343 8,183,430
--------------
18,828,480
--------------
CONSTRUCTION -- 0.2%
Ply-Gem Industries.............................. 400,000 7,650,000
--------------
CONTAINERS -- 0.5%
Ball Corp....................................... 363,600 11,453,400
+Sealed Air Corp................................ 167,800 6,082,750
--------------
17,536,150
--------------
DIVERSIFIED GAS -- 0.1%
+Basin Exploration, Inc......................... 148,000 1,628,000
--------------
DRUGS AND HOSPITAL SUPPLIES -- 1.1%
Schering-Plough Corp............................ 289,000 21,386,000
Warner-Lambert Co............................... 210,600 16,216,200
--------------
37,602,200
--------------
ELECTRICAL EQUIPMENT -- 0.3%
Belden Corp..................................... 524,300 11,665,675
--------------
ELECTRONICS -- 0.4%
+ADT Ltd........................................ 620,000 6,665,000
+IMO Industries, Inc............................ 477,900 5,973,750
--------------
12,638,750
--------------
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
FINANCIAL SERVICES -- 1.3%
American Express Co............................. 319,000 $ 9,410,500
Dean Witter, Discover & Co...................... 736,500 24,948,938
Reinsurance Group of America, Inc............... 487,800 12,012,075
--------------
46,371,513
--------------
FOODS -- 0.4%
Universal Foods Corp............................ 542,000 14,905,000
--------------
FOREST PRODUCTS -- 0.6%
Mead Corp....................................... 455,900 22,168,137
--------------
FURNITURE -- 0.1%
Leggett & Platt, Inc............................ 128,700 4,504,500
--------------
GAS PIPELINES -- 0.4%
Enron Oil & Gas Co.............................. 332,700 6,238,125
+Seagull Energy Corp............................ 387,200 7,405,200
--------------
13,643,325
--------------
HOSPITAL MANAGEMENT -- 1.3%
+Healthtrust, Inc.-The Hospital Co.............. 735,700 23,358,475
National Medical Enterprises, Inc............... 1,650,000 23,306,250
--------------
46,664,725
--------------
HOUSING RELATED -- 0.8%
+Giant Cement Holdings, Inc..................... 415,200 4,930,500
+Owens-Corning Fiberglas Corp................... 662,800 21,209,600
--------------
26,140,100
--------------
INSURANCE -- 2.4%
Emphesys Financial Group, Inc................... 314,600 9,988,550
Equitable of Iowa Companies..................... 372,700 10,528,775
Financial Security Assurance Holdings, Ltd...... 226,200 4,750,200
National Re Corp................................ 207,600 5,449,500
PennCorp Financial Group, Inc................... 638,400 8,379,000
Provident Life & Accident Insurance Co. (Class
'B' Stock).................................... 177,200 3,854,100
TIG Holdings, Inc............................... 588,300 11,030,625
Trenwick Group, Inc............................. 276,200 11,703,975
W.R. Berkley Corp............................... 192,800 7,230,000
Western National Corp........................... 900,000 11,587,500
--------------
84,502,225
--------------
LEISURE -- 0.4%
+Caesars World, Inc............................. 213,100 14,224,424
--------------
MACHINERY -- 0.6%
DT Industries, Inc.............................. 234,500 2,520,875
+INDRESCO, Inc.................................. 390,700 5,567,475
Kaydon Corp..................................... 229,700 5,512,800
Parker-Hannifin Corp............................ 136,500 6,210,750
--------------
19,811,900
--------------
MEDIA -- 2.2%
Central Newspapers (Class 'A' Stock)............ 331,700 9,329,063
Comcast Corp. (Class 'A' Stock)................. 362,500 5,573,438
Comcast Corp. (Special Class 'A' Stock)......... 9,600 150,600
Lee Enterprises, Inc............................ 168,700 5,820,150
Media General, Inc. (Class 'A' Stock)........... 123,600 3,507,150
+Tele-Communications, Inc. (Class 'A' Stock).... 848,200 18,448,350
Time Warner, Inc................................ 599,500 21,057,437
Times Mirror Co. (Class 'A' Stock).............. 400,000 12,550,000
--------------
76,436,188
--------------
</TABLE>
B14
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
MISCELLANEOUS - BASIC INDUSTRY -- 4.8%
American Publishing Co. (Class 'A' Stock)....... 161,400 $ 1,775,400
BW/IP, Inc. (Class 'A' Stock)................... 379,200 6,493,800
Danaher Corp.................................... 227,800 11,902,550
Diebold, Inc.................................... 421,400 17,330,075
Donaldson Company, Inc.......................... 400,400 9,609,600
+Enterra Corp................................... 280,300 5,325,700
+FMC Corp....................................... 110,800 6,398,700
+IDEX Corp...................................... 190,400 8,044,400
+Itel Corp...................................... 168,700 5,841,238
ITT Corp........................................ 144,000 12,762,000
+Litton Industries, Inc......................... 259,700 9,608,900
Mark IV Industries, Inc......................... 545,300 10,769,675
Mascotech, Inc.................................. 607,300 7,818,988
Pentair, Inc.................................... 472,950 19,982,137
+SPS Transaction Services, Inc.................. 192,800 5,061,000
Textron, Inc.................................... 96,400 4,856,150
Trinity Industries, Inc......................... 385,500 12,143,250
+Wolverine Tube, Inc............................ 279,500 6,638,125
York International Corp......................... 199,000 7,338,125
--------------
169,699,813
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 1.0%
Eastman Kodak Co................................ 372,300 17,777,325
Whitman Corp.................................... 913,400 15,756,150
--------------
33,533,475
--------------
PETROLEUM -- 0.9%
Cabot Oil & Gas Corp. (Class 'A' Stock)......... 594,400 8,618,800
Elf Aquitaine, ADR.............................. 530,100 18,686,025
Parker & Parsley Petroleum Co................... 257,800 5,284,900
--------------
32,589,725
--------------
PETROLEUM SERVICES -- 0.7%
+Mesa, Inc...................................... 1,008,400 4,915,950
Murphy Oil Corp................................. 190,800 8,109,000
Oryx Energy Co.................................. 849,400 10,086,625
--------------
23,111,575
--------------
RAILROADS -- 1.1%
Burlington Northern, Inc........................ 259,000 12,464,375
+Chicago & North Western Transportation Co...... 671,600 12,928,300
Illinois Central Corp........................... 440,000 13,530,000
--------------
38,922,675
--------------
REAL ESTATE DEVELOPMENT -- 0.7%
Zeneca Group, PLC, ADR.......................... 607,200 24,971,100
--------------
RESTAURANTS -- 0.4%
Morrison Restaurants, Inc....................... 350,300 8,582,350
+Shoney's, Inc.................................. 530,100 6,758,775
--------------
15,341,125
--------------
RETAIL -- 1.3%
+Best Products Corp., Inc....................... 1,081,600 7,030,400
+Caldor Corp.................................... 382,100 8,501,725
Harcourt General, Inc........................... 277,500 9,781,875
K mart Corp..................................... 621,400 8,078,200
Rite Aid Corp................................... 258,200 6,035,425
Sears, Roebuck & Co............................. 139,800 6,430,800
--------------
45,858,425
--------------
RUBBER -- 0.3%
Goodyear Tire & Rubber Co....................... 269,800 9,072,024
--------------
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
STEEL -- 0.3%
+Material Sciences Corp......................... 675,000 $ 10,715,624
--------------
TELECOMMUNICATIONS -- 1.6%
+Airtouch Communications, Inc................... 385,500 11,227,688
Century Telephone Enterprises, Inc.............. 337,300 9,950,350
MCI Communications Corp......................... 661,100 12,147,713
+Nextel Communications, Inc. (Class 'A'
Stock)........................................ 495,400 7,121,375
Rochester Telephone Corp........................ 797,700 16,851,412
--------------
57,298,538
--------------
TEXTILES -- 0.4%
+Owens-Illinois, Inc............................ 552,700 6,079,700
V.F. Corp....................................... 181,900 8,844,888
--------------
14,924,588
--------------
TRUCKING/SHIPPING -- 0.2%
Ryder System, Inc............................... 385,500 8,481,000
--------------
TOTAL COMMON STOCKS
(Cost $1,152,952,120).......................................... 1,218,998,355
--------------
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 27.3% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 5.2%
Associates Corp. of North America,
6.875%, 01/15/97.............................. $ 5,250,000 $ 5,117,018
8.250%, 12/01/99.............................. 34,100,000 33,900,515
8.375%, 01/15/98.............................. 1,100,000 1,099,989
Banc One Credit Card Master Trust, CMO,
7.750%, 12/15/99, Series 1994-B, Class B...... 5,100,000 5,036,250
%Chrysler Financial Corp.,
3.813%, 11/15/96.............................. 13,200,000 13,264,415
Chrysler Financial Corp., M.T.N.,
5.390%, 08/27/96, Tranche #TR00041............ 7,300,000 7,005,810
CIGNA Mortgage Securities, Inc.,
9.400%, 01/15/02, Series 1988-1, Class A2..... 3,362,186 3,329,614
Citicorp, M.T.N.,
8.500%, 02/24/97, Tranche #TR00128............ 5,100,000 5,131,263
Dean Witter, Discover & Co.,
6.000%, 03/01/98.............................. 2,500,000 2,334,275
Discover Card Trust,
7.875%, 04/16/98, Series #1991-C, Class B..... 10,000,000 9,959,300
Federal Express Corp., M.T.N.,
10.010%, 06/01/98, Tranche #SR00067........... 3,000,000 3,101,790
10.050%, 06/15/99, Tranche #SR00068........... 500,000 521,055
First Union Corp.,
9.450%, 06/15/99.............................. 4,000,000 4,112,080
Ford Credit Grantor Trust, CMO,
7.300%, 10/15/99, Series 1994-8, Class A...... 11,669,941 11,527,714
Ford Motor Credit Co.,
7.750%, 11/15/02.............................. 3,300,000 3,146,979
General Motors Acceptance Corp.,
8.250%, 08/01/96.............................. 5,000,000 4,985,950
</TABLE>
B15
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
General Motors Acceptance Corp., M.T.N.,
6.300%, 09/10/97, Tranche #TR00532............ $ 5,000,000 $ 4,735,700
6.500%, 06/10/96.............................. 13,000,000 12,725,960
7.375%, 07/20/98, Tranche #TR00667............ 4,650,000 4,474,184
7.500%, 11/04/97, Tranche #TR00598............ 15,000,000 14,602,050
7.850%, 03/05/97, Tranche #TR00187............ 3,300,000 3,259,938
Mellon Financial Co.,
6.500%, 12/01/97.............................. 1,650,000 1,577,565
Standard Credit Card Master Trust,
7.250%, 04/07/08, Series 1994-2A, Class A..... 4,650,000 4,237,313
Standard Credit Card Trust,
9.375%, 03/10/96, Series 1990-1............... 7,000,000 7,028,420
Union Bank Finland, Ltd.,
5.250%, 06/15/96.............................. 16,650,000 15,942,542
Westinghouse Credit Corp., M.T.N.,
8.750%, 06/03/96, Tranche #00248.............. 2,600,000 2,606,968
--------------
184,764,657
--------------
FOREIGN -- 4.5%
**Banco Del Estado-Chile,
8.390%, 08/01/01.............................. 3,700,000 3,487,250
**Banco Ganadero, SA, M.T.N.,
9.750%, 08/26/99, Tranche #TR00001............ 7,300,000 7,081,000
**%Cemex, SA,
6.250%, 10/25/95, Series B.................... 4,250,000 4,165,000
**Cemex, SA, M.T.N.,
9.500%, 09/20/01, Tranche #TR00010............ 12,500,000 10,625,000
**Compania Sud Americana de Vapores, SA,
7.375%, 12/08/03.............................. 10,000,000 8,187,500
Controladora Commercial Mexicana, SA,
8.750%, 04/21/98.............................. 5,190,000 4,411,500
Empresa Columbia de Petroleos,
7.250%, 07/08/98.............................. 8,250,000 7,342,500
Financiera Energetic Nacional,
6.625%, 12/13/96.............................. 5,000,000 4,800,000
**Financiera Energetic Nacional, M.T.N.,
9.000%, 11/08/99.............................. 9,900,000 9,420,432
Fomento Economico Mexicano, SA,
9.500%, 07/22/97.............................. 5,150,000 5,107,352
**Grupo Condumex, SA, M.T.N.,
6.250%, 07/27/96.............................. 4,300,000 3,827,000
**Grupo Embotellador Mexicana,
10.750%, 11/19/97............................. 8,015,000 7,133,350
Grupo Televisa, SA,
10.000%, 11/09/97............................. 7,250,000 6,561,250
%Hydro-Quebec,
3.438%, 09/30/49.............................. 3,500,000 2,925,780
**Kansallis-Osake Pankki, N.Y.,
8.650%, 12/29/49.............................. 10,000,000 9,675,000
Kansallis-Osake Pankki, N.Y., C.D.,
6.125%, 05/15/98.............................. 6,160,000 5,715,494
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Korea Development Bank,
5.875%, 12/01/98.............................. $ 1,900,000 $ 1,727,290
6.750%, 12/01/05.............................. 10,400,000 8,811,504
9.250%, 06/15/98.............................. 10,000,000 10,159,300
Korea Electric Power Corp.,
7.750%, 04/01/13.............................. 2,350,000 2,038,343
Republic of Columbia,
7.125%, 05/11/98.............................. 2,775,000 2,548,664
7.250%, 02/23/04.............................. 5,400,000 4,448,250
8.750%, 10/06/99.............................. 925,000 882,219
Republic of South Africa,
9.625%, 12/15/99.............................. 8,200,000 8,120,563
**Republic of Trinidad and Tobago,
11.750%, 10/03/04............................. 9,300,000 9,416,250
United Mexican States,
5.820%, 06/28/01.............................. 1,375,000 976,250
6.970%, 08/12/00.............................. 2,300,000 1,771,000
8.500%, 09/15/02.............................. 6,850,000 5,514,250
--------------
156,879,291
--------------
INDUSTRIAL -- 4.3%
Arkla, Inc., M.T.N.,
9.250%, 12/18/97, Tranche #TR00027............ 3,000,000 2,988,840
Avenor, Inc.,
9.375%, 02/15/04.............................. 11,225,000 10,590,086
Coca-Cola Enterprises, Inc.,
6.500%, 11/15/97.............................. 3,750,000 3,582,975
Columbia/HCA Healthcare Corp., M.T.N.,
8.850%, 01/01/07, Tranche #TR00009............ 12,700,000 12,674,600
Comdisco, Inc.,
8.950%, 05/15/95.............................. 19,420,000 19,533,800
Delta Air Lines, Inc.,
9.750%, 05/15/21.............................. 10,800,000 9,927,575
10.375%, 02/01/11............................. 6,850,000 6,697,040
**Enterprise Rent A Car, M.T.N.,
8.750%, 12/15/99.............................. 13,750,000 13,702,563
Ford Motor Co.,
9.000%, 09/15/01.............................. 3,900,000 3,979,482
Hanson Overseas Corp.,
5.500%, 01/15/96.............................. 2,000,000 1,953,980
News America Holdings, Inc.,
7.750%, 01/20/24.............................. 4,550,000 3,716,304
Oryx Energy Co., M.T.N.,
6.050%, 02/01/96, Tranche #TR00013............ 12,000,000 11,550,000
PT Alatief Freeport Financial Co.,
9.750%, 04/15/01.............................. 8,950,000 8,726,250
RJR Nabisco, Inc.,
8.625%, 12/01/02.............................. 14,350,000 13,310,056
8.750%, 08/15/05.............................. 2,550,000 2,324,886
Sears, Roebuck & Co., M.T.N.,
9.420%, 04/01/96, Series IV................... 1,000,000 1,018,625
Sears, Roebuck Acceptance Corp.,
9.000%, 09/15/96.............................. 2,000,000 2,024,140
Tele-Communications, Inc.,
7.875%, 08/01/13.............................. 6,800,000 5,664,060
9.875%, 06/15/22.............................. 4,700,000 4,606,658
**Time Warner, Inc.,
6.050%, 07/01/95.............................. 8,000,000 7,933,040
</TABLE>
B16
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Westinghouse Electric Corp., M.T.N.,
8.700%, 06/20/96, Tranche #TR00029............ $ 2,950,000 $ 2,956,136
--------------
149,461,096
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 13.3%
Federal National Mortgage Association,
9.050%, 04/10/00.............................. 14,000,000 14,647,500
United States Treasury Bonds,
6.250%, 08/15/23.............................. 29,585,000 24,051,717
11.250%, 02/15/15............................. 168,850,000 223,093,063
12.000%, 08/15/13............................. 50,450,000 67,082,861
United States Treasury Notes,
6.000%, 11/30/97.............................. 87,600,000 83,534,484
7.250%, 11/15/96.............................. 21,000,000 20,835,990
7.500%, 10/31/99.............................. 8,550,000 8,427,050
7.750%, 11/30/99.............................. 4,525,000 4,508,031
7.875%, 11/15/04.............................. 19,075,000 19,128,601
--------------
465,309,297
--------------
TOTAL LONG-TERM BONDS
(Cost $997,384,451)............................................ 956,414,341
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 36.9% AMOUNT VALUE
------------- --------------
<S> <C> <C>
BANK-RELATED INSTRUMENTS -- 5.9%
Bank of Tokyo, Ltd., C.D.,
6.460%, 03/30/95.............................. 25,000,000 25,000,000
Banque Nationale De Paris, C.D.,
6.010%, 02/01/95.............................. 35,000,000 35,000,000
Chemical Bank, N.Y., T.D.,
6.250%, 01/03/95.............................. 7,393,000 7,393,000
Fuji Bank, Ltd., C.D.,
5.906%, 01/20/95.............................. 7,000,000 7,000,000
6.360%, 03/21/95.............................. 15,000,000 15,000,000
Fuji Bank, Ltd., T.D.,
6.400%, 01/03/95.............................. 25,000,000 25,000,000
National Westminister Bank, PLC, C.D.,
5.800%, 01/23/95.............................. 1,000,000 999,870
Republic National Bank of New York, C.D.,
4.300%, 03/08/95.............................. 21,000,000 20,988,906
Sanwa Bank, Ltd., C.D.,
6.040%, 02/02/95.............................. 50,000,000 50,000,000
Sumitomo Bank, Ltd., C.D.,
5.960%, 01/30/95.............................. 10,000,000 10,000,000
Sumitomo Bank, Ltd., T.D.,
6.060%, 02/01/95.............................. 10,000,000 10,000,000
--------------
206,381,776
--------------
COMMERCIAL PAPER -- 23.8%
%American Express Centurion Bank,
4.500%, 08/04/95, Tranche #TR00037............ 4,000,000 3,999,765
American Home Products Corp.,
5.900%, 01/31/95.............................. 61,440,000 61,158,059
American Honda Finance Corp.,
5.980%, 01/31/95.............................. 13,000,000 12,939,535
Aristar, Inc.,
5.540%, 01/23/95.............................. 1,000,000 996,922
6.300%, 03/20/95.............................. 2,000,000 1,973,400
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Asset Securitization Cooperative Corp.,
5.500%, 01/23/95.............................. $ 9,000,000 $ 8,972,500
5.970%, 02/02/95.............................. 6,000,000 5,970,150
6.050%, 02/01/95.............................. 12,800,000 12,737,618
Bankers Trust New York Corp.,
5.150%, 04/03/95.............................. 25,637,000 25,306,924
5.440%, 01/24/95.............................. 17,200,000 17,145,419
Barclays Bank, PLC,
6.100%, 02/17/95.............................. 500,000 496,188
Chrysler Financial Corp.,
5.750%, 01/17/95.............................. 23,000,000 22,948,569
CIESCO,
5.500%, 01/11/95.............................. 5,000,000 4,993,889
CIT Group Holdings, Inc.,
5.500%, 01/17/95.............................. 13,000,000 12,972,194
5.970%, 02/01/95.............................. 14,000,000 13,932,672
Coca-Cola Enterprises, Inc.,
6.015%, 02/01/95.............................. 23,000,000 22,888,555
6.120%, 01/31/95.............................. 31,970,000 31,817,823
6.170%, 03/07/95.............................. 4,900,000 4,847,092
Corporate Receivables Corp.,
6.170%, 03/07/95.............................. 47,000,000 46,492,518
6.570%, 05/23/95.............................. 11,100,000 10,816,395
Dean Witter, Discover & Co.,
5.970%, 02/01/95.............................. 7,344,000 7,308,680
Deerfield Capital,
6.090%, 01/17/95.............................. 19,900,000 19,852,870
Duracell, Inc.,
6.300%, 02/10/95.............................. 2,000,000 1,986,700
Falcon Asset Securitization Corp.,
6.100%, 01/13/95.............................. 11,000,000 10,981,360
6.170%, 03/07/95.............................. 8,975,000 8,878,092
General Electric Capital Corp.,
6.430%, 04/13/95.............................. 6,150,000 6,040,154
6.450%, 04/13/95-04/18/95..................... 36,350,000 35,684,396
General Motors Acceptance Corp.,
5.740%, 01/17/95.............................. 60,500,000 60,364,951
Golden Peanut Co.,
5.600%, 02/01/95-02/03/95..................... 9,500,000 9,455,589
Greyhound Financial Corp.,
6.180%, 02/16/95.............................. 7,649,000 7,591,225
6.290%, 02/08/95.............................. 5,000,000 4,968,550
6.300%, 01/27/95.............................. 7,000,000 6,970,600
6.330%, 02/07/95.............................. 2,000,000 1,987,692
Hanson Finance, PLC,
5.470%, 01/17/95.............................. 2,000,000 1,995,746
6.260%, 03/03/95.............................. 5,000,000 4,948,703
6.270%, 03/09/95.............................. 13,000,000 12,852,829
6.280%, 03/01/95.............................. 4,000,000 3,960,227
Heller Financial, Inc.,
6.300%, 03/14/95.............................. 6,000,000 5,926,500
International Lease Finance Corp.,
6.200%, 03/20/95.............................. 10,000,000 9,869,111
ITT Corp.,
5.820%, 01/17/95.............................. 7,000,000 6,984,157
ITT Financial Corp.,
6.200%, 01/20/95.............................. 28,000,000 27,918,022
Maguire/Thomas Partners,
6.100%, 01/18/95.............................. 5,000,000 4,987,292
MCA Funding Corp.,
5.100%, 01/09/95.............................. 5,000,000 4,995,750
5.120%, 01/17/95.............................. 22,000,000 21,956,196
</TABLE>
B17
<PAGE>
CONSERVATIVELY MANAGED FLEXIBLE PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
McKenna Triangle National Corp.,
6.100%, 01/23/95.............................. $ 1,000,000 $ 996,611
Merrill Lynch & Co., Inc.,
5.750%, 01/17/95.............................. 15,000,000 14,966,458
Morgan Stanley Group, Inc.,
6.270%, 03/01/95.............................. 8,500,000 8,415,616
National Australia Funding, Inc.,
5.600%, 02/01/95.............................. 2,000,000 1,990,978
NationsBank Corp. of North Carolina,
5.400%, 01/23/95.............................. 19,000,000 18,943,000
Newell Co.,
6.000%, 01/05/95.............................. 21,054,000 21,046,982
Preferred Receivables Funding Corp.,
5.650%, 01/11/95.............................. 13,000,000 12,983,678
Public Service Electric & Gas Co.,
6.020%, 01/17/95.............................. 11,000,000 10,974,248
Republic National Bank of New York,
5.750%, 02/01/95.............................. 5,000,000 4,999,985
Sears Roebuck Acceptance Corp.,
6.050%, 02/07/95.............................. 37,000,000 36,782,368
State Street Bank & Trust,
5.950%, 01/17/95.............................. 33,377,000 33,299,769
WCP Funding, Inc.,
6.280%, 03/06/95.............................. 4,000,000 3,956,738
Westpac Capital Corp.,
6.280%, 03/14/95.............................. 6,000,000 5,926,733
Whirlpool Corp.,
5.660%, 02/02/95.............................. 2,000,000 1,990,567
Whirlpool Financial Corp.,
5.600%, 02/06/95-02/09/95..................... 3,000,000 2,983,667
5.610%, 02/10/95.............................. 5,000,000 4,970,392
WMX Technologies,
5.200%, 05/12/95.............................. 4,000,000 3,925,467
5.225%, 02/07/95.............................. 3,000,000 2,984,760
Xerox Credit Corp.,
5.970%, 02/01/95.............................. 32,000,000 31,846,107
--------------
835,855,703
--------------
MEDIUM TERM NOTES -- 2.4%
PNC Bank N.A., M.T.N.,
5.150%, 02/22/95, Tranche #TR00005............ 10,000,000 10,000,066
%Corestates Capital Corp., M.T.N.,
6.020%, 07/19/95, Tranche #TR00076............ 10,000,000 10,002,084
**%Goldman Sachs Group, L.P., M.T.N.,
3.875%, 04/13/95.............................. 48,000,000 48,000,000
%Xerox Credit Corp., M.T.N.,
6.800%, 06/02/95, Tranche #TR00016............ 15,000,000 15,003,075
--------------
83,005,225
--------------
PROMISSORY NOTES -- 1.3%
Diamond Lease USA, Inc.,
6.100%, 01/18/95.............................. 1,000,000 997,458
Lehman Brothers Holdings, Inc.,
5.028%, 05/23/95.............................. 32,000,000 32,000,000
Seiko Corporation of America,
6.100%, 01/20/95.............................. 3,000,000 2,991,358
SRD Finance, Inc.,
6.100%, 01/12/95.............................. 3,000,000 2,995,425
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS (CONTINUED) AMOUNT VALUE
------------- --------------
<S> <C> <C>
Sumitomo Electric Finance U.S.A., Inc.,
6.050%, 01/26/95.............................. $ 8,000,000 $ 7,969,078
--------------
46,953,319
--------------
REPURCHASE AGREEMENTS -- 3.5%
Joint Repurchase Agreement Account,
5.720%, 01/03/95 (see Note 4)................. 121,345,000 121,345,000
--------------
TOTAL SHORT-TERM INVESTMENTS..................................... 1,293,541,023
--------------
OTHER ASSETS -- 1.0%
(net of liabilities)........................................... 32,150,567
--------------
TOTAL NET ASSETS -- 100.0%....................................... $3,501,104,286
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
C.D. Certificates of Deposit
CMO Collateralized Mortgage Obligations
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 $148,547,029. The aggregate value, $142,653,385 is
approximately 4.1% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending December
31, 1994.
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B18
<PAGE>
ZERO COUPON BOND 1995 PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 100.1% VALUE VALUE
------------- --------------
<S> <C> <C>
INDUSTRIAL -- 4.1%
Schering-Plough Corp.,
Zero Coupon, 12/02/96......................... $ 850,000 $ 731,400
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 96.0%
Certificate of Accrual on Treasury Securities,
Zero Coupon, 02/15/97......................... 1,003,000 855,027
Coupon Treasury Receipts,
Zero Coupon, 05/15/95-02/15/97................ 13,002,145 11,928,682
Treasury Investment Growth Receipts,
Zero Coupon, 11/15/95......................... 236,000 222,494
United States Treasury Bills,
Zero Coupon, 11/16/95......................... 3,000,000 2,822,490
United States Treasury Bonds, Stripped,
Zero Coupon, 02/15/97......................... 1,407,000 1,198,553
--------------
17,027,246
--------------
TOTAL LONG-TERM BONDS
(Cost $17,721,753)............................................. 17,758,646
--------------
LIABILITIES -- (0.1%)
(net of other assets).......................................... (25,014)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 17,733,632
--------------
--------------
</TABLE>
ZERO COUPON BOND 2000 PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 100.1% VALUE VALUE
------------- --------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS
Certificate of Accrual on Treasury Securities,
Zero Coupon, 05/15/01......................... $ 1,088,000 $ 666,117
Coupon Treasury Receipts,
Zero Coupon, 11/15/00-08/15/01................ 3,622,026 2,208,859
Treasury Investment Growth Receipts,
Zero Coupon, 02/15/02......................... 9,831,000 5,669,144
United States Treasury Bonds, Stripped,
Zero Coupon, 02/15/00-05/15/02................ 19,368,000 12,121,776
--------------
TOTAL LONG-TERM BONDS
(Cost $20,000,846)............................................. 20,665,896
--------------
LIABILITIES -- (0.1%)
(net of other assets).......................................... (30,900)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 20,634,996
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B19
<PAGE>
HIGH YIELD BOND PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 0.7% SHARES VALUE
------------- --------------
<S> <C> <C>
BEVERAGES -- 0.0%
**+Dr. Pepper Bottling Holdings, Inc. (Class 'B'
Stock)........................................ 5,807 $ 20,325
--------------
CHEMICALS - SPECIALTY -- 0.1%
**+Thermadyne Holdings Corp. (Class 'B'
Stock)........................................ 3,787 45,444
--------------
CONTAINERS -- 0.0%
+Gaylord Container Corp. (Class 'A' Stock)...... 1,738 15,859
--------------
ELECTRONICS -- 0.2%
**+Berg Electronics Holding Corp................ 154,080 693,360
--------------
FINANCIAL SERVICES -- 0.0%
**+PM Holdings Corp............................. 1,103 0
--------------
FOODS -- 0.0%
**+Specialty Foods Acquisition Corp............. 30,000 22,500
--------------
HOUSING RELATED -- 0.0%
+U.S. Home Corp................................. 1,290 20,800
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 0.0%
+Total Renal Care, Inc. (Class 'B' Stock)....... 4,500 0
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.0%
**+Acme Boot, Inc............................... 1,250 0
--------------
PETROLEUM SERVICES -- 0.0%
+Mesa, Inc...................................... 6,417 31,283
--------------
RETAIL -- 0.0%
**+Loehmann's Holdings, Inc..................... 19,708 19,708
--------------
TOBACCO -- 0.4%
+RJR Nabisco Holdings Corp...................... 204,501 1,124,756
--------------
TOTAL COMMON STOCKS
(Cost $2,424,049).............................................. 1,994,035
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 4.2% SHARES VALUE
------------- --------------
<S> <C> <C>
AIRLINES -- 0.0%
USAir Group, Inc. (Conv. Pfd.; Class 'B'
Stock)........................................ 5,000 75,625
--------------
BANKS AND SAVINGS & LOANS -- 0.4%
**Riggs National Corp., Series B................ 47,500 1,163,750
--------------
ELECTRONICS -- 0.6%
[Berg Electronics Holding Corp. (Class 'E'
Stock)........................................ 73,345 1,870,298
--------------
FINANCIAL SERVICES -- 0.2%
[SD Warren Co................................... 20,000 520,000
--------------
FOODS -- 0.1%
Pantry Pride, Inc. (Ex. Pfd.; Class 'B'
Stock)........................................ 2,950 281,725
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 1.3%
[FoxMeyer Health Corp. (Ex. Pfd.; Class 'A'
Stock)........................................ 7,533 241,056
[Harvard Industries, Inc. (Ex. Pfd.)............ 98,161 2,564,456
[Supermarkets General Holdings Corp. (Ex.
Pfd.)......................................... 56,670 1,246,740
--------------
4,052,252
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.0%
[+Pay 'n Pak Stores (Cum. Ex. Pfd.)............. 82,384 0
--------------
PETROLEUM-CANADIAN -- 0.1%
%+Gulf Canada Resources Ltd.,
Series 1...................................... 122,000 305,000
--------------
REAL ESTATE DEVELOPMENT -- 0.1%
[UDC Homes, Inc. (Ex. Pfd.)..................... 107,789 296,420
--------------
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
PREFERRED STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
RETAIL -- 0.9%
Color Tile, Inc................................. 10,000 $ 1,680,000
**Color Tile, Inc. (Class 'A' Stock)............ 47,500 1,187,500
Grand Union Holdings Corp. (Cum. Conv. Pfd.;
Class 'C' Stock).............................. 9,000 1,125
--------------
2,868,625
--------------
STEEL -- 0.3%
**Republic Engineered Steels, Inc............... 76,167 856,883
--------------
TELECOMMUNICATIONS -- 0.2%
Tele Communications, Inc. (Ex. Pfd.; Class 'B'
Stock)........................................ 9,900 559,350
--------------
TOTAL PREFERRED STOCKS
(Cost $16,088,791)............................................. 12,849,928
--------------
<CAPTION>
MARKET
RIGHTS AND WARRANTS -- 0.1% SHARES VALUE
------------- --------------
<S> <C> <C>
COMMUNICATIONS -- 0.0%
++Dial Call Communications, Inc. (Warrant)...... 3,793 4,741
--------------
CONTAINERS -- 0.1%
++Gaylord Container Corp. (Warrant)............. 21,259 154,128
--------------
ENVIRONMENTAL SERVICES -- 0.0%
++ICF Kaiser International, Inc. (Warrant)...... 7,200 7,200
--------------
FINANCIAL SERVICES -- 0.0%
++SD Warren Co. (Warrant)....................... 20,000 0
--------------
HEALTHCARE -- 0.0%
++Eye Care Centers of America, Inc. (Warrant)... 1,250 0
--------------
HOUSING RELATED -- 0.0%
**++J.M. Peters Co., Inc. (Warrant)............. 9,875 0
++Miles Homes, Inc. (Warrant)................... 15,000 0
++U.S. Home Corp. (Class 'B' Warrant)........... 1,056 6,072
--------------
6,072
--------------
INDUSTRIAL -- 0.0%
++United International Holdings, Inc.
(Warrant)..................................... 6,000 0
--------------
LEISURE -- 0.0%
++Casino America, Inc. (Warrant)................ 6,526 1,000
++Casino Magic Finance Corp. (Warrant).......... 10,500 525
**++Louisiana Casino Cruise, Inc. (Warrant)..... 4,200 0
**++President Riverboat Casinos, Inc.
(Warrant)..................................... 15,000 7,500
++President Riverboat Casinos, Inc. (Warrant)... 22,075 11,038
--------------
20,063
--------------
LODGING -- 0.0%
++Santa Fe Hotel, Inc. (Warrant)................ 50 0
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 0.0%
++Berry Plastics Corp. (Warrant)................ 1,000 15,000
**++Fitzgerald's Gaming Corp. (Warrant)......... 500 0
++Foamex - JPS Automotive, L.P. (Warrant)....... 2,000 0
++Health O Meter, Inc. (Warrant)................ 1,000 0
**++Purity Supreme (Warrant).................... 5,198 104
**++Sam Houston Race Park (Warrant)............. 4,000 100
**++Southdown, Inc. (Warrant)................... 5,000 20,000
++Uniroyal Technology Corp.(Warrant)............ 12,500 6,250
--------------
41,454
--------------
</TABLE>
B20
<PAGE>
HIGH YIELD BOND PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
RIGHTS AND WARRANTS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
RETAIL -- 0.0%
**++Apparel Ventures (Warrant).................. 500 $ 0
--------------
TELECOMMUNICATIONS -- 0.0%
**++Pagemart, Inc. (Warrant).................... 9,200 0
--------------
TOTAL RIGHTS AND WARRANTS
(Cost $130,633)................................................ 233,658
--------------
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 87.9% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 5.6%
American Financial Corp.,
12.000%, 09/03/99............................. $ 1,000,000 $ 1,002,500
12.000%, 09/03/99, Series A................... 500,000 501,250
GB Property Funding Corp.,
10.875%, 01/15/04............................. 1,000,000 810,000
Indah Kiat International Finance Co.,
12.500%, 06/15/06............................. 3,000,000 2,917,500
Lomas Mortgage USA, Inc.,
10.250%, 10/01/02............................. 1,250,000 1,037,500
*Mesa Capital Corp.,
Zero Coupon, 06/30/96-06/30/98................ 3,017,000 2,602,970
*PM Holdings Corp.,
Zero Coupon, 09/01/05, Series B............... 3,281,000 1,464,146
**PSF Finance, L.P.,
12.250%, 06/15/04............................. 1,000,000 1,005,000
Reliance Group Holdings, Inc.,
9.750%, 11/15/03.............................. 1,500,000 1,312,500
SD Warren Co.,
12.000%, 12/15/04............................. 1,750,000 1,789,375
Tiphook Finance Corp.,
7.125%, 05/01/98.............................. 593,000 432,890
8.000%, 03/15/00.............................. 1,940,000 1,358,000
*Transtar Holdings, L.P.,
Zero Coupon, 12/15/03, Series B............... 2,000,000 1,035,000
--------------
17,268,631
--------------
FOREIGN -- 1.1%
*Bell Cablemedia, PLC,
Zero Coupon, 07/15/04......................... 1,500,000 802,500
*Diamond Cable Communication, PLC,
Zero Coupon, 09/30/04......................... 2,000,000 980,000
**Tubos De Acero De Mexico, SA, M.T.N.,
13.750%, 12/08/99, Tranche #TR00001........... 1,000,000 955,000
*Videotron Holdings, PLC,
Zero Coupon, 07/01/04......................... 1,000,000 525,000
--------------
3,262,500
--------------
INDUSTRIAL -- 81.2%
Acme Boot, Inc.,
11.500%, 12/15/00, Series B................... 1,250,000 500,000
ACME Holdings, Inc.,
11.750%, 06/01/00............................. 2,500,000 1,050,000
Adelphia Communications Corp.,
&9.500%, 02/15/04, Series B................... 2,092,220 1,506,398
12.500%, 05/15/02............................. 1,500,000 1,402,500
Affinity Group, Inc.,
11.500%, 10/15/03............................. 1,500,000 1,432,500
American Media Operations, Inc.,
11.625%, 11/15/04............................. 1,000,000 1,025,000
*American Standard, Inc.,
Zero Coupon, 06/01/05......................... 1,250,000 803,125
Americold Corp.,
11.500%, 03/01/05, Series B................... 750,000 675,000
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
*Apparel Retailers, Inc.,
Zero Coupon, 08/15/05, Series B............... $ 5,500,000 $ 3,080,000
Apparel Ventures, Inc.,
12.250%, 12/31/00, Series B................... 500,000 447,500
Applied Extrusion Technologies, Inc.,
11.500%, 04/01/02, Series B................... 1,000,000 990,000
Arcadian Partners, L.P.,
10.750%, 05/01/05, Series B................... 2,500,000 2,350,000
Astrum International Corp.,
11.500%, 06/08/03............................. 389,000 390,945
Aztar Corp.,
11.000%, 10/01/02............................. 1,000,000 910,000
13.750%, 10/01/04............................. 1,500,000 1,522,500
Baldwin Co.,
10.375%, 08/01/03, Series B................... 1,750,000 945,000
Bally's Park Place Funding, Inc.,
9.250%, 03/15/04.............................. 2,000,000 1,720,000
*Bell & Howell Holdings Co.,
Zero Coupon, 03/01/05......................... 3,250,000 1,584,375
Berg Electronics, Inc.,
11.375%, 05/01/03............................. 1,000,000 992,500
Berry Plastics Corp.,
12.250%, 04/15/04............................. 1,000,000 965,000
Big Flower Press, Inc.,
10.750%, 08/01/03............................. 2,000,000 1,860,000
*Building Materials Corp. of America,
Zero Coupon, 07/01/04, Series B............... 3,000,000 1,530,000
Cablevision Industries Corp.,
9.250%, 04/01/08, Series B.................... 750,000 671,250
10.750%, 01/30/02............................. 1,000,000 995,000
Cablevision Systems Corp.,
9.875%, 02/15/13.............................. 1,000,000 900,000
*Call-Net Enterprises, Inc.,
Zero Coupon, 12/01/04......................... 2,000,000 1,045,000
Carrols Corp.,
11.500%, 08/15/03............................. 2,250,000 2,070,000
Casino America, Inc.,
11.500%, 11/15/01............................. 2,000,000 1,690,000
Casino Magic Finance Corp.,
11.500%, 10/15/01, Series B................... 1,750,000 1,120,000
*Cencall Communications Corp.,
Zero Coupon, 01/15/04......................... 500,000 175,000
Chancellor Broadcasting Co.,
12.500%, 10/01/04............................. 2,000,000 2,000,000
Charter Medical Corp.,
11.250%, 04/15/04, Series A................... 1,000,000 1,030,000
Chiquita Brands International, Inc.,
10.500%, 08/01/04............................. 327,000 320,460
11.500%, 06/01/01............................. 250,000 243,750
Clark R&M Holdings, Inc.,
Zero Coupon, 02/15/00, Series A............... 1,500,000 855,000
Clean Harbors, Inc.,
12.500%, 05/15/01............................. 1,000,000 957,500
CMI Industries, Inc.,
9.500%, 10/01/03.............................. 750,000 622,500
Cole National Group, Inc.,
11.250%, 10/01/01............................. 875,000 822,500
Color Tile, Inc.,
10.750%, 12/15/01............................. 2,000,000 1,760,000
Computervision Corp.,
10.875%, 08/15/97............................. 1,500,000 1,380,000
Container Corp. of America,
11.250%, 05/01/04, Series A................... 1,000,000 1,025,000
Continental Cablevision, Inc.,
9.500%, 08/01/13.............................. 1,000,000 915,000
Continental Homes Holding Corp.,
12.000%, 08/01/99............................. 1,000,000 940,000
</TABLE>
B21
<PAGE>
HIGH YIELD BOND PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Dairy Mart Convenience Stores, Inc.,
10.250%, 03/15/04............................. $ 750,000 $ 555,000
Dan River, Inc.,
10.125%, 12/15/03............................. 1,000,000 900,000
**&Del Monte Corp.,
12.250%, 09/01/02............................. 2,388,000 2,220,840
Di Giorgio Corp.,
12.000%, 02/15/03............................. 1,500,000 1,440,000
*Dial Call Communications, Inc.,
Zero Coupon, 04/15/04-12/15/05................ 3,250,000 1,077,500
Doehler-Jarvis, Inc.,
11.875%, 06/01/02............................. 3,000,000 2,940,000
Domtar, Inc.,
11.750%, 03/15/99............................. 1,000,000 1,027,500
12.000%, 04/15/01............................. 1,000,000 1,040,000
Engle Homes, Inc,
11.750%, 12/15/00............................. 1,000,000 920,000
Eye Care Centers of America, Inc.,
12.000%, 10/01/03............................. 1,250,000 975,000
Fairchild Corp.,
13.125%, 03/15/06............................. 655,000 563,300
Fairchild Industries, Inc.,
12.250%, 02/01/99............................. 2,480,000 2,380,800
Family Restaurants, Inc.,
*Zero Coupon, 02/01/04........................ 1,800,000 954,000
9.750%, 02/01/02.............................. 1,250,000 981,250
Farm Fresh, Inc.,
12.250%, 10/01/00............................. 1,500,000 1,300,000
Federated Department Stores,
11.290%, 06/30/02, Series B................... 250,000 252,188
***Fitzgerald's Gaming Corp.,
Zero Coupon, 03/15/96......................... 500,000 270,000
Flagstar Corp.,
10.750%, 09/15/01............................. 1,250,000 1,171,875
11.250%, 11/01/04............................. 2,567,000 2,117,775
Florida Steel Corp.,
11.500%, 12/15/00............................. 500,000 490,000
Florsheim Shoe Co.,
12.750%, 09/01/02............................. 1,000,000 970,000
Foamex, L.P.,
11.250%, 10/01/02............................. 1,500,000 1,425,000
*Foamex - JPS Automotive, L.P.,
Zero Coupon, 07/01/04, Series B............... 2,000,000 1,050,000
Food 4 Less Supermarkets, Inc.,
*Zero Coupon, 12/15/04, Series B.............. 2,500,000 1,850,000
13.750%, 06/15/01............................. 1,000,000 1,085,000
Forecast Group, L.P.,
11.375%, 12/15/00............................. 1,000,000 670,000
Forest Oil Corp.,
11.250%, 09/01/03............................. 1,500,000 1,327,500
Forstmann & Co., Inc.,
**14.750%, 04/15/99........................... 500,000 515,000
14.750%, 04/15/99............................. 1,330,000 1,383,200
Fort Howard Corp.,
14.125%, 11/01/04............................. 3,500,000 3,526,250
12.625%, 11/01/00............................. 500,000 515,000
Fresh Del Monte Produce,
10.000%, 05/01/03, Series B................... 500,000 340,000
G-I Holdings, Inc.,
Zero Coupon, 10/01/98......................... 500,000 305,000
G.U. Acquisition Corp.,
13.000%, 03/02/98............................. 1,000,000 300,000
Garden State Newspapers, Inc.,
12.000%, 07/01/04............................. 2,250,000 2,250,000
Gaylord Container Corp.,
11.500%, 05/15/01............................. 500,000 515,000
Geneva Steel, Inc.,
11.125%, 03/15/01............................. 1,000,000 940,000
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Georgia Gulf Corp.,
15.000%, 04/15/00............................. $ 500,000 $ 510,000
Gillett Holdings, Inc.,
12.250%, 06/30/02, Series A................... 1,000,000 1,057,500
Grand Casinos Resorts, Inc.,
12.500%, 02/01/00, Series B................... 1,000,000 940,000
Great Dane Holdings, Inc.,
12.750%, 08/01/01............................. 1,925,000 1,905,750
GS Technologies Operating Co.,
12.000%, 09/01/04............................. 1,750,000 1,728,125
Gulf Canada Resources Ltd.,
9.250%, 01/15/04.............................. 500,000 458,750
Harvard Industries, Inc.,
12.000%, 07/15/04............................. 1,250,000 1,259,375
Health O Meter, Inc.,
13.000%, 08/15/02............................. 1,000,000 900,000
Hills Stores Co.,
10.250%, 09/30/03............................. 500,000 465,000
Hollywood Casino Corp.,
14.000%, 04/01/98............................. 1,750,000 1,732,500
Horsehead Industries, Inc.,
14.000%, 06/01/99............................. 2,000,000 1,980,000
15.750%, 06/01/97............................. 296,000 304,880
Host Marriott Hospitality, Inc.,
9.875%, 05/01/01, Series D.................... 938,000 938,000
10.500%, 05/01/06, Series M................... 253,000 251,735
10.875%, 11/01/01, Series E................... 220,000 223,300
ICF Kaiser International, Inc.,
12.000%, 12/31/03............................. 1,500,000 1,305,000
*Imax Corp.,
7.000%, 03/01/01.............................. 1,500,000 1,252,500
Imo Industries, Inc.,
12.000%, 11/01/01............................. 1,500,000 1,513,125
12.250%, 08/15/97............................. 750,000 750,000
*Indspec Chemical Corp.,
Zero Coupon, 12/01/03, Class B................ 1,249,000 711,930
Inter-City Products Corp.,
9.750%, 03/01/00.............................. 1,750,000 1,631,875
Interlake Corp.,
12.125%, 03/01/02............................. 2,500,000 2,325,000
*Ivex Holdings Corp.,
Zero Coupon, 03/15/05, Series B............... 2,000,000 800,000
Ivex Packaging Corp.,
12.500%, 12/15/02............................. 1,250,000 1,243,750
**J B Williams Holdings, Inc.,
12.000%, 03/01/04............................. 1,000,000 935,000
J.B. Poindexter & Co.,
12.500%, 05/15/04............................. 3,250,000 3,055,000
J.M. Peters Co.,
12.750%, 05/01/02............................. 1,250,000 1,037,500
Jones Intercable, Inc.,
10.500%, 03/01/08............................. 1,250,000 1,225,000
Jordan Industries, Inc.,
*Zero Coupon, 08/01/05........................ 500,000 250,000
10.375%, 08/01/03............................. 500,000 445,000
JPS Automotive Products Corp.,
11.125%, 06/15/01............................. 500,000 480,000
JPS Textile Group, Inc.,
7.000%, 05/15/00.............................. 1,000,000 410,000
9.850%, 06/01/99.............................. 1,049,000 645,135
K & F Industries, Inc.,
11.875%, 12/01/03............................. 1,500,000 1,458,750
13.750%, 08/01/01............................. 500,000 450,000
K. Hovnanian Enterprises, Inc.,
11.250%, 04/15/02............................. 1,000,000 835,000
Kaiser Aluminum & Chemical Corp.,
12.750%, 02/01/03............................. 1,375,000 1,385,313
</TABLE>
B22
<PAGE>
HIGH YIELD BOND PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Kloster Cruise Ltd.,
13.000%, 05/01/03............................. $ 1,500,000 $ 1,350,000
Lady Luck Gaming Corp.,
10.500%, 03/01/01, Series B................... 1,000,000 390,000
Lamson & Sessions Co.,
14.000%, 06/01/97............................. 500,000 505,000
Laroche Industries, Inc.,
13.000%, 08/15/04............................. 1,000,000 920,000
Loehmann's Holdings, Inc.,
10.250%, 10/01/97............................. 300,000 289,500
13.750%, 02/15/99............................. 1,600,000 1,584,000
Louisiana Casino Cruises, Inc.,
11.500%, 12/01/98............................. 1,400,000 1,190,000
MacAndrews & Forbes Group, Inc.,
12.250%, 07/01/96............................. 750,000 742,500
13.000%, 03/01/99............................. 1,250,000 1,225,000
Mail-Well Corp.,
10.500%, 02/15/04............................. 2,500,000 2,175,000
Malette, Inc.,
12.250%, 07/15/04............................. 2,500,000 2,525,000
*Marcus Cable Operating Co., L.P.,
Zero Coupon, 08/01/04......................... 3,000,000 1,590,000
Marvel Holdings, Inc.,
Zero Coupon, 04/15/98, Series B............... 2,000,000 1,230,000
Maxxam Group, Inc.,
*Zero Coupon, 08/01/03........................ 2,500,000 1,425,000
11.250%, 08/01/03............................. 1,000,000 937,500
Miles Homes, Inc.,
12.000%, 04/01/01............................. 1,250,000 862,500
Moran Transportation Co.,
11.750%, 07/15/04, Series B................... 1,000,000 945,000
Motor Wheel Corp.,
11.500%, 03/01/00, Series B................... 2,500,000 2,312,500
*Neodata Services, Inc.,
Zero Coupon, 05/01/03, Series B............... 2,000,000 1,560,000
NewCity Communications, Inc.,
11.375%, 11/01/03............................. 1,500,000 1,380,000
Newflo Corp.,
13.250%, 11/15/02............................. 1,000,000 985,000
*Nextel Communications, Inc.,
Zero Coupon, 09/01/03-08/15/04................ 2,000,000 760,000
NL Industries, Inc.,
*Zero Coupon, 10/15/05........................ 2,250,000 1,395,000
11.750%, 10/15/03............................. 1,250,000 1,250,000
Nortek, Inc.,
9.875%, 03/01/04.............................. 1,750,000 1,557,500
**%Northwest Airlines, Inc,
12.092%, 12/31/00............................. 1,976,884 1,907,693
NVR, Inc.,
11.000%, 04/15/03............................. 2,000,000 1,670,000
NWCG Holdings Corp.,
Zero Coupon, 06/15/99, Series B............... 3,000,000 1,530,000
OrNda Healthcorp,
11.375%, 08/15/04............................. 1,000,000 1,025,000
12.250%, 05/15/02............................. 1,500,000 1,605,000
Outdoor Systems, Inc.,
10.750%, 08/15/03............................. 1,250,000 1,125,000
Overhead Door Co.,
12.250%, 02/01/00............................. 1,000,000 1,012,500
PA Holdings Corp.,
13.750%, 07/15/99............................. 224,000 235,200
Pagemart, Inc.,
12.250%, 11/01/03............................. 2,000,000 1,200,000
Pamida, Inc.,
11.750%, 03/15/03............................. 1,500,000 1,402,500
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Pathmark Stores, Inc.,
*Zero Coupon, 11/01/03........................ $ 2,500,000 $ 1,275,000
9.625%, 05/01/03.............................. 500,000 445,000
11.625%, 06/15/02............................. 1,000,000 960,000
Petroleum Heat & Power Company, Inc.,
9.375%, 02/01/06.............................. 500,000 425,000
10.125%, 04/01/03............................. 1,240,000 1,128,400
**PF Acquisition Corp.,
12.250%, 02/01/05............................. 1,500,000 1,500,000
Pier 1 Imports, Inc.,
11.500%, 07/15/03............................. 347,000 357,410
Pilgrim's Pride Corp.,
10.875%, 08/01/03............................. 1,750,000 1,649,375
**Polymer Group, Inc.,
12.250%, 07/15/02............................. 1,250,000 1,193,750
**President Riverboat Casinos, Inc.,
13.000%, 09/15/01............................. 2,500,000 2,200,000
Presidio Oil Co.,
11.500%, 09/15/00, Series B................... 800,000 580,000
%14.050%, 07/15/02, Series B.................. 400,000 248,000
Presley Cos.,
12.500%, 07/01/01............................. 1,750,000 1,505,000
***Pricellular Wireless Corp.,
Zero Coupon, 11/15/01......................... 1,000,000 660,000
Pueblo Xtra International, Inc.,
9.500%, 08/01/03.............................. 500,000 420,000
Purity Supreme, Inc.,
11.750%, 08/01/99, Series B................... 1,250,000 1,037,500
Ralphs Grocery Co.,
9.000%, 04/01/03, Series B.................... 1,250,000 1,212,500
***Remington Arms Co.,
9.500%, 12/01/03.............................. 1,000,000 840,000
Republic Engineered Steel, Inc.,
9.875%, 12/15/01.............................. 1,000,000 905,000
Rexene Corp.,
11.750%, 12/01/04............................. 1,000,000 1,025,000
Robin Media Group, Inc.,
11.125%, 04/01/97............................. 1,250,000 1,187,500
Rohr, Inc.,
11.625%, 05/15/03............................. 1,000,000 995,000
Ryland Group, Inc.,
9.625%, 06/01/04.............................. 1,000,000 840,000
**Sam Houston Race Park, Ltd.,
11.750%, 07/15/99............................. 1,000,000 350,000
Santa Fe Hotel, Inc.,
11.000%, 12/15/00............................. 500,000 440,000
Scott Cable Communications, Inc.,
12.250%, 04/15/01............................. 250,000 200,000
Seminole Kraft Corp.,
13.500%, 10/15/96............................. 287,000 287,000
Seven-Up/RC Bottling Co.,
11.500%, 08/01/99............................. 1,250,000 1,050,000
Showboat, Inc.,
13.000%, 08/01/09............................. 1,500,000 1,425,000
Silgan Corp.,
11.750%, 06/15/02............................. 1,000,000 1,035,000
*Silgan Holdings, Inc.,
Zero Coupon, 12/15/02......................... 2,000,000 1,680,000
Southdown, Inc.,
14.000%, 10/15/01, Series B................... 500,000 556,250
Southland Corp.,
12.000%, 06/15/09, Series C................... 500,000 490,000
Specialty Foods Acquisition Corp.,
*Zero Coupon, 08/15/05, Series B.............. 2,000,000 805,000
10.250%, 08/15/01, Series B................... 1,000,000 890,000
11.250%, 08/15/03, Series B................... 1,250,000 1,087,500
</TABLE>
B23
<PAGE>
HIGH YIELD BOND PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
SPX Corp.,
11.750%, 06/01/02............................. $ 2,500,000 $ 2,487,500
**Star Markets, Inc.,
13.000%, 11/01/04............................. 1,000,000 1,017,500
Station Casinos, Inc.,
9.625%, 06/01/03.............................. 2,000,000 1,680,000
Stone Consolidated Corp.,
10.250%, 12/15/00............................. 650,000 640,250
Stone Container Corp.,
9.875%, 02/01/01.............................. 1,500,000 1,410,000
12.625%, 07/15/98............................. 1,500,000 1,571,250
Surgical Health Corp.,
11.500%, 07/15/04............................. 600,000 600,000
*Talley Industries, Inc.,
Zero Coupon, 10/15/05......................... 2,750,000 1,375,000
Talley Manufacturing & Technology, Inc.,
10.750%, 10/15/03............................. 500,000 450,000
Thrifty Payless, Inc.,
11.750%, 04/15/03............................. 3,000,000 2,940,000
*Total Renal Care, Inc.,
Zero Coupon, 08/15/04......................... 500,000 375,000
Triangle Pacific Corp.,
10.500%, 08/01/03............................. 2,000,000 1,915,000
Trism, Inc.,
10.750%, 12/15/00............................. 500,000 475,000
*Triton Energy Corp.,
Zero Coupon, 12/15/00......................... 2,000,000 1,492,500
Trump Plaza Funding,
10.875%, 06/15/01............................. 800,000 608,000
Trump Taj Mahal Funding, Inc.,
11.350%, 11/15/99, Series A................... 2,000,000 1,330,000
Uniroyal Technology Corp.,
11.750%, 06/01/03............................. 2,000,000 1,620,000
%Unisys Corp.,
13.500%, 07/01/97............................. 750,000 802,500
United Artists Theatre Circuit, Inc.,
11.500%, 05/01/02, Series B................... 1,000,000 1,032,500
United International Holdings, Inc.,
Zero Coupon, 11/15/99......................... 6,000,000 3,030,000
US Air, Inc.,
9.625%, 02/01/01.............................. 2,000,000 1,100,000
10.375%, 03/01/13, Series 93-A3............... 1,000,000 815,000
12.875%, 04/01/00............................. 950,000 762,375
Valcor, Inc.,
9.625%, 11/01/03.............................. 750,000 690,000
Wainoco Oil Corp.,
12.000%, 08/01/02............................. 1,500,000 1,530,000
Waters Corp.,
12.750%, 09/30/04, Series B................... 1,250,000 1,256,250
Webb Corp.,
9.000%, 02/15/06.............................. 375,000 285,000
Webcraft Technologies, Inc.,
9.375%, 02/15/02.............................. 1,500,000 1,297,500
Wheeling-Pittsburgh Corp.,
9.375%, 11/15/03.............................. 1,400,000 1,190,000
Wherehouse Entertainment, Inc.,
13.000%, 08/01/02, Series B................... 150,000 75,000
White Rose Foods, Inc.,
Zero Coupon, 11/01/98......................... 1,750,000 945,000
Wickes Lumber Co.,
11.625%, 12/15/03............................. 2,500,000 2,425,000
Williamhouse Regency, Inc.,
11.500%, 06/15/05............................. 2,000,000 1,840,000
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Young Broadcasting Corp.,
11.750%, 11/15/04............................. $ 500,000 $ 505,000
--------------
248,816,277
--------------
TOTAL LONG-TERM BONDS
(Cost $293,001,887)............................................ 269,347,408
--------------
<CAPTION>
MARKET
OTHER LONG-TERM INVESTMENTS -- 0.1% SHARES VALUE
------------- --------------
<S> <C> <C>
**+PG Partners L.P.............................. 7,541 361,968
(Cost $115,290)
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 4.7% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
5.720%, 01/03/95 (see Note 4)................. 14,296,000 14,296,000
--------------
OTHER ASSETS -- 2.3%
(net of liabilities)........................................... 7,141,716
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 306,224,713
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
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)
*Denotes deferred interest security that accrues no interest until a
predetermined date at which time a specified coupon rate becomes effective.
**Indicates a restricted security; the aggregate cost of the restricted
securities is $21,440,552. The aggregate value, $19,903,619 is
approximately 6.5% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending December
31, 1994.
++Non-income producing.
%Indicates a variable rate security.
[Payment-in-kind preferred stock--dividend is paid in additional preferred
shares in lieu of cash.
&Payment-in-kind bonds--interest is paid in additional bonds in lieu of
cash.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B24
<PAGE>
STOCK INDEX PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 96.1% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 2.1%
AlliedSignal, Inc............................... 54,100 $ 1,839,400
Boeing Co....................................... 64,850 3,031,737
E-Systems, Inc.................................. 6,200 258,075
General Dynamics Corp........................... 12,100 526,350
Lockheed Corp................................... 11,900 864,237
Loral Corp...................................... 16,300 617,362
Martin Marietta Corp............................ 18,400 816,500
McDonnell Douglas Corp.......................... 7,500 1,065,000
Northrop Grumman Corp........................... 9,300 390,600
Raytheon Co..................................... 25,800 1,647,975
Rockwell International Corp..................... 41,800 1,494,350
United Technologies Corp........................ 24,200 1,521,575
--------------
14,073,161
--------------
AIRLINES -- 0.3%
+AMR Corp....................................... 14,600 777,450
Delta Air Lines, Inc............................ 9,900 499,950
Southwest Airlines Co........................... 27,100 453,925
+USAir Group, Inc............................... 10,500 45,938
--------------
1,777,263
--------------
ALUMINUM -- 0.5%
Alcan Aluminum, Ltd............................. 42,450 1,077,169
Aluminum Co. of America......................... 16,900 1,463,962
Reynolds Metals Co.............................. 12,100 592,900
--------------
3,134,031
--------------
AUTOS - CARS & TRUCKS -- 2.6%
Chrysler Corp................................... 67,800 3,322,200
Cummins Engine Co., Inc......................... 8,300 375,575
Dana Corp....................................... 18,800 439,450
Echlin, Inc..................................... 10,900 327,000
Ford Motor Co................................... 191,800 5,370,400
General Motors Corp............................. 142,700 6,029,075
Genuine Parts Co................................ 23,650 851,400
Johnson Controls, Inc........................... 7,500 367,500
+Navistar International Corp.................... 14,500 219,312
Safety Kleen Corp............................... 11,050 162,987
--------------
17,464,899
--------------
BANKS AND SAVINGS & LOANS -- 5.1%
Banc One Corp................................... 77,622 1,969,658
Bank of Boston Corp............................. 20,300 525,262
BankAmerica Corp................................ 70,548 2,786,646
Bankers Trust NY Corp........................... 15,300 847,237
Barnett Banks, Inc.............................. 18,700 717,612
Boatmen's Bancshares, Inc....................... 19,500 528,937
Chase Manhattan Corp............................ 36,501 1,254,722
Chemical Banking Corp........................... 48,382 1,735,704
Citicorp........................................ 74,100 3,065,887
CoreStates Financial Corp....................... 28,000 728,000
First Chicago Corp.............................. 17,800 849,950
First Fidelity Bancorp.......................... 15,600 700,050
First Interstate Bancorp........................ 15,500 1,048,187
First Union Corp................................ 32,500 1,344,688
Fleet Financial Group, Inc...................... 26,700 867,750
Golden West Financial Corp...................... 12,200 430,050
Great Western Financial Corp.................... 24,500 392,000
H.F. Ahmanson & Co.............................. 22,200 357,975
J.P. Morgan & Co., Inc.......................... 36,650 2,052,400
KeyCorp......................................... 47,100 1,177,500
Mellon Bank Corp................................ 27,850 852,906
NationsBank Corp................................ 52,239 2,357,285
NBD Bancorp, Inc................................ 30,425 832,884
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Norwest Corp.................................... 60,800 $ 1,421,200
PNC Bank Corp................................... 44,300 935,838
Shawmut National Corp........................... 22,300 365,163
Suntrust Banks, Inc............................. 23,100 1,103,025
U.S. Bancorp.................................... 18,900 427,613
Wachovia Corp................................... 32,400 1,044,900
Wells Fargo & Co................................ 10,400 1,508,000
--------------
34,229,029
--------------
BEVERAGES -- 3.5%
Adolph Coors Co. (Class 'B' Stock).............. 7,100 118,925
Anheuser-Busch Companies, Inc................... 49,900 2,538,663
Brown-Forman Corp. (Class 'B' Stock)............ 15,300 466,650
Coca-Cola Co.................................... 246,100 12,674,150
PepsiCo, Inc.................................... 150,800 5,466,500
Seagram Co., Ltd................................ 70,300 2,073,850
--------------
23,338,738
--------------
CHEMICALS -- 2.8%
Air Products & Chemicals, Inc................... 21,700 968,362
Dow Chemical Co................................. 52,500 3,530,625
E.I. du Pont de Nemours & Co.................... 129,700 7,295,625
Eastman Chemical Co............................. 15,900 802,950
Hercules, Inc................................... 7,800 899,925
Mallinckrodt Group, Inc......................... 14,800 442,150
Monsanto Co..................................... 22,500 1,586,250
Nalco Chemical Co............................... 12,900 432,150
Rohm & Haas Co.................................. 13,100 748,337
Sigma-Aldrich Corp.............................. 9,000 297,000
Union Carbide Corp.............................. 28,600 840,125
W.R. Grace & Co................................. 17,900 691,388
--------------
18,534,887
--------------
CHEMICALS - SPECIALTY -- 0.4%
Engelhard Corp.................................. 18,850 419,413
First Mississippi Corp.......................... 3,700 92,500
Great Lakes Chemical Corp....................... 13,700 780,900
Morton International, Inc....................... 28,100 800,850
Praxair, Inc.................................... 25,100 514,550
Raychem Corp.................................... 7,800 277,875
--------------
2,886,088
--------------
COMMERCIAL SERVICES -- 0.2%
Deluxe Corp..................................... 15,300 405,450
John H. Harland Co.............................. 5,900 118,000
Moore Corp., Ltd................................ 18,300 345,413
Ogden Corp...................................... 7,600 142,500
--------------
1,011,363
--------------
COMPUTER SERVICES -- 2.8%
Autodesk, Inc................................... 8,800 348,700
Automatic Data Processing, Inc.................. 26,700 1,561,950
+Ceridian Corp.................................. 8,200 220,375
+Cisco Systems.................................. 50,000 1,756,250
Computer Associates International, Inc.......... 31,350 1,520,475
+Computer Sciences Corp......................... 9,900 504,900
First Data Corp................................. 20,600 975,925
+Harris Computer Systems Corp................... 370 4,532
+Intergraph Corp................................ 7,600 61,750
+Lotus Development Corp......................... 9,000 369,000
+Microsoft Corp................................. 109,900 6,717,638
+Novell, Inc.................................... 70,000 1,198,750
+Oracle Systems Corp............................ 54,400 2,400,400
</TABLE>
B25
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
+Sun Microsystems, Inc.......................... 19,300 $ 685,150
+Tandem Computers, Inc.......................... 21,100 361,338
--------------
18,687,133
--------------
CONSTRUCTION -- 0.2%
Fluor Corp...................................... 15,600 672,750
Foster Wheeler Corp............................. 6,800 202,300
Kaufman & Broad Home Corp....................... 6,366 81,962
Pulte Corp...................................... 5,100 117,300
--------------
1,074,312
--------------
CONTAINERS -- 0.2%
Ball Corp....................................... 5,400 170,100
Bemis Co., Inc.................................. 10,000 240,000
+Crown Cork & Seal, Inc......................... 17,300 653,075
--------------
1,063,175
--------------
COSMETICS & SOAPS -- 2.3%
Alberto Culver Co. (Class 'B' Stock)............ 5,000 136,250
Avon Products, Inc.............................. 13,400 800,650
Clorox Co....................................... 9,900 582,862
Colgate Palmolive Co............................ 28,500 1,806,188
Gillette Co..................................... 41,900 3,132,025
International Flavors & Fragrances, Inc......... 21,000 971,250
Procter & Gamble Co............................. 130,552 8,094,224
--------------
15,523,449
--------------
DIVERSIFIED GAS -- 0.2%
Coastal Corp.................................... 19,900 512,425
Eastern Enterprises............................. 4,100 107,625
ENSERCH Corp.................................... 12,200 160,125
NICOR, Inc...................................... 10,300 234,325
ONEOK, Inc...................................... 4,600 82,800
--------------
1,097,300
--------------
DIVERSIFIED OFFICE EQUIPMENT -- 2.3%
Alco Standard Corp.............................. 10,388 651,847
Avery Dennison Corp............................. 10,500 372,750
+COMPAQ Computer Corp........................... 49,400 1,951,300
Honeywell, Inc.................................. 24,900 784,350
International Business Machines Corp............ 111,100 8,165,850
Pitney-Bowes, Inc............................... 29,600 939,800
+Unisys Corp.................................... 31,100 268,238
Xerox Corp...................................... 20,182 1,998,018
--------------
15,132,153
--------------
DRUGS AND HOSPITAL SUPPLIES -- 7.7%
Abbott Laboratories............................. 155,000 5,056,875
Allergan, Inc................................... 12,100 341,825
+ALZA Corp...................................... 15,200 273,600
American Home Products Corp..................... 58,200 3,652,050
+Amgen, Inc..................................... 25,600 1,510,400
Bausch & Lomb, Inc.............................. 11,300 382,787
Baxter International, Inc....................... 53,600 1,514,200
Becton, Dickinson & Co.......................... 14,000 672,000
+Biomet, Inc.................................... 21,600 302,400
Bristol-Myers Squibb Co......................... 97,140 5,621,978
C.R. Bard, Inc.................................. 9,900 267,300
Eli Lilly & Co.................................. 55,800 3,661,875
Johnson & Johnson............................... 122,600 6,712,350
Medtronic, Inc.................................. 22,000 1,223,750
Merck & Co., Inc................................ 240,050 9,151,906
Pfizer, Inc..................................... 58,300 4,503,675
Schering-Plough Corp............................ 36,700 2,715,800
St. Jude Medical, Inc........................... 8,500 337,875
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
United States Surgical Corp..................... 10,500 $ 199,500
Upjohn Co....................................... 32,700 1,005,525
Warner-Lambert Co............................... 25,500 1,963,500
--------------
51,071,171
--------------
ELECTRICAL EQUIPMENT -- 0.1%
Westinghouse Electric Corp...................... 66,800 818,300
--------------
ELECTRONICS -- 4.1%
+Advanced Micro Devices, Inc.................... 17,700 440,288
Amdahl Corp..................................... 23,300 256,300
AMP, Inc........................................ 20,200 1,469,550
Apple Computer, Inc............................. 22,400 873,600
+Cray Research, Inc............................. 4,700 74,025
+Data General Corp.............................. 5,400 54,000
+Digital Equipment Corp......................... 26,400 877,800
EG&G, Inc....................................... 9,700 137,012
Emerson Electric Co............................. 42,700 2,668,750
Harris Corp..................................... 7,400 314,500
Hewlett-Packard Co.............................. 48,500 4,843,937
Intel Corp...................................... 79,800 5,097,225
Micron Technology, Inc.......................... 19,800 873,675
Motorola, Inc................................... 107,800 6,238,925
+National Semiconductor Corp.................... 23,900 466,050
Perkin-Elmer Corp............................... 8,100 207,562
Tandy Corp...................................... 12,265 614,783
Tektronix, Inc.................................. 5,600 191,800
Texas Instruments, Inc.......................... 17,500 1,310,312
Thomas & Betts Corp............................. 3,500 234,938
+Zenith Electronics Corp........................ 8,300 96,488
--------------
27,341,520
--------------
FINANCIAL SERVICES -- 2.6%
American Express Co............................. 94,200 2,778,900
Beneficial Corp................................. 9,700 378,300
Dean Witter, Discover & Co...................... 32,245 1,092,299
Federal Home Loan Mortgage Corporation.......... 34,150 1,724,575
Federal National Mortgage Association........... 51,700 3,767,637
H & R Block, Inc................................ 19,800 735,075
Household International , Inc................... 17,500 649,688
MBNA Corp....................................... 27,800 649,825
Merrill Lynch & Co., Inc........................ 39,200 1,401,400
National City Corp.............................. 28,200 729,675
Salomon, Inc.................................... 20,600 772,500
Transamerica Corp............................... 14,200 706,450
Travelers, Inc.................................. 62,031 2,016,008
--------------
17,402,332
--------------
FOODS -- 3.2%
Archer-Daniels-Midland Co....................... 98,764 2,037,007
Campbell Soup Co................................ 47,900 2,113,587
ConAgra, Inc.................................... 47,600 1,487,500
CPC International, Inc.......................... 28,200 1,501,650
Fleming Companies, Inc.......................... 6,700 155,775
General Mills, Inc.............................. 30,000 1,710,000
Giant Food, Inc. (Class 'A' Stock).............. 10,900 237,075
H.J. Heinz & Co................................. 47,100 1,730,925
Hershey Foods Corp.............................. 16,300 788,513
Kellogg Co...................................... 42,500 2,470,313
Pet, Inc........................................ 19,900 393,025
Pioneer Hi-Bred International, Inc.............. 16,600 572,700
Quaker Oats Co.................................. 26,000 799,500
Ralston-Ralston Purina Group.................... 19,240 858,585
Sara Lee Corp................................... 91,000 2,297,750
</TABLE>
B26
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Sysco Corp...................................... 34,800 $ 896,100
W. M. Wrigley, Jr. Co........................... 22,300 1,101,063
--------------
21,151,068
--------------
FOREST PRODUCTS -- 1.8%
Boise Cascade Corp.............................. 7,686 205,600
Champion International Corp..................... 17,900 653,350
Federal Paper Board Co., Inc.................... 8,500 246,500
Georgia-Pacific Corp............................ 17,200 1,229,800
International Paper Co.......................... 23,600 1,778,850
James River Corp. of Virginia................... 15,900 321,975
Kimberly-Clark Corp............................. 31,000 1,565,500
Louisiana Pacific Corp.......................... 21,000 572,250
Mead Corp....................................... 11,100 539,737
Potlatch Corp................................... 5,800 216,050
Scott Paper Co.................................. 14,100 974,663
Stone Container Corp............................ 17,066 294,388
Temple Inland, Inc.............................. 10,500 473,813
Union Camp Corp................................. 13,100 617,338
Westvaco Corp................................... 12,400 486,700
Weyerhaeuser Co................................. 39,300 1,473,750
--------------
11,650,264
--------------
GAS PIPELINES -- 0.6%
+Columbia Gas System, Inc....................... 9,500 223,250
Consolidated Natural Gas Co..................... 17,900 635,450
Enron Corp...................................... 47,400 1,445,700
NorAm Energy Corp............................... 21,100 113,413
Panhandle Eastern Corp.......................... 22,990 454,053
Peoples Energy Corp............................. 6,400 167,200
Transco Energy Co............................... 7,600 126,350
Williams Companies, Inc......................... 19,900 499,987
--------------
3,665,403
--------------
HOSPITAL MANAGEMENT -- 0.6%
+Beverly Enterprises, Inc....................... 17,000 244,375
Columbia / HCA Healthcare Corp.................. 68,132 2,486,818
Community Psychiatric Centers................... 6,900 75,900
Manor Care, Inc................................. 11,850 324,394
National Medical Enterprises, Inc............... 30,600 432,225
Service Corp. International..................... 17,800 493,950
Shared Medical Systems Corp..................... 4,700 153,925
--------------
4,211,587
--------------
HOUSING RELATED -- 0.6%
Armstrong World Industries, Inc................. 7,100 273,350
Centex Corp..................................... 6,000 136,500
Fleetwood Enterprises, Inc...................... 8,700 163,125
Lowe's Companies, Inc........................... 30,000 1,042,500
Masco Corp...................................... 29,300 662,913
Maytag Corp..................................... 19,500 292,500
+Owens-Corning Fiberglas Corp................... 8,600 275,200
Skyline Corp.................................... 1,000 19,250
Stanley Works................................... 9,000 321,750
Whirlpool Corp.................................. 14,200 713,550
--------------
3,900,638
--------------
INSURANCE -- 3.1%
Aetna Life & Casualty Co........................ 21,500 1,013,187
Alexander & Alexander Services, Inc............. 8,500 157,250
American General Corp........................... 40,400 1,141,300
American International Group, Inc............... 60,225 5,902,050
Chubb Corp...................................... 16,800 1,299,900
CIGNA Corp...................................... 13,700 871,662
Continental Corp................................ 10,600 201,400
General Re Corp................................. 15,750 1,949,062
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Jefferson-Pilot Corp............................ 9,650 $ 500,594
Lincoln National Corp........................... 17,800 623,000
Marsh & McLennan Companies, Inc................. 13,800 1,093,650
Providian Corp.................................. 18,500 571,188
SAFECO Corp..................................... 11,700 608,400
St. Paul Companies, Inc......................... 16,000 716,000
Torchmark Corp.................................. 13,900 484,763
U.S. Healthcare, Inc............................ 30,500 1,258,125
United Healthcare Corp.......................... 32,700 1,475,587
UNUM Corp....................................... 14,500 547,375
USF&G Corp...................................... 14,900 203,013
USLIFE Corp..................................... 4,100 142,987
--------------
20,760,493
--------------
LEISURE -- 1.0%
+Bally Entertainment Corp....................... 7,200 44,100
Brunswick Corp.................................. 18,300 345,412
Handleman Co.................................... 5,850 66,544
Hasbro, Inc..................................... 16,500 482,625
+King World Productions, Inc.................... 6,650 229,425
Mattel, Inc..................................... 34,356 863,195
Outboard Marine Corp............................ 3,900 76,537
Walt Disney Co.................................. 102,200 4,713,975
--------------
6,821,813
--------------
LODGING -- 0.3%
Hilton Hotels Corp.............................. 9,400 633,325
Marriott International, Inc..................... 23,700 666,563
+Promus Companies, Inc.......................... 19,950 618,450
--------------
1,918,338
--------------
MACHINERY -- 1.2%
Briggs & Stratton Corp.......................... 5,200 170,300
Caterpillar, Inc................................ 38,500 2,122,312
Cincinnati Milacron, Inc........................ 6,900 163,013
+Clark Equipment Co............................. 3,200 173,600
Cooper Industries, Inc.......................... 22,100 754,162
Deere & Co...................................... 16,500 1,093,125
Dover Corp...................................... 10,700 552,387
Eaton Corp...................................... 14,900 737,550
Giddings & Lewis, Inc........................... 6,900 101,775
+Giddings & Lewis, Inc. (Contingent Payment
Right)........................................ 1,000 0
Harnischfeger Industries, Inc................... 8,400 236,250
Ingersoll-Rand Co............................... 19,700 620,550
PACCAR, Inc..................................... 7,130 315,503
Parker-Hannifin Corp............................ 9,300 423,150
Snap-On Inc..................................... 8,000 266,000
SPX Corp........................................ 1,500 24,938
Timken Co....................................... 6,400 225,600
+Varity Corp.................................... 8,810 319,363
--------------
8,299,578
--------------
MEDIA -- 3.0%
Capital Cities/ABC, Inc......................... 29,800 2,540,450
CBS, Inc........................................ 12,150 672,806
Comcast Corp. (Special Class 'A' Stock)......... 44,400 696,525
Dow Jones & Co., Inc............................ 18,300 567,300
Dun & Bradstreet Corp........................... 32,760 1,801,800
Gannett Co., Inc................................ 27,800 1,480,350
Interpublic Group of Companies, Inc............. 14,400 462,600
Knight-Ridder, Inc.............................. 9,900 499,950
McGraw-Hill, Inc................................ 9,400 628,625
Meredith Corp................................... 2,900 135,213
</TABLE>
B27
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
New York Times Co. (Class 'A' Stock)............ 19,800 $ 438,075
R. R. Donnelley & Sons Co....................... 29,500 870,250
+Tele-Communications, Inc. (Class 'A' Stock).... 109,900 2,390,325
Time Warner, Inc................................ 71,940 2,526,893
Times Mirror Co. (Class 'A' Stock).............. 24,000 753,000
Tribune Co...................................... 12,500 684,375
+Viacom, Inc. (Class 'B' Stock)................. 66,367 2,696,159
--------------
19,844,696
--------------
MINERAL RESOURCES -- 1.1%
American Barrick Resources Corp................. 67,100 1,492,975
ASARCO, Inc..................................... 8,700 247,950
Burlington Resources, Inc....................... 24,600 861,000
Cyprus Amax Minerals Co......................... 17,600 459,800
Echo Bay Mines, Ltd............................. 21,800 231,625
Homestake Mining Co............................. 26,300 450,388
Inco, Ltd....................................... 22,200 635,475
Newmont Mining Corp............................. 16,100 579,600
Phelps Dodge Corp............................... 13,300 822,937
Pittston Services Group......................... 7,300 193,450
Placer Dome, Inc................................ 45,800 996,150
+Sante Fe Pacific Gold Corp..................... 46,916 604,044
--------------
7,575,394
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 4.5%
Bassett Furniture Industries, Inc............... 2,612 74,442
Browning-Ferris Industries, Inc................. 37,400 1,061,225
Crane Co........................................ 5,500 147,813
Ecolab, Inc..................................... 12,000 252,000
+FMC Corp....................................... 6,900 398,475
General Electric Co............................. 326,400 16,646,400
General Signal Corp............................. 9,262 295,226
Illinois Tool Works, Inc........................ 21,400 936,250
ITT Corp........................................ 22,400 1,985,200
+JWP, Inc....................................... 4,200 0
Millipore Corp.................................. 5,500 266,062
Morrison Knudsen Corp........................... 5,800 73,950
NACCO Industries, Inc. (Class 'A' Stock)........ 1,600 77,400
Pall Corp....................................... 21,900 410,625
PPG Industries, Inc............................. 40,400 1,499,850
Rollins Environmental Services, Inc............. 9,400 45,825
Teledyne, Inc................................... 10,300 207,287
Textron, Inc.................................... 17,100 861,412
Trinova Corp.................................... 5,600 164,500
TRW, Inc........................................ 12,300 811,800
Tyco International, Ltd......................... 14,300 679,250
W.W. Grainger, Inc.............................. 9,500 548,625
WMX Technologies, Inc........................... 91,700 2,407,125
Zurn Industries, Inc............................ 2,000 36,000
--------------
29,886,742
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 2.3%
American Greetings Corp. (Class 'A' Stock)...... 13,800 372,600
Black & Decker Corp............................. 16,500 391,875
Corning, Inc.................................... 42,400 1,266,700
Dial Corp....................................... 17,600 374,000
Eastman Kodak Co................................ 63,300 3,022,575
Jostens, Inc.................................... 8,100 150,863
Minnesota Mining & Manufacturing Co............. 80,500 4,296,687
+National Education Corp........................ 2,700 11,138
Polaroid Corp................................... 9,500 308,750
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Premark International, Inc...................... 12,300 $ 538,125
Rubbermaid, Inc................................. 30,800 885,500
Unilever N.V., ADR.............................. 30,400 3,541,600
Whitman Corp.................................... 19,700 339,825
--------------
15,500,238
--------------
PETROLEUM -- 8.8%
Amerada Hess Corp............................... 17,500 798,438
Amoco Corp...................................... 94,730 5,600,911
Ashland Oil, Inc................................ 11,600 400,200
Atlantic Richfield Co........................... 30,485 3,101,848
Chevron Corp.................................... 123,900 5,529,037
Exxon Corp...................................... 236,800 14,385,600
Kerr-McGee Corp................................. 9,900 455,400
Louisiana Land & Exploration Co................. 6,500 236,438
+Maxus Energy Corp.............................. 23,000 77,625
Mobil Corp...................................... 75,800 6,386,150
Occidental Petroleum Corp....................... 59,700 1,149,225
Pennzoil Co..................................... 9,100 401,538
Phillips Petroleum Co........................... 49,700 1,627,675
Royal Dutch Petroleum Co........................ 102,000 10,965,000
Santa Fe Energy Resources, Inc.................. 15,970 127,760
Sun Co., Inc.................................... 21,000 603,750
Tenneco, Inc.................................... 32,700 1,389,750
Texaco, Inc..................................... 49,600 2,969,800
Unocal Corp..................................... 46,300 1,261,675
USX-Marathon Group.............................. 54,800 897,350
--------------
58,365,170
--------------
PETROLEUM SERVICES -- 0.9%
Baker Hughes, Inc............................... 26,700 487,275
Dresser Industries, Inc......................... 35,000 660,625
Halliburton Co.................................. 21,800 722,125
Helmerich & Payne, Inc.......................... 5,100 130,687
McDermott International, Inc.................... 9,700 240,075
Oryx Energy Co.................................. 18,600 220,875
+Rowan Companies, Inc........................... 15,200 93,100
Schlumberger, Ltd............................... 46,600 2,347,475
Sonat, Inc...................................... 16,000 448,000
+Western Atlas, Inc............................. 9,700 364,963
--------------
5,715,200
--------------
RAILROADS -- 1.0%
Burlington Northern, Inc........................ 17,300 832,562
Conrail Inc..................................... 15,100 762,550
CSX Corp........................................ 19,856 1,382,474
Norfolk Southern Corp........................... 25,800 1,564,125
Santa Fe Pacific Corp........................... 36,260 634,550
Union Pacific Corp.............................. 39,300 1,793,063
--------------
6,969,324
--------------
RESTAURANTS -- 0.7%
Luby's Cafeterias, Inc.......................... 4,550 101,806
McDonald's Corp................................. 133,800 3,913,650
+Ryan's Family Steak Houses, Inc................ 8,500 63,750
+Shoney's, Inc.................................. 7,900 100,725
Wendy's International, Inc...................... 19,700 283,188
--------------
4,463,119
--------------
RETAIL -- 5.9%
Albertson's, Inc................................ 48,300 1,400,700
American Stores Co.............................. 27,600 741,750
Brown Group, Inc................................ 3,000 96,000
Bruno's, Inc.................................... 13,700 114,737
Charming Shoppes, Inc........................... 18,300 121,237
Circuit City Stores, Inc........................ 18,700 416,075
</TABLE>
B28
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Dayton Hudson Corp.............................. 13,614 $ 963,190
Dillard Department Stores, Inc. (Class 'A'
Stock)........................................ 21,950 587,163
Great Atlantic & Pacific Tea Co., Inc........... 7,000 126,875
Hartcourt General, Inc.......................... 15,406 543,062
+Hartmarx Corp.................................. 2,600 15,275
Home Depot, Inc................................. 85,749 3,944,454
J.C. Penney Co., Inc............................ 44,700 1,994,737
K mart Corp..................................... 85,700 1,114,100
+Kroger Co...................................... 22,100 533,163
Liz Claiborne, Inc.............................. 15,600 263,250
Longs Drug Stores, Inc.......................... 3,600 114,300
May Department Stores Co........................ 47,300 1,596,375
Melville Corp................................... 20,200 623,675
Mercantile Stores Co., Inc...................... 7,100 280,450
Newell Co....................................... 30,000 630,000
Nike, Inc. (Class 'B' Stock).................... 14,100 1,052,212
Nordstrom, Inc.................................. 15,400 646,800
Oshkosh B' Gosh, Inc. (Class 'A' Stock)......... 1,900 26,600
Pep Boys-Manny, Moe & Jack...................... 11,700 362,700
+Price/Costco, Inc.............................. 42,566 548,037
Reebok International, Ltd....................... 15,600 616,200
Rite Aid Corp................................... 17,100 399,713
Sears, Roebuck & Co............................. 66,900 3,077,400
Sherwin-Williams Co............................. 16,200 536,625
Stride Rite Corp................................ 9,400 104,575
Supervalu, Inc.................................. 13,700 335,650
The Gap, Inc.................................... 27,300 832,650
The Limited, Inc................................ 68,700 1,245,187
TJX Companies, Inc.............................. 14,300 223,438
+Toys 'R' Us, Inc............................... 54,850 1,672,925
Wal-Mart Stores, Inc............................ 438,600 9,320,250
Walgreen Co..................................... 23,700 1,036,875
Winn Dixie Stores, Inc.......................... 14,300 734,663
Woolworth Corp.................................. 24,400 366,000
--------------
39,359,068
--------------
RUBBER -- 0.2%
B.F. Goodrich Co................................ 4,700 203,863
Cooper Tire & Rubber Co......................... 16,200 382,725
Goodyear Tire & Rubber Co....................... 28,900 971,762
--------------
1,558,350
--------------
STEEL -- 0.4%
+Armco, Inc..................................... 19,500 129,188
+Bethlehem Steel Corp........................... 21,000 378,000
+Inland Steel Industries, Inc................... 8,900 312,612
Nucor Corp...................................... 16,600 921,300
USX-U.S. Steel Group............................ 14,140 501,970
Worthington Industries, Inc..................... 17,300 346,000
--------------
2,589,070
--------------
TELECOMMUNICATIONS -- 4.5%
+Airtouch Communications........................ 94,200 2,743,575
Alltel Corp..................................... 30,000 903,750
Ameritech Corp.................................. 104,600 4,223,225
+Andrew Corp.................................... 4,900 256,025
AT&T Corporation................................ 299,173 15,033,443
+DSC Communications Corp........................ 21,200 760,550
+M/A-Com, Inc................................... 2,300 16,675
MCI Communications Corp......................... 123,300 2,265,638
Northern Telecom, Ltd........................... 48,000 1,602,000
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Scientific-Atlanta, Inc......................... 14,500 $ 304,500
Sprint Corp..................................... 65,400 1,806,675
--------------
29,916,056
--------------
TEXTILES -- 0.2%
National Service Industries, Inc................ 9,500 243,438
Russell Corp.................................... 7,200 225,900
Springs Industries, Inc......................... 3,700 136,900
V.F. Corp....................................... 12,018 584,375
--------------
1,190,613
--------------
TOBACCO -- 1.9%
American Brands, Inc............................ 39,000 1,462,500
Philip Morris Companies, Inc.................... 166,100 9,550,750
+RJR Nabisco Holdings Corp...................... 62,557 344,063
UST, Inc........................................ 38,600 1,071,150
--------------
12,428,463
--------------
TRUCKING/SHIPPING -- 0.3%
Consolidated Freightways, Inc................... 6,500 145,438
+Federal Express Corp........................... 10,400 626,600
Roadway Services, Inc........................... 7,600 431,300
Ryder System, Inc............................... 14,600 321,200
Yellow Corp..................................... 6,000 143,250
--------------
1,667,788
--------------
UTILITY - COMMUNICATIONS -- 4.2%
Bell Atlantic Corp.............................. 83,100 4,134,225
BellSouth Corp.................................. 94,400 5,109,400
GTE Corp........................................ 182,620 5,547,083
NYNEX Corp...................................... 79,800 2,932,650
Pacific Telesis Group........................... 80,500 2,294,250
Southwestern Bell Corp.......................... 115,000 4,643,125
U S West, Inc................................... 86,800 3,092,250
--------------
27,752,983
--------------
UTILITY - ELECTRIC -- 3.8%
American Electric Power Co., Inc................ 35,300 1,160,487
Baltimore Gas & Electric Co..................... 27,650 611,756
Carolina Power & Light Co....................... 30,500 812,062
Central & South West Corp....................... 36,400 823,550
CINergy Corp.................................... 27,739 648,399
Consolidated Edison Co. of NY, Inc.............. 44,900 1,156,175
Detroit Edison Co............................... 28,300 739,337
Dominion Resources, Inc......................... 32,050 1,145,788
Duke Power Co................................... 39,200 1,494,500
Entergy Corp.................................... 42,900 938,438
FPL Group, Inc.................................. 35,900 1,260,987
Houston Industries, Inc......................... 24,700 879,938
Niagara Mohawk Power Corp....................... 26,200 373,350
Northern States Power Co........................ 12,900 567,600
Ohio Edison Co.................................. 28,200 521,700
Pacific Enterprises............................. 15,700 333,625
Pacific Gas & Electric Co....................... 82,600 2,013,375
PacifiCorp...................................... 54,200 982,375
PECO Energy Co.................................. 42,500 1,041,250
Public Service Enterprise Group, Inc............ 47,100 1,248,150
SCEcorp......................................... 84,800 1,240,200
Southern Co..................................... 124,300 2,486,000
Texas Utilities Co.............................. 42,829 1,370,528
Unicom Corp..................................... 41,000 984,000
Union Electric Company.......................... 19,600 693,350
--------------
25,526,920
--------------
TOTAL COMMON STOCKS
(Cost $557,376,390)............................................ 638,348,680
--------------
</TABLE>
B29
<PAGE>
STOCK INDEX PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 4.1% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS -- 3.9%
Joint Repurchase Agreement Account,
5.720%, 01/03/95 (see Note 4)................. $ 25,939,000 $ 25,939,000
--------------
U. S. GOVERNMENT & AGENCY OBLIGATIONS -- 0.2%
United States Treasury Bills,
/5.590%, 03/16/95............................ 100,000 98,882
/5.640%, 03/16/95............................ 1,200,000 1,186,464
--------------
1,285,346
--------------
TOTAL SHORT-TERM INVESTMENTS..................................... 27,224,346
--------------
##VARIATION MARGIN ON OPEN FUTURES CONTRACTS -- 0.0%............... (178,025)
--------------
LIABILITIES -- (0.2%)
(net of other assets).......................................... (860,794)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 664,534,207
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
+No dividend was paid on this security during the 12 months ending December
31, 1994.
/Entire amount pledged as collateral for futures transactions (See Note 2).
##Open futures contracts as of December 31, 1994 are as follows:
PAR VALUE
COVERED BY CONTRACT TYPE EXPIRATION DATE VALUE OF CONTRACTS
$24,628,425 S&P 500 Index Futures Mar 95 $25,143,575
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B30
<PAGE>
HIGH DIVIDEND STOCK PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 67.8% SHARES VALUE
------------- --------------
<S> <C> <C>
AEROSPACE -- 5.1%
E-Systems, Inc.................................. 78,900 $ 3,284,212
Northrop Grumman Corp........................... 379,200 15,926,400
Rockwell International Corp..................... 127,400 4,554,550
Thiokol Corp.................................... 706,600 19,696,475
--------------
43,461,637
--------------
AUTOS - CARS & TRUCKS -- 1.1%
Chrysler Corp................................... 106,100 5,198,900
General Motors Corp............................. 106,100 4,482,725
--------------
9,681,625
--------------
BANKS AND SAVINGS & LOANS -- 0.1%
First Fidelity Bancorp.......................... 12,300 551,963
--------------
COMPUTER SERVICES -- 0.7%
+Intergraph Corp................................ 760,900 6,182,313
--------------
DIVERSIFIED GAS -- 2.3%
British Gas, PLC, ADR........................... 225,600 10,998,000
Equitable Resources, Inc........................ 83,550 2,266,293
Sonat Offshore Drilling, Inc.................... 311,200 5,523,800
Yankee Energy Systems, Inc...................... 30,400 661,200
--------------
19,449,293
--------------
DIVERSIFIED OFFICE EQUIPMENT -- 3.1%
International Business Machines Corp............ 279,600 20,550,600
United Stationers, Inc.......................... 429,800 5,694,850
--------------
26,245,450
--------------
DRUGS AND HOSPITAL SUPPLIES -- 0.8%
Baxter International, Inc....................... 254,000 7,175,500
--------------
ELECTRICAL EQUIPMENT -- 1.6%
Westinghouse Electric Corp...................... 1,105,600 13,543,600
--------------
ELECTRONICS -- 1.6%
+Digital Equipment Corp......................... 62,600 2,081,450
+IMO Industries, Inc............................ 411,200 5,140,000
Kollmorgen Corp................................. 4,600 26,450
Newport Corp.................................... 316,400 2,452,100
Pacific Scientific Co........................... 101,500 4,110,750
--------------
13,810,750
--------------
FINANCIAL SERVICES -- 5.5%
A.G. Edwards, Inc............................... 425,100 7,651,800
Alex Brown, Inc................................. 118,700 3,605,513
Bear Stearns Companies, Inc..................... 560,000 8,610,000
Carr Realty Corp................................ 22,100 397,800
Legg Mason, Inc................................. 89,300 1,897,625
Lehman Brothers Holdings, Inc................... 1,124,100 16,580,475
Manufactured Home Communities, Inc.............. 137,100 2,724,863
Property Trust of America....................... 347,771 6,259,877
--------------
47,727,953
--------------
GAS PIPELINES -- 2.1%
Panhandle Eastern Corp.......................... 421,700 8,328,575
TransCanada Pipelines, Ltd...................... 442,700 5,367,738
Transco Energy Co............................... 183,500 3,050,687
Williams Companies, Inc......................... 42,000 1,055,250
--------------
17,802,250
--------------
HOUSING RELATED -- 0.8%
Irvine Apartment Communities, Inc............... 400,000 6,550,000
--------------
INSURANCE -- 7.3%
Aetna Life & Casualty Co........................ 161,600 7,615,400
Alexander & Alexander Services, Inc............. 812,000 15,022,000
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Continental Corp................................ 822,300 $ 15,623,700
Jefferson-Pilot Corp............................ 51,600 2,676,750
Lincoln National Corp........................... 168,800 5,908,000
Ohio Casualty Corp.............................. 97,600 2,757,200
SAFECO Corp..................................... 159,200 8,278,400
Selective Insurance Group, Inc.................. 208,400 5,262,100
--------------
63,143,550
--------------
MACHINERY -- 0.7%
+Esterline Technologies Corp.................... 298,800 4,108,500
+Terex Corp..................................... 278,600 1,950,200
--------------
6,058,700
--------------
MINERAL RESOURCES -- 0.4%
Potash Corp. of Saskatchewan, Inc............... 113,300 3,852,200
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 0.9%
+Moog, Inc. (Class 'A' Stock)................... 7,700 71,225
Morrison Knudsen Corp........................... 546,000 6,961,500
+Tubos De Acero De Mexico, ADR.................. 59,500 278,906
--------------
7,311,631
--------------
MISCELLANEOUS - CONSUMER GROWTH/STABLE -- 0.6%
Pulitzer Publishing Co.......................... 132,800 5,328,600
--------------
PETROLEUM -- 7.8%
Elf Aquitaine, ADR.............................. 385,979 13,605,760
KN Energy, Inc.................................. 261,900 6,220,125
Mobil Corp...................................... 36,700 3,091,975
Occidental Petroleum Corp....................... 445,100 8,568,175
Petroleum Heat and Power Co., Inc. (Class 'A'
Stock)........................................ 49,800 460,650
Quaker State Corp............................... 652,800 9,139,200
Sun Co., Inc.................................... 150,100 4,315,375
Tenneco, Inc.................................... 258,700 10,994,750
Texaco, Inc..................................... 47,200 2,826,100
USX-Marathon Group.............................. 498,600 8,164,575
--------------
67,386,685
--------------
PETROLEUM SERVICES -- 8.3%
Baker Hughes, Inc............................... 601,300 10,973,725
**+Crestar Energy, Inc.......................... 200,000 2,067,367
Dresser Industries, Inc......................... 576,400 10,879,550
Halliburton Co.................................. 480,000 15,900,000
McDermott International, Inc.................... 782,400 19,364,400
+Smith International Inc........................ 102,300 1,278,750
Sonat, Inc...................................... 144,400 4,043,200
+Varco International, Inc....................... 1,056,300 6,601,875
--------------
71,108,867
--------------
REAL ESTATE DEVELOPMENT -- 8.7%
Amli Residential Properties Trust............... 208,300 3,905,625
Avalon Properties, Inc.......................... 265,000 6,095,000
Beacon Properties Corp.......................... 184,800 3,511,200
Crescent Real Estate Equities, Inc.............. 251,000 6,808,375
Equity Residential Properties Trust............. 686,000 20,580,000
First Union Real Estate Investments............. 130,500 864,563
Gables Residential Trust........................ 345,800 7,434,700
Glimcher Realty Trust........................... 300,000 6,562,500
JP Realty, Inc.................................. 84,000 1,764,000
Kimco Realty Corp............................... 37,500 1,420,312
Malan Realty Investors, Inc..................... 140,000 1,872,500
Simon Property Group, Inc....................... 214,300 5,196,775
Vornado Realty Trust............................ 175,400 6,292,475
Weingarten Realty Investors..................... 62,500 2,367,187
--------------
74,675,212
--------------
</TABLE>
B31
<PAGE>
HIGH DIVIDEND STOCK PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
RETAIL -- 0.8%
Bradlees, Inc................................... 900 $ 10,463
K mart Corp..................................... 160,000 2,080,000
May Department Stores Co........................ 150,000 5,062,500
--------------
7,152,963
--------------
STEEL -- 0.8%
USX-U.S. Steel Group............................ 187,600 6,659,800
--------------
TELECOMMUNICATIONS -- 3.3%
Ameritech Corp.................................. 12,800 516,800
Telefonos de Mexico (Class 'L' Stock), ADR...... 682,200 27,970,200
--------------
28,487,000
--------------
UTILITY - COMMUNICATIONS -- 0.9%
BellSouth Corp.................................. 80,000 4,330,000
NYNEX Corp...................................... 73,300 2,693,775
U S West, Inc................................... 14,800 527,250
--------------
7,551,025
--------------
UTILITY - ELECTRIC -- 2.5%
Central & South West Corp....................... 63,000 1,425,375
Central Hudson Gas & Electric Corp., Inc........ 34,400 911,600
Central Louisiana Electric Co................... 54,500 1,287,563
CINergy Corp.................................... 343,728 8,034,642
Entergy Corp.................................... 217,200 4,751,250
NIPSCO Industries, Inc.......................... 91,000 2,707,250
SCEcorp......................................... 182,000 2,661,750
--------------
21,779,430
--------------
TOTAL COMMON STOCKS
(Cost $583,122,780)............................................ 582,677,997
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 16.4% SHARES VALUE
------------- --------------
<S> <C> <C>
ALUMINUM -- 1.3%
Kaiser Aluminum Corp. (Conv. Pfd.).............. 363,500 3,862,187
Reynolds Metals Co. (Conv. Pfd.)................ 147,700 7,144,988
--------------
11,007,175
--------------
AUTOS - CARS & TRUCKS -- 1.4%
Ford Motor Co. (Cum. Conv. Pfd.), Series A...... 127,000 11,684,000
--------------
DRUGS & HOSPITAL SUPPLIES -- 0.6%
U.S. Surgical Corp. (Conv. Pfd.)................ 224,400 5,161,200
--------------
ELECTRICAL EQUIPMENT -- 2.3%
**Westinghouse Electric Corp. (Conv. Pfd.)...... 1,457,000 19,487,375
--------------
ELECTRONICS -- 2.0%
Advanced Micro Devices, Inc. (Conv. Ex. Pfd.)... 160,000 8,400,000
National Semiconductor Corp. (Conv. Pfd.)....... 125,000 9,062,500
--------------
17,462,500
--------------
FINANCIAL SERVICES -- 0.8%
**Parker & Parsley Capital, LLC (Conv. Pfd.).... 135,000 6,210,000
Property Trust of America (Conv. Pfd.), Series
A............................................. 54,500 1,199,000
--------------
7,409,000
--------------
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
PREFERRED STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
FOREST PRODUCTS -- 1.1%
Bowater, Inc. (Conv. Pfd.), Series B............ 161,100 $ 3,967,088
James River Corp. of Virginia (Cum. Conv. Ex.
Pfd.), Series P............................... 268,300 5,433,075
--------------
9,400,163
--------------
INSURANCE -- 0.7%
**Alexander & Alexander Services, Inc. (Conv
Pfd.), Series A............................... 100,000 4,000,000
**Unocal Corp. (Conv. Pfd.)..................... 35,000 1,754,375
USF&G Corp. (Conv. Ex. Pfd.), Series A.......... 10,900 493,225
--------------
6,247,600
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 0.7%
Echo Bay Finance Corp. (Conv. Pfd.), Series A... 100,000 3,287,500
Hecla Mining Co. (Conv. Pfd.), Series B......... 60,000 2,805,000
--------------
6,092,500
--------------
PETROLEUM SERVICES -- 1.0%
McDermott International, Inc. (Conv. Pfd.),
Series C...................................... 100,000 4,137,500
Noble Drilling Corp. (Conv. Pfd.)............... 90,000 1,822,500
Reading & Bates Corp. (Conv. Pfd.).............. 134,800 2,780,250
--------------
8,740,250
--------------
STEEL -- 2.3%
**Bethlehem Steel Corp. (Cum. Conv. Pfd.)....... 300,000 14,700,000
USX Corp. (Cum. Conv. Pfd.)..................... 114,600 5,128,350
--------------
19,828,350
--------------
TOBACCO -- 2.1%
RJR Nabisco Holdings Corp. (Conv. Pfd.), Series
C............................................. 2,955,000 17,730,000
--------------
UTILITY - ELECTRIC -- 0.1%
Gulf States Utilities Co........................ 900 51,075
Gulf States Utilities Co. (Preferred Series
A)............................................ 4,392 432,612
--------------
483,687
--------------
TOTAL PREFERRED STOCKS
(Cost $151,254,542)............................................ 140,733,800
--------------
<CAPTION>
MARKET
RIGHTS AND WARRANTS -- 0.0% SHARES VALUE
------------- --------------
<S> <C> <C>
MACHINERY
**++Terex Corp. (Rights)........................ 16,950 0
--------------
(Cost $0)
<CAPTION>
PAR MARKET
CONVERTIBLE BONDS -- 4.5% VALUE VALUE
------------- --------------
<S> <C> <C>
INDUSTRIAL
Coeur D'Alene Mines, Corp.,
7.000%, 11/30/02.............................. $ 3,000,000 $ 3,375,000
Conner Peripherals, Inc.,
6.750%, 03/01/01.............................. 1,980,000 1,366,200
Cross Timbers Oil Co.,
5.250%, 11/01/03.............................. 2,583,000 2,095,459
**Cypress Semiconductor Corp.,
3.150%, 03/15/01.............................. 1,335,000 1,229,869
</TABLE>
B32
<PAGE>
HIGH DIVIDEND STOCK PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
CONVERTIBLE BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
IMC Global, Inc.,
6.250%, 12/01/01.............................. $ 4,500,000 $ 4,162,500
Malan Realty Investors, Inc.,
9.500%, 07/15/04.............................. 3,000,000 2,576,250
Noble Affiliates, Inc.,
4.250%, 11/01/03.............................. 11,701,000 9,945,850
Oryx Energy Co.,
7.500%, 05/15/14.............................. 2,000,000 1,385,000
Quantum Corp.,
6.375%, 04/01/02.............................. 5,250,000 5,118,750
Seagate Technology,
**5.000%, 11/01/03............................ 4,200,000 4,326,000
6.750%, 05/01/12.............................. 3,070,000 2,548,100
VLSI Technology, Inc.,
7.000%, 05/01/12.............................. 1,054,000 901,170
--------------
TOTAL CONVERTIBLE BONDS
(Cost $41,994,290)............................................. 39,030,148
--------------
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 2.5% VALUE VALUE
------------- --------------
<S> <C> <C>
INDUSTRIAL -- 0.5%
**Terex Corp.,
13.000%, 08/01/96............................. 4,583,000 4,376,765
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 2.0%
United States Treasury Notes,
7.500%, 10/31/99, Series 1999................. 17,000,000 16,755,540
--------------
TOTAL LONG-TERM BONDS
(Cost $20,818,910)............................................. 21,132,305
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 8.8% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
5.720%, 01/03/95 (see Note 4)................. 75,853,000 75,853,000
--------------
OTHER ASSETS -- 0.0%
(net of liabilities)........................................... 244,002
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 859,671,252
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
PLC Public Limited Company (British Corporation)
**Indicates a restricted security; the aggregate cost of the restricted
securities is $63,176,231. The aggregate value, $58,151,751 is
approximately 6.8% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending December
31, 1994.
++Non-income producing.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B33
<PAGE>
NATURAL RESOURCES PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 88.3% SHARES VALUE
------------- --------------
<S> <C> <C>
ALUMINUM -- 6.0%
+Alumax, Inc.................................... 100,000 $ 2,837,500
Aluminum Co. of America......................... 40,000 3,465,000
Comalco, Ltd., ADR.............................. 142,000 2,753,579
+Kaiser Aluminum Corp........................... 91,000 989,625
Reynolds Metals Co.............................. 75,050 3,677,450
--------------
13,723,154
--------------
CHEMICALS -- 0.8%
Calgon Carbon Corp.............................. 180,000 1,867,499
--------------
CHEMICALS - SPECIALTY -- 3.0%
IMC Global, Inc................................. 154,800 6,695,099
--------------
DIVERSIFIED GAS -- 7.1%
+Basin Exploration, Inc......................... 130,000 1,413,750
Cross Timbers Oil Co............................ 224,900 3,373,500
+Rigel Energy Corp.............................. 294,500 2,945,000
Sonat Offshore Drilling, Inc.................... 127,000 2,254,250
USX-Delhi Group................................. 106,500 1,065,000
Western Gas Resources, Inc...................... 257,600 4,958,800
--------------
16,010,300
--------------
FOREST PRODUCTS -- 4.7%
Champion International Corp..................... 99,500 3,631,750
Fletcher Challenge, Ltd., ADR................... 312,900 3,559,238
Rayonier, Inc................................... 116,100 3,541,050
--------------
10,732,038
--------------
GAS PIPELINES -- 4.3%
Aquila Gas Pipeline Corp........................ 113,700 895,388
+Global Marine, Inc............................. 206,500 748,563
+Reading & Bates Offshore Drilling Co........... 232,600 1,395,600
+Seagull Energy Corp............................ 170,400 3,258,900
+Tejas Gas Corp................................. 70,450 3,355,180
--------------
9,653,631
--------------
METALS - DIVERSIFIED -- 1.4%
+Stillwater Mining Co........................... 242,900 3,263,969
--------------
MINERAL RESOURCES -- 30.9%
Agnico-Eagle Mines, Ltd......................... 425,000 4,515,625
American Barrick Resources Corp................. 254,653 5,666,029
Battle Mountain Gold Co......................... 162,300 1,785,300
+Cominco, Ltd................................... 144,000 2,556,000
CRA, Ltd., ADR.................................. 69,200 3,821,688
Freeport-McMoRan Copper & Gold, Inc. (Class 'A'
Stock)........................................ 162,300 3,448,875
Inco, Ltd....................................... 168,600 4,826,175
M.I.M. Holdings, Ltd., ADR...................... 840,000 2,801,652
Newmont Mining Corp............................. 126,307 4,547,052
Pegasus Gold, Inc............................... 172,000 1,956,500
Placer Dome, Inc................................ 199,700 4,343,475
Potash Corp. of Saskatchewan, Inc............... 320,400 10,893,600
+Sante Fe Pacific Gold Corp..................... 437,700 5,635,388
+TVX Gold, Inc.................................. 600,000 4,050,000
Vigoro Corp..................................... 169,000 5,070,000
Western Mining Corp. Holdings, Ltd., ADR........ 187,500 4,382,812
--------------
70,300,171
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 0.8%
+Enterra Corp................................... 98,500 1,871,500
--------------
PETROLEUM -- 6.9%
Amerada Hess Corp............................... 47,900 2,185,438
Cabot Oil & Gas Corp. (Class 'A' Stock)......... 129,900 1,883,550
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Elf Aquitaine, ADR.............................. 189,783 $ 6,689,850
Parker & Parsley Petroleum Co................... 145,000 2,972,500
USX-Marathon Group.............................. 117,100 1,917,513
--------------
15,648,851
--------------
PETROLEUM CANADIAN -- 2.7%
Beau Canada Exploration, Ltd. (Class 'A'
Stock)........................................ 831,900 1,186,099
+Talisman Energy, Inc........................... 290,000 4,858,314
--------------
6,044,413
--------------
PETROLEUM SERVICES -- 19.7%
+American Oilfield Divers, Inc.................. 59,900 374,375
Baker Hughes, Inc............................... 126,700 2,312,275
+Cairn Energy USA, Inc.......................... 250,000 1,968,750
Camco International, Inc........................ 100,000 1,887,500
+Coflexip, ADR.................................. 172,000 3,999,000
**+Crestar Energy, Inc.......................... 240,000 2,480,841
+Dreco Energy Services, Ltd. (Class 'A'
Stock)........................................ 88,100 644,231
+Hornbeck Offshore Services, Inc................ 127,200 1,605,900
+ICO, Inc....................................... 192,300 769,200
+Marine Drilling Co., Inc....................... 820,400 2,307,375
+Mesa, Inc...................................... 440,900 2,149,388
+Newfield Exploration Co........................ 204,000 4,029,000
Noble Affiliates, Inc........................... 156,700 3,878,325
+Noble Drilling Corp............................ 140,600 826,025
+Offshore Pipelines, Inc........................ 150,000 3,393,750
Oryx Energy Co.................................. 117,100 1,390,563
+PetroCorp, Inc................................. 217,500 2,324,531
+Pride Petroleum Services, Inc.................. 260,000 1,348,750
+Stolt Comex Seaway, SA......................... 220,000 1,567,500
Trident NGL Holding, Inc........................ 200,000 2,100,000
+Varco International, Inc....................... 115,800 723,750
+Western Co. of North America................... 162,200 2,737,125
--------------
44,818,154
--------------
TOTAL COMMON STOCKS
(Cost $195,869,708)............................................ 200,628,779
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 5.5% SHARES VALUE
------------- --------------
<S> <C> <C>
ALUMINUM -- 0.7%
Kaiser Aluminum Corp. (Conv. Pfd.).............. 150,000 1,593,750
--------------
MINERAL RESOURCES -- 1.3%
Amax Gold, Inc. (Conv. Pfd), Series B........... 22,400 1,086,400
Battle Mountain Gold Co. (Conv. Pfd.)........... 12,000 732,000
Freeport - McMoRan Copper & Gold, Inc........... 60,000 1,177,500
--------------
2,995,900
--------------
MISCELLANEOUS - BASIC INDUSTRY -- 1.8%
Hecla Mining Co. (Conv. Pfd.), Series B......... 87,000 4,067,250
--------------
PETROLEUM SERVICES -- 1.7%
Noble Drilling Corp. (Conv. Pfd.)............... 150,000 3,037,500
Reading & Bates Corp. (Cum. Conv. Pfd.)......... 39,900 822,938
--------------
3,860,438
--------------
TOTAL PREFERRED STOCKS
(Cost $13,791,225)............................................. 12,517,338
--------------
</TABLE>
B34
<PAGE>
NATURAL RESOURCES PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
CONVERTIBLE BONDS -- 3.0% VALUE VALUE
------------- --------------
<S> <C> <C>
INDUSTRIAL
Coeur d'Alene Mines Corp.,
6.375%, 01/31/04.............................. $ 4,319,000 $ 3,584,770
7.000%, 11/30/02.............................. 1,465,000 1,648,125
**Homestake Mining Co.,
5.500%, 06/23/00.............................. 1,519,000 1,486,722
--------------
TOTAL CONVERTIBLE BONDS
(Cost $7,130,853).............................................. 6,719,617
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 4.5% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
5.720%, 01/03/95 (see Note 4)................. 10,291,000 10,291,000
--------------
LIABILITIES -- (1.3%)
(net of other assets).......................................... (2,882,805)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 227,273,929
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
ADR American Depository Receipt
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
**Indicates a restricted security; the aggregate cost of the restricted
securities is $4,570,797. The aggregate value, $3,967,563 is approximately
1.7% of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending December
31, 1994.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B35
<PAGE>
GLOBAL EQUITY PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS -- 87.0% SHARES VALUE
------------- --------------
<S> <C> <C>
AUSTRALIA -- 6.7%
Brambles Industries, Ltd.
(Miscellaneous - Basic Industry).............. 314,800 $ 3,006,681
Broken Hill Proprietary Co., Ltd.
(Metals - Diversified)........................ 303,900 4,617,732
BTR Nylex, Ltd.
(Miscellaneous - Basic Industry).............. 1,391,344 2,588,736
Coca-Cola Amatil, Ltd.
(Foods)....................................... 817,705 5,198,194
Publishing and Broadcasting, Ltd.
(Media)....................................... 50,000 139,933
Western Mining Corp. Holdings, Ltd.
(Metals - Diversified)........................ 1,336,312 7,728,382
--------------
23,279,658
--------------
BELGIUM -- 0.9%
Bekaert, NPV
(Miscellaneous - Basic Industry).............. 4,500 3,194,107
--------------
FEDERAL REPUBLIC OF GERMANY -- 2.5%
BASF, AG
(Chemicals)................................... 18,900 3,896,719
Bilfinger & Berger Bau, AG
(Construction)................................ 3,744 1,908,663
Preussag, AG
(Miscellaneous - Basic Industry).............. 9,270 2,691,898
--------------
8,497,280
--------------
FINLAND -- 0.7%
Kymmene Corp.
(Forest Products)............................. 85,200 2,320,066
--------------
FRANCE -- 4.6%
Guyenne et Gascogne
(Retail)...................................... 3,100 783,561
Imetal
(Mineral Resources)........................... 32,880 3,176,574
Lafarge Coppee
(Construction)................................ 47,510 3,380,228
**Lafarge Coppee
(Construction)................................ 1,100 78,263
Legrand
(Electrical Equipment)........................ 2,700 3,275,791
Plastic Omnium
(Autos - Cars & Trucks)....................... 6,765 729,571
Valeo, SA
(Autos - Cars & Trucks)....................... 88,885 4,425,112
--------------
15,849,100
--------------
HONG KONG -- 4.4%
Cdl Hotels International, Ltd.
(Real Estate Development)..................... 3,908,174 1,540,540
Citic Pacific, Ltd.
(Miscellaneous - Basic Industry).............. 1,387,000 3,343,141
Guoco Group, Ltd.
(Financial Services).......................... 1,243,000 5,317,389
Hung Hing Printing Group, Ltd.
(Miscellaneous - Basic Industry).............. 3,452,000 709,361
Hutchison Whampoa, Ltd.
(Miscellaneous - Basic Industry).............. 1,097,000 4,480,155
--------------
15,390,586
--------------
INDONESIA -- 0.4%
PT Kabelmetal Indonesia (Foreign)
(Telecommunications).......................... 1,047,400 1,429,572
--------------
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
JAPAN -- 17.0%
Aiwa
(Electronics)................................. 122,000 $ 2,999,498
Autobacs Seven
(Retail)...................................... 41,700 4,979,729
DDI Corp.
(Telecommunications).......................... 370 3,193,176
Japan Associated Finance
(Financial Services).......................... 26,000 4,044,155
Kamigumi Co.
(Trucking/Shipping)........................... 302,000 3,212,444
Keyence Corp.
(Electrical Equipment)........................ 37,000 4,195,685
Kyocera Corp.
(Electrical Equipment)........................ 59,000 4,375,414
Minebea Co., Ltd.
(Miscellaneous - Basic Industry).............. 434,000 3,658,404
Murata Manufacturing Co., Ltd.
(Electronics)................................. 55,500 2,144,255
Nichiei Co., Ltd.
(Financial Services).......................... 77,300 4,964,576
Nissen Co., Ltd.
(Retail)...................................... 68,520 2,117,828
Nisshin Steel Co., Ltd.
(Steel)....................................... 578,000 2,911,751
Rohm Co.
(Electronics)................................. 102,000 4,319,518
Shin-Etsu Chemical Co.
(Chemicals)................................... 176,000 3,497,040
Sony Music Entertainment
(Leisure)..................................... 65,600 3,686,503
Tokyo Electron, Ltd.
(Electrical Equipment)........................ 141,000 4,386,352
--------------
58,686,328
--------------
MALAYSIA -- 3.9%
Hong Leong Industries Berhad
(Construction)................................ 3,000 15,508
I.J.M. Corp. Berhad (Loan Stock)
(Construction)................................ 810,000 1,887,409
Malaysian Airline Systems Berhad
(Airlines).................................... 421,000 1,261,269
Renong Berhad
(Miscellaneous - Basic Industry).............. 2,181,000 2,699,025
Resorts World Berhad
(Leisure)..................................... 804,000 4,722,929
Technology Resources Industries Berhad
(Miscellaneous - Basic Industry).............. 904,000 2,885,295
United Merchant Group Berhad
(Financial Services).......................... 666 1,226
--------------
13,472,661
--------------
MEXICO -- 2.2%
Cementos Apasco, SA (Class 'A' Stock)
(Housing Related)............................. 426,400 2,125,573
Cifra, SA (Class 'B' Stock)
(Retail)...................................... 1,259,800 2,562,648
Femsa (Class 'B' Stock)
(Miscellaneous - Basic Industry).............. 604,900 1,549,030
Grupo Financiero Banamex (Class 'L' Stock)
(Banks and Savings & Loans)................... 5,720 16,556
</TABLE>
B36
<PAGE>
GLOBAL EQUITY PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
Grupo Financiero Banamex Accival, SA (Class 'C'
Stock)
(Banks and Savings & Loans)................... 414,100 $ 1,223,572
--------------
7,477,379
--------------
NETHERLANDS -- 0.5%
Boskalis Westminster, CVA
(Construction)................................ 91,050 1,857,002
--------------
NEW ZEALAND -- 1.1%
Fletcher Challenge, Ltd.
(Forest Products)............................. 1,574,000 3,697,877
--------------
REPUBLIC OF KOREA -- 1.4%
Pohang Iron & Steel Co., Ltd.
(Steel)....................................... 3,800 306,988
Samsung Electronics Co.
(Electronics)................................. 27,390 3,786,316
Samsung Electronics Co. (New)
(Electronics)................................. 1,309 178,462
Shinsegae Department Store
(Retail)...................................... 4,200 434,115
--------------
4,705,881
--------------
SINGAPORE -- 6.5%
Fraser & Neave, Ltd.
(Beverages)................................... 303,000 3,139,142
Overseas Union Bank, Ltd. (Foreign)
(Banks and Savings & Loans)................... 740,000 4,315,609
Sembawang Maritime, Ltd.
(Trucking/Shipping)........................... 706,500 3,417,376
Singapore Airlines, Ltd. (Foreign)
(Airlines).................................... 508,000 4,670,463
United Overseas Bank, Ltd. (Foreign)
(Banks and Savings & Loans)................... 527,000 5,568,302
Wing Tai Holdings, Ltd.
(Miscellaneous - Basic Industry).............. 856,250 1,515,695
--------------
22,626,587
--------------
SPAIN -- 2.7%
Acerinox, SA
(Steel)....................................... 30,760 3,212,862
Centros Commerciales Pryca, SA
(Retail)...................................... 93,362 1,407,776
Dragados Y Construcciones, SA
(Construction)................................ 118,900 1,670,924
Vallehermoso, SA
(Real Estate Development)..................... 167,233 2,902,760
--------------
9,194,322
--------------
SWEDEN -- 4.2%
Astra, AB (Series 'B' Free)
(Drugs and Hospital Supplies)................. 145,150 3,701,724
Hennes & Mauritz (Series 'B' Free)
(Retail)...................................... 90,200 4,624,974
Mo Och Domsjo, AB (Series 'B' Free)
(Forest Products)............................. 57,000 2,654,170
Volvo, AB (Series 'B' Free)
(Autos - Cars & Trucks)....................... 190,200 3,583,573
--------------
14,564,441
--------------
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
THAILAND -- 0.9%
Land & House Public Co., Ltd. (Foreign)
(Construction)................................ 25,700 $ 458,618
Sahaviriya Steel Industry
(Metals - Diversified)........................ 764,800 1,949,699
Sahaviriya Steel Industry (Foreign)
(Metals - Diversified)........................ 322,000 820,872
--------------
3,229,189
--------------
UNITED KINGDOM -- 8.9%
Barclays, PLC
(Banks and Savings & Loans)................... 246,900 2,360,517
British Sky Broadcasting Group, PLC
(Media)....................................... 620,600 2,490,829
Carlton Communications
(Communications).............................. 192,600 2,703,295
Guest Kean & Nettlefolds, PLC
(Autos - Cars & Trucks)....................... 446,570 4,105,274
**Guest Kean & Nettlefolds, PLC
(Autos - Cars & Trucks)....................... 22,870 210,242
J. Sainsbury, PLC
(Retail)...................................... 299,500 1,928,464
Powergen, PLC
(Utility - Electric).......................... 294,000 2,465,795
S.G. Warburg Group, PLC
(Financial Services).......................... 171,900 1,861,344
Siebe, PLC
(Machinery)................................... 500,840 4,369,066
TeleWest Communications, PLC
(Media)....................................... 1,200,000 3,192,089
Vodafone Group, PLC
(Telecommunications).......................... 1,503,900 4,988,840
--------------
30,675,755
--------------
UNITED STATES -- 17.5%
+Adaptec, Inc.
(Computer Services)........................... 206,600 4,880,925
+Applied Materials, Inc.
(Electrical Equipment)........................ 81,000 3,422,250
+Cirrus Logic, Inc.
(Electronics)................................. 106,500 2,396,250
+Electronic Arts, Inc.
(Computer Services)........................... 139,700 2,689,225
Exide Corp.
(Autos - Cars & Trucks)....................... 61,000 3,431,250
Mattel, Inc.
(Leisure)..................................... 171,050 4,297,631
MCI Communications Corp.
(Telecommunications).......................... 162,300 2,982,263
+Microsoft Corp.
(Computer Services)........................... 72,800 4,449,900
Mobil Corp.
(Petroleum)................................... 48,500 4,086,125
Motorola, Inc.
(Electronics)................................. 105,900 6,128,962
+Nextel Communications, Inc. (Class 'A' Stock)
(Telecommunications).......................... 186,600 2,682,375
Norwest Corp.
(Banks and Savings & Loans)................... 155,000 3,623,125
+Oracle Systems Corp.
(Computer Services)........................... 115,900 5,114,087
Pohang Iron & Steel Co., Ltd., ADR
(Steel)....................................... 60,800 1,778,400
</TABLE>
B37
<PAGE>
GLOBAL EQUITY PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
MARKET
COMMON STOCKS (CONTINUED) SHARES VALUE
------------- --------------
<S> <C> <C>
+Silicon Graphics, Inc.
(Computer Services)........................... 157,800 $ 4,891,800
Time Warner, Inc.
(Media)....................................... 103,300 3,628,413
--------------
60,482,981
--------------
TOTAL COMMON STOCKS
(Cost $296,456,732)............................................ 300,630,772
--------------
<CAPTION>
MARKET
PREFERRED STOCKS -- 3.2% SHARES VALUE
------------- --------------
<S> <C> <C>
FEDERAL REPUBLIC OF GERMANY -- 0.7%
Krones, AG
(Machinery)................................... 4,368 2,452,270
--------------
FINLAND -- 2.4%
Nokia, AB
(Miscellaneous - Basic Industry).............. 55,900 8,236,414
--------------
REPUBLIC OF KOREA -- 0.1%
Samsung Electronics Co.
(Electronics)................................. 5,213 394,033
--------------
TOTAL PREFERRED STOCKS
(Cost $7,891,492).............................................. 11,082,717
--------------
<CAPTION>
MARKET
RIGHTS AND WARRANTS -- 0.4% SHARES VALUE
------------- --------------
<S> <C> <C>
FEDERAL REPUBLIC OF GERMANY -- 0.2%
)Kamigumi Co. (Warrants),
(Trucking/Shipping)........................... 1,000 164,553
)Nissen Co., Ltd. (Warrants),
(Retail)...................................... 316 397,638
--------------
562,191
--------------
FRANCE -- 0.0%
**Lafarge Coppee (Warrants),
(Construction)................................ 1,000 5,074
--------------
SWITZERLAND -- 0.1%
\Nitori Co., Ltd. (Warrants),
(Furniture)................................... 2,950 507,066
--------------
UNITED STATES -- 0.1%
#Autobacs Seven Warrants 95 #1,
(Retail)...................................... 35 130,813
#Autobacs Seven Warrants 96 #2,
(Retail)...................................... 35 127,313
--------------
258,126
--------------
TOTAL RIGHTS AND WARRANTS
(Cost $1,517,852).............................................. 1,332,457
--------------
<CAPTION>
PAR MARKET
CONVERTIBLE BONDS -- 0.3% VALUE VALUE
------------- --------------
<S> <C> <C>
SINGAPORE -- 0.1%
Sembawang Maritime, Ltd.,
(1.500%, 10/25/98
(Trucking/Shipping)........................... $ 154,000 $ 240,906
--------------
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
CONVERTIBLE BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
UNITED STATES -- 0.2%
MDX Public Co., Ltd.,
(4.750%, 9/17/03
(Real Estate Development)..................... $ 1,227,000 $ 779,145
--------------
TOTAL CONVERTIBLE BONDS
(Cost $1,393,348).............................................. 1,020,051
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 7.5% AMOUNT VALUE
------------- --------------
<S> <C> <C>
UNITED STATES
REPURCHASE AGREEMENTS
(Sanawa, 5.750%, entered 12/30/94; maturing
01/03/95 in the amount of $26,000,000
(collateralized by $25,575,000 United States
Treasury Notes, 7.875%, 01/15/98)........... 26,000,000 26,000,000
--------------
-C-UNREALIZED APPRECIATION ON FORWARD FOREIGN EXCHANGE CONTRACTS
- 0.0%......................................................... 17,247
--------------
OTHER ASSETS -- 1.6%
(net of liabilities)........................................... 5,650,734
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 345,733,978
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
AB Aktiebolag (Swedish Stock Company)
ADR American Depository Receipt
AG Aktiengesellschaft (West German Stock Company)
CVA Certificaten Van Affecton (Guaranteed)
NPV Net Present Value
PLC Public Limited Company (British Corporation)
SA Sociedad Anonima (Spanish Corporation) or Societe
Anonyme (French Corporation)
#These are American warrants with an underlying Japanese security.
)These are German warrants with an underlying Japanese security.
\These are Swiss warrants with an underlying Japanese security.
**Indicates a restricted security; the aggregate cost of the restricted
securities is $216,115. The aggregate value, $293,578 is approximately .1%
of net assets. (See Note 2)
+No dividend was paid on this security during the 12 months ending December
31, 1994.
-C- Forward Foreign Exchange Contracts as of December 31, 1994:
FOREIGN CURRENCY SOLD EXPIRATION DATE UNREALIZED APPRECIATION
Australian Dollar
171,259 January 1995 $17,247
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B38
<PAGE>
GOVERNMENT SECURITIES PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 90.5% VALUE VALUE
------------- --------------
<S> <C> <C>
FINANCIAL -- 8.0%
Collateralized Mortgage Obligation, Trust 63
(Class E),
9.000%, 09/20/99.............................. $ 1,000,000 $ 995,310
ContiMortgage Home Equity Loan Trust, CMO,
7.960%, 09/15/09, Series 1994-4, Class A2..... 5,000,000 4,900,000
Equicon Home Equity Loan Trust, CMO,
7.850%, 03/18/14, Series 1994-2, Class A2..... 3,000,000 2,949,375
Equicredit Home Equity Loan Trust, CMO,
7.440%, 10/15/05, Series 1994-3, Class A2..... 5,000,000 4,871,875
European Investment Bank,
9.125%, 06/01/02.............................. 3,500,000 3,672,515
Green Tree Financial Corp., CMO,
7.250%, 11/15/19, Series 1994-6, Class A2..... 5,000,000 4,880,469
Olympic Automobile Receivables Trust, CMO,
6.850%, 06/15/01, Series 1994-B, Class A2..... 3,000,000 2,914,687
%People's Bank Credit Card Master Trust, CMO,
5.525%, 03/15/01, Series 1994-2, Class A...... 4,000,000 3,730,562
Vanderbilt Mortgage Finance, CMO,
7.600%, 07/10/19, Series 1994-A, Class A2..... 4,000,000 3,856,250
Western Financial Grantor Trust, CMO,
6.650%, 12/01/99, Series 1994-3, Class A...... 3,570,339 3,489,449
World Omni Automobile Lease Securitization
Trust, CMO,
6.450%, 09/25/00, Series 1994-A, Class A...... 3,000,000 2,907,188
--------------
39,167,680
--------------
INDUSTRIAL -- 0.6%
%Aircraft Lease Portfolio Securitization, Ltd.,
CMO,
7.800%, 09/15/04, Series 1994-1, Class A4..... 3,000,000 2,918,906
--------------
U.S. GOVERNMENT & AGENCY OBLIGATIONS -- 81.9%
Federal Farm Credit Bank, M.T.N.,
5.930%, 08/18/03.............................. 3,859,000 3,330,819
7.900%, 03/01/96.............................. 7,000,000 7,041,860
8.600%, 05/30/06.............................. 1,250,000 1,286,913
Federal Home Loan Bank,
5.000%, 10/25/95.............................. 5,000,000 4,903,100
Federal Home Loan Mortgage Corporation, Gold
Fixed Participation,
6.095%, 02/23/01.............................. 12,000,000 11,032,440
6.130%, 08/19/99.............................. 7,000,000 6,492,500
6.270%, 01/27/04.............................. 5,000,000 4,326,550
6.485%, 02/18/04.............................. 10,000,000 8,734,400
6.550%, 04/02/03.............................. 4,000,000 3,558,760
6.600%, 11/12/99.............................. 4,000,000 3,820,000
7.500%, 01/01/00-07/23/07..................... 28,463,802 26,902,313
</TABLE>
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
Federal Home Loan Mortgage Corporation, REMIC,
7.500%, 09/15/05, Series 1295, Class 1295-G... $ 2,100,000 $ 2,007,453
Federal National Mortgage Association,
Zero Coupon, 10/09/19......................... 22,500,000 3,009,375
7.600%, 04/14/04.............................. 7,000,000 6,573,420
7.850%, 09/10/98.............................. 3,000,000 3,010,320
8.200%, 12/23/96, Series K.................... 5,000,000 5,026,550
8.200%, 08/10/98, Series F.................... 2,000,000 1,996,240
8.500%, 06/10/96, Series G.................... 5,500,000 5,549,830
11.000%, 11/01/20............................. 7,527,510 8,124,968
Federal National Mortgage Association, M.T.N.,
5.930%, 09/26/03.............................. 5,000,000 4,309,000
5.990%, 10/01/03.............................. 5,000,000 4,327,100
7.800%, 02/21/07.............................. 5,000,000 4,701,563
8.625%, 06/30/04.............................. 3,000,000 3,087,330
Federal National Mortgage Association, REMIC,
6.500%, 07/25/20, Trust 1992-138, Class D..... 4,000,000 3,593,720
8.950%, 12/25/18, Trust 1990-45, Class 45-G... 2,000,000 1,993,750
Financing Corp.,
9.400%, 02/08/18.............................. 9,850,000 10,955,072
Government National Mortgage Association,
7.000%, 09/15/22-01/15/24..................... 33,750,027 30,290,650
8.500%, 07/15/08-08/15/24..................... 7,292,192 7,165,689
International Bank for Reconstruction and
Development,
7.625%, 01/19/23.............................. 5,000,000 4,662,300
8.375%, 10/01/99.............................. 7,900,000 8,102,398
Private Export Funding Corp.,
8.750%, 06/30/03, Series KK................... 9,950,000 10,294,867
Resolution Funding Corp.,
8.125%, 10/15/19, Principle Only Class A...... 4,200,000 4,219,698
Student Loan Marketing Association,
7.300%, 08/01/12.............................. 19,850,000 18,255,648
Tennessee Valley Authority Power,
8.375%, 10/01/99, Power 1989, Series D........ 6,300,000 6,402,375
8.625%, 11/15/29, Power 1989, Series G........ 3,100,000 3,076,037
United States Treasury Bonds,
6.250%, 08/15/23.............................. 1,600,000 1,300,752
7.625%, 11/15/22.............................. 3,200,000 3,088,512
7.875%, 02/15/21.............................. 500,000 493,750
8.000%, 11/15/21.............................. 11,400,000 11,444,574
8.125%, 08/15/19-08/15/21..................... 18,605,000 18,887,658
8.750%, 08/15/20.............................. 11,300,000 12,219,933
8.875%, 08/15/17-02/15/19..................... 11,850,000 12,917,785
9.250%, 02/15/16.............................. 800,000 900,128
10.375%, 11/15/12............................. 4,000,000 4,760,000
10.750%, 08/15/05............................. 7,300,000 8,769,125
11.250%, 02/15/15............................. 3,400,000 4,492,250
11.625%, 11/15/04............................. 3,750,000 4,696,875
United States Treasury Bonds, Stripped,
Zero Coupon, 02/15/05-02/15/12................ 4,750,000 1,756,783
</TABLE>
B39
<PAGE>
GOVERNMENT SECURITIES PORTFOLIO (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS (CONTINUED) VALUE VALUE
------------- --------------
<S> <C> <C>
United States Treasury Notes,
4.625%, 08/15/95.............................. $ 4,700,000 $ 4,633,918
5.875%, 05/15/95.............................. 2,300,000 2,294,963
6.875%, 08/31/99.............................. 2,400,000 2,310,000
7.000%, 04/15/99.............................. 13,000,000 12,597,780
7.125%, 09/30/99.............................. 11,700,000 11,363,625
7.750%, 03/31/96-11/30/99..................... 7,000,000 6,995,320
8.000%, 08/15/99.............................. 10,100,000 10,158,378
8.500%, 11/15/00.............................. 2,000,000 2,061,560
8.625%, 08/15/97.............................. 7,600,000 7,743,715
8.875%, 02/15/99.............................. 10,700,000 11,074,500
--------------
399,126,892
--------------
TOTAL LONG-TERM BONDS
(Cost $470,157,047)............................................ 441,213,478
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 7.6% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
5.720%, 01/03/95 (see Note 4)................. 36,874,000 36,874,000
--------------
OTHER ASSETS -- 1.9%
(net of liabilities)........................................... 9,486,827
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 487,574,305
--------------
--------------
<FN>
The following abbreviations are used in portfolio descriptions:
CMO Collateralized Mortgage Obligations
M.T.N. Medium Term Note
REMIC Real Estate Mortgage Investment Conduit
%Indicates a variable rate security.
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B40
<PAGE>
ZERO COUPON BOND 2005 PORTFOLIO
DECEMBER 31, 1994
<TABLE>
<CAPTION>
PAR MARKET
LONG-TERM BONDS -- 96.3% VALUE VALUE
------------- --------------
<S> <C> <C>
U.S. GOVERNMENT & AGENCY OBLIGATIONS
Certificate of Accrual on Treasury Securities,
Zero Coupon, 08/15/04-05/15/11................ $ 4,605,000 $ 1,873,840
Principal Treasury Receipts,
Zero Coupon, 05/15/03......................... 1,590,000 829,360
Treasury Investment Growth Receipts,
Zero Coupon, 05/15/04-11/15/11................ 13,113,500 4,451,632
United States Treasury Bonds, Stripped,
Zero Coupon, 05/15/04-11/15/07................ 21,221,000 8,740,485
--------------
TOTAL LONG-TERM BONDS
(Cost $16,082,218)............................................. 15,895,317
--------------
<CAPTION>
PRINCIPAL
SHORT-TERM INVESTMENTS -- 3.9% AMOUNT VALUE
------------- --------------
<S> <C> <C>
REPURCHASE AGREEMENTS
Joint Repurchase Agreement Account,
5.720%, 01/03/95 (see Note 4)................. 636,000 636,000
--------------
LIABILITIES -- (0.2%)
(net of other assets).......................................... (25,619)
--------------
TOTAL NET ASSETS -- 100.0%....................................... $ 16,505,698
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS ON PAGES B42 THROUGH B54.
B41
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS OF
THE PRUDENTIAL SERIES FUND, INC.
FOR THE YEARS ENDED DECEMBER 31, 1994 AND DECEMBER 31, 1993 (AS RESTATED)
NOTE 1: GENERAL
The Prudential Series Fund, Inc. ("Series Fund"), a Maryland corporation,
organized on November 15, 1982, is a diversified open-end management investment
company registered under the Investment Company Act of 1940, as amended. The
Series Fund is composed of fourteen Portfolios, each with a separate series of
capital stock. 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 shareholders of Pruco Life Series Fund, Inc. ("Pruco Fund") and the Series
Fund approved the merger of the Pruco Fund into the Series Fund as of November
1, 1986. The merger combined five portfolios with identical investment
strategies (Money Market, Bond, Common Stock, Aggressively Managed Flexible and
Conservatively Managed Flexible) of the Pruco Fund with their counterpart in the
Series Fund. The merger was effected by converting the net assets of the Pruco
Fund at the merger date into shares of the Series Fund at the share price of
that day and was accounted for as a pooling of interest.
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SECURITIES VALUATION: Equity securities are valued at market. Securities traded
on a national securities exchange are valued at the last sales price on such
exchange as of the close of the New York Stock Exchange or, in the absence of
recorded sales, at the mean between the most recently quoted bid and asked
prices. For any securities not traded on a national securities exchange but
traded in the over-the-counter market, the securities are valued at the mean
between the most recently quoted bid and asked prices, except that securities
for which quotations are furnished through a nationwide automated quotation
system approved by the National Association of Securities Dealers, Inc.
("NASDAQ") are valued at the last sales price or if there was no sale on such
day, at the mean between the most recently quoted bid and asked prices.
Convertible debt securities are valued at the mean between the most recently
quoted bid and asked prices provided by principal market makers. High yield
bonds are valued either by quotes received from principal market makers or by an
independent pricing service which determines prices by analysis of quality,
coupon, maturity and other adjustment factors. Long-term bonds are valued at
market, based on valuation prices by an independent pricing service which
determines prices by analysis of quality, coupon, maturity and other adjustment
factors. Short-term investments are valued at amortized cost, which with accrued
interest approximates market value. Amortized cost is computed using the cost on
the date of purchase adjusted for constant amortization of discount or premium
to maturity. The interest rates shown for Commercial Paper, Promissory Notes,
and certain U.S. Government Agency Obligations on the Schedules of Investments
are the discount rates paid at the time of purchase. Any security for which a
quotation is unavailable is valued at fair value as determined in good faith by
or under the direction of the Series Fund's Board of Directors.
The ability of issuers of debt securities held by specific Portfolios of the
Series Fund to meet their obligations may be affected by economic developments
in a specific country or industry.
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 procedures noted above.
DERIVATIVE FINANCIAL INSTRUMENTS: The Series Fund may engage in various
portfolio strategies to seek increased returns by hedging the portfolios against
adverse movements in the equity, debt, and currency markets. Losses may arise
due to changes in the value of the contract or if the counterparty does not
perform under the contract.
OPTION WRITING: When the Series Fund sells an option, an amount equal to the
premium received is recorded as a liability and is subsequently adjusted to the
current market value of the option written. Premiums received 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
B42
<PAGE>
premium received is less than the amount paid for the closing purchase
transaction, as a loss. If a call option is exercised, the premium is added to
the proceeds from the sale in determining whether a gain or loss has been
realized.
The Series Fund's use of written options involves, to varying degrees, elements
of market risk in excess of the amount recognized in the statement of assets and
liabilities. The contract or notional amounts reflect the extent of the Series
Fund's involvement in these financial instruments. Risks arise from the possible
movements in foreign exchange rates and securities values underlying these
instruments.
STOCK INDEX FUTURES: Portfolios of the Fund may attempt to reduce the risk of
investment in equity securities by hedging a portion of their equity portfolios
through the use of stock index futures traded on a commodities exchange or board
of trade. A stock index futures contract is an agreement in which the seller of
the contract agrees to deliver to the buyer an amount of cash equal to a
specific dollar amount times the difference between the value of a specific
stock index at the close of the last trading day of the contract and the price
at which the agreement was made. Upon entering into a futures contract, a
Portfolio is required to pledge to the broker liquid assets equal to the minimum
"initial margin," approximately 5% of the contract amount. The Portfolio further
agrees to receive or pay to the broker an amount of cash equal to the futures
contract's daily fluctuation in value. These receipts or payments are known as
the "variation margin" and are recorded as unrealized gains or losses. When a
futures contract is closed, the Portfolio records a realized gain or loss equal
to the difference between the value of the contract at the time it was opened
and the value at the time it was closed.
FOREIGN CURRENCY TRANSACTIONS: The books and records of the Series Fund are
maintained in U.S. dollars. Foreign currency amounts are translated into U.S.
dollars on the following basis:
(i) market value of investment securities, other assets and liabilities at the
mid daily rate of exchange as reported by a major New York City bank;
(ii) purchases and sales of investment securities, income and expenses at the
rate of exchange prevailing on the respective dates of such transactions.
Since the net assets of the Series Fund are presented at the foreign exchange
rates and market values at the close of the fiscal period, it is not practical
to isolate that portion of the results of operations arising as a result of
changes in the foreign exchange rates from the fluctuations arising from change
in the market prices of securities held at the end of the fiscal period.
Similarly, it is not practical to isolate the effect of changes in foreign
exchange rates from the fluctuations arising from changes in the market prices
of equities sold during the fiscal year.
Foreign security and currency transactions may involve certain considerations
and risks not typically associated with those of domestic origin as a result of,
among other factors, the possibility of political and economic instability and
the level of government supervision and regulation of foreign security markets.
The Global Equity Portfolio may invest up to 100% of its total assets in common
stock and convertible securities denominated in a foreign currency and issued by
foreign or domestic issuers. The Bond and High Yield Bond 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. In
addition, the bond components of the Conservatively Managed Flexible and
Aggressively Managed Flexible Portfolios may each invest up to 20% of their
assets in such securities. Further, the High Dividend Stock and Aggressively
Managed Flexible Portfolios may invest up to 30% of their total assets in debt
and equity securities denominated in a foreign currency and issued by foreign or
domestic issuers. In addition, Common Stock and Natural Resources Portfolios may
invest up to 30% of their total assets in non-United States currency denominated
common stock and fixed-income securities convertible into common stock of
foreign and U.S. issuers.
Net realized gains and losses on foreign currency transactions represent net
foreign exchange gains and losses from holding of foreign currencies; currency
gains or losses realized between the trade and settlement dates on security
transactions; and the difference between the amounts of the dividends and
foreign taxes recorded on the Series Fund's books and the U.S. dollar equivalent
amounts actually received or paid. Net currency gains and losses from valuing
foreign currency denominated assets and liabilities at fiscal period end
exchange rates are reflected as a component of unrealized loss on foreign
currencies.
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.
B43
<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. As of
December 31, 1994, (based on an October 31 measurement period) the Bond
Portfolio had a net capital loss carry forward of $643,550 (expiring in 2002).
The High Yield Bond Portfolio had a net capital loss carry forward of $5,141,222
($3,756,791 expiring in 1999 and $1,384,431 expiring in 2002). The Global Equity
Portfolio had a net capital loss carry forward of $6,265,350 (expiring in 2002).
Finally, the Zero Coupon Bond 2005 Portfolio had a net capital loss carry
forward of $123,179 (expiring in 2002). These amounts will be available to
offset any future taxable gains.
The Money Market Portfolio declares dividends of net investment income
(including realized and unrealized gains and losses on Portfolio securities) on
each business day. These dividends are reinvested in additional full and
fractional shares of the Portfolio. This policy enables the Money Market
Portfolio to maintain a net asset value of $10.00 per share. Dividends from
investment income of the other Portfolios will normally be declared and
reinvested in additional full and fractional shares four times annually.
Dividends from net realized capital gains are declared and reinvested in
additional full and fractional shares twice a year.
EXPENSES: Each Portfolio pays for certain expenses incurred in its individual
operation, and also pays a portion of the Series Fund's general administrative
expenses allocated on the basis of the asset size of the respective Portfolios.
The Series Fund has an arrangement with Chemical Banking Corporation, a
custodian bank. On a daily basis, cash funds which are not invested earn a
credit which is used to offset custody charges on a Portfolio basis, exclusive
of the Global Equity Portfolio, for which Brown Brothers Harriman & Co. is the
custodian bank. For the year ended December 31, 1994, the total of the credits
used was:
<TABLE>
<S> <C>
Conservatively Managed Flexible Portfolio..................... $ 91,232
Aggressively Managed Flexible Portfolio....................... 41,492
Government Securities Portfolio............................... 15,374
Money Market Portfolio........................................ 14,851
High Yield Bond Portfolio..................................... 7,469
Bond Portfolio................................................ 4,838
Zero Coupon Bond 2005 Portfolio............................... 2,531
Zero Coupon Bond 2000 Portfolio............................... 1,447
Zero Coupon Bond 1995 Portfolio............................... 517
</TABLE>
NOTE 3: INVESTMENT MANAGEMENT FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT MANAGEMENT AND ACCOUNTING FEES: Pursuant to an investment advisory
agreement (the "Agreement"), The Prudential receives an investment management
fee, calculated daily, at an effective annual rate of 0.35% of the average daily
net assets of the Stock Index Portfolio: 0.40% of the average daily net assets
of the Money Market, Bond, Zero Coupon Bond 1995, Zero Coupon Bond 2000, Zero
Coupon Bond 2005, High Dividend Stock and Government Securities Portfolios;
0.45% of average daily net assets of the Common Stock and Natural Resources
Portfolios; 0.55% of the average daily net assets of the Conservatively Managed
Flexible and the High Yield Bond Portfolios; 0.60% of the average daily net
assets of the Aggressively Managed Flexible Portfolio; and 0.75% of the average
daily net assets of the Global Equity Portfolio. Under the Agreement, The
Prudential has agreed to refund to a portfolio (other than the Global Equity
Portfolio), the portion of the management fee for that Portfolio equal to the
amount that the aggregate annual ordinary operating expenses (excluding
interest, taxes and brokerage commissions) exceeds 0.75% of the Portfolio's
B44
<PAGE>
average daily net assets. The Agreement also requires the Series Fund to
reimburse The Prudential for the cost of maintaining staff and personnel who
provide daily accounting services for the operation of the Series Fund with the
exception of the Global Equity Portfolio.
DIRECTORS' EXPENSES: The Series Fund pays for the fees and expenses of those
members of the Series Fund's Board of Directors who are not officers or
employees of The Prudential or its affiliates.
BROKERAGE COMMISSIONS: For the year ended December 31, 1994, Prudential
Securities Inc., an indirect, wholly-owned subsidiary of The Prudential, earned
$560,155 in brokerage commissions from Portfolio transactions executed on behalf
of the Series Fund.
OTHER TRANSACTIONS WITH AFFILIATES: As of December 31, 1994, The Prudential had
investments of $7,208,297 in the Zero Coupon Bond 1995 Portfolio; $105,934 in
the Zero Coupon Bond 2000 Portfolio; and $1,158,347 in the Global Equity
Portfolio.
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, $974,388,000 as of December 31, 1994. The Portfolios
of the Series Fund with cash invested in the joint account had the following
percentage participation in the account:
<TABLE>
<S> <C>
Common Stock Portfolio........................................ 35.23%
Aggressively Managed Flexible Portfolio....................... 33.94%
Conservatively Managed Flexible Portfolio..................... 12.45%
High Dividend Stock Portfolio................................. 7.78%
Government Securities Portfolio............................... 3.78%
Stock Index Portfolio......................................... 2.66%
Bond Portfolio................................................ 1.56%
High Yield Bond Portfolio..................................... 1.47%
Natural Resources Portfolio................................... 1.06%
Zero Coupon Bond 2005 Portfolio............................... .07%
----------
100.00%
</TABLE>
Banker's Trust Securities Repurchase Agreement, dated 12/30/94, in the principal
amount of $225,000,000, repurchase price $225,143,746, due 1/3/95;
collateralized by $225,555,000 U.S. Treasury Notes, 8%, due 5/15/01.
Goldman Sachs Repurchase Agreement, dated 12/30/94, in the principal amount of
$67,388,000, repurchase price $67,427,309, due 1/3/95; collateralized by
$61,265,000 U.S. Treasury Bonds, 8.875%, due 2/15/19.
Morgan Stanley Repurchase Agreement, dated 12/30/94, in the principal amount of
$278,000,000, repurchase price $278,171,508, due 1/3/95; collateralized by
$143,865,000 U.S. Treasury Notes, 5.125%, due 3/31/98; $142,980,000 U.S.
Treasury Notes, 8.75%, due 10/15/97.
Nomura Securities Repurchase Agreement, dated 12/30/94, in the principal amount
of $179,000,000, repurchase price $179,119,333, due 1/3/95; collateralized by
$26,435,000 U.S. Treasury Bonds, 7.125%, due 2/15/23; $33,240,000 U.S. Treasury
Bonds, 7.875%, due 2/15/21; $118,360,000 U.S. Treasury Bonds, 8.125%, due
8/15/19.
Smith Barney Repurchase Agreement, dated 12/30/94, in the principal amount of
$100,000,000, repurchase price $100,065,552, due 1/3/95; collateralized by
$4,805,000 U.S. Treasury Bonds, 12.0%, due 8/15/13; $17,000,000 U.S. Treasury
Bonds, 7.125%, due 2/15/23; $15,000,000 U.S. Treasury Bonds, 8.875%, due
2/15/19; $17,000,000 U.S. Treasury Bonds, 11.875%, due 11/15/03; $33,000,000
U.S. Treasury Bonds, 11.125%, due 8/15/03.
UBS Securities Repurchase Agreement, dated 12/30/94, in the principal amount of
$125,000,000, repurchase price $125,079,860, due 1/3/95; collateralized by
$45,000,000 U.S. Treasury Bonds, 14.0%, due 11/15/11; $62,000,000 U.S. Treasury
Notes, 5.125%, due 3/31/96.
B45
<PAGE>
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 year ended December 31, 1994 were as
follows:
Cost of Purchases:
<TABLE>
<CAPTION>
AGGRESSIVELY CONSERVATIVELY ZERO ZERO HIGH
COMMON MANAGED MANAGED COUPON COUPON YIELD
BOND STOCK FLEXIBLE FLEXIBLE 1995 2000 BOND
------------ ------------ -------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Debt Securities.......... $230,427,085 $ 0 $2,110,107,294 $2,264,216,698 $ 3,088,318 $ 2,167,569 $245,231,365
Equity Securities........ $ 0 $798,167,933 $1,463,207,489 $ 587,491,444 $ 0 $ 0 $ 15,834,213
</TABLE>
<TABLE>
<CAPTION>
HIGH ZERO
STOCK DIVIDEND NATURAL GLOBAL GOVERNMENT COUPON
INDEX STOCK RESOURCES EQUITY SECURITIES 2005
------------ ------------ -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Debt Securities.......... $ 0 $ 59,651,560 $ 4,138,265 $ 2,014,070 $170,067,390 $ 3,833,265
Equity Securities........ $ 59,347,016 $672,161,860 $ 115,627,163 $ 298,502,390 $ 0 $ 0
</TABLE>
Proceeds From Sales:
<TABLE>
<CAPTION>
AGGRESSIVELY CONSERVATIVELY ZERO ZERO HIGH
COMMON MANAGED MANAGED COUPON COUPON YIELD
BOND STOCK FLEXIBLE FLEXIBLE 1995 2000 BOND
------------ ------------ -------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Debt Securities.......... $161,141,232 $ 0 $1,985,428,664 $2,265,817,380 $ 670,613 $ 1,988,360 $184,820,098
Equity Securities........ $ 0 $133,822,827 $1,492,407,199 $ 430,107,759 $ 0 $ 0 $ 13,401,205
</TABLE>
<TABLE>
<CAPTION>
HIGH ZERO
STOCK DIVIDEND NATURAL GLOBAL GOVERNMENT COUPON
INDEX STOCK RESOURCES EQUITY SECURITIES 2005
------------ ------------ -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Debt Securities.......... $ 0 $ 14,057,405 $ 2,019,170 $ 3,180,314 $192,629,378 $ 854,514
Equity Securities........ $ 10,703,691 $440,060,612 $ 34,073,194 $ 80,485,320 $ 0 $ 0
</TABLE>
Transactions in call options written during the year ended December 31, 1994
were as follows:
<TABLE>
<CAPTION>
NATURAL
RESOURCES
----------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- -----------
<S> <C> <C>
Options outstanding at
December 31, 1993....... 0 $ 0
Options written........... 300 66,832
Options terminated in
closing purchase
transactions............ (300) (66,832)
Options expired........... 0 0
Options exercised......... 0 0
--------- -----------
Options outstanding at
December 31, 1994....... 0 $ 0
--------- -----------
--------- -----------
</TABLE>
The federal income tax basis and unrealized appreciation/depreciation of the
Fund's investments as of December 31, 1994 were as follows:
<TABLE>
<CAPTION>
AGGRESSIVELY CONSERVATIVELY ZERO ZERO HIGH
COMMON MANAGED MANAGED COUPON COUPON YIELD
BOND STOCK FLEXIBLE FLEXIBLE 1995 2000 BOND
----------- ------------- ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Unrealized Appreciation... $ 1,403,760 376,581,396 224,521,828 147,865,296 147,086 839,286 3,272,256
Gross Unrealized Depreciation... 33,335,908 130,109,851 93,827,948 122,789,171 110,193 174,236 32,262,000
Total Net Unrealized............ (31,932,148) 246,471,545 130,693,880 25,076,125 36,893 665,050 (28,989,744)
Tax Basis....................... 563,227,825 2,419,493,392 3,347,362,272 3,443,877,594 17,721,753 20,000,846 328,072,741
<CAPTION>
HIGH ZERO
STOCK DIVIDEND NATURAL GLOBAL GOVERNMENT COUPON MONEY
INDEX STOCK RESOURCES EQUITY SECURITIES 2005 MARKET
----------- ------------- ------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Gross Unrealized Appreciation... $105,889,895 41,940,476 23,326,212 29,685,605 947,221 381,531 0
Gross Unrealized Depreciation... 24,917,605 55,556,748 20,252,264 22,797,770 29,890,790 568,432 0
Total Net Unrealized............ 80,972,290 (13,616,272) 3,073,948 6,887,835 (28,943,569) (186,901) 0
Tax Basis....................... 584,600,736 873,043,522 227,082,786 340,366,881 507,031,047 16,718,218 581,582,129
</TABLE>
B46
<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>
MONEY MARKET
-------------------------------------------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85
TO TO TO TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85*
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $ 1.000 $ 1.000
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income.... 0.402 0.290 0.372 0.596 0.778 0.877 0.717 0.630 0.062 0.079
Net realized and
unrealized gains
(losses) on
investments............ 0 0 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations........... 0.402 0.290 0.372 0.596 0.778 0.877 0.717 0.630 0.062 0.079
Distributions to
Shareholders:
Distributions from net
investment income...... (0.402) (0.290) (0.372) (0.596) (0.778) (0.877) (0.717) (0.630) (0.062) (0.079)
Distributions from net
realized gains......... 0 0 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions........ (0.402) (0.290) (0.372) (0.596) (0.778) (0.877) (0.717) (0.630) (0.062) (0.079)
Reverse stock split (10
to 1).................. -- -- -- -- -- -- -- -- 9.000 --
Net increase (decrease)
in Net Asset Value..... 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 9.000 0.000
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value at end of
period................. $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $10.000 $ 10.000 $ 1.000
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total Investment Rate of
Return:**.............. 4.05 % 2.95 % 3.79 % 6.16 % 8.16 % 9.25 % 7.35 % 6.52 % 6.54 % 7.91 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $583.3 $474.7 $528.7 $529.6 $434.2 $236.1 $155.9 $107.2 $52.5 $50.5
Ratio of expenses net of
reimbursement to
average net assets..... 0.47 % 0.45 % 0.47 % 0.46 % 0.50 % 0.55 % 0.57 % 0.53 % 0.55 % 0.68 %
Ratio of net investment
income to average net
assets................. 4.02 % 2.90 % 3.72 % 5.96 % 7.80 % 8.77 % 7.17 % 6.30 % 6.16 % 7.60 %
Portfolio turnover
rate................... -- -- -- -- -- -- -- -- -- --
Number of shares
outstanding at end of
period (in millions)... 58.3 47.5 52.9 53.0 43.4 23.6 15.6 10.7 5.2 20.3
</TABLE>
<TABLE>
<CAPTION>
BOND
-------------------------------------------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85
TO TO TO TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85*
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $11.103 $10.829 $11.002 $10.332 $10.321 $ 9.942 $10.038 $11.048 $ 10.967 $ 9.998
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income.... 0.682 0.686 0.761 0.797 0.825 0.886 0.875 0.859 0.904 1.073
Net realized and
unrealized gains
(losses) on
investments............ (1.040) 0.398 0.013 0.842 (0.004) 0.424 (0.069) (0.821) 0.607 0.739
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations........... (0.358) 1.084 0.774 1.639 0.821 1.310 0.806 0.038 1.511 1.812
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.683) (0.657) (0.728) (0.779) (0.810) (0.854) (0.902) (0.990) (0.909) (0.843)
Distributions from net
realized gains......... (0.024) (0.153) (0.219) (0.190) 0 (0.077) 0 (0.058) (0.521) 0
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions........ (0.707) (0.810) (0.947) (0.969) (0.810) (0.931) (0.902) (1.048) (1.430) (0.843)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net increase (decrease)
in Net Asset Value..... (1.065) 0.274 (0.173) 0.670 0.011 0.379 (0.096) (1.010) 0.081 0.969
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value at end of
period................. $10.038 $11.103 $10.829 $11.002 $10.332 $10.321 $ 9.942 $10.038 $ 11.048 $ 10.967
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total Investment Rate of
Return:**.............. (3.23 %) 10.13 % 7.19 % 16.44 % 8.32 % 13.49 % 8.19 % 0.29 % 14.45 % 18.65 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $541.6 $576.2 $428.8 $318.7 $227.7 $191.1 $148.8 $139.5 $110.1 $40.9
Ratio of expenses net of
reimbursement to
average net assets..... 0.45 % 0.46 % 0.47 % 0.49 % 0.47 % 0.53 % 0.53 % 0.53 % 0.51 % 0.68 %
Ratio of net investment
income to average net
assets................. 6.41 % 6.05 % 6.89 % 7.43 % 8.06 % 8.56 % 8.52 % 8.15 % 8.11 % 9.85 %
Portfolio turnover
rate................... 31.57 % 41.12 % 60.53 % 131.01 % 42.10 % 272.85 % 222.20 % 238.41 % 246.82 % 92.56 %
Number of shares
outstanding at end of
period (in millions)... 54.0 51.9 39.6 29.0 22.0 18.5 15.0 13.9 10.0 2.5
</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.
B47
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------------------------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85
TO TO TO TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85*
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $21.487 $18.903 $17.905 $15.449 $18.539 $15.463 $13.620 $14.815 $ 14.634 $ 11.160
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income.... 0.512 0.417 0.444 0.482 0.577 0.474 0.402 0.393 0.448 0.340
Net realized and
unrealized gains
(losses) on
investments............ 0.054 3.666 2.050 3.414 (1.573) 4.064 1.909 (0.065) 1.765 3.306
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations........... 0.566 4.083 2.494 3.896 (0.996) 4.538 2.311 0.328 2.213 3.646
Distributions to
Shareholders:
Distributions from net
investment income...... (0.487) (0.404) (0.439) (0.478) (0.563) (0.503) (0.468) (0.496) (0.275) (0.172)
Distributions from net
realized gains......... (0.904) (1.095) (1.057) (0.962) (1.531) (0.959) 0 (1.027) (1.757) 0
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions........ (1.391) (1.499) (1.496) (1.440) (2.094) (1.462) (0.468) (1.523) (2.032) (0.172)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net increase (decrease)
in Net Asset Value..... (0.825) 2.584 0.998 2.456 (3.090) 3.076 1.843 (1.195) 0.181 3.474
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value at end of
period................. $20.662 $21.487 $18.903 $17.905 $15.449 $18.539 $15.463 $13.620 $ 14.815 $ 14.634
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total Investment Rate of
Return:**.............. 2.78 % 21.87 % 14.17 % 26.01 % (5.21 %) 29.73 % 17.05 % 1.67 % 15.10 % 32.84 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $2,617.8 $2,186.5 $1,416.6 $1,032.8 $700.5 $675.5 $500.1 $451.0 $247.9 $68.8
Ratio of expenses net of
reimbursement to
average net assets..... 0.55 % 0.53 % 0.53 % 0.51 % 0.56 % 0.56 % 0.57 % 0.51 % 0.52 % 0.88 %
Ratio of net investment
income to average net
assets................. 2.39 % 1.99 % 2.33 % 2.66 % 3.37 % 2.66 % 2.67 % 2.34 % 2.90 % 2.44 %
Portfolio turnover
rate................... 6.90 % 12.95 % 15.70 % 20.85 % 84.84 % 73.54 % 62.35 % 79.91 % 117.15 % 91.70 %
Number of shares
outstanding at end of
period (in millions)... 126.7 101.8 74.9 57.7 45.3 36.4 32.3 33.1 16.7 2.0
<CAPTION>
AGGRESSIVELY MANAGED FLEXIBLE
-------------------------------------------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85
TO TO TO TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85*
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $16.957 $16.005 $16.288 $13.996 $14.446 $13.123 $12.326 $13.555 $ 12.810 $ 10.469
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income.... 0.473 0.566 0.583 0.650 0.715 0.813 0.724 0.577 0.611 0.584
Net realized and
unrealized gains
(losses) on
investments............ (1.021) 1.882 0.607 2.809 (0.466) 1.989 0.840 (0.753) 1.342 2.095
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations........... (0.548) 2.448 1.190 3.459 0.249 2.802 1.564 (0.176) 1.953 2.679
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.451) (0.567) (0.559) (0.654) (0.699) (0.813) (0.767) (0.673) (0.456) (0.338)
Distributions from net
realized gains......... (0.462) (0.929) (0.914) (0.513) 0 (0.666) 0 (0.380) (0.752) 0
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions........ (0.913) (1.496) (1.473) (1.167) (0.699) (1.479) (0.767) (1.053) (1.208) (0.338)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net increase (decrease)
in Net Asset Value..... (1.461) 0.952 (0.283) 2.292 (0.450) 1.323 0.797 (1.229) 0.745 2.341
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value at end of
period................. $15.496 $16.957 $16.005 $16.288 $13.996 $14.446 $13.123 $12.326 $ 13.555 $ 12.810
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total Investment Rate of
Return:**.............. (3.16 %) 15.58 % 7.61 % 25.43 % 1.91 % 21.77 % 12.83 % (1.83 %) 15.48 % 25.87 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $3,481.5 $3,292.2 $2,435.6 $1,990.7 $1,507.8 $1,386.5 $1,103.9 $1,062.4 $593.6 $138.7
Ratio of expenses net of
reimbursement to
average net assets..... 0.66 % 0.66 % 0.67 % 0.67 % 0.69 % 0.69 % 0.70 % 0.71 % 0.67 % 0.93 %
Ratio of net investment
income to average net
assets................. 2.90 % 3.30 % 3.63 % 4.23 % 5.13 % 5.66 % 5.52 % 4.09 % 4.43 % 4.65 %
Portfolio turnover
rate................... 123.63 % 62.99 % 59.03 % 93.13 % 51.87 % 141.04 % 128.45 % 123.83 % 133.76 % 56.46 %
Number of shares
outstanding at end of
period (in millions)... 224.7 194.1 152.2 122.2 107.7 96.0 84.1 86.2 43.8 6.1
</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.
B48
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
CONSERVATIVELY MANAGED FLEXIBLE
-----------------------------------------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 01/01/86 01/01/85
TO TO TO TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86* 12/31/85*
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $14.905 $14.243 $14.318 $13.060 $13.361 $12.295 $11.889 $12.571 $ 12.173 $ 10.469
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Income From Investment
Operations:
Net investment income.... 0.528 0.486 0.558 0.687 0.821 0.891 0.773 0.656 0.652 0.725
Net realized and
unrealized gains
(losses) on
investments............ (0.679) 1.229 0.410 1.738 (0.143) 1.155 0.424 (0.399) 1.046 1.443
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total from investment
operations........... (0.151) 1.715 0.968 2.425 0.678 2.046 1.197 0.257 1.698 2.168
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.505) (0.468) (0.533) (0.668) (0.812) (0.887) (0.791) (0.709) (0.517) (0.464)
Distributions from net
realized gains......... (0.154) (0.585) (0.510) (0.499) (0.167) (0.093) 0 (0.230) (0.783) 0
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total
distributions........ (0.659) (1.053) (1.043) (1.167) (0.979) (0.980) (0.791) (0.939) (1.300) (0.464)
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net increase (decrease)
in Net Asset Value..... (0.810) 0.662 (0.075) 1.258 (0.301) 1.066 0.406 (0.682) 0.398 1.704
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Net Asset Value at end of
period................. $14.095 $14.905 $14.243 $14.318 $13.060 $13.361 $12.295 $11.889 $ 12.571 $ 12.173
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- --------- ---------
Total Investment Rate of
Return:**.............. (0.97 %) 12.20 % 6.95 % 19.07 % 5.27 % 16.99 % 10.19 % 1.54 % 14.17 % 21.11 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $3,501.1 $3,103.2 $2,114.0 $1,500.0 $1,100.2 $976.0 $815.6 $803.9 $375.4 $75.9
Ratio of expenses net of
reimbursement to
average net assets..... 0.61 % 0.60 % 0.62 % 0.63 % 0.65 % 0.64 % 0.65 % 0.66 % 0.64 % 0.86 %
Ratio of net investment
income to average net
assets................. 3.61 % 3.22 % 3.88 % 4.89 % 6.21 % 6.81 % 6.22 % 5.05 % 5.10 % 5.99 %
Portfolio turnover
rate................... 125.18 % 79.46 % 62.07 % 115.35 % 44.04 % 153.92 % 110.67 % 140.69 % 207.78 % 54.89 %
Number of shares
outstanding at end of
period (in millions)... 248.4 208.2 148.4 104.8 84.2 73.0 66.3 67.6 29.9 4.2
</TABLE>
<TABLE>
<CAPTION>
ZERO COUPON BOND 1995
-------------------------------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 02/12/86
TO TO TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
-------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $11.282 $11.174 $11.250 $10.380 $11.094 $10.331 $10.270 $11.724 $ 10.156
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Income From Investment
Operations:
Net investment income.... 0.800 0.761 0.802 0.844 1.447 0.889 0.888 0.893 0.791
Net realized and
unrealized gains
(losses) on
investments............ (0.808) 0.107 (0.010) 0.874 (0.670) 0.766 0.027 (1.263) 1.437
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total from investment
operations........... (0.008) 0.868 0.792 1.718 0.777 1.655 0.915 (0.370) 2.228
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.679) (0.760) (0.798) (0.845) (1.491) (0.892) (0.854) (1.084) (0.660)
Distributions from net
realized gains......... (0.002) 0 (0.070) (0.003) 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total
distributions........ (0.681) (0.760) (0.868) (0.848) (1.491) (0.892) (0.854) (1.084) (0.660)
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Net increase (decrease)
in Net Asset Value..... (0.689) 0.108 (0.076) 0.870 (0.714) 0.763 0.061 (1.454) 1.568
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Net Asset Value at end of
period................. $10.593 $11.282 $11.174 $11.250 $10.380 $11.094 $10.331 $10.270 $ 11.724
-------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total Investment Rate of
Return:**.............. (0.03 %) 7.87 % 7.19 % 17.20 % 7.95 % 16.41 % 9.01 % (3.25 %) 21.96 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $17.7 $15.2 $13.6 $13.0 $11.0 $10.0 $9.0 $7.5 $7.2
Ratio of expenses net of
reimbursement to
average net assets..... 0.60 % 0.63 % 0.69 % 0.71 % 0.75 % 0.75 % 0.75 % 0.69 % 0.42 %
Ratio of net investment
income to average net
assets................. 6.72 % 6.61 % 7.12 % 7.86 % 13.80 % 8.13 % 8.34 % 8.17 % 6.89 %
Portfolio turnover
rate................... 4.38 % 5.84 % 34.80 % 0.77 % 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
Number of shares
outstanding at end of
period (in millions)... 1.7 1.3 1.2 1.2 1.1 0.9 0.9 0.7 0.6
</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.
B49
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
ZERO COUPON BOND 2000
-------------------------------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 01/01/87 02/12/86
TO TO TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87 12/31/86
-------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $13.715 $12.550 $12.402 $11.279 $11.883 $11.004 $10.685 $12.476 $ 10.267
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Income From Investment
Operations:
Net investment income.... 0.927 0.850 0.892 0.908 1.114 0.919 0.919 0.934 0.807
Net realized and
unrealized gains
(losses) on
investments............ (1.907) 1.157 0.140 1.308 (0.593) 1.277 0.292 (1.623) 2.087
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total from investment
operations........... (0.980) 2.007 1.032 2.216 0.521 2.196 1.211 (0.689) 2.894
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.850) (0.837) (0.884) (0.944) (1.125) (0.915) (0.892) (1.102) (0.685)
Distributions from net
realized gains......... (0.023) (0.005) 0 (0.149) 0 (0.402) 0 0 0
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total
distributions........ (0.873) (0.842) (0.884) (1.093) (1.125) (1.317) (0.892) (1.102) (0.685)
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Net increase (decrease)
in Net Asset Value..... (1.853) 1.165 0.148 1.123 (0.604) 0.879 0.319 (1.791) 2.209
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Net Asset Value at end of
period................. $11.862 $13.715 $12.550 $12.402 $11.279 $11.883 $11.004 $10.685 $ 12.476
-------- -------- -------- -------- -------- -------- -------- -------- ---------
-------- -------- -------- -------- -------- -------- -------- -------- ---------
Total Investment Rate of
Return:**.............. (7.18 %) 16.15 % 8.59 % 20.71 % 5.11 % 20.38 % 11.56 % (5.51 %) 28.62 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $20.6 $22.2 $16.7 $14.6 $13.9 $13.1 $10.9 $9.0 $8.1
Ratio of expenses net of
reimbursement to
average net assets..... 0.51 % 0.62 % 0.66 % 0.68 % 0.75 % 0.75 % 0.75 % 0.64 % 0.40 %
Ratio of net investment
income to average net
assets................. 6.69 % 6.21 % 7.24 % 7.77 % 9.99 % 7.73 % 8.24 % 8.19 % 6.61 %
Portfolio turnover
rate................... 9.41 % 0.53 % 0.00 % 0.00 % 0.00 % 38.62 % 0.00 % 0.00 % 0.00 %
Number of shares
outstanding at end of
period (in millions)... 1.7 1.6 1.3 1.2 1.2 1.1 1.0 0.8 0.7
</TABLE>
<TABLE>
<CAPTION>
HIGH YIELD BOND
---------------------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 02/23/87
TO TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(AS RESTATED)
Net Asset Value at
beginning of period.... $ 8.406 $ 7.719 $ 7.212 $ 5.838 $ 7.673 $ 8.904 $ 8.742 $10.000
-------- -------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income.... 0.869 0.822 0.824 0.836 0.936 1.071 1.066 0.968
Net realized and
unrealized gains
(losses) on
investments............ (1.102) 0.632 0.415 1.397 (1.792) (1.223) 0.065 (1.428)
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations........... (0.233) 1.454 1.239 2.233 (0.856) (0.152) 1.131 (0.460)
-------- -------- -------- -------- -------- -------- -------- --------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.807) (0.767) (0.732) (0.859) (0.979) (1.079) (0.969) (0.798)
Distributions from net
realized gains......... 0 0 0 0 0 0 0 0
-------- -------- -------- -------- -------- -------- -------- --------
Total
distributions........ (0.807) (0.767) (0.732) (0.859) (0.979) (1.079) (0.969) (0.798)
-------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in Net Asset Value..... (1.040) 0.687 0.507 1.374 (1.835) (1.231) 0.162 (1.258)
-------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value at end of
period................. $ 7.366 $ 8.406 $ 7.719 $ 7.212 $ 5.838 $ 7.673 $ 8.904 $ 8.742
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Total Investment Rate of
Return:**.............. (2.72 %) 19.27 % 17.54 % 39.71 % (11.84 %) (2.05 %) 13.17 % (4.91 %)
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $306.2 $282.9 $153.7 $78.7 $49.8 $60.0 $65.8 $40.4
Ratio of expenses net of
reimbursement to
average net assets..... 0.65 % 0.65 % 0.70 % 0.75 % 0.75 % 0.71 % 0.75 % 0.73 %
Ratio of net investment
income to average net
assets................. 9.82 % 9.91 % 10.67 % 12.05 % 13.42 % 12.29 % 11.60 % 10.13 %
Portfolio turnover
rate................... 68.67 % 95.52 % 75.04 % 57.21 % 34.66 % 60.59 % 70.73 % 16.58 %
Number of shares
outstanding at end of
period (in millions)... 41.6 33.6 19.9 10.9 8.5 7.8 7.4 4.6
</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.
B50
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
STOCK INDEX
---------------------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 01/01/88 10/19/87
TO TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88 12/31/87
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $15.202 $14.218 $13.605 $10.760 $11.732 $ 9.454 $ 8.531 $ 8.071
-------- -------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income.... 0.377 0.361 0.350 0.351 0.357 0.326 0.357 0.047
Net realized and
unrealized gains
(losses) on
investments............ (0.231) 1.002 0.600 2.814 (0.792) 2.570 0.951 0.548
-------- -------- -------- -------- -------- -------- -------- --------
Total from investment
operations........... 0.146 1.363 0.950 3.165 (0.435) 2.896 1.308 0.595
-------- -------- -------- -------- -------- -------- -------- --------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.368) (0.346) (0.329) (0.307) (0.309) (0.354) (0.385) (0.135)
Distributions from net
realized gains......... (0.023) (0.033) (0.008) (0.013) (0.228) (0.264) 0 0
-------- -------- -------- -------- -------- -------- -------- --------
Total
distributions........ (0.391) (0.379) (0.337) (0.320) (0.537) (0.618) (0.385) (0.135)
-------- -------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in Net Asset Value..... (0.245) 0.984 0.613 2.845 (0.972) 2.278 0.923 0.460
-------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value at end of
period................. $14.957 $15.202 $14.218 $13.605 $10.760 $11.732 $ 9.454 $ 8.531
-------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- --------
Total Investment Rate of
Return:**.............. 1.01 % 9.66 % 7.13 % 29.72 % (3.63 %) 30.93 % 15.44 % 7.35 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $664.5 $615.1 $433.5 $236.9 $104.5 $53.8 $36.0 $24.5
Ratio of expenses net of
reimbursement to
average net assets..... 0.42 % 0.42 % 0.46 % 0.47 % 0.60 % 0.69 % 0.78 % 0.45 %
Ratio of net investment
income to average net
assets................. 2.50 % 2.43 % 2.56 % 2.82 % 3.23 % 2.95 % 3.87 % 0.53 %
Portfolio turnover
rate................... 1.74 % 0.60 % 0.43 % 1.10 % 17.80 % 14.54 % 15.62 % 0.47 %
Number of shares
outstanding at end of
period (in millions)... 44.4 40.5 30.5 17.4 9.7 4.6 3.8 2.9
</TABLE>
<TABLE>
<CAPTION>
HIGH DIVIDEND STOCK
-----------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 02/19/88
TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period $15.655 $13.673 $13.209 $11.241 $12.254 $10.621 $10.132
-------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income.... 0.664 0.551 0.582 0.578 0.509 0.539 0.452
Net realized and
unrealized gains
(losses) on
investments............ (0.453) 2.459 0.723 2.430 (0.980) 1.841 0.684
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations 0.211 3.010 1.305 3.008 (0.471) 2.380 1.136
-------- -------- -------- -------- -------- -------- --------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.562) (0.501) (0.515) (0.542) (0.461) (0.462) (0.420)
Distributions from net
realized gains......... (0.820) (0.527) (0.326) (0.498) (0.081) (0.285) (0.227)
-------- -------- -------- -------- -------- -------- --------
Total
distributions........ (1.382) (1.028) (0.841) (1.040) (0.542) (0.747) (0.647)
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in Net Asset Value..... (1.171) 1.982 0.464 1.968 (1.013) 1.633 0.489
-------- -------- -------- -------- -------- -------- --------
Net Asset Value at end of
period................. $14.484 $15.655 $13.673 $13.209 $11.241 $12.254 $10.621
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Total Investment Rate of
Return:**.............. 1.44 % 22.28 % 10.14 % 27.50 % (3.73 %) 22.67 % 11.31 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $859.7 $602.8 $234.4 $106.9 $55.5 $34.9 $11.3
Ratio of expenses net of
reimbursement to
average net assets..... 0.52 % 0.54 % 0.57 % 0.57 % 0.60 % 0.74 % 0.64 %
Ratio of net investment
income to average net
assets................. 3.92 % 3.56 % 4.32 % 4.53 % 4.53 % 4.48 % 4.08 %
Portfolio turnover
rate................... 62.66 % 41.43 % 39.98 % 60.12 % 54.79 % 56.65 % 61.31 %
Number of shares
outstanding at end of
period (in millions)... 59.4 38.5 17.1 8.1 4.9 2.9 1.1
</TABLE>
All calculations are based on average month-end shares outstanding, where
applicable.
**Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.
B51
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
NATURAL RESOURCES
-----------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 05/01/88
TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period.... $15.562 $12.949 $12.450 $11.622 $12.705 $10.141 $ 9.910
-------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income.... 0.183 0.227 0.319 0.368 0.417 0.364 0.254
Net realized and
unrealized gains
(losses) on
investments............ (0.850) 3.004 0.588 0.821 (1.143) 3.216 0.274
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations........... (0.667) 3.231 0.907 1.189 (0.726) 3.580 0.528
-------- -------- -------- -------- -------- -------- --------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.150) (0.207) (0.309) (0.361) (0.336) (0.358) (0.252)
Distributions from net
realized gains......... (0.302) (0.411) (0.099) 0 (0.021) (0.658) (0.045)
-------- -------- -------- -------- -------- -------- --------
Total
distributions........ (0.452) (0.618) (0.408) (0.361) (0.357) (1.016) (0.297)
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in Net Asset Value..... (1.119) 2.613 0.499 0.828 (1.083) 2.564 0.231
-------- -------- -------- -------- -------- -------- --------
Net Asset Value at end of
period................. $14.443 $15.562 $12.949 $12.450 $11.622 $12.705 $10.141
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Total Investment Rate of
Return:**.............. (4.30 %) 25.15 % 7.30 % 10.30 % (5.76 %) 35.64 % 5.42 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $227.3 $158.8 $77.5 $62.6 $50.6 $17.9 $9.5
Ratio of expenses net of
reimbursement to
average net assets..... 0.61 % 0.60 % 0.72 % 0.68 % 0.75 % 0.86 % 0.58 %
Ratio of net investment
income to average net
assets................. 1.09 % 1.50 % 2.44 % 2.97 % 3.45 % 3.04 % 2.46 %
Portfolio turnover
rate................... 18.10 % 19.64 % 29.20 % 21.33 % 42.18 % 49.17 % 59.33 %
Number of shares
outstanding at end of
period (in millions)... 15.7 10.2 6.0 5.0 4.4 1.4 0.9
<CAPTION>
GLOBAL EQUITY
-----------------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 01/01/89 09/19/88
TO TO TO TO TO TO TO
12/31/94 12/31/93 12/31/92 12/31/91 12/31/90 12/31/89 12/31/88
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value at
beginning of period $14.639 $10.368 $10.792 $ 9.866 $11.547 $10.508 $ 9.818
-------- -------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income.... 0.028 0.023 0.051 0.096 0.203 0.079 0.052
Net realized and
unrealized gains
(losses) on
investments............ (0.744) 4.433 (0.419) 1.020 (1.802) 1.806 0.787
-------- -------- -------- -------- -------- -------- --------
Total from investment
operations........... (0.716) 4.456 (0.368) 1.116 (1.599) 1.885 0.839
-------- -------- -------- -------- -------- -------- --------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.019) (0.079) (0.056) (0.100) (0.067) (0.073) (0.149)
Distributions from net
realized gains......... (0.025) (0.106) 0 (0.090) (0.015) (0.773) 0
-------- -------- -------- -------- -------- -------- --------
Total
distributions........ (0.044) (0.185) (0.056) (0.190) (0.082) (0.846) (0.149)
-------- -------- -------- -------- -------- -------- --------
Net increase (decrease)
in Net Asset Value..... (0.760) 4.271 (0.424) 0.926 (1.681) 1.039 0.690
-------- -------- -------- -------- -------- -------- --------
Net Asset Value at end of
period................. $13.879 $14.639 $10.368 $10.792 $ 9.866 $11.547 $10.508
-------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- --------
Total Investment Rate of
Return:**.............. (4.89 %) 43.14 % (3.42 %) 11.39 % (12.91 %) 18.82 % 8.57 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $345.7 $129.1 $34.0 $34.3 $26.2 $29.4 $26.9
Ratio of expenses net of
reimbursement to
average net assets..... 1.23 % 1.44 % 1.87 % 1.62 % 1.67 % 1.47 % 0.42 %
Ratio of net investment
income to average net
assets................. 0.20 % 0.18 % 0.49 % 0.92 % 1.92 % 0.70 % 0.51 %
Portfolio turnover
rate................... 37.46 % 54.54 % 78.16 % 136.21 % 43.12 % 47.95 % 6.40 %
Number of shares
outstanding at end of
period (in millions)... 24.9 8.8 3.3 3.2 2.7 2.5 2.6
</TABLE>
All calculations are based on average month-end shares outstanding, where
applicable.
**Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.
B52
<PAGE>
NOTE 6: FINANCIAL HIGHLIGHTS (CONTINUED)
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES
-------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 05/01/89
TO TO TO TO TO TO
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>
Net Asset Value at
beginning of period.... $11.784 $11.094 $11.133 $10.146 $10.324 $10.017
-------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income.... 0.703 0.700 0.731 0.736 0.791 0.545
Net realized and
unrealized gains
(losses) on
investments............ (1.311) 0.678 (0.092) 0.847 (0.177) 0.613
-------- -------- -------- -------- -------- --------
Total from investment
operations........... (0.608) 1.378 0.639 1.583 0.614 1.158
-------- -------- -------- -------- -------- --------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.723) (0.642) (0.593) (0.596) (0.769) (0.489)
Distributions from net
realized gains......... 0.008 (0.046) (0.085) 0 (0.023) (0.362)
-------- -------- -------- -------- -------- --------
Total
distributions........ (0.715) (0.688) (0.678) (0.596) (0.792) (0.851)
-------- -------- -------- -------- -------- --------
Net increase (decrease)
in Net Asset Value..... (1.323) 0.690 (0.039) 0.987 (0.178) 0.307
-------- -------- -------- -------- -------- --------
Net Asset Value at end of
period................. $10.461 $11.784 $11.094 $11.133 $10.146 $10.324
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total Investment Rate of
Return:**.............. (5.16 %) 12.56 % 5.85 % 16.11 % 6.34 % 11.60 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $487.6 $540.1 $315.5 $95.0 $23.7 $17.0
Ratio of expenses net of
reimbursement to
average net assets..... 0.45 % 0.46 % 0.53 % 0.58 % 0.74 % 0.50 %
Ratio of net investment
income to average net
assets................. 6.30 % 5.91 % 6.58 % 6.97 % 7.86 % 5.06 %
Portfolio turnover
rate................... 34.19 % 18.59 % 80.71 % 127.18 % 379.45 % 208.86 %
Number of shares
outstanding at end of
period (in millions)... 46.6 45.8 28.3 8.5 2.3 1.6
<CAPTION>
ZERO COUPON BOND 2005
-------------------------------------------------------------
01/01/94 01/01/93 01/01/92 01/01/91 01/01/90 05/01/89
TO TO TO TO TO TO
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>
Net Asset Value at
beginning of period.... $12.677 $11.029 $10.874 $ 9.798 $10.457 $10.017
-------- -------- -------- -------- -------- --------
Income From Investment
Operations:
Net investment income.... 0.752 0.768 0.804 0.820 0.850 0.561
Net realized and
unrealized gains
(losses) on
investments............ (1.967) 1.623 0.207 1.143 (0.649) 0.598
-------- -------- -------- -------- -------- --------
Total from investment
operations........... (1.215) 2.391 1.011 1.963 0.201 1.159
-------- -------- -------- -------- -------- --------
Distributions to
Shareholders:
Distributions from net
investment income...... (0.715) (0.741) (0.792) (0.827) (0.860) (0.531)
Distributions from net
realized gains......... (0.003) (0.002) (0.064) (0.060) 0 (0.188)
-------- -------- -------- -------- -------- --------
Total
distributions........ (0.718) (0.743) (0.856) (0.887) (0.860) (0.719)
-------- -------- -------- -------- -------- --------
Net increase (decrease)
in Net Asset Value..... (1.933) 1.648 0.155 1.076 (0.659) 0.440
-------- -------- -------- -------- -------- --------
Net Asset Value at end of
period................. $10.744 $12.677 $11.029 $10.874 $ 9.798 $10.457
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Total Investment Rate of
Return:**.............. (9.61 %) 21.94 % 9.66 % 21.16 % 2.56 % 11.67 %
Ratios/Supplemental Data:
Net assets at end of
period (in millions)... $16.5 $14.5 $9.8 $8.7 $7.3 $7.2
Ratio of expenses net of
reimbursement to
average net assets..... 0.60 % 0.66 % 0.75 % 0.75 % 0.75 % 0.49 %
Ratio of net investment
income to average net
assets................. 6.53 % 6.17 % 7.46 % 8.08 % 8.83 % 5.25 %
Portfolio turnover
rate................... 5.94 % 3.62 % 11.48 % 5.76 % 4.36 % 59.90 %
Number of shares
outstanding at end of
period (in millions)... 1.5 1.1 0.9 0.8 0.7 0.7
</TABLE>
All calculations are based on average month-end shares outstanding, where
applicable.
**Total investment returns are at the portfolio level and exclude contract
specific charges which would reduce returns.
B53
<PAGE>
NOTE 7: RESTATEMENT
Subsequent to the issuance of the 1993 financial statements of the High Yield
Bond Portfolio ("the Portfolio"), Prudential management learned that
distributions of $1,366,447 received by the Portfolio had been erroneously
reported to the Series Fund and reflected in the Portfolio's 1993 financial
statements as interest income. These distributions, in fact, represented
payments for partial redemptions of the underlying security.
This error resulted in the following overstatements in the originally issued
1993 financial statements:
<TABLE>
<S> <C>
Investments $1,708,058
----------
----------
Interest Income $1,366,447
Net Unrealized Gain
on Investments 341,611
----------
Net Assets $1,708,058
----------
----------
Net Asset Value Per Share $.051
----------
----------
</TABLE>
The comparative 1993 financial information included in the statements of changes
in net assets of the Portfolio has been restated to correct for this error.
B54
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Shareholders and Board of Directors of The Prudential Series Fund, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments, of the Money Market, Bond, Common Stock,
Aggressively Managed Flexible, Conservatively Managed Flexible, Zero Coupon Bond
1995, Zero Coupon Bond 2000, Zero Coupon Bond 2005, High Yield Bond, Stock
Index, High Dividend Stock, Natural Resources, Government Securities and Global
Equity Portfolios of The Prudential Series Fund, Inc. as of December 31, 1994,
the related statements of operations for the year then ended and the statements
of changes in net assets for each of the two years in the period then ended.
These financial statements are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures included
confirmation of securities owned as of December 31, 1994, by correspondence with
the custodians and brokers; where replies were not received from brokers, we
performed other auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of each of the respective portfolios of The
Prudential Series Fund, Inc. as of December 31, 1994, the results of their
operations for the year then ended and the changes in their net assets for each
of the two years in the period then ended in conformity with generally accepted
accounting principles.
As discussed in Note 7, the 1993 financial statements of the High Yield Bond
Portfolio have been restated.
Deloitte & Touche LLP
Parsippany, New Jersey
February 10, 1995
B55
<PAGE>
(This page intentionally left blank.)
B56
<PAGE>
GRAPH DESCRIPTIONS
GRAPH 1: (Money Market Portfolio)
Rising Interest Rates Push Money Market Rates Higher.
Historical Yield Curve: For year ended December 31, 1993, the 3 month yield was
approximately 3%, curving upward to the 30 year yield at approximately 6.2%.
For year ended December 31, 1994, the 3 month yield was approximately 5.7%
curving upward to the 2 year yield at approximately 7.5%, then leveling out.
GRAPH 2: (Money Market Portfolio)
How Money Markets Fared Compared With Other Asset Classes.
1994 Investment Total Returns: U.S. Bonds-3.5%; U.S. Stocks 1.3%; Global Stocks
5.6%; U.S. Money Markets 3.8%.
GRAPH 3: (Bond Portfolio)
Graph represents the growth of $10,000 invested in the Bond Portfolio
compared with Lehman Aggregate Index and Lipper VIP Corporate Bond Average.
In the ten years ended December 31, 1994, an investment of $10,000 would have
a value of $24,088, $25,848, and $24,353, respectively.
GRAPH 4: (Government Securities Portfolio)
Graph represents the growth of $10,000 invested in the Government Securities
Portfolio compared with Lehman Government Index and Lipper VIP U.S. Government
Average. In the seven years ended December 31, 1994, an investment of $10,000
would have a value of $15,567, $15,901, and $15,457, respectively.
GRAPH 5: (Zero Coupon Bond 1995)
Graph represents the growth of $10,000 invested in the Zero Coupon Bond 1995
Portfolio compared with Lehman Government Index and Lipper VIP Target Maturity
Average. In the ten years ended December 31, 1994, an investment of $10,000
would have a value of $21,899, $19,801, and $21,133, respectively.
<PAGE>
Graph 6: (Zero Coupon Bond 2000)
Graph represents the growth of $10,000 invested in the Zero Coupon Bond 2000
Portfolio compared with Lehman Government Index and Lipper VIP Target Maturity
Average. In the ten years ended December 31, 1994, an investment of $10,000
would have a value of $24,251, $19,801, and $21,133, respectively.
Graph 7: (Zero Coupon Bond 2005)
Graph represents the growth of $10,000 invested in the Zero Coupon Bond 2005
Portfolio compared with Lehman Government Index and Lipper VIP Target Maturity
Average. In the seven years ended December 31, 1994, an investment of $10,000
would have a value of $16,773, $15,901, and $17,069, respectively.
Graph 8: (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
Lipper VIP Flex Average. In the ten years ended December 31, 1994, an
investment of $10,000 would have a value of $26,961, $38,269, $25,848, and
$29,766, respectively.
Graph 9: (Aggressively Managed Flexible Portfolio)
Graph represents the growth of $10,000 invested in the Aggressively Managed
Flexible Portfolio compared with S&P 500, Lehman Aggregate Index, and Lipper
VIP Flex Average. In the ten years ended December 31, 1994, an investment of
$10,000 would have a value of $30,187, $38,269, $25,848, and $29,766,
respectively.
Graph 10: (High Yield)
Graph represents the growth of $10,000 invested in the High Yield Bond
Portfolio compared with Lehman High Yield Index and Lipper VIP High Yield
Average. In the nine years ended December 31, 1994, an investment of $10,000
would have a value of $17,634, $19,867, and $19,065, respectively.
<PAGE>
Graph 11: (Stock Index Portfolio)
Graph 11 represents the growth of $10,000 invested in the Stock Index Portfolio
compared with the S&P 500 and Lipper VIP Growth and Income Average. In the nine
years ended December 31, 1994, and investment of $10,000 would have a value of
$24,066, $22,968, and $22,342, respectively.
Graph 12: (High Dividend Stock Portfolio)
Graph 12 represents the growth of $10,000 invested in the High Dividend Stock
Portfolio compared with the S&P 500 and Lipper VIP Equity Income Average. In
the eight years ended December 31, 1994, an investment of $10,000 would have a
value of $22,896, $21,335 and $19,428, respectively.
Graph 13: (Common Stock Portfolio)
Graph 13 represents the growth of $10,000 invested in the Common Stock
Portfolio compared with the S&P 500 and Lipper Growth Average. In the ten
years ended December 31, 1994, an investment of $10,000 would have a value of
$40,332, $38,269, and $34,760, respectively.
Graph 14: (Global Equity Portfolio)
Graph 14 represents the growth of $10,000 invested in the Global Equity
Portfolio compared with Morgan Stanley World Index and Lipper VIP Global
Average. In the eight years ended December 31, 1994, an investment of $10,000
would have a value of $16,452, $16,134, and $17,668, respectively.
Graph 15: (Natural Resources Portfolio)
Graph 15 represents the growth of $10,000 invested in the Natural Resources
Portfolio compared with the S&P 500 and Lipper VIP Natural Resources Average.
In the eight years ended December 31, 1994, an investment of $10,000 would
have a value of $19,102, $21,773, and $14,631, respectively.
<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
