<PAGE>
HORACE MANN FAMILY OF FUNDS
[PHOTO ARTWORK FOR GLOBE, HOUR GLASS & MAP APPEARS HERE]
SEMIANNUAL REPORT, JUNE 30, 1995
<PAGE>
HORACE MANN FAMILY OF FUNDS
HORACE MANN GROWTH FUND, INC.
HORACE MANN INCOME FUND, INC.
HORACE MANN BALANCED FUND, INC.
HORACE MANN SHORT - TERM INVESTMENT FUND, INC.
================================================================================
[ARTWORK APPEARS HERE]
PUT TIME ON YOUR SIDE
In life, timing is everything, and the person who takes the time to plan for the
long-term, is the one who gets ahead. Retirement security is a matter of
planning. By planning, you can have the assurance you want that you'll be self-
sufficient and secure during your retirement years.
At Horace Mann, we know everyone's retirement needs are different. That's why
we offer a variety of retirement planning products designed to meet your needs
now and in the future. Together, you and your Horace Mann representative can
design a retirement strategy that will help you attain your financial goals.
<PAGE>
DEAR SHAREHOLDER:
In this, our first letter to you as the newly elected chairman and president of
the Horace Mann Funds, we are pleased to report that the Company's family of
four funds - Growth, Income, Balanced and Short-Term - continues its strong
performance, despite the vagaries of the financial markets and the uncertainty
of worldwide economic conditions.
On an annualized basis, each of our four funds either outperformed or closely
mirrored their comparative market benchmarks on a five-year basis. This
achievement is of particular importance to our customers, who are long-term
investors in our annuity products backed by mutual funds.
Our two largest funds, Growth and Balanced, clearly outpaced their market
benchmarks for the five year period July 1, 1990 through June 30, 1995. During
the same period, both the Income and Short-Term funds performed almost evenly
with their market benchmarks. (See performance chart on page 6.)
Looking ahead, our focus will be to continue building on the solid, long-term
performance educators expect from Horace Mann variable annuities. While we
recognize the importance of short-term results, we know that our customers are
saving for retirement and are concerned about preservation of capital. Our goal
is to help you accumulate assets well in excess of inflation and, therefore,
help to provide you with secure retirement income.
We also recognize that the investment world is evolving, offering a broader
array of options and corresponding number of complexities. Through the
professional investment services of Wellington Management Company, we believe
that investors in our family of funds can keep pace. Wellington has served as
the investment advisor for each of the Horace Mann funds since 1989, and has
recorded a noteworthy performance for us over that period of time. We believe
that our relationship with Wellington has provided our investors with clear,
long-term benefits.
The same is true of our agents, who are experienced financial counselors.
Special services offered through our agents include individualized help with
retirement planning. Working with our educator customers, our agents project
individual state retirement benefits and help calculate the appropriate level of
additional savings each customer should place in a tax qualified annuity to help
ensure their secure retirement.
On behalf of all of the directors and officers of the Horace Mann Family of
Funds, we want to thank you for your continuing confidence. Through our
collective experience and initiative, we pledge to continue our commitment to
providing long-term security and financial results to our customers.
Sincerely
/s/ Larry K. Becker
Larry K. Becker
Chairman
Horace Mann Family of Funds
/s/ George J. Zock
George J. Zock
President
Horace Mann Family of Funds
3
<PAGE>
(THIS PAGE INTENTIONALLY LEFT BLANK.)
4
<PAGE>
AVERAGE ANNUAL TOTAL RETURN June 30, 1995
[LOGO] HORACE MANN ANNUITY ALTERNATIVES CONTRACTS (Unaudited)
===============================================================================
FOR ANNUITY ALTERNATIVES CONTRACT OWNERS
Average annual total returns for the period ended June 30, 1995 for the Annuity
Alternatives contracts are shown in the following table. FOR CONTRIBUTIONS WHICH
REMAINED INVESTED IN AN ANNUITY ALTERNATIVES CONTRACT, RETURNS ARE SHOWN IN THE
"WITHOUT REDEMPTION" COLUMNS. FOR CONTRACTS WHICH WERE SURRENDERED, RETURNS ARE
SHOWN IN THE "WITH REDEMPTION" COLUMNS. REDEMPTION HAS NO AFFECT ON THE VARIABLE
ACCOUNT RATES OF RETURN AFTER THE INITIAL FIVE-YEAR CONTRACT PERIOD.
<TABLE>
<CAPTION>
1 YEAR 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION/1/
WITHOUT WITH WITH OR WITHOUT WITH OR WITHOUT WITH OR WITHOUT
REDEMPTION REDEMPTION REDEMPTION REDEMPTION REDEMPTION
----------- ----------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Growth Fund.................. 15.05% 5.84% 11.03% 11.55% 11.39%
Income Fund.................. 8.39 -0.28 6.96 7.91 8.61
Balanced Fund................ 12.69 3.68 9.61 10.19 11.03
Short-Term Investment Fund.. 3.50 -4.87 3.04 4.29 4.72
</TABLE>
The average annual total rates of return assume contributions were made on the
first business day of the period indicated.
Total return measures the past performance of each Fund subaccount and does not
represent the actual experience of investments made by a particular contract
owner. The total return and principal value of an account will fluctuate. The
value of an account may be worth more or less than its original cost, when
redeemed, depending upon market fluctuations. Past performance does not
guarantee future results of the subaccounts.
Total returns for the variable portion of the Annuity Alternatives contracts
include a reduction for mutual fund expenses and contract charges of 1.35%
annually for mortality and expense risk. Annuity contracts issued prior to
January 1984 have mortality and expense charges or sales fees that differ from
those of the Annuity Alternatives contracts. Such other charges and fees do not
exceed those reflected in the table above.
During the first five contract years, redemption charges range from 2 to 8% for
the flexible premium contracts and 1 to 5% for single premium contracts. The
average annual total returns with redemption are calculated using flexible
premium redemption charges.
Annuity Alternatives contracts require a $25 annual maintenance charge on the
contract anniversary when the contract value is less than $10,000. This charge,
which is not reflected in the returns above, reduces total rates of return by
2.5% on a $1,000 investment or .5% on a $5,000 investment.
During 1994 and the first six months of 1995, commission credits were used to
pay expenses of the Growth Fund. The Balanced Fund's expenses were paid by
commission credit during 1994. Certain mutual fund expenses have been
subsidized (assumed and/or waived) since 1983 for the Income and Short-Term
Investment Funds. Certain Balanced Fund expenses were subsidized from 1983
through 1987. Subsidization and use of credits result in higher returns ranging
up to 1%, depending on the period subsidized for each Fund. There is no
guarantee that subsidization, and use of credits will continue in the future.
/1/ Since inception refers to January 31, 1983, the date the Horace Mann Funds
began serving as the underlying investment vehicle for the Annuity
Alternatives contracts offered by Horace Mann Life Insurance Company.
5
<PAGE>
AVERAGE ANNUAL TOTAL RETURN June 30, 1995
[LOGO] HORACE MANN FAMILY OF FUNDS (Unaudited)
===============================================================================
FOR GROWTH FUND PUBLIC SHAREHOLDERS AND PARTICIPANTS IN THE HORACE MANN EMPLOYEE
401(K) PLAN
Total average annualized returns for the period ended June 30, 1995 for the
Horace Mann Funds and their comparable benchmark indices are shown in the
following table:
<TABLE>
<CAPTION>
SINCE
1 YEAR 5 YEARS 10 YEARS INCEPTION/1/
------- -------- --------- -------------
<S> <C> <C> <C> <C>
Horace Mann Growth Fund..................... 16.66% 12.56% 13.07% 12.85%
S&P 500 Stock Index......................... 26.07 12.09 14.67 15.17
Horace Mann Income Fund..................... 9.85 8.41 9.38 10.09
Lehman Intermediate Gov't/Corp. Bond Index.. 10.37 8.76 9.10 9.88
Horace Mann Balanced Fund................... 14.24 11.11 11.69 12.54
Stock/Bond Composite/2/..................... 19.61 10.88 12.71 13.30
Horace Mann Short-Term Investment Fund...... 4.90 4.44 5.71 6.13
90-day Treasury Bills....................... 4.92 4.51 5.85 6.53
</TABLE>
Returns of the Horace Mann Funds in the above table are shown net of mutual fund
expenses. Certain mutual fund expenses have been subsidized (assumed and/or
waived) since 1983 for the Income and Short-Term Investment Funds. During 1994
and the first six months of 1995, commission credits were used to pay expenses
of the Growth Fund. The Balanced Fund's expenses were paid by commission credit
during 1994. Certain Balanced Fund expenses were subsidized from 1983 through
1987. Subsidization and use of credits result in higher returns ranging up to
1%, depending on the period subsidized for each Fund. There is no guarantee that
subsidization and use of credits will continue in the future.
The performance data quoted represents past performance, and does not guarantee
future results. The investment return and principal value of an investment will
fluctuate, and when redeemed, may be worth more or less than its original cost.
The benchmark indices indicated are unmanaged and have no expenses.
/1/ Since inception refers to January 31, 1983 the date the Horace Mann Funds
began serving as the underlying investment vehicle for the Annuity
Alternatives contracts offered by Horace Mann Life Insurance Company.
/2/ 60% S&P 500, 40% Lehman Brothers Intermediate Government/Corporate Bond
Index, rebalanced monthly.
6
<PAGE>
SEMIANNUAL REPORT
JUNE 30, 1995
================================================================================
HORACE MANN FAMILY OF FUNDS
HORACE MANN GROWTH FUND, INC.
HORACE MANN INCOME FUND, INC.
HORACE MANN BALANCED FUND, INC.
HORACE MANN SHORT-TERM INVESTMENT FUND, INC.
DIRECTORS OF THE FUNDS
A. THOMAS ARISMAN LARRY K. BECKER, CHAIRMAN A.L. GALLOP
HARRIET A. RUSSELL GEORGE J. ZOCK
OFFICERS OF THE FUNDS
GEORGE J. ZOCK WILLIAM J. KELLY ROGER FISHER
President Treasurer and Regulatory Controller
Compliance Officer
ANN CAPARR'OS LINDA L. SACCO DIANE M. BARNETT
Secretary and Assistant Secretary Assistant Treasurer &
Ethics Compliance Officer Tax Compliance Officer
Investment Adviser Business Manager
WELLINGTON MANAGEMENT COMPANY HORACE MANN INVESTORS, INC.
75 State Street One Horace Mann Plaza
Boston, MA 02109 Springfield, IL 62715-0001
Custodian
FIRST NATIONAL BANK OF BOSTON
150 Royall Street
Canton, MA 02021
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1995
HORACE MANN GROWTH FUND, INC. (Unaudited)
[LOGO] ========================================================================
[CHART APPEARS HERE]
Cash & Short-Term Investments.................... 4%
Common & Preferred Stock........................ 96%
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES (000)
--------- -------
<S> <C> <C>
COMMON STOCKS
AUTO/ACCESSORIES - 6.04%
Ford Motor Company..................... 126,000 $ 3,748
General Motors Corp.................... 55,500 2,602
Goodyear Tire & Rubber Co. (The)....... 209,000 8,621
-------
14,971
BANKS/FINANCIAL SERVICES - 5.87%
Bancorp Hawaii, Inc.................... 22,800 684
Bank of Boston Corp.................... 80,200 3,007
BankAmerica Corp....................... 129,500 6,815
Corestates Financial Corp.............. 71,700 2,500
Crestar Financial Corp................. 17,500 858
First Interstate Banccorp.............. 8,500 682
-------
14,546
BUILDING & CONSTRUCTION - 1.83%
Beazer Homes USA Inc.*................. 59,700 993
M/I Schottenstein Homes, Inc.*......... 99,000 866
Ryland Group Inc....................... 81,500 1,314
USG Corp.*............................. 57,600 1,368
-------
4,541
CHEMICALS - 4.07%
Air Products & Chemicals, Inc.......... 35,100 1,957
Betz Laboratories...................... 53,100 2,403
Du Pont (E.I.) de Nemours & Co., Inc... 24,000 1,650
Ferro Corp............................. 35,200 933
IMC Global Inc......................... 22,300 1,207
Vigoro Group........................... 47,000 1,951
-------
10,101
ENTERTAINMENT - 0.77%
King World Productions Inc.*........... 46,900 1,899
FOOD/GROCERY PRODUCTS - 1.38%
Flowers Industries, Inc................ 79,200 1,564
Interstate Bakeries Corp............... 112,500 1,856
-------
3,420
HEALTH CARE - 1.80%
Mallinckrodt Group..................... 80,700 2,865
US HealthCare Inc...................... 51,900 1,589
-------
4,454
INSURANCE - 7.76%
ACE Limited............................ 137,700 3,993
Aetna Life & Casualty Co............... 53,500 3,364
Allstate Corporation................... 86,000 2,548
Chubb Corp............................. 88,500 7,091
EXEL Limited........................... 16,800 874
Mercury General Corp................... 11,300 388
Old Republic International Corp........ 38,100 995
-------
19,253
IRON & STEEL - 0.36%
Bethlehem Steel Corp.*................. 54,800 891
MANUFACTURING (DIVERSIFIED) - 6.10%
Caterpillar Inc........................ 69,300 4,452
Cooper Industries Inc.................. 58,500 2,311
Johnson Controls, Inc.................. 60,300 3,407
Minnesota Mining & Manufacturing....... 86,800 4,969
-------
15,139
METALS & MINING - 6.52%
Alcan Aluminum Ltd..................... 111,500 3,373
Aluminum Co. of America................ 228,800 11,469
Reynolds Metals Co..................... 25,700 1,330
-------
16,172
OIL/GAS - 14.68%
Amerada Hess Corp...................... 48,300 2,361
Ashland................................ 64,300 2,258
Burlington Resources Inc............... 61,500 2,268
Camco International Capital Corp....... 53,200 1,244
Kerr-McGee Corp........................ 49,100 2,633
Noble Drilling Corp.*.................. 99,200 732
Oryx Energy Co.*....................... 64,600 888
Parker & Parsley Petroleum Co.......... 104,100 2,043
Seagull Energy Corp.*.................. 163,000 2,690
Tenneco Inc............................ 61,500 2,829
Total S.A. ADR......................... 82,200 2,486
Union Texas Petroleum Holdings Inc..... 124,700 2,635
Unocal Corp............................ 256,600 7,089
USX-Marathon Group..................... 215,200 4,250
-------
36,406
</TABLE>
See notes to the financial statements.
8
<PAGE>
STATEMENT OF INVESTMENTS (CONCLUDED) June 30, 1995
HORACE MANN GROWTH FUND, INC. (Unaudited)
[LOGO] ========================================================================
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES (000)
--------- --------
<S> <C> <C>
COMMON STOCKS (CONTINUED)
PAPER & WOOD PRODUCTS - 7.46%
International Paper Co................. 102,500 $ 8,789
Kimberly-Clark Corp.................... 52,400 3,137
Mead Corporation....................... 64,000 3,800
Temple-Inland Inc...................... 58,400 2,781
--------
18,507
PHOTOGRAPHY - 2.25%
Eastman Kodak Co....................... 91,900 5,571
RETAIL & FOOD STORES - 4.39%
May Department Stores Co............... 103,900 4,325
Penney (J.C.) Co, Inc.................. 106,000 5,088
Sears Roebuck & Co..................... 24,800 1,485
--------
10,898
TOBACCO - 1.24%
Universal Corp.(Va.)................... 146,300 3,072
TRANSPORTATION - 6.78%
Conrail Inc............................ 106,800 5,941
CSX Corporation........................ 33,000 2,479
Pittston Services Group................ 124,000 2,976
Trinity Industries..................... 63,300 2,103
Union Pacific Corp..................... 60,000 3,323
--------
16,822
UTILITIES/COMMUNICATION - 6.71%
AT & T Corp............................ 110,500 5,870
BCE Inc................................ 61,200 1,966
Bell Atlantic Corp..................... 49,800 2,789
COMSAT Corporation..................... 86,900 1,705
GTE Corp............................... 53,000 1,809
US West Inc............................ 60,000 2,497
--------
16,636
UTILITIES/OTHER - 9.34%
Entergy Corp........................... 148,100 3,573
General Public Utilities Corp.......... 144,400 4,296
New England Electric System............ 79,500 2,743
New York State Electric & Gas Corp..... 107,000 2,501
Niagara Mohawk Power Corp.............. 99,300 1,465
Pacific Gas & Electric Co.............. 150,100 4,353
Public Service Enterpise............... 43,000 1,193
SCE Corp............................... 65,100 1,115
Western Resources, Inc................. 62,000 1,914
--------
23,153
--------
TOTAL COMMON STOCKS.............. 95.35% 236,452
(cost $214,546,718)
CONVERTIBLE PREFERRED STOCK
Banks/Financial Services - 0.24%
Citicorp PERCS......................... 29,865 605
TOTAL COMMON AND
PREFERRED STOCKS................ 95.59% 237,057
(cost $214,987,228)
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
(000) (000)
--------- --------
<S> <C> <C>
SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENT
UBS Securities, Inc., 6.125%, 07/03/95,
(secured by $12,320,167, US Treasury
Bond, 9.875%, 11/15/15).................. $12,051 $ 12,051
------- --------
TOTAL SHORT-TERM
INVESTMENTS....................... 4.86% 12,051 12,051
--------
(cost $12,051,000)
TOTAL INVESTMENTS................. 100.45% 249,108
(cost $227,038,228)
LIABILITIES IN EXCESS OF CASH
AND OTHER ASSETS................. (0.45%) (1,127)
--------
NET ASSETS........................ 100.00% $247,981
========
</TABLE>
- ----------------
* Non-income producing during the six months ended June 30, 1995.
See notes to the financial statements.
The identified cost of investments owned at June 30, 1995 was the same for
federal income tax and book purposes.
9
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1995
[LOGO] HORACE MANN INCOME FUND, INC. (Unaudited)
===============================================================================
[CHART APPEARS HERE]
U.S. & Foreign Government & Agency Obligations........... 68%
Cash & Short-Term Investments............................ 3%
Corporate Bonds/Notes.................................... 29%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
(000) (000)
--------- ------
<S> <C> <C>
U.S. AND FOREIGN GOVERNMENT
AND AGENCY OBLIGATIONS
TREASURY BONDS/NOTES
6.125%, 07/31/96................. $1,400 $1,405
7.125%, 02/29/00................. 1,500 1,567
FEDERAL HOME LOAN BANK
(MORTGAGE BACKED SECURITIES)
7.310%, 06/16/04................. 350 366
FEDERAL HOME LOAN MORTGAGE
CORPORATION (MORTGAGE BACKED
SECURITIES)
9.500%, 03/01/01................. 65 68
9.500%, 06/01/01................. 37 38
9.500%, 08/01/01................. 21 22
9.500%, 10/01/01................. 22 24
7.000%, 11/01/03................. 67 66
8.000%, 12/01/11................. 21 21
FEDERAL NATIONAL MORTGAGE
ASSOCIATION (MORTGAGE BACKED
SECURITIES)
8.875%, 07/10/01................. 100 103
8.000%, 11/01/09................. 29 29
7.500%, 05/01/25................. 795 799
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (MORTGAGE BACKED
SECURITIES)
11.500%, 03/15/10................ 17 19
12.500%, 06/15/10................ 9 10
12.000%, 03/15/14................ 12 14
12.000%, 04/15/14................ 8 8
12.000%, 12/15/14................ 23 26
12.000%, 02/15/15................ 6 7
12.000%, 03/15/15................ 15 17
12.000%, 06/15/15................ 19 21
12.000%, 07/15/15................ 22 24
12.000%, 04/15/15................ 13 14
12.500%, 04/15/15................ 4 5
12.000%, 11/15/15................ 22 24
9.000%, 11/15/16................. 174 182
9.000%, 07/15/19................. 122 128
8.500%, 09/15/24................. 343 356
9.000%, 01/15/25................. 35 36
9.000%, 05/15/25................. 843 886
COLLATERALIZED MORTGAGE OBLIATION
(PLANNED AMORTIZATION CLASS)
FHLMC 1737-E PAC
6.000%, 12/15/17................. 220 214
FOREIGN (U.S.DOLLAR DENOMINATED)
Iceland Republic
6.125%, 02/01/04................. 200 190
------ ------
TOTAL U.S. AND FOREIGN GOVERNMENT
AGENCY OBLIGATIONS.........68.07% 6,514 6,689
(cost $6,541,176)
CORPORATE BONDS/NOTES
American Brands Inc.
5.25%, 07/15/95.................. 100 100
BankAmerica Corp.
6.85%, 03/01/03.................. 150 150
Boeing Co.
6.35%, 06/15/03.................. 200 197
BP America Inc. Euro
9.75%, 03/01/99.................. 100 110
Chrysler Financial
5.375%, 10/01/98................. 200 193
Citicorp
6.750%, 08/15/05................. 200 196
</TABLE>
See notes to the financial statements.
10
<PAGE>
STATEMENT OF INVESTMENTS (CONCLUDED) June 30, 1995
[LOGO] HORACE MANN INCOME FUND, INC. (Unaudited)
===============================================================================
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
(000) (000)
--------- ------
<S> <C> <C>
CORPORATE BONDS/NOTES (CONTINUED)
Du Pont (E.I.) de Nemours & Co., Inc.
9.15%, 04/15/00...................... $130 $ 144
Gannett Co.
5.85%, 05/01/00...................... 200 194
Hertz Corp.
7.00%, 04/15/01...................... 200 203
Penney (J.C.) Co., Inc.
5.375%, 11/15/98..................... 200 193
Pacific Gas and Electric Euro
12.00%, 01/09/00..................... 100 108
Southwestern Bell Telephone Co.
5.55%, 03/10/98...................... 100 98
World Savings & Loan Assn.
10.25%, 10/01/97..................... 100 107
ASSET BACKED
Ford Credit Trust 93-B
4.30%, 07/15/98...................... 74 73
GMAC Grantor Trust 92-D
5.55%, 05/15/97...................... 10 10
GMAC Grantor Trust 92-E
4.75%, 08/15/97...................... 23 23
Government Backed Trust
9.625%, 05/15/02..................... 125 138
IBM Credit Trust 93-1
4.55%, 11/15/00...................... 95 93
Nations Bank Credit Trust 93-2
6.00%, 12/15/05...................... 200 192
Premier Auto Trust 92-3
5.90%, 11/17/97..................... 19 19
Premier Auto Trust 92-4
5.05%, 01/15/98..................... 25 24
Premier Auto Trust 93-6 A2
4.65%, 11/02/99..................... 135 132
Premier Auto Trust 94-1
4.75%, 02/02/00..................... 200 195
----- ------
TOTAL CORPORATE BONDS/NOTES......29.43% 2,886 2,892
(cost $2,885,757)
SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENT
UBS Securities Inc., 6.125%, 07/03/95
(secured by $131,164 US Treasury
Bond, 11.75%, 02/15/01)............... 100 100
----- ------
TOTAL SHORT-TERM
INVESTMENTS.....................1.02% 100 100
(cost $100,000)
TOTAL INVESTMENTS................98.52% 9,681
(cost $9,526,933)
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES...........1.48% 145
------
NET ASSETS......................100.00% $9,826
======
</TABLE>
See notes to the financial statements.
The identified cost of investments owned at June 30, 1995 was the same for
federal income tax and book purposes.
11
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1995
HORACE MANN BALANCED FUND, INC. (Unaudited)
[LOGO] ========================================================================
[CHART APPEARS HERE]
Cash & Short-Term Investments........................ 3%
Corporate Bonds/Notes................................ 9%
U.S. & Foreign Government & Agency Obligations....... 25%
Common & Preferred Stock............................. 63%
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES (000)
--------- ------
<S> <C> <C>
COMMON STOCKS
AUTO/ACCESSORIES - 4.14%
Ford Motor Company..................... 65,600 $1,952
General Motors Corp.................... 32,200 1,509
Goodyear Tire & Rubber Co. (The)....... 111,200 4,587
------
8,048
BANKS/FINANCIAL SERVICES - 3.93%
Bancorp Hawaii, Inc.................... 10,800 324
Bank of Boston Corp.................... 44,200 1,657
BankAmerica Corp....................... 67,000 3,526
Boatmen's Bancshares, Inc.............. 1,000 35
CoreStates Financial Corp.............. 36,300 1,266
Crestar Financial Corp................. 8,500 417
First Interstate Bancorp............... 5,200 417
------
7,642
BUILDING & CONSTRUCTION - 1.16%
Beazer Homes USA Inc.*................. 29,000 482
M/I Schottenstein Homes, Inc.*......... 50,700 444
Ryland Group Inc....................... 38,900 627
USG Corp.*............................. 30,000 713
------
2,266
CHEMICALS - 2.72%
Air Products & Chemicals, Inc.......... 19,600 1,093
Betz Laboratories...................... 27,600 1,249
Du Pont (E.I.) de Nemours & Co., Inc... 12,500 859
Ferro Corp............................. 17,000 450
IMC Global Inc......................... 11,600 628
Vigoro Group........................... 24,200 1,004
------
5,283
ENTERTAINMENT -0.50%
King World Productions Inc.*........... 24,100 976
FOOD/GROCERY PRODUCTS - 0.91%
Flowers Industries, Inc................ 41,000 810
Interstate Bakeries Corp............... 58,100 959
------
1,769
HEALTH CARE - 1.17%
Mallinckrodt Group..................... 41,700 1,480
US HealthCare Inc...................... 25,700 787
------
2,267
INSURANCE - 5.10%
ACE Limited............................ 72,200 2,094
Aetna Life & Casualty Co............... 27,200 1,710
Allstate Corporation................... 45,800 1,357
Chubb Corp............................. 44,600 3,573
EXEL Limited........................... 10,100 525
Mercury General Corp................... 5,600 193
Old Republic International Corp........ 17,800 465
------
9,917
IRON & STEEL - 0.25%
Bethlehem Steel Corp.*................. 30,400 494
MANUFACTURING (DIVERSIFIED) - 3.98%
Caterpillar Inc........................ 34,600 2,223
Cooper Industries Inc.................. 30,100 1,189
Johnson Controls, Inc.................. 33,000 1,864
Minnesota Mining & Manufacturing....... 43,200 2,473
------
7,749
METALS & MINING - 4.29%
Alcan Aluminum Ltd..................... 57,400 1,736
Aluminum Co. of America................ 117,700 5,900
Reynolds Metals Co..................... 13,700 709
------
8,345
OIL/GAS - 9.89%
Amerada Hess Corp...................... 26,700 1,305
Ashland Oil Inc........................ 32,300 1,134
Burlington Resources Inc............... 33,600 1,239
Camco International Capital Corp....... 29,100 680
</TABLE>
See notes to the financial statements.
12
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED) June 30, 1995
[LOGO] HORACE MANN BALANCED FUND, INC. (Unaudited)
===============================================================================
<TABLE>
<CAPTION>
NUMBER OF MARKET
SHARES (000)
--------- ------
<S> <C> <C>
OIL/GAS (CONTINUED)
Kerr-McGee Corp...................... 26,900 $ 1,443
Noble Drilling Corp.*................ 48,400 357
Oryx Energy Co.*..................... 33,200 457
Parker & Parsley Petroleum Co........ 55,800 1,095
Seagull Energy Corp.*................ 87,200 1,439
Tenneco Inc.......................... 31,300 1,440
Total S.A. ADR....................... 38,600 1,168
Union Texas Petroleum Holdings Inc... 63,800 1,348
Unocal Corp.......................... 140,700 3,887
USX-Marathon Group................... 113,400 2,240
--------
19,232
PAPER & WOOD PRODUCTS - 4.84%
International Paper Co............... 49,700 4,262
Kimberly-Clark Corp.................. 27,500 1,647
Mead Corporation..................... 35,400 2,102
Temple-Inland Inc.................... 29,400 1,400
--------
9,411
PHOTOGRAPHY - 1.48%
Eastman Kodak Co..................... 47,500 2,880
RETAIL & FOOD STORES - 2.95%
May Department Stores Co. ........... 55,300 2,302
Penney (J.C.) Co. Inc................ 56,100 2,693
Sears Roebuck & Co................... 12,300 736
--------
5,731
TOBACCO - 0.76%
Universal Corp.(Va).................. 70,000 1,470
TRANSPORTATION - 4.47%
Conrail Inc.......................... 54,600 3,037
CSX Corporation...................... 16,500 1,239
Pittston Services Group.............. 64,400 1,546
Trinity Industries................... 33,300 1,105
Union Pacific Corp................... 31,800 1,761
--------
8,688
UTILITIES/COMMUNICATION - 4.31%
AT & T Corp.......................... 55,000 2,922
BCE Inc.............................. 29,900 960
Bell Atlantic Corp................... 25,200 1,411
COMSAT Corporation................... 46,000 903
GTE Corp............................. 27,500 938
US West Inc.......................... 30,000 1,249
--------
8,383
UTILITIES/OTHER - 6.34%
Entergy Corp......................... 78,300 1,889
General Public Utilities Corp........ 71,400 2,124
New England Electric System.......... 43,200 1,490
New York State Electric & Gas Corp... 68,700 1,606
Niagara Mohawk Power Corp............ 52,300 771
Pacific Gas & Electric Co............ 76,500 2,219
Public Service Enterprise............ 23,000 638
SCE Corp............................. 35,300 605
Western Resources, Inc............... 32,000 988
--------
12,330
--------
TOTAL COMMON STOCK...............63.19% 122,881
(cost $111,605,036)
CONVERTIBLE PREFERRED STOCK
BANKS/FINANCIAL SERVICES - 0.10%
Citicorp PERCS....................... 9,960 202
--------
TOTAL COMMON AND
PREFERRED STOCKS................63.29% $123,083
(cost $111,753,662)
PRINCIPAL
AMOUNT MARKET
(000) (000)
--------- ------
U.S. AND FOREIGN GOVERNMENT
AND AGENCY OBLIGATION
TREASURY BONDS/NOTES
6.125%, 07/31/96.................... $ 8,500 $ 8,531
5.375%, 05/31/98.................... 2,000 1,972
7.875%, 11/15/99.................... 1,200 1,284
7.125%, 02/29/00.................... 10,750 11,227
FEDERAL HOME LOAN BANK
(MORTGAGE BACKED SECURITIES)
6.67%, 04/06/01..................... 1,500 1,515
7.31%, 06/16/04..................... 1,650 1,727
</TABLE>
See notes to the financial statements.
13
<PAGE>
STATEMENT OF INVESTMENTS (CONTINUED) June 30, 1995
[LOGO] HORACE MANN BALANCED FUND, INC. (Unaudited)
===============================================================================
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
(000) (000)
--------- ------
<S> <C> <C>
U.S. AND FOREIGN GOVERNMENT
AND AGENCY OBLIGATION (CONTINUED)
FEDERAL HOME LOAN MORTGAGE
CORPORATION (MORTGAGE BACKED
SECURITIES)
9.500%, 07/01/01.................... $ 23 $ 24
9.500%, 08/01/01.................... 12 12
9.500%, 09/01/01.................... 32 33
9.500%, 10/01/01.................... 34 36
8.500%, 06/01/02.................... 58 60
9.250%, 11/01/02.................... 75 78
8.250%, 11/01/07.................... 103 105
8.750%, 05/01/08.................... 112 116
8.500%, 08/01/08.................... 144 148
9.000%, 09/01/08.................... 103 106
8.250%, 10/01/08.................... 93 94
8.000%, 09/01/09.................... 80 81
8.000%, 04/01/10.................... 146 148
FEDERAL NATIONAL MORTGAGE ASSOCIATION
(MORTGAGE BACKED SECURITIES)
8.000%, 07/01/98.................... 157 161
8.875%, 07/10/01.................... 500 513
8.750%, 02/01/10.................... 475 491
10.250%, 07/01/13................... 36 39
7.500%, 07/01/23.................... 431 433
7.500%, 04/01/24.................... 688 688
7.500%, 05/01/24.................... 216 217
7.500%, 06/01/24.................... 548 551
7.500%, 08/01/24.................... 684 687
7.500%, 09/01/24.................... 1,037 1,042
7.500%, 10/01/24.................... 756 759
7.500%, 02/01/25.................... 190 191
7.500%, 04/01/25.................... 1,410 1,415
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION (MORTGAGE BACKED
SECURITIES)
11.000%, 12/15/00................... 66 71
9.500%, 08/20/01.................... 91 94
9.500%, 10/20/01.................... 78 80
9.500%, 07/20/02.................... 104 108
9.500%, 12/20/02.................... 101 105
9.500%, 01/20/03.................... 67 70
9.500%, 02/20/03.................... 69 72
9.500%, 05/20/03.................... 109 113
9.500%, 08/20/03.................... 137 142
9.500%, 09/20/03.................... 154 160
9.500%, 11/20/03.................... 69 72
9.500%, 09/20/04.................... 54 56
8.250%, 05/15/05.................... 186 192
12.000%, 01/15/15................... 26 29
12.000%, 03/15/15................... 59 66
9.000%, 04/15/16.................... 85 89
9.000%, 05/15/16.................... 618 647
9.000%, 09/15/16.................... 215 225
9.000%, 01/15/17.................... 46 48
8.500%, 01/15/20.................... 53 55
8.500%, 02/15/21.................... 360 373
8.500%, 06/15/21.................... 243 252
8.500%, 08/15/21.................... 46 48
8.500%, 04/15/23.................... 322 334
9.000%, 07/15/24.................... 873 917
8.500%, 09/15/24.................... 888 923
9.000%, 09/15/24.................... 30 32
9.000%, 12/15/24.................... 667 700
9.000%, 01/15/25.................... 2,493 2,619
9.000%, 02/15/25.................... 117 123
9.000%, 04/15/25.................... 290 305
9.000%, 05/15/25.................... 1,973 2,072
COLLATERALIZED MORTGAGE OBLIGATION
(PLANNED AMORTIZATION CLASS)
FHLMC G42-D
8.000%, 08/17/17.................... 1,461 1,517
FOREIGN (U.S. DOLLAR DENOMINATED)
Iceland Republic
6.125%, 02/01/04.................... 1,000 949
------- -------
TOTAL U.S. AND FOREIGN GOVERNMENT
AND AGENCY OBLIGATIONS...........24.76% 46,893 48,142
(cost $46,991,993)
</TABLE>
See notes to the financial statements.
14
<PAGE>
STATEMENT OF INVESTMENTS (CONCLUDED) June 30, 1995
[LOGO] HORACE MANN BALANCED FUND, INC. (Unaudited)
===============================================================================
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
(000) (000)
--------- ------
<S> <C> <C>
CORPORATE BONDS/NOTES
American Brands, Inc.
5.25%, 07/15/95................ $ 500 $ 500
Associate Corp. NA
5.25%, 09/01/98................ 315 305
Associate Corp. NA
6.00%, 06/15/00................ 500 489
BankAmerica Corp.
6.85%, 03/01/03................ 500 499
Bankers Trust
8.25%, 05/01/05................ 1,500 1,586
Beneficial Corp.
12.875%, 08/01/13.............. 261 315
Boeing Co.
6.35%, 06/15/03................ 750 738
BP America Inc.
9.50%, 01/01/98................ 500 536
Chrysler Financial
5.375%, 10/15/98............... 1,000 965
Citicorp
6.75%, 08/15/05................ 1,000 981
Ford Motor Credit Corp.
7.50%, 06/15/04................ 200 208
Gannett Co.
5.85%, 05/01/00................ 750 727
Hertz Corp.
7.00%, 04/15/01................ 1,000 1,016
Pacific Gas and Electric Euro
12.00%, 01/09/00............... 400 433
Penney (J.C.) Co., Inc.
5.375%, 11/15/98............... 1,000 965
Southwestern Bell Telephone Co.
5.550%, 03/10/98............... 400 392
United Technologies Corp.
9.625%, 05/15/99............... 400 412
World Savings & Loan Assn.
10.25%, 10/01/97............... 400 429
ASSET BACKED
Ford Credit 93-B
4.30%, 07/15/98................ 186 183
GMAC Grantor Trust 92-D
5.55%, 05/15/97................ 49 49
GMAC Grantor Trust 92-E
4.75%, 08/15/97................ 118 117
IBM Credit Trust 93-1
4.55%, 11/15/00................ 473 467
Nations Bank Credit Trust 93-2
6.00%, 12/15/05................ 1,000 958
Premier Auto Trust 92-3
5.90%, 11/17/97................ 96 95
Premier Auto Trust 92-4
5.05%, 01/15/98................ 124 122
Premier Auto Trust 93-6 A2
4.65%, 11/02/99................ 675 659
Premier Auto Trust 94-1
4.75%, 02/02/00................ 2,000 1,952
Premier Auto Trust 94-2
6.35%, 05/02/00................ 1,000 1,003
------- --------
TOTAL CORPORATE BONDS/NOTES..8.79% 17,097 17,101
(cost $17,100,062)
SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENT
UBS Securities, Inc., 6.125%, 07/03/95
(secured by $5,983,598 US Treasury
Note, 9.375%, 04/15/96).......... 5,722 5,722
------- --------
TOTAL SHORT-TERM INVESTMENTS..2.94% 5,722 5,722
(cost $5,722,000)
TOTAL INVESTMENTS............99.79% 194,048
(cost $181,567,717)
CASH AND OTHER ASSETS IN
EXCESS OF LIABILITIES........0.21% 418
--------
NET ASSETS..................100.00% $194,466
========
</TABLE>
- --------------------
*Non-income producing during the six months ended June 30, 1995.
See notes to the financial statements.
The identified cost of investments owned at June 30, 1995 was the same for
federal income tax and book purposes.
15
<PAGE>
STATEMENT OF INVESTMENTS June 30, 1995
HORACE MANN SHORT-TERM INVESTMENT FUND, INC. (Unaudited)
[LOGO] ========================================================================
[CHART APPEARS HERE]
Cash.............................................. 12%
U.S. & Foreign Government & Agency Obligations.... 88%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT MARKET
(000) (000)
--------- ------
<S> <C> <C>
U.S. GOVERNMENT AND AGENCY OBLIGATIONS
FEDERAL HOME LOAN BANK DISCOUNT NOTE
5.91%, 07/10/95..................................... $ 120 $ 120
FEDERAL FARM CREDIT BANK DISCOUNT NOTES
5.90%, 07/05/95..................................... 130 130
5.97%, 07/11/95..................................... 10 10
5.87%, 07/17/95..................................... 45 45
5.96%, 07/26/95..................................... 45 45
FEDERAL HOME LOAN MORTGAGE CORP. DISCOUNT NOTES
5.85%, 07/31/95..................................... 32 32
5.71%, 08/07/95..................................... 45 45
6.04%, 08/25/95..................................... 56 55
FEDERAL NATIONAL MORTGAGE ASSOCIATION DISCOUNT NOTES
5.89%, 07/13/95..................................... 60 60
5.87%, 07/18/95..................................... 70 70
5.86%, 08/04/95..................................... 30 30
5.85%, 08/23/95..................................... 35 34
7.02%, 08/28/95..................................... 100 99
5.85%, 08/29/95..................................... 60 59
5.75%, 09/01/95..................................... 50 50
5.75%, 09/11/95..................................... 45 44
------ ------
TOTAL U.S. GOVERNMENT AND AGENCY OBLIGATIONS.... 63.78% 933 928
COMMERICAL PAPER
General Finance, 4.96%, 07/06/95.................... 50 50
General Electric Capital, 5.84%, 08/17/95........... 50 49
McKenna Triangle, 4.76%, 07/05/95................... 50 50
PHH Corporation, 5.10%, 07/07/95.................... 50 50
Prudential Funding Corporation, 5.85%, 08/18/95..... 50 50
Associate Corporation of America, 5.36%, 07/10/95... 50 50
CIT Group Holdings, 4.95%, 07/06/95................. 50 50
------ ------
TOTAL COMMERICAL PAPER.......................... 23.99% 350 349
------ ------
TOTAL INVESTMENTS (COST $1,277,217)............. 87.77% 1,283 1,277
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES.. 12.23% 178
------
NET ASSETS..................................... 100.00% $1,455
======
</TABLE>
See notes to the financial statements.
The identified cost of investments owned at June 30, 1995 was the same for
federal income tax and book purposes.
16
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES June 30, 1995
HORACE MANN FAMILY OF FUNDS (Unaudited)
[LOGO] ========================================================================
<TABLE>
<CAPTION>
GROWTH INCOME BALANCED SHORT-TERM
FUND FUND FUND FUND
------------ ---------- ------------ ----------
<S> <C> <C> <C> <C>
ASSETS
Investments at market value*..................... $249,108,062 $9,680,749 $194,048,076 $1,277,040
Cash............................................. 995 - 158 44,841
Dividends and interest receivable................ 595,479 144,825 1,253,161 -
Receivable for fund shares sold.................. 184,224 6,529 188,292 168,640
Receivable for investments sold.................. 117,343 3,799 76,056 -
Prepaid expenses................................. 8,386 916 6,482 -
------------ ---------- ------------ ----------
TOTAL ASSETS..................................... 250,014,489 9,836,818 195,572,225 1,490,521
------------ ---------- ------------ ----------
LIABILITIES
Payable-due to bank.............................. - 605 - -
Payable for fund shares redeemed................. 34,832 230 47,089 33,877
Payable for investments purchased................ 1,873,708 - 945,018 -
Accrued expenses................................. 125,247 10,071 114,186 1,771
------------ ---------- ------------ ----------
TOTAL LIABILITIES................................ 2,033,787 10,906 1,106,293 35,648
------------ ---------- ------------ ----------
NET ASSETS......................................... $247,980,702 $9,825,912 $194,465,932 $1,454,873
============ ========== ============ ==========
NET ASSETS CONSIST OF:
Par Value of Common Shares....................... 12,028,888 75,017 1,116,153 14,068
Paid in Surplus.................................. 206,041,315 9,370,371 175,012,280 1,411,657
Accumulated Undistributed Net Investment Income.. 3,088,243 296,926 3,538,742 29,288
Accumulated Undistributed Net Realized Gain(Loss)
on Investments.................................. 4,752,422 (70,218) 2,318,398 37
Net Unrealized Appreciation (Depreciation)
on Investments.................................. 22,069,834 153,816 12,480,359 (177)
------------ ---------- ------------ ----------
NET ASSETS......................................... $247,980,702 $9,825,912 $194,465,932 $1,454,873
============ ========== ============ ==========
NUMBER OF SHARES OUTSTANDING:
(Authorized 50,000,000 shares each; $1.00 par
value for Growth Fund; $.10 par value capital
stock for Income Fund, Balanced Fund, and
Short-Term Fund)................................. 12,028,888 750,171 11,161,529 140,673
============ ========== ============ ==========
NET ASSET VALUE PER SHARE.......................... $20.62 $13.10 $17.42 $10.34
============ ========== ============ ==========
*Cost of Investments............................... $227,038,228 $9,526,933 $181,567,717 $1,277,217
</TABLE>
See notes to the financial statements.
17
<PAGE>
For the Six Months Ended
STATEMENTS OF OPERATIONS June 30, 1995
[LOGO] HORACE MANN FAMILY OF FUNDS (Unaudited)
===============================================================================
<TABLE>
<CAPTION>
GROWTH INCOME BALANCED SHORT-TERM
FUND FUND FUND FUND
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends.............................................. $ 3,333,519 $ - $ 1,746,226 $ -
Interest & amortization................................ 422,040 325,694 2,285,349 33,579
----------- ---------- ----------- ----------
TOTAL INVESTMENT INCOME................................. 3,755,559 325,694 4,031,575 33,579
EXPENSES:
Investment advisory and related fees................... 388,242 12,292 276,070 750
Management fees........................................ 235,850 10,116 185,180 1,188
Fund pricing fees...................................... 13,313 2,646 10,934 2,281
Professional fees...................................... 13,273 8,447 13,273 3,708
Custodian fees......................................... 22,325 5,792 24,735 2,986
Transfer agent fee..................................... 13,720 24 24 24
Shareholder reports.................................... 3,299 62 691 -
Directors' fees and expenses........................... 1,719 1,719 1,719 1,719
Other expenses......................................... 18,282 232 15,354 225
Insurance expenses..................................... 12,150 1,077 9,688 415
----------- ---------- ----------- ----------
722,173 42,407 537,668 13,296
----------- ---------- ----------- ----------
Less management fees waived............................ - (10,116) - (1,188)
Less expenses paid by Horace Mann Investors............ - (2,646) - (7,278)
Less expenses paid by commission credits............... (35,637) - - -
----------- ---------- ----------- ----------
TOTAL NET EXPENSES..................................... 686,536 29,645 537,668 4,830
----------- ---------- ----------- ----------
NET INVESTMENT INCOME.................................. 3,069,023 296,049 3,493,907 28,749
----------- ---------- ----------- ----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments:
Proceeds from sales................................... 66,004,787 4,568,419 60,620,312 1,996,965
Cost of securities sold............................... 61,338,786 4,500,241 58,329,284 1,996,908
----------- ---------- ----------- ----------
NET REALIZED GAIN...................................... 4,666,001 68,178 2,291,028 57
Unrealized appreciation (depreciation) of investments:
Beginning of period................................... (5,276,008) (302,098) (5,263,648) (284)
End of period......................................... 22,069,834 153,816 12,480,359 (177)
----------- ---------- ----------- ----------
UNREALIZED APPRECIATION FOR THE PERIOD................. 27,345,842 445,914 17,744,007 107
----------- ---------- ----------- ----------
NET GAIN ON INVESTMENTS................................ 32,011,843 524,092 20,035,035 164
----------- ---------- ----------- ----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS......................................... $35,080,866 $ 820,141 $23,528,942 $ 28,913
=========== ========== =========== ==========
</TABLE>
See notes to the financial statements.
18
<PAGE>
For the Six Months Ended
STATEMENTS OF CHANGES IN NET ASSETS June 30, 1995 (Unaudited)
[LOGO] HORACE MANN FAMILY OF FUNDS and the Year Ended December 31, 1994
================================================================================
<TABLE>
<CAPTION>
GROWTH FUND INCOME FUND BALANCED FUND SHORT-TERM FUND
-------------------------- ---------------------- -------------------------- ----------------------
06/30/95 12/31/94 06/30/95 12/31/94 06/30/95 12/31/94 06/30/95 12/31/94
6 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS 6 MONTHS 12 MONTHS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
Operations:
Net investment income.... $ 3,069,023 $ 4,633,805 $ 296,049 $ 546,558 $ 3,493,907 $ 5,412,433 $ 28,749 $ 42,191
Net realized short-term
gain (loss) on
investments............. 2,006,600 5,618,163 65,350 (150,531) 1,396,465 1,772,739 57 (19)
Net realized long-term
gain on investments..... 2,659,401 11,667,280 2,828 12,149 894,563 5,270,846 - -
Net increase (decrease)
in unrealized
appreciation............ 27,345,842 (23,106,773) 455,914 (619,886) 17,744,007 (14,444,485) 107 (231)
------------ ------------ ---------- ---------- ------------ ------------ ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS......... 35,080,866 (1,187,525) 820,141 (211,710) 23,528,942 (1,988,467) 28,913 41,941
------------ ------------ ---------- ---------- ------------ ------------ ---------- ----------
DIVIDENDS TO SHAREHOLDERS
FROM:
Net investment income.... - (4,631,244) - (550,014) - (5,400,025) - (41,965)
Net realized short-term
gain from investment
transactions............ - (5,625,272) - (293) - (1,781,006) - (11)
Net realized long-term
gain from investment
transactions............ - (11,689,359) - (367) - (5,287,975) - -
------------ ------------ ---------- ---------- ------------ ------------ ---------- ----------
Decrease in net assets
resulting from
dividends............... - (21,945,875) - (550,674) - (12,469,006) - (41,976)
------------ ------------ ---------- ---------- ------------ ------------ ---------- ----------
FROM FUND SHARE
TRANSACTIONS:
Proceeds from shares
sold.................... 20,092,325 40,423,151 1,002,033 2,121,796 19,511,061 42,208,931 5,293,252 4,954,081
Net asset value of shares
issued upon reinvestment
of dividends and capital
gains distributions.... - 20,210,696 - 443,428 - 10,650,675 - 27,818
------------ ------------ ---------- ---------- ------------ ------------ ---------- ----------
20,092,325 60,633,847 1,002,033 2,565,224 19,511,061 52,859,606 5,293,252 4,981,899
Cost of shares redeemed.. 9,295,779 13,776,416 1,255,616 1,952,760 9,388,850 9,962,967 4,980,865 4,978,263
------------ ------------ ---------- ---------- ------------ ------------ ---------- ----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM FUND SHARE
TRANSACTIONS............ 10,796,546 46,857,431 (253,583) 612,464 10,122,211 42,896,639 312,387 3,636
------------ ------------ ---------- ---------- ------------ ------------ ---------- ----------
TOTAL INCREASE (DECREASE).. 45,877,412 23,724,031 566,558 (149,920) 33,651,153 28,439,166 341,300 3,601
NET ASSETS:
Beginning of period...... 202,103,290 178,379,259 9,259,354 9,409,274 160,814,779 132,375,613 1,113,573 1,109,972
------------ ------------ ---------- ---------- ------------ ------------ ---------- ----------
End of period............ $247,980,702 $202,103,290 $9,825,912 $9,259,354 $194,465,932 $160,814,779 $1,454,873 $1,113,573
============ ============ ========== ========== ============ ============ ========== ==========
Undistributed net
investment income......... $ 3,088,243 $ 19,220 $ 296,926 $ 877 $ 3,538,742 $ 44,835 $ 29,288 $ 539
============ ============ ========== ========== ============ ============ ========== ==========
</TABLE>
See notes to the financial statements.
19
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS June 30, 1995
[LOGO] HORACE MANN FAMILY OF FUNDS (Unaudited)
===============================================================================
1. BUSINESS ORGANIZATION - Horace Mann Growth Fund, Inc. ("Growth Fund") was
incorporated on May 21, 1957. Horace Mann Income Fund, Inc. ("Income Fund"),
Horace Mann Balanced Fund, Inc. ("Balanced Fund"), and Horace Mann Short-Term
Investment Fund, Inc. ("Short-Term Fund") each were organized on September 22,
1982, and on January 31, 1983, each of these funds sold 10,000 shares of $.10
par value capital stock to Horace Mann Life Insurance Company ("HMLIC") for
$100,000. The funds listed above collectively are referred to as the "Funds".
2. SIGNIFICANT ACCOUNTING POLICIES:
A. SECURITY VALUATION - A security listed or traded on an exchange is valued
at its last sales price on the exchange where it is principally traded. In
the absence of a current quotation, the security is valued at the mean
between the last bid and asked prices on that exchange. Securities traded
over-the-counter are valued at the last current bid price. Debt securities
that have a remaining maturity of 60 days or less are valued at cost, plus or
minus any unamortized premium or discount. In the event market quotations
would not be available, securities would be valued at fair value as
determined in good faith by the Board of Directors; no such securities were
owned by the Funds at June 30, 1995.
B. SECURITY TRANSACTIONS AND INVESTMENT INCOME - Security transactions are
recorded on the trade date. Dividend income is recorded on the ex-dividend
date. Interest income including level yield, premium and discount
amortization is recorded on the accrual basis. Securities gains and losses
are determined on the basis of identified cost.
C. FEDERAL INCOME TAXES - Since it is the Funds' policy to comply with the
provisions of the Internal Revenue Code applicable to regulated investment
companies and to distribute all taxable income to their shareholders, no
provision has been made for federal income tax or excise taxes. Dividends and
distributions payable to shareholders are recorded by the Funds on the record
date. The Income and Short-Term Funds intend to utilize provisions of the
federal income tax laws which allow them to carry realized capital losses
forward for eight years following the year of the loss and offset such losses
against any future realized capital gains. At December 31, 1994, the Income
and Short-Term Funds have accumulated capital loss carry forwards for tax
purposes of $138,396 and $20, respectively, which will expire on December 31,
2002.
3. FUND INVESTMENT OBJECTIVES:
A. GROWTH FUND - primary, long-term capital growth; secondary, conservation
of principal and production of income.
B. INCOME FUND - primary, maximization of current income consistent with
prudent investment risks; secondary, preservation of capital.
C. BALANCED FUND - realization of high long-term total rate of return
consistent with prudent investment risks.
D. SHORT-TERM FUND - primary, realize maximum current income to the extent
consistent with liquidity; secondary, preservation of principal.
20
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) June 30, 1995
[LOGO] HORACE MANN FAMILY OF FUNDS (Unaudited)
===============================================================================
4. OPERATING POLICIES:
A. REPURCHASE AGREEMENTS - The Funds, through their custodian, receive
delivery of the underlying securities, whose market value is required to be
at least 102% of the resale price at the time of purchase. Wellington
Management Company, the Funds' investment adviser, is responsible for
assuring that the value of these underlying securities remains at least equal
to their sale price.
B. ASSET BACKED SECURITIES - These securities are secured by installment
loans or leases or by revolving lines of credit. They usually include credit
enhancements that limit investors exposure to the underlying credit. These
securities are valued on the basis of the timing and certainty of the cash
flows compared to investments with similar durations.
C. PERCS(PREFERRED EQUITY REDEMPTION CUMULATIVE STOCK) - These securities
provide a fixed dividend and are normally convertible by the issuer into one
share of common stock. These securities are valued on the basis of the bid
price available from brokers.
D. COLLATERALIZED MORTGAGE OBLIGATIONS - (PAC), (Planned Amortization
Class) -These securities have a pre-determined schedule for principal
repayment coupled with an enhanced degree of cash-flow certainty. A PAC
security is a specific class of mortgages which usually carry the most stable
cash flows and the lowest amount of prepayment risk. These securities are
valued on the basis of the timing and certainty of the cash flows compared to
investments with similar durations.
E. COMMISSION CREDITS - Wellington Management Company, the Funds' investment
adviser, seeks the best price and execution on each transaction and
negotiates commission rates solely on the execution requirements of each
trade. Occasionally, they place, under a directed brokerage arrangement,
common stock trades with a broker/dealer who credits to the Funds part of the
commissions paid. The use of these commission credits is left to the
discretion of the Funds' management. In 1995, the commission credits were
primarily used to pay expenses associated with obtaining portfolio valuation
services for the Growth Fund.
5. FUND SHARE TRANSACTIONS - The Funds are registered as diversified, open-end
management investment companies under the Investment Company Act of 1940. Shares
are presently offered only to the HMLIC Separate Account and the HMLIC 401K
Separate Account for the Income Fund, Balanced Fund, and Short-Term Fund. The
Growth Fund's shares may be purchased by the separate accounts of HMLIC, by
certain tax-qualified trusteed retirement plans, and by the general public in
the case of reinvestment of dividends and distributions in accordance with
Revenue Ruling 82-55.
21
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) June 30, 1995
[LOGO] HORACE MANN FAMILY OF FUNDS (Unaudited)
===============================================================================
Transactions in capital stock for the six months ended June 30, 1995 and the
year ended December 31, 1994 were:
<TABLE>
<CAPTION>
GROWTH FUND INCOME FUND BALANCED FUND SHORT-TERM
------------ ------------ -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6/30/95 1994 6/30/95 1994 6/30/95 1994 6/30/95 1994
--------- --------- -------- -------- --------- --------- -------- --------
Shares sold................. 1,056,246 2,003,521 80,253 165,517 1,199,935 2,517,999 517,549 479,077
Shares issued to
shareholders in
reinvestment
of dividends and
distributions............ -- 1,150,951 -- 36,891 -- 700,242 -- 2,763
Shares redeemed............. (486,637) (680,037) (100,591) (152,384) (578,737) (593,492) (487,391) (481,511)
--------- --------- -------- -------- --------- --------- -------- --------
Net increase (decrease)..... 569,609 2,474,435 (20,338) 50,024 621,198 2,624,749 30,158 329
========= ========= ======== ======== ========= ========= ======== ========
</TABLE>
6. TRANSACTIONS WITH AFFILIATES - Horace Mann Educators Corporation ("HMEC") is
the parent company of Horace Mann Investors, Inc. ("Investors") and Horace Mann
Service Corporation ("HMSC") and indirectly owns HMLIC. Collectively these
companies are referred to as Horace Mann.
Pursuant to management agreements between the Funds and Investors, Investors
receives a monthly management fee based on a pro rata share from each Fund equal
to 0.25% of the aggregate average net assets of the Funds up to $100,000,000 and
0.20% of such assets exceeding that amount. Investors also serves as the
principal underwriter and distributor of the HMLIC Separate Account. Investors'
management fee is reduced by the amount, if any, that the total annual expenses
of any Fund (exclusive of taxes, interest, extraordinary items and brokers'
commissions and other charges related to the purchase and sale of portfolio
securities) exceed 1.5% of the first $30,000,000 of the average daily net assets
and 1% of the average daily net assets in excess of $30,000,000 of that Fund.
The pro rata share is determined by the relative net asset values for each Fund.
For the six months ended June 30, 1995, the Growth Fund paid $235,850 and the
Balanced Fund paid $185,180 for management fees to Investors. During the same
period, Investors waived the management fees for the Income Fund and Short-Term
Fund.
Investors paid expenses for advisory fees, professional fees, insurance fees,
and other taxes and fees for the six months ended June 30, 1995 of $7,278 for
the Short-Term Fund. Investors paid expenses for pricing and accounting of
$2,646 for the Income Fund for the six months ended June 30, 1995.
22
<PAGE>
NOTES TO THE FINANCIAL STATEMENTS (CONCLUDED) June 30, 1995
[LOGO] HORACE MANN FAMILY OF FUNDS (Unaudited)
===============================================================================
Transfer and dividend disbursing agent services are provided by HMSC on a per
share basis for the Growth Fund and on a per account basis for Income, Balanced
and Short-Term Funds. The transfer agent fees for the six months ended June 30,
1995 were $13,720 for the Growth Fund and $24 each for the Income, Balanced and
Short-Term Funds.
Outside directors were compensated $150 per diem for each Board meeting
attended. No compensation is paid to interested officers and directors (those
who are also officers and/or directors of Horace Mann). For the six months ended
June 30, 1995, the per diem fees, excluding travel expenses, for outside
directors totaled $600 for each Fund.
7. TRANSACTIONS WITH INVESTMENT ADVISER - Pursuant to the investment advisory
agreements with Wellington Management Company (WMC), effective November 1, 1989,
the adviser receives a fee based on the Funds' monthly average net assets as
follows: Growth Fund, 0.400% on the initial $100,000,000 and 0.300% over
$100,000,000; Income Fund, 0.250% on the initial $100,000,000, 0.200% on the
next $100,000,000 and 0.150% over $200,000,000; Balanced Fund, 0.350% on the
initial $100,000,000, 0.300% on the next $50,000,000, and 0.250% over
$150,000,000; Short-Term Fund, 0.125% on the initial $100,000,000, 0.100% on the
next $100,000,000 and 0.075% over $200,000,000. Effective November 1, 1993,
Horace Mann Growth Fund and Horace Mann Balanced Fund negotiated a reduced fee
schedule with WMC for investment advisory services. The new fee schedule is as
follows: Growth Fund, 0.400% on the initial $100,000,000, 0.300% on the next
$100,000,000 and 0.250% over $200,000,000; Balanced Fund, 0.325% on the initial
$100,000,000, 0.275% on the next $100,000,000, 0.225% on the next $300,000,000
and 0.200% over $500,000,000. No changes were made to the fee schedules in
effect on November 1, 1989 for the Income and Short-Term Funds.
8. INVESTMENT TRANSACTIONS - Investment transactions, excluding short-term
investments, for the six months ended June 30, 1995 are:
<TABLE>
<CAPTION>
GROWTH FUND INCOME FUND BALANCED FUND SHORT-TERM
----------- ----------- ------------- ----------
<S> <C> <C> <C> <C>
Purchases............ $75,110,260 $5,346,537 $75,688,989 $ --
=========== ========== =========== ==========
Proceeds from sales.. $66,004,787 $4,568,419 $60,620,312 $ --
=========== ========== =========== ==========
</TABLE>
The following table is based on the difference between cost and market value of
securities owned by each Fund at June 30, 1995.
<TABLE>
<CAPTION>
GROWTH FUND INCOME FUND BALANCED FUND SHORT-TERM
------------ ------------ -------------- -----------
<S> <C> <C> <C> <C>
Aggregate gross unrealized appreciation.... $26,090,836 $203,473 $14,807,753 $ 8
Aggregate gross unrealized depreciation.... (4,021,002) (49,657) (2,327,394) (185)
----------- -------- ----------- -----
Net unrealized appreciation(depreciation).. $22,069,834 $153,816 $12,480,359 $(177)
=========== ======== =========== =====
</TABLE>
23
<PAGE>
GROWTH FUND
FINANCIAL HIGHLIGHTS
[LOGO] ========================================================================
<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ---------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
-------- -------- -------- -------- -------- ------- -------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
- --------------
NET ASSET VALUE, BEGINNING
OF PERIOD................. $ 17.64 $ 19.85 $ 19.49 $ 19.15 $ 16.64 $ 18.88 $ 17.30 $ 16.00 $ 21.29 $ 25.85 $ 23.06
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income.... 0.26 0.49 0.54 0.53 0.60 0.70 0.56 0.42 0.50 0.49 0.66
Net Gains (Losses) on
Securities -- realized
and unrealized.......... 2.72 (0.57) 3.32 1.31 3.76 (1.74) 4.58 1.37 0.74 2.28 4.85
-------- -------- -------- -------- -------- ------- -------- ------- ------- ------- -------
Total Income (Loss) From
Investment Operations... 2.98 (0.08) 3.86 1.84 4.36 (1.04) 5.14 1.79 1.24 2.77 5.51
LESS DISTRIBUTIONS:
From net investment
income.................. - 0.45 0.52 0.51 0.60 0.70 0.62 0.40 0.51 1.17 0.59
From net realized gains.. - 1.68 2.98 0.99 1.25 0.50 2.94 0.09 6.02 6.16 2.13
-------- -------- -------- -------- -------- ------- -------- ------- ------- ------- -------
Total Distributions........ - 2.13 3.50 1.50 1.85 1.20 3.56 0.49 6.53 7.33 2.72
NET ASSET VALUE,
END OF PERIOD............. $ 20.62 $ 17.64 $ 19.85 $ 19.49 $ 19.15 $ 16.64 $ 18.88 $ 17.30 $ 16.00 $ 21.29 $ 25.85
======== ======== ======== ======== ======== ======= ======== ======= ======= ======= =======
TOTAL RETURN............... 16.89% (0.35%) 19.74% 9.59% 26.50% (5.48%) 29.88% 11.23% 6.23% 11.68% 25.99%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets (000's omitted),
End of Period............. $247,981 $202,103 $178,379 $140,257 $124,140 $97,610 $102,956 $86,755 $81,159 $77,630 $75,429
Ratio of Net Expenses to
Average Net Assets........ 0.31% 0.67% 0.69% 0.73% 0.76% 0.78% 0.64% 0.64% 0.67% 0.69% 0.68%
Ratio of Net Investment
Income to Average Net
Assets.................... 1.37% 2.38% 2.48% 2.65% 3.13% 3.86% 2.69% 2.41% 2.06% 1.94% 2.74%
Portfolio Turnover Rate.... 31.26% 69.42% 47.39% 31.78% 51.01% 52.97% 71.25% 41.57% 86.50% 52.88% 28.12%
Ratio to Average Net Assets
before commission credits,
waived and reimbursed
expenses:
Ratio of Gross Expenses.... 0.32% 0.69% 0.69% 0.73% 0.76% 0.78% 0.64% 0.64% 0.67% 0.69% 0.68%
Ratio of Net Investment
Income.................... 1.36% 2.36% 2.48% 2.65% 3.13% 3.86% 2.69% 2.41% 2.06% 1.94% 2.74%
</TABLE>
The "Net Investment Income" per share and the "Net gains(losses) on Securities-
realized and unrealized" per share represent a proportionate share respective to
the increase in net assets as presented in the Statement of Operations.
The Fund's investment adviser was changed effective November 1, 1989.
The total return is determined by the ratio of ending net asset value to
beginning net asset value, adjusted for reinvestment of dividends from net
investment income and net realized capital gains.
If you are an annuity contract owner, the above total return does not reflect
expenses that apply to the separate account or related policies. The inclusion
of these charges would reduce the total return figures for all periods shown.
24
<PAGE>
INCOME FUND
[LOGO] FINANCIAL HIGHLIGHTS
===============================================================================
<TABLE>
<CAPTION>
(UNAUDITED) YEAR ENDED DECEMBER 31,
6 MONTHS ENDED
JUNE 30, ------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------ ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
- --------------
NET ASSET VALUE,
BEGINNING OF PERIOD...... $12.02 $ 13.06 $12.95 $12.92 $12.26 $12.35 $11.64 $11.59 $13.96 $13.04 $11.21
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income.... 0.39 0.75 0.82 0.94 1.12 1.14 1.04 1.00 1.23 1.44 1.09
Net Gains(Losses) on
Securities-realized and
unrealized.............. 0.69 (1.04) 0.23 (0.01) 0.71 (0.21) 0.75 (0.11) (1.32) 0.71 1.26
------ ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Income(Loss) From
Investment Operations.. 1.08 (0.29) 1.05 0.93 1.83 0.93 1.79 0.89 (0.09) 2.15 2.35
LESS DISTRIBUTIONS:
From net investment
income.................. - 0.75 0.75 0.87 1.17 1.02 0.96 0.84 2.28 1.21 0.52
From net realized gains.. - - 0.19 0.03 - - 0.12 - - 0.02 -
------ ------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions..... - 0.75 0.94 0.90 1.17 1.02 1.08 0.84 2.28 1.23 0.52
NET ASSET VALUE,
END OF PERIOD............. $13.10 $ 12.02 $13.06 $12.95 $12.92 $12.26 $12.35 $11.64 $11.59 $13.96 $13.04
====== ======= ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN............... 8.99% (2.21)% 8.07% 7.20% 14.93% 7.58% 15.43% 7.64% (0.62)% 17.33% 21.86%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets (000's omitted),
End of Period............. $9,826 $ 9,259 $9,409 $7,668 $6,396 $5,552 $4,457 $3,390 $2,567 $1,170 $ 272
Ratio of Net Expenses
to Average Net Assets..... 0.31% 0.61% 0.41% 0.19% 0.17% 0.20% 0.29% 0.24% 0.14% 0.03% 0.02%
Ratio of Net Investment
Income to Average
Net Assets................ 3.11% 5.85% 5.92% 6.94% 8.62% 8.86% 8.13% 7.97% 7.96% 7.65% 9.85%
Portfolio Turnover Rate.... 51.76% 205.35% 74.16% 35.11% 44.82% 62.40% 92.94% 174.32% 53.28% 8.17% 8.66%
Ratio to Average Net Assets
before commission credits,
waived and reimbursed
expenses:
Ratio of Gross Expenses.... .44% 0.92% 0.87% 1.21% 1.49% 1.64% 1.52% 0.92% 0.87% 0.60% 0.44%
Ratio of Net
Investment Income......... 2.98% 5.54% 5.46% 5.92% 7.30% 7.42% 6.90% 7.29% 7.23% 7.08% 9.43%
</TABLE>
Equalization-Through December 31, 1987, the Income Fund followed the accounting
practice known as equalization, by which a portion of the proceeds from sales
and cost of redemptions of Fund shares was credited or charged to undistributed
income. Effective December 31, 1987 equalization accounting was discontinued and
the cumulative net equalization credits were paid as dividends from net
investment income and equalization credits. Net asset values was not affected by
this change.
Certain expenses for the Income Fund were assumed or waived by Horace Mann
Investors, Inc. through June 30, 1995. The investment advisory expenses for the
Income Fund were waived by CIGNA Investments from January 1, 1984 through
October 31, 1989.
The "Net Investment Income" per share and the "Net gains(losses) on Securities -
realized and unrealized" per share represent a proportionate share respective to
the increase in net assets as presented in the Statement of Operations.
The Fund's investment adviser was changed effective November 1, 1989.
The total return is determined by the ratio of ending net asset value to
beginning net asset value, adjusted for reinvestment of dividends from net
investment income and net realized capital gains.
If you are an annuity contract owner, the above total return does not reflect
expenses that apply to the separate account or related policies. The inclusion
of these charges would reduce the total return figures for all periods shown.
25
<PAGE>
BALANCED FUND
FINANCIAL HIGHLIGHTS
[LOGO] ========================================================================
<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
- --------------
NET ASSET VALUE, BEGINNING
OF PERIOD................. $ 15.26 $ 16.72 $ 16.22 $15.91 $14.19 $15.10 $13.48 $12.71 $14.91 $13.71 $11.16
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income.... 0.32 0.62 0.65 0.66 0.78 0.86 0.77 0.66 1.05 1.18 0.84
Net Gains(Losses) on
Securities-realized and
unrealized.............. 1.84 (0.81) 1.87 0.68 2.25 (0.92) 2.77 0.72 (1.20) 1.05 2.01
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Total Income(Loss) From
Investment Operations... 2.16 (0.19) 2.52 1.34 3.03 (0.06) 3.54 1.38 (0.15) 2.23 2.85
LESS DISTRIBUTIONS:
From net investment
income.................. - 0.55 0.56 0.59 0.74 0.74 0.70 0.61 2.05 0.63 0.29
From net realized gains.. - 0.72 1.46 0.44 0.57 0.11 1.22 - - 0.40 0.01
------- ------- ------- ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions...... - 1.27 2.02 1.03 1.31 0.85 1.92 0.61 2.05 1.03 0.30
NET ASSET VALUE, END OF
PERIOD.................... $ 17.42 $ 15.26 $ 16.72 $16.22 $15.91 $14.19 $15.10 $13.48 $12.71 $14.91 $13.71
======= ======= ======= ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN............... 14.15% (1.12)% 15.46% 8.37% 21.57% (0.41)% 26.31% 10.57% (0.87)% 16.79% 26.08%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets(000's omitted),
End of Period............. 194,466 160,815 132,376 92,463 72,343 53,289 42,214 29,223 21,493 6,974 793
Ratio of Net Expenses
to Average Net Assets..... 0.30% 0.63% 0.66% 0.71% 0.75% 0.81% 0.72% 0.76% 0.08% 0.03% 0.22%
Ratio of Net Investment
Income to Average Net
Assets.................... 1.97% 3.59% 3.54% 3.94% 4.96% 5.59% 4.85% 4.81% 5.56% 5.12% 7.22%
Portfolio Turnover Rate.... 35.52% 121.82% 52.43% 27.06% 42.09% 47.62% 56.80% 27.68% 84.74% 45.48% 29.54%
Ratio to Average Net Assets
before commission credits,
waived and reimbursed
expenses:
Ratio of Gross Expenses.... 0.30% 0.64% 0.66% 0.71% 0.75% 0.81% 0.72% 0.76% 0.64% 0.61% 0.70%
Ratio of Net Investment
Income.................... 1.97% 3.58% 3.54% 3.94% 4.96% 5.59% 4.85% 4.81% 5.00% 4.54% 6.74%
</TABLE>
Equalization-Through December 31, 1987, the Balanced Fund followed the
accounting practice known as equalization, by which a portion of the proceeds
from sales and cost of redemptions of Fund shares was credited or charged to
undistributed income. Effective December 31, 1987 equalization accounting was
discontinued and the cumulative net equalization credits were paid as dividends
from net investment income and equalization credits. Net asset value was not
affected by this change.
Expenses for the Balanced Fund were assumed or waived by Horace Mann Investors,
Inc. and CIGNA Investments through 1987.
The "Net Investment Income" per share and the "Net gains(losses) on Securities-
realized and unrealized" per share represent a proportionate share respective to
the increase in net assets as presented in the Statement of Operations.
The Fund's investment adviser was changed effective November 1, 1989.
The total return is determined by the ratio of ending net asset value to
beginning net asset value, adjusted for reinvestment of dividends from net
investment income and net realized capital gains.
If you are an annuity contract owner, the above total return does not reflect
expenses that apply to the separate account or related policies. The inclusion
of these charges would reduce the total return figures for all periods shown.
26
<PAGE>
SHORT-TERM FUND
FINANCIAL HIGHLIGHTS
[LOGO] ========================================================================
<TABLE>
<CAPTION>
(UNAUDITED)
6 MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, ----------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986 1985
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
- --------------
NET ASSET VALUE, BEGINNING
OF PERIOD....................... $10.08 $10.07 $10.09 $10.10 $10.37 $10.73 $10.49 $10.25 $11.17 $11.44 $10.92
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income.......... 0.26 0.39 0.26 0.33 0.61 0.85 0.85 0.69 0.65 0.68 0.88
Net Gains(Losses) on
Securities-realized and
unrealized.................... - - - - - 0.01 - - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Income(Loss) From
Investment Operations......... 0.26 0.39 0.26 0.33 0.61 0.86 0.85 0.69 0.65 0.68 0.88
LESS DISTRIBUTIONS:
From net investment
income........................ - 0.38 0.28 0.34 0.88 1.22 0.60 0.45 1.57 0.95 0.36
From net realized gains........ - - - - - - 0.01 - - - -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total Distributions............ - 0.38 0.28 0.34 0.88 1.22 0.61 0.45 1.57 0.95 0.36
NET ASSET VALUE,
END OF PERIOD.................... $10.34 $10.08 $10.07 $10.09 $10.10 $10.37 $10.73 $10.49 $10.25 $11.17 $11.44
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN..................... 2.58% 3.89% 2.53% 3.30% 5.93% 7.89% 8.27% 6.74% 5.80% 6.26% 8.31%
RATIOS/SUPPLEMENTAL DATA
- ------------------------
Net Assets(000's omitted),
End of Period.................. $1,455 $1,114 $1,110 $1,131 $1,076 $1,195 $1,175 $1,140 $ 852 $ 356 $ 196
Ratio of Net Expenses
to Average Net Assets.......... 0.42% 0.49% 0.61% 0.51% 0.43% 0.38% 0.46% 0.37% 0.21% 0.14% 0.04%
Ratio of Net Investment Income
to Average Net Assets.......... 2.52% 3.89% 2.56% 3.16% 5.88% 7.57% 7.83% 6.50% 5.68% 5.94% 7.92%
Portfolio Turnover Rate.......... 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Ratio to Average Net Assets
before commission credits,
waived and reimbursed
expenses:
Ratio of Gross Expenses......... 1.18% 2.36% 2.42% 3.44% 4.45% 4.46% 3.29% 1.48% 1.53% 0.61% 0.55%
Ratio of Net Investment Income... 1.76% 1.91% 0.75% 0.23% 1.86% 3.49% 5.00% 5.39% 4.36% 5.47% 7.41%
</TABLE>
Equalization-Through December 31, 1987, the Short-Term Investment Fund followed
the accounting practice known as equalization, by which a portion of the
proceeds from sales and cost of redemptions of Fund shares was credited or
charged to undistributed income. Effective December 31, 1987 equalization
accounting was discontinued and the cumulative net equalization credits were
paid as dividends from net investment income and equalization investment
credits. Net asset values was not affected by this change.
Certain expenses for the Short-Term Fund were assumed or waived by Horace Mann
Investors, Inc. through June 30, 1995. The investment
advisory expenses for the Short-Term Investment Fund were waived by CIGNA
Investments from January 1, 1984 through October 31, 1989.
The "Net Investment Income" per share and the "Net gains(losses) on Securities -
realized and unrealized" per share represent a proportionate
share respective to the increase in net assets as presented in the Statement of
Operations.
The Fund's investment adviser was changed effective November 1, 1989.
The total return is determined by the ratio of ending net asset value to
beginning net asset value, adjusted for reinvestment of dividends from net
investment income and net realized capital gains.
If you are an annuity contract owner, the above total return does not reflect
expenses that apply to the separate account or related policies. The inclusion
of these charges would reduce the total return figures for all periods shown.
27
<PAGE>
Horace Mann Funds
P.O. Box 4657
Springfield, IL 62708-4657
1-800-999-1030
This report is not to be distributed unless
preceded or accompanied by a current
prospectus.
IA-004359(8/95)
