RULE 497(C) FILING
REGISTRATION NO. 2-83631/811-3738
MARKED TO SHOW CHANGES
AMERICAN GENERAL SERIES PORTFOLIO COMPANY
PROSPECTUS OCTOBER 1, 1995
AMERICAN GENERAL SERIES PORTFOLIO COMPANY
2929 ALLEN PARKWAY
HOUSTON, TEXAS 77019
OCTOBER 1, 1995
PROSPECTUS
The American General Series Portfolio Company (the "Series Company") is a mutual
fund made up of 13 separate funds (the "Funds"). Each of the Funds has a
different investment objective. Each Fund is explained in more detail on its
Fact Sheet contained in this prospectus. Here is a summary of the goals of the
13 Funds:
INDEX EQUITY FUNDS:
STOCK INDEX FUND SMALL CAP INDEX FUND
Growth through investments Growth through investments tracking the
tracking the S&P 500 Index. Russell 2000 Index.
MIDCAP INDEX FUND INTERNATIONAL EQUITIES FUND
Growth through investments Growth through investments tracking the
tracking the S&P MidCap 400 EAFE Index.
Index.
ACTIVELY MANAGED EQUITY FUNDS:
GROWTH FUND GROWTH & INCOME FUND
Growth through investments in Growth and income through investments in
service sector companies. stocks (or securities convertible to
stocks).
INCOME FUNDS:
CAPITAL CONSERVATION FUND GOVERNMENT SECURITIES FUND
Income and possible growth Income and possible growth through
through investments in high investments in intermediate and long-term
quality debt securities. government debt securities.
INTERNATIONAL GOVERNMENT BOND FUND
Income and possible growth through investments in
high quality foreign government debt securities.
SPECIALTY EQUITY FUNDS:
SOCIAL AWARENESS FUND SCIENCE & TECHNOLOGY FUND
Growth through investments in Growth through investments in stocks of
stocks of companies meeting companies which benefit from development
social criteria of the Fund. of science and technology.
MONEY MARKET FUND:
MONEY MARKET FUND
Income through investments in
short-term money market
securities.
ASSET ALLOCATION FUND:
TIMED OPPORTUNITY FUND
Maximum return through
investments in a mix of
stocks, bonds and money
market securities.
SHARES OF THE MONEY MARKET FUND ARE NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT. THERE IS NO ASSURANCE THAT THIS FUND WILL BE ABLE TO MAINTAIN A
STABLE NET ASSET VALUE OF $1.00 PER SHARE.
These Funds are available to you only through a variable annuity contract you or
your employer bought from The Variable Annuity Life Insurance Company (VALIC) or
one of its affiliates, or employee thrift plans maintained by VALIC or American
General Corporation. VALIC is a member of the American General Corporation group
of companies.
Because different contracts contain different combinations of Funds, all of the
Funds in this prospectus may not be available to you. And, there may be some
Funds that are available to you that don't appear in this prospectus. See the
separate prospectus that describes your, or your employer's, annuity contract
for a complete list of funds in which you may invest. BE SURE TO READ BOTH
PROSPECTUSES IN FULL BEFORE YOU START PARTICIPATING AND KEEP THEM FOR FUTURE
REFERENCE.
VALIC has filed a Statement of Additional Information, dated October 1, 1995,
with the Securities and Exchange Commission. This Statement contains additional
information about these Funds and is part of this prospectus. For a free copy,
write to the American General Series Portfolio Company at the address above or
call (800)-44-VALIC.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
FUNDS. ALSO, IT HAS NOT PASSED ON WHETHER THIS PROSPECTUS IS ADEQUATE OR
ACCURATE. IT IS A CRIMINAL OFFENSE TO STATE OTHERWISE.
<PAGE>
TABLE OF CONTENTS
PAGE
----
COVER PAGE............................................................
WELCOME............................................................... 1
FINANCIAL HIGHLIGHTS.................................................. 2
ABOUT THE FUND'S MANAGEMENT........................................... 10
Investment Adviser................................................ 10
Investment Sub-advisers........................................... 10
Portfolio Manager................................................. 11
How Advisers Are Paid for Their Services.......................... 11
About the Board of Directors...................................... 12
ABOUT THE FUNDS....................................................... 13
Growth, Income and Stability Catagories........................... 13
About Level of Risk............................................... 13
About Portfolio Turnover.......................................... 13
About Fund Performance............................................ 14
HOW TO READ A FUND FACT SHEET......................................... 15
THE INDEX EQUITY FUNDS................................................ 16
Stock Index Fund.................................................. 18
MidCap Index Fund................................................. 20
Small Cap Index Fund.............................................. 22
International Equities Fund....................................... 24
ACTIVELY MANAGED EQUITY FUNDS
Growth Fund....................................................... 26
Growth & Income Fund.............................................. 28
INCOME FUNDS
Capital Conservation Fund......................................... 30
Government Securities Fund........................................ 32
International Government Bond Fund................................ 34
SPECIALTY EQUITY FUNDS
Social Awareness Fund............................................. 36
Science & Technology Fund......................................... 38
MONEY MARKET FUND..................................................... 40
ASSET ALLOCATION FUND
Timed Opportunity Fund............................................ 41
TYPES OF INVESTMENTS.................................................. 43
Stocks............................................................ 43
Bonds............................................................. 43
Asset-Backed Securities....................................... 43
Loan Participations........................................... 44
Illiquid and Restricted Securities................................ 44
ADRs.............................................................. 44
Foreign Currency.................................................. 44
When-Issued Securities............................................ 44
Money Market Securities........................................... 44
Derivatives....................................................... 45
Options....................................................... 45
Futures Contracts............................................. 45
Repurchase Agreements............................................. 46
A Word About Risk................................................. 46
Investment Practices.............................................. 47
Limitations................................................... 47
Lending Portfolio Securities.................................. 47
ABOUT THE SERIES COMPANY.............................................. 48
Series Company Shares............................................. 48
Net Asset Value of the Series Company Shares...................... 48
Dividends and Capital Gains....................................... 49
Diversification................................................... 49
Taxes............................................................. 50
Voting Rights..................................................... 50
Reports........................................................... 50
Legal Matters..................................................... 50
(i)
WELCOME
UNLESS OTHERWISE SPECIFIED IN THIS PROSPECTUS, THE WORDS WE, OUR, AND VALIC MEAN
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY. THE WORDS YOU AND YOUR MEAN THE
PARTICIPANT.
American General Series Portfolio Company (the "Series Company") was
incorporated under the laws of Maryland on December 7, 1984.
The Series Company is an open-end management investment company and currently
consists of 13 different Funds, each of which is described in detail in this
prospectus. We serve as each Fund's Investment Adviser and, in this role, report
directly to the Series Company's Board of Directors. As Investment Adviser, we
make investment decisions for the Funds and are responsible for their day to day
management. For more information, see "About the Funds' Management" in this
prospectus.
Individuals can't invest in these Funds directly. Instead, they participate
through an annuity contract or employer plan with VALIC or one of its
affiliates, or employee thrift plans maintained by VALIC or American General
Corporation. Most often employers set up these annuity contracts so they can
offer their employees a way to save for retirement. Retirement plans through
employers may be entitled to tax benefits that individual retirement plans may
not be entitled to. These tax benefits are fully explained in your contract
prospectus.
After you invest in a Fund you participate in Fund earnings or losses, in
proportion to the amount of money you invest. Depending on your contract, if you
withdraw your money before retirement, you may incur charges and additional tax
liabilities. However, to save for retirement, you generally should let your
investments and their earnings build. At retirement, you may withdraw all or a
portion of your money, leave it in the account until you need it, or start
receiving annuity payments. At a certain age you may be required to begin
withdrawals.
All inquiries regarding this prospectus and annuity contracts issued by VALIC,
should be directed, in writing, to VALIC Customer Service, A3-01, at the address
above, or by calling 1 (800) 633-8960.
All inquiries regarding annuity contracts issued by American General Life
Insurance Company (AGL) should be directed to AGL's Annuity Administration
Department, 2727-A Allen Parkway, Houston, Texas 77019-2191 or call (713)
831-3102. AGL is a member of the American General Corporation group of
companies, as is VALIC.
OPEN-END MEANS SHARES OF THE FUNDS CAN BE BOUGHT OR SOLD BY THE SERIES COMPANY
AT ANY TIME. ALSO, THERE IS NO LIMIT ON THE NUMBER OF INVESTORS WHO MAY BUY
SHARES.
1
Financial Highlights
A FUND'S FISCAL YEAR ENDS EVERY MAY 31ST.
Financial highlights are provided below for each of the Funds. The financial
highlights are for the last 10 years of the Funds or if the Fund has been in
operation a shorter period of time, since the date the Fund began
operation. Ernst & Young LLP, Independent Auditors for the Series Company, has
audited the Series Company's financial statements which include the information
presented here. Their unqualified report appears in those audited financial
statements, which are included in the Statement of Additional Information.
Per share data assumes that you held each share from the beginning to the end
of each fiscal year. Total return assumes that you bought additional shares
with dividends paid by the Fund. Total returns for periods of less than one
year are not annualized.
STOCK INDEX FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $14.39 $14.36 $13.34 $12.60 $11.86 $10.69 $8.90 $9.88
------------------------------------------------------------------------------------------
+ INCOME (LOSS)
from net investment income 0.37 0.35 0.34 0.32 0.31 0.33 0.27 0.19
from net realized & unrealized
gain (loss) on securities 2.45 0.12 1.20 0.74 0.81 1.32 1.86 (0.92)
------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 2.82 0.47 1.54 1.06 1.12 1.65 2.13 (0.73)
------------------------------------------------------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.37) (0.35) (0.34) (0.32) (0.31) (0.35) (0.25) (0.21)
from net realized gain on
securities (0.03) (0.09) (0.18) (0.07) (0.13) (0.09) (0.04)
------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.40) (0.44) (0.52) (0.32) (0.38) (0.48) (0.34) (0.25)
------------------------------------------------------------------------------------------
= SHARE VALUE
AT END OF YEAR $16.81 $14.39 $14.36 $13.34 $12.60 $11.86 $10.69 $8.90
------------------------------------------------------------------------------------------
TOTAL RETURN 19.98% 3.29% 11.74% 8.57% 9.98% 15.78% 24.40% (7.48)%
------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.38% 0.39% 0.43% 0.50% 0.67% 0.61% 0.78% 1.29%
Ratio of net invest. income to
average net assets 2.44% 2.44% 2.52% 3.12% 2.82% 3.05% 3.05% 2.23%
Portfolio turnover rate 14% 3% 1% 45% 6% 8% 14% 16%
Number of shares outstanding at end
of year (000's) 75,451 75,494 66,224 55,598 6,662 3,456 1,924 1,174
Net assets at end of
year (000's) $ 1,267,992 $ 1,086,459 $ 951,200 $ 741,667 $ 83,970 $ 40,969 $ 20,572 $ 10,443
Average net assets during the year
(000's) $ 1,140,085 $ 1,030,581 $ 836,510 $ 167,262 $ 55,147 $ 29,824 $ 14,060 $ 7,933
</TABLE>
PERIOD FROM
APRIL 20,
1987
TO MAY 31,
1987
- -----------------------------------------------------
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $10.00(1)
+ INCOME (LOSS)
from net investment income 0.05
from net realized & unrealized
gain (loss) on securities (0.13)
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS (0.08)
- - DISTRIBUTIONS
from net investment income (0.04)
from net realized gain on
securities
TOTAL DISTRIBUTIONS (0.04)
= SHARE VALUE
AT END OF YEAR $9.88
TOTAL RETURN (0.80)%
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.14%
Ratio of net invest. income to
average net assets 0.54%
Portfolio turnover rate 1%
Number of shares outstanding at end
of year (000's) 511
Net assets at end of
year (000's) $5,053
Average net assets during the year
(000's) $5,004
- ------------
(1) The net asset value at the beginning of the period is as of commencement
of operations on April 20, 1987. Bankers Trust has been the Fund's
Sub-adviser since May 1, 1992.
2
MIDCAP INDEX FUND(1)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
--------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $14.54 $14.38 $12.86 $12.51 $12.92 $12.25 $10.86 $13.87
--------------------------------------------------------------------------------------
+ INCOME (LOSS)
from net investment income 0.26 0.23 0.24 0.23 0.28 0.28 0.30 0.17
from net realized & unrealized
gain (loss) on securities 1.59 0.28 1.93 0.39 (0.30) 0.71 1.51 (1.41)
--------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.85 0.51 2.17 0.62 (0.02) 0.99 1.81 (1.24)
--------------------------------------------------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.26) (0.23) (0.24) (0.23) (0.28) (0.32) (0.27) (0.18)
from net realized gain on
securities (0.45) (0.12) (0.41) (0.04) (0.11) (0.15) (1.59)
--------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.71) (0.35) (0.65) (0.27) (0.39) (0.32) (0.42) (1.77)
--------------------------------------------------------------------------------------
= SHARE VALUE
AT END OF YEAR $15.68 $14.54 $14.38 $12.86 $12.51 $12.92 $12.25 $10.86
--------------------------------------------------------------------------------------
TOTAL RETURN 13.26% 3.52% 17.21% 5.01% 0.20% 8.22% 17.06% (7.30)%
--------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.44% 0.46% 0.47% 0.54% 0.67% 0.68% 0.74% 0.79%
Ratio of net invest. income to
average net assets 1.73% 1.62% 1.79% 1.82% 2.41% 2.29% 2.72% 1.51%
Portfolio turnover rate 23% 17% 5% 112% 101% 131% 67% 108%
Number of shares outstanding at end
of year (000's) 25,988 24,001 14,673 8,862 6,168 5,712 5,354 4,827
Net assets at end of
year (000's) $ 407,557 $ 349,041 $ 210,931 $ 113,992 $ 77,146 $ 73,815 $ 65,586 $ 52,435
Average net assets during the year
(000's) $ 376,486 $ 285,247 $ 154,979 $ 88,456 $ 69,696 $ 67,421 $ 57,398 $ 49,877
</TABLE>
1987 1986
- -----------------------------------------------------------
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $13.56 $11.69
+ INCOME (LOSS)
from net investment income 0.18 0.30
from net realized & unrealized
gain (loss) on securities 0.40 1.90
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.58 2.20
- - DISTRIBUTIONS
from net investment income (0.18) (0.30)
from net realized gain on
securities (0.09) (0.03)
TOTAL DISTRIBUTIONS (0.27) (0.33)
= SHARE VALUE
AT END OF YEAR $13.87 $13.56
TOTAL RETURN 4.29% 21.22%
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 1.00% 1.10%
Ratio of net invest. income to
average net assets 1.36% 2.54%
Portfolio turnover rate 98% 67%
Number of shares outstanding at end
of year (000's) 3,583 2,586
Net assets at end of
year (000's) $ 49,691 $ 35,074
Average net assets during the year
(000's) $ 40,029 $ 28,223
- ------------
(1) Effective October 1, 1991 the Fund's name was changed from the Capital
Accumulation Fund to the MidCap Index Fund. Additionally, on October 1,
1991 the investment objectives and investment program for the Fund were
changed. Bankers Trust has been the Fund's Sub-adviser since May 1,
1992.
3
SMALL CAP INDEX FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
FISCAL YEAR ENDED MAY 31, MAY 1, 1992
------------------------------- TO
1995 1994 1993 MAY 31, 1992
-----------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF PERIOD $11.52 $11.28 $ 9.93 $10.00(1)
-----------------------------------------------
+ INCOME (LOSS)
from net investment income 0.17 0.13 0.15 0.02
from net realized & unrealized
gain (loss) on securities 0.97 0.58 1.48 (0.07)
-----------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.14 0.71 1.63 (0.05)
-----------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.17) (0.13) (0.15) (0.02)
from net realized gain on
securities (0.34) (0.13)
-----------------------------------------------
TOTAL DISTRIBUTIONS (0.17) (0.47) (0.28) (0.02)
-----------------------------------------------
= SHARE VALUE
AT END OF YEAR $12.49 $11.52 $11.28 $9.93
-----------------------------------------------
TOTAL RETURN 9.98% 6.18% 16.64% (0.50)%
-----------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.44% 0.47% 0.47% 0.04%
Ratio of net invest. income to
average net assets 1.44% 1.10% 1.40% 0.21%
Portfolio turnover rate 34% 16% 20% 0%
Number of shares outstanding at end
of year (000's) 10,136 9,381 3,687 1,107
Net assets at end of year (000's) $ 126,567 $ 108,050 $ 41,581 $ 10,989
Average net assets during the year
(000's) $ 120,298 $ 70,690 $ 22,142 $ 10,989
</TABLE>
- ---------
(1) The net asset value at the beginning of the period is as of commencement
of operations on May 1, 1992. Bankers Trust has been the Fund's
Sub-adviser since May 1, 1992.
INTERNATIONAL EQUITIES FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 2,
FISCAL YEAR ENDED MAY 31, 1989
---------------------------------------------------------- TO MAY 31,
1995 1994 1993 1992 1991 1990
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $10.14 $8.99 $8.03 $8.58 $9.17 $10.00(1)
--------------------------------------------------------------------------
+ INCOME (LOSS)
from net investment income 0.15 0.11 0.18 0.15 0.23 0.10
from net realized & unrealized
gain (loss) on securities 0.34 1.17 0.93 (0.55) (0.59) (0.83)
--------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.49 1.28 1.11 (0.40) (0.36) (0.73)
--------------------------------------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.15) (0.11) (0.15) (0.15) (0.23) (0.10)
from net realized gain on
securities (0.06) (0.02)
--------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.21) (0.13) (0.15) (0.15) (0.23) (0.10)
--------------------------------------------------------------------------
= SHARE VALUE
AT END OF YEAR $10.42 $10.14 $8.99 $8.03 $8.58 $9.17
--------------------------------------------------------------------------
TOTAL RETURN 4.92% 14.31% 14.18% (4.69)% (3.71)% (7.42)%
--------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.45% 0.47% 0.53% 0.65% 0.37% 0.19%
Ratio of net invest. income to
average net assets 1.47% 1.43% 2.33% 1.84% 2.67% 1.10%
Portfolio turnover rate 14% 7% 9% 5% 3% 0%
Number of shares outstanding at end
of year (000's) 20,074 17,273 7,429 4,256 2,451 1,310
Net assets at end of year (000's) $ 209,091 $ 175,183 $ 66,809 $ 34,182 $ 21,036 $ 12,005
Average net assets during the year
(000's) $ 199,235 $ 117,264 $ 45,509 $ 26,542 $ 15,693 $ 7,853
</TABLE>
- ---------
(1) The net asset value at the beginning of the period is as of commencement
of operations on October 2, 1989.
4
GROWTH FUND
- ------------------------------------------------------------------------------
PERIOD FROM
FISCAL YEAR APRIL 29, 1994
ENDED TO
MAY 31, 1995 MAY 31, 1994
-----------------------------
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $9.87 $10.00(1)
-----------------------------
+ INCOME (LOSS)
from net investment income 0.04 0.01
from net realized & unrealized
gain (loss) on securities 1.56 (0.13)
-----------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.60 (0.12)
-----------------------------
- - DISTRIBUTIONS
from net investment income (0.04) (0.01)
-----------------------------
= SHARE VALUE
AT END OF YEAR $11.43 $9.87
-----------------------------
TOTAL RETURN 16.25% (1.19)%
-----------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.91% 0.08%
Ratio of net invest. income to
average net assets 0.41% 0.11%
Portfolio turnover rate 61% 0%
Number of shares outstanding at end
of year (000's) 8,800 1,001
Net assets at end of year (000's) $ 100,614 $9,885
Average net assets during the year
(000's) $ 42,232 $9,944
- ---------
(1) The net asset value at the beginning of the period is as of commencement
of operations on April 29, 1994.
GROWTH & INCOME FUND
- ------------------------------------------------------------------------------
PERIOD FROM
FISCAL YEAR APRIL 29, 1994
ENDED TO
MAY 31, 1995 MAY 31, 1994
-------------------------------
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $9.87 $10.00(1)
-------------------------------
+ INCOME (LOSS)
from net investment income 0.09 0.02
from net realized & unrealized
gain (loss) on securities 1.22 (0.13)
-------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.31 (0.11)
-------------------------------
- - DISTRIBUTIONS
from net investment income (0.09) (0.02)
-------------------------------
= SHARE VALUE
AT END OF YEAR $11.09 $9.87
-------------------------------
TOTAL RETURN 13.35% (1.11)%
-------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.86% 0.07%
Ratio of net invest. income to
average net assets 0.93% 0.22%
Portfolio turnover rate 97% 11%
Number of shares outstanding at end
of year (000's) 3,867 1,002
Net assets at end of year (000's) $ 42,867 $ 9,890
Average net assets during the year
(000's) $ 21,910 $ 9,946
- ---------
(1) The net asset value at the beginning of the period is as of commencement
of operations on April 29, 1994.
5
CAPITAL CONSERVATION FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
--------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $9.13 $9.87 $9.29 $8.81 $9.08 $9.48 $9.29 $9.51
--------------------------------------------------------------------------------------
+ INCOME (LOSS)
from net investment income 0.63 0.61 0.65 0.69 0.73 0.80 0.75 0.63
from net realized & unrealized gain
(loss) on securities 0.39 (0.69) 0.58 0.48 (0.27) (0.36) 0.17 (0.24)
--------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS 1.02 (0.08) 1.23 1.17 0.46 0.44 0.92 0.39
--------------------------------------------------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.63) (0.61) (0.65) (0.69) (0.73) (0.84) (0.73) (0.61)
from net realized gain on
securities (0.05)
--------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.63) (0.66) (0.65) (0.69) (0.73) (0.84) (0.73) (0.61)
--------------------------------------------------------------------------------------
= SHARE VALUE
AT END OF YEAR $9.52 $9.13 $9.87 $9.29 $8.81 $9.08 $9.48 $9.29
--------------------------------------------------------------------------------------
TOTAL RETURN 11.80% (1.13)% 13.60% 13.72% 5.40% 4.73% 10.45% 4.16%
--------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.58% 0.59% 0.67% 0.77% 0.83% 0.83% 0.88% 1.66%
Ratio of net invest. income to
average net assets 6.88% 6.24% 6.77% 7.80% 8.25% 8.64% 8.82% 6.73%
Portfolio turnover rate 100% 55% 58% 121% 142% 125% 55% 27%
Number of shares outstanding at end
of period (000's) 6,935 6,712 5,095 3,939 2,333 1,983 1,429 563
Net assets at end of period (000's) $66,031 $61,305 $50,290 $36,609 $20,541 $18,006 $13,544 $5,226
Average net assets during the
period (000's) $61,568 $59,210 $43,316 $29,793 $19,105 $16,278 $9,562 $4,584
</TABLE>
PERIOD FROM
DECEMBER 16,
1985 TO
MAY 31,
1987 1986
- --------------------------------------------------------------
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $9.81 $ 10.00(1)
+ INCOME (LOSS)
from net investment income 0.62 0.17
from net realized & unrealized gain
(loss) on securities (0.31) (0.19)
TOTAL INCOME (LOSS) FROM INVESTMENT
OPERATIONS 0.31 (0.02)
- - DISTRIBUTIONS
from net investment income (0.61) (0.17)
from net realized gain on
securities
TOTAL DISTRIBUTIONS (0.61) (0.17)
= SHARE VALUE
AT END OF YEAR $9.51 $ 9.81
TOTAL RETURN 2.96% (0.42)%
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 1.23% 0.41%
Ratio of net invest. income to
average net assets 6.33% 2.72%
Portfolio turnover rate 238% 120%
Number of shares outstanding at end
of period (000's) 417 241
Net assets at end of period (000's) $3,963 $ 2,365
Average net assets during the
period (000's) $3,252 $ 567
- ----------
(1) The net asset value at the beginning of the period is as of commencement
of operations on December 16, 1985.
6
GOVERNMENT SECURITIES FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
--------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $9.55 $10.30 $9.84 $9.34 $9.20 $9.42 $9.24 $9.51
--------------------------------------------------------------------------------------
+ INCOME (LOSS)
from investment income 0.60 0.55 0.61 0.65 0.66 0.70 0.71 0.61
from net realized & unrealized
gain (loss) on securities 0.35 (0.59) 0.59 0.49 0.14 (0.17) 0.15 (0.28)
--------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.95 (0.04) 1.20 1.14 0.80 0.53 0.86 0.33
--------------------------------------------------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.61) (0.55) (0.61) (0.64) (0.66) (0.75) (0.68) (0.60)
from net realized gain on
securities (0.16) (0.13)
--------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.61) (0.71) (0.74) (0.64) (0.66) (0.75) (0.68) (0.60)
--------------------------------------------------------------------------------------
= SHARE VALUE
AT END OF YEAR $9.89 $9.55 $10.30 $9.84 $9.34 $9.20 $9.42 $9.24
--------------------------------------------------------------------------------------
TOTAL RETURN 10.43% (0.66)% 12.56% 12.60% 9.28% 5.76% 9.57% 3.45%
--------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.58% 0.59% 0.67% 0.76% 0.87% 0.86% 0.85% 1.66%
Ratio of net invest. income to
average net assets 6.36% 5.44% 6.08% 6.77% 7.25% 7.77% 7.89% 6.48%
Portfolio turnover rate 229% 85% 105% 78% 87% 85% 38% 36%
Number of shares outstanding at end
of year (000's) 5,478 4,544 3,110 2,090 1,468 978 570 405
Net assets at end of year (000's) $ 54,174 $ 43,401 $ 32,023 $ 20,559 $ 13,711 $ 8,997 $ 5,374 $ 3,747
Average net assets during the year
(000's) $ 45,200 $ 41,596 $ 26,145 $ 17,069 $ 11,393 $ 7,233 $ 4,565 $ 3,257
</TABLE>
PERIOD FROM
DECEMBER 16,
1985 TO
MAY 31,
1987 1986
- -------------------------------------------------------------
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $9.74 $10.00(1)
+ INCOME (LOSS)
from investment income 0.60 0.16
from net realized & unrealized
gain (loss) on securities (0.23) (0.26)
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 0.37 (0.10)
- - DISTRIBUTIONS
from net investment income (0.60) (0.16)
from net realized gain on
securities
TOTAL DISTRIBUTIONS (0.60) (0.16)
= SHARE VALUE
AT END OF YEAR $9.51 $9.74
TOTAL RETURN 3.62% (1.68)%
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 1.24% 0.41%
Ratio of net invest. income to
average net assets 6.38% 2.61%
Portfolio turnover rate 229% 149%
Number of shares outstanding at end
of year (000's) 302 145
Net assets at end of year (000's) $ 2,871 $1,412
Average net assets during the year
(000's) $ 2,237 $ 377
------------
(1) The net asset value at the beginning of the period is as of commencement
of operations on December 16, 1985.
INTERNATIONAL GOVERNMENT BOND FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
OCTOBER 1,
FISCAL YEAR ENDED MAY 31, 1991 TO
---------------------------------- MAY 31,
1995 1994 1993 1992
-------------------------------------------------
<S> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $10.97 $11.16 $10.43 $10.00(1)
-------------------------------------------------
+ INCOME (LOSS)
from net investment income 0.65 0.62 0.76 0.48
from net realized & unrealized
gain (loss) on securities and
foreign currencies 1.80 (0.20) 0.70 0.42
-------------------------------------------------
TOTAL INCOME FROM INVESTMENT
OPERATIONS 2.45 0.42 1.46 0.90
-------------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.70) (0.60) (0.73) (0.47)
from net realized gain on
securities (0.01)
-------------------------------------------------
TOTAL DISTRIBUTIONS (0.70) (0.61) (0.73) (0.47)
-------------------------------------------------
= SHARE VALUE
AT END OF YEAR $12.72 $10.97 $11.16 $10.43
-------------------------------------------------
TOTAL RETURN 23.23% 3.87% 14.50% 9.18%
-------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.59% 0.48% 0.14% 0.08%
Ratio of net invest. income to
average net assets 5.83% 5.87% 7.02% 4.62%
Portfolio turnover rate 6% 3% 26% 12%
Number of shares outstanding at end
of year (000's) 6,111 3,741 2,062 1,259
Net assets at end of year (000's) $ 77,734 $ 41,028 $ 23,009 $ 13,126
Average net assets during the year
(000's) $ 51,451 $ 33,561 $ 18,135 $ 11,938
</TABLE>
- ---------
(1) The net asset value at the beginning of the period is as of commencement
of operations on October 1, 1991.
7
SOCIAL AWARENESS FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PERIOD FROM
FISCAL YEAR ENDED MAY 31, OCTOBER 2, 1989
---------------------------------------------------------- TO
1995 1994 1993 1992 1991 MAY 31, 1990
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $11.98 $12.12 $11.43 $11.13 $10.59 $10.00(1)
---------------------------------------------------------------------------
+ INCOME (LOSS)
from net investment income 0.27 0.26 0.24 0.26 0.26 0.20
from net realized & unrealized
gain (loss) on securities 1.75 (0.02) 1.22 0.30 0.54 0.59
---------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 2.02 0.24 1.46 0.56 0.80 0.79
---------------------------------------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.27) (0.26) (0.24) (0.26) (0.26) (0.20)
from net realized gain on
securities (0.71) (0.12) (0.53)
---------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.98) (0.38) (0.77) (0.26) (0.26) (0.20)
---------------------------------------------------------------------------
= SHARE VALUE
AT END OF YEAR $13.02 $11.98 $12.12 $11.43 $11.13 $10.59
---------------------------------------------------------------------------
TOTAL RETURN 18.19% 1.97% 13.08% 5.08% 7.89% 8.09%
---------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.58% 0.60% 0.63% 0.16% 0.44% 0.23%
Ratio of net invest. income to
average net assets 2.22% 2.19% 2.14% 2.34% 2.66% 2.04%
Portfolio turnover rate 148% 83% 106% 203% 100% 95%
Number of shares outstanding at end
of year (000's) 4,143 3,817 2,819 1,799 973 612
Net assets at end of year (000's) $ 53,927 $ 45,729 $ 34,166 $ 20,570 $ 10,835 $ 6,485
Average net assets during the year
(000's) $ 47,942 $ 41,002 $ 26,920 $ 15,365 $ 7,959 $ 5,358
</TABLE>
- ---------
(1) The net asset value at the beginning of the period is as of commencement
of operations on October 2, 1989.
SCIENCE & TECHNOLOGY FUND
- ------------------------------------------------------------------------------
PERIOD FROM
FISCAL YEAR APRIL 29, 1994
ENDED TO
MAY 31, 1995 MAY 31, 1994
-------------------------------
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $9.83 $10.00(1)
-------------------------------
+ INCOME (LOSS)
from net investment income 0.03 0.00
from realized & unrealized gain
(loss) on securities 4.72 (0.17)
-------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 4.75 (0.17)
-------------------------------
- - DISTRIBUTIONS
from net investment income (0.02) (0.00)
from net realized gain on
securities (0.13) (0.00)
-------------------------------
TOTAL DISTRIBUTIONS (0.15) (0.00)
-------------------------------
= SHARE VALUE
AT END OF YEAR $14.43 $9.83
-------------------------------
TOTAL RETURN 48.61% (1.66)%
-------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 1.00% 0.08%
Ratio of net invest. income to
average net assets 0.36% 0.04%
Portfolio turnover rate 121% 0%
Number of shares outstanding at end
of year (000's) 11,550 1,001
Net assets at end of year (000's) $ 166,683 $ 9,834
Average net assets during the year
(000's) $ 64,974 $ 9,918
- ---------
(1) The net asset value at the beginning of the period is as of commencement
of operations on April 29, 1994.
8
MONEY MARKET FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------------------------------------------------------------------------------
+ INCOME (LOSS)
from net investment income 0.05 0.03 0.03 0.05 0.07 0.08 0.08 0.05
------------------------------------------------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.05) (0.03) (0.03) (0.05) (0.07) (0.08) (0.08) (0.05)
------------------------------------------------------------------------------------
= SHARE VALUE
AT END OF YEAR $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------------------------------------------------------------------------------------
TOTAL RETURN 4.90% 2.83% 2.85% 4.47% 7.11% 8.31% 8.63% 6.02%
------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.57% 0.58% 0.63% 0.67% 0.68% 0.74% 0.46% 1.77%
Ratio of net invest. income to
average net assets 4.75% 2.78% 2.81% 4.42% 6.86% 7.93% 8.39% 5.30%
Number of shares outstanding at end
of year (000's) 82,256 50,534 45,323 48,355 38,572 27,628 21,445 7,336
Total net assets at end of year
(000's) $ 82,254 $ 50,533 $ 45,322 $ 48,353 $ 38,570 $ 27,628 $ 21,445 $ 7,341
Average net assets during the year
(000's) $ 67,021 $ 46,222 $ 45,562 $ 46,305 $ 34,733 $ 22,563 $ 13,385 $ 5,390
</TABLE>
PERIOD FROM
DECEMBER 16,
1985 TO
1987 MAY 31, 1986
- -------------------------------------------------------------
PER SHARE DATA
SHARE VALUE
AT BEGINNING OF YEAR $1.00 $1.00(1)
+ INCOME (LOSS)
from net investment income 0.05 0.02
- - DISTRIBUTIONS
from net investment income (0.05) (0.02)
= SHARE VALUE
AT END OF YEAR $1.00 $1.00
TOTAL RETURN 4.85% 2.82%
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 1.17% 0.40%
Ratio of net invest. income to
average net assets 4.93% 2.39%
Number of shares outstanding at end
of year (000's) 2,800 451
Total net assets at end of year
(000's) $ 2,800 $451
Average net assets during the year
(000's) $ 1,844 $152
------------
(1) The net asset value at the beginning of the period is as of commencement
of operations on December 16, 1985.
TIMED OPPORTUNITY FUND
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
--------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PER SHARE DATA
SHARE VALUE AT BEGINNING OF YEAR $10.84 $11.18 $10.66 $11.05 $10.48 $10.06 $9.40 $11.07
--------------------------------------------------------------------------------------
+ INCOME
from net investment income 0.44 0.37 0.35 0.30 0.40 0.55 0.62 0.35
from net realized & unrealized
gain (loss) on securities 0.82 (0.15) 0.61 (0.19) 0.57 0.44 0.65 (0.31)
--------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.26 0.22 0.96 0.11 0.97 0.99 1.27 0.04
--------------------------------------------------------------------------------------
- - DISTRIBUTIONS
from net investment income (0.44) (0.37) (0.35) (0.30) (0.40) (0.57) (0.61) (0.35)
from net realized gain on
securities (0.42) (0.19) (0.09) (0.20) (1.36)
--------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (0.86) (0.56) (0.44) (0.50) (0.40) (0.57) (0.61) (1.71)
--------------------------------------------------------------------------------------
= SHARE VALUE
AT END OF YEAR $11.24 $10.84 $11.18 $10.66 $11.05 $10.48 $10.06 $9.40
--------------------------------------------------------------------------------------
TOTAL RETURN 12.43% 1.86% 9.17% 0.87% 9.75% 10.06% 14.00% 0.88%
--------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 0.58% 0.59% 0.70% 0.90% 0.92% 0.92% 1.00% 1.01%
Ratio of net invest. income to
average net assets 4.03% 3.24% 3.28% 2.72% 3.94% 5.38% 6.43% 3.56%
Portfolio turnover rate 133% 76% 78% 111% 55% 51% 93% 162%
Number of shares outstanding at end
of year (000's) 16,319 17,956 14,758 13,341 11,891 11,158 9,969 9,196
Net assets at end of year (000's) $ 183,393 $ 194,576 $ 165,002 $ 142,213 $ 131,416 $ 116,966 $ 100,248 $ 86,476
Average net assets during the year
(000's) $ 186,487 $ 185,036 $ 151,450 $ 137,179 $ 116,266 $ 107,626 $ 92,364 $ 77,192
</TABLE>
1987 1986
- -----------------------------------------------------------
PER SHARE DATA
SHARE VALUE AT BEGINNING OF YEAR $10.79 $9.41
+ INCOME
from net investment income 0.32 0.45
from net realized & unrealized
gain (loss) on securities 0.75 1.37
TOTAL INCOME (LOSS) FROM
INVESTMENT OPERATIONS 1.07 1.82
- - DISTRIBUTIONS
from net investment income (0.32) (0.44)
from net realized gain on
securities (0.47)
TOTAL DISTRIBUTIONS (0.79) (0.44)
= SHARE VALUE
AT END OF YEAR $11.07 $10.79
TOTAL RETURN 10.72% 19.81%
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net
assets 1.28% 1.44%
Ratio of net invest. income to
average net assets 3.04% 4.54%
Portfolio turnover rate 172% 162%
Number of shares outstanding at end
of year (000's) 5,914 3,629
Net assets at end of year (000's) $ 65,498 $ 39,155
Average net assets during the year
(000's) $ 49,902 $ 34,293
9
ABOUT THE FUND'S MANAGEMENT
INVESTMENT ADVISER
VALIC, a stock life insurance company, has been in the investment advisory
business since 1960. Since May 30, 1985, VALIC has been the Investment Adviser
for the funds that comprise the Series Company.
VALIC is a member of the American General Corporation group of companies.
Members of the American General Corporation group of companies operate in each
of the 50 states and Canada and collectively provide financial services with
activities heavily weighted toward insurance.
As Investment Adviser, VALIC is responsible for each Fund's day to day
operations. Also, VALIC develops Fund investment strategy and buys and sells
Fund investments. VALIC serves as Investment Adviser through an Investment
Advisory Agreement it enters into with each Fund. These agreements are renewed
once each year, by the Series Company Board of Directors.
One Investment Advisory Agreement covers these Funds:
FUND NAME EFFECTIVE DATE OF AGREEMENT
- --------------------------------------------- ---------------------------------
Timed Opportunity Fund September 7, 1990
Money Market Fund
Capital Conservation Fund
Government Securities Fund
International Equities Fund
Social Awareness Fund
International Government Bond Fund October 1, 1991
Another Investment Advisory Agreement covers
these Funds:
FUND NAME EFFECTIVE DATE OF AGREEMENT
- --------------------------------------------- ---------------------------------
MidCap Index Fund May 1, 1992
Stock Index Fund
Small Cap Index Fund
Growth Fund May 1, 1994
Growth & Income Fund
Science & Technology Fund
For more information on these agreements, see the "Investment Adviser" section
in the Statement of Additional Information.
VALIC'S ADDRESS IS 2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019.
INVESTMENT SUB-ADVISERS
For some of the Funds, VALIC works with Investment Sub-advisers, financial
service companies that specialize in certain types of investing. However, VALIC
still retains ultimate responsibility for managing the Funds. The Sub-adviser's
role is to make investment decisions for the Funds according to each Fund's
investment objectives and restrictions.
The Sub-advisers are:
BANKERS TRUST COMPANY ("BANKERS TRUST")
Since May 1, 1992, Bankers Trust has been the Sub-adviser for the MidCap Index
Fund, the Stock Index Fund, and the Small Cap Index Fund. Bankers Trust first
offered investment management services in 1938 and began managing index funds in
1977. As of December 31, 1994, Bankers Trust managed $184.8 billion in assets.
Bankers Trust is entirely owned by the Bankers Trust New York Corporation, a
bank holding company. It is the seventh largest U.S. bank-holding company as of
December 31, 1994.
BANKERS TRUST'S PRINCIPAL OFFICES ARE LOCATED AT 130 LIBERTY ST., NEW YORK, NEW
YORK 10006.
T. ROWE PRICE ASSOCIATES, INC. ("T. ROWE PRICE")
Since May 1, 1994, T. Rowe Price has been the Sub-adviser for the Growth Fund
and the Science & Technology Fund. T. Rowe Price was incorporated in Maryland
in 1947.
The firm, which was founded by Thomas Rowe Price in 1938, is one of the pioneers
of growth stock investment. T. Rowe Price is one of the leading fund managers
with $62.7 billion of assets under management as of March 31, 1995. Its approach
to managing money is based on proprietary research and a strict investment
discipline developed over 50 years.
T. ROWE PRICE'S PRINCIPAL OFFICES ARE LOCATED AT 100 EAST PRATT STREET,
BALTIMORE, MARYLAND 21202.
VALUE LINE, INC. ("VALUE LINE")
Since May 1, 1994, Value Line has been the Sub-adviser for the Growth & Income
Fund.
Value Line, with assets under management in excess of $4 billion as of June 30,
1995, provides investment counseling services to companies and others.
Investment selection is based on the Value Line Ranking System for Timeliness,
which has evolved over many years of research. Value Line also publishes the
Value Line Investment Survey, one of the best known U.S. investment advisory
services covering about 1,700 stocks, organized into 90 industries. The majority
of Value Line's outstanding stock is owned by Arnold Bernhard & Co., Inc. Value
Line is a New York corporation.
VALUE LINE'S PRINCIPAL OFFICES ARE LOCATED AT 220 EAST 42ND STREET, NEW YORK,
NEW YORK 10017-5981.
10
These financial service companies act as Investment Sub-advisers through an
agreement each entered into with VALIC. For more information on these agreements
and on these Sub-advisers, see the "Investment Sub-Advisers" section in the
Statement of Additional Information.
PORTFOLIO MANAGER
A portfolio manager is a person or team of persons VALIC, or one of its
Sub-advisers, has assigned to be primarily responsible for the day to day
management of a Fund's investments. A Fund's investments are called its
portfolio.
HOW ADVISERS ARE PAID FOR THEIR SERVICES
VALIC
Each Fund pays VALIC a fee based on its average daily net asset value. A Fund's
net asset value is the total value of the Fund's assets minus any money it owes
for operating expenses, such as the fee paid to its Custodian to safeguard and
value the Fund's investments.
Here is a list of the percentages each Fund pays VALIC.
FUND NAME ADVISORY FEE (ANNUAL RATE)
Index Equity Funds
Stock Index Fund
MidCap Index Fund 0.35% on the first $500 million;
Small Cap Index Fund 0.25% on assets over $500 million
International Equities Fund
Growth Fund 0.80%
Growth & Income Fund 0.75%
Capital Conservation Fund 0.50%
Government Securities Fund 0.50%
International Government Bond Fund 0.50%
Social Awareness Fund 0.50%
Science & Technology Fund 0.90%
Money Market Fund 0.50%
Timed Opportunity Fund 0.50%
The Investment Advisory Agreements we entered into with each Fund do not limit
how much the Funds pay in monthly expenses each year. However, we voluntarily
limit the Funds' monthly expenses as follows:
If a Fund's average monthly expenses, when annualized, are more than 2% of the
Fund's estimated average daily net assets, we will pay the difference. As a
result the Fund's yield or total return will increase. If VALIC decides to stop
voluntarily reducing a Fund's expenses, it may do so by giving 30 days notice,
in writing, to the Series Company. To date, VALIC has not had to reduce expenses
of any Fund as a result of this 2% voluntary reduction.
For the fiscal year ended May 31, 1995, the total expenses paid by the Series
Company of each Fund's average net assets were, as a percentage, as follows:
FUND NAME TOTAL EXPENSES RATIO
Stock Index Fund .38%
MidCap Index Fund .44%
Small Cap Index Fund .44%
International Equities Fund .45%
Growth Fund .91%
Growth & Income Fund .86%
Capital Conservation Fund .58%
Government Securities Fund .58%
International Government Bond Fund .59%
Social Awareness Fund .58%
Science & Technology Fund 1.00%
Money Market Fund .57%
Timed Opportunity Fund .58%
11
THE SUB-ADVISERS
According to the agreements we have with the Sub-advisers, we pay them directly
out of the fee we receive from the Funds. The Funds do not pay the Sub-advisers
directly. We pay them a percentage of what is paid to us by the Funds. We and
the Sub-advisers may agree to change the amount of money we pay them when their
agreements are renewed each year. Any such change increasing the charge would
have to be approved by the Series Company Board of Directors and by the
shareholders of the Fund.
Under the Investment Sub-Advisory Agreement we have with Bankers Trust, we pay
to Bankers Trust a monthly fee based on the respective average daily net asset
values of the MidCap Index Fund, the Stock Index Fund and the Small Cap Index
Fund at the annual rate of .05% on the first $500 million and .03% on assets
over $500 million.
Under the Investment Sub-Advisory Agreement we have with T. Rowe Price, we pay
T. Rowe Price a monthly fee based on average daily net asset values of the
Growth Fund at an annual rate of .50% and the Science & Technology Fund at the
annual rate of .60%.
Under the Investment Sub-Advisory Agreement we have with Value Line, we pay
Value Line a monthly fee based on the average daily net asset value of the
Growth & Income Fund at an annual rate of .45%.
VALIC is required to pay a minimum yearly sub-advisory fee of $50,000 for the
Small Cap Index Fund. There are no minimum yearly sub-advisory fees for the
Stock Index Fund, MidCap Index Fund, Growth Fund, Growth & Income Fund and the
Science & Technology Fund.
According to the agreements we have with the Sub-advisers, we will receive
investment advice for each sub-advised Fund. Under these agreements we give the
Sub-advisers the authority to manage these Funds and to buy and sell securities
for these Funds. We retain the responsibility for the overall management of
these Funds. The Sub-advisers may buy and sell securities for each Fund with
broker-dealers and other financial intermediaries that they select.
The Sub-advisers may place orders to buy and sell securities of these Funds with
a broker-dealer affiliated with the Sub-adviser as allowed by law. This could
include any affiliated futures commission merchants. Further in the case of T.
Rowe Price it may include any indirectly related broker.
The Investment Company Act of 1940 ("1940 Act") permits Sub-advisers under
certain conditions to place an order to buy or sell securities with an
affiliated broker. One of these conditions is that the commission received by
the affiliated broker can not be greater than the usual and customary broker's
commission if the sale was completed on a securities exchange. The Series
Company has adopted procedures, as required by the 1940 Act, which provide that
any commissions received by a Sub-adviser's affiliated broker are reasonable and
fair if compared to the commission received by other brokers for the same type
of securities transaction.
The Securities Exchange Act of 1934 prohibits members of national securities
exchanges from effecting exchange transactions for accounts that they or their
affiliates manage, except as allowed under rules adopted by the Securities and
Exchange Commission ("SEC"). The Series Company and the Sub-adviser will enter
into a written contract, as required by the 1940 Act, to allow the
Sub-adviser's affiliate to effect these type of transactions for commissions.
The 1940 Act generally prohibits a Sub-adviser or a Sub-adviser's affiliate,
acting as principal, from engaging in securities transactions with a Fund,
without an exemptive order from the SEC.
We and the Sub-advisers may enter into simultaneous purchase and sale
transactions for the Funds or affiliates of the Funds.
FOR MORE INFORMATION ON WHAT THE SUB-ADVISERS ARE PAID, SEE THE "INVESTMENT
SUB-ADVISERS" SECTION IN THE STATEMENT OF ADDITIONAL INFORMATION.
ABOUT THE BOARD OF DIRECTORS
The Series Company Board of Directors currently consists of nine members: five
are independent directors, three are VALIC employees, and one is an employee of
American General Corporation.
The Board of Directors may change each Fund's investment objective, investment
policies and non-fundamental investment restrictions without shareholder
approval. The Board may not change any fundamental restrictions placed on the
types of investments each Fund may buy. The fundamental restrictions appear in
the Statement of Additional Information. Changes to these restrictions may be
made with shareholder approval only.
12
ABOUT THE FUNDS
GROWTH, INCOME AND STABILITY CATEGORIES
The Funds offered in this prospectus fall into three general investment
categories: growth, income and stability.
GROWTH CATEGORY
The goal of a Fund in the growth category is to increase the value of your
investment over the long term by investing mostly in stocks. Stocks are a type
of investment that can increase in value over a period of years. Companies sell
stock to get the money they need to grow. These companies often keep some of
their profits to reinvest in their business. As they grow, the value of their
stock may increase. This is how the value of your investment may increase.
SERIES COMPANY GROWTH CATEGORY INCLUDES:
Growth Fund Growth & Income Fund
Stock Index Fund Social Awareness Fund
MidCap Index Fund Science & Technology Fund
Small Cap Index Fund Timed Opportunity Fund
International Equities Fund
INCOME CATEGORY
Unlike Funds in the growth category, where the objective is to make the Fund's
investments increase in value, Funds in the income category try to keep the
value of their investments from falling, while providing an increase in the
value of your investment through the income earned on the Fund's investments. To
meet this objective, Funds in the income category buy investments that are
expected to pay interest to the Fund on a regular basis.
SERIES COMPANY INCOME CATEGORY INCLUDES:
Capital Conservation Fund International Government Bond Fund
Government Securities Fund
STABILITY CATEGORY
Funds in the stability category provide liquidity, protection of capital and
current income through investments in high quality securities.
SERIES COMPANY STABILITY CATEGORY INCLUDES:
Money Market Fund
ABOUT LEVEL OF RISK
The risks involved in each Fund are described in each Fund's Fact Sheet. These
risks include market risk, credit risk, interest rate risk and risk associated
with foreign securities. These risks are described in the "Types of Investments"
section in this prospectus. The money you invest in the Series Company is not
insured. And, we can't guarantee that any of the Funds will meet their
investment objectives. There's a chance you may lose money and end up with less
than you invested.
ABOUT PORTFOLIO TURNOVER
Portfolio turnover occurs when a Fund sells its investments and buys new ones.
In some Funds, high portfolio turnover occurs when these Funds sell and buy
investments as part of their investment strategy. In other Funds, like the Index
Funds discussed below, portfolio turnover is lower because the make up of the
index stays fairly constant.
High portfolio turnover may cause a fund's expenses to increase. For example, a
fund may have to pay brokerage fees and other related expenses.
13
For each of the last two fiscal years the portfolio turnover rates for each of
the Funds except the Money Market Fund were, as follows:
FISCAL YEAR ENDING
------------------------------
MAY 31, 1994 MAY 31, 1995
------------ ------------
Stock Index Fund 3% 14%
MidCap Index Fund 17% 23%
Small Cap Index Fund 16% 34%
International Equities Fund 7% 14%
Growth Fund 0%* 61%
Growth & Income Fund 11%* 97%
Capital Conservation Fund 55% 100%
Government Securities Fund 85% 229%
International Government Bond Fund 3% 6%
Social Awareness Fund 83% 148%
Science & Technology Fund *0% 121%
Timed Opportunity Fund 76% 133%
- ---------
* For period April 29, 1994 to May 31, 1994
A portfolio turnover rate over 100% a year is higher than the rates of many
other mutual fund companies. A high rate increases a Fund's transaction costs
and expenses.
Excessive short-term trading may result in excessive "short-short income" under
the Internal Revenue Code ("Code"). Excessive "short-short income" in a Fund
could affect a Fund's status as a regulated investment company (RIC) under the
Code. Failure of a Fund to qualify as a RIC could cause the separate accounts
investing in the Fund to be nondiversified under Section 817[h] of the Code. See
"Income Dividends, Capital Gains", "Diversification" and "Taxes" in this
prospectus for a fuller discussion of certain of these tax provisions.
ABOUT FUND PERFORMANCE
From time to time the Series Company may advertise Fund performance information
such as Fund average total return and index total return. Current Fund
performance and information as to how this Fund performance information is
calculated appears in the Statement of Additional Information. Additionally
information on separate account performance appears in your contract prospectus.
14
HOW TO READ A FUND FACT SHEET
- -------------------------------------------------------------------------------
_ _ _ _ _ _ _ _ _ _ _ _ _
FUND HIGHLIGHTS ----------- [Line to applicable | |
Gives you a quick recap section of fact sheet] | |
of each Fund. | |
| |
FUND NAME ----------------- [Line to applicable | |
section of fact sheet] | |
INVESTMENT ADVISER; | |
INVESTMENT SUB-ADVISER | |
They make the investment -- [Line to applicable | |
decisions for the Fund. section of fact sheet] | FACSIMILE |
See "About the Fund's | |
Management" for more | |
information. | |
| |
PORTFOLIO MANAGER | |
Some Funds have a specific | |
person or persons assigned | OF |
as the portfolio manager. | |
This person is described | |
here. The portfolio | |
manager's role is explained | |
in "About the Fund's | |
Management". | |
| STOCK |
INVESTMENT OBJECTIVE ------ [Line to applicable | |
This is the goal of the section of fact sheet] | |
Fund, which is set by the | |
Series Company Board of | |
Directors. | |
| |
INVESTMENT RISK ----------- [Line to applicable | INDEX |
Shows some of the section of fact sheet] | |
investment risks of the | |
Fund. | |
| |
INVESTMENT STRATEGY ------- [Line to applicable | |
This section explains how section of fact sheet] | |
the Investment Advisers go | FUND |
about meeting the Fund's | |
Investment Objective. | |
| |
FUND INVESTMENTS ---------- [Line to applicable | |
Shows the types of section of fact sheet] | |
investments the Fund makes. | |
| FACT |
PERFORMANCE INFORMATION --- [Line to applicable | |
This shows the average section of fact sheet] | |
annual total return for the | |
Fund for the time period | |
indicated. Information | |
about how the Fund | |
performed last year is | SHEET |
discussed. The graph also | |
shows the return for an | |
index to which we compare | |
the Fund's performance. | |
For all the Funds except | |
the four Index Funds, | |
we call this the Fund's | |
"benchmark". The difference | |
between the Fund and index | |
return is caused by Fund | |
expenses and tracking | |
differences. |_ _ _ _ _ _ _ _ _ _ _ _ _|
15
THE INDEX EQUITY FUNDS
INDEX FUNDS HAVE OUTPERFORMED MOST MUTUAL FUNDS OVER CONSECUTIVE TEN YEAR
PERIODS. HOWEVER, BECAUSE THEY ARE MANAGED TO TRACK AN INDEX THEY WILL RISE AND
FALL WITH THE MARKET.
Four of the 13 Funds in the Series Company are Index Equity Funds investing
mostly in stocks. Their investment strategy is to track the performance of a
specific index. This strategy is followed whether markets go up or down. As part
of this investment strategy, each Fund may also invest in futures contracts and
options. Because these Funds do not have a defensive investment strategy, when
the market goes down, you will bear the risk of such market decline.
Index Funds perform best over the long term. This means you should plan to keep
your money in an Index Fund for a period of years.
WHAT IS AN INDEX?
An index reflects the average performance of a particular class of securities.
Examples of indexes include large company stocks (S&P 500 Index), mid-size
company stocks (S&P MidCap 400 Index), the bond market, or stocks of companies
in specific industries. Indexes are not managed funds, and cannot be bought.
Investment advisers compare the results of the funds they manage to indexes that
are close to the investment style of the fund. Information about the Series
Company's use of Standard & Poor's Indexes is in the Statement of Additional
Information.
WHICH INDEXES DO THESE FUNDS TRY TO TRACK?
While there are more than a hundred different indexes, the Index Funds in this
prospectus try to track four very prominent stock indexes:
THE STOCK INDEX FUND TRACKS THE STANDARD & POOR'S 500 STOCK INDEX*
The Standard & Poor's 500 Stock Index (S&P 500) tracks the common stock
performance of large U.S. companies in the manufacturing, utilities,
transportation, and financial industries. These companies are usually listed on
the New York Stock Exchange. It also tracks performance of common stocks sold by
foreign and smaller U.S. companies in similar industries. The smaller U.S.
companies are usually listed on the American Stock Exchange. In total, this
index tracks 500 common stocks.
This index may periodically change some of the stocks it tracks. And, different
indexes sometimes track some of the same stocks. For example, as of May 31,
1995, this Index was tracking 34 of the same stocks tracked by the Russell 2000
Index.
THE MIDCAP INDEX FUND TRACKS THE STANDARD & POOR'S MIDCAP 400 INDEX*
The Standard & Poor's MidCap 400 Index (S&P MidCap 400) tracks the common stock
performance of 400 medium capitalized U.S. and foreign companies that are in the
manufacturing, utilities, transportation, and financial industries. Medium
capitalized means the market value of these companies' stock is around $600
million.
Standard & Poor's created this Index in 1991 to give investors an idea of how
the stocks of medium capitalized companies generally perform.
Standard & Poor's may periodically change some of the stocks in the index. And,
different indexes sometimes include some of the same stocks. For example, as of
May 31, 1995, this Index was tracking 123 of the same stocks tracked by the
Russell 2000 Index. This Index does not track the same stocks as the S&P 500
Index.
THE SMALL CAP INDEX FUND TRACKS THE RUSSELL 2000 INDEX**
The Russell 2000 Index is provided by The Frank Russell Company. This Index
tracks the common stock performance of 2,000 small capitalized U.S. companies in
various industries. Small capitalized means these companies have a market value
below $750 million.
The Frank Russell Company created this Index in 1979 to give investors an idea
of how the stocks of small capitalized companies generally perform. Most of the
companies tracked by this Index have common stocks with a market value of $100
million to $750 million.
The stocks tracked by this Index are updated monthly because many small
capitalized companies eventually become medium capitalized companies and some
fail.
16
THE INTERNATIONAL EQUITIES FUND TRACKS THE MORGAN STANLEY CAPITAL INTERNATIONAL,
EUROPE, AUSTRALIA AND THE FAR EAST (EAFE) INDEX
The EAFE Index tracks the performance of about 1,000 common stocks of companies
in 20 foreign countries. This index provides a measure of the performance of
companies in the more developed countries in Europe, Australia and the Far East.
Morgan Stanley publishes the EAFE Index daily and, at times, may change some of
the stocks in the index.
HOW CLOSELY CAN INDEX FUNDS TRACK THE PERFORMANCE OF THEIR INDEX?
The factors that cause a Fund to perform differently from the Index it tries to
track are called tracking differences. There is no assurance that an Index Fund
can track its index.
The coefficient of correlation (r) is an index number which shows how closely
two variables are related. If r=0 there is no tendency for one variable to
change with the other. A value of +1 means that one variable will vary exactly
with the other. Index funds try to keep their coefficient of correlation as
close to 1 as possible. As a practical matter, any coefficient above .95, when
measured against the comparison index, shows good tracking.
The index may remove one stock and substitute another requiring the sub-adviser
of the Fund to do the same. When a stock is sold and the new stock purchased,
the Fund incurs transaction costs. The index incurs no transaction costs.
Therefore, the portfolio manager cannot match exactly the performance of an
index.
Also, it may not be possible for a Fund to buy every stock in its index or in
the same proportions. Fund portfolio managers may rely on a statistical
selection technique to figure out, of the stocks tracked by their index, how
many and which ones to buy. Stocks are bought and sold when they are added to or
dropped from the Index. This keeps brokerage fees and other transaction costs
low. For more information, see the "Investment Strategy" sections on each Fund's
Fact Sheet.
- ---------
* "STANDARD & POOR'S", "S&P(R)", "S&P 500(R)" "S&P MIDCAP 400(R)" ARE
TRADEMARKS OF STANDARD & POOR'S ("S&P"). NEITHER THE MIDCAP INDEX FUND NOR
THE STOCK INDEX FUND IS SPONSORED, ENDORSED, SOLD OR PROMOTED BY S&P, AND
S&P MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF INVESTMENT IN
THESE FUNDS.
** THE RUSSELL 2000 INDEX IS A TRADEMARK/SERVICE MARK OF THE FRANK RUSSELL
TRUST COMPANY. THE SMALL CAP INDEX FUND IS NOT PROMOTED, SPONSORED OR
ENDORSED BY, NOR IN ANY WAY AFFILIATED WITH FRANK RUSSELL COMPANY. FRANK
RUSSELL COMPANY IS NOT RESPONSIBLE FOR AND HAS NOT REVIEWED THE FUND OR ANY
ASSOCIATED LITERATURE OR PUBLICATIONS AND MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THEIR ACCURACY, OR COMPLETENESS, OR
OTHERWISE.
17
STOCK INDEX FUND ----------------------------------
Fact Sheet Investment Goal
GROWTH THROUGH
INVESTMENTS TRACKING
THE S&P 500 INDEX
----------------------------------
Investment Category
GROWTH
- -------------------------------------------------------------------------------
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER
VALIC
INVESTMENT SUB-ADVISER
Bankers Trust
INVESTMENT OBJECTIVE
Seeks long-term capital growth through investment in common stocks that, as a
group, are expected to provide investment results closely corresponding to the
performance of the S&P 500 Index.
INVESTMENT RISK
The S&P 500 Index includes the stocks of many large, well-established companies.
These companies usually have the financial strength to weather difficult
financial times. However, the value of any stock can rise and fall over short
and long periods of time. This Fund which holds nearly all of the 500 stocks in
the S&P 500 Index avoids the risk of individual stock selection and seeks to
provide the return of the large company sector of the market. In the past that
return has been positive over many years but can be negative at certain times.
There is no assurance that a positive return will occur in the future.
Because the Fund invests in many of the stocks tracked by this Index, your
investment will experience similar changes in value and share similar risks,
such as market risk and risk associated with foreign securities. For more
information about market risk and risk associated with foreign securities, see
"A Word About Risk" in this prospectus.
INVESTMENT STRATEGY
The Fund invests in most of the stocks in the S&P 500 Index that, as a group,
should reflect its performance. Since it's not possible for this Fund to buy
every stock included in its Index or in the same proportions, we buy as many
stocks as we need to closely track the performance of the S&P 500 Index.
We follow the guidelines listed below for making the primary investments for the
Fund.
PERCENT OF
FUND INVESTMENTS FUND'S ASSETS*
- ----------------------------------------------------------
Stocks in the S&P 500 Index at least 65%
- ----------------------------------------------------------
Foreign stocks (listed and no more than 20%
over-the-counter) in the S&P
500 Index
- ----------------------------------------------------------
Futures and options no more than 33%
- ----------------------------------------------------------
Investments not in the S&P no more than 35%
500 Index
Common stock and
related securities
High quality money
market securities
Illiquid and restricted
securities
- ----------------------------------------------------------
* At time of purchase.
18
STOCK INDEX FUND
Fact Sheet
For the fiscal year ended May 31, 1995, this Fund had a return of 20.36%, before
subtracting expenses of 0.38%. This return represented a positive tracking
difference of 0.17% compared to the S&P 500 Index. A combination of careful
purchasing of securities and low cost trading techniques resulted in the close
tracking of the Index.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE STOCK INDEX FUND AND THE S&P 500 INDEX
Average Annual Total Return - Fund
1 Year 5 Year Since Inception
19.98% 10.58% 10.11%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
STOCK INDEX S&P 500
FUND INDEX
------------ -------------
20-Apr-87 .................. 10,000.00 10,000.00
30-Apr-87 .................. 9,840.00 9,967.44
31-May-87 .................. 9,920.16 10,053.86
30-Jun-87 .................. 10,415.68 10,561.58
31-Jul-87 .................. 10,915.14 11,096.63
31-Aug-87 .................. 11,348.93 11,510.64
30-Sep-87 .................. 11,066.44 11,258.33
31-Oct-87 .................. 8,628.40 8,833.74
30-Nov-87 .................. 7,971.04 8,105.75
31-Dec-87 .................. 8,619.72 8,722.35
31-Jan-88 .................. 8,936.32 9,089.21
29-Feb-88 .................. 9,330.49 9,512.86
31-Mar-88 .................. 9,041.01 9,219.01
30-Apr-88 .................. 9,126.64 9,320.97
31-May-88 .................. 9,177.83 9,401.60
30-Jun-88 .................. 9,566.35 9,833.04
31-Jul-88 .................. 9,529.48 9,795.77
31-Aug-88 .................. 9,189.38 9,463.20
30-Sep-88 .................. 9,591.57 9,866.43
31-Oct-88 .................. 9,816.35 10,141.11
30-Nov-88 .................. 9,665.56 9,996.60
31-Dec-88 .................. 9,849.03 10,171.04
31-Jan-89 .................. 10,532.84 10,915.87
28-Feb-89 .................. 10,262.28 10,643.84
31-Mar-89 .................. 10,461.40 10,892.16
30-Apr-89 .................. 10,977.38 11,457.69
31-May-89 .................. 11,417.37 11,921.26
30-Jun-89 .................. 11,305.35 11,853.67
31-Jul-89 .................. 12,284.06 12,923.94
31-Aug-89 .................. 12,516.58 13,176.60
30-Sep-89 .................. 12,472.83 13,123.10
31-Oct-89 .................. 12,192.53 12,818.39
30-Nov-89 .................. 12,443.45 13,079.75
31-Dec-89 .................. 12,721.71 13,393.80
31-Jan-90 .................. 11,878.02 12,494.54
28-Feb-90 .................. 12,015.07 12,655.47
31-Mar-90 .................. 12,350.76 12,990.84
30-Apr-90 .................. 12,022.59 12,666.72
31-May-90 .................. 13,218.83 13,901.85
30-Jun-90 .................. 13,147.92 13,808.01
31-Jul-90 .................. 13,052.56 13,763.69
31-Aug-90 .................. 11,824.51 12,519.59
30-Sep-90 .................. 11,255.21 11,910.26
31-Oct-90 .................. 11,163.15 11,859.52
30-Nov-90 .................. 11,885.15 12,626.12
31-Dec-90 .................. 12,229.67 12,977.88
31-Jan-91 .................. 12,739.04 13,543.07
28-Feb-91 .................. 13,628.53 14,511.67
31-Mar-91 .................. 13,936.95 14,863.14
30-Apr-91 .................. 13,941.65 14,898.37
31-May-91 .................. 14,538.40 15,541.09
30-Jun-91 .................. 13,858.38 14,829.15
31-Jul-91 .................. 14,489.63 15,520.33
31-Aug-91 .................. 14,804.64 15,888.01
30-Sep-91 .................. 14,545.68 15,622.21
31-Oct-91 .................. 14,750.41 15,832.17
30-Nov-91 .................. 14,211.59 15,194.29
31-Dec-91 .................. 15,775.87 16,932.06
31-Jan-92 .................. 15,450.66 16,616.62
29-Feb-92 .................. 15,635.46 16,831.80
31-Mar-92 .................. 15,310.15 16,504.42
30-Apr-92 .................. 15,708.17 16,988.99
31-May-92 .................. 15,784.21 17,072.24
30-Jun-92 .................. 15,560.05 16,818.20
31-Jul-92 .................. 16,183.23 17,505.23
31-Aug-92 .................. 15,837.32 17,146.90
30-Sep-92 .................. 16,042.51 17,348.37
31-Oct-92 .................. 16,096.17 17,408.22
30-Nov-92 .................. 16,633.50 18,000.97
31-Dec-92 .................. 16,827.27 18,221.85
31-Jan-93 .................. 16,992.56 18,374.18
28-Feb-93 .................. 17,244.06 18,624.62
31-Mar-93 .................. 17,621.36 19,017.60
30-Apr-93 .................. 17,192.63 18,557.94
31-May-93 .................. 17,637.58 19,054.37
30-Jun-93 .................. 17,677.02 19,110.20
31-Jul-93 .................. 17,598.74 19,033.38
31-Aug-93 .................. 18,250.10 19,755.50
30-Sep-93 .................. 18,106.93 19,603.98
31-Oct-93 .................. 18,473.24 20,009.58
30-Nov-93 .................. 18,287.99 19,818.89
31-Dec-93 .................. 18,488.69 20,058.50
31-Jan-94 .................. 19,092.22 20,740.49
28-Feb-94 .................. 18,565.05 20,177.39
31-Mar-94 .................. 17,748.25 19,297.65
30-Apr-94 .................. 17,945.09 19,545.05
31-May-94 .................. 18,218.46 19,865.78
30-Jun-94 .................. 17,775.61 19,378.87
31-Jul-94 .................. 18,342.70 20,015.28
31-Aug-94 .................. 19,094.23 20,835.90
30-Sep-94 .................. 18,623.21 20,326.46
31-Oct-94 .................. 19,041.69 20,783.20
30-Nov-94 .................. 18,356.68 20,026.28
31-Dec-94 .................. 18,618.40 20,323.26
31-Jan-95 .................. 19,112.67 20,850.25
28-Feb-95 .................. 19,849.16 21,662.78
31-Mar-95 .................. 20,417.80 22,302.05
30-Apr-95 .................. 21,026.65 22,958.85
31-May-95 .................. 21,858.44 23,876.51
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
19
MIDCAP INDEX FUND
Fact Sheet
INVESTMENT GOAL -- GROWTH THROUGH INVESTMENTS TRACKING THE S&P 400 MIDCAP INDEX
INVESTMENT CATEGORY -- GROWTH
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER: VALIC INVESTMENT SUB-ADVISER: Bankers Trust
INVESTMENT OBJECTIVE --
Seeks to provide growth of capital through investments primarily in a
diversified portfolio of common stocks that, as a group, are expected to provide
investment results closely corresponding to the performance of the S&P MidCap
400 Index.
INVESTMENT RISK
The S&P MidCap 400 Index includes the stocks of many medium sized companies.
These companies usually do not have as much financial strength as very large
companies and so may not be able to do as well in difficult times. However,
because they are medium sized, they have more potential to grow, which means the
value of their stock may increase. The S&P MidCap 400 Index also includes stocks
of certain medium sized foreign companies. These stocks can be more risky than
large company stocks. An index fund holding nearly all of the 400 stocks in the
S&P MidCap 400 Index avoids the risk of individual stock selection and seeks to
provide the return of the medium-sized company sector of the market. On average
that return has been positive over many years but can be negative at certain
times. There is no assurance that a positive return will occur in the future.
Because this Fund invests in many of the stocks tracked by this Index, your
investment will experience similar changes in value and share similar risks such
as market risk and risk associated with foreign securities. For more information
about market risk and risk associated with foreign securities, see "A Word About
Risk" in this prospectus.
INVESTMENT STRATEGY
The Fund invests in most of the stocks in the S&P MidCap 400 Index that, as a
group, should reflect its performance. Since it's not possible for this Fund to
buy every stock included in its index or in the same proportions, we buy as many
stocks as we need to closely track the performance of the S&P MidCap 400 Index.
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND'S ASSETS*
Stocks in the S&P MidCap 400 Index at least 65%
Foreign stocks (listed and no more than 20%
over-the-counter)
in the S&P MidCap 400 Index
Futures and options no more than 33%
Investments not in the S&P MidCap no more than 35%
400 Index
Common stock and related securities
High quality money market securities
illiquid and restricted securities
- ---------
* At time of purchase.
20
MIDCAP INDEX FUND
Fact Sheet
For the fiscal year ended May 31, 1995, this Fund had a return of 13.70%, before
subtracting expenses of 0.44%. This return represented a positive tracking
difference of 0.20% compared to the S&P MidCap 400 Index. The positive tracking
resulted from the use of futures to keep the Fund fully invested. The Fund uses
some S&P 500 Index futures because of their high liquidity and lower cost. In
the past year these futures outperformed the MidCap 400 Index and this
contributed to the positive tracking of the Index.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE MIDCAP INDEX FUND AND
THE S&P MIDCAP 400 INDEX
Average Annual Total Return - Fund
1 Year Since 10/1/91
19.98% 10.11%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
MIDCAP INDEX S&P MIDCAP
FUND 400 INDEX
------------ -------------
01-Oct-91 .................. 10,000.00 10,000.00
31-Oct-91 .................. 10,386.29 10,391.80
30-Nov-91 .................. 10,016.62 10,041.60
31-Dec-91 .................. 11,190.90 11,228.61
31-Jan-92 .................. 11,339.99 11,427.25
29-Feb-92 .................. 11,496.15 11,609.06
31-Mar-92 .................. 11,049.74 11,171.86
30-Apr-92 .................. 10,901.18 11,038.47
31-May-92 .................. 10,987.86 11,143.00
30-Jun-92 .................. 10,671.41 10,824.87
31-Jul-92 .................. 11,183.88 11,362.32
31-Aug-92 .................. 10,911.94 11,090.54
30-Sep-92 .................. 11,056.97 11,245.69
31-Oct-92 .................. 11,312.32 11,515.03
30-Nov-92 .................. 11,926.36 12,158.49
31-Dec-92 .................. 12,298.40 12,566.28
31-Jan-93 .................. 12,428.44 12,723.36
28-Feb-93 .................. 12,262.11 12,545.36
31-Mar-93 .................. 12,671.04 12,978.55
30-Apr-93 .................. 12,328.19 12,638.90
31-May-93 .................. 12,878.62 13,214.61
30-Jun-93 .................. 12,939.28 13,280.81
31-Jul-93 .................. 12,899.79 13,255.31
31-Aug-93 .................. 13,431.85 13,802.62
30-Sep-93 .................. 13,546.59 13,948.38
31-Oct-93 .................. 13,579.81 13,993.85
30-Nov-93 .................. 13,283.84 13,684.31
31-Dec-93 .................. 13,885.20 14,319.53
31-Jan-94 .................. 14,219.39 14,652.60
28-Feb-94 .................. 14,015.91 14,444.68
31-Mar-94 .................. 13,367.03 13,775.61
30-Apr-94 .................. 13,473.09 13,878.10
31-May-94 .................. 13,331.86 13,746.67
30-Jun-94 .................. 12,864.32 13,273.24
31-Jul-94 .................. 13,303.77 13,722.40
31-Aug-94 .................. 13,998.41 14,441.04
30-Sep-94 .................. 13,740.53 14,171.57
31-Oct-94 .................. 13,886.05 14,326.47
30-Nov-94 .................. 13,253.80 13,680.35
31-Dec-94 .................. 13,365.56 13,805.93
31-Jan-95 .................. 13,497.32 13,949.65
28-Feb-95 .................. 14,213.12 14,680.89
31-Mar-95 .................. 14,454.26 14,935.61
30-Apr-95 .................. 14,746.43 15,235.51
31-May-95 .................. 15,099.61 15,603.15
FISCAL YEAR ENDED MAY 31
*Effective October 1, 1991, the Fund's name was changed from the Capital
Accumulation Fund to the MidCap Index Fund. Additionally the investment
objectives and investment program for the Fund were changed.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE MIDCAP INDEX FUND AND
THE S&P MIDCAP 400 INDEX
Average Annual Total Return - Fund
1 Year 5 year 10 year
13.26% 7.65% 7.93%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
MIDCAP INDEX S&P MIDCAP
FUND 400 INDEX
------------ -------------
01-Jun-85 .................. 10,000.00 10,000.00
30-Jun-85 .................. 9,968.52 10,419.70
30-Jul-85 .................. 10,025.04 10,428.35
31-Aug-85 .................. 9,834.09 10,353.89
30-Sep-85 .................. 9,397.32 9,858.87
31-Oct-85 .................. 9,558.28 10,405.64
30-Nov-85 .................. 10,152.43 11,052.35
31-Dec-85 .................. 10,571.17 11,599.56
31-Jan-86 .................. 10,631.65 11,792.92
28-Feb-86 .................. 11,242.93 12,662.18
31-Mar-86 .................. 11,500.97 13,272.49
30-Apr-86 .................. 11,566.55 13,371.77
31-May-86 .................. 12,122.41 13,897.82
30-Jun-86 .................. 12,027.79 14,268.47
31-Jul-86 .................. 11,151.57 13,563.32
31-Aug-86 .................. 11,688.38 14,304.56
30-Sep-86 .................. 10,563.84 13,175.22
31-Oct-86 .................. 11,158.17 13,727.52
30-Nov-86 .................. 11,237.25 13,722.17
31-Dec-86 .................. 10,977.43 13,479.83
31-Jan-87 .................. 12,032.16 15,215.09
28-Feb-87 .................. 12,755.21 15,923.96
31-Mar-87 .................. 12,809.79 16,299.45
30-Apr-87 .................. 12,559.64 15,759.12
31-May-87 .................. 12,643.02 15,598.07
30-Jun-87 .................. 12,895.93 16,161.31
31-Jul-87 .................. 13,233.38 16,615.44
31-Aug-87 .................. 13,850.36 17,217.92
30-Sep-87 .................. 13,720.19 16,885.44
31-Oct-87 .................. 10,488.96 12,894.40
30-Nov-87 .................. 9,769.63 12,257.93
31-Dec-87 .................. 10,566.20 13,205.71
31-Jan-88 .................. 10,884.00 13,810.54
29-Feb-88 .................. 11,593.95 14,687.09
31-Mar-88 .................. 11,488.01 14,925.76
30-Apr-88 .................. 11,586.60 15,001.13
31-May-88 .................. 11,719.66 14,687.76
30-Jun-88 .................. 12,468.84 15,746.16
31-Jul-88 .................. 12,113.69 15,323.06
31-Aug-88 .................. 11,599.11 14,967.41
30-Sep-88 .................. 11,948.73 15,539.91
31-Oct-88 .................. 11,930.78 15,646.98
30-Nov-88 .................. 11,673.08 15,342.18
31-Dec-88 .................. 12,051.11 15,961.54
31-Jan-89 .................. 12,810.07 17,049.00
28-Feb-89 .................. 12,612.93 17,105.10
31-Mar-89 .................. 12,814.70 17,485.00
30-Apr-89 .................. 13,220.87 18,431.11
31-May-89 .................. 13,718.64 19,320.78
30-Jun-89 .................. 13,210.35 19,234.81
31-Jul-89 .................. 14,081.55 20,377.35
31-Aug-89 .................. 14,325.10 21,101.16
30-Sep-89 .................. 14,350.71 21,333.90
31-Oct-89 .................. 13,729.82 20,436.81
30-Nov-89 .................. 14,031.95 20,888.26
31-Dec-89 .................. 14,375.15 21,634.39
31-Jan-90 .................. 13,450.94 19,804.77
28-Feb-90 .................. 13,806.55 20,516.16
31-Mar-90 .................. 14,139.87 20,959.72
30-Apr-90 .................. 13,520.88 20,146.06
31-May-90 .................. 14,845.90 22,112.72
30-Jun-90 .................. 14,816.58 22,203.60
31-Jul-90 .................. 14,532.60 21,696.03
31-Aug-90 .................. 13,070.62 19,447.02
30-Sep-90 .................. 12,245.01 18,256.08
31-Oct-90 .................. 11,876.75 17,700.00
30-Nov-90 .................. 12,744.70 19,401.15
31-Dec-90 .................. 13,038.82 20,527.38
31-Jan-91 .................. 13,620.37 22,149.05
28-Feb-91 .................. 14,499.05 24,137.81
31-Mar-91 .................. 14,599.97 25,238.98
30-Apr-91 .................. 14,507.56 25,232.67
31-May-91 .................. 14,876.21 26,395.64
30-Jun-91 .................. 13,741.06 25,053.69
31-Jul-91 .................. 14,297.70 26,561.42
31-Aug-91 .................. 14,578.93 27,528.52
30-Sep-91 .................. 14,217.30 27,439.60
31-Oct-91 .................. 14,766.51 28,514.69
30-Nov-91 .................. 14,240.94 27,553.74
31-Dec-91 .................. 15,910.44 30,810.87
31-Jan-92 .................. 16,122.41 31,355.91
29-Feb-92 .................. 16,344.42 31,854.79
31-Mar-92 .................. 15,709.75 30,655.14
30-Apr-92 .................. 15,498.54 30,289.11
31-May-92 .................. 15,621.78 30,575.95
30-Jun-92 .................. 15,171.87 29,703.01
31-Jul-92 .................. 15,900.47 31,177.76
31-Aug-92 .................. 15,513.83 30,431.99
30-Sep-92 .................. 15,720.02 30,857.73
31-Oct-92 .................. 16,083.07 31,596.78
30-Nov-92 .................. 16,956.06 33,362.40
31-Dec-92 .................. 17,485.01 34,481.38
31-Jan-93 .................. 17,669.89 34,912.40
28-Feb-93 .................. 17,433.42 34,423.97
31-Mar-93 .................. 18,014.80 35,612.63
30-Apr-93 .................. 17,527.36 34,680.65
31-May-93 .................. 18,309.92 36,260.35
30-Jun-93 .................. 18,396.17 36,442.02
31-Jul-93 .................. 18,340.02 36,372.05
31-Aug-93 .................. 19,096.46 37,873.85
30-Sep-93 .................. 19,259.59 38,273.80
31-Oct-93 .................. 19,306.82 38,398.57
30-Nov-93 .................. 18,886.03 37,549.19
31-Dec-93 .................. 19,741.01 39,292.23
31-Jan-94 .................. 20,216.14 40,206.16
28-Feb-94 .................. 19,926.84 39,635.64
31-Mar-94 .................. 19,004.32 37,799.72
30-Apr-94 .................. 19,155.11 38,080.95
31-May-94 .................. 18,954.31 37,720.32
30-Jun-94 .................. 18,289.59 36,421.23
31-Jul-94 .................. 18,914.37 37,653.73
31-Aug-94 .................. 19,901.96 39,625.65
30-Sep-94 .................. 19,535.32 38,886.24
31-Oct-94 .................. 19,742.21 39,311.26
30-Nov-94 .................. 18,843.33 37,538.33
31-Dec-94 .................. 19,002.22 37,882.93
31-Jan-95 .................. 19,189.54 38,277.29
28-Feb-95 .................. 20,207.23 40,283.78
31-Mar-95 .................. 20,550.06 40,982.71
30-Apr-95 .................. 20,965.45 41,805.64
31-May-95 .................. 21,467.57 42,814.41
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
21
SMALL CAP INDEX FUND
Fact Sheet
INVESTMENT GOAL -- GROWTH THROUGH INVESTMENTS TRACKING THE RUSSELL 2000 INDEX
INVESTMENT CATEGORY -- GROWTH
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER: VALIC INVESTMENT SUB-ADVISER: Bankers Trust
INVESTMENT OBJECTIVE --
Seeks to provide growth of capital through investment primarily in a diversified
portfolio of common stocks that, as a group, are expected to provide investment
results closely corresponding to the performance of the Russell 2000 Index.
INVESTMENT RISK --
The Russell 2000 Index includes many small U.S. companies. Some of these
companies often do not have the financial strength needed to do well in
difficult times. Also, they often sell limited numbers of products, which can
make it harder for them to compete with medium and large companies. However,
because they are small, their stock prices may fluctuate more over the
short-term, but they have more potential to grow. This means their stock value
may offer greater potential for appreciation. An index fund holding a large
sampling of the 2,000 stocks in the Russell 2000 Index avoids the risks of
individual stock selection and seeks to provide the return of the smaller-sized
company sector of the market. On average that return has been positive over the
years but has been negative at certain times. There is no assurance that a
positive return will occur in the future.
Because this Fund invests in many of the stocks tracked by this Index, your
investment will experience similar changes in value and share similar risks such
as market risk and risk associated with foreign securities. For more information
about market risk and risk associated with foreign securities, see "A Word About
Risk" in this prospectus.
INVESTMENT STRATEGY --
The Fund invests in a sampling of stocks in the Russell 2000 Index that, as a
group, should reflect its performance. Since its not possible for this Fund to
buy every stock included in its index or in the same proportions, we buy as many
stocks as we need to closely track the performance of the Russell 2000 Index.
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND'S ASSETS*
Stocks in the Russell 2000 Index at least 65%
Foreign stocks (listed and no more than 20%
over-the-counter)
in the Russell 2000 Index
Futures and options no more than 33%
Investments not in the Russell 2000 no more than 35%
Index
Common stock and related securities
High quality money market securities
illiquid and restricted securities
---------
* At time of purchase.
22
SMALL CAP INDEX FUND
Fact Sheet
For the fiscal year ended May 31, 1995, this Fund had a return of 10.42%, before
subtracting expenses of 0.44%. This return represented a positive tracking
difference of 0.11% compared to the Russell 2000 Index. The positive tracking
resulted from the use of futures to keep the Fund fully invested. The Fund uses
some S&P 500 Index futures because of their high liquidity and lower cost. In
the past year the S&P 500 Index outperformed the Russell 2000 Index and this
contributed to the positive tracking of the Index.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE SMALL CAP INDEX FUND AND
THE RUSSELL 2000 INDEX
Average Annual Total Return - Fund
1 Year Since Inception
9.98% 10.36%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
SMALL CAP RUSSELL
INDEX FUND 2000 INDEX
------------- ------------
01-May-92 .................. 10,000.00 10,000.00
31-May-92 .................. 9,949.99 10,132.98
30-Jun-92 .................. 9,502.07 9,653.76
31-Jul-92 .................. 9,893.28 9,989.52
31-Aug-92 .................. 9,694.79 9,707.63
30-Sep-92 .................. 9,890.75 9,931.67
31-Oct-92 .................. 10,133.68 10,247.35
30-Nov-92 .................. 10,743.08 11,031.48
31-Dec-92 .................. 11,101.31 11,415.79
31-Jan-93 .................. 11,425.27 11,802.18
28-Feb-93 .................. 11,120.62 11,529.58
31-Mar-93 .................. 11,449.38 11,903.71
30-Apr-93 .................. 11,108.05 11,576.96
31-May-93 .................. 11,606.12 12,089.23
30-Jun-93 .................. 11,665.27 12,164.65
31-Jul-93 .................. 11,746.89 12,332.60
31-Aug-93 .................. 12,252.47 12,865.39
30-Sep-93 .................. 12,613.91 13,228.45
31-Oct-93 .................. 12,880.89 13,568.93
30-Nov-93 .................. 12,458.92 13,122.33
31-Dec-93 .................. 12,869.40 13,571.00
31-Jan-94 .................. 13,249.31 13,996.49
28-Feb-94 .................. 13,175.84 13,945.87
31-Mar-94 .................. 12,442.28 13,209.56
30-Apr-94 .................. 12,481.86 13,288.07
31-May-94 .................. 12,323.81 13,138.86
30-Jun-94 .................. 11,897.80 12,692.71
31-Jul-94 .................. 12,091.04 12,901.25
31-Aug-94 .................. 12,752.81 13,620.14
30-Sep-94 .................. 12,662.69 13,574.54
31-Oct-94 .................. 12,631.73 13,520.96
30-Nov-94 .................. 12,119.84 12,974.90
31-Dec-94 .................. 12,440.34 13,323.49
31-Jan-95 .................. 12,278.18 13,155.39
28-Feb-95 .................. 12,770.50 13,702.64
31-Mar-95 .................. 13,017.95 13,938.63
30-Apr-95 .................. 13,320.98 14,248.56
31-May-95 .................. 13,553.73 14,493.56
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
23
INTERNATIONAL EQUITIES FUND
Fact Sheet
INVESTMENT GOAL -- GROWTH THROUGH INVESTMENTS TRACKING THE EAFE INDEX
INVESTMENT CATEGORY -- GROWTH
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER: VALIC
PORTFOLIO MANAGER: While this Fund attempts to track the performance of the
EAFE Index, it is actively managed. William Trimbur, Jr. has been this Fund's
Portfolio Manager since the Fund was started in 1989. He has been Vice President
and Investment Officer for the Series Company since 1987. Mr. Trimbur is also
the portfolio manager for The International Government Bond Fund.
INVESTMENT OBJECTIVE --
Seeks to provide long-term growth of capital through investments primarily in a
diversified portfolio of equity and equity related securities of foreign issuers
that, as a group, are expected to provide investment results closely
corresponding to the performance of the EAFE Index.
INVESTMENT RISK --
As described in the Investment Strategy section below, this Fund invests almost
all its assets in foreign securities, which have risks that U.S. investments
don't have. For a further explanation of the risks associated with foreign
securities and market risk, see "A Word About Risk" in this prospectus.
INVESTMENT STRATEGY --
The Fund invests in a sampling of about 100 foreign stocks of companies that are
either in the EAFE Index or are similar to stocks in the EAFE Index. These
stocks, as a group, should reflect EAFE's performance. Since it's not possible
for this Fund to buy every stock included in this index or in the same
proportions, we buy as many stocks as are needed to closely track the
performance of the EAFE Index.
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND ASSETS*
Stocks in EAFE Index at least 65%
Other investments not in EAFE Index no more than 35%
Foreign equity and related
securities including common
stocks, convertible stocks,
preferred stocks and warrants
Futures and options no more than 33%
Covered put and call options
on foreign currencies, listed
and unlisted put and call
options on currency futures,
Listed and unlisted foreign
currency futures contracts
High quality foreign and domestic up to 100%
money market securities**
Illiquid and restricted no more than 10%
securities
- ---------
*At time of purchase.
**It is possible we may invest up to 100% of the Fund's assets in short term,
high quality, foreign and domestic money market securities when we think
economic, political and market conditions in foreign countries make it too
risky to follow our general guidelines.
24
INTERNATIONAL EQUITIES FUND
Fact Sheet
For the fiscal year ended May 31, 1995, the Fund had a return of 5.37% before
subtracting expenses of 0.45%. This return represented a positive tracking
difference of 0.44% compared to the EAFE Index. This tracking difference
resulted from the Fund's heavy exposure to financial service companies. A second
factor was the merger activity of companies in Europe which generated large
gains in a small number of holdings. For the year, the gains in Europe were
offset somewhat by the 21% decline in the Japanese market.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE INTERNATIONAL EQUITIES FUND AND
THE EAFE INDEX
Average Annual Total Return - Fund
1 Year 5 Year Since Inception
19.98% 4.67% 2.71%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
INTERNATIONAL
EQUITIES FUND EAFE INDEX
------------ ------------
02-Oct-89 .................. 10,000.00 10,000.00
31-Oct-89 .................. 9,467.86 9,611.15
30-Nov-89 .................. 9,954.00 10,094.23
31-Dec-89 .................. 10,312.63 10,467.01
31-Jan-90 .................. 9,946.33 10,077.54
28-Feb-90 .................. 9,287.31 9,374.18
31-Mar-90 .................. 8,435.58 8,397.36
30-Apr-90 .................. 8,367.25 8,330.74
31-May-90 .................. 9,257.81 9,281.55
30-Jun-90 .................. 9,148.00 9,199.70
31-Jul-90 .................. 9,312.00 9,329.28
31-Aug-90 .................. 8,581.16 8,423.42
30-Sep-90 .................. 7,674.32 7,249.50
31-Oct-90 .................. 8,604.25 8,378.92
30-Nov-90 .................. 8,228.58 7,884.54
31-Dec-90 .................. 8,238.92 8,012.84
31-Jan-91 .................. 8,473.44 8,271.71
28-Feb-91 .................. 9,245.76 9,158.35
31-Mar-91 .................. 8,740.62 8,608.43
30-Apr-91 .................. 8,879.95 8,693.15
31-May-91 .................. 8,914.12 8,784.11
30-Jun-91 .................. 8,346.01 8,138.70
31-Jul-91 .................. 8,804.92 8,538.48
31-Aug-91 .................. 8,625.45 8,364.88
30-Sep-91 .................. 9,053.84 8,836.44
31-Oct-91 .................. 9,236.35 8,961.54
30-Nov-91 .................. 8,822.09 8,543.15
31-Dec-91 .................. 9,158.81 8,984.48
31-Jan-92 .................. 8,915.44 8,792.75
29-Feb-92 .................. 8,537.40 8,478.03
31-Mar-92 .................. 7,949.67 7,918.30
30-Apr-92 .................. 8,019.94 7,955.54
31-May-92 .................. 8,495.84 8,488.04
30-Jun-92 .................. 8,156.05 8,085.70
31-Jul-92 .................. 8,048.84 7,878.77
31-Aug-92 .................. 8,506.04 8,372.93
30-Sep-92 .................. 8,304.92 8,207.59
31-Oct-92 .................. 7,843.56 7,777.06
30-Nov-92 .................. 7,962.04 7,850.25
31-Dec-92 .................. 7,929.36 7,890.85
31-Jan-93 .................. 7,940.12 7,889.88
28-Feb-93 .................. 8,176.82 8,128.21
31-Mar-93 .................. 8,801.37 8,836.71
30-Apr-93 .................. 9,441.27 9,675.33
31-May-93 .................. 9,700.23 9,879.68
30-Jun-93 .................. 9,415.93 9,725.53
31-Jul-93 .................. 9,823.25 10,065.97
31-Aug-93 .................. 10,426.44 10,609.37
30-Sep-93 .................. 10,245.51 10,370.56
31-Oct-93 .................. 10,577.72 10,690.15
30-Nov-93 .................. 9,606.94 9,755.72
31-Dec-93 .................. 10,298.16 10,460.15
31-Jan-94 .................. 11,157.25 11,344.51
28-Feb-94 .................. 11,113.75 11,313.09
31-Mar-94 .................. 10,634.48 10,825.82
30-Apr-94 .................. 11,082.05 11,285.15
31-May-94 .................. 11,088.47 11,220.36
30-Jun-94 .................. 11,200.43 11,378.92
31-Jul-94 .................. 11,363.53 11,488.35
31-Aug-94 .................. 11,632.41 11,760.34
30-Sep-94 .................. 11,264.95 11,389.94
31-Oct-94 .................. 11,633.22 11,769.23
30-Nov-94 .................. 11,058.75 11,203.59
31-Dec-94 .................. 11,119.65 11,273.75
31-Jan-95 .................. 10,642.94 10,840.66
28-Feb-95 .................. 10,645.73 10,809.55
31-Mar-95 .................. 11,222.90 11,483.75
30-Apr-95 .................. 11,717.31 11,915.64
31-May-95 .................. 11,633.50 11,773.60
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
25
GROWTH FUND
Fact Sheet
INVESTMENT GOAL -- GROWTH THROUGH INVESTMENTS IN SERVICE SECTOR COMPANIES
INVESTMENT CATEGORY -- GROWTH
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES
OF INVESTMENTS".
INVESTMENT ADVISER: VALIC INVESTMENT SUB-ADVISER: T. Rowe Price
PORTFOLIO MANAGER: This Fund is managed by an Investment Advisory Committee
chaired by John H. Laporte. Mr. Laporte has been managing investments since
joining T. Rowe Price in 1976. He has been chairman of this committee since it
was started in 1985.
INVESTMENT OBJECTIVE --
Seeks to provide long-term growth of capital through investment primarily in
common stocks of U.S. growth companies engaged in service-related activities.
INVESTMENT RISK --
This Fund invests in many companies that are small and/or new. These companies
face special risks because they may not have the financial strength to do well
during difficult times. The securities that the Fund invests in involve certain
risks, such as market risk, and risk associated with foreign securities. For a
discussion of these risks, see "A Word About Risk" in this prospectus.
INVESTMENT STRATEGY --
The Fund invests primarily in U.S. companies that are in the services industry.
Examples include: consumer services (retailing, entertainment/leisure,
restaurants/food distribution) business services (healthcare, computers), and
financial services (insurance, investment service). We believe service companies
will continue to grow in value faster and be more successful than manufacturing
companies. Currently, over 50% of the U.S. economy is made up of service
industry companies.
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND ASSETS*
Common stocks and related securities, at least 75%
bonds, preferred stock, convertible
stock of service industry companies
Foreign securities up to 15%
Equity securities sold by non-service up to 25%
related companies
Illiquid and restricted securities** up to 15%
Futures and options up to 25%
High quality money market up to 100%
securities***
- ---------
* At the time of purchase.
** We may invest up to 15% of the Fund's assets in illiquid securities, as long
as no more than 5% of the Fund's assets are invested in restricted
securities that are also considered illiquid. Restricted securities are
explained under "Types of Investments".
*** If for temporary defensive reasons, we invest 35% or more of the Fund's
assets in money market securities, it is likely 25% or more of the Fund's
assets will be invested in securities of the banking industry. This type of
concentration in a single industry may increase the general level of risk to
the Fund.
26
GROWTH FUND
Fact Sheet
For the fiscal year ended May 31, 1995, this Fund had a return of 17.16%
before subtracting expenses of 0.91%. This return represented a negative
tracking difference of 3.03% compared to the Fund's benchmark, the S&P 500
Index. The very large companies that dominate the S&P 500 Index outperformed the
smaller and medium sized companies that were owned by this Fund during this
period. Also, multinational companies did well in the expectation that they
would benefit from the decline in the value of the dollar. The Fund's approach
is to invest in rapidly growing, noncyclical domestic growth companies operating
primarily in service businesses. During this period cyclical companies,
companies sensitive to the ups and downs of the economy, outperformed
noncyclical companies.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE GROWTH FUND AND THE S&P 500 INDEX
Average Annual Total Return - Fund
1 Year Inception
16.25% 13.55%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH S&P 500
FUND INDEX
------------ -----------
29-Apr-94 .................. 10,000.00 10,000.00
30-Apr-94 .................. 10,000.00 10,040.00
31-May-94 .................. 9,880.61 10,204.76
30-Jun-94 .................. 9,543.84 9,954.64
31-Jul-94 .................. 9,633.97 10,281.55
31-Aug-94 .................. 10,248.29 10,703.09
30-Sep-94 .................. 10,079.96 10,441.40
31-Oct-94 .................. 10,251.59 10,676.02
30-Nov-94 .................. 9,892.87 10,287.20
31-Dec-94 .................. 10,086.78 10,439.76
31-Jan-95 .................. 10,438.93 10,710.46
28-Feb-95 .................. 10,673.74 11,127.85
31-Mar-95 .................. 11,350.95 11,456.23
30-Apr-95 .................. 11,171.05 11,793.62
31-May-95 .................. 11,486.23 12,265.01
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
27
GROWTH & INCOME FUND
Fact Sheet
INVESTMENT GOAL -- GROWTH AND INCOME THROUGH INVESTMENTS IN STOCKS OR
SECURITIES CONVERTIBLE INTO STOCKS
INVESTMENT CATEGORY -- GROWTH
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER: VALIC INVESTMENT SUB-ADVISER: Value Line
PORTFOLIO MANAGER: This Fund is managed by an Investment Committee comprised
of Value Line employees.
INVESTMENT OBJECTIVE --
Seeks to provide long-term growth of capital and, secondarily, current income
through investment in common stocks and equity-related securities.
INVESTMENT RISK --
This Fund invests almost entirely in stocks. Stock values can rise and fall over
both short and long periods of time. However, we believe that our investment
strategy helps us to manage the risks the Fund is subject to such as market
risk, credit risk, interest rate risk and risk associated with foreign
securities. The Value Line Ranking System (discussed below) does not eliminate
these risks. The Sub-adviser believes that the Value Line Ranking System
provides objective standards for determining whether the market is undervaluing
or overvaluing a particular security. Using these rankings provides no assurance
that the Fund will perform better than the general market over any particular
period. For a discussion of market risk, credit risk, interest rate risk and
risk associated with foreign securities, see "A Word About Risk" in this
prospectus.
INVESTMENT STRATEGY --
The Fund invests in stocks that provide long-term growth potential. As a
secondary goal, the Fund invests in securities that will provide current income.
We make investments which, according to the Value Line Ranking System (the
Ranking System), are timely. Timely means that, in Value Line's opinion, on a
ranking scale of 1 (highest) to 5 (lowest), certain stocks in the Ranking System
are more likely to outperform the others over the coming year.
The Value Line Investment Survey covers about 1,700 stocks that are ranked for
Timeliness by the Ranking System. These rankings are updated weekly. Stocks
ranked 1 or 2 are expected to comprise the majority of the Fund's investments.
However, the Fund may invest in stocks ranked below 2 or hold stocks that have
fallen below 3, when the Sub-adviser decides it is appropriate.
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND ASSETS*
Common stocks and equity related generally 90-95%**
securities bonds, preferred
stock, convertible
stock and warrants
Futures and options up to 25%
Foreign securities up to 20%
Illiquid and restricted
securities*** up to 15%
High quality money market up to 100%
securities**
- ---------
* At the time of purchase.
** We may invest up to 15% of the Fund's assets in illiquid securities, as long
as no more than 5% of the Fund's total assets are invested in restricted
securities that are also considered illiquid. Restricted investments are
explained under "Types of Investments".
*** For temporary defensive reasons, we may invest up to 100% of the Fund's
assets in fixed income securities such as U.S. Government securities, bonds,
commercial paper, repurchase agreements and cash equivalents. We may do this
when we think economic and market conditions make it too risky for us to
follow our general guidelines.
28
GROWTH & INCOME FUND
Fact Sheet
For the fiscal year ended May 31, 1995, this Fund had a return of 14.21% before
subtracting expenses of 0.86%. This return represented a negative tracking
difference of 5.98% compared to the Fund's benchmark, the S&P 500 Index. This
was principally because the Fund held a large number of mid-sized companies. The
mid-size companies underperformed the S&P 500 Index. Additionally the Fund had
about 10% of its assets in cash and this contributed to the negative tracking
difference.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE GROWTH & INCOME FUND AND
THE S&P 500 INDEX
Average Annual Total Return - Fund
1 Year Inception
13.35% 11.04%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
GROWTH & S&P 500
INCOME FUND INDEX
------------ -----------
29-Apr-94 .................. 10,000.00 10,000.00
30-Apr-94 .................. 10,000.00 10,040.00
31-May-94 .................. 9,888.94 10,204.76
30-Jun-94 .................. 9,495.87 9,954.64
31-Jul-94 .................. 9,667.60 10,281.55
31-Aug-94 .................. 10,211.38 10,703.09
30-Sep-94 .................. 10,076.35 10,441.40
31-Oct-94 .................. 10,210.53 10,676.02
30-Nov-94 .................. 9,789.59 10,287.20
31-Dec-94 .................. 9,999.48 10,439.76
31-Jan-95 .................. 10,025.45 10,710.46
28-Feb-95 .................. 10,470.07 11,127.85
31-Mar-95 .................. 10,862.30 11,456.23
30-Apr-95 .................. 11,047.08 11,793.62
31-May-95 .................. 11,209.35 12,265.01
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
29
CAPITAL CONSERVATION FUND
Fact Sheet
INVESTMENT GOAL -- INCOME AND POSSIBLE GROWTH THROUGH INVESTMENTS IN
HIGH QUALITY DEBT SECURITIES
INVESTMENT CATEGORY -- INCOME
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS"
INVESTMENT ADVISER: VALIC
PORTFOLIO MANAGER: Leon A. Olver, Vice President and Investment Officer for the
Series Company is this Fund's Portfolio Manager. Mr. Olver was an Assistant Vice
President for Pulte Financial Companies, Denver, Colorado, from 1984 to 1991.
From 1991 to 1995 Mr. Olver worked for First Heights Bank, Houston, Texas; he
was Vice President, Assistant Treasurer 1991-1994, and Vice President, Treasurer
from 1994 to 1995. He is also the Portfolio Manager for the Government
Securities Fund.
INVESTMENT OBJECTIVE --
Seeks the highest possible total return consistent with preservation of capital
through current income and capital gains on investments in intermediate and
long-term debt instruments and other income producing securities.
INVESTMENT RISK --
The securities the Fund invests in involve certain risks, such as, interest rate
risk, credit risk, market risk and risk associated with foreign securities. This
may cause the debt instruments that the Fund owns to be worth less than what the
Fund paid. For a discussion of these risks see: "A Word About Risk" in this
prospectus.
INVESTMENT STRATEGY --
To provide you with the highest possible total return from current income and
capital gains as is consistent with preserving your investment the Fund invests
in high quality bonds. To increase the Fund's earning potential, we may use a
small part of the Fund's assets to make some higher risk investments.
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND ASSETS*
Investment grade intermediate and at least 75%
long-term corporate bonds rated
at least Baa by Moody's or
another rating organization**,
securities issued or guaranteed by
the U.S. Government***, mortgage
backed securities, asset-backed
securities collaterized mortgage
obligations and high quality money
market securities
Sstraight debt securities rated at up to 25%
least B by Moody's or another
rating organization****
Ppreferred or convertible preferred
stock, convertible debt securities
Foreign securities, mostly foreign up to 20%
bonds that are of the same quality
as other bonds purchased by this
Fund
Common stocks***** up to 10%
Futures and options up to 33%
Illiquid and restricted securities up to 10%
- ---------
* At the time of purchase.
** For more information concerning ratings see "Description of Corporate Bond
Ratings" and "Description of Commercial Paper Ratings" in the Statement of
Additional Information.
*** U.S. Government securities are securities issued or guaranteed by the U.S.
Government which are supported by (i) the full faith and credit of the
U.S. Government, (ii) the right of the issuer to borrow from the U.S.
Treasury, (iii) the credit of the issuing government agency or (iv) the
discretionary authority of the U.S. Government or GNMA to purchase certain
obligations of the agency. For more information see "Government Securities
Fund" in the Statement of Additional Information.
**** The Fund currently intends to limit these investments to no more than 5%
of its total assets. For the fiscal year ended May 31, 1995 less than 2%
of the Fund's average monthly assets were invested in securities rated
below Baa determined on a dollar-weighted basis.
***** Only stocks acquired by conversion of income-bearing securities or by
exercising warrants attached to income-bearing securities.
30
CAPITAL CONSERVATION FUND
Fact Sheet
For the fiscal year ended May 31, 1995 this Fund had a return of 12.38% before
subtracting expenses of 0.58%. This represents a negative tracking difference of
0.99% from the Fund's benchmark, the Merrill Lynch Corporate Master Index.
Performance was close to the Fund's benchmark in the November and February
quarters but slipped in the August and May quarters. This was due to
under-performance of some corporate holdings and certain mortgage related
securities.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE CAPITAL CONSERVATION FUND AND
THE MERRILL LYNCH CORPORATE MASTER INDEX
Average Annual Total Return - Fund
1 Year 5 Year Since Inception
11.80% 8.51% 6.83%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
MERRILL LYNCH
CAPITAL CORPORATE
CONSERVATION FUND MASTER INDEX
----------------- -------------
16-Jan-86 .................. 10,000.00 10,000.00
30-Jan-86 .................. 10,029.94 10,019.31
28-Feb-86 .................. 10,134.91 10,574.64
31-Mar-86 .................. 10,102.52 10,812.30
30-Apr-86 .................. 10,149.18 10,831.81
31-May-86 .................. 9,957.59 10,738.26
30-Jun-86 .................. 10,211.19 10,913.12
31-Jul-86 .................. 10,313.04 10,918.08
31-Aug-86 .................. 10,507.86 11,191.11
30-Sep-86 .................. 10,336.67 11,109.80
31-Oct-86 .................. 10,494.09 11,285.32
30-Nov-86 .................. 10,659.71 11,486.63
31-Dec-86 .................. 10,619.28 11,608.93
31-Jan-87 .................. 10,738.20 11,796.68
28-Feb-87 .................. 10,828.75 11,882.30
31-Mar-87 .................. 10,783.35 11,819.16
30-Apr-87 .................. 10,316.92 11,453.57
31-May-87 .................. 10,252.76 11,382.83
30-Jun-87 .................. 10,412.63 11,560.01
31-Jul-87 .................. 10,337.15 11,502.16
31-Aug-87 .................. 10,234.56 11,409.94
30-Sep-87 .................. 9,889.20 11,131.95
31-Oct-87 .................. 10,257.91 11,462.50
30-Nov-87 .................. 10,283.23 11,649.59
31-Dec-87 .................. 10,422.73 11,822.80
31-Jan-88 .................. 10,821.32 12,275.65
29-Feb-88 .................. 10,924.93 12,481.91
31-Mar-88 .................. 10,812.80 12,339.78
30-Apr-88 .................. 10,752.57 12,217.47
31-May-88 .................. 10,679.14 12,124.92
30-Jun-88 .................. 10,902.22 12,450.51
31-Jul-88 .................. 10,842.64 12,441.26
31-Aug-88 .................. 10,859.82 12,523.89
30-Sep-88 .................. 11,062.08 12,808.50
31-Oct-88 .................. 11,227.55 13,015.09
30-Nov-88 .................. 11,043.59 12,919.89
31-Dec-88 .................. 11,150.08 12,976.42
31-Jan-89 .................. 11,269.92 13,155.91
28-Feb-89 .................. 11,086.19 13,070.62
31-Mar-89 .................. 11,180.85 13,143.68
30-Apr-89 .................. 11,381.26 13,383.32
31-May-89 .................. 11,794.72 13,793.87
30-Jun-89 .................. 12,323.43 14,219.62
31-Jul-89 .................. 12,278.75 14,492.65
31-Aug-89 .................. 12,128.75 14,303.91
30-Sep-89 .................. 12,178.82 14,375.97
31-Oct-89 .................. 12,333.86 14,673.46
30-Nov-89 .................. 12,380.84 14,759.74
31-Dec-89 .................. 12,458.51 14,808.00
31-Jan-90 .................. 12,159.67 14,594.46
28-Feb-90 .................. 12,162.08 14,655.94
31-Mar-90 .................. 12,208.69 14,704.53
30-Apr-90 .................. 11,971.68 14,538.60
31-May-90 .................. 12,352.23 14,940.55
30-Jun-90 .................. 12,578.08 15,191.44
31-Jul-90 .................. 12,592.90 15,389.77
31-Aug-90 .................. 12,152.77 15,115.74
30-Sep-90 .................. 12,134.16 15,180.20
31-Oct-90 .................. 12,116.87 15,305.14
30-Nov-90 .................. 12,273.61 15,622.47
31-Dec-90 .................. 12,423.88 15,899.47
31-Jan-91 .................. 12,499.80 16,079.29
28-Feb-91 .................. 12,616.05 16,283.90
31-Mar-91 .................. 12,707.14 16,482.23
30-Apr-91 .................. 12,923.42 16,723.21
31-May-91 .................. 13,018.94 16,868.32
30-Jun-91 .................. 12,964.70 16,847.16
31-Jul-91 .................. 13,151.85 17,078.88
31-Aug-91 .................. 13,486.72 17,478.18
30-Sep-91 .................. 13,764.11 17,851.37
31-Oct-91 .................. 13,932.65 18,028.55
30-Nov-91 .................. 14,053.64 18,187.21
31-Dec-91 .................. 14,556.45 18,799.39
31-Jan-92 .................. 14,323.43 18,575.94
29-Feb-92 .................. 14,451.24 18,694.61
31-Mar-92 .................. 14,378.33 18,683.37
30-Apr-92 .................. 14,449.31 18,800.72
31-May-92 .................. 14,804.99 19,190.43
30-Jun-92 .................. 15,089.19 19,502.14
31-Jul-92 .................. 15,564.65 20,013.17
31-Aug-92 .................. 15,755.95 20,204.56
30-Sep-92 .................. 16,023.66 20,462.06
31-Oct-92 .................. 15,673.30 20,161.26
30-Nov-92 .................. 15,638.61 20,179.77
31-Dec-92 .................. 15,812.64 20,513.63
31-Jan-93 .................. 16,193.81 20,950.62
28-Feb-93 .................. 16,542.21 21,404.13
31-Mar-93 .................. 16,663.03 21,562.13
30-Apr-93 .................. 16,767.21 21,715.51
31-May-93 .................. 16,817.94 21,729.06
30-Jun-93 .................. 17,238.28 22,229.51
31-Jul-93 .................. 17,310.00 22,381.57
31-Aug-93 .................. 17,745.54 22,960.36
30-Sep-93 .................. 17,846.19 23,087.29
31-Oct-93 .................. 17,893.85 23,205.96
30-Nov-93 .................. 17,581.66 22,919.04
31-Dec-93 .................. 17,708.75 23,063.49
31-Jan-94 .................. 17,980.67 23,450.90
28-Feb-94 .................. 17,471.43 22,919.70
31-Mar-94 .................. 16,902.68 22,351.49
30-Apr-94 .................. 16,701.40 22,113.49
31-May-94 .................. 16,627.86 22,072.83
30-Jun-94 .................. 16,562.53 22,035.47
31-Jul-94 .................. 16,834.28 22,469.16
31-Aug-94 .................. 16,880.69 22,515.76
30-Sep-94 .................. 16,607.06 22,153.15
31-Oct-94 .................. 16,572.36 22,107.53
30-Nov-94 .................. 16,524.44 22,092.00
31-Dec-94 .................. 16,627.18 22,287.68
31-Jan-95 .................. 16,951.95 22,718.06
28-Feb-95 .................. 17,387.09 23,262.81
31-Mar-95 .................. 17,534.21 23,530.88
30-Apr-95 .................. 17,780.17 23,882.92
31-May-95 .................. 18,589.66 25,024.97
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
31
GOVERNMENT SECURITIES FUND
Fact Sheet
INVESTMENT GOAL -- INCOME AND POSSIBLE GROWTH THROUGH INVESTMENTS IN
INTERMEDIATE & LONG-TERM GOVERNMENT DEBT SECURITIES
INVESTMENT CATEGORY -- INCOME
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER: VALIC
PORTFOLIO MANAGER: Leon A. Olver, Vice President and Investment Officer for the
Series Company, is this Fund's Portfolio Manager. Mr. Olver was an Assistant
Vice President for Pulte Financial Companies, Denver, Colorado from 1984 to
1991. From 1991 to 1995 Mr. Olver worked for First Heights Bank, Houston, Texas;
he was Vice President, Assistant Treasurer 1991-1994; and Vice President,
Treasurer from 1994 to 1995. He is also the Portfolio Manager for the Capital
Conservation Fund.
INVESTMENT OBJECTIVE --
Seeks high current income and protection of capital through investments in
intermediate and long-term U.S. Government debt securities.
INVESTMENT RISK --
The securities the Fund invests in involve certain risks, including interest
rate risk, credit risk and risk associated with foreign securities. This may
cause the debt instruments that the Fund owns to be worth less than what the
Fund paid. For a discussion of these risks see: "A Word About Risk" in this
prospectus.
INVESTMENT STRATEGY --
The Fund primarily invests in intermediate, and long term U.S. Government and
government sponsored investments. The Fund may also use up to 20% of its assets
to make high quality foreign investments payable in U.S. dollars.
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND ASSETS*
Debt securities issued or guaranteed at least 80%
by the U.S. Government**,
asset-backed securities, high
quality domestic money market
securities
Mortgage-backed securities up to 25%
High quality foreign government up to 20%
securities and high quality
foreign money market
securities payable in
U.S. dollars
Futures and options up to 33%
listed and unlisted call and put
options on securities, stock
indices and currencies
Illiquid and restricted securities up to 10%
- ---------
* At the time of purchase.
** U.S. Government securities are securities issued or guaranteed by the U.S.
Government and which are supported by (i) the full faith and credit of the
U.S. Government (ii) the right of the issuer to borrow from the U.S. Treasury
(iii) the credit of the issuing government agency or (iv) the discretionary
authority of the U.S. Government or GNMA to purchase certain obligations of
the agency. For more information see "Government Securities Fund" in the
Statement of Additional Information.
32
GOVERNMENT SECURITIES FUND
Fact Sheet
For the fiscal year ended May 31, 1995, this Fund had a return of 11.01% before
subtracting expenses of 0.58%. This represents a positive tracking difference of
0.19% from the Fund's benchmark, the Lehman Brothers U.S. Treasury Composite
Index. The positive performance was the result of having a slightly longer
average maturity than the Index in the second half of the year when interest
rates were declining.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE GOVERNMENT SECURITIES FUND AND
THE LEHMAN BROTHERS U.S. TREASURY COMPOSITE INDEX
Average Annual Total Return - Fund
1 Year 5 Year Since Inception
11.80% 8.51% 6.83%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
LEHMAN BROTHERS
GOVERNMENT U.S. TREASURY
SECURITIES FUND COMPOSITE INDEX
--------------- ----------------
16-Jan-86 .................. 10,000.00 10,000.00
30-Jan-86 .................. 10,029.94 10,104.20
28-Feb-86 .................. 10,024.43 10,542.17
31-Mar-86 .................. 10,052.98 10,996.69
30-Apr-86 .................. 10,090.96 11,019.61
31-May-86 .................. 9,832.27 10,741.37
30-Jun-86 .................. 10,104.82 11,113.05
31-Jul-86 .................. 10,216.31 11,193.06
31-Aug-86 .................. 10,369.10 11,516.42
30-Sep-86 .................. 10,264.76 11,312.64
31-Oct-86 .................. 10,429.18 11,474.13
30-Nov-86 .................. 10,625.49 11,609.67
31-Dec-86 .................. 10,552.82 11,630.35
31-Jan-87 .................. 10,681.82 11,752.07
28-Feb-87 .................. 10,739.46 11,847.22
31-Mar-87 .................. 10,703.58 11,734.45
30-Apr-87 .................. 10,250.43 11,470.57
31-May-87 .................. 10,187.91 11,424.09
30-Jun-87 .................. 10,330.70 11,562.22
31-Jul-87 .................. 10,238.54 11,513.89
31-Aug-87 .................. 10,135.42 11,451.11
30-Sep-87 .................. 9,762.68 11,230.83
31-Oct-87 .................. 10,161.87 11,662.33
30-Nov-87 .................. 10,196.68 11,714.89
31-Dec-87 .................. 10,307.55 11,862.01
31-Jan-88 .................. 10,699.92 12,266.89
29-Feb-88 .................. 10,792.42 12,396.10
31-Mar-88 .................. 10,669.13 12,261.44
30-Apr-88 .................. 10,614.34 12,168.63
31-May-88 .................. 10,538.88 12,112.95
30-Jun-88 .................. 10,747.50 12,365.59
31-Jul-88 .................. 10,697.76 12,274.24
31-Aug-88 .................. 10,702.40 12,303.68
30-Sep-88 .................. 10,920.58 12,568.25
31-Oct-88 .................. 11,093.28 12,796.31
30-Nov-88 .................. 10,959.98 12,648.11
31-Dec-88 .................. 10,926.35 12,694.39
31-Jan-89 .................. 11,045.80 12,864.01
28-Feb-89 .................. 10,985.69 12,760.00
31-Mar-89 .................. 11,020.65 12,839.33
30-Apr-89 .................. 11,185.00 13,067.15
31-May-89 .................. 11,547.14 13,423.01
30-Jun-89 .................. 11,794.73 13,888.48
31-Jul-89 .................. 12,013.30 14,179.13
31-Aug-89 .................. 11,803.06 13,933.30
30-Sep-89 .................. 11,848.53 13,992.68
31-Oct-89 .................. 12,134.76 14,361.49
30-Nov-89 .................. 12,240.69 14,491.00
31-Dec-89 .................. 12,253.40 14,516.06
31-Jan-90 .................. 11,997.92 14,313.11
28-Feb-90 .................. 12,026.20 14,320.27
31-Mar-90 .................. 12,037.79 14,333.31
30-Apr-90 .................. 11,848.60 14,211.35
31-May-90 .................. 12,212.77 14,595.83
30-Jun-90 .................. 12,434.38 14,825.89
31-Jul-90 .................. 12,579.99 15,022.27
31-Aug-90 .................. 12,327.27 14,804.96
30-Sep-90 .................. 12,416.56 14,937.97
31-Oct-90 .................. 12,587.08 15,182.48
30-Nov-90 .................. 12,814.34 15,529.73
31-Dec-90 .................. 12,984.82 15,765.34
31-Jan-91 .................. 13,093.87 15,942.64
28-Feb-91 .................. 13,149.80 16,003.09
31-Mar-91 .................. 13,160.24 16,085.72
30-Apr-91 .................. 13,306.23 16,276.21
31-May-91 .................. 13,345.75 16,332.91
30-Jun-91 .................. 13,299.93 16,313.20
31-Jul-91 .................. 13,462.96 16,524.04
31-Aug-91 .................. 13,813.61 16,893.48
30-Sep-91 .................. 14,160.59 17,259.32
31-Oct-91 .................. 14,266.85 17,402.70
30-Nov-91 .................. 14,410.54 17,577.66
31-Dec-91 .................. 14,897.84 18,187.34
31-Jan-92 .................. 14,635.05 17,897.08
29-Feb-92 .................. 14,693.06 17,966.67
31-Mar-92 .................. 14,583.71 17,862.91
30-Apr-92 .................. 14,664.66 17,987.36
31-May-92 .................. 15,027.86 18,294.11
30-Jun-92 .................. 15,264.15 18,570.80
31-Jul-92 .................. 15,700.66 19,036.41
31-Aug-92 .................. 15,896.36 19,223.44
30-Sep-92 .................. 16,145.67 19,503.04
31-Oct-92 .................. 15,852.25 19,213.08
30-Nov-92 .................. 15,765.05 19,166.65
31-Dec-92 .................. 15,971.26 19,501.83
31-Jan-93 .................. 16,352.32 19,927.97
28-Feb-93 .................. 16,653.56 20,327.35
31-Mar-93 .................. 16,745.63 20,386.43
30-Apr-93 .................. 16,857.50 20,568.94
31-May-93 .................. 16,915.45 20,517.40
30-Jun-93 .................. 17,279.33 20,984.42
31-Jul-93 .................. 17,358.10 21,111.98
31-Aug-93 .................. 17,736.27 21,585.04
30-Sep-93 .................. 17,843.22 21,678.34
31-Oct-93 .................. 17,848.45 21,740.25
30-Nov-93 .................. 17,591.07 21,500.60
31-Dec-93 .................. 17,696.62 21,596.53
31-Jan-94 .................. 17,928.66 21,888.25
28-Feb-94 .................. 17,515.85 21,440.45
31-Mar-94 .................. 17,032.99 20,979.51
30-Apr-94 .................. 16,898.66 20,798.17
31-May-94 .................. 16,802.97 20,777.68
30-Jun-94 .................. 16,732.10 20,738.30
31-Jul-94 .................. 17,009.12 21,087.31
31-Aug-94 .................. 17,045.59 21,106.53
30-Sep-94 .................. 16,809.31 20,811.84
31-Oct-94 .................. 16,780.31 20,796.27
30-Nov-94 .................. 16,762.35 20,749.40
31-Dec-94 .................. 16,901.44 20,856.47
31-Jan-95 .................. 17,186.48 21,257.36
28-Feb-95 .................. 17,549.44 21,721.99
31-Mar-95 .................. 17,632.89 21,840.55
30-Apr-95 .................. 17,852.56 22,125.94
31-May-95 .................. 18,555.12 23,026.07
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
33
INTERNATIONAL GOVERNMENT BOND FUND
Fact Sheet
INVESTMENT GOAL -- INCOME AND POSSIBLE GROWTH THROUGH INVESTMENTS IN HIGH
QUALITY FOREIGN GOVERNMENT DEBT SECURITIES
INVESTMENT CATEGORY -- INCOME
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER: VALIC
PORTFOLIO MANAGER: William Trimbur, Jr. has been this Fund's portfolio manager
since the Fund was started in 1991. He has been Vice President and Investment
Officer for the American General Series Portfolio Company since 1987. Mr.
Trimbur is also the portfolio manager for The International Equities Fund.
INVESTMENT OBJECTIVE --
Seeks high current income through investments primarily in high quality debt
securities issued or guaranteed by foreign governments.
INVESTMENT RISK --
This Fund invests mostly in bonds that are issued by foreign governments.
Although these governments promise to pay the principal and interest due on
their bonds, it is still possible you may not get back all the money you invest.
For a discussion of the risks associated with foreign securities, credit risk,
and interest rate risk see: "A Word About Risk" in this prospectus.
INVESTMENT STRATEGY --
The Fund aims to give you foreign investment opportunities primarily in high
quality government and government sponsored debt securities. Since the Fund
expects to concentrate in certain foreign government securities, it is
classified as a "non-diversified" investment company. Also, the Fund attempts to
have all of its investments payable in foreign currencies. The Fund may also
convert its cash to foreign currency. To help us choose which countries to
invest in we rely, in part, on the Salomon Brothers Non-U.S. Dollar World
Government Bond Index (Salomon Index).
The Salomon Index is a widely used, international government bond index. It
tracks the performance of government bonds sold in Austria, Australia, Belgium,
Canada, Denmark, France, Germany, Italy, Japan, the Netherlands, Spain, Sweden,
and the United Kingdom. In addition, the Fund may invest in securities in other
countries, provided such securities are payable in the currencies of the
countries in the Salomon Index. We do not try to copy this index's performance.
Rather, we use it as a guide.
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND ASSET*
High quality debt securities issued at least 65%
or guaranteed by foreign
governments
Other high quality debt securities no more than 35%
including:
Foreign corporate
debt and foreign money market
securities sold in the countries
listed above
High quality
domestic money market securities
and debt obligations issued
or guaranteed by the
U.S. Government
Foreign currency exchange
transactions
Futures and options no more than 33%
covered put and call options on
foreign currencies, listed put and
call options on currencies
Listed and unlisted foreign
currency futures contracts
Illiquid and restricted securities up to 10%
- ---------
* At the time of purchase.
34
INTERNATIONAL GOVERNMENT BOND FUND
Fact Sheet
For temporary defensive reasons, we may invest up to 100% of the Fund's assets
in short term, high quality U.S. money market securities and U.S. Government
debt securities. We may do this when we think economic, political or market
conditions in foreign countries make it too risky to follow our general
guidelines.
For the fiscal year ended May 31, 1995, the Fund had a return of 23.82% before
subtracting expenses of 0.59%. This represents a negative tracking difference of
0.86% from the Fund's benchmark, the Salomon Index. The tracking difference was
due to some underperformance of the German market for a short period. The Fund's
positive performance was the result of a combination of bond market recoveries
and currency gains. 42
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE INTERNATIONAL GOVERNMENT BOND FUND
AND THE SALOMON INDEX
Average Annual Total Return - Fund
1 Year Since Inception
23.23% 13.67%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
INTERNATIONAL
GOVERNMENT SALOMON
BOND FUND INDEX
------------- -----------
01-Oct-91 .................. 10,000.00 10,000.00
31-Oct-91 .................. 10,028.89 10,129.00
30-Nov-91 .................. 10,233.10 10,338.67
31-Dec-91 .................. 10,952.56 11,041.70
31-Jan-92 .................. 10,736.39 10,824.18
29-Feb-92 .................. 10,578.78 10,663.98
31-Mar-92 .................. 10,395.54 10,502.95
30-Apr-92 .................. 10,436.77 10,577.53
31-May-92 .................. 10,918.04 11,041.88
30-Jun-92 .................. 11,370.03 11,482.45
31-Jul-92 .................. 11,607.51 11,730.47
31-Aug-92 .................. 12,110.76 12,248.96
30-Sep-92 .................. 12,124.98 12,323.68
31-Oct-92 .................. 11,612.36 11,877.56
30-Nov-92 .................. 11,265.76 11,571.12
31-Dec-92 .................. 11,279.60 11,539.88
31-Jan-93 .................. 11,438.98 11,695.66
28-Feb-93 .................. 11,658.05 11,926.07
31-Mar-93 .................. 11,949.67 12,217.06
30-Apr-93 .................. 12,299.68 12,582.36
31-May-93 .................. 12,501.31 12,810.10
30-Jun-93 .................. 12,275.93 12,562.86
31-Jul-93 .................. 12,279.99 12,570.40
31-Aug-93 .................. 12,671.19 13,016.65
30-Sep-93 .................. 12,854.59 13,231.42
31-Oct-93 .................. 12,826.45 13,169.23
30-Nov-93 .................. 12,728.11 13,107.34
31-Dec-93 .................. 12,881.04 13,246.28
31-Jan-94 .................. 12,971.85 13,301.91
28-Feb-94 .................. 12,975.75 13,337.83
31-Mar-94 .................. 13,077.38 13,495.21
30-Apr-94 .................. 13,099.09 13,581.58
31-May-94 .................. 12,985.34 13,398.23
30-Jun-94 .................. 13,295.29 13,714.43
31-Jul-94 .................. 13,247.63 13,747.34
31-Aug-94 .................. 13,146.74 13,666.23
30-Sep-94 .................. 13,386.50 13,929.99
31-Oct-94 .................. 13,769.65 14,287.99
30-Nov-94 .................. 13,452.67 13,999.38
31-Dec-94 .................. 13,455.06 13,999.38
31-Jan-95 .................. 13,668.26 14,301.76
28-Feb-95 .................. 14,153.50 14,706.50
31-Mar-95 .................. 15,256.65 16,009.50
30-Apr-95 .................. 15,637.36 16,350.50
31-May-95 .................. 16,002.03 16,705.31
FISCAL YEARENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
35
SOCIAL AWARENESS FUND
Fact Sheet
INVESTMENT GOAL -- GROWTH THROUGH INVESTMENTS IN STOCKS OF COMPANIES MEETING
SOCIAL CRITERIA OF THE FUND
INVESTMENT CATEGORY -- GROWTH
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER: VALIC
PORTFOLIO MANAGER: Since 1992, John W. Mossbarger has been this Fund's
portfolio manager and Vice President and Investment Officer for the Series
Company. From 1988 to 1992, Mr. Mossbarger worked for American General
Corporation: he was Managing Director, Common Stocks from 1989 to 1992, and
Senior Vice President, Equity Investments from 1988 to 1989.
INVESTMENT OBJECTIVE --
Seeks to obtain growth of capital through investment, primarily in common
stocks, in companies which meet the social criteria established for the Fund.
The Fund invests only in companies which meet its social criteria. The Fund does
not invest in companies that:
o produce nuclear energy;
o make military weapons or delivery systems; or
o engage continuously in practices or produce products that significantly
pollute the environment (such products include tobacco products).
INVESTMENT RISK --
Most of the companies this Fund invests in are included in the S&P 500 Index.
This Fund's degree of market risk is slightly greater than the Stock Index
Fund's degree of risk. This is because its investments are more limited by its
investment objective. This Fund may also experience market risk, and risks
associated with foreign securities. For a discussion of these risks see the
Stock Index Fund's Fact Sheet and "A Word About Risk" in this prospectus.
If a company stops meeting the Fund's social criteria after the Fund invested in
it, the Fund will sell these investments even if this means the Fund loses
money. Also, if the Fund changes its social criteria and the companies the Fund
has already invested in no longer qualify, the Fund will sell these investments
even if this means the Fund loses money. Social criteria screening will limit
the availability of investment opportunities for the Fund more than for funds
having no such criteria.
INVESTMENT STRATEGY --
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND ASSETS*
Common stocks of companies meeting at least 80%
Fund's social criteria
Other types of securities of up to 20%
companies meeting social criteria
including:
Foreign securities
Preferred stock
Convertible securities
High quality money
market securities and warrants
Futures and options up to 33%
Illiquid and restricted securities up to 10%
- ---------
* At time of purchase.
To find out which companies meet the Fund's social criteria, we rely on industry
classifications, research services such as the Investor Responsibility Research
Center (IRRC), and special magazines and papers that publish this type of
information.
Since our definition of social criteria is not "fundamental," the Series
Company's Board of Directors may change it without shareholder approval. When
deciding to make changes to the criteria, the Board will consider, among other
things, new or revised state laws that govern or affect the investments of
public funds. At least once a year, we survey state laws on this issue to look
for any new developments. If our survey shows that at least 20 states have
adopted laws that restrict public funds from being invested in a clearly
definable category of investments, this category is automatically added to our
social criteria list.
36
SOCIAL AWARENESS FUND
Fact Sheet
For the fiscal year ended May 31, 1995 the Fund had a return of 18.77%
before subtracting expenses of 0.58%. This resulted in a negative tracking
difference of 1.42% compared to the Fund's benchmark, the S&P 500 Index.
Industry weightings in the portfolio accounted for most of the tracking
difference. Benefits were derived from under-weighting in international oil and
motor vehicles while lower weightings of aerospace and medical issues were
favorable. Stocks of tobacco companies were positive contributors to the
benchmark but the Fund has an investment policy restriction which prohibits
purchases of tobacco company stocks.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE SOCIAL AWARENESS FUND
AND THE S&P 500 INDEX
Average Annual Total Return - Fund
1 Year 5 Year Since Inception
18.19% 9.09% 9.48%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
SOCIAL AWARENESS S&P 500
FUND INDEX
---------------- -----------
02-Oct-89 .................. 10,000.00 10,000.00
31-Oct-89 .................. 9,661.30 9,775.29
30-Nov-89 .................. 9,925.83 9,974.61
31-Dec-89 .................. 10,162.74 10,214.10
31-Jan-90 .................. 9,508.68 9,528.32
28-Feb-90 .................. 9,763.10 9,651.05
31-Mar-90 .................. 10,048.94 9,906.80
30-Apr-90 .................. 9,784.90 9,659.63
31-May-90 .................. 10,809.05 10,601.54
30-Jun-90 .................. 10,817.00 10,529.98
31-Jul-90 .................. 10,619.81 10,496.18
31-Aug-90 .................. 9,707.79 9,547.43
30-Sep-90 .................. 9,094.68 9,082.75
31-Oct-90 .................. 9,041.46 9,044.06
30-Nov-90 .................. 9,723.42 9,628.67
31-Dec-90 .................. 10,020.57 9,896.92
31-Jan-91 .................. 10,561.75 10,327.93
28-Feb-91 .................. 11,052.08 11,066.59
31-Mar-91 .................. 11,358.60 11,334.62
30-Apr-91 .................. 11,316.34 11,361.48
31-May-91 .................. 11,663.64 11,851.62
30-Jun-91 .................. 10,936.51 11,308.70
31-Jul-91 .................. 11,491.06 11,835.79
31-Aug-91 .................. 11,721.93 12,116.18
30-Sep-91 .................. 11,562.46 11,913.48
31-Oct-91 .................. 11,863.79 12,073.60
30-Nov-91 .................. 11,524.43 11,587.15
31-Dec-91 .................. 12,814.78 12,912.38
31-Jan-92 .................. 12,491.68 12,671.82
29-Feb-92 .................. 12,570.44 12,835.92
31-Mar-92 .................. 12,133.94 12,586.26
30-Apr-92 .................. 12,138.11 12,955.79
31-May-92 .................. 12,256.51 13,019.27
30-Jun-92 .................. 11,996.23 12,825.55
31-Jul-92 .................. 12,416.77 13,349.47
31-Aug-92 .................. 12,233.92 13,076.21
30-Sep-92 .................. 12,421.99 13,229.85
31-Oct-92 .................. 12,556.83 13,275.50
30-Nov-92 .................. 12,942.91 13,727.53
31-Dec-92 .................. 13,244.71 13,895.96
31-Jan-93 .................. 13,376.75 14,012.13
28-Feb-93 .................. 13,672.60 14,203.12
31-Mar-93 .................. 13,864.98 14,502.81
30-Apr-93 .................. 13,483.94 14,152.27
31-May-93 .................. 13,860.25 14,530.85
30-Jun-93 .................. 13,825.12 14,573.42
31-Jul-93 .................. 13,877.35 14,514.84
31-Aug-93 .................. 14,486.55 15,065.53
30-Sep-93 .................. 14,324.76 14,949.98
31-Oct-93 .................. 14,459.26 15,259.29
30-Nov-93 .................. 14,219.76 15,113.87
31-Dec-93 .................. 14,292.37 15,296.60
31-Jan-94 .................. 14,827.81 15,816.68
28-Feb-94 .................. 14,329.75 15,387.26
31-Mar-94 .................. 13,722.14 14,716.37
30-Apr-94 .................. 13,866.68 14,905.04
31-May-94 .................. 14,133.16 15,149.63
30-Jun-94 .................. 13,861.06 14,778.31
31-Jul-94 .................. 14,193.04 15,263.63
31-Aug-94 .................. 14,604.78 15,889.44
30-Sep-94 .................. 14,170.96 15,500.94
31-Oct-94 .................. 14,483.14 15,849.25
30-Nov-94 .................. 13,926.05 15,272.02
31-Dec-94 .................. 14,086.66 15,498.50
31-Jan-95 .................. 14,557.06 15,900.38
28-Feb-95 .................. 15,133.75 16,520.02
31-Mar-95 .................. 15,549.68 17,007.52
30-Apr-95 .................. 16,075.94 17,508.40
31-May-95 .................. 16,704.38 18,208.21
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
37
SCIENCE & TECHNOLOGY FUND
Fact Sheet
INVESTMENT GOAL -- GROWTH THROUGH INVESTMENTS IN STOCKS OF COMPANIES WHICH
BENEFIT FROM DEVELOPMENT OF SCIENCE AND TECHNOLOGY
INVESTMENT CATEGORY -- GROWTH
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER: VALIC INVESTMENT SUB-ADVISER: T. Rowe Price
PORTFOLIO MANAGER: This Fund is managed by an Investment Advisory Committee
chaired by Charles A. Morris. Mr. Morris joined T. Rowe Price in 1987 as an
investment analyst. He has been managing investments since 1991.
INVESTMENT OBJECTIVE --
Seeks long-term growth of capital through investment primarily in the common
stocks and equity-related securities of companies that are expected to benefit
from the development, advancement and use of science and technology.
INVESTMENT RISK --
The Science & Technology Fund invests in many small and/or new companies that
develop and sell new products or services. These products or services may fail
or become quickly outdated. Also, small and new companies have limited product
lines and do not always have the financial strength to do well in difficult
times. Because these companies are small, their stock prices will go up and down
over the short-term, but may have greater growth potential.
The securities the Fund invests in involve certain risks, including market risk
and risk associated with foreign securities. For a discussion of these risks,
see "A Word About Risk" in this prospectus.
INVESTMENT STRATEGY --
The Fund invests in companies that are expected to benefit from scientific
breakthroughs and advancements in technology. We believe that stocks of
companies that develop products using new technology or benefit from this
technology may greatly increase in value. These companies are in the following
industries: computer, pharmaceutical, defense, telecommunications and
electronics.
We follow the guidelines listed below for making the primary investments for the
Fund.
FUND INVESTMENTS PERCENT OF FUND ASSETS*
Common stocks of science and at least 65%
technology companies
Other equity-related securities of up to 25%
science and technology companies
including convertible debt
securities, convertible preferred
stock
Foreign securities up to 30%
Illiquid and restricted securities** up to 15%
Futures and options up to 25%
High quality money market securities
- ---------
* At time of purchase.
** We may invest up to 15% of the Fund's assets in illiquid securities, as
long as no more than 5% of the Fund's assets are invested in restricted
securities that are considered illiquid. Restricted securities are
explained under "Types of Investments".
38
SCIENCE & TECHNOLOGY FUND
Fact Sheet
For the fiscal year ended May 31, 1995 this Fund had a return of 49.61% before
subtracting expenses of 1.00%. This represents a positive tracking difference of
29.42% from the Fund's benchmark, the S&P 500 Index. The science and technology
sector significantly outperformed the broad based S&P 500 Index. Several factors
contributed to this positive performance. Companies are purchasing computers to
deal with increasing competition and to increase productivity. Individuals are
using computers for information, entertainment, aspects of household management
and education. Stocks of certain biotechnology companies performed well during
this period.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE SCIENCE & TECHNOLOGY FUND
AND THE S&P 500 INDEX
Average Annual Total Return - Fund
1 Year Since Inception
48.61% 41.62%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
SCIENCE & S&P 500
TECHNOLOGY FUND INDEX
--------------- -----------
29-Apr-94 .................. 10,000.00 10,000.00
30-Apr-94 .................. 10,000.00 10,040.00
31-May-94 .................. 9,834.07 10,204.76
30-Jun-94 .................. 9,473.92 9,954.64
31-Jul-94 .................. 9,844.07 10,281.55
31-Aug-94 .................. 11,014.56 10,703.09
30-Sep-94 .................. 11,364.70 10,441.40
31-Oct-94 .................. 12,345.11 10,676.02
30-Nov-94 .................. 12,135.02 10,287.20
31-Dec-94 .................. 12,562.10 10,439.76
31-Jan-95 .................. 12,392.55 10,710.46
28-Feb-95 .................. 13,124.87 11,127.85
31-Mar-95 .................. 13,880.83 11,456.23
30-Apr-95 .................. 14,351.44 11,793.62
31-May-95 .................. 14,614.77 12,265.01
FISCAL YEAR ENDED MAY 31
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
39
MONEY MARKET FUND
Fact Sheet
INVESTMENT GOAL -- INCOME THROUGH INVESTMENT IN SHORT-TERM MONEY MARKET
SECURITIES
INVESTMENT CATEGORY -- STABILITY
ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS IS PROVIDED UNDER "TYPES OF
INVESTMENTS".
INVESTMENT ADVISER: VALIC
PORTFOLIO MANAGER: Teresa Moro has been this Fund's portfolio manager and
Vice President and Investment Officer for the Series Company since 1991. From
1986 to 1991, Ms. Moro was an Assistant Vice President and Money Market Trader
for the Fund.
INVESTMENT OBJECTIVE --
Seeks liquidity, protection of capital and current income through
investments in short-term money market instruments.
INVESTMENT RISK --
The short term money market securities that this Fund invests in are high
quality investments, posing low credit and interest rate risk. The current yield
of the Fund will generally go up or down with changes in the level of interest
rates. The Fund uses the amortized cost method to value its portfolio securities
and tries to keep its net asset value at $1.00 per share. There can be no
assurance that the net asset value will be $1.00 per share at all times.
Because the risk to the money you invest is low, the potential for profit is
also low. The Fund may experience risks including interest rate risk, market
risk, credit risk and risk associated with foreign securities. For a discussion
of these risks, see "A Word About Risk" in this prospectus.
INVESTMENT STRATEGY --
The Fund invests in short-term money market securities to provide you with
liquidity, protection of your investment and current income. We use 95% of the
Fund's assets to buy short-term securities that are rated within the highest
rating category for short term debt obligations by at least two nationally
recognized rating services or unrated securities of comparable investment
quality. These eligible securities must mature in 13 months or less and the Fund
must have a dollar-weighted average portfolio maturity of 90 days or less. These
practices are designed to minimize any fluctuation in the value of the Fund's
portfolio.
The investments this Fund may buy include:
o Securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities
o Certificates of deposit and other obligations of domestic banks that
have total assets in excess of $1 billion
o Commercial paper sold by corporations and finance companies
o Corporate debt obligations with remaining maturities of 13 months or
less
o Repurchase agreements
o Money market instruments of foreign issuers payable in U.S. dollars
(limited to no more than 20% of the Fund's net assets)
o Asset-backed securities
o Loan participations
o Adjustable rate securities
o Illiquid and restricted securities (except for Rule 144A Securities)*
- ---------
*limited to 10% of the Fund's net assets
40
TIMED OPPORTUNITY FUND
Fact Sheet
INVESTMENT GOAL -- MAXIMUM RETURN THROUGH INVESTMENT IN A MIX OF STOCKS,
BONDS AND MONEY MARKET SECURITIES
INVESTMENT CATEGORY -- GROWTH
INVESTMENT ADVISER: VALIC
PORTFOLIO MANAGER: Norman Jaskol who is Vice President and Managing Director
of Investments for VALIC is the Portfolio Manager of this Fund. Mr. Jaskol has
been Vice President and Senior Investment Officer for the Series Company since
1988.
INVESTMENT OBJECTIVE --
Seeks maximum aggregate rate of return over the long-term through controlled
investment risk by adjusting its investment mix among stocks, long-term debt
securities and short-term money market securities.
INVESTMENT RISK --
The Fund uses the Bankers Trust Tactical Asset Allocation Model (Model) which
allocates the Fund's assets. The Model tries to get the best return from three
types of securities. A part of that program also tries to reduce risk.
The mix of securities the Fund invests in involves market risk, credit risk,
interest rate risk and risk associated with foreign securities. For a discussion
of these risks, see "A Word About Risk" in this prospectus.
INVESTMENT STRATEGY --
The Fund is an asset allocation fund that attempts to maximize returns with a
mix of stocks, bonds and money market securities. We buy and sell securities for
the Fund by changing its investment mix among stocks, intermediate and long-term
bonds and money market securities. As a result, the Fund's investments may
change often. Also, the Fund can invest 100% in just one of these market
sectors.
Unlike an index fund, which tries to increase the money you invest by matching a
specific index's performance, the Timed Opportunity Fund tries to perform better
than a blend of three market sectors measured by:
o the S&P 500 Index;
o the Merrill Lynch Corporate and Government Master Index; and
o the Certificate of Deposit Primary Offering by New York City Banks,
30-Day Rate
To help us decide how to allocate the Fund's assets, we rely on the Model. The
Model analyzes many factors that affect the performance of securities that
comprise certain indexes.
Based on the Model, we intend to allocate the Fund's assets around the following
benchmarks:
stocks (common stock, preferred stock 55%
and convertible preferred stock)
intermediate and long-term bonds 35%
high quality money market securities 10%
As of May 31, 1995, the Fund's assets were invested as follows:
stocks 47.80%
intermediate and long term bonds 24.85%
high quality money market securities 27.35%*
* After taking the contract value of futures positions into consideration.
See "Types of Investments".
Because there is no limit as to how often we may buy and sell securities for
this Fund, this can increase what is called the "portfolio turnover" rate. A
higher rate of portfolio turnover will also increase the brokerage fees and
expenses payable out of the Fund's assets. For more information about portfolio
turnover, see "About the Funds" in this prospectus.
FOR ADDITIONAL INFORMATION ABOUT THE FUND'S INVESTMENTS SEE "TYPES OF
INVESTMENTS" IN THIS PROSPECTUS.
41
TIMED OPPORTUNITY FUND
Fact Sheet
For the fiscal year ended May 31, 1995, this Fund had a return of 13.01% before
subtracting expenses of 0.58%. This represents a negative tracking difference of
2.53% from the Fund's benchmark, a blended Index of the S&P 500 Index, the
Merrill Lynch Corporate and Government Master Index and the Certificate of
Deposit Primary Offering by New York City Banks, 30 Day Rate. The Fund's
tracking difference in the declining market environment of the quarter ended
November 30 was positive. However, a higher cash position for the Fund,
recommended by the Model, caused the Fund to underperform its benchmark in the
three quarters when bond and stock prices were rising.
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE TIMED OPPORTUNITY FUND AND
THE S&P 500 INDEX
Average Annual Total Return - Fund
1 Year 5 Year Since Inception
12.43% 6.71% 8.79%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
TIMED OPPORTUNITY S&P 500
FUND INDEX
----------------- -----------------
01-Jun-85 .................. 10,000.00 10,000.00
30-Jun-85 .................. 10,069.81 10,156.70
31-Jul-85 .................. 10,111.78 10,141.87
31-Aug-85 .................. 10,071.31 10,055.26
30-Sep-85 .................. 10,049.74 9,740.73
31-Oct-85 .................. 10,285.95 10,190.66
30-Nov-85 .................. 10,473.89 10,889.63
31-Dec-85 .................. 10,731.34 11,416.47
30-Jan-86 .................. 10,820.28 11,480.29
28-Feb-86 .................. 11,041.49 12,338.44
31-Mar-86 .................. 11,522.09 13,026.80
30-Apr-86 .................. 11,539.94 12,880.12
31-May-86 .................. 11,980.76 13,565.35
30-Jun-86 .................. 12,077.13 13,794.60
31-Jul-86 .................. 11,658.97 13,023.07
31-Aug-86 .................. 12,410.43 13,988.86
30-Sep-86 .................. 11,673.14 12,832.40
31-Oct-86 .................. 11,769.47 13,572.44
30-Nov-86 .................. 11,812.16 13,902.39
31-Dec-86 .................. 11,853.21 13,547.60
31-Jan-87 .................. 12,539.20 15,371.92
28-Feb-87 .................. 13,003.63 15,979.27
31-Mar-87 .................. 13,400.14 16,440.27
30-Apr-87 .................. 13,246.65 16,294.28
31-May-87 .................. 13,264.61 16,435.55
30-Jun-87 .................. 13,859.13 17,265.54
31-Jul-87 .................. 14,320.15 18,140.22
31-Aug-87 .................. 14,623.49 18,817.03
30-Sep-87 .................. 14,393.59 18,404.56
31-Oct-87 .................. 13,044.48 14,440.95
30-Nov-87 .................. 12,064.05 13,250.87
31-Dec-87 .................. 12,842.80 14,258.87
31-Jan-88 .................. 13,093.55 14,858.60
29-Feb-88 .................. 13,432.14 15,551.16
31-Mar-88 .................. 13,241.61 15,070.78
30-Apr-88 .................. 13,319.64 15,237.46
31-May-88 .................. 13,381.80 15,369.27
30-Jun-88 .................. 13,611.63 16,074.56
31-Jul-88 .................. 13,653.52 16,013.64
31-Aug-88 .................. 13,647.37 15,469.98
30-Sep-88 .................. 13,817.41 16,129.15
31-Oct-88 .................. 13,970.61 16,578.19
30-Nov-88 .................. 14,000.06 16,341.95
31-Dec-88 .................. 14,091.40 16,627.12
31-Jan-89 .................. 14,550.67 17,844.72
28-Feb-89 .................. 14,436.01 17,400.03
31-Mar-89 .................. 14,644.97 17,805.97
30-Apr-89 .................. 14,924.66 18,730.46
31-May-89 .................. 15,254.66 19,488.29
30-Jun-89 .................. 15,413.83 19,377.79
31-Jul-89 .................. 15,961.66 21,127.42
31-Aug-89 .................. 16,088.33 21,540.46
30-Sep-89 .................. 16,086.04 21,453.00
31-Oct-89 .................. 16,011.57 20,954.86
30-Nov-89 .................. 16,270.98 21,382.13
31-Dec-89 .................. 16,482.44 21,895.52
31-Jan-90 .................. 15,905.10 20,425.45
28-Feb-90 .................. 16,006.21 20,688.53
31-Mar-90 .................. 16,165.44 21,236.78
30-Apr-90 .................. 15,905.96 20,706.92
31-May-90 .................. 16,789.92 22,726.05
30-Jun-90 .................. 16,689.70 22,572.65
31-Jul-90 .................. 16,626.10 22,500.19
31-Aug-90 .................. 15,472.57 20,466.40
30-Sep-90 .................. 15,020.71 19,470.30
31-Oct-90 .................. 14,987.44 19,387.36
30-Nov-90 .................. 15,743.00 20,640.56
31-Dec-90 .................. 16,085.91 21,215.60
31-Jan-91 .................. 16,638.06 22,139.54
28-Feb-91 .................. 17,475.35 23,722.96
31-Mar-91 .................. 17,666.84 24,297.53
30-Apr-91 .................. 17,732.61 24,355.12
31-May-91 .................. 18,426.38 25,405.80
30-Jun-91 .................. 17,680.19 24,241.96
31-Jul-91 .................. 18,331.48 25,371.88
31-Aug-91 .................. 18,664.25 25,972.94
30-Sep-91 .................. 18,424.54 25,538.41
31-Oct-91 .................. 18,614.47 25,881.64
30-Nov-91 .................. 18,135.86 24,838.87
31-Dec-91 .................. 19,519.05 27,679.69
31-Jan-92 .................. 19,237.70 27,164.02
29-Feb-92 .................. 19,465.44 27,515.80
31-Mar-92 .................. 18,844.13 26,980.61
30-Apr-92 .................. 18,682.05 27,772.76
31-May-92 .................. 18,587.45 27,908.85
30-Jun-92 .................. 18,369.84 27,493.57
31-Jul-92 .................. 18,895.16 28,616.68
31-Aug-92 .................. 18,607.18 28,030.90
30-Sep-92 .................. 18,841.58 28,360.26
31-Oct-92 .................. 18,746.23 28,458.10
30-Nov-92 .................. 19,127.41 29,427.10
31-Dec-92 .................. 19,377.42 29,788.17
31-Jan-93 .................. 19,635.20 30,037.20
28-Feb-93 .................. 19,949.89 30,446.61
31-Mar-93 .................. 20,243.26 31,089.03
30-Apr-93 .................. 19,986.06 30,337.61
31-May-93 .................. 20,292.54 31,149.14
30-Jun-93 .................. 20,464.39 31,240.41
31-Jul-93 .................. 20,422.45 31,114.82
31-Aug-93 .................. 21,055.57 32,295.32
30-Sep-93 .................. 21,024.36 32,047.61
31-Oct-93 .................. 21,286.78 32,710.68
30-Nov-93 .................. 21,022.73 32,398.94
31-Dec-93 .................. 21,175.62 32,790.65
31-Jan-94 .................. 21,768.15 33,905.53
28-Feb-94 .................. 21,199.77 32,984.99
31-Mar-94 .................. 20,553.27 31,546.85
30-Apr-94 .................. 20,560.41 31,951.28
31-May-94 .................. 20,669.33 32,475.60
30-Jun-94 .................. 20,371.95 31,679.62
31-Jul-94 .................. 20,790.52 32,719.98
31-Aug-94 .................. 21,176.56 34,061.50
30-Sep-94 .................. 20,837.78 33,228.70
31-Oct-94 .................. 21,067.35 33,975.35
30-Nov-94 .................. 20,700.67 32,737.96
31-Dec-94 .................. 20,898.70 33,223.47
31-Jan-95 .................. 21,210.08 34,084.95
28-Feb-95 .................. 21,737.83 35,413.24
31-Mar-95 .................. 22,064.74 36,458.29
30-Apr-95 .................. 22,502.65 37,531.98
31-May-95 .................. 23,239.35 39,032.14
FISCAL YEAR ENDED MAY 31
COMPARISON OF A CHANGE IN THE VALUE OF A $10,000
INVESTMENT IN THE TIMED OPPORTUNITY FUND
AND THE MODEL BENCHMARK
Average Annual Total Return - Fund
1 Year Since 9/1/92*
12.43% 8.43%
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
TIMED OPPORTUNITY MODEL
FUND BENCHMARK
----------------- ---------
01-Sep-92 .................. 10,000.00 10,000.00
30-Sep-92 .................. 10,125.97 10,114.67
31-Oct-92 .................. 10,074.73 10,086.00
30-Nov-92 .................. 10,279.59 10,272.22
31-Dec-92 .................. 10,413.95 10,403.42
31-Jan-93 .................. 10,552.49 10,530.49
28-Feb-93 .................. 10,721.61 10,686.59
31-Mar-93 .................. 10,879.27 10,829.16
30-Apr-93 .................. 10,741.05 10,716.43
31-May-93 .................. 10,905.76 10,875.07
30-Jun-93 .................. 10,998.11 10,977.85
31-Jul-93 .................. 10,975.57 10,979.78
31-Aug-93 .................. 11,315.83 11,299.73
30-Sep-93 .................. 11,299.06 11,273.25
31-Oct-93 .................. 11,440.09 11,419.08
30-Nov-93 .................. 11,298.18 11,316.85
31-Dec-93 .................. 11,380.35 11,412.00
31-Jan-94 .................. 11,698.79 11,685.79
28-Feb-94 .................. 11,393.33 11,424.25
31-Mar-94 .................. 11,045.88 11,065.84
30-Apr-94 .................. 11,049.72 11,110.71
31-May-94 .................. 11,108.26 11,210.14
30-Jun-94 .................. 10,948.44 11,055.79
31-Jul-94 .................. 11,173.39 11,327.43
31-Aug-94 .................. 11,380.85 11,590.65
30-Sep-94 .................. 11,198.79 11,380.62
31-Oct-94 .................. 11,322.17 11,520.59
30-Nov-94 .................. 11,125.10 11,285.63
31-Dec-94 .................. 11,231.53 11,411.81
31-Jan-95 .................. 11,398.87 11,653.40
28-Feb-95 .................. 11,682.50 11,997.63
31-Mar-95 .................. 11,858.19 12,228.91
30-Apr-95 .................. 12,093.53 12,489.85
31-May-95 .................. 12,489.45 12,952.61
FISCAL YEAR ENDED MAY 31
Beginning September 1, 1992, we began to use the Bankers Trust's Tactical
Asset Allocation Model to manage this Fund. The performance of the Fund may be
compared to a benchmark comprised of a weighted average of three market
sectors in which the Fund invests. This benchmark is described above.
PAST PERFORMANCE IS NOT PREDICTIVE OF FUTURE PERFORMANCE.
The Fund returns reflect investment management fees and other Fund expenses.
The Fund returns do not reflect charges included in the annuity contract for
mortality and expense guarantees, administrative fees or surrender charges.
42
TYPES OF INVESTMENTS
STOCKS -- also called equity securities If you own a share of stock, you own a
part of the company that issued it. Companies sell stock to get
the money they need to grow.
There are three types of stocks:
COMMON STOCK -- Each share of common stock represents a part of the ownership of
the company. The holder of common stock participates in the growth of the
company through increasing stock price and receipt of dividends. If the company
runs into difficulty, the stock price can decline and dividends may not be paid.
PREFERRED STOCK -- Each share of preferred stock allows the holder to get a set
dividend before the common stock shareholders receive any dividends on their
shares.
CONVERTIBLE PREFERRED STOCK -- a stock with a set dividend which the holder may
exchange for a certain amount of common stock.
All of the Funds except the Money Market Fund in this prospectus may invest in
common, preferred, and convertible preferred stock in accordance with their
investment strategies.
BONDS (also called debt securities)
Bonds are sold by governments on the local, state, and federal levels, and by
companies. There are many different kinds of bonds. For example, each bond issue
has specific terms. U.S. Government bonds are guaranteed to pay interest and
principal by the federal government. Revenue bonds are usually only paid from
the revenue of the issuer. An example of that would be an airport revenue bond.
Debentures are a very common type of corporate bond (a bond sold by a company).
Payment of interest and return of principal is subject to the company's ability
to pay. Convertible bonds are corporate bonds that can be exchanged for stock.
The types of bonds the Funds may invest in are as follows: U.S. Government
bonds, investment grade corporate bonds (the Capital Conservation Fund may also
invest in below investment grade bonds).
Investing in a bond is like making a loan for a fixed period of time at a fixed
interest rate. During the fixed period, the bond pays interest on a regular
basis. At the end of the fixed period, the bond matures and the investor usually
gets back the principal amount of the bond. Fixed periods to maturity are
categorized as short term (generally less than 12 months), intermediate (one to
10 years), and long term (10 years or more).
Commercial paper is a specific type of corporate or short term note. In fact,
it's very short term, being paid in less than 270 days. Most commercial paper
matures in 50 days or less.
Bonds rated Ba or B by Moody's Investors Service Inc. (generally known as
lower-medium and lower-quality bonds) are regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and principal
in accordance with the terms of the obligation. While such bonds will likely
have some quality and protective characteristics, these are outweighed by
uncertainties or risk exposures to adverse conditions. Lower-medium and
lower-quality bonds may be more susceptible to real or perceived adverse
economic and individual corporate developments than would investment grade
bonds.
For example, a projected economic downturn or the possibility of an increase in
interest rates could cause a decline in high yield, high risk, bond prices
because such an event might lessen the ability of highly leveraged high yield
issuers to meet their principal and interest payment obligations, meet projected
business goals, or obtain additional financing. In addition, the secondary
trading market for lower-medium and lower-quality bonds may be less liquid than
the market for investment grade bonds. This potential lack of liquidity may make
it more difficult to accurately value certain of these lower-grade portfolio
securities.
ASSET-BACKED SECURITIES
Asset-backed securities are bonds or notes that are normally supported by a
specific property. If the issuer fails to pay the interest or return the
principal when the bond matures, then the issuer must give the property to the
bondholders or noteholders.
All of the Funds in this prospectus may invest in asset-backed securities.
Examples of assets supporting asset-backed securities include credit card
receivables, retail installment loans, home equity loans, auto loans, and
manufactured housing loans.
ISSUED MEANS THE COMPANY (ISSUER) SOLD IT ORIGINALLY TO THE PUBLIC.
FOR MORE INFORMATION ABOUT BONDS AND RATINGS OF BONDS, SEE THE STATEMENT OF
ADDITIONAL INFORMATION.
FOR MORE INFORMATION ABOUT ASSET-BACKED SECURITIES SEE THE STATEMENT OF
ADDITIONAL INFORMATION.
43
LOAN PARTICIPATIONS
A loan participation is an investment in a loan made to a U.S. company that is
secured by the company's assets. The assets must be, at all times, worth enough
money to cover the balance due on the loan. Major national and regional banks
make loans to companies and then sell the loans to investors. These banks don't
guarantee the companies will pay the principal and interest due on the loans.
All the Funds in this prospectus may invest in loan participations.
ILLIQUID AND RESTRICTED SECURITIES
An illiquid security is one that may not be frequently traded. If it must be
sold quickly, it may have to be sold at a loss. For example, if a fund owns a
stock that is not sold very often and the fund needs to sell this stock quickly,
it may have to offer the investment at a low price for someone to buy it.
A restricted security is one that has not been registered with the SEC and
therefore can't be sold in the public market. Restricted securities do include
securities eligible for resale under Rule 144A of the Securities Act of 1933.
Some Rule 144A securities may be liquid as determined by VALIC. For more
information about Rule 144A securities see the Statement of Additional
Information. These investments can be very risky because the Fund's ability
to sell a restricted stock is very limited.
All the Funds may buy illiquid and restricted securities, but are restricted as
to how much money they may invest in them. See "LIMITATIONS", below.
ADRS
ADRs are certificates issued by a United States bank or trust company and
represent the right to receive securities of a foreign issuer deposited in a
domestic bank or foreign branch of a United States bank. We consider ADRs
foreign securities.
FOREIGN CURRENCY
All of the Funds, except the Government Securities Fund and the Money Market
Fund, may buy and sell foreign currencies the same way they buy and sell other
investments. Funds buy foreign currencies when they believe the value of the
currency will increase. If it does increase, they sell the currency for a
profit. If it decreases they will experience a loss. Funds may also buy foreign
currencies to pay for foreign securities bought for the Fund.
The Funds except the Money Market Fund and the Government Securities Fund may
purchase forward foreign currency exchange contracts to protect against a
decline in the value of the U.S. dollar.
WHEN-ISSUED SECURITIES
When-issued securities are those investments that have been announced by the
issuer and will be on the market soon. The Funds negotiate the price with a
broker before it goes on the market. If the security ends up selling on the
market at a lower price than negotiated, the Funds may have a loss. If it sells
at a higher price, the Funds may have a profit.
All of the Funds may buy when-issued securities in accordance with their
investment strategy.
MONEY MARKET SECURITIES
All of the Funds may invest part of their assets in high quality money market
securities payable in US dollars. A listing of the types of money market
securities in which the Money Market Fund may invest in is in that Fund's Fact
Sheet. A money market security is high quality when it is rated in one of the
two highest credit categories by Moody's or Standard & Poors or another
nationally recognized rating service or if unrated, deemed high quality by
VALIC.
These high quality money market securities include:
o securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities
o certificates of deposit and other obligations of domestic banks having
total assets in excess of $1 billion
o commercial paper sold by corporations and finance companies
o corporate debt obligations with remaining maturities of 13 months or
less
o Repurchase agreements, money market securities of foreign issuers if
payable in U.S. dollars, asset-backed securities, loan participations,
and adjustable rate securities
FOR MORE INFORMATION ABOUT LOAN PARTICIPATIONS SEE THE STATEMENT OF ADDITIONAL
INFORMATION.
FOR MORE INFORMATION ABOUT WHEN-ISSUED SECURITIES, SEE THE STATEMENT OF
ADDITIONAL INFORMATION.
FOR MORE INFORMATION ABOUT ILLIQUID AND RESTRICTED SECURITIES SEE THE STATEMENT
OF ADDITIONAL INFORMATION.
FOR MORE INFORMATION ABOUT MONEY MARKET SECURITIES OF FOREIGN ISSUERS THE FUNDS
MAY PURCHASE, SEE THE STATEMENT OF ADDITIONAL INFORMATION.
FOR MORE INFORMATION ABOUT FOREIGN CURRENCY EXCHANGE TRANSACTIONS, SEE THE
STATEMENT OF ADDITIONAL INFORMATION.
44
DERIVATIVES
Unlike stocks and bonds that, represent actual ownership of that stock or bond,
derivatives are investments which "derive" their value from securities issued by
a company, government, or government agency. Derivatives are bought to protect
("hedge") against a change in the price of the underlying security. There are
some investors who take higher risk ("speculate") and buy derivatives to profit
from a change in price of the underlying security. We buy derivatives to hedge
the investment portfolios and to earn additional income in order to help achieve
the Funds' objectives. We do not buy derivatives to speculate.
The Funds except the Money Market Fund may buy two types of derivatives: futures
and options.
OPTIONS
An option is the right to buy or sell any type of investment for a preset price
over a specific period of time.
CALL OPTION
For example, you can buy an option from Mr. Smith that gives you the right to
buy 10 shares of stock X at $25.00 per share anytime between now and six weeks
from now. You believe stock X will be selling for more than $25.00 per share
between now and then. Mr. Smith believes it won't be. If you exercise this
option before it expires, Mr. Smith must sell you 10 shares of stock X at $25.00
per share.
On the other hand, you can sell an option to Mr. Smith that gives him the right
to buy 10 shares of stock X at $25.00 per share anytime between now and six
weeks from now. You believe stock X will be selling for less than $25.00 per
share between now and then. Mr. Smith believes it won't be. If he exercises this
option before it expires, you must sell to Mr. Smith 10 shares of stock X at
$25.00 per share.
PUT OPTION
Or, you can buy an option from Mr. Smith that gives you the right to sell him 10
shares of X stock at $25.00 per share anytime between now and six weeks from
now. In this example, you believe stock X will be selling for less than $25.00
per share between now and then. Mr. Smith thinks it will be selling for more.
Or, you can sell an option to Mr. Smith that gives him the right to sell to you
10 shares of X stock at $25.00 per share anytime between now and six weeks from
now. In this example, he believes stock X will be selling for less than $25.00
per share between now and then.
FUTURES CONTRACTS
A futures contract is an agreement between a buyer and a seller to buy or sell
an investment on a future date at a price the buyer and seller set today. The
buyer thinks the price will go up between now and then, and the seller thinks
the price will go down or they may just want to receive today's price because
they do not know which way prices are going to go.
All of the Funds, except the Money Market Fund, may enter into certain types of
futures contracts. The Funds use futures contracts as a tool to earn more money,
and to protect against rising or falling prices in the stock and bond markets.
The Funds use stock and bond futures to invest cash and cash equivalents. When
certain levels are reached the Fund will sell the futures and buy stocks or
bonds.
All of the Funds, except the Money Market Fund can invest in these types of
futures and options:
o Write exchange traded covered put and call options on securities and
stock indices.
o purchase exchange traded put and call options on securities and stock
indices.
o purchase and sell exchange traded financial futures contracts.
o write covered call options and purchase exchange traded put and call
options on financial futures contracts.
o write covered call options and purchase non exchange traded call and
put options on financial futures contracts.
The Capital Conservation Fund, the Government Securities Fund, the International
Equities Fund, the International Government Bond Fund and the Science &
Technology Fund may write and purchase put and call options on securities and
stock indicies that are not traded on an exchange.
FOR MORE INFORMATION ON PUT AND CALL OPTIONS AND FINANCIAL FUTURES CONTRACTS AND
OPTIONS, SEE THE STATEMENT OF ADDITIONAL INFORMATION.
45
REPURCHASE AGREEMENTS
A repurchase agreement requires the seller of the security to buy it back at a
set price at a certain time. If a Fund enters into a repurchase agreement, it is
really making a short term loan (usually for one day to one week). The Funds may
enter into repurchase agreements only with well- established securities dealers
or banks that are members of the Federal Reserve System. All the Funds in this
prospectus may invest in repurchase agreements.
The risk in a repurchase agreement is the failure of the seller to be able to
buy the security back. If the value of the security declines, the Fund may have
to sell at a loss.
A repurchase agreement of more than 7 days duration is illiquid. A discussion of
repurchase agreements, illiquid securities and Fund limitations is contained in
the Statement of Additional Information.
A WORD ABOUT RISK
There are four basic types of investment risk you may be subject to:
o Market Risk
o Credit (Financial) Risk
o Interest Rate Risk
o Risk Associated with Foreign Securities
Generally stocks are considered to be subject to market risk, while debt
securities, such as U.S. government bonds and money market securities are
subject to interest rate risk. Other debt securities, such as corporate bonds,
involve both interest rate and credit (financial) risk. Lastly, risks associated
with foreign securities can involve political, currency and limited information
risks. Each of these four basic types of investment risks is discussed below.
MARKET RISK
Market risk refers to the loss of capital resulting from changes in the prices
of investments. For example, market risk occurs when expectations of lower
corporate profits in general cause the broad market of stocks to fall in price.
When this happens, even though a company is experiencing growth in profits, the
price of its stock could fall.
CREDIT (FINANCIAL) RISK
Credit risk refers to the risk that the issuer of a bond may default or be
unable to pay interest or principal due on a bond.
To help the Fund's Investment Adviser or Sub-Advisers decide which U.S.
corporate and foreign bonds to buy, they rely on Moody's and Standard & Poor's
(two nationally recognized bond rating services), and on VALIC's own research.
This research lowers the risk of buying a bond of a company that may not pay the
interest and principal on the bond.
All of the Funds in this prospectus may buy bonds that are rated as investment
grade. There are four different levels of investment grade, from AAA to BBB, see
Description of Corporate Bond Ratings in the Statement of Additional
Information. All bonds with these ratings are considered to have adequate
ability to pay interest and principal.
All of the Funds in this prospectus may buy bonds issued by the U.S. Government.
The U.S. government guarantees it will always pay principal and interest.
INTEREST RATE RISK
Interest rate risk refers to the risk that fluctuations in interest rates may
affect the value of interest paying securities in a Fund. If a fund sells a bond
before it matures, it may lose money, even if the bond is guaranteed by the U.S.
government. Say, for example, a fund bought an intermediate government bond last
year that was paying interest at a fixed rate of 6%. Now, intermediate
government bonds are paying interest at a rate of 7%. If the fund wants to sell
the bond paying 6%, it will have to sell it at a discount (and realize a loss)
to attract buyers because they can buy new bonds paying 7% interest.
46
RISK ASSOCIATED WITH FOREIGN SECURITIES
Each of the Funds may, subject to limits stated in each Fund's Fact Sheet,
invest in foreign securities including ADRs. A foreign security is a security
issued by an entity domiciled or incorporated outside of the U.S.
There are three principal risks of owning foreign securities:
POLITICAL RISK -- the chance of a change in government and the assets of
the company being taken away.
CURRENCY RISK -- a change in the value of the foreign currency compared to
the dollar. If the foreign currency declines in value, your investment valued
in U.S. dollars will decline even if the value of the foreign stock or bond is
unchanged.
LIMITED INFORMATION -- foreign companies generally are not regulated to
the degree U.S. companies are and may not report all of the information we are
used to getting. To minimize taxes they may not report some income or they may
report higher expenses.
INVESTMENT PRACTICES
LIMITATIONS.
Each Fund has limitations on the percentage of its assets that it may allocate
to certain investments. These limits are determined by the Fund's investment
objectives and risk level.
For example, the Stock Index Fund's investment goal is growth through
investments tracking the S&P 500 Index, an index that includes stocks of
domestic and foreign companies. As a result, this Fund may invest no more than
35% of its assets in stocks that are not part of the S&P 500 Index.
Some Funds are restricted from buying certain types of investments altogether.
For example, the Money Market Fund may not invest in futures and options.
Each Fund's limitations are shown in the Investment Strategy section of its Fact
Sheet.
LENDING PORTFOLIO SECURITIES.
Each Fund except the Growth Fund and the Science & Technology Fund may lend up
to 30% of its total assets to broker-dealers and other financial institutions to
earn more money for the Fund. The Growth Fund and the Science & Technology Fund
may lend up to 33 1/3% of their net assets. Assets are placed in a special
account by the borrower to cover the market value of the securities on loan. The
assets serving as collateral for the loan are valued daily.
A risk of lending portfolio investments is that there may be a delay in the Fund
getting its investments back when a loaned security is sold.
The Funds will only make loans to broker-dealers and other financial
institutions that VALIC considers to be creditworthy.
FOR MORE INFORMATION ABOUT LENDING PORTFOLIO SECURITIES, SEE THE STATEMENT OF
ADDITIONAL INFORMATION.
FOR MORE INFORMATION ABOUT FOREIGN SECURITIES, SEE THE STATEMENT OF ADDITIONAL
INFORMATION.
FOR MORE INFORMATION ABOUT INVESTMENT LIMITATIONS, SEE THE STATEMENT OF
ADDITIONAL INFORMATION.
47
ABOUT THE SERIES COMPANY
SERIES COMPANY SHARES
The Series Company is an open-end mutual fund and may offer shares of the Funds
for sale at any time. However, the Series Company offers shares of the Funds
only to registered and unregistered separate accounts of VALIC and its
affiliates, or employee thrift plans maintained by VALIC or American General
Corporation.
As a participant, you do not directly buy shares of the Funds that make up the
Series Company. Instead, you buy units in either a registered or unregistered
separate account of VALIC or of its affiliates. When you buy these units, you
specify which Funds you want the separate account to invest your money in. The
separate account, in turn, buys the shares of the Funds according to your
instructions. See your contract prospectus for more information on the separate
account associated with your contract.
When the separate accounts buy, sell, or transfer shares of the Funds, they do
not pay any charges related to these transactions.
As distributor, (VAMCO) sells shares of the Funds to the separate accounts.
VAMCO is a wholly owned subsidiary of VALIC and acts as a distributor under an
agreement it has with the Series Company. VAMCO does not charge the Series
Company or the separate accounts for its services. Also, VAMCO is not required
to sell a minimum number of shares to the separate accounts.
VAMCO sends orders to buy, sell or transfer shares to the Series Company's
transfer agent daily. The price of any share affected by the request is the next
net asset value calculated after order was received.
For more information on how to participate, see your contract prospectus.
NET ASSET VALUE OF THE SERIES COMPANY SHARES
HOW NET ASSET VALUE IS CALCULATED
Here is how the Series Company calculates the net asset value of each Fund's
shares:
Step 1:
Total value of the Fund's assets* (including money owed to the Fund but not
yet collected)
- - The Fund's liabilities (including money owed by the Fund but not yet paid)
- -----------------------------------------------------------------------------
= The Fund's total net asset value
Step 2:
The Fund's total net asset value (from Step 1)
- ----------------------------------------------- = NET ASSET VALUE PER SHARE
The total number of the Fund's shares that
are outstanding
* The Series Company uses the fair market value of Fund's investments to
calculate the Fund's total value. However, it uses the amortized cost method
to determine the values of all the Money Market Fund's investments and of any
other Fund's short-term securities maturing within 60 days. The amortized cost
method approximates the fair market value.
If a Fund's portfolio includes investments that are not sold often or are not
sold on any exchanges, the Series Company's Board of Directors or its delegate
will, in good faith, estimate the fair market value of these investments.
WHEN NET ASSET VALUE IS CALCULATED
The Series Company calculates the net asset value of each Fund's shares at
approximately 4pm EST each day the New York Stock Exchange is open, with a few
exceptions. (The New York Stock Exchange is open Monday through Friday but is
closed on certain federal and other holidays.)
In addition, the Series Company will not calculate net asset values on the
following days even when the New York Stock Exchange is open:
o the Friday after Thanksgiving; or
o when Christmas falls on a Thursday, the Friday after Christmas; and
0 when Christmas falls on a Tuesday, the Monday before Christmas.
THE VARIABLE ANNUITY MARKETING COMPANY (VAMCO) ACTS AS THE SERIES COMPANY'S
DISTRIBUTOR.
48
The separate accounts can buy, sell, and transfer shares in the Funds only on
days that the Series Company calculates the net asset value of each Fund's
shares. Through VAMCO, the separate accounts send orders to the Series Company
to buy, sell, or transfer shares based on requests they receive from
participants.
DIVIDENDS AND CAPITAL GAINS
DIVIDENDS FROM NET INVESTMENT INCOME
Net investment income generally includes stock dividends received and bond
interest earned less expenses paid by the Fund. Each Fund pays dividends from
net investment income occasionally. Dividends from net investment income are
automatically reinvested for you into additional shares of the Fund. The Money
Market Fund pays dividends daily and all other Funds pay dividends once a month.
DISTRIBUTIONS FROM CAPITAL GAINS
When a Fund sells a security for more than it paid for that security, a capital
gain results. Once a year, each Fund pays distributions from capital gains, as
long as total capital gains exceed total capital losses. Distributions from
capital gains are automatically reinvested for you into additional shares of the
Fund.
DIVERSIFICATION
Each Fund's diversification policy limits the amount that the Fund may invest in
certain securities. Each Fund's diversification policy is also designed to
comply with the diversification requirements of the Internal Revenue Code (the
"Code") Code as well as the Investment Company Act of 1940 ("the 1940 Act").
All of the Funds except International Government Bond Fund, Growth Fund and
Science & Technology Fund may invest up to 5% of their total assets in a single
issuer. An issuer, or "company" does not include the U.S. Government or agencies
of the U.S. Government according to the Code and the 1940 Act. For
diversification purposes, repurchase agreements are considered to be issued by
the U.S. Government if backed by U.S. Government securities. Also, these Funds
may not own more than 10% of the voting securities of a company.
The Growth Fund and the Science & Technology Fund may invest up to 25% of their
total assets in one company as long as those investments representing over 5% of
total assets plus those investments representing over 10% of the voting
securities of one company do not exceed 25% of total assets of the Fund. The
remaining 75% of the total assets may not include more than 5% of total assets
in one company or 10% of total assets in the voting securities of one company.
The International Government Bond Fund is "non-diversified" under the 1940 Act.
This means it can invest more of its assets in fewer issuers and for this reason
may be riskier than the other Funds. This Fund may invest up to 25% of its total
assets in a single issuer as long as those investments representing over 5% of
total assets in one issuer do not exceed 50% of total assets of the Fund. The
remaining 50% of total assets may not include more than 5% of total assets in
one issuer.
Also, the Money Market Fund may not invest more than 5% of its total
assets in any company rated as "second tier" by a national rating service (as
described in TYPES OF INVESTMENTS).
49
SEE THE STATEMENT OF ADDITIONAL INFORMATION AND YOUR CONTRACT PROSPECTUS FOR
FURTHER TAX DISCUSSIONS. YOU SHOULD ALSO CONSULT YOUR TAX ADVISOR BEFORE
INVESTING.
TAXES
By paying out all earnings as described in the DIVIDENDS AND CAPITAL GAINS
section above and by complying with the diversification requirements under the
Code, each Fund expects to qualify as a "RIC" under Subchapter M of the Code. By
qualifying as a "RIC" the Funds will not have to pay federal income taxes.
VOTING RIGHTS
ONE VOTE PER SHARE
Each outstanding share has one vote on all matters that shareholders vote on. As
a participant, you vote on these matters indirectly by voting your units. The
way you vote your units as a participant depends on your contract. See your
contract prospectus for specific details.
When a matter comes up for vote, the separate account will vote its shares in
the same proportion as the unit votes it actually receives. If VALIC determines
that it may, under the current interpretation of the 1940 Act, vote shares
directly instead of voting through its units, it may decide to vote that way.
VALIC owns more than 25% of the Growth & Income Fund. As a result, VALIC may
have a "controlling interest" in this Fund as this term is defined in the Act.
VALIC has the same voting and other rights as any other participant.
SHAREHOLDER MEETINGS
Maryland law does not require the Series Company to hold regular, annual
shareholder meetings. But, the Series Company must hold shareholder meetings on
the following matters:
o to approve certain agreements as required by the 1940 Act;
o to change fundamental investment objectives in the DIVERSIFICATION
section and to change fundamental investment restrictions, above;
o to fill vacancies on the Series Company's Board of Directors if the
shareholders have elected less than a majority of the Directors.
Shareholders may call a meeting to remove a Director from the Board if at least
10% of the outstanding shares vote to have this meeting. Then, at the meeting,
at least 2/3 of all the outstanding shares of all the Funds must vote in favor
of removing the Director.
SHAREHOLDER COMMUNICATIONS
The Series Company will assist in shareholder communications.
REPORTS
The Series Company sends Annual Reports containing audited financial statements,
Semi-Annual Reports containing unaudited financial statements, and proxy
materials to Contract owners or participants. Also, the Series Company attaches
Annual Reports to each Statement of Additional Information it sends out.
If you have any questions about the Annual or Semi-Annual Reports, call or write
to the Series Company at the phone number/address found on the cover page of
this prospectus.
LEGAL MATTERS
Cynthia A. Toles, Senior Associate General Counsel and Secretary of VALIC,
reviews the legal matters regarding the investments offered in this prospectus
and the federal laws and regulations related to their issue and sale.
50
Please tear off, complete and return the form below to Suite A3-01,
Communications Unit, The Variable Annuity Life Insurance Company, 2929 Allen
Parkway, Houston, Texas 77019 to order a Statement of Additional Information for
the Company. A Statement of Additional Information may also be ordered by
calling (800)-44-VALIC.
- ---------------------------------------------------------------------------
Please send me a free copy of the Statement of Additional Information for
American General Series Portfolio Company.
Name: _______________________________ GA #: _______________________
Address: ____________________________ Policy #: ___________________
Social Security Number: _____________
- ----------------------------------------------------------------------------
TABLE OF CONTENTS
OF STATEMENT OF ADDITIONAL INFORMATION
PAGE
----
General Information and History...................................... 2
Additional Information Regarding Certain Funds....................... 3
International Equities Fund...................................... 3
Government Securities Fund....................................... 3
Timed Opportunity Fund........................................... 4
Performance and Yield Information................................ 5
Fundamental Investment Restrictions.................................. 8
Fundamental Investment Restrictions Applicable to All Funds...... 8
MMF Investment Restrictions...................................... 9
TOF, CCF, GSF, SIF, IEF MIF and SCIF Investment Restrictions..... 9
GIF Investment Restrictions...................................... 9
GF and STF Investment Restrictions............................... 9
SAF Investment Restrictions...................................... 10
IGBF Investment Restrictions..................................... 10
Investment Practices................................................. 11
Repurchase Agreements............................................ 11
Lending Portfolio Securities..................................... 11
Foreign Securities............................................... 12
Foreign Currency Exchange Transactions........................... 13
When Issued Securities........................................... 13
Debt Securities.................................................. 13
Warrants......................................................... 14
Eurodollar Obligations........................................... 14
Asset-Backed Securities..........................................
Mortgage-Backed Securities....................................... 15
Loan Participations.............................................. 15
Adjustable Rate Securities....................................... 16
Illiquid Securities.............................................. 16
Rule 144A Securities............................................. 16
Options on Securities and Securities Indices..................... 17
Writing Covered Call and Put Options and Purchasing Call
and Put Options................................................. 18
Financial Futures Contracts...................................... 20
Options on Financial Futures Contracts........................... 22
Certain Additional Risks of Options and Financial Futures
Contracts....................................................... 22
Limitations...................................................... 24
Money Market Securities of Foreign Issuers.......................
Investment Adviser................................................... 25
Investment Sub-Advisers.............................................. 27
Portfolio Transactions and Brokerage................................. 29
Offering, Purchase, and Redemption of Fund Shares.................... 32
Determination of Net Asset Value..................................... 33
Calculation of Yield for the Money Market Fund....................... 34
Accounting and Tax Treatment......................................... 35
Calls and Puts................................................... 35
Financial Futures Contracts...................................... 35
Subchapter M of the Internal Revenue Code of 1986................ 35
Section 817(h) of the Code....................................... 36
Other Information.................................................... 37
Shareholder Reports.............................................. 37
Voting and Other Rights.......................................... 37
Custody of Assets................................................ 37
Index Funds...................................................... 38
Description of Corporate Bond Ratings............................ 39
Description of Commercial Paper Ratings.......................... 40
Independent Auditors............................................. 40
Directors and Officers............................................... 41
Financial Statements................................................. 44
51
DISTRIBUTOR:
The Variable Annuity Marketing Company
2929 Allen Parkway
Houston, Texas 77019
INVESTMENT ADVISER:
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, Texas 77019
INVESTMENT SUB-ADVISERS:
Bankers Trust Company
130 Liberty St.
New York, New York 10006
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202
Value Line, Inc.
220 East 42nd Street
New York, New York 10017-5981
CUSTODIAN:
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02110
INDEPENDENT AUDITORS:
Ernst & Young LLP
1221 McKinney
Houston, Texas 77010
TRANSFER AND SHAREHOLDER SERVICE AGENT:
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, Texas 77019
DIRECTORS AND OFFICERS
DIRECTORS
Stephen D. Bickel
Thomas L. West, Jr.
Peter V. Tuters
Joe C. Osborne
Norman Hackerman
John William Lancaster
F. Robert Paulsen
R. Miller Upton
Ben H. Love
OFFICERS
Stephen D. Bickel Chairman and President
Thomas L. West, Jr. Executive Vice President
Norman Jaskol Vice President and
Senior Investment
Officer
John W. Mossbarger Vice President and
Investment Officer
Teresa S. Moro Vice President and
Investment Officer
William Trimbur, Jr. Vice President and
Investment Officer
Leon A. Olver Vice President and
Investment Officer
Brent C. Nelson Vice President
Cynthia A. Toles General Counsel and
Secretary
Gregory R. Seward Treasurer and Controller
Betty J. North Assistant Vice President
David H. den Boer Assistant Secretary
Debra A. Yeang Assistant Treasurer
William W. Merryman Assistant Controller
(C)1995 The Variable Annuity Life Insurance Company, Houston, Texas
Printed Matter
Printed in U.S.A.
VA 9017 Rev 10/95
RULE 497(C) FILING
REGISTRATION NO. 2-83631/811-3738
MARKED TO SHOW CHANGES
AMERICAN GENERAL SERIES PORTFOLIO COMPANY
STOCK INDEX FUND
MIDCAP INDEX FUND
SMALL CAP INDEX FUND
INTERNATIONAL EQUITIES FUND
GROWTH FUND
GROWTH & INCOME FUND
CAPITAL CONSERVATION FUND
GOVERNMENT SECURITIES FUND
INTERNATIONAL GOVERNMENT SECURITIES FUND
SOCIAL AWARENESS FUND
SCIENCE & TECHNOLOGY FUND
MONEY MARKET FUND
TIMED OPPORTUNITY FUND
-----------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------------------
FORM N-1A PART B
OCTOBER 1, 1995
This Statement of Additional Information is not a prospectus and contains
information in addition to that in the Prospectus for American General Series
Portfolio Company (the "Company"). It should be read in conjunction with the
Prospectus. The Statement of Additional Information and the related Prospectus
are both dated October 1, 1995. For an individual interested in a variable
annuity contract issued by The Variable Annuity Life Insurance Company
("VALIC"), a Prospectus may be obtained by calling (713) 831-5069 or writing
the Company or The Variable Annuity Marketing Company ("VAMCO") at 2929 Allen
Parkway, Houston, Texas 77019. All inquiries regarding variable annuity
contracts issued by American General Life Insurance Company ("AGL"), the
successor to California-Western States Life Insurance Company ("Cal-West"),
should be directed in writing to AGL's Annuity Administration Department,
2727-A Allen Parkway, Houston, Texas 77019-2191 or by calling (713) 831-3102.
Shares in the Company are available to the public only through the purchase of
certain variable annuity contracts issued and employee thrift plans maintained
by VALIC and its affiliates.
TABLE OF CONTENTS
Page
-----
General Information and History....................................... 2
Additional Information Regarding Certain Funds........................ 3
International Equities Fund......................................... 3
Government Securities Fund.......................................... 3
Timed Opportunity Fund.............................................. 4
Performance and Yield Information................................... 5
Fundamental Investment Restrictions................................... 8
Fundamental Investment Restrictions Applicable to All Funds......... 8
MMF Investment Restrictions......................................... 9
TOF, CCF, GSF, SIF, IEF, MIF and SCIF Investment Restrictions....... 9
GIF Investment Restrictions......................................... 9
GF and STF Investment Restrictions.................................. 9
SAF Investment Restrictions......................................... 10
IGBF Investment Restrictions........................................ 10
Investment Practices.................................................. 11
Repurchase Agreements............................................... 11
Lending Portfolio Securities........................................ 11
Foreign Securities.................................................. 12
Foreign Currency Exchange Transactions.............................. 13
When Issued Securities.............................................. 13
Debt Securities..................................................... 13
Warrants............................................................ 14
Eurodollar Obligations.............................................. 14
Asset-Backed Securities............................................. 14
Mortgage-Backed Securities.......................................... 15
Loan Participations................................................. 15
Adjustable Rate Securities.......................................... 16
Illiquid Securities................................................. 16
Rule 144A Securities................................................ 16
Options on Securities and Securities Indices........................ 17
Writing Covered Call and Put Options and Purchasing Call and
Put Options........................................................ 18
Financial Futures Contracts......................................... 20
Options on Financial Futures Contracts.............................. 22
Certain Additional Risks of Options and Financial
Futures Contracts.................................................. 22
Limitations......................................................... 24
Money Market Securities of Foreign Issuers.......................... 24
Investment Adviser.................................................... 25
Investment Sub-Advisers............................................... 27
Portfolio Transactions and Brokerage.................................. 29
Offering, Purchase, and Redemption of Fund Shares..................... 32
Determination of Net Asset Value...................................... 33
Calculation of Yield for the Money Market Fund........................ 34
Accounting and Tax Treatment.......................................... 35
Calls and Puts...................................................... 35
Financial Futures Contracts......................................... 35
Subchapter M of the Internal Revenue Code of 1986................... 35
Section 817(h) of the Code.......................................... 36
Other Information..................................................... 37
Shareholder Reports................................................. 37
Voting and Other Rights............................................. 37
Custody of Assets................................................... 37
Index Funds......................................................... 38
Description of Corporate Bond Ratings............................... 39
Description of Commercial Paper Ratings............................. 40
Independent Auditors................................................ 40
Directors and Officers................................................ 41
Financial Statements.................................................. 44
VA 9017-1, Rev. 10/95
GENERAL INFORMATION AND HISTORY
American General Series Portfolio Company (the "Company") was incorporated
in Maryland on December 7, 1984, by VALIC and is registered under the
Investment Company Act of 1940, as amended, (the "1940 Act") as an open-end,
management investment company. Pursuant to Investment Advisory Agreements with
the Company and subject to the authority of the Company's Board of Directors,
VALIC serves as the Company's investment adviser and conducts the business and
affairs of the Company. Additionally, VALIC has engaged an investment
sub-adviser to provide investment sub-advisory services for the Stock Index
Fund, the MidCap Index Fund, the Small Cap Index Fund, the Growth Fund, the
Growth & Income Fund, and the Science & Technology Fund, subject to VALIC's
control, direction and supervision. The Company consists of thirteen separate
investment portfolios (hereinafter collectively referred to as the "Funds" or
individually as a "Fund"), each of which is, in effect, a separate mutual fund
issuing its own separate class of common stock. The Company issues shares of
common stock of each Fund to registered and unregistered separate accounts of
VALIC and its affiliates to fund variable annuity contracts (the "Contracts").
Currently the Company acts as an investment vehicle for assets of VALIC's
Separate Account A, and AGL Separate Account A and Separate Account D, each of
which is a unit investment trust registered as an investment company under the
1940 Act, and AGL Separate Account B, a unit investment trust that is exempt
from registration as an investment company under the 1940 Act. Additionally,
retirement plans maintained by VALIC and American General Corporation may own
shares of certain of the Funds.
The Company and VALIC have Codes of Ethics which establish for their
officers, directors and certain employees procedures and restrictions as to
those individual's personal investment trading activities.
<TABLE>
<CAPTION>
DATE OPERATIONS
DATE OF DATE SEED COMMENCED
INCORPORATION OR MONEY WAS (BY ISSUANCE OR
BOARD APPROVAL FIRST PROVIDED AVAILABILITY
NAME OF FUND FOR ORGANIZATION TO THE COMPANY OF SHARES)
------------ ---------------- --------------
<S> <C> <C> <C>
Stock Index Fund ("SIF")............. 2-02-87 4-20-87 4-20-87
MidCap Index Fund ("MIF")............ 3-16-82 8-30-82 9-17-82
Small Cap Index Fund ("SCIF")........ 10-28-91 5-01-92 5-01-92
International Equities Fund
("IEF")............................ 7-18-89 9-29-89 10-02-89
Growth Fund ("GF")................... 1-25-94 4-29-94 4-29-94
Growth & Income Fund ("GIF")......... 1-25-94 4-29-94 4-29-94
Science & Technology Fund ("STF").... 12-17-93 4-29-94 4-29-94
Social Awareness Fund ("SAF")........ 7-18-89 9-29-89 10-02-89
Timed Opportunity Fund ("TOF")....... 2-22-83 8-08-83 9-06-83
Capital Conservation Fund ("CCF").... 12-07-84 12-16-85 12-16-85
Government Securities Fund ("GSF")... 12-07-84 12-16-85 12-16-85
International Government Bond Fund
("IGBF")........................... 7-30-91 10-01-91 10-01-91
Money Market Fund ("MMF")............ 12-07-84 12-16-85 12-16-85
</TABLE>
The MidCap Index Fund and the Timed Opportunity Fund are the successors to
Capital Accumulation Fund, Inc. and Timed Opportunity Fund, Inc., respectively,
which were separately registered open-end diversified management investment
companies under the 1940 Act, pursuant to a reorganization entered into on
September 25, 1985. The MidCap Index Fund effected a change in its name and
investment objective, investment program and one of its restrictions as of
October 1, 1991. In addition, the Quality Growth Fund was combined into the
Stock Index Fund, by means of a reclassification of its shares, effective May 1,
1992.
2
ADDITIONAL INFORMATION REGARDING CERTAIN FUNDS
The following disclosures supplement disclosures set forth in the
Prospectus and do not, standing alone, present a complete explanation of the
matters disclosed. Please refer also to the Prospectus for a complete
presentation of these matters.
INTERNATIONAL EQUITIES FUND
The International Equities Fund intends to provide long-term growth of
capital through investments primarily in a diversified portfolio of equity and
equity-related securities of foreign issuers that, as a group, are expected to
provide investment results closely corresponding to the Morgan Stanley's
Capital International, Europe, Australia and Far East Index ("EAFE Index").
The EAFE Index, which commenced in 1969, is an unmanaged capitalization
weighted stock index consisting of more than 1000 companies operating in 20
countries in Europe, Australia, and the Far East. The EAFE Index is a well
known measure for international stock performance. The EAFE Index does not
reflect charges, fees, and commissions applicable to the Fund.
The weighted breakdown by country of the EAFE Index (as of May 31, 1995)
is set forth below:
EAFE INDEX BREAKDOWN BY COUNTRY
COUNTRY WEIGHT
------- ------
1 AUSTRALIA............................ 2.56
2 AUSTRIA.............................. 0.38
3 BELGIUM.............................. 1.15
4 DENMARK.............................. 0.82
5 FINLAND.............................. 0.61
6 FRANCE............................... 6.25
7 GERMANY.............................. 6.73
8 HONG KONG............................ 3.17
9 IRELAND.............................. 0.28
10 ITALY................................ 2.20
11 JAPAN................................ 42.21
12 MALAYSIA............................. 2.44
13 NETHERLANDS.......................... 3.89
14 NEW ZEALAND.......................... 0.42
15 NORWAY............................... 0.42
16 SINGAPORE............................ 1.24
17 SPAIN................................ 1.69
18 SWEDEN............................... 1.74
19 SWITZERLAND.......................... 5.32
20 UNITED KINGDOM....................... 16.48
GOVERNMENT SECURITIES FUND
The Government Securities Fund may invest in intermediate and long-term debt
instruments issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. U.S. Government securities in which the Fund may invest
include: (1) U.S. Treasury bills, notes, and bonds; (2) obligations issued or
guaranteed by U.S. Government agencies and instrumentalities which are supported
by any of the following: (a) the full faith and credit of the U.S. Government
(E.G., Government National Mortgage Association ("GNMA") Certificates); (b) the
right of the issuer to borrow an amount limited to a specific line of credit
from the U.S. Treasury (E.G., debt of each of the Federal Home Loan banks); (c)
the discretionary authority of the U.S. Government or GNMA to purchase certain
financial obligations of the agency or instrumentality (E.G., Federal National
Mortgage Association); or (d) the credit of the issuing agency or
instrumentality (E.G., Federal Land Banks, Farmers, Farmers Home Administration
or Student Loan Marketing Association); and (3) collateralized mortgage
obligations ("CMOs") that are issued by governmental or non-governmental
entities and collateralized by U.S. Treasury Obligations or by U.S. Government
agency or instrumentality securities. No assurance can be given that the U.S.
Government will provide sup-
3
port to such U.S. Government sponsored agencies or instrumentalities in the
future, since it is not required to do so by law.
TIMED OPPORTUNITY FUND
The chart below indicates the historic allocations, from June 1983 through
June 1995, based on the investment benchmarks of 55% in equity securities, 35%
in intermediate or long-term debt securities and 10% in money market or short
term debt instruments, as recommended by the Bankers Trust Company Tactical
Asset Allocation Model. The Bankers Trust Company Tactical Asset Allocation
Model is currently used in connection with the management of over $2.2 billion
of assets.
TACTICAL ASSET ALLOCATION SHIFTS
Stock Bond Cash
----- ---- ----
Benchmark 55 35 10
1983 J ..................... 42 52 6
S ..................... 2 84 14
D ..................... 24 66 10
1984 M ..................... 8 73 19
J ..................... 7 55 38
S ..................... 65 25 10
D ..................... 54 26 20
1985 M ..................... 40 51 9
J ..................... 74 23 3
S ..................... 66 30 4
D ..................... 86 11 3
1986 M ..................... 86 10 4
J ..................... 71 27 2
S ..................... 75 24 1
D ..................... 86 9 5
1987 M ..................... 63 28 9
J ..................... 41 29 30
S ..................... 35 17 48
D ..................... 98 2 0
1988 M ..................... 94 1 5
J ..................... 32 35 33
S ..................... 20 32 48
D ..................... 55 14 31
1989 M ..................... 48 33 19
J ..................... 56 36 8
S ..................... 64 36 0
D ..................... 59 41 0
1990 M ..................... 51 46 3
J ..................... 62 38 0
S ..................... 51 48 1
D ..................... 54 46 0
1991 M ..................... 65 35 0
J ..................... 59 41 0
S ..................... 70 30 0
D ..................... 66 34 0
1992 M ..................... 63 37 0
J ..................... 68 32 0
S ..................... 66 34 0
D ..................... 65 35 0
1993 M ..................... 62 38 0
J ..................... 59 41 0
S ..................... 60 40 0
D ..................... 62 38 0
1994 M ..................... 51 27 22
J ..................... 43 30 27
S ..................... 48 21 31
D ..................... 43 26 31
1995 M ..................... 43 24 33
J ..................... 45 36 19
4
PERFORMANCE AND YIELD INFORMATION
The Series Company may compute the total return of a Fund ("Average Annual
Total Return"), total return of a Fund before expenses ("Portfolio Total
Return"), and compare Portfolio Total Return to the total return of the Fund's
benchmark index ("Index Total Return"). The difference between Portfolio Total
Return and Index Total Return is referred to as "tracking difference." Tracking
difference represents the amount that the return on the investment portfolio
(which results from the Adviser's investment selection) deviates from its
benchmark's Index Total Return. Fund performance does not reflect contract
charges or separate account charges which will reduce Fund values which are
available to Participants. Information about Separate Account performance is
available in the applicable contract prospectus.
AVERAGE ANNUAL TOTAL RETURN
Average Annual Total Return quotations for periods of 1, 3, 5, and 10
years, or, since inception of the Fund, are calculated according to the
following formula:
P (1+T)(n) = ERV
Where:
P = A hypothetical initial Purchase Payment of $1,000.
T = Average annual total return.
(n) = Number of years.
ERV = Ending redeemable value of a hypothetical $1,000 Purchase Payment
made at the beginning of the first period.
Average Annual Total Return reflects the deduction of Fund expenses and
assumes that all dividends and distributions are reinvested when paid.
PORTFOLIO TOTAL RETURN
Portfolio Total Return quotations for periods of 1, 3, 5, and 10 years,
or, since inception are calculated by adding to the Average Total Annual
Return (described above) the expenses of the Fund. Expenses of the Fund are
calculated at the end of each Fund's fiscal year and are expressed as a
percentage of average net assets. Expenses as a percentage of average net
assets are prorated equally over the months in the fiscal year in which the
ratio was calculated when determining expenses for periods crossing over
fiscal years.
INDEX TOTAL RETURN
Index Total Return quotations for periods 1, 3, 5, and 10 years, or, since
inception are calculated by determining the percentage change in value of the
benchmark index over the applicable period adjusting for reinvestment of
dividends and interest as applicable. Index Total Return is calculated according
to the formula described above for Average Annual Total Return, however it does
not include an expense component; if an expense component were included the
return would be lower.
SEVEN DAY YIELDS
The Money Market Fund may quote a Seven Day Current Yield and a Seven Day
Effective Yield. The Seven Day Current Yield is calculated by determining the
total return for the current seven day period ("based period return") and
annualizing the base period return by dividing by seven days, then multiplying
the result by 365 days. The Seven Day Effective Yield annualizes the base
period return while compounding weekly the base period return according to the
following formula:
Seven Day Effective Yield = [(Base Period Return + 1)(365/7) - 1]
5
30 DAY CURRENT YIELD
The Capital Conservation Fund, Government Securities Fund, and the
International Government Bond Fund may quote a 30 Day Current Yield which is
determined based on the current 30 day period, according to the following
standardized formula:
Yield = 2[(1 + NII )(6) - 1]
-------
S x NAV
Where:
NII = Net investment income (interest income, plus dividend income, plus
other income, less fund expenses.
S = Average daily shares outstanding.
NAV = Net asset value per share on the last day of the period.
6
<PAGE>
PERFORMANCE RETURNS
MAY 31, 1995
<TABLE>
<CAPTION>
PERFORMANCE RETURNS
-------------------------------------------
10 YEAR
INCEPTION OR SINCE
DATE 1 YEAR 3 YEAR 5 YEAR INCEPTION (A)
--------- ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C>
STOCK INDEX FUND: 04/20/87
Average Annual Total Return 19.98% 11.46% 10.58% 10.11%
Portfolio Total Return 20.36% 11.86% 11.05% 10.75%
S & P 500 20.19% 11.83% 11.42% 11.31%
MIDCAP INDEX FUND: 10/13/82
Average Annual Total Return 13.26% 11.18% 7.65% 7.93%
Portfolio Total Return 13.70% 11.67% 8.21% 8.62%
S & P MidCap 400 13.50% 11.88% 14.12% 15.64%
SMALL CAP INDEX FUND: 05/01/92
Average Annual Total Return 9.98% 10.85% N/A 10.36%
Portfolio Total Return 10.42% 11.02% N/A 10.53%
Russell 2000 10.31% 12.67% N/A 12.78%
INTERNATIONAL EQUITIES FUND: 10/02/89
Average Annual Total Return 4.92% 11.05% 4.67% 2.71%
Portfolio Total Return 5.37% 11.53% 5.16% 3.18%
Morgan Stanley Capital
International -- EAFE 4.93% 11.52% 4.87% 2.92%
GROWTH FUND 04/29/94
Average Annual Total Return 16.25% N/A N/A 13.55%
Portfolio Total Return 17.16% N/A N/A 14.47%
S & P 500 20.19% N/A N/A 21.56%
GROWTH & INCOME FUND 04/29/94
Average Annual Total Return 13.35% N/A N/A 11.04%
Portfolio Total Return 14.21% N/A N/A 11.90%
S & P 500 20.19% N/A N/A 21.56%
SCIENCE & TECHNOLOGY FUND 04/29/94
Average Annual Total Return 48.61% N/A N/A 41.62%
Portfolio Total Return 49.61% N/A N/A 42.62%
S & P 500 20.19% N/A N/A 21.56%
SOCIAL AWARENESS FUND 10/02/89
Average Annual Total Return 18.19% 10.87% 9.09% 9.48%
Portfolio Total Return 18.77% 11.47% 9.57% 9.95%
S & P 500 20.19% 11.83% 11.42% 11.16%
TIMED OPPORTUNITY FUND 09/06/83
Average Annual Total Return 12.43% 7.73% 6.71% 8.79%
Portfolio Total Return 13.01% 8.35% 7.45% 9.72%
Benchmark (B) 15.54% 9.76% 10.28% 12.38%
CAPITAL CONSERVATION FUND 01/16/86
Average Annual Total Return 11.80% 7.88% 8.51% 6.83%
Portfolio Total Return 12.38% 8.49% 9.20% 7.72%
Merrill Lynch Corporate Master
Index 13.37% 9.25% 10.86% 10.28%
GOVERNMENT SECURITIES FUND 01/06/86
Average Annual Total Return 10.43% 7.28% 8.72% 6.81%
Portfolio Total Return 11.01% 7.89% 9.41% 7.71%
Lehman Brothers U.S. Treasury Index 10.82% 7.97% 9.54% 9.30%
INTERNATIONAL GOVERNMENT BOND FUND 10/01/91
Average Annual Total Return 23.23% 13.59% N/A 13.67%
Portfolio Total Return 23.82% 13.99% N/A 14.02%
Salomon Brothers Non-U.S.
Government Bond Index 24.68% 14.80% N/A 15.01%
MONEY MARKET FUND 01/16/86
Average Annual Total Return 4.90% 3.52% 4.42% 5.62%
Portfolio Total Return 5.47% 4.11% 5.05% 6.44%
30-Day Certificate of Deposit
Primary Offering Rate
by New York City Banks 4.44% 3.32% 4.29% 5.64%
</TABLE>
- ------------
(A) Amounts shown are returns for ten years or since inception if the fund has
been in existence for less than ten years.
(B) Benchmark consists of 55% S&P 500 Index, 35% Merrill Lynch Corporate &
Government Master Index, and 10% NYC 30 Day Primary CD Rate.
7
FUNDAMENTAL INVESTMENT RESTRICTIONS
The Funds have each adopted certain fundamental investment restrictions
which, unlike the other investment objective(s), policies, and investment
program of each Fund, may only be changed for each Fund with the consent of a
majority of the outstanding voting securities of the particular Fund. The 1940
Act defines such a majority as the lesser of (1) 67% or more of the voting
securities present in person or by proxy at a shareholders' meeting, if the
holders of more than 50% of the outstanding voting securities of a Fund are
present or represented by proxy, or (2) more than 50% of a Fund's outstanding
voting securities.
FUNDAMENTAL INVESTMENT RESTRICTIONS APPLICABLE TO ALL FUNDS
All the Funds, except the International Government Bond Fund, the Growth
Fund and the Science & Technology Fund have adopted each of the following
fundamental investment restrictions. The International Government Bond Fund
has adopted fundamental investment restrictions 2-10 below. (The Growth Fund
and the the Science & Technology Fund have adopted investment restrictions 3,
6 and 7 as non-fundamental operating policies. In addition, as a
non-fundamental operating policy, the Growth Fund and the Science & Technology
Fund will not invest in oil, gas or mineral exploration programs.) Such
restrictions provide that no Fund may:
1. Invest more than 5% of the value of its total assets in the
securities of any one issuer or purchase more than 10% of the outstanding
voting securities, or any other class of securities, of any one issuer.
For purposes of this restriction, all outstanding debt securities of an
issuer are considered as one class, and all preferred stock of an issuer
is considered as one class. This restriction does not apply to obligations
issued or guaranteed by the U.S. Government, its agencies, or
instrumentalities. As a matter of operating policy, the Company will not
consider repurchase agreements subject to the 5% limitation if the
collateral underlying the repurchase agreements are U.S. Government
securities.
2. (a) Issue senior securities except in connection with investments
in options and futures contracts; or (b) borrow money except as a
temporary measure for extraordinary or emergency purposes (such as to meet
redemption requests which might otherwise require the disadvantageous sale
of portfolio securities) and then not in excess of 5% of the Fund's total
assets. No Fund may mortgage, pledge or hypothecate more than 5% of the
value of its total assets, and then only to secure borrowings made under
this restriction.
3. Acquire more than 3% of the voting securities of any single other
investment company or invest more than 10% of (the value of) the Fund's
assets in the securities of other investment companies (5% in the case of
each such other company). Additionally, investment company securities will
only be purchased on the open market or from brokers or dealers receiving
customary commissions.
4. Acquire real estate or real estate contracts, although a Fund may
acquire obligations that are secured by real estate or securities issued
by companies investing in real estate, such as real estate investment
trusts.
5. Underwrite securities of other issuers except where the sale of
restricted portfolio securities constitutes an underwriting under the
federal securities laws.
6. Acquire securities for the purpose of influencing the management
of, or exercising control over, the issuer.
7. Effect short sales of securities or purchase securities on margin,
except in connection with investment in options and futures contracts.
Each Fund may use short-term credits when necessary to clear transactions.
8. Lend money, except by purchasing debt obligations in which a Fund
may invest consistent with its investment objective(s) and policies or by
purchasing securities subject to repurchase agreements.
9. Purchase or sell commodities (except in connection with
investments in
8
options and futures contracts) or invest in oil, gas or mineral
exploration programs.
10. Make loans to other persons, except that a Fund may lend its
portfolio securities to broker-dealers and other financial institutions in
an amount up to 30% of the value of the Fund's total assets.
MMF INVESTMENT RESTRICTIONS
MMF may not:
1. Purchase any security which matures more than 13 months from the
date of purchase.
2. Purchase or sell commodity con-
tracts.
3. Invest in warrants, or write, purchase or sell puts, calls,
straddles, spreads or combinations thereof.
4. Invest more than 25% of the value of its total assets in the
securities of issuers primarily engaged in any one industry, except
investments in obligations issued or guaranteed by the U.S. Government,
its agencies, or instrumentalities.
TOF, CCF, GSF, SIF, IEF, MIF, AND SCIF INVESTMENT RESTRICTIONS
TOF, CCF, GSF, SIF, IEF, MIF, and SCIF may not:
1. Enter into a financial futures contract (by exercise of any option
or otherwise) or acquire any options thereon, if, immediately thereafter,
the total of the initial margin deposits required with respect to all open
futures positions, at the time such positions were established, plus the
sum of the premiums paid for all unexpired options on futures contracts
would exceed 5% of the value of its total assets.
2. Invest more than 25% of the value of its total assets in the
securities of issuers primarily engaged in any one industry.
GIF INVESTMENT RESTRICTIONS
GIF may not:
1. Invest 25% or more of its assets in securities of issuers in any
one industry.
GF AND STF INVESTMENT RESTRICTIONS
GF and STF may not:
1. Borrow money except that the Funds may (i) borrow for
non-leveraging, temporary or emergency purposes and (ii) engage in reverse
repurchase agreements and make other investments or engage in other
transactions, which may involve a borrowing, in a manner consistent with
the Funds' investment objective and program, provided that the combination
of (i) and (ii) shall not exceed 33 1/3% of the value of the Funds' total
assets (including the amount borrowed) less liabilities (other than
borrowings) or such other percentage permitted by law. Any borrowings
which come to exceed this amount will be reduced in accordance with
applicable law. The Funds may borrow from banks, other T. Rowe Price Funds
or other persons to the extent permitted by law.
2. Purchase the securities of any issuer if, as a result, more than
25% of the value of the Funds' total assets would be invested in the
securities of issuers having their principal business activities in the
same industry; provided, however, the Growth Fund will normally
concentrate 25% or more of its assets in the securities of the banking
industry when the Growth Fund's position in issues maturing in one year or
less equals 35% or more of the Growth Fund's total assets.
3. Make loans, although the Funds may (i) lend portfolio securities;
provided that no such loan may be made if, as a result, the aggregate of
such loans would exceed 33 1/3% of the value of the Funds' total assets;
(ii) purchase money market securities and enter into repurchase
agreements; and (iii) acquire publicly-distributed or privately-placed
debt securities and purchase debt.
4. Purchase a security if, as a result, with respect to 75% of the
Funds' total assets, more than 5% of the value of its total assets would
be invested in the securities of a single issuer or more than 10% of the
outstanding voting securities of any issuer would be held by the Funds,
except securities issued or guaranteed by the U.S. Government or any of
its agencies or instrumentalities.
9
5. Purchase or sell physical commodities; except that it may enter
into futures contracts and options thereon;
6. Purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments (but this shall not prevent
the Funds from investing in securities or other instruments backed by real
estate or securities of companies engaged in the real estate business);
7. Issue senior securities except in compliance with the investment
Company Act of 1940;
8. Underwrite securities issued by other persons, except to the
extent that the Funds may be deemed to be an underwriter within the
meaning of the Securities Act of 1933 in connection with the purchase and
sale of its portfolio securities in the ordinary course of pursuing its
investment program.
With respect to investment restriction (5), the Fund does not consider
forward foreign currency contracts or hybrid investments to be
commodities. For purposes of investment restriction (2), U.S. state or
local governments, or related agencies or instrumentalities, are not
considered an industry.
Notwithstanding anything in the above fundamental and operating
restrictions to the contrary, subject to any regulatory requirements, GF
and STF may each invest all of its assets in a single investment company
or a series thereof in connection with a "master-feeder" arrangement. Such
an investment would be made where the Fund (a "Feeder"), and one or more
other funds with the same investment objective and program as the Fund,
sought to accomplish its investment objective and program by investing all
of its assets in the shares of another investment company (the "Master").
The Master would, in turn, have the same investment objective and program
as the Fund. The Funds would invest in this manner in an effort to achieve
the economies of scale associated with having a Master fund make
investments in portfolio companies on behalf of a number of Feeder funds.
SAF INVESTMENT RESTRICTIONS
SAF may not:
1. Enter into financial futures contracts (by exercise of any option
or otherwise) or acquire any options thereon, if, immediately thereafter,
the total of the initial margin deposits required with respect to all open
futures positions at the time such positions were established plus the sum
of the premiums paid for all unexpired options on futures contracts would
exceed 5% of the value of its total assets.
2. Invest more than 25% of the value of its total assets in the
securities of issuers primarily engaged in any one industry.
IGBF INVESTMENT RESTRICTIONS
IGBF may not:
1. With respect to 50% of its total assets, invest more than 5% of
its total assets in securities of any one issuer or purchase more than 10%
of the outstanding voting securities of any one issuer. With respect to
the remaining 50% of its total assets, invest more than 25% of its total
assets in the securities of any one issuer. This restriction does not
apply to obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities.
2. Enter into a financial futures contract (by exercise of any option
or otherwise) or acquire any options thereon, if, immediately thereafter,
the total of the initial margin deposits required with respect to all open
futures positions, at the time such positions were established, plus the
sum of the premiums paid for all unexpired options on futures contracts
would exceed 5% of the value of its total assets.
3. Invest more than 25% of the value of its total assets in the
securities of issuers primarily engaged in any one industry.
10
INVESTMENT PRACTICES
REPURCHASE AGREEMENTS
Each Fund may hold commercial paper, certificates of deposits, and
government obligations (including government guaranteed obligations) subject
to repurchase agreements with certain well established domestic banks and
certain broker-dealers, including primary government securities dealers,
approved as creditworthy by the Board of Directors. The underlying security
must be a high-quality domestic money market security (except for the
International Equities Fund and International Government Bond Fund which
utilize foreign money market securities) and the seller must be a
well-established securities dealer or bank that is a member of the Federal
Reserve System. For the Money Market Fund, the underlying security must be a
U.S. Government security or a security rated in the highest rating category by
the Requisite NRSROs (Nationally Recognized Statistical Rating Organization)
and must be determined to present minimal credit risk. Repurchase agreements
are generally for short periods, often less than a week. Repurchase agreements
typically obligate a seller, at the time it sells securities to a Fund, to
repurchase the securities at a specific future time and price. The price for
which the Fund resells the securities is calculated to exceed the price the
Fund initially paid for the same securities, thereby determining the yield
during the Fund's holding period. This results in a fixed market rate of
interest, agreed upon by that Fund and the seller, which is accrued as
ordinary income. Most repurchase agreements mature within seven days although
some may have a longer duration. The underlying securities constitute
collateral for these repurchase agreements, which are considered loans under
the 1940 Act.
The Funds do not intend to sell the underlying securities subject to a
repurchase agreement (except to the seller upon maturity of the agreement).
During the term of the repurchase agreement, the Funds (i) retain the
securities subject to the repurchase agreement as collateral securing the
seller's obligation to repurchase the securities, (ii) monitor on a daily
basis the market value of the securities subject to the repurchase agreement,
and (iii) require the seller to deposit with the Company's custodian
collateral equal to any amount by which the market value of the securities
subject to the repurchase agreement falls below the resale amount provided
under the repurchase agreement. In the event that a seller defaults on its
obligation to repurchase the securities, the Funds must hold the securities
until they mature or may sell them on the open market, either of which may
result in a loss to a Fund if, and to the extent that, the values of the
securities decline. Additionally, the Funds may incur disposition expenses
when selling the securities. Bankruptcy proceedings by the seller may also
limit or delay realization and liquidation of the collateral by a Fund and may
result in a loss to that Fund. The Board of Directors of the Company will
evaluate the creditworthiness of all banks and broker-dealers with which the
Company proposes to enter into repurchase agreements. The Funds will not
invest in repurchase agreements that do not mature within seven days if any
such investment, together with any illiquid assets held by a Fund, exceeds 10%
of the value of that Fund's total assets (15% in the case of Growth Fund,
Growth & Income Fund and Science & Technology Fund.)
LENDING PORTFOLIO SECURITIES
For purposes of realizing additional income, each Fund may make secured
loans of its portfolio securities amounting to no more than 30% of the value
of each Fund's total assets (33 1/3% in the case of Growth Fund and Science &
Technology Fund). This policy is a fundamental policy of each of the Funds.
Securities loans are made to broker-dealers and other financial institutions
approved by VALIC and pursuant to agreements requiring that the loans be
continuously secured by collateral at least equal at all times to the loaned
securities marked to market on a daily basis. The collateral received will
consist of cash, U.S. government securities, letters of credit or such other
collateral as permitted by interpretations or rules of the Securities and
Exchange Commission ("SEC"). While the securities are on loan, the Funds will
continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower.
Any loan of portfolio securities by any Fund will be callable at any time
by the lending Fund upon notice of five business days. When voting or
11
consent rights which accompany loaned securities pass to the borrower, the
lending Fund will call the loan, in whole or in part as appropriate, to permit
the exercise of such rights if the matters involved would have a material
effect on that Fund's investment in the securities being loaned. If the
borrower fails to maintain the requisite amount of collateral, the loan will
automatically terminate, and the lending Fund will be permitted to use the
collateral to replace the securities while holding the borrower liable for any
excess of replacement cost over collateral. As with any extensions of credit,
there are risks of delay in receiving additional collateral or in the recovery
of the securities or, in some cases, even loss of rights in the collateral
should the borrower of the securities fail financially. However, these loans
of portfolio securities will be made only when VALIC considers the borrowing
broker-dealers or financial institutions to be creditworthy and of good
standing and the interest earned from such loans to justify the attendant
risks. On termination of the loan, the borrower will be required to return the
securities to the lending Fund. Any gain or loss in the market price during
the loan would inure to the lending Fund. The lending Fund may pay reasonable
finders', administrative, and custodial fees in connection with a loan of its
securities.
FOREIGN SECURITIES
A foreign security is a security issued by an entity domiciled or
incorporated outside of the United States.
Included within the definition of foreign securities are American
Depository Receipts (ADRs).
ADRs are certificates issued by a United States bank or trust company and
represent the right to receive securities of a foreign issuer deposited in a
domestic bank or foreign branch of a United States bank and traded on a United
States exchange or in an over-the-counter market. Generally, ADRs are in
registered form. Investment in ADRs has certain advantages over direct
investment in the underlying foreign securities since: (i) ADRs are U.S.
dollar-denominated investments that are easily transferable and for which
market quotations are readily available, and (ii) issuers whose securities are
represented by ADRs are generally subject to auditing, accounting and
financial reporting standards similar to those applied to domestic issuers.
Each Fund may also, in accordance with its specific investment
objective(s) and investment program, policies and restrictions purchase U.S.
dollar-denominated money market securities of foreign issuers. Such money
market securities may be registered domestically and traded on domestic
exchanges or in the over-the-counter market (E.G., Yankee securities) or may
be registered abroad and traded exclusively in foreign markets (E.G.,
Eurodollar securities).
In addition, all the Funds, except the Government Securities Fund and the
Money Market Fund, may invest in non-U.S. dollar denominated foreign
securities, in accordance with their specific investment objective(s),
investment programs, policies, and restrictions. Investing in foreign
securities may involve advantages and disadvantages not present in domestic
investments. There may be less publicly available information about securities
not registered domestically, or their issuers, than is available about
domestic issuers or their domestically registered securities. Stock markets
outside the U.S. may not be as developed as domestic markets, and there may
also be less government supervision of foreign exchanges and brokers. Foreign
securities may be less liquid or more volatile than U.S. securities. Trade
settlements may be slower and could possibly be subject to failure. In
addition, brokerage commissions and custodial costs with respect to foreign
securities may be higher than those for domestic investments. Accounting,
auditing, financial reporting and disclosure standards for foreign issuers may
be different than those applicable to domestic issuers. Non-U.S.
dollar-denominated foreign securities may be affected favorably or unfavorably
by changes in currency exchange rates and exchange control regulations
(including currency blockage) and a Fund may incur costs in connection with
conversions between various currencies. Foreign securities may also involve
risks due to changes in the political or economic conditions of such foreign
countries, the possibility of expropriation of assets or nationalization, and
possible difficulty in obtaining and enforcing judgments against foreign
entities.
12
FOREIGN CURRENCY EXCHANGE TRANSACTIONS
Foreign currency transactions used by the Funds may be either: (i) on the
spot (I.E., cash) basis at the spot rate prevailing in the foreign exchange
market, or (ii) conducted through the use of forward foreign currency exchange
contracts. A forward foreign currency exchange contract involves an obligation
to purchase or sell a specific currency at a future date. In general, forward
foreign currency exchange contracts are not guaranteed by a third party and,
accordingly, each party to a forward foreign currency exchange contract is
dependent upon the creditworthiness and good faith of the other party.
A Fund will enter into forward foreign currency exchange contracts only
under two circumstances. First, a Fund may enter into a forward foreign
currency exchange contract to purchase an amount of foreign currency to
protect itself against a possible loss that might occur between trade and
settlement dates for a particular security, resulting from a decline in the
U.S. dollar against the foreign currency in which such security is
denominated. This practice may limit the potential gains that might result
from a positive change in such currency relationships. Second, when VALIC or a
Sub-adviser believes that the currency of a particular foreign country may
suffer or enjoy a substantial movement against the U.S. dollar, a Fund may
enter into a forward foreign currency exchange contract to purchase or sell an
amount of foreign currency approximating the value of some or all of that
Fund's portfolio securities denominated in such foreign currency. The
forecasting of short-term currency market movements is extremely difficult and
it is uncertain whether such short-term hedging strategies will be successful.
WHEN-ISSUED SECURITIES
Each of the Funds except the Money Market Fund may purchase securities on
a when-issued or delayed delivery basis. When such transactions are
negotiated, the price of such securities is fixed at the time of commitment,
but delivery and payment for the securities may take place a month or more
after the date of the commitment to purchase. The securities so purchased are
subject to market fluctuation, and no interest accrues to the purchaser during
this period. Forward commitments involve a risk of loss if the value of the
security to be purchased declines prior to the settlement date. VALIC does not
believe that a Fund's net asset value or income will be adversely affected by
the purchase of securities on a when-issued basis.
DEBT SECURITIES
Debt securities are considered high-quality if they are rated at least Aa
by Moody's or its equivalent by any other NRSRO or, if unrated, are determined
to be of equivalent investment quality. High-quality debt securities are
considered to have a very strong capacity to pay principal and interest. Debt
securities are considered investment grade if they are rated, for example, at
least Baa by Moody's or its equivalent by any other NRSRO or, if not rated,
are determined to be of equivalent investment quality. Investment grade debt
securities are regarded as having an adequate capacity to pay principal and
interest. Lower-medium and lower-quality securities rated, for example, Ba and
B by Moody's or its equivalent by any other NRSRO are regarded on balance as
high risk and predominantly speculative with respect to the issuer's
continuing ability to meet principal and interest payments. See the Section
regarding "Description of Corporate Bond Ratings" for a description of each
rating category in this Statement of Additional Information for a more
complete description of lower-medium and lower-quality debt securities and
their risks.
The maturity of debt securities may be considered long (ten plus years),
intermediate (one to ten years), or short-term (thirteen months or less). In
general, the principal values of longer-term securities fluctuate more widely
in response to changes in interest rates than those of shorter-term
securities, providing greater opportunity for capital gain or risk of capital
loss. A decline in interest rates usually produces an increase in the value of
debt securities, while an increase in interest rates generally reduces their
value.
A Fund will not purchase debt securities issued by an investment adviser
or a broker/dealer unless they are rated Aa by Moody's or its equivalent by
any other NRSRO. A Fund will not purchase debt securities issued by an
investment adviser or a broker dealer if they are unrated.
13
WARRANTS
Each Fund, except the Money Market Fund, Government Securities Fund,
Capital Conservation Fund and the International Government Bond Fund may
invest in warrants limited to no more than 5% of the value of the total assets
of each Fund. Warrants are securities that give the Funds the right to
purchase equity securities from the issuer at a specific price (the "strike
price") for a limited period of time. Warrants do not entitle a holder to
dividends or voting rights with respect to the underlying securities and do
not represent any rights in the assets of the issuing company. In addition,
the value of warrants does not, necessarily, in all cases change to the same
extent as the value of the underlying securities to which they relate.
Warrants cease to have value if they are not exercised prior to the expiration
date. These factors can make warrants more speculative than other types of
investments.
EURODOLLAR OBLIGATIONS
Each Fund in accordance with its investment objective(s), policies, and
investment program may invest in Eurodollar obligations, including Eurodollar
bonds and Eurodollar certificates of deposit. A Eurodollar obligation is a
security denominated in U.S. dollars and originated principally in Europe,
giving rise to the term Eurodollar.
Such securities are not registered with the SEC and generally may only be
sold to U.S. investors after the initial offering and cooling-off periods. The
market for Eurodollar securities is dominated by foreign-based investors and
the primary trading market for these securities is London.
Eurodollar obligations, including Eurodollar bonds and Eurodollar
certificates of deposit, are principally obligations of foreign branches of
U.S. banks. These instruments represent the loan of funds actually on deposit
in the U.S. The Company believes that the U.S. bank would be liable in the
event that its foreign branch failed to pay on its U.S. dollar denominated
obligations. Nevertheless, the assets supporting the liability could be
expropriated or otherwise restricted if located outside the U.S. Exchange
controls, taxes, or political and economic developments also could affect
liquidity or repayment. Due to possibly conflicting laws or regulations, the
foreign branch of the U.S. bank could maintain and prevail that the liability
is solely its own, thus exposing a Fund to a possible loss. Such U.S. dollar
denominated obligations of foreign branches of Federal Deposit Insurance
Corporation ("FDIC") member U.S. banks are not covered by the usual $100,000
of FDIC insurance if they are payable only at an office of such a bank located
outside the U.S., Puerto Rico, Guam, American Samoa, and the Virgin Islands.
Moreover, there may be less publicly available information about foreign
issuers whose securities are not registered with the SEC and such foreign
issuers may not be subject to the accounting, auditing, and financial
reporting standards applicable to issuers registered domestically. In
addition, foreign issuers, stock exchanges, and brokers generally are subject
to less government regulation. There are however, no risks of currency
fluctuation since the obligations are U.S. dollar denominated.
ASSET-BACKED SECURITIES
Each of the Funds may invest in asset-backed securities (unrelated to
first mortgage loans) that represent fractional interests in pools of retail
installment loans, both secured (such as certificates for automobile
receivables) and unsecured, and leases, or revolving credit receivables both
secured and unsecured (such as credit card receivable securities). These
assets are generally held by a trust and payments of principal and interest,
or interest only are passed through monthly or quarterly to certificate
holders and may be guaranteed up to certain amounts by letters of credit
issued by a financial institution affiliated or unaffiliated with the trustee
or originator of the trust.
Underlying automobile sales contracts, leases or credit card receivables
are subject to prepayment, which may reduce the overall return to certificate
holders. Nevertheless, principal repayment rates tend not to vary much with
interest rates and the short-term nature of the underlying loans, leases, or
receivables tends to dampen the impact of any change in the prepayment level.
Certificate holders may also experience delays in payment on the certificates
if the full amounts due on underlying loans, leases or receivables are not
realized by the trust because of unanticipated legal or administrative costs
of enforcing the con-
14
tracts or because of depreciation or damage to the collateral (usually
automobiles) securing certain contracts, or other factors. If consistent with
its investment objective(s) and policies, a Fund may invest in other
asset-backed securities that may be developed in the future.
MORTGAGE-BACKED SECURITIES
Certain of the Funds may invest in Government National Mortgage
Association ("GNMA") Certificates. GNMA Certificates are securities
representing part ownership of a pool of mortgage loans. These loans, issued
by lenders such as mortgage bankers, commercial banks, and savings and loan
associations, are either insured by the Federal Housing Administration or
guaranteed by the Veterans Administration. Each pool of mortgage loans is
assembled and, after being approved by GNMA, is offered to investors through
securities dealers in the form of certificates representing participations in
the pool. Once approved by GNMA, the timely payment of interest and principal
of each mortgage is guaranteed by GNMA and backed by the full faith and credit
of the U.S. Government. GNMA Certificates differ from bonds in that principal
is paid monthly by the borrower over the term of the loan rather than returned
in a lump sum at maturity. GNMA Certificates are called "pass-through"
certificates because both principal and interest payments (including
prepayments) are passed through to the holder of the certificate.
The average life of GNMA Certificates varies with the maturities of the
underlying mortgage instruments. Upon receipt, principal payments may be used
by the Funds to purchase additional GNMA Certificates or other U.S. Government
Securities. In addition, prepayments of the mortgages included in the
underlying mortgage pool will usually result in the return of the greatest
part of principal invested well before the maturity of the mortgages in the
pool. The volume of such prepayments of principal in a given pool of mortgages
will influence the actual yield of the GNMA Certificate, and principal
returned to the Funds may be reinvested in instruments whose yield may be
higher or lower than that which might have been obtained had such prepayments
not occurred. In quoting yields of GNMA Certificates, the standard practice is
to assume that the certificates will have a 12 year life. As previously noted,
however, the actual life of an individual pool may differ widely and actual
yield may differ significantly from estimated yields based on the 12 year life
assumption.
Certain Funds may also invest in collateralized mortgage obligations
("CMOs") issued by governmental or non-governmental entities, such as banks
and other mortgage lenders. Non-governmental securities may offer a higher
yield but may be subject to greater price fluctuation and risk than
governmental securities.
CMOs are obligations fully collateralized directly or indirectly by a pool
of mortgages on which payments of principal and interest are passed through to
the holders of the CMOs on the same schedule as they are received, although
not necessarily on a pro rata basis. In reliance on an SEC interpretation, the
Funds' investments in certain qualifying CMOs, are not subject to legal
limitations on acquiring interests in other investment companies. In order to
be able to rely on the SEC's interpretation, the CMOs must be unmanaged,
fixed-asset issuers that (i) invest primarily in mortgage-backed securities,
(ii) do not issue redeemable securities, (iii) operate under general exemptive
orders exempting them from all provisions of the Investment Company Act, and
(iv) are not registered or regulated under the Investment Company Act as
investment companies. To the extent that a Fund selects CMOs that do not meet
the above requirements, the Fund may not invest more than 10% of its assets in
all such entities and may not acquire more than 3% of the voting securities of
any single such entity.
LOAN PARTICIPATIONS
Loan Participations are debt obligations of corporations and are usually
purchased from major money center banks, selected regional banks, and major
foreign banks with branches in the U.S. which are regulated by the Federal
Reserve System or appropriate state regulatory authorities. VALIC and the
Sub-advisers believe that the credit standards imposed by such banks are
comparable to the standards such banks use in connection with loans originated
by them and in which they intend to maintain a full interest. The financial
institutions offering loan participations do not guarantee principal or
interest on the loan participations which they offer. VALIC and the
Sub-advisers will not purchase such securities for
15
the Funds unless they believe that the collateral underlying the corporate
loans is adequate and the corporation will be able, in a timely fashion, to
pay scheduled interest and principal amounts.
ADJUSTABLE RATE SECURITIES
Each of the Funds may invest in adjustable rate money market securities.
Adjustable rate securities (I.E., variable rate and floating rate instruments)
are securities that have interest rates that are adjusted periodically,
according to a set formula. The maturity of some adjustable rate securities
may be shortened under certain special conditions described more fully below.
Variable rate instruments are obligations (usually certificates of
deposit) that provide for the adjustment of their interest rates on pre-
determined dates or whenever a specific interest rate changes. A variable rate
instrument whose principal amount is scheduled to be paid in 13 months or less
is considered to have a maturity equal to the period remaining until the next
readjustment of the interest rate. Many variable rate instruments are subject
to demand features which entitle the purchaser to resell such securities to
the issuer or another designated party, either (l) at any time upon notice of
usually 30 days or less, or (2) at specified intervals, not exceeding 13
months, and upon 30 days notice. A variable rate instrument subject to a
demand feature is considered to have a maturity equal to the longer of the
period remaining until the next readjustment of the interest rate or the
period remaining until the principal amount can be recovered through demand.
Floating rate instruments (generally corporate notes, bank notes, or
Eurodollar certificates of deposit) have interest rate reset provisions
similar to those for variable rate instruments and may be subject to demand
features like those for variable rate instruments. The maturity of a floating
rate instrument is considered to be the period remaining until the principal
amount can be recovered through demand.
ILLIQUID SECURITIES
The Funds will not invest more than 10% (15% in the case of Growth Fund,
Growth & Income Fund and Science & Technology Fund) of the value of their
assets in securities or other investments that are illiquid or not readily
marketable (including repurchase agreements with maturities exceeding seven
days). Securities received as a result of a corporate reorganization or
similar transaction affecting readily-marketable securities already held in
the portfolio of a Fund will not be considered securities or other investments
that are not readily marketable. However, the Funds will attempt, in an
orderly fashion, to dispose of any securities received under these
circumstances, to the extent that such securities are considered not readily
marketable, and together with other illiquid securities, exceed 10% of the
value of a Fund's net assets.
RULE 144A SECURITIES
Each Fund, other than the Money Market Fund, may purchase securities
which, while privately placed, are eligible for purchase and sale pursuant to
Rule 144A under the Securities Act of 1933 (the "1933 Act"). This Rule permits
certain qualified institutional buyers, such as the Funds, to trade in
privately placed securities even though such securities are not registered
under the 1933 Act. The Company, under the supervision of the Board of
Directors, will consider whether securities purchased under Rule 144A are
illiquid and thus subject to the Funds' restriction on investing more than 10%
(15% in the case of the Growth Fund, Growth & Income Fund and Science &
Technology Fund) of its assets in illiquid securities. Determination of
whether a Rule 144A security is liquid or not is a question of fact. In making
this determination the Company will consider the trading markets for the
specific security taking into account the unregistered nature of a Rule 144A
security. In addition the Company could consider (i) frequency of trades and
quotes (ii) number of dealers and potential purchasers, (iii) dealer
undertakings to make a market, and (iv) nature of the security and market
place trades (for example, the time needed to dispose of the security, the
method of soliciting offers and the mechanics of transfer). The liquidity of
Rule 144A securities will also be monitored by the Company and, if, as a
result of changed conditions, it is determined that a Rule 144A security is no
longer liquid, the Funds' holding of illiquid securities will be reviewed to
determine what, if any, action is required to assume that the Funds do not
invest more than 10% of their assets in illiquid securities (15% in the case
of the Growth Fund, Growth & Income Fund and Science & Technology Fund).
16
Investing in Rule 144A securities could have the effect of increasing the
amount of the Funds' investments in illiquid securities if qualified
institutional buyers are unwilling to purchase such securities.
OPTIONS ON SECURITIES AND SECURITIES INDICES
Each Fund, other than the Money Market Fund, may write covered call and
put options on securities and securities indices. As a matter of operating
policy, the Growth & Income Fund will only write covered call options on
securities. In addition, the Growth Fund and the Science & Technology Fund
have no current intention of writing put options on securities or securities
indices. The International Equities Fund and the International Government Bond
Fund may also write covered call and put options on foreign currencies that
correlate with the Fund's portfolio of foreign securities. A call option is a
contract that gives to the holder the right to buy a specified amount of the
underlying security or currency at a fixed or determinable price (called the
exercise or "strike" price) upon exercise of the option. A put option is a
contract that gives the holder the right to sell a specified amount of the
underlying security or currency at a fixed or determinable price upon exercise
of the option.
To "cover" a call option written, a Fund may, for example, identify and
have available for sale the specific portfolio security, group of securities,
or foreign currency to which the option relates. To cover a put option
written, a Fund may, for example, establish a segregated asset account with
its custodian containing cash or liquid assets that, when added to amounts
deposited with its broker or futures commission merchant ("FCM") as margin,
equals the market value of the instruments underlying the put option written.
Each of these Funds may write options on securities and securities indices
and the International Equities Fund and the International Government Bond Fund
may write options on currencies for the purpose of increasing the Funds'
return on such securities or its entire portfolio of securities or to protect
the value of the entire portfolio. Such investment strategies will not be used
for speculation. If a Fund writes an option which expires unexercised or is
closed out by the Fund at a profit, it will retain the premium received for
the option, which will increase its gross income. If the price of the
underlying security or currency moves adversely to the Fund's position, the
option may be exercised and the Fund, as the writer of the option, will be
required to sell or purchase the underlying security or currency at a
disadvantageous price, which may only be partially offset by the amount of
premium received.
Options on stock indices are similar to options on stock, except that all
settlements are made in cash rather than by delivery of stock, and gains or
losses depend on price movements in the stock market generally (or in a
particular industry or segment of the market represented by the index) rather
than price movements of individual stocks. When a Fund writes an option on a
securities index, and the underlying index moves adversely to the Fund's
position, the option may be exercised. Upon such exercise, the Fund, as the
writer of the option, will be required to pay in cash an amount equal to the
difference between the exercise settlement value of the underlying index and
the exercise price of the option, multiplied by a specified index
"multiplier."
Call or put options on a stock index may be written at an exercise or
"strike" price which is either below or above the current value of the index.
If the exercise price at the time of writing the option is below the current
value of the index for a call option or above the current value of the index
for a put option the option is considered to be "in the money." In such a
case, the Fund will cover such options written by segregating with its
custodian or pledging to its commodity broker as collateral cash, U.S.
Government or other high-grade, short-term debt obligations equal in value to
the amount by which the option written is in the money, times the multiplier,
times the number of contracts.
Stock indices for which options are currently traded include the S&P 500
Index, Value Line Index, National OTC Index, Major Market Index, Computer
Technology Index, Oil Index, NYSE Options Index, Technology Index, Gold/Silver
Index, Institutional Index and NYSE Beta Index. The Funds may also use options
on such other indices as may now or in the future be available.
Each Fund, except the Money Market Fund, may also purchase put or call
options on securities and securities indices in order to (i) hedge against
anticipated changes in interest rates or
17
stock prices that may adversely affect the prices of securities that the Fund
intends to purchase at a later date, (ii) hedge its investments against an
anticipated decline in value, or (iii) attempt to reduce the risk of missing a
market or industry segment advance. As a matter of operating policy, the
Growth & Income Fund will only purchase call options on securities to close
out open positions for covered call options it has written. In addition, the
Growth Fund and the Science & Technology Fund have no current intention of
purchasing call options on securities or securities indices. The International
Equities Fund and the International Government Bond Fund also may purchase put
options on foreign currencies that correlate with the Fund's portfolio
securities in order to minimize or hedge against anticipated declines in the
exchange rate of the currencies in which the Fund's securities are denominated
and may purchase call options on foreign currencies that correlate with its
portfolio securities to take advantage of anticipated increases in exchange
rates. In the event that the anticipated changes in interest rates, stock
prices, or exchange rates occur, the Fund may be able to offset the resulting
adverse effect on the Fund, in whole or in part, through the options
purchased.
The premium paid for a put or call option plus any transaction costs will
reduce the benefit, if any, realized by the Fund upon exercise or liquidation
of the option, and, unless the price of the underlying security, securities
index, or currency changes sufficiently, the option may expire without value
to the Fund. To close option positions purchased by the Funds, the Funds may
sell put or call options identical to options previously purchased, which
could result in a net gain or loss depending on whether the amount received on
the sale is more or less than the premium and other transaction costs paid on
the put or call option purchased.
Options used by the Funds may be traded on the national securities
exchanges or in the over-the-counter market. Only the Capital Conservation
Fund, the Government Securities Fund the International Equities Fund and the
International Government Bond Fund may use over-the-counter options. Options
traded in the over-the-counter market may not be as actively traded as those
on an exchange. Accordingly, it may be more difficult to value such options.
In addition, it may be more difficult to enter into closing transactions with
respect to options traded over-the-counter. In this regard, the Funds may
enter into contracts with the primary dealers with whom they write over-
the-counter options. The contracts will provide that each Fund has the
absolute right to repurchase an option it writes at any time at a repurchase
price which represents the fair market value of such option, as determined in
good faith through negotiations between the parties, but which in no event
will exceed a price determined pursuant to a formula contained in the
contract. Although the specific details of the formula may vary between
contracts with different primary dealers, the formula will generally be based
on a multiple of the premium received by each Fund for writing the option,
plus the amount, if any, of the option's intrinsic value (I.E., the amount the
option is "in-the-money"). The formula will also include a factor to account
for the difference between the price of the security and the strike price of
the option if the option is written "out-of-the-money." Although the specific
details of the formula may vary with different primary dealers, each contract
will provide a formula to determine the maximum price at which each Fund can
repurchase the option at any time. The Funds have established standards of
creditworthiness for these primary dealers.
WRITING COVERED CALL AND PUT OPTIONS AND PURCHASING CALL AND PUT OPTIONS
All of the Funds, except the Money Market Fund, may write exchange-traded
covered call and put options on or relating to specific securities in order to
earn additional income or, in the case of a call written, to minimize or hedge
against anticipated declines in the value of the Fund's securities. As a
matter of operating policy, the Growth & Income Fund will only write covered
call options on securities. The International Equities Fund and the
International Government Bond Fund may also write covered call and put options
on foreign currencies that correlate with its portfolio securities in order to
earn additional income or in the case of call options written to minimize or
hedge against anticipated declines in the exchange rate of the currencies in
which the Fund's securities are denominated. To "cover" an option means, for
example, to identify and make available for sale the specific portfolio
security or foreign currency to which the option relates.
18
Through the writing of a covered call option a Fund receives premium income
but obligates itself to sell to the purchaser of such an option the particular
security or foreign currency underlying the option at a specified price at any
time prior to the expiration of the option period, regardless of the market
value of the security or the exchange rate for the foreign currency during
this period. Through the writing of a covered put option a Fund receives
premium income but obligates itself to purchase a particular security or
foreign currency underlying the option at a specified price at any time prior
to the expiration of the option period, regardless of market value or exchange
rate during the option period.
Certain Funds, in accordance with their investment objective(s) and
investment programs, may also write exchange-traded covered call and put
options on stock indices and may purchase call and put options on stock
indices that correlate with the Fund's portfolio securities. These Funds may
engage in such transactions for the same purposes as they may engage in such
transactions with respect to individual portfolio securities or foreign
currencies, that is, to generate additional income or as a hedging technique
to minimize anticipated declines in the value of the Fund's portfolio
securities or the exchange rate of the securities in which the Fund invested.
In economic effect, a stock index call or put option is similar to an option
on a particular security, except that the value of the option depends on the
weighted value of the group of securities comprising the index, rather than a
particular security, and settlements are made in cash rather than by delivery
of a particular security.
Each Fund, other than the Money Market Fund, may also purchase
exchange-traded call and put options with respect to securities and stock
indices that correlate with that Fund's particular portfolio securities. As a
matter of operating policy, the Growth & Income Fund will only purchase call
options on securities to close out open positions for covered call options
written by it. The International Equities Fund and the International
Government Bond Fund may also purchase call and put options on foreign
currencies that correlate with the currencies in which the Fund's securities
are denominated.
A Fund may purchase put options for defensive purposes in order to protect
against an anticipated decline in the value of its portfolio securities or
currencies. As the holder of a put option with respect to individual
securities or currencies, the Fund has the right to sell the securities or
currencies underlying the options and to receive a cash payment at the
exercise price at any time during the option period. As the holder of a put
option on an index, a Fund has the right to receive, upon exercise of the
option, a cash payment equal to a multiple of any excess of the strike price
specified by the option over the value of the index.
A Fund may purchase call options on individual securities, currencies or
stock indices in order to take advantage of anticipated increases in the price
of those securities or currencies by purchasing the right to acquire the
securities or currencies underlying the option or, with respect to options on
indices, to receive income equal to the value of such index over the strike
price. As the holder of a call option with respect to individual securities or
currencies, a Fund obtains the right to purchase the underlying securities or
currencies at the exercise price at any time during the option period. As the
holder of a call option on a stock index, a Fund obtains the right to receive,
upon exercise of the option, a cash payment equal to the multiple of any
excess of the value of the index on the exercise date over the strike price
specified in the option.
Unlisted options may be used by the Capital Conservation Fund, the
Government Securities Fund, the International Equities Fund and the
International Government Bond Fund. Such options are not traded on an exchange
and may not be as actively traded as listed securities, making the valuation
of these securities more difficult. In addition, an unlisted option entails a
risk not found in connection with listed options -- that the party on the
other side of the option transaction will default. This may make it impossible
to close out an unlisted option position in some cases, and profits may be
lost thereby. Such unlisted, over-the-counter options, unless otherwise
indicated, will be considered illiquid securities. The Funds will engage in
such transactions only with firms of sufficient credit to minimize these
risks. In instances in which a Fund has entered into agreements with primary
dealers with respect to the unlisted, over-the-counter options it has written,
and such agreements
19
would enable the Fund to have an absolute right to repurchase, at a
pre-established formula price, the over-the-counter options written by it, the
Fund will treat as illiquid only the amount equal to the formula price
described above less the amount by which the option is "in-the-money."
Although these investment practices will be used to generate additional
income and to attempt to reduce the effect of any adverse price movement in
the securities or currencies subject to the option, they do involve certain
risks that are different in some respects from investment risks associated
with similar funds which do not engage in such activities. These risks include
the following: writing covered call options -- the inability to effect closing
transactions at favorable prices and the inability to participate in the
appreciation of the underlying securities or currencies above the exercise
price; writing covered put options -- the inability to effect closing
transactions at favorable prices and the obligation to purchase the specified
securities or currencies or to make a cash settlement on the stock index at
prices which may not reflect current market values or exchange rates; and
purchasing put and call options -- possible loss of the entire premium paid.
In addition, the effectiveness of hedging through the purchase or sale
(writing) of stock index options will depend upon the extent to which price
movements in the portion of a Fund's portfolio being hedged correlate with
price movements in the selected stock index. Perfect correlation may not be
possible because the securities held or to be acquired by a Fund may not
exactly match the composition of the stock index on which options are
purchased or written. If the forecasts of VALIC regarding movements in
securities prices, currencies or interest rates are incorrect, a Fund's
investment results may have been better without the hedge. A more detailed
description of these investment practices and their associated risks is
contained in the Fund's Statement of Additional Information.
FINANCIAL FUTURES CONTRACTS
Each Fund, except the Money Market Fund, in accordance with its investment
objective(s), investment program, policies, and restrictions may purchase and
sell exchange-traded financial futures contracts as a hedge to protect against
anticipated changes in prevailing interest rates, overall stock prices or
currency rates, or to efficiently and in a less costly manner implement either
increases or decreases in exposure to the equity or bond markets. The Funds
may also write covered call options and purchase put and call options on
financial futures contracts for the same purposes or to earn additional
income. Although they have no current intention to do so, the Growth Fund, the
Growth & Income Fund and the Science & Technology Fund may also write covered
put options on stock index futures contracts. Only the International Equities
Fund and the International Government Bond Fund may utilize currency futures
contracts and both listed and unlisted financial futures contracts and options
thereon.
Financial futures contracts consist of interest rate futures contracts,
stock index futures contracts, and currency futures contracts. An interest
rate futures contract is a contract to buy or sell specified debt securities
at a future time for a fixed price. A stock index futures contract is similar
in economic effect, except that rather than being based on specific
securities, it is based on a specified index of stocks and not the stocks
themselves. A currency futures contract is a contract to buy or sell a
specific foreign currency at a future time for a fixed price.
An interest rate futures contract binds the seller to deliver to the
purchaser on a specified future date a specified quantity of one of several
listed financial instruments, against payment of a settlement price specified
in the contract. A public market currently exists for futures contracts on
GNMA Certificates, long-term U.S. Treasury Bonds, three-month U.S. Treasury
Bills, short-term U.S. Treasury Notes, and bank certificates of deposit.
Stock index futures contracts bind purchaser and seller to deliver, at a
future date specified in the contract, a cash amount equal to a multiple of
the difference between the value of a specified stock index on that date and
the settlement price specified by the contract. That is, the seller of the
futures contract must pay and the purchaser would receive a multiple of any
excess of the value of the index over the settlement price, and conversely,
the purchaser must pay and the seller would receive a multiple of any excess
of the settlement price over the value of the index. A public market currently
exists for stock index
20
futures contracts based on the S&P 500 Index, the New York Stock Exchange
Composite Index, the Value Line Stock Index, and the Major Market Index. It is
expected that financial instruments related to broad-based indices, in
addition to those for which futures contracts are currently traded, will in
the future be the subject of publicly-traded futures contracts, and the Funds
may use any of these, which are appropriate, in its hedging strategies.
A financial futures contract is an agreement to buy or sell a security (or
deliver a final cash settlement price, in the case of a contract relating to
an index or otherwise not calling for physical delivery of a specified
security) for a set price in the future. Exchange-traded futures contracts are
designated by boards of trade which have been designated "contracts markets"
by the Commodity Futures Trading Commission ("CFTC").
Positions taken in the futures markets are not normally held until
delivery or cash settlement is required, but instead are liquidated through
offsetting transactions which may result in a gain or a loss. While futures
positions taken by a Fund will usually be liquidated in this manner, the Fund
may instead make or take delivery of underlying securities whenever it appears
economically advantageous to the Fund to do so. A clearing organization
associated with the relevant exchange assumes responsibility for closing out
transactions and guarantees that, as between the clearing members of an
exchange, the sale and purchase obligations will be performed with regard to
all positions that remain open at the termination of the contract.
Unlisted financial futures contracts, which may be purchased or sold only by
the International Equities Fund and the International Government Bond Fund, like
unlisted options, are not traded on an exchange and, generally, are not as
actively traded as listed futures contracts or listed securities. Such financial
futures contracts generally DO NOT have the following elements: standardized
contract terms, margin requirements relating to price movements, clearing
organizations that guarantee counter-party performance, open and competitive
trading in centralized markets, and public price dissemination. These elements
in listed instruments serve to facilitate their trading and accurate valuation.
As a result, the accurate valuation of unlisted financial futures contracts may
be difficult. In addition, it may be difficult or even impossible, in some
cases, to close out an unlisted financial futures contract, which may, in turn,
result in significant losses to the Fund. Such unlisted financial futures
contracts will be considered by the Fund to be illiquid securities and together
with other illiquid securities will be limited to no more than 10% (15% in the
case of the Growth Fund, the Growth & Income Fund and the Science & Technology
Fund) of the value of such Fund's total assets. In making such determination,
the value of unlisted financial futures contracts will be based upon the "face
amount" of such contracts. The International Equities Fund and the International
Government Bond Fund will engage in such transactions only with securities firms
having sufficient credit or other resources to minimize certain of these risks.
When financial futures contracts are entered into by a Fund, either as the
purchaser or the seller of such contracts, the Fund is required to deposit
with its custodian in a segregated account in the name of the FCM an initial
margin of cash or U.S. Treasury bills equalling as much as 5% to 10% or more
of the contract settlement price. The nature of initial margin requirements in
futures transactions differs from traditional margin payments made in
securities transactions in that initial margins for financial futures
contracts do not involve the borrowing of funds by the customer to finance the
transaction. Instead, a customer's initial margin on a financial futures
contract represents a good faith deposit securing the customer's contractual
obligations under the financial futures contract. The initial margin deposit
is returned, assuming these obligations have been met, when the financial
futures contract is terminated. In addition, subsequent payments to and from
the FCM, called "variation margin," are made on a daily basis as the price of
the underlying security, stock index, or currency fluctuates, reflecting the
change in value in the long (purchase) or short (sale) positions in the
financial futures contract, a process known as "marking to market."
The Fund, as an internal operating policy may not hold financial futures
contracts in an amount greater than 33% of the Fund's net assets. A Fund may
not adhere to this internal operating policy in circumstances where the Fund
21
is required to invest a large cash infusion. In this circumstance the Fund's
total invested position, including the security value of the financial futures
contracts may not exceed 100% of the Fund's net assets.
Financial futures contracts generally are not entered into to acquire the
underlying asset and generally are not held to term. Prior to the contract
settlement date, the Funds will normally close all futures positions by
entering into an offsetting transaction which operates to cancel the position
held, and which usually results in a profit or loss.
OPTIONS ON FINANCIAL FUTURES CONTRACTS
For bona fide hedging purposes, each Fund, except the Money Market Fund,
may also purchase call and put options on financial futures contracts and
write call options on financial futures contracts of the type which the
particular Fund is authorized to enter into. Except for options on currency
futures contracts used by the International Equities Fund and the
International Government Bond Fund, options on financial future contracts used
by the Funds are traded on exchanges that are licensed and regulated by the
CFTC. A call option on a financial futures contract gives the purchaser the
right in return for the premium paid, to purchase a financial futures contract
(assume a "long" position) at a specified exercise price at any time before
the option expires. A put option gives the purchaser the right, in return for
the premium paid, to sell a financial futures contract (assume a "short"
position), for a specified exercise price, at any time before the option
expires.
Unlike entering into financial futures contracts, purchasing options on
financial futures contracts allows a Fund to decline to exercise the option,
thereby avoiding any loss beyond foregoing the purchase price (or "premium")
paid for the options. Therefore, the purchase of options on financial futures
contracts may be a preferable hedging strategy when a Fund desires maximum
flexibility. Whether, in order to achieve a particular objective, a Fund
enters into a financial futures contract, on the one hand, or an option
contract, on the other, will depend on all the circumstances, including the
relative costs, liquidity, availability and capital requirements of such
financial futures and options contracts. Also, the Funds will consider the
relative risks involved, which may be quite different. These factors, among
others, will be considered in light of market conditions and the particular
objective to be achieved.
CERTAIN ADDITIONAL RISKS OF OPTIONS AND FINANCIAL FUTURES CONTRACTS
In addition to the risks described in the Company's Prospectus, the use of
options and financial futures contracts may entail the following risks. First,
although such instruments when used by the Funds are intended to correlate
with the Funds' portfolio securities or currencies, in many cases the options
or financial futures contracts used may be based on securities, currencies, or
stock indices the components of which are not identical to the portfolio
securities owned or intended to be acquired by the Funds. Second, due to
supply and demand imbalances and other market factors, the price movements of
financial futures contracts, options thereon, currency options, and stock
index options may not necessarily correspond exactly to the price movements of
the securities, currencies, or stock indices on which such instruments are
based. Accordingly, there is a risk that a Fund's transactions in those
instruments will not in fact offset the impact on the Fund of adverse market
developments in the manner or to the extent contemplated or that such
transactions will result in losses to the Fund which are not offset by gains
with respect to corresponding portfolio securities owned or to be purchased by
that Fund.
To some extent, these risks can be minimized by careful management of
hedging activities. For example, where price movements in a financial futures or
option contract are expected to be less volatile than price movements in the
related portfolio securities owned or intended to be acquired by a Fund, it may,
in order to compensate for this difference, use an amount of financial futures
or option contracts which is greater than the amount of such portfolio
securities. Similarly, where the price movement of a financial futures or option
contract is anticipated to be more volatile, a Fund may use an amount of such
contracts which is smaller than the amount of portfolio securities to which such
contracts relate.
22
The risk that the hedging technique used will not actually or entirely
offset an adverse change in a Fund's portfolio securities is particularly
relevant to financial futures contracts and options written on stock indices
and currencies. A Fund, in entering into a futures purchase contract,
potentially could lose any or all of the contract's settlement price. In
entering into a futures sale contract, a Fund could potentially lose a sum
equal to the excess of the contract's value (marked to market daily) over the
contract's settlement price. In writing options on stock indices or currencies
a Fund could potentially lose a sum equal to the excess of the value of the
index or currency (marked to market daily) over the exercise price. In
addition, because financial futures contracts require delivery at a future
date of either a specified security or currency, or an amount of cash equal to
a multiple of the difference between the value of a specified stock index on
that date and the settlement price, an algebraic relationship exists between
any price movement in the underlying security or currency or index and the
potential cost of settlement to a Fund. A small increase or decrease in the
value of the underlying security or currency or stock index can, therefore,
result in a much greater increase or decrease in the cost to the Fund.
Stock index call options written also pose another risk as hedging tools.
Because exercises of stock index options are settled in cash, there is an
inherent timing risk that the value of a Fund's portfolio securities
"covering" a stock index call option written by it may decline during the time
between exercise of the option by the option holder and notice to the Fund of
such exercise (usually one day or more) thereby requiring the Fund to use
additional assets to settle the transaction. This risk is not present in the
case of covered call options on individual securities, which are settled by
delivery of the actual securities.
There are also special risks in using currency options including the
following: (i) settlement of such options must occur in the country issuing
the currency in conformity with foreign regulations for such delivery,
including the possible imposition of additional costs and taxes, (ii) no
systematic reporting of "last sale" information for foreign currencies, and
(iii) the need to use "odd lot" transactions for underlying currencies at
prices less favorable than those for "round lot" transactions.
Although the Funds intend to establish positions in these instruments only
when there appears to be an active market, there is no assurance that a liquid
market for such instruments will exist when a Fund seeks to "close out" (I.E.
terminate) a particular financial futures contract or option position. This is
particularly relevant for over-the-counter options and financial futures
contracts, as previously noted. Trading in such instruments could be
interrupted, for example, because of a lack of either buyers or sellers. In
addition, the futures and options exchanges may suspend trading after the
price of such instruments has risen or fallen more than the maximum amount
specified by the exchange. Exercise of options could also be restricted or
delayed because of regulatory restrictions or other factors. A Fund may be
able, by adjusting investment strategy in the cash or other contract markets,
to offset to some extent any adverse effects of being unable to liquidate a
hedge position. Nevertheless, in some cases, a Fund may experience losses as a
result of such inability. Therefore it may have to liquidate other more
advantageous investments to meet its cash needs.
In addition, FCMs or brokers in certain circumstances will have access to
a Fund's assets posted as margin in connection with these transactions as
permitted under the 1940 Act. See "Other Information Custody of Assets." in
this Statement of Additional Information. The Funds will use only FCMs or
brokers in whose reliability and financial soundness they have full confidence
and have adopted certain other procedures and limitations to reduce the risk
of loss with respect to any assets which brokers hold or to which they may
have access. Nevertheless, in the event of a broker's insolvency or
bankruptcy, it is possible that a Fund could experience a delay or incur costs
in recovering such assets or might recover less than the full amount due. Also
the value of such assets could decline by the time a Fund could effect such
recovery.
The success of a Fund in using hedging techniques depends, among other
things, on VALIC's ability to predict the direction and volatility of price
movements in both the futures and options markets as well as the securities
markets and on VALIC's ability to select the proper type,
23
time, and duration of hedges. There can be no assurance that these techniques
will produce their intended results. In any event, VALIC will use financial
future contracts, options thereon, currency options and stock index options
only when it believes the overall effect is to reduce, rather than increase,
the risks to which a Fund is exposed. Hedging transactions also, of course,
may be more, rather than less, favorable to a Fund than originally
anticipated.
LIMITATIONS
No Fund will enter into any financial futures contract or purchase any
option thereon if immediately thereafter the total amount of its assets
required to be on deposit as initial margin to secure its obligations under
financial futures contracts, plus the amount of premiums paid by it for
outstanding options to purchase futures contracts, exceeds 5% of the market
value of its total assets. (Net assets in the case of Growth & Income Fund);
provided however, that in the case of an option that is in-the-money at the
time of purchase, the in-the-money amount may be excluded in calculating the
5% limitation. This is a fundamental policy of each Fund that is permitted to
use options and financial futures contracts.
In addition, each Fund has an operating policy which provides that it will
not enter into financial futures contracts or write put or call options with
respect to financial futures contracts unless such transactions are either
"covered" or subject to segregation requirements considered appropriate by the
SEC staff. Further, each Fund has an operating policy which provides that it
will not enter into custodial arrangements with respect to initial or
variation margin deposits or marked-to-market amounts unless the custody of
such initial and variation margin deposits and marked-to-market amounts are in
compliance with current SEC staff interpretive positions or no-action letters
or rules adopted by the SEC.
MONEY MARKET SECURITIES OF FOREIGN ISSUERS
Foreign money market instruments utilized by the Funds will be limited to:
(i) obligations of, or guaranteed by, a foreign government, its agencies or
instrumentalities; (ii) certificates of deposit, bankers' acceptances,
short-term notes, negotiable time deposits and other obligations of the ten
largest banks in each foreign country, measured in terms of net assets; (iii)
other short-term unsecured corporate obligations (usually 1 to 270 day
commercial paper) of foreign companies; and (iv) repurchase agreements with
domestic securities dealers or banks. For temporary purposes or in light of
adverse foreign political or economic conditions, the Fund may invest in
short-term high quality domestic and foreign money market securities without
limitation.
24
INVESTMENT ADVISER
VALIC serves as the investment adviser to Timed Opportunity Fund, Money
Market Fund, Capital Conservation Fund, Government Securities Fund,
International Equities Fund and Social Awareness Fund pursuant to an
Investment Advisory Agreement dated September 30, 1987, approved by
shareholders at a meeting held on September 7, 1990. This Investment Advisory
Agreement was also made applicable to the International Government Bond Fund
effective October 1, 1991. The Investment Advisory Agreement was approved by
the shareholders of the International Government Bond Fund on September 15,
1992. VALIC also serves as investment adviser to the MidCap Index Fund, the
Stock Index Fund, the Small Cap Index Fund pursuant to an Investment Advisory
Agreement effective May 1, 1992 that was approved by shareholders of the
MidCap Index Fund and Stock Index Fund on April 28, 1992 and approved by
shareholders of the Small Cap Index Fund on September 15, 1992. This
Investment Advisory Agreement was also made applicable to the Growth Fund, the
Growth & Income Fund and the Science & Technology Fund effective May 1, 1994.
Prior to May 1, 1992, VALIC served as investment adviser to the MidCap Index
Fund and Stock Index Fund pursuant to the Investment Advisory Agreement dated
September 30, 1987. VALIC is a stock life insurance company organized on May
1, 1969 under the Texas Insurance Code as a successor to The Variable Annuity
Life Insurance Company of America, a District of Columbia insurance company
organized in 1955. VALIC's sole business consists of offering fixed and
variable (and combinations thereof) retirement annuity contracts. VALIC is an
indirect wholly-owned subsidiary of American General Corporation, Houston,
Texas. Members of the American General Corporation group of companies operate
in each of the 50 states, the District of Columbia, and Canada and
collectively engage in substantially all forms of financial services, with
activities heavily weighted toward insurance. American General was
incorporated as a Texas business corporation on February 26, 1980 as the
successor to American General Life Insurance Company (organized in 1926) as
the result of a corporate reorganization completed on July 1, 1980.
Pursuant to the Investment Advisory Agreements, the Company retains VALIC
to manage the investment of the assets of each Fund, maintain a trading desk,
and place orders for the purchase and sale of portfolio securities. As
investment adviser, VALIC obtains and evaluates as appropriate economic,
statistical, and financial information in order to formulate and implement
investment programs in furtherance of each Fund's investment objective(s) and
investment program. Pursuant to the Investment Advisory Agreements, VALIC
provides other services including furnishing the services of the President and
such other executives and clerical personnel as the Company requires to
conduct its day-to-day operations, to prepare the various reports and
statements required by law, and to conduct any other recurring or nonrecurring
activity which the Company may need to continue operations. The Investment
Advisory Agreement provides that the Company pay all expenses not specifically
assumed by VALIC under the Agreements. Examples of the expenses paid by the
Company include transfer agency fees, custodial fees, the fees of outside
legal and auditing firms, the costs of reports to shareholders, expenses of
servicing shareholder accounts and fees for accounting services, (E.G., daily
calculation of the net asset value).
The Investment Advisory Agreements require that VALIC's advisory fee be
reduced by any commissions, tender and exchange offer solicitation fees and
other fees, or similar payments (less any direct expenses incurred) received
by VALIC or its affiliates in connection with the purchase and sale of
portfolio investments of the Funds. In this regard, the Investment Advisory
Agreements require VALIC to use its best efforts to recapture tender and
exchange solicitation offer fees for each Fund's benefits, and to advise the
Company's Board of Directors of any other fees, or similar payments that it
(or any of its affiliates) may receive in connection with each Fund's
portfolio transactions or of other arrangements that may benefit any of the
Funds or the Company.
VALIC had historically provided accounting services to the Company for
which it has been reimbursed for the cost of certain expenses incurred during
the performance of these serv-
25
ices. The Company, by action of its Board of Directors, determined to transfer
the function of providing accounting services from VALIC to the Company's
custodian bank, pursuant to a Custodian Contract entered into between the
Company and State Street Bank and Trust Company on May 24, 1990. The cost to
the Company of receiving these accounting services is currently included in
the fee paid under the terms of the Custodian Contract.
For the fiscal year ended May 31, 1993, the investment advisory fees
(before reduction of expenses or waiver) paid by the Company for the Stock
Index Fund, the MidCap Index Fund, the Small Cap Index Fund, the International
Equities Fund, the Social Awareness Fund, the Timed Opportunity Fund, the
Capital Conservation Fund, the Government Securities Fund, the International
Government Bond Fund and the Money Market Fund were $2,583,290, $536,112,
$75,323, $175,365, $133,896, $875,129, $229,755, $137,979, $89,954 and
$227,464, respectively. For the same period, VALIC reduced expenses by $89,954
for the International Government Bond Fund as a result of its voluntary
reduction.
For the fiscal year ended May 31, 1994, the investment advisory fees
(before reduction of expenses or waiver) paid by the Company for the Stock
Index Fund, the MidCap Index Fund, the Small Cap Index Fund, the International
Equities Fund, the Social Awareness Fund, the Timed Opportunity Fund, the
Capital Conservation Fund, the Government Securities Fund, the International
Government Bond Fund and the Money Market Fund were $3,073,673, $993,023,
$244,441, $406,818, $204,647, $925,356, $297,020, $209,147, $167,533 and
$229,057 respectively. For the same period, VALIC reduced expenses by $44,024
for the International Government Bond Fund as a result of its voluntary
reduction. This waiver expired on September 30, 1993. For the period from
April 29, 1994 to May 31, 1994 the investment advisory fees paid by the
Company for the Growth Fund, Growth & Income Fund and Science & Technology
Fund were $6,706, $6,294 and $7,517 respectively.
For the fiscal year ended May 31, 1995, the investment advisory fees paid
by the Company for the Stock index Fund, the MidCap Index Fund, the Small Cap
Index Fund, the International Equities Fund, the Growth Fund, the Growth &
Income Fund, the Science & Technology Fund, the Social Awareness Fund, the
Timed Opportunity Fund, the Capital Conservation Fund, the Government
Securities Fund, the International Government Bond Fund, and the Money Market
Fund were $3,339,165, $1,314,837, $420,925, $697,990, $323,295, $159,996,
$558,564, $238,741, $931,720, $307,082, $224,415, $252,782, and $321,207,
respectively.
The Investment Advisory Agreements may be continued with respect to any
Fund if specifically approved at least annually by (a)(i) the Company's Board
of Directors or (ii) a majority of that Fund's outstanding voting securities
(as defined by the 1940 Act), and (b) the affirmative vote of a majority of
the directors who are not parties to the agreement or "interested persons" of
any such party (as defined by the 1940 Act) by votes cast in person at a
meeting called for this purpose. The Investment Advisory Agreements also
provide that they shall terminate automatically if assigned. The Investment
Advisory Agreements may be terminated as to any Fund at any time by the
Company's Board of Directors, by vote of a majority of the Fund's outstanding
voting securities, or by VALIC, on not more than 60 days' written notice, nor
less than 30 days' written notice, or upon such shorter notice as may be
mutually agreed upon, without the payment of any penalty. Additionally either
Investment Advisory Agreement that VALIC shall not be liable to the Company,
or any shareholder in the Company, for any act or omission in rendering
services under the Agreement, or for any losses sustained in the purchase,
holding, or sale of any portfolio security, so long as there has been no
willful misfeasance, bad faith, negligence, or reckless disregard of
obligations or duties on the part of VALIC.
26
INVESTMENT SUB-ADVISERS
Pursuant to an Investment Sub-Advisory Agreement which was approved by
shareholders of the Stock Index Fund and the MidCap Index Fund on April 28,
1992 and by shareholders of the Small Cap Index Fund on September 15, 1992,
VALIC has engaged Bankers Trust Company ("Bankers Trust") to provide
investment Sub-Advisory services for the Stock Index Fund, the MidCap Index
Fund and the Small Cap Index Fund. T. Rowe Price Associates, Inc. ("T. Rowe
Price") provides Sub-Advisory services for the Growth Fund and the Science &
Technology Fund pursuant to a Sub-Advisory Agreement. Value Line, Inc. ("Value
Line") provides Sub-Advisory services for the Growth & Income Fund pursuant to
a Sub-Advisory Agreement. Bankers Trust, T. Rowe Price and Value Line
(collectively the "Sub-Advisers") will be subject to the control, supervision
and direction of VALIC, which will retain responsibility for the overall
management of the Stock Index Fund, the MidCap Index Fund, the Small Cap Index
Fund, the Growth Fund, the Growth & Income Fund and the Science & Technology
Fund, respectively (collectively the "Sub-Advised Funds").
In addition to acting as Sub-adviser to the MidCap Index Fund, the Stock
Index Fund and Small Cap Index Fund as of September 30, 1994, Bankers Trust
was an investment adviser to the following registered investment companies:
Accessor Funds, Inc., Short Intermediate Fixed Income Portfolio; AHA
Investment Funds, Inc. -- Full Maturity Fixed Income Portfolio; Asset
Management Portfolio; Asset Management Portfolio II; Asset Management
Portfolio III; European Equity Portfolio (unfunded); The Bank Fiduciary
Fund -- Equity Portfolio and Fixed Income Portfolio; Capital Appreciation
Portfolio; European Equity Portfolio; Cash Management Portfolio; Equity 500
Index Portfolio; GCG Trust; Limited Maturity Bond Series; Liquid Asset Series;
Emerging Market; Global High Yield Portfolio; Hercules Latin American Value
Fund; International Bond Fund (unfunded); International Equity Portfolio; The
Israel Opportunities Fund Inc. (unfunded); Intermediate Tax Free Portfolio;
International Equity Portfolio; Latin American Equity Portfolio; Liquid Assets
Portfolio; Mortgage-Backed Mutual Fund (closed); NY Tax Free Money Portfolio;
Pacific Basin Equity Portfolio; Pacific Select Fund -- Equity Index Series;
Short Intermediate Government Securities Portfolio; Short-term Securities
Portfolio (closed); Small Cap Portfolio; Tax Free Money Portfolio; Treasury
Money Portfolio and Utility Portfolio.
In addition to acting as Sub-adviser to the Growth Fund and the Science &
Technology Fund, T. Rowe Price manages the following funds with which it is
affiliated: T. Rowe Price Growth Stock Fund, Inc.; T. Rowe Price New Horizons
Fund, Inc.; T. Rowe Price New Era Fund, Inc.; T. Rowe Price New Income Fund,
Inc.; T. Rowe Price Growth & Income Fund, Inc.; T. Rowe Price Prime Reserve
Fund, Inc.; T. Rowe Price Tax-Free Income Fund, Inc.; T. Rowe Price Tax-Exempt
Money Fund, Inc.; T. Rowe Price Short-Term Bond Fund, Inc.; T. Rowe Price
Tax-Free Insured Intermediate Bond Fund, Inc.; T. Rowe Price Tax-Free
Short-Intermediate, Inc.; T. Rowe Price High Yield Fund, Inc.; T. Rowe Price
Tax-Free High Yield Fund, Inc.; T. Rowe Price GNMA Fund; T. Rowe Price Equity
Income Fund; T. Rowe Price New America Growth Fund; T. Rowe Price Capital
Appreciation Fund; T. Rowe Price Science & Technology Fund, Inc.; T. Rowe
Price Small-Cap Value Fund, Inc.; T. Rowe Price U.S. Treasury Funds, Inc.
(which includes U.S. Treasury Money Fund, U.S. Treasury Intermediate Fund and
U.S. Treasury Long-Term Fund); T. Rowe Price State Tax-Free Income Trust
(which includes Maryland Tax-Free Bond Fund, New York Tax-Free Bond Fund, New
York Tax-Free Money Fund, Virginia Tax-Free Bond Fund, New Jersey Tax-Free
Bond Fund, Georgia Tax-Free Bond Fund, Florida Insured Intermediate Tax-Free
Fund, and Maryland Short-Term Tax-Free Bond Fund); T. Rowe Price California
Tax-Free Income Trust (which includes California Tax-Free Bond Fund and
California Tax-Free Money Fund); T. Rowe Price Index Trust, Inc. (which
includes the T. Rowe Price Equity Index Fund); T. Rowe Price Spectrum Fund,
Inc. (which includes the Spectrum Growth Fund and Spectrum Income Fund); T.
Rowe Price Adjustable Rate U.S. Government Fund, Inc.; T. Rowe Price Balanced
Fund, Inc.; T. Rowe Price Mid-Cap Value Fund, Inc.; T. Rowe Price OTC Fund,
Inc., T. Rowe Price Blue Chip Growth Fund, Inc., T. Rowe Price Dividend Growth
Fund, Inc., T. Rowe Price Summit Funds, Inc. (which includes Summit Cash
Reserves Fund, Summit Limited-
27
Term Bond Fund and Summit GNMA Fund), T. Rowe Price Summit Municipal Funds,
Inc. (which includes Summit Municipal Money Market Fund, Summit Municipal
Intermediate Fund, Summit Municipal Income Fund; CUNA Mutual Funds, Inc. which
includes CUNA Mutual Tax-Free Intermediate-Term Fund, CUNA Mutual U.S.
Government Income Fund and CUNA Mutual Cornerstone Fund). T. Rowe Price also
serves as investment adviser to the following unaffiliated funds: Management
of Managers (which includes the Short Term Municipal Bond Fund); the Security
First Trust (which includes the Growth and Income Series, Bond Series and the
Money Market Series) and the Penn Series Funds, Inc. (which includes the
Aggressive Equity Fund and High Yield Fund), T. Rowe Price Equity Series, Inc.
(which includes T. Rowe Price Equity Income Portfolio and T. Rowe Price New
America Growth Portfolio), T. Rowe Price Fixed Income Series, Inc. (which
includes T. Rowe Price Limited-Term Bond Portfolio), T. Rowe Price
International Series, Inc. (which includes T. Rowe Price International Stock
Portfolio); T. Rowe Price Personal Strategy Funds, Inc. (which includes T.
Rowe Price Personal Strategy Income Fund, T. Rowe Price Strategy Balanced Fund
and Personal Strategy Growth Fund). In addition, an affiliate of T. Rowe
Price, Rowe Price-Fleming International, Inc., acts as investment adviser to
the T. Rowe Price International Funds, Inc. (which includes the T. Rowe Price
International Stock Fund, T. Rowe Price International Bond Fund, T. Rowe Price
International Discovery Fund, T. Rowe Price European Stock Fund, T. Rowe Price
New Asia Fund, T. Rowe Price Global Government Bond Fund, T. Rowe Price Japan
Fund; T. Rowe Price Short-Term Global Fund, and T. Rowe Price Latin America
Fund; Frank Russell Investment Securities Fund; the RPF International Bond
Fund; and the Institutional International Funds, Inc. (which includes the
Foreign Equity Fund).
In addition to acting as Sub-adviser to the Growth & Income Fund, Value
Line manages the following funds with which it is affiliated: The Value Line
Fund, Inc.; The Value Line Income Fund, Inc.; The Value Line Special
Situations Fund, Inc.; Value Line Leveraged Growth Investors, Inc.; The Value
Line Cash Fund, Inc.; Value Line U.S. Governmental Securities Fund, Inc.;
Value Line Centurion Fund, Inc.; The Value Line Tax Exempt Fund, Inc.; Value
Line Convertible Fund, Inc.; Value Line Aggressive Income Trust; Value Line
New York Tax Exempt Trust; Value Line Strategic Asset Management Trust; The
Value Line Adjustable Rate U.S. Government Securities Fund, Inc.; Value Line
Small-Cap Growth Fund, Inc.; and Value Line Asset Allocation Fund, Inc.
Pursuant to the Investment Sub-Advisory Agreements and subject to VALIC's
control, supervision and direction, the Sub-Advisers will manage the
investment and reinvestment of the assets of the Sub-Advised Funds, including
the evaluation of pertinent economic, statistical, financial and other data,
and the determination of industries and companies to be represented in the
Sub-Advised Funds. Further, the Sub-Advisers will maintain a trading desk and
place orders for the purchase and sale of portfolio investments for the
Sub-Advised Funds, accounts with brokers and dealers selected by the Sub-
Advisers, or arrange for any other entity to provide a trading desk and to
place orders with brokers and dealers selected by the Sub-Advisers and VALIC.
The Investment Sub-Advisory Agreements provide that the Sub-Advisers will
bear the expense of discharging their responsibilities.
VALIC shall, from the compensation VALIC receives from the Company for
acting as investment adviser, pay to BTC, for the services rendered and
expenses paid by BTC, a monthly fee computed at the annual rate of .05% of the
first $500 million and .03% of average daily net asset values on the excess
over $500 million based on the Stock Index Fund, the MidCap Index Fund and
Small Cap Index Fund respectively. VALIC shall, from the compensation VALIC
receives from the Company for acting as investment adviser, pay to T. Rowe
Price, for the services rendered and expenses paid by T. Rowe Price, a monthly
fee based on average daily net asset values of the Growth Fund at an annual
rate of .50% and the Science & Technology Fund at the annual rate of .60%.
VALIC shall, from the compensation VALIC receives from the Company for acting
as investment adviser, pay to Value Line, for services rendered and expenses
paid by Value Line, a monthly fee based on average daily net asset values of
the Growth & Income Fund at an annual rate of .45%. Notwithstanding the
28
above provision, VALIC is required to pay a minimum annual sub-advisory fee of
$50,000 to BTC for the Small Cap Index Fund. There are no minimum sub-advisory
fees for the Stock Index Fund, MidCap Index Fund, the Growth Fund, the Growth
& Income Fund or the Science & Technology Fund.
The Investment Sub-Advisory Agreements require that each Sub-Adviser
promptly reduce its monthly fee by the amount of any commission, tender and
exchange offer solicitation fees, other fees or similar payments received by
the Sub-Adviser, or any affiliated person of the Sub-Adviser, in connection
with Sub-Advised Fund portfolio transactions. Such "commissions" or "other
fees" exclude those charged by brokers or dealers affiliated with a
Sub-Adviser, as referred to below. Such "tender and exchange offer
solicitation fees" exclude those received by a Sub-Adviser acting in the
capacity of manager for any such offer. In this regard, the Sub-Advisory
Agreements require the Sub-Advisers to use their best efforts to obtain tender
and exchange solicitation offer fees for each Fund's benefit, and to advise
VALIC of any other fees or similar payments that they (or any of their
affiliates) may receive in connection with any Fund's portfolio transactions
or of other arrangements that may benefit any of the Funds.
The Investment Sub-Advisory Agreements may be continued with respect to
any of the Funds if approved at least annually by the vote of the Company's
Board of Directors who are not parties to the Investment Sub-Advisory
Agreements or interested persons of any such parties, cast in person at a
meeting called for the purpose of voting on such approval and by a vote of a
majority of the Company's Board of Directors or a majority of the relevant
Fund's outstanding voting securities.
The Investment Sub-Advisory Agreements will automatically terminate in the
event of assignment or in the event of termination of the Investment Advisory
Agreement between VALIC and the Company as it relates to the relevant Sub-
Advised Fund. The Investment Sub-Advisory Agreements may be terminated at any
time by VALIC, the relevant Sub-Adviser, the Company's Board of Directors, or
by vote of a majority of the outstanding voting securities of the relevant
Sub-Advised Fund, on not more than 60 days' nor less than 30 days' written
notice to the other entities, or upon such shorter notice as may be mutually
agreed upon. Such termination shall be without the payment of any penalty.
The Investment Sub-Advisory Agreements provide that the Sub-Advisers shall
not be liable to VALIC, the Company or to any shareholder of the Company for
any act or omission in rendering services under the Investment Sub-Advisory
Agreements or for any losses sustained in the purchase, holding or sale of any
portfolio security, so long as there has been no willful misfeasance, bad
faith, negligence or reckless disregard of obligations or duties on the part
of the Sub-Advisers.
PORTFOLIO TRANSACTIONS AND BROKERAGE
As investment adviser to the Company, VALIC has responsibility for placing
(and deciding when to place) orders for the purchase and sale of investments
for the portfolio of each Fund, selecting brokers or dealers to handle these
transactions, and negotiating commissions on these transactions. VALIC
utilizes the assistance of Sub-Advisers in selecting brokers or dealers to
handle transactions for the Stock Index Fund, the MidCap Index Fund, the Small
Cap Index Fund, the Growth Fund, the Growth & Income Fund and the Science &
Technology Fund. The Sub-Advisers may employ affiliated brokers or, in the
case of T. Rowe Price, indirectly related brokers for portfolio transactions
under circumstances described in the Prospectus under the heading "Investment
Management."
Virtually all of the over-the-counter transactions by the Timed
Opportunity Fund, the Money Market Fund, the Capital Conservation Fund, the
Government Securities Fund, the International Government Bond Fund and the
Growth & Income Fund are principal transactions with issuers and dealers at
net prices which entail no brokerage commissions. The MidCap Index Fund, the
Stock Index Fund, the International Equities Fund, the Small Cap Index Fund,
and the Social Awareness Fund, each purchase and sell most of their portfolio
securities on a national securities exchange on an agency basis. The Growth
Fund and the Science & Technology Fund engage in
29
over-the-counter transactions with principals and transactions with national
securities exchanges on an agency basis. The Company normally enters into
principal transactions directly with the issuer or the market-maker.
When the Company purchases or sells securities or financial futures
contracts on an exchange, it pays a commission to any FCM or broker executing
the transaction. When the Company purchases securities from the issuer, an
underwriter usually receives a commission or "concession" paid by the issuer.
When the Company purchases securities from a market-maker, it pays no
commission, but the price includes a "spread" or "mark-up" (between the bid
and asked price) earned by the market-making dealer on the transaction.
In purchasing and selling each Fund's portfolio securities, it is the
policy of VALIC and the Sub-Advisers (collectively, the "Advisers") to seek
the best execution at the most favorable price through responsible
broker-dealers and, in the case of agency transactions, at competitive
commission rates. When selecting brokers or dealers, and in negotiating prices
and commissions, the Advisers consider such factors as: the broker or dealer's
reliability; the quality of the broker or dealer's execution services on a
continuing basis; the rate of the commission; the size and difficulty of the
order and the timeliness of execution; the reliability, integrity, financial
condition, general execution, and operational capabilities of that firm and
competing broker-dealers. In over-the-counter transactions, the Advisers place
orders directly with the principal market-maker unless they believe the
Company can obtain a better price (or receive better execution of orders) from
a broker on an agency basis. In transactions executed on securities or
commodities exchanges, the Advisers seek the best overall price and execution
at the most favorable commission rate (except when higher brokerage
commissions are paid to obtain brokerage and research services, as explained
below). When the Advisers believe that more than one firm meets these criteria
the Advisers may prefer brokers who provide the Advisers or the Company with
brokerage and research services, described below.
The Advisers may cause a Fund to pay a broker-dealer a commission (for
executing a securities transaction) that is greater than the commission
another broker-dealer would have received for executing the same transaction,
if the Advisers determine in good faith that the greater commission paid to
the first broker-dealer is reasonable in relation to the value of brokerage
and research services provided to the Advisers viewed in terms of either that
particular transaction or the overall responsibilities of the Advisers.
The Advisers receive a wide range of research services from
broker-dealers, including: information on securities markets, the economy and
individual companies; statistical information; accounting and tax law
interpretations; technical market action; pricing and appraisal services; and
credit analyses. Research services are received by the Advisers primarily in
the form of written reports, telephone contacts, personal meetings with
securities analysts, corporate and industry spokespersons, and access to
various computer-generated data.
The Advisers have no agreements or understandings with broker-dealers by
which specific amounts of transactions or commissions are directed to specific
broker-dealers. VALIC generally allocates for the Social Awareness Fund,
commissions to be used for research services to the brokerage house that
provides access to data bases that are used to screen the Social Awareness
Fund's potential investments for compliance with the Fund's social criteria.
The Fund does not allocate a specific amount of commissions for this service.
This arrangement has been reviewed by the Board.
The Advisers evaluate whether such research services provide lawful and
appropriate assistance to them in the performance of their investment
decision-making responsibilities, for the Company. The Advisers will not cause
the Company to pay higher commissions without first determining, in good
faith, that the cost is reasonable considering the brokerage and research
services provided, with respect to either the particular transaction or the
Advisers' overall responsibilities with respect to accounts for which they
exercise investment discretion. The Advisers receive research services at no
cost and cannot assign any specific monetary value to them; nevertheless, the
Advisers believe these supplemental investment research services are essential
to the Advisers' ability to provide high quality portfolio management to the
Funds. Research services furnished by broker-dealers through
30
whom a Fund effects securities transactions may be used by the Advisers in
servicing all of the Funds, and the Advisers may not use all such services in
managing the Funds.
The amount of brokerage commissions paid, the quality of execution, the
nature and quality of research services provided, and the amount of
commissions paid to firms providing research services are reviewed quarterly
by the Company's Board of Directors.
Brokerage commissions paid by the Stock Index Fund on portfolio
transactions for the fiscal years ended May 31, 1995, 1994, and 1993, totalled
$95,461, $92,443, and $23,252, respectively. For the fiscal year ended May 31,
1995, the Stock Index Fund paid no brokerage commissions to brokers for
research services provided to the Advisers.
Brokerage commissions paid by the MidCap Index Fund on portfolio
transactions for the fiscal years ended May 31, 1995, 1994, and 1993, totalled
$118,210, $138,626, and $52,966, respectively. For the fiscal year ended May
31, 1995, the MidCap Index Fund paid no brokerage commissions to brokers for
research services provided to the Advisers.
Brokerage commissions paid by the Small Cap Index Fund on portfolio
transactions for the fiscal year ended May 31, 1995, 1994 and 1993 totalled
$36,808, $64,996 and $28,882, respectively. For the fiscal year ended May 31,
1995, the Small Cap Index Fund paid no brokerage commissions to brokers for
research services provided to the Advisers.
Brokerage commissions paid by the International Equities Fund on portfolio
transactions for the fiscal years ended May 31, 1995, 1994, and 1993 totalled
$187,369, $28,981, and $9,066, respectively. For the fiscal year ended May 31,
1995, the International Equities Fund paid $81,917 in brokerage commissions,
on transactions totalling $17,564,308, to brokers selected on the basis of the
quality of the execution together with research services provided to VALIC.
Brokerage commissions paid by the Social Awareness Fund on portfolio
transactions for the fiscal years ended May 31, 1995, 1994, and 1993 totalled
$134,591, $78,908, $60,184, respectively. For the fiscal year ended May 31,
1995 the Social Awareness Fund paid $36,053 in brokerage commissions on
transactions totalling $26,813,662 to brokers selected on the basis of the
quality of the execution together with research services provided to VALIC.
Brokerage commissions paid by the Growth Fund on portfolio transactions
for the fiscal year ended May 31, 1995, totalled $204,382. Brokerage
commissions paid by the Growth Fund on portfolio transactions for the period
beginning April 29, 1994 and ended May 31, 1994 totalled $16,320. For the
fiscal year ended May 31, 1995, the Growth Fund paid $5,334 in brokerage
commissions, on transactions totalling $2,278,364, to brokers selected on the
basis of the quality of the execution together with research services provided
to VALIC.
Brokerage commissions paid by the Growth & Income Fund on portfolio
transactions for the fiscal year ended May 31, 1995, totalled $81,155.
Brokerage commissions paid by the Growth & Income Fund on portfolio
transactions for the period beginning April 29, 1994 and ended May 31, 1994
totalled $8,400. For the fiscal year ended May 31, 1995, the Growth & Income
Fund paid $315 in brokerage commissions, on transactions totalling $134,161,
to brokers selected on the basis of the quality of the execution together with
research services provided to VALIC.
Brokerage commissions paid by the Science & Technology Fund on portfolio
transactions for the fiscal year ended May 31, 1995, totalled $182,202.
Brokerage commissions paid by the Science & Technology Fund on portfolio
transactions for the period beginning April 29, 1994 and ended May 31, 1994
totalled $5,735. For the fiscal year ended May 31, 1995, the Science &
Technology Fund paid $1,800 in brokerage commissions, on transactions
totalling $2,686,056, to brokers selected on the basis of the quality of the
execution together with research services provided to VALIC.
Brokerage commissions paid by the Timed Opportunity Fund on portfolio
transactions for the fiscal years ended May 31, 1995, 1994, and 1993 totalled
$155,506, $75,690, and $132,494, respectively. For the fiscal year ended May
31, 1995, the Timed Opportunity Fund paid no brokerage commissions to brokers
for research services provided to VALIC.
No brokerage commissions were paid by the Capital Conservation Fund,
Government Securities Fund, International Government Bond Fund
31
and Money Market Fund and fiscal years ended May 31, 1995, 1994, and 1993.
Occasions may arise when one or more of the Funds or other accounts that
may be considered affiliated persons of the Funds under the 1940 Act desire to
purchase or sell the same portfolio security at approximately the same time.
On those occasions when such simultaneous purchase and sale transactions are
made such transaction will be allocated in an equitable manner according to
written procedures approved by the Company's Board of Directors. Specifically,
such written procedures provide that in allocating purchase and sale
transactions made on a combined basis the parties will seek to achieve the
same net unit price of securities for each Fund or other account and to
allocate as nearly as practicable, such transactions on a pro-rata basis
substantially in proportion to the amounts ordered to be purchased and sold by
each Fund or other account. In some cases, this procedure could have an
adverse effect on the price or quantity of securities available to the Funds.
However, the Funds may, alternatively, benefit from lower broker's commissions
and/or correspondingly lower costs for brokerage and research services by
engaging in such combined transactions. In the Advisers' opinion, the results
of this procedure will, on the whole, be in the best interest of each Fund.
OFFERING, PURCHASE, AND REDEMPTION OF FUND SHARES
Pursuant to a distribution agreement, The Variable Annuity Marketing
Company ("VAMCO") acts without remuneration as the Company's agent in the
distribution of Fund shares to the VALIC, AG Life and AGNY separate accounts.
VAMCO's address is the same as that of VALIC.
The distribution agreement between VAMCO and the Company provides that it
shall continue in force from year to year, provided that such continuance is
approved at least annually (a)(i) by the Board of Directors of the Company, or
(ii) by vote of a majority of the Company's outstanding voting securities (as
defined in the 1940 Act) and (b) by the affirmative vote of a majority of the
Company's Directors who are not "interested persons" (as defined in the 1940
Act) of the Company by votes cast in person at a meeting called for such
purpose. The distribution agreement may be terminated at any time, without
penalty, by a vote of the Board of Directors of the Company or by a vote of a
majority of the outstanding voting securities of the Company, or by VAMCO, on
sixty days' written notice to the other party. The distribution agreement also
provides that it shall automatically terminate in the event of its assignment.
Pursuant to the distribution agreement, VAMCO pays promotional and
advertising expenses and the cost of printing prospectuses used to offer and
sell shares of the Company (after typesetting and printing the copies required
for regulatory filings by the Company). Promotional and advertising expenses
include any expense related to distribution of shares of the Funds or
attributable to any activity primarily intended to result in the sale of shares,
including, for example, the preparation, printing, and distribution of
advertising and sales literature (including reports to shareholders used as
sales literature). VALIC reimburses VAMCO for these expenses. Thus all such
expenses incurred by VAMCO are passed directly on to VALIC, its parent. The
Company pays all expenses related to the registration of Fund shares under
federal and state laws, including registration and filing fees, the cost of
preparing the prospectus for such purpose, and related expenses of outside legal
and auditing firms.
As explained in the prospectus for the Contracts, payments of surrender
values, as well as lump sum payments available under the annuity options of
the Contracts, may be suspended or postponed at any time when redemption of
shares is suspended. Normally, the Company redeems Fund shares within seven
days of receipt of request therefor, but may postpone redemptions beyond seven
days when: (1) the New York Stock Exchange is closed for other than weekends
and customary holidays, or trading on the New York Stock Exchange becomes
restricted; (2) an emergency exists making disposal or valuation of a Fund's
assets not reasonably practicable; or (3) the Securities and Exchange
Commission has so permitted by order for the protection of the Company's
shareholders.
The Company normally redeems Fund shares for cash. Although the Company,
with respect to each Fund, may make full or partial payment by assigning to
the separate accounts investing in the Company portfolio securities at their
value used in determining the redemption price (I.E. by
32
redemption-in-kind), the Company, pursuant to Rule 18f-1 under the 1940 Act,
has filed a notification of election on Form 18f-1. Pursuant to this election,
the Company has committed itself to pay the separate accounts, in cash, all
redemptions made during any 90 day period, up to the lesser of $250,000 or 1%
of the Company's net asset value. The securities to be paid in-kind to the
separate accounts will be selected in such manner as the Board of Directors
deems fair and equitable. In such cases, the separate accounts would incur
brokerage expenses should they wish to liquidate these portfolio securities.
All shares are offered for sale and redeemed at net asset value. Net asset
value per share is determined by dividing the net assets of a Fund by the
number of that Fund's outstanding shares at such time.
DETERMINATION OF NET ASSET VALUE
Equity investments (including common stocks, preferred stocks, convertible
securities, and warrants) and call options written on all portfolio investments
listed or traded on a national exchange are valued at their last sale price on
that exchange prior to the time when assets are valued. In the absence of any
exchange sales on that day and for unlisted equity securities, such securities
and call options written on portfolio securities are valued at the last sale
price on the NASDAQ (National Association of Securities Dealers Automated
Quotations) National Market System. In the absence of any National Market System
sales on that day, equity securities are valued at the last reported bid price
and call options written on all portfolio securities for which other
over-the-counter market quotations are readily available are valued at the last
reported asked price.
U.S. Treasury securities and other obligations issued or guaranteed by the
U.S. government, its agencies or instrumentalities, are valued at representative
quoted prices. Such quotations generally are obtained from government securities
pricing services; however, in circumstances where it is deemed appropriate to do
so, quotations may be obtained from dealers in government securities.
Publicly-traded corporate bonds are valued at prices obtained from State
Street Bank and Trust Company.
Short-term debt securities for which market quotations are readily
available are valued at the last reported bid price, except for those with a
remaining maturity of 60 days or less which are valued by the amortized cost
method (unless, due to special circumstances, the use of such a method with
respect to any security would result in a valuation which does not approximate
fair market value).
Convertible bonds are valued at prices obtained from one or more of the
major dealers in such bonds. Where there is a discrepancy between dealers or
when no quotes are readily available, values may be adjusted based on a
combination of yields and premium spreads to the underlying common stock.
Portfolio securities that are primarily traded on foreign securities
exchanges are generally valued at the last sale price on the exchange where
such security is primarily traded. All foreign securities traded on the
over-the-counter market are valued at the last sale quote, if market
quotations are available, or the last closing bid price, if there is no active
trading in a particular security for a given day. Where market quotations are
not readily available for such foreign over-the-counter securities, then such
securities will be valued in good faith by a method that the Company's Board
of Directors, or its delegates, believes accurately reflects fair value.
Quotations of foreign securities in foreign currencies are converted, at
current exchange rates, to their U.S. dollar equivalents in order to determine
their current value. In addition, because of the need to value foreign
securities (other than ADRs) as of the close of trading on various exchanges
and over-the-counter markets throughout the world, the calculation of the net
asset value of Funds investing in such foreign securities may not take place
contemporaneously with the valuation of such foreign securities in those
Funds' portfolios.
Options purchased by the Funds (including options on financial futures
contracts, stock indices, foreign currencies, and securities) listed on
national securities exchanges are valued on
33
the exchange where such security is primarily traded.
Over-the-counter options purchased or sold by the Funds are valued based
upon prices provided by market-makers in such securities or dealers in such
currencies.
Exchange-traded financial futures contracts (including interest rate
futures contracts, stock index futures contracts, and currency futures
contracts) are valued at the settlement price for such contracts established
each day by the board of trade or exchange on which such contracts are traded.
Unlisted financial futures contracts are valued based upon prices provided by
market-makers in such financial futures contracts.
All of the assets of the Money Market Fund are valued on the basis of
amortized cost. Under the amortized cost method of valuation, securities are
valued at a price on a given date, and thereafter a constant accretion of any
discount or amortization of any premium to maturity is assumed, regardless of
the impact of fluctuating interest rates on the market value of the security.
While this method provides certainty in valuation it may result in periods in
which value as determined by amortized cost is higher or lower than the price
a Fund would receive if it sold the security. During such periods, the yield
to investors may differ somewhat from that obtained by a similar fund or
portfolio which uses available market quotations to value all of its portfolio
securities. The Company's Board of Directors has established procedures
reasonably designed, taking into account current market conditions and Money
Market Fund's investment objective, to stabilize the net asset value per share
for purposes of sales and redemptions at $1.00. These procedures include
review by the Board, at such intervals as it deems appropriate, to determine
the extent, if any, to which the net asset value per share calculated by using
available market quotations deviates from $1.00 per share. In the event such
deviation should exceed one half of one percent, the Board will promptly
consider initiating corrective action. If the Board believes that the extent
of any deviation from a $1.00 amortized cost price per share may result in
material dilution or other unfair results to new or existing shareholders, it
will take such steps as it considers appropriate to eliminate or reduce these
consequences to the extent reasonably practicable. Such steps may include:
selling portfolio securities prior to maturity; shortening the average
maturity of the portfolio; withholding or reducing dividends; or utilizing a
net asset value per share determined from available market quotations. Even if
these steps were taken, the Money Market Fund's net asset value might still
decline.
CALCULATION OF YIELD FOR THE MONEY MARKET FUND
The yield of the Money Market Fund is its net income expressed as a
percentage of assets on an annualized basis for a seven day period. Rule 482
under the Securities Act of 1933 requires that a yield quotation set forth in
an advertisement for a money market fund be computed by a standardized method
based on an historical seven calendar day period. The current yield is
computed by determining the net change (exclusive of realized gains and losses
from the sale of securities and unrealized appreciation and depreciation) in
the value of a hypothetical pre-existing account having a balance of one share
at the beginning of the period, and then dividing the net change in account
value by the value of the account at the beginning of the base period to
obtain the base period return. The base period return is then multiplied by
(365/7) to annualize the yield figure. The determination of net change in
account value reflects the value of additional shares purchased with dividends
from the original share, dividends declared on both the original share and
such additional shares, and any fees that are charged to all shareholder
accounts, in proportion to the length of the base period and the Money Market
Fund's average account size. The Money Market Fund may also calculate its
compound effective yield by compounding the unannualized base period return
(calculated as described above) by adding one to the base period return,
raising the sum to a power equal to 365 divided by 7, and subtracting one.
The yield quoted by the Money Market Fund at any time represents the
amount being earned on a current basis for the indicated period and is a
function of the types of instruments in the Money Market Fund's portfolio,
their quality and length of maturity, and the Money Market Fund's operating
expenses. The length of maturity for the portfolio is the average dollar
weighted maturity of the portfolio. In other words, the portfolio has an
34
average maturity for all of its issues, stated in numbers of days and weighted
according to the relative value of each investment.
The yield fluctuates daily as the income earned on the investments of the
Money Market Fund fluctuates. Accordingly, neither the Company nor VALIC can
assure the yield quoted on any given occasion will remain constant for any
period of time. For example, the Money Market Fund's yield will change if it
experiences a net inflow of new assets which it then invests in securities
whose yield is higher or lower than that being currently earned on
investments. Investments in the Money Market Fund are not insured and
investors comparing results of the Money Market Fund with investment results
and yields from other sources such as banks or savings and loan associations
should understand this distinction. In addition, other money market funds as
well as banks and savings and loan associations may calculate their yields on
a different basis and the yield quoted by the Money Market Fund from
time-to-time could vary upwards or downwards if another method of calculation
or base period were used.
ACCOUNTING AND TAX TREATMENT
CALL AND PUTS
When a Fund writes a call or put option, an amount equal to the premium
received by it is included in that Fund's Statement of Assets and Liabilities
as an asset and as an equivalent liability. The amount of the liability is
subsequently "marked to market" to reflect the current market value of the
option written. The current market value of a written option is the last sale
price on the principal Exchange on which such option is traded. If a call
option which a Fund has written either expires on its stipulated expiration
date, or if a Fund enters into a closing purchase transaction, it realizes a
gain (or loss if the cost of the closing transaction exceeds the premium
received when the option was sold) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a call option which a Fund has written is exercised, the Fund
realizes a capital gain or loss from the sale of the underlying security and
proceeds from such sale are increased by the premium originally received.
The premium paid by a Fund for the purchase of a put option is included in
the asset section of its Statement of Assets and Liabilities as an investment
and subsequently adjusted daily to the current market value of the option. For
example, if the current market value of the option exceeds the premium paid,
the excess would be unrealized appreciation and, conversely, if the premium
exceeds the current market value, such excess would be unrealized
depreciation. The current market value of a purchased option is the last sale
price on the principal Exchange on which such option is traded. If a put
option which a Fund has purchased expires unexercised it realizes a capital
loss equal to the cost of the option. If a Fund exercises a put option, it
realizes a capital gain or loss from the sale of the underlying security and
the proceeds from such sale will be decreased by the premium originally paid.
FINANCIAL FUTURES CONTRACTS
Accounting for financial futures contracts will be in accordance with
generally accepted accounting principles. Initial margin deposits made upon
entering into financial futures contracts will be recognized as assets due
from the FCM (the Fund's agent in acquiring the futures position). During the
period the financial futures contract is open, changes in the value of the
contract will be recognized as unrealized gains or losses by
"marking-to-market" on a daily basis to reflect the market value of the
contract at the end of each day's trading. Variation (or maintenance) margin
payments will be made or received, depending upon whether gains or losses are
incurred. Financial futures contracts held by a Fund at the end of each fiscal
year will be required to be "marked to market" for federal income tax purposes
(that is, treated as having been sold at market value).
SUBCHAPTER M OF THE INTERNAL REVENUE CODE OF 1986.
Each Fund of the Company intends to qualify annually as a regulated
investment company under Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code"). A Fund must meet several requirements to obtain and
maintain its status as a regulated investment company. Among these
requirements are that: (i)
35
at least 90% of a Fund's gross income be derived from dividends, interest,
payments with respect to securities loans and gains from the sale or
disposition of securities; (ii) less than 30% of a Fund's gross income be
derived from gains (without deduction for losses) from sales of securities
held for less than three months (legislation has been introduced in Congress,
in each of the past several years, which, if adopted, would repeal the
requirement that less than 30% of a Fund's gross income be derived from gains
from the sale or other disposition of securities held for less than three
months); (iii) at the close of each quarter of a Fund's taxable year (a) at
least 50% of the value of the Fund's assets consist of cash, government
securities, securities of other regulated investment companies and other
securities (such other securities of any one issuer being not greater than 5%
of the value of a Fund and the Fund holding not more than 10% of the
outstanding voting securities of any such issuer) and (b) not more than 25% of
the value of a Fund's assets be invested in the securities of any one issuer
(other than United States government securities or securities of other
regulated investment companies.) Each Fund of the Company is treated as a
separate entity for federal income tax purposes.
The Internal Revenue Service ("Service") has ruled publicly that an
exchange-traded call option is a security for purposes of the 50% of assets
test and that its issuer is the issuer of the underlying security, not the
writer of the option, for purposes of the diversification requirements. It has
ruled privately (at the request of a taxpayer other than the Company) that
income from closing financial futures contracts is considered gain from a
disposition of securities for purposes of the 90% of gross income test, and
that all of the gain taken into income as a result of the mark-to-market rule
will be treated as gain from a sale of a security held for at least three
months, regardless of when the contract was acquired, for purposes of the 30%
limitation on less-than-three-month gains. However, since taxpayers other than
the taxpayer requesting a particular private ruling are not entitled to rely
on such ruling, the Company intends to keep its Funds' activity in futures
contracts and options at a low enough volume such that gains from closing
futures contracts will not exceed 10% of a Fund's gross income until the
Service rules publicly on the issues or the Company is otherwise satisfied
that those gains are qualifying income.
The requirement that less than 30% of a Fund's gross income be derived
from gains from the sale or other disposition of securities held for less than
three months may restrict a Fund's ability to write covered call options on
securities which it has held less than three months and on stock indices based
on such securities, to write options which expire in less than three months,
and to effect closing purchase transactions with respect to options which have
been written less than three months prior to such transactions. Consequently,
in order to avoid realizing a gain within the three month period, a Fund may
be required to defer the closing out of a contract beyond the time when it
might otherwise be advantageous to do so. A Fund may also be restricted in the
purchasing of put options for the purpose of hedging underlying securities
because of the application of short sale holding period rules with respect to
such underlying securities.
SECTION 817(H) OF THE CODE
Each of the Funds intends to comply with Section 817(h) of the Code and
the regulations issued thereunder. Section 817(h) of the Code and Treasury
Department regulations thereunder impose certain diversification requirements
on variable annuity contracts based upon segregated asset accounts. These
requirements are in addition to the diversification requirements of Subchapter
M and the 1940 Act and may affect the securities in which a Fund may invest.
Failure to meet the requirements of Section 817(h) could result in immediate
taxation of the Contract Owner to the extent of appreciation on investment
under the Contract.
The Section 817(h) diversification requirements do not apply to pension
plan contracts. "Pension plan contracts" for these purposes generally means
annuity contracts issued with respect to plans qualified under Section 401(a)
or 403(a) of the Code, Section 403(b) annuities, Individual Retirement Account
annuities and annuities issued with respect to Section 457 plans.
The Secretary of the Treasury may, in the future, issue additional
regulations that will prescribe the circumstances in which a Contract Owner's
control of the investments of the separate accounts investing in the Company may
36
cause the Contract Owner, rather than VALIC, to be treated as the owner of the
assets of that separate account.
In order to comply with the requirements of Section 817(h) and the
regulations thereunder, the Company may find it necessary to take action to
ensure that a Contract funded by the Company continues to qualify as such
under federal tax laws. The Company, for example, may be required to alter the
investment objectives of a Fund or Funds, or substitute the shares of one Fund
for those of another. No such change of investment objectives or substitution
of securities will take place without notice to the shareholders of the
affected Fund, and the approval of a majority of such shareholders (as defined
in the 1940 Act) and without prior approval of the Securities and Exchange
Commission, to the extent legally required.
It is not feasible to comment on all of the federal income tax
consequences concerning the Funds. Each owner of a Contract funded by the
Company should consult a qualified tax adviser for more complete information.
The reader should refer to the appropriate prospectus related to his or her
Contracts, for a more complete description of the taxation of the separate
account and of the owner of the particular Contract.
OTHER INFORMATION
SHAREHOLDER REPORTS
Annual Reports containing audited financial statements of the Company and
Semiannual Reports containing unaudited financial statements, as well as proxy
materials, are sent to Contract Owners, annuitants, or beneficiaries as
appropriate.
VOTING AND OTHER RIGHTS
The Company has an authorized capitalization of 13,000,000,000 shares of
common stock, $0.01 par value per share, 13,000,000,000 of which are
authorized to be issued in fourteen classes comprising 1,000,000,000 shares
each. Each of the thirteen classes of stock corresponds to one of the Funds
and represents an ownership interest in that Fund. See "Voting and Other
Rights" in the Prospectus for a full discussion of the manner in which shares
of the Fund are voted.
VALIC has made initial organization investments in each of the following
Funds, and, as of May 31, 1995, owned of record the following percentage of
the outstanding shares of these Funds; 0% of the Stock Index Fund, 0% of the
MidCap Index Fund, 0% of the Small Cap Index Fund, 11.42% of the Growth Fund,
26.14% of the Growth & Income Fund, 8.77% of the Science & Technology Fund,
2.78% of the International Equities Fund, 15.49% of the Social Awareness Fund,
0% of the Timed Opportunity Fund, 18.66% of the Capital Conservation Fund,
3.90% of the Government Securities Fund, 20.59% of the International
Government Bond Fund, and 0% of the Money Market Fund.
VALIC's ownership of more than 25% of the outstanding shares may result in
VALIC's being deemed a controlling entity of each of those Funds as that term
is defined in the 1940 Act. Such control will dilute the effect of the votes
of other shareholders and contract owners.
As of May 31, 1995, VALIC Separate Account A owned of record the following
percentage of the outstanding shares of each Fund: 96.34% of the Stock Index
Fund, 99.99% of the MidCap Index Fund, 100% of the Small Cap Index Fund,
96.86% of the International Equities Fund, 84.39% of the Social Awareness
Fund, 88.58% of the Growth Fund, 73.86% of the Growth & Income Fund, 91.23% of
the Science & Technology Fund, 96.61% of the Timed Opportunity Fund, 81.33% of
the Capital Conservation Fund, 96.09% of the Government Securities Fund,
79.41% of the International Government Bond Fund, and 99.99% of the Money
Market Fund.
As of May 31, 1995, the other share-
holders of the Funds included AGL Separate Account A, AGL Separate Account B,
AGL Separate Account D, American General Corporation Thrift Plan and VALIC
Agents' and Managers' Thrift Plan. None of these other shareholders owned of
record more than 5% of any Fund's outstanding shares.
CUSTODY OF ASSETS
Pursuant to a Custodian Contract with the Company, State Street Bank and
Trust Company ("State Street"), 225 Franklin Street, Boston, Massachusetts
02110, holds the cash and portfolio securities of the Company as custodian.
State Street is responsible for holding all securities and cash of each
Fund, receiving and paying for securities purchased, delivering
37
against payment securities sold, receiving and collecting income from
investments, making all payments covering expenses of the Company, computing
the net asset value of each Fund, calculating each Fund's standardized
performance information, and performing other accounting services and
administrative duties, all as directed by persons authorized by the Company.
State Street does not exercise any supervisory function in such matters as the
purchase and sale of portfolio securities, payment of dividends, or payment of
expenses of the Funds or the Company. Portfolio securities of the Funds
purchased domestically are maintained in the custody of State Street and may
be entered into the book entry systems of securities depositories approved by
the Board of Directors. Pursuant to the Custodian Contract, portfolio
securities purchased outside the United States will be maintained in the
custody of various foreign branches of State Street and such other custodians,
including foreign banks and foreign securities depositories, as are approved
by the Board of Directors, in accordance with regulations under the 1940 Act.
State Street holds securities of the Funds on which call options have been
written and certain assets of the Funds constituting margin deposits with
respect to financial futures contracts at the disposal of the FCMs through
which such transactions are effected. The Funds may also be required to post
margin deposits with respect to covered call and put options written on stock
indices and for this purpose certain assets of those Funds may be held by the
custodian pursuant to similar arrangements with the brokers involved.
This arrangement regarding margin deposits essentially consists of State
Street creating a separate segregated account into which it transfers (upon
the Company's instructions) assets from a Fund's general (regular) custodial
account. The custody agreement for such arrangement provides that FCMs or
brokers will have access to the funds in the segregated accounts when and if
the FCMs or brokers represent that the Company has defaulted on its obligation
to the FCMs or brokers and that the FCMs or brokers have met all the
conditions precedent to their right to receive such funds under the agreement
between the Company and the FCMs or brokers. The Company has an agreement with
each FCM or broker which provides (1) that the assets of any Fund held by the
FCM or broker will be in the possession of State Street until released or sold
or otherwise disposed of in accordance with or under the terms of such
agreement, (2) that such assets would not otherwise be pledged or encumbered
by the FCM or broker, (3) that when requested by the Company the FCM or broker
will cause State Street to release to its general custodial account any assets
to which a Fund is entitled under the terms of such agreement, and (4) that
the assets in the segregated account shall otherwise be used only to satisfy
the Company's obligations to the FCM or broker under the terms of such
agreement.
If on any day a Fund experiences net realized or unrealized gains with
respect to financial futures contracts or covered options on stock indices
held through a given FCM or broker, it is entitled immediately to receive from
the FCM or broker, and usually will receive by the next business day, the net
amount of such gains. Thereupon, such assets will be deposited in its general
or segregated account with State Street, as appropriate.
INDEX FUNDS
The Small Cap Index Fund is not promoted, sponsored or endorsed by, nor in
any way affiliated with Frank Russell Company. Frank Russell Company is not
responsible for and has not reviewed the Fund nor any associated literature or
publications and Frank Russell Company makes no representation or warranty,
express or implied, as to their accuracy, or completeness, or otherwise.
Frank Russell Company reserves the right, at any time and without notice,
to alter, amend, terminate or in any way change its Index(es). Frank Russell
Company has no obligation to take the needs of any particular fund or its
participants or any product or person into consideration in determining,
comprising or calculating the Index(es).
Frank Russell Company's publication of the Index(es) in no way suggests or
implies an opinion by Frank Russell Company as to the attractiveness or
appropriateness of investment in any or all securities upon which the
Index(es) is (are) based. FRANK RUSSELL COMPANY MAKES NO REPRESENTATION,
WARRANTY, OR GUARANTEE AS TO THE ACCURACY, COMPLETENESS, RELIABILITY, OR
OTHERWISE OF THE INDEX(ES) OR ANY DATA INCLUDED IN THE INDEX(ES). FRANK
RUSSELL COMPANY MAKES
38
NO REPRESENTATION OR WARRANTY REGARDING THE USE, OR THE RESULTS OF USE, OF THE
INDEX(ES) OR ANY DATA INCLUDED THEREIN, OR ANY SECURITY (OR COMBINATION
THEREOF) COMPRISING THE INDEX(ES). FRANK RUSSELL COMPANY MAKES NO OTHER
EXPRESS OR IMPLIED WARRANTY, AND EXPRESSLY DISCLAIMS ANY WARRANTY, OF ANY
KIND, INCLUDING WITHOUT MEANS OR LIMITATION, ANY WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX(ES) OR ANY DATA
OR ANY SECURITY (OR COMBINATION THEREOF) INCLUDED THEREIN.
The Stock Index Fund and the MidCap Index Fund are not sponsored,
endorsed, sold or promoted by Standard & Poor's Corporation ("S&P"). S&P makes
no representation or warranty, express or implied, to the Company or its
participants regarding the advisability of investing in securities generally
or in the Stock Index Fund or MidCap Index Fund particularly or the ability of
the S&P Index or the S&P MidCap 400 Index Fund to track general stock market
performance. S&P has no obligation to take the need of the Company or the
Company's participants into consideration in determining, composing or
calculating the S&P 500 Index or S&P MidCap 400 Index. S&P is not responsible
for and has not participated in the determination of the prices and amount of
the Stock Index Fund or MidCap Index Fund or the timing of the issuance or
sale of such Funds or in the determination or calculation of the equation by
which such Funds are to be converted into cash. S&P has no obligation or
liability in connection with the administration, marketing or trading of the
Funds.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE
NO LIABILITY FOR ANY ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO
WARRANTY, EXPRESS OR IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE COMPANY FROM
THE USE OF THE S&P 500 INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS
ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE
WITH RESPECT TO THE S&P 500 INDEX OR S&P MIDCAP 400 INDEX OR ANY DATA INCLUDED
THEREIN. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY
LIABILITY FOR ANY SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES
(INCLUDING LOST PROFITS), EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
DESCRIPTION OF CORPORATE BOND RATINGS
MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS ARE AS FOLLOWS:
Aaa -- Bonds which are rated Aaa are judged to be of the best quality and
carry the smallest degree of investment risk. Interest payments are protected
by a large or by an exceptionally stable margin, and principal is secure.
While the various protective elements are likely to change, such changes as
can be visualized are most unlikely to impair the fundamentally strong
position of such issues.
Aa -- Bonds which are rated Aa are judged to be of high-quality by all
standards. Together with the Aaa group they comprise what are generally known
as high-grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A -- Bonds which are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may be
present which suggest a susceptibility to impairment sometime in the future.
Baa -- Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present but
certain protective elements may be lacking or may be characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba -- Bonds which are rated Ba are judged to have speculative elements and
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safe-
39
guarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.
B -- Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time may be
small.
Caa -- Bonds which are rated Caa are of poor standing. Such issues may be
in default or there may be present elements of danger with respect to
principal or interest.
Ca -- Bonds which are rated Ca represent obligations which are speculative
in a high degree. Such issues are often in default of have other marked
shortcomings.
STANDARD & POOR'S CORPORATION CLASSIFICATIONS ARE AS FOLLOWS:
AAA -- This is the highest rating assigned by Standard & Poor's to a debt
obligation and indicates an extremely strong capacity to pay principal and
interest.
AA -- Bonds rated AA also qualify as high-quality debt obligations.
Capacity to pay principal and interest in very strong, and in the majority of
instances they differ from AAA issues only in small degree.
A -- Bonds rated A have a strong capacity to pay principal and interest,
although they are somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions.
BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
principal and interest. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for bonds
in this category than for bonds in the A category.
BB-B-CCC-C -- Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation. While such bonds will likely
have some quality and protective characteristics, there are outweighed by
large uncertainties or major risk exposures to adverse conditions.
DESCRIPTION OF COMMERCIAL PAPER RATINGS
A and Prime Commercial Paper Ratings.
Commercial paper rated A by S & P has the following characteristics:
Liquidity ratios are adequate to meet cash requirements. Long-term senior debt
is rated "A" or better, although, in some cases "BBB" credits may be allowed.
The issuer has access to at least two additional channels of borrowing. Basic
earnings and cash flow have an upward trend with allowance made for unusual
circumstances. Typically, the issuer's industry is well established and the
issuer has a strong position within the industry. The reliability and quality
of management are unquestioned. The rating is described by S & P as the
investment grade category, the highest rating classification. Relative
strength or weakness of the above factors determine whether the issuer's
commercial paper is rated A-1, A-2 or A-3.
Among the factors considered by Moody's in assigning commercial paper
ratings are the following: (1) evaluation of the management of the issuer; (2)
economic evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas: (3) evaluation
of the issuer's products in relation to competition and customer acceptance;
(4) liquidity; (5) amount and quality of long-term debt; (6) trend of earnings
over a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations. Relative
differences in strengths and weaknesses in respect of these criteria establish
a rating in one of three classifications. The rating Prime-1 is the highest
commercial paper rating assigned by Moody's. Its other two ratings, Prime-2
and Prime-3 are designated Higher Quality and High Quality, respectively.
INDEPENDENT AUDITORS
Ernst & Young LLP, One Houston Center, 1221 McKinney, Suite 2400, Houston,
Texas 77010, serve as independent accountants and auditors of the Company.
40
<TABLE>
<CAPTION>
DIRECTORS AND OFFICERS
POSITION(S) HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH REGISTRANT DURING PAST 5 YEARS
- ---------------- ---------------- -----------------------
<S> <C> <C>
Stephen D. Bickel* ............ President and Chairman Chairman, Chief Executive Officer and
2929 Allen Parkway since 1988 Director, VALIC; Chairman of the Board of
Houston, Texas 77019 Directors, VAMCO. Formerly, President,
Chief Executive Officer, and Director,
VALIC (1988-1994); Executive Vice
President -- Actuarial & Tax, American
General Corporation (1987-1988); Senior
Vice President & Actuary, American General
Corporation (1983-1987).
Thomas L. West, Jr.* .......... Director since 1994 President and Director, VALIC. Formerly
2929 Allen Parkway Senior Vice President Annuity Business
Houston, Texas 77019 Unit -- Aetna Life Insurance & Annuity Co.
(1987-1994).
Joe C. Osborne* ............... Director since 1992 Senior Vice President -- Marketing
2929 Allen Parkway and Director, VALIC; President and Di-
Houston, Texas 77019 rector, VAMCO; Formerly, Executive Vice
President -- Marketing, VALIC (1987-1989);
Senior Vice President -- Marketing, VALIC
(1983-1987).
Peter V. Tuters* .............. Director since 1992 Vice President, Chief Investment Officer
2929 Allen Parkway and Director, VALIC; Senior Vice
Houston, Texas 77019 President, Chief Investment Officer,
American General Corporation; Vice
President -- Bonds, Crown Life Insurance
Company (1977-1992).
Dr. Norman Hackerman .......... Director since 1984 Chairman -- Scientific Advisory Board The
4605 Post Oak Place Robert A. Welch Foundation; (Director,
Suite 200 First Federal Savings and Loan Association
Houston, TX 77027 of Austin; Radian Corporation (Research
and Development); Tracor, Inc. (Research
and Development, Electronic Equipment);
Sum X Corporation (Research and Develop-
ment); Vista Chemical Corporation
(Chemicals); Consultant, FuelTech,
(National Science Board.) Formerly,
President, Rice University, Houston, Texas
(1970-1985).(1)(2)(4)
Dr. John W. Lancaster ......... Director since 1984 Retired. Formerly, Pastor, First Presby-
229 Texas Extension Rd. terian Church, Houston, Texas.(4)
Montreat, NC 28757
Dr. F. Robert Paulsen ......... Director since 1985 Dean Emeritus and Professor,
2801 N. Indian Ruins College of Higher Education, The
Tucson, AZ 85715 University of Arizona, Tucson,
Arizona.(1)(2)(3)(4)
</TABLE>
- ---------
* Interested persons of the Company as defined in the 1940 Act specifically
because of their capacity as officers, directors or consultants of the
Company, VALIC or American General Corporation.
(1) A managing general partner of American Capital Exchange Fund.
(2) A director of American Capital Bond Fund, Inc., American Capital Income
Fund Inc. and American Capital Convertible Securities Fund, Inc.
(3) A trustee of Common Sense Trust.
(4) Directors who are not interested persons of the Company, receive an annual
retainer of $16,000. In addition, such directors are paid a per meeting
fee of $1,500 plus expenses incurred.
41
<TABLE>
<CAPTION>
POSITION(S) HELD PRINCIPAL OCCUPATION(S)
NAME AND ADDRESS WITH REGISTRANT DURING PAST 5 YEARS
- ---------------- ---------------- -----------------------
<S> <C> <C>
Dr. R. Miller Upton ................ Director since 1984 Economist; President, Elkhorn, Stud, Inc.
3201 South Short Dr. Director, Household International, Inc.
Delavan, WI 43115 (1965-1989). Formerly, Director, Home Life
Insurance Company of New York (1965-1988)
President, of Beloit College, Wisconsin.
(1954-1975)(1)(2)(4)
Ben H. Love ........................ Director since 1991 Chief Executive, Boy Scouts of America.
1325 West Walnut Hill Lane (Retired)(4)
Irving, Texas 75015
</TABLE>
Listed below are the Company's officers and their principal occupations.
All are affiliates of VALIC and are located at 2929 Allen Parkway, Houston,
Texas 77019. Each officer serves until his or her successor is elected and
shall qualify.
<TABLE>
<CAPTION>
POSITION HELD PRINCIPAL OCCUPATION(S)
NAME WITH REGISTRANT DURING PAST 5 YEARS
- ---- --------------- -----------------------
<S> <C> <C>
Norman Jaskol....................... Vice President & Senior Vice President and Managing Direc-
Investment Officer tor -- Investments, VALIC. Formerly,
since 1988 Senior Vice President -- Portfolio Man-
ager, Lomas Capital Management Company
(1987-1988); Deputy Executive
Director -- Investments, Colorado Public
Employees Retirement Association
(1978-1987).
Teresa Moro......................... Vice President & Trader -- VALIC. Formerly, Money Market
Investment Officer since Trader, VALIC (1986-1990); AIM Management
1990 Group Inc. (1983-1986).
John W. Mossbarger.................. Vice President and Portfolio Manager, VALIC. Formerly
Investment Officer since Managing Director, Common Stocks American
1992 General Corporation (1989-1992) Senior
Vice President Equity Investments American
General Corporation (1988-1989) Vice
President and Trust Officer Texas Commerce
Bank N.A. (1982-1988).
Leon A. Olver....................... Vice President & Portfolio Manager, VALIC. Formerly Vice
Investment Officer since President Treasurer, First Heights Bank
1995 (1994-1995), Vice President, Assistant
Treasurer, First Heights Bank (1991-1994);
Assistant Vice President Pulte Financial
Companies (1984-1991).
William Trimbur, Jr................. Vice President & Investment Portfolio Manager, VALIC. Formerly, Second
Officer Vice President, VALIC (1985- 1990);
since 1987 Controller, VALIC (1985-1986); Assistant
Controller, VALIC (1982-1985) and
Assistant Treasurer, VALIC (1982-1986).
42
Brent C. Nelson..................... Vice President Senior Vice President and Controller,
since 1987 Director, VALIC. Formerly, Vice President
and Controller, VALIC (1990-1994);
Controller, VALIC (1987-1990); Second Vice
President and Controller, VALIC
(1986-1987); Second Vice President -- Fund
Operations, VALIC (1985-1986); Assistant
Vice President --Controller, Lomas
Financial Security Insurance Co.
(1982-1985).
Cynthia A. Toles.................... General Counsel and Senior Associate General Counsel
Secretary since 1985 and Secretary, VALIC. Secretary
and Assistant Treasurer, VAMCO.
Formerly, Vice President,
Associate General Counsel &
Assistant Secretary (1988- 1989);
Second Vice President, Associate
General Counsel and Assistant
Secretary, VALIC (1986-1988);
Assistant Vice President,
Assistant General Counsel and
Assistant Secretary, VALIC
(1983-1986).
Gregory R. Seward................... Treasurer and Controller Director of Fund Operations and
since 1991 Assistant Controller, VALIC.
Formerly, Controller, Avanti
Health Systems, Inc. (1988-1991);
Reports Manager, American Capital
Asset Management, Inc.
(1986-1988); Senior Auditor, Price
Waterhouse (1982-1986).
Betty J. North...................... Assistant Vice President Senior Compliance Analyst, VALIC.
since 1991 Formerly, Vice President, American
Capital Advisors (1982-1987).
David H. den Boer................... Assistant Secretary Associate General Counsel, VALIC.
since 1991 Formerly, Senior Counsel, VALIC
(1989-1990); Private Law Practice
(1981-1989).
William W. Merryman................. Assistant Controller Manager -- Variable Product
since 1989 Accounting, VALIC. Formerly,
Management Trainee, VALIC
(1987-1989); University of Texas
at Austin -- BBA, Management
(1987).
Debra A. Yeang...................... Assistant Treasurer Manager -- Fund Reporting, VALIC.
since 1992 Formerly, Staff Accountant --Fund
Operations, VALIC (1991-1992);
Senior Auditor, Arthur Andersen
(1987-1991).
</TABLE>
43
The officers conduct and supervise the daily business operations of the
Company, while the directors, in addition to their functions set forth under
"Investment Adviser," review such actions and decide on general policy.
The Company has an Audit Committee. The Company's Audit Committee consists
of Messrs. Lancaster, Hackerman, Paulsen, Upton, and Love. The Audit Committee
recommends to the Board the selection of independent auditors for the Company
and reviews with such independent auditors the scope and results of the annual
audit, reviews the performance of the accounts, and considers any comments of
the independent auditors regarding the Company's financial statements or books
of account. The Company does not have a standing nominating or compensation
committee.
The five directors of the Company who are not affiliated with VALIC are
each paid annual directors' fees and are reimbursed for certain out-of-pocket
expenses by the Company.
The directors and officers of the Company and members of their families as
a group, beneficially owned less than 1% of the common stock of each Fund
outstanding as of May 31, 1995.
FINANCIAL STATEMENTS
The financial statements for the year ended May 31, 1995 and the report of
independent auditors for that period are included in the American General
Series Portfolio Company Annual Report for that period.
The Annual Report to shareholders as of May 31, 1995 is incorporated by
reference in this Statement of Additional Information. The financial
statements included in the Annual Report and incorporated by reference in this
Statement of Additional Information have been audited by Ernst & Young LLP,
Independent Auditors, as set forth in their report thereon which appears in
the Annual Report and have been incorporated by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
44
STOCK INDEX FUND MAY 31, 1995 STATEMENT OF NET ASSETS
NUMBER MARKET
OF SHARES VALUE
- --------- -------------
COMMON STOCKS - 99.02%
ADVERTISING - 0.06%
21,700 Interpublic Group of Cos Inc ....................... $ 800,188
-------------
AEROSPACE/DEFENSE - 2.20%
112,350 Boeing Co .......................................... 6,614,606
29,000 EG & G Inc ......................................... 525,625
18,880 General Dynamics Corp .............................. 826,000
70,684 Lockheed Corp ...................................... 4,205,698
23,700 Loral Corp ......................................... 1,134,638
43,200 McDonnell Douglas Corp ............................. 3,121,200
11,900 Northrop Corp ...................................... 623,263
41,700 Raytheon Co ........................................ 3,231,750
63,700 Rockwell International Corp ........................ 2,906,313
16,600 TRW Inc ............................................ 1,309,325
44,700 United Technologies Corp ........................... 3,391,613
-------------
27,890,031
-------------
AIRLINES - 0.33%
24,400 * AMR Corp ........................................... 1,665,300
14,000 Delta Air Lines Inc ................................ 911,750
55,200 Southwest Airlines Co .............................. 1,221,300
41,400 * US Air Group Inc ................................... 367,425
-------------
4,165,775
-------------
APPAREL & PRODUCTS - 0.06%
16,500 * Fruit of the Loom Inc Class A ...................... 439,313
15,900 Liz Claiborne ...................................... 282,225
-------------
721,538
-------------
APPLIANCES/FURNISHINGS - 0.18%
12,975 Bassett Furniture Industries Inc ................... 350,325
21,800 Maytag Corp ........................................ 354,250
27,800 Whirlpool Corp ..................................... 1,588,075
-------------
2,292,650
-------------
AUTO - CARS - 2.00%
114,100 Chrysler Corp ...................................... 4,977,613
299,000 Ford Motor Co ...................................... 8,745,750
242,200 General Motors Corp ................................ 11,625,600
-------------
25,348,963
-------------
AUTO - REPLACEMENT PARTS - 0.44%
18,700 Cooper Tire & Rubber Co ............................ 453,475
14,300 Echlin Inc ......................................... 514,800
45,600 Genuine Parts Co ................................... 1,789,800
55,100 Goodyear Tire & Rubber Co .......................... 2,327,975
15,800 Pep Boys Manny Moe & Jack Co ....................... 440,425
-------------
5,526,475
-------------
BANKS - NEW YORK CITY - 1.54%
55,800 Bank of New York Inc ............................... 2,273,850
57,000 Chase Manhattan Corp ............................... 2,636,250
78,534 Chemical Banking Corp .............................. 3,622,381
126,500 Citicorp ........................................... 6,767,750
60,700 J P Morgan & Co Inc ................................ 4,302,113
-------------
19,602,344
-------------
BANKS - OTHER - 1.66%
44,200 Bank of Boston Corp ................................ 1,613,300
120,268 BankAmerica Corp ................................... 6,284,003
33,300 First Chicago Corp ................................. 1,910,588
60,700 First Union Corp ................................... 2,974,300
45,300 Fleet Financial Group Inc .......................... 1,579,838
37,800 Mellon Bank Corp ................................... 1,615,950
43,600 National City Corp ................................. 1,324,350
26,800 U S Bancorp Oregon ................................. 659,950
16,800 Wells Fargo & Co ................................... 3,091,200
-------------
21,053,479
-------------
BANKS - REGIONAL - 2.69%
133,471 Banc One Corp ...................................... 4,638,117
37,500 Barnett Banks Inc .................................. 1,860,938
41,800 Boatmens Bancshares Inc ............................ 1,363,725
41,500 Corestates Financial Corp .......................... 1,379,875
23,000 First Fidelity Bancorp Inc ......................... 1,221,875
30,300 First Interstate Bancorp Inc ....................... 2,545,200
92,670 Keycorp ............................................ 2,838,019
88,902 NationsBank Corp ................................... 5,034,076
60,350 NBD Bancorp Inc .................................... 1,984,006
114,100 Norwest Corp ....................................... 3,237,588
87,200 PNC Bank Corp ...................................... 2,354,400
48,300 Shawmut National Corp .............................. 1,400,700
36,100 SunTrust Banks Inc ................................. 2,093,800
55,513 Wachovia Corp ...................................... 2,102,555
-------------
34,054,874
-------------
BEVERAGE - BREWERS/
DISTRIBUTORS - 0.76%
11,900 Adolph Coors Class B ............................... 205,275
86,200 Anheuser Busch Cos Inc ............................. 5,096,575
18,915 Brown-Forman Corp Class B .......................... 628,924
121,700 Seagram Ltd ........................................ 3,651,000
-------------
9,581,774
-------------
BEVERAGE - SOFT DRINKS - 3.00%
413,200 Coca Cola Co ....................................... 25,566,750
254,500 Pepsico Inc ........................................ 12,470,500
-------------
38,037,250
-------------
BROADCASTING - 1.31%
47,000 Capital Cities/ABC Inc ............................. 4,535,500
25,370 CBS Inc ............................................ 1,699,790
71,850 Comcast Corp Class A ............................... 1,257,375
183,500 * Tele Communications Inc Class A .................... 3,876,438
112,900 * Viacom Inc Class B ................................. 5,263,963
-------------
16,633,066
-------------
BUILDING MATERIALS - 0.38%
8,900 Armstrong World Industries Inc ..................... 459,463
57,100 Lowes Cos Inc ...................................... 1,555,975
57,500 Masco Corp ......................................... 1,660,313
4,400 * Owens Corning Fiberglass Corp ...................... 159,500
28,200 Sherwin Williams Co ................................ 1,036,350
-------------
4,871,601
-------------
45
CHEMICAL - MAJOR - 2.66%
1,900 B F Goodrich Co .................................... $ 94,288
89,000 Dow Chemical Co .................................... 6,530,375
171,800 Du Pont E I De Nemours & Co ........................ 11,660,925
44,100 Hercules Inc ....................................... 2,315,250
41,400 Monsanto Co ........................................ 3,446,550
54,900 Morton International Inc ........................... 1,743,075
66,500 PPG Industries Inc ................................. 2,768,063
28,800 Praxair Inc ........................................ 716,400
16,600 Rohm & Haas Co ..................................... 977,325
56,100 Union Carbide Corp ................................. 1,640,925
28,200 W R Grace Co ....................................... 1,811,850
-------------
33,705,026
-------------
CHEMICAL - MISCELLANEOUS - 0.73%
41,100 Air Products & Chemicals Inc ....................... 2,183,438
30,637 Eastman Chemical Co ................................ 1,838,220
9,000 Ecolab Inc ......................................... 228,375
8,200 * FMC Corp ........................................... 527,875
26,500 Great Lakes Chemical Corp .......................... 1,616,500
30,800 Mallinckrodt Group Inc ............................. 1,120,350
4,664 Millipore Corp ..................................... 306,075
20,300 Nalco Chemical Co .................................. 766,325
16,200 Sigma Aldrich ...................................... 712,800
-------------
9,299,958
-------------
CONGLOMERATES - 1.19%
98,700 Allied Signal Inc .................................. 3,985,013
24,000 Dial Corp .......................................... 588,000
36,000 ITT Corp ........................................... 4,027,500
3,900 Ogden Corp ......................................... 85,800
17,000 Teledyne Inc ....................................... 414,375
170 Teledyne Inc (Preferred) ........................... 2,359
60,100 Tenneco Inc ........................................ 2,884,800
24,300 Textron Inc ........................................ 1,479,263
21,200 Tyco International Ltd ............................. 1,147,450
25,900 Whitman Corp ....................................... 469,438
-------------
15,083,998
-------------
CONSUMER FINANCE - 0.13%
8,900 Beneficial Corp .................................... 396,050
36,600 MBNA Corp .......................................... 1,235,250
-------------
1,631,300
-------------
CONTAINERS - METAL/GLASS - 0.11%
4,700 Ball Corp .......................................... 156,275
25,300 * Crown Cork & Seal Inc .............................. 1,189,100
-------------
1,345,375
-------------
CONTAINERS - PAPER - 0.06%
6,500 Bemis Inc .......................................... 185,250
13,300 Temple Inland Inc .................................. 575,225
-------------
760,475
-------------
COSMETICS/TOILETRIES - 0.74%
3,400 Alberto Culver Co Class B .......................... 109,650
19,300 Avon Products Inc .................................. 1,300,338
74,900 Gillette Co ........................................ 6,319,688
34,800 International Flavors & Fragrances ................. 1,713,900
-------------
9,443,576
-------------
DRUGS - 5.32%
14,200 Allergan Inc ....................................... 378,075
16,400 * Alza Corp .......................................... 342,351
98,300 American Home Products Corp ........................ 7,237,338
42,700 * Amgen Inc .......................................... 3,095,750
164,100 Bristol Myers Squibb Co ............................ 10,892,138
93,900 Eli Lilly & Co ..................................... 7,007,288
404,400 Merck & Co Inc ..................................... 19,057,350
101,600 Pfizer Inc ......................................... 8,953,500
61,700 Schering Plough Corp ............................... 4,858,875
56,600 Upjohn Co .......................................... 2,058,825
43,300 Warner Lambert Co .................................. 3,588,488
-------------
67,469,978
-------------
ELECTRICAL EQUIPMENT - 3.56%
74,000 AMP Inc ............................................ 3,154,250
20,000 * Cabletron Systems Inc .............................. 1,070,000
77,300 Emerson Electric Co ................................ 5,314,375
549,400 General Electric Co ................................ 31,865,148
9,200 National Service Industries Inc .................... 265,650
20,200 Raychem Corp ....................................... 734,775
3,400 Thomas & Betts Corp ................................ 229,075
14,200 W W Grainger Inc ................................... 850,225
116,100 Westinghouse Electric Corp ......................... 1,683,450
-------------
45,166,948
-------------
ELECTRONIC INSTRUMENTS - 0.14%
22,800 General Signal Corp ................................ 843,600
9,000 * Intergraph Corp .................................... 121,500
19,400 Perkin Elmer Corp .................................. 674,150
3,600 Tektronix Inc ...................................... 165,600
-------------
1,804,850
-------------
ENTERTAINMENT - 1.42%
34,550 Hasbro Inc ......................................... 1,217,888
16,200 * King World Productions Inc ......................... 672,300
68,050 Mattel Inc ......................................... 1,701,250
130,000 Time Warner Inc .................................... 5,151,250
167,000 Walt Disney Co ..................................... 9,289,375
-------------
18,032,063
-------------
FERTILIZERS - 0.03%
17,000 First Mississippi Corp ............................. 393,125
-------------
FINANCE COMPANIES - 0.46%
23,500 Household International Inc ........................ 1,160,313
112,089 Travelers Inc ...................................... 4,735,760
-------------
5,896,073
-------------
FOODS - 2.82%
152,785 Archer Daniels Midland Co .......................... 2,826,523
83,000 Campbell Soup Co ................................... 4,077,375
87,250 Conagra Inc ........................................ 2,911,969
48,500 CPC International Inc .............................. 2,946,375
46
55,800 General Mills Inc .................................. $ 2,894,625
82,100 H J Heinz Co ....................................... 3,715,025
19,700 Hershey Foods Corp ................................. 1,017,013
73,800 Kellogg Co ......................................... 4,953,825
24,100 Pioneer Hi Bred International Inc .................. 945,925
45,000 Quaker Oats Co ..................................... 1,569,375
37,700 Ralston Purina Co .................................. 1,894,425
166,700 Sara Lee Corp ...................................... 4,646,763
31,300 Wm Wrigley Jr Co ................................... 1,416,325
-------------
35,815,543
-------------
FOOTWEAR - 0.17%
2,400 Brown Group Inc .................................... 52,500
17,000 Nike Inc Class B ................................... 1,340,875
20,700 Reebok International Ltd ........................... 693,450
3,800 Stride Rite Corp ................................... 42,750
-------------
2,129,575
-------------
FREIGHT - 0.10%
20,600 * Federal Express Corp ............................... 1,233,425
-------------
GOLD MINING - 0.47%
102,200 Barrick Gold Corp .................................. 2,580,550
21,800 Echo Bay Mines Ltd ................................. 194,838
53,900 Homestake Mining Co ................................ 909,563
88,900 Placer Dome Inc .................................... 2,244,725
-------------
5,929,676
-------------
GOVERNMENT SPONSORED - 0.98%
62,300 Federal Home Loan
Mortgage Corp .................................... 4,244,188
87,800 Federal National Mortgage
Association ..................................... 8,165,400
-------------
12,409,588
-------------
HARDWARE & TOOLS - 0.10%
22,200 Black & Decker Corp ................................ 732,600
7,700 Snap On Tools Corp ................................. 273,350
6,000 Stanley Works ...................................... 240,000
-------------
1,245,950
-------------
HEALTHCARE - 0.13%
51,400 U S Healthcare Inc ................................. 1,596,613
-------------
HEAVY DUTY TRUCKS/PARTS - 0.31%
17,500 Cummins Engine Inc ................................. 796,250
27,100 Dana Corp .......................................... 765,575
22,200 Eaton Corp ......................................... 1,356,975
11,910 * Navistar International Corp ........................ 184,605
16,355 Paccar Inc ......................................... 787,084
-------------
3,890,489
-------------
HOME BUILDERS - 0.07%
16,600 Centex Corp ........................................ 477,250
14,456 Kaufman & Broad Home Corp .......................... 204,191
7,900 Pulte Corp ......................................... 216,263
-------------
897,704
-------------
HOSPITAL MANAGEMENT - 0.49%
8,000 * Beverly Enterprises Inc ............................ 91,000
116,423 Columbia/HCA Healthcare Corp ....................... 4,758,790
8,950 * Community Psychiatric Centers ...................... 110,756
13,000 Manor Care Inc ..................................... 380,250
54,900 * Tenet Healthcare Corp .............................. 912,713
-------------
6,253,509
-------------
HOSPITAL SUPPLIES - 2.88%
262,700 Abbott Laboratories ................................ 10,508,000
23,900 Bausch & Lomb Inc .................................. 970,938
100,000 Baxter International Inc ........................... 3,487,500
23,200 Becton Dickinson & Co .............................. 1,334,000
29,000 * Biomet Inc ......................................... 431,375
42,200 * Boston Scientific Corp ............................. 1,213,250
8,400 C R Bard Inc ....................................... 247,800
206,500 Johnson & Johnson .................................. 13,680,625
42,000 Medtronic Inc ...................................... 3,160,500
20,300 * St Jude Medical Inc ................................ 918,575
25,700 United States Surgical Corp ........................ 530,063
-------------
36,482,626
-------------
HOUSEHOLD PRODUCTS - 3.11%
14,400 Clorox Co .......................................... 862,200
46,600 Colgate Palmolive Co ............................... 3,588,200
138,500 Minnesota Mining &
Manufacturing Co ................................. 8,292,688
59,000 Newell Co .......................................... 1,467,625
24,200 Premark International Inc .......................... 1,206,975
220,226 Procter & Gamble Co ................................ 15,828,744
47,900 Rubbermaid Inc ..................................... 1,526,813
52,300 Unilever N V - ADR ................................. 6,655,175
-------------
39,428,420
-------------
INFORMATION PROCESSING - 6.85%
53,500 * Amdahl Corp ........................................ 695,500
39,000 Apple Computer ..................................... 1,620,938
22,200 Autodesk Inc ....................................... 821,400
49,600 Automatic Data Processing Inc ...................... 3,087,600
3,800 * Ceridian Corp ...................................... 122,550
84,500 * Cisco Systems Inc .................................. 3,696,875
83,400 * Compaq Computer Corp ............................... 3,263,025
56,750 Computer Associates
International Inc ................................ 3,717,125
14,900 * Computer Sciences Corp ............................. 789,700
1,800 * Cray Research Inc .................................. 41,175
51,400 * Digital Equipment Corp ............................. 2,293,725
32,900 First Data Corp .................................... 1,899,975
39,200 H & R Block Inc .................................... 1,416,100
164,000 Hewlett Packard Co ................................. 10,844,500
35,300 Honeywell Inc ...................................... 1,398,763
188,700 International Business
Machine Corp ..................................... 17,596,275
20,000 * Lotus Development Corp ............................. 610,000
187,200 * Microsoft Corp ..................................... 15,853,500
118,000 * Novell Inc ......................................... 2,278,875
138,750 * Oracle Systems Corp ................................ 4,821,563
60,100 Pitney Bowes Inc ................................... 2,223,700
44,100 * Silicon Graphics Inc ............................... 1,714,388
47
30,600 * Sun Microsystems Inc ............................... $ 1,377,000
26,800 * Tandem Computers Inc ............................... 355,100
37,700 * Unisys Corp ........................................ 400,563
34,200 Xerox Corp ......................................... 3,877,425
-------------
86,817,340
-------------
INSURANCE - CASUALTY - 0.44%
32,300 Chubb Corp ......................................... 2,660,713
23,700 Safeco Corp ........................................ 1,392,375
24,300 St Paul Companies Inc .............................. 1,236,263
13,900 USF & G Corp ....................................... 239,775
-------------
5,529,126
-------------
INSURANCE - LIFE - 0.38%
20,250 Jefferson Pilot Corp ............................... 1,068,188
37,300 Lincoln National Corp .............................. 1,687,825
20,200 Torchmark Corp ..................................... 805,475
21,109 Transamerica Corp .................................. 1,261,263
1,700 USLIFE Corp ........................................ 68,425
-------------
4,891,176
-------------
INSURANCE - MISCELLANEOUS - 0.56%
3,200 Alexander & Alexander Services ..................... 81,200
27,600 General Reinsurance Corp ........................... 3,736,350
55,600 United Healthcare Corp ............................. 2,071,100
28,800 UNUM Corp .......................................... 1,231,200
-------------
7,119,850
-------------
INSURANCE - MULTILINE - 1.52%
40,100 Aetna Life & Casualty Co ........................... 2,390,963
101,612 American International Group Inc ................... 11,558,365
27,400 Cigna Corp ......................................... 2,048,150
21,700 Marsh & McLennan Cos Inc ........................... 1,727,863
41,400 Providian Corp ..................................... 1,505,925
-------------
19,231,266
-------------
LEISURE TIME - 0.05%
16,100 * Bally Entertainment Group .......................... 167,038
17,900 Brunswick Corp ..................................... 328,913
8,700 Outboard Marine Corp ............................... 175,088
-------------
671,039
-------------
LODGING - 0.30%
12,900 Hilton Hotels Corp ................................. 864,300
38,100 Marriott International Inc ......................... 1,290,638
39,200 * Promus Cos Inc ..................................... 1,641,500
-------------
3,796,438
-------------
MACHINE TOOLS - 0.01%
4,700 Cincinnati Milacron Inc ............................ 126,900
-------------
MACHINERY - AGRICULTURE - 0.23%
31,100 Deere & Co ......................................... 2,690,150
5,340 * Varity Corp ........................................ 230,288
-------------
2,920,438
-------------
MACHINERY - CONSTRUCTION &
CONTRACTS - 0.48%
71,000 Caterpillar Inc .................................... 4,277,750
1,800 * Clark Equipment Co ................................. 154,575
30,300 Fluor Corp ......................................... 1,499,850
2,600 Foster Wheeler Corp ................................ 85,475
2,900 Harnischfeger Industries Inc ....................... 100,775
-------------
6,118,425
-------------
MACHINERY - INDUSTRIAL/
SPECIALTY - 0.64%
14,600 Briggs & Stratton Corp ............................. 518,300
42,700 Cooper Industries Inc .............................. 1,579,900
16,200 Dover Corp ......................................... 1,063,125
33,600 Illinois Tool Works Inc ............................ 1,671,600
25,600 Ingersoll Rand Co .................................. 953,600
16,000 Johnson Controls Inc ............................... 916,000
21,633 Pall Corp .......................................... 475,926
10,900 Parker Hannifin Corp ............................... 622,663
6,400 Timken Corp ........................................ 269,600
1,600 Trinova Corp ....................................... 54,400
-------------
8,125,114
-------------
MERCHANDISE - DRUG - 0.21%
8,300 Longs Drug Stores Corp ............................. 291,538
24,200 Rite Aid Corp ...................................... 574,750
36,400 Walgreen Co ........................................ 1,751,750
-------------
2,618,038
-------------
MERCHANDISE - SPECIALTY - 1.45%
28,300 American Greetings Corp Class A .................... 799,475
29,500 Charming Shoppes Inc ............................... 129,063
27,100 Circuit City Stores Inc ............................ 745,250
53,000 Gap Inc ............................................ 1,821,875
145,600 Home Depot Inc ..................................... 6,060,600
4,100 Jostens Inc ........................................ 82,513
129,800 Limited Inc ........................................ 2,888,050
32,300 Melville Corp ...................................... 1,283,925
30,900 Nordstrom Inc ...................................... 1,282,350
16,800 Tandy Corp ......................................... 785,400
18,600 TJX Cos Inc ........................................ 248,775
89,225 * Toys R Us Inc ...................................... 2,252,931
-------------
18,380,207
-------------
MERCHANDISING - DEPARTMENT - 0.54%
25,900 Dayton Hudson Corp ................................. 1,835,663
30,800 Dillard Department Stores Inc
Class A .......................................... 885,500
86,200 May Department Stores Co ........................... 3,383,350
16,000 Mercantile Stores Inc .............................. 750,000
-------------
6,854,513
-------------
MERCHANDISING - FOOD - 0.70%
79,800 Albertsons Inc ..................................... 2,234,400
34,800 American Stores Co ................................. 909,150
15,400 Brunos Inc ......................................... 178,063
6,900 Fleming Cos Inc .................................... 178,538
48
15,500 Giant Foods Inc Class A ............................ $ 445,625
15,300 Great Atlantic & Pacific Tea Inc ................... 380,588
31,700 * Kroger Co .......................................... 824,200
16,700 Supervalu Inc ...................................... 473,863
64,100 Sysco Corp ......................................... 1,738,713
26,000 Winn Dixie Stores Inc .............................. 1,491,750
-------------
8,854,890
-------------
MERCHANDISING - MASS - 2.58%
81,400 J C Penney Inc ..................................... 3,835,975
145,900 K Mart Corp ........................................ 1,860,225
82,622 * Price Costco Inc ................................... 1,167,036
121,700 Sears Roebuck & Co ................................. 6,860,838
738,600 Wal Mart Stores Inc ................................ 18,465,000
35,000 * Woolworth Corp ..................................... 538,125
-------------
32,727,199
-------------
METALS - ALUMINUM - 0.46%
68,000 Alcan Aluminium Ltd ................................ 2,014,500
60,800 Aluminum Co of America ............................. 2,827,200
20,300 Reynolds Metal Co .................................. 1,002,313
-------------
5,844,013
-------------
METALS - COPPER - 0.24%
9,200 Asarco Inc ......................................... 265,650
32,649 Newmont Mining Corp ................................ 1,363,096
26,200 Phelps Dodge Corp .................................. 1,444,275
-------------
3,073,021
-------------
METALS - MISCELLANEOUS - 0.25%
31,350 Cyprus Amax Minerals Co ............................ 830,775
38,050 Englehard Corp ..................................... 1,583,831
29,700 Inco Ltd ........................................... 742,500
-------------
3,157,106
-------------
METALS - STEEL - 0.34%
22,300 * Armco Inc .......................................... 142,163
21,900 * Bethlehem Steel Corp ............................... 323,025
20,200 Inland Steel Industries ............................ 568,125
31,100 Nucor Corp ......................................... 1,485,025
29,620 USX US Steel Group ................................. 947,840
38,925 Worthington Industries Inc ......................... 812,559
-------------
4,278,737
-------------
MISCELLANEOUS - 0.48%
69,300 Corning Inc ........................................ 2,217,600
33,000 * CUC International Inc .............................. 1,212,750
17,500 Loews Corp ......................................... 2,080,313
21,450 Service Corp International ......................... 614,006
-------------
6,124,669
-------------
MOBILE HOMES - 0.02%
14,600 Fleetwood Enterprises Inc .......................... 302,950
-------------
NATURAL GAS - DIVERSIFIED - 0.24%
26,000 Coastal Corp ....................................... 815,750
11,200 Enserch Corp ....................................... 194,600
8,800 NorAm Energy Corp .................................. 58,300
47,929 Panhandle Eastern Corp ............................. 1,204,216
23,700 Sonat Inc .......................................... 779,138
-------------
3,052,004
-------------
OIL - INTEGRATED DOMESTIC - 2.68%
34,000 Amerada Hess Corp .................................. 1,725,500
159,700 Amoco Corp ......................................... 10,919,488
10,000 Ashland Oil Inc .................................... 371,250
51,700 Atlantic Richfield Co .............................. 6,003,663
47,300 Burlington Resources Inc ........................... 1,962,950
11,100 Kerr McGee Corp .................................... 618,825
111,700 Occidental Petroleum Corp .......................... 2,569,100
28,500 * Oryx Energy Corp ................................... 409,688
11,000 Pennzoil Co ........................................ 543,125
91,800 Phillips Petroleum Co .............................. 3,327,750
40,202 * Santa Fe Energy Resources Inc ...................... 391,970
26,800 Sun Co ............................................. 844,200
86,400 Unocal Corp ........................................ 2,559,600
87,000 USX Marathon Group ................................. 1,729,125
-------------
33,976,234
-------------
OIL - INTEGRATED
INTERNATIONAL - 6.24%
209,400 Chevron Corp ....................................... 10,286,775
399,100 Exxon Corp ......................................... 28,485,763
127,100 Mobil Corp ......................................... 12,757,663
172,300 Royal Dutch Petroleum Co - ADR ..................... 21,839,025
83,900 Texaco Inc ......................................... 5,747,150
-------------
79,116,376
-------------
OIL - SERVICES - 0.87%
50,100 Baker Hughes Inc ................................... 1,127,250
69,300 Dresser Industries Inc ............................. 1,585,238
42,500 Halliburton Co ..................................... 1,657,500
24,000 McDermott International Inc ........................ 630,000
79,500 Schlumberger Ltd ................................... 5,167,500
18,500 * Western Atlas Inc .................................. 834,813
-------------
11,002,301
-------------
OIL/GAS PRODUCERS - 0.03%
3,000 Helmerich & Payne Inc .............................. 89,625
8,700 Louisiana Land & Exploration Co .................... 337,125
-------------
426,750
-------------
PAPER/FOREST PRODUCTS - 1.88%
20,500 Alco Standard Corp ................................. 1,468,313
24,100 Avery Dennison Corp ................................ 994,125
8,366 Boise Cascade Corp ................................. 276,078
25,300 Champion International Corp ........................ 1,173,288
9,100 Federal Paper Board Inc ............................ 295,750
32,500 Georgia Pacific Corp ............................... 2,526,875
40,200 International Paper Co ............................. 3,160,725
24,300 James River Corp ................................... 656,100
56,900 Kimberly Clark Corp ................................ 3,414,000
41,600 Louisiana Pacific Corp ............................. 925,600
49
16,000 Mead Corp .......................................... $ 862,000
4,900 Potlatch Corp ...................................... 210,088
48,400 Scott Paper Co ..................................... 2,099,350
23,364 * Stone Container Corp ............................... 408,870
27,250 Union Camp Corp .................................... 1,413,594
17,900 Westvaco Corp ...................................... 765,225
72,800 Weyerhaeuser Co .................................... 3,194,100
-------------
23,844,081
-------------
PHOTOGRAPHY - 0.56%
111,450 Eastman Kodak Co ................................... 6,728,794
10,400 Polaroid Corp ...................................... 383,500
-------------
7,112,294
-------------
POLLUTION CONTROL - 0.59%
70,000 Browning Ferris Industries Inc ..................... 2,493,750
71,800 Laidlaw Inc ........................................ 664,150
50 Safety Kleen Corp .................................. 850
158,100 WMX Technologies Inc ............................... 4,308,225
-------------
7,466,975
-------------
PUBLISHING - NEWS - 0.56%
31,600 Dow Jones & Co Inc ................................. 1,153,400
47,600 Gannett Inc ........................................ 2,546,600
21,200 Knight-Ridder Inc .................................. 1,171,300
22,200 New York Times Co Class A .......................... 502,275
34,232 Times Mirror Co .................................... 795,894
15,600 Tribune Co ......................................... 930,150
-------------
7,099,619
-------------
PUBLISHING/PRINTING - 0.57%
13,900 Deluxe Corp ........................................ 443,063
59,400 Dun & Bradstreet Corp .............................. 3,148,200
19,217 Harcourt General Inc ............................... 809,516
12,000 McGraw Hill Inc .................................... 888,000
21,600 Moore Corp Ltd ..................................... 472,500
39,200 R R Donnelley & Sons Co ............................ 1,430,800
-------------
7,192,079
-------------
RAILROAD - 1.16%
28,800 Burlington Northern Inc ............................ 1,760,400
29,300 Conrail Inc ........................................ 1,582,200
36,800 CSX Corp ........................................... 2,806,000
48,300 Norfolk Southern Corp .............................. 3,308,550
32,875 Santa Fe Pacific Corp .............................. 805,438
45,309 Santa Fe Pacific Gold Corp ......................... 566,363
70,700 Union Pacific Corp ................................. 3,915,013
-------------
14,743,964
-------------
RESTAURANTS - 0.79%
55,800 * Darden Restaurants Inc ............................. 613,800
7,550 Lubys Cafeterias Inc ............................... 153,831
227,700 McDonalds Corp ..................................... 8,624,138
7,800 * Shoneys Inc ........................................ 84,825
30,000 Wendy's International Inc .......................... 513,750
-------------
9,990,344
-------------
SAVINGS & LOAN - 0.22%
25,100 Golden West Financial Corp ......................... 1,233,038
47,050 Great Western Financial Corp ....................... 1,029,219
24,900 H F Ahmanson & Co .................................. 566,475
-------------
2,828,732
-------------
SECURITIES RELATED - 1.06%
163,700 American Express Co ................................ 5,831,813
60,648 Dean Witter Discover & Co .......................... 2,888,361
65,100 Merrill Lynch & Co Inc ............................. 3,059,700
39,900 Salomon Inc ........................................ 1,635,900
-------------
13,415,774
-------------
SEMICONDUCTORS - 2.91%
37,000 * Advanced Micro Devices Inc ......................... 1,216,375
24,400 * Applied Materials Inc .............................. 1,878,800
133,200 Intel Corp ......................................... 14,951,700
66,000 Micron Technology Inc .............................. 2,945,250
188,400 Motorola Inc ....................................... 11,280,450
46,700 * National Semiconductor Corp ........................ 1,167,500
29,800 Texas Instruments Inc .............................. 3,445,625
-------------
36,885,700
-------------
TELECOMMUNICATIONS - 0.93%
158,600 * Airtouch Communications Inc ........................ 4,321,850
56,300 ALLTEL Corp ........................................ 1,386,388
10,327 * Andrew Corp ........................................ 503,441
42,200 * DSC Communications Corp ............................ 1,561,400
6,600 Harris Corp ........................................ 350,625
85,800 Northern Telecommunications Corp ................... 3,292,575
17,300 Scientific Atlanta Inc ............................. 322,213
-------------
11,738,492
-------------
TEXTILE - PRODUCTS - 0.09%
11,400 Russell Corp ....................................... 330,600
16,100 V F Corp ........................................... 857,325
-------------
1,187,925
-------------
TOBACCO - 1.95%
62,800 American Brands Inc ................................ 2,535,550
273,800 Philip Morris Cos Inc .............................. 19,953,175
73,300 UST Inc ............................................ 2,189,838
-------------
24,678,563
-------------
TRUCKERS - 0.12%
2,300 Consolidated Freightways Inc ....................... 54,625
14,200 Roadway Services Inc ............................... 663,850
15,900 Ryder System Inc ................................... 403,463
19,300 Yellow Corp ........................................ 366,700
-------------
1,488,638
-------------
UTILITIES - COMMUNICATION - 7.52%
184,400 Ameritech Corp ..................................... 8,182,750
504,226 AT & T Corp ........................................ 25,589,470
143,600 Bell Atlantic Corp ................................. 8,005,700
162,200 Bellsouth Corp ..................................... 9,955,025
309,200 GTE Corp ........................................... 10,319,550
218,400 MCI Communications Corp ............................ 4,422,600
50
142,500 Nynex Corp ......................................... $ 5,949,375
146,200 Pacific Telesis Group .............................. 3,910,850
192,700 SBC Communications Inc ............................. 8,671,500
119,200 Sprint Corp ........................................ 3,993,200
155,300 U S West Inc ....................................... 6,406,125
-------------
95,406,145
-------------
UTILITIES - ELECTRIC - 3.87%
50,600 American Electric Power Inc ........................ 1,733,050
35,200 Baltimore Gas & Electric Co ........................ 915,200
60,100 Carolina Power & Light Co .......................... 1,795,488
70,100 Central & South West Corp .......................... 1,805,075
41,164 Cinergy Corp ....................................... 1,095,992
71,500 Consolidated Edison Co New York .................... 2,136,063
42,300 Detroit Edison Co .................................. 1,274,288
57,650 Dominion Resources Inc ............................. 2,140,256
61,200 Duke Power Co ...................................... 2,555,100
86,000 Entergy Corp ....................................... 2,128,500
68,400 FPL Group Inc ...................................... 2,684,700
50,900 Houston Industries Inc ............................. 2,195,063
37,500 Niagara Mohawk Power Corp .......................... 553,125
26,000 Northern States Power Co ........................... 1,231,750
35,900 Ohio Edison Co ..................................... 785,313
148,000 Pacific Gas & Electric Co .......................... 4,292,000
83,900 PacifiCorp ......................................... 1,657,025
79,400 Peco Energy Co ..................................... 2,233,125
74,850 Public Service Enterprise Group .................... 2,226,788
163,800 SCE Corp ........................................... 2,846,025
213,600 Southern Co ........................................ 4,725,900
79,800 Texas Utilities Co ................................. 2,882,775
77,700 Unicom Corp ........................................ 2,117,325
28,800 Union Electric Co .................................. 1,090,800
-------------
49,100,726
-------------
UTILITIES - GAS, PIPELINE - 0.58%
13,000 * Columbia Gas System Inc ............................ 390,000
22,600 Consolidated Natural Gas Co ........................ 901,175
89,500 Enron Corp ......................................... 3,266,750
23,700 Nicor Inc .......................................... 631,013
18,300 Oneok Inc .......................................... 347,700
15,000 Pacific Enterprises ................................ 378,750
2,200 Peoples Energy Corp ................................ 58,850
40,100 Williams Cos Inc ................................... 1,363,400
-------------
7,337,638
-------------
UTILITIES - MISCELLANEOUS - 0.08%
32,600 General Public Utilities Corp ...................... 978,000
-------------
TOTAL COMMON STOCKS
(Cost $995,336,622)................................. 1,255,557,680
-------------
PAR MARKET
VALUE VALUE
- ---------- ----------------
CORPORATE SHORT TERM
COMMERCIAL PAPER - 0.62%
CHEMICAL - MAJOR - 0.62%
$7,831,000 Dow Chemical Co,
6.125% due 06/01/95
(Cost $7,831,000) ........................... $ 7,831,000
----------------
UNITED STATES GOVERNMENT -
SHORT TERM - 0.04%
500,000 United States Treasury Bills,
5.735% due 06/22/95
(Cost $498,327) ............................. 498,327
----------------
TOTAL INVESTMENTS
(Cost $1,003,665,949) - 99.68% ................ 1,263,887,007
Other assets and liabilities,
net - 0.32% ................................. 4,105,106
----------------
NET ASSETS (equivalent
to $16.81 per share on
75,451,459 shares
outstanding) - 100% ......................... $ 1,267,992,113
================
* Non-income producing
UNREALIZED
CONTRACTS APPRECIATION
- --------- ------------
FUTURES CONTRACTS PURCHASED (1)
36 (2) (Delivery month/Value at 05/31/95)
S&P 500 Index Futures
(June/$533.35) .................................. $ 153,925
==========
(1) U.S. Treasury Bills with a market value of approximately
$500,000 were maintained in a segregated account with a portion
placed as collateral for futures contracts.
(2) Per 500
- -------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
75,451,459 shares outstanding ............................... $ 754,515
Additional paid in capital .................................... 977,091,642
Undistributed net realized gain on securities ................. 29,641,865
Undistributed net investment income ........................... 129,108
Unrealized appreciation of:
Investments ................................. $ 260,221,058
Futures ..................................... 153,925 260,374,983
-------------- --------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING .................................................. $1,267,992,113
==============
SEE NOTES TO FINANCIAL STATEMENTS.
51
<PAGE>
STOCK INDEX FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................................................................... $ 31,651,326
Interest ...................................................................................................... 495,737
-------------
Total investment income ................................................................................... 32,147,063
-------------
EXPENSES:
Advisory fees ................................................................................................. 3,339,165
Custodian and accounting services ............................................................................. 593,597
Reports to shareholders ....................................................................................... 158,278
Audit fees .................................................................................................... 87,320
Directors' fees and expenses .................................................................................. 47,279
Miscellaneous ................................................................................................. 100,866
-------------
Total expenses ............................................................................................ 4,326,505
-------------
NET INVESTMENT INCOME ......................................................................................... 27,820,558
=============
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES:
Net realized gain on:
Investments ......................................................................... $ 29,316,029
Futures contracts ................................................................... 990,600 30,306,629
-------------
Net unrealized appreciation (depreciation) of securities during the year:
Investments ......................................................................... 154,874,674
Futures contracts ................................................................... (221,975) 154,652,699
------------- -------------
Net realized and unrealized gain on securities during the year .......................................... 184,959,328
=============
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ............................................................. $ 212,779,886
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended May 31:
<TABLE>
<CAPTION>
OPERATIONS: 1995 1994
--------------- ---------------
<S> <C> <C>
Net investment income .................................................................... $ 27,820,558 $ 25,156,154
Net realized gain on securities .......................................................... 30,306,629 1,982,546
Net unrealized appreciation of securities during the year ................................ 154,652,699 4,385,716
--------------- ---------------
Increase in net assets resulting from operations ..................................... 212,779,886 31,524,416
=============== ===============
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .................................................................... (27,954,349 (25,158,972)
Net realized gain on securities .......................................................... (2,497,235) (6,369,631)
--------------- ---------------
Decrease in net assets resulting from distributions to shareholders .................. (30,451,584 (31,528,603)
=============== ===============
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold ......................................................... 100,308,445 153,824,377
Proceeds from capital stock issued for distributions reinvested .......................... 30,451,584 31,528,603
--------------- ---------------
130,760,029 185,352,980
Cost of capital stock repurchased ........................................................ (131,555,447) (50,090,059)
--------------- ---------------
Increase (decrease) in net assets resulting from capital stock transactions .......... (795,418) 135,262,921
=============== ===============
TOTAL INCREASE IN NET ASSETS ............................................................. 181,532,884 135,258,734
NET ASSETS:
Beginning of year ........................................................................ 1,086,459,229 951,200,495
--------------- ---------------
End of year (including undistributed net investment income of $129,108 and $189,502) ..... $ 1,267,992,113 $ 1,086,459,229
=============== ===============
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold ............................................................. 6,656,098 10,547,172
Shares issued for distributions reinvested ............................................... 2,028,815 2,156,127
Shares of capital stock repurchased ...................................................... (8,727,186) (3,433,271)
--------------- ---------------
Increase (decrease) in shares outstanding ............................................ (42,273) 9,270,028
Shares outstanding:
Beginning of year .................................................................... 75,493,732 66,223,704
--------------- ---------------
End of year .......................................................................... 75,451,459 75,493,732
--------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
52
<PAGE>
MIDCAP INDEX FUND MAY 31, 1995 STATEMENT OF NET ASSETS
NUMBER MARKET
OF SHARES VALUE
- --------- -------------
COMMON STOCKS - 98.71%
ADVERTISING - 0.40%
28,482 Omnicom Group ..................................... $ 1,641,275
-------------
AEROSPACE/DEFENSE - 0.91%
18,480 Gencorp Inc ....................................... 237,930
12,971 OEA Inc............................................ 393,994
21,855 * Rohr Industries Inc ............................... 270,456
3,700 * Sequa Corp Class A ................................ 111,000
30,237 Sunstrand Corp .................................... 1,678,154
10,210 Teleflex Inc ...................................... 422,439
18,761 Thiokol Corp ...................................... 588,626
-------------
3,702,599
-------------
AIRLINES - 0.25%
17,921 * Alaska Air Group Inc .............................. 297,937
29,574 Atlantic Southeast Airlines Inc ................... 713,473
-------------
1,011,410
-------------
APPAREL & PRODUCTS - 0.64%
2,753 Angelica Corp ..................................... 70,890
16,300 * Ann Taylor Stores Corp ............................ 340,263
40,953 Cintas Corp ....................................... 1,412,879
10,176 Claire's Stores Inc ............................... 162,816
37,014 CML Group Inc ..................................... 268,352
23,424 * Lands End Inc ..................................... 360,144
-------------
2,615,344
-------------
APPLIANCES/FURNISHINGS - 1.03%
41,359 Heilig Meyers Co .................................. 987,446
29,914 Herman Miller Inc ................................. 646,890
27,501 Lancaster Colony Corp ............................. 996,911
34,788 Leggett & Platt Inc ............................... 1,452,399
2,604 National Presto Industries Inc .................... 113,600
-------------
4,197,246
-------------
AUTO - ORIGINAL EQUIPMENT - 1.32%
16,925 Arvin Industries Inc ............................... 387,159
7,700 Carlisle Co Inc .................................... 298,375
41,442 Danaher Corp ....................................... 1,253,621
16,218 Donaldson Co Inc ................................... 407,477
29,670 Federal Mogul Corp ................................. 534,060
39,670 Mark IV Industries Inc ............................. 798,359
27,228 Modine Manufacturing Co ............................ 1,027,857
23,200 Superior Inds International ........................ 684,400
-------------
5,391,308
-------------
AUTO - OTHER - 0.39%
64,770 Harley Davidson Inc................................. 1,578,769
-------------
AUTO - REPLACEMENT PARTS - 0.11%
16,221 Kaydon Corp......................................... 446,078
-------------
BANKS - OTHER - 0.50%
60,972 State Street Boston Corp ........................... 2,050,184
-------------
BANKS - REGIONAL - 7.97%
28,234 BanCorp Hawaii Inc ................................. 854,079
30,952 Central Fidelity Banks Inc ......................... 858,918
43,055 City National Corp ................................. 478,987
86,903 Comerica Inc ....................................... 2,748,307
29,286 Crestar Financial Corp ............................. 1,347,156
18,718 Dauphin Dep Corp ................................... 467,950
47,600 Fifth Third Bancorp ................................ 2,534,700
52,343 First American Bank Corp ........................... 1,890,891
103,078 First Bank System Inc .............................. 4,329,276
41,441 First Security Corp ................................ 1,061,926
29,201 First Tennessee National Corp ...................... 1,281,194
24,775 First Virginia Banks Inc ........................... 888,803
73,700 Hibernia Corp Class A .............................. 617,238
77,348 Marshall & Ilsley Corp ............................. 1,667,816
29,334 Mercantile Bancorporation Inc ...................... 1,169,693
28,656 Mercantile Bankshares Corp ......................... 680,580
54,996 Meridian Bancorp ................................... 1,759,872
47,653 Northern Trust Corp ................................ 1,846,554
35,209 Regions Financial Corp ............................. 1,249,920
68,687 SouthTrust Corp .................................... 1,468,185
45,103 UJB Financial Corp ................................. 1,330,539
39,836 West One Bancorp ................................... 1,344,465
23,978 Wilmington Trust Corp .............................. 629,423
-------------
32,506,472
-------------
BEVERAGE - SOFT DRINKS - 0.53%
101,903 Coca Cola Enterprises Inc .......................... 2,178,177
-------------
BROADCASTING - 0.87%
13,164 A H Belo Corp ...................................... 826,041
23,819 * Chris Craft Industries Inc ......................... 800,914
34,429 * Multimedia Inc ..................................... 1,316,909
23,216 TCA Cable TV Inc ................................... 592,008
-------------
3,535,872
-------------
BUILDING MATERIALS - 0.87%
12,766 Calmat Co .......................................... 256,916
20,825 Hon Industries Inc ................................. 567,481
52,672 RPM Inc Ohio ....................................... 1,050,148
12,000 * Southdown Inc ...................................... 217,500
26,400 Vulcan Materials Co ................................ 1,442,100
-------------
3,534,145
-------------
CHEMICAL - MAJOR - 0.18%
48,000 Albemarle Corp ..................................... 738,000
-------------
CHEMICAL - MISCELLANEOUS - 3.62%
25,080 Betz Labs Inc ...................................... 1,065,900
34,337 Crompton & Knowles Corp ............................ 622,358
13,268 Dexter Corp ........................................ 313,457
92,000 Ethyl Corp ......................................... 1,069,500
22,547 Ferro Corp ......................................... 620,043
32,633 Georgia Gulf Corp .................................. 991,227
14,064 H B Fuller Co ...................................... 527,400
25,693 Lawter International Inc ........................... 343,644
24,780 Loctite Corp ....................................... 1,235,903
55,619 Lubrizol Corp ...................................... 1,939,713
66,678 Lyondell Petrochemical Co .......................... 1,666,950
32,424 M A Hanna Co ....................................... 802,494
4,355 NCH Corp ........................................... 259,123
53
21,571 Olin Corp .......................................... $ 1,164,834
23,025 Rollins Inc ........................................ 601,528
33,873 Schulman A Inc ..................................... 1,016,190
49,900 * Sterling Chemical Inc .............................. 530,188
-------------
14,770,452
-------------
CONGLOMERATES - 1.09%
36,698 Alexander & Baldwin Inc ............................ 880,752
36,300 * Litton Inds ........................................ 1,397,550
3,400 * Maxxam Inc ......................................... 112,625
17,761 PHH Corp ........................................... 745,962
34,921 Trinity Industries Inc ............................. 1,322,633
-------------
4,459,522
-------------
CONTAINERS - PAPER - 0.73%
15,614 Chesapeake Corp .................................... 444,999
12,761 * Sealed Air Corp .................................... 569,460
78,836 Sonoco Products Co ................................. 1,951,193
-------------
2,965,652
-------------
COSMETICS/TOILETRIES - 0.34%
32,888 Tambrands Inc ...................................... 1,410,073
-------------
DRUGS - 3.31%
27,104 Bergen Brunswig Corp Class A ....................... 623,392
26,776 * Biogen Inc ......................................... 1,111,204
32,346 Carter Wallace Inc ................................. 371,979
45,188 * Centocor Inc ....................................... 612,862
29,970 * Chiron Corp ........................................ 1,550,948
23,488 * Diagnostek Inc ..................................... 411,040
38,441 * Forest Laboratories Inc ............................ 1,696,209
20,271 * Genzyme Corp ....................................... 750,027
2,804 * Genzyme Tissue Repair .............................. 18,226
89,236 Ivax Corp .......................................... 2,308,982
32,000 Mc Kesson Corp ..................................... 1,428,000
62,023 Mylan Labs Inc ..................................... 1,775,408
18,900 * R P Scherer Corp ................................... 843,413
-------------
13,501,690
-------------
ELECTRICAL EQUIPMENT - 3.01%
68,486 * American Power Conversion Corp ..................... 1,249,870
34,331 Ametek Inc ......................................... 592,210
55,898 * Conner Peripherals Inc ............................. 719,687
25,935 Hubbell Inc ........................................ 1,475,053
31,700 * Kohl Corp .......................................... 1,374,988
65,187 Molex Inc .......................................... 2,428,216
46,096 * Quantum Corp ....................................... 991,064
55,615 * Seagate Technology ................................. 1,995,188
27,073 * Teradyne Inc ....................................... 1,465,326
-------------
12,291,602
-------------
ELECTRONIC INSTRUMENTS - 2.35%
40,576 * Arrow Electronics Inc .............................. 1,866,496
29,666 * Exabyte Corp ....................................... 404,199
21,321 * Magnetek Inc ....................................... 322,480
68,979 Sensormatic Electronics Corp ....................... 2,026,258
21,673 * Symbol Technologies Inc ............................ 731,464
59,840 * Thermo Electron Corp ............................... 2,154,222
28,742 Varian Association Inc ............................. 1,505,362
26,173 * Verifone Inc ....................................... 565,991
-------------
9,576,472
-------------
FERTILIZERS - 0.73%
113,395 * Freeport McMoran Inc ............................... 1,956,064
22,973 IMC Global Inc ..................................... 1,033,785
-------------
2,989,849
-------------
FINANCE COMPANIES - 0.55%
51,400 Green Tree Financial Corp .......................... 2,242,325
-------------
FOODS - 2.63%
29,082 Dean Foods Co ...................................... 814,296
47,009 Dole Foods Inc ..................................... 1,386,766
17,118 Dreyers Grand Ice Cream Inc ........................ 543,497
23,091 Flowers Industries Inc ............................. 398,320
37,100 IBP Inc ............................................ 1,391,250
8,212 International Multifoods Corp ...................... 173,479
18,171 J M Smucker Co Class A ............................. 411,119
17,771 Lance Inc .......................................... 315,435
71,278 McCormick & Co Inc ................................. 1,496,838
20,676 Michael Foods Inc .................................. 250,697
121,491 Tyson Foods Inc Class A ............................ 2,718,361
25,229 Universal Foods Corp ............................... 801,021
-------------
10,701,079
-------------
FOOTWEAR - 0.29%
16,216 Edison Brothers Stores Inc ......................... 212,835
27,400 * Nine West Group Inc ................................ 955,575
-------------
1,168,410
-------------
FREIGHT - 0.47%
19,073 Airborne Freight Corp .............................. 360,003
21,560 American President Co Ltd .......................... 522,830
34,000 JB Hunt Transport Services Inc ..................... 595,000
22,871 Overseas Shipholding Group Inc ..................... 434,549
-------------
1,912,382
-------------
GOLD MINING - 0.19%
74,094 Battle Mountain Gold Co ............................ 759,464
-------------
HARDWARE & TOOLS - 0.05%
7,355 Lawson Products Inc ................................ 200,424
-------------
HEALTHCARE - 2.21%
36,353 Cardinal Health Inc ................................ 1,658,606
31,201 * Continental Medical Systems Inc .................... 292,509
25,943 * Coram Healthcare Corp .............................. 466,974
36,076 * FHP International Corp ............................. 793,672
26,886 * Healthcare Compare Corp ............................ 840,188
50,892 * Healthsouth Rehabilitation ......................... 877,887
68,564 * Laboratory Corporation of America .................. 848,480
12,019 * Laboratory Corporation of America
(Warrants) ....................................... 18,028
54
51,891 * Novacare Inc ....................................... $ 389,183
26,200 * Pacificare Health System Inc Class B ............... 1,735,750
33,400 * Value Health Inc ................................... 1,077,150
-------------
8,998,427
-------------
HEAVY DUTY TRUCKS/PARTS - 0.16%
30,204 Federal Signal Corp ................................ 638,060
-------------
HOME BUILDERS - 0.32%
74,476 Clayton Homes Inc .................................. 1,294,021
-------------
HOSPITAL MANAGEMENT - 0.87%
44,500 * Foundation Health Corp ............................. 1,251,563
29,600 * Healthcare and Retirement Corp ..................... 873,200
22,700 * Healthsource Inc ................................... 896,650
26,429 Surgical Care Affiliates Inc ....................... 541,795
-------------
3,563,208
-------------
HOSPITAL SUPPLIES - 1.34%
17,335 * Acuson Corp ........................................ 190,685
14,810 * Advanced Technology Laboratories ................... 238,811
18,633 Beckman Instruments Inc ............................ 517,066
14,366 * Cordis Corp ........................................ 991,254
8,568 * Datascope Corp ..................................... 139,230
22,100 Dentsply International Inc ......................... 795,600
8,009 Diagnostic Products Corp ........................... 323,363
15,968 * Nellcor Inc ........................................ 694,608
41,291 Stryker Corp ....................................... 1,584,542
-------------
5,475,159
-------------
HOUSEHOLD PRODUCTS - 0.31%
10,314 Church & Dwight Inc ................................ 215,305
14,273 First Brands Corp .................................. 588,761
14,164 Stanhome Inc ....................................... 447,937
-------------
1,252,003
-------------
INFORMATION PROCESSING - 8.33%
47,550 Adobe Systems Inc .................................. 2,472,600
29,582 * AST Research Inc ................................... 547,267
84,500 * Bay Networks Inc ................................... 3,084,250
18,476 * BMC Software Inc ................................... 1,187,083
31,421 * Borland International Inc .......................... 392,763
30,746 * Cadence Design Systems Inc ......................... 914,694
25,026 Comdisco Inc ....................................... 750,780
39,500 * Compuware Corp ..................................... 1,175,125
10,173 * Convex Computer Corp ............................... 39,420
30,156 * Dell Computer Corp ................................. 1,519,109
30,523 Diebold Inc ........................................ 1,270,520
152,200 * E M C Corp ......................................... 3,500,600
47,705 First Financial Management Corp .................... 3,387,023
36,364 * Fiserv Inc ......................................... 959,101
20,776 * Information Resources Inc .......................... 283,073
52,200 * Informix Corp ...................................... 2,205,450
27,584 * Legent Corp ........................................ 1,203,352
9,514 Measurex Corp ...................................... 249,743
38,107 * Mentor Graphics Corp ............................... 647,819
44,042 * Parametric Technology Corp ......................... 1,871,785
37,493 Paychex Inc ........................................ 1,106,029
17,418 * Policy Management Systems Corp ..................... 801,228
36,854 Reynolds & Reynolds Co Class A ..................... 1,059,553
36,725 * Sequent Computer Systems Inc ....................... 541,694
43,190 * Storage Technology Corp ............................ 923,186
25,825 * Stratus Computer Inc ............................... 790,891
31,573 * Structural Dynamics Research Corp .................. 436,102
26,812 * Symantec Corp ...................................... 616,676
-------------
33,936,916
-------------
INSURANCE - CASUALTY - 1.03%
43,233 American Premier Group ............................. 1,086,229
53,662 Progressive Corp Ohio .............................. 2,039,156
17,018 Transatlantic Holdings Inc ......................... 1,080,643
-------------
4,206,028
-------------
INSURANCE - LIFE - 0.25%
42,486 Provident Life & Accident Class B .................. 1,030,286
-------------
INSURANCE - MISCELLANEOUS - 0.47%
12,366 Hartford Steam Boiler Inspections .................. 545,650
28,850 Kemper Corp ........................................ 1,359,556
-------------
1,905,206
-------------
INSURANCE - MULTILINE - 1.52%
78,250 AFLAC Inc .......................................... 3,286,500
79,872 Aon Corp ........................................... 2,915,328
-------------
6,201,828
-------------
LEISURE TIME - 1.68%
62,000 Callaway Golf Co ................................... 891,250
66,925 * Circus Circus Enterprise Inc ....................... 2,233,622
98,602 International Game Technology ...................... 1,589,957
71,045 * Mirage Resorts Inc ................................. 2,122,469
-------------
6,837,298
-------------
LODGING - 0.29%
39,000 * Hospitality Franchise Sys Inc ...................... 1,174,875
-------------
MACHINERY - CONSTRUCTION &
CONTRACTS - 0.14%
11,514 Granite Construction Inc ........................... 247,551
14,968 * Jacobs Engineering Group Inc ....................... 327,425
-------------
574,976
-------------
MACHINERY - INDUSTRIAL/
SPECIALTY - 1.89%
29,273 Albany International Corp Class A .................. 651,324
15,018 Duriron Co Inc ..................................... 315,378
21,425 Goulds Pumps Inc ................................... 500,809
29,576 Keystone International Inc ......................... 639,581
12,514 Nordson Corp ....................................... 707,041
32,133 Stewart & Stevenson Services Inc ................... 1,064,406
14,600 Tecumseh Products Co Class A ....................... 680,725
53,892 Tidewater Inc ...................................... 1,347,300
55
27,624 Watts Industry Inc Class A ......................... $ 587,010
28,900 York International Corp ............................ 1,199,350
-------------
7,692,924
-------------
MEDICAL TECHNOLOGY - 0.02%
12,788 * Applied Bioscience International Inc ............... 65,539
-------------
MERCHANDISE - DRUG - 0.44%
66,600 * Perrigo Company .................................... 732,600
50,700 * Revco Drugs Inc .................................... 1,077,375
-------------
1,809,975
-------------
MERCHANDISE - SPECIALTY - 2.67%
31,200 * Best Buy Co Inc .................................... 760,500
3,857 Cross AT Co Class A ................................ 60,748
57,697 Dollar General Corp ................................ 1,637,152
15,523 Duty Free International Inc ........................ 157,170
17,257 * Enterra Corp ....................................... 330,040
41,100 Fingerhut Companies Inc ............................ 565,125
23,771 * Gibson Greetings Inc ............................... 255,538
6,657 Hancock Fabrics Inc ................................ 54,920
68,464 * Home Shopping Network Inc .......................... 479,248
33,027 Intelligent Electronics Inc ........................ 425,223
23,821 * MacFrugals Bargains Close Outs ..................... 357,315
115,437 * Office Depot Inc ................................... 2,770,488
53,711 Sothebys Holdings Inc .............................. 691,529
49,400 * Staples Inc ........................................ 1,395,550
15,368 Tiffany & Co ....................................... 495,618
31,086 * Waban Inc .......................................... 454,633
-------------
10,890,797
-------------
MERCHANDISING - FOOD - 0.50%
29,900 Hannaford Brothers Co .............................. 799,825
12,100 Ruddick Corp ....................................... 251,075
13,668 Savannah Foods & Industries Inc .................... 153,765
39,688 * Vons Cos Inc ....................................... 823,526
-------------
2,028,191
-------------
MERCHANDISING - MASS - 0.19%
40,007 Family Dollar Stores Inc ........................... 475,083
66,024 * Service Merchandise Inc ............................ 313,614
-------------
788,697
-------------
METALS - ALUMINUM - 0.23%
32,567 * Alumax Inc ......................................... 948,514
-------------
METALS - MISCELLANEOUS - 0.43%
17,700 Brush Wellman Inc .................................. 384,975
24,506 Kennametal Inc ..................................... 796,445
19,950 Precision Castparts Corp ........................... 573,563
-------------
1,754,983
-------------
METALS - STEEL - 1.16%
60,152 Allegheny Ludlum Corp .............................. 1,188,002
3,855 Carpenter Technology Corp .......................... 247,684
33,888 CBI Industries Inc ................................. 855,672
12,857 Cleveland Cliffs Inc ............................... 499,816
21,721 Harsco Corp ........................................ 1,105,056
15,516 Lukens Inc ......................................... 523,665
18,323 Oregon Steel Mills Inc ............................. 293,168
-------------
4,713,063
-------------
MISCELLANEOUS - 2.01%
35,000 * Electronic Arts .................................... 901,250
63,700 Equifax Inc ........................................ 1,998,588
22,186 Flightsafety International Inc ..................... 1,039,969
16,800 * Jones Apparel Group Inc ............................ 485,100
33,803 Kelly Services Inc Class A ......................... 980,287
63,700 Manpower Inc ....................................... 1,696,013
36,300 Olsten Corp ........................................ 1,093,538
-------------
8,194,745
-------------
NATURAL GAS - DIVERSIFIED - 0.89%
39,000 El Paso Natural Gas Co ............................. 1,092,000
39,843 Questar Corp ....................................... 1,195,290
31,032 * Seagull Energy Corp ................................ 601,245
34,191 Valero Energy Corp ................................. 726,559
-------------
3,615,094
-------------
OIL - INTEGRATED DOMESTIC - 0.58%
27,073 Diamond Shamrock Inc ............................... 734,355
23,980 Mapco Inc .......................................... 1,411,823
16,614 Quaker State Corp .................................. 226,366
-------------
2,372,544
-------------
OIL - INTEGRATED
INTERNATIONAL - 0.40%
36,846 Murphy Oil Corp .................................... 1,612,013
-------------
OIL - SERVICE - PRODUCTS - 0.11%
68,825 * Parker Drilling Co ................................. 378,538
5,786 * Varco International Inc ............................ 52,074
-------------
430,612
-------------
OIL - SERVICES - 0.91%
19,421 * BJ Services Co ..................................... 495,236
147,215 * Global Marine Inc .................................. 791,281
68,339 * Nabors Industries Inc .............................. 589,424
30,846 * Smith International Inc ............................ 551,372
46,546 Witco Corp ......................................... 1,280,015
-------------
3,707,328
-------------
OIL/GAS PRODUCERS - 1.69%
47,455 Anadarko Petroleum Corp ............................ 2,058,361
52,498 Apache Corp ........................................ 1,522,442
31,640 Cabot Corp ......................................... 1,332,835
11,379 * McMoran Oil & Gas .................................. 42,671
39,235 Noble Affiliates Inc ............................... 1,064,249
23,400 Parker & Parsley Petroleum Co ...................... 456,300
62,766 Ranger Oil Ltd ..................................... 392,288
-------------
6,869,146
-------------
PAPER/FOREST PRODUCTS - 2.16%
33,539 Bowater Inc ........................................ 1,316,406
32,835 Consolidated Papers Inc ............................ 1,699,211
56
36,739 Longview Fibre Co Washington ....................... $ 587,824
28,300 P H Glatfelter Co .................................. 537,700
16,988 Pentair Inc ........................................ 777,201
27,800 Rayonier Inc ....................................... 955,625
16,670 Standard Register Inc .............................. 329,233
19,009 Wausau Paper Mills Co .............................. 406,317
43,653 Willamette Industries Inc .......................... 2,193,563
-------------
8,803,080
-------------
PHOTOGRAPHY - 0.02%
3,753 CPI Corp ........................................... 67,085
-------------
POLLUTION CONTROL - 0.09%
10,016 * Air & Water Technologies Corp
Class A .......................................... 60,096
24,533 Calgon Carbon Corp ................................. 315,862
-------------
375,958
-------------
PUBLISHING - NEWS - 0.91%
13,900 Lee Enterprises Inc ................................ 526,463
17,268 Media General Inc Class A .......................... 556,893
9,861 Washington Post Co Class B ......................... 2,610,700
-------------
3,694,056
-------------
PUBLISHING/PRINTING - 0.62%
21,791 Banta Corp ......................................... 729,999
3,857 Ennis Business Forms Inc ........................... 51,105
13,216 Houghton Mifflin Co ................................ 678,972
26,800 * Topps Inc .......................................... 159,125
18,514 Wallace Computer Services Inc ...................... 671,133
21,325 * Western Publishing Group Inc ....................... 231,909
-------------
2,522,243
-------------
RAILROAD - 0.78%
16,312 GATX Corp .......................................... 691,221
37,818 Illinois Central Corp .............................. 1,337,812
31,432 Kansas City Southern Industries Inc ................ 1,155,126
-------------
3,184,159
-------------
RESTAURANTS - 1.41%
40,133 Bob Evans Farms Inc ................................ 847,810
56,055 * Brinker International Inc .......................... 945,928
29,132 * Buffets Inc ........................................ 404,207
46,866 Cracker Barrel Old Country Stores .................. 1,142,359
12,780 * International Dairy Queen Inc
Class A .......................................... 246,015
31,853 Morrison Restaurants Inc ........................... 684,840
6,300 * NPC International Inc Class A ...................... 40,950
37,600 * Outback Steakhouse Inc ............................. 1,123,300
12,288 Sbarro Inc ......................................... 282,624
7,606 Sizzler International Inc .......................... 43,735
-------------
5,761,768
-------------
SECURITIES RELATED - 3.45%
50,076 A G Edwards Inc .................................... 1,132,970
90,666 Bear Stearns Co Inc ................................ 1,835,996
67,226 Charles Schwab Corp ................................ 2,352,910
61,868 Franklin Resources Inc ............................. 2,706,725
60,121 Morgan Stanley Group Inc ........................... 4,576,711
73,900 Paine Webber Group Inc ............................. 1,459,525
-------------
14,064,837
-------------
SEMICONDUCTORS - 3.78%
16,410 * Altera Corp ........................................ 1,277,929
69,486 * Analog Devices Inc ................................. 2,162,752
35,000 * Atmel Corp ......................................... 1,540,000
31,788 Avnet Inc .......................................... 1,446,354
22,368 * Cirrus Logic Inc ................................... 1,101,624
28,641 * Cypress Semiconductor Corp ......................... 927,252
30,527 Linear Technology Corp ............................. 1,869,779
47,850 * LSI Logic Corp ..................................... 3,217,913
22,027 * Xilinx Inc ......................................... 1,855,775
-------------
15,399,378
-------------
TELECOMMUNICATIONS - 1.95%
43,864 * ADC Telecommunications Inc ......................... 1,359,784
34,942 Comsat Corp ........................................ 681,369
88,000 * Nextel Communications Inc
Class A .......................................... 1,188,000
17,370 * Octel Communications Corp .......................... 406,024
37,840 * Vanguard Cellular System Inc
Class A .......................................... 912,890
130,152 * Worldcom Inc ....................................... 3,383,952
-------------
7,932,019
-------------
TEXTILE - PRODUCTS - 1.03%
45,300 * Burlington Inds Inc ................................ 486,975
108,910 Shaw Industries Inc ................................ 1,728,946
54,921 Unifi Inc .......................................... 1,338,699
26,284 Wellman Inc ........................................ 660,386
-------------
4,215,006
-------------
TOBACCO - 0.18%
31,835 Universal Corp ..................................... 740,164
-------------
TRUCKERS - 0.08%
17,614 Arnold Industries Inc .............................. 308,245
-------------
UTILITIES - COMMUNICATION - 1.65%
39,650 Century Telephone Enterprises Inc .................. 1,164,719
72,746 Frontier Corp ...................................... 1,654,972
18,618 Lincoln Telecommunications Co ...................... 290,906
51,764 Southern New England Telecommunications Corp ....... 1,740,565
49,291 Telephone & Data Systems Inc ....................... 1,860,735
-------------
6,711,897
-------------
UTILITIES - ELECTRIC - 11.28%
53,136 * AES Corp ........................................... 929,880
94,614 Allegheny Power System Inc ......................... 2,353,523
14,968 Atlanta Gas & Light Co ............................. 512,654
43,035 Atlantic Energy Inc N J ............................ 817,665
3,853 Black Hills Corp ................................... 83,321
57
31,000 * California Energy Inc .............................. $ 496,000
7,959 Central Louisiana Electric Co ...................... 190,021
30,416 Central Maine Power Co ............................. 357,388
67,264 CMS Energy Corp .................................... 1,622,744
54,537 Delmarva Power & Light Co .......................... 1,097,557
71,062 Florida Progress Corp .............................. 2,265,101
15,866 Hawaiian Electric Industries Inc ................... 567,210
20,623 Idaho Power Co ..................................... 541,354
59,100 Illinova Corp ...................................... 1,462,725
11,059 Indiana Energy Inc ................................. 217,033
16,418 Iowa Illinois Gas & Electric Co .................... 340,674
33,876 Ipalco Enterprises ................................. 1,109,439
53,219 Kansas City Power & Light Co ....................... 1,257,299
22,971 LG & E Energy Corp ................................. 913,097
16,218 Minnesota Power & Light Co ......................... 445,995
51,557 Montana Power Co ................................... 1,179,366
24,533 Nevada Power Co .................................... 512,126
55,517 New England Electric System ........................ 1,915,337
56,621 New York State Electric & Gas Corp ................. 1,316,438
57,472 Nipsco Industries Inc .............................. 1,982,784
100,933 Northeast Utilities ................................ 2,409,775
38,146 Oklahoma Gas & Electric Co ......................... 1,344,647
63,523 Pinnacle West Capital Corp ......................... 1,461,029
30,891 Portland General Corp .............................. 702,770
114,064 Potomac Electric Power Co .......................... 2,324,054
57,112 Public Service Co of Colorado ...................... 1,870,418
39,337 * Public Service Co of New Mexico .................... 560,552
58,362 Puget Sound Power & Light Co ....................... 1,335,031
87,988 Scana Corp ......................................... 1,957,733
40,248 Southwestern Public Service Co ..................... 1,162,161
81,020 Teco Energy Inc .................................... 1,782,440
32,788 Utilicorp United Inc ............................... 934,458
24,224 Washington Gas Light Co ............................ 469,340
93,652 Wisconsin Energy Corp .............................. 2,692,495
16,616 WPL Holdings Inc ................................... 481,864
-------------
45,975,498
-------------
UTILITIES - GAS, DISTRIBUTION - 0.95%
30,905 Brooklyn Union Gas Co .............................. 780,351
54,968 MCN Corp ................... ....................... 1,030,650
35,578 National Fuel Gas Co N J ... ....................... 1,027,315
28,982 Tosco Corp ................. ....................... 1,028,861
-------------
3,867,177
-------------
TOTAL COMMON STOCKS
(Cost $363,580,013)................................. 402,281,301
-------------
PAR MARKET
VALUE VALUE
- ---------- ------------
CORPORATE SHORT TERM
COMMERCIAL PAPER - 1.14%
CHEMICAL - MAJOR - 0.88%
$3,612,000 Dow Chemical Co, 6.125%
due 06/01/95 ................................... 3,612,000
------------
CONSUMER FINANCE - 0.26%
1,050,000 Commercial Credit Co, 5.88%
due 06/01/95 ................................... 1,050,000
------------
TOTAL CORPORATE SHORT TERM
COMMERCIAL PAPER
(Cost $4,662,000)................................. $ 4,662,000
------------
UNITED STATES GOVERNMENT -
SHORT TERM - 0.07%
United States Treasury Bills:
$ 200,000 5.735% due 06/22/95............................. 199,331
100,000 5.35% due 06/15/95.............................. 99,792
------------
299,123
------------
TOTAL UNITED STATES GOVERNMENT -
SHORT TERM
(Cost $299,123)................................... 299,123
------------
TOTAL INVESTMENTS
(Cost $368,541,136) - 99.92% ..................... 407,242,424
Other assets and liabilities,
net - 0.08% .................................... 314,226
------------
NET ASSETS (equivalent
to $15.68 per share on
25,987,970 shares
outstanding) - 100% ............................ $407,556,650
============
*Non-income producing
UNREALIZED
CONTRACTS APPRECIATION
- --------- ------------
FUTURES CONTRACTS PURCHASED (1)
40 (2) (Delivery month/Value at 05/31/95)
S&P MidCap 400 Index Futures
(June/$190.10) ................................. $ 26,850
============
(1) U.S. Treasury Bills with a market value of
approximately $300,000 were maintained in a
segregated account with a portion placed as
collateral for futures contracts.
(2) Per 500
- -------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
25,987,970 shares outstanding................................ $ 259,880
Additional paid in capital..................................... 351,343,855
Undistributed net realized gain on securities ................. 17,066,190
Undistributed net investment income............................ 158,587
Unrealized appreciation of:
Investments.................................. $ 38,701,288
Futures...................................... 26,850 38,728,138
------------ ------------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING ................................. $407,556,650
============
SEE NOTES TO FINANCIAL STATEMENTS.
58
<PAGE>
MIDCAP INDEX FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ..................................................................................................... $ 7,606,499
Interest ...................................................................................................... 539,581
------------
Total investment income ................................................................................... 8,146,080
------------
EXPENSES:
Advisory fees ................................................................................................. 1,314,837
Custodian and accounting services ............................................................................. 191,536
Reports to shareholders ....................................................................................... 53,054
Audit fees .................................................................................................... 30,987
Registration fees ............................................................................................. 4,971
Directors' fees and expenses .................................................................................. 15,851
Miscellaneous ................................................................................................. 36,901
------------
Total expenses ............................................................................................ 1,648,137
------------
NET INVESTMENT INCOME ......................................................................................... 6,497,943
------------
REALIZED AND UNREALIZED GAIN (LOSS)ON SECURITIES:
Net realized gain on:
Investments ......................................................................... $ 16,709,615
Futures contracts ................................................................... 575,615 17,285,230
------------
Net unrealized appreciation (depreciation) during the year:
Investments ......................................................................... 24,529,913
Futures contracts ................................................................... (88,225) 24,441,688
------------ ------------
Net realized and unrealized gain on securities during the year .......................................... 41,726,918
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .............................................................. $ 48,224,861
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended May 31:
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................................................... $ 6,497,943 $ 4,627,192
Net realized gain on securities ............................................................ 17,285,230 11,562,980
Net unrealized appreciation (depreciation) of securities during the year ................... 24,441,688 (9,757,693)
------------- -------------
Increase in net assets resulting from operations ....................................... 48,224,861 6,432,479
============= =============
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ...................................................................... (6,508,350) (4,590,692)
Net realized gain on securities ............................................................ (11,552,354) (2,344,559)
------------- -------------
Decrease in net assets resulting from distributions to shareholders .................... (18,060,704) (6,935,251)
============= =============
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold ........................................................... 49,716,369 133,701,102
Proceeds from capital stock issued for distributions reinvested ............................ 18,060,704 6,935,251
------------- -------------
67,777,073 140,636,353
Cost of capital stock repurchased .......................................................... (39,425,302) (2,024,198)
------------- -------------
Increase in net assets resulting from capital stock transactions ....................... 28,351,771 138,612,155
============= =============
TOTAL INCREASE IN NET ASSETS ............................................................... 58,515,928 138,109,383
NET ASSETS:
Beginning of year .......................................................................... 349,040,722 210,931,339
------------- -------------
End of year (including undistributed net investment income of $158,587 and $51,973) ........ $ 407,556,650 $ 349,040,722
============= =============
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold ............................................................... 3,399,417 8,998,210
Shares issued for distributions reinvested ................................................. 1,269,279 463,326
Shares of capital stock repurchased ........................................................ (2,681,672) (133,285)
------------- -------------
Increase in shares outstanding ......................................................... 1,987,024 9,328,251
Shares outstanding:
Beginning of year ...................................................................... 24,000,946 14,672,695
------------- -------------
End of year ............................................................................ 25,987,970 24,000,946
------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
59
<PAGE>
SMALL CAP INDEX FUND MAY 31, 1995 STATEMENT OF NET ASSETS
NUMBER MARKET
OF SHARES VALUE
- --------- -------------
COMMON STOCKS - 98.27%
ADVERTISING - 0.62%
4,000 * Acxiom Corp ........................................ $ 78,000
5,025 Advo Inc ........................................... 106,781
1,800 * American Business Information ...................... 41,850
2,600 * Catalina Marketing Corp ............................ 115,375
5,000 * Edisto Resources Corp .............................. 38,750
600 Grey Advertising Inc ............................... 101,100
8,800 True North Communications .......................... 173,800
9,800 * Westwood One Inc ................................... 127,400
-------------
783,056
-------------
AEROSPACE/DEFENSE - 1.16%
2,600 * Alliant Techsystems Inc ............................ 95,225
1,900 * Alpine Group Inc ................................... 10,213
9,100 Aviall Inc ......................................... 76,213
6,200 * BE Aerospace Inc ................................... 51,150
400 Cubic Corp ......................................... 9,300
6,900 Gencorp Inc ........................................ 88,838
13,900 * Geotek Industries Inc .............................. 109,463
1,000 * Nortek Inc ......................................... 9,625
5,800 OEA Inc ............................................ 176,175
5,500 * Orbital Sciences Corp .............................. 97,625
1,900 * Rohr Industries Inc ................................ 23,513
9,800 * SCI Systems Inc .................................... 203,350
3,600 * Sequa Corp Class A ................................. 108,000
600 * Tech Sym Corp ...................................... 15,450
3,700 Teleflex Inc ....................................... 153,088
4,800 Thiokol Corp ....................................... 150,600
3,300 * Trimble Navigation Ltd ............................. 78,375
600 * Whittaker Corp ..................................... 13,275
-------------
1,469,478
-------------
AIRLINES - 0.66%
6,100 * Alaska Air Group Inc ............................... 101,413
12,300 * America West Airlines Inc Class B .................. 118,388
4,450 Comair Holdings Inc ................................ 124,600
6,500 * Continental Airlines Inc Class B ................... 108,875
5,350 Expeditors International of
Washington Inc ................................... 119,038
5,100 Harper Group Inc ................................... 92,438
9,700 * Mesa Airlines Inc .................................. 63,050
1,200 Skywest Inc ........................................ 18,450
7,300 Tower Air Inc ...................................... 52,013
7,000 * UNC Inc ............................................ 35,875
-------------
834,140
-------------
APPAREL & PRODUCTS - 1.31%
1,800 Angelica Corp ...................................... 46,350
3,100 * Ashworth Inc ....................................... 26,350
7,100 * Authentic Fitness Corp ............................. 110,938
2,200 Blair Corp ......................................... 70,950
8,150 Cato Corp .......................................... 65,200
5,800 * Chic by H I S Inc .................................. 62,350
3,700 Claire's Stores Inc ................................ 59,200
3,200 * Cygne Designs Inc .................................. 18,000
2,000 * Damark International Inc Class A ................... 12,750
5,200 * Designs Inc ........................................ 45,500
7,100 * Dress Barn ......................................... 65,675
1,200 Fab Industries ..................................... 38,100
4,000 * Filenes Basement Corp .............................. 16,000
200 Garan Inc .......................................... 3,450
2,550 * Goodys Family Clothing Inc ......................... 24,225
8,200 * Gymboree Corp ...................................... 199,875
2,300 Haggar Corp ........................................ 43,125
2,700 * Hartmarx Corp ...................................... 13,163
400 * Johnson Worldwide Associates Inc ................... 8,600
900 K Swiss Inc Class A ................................ 11,700
5,750 Kellwood Co ........................................ 97,750
2,600 * Mens Wearhouse Inc ................................. 66,300
1,700 * Merry Go Round Enterprises Inc ..................... 1,488
2,600 * Nautica Enterprises Inc ............................ 78,000
2,500 * One Price Clothing Stores Inc ...................... 11,875
6,100 Oshkosh B Gosh Inc Class A ......................... 95,313
3,700 Oxford Industries Inc .............................. 67,525
450 Raven Industries Inc ............................... 9,000
6,700 Ross Stores ........................................ 71,188
2,100 St. John Knits Inc ................................. 81,375
3,000 * Todays Man Inc ..................................... 37,313
13,500 * Tultex Corp ........................................ 74,250
600 Unifirst Corp ...................................... 7,275
2,400 * United Retail Group Inc ............................ 16,800
-------------
1,656,953
-------------
APPLIANCES/FURNISHINGS - 1.08%
2,100 Aaron Rents Inc Class A ............................ 31,238
5,650 Bassett Furniture Industries Inc ................... 152,550
4,200 Crown Crafts Inc ................................... 73,500
1,500 Falcon Products Inc ................................ 18,750
525 Flexsteel Industries Inc ........................... 5,381
11,203 * General Host Corp .................................. 77,021
4,856 * Griffon Corp ....................................... 41,276
5,000 Haverty Furniture Companies Inc .................... 51,875
11,000 Hechinger Co Class A ............................... 83,188
1,450 * Helen of Troy Corp ................................. 28,275
6,800 Herman Miller Inc .................................. 147,050
6,000 Hunt Manufacturing Co .............................. 88,500
2,200 La Z Boy Chair Co .................................. 57,200
4,800 * Lechters Inc ....................................... 70,800
2,800 National Presto Industries Inc ..................... 122,150
2,500 Oneida Ltd ......................................... 37,500
5,000 * Rhodes Inc ......................................... 43,125
4,400 Rival Co ........................................... 70,400
200 * Royal Appliance Manufacturing Co ................... 575
5,200 Sun Television and Appliances Inc .................. 40,625
4,900 Windmere Corp ...................................... 42,263
11,700 * Zenith Electronics Corp ............................ 90,675
-------------
1,373,917
-------------
AUTO - CARS - 0.14%
2,800 * Insurance Auto Auctions Inc ........................ 79,450
6,200 * Roadmaster Industries Inc .......................... 20,150
2,949 Varlen Corp ........................................ 76,674
-------------
176,274
-------------
60
AUTO - ORIGINAL EQUIPMENT - 0.52%
8,200 Allen Group Inc .................................... $ 191,675
3,900 Arvin Inds Inc ..................................... 89,213
2,100 Carlisle Co Inc .................................... 81,375
6,300 Donaldson Co Inc ................................... 158,288
3,500 Excel Industries Inc ............................... 48,125
4,800 Hayes Wheels International Inc ..................... 86,400
-------------
655,076
-------------
AUTO - REPLACEMENT PARTS - 1.14%
3,300 A O Smith Corp ..................................... 77,550
5,100 * APS Holding Corp Class A ........................... 132,600
3,500 * Automotive Industries Holdings Inc
Class A ............................................ 90,125
1,100 * Custom Chrome Inc .................................. 21,863
575 Dart Group Corp Class A ............................ 51,175
1,200 * Discount Auto Parts Inc ............................ 32,250
4,600 Furon Co ........................................... 101,200
2,200 Handy & Harman ..................................... 33,550
4,600 * Hi Lo Automotive Inc ............................... 40,825
800 * Jason Inc .......................................... 7,700
6,700 Kaydon Corp ........................................ 184,250
1,400 * Monro Muffler Brake Inc ............................ 24,850
858 Myers Industries Inc ............................... 13,192
7,950 Simpson Industries Inc ............................. 82,481
6,400 SPX Corp ........................................... 84,000
2,100 Standard Motor Products Inc ........................ 41,475
6,450 Standard Products Co Class A ....................... 139,481
11,200 * TBC Corp ........................................... 124,600
3,300 Walbro Corp ........................................ 66,000
4,050 Wynns International Inc ............................ 93,150
-------------
1,442,317
-------------
BANKS - NEW YORK CITY - 0.10%
6,500 New York Bancorp Inc ............................... 130,000
-------------
BANKS - REGIONAL - 6.92%
4,900 Amcore Financial Inc ............................... 85,750
2,100 Anchor Bancorp Wisconsin Inc ....................... 63,525
3,135 Associated Banc Corp ............................... 117,563
200 Bancfirst Corp ..................................... 2,900
4,300 Bancorpsouth Inc ................................... 164,475
390 Bank of Granite Corp ............................... 10,628
2,100 BSB Bancorp ........................................ 61,950
259 BT Financial Corp .................................. 7,835
3,312 CCB Financial Corp ................................. 136,620
8,500 Centura Banks ...................................... 219,938
4,700 Chemical Financial Corp ............................ 138,650
3,000 Citizens Bancorp Inc Md ............................ 88,875
600 Citizens Banking Corp Mich ......................... 16,500
14,000 City National Corp ................................. 155,750
5,812 CNB Bancshares Inc ................................. 171,454
2,000 Cobancorp Inc ...................................... 41,000
5,549 Collective Bancorp Inc ............................. 123,465
2,700 Colonial BancGroup Inc ............................. 68,175
2,012 Commerce Bancorp Inc N J ........................... 35,713
5,100 * Commercial Fed Corp ................................ 149,175
5,300 Community First Bankshares Inc ..................... 81,488
4,120 Cullen Frost Bankers Inc ........................... 162,740
1,000 * Cyrk Inc ........................................... 8,625
6,600 Deposit Guaranty Corp .............................. 242,550
1,742 F & M National Corp ................................ 27,654
3,524 First American Financial Corp ...................... 76,207
1,350 First Citizens BancShares Inc ...................... 64,800
225 First Commerce BancShares Inc ...................... 3,656
8,156 First Commercial Corp .............................. 204,920
200 First Financial Corp Ind ........................... 5,825
6,900 First Financial Corp Wis ........................... 113,850
7,857 First Michigan Bank Corp ........................... 192,500
3,900 First Midwest Bancorp Inc .......................... 94,575
6,300 First National Bancorp of Gainesville .............. 129,150
315 First Western Bancorp Inc .......................... 8,820
337 Firstbank of Illinois Co ........................... 9,015
4,350 Firstfed Michigan Corp ............................. 126,150
2,100 Firstier Financial Inc ............................. 72,450
7,500 FirstMerit Corp .................................... 180,000
3,087 Fort Wayne National Corp ........................... 87,208
9,350 Fulton Financial Corp .............................. 170,638
1,600 GBC Bancorp California ............................. 19,200
4,500 Great Financial Corp ............................... 78,188
315 Harleysville National Corp PA ...................... 7,875
6,300 Hawkeye Bancorporation ............................. 137,813
1,900 Heritage Financial Services Inc .................... 33,725
5,925 Hubco Inc .......................................... 101,466
4,741 * Imperial Bancorp ................................... 90,079
3,900 Jefferson Bankshares Inc ........................... 81,900
1,500 Leader Financial Corp .............................. 40,500
2,400 Liberty Bancorp Inc ................................ 79,800
9,600 Magna Group Inc .................................... 198,000
4,400 Mark Twain Bancshares .............................. 137,500
4,726 Mid America Inc .................................... 67,936
1,825 National Bancorp of Alaska Inc ..................... 91,250
6,287 National Commerce Bancorporation ................... 158,747
3,380 National Penn Bancshares Inc ....................... 92,105
6,100 North Fork Bancorporation Inc ...................... 108,275
3,012 North Side Savings Bank ............................ 70,782
3,860 Onbancorp Inc ...................................... 102,773
6,574 One Valley Bancorp of West Virginia ................ 200,507
210 Peoples First Corp ................................. 3,780
600 Pikeville National Corp ............................ 12,150
12,300 * Premier Bancorp Inc ................................ 212,175
2,775 Provident Bancorp Inc .............................. 92,963
9,800 * Riggs National Corp Washington DC .................. 91,875
2,625 River Forest Bancorp ............................... 100,406
7,818 Roosevelt Financial Group .......................... 134,861
3,900 SF Fed Corp ........................................ 78,488
315 Shoreline Financial Corp ........................... 5,552
5,300 St Paul Bancorp Inc ................................ 117,263
10,725 Summit Bancorp ..................................... 221,203
875 Susquehanna Bancshares Inc ......................... 20,344
3,508 TCF Financial Corp ................................. 163,122
8,200 The Trust Company of New Jersey .................... 103,525
2,000 Trans Financial Bancorp Inc ........................ 29,500
61
2,860 Trustcompany Bancorporation ........................ $ 57,915
9,650 Trustmark Corp ..................................... 167,669
2,090 UMB Financial Corp ................................. 65,835
10,124 Union Planters Corp ................................ 268,286
2,225 United Carolina Bancshares ......................... 67,863
75 United Counties Bancorporation ..................... 11,288
3,300 US Trust Corp ...................................... 228,938
8,000 * UST Corp ........................................... 100,000
1,400 Victoria Bankshares Inc ............................ 35,700
4,100 Westamercia Bankshares Inc ......................... 145,550
661 Westcorp Inc ....................................... 8,593
6,200 Whitney Holding Corp ............................... 159,650
5,200 Zions Bancorporation ............................... 235,300
-------------
8,760,977
-------------
BEVERAGE - SOFT DRINKS - 0.07%
2,800 Coca Cola Co ....................................... 89,950
-------------
BROADCASTING - 1.22%
3,100 * Adelphia Communications Corp
Class A .......................................... 31,000
5,100 * American Mobile Satellite Corp ..................... 119,850
5,800 * American Telecasting Inc ........................... 81,200
4,800 * Antec Corp ......................................... 99,600
7,200 * Citicasters Inc .................................... 169,200
3,400 * Clear Channel Communications Inc ................... 191,675
3,100 * Cyrix Corp ......................................... 79,825
17,300 * DMX Inc ............................................ 36,763
3,300 * Heritage Media Corp Class A ........................ 91,575
2,800 * International Family Entertainment
Class B .......................................... 45,850
400 * N T N Communications Inc ........................... 1,950
2,900 * Peoples Choice TV Corp ............................. 70,144
4,400 * Renaissance Communication Corp ..................... 148,500
6,500 TCA Cable TV Inc ................................... 165,750
7,300 * United International Holdings Inc
Class A .......................................... 113,150
100 United Television Inc .............................. 6,638
6,500 * Westcott Communications Inc ........................ 97,500
-------------
1,550,170
-------------
BUILDING MATERIALS - 1.05%
3,100 * ABT Bldg Prods Corp ................................ 51,925
800 Ameron Inc ......................................... 27,800
100 Apogee Enterprises Inc ............................. 1,706
1,600 Butler Manufacturing Co ............................ 64,800
5,300 CalMat Co .......................................... 106,663
2,600 * Centex Construction
Productions Inc .................................. 33,150
2,100 * Elcor Corp ......................................... 40,688
10,400 Fastenal Co ........................................ 296,244
4,750 * Fedders Corp Class A ............................... 27,313
9,500 * Fedders USA Inc .................................... 64,125
2,100 Florida Rock Industries Inc ........................ 60,113
5,000 Interface Inc Class A .............................. 70,000
3,600 Lone Star Industries Inc ........................... 75,600
4,200 Medusa Corp ........................................ 100,800
13,800 * Payless Cashways Inc ............................... 100,050
1,000 Puerto Rican Cement Co Inc ......................... 30,625
3,500 * Southdown Inc ...................................... 63,438
6,800 * Triangle Pac Corp .................................. 109,650
600 Wolohan Lumber Co .................................. 8,175
-------------
1,332,865
-------------
CHEMICAL - MAJOR - 0.14%
3,800 Chemed Corp ........................................ 128,725
1,800 * Synetic Inc ........................................ 43,200
-------------
171,925
-------------
CHEMICAL - MISCELLANEOUS - 1.68%
2,800 * American Pacific Corp .............................. 14,350
3,600 * Cytec Inds Inc ..................................... 132,750
4,200 Dexter Corp ........................................ 99,225
5,900 Fisher Scientific International Inc ................ 192,488
7,500 * Foamex International Inc ........................... 56,250
6,100 Grow Group Co ...................................... 134,200
5,300 H B Fuller Co ...................................... 198,750
10,700 Lawter International Inc ........................... 143,113
2,500 * Learning Co ........................................ 74,688
500 Learonal Inc ....................................... 10,063
2,000 Lesco Inc .......................................... 33,500
4,700 * McWhorter Technologies Inc ......................... 71,675
4,900 Minerals Technologies Inc .......................... 161,700
7,000 * Mycogen Corp ....................................... 58,625
1,400 NCH Corp ........................................... 83,300
7,300 * NL Industries Inc .................................. 114,063
2,600 O'Sullivan Corp .................................... 29,575
7,500 * O'Sullivan Industries .............................. 59,063
375 Penwest Ltd ........................................ 8,156
925 Petrolite Corp ..................................... 26,998
1,700 Quaker Chemical .................................... 27,200
11,500 * Sterling Chemicals Inc ............................. 122,188
1,500 * Sybron Chems Inc ................................... 22,125
10,800 Terra Industries Inc ............................... 108,000
375 Tuscarora Inc ...................................... 7,313
600 Univar Corp ........................................ 7,200
2,450 VWR Corp ........................................... 28,788
2,000 WD 40 Co ........................................... 86,000
250 W H Brady Co Class A ............................... 15,688
-------------
2,127,034
-------------
COAL - 0.30%
1,900 * Addington Resources Inc ............................ 24,700
1,800 Ashland Coal Inc ................................... 48,150
3,600 Eastern Enterprises ................................ 108,000
2,200 NACCO Industries Inc Class A ....................... 132,000
850 Penn Virginia Corp ................................. 27,200
3,500 Pittston Minerals Group ............................ 38,500
-------------
378,550
-------------
62
CONGLOMERATES - 0.20%
500 * Maxxam Inc ......................................... $ 16,563
2,300 * PEC Israel Economic Group .......................... 55,775
4,200 PHH Corp ........................................... 176,400
-------------
248,738
-------------
CONSUMER FINANCE - 0.31%
6,100 * Americredit Corp ................................... 54,138
2,500 * Autofinance Group Inc .............................. 39,063
3,700 Eaton Vance Corp ................................... 122,100
1,120 * Fleet Financial .................................... 5,740
6,100 SEI Corp ........................................... 117,425
1,600 * World Acceptance Corp .............................. 48,800
-------------
387,266
-------------
CONTAINERS - METAL/GLASS - 0.44%
2,200 * Alltrista Corp ..................................... 47,850
5,800 Aptargroup Inc ..................................... 176,900
2,800 Clarcor Inc ........................................ 57,400
600 * CSS Industries Inc ................................. 9,600
4,400 Greif Brothers Corp Class A ........................ 106,150
425 Liqui Box Corp ..................................... 13,494
9,900 * Omega Environmental Inc ............................ 37,125
5,700 * U S Can Corp ....................................... 112,575
-------------
561,094
-------------
CONTAINERS - PAPER - 0.57%
5,800 Chesapeake Corp .................................... 165,300
12,600 * Gaylord Container Corp Class A ..................... 118,125
6,800 Rock Tenn Co Class A ............................... 105,400
6,300 * Sealed Air Corp .................................... 281,138
3,600 * Shorewood Packaging Corp ........................... 56,700
-------------
726,663
-------------
COSMETICS/TOILETRIES - 0.41%
3,700 Alberto Culver Co Class B .......................... 119,325
3,300 Helene Curtis Industries Inc ....................... 108,900
3,600 * Inbrand Corp ....................................... 56,250
4,900 * Jean Phillippe Fragrances Inc ...................... 49,000
5,921 Maybelline Inc ..................................... 119,160
9,100 * Playtex Products Inc ............................... 70,525
-------------
523,160
-------------
DRUGS - 2.23%
3,500 A L Pharma Inc Class A ............................. 64,750
3,600 * Agouron Pharmaceuticals Inc ........................ 74,700
9,100 * Alliance Pharmaceuticals Corp ...................... 60,288
2,700 * Alpha Beta Technology Inc .......................... 16,875
1,900 * Amylin Pharmaceuticals Inc ......................... 14,250
1,000 * Aphton Corp ........................................ 9,750
5,400 * Athena Neurosciences Inc ........................... 41,850
10,930 Bergen Brunswig Corp Class A ....................... 251,390
5,300 Bindley Western Inds Inc ........................... 82,150
1,400 Biocraft Laboratories Inc .......................... 25,900
1,500 * Cellpro Inc ........................................ 15,375
14,000 * Centocor Inc ....................................... 189,875
4,100 * Cephalon Inc ....................................... 40,231
4,300 * Circa Pharmaceuticals Inc .......................... 127,388
2,800 * Columbia Laboratories Inc .......................... 19,250
2,698 * Copley Pharmaceuticals Inc ......................... 44,517
3,200 * Cygnus Therapeutic Systems ......................... 26,000
8,400 * Cytrx Corp ......................................... 15,225
5,800 * Diagnostek Inc ..................................... 101,500
3,400 * Genetic Therapy Inc ................................ 40,375
7,100 * Gensia Inc ......................................... 21,300
2,000 * Genta Inc .......................................... 5,250
5,000 * Gilead Sciences Inc ................................ 81,250
6,993 ICN Pharmaceuticals Inc ............................ 118,873
5,900 * ICOS Corp .......................................... 30,238
5,500 * Idexx Laboratories ................................. 247,500
3,400 * Immulogic Pharmaceutical Corp ...................... 25,394
2,200 * Immune Response Corp ............................... 6,875
6,200 * Immunex Corp ....................................... 80,600
4,100 * Interneuron Pharmaceuticals Corp ................... 33,313
4,500 Life Technologies Inc .............................. 92,250
3,458 * Ligand Pharmaceuticals Inc ......................... 20,316
4,200 * Marsam Pharmaceuticals Inc ......................... 80,325
1,600 * Medco Research Inc ................................. 21,400
2,420 Natures Sunshine Products Inc ...................... 34,183
2,700 * NBTY Inc ........................................... 15,863
5,500 * Noven Pharmaceuticals Inc .......................... 46,750
2,200 * Pharmaceutical Research Inc ........................ 23,100
3,400 * Procyte Corp ....................................... 7,650
3,800 * Pure Pac ........................................... 37,050
7,000 * Regeneron Pharmaceuticals Inc ...................... 42,875
2,700 * Roberts Pharmaceutical Corp ........................ 52,313
6,300 * Sepracor Inc ....................................... 75,600
7,300 * Shaman Pharmaceuticals Inc ......................... 25,550
4,100 * Somatogen Inc ...................................... 48,688
5,400 * Syncor International Corp .......................... 48,600
5,700 * Systemed Inc ....................................... 39,900
800 * Systemix Inc ....................................... 11,000
2,900 * Vertex Pharmaceuticals Inc ......................... 45,675
3,700 * Watson Pharmaceuticals Inc ......................... 135,975
-------------
2,817,295
-------------
ELECTRICAL EQUIPMENT - 2.14%
3,400 * American Superconductor Corp ....................... 51,850
7,200 Ametek Inc ......................................... 124,200
3,400 * Applied Innovation Inc ............................. 138,550
2,900 * Audiovox Corp Class A .............................. 15,406
4,150 * Banctec Inc ........................................ 63,806
8,100 Belden Inc ......................................... 191,363
3,650 * C Cor Electronics .................................. 92,163
4,200 * C Cube Microsystems Inc ............................ 107,100
4,800 * Cable Design Technologies Corp ..................... 94,800
4,500 * California Microwave Inc ........................... 141,750
6,500 * Cerplex Group Inc .................................. 50,375
400 * Cherry Corp Class B ................................ 5,700
2,800 * Digital Microwave Corp ............................. 34,650
750 * Electro Rent Corp .................................. 16,500
3,500 * Encore Wire Corp ................................... 49,000
2,378 * Executive Telecard Ltd ............................. 8,918
63
2,300 * Exide Electronics Group ............................ $ 40,825
4,000 * Holophone Corp ..................................... 83,000
600 * Hutchinson Technology Inc .......................... 20,025
2,700 * Integrated Circuit Systems Inc ..................... 34,088
3,050 Joslyn Manufacturing Co ............................ 79,300
5,100 Juno Lighting Inc .................................. 89,888
5,100 * Kemet Corp ......................................... 244,800
750 * Kent Electronics Corp .............................. 23,063
3,800 * Kopin Corp ......................................... 39,900
500 Kuhlman Corp ....................................... 6,063
2,800 * Lamson & Sessions Co ............................... 16,450
9,100 * Microchip Technology Inc ........................... 270,725
7,600 * Micropolis Corp .................................... 45,125
3,500 * Netframe Systems Inc ............................... 18,594
3,100 * Smith Corona Corp .................................. 4,650
11,000 * Spectrum Information ............................... 1,719
5,200 Standex International Corp ......................... 158,600
900 Thomas Industries Inc .............................. 14,513
4,600 * Vicor Corp ......................................... 181,700
5,100 Woodhead Industries ................................ 72,356
3,800 X Rite Inc ......................................... 72,200
-------------
2,703,715
-------------
ELECTRONIC INSTRUMENTS - 3.89%
1,550 Analogic Corp ...................................... 27,319
8,600 * Applied Magnetics Corp ............................. 49,450
5,900 Augat Inc .......................................... 120,950
1,949 * Bell Industries .................................... 37,271
5,300 * Cognex Corp ........................................ 176,225
5,000 Core Industries Inc ................................ 51,875
1,400 CTS Corp ........................................... 45,150
700 Daniel Industries Inc .............................. 10,763
2,600 * Dial Page Inc ...................................... 35,100
2,000 * Dionex Corp ........................................ 84,000
7,000 * Dynatech Corp ...................................... 126,000
4,000 * Evans & Sutherland Computer Co ..................... 54,000
4,600 * Exabyte Corp ....................................... 62,675
3,700 * Exar Corp .......................................... 98,050
203 * Ferrofluidics Corp ................................. 1,573
2,200 Fluke Corp ......................................... 92,125
3,700 * Gentex Corp ........................................ 67,525
7,800 Gerber Scientific Inc .............................. 126,750
3,000 Harman International Industries Inc ................ 108,375
9,600 * Interdigital Comm Corp ............................. 63,000
15,600 * Intergraph Corp .................................... 210,600
6,650 * Lattice Semiconductor Corp ......................... 206,981
9,700 * Lo Jack Corp ....................................... 88,513
6,100 * Magnetek Inc ....................................... 92,263
3,400 * Marshall Industries ................................ 91,800
6,300 Methode Electronics Inc Class A .................... 124,425
2,800 Moorco International Inc ........................... 64,050
2,500 Nashua Corp ........................................ 48,125
6,300 National Computer Systems Inc ...................... 119,700
2,400 Park Electrochemical Corp .......................... 83,400
3,000 * Performance Food Group Co .......................... 57,000
6,225 Pioneer Standard Electronic Inc .................... 142,397
11,300 * Read Rite Corp ..................................... 254,956
7,300 * Recognition International Inc ...................... 62,963
4,800 * Standard Microsystems Corp ......................... 83,400
7,500 * Symbol Technologies Inc ............................ 253,125
6,200 Telxon Corp ........................................ 110,050
3,500 * Tencor Instruments ................................. 235,375
3,300 Texas Industries Inc ............................... 124,163
1,500 * Three-Five Systems Inc ............................. 44,250
6,200 * 3Do Co ............................................. 71,300
5,400 * Verifone Inc ....................................... 116,775
3,100 Watkins Johnson Co ................................. 138,725
11,300 * Western Digital Corp ............................... 199,163
4,200 Wyle Laboratories .................................. 110,250
8,200 Zero Corp .......................................... 113,775
6,050 * Zilog Inc .......................................... 232,169
-------------
4,917,869
-------------
ENTERTAINMENT - 0.96%
5,600 American Classic Voyager Co ........................ 51,100
4,400 * Argosy Gaming Corp ................................. 57,750
6,900 * Autotote Corp Class A .............................. 26,738
15,800 * Aztar Corp ......................................... 148,125
2,200 * BET Holdings Inc Class A ........................... 37,950
1,000 * Boomtown Inc ....................................... 11,125
1,100 * Carmike Cinemas Inc ................................ 26,263
6,900 * Discovery Zone Inc ................................. 63,825
2,800 * GC Cos Inc ......................................... 94,500
6,700 * Grand Casinos Inc .................................. 213,563
2,100 * Hollywood Entertainment Corp ....................... 75,075
5,900 * Image Entertainment Inc ............................ 42,775
7,800 * Lady Luck Gaming Corp .............................. 14,625
6,700 * Musicland Stores Corp .............................. 65,325
2,100 * Recoton Corp ....................................... 34,388
3,000 * Sodak Gaming Inc ................................... 41,250
6,100 * Spelling Entertainment Group Inc ................... 67,100
4,500 * Sports & Recreation Inc ............................ 51,750
6,400 * Starsight Telecast Inc ............................. 33,600
8,200 * Tyco Toys Inc ...................................... 55,350
-------------
1,212,177
-------------
FERTILIZERS - 0.49%
4,200 Delta & Pine Land Co ............................... 105,525
10,600 * Ecogen Inc ......................................... 21,863
5,600 First Mississippi Corp ............................. 129,500
2,200 * Great American Management &
Investment Inc ................................... 73,700
7,100 * Indresco Inc ....................................... 96,738
4,800 Vigoro Corp ........................................ 187,200
-------------
614,526
-------------
FINANCE COMPANIES - 0.63%
3,200 * Credit Acceptance Corp ............................. 65,600
6,600 FINOVA Group Inc ................................... 243,375
6,100 Foothill Group Inc Class A ......................... 150,975
1,980 * Imperial Credit Industries Inc ..................... 22,523
8,600 Keystone Financial Inc ............................. 240,800
64
9,700 * Lomas Financial Corp ............................... $ 13,338
900 Money Store Inc .................................... 27,788
2,000 PMC Capital Inc .................................... 23,000
5,500 * Search Cap Group Inc ............................... 9,625
-------------
797,024
-------------
FOODS - 1.16%
2,000 * Ben & Jerrys Homemade Inc .......................... 28,000
350 Bridgford Foods Corp ............................... 4,288
5,300 Dreyers Grand Ice Cream Inc ........................ 168,275
11,800 Flowers Inds Inc ................................... 203,550
5,850 Hudson Foods Inc Class A ........................... 80,438
7,500 International Multifoods Corp ...................... 158,438
8,600 Interstate Bakeries Corp ........................... 125,775
6,300 J M Smucker Co Class A ............................. 142,538
5,200 Lance Inc .......................................... 92,300
6,600 Michaels Foods Inc ................................. 80,025
6,700 * Morningstar Group Inc .............................. 49,413
8,000 * Ralcorp Holdings Inc ............................... 176,000
2,250 Thorn Apple Valley inc ............................. 46,406
1,545 Tootsie Roll Inds Inc .............................. 100,039
1,300 * Wholesome & Hearty Foods Inc ....................... 15,925
-------------
1,471,410
-------------
FOOTWEAR - 0.42%
6,300 Brown Group Inc .................................... 137,813
3,366 * Converse Inc ....................................... 22,721
4,600 Edison Brothers Stores Inc ......................... 60,375
1,683 * Florsheim Shoe Co .................................. 8,205
4,400 J Baker Inc ........................................ 57,750
6,200 Justin Industries Inc .............................. 62,775
10,700 * LA Gear Inc ........................................ 32,100
2,000 * Timberland Co Class A .............................. 44,500
4,950 Wolverine World Wide Inc ........................... 100,856
-------------
527,095
-------------
FREIGHT - 0.60%
5,000 Air Express International Corp ..................... 112,500
7,800 American President Co Ltd .......................... 189,150
800 * Fritz Companies Inc ................................ 42,200
1,800 * Greyhound Lines Inc ................................ 6,075
4,700 * Hornbeck Offshore Services ......................... 72,850
400 International Shipholding Corp ..................... 8,100
5,500 * Interpool Inc ...................................... 79,063
5,050 Intertrans Corp .................................... 97,844
6,000 * Kirby Corp ......................................... 84,000
8,300 * OMI Corp ........................................... 44,613
800 * Seacor Holdings Inc ................................ 18,700
-------------
755,095
-------------
GOLD MINING - 0.32%
19,800 * Amax Gold Inc ...................................... 106,425
6,600 Coeur D'Alene Mines Corp ........................... 128,700
1,600 * Firstmiss Gold Inc ................................. 22,600
2,600 FMC Gold Co ........................................ 10,400
65,500 * Sunshine Mining Co ................................. 139,188
-------------
407,313
-------------
HARDWARE & TOOLS - 0.13%
2,100 Brenco Inc ......................................... 26,775
2,500 * Forschner Group Inc ................................ 25,000
4,000 Lawson Products Inc ................................ 109,000
-------------
160,775
-------------
HEALTHCARE - 3.41%
4,136 * Abbey Healthcare Group Inc ......................... 148,379
11,700 * Advanced Tissue Sciences Inc ....................... 73,125
2,200 * American Medical Response .......................... 54,725
3,200 * Arbor Health Care Co ............................... 60,800
3,038 * Benson Eyecare Corp ................................ 31,140
2,100 Block Drug Inc Class A ............................. 75,075
4,100 Collagen Corp ...................................... 70,725
6,500 * Continental Medical Systems Inc .................... 60,938
5,100 * Cytogen Corp ....................................... 18,806
4,200 * Employee Benefit Plans Inc ......................... 56,175
4,160 FHP International Corp ............................. 95,420
4,300 * Genesis Health Ventures Inc ........................ 127,388
4,300 * Grancare Inc ....................................... 68,263
4,500 * Healthcare Services Group Inc ...................... 51,750
6,900 * Hillhaven Corp ..................................... 197,513
4,000 * Homedco Group Inc .................................. 208,000
6,700 * Horizon Healthcare Corp ............................ 122,275
4,700 Integrated Health Services Inc ..................... 156,863
4,700 Invacare Corp ...................................... 189,175
1,200 Kinetic Concepts Inc ............................... 8,400
5,300 * Lincare Holdings Inc ............................... 141,113
4,100 * Living Centers of America Inc ...................... 127,100
7,200 * Mariner Health Group Inc ........................... 104,400
4,500 * Maxicare Health Plans Inc .......................... 69,188
2,600 Mentor Corp ........................................ 59,231
3,500 * Multicare Cos Inc .................................. 65,188
3,100 Omnicare Inc ....................................... 147,250
4,150 * Pacific Physician Services Inc ..................... 68,994
4,850 * Patterson Dental Co ................................ 109,125
5,900 * Phycor Inc ......................................... 177,738
1,800 * Physicians Health Care Ltd Class A ................. 56,813
5,000 * Quantum Health Resources Inc ....................... 96,250
4,300 * Regency Health Services Inc ........................ 47,300
100 * Renal Treatment Centers Inc ........................ 2,163
800 * Respironics Inc .................................... 10,400
1,700 * Response Technologies Inc .......................... 3,931
2,800 * Rotech Medical Corp ................................ 76,300
3,500 * Rural/Metro Corp ................................... 61,250
2,800 * Sierra Health Services Inc ......................... 75,250
5,000 * Spacelabs Inc ...................................... 120,000
3,000 * Steris Corp ........................................ 127,500
2,000 * Summit Care Corp ................................... 38,500
5,488 * Sun Healthcare Group Inc ........................... 91,238
3,400 * Sunrise Medical Inc ................................ 113,900
3,850 * Technol Medical Products Inc ....................... 72,669
5,000 * Universal Health Services Inc
Class B .......................................... 138,125
4,900 * Visx Inc ........................................... 61,250
2,300 Vital Signs Inc .................................... 35,938
4,950 * Vivra Inc .......................................... 139,838
-------------
4,312,877
-------------
65
HEAVY DUTY TRUCKS/PARTS - 0.22%
800 Cascade Corp ....................................... $ 13,500
2,800 * Detroit Diesel Corp ................................ 61,600
1,700 Osh Kosh Truck Corp Class B ........................ 20,825
550 * Raymond Corp ....................................... 11,550
4,450 * Spartan Motor Inc .................................. 40,050
4,450 Wabash National Corp ............................... 134,613
-------------
282,138
-------------
HOME BUILDERS - 0.71%
3,100 Continental Homes Holdings Corp .................... 47,275
5,230 * D R Horton Inc ..................................... 60,143
4,050 * Hovnanian Enterprises Inc Class A .................. 24,047
350 * Hovnanian Enterprises Inc Class B .................. 2,078
4,900 Pulte Corp ......................................... 134,138
4,000 * Redman Industries .................................. 80,000
4,200 Ryland Group Inc ................................... 66,675
3,600 * Schuler Homes Inc .................................. 41,400
10,200 Standard Pacific Corp .............................. 71,400
7,300 * Toll Bros Inc ...................................... 114,063
5,170 * US Home Corp ....................................... 113,094
6,400 Webb Del Corp ...................................... 139,200
-------------
893,513
-------------
HOSPITAL MANAGEMENT - 1.38%
2,300 * Advantage Health Corp .............................. 64,400
6,500 * Charter Medical Corp ............................... 111,313
4,050 * Community Health Systems Inc ....................... 142,763
9,700 * Community Psychiatrics Centers ..................... 120,038
6,900 * Coventry Corp ...................................... 142,313
3,600 * Health Management Association ...................... 62,550
3,900 * Health Management Systems Inc ...................... 102,863
2,900 * Healthwise America Inc ............................. 84,825
4,100 * Medaphis Corp ...................................... 247,025
19,500 * Primedex Health System Inc ......................... 12,188
6,300 Shared Medical Systems ............................. 210,263
6,900 Surgical Care Affiliates Inc ....................... 141,450
13,300 * Unilab Corp ........................................ 66,500
7,428 * Vencor Inc ......................................... 234,911
-------------
1,743,402
-------------
HOSPITAL SUPPLIES - 1.56%
9,400 * Acuson Corp ........................................ 103,400
1,400 * Advanced Technology Labs Inc ....................... 22,575
1,400 Arrow International Inc ............................ 54,075
10,800 Ballard Medical Products ........................... 125,550
10,200 * Bio Technology General Corp ........................ 40,163
4,600 * Coherent Inc ....................................... 112,700
2,500 * Datascope Inc ...................................... 40,625
4,500 Diagnostic Products Corp ........................... 181,688
3,600 * Gulf South Medical Supply Inc ...................... 74,700
7,300 * Healthdyne Inc ..................................... 34,675
4,750 * Healthdyne Technologies Inc ........................ 51,658
700 * Immunomedics Inc ................................... 1,750
5,100 * Isis Pharmaceuticals Inc ........................... 58,650
600 Landauer Inc ....................................... 10,875
1,600 * Maxxim Medical Inc ................................. 22,200
5,700 * Nellcor Inc ........................................ 247,950
4,200 * Oncor Inc .......................................... 18,638
10,950 Owens & Minor Inc .................................. 142,350
3,700 * Perseptive Biosystems Inc .......................... 30,525
2,700 * Pharmaceutical Marketing Services .................. 21,938
4,800 Puritan Bennett Corp ............................... 175,800
7,600 * Ribi Immunochem Research Inc ....................... 34,200
1,800 * Sullivan Dental Products Inc ....................... 22,050
4,300 * Summitt Technology Inc ............................. 133,300
2,200 * Target Therapeutics Inc ............................ 80,850
1,800 * Techne Corp ........................................ 24,300
3,800 West Co Inc ........................................ 106,875
-------------
1,974,060
-------------
HOUSEHOLD PRODUCTS - 0.71%
4,500 Armor All Products Corp ............................ 84,375
1,800 * Duracraft .......................................... 56,475
3,000 Ekco Group Inc ..................................... 18,000
1,125 Fays Inc ........................................... 8,156
6,600 * First Alert Inc .................................... 94,050
4,400 Libbey Inc ......................................... 84,700
2,912 Midwest Grain Products Inc ......................... 53,144
4,225 Oil Dri Corp of America ............................ 65,488
2,700 Pittway Corp Class A ............................... 120,825
3,250 Rykoff Sexton Inc .................................. 58,906
7,600 Stanhome Inc ....................................... 240,350
800 * Syratech Corp ...................................... 13,900
-------------
898,369
-------------
INFORMATION PROCESSING - 8.39%
7,733 Adac Laboratories .................................. 78,297
3,400 * Alantec Corp ....................................... 113,900
7,400 * America Online Inc ................................. 263,625
8,725 * American Management
Systems Inc ...................................... 196,313
10,000 * American Software Inc Class A ...................... 38,750
7,000 * Anacomp Inc ........................................ 5,688
2,400 Analysts International Corp ........................ 64,200
3,300 * Artisoft Inc ....................................... 28,875
7,100 * AST Research Inc ................................... 131,350
1,900 * Atria Software Inc ................................. 83,125
8,100 * Auspex Systems Inc ................................. 75,938
5,200 * Banyan Systems Inc ................................. 85,800
5,800 * Bisys Group Inc .................................... 110,200
7,300 * Black Box Corp ..................................... 113,150
5,300 * Bolt Beranek & Newman Inc .......................... 88,775
3,100 * Boole & Babbage Inc ................................ 94,938
10,900 * Borland International Inc .......................... 136,250
6,900 * Boston Technology Inc .............................. 112,988
4,100 * Broderbund Software Inc ............................ 184,500
400 * Business Records Corporation
Holding Co ....................................... 14,000
10,600 * Cadence Design Systems Inc ......................... 315,350
2,000 * Cerner Corp ........................................ 114,000
1,400 * Clinicom Inc ....................................... 23,450
800 * CompUSA Inc ........................................ 21,000
66
7,000 * Computer Network Technology Corp ................... $ 70,875
6,300 * Computer Vision .................................... 35,438
7,700 * Comverse Technology Inc ............................ 115,019
9,075 * Concord EFS Inc .................................... 188,306
6,700 * Continuum Co Inc ................................... 207,700
7,300 * Control Data Systems Inc ........................... 74,825
8,300 * Copytele Inc ....................................... 56,025
8,200 * Cray Research Inc .................................. 187,575
13,000 * Data General Corp .................................. 104,000
4,000 * Dialogic Corp ...................................... 99,000
3,800 * DSP Group Inc ...................................... 78,850
7,100 * Egghead Inc ........................................ 72,775
3,600 * Electronic For Imaging Inc ......................... 165,150
4,800 * Envoy Corp ......................................... 105,600
3,000 * FileNet Corp ....................................... 94,875
4,500 * Frame Technology Corp .............................. 110,250
3,600 * FTP Software Inc ................................... 76,950
4,800 * General Datacommunications
Industries Inc ................................... 48,600
2,950 Gilbert Associates Inc Class A ..................... 37,613
3,200 * Gupta Corp ......................................... 29,600
1,800 Henry Jack & Associates Inc ........................ 20,250
6,100 * Hogan Systems Inc .................................. 51,088
1,400 * Hyperion Software Corp ............................. 51,975
8,100 * IMO Industries Inc ................................. 64,800
3,800 * In Focus Systems Inc ............................... 92,150
4,100 * Input Output Inc ................................... 139,400
6,100 * Interleaf Inc ...................................... 37,363
6,000 * Intersolv Inc ...................................... 98,250
3,100 * Intuit Inc ......................................... 196,075
5,400 * Keane Inc .......................................... 130,275
6,200 * Komag Inc .......................................... 240,250
3,900 * Landmark Graphics Corp ............................. 92,138
3,100 Logicon Inc ........................................ 118,963
2,200 MacNeal-Schwendler Corp ............................ 30,250
3,100 * Macromedia Inc ..................................... 107,725
3,000 * Mapinfo Corp ....................................... 105,750
4,400 * Marcam Corp ........................................ 69,575
18,300 * MaxTor Corp ........................................ 100,650
3,400 Measurex Corp ...................................... 89,250
200 * Medic Computer Systems Inc ......................... 7,650
16,500 * Mentor Graphics Corp ............................... 280,500
5,600 * Merisel Inc ........................................ 35,700
4,999 * Micom Communications ............................... 30,619
300 * Micros Systems Inc ................................. 8,888
1,550 MTS Systems Corp ................................... 41,850
6,750 National Data Corp ................................. 140,063
8,000 * Netmanage Inc ...................................... 112,000
3,600 * Network General Corp ............................... 86,400
1,500 * Norand Corp ........................................ 49,500
1,707 * Paxar Corp ......................................... 27,952
3,100 * People Soft Inc .................................... 153,450
4,800 * Platinum Tecnology Inc ............................. 79,200
5,500 * Primark Corp ....................................... 89,375
2,000 * Progress Software Corp ............................. 100,500
10,100 * Pyxis Corp ......................................... 243,663
8,300 * Racoktec Inc ....................................... 46,688
5,200 * Retix .............................................. 19,500
3,500 * S3 Inc ............................................. 94,938
800 * Safeguard Scientifics Inc .......................... 27,200
8,400 * Sequent Computer Systems Inc ....................... 123,900
5,200 * Sierra On Line Inc ................................. 94,250
8,800 * Stac Electronics ................................... 52,800
6,900 * Stratacom Inc ...................................... 263,925
5,200 * Structural Dynamics Research Corp .................. 71,825
5,200 * SunGard Data Systems ............................... 259,350
11,300 * Symantec Corp ...................................... 259,900
5,000 * Synopsys Inc ....................................... 271,250
4,500 * Syquest Technology Inc ............................. 49,500
4,900 System Software Assoc Inc .......................... 118,213
5,000 * Systems & Computer
Technology Corp .................................. 98,750
11,100 * Tech Data Corp ..................................... 113,775
5,100 Tseng Laboratories Inc ............................. 34,425
4,251 * U S Robotics Inc ................................... 354,959
6,600 * Viewlogic Systems Inc .............................. 67,650
1,700 * Vmark Software Inc ................................. 26,775
10,400 * Wang Laboratories Inc .............................. 135,200
3,700 * Wonderware Corp .................................... 118,400
3,300 * Xircom Inc ......................................... 35,063
2,200 * Zebra Technologies Corp Class A .................... 99,000
-------------
10,614,211
-------------
INSURANCE - CASUALTY - 1.18%
500 Avemco Corp ........................................ 8,563
900 Baldwin & Lyons Inc Class B ........................ 14,175
4,000 * Capsure Holdings Corp .............................. 56,000
7,400 Citizens Corp ...................................... 126,725
8,800 Commerce Group Inc Mass ............................ 157,300
4,600 E W Blanch Holdings Inc ............................ 83,950
3,969 Frontier Insurance Group Inc ....................... 98,729
1,403 Gainsco Inc ........................................ 14,205
600 * HCC Insurance Inc .................................. 14,400
5,800 * Home Holdings Inc .................................. 58,725
3,600 Midland Financial Group Inc ........................ 63,000
5,500 Nac Re Corp ........................................ 161,563
5,400 National Re Corp ................................... 166,050
750 * Navigators Group Inc ............................... 9,750
200 Nymagic Inc ........................................ 3,275
2,481 Orion Capital Corp ................................. 96,139
19,200 Reliance Group Holdings Inc ........................ 122,400
400 Scor U S Corp ...................................... 3,600
3,200 Selective Insurance Group Inc ...................... 93,600
700 * Transnational Re Corp .............................. 13,825
2,800 Trenwick Group Inc ................................. 121,800
337 United Fire & Casualty Co .......................... 9,183
-------------
1,496,957
-------------
INSURANCE - LIFE - 0.89%
4,400 American Bankers Insurance
Group Inc .......................................... 129,800
67
450 American Heritage Life
Investment Corp .................................... $ 8,719
3,500 CCP Insurance Inc .................................. 78,750
3,050 Independent Insurance Group Inc .................... 37,744
300 Kansas City Life Insurance Co ...................... 14,100
7,100 * Life USA Holdings Inc .............................. 69,225
500 * National Western Life Insurance Co ................. 20,375
1,800 Presidential Life Corp ............................. 13,050
3,275 Protective Life Corp ............................... 162,522
3,200 Reinsurance Group of America Inc ................... 82,000
435 Seafield Capital Corp .............................. 16,204
3,800 Security Conn Corp ................................. 89,775
2,835 United Companies Financial Corp .................... 125,449
1,600 * United Insurance Cos Inc ........................... 84,400
5,400 W R Berkley Corp ................................... 198,450
-------------
1,130,563
-------------
INSURANCE - MISCELLANEOUS - 1.43%
5,500 Acordia Inc ........................................ 168,438
3,550 Allied Group Inc ................................... 100,731
3,000 Capital Guaranty Corp .............................. 52,875
1,100 Capital RE Corp .................................... 27,088
4,800 CMAC Investment Corp ............................... 199,200
3,900 Emphesys Financial Group Inc ....................... 98,475
5,300 Executive Risk Inc ................................. 92,750
3,750 Fidelity National Inc .............................. 48,750
3,600 Foremost Corp of America ........................... 144,900
5,775 Fremont General Corp ............................... 145,819
4,800 Gallagher Arthur J & Co ............................ 167,400
1,300 Guaranty National Corp ............................. 22,100
600 Harleysville Group Inc ............................. 14,513
2,250 Hilb Rogal & Hamilton Co ........................... 28,125
4,800 Integon Corp ....................................... 82,200
4,050 Lawyers Title Corp ................................. 57,713
5,100 Liberty Corp ....................................... 131,963
200 Midland Co ......................................... 9,475
2,023 * Mutual Assurance Inc ............................... 54,115
525 Poe & Brown Inc .................................... 12,600
3,300 Stewart Information Services Corp .................. 61,050
4,100 Zenith National Insurance Corp ..................... 88,150
-------------
1,808,430
-------------
INSURANCE - MULTILINE - 0.56%
1,650 Alfa Corp .......................................... 18,563
6,378 American Annuity Group Inc ......................... 62,983
700 * American Travelers Group ........................... 12,600
6,600 Amvestors Financial Corp ........................... 71,775
2,800 * Delphi Financial Group Inc ......................... 47,600
3,700 Home Beneficial Corp Class A ....................... 74,925
6,100 Life Re Corp ....................................... 103,700
250 * Markel Corp ........................................ 13,813
8,800 Penncorp Financial Group Inc ....................... 162,800
1,700 * REN Corp - USA ..................................... 23,375
15,100 * Southwestern Life Corp ............................. 10,381
1,100 United Wisconsin Services Inc ...................... 23,100
4,000 Washington National Corp ........................... 79,000
-------------
704,615
-------------
LEISURE TIME - 1.15%
6,800 * Acclaim Entertainment Inc .......................... 116,025
6,700 * Aldila Inc ......................................... 36,431
9,000 * Bally Entertainment Group .......................... 93,375
3,900 * Bally Gaming International Inc ..................... 34,613
1,500 * Casino America Inc ................................. 22,688
12,900 Handleman Co ....................................... 149,963
4,900 * Hollywood Park Inc ................................. 66,150
6,700 Huffy Corp ......................................... 94,638
5,182 Jackpot Enterprises Inc ............................ 44,695
7,900 Outboard Marine Corp ............................... 158,988
9,600 * Player International Inc ........................... 201,600
3,700 Quixote Corp ....................................... 45,788
5,500 * Rio Hotel & Casino Inc ............................. 79,063
7,400 * Scotts Co .......................................... 160,950
2,900 Showboat Inc ....................................... 48,575
5,500 * SLM International Inc .............................. 5,156
245 * Swing N Slide Corp ................................. 1,041
3,000 * Video Lottery Technologies Inc ..................... 23,625
1,900 Winnebago Industries Inc ........................... 17,813
3,300 * WMS Industries Inc ................................. 61,050
-------------
1,462,227
-------------
LODGING - 0.05%
2,262 Marcus Corp ........................................ 64,750
-------------
MACHINE TOOLS - 0.20%
5,600 Greenfield Industries Inc .......................... 162,400
2,700 Roper Industries ................................... 87,075
-------------
249,475
-------------
MACHINERY - AGRICULTURE - 0.16%
14,100 * DNA Plant Technology Corp .......................... 29,081
1,200 * Lindsay Manufacturing Co ........................... 37,800
4,800 Toro Co ............................................ 132,600
-------------
199,481
-------------
MACHINERY - CONSTRUCTION &
CONTRACTS - 1.12%
2,900 * Astec Industries Inc ............................... 33,350
1,800 Blount Inc Class A ................................. 68,175
4,600 * CDI Corp ........................................... 102,925
1,000 CRSS Inc ........................................... 14,500
2,000 Granite Construction Inc ........................... 43,000
10,965 Harnischfeger Industries Inc ....................... 381,034
2,300 Instituform Midamerica Inc ......................... 32,488
4,000 * Instituform Technologies Inc
Class A ............................................ 52,000
3,900 * J Ray McDermott .................................... 102,375
5,700 * Jacobs Engineering Group Inc ....................... 124,688
9,900 Kaman Corp Class A ................................. 121,275
2,400 * Kasler Corp ........................................ 13,800
6,200 Lennar Corp ........................................ 120,900
1,300 MDC Holdings Inc ................................... 7,963
9,000 * Morrison Knudsen Corp .............................. 49,500
2,700 Stone & Webster Inc ................................ 83,025
3,900 TJ International Inc ............................... 66,300
-------------
1,417,298
-------------
68
MACHINERY - INDUSTRIAL/SPECIALTY - 2.64%
5,800 AAR Corp ........................................... $ 88,450
9,600 Albany International Corp Class A .................. 213,600
4,100 * Amsco International Inc ............................ 51,250
525 Applied Power Inc Class A .......................... 13,519
4,320 Baldor Electric Co ................................. 123,120
3,900 Bearings Inc ....................................... 108,225
9,000 BWIP Holdings Inc .................................. 162,000
3,800 * Dovatron International Inc ......................... 85,500
5,050 Duriron Co Inc ..................................... 106,050
4,900 Exide Corp ......................................... 176,400
475 General Binding Corp ............................... 8,313
450 Gorman Rupp Co ..................................... 6,919
5,800 Goulds Pumps Inc ................................... 135,575
600 Graco Inc .......................................... 15,975
400 Helix Technology Corp .............................. 15,200
2,400 Hughes Supply Inc .................................. 47,100
7,200 Idex Corp .......................................... 244,800
4,100 * Insilco Corp ....................................... 118,388
3,300 * International Imaging Materials .................... 79,200
5,200 * Ionics Inc ......................................... 143,000
2,300 Katy Industries .................................... 20,413
12,400 * Kenetech Corp ...................................... 130,200
3,400 * Kulicke & Soffa Industries Inc ..................... 144,500
9,450 Lilly Industries Inc ............................... 106,313
850 Lufkin Industries Inc .............................. 16,363
4,100 Manitowoc Co Inc ................................... 108,138
3,840 * Oak Industries Inc ................................. 106,560
600 * Osmonics Inc ....................................... 10,575
3,500 * Park Ohio Industries Inc ........................... 40,250
2,500 * Presstek Inc ....................................... 145,000
7,000 Regal Beloit Corp .................................. 107,625
350 Robbins & Myers Inc ................................ 9,275
2,125 Roto Rooter Inc .................................... 56,313
800 Scotsman Industries Inc ............................ 15,700
5,100 * Silicon Valley Group Inc ........................... 159,375
6,800 * Specialty Equipment Cos Inc ........................ 80,325
2,700 * SPS Technologies Inc ............................... 91,125
500 Tennant Co ......................................... 13,500
2,900 * Thermo Power Corp .................................. 39,150
-------------
3,343,284
-------------
MEDICAL TECHNOLOGY - 0.82%
11,500 * Applied Bioscience
International Inc .................................. 58,938
10,600 * Calgene Inc ........................................ 63,600
2,200 Dekalb Genetics Corp Class B ....................... 82,500
4,600 * Epitope Inc ........................................ 67,850
800 * Focal Surgery Inc .................................. 150
4,000 * Haemonetics Corp ................................... 72,000
1,300 * Heart Technology Inc ............................... 25,756
4,300 * I Stat Corp ........................................ 85,463
8,800 * Igen Inc ........................................... 42,900
1,000 * Isomedix Inc ....................................... 14,500
8,100 * Liposome Co Inc .................................... 77,963
4,700 * Liposome Technology Inc ............................ 35,250
800 * MGI Pharmaceuticals Inc ............................ 3,450
1,202 * Molecular Biosystems Inc ........................... 7,663
4,400 * Organogenesis Inc .................................. 55,000
2,700 * Protein Design Labs Inc ............................ 63,450
5,900 * Sciclone Pharmaceuticals Inc ....................... 37,613
7,724 * Scios Nova Inc ..................................... 27,517
400 * Sofamor/Danek Group Inc ............................ 8,400
400 * Thermo Cadiosystems Inc ............................ 15,150
1,400 * Thermotrex Corp .................................... 32,200
9,500 * US Bioscience Inc .................................. 24,344
6,700 * Ventritex .......................................... 96,313
3,500 * Zoll Medical Corp .................................. 40,250
-------------
1,038,220
-------------
MERCHANDISE - DRUG - 0.68%
7,650 Arbor Drugs Inc .................................... 128,138
6,000 Big B Inc .......................................... 82,500
7,800 * Eckerd Jack Corp ................................... 252,525
5,300 * Express Scripts Inc ................................ 165,625
7,939 * Foxmeyer Corp ...................................... 143,894
770 Genovese Drug Store Inc Class A .................... 8,181
1,700 Medicine Shoppe International Inc .................. 57,375
2,700 * Medimmune Inc ...................................... 23,625
-------------
861,863
-------------
MERCHANDISE - SPECIALTY - 2.72%
4,100 * American Rec Co Holdings Inc ....................... 30,750
578 Anthony Industries Inc ............................. 9,537
10,518 Arctco Inc ......................................... 145,280
10,700 * Aura Systems Inc ................................... 57,513
3,800 * Avid Technology Inc ................................ 139,650
1,400 * Bell Sports Corp ................................... 16,975
2,550 * BMC West Corp ...................................... 36,975
11,000 * Bombay Inc ......................................... 83,875
5,200 * Books A Million Inc ................................ 72,800
1,600 * Bush Boake Allen Inc ............................... 45,400
9,300 Caseys General Stores Inc .......................... 158,100
8,200 Cash America Investments Inc ....................... 63,550
2,700 * Chicos Fas Inc ..................................... 14,513
3,200 * Cobra Golf Inc ..................................... 86,400
11,600 * Consolidated Stores Corp ........................... 217,500
6,500 Cross AT Co Class A ................................ 102,375
300 * Crown Books Corp ................................... 4,200
7,800 * Eagle Hardware and Garden .......................... 56,550
4,800 * EMPI Inc ........................................... 68,400
5,600 * Enterra Corp ....................................... 107,100
2,100 * Ezcorp Inc ......................................... 13,650
2,200 * Fossil Inc ......................................... 37,400
4,800 * Friedmans Inc ...................................... 87,000
4,100 * Gibson Greetings Inc ............................... 44,075
10,100 Hancock Fabrics Inc ................................ 83,325
4,000 * Inacom Corp ........................................ 42,000
10,700 * Intreco Inc ........................................ 65,538
6,600 * Jenny Craig Inc .................................... 49,500
500 Labone Inc ......................................... 7,000
7,700 * MacFrugals Bargains Close Outs ..................... 115,500
2,400 * Mail Boxes Etc ..................................... 21,600
1,500 * Microage Inc ....................................... 17,438
3,600 * Rex Stores Corp .................................... 50,400
69
5,200 Russ Berrie & Co ................................... $ 74,750
1,600 * Safety 1st Inc ..................................... 30,000
3,200 * Seitel Inc ......................................... 90,400
1,300 * Sportmart Inc ...................................... 11,213
4,691 * Sterling Software Inc .............................. 158,908
3,500 Sturm Ruger & Co Inc ............................... 101,938
4,300 * Sunglass Hut International Inc ..................... 134,375
800 * Tandycrafts Inc .................................... 6,400
5,000 Tiffany & Co ....................................... 161,250
3,700 * Tractor Supply Co .................................. 73,075
193 United Stationers Inc .............................. 3,426
4,100 Unitog Co .......................................... 85,075
7,400 * Waban Inc .......................................... 108,225
5,100 * Williams Sonoma Inc ................................ 93,713
13,400 * Zale Corp .......................................... 154,938
-------------
3,439,555
-------------
MERCHANDISING - DEPARTMENT - 0.44%
200 * Alexanders Inc ..................................... 11,525
1,300 * Bon Ton Stores Inc ................................. 13,488
5,400 * Bradlees Inc ....................................... 26,325
10,316 * Broadway Stores Inc ................................ 55,449
17 * Broadway Stores Inc (Warrants) ..................... 8
2,400 * Ero Inc ............................................ 18,600
7,700 Neiman Marcus Group Inc ............................ 103,950
10,815 Pier 1 Imports Inc ................................. 86,520
3,800 * Proffitts Inc ...................................... 93,575
4,150 * Stein Mart Inc ..................................... 48,763
412 Strawbridge & Clothier ............................. 7,931
3,700 Venture Stores Inc ................................. 37,000
2,700 * Younkers Inc ....................................... 49,613
-------------
552,747
-------------
MERCHANDISING - FOOD - 1.02%
16,800 Brunos Inc ......................................... 194,250
3,400 Delchamps Inc ...................................... 64,600
75 Farmer Brothers Inc ................................ 9,150
2,200 * IHOP Corp .......................................... 50,600
1,800 Ingles Markets Inc ................................. 16,875
2,000 * J & J Snack Foods Corp ............................. 24,250
4,575 Nash Finch Co ...................................... 73,772
1,800 * Penn Traffic Co .................................... 59,400
1,234 * Quality Food Centers Inc ........................... 24,372
6,800 Richfood Holdings Inc .............................. 147,900
1,900 Ruddick Corp ....................................... 39,425
3,300 Sanderson Farms Inc ................................ 35,475
4,900 Savannah Foods & Industries Inc .................... 55,125
3,000 * Showbiz Pizza Time Inc ............................. 33,375
5,500 Smart & Final Inc .................................. 90,750
4,700 * Smithfield Foods Inc ............................... 98,700
3,500 Smith's Food & Drug Centers Inc .................... 67,813
1,900 Super Food Services Inc ............................ 20,188
900 * Super Rite Foods Corp .............................. 14,400
6,500 * Whole Foods Market Inc ............................. 93,438
5,437 WLR Foods Inc ...................................... 76,118
-------------
1,289,976
-------------
MERCHANDISING - MASS - 0.26%
4,900 * Caldor Corp ........................................ 91,875
2,700 Freds Inc .......................................... 27,675
5,400 * Good Guys Inc ...................................... 57,038
3,170 * Hills Store Co ..................................... 75,288
6,700 Shopko Stores Inc .................................. 72,025
-------------
323,901
-------------
METALS - ALUMINUM - 0.23%
2,600 * ACX Technologies Inc ............................... 108,550
4,700 IMCO Recycling Inc ................................. 85,188
5,200 * Kaiser Aluminum Corp ............................... 60,450
1,371 Tredagar Industries Inc ............................ 32,733
-------------
286,921
-------------
METALS - COPPER - 0.02%
800 * Wolverine Tube Inc ................................. 25,800
-------------
METALS - MISCELLANEOUS - 0.84%
750 A M Castle & Co .................................... 11,344
7,200 Brush Wellman Inc .................................. 156,600
6,133 Commercial Metals Inc .............................. 167,891
2,800 * Dravo Corp ......................................... 37,100
16,900 * Hecla Mining Co .................................... 181,675
3,800 * Jan Bell Marketing Inc ............................. 9,975
7,800 Kennametal Inc ..................................... 253,500
6,650 * Material Sciences Corp ............................. 131,338
3,900 Precision Castparts Corp ........................... 112,125
-------------
1,061,548
-------------
METALS - STEEL - 1.60%
5,000 * Acme Metals Inc .................................... 82,500
5,300 * AK Steel Holdings Corp ............................. 144,425
5,000 Amcast Industrial Corp ............................. 98,750
31,300 * Armco Inc .......................................... 199,538
3,000 Carpenter Technology Corp .......................... 192,750
800 Chaparral Steel Co ................................. 7,600
4,700 Cleveland Cliffs Inc ............................... 182,713
1,350 Commercial Intertech Corp .......................... 24,300
1,500 * Envirosource Inc ................................... 6,000
5,100 * Geneva Steel Co Class A ............................ 51,638
2,500 Huntco Inc ......................................... 48,125
10,000 * Intermet Corp ...................................... 85,000
2,600 Lukens Inc ......................................... 87,750
2,600 * Mueller Industries Inc ............................. 118,950
300 * New Jersey Steel Corp .............................. 3,525
10,000 * Northwestern Steel & Wire Co ....................... 70,000
700 * NS Group Inc ....................................... 2,888
7,500 Oregon Steel Mills Inc ............................. 120,000
5,300 Quanex Corp ........................................ 126,538
1,850 Steel Technologies Inc ............................. 22,200
13,300 UNR Industries Inc ................................. 87,281
4,500 Valmont Industries Inc ............................. 87,750
7,800 * Weirton Steel Corp ................................. 56,550
4,400 * WHX Corp ........................................... 47,850
6,800 * Wyman Gordon Co .................................... 72,250
-------------
2,026,871
-------------
70
MISCELLANEOUS - 1.09%
6,400 Amcol International Corp ........................... $ 90,000
6,600 Barefoot Inc ....................................... 81,263
8,200 * Borg-Warner Security Corp .......................... 61,500
3,000 * Career Horizons Inc ................................ 60,000
1,700 * Coastal Physician Group Inc ........................ 26,563
4,700 * Corrections Corp of America ........................ 164,500
3,400 * DeVRY Inc .......................................... 132,600
1,700 * Education Alternatives Inc ......................... 19,338
8,200 * Figgie International Holdings Inc
Class A .......................................... 66,113
7,900 Ideon Group Inc .................................... 77,025
3,400 * Kinder Care Learning Centers Inc ................... 45,050
1,092 LADD Furniture Inc ................................. 14,947
3,100 * National Education Corp ............................ 12,013
3,000 * Pinkertons Inc ..................................... 46,500
8,300 * Rexel Inc .......................................... 69,513
4,300 * Robert Half International Inc ...................... 92,450
7,900 Stewart Enterprises Inc ............................ 237,000
2,000 * Supercuts Inc ...................................... 15,375
3,800 * Sylvan Learning Systems Inc ........................ 69,350
-------------
1,381,100
-------------
MOBILE HOMES - 0.28%
4,200 * Champion Enterprises Inc ........................... 70,350
2,300 Coachmen Industries Inc ............................ 31,625
400 McGrath Rentcorp ................................... 6,600
5,450 Oakwood Homes Corp ................................. 136,931
4,900 Skyline Corp ....................................... 89,425
750 Thor Industries .................................... 14,906
-------------
349,837
-------------
NATURAL GAS - DIVERSIFIED - 0.83%
3,150 Atmos Energy Corp .................................. 60,638
1,000 Bay State Gas Co ................................... 24,500
300 Cascade Natural Gas Corp ........................... 4,463
9,504 K N Energy Inc ..................................... 247,104
1,500 Laclede Gas Co ..................................... 28,313
5,400 New Jersey Resources Corp .......................... 122,850
500 Providence Energy Corp ............................. 8,125
787 * Southern Union Co .................................. 14,953
10,400 Southwest Gas Corp ................................. 148,200
2,650 * Tejas Gas Corp ..................................... 141,444
4,700 United Cities Gas Co ............................... 72,850
6,400 Wicor Inc .......................................... 180,000
-------------
1,053,440
-------------
OIL - INTEGRATED DOMESTIC - 0.29%
4,600 * Crown Central Petroleum Corp ....................... 77,050
1,900 Giant Industries Inc ............................... 16,150
2,500 * Hondo Oil & Gas Co ................................. 33,750
2,600 * National Vision Associates ......................... 11,050
12,100 Quaker State Corp .................................. 164,863
5,600 * Tesoro Petroleum Corp .............................. 60,900
-------------
363,763
-------------
OIL - SERVICE - PRODUCTS - 0.41%
4,275 * Energy Ventures Inc ................................ 78,019
500 * Getty Petroleum Corp ............................... 5,750
3,100 * Global Industries Inc .............................. 75,950
7,100 * Kelley Oil & Gas Corp .............................. 39,050
2,700 * Lone Star Technologies Inc ......................... 20,925
12,100 * Parker Drilling Co ................................. 66,550
4,163 * Varco International Inc ............................ 37,467
17,500 * Weatherford International Inc ...................... 196,875
-------------
520,586
-------------
OIL - SERVICES - 1.22%
6,400 * BJ Services Co ..................................... 163,200
880 * BJ Services Co (Warrants) .......................... 4,840
54,300 * Global Marine Inc .................................. 291,863
18,600 * Marine Drilling Co Inc ............................. 76,725
23,800 * Nabors Industries Inc .............................. 205,275
21,600 * Noble Drilling Corp ................................ 159,300
6,900 * Oceaneering International Inc ...................... 67,275
4,900 * Offshore Logistics Inc ............................. 70,438
3,575 Pennsylvania Enterprises Inc ....................... 113,506
3,600 * Pool Energy Services Co ............................ 29,700
3,200 Production Operators Corp .......................... 96,800
13,300 * Smith International Inc ............................ 237,738
5,400 * Tuboscope Vetco International Corp ................. 32,400
-------------
1,549,060
-------------
OIL/GAS PRODUCERS - 1.88%
3,300 * American Exploration Co ............................ 3,094
3,856 Apache Corp ........................................ 111,824
160 * Aztec Energy Corp Utah ............................. 10
4,800 * Barrett Resources Corp ............................. 102,000
9,800 * Benton Oil & Gas Co ................................ 128,625
3,400 Berry Petroleum Co ................................. 36,550
7,800 * Box Energy Corp .................................... 70,200
8,900 Cabot Oil & Gas Corp Class A ....................... 140,175
11,200 * Coda Energy Inc .................................... 75,600
6,300 Devon Energy Corp .................................. 135,450
12,000 * Forest Oil Corp .................................... 24,000
3,000 * Gerrity Oil & Gas Corp ............................. 12,375
4,800 * Global Natural Resources Inc ....................... 52,800
3,100 * H S Res Inc ........................................ 45,725
6,900 Helmerich & Payne Inc .............................. 206,138
500 Holly Corp ......................................... 12,250
4,200 * Hugoton Energy Corp ................................ 35,700
4,200 KCS Energy Inc ..................................... 77,700
21,500 * Mesa Inc ........................................... 112,875
2,400 * Nuevo Energy Co .................................... 51,300
1,200 Phoenix Resource Companies Inc ..................... 38,550
4,600 Plains Petroleum Co ................................ 123,625
18,500 * Rowan Cos Inc ...................................... 138,750
8,400 Snyder Oil Corp .................................... 120,750
2,400 St Mary Land & Exploration Co ...................... 30,600
4,500 * Stone Energy Corp .................................. 64,125
4,900 * Texas Meridian Resources Corp ...................... 49,613
4,200 * Tide West Oil Inc .................................. 45,150
6,700 * Tom Brown Inc ...................................... 97,988
71
6,200 USX Delhi Group .................................... $ 76,725
1,600 Vintage Petroleum Inc .............................. 31,600
11,200 * Wainoco Oil Corp ................................... 47,600
2,400 Wiser Oil Co ....................................... 33,000
500 * XCL Ltd ............................................ 344
12,380 * Zapata Corp ........................................ 41,783
-------------
2,374,594
-------------
PAPER/FOREST PRODUCTS - 0.59%
8,000 Caraustar Industries Inc ........................... 158,000
1,320 Mosinee Paper Corp ................................. 33,000
5,050 Pentair Inc ........................................ 231,038
3,300 Ply Gem Industries ................................. 52,388
5,500 Pope & Talbot Inc .................................. 88,000
4,000 Republic Gypsum Co ................................. 40,000
3,200 Sealright Co Inc ................................... 56,800
4,300 Standard Register .................................. 84,925
-------------
744,151
-------------
PHOTOGRAPHY - 0.18%
6,900 * Actava Group Inc ................................... 73,313
3,400 American Studios Inc ............................... 8,500
5,700 CPI Corp ........................................... 101,888
1,950 * Photronics Inc ..................................... 46,313
-------------
230,014
-------------
POLLUTION CONTROL - 0.86%
700 * Air & Water Tech Corp .............................. 4,200
5,700 * Allwaste Inc ....................................... 32,063
2,000 * Chambers Development Co Inc Class A ................ 12,000
4,400 Dames & Moore Inc .................................. 52,250
6,000 * Envirotest Systems Corp ............................ 36,750
3,500 * Groundwater Technology Inc ......................... 42,000
546 Heidemij NV ........................................ 4,914
8,300 * Hunter Environmental Services Inc .................. 1,328
4,200 * International Technology Corp ...................... 12,600
7,100 * Mid American Waste Systems Inc ..................... 37,275
225 Mine Safety Appliances Co .......................... 10,294
6,100 * Molten Metal Land Technology Inc ................... 132,675
4,800 * Newpark Res Inc .................................... 104,400
5,200 * OHM Corp ........................................... 62,400
15,800 * Rollins Environmental Services ..................... 69,125
5,900 * Sanifill Inc ....................................... 159,300
3,800 * Tetra Technologies Inc ............................. 45,600
2,500 * U S Filter Corp .................................... 42,813
3,700 * United Waste Systems Inc ........................... 115,394
2,000 * USA Waste Services Inc ............................. 29,750
600 * Western Waste Industries ........................... 11,550
3,700 Zurn Industries Inc ................................ 74,463
-------------
1,093,144
-------------
PUBLISHING - NEWS - 0.30%
5,600 Media General Inc .................................. 180,600
3,900 * Network Equip Technologies ......................... 93,600
2,500 Pulitzer Publishing Co ............................. 106,563
-------------
380,763
-------------
PUBLISHING/PRINTING - 1.59%
5,900 Banta Corp ......................................... 197,650
2,200 Bowne & Co Inc ..................................... 39,050
4,900 CCH Inc ............................................ 79,625
4,400 Ennis Business Forms Inc ........................... 58,300
3,100 * Gartner Group Inc .................................. 148,025
3,100 John Wiley & Son ................................... 176,700
8,800 Meredith Corp ...................................... 231,000
3,200 Merrill Corp ....................................... 56,000
3,609 Nelson Thomas Inc .................................. 64,958
3,300 New England Business Inc ........................... 69,713
4,100 * Nu Kote Holdings Inc ............................... 114,800
300 Plenum Publishing Corp ............................. 9,750
4,500 * Scholastic Corp .................................... 248,625
5,200 * Scientific Games Holding Corp ...................... 131,300
16,000 * Topps Inc .......................................... 95,000
10,100 * Valassis Communications Inc ........................ 165,388
9,000 * ValueVision International Inc ...................... 42,750
7,400 * Western Publishing Group Inc ....................... 80,475
-------------
2,009,109
-------------
RAILROAD - 0.25%
500 Florida East Coast Industries Inc .................. 36,688
4,200 * Johnstown America Inds Inc ......................... 47,775
4,600 * Wisconsin Central Transportation Corp .............. 231,150
-------------
315,613
-------------
REAL ESTATE - 0.70%
2,900 * Avatar Holdings Inc ................................ 105,850
20,700 * Catellus Development Corp .......................... 129,375
200 * Christiana Cos Inc ................................. 5,400
3,175 Cousins Properties Inc ............................. 54,372
4,400 * Insignia Financial Group Inc ....................... 108,900
4,800 * Mercer International Inc ........................... 82,200
8,700 Merry Land & Investment Co Inc ..................... 183,788
5,900 North American Mortgage Co ......................... 129,800
7,347 Republic Bancorp Inc ............................... 85,409
500 Tejon Ranch Co ..................................... 6,750
-------------
891,844
-------------
REAL ESTATE INVESTMENT TRUSTS - 4.68%
3,600 Allied Cap Corp .................................... 61,650
6,800 American Health Properties Inc ..................... 146,200
4,500 Associated Estates Realty Corp ..................... 92,250
100 * Atlantic Gulf Communities Corp ..................... 788
8,300 Avalon Properties Inc .............................. 163,925
4,400 Bay Apartment Community Inc ........................ 80,300
8,600 Berkshire Real Estate Co Inc ....................... 83,850
4,200 Bradley Real Estate Inc ............................ 66,150
2,100 BRE Properties Inc ................................. 63,263
2,300 Burnham Pacific Properties Inc ..................... 28,463
4,200 Capstead Mortgage Corp ............................. 114,975
3,000 Chateau Properties Inc ............................. 66,750
2,400 Chelsea GCA Realty Inc ............................. 63,300
3,900 Columbus Realty Trust .............................. 71,175
8,200 Commercial Net Lease Realty Inc .................... 105,575
72
600 CRI Liquidating Real Estate Investment Trust Inc ... $ 2,100
1,400 Criimi Mae Inc ..................................... 11,375
10,800 CWM Mortgage Holdings Inc .......................... 125,550
5,600 Developers Diversified Realty ...................... 158,200
6,900 Duke Realty Investments Inc ........................ 193,200
4,500 Excel Realty Trust Inc ............................. 87,188
2,700 Factory Store America Inc .......................... 52,313
9,900 First Union Real Estate Equity & Mortgage .......... 75,488
3,800 Gables Residential Trust ........................... 74,575
4,400 General Growth Properties Inc ...................... 89,100
1,400 Glimcher Realty Trust .............................. 29,050
5,200 Haagen Alexander Properties Inc .................... 57,200
500 Health Care REIT Inc ............................... 11,125
10,300 IRT Property Corp .................................. 100,425
4,900 Irvine Apartment Community Inc ..................... 85,750
3,200 JDN Realty Corp .................................... 64,400
4,700 JP Realty Inc ...................................... 95,763
8,500 * Koger Equity Inc ................................... 75,438
7,900 LTC Properties ..................................... 101,713
3,500 Macerich Co ........................................ 69,125
5,300 Manufactured Home Communities Inc .................. 83,475
5,400 MGI Properties ..................................... 81,675
2,800 Mid America Apartment Communities Inc .............. 70,350
4,200 Mills Corp ......................................... 82,950
4,500 National Golf Properties Inc ....................... 96,750
5,886 Omega Healthcare Investors ......................... 150,093
3,500 Pennsylvania Real Estate Investment Trust .......... 76,563
3,900 Post Properties Inc ................................ 120,413
500 Price Reit ......................................... 14,875
4,500 Real Estate Investment Trust of California ......... 73,688
3,700 Regency Realty Corp ................................ 63,825
5,500 Resource Mortgage Capital Inc ...................... 101,750
6,500 RFS Hotel Investment Inc ........................... 97,906
5,800 Roc Communities Inc ................................ 126,875
16,200 Rockfeller Center Properties Inc ................... 87,075
15,700 RPS Realty Trust ................................... 72,613
5,100 Saul Centers Inc ................................... 77,775
14,800 Security Capital Indl Trust ........................ 233,100
5,100 Sizeler Properties Investment Inc .................. 52,275
3,700 South West Properties Trust Inc .................... 45,788
8,900 Storage Equities Inc ............................... 141,288
3,300 Storage USA Inc .................................... 93,638
3,100 Sun Communities Inc ................................ 74,013
3,400 Tanger Factory Outlet Centers Inc .................. 85,000
2,300 Taubman Centers Inc ................................ 22,138
5,600 Thornburg Mtg Asset Corp ........................... 76,300
1,600 Town & Country Trust ............................... 22,800
3,600 Trinet Corp Realty Trust Inc ....................... 99,450
5,200 Tucker Properties Corp ............................. 63,050
13,700 United Dominion Realty Trust Inc ................... 191,800
4,200 Universal Health Realty Inc ........................ 66,675
1,600 Urban Shopping Centers Inc ......................... 34,800
3,500 Walden Residential Properties Inc .................. 64,750
6,500 Washington Real Estate Investment Trust ............ 104,000
6,000 Wellsford Residential Properties ................... 129,000
6,900 Western Investment Real Estate Trust ............... 83,663
-------------
5,929,871
-------------
RESTAURANTS - 1.56%
5,262 Apple South Inc .................................... 91,427
4,550 Applebees International Inc ........................ 114,888
2,600 * Au Bon Pain Co Inc ................................. 30,875
1,800 * Bertuccis Inc ...................................... 12,600
10,400 * Boston Chicken Inc ................................. 241,800
9,300 * Buffets Inc ........................................ 129,038
6,500 CKE Restaurants Inc ................................ 50,375
15,580 * Flagstar Cos Inc ................................... 77,900
7,000 * Foodmaker Inc ...................................... 35,875
1,400 * Fresh Choice Inc ................................... 14,700
336 Frischs Restaurants Inc ............................ 3,150
3,100 * Hometown Buffet Inc ................................ 32,550
2,200 * International Dairy Queen Inc ...................... 42,350
6,900 * Lone Star Steakhouse & Saloon ...................... 216,488
9,800 Lubys Cafeterias Inc ............................... 199,675
2,500 * Papa Johns International Inc ....................... 85,313
700 Picadilly Cafeterias ............................... 6,300
20,200 * Ryans Family Steak House ........................... 141,400
2,700 Sbarro Inc ......................................... 62,100
3,433 * Sholodge Inc ....................................... 49,779
7,800 Sizzler International Inc .......................... 44,850
3,700 * Sonic Corp ......................................... 99,900
6,000 * Taco Cabana Inc .................................... 31,500
3,000 TCBY Enterprises Inc ............................... 15,000
10,500 * TPI Enterprises Inc ................................ 47,250
3,900 * Triarc Cos Inc ..................................... 60,450
2,400 * Vicorp Restaurant Inc .............................. 33,600
-------------
1,971,133
-------------
SAVINGS & LOAN - 2.83%
3,700 Albank Financial ................................... 95,738
5,000 * Astoria Financial Corp ............................. 177,500
7,812 Bankers Corp ....................................... 128,898
3,700 Bay View Capital Corp .............................. 95,275
5,000 Bell Bancorp ....................................... 137,500
3,150 Boston Bancorp ..................................... 134,663
16,720 * California Federal Bank ............................ 215,270
5,800 Centerbank Waterbury Conn .......................... 82,650
9,250 Charter One Financial Inc .......................... 233,563
2,000 Citfed Bancorp Inc ................................. 53,000
8,000 * Coast Savings Financial Inc ........................ 165,000
3,200 * Coral Gables Federal Corp Inc ...................... 84,800
1,900 * C S F Holdings Inc ................................. 56,050
73
27,507 * Dime Bancorp Inc ................................... $ 261,317
1,700 Downey Financial Corp .............................. 30,600
4,100 Financial Trust Corp ............................... 111,725
1,994 * First Republic Bancorp Inc ......................... 26,171
1,600 * Firstfed Financial Corp ............................ 26,800
11,692 * Glendale Federal Bank FSB .......................... 160,765
3,600 * Greater New York Savings Bank ...................... 32,625
3,000 JSB Financial Inc .................................. 92,625
5,900 Loyola Capital Corp ................................ 172,575
3,700 N S Bancorp Inc .................................... 111,000
2,000 Peoples Bank Bridgeport Conn ....................... 30,250
6,500 Peoples Heritage Financial Group ................... 93,438
3,780 Provident Bankshares Corp .......................... 95,445
6,000 Rochester Community Savings Bank ................... 123,000
3,800 * Security Capital Corp Wis .......................... 182,400
14,443 Sovereign Bancorp Inc .............................. 122,766
3,800 * St Francis Capital Corp ............................ 72,675
5,400 T R Financial Corp ................................. 98,550
3,300 Webster Financial Corp Waterbury ................... 78,788
-------------
3,583,422
-------------
SECURITIES RELATED - 1.05%
3,700 Alex Brown Inc ..................................... 147,075
1,100 * Ampal America Israel Corp .......................... 6,463
2,650 BHC Financial Inc .................................. 39,088
225 Capital Southwest Corp ............................. 8,775
6,933 * Comdata Holding Corp ............................... 86,663
1,500 Duff & Phelps Credit Rating Co ..................... 19,313
4,500 Duff & Phelps Inc .................................. 48,375
3,700 Enhance Financial Services Group Inc ............... 66,138
800 Inter Regional Financial Group Inc ................. 21,500
2,500 Jefferies Group Inc ................................ 90,000
5,250 Legg Mason Inc ..................................... 141,750
1,206 Liberty Financial Cos Inc .......................... 31,055
900 Mc Donald & Co Investments Inc ..................... 14,513
5,600 Morgan Keegan Inc .................................. 99,400
8,600 Pioneer Group Inc .................................. 231,125
1,743 Quick & Reilly Group Inc ........................... 81,921
3,600 Raymond James Financial Inc ........................ 66,150
2,987 Waterhouse Investor Services Inc ................... 52,273
2,400 * White Riv Corp ..................................... 78,000
-------------
1,329,577
-------------
SEMICONDUCTORS - 1.91%
7,700 * Actel Corp ......................................... 88,550
3,100 * Alliance Semiconductor Corp ........................ 130,200
5,200 * Altera Corp ........................................ 404,950
4,300 * Brooktree Corp ..................................... 69,338
7,800 * Burr Brown ......................................... 175,500
4,500 * Chipcom Corp ....................................... 96,188
3,500 * Credence Systems Corp .............................. 121,188
9,400 * Cypress Semiconductor Corp ......................... 304,325
8,800 Dallas Semiconductor Corp........................... 161,700
2,700 * Electroglas Inc .................................... 138,375
1,500 * Fusion Systems Corp ................................ 49,500
5,400 * International Rectifier Corp ....................... 145,125
4,900 * Level One Communications Inc ....................... 77,175
3,900 * Novellus Systems Inc ............................... 241,800
8,300 * VLSI Technology Inc ................................ 216,319
-------------
2,420,233
-------------
TELECOMMUNICATIONS - 2.80%
1,400 ABM Industries Inc ................................. 31,850
3,600 ACC Corp ........................................... 49,050
5,050 AGCO Corp .......................................... 191,269
5,875 Amtech Corp ........................................ 35,984
3,900 * Arch Communications Group Inc ...................... 81,413
6,600 * Ascend Communications Inc .......................... 255,750
2,700 * Aspect Telecommunication Corp ...................... 110,025
1,500 * Atlantic Tele Network Inc .......................... 12,375
3,600 * Broadbans Technologies Inc ......................... 89,100
3,400 * Cellular Communications International .............. 129,200
2,600 * Cellular Communications Puerto Rico ................ 79,625
3,300 * Cellular Technical Services Inc .................... 64,763
3,500 * Centennial Cellular Corp ........................... 48,125
1,600 * Centigram Communications Corp ...................... 21,200
2,100 * Checkpoint Systems Inc ............................. 45,938
2,500 * Cidco Inc .......................................... 81,250
4,800 * Commnet Cellular Inc ............................... 129,000
1,800 Communications Systems Inc ......................... 28,350
700 * Compression Laboratory Inc ......................... 6,475
2,600 * Crosscomm Corp ..................................... 30,875
5,100 * Digi International Inc ............................. 104,550
5,400 * First Pacific Networks Inc ......................... 11,475
1,500 Harmon Inds Inc .................................... 26,625
6,200 * International CableTel Inc ......................... 198,400
5,400 * Intervoice Inc ..................................... 85,050
7,000 * LCI International Inc .............................. 185,500
7,900 * MA Communications Inc .............................. 93,813
3,800 * Metricom Inc ....................................... 61,750
2,794 * Millicom International Cellular .................... 69,501
10,100 * Mobile Telecommunication ........................... 227,250
3,900 * Nationwide Cellular Service Inc .................... 93,113
7,640 * Octel Communications Corp .......................... 178,585
7,500 * Peoples Telephone Co Inc ........................... 32,813
4,500 * Picturetel Corp .................................... 195,750
3,700 * Plantronics Inc .................................... 91,575
3,300 * Sanmina Corp ....................................... 118,800
4,700 * Symmetricom Inc .................................... 85,775
4,500 * Telco Systems Inc .................................. 43,594
4,800 * U S Long Distance Corp ............................. 72,000
2,500 * Xpedite Systems .................................... 51,250
-------------
3,548,786
-------------
TEXTILE - PRODUCTS - 0.65%
5,000 * Cone Mills Corp .................................... 63,125
2,850 Culp Inc ........................................... 26,363
3,100 Delta Woodside Industries Inc ...................... 25,188
4,800 * Dixie Yarns Inc .................................... 33,000
600 * Fabri Centers of America Inc ....................... 12,150
74
3,600 * Fieldcrest Canyon Inc .............................. $ 81,900
4,050 G & K Services Inc Class A ......................... 72,394
5,300 * Galey & Lord Inc ................................... 64,263
2,900 Gulford Mills Inc .................................. 74,675
900 Johnston Industries Inc ............................ 8,550
150 * Lydall Inc ......................................... 5,869
6,100 * Mohawk Industries Inc .............................. 91,500
2,200 * Norton McNaughton Inc .............................. 31,350
4,100 * Quaker Fabric Corp ................................. 36,900
10,100 * Stevens Westpoint Inc .............................. 183,063
900 Thomaston Mills Inc ................................ 11,025
-------------
821,315
-------------
TOBACCO - 0.27%
9,000 DiMon Inc .......................................... 155,250
1,339 * Standard Commercial Corp ........................... 19,252
7,500 Universal Corp Va .................................. 174,375
-------------
348,877
-------------
TRUCKERS - 0.68%
6,300 * American Freightways Corp .......................... 129,150
7,050 Arnold Industries Inc .............................. 123,375
221 Frozen Food Express Industries Inc ................. 2,265
707 * Heartland Express Inc .............................. 19,001
500 * Landair Services Inc ............................... 6,500
4,200 * Landstar Systems Inc ............................... 111,300
3,200 * MS Carriers Inc .................................... 64,800
14,175 Rollins Truck Leasing Corp ......................... 148,838
3,800 * Swift Transportation Co Inc ........................ 63,175
4,900 TNT Freightways Corp ............................... 111,475
4,400 Yellow Corp ........................................ 83,600
-------------
863,479
-------------
UTILITIES - COMMUNICATION - 0.20%
1,600 * C Tec Corp ......................................... 35,000
9,600 Lincoln Telecommunications Co ...................... 150,000
3,300 PXRE Corporation ................................... 71,363
-------------
256,363
-------------
UTILITIES - ELECTRIC - 1.77%
5,500 Bangor Hydro Electric Corp ......................... 62,563
2,700 Black Hills Corp ................................... 58,388
8,300 Central Louisiana Electric Co ...................... 198,163
6,250 Central Vermont Public Service Corp ................ 86,719
5,500 Cilcorp Inc Holding Co ............................. 204,188
4,600 Commonwealth Energy Systems ........................ 181,700
5,800 Eastern Utilities Assoc ............................ 134,125
800 Empire District Electric ........................... 13,600
1,400 Green Mountain Power Corp .......................... 37,100
8,200 Indiana Energy Inc ................................. 160,925
5,300 Interstate Power Co ................................ 128,525
5,300 Iowa Illinois Gas & Electric ....................... 109,975
1,750 Madison Gas & Electric Co .......................... 54,250
4,575 Otter Tail Power Co ................................ 142,969
16,200 * Public Service Co of New Mexico .................... 230,850
400 Saint Joseph Light & Power Co ...................... 11,750
2,200 Southern Indiana Gas & Electric Co ................. 67,650
4,500 TNP Enterprises Inc ................................ 73,125
53,600 * Tucson Electric Power Co ........................... 174,200
3,500 United Illuminating Co ............................. 113,750
-------------
2,244,515
-------------
UTILITIES - GAS, DISTRIBUTION - 0.77%
1,000 Colonial Gas Co .................................... 20,000
1,800 Connecticut Energy Corp ............................ 35,325
1,200 Connecticut Natural Gas Corp ....................... 27,150
4,100 Energen Corp ....................................... 85,075
18 International Recovery Corp ........................ 376
3,720 NGC Corp ........................................... 32,550
5,700 Northwest Natural Gas Co ........................... 168,863
1,200 NUI Corp ........................................... 18,150
9,400 Piedmont Natural Gas Co ............................ 191,525
4,800 Public Service Co of North Carolina Inc ............ 71,400
714 South Jersey Industries Inc ........................ 14,012
7,800 Southwestern Energy Co ............................. 118,950
9,600 Washington Energy Co ............................... 153,600
2,150 Yankee Energy System Inc ........................... 43,806
-------------
980,782
-------------
UTILITIES - GAS, PIPELINE - 0.22%
9,900 Oneok Inc .......................................... 188,100
2,768 Williams Cos Inc ................................... 94,112
-------------
282,212
-------------
UTILITIES - MISCELLANEOUS - 0.66%
13,700 * California Energy Inc .............................. 219,200
6,600 Central Hudson Gas & Electric Corp ................. 179,025
3,100 MDU Resources Group ................................ 87,188
400 Northwestern Public Service Co ..................... 11,300
3,700 Orange & Rockland Utilities Inc .................... 124,413
10,100 Sierra Pacific Resources ........................... 210,838
-------------
831,964
-------------
WATER SERVICES - 0.35%
900 Aquarion Co ........................................ 20,700
400 California Water Service Co ........................ 12,800
1,200 Consumers Water Co ................................. 17,700
1,300 E Town Corp ........................................ 33,638
1,050 IWC Resources Corp ................................. 19,950
2,100 Philadephia Suburban Corp .......................... 38,063
2,400 SJW Corp ........................................... 82,800
5,750 Southern California Water Co ....................... 106,375
8,400 United Water Resources Inc ......................... 111,300
-------------
443,326
-------------
TOTAL COMMON STOCKS
(Cost $115,734,080)........ 124,379,822
-------------
75
PAR MARKET
VALUE VALUE
- ---------- ------------
CORPORATE SHORT TERM
COMMERCIAL PAPER - 1.56%
FINANCE COMPANIES - 1.56%
$1,977,000 Ford Motor Credit Co, 6.10% due 06/01/95
(Cost $1,977,000) ................................ $ 1,977,000
------------
UNITED STATES GOVERNMENT - SHORT TERM - 0.08%
100,000 United States Treasury Bills,
5.735% due 06/22/95
(Cost $99,666) ................................... 99,666
------------
TOTAL INVESTMENTS
(Cost $117,810,746) - 99.91% ...................... 126,456,488
Other assets and liabilities, net - 0.09% ......... 110,617
------------
NET ASSETS (equivalent to $12.49 per share on
10,136,256 shares outstanding) - 100% ............ $126,567,105
============
* Non-income producing
UNREALIZED
CONTRACTS APPRECIATION
--------- ------------
FUTURES CONTRACTS PURCHASED (1)
(Delivery month/Value at 05/31/95)
13(2) Russell 2000 Index Futures
(June/$273.45) .................................... $ 31,175
============
(1) U.S. Treasury Bills with a market value of
approximately $100,000 were maintained in a
segregated account with a portion placed as
collateral for future contracts.
(2) Per 500
- -------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
10,136,256 shares outstanding ............................... $ 101,363
Additional paid in capital .................................... 114,982,202
Undistributed net realized gain on securities ................. 2,791,221
Undistributed net investment income ........................... 15,402
Unrealized appreciation of:
Investments ................................ $8,645,742
Futures .................................... 31,175 8,676,917
---------- ------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING ................... $126,567,105
============
SEE NOTES TO FINANCIAL STATEMENTS.
76
<PAGE>
SMALL CAP INDEX FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends ...................................................................................... $ 1,907,998
Interest ....................................................................................... 349,526
-------------
Total investment income .................................................................... 2,257,524
-------------
EXPENSES:
Advisory fees .................................................................................. 420,925
Custodian and accounting services .............................................................. 59,941
Reports to shareholders ........................................................................ 17,489
Audit fees ..................................................................................... 11,020
Registration fees .............................................................................. 3,108
Directors' fees and expenses ................................................................... 5,217
Miscellaneous .................................................................................. 11,315
-------------
Total expenses ............................................................................. 529,015
-------------
NET INVESTMENT INCOME .......................................................................... 1,728,509
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES:
Net realized gain (loss) on:
Investments ............................................................................ $ 2,886,004
Futures contracts ...................................................................... (89,655) 2,796,349
-------------
Net unrealized appreciation during the year:
Investments ............................................................................ 7,213,096
Futures contracts ...................................................................... 78,675 7,291,771
------------- -------------
Net realized and unrealized gain on securities during the year .......................................... 10,088,120
-------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS .............................................................. $ 11,816,629
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the fiscal year ended May 31: 1995 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ...................................................................... $ 1,728,509 $ 780,457
Net realized gain on securities ............................................................ 2,796,349 1,144,203
Net unrealized appreciation (depreciation) of securities during the year ................... 7,291,771 (696,567)
------------- -------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................................... 11,816,629 1,228,093
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ...................................................................... (1,724,116) (770,415)
Net realized gain on securities ............................................................ -- (1,951,667)
------------- -------------
Decrease in net assets resulting from distributions to shareholders .................... (1,724,116) (2,722,082)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold ........................................................... 27,773,025 80,241,365
Proceeds from capital stock issued for distributions reinvested ............................ 1,724,116 2,722,082
------------- -------------
29,497,141 82,963,447
Cost of capital stock repurchased .......................................................... (21,072,208) (15,000,496)
------------- -------------
Increase in net assets resulting from capital stock transactions ....................... 8,424,933 67,962,951
------------- -------------
Total Increase in Net Assets ............................................................... 18,517,446 66,468,962
NET ASSETS:
Beginning of year .......................................................................... 108,049,659 41,580,697
End of year (including undistributed net investment income of $15,402 and $11,009) ......... $ 126,567,105 $ 108,049,659
============= =============
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold ............................................................... 2,410,176 6,705,259
Shares issued for distributions reinvested ................................................. 147,801 228,222
Shares of capital stock repurchased ........................................................ (1,802,417) (1,239,663)
------------- -------------
Increase in shares outstanding ......................................................... 755,560 5,693,818
Shares outstanding:
Beginning of year ...................................................................... 9,380,696 3,686,878
------------- -------------
End of year ............................................................................ 10,136,256 9,380,696
============= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
77
<PAGE>
INTERNATIONAL EQUITIES FUND May 31, 1995 STATEMENT OF NET ASSETS
NUMBER MARKET
OF SHARES VALUE
- --------- ------------
COMMON STOCKS - 98.16%
ADVERTISING - 0.38%
3,000 Euro RSCG Worldwide ................................... $ 311,398
6,000 Havas ................................................. 488,804
------------
800,202
------------
AIRLINES - 0.94%
9,100 British Airways Plc - ADR ............................. 598,325
20,000 * Japan Air Lines Co Ltd ................................ 138,966
41,150 * Japan Air Lines Co Ltd - ADR .......................... 565,813
5,000 Lufthansa A G ......................................... 672,186
------------
1,975,290
------------
APPAREL & PRODUCTS - 0.45%
20,000 Onward Kashiyama ...................................... 274,151
313,039 Pacific Dunlop Ltd .................................... 670,011
------------
944,162
------------
APPLIANCES/FURNISHINGS - 2.20%
50,000 Brother Industries .................................... 248,154
52,000 Matsushita Electric Ind Co Ltd ........................ 804,963
4,200 Matsushita Electric Ind Co Ltd - ADR .................. 659,400
15,000 Philips Electronic .................................... 597,421
133,000 Sanyo Electric Co Ltd ................................. 682,092
3,400 Sanyo Electric Co Ltd - ADR ........................... 86,700
45,000 Sharp Corp ............................................ 638,109
17,970 Sony Corp - ADR ....................................... 880,530
------------
4,597,369
------------
AUTO - CARS - 3.67%
27,500 Daimler Benz A G - ADR ................................ 1,337,188
100,000 * Fiat S P A ............................................ 394,456
30,720 * Fiat S P A - ADR ...................................... 610,560
25,000 Honda Motor Co Ltd - ADR .............................. 756,250
35,000 Nissan Motor Co Ltd ................................... 226,233
18,000 Nissan Motor Co Ltd - ADR ............................. 229,500
500 * Peugeot-Citroen S A ................................... 75,481
13,200 * Peugeot-Citroen S A - ADR ............................. 497,243
1,250 * Porsche A G (Preferred) ............................... 539,164
98,000 Toyota Motor Corp ..................................... 1,899,202
28,519 Toyota Motor Corp - ADR ............................... 1,108,676
------------
7,673,953
------------
AUTO - REPLACEMENT PARTS - 0.92%
36,000 Bridgestone Corp ...................................... 527,504
1,600 Bridgestone Corp - ADR ................................ 234,398
10,000 * Michelin (CGDE) Class B ............................... 456,112
5,550 Nippondenso Ltd - ADR ................................. 401,288
2,000 * Phoenix A G ........................................... 312,743
------------
1,932,045
------------
BANKS - OTHER - 16.09%
14,688 ABN Amro Holdings NV .................................. 555,280
50,000 Asahi Bank Ltd ........................................ 620,384
6,190 Asahi Bank Ltd - ADR .................................. 767,878
13,700 Banco de Santander S A - ADR .......................... 522,313
35,000 Bank of Tokyo Ltd ..................................... 620,384
4,180 Bank of Tokyo Ltd - ADR ............................... 740,763
68,000 Bank of Yokohama Ltd .................................. 630,783
2,296 Bank of Yokohama Ltd - ADR ............................ 212,938
36,000 Barclays Plc .......................................... 385,898
15,840 Barclays Plc - ADR .................................... 677,160
40,000 Chiba Bank ............................................ 401,773
275,000 Credito Italiano ...................................... 314,621
107,000 Dai Ichi Kangyo Bank Ltd .............................. 2,023,043
4,090 Dai Ichi Kangyo Bank Ltd - ADR ........................ 773,135
200,000 * DCB Holdings Berhad ................................... 600,527
50,000 * DCB Holdings Berhad (Warrants) ........................ 57,212
13,300 Den Danske Bank A F - ADR ............................. 850,832
4,250 Deutsche Bank A G - ADR ............................... 2,081,379
10,000 Development Bank Singapore ............................ 117,014
13,625 Development Bank Singapore - ADR ...................... 637,412
1,000 Dresdner Bank A G ..................................... 278,780
52,000 Dresdner Bank A G - ADR ............................... 1,449,958
60,000 Fuji Bank Ltd ......................................... 1,375,480
6,830 Fuji Bank Ltd - ADR ................................... 1,565,433
8,180 HSBC Holdings Plc - ADR ............................... 1,062,810
53,000 Industrial Bank of Japan Ltd .......................... 1,540,679
1,280 Industrial Bank of Japan Ltd - ADR .................... 372,012
13,500 Istituto Mobiliare Italiano - ADR ..................... 254,813
48,000 Joyo Bank Ltd ......................................... 425,406
100,300 Lloyds Bank ........................................... 1,043,298
60,000 Mitsui Trust & Banking Co Ltd ......................... 589,188
26,073 National Australia Bank ............................... 222,097
9,319 National Australia Bank - ADR ......................... 396,058
10,000 National Westminster Bank Plc ......................... 85,596
9,100 National Westminster Bank Plc - ADR ................... 466,375
98,000 Sakura Bank Ltd ....................................... 1,169,631
3,290 Sakura Bank Ltd - ADR ................................. 392,581
1,800 SCHW Bankgesellsch .................................... 1,822,375
60,000 Shizuoka Bank Ltd ..................................... 843,722
89,000 Sumitomo Bank Ltd ..................................... 1,850,990
5,910 Sumitomo Bank Ltd - ADR ............................... 1,228,887
46,000 Tokai Bank Ltd ........................................ 576,189
2,225 Tokai Bank Ltd - ADR .................................. 557,286
10,000 Toyo Trust & Banking .................................. 93,471
21,300 Westpac Banking Corp - ADR ............................ 391,388
------------
33,645,232
------------
BEVERAGE - BREWERS/DISTRIBUTORS - 1.86%
58,800 Bass Plc Co ........................................... 544,393
96,100 Guinness Plc .......................................... 731,013
5,000 Guinness Plc - ADR .................................... 190,036
16,000 Kirin Brewery Co Ltd .................................. 184,343
4,995 Kirin Brewery Co Ltd - ADR ............................ 569,430
22,000 LVMH Moet Hennessy Louis - ADR ........................ 838,750
45,000 Sapporo Breweries ..................................... 459,970
40,000 Whitbread ............................................. 377,323
------------
3,895,258
------------
78
BUILDING MATERIALS - 3.29%
30,000 CRH ................................................... $ 189,843
4,700 Glaverbel ............................................. 679,938
1,025 Holderbk Fn Glarus .................................... 815,431
5,564 Imetal ................................................ 635,854
40,000 Inax Corp ............................................. 416,425
78,315 Redland Plc ........................................... 536,651
24,642 Redland Plc - ADR ..................................... 169,892
80,000 Sekisui House Ltd ..................................... 1,011,521
214 Sekisui House Ltd - ADR ............................... 27,053
2,400 Taisei Construction Ltd - ADR ......................... 154,249
110,000 Taisei Corp ........................................... 707,120
15,000 Tostem Corp ........................................... 506,942
24,000 Toto Ltd .............................................. 368,685
525 Toto Ltd - ADR ........................................ 80,633
48,000 * Uralita S A ........................................... 576,353
------------
6,876,590
------------
CHEMICAL - MAJOR - 0.90%
2,000 Ciba Geigy A G ........................................ 1,419,631
40,000 Sekisui Chemical ...................................... 469,837
------------
1,889,468
------------
CHEMICAL - MISCELLANEOUS - 3.41%
24,867 Air Liquide - ADR ..................................... 779,406
5,100 Akzo N V - ADR ........................................ 312,375
8,500 Asahi Chemical Industry Co Ltd - ADR .................. 596,509
1,500 Basf AG ............................................... 321,057
1,000 Bayer A G ............................................. 241,492
18,000 Bayer A G - ADR........................................ 434,772
40,701 BOC Group ............................................. 515,145
100,000 * Denki Kagaku Kogyo .................................... 388,774
7,500 Gevaert Photo Producten N V - ADR ..................... 410,864
11,000 Imperial Chemical Industries Plc - ADR ................ 558,250
20,000 Mitsubishi Chemical Corp .............................. 95,953
8,040 Mitsubishi Chemical Corp - ADR ........................ 385,651
56,515 * Montedison S P A - ADR ................................ 395,605
220,000 Nylex (Malaysia) BHD .................................. 629,336
22,000 Shin Etsu Chemical Co ................................. 395,155
50,000 Toray Industries Inc .................................. 323,781
5,500 Toray Industries Inc - ADR ............................ 356,086
------------
7,140,211
------------
CONGLOMERATES - 4.55%
100,000 BET ................................................... 206,448
24,695 Broken Hill Proprietary Co Ltd - ADR .................. 1,259,445
40,756 BTR Plc ............................................... 221,352
36,483 BTR Plc - ADR ......................................... 790,532
50,800 Hanson Plc - ADR ...................................... 965,200
100,000 * Idris Hydraulic ....................................... 145,263
70,000 Itochu Corp ........................................... 429,306
3,300 Itochu Corp - ADR ..................................... 202,345
30,000 Keppel Corp Ltd ....................................... 273,510
21,500 Keppel Corp Ltd - ADR ................................. 391,838
8,000 Lagardere Groupe ...................................... 178,333
70,000 Marubeni Corp ......................................... 373,058
3,200 Marubeni Corp - ADR ................................... 170,506
57,000 Mitsubishi Corp ....................................... 652,006
140,000 Mitsubishi Hvy Ind .................................... 961,182
50,000 Mitsui & Co Ltd ....................................... 393,501
2,200 Mitsui & Co Ltd - ADR ................................. 343,200
60,000 Sime Darby Holdings Ltd ............................... 170,420
194,400 Sime Darby Holdings Ltd - ADR ......................... 552,038
100,763 Tomkins ............................................... 389,642
200,000 Trafalgar House ....................................... 152,453
150,000 Wing Tai Holdings ..................................... 292,893
------------
9,514,471
------------
CONSUMER FINANCE - 0.16%
52,000 Nippon Shinpan Co ..................................... 344,106
------------
COSMETICS/TOILETRIES - 0.85%
14,000 Loreal Co ............................................. 735,657
1,000 Loreal Co - ADR ....................................... 263,227
30,000 Shiseido Co Ltd ....................................... 365,140
34,490 Shiseido Co Ltd - ADR ................................. 419,702
------------
1,783,726
------------
DRUGS - 4.56%
30,000 Astra AB .............................................. 879,106
1,800 Banyu Pharmaceutical Co Ltd - ADR ..................... 407,455
6,158 Eisai Co Ltd - ADR .................................... 1,084,021
70,400 Glaxo Wellcome Plc - ADR .............................. 1,636,800
30,000 Kaken Pharmaceutical Co Ltd ........................... 322,954
24,000 Nippon Shinyaku Co .................................... 262,334
350 Roche Holdings A G .................................... 2,155,808
27,500 Sankyo Co ............................................. 636,928
75,961 Smithkline Beecham Plc ................................ 585,058
65,000 Takeda Chemical Industries Ltd ........................ 867,947
15,300 Zeneca Group Plc - ADR ................................ 688,500
------------
9,526,911
------------
ELECTRICAL EQUIPMENT - 1.57%
78,000 Delta Plc ............................................. 637,923
39,000 Denki Kogyo Co Ltd .................................... 367,764
15,000 Fanuc ................................................. 650,517
49,000 * Franco Tosi S P A ..................................... 486,567
14,000 * Franco Tosi S P A (Warrants) .......................... 3,475
134,000 General Electric Plc .................................. 683,087
10,400 General Electric Plc - ADR ............................ 52,867
3,400 Sumitomo Electric Ind Ltd - ADR ....................... 396,468
------------
3,278,668
------------
ELECTRONIC INSTRUMENTS - 2.99%
40,000 Hitachi Ltd ........................................... 386,174
8,550 Hitachi Ltd - ADR ..................................... 840,038
1,000 Kyocera Corp .......................................... 75,982
4,800 Kyocera Corp - ADR .................................... 729,600
144,000 Mitsubishi Electric Corp .............................. 995,450
600 Mitsubishi Electric Corp - ADR ........................ 41,469
79
50,000 NEC Corp .............................................. $ 531,758
5,100 NEC Corp - ADR ........................................ 270,300
50,000 Racal Electronics ..................................... 213,991
800 Siemens A G ........................................... 380,386
14,000 Siemens A G - ADR ..................................... 1,331,628
55,000 Yokogawa Electric ..................................... 458,848
------------
6,255,624
------------
ENTERTAINMENT - 0.22%
65,000 Rank Organisation ..................................... 452,636
------------
FINANCE COMPANIES - 0.42%
4,500 Credit Local de France ................................ 395,354
4,613 International Nederlanden ............................. 249,900
2,000 Societe Generale ...................................... 235,010
------------
880,264
------------
FOODS - 3.35%
25,000 Ajinomoto Inc ......................................... 283,604
1,900 Ajinomoto Inc - ADR ................................... 215,495
20,459 Cadbury Schweppes Plc ................................. 154,165
13,500 Cadbury Schweppes Plc - ADR ........................... 407,531
70,524 Coca Cola Amatil Ltd .................................. 419,912
10,000 Dai Ei Inc ............................................ 124,077
11,500 Dai Ei Inc - ADR ...................................... 276,000
750 Danone ................................................ 123,954
120,000 Grand Metropolitan .................................... 752,739
20,060 Groupe Danone - ADR ................................... 661,834
5,346 Kao Corp - ADR ........................................ 644,230
48,000 Nestle S A - ADR ...................................... 2,421,571
104,322 Northern Foods ........................................ 319,742
250,000 Tasman Agriculture .................................... 196,105
------------
7,000,959
------------
FOOTWEAR - 0.17%
50,000 Church & Co Plc ....................................... 353,343
------------
FREIGHT - 0.69%
98,000 Mitsui OSK Lines Ltd .................................. 290,671
40,000 Nippon Yusen KK ....................................... 238,227
8,570 Nippon Yusen KK - ADR ................................. 510,297
20,000 P & O Steam Navigation ................................ 195,331
300,000 Shun Tak Holdings ..................................... 201,673
------------
1,436,199
------------
HARDWARE & TOOLS - 0.20%
22,000 SKF AB ................................................ 428,786
------------
HOSPITAL SUPPLIES - 0.11%
8,800 Novo Norkisk A S - ADR ................................ 235,400
------------
HOUSEHOLD PRODUCTS - 0.72%
7,000 Katokichi Co .......................................... 153,855
10,600 Unilever N V - ADR .................................... 1,348,850
------------
1,502,705
------------
INFORMATION PROCESSING - 0.83%
5,000 CSK Corp .............................................. 120,532
3,700 CSK Corp - ADR ........................................ 85,100
14,000 Fujitsu Ltd ........................................... 134,003
15,200 Fujitsu Ltd - ADR ..................................... 727,293
15,224 Getronics N V ......................................... 658,314
------------
1,725,242
------------
INSURANCE - CASUALTY - 0.88%
80,000 Nichido Fire & Marine Insurance Co Ltd ................ 650,399
25,000 Sumitomo Marine & Fire ................................ 210,340
20,000 Tokio Marine & Fire Insurance Co Ltd .................. 229,247
13,100 Tokio Marine & Fire Insurance Co Ltd - ADR ............ 749,975
------------
1,839,961
------------
INSURANCE - LIFE - 0.49%
60,000 Irish Life ............................................ 195,331
30,240 Prudential Plc - ADR .................................. 819,069
------------
1,014,400
------------
INSURANCE - MULTILINE - 2.94%
29,590 Assic Generali ........................................ 717,443
22,500 AXA ................................................... 1,191,777
15,277 Fortis Amev NV ........................................ 831,552
7,000 Gan Group ............................................. 251,134
40,525 General Accident ...................................... 398,042
300 Munchener Ruckvers .................................... 518,998
133,823 Royal Insurance ....................................... 711,937
1,300 Zurich Insurance ...................................... 1,520,103
------------
6,140,986
------------
LEISURE TIME - 1.10%
58,000 * Asahi Optical Co Ltd .................................. 225,489
11,000 Canon Inc - ADR ....................................... 860,750
20,000 Fuji Photo Film Co Ltd ................................ 479,764
9,601 Fuji Photo Film Co Ltd - ADR .......................... 463,248
5,000 Sega Enterprises Ltd .................................. 187,297
8,000 Sega Enterprises Ltd - ADR............................. 74,902
------------
2,291,450
------------
LODGING - 0.93%
4,500 Accor ................................................. 577,749
580,000 Hotel Properties ...................................... 1,115,865
200,000 Shangri La Asia Ltd ................................... 241,749
------------
1,935,363
------------
MACHINE TOOLS - 0.47%
35,000 Amada Co .............................................. 347,415
20,000 * Makino Milling ........................................ 129,985
16,000 Makita Electric Works Ltd - ADR ....................... 246,000
40,000 Minebea Co ............................................ 259,970
------------
983,370
------------
80
MACHINERY - CONSTRUCTION & CONTRACTS - 1.75%
1,000 Bilfinger & Berger .................................... $ 509,446
1,500 Deutsche Babcock ...................................... 170,877
42,000 Kajima Corp ........................................... 412,928
2,340 Kajima Corp - ADR ..................................... 230,012
80,000 Kumagai Gumi HK ....................................... 65,673
4,000 Lefebvre (Jean) ....................................... 293,460
70,000 Shimizu Corp .......................................... 711,374
5,000 Volker Stevin ......................................... 306,613
2,500 Vossloh A G ........................................... 953,442
------------
3,653,825
------------
MACHINERY - INDUSTRIAL/SPECIALTY - 1.87%
30,000 Atlas Copco AB ........................................ 437,508
5,250 CNIM .................................................. 251,839
8,000 Ebara Corp ............................................ 112,496
2,530 Ebara Corp - ADR ...................................... 355,696
275,000 Johan Holdings Berhad ................................. 262,224
54,000 Komatsu Ltd ........................................... 420,514
400 Komatsu Ltd - ADR ..................................... 62,286
70,000 Kubota Corp ........................................... 479,764
1,350 Kubota Corp - ADR ..................................... 191,531
400 Rieter Holdings AG .................................... 548,650
76,260 Rolls Royce ........................................... 227,678
70,000 SASIB ................................................. 316,418
25,000 Siebe ................................................. 239,400
------------
3,906,004
------------
MERCHANDISE - SPECIALTY - 0.32%
20,150 BAA ................................................... 155,197
450,000 Dickson Concept Int ................................... 254,515
20,000 Esselte AB ............................................ 252,147
------------
661,859
------------
MERCHANDISING - DEPARTMENT - 1.09%
45,000 Daimaru Inc ........................................... 228,124
40,000 Hankyu Deptartment Stores Inc ......................... 477,400
15,000 Marks & Spencer Ltd ................................... 98,857
25,033 Marks & Spencer Ltd - ADR ............................. 987,822
32,000 Marui Co .............................................. 476,455
------------
2,268,658
------------
MERCHANDISING - FOOD - 1.17%
1,700 Carrefour ............................................. 840,492
15,000 Delhaize Le Lion ...................................... 700,405
20,000 Kwik Save Group ....................................... 190,091
100,000 Sainsbury ............................................. 714,626
------------
2,445,614
------------
MERCHANDISING - MASS - 1.99%
35,000 ARGOS ................................................. 236,224
20,000 Centros Com Pryca ..................................... 369,206
3,600 Familymart Co ......................................... 175,267
4,000 Ito-Yokado Co Ltd ..................................... 211,758
5,050 Ito-Yokado Co Ltd - ADR................................ 1,071,863
56,000 Mitsukoshi ............................................ 464,544
200 Mitsukoshi Ltd - ADR .................................. 16,587
20,000 Seiyu ................................................. 255,244
2,000 Seven-Eleven Japan Co Ltd ............................. 147,710
16,371 Seven-Eleven Japan Co Ltd - ADR ....................... 1,208,833
------------
4,157,236
------------
METALS - COPPER - 0.40%
22,180 RTZ Corp .............................................. 283,546
10,700 RTZ Corp Plc - ADR .................................... 551,050
------------
834,596
------------
METALS - MISCELLANEOUS - 0.76%
900 Alusuisse Lonza HD .................................... 530,819
12,500 CRA Ltd - ADR ......................................... 668,664
100,000 North Ltd ............................................. 237,018
30,000 Western Mining ........................................ 159,664
------------
1,596,165
------------
METALS - STEEL - 1.61%
36,700 British Steel Plc ..................................... 102,722
12,000 British Steel Plc - ADR ............................... 337,500
50,000 * Cockerill Sambre ...................................... 325,890
60,000 * Kawasaki Steel Corp ................................... 226,174
15,420 * Kawasaki Steel Corp - ADR ............................. 581,146
255,000 NKK Corp .............................................. 641,831
178,000 * Sumitomo Metal Industries Ltd ......................... 527,953
7,400 * Sumitomo Metal Industries Ltd - ADR ................... 219,440
50,000 Sumitomo Metal Mining ................................. 394,682
------------
3,357,338
------------
MISCELLANEOUS - 1.18%
20,000 Asahi Glass Co Ltd .................................... 248,154
5,400 Asahi Glass Co Ltd - ADR .............................. 669,877
22,050 Pakhoed N V ........................................... 664,940
1,250 Preussag AG ........................................... 371,471
8,000 Secom Co .............................................. 504,815
------------
2,459,257
------------
OIL - INTEGRATED INTERNATIONAL - 3.05%
17,533 British Petroleum Co Plc - ADR ........................ 1,496,875
20,302 Elf Aquitaine - ADR ................................... 796,854
20,000 Mitsubishi Oil Co ..................................... 194,742
13,000 Repsol S A - ADR ...................................... 424,125
22,098 Royal Dutch Petroleum Co - ADR ........................ 2,800,922
10,699 TOTAL ................................................. 663,310
------------
6,376,828
------------
OIL/GAS PRODUCERS - 0.86%
15,448 Enterprise Oil Plc - ADR .............................. 301,236
23,500 Norsk Hydro A S - ADR.................................. 969,375
5,000 * OMV A G ............................................... 532,488
------------
1,803,099
------------
81
PAPER/FOREST PRODUCTS - 1.32%
2,505 Fletcher Challenge - ADR .............................. $ 33,818
97,000 Fletcher Challenge Forest Ltd ......................... 132,188
10,020 Fletcher Challenge Ltd - ADR .......................... 268,035
37,000 Honshu Paper Co Ltd ................................... 256,650
77,000 New Oji Paper Co Ltd .................................. 801,619
300 New Oji Paper Co Ltd - ADR ............................ 31,225
60,000 Nippon Paper Inds ..................................... 446,676
27,000 Repola ................................................ 546,109
15,000 Sumitomo Forestry ..................................... 244,609
------------
2,760,929
------------
POLLUTION CONTROL - 0.22%
5,000 Sophus Berendsen ...................................... 457,510
------------
PUBLISHING - NEWS - 0.73%
62,500 Independent News Plc .................................. 292,573
28,000 News Corp Ltd - ADR.................................... 605,500
85,000 Reuters ............................................... 635,779
------------
1,533,852
------------
PUBLISHING/PRINTING - 0.67%
30,000 Dai Nippon Printing Ltd ............................... 460,857
1,000 Dai Nippon Printing Ltd - ADR ......................... 153,587
81,380 Pearson ............................................... 785,756
------------
1,400,200
------------
RAILROAD - 1.24%
30,000 Fukuyama Transport .................................... 280,059
90,000 Nagoya Railroad Co Ltd ................................ 476,455
9,218 Nagoya Railroad Co Ltd - ADR .......................... 487,894
99,000 Odakyu Electric Railway Co Ltd ........................ 760,414
90,000 Tokyu Corp ............................................ 582,806
------------
2,587,628
------------
REAL ESTATE - 2.21%
60,000 Hang Lung Developement Co ............................. 96,958
83,000 Mitsubishi Estate Co Ltd .............................. 930,777
65,000 Mitsui Fudosan Co ..................................... 728,922
227,600 Sun Hung Kai Properties Ltd ........................... 1,647,719
98,000 Wharf Holdings Ltd .................................... 321,797
55,000 Wharf Holdings Ltd - ADR .............................. 903,029
------------
4,629,202
------------
SECURITIES RELATED - 2.30%
15,000 Daiwa Securities Co Ltd ............................... 166,263
4,810 Daiwa Securities Co Ltd - ADR ......................... 533,040
46,000 Mitsubishi Trust & Banking Corp ....................... 744,697
4,290 Mitsubishi Trust & Banking Corp - ADR ................. 694,368
55,000 Nomura Securities Co Ltd .............................. 987,888
3,800 Nomura Securities Co Ltd - ADR ........................ 682,400
60,000 Peregrine Investment .................................. 76,015
6,000 Yamaichi Securities Co Ltd - ADR ...................... 362,229
20,000 Yasuda Trust & Banking Co Ltd ......................... 148,183
5,670 Yasuda Trust & Banking Co Ltd - ADR ................... 420,012
------------
4,815,095
------------
TELECOMMUNICATIONS - 4.53%
26,379 British Telecommunications Plc - ADR .................. 1,665,174
36,800 Cable & Wireless Plc - ADR ............................ 754,400
13,800 Ericsson L M Telephone Co Class B - ADR ............... 1,013,438
60,600 Hong Kong Telecommunications Ltd - ADR ................ 1,295,325
15,395 Kon Ptt Nederland ..................................... 556,694
15,000 Nokia AB OY ........................................... 685,754
200,000 Stet .................................................. 575,693
85,000 Telecom Italia ........................................ 222,662
8,300 Telecomm Corp New Zealand Ltd - ADR ................... 533,270
14,000 Telefonica De Espana S A .............................. 184,113
14,600 Telefonica De Espana S A - ADR ........................ 584,000
110,000 Telekom Malaysia ...................................... 843,579
16,500 Vodafone Group Plc - ADR .............................. 554,813
------------
9,468,915
------------
TEXTILE - PRODUCTS - 0.23%
30,000 Benetton Group SPA .................................... 290,588
30,000 Marzotto & Figli ...................................... 200,122
------------
490,710
------------
TOBACCO - 0.57%
73,067 BAT Ind Ltd Plc ....................................... 572,051
40,100 BAT Ind Ltd Plc - ADR ................................. 626,563
------------
1,198,614
------------
UTILITIES - ELECTRIC - 3.89%
205,000 China Light & Power ................................... 1,121,029
18,000 Empresa Nacional De Electricidad - ADR ................ 868,500
56,100 Kansai Electric Power Co Inc .......................... 1,478,322
40,000 Manweb ................................................ 428,776
80,000 National Power ........................................ 594,569
4,000 * Oester Elektrizita Class A ............................ 283,859
30,000 RWE A G - ADR ......................................... 1,013,793
190,000 Tenaga Nasional ....................................... 786,366
13,000 Tokyo Electric Power .................................. 411,699
3,000 Veba A G .............................................. 1,140,522
------------
8,127,435
------------
UTILITIES - GAS, DISTRIBUTION - 0.50%
120,000 Hong Kong & China Gas ................................. 194,692
227,000 Osaka Gas Co Ltd ...................................... 844,963
------------
1,039,655
------------
82
UTILITIES - GAS, PIPELINE - 0.64%
50,000 British Gas Plc ....................................... $ 240,190
22,700 British Gas Plc - ADR ................................. 1,100,950
------------
1,341,140
------------
WATER SERVICES - 0.75%
10,000 Eaux (Cie Generale) ................................... 1,108,537
50,000 North West Water ...................................... 464,507
------------
1,573,044
------------
TOTAL COMMON STOCKS
(Cost $183,606,230) ................................... 205,238,758
------------
PAR
VALUE
- -------
UNITED STATES GOVERNMENT -
SHORT TERM - 0.15%
$325,000 United States Treasury Bills, 5.72%
due 06/22/95 (Cost $323,915) ......................... 323,915
------------
TOTAL INVESTMENTS
(Cost $183,930,145) - 98.31% .......................... 205,562,673
------------
Other assets and liabilities, net - 1.69%.............. 3,528,206
------------
NET ASSETS (equivalent to $10.42 per share on
20,073,754 shares outstanding) - 100%................. $209,090,879
============
* Non-income producing
UNREALIZED
CONTRACTS DEPRECIATION
- --------- -------------
FUTURES CONTRACTS PURCHASED (1)
(Delivery month/Value at 05/31/95)
8(2) Nikkei 225 Futures
(June/$182.69)........................................ $ (43,807)
3(2) Nikkei 225 Futures
(September/$183.22)................................... (27,418)
------------
$ (71,225)
============
(1) U.S. Treasury Bills with a market value of
approximately $325,000 were maintained in a
segregated account with a portion placed as
collateral for future contracts.
(2) Per 500
- --------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
20,073,754 shares outstanding................................... $ 200,738
Additional paid in capital........................................ 186,084,687
Undistributed net realized gain on securities and
foreign currency transactions................................... 1,167,818
Undistributed net investment income............................... 82,048
Unrealized appreciation (depreciation) of:
Investments....................................... $21,632,528
Futures .......................................... (71,225)
Foreign currency translation ..................... (5,715) 21,555,588
----------- ------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING ...................... $209,090,879
------------
SEE NOTES TO FINANCIAL STATEMENTS.
83
<PAGE>
INTERNATIONAL EQUITIES FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $492,135) ................................................. $ 3,658,739
Interest ................................................................................................. 179,486
-------------
Total investment income .............................................................................. 3,838,225
-------------
EXPENSES:
Advisory fees ............................................................................................ 697,990
Custodian and accounting services ........................................................................ 100,097
Reports to shareholders .................................................................................. 28,736
Audit fees ............................................................................................... 17,743
Registration fees ........................................................................................ 11,922
Directors' fees and expenses ............................................................................. 8,527
Miscellaneous ............................................................................................ 37,534
-------------
Total expenses ....................................................................................... 902,549
-------------
NET INVESTMENT INCOME .................................................................................... 2,935,676
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investments ................................................................................ $ 1,585,879
Foreign currency transactions .............................................................. 55,817
Futures .................................................................................... (29,188) 1,612,508
-------------
Net unrealized appreciation (depreciation) during the year:
Investments ................................................................................ 4,257,838
Foreign currency translation ............................................................... (6,863)
Futures .................................................................................... (71,225) 4,179,750
------------- -------------
Net realized and unrealized gain on securities and foreign currencies during the year ...................... 5,792,258
-------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ................................................................ $ 8,727,934
=============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the fiscal year ended May 31: 1995 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ............................................................................ $ 2,935,676 $ 1,676,984
Net realized gain on securities and foreign currency transactions ................................ 1,612,508 850,684
Net unrealized appreciation of securities and translation of foreign currencies during the year .. 4,179,750 12,588,338
------------- -------------
Increase in net assets resulting from operations ............................................. 8,727,934 15,116,006
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ............................................................................ (2,923,253) (1,503,417)
Net realized gain on securities .................................................................. (1,262,696) (209,812)
------------- -------------
Decrease in net assets resulting from distributions to shareholders .......................... (4,185,949) (1,713,229)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold ................................................................. 70,844,488 99,379,292
Proceeds from capital stock issued for distributions reinvested .................................. 4,185,949 1,713,229
------------- -------------
75,030,437 101,092,521
Cost of capital stock repurchased ................................................................ (45,664,455) (6,121,232)
------------- -------------
Increase in net assets resulting from capital stock transactions ............................. 29,365,982 94,971,289
------------- -------------
TOTAL INCREASE IN NET ASSETS ..................................................................... 33,907,967 108,374,066
NET ASSETS:
Beginning of year ................................................................................ 175,182,912 66,808,846
------------- -------------
End of year (including undistributed net investment income of $82,048 and $385,487) .............. $ 209,090,879 $ 175,182,912
============= =============
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold ..................................................................... 6,923,001 10,300,352
Shares issued for distributions reinvested ....................................................... 410,419 176,475
Shares of capital stock repurchased .............................................................. (4,532,670) (633,277)
------------- -------------
Increase in shares outstanding ............................................................... 2,800,750 9,843,550
Shares outstanding:
Beginning of year ............................................................................ 17,273,004 7,429,454
------------- -------------
End of year .................................................................................. 20,073,754 17,273,004
============= =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
84
<PAGE>
GROWTH FUND May 31, 1995 STATEMENT OF NET ASSETS
NUMBER MARKET
OF SHARES VALUE
- ---------- ------------
COMMON STOCKS - 91.94%
ADVERTISING - 5.80%
100,000 Advo System Inc .................................... $ 2,125,000
50,000 * Catalina Marketing Corp ............................ 2,218,750
100,000 * Dimac Corp ......................................... 1,487,500
------------
5,831,250
------------
APPAREL & PRODUCTS - 2.66%
40,300 * Ann Taylor Stores Corp ............................. 841,262
70,000 * Tommy Hilfiger Corp ................................ 1,837,500
------------
2,678,762
------------
BROADCASTING - 6.60%
40,000 Comcast Corp Class A ............................... 695,000
110,000 Comcast Corp Special Class A ....................... 1,925,000
88,100 * Cox Communications Inc Class A ..................... 1,431,625
55,000 * Viacom Inc Class B ................................. 2,564,375
20,000 * Viacom Inc (Rights) ................................ 26,250
------------
6,642,250
------------
FINANCE COMPANIES - 1.46%
47,500 Money Store Inc .................................... 1,466,563
------------
GOVERNMENT SPONSORED - 3.42%
30,000 Federal Home Loan Mortgage Corp .................... 2,043,750
15,000 Federal National Mortgage Association .............. 1,395,000
------------
3,438,750
------------
HEALTHCARE - 6.71%
40,000 Cardinal Health Inc ................................ 1,825,000
50,000 * Genesis Health Ventures Inc ........................ 1,481,250
14,000 * Pacificare Health System Inc Class B ............... 927,500
70,000 * Patterson Dental Co ................................ 1,575,000
35,000 * Sierra Health Services Inc ......................... 940,625
------------
6,749,375
------------
HOSPITAL MANAGEMENT - 2.64%
65,000 Columbia/HCA Healthcare Corp ....................... 2,656,875
------------
INFORMATION PROCESSING - 8.33%
93,000 * Bisys Group Inc .................................... 1,767,000
50,000 * Ceridian Corp ...................................... 1,612,500
5,000 * Creative Computers Inc ............................. 113,750
35,000 First Financial Management Corp .................... 2,485,000
25,000 H & R Block Inc .................................... 903,125
30,000 * SunGard Data Systems ............................... 1,496,250
------------
8,377,625
------------
INSURANCE - MISCELLANEOUS - 6.21%
20,000 CMAC Investment Corp ............................... 830,000
25,000 MGIC Investment Corp ............................... 1,175,000
40,000 PMI Group Inc ...................................... 1,635,000
70,000 United Healthcare Corp ............................. 2,607,500
------------
6,247,500
------------
LEISURE TIME - 1.48%
50,000 * Mirage Resorts Inc ................................. 1,493,750
------------
LODGING - 3.49%
75,000 * Hospitality Franchise Sys .......................... 2,259,375
30,000 * Promus Cos Inc ..................................... 1,256,250
------------
3,515,625
------------
MERCHANDISE - DRUG - 2.11%
100,000 * Revco Drugs Inc .................................... 2,125,000
------------
MERCHANDISE - SPECIALTY - 10.90%
75,000 Circuit City Stores Inc ............................ 2,062,500
36,600 * Cole National Corp Class A ......................... 356,850
25,000 * Corporate Express Inc .............................. 721,875
50,000 Dollar General Corp ................................ 1,418,750
50,000 * General Nutrition Cos Inc .......................... 1,450,000
35,000 * Micro Warehouse Inc ................................ 1,356,250
100,000 * Office Depot Inc ................................... 2,400,000
41,300 * Starbucks Corp ..................................... 1,200,281
------------
10,966,506
------------
MISCELLANEOUS - 7.19%
150,000 * ADT Ltd ............................................ 1,706,250
90,000 * CUC International Inc .............................. 3,307,500
33,000 Loewen Group Inc ................................... 1,093,125
37,500 Olsten Corp ........................................ 1,129,688
------------
7,236,563
------------
OIL - SERVICES - 3.64%
25,000 * BJ Services Co ..................................... 637,500
30,000 Schlumberger Ltd ................................... 1,950,000
60,000 * Smith International Inc ............................ 1,072,500
------------
3,660,000
------------
PAPER/FOREST PRODUCTS - 2.14%
30,000 Alco Standard Corp ................................. 2,148,750
------------
POLLUTION CONTROL - 3.03%
40,000 Browning Ferris Industries Inc ..................... 1,425,000
60,000 * Sanifill Inc ....................................... 1,620,000
------------
3,045,000
------------
RESTAURANTS - 3.54%
50,000 * Lone Star Steakhouse & Saloon ...................... 1,568,750
30,000 * Outback Steakhouse Inc ............................. 896,250
47,500 Sbarro Inc ......................................... 1,092,500
------------
3,557,500
------------
SECURITIES RELATED - 2.17%
50,000 Franklin Resources Inc ............................. 2,187,500
------------
TELECOMMUNICATIONS - 8.42%
40,000 * ALC Communications Corp ............................ 1,740,000
75,000 * Mobile Telecommunication ........................... 1,687,500
85,000 * Paging Network Inc ................................. 2,358,750
80,000 Vodafone Group Plc - ADR ........................... 2,690,000
------------
8,476,250
------------
85
PAR
VALUE
- ----------
TOTAL COMMON STOCKS
(Cost $83,807,437) ................................. $ 92,501,394
------------
CORPORATE SHORT TERM COMMERCIAL PAPER - 15.91%
CONSUMER FINANCE - 8.47%
$4,400,000 Commercial Credit Group Inc,
5.80% due 06/01/95 ................................ 4,400,000
4,124,000 Sears Roebuck Acceptance Corp,
5.80% due 06/02/95 ................................ 4,123,336
------------
8,523,336
------------
FINANCE COMPANIES - 5.32%
3,814,000 Ford Motor Credit Co, 6.10%
due 06/01/95 ...................................... 3,814,000
1,542,000 IBM Credit Corp, 5.90%
due 06/02/95 ...................................... 1,541,747
------------
5,355,747
------------
SECURITIES RELATED - 2.12%
2,133,000 Merrill Lynch & Co Inc, 5.95%
due 06/01/95 ...................................... 2,133,000
------------
TOTAL CORPORATE SHORT TERM
COMMERCIAL PAPER
(Cost $16,012,083) ................................. 16,012,083
------------
TOTAL INVESTMENTS
(Cost $99,819,520) - 107.85% ....................... 108,513,477
------------
Payable for investments
purchased - (10.12%) .............................. (10,186,580)
Other assets and liabilities,
net - 2.27% ....................................... 2,287,228
------------
NET ASSETS (equivalent to $11.43 per share on
8,799,838 shares outstanding) - 100% .............. $100,614,125
============
* Non-income producing
- -------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
8,799,838 shares outstanding ................................... $ 87,998
Additional paid in capital ....................................... 91,558,133
Undistributed net realized gain on securities .................... 273,762
Undistributed net investment income .............................. 275
Unrealized appreciation of securities ............................ 8,693,957
------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING ...................... $100,614,125
============
SEE NOTES TO FINANCIAL STATEMENTS.
86
<PAGE>
GROWTH FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends ............................................................................................................ $ 191,782
Interest ............................................................................................................. 365,576
------------
Total investment income .......................................................................................... 557,358
------------
EXPENSES:
Advisory fees ........................................................................................................ 323,295
Custodian and accounting services .................................................................................... 16,756
Reports to shareholders .............................................................................................. 7,868
Audit fees ........................................................................................................... 4,432
Registration fees .................................................................................................... 27,124
Directors' fees and expenses ......................................................................................... 1,315
Miscellaneous ........................................................................................................ 1,528
------------
Total expenses ................................................................................................... 382,318
------------
NET INVESTMENT INCOME ................................................................................................ 175,040
REALIZED AND UNREALIZED GAIN ON SECURITIES: ------------
Net realized gain on securities ...................................................................................... 273,762
Net unrealized appreciation of securities during the year ............................................................ 8,820,861
------------
Net realized and unrealized gain on securities during the year ................................................... 9,094,623
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ..................................................................... $ 9,269,663
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE PERIOD FROM
YEAR ENDED APRIL 29, 1994 TO
MAY 31, 1995 MAY 31, 1994
------------- -------------------
<S> <C> <C>
OPERATIONS:
Net investment income ................................................................. $ 175,040 $ 11,326
Net realized gain on securities ....................................................... 273,762 --
Net unrealized appreciation (depreciation) of securities during the period ............ 8,820,861 (126,904)
------------- ------------
Increase (decrease) in net assets resulting from operations ....................... 9,269,663 (115,578)
------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income ................................................................. (175,491) (10,600)
------------- ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold ...................................................... 81,516,869 10,001,000
Proceeds from capital stock issued for distributions reinvested ....................... 175,491 10,600
------------- ------------
81,692,360 10,011,600
Cost of capital stock repurchased ..................................................... (57,829) --
------------- ------------
Increase in net assets resulting from capital stock transactions .................. 81,634,531 10,011,600
------------- ------------
TOTAL INCREASE IN NET ASSETS .......................................................... 90,728,703 9,885,422
NET ASSETS:
Beginning of period ................................................................... 9,885,422 --
------------- ------------
End of year (including undistributed net investment income of $275 and $726) .......... $ 100,614,125 $ 9,885,422
============= ============
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold .......................................................... 7,787,173 1,000,100
Shares issued for distributions reinvested ............................................ 16,615 1,075
Shares of capital stock repurchased ................................................... (5,125) --
------------- ------------
Increase in shares outstanding .................................................... 7,798,663 1,001,175
Shares outstanding:
Beginning of period ............................................................... 1,001,175 --
------------- ------------
End of period ..................................................................... 8,799,838 1,001,175
============= ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
87
<PAGE>
GROWTH & INCOME FUND May 31, 1995 STATEMENT OF NET ASSETS
NUMBER MARKET
OF SHARES VALUE
--------- --------------
COMMON STOCKS - 95.55%
ADVERTISING - 1.13%
8,400 Omnicom Group ................................... $ 484,050
-------------
AEROSPACE/DEFENSE - 3.37%
10,800 McDonnell Douglas Corp .......................... 780,300
7,200 Northrop Corp ................................... 377,100
3,400 Rockwell International Corp ..................... 155,125
2,400 Sundstrand Corp ................................. 133,200
-------------
1,445,725
-------------
APPLIANCES/FURNISHINGS - 0.56%
3,400 * Helen of Troy Corp .............................. 66,300
2,400 Lancaster Colony Corp ........................... 87,000
4,700 Sunbeam-Oster Inc ............................... 85,188
-------------
238,488
-------------
AUTO - ORIGINAL EQUIPMENT - 1.98%
600 Carlisle Co Inc ................................. 23,250
18,400 Danaher Corp .................................... 556,600
12,180 Mark IV Industries Inc .......................... 245,123
600 Modine Manufacturing Co ......................... 22,650
-------------
847,623
-------------
AUTO - REPLACEMENT PARTS - 0.32%
3,800 Echlin Inc ...................................... 136,800
-------------
BANKS - OTHER - 0.34%
800 Wells Fargo & Co ................................ 147,200
-------------
BANKS - REGIONAL - 0.63%
5,600 Midlantic Corp .................................. 212,100
1,300 Star Banc Corp .................................. 56,388
-------------
268,488
-------------
BEVERAGE - BREWERS/DISTRIBUTORS - 0.51%
5,100 * Canandaigua Wine Co Inc Class A ................. 220,575
-------------
BEVERAGE - SOFT DRINKS - 0.96%
11,900 Coca Cola Enterprises Inc ....................... 254,363
3,200 Pepsico Inc ..................................... 156,800
-------------
411,163
-------------
BROADCASTING - 2.90%
6,300 Capital Cities/ABC Inc .......................... 607,950
3,800 * Heritage Media Corp Class A ..................... 105,450
11,364 * Viacom Inc Class B .............................. 529,845
-------------
1,243,245
-------------
CHEMICAL - MAJOR - 2.02%
9,600 Hercules Inc .................................... 504,000
14,600 Praxair Inc ..................................... 363,175
-------------
867,175
-------------
CHEMICAL - MISCELLANEOUS - 2.55%
6,600 * Airgas Inc ...................................... 171,600
1,000 Ferro Corp ...................................... 27,500
5,500 Lyondell Petrochemical Co ....................... 137,500
2,800 Schulman A Inc .................................. 84,000
7,000 Sigma Aldrich ................................... 308,000
36,500 Terra Industries Inc ............................ 365,000
-------------
1,093,600
-------------
CONGLOMERATES - 0.57%
2,200 ITT Corp ........................................ 246,125
-------------
CONTAINERS - PAPER - 0.11%
1,100 * Sealed Air Corp ................................. 49,085
-------------
COSMETICS/TOILETRIES - 0.76%
6,600 International Flavors & Fragrances .............. 325,050
-------------
DRUGS - 3.11%
1,300 A L Pharma Inc Class A .......................... 24,050
11,900 Bergen Brunswig Corp Class A .................... 273,700
2,200 Bristol Myers Squibb Co ......................... 146,025
6,000 Glaxo Wellcome Plc - ADR ........................ 139,500
16,900 Mylan Labs Inc .................................. 483,763
3,000 Pfizer Inc ...................................... 264,375
-------------
1,331,413
-------------
ELECTRICAL EQUIPMENT - 2.43%
3,000 AMP Inc ......................................... 127,875
3,200 * Cabletron Systems Inc ........................... 171,200
7,400 * General Instrument Corp ......................... 228,475
2,900 * Itel Corp ....................................... 112,738
1,900 Molex Inc ....................................... 70,775
8,200 Philips Electric - ADR .......................... 329,025
-------------
1,040,088
-------------
ELECTRONIC INSTRUMENTS - 3.91%
1,100 * Dionex Corp ..................................... 46,200
4,300 * Dynatech Corp ................................... 77,400
15,800 * Symbol Technologies Inc ......................... 533,250
10,200 Tektronix Inc ................................... 469,200
8,305 * Vishay Intertechnology Inc ...................... 549,165
-------------
1,675,215
-------------
ENTERTAINMENT - 0.57%
4,400 Walt Disney Co .................................. 244,750
-------------
FERTILIZERS - 0.29%
2,700 First Mississippi Corp .......................... 62,438
1,400 IMC Global Inc .................................. 63,000
-------------
125,438
-------------
FINANCE COMPANIES - 1.63%
12,600 Green Tree Financial Corp ....................... 549,675
3,000 Household International Inc ..................... 148,125
-------------
697,800
-------------
FOODS - 3.06%
24,400 Archer Daniels Midland Co ....................... 451,400
3,000 H J Heinz Co .................................... 135,750
88
13,050 Hudson Foods Inc Class A ........................ $ 179,438
10,600 IBP Inc ......................................... 397,500
2,200 Kellogg Co ...................................... 147,675
-------------
1,311,763
-------------
FOOTWEAR - 0.46%
2,500 Nike Inc Class B ................................ 197,188
-------------
HARDWARE & TOOLS - 1.71%
22,200 Black & Decker Corp ............................. 732,600
-------------
HEALTHCARE - 1.96%
12,100 Cardinal Health Inc ............................. 552,060
4,400 Invacare Corp ................................... 177,100
4,000 * Rotech Medical Corp ............................. 109,000
-------------
838,160
-------------
HEAVY DUTY TRUCKS/PARTS - 0.56%
11,430 * Raymond Corp .................................... 240,030
-------------
HOME BUILDERS - 0.98%
24,125 Clayton Homes Inc ............................... 419,172
-------------
HOSPITAL MANAGEMENT - 0.57%
11,900 Surgical Care Affiliates Inc .................... 243,950
-------------
HOSPITAL SUPPLIES - 5.40%
5,500 Becton Dickinson & Co ........................... 316,250
5,200 * Boston Scientific Corp .......................... 149,500
5,800 * Cordis Corp ..................................... 400,200
6,000 Johnson & Johnson ............................... 397,500
9,100 Medtronic Inc ................................... 684,775
3,000 * Nellcor Inc ..................................... 130,500
1,500 Puritan Bennett Corp ............................ 54,938
4,000 * St Jude Medical Inc ............................. 181,000
-------------
2,314,663
-------------
HOUSEHOLD PRODUCTS - 0.34%
2,000 Procter & Gamble Co ............................. 143,750
-------------
INFORMATION PROCESSING - 10.18%
5,600 Apple Computer .................................. 232,750
11,500 * Ceridian Corp ................................... 370,875
7,000 Computer Associates International Inc ........... 458,500
6,000 Danka Business Systems - ADR .................... 147,750
6,100 HBO & Co ........................................ 295,850
2,000 Honeywell Inc ................................... 79,250
4,100 * Informix Corp ................................... 173,225
6,300 International Business Machine Corp ............. 587,470
1,800 Logicon Inc ..................................... 69,075
3,500 * Medic Computer Systems Inc ...................... 133,875
1,200 National Data Corp .............................. 24,900
6,150 * Oracle Systems Corp ............................. 213,713
12,000 Paychex Inc ..................................... 354,000
3,000 * Policy Management Systems Corp .................. 138,000
13,100 Reynolds & Reynolds Co Class A .................. 376,625
3,000 * Silicon Graphics Inc ............................ 116,625
6,600 System Software Assoc Inc ....................... 159,225
3,800 Xerox Corp ...................................... 430,825
-------------
4,362,533
-------------
INSURANCE - CASUALTY - 0.64%
15,800 USF & G Corp .................................... 272,550
-------------
INSURANCE - LIFE - 0.36%
5,300 American Bankers Insurance Group Inc ............ 156,350
-------------
INSURANCE - MISCELLANEOUS - 1.47%
2,000 Alexander & Alexander Services .................. 50,750
700 * CNA Financial Corp .............................. 59,850
2,100 General Re Corp ................................. 284,288
5,000 MGIC Investment Corp ............................ 235,000
-------------
629,888
-------------
INSURANCE - MULTILINE - 0.98%
3,700 American International Group Inc ................ 420,875
-------------
LEISURE TIME - 1.20%
6,600 * Circus Circus Enterprise Inc .................... 220,275
8,400 * Mirage Resorts Inc .............................. 250,950
3,000 * Rio Hotel & Casino Inc .......................... 43,125
-------------
514,350
-------------
LODGING - 1.55%
12,700 La Quinta Motor Inns Inc ........................ 360,363
7,300 * Promus Cos Inc .................................. 305,688
-------------
666,051
-------------
MACHINERY - AGRICULTURE - 0.34%
5,300 Toro Co ......................................... 146,413
-------------
MACHINERY - CONSTRUCTION & CONTRACTS - 2.25%
5,800 Blount Inc Class A .............................. 219,675
6,000 * Clark Equipment Co .............................. 515,250
6,600 Harnischfeger Industries Inc .................... 229,350
-------------
964,275
-------------
MACHINERY - INDUSTRIAL/SPECIALTY - 3.11%
2,900 Dover Corp ...................................... 190,313
14,000 Idex Corp ....................................... 476,000
4,900 JLG Industries Inc .............................. 123,725
800 Pacific Scientific Co ........................... 14,000
5,800 Pall Corp ....................................... 127,600
7,000 Parker Hannifin Corp ............................ 399,875
-------------
1,331,513
-------------
MEDICAL TECHNOLOGY - 0.19%
2,700 * Bio Rad Laboratories Inc Class A ................ 81,000
-------------
MERCHANDISE - DRUG - 0.60%
10,900 Rite Aid Corp.................................... 258,875
-------------
89
MERCHANDISE - SPECIALTY - 5.05%
2,200 Caseys General Stores Inc ....................... $ 37,400
10,200 * Consolidated Stores Inc ......................... 191,250
22,500 Dollar General Corp ............................. 638,438
5,300 Jostens Inc ..................................... 106,663
11,600 * Office Depot Inc ................................ 278,400
21,500 * Staples Inc ..................................... 607,375
20,900 * Waban Inc ....................................... 305,663
-------------
2,165,189
-------------
MERCHANDISING - FOOD - 2.15%
10,500 * Kroger Co ....................................... 273,000
17,800 * Safeway Inc ..................................... 649,700
-------------
922,700
-------------
MISCELLANEOUS - 2.67%
8,100 * CUC International Inc ........................... 297,675
15,100 Equifax Inc ..................................... 473,763
13,200 Manpower Inc .................................... 351,450
2,400 Uniforce Temp Personnel Inc ..................... 21,600
-------------
1,144,488
-------------
MOBILE HOMES - 1.08%
18,500 Oakwood Homes Corp .............................. 464,813
-------------
NATURAL GAS - DIVERSIFIED - 0.65%
11,100 Panhandle Eastern Corp .......................... 278,888
-------------
OIL - INTEGRATED DOMESTIC - 1.71%
5,200 Amoco Corp ...................................... 355,550
1,100 Atlantic Richfield Co ........................... 127,738
6,800 Occidental Petroleum Corp ....................... 156,400
2,600 Phillips Petroleum Co ........................... 94,250
-------------
733,938
-------------
OIL - INTEGRATED
INTERNATIONAL - 1.43%
3,500 British Petroleum Co Plc - ADR .................. 298,813
4,500 Imperial Oil Ltd ................................ 174,938
1,400 Mobil Corp ...................................... 140,525
-------------
614,276
-------------
OIL - SERVICES - 1.12%
5,900 Halliburton Co .................................. 230,100
3,000 Schlumberger Ltd ................................ 195,000
3,000 * Smith International Inc ......................... 53,625
-------------
478,725
-------------
OIL/GAS PRODUCERS - 0.52%
5,400 Norsk Hydro A S - ADR ........................... 222,750
-------------
PAPER/FOREST PRODUCTS - 1.51%
3,000 Avery Dennison Corp ............................. 123,750
8,500 Scott Paper Co .................................. 368,688
8,900 * Stone Container Corp ............................ 155,750
-------------
648,188
-------------
POLLUTION CONTROL - 0.63%
7,600 Browning Ferris Industries Inc .................. 270,750
-------------
RAILROAD - 0.07%
800 Illinois Central Corp ........................... 28,300
-------------
RESTAURANTS - 0.99%
8,100 Applebees International Inc ..................... 204,525
5,800 McDonalds Corp .................................. 219,675
-------------
424,200
-------------
TELECOMMUNICATIONS - 3.39%
7,600 * ADC Telecommunications Inc ...................... 235,600
12,050 * Andrew Corp ..................................... 587,438
1,500 Ericsson LM Telephone Class B - ADR ............. 110,156
4,100 Scientific Atlanta Inc .......................... 76,363
3,100 Telecomm Corp New Zealand Ltd - ADR ............. 199,175
4,000 * Tellabs Inc ..................................... 132,000
7,600 * U S Long Distance Corp .......................... 114,000
-------------
1,454,732
-------------
TEXTILE - PRODUCTS - 0.63%
5,700 Unifi Inc ....................................... 138,938
5,300 Wellman Inc ..................................... 133,163
-------------
272,101
-------------
TRUCKERS - 1.72%
6,800 Consolidated Freightways Inc .................... 161,500
11,900 XTRA Corp ....................................... 574,175
-------------
735,675
-------------
UTILITIES - COMMUNICATION - 0.45%
6,600 Century Telephone Enterprises Inc ............... 193,875
-------------
UTILITIES - ELECTRIC - 0.42%
2,800 American Electric Power Inc ..................... 95,900
3,400 Illinova Corp ................................... 84,150
-------------
180,050
-------------
UTILITIES - GAS, PIPELINE - 0.57%
7,200 Williams Cos Inc ................................ 244,800
-------------
UTILITIES - MISCELLANEOUS - 0.23%
8,935 * Citizens Utility Co Class A ..................... 98,285
-------------
TOTAL COMMON STOCKS
(Cost $36,953,184) .............................. 40,961,768
-------------
PAR
VALUE
-----
CORPORATE SHORT TERM
COMMERCIAL PAPER - 6.67%
CONSUMER FINANCE - 3.31%
$1,420,000 Commercial Credit Co,
6.10% due 06/01/95 ............................. 1,420,000
-------------
90
FINANCE COMPANIES - 3.36%
$1,438,000 CIESCO L P, 6.00% due 06/01/95 .................. $ 1,438,000
-------------
TOTAL CORPORATE SHORT TERM
COMMERCIAL PAPER
(Cost $2,858,000) ............................... 2,858,000
-------------
TOTAL INVESTMENTS
(Cost $39,811,184) - 102.22% .................... 43,819,768
Other assets and liabilities, net - (2.22%) ..... (953,260)
-------------
NET ASSETS (equivalent
to $11.09 per share on
3,866,587 shares
outstanding) - 100% ............................ $ 42,866,508
=============
* Non-income producing
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
3,866,587 shares outstanding ................................ $ 38,666
Additional paid in capital .................................... 39,289,568
Accumulated net realized loss on securities ................... (472,931)
Undistributed net investment income ........................... 2,621
Unrealized appreciation of securities ......................... 4,008,584
-------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING ................... $ 42,866,508
=============
SEE NOTES TO FINANCIAL STATEMENTS.
91
<PAGE>
GROWTH & INCOME FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Dividends ............................................................................................... $ 193,280
Interest ................................................................................................ 196,778
------------
Total investment income ............................................................................. 390,058
------------
EXPENSES:
Advisory fees ........................................................................................... 159,996
Custodian and accounting services ....................................................................... 9,388
Reports to shareholders ................................................................................. 4,112
Audit fees .............................................................................................. 2,234
Registration fees ....................................................................................... 10,279
Directors' fees and expenses ............................................................................ 755
Miscellaneous ........................................................................................... 1,180
------------
Total expenses ...................................................................................... 187,944
------------
NET INVESTMENT INCOME ................................................................................... 202,114
------------
REALIZED AND UNREALIZED GAIN (LOSS)ON SECURITIES:
Net realized loss on securities ......................................................................... (401,877)
Net unrealized appreciation on securities during the year ............................................... 4,070,674
------------
Net realized and unrealized gain on securities during the year .................................... 3,668,797
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........................................................ $ 3,870,911
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE PERIOD FROM
YEAR ENDED APRIL 29, 1994 TO
MAY 31, 1995 MAY 31, 1994
-------------- -------------------
<S> <C> <C>
OPERATIONS:
Net investment income .................................................................. $ 202,114 $ 22,102
Net realized loss on securities ........................................................ (401,877) (71,054)
Net unrealized appreciation (depreciation) of securities during the period ............. 4,070,674 (62,090)
------------ ------------
Increase (decrease) in net assets resulting from operations ........................ 3,870,911 (111,042)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income .................................................................. (202,618) (18,977)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold ....................................................... 29,191,427 10,001,000
Proceeds from capital stock issued for distributions reinvested ........................ 202,618 18,977
------------ ------------
29,394,045 10,019,977
Cost of capital stock repurchased ...................................................... (85,788) --
------------ ------------
Increase in net assets resulting from capital stock transactions ................... 29,308,257 10,019,977
------------ ------------
TOTAL INCREASE IN NET ASSETS ........................................................... 32,976,550 9,889,958
NET ASSETS:
Beginning of period .................................................................... 9,889,958 --
------------ ------------
End of period (including undistributed net investment income of $2,621 and $3,125) ..... $ 42,866,508 $ 9,889,958
============ ============
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold ........................................................... 2,853,051 1,000,100
Shares issued for distributions reinvested ............................................. 19,591 1,919
Shares of capital stock repurchased .................................................... (8,074) --
------------ ------------
Increase in shares outstanding ..................................................... 2,864,568 1,002,019
Shares outstanding:
Beginning of period ................................................................ 1,002,019 --
------------ ------------
End of period ...................................................................... 3,866,587 1,002,019
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
92
<PAGE>
SCIENCE & TECHNOLOGY FUND May 31, 1995 STATEMENT OF NET ASSETS
NUMBER MARKET
OF SHARES VALUE
- ---------- -------------
COMMON STOCKS - 92.54%
AIRLINES - 1.14%
150,000 * Worldcorp Inc ................................... $ 1,893,750
-------------
DRUGS - 4.34%
95,000 * Alza Corp ....................................... 1,983,125
20,000 * Amgen Inc ....................................... 1,450,000
150,000 * Cephalon Inc .................................... 1,471,875
45,000 * Chiron Corp ..................................... 2,328,750
-------------
7,233,750
-------------
INFORMATION PROCESSING -
COMPUTER HARDWARE SYSTEMS - 6.55%
80,000 * Compaq Computer Corp ............................ 3,130,000
35,000 Hewlett Packard Co .............................. 2,314,375
60,000 * Komag Inc ....................................... 2,325,000
70,000 * Sun Microsystems Inc ............................ 3,150,000
-------------
10,919,375
-------------
INFORMATION PROCESSING -
COMPUTER SERVICES - 8.31%
100,000 * America Online Inc .............................. 3,562,500
55,000 First Financial Management Corp ................. 3,905,000
65,000 H & R Block Inc ................................. 2,348,125
50,000 * SunGard Data Systems ............................ 2,493,750
150,000 * Tech Data Corp .................................. 1,537,500
-------------
13,846,875
-------------
INFORMATION PROCESSING -
COMPUTER SOFTWARE - 22.66%
75,000 Adobe Systems Inc ............................... 3,900,000
3,800 * Alias Resh Inc .................................. 130,150
2,500 * Baan Co ......................................... 58,750
120,000 * Broderbund Software Inc ......................... 5,400,000
35,000 * Cadence Design Systems Inc ...................... 1,041,250
120,000 * Expert Software Inc ............................. 1,770,000
50,000 * Intuit Inc ...................................... 3,162,500
39,800 * Learning Co ..................................... 1,189,025
100,000 * Lotus Development Corp .......................... 3,050,000
40,000 * Microsoft Corp .................................. 3,387,500
62,000 * People Soft Inc ................................. 3,069,000
30,000 * Pinnacle Systems Inc ............................ 592,500
2,500 * Sap Ag .......................................... 2,927,545
130,400 * Sybase Inc ...................................... 2,738,400
115,000 * Symantec Corp ................................... 2,645,000
50,000 * Synopsys Inc .................................... 2,712,500
-------------
37,774,120
-------------
INFORMATION PROCESSING -
NETWORKING - 9.65%
50,000 * Alantec Corp .................................... 1,675,000
110,000 * Bay Networks Inc ................................ 4,015,000
6,900 * Cascade Communications Corp ..................... 439,875
79,300 * Firefox Communications Inc ...................... 1,809,030
40,000 * Netmanage Inc ................................... 560,000
75,000 * Shiva Corp ...................................... 2,906,250
26,100 * TGV Software Inc ................................ 512,214
65,000 * 3COM Corp ....................................... 4,160,000
-------------
16,077,369
-------------
MACHINERY - INDUSTRIAL/
SPECIALTY - 0.76%
40,700 * Silicon Valley Group Inc ........................ 1,271,875
-------------
MEDICAL TECHNOLOGY - 1.08%
100,000 * Haemonetics Corp ................................ 1,800,000
-------------
SECURITIES RELATED - 0.54%
125,000 * Investment Technology Group Inc ................. 906,250
-------------
SEMICONDUCTORS - 19.76%
200,000 * Actel Corp ...................................... 2,300,000
100,000 * Analog Devices Inc .............................. 3,112,500
71,100 * Applied Materials Inc ........................... 5,474,700
120,000 * Cirrus Logic Inc ................................ 5,910,000
30,000 Intel Corp ...................................... 3,367,500
100,000 * Maxim Integrated Products Inc ................... 4,587,500
177,700 * Micro Linear Corp ............................... 2,287,888
70,000 Xilinx Inc ...................................... 5,897,500
-------------
32,937,588
-------------
TELECOMMUNICATIONS - 14.78%
100,000 * Act Networks Inc ................................ 1,925,000
67,400 * Ascend Communications Inc ....................... 2,611,750
120,000 * Centennial Cellular Corp Class A ................ 1,650,000
6,000 Ericsson LM Telephone Class B - ADR ............. 440,625
110,000 * Mobile Telecommunication ........................ 2,475,000
110,000 Nokia Corp - ADR ................................ 5,115,000
85,000 * Paging Network Inc .............................. 2,358,750
240,000 Vodafone Group Plc - ADR ........................ 8,070,000
-------------
24,646,125
-------------
UTILITIES - COMMUNICATION - 2.97%
120,000 MCI Communications Corp ......................... 2,430,000
75,000 Sprint Corp ..................................... 2,512,500
-------------
4,942,500
-------------
TOTAL COMMON STOCKS
(Cost $139,908,302).............................. 154,249,577
-------------
PAR
VALUE
---------
CORPORATE SHORT TERM
COMMERCIAL PAPER - 6.18%
CONSUMER FINANCE - 4.42%
$7,365,000 Commercial Credit Group Inc, 6.10% due 06/01/95 . 7,365,000
-------------
93
FINANCE COMPANIES - 1.76%
$2,941,000 CIESCO L P, 6.00% due 06/01/95 .................. $ 2,941,000
-------------
TOTAL CORPORATE SHORT TERM
COMMERCIAL PAPER
(Cost $10,306,000) .............................. 10,306,000
-------------
TOTAL INVESTMENTS
(Cost $150,214,302) - 98.72% .................... 164,555,577
Other assets and liabilities, net - 1.28% ....... 2,127,463
-------------
NET ASSETS (equivalent to $14.43 per share
on 11,550,196 shares outstanding) - 100% ....... $ 166,683,040
=============
*Non-income producing
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
11,550,196 shares outstanding ................... $ 115,502
Additional paid in capital ....................... 143,575,756
Undistributed net realized gain on securities ... 8,620,288
Undistributed net investment income ............. 30,219
Unrealized appreciation of securities ........... 14,341,275
-------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING ..... $ 166,683,040
=============
SEE NOTES TO FINANCIAL STATEMENTS.
94
<PAGE>
SCIENCE & TECHNOLOGY FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends (net of foreign withholding taxes of $11,849)............................................................. $ 113,010
Interest............................................................................................................ 770,528
-----------
Total investment income......................................................................................... 883,538
-----------
EXPENSES:
Advisory fees....................................................................................................... 558,564
Custodian and accounting services................................................................................... 24,889
Reports to shareholders............................................................................................. 12,148
Audit fees.......................................................................................................... 6,941
Registration fees................................................................................................... 45,648
Directors' fees and expenses........................................................................................ 1,846
Miscellaneous....................................................................................................... 1,838
-----------
Total expenses.................................................................................................. 651,874
-----------
NET INVESTMENT INCOME............................................................................................... 231,664
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES AND FOREIGN CURRENCIES:
Net realized gain (loss) on:
Investments..................................................................................... $9,284,144
Foreign currency transactions................................................................... (7,288)
Options written................................................................................. 16,265 9,293,121
---------- -----------
Net unrealized appreciation of securities during the year........................................................... 14,512,577
-----------
23,805,698
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................................... $24,037,362
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FISCAL FOR THE PERIOD
YEAR ENDED APRIL 29, 1994
MAY 31, 1995 TO MAY 31, 1994
-------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income.......................................................................... $ 231,664 $ 4,229
Net realized gain on securities................................................................ 9,293,121 -
Net unrealized appreciation (depreciation) of securities during the period................. 14,512,577 (171,302)
------------- -------------
Increase (decrease) in net assets resulting from operations................................ 24,037,362 (167,073)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.......................................................................... (194,344) (4,042)
Net realized gain on securities................................................................ (680,121) -
------------- -------------
Decrease in net assets resulting from distributions to shareholders........................ (874,465) (4,042)
CAPITAL STOCK TRANSACTIONS: ------------- -------------
Proceeds from capital stock sold............................................................... 138,322,673 10,001,000
Proceeds from capital stock issued for distributions reinvested................................ 874,465 4,042
------------- -------------
139,197,138 10,005,042
Cost of capital stock repurchased.............................................................. (5,510,922) -
------------- -------------
Increase in net assets resulting from capital stock transactions........................... 133,686,216 10,005,042
------------- -------------
TOTAL INCREASE IN NET ASSETS................................................................... 156,849,113 9,833,927
NET ASSETS:
Beginning of period............................................................................ 9,833,92 -
------------- -------------
End of period (including undistributed net investment income of $30,219 and $187).............. $166,683,040 $ 9,833,927
============= =============
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold................................................................... 10,904,305 1,000,100
Shares issued for distributions reinvested..................................................... 69,381 414
Shares of capital stock repurchased ........................................................... (424,004) -
------------- -------------
Increase in shares outstanding............................................................. 10,549,682 1,000,514
Shares outstanding:
Beginning of period........................................................................ 1,000,514 -
------------- -------------
End of period.............................................................................. 11,550,196 1,000,514
============= =============
</TABLE>
95
<PAGE>
SOCIAL AWARENESS FUND MAY 31, 1995 STATEMENT OF NET ASSETS
NUMBER MARKET
OF SHARES VALUE
- ---------- -------------
COMMON STOCKS - 98.31%
ADVERTISING - 0.17%
2,523 Interpublic Group of Cos Inc .................... $ 93,036
-------------
AIRLINES - 0.52%
3,389 * AMR Corp ........................................ 231,299
-------------
744 Delta Air Lines Inc ............................. 48,453
-------------
279,752
APPLIANCES/FURNISHINGS - 0.24%
2,226 Whirlpool Corp .................................. 127,160
-------------
AUTO - CARS - 0.78%
9,588 Chrysler Corp ................................... 418,277
-------------
AUTO - REPLACEMENT PARTS - 1.02%
443 Cooper Tire & Rubber Co ......................... 10,743
2,750 Echlin Inc ...................................... 99,000
5,180 Genuine Parts Co ................................ 203,315
5,624 Goodyear Tire & Rubber Co ....................... 237,614
-------------
550,672
-------------
BANKS - NEW YORK CITY - 2.06%
3,805 Bank of New York Inc ............................ 155,054
1,487 Chase Manhattan Corp ............................ 68,774
4,686 Chemical Banking Corp ........................... 216,142
6,551 Citicorp ........................................ 350,479
4,487 J P Morgan & Co Inc ............................. 318,016
-------------
1,108,465
-------------
BANKS - OTHER - 1.89%
9,968 BankAmerica Corp ................................ 520,828
3,828 First Union Corp ................................ 187,572
2,322 Fleet Financial Group Inc ....................... 80,980
4,396 Mellon Bank Corp ................................ 187,929
213 Wells Fargo & Co ................................ 39,192
-------------
1,016,501
-------------
BANKS - REGIONAL - 3.58%
9,126 Banc One Corp ................................... 317,129
411 Barnett Banks Inc ............................... 20,396
849 Corestates Financial Corp ....................... 28,229
962 First Fidelity Bancorp Inc ...................... 51,106
1,356 First Interstate Bancorp Inc .................... 113,904
8,926 Keycorp ......................................... 273,359
7,869 NationsBank Corp ................................ 445,582
5,652 NBD Bancorp Inc ................................. 185,810
5,478 Norwest Corp .................................... 155,438
5,571 PNC Bank Corp ................................... 150,417
761 Shawmut National Corp ........................... 22,069
972 SunTrust Banks Inc .............................. 56,376
2,894 Wachovia Corp ................................... 109,610
-------------
1,929,425
-------------
BEVERAGE - BREWERS/
DISTRIBUTORS - 1.19%
4,784 Anheuser Busch Cos Inc .......................... 282,854
11,866 Seagram Ltd ..................................... 355,980
-------------
638,834
-------------
BEVERAGE - SOFT DRINKS - 4.03%
23,957 Coca Cola Co .................................... 1,482,339
14,088 Pepsico Inc ..................................... 690,312
-------------
2,172,651
-------------
BROADCASTING - 1.33%
2,757 Capital Cities/ABC Inc .......................... 266,051
11,373 * Tele Communications Inc Class A ................. 240,255
4,542 * Viacom Inc Class B .............................. 211,771
-------------
718,077
-------------
BUILDING MATERIALS - 0.45%
865 Armstrong World Industries Inc .................. 44,656
1,647 Lowes Cos Inc ................................... 44,881
5,408 Masco Corp ...................................... 156,156
-------------
245,693
-------------
CHEMICAL - MAJOR - 1.85%
1,094 B F Goodrich Co ................................. 54,290
3,121 Morton International Inc ........................ 99,092
7,931 PPG Industries Inc .............................. 330,128
3,687 Praxair Inc ..................................... 91,714
3,337 Rohm & Haas Co .................................. 196,466
3,496 W R Grace Co .................................... 224,618
-------------
996,308
-------------
CHEMICAL - MISCELLANEOUS - 0.63%
3,068 Great Lakes Chemical Corp ....................... 187,148
2,080 Lubrizol Corp ................................... 72,540
1,270 Lyondell Petrochemical Co ....................... 31,750
1,216 Nalco Chemical Co ............................... 45,904
-------------
337,342
-------------
CONGLOMERATES - 0.18%
1,753 Tyco International Ltd .......................... 94,881
-------------
CONSUMER FINANCE - 0.09%
899 Beneficial Corp ................................. 40,006
220 MBNA Corp ....................................... 7,425
-------------
47,431
-------------
CONTAINERS - METAL/GLASS - 0.11%
1,212 * Crown Cork & Seal Inc ........................... 56,964
-------------
CONTAINERS - PAPER - 0.14%
1,738 Temple Inland Inc ............................... 75,169
-------------
COSMETICS/TOILETRIES - 1.39%
1,528 Avon Products Inc ............................... 102,949
5,931 Gillette Co ..................................... 500,428
2,937 International Flavors & Fragrances .............. 144,647
-------------
748,024
-------------
96
DRUGS - 6.61%
5,956 American Home Products Corp ..................... $ 438,511
801 * Amgen Inc ....................................... 58,073
12,731 Bristol Myers Squibb Co ......................... 845,020
24,198 Merck & Co Inc .................................. 1,140,331
6,603 Pfizer Inc ...................................... 581,889
3,561 Schering Plough Corp ............................ 280,429
2,668 Warner Lambert Co ............................... 221,111
-------------
3,565,364
-------------
ELECTRICAL EQUIPMENT - 1.94%
5,575 AMP Inc ......................................... 237,634
9,643 Emerson Electric Co ............................. 662,956
1,858 Raychem Corp .................................... 67,585
514 Thomas & Betts Corp ............................. 34,631
750 W W Grainger Inc ................................ 44,906
-------------
1,047,712
-------------
ENTERTAINMENT - 1.81%
770 Hasbro Inc ...................................... 27,143
3,881 Mattel Inc ...................................... 97,025
7,865 Time Warner Inc ................................. 311,651
9,695 Walt Disney Co .................................. 539,284
-------------
975,103
-------------
FINANCE COMPANIES - 0.60%
1,736 Household International Corp .................... 85,715
5,670 Travelers Inc ................................... 239,558
-------------
325,273
-------------
FOODS - 2.97%
10,518 Archer Daniels Midland Co ....................... 194,583
4,986 Campbell Soup Co ................................ 244,937
4,944 Conagra Inc ..................................... 165,006
3,595 CPC International Inc ........................... 218,396
2,404 General Mills Inc ............................... 124,708
5,662 H J Heinz Co .................................... 256,206
198 Hershey Foods Corp .............................. 10,222
3,952 Kellogg Co ...................................... 265,278
479 Quaker Oats Co .................................. 16,705
1,488 Ralston Purina Co ............................... 74,772
732 Wm Wrigley Jr Co ................................ 33,123
-------------
1,603,936
-------------
FOOTWEAR - 0.29%
1,272 Nike Inc Class B ................................ 100,329
1,665 Reebok International Ltd ........................ 55,778
-------------
156,107
-------------
FREIGHT - 0.10%
870 * Federal Express Corp ............................ 52,091
-------------
GOLD MINING - 0.56%
474 Echo Bay Mines Ltd .............................. 4,236
4,205 Homestake Mining Co ............................. 70,959
8,975 Placer Dome Inc ................................. 226,619
-------------
301,814
-------------
GOVERNMENT SPONSORED - 1.44%
3,317 Federal Home Loan Mortgage Corp ................. $ 225,971
5,936 Federal National Mortgage Association ........... 552,048
-------------
778,019
-------------
HARDWARE & TOOLS - 0.11%
617 Black & Decker Corp ............................. 20,361
1,021 Stanley Works ................................... 40,840
-------------
61,201
-------------
HEALTHCARE - 0.16%
2,718 U S Healthcare Inc .............................. 84,428
-------------
HEAVY DUTY TRUCKS/PARTS - 0.31%
955 Cummins Engine Inc .............................. 43,453
4,299 Dana Corp ....................................... 121,447
-------------
164,900
-------------
HOSPITAL MANAGEMENT - 0.38%
5,042 Columbia/HCA Healthcare Corp .................. 206,092
-------------
HOSPITAL SUPPLIES - 3.00%
12,546 Abbott Laboratories ............................. 501,840
6,113 Baxter International Inc ........................ 213,191
12,387 Johnson & Johnson ............................... 820,639
1,110 Medtronic Inc ................................... 83,528
-------------
1,619,198
-------------
HOUSEHOLD PRODUCTS - 1.88%
3,368 Colgate Palmolive Co ............................ 259,336
741 Newell Co ....................................... 18,432
247 Premark International Inc ....................... 12,319
1,364 Rubbermaid Inc .................................. 43,478
5,336 Unilever N V - ADR .............................. 679,006
-------------
1,012,571
-------------
INFORMATION PROCESSING - 7.64%
1,912 Apple Computer .................................. 79,468
285 Autodesk Inc .................................... 10,545
1,128 Automatic Data Processing Inc ................... 70,218
3,703 * Cisco Systems Inc ............................... 162,006
4,149 * Compaq Computer Corp ............................ 162,330
2,504 Computer Associates International Inc ........... 164,012
1,766 * Digital Equipment Corp .......................... 78,808
166 H & R Block Inc ................................. 5,997
10,710 Hewlett Packard Co .............................. 708,199
10,979 International Business Machine Corp ............. 1,023,792
8,651 * Microsoft Corp .................................. 732,632
1,243 * Novell Inc ...................................... 24,005
6,929 * Oracle Systems Inc .............................. 240,783
4,100 Pitney Bowes Inc ................................ 151,700
1,456 * Silicon Graphics Inc ............................ 56,602
555 * Sun Microsystems Inc ............................ 24,975
1,333 * Tandem Computers Inc ............................ 17,662
3,588 Xerox Corp ...................................... 406,790
-------------
4,120,524
-------------
97
INSURANCE - CASUALTY - 0.17%
511 Chubb Corp ...................................... $ 42,094
930 St Paul Companies Inc ........................... 47,314
-------------
89,408
-------------
INSURANCE - LIFE - 0.31%
149 Lincoln National Corp ........................... 6,742
2,705 Transamerica Corp ............................... 161,624
-------------
168,366
-------------
INSURANCE - MISCELLANEOUS - 0.28%
512 General Reinsurance Corp ........................ 69,312
2,209 United Healthcare Corp .......................... 82,285
-------------
151,597
-------------
INSURANCE - MULTILINE - 2.48%
2,026 Aetna Life & Casualty Co ........................ 120,800
7,700 American International Group Inc ................ 875,875
2,558 Cigna Corp ...................................... 191,211
1,575 Marsh & McLennan Cos Inc ........................ 125,409
623 Providian Corp .................................. 22,662
-------------
1,335,957
-------------
MACHINERY - AGRICULTURE - 0.44%
2,724 Deere & Co ...................................... 235,626
-------------
MACHINERY - CONSTRUCTION & CONTRACTS - 0.59%
5,323 Caterpillar Inc ................................. 320,711
-------------
MACHINERY - INDUSTRIAL/SPECIALTY - 1.09%
6,964 Cooper Industries Inc ........................... 257,668
811 Dover Corp ...................................... 53,222
2,981 Illinois Tool Works Inc ......................... 148,305
1,823 Ingersoll Rand Co ............................... 67,907
948 Johnson Controls Inc ............................ 54,273
372 Pall Corp ....................................... 8,184
-------------
589,559
-------------
MERCHANDISE - SPECIALTY - 0.78%
144 American Greetings Corp Class A ................. 4,068
582 Gap Inc ......................................... 20,006
5,921 Home Depot Inc .................................. 246,462
4,383 Limited Inc ..................................... 97,522
2,199 * Toys R Us Inc ................................... 55,525
-------------
423,583
-------------
MERCHANDISING - DEPARTMENT - 0.46%
1,090 Dayton Hudson Corp .............................. 77,254
4,398 May Department Stores Co ........................ 172,622
-------------
249,876
-------------
MERCHANDISING - FOOD - 0.30%
3,896 Albertsons Inc .................................. 109,088
823 American Stores Co .............................. 21,501
593 Winn Dixie Stores Inc ........................... 34,023
-------------
164,612
-------------
MERCHANDISING - MASS - 3.50%
5,395 J C Penney Inc .................................. 254,239
7,781 K Mart Corp ..................................... 99,208
8,748 Sears Roebuck & Co .............................. 493,169
41,563 Wal Mart Stores Inc ............................. 1,039,075
-------------
1,885,691
-------------
METALS - ALUMINUM - 1.11%
7,726 Alcan Aluminium Ltd ............................. 228,883
6,476 Aluminum Co of America .......................... 301,134
1,368 Reynolds Metal Co ............................... 67,545
-------------
597,562
-------------
METALS - COPPER - 0.16%
2,024 Newmont Mining Corp ............................. 84,502
-------------
METALS - MISCELLANEOUS - 0.25%
1,100 Cyprus Amax Minerals Co ......................... 29,150
499 Englehard Corp .................................. 20,771
3,395 Inco Ltd ........................................ 84,875
-------------
134,796
-------------
METALS - STEEL - 0.23%
648 CBI Industries Inc .............................. 16,362
1,235 Nucor Corp ...................................... 58,971
1,490 USX US Steel Group .............................. 47,680
-------------
123,013
-------------
MISCELLANEOUS - 0.27%
4,549 Corning Inc ..................................... 145,568
-------------
NATURAL GAS - DIVERSIFIED - 0.28%
4,010 Panhandle Eastern Corp .......................... 100,751
1,546 Sonat Inc ....................................... 50,825
-------------
151,576
-------------
OIL - INTEGRATED DOMESTIC - 3.16%
3,574 Amerada Hess Corp ............................... 181,381
3,148 Ashland Oil Inc ................................. 116,870
3,997 Burlington Resources Inc ........................ 165,876
1,514 Mapco Inc ....................................... 89,137
3,070 * Oryx Energy Corp ................................ 44,131
2,261 Pennzoil Co ..................................... 111,637
14,174 Phillips Petroleum Co ........................... 513,808
7,093 Sun Co .......................................... 223,430
13,021 USX Marathon Group .............................. 258,792
-------------
1,705,062
-------------
OIL - INTEGRATED INTERNATIONAL - 3.33%
34,257 Chevron Corp .................................... 1,682,875
2,618 Murphy Oil Corp ................................. 114,538
-------------
1,797,413
-------------
OIL - SERVICES - 1.58%
1,382 Baker Hughes Inc ................................ 31,095
6,426 Dresser Industries Inc .......................... 146,995
98
2,128 Halliburton Co .................................. $ 82,992
9,116 Schlumberger Ltd ................................ 592,540
-------------
853,622
-------------
PAPER/FOREST PRODUCTS - 2.01%
1,067 Alco Standard Corp .............................. 76,424
1,202 Avery Dennison Corp ............................. 49,583
994 Boise Cascade Corp .............................. 32,802
4,471 Kimberly Clark Corp ............................. 268,260
2,070 Mead Corp ....................................... 111,521
3,688 Scott Paper Co .................................. 159,967
7,451 Weyerhaeuser Co ................................. 326,913
1,198 Willamette Industries Inc ....................... 60,200
-------------
1,085,670
-------------
PHOTOGRAPHY - 0.07%
970 Polaroid Corp ................................... 35,769
-------------
POLLUTION CONTROL - 0.93%
2,255 Browning Ferris Industries Inc .................. 80,334
15,556 WMX Technologies Inc ............................ 423,901
-------------
504,235
-------------
PUBLISHING - NEWS - 0.44%
3,036 Dow Jones & Co Inc .............................. 110,814
2,372 Gannett Inc ..................................... 126,902
-------------
237,716
-------------
PUBLISHING/PRINTING - 0.91%
8,897 Dun & Bradstreet Corp ........................... 471,541
910 Moore Corp Ltd .................................. 19,906
-------------
491,447
-------------
RAILROAD - 1.98%
992 Burlington Northern Inc ......................... 60,636
2,130 Conrail Inc ..................................... 115,020
2,572 CSX Corp ........................................ 196,115
4,357 Norfolk Southern Corp ........................... 298,455
7,209 Union Pacific Corp .............................. 399,198
-------------
1,069,424
-------------
RESTAURANTS - 1.14%
2,404 * Darden Restaurants .............................. 26,444
15,459 McDonalds Corp .................................. 585,510
-------------
611,954
-------------
SAVINGS & LOAN - 0.04%
1,001 Great Western Financial Corp .................... 21,897
-------------
SECURITIES RELATED - 1.99%
12,702 American Express Co ............................. 452,509
2,270 Dean Witter Discover & Co ....................... 108,109
5,406 Merrill Lynch & Co Inc .......................... 254,082
1,847 Morgan Stanley Group Inc ........................ 140,603
2,863 Salomon Inc ..................................... 117,383
-------------
1,072,686
-------------
SEMICONDUCTORS - 2.01%
2,008 * Advanced Micro Devices Inc ...................... 66,013
1,117 * Applied Materials Inc ........................... 86,009
7,033 Intel Corp ...................................... 789,454
3,212 Micron Technology Inc ........................... 143,336
-------------
1,084,812
-------------
TELECOMMUNICATIONS - 0.87%
391 * Airtouch Communications ......................... 10,655
4,547 ALLTEL Corp ..................................... 111,970
650 * DSC Communications Corp ......................... 24,050
8,447 Northern Telecommunications Ltd ................. 324,154
-------------
470,829
-------------
TEXTILE - PRODUCTS - 0.13%
1,263 V F Corp ........................................ 67,255
-------------
TRUCKERS - 0.09%
527 Roadway Services Inc ............................ 24,637
909 Ryder System Inc ................................ 23,066
-------------
47,703
-------------
UTILITIES - COMMUNICATION - 9.78%
8,673 Ameritech Corp .................................. 384,864
31,698 AT & T Corp ..................................... 1,608,650
10,184 Bell Atlantic Corp .............................. 567,758
10,869 Bellsouth Corp .................................. 667,085
7,131 MCI Communications Corp ......................... 144,403
11,507 Nynex Corp ...................................... 480,417
14,443 Pacific Telesis Group ........................... 386,350
10,781 SBC Communications Inc .......................... 485,145
3,490 Sprint Corp ..................................... 116,915
10,540 U S West Inc .................................... 434,775
-------------
5,276,362
-------------
UTILITIES - ELECTRIC - 2.45%
8,021 Allegheny Power System Inc ...................... 199,522
7,557 Cinergy Corp .................................... 201,205
288 Ipalco Enterprises .............................. 9,432
1,139 Montana Power Co ................................ 26,055
1,371 Oklahoma Gas & Electric Co ...................... 48,328
19,114 PacifiCorp ...................................... 377,502
7,951 Potomac Electric Power Co ....................... 162,002
4,214 Public Service Co of Colorado ................... 138,009
4,322 Puget Sound Power & Light Co .................... 98,866
534 Teco Energy Inc ................................. 11,748
1,756 Utilicorp United Inc ............................ 50,046
-------------
1,322,715
-------------
UTILITIES - GAS, PIPELINE - 1.25%
513 * Columbia Gas System Inc ......................... 15,390
3,612 Consolidated Natural Gas Co ..................... 144,029
7,427 Enron Corp ...................................... 271,086
679 Nicor Inc ....................................... 18,078
3,658 Pacific Enterprises ............................. 92,365
1,215 Peoples Energy Corp ............................. 32,501
3,024 Williams Cos Inc ................................ 102,816
-------------
676,265
-------------
99
TOTAL COMMON STOCKS
(Cost $47,160,938)............................... $ 53,013,834
=============
PAR VALUE
CORPORATE SHORT TERM
COMMERCIAL PAPER - 1.29%
CONSUMER FINANCE - 1.29%
Sears Roebuck Acceptance Corp:
$ 219,000 5.80% due 06/01/95 .............................. 219,000
475,000 5.80% due 06/02/95 .............................. 474,924
-------------
693,924
-------------
TOTAL CORPORATE SHORT TERM
COMMERCIAL PAPER
(Cost $693,924).................................. 693,924
-------------
UNITED STATES GOVERNMENT -
SHORT TERM - 0.04%
25,000 United States Treasury Bills, 5.735% due
06/22/95 (Cost $24,916).......................... 24,916
-------------
TOTAL INVESTMENTS
(Cost $47,879,778) - 99.64%...................... 53,732,674
Other assets and liabilities, net - 0.36%........ 194,417
-------------
NET ASSETS (equivalent to $13.02 per share on
4,143,021 shares outstanding) - 100%............. $ 53,927,091
=============
*Non-income producing
UNREALIZED
CONTRACTS APPRECIATION
--------- -------------
FUTURES CONTRACTS PURCHASED (1) (Delivery
month/Value at 05/31/95)
2(2) S&P 500 Index Futures (June/$533.35)............. $ 17,950
=============
(1) U.S. Treasury Bills with a market value of
approximately $25,000 were maintained in a
segregated account with a portion placed as
collateral for futures contracts.
(2) Per 500
- -------------------------------------------------------------------------------
Net Assets Represented By:
Capital stock, $.01 par value per share, 1,000,000,000 shares
authorized, 4,143,021 shares outstanding .................. $ 41,430
Additional paid in capital .................................. 46,998,684
Undistributed net realized gain on securities ............... 1,016,131
Unrealized appreciation of:
Investments ............................. $ 5,852,896
Futures ................................. 17,950 5,870,846
----------- -----------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING ................. $53,927,091
===========
SEE NOTES TO FINANCIAL STATEMENTS.
100
<PAGE>
SOCIAL AWARENESS FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends.................................................................................................... $ 1,332,818
Interest..................................................................................................... 10,494
------------
Total investment income.................................................................................. 1,343,312
------------
EXPENSES:
Advisory fees................................................................................................ 238,741
Custodian and accounting services............................................................................ 24,719
Reports to shareholders...................................................................................... 6,580
Audit fees................................................................................................... 3,716
Directors' fees and expenses................................................................................. 2,018
Miscellaneous................................................................................................ 4,318
------------
Total expenses........................................................................................... 280,092
------------
NET INVESTMENT INCOME........................................................................................ 1,063,220
------------
REALIZED AND UNREALIZED GAIN ON SECURITIES:
Net realized gain on:
Investments............................................................................... $ 2,352,412
Futures contracts......................................................................... 3,885 2,356,297
------------
Net unrealized appreciation of securities during the year:
Investments............................................................................... 4,798,225
Futures contracts......................................................................... 17,950 4,816,175
------------ ------------
Net realized and unrealized gain on securities during the year............................................... 7,172,472
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................................................. $ 8,235,692
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended May 31:
<TABLE>
<CAPTION>
1995 1994
------------ ----------
<S> <C> <C>
OPERATIONS:
Net investment income......................................................................... $ 1,063,220 $ 898,611
Net realized gain on securities............................................................... 2,356,297 1,700,299
Net unrealized appreciation (depreciation) of securities during the year...................... 4,816,175 (1,911,622)
------------ ----------
Increase in net assets resulting from operations.......................................... 8,235,692 687,288
------------ ----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income......................................................................... (1,067,168) (898,661)
Net realized gain on securities............................................................... (2,755,148) (407,216)
------------ ----------
Decrease in net assets resulting from distributions to shareholders....................... (3,822,316) (1,305,877)
------------ ----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold.............................................................. 6,436,649 12,845,561
Proceeds from capital stock issued for distributions reinvested............................... 3,822,316 1,305,877
----------- -----------
10,258,965 14,151,438
Cost of capital stock repurchased............................................................. (6,474,724) (1,969,138)
----------- -----------
Increase in net assets resulting from capital stock transactions.......................... 3,784,241 12,182,300
----------- -----------
TOTAL INCREASE IN NET ASSETS.................................................................. 8,197,617 11,563,711
NET ASSETS:
Beginning of year............................................................................. 45,729,474 34,165,763
------------ -----------
End of year (including undistributed net investment income of $0 and $4,889).................. $ 53,927,091 $45,729,474
============ ===========
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold.................................................................. 537,130 1,051,900
Shares issued for distributions reinvested.................................................... 336,272 106,851
Shares of capital stock repurchased .......................................................... (547,073) (161,494)
------------ ----------
Increase in shares outstanding............................................................ 326,329 997,257
Shares outstanding:
Beginning of year......................................................................... 3,816,692 2,819,435
End of year............................................................................... 4,143,021 3,816,692
============ ==========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
101
<PAGE>
TIMED OPPORTUNITY FUND May 31, 1995 STATEMENT OF NET ASSETS
NUMBER MARKET
OF SHARES VALUE
- -------- ------
COMMON STOCKS - 42.25%
AEROSPACE/DEFENSE - 0.62%
2,019 Boeing Co ......................................... $ 118,869
3,872 General Dynamics Corp ............................. 169,400
6,352 Lockheed Corp ..................................... 377,944
2,714 McDonnell Douglas Corp ............................ 196,087
1,538 Northrop Corp ..................................... 80,553
1,917 Raytheon Co ....................................... 148,568
412 Rockwell International Corp ....................... 18,798
469 United Technologies Corp .......................... 35,585
------------
1,145,804
------------
AIRLINES - 0.07%
1,518 * AMR Corp .......................................... 103,604
271 Delta Air Lines Inc ............................... 17,649
------------
121,253
------------
APPLIANCES/FURNISHINGS - 0.03%
612 Whirlpool Corp .................................... 34,961
2,308 * Zenith Electronics Corp ........................... 17,887
------------
52,848
------------
AUTO - CARS - 0.81%
5,873 Chrysler Corp ..................................... 256,210
19,346 Ford Motor Co ..................................... 565,871
13,919 General Motors Corp ............................... 668,112
------------
1,490,193
------------
AUTO - REPLACEMENT PARTS - 0.56%
13,867 Cooper Tire & Rubber Co ........................... 336,275
3,603 Echlin Inc ........................................ 129,708
6,767 Genuine Parts Co .................................. 265,605
7,708 Pep Boys Manny Moe & Jack Co ...................... 214,861
5,467 SPX Corp .......................................... 71,754
------------
1,018,203
------------
BANKS - NEW YORK CITY - 0.39%
3,174 Chemical Banking Corp ............................. 146,401
4,016 Citicorp .......................................... 214,856
4,961 J P Morgan & Co Inc ............................... 351,611
------------
712,868
------------
BANKS - OTHER - 0.49%
4,759 BankAmerica Corp .................................. 248,658
784 First Union Corp .................................. 38,416
603 Fleet Financial Group Inc ......................... 21,030
10,677 National City Corp ................................ 324,314
1,397 Wells Fargo & Co .................................. 257,048
------------
889,466
------------
BANKS - REGIONAL - 1.48%
2,894 Barnett Banks Inc ................................. 143,615
2,380 First Fidelity Bancorp Inc ........................ 126,438
3,689 First Interstate Bancorp Inc ...................... 309,876
16,407 Keycorp ........................................... 502,464
10,032 NationsBank Corp .................................. 568,062
9,804 NBD Bancorp Inc ................................... 322,307
11,015 Norwest Corp ...................................... 312,551
2,772 Shawmut National Corp ............................. 80,388
3,587 SunTrust Banks Inc ................................ 208,046
3,943 Wachovia Corp ..................................... 149,341
------------
2,723,088
------------
BEVERAGE - BREWERS/
DISTRIBUTORS - 0.30%
1,585 Anheuser Busch Cos Inc ............................ 93,713
15,054 Seagram Ltd ....................................... 451,620
------------
545,333
------------
BEVERAGE - SOFT DRINKS - 1.43%
26,815 Coca Cola Co ...................................... 1,659,178
19,765 Pepsico Inc ....................................... 968,485
------------
2,627,663
------------
BROADCASTING - 0.57%
3,376 Capital Cities/ABC Inc ............................ 325,784
305 CBS Inc ........................................... 20,435
4,087 Comcast Corp Class A .............................. 71,523
15,008 * Tele Communications Inc Class A ................... 317,044
6,552 * Viacom Inc Class B ................................ 305,487
------------
1,040,273
------------
BUILDING MATERIALS - 0.14%
755 Armstrong World Industries Inc .................... 38,977
7,936 Lowes Cos Inc ..................................... 216,256
------------
255,233
------------
CHEMICAL - MAJOR - 1.04%
1,109 B F Goodrich Co ................................... 55,034
6,773 Dow Chemical Co ................................... 496,969
9,151 Du Pont E I De Nemours & Co ....................... 621,124
2,260 Monsanto Co ....................................... 188,145
191 Morton International Inc .......................... 6,064
2,880 PPG Industries Inc ................................ 119,880
6,520 Praxair Inc ....................................... 162,185
1,682 Rohm & Haas Co .................................... 99,028
5,227 Union Carbide Corp ................................ 152,890
------------
1,901,319
------------
CHEMICAL - MISCELLANEOUS - 0.51%
3,179 Eastman Chemical Co ............................... 190,740
1,436 Ecolab Inc ........................................ 36,439
2,103 * FMC Corp .......................................... 135,381
4,792 Great Lakes Chemical Corp ......................... 292,312
7,406 Nalco Chemical Co ................................. 279,577
------------
934,449
------------
COAL - 0.01%
65 NACCO Industries Inc Class A ...................... 3,900
------------
CONGLOMERATES - 0.48%
6,433 Allied Signal Inc ................................. 259,732
1,280 Dial Corp ......................................... 31,360
4,415 Ogden Corp ........................................ 97,130
102
2,130 Teledyne Inc ...................................... $ 51,919
27 Teledyne Inc (Preferred) .......................... 375
4,147 Tenneco Inc ....................................... 199,056
2,821 Textron Inc ....................................... 171,728
1,371 Tyco International Ltd ............................ 74,205
------------
885,505
------------
CONSUMER FINANCE - 0.06%
1,936 Beneficial Corp ................................... 86,152
617 MBNA Corp ......................................... 20,824
------------
106,976
------------
CONTAINERS - METAL/GLASS - 0.06%
2,291 * Crown Cork & Seal Inc ............................. 107,677
------------
CONTAINERS - PAPER - 0.14%
5,961 Temple Inland Inc ................................. 257,813
------------
COSMETICS/TOILETRIES - 0.22%
4,907 Gillette Co ....................................... 414,028
------------
DRUGS - 2.65%
2,318 Allergan Inc ...................................... 61,717
73 * Allergan Ligand Retinoid
Therapeutics Inc (Rights) ......................... 64
9,018 * Alza Corp ......................................... 188,251
7,591 American Home Products Corp ....................... 558,887
2,069 * Amgen Inc ......................................... 150,003
12,065 Bristol Myers Squibb Co ........................... 800,814
2,708 Eli Lilly & Co .................................... 202,085
29,514 Merck & Co Inc .................................... 1,390,847
7,793 Pfizer Inc ........................................ 686,758
7,588 Schering Plough Corp .............................. 597,555
5,701 Upjohn Co ......................................... 207,374
198 Warner Lambert Co ................................. 16,409
------------
4,860,764
------------
ELECTRICAL EQUIPMENT - 1.78%
2,502 Emerson Electric Co ............................... 172,013
39,148 General Electric Co ............................... 2,270,584
8,949 Raychem Corp ...................................... 325,520
2,411 Thomas & Betts Corp ............................... 162,441
4,372 W W Grainger Inc .................................. 261,774
4,380 Westinghouse Electric Corp ........................ 63,510
------------
3,255,842
------------
ELECTRONIC INSTRUMENTS - 0.13%
1,700 General Signal Corp ............................... 62,900
12,370 * Intergraph Corp ................................... 166,995
------------
229,895
------------
ENTERTAINMENT - 0.53%
2,504 Hasbro Inc ........................................ 88,266
2,519 Time Warner Inc ................................... 99,815
13,934 Walt Disney Co .................................... 775,079
------------
963,160
------------
FERTILIZERS - 0.08%
6,731 First Mississippi Corp ............................ 155,654
------------
FINANCE COMPANIES - 0.10%
2,626 Household International Inc ....................... 129,659
1,145 Travelers Inc ..................................... 48,376
------------
178,035
------------
FOODS - 1.00%
15,259 Archer Daniels Midland Co ......................... 282,292
5,977 Campbell Soup Co .................................. 293,620
2,928 Conagra Inc ....................................... 97,722
5,505 General Mills Inc ................................. 285,572
2,761 H J Heinz Co ...................................... 124,935
431 Hershey Foods Corp ................................ 22,250
1,734 Kellogg Co ........................................ 116,395
956 Pioneer Hi Bred International Inc ................. 37,523
3,103 Ralston Purina Co ................................. 155,926
15,178 Sara Lee Corp ..................................... 423,087
------------
1,839,322
------------
FOOTWEAR - 0.23%
1,109 Brown Group Inc ................................... 24,259
2,301 Nike Inc Class B .................................. 181,491
6,291 Reebok International Ltd .......................... 210,749
400 Stride Rite Corp .................................. 4,500
------------
420,999
------------
FREIGHT - 0.26%
2,957 * Federal Express Corp .............................. 177,050
12,444 Pittston Services Group ........................... 300,212
------------
477,262
------------
GOLD MINING - 0.19%
6,022 Barrick Gold Corp ................................. 152,056
1,691 Echo Bay Mines Ltd ................................ 15,113
6,165 Homestake Mining Co ............................... 104,034
3,145 Placer Dome Inc ................................... 79,411
------------
350,614
------------
GOVERNMENT SPONSORED - 0.19%
438 Federal Home Loan
Mortgage Corp ................................... 29,839
3,470 Federal National Mortgage
Association ..................................... 322,710
------------
352,549
------------
HARDWARE & TOOLS - 0.06%
2,640 Stanley Works ..................................... 105,600
------------
HEALTHCARE - 0.17%
10,138 U S Healthcare Inc ................................ 314,912
------------
HEAVY DUTY TRUCKS/PARTS - 0.12%
2,976 Cummins Engine Inc ................................ 135,408
2,678 Dana Corp ......................................... 75,654
------------
211,062
------------
103
HOME BUILDERS - 0.12%
648 Centex Corp ....................................... $ 18,630
7,586 Pulte Corp ........................................ 207,667
------------
226,297
------------
HOSPITAL MANAGEMENT - 0.24%
89 * Beverly Enterprises Inc ........................... 1,012
8,573 Columbia/HCA Healthcare Corp ...................... 350,421
2,896 Manor Care Inc .................................... 84,708
------------
436,141
------------
HOSPITAL SUPPLIES - 0.75%
7,863 Abbott Laboratories ............................... 314,520
2,936 Baxter International Inc .......................... 102,393
333 Becton Dickinson & Co ............................. 19,148
13,518 Johnson & Johnson ................................. 895,568
93 Medtronic Inc ..................................... 6,998
1,656 United States Surgical Corp ....................... 34,155
------------
1,372,782
------------
HOUSEHOLD PRODUCTS - 1.04%
2,667 Clorox Co ......................................... 159,687
3,777 Minnesota Mining &
Manufacturing Co ................................ 226,148
14,540 Procter & Gamble Co ............................... 1,045,063
4,420 Rubbermaid Inc .................................... 140,888
2,633 Unilever N V - ADR ................................ 335,049
------------
1,906,835
------------
INFORMATION PROCESSING - 3.05%
2,980 * Amdahl Corp ....................................... 38,740
1,545 Apple Computer .................................... 64,214
8,877 Autodesk Inc ...................................... 328,449
6,388 Automatic Data Processing Inc ..................... 397,653
5,350 * Cisco Systems Inc ................................. 234,063
3,785 * Compaq Computer Corp .............................. 148,088
4,973 Computer Associates
International Inc ............................... 325,732
1,667 * Computer Sciences Corp ............................ 88,351
115 * Computer Vision ................................... 647
77 * Harris Computer Systems Inc ....................... 1,174
10,344 Hewlett Packard Co ................................ 683,997
11,346 International Business
Machine Corp .................................... 1,058,010
4,926 * Lotus Development Corp ............................ 150,243
7,055 * Microsoft Corp .................................... 597,470
14,074 * Oracle Systems Corp ............................... 489,072
7,878 Pitney Bowes Inc .................................. 291,486
2,807 * Silicon Graphics Inc .............................. 109,122
13,016 * Tandem Computers Inc .............................. 172,462
3,715 Xerox Corp ........................................ 421,188
------------
5,600,161
------------
INSURANCE - CASUALTY - 0.25%
3,197 Chubb Corp ........................................ 263,353
3,808 St Paul Companies Inc ............................. 193,732
------------
457,085
------------
INSURANCE - LIFE - 0.12%
3,579 Lincoln National Corp ............................. 161,950
1,365 Torchmark Corp .................................... 54,429
74 Transamerica Corp ................................. 4,422
------------
220,801
------------
INSURANCE - MISCELLANEOUS - 0.43%
2,365 General Reinsurance Corp .......................... 320,162
11,561 United Healthcare Corp ............................ 430,647
693 UNUM Corp ......................................... 29,626
------------
780,435
------------
INSURANCE - MULTILINE - 0.85%
2,816 Aetna Life & Casualty Co .......................... 167,904
7,749 American International Group Inc .................. 881,449
2,570 Cigna Corp ........................................ 192,108
2,398 Marsh & McLennan Cos Inc .......................... 190,941
3,690 Providian Corp .................................... 134,224
------------
1,566,626
------------
LODGING - 0.03%
1,270 * Promus Cos Inc ................................... 53,181
------------
MACHINERY - AGRICULTURE - 0.03%
649 Deere & Co ........................................ 56,139
------------
MACHINERY - CONSTRUCTION & CONTRACTS - 0.04%
1,320 Fluor Corp ........................................ 65,340
------------
MACHINERY - INDUSTRIAL/SPECIALTY - 0.19%
1,250 Briggs & Stratton Corp ............................ 44,375
8,190 Cooper Industries Inc ............................. 303,030
------------
347,405
------------
MERCHANDISE - DRUG - 0.28%
9,515 Rite Aid Corp ..................................... 225,981
5,849 Walgreen Co ....................................... 281,483
------------
507,464
------------
MERCHANDISE - SPECIALTY - 0.56%
4,211 American Greetings Corp Class A ................... 118,961
2,556 Charming Shoppes Inc .............................. 11,183
14,942 Home Depot Inc .................................... 621,961
4,122 Jostens Inc ....................................... 82,955
2,081 Nordstrom Inc ..................................... 86,362
9,686 * Price Enterprises Inc ............................. 115,021
------------
1,036,443
------------
MERCHANDISING - DEPARTMENT - 0.10%
2,301 Dayton Hudson Corp ................................ 163,083
146 Dillard Department Stores Inc Class A ............. 4,198
303 May Department Stores Co .......................... 11,893
------------
179,174
------------
104
MERCHANDISING - FOOD - 0.30%
6,816 * Kroger Co ......................................... $ 177,216
2,662 Supervalu Inc ..................................... 75,534
6,392 Sysco Corp ........................................ 173,383
2,060 Winn Dixie Stores Inc ............................. 118,193
------------
544,326
------------
MERCHANDISING - MASS - 0.97%
6,585 Sears Roebuck & Co ................................ 371,229
56,658 Wal Mart Stores Inc ............................... 1,416,450
------------
1,787,679
------------
METALS - ALUMINUM - 0.19%
2,634 Alcan Aluminium Ltd ............................... 78,032
2,302 Aluminum Co of America ............................ 107,043
3,274 Reynolds Metal Co ................................. 161,654
------------
346,729
------------
METALS - COPPER - 0.08%
1,507 Newmont Mining Corp ............................... 62,917
1,540 Phelps Dodge Corp ................................. 84,893
------------
147,810
------------
METALS - STEEL - 0.10%
5,111 * Armco Inc ......................................... 32,583
407 * Bethlehem Steel Corp .............................. 6,003
2,076 Nucor Corp ........................................ 99,129
1,473 USX US Steel Group ................................ 47,136
------------
184,851
------------
MISCELLANEOUS - 0.03%
1,697 Corning Inc ....................................... 54,304
------------
MOBILE HOMES - 0.04%
1,343 Fleetwood Enterprises Inc ......................... 27,867
3,088 Skyline Corp ...................................... 56,356
------------
84,223
------------
NATURAL GAS - DIVERSIFIED - 0.09%
4,354 NorAm Energy Corp ................................. 28,845
784 Panhandle Eastern Corp ............................ 19,698
3,531 Sonat Inc ......................................... 116,082
------------
164,625
------------
OIL - INTEGRATED DOMESTIC - 1.26%
2,662 Amerada Hess Corp ................................. 135,097
5,933 Amoco Corp ........................................ 405,669
6,763 Atlantic Richfield Co ............................. 785,353
1,086 Burlington Resources Inc .......................... 45,069
838 Kerr McGee Corp ................................... 46,719
1,135 Occidental Petroleum Corp ......................... 26,105
1,371 Pennzoil Co ....................................... 67,693
9,045 Phillips Petroleum Co ............................. 327,881
5,557 Sun Co ............................................ 175,046
9,003 Unocal Corp ....................................... 266,714
1,618 USX Marathon Group ................................ 32,158
------------
2,313,504
------------
OIL - INTEGRATED INTERNATIONAL - 2.74%
8,774 Chevron Corp ...................................... 431,023
26,921 Exxon Corp ........................................ 1,921,486
8,420 Mobil Corp ........................................ 845,158
11,144 Royal Dutch Petroleum Co - ADR .................... 1,412,502
6,006 Texaco Inc ........................................ 411,411
------------
5,021,580
------------
OIL - SERVICES - 0.46%
10,575 Dresser Industries Inc ............................ 241,903
8,383 Halliburton Co .................................... 326,937
5,046 McDermott International Inc ....................... 132,458
1,162 Schlumberger Ltd .................................. 75,530
1,572 * Western Atlas Inc ................................. 70,937
------------
847,765
------------
OIL/GAS PRODUCERS - 0.01%
658 Louisiana Land & Exploration Co ................... 25,498
------------
PAPER/FOREST PRODUCTS - 0.78%
2,862 Alco Standard Corp ................................ 204,991
1,631 Georgia Pacific Corp .............................. 126,810
2,060 International Paper Co ............................ 161,968
3,931 Kimberly Clark Corp ............................... 235,860
4,345 Louisiana Pacific Corp ............................ 96,676
3,804 Mead Corp ......................................... 204,941
2,275 Potlatch Corp ..................................... 97,541
1,550 Scott Paper Co .................................... 67,231
5,632 * Stone Container Corp .............................. 98,560
1,955 Union Camp Corp ................................... 101,416
938 Westvaco Corp ..................................... 40,100
------------
1,436,094
------------
PHOTOGRAPHY - 0.19%
3,689 Eastman Kodak Co .................................. 222,723
3,524 Polaroid Corp ..................................... 129,948
------------
352,671
------------
POLLUTION CONTROL - 0.23%
15,817 WMX Technologies Inc .............................. 431,013
------------
PUBLISHING - NEWS - 0.13%
3,392 Dow Jones & Co Inc ................................ 123,808
2,177 Knight-Ridder Inc ................................. 120,279
------------
244,087
------------
PUBLISHING/PRINTING - 0.44%
11,512 Dun & Bradstreet Corp ............................. 610,136
153 Harcourt General Inc .............................. 6,445
5,400 R R Donnelley & Sons Co ........................... 197,100
------------
813,681
------------
RAILROAD - 0.38%
2,413 Burlington Northern Inc ........................... 147,495
2,082 Conrail Inc ....................................... 112,428
113 CSX Corp .......................................... 8,616
3,445 Norfolk Southern Corp ............................. 235,983
105
6,552 Santa Fe Pacific Corp ............................. $ 160,524
638 Union Pacific Corp ................................ 35,329
------------
700,375
------------
RESTAURANTS - 0.43%
5,505 * Darden Restaurants Inc ............................ 60,555
12,506 Lubys Cafeterias Inc .............................. 254,810
11,466 McDonalds Corp .................................... 434,270
5,442 * Ryans Family Steak House .......................... 38,094
------------
787,729
------------
SAVINGS & LOAN - 0.04%
2,923 H F Ahmanson & Co ................................. 66,498
------------
SECURITIES RELATED - 0.51%
8,023 American Express Co ............................... 285,819
4,844 Dean Witter Discover & Co ......................... 230,696
6,284 Merrill Lynch & Co Inc ............................ 295,348
2,968 Salomon Inc ....................................... 121,688
------------
933,551
------------
SEMICONDUCTORS - 1.24%
476 * Advanced Micro Devices Inc ........................ 15,649
5,802 Intel Corp ........................................ 651,275
7,352 Micron Technology Inc ............................. 328,083
17,797 Motorola Inc ...................................... 1,065,590
1,861 Texas Instruments Inc ............................. 215,178
------------
2,275,775
------------
TELECOMMUNICATIONS - 1.00%
16,614 * Airtouch Communications ........................... 452,732
25,317 ALLTEL Corp ....................................... 623,431
2,302 * DSC Communications Corp ........................... 85,174
1,462 Harris Corp ....................................... 77,669
12,452 Northern Telecommunications Corp .................. 477,846
6,752 Scientific Atlanta Inc ............................ 125,756
------------
1,842,608
------------
TEXTILE - PRODUCTS - 0.02%
164 Russell Corp ...................................... 4,756
540 V F Corp .......................................... 28,750
------------
33,506
------------
TOBACCO - 0.87%
19,112 Philip Morris Cos Inc ............................. 1,392,787
6,822 UST Inc ........................................... 203,807
------------
1,596,594
------------
TRUCKERS - 0.03%
1,272 Roadway Services Inc .............................. 59,466
------------
UTILITIES - COMMUNICATION - 3.22%
7,837 Ameritech Corp .................................... 1,691,853
33,337 AT & T Corp ....................................... 347,767
10,282 Bell Atlantic Corp ................................ 573,222
10,422 Bellsouth Corp .................................... 639,650
28,484 GTE Corp .......................................... 950,654
7,263 MCI Communications Corp ........................... 147,076
9,025 Nynex Corp ........................................ 376,794
10,632 Pacific Telesis Group ............................. 284,406
11,572 SBC Communications Inc ............................ 520,740
2,886 Sprint Corp ....................................... 96,681
6,602 U S West Inc ...................................... 272,333
------------
5,901,176
------------
UTILITIES - ELECTRIC - 1.23%
3,046 Central & South West Corp ......................... 78,435
3,149 Cinergy Corp ...................................... 83,842
5,027 Consolidated Edison Co New York ................... 150,182
8,484 Dominion Resources Inc ............................ 314,969
7,258 Duke Power Co ..................................... 303,022
2,220 Entergy Corp ...................................... 54,940
1,629 FPL Group Inc ..................................... 63,938
3,510 Ohio Edison Co .................................... 76,781
7,696 Pacific Gas & Electric Co ......................... 223,184
2,109 PacifiCorp ........................................ 41,653
4,565 Public Service Enterprise Group ................... 135,809
6,358 SCE Corp .......................................... 110,470
15,912 Southern Co ....................................... 352,053
6,842 Union Electric Co ................................. 259,141
------------
2,248,419
------------
UTILITIES - GAS, PIPELINE - 0.26%
459 Consolidated Natural Gas Co ....................... 18,303
7,825 Enron Corp ........................................ 285,613
3,088 Nicor Inc ......................................... 82,215
1,400 Pacific Enterprises ............................... 35,350
1,245 Peoples Energy Corp ............................... 33,304
646 Williams Cos Inc .................................. 21,964
------------
476,749
------------
TOTAL COMMON STOCKS
(Cost $67,512,626) ................................ 77,484,757
------------
PAR
VALUE
-----
CORPORATE BONDS - 9.03%
AUTO - CARS - 1.10%
$ 2,000,000 General Motors Acceptance Corp,
7.125% due 03/31/97 ............................. 2,023,900
------------
BANKS - OTHER - 1.10%
2,000,000 Heller Financial Inc,
7.00% due 05/15/02 .............................. 2,018,420
------------
BANKS - REGIONAL - 1.13%
2,000,000 NationsBank Corp,
7.625% due 04/15/05 ............................. 2,076,980
------------
CONSUMER FINANCE - 0.91%
1,700,000 Associates Corp of North America,
6.00% due 06/15/00 .............................. 1,661,546
------------
106
FINANCE COMPANIES - 0.54%
$ 1,000,000 Ford Motor Credit Co,
6.25% due 02/26/98 .............................. $ 997,050
------------
HEAVY DUTY TRUCKS/PARTS - 0.52%
1,000,000 Eaton Corp, 7.00% due 04/01/11 .................... 954,990
------------
MERCHANDISE - DRUG - 0.50%
1,000,000 Rite Aid Corp, 6.875% due 08/15/13 ................ 921,260
------------
PUBLISHING - NEWS - 1.05%
2,000,000 Time Warner Entertainment Co,
7.25% due 09/01/08 .............................. 1,915,520
------------
TRUCKERS - 0.55%
1,000,000 Ryder Systems Inc,
6.77% due 04/20/01 .............................. 1,006,250
------------
UTILITIES - COMMUNICATION - 0.56%
1,000,000 AT & T Corp,
7.00% due 05/15/05 .............................. 1,014,940
------------
UTILITIES - ELECTRIC - 1.07%
2,000,000 Texas Utilities Electric Co,
6.75% due 07/01/05 .............................. 1,965,260
------------
TOTAL CORPORATE BONDS
(Cost $16,390,506)................................. 16,556,116
------------
UNITED STATES GOVERNMENT - LONG TERM - 15.82%
UNITED STATES BONDS & NOTES - 15.82%
United States Treasury Bonds:
3,000,000 7.625% due 02/15/25 ............................. 4,399,360
4,000,000 7.50% due 11/15/24 .............................. 3,372,180
United States Treasury Notes:
1,000,000 8.50% due 07/15/97 .............................. 1,051,720
1,000,000 8.00% due 08/15/99 .............................. 1,072,030
10,000,000 7.875% due 11/15/04 ............................. 11,081,200
2,000,000 7.125% due 02/28/97 ............................. 2,033,120
1,000,000 6.75% due 05/31/99 .............................. 1,025,310
3,000,000 6.125% due 05/15/98 ............................. 3,015,480
1,000,000 5.50% due 04/15/00 .............................. 977,660
1,000,000 5.375% due 05/31/98 ............................. 983,910
------------
TOTAL UNITED STATES GOVERNMENT - LONG TERM
(Cost $27,387,027) ................................ 29,011,970
------------
CORPORATE SHORT TERM COMMERCIAL PAPER - 32.18%
BANKS - REGIONAL - 2.29%
Banc One Corp:
2,287,000 6.01% due 07/05/95 .............................. 2,274,019
1,927,000 5.93% due 06/06/95 .............................. 1,925,413
------------
4,199,432
------------
BEVERAGE - SOFT DRINKS - 3.09%
Coca Cola Enterprises Inc:
2,000,000 6.08% due 06/19/95 .............................. 1,993,920
2,500,000 5.98% due 07/07/95 .............................. 2,485,050
1,200,000 Pepsico Inc, 5.92% due 7/07/95 .................... 1,192,896
------------
5,671,866
------------
CHEMICAL - MAJOR - 0.71%
1,303,000 Dow Chemical Co, 6.125% due 06/01/95 .............. 1,303,000
------------
CONSUMER FINANCE - 7.92%
Beneficial Corp:
1,086,000 6.13% due 06/07/95 .............................. 1,084,890
3,309,000 5.98% due 06/26/95 .............................. 3,295,258
2,500,000 Commercial Credit Co, 5.97% due 06/12/95 .......... 2,495,440
Sears Roebuck Acceptance Corp:
2,500,000 5.98% due 06/08/95 .............................. 2,497,093
3,450,000 5.98% due 07/10/95 .............................. 3,427,650
1,738,000 5.92% due 08/01/95 .............................. 1,720,566
------------
14,520,897
------------
FINANCE COMPANIES - 9.87%
Caterpillar Financial Services:
1,842,000 6.00% due 06/14/95 .............................. 1,838,009
1,000,000 5.90% due 08/11/95 .............................. 988,364
CIESCO L P:
991,000 6.10% due 08/24/95 .............................. 976,895
1,128,000 6.00% due 06/21/95 .............................. 1,124,240
2,000,000 5.95% due 06/16/95 .............................. 1,995,042
2,000,000 5.93% due 06/13/95 .............................. 1,996,047
819,000 CIT Group Holdings Inc,
5.95% due 06/01/95 .............................. 819,000
4,607,000 Ford Motor Credit Co,
5.97% due 06/28/95 .............................. 4,586,372
1,500,000 General Electric Capital Corp,
5.75% due 07/03/95 .............................. 1,492,333
1,287,000 IBM Credit Corp, 6.00% due 06/29/95 ............... 1,280,994
1,000,000 Transamerica Finance Corp,
6.05% due 06/30/95 .............................. 995,126
------------
18,092,422
------------
INFORMATION PROCESSING - 1.63%
3,000,000 Hewlett Packard Co, 5.95% due 07/11/95 ............ 2,980,167
------------
SECURITIES RELATED - 3.31%
Merrill Lynch & Co Inc:
3,530,000 5.96% due 06/02/95 .............................. 3,529,416
2,544,000 5.95% due 06/09/95 .............................. 2,540,636
------------
6,070,052
------------
TOBACCO - 0.72%
1,337,000 Philip Morris Cos Inc, 5.88% due 08/22/95 ......... 1,319,093
------------
107
UTILITIES - ELECTRIC - 2.64%
Central & South West Corp:
$ 1,004,000 5.95% due 06/05/95 .............................. $ 1,003,335
2,373,000 5.95% due 07/13/95 .............................. 2,356,527
1,500,000 5.94% due 07/14/95 .............................. 1,489,358
------------
4,849,220
------------
TOTAL CORPORATE SHORT TERM
COMMERCIAL PAPER (Cost $59,006,149) ............... 59,006,149
------------
UNITED STATES GOVERNMENT - SHORT TERM - 0.24%
United States Treasury Bills:
250,000 5.735% due 06/22/95 ............................. 249,164
200,000 5.67% due 06/22/95 .............................. 199,339
------------
TOTAL UNITED STATES GOVERNMENT - SHORT TERM
(Cost $448,503) ................................... 448,503
------------
TOTAL INVESTMENTS
(Cost $170,744,811) - 99.52% ...................... 182,507,495
Other assets and liabilities, net - 0.48% ......... 885,845
------------
NET ASSETS (equivalent to $11.24 per share on
16,319,343 shares outstanding) - 100% ........... $183,393,340
============
* Non-income producing
UNREALIZED
CONTRACTS APPRECIATION
- --------- -------------
FUTURES CONTRACTS PURCHASED (1)
(Delivery month/Value at 05/31/95)
30 (2) S&P 500 Index Futures (June/$533.35) .............. $ 276,200
8 (2) S&P 500 Index Futures (September/$537.90) ......... 18,400
------------
$ 294,600
============
(1) U.S. Treasury Bills with a market value of
approximately $450,000 were maintained in a
segregated account with a portion placed as
collateral for futures contracts.
(2) Per 500
- -------------------------------------------------------------------------------
Net Assets Represented by:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
16,319,343 shares outstanding ................................. $ 163,193
Additional paid in capital ...................................... 168,765,829
Undistributed net realized gain on securities ................... 2,250,114
Undistributed net investment income ............................. 156,920
Unrealized appreciation of:
Investments ..................................... $ 11,762,684
Futures ......................................... 294,600 12,057,284
------------ ------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING ..................... $183,393,340
============
SEE NOTES TO FINANCIAL STATEMENTS.
108
<PAGE>
TIMED OPPORTUNITY FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Dividends......................................................................................................... $ 2,280,405
Interest.......................................................................................................... 6,317,965
------------
Total investment income....................................................................................... 8,598,370
------------
EXPENSES:
Advisory fees..................................................................................................... 931,720
Custodian and accounting services................................................................................. 99,133
Reports to shareholders........................................................................................... 25,055
Audit fees........................................................................................................ 13,567
Directors' fees and expenses...................................................................................... 7,993
Miscellaneous..................................................................................................... 7,989
------------
Total expenses................................................................................................ 1,085,457
------------
NET INVESTMENT INCOME............................................................................................. 7,512,913
------------
REALIZED AND UNREALIZED GAIN ON SECURITIES:
Net realized gain on:
Investments.................................................................................. $ 2,710,066
Futures contracts............................................................................ 690,878 3,400,944
-------------
Net unrealized appreciation during the year:
Investments.................................................................................. 10,130,473
Futures contracts............................................................................ 223,438 10,353,911
------------- ------------
Net realized and unrealized gain during the year............................................................ 13,754,855
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................................. $ 21,267,768
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended May 31:
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income........................................................................ $ 7,512,913 $ 5,999,833
Net realized gain on securities.............................................................. 3,400,944 6,051,598
Net unrealized appreciation (depreciation) of securities during the year..................... 10,353,911 (9,401,324)
-------------- ------------
Increase in net assets resulting from operations......................................... 21,267,768 2,650,107
-------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income........................................................................ (7,558,597) (5,979,590)
Net realized gain on securities.............................................................. (7,068,460) (3,254,311)
-------------- ------------
Decrease in net assets resulting from distributions to shareholders...................... (14,627,057) (9,233,901)
-------------- ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold............................................................. 6,307,925 31,968,573
Proceeds from capital stock issued for distributions reinvested.............................. 14,627,057 9,233,901
-------------- -------------
20,934,982 41,202,474
Cost of capital stock repurchased............................................................ (38,758,320) (5,044,306)
-------------- -------------
Increase (decrease) in net assets resulting from capital stock transactions.............. (17,823,338) 36,158,168
TOTAL INCREASE (DECREASE) IN NET ASSETS...................................................... (11,182,627) 29,574,374
-------------- -------------
NET ASSETS:
Beginning of year............................................................................ 194,575,967 165,001,593
-------------- -------------
End of year (including undistributed net investment income of $156,920 and $77,927).......... $ 183,393,340 $194,575,967
============== =============
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold................................................................. 585,687 2,828,103
Shares issued for distributions reinvested................................................... 1,389,056 820,863
Shares of capital stock repurchased ......................................................... (3,610,925) (451,930)
-------------- -------------
Increase (decrease) in shares outstanding................................................ (1,636,182) 3,197,036
Shares outstanding:
Beginning of year........................................................................ 17,955,525 14,758,489
-------------- -------------
End of year.............................................................................. 16,319,343 17,955,525
============== =============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
109
<PAGE>
CAPITAL CONSERVATION FUND MAY 31, 1995 STATEMENT OF NET ASSETS
PAR MARKET
VALUE VALUE
- ---------- -----------
CORPORATE BONDS - 71.03%
AEROSPACE/DEFENSE - 2.77%
$ 500,000 Boeing Inc, 8.10% due 11/15/06 .................. $ 549,125
750,000 Lockheed Corp,
5.875% due 03/15/98 ........................... 739,268
500,000 Rockwell International Corp,
8.375% due 02/15/01 ........................... 542,645
-----------
1,831,038
-----------
AIRLINES - 3.36%
2,000,000 Southwest Airlines Co,
8.75% due 10/15/03 ............................ 2,218,500
-----------
AUTO - CARS - 1.72%
1,000,000 General Motors Corp,
8.80% due 03/01/21 ............................ 1,136,500
-----------
BANKS - OTHER - 3.85%
500,000 BankAmerica Corp,
7.25% due 02/03/97 ............................ 508,345
500,000 First Chicago Corp,
9.875% due 08/15/00 ........................... 565,260
500,000 Mellon Financial Corp,
9.25% due 08/15/01 ............................ 559,540
1,000,000 Toronto Dominion Bank Ont,
6.125% due 11/01/08 ........................... 907,960
-----------
2,541,105
-----------
BANKS - REGIONAL - 6.11%
500,000 Barnett Banks Inc,
10.875% due 03/15/03 .......................... 613,980
500,000 Boatmens Bancshares Inc,
8.625% due 11/15/03 ........................... 547,795
1,000,000 NationsBank Corp,
7.625% due 04/15/05 ........................... 1,038,490
1,000,000 Norwest Corp,
6.65% due 10/15/23 ............................ 893,270
1,000,000 Wachovia Corp,
6.375% due 02/01/09 ........................... 937,640
-----------
4,031,175
-----------
CHEMICAL - MAJOR - 1.67%
500,000 Dow Capital,
7.80% due 05/11/99 ............................ 522,130
500,000 Dow Chemical Co,
9.00% due 04/01/21 ............................ 579,580
-----------
1,101,710
-----------
CONSUMER FINANCE - 3.80%
1,000,000 Associates Corp of North America,
6.125% due 02/01/98 ........................... 991,660
1,000,000 Commercial Credit Group Inc,
6.875% due 05/01/02 ........................... 1,006,840
500,000 Discover Card Trust,
8.625% due 07/15/96 ........................... 511,250
-----------
2,509,750
-----------
CONTAINERS - METAL/GLASS - 1.54%
1,000,000 Crown Cork & Seal Co Inc,
7.00% due 06/15/99 ............................ 1,014,770
-----------
FINANCE COMPANIES - 11.89%
1,000,000 CIT Group Holdings,
8.375% due 11/01/01 ........................... 1,073,910
Ford Motor Credit Co:
1,000,000 8.20% due 02/15/02 ............................ 1,070,290
500,000 6.375% due 11/05/08 ............................. 466,305
750,000 General Electric Capital Corp,
8.125% due 05/15/12 ........................... 822,600
Grand Metropolitan Investment Corp:
500,000 8.125% due 08/15/96 ........................... 510,180
3,000,000 0.00% due 01/06/04 ............................ 1,633,710
500,000 IBM Credit Corp,
5.72% due 07/28/98 ............................ 488,805
1,000,000 Prudential Funding Corp,
6.75% due 09/15/23 ............................ 843,500
892,540 Rail Car Trust,
7.75% due 06/01/04 ............................ 938,562
-----------
7,847,862
-----------
INSURANCE - MULTILINE - 0.81%
500,000 ITT Hartford Group,
8.30% due 12/01/01 ............................ 531,440
-----------
MACHINERY - INDUSTRIAL/SPECIALTY - 0.88%
500,000 Ingersoll Rand Co,
9.00% due 08/15/21 ............................ 581,870
-----------
MERCHANDISE - DRUG - 1.47%
500,000 Imcera Group Inc,
6.00% due 10/15/03 ............................ 458,515
500,000 Super Value,
7.25% due 07/15/99 ............................ 513,400
-----------
971,915
-----------
MERCHANDISING - DEPARTMENT - 0.81%
500,000 Dillard Department Stores Inc,
8.75% due 06/15/98 ............................ 531,635
-----------
MERCHANDISING - MASS - 1.45%
1,000,000 Sears Roebuck & Co,
6.25% due 01/15/04 ............................ 955,490
-----------
MISCELLANEOUS - 3.09%
2,000,000 Standard Credit Card Master Trust Inc,
8.00% due 10/07/97 ............................ 2,040,620
-----------
NATURAL GAS - DIVERSIFIED - 0.76%
500,000 El Paso Natural Gas,
6.90% due 01/15/97 ............................ 504,360
-----------
OIL - INTEGRATED DOMESTIC - 2.71%
Texaco Capital Inc:
1,000,000 9.75% due 03/15/20 ............................ 1,262,310
500,000 9.00% due 11/15/97 ............................ 530,030
-----------
1,792,340
-----------
110
OIL - INTEGRATED INTERNATIONAL - 0.81%
$ 500,000 Societe National Elf Aquitaine,
8.00% due 10/15/01 ............................ $ 534,900
-----------
PUBLISHING - NEWS - 0.76%
500,000 Times Mirror Co,
7.50% due 07/01/23 ............................ 500,765
-----------
PUBLISHING/PRINTING - 1.45%
1,000,000 Time Warner Entertainment Co,
7.25% due 09/01/08 ............................ 957,760
-----------
TOBACCO - 1.55%
1,000,000 Philip Morris Cos Inc,
7.375% due 02/15/99............................ 1,024,200
-----------
TRUCKERS - 1.52%
1,000,000 Ryder Systems Inc,
6.77% due 04/20/01 ............................ 1,006,250
-----------
UTILITIES - COMMUNICATION - 3.92%
500,000 Bell Telephone Co of PA,
8.75% due 08/15/31 ............................ 591,325
500,000 GTE Corp, 8.85% due 03/01/98 .................... 527,520
1,000,000 Pacific Bell, 7.125% due 03/15/26 ............... 961,720
500,000 Southern New England Telecom,
7.00% due 08/01/04 ............................ 507,475
-----------
2,588,040
-----------
UTILITIES - ELECTRIC - 12.33%
500,000 Arizona Public Service Co,
7.125% due 01/15/97 ........................... 504,915
1,000,000 Central Power & Light Co,
6.00% due 04/01/00 ............................ 979,870
1,000,000 Georgia Power Co,
6.125% due 09/01/99 ........................... 985,840
500,000 Jersey Central Power and Light,
7.90% due 01/23/07 ............................ 531,125
500,000 Metropolitan Edison Co,
7.47% due 04/15/97 ............................ 510,040
500,000 Potomac Electric Power,
7.64% due 01/17/07 ............................ 523,190
1,000,000 PSI Energy Inc,
5.35% due 09/23/98 ............................ 965,330
500,000 Utilicorp United Inc,
8.20% due 01/15/07 ............................ 534,325
Virginia Electric & Power Co:
500,000 9.50% due 01/31/00 ............................ 556,450
1,000,000 9.375% due 06/01/98 ........................... 1,075,850
1,000,000 West Penn Power Co,
5.50% due 06/01/98 ............................ 974,970
-----------
8,141,905
-----------
TOTAL CORPORATE BONDS
(Cost $45,090,259) .............................. 46,895,900
-----------
UNITED STATES GOVERNMENT -
LONG TERM - 26.37%
FEDERAL AGENCIES - 1.37%
Government National Mortgage
Association Pass Through Certificates:
391,470 Pool# 185210,
8.00% due 01/15/22 ............................ 401,132
153,821 Pool# 233862,
9.50% due 05/15/18 ............................ 162,865
220,891 Pool# 247397,
9.50% due 07/15/18 ............................ 233,879
13,417 Pool# 248341,
9.50% due 06/15/18 ............................ 14,206
5,068 Pool# 252064,
9.50% due 06/15/18 ............................ 5,366
19,443 Pool# 253172,
9.50% due 10/15/18 ............................ 20,586
61,802 Pool# 256190,
9.50% due 08/15/18 ............................ 65,436
-----------
903,470
-----------
GOVERNMENT SPONSORED - 5.56%
Federal National Mortgage Association:
1,725,000 6.27% due 04/01/99 ............................ 1,711,165
2,000,000 5.62% due 02/23/98 ............................ 1,958,360
-----------
3,669,525
-----------
UNITED STATES BONDS &
NOTES - 19.44%
1,000,000 United States Treasury Bond, 7.50%
due 11/15/24................................... 1,099,840
United States Treasury Notes:
4,500,000 7.875% due 11/15/04 ........................... 4,986,540
3,000,000 7.50% due 11/15/01 ............................ 3,210,930
2,000,000 6.875% due 02/28/97 ........................... 2,033,120
1,500,000 6.125% due 05/15/98 ........................... 1,507,740
-----------
12,838,170
-----------
TOTAL UNITED STATES
GOVERNMENT - LONG TERM
(Cost $16,551,076)............................... 17,411,165
FOREIGN GOVERNMENT BONDS - 0.77%
CANADA - 0.77%
500,000 New Brunswick Province, 7.125%
due 10/01/02 (Cost $498,735) .................. 511,315
-----------
CORPORATE SHORT TERM
COMMERCIAL PAPER - 0.68%
FINANCE COMPANIES - 0.68%
450,000 Ford Motor Credit Co, 6.10%
due 06/01/95 (Cost $450,000) .................. 450,000
-----------
111
TOTAL INVESTMENTS
(Cost $62,590,070) - 98.85% ..................... $65,268,380
Other assets and liabilities,
net - 1.15% ................................... 762,526
-----------
NET ASSETS (equivalent
to $9.52 per share on
6,935,340 shares
outstanding) - 100% ........................... $66,030,906
===========
Net Assets Represented By:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
6,935,340 shares outstanding................................. $ 69,353
Additional paid in capital..................................... 66,178,278
Accumulated net realized loss on securities.................... (2,896,790)
Undistributed net investment income............................ 1,192
Unrealized appreciation of:
Investments.............................. $ 2,678,310
Futures ................................. 563 2,678,873
----------- -----------
NET ASSETS APPLICABLE TO SHARES
OUTSTANDING ............................. $66,030,906
===========
FUTURES CONTRACTS PURCHASED (1)
(Delivery month/Value at 05/31/95)
9(2) U.S. Treasury 10 Year Notes
(June/$109.75)................................... $ 563
===========
(1) U.S. Treasury Notes with a market value of
approximately $100,000 were maintained in a
segregated account with a portion placed as
collateral for futures contracts.
(2) Per 1,000
SEE NOTES TO FINANCIAL STATEMENTS.
112
<PAGE>
CAPITAL CONSERVATION FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest............................................................................................................ $ 4,604,642
------------
EXPENSES:
Advisory fees....................................................................................................... 307,082
Custodian and accounting services................................................................................... 32,208
Reports to shareholders............................................................................................. 8,364
Audit fees.......................................................................................................... 4,476
Directors' fees and expenses........................................................................................ 2,594
Miscellaneous....................................................................................................... 5,129
-----------
Total expenses.................................................................................................. 359,853
-----------
NET INVESTMENT INCOME............................................................................................... 4,244,789
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES:
Net realized gain (loss) on:
Investments..................................................................................... $ (2,953,329)
Futures contracts............................................................................... 164,683 (2,788,646)
------------
Net unrealized appreciation during the year:
Investments..................................................................................... 5,470,424
Futures contracts............................................................................... 563 5,470,987
------------ ------------
Net realized and unrealized gain on securities during the year ................................................ 2,682,341
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................................. $ 6,927,130
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended May 31:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income................................................................................ $ 4,244,789 $ 3,695,484
Net realized gain (loss) on securities............................................................... (2,788,646) 276,646
Net unrealized appreciation (depreciation) of securities during the year............................. 5,470,987 (5,241,602)
----------- -----------
Increase (decrease) in net assets resulting from operations...................................... 6,927,130 (1,269,472)
----------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................................................................ (4,277,330) (3,685,955)
Net realized gain on securities...................................................................... - (304,713)
----------- -----------
Decrease in net assets resulting from distributions to shareholders.............................. (4,277,330) (3,990,668)
----------- -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold..................................................................... 11,988,687 19,504,320
Proceeds from capital stock issued for distributions reinvested...................................... 4,277,330 3,990,668
----------- -----------
16,266,017 23,494,988
Cost of capital stock repurchased.................................................................. (14,190,188) (7,219,287)
----------- -----------
Increase in net assets resulting from capital stock transactions............................... 2,075,829 16,275,701
----------- -----------
Total Increase in Net Assets....................................................................... 4,725,629 11,015,561
NET ASSETS:
Beginning of year.................................................................................. 61,305,277 50,289,716
----------- -----------
End of year (including undistributed net investment income of $1,192 and $46,379).................. $66,030,906 $61,305,277
=========== ===========
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold....................................................................... 1,308,761 1,947,712
Shares issued for distributions reinvested......................................................... 474,405 405,166
Shares of capital stock repurchased ............................................................... (1,560,060) (735,462)
----------- -----------
Increase in shares outstanding................................................................. 223,106 1,617,416
Shares outstanding:
Beginning of year............................................................................... 6,712,234 5,094,818
----------- -----------
End of year..................................................................................... 6,935,340 6,712,234
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
113
<PAGE>
GOVERNMENT SECURITIES FUND MAY 31, 1995 STATEMENT OF NET ASSETS
PAR MARKET
VALUE VALUE
- ---------- -----------
UNITED STATES GOVERNMENT -
LONG TERM - 92.78%
FEDERAL AGENCY - 0.74%
$ 391,470 Government National Mortgage
Association Pool #185210,
8.00% due 01/15/22 ............................ $ 401,132
GOVERNMENT SPONSORED - 44.42%
Federal Farm Credit Banks:
500,000 9.15% due 02/14/05............................. 587,490
1,000,000 7.35% due 03/24/05 ............................ 1,047,700
1,000,000 7.06% due 05/24/10 ............................ 1,018,950
1,500,000 6.92% due 05/13/02 ............................ 1,538,940
Federal Home Loan Banks:
500,000 8.25% due 06/25/96 ............................ 511,250
3,700,000 7.93% due 01/20/98 ............................ 3,860,136
Federal Home Loan Mortgage Corp:
1,500,000 7.86% due 01/15/97 ............................ 1,541,490
175,000 5.50% due 02/25/19 ............................ 163,296
Federal Home Loan Mortgage
Pass - Throughs:
2,441,166 8.50% due 03/01/25 ............................ 2,525,068
1,793,697 8.00% due 02/01/25 ............................ 1,832,370
Federal National Mortgage Association:
1,000,000 9.05% due 04/10/00 ............................ 1,115,000
1,000,000 7.49% due 03/02/05 ............................ 1,063,510
1,185,000 5.94% due 01/29/98 ............................ 1,181,481
2,000,000 5.33% due 06/26/98 ............................ 1,957,180
Student Loan Marketing Association:
1,000,000 7.50% due 03/08/00 ............................ 1,052,030
3,000,000 7.00% due 03/03/98 ............................ 3,066,570
-----------
24,062,461
-----------
UNITED STATES BONDS & NOTES - 47.62%
United States Treasury Bonds:
1,000,000 11.875% due 11/15/03 .......................... 1,359,530
1,000,000 10.75% due 08/15/05 ........................... 1,322,660
2,000,000 8.75% due 08/15/20 ............................ 2,464,680
4,000,000 8.50% due 02/15/20 ............................ 4,804,360
1,000,000 7.50% due 11/15/24 ............................ 1,099,840
United States Treasury Notes:
1,000,000 8.25% due 07/15/98 ............................ 1,064,370
2,000,000 8.125% due 02/15/98 ........................... 2,108,120
4,000,000 7.375% due 05/15/96 ........................... 4,053,760
2,500,000 6.75% due 04/30/00 ............................ 2,570,700
1,000,000 6.50% due 05/15/97 ............................ 1,011,560
1,000,000 6.375% due 01/15/00 ........................... 1,012,500
1,000,000 5.75% due 08/15/03 ............................ 966,090
2,000,000 4.375% due 11/15/96 ........................... 1,959,060
-----------
25,797,230
-----------
TOTAL UNITED STATES GOVERNMENT - LONG TERM
(Cost $48,005,024)............................... 50,260,823
-----------
SUPRANATIONAL - 4.09%
1,800,000 International Bank for
Reconstruction & Development,
9.25% due 07/15/17
(Cost $1,967,915) ............................. 2,214,503
-----------
743,000 CORPORATE SHORT TERM
COMMERCIAL PAPER - 1.37%
FINANCE COMPANIES - 1.37%
Ford Motor Credit Co,
6.10% due 06/01/95
(Cost $743,000) ............................... 743,000
-----------
TOTAL INVESTMENTS
(Cost $ 50,715,939) - 98.24% 53,218,326
Other assets and liabilities,
net - 1.76% ................................... 955,853
-----------
NET ASSETS (equivalent
to $9.89 per share on
5,477,958 shares
outstanding) - 100% ........................... $54,174,179
===========
UNREALIZED
CONTRACTS APPRECIATION
- --------- ------------
FUTURES CONTRACTS PURCHASED (1)
(Delivery month/Value at 05/31/95)
10 (2) US Treasury 10 Year Notes
(June/$109.75) ................................ $ 7,500
===========
(1) U.S. Treasury Notes with a market value of
approximately $35,000 were maintained in a
segregated account with a portion placed as
collateral for future contracts.
(2) Per 1,000
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
5,477,958 shares outstanding ................................. $ 54,780
Additional paid in capital ..................................... 54,483,849
Accumulated net realized loss on securities .................... (2,884,863)
Undistributed net investment income ............................ 10,526
Unrealized appreciation of:
Investments ................................... $ 2,502,387
Futures ....................................... 7,500 2,509,887
------------ ------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING .................... $ 54,174,179
============
SEE NOTES TO FINANCIAL STATEMENTS.
114
<PAGE>
GOVERNMENT SECURITIES FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest......................................................................................................... $ 3,144,224
-----------
EXPENSES:
Advisory fees..................................................................................................... 224,415
Custodian and accounting services................................................................................. 23,028
Reports to shareholders........................................................................................... 5,888
Audit fees........................................................................................................ 3,194
Directors' fees and expenses...................................................................................... 1,889
Miscellaneous..................................................................................................... 4,612
-----------
Total expenses................................................................................................ 263,026
-----------
NET INVESTMENT INCOME............................................................................................. 2,881,198
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES:
Net realized gain (loss) on:
Investments.................................................................................... $ (2,373,645)
Futures contracts.............................................................................. 123,933 (2,249,712)
-------------
Net unrealized appreciation during the year:
Investments.................................................................................... 4,091,986
Futures contracts.............................................................................. 7,500 4,099,486
------------- -----------
Net realized and unrealized gain on securities during the year................................................ 1,849,774
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................................................................. $ 4,730,972
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended May 31:
<TABLE>
<CAPTION>
OPERATIONS: 1995 1994
------------- -----------
<S> <C> <C>
Net investment income.............................................................................. $ 2,881,198 $ 2,264,021
Net realized loss on securities.................................................................... (2,249,712) (300,676)
Net unrealized appreciation (depreciation) of securities during the year........................... 4,099,486 (2,809,355)
------------- -----------
Increase (decrease) in net assets resulting from operations.................................... 4,730,972 (846,010)
------------- -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income.............................................................................. (2,899,817) (2,254,675)
Net realized gain on securities.................................................................... - (696,462)
------------- -----------
Decrease in net assets resulting from distributions to shareholders............................ (2,899,817) (2,951,137)
------------- -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold................................................................... 12,735,273 19,059,879
Proceeds from capital stock issued for distributions reinvested.................................... 2,899,817 2,951,137
------------- -----------
15,635,090 22,011,016
Cost of capital stock repurchased.................................................................. (6,693,122) (6,835,420)
------------- -----------
Increase in net assets resulting from capital stock transactions............................... 8,941,968 15,175,596
------------- -----------
TOTAL INCREASE IN NET ASSETS....................................................................... 10,773,123 11,378,449
NET ASSETS:
Beginning of year.................................................................................. 43,401,056 32,022,607
------------- -----------
End of year (including undistributed net investment income of $10,526 and $31,797)................. $ 54,174,179 $43,401,056
============= ===========
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold....................................................................... 1,337,149 1,827,452
Shares issued for distributions reinvested......................................................... 306,305 288,283
Shares of capital stock repurchased ............................................................... (709,711) (681,437)
------------- -----------
Increase in shares outstanding................................................................. 933,743 1,434,298
Shares outstanding:
Beginning of year.............................................................................. 4,544,215 3,109,917
------------- -----------
End of year.................................................................................... 5,477,958 4,544,215
============= ===========
SEE NOTES TO FINANCIAL STATEMENTS.
</TABLE>
115
<PAGE>
INTERNATIONAL GOVERNMENT BOND FUND MAY 31, 1995 INVESTMENT PORTFOLIO
PAR MARKET
VALUE VALUE
- --------------- ------------
GOVERNMENT BONDS - 80.74%
AUSTRALIA - 1.83%
Commonwealth:
A$ 400,000 10.00% due 10/15/07 ........................ $ 308,543
A$ 500,000 7.00% due 04/15/00 ......................... 340,731
A$ 400,000 South Australia,
7.75% due 04/15/98 ......................... 283,524
A$ 300,000 South Australia Finance Authority,
12.50% due 05/08/01 ........................ 249,811
A$ 200,000 State Bank of New South Wales,
7.00% due 06/30/99 ......................... 138,081
A$ 150,000 State Bank of South Australia,
7.25% due 06/15/00 ......................... 101,541
-----------
1,422,231
-----------
AUSTRIA - 2.89%
Republic of Austria:
As 2,500,000 8.50% due 02/21/01 ......................... 273,416
As 1,500,000 7.00% due 02/14/00 ......................... 156,659
As 2,200,000 7.00% due 01/20/03 ......................... 223,444
As 1,000,000 5.75% due 03/22/99 ......................... 100,206
As 1,500,000 5.375% due 11/23/98 ........................ 150,008
Y 100MM 4.75% due 12/20/04 ......................... 1,342,688
-----------
2,246,421
-----------
BELGIUM - 4.05%
Kingdom of Belgium:
Bf 5,000,000 10.00% due 08/02/00 ........................ 198,690
Bf 4,000,000 9.25% due 08/29/97 ......................... 147,654
Bf 10,000,000 9.00% due 07/30/98 ......................... 374,032
Bf 25,000,000 8.75% due 06/25/02 ......................... 950,599
Bf 10,000,000 8.00% due 12/14/12 ......................... 346,409
Bf 10,000,000 7.75% due 10/15/04 ......................... 355,169
Bf 22,000,000 7.00% due 04/29/99 ......................... 779,853
-----------
3,152,406
-----------
CANADA - 4.17%
C$ 800,000 British Columbia Province,
9.85% due 05/01/98 ......................... 619,643
Government of Canada:
C$ 550,000 9.50% due 06/01/10 ......................... 445,987
C$ 500,000 8.50% due 03/01/00 ......................... 380,129
C$ 500,000 8.00% due 06/01/23 ......................... 352,110
C$ 1,000,000 7.75% due 09/01/99 ......................... 736,930
C$ 1,000,000 7.25% due 06/01/03 ......................... 704,482
-----------
3,239,281
-----------
DENMARK - 2.28%
Kingdom of Denmark:
DK 2,500,000 9.00% due 11/15/98 ......................... 476,400
DK 2,500,000 9.00% due 11/15/00 ......................... 480,431
DK 1,500,000 8.00% due 11/15/01 ......................... 275,050
DK 1,000,000 8.00% due 05/15/03 ......................... 181,102
DK 1,000,000 7.00% due 12/15/04 ......................... 168,871
DK 1,250,000 7.00% due 11/10/24 ......................... 188,553
-----------
1,770,407
-----------
FINLAND - 3.16%
Republic of Finland:
Ff 5,000,000 9.00% due 04/15/97 ......................... 1,043,031
Y 100MM 6.00% due 01/29/02 ......................... 1,410,635
-----------
2,453,666
-----------
FRANCE - 3.87%
Government of France:
Ff 4,600,000 9.50% due 01/25/01 ......................... 1,028,197
Ff 3,500,000 8.50% due 12/26/12 ......................... 751,708
Ff 3,500,000 6.75% due 10/25/03 ......................... 679,542
Ff 3,500,000 6.00% due 10/25/25 ......................... 550,590
-----------
3,010,037
-----------
GERMANY - 15.42%
Federal Republic of Germany:
DM 1,825,000 8.75% due 08/20/01 ......................... 1,452,459
DM 3,050,000 8.00% due 03/20/97 ......................... 2,274,390
DM 3,100,000 7.125% due 12/20/02 ........................ 2,276,799
DM 2,250,000 6.875% due 02/24/99 ........................ 1,659,980
DM 1,000,000 6.50% due 07/15/03 ......................... 704,734
DM 2,250,000 6.25% due 01/04/24 ......................... 1,404,320
DM 2,000,000 6.00% due 02/20/98 ......................... 1,445,270
DM 1,250,000 6.00% due 06/20/16 ......................... 772,306
-----------
11,990,258
-----------
ITALY - 4.69%
Republic of Italy:
Lit 1,100MM 12.50% due 06/15/96 ........................ 677,222
Lit 500MM 12.00% due 06/01/01 ........................ 305,285
Lit 900MM 10.00% due 08/01/03 ........................ 496,193
Lit 2,000MM 9.50% due 12/01/97 ......................... 1,170,655
Lit 900MM 8.50% due 01/01/99 ......................... 499,756
Lit 1,000MM 8.50% due 08/01/04 ......................... 496,802
-----------
3,645,913
-----------
JAPAN - 22.76%
Government of Japan:
Y 320MM 6.40% due 03/20/00 ......................... 4,528,207
Y 105MM 6.00% due 12/20/01 ......................... 1,491,651
Y 215MM 5.50% due 03/20/02 ......................... 2,988,024
Y 30MM 5.00% due 12/22/97 ......................... 388,006
Y 20MM 5.00% due 12/20/02 ......................... 271,622
Y 100MM 5.00% due 09/21/09 ......................... 1,396,514
Y 130MM 4.80% due 06/21/99 ......................... 1,720,532
Y 20MM 4.60% due 06/22/98 ......................... 258,931
Y 277MM 4.50% due 06/20/03 ......................... 3,656,891
Y 75MM 4.50% due 12/20/04 ......................... 994,564
-----------
17,694,942
-----------
NETHERLANDS - 4.10%
Government of the Netherlands:
NG 1,050,000 9.00% due 10/16/00 ......................... 751,754
NG 500,000 8.25% due 02/15/07 ......................... 348,811
NG 750,000 7.50% due 01/15/23 ......................... 487,182
NG 1,250,000 6.50% due 07/15/98 ......................... 813,156
NG 1,250,000 6.50% due 04/15/03 ......................... 790,240
-----------
3,191,143
-----------
116
SPAIN - 3.04%
Government of Spain:
Pst 40MM 12.25% due 03/25/00 ........................ $ 340,290
Pst 55MM 11.45% due 08/30/98 ........................ 453,720
Pst 45MM 11.00% due 06/15/97 ........................ 366,387
Pst 50MM 10.30% due 06/15/02 ........................ 384,460
Pst 50MM 8.30% due 12/15/98 ......................... 375,944
Pst 70MM 8.20% due 02/28/09 ......................... 440,841
-----------
2,361,642
-----------
SWEDEN - 2.21%
Kingdom of Sweden:
SK 2,000,000 13.00% due 06/15/01 ........................ 302,440
SK 1,500,000 11.00% due 01/21/99 ........................ 208,880
SK 3,000,000 10.75% due 01/23/97 ........................ 413,875
SK 2,000,000 10.25% due 05/05/03 ........................ 267,657
SK 1,500,000 9.00% due 04/20/09 ......................... 177,559
SK 3,500,000 6.00% due 02/09/05 ......................... 345,087
-----------
1,715,498
-----------
UNITED KINGDOM - 6.27%
Government of United Kingdom:
L 250,000 10.00% due 02/26/01 ........................ 436,840
L 325,000 9.00% due 03/03/00 ......................... 542,570
L 400,000 9.00% due 10/13/08 ......................... 688,820
L 400,000 9.00% due 08/06/12 ......................... 695,172
L 150,000 8.75% due 08/25/17 ......................... 258,233
L 550,000 8.00% due 06/10/03 ......................... 877,526
L 250,000 8.00% due 12/07/15 ......................... 400,985
L 100,000 7.25% due 03/30/98 ......................... 157,814
L 300,000 6.75% due 11/26/04 ......................... 438,304
L 250,000 6.00% due 08/10/99 ......................... 373,814
-----------
4,870,078
-----------
TOTAL GOVERNMENT BONDS
(Cost $54,575,393) ........................... 62,763,923
-----------
SUPRANATIONAL - 11.12%
Y 50MM Asian Dev Bank, 5.00%
due 02/05/03 ............................... 678,730
Eurofima:
Ff 1,600,000 9.25% due 12/18/03 ......................... 355,135
L 250,000 7.50% due 02/05/98 ......................... 396,022
European Investment Bank:
Lit 400MM 10.50% due 04/30/98 ........................ 243,070
Lit 1,100MM 10.50% due 02/07/02 ........................ 695,248
Y 25MM 6.625% due 03/15/00 ........................ 354,505
Ff 2,000,000 6.125% due 10/08/04 ........................ 365,565
Y 100MM 4.625% due 02/26/03 ........................ 1,330,871
Y 20MM 4.50% due 10/08/97 ......................... 253,471
Y 55MM Inter-American Development Bank,
6.75% due 02/20/01 ......................... 795,347
International Bank for Reconstruction
& Development:
Lit 150MM 10.80% due 11/13/01 ........................ 95,949
Lit 500MM 10.625% due 03/27/98 ....................... 304,745
Lit 200MM 9.45% due 08/11/03 ......................... 111,788
L 400,000 9.25% due 07/20/07 ......................... 679,292
Y 50MM 4.50% due 06/20/00 ......................... 659,158
Y 100MM 4.50% due 03/20/03 ......................... 1,324,225
-----------
TOTAL SUPRANATIONAL
(Cost $7,751,380) ............................ 8,643,121
-----------
CORPORATE BONDS - 4.38%
FRANCE - FINANCE COMPANIES - 2.37%
Credit Local de France:
Ff 2,500,000 9.25% due 12/07/99 ......................... 544,190
Ff 3,000,000 6.25% due 09/27/05 ......................... 547,969
Ff 4,000,000 6.00% due 11/15/01 ......................... 750,781
-----------
1,842,940
-----------
FRANCE - RAILROAD - 0.23%
Societe Nationale des Chemins
de fer Francais:
Ff 1,000,000 6.75% due 09/16/13 ......................... 177,240
-----------
ITALY - AUTO - CARS - 0.38%
Lit 500MM Daimer Benz Inter, 10.50%
due 06/23/00 ............................... 299,269
-----------
ITALY - FINANCE COMPANIES - 0.76%
Lit 500MM Gen Elec Cap Corp, 11.875%
due 07/11/96 ............................... 306,503
Lit 500MM Union Bank of Switzerland, 9.25%
due 08/23/00 ............................... 280,232
-----------
586,735
-----------
NETHERLANDS - INSURANCE - 0.64%
NG 750,000 Aegon NV, 7.125% due 09/01/98 ................ 494,887
-----------
TOTAL CORPORATE BONDS
(Cost $3,280,630) ............................ 3,401,071
-----------
TOTAL INVESTMENTS
(Cost $65,607,403) - 96.24% .................. 74,808,115
Other assets and liabilities,
net - 3.76% ................................ 2,925,688
-----------
NET ASSETS (equivalent to $12.72 per share
on 6,110,908 shares outstanding) - 100% .... $77,733,803
===========
117
STATEMENT OF ASSETS AND LIABILITIES
ASSETS
Investments (Cost $65,607,403) ................................ $74,808,115
Foreign currencies (Cost $1,089,600) .......................... 1,073,420
Cash .......................................................... 769,489
Receivable for:
Investment income ........................................... 2,071,678
Foreign withholding taxes ................................... 76,959
Capital stock sold .......................................... 78,459
Other assets .................................................. 4,528
-----------
Total assets .................................................. 78,882,648
-----------
LIABILITIES
Payable for:
Investments purchased ....................................... 1,055,635
Foreign withholding taxes ................................... 43,476
Advisory fees ............................................... 31,058
Other liabilities ............................................. 18,676
-----------
Total liabilities ........................................... 1,148,845
-----------
NET ASSETS APPLICABLE TO
SHARES OUTSTANDING .......................................... $77,733,803
===========
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
6,110,908 shares outstanding ................................ $ 61,109
Additional paid in capital .................................... 68,319,372
Undistributed net realized gain on securities and
foreign currency transactions ............................... 71,136
Undistributed net investment income ........................... 28,252
Unrealized appreciation of securities and
foreign currency translation ................................ 9,253,934
-----------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING ................... $77,733,803
===========
SEE NOTES TO FINANCIAL STATEMENTS.
118
<PAGE>
INTERNATIONAL GOVERNMENT BOND FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest (net of foreign withholding taxes of $97,586).............................................................. $ 3,304,699
------------
EXPENSES:
Advisory fees....................................................................................................... 252,782
Custodian and accounting services................................................................................... 24,908
Reports to shareholders............................................................................................. 7,111
Audit fees.......................................................................................................... 4,220
Registration fees................................................................................................... 6,279
Directors' fees and expenses........................................................................................ 1,980
Miscellaneous....................................................................................................... 4,595
------------
Total expenses.................................................................................................. 301,875
------------
NET INVESTMENT INCOME............................................................................................... 3,002,824
------------
REALIZED AND UNREALIZED GAIN ON SECURITIES AND FOREIGN CURRENCIES:
Net realized gain on:
Securities......................................................................................... $ 37,659
Foreign currency transactions...................................................................... 157,001 194,660
Net unrealized appreciation during the year: ----------
Securities......................................................................................... 8,463,954
Foreign currency translation....................................................................... 27,160 8,491,114
---------- ------------
Net realized and unrealized gain on securities and foreign currencies during the year........................ 8,685,774
------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................................... $ 11,688,598
============
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended May 31:
<TABLE>
<CAPTION>
1995 1994
------------ -----------
<S> <C> <C>
OPERATIONS:
Net investment income............................................................................. $ 3,002,824 $ 1,971,039
Net realized gain (loss) on securities and foreign currency transactions.......................... 194,660 (74,215)
Net unrealized appreciation (depreciation) of securities and translation
of foreign currencies during the period....................................................... 8,491,114 (719,814)
------------ -----------
Increase in net assets resulting from operations............................................ 11,688,598 1,177,010
------------ -----------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income............................................................................. (3,173,182) (1,859,582)
Net realized gain on securities................................................................... - (27,975)
------------ -----------
Decrease in net assets resulting from operations............................................ (3,173,182) (1,887,557)
------------ -----------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold.................................................................. 34,640,967 20,318,770
Proceeds from capital stock issued for distributions reinvested................................... 3,173,182 1,887,557
------------ -----------
37,814,149 22,206,327
Cost of capital stock repurchased................................................................. (9,623,857) (3,476,386)
------------ -----------
Increase in net assets resulting from capital stock transactions.............................. 28,190,292 18,729,941
------------ -----------
TOTAL INCREASE IN NET ASSETS ..................................................................... 36,705,708 18,019,394
NET ASSETS:
Beginning of year................................................................................. 41,028,095 23,008,701
------------ -----------
End of year (including undistributed net investment income of $28,252 and $171,913)............... $ 77,733,803 $41,028,095
============ ===========
CHANGE IN SHARES OUTSTANDING:
Shares of capital stock sold...................................................................... 2,933,943 1,821,848
Shares issued for distributions reinvested........................................................ 274,556 170,126
Shares of capital stock repurchased .............................................................. (838,751) (312,612)
------------ -----------
Increase in shares outstanding................................................................ 2,369,748 1,679,362
Shares outstanding:
Beginning of year............................................................................. 3,741,160 2,061,798
------------ -----------
End of year................................................................................... 6,110,908 3,741,160
============ ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
119
<PAGE>
MONEY MARKET FUND MAY 31, 1995 STATEMENT OF NET ASSETS
PAR MARKET
VALUE VALUE
- ---------- --------------
CORPORATE SHORT TERM
COMMERCIAL PAPER - 92.83%
APPLIANCES/FURNISHINGS - 1.81%
$1,500,000 Whirlpool Corp,
6.00% due 07/05/95 ............................ $ 1,491,500
--------------
BANKS - REGIONAL - 3.54%
Bank One Corp:
550,000 6.03% due 06/29/95 ............................ 547,421
1,400,000 6.03% due 07/07/95 ............................ 1,391,558
1,000,000 5.85% due 11/08/95 ............................ 974,000
--------------
2,912,979
--------------
BEVERAGE - SOFT DRINKS - 5.15%
Coca Cola Enterprises Inc:
1,000,000 6.07% due 06/20/95 ............................ 996,796
1,475,000 6.06% due 06/23/95 ............................ 1,469,538
1,778,000 Pepsico Inc, 5.93% due 06/21/95 ................. 1,772,142
--------------
4,238,476
--------------
CHEMICAL - MAJOR - 5.73%
2,254,000 Dow Chemical Co,
6.125% due 06/01/95 ......................... 2,254,000
Du Pont E I De Nemours & Co:
1,490,000 5.97% due 08/11/95 .......................... 1,472,456
1,000,000 5.92% due 08/18/95 .......................... 987,173
--------------
4,713,629
--------------
CONSUMER FINANCE - 14.67%
1,500,000 Associates Corp of North America,
5.90% due 09/20/95 ............................ 1,472,713
Beneficial Corp:
1,084,000 6.01% due 08/24/95 ............................ 1,068,799
1,500,000 5.96% due 07/10/95 ............................ 1,490,315
1,000,000 5.94% due 08/14/95 ............................ 987,790
Commercial Credit Co:
1,208,000 6.00% due 06/05/95 ............................ 1,207,195
1,200,000 5.94% due 08/09/95 ............................ 1,186,338
1,000,000 5.92% due 06/09/95 ............................ 998,684
Sears Roebuck Acceptance Corp:
491,000 6.02% due 07/05/95 ............................ 488,208
750,000 6.02% due 08/29/95 ............................ 738,838
1,150,000 5.93% due 07/06/95 ............................ 1,143,370
1,300,000 5.92% due 08/25/95 ............................ 1,281,829
--------------
12,064,079
--------------
DRUGS - 3.55%
Schering Plough Corp:
733,000 6.07% due 09/05/95 ............................ 721,135
1,500,000 6.03% due 09/19/95 ............................ 1,472,363
742,000 5.875% due 10/04/95 ........................... 726,864
--------------
2,920,362
--------------
ELECTRICAL EQUIPMENT - 0.68%
565,000 General Electric Co,
5.73% due 07/03/95 ............................ 562,122
--------------
ENTERTAINMENT - 1.21%
1,000,000 Mattel Inc, 6.05% due 07/06/95 .................. 994,118
--------------
FINANCE COMPANIES - 20.43%
CIESCO L P:
1,100,000 6.05% due 06/19/95 ............................ 1,096,673
895,000 6.00% due 06/21/95 ............................ 892,017
1,500,000 5.95% due 06/22/95 ............................ 1,494,794
CIT Group Holdings:
1,000,000 6.10% due 06/08/95 ............................ 998,814
515,000 6.05% due 06/01/95 ............................ 515,000
1,000,000 6.00% due 06/06/95 ............................ 999,167
1,000,000 5.91% due 07/21/95 ............................ 991,792
1,000,000 Ford Credit Europe Plc,
5.95% due 06/27/95 ............................ 995,703
1,000,000 Ford Motor Credit Co,
5.92% due 07/12/95 ............................ 993,258
1,400,000 General Electric Capital,
6.07% due 07/18/95 ............................ 1,388,905
International Lease Finance Corp:
1,000,000 6.18% due 06/15/95 ............................ 997,597
1,400,000 6.06% due 07/14/95 ............................ 1,389,866
1,000,000 5.95% due 07/20/95 ............................ 991,901
Transamerica Finance Corp:
1,000,000 6.05% due 06/30/95 ............................ 995,126
1,100,000 5.95% due 07/13/95 ............................ 1,092,364
1,000,000 5.87% due 11/01/95 ............................ 975,053
--------------
16,808,030
--------------
FOODS - 1.19%
991,000 McCormick & Co Inc,
6.10% due 08/21/95 ............................ 977,399
--------------
HOSPITAL SUPPLIES - 1.21%
1,000,000 Abbott Laboratories,
5.87% due 07/19/95 ............................ 992,173
--------------
INFORMATION PROCESSING - 7.89%
Hewlett Packard Co:
1,000,000 5.93% due 07/31/95 ............................ 990,117
1,000,000 5.90% due 08/15/95 ............................ 987,708
1,000,000 5.90% due 08/22/95 ............................ 986,561
International Business Machine Corp:
1,700,000 6.04% due 07/17/95 ............................ 1,686,880
1,100,000 6.00% due 08/01/95 ............................ 1,088,817
755,000 5.98% due 06/26/95 ............................ 751,865
--------------
6,491,948
--------------
INSURANCE - MULTILINE - 3.01%
Marsh & McLennan Cos Inc:
1,500,000 6.09% due 08/08/95 ............................ 1,482,745
1,000,000 6.08% due 07/24/95 ............................ 991,049
--------------
2,473,794
--------------
120
MACHINERY - INDUSTRIAL/
SPECIALTY - 3.93%
Cooper Industries Inc:
$1,000,000 6.02% due 06/13/95 ............................ $ 997,993
1,000,000 6.00% due 06/07/95 ............................ 999,000
1,238,000 Dover Corp, 5.95% due 06/01/95 .................. 1,238,000
--------------
3,234,993
--------------
MERCHANDISE - DRUG - 0.28%
231,000 Rite Aid Corp,
6.07% due 06/06/95 ............................ 230,805
--------------
OIL - INTEGRATED DOMESTIC - 3.01%
Atlantic Richfield Co:
1,500,000 6.08% due 09/12/95 ............................ 1,473,907
1,000,000 5.94% due 06/02/95 ............................ 999,835
--------------
2,473,742
--------------
PUBLISHING/PRINTING - 2.81%
RR Donnelley & Sons Co:
1,500,000 5.95% due 06/13/95 ............................ 1,497,025
814,000 5.94% due 06/28/95 ............................ 810,374
--------------
2,307,399
--------------
SECURITIES RELATED - 3.90%
Merrill Lynch & Co Inc:
1,000,000 6.07% due 08/04/95 ............................ 989,209
1,129,000 6.02% due 07/25/95 ............................ 1,118,805
1,103,000 6.01% due 06/28/95 ............................ 1,098,028
--------------
3,206,042
--------------
TOBACCO - 4.02%
Philip Morris Cos Inc:
1,319,000 6.03% due 06/12/95 ............................ 1,316,570
1,500,000 6.00% due 06/16/95 ............................ 1,496,250
500,000 5.85% due 09/05/95 ............................ 492,200
--------------
3,305,020
--------------
UTILITIES - COMMUNICATION - 3.27%
Bellsouth Telecommunications Inc:
1,000,000 5.95% due 06/06/95 ............................ 999,174
1,000,000 5.92% due 08/07/95 ............................ 988,982
705,000 GTE North Inc,
5.98% due 06/02/95 ............................ 704,883
--------------
2,693,039
--------------
UTILITIES - ELECTRIC - 1.54%
1,275,000 Central & South West Corp,
5.95% due 07/13/95 ............................ 1,266,149
--------------
TOTAL CORPORATE SHORT TERM COMMERCIAL PAPER
(Cost $76,357,798) .............................. 76,357,798
--------------
CORPORATE SHORT TERM OBLIGATIONS - 3.65%
FINANCE COMPANIES - 1.22%
1,000,000 General Electric Capital Corp,
Floating rate note due 02/09/96,
6.35% at 05/31/95 ........................... 1,000,000
--------------
SECURITIES RELATED - 2.43%
Bear Stearns Co Inc:
1,000,000 Floating rate note due 10/20/95,
6.178% at 05/31/95 .......................... 1,000,000
1,000,000 Floating rate note due 05/15/96,
6.1625% at 05/31/95 ......................... 1,000,000
--------------
2,000,000
--------------
TOTAL CORPORATE SHORT TERM OBLIGATIONS
(Cost $3,000,000) ................................ 3,000,000
--------------
UNITED STATES GOVERNMENT - SHORT TERM - 5.44%
GOVERNMENT SPONSORED - 5.44%
Federal Home Loan Banks:
Floating rate note due 09/20/95,
1,000,000 6.40% at 05/31/95 .......................... 1,000,685
1,000,000 6.06% due 08/02/95 ......................... 989,563
Federal National Mortgage Association:
1,000,000 6.07% due 08/17/95 ......................... 987,017
1,500,000 5.94% due 06/14/95 ......................... 1,496,780
--------------
TOTAL UNITED STATES GOVERNMENT - SHORT TERM
(Cost $4,474,045) ............................... 4,474,045
--------------
TOTAL INVESTMENTS
(Cost $83,831,843) - 101.92% .................... 83,831,843
Other assets and liabilities, net - (1.92%) ..... (1,578,046)
--------------
NET ASSETS (equivalent to $1.00 per share on
82,255,593 shares outstanding) - 100% ......... $ 82,253,797
==============
- -------------------------------------------------------------------------------
NET ASSETS REPRESENTED BY:
Capital stock, $.01 par value per share,
1,000,000,000 shares authorized,
82,255,593 shares outstanding ............................... $ 822,556
Additional paid in capital .................................... 81,433,036
Accumulated net realized loss on securities ................... (1,795)
--------------
NET ASSETS APPLICABLE TO SHARES OUTSTANDING ................... $ 82,253,797
==============
SEE NOTES TO FINANCIAL STATEMENTS.
121
<PAGE>
MONEY MARKET FUND FINANCIAL STATEMENTS
STATEMENT OF OPERATIONS
For the fiscal year ended May 31, 1995
<TABLE>
<S> <C>
INVESTMENT INCOME:
Interest............................................................................................................... $ 3,566,697
-----------
EXPENSES:
Advisory fees.......................................................................................................... 321,207
Custodian and accounting services...................................................................................... 32,690
Reports to shareholders................................................................................................ 10,631
Audit fees............................................................................................................. 6,044
Registration fees...................................................................................................... 1,264
Directors' fees and expenses........................................................................................... 2,598
Miscellaneous.......................................................................................................... 5,451
-----------
Total expenses..................................................................................................... 379,885
-----------
NET INVESTMENT INCOME.................................................................................................. 3,186,812
-----------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS...................................................................... $ 3,186,812
===========
</TABLE>
STATEMENT OF CHANGES IN NET ASSETS
For the fiscal year ended May 31:
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income................................................................................ $ 3,186,812 $ 1,284,483
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net investment income................................................................................ (3,186,812) (1,284,483)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from capital stock sold..................................................................... 133,137,958 40,235,515
Proceeds from capital stock issued for distributions reinvested...................................... 3,186,812 1,284,483
------------ ------------
136,324,770 41,519,998
Cost of capital stock repurchased.................................................................... (104,603,566) (36,309,057)
------------ ------------
Increase in net assets resulting from capital stock transactions................................. 31,721,204 5,210,941
------------ ------------
TOTAL INCREASE IN NET ASSETS......................................................................... 31,721,204 5,210,941
NET ASSETS:
Beginning of year.................................................................................... 50,532,593 45,321,652
End of year.......................................................................................... $ 82,253,797 $ 50,532,593
============ ============
CHANGE IN SHARES OUTSTANDING
Shares of capital stock sold......................................................................... 133,137,958 40,235,515
Shares issued for distributions reinvested........................................................... 3,186,812 1,284,483
Shares of capital stock repurchased ................................................................. (104,603,566) (36,309,057)
------------ ------------
Increase in shares outstanding................................................................... 31,721,204 5,210,941
Shares outstanding:
Beginning of year............................................................................... 50,534,389 45,323,448
------------ ------------
End of year..................................................................................... 82,255,593 50,534,389
============ ============
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
122
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION
The American General Series Portfolio Company (the "Series") consists of
thirteen separate investment portfolios (the "Funds"):
Stock Index Fund
MidCap Index Fund
Small Cap Index Fund
International Equities Fund
Growth Fund
Growth & Income Fund
Science & Technology Fund
Social Awareness Fund
Timed Opportunity Fund
Capital Conservation Fund
Government Securities Fund
International Government Bond Fund
Money Market Fund
On April 29, 1994, Growth Fund, Growth & Income Fund, and Science &
Technology Fund commenced operations.
The Series is registered under the Investment Company Act of 1940 (the
"1940 Act"), as amended, as an open-end management investment company. Each Fund
is diversified with the exception of International Government Bond Fund which is
non-diversified as defined by the 1940 Act.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
Each Fund is accounted for as a separate entity. The following is a
summary of significant accounting policies consistently followed by each Fund in
the preparation of its financial statements.
A. INVESTMENT VALUATION
Securities listed or traded on a national exchange are valued daily at
their last reported sale price. In the absence of any exchange sales on that day
and for unlisted issues, securities are valued at the last sale price on the
NASDAQ National Market System. In the absence of any National Market System
sales on that day, securities are valued at the last reported bid price.
However, options written for which other over-the-counter market quotations are
readily available are valued at the last reported asked price, in the absence of
any National Market System sales on that day. Futures contracts, options
thereon, and options on stock indexes are valued at the amount which would be
received upon a current disposition of such investments (i.e., their fair market
value), in the absence of any sales on that day. Short term debt securities for
which market quotations are readily available are valued at the last reported
bid price. However, any short term security with a remaining maturity of 60 days
or less and all investments of the Money Market Fund are valued by the amortized
cost method which approximates fair market value. Investments for which market
quotations are not readily available are valued at fair value as determined in
good faith by, or under authority delegated by, the Series' Board of Directors.
B. OPTIONS AND FUTURES
CALL AND PUT OPTIONS. When a Fund writes a call or a put option, an
amount equal to the premium received is recorded as a liability. The liability
is "marked to market" daily to reflect the current market value of the option
written. When a written option expires, the Fund realizes a gain in the amount
of the premium originally received. If the Fund enters into a closing purchase
transaction, the Fund realizes a gain or loss in the amount of the original
premium less the cost of the closing transaction. If a written call option is
exercised, the Fund realizes a gain or loss from the sale of the underlying
security, and the proceeds from such sale are increased by the premium
originally received. If a written put option is exercised, the amount of the
premium originally received reduces the cost of the security which the Fund
purchases upon exercise of the option.
Purchased options are recorded as investments. If a purchased option
expires, the Fund realizes a loss in the amount of the cost of the option. If
the Fund enters into a closing transaction, it realizes a gain (or loss), to the
extent that the proceeds from the sale are greater (or less) than the cost of
the option. If the Fund exercises a put option, it realizes a gain or loss from
the sale of the underlying security by adjusting the proceeds from such sale by
the amount of the premium originally paid. If the Fund exercises a call option,
the cost of the security purchased upon exercise is increased by the premium
originally paid.
FUTURES CONTRACTS. The initial margin deposit made upon entering into a
futures contract is held by the custodian, in a segregated account, in the name
of the broker (the Fund's agent in acquiring the futures position). During the
period the futures contract is open, changes in the value of the contract are
recognized as unrealized gains or losses by "marking to market" on a daily basis
to reflect the market value of the contract at the end of each day's trading.
Variation margin payments are received or made daily, as u nrealized gains or
losses are incurred. When the contract is closed, the Fund realizes a gain or
loss in the amount of the cost of or proceeds from the closing transaction less
the Fund's basis in the contract.
C. REPURCHASE AGREEMENTS
The seller of a repurchase agreement collateralizes the agreement with
securities delivered to the Fund's custodian bank. The Adviser determines, on a
daily basis, that the seller maintains collateral of at least 100% of the
repurchase proceeds due to the Fund at maturity.
123
D. FOREIGN CURRENCY TRANSLATION
The accounting records of each Fund are maintained in U.S. dollars.
Transactions denominated in foreign currencies ("local currencies") are
translated into U.S. dollars at prevailing exchange rates on transaction
date.
Net realized gains or losses on foreign currency transactions include
exchange rate gains and losses from disposition of foreign currencies, currency
gains and losses realized between trade and settlement dates of security
transactions, and currency gains and losses realized on settlement of other
assets and liabilities settled in local currencies.
In determining realized and unrealized gains or losses on foreign
securities for the period, the Funds do not isolate exchange rate fluctuations
from local security price fluctuations. Foreign currencies and other assets and
liabilities denominated in local currencies are marked-to-market daily to
reflect fluctuations in foreign exchange rates.
E. FEDERAL INCOME TAXES
Each Fund intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code and to distribute all of its taxable
net investment income and taxable net realized capital gains, in excess of any
available capital loss carryovers. Therefore no federal income tax provision is
required.
F. INVESTMENT TRANSACTIONS AND RELATED
INVESTMENT INCOME
Investment transactions are accounted for on the trade date. Realized
gains and losses are determined on the basis of identified cost. Dividend income
is recorded on the ex-dividend date, except for dividend income on certain
foreign securities which is recorded when the Fund becomes aware of the
dividend. Interest income on investments is accrued daily.
G. DISTRIBUTIONS TO SHAREHOLDERS
Distributions to shareholders are recorded on the record date. The Funds
declare distributions from net investment income monthly, except for the Money
Market Fund, which declares daily. Capital gains distributions are declared
annually.
Investment income and capital gains and losses are recognized in
accordance with generally accepted accounting principles ("book"). Distributions
from net investment income and realized capital gains are based on earnings as
determined in accordance with federal tax regulations ("tax") which may differ
from book basis earnings. At the end of the year, offsetting adjustments to
undistributed net investment income and undistributed net realized gains
(losses) are made to eliminate permanent book/tax differences arising in the
current year. Permanent book/tax differences which arose in previous years were
reclassified to additional paid in capital as of May 31, 1995. Such
reclassifications had no effect on net assets or net asset value per share.
NOTE 3 - ADVISORY FEES AND OTHER
TRANSACTIONS WITH AFFILIATES
VALIC (the "Adviser") serves as investment adviser to the Series. VALIC
is an indirect wholly-owned subsidiary of American General Corporation, Houston,
Texas. On May 1, 1992, the Adviser entered into a sub-advisory agreement with
Bankers Trust Company ("Bankers Trust"), a wholly-owned subsidiary of Bankers
Trust New York Corporation, to serve as investment sub-adviser to Stock Index
Fund, MidCap Index Fund, and Small Cap Index Fund. On April 29, 1994, the
Adviser entered into sub-advisory agreements with T. Rowe Price Associates, Inc.
to serve as investment sub-adviser to Growth Fund and Science & Technology Fund,
and with Value Line, Inc., to serve as investment sub-adviser to Growth & Income
Fund. Sub-advisers are compensated for such services by the Adviser.
The Adviser receives from the Series a monthly fee based on each Fund's
average daily net asset value at the following annual rates: for Stock Index
Fund, MidCap Index Fund, Small Cap Index Fund and International Equities Fund
.35% on the first $500 million and .25% on the excess over $500 million; for
Social Awareness Fund, Timed Opportunity Fund, Capital Conservation Fund,
Government Securities Fund, International Government Bond Fund, and Money Market
Fund, .50%; for Growth & Income Fund, .75%; for Growth Fund, .80%; for Science &
Technology Fund, .90%.
To the extent that any Fund's accrued expenses for a given month exceed,
on an annualized basis, 2% of the Fund's average daily net assets, the Adviser
will voluntarily reduce expenses of any such Fund by the amount of the excess.
The Adviser may withdraw this voluntary undertaking upon 30 days written notice
to the Series.
The Adviser provided to the Series, at cost, certain services associated
with the printing of reports to shareholders. During the year ended May 31,
1995, the Series paid $14,880 for such services.
For the year ended May 31, 1995, the Series paid commissions of $241 to
BT Brokerage Corporation, an affiliate of Bankers Trust.
124
During the year ended May 31, 1995, security transactions were
affected between the following Funds at the then current market price with no
brokerage commissions incurred:
<TABLE>
<CAPTION>
SELLER PURCHASER COST TO PURCHASER NET GAIN TO SELLER
- ----------------- ---------------- ----------------- ------------------
<S> <C> <C> <C>
MidCap Index Fund Stock Index Fund $13,687,425 $4,521,751
Capital Conservation Fund Government Securities Fund 2,004,375 8,118
</TABLE>
At May 31, 1995, VALIC Separate Account A (a registered separate
account of VALIC) and VALIC owned over five percent of the outstanding shares
of the following Funds:
VALIC
SEPARATE
ACCOUNT A VALIC
--------- -----
Stock Index Fund ............................... 96.34%
MidCap Index Fund .............................. 99.99
Small Cap Index Fund ........................... 100.00
International Equities Fund .................... 96.86
Growth Fund .................................... 88.58 11.42%
Growth & Income Fund ........................... 73.86 26.14
Science & Technology Fund ...................... 91.23 8.77
Social Awareness Fund .......................... 84.39 15.49
Timed Opportunity Fund ......................... 96.61
Capital Conservation Fund ...................... 81.33 18.66
Government Securities Fund ..................... 96.09
International Government Bond Fund ............. 79.41 20.59
Money Market Fund .............................. 99.99
Certain officers and directors of the Series are officers and directors
of VALIC or American General Corporation.
NOTE 4 - INVESTMENT ACTIVITY
The information in the following table is presented on the basis of cost for
federal income tax purposes for the year ended
May 31, 1995.
<TABLE>
<CAPTION>
IDENTIFIED COST GROSS GROSS
OF INVESTMENTS UNREALIZED UNREALIZED NET UNREALIZED
OWNED APPRECIATION DEPRECIATION APPRECIATION
--------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Stock Index Fund .................................. $1,004,866,072 $281,750,305 $22,575,445 $259,174,860
MidCap Index Fund ................................. 368,853,005 60,830,620 22,414,351 38,416,269
Small Cap Index Fund .............................. 117,965,346 20,588,678 12,066,361 8,522,317
International Equities Fund ....................... 183,930,145 28,509,032 6,876,504 21,632,528
Growth Fund ....................................... 99,890,671 10,167,052 1,544,246 8,622,806
Growth & Income Fund .............................. 39,822,374 4,498,441 501,047 3,997,394
Science & Technology Fund ......................... 150,591,152 19,982,681 6,018,256 13,964,425
Social Awareness Fund ............................. 48,525,776 5,618,465 393,617 5,224,848
Timed Opportunity Fund ............................ 172,200,626 11,612,927 1,011,458 10,601,469
Capital Conservation Fund ......................... 62,590,633 2,994,768 316,458 2,678,310
Government Securities Fund ........................ 50,737,960 2,487,866 -- 2,487,866
International Government Bond Fund ................ 65,607,403 10,186,131 985,419 9,200,712
Money Market Fund ................................. 83,831,843 -- -- --
</TABLE>
The following net realized capital loss carryforwards at May 31,
1995, may be utilized to offset future capital gains.
CAPITAL LOSS EXPIRATION
CARRYFORWARD THROUGH:
------------ ------------
Growth & Income Fund ..................... $ 461,741 May 31, 2003
Capital Conservation Fund ................ 2,551,375 May 31, 2003
Government Securities Fund ............... 1,714,490 May 31, 2003
Money Market Fund ........................ 3,023 May 31, 2002
125
During the period, the cost of purchases and proceeds from sales of securities,
excluding short term securities were:
COST OF PROCEEDS FROM
SECURITIES SECURITIES SOLD
PURCHASED OR MATURED
------------ ---------------
Stock Index Fund ........................... $165,349,479 $154,316,356
MidCap Index Fund .......................... 107,401,319 85,852,643
Small Cap Index Fund ....................... 47,361,446 39,163,195
International Equities Fund ................ 53,198,153 27,222,089
Growth Fund ................................ 97,825,190 22,918,044
Growth & Income Fund ....................... 47,745,354 18,417,145
Science & Technology Fund .................. 186,825,160 65,898,712
Social Awareness Fund ...................... 71,183,464 70,393,726
Timed Opportunity Fund ..................... 166,438,573 195,804,462
Capital Conservation Fund .................. 60,839,572 58,469,170
Government Securities Fund ................. 108,518,697 97,143,092
International Government Bond Fund ......... 29,989,868 3,206,631
Transactions in written options during the period were:
SCIENCE & TECHNOLOGY FUND
-------------------------
CONTRACTS PREMIUMS
--------- --------
Beginning Balance............................. 0 $ 0
Written....................................... 120 16,265
Expired....................................... (120) (16,265)
------ --------
Ending Balance................................ 0 $ 0
------ --------
NOTE 5 - PORTFOLIO SECURITIES LOANED
To realize additional income, a Fund may lend portfolio securities with
a value of up to 30% (33 1/3% in the case of Growth Fund and Science &
Technology Fund) of its total assets. Any such loans will be continuously
secured by collateral, maintained in a segregated account, at least equal to the
market value of the securities loaned. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delays in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially. Loans by a Fund will only be made to broker-dealers deemed by the
Adviser to be creditworthy and will not be made unless, in the judgment of the
Adviser, the consideration to be earned from such loans would justify the risk.
Each Fund receives income earned on the securities during the lending period and
a portion of the interest or rebate earned on the collateral received.
Portfolio securities on loan at May 31, 1995 are summarized as follows:
MARKET VALUE COLLATERAL VALUE
------------ ----------------
Stock Index Fund ......................... $ 2,138,712 $ 2,198,100
MidCap Index Fund ........................ 21,535,671 22,625,131
Small Cap Index Fund ..................... 8,990,171 9,384,678
International Equities Fund .............. 9,969,225 10,235,171
Growth Fund .............................. 1,473,131 1,500,000
Growth & Income Fund ..................... 1,101,072 1,125,193
Science & Technology Fund ................ 9,362,375 9,488,800
Social Awareness Fund .................... 161,008 166,971
Timed Opportunity Fund ................... 439,374 447,033
Capital Conservation Fund ................ 153,725 156,500
Government Securities Fund ............... 35,990 36,225
----------- -----------
Total ........................... $55,360,454 $57,363,802
=========== ===========
NOTE 6 - INVESTMENT CONCENTRATION
A significant portion of Government Securities Fund's investments may be
in U.S. Government sponsored securities. No assurance can be given that the U.S.
Government will provide support to such U.S. Government sponsored agencies or
instrumentalities in the future since it is not required to do so by law. As a
result of the Fund's concentration in such investments, it may be subject to
risks associated with U.S. Government sponsored securities. At May 31, 1995,
Government Securities Fund had 44% of its net assets invested in such
securities.
At May 31, 1995, International Government Bond Fund had 23% of its net
assets invested in securities issued by the Government of Japan and an
additional 10% in issues of companies located in Japan and/or denominated in
Japanese Yen. Future economic and political developments in a foreign country
could adversely affect the liquidity and value of foreign securities or the
currency exchange rates from which foreign currencies are translated.
126
FINANCIAL HIGHLIGHTS
Per share data is for a share of capital stock outstanding throughout the
period. Total return includes reinvestment of dividends on the reinvestment
date. Total returns and ratios for periods of less than one year are not
annualized.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
--------------------------------------------------------------
STOCK INDEX FUND 1995 1994 1993 1992 1991
---------- ---------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period .......................... $ 14.39 $ 14.36 $ 13.34 $ 12.60 $ 11.86
---------- ---------- -------- -------- -------
Income from investment operations:
Net investment income ..................................... 0.37 0.35 0.34 0.32 0.31
Net realized and unrealized gain on securities ............ 2.45 0.12 1.20 0.74 0.81
---------- ---------- -------- -------- -------
Total income from investment operations ................... 2.82 0.47 1.54 1.06 1.12
---------- ---------- -------- -------- -------
Distributions:
Distributions from net investment income .................. (0.37) (0.35) (0.34) (0.32) (0.31)
Distributions from net realized gain on securities ........ (0.03) (0.09) (0.18) (0.07)
---------- ---------- -------- -------- -------
Total distributions ....................................... (0.40) (0.44) (0.52) (0.32) (0.38)
---------- ---------- -------- -------- -------
Net asset value at end of period ................................ $ 16.81 $ 14.39 $ 14.36 $ 13.34 $ 12.60
========== ========== ======== ======== =======
TOTAL RETURN .................................................... 19.98% 3.29% 11.74% 8.57% 9.98%
========== ========== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ..................... 0.38% 0.39% 0.43% 0.50% 0.67%
Ratio of net investment income to average net assets ........ 2.44% 2.44% 2.52% 3.12% 2.82%
Portfolio turnover rate ..................................... 14% 3% 1% 45% 6%
Number of shares outstanding at end of period (000's) ....... 75,451 75,494 66,224 55,598 6,662
Net assets at end of period (000's) ......................... $1,267,992 $1,086,459 $951,200 $741,667 $83,970
Average net assets during the period (000's) ................ $1,140,085 $1,030,581 $836,510 $167,262 $55,147
<CAPTION>
FISCAL YEAR ENDED MAY 31,
--------------------------------------------------------
MINCAP INDEX FUND(1) 1995 1994 1993 1992 1991
-------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period ................................. $ 14.54 $ 14.38 $ 12.86 $ 12.51 $ 12.92
-------- -------- -------- -------- -------
Income (loss) from investment operations:
Net investment income ............................................ 0.26 0.23 0.24 0.23 0.28
Net realized and unrealized gain (loss) on securities ............ 1.59 0.28 1.93 0.39 (0.30)
-------- -------- -------- -------- -------
Total income (loss) from investment operations ................... 1.85 0.51 2.17 0.62 (0.02)
-------- -------- -------- -------- -------
Distributions:
Distributions from net investment income ......................... (0.26) (0.23) (0.24) (0.23) (0.28)
Distributions from net realized gain on securities ............... (0.45) (0.12) (0.41) (0.04) (0.11)
-------- -------- -------- -------- -------
Total distributions .............................................. (0.71) (0.35) (0.65) (0.27) (0.39)
-------- -------- -------- -------- -------
Net asset value at end of period ....................................... $ 15.68 $ 14.54 $ 14.38 $ 12.86 $ 12.51
======== ======== ======== ======== =======
TOTAL RETURN ........................................................... 13.26% 3.52% 17.21% 5.01% 0.20%
======== ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ............................ 0.44% 0.46% 0.47% 0.54% 0.67%
Ratio of net investment income to average net assets ............... 1.73% 1.62% 1.79% 1.82% 2.41%
Portfolio turnover rate ............................................ 23% 17% 5% 112% 101%
Number of shares outstanding at end of period (000's) .............. 25,988 24,001 14,673 8,862 6,168
Net assets at end of period (000's) ................................ $407,557 $349,041 $210,931 $113,992 $77,146
Average net assets during the period (000's) ....................... $376,486 $285,247 $154,979 $ 88,456 $69,696
</TABLE>
(1) Effective October 1, 1991, the Fund's name was changed from Capital
Accumulation Fund to MidCap Index Fund. Additionally, on October 1,
1991, the investment objectives and investment program for the Fund
were changed.
SEE NOTES TO FINANCIAL STATEMENTS.
127
<PAGE>
<TABLE>
<CAPTION>
PERIOD FROM
FISCAL YEAR ENDED MAY 31, MAY 1, 1992
------------------------------------ TO
1995 1994 1993 MAY 31, 1992
SMALL CAP INDEX FUND -------- -------- ------- ------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period ................................... $ 11.52 $ 11.28 $ 9.93 $ 10.00(1)
-------- -------- ------- ---------
Income (loss) from investment operations:
Net investment income .............................................. 0.17 0.13 0.15 0.02
Net realized and unrealized gain (loss) on securities .............. 0.97 0.58 1.48 (0.07)
-------- -------- ------- ---------
Total income (loss) from investment operations ..................... 1.14 0.71 1.63 (0.05)
-------- -------- ------- ---------
Distributions:
Distributions from net investment income ........................... (0.17) (0.13) (0.15) (0.02)
Distributions from net realized gain on securities ................. (0.34) (0.13)
-------- -------- ------- ---------
Total distributions ................................................ (0.17) (0.47) (0.28) (0.02)
-------- -------- ------- ---------
Net asset value at end of period ......................................... $ 12.49 $ 11.52 $ 11.28 $ 9.93
======== ======== ======= =========
TOTAL RETURN ............................................................. 9.98% 6.18% 16.64% (0.50)%
======== ======== ======= =========
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets .............................. 0.44% 0.47% 0.47% 0.04%
Ratio of net investment income to average net assets ................. 1.44% 1.10% 1.40% 0.21%
Portfolio turnover rate .............................................. 34% 16% 20% 0%
Number of shares outstanding at end of period (000's) ................ 10,136 9,381 3,687 1,107
Net assets at end of period (000's) .................................. $126,567 $108,050 $41,581 $10,989
Average net assets during the period (000's) ......................... $120,298 $ 70,690 $22,142 $10,989
</TABLE>
(1) The net asset value at the beginning of the period is as of commencement of
operations on May 1, 1992.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
--------------------------------------------------------------
INTERNATIONAL EQUITIES FUND 1995 1994 1993 1992 1991
-------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period ......................... $10.14 $ 8.99 $ 8.03 $8.58 $9.17
-------- -------- ------- ------- -------
Income (loss) from investment operations:
Net investment income .................................... 0.15 0.11 0.18 0.15 0.23
Net realized and unrealized gain (loss) on securities
and foreign currencies ................................. 0.34 1.17 0.93 (0.55) (0.59)
-------- -------- ------- ------- -------
Total income (loss) from investment operations ........... 0.49 1.28 1.11 (0.40) (0.36)
-------- -------- ------- ------- -------
Distributions:
Distributions from net investment income ................. (0.15) (0.11) (0.15) (0.15) (0.23)
Distributions from net realized gain on securities ....... (0.06) (0.02)
-------- -------- ------- ------- -------
Total distributions ................................. (0.21) (0.13) (0.15) (0.15) (0.23)
-------- -------- ------- ------- -------
Net asset value at end of period ............................... $10.42 $10.14 $ 8.99 $8.03 $8.58
======== ======== ======= ======= =======
TOTAL RETURN ................................................... 4.92% 14.31% 14.18% (4.69)% (3.71)%
======== ======== ======= ======= =======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets .................... 0.45% 0.47% 0.53% 0.65% 0.37%
Ratio of net investment income to average net assets ....... 1.47% 1.43% 2.33% 1.84% 2.67%
Portfolio turnover rate .................................... 14% 7% 9% 5% 3%
Number of shares outstanding at end of period (000's) ...... 20,074 17,273 7,429 4,256 2,451
Net assets at end of period (000's) ........................ $209,091 $175,183 $66,809 $34,182 $21,036
Average net assets during the period (000's) ............... $199,235 $117,264 $45,509 $26,542 $15,693
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
128
<TABLE>
<CAPTION>
FISCAL YEAR PERIOD FROM
ENDED APRIL 29, 1994
MAY 31, TO
GROWTH FUND 1995 MAY 31, 1994
----------- --------------
<S> <C> <C>
PER SHARE DATA
Net asset value at beginning of period .................... $ 9.87 $10.00(1)
-------- ------
Income (loss) from investment operations:
Net investment income ............................... 0.04 0.01
Net realized and unrealized gain (loss) on securities 1.56 (0.13)
-------- ------
Total income (loss) from investment operations ...... 1.60 (0.12)
-------- ------
Distributions:
Distributions from net investment income ............ (0.04) (0.01)
-------- ------
Net asset value at end of period .......................... $11.43 $ 9.87
======== ======
TOTAL RETURN .............................................. 16.25% (1.19)%
======== ======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ............... 0.91% 0.08%
Ratio of net investment income to average net assets .. 0.41% 0.11%
Portfolio turnover rate ............................... 61% 0%
Number of shares outstanding at end of period (000's) . 8,800 1,001
Net assets at end of period (000's) ................... $100,614 $9,885
Average net assets during the period (000's) .......... $ 42,232 $9,944
</TABLE>
(1) The net asset value at the beginning of the period is as of commencement of
operations on April 29, 1994.
<TABLE>
<CAPTION>
FISCAL YEAR PERIOD FROM
ENDED APRIL 29, 1994
MAY 31, TO
GROWTH & INCOME FUND 1995 MAY 31, 1994
----------- --------------
<S> <C> <C>
PER SHARE DATA
Net asset value at beginning of period .................... $ 9.87 $10.00(1)
------- ------
Income (loss) from investment operations:
Net investment income ............................... 0.09 0.02
Net realized and unrealized gain (loss) on securities 1.22 (0.13)
------- ------
Total income (loss) from investment operations ...... 1.31 (0.11)
------- ------
Distributions:
Distributions from net investment income ............ (0.09) (0.02)
------- ------
Net asset value at end of period .......................... $11.09 $ 9.87
======= ======
TOTAL RETURN .............................................. 13.35% (1.11)%
======= ======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ............... 0.86% 0.07%
Ratio of net investment income to average net assets .. 0.93% 0.22%
Portfolio turnover rate ............................... 97% 11%
Number of shares outstanding at end of period (000's) . 3,867 1,002
Net assets at end of period (000's) ................... $42,867 $9,890
Average net assets during the period (000's) .......... $21,910 $9,946
</TABLE>
(1) The net asset value at the beginning of the period is as of commencement of
operations on April 29, 1994.
SEE NOTES TO FINANCIAL STATEMENTS.
129
<TABLE>
<CAPTION>
FISCAL YEAR PERIOD FROM
ENDED APRIL 29, 1994
MAY 31, TO
SCIENCE & TECHNOLOGY FUND 1995 MAY 31, 1994
----------- --------------
<S> <C> <C>
PER SHARE DATA
Net asset value at beginning of period .................. $ 9.83 $10.00(1)
------- ------
Income (loss) from investment operations:
Net investment income ............................. 0.03 0.00
Net realized and unrealized gain (loss) on
securities and foreign currencies ................ 4.72 (0.17)
------- ------
Total income (loss) from investment operations .... 4.75 (0.17)
------- ------
Distributions:
Distributions from net investment income .......... (0.02) 0.00
Distributions from net realized gain on securities (0.13) 0.00
------- ------
Total distributions ............................... (0.15) 0.00
------- ------
Net asset value at end of period ........................ $14.43 $ 9.83
======= ======
TOTAL RETURN ............................................ 48.61% (1.66)%
======= ======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ............. 1.00% 0.08%
Ratio of net investment income to average net assets 0.36% 0.04%
Portfolio turnover rate ............................. 121% 0%
Number of shares outstanding at end of period (000's) 11,550 1,001
Net assets at end of period (000's) ................. $166,683 $9,834
Average net assets during the period (000's) ........ $64,974 $9,918
</TABLE>
(1) The net asset value at the beginning of the period is as of commencement of
operations on April 29, 1994.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
-----------------------------------------------------------
SOCIAL AWARENESS FUND 1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period ............................ $11.98 $12.12 $11.43 $11.13 $10.59
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income ....................................... 0.27 0.26 0.24 0.26 0.26
Net realized and unrealized gain (loss) on securities ....... 1.75 (0.02) 1.22 0.30 0.54
------- ------- ------- ------- -------
Total income (loss) from investment operations .............. 2.02 0.24 1.46 0.56 0.80
------- ------- ------- ------- -------
Distributions:
Distributions from net investment income .................... (0.27) (0.26) (0.24) (0.26) (0.26)
Distributions from net realized gain on securities .......... (0.71) (0.12) (0.53)
------- ------- ------- ------- -------
Total distributions ......................................... (0.98) (0.38) (0.77) (0.26) (0.26)
------- ------- ------- ------- -------
Net asset value at end of period .................................. $13.02 $11.98 $12.12 $11.43 $11.13
======= ======= ======= ======= =======
TOTAL RETURN ...................................................... 18.19% 1.97% 13.08% 5.08% 7.89%
======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ....................... 0.58% 0.60% 0.63% 0.16% 0.44%
Ratio of net investment income to average net assets .......... 2.22% 2.19% 2.14% 2.34% 2.66%
Portfolio turnover rate ....................................... 148% 83% 106% 203% 100%
Number of shares outstanding at end of period (000's) ......... 4,143 3,817 2,819 1,799 973
Total net assets at end of period (000's) ..................... $53,927 $45,729 $34,166 $20,570 $10,835
Average net assets during the period (000's) .................. $47,942 $41,002 $26,920 $15,365 $ 7,959
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
130
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
-----------------------------------------------------------
TIMED OPPORTUNITY FUND 1995 1994 1993 1992 1991
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period ............................ $10.84 $11.18 $10.66 $11.05 $10.48
-------- -------- -------- -------- --------
Income from investment operations:
Net investment income ....................................... 0.44 0.37 0.35 0.30 0.40
Net realized and unrealized gain (loss) on securities ....... 0.82 (0.15) 0.61 (0.19) 0.57
-------- -------- -------- -------- --------
Total income from investment operations ..................... 1.26 0.22 0.96 0.11 0.97
-------- -------- -------- -------- --------
Distributions:
Distributions from net investment income .................... (0.44) (0.37) (0.35) (0.30) (0.40)
Distributions from net realized gain on securities .......... (0.42) (0.19) (0.09) (0.20)
-------- -------- -------- -------- --------
Total distributions ......................................... (0.86) (0.56) (0.44) (0.50) (0.40)
-------- -------- -------- -------- --------
Net asset value at end of period .................................. $11.24 $10.84 $11.18 $10.66 $11.05
======== ======== ======== ======== ========
TOTAL RETURN ...................................................... 12.43% 1.86% 9.17% 0.87% 9.75%
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ....................... 0.58% 0.59% 0.70% 0.90% 0.92%
Ratio of net investment income to
average net assets .......................................... 4.03% 3.24% 3.28% 2.72% 3.94%
Portfolio turnover rate ....................................... 133% 76% 78% 111% 55%
Number of shares outstanding at end of period (000's) ......... 16,319 17,956 14,758 13,341 11,891
Total net assets at end of period (000's) ..................... $183,393 $194,576 $165,002 $142,213 $131,416
Average net assets during the period (000's) .................. $186,487 $185,036 $151,450 $137,179 $116,266
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
---------------------------------------------------------
CAPITAL CONSERVATION FUND 1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period .............................. $ 9.13 $9.87 $ 9.29 $ 8.81 $9.08
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income ......................................... 0.63 0.61 0.65 0.69 0.73
Net realized and unrealized gain (loss) on securities ......... 0.39 (0.69) 0.58 0.48 (0.27)
------- ------- ------- ------- -------
Total income (loss) from investment operations ................ 1.02 (0.08) 1.23 1.17 0.46
------- ------- ------- ------- -------
Distributions:
Distributions from net investment income ...................... (0.63) (0.61) (0.65) (0.69) (0.73)
Distributions from net realized gain on securities ............ (0.05)
------- ------- ------- ------- -------
Total distributions ........................................... (0.63) (0.66) (0.65) (0.69) (0.73)
------- ------- ------- ------- -------
Net asset value at end of period .................................... $ 9.52 $9.13 $ 9.87 $ 9.29 $8.81
======= ======= ======= ======= =======
TOTAL RETURN ........................................................ 11.80% (1.13)% 13.60% 13.72% 5.40%
======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ......................... 0.58% 0.59% 0.67% 0.77% 0.83%
Ratio of net investment income to average net assets ............ 6.88% 6.24% 6.77% 7.80% 8.25%
Portfolio turnover rate ......................................... 100% 55% 58% 121% 142%
Number of shares outstanding at end of period (000's) ........... 6,935 6,712 5,095 3,939 2,333
Total net assets at end of period (000's) ....................... $66,031 $61,305 $50,290 $36,609 $20,541
Average net assets during the period (000's) .................... $61,568 $59,210 $43,316 $29,793 $19,105
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
131
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
---------------------------------------------------------
GOVERNMENT SECURITIES FUND 1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period ............................. $ 9.55 $10.30 $ 9.84 $ 9.34 $9.20
------- ------- ------- ------- -------
Income (loss) from investment operations:
Net investment income ........................................ 0.60 0.55 0.61 0.65 0.66
Net realized and unrealized gain (loss) on securities ........ 0.35 (0.59) 0.59 0.49 0.14
------- ------- ------- ------- -------
Total income (loss) from investment operations ............... 0.95 (0.04) 1.20 1.14 0.80
------- ------- ------- ------- -------
Distributions:
Distributions from net investment income ..................... (0.61) (0.55) (0.61) (0.64) (0.66)
Distributions from net realized gain on securities ........... (0.16) (0.13)
------- ------- ------- ------- -------
Total distributions .......................................... (0.61) (0.71) (0.74) (0.64) (0.66)
------- ------- ------- ------- -------
Net asset value at end of period ............................... $ 9.89 $ 9.55 $10.30 $ 9.84 $9.34
======= ======= ======= ======= =======
TOTAL RETURN ....................................................... 10.43% (0.66)% 12.56% 12.60% 9.28%
======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ........................ 0.58% 0.59% 0.67% 0.76% 0.87%
Ratio of net investment income to average net assets ........... 6.36% 5.44% 6.08% 6.77% 7.25%
Portfolio turnover rate ........................................ 229% 85% 105% 78% 87%
Number of shares outstanding at end of period (000's) .......... 5,478 4,544 3,110 2,090 1,468
Total net assets at end of period (000's) ...................... $54,174 $43,401 $32,023 $20,559 $13,711
Average net assets during the period (000's) ................... $45,200 $41,596 $26,145 $17,069 $11,393
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM
FISCAL YEAR ENDED MAY 31, OCTOBER 1,
------------------------------------ 1991 TO
INTERNATIONAL GOVERNMENT BOND FUND 1995 1994 1993 MAY 31, 1992
------- ------- ------- ------------
<S> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period ............................... $10.97 $11.16 $10.43 $10.00(1)
------- ------- ------- -------
Income from investment operations:
Net investment income .......................................... 0.65 0.62 0.76 0.48
Net realized and unrealized gain (loss) on securities
and foreign currencies ....................................... 1.80 (0.20) 0.70 0.42
------- ------- ------- -------
Total income from investment operations ........................ 2.45 0.42 1.46 0.90
------- ------- ------- -------
Distributions:
Distributions from net investment income ....................... (0.70) (0.60) (0.73) (0.47)
Distributions from net realized gain on securities ............. (0.01)
------- ------- ------- -------
Total distributions ............................................ (0.70) (0.61) (0.73) (0.47)
------- ------- ------- -------
Net asset value at end of period ..................................... $12.72 $10.97 $11.16 $10.43
======= ======= ======= =======
TOTAL RETURN ......................................................... 23.23% 3.87% 14.50% 9.18%
======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets .......................... 0.59% 0.48% 0.14% 0.08%
Ratio of net investment income to average net assets ............. 5.83% 5.87% 7.02% 4.62%
Portfolio turnover rate .......................................... 6% 3% 26% 12%
Number of shares outstanding at end of period (000's) ............ 6,111 3,741 2,062 1,259
Total net assets at end of period (000's) ........................ $77,734 $41,028 $23,009 $13,126
Average net assets during the period (000's) ..................... $51,451 $33,561 $18,135 $11,938
</TABLE>
(1) The net asset value at the beginning of the period is as of commencement of
operations on October 1, 1991.
SEE NOTES TO FINANCIAL STATEMENTS.
132
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
-----------------------------------------------------------
MONEY MARKET FUND 1995 1994 1993 1992 1991
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
PER SHARE DATA
Net asset value at beginning of period ............................ $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- -------
Income from investment operations:
Net investment income ....................................... 0.05 0.03 0.03 0.05 0.07
------- ------- ------- ------- -------
Distributions:
Distributions from net investment income .................... (0.05) (0.03) (0.03) (0.05) (0.07)
------- ------- ------- ------- -------
Net asset value at end of period .................................. $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
TOTAL RETURN ...................................................... 4.90% 2.83% 2.85% 4.47% 7.11%
======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets ....................... 0.57% 0.58% 0.63% 0.67% 0.68%
Ratio of net investment income to average net assets .......... 4.75% 2.78% 2.81% 4.42% 6.86%
Number of shares outstanding at end of period (000's) ......... 82,256 50,534 45,323 48,355 38,572
Total net assets at end of period (000's) ..................... $82,254 $50,533 $45,322 $48,353 $38,570
Average net assets during the period (000's) .................. $67,021 $46,222 $45,562 $46,305 $34,733
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
133
REPORT OF INDEPENDENT AUDITORS
TO THE SHAREHOLDERS AND BOARD OF DIRECTORS OF
AMERICAN GENERAL SERIES PORTFOLIO COMPANY
We have audited the accompanying statements of net assets of Stock Index Fund,
MidCap Index Fund, Small Cap Index Fund, International Equities Fund, Growth
Fund, Growth & Income Fund, Science & Technology Fund, Social Awareness Fund,
Timed Opportunity Fund, Capital Conservation Fund, Government Securities Fund,
and Money Market Fund and the accompanying statement of assets and liabilities
of International Government Bond Fund, including the schedule of portfolio
investments, (such "Funds" comprising the American General Series Portfolio
Company) as of May 31, 1995. We have also audited the related statement of
operations for each of the Funds for the year ended May 31, 1995, and the
statement of changes in net assets for each of the two years in the period ended
May 31, 1995 (except that the statements of changes in net assets of Growth
Fund, Growth & Income Fund, and Science & Technology Fund are for the year ended
May 31, 1995 and the period from April 29, 1994 to May 31, 1994). We have also
audited the financial highlights for each of the Funds for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and financial highlights 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 and financial
highlights 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
May 31, 1995, by correspondence with the custodian and brokers. 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, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds comprising the American General Series Portfolio Company
at May 31, 1995, the results of their operations and the changes in their net
assets for the periods identified above, and the financial highlights for each
of the periods indicated therein, in conformity with generally accepted
accounting principles.
ERNST & YOUNG LLP
Houston, Texas
July 14, 1995