Fellow Shareholders:
There is still little agreement among market watchers about which dynamics are
driving what markets and when. Does anybody care?
We sure don't. All that really matters is that this is the greatest bull market
of all time.
Indeed, even as the so-called pundits continue to question the condition of the
market, investors continue to reap its rewards: a payoff for their patience; for
sticking with their strategies; for maintaining a discipline; for keeping their
long-term plans.
It was just two years ago that the markets were so decidedly unpleasant--when
fears of "the correction" so dominated the investment landscape. And it was
just two years ago we reminded you--and ourselves--that long-term investment
strategies don't have to time the market to get a good return. It is time in the
market, not timing of the market, that determines success.
It wasn't easy to hold the course in such a volatile market, but those who did
are most likely being rewarded for it now.
And our hats are off to you all.
We're proud of the manner in which the IDEX II Series Fund portfolio managers
have guided and positioned your funds through these dramatic market changes. And
we are, of course, delighted with the extraordinary results they have posted
for this period. Please take a few minutes and review the personal comments from
these outstanding professionals regarding their respective Portfolios--including
our newest additions, the Tactical Asset Allocation Portfolio and the C.A.S.E.
Growth Portfolio. We invite you to evaluate these reports and review the data,
including major equity positions and industry weightings. All of this
information is intended to provide insight into some of the industry's finest
performances.
So far, 1996 is off to a spectacular start, faster even than the stock market's
historical average return of 10% a year. And not too surprisingly, the
sensational advances of recent months are becoming a bit unnerving--it's only
natural to fear that the markets are about to "run out of gas." Can another
stunning year lie ahead? Can the economy roll along strongly enough to boost
profits while not pushing interest rates higher? Will the presidential election
cycle keep investors on edge much of the year? Who knows? Forecasts are like
reading yesterday's newspaper, and often as not, the common wisdom is
way off--as it was in 1994 and 1995.
For ourselves, we aren't making any predictions on what will happen in 1996.
After all, in the short-term, the markets are unknowable. But long-term, they're
inevitable. The secret to wealth accumulation in the market is long-term
investing and not worrying about the interim peaks and troughs. History has
shown that investors see better results the longer they hold their investment.
And we're in it for the long-term--we're investors.
If it's true that success solicits success, then we're justified in our
optimistic outlook for this year and for years after that.
The Portfolios of the IDEX II Series Fund are managed not only with long-term
results in mind but long-term relationships as well. Our highest priority
remains the safety of the funds you've entrusted to us. We respect your personal
task of financial planning and appreciate the opportunity to help.
Sincerely yours,
/s/ Jack R. Kenny /s/ G. John Hurley
- ----------------- ------------------
Jack R. Kenny G. John Hurley
Aggressive Growth Portfolio
Rarely has there been a time when there's been so little understanding of the
economic forces shaping the market as there is now. The market is being whipped
around by a variety of unconnected events causing investors to attempt to
maneuver over every last bit of economic data. As a result, wild swings in the
market have taken place and, more importantly, stocks have reacted with great
volatility to economic news. In this kind of market it's easy to lose sight of
the big picture.
At the same time, the market has been wrestling with another countervailing
trend: earnings growth. Because the economy is growing so slowly, many
corporations are finding difficulty increasing earnings significantly. This is
becoming apparent as company after company reports pre-announced bad results for
the first quarter.
One of the groups hardest hit by this is the technology sector. Sluggish
consumer and commercial sales of personal computers (PCs) in the fourth quarter
of 1995 has spread into the first quarter of 1996. One stock which was
especially up-ended by this drop in sales was Digital Equipment. In March,
Digital reported that its second quarter sales of domestic PCs were far below
expectations. As a result, earnings were expected to be much lower than earlier
anticipated. This announcement sent shock waves through the technology sector.
Digital was trading at $75 per share prior to the announcement, ending at $55
per share on March 31, 1996. It is our belief that the company will earn $4 per
share in calendar 1996, notwithstanding these problems, and therefore should
trade between $50-$65 based on those earnings. Aggressive Growth does own a
position in Digital. Many of our other tech stocks were hurt as well even
though they did not have Digital's problems. The result is the whole sector is
selling at extremely low valuations as compared to recent standards.
For the six months ended March 31, 1996, the Aggressive Growth Portfolio
underperformed its benchmark index, the S&P 500. We invite you to review its
corresponding Portfolio Performance page for details.
While we had been reducing our commitment to the technology sector fairly
sharply since last September, Aggressive Growth still felt a strong impact from
the substantial drop in these stocks. We expect, however, that once our
technology stocks begin to report their earnings, they will bounce back
dramatically.
Given these economic and market conditions, several changes have occurred in the
Portfolio. Over the six-month period ended March 31, as total assets increased,
the Portfolio's weighted market capitalization decreased slightly from $9.8
billion to $9.3 billion while the number of companies held by the Portfolio
increased from 76 to 91. During this period the portfolio purchased new
companies and eliminated companies but held 38 companies from last period for
the entire six months. Of the 38 companies held for the entire period, 26
increased in value, 11 declined and 1 remained unchanged. Health Management
Association, Healthsource Inc. and U.S. Robotics Corp. were the best performing
companies. All three rose more than 50% in price. The poorest performing stocks
over the period included Loewen Group, Inc. (-29.1%), Xilinx, Inc. (-34.0%) and
Softkey International (-54.5%).
The most notable additions to Aggressive Growth include Chemical Financial
Corp., The Money Store and United Healthcare Corp. Significant eliminations
include Applied Materials Inc., DSC Communications Corp., and Micron
Technology Inc.
We believe that from their current level, interest rates will decline over the
rest of the year, the economy will grow slowly, inflation will remain low and
the market will appreciate. Growth stocks, which had been lagging last year and
so far year-to-date, should have an excellent year compared to the market, once
all of the cross-currents are sorted out.
/s/ David Alger
- ---------------
David Alger
Aggressive Growth Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class
A Shares, based on the different loads and fees paid by shareholders investing
in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
6 months 1 year Inception Date
<S> <C> <C> <C> <C>
Class A (without sales load) (6.54)% 36.53% 46.00 % 12/2/94
Class A** (with sales load) (11.67)% 24.97% 36.40 % 12/2/94
S&P 500*** 11.70 % 32.00% 33.50 % 12/2/94
Class B (without sales load) (6.99)% - (6.99)% 10/1/95
Class B**(with sales load) (11.63)% - (11.63)% 10/1/95
Class C (6.67)% 36.17% 45.34 % 12/2/94
</TABLE>
* Aggressive Growth Portfolio performance includes dividends and capital
gains reinvested. Investment return and principal value will fluctuate; shares
when redeemed may be worth more or less than their original cost. Past
performance does not guarantee future results. Periods less than one year
represent total return and are not annualized.
** Aggressive Growth Portfolio Class A Shares performance reflects the
maximum sales charge of 5.5%. Aggressive Growth Portfolio Class B Shares
reflects the maximum applicable contingent deferred sales charge (5% in the
first year, decreasing to 0% after 6 years).
*** The Standard & Poor's 500 Index is an unmanaged index used as a general
measure of market performance. Calculations assume dividends and capital gains
are reinvested and do not include any managerial expenses. From inception
calculation is based on life of Class A.
<TABLE>
<CAPTION>
Investments by major industry as a percentage of net assets
3/31/96 9/30/95
<S> <C> <C>
Consumer Cyclical 17.8% 11.8%
Consumer Non-cyclical 21.7% 11.5%
Financial 13.3% 2.3%
Industrial 2.7% 3.0%
Technology 39.3% 82.9%
Utilities 2.1% --
Short-term 3.1% --
Basic Materials 0.5% --
Energy 1.0% --
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
Capital Appreciation Portfolio
Despite substantial volatility, the recent period has produced significant
returns for stocks. We are pleased to report that for the six months ended
March 31, 1996, the Capital Appreciation Portfolio outperformed its benchmark
indexes, the S&P 400 and the S&P 500. We invite you to review its corresponding
Portfolio Performance page for details. The more recent volatility in the
equities market can be directly attributed to a rise in interest rates, which
produced a divergence between bond and stock prices. While bonds may yet rally
and bolster stock prices, the current situation bears monitoring.
During the period, we increased our holdings in PetCo Animal Supplies, a long-
standing position (the stock rose more than 50% during the first quarter),
Family Golf Centers, an owner and developer of driving ranges, and TheraTech,
which makes unique drug delivery systems. All these positions enhanced the
performance of the Portfolio significantly. Lone Star Steakhouse & Saloon was
basically flat, but that position was increased because the long-term
fundamentals remain very attractive. General Nutrition Companies, a retailer of
vitamin and nutritional supp-lements, and 360 Communications, a cellular
communications com-pany, also contributed positively to to performance.
HFS, which franchises hotels and motels, including Howard Johnson's, Ramada, and
Super 8 was another excellent performer. HFS has developed a number of
successful cross-selling strategies in its lodging and real estate businesses
(HFS recently acquired Century 21). Another long-term holding, Insignia
Financial Group, is the largest real estate management company in the U.S. The
company has a joint venture to cross-sell its services to Century 21 customers.
Medaphis, which provides billing and accounting services to physicians' groups,
also performed well, along with Sealed Air, a manufacturer of protective
packaging. We had weaker showings, however, from CUC International, a consumer
marketing company; Minerals Technology, which supplies a cost-reducing additive
to the paper industry; and Exide, which was sold at a loss.
Gains were realized when we reduced our positions in R.P. Scherer and data
processor First Data.
Our foreign positions provided solid results. J.D. Wetherspoon, a chain of
British pubs, performed particularly well. For the last quarter, the stock rose
more than 30%. It rose more than 80% over the preceding twelve months.
Overall, we're somewhat concerned about the widening divergence between the
stock and bond markets. The ambient risk level for the market is now above
average. But since our discipline is to select stocks one at a time, we continue
to be fully invested. Our research efforts are generating compelling ideas, and
the companies in the Portfolio have excellent prospects for rapid growth. As
long as we continue to find strong ideas at reasonable prices, Portfolio assets
will remain fully committed. Timing the market is not part of our discipline,
and our investments are not predicated on an inexorable rise in the broad equity
markets. Instead, we like to find dominant, well-managed businesses with clear
prospects for superior growth in virtually any economic environment.
/s/ James P. Goff
- -----------------
James P. Goff
Capital Appreciation Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class A Shares, based on the different loads
and fees paid by shareholders investing in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
6 months 1 year Inception Date
<S> <C> <C> <C> <C>
Class A (without sales load) 19.73% 47.24% 43.85% 12/2/94
Class A** (with sales load) 13.13% 34.75% 34.40% 12/2/94
S&P 500*** 11.70% 32.00% 33.50% 12/2/94
S&P 400*** 7.70% 28.50% 28.80% 12/2/94
Class B (without sales load) 19.57% - 19.57% 10/1/95
Class B** (with sales load) 13.62% - 13.62% 10/1/95
Class C 19.41% 46.68% 43.06% 12/2/94
</TABLE>
* Capital Appreciation Portfolio performance includes dividends and capital
gains reinvested. Investment return and principal value will fluctuate; shares
when redeemed may be worth more or less than their original cost. Past
performance does not guarantee future results. Periods less than one year
represent total return and are not annualized.
** Capital Appreciation Portfolio Class A Shares performance reflects the
maximum sales charge of 5.5%. Capital Appreciation Portfolio Class B Shares
reflects the maximum applicable contingent deferred sales charge (5% in the
first year, decreasing to 0% after 6 years).
*** The Standard & Poor's 500 Index and Standard & Poor's MidCap 400 Index
are unmanaged indices used as a general measure of market performance.
Calculations assume dividends and capital gains are reinvested and do not
include any managerial expenses. From inception calculation is based on life of
Class A.
<TABLE>
<CAPTION>
Investments by major industry
as a percentage of net assets
3/31/96 9/30/95
<S> <C> <C>
Basic Materials 1.9% 4.1%
Consumer Cyclical 32.6% 22.1%
Consumer Non-cyclical 14.3% 17.6%
Financial 12.5% 15.0%
Independent -- 2.4%
Industrial 5.5% 6.3%
Technology 20.9% 23.3%
Utilities 2.6% 5.1%
Short-term 9.6% 1.9%
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
Global Portfolio
We are pleased to report that for the six months ended March 31, 1996, the
Global Portfolio outperformed its benchmark index, the Morgan Stanley Capital
International World. We invite you to review its corresponding Portfolio
Performance page for details. While U.S. stocks continued their rally and
foreign markets performed well during the period, fundamental and intensively
researched stock selections were still the most influential drivers of the
Portfolio's performance.
During the most recent quarter, the rise in U.S. interest rates introduced
additional volatility into domestic markets and precipitated a divergence in
stock and bond prices. A similar divergence was resolved positively in late
1994, when bonds joined the equities rally and helped set in motion the
excellent performance of 1995. A positive resolution is the exception not the
rule, however, so the current market divergence requires monitoring. Still, as
long as the economy continues on a steady course and inflation remains subdued,
stocks should continue to rise. Any further deterioration in bond prices,
however, could cause a downward adjustment in equities.
In the last three months, interest rates trended lower in Europe, where many of
our foreign holdings are headquartered. The larger European economies remain
sluggish, and a number of these markets rallied during the first quarter in
anticipation of lower rates. Among our better foreign performers were Getronics,
a Dutch computer systems integrator and service provider that operates primarily
in Europe. Getronics is benefiting from the trend to increase efficiency through
enhanced technology.
We also obtained good returns from Millicom International, which is
participating in the booming cellular markets in emerging economies, and from
Assa-Abloy, a Swedish maker of infant formula and clinical devices. A smaller
position, Nutricia, a Dutch maker of infant formula and clinical nutrients
administered intravenously, also performed well. Drug giant SmithKline
Beecham and consumer products marketer Amway Japan declined during the period,
but we continue to hold both positions due to a positive outlook.
Among our U.S. holdings, there were a number of significant additions, including
IBM. "Big Blue" has cut costs and is generating impressive cash flow, and its
mainframe business, where it dominates all competitors, is enjoying renewed
demand. Their service division, which supports these networks, is prospering as
well. We also expect the company to repurchase substantial amounts of its own
stock over the next few years. Another significant addition was SunGard Data
Systems, which provides disaster recovery services for computer systems in
addition to investment support services.
Since January, we continued to do well with AMRE. AMRE receives referrals from
Century 21's customer base for home remodeling, and is rapidly developing a
successful cross-selling strategy. Longtime holding EDS (General Motors Class E)
was another solid performer. The company is expected to be spun off from General
Motors sometime during the second quarter. We continue to hold Mattel even
though the stock was soft the last three months. Our position in Pfizer, which
has added positive performance to the Portfolio, was reduced when it approached
our price target.
Although the recent months have witnessed additional volatility in the U.S.
equity market, the Portfolio should generate solid performance as long as
economic growth remains at sustainable levels and inflation does not accelerate.
The positive side of market volatility is an increase in buying opportunities
and a greater demand for high-quality growth stocks with stable, more
predictable earnings. Volatility also tends to make markets less efficient,
which increases the importance of intensive research, where attention to detail
and sound investment judgement can add even greater value.
/s/ Helen Young Hayes
- ---------------------
Helen Young Hayes
Global Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class A Shares, based on the different loads
and fees paid by shareholders investing in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
6 months 1 year Inception Date
<S> <C> <C> <C> <C>
Class A (without sales load) 14.64% 36.51% 23.75% 10/1/92
Class A**(with sales load) 8.35% 28.97% 21.78% 10/1/92
MSCIW*** 9.30% 20.70% - 10/1/92
Class B (without sales load) 13.40% - 13.40% 10/1/95
Class B** (with sales load) 7.75% - 7.75% 10/1/95
Class C 14.76% 36.59% 19.19% 10/1/93
</TABLE>
* Global Portfolio performance includes dividends and capital gains
reinvested. Investment return and principal value will fluctuate; shares when
redeemed may be worth more or less than their original cost. Past performance
does not guarantee future results. Periods less than one year represent total
return and are not annualized.
** Global Portfolio Class A Shares performance reflects the maximum sales
charge of 5.5%. Global Portfolio Class B Shares reflects the maximum applicable
contingent deferred sales charge (5% in the first year, decreasing to 0% after 6
years).
*** The Morgan Stanley Capital International World (MSCIW) Index is an
unmanaged index used as a general measure of market performance. Calculations
assume dividends and capital gains are reinvested and do not include any
managerial expenses. From inception calculation is based on life of Class A.
<TABLE>
<CAPTION>
Investments by major industry as a percentage of net assets
3/31/96 9/30/95
<S> <C> <C>
Basic Materials 5.0% 1.0%
Consumer Cyclical 17.7% 23.0%
Consumer Non-cyclical 19.1% 14.6%
Energy 0.2% 0.6%
Financial 9.3% 10.8%
Independent 5.5% 7.1%
Industrial 10.0% 10.9%
Technology 30.4% 26.9%
Utilities 1.0% 1.4%
Short-term 5.7% --
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
Global Portfolio
<TABLE>
<CAPTION>
Investment Holdings By Country
March 31, 1996
As a Percentage of Net Assets
<S> <C>
Europe
Austria 1.06%
Belgium 1.00
Denmark 0.48
Finland 1.46
France 2.76
Germany 11.24
Italy 2.00
Netherlands 7.33
Norway 1.08
Spain 1.03
Sweden 11.45
Switzerland 9.41
United Kingdom 2.39
Asia/Pacific Rim
Hong Kong 2.04%
India 0.95
Indonesia 4.09
Japan 15.36
Philippines 0.39
South Korea 1.18
Latin America
Argentina 1.89%
Brazil 0.33
Chile 0.15
Mexico 2.98
Australia 0.07%
North America
Canada 0.49%
United States 15.66
Cash and Other 1.73
</TABLE>
Growth Portfolio
Recently, the overall market produced its share of fireworks, as investors
worried about rate increases, the future of corporate profits, and whether the
economy was too strong or too weak. Three separate one-day declines in the Dow
Jones Industrials ranked among the top-ten point declines since 1987, according
to The Wall Street Journal (March 19, 1996). But as the same article pointed
out, on a percentage basis these declines were relatively small by historical
standards.
The Growth Portfolio underperformed its benchmark index, the S&P 500, for the
six months ended March 31, 1996. We invite you to review its corresponding
Portfolio Performance page for details.
Although economic conditions are always difficult to predict, we believe that
Federal Reserve Chairman Alan Greenspan is probably correct in his recent
assessment. While the economy may be a bit stronger than was estimated as the
year began, it is still growing at a moderate clip, well within healthy,
sustainable parameters. As long as inflation remains under control at
the wholesale and retail levels, we expect the economy will stay on track.
On the political front, however, a significant casualty during the period was
the lack of a balanced budget agreement, which appears to have been shelved
indefinitely. This may come back to haunt the market later, but so far stocks
have absorbed the blow without too much disturbance.
Not much changed in the Portfolio during this period. We remain comfortable with
the long-term valuations of our holdings. We are also very confident in these
companies' ability to out-earn (on an earnings-per-share basis) the market
averages going forward, and expect their ratio of outperformance to buoy their
stock prices.
The Portfolio continues to emphasize those industry sectors we believe will be
helped by economic and demographic trends. These include healthcare, financial,
telecommunications, technology, and selected retailers. As always, we have
tried to purchase companies that have exceptional individual characteristics. We
are not interested in owning an industry, no matter how attractive its macro
environment may seem.
Some of the better performers during the period included Cisco Systems, which
dominates the market for products that allow large computer networks to
communicate with each other; U.S. Robotics Corp., a manufacturer of high-speed
modems; and Ascend Communications, Inc., which makes Internet connecting
equipment. HBO & Co., a processor of information for hospitals, also registered
strong price growth. Finally, drug manufacturer Pfizer had an encouraging
quarter due to an improving process of speeding products to market.
Since year end 1995, we've believed more volatile markets were to be expected.
To date this has proven true. It also appears this increased volatility will
stay with us as the year progresses, which could lead to more of the sharp
rotations among industries we have seen year to date. Investors may also swing
back and forth between growth stocks, which are often thought of as defensive,
and more economically-sensitive (or cyclical) stocks. We have already
experienced some shifting between the two groups in the first quarter. Despite
these factors, we will stick to our knitting, looking for companies with
outstanding growth selling at reasonable prices.
Market volatility usually creates pricing inefficiencies, and we will continue
to take advantage of price declines to build positions. When stocks get ahead of
themselves, however, and valuations are out of line, we'll be content to take
profits--and perhaps revisit the shares later at more attractive prices.
/s/ Scott Schoelzel
- -------------------
Scott Schoelzel
Growth Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class
A Shares, based on the different loads and fees paid by shareholders investing
in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
6 months 1 year 5 year Inception Date
<S> <C> <C> <C> <C> <C>
Class A (without sales load) 9.96% 45.60% 13.90% 16.41% 5/8/86
Class A** (with sales load) 3.92% 37.62% 12.62% 15.75% 5/8/86
S&P 500*** 11.70% 32.00% 14.60% 14.20% 5/8/86
Class B (without sales load) 8.64% - - 8.64% 10/1/95
Class B** (with sales load) 3.22% - - 3.22% 10/1/95
Class C 9.82% 36.59% - 19.19% 10/1/93
</TABLE>
* Growth Portfolio performance includes dividends and capital gains
reinvested. Investment return and principal value will fluctuate; shares when
redeemed may be worth more or less than their original cost. Past performance
does not guarantee future results. Periods less than one year represent total
return and are not annualized.
** Growth Portfolio Class A Shares performance reflects the maximum sales
charge of 5.5%. Growth Portfolio Class B Shares reflects the maximum applicable
contingent deferred sales charge (5% in the first year, decreasing to 0% after 6
years).
*** The Standard & Poor's 500 Stock Index is an unmanaged index used as a
general measure of market performance. Calculations assume dividends and capital
gains are reinvested and do not include any managerial expenses. From
inception calculation is based on life of Class A.
<TABLE>
<CAPTION>
Investments by major industry as a percentage of net assets
3/31/96 9/30/95
<S> <C> <C>
Basic Materials -- 1.4%
Consumer Cyclical 6.9% 5.0%
Consumer Non-cyclical 17.5% 10.2%
Financial 17.5% 13.6%
Independent 1.0% --
Industrial -- 0.4%
Technology 40.7% 58.6%
Long-term U.S. Gov't 2.8% 3.0%
Short-term 15.4% 8.3%
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
C.A.S.E. Portfolio
The C.A.S.E. Portfolio began February 1, 1996 with an investment objective of
annual growth of capital through investment in companies whose management,
financial resources and fundamentals appear attractive on a scale measured
against each company's present value.
In terms of the current environment, the market appears to have reached a
crossroads. The positive side reflects a record inflow of capital to equities.
Contributing to this historical precedent are pension funds, profit sharing
plans, IRAs, 401k plans and direct investments. Adding to the market's drive are
the lack of attractive alternative investments, a relatively low inflation rate,
and the upcoming Presidential election. The negative side involves a fear of
higher inflation causing a rise in interest rates, and the uncertainty of future
economic growth. Both sides are monitoring corporate profits. Investors are
quick to buy or sell a security based on its most recent earnings report, with
no sympathy for a disappointment and overenthusiasm for a positive surprise.
In the two months since inception, we have had excellent performance from our
oil company stocks. In addition, Nike performed well in the athletic apparel
industry.
Acknowledging these cross-currents, our studies reveal the transference of a
broad-based market move to a more selective one. As we enter the second quarter,
the Portfolio is being positioned to take advantage of improving trends in the
energy sector and the retailing industries. As a matter of policy, we resist
temptations to time markets and instead choose to rely more heavily upon our
sector and industry analysis to guide us in the short-term and long-term
direction of our economy as a whole, and the stock market in particular.
The C.A.S.E. Portfolio's strategic alignment reflects investments in all eight
of our economic sectors in 28 different industries. The Portfolio possesses
equities with positive earnings surprises, rising earnings estimates, and
superior forecasted rates of growth, while selling at an average of 15% to 20%
below the market's earnings multiple. Stocks that exhibit such "above market"
fundamentals tend to perform better over time than the general market.
/s/ William E. Lange
- --------------------
William E. Lange
C.A.S.E. Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class A Shares, based on the different loads
and fees paid by shareholders investing in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
Inception Date
<S> <C> <C>
Class A (without sales load) 0.40 % 2/1/96
Class A** (with sales load) (5.10)% 2/1/96
S&P 500*** 1.90 % 2/1/96
Class B (without sales load) 0.30 % 2/1/96
Class B**(with sales load) (4.75)% 2/1/96
Class C 0.30 % 2/1/96
</TABLE>
* C.A.S.E. Portfolio performance includes dividends and capital gains
reinvested. Investment return and principal value will fluctuate; shares when
redeemed may be worth more or less than their original cost. Past performance
does not guarantee future results. Periods less than one year represent total
return and are not annualized.
** C.A.S.E. Portfolio Class A Shares performance reflects the maximum sales
charge of 5.5%. C.A.S.E. Portfolio Class B Shares reflects the maximum
applicable contingent deferred sales charge (5% in the first year, decreasing to
0% after 6 years).
*** The Standard & Poor's 500 Index is an unmanaged indices used as a general
measure of market performance. Calculations assume dividends and capital gains
are reinvested and do not include any managerial expenses.
<TABLE>
<CAPTION>
Investments by major industry as a percentage of net assets
3/31/96
<S> <C>
Basic Materials 2.3%
Consumer Cyclical 4.1%
Consumer Non-cyclical 5.7%
Energy 5.6%
Financial 9.2%
Industrial 6.7%
Technology 13.8%
Utilities 3.6%
Short-term 13.5%
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
Tactical Asset Allocation Portfolio
The Tactical Asset Allocation Portfolio began operations on October 1, 1995.
Tactical Asset Allocation's objective is preservation of capital and competitive
investment returns. The Portfolio seeks to meet this objective by "tactically"
allocating its assets among stocks, U.S. Treasury bonds, notes and bills, and
money market funds. Stock and bond market volatility increased significantly
during the past six months. We are disappointed to report that for the six
months ended March 31, 1996, Tactical Asset Allocation underperformed its
benchmark indexes, the S&P 500 and the Lehman Brothers Intermediate
Government/Corporate Bond. We invite you to review its corresponding
Portfolio Performance page for details. As the first quarter of 1996 unfolded,
yields on long-term Treasuries were approaching seven percent, causing
sharp capital losses for bondholders. These same securities finished 1995
yielding about six percent. And while broader stock market measures have been
achieving record highs in recent months, internal market volatility has been
ferocious.
The powerful rally in technology stocks came to a halt in late summer and
entered a violent corrective phase during the autumn and winter. This internal
volatility highlights the enormous "rotation" taking place within the stock
market.
Our indicators are suggesting that the U.S. equity market could enter a
corrective phase in the short-to-intermediate term.
While some of our long-term indicators suggest a more positive environment for
stocks, in keeping with the Portfolio's objective of preservation of capital and
competitive returns, the Portfolio has maintained a relatively cautious exposure
to equities. The current equity exposure is about 50% in a broadly diversified
group of value stocks. The remainder of the Portfolio is invested in short-to-
intermediate term U.S. Government Securities and cash investments.
Given the relatively modest exposure to equities, performance relative to the
Standard & Poor's 500 Index has lagged for the period.
While our exposure to equities is modest, the stock holdings in the portfolio
have performed very well during the past six months. The Portfolio has important
exposure in industries that have recently come into the market's favor--we have
found good values in industries such as retail, chemicals, automotive, and paper
products. In addition, we have made additional investments in selective
technology companies.
Our outlook on the U.S. economy is basically constructive. We believe the U.S.
has entered a modest growth phase as the forces that caused a slowing in the
economy in 1995 have run their course. The significant decline in interest rates
and the powerful rally in stocks and bonds during 1995 should exert an
expansionary influence on the economy beyond the middle part of 1996. We should
note here, too, that the economies of our major trading partners were similarly
weak in 1995 and are poised to enter an expansionary phase as monetary policies
around the world are in an expansionary mode.
Given the firmer outlook for the major global economies, interest rates should
move higher and then perhaps enter a broad trading range. The broad U.S. equity
market should enter a corrective phase in the short-to-intermediate term. We
expect, however, the more economy-sensitive components of the U.S. equity market
to perform somewhat better than the broader market averages.
/s/ John Riazzi
- ---------------
John Riazzi
/s/ Arvind Sachdeva
- -------------------
Arvind Sachdeva
Tactical Asset Allocation
Portfolio Managers
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class A Shares, based on the different loads
and fees paid by shareholders investing in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
Inception Date
<S> <C> <C>
Class A (without sales load) 8.11% 10/1/95
Class A**(with sales load) 2.18% 10/1/95
S&P 500*** 11.70% 10/1/95
LBIGCB*** 2.70% 10/1/95
Class B (without sales load) 7.79% 10/1/95
Class B** (with sales load) 2.36% 10/1/95
Class C 7.84% 10/1/95
</TABLE>
* Tactical Asset Allocation Portfolio performance includes dividends and
capital gains reinvested. Investment return and principal value will
fluctuate; shares when redeemed may be worth more or less than their original
cost. Past performance does not guarantee future results. Periods less than
one year represent total return and are not annualized.
** Tactical Asset Allocation Portfolio Class A Shares performance reflects
the maximum sales charge of 5.5%. Tactical Asset Allocation Portfolio Class B
Shares reflects the maximum applicable contingent deferred sales charge (5% in
the first year, decreasing to 0% after 6 years).
*** The Standard & Poor's 500 Index and Lehman Brothers Intermediate
Government/Corporate Bond (LBIGCB) Index are unmanaged indices used as a general
measure of market performance. Calculations assume dividends and capital gains
are reinvested and do not include any managerial expenses.
<TABLE>
<CAPTION>
Investments by major industry as a percentage of net assets
3/31/96
<S> <C>
Basic Materials 12.8%
Consumer Cyclical 14.5%
Consumer Non-cyclical 3.2%
Energy 2.4%
Financial 8.4%
Independent 1.8%
Industrial 3.7%
Technology 6.3%
Utilities 0.2%
Long-term U.S. Gov't 40.1%
Short-term 7.6%
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
Equity-Income Portfolio
We are pleased to report that for the six months ended March 31, 1996 the Equity
Income Portfolio performed well against its benchmark indexes, the S&P 500 and
the Lehman Brothers Intermediate Government/Corporate Bond. We invite you to
review its corresponding Portfolio Performance page for details. The Portfolio's
asset mix at period's end was 66.9% stocks, 6.5% convertible securities, 6.7%
corporate bonds, 8.8% U.S. Treasury bonds, and 11.1% cash or cash equivalents.
The stock market momentum generated during 1995 carried over into the first
quarter of 1996. Most of the factors driving performance of the equity market in
1995 continued to be present--strong merger and acquisition activity, profitable
business lines, and record inflows into mutual funds. Factors that did begin to
shift during the period included a slowdown in the rate of growth in corporate
profits, and a large increase in interest rates late during the first quarter.
Bond investors had been anticipating more easing of monetary policy by the
Federal Reserve, and the change in sentiment resulted in much more volatility in
stocks as well as bonds. Adding to the anxieties of bond holders, several
commodities exhibited strength indicative of a potential increase in the rate of
inflation.
The stock market advance was not as narrow or as well defined as it had been in
the previous several quarters. In general, companies with consistent growth
patterns were favored by investors. Energy stocks benefited from higher oil and
gas prices, retail stocks improved after lagging the market for several
quarters, and health care stocks were strong due to ongoing consolidation. These
sector movements marked a leadership change from technology and financial
services which led the market during most of 1995. These trends benefited the
Portfolio, which had meaningful positions in energy, retail and health care, and
an underweighted position in technology.
In our view, investors will continue to focus on stocks of companies that are
able to deliver good earnings during this period of slower corporate earnings
growth. Identifying industries and companies with these attributes will continue
to increase in importance during the remainder of 1996. Consolidation and merger
activity of securities within the Portfolio is also a theme; one takeover has
occurred in the Portfolio during 1996. The Portfolio retains its above-average
exposure to medium-sized companies that could become attractive targets for
larger companies hoping to continue to deliver growth in earnings while
sales growth slows down.
With investor expectations still at elevated levels, and with all the
uncertainty surrounding interest rates, corporate profit growth, and the
economy, we anticipate an increase in stock market volatility in 1996. Investing
in fundamentally sound companies and avoiding overvalued sectors of the market
will play a larger role in the returns available to investors during
1996. The Portfolio remains focused on shares of companies with strong balance
sheets, established market shares within their industries, and high and
sustainable profitability levels. We have not materially altered the asset mix
in the portfolio, but the average maturity of the bond holdings has been
shortened and we have increased the invested position in Treasury securities as
a means of helping control risk.
/s/ Luther King
- ---------------
Luther King
Equity-Income Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class A Shares, based on the different loads
and fees paid by shareholders investing in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
6 months 1 year Inception Date
<S> <C> <C> <C> <C>
Class A** (without sales load) 10.38% 20.93% 22.34% 12/2/94
Class A (with sales load) 4.34% 10.65% 14.36% 12/2/94
S&P 500*** 11.70% 32.00% 33.50% 12/2/94
LBIGCB*** 2.70% 9.60% 10.90% 12/2/94
Class B** (without sales load) 4.43% - 4.43% 10/1/95
Class B (with sales load) 9.95% - 9.95% 10/1/95
Class C 10.08% 20.29% 21.63% 12/2/94
</TABLE>
* Equity-Income Portfolio performance includes dividends and capital gains
reinvested. Investment return and principal value will fluctuate; shares when
redeemed may be worth more or less than their original cost. Past performance
does not guarantee future results. Periods less than one year represent total
return and are not annualized.
** Equity-Income Portfolio Class A Shares performance reflects the maximum
sales charge of 5.5%. Equity-Income Portfolio Class B Shares reflects the
maximum applicable contingent deferred sales charge (5% in the first year,
decreasing to 0% after 6 years).
*** The Standard & Poor's 500 Index and Lehman Brothers Intermediate
Government/Corporate Bond (LBIGCB) Index are unmanaged indices used as a general
measure of market performance. Calculations assume dividends and capital gains
are reinvested and do not include any managerial expenses. From inception
calculation is based on life of Class A.
<TABLE>
<CAPTION>
Investments by major industry as a percentage of net assets
3/31/96 9/30/95
<S> <C> <C>
Basic Materials 6.2% 13.5%
Consumer Cyclical 9.7% 10.9%
Consumer Non-cyclical 19.5% 18.2%
Energy 8.9% 8.6%
Financial 10.2% 9.3%
Independent 3.9% 3.4%
Industrial 15.9% 12.8%
Technology 3.7% 4.5%
Utilities 2.1% 0.9%
Long-term U.S. Gov't 8.8% 8.3%
Short-term 11.1% --
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
Balanced Portfolio
After finishing 1995 on a downward stroke, interest rates rose substantially in
the first quarter of 1996. The resulting effect injected renewed volatility into
the stock and bond markets--bonds ended the quarter down as stocks appreciated.
This divergence is reflected in the Portfolio's benchmark indexes, the S&P 500
and the Lehman Brothers Long Government/Corporate Bond.
In spite of the poor showing in bonds, the Portfolio was able to register
positive results for the period. We are pleased to report that for the six
months ended March 31, 1996, the Balanced Portfolio performed well against its
benchmark indexes.
We invite you to review its corresponding Portfolio Performance page for
details. We did not get caught in the panic technology sell-offs in late 1995
and again in 1996. Moreover, money coming out of the tech sector seemingly found
a home in companies with more predictable earnings growth, which helped drive up
the prices of many of our equity holdings.
Driven by lower earnings expectations for 1996 and the increase in interest
rates, the period has displayed some dramatic rotations among sectors. If the
current divergence between stocks and bonds persists, or worsens, stocks could
undergo a re-valuation and prices may indeed adjust downward. At present,
though, the rise in rates looks to be more of a market phenomenon than an
economic one. In other words, the economy was a bit stronger than the bond bulls
had hoped and the market overheated. If no signs of inflation or additional
economic strength appear, bonds could rally and resolve the divergence in the
same way it was resolved in late 1994 when stocks moved higher. Since interest
rates are still the linchpin of the equity market, we intend to monitor the
situation closely.
On the fixed-income side of the Portfolio, our conservative stance helped us
avoid some of the damage in the bond market.
During the period, maturities were kept relatively short to take advantage of
the competitive yields in the short and intermediate sectors, as well as the
lower price volatility that shorter-term securities tend to experience. Cash,
government bonds, and corporate bonds still make up the bulk of our income
positions.
On the equity side, we did take advantage of the decline in technology stocks to
add a significant new position in IBM. We also increased our existing position
in Cisco Systems. Both companies represent franchise operations in their
respective markets, and both are dedicated to running efficient operations that
focus on high-margin businesses.
Outsourcing continues to be one of the Portfolio's chief areas of focus,
especially in the area of data processing and information management. During the
quarter, EDS (General Motors Corp. Class E) posted solid rises, as did First
Data and Computer Associates, all of which provide computer outsourcing services
to corporations and government agencies.
Another outsourcer, Computer Sciences, however, declined moderately.
Banking remains a significant theme for the Portfolio. Prominent holdings
include longtime positions in Citicorp and Bank of New York, as well as a new
addition, First Interstate Bancorp, which then merged with Wells Fargo. These
banks have developed specialized higher-margin businesses that make their
earnings potential very exciting. During the period, we sold First Chicago at
close to its original purchase price due to credit quality concerns. A portion
of Federal National Mortgage Association was sold at a profit when it hit our
valuation target.
The Portfolio continues to own a number of pharmaceutical and health care
stocks. Positions in Eli Lilly and Cardinal Health were increased. Lilly and
another holding, Swiss pharmaceutical giant SmithKline Beecham, have impressive
product production and delivery processes. Lilly is completing tests on drugs
for the treatment of schizophrenia and acute cardiovascular disease, and
SmithKline is developing a new heart drug that significantly lowers the death
rate from congestive heart failure.
The final significant change in the Portfolio during the period was the sale of
Prudential Reinsurance. The stock performed well and reached our target
valuation.
Despite the rise in interest rates, stocks can still post good numbers this year
if economic growth and inflation remain moderate. While a volatile market tends
to be less efficient, it can present more opportunities to add value through
good stock selection. For the last three years, stock selection has mattered
somewhat less than usual, but in a less single-minded market, we expect
companies with more predictable earnings streams to sell at a better premium.
The shorter maturities and competitive yields on our fixed-income investments
should also provide a degree of protection if the bond market declines further,
and give us solid returns if rates retreat from current levels.
/s/ Blaine Rollins
- ------------------
Blaine Rollins
Balanced Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class A Shares, based on the different loads
and fees paid by shareholders investing in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
6 months 1 year Inception Date
<S> <C> <C> <C> <C>
Class A (without sales load) 12.06% 23.93% 21.31% 12/2/94
Class A** (with sales load) 5.89% 13.37% 13.40% 12/2/94
S&P 500*** 11.70% 32.00% 33.50% 12/2/94
LBLGCB*** 2.20% 10.90% 12.70% 12/2/94
Class B (without sales load) 11.71% - 11.71% 10/1/95
Class B** (with sales load) 6.17% - 6.17% 10/1/95
Class C 11.86% 23.27% 20.61% 12/2/94
</TABLE>
* Balanced Portfolio performance includes dividends and capital gains
reinvested. Investment return and principal value will fluctuate; shares when
redeemed may be worth more or less than their original cost. Past performance
does not guarantee future results. Periods less than one year represent total
return and are not annualized.
** Balanced Portfolio Class A Shares performance reflects the maximum sales
charge of 5.5%. Balanced Portfolio Class B Shares reflects the maximum
applicable contingent deferred sales charge (5% in the first year, decreasing to
0% after 6 years).
*** The Standard & Poor's 500 Index and Lehman Brothers Long
Government/Corporate Bond (LBLGCB) Index are unmanaged indices used as a general
measure of market performance. Calculations assume dividends and capital gains
are reinvested and do not include any managerial expenses. From inception
calculation is based on life of Class A.
<TABLE>
<CAPTION>
Investments by major industry as a percentage of net assets
3/31/96 9/30/95
<S> <C> <C>
Basic Materials 2.8% 5.7%
Consumer Cyclical 14.2% 19.4%
Consumer Non-cyclical 8.8% 13.7%
Financial 37.2% 23.0%
Independent -- 0.7%
Industrial 5.4% 8.5%
Technology 14.7% 12.3%
Long-term U.S. Gov't 11.9% 5.2%
Long-term Foreign Gov't 4.2% --
Short-term 1.6% 13.9%
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
Flexible Income Portfolio
We are pleased to report that for the six months ended March 31, 1996, the
Flexible Income Portfolio outperformed its benchmark index, the Lehman Brothers
Long Government/Corporate. We invite you to review its corresponding Portfolio
Performance page for details. Although bonds posted significant returns at the
close of 1995, the first quarter of 1996 proved to be a difficult environment.
During the most recent quarter, interest rates climbed approximately 70 basis
points, which is a dramatic move. Yield on the benchmark 10-year U.S. Treasury
Note rose from 5.58% to 6.33% during the quarter, and yield on the 30-year
Treasury jumped from 5.95% to 6.67%. After a positive performance in the fourth
quarter, the Lehman Brothers Long Government/Corporate Bond Index gave back
2.34% during the first quarter.
The bond market has been unusually volatile for the last nine quarters. Bonds
have been on a seesaw between some of the worst periods on record and some of
the best. Much of the market's negative reaction this quarter was probably the
result of overenthusiasm on the part of bond bulls and speculators in the fourth
quarter of 1995. In addition, a big chip was taken off the table when Congress
backed away from a balanced budget agreement. Rising commodity prices and strong
employment figures also contributed to the interest-rate run up, as investors
worried about the economy strengthening and inflation accelerating.
On the whole, with the economic picture so cloudy, we are taking a cautious
stance. We shortened the weighted average maturity of the Portfolio and raised
the level of cash moderately. During the period, the one sector of the market
that performed well was high-risk/high-yield corporate bonds. These bonds tend
to correlate more with the equity market, and during the period we had a
divergence between stocks and bonds. Stocks finished the period higher, which
pulled up the high-risk/high-yield debt market, while Treasury and investment-
grade issues declined.
In some ways the shake-out in bonds was healthy. Investors probably now have
more realistic expectations about rates and yields and there is less leverage
exaggerating price moves than at the beginning of the year. Currently, it does
not appear rates will spike up much further, although a modest increase is not
out of the question. Given the current environment, such an increase would
probably happen quickly though.
Rapidly rising rates tend to be self-correcting. If the economy is warming up, a
fast rate run up will take hold sooner rather than later and moderate the rate
of economic growth. Although the economy does not have much slack in it right
now, manufacturing, retail sales--including autos--and high levels of consumer
debt (and loan delinquencies) all argue that growth is not getting out of hand.
Still, looking ahead, our biggest concern is inflation. Rising commodity prices
may eventually push wholesale and retail prices up, while wage pressure may
increase as well if the economy strengthens significantly.
Overall, we're pleased that the Portfolio has remained very competitive with the
averages in spite of the period's volatility.
We are currently positioned to mitigate much of the downside risk should rates
rise further, without sacrificing too much upside potential should they
stabilize or retreat.
If the economy continues to grow at a moderate pace, interest rates will
probably stay flat or decline somewhat. At the same time, though, a significant
acceleration in growth could drive rates higher, which would probably mean
stocks would join bonds on the downside. If this scenario should come to pass,
we will demand a more favorable risk-reward ratio from our holdings, and would
trim or sell altogether some positions.
/s/ Ronald V. Speaker
- ---------------------
Ronald V. Speaker
Flexible Income Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class A Shares, based on the different loads
and fees paid by shareholders investing in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
6 months 1 year 5 year Inception Date
<S> <C> <C> <C> <C> <C>
Class A (without sales load) 2.89 % 12.00% 10.33% 8.05 % 6/29/87
Class A**(with sales load) (2.02)% 6.63% 9.27% 7.39 % 6/29/87
LBLGCB*** 2.20 % 10.90% 8.70% 9.00 % 6/29/87
Class B (without sales load) 2.23 % - - 2.23 % 10/1/95
Class B**(with sales load) (2.85)% - - (2.85)% 10/1/95
Class C 2.61 % 11.39% - 4.32 % 10/1/93
</TABLE>
* Flexible Income Portfolio performance includes dividends and capital
gains reinvested. Investment return and principal value will fluctuate; shares
when redeemed may be worth more or less than their original cost. Past
performance does not guarantee future results. Periods less than one year
represent total return and are not annualized.
** Flexible Income Portfolio Class A Shares performance reflects the maximum
sales charge of 4.75%. Flexible Income Portfolio Class B Shares reflects the
maximum applicable contingent deferred sales charge (5% in the first year,
decreasing to 0% after 6 years).
*** The Lehman Brothers Long Government/Corporate Bond (LBLGCB) Index is an
unmanaged index used as a general measure of market performance. Calculations
assume dividends and capital gains are reinvested and do not include any
managerial expenses. From inception calculation is based on life of Class A.
<TABLE>
<CAPTION>
Investments by major industry as a percentage of net assets
3/31/96 9/30/95
<S> <C> <C>
Consumer Cyclical 18.6% 22.8%
Consumer Non-cyclical 5.6% 10.0%
Energy 6.2% 6.1%
Financial 33.8% 22.1%
Industrial 11.3% 9.4%
Technology 5.5% 12.9%
Utilities 1.0% --
Long-term U.S. Gov't 11.5% 12.6%
Short-term 4.2% --
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
Income Plus Portfolio
High-yield bonds generally outperformed investment-grade bonds during the
period. This was due primarily to technical rather than fundamental conditions,
since mutual fund cash flow has remained strong throughout the period and
there's been considerable crossover interest from investment-grade buyers. The
continued expectation of positive mutual fund cash flow and a strengthening
economy should provide good support through the end of the fiscal year.
However, for the six months ended March 31, 1996, the Income Plus Portfolio
underperformed its benchmark index, the Merrill Lynch High Yield Master. We
invite you to review its corresponding Portfolio Performance page for details.
The investment-grade sector has experienced a fairly significant amount of
volatility over the past six months. The two main forces behind this volatility
were: 1) a change in the posture of the Federal Reserve's (Fed) monetary
policy, and 2) an increased amount of merger and acquisition (M&A) activity.
Investors had become convinced during December 1995 and January 1996 that the
Fed would continue to lower interest rates. But as the economy began to show
stronger signs of life during February, the market started to discount the
unlikely event that the Fed would be in a position to further lower interest
rates. In addition, M&A activity has created more leveraged balance sheets;
spreads have widened for most of the companies involved and, to a lesser extent,
for other corporates that may be vulnerable to M&A activity.
Right now, an increase in interest rates is the key risk to the Portfolio. Last
year we took the position that assuming more interest rate risk was preferable
to credit risk; this proved to be incorrect as we misread the strong technicals
working in the high-yield market. The primary factor of interest rate risk is
that of renewed inflation expectations. Grain and energy prices have rebounded
to new highs resulting in fears that these front-end prices may soon appear in
rising consumer prices. Early in 1996, we did begin to increase our exposure to
the high-yield area as we felt conditions would remain positive for the sector
and that conditions for the investment-grade market were deteriorating. We've
continued to keep our duration below that of our blended index which should help
mitigate any further rise in interest rates.
The outlook for fiscal 1996 remains moderately favorable for the Income Plus
Portfolio. Conditions remain favorable for high-yield bonds, and the sharp
correction in interest rates has once again moved bonds to a more undervalued
position. Since mid-February of 1996 we have preferred credit risk over interest
rate risk, and would expect to most likely continue that view for the remainder
of the fiscal year.
/s/ David R. Halfpap
- --------------------
David R. Halfpap
Income Plus Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class A Shares, based on the different loads
and fees paid by shareholders investing in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
6 months 1 year 5 year 10 year Inception Date
<S> <C> <C> <C> <C> <C> <C>
Class A (without
sales load) 2.84 % 11.70% 10.80% 9.40% 10.65% 6/14/85
Class A**(with
sales load) (2.07)% 6.42% 9.72% 8.87% 10.15% 6/14/85
MLHYM*** 4.80 % 14.70% 15.00% 11.40% 12.30% 6/14/85
Class B (without
sales load) 2.51 % - - - 2.51% 10/1/95
Class B**(with
sales load) (2.66)% - - - (2.66)% 10/1/95
Class C 2.66 % 11.09% - - 4.92% 10/1/93
</TABLE>
* Income Plus Portfolio performance includes dividends and capital gains
reinvested. Investment return and principal value will fluctuate; shares when
redeemed may be worth more or less than their original cost. Past performance
does not guarantee future results. Periods less than one year represent total
return and are not annualized.
** Income Plus Portfolio Class A Shares performance reflects the maximum
sales charge of 4.75%. Income Plus Portfolio Class B Shares reflects the
maximum applicable contingent deferred sales charge (5% in the first year,
decreasing to 0% after 6 years).
*** The Merrill Lynch High Yield Master (MLHYM) Index is an unmanaged index
used as a general measure of market performance. Calculations assume dividends
and capital gains are reinvested and do not include any managerial
expenses. From inception calculation is based on life of Class A.
<TABLE>
<CAPTION>
Investments by major industry as a percentage of net assets
3/31/96 9/30/95
<S> <C> <C>
Basic Materials 4.1% 8.2%
Consumer Cyclical 18.9% 11.9%
Consumer Non-cyclical 23.6% 23.3%
Energy 11.2% 11.0%
Financial 8.4% 5.5%
Independent 1.5% -
Industrial 11.7% 13.4%
Technology - 1.4%
Utilities 8.9% 7.8%
Short-term 8.5% 14.2%
</TABLE>
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
Tax-Exempt Portfolio
By some measures, 1995 represented the third best year in the bond market since
1926. Every sector of the coupon curve generated solid returns. The first three
months of 1996, however, presented a more modest picture as yields on tax-exempt
bonds underperformed Treasury bonds. We are disappointed to report that for the
six months ended March 31, 1996, the Tax-Exempt Portfolio underperformed its
benchmark index, the Lehman Brothers Long Municipal Bond. We invite you to
review its corresponding Portfolio Performance page for details.
The tax-exempt bond market was particularly volatile during March. Several
factors account for the fluctuation in prices: 1) higher interest rate levels
have prevented many new refunding issues from coming to market and have kept the
new issue supply calendar heavier than usual; 2) concerns that the economy is
growing fast enough to spur inflation and keep the Federal Reserve from further
lowering bank lending rates; and, 3) concern that rising interest rates will
prompt additional redemptions from tax-exempt mutual funds despite the usual
increased demand for municipal bonds around the April 15 deadline for paying
federal income taxes.
For most tax-exempt investors, the dominant event in 1995 was the bankruptcy
declaration by Orange County, California, and the Orange County Investment Pool.
As a result, considerable attention has been focused on state and local
governmental investment practices nationwide. Going forward, we expect to see
continued investigations into allegations of securities fraud made against
securities firms and issuers, especially in regard to inadequate disclosure.
More stringent disclosures will make our credit analysis work easier, but they
challenge municipalities who are already contending with reduced levels of
federal funding and uncertainty due to the protracted federal budget debate.
The inability of Congress and the President to reach a budget agreement adds
further complications to the municipal bond market. I expect the continued
indecision to extend into the 1996 elections. As state budget deliberations
begin for fiscal year 1997, state officials will need to be cautious about
predicting federal policy changes. Local government finances will be
particularly strained throughout 1996 as the federal government reduces funding
for social service programs. For this reason, we do not expect states to adopt
new expenditure initiatives. This could result in a curtailment of bond
proposals.
For some investors, the flat tax proposal is still an issue. The potential of
federal tax changes has inhibited state legislatures from developing realistic
revenue projections. While I continue to believe the actual passage of a flat
tax is remote, such a system would be harmful to municipal credits and would
reduce the value of tax exemption to municipal bond investors.
Going forward in 1996, I expect the municipal market to stabilize and eventually
return to the lower interest rate levels anticipated at the end of 1995. Steady
demand for tax-exempt bonds will help the market outperform Treasury bonds over
time. The trend in municipal underwriting reaffirms this view with the pace of
underwriting volume lower than the volume of bonds being retired from maturity
and early redemption.
/s/ Rachel Dennis
- -----------------
Rachel Dennis
Tax-Exempt Portfolio Manager
Note: Performance of Class B and C Shares will be greater or less than the
performance shown in this chart for Class A Shares, based on the different loads
and fees paid by shareholders investing in the different classes.
<TABLE>
<CAPTION>
Average Annual Total Returns
For the Period Ended 3/31/96*
From Inception
6 months 1 year 5 year 10 year Inception Date
<S> <C> <C> <C> <C> <C> <C>
Class A (without
sales load) 2.12 % 5.39% 6.37% 6.70% 7.95% 4/1/85
Class A**(with
sales load) (2.77)% 0.40% 5.33% 6.18% 7.47% 4/1/85
LBLMB*** 2.90 % 8.40% 8.10% 8.10% 9.70% 4/1/85
Class B (without
sales load) 1.43 % - - - 1.43% 10/1/95
Class B** (with
sales load) (3.65)% - - - (3.65) 10/1/95
Class C 1.99 % 5.22% - - 3.44 10/1/93
</TABLE>
* Tax-Exempt Portfolio performance includes dividends and capital gains
reinvested. Investment return and principal value will fluctuate; shares when
redeemed may be worth more or less than their original cost. Past performance
does not guarantee future results. Periods less than one year represent total
return and are not annualized.
** Tax-Exempt Portfolio Class A Shares performance reflects the maximum
sales charge of 4.75%. Tax-Exempt Portfolio Class B Shares reflects the maximum
applicable contingent deferred sales charge (5% in the first year, decreasing to
0% after 6 years).
*** The Lehman Brothers Long Municipal Bond (LBLMB) Index is an unmanaged
index used as a general measure of market performance. Calculations assume
dividends and capital gains are reinvested and do not include any managerial
expenses. From inception calculation is based on life of Class A.
This material must be preceded or accompanied by the Fund's current prospectus
which includes information about the sales commissions, objectives, policies and
other facts about the Fund.
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
AGGRESSIVE GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Shares Description Value
<S> <C>
COMMON STOCK (98.4%)
Basic Materials (0.5%)
Aluminum
1,900 Aluminum Company Of America $118,988
Consumer Cyclical (17.8%)
Clothing/Fabric (3.6%)
5,000 Cintas Corp. 250,000
7,000 Gucci Group N.V. # * 336,000
5,400 Tommy Hilfiger Corp. * 247,725
833,725
Broadcasting (0.5%)
3,400 Evergreen Media Corp. Class A * 122,400
Home Construction (1.3%)
14,450 Clayton Homes, Inc. 301,644
Recreation Products - Other (0.5%)
3,000 Oakley, Inc. * 113,250
Restaurants (3.8%)
7,400 Boston Chicken, Inc. * 252,063
16,100 Lone Star Steakhouse & Saloon, Inc. * 615,825
867,888
Retailers - Apparel (2.2%)
9,000 Gap, Inc. 498,375
Retailers - Drug Based (1.4%)
5,000 Cardinal Health, Inc. 321,250
Retailers - Specialty (4.5%)
15,100 General Nutrition Companies * 377,500
27,800 OfficeMax, Inc. * 674,150
1,051,650
Consumer Non-Cyclical (21.7%)
Consumer Services (2.7%)
4,300 Loewen Group, Inc. 125,775
10,200 Service Corp. International 497,250
623,025
Healthcare (11.0%)
10,000 Columbia / HCA Healthcare Corp. 577,500
750 Health Management Association, Inc. Class A 26,250
17,200 Healthsource, Inc. * 666,500
6,500 Oxford Health Plans, Inc. * 570,375
3,900 PhyCor, Inc. * 171,600
8,500 United Healthcare Corp. 522,750
2,534,975
Household Products (0.5%)
1,500 Colgate-Palmolive Company 116,813
Pharmaceuticals (7.5%)
11,200 BioChem Pharmaceuticals, Inc. * 459,200
6,000 Eli Lilly and Company 390,000
1,242 Johnson & Johnson 114,575
4,100 Merck & Company, Inc. 255,225
600 Omnicare, Inc. 32,325
3,500 Pfizer Inc. 234,500
5,000 SmithKline Beecham PLC # 257,500
1,743,325
Energy (1.0%)
Mining
4,400 Case Corp. $223,850
Financial (13.3%)
Banks (3.8%)
9,000 Chemical Financial Corp. 634,500
8,250 MBNA Corp. 244,406
878,906
Diversified (5.4%)
800 ADVANTA Corp. Class B 38,000
9,392 First Data Corp. 662,136
20,000 The Money Store, Inc. 557,500
1,257,636
Insurance (3.3%)
3,500 American International Group, Inc. 327,688
6,700 Travelers Group, Inc. 442,200
769,888
Real Estate (0.6%)
4,000 Green Tree Financial Corp. 137,500
Securities Brokers (0.2%)
600 Merrill Lynch and Company, Inc. * 36,450
Industrial (2.7%)
Diversified (0.5%)
800 Monsanto Company 122,800
Pollution Control (2.2%)
10,000 U.S.A. Waste Services, Inc. * 255,000
5,000 United Waste Systems, Inc. * 250,000
505,000
Technology (39.3%)
Advanced Medical Devices (4.3%)
2,500 Guidant Corp. 135,313
1,200 Medtronic, Inc. 71,550
3,000 St. Jude Medical, Inc. * 111,938
15,000 Summit Technology, Inc. * 354,375
8,500 VISX, Inc. * 310,250
983,426
Aerospace/Defense (4.0%)
2,700 The Boeing Company 233,887
1,500 Lockheed Martin Corp. 113,812
4,900 McDonnell Douglas Corp. 448,962
7,700 Tracor, Inc. * 134,269
930,930
Biotechnology (4.1%)
3,800 Amgen, Inc. * 220,875
10,000 IDEXX Laboratories Inc. * 420,000
14,500 Liposome Company, Inc. * 302,687
943,562
Communications (5.1%)
6,000 America Online, Inc. * 336,000
10,075 Glenayre Technologies, Inc. * 385,369
3,000 Tellabs, Inc. * 145,125
2,500 US Robotics Corp. * 323,125
1,189,619
Computers (10.4%)
9,700 3Com Corp. * $386,787
9,000 Bay Networks, Inc. * 276,750
1,700 Cabletron Systems, Inc. * 112,625
11,400 Cisco Systems, Inc. * 528,675
8,300 Digital Equipment Corp. * 457,537
1,500 International Business Machines Corp. 166,687
8,700 Seagate Technology, Inc. * 476,325
2,405,386
Office Equipment (1.5%)
2,800 Alco Standard Corp. 145,950
3,800 Viking Office Products, Inc. * 211,375
357,325
Semiconductors (7.0%)
5,000 Altera Corp. * 279,375
9,800 Linear Technology Corp. 409,150
15,600 Maxim Integrated Products, Inc. * 483,600
6,700 Microchip Technology, Inc. * 184,250
8,300 Xilinx, Inc. * 263,525
1,619,900
Software (2.9%)
8,600 Electronics For Imaging, Inc. * $374,100
2,500 Intuit, Inc. * 112,500
9,300 Softkey International, Inc. * 187,162
673,762
Utilities (2.1%)
Telephone
10,400 WorldCom, Inc. * 478,400
Total Common Stock (cost $19,719,144) 22,761,648
<CAPTION>
Principal Description Value
<S> <C>
SHORT-TERM SECURITIES (3.1%)
$720,535 State Street Bank & Trust ***
4.000% Repurchase Agreement dated 3-29-96 to be
repurchased at $720,772 on 4-1-96 (cost $720,535) 720,535
Total Investments (101.5%) (cost $20,439,679) 23,482,183
Liablities in Excess of Other Assets (-1.5%) (352,082)
Net Assets (100.0%) $23,130,101
</TABLE>
See Notes to the Schedule of Investments
March 31,1996
SCHEDULE OF INVESTMENTS (unaudited)
CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
Shares Description Value
<S> <C>
COMMON STOCK (89.9%)
Basic Materials (1.9%)
Chemical - Specialty
7,450 Minerals Technology, Inc. $257,956
Consumer, Cyclical (32.6%)
Auto Parts & Equipment (1.1%)
8,200 APS Holding Corp. - Class A * 141,450
Entertainment (2.0%)
10,325 Family Golf Centers, Inc. 276,194
Lodging (6.8%)
18,725 HFS, Inc. * 910,503
Recreation Products - Other (2.0%)
458 Fotolabo S.A. + 231,105
1,175 Scientific Games Holdings Corp. * 32,900
264,005
Restaurants (10.9%)
47,054 J.D. Wetherspoon PLC + * 628,391
12,000 Lone Star Steakhouse & Saloon, Inc. * 459,000
6,488 Papa John's International, Inc. * 289,505
17,238 Pizza Express PLC + 83,401
1,460,297
Retailers - Drug Based (0.5%)
950 Cardinal Health, Inc. 61,038
Retailers - Specialty (9.3%)
5,900 Autozone, Inc. * 199,863
19,275 General Nutrition Companies, Inc. * 481,875
1,550 O'Reilly Automotive, Inc. * 53,862
10,750 Petco Animal Supplies, Inc. * 481,062
950 Sunglass Hut International, Inc. * 31,469
1,248,131
Consumer, Non-Cyclical (14.3%)
Consumer Services (6.3%)
13,125 CUC International, Inc. * 383,906
1,807 Grand Optical-Photoservice S.A. + 211,723
1,255 Loewen Group, Inc. 36,709
1,600 Loewen Group, Inc. + 47,009
11,175 Profit Recovery Group International * 173,212
852,559
Healthcare (1.0%)
2,050 HEALTHSOUTH Corp. * 69,700
2,100 Medpartners Mullikin, Inc. * 59,850
129,550
Medical Supplies (1.0%)
8,575 Exogen, Inc. * 117,906
325 Gulf South Medical Supply, Inc. * 12,269
130,175
Pharmaceuticals (6.0%)
1,275 Centocor, Inc. * 46,059
3,525 Interneuron Pharmaceuticals, Inc. * 130,866
650 Neorx Corp. 5,281
1,150 Omnicare, Inc. 61,956
6,000 R.P. Scherer Corp. 263,250
14,175 TheraTech, Inc. * 301,219
808,631
Financial (12.5%)
Diversified (5.6%)
2,500 First Data Corp. $176,250
11,900 Medaphis Corp. * 577,150
753,400
Insurance (1.8%)
6,425 American Business Information, Inc. * 102,800
3,925 Protective Life Corp. 132,469
235,269
Real Estate (5.1%)
28,050 Insignia Financial Group, Inc. Class A * 683,719
Industrial (5.1%)
Containers & Packaging (2.0%)
7,775 Sealed Air Corp. * 265,322
Electronic Components & Equipment (0.6%)
2,050 Littelfuse, Inc. 77,387
150 Pittway Corp. Class A 7,500
84,887
Pollution Control (1.0%)
3,825 Culligan Water Technologies, Inc. * 124,313
Railroads (1.5%)
3,075 Wisconsin Central Transportation Corp. * 204,488
Technology (20.9%)
Biotechnology (1.0%)
2,225 DepoTech Corp. * 54,513
3,000 Sybron International Corp. * 73,500
128,013
Communication (14.6%)
5,025 360 Communications Company * 119,972
9,825 Arch Communications Group, Inc. * 227,203
8,900 CommNet Cellular, Inc. * 248,088
3,750 Millicom International Cellular S.A. # * 162,187
1,425 Mobilemedia Corp. * 29,569
3,200 Omnipoint Corp. * 81,600
38,275 Paging Network, Inc. * 956,875
8,969 PriCellular Corp. Class A * 119,957
1,945,451
Computers (0.3%)
1,025 Fair Isaac & Company, Inc. 30,750
575 Pyxis Corp. * 14,770
45,520
Diversified (0.8%)
3,325 American List Corp. 104,738
Office Equipment (1.0%)
2,600 Global DirectMail Corp. * 90,675
850 Viking Office Products, Inc. * 47,281
137,956
Software (3.2%)
1,125 Acxiom Corp. * 26,859
12,250 Black Box Corp. * 208,250
3,750 Xylan Corp. * 195,000
430,109
Utilities (2.6%)
Electric
15,825 Trigen Energy Corp. $342,215
Total Common Stock (cost $9,462,610 ) 12,025,889
WARRANTS (0.4%)
Industrial
Electronic Components & Equipment
1,625 Littelfuse, Inc. * (cost $33,511 ) 48,141
<CAPTION>
Principal Description Value
<S> <C>
SHORT-TERM U.S.GOVERNMENT AGENCIES (3.0%)
$400,000 Federal Home Loan Bank
5.270% 4-5-96 (cost $399,766) 399,766
COMMERCIAL PAPER (6.6%)
400,000 Ford Motor Credit Corp. 399,817
5.480% 4-4-96
480,000 Household Finance Company
5.350% 4-1-96 480,000
Total Commercial Paper (cost $879,817 ) 879,817
Total Investments (99.9%) (cost $10,775,704 ) 13,353,613
<CAPTION>
Notional
Amount Description Value
UNREALIZED GAIN(LOSS)ON FORWARD FOREIGN CURRENCY CONTRACTS (0.0%) @
<S> <C>
B 2,000 British Pound 6-28-96 Sell $(5)
B 50,000 British Pound 7-15-96 Sell 788
B 102,000 British Pound 7-15-96 Sell (1,572)
B 75,000 British Pound 10-1-96 Sell (33)
F 26,407 French Franc 4-2-96 Buy (12)
S 8,515 Swiss Franc 4-3-96 Buy 34
Total Unrealized Loss on Forward Foreign Currency Contracts (800)
Other Assets in Excess of Liabilities (0.1%) 12,433
Net Assets (100.0%) $13,365,246
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
GLOBAL PORTFOLIO
<TABLE>
<CAPTION>
Shares Description Value
<S> <C>
COMMON STOCK (94.1%)
Basic Materials (5.0%)
Chemicals (3.0%)
1,725 Cytec Industries, Inc. * $145,762
9,053 Hoechst AG + 3,212,197
3,357,959
Forest Products (0.1%)
114,543 Rottneros Bruk AB + 112,334
Mining - Diversified (0.5%)
8,714 Potash Corp. of Saskatchewan, Inc. # 544,625
Precious Metals (0.4%)
16,315 Hoganas AB B-Free + 497,111
Steel (1.0%)
10,345 Boehler-Uddeholm AG + * 803,641
50,000 Kobe Steel, Ltd. + * 154,464
55,000 NKK Corp. + * 158,617
164 Ssab AB + * 1,928
1,118,650
Consumer Cyclical (17.6%)
Airlines (2.3%)
2,485 Swissair AG + * 2,607,993
Auto Manufacturers (3.7%)
70,000 Honda Motor Company, Ltd. + 1,522,236
98,000 Isuzu Motors, Ltd. + 566,167
2,686 Porsche AG + 1,518,696
36,900 Tata Engineering & Locomotive, Ltd. # 571,950
4,179,049
Auto Parts & Equipment (0.4%)
15,850 Bajaj Auto, Ltd. # 487,387
Broadcasting (1.3%)
32,300 Central European Media Enterprises, Ltd.
Class A # * 694,450
25,750 Grupo Televisa S.A. # * 640,531
4,375 Heritage Media Corp. Class A * 156,953
1,491,934
Clothing/Fabric (1.5%)
10,610 Fila Holding SpA # 677,714
21,475 Gucci Group N.V. # * 1,030,800
1,708,514
Consumer Electronics (0.5%)
2,075 Sony Corp. # 126,056
4,400 Sony Corp. + 262,411
11,000 Victor Company of Japan, Ltd. + * 139,624
528,091
Entertainment (0.2%)
18,341 Tabcorp Holdings, Ltd. + 74,519
16,000 Yamaha Motor Company, Ltd. + 156,797
231,316
Footware (1.2%)
18,208 Adidas AG + * 1,343,900
Home Furnishings - Other (0.8%)
17,325 AMRE, Inc. 322,678
9,750 Industrie Natuzzi SpA # 530,156
852,834
Publishing (2.3%)
15,873 Emap PLC + $155,532
21,551 Wolters Kluwer N.V. + 2,371,223
2,526,755
Retailers - Apparel (0.6%)
10,650 Gymboree Corp. * 278,231
28,000 Isetan Company + 407,672
685,903
Retailers - Broadline (1.4%)
18,000 Daimaru, Inc. + 127,845
23,000 Hankyu Department Stores + 321,994
11,000 Ito-Yokado Company, Ltd + 651,920
182,500 PT Matahari Putra Prima + * 398,097
1,499,856
Retailers - Specialty (0.4%)
17,950 General Nutrition Companies * 448,750
Toys (1.0%)
38,982 Mattel, Inc. 1,057,387
2,442 Thorn EMI PLC + 62,764
1,120,151
Consumer Non-Cyclical (19.1%)
Beverages (0.6%)
770,000 Companhia Cervejaria Brahma + 371,883
25,000 Quilmes Industrial S.A. # * 268,750
640,633
Consumer Services (0.9%)
19,800 Amway Japan, Ltd. + 997,900
Food-Other (3.0%)
12,870 Cultor OY Series 1 + * 577,189
15,666 Cultor OY Series 2 + * 709,341
20,924 Nutricia N.V. + 2,095,819
3,382,349
Health Care (0.5%)
9,325 HEALTHSOUTH Corp. * 317,050
110,279 Takare PLC + * 253,312
570,362
Pharmaceuticals (12.3%)
21,981 Astra AB A-Free + 1,018,614
1,300 Ciba-Geigy AG + 1,625,205
72,350 Eisai Company, Ltd. + 1,445,042
275 Eli Lilly And Company 17,875
1,996 Gehe AG + 1,148,835
4,325 Pfizer, Inc. 289,775
475 Roche Holding AG + 3,940,221
2,005 Sandoz AG + * 2,348,327
20,000 Sankyo Company, Ltd. + 457,324
3,100 SmithKline Beecham # * 159,650
27,575 SmithKline Beecham + 276,507
36,000 Takeda Chemical Industries, Ltd. + 561,109
21,000 Yamanouchi Pharmaceutical Company + 466,471
13,754,955
Tobacco (1.8%)
191,500 PT Hanjaya Mandala Sampoerna + 2,000,593
Energy (0.2%)
Oilfield Equipment & Services
9,325 Petroleum Geo-Services A/S # * 234,873
Financial (9.3%)
Banks (4.7%)
15,612 Corporation Bancaria de Espana S.A. + $660,167
14,925 Citicorp 1,194,000
12,000 Dai-Ichi Kangyo Bank, Ltd. + * 234,075
2,000 First Interstate Bancorp 347,000
47,800 HSBC Holdings PLC + 716,873
96,027 Lloyds TSB Group PLC + 458,005
7,000 Mitsui Trust & Banking Company + 78,398
17,666 Nordbanken AB + * 292,282
511,650 PT Bank Dagang Nasional Indonesia + 443,153
11,013 Sparbanken Sverige AB + * 123,671
9,000 Sumitomo Trust & Banking Company, Ltd. + * 123,478
11,849 Unidanmark A/S + 535,956
5,207,058
Diversified (2.9%)
46,000 Credit Saison Company, Ltd. + 1,000,327
1,000 First Data Corp. 70,500
16,000 First Pacific Company, Ltd. + 22,755
458,825 Grupo Financiero Inbursa S.A. Class B + * 1,765,181
8,150 Medaphis Corp. * 395,275
3,254,038
Real Estate (1.7%)
315,000 Citic Pacific, Ltd. + 1,221,767
40,000 Mitsubishi Estate Company, Ltd. + 548,789
8,000 Mitsui Fudosan Company + * 103,785
1,874,341
U.S. Government Agency (0.0%)
575 Federal National Mortgage Association 18,328
Independent (5.4%)
Conglomerates
8,107 Barco N.V. + 1,119,681
80,925 Groupo Carso, S.A. de C.V. + * 631,269
117,148 Kinnevik Investments AB B-Free + 4,034,264
7,148 Orkla A/S Class A + 328,503
6,113,717
Industrial (10.0%)
Building Materials (0.4%)
2,442 Hunter Douglas N.V. + 165,529
122,000 PT Semen Cibinong + * 344,397
509,926
Containers & Packaging (1.5%)
35,500 Crown Cork & Seal Company, Inc. * 1,730,625
Diversified (1.3%)
121,000 Mitsubishi Heavy Industries, Ltd. + * 1,043,483
4,079 OMV AG + 375,917
1,419,400
Electronic Components and Equipment (1.3%)
45,000 Omron Corp. + 995,380
10,850 UCAR International, Inc. * 421,794
1,417,174
Factory Equipment (1.0%)
11,095 SGL Carbon AG + 1,068,329
Heavy Construction (0.0%)
25,600 New World Infrastructure + * 54,611
Other Services (4.0%)
125,617 Assa Abloy AB + 1,278,966
22,852 Rentokil Group PLC + 126,258
52,343 Securitas AB + 3,119,200
4,524,424
Technology (0.5%)
21,625 Waters Corp. * $524,406
Technology (26.5%)
Advanced Medical Devices (1.5%)
20,764 Getinge Industrier AB Class B + 1,063,258
3,475 Gelman Sciences, Inc. * 90,350
16,247 Hafslund Nycomed A/S + 455,594
5,000 Nobelpharma 144A + 78,607
378 Nobelpharma AB + 5,943
1,693,752
Communications (8.7%)
1,975 Compania de Telefonos de Chile S.A. # 167,381
14,813 Korea Mobile Telecom Corp. # * 666,585
51,135 Lagardere Groupe + 1,355,679
83,925 Millicom International Cellular S.A. # * 3,629,756
8,025 Paging Network, Inc. * 200,625
8,275 Philippine Long Distance Telephone Company # 440,644
25,450 PT Indonesian Satellite # 868,481
2,150 Telecom Argentina STET-France Telecom S.A. # 89,225
5,174 Telecomunicacoes Brasileiras S.A. + 258
24,875 Telefonica de Argentina S.A. # 637,422
16,650 Telekomunikasi Indonesia # * 514,069
55,350 YPF Sociedad Anonima S.A. # 1,113,919
9,684,044
Computers (5.3%)
4,309 Frontec AB Class B + * 162,584
38,825 International Business Machines Corp. 4,314,428
10,050 Sun Microsystems, Inc. * 439,687
22,942 WM Data AB Class B + 1,013,339
5,930,038
Consumer Services (0.5%)
3,120 Grand Optical Photoservice S.A. + 365,564
22,176 Merkantildata A/S + 193,466
559,030
Office Equipment (1.9%)
95,000 Canon, Inc. + 1,808,764
3,535 Oce-van der Grinten N.V. + 329,474
2,138,238
Software (8.6%)
18,100 General Motors Corp. Class E 1,031,700
38,534 Getronics N.V. + * 2,793,907
10,769 Group Axime + * 1,368,714
81,374 JBA Holdings PLC + 484,369
1,030 NTT Data Communications System Corp. + 3,133,884
4,000 Rohm Company + * 227,729
1,750 SunGard Data Systems, Inc. * 59,938
38,500 Triple P N.V. + * 433,125
9,533,366
Utilities (1.0%)
Electric (0.7%)
2,275 Consolidated Electric Power Asia # 37,656
135,000 Consolidated Electric Power Asia + 223,409
53,333 Iberdrola S.A. + 491,855
752,920
Telephone (0.3%)
8,900 Telefonos De Mexico # 292,587
Total Common Stock (cost $86,405,087) 105,225,129
NON-CONVERTIBLE PREFERRED STOCK (3.8%)
Consumer, Cyclical (0.1%)
Retail-Broadline
1,123 Fielmann + $53,230
Technology (3.7%)
Advanced Medical Devices (1.2%)
7,928 Fresenius AG + 1,385,038
Software (2.5%)
19,815 Sap AG Vorzug + 2,836,465
CONVERTIBLE PREFERRED STOCK (0.3%)
Technology
Diversified
9,836 Nokia Ordinaries Cv Pfd 341,396
Total Preferred Stock (cost $2,692,965) 4,616,129
<CAPTION>
Principal Description Value
<S> <C>
SHORT-TERM U.S. GOVERNMENT SECURITIES (0.4%)
$400,000 United States Treasury Bills
4.760%, 6/20/96 (cost $395,769) 395,769
SHORT-TERM U.S. GOVERNMENT AGENCIES (1.8%)
100,000 Federal National Mortgage Association
5.170%, 4/15/96 (cost $1,995,979) 1,995,979
COMMERCIAL PAPER (3.5%)
3,900,000 Household Finance Company
5.350%, 4/1/96 (cost $3,900,000) 3,900,000
Total Investments (103.9%) (cost $95,389,800) $116,133,006
<CAPTION>
Notional
Amount Description Value
UNREALIZED GAIN (LOSS) ON FORWARD FOREIGN CURRENCY CONTRACTS (0.1%)@
<S> <C>
A 8,120,825 Austrian Schilling 4/3/96 Buy $(151)
B 5,879 British Pound 4/2/96 Sell 17
B 249,000 British Pound 7/2596 Sell (4,503)
B 140,000 British Pound 8/22/96 Sell 1,459
D 250,000 German Deutschemark 4/11/96 Sell 3,768
D 8,287,000 German Deutschemark 7/25/96 Sell (12,576)
F 1,661,444 French Franc 4/30/96 Buy 451
F 5,300,000 French Franc 9/12/96 Sell (2,898)
J 3,008,245 Japanese Yen 4/1/96 Buy (211)
J 220,682,066 Japanese Yen 4/2/96 Buy (18,513)
J 225,000,000 Japanese Yen 4/11/96 Sell 55,122
J 440,000,000 Japanese Yen 8/8/96 Sell 49,940
J 161,000,000 Japanese Yen 8/22/96 Sell 34,124
J 510,000,000 Japanese Yen 9/17/96 Sell 97,063
K 21,659,000 Swedish Krona 5/23/96 Sell (162,619)
K 32,900,000 Swedish Krona 7/25/96 Sell (160,563)
M 5,453,000 Finnish Marka 5/9/96 Sell 109,445
M 3,550,000 Finnish Marka 5/9/96 Buy (19,471)
M 3,950,000 Finnish Marka 7/25/96 Sell 16,927
M 1,000,000 Finnish Marka 7/25/96 Buy (4,981)
S 2,018,000 Swiss Franc 5/9/96 Sell 109,190
Total Unrealized Gain on Forward Foreign Currency Contracts 91,020
Liabilities in Excess of Other Assets (-4.0%) (4,434,531)
Net Assets (100.0%) $111,789,495
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
GROWTH PORTFOLIO
<TABLE>
<CAPTION>
Shares Description Value
<S> <C>
COMMON STOCK (80.4%)
Consumer, Cyclical (6.9%)
Broadcasting (0.8%)
95,768 Infinity Broadcasting Corp. Class A * $4,153,937
Clothing/Fabric (2.5%)
58,900 Fila Holding SpA # 3,762,238
199,075 Gucci Group N.V. # * 9,555,600
13,317,838
Entertainment (1.5%)
127,975 Walt Disney Company 8,174,403
Footware (1.9%)
124,650 Nike, Inc. Class B 10,127,813
Restuarants (0.2%)
22,825 McDonald's Corp. 1,095,600
Consumer, Non-Cyclical (17.5%)
Beverages (3.4%)
186,050 Coca-Cola Company 15,372,381
36,525 Pepsico, Inc. 2,310,206
17,682,587
Food - Retailers (0.4%)
96,100 Starbucks Corp. * 2,240,331
Health Care (5.2%)
158,275 Oxford Health Plans, Inc. * 13,888,631
91,725 Pacificare Health Systems, Inc. Class B * 7,819,556
93,525 United Healthcare Corp. 5,751,788
27,459,975
Pharmaceuticals (8.5%)
101,848 Astra AB A-Free + 4,719,703
28,375 BioChem Pharma, Inc. * 1,163,375
116,150 Eli Lilly and Company 7,549,750
74,375 Johnson & Johnson 6,861,094
230,150 Pfizer, Inc. 15,420,050
173,900 SmithKline Beecham PLC # 8,955,850
21,410 SmithKline Beecham PLC Class A + 214,688
44,884,510
Financial (17.5%)
Banks (7.3%)
115,700 Chemical Banking Corp. 8,156,850
179,085 Citicorp 14,326,800
90,950 First Interstate Bancorp 15,779,825
38,263,475
Diversified (4.5%)
320,325 First Data Corp. 22,582,912
307,225 Grupo Financiero Inbursa S.A. Class B + * 1,181,949
23,764,861
Securities Brokers (2.7%)
236,725 Merrill Lynch and Company, Inc. 14,381,044
U.S. Government Agency (3.0%)
77,675 Federal Home Loan Mortgage Corp. 6,621,794
287,820 Federal National Mortgage Association 9,174,262
15,796,056
Independent (1.0%)
Conglomerates
66,875 General Electric Company 5,207,891
Technology (37.5%)
Advanced Medical Devices (1.1%)
95,900 Medtronic, Inc. 5,718,038
Aerospace/Defense (0.9%)
55,625 The Boeing Company $4,818,516
Biotechnology (3.1%)
166,900 Amgen, Inc. * 9,701,062
68,475 Chiron Corp. * 6,727,669
3,186 U.S. Bioscience, Inc. * 20,908
16,449,639
Communications (13.3%)
79,200 America Online, Inc. * 4,435,200
430,400 Ascend Communications, Inc. * 23,187,800
222,318 Glenayre Technologies, Inc. * 8,503,663
230,550 L.M. Ericsson Telephone Company Class B # 4,928,006
235,550 PictureTel Corp. * 7,302,050
119,875 Premisys Communications Inc. * 3,895,938
18,450 Tellabs, Inc. * 892,519
129,775 US Robotics Corp. 16,773,419
69,918,595
Computers (8.5%)
356,000 Cisco Systems, Inc. * 16,509,500
34,050 International Business Machines Corp. 3,783,806
48,075 Shiva Corp. * 4,362,806
348,500 StrataCom, Inc. * 12,763,813
135,300 Sun Microsystems, Inc. * 5,919,375
37,300 Verity, Inc. * 1,258,875
44,598,175
Software (10.6%)
49,950 Broderbund Software, Inc. * 1,885,612
22,625 Dialogic Corp. * 955,906
156,800 HBO & Company 14,778,400
12,200 HNC Software, Inc. * 829,600
192,675 Informix Corp. * 5,081,803
84,900 Intuit, Inc. * 3,820,500
137,200 Microsoft Corp. * 14,148,750
98,675 Netscape Communications Corp. * 4,095,013
145,250 PeopleSoft, Inc. * 8,351,875
45,150 Red Brick Systems, Inc. * 1,941,450
55,888,909
Total Common Stock (cost $289,780,678) 423,942,193
NON-CONVERTIBLE PREFERRED STOCK (3.2%)
Technology
Software
116,769 Sap AG Vorzug + (cost $6,857,763) 16,715,172
<CAPTION>
Principal Description Value
<S> <C>
LONG-TERM U.S. GOVERNMENT SECURITIES (2.8%)
$15,000,000 United States Treasury Notes
5.500%, 9-30-97 (cost $15,076,778) 14,959,350
SHORT-TERM U.S. GOVERNMENT AGENCIES
15,000,000 Federal National Mortgage Association
5.170%, 4-15-96 14,969,842
20,000,000 Federal Home Loan Mortgage Acceptance
Corp., 5.240%, 4-1-96 20,000,000
20,000,000 Federal National Mortgage Association
5.130%, 4-2-96 19,997,150
Total Short-Term U.S. Government Agencies
(cost $54,966,992) 54,966,992
COMMERCIAL PAPER (5.0%)
$10,000,000 Household Finance Corp.
5.350%, 4-1-96 $10,000,000
16,200,000 Prudential Funding Corp.
5.380%, 4-1-96 16,200,000
Total Commercial Paper (cost $26,200,000) 26,200,000
Total Investments (101.8%) (cost $392,882,211) 536,783,707
<CAPTION>
Notional
Amount Description Value
UNREALIZED GAIN ON FORWARD FOREIGN CURRENCY CONTRACTS (0.1%) @
<S> <C>
D 10,000,000 German Deutschemark 4-11-96 Sell $292,250
D 1,000,000 German Deutschemark 4-25-96 Sell 44,916
D 10,822,000 German Deutschemark 8-22-96 Sell 113,128
Total Unrealized Gain on Forward Foreign Currency Contracts 450,294
Liabilities in Excess of Other Assets (-1.9%) (9,711,693)
Net Assets (100.0%) $527,522,308
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
C.A.S.E. PORTFOLIO
<TABLE>
<CAPTION>
Shares Description Value
<S> <C>
COMMON STOCK (51.0%)
Basic Materials (2.3%)
Chemicals (2.3%)
170 Hercules, Inc. $10,540
400 Rohm & Haas Company 26,600
37,140
Consumer, Cyclical (4.1%)
Airlines (0.7%)
670 USAir Group, Inc. * 12,227
Broadcasting (0.9%)
850 Comcast Corp. Class A (non-voting) 15,034
Footware (0.7%)
150 Nike, Inc. Class B 12,187
Lodging (1.2%)
200 Hilton Hotels Corp. 18,800
Retailers - Drug Based (0.6%)
300 Walgreen Company 9,788
Consumer, Non-Cyclical (5.7%)
Beverages (1.0%)
250 Pepsico, Inc. 15,813
Food-Other (1.7%)
530 Archer-Daniels-Midland Company 9,739
250 Hershey Foods Corp. 18,625
28,364
Medical Supplies (0.6%)
120 Becton Dickinson & Company 9,825
Pharmaceuticals (2.4%)
130 Bristol-Myers Squibb Company 11,131
200 Johnson & Johnson 18,450
170 Merck and Company, Inc. 10,582
40,163
Energy (5.6%)
Oil Companies - Major (2.7%)
90 Mobil Corp. 10,429
130 Texaco, Inc. 11,180
340 Unocal Corp. 11,347
220 Williams Companies, Inc. 11,083
44,039
Oil Companies - Secondary (2.2%)
400 Baker Hughes, Inc. 11,700
400 Dresser Industries, Inc. 12,200
950 Rowan Companies, Inc. * 12,112
36,012
Oilfield Equipment/Services (0.7%)
210 Halliburton Company 11,944
Financial (9.2%)
Banks (5.4%)
400 BankAmerica Corp. 31,000
660 First Chicago NBD Corp. 27,390
190 First Bank System, Inc. 11,329
250 Chase Manhattan Corp. 18,375
88,094
Diversified (1.0%)
350 American Express Company 17,281
Insurance (2.2%)
410 Travelers Group, Inc. 27,060
230 Allstate Corp. 9,689
36,749
Securities Brokers (0.6%)
260 Salomon, Inc. $9,750
Industrial (6.7%)
Containers & Packaging (2.3%)
500 Avery Dennison Corp. 27,000
360 Bemis, Inc. 11,295
38,295
Diversified (1.3%)
220 Dover Corp. 10,065
290 Harnischfeger Industries, Inc. 11,238
21,303
Electronic Components & Equipment (2.4%)
170 Harris Corp. 10,519
380 Thomas and Betts Corp. 28,500
39,019
Heavy Machinery (0.7%)
160 Caterpillar, Inc. 10,880
Technology (13.8%)
Aerospace/Defense (1.7%)
480 Rockwell International Corp. 28,260
Communications (1.8%)
133 360 Communications Company * 3,175
400 Sprint Corp. 15,200
240 Tellabs, Inc. * 11,610
29,985
Computers (8.4%)
400 Cisco Systems, Inc. * 18,550
400 Computer Associates International, Inc. 28,650
710 Digital Equipment Corp. * 39,139
560 Intergraph Corp. * 8,960
970 Sun Microsystems, Inc. * 42,437
137,736
Industrial (1.9%)
560 Perkin-Elmer Corp. 30,310
Utilities (3.6%)
Electric (3.0%)
230 American Electric Power , Inc. 9,603
280 DTE Energy Corp. 9,415
210 Duke Power Company 10,605
340 Entergy Corp. 9,520
290 General Public Utilities Corp. 9,570
48,713
Gas (0.6%)
310 Peoples Energy Corp. 10,036
Total Common Stock (cost $837,585) 837,747
<CAPTION>
Principal Description Value
<S> <C>
SHORT-TERM SECURITIES (13.5%)
$121,476 State Street Bank & Trust ***
4.000% Repurchase Agreement dated 3/29/96 to be repurchased
at $121,516 on 4/1/96 121,476
100,000 Seven Seas Money Market Fund,
5.030%, 4/1/96 100,000
Total Short-term Securities (cost $221,476) 221,476
Total Investments (64.5%) (cost $1,059,061) 1,059,223
Other Assets in Excess of Liabilities (35.5%) 582,990
Net Assets (100.0%) $1,642,213
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
TACTICAL ASSET ALLOCATION PORTFOLIO
<TABLE>
<CAPTION>
Shares Description Value
<S> <C>
COMMON STOCK (52.8%)
Basic Materials (12.8%)
Aluminum (2.8%)
2,500 Alumax, Inc. * $88,437
1,700 Aluminum Company of America 106,463
194,900
Chemicals (6.5%)
2,000 Dow Chemical Company 173,750
1,500 Eastman Chemical Company 103,687
2,500 Georgia Gulf Corp. 93,750
1,000 Praxair, Inc. 39,875
1,500 Wellman, Inc. 35,250
446,312
Forest Products (1.4%)
4,000 Louisiana-Pacific Corp. 97,500
Paper Products (1.2%)
2,000 International Paper Company 78,750
Steel (0.9%)
4,000 Birmingham Steel Corp. 59,000
Consumer, Cyclical (14.5%)
Apparel (2.1%)
1,000 Reebok International, Ltd. 27,625
3,000 Russell Corp. 80,250
600 VF Corp. 33,150
141,025
Auto Manufacturers (3.8%)
2,000 Chrysler Corp. 124,500
4,000 Ford Motor Company 137,500
262,000
Auto Parts & Equipment (0.4%)
3,400 TBC Corp. * 24,650
Home Construction (0.9%)
3,000 Clayton Homes, Inc. 62,625
Restaurants (0.7%)
2,000 Cracker Barrel Old Country Store, Inc. * 46,500
Retailers - Broadline (1.4%)
2,000 May Department Stores Company 96,500
Retailers - Specialty (5.2%)
7,000 Fingerhut Companies, Inc. 90,125
3,000 TJX Companies, Inc. 75,375
6,000 Toys R US, Inc. * 162,000
3,100 Value City Department Stores, Inc. * 30,225
357,725
Consumer, Non-Cyclical (3.2%)
Healthcare (1.8%)
3,000 Humana, Inc. * 75,375
1,100 U.S. Healthcare, Inc. 50,463
125,838
Tobacco (1.4%)
3,000 UST, Inc. 95,625
Energy (2.4%)
Oil Companies - Major (1.5%)
1,000 Ashland, Inc. $38,375
2,000 Unocal Corp. 66,750
105,125
Oil Companies - Secondary (0.9%)
2,500 Valero Energy Corp. 61,562
Financial (8.4%)
Diversified (0.9%)
3,000 Countrywide Credit Industries, Inc. 66,375
Insurance (4.8%)
3,000 AFLAC, Inc. 93,750
400 AMBAC, Inc. 19,250
5,000 John Alden Financial Corp. 88,125
3,000 PMI Group, Inc. 130,875
332,000
Securities Brokers (1.1%)
2,700 Lehman Brothers Holdings, Inc. 72,225
U.S. Government Agency (1.6%)
500 Federal Home Loan Mortgage Corp. 42,625
2,000 Federal National Mortgage Association 63,750
106,375
Independent (1.3%)
Conglomerates
1,000 Philip Morris Companies, Inc. 87,750
Industrial (3.7%)
Building Materials (0.3%)
700 USG Corp. * 17,763
Containers & Packaging (1.8%)
1,000 Ball Corp. 31,000
2,000 Temple-Inland, Inc. 93,750
124,750
Electronic Components & Equipment (0.9%)
6,000 American Power Conversion Corp. * 60,000
Trucking (0.7%)
3,000 Arnold Industries, Inc. 47,250
Technology (6.3%)
Communication (2.4%)
100 360 Communications Company * 2,387
3,000 EMC Corp. * 65,625
1,500 Seagate Technology, Inc. * 82,125
300 Sprint Corp. 11,400
161,537
Diversified (2.0%)
2,500 Philips Electronics N.V. # * 90,938
1,000 Teleflex, Inc. 45,125
136,063
Semiconductors (1.9%)
2,000 Applied Materials, Inc. * 69,750
1,000 Intel Corp. 56,875
126,625
Utilities (0.2%)
Telephone
500 Telefonos De Mexico S.A. # $16,438
Total Common Stock (cost $3,403,460) 3,610,788
CONVERTIBLE PREFERRED STOCK (0.5%)
Independent
Conglomerate
6,000 RJR Nabisco Holdings Corp. (cost $36,980) 36,750
<CAPTION>
Principal Description Value
<S> <C>
LONG-TERM U.S. GOVERNMENT AGENCIES (4.6%)
Federal Home Loan Bank
$100,000 8.600% 8-25-99 107,815
100,000 7.880% 2-9-00 105,495
100,000 6.080% 9-8-98 100,486
Total Long-term U.S. Government Agencies (cost $319,099) 313,796
LONG-TERM U.S. GOVERNMENT SECURITIES (35.5%)
United States Treasury Notes
300,000 7.125% 10-15-98 308,604
200,000 7.500% 11-15-01 212,230
100,000 6.125% 12-31-96 100,551
100,000 5.500% 7-31-97 99,839
200,000 6.375% 8-15-02 201,150
500,000 6.000% 10-15-99 500,135
200,000 5.500% 4-15-00 196,396
300,000 5.250% 7-31-98 296,100
300,000 5.875% 3-31-99 299,469
200,000 7.750% 2-15-01 213,496
Total Long-term Government Securities (cost $2,468,583) 2,427,970
SHORT-TERM SECURITIES (7.6%)
$200,823 Seven Seas Money Market Fund
5.030% 4-1-96 $200,823
319,534 State Street Bank & Trust ***
4.00% Repurchase Agreement
dated 3-29-96 to be repurchased
at $319,640 on 4-1-96 319,534
Total Short - Term Securities (cost $520,357) 520,357
Total Investments (101.0 %) (cost $6,748,479) 6,909,661
Liabilities in Excess of Other Assets (-1.0 %) (68,328)
Net Assets (100.0%) $6,841,333
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
EQUITY-INCOME PORTFOLIO
<TABLE>
<CAPTION>
Shares Description Value
<S> <C>
COMMON STOCK (66.9%)
Basic Materials (5.7%)
Chemicals (4.8%)
1,200 E.I. Du Pont de Nemours and Company $99,600
2,500 M.A. Hanna Company 86,875
7,400 Lawter International, Inc. 80,475
4,100 Nalco Chemical Company 126,075
1,000 Olin Corp. 87,000
480,025
Mining (0.9%)
2,166 Freeport McMoran, Inc. 86,369
Consumer Cyclical (7.6%)
Auto Parts & Equipment (0.9%)
3,000 Stewart & Stevenson Services, Inc. 84,375
Clothing/Fabric (1.0%)
5,000 Intimate Brands, Inc. Class A 96,875
Entertainment (2.0%)
1,400 Eastman Kodak Company 99,400
1,500 Walt Disney Company 95,813
195,213
Publishing (1.1%)
3,300 A.H. Belo Corp. 112,200
Real Estate (0.4%)
1,200 Crescent Real Estate Equities 40,350
Retailers - Broadline (1.0%)
2,000 J.C. Penney Company, Inc. 99,500
Retailers - Specialty (0.7%)
1,500 Home Depot, Inc. 71,813
Toys (0.5%)
1,400 Hasbro, Inc. 51,800
Consumer Non-Cyclical (16.1%)
Beverages (0.5%)
2,900 Adolph Coors Company Class B 51,838
Consumer Services (1.9%)
2,500 H&R Block, Inc. 90,313
3,000 Storage USA, Inc. 103,125
193,438
Cosmetics (1.4%)
3,900 Estee Lauder Companies Class A * 139,425
Food-Other (2.9%)
5,100 H.J. Heinz Company 168,938
1,600 Kellogg Company 121,200
290,138
Healthcare (1.8%)
2,300 Columbia / HCA Healthcare Corp. 132,825
5,500 Hooper Holmes, Inc. 46,750
179,575
Household Products - Non-Durable (3.0%)
1,100 Colgate-Palmolive Company $85,662
1,700 Duracell International, Inc. 84,362
1,500 Procter & Gamble Company 127,125
297,149
Medical Supplies (1.2%)
3,400 C.R. Bard, Inc. 121,125
Pharmaceuticals (3.4%)
1,500 Johnson & Johnson 138,375
2,610 Pharmacia & Upjohn, Inc. 104,074
1,600 Schering Plough Corp. 93,000
335,449
Energy (7.8%)
Oil Companies - Major (6.3%)
2,000 Amoco Corp. 144,500
1,200 Atlantic Richfield Company 142,800
1,500 Exxon Corp. 122,437
900 Mobil Corp. 104,287
4,300 Union Pacific Resources Group, Inc. * 113,950
627,974
Oil Companies - Secondary (1.2%)
4,000 Baker Hughes, Inc. 117,000
Pipelines (0.3%)
1,100 Panhandle Eastern Corp. 34,238
Financial (6.3%)
Banks (2.4%)
2,700 Mellon Bank Corp. 148,837
7,000 First Colorado Bancorp, Inc. 86,625
235,462
Consumer Services (1.4%)
1,500 Marsh & McLennan Companies, Inc. 139,312
Insurance (1.4%)
1,500 American International Group, Inc. 140,438
U.S. Government Agency (1.1%)
3,500 Federal National Mortgage Association 111,562
Independent (3.9%)
Conglomerates
1,700 General Electric Company 132,388
7,700 Hanson PLC # 115,500
1,600 Philip Morris Companies 140,400
388,288
Industrial (13.7%)
Building Materials (0.9%)
2,100 Sherwin Williams Company 93,187
Electronic Components and Equipment (4.9%)
2,900 AMP, Inc. 119,987
900 Emerson Electric Company 72,675
4,500 Fisher Scientific International, Inc. 172,125
1,700 Thomas & Betts Corp. 127,500
492,287
Diversified (2.6%)
6,500 Keystone International, Inc. $146,250
3,200 Tyco International Ltd 114,400
260,650
Other Industrial Services (4.2%)
1,600 Loctite Corp. 80,800
4,000 Manpower, Inc. 124,000
3,000 National Service Industries, Inc. 108,750
3,150 Olsten Corp. 101,588
415,138
Pollution Control (1.1%)
3,300 WMX Technologies, Inc. 104,775
Technology (3.7%)
Computers (1.0%)
1,100 Hewlett-Packard Company 103,400
Diversified (1.6%)
3,000 DST Systems, Inc. * 91,875
1,400 Raytheon Company 71,750
163,625
Office Equipment (1.1%)
2,500 Danka Business Systems PLC # 105,625
Utilities (2.1%)
Telephone
3,100 AirTouch Communications, Inc. * 96,488
3,600 ALLTEL Corp. 111,600
208,088
Total Common Stock (cost $5,960,213) 6,667,706
CONVERTIBLE PREFERRED STOCK (3.5%)
Basic Materials (0.5%)
Paper Products
1,000 International Paper Company 46,875
Consumer, Non-Cyclical (0.9%)
Household Products - Non-Durable
1,900 James River Corp. of Virginia 90,012
Financial (0.9%)
Diversified
2,500 Time Warner Financing Trust 92,500
Industrial (1.2%)
Pollution Control
4,500 Laidlaw One, Inc. 120,375
Total Preferred Stock (cost $311,448) 349,762
<CAPTION>
Principal Description Value
<S> <C>
CONVERTIBLE CORPORATE BONDS (3.0%)
Financial
Insurance (1.5%)
$100,000 American Travellers Corp. *
6.500% 10-1-05 $146,625
Real Estate (1.5%)
150,000 Meditrust Corp.
6.875% 11-15-98 150,562
Total Convertible Corporate Bonds (cost $251,343) 297,187
NON-CONVERTIBLE CORPORATE BONDS (6.7%)
Consumer Cyclical (2.1%)
Entertainment (1.0%)
100,000 Walt Disney Company 7.750% (until 1997,
increasing thereafter), 10-05-09 101,730
Retailers - Broadline (1.1%)
100,000 May Department Stores Company
9.125% 12-01-16 105,000
Consumer Non-Cyclical (2.5%)
Healthcare
250,000 Olsten Corp.
7.000% 3-15-06 249,062
Energy (1.1%)
Pipelines
100,000 Transcontinental Gas Pipeline Corp.
9.125% 2-1-17 104,375
Industrial (1.0%)
Railroads
100,000 Union Pacific Corp.
7.375% 5-15-01 103,250
Total Non-Convertible Corporate Bonds (cost $660,409) 663,417
LONG-TERM U.S. GOVERNMENT SECURITIES (8.8%)
Treasury Notes
200,000 7.000% 4-15-99 205,638
150,000 6.000% 11-30-97 150,570
200,000 6.125% 5-15-98 201,182
120,000 6.125% 5-31-97 120,689
200,000 5.875% 8-15-98 200,046
Total Long-Term U.S. Government Securities (cost $876,112) 878,125
SHORT-TERM SECURITIES (11.1%)
1,103,548 State Street Bank & Trust***
4.000% Repurchase Agreement dated 3-29-96 to be repurchased
at $1,103,911 on 4-1-96 (cost $1,103,548) 1,103,548
Total Investments (100.0%) (cost $9,163,073) 9,959,745
Other Assets in Excess of Liabilities (0.0%) 9,132
Net Assets (100.0%) $9,968,877
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
BALANCED PORTFOLIO
<TABLE>
<CAPTION>
Shares Description Value
<S> <C>
COMMON STOCK (52.1%)
Basic Materials (2.8%)
Chemicals (2.8%)
2,250 Minerals Technologies, Inc. $77,906
1,400 W.R. Grace & Company 109,550
2,600 Witco Corp. 91,650
279,106
Consumer, Cyclical (4.1%)
Home Furnishings (0.8%)
12,821 Pagnossin SpA + * 82,120
Broadcasting (1.0%)
1,525 Heritage Media Corp. Class A * 54,709
1,175 U.S. Satellite Broadcasting Company 38,481
93,190
Publishing (0.4%)
330 Wolters Kluwer N.V. + 36,309
Recreation Products - Other (0.1%)
275 Coleman Company, Inc. 12,134
Retailers - Drug Based (1.1%)
1,750 Cardinal Health, Inc. 112,437
Retailers - Specialty (0.7%)
2,800 General Nutrition Companies, Inc. * 70,000
Consumer, Non-Cyclical (6.8%)
Food-Other (0.8%)
1,025 Kellogg Company 77,644
Medical Supplies (2.9%)
1,050 Baxter International, Inc. 47,513
4,000 Esc Medical Systems, Ltd. * 138,000
1,250 Luxottica Group SpA # 97,656
283,169
Pharmaceuticals (3.1%)
1,050 Centocor, Inc. * 37,931
1,475 Eli Lilly And Company 95,875
12 Roche Holding AG + 99,542
1,375 SmithKline Beecham PLC # 70,813
304,161
Financial (19.3%)
Banks (10.1%)
237 Banco Popular Espanol S.A. + 40,927
4,050 Bank Of New York Company, Inc. 208,575
6,304 Barclays PLC # 69,948
2,375 Citicorp 190,000
1,775 First Chicago NBD Corp. 73,663
1,275 First Interstate Bancorp 221,212
2,625 First Savings Bank of Washington Bancorp, Inc. 35,438
8,475 Klamath First Bancorp, Inc. 113,353
675 Star Banc Corp. 43,538
996,654
Diversified (3.0%)
2,950 First Data Corp. 207,975
325 First USA Paymentech, Inc. 11,456
3,650 Investors Financial Services Corp. * 79,844
299,275
Insurance (5.1%)
675 Conseco, Inc. $48,853
1,800 Delphi Financial Group, Inc. Class A * 43,200
1,500 Foremost Corp. of America 82,500
2,075 Travelers Group, Inc. 136,950
3,200 UNUM Corp. 190,400
501,903
Savings & Loans (0.2%)
1,000 HFNC Financial Corp. * 14,875
U.S. Government Agency (0.9%)
2,700 Federal National Mortgage Association 86,063
Industrial (5.4%)
Containers & Packaging (0.3%)
1,000 Sealed Air Corp. * 34,125
Electronic Components & Equipment (0.5%)
1,012 Pittway Corp. Class A 50,600
Diversified (0.8%)
1,350 Tenneco, Inc. 75,431
Other Industrial Services (3.3%)
6,675 Robert Half International, Inc. * 324,572
Railroads (0.5%)
550 Burlington Northern Santa Fe Corp. 45,169
Technology (13.7%)
Communications (3.3%)
650 MFS Communications, Inc. * 40,463
60,000 Orange PLC + * 202,839
3,375 Paging Network, Inc. 84,375
327,677
Computers (3.4%)
2,400 International Business Machines Corp. 266,700
1,450 Cisco Systems, Inc. * 67,244
333,944
Diversified (2.0%)
2,825 Primark Corp. * 104,525
825 United Technologies Corp. 92,606
197,131
Office Equipment (0.7%)
1,250 Alco Standard Corp. 65,156
Software (4.3%)
900 BMC Software, Inc. * 49,275
625 Computer Sciences Corp. * 43,984
4,900 General Motors Corp. Class E 279,300
1,475 Sungard Data Systems, Inc. * 50,519
423,078
Total Common Stock (cost $4,340,687) 5,125,923
NON-CONVERTIBLE PREFERRED STOCK (5.5%)
Financial (4.5%)
Diversified
18,000 Hartford Capital Corp. Series A 445,500
Technology (1.0%)
Software
700 SAP AG - Vorzug + 100,203
Total Non-Convertible Preferred Stock (cost $533,926) 545,703
<CAPTION>
Principal Description Value
<S> <C>
CONVERTIBLE CORPORATE BONDS (0.2%)
Consumer, Cyclical
Recreation Products - Other
$60,000 Coleman Worldwide Corp., Zero
Coupon, 5-27-13, cost ($18,372) $21,825
NON-CONVERTIBLE CORPORATE BONDS (25.3%)
Consumer, Cyclical (9.9%)
Auto Manufacturers (1.7%)
175,000 General Motors Corp.,
7.400%, 9-1-25 170,187
Broadcasting (1.0%)
100,000 Heritage Media Corp.,
8.750%, 2-15-06 96,625
Casinos (2.3%)
240,000 Circus Circus Enterprises, Inc.,
6.450%, 2-1-06 226,800
Entertainment (1.2%)
120,000 Walt Disney Company,
6.375%, 3-30-01 119,400
Restaurants (3.7%)
400,000 Wendy's International, Inc.,
7.000%, 12-15-25 367,500
Consumer, Non-Cyclical (2.0%)
Beverages
200,000 Pepsico, Inc.,
5.875%, 6-1-00 196,000
Financial (13.4%)
Banks (5.5%)
200,000 Bank of Boston Corp.,
6.625%, 12-1-05 194,000
150,000 First Nationwide Holdings, Inc.,
9.125%, 1-15-03 147,703
200,000 First USA Bank of Wilmington Delaware, Inc.,
5.750%, 1-15-99 196,000
537,703
Diversified (7.9%)
400,000 Associates Corp. of North America,
5.600%, 1-15-01 385,500
400,000 International Lease Finance Corp.,
5.750%, 12-15-99 391,000
776,500
Total Non-Convertible Corporate Bonds (cost $2,568,796) 2,490,715
FOREIGN GOVERNMENT BONDS (4.2%) @
D 200,000 Federal Republic of Germany,
6.250%, 1-4-24 $120,084
C 370,000 Canadian Government,
8.750%, 12-1-05 292,179
Total Foreign Government Bonds (cost $427,235) 412,263
LONG-TERM U.S. GOVERNMENT SECURITIES (11.9%)
United States Treasury Notes
$300,000 5.000%, 1-31-98 295,908
55,000 5.500%, 11-15-98 54,429
500,000 5.625%, 2-28-01 490,115
United States Treasury Bonds
325,000 6.875%, 8-15-25 329,924
Total Long-term U.S. Government Securities (cost $1,203,111) 1,170,376
COMMERCIAL PAPER (1.6%)
160,000 Household Finance Company,
5.350%, 4-1-96, cost ($160,000) 160,000
Total Investments (100.8%) (cost $9,252,127) 9,926,805
<CAPTION>
Notional
Amount Description Value
<S> <C>
UNREALIZED GAIN ON FORWARD CURRENCY CONTRACTS (0.1%) @
B 123,000 British Pound 4-2-96 Buy 707
B 11,000 British Pound 8-22-96 Sell 115
D 175,000 German Deutschmark 4-30-96 Sell 429
D 180,000 German Deutschmark 6-13-96 Sell 3,039
D 80,000 German Deutschmark 8-22-96 Sell 863
D 120,000 German Deutschmark 6-13-96 Buy 318
D 10,000 German Deutschmark 6-13-96 Buy 9
Total Forward Foreign Currency Contracts 5,480
Liabilities in Excess of Other Assets (-0.9%) (92,939)
Net Assets (100.0%) $9,839,346
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
FLEXIBLE INCOME PORTFOLIO
<TABLE>
<CAPTION>
Description Principal Value
<S> <C> <C>
NON-CONVERTIBLE CORPORATE BONDS (80.1%)
Consumer, Cyclical (18.6%)
Airlines (0.8%)
Delta Airlines, Inc.
9.000% 5-15-16 $144,000 $154,800
Broadcasting (4.2%)
CF Cable T.V., Inc.
11.625% 2-15-05 475,000 516,563
Echostar Satellite Broadcasting Corp.
Discount Notes 13.125% 3-15-04 500,000 301,250
817,813
Home Furnishings (3.2%)
Selmer Company, Inc.
11.000% 5-15-05 600,000 621,000
Publishing (2.4%)
News American Holdings, Inc.
7.750% 1-20-24 500,000 473,750
Entertainment (3.9%)
Premier Parks, Inc.
12.000% 8-15-03 250,000 265,000
United Artists Theatres
9.300% 7-1-15 500,000 485,625
750,625
Retailers - Specialty (4.1%)
Pier 1 Imports, Inc.
11.500% 7-15-03 799,000 795,005
Consumer, Non-Cyclical (5.6%)
Food-Other (4.0%)
Carr-Gottstein Foods Company
12.000% 11-15-05 300,000 306,750
Ralston Purina Company
7.875% 6-15-25 475,000 478,563
785,313
Healthcare (1.6%)
Tenet Healthcare Corp.
8.625% 12-1-03 300,000 308,250
Energy (6.2%)
Oil Companies - Major (3.5%)
Texaco Capital, Inc.
7.500% 3-1-43 700,000 686,000
Oil Companies - Secondary (2.7%)
Texas Eastern Transmission Corp.
10.000% 10-1-11 500,000 528,750
Financial (33.8%)
Banks (16.0%)
Anchor Bancorp, Inc.
8.938% 7-9-03 500,000 506,250
Bank of Boston Corp.
6.625% 12-1-05 500,000 485,000
Center Banks, Inc.
8.375% 10-1-02 500,000 501,875
First Nationwide Holdings, Inc.
9.125% 1-15-03 300,000 295,406
First Union Corp.
7.050% 8-1-05 400,000 401,000
Norwest Financial, Inc.
6.750% 6-1-05 200,000 198,500
Swiss Bank Corp.
7.000% 10-15-15 500,000 481,250
Union Planters Corp.
6.750% 11-1-05 250,000 241,562
3,110,843
Diversified (5.0%)
Ford Motor Credit Company
6.750% 8-15-08 250,000 242,188
7.750% 3-15-05 700,000 732,375
974,563
Insurance (12.8%)
Delphi Financial Group, Inc.
8.000% 10-1-03 1,000,000 960,000
Leucadia National Corp.
10.375% 6-15-02 475,000 510,625
Orion Capital Corp.
7.250% 7-15-05 1,000,000 997,500
2,468,125
Industrial (9.4%)
Containers & Packaging (1.3%)
Stone Container Corp.
11.000% 8-15-99 264,000 258,720
Diversified (5.5%)
Harvard Industries, Inc.
11.125% 8-1-05 400,000 399,000
USG Corp.
8.500% 8-1-05 225,000 229,780
USG Corp. Series B
9.250% 9-15-01 400,000 430,000
1,058,780
Heavy Machinery (2.6%)
AGCO Corp.
8.500% 3-15-06 500,000 499,375
Technology (5.5%)
Communications (1.3%)
TCI Communications, Inc.
8.000% 8-1-05 250,000 257,188
Computers (2.6%)
International Business Machines Corp.
7.500% 6-15-13 500,000 511,875
Diversified (1.6%)
Neodata Services, Inc.
12.000% 5-1-03 300,000 301,125
Utilities (1.0%)
Electric (1.0%)
El Paso Electric Company
9.400% 5-1-11 $200,000 $202,000
Total Non-convertible corporate bonds (cost $15,467,154) 15,563,900
CONVERTIBLE CORPORATE BONDS (1.9%)
Industrial
Diversified
Pegasus Media & Communications, Inc.
12.500% 7-1-05 (cost $350,000) 350,000 361,813
LONG-TERM U.S. GOVERNMENT SECURITIES (11.5%)
United States Treasury Notes
7.875% 11-15-04 $1,900,000 $2,082,077
6.500% 8-15-05 150,000 150,937
Total Long-term U.S. Government Securities (cost $2,148,464) 2,233,014
COMMERCIAL PAPER (4.2%)
Prudential Funding Corp.
5.380% 4-1-96 (cost $820,000) 820,000 820,000
Total Investments (97.7%) ( cost $18,785,618 ) 18,978,727
Other Assets in Excess of Liabilities (2.3%) 437,584
Net Assets (100.0%) $19,416,311
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
INCOME PLUS PORTFOLIO
<TABLE>
<CAPTION>
Description Principal Value
<S> <C> <C>
NON-CONVERTIBLE CORPORATE BONDS (87.8%)
Basic Materials (3.9%)
Precious Metals
Inco, Ltd.
9.600% 6-15-22 $2,500,000 $2,726,650
Consumer Cyclical (19.0%)
Airlines (1.9%)
Piedmont Aviation, Inc.
10.100% 5-13-07 1,048,000 941,890
USAir, Inc.
10.800% 1-1-05 400,000 379,500
1,321,390
Auto Parts & Equipment (3.6%)
Mark IV Industries, Inc.
8.750% 4-1-03 2,430,000 2,502,900
Casinos (2.8%)
Circus Circus Enterprises, Inc.
6.450% 2-1-06 1,000,000 948,730
Station Casinos, Inc.
9.625% 6-1-03 1,000,000 980,000
1,928,730
Home Furnishings (3.0%)
Black & Decker Corp.
7.500% 4-1-03 2,000,000 2,048,860
Publishing (5.1%)
News America Holdings, Inc.
8.625% 2-1-03 1,500,000 1,622,250
Western Publishing Group, Inc.
7.650% 9-15-02 2,250,000 1,867,500
3,489,750
Real Estate (1.4%)
M.D.C. Holdings, Inc.
11.125% 12-15-03 1,000,000 970,000
Retailers - Broadline (1.2%)
K mart Corp.
8.125% 12-1-06 1,000,000 860,000
Consumer Non-Cyclical (23.7%)
Consumer Services (7.0%)
ERAC USA Finance Company
6.350% 1-15-01 2,000,000 1,960,040
Hertz Corp.
6.000% 1-15-03 2,000,000 1,904,600
Metromedia International Group, Inc.
9.875% 3-15-97 974,000 971,565
4,836,205
Food Retailers (7.3%)
American Stores Company
9.125% 4-1-02 1,000,000 1,107,360
Great Atlantic & Pacific Tea, Inc.
7.700% 1-15-04 2,000,000 1,936,180
Ralph's Grocery Company
10.450% 6-15-04 1,000,000 950,000
Super Rite Foods, Inc.
10.625% 4-1-02 1,000,000 1,085,000
5,078,540
Food - Other (2.2%)
BFI Acquisition Corp.
12.000% 12-1-01 ## $1,000,000 $320,000
Fleming Companies, Inc.
7.750% 12-15-01 1,500,000 1,170,000
1,490,000
Healthcare (7.2%)
Dynacare, Inc.
10.750% 1-15-06 1,500,000 1,507,500
FHP International Corp.
7.000% 9-15-03 2,000,000 1,910,020
Mediq/PRN Life Support Services, Inc.
12.125% 7-1-99 1,463,000 1,539,807
4,957,327
Energy (11.2%)
Oil Drilling (4.2%)
Louisiana Land Exploration Company
7.625% 4-15-13 2,000,000 1,964,820
Maxus Energy Corp.
11.250% 5-1-13 905,000 925,363
2,890,183
Oilfield Equipment/Services (1.6%)
McDermott, Inc.
9.375% 3-15-02 1,000,000 1,106,110
Pipelines (5.4%)
Enron Corp.
6.750% 7-1-05 2,500,000 2,449,700
Williams Companies, Inc.
10.250% 7-15-20 1,000,000 1,260,570
3,710,270
Financial (7.9%)
Banks (1.6%)
Citicorp
9.500% 2-1-02 1,000,000 1,138,060
Diversified (6.1%)
BAT Capital Corp.
6.500% 11-24-03 2,000,000 1,940,380
Continental Bank N.A.
11.250% 7-1-01 1,100,000 1,211,771
GNS Financial Corp.
9.250% 3-15-03 1,000,000 1,087,500
4,239,651
Insurance (0.2%)
Reliance Financial Services Corp.
9.480% 11-1-00 150,000 150,000
Independent (1.5%)
Conglomerates
Canadian Pacific Forest Products, Ltd.
9.250% 6-15-02 1,000,000 1,063,520
Industrial (11.7%)
Air Freight (1.6%)
Federal Express Corp.
9.625% 10-15-19 1,000,000 1,100,100
Factory Equipment (1.5%)
Penn Central Corp.
10.625% 4-15-00 1,000,000 1,050,000
Diversified (1.4%)
Unisys Corp.
9.750% 9-15-96 $1,000,000 $1,003,750
Other Industrial Services (1.4%)
Figgie International, Inc.
9.875% 10-1-99 1,000,000 1,017,500
Pollution Control (1.6%)
Allied Waste Industries, Inc.
12.000% 2-1-04 1,000,000 1,085,000
Transportation Equipment (2.8%)
AAR Corp.
7.250% 10-15-03 2,000,000 1,917,880
Trucking (1.4%)
Penske Truck Leasing Company
6.550% 9-19-00 1,000,000 1,000,100
Utilities (8.9%)
Electric
Beaver Valley Power Station Funding Corp.
8.330% 12-1-07 1,993,000 1,923,345
El Paso Electric Company
8.250% 2-1-03 1,000,000 985,000
El Paso Electric Company
8.900% 2-1-06 500,000 503,750
First PV Funding Corp.
10.300% 1-15-14 1,225,000 1,292,375
Texas Utilities Electric Company
6.750% 4-1-03 1,500,000 1,481,040
6,185,510
Total Non-Convertible Corporate Bonds (cost $60,198,975) 60,867,986
<CAPTION>
Description Shares Value
<S> <C> <C>
NON-CONVERTIBLE PREFERRED STOCK (0.5%)
Financial
Banks
Riggs National Corp. Class B, 10.750%
(cost $316,275) 12,651 $352,646
<CAPTION>
Description Principal Value
<S> <C> <C>
COMMERCIAL PAPER (8.5%)
Marsh & McLennan Companies, Inc.
5.550% 4-4-96 $3,400,000 3,398,428
Ryobi Finance Corp.
5.380% 4-2-96 2,500,000 2,499,626
Total Commercial Paper (cost $5,898,054) 5,898,054
Total Investments (96.8%) (cost $66,413,304) 67,118,686
Other Assets in Excess of Liabilities (3.2%) 2,177,256
Net Assets (100.0%) $69,295,942
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
TAX-EXEMPT PORTFOLIO
<TABLE>
<Caption
Description Principal Value
<S> <C> <C>
MUNICIPAL BONDS (95.5%)
California (0.3%)
Los Angeles, Convention and Exhibition
Center, Certificates of Participation,
9.000%, 12-1-20, AAA/Aaa $50,000 $65,864
Florida (4.2%)
Broward County, Resource Recovery,
Revenue Bonds, 7.950%, 12-1-08, A-/A 1,000,000 1,109,180
Georgia (3.7%)
Atlanta School Improvement,
General Obligation Bonds, 5.600%,
12-1-18, AA/Aa 1,000,000 968,740
Illinois (11.7%)
Chicago Park District, General Obligation
Bonds, 5.750%, 1-1-07, AAA/Aaa 1,000,000 1,033,230
Illinois State Dedicated Civic Center Tax,
Revenue Bonds, Series A, 6.000%,
12-15-15, AAA/Aaa 1,000,000 1,007,630
Palatine, General Obligation Bonds,
Series 1985, 9.900%, 1-1-16, NR/A1 25,000 29,711
West Chicago, IDR-Leggett and Platt, Inc.
Project, Revenue Bonds, Series 1994,
6.900%, 9-1-24, A/NR 1,000,000 1,030,250
3,100,821
Indiana (7.7%)
Indiana Transportation Finance Authority,
Airport Facility Lease Revenue Series,
1992A, 6.250%, 11-1-16, A/A 1,000,000 1,002,560
Indiana State Office Building and
Correctional Facility Program, Revenue
Bonds, 6.375%, 7-1-16, A+/A1 1,000,000 1,027,630
2,030,190
Iowa (11.4%)
Iowa State Certificate of Participation,
Revenue Bonds, Series 1992A, 6.500%
7-1-06, AAA/Aaa 1,000,000 1,090,930
Iowa Finance Authority, Drake University
Project, Revenue Bonds, 5.400%, 12-1-16,
AAA/Aaa 1,000,000 957,900
Iowa Higher Education Loan Authority, St.
Ambrose University Project, Revenue
Bonds, 5.750%, 2-1-11, BBB/NR 1,000,000 949,220
2,998,050
Kentucky (3.3%)
Kentucky Housing Corp., Single Family
Mortgage Revenue Bonds, AMT Series Bonds,
1991D-1, 6.800%, 1-1-24, AAA/Aaa 855,000 879,273
Massachusetts (3.8%)
Massachusetts State Housing Finance
Agency, Series 1993A
6.300%, 10-1-13, A+/A1 1,000,000 1,002,720
Michigan (11.4%)
Michigan State Building Authority, Revenue
Refunding Special Sinking Fund, Series
1992A, 6.800%, 10-1-21, AA-/A1 $900,000 $965,610
Detroit School District, General Obligation
Bonds, 6.250%, 5-1-12, AA/Aa 1,000,000 1,039,910
Royal Oak Hospital Finance Authority,
Revenue Bonds, Series F, 6.250%, 1-1-19,
AA/Aa 1,000,000 1,012,120
3,017,640
Nebraska (3.7%)
Nebraska Higher Education Loan Program,
Revenue Bonds, Series 1992A-6, AMT
Bonds, 6.950%, 6-1-08, NR/A 1,000,000 987,130
Nevada (1.2%)
Nevada Housing Division,
Single Family Program, Series 1990B,
AMT Bonds, 7.900%, 4-1-22, AA/NR 310,000 325,962
New York (3.8%)
New York State Local Government
Assistance Corporation, Series 1995A,
6.000%, 4-1-16, A/A 1,000,000 997,690
Pennsylvania (0.0%)
Pennsylvania Housing Finance Agency,
Multi-Family Mortgage Revenue Bonds,
Series 1985A, 9.375%, 8-1-28, AA/Aa 5,000 5,121
Rhode Island (3.6%)
Rhode Island Convention Center, Revenue
Bonds, Series A, 5.750%, 5-15-20,
AAA/Aaa 1,000,000 958,440
South Dakota (3.8%)
Sioux Falls South Dakota School District,
Number 49-5 Refunding Capital Outlay
Certificates, Series 1992B, 5.750%,
7-1-12, AAA/Aaa 1,000,000 1,003,020
Texas (10.4%)
Carroll Independent School District,
General Obligation Bonds, 5.625%,
2-15-19, AAA/Aaa 1,000,000 963,210
Galveston, Industrial Development
Corporation Sales Tax Revenue, Series
1995, 5.750%, 9-1-15, AAA/Aaa 1,000,000 989,570
Tarrant County, Housing Finance Corp.,
Single Family Mortgage Revenue Bonds,
GNMA, Series 1989A, 8.000%, 7-1-21,
AAA/NR 745,000 782,593
2,735,373
Virginia (3.9%)
Virginia State Housing Development
Authority, Multi Family Housing, Series
1995 II, 6.300%, 11-1-20, AAA/Aaa 1,000,000 1,024,790
Washington (3.9%)
Washington Housing Finance Committee,
Single Family Mortgage Revenue Bonds
Series 1995A, 6.650%, 7-1-16, AAA/NR 1,000,000 1,024,070
Wyoming (3.7%)
Wyoming State Farm Loan Board, Capital
Facilities Revenue Bonds,
5.750%, 10-1-20, AA-/NR $1,000,000 $973,120
Total Investments (95.5%) (cost $25,184,198) 7,374,945
Other Assets in Excess of Liabilities (4.5%) 19,017,335
Net Assets (100.0%) $26,392,280
</TABLE>
See Notes to the Schedule of Investments
March 31, 1996
SCHEDULE OF INVESTMENTS (unaudited)
Notes to Schedules of Investments
+ Foreign securities.
@ Notional amount of forward foreign currency contracts and principal
amount of foreign bonds are denominated in the indicated currency:
B-British Pound; D-German Deutschemark; E-Belgian Franc; F-French
Franc; G-Dutch Guilder; J-Japanese Yen; K-Swedish Krona; L-Italian
Lira; M-Finish Marka; P-Spanish Peseta; S-Swiss Franc.
# American Depository Receipts or Global Depository Receipts.
## BFI Acquisition Corp. is currently in default on payment of its six
month interest payment which was due 12-1-95.
* Presently non-income producing.
** Ratings indicated are by Standard and Poor's/Moody's, respectively,
and are unaudited; NR: not rated by this service.
*** Aggressive Growth
Collateralized by $595,000 principal of U.S. Treasury Bonds 8.75% due
5/15/17; market value and accrued interest aggregated $738,521 for
this collateral at March 31, 1996.
*** C.A.S.E.
Collateralized by $105,000 principal of U.S. Treasury Bonds 8.75% due
5/15/17; market value and accrued interest aggregated $738,521 for
this collateral at March 31, 1996.
*** Tactical Asset Allocation
Collateralized by $265,000 principal of U.S. Treasury Bonds 8.75% due
5/15/17; market value and accrued interest aggregated $738,521 for
this collateral at March 31, 1996.
*** Equity-Income
Collateralized by $910,000 principal of U.S. Treasury Bonds 8.75% due
5/15/17; market value and accrued interest aggregated $738,521 for
this collateral at March 31, 1996.
See Note 2 to financial statements for security valuation and other
significant accounting policies.
See Note 6 to financial statements for cost and unrealized appreciation
and depreciation of investments for Federal income tax purposes.
March 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
All numbers (except per share amounts) in thousands
<TABLE>
<CAPTION>
Aggressive Capital
Assets: Growth Appreciation Global
<S> <C> <C> <C>
Investment securities, at market value $23,482 $13,354 $116,133
Cash 14 343 1,195
Receivables:
Investment securities sold - 51 50
Shares of beneficial interest sold 43 14 188
Interest - - -
Dividends 8 3 164
Due from investment adviser (Note 3) 38 53
Forward foreign currency contracts (Notes 2,5) - - 477
Other - - 51
Total assets 23,585 13,818 118,258
Liabilities:
Accounts payable:
Investment securities purchased 373 393 5,769
Shares of beneficial interest redeemed 21 - 4
Due to custodian - - -
Accrued liabilities (Note 3):
Management and advisory fees - - 106
Distribution fees 8 5 34
Transfer agent fees and expenses 27 15 131
Forward foreign currency contracts (Notes 2,5) - - 386
Other 26 40 38
Total liabilities 455 453 6,468
Net Assets $23,130 $13,365 $111,790
Investment securities, at cost $20,440 $10,776 $95,390
Net asset value per share (net assets divided by shares outstanding):
Class A shares $15.48 $15.19 $19.61
Class B shares $15.40 $15.17 $19.40
Class C shares $15.41 $15.17 $19.33
Offering price per share:
Class A shares (1) $16.38 $16.07 $20.75
Class B shares $15.40 $15.17 $19.40
Class C shares $15.41 $15.17 $19.33
</TABLE>
(1) Includes the maximum selling commission (represented as a percentage of
offering price) which is reduced on sales of $50,000 or more as set forth in
the prospectus.
March 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
All numbers (except per share amounts) in thousands
<TABLE>
<CAPTION>
Tactical Asset
Assets: Growth C.A.S.E. Allocation
<S> <C> <C> <C>
Investment securities, at market value $536,784 $1,059 $6,910
Cash - 41 -
Receivables:
Investment securities sold 1,482 - -
Shares of beneficial interest sold 60 542 12
Interest 415 - 55
Dividends 183 1 6
Due from investment adviser (Note 3) - 1 -
Forward foreign currency contracts (Nts 2,5) 450 - -
Other 12 - -
Total assets 539,386 1,644 6,983
Liabilities:
Accounts payable:
Investment securities purchased 10,892 - 104
Shares of beneficial interest redeemed 16 - -
Due to custodian 121 - 15
Accrued liabilities (Note 3):
Management and advisory fees 62 - 13
Distribution fees 160 1 4
Transfer agent fees and expenses 366 1 5
Forward foreign currency contracts (Notes 2,5) - - -
Other 119 - 1
Total liabilities 11,736 2 142
Net Assets $527,650 $1,642 $6,841
Investment securities, at cost $392,882 $1,059 $6,748
Net asset value per share (net assets divided by shares outstanding):
Class A shares $21.82 $10.04 $10.77
Class B shares $21.53 $10.03 $10.77
Class C shares $21.57 $10.03 $10.77
Offering price per share:
Class A shares (1) $23.09 $10.62 $11.40
Class B shares $21.53 $10.03 $10.77
Class C shares $21.57 $10.03 $10.77
</TABLE>
(1) Includes the maximum selling commission (represented as a percentage of
offering price) which is reduced on sales of $50,000 or more as set forth in the
prospectus.
March 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
All numbers (except per share amounts) in thousands
<TABLE>
<CAPTION>
Equity- Flexible
Assets: Income Balanced Income
<S> <C> <C> <C>
Investment securities, at market value $9,960 $9,927 $18,979
Cash 28 9 -
Receivables:
Investment securities sold - - 174
Shares of beneficial interest sold 65 16 -
Interest 37 56 400
Dividends 15 8 -
Due from investment adviser (Note 3) 35 45 11
Forward foreign currency contracts (Nts 2,5) - - -
Other - 4 -
Total assets 10,140 10,065 19,564
Liabilities:
Accounts payable:
Investment securities purchased 143 189 -
Shares of beneficial interest redeemed - - -
Due to custodian - - 106
Accrued liabilities (Note 3):
Management and advisory fees - - -
Distribution fees 4 5 6
Transfer agent fees and expenses 5 10 20
Forward foreign currency contracts (Notes 2,5) - - -
Other 19 22 16
Total liabilities 171 226 148
Net Assets $9,969 $9,839 $19,416
Investment securities, at cost $9,163 $9,252 $18,786
Net asset value per share (net assets divided by shares outstanding):
Class A shares $12.72 $12.48 $9.16
Class B shares $12.71 $12.48 $9.16
Class C shares $12.71 $12.48 $9.16
Offering price per share:
Class A shares (1) $13.46 $13.21 $9.62
Class B shares $12.71 $12.48 $9.16
Class C shares $12.71 $12.48 $9.16
</TABLE>
(1) Includes the maximum selling commission (represented as a percentage of
offering price) which is reduced on sales of $50,000 or more as set forth in the
prospectus.
March 31, 1996
STATEMENTS OF ASSETS AND LIABILITIES (unaudited)
All numbers (except per share amounts) in thousands
<TABLE>
<CAPTION>
Income Tax-
Assets: Plus Exempt
<S> <C> <C>
Investment securities, at market value $67,119 $25,207
Cash 863 697
Receivables:
Investment securities sold - -
Shares of beneficial interest sold 24 -
Interest 1,452 514
Dividends - -
Due from investment adviser (Note 3) - 12
Forward foreign currency contracts (Nts 2,5) - -
Other 2 1
Total assets 69,460 26,431
Liabilities:
Accounts payable:
Investment securities purchased - -
Shares of beneficial interest redeemed 6 -
Due to custodian - -
Accrued liabilities (Note 3):
Management and advisory fees 35 -
Distribution fees 22 8
Transfer agent fees and expenses 64 14
Forward foreign currency contracts (Notes 2,5) - -
Other 37 17
Total liabilities 164 39
Net Assets $69,296 $26,392
Investment securities, at cost $66,413 $25,184
Net asset value per share (net assets divided by shares outstanding):
Class A shares $10.30 $11.23
Class B shares $10.30 $11.23
Class C shares $10.30 $11.23
Offering price per share:
Class A shares (1) $10.81 $11.79
Class B shares $10.30 $11.23
Class C shares $10.30 $11.23
</TABLE>
(1) Includes the maximum selling commission (represented as a percentage of
offering price) which is reduced on sales of $50,000 or more as set forth in the
prospectus.
STATEMENTS OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>
All numbers in thousands Aggressive Capital
Investment Income: Growth (1) Appreciation (1) Global (1)
<S> <C> <C> <C>
Interest $12 $15 $304
Dividends 30 8 78
Withholding taxes on foreign dividends - - (27)
42 23 355
Expenses (Note 3):
Management and advisory fees 105 50 484
Distribution fees:
Class A 32 13 162
Class B 1 1 2
Class C 12 11 18
Transfer agent fees and expenses 71 27 233
Custody fees and expenses 17 24 105
Registration fees 32 30 30
Audit fees and expenses 13 13 13
Trustees fees and expenses 2 1 3
Other 17 12 38
Less amounts waived/reimbursed by invmnt adv (97) (80) -
205 102 1,088
Custodian earnings and brokerage credits (1) (1) (34)
Net expenses 204 101 1,054
Net investment income (loss) (162) (78) (699)
Realized and unrealized gain (loss) on
investments and foreign currency (Note 2):
Net realized gain (loss) on investments (1,135) 605 6,506
Net realized gain (loss) from foreign
currency transactions - (15) 2,041
Net realized gain (loss) (1,135) 590 8,547
Net unrealized appreciation (depreciation)
during the period on:
Investments (15) 1,461 (839)
Translation of assets and liabilities
denominated in foreign currency - 12 6,773
Net unrealized appreciation (depreciation)
during the period (15) 1,473 5,934
Net gain (loss) on investments and
foreign currency (1,150) 2,063 14,481
Net increase (decrease) in net assets
resulting from operations $(1,312) $1,985 $13,782
</TABLE>
(1) For the six months ended March 31, 1996.
(2) From the commencement of investment operations on February 1, 1996 through
March 31, 1996.
STATEMENTS OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>
All numbers in thousands Tactical Asset
Investment Income: Growth (1) C.A.S.E. (2)Allocation (1)
<S> <C> <C> <C>
Interest $2,544 $2 $39
Dividends 1,215 1 18
Withholding taxes on foreign dividends - - -
3,759 3 57
Expenses (Note 3):
Management and advisory fees 2,535 1 14
Distribution fees:
Class A 874 1 3
Class B 2 - 4
Class C 30 - 2
Transfer agent fees and expenses 861 2 10
Custody fees and expenses 85 1 9
Registration fees 76 1 8
Audit fees and expenses 14 - -
Trustees fees and expenses 28 - -
Other 146 - 1
Less amounts waived/reimbursed by invmnt adv - (2) (2)
4,651 4 49
Custodian earnings and brokerage credits (72) - (4)
Net expenses 4,579 4 45
Net investment income (loss) (820) (1) 12
Realized and unrealized gain (loss) on
investments and foreign currency (Note 2):
Net realized gain (loss) on investments 37,825 - 30
Net realized gain (loss) from foreign
currency transactions 164 - -
Net realized gain (loss) 37,989 - 30
Net unrealized appreciation (depreciation)
during the period on:
Investments 10,782 - 161
Translation of assets and liabilities
denominated in foreign currency 297 - -
Net unrealized appreciation (depreciation)
during the period 11,079 - 161
Net gain (loss) on investments and
foreign currency 49,068 - 191
Net increase (decrease) in net assets
resulting from operations $48,248 $(1) $203
</TABLE>
(1) For the six months ended March 31, 1996.
(2) From the commencement of investment operations on February 1, 1996 through
March 31, 1996.
STATEMENTS OF OPERATIONS (unaudited)
<TABLE>
<CAPTION>
All numbers in thousands Equity- Flexible
Investment Income: Income (1) Balanced (1) Income (1)
<S> <C> <C> <C>
Interest $60 $119 $825
Dividends 69 28 -
Withholding taxes on foreign dividends - - -
129 147 825
Expenses (Note 3):
Management and advisory fees 36 41 92
Distribution fees:
Class A 11 8 34
Class B 1 1 -
Class C 3 15 4
Transfer agent fees and expenses 17 16 44
Custody fees and expenses 4 18 11
Registration fees 31 32 19
Audit fees and expenses 13 13 4
Trustees fees and expenses 1 1 1
Other 8 7 3
Less amounts waived/reimbursed by invmnt adv (56) (66) (10)
69 86 202
Custodian earnings and brokerage credits (1) (1) (11)
Net expenses 68 85 191
Net investment income (loss) 61 62 634
Realized and unrealized gain (loss) on
investments and foreign currency (Note 2):
Net realized gain (loss) on investments 223 593 603
Net realized gain (loss) from foreign
currency transactions - (6) -
Net realized gain (loss) 223 587 603
Net unrealized appreciation (depreciation)
during the period on:
Investments 409 241 (643)
Translation of assets and liabilities
denominated in foreign currency - 11 -
Net unrealized appreciation (depreciation)
during the period 409 252 (643)
Net gain (loss) on investments and
foreign currency 632 839 (40)
Net increase (decrease) in net assets
resulting from operations $693 $901 $594
</TABLE>
(1) For the six months ended March 31, 1996.
(2) From the commencement of investment operations on February 1, 1996 through
March 31, 1996
STATEMENTS OF OPERATIONS (unaudited)
All numbers in thousands
<TABLE>
<CAPTION>
Income Tax-
Investment Income: Plus (1) Exempt (1)
<S> <C> <C>
Interest $2,794 $792
Dividends 17 -
Withholding taxes on foreign dividends - -
2,811 792
Expenses (Note 3):
Management and advisory fees 210 82
Distribution fees:
Class A 119 47
Class B 1 -
Class C 10 2
Transfer agent fees and expenses 83 27
Custody fees and expenses 26 20
Registration fees 23 14
Audit fees and expenses 9 9
Trustees fees and expenses 2 1
Other 13 5
Less amounts waived/reimbursed by the investment adviser - (53)
496 154
Custodian earnings and brokerage credits (8) (15)
Net expenses 488 139
Net investment income (loss) 2,323 653
Realized and unrealized gain (loss) on investments
and foreign currency (Note 2):
Net realized gain (loss) on investments 401 148
Net realized gain (loss) from foreign currency
transactions - -
Net realized gain (loss) 401 148
Net unrealized appreciation (depreciation) during the
period on:
Investments (756) (194)
Translation of assets and liabilities denominated
in foreign currency - -
Net unrealized appreciation (depreciation) during the
period (756) (194)
Net gain (loss) on investments and foreign currency (355) (46)
Net increase (decrease) in net assets resulting from
operations $1,968 $607
</TABLE>
(1) For the six months ended March 31, 1996.
(2) From the commencement of investment operations on February 1, 1996 through
March 31, 1996.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Aggressive Capital
Growth Appreciation
1996 (1) 1995 (2) 1996 (1) 1995 (2)
Increase (decrease) in net assets from:
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $(162) $(150) $(78) $29
Net realized gain (loss) on
investments and foreign
currency transactions (1,135) 1,358 590 476
Net unrealized appreciation
(depreciation) during period (15) 3,058 1,473 1,103
Net increase (decrease) in net
assets resulting from operations (1,312) 4,266 1,985 1,608
Distributions to shareholders:
From net investment income:
Class A - - (29) -
Class B - - (1) -
Class C - - (9) -
- - (39) -
From net realized gains on
investments and foreign
currency transactions (1,314) - (571) -
(1,314) - (610) -
Shares of beneficial interest
transactions (Note 3):
Class A
Proceeds from sale of shares 9,960 14,370 3,287 6,467
Shares issued on reinvestment of
distributions 1,094 - 438 -
Cost of shares repurchased (5,296) (1,690) (1,048) (1,451)
Net increase (decrease) from
Class A share transactions 5,758 12,680 2,677 5,016
Class B
Proceeds from sale of shares 901 - 482 -
Shares issued on reinvestment of
distributions 16 - 7 -
Cost of shares repurchased (146) - (11) -
Net increase from Class B
share transactions 771 - 478 -
Class C
Proceeds from sale of shares 2,633 2,108 833 2,407
Shares issued on reinvestment of
distributions 179 - 145 -
Cost of shares repurchased (2,068) (571) (949) (225)
Net increase (decrease) from
Class C share transactions 744 1,537 29 2,182
Total net increase (decrease)
from share transactions 7,273 14,217 3,184 7,198
Net increase (decrease)
in net assets 4,647 18,483 4,559 8,806
Net Assets:
Beginning of period 18,483 - 8,806 -
End of period $23,130 $18,483 $13,365 $8,806
Net Assets consist of (Note 2):
Shares of beneficial interest,
unlimited shares authorized 21,490 14,217 10,382 7,198
Undistributed net investment
income (loss) (162) - (88) 29
Undistributed net realized gain
(loss) from investments and
foreign currency transactions (1,241) 1,208 495 476
Net unrealized appreciation
(depreciation) of investments
and on translation of assets and
liabilities in foreign currencies 3,043 3,058 2,576 1,103
Total net assets $23,130 $18,483 $13,365 $8,806
</TABLE>
(1) For the six months ended March 31, 1996. Unaudited.
(2) For the year ended September 30, 1995.
(3) From commencement of investment operations on February 1, 1996 through
March 31, 1996. Unaudited.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Global Growth
1996 (1) 1995 (2) 1996 (1) 1995 (2)
Increase (decrease) in net assets from:
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $(699) $(284) $(820) $(1,043)
Net realized gain (loss) on
investments and foreign
currency transactions 8,547 1,394 37,989 55,933
Net unrealized appreciation
(depreciation) during period 5,934 11,284 11,079 81,841
Net increase (decrease) in net
assets resulting from operations 13,782 12,394 48,248 136,731
Distributions to shareholders:
From net investment income:
Class A - - - -
Class B - - - -
Class C - - - -
- - - -
From net realized gains on
investments and foreign currency
transactions (3,252) (3,199) (67,047) (1,732)
(3,252) (3,199) (67,047) (1,732)
Shares of beneficial interest transactions (Note 3):
Class A
Proceeds from sale of shares 10,538 20,086 27,842 30,383
Shares issued on reinvestment of
distributions 3,076 2,979 63,598 1,639
Cost of shares repurchased (7,439) (23,750) (40,583) (110,904)
Net increase (decrease) from
Class A share transactions 6,175 (685) 50,857 (78,882)
Class B
Proceeds from sale of shares 948 - 1,361 -
Shares issued on reinvestment of
distributions 6 - 46 -
Cost of shares repurchased (4) - (5) -
Net increase from Class B
share transactions 950 - 1,402 -
Class C
Proceeds from sale of shares 1,556 1,228 5,126 1,872
Shares issued on reinvestment of
distributions 132 133 840 15
Cost of shares repurchased (517) (1,719) (3,304) (1,106)
Net increase (decrease) from
Class C share transactions 1,171 (358) 2,662 781
Total net increase (decrease)
from share transactions 8,296 (1,043) 54,921 (78,101)
Net increase (decrease)
in net assets 18,826 8,152 36,122 56,898
Net Assets:
Beginning of period 92,964 84,812 491,528 434,630
End of period $111,790 $92,964 $527,650 $491,528
Net Assets consist of (Note 2):
Shares of beneficial interest,
unlimited shares authorized 85,461 77,165 362,337 307,416
Undistributed net investment
income (loss) (713) (14) (820) -
Undistributed net realized gain
(loss) from investments and
foreign currency transactions 6,194 899 21,781 50,839
Net unrealized appreciation
(depreciation) of investments and
on translation of assets and
liabilities in foreign currencies20,848 14,914 144,352 133,273
Total net assets $111,790 $92,964 $527,650 $491,528
</TABLE>
(1) For the six months ended March 31, 1996. Unaudited.
(2) For the year ended September 30, 1995.
(3) From commencement of investment operations on February 1, 1996 through
March 31, 1996. Unaudited.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Tactical
Asset
C.A.S.E. Allocatn Equity-Income
1996 (3) 1996 (1) 1996 (1) 1995 (2)
Increase (decrease) in net assets from:
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $(1) $12 $61 $24
Net realized gain (loss) on
investments and foreign
currency transactions - 30 223 78
Net unrealized appreciation
(depreciation) during period - 161 409 388
Net increase (decrease) in net
assets resulting from operations (1) 203 693 490
Distributions to shareholders:
From net investment income:
Class A - (6) (39) (27)
Class B - (1) (2) -
Class C - (1) (3) (1)
- (8) (44) (28)
From net realized gains on investments
and foreign currency transactions - - (86) -
- (8) (130) (28)
Shares of beneficial interest transactions (Note 3):
Class A
Proceeds from sale of shares 686 3,222 3,350 5,203
Shares issued on reinvestment of
distributions - 7 112 25
Cost of shares repurchased - (240) (786) (501)
Net increase (decrease) from
Class A share transactions 686 2,989 2,676 4,727
Class B
Proceeds from sale of shares 283 2,000 568 -
Shares issued on reinvestment of
distributions - 1 3 -
Cost of shares repurchased (1) (100) (4) -
Net increase from Class B share
transactions 282 1,901 567 -
Class C
Proceeds from sale of shares 675 1,795 759 325
Shares issued on reinvestment of
distributions - 1 8 1
Cost of shares repurchased - (40) (52) (67)
Net increase (decrease) from
Class C share transactions 675 1,756 715 259
Total net increase (decrease)
from share transactions 1,643 6,646 3,958 4,986
Net increase (decrease)
in net assets 1,642 6,841 4,521 5,448
Net Assets:
Beginning of period - - 5,448 -
End of period $1,642 $6,841 $9,969 $5,448
Net Assets consist of (Note 2):
Shares of beneficial interest,
unlimited shares authorized 1,643 6,646 8,944 4,986
Undistributed net investment
income (loss) (1) 4 13 (4)
Undistributed net realized gain
(loss) from investments and
and foreign currency transactions - 30 215 78
Net unrealized appreciation
(depreciation) of investments and
on translation of assets and
liabilities in foreign currencies - 161 797 388
Total net assets $1,642 $6,841 $9,969 $5,448
</TABLE>
(1) For the six months ended March 31, 1996. Unaudited.
(2) For the year ended September 30, 1995.
(3) From commencement of investment operations on February 1, 1996 through
March 31, 1996. Unaudited.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Balanced Flexible Income
1996 (1) 1995 (2) 1996 (1) 1995 (2)
Increase (decrease) in net assets from:
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $62 $12 $634 $1,451
Net realized gain (loss) on
investments and foreign
currency transactions 587 150 603 (803)
Net unrealized appreciation
(depreciation) during period 252 428 (643) 1,574
Net increase (decrease) in net
assets resulting from operations 901 590 594 2,222
Distributions to shareholders:
From net investment income:
Class A (17) (11) (569) (1,435)
Class B (3) - (2) -
Class C (33) (2) (27) (43)
(53) (13) (598) (1,478)
From net realized gains on
investments and foreign
currency transactions (178) - - -
(231) (13) (598) (1,478)
Shares of beneficial interest transactions (Note 3):
Class A
Proceeds from sale of shares 2,324 3,672 1,232 1,747
Shares issued on reinvestment of
distributions 133 11 421 1,089
Cost of shares repurchased (381) (319) (3,185) (5,299)
Net increase (decrease) from
Class A share transactions 2,076 3,364 (1,532) (2,463)
Class B
Proceeds from sale of shares 254 - 259 -
Shares issued on reinvestment of
distributions 2 - 1 -
Cost of shares repurchased (2) - (6) -
Net increase from Class B
share transactions 254 - 254 -
Class C
Proceeds from sale of shares 307 3,134 487 250
Shares issued on reinvestment of
distributions 88 2 20 36
Cost of shares repurchased (591) (42) (153) (441)
Net increase (decrease) from
Class C share transactions (196) 3,094 354 (155)
Total net increase (decrease)
from share transactions 2,134 6,458 (924) (2,618)
Net increase (decrease)
in net assets 2,804 7,035 (928) (1,874)
Net Assets:
Beginning of period 7,035 - 20,344 22,218
End of period $9,839 $7,035 $19,416 $20,344
Net Assets consist of (Note 2):
Shares of beneficial interest,
unlimited shares authorized 8,592 6,458 22,074 22,998
Undistributed net investment
income (loss) 8 (1) 58 22
Undistributed net realized gain
(loss) from investments
and foreign currency transactions 559 150 (2,909) (3,512)
Net unrealized appreciation
(depreciation) of investments and
on translation of assets and
liabilities in foreign currencies 680 428 193 836
Total net assets $9,839 $7,035 $19,416 $20,344
</TABLE>
(1) For the six months ended March 31, 1996. Unaudited.
(2) For the year ended September 30, 1995.
(3) From commencement of investment operations on February 1, 1996 through
March 31, 1996. Unaudited.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Income Plus Tax-Exempt
1996 (1) 1995 (2) 1996 (1) 1995 (2)
Increase (decrease) in net assets from:
Operations:
<S> <C> <C> <C> <C>
Net investment income (loss) $2,323 $5,050 $653 $1,368
Net realized gain (loss) on
investments and foreign
currency transactions 401 (534) 148 120
Net unrealized appreciation
(depreciation) during period (756) 5,224 (194) 602
Net increase (decrease) in net
assets resulting from operations 1,968 9,740 607 2,090
Distributions to shareholders:
From net investment income:
Class A (2,260) (4,919) (665) (1,397)
Class B (24) - (1) -
Class C (70) (131) (14) (14)
(2,354) (5,050) (680) (1,411)
From net realized gains on
investments and foreign currency
transactions - (676) (164) (91)
(2,354) (5,726) (844) (1,502)
Shares of beneficial interest transactions (Note 3):
Class A
Proceeds from sale of shares 3,624 6,337 654 1,594
Shares issued on reinvestment of
distributions 1,580 3,940 558 993
Cost of shares repurchased (7,601) (9,434) (2,685) (4,866)
Net increase (decrease) from
Class A share transactions (2,397) 843 (1,473) (2,279)
Class B
Proceeds from sale of shares 572 - 180 -
Shares issued on reinvestment of
distributions 6 - 1 -
Cost of shares repurchased (9) - - -
Net increase from Class B
share transactions 569 - 181 -
Class C
Proceeds from sale of shares 1,084 658 278 387
Shares issued on reinvestment of
distributions 59 124 12 10
Cost of shares repurchased (359) (1,020) (224) (224)
Net increase (decrease) from
Class C share transactions 784 (238) 66 173
Total net increase (decrease)
from share transactions (1,044) 605 (1,226) (2,106)
Net increase (decrease)
in net assets (1,430) 4,619 (1,463) (1,518)
Net Assets:
Beginning of period 70,726 66,107 27,855 29,373
End of period $69,296 $70,726 $26,392 $27,855
Net Assets consist of (Note 2):
Shares of beneficial interest,
unlimited shares authorized 68,444 69,488 26,307 27,533
Undistributed net investment
income (loss) 127 158 41 68
Undistributed net realized gain
(loss) from investments and
foreign currency transactions 20 (381) 21 37
Net unrealized appreciation
(depreciation) of investments
and on translation of assets
and liabilities in foreign
currencies 705 1,461 23 217
Total net assets $69,296 $70,726 $26,392 $27,855
</TABLE>
(1) For the six months ended March 31, 1996. Unaudited.
(2) For the year ended September 30, 1995.
(3) From commencement of investment operations on February 1, 1996 through
March 31, 1996. Unaudited.
FINANCIAL HIGHLIGHTS (unaudited)
Selected per share data for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
Net Asset Net Realized
Year or Value Net and Unrealized
Period Beginning Investment Gain (Loss) on
Ended of Period Income (Loss) Investments
Aggressive Growth
<S> <C> <C> <C>
Class A 03/31/96 $17.68 $(0.10) $(1.08)
09/30/95(2) 10.00 (0.14) 7.82
Class B 03/31/96 17.64 (0.14) (1.08)
Class C 03/31/96 17.64 (0.13) (1.08)
09/30/95(2) 10.00 (0.18) 7.82
Capital Appreciation
Class A 03/31/96 13.54 - 1.72
09/30/95(2) 10.00 (0.03) 3.57
Class B 03/31/96 13.49 (0.04) 1.72
Class C 03/31/96 13.49 (0.03) 1.72
09/30/95(2) 10.00 (0.08) 3.57
Global
Class A 03/31/96 17.73 (0.12) 3.71
09/30/95 15.93 (0.06) 2.42
09/30/94 13.35 (0.04) 2.62
09/30/93 10.00 (0.04) 3.39
Class B 03/31/96 17.57 (0.17) 3.71
Class C 03/31/96 17.46 (0.13) 3.71
09/30/95 15.74 (0.14) 2.42
09/30/94 13.35 (0.23) 2.62
Growth (1)
Class A 03/31/96 22.84 (0.04) 2.16
09/30/95 16.78 (0.05) 6.18
09/30/94 18.46 0.01 (1.22)
09/30/93 16.46 0.04 2.42
09/30/92 16.22 0.08 0.88
09/30/91 13.77 0.14 5.32
Class B 03/31/96 22.64 (0.13) 2.16
Class C 03/31/96 22.64 (0.09) 2.16
09/30/95 16.68 (0.15) 6.18
09/30/94 18.46 (0.09) (1.22)
C.A.S.E.
Class A 03/31/96(3) 10.00 0.01 0.03
Class B 03/31/96(3) 10.00 - 0.03
Class C 03/31/96(3) 10.00 - 0.03
Tactical Asset Allocation
Class A 03/31/96 10.00 0.11 0.70
Class B 03/31/96 10.00 0.08 0.70
Class C 03/31/96 10.00 0.08 0.70
Equity-Income
Class A 03/31/96 11.74 0.24 0.96
09/30/95(2) 10.00 0.09 1.75
Class B 03/31/96 11.73 0.20 0.96
Class C 03/31/96 11.73 0.21 0.96
09/30/95(2) 10.00 0.03 1.75
Balanced
Class A 03/31/96 11.47 0.30 1.08
09/30/95(2) 10.00 0.05 1.47
Class B 03/31/96 11.47 0.26 1.08
Class C 03/31/96 11.47 0.27 1.08
09/30/95(2) 10.00 0.01 1.47
Flexible Income (4)
Class A 3/31/96 $9.17 $1.08 $(0.81)
9/30/95 8.83 0.61 0.37
9/30/94 9.59 0.65 (0.81)
9/30/93 8.95 0.70 0.60
10/31/92 8.73 0.80 0.22
10/31/91 7.74 0.82 1.10
Class B 3/31/96 9.17 1.05 (0.81)
Class C 3/31/96 9.17 1.05 (0.81)
9/30/95 8.83 0.56 0.37
9/30/94 9.59 0.60 (0.81)
Income Plus
Class A 3/31/96 10.36 1.34 (1.05)
9/30/95 9.75 0.75 0.71
9/30/94 10.98 0.76 (1.10)
9/30/93 10.55 0.83 0.46
9/30/92 10.04 0.76 0.64
11/30/91 9.20 0.98 0.87
Class B 3/31/96 10.35 1.32 (1.05)
Class C 3/31/96 10.35 1.32 (1.05)
9/30/95 9.74 0.69 0.71
9/30/94 10.98 0.66 (1.10)
Tax-Exempt
Class A 3/31/96 11.34 1.07 (0.83)
9/30/95 11.10 0.55 0.29
9/30/94 12.07 0.56 (0.60)
9/30/93 11.62 0.56 0.45
9/30/92 11.46 0.54 0.28
11/30/91 11.27 0.75 0.26
Class B 3/31/96 11.34 1.04 (0.83)
Class C 3/31/96 11.34 1.06 (0.83)
9/30/95 11.10 0.52 0.29
9/30/94 12.07 0.53 (0.60)
</TABLE>
FINANCIAL HIGHLIGHTS (unaudited)
Selected per share data for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
Total Income Dividends Distributions
Year or (Loss) From From Net From Net
Period Investment Investment Realized
Ended Operations Income Capital Gains
Aggressive Growth
<S> <C> <C> <C>
Class A 03/31/96 $(1.18) $- $(1.02)
09/30/95(2) 7.68 - -
Class B 03/31/96 (1.22) - (1.02)
Class C 03/31/96 (1.21) - (1.02)
09/30/95(2) 7.64 - -
Capital Appreciation
Class A 03/31/96 1.72 (0.07) -
09/30/95(2) 3.54 - -
Class B 03/31/96 1.68 - -
Class C 03/31/96 1.69 (0.01) -
09/30/95(2) 3.49 - -
Global
Class A 03/31/96 3.59 - (1.71)
09/30/95 2.36 - (0.56)
09/30/94 2.58 - -
09/30/93 3.35 - -
Class B 03/31/96 3.54 - (1.71)
Class C 03/31/96 3.58 - (1.71)
09/30/95 2.28 - (0.56)
09/30/94 2.39 - -
Growth (1)
Class A 03/31/96 2.12 - (3.14)
09/30/95 6.13 - (0.07)
09/30/94 (1.21) - (0.33)
09/30/93 2.46 (0.07) (0.39)
09/30/92 0.96 (0.07) (0.65)
09/30/91 5.46 (0.17) (2.84)
Class B 03/31/96 2.03 - (3.14)
Class C 03/31/96 2.07 - (3.14)
09/30/95 6.03 - (0.07)
09/30/94 (1.31) - (0.33)
C.A.S.E.
Class A 03/31/96(3) 0.04 - -
Class B 03/31/96(3) 0.03 - -
Class C 03/31/96(3) 0.03 - -
Tactical Asset Allocation
Class A 03/31/96 0.81 (0.04) -
Class B 03/31/96 0.78 (0.01) -
Class C 03/31/96 0.78 (0.01) -
Equity-Income
Class A 03/31/96 1.20 (0.07) (0.15)
09/30/95(2) 1.84 (0.10) -
Class B 03/31/96 1.16 (0.03) (0.15)
Class C 03/31/96 1.17 (0.04) (0.15)
09/30/95(2) 1.78 (0.05) -
Balanced
Class A 03/31/96 1.38 (0.09) (0.28)
09/30/95(2) 1.52 (0.05) -
Class B 03/31/96 1.34 (0.05) (0.28)
Class C 03/31/96 1.35 (0.06) (0.28)
09/30/95(2) 1.48 (0.01) -
Flexible Income (4)
Class A 3/31/96 $0.27 $(0.28) $-
9/30/95 0.98 (0.64) -
9/30/94 (0.16) (0.60) -
9/30/93 1.30 (0.66) -
10/31/92 1.02 (0.80) -
10/31/91 1.92 (0.80) (0.13)
Class B 3/31/96 0.24 (0.25) -
Class C 3/31/96 0.24 (0.25) -
9/30/95 0.93 (0.59) -
9/30/94 (0.21) (0.55) -
Income Plus
Class A 3/31/96 0.29 (0.35) -
9/30/95 1.46 (0.75) (0.10)
9/30/94 (0.34) (0.75) (0.14)
9/30/93 1.29 (0.81) (0.05)
9/30/92 1.40 (0.76) (0.13)
11/30/91 1.85 (0.98) (0.03)
Class B 3/31/96 0.27 (0.32) -
Class C 3/31/96 0.27 (0.32) -
9/30/95 1.40 (0.69) (0.10)
9/30/94 (0.44) (0.66) (0.14)
Tax-Exempt
Class A 3/31/96 0.24 (0.28) (0.07)
9/30/95 0.84 (0.56) (0.04)
9/30/94 (0.04) (0.54) (0.39)
9/30/93 1.01 (0.54) (0.02)
9/30/92 0.82 (0.54) (0.12)
11/30/91 1.01 (0.75) (0.07)
Class B 3/31/96 0.21 (0.25) (0.07)
Class C 3/31/96 0.23 (0.27) (0.07)
9/30/95 0.81 (0.53) (0.04)
9/30/94 (0.07) (0.51) (0.39)
</TABLE>
FINANCIAL HIGHLIGHTS (unaudited)
Selected per share data for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
Distributions Net Asset
Year or In Excess of Value
Period Net Realized Total End
Ended Capital Gains Distributions of Period
Aggressive Growth
<S> <C> <C> <C>
Class A 03/31/96 $- $(1.02) $15.48
09/30/95(2) - - 17.68
Class B 03/31/96 - (1.02) 15.40
Class C 03/31/96 - (1.02) 15.41
09/30/95(2) - - 17.64
Capital Appreciation
Class A 03/31/96 - (0.07) 15.19
09/30/95(2) - - 13.54
Class B 03/31/96 - - 15.17
Class C 03/31/96 - (0.01) 15.17
09/30/95(2) - - 13.49
Global
Class A 03/31/96 - (1.71) 19.61
09/30/95 - (0.56) 17.73
09/30/94 - - 15.93
09/30/93 - - 13.35
Class B 03/31/96 - (1.71) 19.40
Class C 03/31/96 - (1.71) 19.33
09/30/95 - (0.56) 17.46
09/30/94 - - 15.74
Growth (1)
Class A 03/31/96 - (3.14) 21.82
09/30/95 - (0.07) 22.84
09/30/94 (0.14) (0.47) 16.78
09/30/93 - (0.46) 18.46
09/30/92 - (0.72) 16.46
09/30/91 - (3.01) 16.22
Class B 03/31/96 - (3.14) 21.53
Class C 03/31/96 - (3.14) 21.57
09/30/95 - (0.07) 22.64
09/30/94 (0.14) (0.47) 16.68
C.A.S.E.
Class A 03/31/96(3) - - 10.04
Class B 03/31/96(3) - - 10.03
Class C 03/31/96(3) - - 10.03
Tactical Asset Allocation
Class A 03/31/96 - (0.04) 10.77
Class B 03/31/96 - (0.01) 10.77
Class C 03/31/96 - (0.01) 10.77
Equity-Income
Class A 03/31/96 - (0.22) 12.72
09/30/95(2) - (0.10) 11.74
Class B 03/31/96 - (0.18) 12.71
Class C 03/31/96 - (0.19) 12.71
09/30/95(2) - (0.05) 11.73
Balanced
Class A 03/31/96 - (0.37) 12.48
09/30/95(2) - (0.05) 11.47
Class B 03/31/96 - (0.33) 12.48
Class C 03/31/96 - (0.34) 12.48
09/30/95(2) - (0.01) 11.47
Flexible Income (4)
Class A 3/31/96 $- $(0.28) $9.16
9/30/95 - (0.64) 9.17
9/30/94 - (0.60) 8.83
9/30/93 - (0.66) 9.59
10/31/92 - (0.80) 8.95
10/31/91 - (0.93) 8.73
Class B 3/31/96 - (0.25) 9.16
Class C 3/31/96 - (0.25) 9.16
9/30/95 - (0.59) 9.17
9/30/94 - (0.55) 8.83
Income Plus
Class A 3/31/96 - (0.35) 10.30
9/30/95 - (0.85) 10.36
9/30/94 - (0.89) 9.75
9/30/93 - (0.86) 10.98
9/30/92 - (0.89) 10.55
11/30/91 - (1.01) 10.04
Class B 3/31/96 - (0.32) 10.30
Class C 3/31/96 - (0.32) 10.30
9/30/95 - (0.79) 10.35
9/30/94 - (0.80) 9.74
Tax-Exempt
Class A 3/31/96 - (0.35) 11.23
9/30/95 - (0.60) 11.34
9/30/94 - (0.93) 11.10
9/30/93 - (0.56) 12.07
9/30/92 - (0.66) 11.62
11/30/91 - (0.82) 11.46
Class B 3/31/96 - (0.32) 11.23
Class C 3/31/96 - (0.34) 11.23
9/30/95 - (0.57) 11.34
9/30/94 - (0.90) 11.10
</TABLE>
FINANCIAL HIGHLIGHTS (unaudited)
Selected per share data for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
Net Assets
Year or End of
Period Total Period
Ended Return (5) (000's)
Aggressive Growth
<S> <C> <C>
Class A 03/31/96 (6.54)% $20,169
09/30/95(2) 76.80 16,747
Class B 03/31/96 (6.99) 773
Class C 03/31/96 (6.67) 2,188
09/30/95(2) 76.40 1,736
Capital Appreciation
Class A 03/31/96 19.73 9,931
09/30/95(2) 35.40 6,241
Class B 03/31/96 19.57 530
Class C 03/31/96 19.41 2,904
09/30/95(2) 34.90 2,565
Global
Class A 03/31/96 14.64 105,562
09/30/95 15.47 89,397
09/30/94 19.33 81,241
09/30/93 33.52 17,430
Class B 03/31/96 13.40 1,015
Class C 03/31/96 14.76 5,213
09/30/95 15.14 3,567
09/30/94 17.90 3,571
Growth (1)
Class A 03/31/96 9.96 518,599
09/30/95 36.70 485,935
09/30/94 (6.72) 431,207
09/30/93 15.13 548,564
09/30/92 6.10 403,361
09/30/91 48.00 126,436
Class B 03/31/96 8.64 1,400
Class C 03/31/96 9.82 7,651
09/30/95 36.32 5,593
09/30/94 (7.72) 3,423
C.A.S.E.
Class A 03/31/96(3) 0.40 688
Class B 03/31/96(3) 0.30 281
Class C 03/31/96(3) 0.30 673
Tactical Asset Allocation
Class A 03/31/96 8.11 3,095
Class B 03/31/96 7.79 1,960
Class C 03/31/96 7.84 1,786
Equity-Income
Class A 03/31/96 10.38 8,350
09/30/95(2) 18.43 5,167
Class B 03/31/96 9.95 586
Class C 03/31/96 10.08 1,033
09/30/95(2) 17.95 281
Balanced
Class A 03/31/96 12.06 6,124
09/30/95(2) 15.27 3,670
Class B 03/31/96 11.71 261
Class C 03/31/96 11.86 3,454
09/30/95(2) 14.77 3,365
Flexible Income (4)
Class A 3/31/96 2.89% $18,260
9/30/95 11.57 19,786
9/30/94 (1.54) 21,527
9/30/93 13.66 29,232
10/31/92 12.17 26,676
10/31/91 26.38 18,696
Class B 3/31/96 2.23 251
Class C 3/31/96 2.61 905
9/30/95 10.95 558
9/30/94 (2.15) 691
Income Plus
Class A 3/31/96 2.84 65,988
9/30/95 15.85 68,746
9/30/94 (3.28) 63,995
9/30/93 12.80 72,401
9/30/92 14.40 54,647
11/30/91 21.00 47,334
Class B 3/31/96 2.51 566
Class C 3/31/96 2.66 2,742
9/30/95 15.08 1,980
9/30/94 (4.55) 2,112
Tax-Exempt
Class A 3/31/96 2.12 25,695
9/30/95 7.75 27,401
9/30/94 (0.41) 29,096
9/30/93 8.97 30,717
9/30/92 7.20 28,363
11/30/91 9.20 28,242
Class B 3/31/96 1.43 181
Class C 3/31/96 1.99 516
9/30/95 7.48 454
9/30/94 (0.73) 277
</TABLE>
FINANCIAL HIGHLIGHTS (unaudited)
Selected per share data for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
Year or Ratio of Expenses to Average Net Assets (6)
Period Without
Ended Gross Reimbursement Net
Aggressive Growth
<S> <C> <C> <C>
Class A 03/31/96 1.86% 2.78% 1.85%
09/30/95(2) 2.85 3.35 2.85
Class B 03/31/96 2.51 3.43 2.50
Class C 03/31/96 2.41 3.33 2.40
09/30/95(2) 3.40 3.91 3.40
Capital Appreciation
Class A 03/31/96 1.86 3.44 1.85
09/30/95(2) 2.90 4.17 2.85
Class B 03/31/96 2.51 4.09 2.50
Class C 03/31/96 2.41 3.99 2.40
09/30/95(2) 3.45 4.72 3.40
Global
Class A 03/31/96 2.28 - 2.21
09/30/95 2.10 - 1.97
09/30/94 2.14 - -
09/30/93 2.84 3.65 -
Class B 03/31/96 2.93 - 2.86
Class C 03/31/96 2.83 - 2.76
09/30/95 2.65 - 2.52
09/30/94 4.04 - -
Growth (1)
Class A 03/31/96 1.83 - 1.80
09/30/95 1.86 - 1.84
09/30/94 1.76 - -
09/30/93 1.61 - -
09/30/92 1.61 - -
09/30/91 1.48 - -
Class B 03/31/96 2.48 - 2.45
Class C 03/31/96 2.38 - 2.35
09/30/95 2.41 - 2.38
09/30/94 3.48 - -
C.A.S.E.
Class A 03/31/96(3) 2.85 4.63 2.85
Class B 03/31/96(3) 3.50 5.28 3.50
Class C 03/31/96(3) 3.40 5.18 3.40
Tactical Asset Allocation
Class A 03/31/96 3.16 3.27 2.85
Class B 03/31/96 3.81 3.92 3.50
Class C 03/31/96 3.71 3.82 3.40
Equity-Income
Class A 03/31/96 1.85 3.41 1.85
09/30/95(2) 2.99 4.57 2.85
Class B 03/31/96 2.50 4.06 2.50
Class C 03/31/96 2.40 3.96 2.40
09/30/95(2) 3.54 5.12 3.40
Balanced
Class A 03/31/96 1.86 3.48 1.85
09/30/95(2) 2.92 4.48 2.85
Class B 03/31/96 2.51 4.13 2.50
Class C 03/31/96 2.41 4.03 2.40
09/30/95(2) 3.47 5.03 3.40
Flexible Income (4)
Class A 3/31/96 1.96% 2.06% 1.85%
9/30/95 1.87 1.94 1.85
9/30/94 1.85 2.13 -
9/30/93 1.50 1.56 -
10/31/92 1.50 1.66 -
10/31/91 1.50 1.75 -
Class B 3/31/96 2.60 2.71 2.50
Class C 3/31/96 2.50 2.61 2.40
9/30/95 2.42 2.49 2.40
9/30/94 2.40 8.59 -
Income Plus
Class A 3/31/96 1.40 - 1.37
9/30/95 1.29 - 1.26
9/30/94 1.33 - -
9/30/93 1.33 - -
9/30/92 1.17 - -
11/30/91 1.15 1.21 -
Class B 3/31/96 2.05 - 2.02
Class C 3/31/96 1.95 - 1.92
9/30/95 1.84 - 1.81
9/30/94 3.52 - -
Tax-Exempt
Class A 3/31/96 1.11 1.50 1.00
9/30/95 1.02 1.35 1.00
9/30/94 1.00 1.30 -
9/30/93 1.00 1.43 -
9/30/92 1.00 1.20 -
11/30/91 0.95 1.24 -
Class B 3/31/96 1.76 2.15 1.65
Class C 3/31/96 1.36 1.75 1.25
9/30/95 1.27 1.60 1.25
9/30/94 1.25 20.88 -
</TABLE>
FINANCIAL HIGHLIGHTS (unaudited)
Selected per share data for a share of beneficial interest outstanding
throughout each period:
<TABLE>
<CAPTION>
Ratio of Net
Investment
Year or Income (Loss) Portfolio Average
Period to Average Turnover Commission
Ended Net Assets Rate (7) Rate (8)
Aggressive Growth
<S> <C> <C> <C>
Class A 03/31/96 (1.46)% 66.02% $0.0602
09/30/95(2) (2.39) 88.28 -
Class B 03/31/96 (2.11) 66.02 0.0602
Class C 03/31/96 (2.01) 66.02 0.0602
09/30/95(2) (2.94) 88.28 -
Capital Appreciation
Class A 03/31/96 (1.40) 65.41 0.0801
09/30/95(2) 0.75 262.97 -
Class B 03/31/96 (2.05) 65.41 0.0801
Class C 03/31/96 (1.95) 65.41 0.0801
09/30/95(2) 0.20 262.97 -
Global
Class A 03/31/96 (1.49) 55.08 0.0876
09/30/95 (0.43) 161.48 -
09/30/94 (0.55) 148.01 -
09/30/93 (0.87) 116.98 -
Class B 03/31/96 (2.14) 55.08 0.0876
Class C 03/31/96 (2.04) 55.08 0.0876
09/30/95 (0.98) 161.48 -
09/30/94 (2.46) 148.01 -
Growth (1)
Class A 03/31/96 (0.40) 32.73 0.0418
09/30/95 (0.26) 123.26 -
09/30/94 0.04 63.73 -
09/30/93 0.29 97.40 -
09/30/92 0.69 56.21 -
09/30/91 0.88 102.16 -
Class B 03/31/96 (1.05) 32.73 0.0418
Class C 03/31/96 (0.95) 32.73 0.0418
09/30/95 (0.81) 123.26 -
09/30/94 (1.68) 63.73 -
C.A.S.E.
Class A 03/31/96(3) (0.39) 11.00 0.0601
Class B 03/31/96(3) (1.04) 11.00 0.0601
Class C 03/31/96(3) (0.94) 11.00 0.0601
Tactical Asset Allocation
Class A 03/31/96 0.80 4.78 0.0788
Class B 03/31/96 0.15 4.78 0.0788
Class C 03/31/96 0.25 4.78 0.0788
Equity-Income
Class A 03/31/96 1.74 19.31 0.0655
09/30/95(2) 0.85 34.67 -
Class B 03/31/96 1.09 19.31 0.0655
Class C 03/31/96 1.19 19.31 0.0655
09/30/95(2) 0.30 34.67 -
Balanced
Class A 03/31/96 1.72 91.59 0.0531
09/30/95(2) 0.56 82.48 -
Class B 03/31/96 1.07 91.59 0.0531
Class C 03/31/96 1.17 91.59 0.0531
09/30/95(2) 0.01 82.48 -
Flexible Income (4)
Class A 3/31/96 6.15% 54.96% $-
9/30/95 7.03 149.58 -
9/30/94 6.57 105.40 -
9/30/93 7.76 138.86 -
10/31/92 8.55 140.23 -
10/31/91 9.84 130.73 -
Class B 3/31/96 5.50 54.96 -
Class C 3/31/96 5.60 54.96 -
9/30/95 6.48 149.58 -
9/30/94 6.03 105.40 -
Income Plus
Class A 3/31/96 6.76 39.26 -
9/30/95 7.53 25.07 -
9/30/94 7.35 48.12 -
9/30/93 7.73 54.51 -
9/30/92 8.79 91.01 -
11/30/91 10.20 52.79 -
Class B 3/31/96 6.11 39.26 -
Class C 3/31/96 6.21 39.26 -
9/30/95 6.98 25.07 -
9/30/94 5.16 48.12 -
Tax-Exempt
- -
Class A 3/31/96 4.65 45.41 -
9/30/95 4.83 126.48 -
9/30/94 4.83 59.84 -
9/30/93 4.83 91.03 -
9/30/92 5.49 106.89 -
11/30/91 6.67 117.92 -
Class B 3/31/96 4.00 45.41 -
Class C 3/31/96 4.40 45.41 -
9/30/95 4.58 126.48 -
9/30/94 4.58 59.84 -
</TABLE>
FINANCIAL HIGHLIGHTS (unaudited)
Selected per share data for a share of beneficial interest outstanding
throughout each period:
Notes to Financial Highlights
(1) As of October 1, 1992, Growth Class A discontinued the practice of
equalization accounting. On October 1, 1993, Growth Class A changed its
distribution rate to 0.35% from 0.25%; prior to May 1, 1991, no distribution
fees were incurred by Growth Class A (Note 3).
(2) From commencement of operations, December 2, 1994.
(3) From commencement of operations, February 1, 1995.
(4) As of October 1, 1992, Flexible Income Class A discontinued the practice of
equalization accounting. On October 1, 1993, Flexible Income Class A
initiated a 12b-1 plan of distribution.
(5) Total return has been calculated for the period ended March 31, 1996
without
deduction of a sales load, if any, on an initial purchase for Class A
shares.
(6) Ratio of expenses to average net assets include:
Gross expenses (expenses less amounts waived/reimbursed by the investment
adviser)
Without reimbursement expenses (expenses without waived/reimbursed amounts
by the Investment adviser)
Net expenses (expenses less amounts waived/reimbursed by the investment
adviser and reduced by affiliated brokerage and custody earnings credits)
Short periods (where applicable) are annualized (See Note 3).
(7) This rate is calculated by dividing the average value of the portfolio's
long-term investments during the period into lesser of its respective long-
term purchases or sales during the period.
Rates for periods of less than a full year are not annualized.
(8) This rate is calculated by dividing total commissions paid on purchases and
sales of securities during the period by total shares purchased or sold in
those same transactions and is reported for periods ended March 31, 1996 and
forward to the extent that commissionable trades constitute more than 10% of
the average net assets for the period.
IDEX II SERIES FUND
NOTES TO FINANCIAL STATEMENTS (unaudited)
March 31, 1996
NOTE 1. Organization:
IDEX II Series Fund ("IDEX II Series") is a Massachusetts business trust
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management investment company. IDEX II Series is
comprised of eleven portfolios (each a "Portfolio" and collectively the
"Portfolios"): IDEX II Aggressive Growth Portfolio ("Aggressive Growth"),
IDEX II Capital Appreciation Portfolio ("Capital Appreciation"), IDEX II
Global Portfolio ("Global"), IDEX II Growth Portfolio ("Growth"), IDEX II
C.A.S.E. Portfolio ("C.A.S.E."), IDEX II Tactical Asset Allocation
Portfolio ("Tactical Asset Allocation"), IDEX II Equity-Income Portfolio
("Equity-Income"), IDEX II Balanced Portfolio ("Balanced"), IDEX II Flexible
Income Portfolio ("Flexible Income"), IDEX II Income Plus Portfolio ("Income
Plus"), and IDEX II Tax- Exempt Portfolio ("Tax-Exempt"). All Portfolios
are diversified except Capital Appreciation. Aggressive Growth, Capital
Appreciation, Balanced and Equity Income commenced investment operations on
December 2, 1994. Tactical Asset Allocation and C.A.S.E. commenced
investment operations on October 1, 1995 and February 1, 1996, respectively.
Effective October 1, 1995, each Portfolio of IDEX II Series in operation was
authorized to offer investors a choice of three classes of shares, each with
a public offering price that reflects different sales charges, if any, and
expense levels. A comprehensive discussion of the terms under which shares
of any class is offered is contained within the Prospectus.
NOTE 2. Significant Accounting Policies:
The following is a summary of significant accounting policies followed
consistently by the Portfolios in the preparation of their financial
statements; the policies are in conformity with generally accepted accounting
principles.
A. Security valuations: Investments of the Portfolios traded on a national
securities exchange and the NASDAQ National Market System are stated at the
last reported sales price on the day of valuation; securities traded in the
over-the-counter market and listed securities for which no sale was reported
on that date are valued at the last quoted bid price. Foreign securities are
converted to U.S. dollars using exchange rates at the close of the New York
Stock Exchange. Long-term debt securities are valued by major independent
providers of pricing services. Short-term debt securities are valued at
amortized cost, which approximates market. Other securities for which
quotations are not readily available are valued at fair value determined in
such manner as the sub-advisers, under the supervision of the Board of
Trustees, decide in good faith.
B. Security transactions and related investment income: Security transactions
are accounted for on the trade date (date the order to buy or sell is
executed). Securities gains and losses are calculated on the specific
identification basis and dividend income is recorded on the ex-dividend date
for both financial and Federal tax reporting purposes; interest income is
recorded on the accrual basis, including amortization of premium and
discount. Original issue discount (as defined in the Internal Revenue Code)
and market premium and discount are amortized for both financial and Federal
tax reporting purposes over the remaining life of the related bonds.
C. Foreign currency translation: Securities and other assets and liabilities
denominated in foreign currencies are translated into U.S. dollars at the
closing exchange rate each day. The cost of foreign securities is translated
at the exchange rate in effect when the investment was acquired. The
Portfolios combine fluctuations from currency exchange rates and fluctuations
in market value when computing net realized and unrealized gain or loss from
investments. Transaction gains or losses resulting from changes in exchange
rates during the reporting period or upon settlement of the foreign currency
transactions are reported in the Statement of Operations for the current
period. Foreign denominated assets and the use of forward contracts may
involve risks not typically associated with domestic transactions, including
unanticipated movements in exchange rates, the degree of government
supervision and regulation of security markets, and the possibility of
political or economic instability.
D. Federal taxes: It is the policy of the Portfolios to distribute all income
and realized net capital gains to shareholders and otherwise qualify as
regulated investment companies under the Internal Revenue Code. In addition,
the Portfolios intend to pay distributions as required to avoid excise taxes.
Accordingly, no provisions have been made for Federal taxes.
E. Distributions to shareholders: Dividends and distributions are recorded by
the Portfolios on the ex-dividend date. Income and capital gain distributions
are determined in accordance with Federal income tax regulations which may
differ from generally accepted accounting principles. Accordingly, permanent
book and tax basis differences relating to Portfolio earnings and shareholder
distributions are reclassified as necessary among components of net assets.
NOTE 3. Investment Advisory and Other Payments To/From Affiliates:
Idex Management, Inc. ("IMI") is the investment adviser for Capital
Appreciation, Global, Growth, Balanced and Flexible Income;
InterSecurities, Inc. ("ISI") is the investment adviser for Aggressive
Growth, C.A.S.E., Tactical Asset Allocation, Equity-Income, Income Plus
and Tax-Exempt. In addition, ISI is the Portfolios' underwriter. Idex
Investor Services, Inc. ("IIS") is the Portfolios' transfer agent. IMI is
owned equally by AUSA Holding Company ("AUSA") and Janus Capital
Corporation ("JCC"). ISI and IIS are 100% owned by AUSA. AUSA is a
wholly-owned subsidiary of AEGON N.V., a Netherlands corporation.
Under each Portfolio's Management and Investment Advisory Agreement, the
Portfolios pay management fees based upon average daily net assets to
their respective investment advisers. The Portfolios will be reimbursed
by their advisers to the extent that certain operating expenses exceed the
lesser of a stated annual limitation or any limitation imposed by the most
restrictive state law. The Portfolios have a 12b-1 distribution plan
under the 1940 Act pursuant to which an annual fee based on daily net
assets is paid to ISI for various disbursements such as broker-dealer
account servicing fees and other promotional expenses of the Portfolios.
The 12b-1 fee for all Portfolios is comprised of a 0.25% service fee and
the remaining amount is an asset-based sales charge/distribution fee. The
Portfolios reimburse IIS for expenses and pay fees which include a monthly
per open account fee of $1.185 plus $2.48 for each new account opened.
For the period ended March 31, 1996:
<TABLE>
<CAPTION>
Exp.
Limit 12b-1 Distributn Fees Underwriter Fees
(excl by Class Custody
Mgmt 12b-1 Rcvd by Retained Earnings
Fee 1 fees) A B C ISI by ISI Credits
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aggressive
Growth 1.00% 1.50% 0.35% 1.00% 0.90% $267,781 $39,154 $937
Capital
Appreciation 1.00% 1.50% 0.35% 1.00% 0.90% 91,374 13,606 624
Global 1.00% 2.00% 0.35% 1.00% 0.90% 309,602 46,263 33,470
Growth 1.00% 1.50% 0.35% 1.00% 0.90% 912,428 131,740 71,866
C.A.S.E. 1.00% 2.50% 0.35% 1.00% 0.90% 8,536 1,180 -
Tactical Asset
Allocation 1.00% 2.50% 0.35% 1.00% 0.90% 82,029 12,229 4,380
Equity-Income 1.00% 1.50% 0.35% 1.00% 0.90% 96,595 15,063 23
Balanced 1.00% 1.50% 0.35% 1.00% 0.90% 56,504 8,729 590
Flexible Income0.90% 1.50% 0.35% 1.00% 0.90% 29,091 5,337 10,684
Income Plus 0.60% 1.25% 0.35% 1.00% 0.90% 104,247 18,266 8,160
Tax-Exempt 0.60% 0.65% 0.35% 1.00% 0.60% 21,234 3,742 15,192
</TABLE>
(1) The rates for Aggressive Growth, Capital Appreciation, Global, Growth,
C.A.S.E., Tactical Asset Allocation, Equity-Income, and Balanced apply to
the first $750 million in average net assets. The rate for Flexible
Income applies to the first $100 million in average net assets.
(2) The rate for Aggressive Growth, Capital Appreciation, Global, C.A.S.E.,
Tactical Asset Allocation, Equity-Income and Balanced is 2.50% on the
first $30 million, 2.00% on the next $70 million and 1.50% of average net
assets thereafter.
(3) Underwriter commissions relate only to front-end sales charges
imposed for Class A shares.
NOTE 4. Investment Transactions:
The cost of securities purchased and proceeds from securities sold (excluding
non-U.S. Government short-term securities) for the period ended March 31,
1996 were as follows:
<TABLE>
<CAPTION>
Non U.S. Government U.S. Government
Purchases Sales Purchases Sales
<S> <C> <C> <C> <C>
Aggressive Growth $ 17,416,680 $ 14,106,049 $ - $ -
Capital Appreciation 8,000,693 6,471,707 4,001,623 3,807,751
Global 60,238,928 53,039,040 3,998,867 2,000,000
Growth 142,997,337 191,028,718 136,919,212 80,000,000
C.A.S.E. 910,698 73,064 - -
Tactical Asset Allocation 3,459,040 148,495 2,890,859 -
Equity-Income 4,585,817 860,986 - 448,098
Balanced 7,827,272 1,030,405 4,188,874 3,599,578
Flexible Income 10,455,295 11,480,312 154,863 445,500
Income Plus 26,633,910 23,426,720 - -
Tax-Exempt 12,312,139 14,779,957 - -
</TABLE>
NOTE 5. Futures, Forward Currency Contracts And Other Derivative Transactions:
When a Portfolio enters into a stock index or U.S. Treasury securities
futures contract, the Portfolio is required to pledge to the broker an amount
of U.S. Government securities, equal to a portion of the contract's
value, as "initial margin" on the contract. Subsequently, the Portfolio
receives or makes delivery of cash equal to a specific dollar amount
times the difference between the stock index value (or for Treasury
securities futures, the per-contract value) at the close of the valuation day
and the contract's opening strike price. These payments, called "variation
margin", are recorded by the Portfolio as unrealized gains or losses. To the
extent variation margin is unsettled and is due to or owed by the Portfolio on
open futures contracts, a receivable or payable will exist and will be
indicated in the Statement of Assets and Liabilities and the Schedule of
Investments. When a futures contract expires or is closed, the Portfolio may
realize a gain or loss. Realized net gains (losses) on futures contracts
for the six months ended March 31, 1996 were $177,231 for Global.
Forward foreign currency contracts are contracts for delayed delivery of
financial interests in which the seller agrees to make delivery at a
specified future date of a specified financial instrument, at a specified
price or yield. Risks arise from changes in the market value of the
underlying instruments and from the possible inability of counterparties to
meet the terms of their contracts.
Forward foreign currency contracts are valued at the forward rate, and are
marked to market daily. The change in market value is recorded by a Portfolio
as an unrealized gain or loss. When the contract is closed, the Portfolio
records a realized gain or loss equal to the difference between the value of
the contract at the time it was opened and the value at the time it was
closed.
NOTE 6. Information for Federal Income Tax Purposes:
At March 31, 1996:
<TABLE>
<CAPTION>
Unrealized Unrealized
Cost of appreciation depreciation Net unrealized
Securities of investments of investments appreciation
<S> <C> <C> <C> <C>
Aggressive Growth $ 20,439,679 $ 3,565,847 $ (523,343) $ 3,042,504
Capital Appreciation 10,775,704 2,786,953 (209,044) 2,577,909
Global 95,389,800 22,077,749 (1,334,543) 20,743,206
Growth 392,882,211 147,632,431 (3,730,935) 143,901,496
C.A.S.E. 1,059,061 26,760 (26,598) 162
Tactical Asset Alloc 6,748,479 246,446 (85,264) 161,182
Equity-Income 9,163,073 878,153 (81,481) 796,672
Balanced 9,252,127 857,633 (182,955) 674,678
Flexible Income 18,785,618 342,890 (149,781) 193,109
Income Plus 66,413,304 2,440,006 (1,734,624) 705,382
Tax-Exempt 25,184,198 253,389 (230,393) 22,996
</TABLE>
Realized net capital gains available to distribute were paid to shareholders
in December, 1995. The realized net capital gains of Flexible Income and
Income Plus were entirely offset by the utilization of capital loss
carryforwards for the period ended September 30, 1995. The remaining prior
year capital loss carryforwards for Flexible Income aggregated $2,870,174 and
are available to offset future realized net capital gains through September
30, 1998; of this amount, $480,919 is available through September 30, 1999
and $186,837 is available through September 30, 2003. Capital loss
carryforwards for Income Plus are $158,472 and are available through
September 30, 2003. Flexible Income and Income Plus will elect to treat
approximately $626,425 and $375,891, respectively, of net capital losses
incurred in the 11 month period ended September 30, 1995 as having been
incurred in the following fiscal year. Flexible Income and Income Plus will
make net capital gain distributions in future years to the extent that net
capital gains are realized in excess of available loss carryforwards.
NOTE 7. Shares of Beneficial Interest Transactions (all shares in thousands):
<TABLE>
<CAPTION>
Class A Class B Class C
Period Year Period Period Year
ended ended ended ended ended
3/31/96 9/30/95 3/31/96 3/31/96 9/30/95
Aggressive Growth
<S> <C> <C> <C> <C> <C>
Shares sold 619 1,055 59 163 137
Issued on reinvestment of dividends 73 - 1 12 -
Shares redeemed (336) (108) (10) (131) (39)
Net increase in shares 356 947 50 44 98
Shares at beginning of period 947 - - 98 -
Shares at end of period 1,303 947 50 142 98
Capital Appreciation
Shares sold 237 589 35 60 210
Issued on reinvestment of dividends 34 - 1 11 -
Shares redeemed (78) (128) (1) (70) (20)
Net increase in shares 193 461 35 1 190
Shares at beginning of period 461 - - 190 -
Shares at end of period 653 461 35 191 190
Global
Shares sold 578 1,267 52 87 78
Issued on reinvestment of dividends 178 198 - 8 9
Shares redeemed (416) (1,525) - (29) (110)
Net increase (decrease) in shares 340 (60) 52 66 (23)
Shares at beginning of period 5,042 5,102 - 204 227
Shares at end of period 5,382 5,042 52 270 204
Growth
Shares sold 1,265 1,662 63 224 100
Issued on reinvestment of dividends 3,060 101 2 41 1
Shares redeemed (1,840) (6,181) - (157) (59)
Net increase (decrease) in shares 2,485 (4,418) 65 108 42
Shares at beginning of period 21,273 25,691 - 247 205
Shares at end of period 23,758 21,273 65 355 247
C.A.S.E.
Shares sold 69 28 67
Issued on reinvestment of dividends - - -
Shares redeemed - - -
Net increase in shares 69 28 67
Shares at beginning of period - - -
Shares at end of period 69 28 67
Tactical Asset Allocation
Shares sold 309 191 170
Issued on reinvestment of dividends 1 - -
Shares redeemed (23) (9) (4)
Net increase in shares 287 182 166
Shares at beginning of period - - -
Shares at end of period 287 182 166
Equity-Income
Shares sold 272 483 46 61 30
Issued on reinvestment of dividends 9 2 - 1 -
Shares redeemed (64) (45) - (5) (6)
Net increase in shares 217 440 46 57 24
Shares at beginning of period 440 - - 24 -
Shares at end of period 657 440 46 81 24
Balanced
Shares sold 191 348 21 25 297
Issued on reinvestment of dividends 11 1 - 8 -
Shares redeemed (31) (29) - (49) (4)
Net increase (decrease) in shares 171 320 21 (16) 293
Shares at beginning of period 320 - - 293 -
Shares at end of period 491 320 21 277 293
Flexible Income
Shares sold 132 196 28 52 28
Issued on reinvestment of dividends 45 123 - 2 4
Shares redeemed (341) (599) (1) (16) (49)
Net increase (decrease) in shares (164) (280) 27 38 (17)
Shares at beginning of period 2,158 2,438 - 61 78
Shares at end of period 1,994 2,158 27 99 61
Income Plus
Shares sold 348 629 55 104 66
Issued on reinvestment of dividends 152 401 1 6 12
Shares redeemed (731) (952) (1) (35) (104)
Net increase (decrease) in shares (231) 78 55 75 (26)
Shares at beginning of period 6,638 6,560 - 191 217
Shares at end of period 6,407 6,638 55 266 191
Tax-Exempt
Shares sold 57 143 16 24 35
Issued on reinvestment of dividends 49 90 - 1 1
Shares redeemed (235) (438) - (19) (21)
Net increase (decrease) in shares (129) (205) 16 6 15
Shares at beginning of period 2,416 2,621 - 40 25
Shares at end of period 2,287 2,416 16 46 40
</TABLE>
IDEX II Series Fund
TRUSTEES
Peter R. Brown
Largo, Florida
Chairman of the Board,
Peter Brown Construction Company
Dan Calabria
S. Pasadena, Florida
Retired; Former President/CEO
Templeton Funds Management, Inc.
James L. Churchill
Hilton Head, South Carolina
Retired; former President of the Avionics
Group of Rockwell International Corporation
Charles C. Harris
Belleair, Florida
Retired; former Senior Vice President, Western
Reserve Life Assurance Co. of Ohio
G. John Hurley
Largo, Florida
President and Chief Executive Officer
of the Fund;
President and Chief Executive Officer
of InterSecurities, Inc.
John R. Kenney
Largo, Florida
Chairman of the Board of the Fund;
Chairman of the Board of InterSecurities, Inc.
Julian Lerner
Dallas, Texas
Investment Consultant to AIM
Capital Management
William W. Short, Jr.
Largo, Florida
Chairman, Southern Apparel Corporation
and S.A.C. Distributors
Jack E. Zimmerman
Dayton, Ohio
Retired; former Director, Regional Marketing,
Martin Marietta Corporation
TRANSFER AGENT
Idex Investor Services, Inc.
P.O. Box 9015
Clearwater, Florida 34618-9015
OFFICERS
John R. Kenney
Chairman of the Board
G. John Hurley
President and Chief
Executive Officer
Thomas R. Moriarty
Senior Vice President
William H. Geiger
Vice President and
Assistant Secretary
Leslie E. Martin, III
Vice President - Marketing
Becky A. Ferrell
Vice President, Counsel
and Secretary
Christopher G. Roetzer
Assistant Vice President and
Principal Accounting Officer
Richard B. Franz II
Treasurer
Our corporate offices
are located at:
201 Highland Avenue
Largo, Florida 34640
CUSTOMER SERVICE
(800) 851-9777
Hours: 8 a.m. to 7 p.m. Eastern time
IDEX ASSIST LINE
(800) 421-IDEX (4339)
24-hour automated account information
INVESTMENT ADVISERS
Idex Management, Inc.
201 Highland Avenue
Largo, Florida 34640
InterSecurities, Inc.
201 Highland Avenue
Largo, Florida 34640
SUB-ADVISERS
AEGON USA
Investment Management, Inc.
4333 Edgewood Road, N.E.
Cedar Rapids, Iowa 52499
C.A.S.E. Management, Inc.
2255 Glades Road, Suite 221-A
Boca Raton, FL 33431
Dean Investment Associates
2480 Kettering Tower
Dayton, Ohio 45423
Fred Alger Management, Inc.
30 Montgomery Street
Jersey City, New Jersey 07302
Janus Capital Corporation
100 Fillmore Street, Suite 300
Denver, Colorado 80206
Luther King Capital
Management Corporation
301 Commerce Street, Suite 1600
Ft. Worth, Texas 76102
PRINCIPAL
UNDERWRITER
InterSecurities, Inc.
201 Highland Avenue
Largo, Florida 34640
CUSTODIAN
Investors Fiduciary Trust
Company
Kansas City, Missouri 64105
Please send all correspondence
to the Transfer Agent
INDEPENDENT
ACCOUNTANTS
Price Waterhouse LLP
1055 Broadway
Kansas City, Missouri 64105
If you receive duplicate mailings because you have more than one account in the
same Fund or in the IDEX II Series Fund, at the same household, you may wish to
save your Fund money by consolidating your accounts by address.
Please call IDEX Customer Service at (800) 851-9777.
